OFFICIAL STATEMENT DATED JULY 25, 2017 $388,850,000(1) School District No

Home , Jeff Lewis (writer), Trillium Charter School

COMPETITIVE SALE—The Bonds will be sold pursuant to competitive sales held at 9:00 and 9:30 a.m. (Pacific Time) on August 3, 2017, as further described in the Notices of Sale attached hereto.

PRELIMINARY OFFICIAL STATEMENT DATED JULY 25, 2017 $388,850,000(1) School District No. 1J, Multnomah County, Oregon (Portland Public Schools) Multnomah, Washington, and Clackamas Counties, Oregon General Obligation Bonds, Series 2017 $168,950,000(1) Series 2017A $219,900,000 (1) Series 2017B (Federally Taxable) (Tax-Exempt)

DATED: August 10, 2017 (estimated “Date of Delivery”) DUE: June 15, as shown on the inside cover PURPOSE— The $168,950,000(1) General Obligation Bonds, Series 2017A (Federally Taxable) (the “2017A Bonds”) and $219,900,000(1) General Obligation Bonds, Series 2017B (Tax-Exempt) (the “2017B Bonds,” collectively with the 2017A Bonds, the “Bonds”) are being issued by School District No. 1J, Multnomah County, Oregon (Portland Public Schools) (the “District”), located in Multnomah, Washington, and Clackamas Counties, Oregon. The Bonds are being issued to finance capital costs for the District, and to pay the costs of issuance of the Bonds. See “Purpose and Use of Proceeds” herein. MOODY’S AND S&P GLOBAL RATINGS— “Aa2” and “AA-” underlying “Aa1” and “AA+,” enhanced. See “Oregon School Bond Guaranty” and “Ratings” herein. NOT BANK QUALIFIED— The District has NOT designated the Bonds as “qualified tax-exempt obligations” for purposes of Section 265(b)(3)(B) of the Internal Revenue Code of 1986, as amended (the “Code”). BOOK-ENTRY ONLY SYSTEM— The Bonds will be issued, executed and delivered in fully registered form under a book- entry only system and registered in the name of Cede & Co., as owner and nominee for The Depository Trust Company OfficialStatement substantially in this form. (“DTC”). DTC will act as initial securities depository for the Bonds. Individual purchases of the Bonds will be made in al book-entry form, in the denomination of $5,000 or any integral multiple thereof. Purchasers will not receive certificates

has authorized the distribution of the Preliminary Official Statement to representing their interest in the Bonds purchased. PRINCIPAL AND INTEREST PAYMENTS— Interest on the Bonds will be paid on December 15, 2017 and semiannually thereafter on June 15 and December 15 of each year to the maturity or earlier redemption of the Bonds and will be computed on the basis of a 360-day year comprised of twelve 30 day months. Principal of and interest on the Bonds will District be payable by the District’s Paying Agent, initially U.S. Bank National Association, to DTC which, in turn, will remit such principal and interest to the DTC participants for subsequent disbursement to the beneficial owners of the Bonds at the address appearing upon the registration books on the last business day (the “Record Date”) of the month preceding a payment date.

MATURITY SCHEDULE—See inside front cover. will complete anda deliver fin REDEMPTION— The 2017A Bonds are not subject to optional redemption prior to their stated maturities. The 2017B Bonds are subject to optional redemption prior to their stated maturities as further described herein. SECURITY— The Bonds are general obligations of the District. The District has pledged its full faith and credit to pay the Bonds pursuant to ORS 287A.315. The District has covenanted for the benefit of the owners of the Bonds to levy a direct

, the District ad valorem tax upon all of the taxable property within the District which is sufficient, after taking into consideration discounts taken and delinquencies that may occur in the payment of such taxes, to pay all Bond principal and interest when due. The District has covenanted to levy this tax each year until all the Bonds are paid. This tax shall be in addition to all other taxes of the District, and this tax shall not be limited in rate, amount or otherwise, by Sections 11 or 11b of Article XI of the Oregon Constitution. The Bonds do not constitute a debt or indebtedness of Multnomah, Washington, and Clackamas Counties, the State of Oregon, or any political subdivision thereof other than the District. Payment of the principal of and interest on the Bonds when due is guaranteed by the full faith and credit of the State of Oregon under the provisions of the Oregon School Bond Guaranty Act. See “Oregon School Bond Guaranty” within. TAX MATTERS— In the opinion of Hawkins Delafield & Wood LLP, Bond Counsel to the District (“Bond Counsel”), under existing statutes and court decisions and assuming continuing compliance with certain tax covenants described herein, (i) interest on the 2017B Bonds is excluded from gross income for federal income tax purposes pursuant to Section 103 of the Internal Revenue Code of 1986, as amended (the “Code”), and (ii) interest on the 2017B Bonds is not treated as a preference item in calculating the alternative minimum tax imposed on individuals and corporations under the Code; such interest, however, is included in the adjusted current earnings of certain corporations for purposes of calculating the alternative minimum tax imposed on such corporations. In the opinion of Bond Counsel, interest on the 2017A Bonds is not excludable from gross income for federal income tax purposes under existing law. In the opinion of Bond Counsel, interest on the Bonds is exempt from State of Oregon personal income tax under existing law. See “Tax Matters” herein. DELIVERY—The Bonds are offered for sale to the original purchaser subject to the final approving legal opinion of Bond Counsel. It is expected that the Bonds will be available for delivery to the Paying Agent for Fast Automated Securities Transfer on behalf of DTC, on or about the Date of Delivery. (1) Preliminary, subject to change. This is a Preliminary Official Statement, subject to correction and change. The prospective purchasers and others. Upon the sale of the Bonds the of sale the Upon others. and purchasers prospective This cover page contains certain information for quick reference only. It is not a summary of the issue. Investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision.

School District No. 1J, Multnomah County, Oregon (Portland Public Schools) Multnomah, Washington, and Clackamas Counties, Oregon General Obligation Bonds, Series 2017

DATED: Date of Delivery DUE: June 15, as shown below

MATURITY SCHEDULE— $168,950,000(1) General Obligation Bonds, Series 2017A (Federally Taxable)

CUSIP® CUSIP® Due Interest Due Interest (1) (1) June 15 Amounts Rates Yields 625517 June 15 Amounts Rates Yields 625517 2018$ 73,725,000 2020$ 18,860,000 2019 76,365,000

$219,900,000(1) General Obligation Bonds, Series 2017B (Tax-Exempt)

CUSIP® CUSIP® Due Interest Due Interest (1) (1) June 15 Amounts Rates Yields 625517 June 15 Amounts Rates Yields 625517 2020$ 61,320,000 2033$ 6,165,000 2021 1,195,000 2034 6,740,000 2022 1,490,000 2035 7,350,000 2023 1,800,000 2036 7,990,000 2024 2,135,000 2037 8,670,000 2025 2,495,000 2038 9,390,000 2026 2,875,000 2039 10,145,000 2027 3,290,000 2040 10,945,000 2028 3,730,000 2041 11,785,000 2029 4,160,000 2042 12,675,000 2030 4,620,000 2043 13,610,000 2031 5,105,000 2044 14,600,000 2032 5,620,000

(1) Preliminary, subject to change. The CUSIP® numbers herein are provided by CUSIP Global Services (CGS), which is managed on behalf of the American Bankers Association by S&P Capital IQ, a division of S&P Global Inc. CUSIP is a registered trademark of the American Bankers Association. CUSIP numbers are provided for convenience of reference only. CUSIP numbers are subject to change. Neither the District nor the Purchaser take any responsibility for the accuracy of such CUSIP numbers.

No website mentioned in this Official Statement is part of this Official Statement, and readers should not rely upon any information presented on any such website in determining whether to purchase the Bonds. Any references to any website mentioned in this Official Statement are not hyperlinks and do not incorporate such websites by reference.

No dealer, broker, salesman or other person has been authorized by the District or Piper Jaffray & Co. (the “Financial Advisor”) to give information or to make any representations with respect to the Bonds, other than those contained in this Official Statement, and, if given or made, such other information or representations must not be relied upon. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale.

The Bonds have not been registered under the Securities Act of 1933, as amended, and the Resolution has not been qualified under the Trust Indenture Act of 1939, as amended, in reliance upon exemptions contained in such acts. The registration or qualification of the Bonds in accordance with applicable provisions of securities laws of the States in which the Bonds have been registered or qualified and the exemption from the registration or qualification in other states cannot be regarded as a recommendation thereof. Neither these States nor any of their agencies have passed upon the merits of the Bonds or the accuracy or completeness of this Official Statement. Any representation to the contrary may be a criminal offense.

This Preliminary Official Statement has been “deemed final” by the District, pursuant to Rule 15c2-12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, except for information which is permitted to be excluded from this Official Statement under said rule 15c2-12.

ii School District No. 1J, Multnomah County, Oregon (Portland Public Schools) 501 North Dixon Street Portland, Oregon 97227 503-916-3499

Board of Directors Julia Brim-Edwards Chair Julie Esparza-Brown Co-Vice Chair Rita Moore Co-Vice Chair Paul Anthony Director Scott Bailey Director Amy Kohnstamm Director Mike Rosen Director

School Administrative Staff Yousef Awwad Interim Superintendent(1) and Deputy Chief Executive Officer Ryan Dutcher Interim Chief Financial Officer Donna Chu Director of District Financial Services

Bond Counsel Hawkins Delafield & Wood LLP Portland, Oregon (503) 402-1320

Financial Advisor Piper Jaffray & Co. Portland, Oregon (503) 275-8300

Paying Agent U.S. Bank National Association Global Corporate Trust Services Portland, Oregon (503) 464-3756

(1) The District has named an Interim Superintendent while pursuing a nationwide search. The District convened a Superintendent Recruitment Task Force which meets regularly to advance the District’s efforts to find a new superintendent. The task force is currently in a second round of interviews with selected candidates.

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iv Table of Contents Page Official Notice of Sale for the 2017A Bonds ...... a Official Notice of Sale for the 2017B Bonds ...... e Form of Issue Price Certificate for the 2017B Bonds ...... l Description of the Bonds ...... 1 Principal Amount, Date, Interest Rates and Maturities ...... 1 Paying Agent and Registration Features ...... 1 Redemption Provisions ...... 2 Defeasance ...... 3 Default and Remedies ...... 3 Authorization for Issuance ...... 4 Purpose and Use of Proceeds ...... 4 Purpose ...... 4 Sources and Uses of Funds ...... 5 Security for the Bonds ...... 5 General ...... 5 Oregon School Bond Guaranty ...... 6 State Intercepts ...... 8 Bonded Indebtedness...... 9 Debt Limitation ...... 9 Outstanding Long-Term Debt ...... 10 Projected Debt Service Requirements...... 11 Summary of Overlapping Debt ...... 12 Debt Ratios ...... 13 Debt Payment Record ...... 13 Future Financings ...... 13 The District ...... 13 Public School Districts ...... 13 General Description ...... 14 Staff ...... 15 The Board of Directors ...... 15 Key Administrative Officials ...... 15 Revenue Sources ...... 16 Oregon School District Funding ...... 16 Property Taxes ...... 16 Local Option Levy Taxes Collected ...... 17 Taxable Property Values ...... 19 Fiscal Year 2017 Representative Levy Rate ...... 21 Tax Collection Record ...... 21 Major Taxpayers ...... 22 State School Funding ...... 23 State Reserve Funds ...... 28 Construction Excise Tax ...... 28 Federal Funding ...... 29 Financial Factors ...... 30 Financial Reporting and Accounting Policies ...... 30 Auditing ...... 30 Statement of Net Position ...... 31 Statement of Revenues, Expenses and Changes in Net Position ...... 32 General Fund Balance Sheet ...... 33 General Fund Statement of Revenues, Expenditures and Changes in Fund Balance ...... 34 Budgetary Process ...... 34 General Fund Adopted Budget ...... 35 Investments ...... 35 Pension System ...... 36 Other Postemployment Benefits ...... 40 Risk Management ...... 42 Demographic Information ...... 42 The Initiative and Referendum Process...... 46 Referendum ...... 47 Initiative Process ...... 47 Legal Matters and Litigation ...... 48 Legal Matters ...... 48 Litigation ...... 48

v Table of Contents, Continued Page Tax Matters - 2017A Bonds ...... 49 Opinion of Bond Counsel ...... 49 Original Issue Discount ...... 49 Acquisition Discount on Short-Term Taxable Bonds ...... 50 Bond Premium ...... 50 Disposition and Defeasance ...... 50 Information Reporting and Backup Withholding ...... 50 U.S. Holders ...... 51 Tax Matters – 2017B Bonds ...... 51 Opinion of Bond Counsel ...... 51 Certain Ongoing Federal Tax Requirements and Covenants ...... 51 Certain Collateral Federal Tax Consequences ...... 51 Original Issue Discount ...... 52 Bond Premium ...... 52 Information Reporting and Backup Withholding ...... 53 Miscellaneous ...... 53 Continuing Disclosure ...... 53 Financial Advisor ...... 54 Preliminary Official Statement ...... 54 Ratings ...... 54 Purchaser of the 2017ABonds ...... 54 Purchaser of the 2017B Bonds ...... 55 Certificate with Respect to Official Statement ...... 55 Appendices: Forms of Bond Counsel Opinions ...... Appendix A Financial Statements ...... Appendix B Book-Entry Only System ...... Appendix C Form of Continuing Disclosure Certificate ...... Appendix D Form of Bond Declaration ...... Appendix E

vi Official Notice of Sale $168,950,000(1) School District No. 1J, Multnomah County, Oregon (Portland Public Schools) Multnomah, Washington, and Clackamas Counties, Oregon General Obligation Bonds, Series 2017A (Federally Taxable)

NOTICE IS HEREBY GIVEN that bids will be received on behalf of School District No. 1J, Multnomah County, Oregon (Portland Public Schools) (the “District”), located in Multnomah, Washington, and Clackamas Counties, Oregon for the purchase of the above-captioned General Obligation Bonds, Series 2017A (Federally Taxable) (the “2017A Bonds”) on:

Bid Date: Thursday, August 3, 2017 Bid Time: 9:00 a.m., Prevailing Pacific Time Electronic Bids: PARITY Bidding System (“Parity”) Security The 2017A Bonds are general obligations of the District. The District has pledged its full faith and credit to pay the 2017A Bonds pursuant to ORS 287A.315. The District has covenanted for the benefit of the owners of the 2017A Bonds to levy a direct ad valorem tax upon all of the taxable property within the District which is sufficient, after taking into consideration discounts taken and delinquencies that may occur in the payment of such taxes, to pay all 2017A Bond principal and interest when due. The District has covenanted to levy this tax each year until all the 2017A Bonds are paid. This tax shall be in addition to all other taxes of the District, and this tax shall not be limited in rate, amount or otherwise, by Sections 11 or 11b of Article XI of the Oregon Constitution. See “Security for the Bonds” in the Preliminary Official Statement.

THE 2017A BONDS DO NOT CONSTITUTE A DEBT OR INDEBTEDNESS OF MULTNOMAH, WASHINGTON, OR CLACKAMAS COUNTIES (THE “COUNTIES”), THE STATE, OR ANY POLITICAL SUBDIVISION THEREOF OTHER THAN THE DISTRICT.

Credit Enhancement Payment of the principal of and interest on the 2017A Bonds when due is guaranteed by the full faith and credit of the State of Oregon under the provisions of the Oregon School Bond Guaranty Act.

Ratings The District has received a rating on the 2017A Bonds of “Aa2”from Moody’s Investors Service and “AA-” from S&P Global Ratings, and will pay the cost thereof. See “Ratings” in the Preliminary Official Statement. The State Guaranty is rated “Aa1” by Moody’s Investors Service and “AA+” by S&P Global Ratings.

Interest Payments and Maturity Interest on the 2017A Bonds is payable semiannually on June 15 and December 15 of each year until maturity, commencing December 15, 2017. Bond Interest will be calculated based on a 360- day year consisting of twelve 30-day months. The 2017A Bonds will be dated with their date of delivery, will be issued in the aggregate principal amount of $168,950,000(1), and will mature on June 15 of the following dates in the following amounts, subject to adjustment as provided below:

Due Due Due (1) (1) (1) June 15 Amounts June 15 Amounts June 15 Amounts 2018$ 73,725,000 2019$ 76,365,000 2020$ 18,860,000

(1) Preliminary, subject to change. a Adjustment of Par Amount and Maturities The 2017A Bonds will be awarded based on the maturity schedule above. However, the District reserves the right to increase or decrease the total principal amount of the 2017A Bonds by an amount not to exceed ten percent (10%) of the total following the opening of the bids. Within the limitations of the last sentence, the District also reserves the right to increase or decrease the par amount of any maturity by t fifteen percent (15%) of the par amount of that maturity in order to properly size the issue and adjust debt service. Notice of any adjustment will be given to the winning bidder after bid opening. The underwriter’s spread will be preserved at the same percentage as bid.

Optional Redemption The 2017A Bonds are not subject to optional redemption prior to maturity.

Term Bonds Bidders may designate two or more consecutive maturities of the 2017A Bonds, with identical interest rates, as 2017A Term Bonds. Each 2017A Term Bond will mature on the final maturity date of its consecutive maturities, in an aggregate principal amount equal to the sum of the principal amounts of its consecutive maturities. 2017A Term Bonds will be subject to mandatory redemption at par and in accordance with operational procedures then in effect for The Depository Trust Company (“DTC”), New York, New York, in the amounts and on the dates which would have been consecutive maturities. See “Description of the Bonds – Redemption Provisions” in the Preliminary Official Statement for a summary of such terms. If no 2017A Term Bonds are designated in the winning bid, the 2017A Bonds will mature serially as provided in this Official Notice of Sale.

Book-Entry Only The 2017A Bonds will be issued in registered, book-entry only form through DTC. 2017A Bonds will be available in denominations of $5,000, or integral multiples. Unless the book-entry-only system is discontinued, Bond principal and interest payments will be made by the District to DTC through the District’s Paying Agent. DTC will be responsible for making payments to beneficial owners of 2017A Bonds.

Authorization and Purpose Under and in accordance with State laws and provisions, specifically ORS Chapter 287A, the 2017A Bonds are being issued pursuant to Resolution No. 5472 (the “Resolution”) adopted by the District’s Board of Directors (the “Board”) on June 20, 2017 to finance capital costs for the District and to pay the costs of issuance of the 2017A Bonds.

Bidding Constraints All bids will be subject to the terms and conditions of this Official Notice of Sale. All bids for the 2017A Bonds must comply with the following conditions: (1) the interest rate must be a multiple of 1/8 or 1/20th of one percent; (2) the 2017A Bonds must bear interest from their date to their stated maturity date at the interest rate specified in the bid; (3) all 2017A Bonds maturing on the same date must bear the same rate of interest; (4) bids must be for an amount of not less than one hundred percent (100.00%) and not more than one hundred and two percent (102.00%) of the principal amount of the 2017A Bonds; and (5) no bid will be considered that does not offer to purchase all of the 2017A Bonds.

Bids Bids must be submitted via PARITY. Bids must be received by the PARITY system not later than the date and time indicated in the first paragraph of this Official Notice of Sale. To the extent any instructions or directions set forth in PARITY conflict with this Official Notice of Sale, the terms of this Official Notice of Sale shall control. Bidders electing to submit bids through PARITY must obtain access to the PARITY system and bear all risks associated with using that system, including errors and delays in receipt of bids.

For further information about submitting a bid using PARITY, potential bidders may contact PARITY at Telephone: (212) 849-5021.

b Selection of Best Bid and Award of Sale Unless all bids are rejected, the 2017A Bonds will be sold to the responsible bidder submitting the bid which results in the lowest true interest cost based on the submitted bid to the District. True interest cost will be determined by doubling the semiannual interest rate necessary to discount the debt service on the 2017A Bonds to August 10, 2017 (the estimated closing date of the 2017A Bonds), and the price bid for the 2017A Bonds. Each bidder is requested to supply the total interest cost and the true interest cost that the District will pay on the 2017A Bonds if the bid is accepted. The purchaser must pay accrued interest, computed on a 360- day basis, from the date of the 2017A Bonds to their date of delivery.

Good Faith Deposit The winning bidder will be required to provide a good faith deposit in the amount of $1,690,000 in immediately available funds wired to the District not later than 2:00 p.m. (Prevailing Pacific Time) on August 3, 2017. The District or the District’s Financial Advisor will provide the wire information immediately upon the award of bids.

The good faith deposit will be held by the District to secure the District from any loss resulting from the failure of the bidder to comply with the terms of its bid, and will be forfeited to the District as liquidated damages if the bidder to whom the 2017A Bonds are awarded withdraws its bid or fails to complete its purchase of the 2017A Bonds in accordance with this Official Notice of Sale and its bid.

Interest earnings on the good faith deposit will be the property of the District, and will not be credited against the purchase price of the 2017A Bonds. The successful bidder shall pay the balance of the purchase price of the 2017A Bonds at closing, in funds immediately available to the District on the date and at the time of closing.

Right of Rejection The District reserves the right to reject any or all bids, and to waive any irregularities.

Right to Cancel, Change Timing and Terms of Sale The District reserves the right to change the date, timing or terms under which the 2017A Bonds are offered for sale, or to cancel the sale based on market conditions, as communicated through TM3, the Bond Buyer Wire, or the Bloomberg News Network.

Legal Opinion The approving opinion of Hawkins Delafield & Wood LLP, Bond Counsel, of Portland, Oregon, substantially in the form attached to the Preliminary Official Statement as Appendix A, will be delivered to the District at closing. A reliance letter will be provided at no cost to the purchaser.

Delivery It is expected that delivery of the 2017A Bonds will be made to the Paying Agent under DTC’s Fast Automated Securities Transfer (FAST) program, without cost to the bidder. Delivery of the 2017A Bonds will be made on or about August 10, 2017.

CUSIP The successful bidder for the 2017A Bonds is responsible for obtaining CUSIP numbers. The charge of the CUSIP Service Bureau will be paid by the successful bidder; however, all expenses for printing CUSIP numbers on the 2017A Bonds shall be paid by the District. c CUSIP identification numbers will appear on the 2017A Bonds, but neither the failure to insert such numbers on the 2017A Bonds nor any error with respect thereto shall constitute cause for a failure or refusal by the purchaser thereof to accept delivery of and pay for the 2017A Bonds in accordance with the terms of this Official Notice of Sale.

Continuing Disclosure The District will undertake to provide continuing disclosure for the benefit of the 2017A Bond Owners in compliance with SEC Rule 15c2-12. The form of the undertaking is attached as Appendix D to the Preliminary Official Statement.

Compliance with SEC Rules The District agrees to provide the successful bidder with one copy of the Final Official Statement in Adobe Portable Document Format (PDF), not later than the seventh business day following the date on which bids are due, to enable the successful bidder to satisfy its responsibilities under the SEC rules, at the expense of the District. The District will also provide paper copies of the Final Official Statement at the request and expense of the bidder. Bidders should expect that the Final Official Statements will not be available prior to the seventh business day following the date on which bids are due, and should not issue confirmations which request payment prior to that date. This provision will constitute a contract with the successful bidder upon acceptance of its bid by the District, in compliance with Section 240.15c2-12(b)(3) in Chapter II of Title 17 of the Code of Federal Regulations.

Bidder’s Option Insurance Bids for the 2017A Bonds may not be conditioned upon obtaining insurance or any other credit enhancement. The District does not intend to qualify the 2017A Bonds for municipal bond insurance. If the successful bidder wishes to obtain municipal bond insurance for any of the 2017A Bonds, the District will cooperate with the bidder and the insurer to allow the insurance to be issued, but only if doing so does not increase the District’s risks or expense. All costs related to municipal bond insurance for the 2017A Bonds must be paid by the successful bidder, and no difficulty with, or failure to obtain, any municipal bond insurance will excuse the successful bidder from its obligation to purchase the 2017A Bonds pursuant to its bid.

Closing Certificates At the time of payment for the delivery of the 2017A Bonds, the District will furnish the successful bidder a certificate confirming that there is no material litigation pending that is not disclosed in the Official Statement, and that the portions of the Official Statement describing the District do not contain any material misstatements or omissions.

Financial Advisor Requests for additional information about this sale should be directed to Lauren MacMillan, Piper Jaffray & Co. (the “Financial Advisor”) at (503) 275-8302.

Preliminary Official Statement and Additional Information The Preliminary Official Statement for the 2017A Bonds (with this Official Notice of Sale) is available in electronic form from i-Deal Prospectus. For information on electronic delivery, please call the i-Deal Prospectus at (212) 849-5024 or contact the Financial Advisor.

- End of Official Notice of Sale –

d Official Notice of Sale $219,900,000(1) School District No. 1J, Multnomah County, Oregon (Portland Public Schools) Multnomah, Washington, and Clackamas Counties, Oregon General Obligation Bonds, Series 2017B (Tax-Exempt)

Bid Date: Thursday, August 3, 2017 Bid Time: 9:30 a.m., Prevailing Pacific Time Electronic Bids: PARITY Bidding System (“Parity”)

Security The 2017B Bonds are general obligations of the District. The District has pledged its full faith and credit to pay the 2017B Bonds pursuant to ORS 287A.315. The District has covenanted for the benefit of the owners of the 2017B Bonds to levy a direct ad valorem tax upon all of the taxable property within the District which is sufficient, after taking into consideration discounts taken and delinquencies that may occur in the payment of such taxes, to pay all 2017B Bond principal and interest when due. The District has covenanted to levy this tax each year until all the 2017B Bonds are paid. This tax shall be in addition to all other taxes of the District, and this tax shall not be limited in rate, amount or otherwise, by Sections 11 or 11b of Article XI of the Oregon Constitution. See “Security for the Bonds” in the Preliminary Official Statement.

THE 2017B BONDS DO NOT CONSTITUTE A DEBT OR INDEBTEDNESS OF MULTNOMAH, WASHINGTON, OR CLACKAMAS COUNTIES (THE “COUNTIES”), THE STATE, OR ANY POLITICAL SUBDIVISION THEREOF OTHER THAN THE DISTRICT.

Credit Enhancement Payment of the principal of and interest on the 2017B Bonds when due is guaranteed by the full faith and credit of the State of Oregon under the provisions of the Oregon School Bond Guaranty Act.

Ratings The District has received a rating on the 2017B Bonds of “Aa2”from Moody’s Investors Service and “AA-” from S&P Global Ratings, and will pay the cost thereof. See “Rating” in the Preliminary Official Statement. The State Guaranty is rated “Aa1” by Moody’s Investors Service and “AA+” by S&P Global Ratings.

Interest Payments and Maturity Interest on the 2017B Bonds is payable semiannually on June 15 and December 15 of each year until maturity, commencing December 15, 2017. 2017B Bond Interest will be calculated based on a 360- day year consisting of twelve 30-day months. The 2017B Bonds will be dated with their date of delivery, will be issued in the aggregate principal amount of $219,900,000(1), and will mature on June 15 of the following dates in the following amounts, subject to adjustment as provided below:

(1) Preliminary, subject to change. e Due Due Due (1) (1) (1) June 15 Amounts June 15 Amounts June 15 Amounts 2020$ 61,320,000 2029$ 4,160,000 2037$ 8,670,000 2021 1,195,000 2030 4,620,000 2038 9,390,000 2022 1,490,000 2031 5,105,000 2039 10,145,000 2023 1,800,000 2032 5,620,000 2040 10,945,000 2024 2,135,000 2033 6,165,000 2041 11,785,000 2025 2,495,000 2034 6,740,000 2042 12,675,000 2026 2,875,000 2035 7,350,000 2043 13,610,000 2027 3,290,000 2036 7,990,000 2044 14,600,000 2028 3,730,000 (1) Preliminary, subject to change.

Adjustment of Par Amount and Maturities The 2017B Bonds will be awarded based on the maturity schedule above. However, the District reserves the right to increase or decrease the total principal amount of the 2017B Bonds by an amount not to exceed ten percent (10%) of the total following the opening of the bids. Within the limitations of the last sentence, the District also reserves the right to increase or decrease the par amount of any maturity by the greater of fifteen percent (15%) of the par amount of that maturity or $850,000 in order to properly size the issue and adjust debt service. Notice of any adjustment will be given to the winning bidder after bid opening. The underwriter’s spread will be preserved at the same percentage as bid.

Optional Redemption The 2017B Bonds maturing in years 2020 through 2027, inclusive, are not subject to optional redemption prior to maturity. The Bonds maturing on June 15, 2028 and on any date thereafter are subject to redemption at the option of the District prior to their stated maturity dates at any time on or after June 15, 2027, as a whole or in part, and if in part, with maturities to be selected by the District at a price of par, plus accrued interest, if any, to the date of redemption. See “Description of the Bonds – Redemption Provisions” in the Preliminary Official Statement for a summary of such terms.

Term Bonds Bidders may designate two or more consecutive maturities of the 2017B Bonds, with identical interest rates, as 2017B Term Bonds. Each 2017B Term Bond will mature on the final maturity date of its consecutive maturities, in an aggregate principal amount equal to the sum of the principal amounts of its consecutive maturities. 2017B Term Bonds will be subject to mandatory redemption at par and in accordance with operational procedures then in effect for The Depository Trust Company (“DTC”), New York, New York, in the amounts and on the dates which would have been consecutive maturities. See “Description of the Bonds – Redemption Provisions” in the Preliminary Official Statement for a summary of such terms. If no 2017B Term Bonds are designated in the winning bid, the 2017B Bonds will mature serially as provided in this Official Notice of Sale.

Book-Entry Only The 2017B Bonds will be issued in registered, book-entry only form through DTC. 2017B Bonds will be available in denominations of $5,000, or integral multiples. Unless the book-entry-only system is discontinued, 2017B Bond principal and interest payments will be made by the District to DTC through the District’s Paying Agent. DTC will be responsible for making payments to beneficial owners of 2017B Bonds.

Authorization and Purpose Under and in accordance with State laws and provisions, specifically ORS Chapter 287A, the 2017B Bonds are being issued pursuant to Resolution No. 5472 (the “Resolution”) adopted by the District’s Board of Directors (the “Board”) on June 20, 2017 to finance capital costs for the District and to pay the costs of issuance of the 2017B Bonds.

f Bidding Constraints All bids will be subject to the terms and conditions of this Official Notice of Sale. All bids for the 2017B Bonds must comply with the following conditions: (1) the interest rate must be a multiple of 1/8 or 1/20th of one percent; (2) the 2017B Bonds must bear interest from their date to their stated maturity date at the interest rate specified in the bid; (3) all 2017B Bonds maturing on the same date must bear the same rate of interest; (4) bids must be for an amount of not less than one hundred percent (100.00%) and not more than one hundred and twenty percent (120.00%) of the principal amount of the 2017B Bonds; (5) the reoffering prices for each maturity cannot be less than ninety-six percent (96.00%) of the principal amount of such maturity; and (6) no bid will be considered that does not offer to purchase all of the 2017B Bonds.

For further information about submitting a bid using PARITY, potential bidders may contact PARITY at Telephone: (212) 849-5021.

Selection of Best Bid and Award of Sale Unless all bids are rejected, the 2017B Bonds will be sold to the responsible bidder submitting the bid which results in the lowest true interest cost based on the submitted bid to the District. True interest cost will be determined by doubling the semiannual interest rate necessary to discount the debt service on the 2017B Bonds to August 10, 2017 (the estimated closing date of the Bonds), and the price bid for the Bonds. Each bidder is requested to supply the total interest cost and the true interest cost that the District will pay on the 2017B Bonds if the bid is accepted. The purchaser must pay accrued interest, computed on a 360-day basis, from the date of the 2017B Bonds to their date of delivery.

Good Faith Deposit The winning bidder will be required to provide a good faith deposit in the amount of $2,230,000 in immediately available funds wired to the District not later than 2:00 p.m. (Prevailing Pacific Time) on August 3, 2017. The District or the District’s Financial Advisor will provide the wire information immediately upon the award of bids.

The good faith deposit will be held by the District to secure the District from any loss resulting from the failure of the bidder to comply with the terms of its bid, and will be forfeited to the District as liquidated damages if the bidder to whom the 2017B Bonds are awarded withdraws its bid or fails to complete its purchase of the Bonds in accordance with this Official Notice of Sale and its bid.

Interest earnings on the good faith deposit will be the property of the District, and will not be credited against the purchase price of the 2017B Bonds. The successful bidder shall pay the balance of the purchase price of the 2017B Bonds at closing, in funds immediately available to the District on the date and at the time of closing.

Right of Rejection The District reserves the right to reject any or all bids, and to waive any irregularities.

Right to Cancel, Change Timing and Terms of Sale The District reserves the right to change the date, timing or terms under which the 2017B Bonds are offered for sale, or to cancel the sale based on market conditions, as communicated through TM3, the Bond Buyer Wire, or the Bloomberg News Network.

g Establishment of Issue Price The winning bidder shall assist the District in establishing the issue price of the 2017B Bonds and shall execute and deliver to the District, at closing, a certificate regarding issue price substantially in the form attached hereto, with such modifications as may be appropriate or necessary, in the reasonable judgment of the winning bidder, the District and Bond Counsel.

By submitting a bid, each bidder is certifying that its bid is a firm offer to purchase the 2017B Bonds and is not a “courtesy bid” being submitted for the purpose of assisting in meeting the competitive sale requirements relating to the establishment of the “issue price” of the 2017B Bonds pursuant to Section 148 of the Internal Revenue Code of 1986, as amended, including the requirement that bids be received from at least three (3) underwriters of municipal bonds who have established industry reputations for underwriting new issuances of municipal bonds (the “Competitive Sale Requirements”). Prior to the formal award of the sale, and promptly after bids for the 2017B Bonds are due, the winning bidder shall provide the District with the reoffering prices and yields for the 2017B Bonds (the “Initial Reoffering Prices”).

Any bid submitted pursuant to this Official Notice of Sale shall be considered a firm offer for the purchase of the 2017B Bonds, as specified in the bid. By submitting a bid for the 2017B Bonds, each bidder certifies that has an established industry reputation for underwriting new issuance of municipal bonds unless specifically noted in the bid.

In the event that the competitive sale requirements are not satisfied, the District shall advise the winning bidder that such requirements are not satisfied. Bids will not be subject to cancellation in the event that the competitive sale requirements are not satisfied. If the competitive sale requirements are not satisfied, one of the following sections will apply:

10% Test May Apply. Unless the winning bidder chooses to apply to “hold the offering price “rule, as described further below, the District shall treat the first price at which 10% of each maturity of the 2017B Bonds (the “10% test”) is sold to the public as the issue price of that maturity, applied on a maturity-by-maturity basis (and if different interest rates apply within a maturity, to each separate CUSIP number within that maturity). The winning bidder shall advise the District if any maturity of the 2017B Bonds satisfies the 10% test as of the date and time of the award of the 2017B Bonds. The District will not require the winning bidder to comply with the “hold the offering price” rule (unless the winning bidder elects to apply the hold the offering price rule in lieu of applying the 10% test).

If the competitive sale requirements are not satisfied, then until the 10% test has been satisfied as to each maturity of the 2017B Bonds, the winning bidder agrees to promptly report to the District the prices at which the unsold 2017B Bonds of that maturity have been sold to the public. That reporting obligation shall continue, whether or not the Delivery Date (as defined in the Preliminary Official Statement) has occurred, until the 10% test has been satisfied as to the 2017B Bonds of that maturity or until all 2017B Bonds of that maturity have been sold.

Hold-the-Offering-Price Rule May Apply. Only if the winning bidder chooses to apply the “hold the offering price“ rule in lieu of the 10% test, the District may determine to treat (i) the first price at which 10% of a maturity of the 2017B Bonds is sold to the public as the issue price of that maturity and/or (ii) the initial offering price to the public as of the sale date of any maturity of the 2017B Bonds as the issue price of that maturity (the “hold-the-offering-price rule”), in each case applied on a maturity-by-maturity basis (and if different interest rates apply within a maturity, to each separate CUSIP number within that maturity). The winning bidder shall advise the District if any maturity of the 2017B Bonds satisfies the 10% test as of the date and time of the award of the 2017B Bonds.

In addition, the winning bidder shall (i) confirm that the underwriters have offered or will offer the 2017B Bonds to the public on or before the date of award at the reoffering price or prices (the “initial offering price”), or at the corresponding yield or yields, set forth in the bid submitted by the winning bidder, (ii) provide the District with reasonable supporting documentation that it offered the 2017B Bonds to the public at the initial offering price on or before the date of award, such as a copy of the pricing wire or equivalent communication, the form of which is acceptable to Bond Counsel, and (iii) agree, on behalf of the underwriters participating in

h the purchase of the 2017B Bonds, that the underwriters will neither offer nor sell unsold 2017B Bonds of any maturity to which the hold-the-offering-price rule shall apply to any person at a price that is higher than the initial reoffering price to the public during the period starting on the sale date and ending on the earlier of the following:

(i) the close of the fifth (5th) business day after the sale date; or (ii) the date on which the underwriters have sold at least 10% of that maturity of the 2017B Bonds to the public at a price that is no higher than the initial offering price to the public.

The winning bidder shall promptly advise the District when the underwriters have sold 10% of that maturity of the 2017B Bonds to the public at a price that is no higher than the initial offering price to the public, if that occurs prior to the close of the fifth (5th) business day after the sale date.

The District acknowledges that, in making the representations set forth above, the winning bidder will rely on (i) the agreement of each underwriter to comply with the hold-the-offering-price rule, as set forth in an agreement among underwriters and the related pricing wires, (ii) in the event a selling group has been created in connection with the initial sale of the 2017B Bonds to the public, the agreement of each dealer who is a member of the selling group to comply with the hold-the-offering-price rule, as set forth in a selling group agreement and the related pricing wires, and (iii) in the event that an underwriter is a party to a retail distribution agreement that was employed in connection with the initial sale of the 2017B Bonds to the public, the agreement of each broker-dealer that is a party to such agreement to comply with the hold-the-offering- price rule, as set forth in the retail distribution agreement and the related pricing wires. The District further acknowledges that each underwriter shall be solely liable for its failure to comply with its agreement regarding the hold-the-offering-price rule and that no underwriter shall be liable for the failure of any other underwriter, or of any dealer who is a member of a selling group, or of any broker-dealer that is a party to a retail distribution agreement to comply with its corresponding agreement regarding the hold-the-offering-price rule as applicable to the 2017B Bonds.

By submitting a bid, each bidder confirms that: (i) any agreement among underwriters, any selling group agreement and each retail distribution agreement (to which the bidder is a party) relating to the initial sale of the 2017B Bonds to the public, together with the related pricing wires, contains or will contain language obligating each underwriter, each dealer who is a member of the selling group, and each broker-dealer that is a party to such retail distribution agreement, as applicable, to (A) report the prices at which it sells to the public the unsold 2017B Bonds of each maturity allotted to it until it is notified by the winning bidder that either the 10% test has been satisfied as to the 2017B Bonds of that maturity or all 2017B Bonds of that maturity have been sold to the public and (B) comply with the hold-the-offering-price rule (if mutually agreed to and applicable), in each case if and for so long as directed by the winning bidder and as set forth in the related pricing wires, and (ii) any agreement among underwriters relating to the initial sale of the 2017B Bonds to the public, together with the related pricing wires, contains or will contain language obligating each underwriter that is a party to a retail distribution agreement to be employed in connection with the initial sale of the 2017B Bonds to the public to require each broker-dealer that is a party to such retail distribution agreement to (A) report the prices at which it sells to the public the unsold 2017B Bonds of each maturity allotted to it until it is notified by the winning bidder or such underwriter that either the 10% test has been satisfied as to the 2017B Bonds of that maturity or all 2017B Bonds of that maturity have been sold to the public and (B) comply with the hold-the- offering-price rule (if mutually agreed to and applicable), in each case if and for so long as directed by the winning bidder or such underwriter and as set forth in the related pricing wires.

Sales of any 2017B Bonds to any person who is a related party to an underwriter shall not constitute sales to the public for purposes of this Official Notice of Sale. Further, for purposes of this Official Notice of Sale:

(i) “public” means any person other than an underwriter or a related party, (ii) “underwriter” means (A) any person that agrees pursuant to a written contract with the District (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the 2017B Bonds to the public and (B) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (A) to participate in the initial sale of the 2017B Bonds to

i the public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the 2017B Bonds to the public), (iii) a purchaser of any of the 2017B Bonds is a “related party” to an underwriter if the underwriter and the purchaser are subject, directly or indirectly, to (i) more than 50% common ownership of the voting power or the total value of their stock, if both entities are corporations (including direct ownership by one corporation of another), (ii) more than 50% common ownership of their capital interests or profit interests, if both entities are partnerships (including direct ownership by one partnership of another), or (iii) more than 50% common ownership of the value of the outstanding stock of the corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation and the other entity is a partnership (including direct ownership of the applicable stock or interests by one entity of the other), and (iv) “sale date” means the date that the 2017B Bonds are awarded by the District to the winning bidder.

Tax Status In the opinion of Bond Counsel, under existing statutes and court decisions and assuming continuing compliance with certain tax covenants described herein, (i) interest on the 2017B Bonds is excluded from gross income for Federal income tax purposes pursuant to Section 103 of the Internal Revenue Code of 1986, as amended (the “Code”), and (ii) interest on the 2017B Bonds is not treated as a preference item in calculating the alternative minimum tax imposed on individuals and corporations under the Code; such interest, however, is included in the adjusted current earnings of certain corporations for purposes of calculating the alternative minimum tax imposed on such corporations. In rendering its opinion, Bond Counsel has relied on certain representations, certifications of fact, and statements of reasonable expectations made by the District in connection with the 2017B Bonds, and Bond Counsel has assumed compliance by the District with certain ongoing covenants to comply with applicable requirements of the Code to assure the exclusion of interest on the 2017B Bonds from gross income under Section 103 of the Code. In addition, in the opinion of Bond Counsel to the District, under existing statutes, interest on the 2017B Bonds is exempt from State of Oregon personal income tax.

Not Bank Qualified The District has not designated the 2017B Bonds as a “qualified tax-exempt obligation” under Section 265(b)(3) of the Code.

Delivery It is expected that delivery of the 2017B Bonds will be made to the Paying Agent under DTC’s Fast Automated Securities Transfer (FAST) program, without cost to the bidder. Delivery of the 2017B Bonds will be made on or about August 10, 2017.

CUSIP The successful bidder for the 2017B Bonds is responsible for obtaining CUSIP numbers. The charge of the CUSIP Service Bureau will be paid by the successful bidder; however, all expenses for printing CUSIP numbers on the 2017B Bonds shall be paid by the District.

CUSIP identification numbers will appear on the 2017B Bonds, but neither the failure to insert such numbers on the 2017B Bonds nor any error with respect thereto shall constitute cause for a failure or refusal by the purchaser thereof to accept delivery of and pay for the 2017B Bonds in accordance with the terms of this Official Notice of Sale.

j Continuing Disclosure The District will undertake to provide continuing disclosure for the benefit of the 2017B Bond Owners in compliance with SEC Rule 15c2-12. The form of the undertaking is attached as Appendix D to the Preliminary Official Statement.

Bidder’s Option Insurance Bids for the 2017B Bonds may not be conditioned upon obtaining insurance or any other credit enhancement. The District does not intend to qualify the 2017B Bonds for municipal bond insurance. If the successful bidder wishes to obtain municipal bond insurance for any of the 2017B Bonds, the District will cooperate with the bidder and the insurer to allow the insurance to be issued, but only if doing so does not increase the District’s risks or expense. All costs related to municipal bond insurance for the 2017B Bonds must be paid by the successful bidder, and no difficulty with, or failure to obtain, any municipal bond insurance will excuse the successful bidder from its obligation to purchase the 2017B Bonds pursuant to its bid.

Closing Certificates At the time of payment for the delivery of the 2017B Bonds, the District will furnish the successful bidder a certificate confirming that there is no material litigation pending that is not disclosed in the Official Statement, and that the portions of the Official Statement describing the District do not contain any material misstatements or omissions.

Financial Advisor Requests for additional information about this sale should be directed to Lauren MacMillan, Piper Jaffray & Co. (the “Financial Advisor”) at (503) 275-8302.

Preliminary Official Statement and Additional Information The Preliminary Official Statement for the 2017B Bonds (with this Official Notice of Sale) is available in electronic form from i-Deal Prospectus. For information on electronic delivery, please call the i-Deal Prospectus at (212) 849-5024 or contact the Financial Advisor.

- End of Official Notice of Sale -

k FORM OF ISSUE PRICE CERTIFICATE FOR THE 2017B BONDS

$__,___,___ School District No. 1J, Multnomah County, Oregon (Portland Public Schools) Multnomah, Washington, and Clackamas Counties, Oregon General Obligation Bonds, Series 2017B

[NAME OF WINNING BIDDER], as the [lead] underwriter and winning bidder (the “Winning Bidder”) in connection with the competitive sale by School District No. 1J, Multnomah County, Oregon (the “Issuer”) of its $______aggregate principal amount General Obligation Bonds, Series 2017B (the “Bonds”) pursuant to the Notice of Sale published on [PUBLICATION DATE], hereby certifies as follows:

[the following (1)-(4) to be used if competitive sale requirements are met]

1. The Winning Bidder reasonably expected to reoffer the Bonds on [SALE DATE] to the Public at the prices or yields set forth in the Issuer’s final Official Statement relating to the Bonds (the “Official Statement”).

2. ATTACHMENT I is a true and correct copy of the bid provided by the Winning Bidder to purchase the Bonds.

3. The Winning Bidder was not given the opportunity to review other bids prior to submitting its bid.

4. The bid submitted by the Winning Bidder constituted a firm offer to purchase the Bonds.

[the following (1)-(4) to be used if competitive sale requirements are not met and the Winning Bidder elects to apply the 10% test.]

1. As of [SALE DATE] (the “Sale Date”), all of the Bonds have been the subject of an offering to the Public at the prices or yields set forth in the Issuer’s Official Statement relating to the Bonds (the “Official Statement”).

2. As of the Sale Date, except for the [PLEASE IDENTIFY UN/UNDERSOLD MATURITIES] (the “Unsold Maturities”), the first price or yield at which at least 10 percent of each Maturity of the Bonds was sold by the Underwriters to the Public was the price or yield set forth in the Official Statement (the “Initial Offering Price”).

3. As of the date hereof, the Underwriters have offered and sold to the Public the first 10 percent of the Unsold Maturities shown on Schedule A hereto at the prices set forth on such Schedule A.

4. To the extent the Underwriters have not sold 10 percent of any Unsold Maturity to the Public as of the date hereof, the Winning Bidder, pursuant to the terms of the Notice of Sale, will report to the Issuer in writing the actual sale prices at which the Underwriters have sold the first 10 percent of such Unsold Maturity to the Public as soon as practicable after such sale.

[the following (1)-(4) to be used if competitive sale requirements are not met and the Winning Bidder elects to comply with the “hold-the-offering-price” requirements.]

1. As of [SALE DATE] (the “Sale Date”), all of the Bonds have been the subject of a offering to the Public at the prices or yields set forth in the Issuer’s Official Statement relating to the Bonds (the “Official Statement”).

l 2. Attached hereto as ATTACHMENT I is a copy of the pricing wire for the Bonds or an equivalent communication showing that each Maturity of the Bonds was offered to the Public on the Sale Date at the price or yield set forth in the Official Statement (the “Initial Offering Price”).

3. As of the Sale Date, except for the [PLEASE IDENTIFY UN/UNDERSOLD MATURITIES] (the “Unsold Maturities”), the first price or yield at which at least 10 percent of each Maturity of the Bonds was sold by the Underwriters to the Public was the price or yield set forth in the Official Statement (the “Initial Offering Price”).

4. Following the Sale Date, with respect to each Unsold Maturity, the Underwriters, as defined below, in compliance with the applicable provisions of the Notice of Sale, have each agreed in writing not to, and have not, offered or sold the Bonds comprising any such Unsold Maturity to the Public at a price that is higher or yield that is lower than the Initial Offering Price during the period starting on the Sale Date and ending on the earlier of the following: (a) the close of the fifth business day after the Sale Date, or (b) the date on which at least 10 percent of the bonds of the Unsold Maturity has been sold to the Public.

5. For purposes of this certificate, the following definitions will apply:

“Public” means any person (including an individual, trust, estate, partnership, association, company or corporation) other than an Underwriter or a Related Party, as defined below, to an Underwriter.

“Underwriter” means (i) the Winning Bidder, (ii) any person that agrees pursuant to a written contract with the Winning Bidder to form an underwriting syndicate to participate in the initial sale of the Bonds to the Public, and (iii) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (ii) of this paragraph to participate in the initial sale of the Bonds to the Public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the Public).

“Related Party” means any entity if an Underwriter and such entity are subject, directly or indirectly, to more than 50 percent common ownership of (i) the voting power or the total value of their stock, if both entities are corporations (including direct ownership by one corporation of another), (ii) their capital interests or profit interests, if both entities are partnerships (including direct ownership by one partnership of another), or (iii) the value of the outstanding stock of the corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation and the other entity is a partnership (including direct ownership of the applicable stock or interests by one entity of the other).

We understand that the representations contained herein may be relied upon by the Issuer in making certain of the representations contained in the Tax Certificate, and we further understand that Hawkins Delafield & Wood LLP, as bond counsel to the Issuer, may rely upon this certificate, among other things, in providing an opinion with respect to the exclusion from gross income of interest on the Bonds pursuant to Section 103 of the Internal Revenue Code of 1986, as amended (the “Code”). The undersigned is certifying only as to facts in existence on the date hereof. Nothing herein represents the undersigned’s interpretation of any laws; in particular the regulations under the Code, or the application of any laws to these facts. The certifications contained herein are not necessarily based on personal knowledge, but may instead be based on either inquiry deemed adequate by the undersigned or institutional knowledge (or both) regarding the matters set forth herein. Although certain information furnished in this Certificate has been derived from other purchasers who may be considered Related Parties to the Winning Bidder and cannot be independently verified by us, we have no reason to believe it to be untrue in any material respect.

m Dated as of the _____ day of ______, 2017. [successful bidder]______

By: Authorized Officer

Name:

Title:

OFFICIAL STATEMENT School District No. 1J, Multnomah County, Oregon (Portland Public Schools) Multnomah, Washington, and Clackamas Counties, Oregon $388,850,000(1) General Obligation Bonds, Series 2017 $168,950,000(1) Series 2017A $219,900,000 (1) Series 2017B (Federally Taxable) (Tax-Exempt)

School District No. 1J, Multnomah County, Oregon (Portland Public Schools) (the “District”), located in Multnomah, Washington, and Clackamas Counties, Oregon, a school district duly organized and existing under and by virtue of the laws of the State of Oregon (the “State”) furnishes this Official Statement in connection with the offering of $168,950,000(1) aggregate principal amount General Obligation Bonds, Series 2017A (Federally Taxable) (the “2017A Bonds”) and $219,900,000(1) General Obligation Bonds, Series 2017B (Tax-Exempt) (the “2017B Bonds,” collectively with the 2017A Bonds, the “Bonds”), dated the Date of Delivery. This Official Statement, which includes the cover page, inside cover page, Notice of Sale, bid form and appendices, provides information concerning the District and the Bonds.

Under and in accordance with State laws and provisions, specifically Oregon Revised Statutes (“ORS”) Chapter 287A, the Bonds are being issued pursuant to Resolution No. 5472 (the “Resolution”) adopted by the District’s Board of Directors (the “Board”) on June 20, 2017 and a bond declaration (the “Declaration”) dated the Date of Delivery of the Bonds, attached hereto as Appendix E.

Certain statements contained in this Official Statement do not reflect historical facts, but are forecasts and “forward-looking statements.” No assurance can be given that the future results discussed herein will be achieved, and actual results may differ materially from the forecasts described herein. In this respect, words such as “estimated,” “projected,” “anticipate,” “expect,” “intend,” “plan,” “believe” and similar expressions are intended to identify forward-looking statements. All projections, assumptions and other forward-looking statements are expressly qualified in the entirety by the cautionary statements set forth in this Official Statement.

Description of the Bonds

Principal Amount, Date, Interest Rates and Maturities The Bonds will be issued in the aggregate principal amount posted on the cover of this Official Statement and will be dated and bear interest from the Date of Delivery. The Bonds will mature on the dates and in the principal amounts set forth on the inside cover of this Official Statement. Interest on the Bonds is payable semiannually on June 15 and December 15 of each year, commencing December 15, 2017, until the maturity or earlier redemption of the Bonds and will be computed on the basis of a 360-day year comprised of twelve 30-day months.

Paying Agent and Registration Features Paying Agent. The principal of and interest on the Bonds will be payable by U.S. Bank National Association (the “Paying Agent” and “Registrar”) to The Depository Trust Company (“DTC”), which, in turn, is obligated to remit such principal and interest to its participants (“DTC Participants”) for subsequent disbursement to the persons in whose names such Bonds are registered (the “Beneficial Owners”) of the Bonds, as further described in Appendix C attached hereto.

(1) Preliminary, subject to change. Book-Entry System. The Bonds will be issued in fully registered form and, when issued, will be registered in the name of Cede & Co. as owner and as nominee for DTC. DTC will act as securities depository for the Bonds. Individual purchases and sales of the Bonds may be made in book-entry form only in minimum denominations of $5,000 within a single maturity and integral multiples thereof. Purchasers will not receive certificates representing their interest in the Bonds. See “Appendix C – Book Entry Only System” for additional information.

Procedure in the Event of Revisions of Book-Entry Transfer System. If the District discontinues maintaining the Bonds in book-entry only form, the District shall cause the Paying Agent to authenticate and deliver replacement Bonds in fully registered form in authorized denominations in the names of the beneficial owners or their nominees; thereafter the provisions set forth in the Declaration, regarding registration, transfer and exchange of Bonds shall apply. Thereafter, the principal of the Bonds will be payable upon due presentment and surrender thereof at the principal office of the Bond Registrar; interest on the Bonds will be mailed to the persons in whose names such Bonds are registered, at the address appearing upon the registration books on the last business day of the month preceding a payment date (the “Record Date”), and the Bonds will be transferable as provided in the Bonds.

Redemption Provisions Optional Redemption. The 2017A Bonds are not subject to optional redemption prior to maturity.

The 2017B Bonds maturing in years 2020 through 2027, inclusive, are not subject to optional redemption prior to maturity. The District reserves the right to redeem all or any portion of the 2017B Bonds maturing on or after June 15, 2028 at the option of the District on June 15, 2027 and on any date thereafter in whole or in part, (with maturities selected by the District), at a price of par plus accrued interest to the date of redemption. [A 2017B Term Bond subject to optional redemption and redeemed in part will have the principal amount within the respective mandatory redemption dates selected by the District.]

For as long as the Bonds are in book-entry only form, if fewer than all of the Bonds of a maturity are called for redemption, the selection of Bonds within a maturity to be redeemed shall be made by DTC in accordance with its operational procedures then in effect. See Appendix C attached hereto. If the Bonds are no longer held in book-entry only form, then the Paying Agent would select Bonds for redemption by lot.

[Mandatory Redemption. [If not previously redeemed under the provisions for optional redemption,] the 2017_ Term Bonds maturing on June 15 in the years ____ and ____ are subject to mandatory redemption (in such manner as the Bond Registrar and DTC will determine or by lot by the Paying Agent) on June 15 of the following years in the following principal amounts, at a price of par, without premium, plus accrued interest to the date of redemption.]

[TO BE PROVIDED IN FINAL OFFICIAL STATEMENT]

Notice of Redemption (Book-Entry). So long as the Bonds are in book-entry only form and unless DTC consents to a shorter period, the Paying Agent shall notify DTC of an early redemption not less than 20 days and not more than 60 days prior to the date fixed for redemption, and shall provide such information in connection therewith as required by a letter of representation submitted to DTC. Official written notice of redemption will be given by the District to the Paying Agent at least five calendar days prior to the date the notice is scheduled to be sent to DTC. The District reserves the right to rescind any redemption notice as allowed in the Declaration.

Notice of Redemption (No Book-Entry). During any period in which the Bonds are not in book-entry only form, unless waived by any Owner of the Bonds to be redeemed, official notice of any redemption of Bonds shall be given by the Paying Agent on behalf of the District by mailing a copy of an official redemption notice by first class mail, postage prepaid, at least 30 days and not more than 60 days prior to the date fixed for redemption, to the Owners of the Bonds to be redeemed at the address shown on the Bond register or at such other address as is furnished in writing by such Owner to the Paying Agent. Official written notice of redemption will be given by the District to the Paying Agent at least five calendar days prior to the date the notice is scheduled to

2 be sent to Owners of the Bonds. The District reserves the right to rescind any redemption notice as allowed in the Declaration.

Conditional Notice. Any notice of optional redemption to the Bond Registrar or to the Owners may state that the optional redemption is conditional upon receipt by the Bond Registrar of moneys sufficient to pay the redemption price of such Bonds or upon the satisfaction of any other condition, and/or that such notice may be rescinded upon the occurrence of any other event, and any conditional notice so given may be rescinded at any time before payment of such redemption price if any such condition so specified is not satisfied or if any such other event occurs. Notice of such rescission or of the failure of any such condition shall be given by the Bond Registrar to affected Owners of Bonds as promptly as practicable upon the failure of such condition or the occurrence of such other event.

Defeasance The District may defease the Bonds by (i) irrevocably depositing money or noncallable Government Obligations, as defined in the Declaration, in escrow with an independent trustee or escrow agent which are calculated to be sufficient without reinvestment for the payment of the Bonds which are to be defeased; (ii) filing with the escrow agent or trustee an opinion from an independent, certified public accountant to the effect that the money and the principal and interest to be received from the Government Obligations are calculated to be sufficient, without further reinvestment, to pay the defeased Bonds when due; and (iii) filing with the escrow agent or trustee an opinion of nationally recognized bond counsel that the proposed defeasance will not cause interest on the defeased Bonds to be includable in gross income under the Code. The District shall be obligated to pay Bonds which are defeased solely from the money and Government Obligations deposited with an independent trustee or escrow agent, and the District shall have no further obligation to pay the defeased Bonds from any source except the amounts deposited in the escrow.

Default and Remedies The occurrence of one or more of the following shall constitute an Event of Default under the Declaration:

a. Failure by the District to pay Bond principal, interest or premium when due (whether at maturity, or upon redemption after a Bond has been properly called for redemption);

b. Failure by the District to observe and perform any covenant, condition or agreement on its part to be observed or performed for the benefit of Owners of Bonds, for a period of sixty (60) days after written notice to the District by the Owners of fifty-one (51%) percent or more of the principal amount of Bonds then Outstanding specifying such failure and requesting that it be remedied; provided however, that if the failure stated in the notice cannot be corrected within such sixty (60) day period, it shall not constitute an Event of Default so long as corrective action is instituted by the District within the sixty (60) day period and diligently pursued, and the default is corrected as promptly as practicable after the written notice referred to in this paragraph; or,

c. The District is adjudged insolvent by a court of competent jurisdiction, admits in writing its inability to pay its debts generally as they become due, files a petition in bankruptcy, or consents to the appointment of a receiver for the payments.

The Owners of fifty-one (51%) percent or more of the principal amount of Bonds then Outstanding may waive any Event of Default and its consequences, except an Event of Default as described in (a) of this Section.

Upon the occurrence and continuance of any Event of Default the Owners of fifty-one (51%) percent or more of the principal amount of Bonds then Outstanding may take whatever action may appear necessary or desirable to enforce or to protect any of the rights of the Owners of Bonds, either at law or in equity or in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement contained in the Declaration or in aid of the exercise of any power granted in the Declaration or for the enforcement of any other legal or equitable right vested in the Owners of Bonds by the Declaration or by law. However, the Bonds shall not be subject to acceleration. 3 No remedy in the Declaration conferred upon or reserved to Owners of Bonds is intended to be exclusive and every such remedy shall be cumulative and shall be in addition to every other remedy given under the Declaration or now or hereafter existing at law or in equity. No delay or omission to exercise any right or power accruing upon any default shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. To entitle the Owners of Bonds to exercise any remedy reserved to them, it shall not be necessary to give any notice other than such notice as may be required by the Declaration or by law.

Authorization for Issuance Ballot Measure. Article XI, Section 11 of the Oregon Constitution (“Article XI, Section 11”), requires majority voter approval for new or additional ad valorem property taxes for all May and November elections. The ballot measures for the Bonds were approved by a majority of the District’s voters at the November 2012 election (“Measure 26-144”) and the May 2017 election (“Measure 26-193”) , respectively. The 2017A Bonds are being issued under Measure 26-193 and the 2017B Bonds are being issued under both measures. Final election results were as follows:

November 2012 May 2017 Official Voter Tally – Measure 26-144 Official Voter Tally – Measure 26-193 Number of Percentage of Number of Percentage of Votes Total Votes Votes Total Votes Yes 161,603 66.21% Yes 80,111 66.01% No 82,458 33.79% No 41,254 33.99%

Source: Multnomah, Clackamas and Washington County Elections Divisions, November 6, 2012 and June 5, 2017, respectively.

Measure 26-144 authorized the issuance of $482,000,000 aggregate principal amount of general obligation bonds to mature over a period not to exceed 21 years for the date of issuance. The District previously issued general obligation bonds under the authority of Measure 26-144 for $144,840,000 in 2013 and $275,000,000 in 2015. The 2017B Bonds will use the remaining authorization of $62,160,000(1).

Measure 26-193 authorized the issuance of $790,000,000 aggregate principal amount of general obligation bonds to mature over a period not to exceed 30 years. The 2017A Bonds will use a principal amount of $168,950,000(1) of the authorized amount and the 2017B Bonds will use a principal amount of $157,740,000(1) of the authorized amount. The District currently plans to issue the remaining $460,230,000(1) of the authorization in calendar year 2020.

Purpose and Use of Proceeds

Purpose The proceeds from the sale of the Bonds will be used to finance health and safety improvements, modernize and repair schools, build education facilities (collectively, the “Project”) and to pay the costs of issuance of the Bonds.

Specifics on the Project include:

2012 Authorization • Replace leaking, worn or deteriorating school roofs, • Renovate or replace schools, • Strengthen schools against earthquakes, • Increase access to schools for students, teachers and visitors with disabilities, and • Upgrade science classrooms at middle grade schools.

(1) Preliminary, subject to change. 4 2017 Authorization • Reduce or eliminate exposure to hazardous materials districtwide, including lead, asbestos, and radon; • Upgrade fire alarm and/or sprinkler systems; • Improve accessibility for people with disabilities; • Repair or replace leaking or deteriorating school roofs; • Upgrade school safety and security; • Strengthen schools against earthquakes; and • Renovate or replace schools, including Benson, Lincoln and Madison high schools and Kellogg middle school, to improve health and safety and provide up-to-date classrooms and facilities, and increase access to technology and modern learning environments.

OSCIM Grant. The District has qualified to receive a grant of $8,000,000 from the Oregon School Capital Improvement Matching (the “OSCIM”) Program. The grant, along with Bond proceeds, is expected to finance the items detailed above. Receipt of the grant is contingent upon the State issuing bonds to fund the grant and the District entering into a grant agreement with the State. The current form of grant agreement includes covenants, warranties and representations to be given by the District to the State. The grant agreement also stipulates events of default under the agreement and remedies of the State in case of a default by the District. The events of default include any false or misleading representations by the District to the State or failure to perform any covenant after notice from the State and a cure period. The remedies include requiring the District to repay grant funds that have been disbursed (including any costs of defeasing the portion of the State’s bonds, allocable costs of issuance and legal fees) and allowing the State to intercept State school fund disbursements due to the District to make these payments. If the grant is not received, is terminated, or is required to be repaid, the District does not expect it would have a material impact on its ability to complete all aspects of the Project, repay the Bonds or to operate the District.

Sources and Uses of Funds The proceeds of the Bonds are estimated to be applied as follows:

Estimated Sources and Uses of Funds

Sources of Funds(1) 2017A Bonds 2017B Bonds The Bonds Par Amount of Bonds(2) $ 168,950,000 $ 219,900,000 $ 388,850,000 Original Issue Premium/(Discount) Total Sources of Funds

Uses of Funds(1) Project Requirements Underwriting, Credit Enhancement and Issuance Costs Total Uses of Funds

(1) Amounts will be provided in the final Official Statement. (2) Preliminary, subject to change.

Security for the Bonds

General The Bonds are general obligations of the District. The District has pledged its full faith and credit to pay the Bonds pursuant to ORS 287A.315. The District has covenanted for the benefit of the owners of the Bonds to levy a direct ad valorem tax upon all of the taxable property within the District which is sufficient, after taking into consideration discounts taken and delinquencies that may occur in the payment of such taxes, to pay all Bond principal and interest when due. The District has covenanted to levy this tax each year until all the

5 Bonds are paid. This tax shall be in addition to all other taxes of the District, and this tax shall not be limited in rate, amount or otherwise, by Sections 11 or 11b of Article XI of the Oregon Constitution. The tax, when collected, is required to be applied solely for the purpose of payment of principal and interest on the Bonds and for no other purpose until the Bonds have been fully paid, satisfied and discharged.

The District may, subject to applicable laws, apply other funds available to make payments with respect to the Bonds and thereby reduce the amount of future tax levies for such purpose. However, the Bonds are not secured by a lien on any District revenues except the revenues of the ad valorem tax that the District levies to pay the Bonds.

The Bonds do not constitute a debt or indebtedness of Multnomah, Washington, or Clackamas Counties (the “Counties”), the State, or any political subdivision thereof other than the District.

Oregon School Bond Guaranty Guaranty Provisions. Article XI-K of the Constitution of the State of Oregon (the “State”) allows the State to guarantee the general obligation bonded indebtedness of school districts, education service districts, and community college districts (generally “school district” or “school districts”) in order to secure lower interest costs on general obligation bonds of such districts. Payment of the principal of and interest on the Bonds when due is guaranteed by the full faith and credit of the State under the provisions of the Oregon School Bond Guaranty Act – Oregon Revised Statutes (ORS) 328.321 to 328.356 (the “Act”). As provided in ORS 328.326(1)(a):

The State Treasurer may, by issuing a certificate of qualification to a school district, pledge the full faith and credit and taxing power of the state to guarantee full and timely payment of the principal of, either at the stated maturity or by advancement of maturity pursuant to a mandatory sinking fund payment, and interest on school bonds as such payments shall become due, except that in the event of any acceleration of the due date of such principal by reason of mandatory or optional redemption or acceleration resulting from default or otherwise, other than any advancement of maturity pursuant to a mandatory sinking fund payment, the payments guaranteed shall be made in such amounts and at such times as such payments of principal would have been due had there not been any such acceleration.

The Act further provides that (i) the guaranty of the State does not extend to the payment of any redemption premium due on any bonds guaranteed under the Guaranty Act and (ii) any bond guaranteed by the State under the Act that is refunded no longer has the benefit of the guaranty from and after the date on which that bond is considered to be paid.

Regularly Scheduled Debt Service Payments. Each school district with outstanding, unpaid bonds guaranteed under the Act, shall transfer moneys sufficient for the scheduled debt service payment to its paying agent at least 15 days before any principal or interest payment date for the bonds. The paying agent may invest the moneys for the benefit of the school district until the payment date. A school district that is unable to transfer the scheduled debt service payment to the paying agent 15 days before the payment date shall immediately notify the paying agent and the State Treasurer. Such notification shall be made to the Office of the State Treasurer as prescribed in the Act. The Act further provides that if sufficient funds are not transferred to the paying agent as required above, the paying agent shall notify the State Treasurer of that failure at least 10 days before the scheduled debt service payment in the manner prescribed in the Act.

Monitoring. Beginning with bonds issued with the guaranty of the State on and after October 30, 2009, a school district with outstanding, unpaid bonds which are guaranteed under the Act, must enter into an agreement with a paying agent under which the paying agent provides the district with notice by January 15 of each year of any required debt service amounts (including any scheduled deposits to a sinking fund for the bonds) due during the following fiscal year. The paying agent must also notify the district of any debt service amounts (including any scheduled deposits to a sinking fund) that must be paid or deposited over the next two fiscal years. In addition, for bonds originally issued as tax credit bonds under the Internal Revenue Code and any bonds resulting from conversion of such bonds (“Qualified Bonds”), the district must provide written

6 verification by May 1 of each year to its paying agent that it has made any required sinking fund deposits. The paying agent must notify the State Treasurer if it does not receive such verification. Further, the district must report to the State Treasurer, at least annually, the amount of moneys paid into its debt service fund to pay the Qualified Bonds and a calculation demonstrating that such deposits are projected to be sufficient to repay the Qualified Bonds in full when payment is due. If annual payments are not made to the debt service fund, the district must demonstrate that the current balance in the fund, plus any scheduled future deposits, will be sufficient to repay the Qualified Bonds when due.

Payment under the Guarantee. If sufficient moneys to pay a scheduled debt service payment have not been transferred to the paying agent, the State Treasurer shall, on or before the scheduled payment date, transfer sufficient moneys to the paying agent to make the scheduled debt service payment. If sufficient moneys of the State are not on hand and available at the time the State is required to make a debt service payment under its guaranty on behalf of the school district, the State Treasurer may singly or in combination:

• Obtain from the Common School Fund or from any other State funds that qualify to make a loan under ORS 293.205 to 293.225, a loan sufficient to make the required payment; • Borrow money, if economical and convenient, as authorized by ORS 286A.045; • Issue State general obligation bonds as provided for in Article XI-K of the Constitution and the Act; and, • With the approval of the Legislative Assembly, or the Emergency Board if emergency funds are lawfully available for making the required payment in the interim between sessions of the Legislative Assembly, pay moneys from the General Fund or any other funds lawfully available for the purpose or from emergency funds amounts sufficient to make the required payment.

Any payment of scheduled debt service payments by the State Treasurer on behalf of a school district (i) discharges the obligation of the issuing school district to its bondholders for the payment, and (ii) transfers the rights represented by the general obligation of the school district from the bondholders to the State.

State Repayment. If one or more payments are made by the State Treasurer as provided for in the Act, the State Treasurer shall pursue recovery from the school district of all moneys necessary to reimburse the State. In seeking recovery, the State Treasurer may (i) intercept any payments from the General Fund, the State School Fund, the income of the Common School Fund and any other source of operating moneys provided by or through the State to the school district that issued the bonds that would otherwise be paid to the school district by the State, and (ii) exercise the rights of a secured creditor in any money or assets pledged by the school district to secure its reimbursement obligation to the State. The Treasurer may apply any intercepted payments or secured assets to reimburse the State for payments made pursuant to the State’s guaranty until all obligations of the school district to the State arising from those payments, including any interest and penalties, are paid in full. The State has no obligation to the school district or to any person or entity to replace any moneys intercepted under the Act. The authority of the Treasurer to intercept payments under the Act has priority over all claims against money provided by the State to a school district, including a claim based on a funds diversion agreement under ORS 238.698.

Additionally, in accordance with the Act, if the State Treasurer determines that it is necessary the State Treasurer shall pursue any legal action, including but not limited to mandamus or foreclosure of a security interest, against the school district or school district board and may compel the school district to (i) levy and provide property tax or other revenues to pay debt service on its bonds and other obligations when due, and (ii) meet its repayment obligations to the State. The Attorney General shall assist the State Treasurer in pursuing such rights of recovery under the Act.

At all times, the school district shall continue to be responsible for the payment of all debt service payments on its bonds. A school district that issued bonds for which the State makes all or part of a debt service payment shall be responsible for reimbursing all moneys drawn or paid by the State Treasurer on its behalf. In addition the school district shall pay interest to the State on all moneys paid by the State from the date the moneys were drawn to the date they are repaid at a rate to be determined by the State Treasurer, in the State Treasurer’s discretion, to be sufficient to cover the costs of funds to the State plus the costs of administration of the guaranty obligation and of collection of reimbursement.

7 Guaranty Limit. Under Article XI-K of the State Constitution, the amount of debt that the State may incur in honoring its guaranty of school bonds may not exceed, at any one time, one-half of one percent of the real market value (RMV) of all taxable property in the State. The State of Oregon has not issued bonds to provide money to satisfy its guaranty of school bonds participating in the program and does not anticipate the need to issue bonds for this purpose in the future.

As of July 25, 2017 the State had guaranteed the following (not including this bond issue or those issues guaranteed between the date identified above and the date of this issue) under the Guaranty Act:

Number of bond issues guaranteed under the Guaranty Program: 443 Aggregate principal amount outstanding of bonds guaranteed at $ 6,078,627,490 Aggregate debt service amount outstanding of bonds guaranteed at: $ 9,310,808,286

Guaranty Contact Person. As of the date of this Official Statement, requests for information regarding the Guaranty Program may be directed to:

Tobias Read, Oregon State Treasurer Oregon School Bond Guaranty Program Office of the State Treasurer Debt Management Division 350 Winter Street NE, Suite 100 Salem, OR 97301-3896 Phone (503) 378-4930 – Fax (503) 378-2870

State of Oregon – Financial and Operating Information. The most recent Comprehensive Annual Financial Report (the “CAFR”) of the State, and its most recent Official Statement for its general obligation debt, are currently on file with the Electronic Municipal Market Access (“EMMA”) system, operated by the Municipal Securities Rulemaking Board (“MSRB”). The financial and operating information with respect to the State contained in the CAFR, and such Official Statement, are hereby included by reference in this Official Statement. Additionally, the CAFR and the most recent Official Statement for its general obligation debt are available upon request from the State’s contact person as indicated under Guaranty Contact Person above.

As of the date of this Official Statement, the outstanding general obligation bonds of the State are rated “AA+” by Fitch, “Aa1” by Moody’s Investors Service, and “AA+” by S&P Global Ratings.

State of Oregon – Continuing Disclosure. The State has executed a Master Disclosure Certificate (the “Certificate”) for the benefit of registered and beneficial holders of bonds guaranteed under the Guaranty Program and to assist Underwriters of such bonds in complying with paragraph (b)(5) of Securities and Exchange Commission Rule 15c2-12 (17 C.F.R. § 240.15c2-12) (the “Rule”). The State, in accordance with the Certificate, provides annually copies of its most recent CAFR of the State to the Municipal Securities Rulemaking Board through depositing such information with EMMA. In addition, the State will provide the MSRB, through EMMA, with any material event notices pertaining to the State of Oregon required under the Rule and pursuant to the Certificate. These filings may be accessed on EMMA, search Issuers for State of Oregon.

State Intercepts Pursuant to ORS 328.346(1)(c), the authority of the State Treasurer to intercept payments and the lien in any pledged moneys under the Oregon School Bond Guaranty (“OSBG”) program, have priority over all claims against money provided by the state to a school district, including a claim that is based on a funds diversion agreement under ORS 238.698. Such funds diversion agreements include intercept agreements for pension bonds, qualified school construction and qualified zone academy bonds. The same statute provides that such funds diversion agreements have priority over all other claims against money provided by the state to a school district other than claims under the OSBG. The District’s General Obligation Bonds, Series 2013 and General Obligation Bonds, Series 2015 are secured by the OSBG. The District’s Limited Tax Pension Obligations, Series 2002, Limited Tax Pension Obligations, Series 2003 and Limited Tax Pension Refunding Obligations, Series 2012 have an intercept agreement.

8 Bonded Indebtedness

Debt Limitation General Obligation Bonds. ORS 328.245 limits the general obligation bonded indebtedness of a school district based on the number of grades that are taught by the school district. Districts teaching kindergarten through twelfth grade may issue an aggregate principal amount up to 7.95 percent of the Real Market Value of all taxable properties within the district. General obligation bonds must be approved by the school district’s voters. General obligation bonds are secured by the power to levy an additional tax outside the limitations of Article XI, Sections 11 and 11b, and are also secured by the full faith and credit of the district issuing the bonds. The Bonds are general obligation bonds and are subject to this debt limitation, as shown below:

School District No. 1J, Multnomah County, Oregon (Portland Public Schools) General Obligation Debt Capacity

(1) Measure 5 Real Market Value (Fiscal Year 2017) $ 106,935,120,227

Debt Capacity General Obligation Debt Capacity (7.95% of Real Market Value) $ 8,501,342,058 Less: Outstanding Debt Subject to Limit (665,720,000) (2) Remaining General Obligation Debt Capacity $ 7,835,622,058 Percent of Capacity Issued 7.83%

(1) Value represents the Real Market Value of taxable properties, including the reduction in Real Market Value of specially assessed properties such as farm and forestland. This value is also commonly referred to as the Measure 5 Real Market Value by county assessors. The District’s fiscal year commences July 1 and ends on June 30 of the following year (the “Fiscal Year”). Source: Multnomah, Washington, and Clackamas Counties Department of Assessment and Taxation. (2) Represents voter-approved, unlimited-tax general obligations of the District, including the Bonds. Preliminary, subject to change. Source: School District No. 1J, Multnomah County, Oregon (Portland Public Schools) Audited Financial Reports for the Fiscal Year Ended June 30, 2016, and this issue.

Limited Tax Obligations. School districts, education service districts, community colleges and local governments may issue “limited tax obligations”. Limited tax obligations can take the form of bonds, certificates of participation, notes or capital leases. Limited tax obligations are secured by a pledge of the issuer’s full faith and credit and taxing power within the limitations of Article XI, Sections 11 and 11b, and are payable from all legally available funds of the issuer, including the issuer’s permanent rate property tax levies. However, limited tax obligations are not secured by the power to levy taxes outside the limitations of Article XI, Sections 11 and 11b. The Bonds are not limited tax obligations.

Pension Bonds. ORS 238.694 authorizes school districts and other local governments to issue limited tax obligations to finance pension liabilities. The Bonds are not pension bonds.

Revenue Bonds. The District may issue revenue bonds for any public purpose, which are secured by revenues pursuant to ORS 287A.150. The Bonds are not revenue bonds.

Notes. Subject to any applicable limitations imposed by the Oregon Constitution or laws of the State or the resolution of an individual school district, ORS 287A.180 provides that the District may borrow money in anticipation of tax revenues or other monies and to provide interim financing (“notes”). The Bonds are not notes.

9 Outstanding Long-Term Debt Date of Date of Amount Amount Governmental Activities Issue Maturity Issued Outstanding(1) General Obligation Bonds (2) : Series 2013 05/01/13 06/15/33 $ 144,840,000 $ 65,315,000 Series 2015 04/30/15 06/15/33 275,000,000 211,555,000 Series 2017 (3) 08/10/17 06/15/44 388,850,000 388,850,000 Total General Obligation Bonds 665,720,000 Full Faith and Credit Obligations: Series 2009 IT Financing 10/08/09 06/01/19 15,000,000 5,152,000 Series 2010 Recovery Zone Bonds(4) 07/08/10 12/01/22 11,000,000 5,758,073 QZAB 2016 08/04/16 08/04/36 4,000,000 4,000,000 Series 2016 11/09/16 12/01/31 5,048,000 5,048,000 Total Full Faith and Credit Obligations 19,958,073

Pension Obligations (2) : Series 2002 10/31/02 06/30/28 210,103,857 155,831,070 Series 2003 04/21/03 06/30/28 281,170,040 202,017,925 Series 2012 Refunding 01/31/12 06/30/21 14,400,000 14,400,000 Total Pension Obligations 372,248,995

Total Governmental Activities Debt $ 1,057,927,068

(1) As of Date of Delivery. (2) Also secured by the District’s full faith and credit pledge. (3) This issue. Preliminary, subject to change. (4) The District receives an interest rate subsidy from the Federal government for up to 45% of the interest due. See “Revenue Sources – Federal Funding” herein. Source: School District No. 1J, Multnomah County, Oregon (Portland Public Schools) Audited Financial Reports for the Fiscal Year Ended June 30, 2016.

General Obligation Bonds Projected Debt Service Requirements

(1) (1) Fiscal Outstanding Bonds The 2017A Bonds The 2017B Bonds Total (1) Year Principal Interest Principal Interest Principal Interest Debt Service 2018$ 19,850,000 $ 12,181,050 $ 73,725,000 $ 2,172,673 $ - $ 8,101,139 $ 116,029,862 2019 21,760,000 11,226,350 76,365,000 1,517,572 - 9,562,000 120,430,922 2020 23,840,000 10,138,350 18,860,000 326,278 61,320,000 9,562,000 124,046,628 2021 38,840,000 8,946,350 - - 1,195,000 6,496,000 55,477,350 2022 8,600,000 7,004,350 - - 1,490,000 6,436,250 23,530,600 2023 9,500,000 6,574,350 - - 1,800,000 6,361,750 24,236,100 2024 10,455,000 6,099,350 - - 2,135,000 6,271,750 24,961,100 2025 11,440,000 5,611,350 - - 2,495,000 6,165,000 25,711,350 2026 12,485,000 5,077,100 - - 2,875,000 6,040,250 26,477,350 2027 13,595,000 4,493,800 - - 3,290,000 5,896,500 27,275,300 2028 14,590,000 4,041,650 - - 3,730,000 5,732,000 28,093,650 2029 15,830,000 3,360,000 - - 4,160,000 5,582,800 28,932,800 2030 17,150,000 2,620,050 - - 4,620,000 5,416,400 29,806,450 2031 18,370,000 1,992,050 - - 5,105,000 5,231,600 30,698,650 2032 19,625,000 1,349,100 - - 5,620,000 5,027,400 31,621,500 2033 20,940,000 662,225 - - 6,165,000 4,802,600 32,569,825 2034 - - - - 6,740,000 4,556,000 11,296,000 2035 - - - - 7,350,000 4,286,400 11,636,400 2036 - - - - 7,990,000 3,992,400 11,982,400 2037 - - - - 8,670,000 3,672,800 12,342,800 2038 - - - - 9,390,000 3,326,000 12,716,000 2039 - - - - 10,145,000 2,950,400 13,095,400 2040 - - - - 10,945,000 2,544,600 13,489,600 2041 - - - - 11,785,000 2,106,800 13,891,800 2042 - - - - 12,675,000 1,635,400 14,310,400 2043 - - - - 13,610,000 1,128,400 14,738,400 2044 - - - - 14,600,000 584,000 15,184,000 $ 276,870,000 $ 91,377,475 $ 168,950,000 $ 4,016,523 $ 219,900,000 $ 133,468,639 $ 894,582,637

(1) Principal and interest are provided for illustrative purposes only; amounts and structure are preliminary, subject to change.

Summary of Overlapping Debt (As of June 30, 2017)

Percent Gross Direct Net Direct (1) (2) Overlapping Issuer Name Overlapping Debt Debt Burlington Water District 100.00%$ 1,370,776 $ 1,370,776 Multnomah Cty Drainage District 1 100.00% 700,000 50,000 Valley View Water District 100.00% 1,621,692 1,621,692 City of Portland 86.41% 574,243,210 134,344,014 Multnomah County 76.15% 181,243,700 109,461,484 Multnomah ESD 75.52% 21,296,781 0 Portland Community College 50.17% 195,272,668 151,543,751 Metro 39.96% 81,017,974 73,335,184 Port of Portland 36.97% 22,958,488 0 City of Lake Oswego 5.02% 8,589,692 460,878 Tualatin Valley Fire & Rescue District 2.01% 982,844 982,844 City of Beaverton 1.75% 648,991 605,546 Tualatin Hills Park & Rec District 1.24% 1,023,720 1,023,720 City of Milwaukie 0.71% 123,398 98,328 Washington Cty Enhanced Patrol Dist. 0.67% 505 505 Washington County 0.62% 1,612,762 1,446,172 Multnomah Cty RFPD 10 0.27% 9,592 9,592 Clackamas Cty RFPD 1 0.17% 72,948 44,792 Clackamas County 0.11% 173,344 171,795 Mt Hood Community College 0.07% 42,624 17,147 $ 1,093,005,709 $ 476,588,220

(1) Gross Direct Debt includes all debt with an unlimited (general obligation bonds) and limited (full faith and credit obligations) tax pledge. Limited tax pension obligations are included. (2) Net Debt is Gross Direct Debt less tax supported obligations which are paid from other revenue sources. Source: Debt Management Division, The Office of the State Treasurer.

Debt Ratios The following table presents information regarding the District’s direct debt, including the Bonds, and the estimated portion of the debt of overlapping taxing districts allocated to the District’s property owners.

Debt Ratios

Total Real Market Value (Fiscal Year 2017)(1) $ 128,100,474,536 Estimated Population 494,509 Per Capita Real Market Value $ 259,046 Gross Direct Net Direct Debt Information Debt(2) Debt(3) District Direct Debt(4) $ 1,057,927,068 $ 1,057,927,068 Overlapping Direct Debt 1,093,005,709 476,588,220 (4) Total Direct Debt $ 2,150,932,777 $ 1,534,515,288

Bonded Debt Ratios(3) District Direct Debt to Real Market Value 0.83% 0.83% Total Direct Debt to Real Market Value 1.68% 1.20% Per Capita District Direct Debt $ 2,139 $ 2,139 Per Capita Total Direct Debt $ 4,350 $ 3,103

(1) Total Real Market Value of taxable properties within the District, not including reductions for specially assessed properties such as farm and forestland. (2) Gross Direct Debt includes all debt with an unlimited (general obligation bonds) and limited (full faith and credit obligations) tax pledge. Limited tax pension obligations are included. (3) Net Debt is Gross Direct Debt less tax supported obligations which are paid from other revenue sources. (4) Includes the Bonds. Preliminary, subject to change. Sources: United State Census Bureau Small Area Income and Poverty Estimates; Debt Management Division, The Office of the State Treasurer as of June 30, 2017; and School District No. 1J, Multnomah County, Oregon (Portland Public Schools) Audited Financial Reports for the Fiscal Year Ended June 30, 2016.

Debt Payment Record The District has promptly met principal and interest payments on outstanding bonds and other indebtedness in the past ten years when due. Additionally, no refunding bonds have been issued for the purpose of preventing an impending default.

Future Financings Capital Projects. The District has authorized $10 million in full faith and credit bonds in the fall of 2016, however, staff does not anticipate issuing that authority for the projects that were approved. The District may consider a separate full faith and credit-backed borrowing of up to $10 million in 2018 to complete projects related to the 2012 general obligation bond authorization due to potential cost overruns. The District plans to issue the remaining general obligation bond authorization under Measure 26-193 in calendar year 2020. See “Description of Bonds – Authorization for Issuance” herein.

Short-term Notes. The District does not anticipate issuing short-term debt within the next twelve months.

The District

Public School Districts Under Oregon law (ORS Chapter 332), the District is responsible for educating children residing within the boundaries of the District. The District discharges this responsibility by building, operating, and maintaining school facilities; developing and maintaining approved educational programs and courses of study, including 13 vocational programs and programs for handicapped students, in accordance with State standards; and carrying out programs for transportation and feeding of pupils in accordance with District, State, and federal programs.

Under Oregon law, local school districts are subject to supervision by the State. The State Board of Education, a group of seven persons appointed by the Governor, establishes standards for educational programs and facilities, adopts rules of general governance, and prescribes courses of study. The administrative functions of the State Board of Education are handled through the Department of Education, whose executive head is the Deputy Superintendent of Public Instruction. The Deputy Superintendent is appointed by the Governor, who serves as the Superintendent of Public Instruction.

General Description The District was established in 1851. It is located in Multnomah, Washington and Clackamas Counties, and includes the City of Portland, portions of the cities of Lake Oswego and Milwaukie, and unincorporated areas of the Counties within its boundaries. The District encompasses approximately 152 square miles and has an estimated population of 494,509.

The District maintains over 100 sites with 286 buildings and a total of more than nine million square feet. Historical and projected enrollments are shown in the following table:

Historical and Projected Enrollment

Fiscal Average Daily Teaching Student to Teacher Year Membership(w) (1) Enrollment (2) Staff (3) Ratio 2018(4) 57,964.9 49,757.0 N/A N/A 2017 57,875.6 49,189.0 2,737.7 18.0 2016(5) 57,491.0 49,075.0 2,632.5 18.6 2015 54,985.7 48,459.0 2,606.8 18.6 2014 54,281.4 48,098.0 2,384.0 20.2 2013 53,692.8 47,523.0 2,353.1 20.2

2012 53,249.8 47,288.0 2,315.0 20.4 (1) Weighted Average Daily Membership (“ADMw”) is the enrollment figure, adjusted for part-time students and students with special needs, that is used to allocate revenues appropriated by the State to school districts. (2) Enrollment is the number of students attending classes, measured in October. (3) Full-time equivalent licensed employees. Includes classroom, music, physical education, special education teachers, librarians and counselors. (4) Projected. Teaching staff and ratio projections not available. (5) Beginning in Fiscal Year 2016, the weight for kindergarten students for calculating ADMw was increased from 0.5 to 1.0. Source: Oregon Department of Education and School District No. 1J, Multnomah County, Oregon (Portland Public Schools).

As of July 1, 2015, school districts may choose to offer free full-day kindergarten and receive a full 1.0 ADMw for kindergarten students for purposes of the State School Fund (“SSF”) formula. Within the total amount appropriated by the Legislature for the SSF in the 2015-17 biennium, $220 million has been allocated for the implementation of full-day kindergarten. See “Revenue Sources – State School Funding – 2015-17 Biennium State Budget” herein. The District implemented full day kindergarten for all kindergarten students in Fiscal Year 2016.

Oregon law creates an open enrollment process which allows students to attend a school district in which they do not reside without the consent of their home school district. A district’s school board can decide how many, if any, non-resident students will be allowed to enroll for the school year. The open enrollment process sunsets on July 1, 2019. In Fiscal Year 2017 the District’s Board voted to accept 32 out of district students and received 44 applicants. The District’s Board has voted not to accept any out of district students in Fiscal Year 2018.

14 Staff As of June 30, 2017, the District had 4,574 full-time employees and 3,204 part-time employees.

Bargaining Units Bargaining Unit No. of Employees Contract Expires Portland Association of Teachers 3,268 (certified) June 30, 2016(1) Portland Federation of School Professionals 1,304 (classified) June 30, 2017(2) Service Employees International Union 528 (cafeteria and custodians) June 30, 2017(2) District Council of Unions 103 (classified) December 31, 2017(3) Amalgamated Transit Union 80 (bus drivers) June 30, 2017(4)

(1) Parties began mediation on July 17, 2017. (2) Bargaining has commenced and initial proposals were exchanged in June 2017. (3) Parties have discussed limited bargaining and largely rolling over the current contract but have not yet set any bargaining dates. (4) First bargaining session is scheduled for the end of July 2017. Source: School District No. 1J, Multnomah County, Oregon (Portland Public Schools).

The Board of Directors The policies of the District are established by an elected seven-member Board. The current members of the Board are: Board of Directors Name Position Occupation Service Began Term Expires Julia Brim-Edwards Chair Senior Director of Operations July 1, 2017 June 30, 2021 Julie Esparza-Brown Co-Vice Chair Associate Professor July 1, 2015 June 30, 2019 Rita Moore Co-Vice Chair Policy Analyst July 1, 2017 June 30, 2021 Paul Anthony Director Chief Financial Officer July 1, 2015 June 30, 2019 Scott Bailey Director Economist & Teacher July 1, 2017 June 30, 2021 Amy Kohnstamm Director Community Leader/Volunteer July 1, 2015 June 30, 2019 Mike Rosen Director Environmental Manager July 1, 2015 June 30, 2019

Source: School District No. 1J, Multnomah County, Oregon (Portland Public Schools).

Key Administrative Officials The day-to-day affairs of the District are managed by a professional administrative staff which includes the following principal officials:

Yousef Awwad, CPA, Interim Superintendent and Deputy Chief Executive Officer. Yousef Awwad began as the District’s Chief Financial Officer in October 2014 and is currently serving as the Interim Superintendent and Deputy Chief Executive Officer. Mr. Awwad brings over 20 years of experience in leadership, accounting, finance and auditing in diverse settings globally. Yousef comes to the District from Tucson Unified School District (“TUSD”) where he served as Deputy Superintendent since July 2013, overseeing all of district operations, from Financial Services to Food Services, with a focus on supporting teaching and learning in schools. Prior to his Deputy Superintendent role, he was TUSD’s Chief Financial Officer for two years. Mr. Awwad holds a Master’s in Business Administration from Webster University in St. Louis and a Bachelor of Science in Accounting from the University of Jordan in Amman, Jordan.

Ryan Dutcher, Interim Chief Financial Officer. Ryan Dutcher first served as the District’s Interim Chief Financial Officer from May 2014 to October 2014 and returned to that position in 2016. He has over 20 years of general management and finance experience at both public and private companies in a variety of industries. He is an owner of Two Ocean Partners which provides finance consulting, interim, and part-time executive finance

15 services to businesses and municipalities. Ryan received his Bachelor of Arts in Economics from the University of Colorado at Boulder and his Master’s in Business Administration from the Johnson Graduate School of Management at Cornell University.

Donna Chu, Director of District Financial Services. Donna Chu has served as the District’s Director of Financial Services since October 2016. Donna brings over 10 years of experience in leadership, finance, banking and cash management for the public sector. In the past 11 years, Donna has worked with school districts in Oregon and California helping them with their finance, banking and cash management. Ms. Chu holds a Master’s in Business Administration from the University of Phoenix and a Bachelor of Science in Business Administration from the University of Oregon.

Revenue Sources

The following section summarizes certain of the major revenue sources of the District.

Oregon School District Funding Oregon school districts receive revenue from two primary sources: State aid and ad valorem property taxes. The following section summarizes these primary revenue sources of the District.

Property Taxes Most local governments, school districts, education service districts and community college districts (“local governments”) have permanent authority to levy property taxes for operations (“Permanent Rates”) up to a maximum rate (the “Operating Tax Rate Limit”). Local governments that have never levied property taxes may request that the voters approve a new Operating Tax Rate Limit.

Local governments may not increase their Operating Tax Rate Limits; rather they may only request that voters approve limited term levies for operations or capital expenditures (“Local Option Levies”) or levies to repay general obligation bonded indebtedness (“General Obligation Bond Levies”).

Senate Bill 1106, approved by the Legislative Assembly in a special session held in April 2006, granted the District authority to levy its expired "gap bond" property tax levy for three years, increasing the District’s permanent tax rate from $4.77 to $5.27 per $1,000 of assessed value. In 2009, the three year increase was made permanent with the passage of House Bill 2533.

Local Option Levies that fund operating expenses are limited to five years, and Local Option Levies that are dedicated to capital expenditures are limited to ten years. Local Option Levies for school districts are limited to the lesser of (i) $1,000 per student, or (ii) 20 percent of a district’s total state resources.

ORS 327.333 through 327.339 provides local option equalization grants to school districts with Local Option Levies that have a total assessed property value per student less than the total assessed property value per student of a designated target district. For the biennium commencing July 1, 2015, $2,859,866 was appropriated from the State’s General Fund to the Department of Education for the Local Option Equalization Grants Account. If the amount of money available is insufficient to make grant payments, the grant payments are to be proportionally reduced. The District does not currently qualify to receive local option equalization grants.

The District currently has a Local Option Levy of $1.99 per $1,000 of assessed value. The District received voter approval at the November 2014 election to renew the Local Option Levy at the same rate. The first year of collections on the renewed Local Option Levy was Fiscal Year 2016 with expiration in Fiscal Year 2020.

16 The District has collected the following Local Option Levy taxes in recent years:

School District No. 1J, Multnomah County, Oregon (Portland Public Schools) Local Option Levy Taxes Collected Fiscal Amount Year Collected 2017(1) $ 84,042,857 2016 76,592,647 2015 63,273,950 2014 56,013,265 2013 51,719,975 2012 53,099,263

(1) Estimated. Source: The District.

Local governments impose property taxes by certifying their levies to the county assessor of the county in which the local government is located. Property taxes ordinarily can only be levied once each Fiscal Year. The local government ordinarily must notify the county assessor of its levies by July 15.

Valuation of Property – Real Market Value. “Real Market Value” is the minimum amount in cash which could reasonably be expected by an informed seller acting without compulsion, from an informed buyer acting without compulsion, in an “arms-length” transaction during the period for which the property is taxed.

Property subject to taxation includes all privately owned real property (land, buildings and improvements) and personal property (machinery, office furniture and equipment) for non-residential taxpayers. There is no property tax on household furnishings (exempt since 1913), personal belongings, automobiles (exempt since 1920), crops, orchards, business inventories or intangible property such as stocks, bonds or bank accounts, except for centrally assessed utilities, for which intangible personal property is subject to taxation.

Property used for charitable, religious, fraternal and governmental purposes is exempt from taxation. Special assessments that provide a reduction in the taxable Real Market Value may be granted (upon application) for veterans’ homesteads, farm and forest land, open space and historic buildings. The Real Market Value of specially assessed properties is often called the “Taxable Real Market Value” or “Measure 5 Real Market Value.” The assessment roll, a listing of all taxable property, is prepared as of January 1 of each year.

Valuation of Property – Assessed Value. Property taxes are imposed on the assessed value of property. The assessed value of each parcel cannot exceed its Taxable Real Market Value, and ordinarily is less than its Taxable Real Market Value. The assessed value of property was initially established in 1997 as a result of a constitutional amendment. That amendment (now Article XI, Section 11, often called “Measure 50”) assigned each property an assessed value and limited increases in that assessed value to three percent per year, unless the property is improved, rezoned, subdivided, or ceases to qualify for exemption. When property is newly constructed or reassessed because it is improved, rezoned, subdivided, or ceases to qualify for exemption, it is assigned an assessed value that is comparable to the assessed value of similar property.

The Oregon Department of Revenue (“ODR”) appraises and establishes values for utility property, forestland and most large industrial property for county tax rolls. It collects taxes on harvested timber for distribution to schools, county taxing districts, and State programs related to timber. Certain properties, such as utilities, are valued on the unitary valuation approach. Under the unitary valuation approach, the taxpaying entity’s operating system is defined and a value is assigned for the operating unit using the market value approach (cost, market value and income appraisals). Values are then allocated to the entities’ operations in Oregon, and then to each county the entity operates in and finally to site locations.

Generally speaking, industrial properties are valued using an income approach, but ODR may apply additions or retirements to the property value through a cost of materials approach. Under the income and cost of materials approaches, property values fluctuate from year-to-year. 17 Tax Rate Limitation – Measure 5. A tax rate limitation was established in 1990 as the result of a constitutional amendment. That amendment (now Article XI, Section 11b, often called “Measure 5”) separates property taxes into two categories: one to fund the public school system (kindergarten through grade twelve school districts, education service districts and community college districts, collectively, “Education Taxes”) and one to fund government operations other than the public school system (“General Government Taxes”). Education Taxes are limited to $5 per $1,000 and General Government taxes are limited to $10 per $1,000 of the Taxable Real Market Value of property (the “Measure 5 Limits”). If the taxes on a property exceed the Measure 5 Limit for Education or General Government, then tax rates are compressed to the Measure 5 Limit. Local Option Levy rates compress to zero before there is any compression of Permanent Rates. In Fiscal Year 2017, there was $1,916,564 of compression of the District’s Permanent Rate due to the tax rate limitation. This compression is taken into account in the State School Fund Distribution Formula described herein (see “State of Oregon Public School Funding – State School Fund”). In addition, there was $19,043,819 of compression of the District’s Local Option Levy.

Taxes imposed to pay the principal and interest on the following bonded indebtedness are not subject to Measure 5 Limits: (1) bonded indebtedness authorized by a specific provision of the Oregon Constitution; and (2) general obligation bonded indebtedness incurred for capital costs approved by the electors of the issuer and bonds issued to refund such bonds. Property taxes imposed to pay the principal of and interest on the Bonds are NOT subject to the limitations of Article XI, Sections 11 and 11b.

In 2007 the Oregon Supreme Court determined that taxes levied by general purpose governments (such as cities and counties) may be subject to the $5 per $1,000 limit if those taxes are used for educational services provided by public schools.

Property Tax Collections. Each county assessor is required to deliver the tax roll to the county tax collector in sufficient time to mail tax statements on or before October 25 each year. All tax levy revenues collected by a county for all taxing districts within the county are required to be placed in an unsegregated pool, and each taxing district shares in the pool in the same proportion as its levy bears to the total of all taxes levied by all taxing districts within the county. As a result, the tax collection record of each taxing district is a pro-rata share of the total tax collection record of all taxing districts within the county combined.

Under the partial payment schedule, taxes are payable in three equal installments on the 15th of November, February and May of the same Fiscal Year. The method of giving notice of taxes due, the county treasurer’s account for the money collected, the division of the taxes among the various taxing districts, notices of delinquency, and collection procedures are all specified by detailed statutes. The lien for property taxes is prior to all other liens or encumbrances of any kind on real or personal property subject to taxation. By law, a county may not commence foreclosure of a tax lien on real property until three years have passed since the first delinquency.

A Senior Citizen Property Tax Deferral Program (1963) allows certain homeowners to defer taxes until death or sale of the home. A similar program is offered for Disability Tax Deferral (2001), which does not have an age limitation.

The following tables represent historical tax information for the District.

18 Taxable Property Values Portland Public Schools (Total)

Fiscal Total Real Market M5 Real Market Total Assessed Urban Renewal AV Used to Year Value Value(1) Valuation Excess Calculate Rates(2) 2017 $ 128,100,474,536 $ 106,935,120,227 $ 53,227,456,836 $ 5,882,588,429 $ 47,344,868,407 2016 108,638,147,911 90,930,547,901 50,812,802,433 5,237,111,063 45,575,691,370 2015 98,321,000,549 81,981,024,596 48,544,520,565 4,907,733,462 43,636,787,103 2014 91,722,985,502 74,430,365,453 46,580,191,840 4,833,326,001 41,746,865,839 2013 85,673,161,533 70,496,361,081 44,995,383,189 4,653,498,847 40,341,884,342 2012 86,754,252,282 71,451,649,438 43,739,219,335 4,519,149,169 39,220,070,166

Multnomah County

Fiscal Total Real Market M5 Real Market Total Assessed Urban Renewal AV Used to Year Value Value(1) Valuation Excess Calculate Rates(2) 2017 $ 127,486,864,838 $ 106,321,510,529 $ 52,854,229,849 $ 5,882,588,429 $ 46,971,641,420 2016 108,084,860,793 90,377,260,783 50,450,823,502 5,237,111,063 45,213,712,439 2015 97,803,413,416 81,463,437,463 48,194,163,160 4,907,733,462 43,286,429,698 2014 91,259,683,997 73,967,063,948 46,241,489,321 4,833,326,001 41,408,163,320 2013 85,244,183,946 70,067,383,494 44,667,657,361 4,653,498,847 40,014,158,514 2012 86,310,271,010 71,007,668,166 43,419,649,621 4,519,149,169 38,900,500,452

Washington County

Fiscal Total Real Market M5 Real Market Total Assessed Urban Renewal AV Used to Year Value Value(1) Valuation Excess Calculate Rates(2) 2017 $ 541,050,359 $ 541,050,359 $ 332,344,289 $ - $ 332,344,289 2016 489,061,073 489,061,073 322,495,093 - 322,495,093 2015 457,292,438 457,292,438 312,065,168 - 312,065,168 2014 410,314,818 410,314,818 302,156,643 - 302,156,643 2013 377,599,077 377,599,077 293,076,777 - 293,076,777 2012 392,131,118 392,131,118 285,320,175 - 285,320,175

Clackamas County

Fiscal Total Real Market M5 Real Market Total Assessed Urban Renewal AV Used to Year Value Value(1) Valuation Excess Calculate Rates(2) 2017 $ 72,559,339 $ 72,559,339 $ 40,882,698 $ - $ 40,882,698 2016 64,226,045 64,226,045 39,483,838 - 39,483,838 2015 60,294,695 60,294,695 38,292,237 - 38,292,237 2014 52,986,687 52,986,687 36,545,876 - 36,545,876 2013 51,378,510 51,378,510 34,649,051 - 34,649,051 2012 51,850,154 51,850,154 34,249,539 - 34,249,539

(1) Value represents the Real Market Value of taxable properties, including the reduction in Real Market Value of specially assessed properties such as farm and forestland. This value is also commonly referred to as the Measure 5 Real Market Value by county assessors. (2) Assessed value of property in the District on which the Permanent Rate is applied to derive ad valorem property taxes, excluding urban renewal, exempt property within enterprise zones and any other offsets. Source: Multnomah, Washington, and Clackamas Counties Department of Assessment and Taxation.

19 Property Tax Exemption Programs. Oregon statutes authorize a wide variety of full and partial property tax exemptions, including exemptions for property owned or used by cities, counties, schools and other local governments, property of the federal government, property used by religious and charitable entities, property used for low-income housing, historical property and transit oriented property.

The Oregon Enterprise Zone program is a State of Oregon economic development program that allows for property tax exemptions for three to five years. In exchange for receiving property tax exemption, participating firms are required to meet the program requirements set by State statutes and the local sponsor.

The Strategic Investments Program (“SIP”) was authorized by the Legislative Assembly in 1993 to provide tax incentives for capital investments by “traded-sector” businesses, including manufacturing. SIP recipients receive a 15 year property tax exemption on new construction over $25 million outside of urban areas, and over $100 million in urban areas. The exemption value ($25 million or $100 million) then increases three percent per year. SIP recipients pay an annual Community Service Fee which is equal to 25 percent of the value of the tax break, which is allocated to local governments through local negotiations. The Community Service Fee is not considered a property tax and thus is outside of the Measure 5 Limit. There are no SIP Agreements within the District’s boundaries. In June 2015, the legislature modified the Gain Share program with the passage of SB 129. The modification limited the sharing of the state income tax to 50% of the tax from new employment and 20% from retained employment, set a cap of $16 million on the amount a county can receive each fiscal year, extended the program from 2019 to 2024 and changed the allocation mechanism from a separate shared services fund to a direct allocation by the Oregon Department of Revenue.

GASB 77. Beginning with the Fiscal Year 2017 financial statements, GASB 77 requires local governments to disclose information related to tax abatement programs and amounts abated. Tax abatements result from agreements entered into by the reporting government, as well as those that are initiated by other governments, which reduce the reporting government’s tax revenues. In Fiscal Year 2017, the District will add a new footnote in their audit disclosing forgone tax revenues due to tax abatement programs.

Natural and Economic Forces. Natural and economic forces can affect the assessed value of taxable property in the District and the District’s collection of revenues. The District is located in the Pacific Northwest, a region subject to periodic significant earthquakes. Such an earthquake and/or tsunami could cause extensive damage to structures and infrastructure along the Pacific coast and could disrupt transportation, communications, water and sewer systems, power and gas delivery and fuel supplies along the Pacific coast and within the District. The District cannot predict how such seismic activity could impact its revenue sources, including property taxes. Other natural or man-made disasters, such as flood, fire, toxic dumping or acts of terrorism, could also cause a reduction in the assessed value of taxable property within the District or adversely affect the District’s revenues. Economic and market forces, such as a downturn in the economy generally, can also affect assessed values. In addition, the total assessed value can be reduced through the reclassification of taxable property to a class exempt from taxation, whether by ownership or use (such as exemptions for property owned by State and local agencies and property used for qualified educational, hospital, charitable or religious purposes). The Bonds are unlimited tax general obligation bonds (see “Security” and “Property Taxes” herein). Further the Bonds are secured by the Oregon School Bond Guaranty (see “Oregon School Bond Guaranty” herein).

Tax Rates and Collections. While the District lies in multiple counties, 99.3 percent of the District’s assessed value lies within Multnomah County. The following table presents the Fiscal Year 2017 tax rates for the District and other taxing jurisdictions within Multnomah County that overlap the District. The District’s Operating Tax Rate Limit is $5.2781 per $1,000 of assessed property value. The Operating Tax Rate Limit was calculated in conjunction with the implementation of Measure 50 in 1997. The Permanent Rates shown in the following table are the rates that are actually applied to the assessed value of the taxing district. The Permanent Rates may be different from the Operating Tax Rate Limit of the taxing district due to the decision by the taxing district to levy less than its Operating Tax Rate Limit.

20 Fiscal Year 2017 Representative Levy Rate (Rates per $1,000 of Assessed Value)

Bond Levy Urban Renewal or UR Portion of the Permanent Special Local Option Consolidated Consolidated (1) (2) General Government Rate Rate Rate Rate Rate Port of Portland $ 0.0701 $ 0.0000 $ 0.0000 $ 0.0701 0.0068 City of Portland 4.5770 2.7504 0.4026 7.7300 0.7588 Metro 0.0966 0.2044 0.0960 0.3970 0.0283 East Multnomah Solid and Water 0.1000 0.0000 0.0000 0.1000 0.0073 Multnomah County 4.3434 0.0500 0.0000 4.3934 0.4540 Multnomah County Library 1.1800 0.0000 0.0000 1.1800 0.1219 Portland Urban Renewal Special Levy 0.0000 0.2405 0.0000 0.2405 0.0000 Total General Government 10.3671 3.2453 0.4986 14.1110 1.3771

Education Multnomah County Education Service District 0.4576 0.0000 0.0000 0.4576 0.0474 Portland Community College 0.2828 0.3957 0.0000 0.6785 0.0725 Portland School District 5.2781 1.0623 1.9900 8.3304 0.7069 Total Education 6.0185 1.4580 1.9900 9.4665 0.8268

Total Tax Rate $ 16.3856 $ 4.7033 $ 2.4886 $ 23.5775 $ 2.2039

NOTE: County assessors report levy rates by tax code. Levy rates apply to the assessed property value. Measure 5 Limits are based on the Taxable Real Market Value and are only reported in total dollar amount of compression, if any, for each taxing jurisdiction (see “Property Taxes – Tax Rate Limitation – Measure 5” herein). (1) Local Option Levies are voter-approved serial levies. They are limited by ORS 280.060 to five years for operations or ten years for capital construction. Local Option Levy rates compress to zero before there is any compression of overlapping jurisdictions’ Permanent Rates (see “Property Taxes – Tax Rate Limitation – Measure 5” herein). (2) A portion of a taxing district’s consolidated rate is contributed to the Portland Development Commission through tax increment financing. Source: Multnomah County Department of Assessment and Taxation. Note that there are 41 tax codes in Multnomah County that overlap the District and Tax Code 201 (represented in the table above) has the highest property value of these tax codes. Total tax levies in the District range from $15.1850 to $23.8691 per $1,000 of assessed property value.

Tax Collection Record (1) Multnomah County Washington County Clackamas County

Fiscal Percent Collected as of Fiscal Percent Collected as of Fiscal Percent Collected as of (2) (3) (2) (3) (2) (3) Year Levy Year 6/30/2017 Year Levy Year 6/30/2017 Year Levy Year 6/30/2017 2017 98.07% 98.07% 2017 98.37% 98.37% 2017 98.09% 98.09% 2016 97.82% 98.75% 2016 98.33% 99.20% 2016 97.81% 98.84% 2015 97.65% 99.03% 2015 98.31% 99.29% 2015 97.67% 99.14% 2014 97.40% 99.23% 2014 98.01% 99.48% 2014 97.49% 99.41% 2013 97.26% 99.42% 2013 97.91% 99.60% 2013 97.04% 99.54% 2012 96.89% 99.37% 2012 97.52% 99.66% 2012 96.73% 99.58% (1) Percentage of total tax levy collection in Multnomah, Washington, and Clackamas Counties. Pre-payment discounts are considered to be collected when outstanding taxes are calculated. The tax rates are before offsets. (2) The percentage of taxes collected in the “year of the levy” represents taxes collected in a single levy year, beginning July 1 and ending June 30. (3) The percentage of taxes shown in the column represents taxes collected cumulatively from July 1 of a given levy year through June 30, 2017. Source: Multnomah, Washington, and Clackamas Counties Department of Assessment and Taxation.

21 Major Taxpayers (As of Fiscal Year 2017) School District No. 1J, Multnomah County, Oregon (Portland Public Schools)

Percent of (1) (2) Taxpayer Business/Service Tax Assessed Value Value Weston Investment Co LLC Real Estate $ 5,471,787 $ 235,693,460 0.44% Port of Portland Airport, Marine, Property Mgmt. 5,216,873 224,928,950 0.42% Pacificorp (PP&L) Electrical Utility 5,184,472 310,099,000 0.58% Portland General Electric Co Electrical Utility 4,391,409 263,252,450 0.49% Comcast Corporation Telecommunications 4,206,589 237,221,400 0.45% 111 SW 5th Avenue US Bank Tower 3,763,466 159,790,490 0.30% AT&T, Inc. Telecommunications 3,721,209 222,667,000 0.42% Capref Lloyd Center LLC Shopping Mall 3,584,163 178,942,540 0.34% Evraz Inc. Steel manufacturer 3,379,570 197,772,190 0.37% AAT Lloyd District LLC Apartment Complex 3,345,446 147,502,600 0.28% Subtotal - ten of District's largest taxpayers 2,177,870,080 4.09% All other District's taxpayers 51,049,586,756 95.91% Total District $ 53,227,456,836 100.00%

Multnomah County

Percent of (1) (2) Taxpayer Business/Service Tax Assessed Value Value Port of Portland Airport, Marine, Property Mgmt. $ 12,576,690 $ 583,529,350 0.77% Comcast Corporation Telecommunications 7,834,632 456,359,200 0.60% Portland General Electric Co. Electrical Utility 6,980,175 424,269,300 0.56% Weston Investment Co LLC Real Estate 6,138,071 272,190,380 0.36% Alaska Airlines Inc. Airline 6,019,634 368,405,400 0.49% Pacificorp (PP&L) Electrical Utility 5,831,910 349,359,000 0.46% AT&T, Inc. Telecommunications 4,180,613 250,408,000 0.33% Fred Meyer Stores Inc. Retail 3,784,291 181,021,900 0.24% 111 SW 5th Avenue Real Estate 3,763,466 159,790,490 0.21% Centurylink Telecommunications 3,587,461 214,907,300 0.28% Subtotal - ten of County's largest taxpayers 3,260,240,320 4.31% All other County's taxpayers 72,339,382,377 95.69% Total County $ 75,599,622,697 100.00%

Note: 99.3 percent of the District’s assessed value is located within Multnomah County. (1) Tax amount is the total tax paid by the taxpayer within the boundaries of the District and County, respectively. This amount is distributed to individual local governments by the County. A breakdown of amounts paid to each individual local government is not available. (2) Assessed value does not exclude offsets such as urban renewal and farm tax credits. Source: Multnomah County Department of Assessment and Taxation.

Note: Comcast has outstanding property value appeals within the Counties. While the contested value is included on the tax rolls, the Counties are not billing the amount owed on the value that is being appealed. Therefore, if the appeal is decided in the favor of the appellant, the overlapping municipal entities will not be required to repay taxes on the contested value, but the assessed value could decline. A favorable ruling to any or all of the appellants is not expected to have a material adverse impact on the District’s finances. House Bill 2407, signed by the Governor in July 2017, allows County Assessors to bill and collect such contested taxes in future property tax years. The Counties would segregate such funds and interest earned would go to the prevailing party at the conclusion of the litigation. Thus, the legislation would also not have a material impact on the District’s finances.

22 State School Funding One of the largest sources of revenue for school districts and education service districts is State aid appropriated through the Oregon Department of Education (“ODE”). ODE funding supports pre- kindergarten through 12th grade education including funding for operation for the State’s 197 school districts and 19 education service districts through the State School Fund (“SSF”). The SSF consists primarily of State General Fund and Lottery Fund revenues.

State School Fund Formula. State aid is provided to school districts pursuant to a formula set by the Legislative Assembly. The objective of the formula is to provide equitable funding for all school districts. Available State and local resources determine the actual amount of the allocation. Under the current formula, each student is given a factor as an enrolled student that is then adjusted to include additional factors such as English as a Second Language, Handicapped with an Individualized Education Plan, attending a remote small school, and Impoverished (the “ADMw”). The formula allocates revenues to districts based on the ADMw for each district. Each district’s share of the formula comprises a general purpose grant, transportation grant, small school district supplement and a high cost disability grant.

The SSF grant (the “SSF Grant”) to each school district is the district’s share of the formula minus local revenues. Local revenues include tax offsets, local property taxes for school operations (specifically excluding taxes for voter approved general obligation bonds and, subject to certain limitations, amounts raised from Local Option Levies), Common School Fund, county school fund and State timber revenues, and money received in lieu of property taxes.

Under the SSF distribution formula for the general purpose grant, the total ADMw is multiplied by a statewide target grant (currently $4,500). A factor of $25 per year per student that a district’s average teachers’ experience exceeds the State average is added to (or subtracted from if below the State average) this calculation. The result is multiplied by a funding ratio to arrive at the State’s general purpose grant.

In 2013, the Legislature approved a change in the way the additional weighting for poverty was calculated. Previously, the SSF distribution formula used 2000 Census data as the basis for the calculation. Now the SSF distribution formula uses the Small Area Income Poverty Estimates published every year by the US Census Bureau. This data provides a count of children living in families in poverty in each school district and more accurately reflects current poverty in Oregon’s school districts to ensure better distribution of the formula. The revised poverty calculation went into effect for the Fiscal Year 2015 distributions.

The facility grant ($12.5 million statewide in the 2015-17 biennium) is distributed on a pro-rata basis to all qualifying districts in the first two years a new school facility is put into use. The grant equals a maximum of eight percent of total construction costs of new school buildings, specifically excluding the cost of acquiring land, but including the addition of new structures to existing school buildings and pre-manufactured buildings if the new structures are used for instructing students. The transportation grant for each school district is between 70 percent and 90 percent of approved transportation costs, depending upon the ranking of the school district. Such ranking is based upon the approved transportation costs per ADMw. The high cost disability grant ($70.0 million statewide in the 2015-17 biennium) is distributed on a pro-rata basis to all qualifying districts and is equal to the approved costs of providing special education and related services to a resident pupil with disabilities in excess of $30,000.

School districts currently receive 95.5 percent of the total SSF distribution and education service districts (“ESDs”) receive the remaining 4.5 percent. Beginning July 1, 2014, school districts are permitted to withdraw from their ESD and receive 90 percent of their district’s prorated share of State funds allocated to the ESD.

State Legislature. The State has a citizen legislature consisting of the Senate, whose 30 members are elected to serve four-year terms, and the House of Representatives, which has 60 members elected for two-year terms (the “Legislature” or “Legislative Assembly”).

The Legislature convenes annually at the State Capitol in Salem, but sessions may not exceed 160 days in odd- numbered years and 35 days in even-numbered years. Five-day extensions are allowed by a two-thirds vote in

23 each house. The Legislative Assembly convenes on the second Monday in January in odd-numbered years, and in February in even-numbered years.

State K-12 Education Budget. SSF funding is set biennially in the State budget adopted by the Legislative Assembly in odd-numbered years (the “Legislatively Adopted Budget”). The State budget covers two fiscal years (a biennium) beginning July 1 of an odd-numbered year to June 30 of the next odd-numbered year, and sets funding for State agencies including ODE. The Legislative Assembly has the power to subsequently approve revisions to the Legislatively Adopted Budget. Such revised State budget is termed the “Legislatively Approved Budget.”

The State Constitution requires the Legislative Assembly to balance the State’s General Fund budget. The Department of Administrative Services Office of Economic Analysis (the “OEA”) produces a forecast of projected revenues (a “Revenue Forecast”) for the biennium generally each March, June (May in odd- numbered years), September and December. The OEA also produces a “Close of Session Forecast” after the end of the legislative session in odd years that reflects the May economic forecast adjusted for any changes made by the legislature.

Revenue Forecasts are based upon currently available information and upon a wide variety of assumptions. The actual results will be affected by future national and state economic activity and other events. If OEA’s assumptions are not realized or if other events occur or fail to occur, the State’s financial projections may not be achieved. Copies of the Revenue Forecasts are available from OEA at: www.oregon.gov/DAS/OEA.

If, over the course of a biennium, the forecasted revenues decline significantly from the Close of Session Forecast, the Legislative Assembly may meet to rebalance the budget, the Governor may direct that expenditures be reduced or the Legislative Assembly may adjust the budget when it meets in its regular session at the end of the biennium.

2015-17 Biennium Revenue Forecasts. On May 16, 2017, the OEA released the May 2017 Revenue Forecast. The May 2017 Revenue Forecast for gross General Fund revenues for the 2015-17 biennium was $18.48 billion, up $483.5 million from the Close of Session forecast, and up $371.0 million from the March 2017 Revenue Forecast. Although revenue growth is still healthy, the slowing pace of Oregon’s expansion has become evident in tax return and jobs data. Excluding corporate taxes, General Fund revenues were 2.4 percent above the Close of Session Forecast and would trigger a personal tax kicker if they hold through the end of the 2015-17 biennium. Corporate tax collections were seen as stabilized after falling sharply during most of 2016. The May 2017 Forecast projected that corporate tax collections were expected to remain relatively flat going forward. The 2017 Close of Session Forecast is expected to be released on August 23, 2017 and will provide final information on the 2015-17 biennium.

24 State General Fund Forecast Summary ($ in Millions)

2015-17 Biennium May 2017 Forecast Revenue Forecast Change From Close of March May March Close of Session 2017 2017 2017 Session Structural Revenues Personal Income Tax 15,713.5$ 15,709.8$ 16,020.8$ $ 311.0 $ 307.3 Corporate Income Tax 1,100.0 1,136.2 1,175.7 39.5 75.7 All Other Revenues 1,184.6 1,264.6 1,285.1 20.5 100.5 Gross General Fund Revenues 17,998.1 18,110.6 18,481.6 371.0 483.5 Beginning Fund Balance 532.9 528.8 528.8 0.0 (4.1) Offsets and Transfers (42.8) (44.4) (45.2) (0.8) (2.4) Administrative Actions (20.2) (14.0) (14.0) 0.0 6.2 Legislative Actions (158.9) (158.3) (158.3) 0.0 0.6 Net Available Resources 18,309.1$ 18,422.7$ 18,792.9$ $ 370.2 $ 483.8

Source: Oregon Office of Economic Analysis, “Oregon Economic and Revenue Forecast, May 2017.” May 16, 2017.

Income Tax Rebate. When total actual revenue collections in the General Fund (excluding corporate income tax receipts) exceed the Close of Session forecast by two percent or more, the collections above the forecasted amount are returned to individual income taxpayers, commonly known as the “kicker.” The May 2017 Revenue Forecast indicates the personal tax kicker base may exceed the kicker threshold by $69.9 million at the end of the 2015-17 biennium, resulting in a personal income tax kicker of $407.9 million. The personal tax kicker refunds do not affect revenues for the 2015-17 biennium but reduce the revenue for the 2017-19 biennium as the refund will be given as a credit on 2017 tax returns. This information will be finalized in the 2017 Close of Session forecast that is expected to be released on August 23, 2017.

When corporate income tax collections exceed the Close of Session forecast by two percent or more, the treatment is different: those revenues are retained in the General Fund and dedicated to funding K-12 education. However, there is no guarantee that future Legislatures will allocate budgets such that total K-12 spending is increased by the amount of revenue generated by any corporate tax kicker. The May 2017 forecast is now projecting corporate income tax collections for 2015-17 will be 6.9 percent higher than the Close of Session forecast and would therefore generate a corporate kicker of $75.5 million at the end of the 2015-17 biennium.

2017-19 Biennium Revenue Forecasts. The May 2017 Forecast also formed the basis for the 2017-19 biennial budget adopted by the 2017 Legislature and projected a budget deficit of $1.4 billion. The 2017 Legislature approved a Legislatively Adopted Budget for 2017-19 biennium before adjourning on July 7, 2017 that addressed the projected deficit through a combination of revenue increases and expenditure reductions. A comprehensive report of total funding levels is not yet available. The Legislatively Adopted Budget may by revised during the biennium if revenue impacting measures are approved at the November 2017 election or when the Legislature convenes in February 2018.

State School Fund Appropriations. The 2017-19 Legislatively Adopted Budget included an appropriation of $8.2 billion for the SSF which represented an eleven percent increase over the 2015-17 biennium’s Legislatively Approved Budget of $7.376 billion.

25 Current and historical state funding levels are detailed in the following table.

State K-12 Education Funding ($ in Millions)

Budget Biennium Fiscal Year Appropriation 2019 $ 4,100 2017-19(1) 2018 4,100 2017 3,747 2015-17 2016 3,629 2015 3,440 2013-15 2014 3,210 2013 2,845 2011-13 2012 2,868 2011 2,813 2009-11 2010 2,940 (1) Preliminary, subject to change. Source: Oregon Department of Education, School Finance Office: www.ode.state.or.us/search/results/?id=344.

Impact on the District. ODE provides SSF Grant estimates to each school district. Estimates are generally revised in July, October, February, March and May. The most recent ODE estimates for the District’s SSF Grant for Fiscal Years 2017 and 2018 are shown in the following table.

26 School District No. 1J, Multnomah County, Oregon (Portland Public Schools) Historical and Projected Weighted Average Daily Membership and State School Fund Grant State School Fund Grant Apportionment 2017 2018 Extended ADMw: Current Fiscal Year Estimated ADMw 57,880.8 57,964.9 Prior Fiscal Year Estimated ADMw 57,491.0 57,880.8 Extended ADMw (greater of Current or Prior Year) 57,880.8 57,964.9

Experience Adjustment: District Average Teacher Experience 11.63 11.63 State Average Teacher Experience 12.10 12.10 Experience Adjustment (District and State Teacher Experience Difference) -0.47 -0.47

Local Revenue: Property Taxes $ 217,302,000 $ 222,626,000 Federal Forest Fees 20,000 20,000 Common School Fund 6,190,520 5,954,430 County School Fund 20,000 20,000 State Managed Timber 0 0 In-lieu of Property Taxes 286,000 296,000 Revenue Adjustments 0 0 Local Revenue $ 223,818,520 $ 228,916,430

Transportation Grant: Net Eligible Transportation Costs $ 19,860,000 $ 20,600,000 Grant (70% of Net Eligible Transportation Costs) $ 13,902,000 $ 14,420,000

General Purpose Grant: (Extended ADMw x [$4,500 + ($25 x Experience Adjust.)]) x Funding Ratio = $411,630,004 $444,033,499

Total Formula Revenue: General Purpose Grant + Transportation Grant = $ 425,532,004 $ 458,453,499

State School Fund Grant: Total Formula Revenue - Local Revenue = $ 201,713,484 $ 229,537,069

Source: Oregon Department of Education, School Finance Office, Fiscal Year 2017 data as of May 10, 2017 and Fiscal Year 2018 data as of June 29, 2017 http://www.oregon.gov/ode/schools-and-districts/grants/Pages/default.aspx.

School districts are required to file their annual audited financials with ODE within six months of the end of the fiscal year pursuant to ORS 327.137. Extensions may be granted by ODE for extenuating circumstances such as natural disasters. Any school district failing to file prior to the deadline and without an extension will not receive SSF payments until after the audit report has been filed. ODE will schedule the payment with the next regularly scheduled SSF payment date.

School districts are presumed to maintain a “standard school district” under ORS 327.103 unless the district has been found deficient by the Oregon Superintendent of Public Instruction, pursuant to standards and rules of the State Board of Education. In the event that a deficiency remains uncorrected beyond required timelines and no exemption exists, the Oregon Superintendent of Public Instruction may withhold portions of State School Fund monies otherwise allocated to the school district for operating expenses until such deficiencies are corrected, unless the withholding would create an undue hardship. In a March 13, 2014 Final Order following a complaint filed by parents concerned about instructional time in high schools, the District was classified as a “conditionally standard district” in two ways, neither of which led to a withholding of State School Fund monies. First, the District did not meet the minimum number of instructional minutes required for each high

27 school course - a state requirement that has since been eliminated. Second, the District’s complaint procedure did not contain all required elements in the event of an appeal to the Oregon Department of Education. The District implemented a corrective action plan for both findings and made corrections as required, the corrective action plan was audited, and the Oregon Department of Education restored the District’s “standard” classification by written notice dated August 21, 2015.

STEM and Outdoor School Funding. The 2017 Legislature approved funding for two measures approved by the voters in the November 2016 election in addition to the SSF grant apportionment. Measure 98 (“M98”), the “High School Graduation and Career and College Readiness Act,” requires the State to direct funding of approximately $800 annually per student to each Oregon high school student for purposes of dropout- prevention and providing career technical and college readiness programs. M98 also directs the Oregon Department of Education to track rates of college attendance and the need for remedial classes for those who attend, as well as provide other performance and financial accountability audits. Senate Bill 5516, currently awaiting the Governor’s signature, appropriates $170 million for the High School Graduation and College and Career Readiness Fund in the 2017-19 biennium. Preliminary estimates from the Department of Education indicate the District will receive $12.3 million in the 2017-19 biennium.

Measure 99 (“M99”), the “Outdoor School Lottery Fund Initiative,” creates a fund to support outdoor school programs for all fifth and sixth graders across the state. The fund is financed with lottery moneys and administrated by Oregon State University. The District currently provides funding for outdoor school programs; therefore, the District may be able to utilize these resources differently. Senate Bill 5524, currently awaiting the Governor’s signature, limits the 2017-19 biennial expenses from lottery funds for this program to $24 million. The District does not yet know how much it may receive in the 2017-19 biennium.

State Reserve Funds The 2007 Legislative Assembly created two budgetary reserve funds, the Rainy Day Fund and the Education Stability Fund. With the approval of three-fifths of each house, the Legislative Assembly may appropriate up to two-thirds of the money in the Rainy Day Fund or Education Stability Fund for use in any biennium if certain economic or revenue triggers occur. The May 2017 Forecast projects that at the end of the 2015-17 biennium the Rainy Day Fund and the Education Stability Fund will have ending fund balances of $388.8 million and $383.8 million, respectively.

Rainy Day Fund. The Rainy Day Fund may be drawn on for any General Fund purpose in the event of a decline in employment, a projected budgetary shortfall or a declaration of a state of emergency. In September 2007 the State made an initial deposit into the Rainy Day Fund of $319.2 million from the corporate tax kicker. The Oregon Rainy Day Fund retains interest earnings in the fund. The Rainy Day Fund receives biennial deposits from the ending General Fund balance in an amount equal to the lesser of (a) the actual General Fund ending balance for the preceding biennium or (b) one percent of the amount of General Fund appropriations for the preceding biennium. The amount on deposit with the Rainy Day Fund is capped at 7.5 percent of General Fund revenues for the prior biennium.

Education Stability Fund. Under the Oregon Constitution, 18 percent of the net proceeds from the State Lottery must be deposited in the Education Stability Fund quarterly. The Education Stability Fund currently does not retain earnings in the fund. The amount in the Education Stability Fund may not exceed five percent of the amount that was collected as revenues in the State’s General Fund during the prior biennium.

Construction Excise Tax School districts may levy a tax for capital improvements on new residential, commercial and industrial development (“Construction Excise Tax”). Affordable housing, public improvements, agricultural buildings, hospitals, private schools, and religious facilities are exempted from the Construction Excise Tax. The Construction Excise Tax for Fiscal Year 2018 is limited to: (i) $1.26 per square foot on residential construction and (ii) 63¢ per square foot on non-residential construction up to the lesser of $31,400 per building permit or $31,400 per structure. The tax rate limits are adjusted annually by the Oregon Department of Revenue for changes in construction costs. The Construction Excise Tax is not subject to voter approval.

28 Revenue generated through a Construction Excise Tax can be used to acquire land, construct, reconstruct or improve school facilities, acquire or install equipment, furnishings or other tangible property, pay for architectural, engineering, legal or other costs related to capital improvements, any expenditure for assets that have a useful life of more than one year, or the payment of obligations and related costs of issuance that are issued to finance or refinance capital improvements.

The District. The District imposes a construction excise tax on residential construction over 500 square feet and the maximum construction excise tax on non-residential construction. The District has intergovernmental agreements in place with the Counties and the City of Portland to collect the construction excise tax. The District has collected the following construction excise taxes in recent years:

School District No. 1J, Multnomah County, Oregon (Portland Public Schools) Construction Excise Taxes Received Fiscal Amount Year Collected 2017(1) $ 6,599,985 2016 5,886,119 2015 6,076,313 2014 4,888,971 2013 3,618,555 2012 2,108,172

(1) Estimated. Source: The District.

Federal Funding Oregon school districts receive federal funding for a variety of purposes. Such funding is generally restricted to specific purposes. The District reported receipt of $54 million of federal funds in Fiscal Year 2016. Of this amount, $24,767 was reported in the District’s General Fund, $39,447,365 in the Grant Fund and $14,529,656 in the Special Revenue Fund. The General Fund portion of federal funding comes from federal forest fees and Medicaid payments.

Federal Direct Payments. The District issued Recovery Zone Bonds in 2010 and elected to receive subsidy payments (“Direct Payments”) from the federal government. The Direct Payments are used to pay interest due on the District’s Recovery Zone Bonds, Series 2010. The District’s Direct Payments in Fiscal Year 2017 were reduced by 6.9 percent due to mandatory sequestration cuts and the District budgeted additional General Fund dollars to cover the shortfall. The United States Office of Management and Budget has stated that qualified tax credit bond subsidy payments in federal Fiscal Year 2018 will be cut by 6.6 percent and the District has budgeted for these cuts. Congress has approved legislation that extends sequestration cuts through federal Fiscal Year 2025 but the annual reduction rate is subject to change and the District cannot predict the amount of future cuts.

Federal Forest Fees. In 2000, Congress passed the Secure Rural Schools and Community Self-Determination Act (the “SRS Act”) to replace a previous revenue sharing program. The SRS Act provides funding from the federal government to 18 of Oregon’s 36 counties for schools, roads, and other purposes (“Federal Forest Fees”). The U.S. Congress has passed several extensions of the SRS Act, the most recent occurring on April 16, 2015 which extended payments through September 30, 2016.

Revenue losses from a discontinuation of the SRS Act will be spread across all school districts statewide as Federal Forest Fees are included in local revenue for calculation of SSF Grants (see “State of Oregon Public School Funding – State School Fund” herein).

29 Financial Factors

Financial Reporting and Accounting Policies The District’s basic financial statements were prepared in conformity with generally accepted accounting principles (“GAAP”) as prescribed by the Governmental Accounting Standards Board (“GASB”).

Additional information on the District’s accounting methods is available in the District’s audited financial statements. A copy of the District’s audited financial report for Fiscal Year 2016 is attached hereto as Appendix B.

Auditing Each Oregon political subdivision must obtain an audit and examination of its funds and account groups at least once each year pursuant to the Oregon Municipal Audit Law, ORS 297.405-297.555. Political subdivisions having annual expenditures of less than $750,000, with the exception of counties and school districts, are exempt from this requirement. All Oregon counties and school districts, regardless of amount of annual expenditures, must obtain an audit annually. The required audit may be performed by the State Division of Audits or by independent public accountants certified by the State as capable of auditing political subdivisions. School districts are required to file their audit annually with ODE within six months of the end of the fiscal year pursuant to ORS 327.137. See “Revenue Sources – State School Funding” herein.

The District audits for the Fiscal Years 2012 through 2016 (“District Audited Financial Statements”) were performed by Talbot, Korvola & Warwick, LLP, CPAs, Lake Oswego, Oregon (the “Auditor”). The audit report for Fiscal Year 2016 indicates the financial statements, in all material respects, fairly present the District’s financial position of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information and the respective changes in financial position and the cash flows, where applicable, in conformance with accounting principles generally accepted in the United States of America. The District has contracted with the Auditor to audit its financial statements for Fiscal Year 2017. The audit review is scheduled to begin in September 2017. The Auditor was not requested to review this Official Statement.

Future financial statements may be obtained from the Electronic Municipal Market Access (“EMMA”) system, a centralized repository operated by the Municipal Securities Rulemaking Board (“MSRB”), currently located at: www.emma.msrb.org.

Summaries of the District’s Net Position and Changes in Net Position follow.

30 Statement of Net Position (Fiscal Years, $ in thousands)

Assets 2012 2013 2014 2015 2016 Cash and cash equivalents $ 79,276 $ 115,875 $ 94,501 $ 110,335 $ 72,569 Cash and cash equivalents held by fiscal agents 4,141 4,277 4,451 4,767 5,663 Investments 59,180 140,438 161,160 407,654 351,389 Accounts and other receivables 18,415 21,192 25,650 34,787 35,310 Property taxes and other taxes receivable 15,606 15,880 18,041 19,563 21,419 Inventories 497 583 421 686 1,044 Bond issue costs, net of accumulated amortization 3,516 - - - - Note receivable - due within one year 89 - - - - Noncurrent assets: Prepaid pension and other prepaid costs 425,421 414,408 404,992 7,767 1,628 Note receivable - due in more than one year 237 - - - - Capital assets, net of accumulated depreciation: Land 8,274 9,174 9,174 9,174 9,174 Construction in progress 13,658 18,595 31,339 42,156 144,960 Buildings and capital improvements 167,237 175,861 183,681 211,915 218,644 Vehicles and equipment 9,889 10,314 9,071 10,712 9,623 Total Assets 805,436 926,597 942,481 859,516 871,423

Deferred Outflows of Resources Pension plan - - - 6,801 3,200

Liabilities Accounts payable 12,780 16,463 18,323 27,740 40,259 Accrued payroll and payroll liabilities 63,844 61,977 65,435 72,503 74,583 Accrued bond interest payable 122 1,148 840 - - Unearned revenue 2,865 349 1,788 809 1,950 Accrued compensated absences - 2,708 2,765 3,358 3,379 Claims payable 4,366 4,540 4,597 4,711 4,530 Long-term debt Due within one year 17,442 54,064 58,160 63,254 66,553 Due in more than one year 470,588 547,729 488,987 824,636 767,822 Net pension liability - - - - 17,185 Net other post employment benefit obligation 33,595 36,263 35,579 32,900 29,933 Total Liabilities 605,602 725,241 676,474 1,029,911 1,006,194

Deferred Inflows of Resources Deferred insurance recovery - 819 - - - Pension Plan - - - 11,102 6,062 Total Deferred Inflows of Rescources - 819 - 11,102 6,062

Net Position Net investment in capital assets, net of related debt 157,209 146,148 183,584 230,251 260,146 Restricted for: Capital projects 15,478 123,461 111,919 373,772 258,804 Grants 6,099 7,599 6,944 8,604 8,770 Student body activities - - - 4,022 4,096 Nutrition services - - - 5,418 6,721 Debt Service - - 361 3,029 4,785 Unrestricted 21,048 (76,671) (36,801) (799,792) (1) (680,955) Total Net Position $ 199,834 $ 200,537 $ 266,007 $ (174,696) $ (137,633)

(1) In Fiscal Year 2015 the District implemented two new accounting standards, GASB Statements 68 and 71, which resulted in a reduction of beginning net position by $411 million. The new standards require that the Statement of Net Position include amounts for the District’s share of the PERS system’s unfunded liability (or asset). In addition, GASB 68 requires that any prepaid pension asset be “written off” and adjusted against the prior year’s net position. As a result, the District wrote off a $403 million prepaid pension asset related to the District’s issuance of Limited Tax Pension Bond debt in 2002 and 2003. In addition, net position was restated for the recognition of accreted interest not previously recorded for the Pension Bonds. Source: District Audited Financial Statements. 31 Statement of Revenues, Expenses and Changes in Net Position (Fiscal Years, $ in thousands) Revenues: 2012 2013 2014 2015 2016 Program Revenues: Charges for services $ 11,577 $ 12,933 $ 13,266 $ 13,587 $ 8,674 Operating grants and contributions 99,629 88,066 78,351 89,751 84,060 General Revenues: Property taxes 200,906 205,177 257,880 269,440 282,533 Construction excise tax 2,108 3,619 4,889 6,076 5,886 Local option taxes 53,622 51,357 55,709 62,923 76,467 State school fund - general support 149,031 151,369 184,690 179,505 211,253 State Common School Fund 4,138 4,608 4,427 4,721 5,810 County and intermediate sources 9,588 14,560 15,736 15,202 15,772 Investment earnings 595 644 774 1,285 3,140 Federal stimulus 403 6 - - - Other 13,535 10,518 11,253 10,563 12,120 Total Revenues 545,132 542,857 626,975 653,053 705,715

Expenses: Instruction 287,424 267,192 308,652 326,935 364,964 Support services 206,856 194,270 200,750 212,213 241,016 Enterprise and Community Services 19,108 18,923 19,164 20,445 21,326 Non-capital facilities maintenance and replacement 10,697 31,635 - - - Facilities Services - - 1,470 2,617 1,230 Interest and fees on long-term debt 25,748 26,813 31,469 31,600 40,116 Total Expenses 549,833 538,833 561,505 593,810 668,652

Increase (decrease) in net position (4,701) 4,024 65,470 59,243 37,063 Net position- July 1 204,535 199,834 200,537 266,007 (174,696) Restatement of Net Position - (3,321) - (499,946) (1) - Total Net Position $ 199,834 $ 200,537 $ 266,007 $ (174,696) $ (137,633)

32 A five-year summary of the District’s General Fund Balance Sheet and Statement of Revenues, Expenditures and Changes in Fund Balance follows.

General Fund Balance Sheet (Fiscal Years, $ in thousands) Assets 2012 2013 2014 2015 2016 Cash and cash equivalents 26,736 42,637 30,786 653 361 Cash and cash equivalents held by fiscal agents 4,141 4,277 4,268 4,530 5,419 Investments 56,968 45,018 71,945 92,960 100,735 Prepaid items 19 28 59 47 125 Accounts receivable 3,802 4,047 1,945 4,380 2,593 Notes receivable 326 - - - - Property taxes and other taxes receivable 15,606 15,880 16,851 17,788 19,228 Due from other funds 3,264 5,845 10,605 8,709 9,150 Inventories 107 110 141 200 261 Total Assets and Other Debits 110,969 117,842 136,600 129,267 137,872

Liabilities Accounts payable 8,858 8,421 8,259 10,865 11,441 Salaries and contracts payable 55,634 56,474 60,095 66,459 69,539 Due to other funds 894 813 744 743 743 Deferred revenues 14,658 - - - - Total Liabilities: 80,044 65,708 69,098 78,067 81,723 Deferred Inflows of Resources Unavailable property tax revenue - 14,677 15,828 16,758 18,314 Fund Balances Nonspendable 452 139 200 247 386 Restricted - - 560 - - Committed 1,583 - - - 7,200 Unassigned 28,890 37,318 50,914 34,195 30,249 Total Fund Balances 30,925 37,457 51,674 34,442 37,835 Total Liabilities and Fund Balance 110,969$ 117,842$ 136,600$ 129,267$ 137,872$

Source: District Audited Financial Statements.

33 General Fund Statement of Revenues, Expenditures and Changes in Fund Balance (Fiscal Years, $ in thousands) Estimated (1) (1) (2) Revenues 2012 2013 2014 2015 2016 2017 Property and other taxes $ 198,417 $ 204,618 $ 212,155 $ 221,904 $ 232,342 $ 240,880 State School Fund 149,031 151,369 184,690 179,505 211,253 207,182 State Common School Fund 4,138 4,608 4,427 4,721 5,810 6,191 Federal and state support 10,113 984 40 60 25 315 Federal stimulus 139 - - - - - Local option taxes 53,099 51,720 56,013 63,274 76,593 84,043 County and intermediate sources 6,965 11,728 12,191 12,691 13,116 13,120 Charges for services 3,016 3,482 3,417 3,225 3,562 4,058 Investment earnings 462 491 239 716 887 1,726 Other 7,221 8,069 6,003 7,415 5,586 3,809 Total Revenues 432,601 437,069 479,175 493,511 549,174 561,324

Expenditures Current: Instruction 250,229 250,772 271,984 293,300 316,030 325,496 Support services 178,859 168,281 182,354 201,248 220,666 240,513 Enterprise and community services 967 1,499 1,621 1,830 1,794 1,754 Facilities acquisition and construction 2,739 193 - - - - Total Expenditures 432,794 420,745 455,959 496,378 538,490 567,763 Excess (deficiency) of revenues over expenditures (193) 16,324 23,216 (2,867) 10,684 (6,439)

Other Financing Sources (Uses) Transfers in 6,309 - - - - - Transfers out (7,066) (10,611) (9,013) (14,409) (7,407) (11,541) Proceeds from the sale of capital assets 102 348 14 44 116 25 Issuance of debt 232 471 - - - - Total Other Financing Sources (Uses) (423) (9,792) (8,999) (14,365) (7,291) (11,516) Change in fund balance (616) 6,532 14,217 (17,232) 3,393 (17,955) Fund balance at beginning of year 31,541 30,925 37,457 51,674 34,442 37,835 Ending fund balance $ 30,925 $ 37,457 $ 51,674 $ 34,442 $ 37,835 19,880

(1) The ending fund balance increased in Fiscal Year 2014 due to better than anticipated permanent rate and local option taxes resulting from increased property values and construction activities, and an increase in SSF revenues as a result of increased payment rates and numbers of students. Ending fund balance decreased in Fiscal Year 2015 due to planned reinvestments in the form of increases in teaching and support staff, addition of instructional days, purchase of musical instruments and technology, and expansion of programs. (2) The ending fund balance in Fiscal Year 2017 is projected to decrease primarily due to one-time expenditures for health and safety improvements related to the lead findings and adoption of a new literacy program. The District recently adopted a new General Fund balance policy that targets a fund balance of five percent of revenues by 2020 and 10 percent of revenues by 2025. Source: District Audited Financial Statements.

Budgetary Process The District prepares an annual budget in accordance with Oregon Local Budget Law (ORS Chapter 294) which establishes standard procedures for all budget functions for Oregon local governments. Under the

34 applicable provisions, there must be public participation in the budget process and the adopted budget must be balanced.

The District’s administrative staff evaluates the budget requests of the various departments of the District to determine the funding levels of the operating programs. The budget is presented to the public through public hearings held by a budget committee consisting of Board members and lay members. After giving due consideration to the input received from the citizens, the Board of Directors adopts the budget, authorizes the levying of taxes and sets appropriations. The budget must be adopted no later than June 30 of each Fiscal Year.

The budget may be amended during the applicable Fiscal Year through the adoption of a supplemental budget. Supplemental budgets may be adopted by the Board pursuant to ORS 294.471.

General Fund Adopted Budget (Fiscal Years) Resources 2017 2018 Revenue from Taxes $ 320,700,760 $ 332,152,000 Tuition 185,000 150,000 Earnings on Investment 1,000,000 1,000,000 Extra-curricular Activities 679,500 700,000 Other Local Sources 8,397,720 7,941,960 Intermediate Sources 13,021,202 13,030,000 State Sources 222,796,690 241,692,000 Other Sources 100,000 749,881 Beginning Balance 25,719,308 19,871,000 Total Resources $ 592,600,180 $ 617,286,841

Requirements Instruction $ 332,299,184 $ 334,250,614 Supporting Services 237,833,986 251,720,466 Enterprise and Community Services 1,812,588 1,886,099 Debt Service & Transfers Out 5,420,705 5,915,375 Contingency 15,233,717 23,514,287 Total Expenditures $ 592,600,180 $ 617,286,841

Source: District Adopted Fiscal Year 2018 Budget.

Investments ORS 294.035 authorizes Oregon political subdivisions to invest in obligations, ranging from U.S. Treasury obligations and Agency securities to municipal obligations, bankers’ acceptances, commercial paper, certificates of deposit, corporate debt and guaranteed investment contracts, all subject to certain size and maturity limitations. No municipality may have investments with maturities in excess of 18 months without adopting a written investment policy which has been reviewed and approved by the Oregon Short Term Fund Board. ORS 294.052 authorizes Oregon political subdivisions to invest proceeds of bonds or certificates of participation and amounts held in a fund or account for such bonds or certificates of participation under investment agreements if the agreements: (i) produce a guaranteed rate of return; (ii) are fully collateralized by direct obligations of, or obligations guaranteed by, the United States; and (iii) require that the collateral be held by the municipality, an agent of the municipality or a third-party safekeeping agent. The District has its own investment policy which is available upon request or on the District’s website.

Political subdivisions are also authorized to invest approximately $47.4 million (adjusted for inflation) in the Local Government Investment Pool of the Oregon Short-Term Fund, which is managed by the State Treasurer’s office. Such investments are managed in accordance with the “prudent person rule” (ORS 293.726) and

35 administrative regulations of the State Treasurer which may change from time to time. Eligible investments presently include all of those listed above, as well as repurchase agreements and reverse repurchase agreements. A listing of investments held by the Oregon Short-Term Fund is available on the Oregon State Treasury website under “Other OSTF Reports – OSTF Detailed Monthly Reports” at http://www.oregon.gov/treasury/Divisions/Investment/Pages/Oregon-Short-Term-Fund-(OSTF).aspx.

Pension System General. The District participates in a retirement pension benefit program under the State of Oregon Public Employees Retirement System (“PERS” or the “System”). After six full months of employment, all District employees are required to participate in PERS. Contributions to the system are divided into those that must be paid by employers, and those that may be paid by employees, or employers on their behalf, depending on the individual contract negotiated between the two. See “Employer Contribution Rates” herein.

T1/T2 Pension Programs. Employees hired before August 29, 2003 participate in the “Tier 1” and “Tier 2” pension programs (the “T1/T2 Pension Programs”). The benefits provided through the T1/T2 Pension Programs are based primarily on a defined benefit model and provide retirement and disability benefits, annual cost-of-living adjustments, and death benefits to members and their beneficiaries. Different benefit structures apply to participants depending on their date of hire. Since January 1, 2004, six percent of each employee’s salary is contributed to fund individual retirement accounts under a separate defined contribution program known as the Individual Account Program (the “IAP”).

OPSRP. Employees hired on or after August 29, 2003 participate in the Oregon Public Service Retirement Plan (“OPSRP”) unless membership was previously established in the T1/T2 Pension Programs. OPSRP is a defined benefit pension plan, but also provides access to the IAP.

Actuarial Valuation. Oregon statutes require an actuarial valuation of the System at least once every two years. PERS’ current actuary is Milliman, Inc. (“Milliman”) which replaced the prior actuary, Mercer (US), Inc. in January 2012. Based on the biennial actuarial valuation as of December 31 of odd-numbered years the Oregon Public Employees Retirement System Board (the “PERB”) establishes the contribution rates that employers will pay to fund the T1/T2 Pension Programs, OPSRP and the PERS-sponsored Retirement Health Insurance Account program (“RHIA”) described herein. Actuarial valuations are performed annually as of December 31 of each year, with the valuations as of December 31 of odd-number years (such as 2015) used to set payroll contribution rates and valuations as of even-numbered years (such as 2014) used for advisory purposes only.

Actuarial valuations are performed for the entire System (the “System Valuation”), and for each participating employer, including the District (the “District Valuation”). Valuations are released nine to eleven months after the valuation date. Current payroll rates are based on the 2015 Valuation, and those rates will extend through June 30, 2019.

Valuation Date Release Date Rates Effective December 31, 2013 September 2014 July 1, 2015 – June 30, 2017 December 31, 2014 November 2015 Advisory only December 31, 2015 September 2016 July 1, 2017 – June 30, 2019

Valuations are based on complex models which utilize assumptions on rates of return, payroll growth rates and demographic trends. Should those assumptions prove inaccurate, liabilities of the system may be higher or lower than calculated. Any increases or decreases in liabilities will be absorbed into future payroll rates assessed against employer payrolls. Further, should the PERB direct the actuary to change assumptions utilized in the model, it may affect payroll rates assessed against employer payrolls. In recent months, the PERB has discussed potentially lowering the rate of return assumption utilized in Milliman’s model. Should that be implemented, unfunded liabilities would be expected to rise above current levels. See “Actuarial Assumptions – 2014 and 2015 Valuations” and “Employer Assets, Liabilities, and Unfunded Actuarial Liabilities” herein.

36 2015 System Valuation Summary. The December 31, 2015 Valuation (the “2015 System Valuation”) was released on September 27, 2016. The 2015 Valuation indicated that the System-wide funded status decreased from approximately 76 percent at December 31, 2014 to 71 percent as of December 31, 2015, without taking into account offsets for deposits made by individual employers from bond proceeds or cash on hand in side accounts (see “Pension Bonds and Side Accounts” herein). The System-wide unfunded actuarial liability (“UAL”) increase from approximately $17.9 billion as of December 31, 2014 to $21.8 billion as of December 31, 2015 is largely attributable to actual investment returns of 2% during 2015, substantially less than the 7.50 percent assumed rate of return.

Actuarial Assumptions – 2013 Valuation. Significant actuarial assumptions and methods used in the 2013 Valuation, which covers payroll rates paid through June 30, 2017, included (a) the Entry Age Normal method, (b) asset valuation method based on market value, (c) rate of return on the investment of present and future assets of 7.75 percent (the “Assumed Earnings Rate”), (d) payroll growth rate of 3.75 percent, (e) consumer price inflation of 2.75 percent per year, (f) UAL amortization method of a level percentage of payroll over 20 years (fixed) for all T1/T2 UALs derived from the 2013 Valuation and thereafter, and through 2033 for all T1/T2 UALs derived from the 2007, 2009 and 2011 valuations, and 16 years (fixed) from the date of the first rate-setting valuation at which the UAL is recognized for OPSRP, and (g) a rate collar to limit increases or decreases in employer contribution rates from biennium to biennium (the “Rate Collar”) (see “Contribution Rate Collar” below).

Actuarial Assumptions – 2014 and 2015 Valuations. At their July 31, 2015 Board meeting, the PERB adopted revisions to its actuarial assumptions and methods based upon recommendations from Milliman. These changes include: a) lowering the assumed earnings rate to 7.50 percent; b) reducing the payroll growth rate from 3.75% to 3.50%; and c) updating the mortality assumptions to increase projections of life expectancy. The revised assumptions are incorporated into the December 31, 2014 (advisory only) and December 31, 2015 (rate- setting for 2017-19 biennium) actuarial valuations.

In recent meetings, the PERB has discussed the potential further reduction in the assumed earnings rate. Should such action be taken, unfunded liabilities and employer payroll rates would be expected to rise; however such increases would not take effect until the 2019-21 biennium or thereafter.

Employer Assets, Liabilities, and Unfunded Actuarial Liabilities. An employer’s unfunded actuarial liability (“UAL”) is the excess of the actuarially determined present value of the employer’s benefit obligations to employees over the existing assets available to pay those benefits.

District UAL. For the T1/T2 Pension Programs, the District is pooled with other kindergarten through grade 12 public school district and education service district public employers (the “School District Pool”). The District’s portion of the School District Pool’s assets and liabilities is based on the District’s proportionate share of the School District Pool’s pooled payroll (the “District Allocated T1/T2 UAL”). Changes in the District’s relative growth in payroll will cause the District Allocated T1/T2 UAL to shift. The District Allocated T1/T2 UAL may increase if other pool participants fail to pay their full employer contributions. According to the 2015 System Valuation, as of December 31, 2015, the School District Pool funded status was 71 percent without taking into account offsets for deposits made by individual employers from bond proceeds or cash on hand in side accounts.

OPSRP’s assets and liabilities are pooled on a program-wide basis. These assets and liabilities are not tracked or calculated on an employer basis. The District’s allocated share of OPSRP’s assets and liabilities is based on the District’s proportionate share of OPSRP’s pooled payroll (the “District Allocated OPSRP UAL”). Changes in the District’s relative growth in payroll will cause the District Allocated OPSRP UAL to shift. As of December 31, 2015, the OPSRP funded status was 64 percent without taking into account offsets for deposits made by individual employers from bond proceeds or cash on hand in side accounts.

Pension Bonds and Side Accounts. In October 2002 and April 2003, the District issued pension bonds in the amounts of $210,103,857and $281,170,040, respectively, to make lump-sum payments to PERS. The payments were deposited in an account for the District (the “District’s Side Account”) that is used towards all or a portion of the District Allocated all or a portion of the District Allocated T1/T2 UAL and District Allocated

37 OPSRP UAL, reducing the District’s contribution rates, although debt service payments are also due on the pension bonds.

The District’s net unfunded pension UAL is the total of the District Allocated T1/T2 UAL and District Allocated OPSRP UAL, less the balance in the District’s Side Account. The District’s net unfunded pension UAL as reported in the District’s actuarial valuation report as of December 31, 2013 (the “2013 District Valuation”) and as reported in the District’s actuarial valuation report as of December 31, 2015 (the “2015 District Valuation”) is shown in the following table.

School District No. 1J, Multnomah County, Oregon (Portland Public Schools) Net Unfunded Pension Liability 2013 Valuation(1) 2015 Valuation(2) Allocated pooled T1/T2 UAL $312,302,169 $ 812,911,698 Allocated pooled OPSRP UAL 17,560,292 44,306,511 District Side Account (656,519,837) (608,675,766) Net unfunded pension actuarial accrued liability/(surplus) $(326,657,376) $ 248,542,443

(1) Takes into account certain legislative changes related to reductions in annual COLA during the 2013 Legislative Session. Most of these changes were later reversed by the Supreme Court; however the 2015-17 rates were not revised. (2) Takes into account a Supreme Court ruling reversing most of the legislative changes made during the 2013 Legislative Session and the changes in the actuarial assumptions made by the PERB at its July 31, 2015 meeting, see “Actuarial Assumptions – 2014 and 2015 Valuations.” herein. Source: 2013 District Valuation and 2015 District Valuation.

Employer Contribution Rates. Employer contribution rates are calculated as a percent of covered payroll. The rates are based on the current and projected cost of benefits and the anticipated level of funding available from the OPERF, including anticipated investment performance of the fund. Contribution rates are subject to future adjustment based on factors such as the result of subsequent actuarial valuations, litigation, decisions by the PERB and changes in benefits resulting from legislative modifications. Pursuant to ORS 238.225, all participating employers are required to make their contribution to PERS based on the employer contribution rates set by the PERB. Employees are required to contribute six percent of their annual salary to the IAP. Employers are allowed to pay the employees’ contribution in addition to the required employers’ contribution. The District has not elected to make the employee contribution.

Rate Collar. The PERB uses a rate collar to limit increases in employer contribution rates from biennium to biennium (the “Rate Collar”) to smooth the impact of significant increases or decreases from one valuation to the next. The Rate Collar limits increases in employer contribution rates before rate reductions from side accounts are deducted, and does not cover charges associated with RHIA. Under normal conditions, the Rate Collar is the greater of three percent of payroll (the “3% parameter”) or 20 percent of the current base rate (the “20% parameter”). If the funded status of an employer or the pool in which the employer participates is below 70 percent (or above 130 percent), the Rate Collar increases by 0.3 percent of payroll if under the 3% parameter, or two percent of the current base rate if under the 20 percent parameter, for every percentage point under the 70 percent (or above 130 percent) funded level (the “Collar Ramp”) until it reaches six percent of payroll, or 40 percent of the current rate base at the 60 percent (or above 140 percent) funded level (the “Double Rate Collar”).

If the projected rate necessary to fully fund the system (the “Uncollared Rate”) causes an increase or decrease in rates that exceeds the Rate Collar, the excess increase or decrease is deferred to future rate cycles. The 2015 Valuation calculates the Uncollared Rate (before adjusting for side accounts and RHIA) for T1/T2 employees for the School District Pool of 32.91% for the 2017-19 biennium; however, the Rate Collar limits the rate to 25.43% of payroll.

District Contribution Rates. The 2015-17 biennial employer contribution rates for the Pension Programs incorporated the impacts of the legislative changes, primarily related to the reduction of annual cost of living adjustments in retirement benefits, that were approved by the 2013 Legislature. Many of these changes were later reversed by the Supreme Court. The 2015-17 rates were not revised as a result of the Supreme Court’s; however rate increases that took effect July 1, 2017 do reflect these decisions.

38 The District’s contribution rates for the 2015-17 biennium under the 2013 District Valuation, and current contribution rates for the 2017-19 biennium under the 2015 District Valuation are provided in the following table.

School District No. 1J, Multnomah County, Oregon (Portland Public Schools) Pension Contribution Rates 2015-17 Biennium(1) 2017-19 Biennium(2) OPSRP OPSRP OPSRP OPSRP

T1/T2 General P&F T1/T2 General P&F Normal cost rate 11.94% 7.33% 11.44% 13.28% 8.02% 12.79% T1/T2 UAL rate 9.25 9.25 9.25 12.15 12.15 12.15 OPSRP UAL rate 0.61 0.61 0.61 1.27 1.27 1.27 Side account rate relief (24.70) (24.70) (24.70) (20.54%) (20.54) (20.54) Retiree Healthcare rate (RHIA)(3) 0.53 0.45 0.45 0.50 0.43 0.43 Total net contribution rate 0.53% 0.45% 0.45% 6.66% 1.33% 6.10%

(1) Takes into account certain legislative changes related to reductions in annual COLA approved during the 2013 Legislative Session. Most of these changes were later reversed by the Supreme Court, however the 2015-17 rates were not revised. (2) Takes into account the Supreme Court ruling reversing most of the legislative changes made during the 2013 Legislative Session (discussed above) and the changes in the actuarial assumptions made by the PERB at its July 31, 2015 meeting. See “Actuarial Assumptions – 2014 and 2015 Valuations” herein. (3) Contribution rates to fund RHIA benefits are included in the total District employer contribution rate, but are not a pension cost. See “Other Postemployment Benefits – Retirement Health Insurance Account” below. Source: 2013 District Valuation, 2015 District Valuation and PERS.

District Contributions. The District’s historical and projected annual contributions to PERS are provided in the following table.

School District No. 1J, Multnomah County, Oregon (Portland Public Schools) Pension Contributions Fiscal District Year Contribution(1) 2017(2) $ - 2016 - 2015 4,894,963 2014 4,784,915 2013 1,938,144 2012 2,448,272 (1) District’s contribution to PERS which is net of the side account rate credit draw and does not include RHIA or debt service on the District’s pension bonds. (2) Estimated. Source: School District No. 1J, Multnomah County, Oregon (Portland Public Schools) and District Audited Financial Statements.

The District cannot predict whether any legislation or related actions will attempt to further modify the PERS system and/or whether such attempts would withstand legal challenge.

GASB 67 and GASB 68. In June 2012, the GASB approved Statements No. 67 and No. 68 that modify the accounting and financial reporting of pensions by state and local governments and pension plans. Statement No. 67 (“GASB 67”), Financial Reporting for Pension Plans, addresses financial reporting for state and local government pension plans. Statement No. 68 (“GASB 68”), Accounting and Financial Reporting for Pensions, establishes new accounting and financial reporting requirements for governments that provide their employees with pensions. The System is subject to GASB 67; each participating employer, including the District is subject to GASB 68. The guidance contained in these statements changes how governments calculate and report the costs and obligations associated with pensions. GASB 67 was effective for Fiscal Year 2014 and GASB 68 was effective for Fiscal Year 2015. GASB 68 was incorporated in the District’s financial statements beginning in Fiscal Year 2015. PERS contracted with Milliman to provide information for local governments to use in their financial statements. 39 Under GASB 68, for Fiscal Year 2016, the District reported a net pension liability of $17,185,491 and a pension expense of $16,949,068. PERS has provided the District with the information to be reported in the Fiscal Year 2017 financial statements and the net pension liability increased to $207,202,551 due to system-wide increases in UAL due to investment returns of two percent during 2015 and increases in District Payroll which were proportionately more than system-wide increases in payroll, thus increasing the District’s proportionate share of the pension liability. The pension expense to be recognized is $48,148,039. See Appendix B “Financial Statements” for more information regarding the District and GASB 68.

Other Postemployment Benefits Retirement Health Insurance Account. PERS retirees who receive benefits through the Tier 1 and Tier 2 plans and are enrolled in certain PERS administered health insurance programs, may receive a subsidy towards the payment of health insurance premiums. Under ORS 238.420, retirees may receive a subsidy for Medicare supplemental health insurance of up to $60 per month towards the cost of their health insurance premium under the RHIA plan. The RHIA program’s assets and liabilities are pooled on a system-wide basis and are not tracked or calculated on an employer basis. According to the 2015 System Valuation, this program had a UAL of approximately $46.3 million. The District’s allocated share of the RHIA program’s assets and liabilities is based on the District’s proportionate share of the program’s pooled payroll. According to the 2015 District Valuation, the District’s allocated share of the RHIA program’s UAL was $1,513,304.

Medical Benefits. Under ORS 243.303 the District is required to offer the same healthcare benefits for current District employees to all retirees and their dependents until such time as the retirees are eligible for Medicare. GASB Statement No. 45 refers to this as an “implicit subsidy” and requires that the corresponding liability be determined and reported.

The District also has an explicit liability as it provides a single-employer defined benefit post-retirement benefits program for employees who have retired from the District with a minimum of fifteen accumulated years of service and are eligible to retire from PERS. There are 4,805 active and 851 retired members in the plan. Covered employees under the plan are eligible to receive full or part District-paid medical and pharmacy benefits for up to 60 months, or until reaching age 65, whichever comes first. The District also pays a portion of the spouse/domestic partner medical and pharmacy costs during the benefit period. The program was established under separate collective bargaining agreements with the certificated and classified employees and by precedent for all other District employees. The Portland Association of Teachers (PAT) group agreed to terminate this benefit after September 30, 2016. The District Council Unions (DCU) agreed to terminate this benefit after December 31, 2014. All other bargaining units and employee groups agreed to terminate this benefit after June 30, 2014.

The District’s annual other post-employment benefit (“OPEB”) cost is calculated based on the annual required contribution (the “ARC”), an amount actuarially determined in accordance with the parameters of GASB 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal costs each year and amortize any unfunded actuarial liabilities over a period of 30 years with an assumed four percent rate of return. The following table details the District’s ARC and Net OPEB Obligation.

Annual Required Contribution – Medical Benefits (Fiscal Years, $ in thousands) 2012 2013 2014 2015 2016 Annual required contribution $ 13,343 $ 10,548 $ 7,879 $ 5,065 $ 4,951 Interest on prior net OPEB obligation 890 1,008 1,088 1,067 987 Adjustment to annual required contribution (1,470) (1,664) (1,796) (1,815) (1,679) Annual OPEB cost 12,763 9,892 7,171 4,317 4,259 Contributions made (8,835) (7,224) (7,855) (6,996) (7,226) Increase in net obligation 3,928 2,668 (684) (2,679) (2,967) Net OPEB obligation - beginning of Fiscal Year 29,667 33,595 36,263 35,579 32,900 Net OPEB obligation - end of Fiscal Year $ 33,595 $ 36,263 $ 35,579 $ 32,900 $ 29,933 % of Annual OPEB Cost Contributed 69% 73% 110% 162% 170% Source: District Audited Financial Statements.

40 The District typically obtains an actuarial valuation of the implicit subsidy and explicit subsidy in odd- numbered years but due to significant changes to the plan provisions in 2014 a new actuarial valuation was obtained at that time. The following table presents the unfunded actuarial accrued liability from the actuarial valuations completed since the adoption of GASB 45.

Unfunded Actuarial Accrued Liability – Medical Benefits (Fiscal Years, $ in thousands)

Actuarial Unfunded Percentage Valuation Value of Accrued Accrued Funded Covered of Covered Date Assets Liability Liability Ratio Payroll Payroll 06/30/15 $ - $ 65,094 $ 65,094 0% $ 283,007 23% 04/01/14 - 105,510 105,510 - 245,261 43% 07/01/13 - 121,159 121,159 - 245,261 49% 07/01/11 - 145,855 145,855 - 267,981 54% Source: District Audited Financial Statements.

The actuarial valuation report as of June 30, 2017 is expected to be available in early August. The District cannot predict whether its net unfunded actuarial accrued liability will increase or decrease as of June 30, 2017 and does not expect to update this Official Statement if the valuation report is released before the closing of the Bonds and the valuation reflects an unfunded actuarial accrued liability of less than $100 million.

Stipend Plan. The District provides a single-employer defined benefit early retirement program for members of the PAT, physical therapists, occupational therapists and licensed administrators. Certificated employees with 15 consecutive years of at least half time service with the District, and who are eligible to retire under PERS, and who retire before age 62 are entitled to a monthly stipend of $425 dollars. Benefits are payable up to the earlier of attaining age 62 or receiving 60 monthly payments. All financial information relating to the stipend benefits is reported in the General Fund. The District does not issue a stand-alone financial report for this plan.

The District’s annual OPEB cost for the Stipend Plan is calculated based on the ARC, an amount actuarially determined in accordance with the parameters of GASB 27. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal costs each year and amortize any unfunded actuarial liabilities over a period of 15 years with an assumed three percent rate of return. The following table details the District’s ARC and Net OPEB Obligation for the Stipend Plan.

Annual Required Contribution - Stipend Plan (Fiscal Years, $ in thousands) 2012 2013 2014 2015 2016 Annual required contribution $ 1,664 $ 1,235 $ 1,062 $ 841 $ 766 Interest on prior net OPEB obligation (22) (23) (29) (38) (56) Adjustment to annual required contribution 61 62 78 107 157 Annual OPEB cost 1,703 1,274 1,111 910 867 Contributions made (1,709) (1,472) (1,432) (1,507) (1,300) Increase in net obligation (6) (198) (321) (597) (433) Net OPEB obligation (asset) - beginning of Fiscal Year (754) (760) (958) (1,279) (1,876) Net OPEB obligation (asset) - end of Fiscal Year $ (760) $ (958) $ (1,279) $ (1,876) $ (2,309)

% of Annual OPEB Cost Contributed 100% 116% 129% 166% 150% Source: District’s Actuarial Valuation as of June 30, 2015.

The District typically obtains an actuarial valuation of the Stipend Plan in odd-numbered years but due to significant changes to the plan provisions in 2014 a new actuarial valuation was obtained at that time. The following table presents the unfunded actuarial accrued liability from the actuarial valuations completed since the adoption of GASB 27.

41 Unfunded Actuarial Accrued Liability - Stipend Plan (Fiscal Years, $ in thousands)

Actuarial Unfunded Percentage Valuation Value of Accrued Accrued Funded Covered of Covered Date Assets Liability Liability Ratio Payroll Payroll 06/30/15 $ - $ 8,040 $ 8,040 0% $ 72,710 11% 04/01/14 - 9,142 9,142 0% 152,827 6% 07/01/13 - 10,496 10,496 0% 152,827 7% 07/01/11 - 14,568 14,568 0% 187,587 8% 07/01/09 - 16,964 16,964 0% 182,491 9% Source: District’s Actuarial Valuation as of June 30, 2015.

See Note 12 “Other Post-Employment Benefits” of the District’s audited financial statements for Fiscal Year 2016 for more information on the District’s OPEB liability.

Risk Management The District is exposed to various risks of loss. A description of the risks is provided in the District’s audited financial statements. The audited financial statement for Fiscal Year 2016 is attached hereto as Appendix B.

Demographic Information

General The District is located in the northwestern part of the State. Its boundaries include a large portion of the City of Portland and also include portions of Multnomah, Washington and Clackamas Counties. The majority of the District is located in Multnomah County (99.3% of Real Market Value).

All three counties are included in the Portland-Beaverton-Vancouver Primary Metropolitan Statistical Area (hereinafter, the “Portland PMSA”). The Portland PMSA includes Multnomah, Washington, Clackamas, Columbia and Yamhill counties in Oregon, and Clark and Skamania County in the state of Washington.

Historical data have been collected from generally accepted standard sources, usually from public bodies. This section will focus on the City of Portland and the Portland PMSA.

42 Population The District’s estimated population is currently 494,509. The following table shows the historical population for the State, the Counties and the City of Portland:

Population State of Multnomah Washington Clackamas City of July 1(1) Oregon County County County Portland 2016 4,076,350 790,670 583,595 404,980 627,395 2015 4,013,845 777,490 570,510 397,385 613,355 2014 3,962,710 765,775 560,465 391,525 601,510 2013 3,919,020 756,530 550,990 386,080 592,120 2012 3,883,735 748,445 542,845 381,680 587,865 2011 3,857,625 741,925 536,370 378,480 585,845 April 1(2) 2010 3,831,074 735,334 529,710 375,992 583,776 2000 3,421,399 660,486 445,342 338,391 529,121 1990 2,842,321 583,887 311,554 278,850 438,802 (1) Source: Center for Population Research and Census, Portland State University. (2) Source: U.S. Census Count on April 1.

Economic Overview The economy of the Portland metropolitan area is broad and widely diversified. The Portland PMSA includes the State’s largest employers, including Intel, Providence Health System, Safeway, Oregon Health & Sciences University, Fred Meyer, Kaiser Foundation Health Plan, Legacy Health System, and Nike.

Currently, transportation and utilities accounts for 18.2 percent of the total non-farm employment in the Portland PMSA, while professional and business services accounts for 15.4 percent, education and health services 14.3 percent, manufacturing 10.7 percent, and leisure and hospitality 10.7 percent.

Income. Historical personal income and per capita income levels for the County and the State are shown below:

Multnomah County and State of Oregon Total Personal and Per Capita Income Multnomah County State of Oregon Dividends, Per Capita Dividends, Per Capita Interest, Rent Dividends, Personal Interest, Rent Dividends, Personal Income ($000 Per Capita Interest, Income ($000 ($000 Per Capita Interest, Year ($000 Omitted) Omitted) Income Rent Omitted) Omitted) Income Rent 2016 N/A N/A N/A N/A $ 184,407,086 $ 34,748,644 $ 45,049 $ 8,489 2015$ 38,906,295 $ 7,465,998 $ 49,230 $ 9,447 173,170,241 32,644,259 42,974 8,101 2014 36,665,814 7,220,622 47,136 9,282 163,652,836 31,399,195 41,220 7,909 2013 34,284,408 6,692,326 44,723 8,730 154,869,050 30,128,608 39,426 7,670 2012 33,288,008 6,578,408 43,847 8,665 152,371,092 30,257,383 39,083 7,761 2011 31,296,864 5,949,561 41,833 7,952 145,083,738 27,889,523 37,512 7,211 Note: Dollar estimates are in current dollars (not adjusted for inflation). Source: U.S. Department of Commerce, Bureau of Economic Analysis. County data as of November 17, 2016; State data as of March 28, 2017.

43 Employment. Non-farm employment within the Portland PMSA is described in the following tables:

Portland PMSA Labor Force Summary (1) (by place of residence)

2017 Change from (2) 2012 2013 2014 2015 2016 2017 2012 2013 2014 2015 2016 Civilian Labor Force 1,186,738 1,171,479 1,200,137 1,224,063 1,275,663 1,312,900 126,162 141,421 112,763 88,837 37,237 Unemployment 96,800 85,290 76,936 64,602 59,775 50,859 -45,941 -34,431 -26,077 -13,743 -8,916 Percent of Labor Force 8.2% 7.3% 6.4% 5.3% 4.7% 3.9% xx xx xx xx xx Total Employment 1,089,938 1,086,189 1,123,201 1,159,461 1,215,888 1,262,041 172,103 175,852 138,840 102,580 46,153

Non-Agricultural Wage & Salary Employment (3)

2017 Change from (2) 2012 2013 2014 2015 2016 2017 2012 2013 2014 2015 2016 Total Nonfarm Payroll Employment 1,006,600 1,026,900 1,073,900 1,111,400 1,144,500 1,177,100 170,500 150,200 103,200 65,700 32,600 Total Private 861,600 884,200 927,700 961,400 991,000 1,019,200 157,600 135,000 91,500 57,800 28,200 Mining and logging 1,000 1,000 1,200 1,200 1,300 1,300 300 300 100 100 0 Construction 48,200 51,000 55,400 55,800 61,900 69,100 20,900 18,100 13,700 13,300 7,200 Manufacturing 114,200 115,600 117,700 121,800 122,700 126,100 11,900 10,500 8,400 4,300 3,400 Trade, transportation, and utilities 193,600 197,900 201,000 207,200 210,400 213,900 20,300 16,000 12,900 6,700 3,500 Information 22,500 22,900 23,500 24,500 25,000 24,100 1,600 1,200 600 -400 -900 Financial activities 62,200 62,800 64,500 66,400 68,100 68,700 6,500 5,900 4,200 2,300 600 Professional and business services 138,700 144,900 163,200 170,900 176,500 180,900 42,200 36,000 17,700 10,000 4,400 Educational and health services 145,200 147,800 155,800 161,200 165,300 167,800 22,600 20,000 12,000 6,600 2,500 Leisure and hospitality 99,700 103,000 107,500 113,300 118,200 126,000 26,300 23,000 18,500 12,700 7,800 Other services 36,500 37,400 37,900 39,200 41,600 41,300 4,800 3,900 3,400 2,100 -300 Government 145,000 142,700 146,200 149,900 153,600 157,900 12,900 15,200 11,700 8,000 4,300 (1) Civilian labor force includes employed and unemployed individuals 16 years and older by place of residence. Employed includes nonfarm payroll employment, self-employed, unpaid family workers, domestics, agriculture and labor disputants. Data are adjusted for multiple job-holding and commuting. (2) Data for month of June 2017; preliminary and subject to change. (3) Nonfarm payroll data are based on the 1987 Standard Industrial Classification manual. The data are by place of work. Persons working multiple jobs are counted more than once. The data excludes the self-employed, volunteers, unpaid family workers, and domestics. Source: State of Oregon Employment Department, July 2017.

44 Major Employers in the Portland PMSA No. Company Service Location Employees State Government Government Regional 23,300 (1) Intel Corporation Semiconductor integrated circuits Hillsboro 19,500 (2) U.S. Government Government Regional 18,200 (1) Providence Health System Health care services Portland 17,378 (2) Oregon Health & Science University Education and health care Portland 15,424 (2) Fred Meyer Stores Grocery/retail Portland 11,200 (2) Kaiser Foundation Health Plan of the NW Health Care Portland 10,269 (2) Legacy Health System Health Care Portland 9,300 (2) Nike, Inc(3) Sports shoes and apparel Beaverton 8,500 (2) Portland Public Schools Education Portland 7,678 (2) Multnomah County Government Portland 6,189 (2) City of Portland Government Portland 5,667 (2) Beaverton School District Education Beaverton 4,903 (2) Wells Fargo Finance Portland 4,350 (2) PeaceHealth Southwest Washington Medical Health Care Vancouver 4,253 (2) Portland State University Education Portland 4,135 (2) U.S. Bank Finance Portland 3,876 (2) Portland Community College Education Portland 3,837 (2) U.S. Postal Service Mail services Regional 3,630 (2) U.S. Department of Veterans Affairs Federal agency Regional 3,424 (2) Vancouver School District Education Vancouver 3,300 (2) New Seasons Market Retail Regional 3,231 (2) Tri-Met Mass Transit Portland 2,837 (2) Daimler Trucks NA (Freightliner Corporation) Heavy duty trucks Portland 2,800 (2) Hillsboro School District Education Hillsboro 2,605 (2) Coho Distributing LLC Alcoholic beverage wholesaler Portland 2,600 (4) Children's Creative Learning Center, Inc. Childcare services Regional 2,400 (4) Portland General Electric Utility Regional 2,320 (2) The Standard Insurance Portland 2,262 (2) Clackamas County Government Oregon City 2,228 (2) David Douglas School District Education Portland 2,200 (4) North Clackamas Schools Education Milwaukie 2,187 (2) Oregon Department of Human Services Social Services Regional 2,058 (2) Cambia Health Solutions Health insurance Portland 2,051 (2) Washington County Government Hillsboro 1,891 (2)

(1) Source: Portland Business Journal "The List: Largest Metro-Area Employers" published July 5, 2016. (2) Source: Hoover's business database, November 2016. (3) Nike recently announced it will cut its global workforce by two percent (estimated at 1,400 positions) as part of a broad restructure. It is unclear how many of the eliminated positions will be in the Portland area. Source: The Oregonian. (4) Source: Oregon Employment Department; data for September 2016; may include part-time, seasonal and temporary employees.

45 Building Permits. Residential building permits are an indicator of growth within a region. The number and valuation of new single-family and multi-family residential building permits in the City of Portland are listed below:

City of Portland Residential Building Permits New Single Family New Multi Family Total Year Number Construction Cost Number Units Construction Cost Construction Cost 2017 (1) 347$ 94,987,983 75 1,770 $ 334,511,192 $ 429,499,175 2016 1,109 303,000,628 182 4,079 581,205,212 884,205,840 2015 1,082 286,826,925 150 3,750 481,613,371 768,440,296 2014 864 222,133,721 121 4,226 569,555,470 791,689,191 2013 851 203,817,573 106 3,004 287,252,929 491,070,502 2012 721 168,021,755 65 1,656 166,739,286 334,761,041 (1) As of May 2017. Source: U.S. Census Bureau, July 2017.

Transportation. The Portland area is a major transportation hub of the Pacific Northwest. Located at the confluence of the Columbia and Willamette rivers, Portland is approximately 110 river miles from the Pacific Ocean at Astoria. Major north-south (I-5) and east-west (I-84) highways connect the area with other major metropolitan areas of the western states. BNSF Railway Company (Burlington Northern Santa Fe) and Union Pacific railroads provide rail freight service to the area and Amtrak provides rail passenger service. Interstate bus transportation is available through Greyhound and local bus service is provided by the Tri-County Metropolitan Transportation District (Tri-Met).

Commercial air transportation is available at Portland International Airport (“PDX”). PDX, operated by the Port of Portland (the “Port”), is served by 17 scheduled passenger air carriers and three charter services. Fourteen cargo carriers service PDX. The Port also operates three general aviation airports in Troutdale, Hillsboro and Mulino. The Hillsboro Airport, 29 miles west of the City of Portland, is the State’s second busiest general aviation site and maintains the largest corporate jet fleet in the state.

Higher Education. Institutions of higher learning in the area include independent institutions such as Reed College, Lewis and Clark College, Pacific University, and church-affiliated institutions such as the University of Portland, Warner Pacific College, Concordia University, and Columbia Pacific College. Portland State University, which is part of the Oregon University System of Higher Education, and the Oregon Health and Science University are also located in Multnomah County. Portland Community College, Mt. Hood Community College, and Clackamas Community College are part of the State’s community college system.

Superfund. Superfund sites are listed on the National Priories List (“NPL”) upon completion of hazard ranking system screening, public solicitation of comments about the proposed site, and after all comments have been addressed. The identification of a site for the NPL is intended primarily to guide the U.S. Environmental Protection Agency (EPA) in determining which sites warrant further investigation, identifying remedial actions, notifying the public, and serving notice to potentially responsible parties. Inclusion of a site on the NPL does not in itself reflect a judgment of the activities of its owner or operator. There are two superfund sites inside Multnomah County.

Additional information pertaining to the superfund sites is available at local libraries, the Oregon Department of Environmental Quality or the EPA Region 10 Superfund Records Center.

The Initiative and Referendum Process

Article IV, Section 1 of the Oregon Constitution reserves to the people of the State the initiative power to amend the State Constitution or to enact legislation by placing measures on the statewide general election 46 ballot for consideration by the voters. Oregon law therefore permits any registered Oregon voter to file a proposed initiative with the Oregon Secretary of State’s office without payment of fees or other burdensome requirements. Consequently, a large number of initiative measures are submitted to the Oregon Secretary of State’s office, and a much smaller number of petitions obtain sufficient signatures to be placed on the ballot.

Because many proposed statewide initiative measures are submitted to the Oregon Secretary of State’s office that that do not qualify for the ballot, the District does not formally or systematically monitor the impact of those measures or estimate their financial effect prior to the time the measures qualify for the ballot. The District also does not formally or systematically monitor efforts to qualify measures for the ballot that would initiate new provisions for, or amend, the District’s charter and ordinances. Consequently, the District does not ordinarily disclose information about proposed initiative measures that have not qualified for the ballot.

Pursuant to ORS 250.125, a five-member Committee composed of the Secretary of State, the State Treasurer, the Director of the Department of Revenue, the Director of the Department of Administrative Services, and a local government representative must prepare an estimate of the direct financial impact of each measure (“Financial Estimate Statements”) to be printed in the voters’ pamphlet and on the ballot.

Referendum “Referendum” generally means measures that have been passed by a legislative body, such as the Legislative Assembly or the governing body of a district, county or other political subdivision and referred to the electors by the legislative body, or by petition prior to the measure’s effective date.

In Oregon, both houses of the Legislative Assembly must vote to refer a statute or constitutional amendment for a popular vote. Such referrals cannot be vetoed by the governor. Any change to the Oregon Constitution passed by the Legislative Assembly requires referral to voters. In the case of a referendum by petition, proponents of the referendum must obtain a specified number of signatures from qualified voters. The required number of signatures is equal to four percent of the votes cast for all candidates for governor at the preceding gubernatorial election.

There were three referendums on the November 2016 ballot, two of which were approved by voters.

Initiative Process To place a proposed statewide initiative on a general election ballot, the proponents must submit to the Secretary of State initiative petitions signed by the number of qualified voters equal to a specified percentage of the total number of votes cast for all candidates for governor at the gubernatorial election at which a governor was elected for a term of four years next preceding the filing of the petition with the Secretary of State. Any elector may sign an initiative petition for any measure on which the elector is entitled to vote. Statewide initiatives may only be filed for general elections in even-numbered years.

A statewide initiative petition must be submitted to the Secretary of State not less than four months prior to the general election at which the proposed measure is to be voted upon. As a practical matter, proponents of an initiative have approximately two years in which to gather the necessary number of signatures. State law permits persons circulating initiative petitions to pay money to persons obtaining signatures for the petition. Once an initiative measure has gathered a sufficient number of signatures and qualified for placement on the ballot, the State is required to prepare a formal estimate of the measure’s financial impact. Typically, this estimate is limited to an evaluation of the direct dollar impact.

47 Historical Initiative Petitions. Historically, a larger number of initiative measures have qualified for the ballot than have been approved by the electors. According to the Elections Division of the Secretary of State, the total number of initiative petitions that qualified for the ballot and the numbers that passed in recent general elections are as follows:

Recent Initiative Petitions

Number of Year of Number of Initiatives Initiatives that General Election that Qualified were Approved 2008 8 0 2010 4 2 2012 7 2 2014 4 2 2016 4 3

Source: Elections Division, Oregon Secretary of State, Initiative, Referendum and Referral Log, Elections Division.

November 2016 Election. Three measures were approved at the November 2016 election. Measure 96 (“M96”) re- allocates net lottery proceeds by dedicating 1.5% of net lottery proceeds to a fund to be used for veterans’ services. The State of Oregon estimates that during the 2017-2019 biennium this measure will result in re- allocation of approximately $9.3 million annually from economic development and education expenditures of net lottery proceeds.

Legal Matters and Litigation

Legal Matters Legal matters incident to the authorization, issuance and sale of Bonds are subject to the approving legal opinion of Bond Counsel, substantially in the form attached hereto as Appendix A. Bond Counsel has reviewed this document only to confirm that the portions of it describing the Bonds and the authority to issue them conform to the Bonds and the applicable laws under which they are issued.

Litigation There is no litigation pending questioning the validity of the Bonds nor the power and authority of the District to issue the Bonds. There is no litigation pending which would materially affect the finances of the District or affect the District’s ability to meet debt service requirements on the Bonds.

Under the Oregon law local public bodies, such as the District, are subject to the following limits on liability. The State of Oregon is subject to different limits.

Personal Injury and Death Claim. The liability of a local public body and its officers, employees and agents acting within the scope of their employment or duties, to any single claimant for covered personal injury or death claims (and not property claims) arising out of a single accident or occurrence may not exceed $500,000, for causes of action arising on or after July 1, 2009, and before July 1, 2010. From July 1, 2010 through June 30, 2017, this cap increases incrementally to $691,200. The liability limits to all claimants for covered personal injury or death claims (and not property claims) arising from a single accident or occurrence increase from $1 million, for causes of action arising on or after July 1, 2009, and before July 1, 2010, incrementally to $1,382,300, for causes of action arising on or after July 1, 2016, and before July 1, 2017.

For causes of action arising on or after July 1, 2017, the liability limits for both a single claimant and all claimants will be adjusted based on a determination by a State Court Administrator of the percentage increase or decrease in the cost of living for the previous calendar year as provided in the statutory formula. The adjustment may not exceed three percent for any year.

48 Property Damage or Destruction Claim. The liability limits of a public body and its officers, employees and agents acting within the scope of their employment or duties, for covered claims for damage and destruction of property that arise from causes of action arising on or after July 1, 2009: (a) $100,000, adjusted as described below, to any single claimant, and (b) $500,000, adjusted as described below, to all claimants.

Beginning in 2010, these liability limits have been adjusted based on a determination by a State Court Administrator of the percentage increase or decrease in the cost of living for the previous calendar year as provided in the statutory formula. The adjustment may not exceed three percent for any year. The liability limits for causes of action arising on or after July 1, 2016, and before July 1, 2017, are $113,400 for a single claimant and $566,900 for all claimants.

Tax Matters - 2017A Bonds

Opinion of Bond Counsel In the opinion of Hawkins Delafield & Wood LLP, Bond Counsel to the District (“Bond Counsel”), interest on the 2017A Bonds (i) is included in gross income for federal income tax purposes pursuant to the Internal Revenue Code of 1986, as amended (the “Code”) and (ii) is exempt, under existing statutes, from personal income taxes imposed by the State of Oregon.

The following discussion is a brief summary of the principal United States federal income tax consequences of the acquisition, ownership and disposition of 2017A Bonds by original purchasers of the 2017A Bonds who are “U.S. Holders”, as defined herein. This summary (i) is based on the Code, Treasury Regulations, revenue rulings and court decisions, all as currently in effect and all subject to change at any time, possibly with retroactive effect; (ii) assumes that the 2017A Bonds will be held as “capital assets”; and (iii) does not discuss all of the United States federal income tax consequences that may be relevant to a holder in light of its particular circumstances or to holders subject to special rules, such as insurance companies, financial institutions, tax-exempt organizations, dealers in securities or foreign currencies, persons holding the 2017A Bonds as a position in a “hedge” or “straddle”, holders whose functional currency (as defined in Section 985 of the Code) is not the United States dollar, holders who acquire 2017A Bonds in the secondary market, or individuals, estates and trusts subject to the tax on unearned income imposed by Section 1411 of the Code.

Holders of 2017A Bonds should consult with their own tax advisors concerning the United States federal income tax and other consequences with respect to the acquisition, ownership and disposition of the 2017A Bonds as well as any tax consequences that may arise under the laws of any state, local or foreign tax jurisdiction.

Original Issue Discount In general, if Original Issue Discount (“OID”) is greater than a statutorily defined de minimis amount, a holder of a 2017A Bond having a maturity of more than one year from its date of issue must include in federal gross income (for each day of the taxable year, or portion of the taxable year, in which such holder holds such 2017A Bond) the daily portion of OID, as it accrues (generally on a constant yield method) and regardless of the holder’s method of accounting. “OID” is the excess of (i) the “stated redemption price at maturity” over (ii) the “issue price”. For purposes of the foregoing: “issue price” means the first price at which a substantial amount of the 2017A Bond is sold to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers); “stated redemption price at maturity” means the sum of all payments, other than “qualified stated interest”, provided by such 2017A Bond; “qualified stated interest” is stated interest that is unconditionally payable in cash or property (other than debt instruments of the District) at least annually at a single fixed rate; and “de minimis amount” is an amount equal to 0.25 percent of the 2017A Bond’s stated redemption price at maturity multiplied by the number of complete years to its maturity. A holder may irrevocably elect to include in gross income all interest that accrues on a 2017A Bond using the constant-yield method, subject to certain modifications.

49 Acquisition Discount on Short-Term Taxable Bonds Each holder of an 2017A Bond with a maturity not longer than one year (a “Short-Term Taxable Bond”) is subject to rules of Sections 1281 through 1283 of the Code, if such holder is an accrual method taxpayer, bank, regulated investment company, common trust fund or among certain types of pass-through entities, or if the Short-Term Taxable Bond is held primarily for sale to customers, is identified under Section 1256(e)(2) of the Code as part of a hedging transaction, or is a stripped bond or coupon held by the person responsible for the underlying stripping transaction. In any such instance, interest on, and “acquisition discount” with respect to, the Short-Term Taxable Bond accrue on a ratable (straight-line) basis, subject to an election to accrue such interest and acquisition discount on a constant interest rate basis using daily compounding. “Acquisition discount” means the excess of the stated redemption price of a Short-Term Taxable Bond at maturity over the holder’s tax basis therefor.

A holder of a Short-Term Taxable Bond not described in the preceding paragraph, including a cash-method taxpayer, must report interest income in accordance with the holder’s regular method of tax accounting, unless such holder irrevocably elects to accrue acquisition discount currently.

Bond Premium In general, if a 2017A Bond is originally issued for an issue price (excluding accrued interest) that reflects a premium over the sum of all amounts payable on the 2017A Bond other than “qualified stated interest” (a “Taxable Premium Bond”), that Taxable Premium Bond will be subject to Section 171 of the Code, relating to bond premium. In general, if the holder of a Taxable Premium Bond elects to amortize the premium as “amortizable bond premium” over the remaining term of the Taxable Premium Bond, determined based on constant yield principles (in certain cases involving a Taxable Premium Bond callable prior to its stated maturity date, the amortization period and yield may be required to be determined on the basis of an earlier call date that results in the highest yield on such bond), the amortizable premium is treated as an offset to interest income; the holder will make a corresponding adjustment to the holder’s basis in the Taxable Premium Bond. Any such election is generally irrevocable and applies to all debt instruments of the holder (other than tax-exempt bonds) held at the beginning of the first taxable year to which the election applies and to all such debt instruments thereafter acquired. Under certain circumstances, the holder of a Taxable Premium Bond may realize a taxable gain upon disposition of the Taxable Premium Bond even though it is sold or redeemed for an amount less than or equal to the holder's original acquisition cost.

Disposition and Defeasance Generally, upon the sale, exchange, redemption, or other disposition (which would include a legal defeasance) of a 2017A Bond, a holder generally will recognize taxable gain or loss in an amount equal to the difference between the amount realized (other than amounts attributable to accrued interest not previously includable in income) and such holder’s adjusted tax basis in the 2017A Bond.

The District may cause the deposit of moneys or securities in escrow in such amount and manner as to cause the 2017A Bonds to be deemed to be no longer outstanding (a “defeasance”). For federal income tax purposes, such defeasance could result in a deemed exchange under Section 1001 of the Code and a recognition by such owner of taxable income or loss, without any corresponding receipt of moneys. In addition, the character and timing of receipt of payments on the 2017A Bonds subsequent to any such defeasance could also be affected.

Information Reporting and Backup Withholding In general, information reporting requirements will apply to non-corporate holders of the 2017A Bonds with respect to payments of principal, payments of interest, and the accrual of OID on a Bond and the proceeds of the sale of a 2017A Bond before maturity within the United States. Backup withholding may apply to holders of Bonds under Section 3406 of the Code. Any amounts withheld under the backup withholding rules from a payment to a beneficial owner, and which constitutes over-withholding, would be allowed as a refund or a credit against such beneficial owner’s United States federal income tax provided the required information is furnished to the Internal Revenue Service.

50 U.S. Holders The term “U.S. Holder” means a beneficial owner of a 2017A Bond that is: (i) a citizen or resident of the United States, (ii) a corporation, partnership or other entity created or organized in or under the laws of the United States or of any political subdivision thereof, (iii) an estate the income of which is subject to United States federal income taxation regardless of its source or (iv) a trust whose administration is subject to the primary jurisdiction of a United States court and which has one or more United States fiduciaries who have the authority to control all substantial decisions of the trust.

Tax Matters – 2017B Bonds

Opinion of Bond Counsel In the opinion of Bond Counsel, under existing statutes and court decisions and assuming continuing compliance with certain tax covenants described herein, (i) interest on the 2017B Bonds is excluded from gross income for federal income tax purposes pursuant to Section 103 of the Internal Revenue Code of 1986, as amended (the “Code”), and (ii) interest on the 2017B Bonds is not treated as a preference item in calculating the alternative minimum tax imposed on individuals and corporations under the Code; such interest, however, is included in the adjusted current earnings of certain corporations for purposes of calculating the alternative minimum tax imposed on such corporations. In rendering its opinion, Bond Counsel has relied on certain representations, certifications of fact, and statements of reasonable expectations made by the District in connection with the 2017B Bonds, and Bond Counsel has assumed compliance by the District with certain ongoing covenants to comply with applicable requirements of the Code to assure the exclusion of interest on the 2017B Bonds from gross income under Section 103 of the Code.

In addition, in the opinion of Bond Counsel to the District, under existing statutes, interest on the 2017B Bonds is exempt from State of Oregon personal income tax.

Bond Counsel expresses no opinion regarding any other federal or state tax consequences with respect to the 2017B Bonds. Bond Counsel renders its opinion under existing statutes and court decisions as of the issue date, and assumes no obligation to update, revise or supplement its opinion to reflect any action hereafter taken or not taken, or any facts or circumstances that may hereafter come to its attention, or changes in law or in interpretations thereof that may hereafter occur, or for any other reason. Bond Counsel expresses no opinion on the effect of any action hereafter taken or not taken in reliance upon an opinion of other counsel on the exclusion from gross income for federal income tax purposes of interest on the 2017B Bonds, or under state and local tax law.

Certain Ongoing Federal Tax Requirements and Covenants The Code establishes certain ongoing requirements that must be met subsequent to the issuance and delivery of the 2017B Bonds in order that interest on the Bonds be and remain excluded from gross income under Section 103 of the Code. These requirements include, but are not limited to, requirements relating to use and expenditure of gross proceeds of the 2017B Bonds, yield and other restrictions on investments of gross proceeds, and the arbitrage rebate requirement that certain excess earnings on gross proceeds be rebated to the federal government. Noncompliance with such requirements may cause interest on the 2017B Bonds to become included in gross income for federal income tax purposes retroactive to their issue date, irrespective of the date on which such noncompliance occurs or is discovered. The District has covenanted to comply with certain applicable requirements of the Code to assure the exclusion of interest on the 2017B Bonds from gross income under Section 103 of the Code.

Certain Collateral Federal Tax Consequences The following is a brief discussion of certain collateral federal income tax matters with respect to the 2017B Bonds. It does not purport to address all aspects of federal taxation that may be relevant to a particular owner of a 2017B Bond. Prospective investors, particularly those who may be subject to special rules, are advised to consult their own tax advisors regarding the federal tax consequences of owning and disposing of the 2017B Bonds. 51 Prospective owners of the 2017B Bonds should be aware that the ownership of such obligations may result in collateral federal income tax consequences to various categories of persons, such as corporations (including S corporations and foreign corporations), financial institutions, property and casualty and life insurance companies, individual recipients of Social Security and railroad retirement benefits, individuals otherwise eligible for the earned income tax credit, and taxpayers deemed to have incurred or continued indebtedness to purchase or carry obligations the interest on which is excluded from gross income for federal income tax purposes. Interest on the 2017B Bonds may be taken into account in determining the tax liability of foreign corporations subject to the branch profits tax imposed by Section 884 of the Code.

Original Issue Discount “Original issue discount” (“OID”) is the excess of the sum of all amounts payable at the stated maturity of a 2017B Bond (excluding certain “qualified stated interest” that is unconditionally payable at least annually at prescribed rates) over the issue price of that maturity. In general, the “issue price” of a maturity means the first price at which a substantial amount of the 2017B Bonds of that maturity was sold (excluding sales to bond houses, brokers, or similar persons acting in the capacity as underwriters, placement agents, or wholesalers). In general, the issue price for each maturity of Bonds is expected to be the initial public offering price set forth on the cover page of the Official Statement. Bond Counsel further is of the opinion that, for any Bonds having OID (a “Discount Bond”), OID that has accrued and is properly allocable to the owners of the Discount Bonds under Section 1288 of the Code is excludable from gross income for federal income tax purposes to the same extent as other interest on the 2017B Bonds.

In general, under Section 1288 of the Code, OID on a Discount Bond accrues under a constant yield method, based on periodic compounding of interest over prescribed accrual periods using a compounding rate determined by reference to the yield on that Discount Bond. An owner’s adjusted basis in a Discount Bond is increased by accrued OID for purposes of determining gain or loss on sale, exchange, or other disposition of such 2017B Bond. Accrued OID may be taken into account as an increase in the amount of tax-exempt income received or deemed to have been received for purposes of determining various other tax consequences of owning a Discount Bond even though there will not be a corresponding cash payment.

Owners of Discount Bonds should consult their own tax advisors with respect to the treatment of original issue discount for federal income tax purposes, including various special rules relating thereto, and the state and local tax consequences of acquiring, holding, and disposing of Discount Bonds.

Bond Premium In general, if an owner acquires a 2017B Bond for a purchase price (excluding accrued interest) or otherwise at a tax basis that reflects a premium over the sum of all amounts payable on the 2017B Bond after the acquisition date (excluding certain “qualified stated interest” that is unconditionally payable at least annually at prescribed rates), that premium constitutes “bond premium” on that Bond (a “Premium Bond”). In general, under Section 171 of the Code, an owner of a Premium Bond must amortize the bond premium over the remaining term of the Premium Bond, based on the owner’s yield over the remaining term of the Premium Bond determined based on constant yield principles (in certain cases involving a Premium Bond callable prior to its stated maturity date, the amortization period and yield may be required to be determined on the basis of an earlier call date that results in the lowest yield on such bond). An owner of a Premium Bond must amortize the bond premium by offsetting the qualified stated interest allocable to each interest accrual period under the owner’s regular method of accounting against the bond premium allocable to that period. In the case of a tax- exempt Premium Bond, if the bond premium allocable to an accrual period exceeds the qualified stated interest allocable to that accrual period, the excess is a nondeductible loss. Under certain circumstances, the owner of a Premium Bond may realize a taxable gain upon disposition of the Premium Bond even though it is sold or redeemed for an amount less than or equal to the owner’s original acquisition cost. Owners of any Premium Bonds should consult their own tax advisors regarding the treatment of bond premium for federal income tax purposes, including various special rules relating thereto, and state and local tax consequences, in connection with the acquisition, ownership, amortization of bond premium on, sale, exchange, or other disposition of Premium Bonds.

52 Information Reporting and Backup Withholding Information reporting requirements apply to interest paid on tax-exempt obligations, including the 2017B Bonds. In general, such requirements are satisfied if the interest recipient completes, and provides the payor with, a Form W-9, “Request for Taxpayer Identification Number and Certification,” or if the recipient is one of a limited class of exempt recipients. A recipient not otherwise exempt from information reporting who fails to satisfy the information reporting requirements will be subject to “backup withholding,” which means that the payor is required to deduct and withhold a tax from the interest payment, calculated in the manner set forth in the Code. For the foregoing purpose, a “payor” generally refers to the person or entity from whom a recipient receives its payments of interest or who collects such payments on behalf of the recipient.

If an owner purchasing a 2017B Bond through a brokerage account has executed a Form W-9 in connection with the establishment of such account, as generally can be expected, no backup withholding should occur. In any event, backup withholding does not affect the excludability of the interest on the 2017B Bonds from gross income for federal income tax purposes. Any amounts withheld pursuant to backup withholding would be allowed as a refund or a credit against the owner’s federal income tax once the required information is furnished to the Internal Revenue Service.

Miscellaneous Tax legislation, administrative actions taken by tax authorities, or court decisions, whether at the federal or state level, may adversely affect the tax-exempt status of interest on the 2017B Bonds under federal or state law or otherwise prevent beneficial owners of the Bonds from realizing the full current benefit of the tax status of such interest. In addition, such legislation or actions (whether currently proposed, proposed in the future, or enacted) and such decisions could affect the market price or marketability of the 2017B Bonds.

Prospective purchasers of the 2017B Bonds should consult their own tax advisors regarding the foregoing matters.

Continuing Disclosure

The Securities and Exchange Commission Rule 15c2-12 (the “Rule”) requires at least annual disclosure of current financial information and timely disclosure of certain events with respect to the Bonds. Pursuant to the Rule, the District has agreed to provide audited financial information and certain financial information or operating data at least annually, and timely notice of certain events (collectively, “Continuing Disclosure”) to the MSRB through its EMMA system (so long as such method of disclosure continues to be approved by the Securities and Exchange Commission for such purposes).

Prior Undertakings. During the previous five fiscal years, the District has been obligated to provide Continuing Disclosure filings for its Full Faith and Credit Refunding Obligations, Series 2004 and Full Faith and Credit Bonds, Series 2007A and 2007B; General Obligation Bonds, Series 2013A and 2013B; General Obligation Bonds, Series 2015A and 2015B; Limited Tax Pension Obligations, Series 2002A and 2002B, Limited Tax Pension Obligations, Series 2003A and 2003B and Limited Tax Pension Refunding Obligations, Series 2012 (collectively, “Outstanding Debt”). The District’s undertakings for its General Obligation Bonds and Full Faith and Credit Obligations require its annual financial information filing by within nine months of the end of the Fiscal Year (March 30). The District’s undertakings for the Pension Obligations require its annual financial information filing within 270 days of the end of the Fiscal Year (usually March 27). Other than as noted below, the District has complied in all material respects with its continuing disclosure requirements under the Rule in the past five years.

Failure to File – Annual Financial Information/Operating Data. Each of the District’s undertakings has a different list of financial information which the District agreed to update annually. Certain annual financial information was not included in the audited financial statements for Fiscal Year 2016 and was subsequently filed by the District on July 7, 2017.

53 The District has updated their annual filing checklist to include the additional operating data and check future new continuing disclosure certificates for any additional requirements in order to maintain compliance in the future. A copy of the form of the District’s Continuing Disclosure Certificate for the Bonds is attached hereto as Appendix D.

Financial Advisor

In connection with the authorization and issuance of the Bonds, the District has retained Piper Jaffray & Co., Portland, Oregon, as its Financial Advisor (the “Financial Advisor”).

The Financial Advisor is not obligated to undertake, and has not undertaken, either to make an independent verification of or to assume responsibility for, the accuracy, completeness, or fairness of the information contained in this Official Statement.

Preliminary Official Statement

The District has executed a “deemed final” letter that deemed final the Preliminary Official Statement pursuant to Securities and Exchange Commission Rule 15c2-12 (except for the omission of the following information: offering prices, interest rates, selling compensation, aggregate principal amount, principal amount per maturity, delivery dates, credit enhancement, if any, ratings, insurance, and other terms of the securities depending on such matters). The District has also represented to the Financial Advisor that the information in this Preliminary Official Statement, except for matters relating to DTC and its book-entry system, the State and the State School Bond Guaranty, the Paying Agent, and the statement regarding the Financial Advisor in the second italicized paragraph on page ii, does not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

Ratings

As noted on the cover page of this Official Statement, Moody’s Investors Service and S&P Global Ratings, a Division of Standard & Poor’s Financial Services LLC, have assigned their underlying ratings of “Aa2” and “AA-,” respectively, to the Bonds. Moody’s Investors Service and Standard & Poor’s have also assigned their ratings of “Aa1” and “AA+,” respectively to the Bonds based on the District’s participation in the Oregon School Bond Guaranty program. See “Security for the Bonds – Oregon School Bond Guaranty” herein. There is no assurance that the ratings will be retained for any given period of time or that the ratings will not be revised downward or withdrawn entirely by the rating agencies if, in their judgment, circumstances so warrant. Any such downward revision or withdrawal of the ratings will be likely to have an adverse effect on the market price of the Bonds.

Purchaser of the 2017ABonds

The 2017A Bonds are being purchased by ______and they will receive compensation of $______. The purchaser of the 2017A Bonds may offer and sell the 2017A Bonds to certain dealers (including dealers depositing the 2017A Bonds into investment trusts) and others at prices lower than the initial offering prices corresponding to the yields set forth on page i of this Official Statement, and such initial offering prices may be changed from time to time by such purchaser. After the initial public offering, the public offering prices may be varied from time to time.

In connection with the offering of the 2017A Bonds, the purchaser of the 2017A Bonds may overallot or effect transactions which stabilize or maintain the market price of the 2017A Bonds at levels above that which might otherwise prevail in the open market. Such stabilizing, if commenced, may be discontinued or recommenced at any time.

54 Purchaser of the 2017B Bonds

The 2017B Bonds are being purchased by ______and they will receive compensation of $______. The purchaser of the Bonds may offer and sell the 2017B Bonds to certain dealers (including dealers depositing the 2017B Bonds into investment trusts) and others at prices lower than the initial offering prices corresponding to the yields set forth on page i of this Official Statement, and such initial offering prices may be changed from time to time by such purchaser. After the initial public offering, the public offering prices may be varied from time to time.

In connection with the offering of the 2017B Bonds, the purchaser of the 2017B Bonds may overallot or effect transactions which stabilize or maintain the market price of the 2017B Bonds at levels above that which might otherwise prevail in the open market. Such stabilizing, if commenced, may be discontinued or recommenced at any time.

Certificate with Respect to Official Statement

At the time of the original delivery of and payment for the Bonds, the District will deliver a certificate of its authorized representative to the effect that he has examined this Official Statement and the financial and other data concerning the District contained herein and that to the best of his knowledge and belief, (i) the Official Statement, both as of its date and as of the date of delivery of the Bonds, does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading and (ii) between the date of the Official Statement and the date of delivery of the Bonds there has been no material adverse change in the affairs (financial or other), financial condition or results of operations of the District except as set forth in or contemplated by the Official Statement.

Appendix A

Form of Bond Counsel Opinion

______, 2017

School District No. 1J, Multnomah County, Oregon 501 N. Dixon Street Portland, Oregon 97227 Subject: $__,000,000 School District No. 1J, Multnomah County, Oregon (Portland Public Schools) Multnomah, Washington and Clackamas Counties, Oregon General Obligation Bonds, Series 2017A (Federally Taxable) Ladies and Gentlemen: We have acted as bond counsel in connection with the issuance by School District No. 1J, Multnomah County, Oregon (Portland Public Schools), in Multnomah, Washington and Clackamas Counties, Oregon (the “District”) of its General Obligation Bonds, Series 2017A (Federally Taxable) (the “Series 2017A Bonds”), which are dated the date of their delivery and are in the aggregate principal amount of $__,000,000. The Series 2017A Bonds are authorized by the applicable provisions of Oregon Revised Statutes Chapter 287A, an authorizing vote of the electors of the District at the May 16, 2017 election, District Resolution No. 5472 adopted June 20, 2017 (the “Resolution”), and a Bond Declaration for the Series 2017A Bonds (the “Bond Declaration”) that is dated as of the date of issuance of the Series 2017A Bonds. We have examined the law and such certified proceedings and other documents as we deem necessary to render this opinion. We have not been engaged or undertaken to review the accuracy, completeness or sufficiency of the official statement or other offering materials which have been or may be supplied to the purchasers of the Series 2017A Bonds, and we express no opinion relating thereto, excepting only the matters set forth as our opinion in the official statement. Regarding questions of fact material to our opinion, we have relied on representations of the District in the Resolution and in the certified proceedings and on other certifications of public officials and others furnished to us without undertaking to verify the same by independent investigation. Based on the foregoing, we are of the opinion that, under existing law: 1. The Series 2017A Bonds have been legally authorized, sold and issued under and pursuant to the Constitution and Statutes of the State of Oregon, the Resolution and the Bond Declaration. The Series 2017A Bonds constitute valid and legally binding general obligations of the District that are enforceable in accordance with their terms. 2. Pursuant to ORS Section 287A.315, the District has pledged its full faith and credit and taxing power to the payment of the Series 2017A Bonds. In addition, the Series 2017A Bonds are payable from ad valorem taxes which may be levied without limitation as to rate or amount on all taxable property within the boundaries of the District.

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3. Interest on the Series 2017A Bonds is not excludable from gross income for federal income tax purposes pursuant to the Internal Revenue Code of 1986, as amended. 4. Interest on the Series 2017A Bonds is exempt from Oregon personal income tax. Except as stated in paragraphs 3 and 4, above, we express no opinion as to any other federal, state or local tax consequences arising with respect to the Series 2017A Bonds or the ownership or disposition thereof. The portion of this opinion that is set forth in paragraph 1, above, is qualified only to the extent that enforceability of the Series 2017A Bonds may be limited by or rendered ineffective by (i) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws affecting creditors’ rights generally; (ii) the application of equitable principles and the exercise of judicial discretion in appropriate cases; (iii) common law and statutes affecting the enforceability of contractual obligations generally; and (iv) principles of public policy concerning, affecting or limiting the enforcement of rights or remedies against governmental entities such as the District. This opinion is given as of the date hereof and is based on existing law, and we assume no obligation to update, revise, or supplement this opinion to reflect any action hereafter taken or not taken, or any facts or circumstances that may hereafter come to our attention or any changes in law or interpretations thereof that may hereafter arise or occur, or for any other reason. This opinion is limited to matters of Oregon law and applicable federal law, and we assume no responsibility as to the applicability of laws of other jurisdictions. This opinion is provided to you as a legal opinion only, and not as a guaranty or warranty of the matters discussed herein. No opinions may be inferred or implied beyond the matters expressly stated herein. No qualification, limitation or exception contained herein shall be construed in any way to limit the scope of the other qualifications, limitations and exceptions. For purposes of this opinion, the terms “law” and “laws” do not include unpublished judicial decisions, and we disclaim the effect of any such decision on this opinion. We have served as bond counsel only to the District in connection with the Series 2017A Bonds and have not represented and are not representing any other party in connection with the Series 2017A Bonds. This opinion is given solely for the benefit of the District in connection with the Series 2017A Bonds and may not be relied on in any manner or for any purpose by any person or entity other than the District and any person to whom we may send a formal reliance letter indicating that the recipient is entitled to rely on this opinion. Very truly yours,

2859724.3 040944 OPN

______, 2017

School District No. 1J, Multnomah County, Oregon 501 N. Dixon Street Portland, Oregon 97227 Subject: $__,000,000 School District No. 1J, Multnomah County, Oregon (Portland Public Schools) Multnomah, Washington and Clackamas Counties, Oregon General Obligation Bonds, Series 2017B (Tax-Exempt) Ladies and Gentlemen: We have acted as bond counsel in connection with the issuance by School District No. 1J, Multnomah County, Oregon (Portland Public Schools), in Multnomah, Washington and Clackamas Counties, Oregon (the “District”) of its General Obligation Bonds, Series 2017B (Tax-Exempt) (the “Series 2017B Bonds”), which are dated the date of their delivery and are in the aggregate principal amount of $__,000,000. The Series 2017B Bonds are authorized by the applicable provisions of Oregon Revised Statutes Chapter 287A, an authorizing vote of the electors of the District at the May 16, 2017 election and the November 6, 2012 election, District Resolution No. 5472 adopted June 20, 2017 (the “Resolution”), and a Bond Declaration for the Series 2017B Bonds (the “Bond Declaration”) that is dated as of the date of issuance of the Series 2017B Bonds. We have examined the law and such certified proceedings and other documents as we deem necessary to render this opinion. We have not been engaged or undertaken to review the accuracy, completeness or sufficiency of the official statement or other offering materials which have been or may be supplied to the purchasers of the Series 2017B Bonds, and we express no opinion relating thereto, excepting only the matters set forth as our opinion in the official statement. Regarding questions of fact material to our opinion, we have relied on representations of the District in the Resolution and in the certified proceedings and on other certifications of public officials and others furnished to us without undertaking to verify the same by independent investigation. Based on the foregoing, we are of the opinion that, under existing law: 1. The Series 2017B Bonds have been legally authorized, sold and issued under and pursuant to the Constitution and Statutes of the State of Oregon, the Resolution and the Bond Declaration. The Series 2017B Bonds constitute valid and legally binding general obligations of the District that are enforceable in accordance with their terms. 2. Pursuant to ORS Section 287A.315 the District has pledged its full faith and credit and taxing power to the payment of the Series 2017B Bonds. In addition, the Series 2017B Bonds are payable from ad valorem taxes which may be levied without limitation as to rate or amount on all taxable property within the boundaries of the District. 3. Under existing statutes and court decisions and assuming continuing compliance with certain tax covenants described below, (i) interest on the Series 2017B Bonds is excluded from gross income for federal income tax purposes pursuant to Section 103 of the Internal Revenue Code of 1986, as amended (the “Code”), and (ii) interest on the Series 2017B Bonds is not treated as a preference item in calculating the alternative minimum tax imposed on individuals and corporations under the Code; such interest, however, is included in the adjusted current earnings of certain corporations for purposes of calculating the alternative minimum tax imposed on such

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corporations. [Bond counsel further is of the opinion that, for any Series 2017B Bonds having original issue discount (a “Discount Bond”), original issue discount that has accrued and is properly allocable to the owners of the Discount Bonds under Section 1288 of the Code is excludable from gross income for federal income tax purposes to the same extent as other interest on the Series 2017B Bonds.] In rendering our opinion, we have relied on certain representations, certifications of fact, and statements of reasonable expectations made by the District, and others in connection with the Series 2017B Bonds, and we have assumed compliance by the District with certain ongoing covenants to comply with applicable requirements of the Code to assure the exclusion of interest on the Series 2017B Bonds from gross income under Section 103 of the Code. The Code establishes certain requirements that must be met subsequent to the issuance and delivery of the Series 2017B Bonds in order that, for federal income tax purposes, interest on the Series 2017B Bonds not be included in gross income pursuant to Section 103 of the Code. These requirements include, but are not limited to, requirements relating to the use and expenditure of proceeds of the Series 2017B Bonds, restrictions on the investment of proceeds of the Series 2017B Bonds prior to expenditure and the requirement that certain earnings be rebated to the federal government. Noncompliance with such requirements may cause interest on the Series 2017B Bonds to become subject to federal income taxation retroactive to the date of issue of the Series 2017B Bonds, irrespective of the date on which such noncompliance occurs or is ascertained. On the date of delivery of the Series 2017B Bonds, the District will execute a Tax Certificate (the “Tax Certificate”) containing provisions and procedures pursuant to which such requirements can be satisfied. In executing the Tax Certificate, the District covenants that it will comply with the provisions and procedures set forth therein and that it will do and perform all acts and things required by the Code to assure that interest paid on the Series 2017B Bonds will, for federal income tax purposes, be excluded from gross income. In rendering the opinion in paragraph 3 hereof, we have relied upon and assumed (i) the material accuracy of the representations, statements of intention and reasonable expectation, and certifications of fact contained in the Tax Certificate with respect to matters affecting the status of interest paid on the Series 2017B Bonds, and (ii) compliance by the District with the procedures and covenants set forth in the Tax Certificate as to such tax matters. 4. Interest on the Series 2017B Bonds is exempt from Oregon personal income tax. Except as stated in paragraphs 3 and 4 above, we express no opinion as to any other federal, state or local tax consequences arising with respect to the Series 2017B Bonds or the ownership or disposition thereof. Furthermore, we express no opinion herein as to the effect of any action hereafter taken or not taken in reliance upon an opinion of counsel other than ourselves on the exclusion from gross income for federal income tax purposes of interest on the Series 2017B Bonds. The portion of this opinion that is set forth in paragraph 1, above, is qualified only to the extent that enforceability of the Series 2017B Bonds may be limited by or rendered ineffective by (i) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws affecting creditors’ rights generally; (ii) the application of equitable principles and the exercise of judicial discretion in appropriate cases; (iii) common law and statutes affecting the enforceability of contractual obligations generally; and (iv) principles of public policy concerning, affecting or limiting the enforcement of rights or remedies against governmental entities such as the District. This opinion is given as of the date hereof and is based on existing law, and we assume no obligation to update, revise, or supplement this opinion to reflect any action hereafter taken or not taken, or any facts or circumstances that may hereafter come to our attention or any changes in law or interpretations thereof that may hereafter arise or occur, or for any other reason. This opinion is limited to matters of Oregon law and applicable federal law, and we assume no responsibility as to the applicability of laws of other jurisdictions.

Legal Opinion ______, 2017 Page 3

This opinion is provided to you as a legal opinion only, and not as a guaranty or warranty of the matters discussed herein. No opinions may be inferred or implied beyond the matters expressly stated herein. No qualification, limitation or exception contained herein shall be construed in any way to limit the scope of the other qualifications, limitations and exceptions. For purposes of this opinion, the terms “law” and “laws” do not include unpublished judicial decisions, and we disclaim the effect of any such decision on this opinion. We have served as bond counsel only to the District in connection with the Series 2017B Bonds and have not represented and are not representing any other party in connection with the Series 2017B Bonds. This opinion is given solely for the benefit of the District in connection with the Series 2017B Bonds and may not be relied on in any manner or for any purpose by any person or entity other than the District and any person to whom we may send a formal reliance letter indicating that the recipient is entitled to rely on this opinion. Very truly yours,

Appendix B

Financial Statements

The District’s Auditor has not performed any further review of the District’s financial statements since the date of the audit contained herein. The Auditor was not requested to review this Official Statement and has not completed any additional auditing procedures subsequent to the issuance of its report on the 2016 Fiscal Year.

School District No. 1J, Multnomah County, Oregon

PORTLAND PUBLIC SCHOOLS

COMPREHENSIVE ANNUAL FINANCIAL REPORT About the Cover

For the year ended June 30, 201 The modernized Roosevelt High School offers the first new PPS high school buildings in nearly 50 years. Roosevelt High School is one of four schools being rebuilt or modernized as part of the 2012 School Building Improvement Bond. Currently both Faubion PK-8 and Franklin High School are under construction, and schematic design is underway at Grant High School.

In late August 2016, Roosevelt students and staff returned to a transformed school. The new buildings included 33 general education classrooms plus several Career Technical Education (CTE) classrooms, a two-court main gymnasium, and three new community program spaces. In early 2017 additional new facilities will open including the new commons/cafeteria, auxiliary gym, and a state of the art theater. In the fall of 2017, the fully renovated historic 1921 building will reopen providing additional new classrooms, the main office, counseling center, and the Albina Head Start facility.

Bond money is also being used to fix leaking and deteriorating roofs and make seismic safety, accessibility and science classroom improvements at up to 63 other schools.

$UWLVW VUHQGHULQJRIWKHPRGHUQL]HG5RRVHYHOW+LJK6FKRRO VFKHGXOHGIRUFRPSOHWLRQLQWKH)DOORI SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON Comprehensive Annual Financial Report For the Year Ended June 30, 2016 Table of Contents

SECTION I - INTRODUCTORY SECTION

Letter of Transmittal i Principal Officials ix Organizational Charts x ASBO Certificate of Excellence in Financial Reporting xii GFOA Certificate of Achievement for Excellence in Financial Reporting xiii

SECTION II - FINANCIAL SECTION

Independent Auditor's Report 1 Management's Discussion and Analysis 4 Basic Financial Statements Government-wide Financial Statements Statement of Net Position 16 Statement of Activities 18 Fund Financial Statements Balance Sheet 20 Reconciliation of the Balance Sheet to the Statement of Net Position 23 Statement of Revenues, Expenditures, and Changes in Fund Balances 24 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities 26 Proprietary Financial Statements Statement of Net Position 27 Statement of Revenues, Expenses, and Changes in Net Position 28 Statement of Cash Flows 29 Notes to the Basic Financial Statements 30 Portland Public Schools Required Supplementary Information Other Postemployment Benefits - Schedule of Funding Progress and Employer Contributions 68 Schedule of the District's Proportionate Share of Net Pension Liability and District Contributions 70 Comprehensive Annual Financial Report Schedules of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual General Fund 72 Grant Fund 74 For the year ended June 30, 2016 PERS Rate Stabilization Reserve Fund 76 Supplementary Information School District No. 1J, Multnomah County, Oregon Combining Statements - Nonmajor Governmental Funds Combining Balance Sheet-Nonmajor Funds Combining by Fund Types 81 Portland, Oregon Special Revenue Funds 82 Debt Service Funds 83 Capital Projects Funds 84 Combining Statement of Revenues, Expenditures and Changes in Fund Balances Prepared by the Accounting and Payroll Services Department Combining by Fund Types 86 Special Revenue Funds 87 Debt Service Funds 88 Capital Projects Funds 90 SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON Comprehensive Annual Financial Report Comprehensive Annual Financial Report For the Year Ended June 30, 2016 For the Year Ended June 30, 2016 Table of Contents (continued) Table of Contents (continued)

SECTION II - FINANCIAL SECTION (continued) SECTION III - STATISTICAL SECTION (continued)

Budgetary Comparison Schedules Debt Capacity Information Schedules of Revenues, Expenditures, and Changes in Fund Balance-Budget and Actual Ratios of Outstanding Debt by Type 126 Governmental Funds Direct and Overlapping Governmental Activities Debt 127 Student Body Activity Fund 94 Legal Debt Margin Information 128 Cafeteria Fund 95 Demographic and Economic Information Dedicated Resource Fund 96 Demographic and Economic Statistics 129 IT Projects Debt Service Fund 98 Principal Employers for the Portland Metro Area 130 PERS UAL Debt Service Fund 99 Operating Information Recovery Zone Debt Service Fund 100 Full Time Equivalent District Employees by Assignment/Function 131 GO Bond Debt Service Fund 101 Meal and Transportation Services Provided 132 Construction Excise Tax Fund 102 School Building and Student Enrollment Information 133 IT System Project Fund 103 Recovery Zone Energy and Water Conservation Fund 104 SECTION IV - AUDIT COMMENTS AND DISCLOSURES SECTION Energy Efficient Schools Fund 105 Facilities Capital Fund 106 Independent Auditor's Report Required by Oregon State Regulations 143 Capital Asset Renewal Fund 107 Partnerships Fund 108 Other Funds GO Bonds Fund 110 Self-Insurance Fund 111 P4

SECTION III - STATISTICAL SECTION

Financial Trends Information Condensed Statement of Net Position 114 Changes in Net Position 116 Fund Balances of Governmental Funds 118 Changes in Fund Balances of Governmental Funds 120 Revenue Capacity Information Assessed Values of Taxable Property within School District No.1J Boundaries 122 Direct and Overlapping Property Tax Rates 123 Principal Property Tax Payers for Multnomah County 124 Property Tax Levies and Collections 125 GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The District’s PORTLAND PUBLIC SCHOOLS MD&A can be found immediately following the Independent Auditor’s Report. 501 North Dixon Street / Portland, OR 97227 Telephone: (503) 916-3200 / Fax: (503) 916-3110 Yousef Awwad Profile of the District Mailing Address: P. O. Box 3107/97208-3107 Chief Financial Officer Email: [email protected] Established in 1851, Portland Public Schools is the largest and oldest school district in the State of Oregon. OFFICE OF THE CFO The District covers an area over 145 square miles and had a population of 460,248 according to the 2010 estimate Census, with 451,258 City of Portland residents (representing 77% of the City total), 2,413 Lake Oswego residents, 1,453 Beaverton residents, and 5,124 unincorporated area residents. The District December 7, 2016 maintains over 100 facilities with a total gross floor area of approximately 9 million square feet. Please see Schedule 16 of the Statistical Section for details of each building’s size, age, and enrollment. To the Community of School District No. 1J, Multnomah County, Oregon, and to the Members of the Board of Education: Student enrollment in the fall of 2016 was 49,232. October enrollment counts are reported to the state in November of each year, allowing time for data entry and confirmation of student records. An enrolled We are pleased to submit the Comprehensive Annual Financial Report (CAFR) of School District No.1J, student is defined as a student who attends one or more schools or programs within the District. Regardless Multnomah County, Oregon (Portland Public Schools or the District or PPS) for the fiscal year ended June of the number of schools or programs attended, each student is counted only once; the counts are 30, 2016, together with the audit opinions thereon of our auditors as required by Oregon Revised Statutes. unduplicated. Responsibility for both the accuracy of the presented data and the completeness and fairness of the presentation, including all disclosures, rests with District management. We believe the financial statements and related information reflecting the financial position and results of the operations of the District are stated fairly in all material aspects. All disclosures necessary to enable the reader to gain maximum understanding of the District’s financial affairs have been included.

To provide a reasonable basis for making these representations, District management has established and maintains an internal control structure designed to ensure that the assets of the District are protected from loss, theft or misuse and to ensure that adequate accounting data are compiled to allow for the preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP). Our internal control structure is designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that: (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits requires estimates and judgments by management. The internal control structure is subject to periodic evaluation by management. We believe our internal control structure adequately safeguards the assets and provides reasonable assurance of proper recording of all financial transactions. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects.

Financial Report Presentation

Designed to meet the needs of a broad spectrum of financial statement readers, this Comprehensive Annual Financial Report (CAFR) is divided into four major sections: Program Type Grade Ranges(1) Enrollment Distribution Regular Schools and Programs The Introductory Section includes the table of contents, this transmittal letter, the District’s organizational Elementary Schools K-5, K-8, PK-5, PK-8 26,618 54% chart, and copies of certificates awarded for Portland Public Schools’ 2015 CAFR. Middle Schools 6-8 6,451 13% The Financial Section includes the Independent Auditor’s Report, Management’s Discussion and Analysis High Schools 9-12 11,346 23% (MD&A), the basic financial statements including notes to the basic financial statements, required Subtotal - Regular Schools 44,415 90% supplementary information (RSI), and supplementary information including the combining and individual PPS Alternative Programs PK, 1-12, 1-8, 9-12, 10-12 1,811 4% fund financial statements. Subtotal - Schools and Alternative Programs 46,226 94% Community-Based Programs 9-12,6-8, 6-12, 8-12 970 2% The Statistical Section includes selected financial and demographic information, generally presented on Special Education Programs K-12 449 1% a multi-year basis. These schedules are designed to improve the understandability and usefulness of the Public Charter Programs K-5, K-8, K-12, K-2, 6-8, 9-12 1,587 3% information presented in the financial section. Grand Total 49,232 100%

(1) The Audit Comments and Disclosures Section includes disclosures required by the Minimum Standards Definitions: PK-Pre-Kindergarten, K-Kindergarten for Audits of Oregon Municipal Corporations. Source: Preliminary PPS Enrollment Summaries - October 1, 2016

i ii After more than a decade of steady decline beginning in 1996-97, Portland Public Schools has seen increasing enrollment counts for the last eight years since a nadir in October, 2008 with the early counts for 2016 continuing this trend. The decline prior to 2008 was primarily a result of lower birth rates and higher housing prices driving families out of the district. These factors have reversed in recent years resulting in enrollment increases since 2008 in elementary grades, although the higher cohorts are now entering middle grades. PPS contracts with the Portland State University Population Research Center (PSUPRC) for forecasting and analysis of population and enrollment trends. Under the Medium Growth forecast scenario, PSUPRC predicts enrollment increasing by just under 2,000 to an enrollment total of 50,900 students by 2020-21. This represents total enrollment growth of just under 4% in five years. Under this scenario, Elementary growth will be slower as incoming kindergarten classes remain close to or slightly below recent levels due to the local, state, and national birth downturn, and Middle and High grade enrollments will grow significantly reflecting larger cohorts attributable to the elementary growth that started in 2007.

The District is governed by a seven-member Board of Education elected by the voters of the District for staggered four-year terms. The chief administrative officer of the District is the Superintendent, who is appointed by the Board. The Board is ultimately accountable for all fiscal matters that significantly influence operations.

Under Oregon Revised Statutes (33.710), school districts are municipal corporations empowered to provide elementary and secondary educational services for the children residing within their boundaries. Portland Public Schools fulfills this responsibility by building, operating, and maintaining school facilities, developing During Superintendent Smith’s tenure, PPS schools have produced gains in student achievement while and maintaining approved educational programs and courses of study (including career/technical narrowing the academic opportunity gap between white students and students of color. The most consistent educational programs and programs for English language learners and special-needs students), and and significant increase has been a steady increase in PPS’ graduation rate, The four-year cohort providing for transportation and feeding of students in accordance with District, State, and Federal program graduation rate for the class of 2014-15 was 74%, which represents a 21 percentage point increase since guidelines. This report includes all funds of the District. 2008-09.

Financial Information The priority goals for the District include ensuring that every student is reading at grade level by the end of third grade, accelerating improvement of the District’s graduation rate, and reducing by 50% the out-of- The financial statements of the District are prepared in conformity with accounting principles generally school discipline rates overall and the disparity in discipline rates between students of color and white accepted in the United States of America (GAAP) as applied to governmental units. The Governmental students. The following outline our 2014-15 achievement: Accounting Standards Board (GASB) is the governing body and establishes governmental accounting and financial reporting principles. The more significant of the District’s accounting policies are discussed in Note 1 of these financial statements.

The District is required by the State of Oregon to adopt an annual budget for all funds subject to the requirements of Local Budget Law as outlined in the 2011 Oregon Revised Statutes 297.405 to 297.555 and 297.990. The budget for each individual fund is a plan for the financial operations to be conducted during the coming fiscal year and is adopted annually, prior to July 1, by the Board of Education after certification by the Multnomah County Tax Supervising and Conservation Commission. After adoption, the budget may be amended through procedures specified in State statute and Board policy.

Service Efforts and Accomplishments

Portland Public Schools is an urban school district in Portland, Oregon. With more than 49,000 students in 81 schools, it is the largest school district in the Pacific Northwest. With highly trained teachers and staff, an engaged parent community, strong partnerships, and a focus on closing the racial educational opportunity gap, Portland Public Schools is realizing consistent gains in its graduation rate and enrollment.

Carole Smith has served as superintendent of Portland Public Schools since October 2007. As one of the District’s longest serving superintendents, Superintendent Smith has led efforts to support more effective teaching in PPS classrooms and build stronger partnerships with higher education, community organizations, and other public and private partners. Superintendent Smith announced her retirement in June, 2016.

Portland Public Schools adopted the Milestones Framework - measures of achievement at key points in a student’s education - because these measures are predictive of long-term success. The Milestones also help us focus our limited resources and invest in the strategies that are gaining the best results.

iii iv At Portland Public Schools, our goal is to increase student learning for every student. Racial equity is a critical component of our District’s strategies and school board policies for a basic and essential reason: To get better results in our schools, we need to close the persistent and unacceptable opportunity gap between white students and students of color. The Portland Public Schools strategic framework illustrated below reflects our dedication to transforming culture as we help every student achieve success.

Oregon Employment by Industry June Change from (Number of jobs, in thousands) 2015 2016 prior year Trade, Transportation & Utilities 335.4 343.5 2.4% Government 310.7 306.6 -1.3% Education & Health Services 252.6 267.6 5.9% Professional & Business Services 228.5 243.2 6.4% Factors Affecting Financial Condition Leisure & Hospitality 199.5 195.7 -1.9% Manufacturing 186.5 185.3 -0.6% The information presented in the financial statements is perhaps best understood when it is considered in Financial Activities 92.2 98.3 6.6% the broader perspective of the specific environment within which the District operates. Construction 83.0 88.0 6.0% Information 33.2 35.2 6.0% With the passage of Measure 5 more than twenty five years ago, school districts across Oregon rely upon Mining & Logging 7.7 7.5 -2.6% the state for the majority of their funding. Although districts continue to collect revenue locally through Other Services 60.4 62.4 3.3% property taxes, school funding is equalized through the allocations under the state school fund, which Total non-farm accounts for more than 70% of the District’s general fund revenue. The state of Oregon is more dependent workforce (in thousands) 1,789.7 1,833.3 upon a single revenue source, state income tax, than any other state in the country. As a result, the financial Workforce change from prior year 3.4% 2.4% outlook for PPS is tied closely to the condition of the Oregon economy. The second most important source of revenue for the District, and the source of funds to repay its capital bonds, is local property taxes. Real Approximately 44 thousand jobs were added over the past year, contributing to workforce growth of 2.4% estate values and associated assessed values of real property are the most important factor in the strength over 2015. The Education & Health Services and Professional & Business Services sectors led the way of this revenue source. with the creation 30 thousand jobs, while smaller gains were observed in Trade, Transportation & Utilities, Financial Activities, Construction, and Information. After steady growth over the past three years, declines Oregon’s unemployment rate has declined from a June 2009 level of 11.3% to Oregon State Economy - were recognized in Government, Leisure & Hospitality, and Manufacturing. As one of the smaller sectors a June 2016 rate of 5.0%1. While Oregon’s unemployment rates have been higher than the U.S. average in the Oregon economy, Mining & Logging continued a three-year decline2. Expectations overall for the in the past few years, this difference has narrowed in the past six months. public sector are for job additions as revenue growth improves. Long-term U.S. and Oregon economic growth depend upon restoring international competitiveness through productivity enhancing investments in The pace of improvement in Oregon’s labor market continues to be strong. Furthermore, Oregon has physical capital, human capital, and infrastructure. The September 2016 Oregon Economic and Revenue regained its traditional advantage in growth relative to the nation. This growth differential largely comes Forecast projects a General Fund increase of $1.9 billion relative to the 2013-15 biennium (11.9%). This from the state’s underlying fundamentals like its industrial structure and strong in-migration flows. Both of increase is in line with the increase projected in 20153. these trends have long-lasting impacts on the Oregon economy but also contribute to the state’s more volatile swings over the course of the business cycle. Within overall non-farm employment numbers the manufacturing sector has continued to expand despite concerns over terms of trade and the impact on exports. 2 United States Department of Labor, Bureau of Labor Statistics, Economy at a Glance – Oregon. http://www.bls.gov/eag/eag.or.htm 1 United States Department of Labor, Bureau of Labor Statistics, Economy at a Glance – Oregon. 3 Oregon Economic and Revenue Forecast, September 2016. http://www.bls.gov/eag/eag.or.htm https://www.oregon.gov/das/OEA/Documents/forecast0916.pdf

v vi Portland Metropolitan Area Economy - The Portland metropolitan area has a diversified economy, with Board immediately conducted a search for an interim superintendent and on August 16th unanimously centralized, accessible schools and excellent public transportation. The area is a major West Coast voted to make Bob McKean the district’s new interim superintendent. Mr. McKean will serve for the 2016- distribution point for wholesale trade and high-tech exports. During this recovery from the recent recession, 17 school year while the nationwide search for a permanent replacement continues. the local Portland economy has recovered faster than rural areas of the state. Independent Audits PPS has the authority to generate revenue locally through the local option levy and has, thanks to the generosity of PPS voters, been able to approve local levies. PPS voters first approved the five-year levy in The provisions of Oregon Revised Statutes require an independent audit of the financial records and fiscal 2011 and then opted to extend the levy another five years when they reaffirmed their support two years affairs of the District. The auditors selected by the Board of Education, Talbot, Korvola & Warwick, LLP, early in November, 2014. Whereas the outlook for state revenue is dependent upon the impact of economic have completed their audit of the basic financial statements and, accordingly, have included their activity in income tax collections, the revenue available locally under the local option levy is a reflection of unmodified Independent Auditor’s Report in the financial section of this report. the impact of the economy on both assessed values and the market values of taxable property within the PPS taxing district. The state of the local economy has an impact on this revenue source. Reduction in Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards market values of residential property within the PPS area during 2008-2011 reduced the income of the (Uniform Guidance) require state and local governments that expend $750,000 or more in federal school district. Recently, both assessed and market values have increased in a relatively strong manner. assistance in a year have a special form of audit conducted for that year. Since 1989, Portland Public 4 In 2015-16 assessed value increased by 4.5%, while market value increased by 12.6% . Schools has issued a separate report on these requirements. Talbot, Korvola & Warwick, LLP have also provided various required reports. Contained in the separately issued Single Audit Report is the Schedule PPS Long-Term Financial Planning and Unique Events - As mentioned above, PPS improved the of Expenditures of Federal Awards, and the required reports on internal controls and compliance with laws medium-term fiscal outlook with the renewal of the five-year local option levy in 2014. In addition to assuring and regulations. this revenue for another five years the renewal also allows the district to eliminate a sharing of local option taxes with the City’s urban renewal agency. Starting in 2015-16, this change contributes about $5 million Awards and Acknowledgments per year. The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Starting in 2017-19 public employers will be faced with the budget implications of the State Supreme Court’s Certificate of Achievement for Excellence in Financial Reporting to the District for its Comprehensive Annual decision to overturn much of Oregon’s 2013 PERS statutory reforms. PPS has a large PERS side account Financial Report for the fiscal year ended June 30, 2015. This was the 36th consecutive year that the District balance (remaining from the 2002 and 2003 debt issuances). Although PPS is projecting an increase in has achieved this prestigious award. In order to be awarded a Certificate of Achievement, a governmental PERS expenditure in 2017-18, the side account will serve to mitigate some of this impact. entity must publish an easily readable and efficiently organized CAFR that satisfies both GAAP and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe our current report continues to conform to Certificate of Achievement Program requirements, and we are In November 2012, PPS voters approved a measure authorizing the issuance of up to $482 million of submitting it to GFOA to determine its eligibility for this coveted Certificate. capital bonds. PPS operates well over 100 buildings on its 81 school campuses. The average age of the school buildings in service is roughly 69 years, about 20 years older than the average for school buildings The Association of School Business Officials International (ASBO) awarded its Certificate of Excellence in nationally. Through more than 20 years of tight budgets and shortfalls, PPS has chosen to support core Financial Reporting to the District for its Comprehensive Annual Financial Report for the fiscal year ended instructional services, and had not invested General Fund dollars in capital improvements to its buildings. June 30, 2015. This was the 36th consecutive year that the District earned this significant award. Receiving In January 2012, PPS adopted a Capital Asset Renewal Plan to set up a fund to maintain schools replaced the Award is recognition that the District has met the highest standards of excellence in school financial or renovated in the future. In May 2012, PPS adopted a Long Range Facility Plan to reduce an estimated reporting as adopted by ASBO. The District believes that this 2016 CAFR, which will be submitted to ASBO $1.6 billion in building deficiencies over the next 24 to 40 years. This long range plan includes funding for review, will also conform to these standards. through capital bonds, capital funding partnerships, Construction Excise Tax revenues, and Cool Schools Funds (House Bill 2960).The 2012 measure focuses on earthquake reinforcements, roof repair and We wish to express our appreciation to the staff of Accounting and Payroll Services and members of other replacement, high school renovations, improved access to schools for people with disabilities, and science District departments who assisted in the preparation of this Comprehensive Annual Financial Report. We classroom upgrades. Work began in the summer of 2013 with five schools seeing significant investment; further extend our appreciation to the members of the Board of Education, employees of the District, and over 40 schools have been beneficiaries since work began. During the summer of 2016, construction was all of the Portland community whose continued cooperation, support, and assistance have contributed underway on modernization of Franklin High School and the rebuilding of Faubion PK-8. In August, the greatly to the achievements of Portland Public Schools. first new complete buildings opened at Roosevelt High School. Next year, a fully modernized Franklin High School and a new Faubion PK-8 will open and construction will begin on the modernization of Grant High School, which is scheduled to be completed by the fall of 2019.

In May 2016, Portland Public Schools confirmed elevated levels of lead in certain water fixtures that were tested at the request of parents. PPS took steps to provide safe drinking water to all students, faculty, and staff. Drinking fountains were shut down and bottled water was supplied for the remainder of the school year. The District worked closely with Multnomah County to provide on-site blood lead level testing to all PPS families. Portland Public Schools developed a Healthy and Safe Schools Plan (currently in DRAFT form with a final version scheduled to be complete in January, 2017) to define assessment, testing, and mitigation.

In June, 2016, Superintendent Carole Smith announced her intent to retire from the district. On July 18th, she affirmed her intent and provided her 90-day notice per her employment contract with the district. The

4 S&P CoreLogic Case-Shiller Portland Home Price NSA Index http://us.spindices.com/indices/real-estate/sp-corelogic-case-shiller-portland-home-price-nsa-index

vii viii SCHOOL DISTRICT NO. 1J, MULTNOMAH COUNTY, OREGON Principal Officials At June 30, 2016

SCHOOL BOARD

Member Zone Term Expires Phone Email Julie Esparza Brown 1 June 30, 2019 503-916-3741 [email protected] Paul Anthony 2 June 30, 2019 503-916-3741 [email protected] Amy Kohnstamm 3 June 30, 2019 503-916-3741 [email protected] Steve Buel 4 June 30, 2017 503-916-3741 [email protected] Pam Knowles 5 June 30, 2017 503-916-3741 [email protected] Tom Koehler 6 June 30, 2017 503-916-3741 [email protected] Portland Public Schools Mike Rosen 7 June 30, 2019 503-916-3741 [email protected] 2015/16 Organizational Structure

PPS Board of Education District OrganizationChart-EducationalDepartments

Sr. Legal Counsel Board Office Jeff Fish, Sr. Director General Counsel & Superintendent of Schools Chief of Staff Rosanne Powell, Sr. Manager Human Resources Deputy Counsel Board Secretary - Analytics Stephanie Harper, Director Amanda Whalen System Planning & Performance Jollee Patterson Carole Smith Sarah Singer, Sr. Director Shawn Helm, Sr. Manager Special Education Deputy Counsel - Educational Measurement & Suzy Harris, Director - Accountability & Reporting Joe Suggs, Program Director Assessment ADMINISTRATIVE STAFF Vacant, Sr. Manager

Asst. Superintendent of Asst. Superintendent of Asst. Superintendent of Student, Family & School Performance Teaching & Learning Antonio Lopez School Support Svcs. Chris Russo Carole Smith (Retired July, 2016) Superintendent Harriet Adair

Office of Teaching & Learning Cleveland Schools Multiple Pathways to Graduation Columbia Regional Programs Advanced Placement / AVID / Harriet Adair Assistant Superintendent, Student Family and School Support Larry Dashiell, Sr. Director Korinna Wolfe, Sr. Director Lisa McConachie, Sr. Director Van Truong, Executive Director International Baccalaureate / Enhanced Brad Hendershott, Program Admin. Andy Wheeler, Sr. Manager Academic Programs Franklin Schools - Alliance High School Kristy Karsten, Program Admin. Bonnie Hobson, Program Director Chris Russo Assistant Superintendent, Teaching and Learning Oscar Gilson, Sr. Director Lorna Fast Buffalo Horse, Principal Scott Wall, Program Admin. - Dual Language Immersion Debbie Armendariz, Sr. Director Tina Acker, Asst. Director -Charter Schools Michael Bacon, Asst. Director Lisa Collins, Program Admin. Grant / Jefferson Schools Kristen Miles, Program Director Early Learning Janelle Dobson, Project Manager Karl Logan, Sr. Director - Community-Based Organizations Deborah Berry, Principal - Head Start Antonio Lopez Assistant Superintendent, School Performance Vacant, Asst. Director Kirsten Plumeau, Program Director Eileen Isham, Principal - Early Instructional Resource Center x Lincoln / Madison Schools - DART Schools Learners Program -ESL Lynette Engstrom, Procurement Manager Lisa McCall, Sr. Director Mark VanHoomissen, Principal Yousef Awwad, CPA Chief Financial Officer Nancy Hauth, Program Manager Veronica Magallanes, Sr. Director Adrienne Howard, Program Manager - Learning Credit Options Vacant, Director - Early Lisa Blount, Asst. Director Roosevelt Schools Diane Berthoin-Hernandez, Childhood Program Francisco Garcia, Sr. Manager Special Education Charlene Williams, Sr. Director Vice Principal Mary Pearson, Sr. Director Kehaulani Haupu, Asst. Director Bob Cantwell, Interim Asst. Director Courtney Westling Interim Chief of Communications and Public Affairs - Portland Evening Scholars / School-Family Partnerships Tonya Mjelde, Asst. Director :ilson Schools Summer Scholars Jeff Brown, Program Admin. Richard Gilliam, Program Director Katherine Sasaki, Program Admin. Paula McCullough, Interim Ginger Taylor, Vice Principal Vadim Riskin, Sr. Manager Lorrie Harris, Program Admin. Sr. Director Josh Klein Chief Information Officer - Reconnection Center - Instruction, Curriculum & Linda Moon, Program Admin. Carla Gay, Vice Principal School Operational Support P .-1 Assessment Lauren Page, Interim Program Admin. College & Career Readiness -Social :ork Services Jill Bryant, Temp, Sr. Manager Ewan Brawley, Sr. Director Claire Skelly, Program Admin. Shay James, Sr. Director Julie Prindle, Sr. Manager Jason Roepel, Sr. Manager Angela Hubbs, Asst. Director Chrystal Watros, Program Admin. Jocelyn Bigay, Program Director Courtney Wilton Interim Chief Operating Officer - Teen Parent Andrea Lockard, Asst. Director Jon Williams, Program Admin. Yeng Dhabolt, Program Director Cheryl James, Vice Principal Student Services Julie Rierson, Asst. Director Greg Wolleck, Program Director Tammy Jackson, Program Director Talented and Gifted (TAG) Sean Murray Chief Human Resources Officer P.-1 Programs - Library Services Andrew Johnson, Program Director - Career Pathways & Career Sascha Perrins, Sr. Director Technical Education - School-wide Integrated Framework Jeanne Yerkovich, Sr. Manager - Athletics for Transformation S:IFT Jollee Patterson, J.D. (Resigned August, 2016) General Counsel Marshall Haskins, Program Director -Gear-Up Program Jeff Erdman, Interim Asst. Director - Textbook Services Kelley Duron, Sr. Manager Marci McGillvray, Sr. Manager Lolenzo Poe Chief Equity and Diversity Officer Angela Nusom, Sr. Manager - New Teacher Mentor Program Funded Programs Lynne Shlom Ferguson, Joe LaFountaine, Sr. Director Asst. Director Jerry Vincent Chief of School Modernization Kathy Gaitan, Asst. Director Nicole Groth, Sr. Manager Karen Kitchen, Program Director Amanda Whalen Chief of Staff Leslie O’Dell, Program Director Angela Sandino, Asst. Director

ix xii

District Organization Chart - Operational Departments Shawn Helm, Sr. Manager Sr. Helm, Shawn Vacant, Sr. Manager Vacant, Assessment Assessment - Analytics - & Measurement Educational Chief of Jerry Vincent Michelle Chariton, Director Michelle Chariton, Program Program Director Gerding, Erik Dan Jung, Asst. Director Patrick LeBoeuf,Program Director Mayne, Capital David Manager Communications Director Pearson, Program Debra Sr. Manager Sohm, Jen Director Sr. Vacant, School Modernization School Modernization School arehouse : Accountability & Reporting Joe Suggs, Program Director Suggs, Joe Rosanne Powell, Manager Powell, Sr. Rosanne Sr. Director Singer, Sarah - Board Office Board & Performance Planning System Tony Magliano Cameron Vaughan-Tyler, Cameron Manager Sr. Andy Fridley, Sr. Manager Fridley, Andy Jeff Lewis, Sr. Manager Manager Sr. Nitsch, Steven Manager Sr. Vacant, Dennis Wright, Program Director Wright, Dennis Whitney Ellersick, Asst.Director Asst.Vacant, Director Civic Use of Buildings Use Civic Program Director King, Sara Delivery, & Mail Services Director Program Vacant, Chief Operating Officer - Management Project Sr. Director Gitta Grether-Sweeney, Program Director George Weatheroy, Director Sr. Brady, Teri - / & Asset Management Planning Judy Brennan, Program Director Brennan, Program Judy Sr. Director David Hobbs, - Operations Facilities Nutrition Services Services Security Transportation Student Enrollment & Center Transfer & Asset Management Facilities Chief of Staff Amanda Whalen Officer Josh Klein Chief Information Marita Ingalsbe, Program Director Marita Ingalsbe, Director Program Vacant, Vacant, Sr. Manager Sr. Manager Candi Malone, Vacant, Sr. Manager Vacant, Sr. Manager Program Director Travis Paakki, Schreiner, Sr. Manager Niku Supervisor Fecker, ERP Alicia Whitman-Morales, Ryan Program Director Jung, Manager Stacey Sr. -Services Application IT Services Client -IT - IT Project Management - Integration & Development Systems - Operations Technical Information Technology Sean Murray Chief Human Chief Carole Smith Resources Officer force Diversity & Development N or Aisha Hollands, Program Director Program Hollands, Aisha Michelle Riddell, Michelle Chief HR Officer Deputy Terri Burton, Program Director Lisa Gardner, Manager Sr. Director Sr. Cusimano, Catherine Program Director Scotto, Frank Harper, Mary-Elizabeth Sr. Manager Sr. Manager Hume, Ross Benjamin-Samuels, Loretta Director Program Maria Araiza, Manager Program Blanchard, Patty Director Sr. Director Ann Higgens, Sue Administration & Operations Benefits Classification & Compensation Relations Labor & Employee Management Talent Services Support & Technology Development & Training : Superintendent of Schools PPS Board of Education 2015/16 Organizational Structure Portland Public Schools Yousef Awwad Budget & Contracting Purchasing Sara Bottomley, Asst. Director Asst. Bottomley, Sara Sr. Manager Jordan, Susan Emily Courtnage, Program Director Sr. Manager Harriet Deary, Interim Anselone, Cheryl Asst. Director Manager Sr. Shick, Dave Ondra Matthews, Asst. Director Sr. Manager Gibbs, Barbara Williams, Manager Rome Chief Financial Officer David Wynde, Deputy CFO CFO & Deputy Wynde, David Director Budget - - Grant Development - DirectorVacant, Sr. - Payable Accounts - Ledger General - Accounting Grant - Payroll Services -Treasury Ramzi Program Director Adas, - Management Records Joe Crelier, Program Director Department of Finance of Department Payroll & Accounting Financial Systems / Publication / Publication Systems Financial Services Services / Support Management Risk Jollee Patterson Board Secretary District Ombudsman General Counsel & Judi Martin, Program Manager Martin, Judi Lolenzo Poe Chief Equity & Diversity Officer Regina Sackrider, Program Admin. Regina Sackrider, Chris Williams, Student Manager Assistance Phu Dao, Sr. Manager Sr. Dao, Phu Hector Roche, Sr. Manager Sr. Manager Andre Jackson, Minoo, Sr. Manager Dunya Director Asst. Kirschmann, Rick Bonnie Gray, Asst. Director Asst. Gray, Bonnie Sr. Director Fukuda, Jeanine Asst. Director Cynthia MacLeod, Equity Programs Equity Development Partnership Educational Services Supplemental Disciplinary School Supportive Practices Affirmative Action Affirmative District Equity Initiatives Development Professional Equity Sr. Legal Legal Sr. Counsel Suzy Harris, Director Suzy Jeff Fish, Sr. Director Stephanie Harper, Director Harper, Stephanie Special Education Deputy Counsel Counsel Deputy Education Special Human Resources Deputy Counsel Deputy Resources Human Vacant Chief of Public Affairs Communications & Kimm Fox-Middleton, Manager Kimm Fox-Middleton, Manager Vacant, Manager Proctor, Terry Erin Barnett, Sr. Communications Manager Westling, Courtney Program Director Fiallo, Rosie Manager ChristinePublic Miles, Information OfficerCommunications & Sr. Manager Sr. Manager Vacant, Capital Communications Capital Communications Services Media Educational Communications Family & Employee Relations Government Development Multi-Media Information Public Svcs. & Interpretation Translation

xi xiii 1 2 3 SCHOOL DISTRICT NO. 1J, MULTNOMAH COUNTY, OREGON OVERVIEW OF THE FINANCIAL STATEMENTS Management’s Discussion and Analysis This discussion and analysis is intended to serve as an introduction to the Portland Public Schools’ basic As management of School District No.1J, Multnomah County, Oregon (Portland Public Schools or the financial statements. The basic financial statements are comprised of three components: (1) District or PPS), we offer readers this narrative overview and analysis of the financial activities of the government-wide financial statements; (2) fund financial statements; and (3) notes to the basic financial Portland Public Schools for the fiscal year ended June 30, 2016. We encourage readers to consider the statements. This report also contains required and other supplementary information in addition to the information presented here in conjunction with additional information that we have furnished in our letter basic financial statements themselves. of transmittal, which can be found on pages i-viii of this report. Government-Wide Financial Statements are designed to provide readers with a broad overview of the District’s finances in a manner similar to a private-sector business. The government-wide financial statements can be found on pages 16-18 of this report. FINANCIAL HIGHLIGHTS Fund Financial Statements are designed to demonstrate compliance with finance-related legal The 2016 budget represents a continuation of our focus on investment in programs and services to our requirements. A fund is a grouping of related accounts that is used to maintain control over resources students targeted at addressing the District’s three priorities (early literacy, reducing out-of-school that have been segregated for specific activities and objectives. All of the funds of the Portland Public discipline, and improving high school graduation and completion rates) as well as other needs: Schools can be divided into two categories: governmental funds and proprietary funds. Reports by fund and fund group are shown in the Financial Section of the report beginning on page 20. ¾ Add educational assistants in kindergarten classes at schools with the highest concentration of historically underserved students. Governmental funds are used to account for essentially the same functions reported as governmental ¾ Make all high school athletic directors full time. activities in the government-wide financial statements. However, unlike the government-wide financial ¾ Add a teacher to eight focus and priority schools. statements, governmental fund financial statements focus on near-term inflows and outflows of available ¾ Add an additional early learning center in Southeast Portland. resources, as well as on balances of available resources at the end of the fiscal year. Such information ¾ Increase the allocation of counselors to K-5, K-8, and middle schools to ensure a minimum of may be useful in evaluating a government’s near-term financing requirements. one full time counselor. ¾ Add transportation services to improve equitable access to dual language immersion Because the focus of governmental funds is narrower than that of the government-wide financial programs. statements, it is useful to compare the information presented for governmental funds with similar ¾ Funding the cost of full day kindergarten through the General Fund. information presented for governmental activities in the government-wide financial statements. By doing ¾ Fund the boundary review process. so, readers may better understand the long-term impact of the District’s near-term financial decisions. ¾ Fund the expansion of the AVID program. The Governmental Fund Balance Sheet and the Governmental Fund Statement of Revenues, ¾ Add 20 FTE for high school teaching positions. Expenditures, and Changes in Fund Balances provide a reconciliation to facilitate this comparison ¾ Expanded funding for restorative practices, equity and school climate. between governmental funds and governmental activities. ¾ Add school secretaries and library/media staff. Portland Public Schools designates four major governmental funds. Information is presented separately in the Governmental Fund Balance Sheet and the Governmental Fund Statement of Revenues, Fair During the year, the District implemented three new accounting standards: GASB Statement No. 72, Expenditures, and Changes in Fund Balances for the General Fund, Grant Fund, PERS Rate Value Measurement and Application The Hierarchy of Generally Accepted , GASB Statement No. 76, Stabilization Reserve Fund and GO Bonds Fund, all of which are considered to be major funds. Data Accounting Principles for State and Local Governments Certain External , GASB Statement No. 79, from the other 14 governmental-type funds are combined into a single, aggregated presentation titled Investment Pools and Pool Participants , all had effective dates that occurred within the 2015-16 fiscal “Other Governmental Funds”. Individual fund data for each of these non-major governmental funds is year. There was no impact to the District’s financial statements from the adoptions. provided in the form of combining statements elsewhere in this report.

In November 2012, District voters passed an eight-year, $482 million capital bond measure. This bond is Portland Public Schools adopts an annual appropriated budget for each of its funds. A budgetary the first phase of a 20-30 year effort to modernize every school in the district. Construction was comparison statement has been provided for each fund individually in either required or supplementary completed in summer 2015 for roof repairs and seismic upgrades at 13 schools, science classroom information to demonstrate compliance with the fund level budgets. The basic governmental fund financial upgrades at 17 schools, and improved disability access at 13 schools. During the year ended June 30, statements can be found on pages 20-26 of this report. 2016 master planning continued for Grant High School, renovation/replacement projects proceeded for Franklin, Roosevelt, and Faubion, and summer 2016 project work was initiated for: Proprietary funds are used to account for a government’s business-type activities. The District maintains only one type of proprietary fund, which is an Internal Service Fund. ¾ Roof replacement and seismic upgrades at 5 schools. ¾ Science classroom upgrades at 8 schools. Internal service funds are accounting devices used to accumulate and allocate costs among various ¾ Improved disability access at 5 schools. internal functions. The District uses an internal service fund to account for its Self-Insurance activities related to workers compensation. Because Portland Public Schools has no business-type functions, this At June 30, 2016 there was a balance of $242.5 million available for completion of the summer 2015 service benefits governmental functions and has been included within the governmental activities in the projects described above, for continued work towards the renovation/replacement of Grant, Franklin and government-wide financial statements. Roosevelt High Schools and Faubion PK-8 school, and a portfolio of roofing, seismic, science lab and accessibility improvements during future summer periods. The summer 2016 work was completed on time and on budget, in time for the start of the 2016-17 academic year. Further discussion can be found on pages 10 and 11 of this Discussion and Analysis.

4 5 Internal service funds provide the same type of information as the government-wide financial statements. The internal service fund financial statements provide separate information for the Self-Insurance Fund, which is considered to be a major fund of Portland Public Schools. The basic internal service fund financial statements can be found on pages 27-29 of this report. Invested in Notes to the Basic Financial Statements provide additional information that is essential to a full capital assets understanding of the data provided in the government-wide and fund financial statements. The Notes to GOVERNMENT-WIDE NET POSITION 25.6 (net of related the Basic Financial Statements can be found on pages 30-65 of this report. 2015 and 2016 debt) $800 Required Supplementary Information (RSI) is located directly after the notes to the basic financial $600 statements and represents the required comparison of the budget and actual results on the District’s 230.3 budgetary basis for the General Fund, Grant Fund and PERS Stabilization Reserve Fund. In addition the $400 260.1 Restricted net position RSI discloses the actuarial estimate of funding progress of the District’s other post-employment $200 healthcare benefits obligations and related employer contributions and the District’s proportion of net 394.8 283.2 - pension liability and District contributions. This information is on pages 67-76. $0

$ Millions -$200 (799.8) Supplementary Information (SI) presented on pages 77-111 includes combining statements for the non- (680.9) Unrestricted net major governmental funds, budgetary comparison schedules for non-major and other funds, and other -$400 position financial schedules. -$600 -$800 Government-Wide Financial Analysis -$1,000 Analysis of Net Position. The Statement of Net Position presents information on all of the District’s 2015 $(174.7) Million 2016 $(137.6) Million assets, liabilities and deferred outflows and inflows. The difference between assets/deferred outflows and liabilities/deferred inflows is reported as net position. Over time net position may serve as a useful indicator of the District’s financial position. Other indicators that can be useful in reviewing the District’s financial health include enrollment trends, debt capacity and the condition of facilities. Net Position - 2016 compared to 2015. Net Position is a primary indicator of financial position. The District’s liabilities and deferred outflows Net Position Government-wide (thousands) exceeded assets and deferred inflows by $137.6 million at June 30, 2016, which represents a $37.0 million 2015 2016 Change % change improvement from the prior year, as further discussed on pages 8-9. Assets Net Investment in Capital Assets Current or other assets $ 585,559 $ 489,022 $ (96,537) -16.5% ($260.1 million) has increased by $29.9 million this year, mainly due to Net capital assets 273,957 382,401 108,444 39.6% the repayment of debt related to capital projects ($37.4 million), offset by depreciation ($5.5 million). Total Assets 859,516 871,423 11,907 1.4% Restricted Net Position ($283.2 million) represents the unspent portions of capital projects funds, debt service funds and net assets restricted by grants, donations and leases. Restricted Net Position decreased Deferred Outflows of Resources 6,801 3,200 (3,601) -52.9% by $111.7 million this year, primarily due to the expenditure of GO bond proceeds. Liabilities Unrestricted Net Position (negative $680.9 million) is the balancing amount to bring Total Net Position to Long-term liabilities outstanding 859,450 815,784 (43,666) -5.1% negative $137.6 million. Unrestricted Net Position increased $118.8 million primarily due to the decrease Other liabilities 170,461 190,410 19,949 11.7% in Restricted Net Position noted above. Total Liabilities 1,029,911 1,006,194 (23,717) -2.3% Analysis of Activities. The Statement of Activities presents expenses and related revenues by program, 11,102 6,062 (5,040) -45.4% Deferred Inflows of Resources showing how the District’s net position changed during the most recent fiscal year. The statement reports revenues earned and expenses incurred under the accrual basis of accounting, where changes in net Net Position position are reported as soon as the underlying event giving rise to the change occurs, regardless of the Net investment in capital assets 230,251 260,146 29,895 13.0% timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items Restricted 394,845 283,176 (111,669) -28.3% that will result in cash flows in future fiscal periods (e.g. uncollected taxes, pension amounts, OPEB, IBNR Unrestricted (799,792) (680,955) 118,837 14.9% claims, and earned but unused vacation leave). Total Net Position $ (174,696) $ (137,633) $ 37,063 21.2%

6 7 Statement of Activities Government-wide (thousands) 2015 2016 % of total 2016 Change % change Revenues Revenues Program Revenues $800.0 Charges for services $ 13,587 $ 8,674 1.2% $ (4,913) -36.2% Operating grants & contributions 89,751 84,060 11.9% (5,691) -6.3% $700.0 Total Program Revenues 103,338 92,734 13.1% (10,604) -10.3% General Revenues $600.0 Property taxes 269,440 282,533 40.0% 13,093 4.9% $500.0 Local option taxes 62,923 76,467 10.9% 13,544 21.5% County & intermediate sources 15,202 15,772 2.2% 570 3.7% $400.0

Construction excise tax 6,076 5,886 0.8% (190) -3.1% Millions State School Fund 179,505 211,253 30.0% 31,748 17.7% $ $300.0 State Common School Fund 4,721 5,810 0.9% 1,089 23.1% Investment earnings 1,285 3,140 0.4% 1,855 144.4% $200.0 Other 10,563 12,120 1.7% 1,557 14.7% Total General Revenues 549,715 612,981 86.9% 63,266 11.5% $100.0 Total Revenues 653,053 705,715 100.0% 52,662 8.1% $Ͳ Expenses 2016 2015 Instruction 326,935 364,964 54.6% 38,029 11.6% Other $36.9 $33.2 Support services 212,213 241,016 36.0% 28,803 13.6% Programrevenues Enterprise & community services 20,445 21,326 3.2% 881 4.3% $92.7 $103.3 Facilities services 2,617 1,230 0.2% (1,387) -53.0% Stateschoolrevenues $217.1 $184.2 Interest & fees on long-term debt 31,600 40,116 6.0% 8,516 26.9% Property&othertaxes $359.0 $332.4 Total Expenses 593,810 668,652 100.0% 74,842 12.6%

Change in net position 59,243 37,063 -26.9% (22,180) -37.4% Net position - beginning of year (233,939) (174,696) 126.9% 59,243 25.3% FY2016RevenuePercentages Net position - end of year $ (174,696) $ (137,633) 100.0% $ 37,063 21.2% 5.1%Other

13.1% The Statement of Activities of the government-wide financial statements distinguishes functions that are Program principally supported by taxes and intergovernmental revenues (governmental activities) from other revenues functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). Portland Public Schools currently does not have any business-type or enterprise fund activities. Additional detail regarding revenue and expense changes are presented below 30.9%State 50.9%Property to provide a better understanding of the District’s operations in 2016 compared to 2015. schoolrevenues &othertaxes

Revenues. Because the District’s mission is to provide a free and appropriate public education for K-12 students within its boundaries, the District may not charge for its core services. The District does charge for non-core services such as facilities rentals, activities fees, and lunches. Therefore, general revenues provide most of the funding required for governmental programs, primarily property taxes and State School Funds.

Revenues – 2016 compared to 2015. Total 2016 revenues of $705.7 million represented a $52.6 million (or 8.1%) increase from prior year revenues of $653.1 million. State school fund revenues increased Expenses. Portland Public Schools program activities include Instruction, Support Services, Enterprise $31.7 million from the prior year primarily due to a combination of an increase in overall state funding, an and Community Services, Facilities Services, and Interest and Fees on Long-term Debt. The District’s increase in District enrollment, and State (ODE) adjustments pertaining to prior years. Grants and activities mirror its chart of accounts which is mandated by the Oregon Department of Education for all contributions decreased $5.7 million, primarily due to funding decreases for Columbia Regional, Common Oregon public schools. Core State Standards Grant, Expanded Reading Grants, STEM/STEAM, Equity Grant, School Dropout Prevention Grant, and Title I funding. Property and local option taxes increased $26.6 million primarily Expenses by function – 2016 compared to 2015. Current year total expenses of $668.7 million due to increases in assessed value of property in the local area. increased 12.6% ($74.8 million) from the prior year. About $31.1 million of this increase was due to changes in pension plan provisions resulting in large part from the Oregon Supreme Court’s Moro ruling, which repealed of most of the PERS reforms in the provisions of Senate Bill 861. Instruction costs increased $38.0 million in the current year. About $19.1 million of this increase was pension-related due to the Moro decision mentioned above. Other increases are discussed in the Financial Analysis of the

8 9 District’s Major Funds, presented below. Support services costs increased $28.8 million in the current Budgetary Highlights for the General Fund year. About $11.2 million of this increase was pension-related due to the Moro decision mentioned on page 9. Other increases are discussed in the Financial Analysis of the District’s Major Funds, presented The 2016 General Fund budget was adjusted two times during the year. The Board approved budget below. Instruction and support services together accounted for 90.6% of the District’s expenses in 2016, changes can be briefly summarized as follows: compared to 90.8%, in the prior year.

x In February 2016, the Board decreased the General Fund budgetary beginning fund balance by $5.3 Financial Analysis of the District’s Major Funds million to $34.4 million, to reflect actual ending fund balances as reported in the June 30, 2015 CAFR In addition, General Fund resources were increased $5.8 million for higher property tax collections, As noted earlier, the District uses fund accounting to ensure and demonstrate compliance with finance- and State School Fund revenues were decreased $0.1 million to reflect the recent estimate. In related legal requirements. The focus of the District’s governmental funds is to provide information on addition, program allocations for funds were adjusted to more accurately reflect intended near-term inflows, outflows, and balances of expendable resources. Such information is useful in expenditures. assessing the District’s financial requirements. In particular, unassigned fund balance may serve as a useful measure of the District’s net resources available for spending at the end of the fiscal year. x In June 2016, the Board increased General Fund resources by $0.1 million and transferred $3.5 million from the State School Fund revenues to property tax collections, to reflect how higher property General Fund. The General Fund is the major operating fund of the District. General Fund’s ending tax collections impact the State School Fund Formula. In addition, program allocations for funds were fund balance increased by $3.4 million to $37.8 million for fiscal year 2016. This was a $17.6 million adjusted to more accurately reflect intended expenditures. improvement over the $14.2 million decrease anticipated (excluding contingency) in the 2016 annual budget. The District classified $7.2 million of the ending fund balance as “assigned”, which is discussed in Footnote 15. State School Fund payments were $31.7 million higher than the prior year as discussed on Capital Assets and Debt Administration page 8. Instructional expenditures increased $22.7 million in total. Wages and benefits accounted for $18.6 million of this increase, primarily due to staffing additions mentioned on page 4, step increases, and Capital Assets. The District’s investment in capital assets includes land, building and improvements, cost of living adjustments. Textbook and library book expenditures increased $2.5 million related to the vehicles and equipment, and construction in progress. As of June 30, 2016, the District had invested reinvestments discussed on page 4. Support services costs increased $19.4 million, due primarily to $382.4 million in capital assets, net of depreciation and amortization, as shown in the following table: spending increases for counseling staff ($3.3 million); program administration ($1.1 million); library/media specialists ($3.0 million); school administrators and support staff ($4.5 million). Capital assets Government-wide (thousands) 2015 2016 change % change Grant Fund. Of the $58.6 million in grant fund revenues, $55.9 million was attributable to federal and Land $ 9,174 $ 9,174 $ - 0.0% state grants. Funding for Title I, other title programs, school improvement programs, college and career Buildings and site improvements 424,356 434,550 10,194 2.4% preparation programs and other state and federal grants targeted to provide additional services to Vehicles and equipment 51,713 52,634 921 1.8% students disadvantaged by poverty, including those homeless or migrant, totaled $19.5 million. Funding Construction in progress 42,156 144,960 102,804 243.9% of $25.4 million was received for IDEA, special education, early vocabulary intervention and long-term 527,399 641,318 113,919 21.6% care and treatment/DART grants and contracts. Head Start funding totaled $8.3 million. Other public and less accumulated depreciation (253,442) (258,917) (5,475) 2.2% private entity awards and other federal and state sources accounted for $5.4 million. Total Grant Fund Capital assets, net of depreciation $ 273,957 $ 382,401 $ 108,444 39.6% revenues and expenditures were $4.8 million lower than the prior year. The largest contributors to this decrease were reductions in funding for Columbia Regional (IDEA) $2.6 million; Title I $1.7 million; and STEM/STEAM $0.7 million. District-wide, capital assets increased by $108.4 million, net of $5.5 million depreciation and amortization. Capital Bond work accounted for most of the increase. Further explanation of capital assets is shown in PERS Rate Stabilization Reserve Fund. The PERS Rate Stabilization Reserve Fund currently has a Note 7 of the financial statements. dedicated revenue stream in the form of property taxes that have been committed at a rate of 0.11%. Current year revenues from property taxes and investment earnings were $339 thousand. The PERS Rate Stabilization Reserve Fund currently has an ending fund balance of $16.4 million. The Board also established conditions under which the Fund may be used that are consistent with the Fund’s original objectives: (1) upon PERS rate increases per specified limits, and (2) upon PERS UAL debt service increase, also per specified limits.

GO Bonds Fund. The GO Bonds Fund was established to account for the debt proceeds, revenues, and capital expenditures related to bond measures approved by voters. The GO Bonds Fund currently has an ending fund balance of $242.5 million, which is a decrease of $114.1 million from the prior year. This decrease is the net result of investment earnings ($1.8 million) less capital expenditures ($115.9 million).

10 11 Debt Administration. At the end of the current fiscal year, the District had total debt outstanding of $710.1 million (excluding premiums and discounts), which is comprised of limited tax pension and x The Oregon labor market is showing steady improvement, with jobs added in the past year, refunding bonds ($384.1 million) and debt backed by the full faith and credit of the District ($326.0 wages increasing, and unemployment rates dropping. Oregon’s job growth is ranked fourth million). During the year the District reduced debt by making scheduled debt service payments of $47.0 fastest in the nation, trailing only our western neighbors Washington, Utah and Idaho. The US million. Further explanation of debt is shown in Note 10 of the Financial Statements (pages 45-48). economic expansion continues, however there are some trends that may indicate a future recession. One factor is that industrial production remains weak; another is the slowdown in Outstanding Debt Government-wide (thousands) personal income growth nationwide and in Oregon as baby boomers age out of the full-time 2015 Decreases 2016 % change workforce. Limited tax pension and refunding bonds $ 395,958 $ (11,883) $ 384,075 -3.0% x Based on the August 2016 enrollment forecast from Portland State University Population Other debt 361,156 (35,137) 326,019 -9.7% Research Center, District K-12 student enrollment is projected to increase from between 61 and Total Long Term Debt 757,114 (47,020) 710,094 781 students annually over the next 15 years, reaching 51,724, to 56,600 by 2030-2031. Unamortized Bond Premium/(Discount) 39,776 (2,237) 37,539 -5.6% x During the 2013 Legislative Session, Senate Bills 822 and 861A were enacted, which created Total Long Term Debt, net of PERS savings by modifying the PERS cost of living calculation (COLA), eliminating tax remedy payments to out of state retirees, and directing the PERS board to recalculate and lower Premium (Discount) $ 796,890 $ (49,257) $ 747,633 -6.2% employer contribution rates in the short term (to be recovered in future periods). These changes enabled a reduction in employer contribution rates for the 2015-17 biennium. In April 2015, the Oregon Supreme Court’s Moro decision overturned most of the financially significant portions of State statutes limit the amount of general obligation debt a school district may issue based on a formula the 2013 legislative changes relating to the COLA calculation. The effects of this decision have for determining the percentage of the Real Market Value of all taxable properties within the District. The resulted in an increase in 2017-19 PERS rates. Tier 1/Tier 2 and OPSRP employer pension District’s general obligation bond debt capacity is 7.95% of Real Market Value or $6.9 billion. More contribution rates will increase from 0% in fiscal year 2017 to 6.16% and 0.9% respectively in information is available in Statistical Section Schedule 11 on page 128 of this report. fiscal year 2018.

OPERS is Oregon’s public pension system. Under the pension plan, the actuarial liability is the present x Thanks in part to the Local Option Levy, the District will make modest investments in the District’s value of the plan’s current and expected benefits payments (plus administrative expenses). If the fund’s seven strategic priorities with the 2016-17 budget. The most significant investments are directed actuarial liability exceeds its assets, then the fund has a shortfall that is known as a Net Pension Liability toward K-12 literacy and enrollment balancing/grade reconfiguration. There are two aspects to (“NPL”). OPERS requires that school districts pay (or “amortize”) this NPL over a period of 20 years the literacy funding. First, the District appropriated $1 million dollars to complete the grades 6–12 (Tier1/Tier2 portion) and (Retiree Health Insurance Account portion) for 10 years. Since interest rates literacy adoption. These funds will acquire materials as well as provide professional development had been at historic lows, an opportunity to benefit from lowered interest was created. and the creation of supporting resources. Second, a $2.1 million commitment for a PK–5 literacy innovation/adoption involving 10 schools and a cohort of demonstration classrooms. The funds The District participated in the Oregon School Board Association (“OSBA”) sponsored pooled pension will provide for materials and professional development and represents the first round of an obligation bond program, in which the proceeds from bond issues were put into a PERS “side account” overall $7.5 million multi-year implementation. Enrollment balancing/grade reconfiguration is the and used to offset a portion of the OPERS Net Pension Liability (NPL). The reduced rate charged for the result of two years of work performed by the District-Wide Boundary Review Committee that NPL that has resulted from the District’s decision to borrow, has saved an estimated $22 million in the recommends a shift to a predominately K-5 and middle school configuration over the next current year; savings that the District has used to provide more instruction and support services. Over several years. The first phase begins in the 2016-17 year with the opening of Ockley Green time, this reduction in rates should dampen the effects of future increases in the District’s NPL. As long middle school and the hiring of two new principals who will facilitate future middle school as OPERS’ investment returns exceed the costs of servicing the bonds, the benefits of this program will openings. exceed the costs. The District’s NPL was reduced but was not eliminated by these borrowing transactions. Statutes, legislation, regulations, and rules regarding OPERS can change at any time.

ECONOMIC FACTORS AND NEXT YEAR’S BUDGET REQUESTS FOR INFORMATION

x The state’s economy continues to recover at a steady pace. Job growth was 3.2% in the past This financial report is designed to provide a general overview of Portland Public Schools’ finances for all year. Wage growth between 3 and 4 percent per year is outpacing inflation, and has been better those with an interest in the District’s finances. Questions concerning any of the information provided in than the typical state. State General Fund revenues for the 2015-17 biennium is expected to the report or requests for additional financial information should be addressed to the Accounting and come in $24 million (0.1%) above the Close of Session forecast. Revenue growth is expected to Payroll Services Department, Portland Public Schools, 501 N Dixon, Portland, OR, 97227. An electronic be stable with personal income tax collections continuing to grow at a healthy pace, keeping copy of this and other prior year financial reports are available at the District website: revenues in line with what was expected when the budget for the biennium was drafted. http://www.pps.net/Page/2184 . Currently the predominant downside risk to the revenue outlook is the threat that the U.S economic recovery will lose steam in the near term. In spite of the improving economy, fiscal pressures for K-12 education funding are likely to continue for the foreseeable future. The state legislature made progress toward stable and adequate funding with the passage of the 2015- 2017 biennial budget reducing the funding gap below the state’s own Quality Education Model from 31.9% in the previous biennium to 24.2%. Without the generous support of local voters and taxpayers the fiscal situation for PPS would be significantly more challenging and the ability to provide the education that our students deserve would be even more seriously compromised.

12 13 BASIC FINANCIAL STATEMENTS

14 15 SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON Statement of Net Position Statement of Net Position (continued) June 30, 2016 June 30, 2016 (amounts expressed in thousands) (amounts expressed in thousands) Governmental Activities ASSETS DEFERRED INFLOWS OF RESOURCES Cash and cash equivalents-unrestricted$ 72,569 Pension differences between employer contribution and proportionate Cash and cash equivalents held by fiscal agents 5,663 share of contributions 2,460 Investments 351,389 Pension differences between actual and expected earnings 3,602 Accounts and other receivables 35,310 Total deferred inflows of resources 6,062 Property taxes and other taxes receivable 21,419 Inventories 1,044 NET POSITION Prepaid items 1,628 Net investment in capital assets 260,146 Capital assets, not depreciated: Restricted for: Land 9,174 Capital projects 258,804 Construction in progress 144,960 Grants 8,770 Capital assets, net of accumulated depreciation: Student body activities 4,096 Buildings and capital improvements 218,644 Nutrition services 6,721 Vehicles and equipment 9,623 Debt service 4,785 Total assets 871,423 Unrestricted (deficit) (680,955) Total net position $ (137,633) DEFERRED OUTFLOWS OF RESOURCES Pension changes in employer proportion 781 Pension differences between employer contribution and proportionate share of contributions 1,492 Pension differences between expected and actual experience 927 Total deferred outflows of resources 3,200

LIABILITIES Accounts payable 40,259 Accrued wages and benefits payable 74,583 Unearned revenues 1,950 Claims payable 4,530 Non-current liabilities: Due within one year Accrued compensated absences 2,535 Bonds 52,273 Accrued bond interest payable 14,280 Due in more than one year Accrued compensated absences 844 Bonds 695,360 Accrued bond interest payable 72,462 Net pension liability 17,185 Net other post employment benefit obligation 29,933 Total liabilities 1,006,194

The notes to the basic financial statements are an integral part of this financial statement. The notes to the basic financial statements are an integral part of this financial statement.

16 17 SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON Statement of Activities For the year ended June 30, 2016 (amounts expressed in thousands)

Net (Expense) Revenue and Changes in Net EXPENSES PROGRAM REVENUES Position Operating Charges for Grants and Governmental Functions/Programs Services Contributions Activities

GOVERNMENTAL ACTIVITIES Instruction$ 364,964 $ 996 $ 58,619 $ (305,349) Support services 241,016 3,157 22,356 (215,503) Enterprise and Community Services 21,326 4,521 3,085 (13,720) Facilities Services 1,230 - - (1,230) Interest and fees on long-term debt 40,116 - - (40,116) Total governmental activities $ 668,652 $ 8,674 $ 84,060 (575,918)

GENERAL REVENUES Property taxes levied for general purposes 233,548 Property taxes levied for debt service 48,985 Construction excise tax 5,886 Local option taxes levied for general purposes 76,467 State School Fund - general support 211,253 State Common School Fund - general support 5,810 County and intermediate sources - general support 15,772 Investment earnings 3,140 Other 12,120 Total general revenues 612,981

Change in net position 37,063

Net position - beginning of year (174,696) Net position - end of year $ (137,633)

The notes to the basic financial statements are an integral part of this financial statement.

18 19 SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON Governmental Funds Balance Sheet June 30, 2016 (amounts expressed in thousands) PERS Rate Other Total General Grant Stabilization GO Bonds Governmental Governmental Fund Fund Reserve Fund Fund Funds Funds ASSETS Cash and cash equivalents-unrestricted $-361 $ $5,973 $ 30,466 $ 31,687 $ 68,487 Cash and cash equivalents held by fiscal agents 5,419 - - - 244 5,663 Investments 100,735 - 10,423 233,939 2,296 347,393 Prepaid items 125 - - 1,491 12 1,628 Accounts receivable 2,593 25,000 - 604 7,066 35,263 Property taxes and other taxes receivable 19,228 - - - 2,191 21,419 Due from other funds 9,150 - - - 9,482 18,632 Inventories 261 - - - 783 1,044 Total assets $ 137,872 $ 25,000 $ 16,396 $ 266,500 $ 53,761 $ 499,529

LIABILITIES Accounts payable $111,441 $ ,646 $ - $ 23,947 $ 3,163 $ 40,197 Accrued wages and benefits 69,539 4,254 - 25 740 74,558 Due to other funds 743 17,150 - - 739 18,632 Unearned revenues - 1,950 - - - 1,950 Total liabilities 81,723 25,000 - 23,972 4,642 135,337

DEFERRED INFLOWS OF RESOURCES Unavailable property tax revenue 18,314 - - - 2,086 20,400 Total deferred inflows of resources 18,314 - - - 2,086 20,400

FUND BALANCES Nonspendable 386 - - 1,491 795 2,672 Restricted - - - 241,037 40,052 281,089 Committed - - 16,396 - 4 16,400 Assigned 7,200 - - - 6,182 13,382 Unassigned 30,249 - ---30,249 Total fund balances 37,835 - 16,396 242,528 47,033 343,792 Total liabilities, deferred inflows and fund balances $ 137,872 $ 25,000 $ 16,396 $ 266,500 $ 53,761 $ 499,529

The notes to the basic financial statements are an integral part of this financial statement. The notes to the basic financial statements are an integral part of this financial statement.

20 21 SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON Reconciliation of the Balance Sheet to the Statement of Net Position June 30, 2016 (amounts expressed in thousands)

Fund balances - total governmental funds (page 21)$ 343,792

Amounts reported for governmental activities in the Statement of Net Position are different because:

Capital assets are not financial resources and are not reported in governmental funds. 382,401

Long-term taxes receivable are not available to pay for current-period expenditures and therefore are a deferred infow of resources in the governmental funds. 20,400

Assets, deferred outlows, liabilities and deferred inflows of the internal service funds are included in activities in the Statement of Net Position. 4,230

Bonds payable are not due and payable in the current period and therefore are not reported in the governmental funds. (747,633)

Actuarially determined pension activity is not reported in the governmental funds. (20,033)

Accrued compensated absences are reported when earned as a liability in the Statement of Net Position while in the governmental funds only the unpaid balance of reimbursable unused vacation is reported as a liability. (3,379)

Accrued property and liability insurance claims incurred but not reported are not (768) due and payable in the current period and therefore are not reported in the governmental funds.

Accrued interest payable is not recognized as a liability in the governmental funds. (86,742)

Other post employment benefit liability obligation is not reported in governmental funds. (29,901)

Net position of governmental activities (page 1)$ (137,633)

The notes to the basic financial statements are an integtral part of this financial statement.

22 23 SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances For the year ended June 30, 2016 (amounts expressed in thousands)

PERS Rate Other Total General Grant Stabilization GO Bonds Governmental Governmental Fund Fund Reserve Fund Fund Funds Funds REVENUES Property and other taxes $-232,342 $ $-249 $ $ 54,444 $ 287,035 State School Fund 211,253 - - - - 211,253 State Common School Fund 5,810 - ---5,810 Federal and state support 25 55,862 - - 15,137 71,024 Local option taxes 76,593 - ---76,593 County and intermediate sources 13,116 1,057 - - 1,598 15,771 Charges for services 3,562 - - - 45,750 49,312 Extracurricular activities - - - - 7,904 7,904 Investment earnings 887 - 90 1,845 274 3,096 Other 5,586 1,649 - 5 8,975 16,215 Total revenues 549,174 58,568 339 1,850 134,082 744,013

EXPENDITURES Current: Instruction 316,030 33,127 - - 12,969 362,126 Support services 220,666 22,356 - 445 4,910 248,377 Enterprise and community services 1,794 3,085 - - 17,046 21,925 Facilities acquisition and construction -- - 115,490 12,001 127,491 Debt Service: Principal - - - - 47,020 47,020 Interest - - - - 46,610 46,610 Total expenditures 538,490 58,568 - 115,935 140,556 853,549 Excess (deficit) of revenues over expenditures 10,684 - 339 (114,085) (6,474) (109,536) OTHER FINANCING SOURCES (USES) Transfers in - - - - 7,407 7,407 Transfers out (7,407) - ---(7,407) Proceeds from the sale of capital assets 116 - ---116 Total other financing sources (uses) (7,291) - - - 7,407 116

Net change in fund balances 3,393 - 339 (114,085) 933 (109,420)

Fund balances - beginning of year 34,442 - 16,057 356,613 46,100 453,212 Fund balances - end of year $-37,835 $ $ 16,396 $ 242,528 $ 47,033 $ 343,792

The notes to the basic financial statements are an integtral part of this financial statement. The notes to the basic financial statements are an integtral part of this financial statement.

24 25 SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON Reconciliation of the Statement of Revenues, Proprietary Fund - Internal Service Fund Expenditures, and Changes in Fund Balances to the Statement of Activities Statement of Net Position For the year ended June 30, 2016 (amounts expressed in thousands) June 30, 2016 (amounts expressed in thousands)

Net change in fund balances - total governmental funds (page 25)$ (109,420) ASSETS Amounts reported for governmental activities in the Statement of Activities are different because: Current Assets Governmental funds report all capital outlay as expenditures. However, in the Statement of Activities the cost of certain assets is allocated over their estimated useful lives and reported Cash and cash equivalents$ 4,082 as depreciation expense. This is the amount by which capital outlays in the current period of Investments 3,996 of $132,653 exceeded depreciation and disposals of $24,209. 108,444 Accounts and other receivables 47 Total assets 8,125 Property tax revenues that do not provide current financial resources are not reported as revenues in the governmental funds. This is the change in deferred inflow of resources related to property taxes. 1,976 DEFERRED OUTFLOWS OF RESOURCES Pension differences between employer contribution and proportionate The Internal Service Fund is used to account for all costs incurred for claims arising from share of contributions 1 workers' compensation losses. The primary funding sources are charges to other funds. Pension differences between expected and actual experience 1 This amount is the change in net position for the year. 896 Total deferred outflows of resources 2

Incurred but not reported property and liability insurance claims expenses are reported in the Total assets and deferred outflows 8,127 Statement of Activites but they are not reported as expenditures in the governmental funds. 195 LIABILITIES The issuance of long-term debt (e.g., bonds, leases) provides current financial resources to Current Liabilities governmental funds, while the repayment of the principal of long-term debt consumes the Accounts payable 62 current financial resources of governmental funds. Neither transaction, however, has any Accrued wages and benefits 25 effect on the change in net position. Also, governmental funds report the effect of issuance Claims payable 3,762 costs, premiums, and similar items when debt is first issued. Premium amounts are deferred and amortized in the Statement of Activities. 49,257 Total current liabilities 3,849 Long-term Liabilities PERS actuarial liability activity is reported in the Statement of Activities but not in the Other post employment benefit obligation 32 governmental funds. (21,488) Net pension liability 13 Other post employment benefits expenses are reported in the Statement of Activities but Total long term liabilities 45 they are not reported as expenditures in the governmental funds. 2,966 Total liabilities 3,894 Change in compensated absences (21) Change in bond interest payable 4,258 DEFERRED INFLOWS OF RESOURCES Change in net position of governmental activities (page 18)$ 37,063 Pension differences between employer contribution and proportionate share of contributions 2 Pension differences between actual and expected earnings 1 Total deferred inflows of resources 3

Total liabilities and deferred inflows of resources 3,897

NET POSITION Unrestricted $ 4,230

The notes to the basic financial statements are an integtral part of this financial statement. The notes to the basic financial statements are an integral part of this financial statement.

26 27 SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON Proprietary Fund - Internal Service Fund Proprietary Fund - Internal Service Fund Statement of Revenues, Expenses, and Changes in Net Position Statement of Cash Flows For the year ended June 30, 2016 For the year ended June 30, 2016 (amounts expressed in thousands) (amounts expressed in thousands)

OPERATING REVENUES CASH FLOWS FROM OPERATING ACTIVITIES Charges for services $ 3,394 Cash received from interfund services provided and used$ 3,394 Insurance recoveries 9 Cash payments for salaries and benefits (336) Total operating revenues 3,403 Cash payments for goods and services (253) Cash payments for claims (2,141) OPERATING EXPENSES Net cash provided by (used for) operating activities 664 Salaries and benefits 355 Materials and services 256 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Claims expense 2,145 Cash subsidy from state return to work reimbursements 206 Total operating expenses 2,756 Net cash provided by (used for) noncapital financing activities 206

Operating income 647 CASH FLOWS FROM INVESTING ACTIVITIES Purchases of investments (1,995) NON-OPERATING REVENUES Investment earnings 43 Federal and state support 206 Net cash provided by (used for) investing activities (1,952) Investment earnings 43 Total non-operating revenues 249 Net increase (decrease) in cash and cash equivalents (1,082)

Change in net position 896 Cash and cash equivalents at beginning of year 5,164 Cash and cash equivalents at end of year$ 4,082 Net position - beginning of year 3,334 Net position - end of year $ 4,230 RECONCILIATION OF OPERATING INCOME TO CASH FROM OPERATING ACTIVITIES Operating income $ 647 Adjustments to reconcile operating income to net cash from operating activities: Increase in accounts and other receivables (18) Increase in accounts and other payables 3 Increase in claims payable 14 Increase in accrued wages and benefits 6 Decrease in net pension asset and deferred outflows 5 Increase in net pension liability and deferred inflows 9 Decrease in net other post employment benefits obligation (2) Total adjustments 17 Net cash provided by (used for) operating activities$ 664

The notes to the basic financial statements are an integtral part of this financial statement. The notes to the basic financial statements are an integtral part of this financial statement.

28 29 School District No. 1J, Multnomah County, Oregon School District No. 1J, Multnomah County, Oregon Notes to the Basic Financial Statements Notes to the Basic Financial Statements For the Year Ended June 30, 2016 For the Year Ended June 30, 2016 (Dollar amounts, unless otherwise indicated, are expressed in thousands) (Dollar amounts, unless otherwise indicated, are expressed in thousands)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued A. Government-wide and fund financial statements - continued School District No. 1J, Multnomah County, Oregon, known as Portland Public Schools or the District, is Measurement focus, basis of accounting, and financial statement presentation – continued governed by a seven-member elected board. The District is the special-purpose primary government exercising financial accountability for all public K-12 education within its boundaries. As required by accounting principles generally accepted in the United States of America, the accompanying financial Property taxes and grant reimbursements are considered to be susceptible to accrual, if received in cash statements present all significant activities and organizations of the District. The District reports no by the District or a county collecting such taxes within 60 days after year-end. All other revenue items are component units, nor is the District a component unit of any other entity, and specifically has no relationship recognized in the accounting period when they become both measurable and available. Measurable means or connection with Multnomah County, Oregon. the amount of the transaction can be determined. Available means collectible within the current fiscal year or soon thereafter. The financial statements of the District have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) as applied to governmental units. The The District reports the following major governmental funds: Governmental Accounting Standards Board (GASB) is the governing body and establishes governmental accounting and financial reporting principles. The more significant of the District’s accounting policies are General Fund – Accounts for the general operations of the District. The General Fund accounts described below. for all financial resources except those required to be accounted for in another fund. The General Fund’s resources are available to the District for any purpose provided they are expended or A. Government-wide and fund financial statements transferred according to a resolution or policy of the District and/or the laws of Oregon. The government-wide financial statements (i.e., the Statement of Net Position and the Statement of Grant Fund – Accounts for revenues and expenditures that are restricted for specific projects. Activities) report information on all of the activities of the District. The District does not report any fiduciary Principal revenue sources are federal, state and local funding. activities. For the most part, the effect of interfund activity has been removed from these statements except that interfund services provided and used are not eliminated in the process of consolidation. PERS Rate Stabilization Reserve Fund – Accounts for reserves that will be used to mitigate the budgetary impact of significant employer personnel benefit rates fluctuations when they occur in The Statement of Activities demonstrates the degree to which the direct expenses of a given function or future OPERS or PERS UAL charges. Disbursements from this fund are made in accordance with segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a resolution 2679 by the District’s Board. Revenues are an allocation of property taxes. specific function or segment. Program revenues include 1) charges to customers who purchase or use goods, services, or privileges provided by a given function and 2) grants and contributions that are restricted GO Bond Fund – Accounts for General Obligation bond proceeds and expenditures for specifically to meeting the operational or capital requirements of a particular function. Taxes and other items not authorized projects. properly included among program revenues are reported instead as general revenues. Certain functional Additionally, the District reports the following internal service fund: expenditures contain an element of indirect cost. Self-Insurance Fund – Accounts for all workers’ compensation activities. The activity and Separate financial statements are provided for Governmental Funds and the Self-Insurance Fund, which is balances of this fund are included in the governmental activities in the government-wide financial an internal service fund (proprietary fund). The Self-Insurance Fund is included in the government-wide statements. The primary resources are charges to other funds, investment earnings and insurance financial statements. Major individual governmental funds are reported as separate columns in the fund recoveries. All revenues except for investment revenues and transfers in are considered operating financial statements. In the internal service fund, all revenues and expenses except interest earnings, revenue. Operating expenses include salaries, benefits, materials, premium costs, claims, and transfers, and federal and state support are considered to be related to operations. other related costs. Measurement focus, basis of accounting, and financial statement presentation The District reports the following non-major governmental funds: The government-wide financial statements are reported using the economic resources measurement focus Special Revenue Funds – Accounts for certain revenues that are restricted to expenditures for and the accrual basis of accounting, as are the proprietary fund financial statements. Revenues are designated purposes. recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants Debt Service Funds – Accounts for the accumulation of financial resources for the payment of and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider long-term debt principal, interest, and related costs. have been met. Capital Projects Funds – Accounts for financial resources to be used for the acquisition of Governmental fund financial statements are reported using the current financial resources measurement property, technology, construction or renovation of facilities. focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the District considers revenues to be available if they are collected within 60 days of the end of the current fiscal year. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service and expenditures related to compensated absences are recorded only when payment is due.

30 31 School District No. 1J, Multnomah County, Oregon School District No. 1J, Multnomah County, Oregon Notes to the Basic Financial Statements Notes to the Basic Financial Statements For the Year Ended June 30, 2016 For the Year Ended June 30, 2016 (Dollar amounts, unless otherwise indicated, are expressed in thousands) (Dollar amounts, unless otherwise indicated, are expressed in thousands)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued B. Appropriations and Budgetary Controls E. Property Taxes The District prepares a budget for all funds in accordance with the modified accrual basis of accounting, Uncollected real and personal property taxes are reflected on the Statement of Net Position and the Balance with certain adjustments, and legal requirements set forth in Local Budget Law. Sheet as receivables. Under state law, county governments are responsible for extending authorized property tax levies, computing tax rates, billing and collecting all property taxes, and making periodic Consistent with Local Budget Law, expenditures are appropriated by fund for each legally adopted annual distributions of collections to entities levying taxes. Property taxes become a lien against the property when operating budget at the following levels of control, as appropriate: levied on July 1 of each year and are payable in three installments due on November 15, February 15 and May 15. Property tax collections are distributed monthly except for November, when such distributions are Instruction made weekly. Support Services Enterprise and Community Services F. Inventories and Prepaid Items Facilities Acquisition and Construction Debt Service Inventories of school operating supplies, maintenance supplies, and food and other cafeteria supplies are Contingency stated at cost using the weighted average method. A portion of the inventory consists of commodities Fund Transfers purchased from the United States Department of Agriculture (USDA). The commodities are recorded at wholesale market value as provided by the USDA. The District accounts for the inventory based on the Capital outlay expenditures are appropriated within the service levels for Instruction, Support Services, consumption method. Under the consumption method, inventory is recorded when purchased and Enterprise and Community Services, and Facilities Acquisition and Construction. Debt service expenditures expenditures are recorded when inventory items are used. Donated foods consumed during the year are in the General Fund are generally appropriated within the Support Services level of control. For reporting reported as revenues and expenditures. The amount of unused donated food at year-end is immaterial. purposes all other debt service expenditures are segregated from the supporting services budgetary control Prepaid insurance is related to capital bond construction activity. Prepaid assets are recognized as levels and are presented in the debt service expenditures category. expenses/expenditures based on the consumption method when their use benefits the District.

After the original budget is adopted, the Board of Education may approve appropriation transfers between G. Capital Assets the levels of control without limitation. Supplemental appropriations may be approved by the Board of Education if any occurrence, condition, or need exists which had not been anticipated at the time the budget Expenditures for capital assets, which include land, buildings and site improvements, construction in was adopted. An appropriations transfer that alters estimated total expenditures by less than 10% of any progress, and vehicles and equipment are reported in the Statement of Revenues, Expenditures, and individual fund may be adopted at the regular meeting of the Board of Education. For conditions that require Changes in Fund Balance by function. The District defines capital assets as assets with an initial cost either supplemental appropriations or an increase in expenditures greater than 10% of an individual fund, exceeding the threshold amounts shown in the schedule below, and an estimated useful life in excess of a supplemental budget must be adopted, requiring public hearings, publications in newspapers and one year. District capital assets are recorded at historical cost, or estimated historical cost if purchased or approval by the Board of Education. Supplemental budgets are submitted, reviewed and certified, similar constructed, and depreciated or amortized, where appropriate, using the straight-line method. Donated to the original budget, by the Multnomah County Tax Supervising and Conservation Commission capital assets are recorded at estimated fair market value at the date of donation. Major outlays for capital subsequent to approval by the Board of Education. Appropriations lapse at the end of each fiscal year. assets and improvements are recorded as construction in progress and capitalized as projects are The District had two supplemental budgets during budget year 2016. completed. When the District determines that an asset has been impaired as defined by GASB Statement No. 42 it adjusts the asset value. Under the pronouncements of GASB Statement No. 51 the District C. Encumbrances capitalizes intangible asset costs, such as costs relating to the internally developed computer software. The intangible asset costs are classified as equipment. During the year encumbrances are recorded in the accounting records when purchase orders are issued. The use of encumbrances indicates to District employees that appropriations are committed however, all Major asset classifications, useful lives and capitalization thresholds are: encumbrances expire at year-end. Capitalization Useful lives, D. Cash and Cash Equivalents and Investments Asset threshold years For the purpose of the Statement of Cash Flows, the Statement of Net Position and the Balance Sheet, the Buildings$ 25 100 District’s monies in the Oregon Local Government Investment Pool, savings deposits, demand deposits Land & site improvements 25 5 to 25 and cash with county treasurer are considered to be cash and cash equivalents. Investments with a Equipment 5 5 to 15 remaining maturity of more than one year at the time of purchase are stated at fair value. Other investments Vehicles 5 5 to 8 are stated at amortized cost, which approximates fair value.

32 33 School District No. 1J, Multnomah County, Oregon School District No. 1J, Multnomah County, Oregon Notes to the Basic Financial Statements Notes to the Basic Financial Statements For the Year Ended June 30, 2016 For the Year Ended June 30, 2016 (Dollar amounts, unless otherwise indicated, are expressed in thousands) (Dollar amounts, unless otherwise indicated, are expressed in thousands)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued K. Receivables and Payables - continued H. Grant Accounting Activities between funds that represent lending/borrowing arrangements outstanding at the end of the Unreimbursed expenditures due from grantor agencies are recorded in the financial statements as accounts fiscal year are referred to as either “due to/from other funds” in the fund financial statements, and are receivable and revenues. Cash received from grantor agencies in excess of related grant expenditures is eliminated in the government-wide statements. reflected as unearned revenue on the Statement of Net Position and the Balance Sheet.

I. Insurance L. Long-term Obligations The District operates the Self-Insurance Fund to account for the costs of workers’ compensation related In the government-wide financial statements, long-term debt and other long-term obligations including costs and resources. Charges to other funds are recognized as revenues and as expenditures in the fund accrued compensation and claims are reported as liabilities. Bond premiums and discounts are deferred incurring the charges. The District accounts for all other insurance related resources and costs, such as and amortized over the life of the bonds using the straight line method which approximates the effective general liability claims, property and fire loss claims, and the payment of premiums through the General interest method. Bonds payable are reported net of applicable bond premium or discount. Bond issuance Fund. costs are reported as outflows of resources (expenses) in the period incurred. The District recognizes the liabilities for estimated losses to be incurred from pending claims and for claims In the fund financial statements, governmental fund types recognize bond premium and discounts, as well incurred but not reported (IBNR). The IBNR claims are estimates of claims that are incurred through the as bond issuance costs as incurred. The face amount of debt issued is reported as other financing sources. end of the fiscal year but have not yet been reported. These liabilities are based on actuarial valuations. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs are reported as expenditures. The District's insurance deductibles and policy limits are as follows: Excess M. Retirement Plans Coverage per Most District employees participate in Oregon’s Public Employees Retirement System (OPERS). Deductibles Occurrence Contributions are made as required by the plan and are recorded as expense/expenditures. General and Automobile Claims $ 1,000 $ 5,000 Property and Fire Claims 1,000 250,000 For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of Earthquake Claims 250 50,000 resources related to pensions, and pension expense, information about the fiduciary net position of OPERS and additions to/deductions from OPERS’s fiduciary net position have been determined on the same basis Flood Claims 1,000 75,000 as they are reported by OPERS. For this purpose, benefit payments (including refunds of employee Workers' Compensation Claims 1,000 25,000 contributions) are recognized by OPERS when due and payable in accordance with the benefit terms. The District has not exceeded the claims limitation on its insurance policies for the last five years. OPERS investments are reported at fair value. The District provides tax-deferred annuity contracts established under Section 403(b) of the Internal J. Compensated Absences Revenue Code. Participation in the program is voluntary. Contributions are made from salary deductions Depending on years of service and union membership, employees can earn annual vacation leave between from participating employees within the limits specified in the Code. 10 days and 22 days per year. Administrators earn 22 days of annual vacation leave. Effective January 1, N. Early Retirement and Other Post-Employment Benefits 2012, employees are allowed to carry over twice their maximum yearly earned balances from one fiscal year to another. All outstanding vacation leave is payable upon resignation, retirement, or death. Certificated employees who have met the requirements for age and years of service with the District are Compensated absences are recognized as liabilities in the District’s proprietary fund. Compensated eligible for early retirement benefits. Early retirement benefits and other post-employment benefits are absences are not reported as liabilities in the governmental funds because they have not “matured,” explained in Note 12. meaning they are not yet payable to the employee. The District is mandated to contribute to Retirement Health Insurance Accounts (RHIAs) for eligible District Sick leave accumulates each month without a limit on the total hours that can be accumulated. employees who are members of OPERS, and were plan members before January 1, 2004. The plan was Accumulated sick leave does not vest and is forfeited at resignation, retirement or death. Sick leave is established by the Oregon Legislature. recorded as an expense/expenditure when leave is taken and no liability is recorded. A health and welfare program the District provides for retirees is accounted for under the provisions of K. Receivables and Payables Governmental Accounting Standards Board (GASB) Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other than Pensions (OPEB). The OPEB obligation is Receivables expected to be collected within sixty days following year-end are considered measurable and actuarially determined, is reflected as a long-term liability in the government–wide financial statements, and available and are recognized as revenues in the fund financial statements. Other receivables are offset by reflects the present value of expected future payments. The net other post-employment benefits liability unearned revenues and, accordingly, have not been recorded as revenue. Receivables, net of any and expenditure in the governmental fund financial statements are limited to amounts that become due and allowance for doubtful accounts, are recorded on the Statement of Net Position/Balance Sheet. payable as of the end of the fiscal year, and are reported on the pay-as-you-go basis.

34 35 School District No. 1J, Multnomah County, Oregon School District No. 1J, Multnomah County, Oregon Notes to the Basic Financial Statements Notes to the Basic Financial Statements For the Year Ended June 30, 2016 For the Year Ended June 30, 2016 (Dollar amounts, unless otherwise indicated, are expressed in thousands) (Dollar amounts, unless otherwise indicated, are expressed in thousands)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued R. Fund Balance Definitions - continued

O. Net Position 4. Assigned fund balances – Amounts the District intends to use for a specific purpose that are Net position represents the difference between the District’s total assets and total liabilities. District net neither restricted nor committed are reported as assigned fund balance. Intent can be position currently has three components: expressed by the Board or delegated authority to an official. An example of assignment is when the District’s Board adopts the annual budget which includes funds identified as reserved Net investment in capital assets represents capital assets less accumulated depreciation and for a specific purpose. outstanding principal of capital asset related debt. 5. Unassigned fund balance – Amounts not included in other classifications above. The amount represents spendable fund balance that is not restricted, committed or assigned in the General Restricted net position represents net position upon which constraints have been placed, either Fund. This classification is also used to report any negative fund balance amounts in other externally by creditors, grantors, contributors or others, or legally constrained by law. governmental funds.

Unrestricted net position represents net position that does not meet the definition of “restricted” or The District’s Board passed resolution number 4461 on June 13, 2011, titled: Compliance with “net investment in capital assets”. Governmental Accounting Standards Board Statement No. 54 (GASB 54): Fund Balance Reporting and Governmental Fund Type Definitions. The resolution reads as follows: P. Deferred Inflows and Outflows of Resources In addition to assets, the Statement of Net Position will sometimes report a separate section for Deferred x The Board affirms that it is the highest level decision authority for the District. Outflows of Resources. This separate financial statement element, Deferred Outflows of Resources, x The Board hereby delegates the authority to classify portions of ending fund balance as “Assigned” represents a consumption of net position that applies to a future period and so will not be recognized as an to the Superintendent. outflow of resources (expense/expenditure) until then. x The Board adopts GASB 54 definitions for Non-spendable, Restricted, Committed, Assigned and Unassigned fund balances. In addition to liabilities, the Statement of Net Position will sometimes report a separate section for Deferred x In conjunction with the adoption of GASB 54 fund balance classifications, the Board declares its Deferred Inflows of Resources Inflows of Resources. This separate financial statement element, , budgeting practices and budget allocations for restricted and unrestricted fund balance amounts represents an acquisition of net position that applies to a future period and so will not be recognized as an will be consistent with the fund balance classification hierarchy. inflow of resources (revenue) until then. x The Board hereby adopts GASB 54 definitions of fund types for the General Fund, special revenue Q. Management Estimates funds, debt services funds, capital projects funds, and permanent funds.

The preparation of basic financial statements in accordance with accounting principles generally accepted S. Use of Restricted Resources in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of When an expense is incurred that can be paid using either restricted or unrestricted resources (net position), the basic financial statements and reported amounts of revenues and expenses during the reporting period. the District first applies the expense toward restricted resources and then toward unrestricted resources. Actual results could differ from those estimates. In governmental funds, the District first applies the expenditure toward restricted fund balance and then to other, less-restrictive classifications, committed and then assigned fund balances, before using unassigned R. Fund Balance Definitions fund balances. In the governmental financial statements, fund balances are reported in classifications that comprise a hierarchy based primarily on the extent to which the District is bound to honor constraints on the specific T. Fund Balance Policy purposes for which amounts in those funds can be spent. The District’s Board policy 8.10.025P mandates that the District budget a minimum of three percent of its Governmental fund balance definitions, from most to least restrictive are: General Fund revenue as contingency, and that a three percent fund balance be maintained.

1. Non-spendable fund balances – Amounts that are not in spendable form or due to legal or U. New Accounting Standards Implemented contractual requirements. Examples of resources in this category are prepaids, inventory or notes receivable. GASB Statement No. 72, Fair Value Measurement and Application, addresses accounting and financial 2. Restricted fund balances – Amounts constrained to specific purposes by their providers (such reporting issues related to fair value measurements, and provides guidance for determining a fair value as grantors or bond holders), through constitutional provisions or by enabling legislation. These measurement for financial reporting purposes. are primarily amounts subject to externally enforceable legal restrictions. 3. Committed fund balances – Amounts constrained to specific purposes by resolution of the GASB Statement No. 76, The Hierarchy of Generally Accepted Accounting Principles for State and Local District’s Board. The District’s Board can modify or rescind a commitment at any time through Governments identifies—in the context of the current governmental financial reporting environment—the passage of a new resolution. In order to commit fund balances the District must take formal hierarchy of generally accepted accounting principles (GAAP). The “GAAP hierarchy” consists of the action prior to the close of the fiscal year. sources of accounting principles used to prepare financial statements of state and local governmental entities in conformity with GAAP and the framework for selecting those principles.

36 37 School District No. 1J, Multnomah County, Oregon School District No. 1J, Multnomah County, Oregon Notes to the Basic Financial Statements Notes to the Basic Financial Statements For the Year Ended June 30, 2016 For the Year Ended June 30, 2016 (Dollar amounts, unless otherwise indicated, are expressed in thousands) (Dollar amounts, unless otherwise indicated, are expressed in thousands)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued NOTE 4 – CASH, CASH EQUIVALENTS AND INVESTMENTS U. New Accounting Standards Implemented – continued Deposits with financial institutions include bank demand deposits, deposits in the Local Government GASB Statement No. 79, Certain External Investment Pools and Pool Participants to address for certain Investment Pool, time certificates of deposit, and savings account deposits, as authorized by Oregon external investment pools and their participants the accounting and financial reporting implications that statutes. result from changes in the regulatory provisions referenced by previous accounting and financial reporting standards. The District categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are NOTE 2 – BUDGETARY BASIS OF ACCOUNTING significant other inputs; Level 3 inputs are significant unobservable inputs. At June 30, 2016, the District’s The District reports financial position, results of operations, and changes in fund balance/Net Position on cash, cash equivalents, and investments were comprised of the following: the basis of U. S. generally accepted accounting principles (GAAP). The budgetary statements provided as part of required or other supplementary information are presented on the budgetary basis to provide a Fair Value meaningful comparison of actual results with the budget. Measurements June 30, 2016 Using Oregon Local Government Investment Pool $ 36,712 N/A NOTE 3 – STATE CONSTITUTIONAL PROPERTY TAX LIMITS Cash in demand deposits 35,850 N/A The State of Oregon has a constitutional limit on property taxes for schools and non-school government Petty cash 7 N/A operations. Under the provisions of the limitation, tax revenues are separated into those for the public Total cash and cash equivalents 72,569 school system and those for local government operations other than the public school system. Property taxes levied for the payment of bonded indebtedness are exempt from the limitation, provided such bonds Cash and cash equivalents held by fiscal agents 5,663 N/A are either authorized by a specific provision of the Oregon Constitution or approved by the voters of the District for capital construction or improvements. U.S. Government agency securities 218,146 Level 1 The District’s tax rates for the year ended June 30, 2016 were: Corporate Paper 113,789 Level 1 Municipal Bonds 19,454 Level 1 Permanent rate $ 5.2781 per $1 thousand of assessed value Total investments 351,389 Local option rate $ 1.9900 per $1 thousand of assessed value Total cash, cash equivalents and investments $ 429,621 GO Bond Levy amount $ 50,343,022 (unrounded dollars) A. Investments Accounting principles generally accepted in the United States of America require investments with a remaining maturity of more than one year at the time of purchase to be stated at fair value. Fair value is determined at the quoted market price, if available; otherwise the fair value is estimated based on the amount at which the investment could be exchanged in a current transaction between willing parties, other than in a forced liquidation sale. Investments with maturities of less than one year are carried at amortized cost. Investments in the Oregon Local Government Investment Pool (LGIP) are stated at share value, which approximates fair value, and is the value at which the shares can be withdrawn. The LGIP does not report all investments at fair value in accordance with the provisions of GASB Statement No. 31. The LGIP is required by Oregon Revised Statutes (ORS) to compute the fair value of all investments maturing more than 270 days from the date the computation is made. If the fair value totals more than one percent of the balance of the LGIP in terms of unrealized gain or loss, the amount is required to be distributed to the pool participants. Fifty percent of the LGIP portfolio must mature within 93 days. Up to 25% of the LGIP portfolio may mature in over one year and no investment may mature in over three years.

38 39 School District No. 1J, Multnomah County, Oregon School District No. 1J, Multnomah County, Oregon Notes to the Basic Financial Statements Notes to the Basic Financial Statements For the Year Ended June 30, 2016 For the Year Ended June 30, 2016 (Dollar amounts, unless otherwise indicated, are expressed in thousands) (Dollar amounts, unless otherwise indicated, are expressed in thousands)

NOTE 4 – CASH, CASH EQUIVALENTS AND INVESTMENTS – continued NOTE 4 – CASH, CASH EQUIVALENTS AND INVESTMENTS – continued A. Investments – continued A. Investments – continued Interest rate risk The District requires all securities to be purchased in the District’s name and held in third party safekeeping. In accordance with its investment policy, the District manages its exposure to declines in fair value of its investments by structuring the investment portfolio so that securities mature to meet ongoing operations. The Oregon Local Government Investment Pool is unrated. Other investments held at June 30, 2016 are categorized by Moody’s and Standard and Poor’s ratings as follows: Credit risk Oregon Revised Statutes authorize school districts to invest in obligations of the U.S. Treasury, agencies U.S. and instrumentalities of the United States, commercial paper, bankers’ acceptances guaranteed by a Government Corporate qualified financial institution, repurchase agreements, interest bearing bonds of any city, county, port or Moodys & Agency Commercial Corporate Municipal school district in Oregon, Washington, Idaho, and California (subject to specific standards), and the LGIP, Rating Obligations Paper Notes Bonds Total among others. The Board of Education has adopted a policy which complies with state statutes. Aaa$ 184,579 $ - -$ -$ $ 184,579 Aa1 - - - 13,097 13,097 The District’s investments in U.S. government securities are not required to be rated. Investments in U.S. Aa2 - - 10,020 208 10,228 government agency securities are rated Aaa by Moody’s Investors Service. Aa3 - - 16,793 554 17,347 Corporate notes are rated between Aa2 and A3 by Moody’s and between AA+ and A- by Standard and A1 - - 30,241 160 30,401 Poor’s. A2 - - 30,544 - 30,544 A3 - - 10,246 - 10,246 Concentration of credit risk-investments NR 33,567 - - 5,435 39,002 In accordance with GASB 40, the District is required to report all individual non-federal investments which exceed 5% of total invested funds. As of June 30, 2016 the District held the following: WeightedP-1 (short Average term) - 15,945 - - 15,945 $ 218,146 $ 15,945 $ 97,844 19,454$ 351,389$ Maturity (Yrs) Percentage of 0.62 0.37 0.35 0.74 0.56 Value total investments JP Morgan - Corporate Obligations$ 18,606 5.3% U.S. Custodial risk-deposits Government Corporate S & P & Agency Commercial Corporate Municipal The District’s deposits with financial institutions are insured by the Federal Depository Insurance Rating Obligations Paper Notes Bonds Total Corporation (FDIC); interest and non-interest bearing accounts are insured up to $250 thousand. To AA+ $ 184,579 $ - $ 16,064 751$ 201,394$ provide additional security required and authorized by Oregon Revised Statutes, Chapter 295, deposits AA - - 12,259 - 12,259 above insurance limits are covered by collateral held in a multiple financial institution collateral pool AA- - - 15, 555 12,106 27,661 administered by the State of Oregon. At June 30, 2016, bank balances of $1,274 were insured by the A+ - - 31,477 - 31,477 FDIC. Funds not covered by FDIC insurance are covered by the Oregon State Treasury Collateral Pool. A - - 14,064 - 14,064 At June 30, 2016, the carrying amount of the District's balance was $35,850 and the bank balance was A- - - 8,425 - 8,425 $39,927. NR 33,567 - - 1,162 34,729 A-1 (short term) - 6,989 - - 6,989 Custodial credit risk-investments A-1+ (short term) - 8,956 - 5,435 14,391 For an investment, this is the risk that, in the event of a failure of the counterparty, the District will not be $ 218,146 $ 15,945 $ 97,844 19,454$ 351,389$ able to recover the value of its investments or collateralized securities that are in the possession of an Weighted Average outside party. The District’s investment policy limits the types of investments that may be held and does Maturity (Yrs) 0.62 0.37 0.35 0.74 0.56 not allow securities to be held by the counterparty.

The LGIP is administered by the Oregon State Treasury with the advice of other state agencies and is not registered with the U.S. Securities and Exchange Commission. The LGIP is an open-ended no-load diversified portfolio offered to any agency, political subdivision, or public corporation of the State that by law is made the custodian of, or has control of any fund. The LGIP is commingled with the State’s short-term funds. In seeking to best serve local governments of Oregon, the Oregon Legislature established the Oregon Short Term Fund Board, which has established diversification percentages and specifies the types

40 41 School District No. 1J, Multnomah County, Oregon School District No. 1J, Multnomah County, Oregon Notes to the Basic Financial Statements Notes to the Basic Financial Statements For the Year Ended June 30, 2016 For the Year Ended June 30, 2016 (Dollar amounts, unless otherwise indicated, are expressed in thousands) (Dollar amounts, unless otherwise indicated, are expressed in thousands)

NOTE 4 – CASH, CASH EQUIVALENTS AND INVESTMENTS – continued NOTE 7 – CAPITAL ASSETS Investments – continued Custodial credit risk-investments – continued A summary of changes in capital assets for the year ended June 30, 2016 follows: and maturities of the investments. The purpose of the Board is to advise the Oregon State Treasury in the Beginning Ending management and investment of the LGIP. Investments within the LGIP must be invested and managed as Balance Additions Deletions Transfers Balance a prudent investor would, exercising reasonable care, skill and caution. Professional standards indicate that the investments in external investment pools are not subject to custodial risk because they are not Capital assets not being evidenced by securities that exist in physical or book entry form. Nevertheless, management does not depreciated or amortized believe that there is any substantial custodial risk related to LGIP investments. Land $ 9,174 $ - -$ -$ $ 9,174 Construction in progress 42,156 131,118 (4,351) (23,963) 144,960 NOTE 5 – RECEIVABLES Total capital assets not being depreciated or amortized 51,330 131,118 (4,351) (23,963) 154,134 Receivables at June 30, 2016 are summarized as follows: Govern- Capital assets being GO mental depreciated or amortized General Grant Bonds and other Buildings and site improvements 424,356 143 (13,912) 23,963 434,550 Fund Fund Fund funds Total Vehicles and equipment 51,713 1,392 (471) - 52,634 Accounts and other receivables: Total capital assets being Interest 278$ -$ 585$ -$ 863$ depreciated or amortized 476,069 1,535 (14,383) 23,963 487,184 Accounts receivable 2,255 - 19 7,113 9,387 Total general capital assets 527,399 132,653 (18,734) - 641,318 Federal, state and local grants - 25,000 - - 25,000 Advances to employees 60 - - - 60 Total accounts and other receivables 2,593 25,000 604 7,113 35,310 Less accumulated depreciation and amortization Property and other taxes receivable 19,228 - - 2,191 21,419 Buildings and site improvements (212,441) (12,277) 8,812 - (215,906) Total receivables $ 21,821 $25,000 $ 604 $ 9,304 $ 56,729 Vehicles and equipment (41,001) (2,478) 468 - (43,011) Total accumulated depreciation and amortization (253,442) (14,755) 9,280 - (258,917) NOTE 6 – PREPAID ASSETS Total capital assets, net of accumulated depreciation 273,957$ $ 117,898 $-(9,454) $ $ 382,401 A summary of changes in prepaid assets for the year ended June 30, 2016 is as follows:

Beginning Ending Depreciation expense for governmental activities is charged to functions as follows: Balance Additions Reductions Balance Prepaid Assets: Instruction 11,471$ Postage$ 43 $ 276 $ (194) $ 125 Supporting services 3,121 Insurance 1,961 271 (729) 1,503 Food services 163 Other 9 - (9) - $ 14,755 Total Prepaid Assets: $ 2,013 $ 547 $ (932) $ 1,628

As of June 30, 2016 the District has three schools that are closed and idle: East Sylvan, Foster and Smith. Prepaid insurance consists of an Owner Controlled Insurance Program (OCIP), which provides liability As of June 30, 2016 the carrying value of these schools is $1,076 and is included in the capital assets coverage for major construction contracts, and builders risk insurance for high school rebuilds. The OCIP summary above. is amortized for 5 years starting in fiscal year 2014, and the builders risk policies are amortized over 23 months (Franklin) and 26 months (Roosevelt) starting June, 2015.

42 43 School District No. 1J, Multnomah County, Oregon School District No. 1J, Multnomah County, Oregon Notes to the Basic Financial Statements Notes to the Basic Financial Statements For the Year Ended June 30, 2016 For the Year Ended June 30, 2016 (Dollar amounts, unless otherwise indicated, are expressed in thousands) (Dollar amounts, unless otherwise indicated, are expressed in thousands)

NOTE 8 – INTERFUND RECEIVABLES, PAYABLE AND TRANSFERS NOTE 10 – BONDED AND OTHER DEBT

Interfund balances represent cash owed by one fund to another. At June 30, 2016, the General Fund owed Changes in District long-term debt during fiscal year 2016 were as follows: the Student Body Activity Fund $743; the Grants Fund was advanced $9,150 by the General Fund and $8,000 from other non-major governmental funds to cover unbilled expenditures; and the Partnerships Fund Original Beginning Matured and Ending Due Within was advanced $739 from other non-major governmental funds to cover unbilled expenditures. Amount Balance Additions Redeemed Balance One Year Pension debt: Interfund receivables and payables on June 30, 2016 are comprised of the following: Limited tax pension bonds Series 2002 210,104$ $164,319 $ - $ (4,203) $ 160,116 $ 4,285 Due To Due From Series 2003281,170 217,239 - (7,680) 209,559 7,540 General Fund$ 9,150 $ 743 Series 2012 14,400 14,400 - -14,400 - Non-major governmental funds 9,482 739 Total pension debt (Note 11) 505,674 395,958 - (11,883) 384,075 11,825 Grant Fund - 17,150 $ 18,632 $ 18,632 Other Debt: Note Payable- 2009 Credit Facility 15,000 9,970 - (2,369) 7,601 2,449 Recovery Zone Economic The District's General Fund made debt service transfers totaling $3,837 to non-major debt funds. The Development Bonds 11,000 7,611 - (913) 6,698 941 District’s General Fund also made transfers totaling $3,570 to non-major capital projects funds. General Obligation Bonds Series 2013B 68,575 68,575 - (1,555) 67,020 1,705 The composition of interfund transfers as of June 30, 2016, is as follows: General Obligation Bonds Series 2015A 30,300 30,300 - (30,300) - - Transfers in Transfers out General Obligation Bonds General Fund$ - $ 7,407 Series 2015B 244,700 244,700 - - 244,700 33,145 Nonmajor Governmental Funds 7,407 - Total other debt 369,575 361,156 - (35,137) 326,019 38,240 $ 7,407 $ 7,407 Total long-term debt $ 875,249 757,114 - (47,020) 710,094 50,065 Unamortized bond premium NOTE 9 – ACCRUED COMPENSATED ABSENCES (discount) 39,776 - (2,237) 37,539 2,208 Total long-term debt, net of The General Fund and Grant Fund are the primary funds from which the compensated absences balance premiums (discounts) $ 796,890 $ - $ (49,257) $ 747,633 $ 52,273 liability is liquidated. The change in the balance of accrued compensated absences for the year was as follows: Changes in District accrued interest during fiscal year 2016 were as follows:

Outstanding Outstanding Due Within Beginning Payme nts and Ending July 1, 2015 Increases Payments June 30, 2016 One Year Accrued Interest: Balance Additions Reductions Balance $ 3,358 $ 4,053 $ (4,032) $ 3,379 $ 2,535 Current Portion 13,997$ $(46,893 $146,610)$ 4,280 Long Term Portion 77,003 - (4,541) 72,462 Total Accrued Interest $ 91,000 $(46,893 $851,151)$ 6,742

A. Limited Tax Pension Bonds In October 2002 Portland Public Schools participated as one of forty-one Oregon school districts and education service districts in issuing limited tax pension bonds. The proceeds were used to finance a portion of the estimated unfunded actuarial liability of each participating school district with the Oregon Public Employees Retirement System (“OPERS”). The Oregon School Boards Association (“OSBA”) sponsored this pooled limited tax pension bond program. The OSBA does not have a financial obligation in connection with the bonds issued under the program. Except for the payment of its pension bond payments and additional charges when due, each participating school district has no obligation or liability to any other participating school district’s pension bonds or liabilities to OPERS. In April 2003, OSBA sponsored another pooled limited tax pension bond program with thirty school districts and education service districts. Payments of yearly principal and interest are recorded as financial statement expenditures

44 45 School District No. 1J, Multnomah County, Oregon School District No. 1J, Multnomah County, Oregon Notes to the Basic Financial Statements Notes to the Basic Financial Statements For the Year Ended June 30, 2016 For the Year Ended June 30, 2016 (Dollar amounts, unless otherwise indicated, are expressed in thousands) (Dollar amounts, unless otherwise indicated, are expressed in thousands)

NOTE 10 – BONDED AND OTHER DEBT – continued NOTE 10 – BONDED AND OTHER DEBT – continued A. Limited Tax Pension Bonds - continued B. Other Debt - continued and water conservation projects that will financially benefit the District in reduced energy and water costs in instruction and in support services. The District anticipates the total costs of financing the District’s and will yield on-going financial benefit once the bonds are paid off. The District makes semi-annual interest actuarial obligation in this manner will result in a significant savings to the District when compared to paying payments and annual principal payments, and the bonds will mature in December 2022. The bond’s for such costs as additional contribution rates to OPERS. interest payments of 5.05% are 45% federally subsidized. As part of a $482 million capital bond measure passed by District voters in 2012, the District has issued the The District issued $210,104 Limited Tax Pension Bonds, Series 2002 (Federally Taxable), of which following General Obligation debt to finance school renovation and replacement: $53,524 are Series 2002A (deferred interest bonds) and $156,580 are Series 2002B (current interest bonds). The 2002 series Limited Tax Pension Bonds were issued on October 31, 2002, and are payable On May 1, 2013 the District issued $68,575 in General Obligation Bonds, Series 2013B. The interest rate annually through June 2028. Interest on the deferred interest bonds is accreted semiannually at yields is fixed at rates ranging from 1.5% to 5%. Interest payments on the bonds are payable semiannually in ranging from 5.67% to 6.10%. Interest on the current coupon bonds is payable semiannually at rates June and December, beginning December 15, 2013. The bonds mature on June 15, 2033 with principal ranging from 5.48% to 5.55%. The Series 2002A Bonds are not subject to optional prepayment prior to payments due annually on June 15th. The bonds were issued at a premium of $7,923 which is being maturity. The Series 2002B Bonds maturing June 30, 2021, shall be subject to prepayment from pension amortized over the life of the bonds. prepayments on or after June 30, 2009, and those due June 30, 2028 are subject to mandatory prepayment On April 30, 2015 the District issued $30,300 in General Obligation Bonds, Series 2015A. The interest rate prior to its stated maturity, in whole or part, on any June 30 on or after June 30, 2024. During 2012 $14,200 is fixed at 0.45% and interest payments on the bonds are payable semiannually in June and December, of Series 2002 Pension Bonds were refinanced. See description of the Limited Tax Pension Bonds, Series beginning December 15, 2015. The Series 2015A Bonds are not subject to optional prepayment prior to 2012 below. maturity. The bonds were issued at a premium of $34, amortized over the life of the bonds. At June 30, 2016 this debt was fully repaid. The District issued $281,170 Limited Tax Pension Bonds, Series 2003 (Federally Taxable), of which $124,800 are Series 2003A (deferred interest bonds) and $156,370 are Series 2003B (current interest On April 30, 2015 the District issued $244,700 in General Obligation Bonds, Series 2015B. The interest bonds). The Series 2003 series Limited Tax Pensions Bonds were issued on April 30, 2003, and are rate is fixed at rates ranging from 3% to 5%. Interest payments on the bonds are payable semiannually in payable annually through June 2028. Interest on the deferred interest bonds is accreted payable June and December, beginning December 15, 2015. The Series 2015B Bonds maturing on or after 2026 semiannually at yields rates ranging from 5.71% to 6.27%. Interest on the current coupon bonds is payable are subject to redemption, at the option of the District, in whole or part, on or after June 15, 2025. The semiannually at rates ranging from 5.45% to 5.68%. The bonds are federally taxable and are not subject bonds mature on June 15, 2033 with principal payments due annually on June 15th. The bonds were to optional prepayment prior to their stated maturities. issued at a premium of $33,178 which is being amortized over the life of the bonds. On January 31, 2012 the District issued $14,400 in Limited Tax Pension Refunding Bonds, Series 2012. Article XI-K of the Oregon Constitution allows the state to guarantee the general obligation bonded The interest rate is fixed at 2.75% and interest payments on the bonds are payable semiannually in June indebtedness of school districts. For the Series 2013A, 2013B, 2015A, and 2015B GO Bonds mentioned and December. The bonds mature on June 30, 2021. The total amount of interest savings (economic gain) immediately above, the District participated in the Oregon School Bond Guaranty program (ORS 328.321 as a result of the refinancing is $3,200 dollars. The present value of future cash savings as a result of the to 328.356), whereby the State of Oregon (State) guarantees all principal and interest payments until refinancing is $2,800 dollars. The bond proceeds, $14,200, were used to pay on the Limited Tax Pension maturity will be made to bondholders when due. Should the District fail to make a payment of debt service Bonds, Series 2002. The Series 2012 bonds are subject to optional prepayment. on these bonds when due, the State will make the payment on behalf of the District, and then will seek recovery from the District. The State may recover funds by means of intercepting any source of operating Under the terms of the borrowing agreements for the 2002, 2003 and 2012 Limited Tax Pension Bonds, moneys normally remitted from the State to the District. Since the inception of the bonds, the District has the District is bound by an intercept agreement whereby Wells Fargo Bank Northwest NA, as the trustee, not used the guarantee, and there are no outstanding amounts due to the State of Oregon as of June 30, directly receives specified amounts that have been withheld from the District’s State School Fund support 2015. payments that are deposited in trust with LGIP. Wells Fargo Bank Northwest NA then makes the scheduled semi-annual debt service payments from the LGIP trust account. Federal arbitrage restrictions apply to substantially all debt. Any liabilities to the federal government are accrued and paid when due. Long-term debt payments are made from the debt service funds. B. Other Debt In October 2009 the District borrowed $15,000 from Bank of America, N.A. to finance capital asset projects related to information technology. Loan interest at 3.4% is payable semi-annually beginning December 1, 2009, and principal is payable annually beginning June 1, 2010. The installment loan is a full faith and credit obligation which matures June 1, 2019. It is authorized by ORS 271.390, which requires that the weighted average life of the projects (approximately 10.0 years) must exceed the weighted average life of the loan (approximately 6.7 years). Pursuant to the American Recovery and Reinvestment Act of 2009 (ARRA), the City of Portland was awarded $13,500 in Recovery Zone Economic Development Bonds (RZEDBs). In July 2010, the City sub- awarded $11,000 of the RZED bonds to Portland Public Schools, which are being used to complete energy

46 47 School District No. 1J, Multnomah County, Oregon School District No. 1J, Multnomah County, Oregon Notes to the Basic Financial Statements Notes to the Basic Financial Statements For the Year Ended June 30, 2016 For the Year Ended June 30, 2016 (Dollar amounts, unless otherwise indicated, are expressed in thousands) (Dollar amounts, unless otherwise indicated, are expressed in thousands)

NOTE 10 – BONDED AND OTHER DEBT – continued NOTE 11 – PENSION PLANS – continued Oregon Public Employees Retirement System (OPERS) – continued The following is a summary of the future annual debt service requirements for the District: General Information about the Pension Plan – continued Limited Benefits provided under Chapter 238 - Tier 1/Tier 2 tax Recovery Other full General pension zone faith & Obligation 1. Pension Benefits. The OPERS retirement allowance is payable monthly for life. It may be selected Fiscal year bonds bonds credit Bonds Total from 13 retirement benefit options. These options include survivorship benefits and lump-sum refunds. The basic benefit is based on years of service and final average salary. A percentage (2.0 percent for Principal police and fire employees, 1.67 percent for general service employees) is multiplied by the number of 2017 $ 11,825 941$ $3 2,449 $ 4,850$ 50,065 years of service and the final average salary. Benefits may also be calculated either under a formula 2018 12,077 969 2,533 19,850 35,429 plus annuity (for members who were contributing before August 21, 1981) or a money match 2019 11,949 999 2,619 21,760 37,327 computation if a greater benefit results. 2020 12,161 1,029 - 23,840 37,030 2021 21,903 1,061 - 38,840 61,804 A member is considered vested and will be eligible at minimum retirement age for a service retirement 2022-2026 213,319 1,700 - 52,480 267,499 allowance if he or she has had a contribution in each of five calendar years or has reached at least 50 2027-2031 100,840 - - 79,535 180,375 years of age before ceasing employment with a participating employer (age 45 for police and fire 2032-2033 - - - 40,565 40,565 members). General service employees may retire after reaching age 55. Police and fire members are Total principal 384,074 6,699 7,601 311,720 710,094 eligible after reaching age 50. Tier 1 general service employee benefits are reduced if retirement occurs prior to age 58 with fewer than 30 years of service. Police and fire member benefits are reduced if retirement occurs prior to age 55 with fewer than 25 years of service. Tier 2 members are eligible for Interest full benefits at age 60. The ORS Chapter 238 Defined Benefit Pension Plan is closed to new members 2017 32,309 326 259 13,889 46,783 hired on or after August 29, 2003. 2018 34,797 279 175 12,181 47,432 2019 36,905 229 89 11,226 48,449 2020 39,699 179 - 10,138 50,016 2. Death Benefits. Upon the death of a non-retired member, the beneficiary receives a lump-sum refund 2021 32,511 126 - 8,947 41,584 of the member’s account balance (accumulated contributions and interest). In addition, the beneficiary 2022-2026 104,879 87 - 30,36 7 135,333 will receive a lump-sum payment from employer funds equal to the account balance, provided one or 2027-2031 7,547 - - 16,508 24,055 more of the following conditions are met: 2032-2033 - - - 2,011 2,011 x Member was employed by an OPERS employer at the time of death, Total interest 288,647 1,226 523 105,267 395,663 x Member died within 120 days after termination of OPERS-covered employment, Total debt service 672,721$ $87,925 $ ,124$ 416,987 $1,105,757 x Member died as a result of injury sustained while employed in an OPERS-covered job, or x Member was on an official leave of absence from an OPERS-covered job at the time of death.

3. Disability Benefits. A member with 10 or more years of creditable service who becomes disabled from other than duty-connected causes may receive a non-duty disability benefit. A disability resulting from NOTE 11 – PENSION PLANS a job-incurred injury or illness qualifies a member (including OPERS judge members) for disability benefits regardless of the length of OPERS-covered service. Upon qualifying for either a non-duty or Oregon Public Employees Retirement System (OPERS) duty disability, service time is computed to age 58 (55 for police and fire members) when determining the monthly benefit. General Information about the Pension Plan

Name of the pension plan: The Oregon Public Employees Retirement System (OPERS) is a cost-sharing 4. Benefit Changes After Retirement. Members may choose to continue participation in a variable equities multiple-employer defined benefit plan, administered by the OPERS Board of Trustees with authority investment account after retiring and may experience annual benefit fluctuations due to changes in the granted by the Oregon Legislature. market value of equity investments.

Plan description. Employees of the District are provided with pensions through OPERS. All the benefits of Under ORS 238.360 monthly benefits are adjusted annually through cost-of-living changes. Under OPERS are established by the Oregon legislature pursuant to Oregon Revised Statute (ORS) Chapters current law, the cap on the COLA in fiscal year 2015 and beyond will vary based on 1.25 percent on 238 and 238A. The ORS Chapter 238 Defined Benefit Pension Plan is closed to new members hired on or the first $60,000 of annual benefit and 0.15 percent on annual benefits above $60,000. after August 29, 2003. OPERS issues a publicly available financial report that can be obtained at http://www.oregon.gov/pers/Pages/section/financial_reports/financials.aspx.

48 49 School District No. 1J, Multnomah County, Oregon School District No. 1J, Multnomah County, Oregon Notes to the Basic Financial Statements Notes to the Basic Financial Statements For the Year Ended June 30, 2016 For the Year Ended June 30, 2016 (Dollar amounts, unless otherwise indicated, are expressed in thousands) (Dollar amounts, unless otherwise indicated, are expressed in thousands)

NOTE 11 – PENSION PLANS – continued NOTE 11 – PENSION PLANS – continued Oregon Public Employees Retirement System (OPERS) – continued Oregon Public Employees Retirement System (OPERS) – continued General Information about the Pension Plan – continued General Information about the Pension Plan – continued Contributions - continued Benefits provided under Chapter 238A - Oregon Public Service Retirement Plan (OPSRP).

1. Pension Benefits. The ORS 238A Defined Benefit Pension Program provides benefits to members The rates in effect for the fiscal year ended June 30, 2016 were: hired on or after August 29, 2003. (1) Tier 1/Tier 2 – 0 percent This portion of the OPSRP provides a life pension funded by employer contributions. Benefits are (2) OPSRP general service – 0 percent calculated with the following formula for members who attain normal retirement age:

General Service: 1.5 percent is multiplied by the number of years of service and the final average Actuarial Valuations: salary. Normal retirement age for general service members is age 65, or age 58 with 30 years of retirement credit. The employer contribution rates effective July 1, 2015, through June 30, 2016, were set using the projected unit credit actuarial cost method. For the Tier 1/Tier 2 component of the OPERS Defined Benefit Plan, this A member of the OPSRP pension program becomes vested on the earliest of the following dates: the method produced an employer contribution rate consisting of (1) an amount for normal cost (the estimated date the member completes 600 hours of service in each of five calendar years, the date the member amount necessary to finance benefits earned by the employees during the current service year), (2) an reaches normal retirement age, and, if the pension program is terminated, the date on which termination amount for the amortization of unfunded actuarial accrued liabilities, which are being amortized over a fixed becomes effective. period with new unfunded actuarial accrued liabilities being amortized over 20 years. For the OPSRP Pension Program component of the OPERS Defined Benefit Plan, this method produced an employer 2. Death Benefits. Upon the death of a non-retired member, the spouse or other person who is contribution rate consisting of (a) an amount for normal cost (the estimated amount necessary to finance constitutionally required to be treated in the same manner as the spouse, receives for life 50 percent benefits earned by the employees during the current service year), (b) an amount for the amortization of of the pension that would otherwise have been paid to the deceased member. unfunded actuarial accrued liabilities, which are being amortized over a fixed period with new unfunded actuarial accrued liabilities being amortized over 16 years. 3. Disability Benefits. A member who has accrued 10 or more years of retirement credits before the member becomes disabled or a member who becomes disabled due to job-related injury shall receive Actuarial Methods and Assumptions: a disability benefit of 45 percent of the member’s salary determined as of the last full month of employment before the disability occurred. Valuation Date December 31, 2013 rolled forward to June 30, 2015 4. Benefit Changes after Retirement. Under ORS 238A.210 monthly benefits are adjusted annually Experience Study Report 2014, Published September 23, 2015 through cost-of-living changes. Under current law, the cap on the COLA in fiscal year 2015 and beyond Actuarial Cost Method Entry Age Normal will vary based on 1.25 percent on the first $60,000 of annual benefit and 0.15 percent on annual Amortized as a level percentage of payroll as layered amortization bases over a closed benefits above $60,000. Amortization Method period; Tier One/Tier Two UAL is amortized over 20 years and OPSRP pension UAL is amortized over 16 years. Contributions: Asset Valuation Method Market value of assets OPERS funding policy provides for monthly employer contributions at actuarially determined rates. These Actuarial Assumptions: contributions, expressed as a percentage of covered payroll, are intended to accumulate sufficient assets Inflation Rate 2.75 percent to pay benefits when due. This funding policy applies to the OPERS Defined Benefit Plan and the Other Investment Rate of Return 7.75 percent Postemployment Benefit Plans. 3.75 percent overall payroll growth; salaries for individuals are assumed to grow at 3.75 Projected Salary Increases percent plus assumed rates of merit/longevity increases based on service. Employer contribution rates during the period were based on the December 31, 2013 actuarial valuation. Mortality Healthy retirees and beneficiaries: The rates based on a percentage of payroll, first became effective July 1, 2015. The state of Oregon and RP-2000 Sex-distinct, generational per Scale AA, with collar adjustments and set-backs certain schools, community colleges, and political subdivisions have made lump sum payments to establish as described in the valuation. side accounts, and their rates have been reduced. Active members: Mortality rates are a percentage of healthy retiree rates that vary by group, as described Employer contributions for the year ended June 30, 2016 were $0 as a result of rate reductions created by in the valuation. the District’s side account. Disabled retirees: Mortality rates are a percentage (65% for males, 90% for females) of the RP-2000 static combined disabled mortality sex-distinct table.

50 51 School District No. 1J, Multnomah County, Oregon School District No. 1J, Multnomah County, Oregon Notes to the Basic Financial Statements Notes to the Basic Financial Statements For the Year Ended June 30, 2016 For the Year Ended June 30, 2016 (Dollar amounts, unless otherwise indicated, are expressed in thousands) (Dollar amounts, unless otherwise indicated, are expressed in thousands)

Actuarial valuations of an ongoing plan involve estimates of the value of projected benefits and assumptions Assumed Asset Allocation: about the probability of events far into the future. Actuarially determined amounts are subject to continual revision as actual results are compared to past expectations and new estimates are made about the future. Low High OIC Experience studies are performed as of December 31 of even numbered years. The methods and Asset Class/Strategy Range Range Target assumptions shown above are based on the 2014 Experience Study which reviewed experience for the Cash 0.0% 3.0% 0.0% four-year period ending on December 31, 2014. Debt Securities 15.0 25.0 20.0 Public Equity 32.5 42.5 37.5 Discount Rate: Private Equity 16.0 24.0 20.0 The discount rate used to measure the total pension liability was 7.75 percent for the Defined Benefit Real Estate 9.5 15.5 12.5 Pension Plan. The projection of cash flows used to determine the discount rate assumed that contributions Alternative Equity 0.0 10.0 10.0 from plan members and those of the contributing employers are made at the contractually required rates, Opportunity Portfolio 0.0 3.0 0.0 as actuarially determined. Based on those assumptions, the pension plan’s fiduciary net position was Total 100.0% projected to be available to make all projected future benefit payments of current plan members. Therefore, Source: June 30, 2015 OPERS CAFR; p.76 the long-term expected rate of return on pension plan investments for the Defined Benefit Pension Plan was applied to all periods of projected benefit payments to determine the total pension liability. On July 31, Long-Term Expected Rate of Return: 2015 OPERS reduced the assumed investment rate of return from 7.75 percent to 7.50 percent effective To develop an analytical basis for the selection of the long-term expected rate of return assumption, in July January 1, 2016. This rate of return will be used in the determination of the district’s contribution rate for 2013 the OPERS Board reviewed long-term assumptions developed by both Milliman’s capital market the 2017-19 biennium (see Note 18). assumptions team and the Oregon Investment Council’s (OIC) investment advisors. The table below shows Milliman’s assumptions for each of the asset classes in which the plan was invested at that time based on Depletion Date Projection: the OIC long-term target asset allocation. The OIC’s description of each asset class was used to map the target allocation to the asset classes shown below. Each asset class assumption is based on a consistent GASB 67 generally requires that a blended discount rate be used to measure the Total Pension Liability set of underlying assumptions, and includes adjustment for the inflation assumption. These assumptions (the Actuarial Accrued Liability calculated using the Individual Entry Age Normal Cost Method). The long- are not based on historical returns, but instead are based on a forward-looking capital market economic term expected return on plan investments may be used to discount liabilities to the extent that the plan’s model. Fiduciary Net Position (fair market value of assets) is projected to cover benefit payments and administrative expenses. A 20-year high quality (AA/Aa or higher) municipal bond rate must be used for Compound Annual Return periods where the Fiduciary Net Position is not projected to cover benefit payments and administrative Asset Class Target (Geometric) expenses. Determining the discount rate under GASB 67 will often require that the actuary perform complex projections of future benefit payments and asset values. GASB 67 (paragraph 43) does allow for alternative Core Fixed Income 7.20% 4.50% evaluations of projected solvency, if such evaluation can reliably be made. GASB does not contemplate a Short-Term Bonds 8.00 3.70 specific method for making an alternative evaluation of sufficiency; it is left to professional judgment. Intermediate-Term Bonds 3.00 4.10 High Yield Bonds 1.80 6.66 The following circumstances justify an alternative evaluation of sufficiency for OPERS: Large Cap US Equities 11.65 7.20 Mid Cap US Equities 3.88 7.30 x OPERS has a formal written policy to calculate an Actuarially Determined Contribution Small Cap US Equities 2.27 7.45 (ADC), which is articulated in the actuarial valuation report. x The ADC is based on a closed, layered amortization period, which means that payment of Developed Foreign Equities 14.21 6.90 the full ADC each year will bring the plan to a 100% funded position by the end of the Emerging Foreign Equities 5.49 7.40 amortization period if future experience follows assumption. Private Equity 20.00 8.26 x GASB 67 specifies that the projections regarding future solvency assume that plan assets Opportunity Funds/Absolute Return 5.00 6.01 earn the assumed rate of return and there are no future changes in the plan provisions or Real Estate (Property) 13.75 6.51 actuarial methods and assumptions, which means that the projections would not reflect any Real Estate (REITS) 2.50 6.76 adverse future experience which might impact the plan’s funded position. Commodities 1.25 6.07 Based on these circumstances, it is OPERS’ independent actuary’s opinion that the detailed depletion date Assumed Inflation – Mean 2.75 projections outlined in GASB 67 would clearly indicate that the Fiduciary Net Position is always projected Source: June 30, 2015 OPERS CAFR; p. 57 to be sufficient to cover benefit payments and administrative expenses.

52 53 School District No. 1J, Multnomah County, Oregon School District No. 1J, Multnomah County, Oregon Notes to the Basic Financial Statements Notes to the Basic Financial Statements For the Year Ended June 30, 2016 For the Year Ended June 30, 2016 (Dollar amounts, unless otherwise indicated, are expressed in thousands) (Dollar amounts, unless otherwise indicated, are expressed in thousands)

Sensitivity of the District’s proportionate share of the net pension liability (asset) to changes in the For the year ended June 30, 2016, the District recognized pension expense of $21,501 for the defined discount rate: benefit portion of the pension plan. At June 30, 2016, the District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: The following presents the District’s proportionate share of the net pension liability (asset) calculated using the discount rate of 7.75 percent, as well as what the District’s proportionate share of the net pension liability Deferred Outflow of Deferred Inflow of (asset) would be if it were calculated using a discount rate that is one percentage point lower (6.75 percent) Resources Resources or one percentage point higher (8.75 percent) than the current rate: Differences between expected and actual experience $ 927 $ - 1% Decrease Discount Rate 1% Increase Pension differences between actual and expected (6.75%) (7.75%) (8.75%) - (3,602) Proportionate share of the earnings net pension liability (asset) $41,477 $17,185 $(3,285) Pension changes in employer proportion 781 - Differences between employer contribution and 1,492 (2,460) On April 30, 2015, the Oregon Supreme Court ruled that the provisions of Senate Bill 861 that limited post- proportionate share of contributions retirement COLA on benefits accrued prior to the signing of the law, was unconstitutional. The ruling noted that benefits could be modified prospectively, but not retrospectively. As a result, those who retired prior 3,200 (6,062) to the bill passing in October 2013 will continue to receive a COLA tied to the Consumer Price Index. This Total (prior to post-measurement date contributions) change is reflected in the net pension liability at June 30, 2016. - - Contributions made subsequent to measurement date Net Deferred Outflow/(Inflow) of Resources $ 3,200 $ (6,062) Pension plan fiduciary net position:

Detailed information about the pension plan’s fiduciary net position is available in the separately issued Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPERS financial report available at: pensions will be recognized in pension expense as follows: KWWSZZZRUHJRQJRYSHUV3DJHVVHFWLRQILQDQFLDOBUHSRUWVILQDQFLDOVDVS[ Employer subsequent Deferred Outflow/(Inflow) of Resources (prior to fiscal years post-measurement date contributions) Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Fiscal Year 2017 $ (1,475) Inflows of Resources Related to Pensions: Fiscal Year 2018 (1,475) Fiscal Year 2019 (1,476) At June 30, 2016, the District reported a liability of $17,185 for its proportionate share of the net pension Fiscal Year 2020 1,632 liability. The net pension liability was measured as of June 30, 2015, and the total pension liability used to Fiscal Year 2021 (68) calculate the net pension liability was determined by an actuarial valuation as of December 31, 2013. The District’s proportion of the net pension liability was based on the District’s projected long-term contribution Total $ (2,862) effort as compared to the total projected long-term contribution effort of all employers. At June 30, 2016, the District’s proportion was 0.29932259 percent, which is an increase of 0.04548946 percent from the District’s proportion of 0.25383313 percent for the ended June 30, 2015.

54 55 School District No. 1J, Multnomah County, Oregon School District No. 1J, Multnomah County, Oregon Notes to the Basic Financial Statements Notes to the Basic Financial Statements For the Year Ended June 30, 2016 For the Year Ended June 30, 2016 (Dollar amounts, unless otherwise indicated, are expressed in thousands) (Dollar amounts, unless otherwise indicated, are expressed in thousands)

NOTE 11 – PENSION PLANS – continued NOTE 12 - OTHER POST-EMPLOYMENT BENEFITS Oregon Public Employees Retirement System (OPERS) – continued A. District Plan – Medical Plan Description Defined Contribution Plan The District provides a single-employer defined benefit post-retirement benefits program for employees OPSRP Individual Account Program (OPSRP IAP) who have retired from the District with a minimum of fifteen accumulated years of service and are eligible to retire from the Oregon retirement system. There are 5,384 active and 998 retired members in the plan. Plan Description. Employees of the District are provided with pensions through OPERS. All the benefits of Covered employees under the plan are eligible to receive full or part District-paid medical and pharmacy OPERS are established by the Oregon legislature pursuant to Oregon Revised Statute (ORS) Chapters benefits for up to 60 months, or until reaching age 65, whichever comes first. The District also pays a 238 and 238A. Chapter 238 Defined Benefit Pension Plan is closed to new members hired on or after portion of the spouse/domestic partner medical and pharmacy costs during the benefit period. The program August 29, 2003. Chapter 238A created the Oregon Public Service Retirement Plan (OPSRP), which was established under separate collective bargaining agreements with the certificated and classified consists of the Defined Benefit Pension Program and the Individual Account Program (IAP). Membership employees and by precedent for all other District employees. The Portland Teachers Association (PAT) includes public employees hired on or after August 29, 2003. PERS members retain their existing defined group has agreed to terminate this benefit after September 30, 2016. All other bargaining units and benefit plan accounts, but member contributions are deposited into the member’s IAP account. OPSRP is employee groups, except the District Council Unions (DCU), agreed to terminate this benefit after June 30, part of OPERS, and is administered by the OPERS Board. 2014. The DCU agreed to terminate this benefit after December 31, 2014. Under Oregon Revised Statute (ORS) 243.303 any OPERS qualifying public employee is allowed to pay the full cost for continued coverage Pension Benefits: under the District group health plans until they become Medicare eligible. Funding Policy Participants in OPERS defined benefit pension plans also participate in their defined contribution plan. An IAP member becomes vested on the date the employee account is established or on the date the rollover The District pays for the benefits. The contributions are financed on a pay-as-you-go basis. During fiscal account was established. If the employer makes optional employer contributions for a member, the member year 2016 the District recognized, on a budgetary basis, expenses/expenditures of approximately $4.5 becomes vested on the earliest of the following dates: the date the member completes 600 hours of service million for the post-employment healthcare benefits. in each of five calendar years, the date the member reaches normal retirement age, the date the IAP is terminated, the date the active member becomes disabled, or the date the active member dies. The General Fund and the Grant Fund are the primary funds from which the Other Post Employment Benefit liability is liquidated. Upon retirement, a member of the OPSRP IAP may receive the amounts in his or her employee account, Annual OPEB Cost and Net OPEB Obligation rollover account, and vested employer account as a lump-sum payment or in equal installments over a 5-, 10-, 15-, 20-year period or an anticipated life span option. Each distribution option has a $200 minimum The District’s annual other postemployment benefit (OPEB) cost (expense) is reflected on the Statement of distribution limit. Net Position on the accrual basis, and is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement Death Benefits: 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to Upon the death of a non-retired member, the beneficiary receives in a lump sum the member’s account exceed thirty years. balance, rollover account balance, and vested employer optional contribution account balance. If a retired member dies before the installment payments are completed, the beneficiary may receive the remaining installment payments or choose a lump-sum payment.

Contributions:

Employees of the District pay 6 percent of their covered payroll. The District did not make any optional contributions to member IAP accounts for the year ended June 30, 2016. Included in accrued liabilities at June 30, 2016 are $1.7 million for employee contributions owed to the plan.

56 57 School District No. 1J, Multnomah County, Oregon School District No. 1J, Multnomah County, Oregon Notes to the Basic Financial Statements Notes to the Basic Financial Statements For the Year Ended June 30, 2016 For the Year Ended June 30, 2016 (Dollar amounts, unless otherwise indicated, are expressed in thousands) (Dollar amounts, unless otherwise indicated, are expressed in thousands)

NOTE 12 - OTHER POST-EMPLOYMENT BENEFITS - continued NOTE 12 - OTHER POST-EMPLOYMENT BENEFITS – continued A. District Plan – Medical – continued A. District Plan – Medical – continued Annual OPEB Cost and Net OPEB Obligation - continued Actuarial methods and assumptions - continued

In the June 30, 2015, actuarial valuation the entry age normal level percent of pay cost method was used The District’s most recent actuarial valuation date was June 30, 2015 and the following table shows the to determine the District’s OPEB liability. In its application of this method: (1) Service was the basis for components of the District’s annual OPEB cost for the year ending June 30, 2016, the amount actually allocation, (2) Entry age was established with the hire date, (3) Liabilities were individually calculated at the contributed to the plan, and changes in the District’s net OPEB obligation: participant level without aggregation, and (4) The 30 year amortization period used for the unfunded Actuarial Accrued Liability (AAL) was based on level dollars over open future periods. The actuarial Governmental Proprietary assumptions included a 3% investment rate of return, a 2.5% inflation rate, and healthcare cost trend rates Funds Fund Total ranging from 5% to 8% depending on the employee group. Annual required contribution (ARC) $ 4,948 $ 3 $ 4,951 Interest on net OPEB obligation 986 1 987 Under the Entry Age Normal Method, the AAL for active members is calculated as the portion of the Adjustment to annual required contribution (1,678) (1) (1,679) Actuarial Present Value of projected benefits allocated to prior years. The cost allocated to the current plan Annual OPEB cost 4,256 3 4,259 year is called the Normal Cost. The AAL for members currently receiving benefits, for active members beyond the assumed retirement age, and for members entitled to deferred benefits, is equal to the present value of the benefits expected to be paid. No normal costs are applicable for these participants. Contributions made (7,221) (5) (7,226) Increase (decrease) in net OPEB obligation (2,965) (2) (2,967) The excess of the total AAL over the actuarial value of plan assets is called the unfunded AAL. Funding requirements are determined by adding the normal cost and an amortization of the unfunded AAL. All Net OPEB obligation - beginning of year 32,866 34 32,900 changes in liability due to plan amendments, changes in actuarial assumptions, or changes in actuarial Net OPEB obligation - end of year $ 29,901 $ 32 $ 29,933 data are amortized separately. In addition, all gains or losses are tracked and an unamortized gain or loss may be amortized each year. All amortization bases are spread as level dollar amounts over future open periods.

The District’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan and the net Calculations are based on the benefits provided under the terms of the substantive plan in effect at the time OPEB obligation for 2016 and the preceding four years are as follows: of each valuation. % of annual In its most recent actuarial valuation expected retiree claims decreased. This decline was a result of Fiscal Annual OPEB cost Net OPEB modifications to labor agreements between the District and various employee bargaining units. The liability year OPEB cost contributed obligation at June 30, 2016 is as shown: 2012$ 12,763 69.2% $ 33,595 Accrued actuarial liability (AAL) reported June 30, 2015 65,094$ 2013 9,892 73.0% 36,263 Accrued actuarial liability (AAL) reported June 30, 2016 61,575 2014 7,171 109.5% 35,579 Decrease in AAL (3,519)$ 2015 4,317 162.0% 32,900 2016 4,259 169.7% 29,933 Funded Status and Funding Progress

As of June 30, 2016 the actuarial accrued liability for benefits was $61.6 million, and the actuarial value of Actuarial methods and assumptions plan assets was $0, resulting in an unfunded actuarial accrued liability (UAAL) of $61.6 million. The covered payroll (annual payroll of active employees covered by the plan) was $321 million for fiscal year 2016 and Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions the ratio of the UAAL to the covered payroll was 19.2%. Using a 30-year amortization period, the Annual about the probability of occurrence of events far into the future. Examples include assumptions about the Required Contribution (ARC) for 2016 has been actuarially determined to be $5.1 million, representing $1.8 future employment, mortality, claim cost, and the healthcare cost trend. Amounts determined regarding the million for the normal cost and $3.3 million for the UAAL. funded status of the plan and the annual required contribution of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the A Schedule of Funding Progress and Employer Contributions for the District Other Post-Employment future. The schedule of funding progress, presented as Required Supplementary Information following the Benefits Plan immediately follows the Notes to the Basic Financial Statements on page 68. This schedule notes to the financial statements, presents multiyear trend information that shows whether the actuarial presents multi-year trend information about whether the actuarial value of plan assets is increasing or value of plan assets is increasing or decreasing over time relative to actuarial accrued liabilities for benefits. decreasing relative to the actuarial accrued liability for benefits over time, and whether contributions made are increasing or decreasing relative to the annual required contribution over time.

58 59 School District No. 1J, Multnomah County, Oregon School District No. 1J, Multnomah County, Oregon Notes to the Basic Financial Statements Notes to the Basic Financial Statements For the Year Ended June 30, 2016 For the Year Ended June 30, 2016 (Dollar amounts, unless otherwise indicated, are expressed in thousands) (Dollar amounts, unless otherwise indicated, are expressed in thousands)

NOTE 12 - OTHER POST-EMPLOYMENT BENEFITS – continued NOTE 12 - OTHER POST-EMPLOYMENT BENEFITS – Continued C. Retirement Health Insurance Account - Continued B. District Plan- Stipend Funding Policy – Continued

Plan Description. Participating school districts are contractually required to contribute to RHIA at a rate assessed each year The District provides a single-employer defined benefit early retirement program for members of the by OPERS, and the District currently contributes 0.53% of annual covered OPERF payroll and 0.45% of Portland Association of Teachers (PAT), physical therapists, occupational therapists and licensed OPSRP payroll under a contractual requirement in effect until June 30, 2017. The OPERS Board of administrators. Certificated employees with 15 consecutive years of at least half time service with the Trustees sets the employer contribution rates based on the annual required contribution of the employers District, and who are eligible to retire under OPERS, and who retire before age 62 are eligible for the early (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The retirement benefits. Eligible employees are entitled to a monthly benefit of $425 dollars commencing on ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each the first month after the retirement. Benefits are payable up to the earlier of attaining age 62 or receiving year and amortize any unfunded actuarial liabilities (or funding excess) of the plan over a period not to 60 monthly payments. All financial information relating to the early retirement benefits is reported in the exceed thirty years. The District's contributions to RHIA for the years ended June 30, 2014, 2015 and 2016 General Fund. The District does not issue a stand-alone financial report for this plan. were $1.5 million, $1.7 million and $0.9 million, respectively, which equaled the required contributions each year. Funding Policy. Actuarial Methods and Assumptions The District pays for the benefits without any cost to employees. The contributions are financed on a pay- as-you-go basis and compared to the actuarially determined annual OPEB cost and annual pension cost Assets are valued at their market value. Gains and losses between odd-year valuations are amortized as for disclosure purposes. Because of this policy, no liability has been recorded for early retirement benefits. a level percentage of combined valuation payroll over 20 years from the odd-year valuation in which they During fiscal year ended June 30, 2016, expenses/expenditures of approximately $1.6 million were are first recognized. The assumed rate of return on investments is 7.75% compounded annually. The recognized. assumed consumer price inflation rate used is 2.75% per year.

C. Retirement Health Insurance Account Plan Description NOTE 13 - RISK MANAGEMENT The Internal Service (Self-Insurance) Fund charges other funds for the costs incurred for workers’ As a member of Oregon Public Employees Retirement System (OPERS) the District contributes to the compensation claims. Charges to other funds by the Self-Insurance Fund are recognized as revenues in Retirement Health Insurance Account (RHIA) for each of its eligible employees. RHIA is a cost-sharing the Self-Insurance Fund and as expenditures/expenses in the fund incurring the charges. The Self- multiple-employer defined benefit other postemployment benefit plan administered by OPERS. RHIA pays Insurance Fund recognized approximately $3.4 million of revenues from other governmental funds for the a monthly contribution toward the cost of Medicare companion health insurance premiums of eligible year ended June 30, 2016. retirees. Oregon Revised Statute (ORS) 238.420 established this trust fund. Authority to establish and amend the benefit provisions of RHIA reside with the Oregon Legislature. The plan is closed to new The District is exposed to various risks of loss related to injuries; torts; theft or damage to and destruction entrants after January 1, 2004. OPERS issues a publicly available financial report that includes financial of assets; errors and omissions; and natural disasters. The District is self-insured up to $1 million and statements and required supplementary information. That report may be obtained by writing to Oregon carries commercial excess insurance. Settlements have not exceeded insurance coverage for the years Public Employees Retirement System, PO Box 23700, Tigard, OR 97281-3700. ended June 30, 2014, 2015, and 2016. There have been no reductions to the District’s insurance coverage during the year ended June 30, 2016. The District anticipates that all accrued claims losses will be paid Funding Policy within twelve months. Because RHIA was created by enabling legislation (ORS 238.420), contribution requirements of the plan The total claims payable at June 30, 2016 of $4.5 million was made up of approximately $3.7 million in members and the participating employers were established and may be amended only by the Oregon worker’s compensation claims (recorded in the Internal Service Fund) and $0.8 million in property and Legislature. ORS require that an amount equal to $60 dollars or the total monthly cost of Medicare general liability claims (accounted for in the General Fund and not accrued on the fund financial companion health insurance premiums coverage, whichever is less, shall be paid from the Retirement statements). Changes in the balances of claims liabilities during the years ended June 30, 2014, through Health Insurance Account established by the employer, and any monthly cost in excess of $60 dollars shall June 30, 2016, were as follows: be paid by the eligible retired member in the manner provided in ORS 238.410. To be eligible to receive this monthly payment toward the premium cost the member must: (1) have eight years or more of qualifying Fiscal Beginning New Payments service in OPERS at the time of retirement or receive a disability allowance as if the member had eight Year Balance Claims on Claims Ending Balance years or more of creditable service in OPERS, (2) receive both Medicare Parts A and B coverage, and (3) 2014$ 4,540 $ 2,925 $ (2,868) $ 4,597 enroll in an OPERS-sponsored health plan. A surviving spouse or dependent of a deceased OPERS retiree who was eligible to receive the subsidy is eligible to receive the subsidy if he or she (1) is receiving a 2015 4,597 2,762 (2,648) 4,711 retirement benefit or allowance from OPERS or (2) was insured at the time the member died and the 2016 4,711 3,341 (3,522) 4,530 member retired before May 1, 1991.

60 61 School District No. 1J, Multnomah County, Oregon School District No. 1J, Multnomah County, Oregon Notes to the Basic Financial Statements Notes to the Basic Financial Statements For the Year Ended June 30, 2016 For the Year Ended June 30, 2016 (Dollar amounts, unless otherwise indicated, are expressed in thousands) (Dollar amounts, unless otherwise indicated, are expressed in thousands)

NOTE 14 – COMMITMENTS AND CONTINGENT LIABILITIES NOTE 14 – COMMITMENTS AND CONTINGENT LIABILITIES - continued

Blanchard Educational Service Center (BESC) Operating leases In June 2000, Multnomah County leased a portion of the BESC facility from the District for $3.5 million The District has operating leases for Pearl School, Community Transition Program and Equipment. Future under a 99-year agreement. In December 2008, Portland Public Schools reacquired a portion of that space minimum required payments under these operating leases are: for $800 thousand, which was fully paid as of June 30, 2014. This lease agreement stipulates that a 2017 $ 650 portion of the initial lease payment received from Multnomah County be set aside to be applied toward the 2018 623 County’s share of major repairs. Any unused balance earns interest at the monthly interest rate earned 2019 325 from the Local Government Investment Pool. As of June 30, 2016 Multnomah County’s reserve balance 2020 325 held in the Facilities Capital Fund was $551. Total minimum payments$ 1,923

Pearl School Contracts In July 2011 the District leased space from Nurture 247 LP, for the Pearl School. The initial lease was for Under Oregon Revised Statute No. 279, should funding not be available, the following contracts may be a five year period with an option to extend for an additional two years. The lease has been extended for cancelled without penalty. Estimated future District service commitments in excess of $2 million are listed an additional two years through June 30, 2017, with an option to extend for an additional three years. as follows:

Contractor Commitments Community Transition Program Skanska $ 61,296 In July 2010 the District leased commercial space for its Special Education Community Transition Program Lease Crutcher Lewis LLC 37,672 from Weigel Properties LLC. The space has approximately 2,700 square feet located on N.E. MLK Jr. Todd Construction 30,341 Boulevard in Portland, Oregon. The initial lease was for a three year period with an option to extend for an First Student 10,621 additional two years. The lease has been extended for an additional two years through June 30, 2017, City of Portland 5,744 with an option to renew for an additional three years. Corp Inc 5,483 2KG Contractors Inc. 4,798 Equipment Lease Portland Community College 4,192 Heery International Inc 3,778 In March 2015, the District entered into a five year lease for floor maintenance equipment from All Lines Rosemary Anderson High School 2,639 Leasing for $27 thousand per month, commencing July 1, 2015. Dull Olson Weekes Architects 2,273 Portland Village School 2,253 Trillium Charter School 2,164 Pending Legal Actions Open Meadow 2,121 $ 175,375 The District is a defendant in certain pending legal actions. Although the outcome cannot be determined, the District believes that settlement of these matters will not have a material effect on the District's financial position and results of operations.

62 63 School District No. 1J, Multnomah County, Oregon School District No. 1J, Multnomah County, Oregon Notes to the Basic Financial Statements Notes to the Basic Financial Statements For the Year Ended June 30, 2016 For the Year Ended June 30, 2016 (Dollar amounts, unless otherwise indicated, are expressed in thousands) (Dollar amounts, unless otherwise indicated, are expressed in thousands)

NOTE 15 – FUND BALANCES NOTE 16 – RELATED ORGANIZATIONS Fund balances by classification for the year ended June 30, 2016 are as follows: The District includes eight charter schools that are legally separate, tax-exempt organizations. The most recent data available indicates charter school total students were 1,590 (representing 3.2% of the District’s Other Total total enrollment); and that charter schools’ Net Position was $3.5 million. Because of their size relative to Other Govern- Govern- the District, the charter schools do not fall under the component unit reporting requirements set forth by General Major mental mental GASB Statement No. 39. Fund Funds Funds Funds Nonspendable: Prepaid items - General Fund$ 125 -$ -$ 125$ NOTE 17 – ARTS TAX (reported in unrounded dollars) Prepaid items - GO Bonds Fund - 1,491 - 1,491 In November, 2012, voters in the City of Portland passed Ballot Measure 26-146 to restore school arts and Prepaid items - Facilities Capital Fund - - 12 12 music education, funded through an income tax of $35 per person per year. In December of 2012, the Inventories - Warehouse 261 - - 261 District entered into an intergovernmental agreement IGA/R 59656 with the City of Portland to receive a Inventories - Cafeteria Fund - - 783 783 portion of this tax, to be used to provide arts and music education, through certified arts and music teachers, 386 1,491 795 2,672 to all K-5 students, including charter schools within the District. Revenues and expenditures for the year Restricted: ended June 30, 2016 are recorded in the General Fund as follows: Special Revenue Funds: Student Body Activity Fund - - 4,096 4,096 Cafeteria Fund - - 6,721 6,721 Arts Tax Arts Tax Number of Dedicated Resource Fund - - 8,770 8,770 Revenues Expenditures 1 FTE Schools Capital Projects Funds: (unrounded) (unrounded) Funded Funded Construction Excise Tax Fund - - 16,024 16,024 Non-Charter Schools$ 4,462,091 $ 4,674,269 67.88 59 Energy Efficient Schools Fund - - 1,024 1,024 Charter Schools 122,347 132,604 2.9 7 Facilities Capital Fund - - 551 551 District Total $ 4,584,438 $ 4,806,873 70.78 66 Partnerships Fund - - 168 168 Debt Service Funds: 1 Includes amounts for unexpended revenues carried forw ard from prior years. GO Bond Debt Service Fund - - 2,698 2,698 GO Bonds Fund - 241,037 - 241,037 - 241,037 40,052 281,089 NOTE 18 – SUBSEQUENT EVENTS Committed: PERS Rate Stabilization Fund - 16,396 - 16,3 96 On August 4, 2016 the District issued $4,000 Limited General Obligation Qualified Zone Academy Bonds Debt Service Fund- PERS UAL - - 4 4 (QZABs) to fund rehabilitation and repair of school facilities. The interest rate on the bonds is zero percent, - 16,396 4 16,400 and the maturity date is August 4, 2036. Many of the District’s school facilities were built between 1908 and 1924. Due to aging and deterioration, Assigned: the District found lead in the water system and in paint. Starting in the summer of 2016, the District General Fund 7,200 - - 7,200 embarked on several projects to address this risk. As of June 30, 2016 the amounts of potential liabilities Capital Projects Funds: cannot be reasonably estimated. The District has begun the process of conducting District-wide IT System Project Fund - - 1,527 1,527 assessments to determine nature, timing and amount of future pollution remediation obligations. Facilities Capital Fund - - 1,143 1,143 Capital Asset Renewal Fund - - 3,512 3,512 On September 30, 2016 the OPERS Board approved employer rates for the 2017-19 biennium based on 7,200 - 6,182 13,382 the 2015 Actuarial Valuation. The District’s pension rates for Tier 1/Tier 2 employees will be 6.16% of salary, and OPSRP General Service rates will be 0.90% of salary. Unassigned 30,249 - - 30,249 Total fund balances 37,835$ 258,924$ 47,033$ $ 343,792 On November 9, 2016 the District issued $5,048 Full Faith and Credit Bond to finance projects that remediate health and safety concerns, including and environmental health and safety assessment, repairs to the water system, lead paint abatement/encapsulation, and other related projects. The interest rate on the bonds is 2.99 percent, and the final maturity date is December 1, 2031. Assigned fund balances in the General Fund are for Self-Insurance Reserve of $1,500; and set-aside of State School Fund payments of $5,700 to be spent in the next fiscal year.

64 65 REQUIRED SUPPLEMENTARY INFORMATION

The information in this section compares budget to actual for the District's General and major special revenue funds.

The budgetary basis of accounting for all funds is modified accrual, which is the same as that required by accounting principles generally accepted in the United States of America. Unless otherwise noted, a reconciliation of budgetary to generally accepted accounting principles activity is not required.

Under the provisions of GASB Statement No. 45, a Schedule of Funding Progress for the District's Other Post Employment Benefit Plan is included in the Required Supplementary Information.

Under the provisions of GASB Statement No. 68, a Schedule of the District's Proportion of Net Pension Liability and District Contributions is included in the Required Supplementary Information.

66 67 SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON Required Supplementary Information Other Postemployment Benefits Schedule of Funding Progress and Employer Contributions June 30, 2016 (amounts expressed in thousands)

Funding Progress Entry Age Normal UAAL as a Actuarial Actuarial Unfunded Percentage Actuarial Value of Accrued AAL Funded Covered of Covered Valuation Assets Liability (AAL) (UAAL) Ratio Payroll Payroll Date (a) (b) (b-a) (a/b) ( c ) ((b-a)/c) 07/01/2011 -$ $ 145,855 $ 145,855 0%$ 267,981 54.4%

07/01/2013 - 121,159 121,159 0% 245,261 49.4%

04/01/2014 - 105,510 105,510 0% 245,261 43.0%

6/30/2015 - 65,094 65,094 0% 283,007 23.0%

The above table presents the most recent actuarial valuations for the District's post-retirement health and welfare benefits plan and it provides information that approximates the funding progress of the plan.

Employer Contributions

Fiscal Annual Year Required Contribution Percentage End Contribution Made Contributed 6/30/2013$ 10,548 $ 7,224 68.5%

6/30/2014 7,879 7,855 99.7%

6/30/2015 5,065 6,996 138.1%

6/30/2016 4,951 7,227 146.0%

The above table presents trend information about the amounts contributed to the plan by the District in comparison to the Annual Required Contribution.

Requests for Information: Copies of the District's most recent actuarial report of its Other Post Employment Benefit Plan are available. Please direct requests to the Accounting and Payroll Services Department; Portland Public Schools; 501 N. Dixon Street; Portland, OR 97227.

68 69 SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON Required Supplementary Information Required Supplementary Information Schedule of the District's Proportionate Share of Net Pension Liability and District Contributions Schedule of the District's Proportionate Share of Net Pension Liability and District Contributions (continued) Last 10 Fiscal Years 1 June 30, 2016 (amounts expressed in thousands) Notes to Required Supplementary Information District's Proportionate Share of Net Pension Liability Changes in Plan Provisions 2014 2015 2016 District's proportion of the net pension A summary of key changes in plan provisions are described in the annual letter from Oregon Public Employees Retirement System's liability/asset 0.254% 0.254% 0.299% actuary, which can be found at: District's proportionate share of the net http://www.oregon.gov/pers/EMP/docs/gasb_68-2_er_reporting.pdf pension liability (asset) $ 12,953 (5,754)$ 17,185$ Changes of Assumptions District's covered-employee payroll2 $ 256,741 264,386$ $ 283,935 A summary of key changes implemented since the December 31, 2013 valuation are described in the Oregon Public Employees District's proportionate share of net pension liability (asset) as a percent of Retirement System's 2014 Actuarial Valuation, which can be found at: covered payroll 5.0% -2.2% 6.1% http://www.oregon.gov/pers/docs/financial_reports/actuarial_service/2015/actuarial_valuation_2015.pdf

Plan fiduciary net position as a Additional details and a comprehensive list of changes in methods and assumptions can be found in the 2014 Experience Study for percentage of the total pension liability 92.0% 103.6% 91.88% the System, which was published on September 23, 2015, and can be found at: OPERS Measurement Date 6/30/2013 6/30/2014 6/30/2015 http://www.oregon.gov/pers/docs/2014_experience_study_9-23-15.pdf

Amounts presented above were determined as of 6/30. Additional years will be presented as they become available. Amounts for covered payroll use the prior year's data to match the measurement date used by the pension plan (OPERS) for each fiscal year presented above.

6FKHGXOHRI'LVWULFW&RQWULEXWLRQV

2014 2015 2016 Contractually required contribution$ 4,785 4,895$ $ -

Contributions in relation to the contractually required contribution 4,785 4,895 -

Contribution deficiency(excess) $ - $ - $ -

District's covered-employee payroll $ 264,386 283,935$ $ 316,998

&RQWULEXWLRQVDVDSHUFHQWDJHRI FRYHUHGHPSOR\HHSD\UROO 1.81% 1.72% 0.00%

Amounts presented above were determined as of 6/30. Additional years will be presented as they become available. Contribution rates were zero due to the rate offset provided by the District's OPERS side account funded by the district's Limited Tax Pension Bonds (See Footnote 10)

Copies of OPERS' most recent actuarial report of its Pension Plan are available at: KWWSZZZRUHJRQJRYSHUV3DJHVVHFWLRQILQDQFLDOBUHSRUWVILQDQFLDOVDVS[

70 71 SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON General Fund General Fund Schedule of Revenues, Expenditures, and Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Changes in Fund Balance - Budget and Actual (continued) For the year ended June 30, 2016 For the year ended June 30, 2016 (amounts expressed in thousands) (amounts expressed in thousands) Variance from Variance from Final Budget Final Budget Budgeted Amounts Actual Positive/ Budgeted Amounts Actual Positive/ Original Final Amounts (Negative) Support services (continued): Original Final Amounts (Negative) REVENUES School administration: Property and other taxes$ 226,992 $232,342 233,778 $$ (1,436) Salaries and benefits$ 37,376 $ 38,926 $ 38,623 $ 303 State School Fund 211,312 207,729 211,253 3,524 Materials and services 1,174 988 685 303 Local option taxes 73,240 75,800 76,593 793 Total school administration 38,550 39,914 39,308 606 County and intermediate sources 13,021 13,021 13,116 95 Business: Federal and state support - - 25 25 Salaries and benefits 42,855 43,126 40,046 3,080 State Common School Fund 4,490 4,490 5,810 1,320 Materials and services 36,443 36,770 37,750 (980) Charges for services 3,128 3,128 3,562 434 Total business 79,298 79,896 77,796 2,100 Investment earnings 300 300 887 587 Central: Other 6,270 6,270 5,586 (684) Salaries and benefits 15,496 15,860 14,015 1,845 Total revenues 538,753 544,516 549,174 4,658 Materials and services 5,714 5,359 6,927 (1,568) Total central 21,210 21,219 20,942 277 EXPENDITURES Total support services 220,841 224,906 220,666 4,240 Current: Enterprise and community services: Instruction: Salaries and benefits 826 704 623 81 Regular programs: Materials and services 1,119 1,119 1,171 (52) Salaries and benefits 230,343 228,235 223,229 5,006 Total enterprise and community services 1,945 1,823 1,794 29 Materials and services 13,929 13,181 12,686 495 Total regular programs 244,272 241,416 235,915 5,501 Operating contingency 21,575 20,199 - 20,199 Special programs: Total expenditures 572,633 571,750 538,490 33,260 Salaries and benefits 57,724 57,098 55,269 1,829 Materials and services 25,498 25,530 23,996 1,534 Excess (deficit) of revenues over expenditures (33,880) (27,234) 10,684 37,918 Total special programs 83,222 82,628 79,265 3,363 Summer school programs: OTHER FINANCING SOURCES (USES) Salaries and benefits 768 768 561 207 Transfers out (5,988) (7,408) (7,407) 1 Materials and services 10 10 289 (279) Proceeds from the sale of capital assets 100 200 116 (84) Total summer school programs 778 778 850 (72) Total other financing sources and (uses) (5,888) (7,208) (7,291) (83) Total instruction 328,272 324,822 316,030 8,792 Support services: Net change in fund balance (39,768) (34,442) 3,393 37,835 Students: Salaries and benefits 43,264 45,144 44,419 725 Fund balance - beginning of year 39,768 34,442 34,442 - Materials and services 4,549 4,499 4,222 277 Fund balance - end of year $-- $3$ 7,835$ 37,835 Total students 47,813 49,643 48,641 1,002 Instructional staff: Salaries and benefits 23,893 24,222 23,158 1,064 Materials and services 3,127 2,592 1,766 826 Total instructional staff 27,020 26,814 24,924 1,890 General administration: Salaries and benefits 5,018 5,571 5,450 121 Materials and services 1,932 1,849 3,605 (1,756) Total general administration 6,950 7,420 9,055 (1,635)

Note: Bolded lines indicate legally required appropriation budget levels of control Note: Bolded lines indicate legally required appropriation budget levels of control

72 73 SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON Grant Fund Grant Fund Schedule of Revenues, Expenditures, and Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Changes in Fund Balance - Budget and Actual (continued) For the year ended June 30, 2016 For the year ended June 30, 2016 (amounts expressed in thousands) (amounts expressed in thousands) Variance from Variance from Final Budget Budgeted Amounts Actual Positive/ Final Budget Original Final Amounts (Negative) Budgeted Amounts Actual Positive/ Support services (continued): Original Final Amounts (Negative) Central: REVENUES Salaries and benefits$ 117 $187 117 $$ (70) Federal and state support$ 62,565 $55,862 62,565 $$ (6,703) Materials and services 143 143 109 34 County and intermediate sources 513 513 1,057 544 Total central 260 260 296 (36) Other 1,657 1,657 1,649 (8) Total support services 26,908 25,433 22,356 3,077 Total revenues 64,735 64,735 58,568 (6,167) Enterprise and community services: Food services: EXPENDITURES Materials and services 510 510 960 (450) Current: Total food services 510 510 960 (450) Instruction: Community services: Regular programs: Salaries and benefits 2,163 2,163 1,847 316 Salaries and benefits 10,890 10,890 10,503 387 Materials and services 1,346 1,346 278 1,068 Materials and services 1,643 1,893 2,451 (558) Total community services 3,509 3,509 2,125 1,384 Total regular programs 12,533 12,783 12,954 (171) Total enterprise and community services 4,019 4,019 3,085 934 Special programs: Salaries and benefits 12,750 13,800 13,851 (51) Total expenditures 64,735 64,735 58,568 6,167 Materials and services 8,193 8,368 6,105 2,263 Total special programs 20,943 22,168 19,956 2,212 Excess (deficit) of revenues over expenditures - - - - Summer school programs: Salaries and benefits 212 212 187 25 Fund balance - beginning of year - - - - Materials and services 120 120 30 90 Fund balance - end of year$- - $-$-$ Total summer school programs 332 332 217 115 Total instruction 33,808 35,283 33,127 2,156 Support services: Students: Salaries and benefits 9,579 9,579 8,670 909 Materials and services 4,225 3,125 3,173 (48) Total students 13,804 12,704 11,843 861 Instructional staff: Salaries and benefits 7,380 7,380 6,421 959 Materials and services 2,507 2,507 1,988 519 Total instructional staff 9,887 9,887 8,409 1,478 General administration: Salaries and benefits - - 548 (548) Materials and services - - 554 (554) Total school administration - - 1,102 (1,102) School administration: Salaries and benefits 1,522 1,522 516 1,006 Materials and services 775 775 137 638 Total school administration 2,297 2,297 653 1,644 Business: Salaries and benefits 464 89 - 89 Materials and services 196 196 53 143 Total business 660 285 53 232

Note: Bolded lines indicate legally required appropriation budget levels of control Note: Bolded lines indicate legally required appropriation budget levels of control

74 75 SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON PERS Rate Stabilization Reserve Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual For the year ended June 30, 2016 (amounts expressed in thousands)

Variance from Final Budget Budgeted Amounts Actual Positive/ Original Final Amounts (Negative) REVENUES Property and other taxes$ 222 $249 222 $27$ SUPPLEMENTARY INFORMATION Investment earnings 60 60 90 30 Total revenues 282 282 339 57

Net change in fund balance 282 282 339 57

Fund balance - beginning of year 16,028 16,057 16,057 - Fund balance - end of year$ 16,310 $ 16,339 $57 16,396 $

Note: Bolded lines indicate legally required appropriation budget levels of control

76 77 COMBINING STATEMENTS Nonmajor Governmental Funds

SPECIAL REVENUE FUNDS Special revenue funds account for certain revenues that are restricted to expenditures for designated purposes.

Student Body Activity Fund This fund has separate accounts for each school's student body activities. Principal revenue sources are donations, fund raisers, individual support from PTAs, booster clubs, student store sales and club dues.

Cafeteria Fund The Cafeteria Fund accounts for revenues and expenditures of the District's food service programs. Principal revenue sources are cash sales and federal subsidies under the National School Lunch and Breakfast Programs, and the sales of food in the BESC Cafeteria.

Dedicated Resource Fund The Dedicated Resource Fund (formerly called the Special Revenue Fund) accounts for specific project revenues and expenditures such as state grants, foundation grants, donations, and charges to participants. DEBT SERVICE FUNDS Debt service funds account for the accumulation of financial resources to pay long-term debt principal, interest and related costs.

IT Projects Debt Service Fund This fund is used for debt service payments of a $15.0 million Full Faith and Credit bank loan that was executed on October 8, 2009.

PERS UAL Debt Service Fund This fund was established to separately account for debt service payments related to series 2002 and 2003 Limited Tax Pension Obligation Bonds.

Recovery Zone Debt Service Fund This fund is used for debt service payments of $11.0 million in ARRA Recovery Zone Economic Development Bonds that were sub-awarded to the District by the City of Portland in July, 2010.

GO Bond Debt Service Fund This fund was established to account for debt service payments associated with capital improvements activities occurring in the GO Bonds Fund. The principal source of revenue is proceeds from property taxes.

CAPITAL PROJECTS FUNDS Capital projects funds account for financial resources used to acquire technology or construction, or for major renovation of capital facilities.

Construction Excise Tax Fund This fund accounts for facilities improvements and construction set forth in Oregon Senate Bill 1036, which authorizes school districts to impose a construction excise tax in order to fund real property improvements.

IT System Project Fund This fund accounts for projects relating to teacher/classroom technology, information systems, and technical infrastructure.

Recovery Zone Energy and Water Conservation Fund This fund accounts for energy and water conservation projects that will financially benefit the District in reduced energy and water costs.

Energy Efficient Schools Fund This fund was established to separately account for resources and requirements of the Energy Efficient Schools Program receipts from the collections of the Public Purpose Charge funds by an electric company.

78 79 COMBINING STATEMENTS SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON Nonmajor Governmental Funds Nonmajor Governmental Funds (continued) Combining Balance Sheet by Fund Types June 30, 2016 CAPITAL PROJECTS FUNDS (continued) (amounts expressed in thousands) Facilities Capital Fund This fund was established to separately account for resources and requirements resulting from capital improvements work conducted by the District. Primary sources of revenue are transfers from the General Fund and debt proceeds. Total Nonmajor Special Debt Capital Capital Asset Renewal Fund Revenue Service Projects This fund was established to separately account for future resources and requirements that relate to life-cycle renewal Funds Funds Funds Total of major building components. Primary sources of revenue are lease revenues, surplus property sales, athletic field ASSETS rental income, and redirection of Recovery Zone Bond utility savings. Cash and cash equivalents-unrestricted$56 9,315 $$ 22,316 $ 31,687 Cash and cash equivalents held by fiscal agents - 244 - 244 Partnerships Fund Investments - 2,296 - 2,296 This fund is used to manage non-bond-funded capital improvement work conducted by the District in conjunction with Accounts and other receivables 3,401 1 3,664 7,066 external partners. Primary sources of revenue are from external partners. Property taxes and other taxes receivable - 2,191 - 2,191 Due from other funds 8,743 - 739 9,482 Prepaid Items - - 12 12 Inventories 783 - - 783 Total assets$4,788 22,242 $$ 26,731 $ 53,761

LIABILITIES Accounts payable$- 1,149 $$3,163 2,014 $ Accrued wages and benefits 723 - 17 740 Due to other funds - - 739 739 Total liabilities 1,872 - 2,770 4,642

DEFERRED INFLOWS OF RESOURCES Unavailable property tax revenue - 2,086 - 2,086

FUND BALANCES Nonspendable 783 - 12 795 Restricted 19,587 2,698 17,767 40,052 Committed - 4 - 4 Assigned - - 6,182 6,182 Total fund balances 20,370 2,702 23,961 47,033 Total liabilities, deferred inflows and fund balances$ 22,242 $ 4,788 $ 26,731 $ 53,761

80 81 SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON Nonmajor Special Revenue Funds Nonmajor Debt Service Funds Combining Balance Sheet Combining Balance Sheet June 30, 2016 June 30, 2016 (amounts expressed in thousands) (amounts expressed in thousands)

PERS UAL GO Bond Debt Debt Student Body Dedicated Service Service Activity Cafeteria Resource Fund Fund Total Fund Fund Fund Total ASSETS ASSETS Cash and cash equivalents$52 4 $56$ Cash and cash equivalents $ 4,207 $ 4,713 $ 395 $ 9,315 Cash and cash equivalents held by fiscal agents - 244 244 Accounts and other receivables 134 2,181 1,086 3,401 Investments - 2,296 2,296 Due from other funds 743 - 8,000 8,743 Accounts and other receivables - 1 1 Inventories - 783 - 783 Property taxes and other taxes receivable - 2,191 2,191 Total assets $ 5,084 $ 7,677 $ 9,481 $ 22,242 Total assets$4,784 4 $$ 4,788

LIABILITIES Accounts payable $8988 $73$18$ ,149 Accrued wages and benefits - 90 633 723 DEFERRED INFLOWS OF RESOURCES Total liabilities 988 173 711 1,872 Unavailable property tax revenue$2,086 - $$ 2,086

FUND BALANCES FUND BALANCES Nonspendable - 783 - 783 Restricted - 2,698 2,698 Restricted 4,096 6,721 8,770 19,587 Committed 4 - 4 Total fund balances 4,096 7,504 8,770 20,370 Total fund balances 4 2,698 2,702 Total liabilities and fund balances $ 5,084 $ 7,677 $ 9,481 $ 22,242 Total deferred inflows and fund balances$4,784 4 $$ 4,788

82 83 SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON Nonmajor Capital Projects Funds Nonmajor Capital Projects Funds (continued) Combining Balance Sheet Combining Balance Sheet June 30, 2016 June 30, 2016 (amounts expressed in thousands) (amounts expressed in thousands)

Energy Capital Construction IT System Efficient Facilities Asset Excise Tax Project Schools Capital Renewal Partnerships Fund Fund Fund Fund Fund Fund Total ASSETS ASSETS Cash and cash equivalents $ 14,978 $91,611 $ 46 Cash and cash equivalents$3,474 1,307 $-$$ 22,316 Accounts and other receivables 1,627 - 91 Accounts and other receivables 51 38 1,857 3,664 Due from other funds - - - Due from other funds 739 - - 739 Prepaid Items - - - Prepaid Items 12 - - 12 Total assets $ 16,605 $11,611 $ ,037 Total assets$3,512 2,109 $1,857$$ 26,731

LIABILITIES LIABILITIES Accounts payable $8581 $14$ 3 Accounts payable $- 386 $$ 950 $ 2,014 Accrued wages and benefits - - - Accrued wages and benefits 17 - - 17 Due to other funds - - - Due to other funds - - 739 739 Total liabilities 581 84 13 Total liabilities 403 - 1,689 2,770

FUND BALANCES FUND BALANCES Nonspendable - - - Nonspendable 12 - - 12 Restricted 16,024 - 1,024 Restricted 551 - 168 17,767 Assigned - 1,527 - Assigned 1,143 3,512 - 6,182 Total fund balances 16,024 1,527 1,024 Total fund balances 1,706 3,512 168 23,961 Total liabilities Total liabilities and fund balances $116,605 $1,611$ ,037 and fund balances$ 2,109 $ 3,512 $ 1,857 $ 26,731

84 85 SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON Nonmajor Governmental Funds Nonmajor Special Revenue Funds Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Combining Statement of Revenues, Expenditures, and Changes in Fund Balances by Fund Type For the year ended June 30, 2016 For the year ended June 30, 2016 (amounts expressed in thousands) (amounts expressed in thousands) Student Body Dedicated Total Nonmajor Activity Cafeteria Resource Special Debt Capital Fund Fund Fund Total REVENUES Revenue Service Projects Federal and state support$ - $85 14,895 $$ 14,980 Funds Funds Funds Total County and intermediate sources - - 1,598 1,598 REVENUES Charges for services - 3,703 815 4,518 Property and other taxes$ - $ 48,558 $ 5,886 $ 54,444 Extracurricular activities 7,904 - - 7,904 Federal and state support 14,980 157 - 15,137 Other - 6 3,995 4,001 County and intermediate sources 1,598 - - 1,598 Total revenues 7,904 18,604 6,493 33,001 Charges for services 4,518 40,637 595 45,750 Extracurricular activities 7,904 - - 7,904 EXPENDITURES Investment earnings - 247 27 274 Current: Other 4,001 - 4,974 8,975 Instruction: Total revenues 33,001 89,599 11,482 134,082 Regular programs 7,830 - 3,206 11,036 Special programs - - 1,916 1,916 EXPENDITURES Summer school programs - - 17 17 Current: Total instruction 7,830 - 5,139 12,969 Instruction: Support services: Regular programs 11,036 - - 11,036 Students - - 443 443 Special programs 1,916 - - 1,916 Instructional staff - - 205 205 Summer school programs 17 - - 17 General administration - - 51 51 Total instruction 12,969 - - 12,969 School administration - - 356 356 Support services: Business - - 88 88 Students 443 - - 443 Central - - 33 Instructional staff 205 - - 205 Total support services - - 1,146 1,146 General administration 51 - - 51 Enterprise and community services: School administration 356 - - 356 Food services - 17,004 7 17,011 Business 88 - 5 93 Community services - - 35 35 Central 3 - 3,759 3,762 Total enterprise & community service - 17,004 42 17,046 Total support services 1,146 - 3,764 4,910 Total expenditures 7,830 17,004 6,327 31,161 Enterprise and community services: Food services 17,011 - - 17,011 Excess (deficit) of revenues over expenditures 74 1,600 166 1,840 Community services 35 - - 35 Total enterprise and community services 17,046 - - 17,046 Net change in fund balances 74 1,600 166 1,840 Facilities acquisition and construction: - - 12,001 12,001 Fund balances - beginning of year 4,022 5,904 8,604 18,530 Debt Service: Fund balances - end of year$ 4,096 7,504$ $ 8,770 $ 20,370 Principal - 47,020 - 47,020 Interest and fiscal charges - 46,610 - 46,610 Total debt service - 93,630 - 93,630 Total expenditures 31,161 93,630 15,765 140,556 Excess (deficit) of revenues over expenditures 1,840 (4,031) (4,283) (6,474) OTHER FINANCING SOURCES (USES) Transfers in - 3,837 3,570 7,407 Total other financing sources (uses) - 3,837 3,570 7,407

Net change in fund balances 1,840 (194) (713) 933

Fund balances - beginning of year 18,530 2,896 24,674 46,100 Fund balances - end of year $220,370 $ ,702$ 23,961 $ 47,033

86 87 SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON Nonmajor Debt Service Funds Combining Statement of Revenues, Expenditures, and Changes in Fund Balances For the year ended June 30, 2016 (amounts expressed in thousands)

IT Projects PERS UAL Recovery GO Bond Debt Debt Zone Debt Debt Service Service Service Service Fund Fund Fund Fund Total REVENUES Property and other taxes $-- $-$ $ 48,558 $ 48,558 Charges for services - 40,637 - - 40,637 Investment earnings - 148 - 99 247 Federal and state support - - 157 - 157 Total revenues - 40,785 157 48,657 89,599

EXPENDITURES Current: Debt Service: Principal 2,369 11,883 913 31,855 47,020 Interest and fiscal charges 339 30,431 373 15,467 46,610 Total expenditures 2,708 42,314 1,286 47,322 93,630

Excess (deficit) of revenues over expenditures (2,708) (1,529) (1,129) 1,335 (4,031)

OTHER FINANCING SOURCES (USES) Transfers in 2,708 - 1,129 - 3,837 Total other financing sources (uses) 2,708 - 1,129 - 3,837

Net change in fund balances - (1,529) - 1,335 (194)

Fund balances - beginning of year - 1,533 - 1,363 2,896 Fund balances - end of year $4- $-$ $22,698 $ ,702

88 89 SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON Nonmajor Capital Projects Funds Nonmajor Capital Projects Funds Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Combining Statement of Revenues, Expenditures, and Changes in Fund Balances (continued) For the year ended June 30, 2016 For the year ended June 30, 2016 (amounts expressed in thousands) (amounts expressed in thousands)

Recovery Zone Energy Capital Construction IT System Energy & Efficient Facilities Asset Excise Tax Project Water Cons. Schools Capital Renewal Partnerships Fund Fund Fund Fund Fund Fund Fund Total

REVENUES REVENUES Property and other taxes$- 5,886 $-$-$ Property and other taxes$- - $-$$ 5,886 Charges for services - - - - Charges for services - 595 - 595 Investment earnings 2 14 - - Investment earnings 11 - - 27 Other - - - 941 Other 53 - 3,980 4,974 Total revenues 5,888 14 - 941 Total revenues 64 595 3,980 11,482

EXPENDITURES EXPENDITURES Current: Current: Support services: Support services: Business - - - - Business 5 - - 5 Central - 3,759 - - Central - - - 3,759 Total support services - 3,759 - - Total support services 5 - - 3,764

Facilities acquisition and construction: 2,893 - 56 573 Facilities acquisition and construction: 4,609 55 3,815 12,001

Total expenditures 2,893 3,759 56 573 Total expenditures 4,614 55 3,815 15,765

Excess (deficit) of revenues over expenditures 2,995 (3,745) (56) 368 Excess (deficit) of revenues over expenditures (4,550) 540 165 (4,283)

OTHER FINANCING SOURCES (USES) OTHER FINANCING SOURCES (USES) Transfers in - 412 - - Transfers in 3,158 - - 3,570 Total other financing sources (uses) - 412 - - Total other financing sources (uses) 3,158 - - 3,570

Net change in fund balances 2,995 (3,333) (56) 368 Net change in fund balances (1,392) 540 165 (713)

Fund balances - beginning of year 13,029 4,860 56 656 Fund balances - beginning of year 3,098 2,972 3 24,674 Fund balances - end of year $ 16,024 $-1,527 $1$ ,024 Fund balances - end of year$3,512 1,706 $ $168 $ 23,961

90 91 BUDGETARY COMPARISON SCHEDULES Nonmajor Governmental Funds

92 93 SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON Student Body Activity Fund Cafeteria Fund Schedule of Revenues, Expenditures, and Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Changes in Fund Balance - Budget and Actual For the year ended June 30, 2016 For the year ended June 30, 2016 (amounts expressed in thousands) (amounts expressed in thousands) Variance from Final Budget Variance from Budgeted Amounts Actual Positive/ Final Budget Original Final Amounts (Negative) Budgeted Amounts Actual Positive/ Original Final Amounts (Negative) REVENUES REVENUES Extracurricular activities $ 8,500 $78,500 $ ,904$ (596) Federal and state support$ 14,783 $ 14,933 $(38) 14,895 $ Total revenues 8,500 8,500 7,904 (596) Charges for services 3,477 3,477 3,703 226 Other 6 6 6 - EXPENDITURES Total revenues 18,266 18,416 18,604 188 Current: Instruction: EXPENDITURES Regular programs Current: Materials and services 8,500 8,500 7,830 670 Enterprise and community services: Total instruction 8,500 8,500 7,830 670 Food services: Salaries and benefits 8,406 8,397 7,753 644 Total expenditures 8,500 8,500 7,830 670 Materials and services 10,816 12,301 9,251 3,050 Total enterprise and community services 19,222 20,698 17,004 3,694 Excess (deficit) of revenues over expenditures - - 74 74

Net change in fund balance - - 74 74 Total expenditures 19,222 20,698 17,004 3,694 Fund balance - beginning of year 3,261 4,022 4,022 - Excess (deficit) of revenues over expenditures (956) (2,282) 1,600 3,882 Fund balance - end of year $ 3,261 $44,022 $7,096$ 4 Net change in fund balance (956) (2,282) 1,600 3,882

Fund balance - beginning of year 4,578 5,904 5,904 - Fund balance - end of year$ 3,622 $ 3,622 $3,882 7,504 $

Note: Bolded lines indicate legally required appropriation budget levels of control Note: Bolded lines indicate legally required appropriation budget levels of control

94 95 SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON Dedicated Resource Fund Dedicated Resource Fund Schedule of Revenues, Expenditures, and Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Changes in Fund Balance - Budget and Actual (continued) For the year ended June 30, 2016 For the year ended June 30, 2016 (amounts expressed in thousands) (amounts expressed in thousands) Variance from Variance from Final Budget Final Budget Budgeted Amounts Actual Positive/ Budgeted Amounts Actual Positive/ Original Final Amounts (Negative) Original Final Amounts (Negative) Support services (continued): Business: REVENUES Salaries and benefits$- - $4$(4)$ Charges for services $11,060 $ ,060$ 815 $ (245) Materials and services 13 108 84 24 County and intermediate sources 4,280 4,280 1,598 (2,682) Total business 13 108 88 20 Federal and state support 91 91 85 (6) Central: Other 2,712 2,712 3,995 1,283 Materials and services 10 10 3 7 Total revenues 8,143 8,143 6,493 (1,650) Total central 101037 Total support services 1,833 2,033 1,146 887 EXPENDITURES Enterprise and community services: Current: Food Services: Instruction: Materials and services 52 52 7 45 Regular programs: Total food services 52 52 7 45 Salaries and benefits 2,632 3,737 2,759 978 Community services: Materials and services 1,697 2,112 447 1,665 Salaries and benefits 58 58 27 31 Total regular programs 4,329 5,849 3,206 2,643 Materials and services 38 38 8 30 Special programs: Total community services 96 96 35 61 Salaries and benefits 6,670 6,670 1,727 4,943 Total enterprise and community services 148 148 42 106 Materials and services 1,181 1,655 189 1,466 Facilities acquisition & construction: Total special programs 7,851 8,325 1,916 6,409 Materials and services 41 241 - 241 Summer school programs: Total facilities acquisition Salaries and benefits - - 4 (4) and construction 41 241 - 241 Materials and services 481 511 13 498 Total expenditures 14,683 17,107 6,327 10,780 Total summer school programs 481 511 17 494 Total instruction 12,661 14,685 5,139 9,546 Excess (deficit) of revenues over expenditures (6,540) (8,964) 166 9,130 Support services: Students: OTHER FINANCING SOURCES (USES) Salaries and benefits 85 85 261 (176) Proceeds from the sale of capital assets 360 360 - (360) Materials and services 379 464 182 282 Total other financing sources (uses) 360 360 - (360) Total students 464 549 443 106 Instructional staff: Net change in fund balance (6,180) (8,604) 166 8,770 Salaries and benefits 323 323 175 148 Materials and services 358 378 30 348 Fund balance - beginning of year 6,180 8,604 8,604 - Total instructional staff 681 701 205 496 Fund balance - end of year$- - $8,770$8,770$ General administration: Materials and services 337 337 51 286 Total general administration 337 337 51 286 School administration: Salaries and benefits 324 324 317 7 Materials and services 4 4 39 (35) Total school administration 328 328 356 (28)

Note: Bolded lines indicate legally required appropriation budget levels of control Note: Bolded lines indicate legally required appropriation budget levels of control

96 97 SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON IT Projects Debt Service Fund PERS UAL Debt Service Fund Schedule of Expenditures and Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual For the year ended June 30, 2016 Changes in Fund Balance - Budget and Actual (amounts expressed in thousands) For the year ended June 30, 2016 Variance from (amounts expressed in thousands) Final Budget Variance from Budgeted Amounts Actual Positive/ Original Final Amounts (Negative) Final Budget EXPENDITURES Budgeted Amounts Actual Positive/ Current: Original Final Amounts (Negative) Debt service: REVENUES Principal$ 2,369 $ 2,369 $- 2,369 $ Charges for services$ 42,214 $ 42,214 $ 40,637 $ (1,577) Interest and fiscal charges 339 339 339 - Investment earnings 100 100 148 48 Total debt service 2,708 2,708 2,708 - Total revenues 42,314 42,314 40,785 (1,529) Total expenditures 2,708 2,708 2,708 - EXPENDITURES OTHER FINANCING SOURCES (USES) Current: Transfers in 2,708 2,708 2,708 - Debt service: Total other financing sources (uses) 2,708 2,708 2,708 - Principal 11,883 11,883 11,883 - Net change in fund balance - - - - Interest and fiscal charges 30,431 30,431 30,431 - Total debt service 42,314 42,314 42,314 - Fund balance - beginning of year - - - - Fund balance - end of year $-- $-$-$ Total expenditures 42,314 42,314 42,314 -

Excess (deficit) of revenues over expenditures - - (1,529) (1,529)

Net change in fund balance - - (1,529) (1,529)

Fund balance - beginning of year - 1,533 1,533 - Fund balance - end of year$ - $4 1,533 $$ (1,529)

Note: Bolded lines indicate legally required appropriation budget levels of control Note: Bolded lines indicate legally required appropriation budget levels of control

98 99 SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON Recovery Zone Debt Service Fund GO Bond Debt Service Fund Schedule of Revenues, Expenditures, and Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Changes in Fund Balance - Budget and Actual For the year ended June 30, 2016 For the year ended June 30, 2016 (amounts expressed in thousands) (amounts expressed in thousands) Variance from Variance from Final Budget Final Budget Budgeted Amounts Actual Positive/ Budgeted Amounts Actual Positive/ Original Final Amounts (Negative) Original Final Amounts (Negative) REVENUES REVENUES Federal and state support$ 156 $ 156 $1 157 $ Property and other taxes$ 47,322 $ 47,322 $1,236 48,558 $ Total revenues 156 156 157 1 Investment earnings 26 26 99 73 Total revenues 47,348 47,348 48,657 1,309 EXPENDITURES Current: EXPENDITURES Debt service: Current: Principal 913 913 913 - Debt service: Interest and fiscal charges 373 373 373 - Principal 31,855 31,855 31,855 - Total debt service 1,286 1,286 1,286 - Interest and fiscal charges 15,467 15,467 15,467 - Total debt service 47,322 47,322 47,322 - Total expenditures 1,286 1,286 1,286 - Total expenditures 47,322 47,322 47,322 - Excess (deficit) of revenues over expenditures (1,130) (1,130) (1,129) 1 Excess (deficit) of revenues over expenditures 26 26 1,335 1,309 OTHER FINANCING SOURCES (USES) Transfers in 1,130 1,130 1,129 (1) Net change in fund balance 26 26 1,335 1,309 Total other financing sources (uses) 1,130 1,130 1,129 (1) Fund balance - beginning of year 700 1,363 1,363 - Net change in fund balance - - - - Fund balance - end of year$ 726 $2,698 1,389 $$ 1,309

Fund balance - beginning of year - - - - Fund balance - end of year $-- $-$-$

Note: Bolded lines indicate legally required appropriation budget levels of control Note: Bolded lines indicate legally required appropriation budget levels of control

100 101 SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON Construction Excise Tax Fund IT System Project Fund Schedule of Revenues, Expenditures, and Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Changes in Fund Balance - Budget and Actual For the year ended June 30, 2016 For the year ended June 30, 2016 (amounts expressed in thousands) (amounts expressed in thousands) Variance from Variance from Final Budget Final Budget Budgeted Amounts Actual Positive/ Budgeted Amounts Actual Positive/ Original Final Amounts (Negative) Original Final Amounts (Negative)

REVENUES REVENUES Construction excise tax$5,401 5,401 $5,886$$ 485 Investment earnings$1 1 $14$13$ Investment earnings 10 10 2 (8) Total revenues 1 1 14 13 Total revenues 5,411 5,411 5,888 477 EXPENDITURES EXPENDITURES Current: Current: Support services: Facilities acquisition & construction: Central: Salaries and benefits - - - - Salaries and benefits - 63 4 59 Materials and services 15,411 18,440 2,893 15,547 Materials and services 3,576 4,759 3,755 1,004 Total facilities acquisition & construction 15,411 18,440 2,893 15,547 Total central 3,576 4,822 3,759 1,063 Total support services 3,576 4,822 3,759 1,063 Total expenditures 15,411 18,440 2,893 15,547 Operating contingency 439 451 - 451 Excess (deficit) of revenues over expenditures (10,000) (13,029) 2,995 16,024 Total expenditures 4,015 5,273 3,759 1,514 Net change in fund balance (10,000) (13,029) 2,995 16,024 Excess (deficit) of revenues over expenditures (4,014) (5,272) (3,745) 1,527 Fund balance - beginning of year 10,000 13,029 13,029 - OTHER FINANCING SOURCES (USES) Fund balance - end of year$- - $$ 16,024 $ 16,024 Transfers in - 412 412 -

Net change in fund balance (4,014) (4,860) (3,333) 1,527

Fund balance - beginning of year 4,014 4,860 4,860 - Fund balance - end of year$- - $$ 1,527 $ 1,527

Note: Bolded lines indicate legally required appropriation budget levels of control Note: Bolded lines indicate legally required appropriation budget levels of control

102 103 SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON Recovery Zone Energy and Water Conservation Fund Energy Efficient Schools Fund Schedule of Revenues, Expenditures, and Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Changes in Fund Balance - Budget and Actual For the year ended June 30, 2016 For the year ended June 30, 2016 (amounts expressed in thousands) (amounts expressed in thousands) Variance from Variance from Final Budget Budgeted Amounts Actual Positive/ Final Budget Original Final Amounts (Negative) Budgeted Amounts Actual Positive/ EXPENDITURES Original Final Amounts (Negative) Current: REVENUES Facilities acquisition & construction: Investment earnings$3 3 $-$(3)$ Other 1,066 1,066 941 (125) Materials and services$56 - $56$-$ Total revenues 1,069 1,069 941 (128) Total facilities acquisition & construction - 56 56 - EXPENDITURES Total expenditures - 56 56 - Current: Facilities acquisition & construction: Excess (deficit) of revenues over expenditures - (56) (56) - Materials and services 1,869 1,725 573 1,152 Total facilities acquisition & construction 1,869 1,725 573 1,152 Net change in fund balance - (56) (56) - Total expenditures 1,869 1,725 573 1,152 Fund balance - beginning of year - 56 56 - Fund balance - end of year$- - $-$-$ Excess (deficit) of revenues over expenditures (800) (656) 368 1,024

Net change in fund balance (800) (656) 368 1,024

Fund balance - beginning of year 800 656 656 - Fund balance - end of year$- - $1,024$1,024$

Note: Bolded lines indicate legally required appropriation budget levels of control Note: Bolded lines indicate legally required appropriation budget levels of control

104 105 SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON Facilities Capital Fund Capital Asset Renewal Fund Schedule of Revenues, Expenditures, and Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Changes in Fund Balance - Budget and Actual For the year ended June 30, 2016 For the year ended June 30, 2016 (amounts expressed in thousands) (amounts expressed in thousands) Variance from Variance from Final Budget Final Budget Budgeted Amounts Actual Positive/ Budgeted Amounts Actual Positive/ Original Final Amounts (Negative) Original Final Amounts (Negative) REVENUES REVENUES Federal and state support$1,340 1,340 $-$$ (1,340) Charges for services $2275 $ 75$3595 $ 20 Investment earnings 3 3 11 8 Investment earnings 1 1 - (1) Other - - 53 53 Total revenues 276 276 595 319 Total revenues 1,343 1,343 64 (1,279) EXPENDITURES EXPENDITURES Current: Current: Facilities acquisition & construction: Support Services: Materials and services 2,776 3,248 55 3,193 Business: Total facilities acquisition & construction 2,776 3,248 55 3,193 Materials and services 5 5 5 - Total support services 5 5 5 - Total expenditures 2,776 3,248 55 3,193

Facilities acquisition & construction: Excess (deficit) of revenues over expenditures (2,500) (2,972) 540 3,512 Salaries and benefits - 63 36 27 Materials and services 5,589 7,531 4,573 2,958 Net change in fund balance (2,500) (2,972) 540 3,512 Total facilities acquisition & construction 5,589 7,594 4,609 2,985 Fund balance - beginning of year 2,500 2,972 2,972 - Total expenditures 5,594 7,599 4,614 2,985 Fund balance - end of year $-- $3$3,512$ ,512

Excess (deficit) of revenues over expenditures (4,251) (6,256) (4,550) 1,706

OTHER FINANCING SOURCES (USES) Transfers in 2,151 3,158 3,158 - Total other financing sources (uses) 2,151 3,158 3,158 -

Net change in fund balance (2,100) (3,098) (1,392) 1,706

Fund balance - beginning of year 2,100 3,098 3,098 - Fund balance - end of year $ - $ - $11,706 $ ,706

Note: Bolded lines indicate legally required appropriation budget levels of control Note: Bolded lines indicate legally required appropriation budget levels of control

106 107 SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON Partnerships Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual For the year ended June 30, 2016 (amounts expressed in thousands) Variance from Final Budget Budgeted Amounts Actual Positive/ Original Final Amounts (Negative) REVENUES Funding from external partners$ 12,000 $ 12,000 $ 3,980 $ (8,020) Total revenues 12,000 12,000 3,980 (8,020) BUDGETARY COMPARISON SCHEDULES EXPENDITURES Other funds Current: Facilities acquisition & construction: Materials and services 12,450 12,003 3,815 8,188 Total facilities acquisition & construction 12,450 12,003 3,815 8,188

Total expenditures 12,450 12,003 3,815 8,188

Excess (deficit) of revenues over expenditures (450) (3) 165 168

Net change in fund balance (450) (3) 165 168

Fund balance - beginning of year 450 3 3 - Fund balance - end of year$- - $168$168$

Note: Bolded lines indicate legally required appropriation budget levels of control

108 109 SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON GO Bonds Fund Self-Insurance Fund Schedule of Revenues, Expenditures, and Schedule of Revenues, Expenses, and Changes in Fund Balance - Budget and Actual Changes in Retained Earnings - Budget and Actual For the year ended June 30, 2016 For the year ended June 30, 2016 (amounts expressed in thousands) (amounts expressed in thousands) Variance from Variance from Final Budget Final Budget Budgeted Amounts Actual Positive/ Budgeted Amounts Actual Positive/ Original Final Amounts (Negative) Original Final Amounts (Negative) REVENUES OPERATING REVENUES Investment earnings$ 4,287 $1,845 4,287 $$ (2,442) Charges for services$3,542 3,542 $3,394$$ (148) Other - - 5 5 Insurance recoveries - - 9 9 Total revenues 4,287 4,287 1,850 (2,437) Total operating revenues 3,542 3,542 3,403 (139)

EXPENDITURES OPERATING EXPENSES Current: Support services: Support services: Salaries and benefits 219 322 338 (16) Business: Materials and services 274 274 256 18 Materials and services 1,321 1,321 445 876 Claims expense 3,302 3,202 2,145 1,057 Total support services 1,321 1,321 445 876 Total support services 3,795 3,798 2,739 1,059 Operating contingency 2,300 3,377 - 3,377 Facilities acquisition & construction: Total operating expenses 6,095 7,175 2,739 4,436 Salaries and benefits 2,420 2,738 2,237 501 Materials and services 164,753 182,237 113,253 68,984 Operating income (loss) (2,553) (3,633) 664 4,297 Total facilities acquisition and construction 167,173 184,975 115,490 69,485 NON OPERATING REVENUES Operating contingency 174,119 174,604 - 174,604 Investment income 3 3 43 40 Total expenditures 342,613 360,900 115,935 244,965 Federal and state support 250 250 206 (44) Total non-operating revenues 253 253 249 (4) Excess (deficit) of revenues over expenditures (338,326) (356,613) (114,085) 242,528 Change in net position (2,300) (3,380) 913 4,293 Net change in fund balance (338,326) (356,613) (114,085) 242,528 Beginning net position - budgetary basis 2,300 3,380 3,380 - Fund balance - beginning of year 338,326 356,613 356,613 - Ending net position - budgetary basis$- - $ 4,293$ 4,293 Fund balance - end of year $-- $ $ 242,528 $ 242,528

Reconciliation: Other post employment benefits obligation (32) Accrued compensated absences (17) Net pension asset, deferred inflows, and deferred outflows (14) Net position - GAAP basis$ 4,230

Note: Bolded lines indicate legally required appropriation budget levels of control Note: Bolded lines indicate legally required appropriation budget levels of control

110 111 Statistical Section

This part of the District's Comprehensive Annual Financial Report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the District's overall financial health.

Contents Page

Financial Trends (Schedules 1-4) 114 These schedules contain trend information to help the reader understand how the District's financial performance and well-being have changed over time.

Revenue Capacity (Schedules 5-8) 122 These schedules contain information to help the reader assess the District's most significant local revenue source, the property tax.

Debt Capacity (Schedules 9-11) 126 These schedules present information to help the reader assess the affordability of the District's current levels of outstanding debt and the District's ability to issue additional debt in the future.

Demographic and Economic Information (Schedules 12-13) 129 These schedules offer demographic and economic indicators to help the reader understand the environment within which the District's financial activities take place.

Operating Information (Schedules 14-16) 131 These schedules contain service and infrastructure data to help the reader understand how the information in the District's financial report relates to the services the District provides and the activities it performs.

Sources:

Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year.

112 113 Schedule 1 SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON Condensed Statement of Net Position Last Ten Fiscal Years (accrual basis of accounting) (dollars in thousands)

Government-wide Activities

???? 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Assets Current and other assets$ 167,964 $ 175,282 $ 175,091 $174,564 $ 177,558 $ 180,957 $ 298,246 $ 304,224 $ 579,805 $ 487,394 Prepaid pension & other prepaid items 471,759 463,507 455,247 445,555 436,790 425,421 414,407 2,149 5,754 1,628 Net capital assets 195,885 187,312 185,571 194,725 200,731 199,058 213,944 233,265 273,957 382,401 Total assets 835,608 826,101 815,909 814,844 815,079 805,436 926,597 539,638 859,516 871,423

Deferred Outflows of Resources Pension 4,785 6,801 3,200

Liabilities Other current liabilities 95,818 88,936 96,163 75,555 77,535 83,977 87,185 90,983 105,763 121,321 Other long-term liabilities 24,271 22,377 10,320 34,182 62,851 57,972 182,759 244,301 495,290 453,679 Limited tax pension bonds payable 476,416 468,163 459,756 450,125 440,491 430,058 419,034 407,499 395,958 384,075 Net pension liability ------17,185 Other post employment benefits - 8,852 17,762 24,741 29,667 33,595 36,263 35,579 32,900 29,933 Total liabilities 596,505 588,328 584,001 584,603 610,544 605,602 725,241 778,362 1,029,911 1,006,193

Deferred Inflows of Resources Insurance recovery 819 - - - Pension -- 11,102 6,062 819 - 11,102 6,062

Net Assets Invested in capital assets, net of related debt 180,034 177,198 181,442 186,783 164,033 157,209 Restricted - - - 8,426 25,597 21,577 Unrestricted 59,069 60,575 50,466 35,032 14,905 21,048 Total Net Assets $ 239,103 $ 237,773 $ 231,908 $230,241 $ 204,535 $ 199,834

Net Position Net investment in capital assets 146,148 183,584 230,251 260,146 Restricted 131,060 119,224 394,845 283,176 Unrestricted (76,671) (536,747) (799,792) (680,955) Total Net Position $(200,537 $(233,939) $174,696) $ (137,633)

Note: The District Implemented GASB 65 beginning in 2013. As a result, Net Assets format is presented for years prior to 2013, and Net Position format is presented for 2013 and subsequent years. 114 115 Schedule 2 SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) (dollars in thousands) Government-wide Activities

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Expenses Instruction$ 281,308 $ 311,474 $ 306,993 $ 323,190 $ 315,465 $ 287,424 $ 267,192 $ 308,652 $ 326,935 $ 364,964 Support services 198,721 192,598 196,857 183,267 204,613 206,856 194,270 200,750 212,213 241,016 Enterprise and community services 15,187 15,750 16,653 17,135 19,758 19,108 18,923 19,164 20,445 21,326 Facilities services 7,633 3,140 6,899 14,177 11,649 10,697 31,635 1,470 2,617 1,230 Interest and fees on long-term debt 1,535 1,815 1,600 1,642 2,135 25,748 26,813 33,546 31,600 40,116 Total expenses 504,384 524,777 529,002 539,411 553,620 549,833 538,833 563,582 593,810 668,652

Program Revenues Charges for services: Instruction 4,100 4,151 4,783 4,898 4,799 5,046 5,958 5,989 6,457 996 Support services 2,157 2,879 3,075 2,883 2,348 2,109 2,852 2,857 2,916 3,157 Enterprise and community services 4,190 4,353 4,442 4,655 4,666 4,422 4,123 4,420 4,214 4,521 Operating grants and contributions: Instruction 51,915 68,180 72,121 71,538 75,981 71,319 62,006 58,418 65,409 58,619 Support services 29,163 27,793 28,722 27,585 25,844 25,447 23,437 17,693 21,638 22,356 Enterprise and community services 12,500 1,889 2,620 2,548 3,915 2,863 2,623 2,240 2,704 3,085 Total program revenues 104,025 109,245 115,763 114,107 117,553 111,206 100,999 91,617 103,338 92,734

Net Expenses (400,359) (415,532) (413,239) (425,304) (436,067) (438,627) (437,834) (471,965) (490,472) (575,918)

General Revenues: Property taxes levied for general purposes 165,536 174,926 181,928 189,234 194,170 200,906 205,177 213,115 222,872 233,548 Property taxes levied for debt service 37 ------44,765 46,568 48,985 Local option taxes levied for general purposes 200 35,887 37,364 38,292 38,226 53,622 51,357 55,709 62,923 76,467 Construction excise tax - 69 1,962 1,192 1,361 2,108 3,619 4,889 6,076 5,886 State School Fund - general support 166,813 168,438 151,376 155,566 139,229 149,031 151,369 184,690 179,505 211,253 State Common School Fund - general support 4,316 4,864 3,717 4,544 4,461 4,138 4,608 4,427 4,721 5,810 County and intermediate sources - general support 30,009 15,511 10,271 10,223 9,543 9,588 14,560 15,736 15,202 15,772 Federal Stimulus - - 8,816 12,182 14,349 595 6 --- Investment earnings 7,795 7,208 3,477 781 582 403 644 774 1,285 3,140 Other 8,303 7,299 8,463 9,905 8,440 13,535 10,518 11,253 10,563 12,120 Total general revenues 383,009 414,202 407,374 421,919 410,361 433,926 441,858 535,358 549,715 612,981

Extraordinary items - - -1,718 - - Change in Net Assets $ (17,350) $ (1,330) $ (5,865) $ (1,667) $ (25,706) $ (4,701)

Change in Net Position $ 4,024 $ 63,393 $ 59,243 $ 37,063

Note: The District Implemented GASB 65 beginning in 2013. As a result, Net Assets format is presented for years prior to 2013, and Net Position format is presented for 2013 and subsequent years.

116 117 Schedule 3 SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) (dollars in thousands)

Governmental Activities 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

General Fund Nonspendable$ 823 1,949$ $11,881 $ ,587 $452795 $$ 139 $ 200 247$ $ 386 Restricted ------560-- Committed - 2,000 2,000 2,000 1,2891,583---- Assigned ------7,200 Unassigned 43,032 50,556 46,079 50,185 29,457 28,890 37,318 50,914 34,195 30,249 Total general fund 43,855 54,505 49,960 53,772 31,541 30,925 37,457 51,674 34,442 37,835

All Other Governmental Funds Nonspendable 591 512 635 446 522 390 473 2,370 2,452 2,286 Restricted 8,913 7,267 11,039 21,648 25,137 27,471 144,677 127,176 393,179 281,089 Committed 16,800 16,800 16,800 16,800 26,899 20,461 15,486 16,342 17,590 16,400 Assigned ------5,5496,182 Unassigned - - (2,467) (14,536) ------Total all other governmental funds 26,304 24,579 26,007 24,358 52,558 48,322 160,636 145,888 418,770 305,957 Total Governmental Fund Balances $ 70,159 $ 79,084 75,967$ $ 78,130 84,099$ 79,247$ 198,093$ $ 197,562 453,212$ $ 343,792

118 119 Schedule 4 SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) (dollars in thousands) Governmental Activities 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Revenues Property and other taxes$ 166,522 174,568$ 181,847$ 190,105$ $ 196,044 200,716$ 208,434$ 260,872$ 274,219$ 287,035$ State School Fund 164,182 168,438 151,376 155,566 139,229 149,031 151,369 184,690 179,505 211,253 Local option taxes 200 35,373 37,042 38,470 38,603 53,099 51,720 56,013 63,274 76,593 County and intermediate sources 30,009 15,511 10,271 10,224 9,544 9,588 14,560 15,736 15,201 15,771 Federal stimulus - - 10,206 26,972 28,991 4,591 1,920 155 - - State Common School Fund 4,316 4,864 3,717 4,544 4,461 4,138 4,608 4,427 4,721 5,810 Federal and state support 80,134 82,435 89,014 74,055 79,034 84,704 71,942 65,231 75,793 71,024 Charges for services 10,446 11,383 12,300 12,436 11,814 45,953 48,674 51,874 54,233 49,312 Extracurricular activities 7,178 7,963 7,524 7,423 7,563 7,355 7,867 8,308 8,276 7,904 Investment earnings 7,531 6,907 3,310 1,037 649 579 632 757 1,255 3,096 Other 13,674 14,068 13,450 13,131 11,991 15,127 16,315 13,138 15,414 16,215 Total revenues 484,192 521,510 520,057 533,963 527,923 574,881 578,041 661,201 691,891 744,013 Expenditures Current: Instruction 276,929 301,171 301,457 310,846 314,597 305,238 303,360 323,921 349,667 362,126 Support services 182,918 203,620 192,384 199,983 205,869 207,691 193,375 202,233 229,254 248,377 Enterprise and community services 15,077 15,467 16,386 17,106 20,001 19,782 19,710 20,059 21,902 21,925 Facilities acquisition and construction 7,633 3,141 6,899 14,166 11,546 10,613 31,575 31,105 54,830 127,491 Debt Service: Principal 8,039 6,966 7,291 5,901 8,082 56,963 62,443 51,500 55,033 47,020 Interest1 ,412 1,546 1,499 1,740 2,043 25,608 26,318 34,921 33,811 46,610 Total expenditures 492,008 531,911 525,916 549,742 562,138 625,895 636,781 663,739 744,497 853,549 Excess (deficit) of revenues over expenditures (7,816) (10,401) (5,859) (15,779) (34,215) (51,014) (58,740) (2,538) (52,606) (109,536) Other Financing Sources (Uses) Transfers in 10,704 8,748 9,913 7,550 9,939 14,090 55,786 9,013 14,409 7,407 Transfers out (10,704) (8,748) (7,913) (7,550) (6,939) (9,680) (55,786) (9,013) (14,409) (7,407) Issuance of debt 2,125 15,220 - 15,000 36,750 27,250 176,931 - 308,212 - Issuance of refunding bonds - - - - - 14,400 - - - - Proceeds from the sale of capital assets 1,796 1,616 743 2,942 434 102 655 2,007 44 116 Total other financing sources (uses) 3,921 16,836 2,743 17,942 40,184 46,162 177,586 2,007 308,256 116

Net change in fund balances $ (3,895) $ 6,435 $ (3,116) $ 2,163 $ 5,969 $ (4,852) $ 118,846 $ (531) $ 255,650 $ (109,420)

Debt service as a percentage of noncapital expenditures 2.0% 1.6% 1.7% 1.4% 1.8% 13.4% 14.7% 13.7% 12.9% 12.9%

120 121 Schedule 6 SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON Direct and Overlapping Property Tax Rates Last Ten Fiscal Years (rate per $1,000 of assessed value)

District Direct Rates General General Tax Obligation Total Permanent Debt Service Direct Tax Fiscal Year Rate Local Option Bonds Rate Schedule 5 SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON Assessed Values of Taxable Property within School District No. 1J Boundaries 2007 $ 5.2781 $ - $ - $ 5.2781 Last Ten Fiscal Years (dollars in thousands) 2008 5.2781 1.2500 - 6.5281 2009 5.2781 1.2500 - 6.5281 2010 5.2781 1.2500 - 6.5281 5.2781 1.2500 6.5281 Assessed Value (not including exempt property) 2011 - 5.2781 1.9900 7.2681 Fiscal Less: 2012 - Year Add: Non- Less: Urban Reduction Total Taxes 2013 5.2781 1.9900 - 7.2681 Ending Personal Manufactured Total Assessed Profit Renewal Total Net Total Direct Amount tax and Imposed 2014 5.2781 1.9900 1.0890 8.3571 June 30, Real Property Property Structures Public Utility Value Housing Excess Assessed Value Tax Rate rate will raise Adjustments (Net Levy) 5.2781 1.9900 1.0854 8.3535 2007$ 32,185,082 $ 1,863,994 $ 13,755 $ 1,309,159 $ 35,371,990 17,332$ $ 2,830,224 $ 32,559,098 5.2781$ $ 171,850 $ 1,963 $ 169,887 2015 2008 34,287,573 1,859,615 14,311 1,273,298 37,434,797 18,062 3,200,929 34,251,930 6.5281 223,600 7,940 215,660 2016 5.2781 1.9900 1.0951 8.3632 2009 36,093,965 1,901,468 14,130 1,383,226 39,392,789 23,270 3,635,372 35,780,687 6.5281 233,580 8,151 225,429 2010 37,714,170 1,883,081 15,640 1,607,399 41,220,290 23,968 4,189,459 37,054,799 6.5281 241,897 8,996 232,901 2011 38,951,439 1,903,652 41,782 1,629,651 42,526,524 19,736 4,425,353 38,120,907 6.5281 248,857 9,390 239,467 Portland Multnomah 2012 40,421,170 1,687,236 41,578 1,568,907 43,718,891 20,328 4,519,149 39,220,070 7.2681 285,055 24,051 261,004 Multnomah Port of City of Community Education Service 2013 41,725,902 1,691,285 18,523 1,538,735 44,974,445 20,938 4,653,499 40,341,884 7.2681 293,209 29,814 263,395 2014 43,211,127 1,716,219 17,485 1,613,794 46,558,625 21,566 4,833,326 41,746,865 8.3571 348,883 27,190 321,693 Fiscal Year County Portland Metro Portland College District 2015 45,073,153 1,757,198 18,655 1,673,302 48,522,308 22,213 4,907,733 43,636,788 8.3535 364,520 23,132 341,388 2016 47,216,863 1,838,347 23,782 1,710,931 50,789,923 22,880 5,237,111 45,575,692 8.3632 381,159 12,569 368,590 $ 4.3434 $ 0.0701 $ 0.0966 $ 4.5770 $ 0.2828 $ 0.4576 122 2007 2008 4.3434 0.0701 0.0966 4.5770 0.2828 0.4576 2009 4.3434 0.0701 0.0966 4.5770 0.2828 0.4576 Notes: 2010 4.3434 0.0701 0.0966 4.5770 0.2828 0.4576 1. Beginning July 1, 1997 property taxes were based on an assessed value. Assessed value is defined as the lower of "maximum assessed value" or "real market value". For the 1997-1998 tax year, "maximum assessed value" was set at the 1995-1996 real market value less 10 percent. Assessed value for later years is limited to 3 percent annual increases. 2011 4.3434 0.0701 0.0966 4.5770 0.2828 0.4576 2012 4.3434 0.0701 0.0966 4.5770 0.2828 0.4576 2. The net levy is the actual imposed tax after adjustments and constitutional property tax limitations due to the passing of Measure 5 in 1990 and Measure 50 in 1997. 2013 4.3434 0.0701 0.0966 4.5770 0.2828 0.4576 Source: FY 2007-2016: Oregon Property Tax Statistics Supplement for the appropriate fiscal year. Values are the combined total for the taxing district, "Portland 1J School", in Multnomah, Clackamas and 2014 4.3434 0.0701 0.0966 4.5770 0.2828 0.4576 Washington counties. 2015 4.3434 0.0701 0.0966 4.5770 0.2828 0.4576 2016 4.3434 0.0701 0.0966 4.5770 0.2828 0.4576

The permanent and local option tax rates are determined by the State of Oregon Constitution and State Statutes. Existing districts cannot increase their permanent rate authority. Local option levies are limited to five years for operations and ten years for capital projects. Elections for local option levies must meet the double majority election test, except in the November general election in even numbered years. Rates for debt service are set based on each year's requirements.

Source: The Tax Supervising and Conservation Commission annual reports for the relevant fiscal year.

123 Schedule 7 Schedule 8 SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON Principal Property Tax Payers for Multnomah County Property Tax Levies and Collections Prior Year and Nine Years Ago Last Ten Fiscal Years Taxing District - 311 Portland School District (dollars in thousands) (dollars in thousands)

Collected within the Fiscal 2015 1 2006 Fiscal Year Net Taxes Year of the Levy Collections in Total Collections to Date Ending Levied for the Percentage Subsequent Percentage 1 Amount of Levy2 Amount of Levy Percentage of June 30 Fiscal Year Years Total Taxable Percentage of Taxable Assessed Assessed Taxable Assessed Total Taxable Taxpayer Value Rank Value Value Rank Assessed Value 2007$ 169,887 $ 160,813 94.66%$ 4,289 $ 165,102 97.18% Ten Largest Taxpayers 2008 216,645 202,448 93.45 4,860 207,308 95.69 Pacifcorp (PP&L) $ 299,787 1 0.69%% 211,738 2 0.67 2009 226,206 211,232 93.38 5,170 216,402 95.67 Comcast Corporation 257,204 2 0.59 - - - 2010 233,861 219,970 94.06 7,203 227,173 97.14 Portland General Electric CO 254,208 3 0.58 210,806 3 0.67 2011 239,467 225,418 94.13 7,481 232,899 97.26 2012 261,004 244,408 93.64 7,349 251,757 96.46 Weston Investment Co LLC 231,629 4 0.53 - - - 2013 263,395 248,807 94.46 8,519 257,326 97.70 Evraz Inc NA 218,465 5 0.50 - - - 2014 321,693 304,458 94.64 8,332 312,790 97.23 Port of Portland 213,083 6 0.49 123,542 7 0.39 2015 341,388 323,906 94.88 10,413 334,319 97.93 Capref Lloyd Center LLC 173,304 7 0.40 - - - 2016 368,590 350,212 95.01 - 350,212 95.01 AT&T, INC 170,140 8 0.39 - - - Centurylink 167,056 9 0.38 - - - 111 SW 5th Avenue 155,136 10 0.36 - - -

Qwest Wireless - - - 254,286 1 0.81

Siltronic Corp - - - 114,574 9 0.36

Oregon Steel Mills Inc - - - 163,511 4 0.52

LC Portland LLC - - - 143,837 5 0.46

Freightliner LLC - - - 127,971 6 0.41

One Eleven Tower LLC - - - 112,303 10 0.36

Cingular Wireless LLC - - - 115,164 8 0.37 Subtotal of Ten Largest Taxpayers 2,140,012 4.91 1,577,732 5.02

All Other Taxpayers 41,496,776 95.09 29,822,819 94.98 Note: Total All Taxpayers $ 43,636,788 100.00 %%$ 31,400,551 100.00 The net taxes levied are combined for Multnomah, Washington, and Clackamas counties. Responsibility for the collection of all property taxes rests within each County's Department of Assessment and Taxation. Current taxes are assessed as of July 1, become due as of November 15 and become delinquent as of May 15. Assessed taxes become a lien upon real property in the fourth year of delinquency. Proceeds of tax sales are applied to delinquent taxes, interest and other costs attributable to the property sold.

1 The net levy is the actual imposed tax after adjustments and constitutional property tax limitations due to the passing of Measure 5 in 1990 and Measure 50 in 1997. Additional information can be found on Schedule 5. Note that the Net Taxes Levied in Schedule 5 is based on the Assessed Value, while data for this schedule is based on the actual Net Taxes Levied.

2 Notes: Collections in subsequent years includes current year revenue received for taxes levied in prior years. 1 2016 information not available at time of distribution Source: Multnomah, Washington and Clackamas Counties, Division of Assessment and Taxation. Source: Multnomah County, Division of Assessment and Taxation

124 125 Schedule 10 SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON Direct and Overlapping Governmental Activities Debt June 30, 2016 (dollars in thousands)

Net Property-tax Percent Overlapping Overlapping Issuer Backed Debt1 Overlapping Debt 2 Burlington Water District $ 1,425 100.00 %$ 1,425 City of Beaverton 722 1.66 12 City of Lake Oswego 13,550 5.39 730 Schedule 9 City of Milwaukie 4,938 0.82 40 SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON Ratios of Outstanding Debt by Type City of Portland 194,581 86.25 167,825 Last Ten Fiscal Years Clackamas County 101,775 0.11 112 (dollars in thousands, except per student and per capita) Clackamas Cty RFPD 1 16,700 0.22 37 General Bonded Debt Metro 199,855 38.89 77,732 Net Net General Percentage of Mt Hood Community College 23,735 0.07 16 General Less Amount Unamortized Obligation Actual Taxable Net General Value of Obligation Debt Multnomah County 160,510 75.43 121,070 Fiscal Obligation Available for Premium Bonds 1 2 4 Year Bonds Repayment (Discount) Outstanding Property Per Student Per Capita Multnomah Cty Drainage District 1 65 100.00 65 2007 $-- $-$-$-%$--$ Multnomah Cty RFPD 10 3,561 0.28 10 2008 ------2009 ------Portland Community College 335,095 48.89 163,834 2010 ------Tualatin Hills Park & Rec District 86,872 1.26 1,092 2011 ------2012 ------Tualatin Valley Fire & Rescue District 52,000 2.09 1,085 2013 144,840 - 13,347 158,187 0.39% 3,329 206 Valley View Water District 1,622 100.00 1,622 2014 108,890 (361) 10,209 118,738 0.28% 2,469 153 2015 343,575 (1,363) 39,974 382,186 0.88% 7,887 N/A Washington County 53,680 0.63 336 2016 311,720 (2,698) 37,726 346,748 0.76% 7,066 N/A Washington Cty Enhanched Patrol Dist. 90 Other Governmental Activities Debt 0.70 1 126 Net Limited Tax Full Faith & Small Scale Unamortized Subtotal, overlapping debt 537,044 Fiscal Pension Certificates of Credit Energy Loan Recovery Zone Premium 5 3 2 4 Year Bonds Participation Obligations Programs Bond Other Debt (Discount) Total District Per Student Per Capita Direct District debt (PERS) 3 383,888 2007$ 484,836 $- 10,130 $3,596$-$2,125$$ (289) $10,803 500,398 $$ 716 3 2008 475,333 5,175 15,090 2,862 - 2,078 (167) 500,371 10,856 702 Direct District debt (other) 363,745 2009 465,622 - 15,090 2,092 - 2,035 (174) 484,665 10,529 667 Subtotal, Direct debt 747,633 2010 454,630 - 26,316 1,369 - 1,992 (181) 484,126 10,394 666 2011 443,571 - 48,095 676 11,000 - (188) 503,154 10,754 673 2012 431,638 - 45,877 325 10,190 - (195) 487,835 10,320 643 Total direct and overlapping debt$ 1,284,677 2013 419,034 - 14,768 179 9,356 471 (202) 601,793 12,663 785 2014 407,500 - 12,261 - 8,496 - (209) 547,147 11,376 704 2015 395,958 - 9,970 - 7,611 - (198) 796,890 16,445 N/A 2016 384,075 - 7,601 - 6,698 - (187) 747,633 15,234 N/A

Note: Details regarding the District's outstanding debt can be found in the notes to the financial statements. 1 See Schedule 5 for property value data. The total estimated actual value of taxable property cannot be reasonably estimated. 2 Student enrollment data can be found in Schedule 16. 3 Includes net general bonded debt and other governmental activities debt, excluding amounts available for repayment. 4 Per capita is calculated using the estimated District population from the US Department of Commerce, Bureau of Economic Analysis as reported in Schedule 12. Data for 2015 and 2016 not available at time of printing. 5 Limited Tax Pension Bonds are not included in the General Bonded Debt schedule above since they are not repaid directly with property tax dollars. Notes: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the District. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of the District. This process recognizes that, when considering the District's ability to issue and repay long-term debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt of each overlapping government.

1 Net Property-tax Backed Debt includes all General Obligation (GO) bonds and Limited-tax GO bonds, less Self-supporting Unlimited-tax (GO) and Self-supporting Limited-tax GO debt. 2 Overlapping Debt is calculated using Net Property-tax Backed Debt times Percent Overlapping that are provided by Oregon State Treasury, Debt Management Division. 3 Direct District debt is net of unamortized premiums and discounts.

Source: Oregon State Treasury, Debt Management Division 127 Schedule 12 SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON Demographic and Economic Statistics Last Ten Calendar Years Multnomah County

Personal Income Per Capita (thousands of Personal Unemployment Year Population dollars) Income (dollars) Rate 2007 699,186 $ 28,385,388 $ 40,598 4.6% 2 Schedule 11 2 SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON 2008 712,539 29,372,019 41,222 5.6 Legal Debt Margin Information 2009 726,855 29,430,654 40,490 9.5 2 Last Ten Fiscal Years 2 (dollars in thousands) 2010 737,476 29,458,183 39,945 9.4 2011 748,031 31,161,157 41,658 9.1 2 Legal Debt Margin Calculation for Fiscal Year 2016 2 Real Market Value $ 90,930,548 2012 759,256 32,715,802 43,089 8.2 1 Debt Limit (7.95%) 7,228,979 2013 766,135 33,376,029 43,564 7.5 2 Amount of Debt Applicable to Debt Limit: 2014 776,712 36,588,018 47,106 6.1 2 General Obligation Bonded Debt 349,446 1 1 1 2 Less: Amount Available in Debt Service Funds (2,698) 2015 - - - 5.3 1 1 1 2 Amount of Debt Applicable to Debt Limit 346,748 2016 - - - 4.9

Legal Debt Margin $ 6,882,231

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Debt Limit $ 5,036,778 $ 5,835,393 $ 6,267,884 $ 6,194,374 $ 6,028,990 $ 5,680,406 $ 5,604,461 $ 5,917,214 $ 6,517,491 $ 7,228,979

Total net debt applicable to limit ------158,187 118,738 382,186 346,748 128 Legal debt margin$ 5,036,778 $ 5,835,393 $ 6,267,884 $ 6,194,374 $ 6,028,990 $ 5,680,406 $ 5,446,274 $ 5,798,476 $ 6,135,305 $ 6,882,231 Total net debt applicable to the limit as a percentage of debt limit 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 2.82% 2.01% 5.86% 4.80%

1 ORS 328.245 establishes a parameter of bonded indebtedness for school districts. Aggregates are governed by real market values within the District based on the following:

A For each grade from kindergarten to eighth for which the District operates schools, fifty-five one-hundredths of one percent (.0055) of the real market value. B For each grade from ninth to twelfth for which the District operates schools, seventy-five one-hundredths of one percent (.0075) of the real market value.

Allowable Percentage of Real Market Value: A Kindergarten through eighth grade, 9 x .0055 4.95% B Ninth through twelfth, 4 x .0075 3.00% Allowable Percentage 7.95%

Source: Market value from Multnomah County, Tax Supervising and Conservation Commission

1 Data for 2015 and 2016 not available at time of printing. 2 As of October, 2016. Sources: Population, personal income and per capita information: US Department of Commerce, Bureau of Economic Analysis. Unemployment rate information: US Department of Labor, Bureau of Labor Statistics.

129 Schedule 13 Schedule 14 SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON Principal Employers for the Portland Metro Area Full-time Equivalent District Employees by Assignment/Function Current Year and Nine Years Ago Last Five Fiscal Years

2016 2007 Full-time Equivalent Employees Percentage of Percentage of for the Fiscal Year Total Total Employer Employees Rank Employment Employees Rank Employment Assignment/Function 2012 2013 2014 2015 2016 Ten Largest Employers Intel Corporation 18,600 1 1.62% 16,740 1 1.54 % Teachers 2,315.0 2,353.1 2,384.0 2,606.8 2,632.5 Providence Health & Services 16,139 2 1.41 14,639 2 - Oregon Health & Science University 14,963 3 1.31 11,500 3 1.06 Educational Assistants 555.8 520.9 509.8 582.1 667.8 Kaiser Permanente Northwest 11,898 4 1.04 8,221 5 0.76 Fred Meyer 10,813 5 0.94 8,500 4 0.78 School Level Administration 142.9 144.2 142.3 155.0 151.0 Legacy Health System 8,700 6 0.76 8,196 6 0.75 Nike Inc. 8,500 7 0.74 7,648 8 0.70 District Level Administration 13.0 14.0 11.0 17.0 22.0 Portland Public Schools 6,135 8 0.54 - - - Multnomah County 5,995 9 0.52 - - - Other Staff 1,850.3 1,798.4 1,720.0 2,056.5 1,959.4 City of Portland 5,481 10 0.48 7,996 7 0.74 Beaverton School District - - - 5,000 10 0.46 Total FTE 4,877.0 4,830.6 4,767.1 5,417.4 5,432.7 State of Oregon - - - 7,180 9 0.66 Subtotal of Ten Largest Employers 107,224 9.36 95,620 7.45

All Other Employers 1,037,976 90.64 990,043 92.55

1 Total Portland MSA Employment 1,145,200 2 100.00% 1,085,663 100.00 %

1 Portland-Vancouver-Hillsboro MSA includes Clackamas, Columbia, Multnomah, Washington, and Yamhill counties in Oregon, and Clark and Skamania counties in Washington. 2 As of June 2016, not seasonally adjusted.

Sources: Portland Business Journal, Book of Lists published December 2007 & December 2016. Source: District System Planning and Performance department. Oregon Employment Department, Workforce and Economic Research

130 131 Schedule 16 SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON School Building and Student Enrollment Information Last Ten Fiscal Years

2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 Footnotes Elementary Schools and Programs Abernethy (1925) (12) Schedule 15 Gross Floor Area (sq ft): 50,358 SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON Elementary Enrollment 357 342 349 392 421 455 505 528 511 513 Meal and Transportation Services Provided Ainsworth w/Annex (1912) Last Ten Fiscal Years Gross Floor Area (sq ft): 57,593 Elementary Enrollment 509 493 520 528 551 568 569 576 582 600 2007 2008 2009 2010 2011 Alameda (1921) Nutrition Services Gross Floor Area (sq ft): 64,138 Number of Meals Served1 Elementary Enrollment 678 697 717 744 774 782 769 773 760 730 Paid Meals 1,333,234 22% 1,553,008 28% 1,439,321 26% 1,443,806 25% 1,421,889 26% Reduced Meals 481,156 8% 577,275 10% 562,630 10% 549,157 10% 502,171 9% Arleta (1929) (6) Free Meals 4,155,965 70% 3,538,655 62% 3,485,451 64% 3,651,647 65% 3,560,515 65% Gross Floor Area (sq ft): 76,489 Total meals served 5,970,355 100% 5,668,938 100% 5,487,402 100% 5,644,610 100% 5,484,575 100% Elementary Enrollment 370 387 420 420 428 422 462 476 454 456 Astor (1948) (6) Average Daily Breakfast Served 14,017 12,343 11,344 10,592 10,101 Gross Floor Area (sq ft): 47,360 Average Daily Lunch Served 20,164 19,875 19,867 20,369 20,295 Elementary Enrollment 331 381 438 458 445 482 478 500 497 493 Student Participation 53.46% 52.45% 47.98% 46.94% 46.96% Atkinson (1953) Transportation Gross Floor Area (sq ft): 58,057 Number of buses 241 240 239 252 258 Elementary Enrollment 549 524 535 491 484 447 440 441 428 435 Total miles traveled 2,848,220 3,006,996 2,914,877 3,317,636 3,265,683 (6) Cost per mile $ 5.09 $ 5.42 $ 5.77 $ 5.50 $ 5.63 Beach (1928) Area encompased by District (sq mi) 160 160 160 160 160 Gross Floor Area (sq ft): 70,404 Elementary Enrollment 412 426 484 538 561 582 613 620 607 631 (4)

132 Beverly Cleary (1959) Gross Floor Area (sq ft): 90,664 2012 2013 2014 2015 2016 Elementary Enrollment 210 578 557 552 604 674 730 814 834 859 Nutrition Services Boise-Eliot/Humboldt (1926) (6,24) Number of Meals Served1 Gross Floor Area (sq ft): 61,369 Paid Meals 1,382,329 25% 1,354,685 25% 1,313,005 25% 1,071,048 19% 1,114,504 20% Elementary Enrollment 415 412 423 417 390 389 535 506 540 540 Reduced Meals 441,829 8% 434,353 8% 375,796 7% 194,558 4% 209,753 4% Bridger (1951) (1,6,13,16,21) Free Meals 3,689,643 67% 3,632,901 67% 3,560,251 68% 4,315,732 77% 4,141,824 76% Gross Floor Area (sq ft): 45,142 Total meals served 5,513,801 100% 5,421,939 100% 5,249,052 100% 5,581,338 100% 5,466,081 100% Elementary Enrollment 421 470 320 331 365 396 405 435 415 476

Average Daily Breakfast Served 10,400 10,768 10,380 10,846 10,724 Bridlemile (1958) Average Daily Lunch Served 19,942 19,059 18,668 19,710 19,083 Gross Floor Area (sq ft): 59,037 Student Participation 49.14% 47.00% 45.80% 44.00% 44.40% Elementary Enrollment 458 468 464 480 463 472 457 450 442 480 Transportation Buckman (1921) Number of buses 257 263 254 269 245 Gross Floor Area (sq ft): 82,023 Total miles traveled 3,019,548 3,392,622 3,156,795 3,127,505 3,273,739 Elementary Enrollment 506 481 498 492 497 488 460 452 444 481 Cost per mile $ 6.24 $ 5.28 $ 5.89 $ 5.97 $ 5.91 Capitol Hill (1917) (12) Area encompased by District (sq mi) 160 160 160 160 160 Gross Floor Area (sq ft): 47,275 Elementary Enrollment 341 354 321 357 351 371 403 405 460 437 1 Number of meals served includes breakfast, lunch, snack, and supper. 2 Cesar Chavez (1928) (4) Student Participation percentage is calculated based on the average daily lunches served at elementary schools, middle schools, and high schools, over the average daily attendance (enrollment adjusted per industry factors) at the schools where nutrition services meals are served. Gross Floor Area (sq ft): 75,814 Middle School Enrollment 401 587 499 484 477 453 473 483 451 522 Chapman (1923) (13) Sources: District Nutrition Services and Transportation departments Gross Floor Area (sq ft): 62,962 Elementary Enrollment 478 476 532 544 522 562 592 646 674 643 Chief Joseph/Ockley Green (1948) (10,12) Gross Floor Area (sq ft): 118,141 Elementary Enrollment 359 361 370 377 408 481 459 642 627 604 Creative Science School (1955) (1,6) Gross Floor Area (sq ft): 50,595 Elementary Enrollment - - 260 301 305 356 388 425 444 476

133 Lewis (1952) Lewis Irvington (1932) Irvington Humboldt (1959) Humboldt Lent (1948) Lent Hayhurst (1954) Hayhurst Harrison Park (1948) Lee (1953) Grout (1927) Grout Glencoe (1923) Glencoe Laurelhurst (1923) Laurelhurst Forest Park (1998) Park Forest King (1927) King Faubion (1951) Faubion Kelly Kelly w/ Center (1952) Duniway (1926) Duniway James John(1929) James Creston w/ Annex (1948) w/ Creston lmnayErlmn 7 0 0 505 503 505 473 Enrollment Elementary 65,285 ft): (sq Area Floor Gross Elementary Enrollment Elementary 48,380 ft): (sq Area Floor Gross lmnayErlmn 4 3 5 7 3 1 - - - - 219 230 275 258 235 240 Enrollment Elementary Gross Floor Area (sqft):46,865 Elementary EnrollmentElementary 76,478 ft): (sq Area Floor Gross lmnayErlmn 4 2 5 8 9 2 1 1 8 499 484 415 412 420 396 385 351 329 345 Enrollment Elementary 56,266 ft): (sq Area Floor Gross Elementary EnrollmentElementary 73,276 ft): (sq Area Floor Gross lmnayErlmn 0 0 1 3 5 5 5 4 4 729 742 742 757 751 751 732 719 507 508 Enrollment Elementary 109,059 ft): (sq Area Floor Gross lmnayErlmn 3 4 3 4 6 5 7 7 8 376 389 377 371 359 361 346 339 349 333 Enrollment Elementary 65,838 ft): (sq Area Floor Gross Elementary EnrollmentElementary 46,204 ft): (sq Area Floor Gross lmnayErlmn 9 0 9 7 8 5 7 0 0 500 503 502 472 453 480 474 499 506 498 Enrollment Elementary 64,378 ft): (sq Area Floor Gross lmnayErlmn 0 0 1 0 0 9 0 9 8 449 486 490 502 491 507 501 512 502 508 Enrollment Elementary 42,000 ft): (sq Area Floor Gross Elementary EnrollmentElementary 88,957 ft): (sq Area Floor Gross lmnayErlmn 3 5 9 9 0 3 5 8 1 479 511 487 454 434 401 393 396 355 332 Enrollment Elementary 0 ft): (sq Area Floor Gross Elementary EnrollmentElementary 97,546 ft): (sq Area Floor Gross lmnayErlmn 4 2 1 2 4 2 2 3 0 494 505 437 423 425 442 423 411 426 446 Enrollment Elementary 67,492 ft): (sq Area Floor Gross lmnayErlmn 5 3 0 8 9 0 3 6 4 429 445 461 439 402 394 384 404 430 459 Enrollment Elementary Gross Floor Area (sqft):63,697 lmnayErlmn 0 3 6 3 4 8 4 5 5 392 350 350 345 380 345 333 365 335 309 Enrollment Elementary 80,940 ft): (sq Area Floor Gross SCHOOL DISTRICT NO.1J, SCHOOL DISTRICTNO.1J, School BuildingandStudentEnrollmentInformation Last TenFiscalYears (continued) (1,18,21) (6,8,24) (6,21) (6,33) (6,12) (13) (16) (12) (21) (6) (6) (6) (6) Footnotes 2006-07 Schedule 16 MULTNOMAH COUNTY,OREGON MULTNOMAH 9 1 4 7 9 9 0 1 8 382 382 414 400 393 396 374 349 310 293 0 7 2 4 6 7 7 0 6 564 560 604 573 577 561 549 528 475 400 5 6 3 5 5 5 9 9 3 456 431 493 497 459 457 458 434 367 354 6 3 0 0 0 8 6 7 7 691 671 673 665 684 704 708 606 536 561 5 5 9 3 8 9 1 3 7 400 370 331 312 292 288 336 399 453 458 3 6 6 6 0 7 2 2 3 610 631 622 626 570 509 467 468 464 439 2007-08 134 2008-09 2009-10 2010-11 529 2011-12 8 6 7 8 493 485 478 460 483 2012-13 2013-14 2014-15 2015-16 Sabin (1928) Sabin Roseway Heights (1923) Heights Roseway Rosa Parks (2006) Rosa Parks Rigler (1931) Rigler Vernon (1931) Vernon Rieke (1961) Rieke Sunnyside Environmental (1925) Environmental Sunnyside Peninsula (1952) Peninsula Stephenson (1965) Stephenson Marysville (1921) Markham (1951) Markham Skyline (1963) Skyline Sitton (1948) Sitton Maplewood (1948) Maplewood Scott (1949) Scott Llewellyn (1928) Llewellyn Elementary EnrollmentElementary 71,946 ft): (sq Area Floor Gross Elementary Enrollment Elementary 75,693 ft): (sq Area Floor Gross Elementary Enrollment Elementary 45,147 ft): (sq Area Floor Gross Elementary Enrollment Elementary 59,760 ft): (sq Area Floor Gross Elementary EnrollmentElementary 72,323 ft): (sq Area Floor Gross Elementary EnrollmentElementary 30,647 ft): (sq Area Floor Gross Elementary Enrollment Elementary 54,361 ft): (sq Area Floor Gross Elementary Enrollment Elementary 70,151 ft): (sq Area Floor Gross Elementary EnrollmentElementary 40,539 ft): (sq Area Floor Gross Elementary Enrollment Elementary 53,490 ft): (sq Area Floor Gross Elementary EnrollmentElementary 37,245 ft): (sq Area Floor Gross Elementary Enrollment Elementary 82,794 ft): (sq Area Floor Gross Elementary EnrollmentElementary Gross Floor Area (sqft):58,762 Elementary EnrollmentElementary 35,022 ft): (sq Area Floor Gross Elementary EnrollmentElementary 62,681 ft): (sq Area Floor Gross lmnayErlmn 0 4 9 3 8 4 8 7 1 531 518 570 583 543 485 434 396 341 309 Enrollment Elementary 50,651 ft): (sq Area Floor Gross SCHOOL DISTRICT NO.1J, SCHOOL DISTRICTNO.1J, School BuildingandStudentEnrollmentInformation Last TenFiscalYears (continued) (6,17,21) (3,6,16) (4,23) (2,6) (3,6) (13) (12) (12) (6) (6) (3) Footnotes 2006-07 Schedule 16 MULTNOMAH COUNTY,OREGON MULTNOMAH 3 5 6 4 6 9 420 392 362 348 363 451 432 0 6 6 7 5 8 1 0 6 697 668 606 616 589 551 578 565 660 406 3 6 0 6 3 0 0 0 4 329 341 405 405 407 434 463 503 562 435 3 6 2 9 8 2 4 6 8 451 480 463 449 524 588 596 525 562 538 0 5 9 9 7 0 4 9 8 407 386 394 440 500 376 397 394 453 404 8 2 4 7 5 1 8 8 8 402 388 388 388 416 356 371 348 322 280 0 4 6 8 8 0 0 8 8 574 586 587 605 608 580 585 565 542 501 9 2 7 7 6 5 6 7 9 374 396 376 368 358 361 375 370 326 299 1 2 2 3 2 3 2 2 0 322 308 320 329 335 324 335 327 320 310 6 0 3 3 0 6 5 1 0 390 405 416 352 363 404 435 437 407 368 3 5 6 9 8 7 7 6 0 300 309 265 273 276 281 294 266 258 233 5 4 6 7 7 8 8 9 8 377 386 393 383 384 376 376 360 349 359 8 1 0 9 0 3 5 7 9 390 399 376 356 333 307 291 309 315 285 0 0 3 4 5 3 2 3 2 359 329 333 327 335 350 342 331 308 307 4 3 3 6 3 2 0 0 8 473 481 507 504 521 533 563 530 539 440 2007-08 135 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 8 1 568 514 485 2014-15 2015-16 Middle Schools andPrograms Schools Middle Hosford (1925) Hosford Gray (1952) Gray George (1950) George Beaumont (1926) Beaumont Woodstock (1910) Woodstock West Sylvan (1954) Woodmere (1954) Woodmere Sellwood (1925) Sellwood Woodlawn (1926) Mt. Tabor (1952) Tabor Mt. Winterhaven (1930) Winterhaven Lane (1927) Whitman (1954) Jackson (1966) Vestal (1929) Vestal ideSho nolet46565158575458576 538 534 547 548 531 516 476 Middle School Enrollment 77,050 ft): (sq Area Floor Gross ideSho nolet474140494842424457566 527 464 422 422 428 419 420 421 457 Middle School Enrollment 60,624 ft): (sq Area Floor Gross ideSho nolet333835383430353339369 359 373 385 360 364 388 375 328 383 Middle School Enrollment 78,713 ft): (sq Area Floor Gross ideSho nolet504048404541535454571 554 584 583 481 455 450 458 460 500 Middle School Enrollment 94,431 ft): (sq Area Floor Gross lmnayErlmn 8 0 4 3 6 9 0 0 8 496 487 505 508 491 466 433 443 407 384 Enrollment Elementary 69,135 ft): (sq Area Floor Gross ideSho nolet868683838988889598966 958 945 888 848 849 863 863 886 896 Middle School Enrollment 104,009 ft): (sq Area Floor Gross lmnayErlmn 2 1 9 9 9 9 8 7 3 312 338 371 383 397 393 397 398 418 422 Enrollment Elementary 59,293 ft): (sq Area Floor Gross ideSho nolet554944404446454355560 545 483 455 486 474 480 474 459 515 Middle School Enrollment 86,823 ft): (sq Area Floor Gross lmnayErlmn 5 2 6 4 7 4 3 4 4 426 443 449 439 443 478 449 462 424 450 Enrollment Elementary 61,595 ft): (sq Area Floor Gross ideSho nolet635855595953666862694 662 628 606 593 579 559 555 588 633 Middle School Enrollment 83,076 ft): (sq Area Floor Gross lmnayErlmn 4 3 4 4 5 4 5 5 4 350 346 356 352 346 352 345 345 335 344 Enrollment Elementary 39,084 ft): (sq Area Floor Gross ideSho nolet574949373841465541481 471 505 486 441 398 397 419 489 527 Middle School Enrollment 87,438 ft): (sq Area Floor Gross lmnayErlmn 8 7 6 7 4 6 5 4 1 271 316 349 351 361 347 372 369 370 384 Enrollment Elementary 69,755 ft): (sq Area Floor Gross ideSho nolet687472615453525358606 548 533 532 533 584 651 712 714 688 Middle School Enrollment 247,779 ft): (sq Area Floor Gross lmnayErlmn 4 8 2 3 5 2 9 0 9 412 399 402 395 420 451 433 428 389 343 Enrollment Elementary 66,378 ft): (sq Area Floor Gross SCHOOL DISTRICT NO.1J, SCHOOL DISTRICTNO.1J, School BuildingandStudentEnrollmentInformation Last TenFiscalYears (continued) (6,16) (21) (12) (16) (21) Footnotes 2006-07 Schedule 16 MULTNOMAH COUNTY,OREGON MULTNOMAH 2007-08 136 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 9 640 591 2015-16 High Schools andPrograms Schools High Marshall (1960) Marshall Wilson (1954) Grant (1923) Grant Madison (1955) Madison Lincoln (1951) Lincoln (1915) Franklin Benson (1916) Roosevelt w/ Auto Shop(1921) Auto w/ Roosevelt Jefferson (1909) (1928) Cleveland High School Enrollment 326,062 ft): (sq Area Floor Gross High School Enrollment 275,173 ft): (sq Area Floor Gross High School Enrollment 370,112 ft): (sq Area Floor Gross ihSho nolet1241281141109689898089914 879 830 889 889 986 1,100 1,134 1,218 1,294 High School Enrollment 0 ft): (sq Area Floor Gross High School Enrollment 410,910 ft): (sq Area Floor Gross High School Enrollment 236,893 ft): (sq Area Floor Gross (Night Sch.) Enroll (Night Prog Focus/Alt High School Enrollment 229,495 ft): (sq Area Floor Gross High School Enrollment 360,911 ft): (sq Area Floor Gross Sch) Enroll (Night Prog Focus/Alt High School Enrollment 253,895 ft): (sq Area Floor Gross High School Enrollment 271,427 ft): (sq Area Floor Gross SCHOOL DISTRICT NO.1J, SCHOOL DISTRICTNO.1J, School BuildingandStudentEnrollmentInformation (8,9,11,21) Last TenFiscalYears (continued) (5,21,33) (5,20) (3,9) (9,8) ------(21) (33) (7) (8) 10------Footnotes 2006-07 Schedule 16 ,5 ,3 ,8 ,3 ,3 ,8 ,3 ,3 ,5 1,324 1,257 1,230 1,236 1,387 1,435 1,439 1,480 1,533 1,556 ,9 ,4 ,5 ,1 ,2 ,6 ,3 ,8 ,0 1,481 1,503 1,486 1,536 1,565 1,620 1,610 1,553 1,642 1,691 ,8 ,3 ,0 ,3 ,3 ,8 ,6 ,6 ,5 1,570 1,552 1,460 1,469 1,480 1,036 1,032 1,007 1,233 1,283 ,9 ,0 ,3 ,9 ,1 ,7 ,1 ,6 ,8 1,696 1,583 1,565 1,513 1,476 1,410 1,395 1,335 1,404 1,498 ,7 ,2 ,1 ,5 ,7 ,2 ,3 ,2 ,1 1,600 1,516 1,523 1,532 1,520 1,570 1,553 1,516 1,528 1,472 MULTNOMAH COUNTY,OREGON MULTNOMAH 3 5 0 6 1 ,6 ,0 ,6 ,7 1,134 1,077 1,066 1,107 1,161 910 860 900 859 936 9 3 0 8 8 4 2 1 4 940 947 914 828 748 683 681 703 730 794 6 0 3 1 2 8 4 1 9 524 493 511 441 584 621 617 631 707 566 6 7 7 4 0 - - - - - 707 747 774 775 860 2007-08 137 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 Facilities with Focus/Alternative Programs Focus/Alternative with Facilities Inactive School and Other Facilities andOther School Inactive Enrollment in other Focus/Alt. Programs Edwards (1961) Edwards (na) (portable) BusParking Columbia (na) Bldg BusBarn Columbia Columbia Holding (1946) Richmond (1908) Richmond Clarendon (1970) Clarendon Metropolitan Learning Center (Couch) (1914) (Couch) Center Learning Metropolitan (1928) (Monroe) daVinci Binnsmead (1949) Binnsmead BESC (1978) Meek (1953) Meek Ball (1948) [sold in 2007] in [sold (1948) Ball Applegate (1954) Applegate Gross Floor Area (sq ft): 20,502 ft): (sq Area Floor Gross 960 ft): (sq Area Floor Gross 9,600 ft): (sq Area Floor Gross 37,746 ft): (sq Area Floor Gross Elementary EnrollmentElementary Gross Floor Area (sqft):77,070 Elementary 42,958 ft): (sq Area Floor Gross 0 ft): (sq Area Floor Gross Enrollment Middle School Enrollment Focus/Alt Prog Enrollment Prog Focus/Alt 68,135 ft): (sq Area Floor Gross Enroll. (Natv. Prog Mont)Focus/Alt Enroll. (da Prog Vinci)Focus/Alt 99,219 ft): (sq Area Floor Gross Gross Floor Area (sq ft): 381,723 ft): (sq Area Floor Gross Focus/Alt Prog Enroll. (Alliance Prog Focus/Alt HS) Focus/AltGross Floor Area (sqft):32,477 Prog Enrollment (8) ------Elementary 0 ft): (sq Area Floor Gross 26,101 ft): (sq Area Floor Gross Enrollment Focus/Alt Prog Enroll. (Turnaround) Prog Focus/Alt Focus/Portland International Scholars Academy (22) ------103122 Focus/Alt Prog Enroll. (ACCESS) Prog Focus/Alt Start) Enroll. (Head Prog Focus/Alt SCHOOL DISTRICT NO.1J, SCHOOL DISTRICTNO.1J, School BuildingandStudentEnrollmentInformation Last TenFiscalYears (continued) (12,28) (14,28) (12,26) (4,19) (2,23) (29) (29) (12) (16) (27) (22) ----22119221730 (1) (8) 92220------(9) Footnotes 2006-07 Schedule 16 MULTNOMAH COUNTY,OREGON MULTNOMAH 3 4 2 4 4 4 5 4 3 426 436 440 455 447 440 443 424 444 439 6 3 0 6 1 6 6 8 7 629 677 687 662 662 612 569 505 436 360 286------1616484346------4 5 4 5 6 6 7 6 6 458 465 468 470 462 464 456 445 458 444 6 9 8 6 2 3 2 8 7 178 172 183 222 233 221 267 288 292 366 0 7 9 3 0 9 2 0 3 799 739 808 824 790 804 732 696 674 606 ------5 0 9 9 1 3 0 346 305 236 219 198 196 200 159 - - 2007-08 138 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 Youngson (1955) (1959) Wilcox East Sylvan (1933) (Bldg used by W. Sylvan) usedbyW. (Bldg (1933) Sylvan East Smith (1958) (1953) Sacajawea (1956) Rice Tubman w/ Annex (1952) Tubman w/ Terwilliger (1917) Ockley Green (1925) Green Ockley King Neighborhood Facility (1 Kenton (1913) Kenton (1913) Village Vocational Glenhaven Foster (1962) Fernwood (1911) Fernwood Kellogg (1913) Annex (1961) w/ Center Holladay Gregory Heights (1923) Heights Gregory (1974) Thumb Green Gross Floor Area (sq ft): 32,824 ft): (sq Area Floor Gross 19,102 ft): (sq Area Floor Gross Middle 96,860 ft): (sq Area Floor Gross School Enrollment Gross Floor Area (sq ft): 24,986 ft): (sq Area Floor Gross 38,472 ft): (sq Area Floor Gross 18,751 ft): (sq Area Floor Gross 16,990 ft): (sq Area Floor Gross Gross Floor Area (sq ft): 24,646 ft): (sq Area Floor Gross Elementary School Elementary Enrollment 0 ft): (sq Area Floor Gross 9,200 ft): (sq Area Floor Gross Elementary 52,363 ft): (sq Area Floor Gross Gross Floor Area (sqft):63,714 12,462 ft): (sq Area Floor Gross Gross Floor Area (sqft):0 Enrollment ------Middle 94,592 ft): (sq Area Floor Gross HS) Enroll (Meek Prog Focus/Alt Middle School School Enrollment Enrollment 269------347------Gross Floor Area (sq ft): 61,457 ft): (sq Area Floor Gross Middle 95,438 ft): (sq Area Floor Gross 32,767 ft): (sq Area Floor Gross School Enrollment 471------SCHOOL DISTRICT NO.1J, SCHOOL DISTRICTNO.1J, School BuildingandStudentEnrollmentInformation 974) Last TenFiscalYears (continued) (4,14,16) (12,30) (12,28) (14,30) (5,31) (4,19) (4,19) (16) (26) (10) (28) (32) (14) (5) (9) ------Footnotes 2006-07 Schedule 16 MULTNOMAH COUNTY,OREGON MULTNOMAH 4 8 3 9 1 6 4 - - - 243 269 310 299 337 389 442 131------2007-08 139 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 Total Gross Floor Area (sq ft) (sq Area Floor Gross Total Sources: Gross Floor Area (sq ft)Summary: Enrollment Total Summary: Enrollment Plus enrollment not normally within PPS facilities: Focus/Alternative Programs Focus/Alternative Other Facilities Other Focus/Alternative Schools Focus/Alternative High Schools Middle Schools Regular Programs Elementary SchoolsElementary only once; the counts are unduplicated. counted is each student attended, programs or schools the of number of Regardless within the District. programs or schools who An one astudent more defined enrolled as or is attends student October. of on about the first or compiled are counts Enrollment 2014-2015. October and Enrollment School Data, Profiles - Planning department PPS System and Performance space is included. Original Building on Site"; Rel. March 4, 2003. Gross area includes portables, fieldhouses, for Construction and of Year Areas, Site and Areas, Floor tunnels; Management "Gross and PPSFacilities Asset - Area Floor noGross unfinished attic Public Charter Programs Public Charter Special Education Programs (7,13,14,15) EducationSpecial Programs Community Based Programs Based Community High Schools Middle Schools Elementary Schools Elementary SCHOOL DISTRICT NO.1J, SCHOOL DISTRICTNO.1J, School BuildingandStudentEnrollmentInformation Last TenFiscalYears (continued)

Footnotes ,6,5 0 910 69 108 8,661,554 ,5,9 0 438 64 105 1,253,298 ,3,7 0 057 90 107 2,734,878 ,7,3 0 410 74 104 3,476,534 2006-07 Schedule 16 7,0 0 563 95 108 276,901 1,4 0 652 66 103 919,943 824 1901,2 1031,3 0981,1 0511,8 08711,183 10,807 10,585 10,551 10,810 10,978 11,034 11,033 11,629 11,950 2352,1 4652,4 5372,9 6572,5 70527,159 27,015 27,051 26,577 25,992 25,397 25,145 24,625 23,817 22,385 46,348 ,0 ,4 ,8 ,0 ,7 ,5 ,0 ,5 ,3 964 1,034 1,055 1,207 1,150 1,275 1,206 1,282 1,342 1,303 ,1 ,3 ,8 ,4 ,6 ,8 ,3 ,9 ,1 1,817 1,716 1,699 1,739 1,689 1,663 1,642 1,587 1,432 1,716 ,2 ,5 ,5 ,9 ,1 ,1 ,6 ,5 ,8 5,911 5,680 5,559 5,365 5,613 5,619 5,695 5,751 6,252 7,622 MULTNOMAH COUNTY,OREGON MULTNOMAH 4 3 2 0 8 0 5 8 4 451 443 485 457 502 385 500 522 539 548 2007-08 Oldest 46,088 1,077 140 2008-09 Median 46,046 1,246 2009-10 Newest 1,374 46,596 2010-11 1,486 46,803 2011-12 1,532 47,288 2012-13 47,523 1627 2013-14 48,098 1,664 2014-15 48,459 1,764 2015-16 49,075 1,590 (11) For the2005-06school(11) For year, schools two high atth located atOckley theSchoolwas toovercrowding Green, merged Due school the2006-07 year,Ockley a (10) For from converted Green AllianceHighSchool. toform years) merged in prior HS, MeekProfessional Technical school year, 2006-07 the For (9) school current year. for (8) Nostudents enrolled Hand inHand sites. The administrative depa and Care Term (Long Residential Programs (7) Day and Treatment (6) Transitioning or recently transitioned or (6) Transitioning on toCapitol Hill, Markham. or Mostschool went Maplewood area ontoatt middle students intheWhitaker residing neighborhood neighborhood ar as well.Most students intheApp elementary school-aged residing SmithElementary Sc Richmond and Kenton, Edwards, (12) Applegate, intooneschool Pau renamed merged Starting withStarting the2015-16 school year, is Tubman occupied by Fa they onwhere atRoosevelt, depending Grant, Madison or program ESis moved toth Clarendon and elementary section ofthereport captured is schools both for enrollment 2009-10, FY ES. Clarendon of instead MS Portsmouth into put been have should schools co only. Enrollment consist KG-5 ofgrades me MS Portsmouth and ES Clarendon school 2007-08 the year, For (4) grade 8th and 7th neighborhood Rigler school year, 2011-12 the Schools. For K-8 became Rigler and Scott 2009-10, For academy. s 2011-12, students2011-12, thechoiceto intheJeffersonclusterhad at Franklin HS. TubmanMSwas also closed anew Women' and Young gr MSwas Eighth closed. school the2007-08 Kellogg year, (5) For in2015as RELA opened AcademyCenter). (RegionalEarlyClarendon Learning Beverly Cleary. Beverly Cleary@Hollyroodis and nowunder Beverly @Fernwood Cleary Roseway for Footage Heights). Square Similarly, Hollyrood ES and Fernwood MS merged to form a KG-8 sc sc K-7 remained Rigler and Scott school 2008-09 year, the For (3) for ACCESS was separated from Sabin elementary. Access was sharing Sabin location and on Sept. 2013 relocated to Rose City Park (2) The ACCESS Program was located at Sabin site but is a distri sc Harrison Park was K-8 atBinnsmead ElementarytotheClarksite.recently renamed Clark K-8 Bridger movedfrom and expanded moved Clark and closed Binnsmead school year, 2008-09 the For (1) as 'closed'. (13) Forthe2004-05 school year, theEnvironmental Middle School (formerly atSunnyside) move In addition, the Odyssey program and its students (formerly at Ch Program type (i.e., elementary, middle, high, high, middle, (i.e.,elementary, type Program Footnotes: or programs attended, each student is only counted attended, once; theco programs or as student is astudent wh defined first ofOctober. Anenrolled chool is was no establishedattheRichmondESsite. Applegate ea went Abernethy, ontoattend those toChie atKenton d toBridger ling Academy of Integrated Sciences. ofIntegrated Academy ling to K-8. In the 2015-16 school year 2015-16 the In toK-8. SCHOOL DISTRICT NO.1J, MULTNOMAH OREGON COUNTY, NO.1J, DISTRICT SCHOOL Elementary. unts for Portsmouth prior to 2007-08 are cont are to2007-08 prior Portsmouth for unts rtment isat rtment located etc.) reflects themost administra recent School Building and Student Enrollment Information Enrollment Student and Building School attend either the new Jefferson Middle College program or aneighb or program College thenewJefferson Middle either attend Last Ten Fiscal Years (continued) Years Fiscal Ten Last with Chief Joseph to form Chief Joseph/Ockely Green K-8. ChiefJoseph/Ockely toform K-8. with ChiefJoseph Green o attends one or more schools or programs within the District. District. the within programs or schools more or one attends o w used for Headstart. Edwards is now leased to Trillium Service. is toTrillium nowleased Headstart.Edwards for w used e Marshall campus, Linus Pauling ct-wide alternative education program drawing students district drawing program education alternative ct-wide Benson High School. unts are unduplicated. Schools and programs that are no longer i nolonger thatare Schoolsunts unduplicated. programs are and ubion K-8 students duringconstr Portland Night HS at Grant, Marshall Night HS, and Madison Foc hools, those and students that apman Elementary) moved toHayhurstapman Elementary. The Family Coo legate neighborhood area went on to attend Woodlawn.Similarly, wentontoattend area students intheEdwards residing neighborhood legate Middle School to a KG-8, and Kellogg and Portsmouth no longer r ade students that would have been enrolled at Kellogg for the for atKellogg students have enrolled ade thatwould been e inactive list. On July 17 lived within the Jefferson cluster boundaries.Young Women's Aca lived withintheJefferson cluster boundaries.Young combined with Sunnyside Elementary andwas renamedas Sunnysi Treatment) are located at Whit located are Treatment) hool (renamed Beverly Rose Cleary) ashool (renamed did City Park Greg ESand from the Clark site theClark site.from intotheBinnsmead TheCreativeSci hools were closed at the end of the 2004-05 school ofthe2004-05 school Whitaker year. attheend hools closed were was Middle closed s Academy campus was ofJefferson onthe Tubman as part opened rged toform aKG-8 school.rged f Joseph; thosef Joseph; Glen atRichmond Creston or toAbernethy, , Rigler transitioned from K-8 toK-5. K-8 from transitioned , Rigler Schedule 16 141 tive years assignment. Inrecent enrollm ained in the MS section of this report. intheMSsectionained ofthis report. , 2010, Clarendon-Portsmouth was , 2010,Clarendon-Portsmouth matriculated from7th to8th gr uction of anew Faubionbuilding Academy and Portland Academy Portland o Academy and eshield, Nickerson, Johns Landing, Enrollmentcounts for years pri Regardless of the number of schools schools of number the of Regardless ent counts are compiled on or about the about onor ent counts compiled are Enrollmentcounts for thetwo -wide. Starting in 2008-09 the enrollment theenrollment in2008-09 Starting -wide. renamed Cesar Chavez. Chavez. Cesar renamed ade attended the attended ade orhood comprehensive schoolorhood high Kenton is School. Kenton leased toDelasalle North 2007-08 school year were enrolled school2007-08 enrolled yearwere ence School Program (CSSP) us (shown inMadison enrollment inthePortsmouth MSlineinthe n operation are designated are n operation . end Tubman. A new focus/option or to 2007-08 for Clarendon Clarendon for to2007-08 or eceived sixth grade students. sixtheceived grade (note#23). rs attended Vernon. f International Studies, f International coe; those and atSmithwent hool. Breakthrough and demy was closed in FY 11-12. FY in closed was demy ory Heights MS (renamed ory Heights MS(renamed perative program de EnvironmentalSchool. de High School. Effective Madison 8th grade Schedule 16 SCHOOL DISTRICT NO.1J, MULTNOMAH COUNTY, OREGON School Building and Student Enrollment Information Last Ten Fiscal Years (continued) Footnotes (continued):

(14) Pioneer Schools consist of elementary, middle and high school programs. It was formerly known as ES B Program at Youngson, MS B Program at Foster and HS B Program at Columbia. Pioneer is now located at Holladay Center and Youngson.

(15) As of the 2003-04 school year, enrollment summaries no longer include the following programs: Hospital Programs (Emanuel, Oregon Health Science University, Shriners Hospitals); M.E.S.D. Functional Living Skills; Portland Early Intervention Program (PeiP) and Columbia Regional Programs (Autism, Deaf and Hard of Hearing, Orthopedic and Vision Oregon State and Oregon State and Services). Administration of the Hospital Programs, Functional Living Skills and PeiP was transferred to Multnomah Education Service District (M.E.S.D.). Historically, enrollments reported for Columbia Regional Programs represent non-District students served by PPS staff on a part-time basis. For purposes of State reporting, membership (i.e., enrollment) the Columbia Regional Program students are reported by the resident District.

(16) Brooklyn and Meek Elementary Schools were closed at the end of the 2002-03 school year. Most students residing in the Brooklyn neighborhood area went on to attend Grout Elementary, while those residing in the Meek neighborhood area attended Vernon Elementary. Similarly, Wilcox and Youngson Elementary Schools were closed at the end of the 2001-02 school year. Most students residing in the Wilcox neighborhood area went on to attend Vestal Elementary, while those residing in the Youngson neighborhood area attended Bridger Elementary. Winterhaven now operates in the Brooklyn Building. Square Footage which was at Brooklyn is now recorded at Winterhaven and Brooklyn square ft. is now zero. Youngson facility is now used for Special Education.

(17) On November 10, 2009, a portion of the Marysville K-8 school was destroyed as a result of a fire. Marysville K-8 school students and staff were moved into the Rose City Park building temporarily until the school was renovated. Marysville moved out of Rose City Park in December, 2012 and moved back to Marysville location in January, 2013. (18) Clark K-8 @ Binnsmead was renamed Harrison Park K-8 school in July 2009. INDEPENDENTAUDITOR'SREPORT (19) In FY 2009-10 Gregory Heights MS, Clarendon ES and Fernwood were moved to the inactive list. In FY 14-15 Clarendon facility was re-activated for Early Learning and Headstart. REQUIREDBYOREGONSTATEREGULATIONS (20) In FY 2009-10, at Jefferson High School, the Academy of Arts & Tech; Science & Tech; School of Champions; School of Pride and the Young Men's Academy programs within Jefferson High School were closed. The Young Men's Academy students returned to Jefferson. (21) As of 7/1/2011, Marshall High School no longer operated as a high school. Students in the Harrison Park K-8 School area attend Madison High School. Students in the Kelly and Woodmere Elementary School areas, and the Bridger, Lent and Marysville K-8 areas, attend Franklin High School. Students in the Whitman Elementary School area attend Cleveland High School. As of the 2015-16 school year, Marshall campus was used by Franklin High School while Franklin was under renovation.

(22) For FY 2015-16, the Focus/Alt Program enrollment of 30 at Turnaround includes the Reconnection Center (28) Teen Parent Program (1) and Ramona Early Childhood (1). In FY 2013-14 International Scholars Academy started at this site. (23) In 2007 Rose City Park was consolidated with Gregory Heights. After the consoldiation the building was named as Rose City Park. Rose City Park location became inactive in December, 2012. On September, 2013 Access Academy relocated in Rose City Park Building. (24) Humboldt closed on June 30, 2012. Students from Humboldt now attend the Boise-Elliot location. Now this space is used for storage. (25) The North parcel of the Children's Service Center(CSC) site, formely Washington High School, was sold to private development. The South site parcel is under review for building demolition and resale pending City and DEQ regulation. It is now referred to as the DEQ site. DEQ building will not be demolished. (26) Applegate and Sacajawea facilities are now used for the Headstart Program. (27) Sold- Entity building sold, therefore Sq.Ft. is removed from total. The schools remain on the list while students remain on the list, for 10 years. (28) Leased- Edwards is leased to Trillium. Kenton is leased to Delasalle North School. King Neighborhood Facility is leased to N.E.C.N. and SEI which is part of Columbia Holding is now leased to Bridges Middle School. (29) Columbia Bus Barn Building and Columbia Bus Parking (portable) facility is now used for Transportation Services. (30) Vacant/Inactive- Smith is now vacant and inactive. (31) Kellogg - Vacant facility is now used by BESC for storage of furniture. (32) East Sylvan facility was used by East and West Sylvan. East Sylvan had 6th grade and West Sylvan had 7th-8th grade. East Sylvan was closed at the end of the 2014-15 school year, and those students were relocated to West Sylvan. All Student numbers are represented under West Sylvan data. (33) As of June 30, 2016 Roosevelt, Faubion and Franklin buildings were partially or completely demolished as part of the renovation/reconstruction funded by the 2012 GO Bond.

142 143 144 145 Portland Public Schools Nondiscrimination Statement Portland Public Schools recognizes the diversity and worth of all individuals and groups and their roles in society. The District is committed to equal opportunity and nondiscrimination in all its educational and employment activities. The District prohibits discrimination based on race; national or ethnic origin; color; sex; religion; age; sexual orientation; gender expression or identity; pregnancy; marital status; familial status; economic status or source of income; mental or physical disability or perceived disability; or military service.

Board of Education Policy 1.80.020-P

Contact Information for Civil Rights Matters

District Title VI and Title IX: Greg Wolleck Phone: 503-916-3963 District 504: Tammy Jackson Phone: 503-916-5460 American Disabilities Act: Human Resources Phone: 503-916-3544

2015-16 CAFR Preparation

Yousef Awwad, CPA, CGMA, PMP, MBA, Chief Financial Officer Joanne Ossanna, Interim Sr. Director Accounting and Payroll David Wynde, Deputy Chief Financial Officer & Budget Director

Accounts Payable Payroll Harriet Deary, CAPP, Sr. Mgr. Accounts Payable Ondra Matthews, CPP, Asst. Director Payroll Suzanne Rademacher, AP Accountant I Jeanette Riopelle, CPP, Payroll Functional Lead Abdullah Elmadhoun, AP Accountant III Elaine Budlong, Sr. Payroll Specialist Jeannie Langston, AP Accountant I Debbie Chan, FPC, Sr. Payroll Coordinator Joy Beach, AP Accountant I Shawna Geer, Payroll Clerk I Gretta Robert, AP Accountant I Connie Preci, Payroll Specialist PERS Shawn Martinez, P-Card Accountant III Marina Vlasenko, FPC, Sr. Payroll Specialist Chad Hepner, AP Clerk Marisha Reese, Sr. Payroll Specialist Tori Hilbruner, Sr. Payroll Specialist General Ledger/Financial Reporting Cheryl Anselone, CPA, Interim Asst. Director Accounting Treasury / Accounts Receivable Greg Lecuyer, General Ledger Sr. Analyst Barb Gibbs, Sr. Manager Treasury Darwin Dittmar, Sr. Bond Accountant Jill Bellone, Accounts Receivable Accountant II Tami Christenson, Student Body Funds Matthew Howe, Accounts Receivable Clerk General Ledger Accountant III Teresa Eckblad, Accounts Receivable Clerk Premila Kumar, General Ledger Accountant III Amoy Williamson, CPA, Student Body Funds Financial Systems Auditor Jeanne Morgan, Sr. Mgr. Financial Systems Kathleen Hiigel, Financial Systems Analyst Grant Accounting Lonnie Doi, PS Functional Lead David Shick, Sr. Manager Grant Accounting Christie Bailey, Sr. Financial Analyst Ruby Beecham, Grant Accountant III Susan Jeannet, Grant Accountant III Chris Roe, Grant Accountant III

Special thanks to Sara Bottomley, Assistant Budget Director and the Budget Department staff

Appendix C

Book Entry Only System

T H E D E P O S I T O R Y T R U S T C O M P A N Y

SAMPLE OFFERING DOCUMENT LANGUAGE DESCRIBING BOOK-ENTRY-ONLY ISSUANCE (Prepared by DTC--bracketed material may apply only to certain issues)

1. The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the securities (the “Securities”). The Securities will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Security certificate will be issued for [each issue of] the Securities, [each] in the aggregate principal amount of such issue, and will be deposited with DTC. [If, however, the aggregate principal amount of [any] issue exceeds $500 million, one certificate will be issued with respect to each $500 million of principal amount, and an additional certificate will be issued with respect to any remaining principal amount of such issue.]

2. DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.6 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a Standard & Poor’s rating of: AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com.

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

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

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

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

7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Securities unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy).

8. Redemption proceeds, distributions, and dividend payments on the Securities will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from Issuer or Agent, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, Agent, or Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of Issuer or Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.

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

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

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

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

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Appendix D

Form of Continuing Disclosure Certificate

FORM OF CONTINUING DISCLOSURE CERTIFICATE

$__,000,000 School District No. 1J, Multnomah County, Oregon (Portland Public Schools) Multnomah, Washington and Clackamas Counties, Oregon $___,000,000 General Obligation Bonds, Series 2017A (Federally Taxable) $___,000,000 General Obligation Bonds, Series 2017B (Tax-Exempt)

This Continuing Disclosure Certificate (the “Certificate”) is executed and delivered by School District No. 1J, Multnomah County, Oregon (Portland Public Schools) located in Multnomah, Washington and Clackamas Counties, Oregon (the “Issuer”) in connection with the issuance of the Issuer’s General Obligation Bonds, Series 2017A (Federally Taxable) and General Obligation Bonds, Series 2017B (Tax-Exempt) (collectively, the “Securities”).

Section 1. Purpose of Certificate. This Certificate constitutes the Issuer’s written undertaking for the benefit of the holders of the Securities and to assist the underwriter of the Securities in complying with paragraph (b)(5) of the United States Securities and Exchange Commission Rule 15c2-12 (17 C.F.R. § 240.15c2-12) as amended (the “Rule”).

Section 2. Definitions. Unless the context otherwise requires, the terms defined in this Section shall, for purposes of this Certificate, have the meanings herein specified.

“Beneficial Owner” means any person who has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of any Securities, including persons holding Securities through nominees or depositories.

“Commission” means the United States Securities and Exchange Commission.

“MSRB” means the United States Municipal Securities Rulemaking Board or any successor to its functions.

“Official Statement” means the final official statement for the Securities dated ______, 2017.

“Rule” means the Commission’s Rule 15c2-12 under the Securities Exchange Act of 1934, as it has been and may be amended.

Section 3. Financial Information. The Issuer agrees to provide or cause to be provided to the MSRB, the Issuer’s latest publicly available annual financial statements prepared in accordance with the Oregon Local Budget Law (or any successor statute) and in accordance with generally accepted accounting principles so prescribed by the Governmental Accounting Standards Board (or its successors) and generally of the type included in the Official Statement under the heading “Appendix B –Financial Statements.”

To the extent not included in its annual financial statements and for the same period as such annual financial statements, the Issuer shall also provide information, of the type set forth in the Official Statement, containing:

Page 1 - Continuing Disclosure Certificate 2845521.3 040944 CLD 1. the total real market value and total assessed value of property within the Issuer’s boundaries (as indicated in the records of the county assessors), or other statement of property valuation that reflects then current Oregon statutes pertaining to property valuation;

2. the amount or rate of property taxes levied by the Issuer for the fiscal year for both operations and debt service, and the amount of property taxes the Issuer received during the fiscal year;

3. the total principal amount of general obligation bonds and other tax- supported obligations of the Issuer which are outstanding at the end of the fiscal year;

4. the major taxpayers for Multnomah County as presented in the Official Statement; and

5. ADMw, or successor measurement of student enrollment that determines funding level, if any.

Any or all of the items listed above may be set forth in one or a set of documents or may be included by specific reference to other documents, including official statements of debt issues of the Issuer or related public entities, which have been made available to the public on the MSRB’s website. The Issuer reserves the right to modify from time to time the format of the presentation of information provided pursuant to this section to the extent necessary or appropriate in the judgment of the Issuer, provided that, in the Issuer’s discretion, such modification shall be consistent with the Rule and the purposes of this Certificate. The Issuer shall clearly identify each such other document so included by reference.

Section 4. Timing. The information described in the preceding paragraph shall be provided on or before nine months after the end of the Issuer's fiscal year, commencing with information for the fiscal year ended June 30, 2017. The annual financial statements described in the preceding section will be provided in the form of audited financial statements if they are then available, and otherwise will be provided in the form of unaudited financial statements. If audited financial statements are not then provided, the Issuer shall provide them to the MSRB when they are available. The Issuer's current fiscal year ends June 30. The Issuer may adjust this fiscal year by providing written notice of the change of fiscal year to the MSRB. In lieu of providing this annual financial information separately, the Issuer may cross-reference to other documents provided to the MSRB.

The Issuer agrees to provide or cause to be provided, in a timely manner, to the MSRB notice of its failure to provide the annual financial information described in Section 3 on or prior to the date set forth in the preceding paragraph.

Section 5. Material Events. The Issuer agrees to provide or cause to be provided to the MSRB, in a timely manner not in excess of ten business days after the occurrence of the event, notice of any of the following events with respect to the Securities:

1. Principal and interest payment delinquencies;

Page 2 - Continuing Disclosure Certificate 2845521.3 040944 CLD 2. Non-payment related defaults, if material;

3. Unscheduled draws on debt service reserves reflecting financial difficulties;

4. Unscheduled draws on credit enhancements reflecting financial difficulties;

5. Substitution of credit or liquidity providers or their failure to perform;

6. Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the Security;

7. Modifications to the rights of Security holders, if material;

8. Bond calls, if material, and tender offers;

9. Defeasances;

10. Release, substitution or sale of property securing repayment of the Securities, if material;

11. Rating changes;

12. Bankruptcy, insolvency, receivership or similar event of the obligated person; (Note: For the purposes of the event identified in this paragraph 12, the event is considered to occur when any of the following occur: The appointment of a receiver, fiscal agent or similar officer for an obligated person in a proceeding under the United States Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the obligated person, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the obligated person.);

13. The consummation of a merger, consolidation, or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material;

14. Appointment of a successor or additional trustee or the change of name of a trustee, if material.

Page 3 - Continuing Disclosure Certificate 2845521.3 040944 CLD Section 6. Termination. The Issuer’s obligation to provide notices of material events shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Securities. This Certificate, or any provision hereof, shall be null and void if the Issuer (a) obtains an opinion of nationally recognized bond counsel to the effect that those portions of the Rule which require this Certificate, or any provision of this Certificate, are invalid, have been repealed retroactively or otherwise do not apply to the Securities; and (b) notifies the MSRB of such opinion and the termination of its obligations under this Certificate.

Section 7. Amendment. Notwithstanding any other provision of this Certificate, the Issuer may amend this Certificate, provided that the following conditions are satisfied:

A. If the amendment relates to the provisions of Sections 3 or 5 hereof, it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature or status of the Issuer with respect to the Securities, or the type of business conducted; and,

B. If this Certificate, as amended, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the original issuance of the Securities, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and

C. The amendment either (i) is approved by the owners of the Securities pursuant to the terms of the Bond Declaration as it is in effect at the time of the amendment or (ii) does not materially impair the interests of the owners or Beneficial Owners of the Securities as determined by a party unaffiliated with the Issuer.

In the event of any amendment of a provision of this Certificate, the Issuer shall describe such amendment in its next annual filing pursuant to Section 3 of this Certificate, and shall include, as applicable, a narrative explanation of the reason for the amendment and its impact on the type (or in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the Issuer. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements, (i) notice of the amendment shall be given in the same manner as for a material event under Section 5 hereof, and (ii) the annual filing pursuant to Section 3 of this Certificate for the first fiscal year that is affected by the change in accounting principles should present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles.

Section 8. Securities Owner’s Remedies Under This Certificate. The right of any holder of Securities or Beneficial Owner of Securities to enforce the provisions of this Certificate shall be limited to a right to obtain specific enforcement of the Issuer’s obligations hereunder, and any failure by the Issuer to comply with the provisions of this undertaking shall not be an event of default with respect to the obligations hereunder.

Page 4 - Continuing Disclosure Certificate 2845521.3 040944 CLD Section 9. Form of Information. All information required to be provided under this certificate will be provided in an electronic format as prescribed by the MSRB and with the identifying information prescribed by the MSRB.

Section 10. Submitting Information Through EMMA. So long as the MSRB continues to approve the use of the Electronic Municipal Market Access (“EMMA”) continuing disclosure service, any information required to be provided to the MSRB under this Certificate may be provided through EMMA. As of the date of this Certificate, the web portal for EMMA is emma.msrb.org.

Section 11. Dissemination Agent. The Issuer may, from time to time, engage or appoint an agent to assist the Issuer in disseminating information hereunder (the “Dissemination Agent”). The Issuer may discharge any Dissemination Agent with or without appointing a successor Dissemination Agent.

Section 12. Choice of Law. This Certificate shall be governed by and construed in accordance with the laws of the State of Oregon, provided that to the extent this Certificate addresses matters of federal securities laws, including the Rule, this Certificate shall be construed in accordance with such federal securities laws and official interpretations thereof.

Dated as of the ___ day of August, 2017.

School District No. 1J, Multnomah County, Oregon (Portland Public Schools)

______Authorized Representative

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Appendix E

Form of Bond Declaration

B OND D ECLARATION

School District No. 1J, Multnomah County, Oregon (Portland Public Schools) Multnomah, Washington and Clackamas Counties, Oregon

General Obligation Bonds, Series 2017A (Federally Taxable) General Obligation Bonds, Series 2017B (Tax-Exempt)

Executed on behalf of School District No. 1J, Multnomah County, Oregon (Portland Public Schools) Multnomah, Washington and Clackamas Counties, Oregon

as of [Closing Date], 2017

2833822.7 040944 RSIND

Table of Contents Section 1. Definitions. 1 Section 2. Series 2017A Bonds Authorized. 2 Section 3. Series 2017B Bonds Authorized. 3 Section 4. Security for Bonds. 4 Section 5. Tax Covenants for the Series 2017B Bonds. 5 Section 6. Book Entry System 5 Section 7. Redemption of Bonds. 6 Section 8. Authentication, Registration and Transfer. 7 Section 9. Amendment of Bond Declaration. 8 Section 10. Default and Remedies. 9 Section 11. Defeasance. 10 Section 12. Form. 10 Section 13. Rules of Construction. 10

Exhibit A Form of Bonds

This table of contents is not a part of the bond declaration but is provided for reference only.

2833822.7 040944 RSIND

B OND D ECLARATION

THIS BOND DECLARATION is executed as of [Closing Date], 2017, on behalf of School District No. 1J, Multnomah County, Oregon (Portland Public Schools), in Multnomah, Washington and Clackamas Counties, Oregon (the “District”) by its ______, acting as the “District Official” pursuant to District Resolution No. 5472 which was adopted by the Board of Education on June 20, 2017. The Resolution authorizes the District Official to execute a bond declaration which contains the terms of the Bonds, and the covenants of the District relating to those Bonds.

Section 1. Definitions. Unless the context clearly requires otherwise, the following terms shall have the following meanings: “BEO” means “book-entry-only” and refers to a system for clearance and settlement of securities transactions through electronic book-entry changes, which eliminates the need for physical movement of securities. “Bond Declaration” means this Bond Declaration, including any amendments made in accordance with Section 9 of this Bond Declaration. “Bonds” means, collectively, the General Obligation Bonds, Series 2017A (Federally Taxable) and the General Obligation Bonds, Series 2017B (Tax-Exempt) issued by the District that are described in Sections 2 and 3 of this Bond Declaration and that are authorized by the Resolution. “Business Day” means any day except a Saturday, a Sunday, a legal holiday, a day on which the Paying Agent or offices of banks in Oregon, Washington, or New York are authorized or required by law or executive order to remain closed, or a day on which the New York Stock Exchange is closed. “Code” means the Internal Revenue Code of 1986, as amended. “District Official” means the Deputy Chief Executive Officer, Chief Financial Officer or the person designated by the Deputy Chief Executive Officer or Chief Financial Officer to act under this Declaration pursuant to the Resolution. “DTC ” means The Depository Trust Company, New York, New York, the securities depository for the Bonds. “Event of Default” refers to an Event of Default listed in Section 10(1) of this Bond Declaration. “Government Obligations” means direct noncallable and nonprepayable obligations of the United States, or noncallable and nonprepayable obligations the principal of and interest on which are fully and unconditionally guaranteed by the United States. “Outstanding” refers to all Bonds authorized and delivered pursuant to this Bond Declaration except Bonds which have been paid, canceled, or defeased pursuant to Section 11 of this Bond

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Declaration, and Bonds which have matured but have not been presented for payment for the payment of which adequate money has been transferred to the Paying Agent. “Owner” means the person shown on the Bond register maintained by the Paying Agent as the registered owner of a Bond. “Paying Agent” means the registrar and paying agent for the Bonds, which, at the time of execution of this Bond Declaration, is U.S. Bank National Association. “Record Date” means the last business day of the month preceding a payment date. “Resolution” means District Resolution No. 5472 which was adopted by the Board of Education on June 20, 2017, and which authorizes the execution of this Bond Declaration and the issuance and sale of the Bonds.

“Series 2017A Bonds” means the District’s General Obligation Bonds, Series 2017A (Federally Taxable) that are described in Section 2 of this Bond Declaration.

“Series 2017B Bonds” means the District’s General Obligation Bonds, Series 2017B (Tax- Exempt) that are described in Section 3 of this Bond Declaration.

Section 2. Series 2017A Bonds Authorized.

(1) Pursuant to the authority granted by the voters of the District by Measure 26-193 from the May 16, 2017 election and the Resolution, the District hereby authorizes the issuance, sale and delivery of the Series 2017A Bonds in accordance with this Bond Declaration and in the aggregate principal amount of $[par amount]. The Series 2017A Bonds shall be dated [Closing Date], 2017, shall bear interest which is payable on June 15 and December 15 of each year commencing December 15, 2017. Interest is calculated based on 360 day year of twelve 30-day month. The Series 2017A Bonds shall mature as follows:

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Due Principal Interest CUSIP No. June 15 Amount ($) Rate (%) (______)

(2) The Series 2017A Bond proceeds shall be used to finance capital costs described in Measure 26-193 from the May 16, 2017 election and to pay costs related to the Series 2017A Bonds. (3) Interest on the Series 2017A Bonds is includable in gross income for federal income tax purposes, as provided in greater detail in the official statement for the Series 2017A Bonds. Interest on the Series 2017A Bonds is exempt from Oregon personal income taxation. Section 3. Series 2017B Bonds Authorized.

(1) Pursuant to the authority granted by the voters of the District by Measure 26-193 from the May 16, 2017 election and Measure 26-144 from the November 6, 2012 election, and the Resolution, the District hereby authorizes the issuance, sale and delivery of the Series 2017B Bonds in accordance with this Bond Declaration and in an aggregate principal amount of $[par amount]. The Series 2017B Bonds shall be dated [Closing Date], 2017, shall bear interest which is payable on June 15 and December 15 of each year commencing December 15, 2017. Interest is calculated based on 360 day year of twelve 30-day month. The Series 2017B Bonds shall mature as follows:

Page 3 – Bond Declaration 2833822.7 040944 RSIND

Due Principal Interest CUSIP No. June 15 Amount ($) Rate (%) (______)

(2) The Series 2017B Bond proceeds shall be used to finance capital costs described in Measure 26-193 from the May 16, 2017 election, capital costs described in Measure 26- 144 from the November 6, 2012 election and to pay costs related to the Series 2017B Bonds. (3) The District intends for the interest on the Series 2017B Bonds to be excluded from gross income for federal income tax purposes pursuant to Sections 103 and 141 through 150 of the Code, and the applicable Income Tax Regulations. The District covenants not to take any action, or knowingly omit to take any action within its control, that if taken or omitted would cause the interest on the Series 2017B Bonds to be includable in gross income for federal income tax purposes.

Section 4. Security for Bonds.

(1) The District hereby pledges its full faith and credit to pay the Bonds pursuant to ORS 287A.315. The District hereby covenants for the benefit of the Owners to levy a direct ad valorem tax upon all of the taxable property within the District which is sufficient, after taking into consideration discounts taken and delinquencies that may occur in the payment of such taxes, to pay all Bond principal and interest when due. The District covenants to levy this tax each year until all the Bonds are paid. This tax shall be in addition to all other taxes of the District, and this tax shall not be limited in rate, amount or otherwise, by Sections 11 or 11b of Article XI of the Oregon Constitution. (2) This Bond Declaration shall constitute a contract with the Owners and shall be enforceable by the Owners.

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Section 5. Tax Covenants for the Series 2017B Bonds.

The District agrees to comply with all representations in the Tax Certificate for the Series 2017B Bonds and covenants for the benefit of the owners of the Series 2017B Bonds to comply with all provisions of the Code which are required for interest on the Series 2017B Bonds to be excluded from gross income for federal income tax purposes. The District makes the following specific covenants with respect to the Code: (1) The District shall not take any action or omit any action, if it would cause the Series 2017B Bonds to become “arbitrage bonds” under Section 148 of the Code. (2) The District shall operate the facilities financed with the Series 2017B Bonds so that the Series 2017B Bonds are not “private activity bonds” within the meaning of Section 141 of the Code. (3) The District shall pay any rebate amounts due under Section 148 of the Code in connection with the Series 2017B Bonds. Section 6. Book Entry System

The Bonds shall be initially issued in BEO form, in the denomination of $5,000 or any integral multiple thereof, and shall be governed by this Section 6. While Bonds are in BEO form no physical Bonds shall be provided to the Owners. A representative of the District has executed and delivered a Blanket Issuer Letter of Representations to DTC (the “Letter of Representations”). While the Bonds are in BEO form, registration and transfer of beneficial interests in the Bonds shall be governed by the Letter of Representations and the Operational Arrangements of DTC, as they may be amended from time to time. So long as Bonds are in BEO form: (1) DTC shall be treated as the Owner for all purposes, including payment and the giving of notices to Owners of Bonds. Bond payments shall be made, and notices shall be given, to DTC in accordance with the Letter of Representations. Any failure of DTC to advise any of its participants, or of any participant to notify the beneficial owner, of any such notice and its content or effect will not affect the validity of the redemption of Bonds or of any other action premised on such notice. (2) The District may discontinue maintaining the Bonds in the BEO form at any time. The District shall discontinue maintaining the Bonds in BEO form if DTC determines not to continue to act as securities depository for the Bonds, or fails to perform satisfactorily as depository, and a satisfactory substitute depository cannot reasonably be found. (3) If the District discontinues maintaining the Bonds in book-entry only form, the District shall cause the Paying Agent to authenticate and deliver replacement Bonds in fully registered form in authorized denominations in the names of the beneficial owners or their nominees; thereafter the provisions set forth in Section 8 below, regarding registration, transfer and exchange of Bonds shall apply. (4) The District and the Paying Agent shall have no responsibility or obligation to any participant or correspondent of DTC or to any beneficial owner on behalf of which such participants or correspondents act as agent for the beneficial owner with respect to:

Page 5 – Bond Declaration 2833822.7 040944 RSIND

(A) the accuracy of the records of DTC, the nominee or any participant or correspondent with respect to any beneficial owner's interest in the Bonds;

(B) the delivery to any participant or correspondent or any other person of any notice with respect to the Bonds, including any notice of prepayment;

(D) the payment to any participant, correspondent, or any other person other than the registered owner of the Bonds as shown in the registration books maintained by the Paying Agent, of any amount with respect to principal, any premium or interest on the Bonds.

(E) The provisions of this Section 6 may be modified without the consent of the beneficial owners in order to conform this Section to the standard practices of DTC or any successor depository for Bonds issued in book-entry only form.

Section 7. Redemption of Bonds.

(1) No Optional Redemption for Series 2017A Bonds . The Series 2017A Bonds are not subject to optional redemption. (2) Optional Redemption for Series 2017B Bonds . The Series 2017B Bonds maturing in the years ____ through _____ inclusive, are not subject to optional redemption prior to maturity. The District reserves the right to redeem all or any portion of the Series 2017B Bonds maturing on or after June 15, 20__ at the option of the District on June 15, 20__ and on any date thereafter in whole or in part, in accordance with DTC’s procedures or by lot (with maturities selected by the District), at a price of par plus accrued interest to the date of redemption. (3) [Mandatory Redemption. The Series 2017[A/B] Bonds are subject to mandatory redemption prior to maturity. The Series 2017[A/B] Term Bonds maturing on ______in the years ____, ____, and ____ are subject to mandatory redemption (in such manner as the Paying Agent and DTC will determine or by lot by the Paying Agent) on ______of the following years in the following principal amounts, at a price of par, without premium, plus accrued interest to the date of redemption: Term Bond Maturing _____ Year (______) Amount

Total

The District may credit against the mandatory redemption requirement any Bonds of the same series and maturity which the District has previously purchased or which the District has previously redeemed pursuant to any optional redemption provisions.]

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(4) The District reserves the right to purchase Bonds in the open market. (5) Any notice of optional redemption given for the Bonds pursuant to this Section 7 may state that the optional redemption is conditional upon receipt by the Paying Agent of moneys sufficient to pay the redemption price of such Bonds or upon the satisfaction of any other condition, and/or that such notice may be rescinded upon the occurrence of any other event, and any conditional notice so given may be rescinded at any time before payment of such redemption price if any such condition so specified is not satisfied or if any such other event occurs. Notice of such rescission or of the failure of any such condition shall be given by the Paying Agent to affected owners of the Bonds as promptly as practicable. (6) So long as Bonds are in book-entry only form, and unless DTC consents to a shorter period the Paying Agent shall notify DTC of any early redemption not less than 20 days nor more than 60 days prior to the date fixed for redemption, and shall provide such information in connection therewith as required by the Letter of Representations. Official written notice of redemption will be given by the District to the Paying Agent at least five calendar days prior to the date the notice is scheduled to be sent to DTC. (7) During any period in which the Bonds are not in book-entry only form, unless waived by any Owner of the Bonds to be redeemed, official notice of any redemption of Bonds shall be given by the Paying Agent on behalf of the District by mailing a copy of an official redemption notice by first class mail postage prepaid at least 30 days and not more than 60 days prior to the date fixed for redemption to the Owner of the Bond or Bonds to be redeemed at the address shown on the Bond register or at such other address as is furnished in writing by such Owner to the Paying Agent. All such official notices of redemption shall be dated and shall state: (A) the redemption date,

(B) the redemption price,

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

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

(E) the place where such Bonds are to be surrendered for payment of the redemption price, which place of payment shall be the principal office of the Paying Agent.

Section 8. Authentication, Registration and Transfer.

(1) No Bond shall be entitled to any right or benefit under this Bond Declaration unless it shall have been authenticated by an authorized officer of the Paying Agent. The Paying Agent shall authenticate all Bonds to be delivered at closing of the Bonds, and shall additionally authenticate all Bonds properly surrendered for exchange or transfer pursuant to this Bond Declaration.

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(2) The ownership of all Bonds shall be entered in the Bond register maintained by the Paying Agent, and the District and the Paying Agent may treat the person listed as owner in the Bond register as the owner of the Bond for all purposes. (3) While the Bonds are in book-entry only form, the Paying Agent shall transfer Bond principal and interest payments in the manner required by DTC. (4) If the Bonds cease to be in book-entry only form, the Paying Agent shall mail each interest payment on the interest payment date (or the next Business Day if the payment date is not a Business Day) to the name and address of the Owners as they appear on the Bond register as of the record date for the Bonds. The record date for the Bonds is the last Business Day of the month immediately preceding a payment date. If payment is so mailed, neither the District nor the Paying Agent shall have any further liability to any party for such payment. (5) Bonds may be exchanged for an equal principal amount of Bonds of the same maturity which are in different denominations, and Bonds may be transferred to other Owners if the Owner submits the following to the Paying Agent: (A) written instructions for exchange or transfer satisfactory to the Paying Agent, signed by the Owner or attorney in fact and guaranteed or witnessed in a manner satisfactory to the Paying Agent and

(B) the Bonds to be exchanged or transferred.

(6) The Paying Agent shall not be required to exchange or transfer any Bonds submitted to it during any period beginning with a record date and ending on the next following payment date; however, such Bonds shall be exchanged or transferred promptly following that payment date. (7) The Paying Agent shall note the date of authentication on each Bond. The date of authentication shall be the date on which the Owner's name is listed on the Bond register. (8) For purposes of this Section 8, Bonds shall be considered submitted to the Paying Agent on the date the Paying Agent actually receives the materials described in Section 8(5), above. (9) The District may alter these provisions regarding registration and transfer by mailing notification of the altered provisions to all Owners. The altered provisions shall take effect on the date stated in the notice, which shall not be earlier than 45 days after notice is mailed. Section 9. Amendment of Bond Declaration.

(1) The District may amend this Bond Declaration without the consent of any Owner for any one or more of the following purposes: (A) To cure any ambiguity or formal defect or omission in this Bond Declaration;

(B) To add to the covenants and agreements of the District in this Bond Declaration other covenants and agreements to be observed by the District which are not contrary to or inconsistent with this Bond Declaration as theretofore in effect;

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(C) To confirm, as further assurance, any security interest or pledge created under this Bond Declaration or any Supplemental Declaration;

(D) To make any change which, in the reasonable judgment of the District, does not materially and adversely affect the rights of the Owners.

(2) This Bond Declaration may be amended for any other purpose only upon consent of Owners representing not less than fifty-one percent (51%) in aggregate principal amount of the adversely affected Bonds then Outstanding. However, no amendment shall be valid which: (A) Extends the maturity of any Bonds, reduces the rate of interest upon any Bonds, extends the time of payment of interest on any Bonds, reduces the amount of principal payable on any Bonds, or reduces any premium payable on any Bonds, without the consent of the affected Owner; or

(B) Reduces the percent of Owners required to approve amendments to this Bond Declaration.

Section 10. Default and Remedies.

(1) The occurrence of one or more of the following shall constitute an Event of Default under this Bond Declaration: (A) Failure by the District to pay Bond principal, interest or premium when due (whether at maturity, or upon redemption after a Bond has been properly called for redemption); or

(B) Failure by the District to observe and perform any covenant, condition or agreement on its part to be observed or performed for the benefit of Owners of Bonds, for a period of 60 days after written notice to the District by the Owners of fifty-one percent or more of the principal amount of Bonds then Outstanding specifying such failure and requesting that it be remedied; provided however, that if the failure stated in the notice cannot be corrected within such 60 day period, it shall not constitute an Event of Default so long as corrective action is instituted by the District within the 60 day period and diligently pursued, and the default is corrected as promptly as practicable after the written notice referred to in this Section 10(1)(B); or

(C) The District is adjudged insolvent by a court of competent jurisdiction, admits in writing its inability to pay its debts generally as they become due, files a petition in bankruptcy, or consents to the appointment of a receiver for the payments.

(2) The Owners of fifty-one percent or more of the principal amount of Bonds then Outstanding may waive any Event of Default and its consequences, except an Event of Default described in Section 10(1)(A). (3) Upon the occurrence and continuance of any Event of Default hereunder the Owners of fifty-one percent or more of the principal amount of Bonds then Outstanding may take whatever action may appear necessary or desirable to enforce or to protect any of the rights of the Owners of Bonds, either at law or in equity or in bankruptcy or otherwise,

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whether for the specific enforcement of any covenant or agreement contained in this Bond Declaration or in aid of the exercise of any power granted in this Bond Declaration or for the enforcement of any other legal or equitable right vested in the Owners of Bonds by this Bond Declaration or by law. However, the Bonds shall not be subject to acceleration. (4) No remedy in this Bond Declaration conferred upon or reserved to Owners of Bonds is intended to be exclusive and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Bond Declaration or now or hereafter existing at law or in equity. No delay or omission to exercise any right or power accruing upon any default shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. To entitle the Owners of Bonds to exercise any remedy reserved to them, it shall not be necessary to give any notice other than such notice as may be required by this Bond Declaration or by law. Section 11. Defeasance.

The District shall be obligated to pay Bonds which are defeased pursuant to this Section solely from the money and Government Obligations deposited with an independent trustee or escrow agent, and the District shall have no further obligation to pay the defeased Bonds from any source except the amounts deposited in the escrow. Bonds shall be deemed defeased if the District: (1) irrevocably deposits money or noncallable Government Obligations in escrow with an independent trustee or escrow agent, which are calculated to be sufficient without reinvestment for the payment of Bonds which are to be defeased; and (2) files with the escrow agent or trustee an opinion from an independent, certified public accountant to the effect that the money and the principal and interest to be received from the Government Obligations are calculated to be sufficient, without further reinvestment, to pay the defeased Bonds when due; and (3) only if defeasing Series 2017B Bonds, files with the escrow agent or trustee an opinion of nationally recognized bond counsel that the proposed defeasance will not, in and of itself, cause interest on the 2017B Bonds to become includable in gross income under the Code. Section 12. Form.

The Bonds shall be issued in substantially the form attached to this Bond Declaration as Exhibit A, with any changes that are approved by a District Official.

Section 13. Rules of Construction.

In determining the meaning of provisions of this Bond Declaration, the following rules shall apply unless the context clearly requires application of a different meaning:

(1) References to section numbers shall be construed as references to sections of this Bond Declaration unless otherwise indicated. (2) References to one gender shall include all genders.

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(3) References to the singular shall include the plural, and references to the plural shall include the singular.

[The remainder of this page is left blank intentionally.]

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Dated as of the ____ day of ______, 2017.

School District No. 1J, Multnomah County, Oregon (Portland Public Schools)

By:______District Official

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Exhibit A - Form of Bonds No. R- $ United States of America State of Oregon Counties of Multnomah, Washington and Clackamas School District No. 1J, Multnomah County, Oregon (Portland Public Schools) [General Obligation Bonds, Series 2017A (Federally Taxable)/ General Obligation Bonds, Series 2017B (Tax-Exempt)]

Dated Date: [Closing Date], 2017 Interest Rate Per Annum: [______]% Maturity Date: June 15, CUSIP Number: Registered Owner: -----Cede & Co.----- Principal Amount: ----- Dollars-----

PAYMENT OF THE PRINCIPAL OF AND INTEREST ON THIS BOND WHEN DUE IS GUARANTEED BY THE FULL FAITH AND CREDIT OF THE STATE OF OREGON UNDER THE PROVISIONS OF THE OREGON SCHOOL BOND GUARANTY ACT (ORS 328.321 TO 328.356). School District No. 1J, Multnomah County, Oregon (Portland Public Schools), in Multnomah, Washington, and Clackamas Counties, Oregon, a municipal corporation of the State of Oregon (the “District”), for value received, acknowledges itself indebted and hereby promises to pay to the Registered Owner hereof, or registered assigns, but solely from the sources indicated below, the Principal Amount indicated above on the Maturity Date indicated above together with interest thereon from the date hereof at the Interest Rate Per Annum indicated above. Interest is payable semiannually on the fifteenth days of June and December in each year until maturity or prior redemption, commencing December 15, 2017. Payment of each installment of principal or interest shall be made to the Registered Owner hereof whose name appears on the registration books of the District maintained by the District's paying agent and registrar, which is currently U.S. Bank National Association (the "Paying Agent") as of the last business day of the month immediately preceding the applicable interest payment date. For so long as this Bond is subject to a book-entry-only system, principal and interest payments shall be payable in same-day funds on each payment date to the nominee of the securities depository for the Bonds. On the date of issuance of this Bond, the securities depository for the Bonds is The Depository Trust Company, New York, New York (“DTC”), and Cede & Co. is the nominee of DTC. Such payments shall be made payable to the order of "Cede & Co." This Bond is one of a duly authorized series of bonds of the District aggregating $[par amount] in principal amount and designated as [General Obligation Bonds, Series 2017A (Federally Taxable)/ General Obligation Bonds, Series 2017B (Tax-Exempt)] (the “Bonds”). The Bonds are issued pursuant to the authority granted by the voters of the District at the election[s] held on [November 6, 2012 and] May 16, 2017, Resolution No. 5472 adopted by the Board of Education on June 20, 2017, and a Bond Declaration dated as of [Closing Date], 2017 (collectively, the “Resolution”) and under the authority of and in full compliance with the Constitution and Statutes of the State of Oregon. The District hereby pledges its full faith and credit to pay this Bonds pursuant to ORS 287A.315. The District hereby covenants for the benefit of the Owners to levy a direct ad valorem tax upon all of the taxable property within the District which is sufficient, after taking into consideration discounts taken and delinquencies that may occur in the payment of such taxes, to pay all Bond principal and interest when due. The District covenants to levy this tax each year until all the Bonds are paid. This tax shall be in addition to all other taxes of the District, and this tax shall not be limited in rate, amount or otherwise, by Sections 11 or 11b of Article XI of the Oregon Constitution. The Bonds are initially issued as a book-entry-only security issue with no certificates provided to the beneficial owners. Records of ownership of beneficial interests in the Bonds will be maintained by DTC and its participants. Should the book-entry-only security system be discontinued, the District shall cause the Paying Agent to authenticate and deliver replacement Bonds in fully registered form in authorized denominations in the names of the beneficial owners or their nominees, as provided in the Resolution.

Page 1 - Form of Bond (Exhibit A to Bond Declaration) 2833822.7 040944 RSIND

The Bonds shall mature and be subject to redemption as described in the Resolution and the final Official Statement for the Bonds. [Unless the book-entry-only system is discontinued, notice of any call for redemption shall be given as required by the Blanket Issuer Letter of Representations to DTC, as referenced in the Resolution. If the book-entry- only system is discontinued, notice of redemption shall be given by first-class mail, postage prepaid, not less than 30 days nor more than 60 days prior to the date fixed for redemption to the Registered Owner of each Bond to be redeemed at the address shown on the Bond register; however, any failure to give notice shall not invalidate the redemption of the Bonds. The Bonds are subject to conditional notice of redemption as described in the Resolution.] Any exchange or transfer of this Bond must be registered, as provided in the Resolution, upon the Bond register kept for that purpose by the Paying Agent. The exchange or transfer of this Bond may be registered only by surrendering it, together with a written instrument of exchange or transfer which is satisfactory to the Paying Agent and which is executed by the registered owner or duly authorized attorney. Upon registration, a new registered Bond, of the same series and maturity and in the same aggregate principal amount, shall be issued to the transferee as provided in the Resolution. The District and the Paying Agent may treat the person in whose name this Bond is registered on the Bond register as its absolute owner for all purposes, as provided in the Resolution. Unless this Bond is presented by an authorized representative of DTC to the District or the Paying Agent for registration of transfer, exchange or payment, and any Bond issued is registered in the name of Cede & Co. or such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entry as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein. This Bond shall remain in the Paying Agent’s custody subject to the provisions of the FAST Balance Certificate Agreement currently in effect between the Paying Agent and DTC. It is hereby certified, recited and declared that all acts, conditions and things required by the Constitution and Statutes of the State of Oregon to exist, to have happened and to have been performed precedent to and in the issuance of this Bond to exist, have happened and have been performed in due time, form and manner as prescribed by law, and that the amount of this Bond, together with all other obligations or indebtedness of the District, does not exceed any constitutional or statutory limitations of indebtedness. IN WITNESS WHEREOF, School District No. 1J, Multnomah County, Oregon (Portland Public Schools), in Multnomah, Washington and Clackamas Counties, Oregon, by its Board of Education, has caused this Bond to be executed in its name with the facsimile signatures of the Board of Education Chair and its ______, an authorized District Official under the Resolution, all as of the date indicated above. School District No. 1J, Multnomah County, Oregon (Portland Public Schools)

______, Board of Education Chair

[Name, Title]

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THIS BOND SHALL NOT BE VALID UNLESS PROPERLY AUTHENTICATED BY THE PAYING AGENT IN THE SPACE INDICATED BELOW. CERTIFICATE OF AUTHENTICATION This Bond is one of the $[2017A Par Amount/2017B Par Amount] aggregate principal amount of School District No. 1J, Multnomah County, Oregon (Portland Public Schools), in Multnomah, Washington and Clackamas Counties, Oregon, [General Obligation Bonds, Series 2017A (Federally Taxable)/General Obligation Bonds, Series 2017B (Tax-Exempt)], and is authorized to be issued under the terms of the Resolution described herein. Date of authentication: [Closing Date], 2017. U.S. Bank National Association, as Paying Agent

Authorized Officer

ASSIGNMENT

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

(Please insert social security or other identifying number of assignee)

this Bond and does hereby irrevocably constitute and appoint as attorney to transfer this Bond on the books kept for registration thereof with the full power of substitution in the premises.

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

NOTICE: Signature(s) must be guaranteed by a member Signature Guaranteed of the New York Stock Exchange or a commercial bank or ______trust company (Bank, Trust Company or Brokerage Firm) ______Authorized Officer

The following abbreviations, when used in the inscription on the face of this Bond, shall be construed as though they were written out in full according to applicable laws or regulations.

TEN COM -- tenants in common TEN ENT -- as tenants by the entireties JT TEN -- as joint tenants with right of survivorship and not as tenants in common OREGON CUSTODIANS use the following ______CUST UL OREG ______MIN as custodian for (name of minor) OR UNIF TRANS MIN ACT under the Oregon Uniform Transfer to Minors Act

Additional abbreviations may also be used though not in the list above.

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