OFFICIAL STATEMENT
NEW ISSUE—BOOK-ENTRY ONLY RATING: Moody’s: “Aa3” (Negative Outlook) (See “RATING” herein) In the opinion of Bond Counsel, interest on the Bonds is not excludable from gross income for purposes of federal income taxation. Under the laws of the Commonwealth of Pennsylvania, the Bonds are exempt from personal property taxes in Pennsylvania, and interest on the Bonds is exempt from Pennsylvania personal income tax and the Pennsylvania corporate net income tax. For a more complete discussion, see “TAX MATTERS” herein. $30,470,000 Bensalem Township School District Bucks County, Pennsylvania General Obligation Bonds, Series of 2020 (Federally Taxable)
Dated: Date of Delivery Bonds Principal Due: June 1, as shown on inside cover Interest Due: June 1 and December 1 First Interest Payment: June 1, 2020 The General Obligation Bonds, Series of 2020 (Federally Taxable) (the “Bonds”) in the aggregate principal amount of $30,470,000 will be issued in registered form in denominations of $5,000 or any integral multiple thereof. The Bonds will be registered in the name of Cede & Co., as the registered owner and nominee of The Depository Trust Company (“DTC”), New York, New York. Beneficial ownership of the Bonds may be acquired in denominations of $5,000 or any integral multiple thereof only under the Book-Entry Only System maintained by DTC through its brokers and dealers who are, or act through, DTC Participants. The purchasers of the Bonds will not receive physical delivery of the Bonds. For so long as any purchaser is the beneficial owner of a Bond, that purchaser must maintain an account with a broker or a dealer who is, or acts through, a DTC Participant to receive payment of principal of and interest on the Bonds. See “BOOK-ENTRY ONLY SYSTEM” herein. If, under the circumstances described herein, Bonds are ever issued in certificated form, the Bonds will be subject to registration of transfer, exchange and payment as described herein.
The Bonds are general obligations of the Bensalem Township School District, Bucks County, Pennsylvania (the “School District”), payable from its tax and other general revenues. The School District has covenanted that it will provide in its budget in each year, and will appropriate from its general revenues in each such year, the amount of the debt service on the Bonds for such year and will duly and punctually pay or cause to be paid from the sinking fund established under the Resolution, hereinafter defined, or from any other of its revenues or funds, the principal of every Bond and the interest thereon on the dates, at the place and in the manner stated in the Bonds, and for such budgeting, appropriation and payment the School District irrevocably has pledged its full faith, credit and available taxing power. (But see “Security” and “SCHOOL DISTRICT FINANCES”, AND “TAXING POWERS OF THE SCHOOL DISRICT” herein).
Interest on each of the Bonds is payable initially on June 1, 2020, and thereafter semiannually on June 1 and December 1 of each year until the maturity date of such Bond or, if such Bond is subject to redemption prior to maturity, until the date fixed for redemption thereof, if payment of the redemption price has been duly made or provided for. The School District has appointed the Bank of New York Mellon Trust Company, N.A. (the “Paying Agent”), as paying agent, registrar and sinking fund depository for the Bonds. So long as Cede & Co., as nominee for DTC, is the registered owner of the Bonds, payments of the principal of, redemption premium, if any, and interest on the Bonds, when due for payment, will be made directly to DTC by the Paying Agent, and DTC will in turn remit such payments to DTC Participants for subsequent disbursement to the Beneficial Owners of the Bonds. If the use of the Book-Entry Only System for the Bonds is ever discontinued, the principal of and redemption premium, if any, on each of the Bonds will be payable, when due, upon surrender of such Bond to the Paying Agent at its corporate trust office located in Philadelphia, Pennsylvania (or any successor paying agent at its designated office(s)) and interest on such Bond will be payable by check and mailed to the person(s) in whose name(s) such Bond is registered as of the Record Date with respect to the particular interest payment date (See “THE BONDS,” infra).
The Bonds are subject to optional redemption prior to maturity as described herein.
Proceeds of the Bonds will be used to: (1) Advance refund a portion of the School District’s outstanding General Obligation Bonds, Series of 2013; and (2) pay issuance costs and expenses of the Bonds.
MATURITIES, AMOUNTS, RATES, PRICES, YIELDS AND CUSIPS As Shown on Inside Front Cover
The Bonds are offered when, as and if issued, subject to withdrawal or modification of the offer without notice, and subject to the approving legal opinion of Eastburn and Gray, P.C. of Doylestown, Pennsylvania, Bond Counsel, to be furnished upon delivery of the Bonds. Certain other matters will be passed upon for the School District by Begley, Carlin & Mandio, LLP, Langhorne, Pennsylvania, School District Solicitor. PFM Financial Advisors LLC, Harrisburg, Pennsylvania, will act as Financial Advisor to the School District in connection with the issuance of the Bonds. It is expected that the Bonds will be available for delivery in New York, New York, on or about March 3, 2020.
Boenning & Scattergood, Inc.
Dated: January 30, 2020 $30,470,000 Bensalem Township School District Bucks County, Pennsylvania General Obligation Bonds, Series of 2020 (Federally Taxable)
Bonds Dated: Date of Delivery Principal Due: June 1, as shown below Interest Due: June 1 and December 1 First Interest Payment: June 1, 2020
MATURITIES, AMOUNTS, RATES, PRICES, YIELDS AND CUSIPS
Year of Maturity Principal Maturity Interest Initial Offering Initial Offering CUSIP (June 1) Amount Rate Yields Prices Numbers (1) 2020 305,000 1.826% 1.826% 100.00% 082383PC8 2021 395,000 1.835% 1.835% 100.00% 082383PD6 2022 400,000 1.855% 1.855% 100.00% 082383PE4 2023 410,000 1.917% 1.917% 100.00% 082383PF1 2024 415,000 1.972% 1.972% 100.00% 082383PG9 2025 425,000 2.032% 2.032% 100.00% 082383PH7 2026 430,000 2.207% 2.207% 100.00% 082383PJ3 2027 440,000 2.317% 2.317% 100.00% 082383PK0 2028 4,210,000 2.453% 2.453% 100.00% 082383PL8 2029 8,935,000 2.503% 2.503% 100.00% 082383PM6 2030 9,155,000 2.603% 2.603% 100.00% 082383PN4 2031 4,950,000 2.693% 2.693% 100.00% 082383PP9
(1) Registered trademark of the American Bankers Association, CUSIP numbers are provided by Standard and Poor’s, CUSIP Service Bureau, a division of The McGraw-Hill Companies, Inc. The CUSIP numbers listed above are being provided solely for the convenience of the holders of Bonds only at the time of issuance of the Bonds and the School District and the Underwriters do not make any representation with respect to such numbers or undertake any responsibility for their accuracy now or at any time in the future. The CUSIP number for a specific maturity is subject to being changed after the issuance of the Bonds as a result of various subsequent actions including, but not limited to, a refunding in whole or in part of such maturity or as a result of the procurement of secondary market portfolio insurance or other similar enhancement by investors that is applicable to all or a portion of certain maturities of the Bonds.
BENSALEM TOWNSHIP SCHOOL DISTRICT Bucks County, Pennsylvania
BOARD OF SCHOOL DIRECTORS
Kim J. Rivera ...... President Heather D. Nicholas ...... Vice President Marc Cohen ...... Member Stephanie A.G. Ferrandez, Esq...... Member Rachel Fingles, Esq...... Member Michelle Benitez ...... Member Eric Price ...... Member Heather Snyder ...... Member Vanessa Woods ...... Member
SUPERINTENDENT DR. SAMUEL LEE
DIRECTOR OF BUSINESS OPERATIONS JOHN STEFFY
SCHOOL DISTRICT SOLICITOR BEGLEY, CARLIN & MANDIO LLP Langhorne, Pennsylvania
BOND COUNSEL EASTBURN AND GRAY, P.C. Doylestown, Pennsylvania
FINANCIAL ADVISOR PFM FINANCIAL ADVISORS LLC Harrisburg, Pennsylvania
UNDERWRITER BOENNING & SCATTERGOOD, INC. West Conshohocken, Pennsylvania
PAYING AGENT BANK OF NEW YORK MELLON TRUST COMPANY, N.A. Philadelphia, Pennsylvania
SCHOOL DISTRICT ADDRESS 3000 Donallen Drive Bensalem, Pennsylvania 19020
No dealer, broker, salesman or other person has been authorized by the School District to give information or to make any representations, other than those contained in this Preliminary Official Statement, and if given or made, such other information or representations must not be relied upon. This Preliminary 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 in any jurisdiction in which it is unlawful to make such offer, solicitation or sale. The information set forth herein has been obtained from the School District and from other sources which are believed to be reliable, but the School District does not guarantee the accuracy or completeness of information from sources other than the School District. The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Preliminary Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in any of the information set forth herein since the date hereof.
TABLE OF CONTENTS Page Page TAX MATTERS ...... 25 INTRODUCTION ...... 1 Federal Tax ...... 25 PURPOSE OF THE ISSUE ...... 1 State Tax ...... 25 Refunding of the 2013 Bonds ...... 1 CONTINUING DISCLOSURE UNDERTAKING ...... 26 Escrow Verification ...... 1 Sources and Uses of Bond Proceeds ...... 1 Existing Continuing Disclosure Filing History ...... 27 Failure to Provide Annual Financial Information ...... 28 THE BONDS ...... 2 Bond Insurance Rating Downgrades and Upgrades by S&P Description ...... 2 and/or Moody’s...... 28 Payment of Principal and Interest ...... 2 Pennsylvania Act 150 School District Intercept Program Transfer, Exchange and Registration of Bonds ...... 2 Enhanced Rating Downgrade July 2012 ...... 28 Security ...... 3 Pennsylvania Act 150 School District Intercept Program Commonwealth Enforcement of Debt Service Payments...... 3 Enhanced Rating Downgrade July 2014 ...... 28 Pennsylvania Budget Adoption ...... 3 Future Continuing Disclosure Compliance ...... 28 Act 85 of 2016 ...... 3 RATING ...... 28 Sinking Fund ...... 4 UNDERWRITING ...... 28 REDEMPTION OF BONDS ...... 5 LEGAL OPINION...... 29 Mandatory Redemption ...... 5 Optional Redemption ...... 5 FINANCIAL ADVISOR ...... 29 Notice of Redemption ...... 5 Manner of Redemption ...... 5 MISCELLANEOUS ...... 29 BOOK-ENTRY ONLY SYSTEM ...... 6 APPENDIX A - DEMOGRAPHIC AND ECONOMIC INFORMATION RELATING TO THE BENSALEM TOWNSHIP SCHOOL DISTRICT THE SCHOOL DISTRICT ...... 7 Introduction ...... A-1 Introduction ...... 7 Population ...... A-1 Administration ...... 7 Employment ...... A-2 School Facilities ...... 8 Income ...... A-3 Enrollment Trends ...... 8 Commercial Activity ...... A-3 SCHOOL DISTRICT FINANCES ...... 9 Housing ...... A-3 Educational Institutions ...... A-3 Introduction ...... 9 Financial Reporting ...... 9 APPENDIX B - BENSALEM TOWNSHIP SCHOOL DISTRICT Budgeting Process in School Districts under Act 1 of 2006 FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2019 (Taxpayer Relief Act) ...... 9 Summary and Discussion of Financial Results ...... 10 APPENDIX C - FORM OF BOND COUNSEL OPINION Revenue ...... 11 APPENDIX D- FORM OF CONTINUING DISCLOSURE TAXING POWERS OF THE SCHOOL DISTRICT ...... 13 AGREEMENT In General ...... 13 The Taxpayer Relief Act (Act 1) ...... 13 Status of the Bonds under Act 1...... 14 Act 24 of 2001 ...... 14 Legislation Limiting Unreserved Fund Balances ...... 15 Tax Levy Trends ...... 15 Real Property Tax ...... 16 Other Taxes ...... 17 COMMONWEALTH AID TO SCHOOL DISTRICTS ...... 18 General ...... 18 Current Lack of State Appropriations for Debt Service Subsidies ...... 18 DEBT AND DEBT LIMITS ...... 19 Debt Statement ...... 19 Debt Limit and Remaining Borrowing Capacity ...... 21 Debt Service Requirements...... 21 Future Financing ...... 22
LABOR RELATIONS ...... 23 School District Employees ...... 23 Pension Program ...... 23 Other Post-Employment Benefits (“OPEB”) ...... 24 LITIGATION ...... 24 DEFAULTS AND REMEDIES ...... 24
PRELIMINARY OFFICIAL STATEMENT
$30,470,000 Bensalem Township School District (Bucks County, Pennsylvania) General Obligation Bonds, Series of 2020 (Federally Taxable)
INTRODUCTION
This Preliminary Official Statement, including the cover and inside cover page hereof and Appendices hereto, is furnished by Bensalem Township School District, Bucks County, Pennsylvania (the “School District”), in connection with the offering of $30,470,000 aggregate principal amount of its General Obligation Bonds, Series of 2020, dated the date the Bonds are issued and delivered (the “Date of Delivery”). The Bonds are being issued pursuant to a Resolution of the Board of School Directors of the School District adopted on September 25, 2019 (the “Resolution”), and pursuant to the Local Government Unit Debt Act of the Commonwealth of Pennsylvania (the “Commonwealth”), 53 Pa. C.S.A. §8001 et seq. (the “Act”).
PURPOSE OF THE ISSUE
Proceeds of the Bonds will be used to undertake the: (i) advance refunding a portion of the School District’s outstanding General Obligation Bonds, Series of 2013; and (ii) pay issuance costs and expenses of the Bonds.
REFUNDING PROGRAM
Upon issuance of the Bonds, a portion of the proceeds of the Bonds will be irrevocably deposited with the Bank of New York Mellon Trust Company, N.A., Philadelphia, Pennsylvania (the “Escrow Agent”), as escrow agent for the refunded 2013 Bonds pursuant to a pledge and Escrow Agreement dated the date of delivery of the Bonds, between the School District and Escrow Agent. The proceeds will be held in cash and/or invested in direct obligations of the United States of America (the “Escrow Securities”), the principal of which together with cash and any investment earnings thereon, will be in an amount sufficient to redeem all Refunded 2013 Bonds, at a redemption price of 100% of principal amount plus accrued interest to the date of redemption. On such date the Refunded 2013 Bonds will be redeemed and retired.
ESCROW VERIFICATION
The accuracy of the mathematical computations supporting the adequacy of the maturing principal amount of, and interest earned on, the amounts deposited pursuant to the Escrow Agreement to pay the principal of, and interest and premium, if any, when due on the 2013 bonds, and the accuracy of certain mathematical computations supporting the conclusion of Bond Counsel that the Bonds will not be “arbitrage bonds” under section 103 (c) of the Internal Revenue Code of 1986, as amended, will be verified by BondResources, LP as a condition to the delivery of the Bonds. BondResources, LD is wholly owned by PFM Asset Management LLC, a member of the PFM Group.
Sources and Uses of Bond Proceeds
The following is a summary of the sources and uses of the proceeds from the issuance of the Bonds.
SOURCES: Par Amount ...... $30,470,000 Total ...... $30,470,000
USES:
Escrow Deposit for the Refund Portion of 2013 Bonds ...... $30,134,444 Costs of Issuance(1) ...... $335,555 Total ...... $30,470,000
(1)Includes legal, financial advisor, underwriters’ discount, printing, rating, CUSIP, paying agent, escrow agent and miscellaneous costs.
1
THE BONDS
Description
The Bonds will be issued in fully registered form in denominations of $5,000 and integral multiples thereof, will be in the aggregate principal amount of $30,470,000, will be dated the Date of Delivery, which is expected to be March 3, 2020, and will bear interest at the rates and mature in the amounts and on the dates set forth on the inside front cover of this Preliminary Official Statement. Interest on the Bonds will be payable initially on June 1, 2020, and thereafter, semiannually on June 1 and December 1 of each year until the maturity date of such Bond or, if such Bond is subject to redemption prior to maturity, until the date fixed for redemption thereof, if payment of the redemption price has been duly made or provided for.
When issued, the Bonds will be registered in the name of Cede & Co., as nominee for The Depository Trust Company (“DTC”), New York, New York. Purchasers of the Bonds (the “Beneficial Owners”) will not receive any physical delivery of bond certificates, and beneficial ownership of the Bonds will be evidenced only by book entries. See “BOOK – ENTRY ONLY SYSTEM” herein.
Payment of Principal and Interest
So long as Cede & Co., as nominee of DTC, is the registered owner of the Bonds, payments of principal of, redemption premium, if any, and interest on the Bonds, when due, are to be made to DTC and all such payments shall be valid and effective to satisfy fully and to discharge the obligations of the School District with respect to, and to the extent of, principal, redemption premium, if any, and interest so paid.
If the use of the Book-Entry Only System for the Bonds is discontinued for any reason, bond certificates will be issued to the Beneficial Owners of the Bonds and payment of principal, redemption premium, if any, and interest on the Bonds shall be made as described in the following paragraphs:
The principal of the Bonds, when due upon maturity or upon any earlier redemption, will be paid to the registered owners of the Bonds, or registered assigns, upon surrender of the Bonds to the Bank of New York Mellon Trust Company, N.A. (the “Paying Agent”), acting as paying agent, registrar and sinking fund depository for the Bonds, at its corporate trust office in Philadelphia, Pennsylvania (or to any successor paying agent at its designated office(s)).
Interest on the Bonds will be payable to the registered owner of a Bond from the interest payment date next preceding the date of registration and authentication of the Bond, unless: (a) such Bond is registered and authenticated as of an interest payment date, in which event such Bond shall bear interest from said interest payment date, or (b) such Bond is registered and authenticated after a Record Date (hereinafter defined) and before the next succeeding interest payment date, in which event such Bond shall bear interest from such interest payment date, or (c) such Bond is registered and authenticated on or prior to the Record Date preceding June 1, 2020, in which event such Bond shall bear interest from the Date of Delivery, or (d) as shown by the records of the Paying Agent, interest on such Bond shall be in default, in which event such Bond shall bear interest from the date to which interest was last paid on such Bond. Interest on each Bond will be payable by check drawn on the Paying Agent, which shall be mailed to the registered owner whose name and address shall appear, at the close of business on the fifteenth (15th) day (whether or not a day on which the Paying Agent is open for business) next preceding each interest payment date (the “Record Date”), on the registration books maintained by the Paying Agent, irrespective of any transfer or exchange of the Bond subsequent to such Record Date and prior to such interest payment date, unless the School District shall be in default in payment of interest due on such interest payment date. In the event of any such default, such defaulted interest shall be payable to the person in whose name the Bond is registered at the close of business on a special record date for the payment of such defaulted interest established by notice mailed by the Paying Agent to the registered owners of such Bonds not less than ten (10) days preceding such special record date.
If the date for payment of the principal of or interest on any Bonds shall be a Saturday, Sunday, legal holiday or a day on which banking institutions in the Commonwealth are authorized or required by law or executive order to close, then the date for payment of such principal or interest shall be the next succeeding day which is not a Saturday, Sunday, legal holiday or a day on which such banking institutions are authorized or required to close, and payment on such date shall have the same force and effect as if made on the nominal date established for such payment.
Transfer, Exchange and Registration of Bonds
Subject to the provisions described below under “BOOK-ENTRY ONLY SYSTEM,” Bonds are transferable or exchangeable by the registered owners thereof upon surrender of Bonds to the Paying Agent, accompanied by a written instrument or instruments in form, with instructions, and with guaranty of signature satisfactory to the Paying Agent, duly executed by the registered owner of such Bond or his attorney- in-fact or legal representative. The Paying Agent shall enter any transfer of ownership of Bonds in the registration books and shall authenticate and deliver at the earliest practicable time in the name of the transferee or transferees a new fully registered bond or bonds of authorized denominations of the same series, maturity and interest rate for the aggregate principal amount which the registered owner is entitled to receive. The School District and the Paying Agent may deem and treat the registered owner of any Bond as the absolute owner thereof (whether or not a Bond shall be overdue) for the purpose of receiving payment of or on account of principal and interest and for all other purposes, and the School District and the Paying Agent shall not be affected by any notice to the contrary.
2
The School District and the Paying Agent shall not be required (a) to register the transfer of or exchange any Bonds then considered for redemption during a period beginning at the close of business on the fifteenth (15th) day next preceding any date of selection of Bonds to be redeemed and ending at the close of business on the day on which the applicable notice of redemption is mailed or (b) to register the transfer of or exchange any portion of any Bond selected for redemption until after the redemption date. Bonds may be exchanged for a like aggregate principal amount of Bonds of other authorized denominations of the same series, maturity and interest rate.
Security
The Bonds will be general obligations of the School District, payable from its tax and other general revenues. The School District has covenanted that it will provide in its budget for each year, and will appropriate from its general revenues in each such year, the amount of the debt service on the Bonds for such year, and will duly and punctually pay or cause to be paid from its applicable Sinking Fund, as hereinafter defined, or any other of its revenues or funds, the principal of each of the Bonds and the interest thereon at the dates and place and in the manner stated on the Bonds, and for such budgeting, appropriation and payment the School District irrevocably has pledged its full faith, credit and available taxing power (See “SCHOOL DISTRICT FINANCES” and “TAXING POWERS OF THE SCHOOL DISTRICT” herein). The Act presently provides for enforcement of debt service payments as hereinafter described (see “DEFAULTS AND REMEDIES” herein), and the Public School Code presently provides for the withholding and application of subsidies in the event of failure to pay debt service (see “Commonwealth Enforcement of Debt Service Payments” herein).
Commonwealth Enforcement of Debt Service Payments
Section 633 of the Pennsylvania Public School Code of 1949, as amended by Act 150 of 1975, and as further amended and supplemented (the “Public School Code”), presently provides that in all cases where the board of school directors of any school district fails to pay or to provide for the payment of any indebtedness on the date of maturity or date of mandatory redemption or on any sinking fund deposit date, or any interest due on such indebtedness on any interest payment date or on any sinking fund deposit date, in accordance with the schedule under which the Bonds were issued, the Secretary of Education shall notify such board of school directors of its obligation and shall withhold out of any Commonwealth appropriation due such school district an amount equal to the sum of the principal amount maturing or subject to mandatory redemption and interest owing by such school district, or sinking fund deposit due by such school district, and shall pay over the amount so withheld to the bank or other person acting as sinking fund depositary for such Bond issue. These withholding provisions are not part of any contract with the holders of the Bonds, and may be amended or repealed by future legislation.
The effectiveness of Section 633 of the Public-School Code may be limited by the application of other withholding provisions contained in the Public-School Code, such as provisions for withholding and paying over of appropriations for payment of unpaid teachers’ salaries. Enforcement may also be limited by bankruptcy, insolvency, or other laws or equitable principles affecting the enforcement of creditors’ rights generally. See “Pennsylvania Budget Adoption” hereinafter.
Pennsylvania Budget Adoption
Over the past several years the Commonwealth of Pennsylvania has, from time to time, started its fiscal year without a fully adopted state budget. Most recently, in the state’s 2015-16 fiscal year, a final budget was not enacted until 270 days following the beginning of the fiscal year on March 27, 2016 when the Governor failed to sign or veto the state budget that was adopted by the General Assembly on March 17, 2016.
For the 2016-17 fiscal year, the state budget became law, known as Act 16A of 2016, on July 12, 2016 when the Governor failed to sign or veto the state budget that was adopted by the General Assembly on July 1, 2016. On July 13, 2016, the General Assembly adopted, and the Governor signed into law an additional tax and revenue package, known as Act 85 of 2016, that was needed to balance the 2016-17 state budget.
For the 2017-18 fiscal year, the state budget became law, known as Act 1A of 2017, on July 11, 2017 when the Governor failed to sign or veto the state budget that was adopted by the General Assembly on June 30, 2017. On October 30, 2017, the Governor signed into law a revenue package that was needed to balance the Commonwealth’s 2017-18 budget and end a four-month impasse. The education-code bill, which authorizes spending to the Commonwealth’s public schools, became law on November 6, 2017 when the Governor failed to sign or veto the education- code bill that was adopted by the General Assembly
For the 2018-19 and the 2019-20 fiscal year, the budget was passed in a timely manner.
During a state budget impasse, school districts in Pennsylvania cannot be certain that state subsidies and revenues owed them from the Commonwealth will become available. This includes many of the major state subsidies, and overall revenues, that a Pennsylvania school district receives including basic education funding, special education funding, PlanCon reimbursements, and certain block grants, among many others. Future budget impasses may affect the timeliness or amount of payments by the Commonwealth under the withholding provisions of Section 633 of the Public School Code, however recent legislation included in Act 85 of 2016 has attempted to address the timeliness of the withholding provisions of Section 633 of the Public School Code during any future budget impasses. See “Act 85 of 2016” hereinafter.
Act 85 of 2016
On July 13, 2016, the Governor of the Commonwealth signed into law Act No. 85 of 2016, (P.L. 664, No. 85) (“Act 85 of 2016”), an amendment to the Act of April 9, 1929 (P.L. 343, No. 176), known as the Fiscal Code (“Fiscal Code”). Act 85 of 2016 adds to the Fiscal Code Article XVII-E.4, entitled “School District Intercepts for the Payment of Debt Service During Budget Impasse”, which provides for intercept of
3 subsidy payments by the Pennsylvania Department of Education (“PDE”) to a school district subject to an intercept statute or an intercept agreement in the event of a Commonwealth budget impasse in any fiscal year.
Act 85 of 2016 includes in the definition of “intercept statutes” Section 633 of the Public-School Code. The School District's general obligation bonds, including the Bonds, are subject to Section 633 of the Public-School Code.
Act 85 of 2016 provides that the amounts that may be necessary for PDE to comply with the provisions of the applicable intercept statute or intercept agreement “shall be appropriated” to PDE from the General Fund of the Commonwealth after PDE submits justification to the majority and minority chairs of the appropriations committees of the Pennsylvania Senate and House of Representatives allowing ten (10) calendar days for their review and comment, if, in any fiscal year:
(1) annual appropriations for payment of Commonwealth money to school districts have not been enacted by July 1 and continue not to be enacted when a payment is due;
(2) the conditions under which PDE is required to comply with an intercept statute or intercept agreement have occurred, thereby requiring PDE to withhold payments which would otherwise be due to school districts; and
(3) the Secretary of PDE, in consultation with the Secretary of the Budget, determines that there are no payments or allocations due to be paid to the applicable school districts from which PDE may withhold money as required by the applicable intercept statute or intercept agreement.
The necessary amounts shall be appropriated and paid to the paying agent on the day the scheduled payment for principal and interest is due on the expiration of the tenth (10th) day following submission of the justification described above to the majority and minority chairs of the appropriations committees, who may comment on the justification but cannot prevent the effectiveness of the appropriation.
The total of all intercept payments under Article XVII-E.4 for a school district may not exceed 50% of the total nonfederal general fund subsidy payments made to that school district in the prior fiscal year.
Act 85 of 2016 requires that each school district with bonds or notes subject to an intercept statute or intercept agreement must deliver to PDE, in such format as PDE may direct, a copy of the final Preliminary Official Statement for the relevant bonds or notes or the loan documents relating to the obligations, within thirty (30) days of receipt of the proceeds of the obligations. The School District intends on submitting this information with respect to the Bonds to PDE within the prescribed timeframe following the issuance of the Bonds. Act 85 of 2016 provides that any obligation for which PDE does not receive the required documents shall not be subject to the applicable intercept statute or intercept agreement.
The provisions of Act 85 of 2016 are not part of any contract with the holders of the Bonds and may be amended or repealed by future legislation.
Sinking Fund
A sinking fund for the payment of debt service on the Bonds, designated “Sinking Fund, General Obligation Bonds, Series of 2020” (the “Sinking Fund”), has been created under the Resolution and is maintained by the Paying Agent, as Sinking Fund Depository. The School District shall deposit in the Sinking Fund a sufficient sum, not later than the date when interest and/or principal is to become due on the Bonds, so that on each payment date the Sinking Fund will contain an amount which, together with any other funds available therein, is sufficient to pay, in full, interest and/or principal then due on the Bonds.
The Sinking Fund shall be held by the Paying Agent, as Sinking Fund Depository, and invested by the Paying Agent in such securities or shall be deposited in such funds or accounts as are authorized by the Act, upon direction of the School District. Such deposits and securities shall be in the name of the School District, but subject to withdrawal or collection only by the Paying Agent, as Sinking Fund Depository, and such deposits and securities, together with the interest thereon, shall be a part of the Sinking Fund.
The Paying Agent, as Sinking Fund Depository, is authorized without further order from the School District to pay from the Sinking Fund the principal of and interest on the Bonds, as and when due and payable.
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4
REDEMPTION OF BONDS
Mandatory Redemption
The Bonds are not subject to Mandatory Redemption
Optional Redemption
The Bonds stated to mature on and after June 1, 2029, are subject to redemption prior to maturity at the option of the School District as a whole, or from time to time in part (and if in part, in any order of maturities designated by the School District and within a maturity as selected by lot), on June 1, 2028 or on any date thereafter, at a redemption price equal to 100% of the principal amount redeemed, together with accrued interest to the date fixed for redemption.
Notice of Redemption
So long as Cede & Co., as nominee of DTC, is the registered owner of the Bonds, the School District and the Paying Agent shall send redemption notices only to Cede & Co. (See “BOOK-ENTRY ONLY SYSTEM” herein for further information.)
Notice of any redemption shall be given by depositing a copy of the redemption notice by first class mail not more than sixty (60) days and not less than thirty (30) days prior to the date fixed for redemption addressed to each of the registered owners of Bonds to be redeemed, in whole or in part, at the addresses shown on the registration books; provided, however, that failure to give such notice by mailing, or any defect therein or in the mailing thereof, shall not affect the validity of any proceeding for redemption of other Bonds called for redemption as to which proper notice has been given.
On the date designated for redemption, notice having been provided as aforesaid, and money for payment of the principal and accrued interest being held by the Paying Agent, interest on the Bonds or portions thereof so called for redemption shall cease to accrue and such Bonds or portions thereof shall cease to be entitled to any benefit or security under the Resolution, and registered owners of such Bonds or portions thereof so called for redemption shall have no rights with respect to such Bonds, except to receive payment of the principal of and accrued interest on such Bonds to the date fixed for redemption.
Manner of Redemption
If a Bond is of a denomination larger than $5,000, a portion of such Bond may be redeemed. For the purposes of redemption, a Bond shall be treated as representing that number of Bonds which is obtained by dividing the principal amount thereof by $5,000, each $5,000 portion of such Bond being subject to redemption. In the case of partial redemption of a Bond, payment of the redemption price shall be made only upon surrender of such Bond in exchange for Bonds of authorized denominations in aggregate principal amount equal to the unredeemed portion of the principal amount thereof.
If the redemption date for any Bonds shall be a Saturday, Sunday, legal holiday or a day on which banking institutions in the Commonwealth of Pennsylvania are authorized by law or executive order to close, then the date for payment of the principal, premium, if any, and interest upon such redemption shall be the next succeeding day which is not a Saturday, Sunday, legal holiday or a day on which such banking institutions are authorized to close, and payment on such date shall have the same force and effect as if made on the nominal date of redemption.
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5
BOOK-ENTRY ONLY SYSTEM
The information in this section has been obtained from materials provided by DTC for such purpose. The School District (herein referred to as the “Issuer”) and the Underwriter do not guaranty the accuracy or completeness of such information, and such information is not to be construed as a representation of the School District or the Underwriter.
The Depository Trust Company (“DTC”), New York, NY, will act as bonds depository for the bonds (the “Bonds”). The Bonds will be issued as fully-registered bonds registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Bond certificate will be issued for each maturity of the Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC.
DTC the world's largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. Bonds 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. Bonds 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.
Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued.
To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not affect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds: DTC's records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit bas agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.
Redemption notices shall be sent to DTC. If less than all of the Bonds within a series and maturity are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such series and maturity to be redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to 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 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).
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Principal, interest and redemption payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from 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 bonds 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 principal, interest and redemption payments on the Bonds to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of Issuer or Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to Issuer or Agent. Under such circumstances, in the event that a successor depository is not obtained, Bond certificates are required to be printed and delivered.
Issuer may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered to DTC.
The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that Issuer believes to be reliable, but Issuer takes no responsibility for the accuracy thereof.
NEITHER THE ISSUER NOR THE PAYING AGENT WILL HAVE ANY RESPONSIBILITY OR OBLIGATION TO ANY DTC PARTICIPANT, INDIRECT PARTICIPANT OR BENEFICIAL OWNER OR ANY OTHER PERSON WITH RESPECT TO: (1) THE BONDS; (2) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC OR ANY DTC PARTICIPANT OR INDIRECT PARTICIPANT; (3) THE PAYMENT BY DTC OR ANY DTC PARTICIPANT OR INDIRECT PARTICIPANT OF ANY AMOUNT DUE TO ANY BENEFICIAL OWNER IN RESPECT OF THE PRINCIPAL OR REDEMPTION PRICE OF OR INTEREST ON THE BONDS; (4) THE DELIVERY TO ANY BENEFICIAL OWNER BY DTC OR ANY DTC PARTICIPANT OR INDIRECT PARTICIPANT OF ANY NOTICE WHICH IS REQUIRED OR PERMITTED UNDER THE TERMS OF THE RESOLUTION TO BE GIVEN TO BONDHOLDERS; (5) THE SELECTION OF THE BENEFICIAL OWNERS TO RECEIVE PAYMENT IN THE EVENT OF ANY PARTIAL REDEMPTION OF THE BONDS; OR (6) ANY OTHER ACTION TAKEN BY DTC AS BONDHOLDER.
The Issuer and the Paying Agent cannot give any assurances that DTC or the Participants will distribute payments of the principal or redemption price of and interest on the Bonds paid to DTC or its nominee, as the registered owner of the Bonds, or any redemption or other notices, to the Beneficial Owners or that they will do so on a timely basis, or that DTC will serve and act in the manner described in this Preliminary Official Statement.
THE SCHOOL DISTRICT
Introduction
The School District is a public-school district of the second class, organized under the laws of the Commonwealth. The School District is coterminous with Bensalem Township, located in lower Bucks County, along the Delaware River and it’s bordered by the City of Philadelphia on the southwest, by Lower Southampton Township on the northwest, Middletown Township and Hulmeville Borough on the northeast, Bristol Township on the east, and by the Delaware River on the south. The School District covers approximately 21 square miles and includes the unincorporated communities of Andalusia, Cornwell Heights, Eddington and a part of both Oakford and Trevose.
The School District has a balance of residential, commercial and industrial activities. As a result of the School District’s close proximity to the City of Philadelphia and the availability of metropolitan transportation facilities, a substantial increase in residential, commercial and industrial development has taken place over the past twenty-five years.
Administration
The School District is governed by a nine-member Board of School Directors (the “School Board”). The Superintendent is the chief administrative officer of the School District, with overall responsibility for all aspects of operations, including education and finance. The Director of Business Operations is responsible for budget and financial operations. Both of these officials are appointed by the School Board.
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School Facilities
The School District presently operates six elementary schools, two middle schools and one high school, all as described on the following table. Students in grades 9-12 can also attend Bucks County Technical High School.
TABLE 1
BENSALEM TOWNSHIP SCHOOL DISTRICT FACILITIES
Original Addition/ Construction Renovation 2019-20 Building Date Date(s) Grades Enrollment Elementary: Belmont Hills ...... 1969 2004 K-6 585 Benjamin Rush ...... 1964 1997 K-6 466 Cornwells ...... 1998 -- K-6 534 Russell C. Struble ...... 1976 2004 K-6 516 Samuel K. Faust ...... 1956 1970,1992, 2008 K-6 642 Valley ...... 1975 2009 K-6 701
Secondary: Cecilia Snyder Middle School ...... 1960 2009 7-8 442 Neil A. Armstrong Middle School(1) ...... Closed Robert K. Shafer Middle School ...... 1980 2008 7-8 585 Bensalem High School ...... 1969 1973, 2002-2006, 9-12 2,003 2011-2015
(1)School closed in 2004 and is currently under contract for agreement of sale. Source: Pennsylvania Department of Education, Public School Enrollments 2019-20.
Enrollment Trends
The following Table 2 presents recent projections of increasing school enrollments.
TABLE 2
BENSALEM TOWNSHIP SCHOOL DISTRICT ENROLLMENT TRENDS
Projected Enrollments Projected Enrollments Year Elementary Secondary Total Year Elementary Secondary Total 2019-20 3,524 3,077 6,601 2024-25 3,361 3,366 6,727 2020-21 3,502 3,210 6,712 2025-26 3,316 3,311 6,672 2021-22 3,463 3,318 6,781 2026-27 3,193 3,391 6,584 2022-23 3,450 3,333 6,783 2027-28 3,143 3,390 6,441 2023-24 3,406 3,346 6,752 2028-29 3,084 3,293 6,377
Source: Pennsylvania Department of Education.
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SCHOOL DISTRICT FINANCES
Introduction
The School District budgets and expends funds pursuant to the Public-School Code, and according to procedures mandated by the Pennsylvania Department of Education (“PDE”). An annual operating budget is prepared by the Superintendent and Director of Business Operations and submitted to the School Board for approval prior to the beginning of the fiscal year on July 1.
Financial Reporting
The financial statements of the School District are prepared in accordance with accounting principles generally accepted in the United States of America. The School District’s reporting entity applies all relevant Governmental Accounting Standards Board (GASB) pronouncements. The government-wide and proprietary fund financial statements apply Financial Accounting Standards Board pronouncements and Accounting Principles Board opinions issued on or before November 30, 1989, unless those pronouncements conflict with or contradict GASB pronouncements, in which case, GASB prevails. The government wide statements report using the economic resources measurement focus and the accrual basis of accounting generally including the reclassification or elimination of internal activity (between or within funds). Its financial statements are audited by an independent certified public accountant, as required by Commonwealth law. The School District’s financial statements are audited annually by an independent certified public accountant, as required by State law. Barbacane, Thornton & Company LLP currently serves as the School District Auditor.
Budgeting Process in School Districts under Act 1 of 2006 (Taxpayer Relief Act)
In General. School districts budget and expend funds according to procedures mandated by PDE. An annual operating budget is prepared by school district administrative officials on a uniform form furnished by PDE and submitted to the board of school directors for approval prior to the beginning of the fiscal year on July 1.
Procedures for Adoption of the Annual Budget. Under Act No. 1 of the Special Session of 2006, as amended, entitled the Taxpayer Relief Act (“Act 1” or the “Taxpayer Relief Act”), all school districts of the first class A, second class, third class and fourth class (except as described below) must adopt a preliminary budget proposal (which must include estimated revenues and expenditures and proposed tax rates) no later than 90 days prior to the date of the election immediately preceding the fiscal year. The preliminary budget proposal must be printed and made available for public inspection at least 20 days prior to its adoption; the board of school directors may hold a public hearing on the budget; and the board must give at least 10 days’ public notice of its intent to adopt the final budget.
If the adopted preliminary budget includes an increase in the rate of any tax levy, the preliminary budget must be submitted to PDE no later than 85 days prior to the date of the election immediately preceding the fiscal year. PDE is to compare the proposed percentage increase in the rate of any tax with the school district’s Index (see “The Taxpayer Relief Act (Act 1)” herein) and within 10 days, but not later than 75 days prior to the upcoming election, inform the school district whether the proposed percentage increase is less than or equal to the Index. If PDE determines that a proposed tax increase will exceed the Index, the school district must reduce the proposed tax increase to an amount less than or equal to the Index, seek voter approval for the tax increase at the upcoming election, or seek approval to utilize one of the referendum exceptions authorized under Act 1.
With respect to the utilization of any of the three Act 1 referendum exceptions, for which PDE approval is required (see “The Taxpayer Relief Act (Act 1)” herein), the school district must publish notice of its intent to seek PDE approval not less than one week before submitting its request for approval to PDE and, if PDE determines to schedule a public hearing on the request, a notice of the date, time and place of such hearing. PDE is required by Act 1 to rule on the school district’s request and inform the school district of its decision no later than 55 days prior to the upcoming election so that, if PDE denies the school district’s request, the school district may submit a referendum question to the local election officials at least 50 days before the upcoming election, if it so chooses.
If a school district seeks voter approval to increase taxes at a rate higher than the applicable Index, whether or not it first seeks approval to utilize one of the referendum exceptions available under Act 1, and the referendum question is not approved by a majority of the voters voting on the question, the board of school directors may not approve an increase in the tax rate greater than the applicable Index.
Simplified Procedures if Index will not be Exceeded. The above budgetary procedures will not apply to a school district if the board of school directors adopts a resolution no later than 110 days prior to the election immediately preceding the upcoming fiscal year declaring that it will not increase any tax at a rate that exceeds the Index and that a tax increase at or below the rate of the Index will be sufficient to balance its budget. In that case, Act 1 requires only that the proposed annual budget be prepared at least 30 days, and made available for public inspection at least 20 days, prior to its adoption, and that at least ten (10) days’ public notice be given of the board’s intent to adopt the annual budget. No referendum exceptions are available to a school district adopting such a resolution.
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Summary and Discussion of Financial Results
A summary of the General Fund balance sheet and changes in fund balances is presented in Tables 3 and 4 which follow. The budget for 2019-20, budgeted revenues of $151,856,791 and expenditures of $156,070,652 which includes a budgetary deficit of $4,213,861.
Table 5 shows audited revenues and expenditures for the past five years and the budget for 2019-20.
TABLE 3
2015 2016 2017 2018 2019 ASSETS Cash and Cash Equivalents $35,981,673 $37,609,984 $26,777,403 $7,663,795 $8,970,450 Investments 10,019,260 0 4,800,000 19,022,297 18,241,326 Taxes Receivable 3,384,444 2,682,404 3,286,762 3,005,620 3,259,358 Interfund Receivables 6,717 0 0 0 0 Intergov’tal Receivables 3,948,270 4,922,867 6,575,698 7,453,920 7,472,922 Prepaid Expenses 28,762 19,175 23,538 57,439 50,863 Other Receivables 366,762 984,964 255,293 450,779 485,647 TOTAL ASSETS $53,735,888 $46,219,394 $41,718,694 $37,653,850 $38,480,566
LIABILITIES Due to Other Funds $0 $235,439 $238,573 $438,406 $2,389,451 Accounts Payable 7,282,080 7,774,800 8,192,690 9,134,493 10,370,045 Accrued Salaries & Benefits 7,602,066 8,200,414 9,285,451 7,260,201 7,195,886 Payroll Deductions & Withholdings 33,894 77,847 474,818 650,951 95,767 Deferred Revenues 0 0 0 0 0 Other Current Liabilities 10,033,994 731,568 996,656 923,863 1,096,500 TOTAL LIABILITIES $24,952,034 $17,020,068 $19,188,188 $18,407,914 $21,147,649
Deferred Inflows of Resources $3,032,823 $2,503,336 $2,446,766 $2,553,651 $2,746,268
FUND EQUITIES
Committed Fund Balance $19,775,000 $19,775,000 $19,775,000 $19,775,000 $19,775,000 Non-spendable Fund Balance 28,762 19,175 23,538 57,439 50,863 Unassigned Fund Balance 5,947,269 6,901,815 285,202 -3,140,154 -5,239,214 Unreserved Fund Balance 0 0 0 0 0 Reserved Fund Balance 0 0 0 0 0 TOTAL FUND EQUITY $25,751,031 $26,695,990 $20,083,740 $16,692,285 $14,586,649
TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND EQUITIES $53,735,888 $46,219,394 $41,718,694 $37,653,850 $38,480,566
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TABLE 4
BENSALEM TOWNSHIP SCHOOL DISTRICT GENERAL FUND SUMMARY OF CHANGES IN FUND BALANCE*
Budget (1) 2015 2016 2017 2018 2019 2020 $14,586,649 Beginning Fund Balance ...... $29,683,109 $25,751,031 $29,683,109 $20,083,739 $16,692,286 (4,213,861) Excess of Revenues over (under) Expenditures (3,932,078) 163,112 (6,612,251) (3,391,453) (2,105,636)
Other ......
Ending Fund Balance ...... 25,751,031 $25,914,144 $20,083,739 $16,692,286 $14,586,649 10,369,488
*Totals may not add due to rounding. (1)Budget, as adopted June 26, 2019.
Revenue
The School District received $147,502,334 in revenue in 2018-19 and has budgeted revenue of $151,856,791 in 2019-20. Local sources decreased as a share of total revenue in the past five years, from 76.9 percent in 2015-16 to 74.4 percent in 2018-19. Revenue from State sources increased as a share of the total from 22.0 percent to 23.4 percent over this period. Revenue from Federal sources decreased as a share of the total from 1.6 percent to 1.1 percent over this period.
Table 5 shows audited revenues and expenditures for the past five years and the budget for 2019-20.
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TABLE 5 BENSALEM TOWNSHIP SCHOOL DISTRICT SUMMARY OF SCHOOL DISTRICT GENERAL FUND REVENUES AND EXPENDITURES* (For years ending June 30)
REVENUE Budgeted Local Sources 2015 2016 2017 2018 2019 2020 (1) Real Estate Taxes (Current) $86,988,375 $90,981,924 $93,604,271 $94,247,494 $96,983,023 $101,064,421 Interim Real Estate Taxes 1,055,355 495,702 1,264,459 483,155 824,505 1,197,991 Total Act 511 Taxes 5,846,501 6,777,054 6,461,415 6,065,760 7,534,152 6,133,034 Public Utility Tax 115,381 109,428 108,021 108,456 106,502 108,021 Payments in Lieu of Current Taxes/ State & Local 70,000 60,000 30,000 30,000 15,000 15,000 Delinquencies on taxes Levied 2,285,513 7,051,407 3,025,895 2,770,922 2,936,647 2,471,408 Earning on Investments 280,055 376,721 478,455 880,691 1,399,219 900,000 Revenue from Student Activities 19,035 18,082 26,184 27,406 37,296 22,770 State Rev Rcvd. From Other Intermediary Sources 73,154 0 0 0 124,777 0 Federal Revenue Rcvd. From Other PA Public LEA 3,211 3,744 3,955 3,675 2,310 5,000 Federal IDEA Pass Through Revenue 1,338,214 1,383,055 1,383,864 1,421,810 1,417,870 1,421,810 Other Revenue from Intermediary Sources 0 0 0 0 0 0 Rentals 90,801 67,433 57,253 142,455 167,487 105,000 Contributions and Donations from Private Sources 14,563 13,735 0 1,250 5,192 0 Other Tuition from Patrons 29,940 21,821 17,869 1,000 27,733 225,000 Receipts from Other LEAs in PA - Education 129,781 0 63,822 556,358 449,997 0 Transportation Services Provided Other PA LEAs 5,535 4,319 13,066 17,271 20,189 0 Services Provided Other Funds 0 0 0 0 0 0 Revenue from Community Service Activities 117,403 120,981 105,001 123,034 149,860 120,000 Refund of Prior Year Expenditures 44,916 49,078 8,958 148,814 0 0 Energy Efficiency Revenues and Incentives 26,944 104,087 44,888 42,011 91,545 0 Miscellaneous Revenue 774,610 494,630 510,781 385,596 237,440 650,000 Total Local Revenue $99,309,288 $108,133,201 $107,208,157 $107,457,158 $112,530,744 $114,439,455 State Sources Basic Educat ion Funding $11,092,895 $11,545,341 $12,132,077 $12,557,926 $12,830,550 $12,771,914 Tuition - Orphans & Children Placed in Priv. Hom 194,541 218,590 246,718 507,395 529,921 500,000 Special Education 4,055,948 4,785,904 3,695,899 4,323,955 4,480,181 4,385,467 Vocational Education 43 0 0 0 0 0 Transportation 1,516,173 1,624,632 1,813,810 1,793,389 1,067,911 1,811,323 Rental and Sinking Fund Payments 1,083,501 20,178 427,337 1,659,159 1,346,688 468,391 Health Services 143,990 139,482 142,850 141,551 141,902 147,594 State Property Tax Reduction Allocations 2,270,631 2,270,463 2,270,629 2,270,483 2,270,500 2,270,629 Revenue for Social Security 1,903,648 1,590,441 2,308,729 2,027,617 2,123,979 2,247,144 Revenue for Retirement 6,060,257 7,408,943 8,900,803 9,421,091 9,685,236 10,072,491 PA Accountability Grant/Ready to Learn Block Gra 474,597 584,234 584,234 584,234 609,234 584,234 Other 0 0 0 374 0 0 Total State Sources $28,796,226 $30,188,208 $32,523,087 $35,287,172 $35,086,102 $35,259,187 Federal Sources Total Federal Sources $1,615,577 $1,472,826 $1,860,128 $3,283,513 $3,235,140 $2,158,149 Other Sources Total Other Sources $2,567 $4,716 $0 $3,270 $3,653,898 $0 TOTAL REVENUE $129,723,658 $139,798,950 $141,591,372 $146,031,113 $154,505,884 $151,856,791 EXP ENDITURES Instruction $82,779,177 $88,576,805 $95,826,015 $97,687,778 $98,091,283 $97,331,642 Pupil Personnel 4,499,134 4,329,217 4,873,438 4,756,189 4,729,322 5,181,391 Instructional Staff 6,146,968 5,981,360 6,629,810 6,388,050 6,052,145 6,314,648 Administration 6,430,039 6,641,911 6,579,635 6,705,021 7,113,474 7,133,572 Pupil Health 1,460,652 1,505,084 1,580,038 1,591,927 1,517,814 1,743,573 Business 1,326,461 1,351,671 1,195,457 1,118,235 1,208,038 1,271,128 Operation and Maintenance 11,177,218 10,704,152 10,335,761 9,712,586 9,476,850 9,346,381 Student Transportation 6,925,844 7,070,116 7,432,827 7,606,529 7,885,725 7,333,142 Central 757,957 956,114 789,790 781,251 620,537 604,146 Other Support 489,580 503,931 659,740 503,985 420,638 469,000 Operation of Noninstructional Services 1,366,427 1,508,940 1,460,206 1,473,195 1,571,511 1,607,746 Facilities Acquisitions, Construction and Improvem 0 0 0 0 0 0 Debt Service 9,704,438 10,097,618 10,425,255 10,706,039 10,823,252 10,602,156 Refund of Prior Year Receipts 591,841 408,918 0 0 0 0 Fund Transfers 0 0 415,650 391,782 7,100,929 425,000 Other Financing Uses 0 0 0 0 0 6,707,127 TOTAL EXPENDITURES $133,655,736 $139,635,838 $148,203,623 $149,422,566 $156,611,521 $156,070,652 REVENUES UNDER (OVER) EXPENDITURES ($3,932,078) $163,112 ($6,612,251) ($3,391,453) ($2,105,637) ($4,213,861) *Totals may not add due to rounding. (1) Budget, as adopted 06/26/2019. Source: School District officials, School District Annual Financial Reports and Budget. 12
TAXING POWERS OF THE SCHOOL DISTRICT
In General
Subject to certain limitations imposed by the Taxpayer Relief Act, Act No. 1 of the Special Session of 2006, as amended (see “The Taxpayer Relief Act (Act 1)” herein), the School District is empowered by the School Code and other statutes to levy the following taxes:
1. A basic annual tax on all real property taxable for school purposes, not to exceed 25 mills on each dollar of assessed valuation, to be used for general school purposes.
2. An unlimited ad valorem tax on the property taxable for school purposes to provide funds:
a. for minimum salaries and increments of the teaching and supervisory staff;
b. to pay rentals due any municipality authority or non-profit corporation or due the State Public School Building Authority;
c. to pay interest and principal on any indebtedness incurred pursuant to the Local Government Unit Debt Act, or any prior or subsequent act governing the incurrence of indebtedness of the school district; and
d. to pay for the amortization of a bond or note issue which provided a school building prior to the first Monday of July, 1959.
3. An annual per capita tax on each resident or inhabitant over 18 years of age of not more than $5.00.
4. Additional taxes subject to division with other political subdivisions authorized to levy similar taxes on the same person, subject, business, transaction or privilege, under Act No. 511, enacted December 31, 1965, as amended (“The Local Tax Enabling Act”). These taxes, which may include, among others, an additional per capita tax, a wage and other earned income tax, a real estate transfer tax, a gross receipts tax, a local services tax and an occupation tax, shall not exceed, in the aggregate, an amount equal to the product of the market valuation of real estate in the School District (as certified by the State Tax Equalization Board of the Commonwealth – “STEB”) multiplied by twelve mills. All local taxing authorities are required by the Local Tax Enabling Act to exempt disabled veterans and members of the armed forces reserve who are called to active duty at any time during the tax year from any local services tax and to exempt from any local services tax levied at a rate in excess of $10 those persons whose total income and net profits from all sources within the political subdivision is less than $12,000 for the tax year. The Local Tax Enabling Act also authorizes, but does not require, taxing authorities to exempt from per capita, occupation, and earned income taxes and any local services tax levied at a rate of $10 or less per year, any person whose total income from all sources is less than $12,000 per year.
The Taxpayer Relief Act (Act 1)
Under Pennsylvania Act No. 1 of the Special Session of 2006, as amended by Act 25 of 2011 (“The Taxpayer Tax Relief Act” or “Act 1”), a school district may not, in fiscal year 2007-2008 or in any subsequent fiscal year, levy any tax for the support of the public schools which was not levied in the 2006-2007 fiscal year, raise the rate of any earned income and net profits tax if already imposed under the authority of the Local Tax Enabling Act (Act 511), or increase the rate of any tax for school purposes by more than the Index (defined below), unless in each case either (a) such increase is approved by the voters in the school district at a public referendum or (b) one of the exceptions summarized below is applicable and the use of such exception is approved by PDE:
1. to pay interest and principal on indebtedness incurred (i) prior to September 4, 2004, in the case of a school district which had elected to become subject to the provisions of the prior Homeowner Tax Relief Act, Act 72 of 2004, or (ii) prior to June 27, 2006, in the case of a school district which had not elected to become subject to Act 72 of 2004; to pay interest and principal on any indebtedness approved by the voters at referendum (electoral debt); and to pay interest and principal on debt refunding or refinancing debt for which one of the above exceptions is permitted, as long as the refunding or refinancing incurs no additional debt other than for costs and expenses related to the refunding or refinancing and the funding of appropriate debt service reserves; 2. to pay costs incurred in providing special education programs and services to students with disabilities, under specified circumstances; and 3. to make payments into the State Public School Employees’ Retirement System when the increase in the estimated payments between the current year and the upcoming year is greater than the Index, as determined by PDE in accordance with the provisions of Act 1. Any revenue derived from an increase in the rate of any tax allowed under the exception numbered 1 above may not exceed the anticipated dollar amount of the expenditure, and any revenue derived from an increase in the rate of any tax allowed pursuant to any other exception enumerated above may not exceed the rate increase required, as determined by PDE. If a school district’s petition or request to increase taxes by
13 more than the Index pursuant to one or more of the allowable exceptions is not approved, the school district may submit the proposed tax increase to a referendum.
The Index (to be determined and reported by PDE by September of each year for application to the following fiscal year) is the average of the percentage increase in the statewide average weekly wage, as determined by the State Department of Labor and Industry for the preceding calendar year, and the employment cost index for elementary and secondary schools, as reported by the federal Bureau of Labor Statistics for the preceding 12-month period beginning July 1 and ending June 30. If and when a school district has a Market Value/Income Aid Ratio greater than 0.40 for the prior school year, however, the Index is adjusted upward by multiplying the unadjusted Index by the sum of 0.75 and such Aid Ratio.
The Act 1 Index applicable to the School District in the next, current and prior fiscal years are as follows:
Fiscal Year Index % 2019-20 2.3 2018-19 2.4 2017-18 2.5 2016-17 2.4 2015-16 1.9 2014-15 2.1 2013-14 1.7
In accordance with Act 1, the School District put a referendum question on the ballot at the May 15, 2007 primary election seeking voter approval to levy (or increase the rate of) an earned income and net profits tax (“EIT”) or a personal income tax (“PIT”) and use the proceeds to reduce local real estate taxes by a homestead and farmstead exclusion. The referendum was NOT approved by the voters.
A board of school directors may submit, but is not required to submit, a referendum question to the voters in a future municipal election seeking approval to levy or increase the rate of an EIT or a PIT for the purpose of funding homestead and farmstead exclusions, but the proposed rate of the EIT or PIT shall not exceed the rate that is required to provide the maximum homestead and farmstead exclusions allowable under law.
SET FORTH ABOVE IS A SUMMARY OF PORTIONS OF ACT 1. THIS SUMMARY IS NOT INTENDED TO BE AN EXHAUSTIVE DISCUSSION OF THE PROVISIONS OF ACT 1 NOR A LEGAL INTERPRETATION OF ANY PROVISION OF ACT 1, AND A PROSPECTIVE PURCHASER OF THE BONDS SHOULD REVIEW THE FULL TEXT OF ACT 1 AS A PART OF ANY DECISION TO PURCHASE THE BONDS.
Status of the Bonds under Act 1
The School District previously elected to become subject to the annual tax increase limitations imposed by former Pennsylvania Act 72 of 2004 (“Act 72”) (Act 72 was repealed by Act 1), however, the Bonds are refunding the 2013 Bonds which represent indebtedness authorized (“incurred”) by the board of school directors prior to the effective date of former Act 72. Consequently, the School District is entitled by Act 1 to apply to PDE for approval to utilize an Act 1 referendum exception, if and to the extent a tax increase greater than the Index is needed to pay the principal and interest on the Bonds in any particular fiscal year (see “The Taxpayer Relief Act (Act 1)” and “Budgeting Process in School Districts under Act 1 of 2006 (Taxpayer Relief Act)” herein). Act 1 provides that PDE shall approve a school district’s request if a review of the data demonstrates that the school district qualifies for the exception sought and the sum of the dollar amounts of all exceptions for which the school district qualifies is not more than what is necessary to balance the budget after giving effect to the revenue to be raised by the allowable tax increase under the Index. There can be no assurance, however, that approval will be given by PDE to utilize a referendum exception in any future fiscal year or years.
Act 24 of 2001
Act 24 of 2001 of the Commonwealth of Pennsylvania, which became law on June 22, 2001, authorizes a board of school directors to schedule a public hearing and conduct a ballot referendum on replacing the school district’s occupation tax with an increase in the local earned income tax. Currently, school districts in Pennsylvania share a 1.0% tax on the annual amount of residents’ wages and other earned income (which excludes unearned or investment income), with the resident municipality. Under the new law, this tax could be increased by the percentage necessary to generate revenue equal to what was collected during the preceding year on the occupation tax. The occupation tax is a flat amount for all employed individuals, or assessed by various trade, occupation and professional titles, regardless of income. The restructured tax is designed to be revenue neutral to the school district.
The School District presently does not levy an occupation tax.
SET FORTH ABOVE IS A SUMMARY OF PORTIONS OF ACT 24 OF 2001. THIS SUMMARY IS NOT INTENDED TO BE AN EXHAUSTIVE DISCUSSION OF THE PROVISIONS OF ACT 24 OF 2001 NOR A LEGAL INTERPRETATION OF ANY PROVISION OF ACT 24 OF 2001, AND A PROSPECTIVE PURCHASER OF THE BONDS SHOULD REVIEW THE FULL TEXT OF ACT 24 OF 2001 AS A PART OF ANY DECISION TO PURCHASE THE BONDS.
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Legislation Limiting Unreserved Fund Balances
Pennsylvania Act No. 2003-48 (enacted December 23, 2003) prohibits a school district from increasing real property taxes for the school year 2005-2006 or any subsequent school year, unless the school district has adopted a budget for such school year that includes an estimated ending unreserved undesignated fund balance which is not more than a specified percentage of the total budgeted expenditures, as set forth below:
Estimated Ending Unreserved Undesignated Fund Balance Total Budgeted Expenditures as a Percentage of Total Budgeted Expenditures Less than or equal to $11,999,999 12.0% Between $12,000,000 and $12,999,999 11.5% Between $13,000,000 and $13,999,999 11.0% Between $14,000,000 and $14,999,999 10.5% Between $12,985,000 and $15,999,999 10.0% Between $16,000,000 and $16,999,999 9.5% Between $17,000,000 and $17,999,999 9.0% Between $18,000,000 and $18,999,999 8.5% Greater than or equal to $19,000,000 8.0%
“Estimated ending unreserved fund balance” is defined in Act 2003-48 as that portion of the fund balance which is appropriable for expenditure or not legally or otherwise segregated for a specific or tentative future use, projected for the close of the school year for which a school district’s budget was adopted and held in the general fund accounts of the school district.
SET FORTH ABOVE IS A SUMMARY OF PORTIONS OF ACT 48. THIS SUMMARY IS NOT INTENDED TO BE AN EXHAUSTIVE DISCUSSION OF THE PROVISIONS OF ACT 48 NOR A LEGAL INTERPRETATION OF ANY PROVISIONS OF ACT 48. A PROSPECTIVE PURCHASER OF THE BONDS SHOULD REVIEW THE FULL TEXT OF ACT 48 AS A PART OF ANY DECISION TO PURCHASE THE BONDS.
Tax Levy Trends
Table 6 which follows shows the recent trend of tax rates levied by the School District. Table 7 shows the comparative trend of real property tax rates for the School District, Bensalem Township and Bucks County.
TABLE 6
BENSALEM TOWNSHIP SCHOOL DISTRICT TAX RATES
Real Estate Real Estate Local Business Mechanical Year (mills) Transfer Services Privilege (mills) Devise Tax 2014-15 ...... 148.9690 0.50% $5.00 1.5 $15-80 2015-16 ...... 151.7994 0.50% $5.00 1.5 $15-80 2016-17 ...... 155.4425 0.50% $5.00 1.5 $15-80 2017-18 ...... 159.1731 0.50% $5.00 1.5 $15-80 2018-19 ...... 162.8340 0.50% $5.00 1.5 $15-80 2019-20 ...... 164.9740 0.50% $5.00 1.5 $15-80
Source: School District Budget and officials.
TABLE 7
BENSALEM TOWNSHIP SCHOOL DISTRICT COMPARATIVE REAL PROPERTY TAX RATES (Mills on Assessed Value)
2015-16 2016-17 2017-18 2018-19 2019-20 School District ...... 151.79940 155.44250 159.1731 162.8340 164.9740
2015 2016 2017 2018 2019 Bensalem Township ...... 19.50000 19.50000 19.50000 20.50000 20.50000 Bucks County ...... 23.20000 23.20000 23.20000 24.50000 24.45000 Source: School District Budget, Bucks County website, and Department of Community and Economic Development – Municipal Statistics.
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Real Property Tax
The real property tax (excluding delinquent collections) produced an estimated $94,247,494 in 2018-19, approximately 87.7 percent of total revenue. The tax is levied on July 1 of each year. The tax bills are dated July 1 and taxpayers who remit within 60 days of July 1 receive a 2 percent discount, and those who remit subsequent to 120 days after July 1 are assessed a 10 percent penalty. Beginning with the 2007-08 fiscal year, eligible taxpayers could opt into the installment method of payment for their school taxes. Installment payments are based upon three (3) one-third payments of the base tax amount.
The following tables summarize recent trends of assessed and market valuations of real property and real property tax collection data. Effective January 1, 2005, Bucks County changed the assessments from 25% of the 1972 valuation to 100%.
TABLE 8 BENSALEM TOWNSHIP SCHOOL DISTRICT REAL PROPERTY ASSESSMENT DATA
Market Assessed Year Value Value Ratio 2014-15 ...... $5,415,743,629 $640,932,010 11.83% 2015-16 ...... 5,441,060,794 643,691,480 11.83% 2016-17 ...... 5,348,570,933 645,674,890 12.07% 2017-18 ...... 5,402,600,162 645,922,380 11.96% 2018-19 ...... 5,506,186,473 648,934,950 11.79%
Compound Average Annual Percentage Change 0.33% n/a
Source: State Tax Equalization Board (STEB)/Tax Equalization Division (TED).
TABLE 9 BENSALEM TOWNSHIP SCHOOL DISTRICT REAL PROPERTY ASSESSMENT DATA
2017 2017 2018 2018 Market Assessed Market Assessed Value Value Value Value School District $5,402,600,162 $645,922,380 $5,506,186,473 $648,934,950 Bensalem Township 5,402,600,162 645,922,380 5,506,186,473 648,934,950 Bucks County 69,678,810,235 8,164,236,890 71,433,171,332 8,219,927,840
Source: State Tax Equalization Board (STEB)/Tax Equalization Division (TED).
TABLE 10 BENSALEM TOWNSHIP SCHOOL DISTRICT ASSESSMENT BY LAND USE
2014 2015 2016 2017 2018 Residential $345,817,340 $346,262,540 $357,750,700 $356,727,370 $362,844,320 Lots 2,663,110 2,833,700 2,738,900 2,421,460 2,213,450 Industrial 52,437,030 52,082,680 51,376,920 51,376,820 51,393,280 Commercial 233,713,360 239,051,000 223,793,940 230,809,810 228,128,980 Agriculture 599,740 576,580 590,950 590,950 885,400 Land 316,010 318,950 336,720 336,270 336,990 Trailers 5,385,420 2,566,030 2,655,220 3,065,150 3,125,330 Total $640,932,040 $643,691,480 $639,249,840 $645,922,380 $648,934,950
Source: State Tax Equalization Board (STEB)/Tax Equalization Division (TED).
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TABLE 11 BENSALEM TOWNSHIP SCHOOL DISTRICT REAL PROPERTY TAX COLLECTION DATA
Gross Current Current Year Total Total School Assessed Adjusted Collections Collections Collections Collections As a Year Valuation Mills Levy Amount As a Percent Amount(1) Percent 2011-12 ...... $611,222,775 141.4280 $86,443,709 $83,586,584 96.69% $85,301,103 98.68% 2012-13 ...... 626,027,840 144.3500 90,967,119 85,112,748 93.56% 87,337,222 96.01% 2013-14 ...... 641,802,350 144.3500 92,644,169 86,635,418 93.51% 88,867,397 95.92% 2014-15 ...... 640,932,010 148.9690 95,479,001 88,547,952 92.74% 93,208,370 97.62% 2015-16 ...... 643,964,000 151.7994 97,753,349 90,222,705 92.30% 95,482,886 97.68% 2016-17 ...... 645,674,890 155.4425 98,094,690 93,604,271 95.42% 96,630,166 98.51% 2017-18 ...... 645,922,380 159.1731 102,813,467 94,247,494 91.67% 94,084,307 91.51% 2018-19 ...... 650,408,120 159.1731 105,668,674 96,983,024 91.78% 97,807,528 92.56% 2019-20 ...... 653,917,490 164.9740 In Collection
(1)Flat billing, less discounts plus penalties. Includes delinquent realty taxes. Source: School District officials.
The ten largest real property taxpayers, together with 2018-19 assessed values, are shown on Table 12 which follows. The aggregate assessed value of these ten (10) taxpayers total approximately 13.12% of the total assessed value. Currently, one of the ten (10) largest real property taxpayers is challenging its tax assessment, which may have a final resolution this year and which may cause the School District during the next several years to sustain a loss of real estate taxes via refunds and annual reductions in the approximate amount of $1,500,000. The Racetrack and Casino has challenged prior tax year assessments which have been concluded, but it may attempt to challenge the current year and subsequent year assessments. There are other taxpayers who have appeals pending with the County Board of Assessment and/or the Bucks County Court of Common Pleas with respect to the assessed value of the real estate. The Decisions of the Board of Assessment or the Court of Common Pleas may impact the total assessed value of real property in the District. In the event that the tax assessment is reduced the District may be required to reimburse the taxpayer for overpayment of taxes from the time period the taxpayer filed the Appeal until the final resolution.
TABLE 12 BENSALEM TOWNSHIP SCHOOL DISTRICT TEN LARGEST REAL PROPERTY TAXPAYERS
2019-20 Assessed Owner Property Value Keystone Turf Club/PARX Casino Race Track/Casino $53,602,740 Salem Harbour Apartment Building 5,045,800 Neshaminy Mall Jt. Venture Shopping Mall 4,215,216 Bensalem 11 LLC Discount Stores 3,723,270 Franklin Commons Apartment Building 3,050,040 THG Owner LLC Residential 2,544,000 Juniper Bensalem RE Holdings Senior Residential/ Assisted Living 2,415,360 Bensalem Holding Co. LP Strip Mall 2,251,720 Bayview Assoc. Commercial Property 2,142,000 Creekside Assoc. Ltd. Apartment Building 2,100,000 Total $81,090,146
Source: School District officials.
Other Taxes
Under Act 511, the School District collected $6,065,760 in other taxes in 2018-19. Among the taxes authorized by Act 511, the Real Estate Transfer Tax, Business Privilege Tax, Local Services Tax and the Mechanical Devise Tax are levied. Its limit under Act 511, equal to 12 mills on the market value of real property, was $66,074,238.
Real Estate Transfer. A tax of one half percent of the value of real estate transfers yielded $2,753,093 in 2015-16 or 1.2% of total revenues.
17 Business Privilege Tax. The School District levies a 1.5 mill tax on Gross Receipts tax annually. The 2018-19 levy yielded $8,259,279 or 3.5% of total revenue.
Local Services Tax. A tax of $5.00 is levied. In 2018-19, the collected portion of this tax yielded $215,960 or less than one percent of total revenues.
Mechanical Devise Tax. The School District levies a tax of $15-$80 on Mechanical Devises. The 2018-19 levy yielded $25,982 or less than one percent of total revenue.
COMMONWEALTH AID TO SCHOOL DISTRICTS
General
Pennsylvania school districts receive financial assistance from the Commonwealth in a number of forms, all subject to statutory provisions and annual appropriation by the Pennsylvania General Assembly.
The largest subsidy, the basic instructional subsidy, is allocated to all school districts based on (1) the per pupil market value of assessable real property in the school district; (2) the per pupil earned income in the school district; and (3) the school district's tax effort, as compared with the tax effort of other school districts in the Commonwealth. School districts also receive subsidies for special education, pupil transportation; vocational education, health service and debt service are also received by the School District.
Current Lack of State Appropriations for Debt Service Subsidies
Commonwealth law presently provides that the School District will receive, subject to state legislative appropriation, reimbursement from the Commonwealth for a portion of debt service paid on the Bonds following final approval by the Pennsylvania Department of Education (“DOE”). Commonwealth reimbursement is calculated based on the “Reimbursable Percentage” assigned to the Bonds by the DOE and the School District's permanent Capital Account Reimbursement Fraction (“CARF”) currently 28.60% or the wealth-based Market Value Aid Ratio (“MVAR”) currently 26.19%, whichever is higher. The Reimbursable Percentage is determined through a process known as the “Planning and Construction Workbook” or “PlanCon”.
Based on the current PlanCon program, School District officials have estimated that the Reimbursable Percentage of the Bonds will be 16.98% (there has been no determination by the PDE). The School District's CARF (which is higher than the MVAR) is 28.60%. The product of these two factors is 4.86%, which is the estimated percentage of debt service which may be reimbursed by the Commonwealth, subject to annual appropriation. In future years, this percentage may change as the School District’s MVAR changes, or as a result of future legislation regarding changes to, or even elimination of, the PlanCon program.
In May of 2016, the Commonwealth enacted appropriation legislation known as Act 25 (“Act 25”), which contains authorization for the Commonwealth Finance Authority (“CFA”) to issue up to $2.5 billion of debt to fund PlanCon reimbursements to school districts. Act 25 also instituted a moratorium on new projects entering the PlanCon process while an advisory committee established under Act 25 considers amendments to the PlanCon reimbursement program. This moratorium went into effect on May 15, 2016 and expired on June 30, 2017. On November 6, 2017, House Bill 178 became law without the signature of the Governor and became known as Act 55 of 2017. Contained in Act 55 of 2017 was an extension of the PlanCon moratorium through the end of the 2017-18 fiscal year and a retroactive effective date of July 1, 2017. Subsequently, the Commonwealth enacted Act 42 of 2018, which permitted PlanCon applications submitted between July 1, 2017 and November 6, 2017, and whose school district votes to proceed with construction and award bids on their construction contracts no later than July 1, 2021, to receive PlanCon funding as permitted by law, if made available by the Commonwealth. On June 22, 2018, the Governor approved and signed House Bill 1448, known as Act 39 of 2018, extending the PlanCon moratorium through the end of the 2018-2019 fiscal year. On June 28, 2019, the Governor approved and signed House Bill 1615, known as Act 16 of 2019, that included a continuation of the moratorium on new Part A submittals through the end of the 2019-20 fiscal year.
To date, the CFA has issued $1,559,680,000, to provide for PlanCon reimbursements owed to school districts, including the issuance of its Revenue Bonds, Series A of 2016 (Federally Taxable) in the principal amount of $758,185,000 issued on October 31, 2016, its Revenue Bonds, Series A of 2018 (Federally Taxable) in the total amount of $412,520,000 issued on January 18, 2018, as well as its Revenue Bonds (Federally Taxable), Series A of 2019 in the total amount of $388,975,000 issued on May 9, 2019. It is expected that proceeds of these issues have been and will continue to be used to provide PlanCon reimbursement that is owed to the School District for past and current fiscal years. However, the School District cannot be certain that any future PlanCon reimbursement will be received by PDE as the ability for CFA to issue additional bonds in the future to fund future PlanCon reimbursements owed to school districts may impact the availability of PlanCon reimbursements payable to the School District. Any failure by the Commonwealth to adopt a timely budget and enact necessary spending authorizations could have a material adverse effect upon the School District’s anticipated receipt of PlanCon reimbursements.
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DEBT AND DEBT LIMITS
Debt Statement
Table 13 which follows shows the debt of the School District as of February 1, 2020 including the issuance of the Bonds.
TABLE 13
BENSALEM TOWNSHIP SCHOOL DISTRICT DEBT STATEMENT (As of February 1, 2020)*
Gross Outstanding NONELECTORAL DEBT General Obligation Bonds, Series of 2020 (last maturity 2031) $30,470,000 General Obligation Bonds, Series of 2017 (last maturity 2027) 11,960,000 General Obligation Bonds, Series of 2016 (last maturity 2036) 8,945,000 General Obligation Bonds, Series of 2015 (last maturity 2025) 9,305,000 General Obligation Bonds, Series of 2013 (last maturity 2031) 40,375,000 General Obligation Bonds, Series of 2012 (last maturity 2022) 7,690,000 General Obligation Bonds, Series of 2004** 15,220,000 TOTAL NONELECTORAL DEBT ...... $123,965,000
TOTAL PRINCIPAL OF DIRECT DEBT ...... $123,965,000
*Includes the estimated principal amount of the Bonds offered through this Preliminary Official Statement. Excludes the 2013 Bonds being refunded herein. **Authorized and incurred debt but not yet issued.
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Table 14 presents the overlapping indebtedness and debt ratios of the School District. After issuance of the Bonds, the principal of direct debt of the School District will total $123,970,000. After adjustment for available funds and estimated Commonwealth aid, the local effort of direct debt will total $123,388,946.
TABLE 14
BENSALEM TOWNSHIP SCHOOL DISTRICT BONDED INDEBTEDNESS AND DEBT RATIOS (As of January 1, 2020) *
Local Effort or Net of Available Funds Gross and Estimated Outstanding Commonwealth Aid(1) DIRECT DEBT Nonelectoral Debt ...... $123,965,000 $123,388,946 Lease Rental Debt ...... TOTAL DIRECT DEBT ...... $123,965,000 $123,388,946
OVERLAPPING DEBT Bucks County, General Obligation(2) ...... $24,359,250 $24,329,250 Municipal Debt ...... 47,175,000 47,175,000 TOTAL OVERLAPPING DEBT ...... $71,534,250 $71,534,250
TOTAL DIRECT AND OVERLAPPING DEBT ...... $195,499,250 $194,923,197
DEBT RATIOS Per Capita ...... $3,235.30 $3,225.76 Percent 2017-18 Assessed Value ...... 30.13% 30.04% Percent 2017-18 Market Value ...... 3.55% 3.54%
*Includes the estimated principal amount of the Bonds offered through this Preliminary Official Statement. Excludes the 2013 Bonds being refunded herein. (1)Gives effect to current appropriations for payment of debt service and expected future State Reimbursement of School District sinking fund payments based on current CARF. See “COMMONWEALTH AID TO SCHOOL DISTRICTS.” The School District may, at any time, claim a credit against the gross principal of debt outstanding equal to the amount estimated to be reimbursed by state sources. (2)Pro rata 7.91 percent share of $350,258,232 principal outstanding.
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Debt Limit and Remaining Borrowing Capacity
The statutory borrowing limit of the School District under the Local Government Unit Debt Act is computed as a percentage of the School District's “Borrowing Base”. The “Borrowing Base” is defined as the annual arithmetic average of “Total Revenues” (as defined by the Act), for the three full fiscal years ended next preceding the date of incurring debt. The School District calculates its present borrowing base and borrowing capacity as follows:
Total Revenues for 2017 ...... $141,164,037 Total Revenues for 2018 ...... $144,371,954 Total Revenues for 2019 ...... $150,851,986
Total ...... $436,387,977
Annual Arithmetic Average (Borrowing Base) ...... $145,462,659
Under the Act as presently in effect, no school district shall incur any nonelectoral debt or lease rental debt, if the aggregate net principal amount of such new debt together with any other net nonelectoral debt and lease rental debt then outstanding, would cause the net nonelectoral debt plus net lease rental debt to exceed 225% of the Borrowing Base. The application of the aforesaid percentage to the School District's Borrowing Base produces the following product:
Remaining Legal Net Debt Borrowing Limit Outstanding* Capacity Net Nonelectoral Debt and Lease Rental Debt Limit: 225% of Borrowing Base $327,290,983 $123,965,000 $203,325,983
*Includes the estimated principal amount of the Bonds described herein; does not reflect credits against gross indebtedness that may be claimed for a portion of principal or debt estimated to be reimbursed by Commonwealth aid. Excludes the 2015 Bonds being refunded herein.
Debt Service Requirements
Table 15 presents the debt service requirements on the School District's outstanding general obligation and lease rental indebtedness including debt service on the Bonds.
Table 16 presents data on the extent to which Commonwealth Aid provides coverage for debt service and lease rental requirements.
The School District has never defaulted on the payment of debt service.
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TABLE 15
BENSALEM TOWNSHIP SCHOOL DISTRICT DEBT SERVICE REQUIREMENTS*
Other General Series of 2020 Total Obligations(1) Principal Interest Subtotal Requirements 2020 9,755,019 305,000 186,542 491,542 10,246,561 2021 9,009,194 395,000 757,555 1,152,555 10,161,749 2022 9,510,944 400,000 750,307 1,150,307 10,661,251 2023 9,506,444 410,000 742,887 1,152,887 10,659,331 2024 9,510,569 415,000 735,027 1,150,027 10,660,596 2025 9,535,731 425,000 726,843 1,151,843 10,687,574 2026 9,343,938 430,000 718,207 1,148,207 10,492,145 2027 9,342,363 440,000 708,717 1,148,717 10,491,080 2028 5,578,450 4,210,000 698,523 4,908,523 10,486,973 2029 1,306,000 8,935,000 595,251 9,530,251 10,836,251 2030 1,299,400 9,155,000 371,608 9,526,608 10,826,008 2031 5,737,200 4,950,000 133,304 5,083,304 10,820,504 2032 11,026,600 11,026,600 2033 706,400 706,400 2034 702,200 702,200 2035 692,200 692,200 2036 691,600 691,600 $103,254,252 $30,470,000 $7,124,771 $37,594,771 $140,849,023
*Totals may not add due to rounding. (1)Does not include authorized and incurred but not yet issued debt. Excludes the estimated debt service for the 2013 Bonds being refunded herein.
TABLE 16
BENSALEM TOWNSHIP SCHOOL DISTRICT COVERAGE OF DEBT SERVICE AND LEASE RENTAL REQUIREMENTS BY STATE AID*
2018-19 Commonwealth Aid Received ...... $35,287,172 2018-19 Debt Service Requirements ...... 10,706,039 Maximum Future Debt Service Requirements after Issuance of Bonds ...... 11,145,161 Coverage of 2019-20 Debt Service Requirements ...... 3.30 times Coverage of Maximum Future Debt Service Requirements after Issuance of Bonds ...... 3.17 times *Assumes current Commonwealth Aid Ratio. See “COMMONWEALTH AID TO SCHOOL DISTRICTS.”
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LABOR RELATIONS
School District Employees
There are presently 986 employees of the School District, including 523 teachers and administrators, and 463 full/part-time support personnel. The support personnel includes secretaries, maintenance staff, custodial, food-service and aides.
The School District's teachers are represented by the Bensalem Township Education Association (the “Association”) under a contract with the School District which expires June 30, 2023. The Association is the representative bargaining unit. Professional employees have a right to strike under Act 88 if bargaining and mediation do not result in agreement on a new contract. In September 2001, the School District’s teachers struck for approximately four weeks.
Pension Program
School Districts in Pennsylvania are required to participate in a statewide pension program administered by the Public-School Employees Retirement System (PSERS). All of the School District's full-time employees, part-time employees who work more than 80 days in a school year, and hourly employees who work over 500 hours a year participate in the program. However, please note a Pennsylvania Supreme Court decision (1) has removed the hourly de minimis requirement for current members of PSERS regarding the purchase of credit for their part-time school service rendered prior to their being members of PSERS, for purposes of increasing their pension benefits.
Currently, each party to the program contributes a fixed percentage of the employee's salary. Employees belonging to the Public-School Employees Retirement System (“PSERS”) prior to July 22, 1983 contribute 5.25% of their salary, and employees who joined the PSERS on or after July 22, 1983 contribute 6.25% of their salary. On February 17, 2002, Governor Ridge signed Act 9 which created a new membership class that sets the employee contribution rate at 7.50% of the employee’s salary for those employees hired on or after July 1, 2001. Act 9 also provides an option for those employees hired prior to July 1, 2001 to elect a contribution rate of 6.50%, if they were hired before July 22, 1983, or 7.50% if they were hired on or after July 22, 1983. Act 120 of 2010 (“Act 120”) was passed by the General Assembly on September 1 and signed by Governor Rendell on November 23, 2010. The benefit reductions contained in this legislation, only impacts individuals who become new members of PSERS on or after July 1, 2011. New members have the option of selecting one of 2 new classes. The members selecting class T-E contribute a base rate of 7.5% with “shared risk” contribution levels between 7.5% and 9.5% and a pension multiplier of 2.0%. Members selecting class T-F contribute a base rate of 10.3% with shared risk contribution levels between 10.3% and 12.3% and a pension multiplier of 2.5%.
The PSERS Board of Trustees certified an annual employer contribution rate of 30.03% for fiscal year 2016-17, which commenced on July 1, 2016. The 30.03% employer contribution rate was composed of 0.83% for health insurance premium assistance and a pension rate of 29.20%. On December 7, 2016 the Board of Trustees certified an annual employer contribution rate of 32.57% for fiscal year 2017-18, which begins July 1, 2017.
The School District and the Commonwealth are responsible for paying a portion of the employer’s share. School entities are initially responsible for paying 100% of the employer share of contributions to PSERS. The Commonwealth reimburses the employer for a minimum of one-half of the payment made on behalf of employees. The School District contributions are made on a quarterly basis and employee contributions are deducted from each eligible employee paycheck and remitted quarterly. Annual School District contributions have been as follows:
Fiscal Year Contributions 2013-14 9,536,682 2014-15 12,223,838 2015-16 14,812,067 2016-17 17,502,027 2017-18 21,542,330 2018-19 18,722,314
Source: School District officials.
PSERS is also funded through investment earnings and mandatory member contributions. PSERS members contribute from 5.25% to 10.30% of pay depending on their membership class and when they joined PSERS. Members will contribute an average of 7.54% of their salary to fund their retirement benefit in fiscal year 2018-19.
(1)Pennsylvania School Board Association, Inc. v. Commonwealth of Pennsylvania, Public School Employees' Retirement Board., 580 Pa. 610, 612, 863 A.2d 432, 434 (2004).
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In June 2012, the Government Accounting Standards Board (“GASB”) issued “Statement No. 68 Accounting and Financial Reporting for Pensions – An Amendment of GASB Statement No 27.” The primary objective of this Statement is to improve accounting and financial reporting by state and local governments for pensions. The accounting standard requires the School District to report in its government-wide financial statements its proportionate share of the new pension liability of the pension systems to which it contributes. GASB 68 is effective for fiscal years beginning after June 15, 2014, which, in the case of the School District began with fiscal year ending June 30, 2015. Please see the School District’s Audited Financial Statements for fiscal year ending June 30, 2018 in Appendix C for the net effects of the implementation of GASB 68.
Source: Pennsylvania School Boards Association at www.PSBA.org and PSERS at www.PSERS.state.pa.us
Other Post-Employment Benefits (“OPEB”)
The School District's annual other post-employment benefit cost (expense) is calculated based on the annual required contribution of the employer (“ARC”), an amount actuarially determined. 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 (or funding excess) over a period not to exceed 30 years.
The following table shows the components of the School District's OPEB cost for the year, the amount actually contributed by the School District and changes in the School District's net OPEB obligation:
Interest on net OPEB obligation ...... 96,739 Adjustment to annual required contribution...... (325,055) Annual OPEB cost ...... $267,979 Effect of Assumption Changes or Inputs ...... 210,180 Increase in net OPEB obligation ...... $249,843 Net OPEB Obligation - beginning of year ...... 3,793,186 Net OPEB Obligation - end of year ...... $4,043,029
For a full description of the plan, please refer to Appendix B – Audited Financial Statement - Fiscal Year Ended June 30, 2018.
LITIGATION
At the time of settlement, the School Board will deliver a certificate and the Solicitor will deliver an opinion stating that there is no litigation pending, or to their knowledge, threatened with respect to the Bonds, the Resolution or the right of the School District to issue the Bonds.
To the knowledge of the School District officials, the School District is not a party to any litigation or other proceeding pending or to their knowledge threatened, in any court, agency or other administrative body (either state or federal) which, if decided adversely to the School District, would have a material adverse effect on the financial condition of the School District.
Each year there are commercial and residential appeals filed by taxpayers before the Bucks County Board of Assessment Appeals. The School District will engage in settlement discussions with the taxpayer on each of these matters; however, litigation at the Court of Common Pleas may ensue if settlement negotiations are unsuccessful. The School Distinct is aware of these appeals and prepares for the same in their budgetary process.
DEFAULTS AND REMEDIES
In the event of failure of the School District to pay or cause to be paid the interest on or principal of the Bonds, as the same becomes due and payable, the holders of the Bonds shall be entitled to certain remedies provided by the Act. Among the remedies, if the failure to pay shall continue for 30 days, holders of the Bonds shall have the right to recover the amount due by bringing an action in assumpsit in the Court of Common Pleas of the county in which the School District is located. The Act provides any judgment shall have an appropriate priority upon the funds next coming into the treasury of the School District. The Act also provides that upon a default of at least 30 days, holders of at least 25 percent of the Bonds may appoint a trustee to represent them. The Act provides certain other remedies in the event of default, and further qualifies the remedies hereinbefore described.
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TAX MATTERS
Federal Tax
Interest on the Bonds is not excludable from gross income for federal income tax purposes.
State Tax
In the opinion of Bond Counsel, under the existing laws of the Commonwealth, the Bonds are exempt from personal property taxes in Pennsylvania and interest on the Bonds is exempt from Pennsylvania personal income tax and Pennsylvania corporate income tax.
This summary is based on laws, regulations, rulings and decisions now in effect, all of which may change. Any change could apply retroactively and could affect the continued validity of the summary. Prospective purchasers of the Bonds should consult their tax advisers about the consequences of purchasing or holding the Bonds.
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CONTINUING DISCLOSURE UNDERTAKING
In accordance with the requirements of Rule 15c2-12 (the “Rule”) promulgated by the Securities and Exchange Commission (the “SEC”), the School District (being an “obligated person” with respect to the Bonds, within the meaning of the Rule), will agree to provide the following to the Municipal Securities Rulemaking Board (the “MSRB”) in an electronic format as prescribed by the MSRB, either directly or indirectly through a designated agent:
(A) Annually, not later than 270 days following the end of each fiscal year, beginning with the fiscal year ending June 30, 2019, the following financial information and operating information for the School District:
(1) financial statements for the most recent fiscal year, prepared in accordance with generally accepted accounting principles for local government units; and
(2) a summary of the budget for the current fiscal year (i.e. the fiscal year following the fiscal year of the financial statements being provided);
(B) If not submitted as part of the annual financial information, then when and if available, audited financial statements for the School District;
(C) In a timely manner not in excess of ten (10) business days after the occurrence of the event, notice of the occurrence of any of the following events with respect to the Bonds:
(1) principal and interest payment delinquencies; (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-exempt status of the Bonds, or other material events affecting the tax-exempt status of the Bonds; (7) modifications to rights of holders of the Bonds, if material; (8) bond calls, if material, and tender offers; (9) defeasances; (10) release, substitution, or sale of property securing repayment of the Bonds, if material; (11) rating changes; (12) bankruptcy, insolvency, receivership or similar event of the School District; (13) the consummation of a merger, consolidation, or acquisition involving the School District or the sale of all or substantially all of the assets of the School District, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and (14) appointment of a successor or additional trustee or the change of name of a trustee, if material; and (15) Incurrence of a financial obligation of the Issuer or Obligated Person, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the Issuer or Obligated Person, any of which affect security holders, if material; or (16) Default, event of acceleration, termination event, modification of terms, or other similar events under terms of the financial obligation of the Issue or Obligated Person, any of which reflect financial difficulties.
(D) in a timely manner, notice of a failure of the School District to provide the required annual financial information specified above, on or before the date specified above.
With respect to the filing of annual financial and operating information, the School District reserves the right to modify from time to time the specific types of information provided or the format of the presentation of such information to the extent necessary or appropriate as a result of a change in legal requirements or a change in the nature of the School District or its operations or financial reporting, but the School District will agree that any such modification will be done in a manner consistent with the Rule.
The events listed in (C) above are those specified in the Rule, not all of which may be relevant to the Bonds. The School District may from time to time choose to file notice of the occurrence of other events, in addition to the events listed in (C) above, but the School District does not commit to provide notice of the occurrence of any events except those specifically listed in (C) above.
The School District acknowledges that its undertaking pursuant to the Rule described herein is intended to be for the benefit of the holders and beneficial owners of the Bonds and shall be enforceable by the holders and beneficial owners of the Bonds, but the right of the holders and beneficial owners of the Bonds to enforce the provisions of the School District’s continuing disclosure undertaking shall be limited to a right to obtain specific enforcement, and any failure by the School District to comply with the provisions of the undertaking shall not be an event of default with respect to the Bonds.
The School District’s obligations with respect to continuing disclosure described herein shall terminate upon the prior redemption or payment in full of all of the Bonds or if and when the School District is no longer an “obligated person” with respect to the Bonds, within the meaning of the Rule.
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The MSRB has been designated by the SEC to be the central and sole repository for continuing disclosure information filed by issuers of municipal securities since July 1, 2009. Information and notices filed by municipal issuers (and other “obligated persons” with respect to municipal securities issues) are made available through the MSRB’s Electronic Municipal Market Access (“EMMA”) System, which may be accessed on the internet at http://www.emma.msrb.org.
Some operating data of the School District may be inherently included in the annual filings of financial statements, the summary of the budget, contents in Preliminary Official Statements of future bond issues and other publicly available information. In connection with the Continuing Disclosure Certificate associated with the Bonds, the items listed in (A) and (B) above may be incorporated by reference from other documents, including Preliminary Official Statements of debt issues of the School District or related public entities, which have been submitted to EMMA. If the document incorporated by reference is a final Preliminary Official Statement, it must be available from the Municipal Securities Rulemaking Board or EMMA. The School District shall clearly identify each such other document so incorporated by reference.
Existing Continuing Disclosure Filing History
The School District has previously executed Continuing Disclosure Certificates with respect to each one of its previously issued bond issues that are currently outstanding. The School District’s filing history of its annual financial and operating information during the past five (5) years is outlined in the table below.
Financial Operating Statement Budget Data Fiscal Year Filing Deadline Filing Date Filing Date Filing Date 06/30/19 02/01/20 12/13/19 1/29/2020 1/29/2020 06/30/18 02/01/19 01/29/19 1/29/2019 01/29/19 06/30/17 02/01/18 01/30/18 1/30/2018 01/30/18 06/30/16 02/01/17 05/24/17 5/24/2017 05/24/17 06/30/15 02/01/16 12/09/15 02/03/15 12/09/15
Based on the information above, the School District’s annual financial and operating filing history over the past five (5) years can be summarized as follows:
For fiscal year ending June 30, 2015, the School District filed its PDE-2057 Annual Financial Report as an interim filing on December 9, 2015. Its audited financial statements were filed on January 14, 2016. The operating data was contained within the budget report which was filed timely on June 19, 2015.
For fiscal year ending June 30, 2016, the School District filed its PDE-2057 Annual Financial Report late on April 6, 2017 and audited financial statements, budget report, and operating data late on May 24, 2017.
For fiscal year ending June 30, 2017, the School District filed its PDE-2057 Annual Financial Report late on January 30, 2018 along with the budget report and operating data. The School District filed is audited financial statements on January 24, 2020
For fiscal year ending June 30, 2018, the School District filed PDE- 2057 Annual Financial Report late on January 29, 2019 along with the budget report and operating data. The School District filed is audited financial statements on September 9, 2019
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Failure to Provide Annual Financial Information
As outlined in the table above, the School District failed to provide certain annual financial information in a timely manner during the past (5) five years. The School District filed a “Failure to Provide Annual Financial Information” notice to EMMA on February 4, 2015, April 6, 2017, January 26, 2018 and on January 24, 2020.
Bond Insurance Rating Downgrades and Upgrades by S&P and/or Moody’s
Some of the School District’s bond issues that have been outstanding during the past five (5) years have been insured by various bond insurance companies that have received rating downgrades and upgrades by both S&P and Moody’s. This information was publicly available from widely accepted information sources at the time of their respective downgrades or upgrades. For informational purposes, the School District filed a summary of rating upgrades and downgrades relating to certain bond insurance companies.
Pennsylvania Act 150 School District Intercept Program Enhanced Rating Downgrade July 2012
Certain bond issues of the School District received an enhanced rating downgrade from “Aa3” to “A1” from Moody’s Investors Service on July 17, 2012 as a result of the downgrade of Pennsylvania Act 150 School District Intercept Program; however, a Notice of Material Event was not posted to EMMA by the School District until February 4, 2015.
Pennsylvania Act 150 School District Intercept Program Enhanced Rating Downgrade July 2014
Certain bond issues of the School District received an enhanced rating downgrade from “A1” to “A2” from Moody’s Investors Service on July 22, 2014 as a result of the downgrade of Pennsylvania Act 150 School District Intercept Program; however, a Notice of Material Event was not posted to EMMA by the School District until February 4, 2015.
Future Continuing Disclosure Compliance
The School District has conducted a thorough review of its continuing disclosure obligations and submissions. Upon discovering any inadvertent omissions with respect to these filings, the School District, to the best of its knowledge, has attempted to bring its continuing disclosure filings up to date.
In an effort to augment the School District’s procedures and policies to maintain future compliance, the School District has taken additional steps intended to assure future compliance with its Continuing Disclosure Agreements. These steps include implementing the MSRB’s EMMA’s internal notification system whereby the School District will receive timely email reminders a month in advance for all of the School District’s annual disclosure filings and coordinating with the School District’s financial advisor to ensure all disclosure obligations have been made on a timely basis and in all material respects.
A member of the School District’s business office will be responsible for ensuring ongoing continuing disclosure compliance. Members of the School District’s business office will make an effort to participate in any ongoing continuing education regarding continuing disclosure undertaking if offered by local groups or affiliated organizations such as MSRB, PASBO or GFOA. The School District may communicate with its financial advisor, underwriter(s), bond counsel, or solicitor regarding any questions or concerns regarding ongoing continuing disclosure compliance. The School District may also communicate with its local auditor and advise of the School District’s need for financial statements in a timely manner. In the event audited financial statements are not available by the filing deadline, the School District will file to EMMA, if available, its State Form PDE-2057 Annual Financial Report as an interim filing until such audited financial statements are available. Some of the operating data requirements may be found contained within the School District’s financial statements or budget filing and may not be filed explicitly by themselves.
RATING
Moody’s Investor Services has assigned its municipal bond rating of “Aa3 (Neagtive)” to this issue of Bonds. Such rating reflects only the view of such organization and any desired explanation of the significance of such rating should be obtained from the rating agency furnishing the same, at the following address: 7 World Trade Center at 250 Greenwich Street, New York, New York 10007. Generally, a rating agency bases its rating on the information and materials furnished to it and on investigations, studies and assumptions of its own. There is no assurance that any such rating will continue for any given period of time or that it will not be revised downward or withdrawn entirely by the rating agency, if circumstances so warrant. Any such downward revision or withdrawal of such rating may have an adverse effect on the market price of the Bonds.
UNDERWRITING
The Underwriter has agreed to purchase the Bonds from the School District, subject to certain conditions precedent, and will purchase all of the Bonds if any of such Bonds are purchased. The Bonds will be purchased by the Underwriter for a purchase price of $30,279,562.50, equal to the par value of the Bonds less an underwriters’ discount of $190,437.50.
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LEGAL OPINION
The Bonds are offered subject to the receipt of the unqualified approving legal opinion of Eastburn & Gray, P.C. of Doylestown, Pennsylvania. Certain other legal matters will be passed upon for the School District by Begley, Carlin & Mandio, LLP, of Langhorne, Pennsylvania, School District Solicitor.
FINANCIAL ADVISOR
The School District has retained PFM Financial Advisors LLC, Harrisburg, Pennsylvania, as financial advisor (the “Financial Advisor”) in connection with the preparation, authorization and issuance of the Bonds. The Financial Advisor is not obligated to undertake, and has not undertaken to make, an independent verification or to assume responsibility for the accuracy, completeness, or fairness of the information contained in the Preliminary Official Statement. Public Financial Management, Inc. is an independent advisory firm and is not engaged in the business of underwriting, trading or distributing municipal securities or other public securities. The Financial Advisor's contract with the School District prohibits it from participating in the underwriting of any of the School District's debt.
MISCELLANEOUS
This Preliminary Official Statement has been prepared under the direction of the School District by PFM Financial Advisors LLC, Harrisburg, Pennsylvania, in its capacity as Financial Advisor to the School District. The information set forth in this Preliminary Official Statement has been obtained from the School District and from other sources believed to be reliable. Insofar as any statement herein includes matters of opinion or estimates about future conditions, it is not intended as representation of fact, and there is no guarantee that it is, or will be, realized. Summaries or descriptions of provisions of the Bonds, the Resolution, and all references to other materials not purporting to be quoted in full are only brief outlines of some of the provisions thereof. Reference is hereby made to the complete documents, copies of which will be furnished by the School District or the Financial Advisor upon request. The information assembled in this Preliminary Official Statement is not to be construed as a contract with holders of the Bonds.
If and when included in this Preliminary Official Statement, the words “expects,” “forecasts,” “projects,” “intends,” “anticipates,” “estimates,” “assumes” and analogous expressions are intended to identify forward-looking statements and any such statements inherently are subject to a variety of risks and uncertainties that could cause actual results to differ materially from those that have been projected. Such risks and uncertainties which could affect the revenues and obligations of the School District include, among others, changes in economic conditions, mandates from other governments and various other events, conditions and circumstances, many of which are beyond the control of the School District. Such forward-looking statements speak only as of the date of this Preliminary Official Statement. The School District disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained herein to reflect any changes in the School District’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.
The School District has authorized the distribution of this Preliminary Official Statement.
BENSALEM TOWNSHIP SCHOOL DISTRICT Bucks County, Pennsylvania
By: /s/ Kim J Rivera President, Board of School Directors
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APPENDIX A Demographic and Economic Information Relating to the Bensalem Township School District
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Introduction
The School District is located in Bucks County, in eastern Pennsylvania and it borders the northeast section of Philadelphia.
Population
Table A-1 shows population trends for the School District, Bucks County, and the Commonwealth. The School District’s population increased by 1,963 residents between 2000 and 2010. Table A-2 shows 2000 age composition in the School District and Bucks County and for the Commonwealth.
TABLE A-1
POPULATION TRENDS
Compound Average Annual Percentage Change 2000 2010 2000-2010 School District ...... 58,464 60,427 0.28% Bucks County ...... 597,635 625,249 0.45% Pennsylvania ...... 12,281,054 12,702,379 0.34%
Source: U.S. Bureau of the Census, Decennial Census and Pennsylvania State Data Center, 2000 & 2010 General Population and Housing Characteristics: Pennsylvania.
TABLE A-2
AGE COMPOSITION
0-17 18-64 65+ Persons Per Years Years Years Household Bucks County ...... 25.7 61.9 12.4 2.80 Pennsylvania ...... 23.7 60.7 15.6 2.57
Source: Pennsylvania State Data Center, 2000 General Population and Housing Characteristics: Pennsylvania.
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A-1
Employment
Table A-3 shows recent trends in labor force, employment, and unemployment for Bucks County and Pennsylvania.
TABLE A-3
RECENT TRENDS IN LABOR FORCE, EMPLOYMENT AND UNEMPLOYMENT (BUCKS COUNTY)
Compound Average Annual % 2015 2016 2017 2018 2019(1) Rate Bucks County Civilian Labor Force (000) 338.4 342.6 341.4 341.1 348.7 0.60% Employment (000) 323.1 326.7 327 328.3 334.8 0.71% Unemployment (000) 15.3 15.9 14.5 12.8 13.9 -1.90% Unemployment Rate 4.5 4.6 4.2 3.7 4.0
Pennsylvania Civilian Labor Force (000) 6,426.0 6,472.0 6,425.0 6,424.0 6,479.0 0.16% Employment (000) 6,085.0 6,120.0 6,111.0 6,149.0 6,225.0 0.46% Unemployment (000) 341.0 352.0 314.0 276.0 255.0 -5.65% Unemployment Rate 5.3 5.4 4.9 4.3 3.9
(1) As of September 2019. Source: Pennsylvania Department of Labor and Industry website.
The largest employers located within Bucks County include:
Employer Product or Service Giant Food Store LLC Food Service Central Bucks School District Education St. Mary Medical Center Medical Doylestown Hospital Medical Bucks County Government Northtec LLC Manufacturing Woods Services Medical Excel Companion Care LLC Medical Wal- Mart Associates Inc. Manufacturing Pennsbury School District Education Source: Pennsylvania Department of Labor & Industry, Center for Workforce Information & Analysis –1st Quarter 2019
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A-2
Income
The data in Table A-5 shows trends in per capita income for the School District, Bucks County and Pennsylvania over the 2000-2012 period. Per capita income in the School District is higher than average per capita income in Bucks County and the State.
TABLE A-4
TRENDS IN PER CAPITA INCOME*
Compound Average Annual Percentage Change 2000 2017 2000-2017 School District ...... 58,464 73,726 1.95% Bucks County ...... 27,430 41,924 3.60% Pennsylvania ...... 20,880 31,467 3.48%
*Income is defined by the Bureau of the Census as the sum of wage and salary income, non-farm self-employment income, net self-employment income, Social Security and Railroad retirement income, public assistance income, interest, dividends, pensions, etc. before deductions for personal income taxes, Social Security, etc. School District income is the population-weighted average for political subdivisions. Source: U.S. Census Bureau, 2013-2017 American Community Survey 5-Year Estimates and 2000 Census.
Commercial Activity
Table A-6 shows 2014-2018 trends for retail sales in Bucks County and Pennsylvania.
TABLE A-5
TOTAL RETAIL SALES (000)
2014 2015 2016 2017 2018
Bucks County $13,232,095 $12,946,128 $13,069,185 $12,946,128 $13,069,185
Pennsylvania 199,975,258 198,215,135 207,887,942 198,215,135 207,887,942
Source: The Neilsen Company.
Housing
According to the 2013-2017 American Community Survey conducted by the U.S. Census Bureau, census figures there are 248,873 housing units in Bucks County, as opposed to 225,498 reported by the U.S. Census Bureau in 2000. This represents an increase of 23,375 units within a decade.
Educational Institutions
Bucks County Community College which is located within Bucks County provides higher education courses to residents of the School District. The School District is also within commuting distance of a number of higher educational institutions within the MSA.
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APPENDIX B BENSALEM TOWNSHIP SCHOOL DISTRICT FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2018
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APPENDIX C Form of Bond Counsel Opinion
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[PROPOSED FORM OF OPINION OF BOND COUNSEL]
March 3, 2020
Bensalem Township School District 3000 Donallen Drive Bensalem, PA 19020
RE: Bensalem Township School District, Bucks County, Pennsylvania $30,470,000 General Obligation Bonds, Series of 2020 (Federally Taxable)
Ladies and Gentlemen:
We have acted as Bond Counsel to the Bensalem Township School District, Bucks County, Pennsylvania (the “School District”), a school district located in the Commonwealth of Pennsylvania (the “Commonwealth”), in connection with the authorization, issuance and sale by the School District of its General Obligation Bonds, Series of 2020, dated March 3, 2020, in the aggregate principal amount of Thirty Million Four Hundred Seventy Thousand Dollars ($30,470,000) (the “Bonds”).
The Board of School Directors of the School District, by a Resolution dated September 25, 2019 (the “Resolution”), has authorized and directed the issuance of the Bonds. The Resolution provides, inter alia, that the proceeds of the Bonds will be used for purposes of (1) advance refund a portion of the School District’s outstanding General Obligation Bonds, Series of 2013 (the “Refunding Program”), and (2) to pay costs of issuance of the Bonds, all in accordance with applicable and appropriate provisions of the Local Government Unit Debt Act of the Commonwealth, as codified by the Act of December 19, 1996 (P.L. 1158, No. 177) (the “LGUDA”). Proceedings for authorization, issuance and sale of the Bonds have been conducted in accordance with the provisions of the LGUDA.
The School District has covenanted in the Resolution (i) to include the amount of debt service for the Bonds for each fiscal year in which such sums are due and payable in its budget for that year, (ii) to appropriate such amounts from its general revenues for the payment of such debt service, and (iii) to duly and punctually pay, or cause to be paid, from its sinking fund or any other of its revenues or funds, the principal or redemption price of, and interest on, the Bonds at the dates and places and in the manner stated in the Bonds, according to the true intent and meaning thereof. For such budgeting, appropriation and payment, the School District, in the Resolution, has pledged its full faith, credit and taxing power.
As Bond Counsel, we have examined the relevant provisions of the Constitution of the Commonwealth of Pennsylvania, the Acts of the Pennsylvania General Assembly pursuant to which the Bonds are authorized, issued and sold, the transcript of proceedings (the Bensalem Township School District “Proceedings”) filed with the Pennsylvania Department of Community and Economic Development (the “Department”) in connection with the Bonds, certain certificates and other documents that we have considered pertinent and such other matters of fact and law as we deemed necessary to enable us to render the opinions set forth below.
Bensalem Township School District March 3, 2020 Page 2
In rendering this opinion, we have examined and relied upon, without undertaking to verify the same by independent investigation, (a) the opinion of Begley Carlin & Mandio, LLP, Solicitor for the School District with respect to, among other things, the due enactment by the School District of the Resolution in accordance with applicable laws, (b) the accuracy of the statements and representations and the performance by the School District of its covenants set forth in the Resolution delivered on this date in connection with the issuance of the Bonds, (c) the Proceedings, and (d) other certifications of public officials and others furnished to us in connection with the Bonds.
Based on the foregoing, we are of the opinion that, under existing law:
1. The Bonds have been duly authorized and executed by the School District, and are valid and binding general obligations of the School District.
2. The Bonds are payable from the revenues of the School District from whatever source derived, which revenues, at the time of the issuance and sale of the Bonds, include ad valorem taxes levied upon all the taxable property within the School District, within the limits established by law.
3. Under the laws of the Commonwealth of Pennsylvania, as currently enacted and construed, the Bonds are exempt from personal property taxes in Pennsylvania and the interest on the Bonds is exempt from Pennsylvania personal income tax.
4. Under the laws of the Commonwealth of Pennsylvania, as enacted and construed on the date hereof, the Bonds and the interest thereon are free from taxation for state and local purposes within the Commonwealth of Pennsylvania, but such exemption does not extend to gift, inheritance, succession or estate taxes or any other taxes not levied or assessed directly on the Bonds or the interest thereon.
5. Interest on the Bonds is not excludable from gross income for federal income tax purposes.
In providing this opinion, we advise you as follows:
The enforceability of the documents mentioned herein may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter enacted by any state or the federal government affecting the enforcement of creditors’ rights generally, or the legal or equitable principles affecting creditors’ rights, and that specific performance would necessarily be available as a remedy in every situation.
This opinion is rendered solely for the benefit of the addressee hereof in connection with the initial issuance of the Bonds. The addressee may not rely on this opinion letter for any other purpose and no other person may rely on this opinion letter for any purpose without the express written consent of the undersigned.
Bensalem Township School District March 3, 2020 Page 3
This opinion letter is limited to the matters set forth herein. No opinion may be inferred or implied beyond the matters expressly stated herein, and our opinions expressed herein must be read in conjunction with the assumptions, limitations, exceptions and qualifications set forth herein. The law covered by the opinions expressed herein is limited to the laws of the Commonwealth of Pennsylvania and the federal law of the United States of America.
We express no opinion herein as to any matter not set forth in the numbered paragraphs herein, including, without limitation, any other federal and state tax consequences arising with respect to the Bonds. We express no opinion herein regarding the accuracy, adequacy, or completeness of the Preliminary Official Statement, dated January 24, 2020 (the “Preliminary Official Statement), or the Official Statement, dated January 30, 2020 (the “Official Statement”) prepared in respect of the offering of the Bonds, and make no representation that we have independently verified the contents thereof. Further, we express no opinion with respect to whether the School District, in connection with the sale of the Bonds or the preparation of the Preliminary Official Statement or the Official Statement, has failed to make any untrue statement of a material fact necessary in order to make any statements made therein not misleading.
This opinion is given as of the date hereof, and we assume no obligation to (i) update or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any change in laws that may hereafter occur, or (ii) review any legal matters incident to the authorization, issuance and validity of the Bonds or the purposes to which the proceeds thereof are to be applied, after the date hereof.
Very truly yours,
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APPENDIX D Form of Bond Continuing Disclosure Certificate
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CONTINUING DISCLOSURE AGREEMENT
This Continuing Disclosure Agreement (the “Disclosure Agreement”) is executed and delivered as of March 3, 2020, by the BENSALEM TOWNSHIP SCHOOL DISTRICT (the “School District”).
WITNESSETH:
WHEREAS, the School District is issuing its $30,470,000 General Obligation Bonds, Series 2020 (Federally Taxable) (the “Bonds”) pursuant to a Bond Purchase Agreement dated September 25, 2019 and Addendum to the Bond Purchase Agreement dated January 30, 2020 by and between the School District and Boenning & Scattergood, Inc. (the “Underwriter”); and
WHEREAS, in connection with the issuance of the Bonds, the School District has delivered its Official Statement dated January 30, 2020 (the “Official Statement”); and
WHEREAS, Rule 15c2-12 promulgated under the Securities Exchange Act of 1934, as amended (the “Rule”), provides that a Participating Underwriter (as defined in the Rule) shall not purchase or sell municipal securities in connection with an Offering (as defined in the Rule) unless the Participating Underwriter has reasonably determined that an issuer of municipal securities, or an obligated person for whom financial or operating data is presented in the final official statement, has undertaken, either individually or in combination with other issuers of such municipal securities or obligated persons, in a written agreement or contract for the benefit of holders of such securities, to provide, either directly or indirectly through an indenture trustee or a designated agent, certain specified financial information and operating data and notices of certain material events; and
WHEREAS, the School District currently is the only obligated person with respect to the Bonds for purposes of the Rule; and
WHEREAS, in order to enable the Underwriter to comply with the requirements of the Rule, the School District, as such obligated person, agrees to undertake to provide the information and notices required by the Rule.
NOW, THEREFORE, in consideration of the premises, the School District, intending to be legally bound hereby, agrees as follows:
Section 1. Covenants of the School District. The School District covenants to comply with all requirements of the Rule in furtherance of the foregoing and without limiting the generality thereof:
(a) So long as any of the Bonds are outstanding, the School District shall deliver in such format as is required by the Rule and the Municipal Securities Rulemaking Board (“MSRB”), and file by not later than the first day of the eight calendar month immediately following the end of each fiscal year of the School District, e.g., by not later than not later than 270 days following the end of each fiscal year, (the “Annual Financials Filing Date”), commencing with the fiscal year ending June 30, 2019 the following financial information and operating data with respect to the school district: . the financial statements for the most recent fiscal year, prepared in accordance with generally accepted accounting principles for local governmental units and audited in accordance with generally accepted auditing standards . a summary of the budget for the current fiscal year
(b) If not submitted as part of the annual financial information, then when and if available, audited financial statements for the School District.
(c) The School District shall promptly, upon receipt thereof, file the reports described in paragraph (a) with the MSRB, through the MSRB’s Electronic Municipal Market Access System (www.emma.msrb.org) (“EMMA”) or through alternate means as so provided by the MSRB.
(d) If the School District is unable to provide the MSRB the reports described in paragraph (a), it shall immediately file a notice with the MSRB, through EMMA or through alternate means as so provided by MSRB, of such failure.
(e) The School District shall, in a timely manner (but in no event later than ten (10) business days after the occurrence of the event), deliver to the MSRB notice, in such format as is required by the Rule and the MSRB, of any of the following events with respect to the Bonds (each a “Reportable Event”), and the School District shall, immediately file with the MSRB through EMMA (or through alternate means as so provided by the MSRB) notice of the occurrence of any of such events:
(i) Principal and interest payment delinquencies; (ii) Non-payment related defaults, if material; (iii) Unscheduled draws on debt service reserves reflecting financial difficulties; (iv) Unscheduled draws on credit enhancements reflecting financial difficulties; (v) Substitution of credit or liquidity providers, or their failure to perform; (vi) Adverse tax opinions, the issuance by the IRS of proposed or final determinations of taxability, Notices of Proposed Issue or other material notices or determinations with respect to the tax status of the Bonds or events affecting the tax-exempt status of the Bonds; (vii) Modifications to rights of bond holders, if material; (viii) Bond calls, if material, and tender offers; (ix) Defeasances; (x) Release, substitution or sale of property securing repayment of the Bonds, if material;
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(xi) Rating changes; (xii) Bankruptcy, insolvency, receivership or similar event of the obligated person;1 (xiii) 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; (xiv) Appointment of a successor or additional paying agent for the Bonds or the change of name of a paying agent, if material; (xv) Incurrence of a financial obligation of the Issuer or Obligated Person, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the Issuer or Obligated Person, any of which affect security holders, if material; or (xvi) Default, event of acceleration, termination event, modification of terms, or other similar events under terms of the financial obligation of the Issue or Obligated Person, any of which reflect financial difficulties.
(f) The School District agrees to provide information required in subsection (a) or (e), above, for all persons who are determined by it to be “Obligated Persons” under the Rule.
(g) The School District agrees that the provisions of this Section 1 shall be for the benefit of the holders and beneficial owners of the Bonds, and shall be enforceable by any holders or beneficial owners of the Bonds, in accordance with the provisions of Section 4 herein.
Section 2. Termination of Reporting Obligations. The School District’s obligations under this Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If the School District’s obligations with respect to the payment of the Bonds are assumed in full by some other entity, such other entity shall be responsible for compliance with this Disclosure Agreement in the same manner as if it were the School District’s, and the School District shall have no further responsibility hereunder, except as provided in Section 6 hereof. In addition, the School District’s obligation to provide information and notices as specified in Section 1 hereof shall terminate (i) at such other times as such information and notices (or any portion thereof) are no longer required to be provided by the Rule as it applies to
1 This 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 U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the 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.
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the Bonds, (ii) in the event of a repeal or rescission of the Rule or (iii) upon a determination that the Rule is invalid or unenforceable.
Section 3. Amendment. The School District may amend this Disclosure Agreement and waive any of the provisions hereof, but no such amendment or waiver shall be executed and effective unless (i) the amendment or waiver is made in connection with a change in legal requirements, change in law or change in the identify, nature or status of the School District or the operations conducted by the School District, (ii) this Disclosure Agreement, as modified by the amendment or waiver, complies with the requirements of the Rule, and (iii) the amendment or waiver does not materially impair the interests of the beneficial Owners of the Bonds. Prior to executing any requested amendment, the School District shall provide an opinion of counsel knowledgeable in federal securities laws to the effect that the proposed amendment satisfies the requirements described above. In the event of any amendment or waiver of a provision of this Disclosure Agreement, the School District shall describe such amendment in its next annual report delivered pursuant to Section 1(a) hereof, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the financial information or operating data being presented by the School District. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements (i.e., changes other than those prescribed by generally accepted accounting principles), (i) notice of such change shall be given pursuant to the Reportable Event notice requirements, as set forth in this Disclosure Agreement; and (ii) the annual report for the year in which the change is made will present a comparison 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. To the extent that the Rule requires or permits an approving vote of beneficial owners of the Bonds in connection with an amendment, the approving vote of beneficial owners of Bonds constituting more than 50% of the aggregate principal amount of the then outstanding Bonds shall constitute such approval. The School District shall provide notice of any amendment to this Disclosure Agreement to the MSRB and to the registered holders of the Bonds.
Section 4. Remedies for Default. In the event of a breach or default by the School District of its covenants to provide annual financial information and notices as provided in Section 1 hereof, the Underwriter, or any holder or beneficial owner of Bonds shall have the right to bring an action in a court of competent jurisdiction to compel specific performance by the School District. A breach or default under this Disclosure Agreement shall not constitute an event of default under the Bonds or any other agreement.
Section 5. Electronic Filing Authorized. All filings with the MSRB pursuant to this Disclosure Agreement (a) shall be made in an electronic format as prescribed by the MSRB; and (b) shall be accompanied by identifying information as prescribed by the MSRB. Reference is made to Commission Release No. 34-59062, dated December 8, 2008 (the “Release”), relating to EMMA. To the extent applicable to its obligations pursuant to this Disclosure Agreement, the School District shall comply with the Release and with EMMA. Unless and until otherwise prescribed by the MSRB, all documents provided to the MSRB in compliance with this Disclosure Agreement shall be submitted through EMMA in format prescribed by the MSRB.
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Section 6. Miscellaneous.
(a) Binding Nature of Undertaking. This Disclosure Agreement shall be binding upon and inure to the benefit of the Underwriters, and their respective successors and assigns. In addition, registered owners of the Bonds which, for the purposes of this Section 6, includes the holders of a book-entry credit evidencing an interest in the Bonds, from time to time shall be third party beneficiaries hereof and shall be entitled to enforce the provisions hereof as if they were parties hereto; but no consent of beneficial owners of the Bonds shall be required in connection with any amendment of this Disclosure Agreement, except as required by the Rule. Holders of book-entry credits evidencing an interest in the Bonds may file their names and addresses with the School District for the purposes of receiving notices or giving direction under this Disclosure Agreement.
(b) Notices. Except with respect to the electronic submission of information to the MSRB through EMMA, as permitted by this Disclosure Agreement, all notices and other communications required or permitted under this Disclosure Agreement shall be in writing and shall be deemed to have been duly given, made and received only when delivered (personally, by recognized national or regional courier service, or by other messenger, for delivery to the intended addressee) or when deposited in the United States mail, registered or certified mail, postage prepaid, return receipt requested, addressed as set forth below:
If to the School District: Bensalem Township School District 3000 Donallen Drive Bensalem, PA 19020 Attention: Business Administration
If to the MSRB: Municipal Services Rulemaking Board 1900 Duke Street Suite 600 Alexandria, VA 22314-2719 Attn.: CDI Telecopy No. (203) 797-6700
Any party may alter the address to which communications are to be sent by giving notice of such change of address, in conformity with the provisions of this Section.
(c) Controlling Law. This Disclosure Agreement and all questions relating to its validity, interpretation, performance and enforcement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania and the Rule.
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(d) Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the School District, the paying agent, the Underwriter, and Holders from time to time of the Bonds, and shall create no rights in any other person or entity.
[signature page to follow]
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IN WITNESS WHEREOF, the undersigned has executed this Disclosure Agreement as of the date first above written.
BENSALEM TOWNSHIP SCHOOL DISTRICT
By: ______Name: Kim J. Rivera Title: Board President
Issuer: Bensalem Township School District, Bucks County, Pennsylvania Issue: $30,470,000, Bensalem Township School District, Bucks County, Pennsylvania, General Obligation Bonds, Series of 2020 (Federally Taxable) Signature Page – Continuing Disclosure Agreement
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