Ratings: Standard & Poor’s: “AA+” (Underlying Rating) Standard & Poor’s: “AA-” (School Bond Reserve Act) (See “RATINGS” herein) OFFICIAL STATEMENT DATED JULY 11, 2012 In the opinion of McManimon, Scotland & Baumann, LLC, Bond Counsel, assuming continuing compliance by the Board (as defined herein) with certain covenants described herein, interest on the Bonds (as defined herein) is not includable in gross income for federal income tax purposes under current law and is not an item of tax preference for purposes of computing the federal alternative minimum tax imposed on individuals and corporations. Interest on the Bonds held by corporate taxpayers is included in the relevant income computation for calculation of the federal alternative minimum tax imposed on corporations as a result of the inclusion of interest on the Bonds in "adjusted current earnings." Bond Counsel expresses no opinion regarding other federal tax consequences arising with respect to the Bonds. Further, in the opinion of Bond Counsel, interest on the Bonds and any gain on the sale thereof are not includable as gross income under the New Jersey Gross Income Tax Act. See "TAX EXEMPTION" herein. New Issue Serial Bonds $2,790,000 THE BOARD OF EDUCATION OF THE BOROUGH OF AVALON IN THE COUNTY OF CAPE MAY, NEW JERSEY REFUNDING SCHOOL BONDS (Book-Entry-Only) (Non-Callable) (Bank Qualified) Dated: Date of Delivery Due: January 1, as shown below The $2,790,000 Refunding School Bonds (the “Bonds”) of The Board of Education of the Borough of Avalon in the County of Cape May, New Jersey (the “Board” when referring to the governing body and legal entity and the “School District” when referring to the territorial boundaries governed by the Board) will be issued in the form of one certificate for the aggregate principal amount of the Bonds maturing in each year and when issued will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York, (“DTC”) which will act as Securities Depository. See "Book-Entry-Only System" herein. Interest on the Bonds will be payable semiannually on January 1 and July 1 in each year until maturity, as defined herein, commencing on January 1, 2013. Principal of and interest on the Bonds will be paid to DTC by the Board or its designated paying agent. Interest on the Bonds will be credited to the participants of DTC as listed on the records of DTC as of each next preceding December 15 and June 15 (the "Record Dates" for the payment of interest on the Bonds). The Bonds are not subject to redemption prior to their stated maturities. Interest on the 2012 Bonds shall be computed on a thirty (30) day month/three hundred sixty (360) day year basis. See “DESCRIPTION OF THE BONDS- Redemption” herein. The Bonds are issued pursuant to: (i) Chapter 24 of Title 18A, Education of the New Jersey Statutes, as amended and supplemented (N.J.S.A. 18A:24-1 et seq.), (ii) a refunding bond ordinance finally adopted on March 21, 2012 and (iii) a resolution adopted on March 21, 2012. The Bonds are being issued for the purpose of: (i) advance refunding of the outstanding callable principal amount of the originally issued $5,696,000 School Bonds of the Board dated June 1, 2004 and maturing on or after January 1, 2015 through and including January 1, 2020, at par plus any unpaid accrued interest to January 1, 2014, the call date for the refunded bonds; and (ii) paying the costs of issuance with respect to the Bonds. The Bonds are valid and legally binding obligations of the Board and, unless paid from other sources, are payable from ad valorem taxes levied upon all the taxable real property within the School District for the payment of the Bonds and the interest thereon without limitation as to rate or amount. MATURITIES, AMOUNTS, INTEREST RATES AND YIELDS Principal Interest Year Amount Rate Yield CUSIP 2015 $470,000 3.00% 0.91% 053465BQ2 2016 490,000 3.00 1.02 053465BR0 2017 510,000 3.00 1.19 053465BS8 2018 505,000 3.00 1.46 053465BT6 2019 500,000 3.00 1.69 053465BU3 2020 315,000 3.00 1.91 053465BV1 The Bonds are offered when, as and if issued, and delivered to the Underwriter, subject to prior sale, to withdrawal or modification of the offer without notice and to the approval of legality by the law firm of McManimon, Scotland & Baumann, LLC, Roseland, New Jersey, and certain other conditions described herein. Phoenix Advisors, LLC, Bordentown, New Jersey, has served as financial advisor in connection with the issuance of the Bonds. Delivery is anticipated to be at the offices of the Board’s Bond Counsel, McManimon, Scotland & Baumann, LLC or at such other place as agreed to with the Underwriter on or about August 1, 2012. THE BOARD OF EDUCATION OF THE BOROUGH OF AVALON IN THE COUNTY OF CAPE MAY, NEW JERSEY MEMBERS OF THE BOARD Dorothy Lynn Schwartz, President Brian Heenan, Vice President James Deever John Richardson Kim Schiela SUPERINTENDENT David Rauenzahn BUSINESS ADMINISTRATOR/BOARD SECRETARY Linda Fiori BOARD AUDITOR Ford, Scott & Associates, LLC Ocean City, New Jersey SOLICITOR Louis J. Greco, Esq. Mays Landing, New Jersey BOND COUNSEL McManimon, Scotland & Baumann, LLC Roseland, New Jersey FINANCIAL ADVISOR Phoenix Advisors, LLC Bordentown, New Jersey No broker, dealer, salesperson or other person has been authorized by the Board to give any information or to make any representations with respect to the Bonds, other than those contained in this Official Statement, and, if given or made, such information or representations must not be relied upon as having been authorized by the Board. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Bonds in any jurisdiction in which it is unlawful for any person to make such an offer, solicitation or sale. The information contained herein has been provided by the Board, DTC and other sources deemed reliable by the Board; however, such information is not guaranteed as to its accuracy or completeness and such information is not to be construed as a representation or warranty by the Board, as to information from sources other than itself. The Board has not confirmed the accuracy or completeness of information relating to DTC which information has been provided by DTC. This Official Statement is not to be construed as a contract or agreement between the Board and the purchasers or owners of any of the Bonds. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale hereunder shall, under any circumstances, create any implication that there has been no change in any of the information herein since the date hereof, or the date as of which such information is given, if earlier. References in this Official Statement to the Constitution of the State of New Jersey, laws, rules, regulations, resolutions, agreements, reports and documents do not purport to be comprehensive or definitive. All references to such documents or laws are qualified in their entirety by reference to the particular source, the full text of which may contain qualifications of and exceptions to statements made herein, and copies of which may be inspected at the offices of the Board during normal business hours. The order and placement of materials in this Official Statement, including the Appendices, are not to be deemed to be a determination of relevance, materiality or importance, and this Official Statement, including the Appendices, must be considered in its entirety. In order to facilitate the distribution of the Bonds, the Underwriter may engage in transactions intended to stabilize the price of the Bonds at a level above that which might otherwise prevail in the open market. Such stabilizing, if commenced, may be discontinued at any time. The Underwriter has provided the following sentence for inclusion in this Official Statement. The Underwriter has reviewed the information in this Official Statement pursuant to its responsibilities to investors under the federal securities laws, but the Underwriter does not guarantee the accuracy or completeness of such information. ii TABLE OF CONTENTS PAGE INTRODUCTION ........................................................................................................................................ 1 DESCRIPTION OF THE BONDS ............................................................................................................... 1 SOURCES AND USES OF FUNDS ............................................................................................................ 4 BOOK-ENTRY-ONLY SYSTEM ............................................................................................................... 4 THE STATE’S ROLE IN PUBLIC EDUCATION ...................................................................................... 7 STRUCTURE OF SCHOOL DISTRICTS IN NEW JERSEY ..................................................................... 7 SUMMARY OF CERTAIN PROVISIONS FOR THE PROTECTION OF SCHOOL DEBT ................... 9 SUMMARY OF STATE AID TO SCHOOL DISTRICTS ........................................................................ 12 SUMMARY OF FEDERAL AID TO SCHOOL DISTRICTS .................................................................. 13 MUNICIPAL FINANCE - FINANCIAL REGULATION OF COUNTIES AND MUNICIPALITIES .. 13 FINANCIAL STATEMENTS .................................................................................................................... 17 LITIGATION .............................................................................................................................................