$1,200,000* hawkeye community college, iowa (merged … hawkeye cc 1.2m tax... · taxable...

New Issue Not Rated Date of Sale: Tuesday, April 28, 2020 Between 10:00 and 10:30 A.M., C.D.T. (Closed Speer Auction)

Official Statement

In the opinion of Ahlers & Cooney, P.C., Bond Counsel, under present law interest on the Certificates is includable in gross income of the owners thereof for purposes of present federal income taxation as more fully discussed under the heading “TAXABILITY OF INTEREST” herein.

$1,200,000* HAWKEYE COMMUNITY COLLEGE, IOWA

(Merged Area VII) Taxable Industrial New Jobs Training Certificates, Series 2020-1

Dated Date of Delivery Book-Entry Due Serially June 1, 2021 - 2030

The $1,200,000* Taxable Industrial New Jobs Training Certificates, Series 2020-1 (the “Certificates”) are being issued by the Hawkeye Community College, Iowa, (Merged Area VII) (the “College”). Interest is payable semiannually on June 1 and December 1 of each year, commencing December 1, 2020. Interest is calculated based on a 360-day year of twelve 30-day months. The Certificates will be issued using a book-entry system. The Depository Trust Company (“DTC”), New York, New York, will act as securities depository for the Certificates. The ownership of one fully registered Certificate for each maturity will be registered in the name of Cede & Co., as nominee for DTC and no physical delivery of Certificates will be made to purchasers. The Certificates will mature on June 1 in the following years and amounts.

AMOUNTS*, MATURITIES, INTEREST RATES, PRICES OR YIELDS AND CUSIP NUMBERS Principal Due Interest Price or CUSIP Principal Due Interest Price or CUSIP Amount* June 1 Rate Yield Number(1) Amount* June 1 Rate Yield Number(1) $130,000 ........... 2021 ______% ______% ___________ $120,000........... 2026 ______% ______% ___________ 125,000 ........... 2022 ______% ______% ___________ 115,000........... 2027 ______% ______% ___________ 125,000 ........... 2023 ______% ______% ___________ 115,000........... 2028 ______% ______% ___________ 120,000 ........... 2024 ______% ______% ___________ 115,000........... 2029 ______% ______% ___________ 120,000 ........... 2025 ______% ______% ___________ 115,000........... 2030 ______% ______% ___________

Any consecutive maturities may be aggregated into term Certificates at the option of the bidder, in which case the mandatory redemption provisions shall be on the same schedule as above.

OPTIONAL REDEMPTION

Certificates due June 1, 2021 - 2026, inclusive, are not subject to optional redemption. Certificates due June 1, 2027 - 2030, inclusive, are callable in whole or in part on any date on or after June 1, 2026, at a price of par and accrued interest. If less than all the Certificates are called, they shall be redeemed in such principal amounts and from such maturities as determined by the College and within any maturity by lot. See “OPTIONAL REDEMPTION” herein.

PURPOSE, LEGALITY AND SECURITY

The Certificate proceeds will be used to: (i) fund new jobs training projects (the “Projects”) pursuant to certain Industrial New Jobs Training Agreements, (ii) fund a Debt Service Reserve Fund in the amount of approximately $120,000 and (iii) pay certain Certificate issuance costs and administrative expenses. See “DESCRIPTION OF THE CERTIFICATES - Projects” and “DESCRIPTION OF THE CERTIFICATES – Use of Proceeds” herein.

In the opinion of Bond Counsel, Ahlers & Cooney, P.C., Des Moines, Iowa, the Certificates will constitute valid and legally binding obligations of the College and the Certificates are payable from the Net Revenues as more fully described herein under “DESCRIPTION OF THE CERTIFICATES - Security”. In the event such Net Revenues are insufficient, the Certificates are payable from a special standby tax levied upon all taxable property within the Merged Area without limitation as to rate or amount, all except as limited by bankruptcy, insolvency, moratorium, reorganization and other similar laws relating to the enforcement of creditors’ rights generally and except that enforcement by equitable and similar remedies, such as mandamus, is subject to the exercise of judicial discretion. Additional security for the Certificates is provided by a Debt Service Reserve Fund (the “Reserve Fund”) to be applied, until depleted, to pay interest and principal payments due on the Certificates.

This Official Statement is dated April 14, 2020, and has been prepared under the authority of the College. An electronic copy of this Official Statement is available from the www.speerfinancial.com web site under “Official Statement Sales Calendar”. Additional copies may be obtained from Mr. Daniel Gillen, Vice President of Administration and Finance, Hawkeye Community College, 1501 E. Orange Road, P.O. Box 8015, Waterloo, Iowa, 50704, or from the Registered Municipal Advisors to the College. *Subject to principal adjustment in accordance with the Official Terms of Offering. (1) CUSIP numbers appearing in this Official Statement have been provided by the CUSIP Service Bureau, which is managed on behalf of the American Bankers Association by S&P Capital IQ, a part of McGraw Hill Financial

Inc. The College is not responsible for the selection of CUSIP numbers and makes no representation as to their correctness on the Certificates or as set forth on the cover of this Official Statement.

http://www.speerfinancial.com/

For purposes of compliance with Rule 15c2-12 of the Securities and Exchange Commission, this document, as the same may be supplemented or corrected by the College from time to time (collectively, the “Official Statement”), may be treated as an Official Statement with respect to the Certificates described herein that is deemed near final as of the date hereof (or the date of any such supplement or correction) by the College.

The Official Statement, when further supplemented by an addendum or addenda specifying the maturity dates, principal amounts and interest rates of the Certificates, together with any other information required by law or deemed appropriate by the College, shall constitute a “Final Official Statement” of the College with respect to the Certificates, as that term is defined in Rule 15c2-12. Any such addendum or addenda shall, on and after the date thereof, be fully incorporated herein and made a part hereof by reference. Alternatively, such final terms of the Certificates and other information may be included in a separate document entitled “Final Official Statement” rather than through supplementing the Official Statement by an addendum or addenda.

No dealer, broker, salesman or other person has been authorized by the College to give any information or to make any representations with respect to the Certificates other than as contained in the Official Statement or the Final Official Statement and, if given or made, such other information or representations must not be relied upon as having been authorized by the College. Certain information contained in the Official Statement and the Final Official Statement may have been obtained from sources other than records of the College and, while believed to be reliable, is not guaranteed as to completeness. THE INFORMATION AND EXPRESSIONS OF OPINION IN THE OFFICIAL STATEMENT AND THE FINAL OFFICIAL STATEMENT ARE SUBJECT TO CHANGE, AND NEITHER THE DELIVERY OF THE OFFICIAL STATEMENT OR THE FINAL OFFICIAL STATEMENT NOR ANY SALE MADE UNDER EITHER SUCH DOCUMENT SHALL CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COLLEGE SINCE THE RESPECTIVE DATES THEREOF.

References herein to laws, rules, regulations, ordinances, resolutions, agreements, reports and other documents do not purport to be comprehensive or definitive. All references to such documents are qualified in their entirety by reference to the particular document, the full text of which may contain qualifications of and exceptions to statements made herein. Where full texts have not been included as appendices to the Official Statement or the Final Official Statement, they will be furnished on request. This Official Statement does not constitute an offer to sell, or solicitation of an offer to buy, any securities to any person in any jurisdiction where such offer or solicitation of such offer would be unlawful.

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TABLE OF CONTENTS

Page CERTIFICATE ISSUE SUMMARY ..................................................................................................................................... 1 CERTIFICATEHOLDERS’ RISKS ....................................................................................................................................... 2

COVID-19 ........................................................................................................................................................................... 2 Secondary Market ............................................................................................................................................................... 3 Forward-Looking Statements .............................................................................................................................................. 3 DTC-Beneficial Owners ..................................................................................................................................................... 3 Continuing Disclosure ........................................................................................................................................................ 4 Cybersecurity ...................................................................................................................................................................... 4 Suitability of Investment ..................................................................................................................................................... 4 Bankruptcy and Insolvency ................................................................................................................................................. 4 Federal Tax Legislation ...................................................................................................................................................... 5 Tax Levy Procedures .......................................................................................................................................................... 5 Other Factors ....................................................................................................................................................................... 5

DESCRIPTION OF THE CERTIFICATES ........................................................................................................................... 5 Introduction ......................................................................................................................................................................... 5 Description of Certificates .................................................................................................................................................. 6 Authority ............................................................................................................................................................................. 6 Projects ................................................................................................................................................................................ 6 Security ............................................................................................................................................................................... 6 Optional Redemption .......................................................................................................................................................... 7 Sources and Use of Proceeds .............................................................................................................................................. 7 Summary of the Resolution and Parity Certificates ............................................................................................................ 7

THE COMPANIES ................................................................................................................................................................. 8 THE COLLEGE ...................................................................................................................................................................... 9

College Organization and Services ..................................................................................................................................... 9 Enrollment History ............................................................................................................................................................ 10 Educational Facilities ........................................................................................................................................................ 10

SOCIOECONOMIC INFORMATION ................................................................................................................................ 11 Population ......................................................................................................................................................................... 11 Employment ...................................................................................................................................................................... 11 Income Statistics ............................................................................................................................................................... 12 Agriculture ........................................................................................................................................................................ 13 Retail Sales ........................................................................................................................................................................ 13

DEFAULT RECORD ........................................................................................................................................................... 13 SHORT-TERM BORROWING ........................................................................................................................................... 13 DEBT INFORMATION ....................................................................................................................................................... 14

Debt Limitation ................................................................................................................................................................. 14 PROPERTY ASSESSMENT AND TAX INFORMATION ................................................................................................ 16

Property Tax Assessment .................................................................................................................................................. 16 Property Tax Collection .................................................................................................................................................... 17 Property Tax Rates ............................................................................................................................................................ 19 Tax Levy Procedures ........................................................................................................................................................ 20 Utility Property Tax Replacement .................................................................................................................................... 20 Tax Increment Financing .................................................................................................................................................. 21 Legislation ......................................................................................................................................................................... 21

FINANCIAL INFORMATION ............................................................................................................................................ 22 Financial Reports .............................................................................................................................................................. 22 No Consent or Updated Information Requested of the Auditor........................................................................................ 22 Summary Financial Information ....................................................................................................................................... 22

EMPLOYEE RETIREMENT AND OTHER POST EMPLOYMENT BENEFIT OBLIGATIONS................................... 26 Pensions ............................................................................................................................................................................ 26 Other Post-Employment Benefits (OPEB)........................................................................................................................ 27

REGISTRATION, TRANSFER AND EXCHANGE........................................................................................................... 29

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TAXABILITY OF INTEREST ............................................................................................................................................ 30

General .............................................................................................................................................................................. 30 Interest Income Taxable .................................................................................................................................................... 30 Sale, Exchange, or Other Disposition ............................................................................................................................... 30 Backup Withholding and Information Reporting ............................................................................................................. 30 Enforcement ...................................................................................................................................................................... 30 Opinion ............................................................................................................................................................................. 31

CONTINUING DISCLOSURE ............................................................................................................................................ 31 OPTIONAL REDEMPTION ................................................................................................................................................ 32 LITIGATION ........................................................................................................................................................................ 32 LEGAL MATTERS .............................................................................................................................................................. 32 OFFICIAL STATEMENT AUTHORIZATION .................................................................................................................. 32 UNDERWRITING ............................................................................................................................................................... 33 MUNICIPAL ADVISOR ...................................................................................................................................................... 33 CERTIFICATION ................................................................................................................................................................ 33 APPENDIX A - FISCAL YEAR 2019 AUDITED FINANCIAL STATEMENTS APPENDIX B - DESCRIBING BOOK-ENTRY-ONLY ISSUANCE APPENDIX C - DRAFT FORM OF LEGAL OPINION APPENDIX D - DRAFT FORM OF CONTINUING DISCLOSURE CERTIFICATE APPENDIX E – IOWA COMMUNITY COLLEGES MAP OFFICIAL BID FORM OFFICIAL TERMS OF OFFERING

Hawkeye Community College, (Merged Area VII), Iowa $1,200,000* Taxable Industrial New Jobs Training Certificates, Series 2020-1

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CERTIFICATE ISSUE SUMMARY

This Certificate Issue Summary is expressly qualified by the entire Official Statement, including the Official Terms of Offering and the Official Bid Form, which are provided for the convenience of potential investors and should be reviewed in their entirety by potential investors.

Issuer: Hawkeye Community College, (Merged Area VII), Iowa.

Issue: $1,200,000* Taxable Industrial New Jobs Training Certificates, Series 2020-1.

Dated Date: Date of delivery (expected to be on or about June 1, 2020).

Interest Due: Each June 1 and December 1, commencing December 1, 2020.

Principal Due: Serially each June 1, commencing June 1, 2021 through 2030, as detailed on the cover page of this Official Statement.

Optional Redemption: Certificates maturing on or after June 1, 2027, are callable at the option of the College on any date on or after June 1, 2026, at a price of par plus accrued interest. See “OPTIONAL REDEMPTION” herein.

Authorization: The Certificates are being issued pursuant to authority established in Code of Iowa, 2019 as amended, Chapter 260E (the “Act”), and all laws amendatory thereof and supplementary thereto, and in conformity with a resolution (the “Resolution” or the “Certificate Resolution”) of the College duly passed and approved.

Security: The Certificates will constitute valid and legally binding obligations of the College payable

from the Net Revenues as more fully described herein under “DESCRIPTION OF THE CERTIFICATES - Security”. In the event such Net Revenues are insufficient, the Certificates are payable from a special standby tax levied upon all taxable property within the Merged Area without limitation as to rate or amount, all except as limited by bankruptcy, insolvency, moratorium, reorganization and other similar laws relating to the enforcement of creditors’ rights generally and except that enforcement by equitable and similar remedies, such as mandamus, is subject to the exercise of judicial discretion. Additional security is provided by a Debt Service Reserve Fund (the “Reserve Fund”) to be applied, until depleted, to pay interest and principal payments due on the Certificates.

No Investment Rating: The College does not intend to apply for an investment rating on the Certificates.

Purpose: The proceeds of the Certificates will be used to: (i) fund new jobs training projects (the “Projects”) pursuant to certain Industrial New Jobs Training Agreements, (ii) fund a Debt Service Reserve Fund in the amount of approximately $120,000*, and (iii) pay certain Certificate issuance costs and administrative expenses. See “DESCRIPTION OF THE CERTIFICATES - Projects” and “DESCRIPTION OF THE CERTIFICATES – Use of Proceeds” herein.

Taxability: The interest to be paid on the Certificates is subject to federal and Iowa state income taxes as discussed under “TAXABILITY OF INTEREST” in this Official Statement. See APPENDIX C for a draft form of legal opinion for the Certificates.

Registrar/Paying Agent: UMB Bank, n.a., West Des Moines, Iowa (the “Registrar”).

Delivery: The Certificates are expected to be delivered on or about June 1, 2020.

Book-Entry Form: The Certificates will be registered in the name of Cede & Co. as nominee for The Depository Trust Company (“DTC”), New York, New York. DTC will act as securities depository of the Certificates. See APPENDIX B herein.

Denomination: $5,000 or integral multiples thereof.

Municipal Advisor: Speer Financial, Inc., Waterloo, Iowa and Chicago, Illinois.

*Subject to change.


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HAWKEYE COMMUNITY COLLEGE, IOWA

(Merged Area VII)

Board of Directors Jay A. Nardini, Chair Bruce R. Clark, Vice Chair John H. Allan Shari M. Sell-Bakker Barbara A. McGregor Casey P. McLaughlin Teresa L. Meyer Todd L. Rohlfsen Joan A. Webster-Vore

__________________________________ Officials Todd Holcomb, Ph.D. .................................................................. President Jane Bradley, Ph.D. ........ Provost and Vice President of Academic Affairs Daniel Gillen ...................... Vice President of Administration and Finance Dione Somerville ................................... Vice President of Student Affairs Holly Johnson ............... Executive Director of Institutional Advancement Susan Hauber .................Executive Director of Human Resource Services Aaron Sauerbrei ........................................ Executive Director of Business and Community Education Julie Thomas ..................................................................... Board Treasurer Annette Staples ................................................................. Board Secretary

______________________________________

CERTIFICATEHOLDERS’ RISKS COVID-19 The outbreak of COVID-19, a respiratory illness caused by a new strain of coronavirus has affected the globe, including the State of Iowa and the College. Efforts to contain the virus from spreading have shuttered businesses in a way that may negatively impact economies. On March 17, 2020, Iowa Governor Kim Reynolds issued a State of Public Health Disaster Emergency. The plan takes significant steps to require social distancing and limit community spread of the virus by implementing temporary measures including moving restaurants to drive-through, carry-out, and delivery only and closures of certain entities such as bars and recreational facilities. The proclamation also allows state agencies additional flexibility in responding to the unprecedented COVID-19 situation, and supports the critical work of public health. Additional emergency declarations have continued to close more businesses, resulting in higher than normal unemployment, and could reduce sales tax collections. Later emergency declarations have closed additional businesses and taken more restrictive measures.


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The College cannot predict whether continued spread of the disease will materially impact its financial condition or ability to provide essential services. The Certificates are general obligations of the College secured by a back up pledge of an unlimited ad valorem property tax as described more fully in the “THE CERTIFICATES – SOURCE OF SECURITY FOR THE CERTIFICATES” herein. However, a State Public Health Emergency Declaration issued on March 20, 2020 temporarily suspends the provisions that require the imposition of penalty and interest for delay in property tax payments and directs that no such penalty or interest may be imposed for the duration of the proclamation and any future extension of the suspension. The proclamation is currently extended and expires on April 30, 2020, at 11:59 p.m. It is impossible to predict whether the proclamation or an extension thereof would have a material effect on the Colleges ability to collect property taxes necessary for the payment of principal and interest on the Certificates. Secondary Market There can be no guarantee that there will be a secondary market for the Certificates or, if a secondary market exists, that such Certificates can be sold for any particular price. Occasionally, because of general market conditions or because of adverse history of economic prospects connected with a particular issue, secondary marketing practices in connection with a particular bond or note issue are suspended or terminated. Additionally, prices of bond or note issues for which a market is being made will depend upon then prevailing circumstances. Such prices could be substantially different from the original purchase price of the Certificates. EACH PROSPECTIVE PURCHASER IS RESPONSIBLE FOR ASSESSING THE MERITS AND RISKS OF AN INVESTMENT IN THE CERTIFICATES AND MUST BE ABLE TO BEAR THE ECONOMIC RISK OF SUCH INVESTMENT. THE SECONDARY MARKET FOR THE CERTIFICATES, IF ANY, COULD BE LIMITED. Forward-Looking Statements

This Official Statement contains statements relating to future results that are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. When used in this Official Statement, the words “estimate,” “forecast,” “intend,” “expect” and similar expressions identify forward-looking statements. Any forward-looking statement is subject to uncertainty. Accordingly, such statements are subject to risks that could cause actual results to differ, possibly materially, from those contemplated in such forward-looking statements. Inevitably, some assumptions used to develop forward-looking statements will not be realized or unanticipated events and circumstances may occur. Therefore, investors should be aware that there are likely to be differences between forward-looking statements and the actual results. These differences could be material and could impact the availability of funds of the College to pay debt service when due on the Certificates. DTC-Beneficial Owners

Beneficial Owners of the Certificates may experience some delay in the receipt of distributions of principal of and interest on the Certificates since such distributions will be forwarded by the Paying Agent to DTC and DTC will credit such distributions to the accounts of the Participants which will thereafter credit them to the accounts of the Beneficial Owner either directly or indirectly through indirect Participants. Neither the College nor the Paying Agent will have any responsibility or obligation to assure that any such notice or payment is forwarded by DTC to any Participants or by any Participant to any Beneficial Owner.

In addition, since transactions in the Certificates can be effected only through DTC Participants, indirect participants and certain banks, the ability of a Beneficial Owner to pledge the Certificates to persons or entities that do not participate in the DTC system, or otherwise to take actions in respect of such Certificates, may be limited due to lack of a physical certificate. Beneficial Owners will be permitted to exercise the rights of registered Owners only indirectly through DTC and the Participants. See APPENDIX B – Describing Book-Entry Only Issuance.


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Continuing Disclosure

A failure by the College to comply with continuing disclosure obligations (see “CONTINUING DISCLOSURE” herein) will not constitute an event of default on the Certificates. Any such failure must be disclosed in accordance with Rule 15c2-12 (the “Rule”) adopted by the Securities and Exchange Commission (the “Commission”) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and may adversely affect the transferability and liquidity of the Certificates and their market price. The College will covenant in a Continuing Disclosure Certificate for the benefit of the Owners and Beneficial Owners of the Certificates to provide annually certain financial information and operating data relating to the College (the “Annual Report”), and to provide notices of the occurrence of certain enumerated events. The Annual Report is to be filed by the College no later than the 15th day of April each year, commencing with the fiscal year ending June 30, 2020, with the Municipal Securities Rulemaking Board, at its internet repository named “Electronic Municipal Market Access” (“EMMA”). The notices of events, if any, are also to be filed with EMMA. See “APPENDIX D – FORM OF CONTINUING DISCLOSURE CERTIFICATE.” The specific nature of the information to be contained in the Annual Report or the notices of events, and the manner in which such materials are to be filed, are summarized in “APPENDIX D – FORM OF CONTINUING DISCLOSURE CERTIFICATE.” These covenants have been made in order to assist the Underwriter in complying with SEC Rule 15c2-12(b)(5) (the “Rule”). Cybersecurity The College, like many other public and private entities, relies on a large and complex technology environment to conduct its operations. As such, it may face multiple cybersecurity threats including but not limited to, hacking, viruses, malware and other attacks on computer or other sensitive digital systems and networks. There can be no assurances that any security and operational control measures implemented by the College will be completely successful to guard against and prevent cyber threats and attacks. Failure to properly maintain functionality, control, security, and integrity of the College’s information systems could impact business operations and/or digital networks and systems and the costs of remedying any such damage could be significant. Along with significant liability claims or regulatory penalties, any security breach could have a material adverse impact on the College’s operations and financial condition. The College has a $5,000,000 Cyber-Liability Policy. The College cannot predict whether this policy will be sufficient in the event of a cyberattack. However, the Certificates are secured by an unlimited ad valorem property tax as described herein. Suitability of Investment The interest rate borne by the Certificates is intended to compensate the investor for assuming the risk of investing in the Certificates. Each prospective investor should carefully examine this Official Statement and its own financial condition to make a judgment as to its ability to bear the economic risk of such an investment, and whether or not the Certificates are an appropriate investment for such investor. Bankruptcy and Insolvency The rights and remedies of the owners of the Certificates may be limited by and are subject to the provisions of federal bankruptcy laws, to other laws or equitable principles that may affect the enforcement of creditors’ rights, to the exercise of judicial discretion in appropriate cases and to limitations on legal remedies against local governments. The various opinions of counsel to be delivered with respect to the Certificates will be similarly qualified.


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Federal Tax Legislation

From time to time, there are Presidential proposals, proposals of various federal committees, and legislative proposals pending in Congress that could, if enacted, alter or amend one or more of the federal tax matters described herein in certain respects or would adversely affect the market value of the Certificates. Further such proposals may impact the marketability or market value of the Certificates simply by being proposed. It cannot be predicted whether or in what forms any of such proposals, either pending or that may be introduced, may be enacted and there can be no assurance that such proposals will not apply to the Certificates. In addition regulatory actions are from time to time announced or proposed, and litigation threatened or commenced, which if implemented or concluded in a particular manner, could adversely affect the market value, marketability or tax status of the Certificates. It cannot be predicted whether any such regulatory action will be implemented, how any particular litigation or judicial action will be resolved, or whether the Certificates would be impacted thereby. Tax Levy Procedures

The Certificates are general obligations of the College, payable from and secured by a continuing ad valorem tax levied against all of the taxable property valuation within the College. See “PROPERTY ASSESSMENT AND TAX INFORMATION” herein for more details. As part of the budgetary process each fiscal year, the College will have an obligation to request a debt service levy to be applied against all of the taxable property within the College. A failure on the part of the College to make a timely levy request or a levy request by the College that is inaccurate or is insufficient to make full payments of the debt service of the Certificates for a particular fiscal year may cause holders to experience delay in the receipt of distributions of principal of and/or interest on the Certificates. In the event of a default in the payment of principal of or interest on the Certificates, there is no provision for acceleration of maturity of the principal of the Certificates. Consequently, the remedies of the owners of the Certificates (consisting primarily of an action in the nature of mandamus requiring the College and certain other public officials to perform the terms of the Resolution for the Certificates) may have to be enforced from year to year. Other Factors

An investment in the Certificates involves an element of risk. The foregoing is intended only as a summary of certain risk factors attendant to an investment in the Certificates. In order for potential investors to identify risk factors and make an informed investment decision, potential investors should become thoroughly familiar with this entire Official Statement and the Appendices hereto.

DESCRIPTION OF THE CERTIFICATES Introduction This Official Statement, including the cover page and all appendices, is provided to set forth certain information with respect to the College, the Certificates, and the companies involved. None of the references to or summaries of the laws of the State of Iowa or any documents referred to in this Official Statement purport to be complete, and all such references are qualified in their entirety by reference to the complete provisions thereof.


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Description of Certificates The Certificates are dated the date of delivery (expected to be on or about June 1, 2020) and will be issued as fully registered certificates in the denomination of $5,000 or any integral multiple thereof and, when issued, will be registered in the name of Cede & Co., as Certificate holder and nominee of the Depository Trust Company, New York, New York (“DTC”). DTC will act as securities depository for the Certificates. Purchases of the Certificates will be made in book-entry form. Purchasers of the Certificates will not receive certificates representing their interest in the Certificates purchased. So long as DTC or its nominee, Cede & Co., is the Certificate holder, the principal and interest on the Certificates will be paid to DTC, which will in turn remit such principal and interest to its participants for subsequent dispersal to the beneficial owners of the Certificates as described herein. Disbursement of such payments to the Beneficial Owners is the responsibility of the DTC Participants as more fully described in APPENDIX B. The Certificates will bear interest from their dated date at such rates and mature on the dates and in the amounts set forth herein, with interest being payable December 1, 2020 and semiannually thereafter on the first day of June and December in each year until maturity or earlier redemption. Interest will be computed on the basis of a 360-day year of twelve 30-day months. Payments of principal and interest shall be made to the registered holders thereof or to their designated agents as the same appear on the books of the Registrar. Authority The Certificates are issued pursuant to the provisions of Chapter 260E of the Code of Iowa, as amended (the “Act”), and in conformity with a resolution of the Board of Directors of the College authorizing the issuance of the Certificates (the “Resolution”). Projects The Certificates are issued for the purpose of paying a portion of the costs of training arrangements and new jobs training programs (the “Projects”) which are the subject of and in conformity with certain Industrial New Jobs Training Agreements (the “Agreements”) between the College and the Companies described under “THE COMPANIES” herein. Security The Certificates constitute a valid and binding obligation of the College, payable from the Net Revenues. The “Net Revenues” are the revenues and funds derived from the Agreements, held in a special fund (the “Revenue Fund”) and pledged to the payment of the Certificates. The sources of Net Revenues include new jobs credit from withholding to be received or derived from new employment resulting from the Projects (1½% of the wages paid on the new jobs created); supplemental new jobs credit from withholding to be received or derived from new employment resulting from the Projects (an additional 1½% of the wages paid on those jobs for which the employer has agreed to pay wages of at least the “laborshed wage” established by the Iowa Economic Development Authority); and tuition, student fees or special charges, if any, fixed by the Board of Directors of the College to defray program costs. The Projects are sized in order that the anticipated Net Revenues are sufficient to meet the debt service requirements of the Certificates as the same become due. Additional security is provided by a Reserve Fund to be applied, until depleted, to pay interest and principal payments due on the Certificates. In the event such Net Revenues are not available and appropriated in any year as provided by the Act and in the Agreement, all the taxable property in the Merged Area is subject to ad valorem taxation without limitation as to rate or amount (the “Standby Tax”) to pay the Certificates, all except as limited by bankruptcy, insolvency, moratorium, reorganization and other similar laws relating to the enforcement of creditors’ rights generally and except that enforcement by equitable and similar remedies, such as mandamus, is subject to the exercise of judicial discretion. The Standby Tax has been levied by the Resolution for the payment of debt service on the Certificates and the College is required by law to include in its annual tax levy the principal and interest coming due on the Certificates to the extent the necessary funds are not provided from other sources.


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Optional Redemption

The Certificates due June 1, 2021 - 2026, inclusive, are not subject to optional redemption prior to maturity. The Certificates due June 1, 2027 - 2030, inclusive, are subject to optional redemption prior to maturity in whole or in part on any date on or after June 1, 2026 at a price of par and accrued interest. If less than all the Certificates are called, they shall be redeemed in any order of maturity as determined by the College and within any maturity by lot. So long as Certificates are held by DTC, the College will notify DTC of the particular amount of such maturity to be redeemed prior to maturity. DTC will determine by lot the amount of each participant’s interest in each maturity to be redeemed and each participant will then select by lot the beneficial ownership interests in such maturity to be redeemed.

The Registrar will give written notice of redemption, identifying the Certificates (or portions thereof) to be redeemed not less than thirty (30) days prior to the date fixed for redemption to the registered owner of each Certificate (or portion thereof) to be redeemed. Failure to give such written notice to any registered owner of the Certificates (or portions thereof) or any defect therein shall not affect the validity of any proceedings for the redemption of other Certificates (or portions thereof). Written notice will be deemed completed upon transmission to the owner of record of the Certificate. All Certificates (or portions thereof) so called for redemption will cease to bear interest after the specified redemption date, provided funds for their redemption are on deposit at the place of payment at that time. Sources and Use of Proceeds The proceeds of the Certificates, other than any accrued interest and except as may be provided below, shall be credited to the Project Fund and used to pay the costs of the Projects and the costs of issuance of the Certificates including, but not limited to, underwriting fees, municipal advisor fees, printing costs, and bond counsel fees and expenses. Proceeds of the Certificates shall also be used to fund the Reserve Fund and to pay all College expenses relating to the administration of the new jobs training projects. The estimated sources and uses of proceeds of the Certificates is as follows: SOURCES: The Certificates ................................................................... $1,200,000.00 Total .................................................................................. $1,200,000.00 USES: New Jobs Training Project .................................................. $ 802,800.00 College Administration Expense .......................................... 234,000.00 Underwriter’s Discount ........................................................ 9,600.00 Legal and Issuance Costs ................................................... 21,600.00 State Administration Expense ............................................. 12,000.00 Reserve Fund ..................................................................... 120,000.00 Total .................................................................................. $1,200,000.00 Summary of the Resolution and Parity Certificates The Board of Directors of the College is expected to adopt the Resolution on April 28, 2020. Under the Resolution, the College pledges the Net Revenues to the payment of the Certificates (as described previously under “DESCRIPTION OF THE CERTIFICATES - Security” herein). A copy of the Resolution shall be filed in the office of the County Auditors of each county contained within the Merged Area. For the purpose of further securing and providing funds to pay the principal and interest of the Certificates, there has been levied and appropriated to the Revenue Fund for each future year the following direct annual tax, the Standby Tax, on all of the taxable property in the Merged Area:


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Preliminary Fiscal Year (July 1 to June 30) Amount of Collection(1) $160,785 .............................................................................. 2020/21 152,185 .............................................................................. 2021/22 150,560 .............................................................................. 2022/23 142,685 .............................................................................. 2023/24 139,805 .............................................................................. 2024/25 136,805 .............................................................................. 2025/26 128,685 .............................................................................. 2026/27 125,465 .............................................................................. 2027/28 122,015 .............................................................................. 2028/29 118,565 .............................................................................. 2029/30 Note: (1) For example, a levy made and certified against the

taxable valuations of January 1, 2019, will be collected during the fiscal year commencing July 1, 2020.

Provided, however, that the College may direct the adjustment and corresponding reduction of any levy of taxes made whenever funds on hand from any source other than taxation and which may be appropriated to the payment of the Certificates are available in the Revenue Fund. The College does not currently anticipate levying the Standby Tax to pay debt service on the Certificates. Additional certificates (the “Parity Certificates”) may be issued on a parity and equality of rank with the Certificates with respect to the lien and claim of such Parity Certificates to the Net Revenues, for the following purposes and under the following conditions, but not otherwise:

(a) For the purpose of refunding any of the Certificates or Parity Certificates which shall have matured or which shall mature not later than three months after the date of delivery of refunding certificates and for the payment of which there shall be insufficient money in the Sinking Fund and the Reserve Fund; and

(b) For the purpose of the Projects or additional projects, so long as Net Revenues are sufficient to secure the

Certificates and the Parity Certificates. Parity Certificates must be payable as to principal and as to interest on the same month and date as the Certificates.

THE COMPANIES Martin Brothers Distributing Company, Inc. Certificate Amount: $365,000 Number of New Jobs: 27 Martin Brothers Distributing Company, Inc. is a full-line, independent, family-owned foodservice distributor founded in 1940 by Roy & Glen Martin and located in Cedar Falls, Iowa. They have grown into a regional, independent distributor serving Iowa and seven surrounding states. The Martin Bros. distribution facility is a 225,000 square foot warehouse stocked with over 12,000 products subdivided into dry, refrigerated and freezer categories. The new jobs will be added at the Cedar Falls, Iowa location. Spinutech, Inc. Certificate Amount: $230,000 Number of New Jobs: 13 Spinutech, Inc. is a web design and web development company. Core services include: content management websites, ecommerce, web design, video to web, digital marketing, SEO, digital strategy, SEM, and social media marketing. The agreement covers 13 new positions in Cedar Falls, Iowa.


9

TrinityRail Certificate Amount: $605,000 Number of New Jobs: 32 TrinityRail, a division of Trinity Industries, provides services and products for rail transportation, including repairs, maintenance and modifications. TrinityRail has manufacturing operations in Texas, Arkansas, Georgia, Oklahoma, North Carolina and Mexico. The new jobs will be added at the Shell Rock, Iowa location.

THE COLLEGE

The College’s main campus is located in Waterloo, Iowa and was founded in 1966. The College is located in part of the Counties of Benton, Black Hawk, Bremer, Buchanan, Butler, Chickasaw, Fayette, Floyd, Grundy and Tama (the “Counties”). See APPENDIX E for a map of the Iowa Community Colleges. The College has a 320-acre campus located near the southeast edge of Waterloo. The main campus is home for the career and transfer programs.

On September 12, 1991, the State Board of Education approved the plan of the Board of Directors of the College to expand the curriculum of the school to include arts and sciences courses, and thereby officially classified the school as an area community college. The College began offering the expanded curriculum on January 1, 1992.

The College is accredited by the Higher Learning Commission and National Alliance of Concurrent Enrollment Partnership. As a public post-high school community college, Hawkeye has been approved jointly by the Iowa Department of Education and Iowa State Board of Regents. Individual accredited programs are recognized as follows: Dental Assisting and Dental Hygiene, Emergency Medical Services, Medical Laboratory Technology, Natural Resource Management, Landscape and Turf Management, Occupational Therapy Assistant, Physical Therapist Assistant Program, Practical Nursing and Associate Degree Nursing, and Respiratory Therapy.

The College offers a well-planned, diversified program of adult education and extends its services and facilities to business and industry by offering trade courses, in-service training, and special workshops anywhere in the area. These courses upgrade employees in their current positions as well as educate employees for new roles and opportunities in business and industry. To complement career and vocational-technical classes, the Business and Community Education offers adult courses and programs that emphasize general interest in the areas of home improvement, family relationships, community services, senior citizens, hobby and leisure time pursuits.

In addition to the main campus facilities, the College has locations in Waterloo - IowaWORKS; Cedar Valley, Regional Transportation Training Center and Van G. Miller Adult Learning Center; Cedar Falls- Business and Community Education Center; and Holland - Western Outreach Center. The College offers more than forty-five different career programs varying from one month to two academic years in length. The College supports and cooperates with twenty-two public school districts in promoting and conducting adult education programs. Over 10,000 people participate annually in the Adult Education program.

In February 2015, voters authorized the College to borrow up to $25 million for facilities to address the following community needs: additional workforce development programs and services for adult students; expanded capacity in high-demand fields such as healthcare and advanced manufacturing; and additional career academies in high schools and the College’s outreach center. The College issued $6,000,000 in General Obligation School Bonds in February of 2016 and $9,500,000 General Obligation School Bonds in January of 2018. College Organization and Services

The College is governed by a Board of Directors, of which nine members are elected from nine districts. Directors are elected to staggered four-year terms.


10

The College employs approximately 675 full and part-time employees including adjunct instructors. The full-time faculty of the College are represented by the Hawkeye Professional Educators’ Association. A three year contract has been negotiated which will expire on August 10, 2023. Enrollment History The full-time equivalent credit enrollment for fiscal year 2019 was 4,928, in addition, the College serves approximately an additional 10,000 registrants in continuing education programs and courses.

College Enrollment(1) Fiscal Total FTE Year Credit Hours Enrollment

2010 ....................................................... 141,643 6,280 2011 ....................................................... 145,035 6,452 2012 ....................................................... 137,166 6,104 2013 ....................................................... 130,140 5,919 2014 ....................................................... 124,418 5,836 2015 ....................................................... 114,658 5,405 2016 ....................................................... 112,563 5,833 2017 ....................................................... 112,436 5,346 2018 ....................................................... 107,614 5,134 2019 ....................................................... 100,663 4,928 Note: (1) Source: the College and the Iowa Department of Education.

Educational Facilities

Located within Merged Area VII are 22 public school districts. The public school districts and their total student enrollments and population are listed below. Certified Enrollment District School District October 2019(1) Population(2) Aplington-Parkersburg ..................................... 788 4,547 Cedar Falls ...................................................... 5,371 40,251 Clarksville ........................................................ 295 2,161 Denver ............................................................. 822 3,847 Dike-New Hartford............................................ 872 4,338 Dunkerton ........................................................ 386 2,566 East Buchanan ................................................. 552 2,961 Gladbrook-Reinbeck ........................................ 605 4,260 Grundy Center ................................................. 646 3,788 Hudson ............................................................ 703 3,709 Independence .................................................. 1,427 9,100 Janesville ......................................................... 436 2,375 Jesup ............................................................... 884 5,094 Nashua-Plainfield ............................................. 585 4,147 North Butler ...................................................... 561 1,877 North Tama County .......................................... 446 3,111 Sumner-Fredericksburg.................................... 797 4,974 Tripoli ............................................................... 410 2,524 Union ............................................................... 1,036 6,214 Wapsie Valley .................................................. 681 3,885 Waterloo .......................................................... 10,866 78,321 Waverly-Shall Rock .......................................... 2,126 13,798 Total ............................................................... 31,295 207,848 Notes: (1) Source: Iowa Department of Education. (2) Source: National Center for Education Statistics as of the 2010

Census.


11

SOCIOECONOMIC INFORMATION

Population

The College has an estimated 2010 population of 207,848. The Counties in the Merged Area VII are listed below. These figures are for the entire respective counties, even though only a portion of each county may be within the boundaries of the Merged Area VII.

Population(1) 2010 2000 1990 1980 Benton ............................................... 26,076 25,308 22,429 23,649 Black Hawk ........................................ 131,090 128,012 123,798 137,961 Bremer ............................................... 24,276 23,325 22,813 24,820 Buchanan .......................................... 20,958 21,093 20,844 22,900 Butler ................................................. 14,867 15,305 15,731 17,668 Chickasaw ......................................... 12,439 13,095 13,295 15,437 Fayette .............................................. 20,880 22,008 21,843 25,488 Floyd .................................................. 16,303 16,900 17,058 19,597 Grundy ............................................... 12,453 12,369 12,029 14,366 Tama ................................................. 17,767 18,103 17,419 19,533 Note (1) Source: U.S. Bureau of the Census. Employment

Following is a list of certain major employers located in the Merged Area VII Counties.

Major Area Employers(1) Approximate Location Name Product/Service Employment Waterloo ................................... John Deere ...................................................... Manufacturing ........................................................... 5,700 Waterloo ................................... MercyOne ........................................................ Health Care ............................................................... 2,895 Waterloo ................................... Tyson Fresh Meats .......................................... Food Processing ....................................................... 2,700 Waterloo ................................... Unity Point Health Care .................................... Health Care ............................................................... 2,520 Cedar Falls ............................... University of Northern Iowa .............................. Higher Education ...................................................... 1,820 Waterloo/Cedar Falls ................ Hy-Vee ............................................................. Grocery Stores .......................................................... 1,720 Waterloo ................................... Waterloo Community Schools .......................... Public Education ....................................................... 1,605 Cedar Falls ............................... Target Regional Distribution ............................. Retail Distribution ...................................................... 950 Waterloo ................................... Omega Cabinetry Ltd. ...................................... Manufacturing ........................................................... 950 Waterloo ................................... CBE Companies, Inc. ....................................... Financial ................................................................... 900 Waterloo ................................... City of Waterloo ............................................... Government .............................................................. 800 Waterloo ................................... Bertch Cabinet Manufacturing .......................... Manufacturing ........................................................... 775 Cedar Falls ............................... Cedar Falls Community Schools ...................... Public Education ....................................................... 750 Waterloo ................................... VGM Group ...................................................... Diversified ................................................................. 720 Waterloo ................................... Black Hawk County .......................................... Government .............................................................. 715 Waterloo ................................... Hawkeye Community College .......................... Higher Education ...................................................... ___ Note: (1) Source: Area Chamber of Commerce, selected telephone surveys and the 2019 Iowa Manufacturers database.


12

The following table shows the annual average unemployment rates for certain Counties, the State and the United

States. These figures are for the entire respective counties, even though only a portion of each county may be within the boundaries of the Merged Area VII.

Annual Average Unemployment Rates(1)

Calendar Black Hawk Bremer Buchanan State of United Year County County County Iowa States 2009 .................................... 5.7% 5.0% 6.2% 6.2% 9.3% 2010 .................................... 6.4% 5.4% 6.9% 6.3% 9.6% 2011 .................................... 5.8% 4.6% 6.3% 5.9% 8.9% 2012 .................................... 5.4% 3.8% 4.8% 5.0% 8.1% 2013 .................................... 5.1% 3.8% 4.7% 4.7% 7.4% 2014 .................................... 4.9% 3.7% 4.6% 4.2% 6.2% 2015 .................................... 4.6% 3.5% 4.3% 3.8% 5.3% 2016 .................................... 4.6% 3.6% 4.1% 3.6% 4.9% 2017 .................................... 3.7% 2.8% 3.2% 3.1% 4.4% 2018 .................................... 2.8% 2.0% 2.6% 2.5% 3.9% 2019(2) ................................ 3.5% 2.6% 3.3% 2.9% 3.5%

Notes: (1) Source: Iowa Workforce Development. (2) Not seasonally adjusted. (3) Preliminary rates for the month of December 2019.

Income Statistics There are 22 school districts within the boundaries of the College. The following is the average adjusted gross income (AGI) per state income tax returns filed by residents of each of the school districts for the year ending December 31, 2018.

Adjusted Gross Income (AGI) By School District in 2018(1) Average AGI School District Adjusted Gross Income Number of Returns Per Return Aplington-Parkersburg ........................... $ 116,761,244 2,805 $41,626 Cedar Falls ............................................ 1,325,620,571 23,199 57,141 Clarksville .............................................. 43,663,510 1,183 36,909 Denver ................................................... 133,057,485 2,488 53,480 Dike-New Hartford ................................. 129,173,233 2,690 48,020 Dunkerton .............................................. 57,678,684 1,406 41,023 East Buchanan ...................................... 72,444,769 1,824 39,718 Gladbrook-Reinbeck .............................. 115,123,088 2,562 44,935 Grundy Center ....................................... 100,701,571 2,307 43,650 Hudson .................................................. 109,735,037 2,051 53,503 Independence ........................................ 228,562,266 5,601 40,807 Janesville ............................................... 74,213,955 1,493 49,708 Jesup ..................................................... 138,804,637 2,985 46,501 Nashua-Plainfield ................................... 90,426,054 2,249 40,207 North Butler ........................................... 82,935,552 2,264 36,632 North Tama ............................................ 133,123,613 1,875 70,999 Sumner-Fredericksburg ......................... 106,705,071 2,972 35,903 Tripoli ..................................................... 54,498,713 1,455 37,456 Union ..................................................... 185,030,312 3,750 49,341 Wapsie Valley ........................................ 84,612,387 2,192 38,601 Waterloo ................................................ 1,674,218,733 43,086 38,858 Waverly-Shell Rock................................ 367,786,096 8,310 44,258 Note: (1) Source: Iowa Department of Revenue.


13

Agriculture

Shown below are agricultural statistics of the Counties in the Merged Area VII and certain data comparing the Counties with statewide averages:

Average Value Per Acre(1) Counties 2015 2016 2017 2018 2019 Benton ........................................................................ $8,485 $7,922 $8,146 $7,994 $8,336 Black Hawk ................................................................. 9,198 8,599 8,841 8,936 9,014 Bremer........................................................................ 8,692 8,139 8,402 8,501 8,376 Buchanan ................................................................... 8,447 7,913 8,153 8,249 8,185 Butler .......................................................................... 8,101 7,596 7,806 7,867 7,934 Chickasaw .................................................................. 7,567 7,084 7,317 7,393 7,282 Fayette ....................................................................... 8,233 7,694 8,000 7,929 7,781 Floyd .......................................................................... 7,808 7,323 7,512 7,742 7,654 Grundy........................................................................ 9,183 8,552 8,816 8,708 8,997 Tama .......................................................................... 7,985 7,455 7,667 7,510 7,842 State of Iowa .............................................................. 7,633 7,183 7,326 7,264 7,432 Note: (1) Source: Cooperative Extension Service - Iowa State University. Retail Sales

The Department of Revenue of the State of Iowa provides retail sales figures based on sales tax reports for years ending June 30. The Department of Revenue figures provide recent data to confirm trends in retail sales activity in the Merged Area Counties.

Retail Taxable Sales(1)

Fiscal Year Ended June 30 Counties 2015 2016 2017 2018 2019 Benton ....................................... $ 129,222,369 $ 131,704,617 $ 132,186,191 $ 132,529,131 $ 136,547,686 Black Hawk ................................ 1,852,652,613 1,903,918,185 1,899,158,804 1,891,918,313 1,920,990,312 Bremer ...................................... 191,961,205 194,465,594 201,296,263 210,225,126 220,025,891 Buchanan .................................. 159,852,993 162,098,547 162,114,135 171,900,829 180,648,430 Butler ......................................... 61,209,960 60,623,470 62,469,512 60,375,801 63,600,425 Chickasaw ................................. 88,306,701 89,603,209 90,898,226 92,157,769 93,759,262 Fayette ...................................... 130,412,827 129,206,774 129,441,806 127,785,462 131,704,288 Floyd ......................................... 120,847,656 119,740,753 119,369,902 119,525,658 118,176,450 Grundy ...................................... 67,682,620 68,115,548 68,117,318 67,665,441 70,065,072 Tama ......................................... 78,065,747 77,983,284 76,622,455 74,794,291 77,548,772 Total ........................................ $2,880,214,691 $2,937,459,981 $2,941,674,612 $2,948,877,821 $3,013,066,588 Note: (1) Source: the Iowa Department of Revenue.

DEFAULT RECORD The College has no record of default and has met its debt repayment obligations promptly.

SHORT-TERM BORROWING The College has not issued tax anticipation warrants or revenue anticipation notes during the last five years to meet its short-term current year cash flow requirements.


14

DEBT INFORMATION

After issuance of the Certificates, the College will have outstanding approximately $15,410,000* principal amount

of Industrial New Jobs Training Certificates paid from proceeds from anticipated job credits from withholding taxes, budgeted reserves, and, in the case of an insufficiency of such sources, from standby property taxes. The College also has approximately $6,050,000 principal amount of General Obligation School Bonds outstanding. Debt Limitation The constitutional general obligation debt limit of a political subdivision of the state of Iowa is equal to five percent (5%) of the value of taxable property within its borders. According to and based upon the January 1, 2018 property valuations, for taxes payable in September 2019 and March 2020 the general obligation debt limit of the College for the period which began July 1, 2019 and ends June 30, 2020 is:

2018 100% Actual Valuation of Property ............................... $17,298,798,004 Constitutional Debt Limit ....................................................... $ 864,939,900 Outstanding Bonds/Notes Applicable to Debt Limit: Industrial New Jobs Training Certificates ............................... $ 15,410,000* General Obligation School Bonds .......................................... 6,050,000 Total Applicable Debt ............................................................ $ 21,460,000* Remaining Debt Capacity ...................................................... $ 843,479,900*

The College expects to issue additional general obligation debt in calendar year 2020, including the possible issuance of an additional general obligation bonds, but the amount has not yet been determined.

Summary of Outstanding General Obligation Bonded Debt(1) (Principal Only)

General Obligation School Bonds

Series 2018 ............................................................................................... $ 6,050,000

Industrial New Jobs Training Certificates Taxable Series 2011-2 .............................................................................. 260,000 Taxable Series 2012-1 .............................................................................. 725,000 Taxable Series 2013-1 .............................................................................. 915,000 Taxable Series 2014-1 .............................................................................. 1,225,000

Taxable Series 2015-1 .............................................................................. 1,100,000 Taxable Series 2016-1 .............................................................................. 1,290,000 Taxable Series 2017-1 .............................................................................. 740,000 Taxable Series 2018-1 .............................................................................. 2,925,000 Taxable Series 2019-1 .............................................................................. 5,030,000 The Certificates(2) ..................................................................................... 1,200,000

Total(2) ............................................................................................................. $21,460,000

Notes: (1) Source: the College. (2) Subject to change.

*Subject to change.

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16

Statement of Bonded Indebtedness(1)(2)

College Actual Value, January 1, 2018 ..................................................................................................................................................... $17,298,798,004 College Taxable Value, January 1, 2018 .................................................................................................................................................. $10,597,632,416

Total Ratio to Ratio to Per Capita Applicable College Actual College Taxable (2010 Pop.

G.O. Debt Valuation Valuation Est. 207,848) Direct General Obligation Bonded Debt(3)(4)..... $ 21,460,000 0.12% 0.20% $ 103.25 Less: Direct Debt Paid From Non Property Tax Sources (3)(4)............................. (15,410,000) (0.09%) (0.15%) (74.14) Net Direct GO Bonded Debt............................ $ 6,050,0000 0.03% 0.05% $ 29.11 Overlapping Debt: Schools ............................................................ $ 82,097,380 0.47% 0.77% $ 394.99 Cities ................................................................ 186,589,572 1.08% 1.76% 897.72 Counties ........................................................... 38,307,377 0.22% 0.36% 184.30 Total Overlapping Debt .................................... $306,994,329 1.77% 2.90% $1,477.01 Total Net Direct General Obligation and Overlapping Bonded Debt(4).................... $313,044,329 1.81% 2.95% $1,506.12

Per Capita Actual Value ................................................................................................................................................................................ $83,228.12 Per Capita Taxable Value .............................................................................................................................................................................. $50,987.42 Notes: (1) Source: the College, Treasurer of the State of Iowa, Outstanding Obligations Report, debt as of June 30, 2019 for the Counties, School

District and Cities. (2) As of the date of issuance for the Direct Bonded Debt and March 10, 2020 for Overlapping Debt. (3) Includes $15,410,000 in Industrial New Jobs Training Certificates, which are expected to be paid by proceeds from anticipated job credits

from withholding taxes. (4) Subject to change.

PROPERTY ASSESSMENT AND TAX INFORMATION Property Tax Assessment

In compliance with Section 441.21 of the Code of Iowa, as amended, the State Director of Revenue annually directs all county auditors to apply prescribed statutory percentages to the assessments of certain categories of real property. The final values, called Actual Valuation, are then adjusted by the County Auditor. Taxable Valuation subject to tax levy is then determined by the application of State determined rollback percentages, principally to residential property.

Beginning in 1978, the State required a reduction in Actual Valuation to reduce the impact of inflation on its residents. The resulting value is defined as the Taxable Valuation. Such rollback percentages may be changed in future years. Certain historical rollback percentages for residential, multi-residential, agricultural and commercial valuations are as follows:

Percentages for Taxable Valuation After Rollbacks(1)

Multi- Ag Land Fiscal Year Residential Residential(2) & Buildings Commercial

2011/12 ................ 48.5299% N/A 69.0152% 100.0000% 2012/13 ................ 50.7518% N/A 57.5411% 100.0000% 2013/14 ................ 52.8166% N/A 59.9334% 100.0000% 2014/15 ................ 54.4002% N/A 43.3997% 95.0000% 2015/16 ................ 55.7335% N/A 44.7021% 90.0000% 2016/17 ................ 55.6259% 86.2500% 46.1068% 90.0000% 2017/18 ................ 56.9391% 82.5000% 47.4996% 90.0000% 2018/19 ................ 55.6209% 78.7500% 54.4480% 90.0000% 2019/20 ................ 56.9180% 75.0000% 56.1324% 90.0000% 2020/21 ................ 55.0743% 71.2500% 81.4832% 90.0000%

Notes: (1) Source: the Iowa Department of Revenue. (2) New category beginning with fiscal year 2017.

Property is assessed on a calendar year basis. The assessments finalized as of January 1 of each year are applied to the following tax year. For example, the assessments finalized on January 1, 2018, are used to calculate tax liability for the tax year starting July 1, 2019 through June 30, 2020.


17

Property Tax Collection

Each county is required by State law to collect all tax levies within its jurisdiction and remit, before the fifteenth of each month, the amount collected through the last day of the preceding month to underlying units of government, including the College. Property tax payments are made at the office of each county treasurer in full or one-half by September 30 and March 31, pursuant to the Code of Iowa, Sections 445.36 and 445.37. Where the first half of any property tax has not been paid by October 1, such installment becomes delinquent. If the second installment is not paid, it becomes delinquent on April 1. Delinquent taxes and special assessments are subject to a penalty at the rate of one and one-half percent per month, to a maximum of eighteen percent per annum.

If taxes are not paid when due, the property may be offered at the regular tax sale on the third Tuesday of June following the delinquency date. Purchasers at the tax sale must pay an amount equal to the taxes, special assessments, interest and penalties due on the property, and funds so received are applied to the payment of taxes. A property owner may redeem from the regular tax sale, but failing redemption within two years, the tax sale purchaser is entitled to a deed which in general conveys the title free and clear of all liens except future installments of taxes.

Actual (100%) Valuations for the College(1)(2) Preliminary Fiscal Year: 2016/17 2017/18 2018/19 2019/20 2020/21 Property Class Levy Year: 2015 2016 2017 2018 2019 Residential ...................................................... $ 9,754,942,712 $ 9,907,584,999 $10,121,773,163 $10,313,253,673 $10,824,066,517 Agricultural Land ............................................... 3,618,668,170 3,618,072,626 3,222,860,546 3,221,723,422 2,288,906,403 Agricultural Buildings ......................................... 174,179,010 180,504,580 132,141,450 137,169,390 103,671,040 Commercial ....................................................... 1,882,848,141 1,904,957,167 1,969,300,062 2,049,016,128 2,121,369,897 Industrial ........................................................... 377,947,262 390,620,510 403,446,345 410,678,057 429,993,237 Multi-residential ................................................. 227,403,507 225,790,809 299,283,530 288,889,170 284,283,015 Railroads ........................................................... 42,498,623 43,974,576 44,222,382 44,110,126 46,914,590 Utilities without Gas and Electric(3) ................... 119,861,320 115,070,814 117,897,972 123,579,179 115,377,676 Other ................................................................. 0 0 75,500 75,500 0 Gas and Electric Utility(3) .................................. 553,998,275 662,347,461 674,610,837 728,755,952 749,234,722 Less: Military Exemption .................................. (20,567,013) (19,928,153) (18,996,517) (18,452,593) (17,778,795) Total ............................................................... $16,731,780,007 $17,028,995,389 $16,966,615,270 $17,298,798,004 $16,946,038,302 Percent Change +(-) ........................................ 3.64%(4) 1.78% (0.37%) 1.96% (2.04%) Notes: (1) Source: Iowa Department of Management. (2) Includes tax increment finance (TIF) valuations used in the following amounts:

January 1: 2015 2016 2017 2018 2019 TIF Valuation ............................... $763,123,470 $618,811,176 $661,008,219 $633,914,219 $697,052,467

(3) See “PROPERTY TAX INFORMATION - Utility Property Tax Replacement” herein. (4) Based on 2014 Actual Valuation of $16,144,737,044.

The remainder of this page was left blank intentionally.


18

For the January 1, 2019 levy year, the College’s Taxable Valuation was comprised of approximately 55%

residential, 18% agriculture, 18% commercial, 4% industrial, 3% utilities, 2% multi-residential, and less than 1% other and military exemption.

Taxable (“Rollback”) Valuations for the College(1)(2) Preliminary Fiscal Year: 2016/17 2017/18 2018/19 2019/20 2020/21 Property Class Levy Year: 2015 2016 2017 2018 2019 Residential ........................................................ $5,426,275,609 $ 5,641,289,472 $ 5,629,821,273 $ 5,870,097,891 $ 5,961,279,187 Agricultural Land ............................................... 1,668,429,565 1,718,549,213 1,754,743,942 1,808,404,177 1,865,070,507 Agricultural Buildings ......................................... 80,330,831 85,758,981 71,987,551 77,022,960 84,478,045 Commercial ....................................................... 1,694,563,373 1,714,461,500 1,772,370,103 1,844,114,564 1,909,232,957 Industrial ........................................................... 340,152,536 351,558,459 363,101,710 369,610,251 386,993,913 Multi-residential ................................................. 196,135,657 186,277,585 235,685,892 216,667,257 202,551,765 Railroads ........................................................... 38,248,762 39,577,123 39,800,151 39,699,120 42,223,135 Utilities without Gas and Electric(3) ................... 119,861,320 115,070,814 117,897,972 123,579,179 115,377,676 Other ................................................................. 0 0 75,500 75,500 0 Gas and Electric Utility(3) .................................. 239,983,540 271,891,849 267,684,160 266,814,110 256,582,703 Less: Military Exemption ................................... (20,567,013) (19,928,153) (18,996,517) (18,452,593) (17,778,795) Total ................................................................ $9,783,414,180 $10,104,506,843 $10,234,171,737 $10,597,632,416 $10,806,011,093 Percent Change +(-) ........................................ 3.69%(4) 3.28% 1.28% 3.55% 1.97% Notes: (1) Source: Iowa Department of Management. (2) Includes tax increment finance (TIF) valuations used in the following amounts:

January 1: 2015 2016 2017 2018 2019 TIF Valuation ............................... $715,466,740 $591,558,284 $632,113,815 $604,406,565 $661,159,866

(3) See “PROPERTY TAX INFORMATION - Utility Property Tax Replacement” herein. (4) Based on 2014 Taxable Valuation of $9,434,892,649.

The following shows the trend in the College’s tax extensions and collections.

Levy Year January 1, 2019 Preliminary College Valuation By County(1) Preliminary Percent Preliminary Percent 100% Actual Value of Total Taxable Value of Total Benton ................................... $ 193,961 1.14% $ 125,505,933 1.16% Black Hawk ............................ 9,724,577,675 57.39% 6,146,693,821 56.88% Bremer ................................... 2,226,506,848 13.14% 1,390,738,619 12.87% Buchanan ............................... 1,540,803,689 9.09% 963,382,617 8.92% Butler ..................................... 1,169,628,779 6.90% 776,955,415 7.19% Chickasaw ............................. 224,388,845 1.32% 146,323,630 1.35% Fayette ................................... 189,064,877 1.12% 134,392,475 1.24% Floyd ...................................... 53,993,707 0.32% 38,047,295 0.35% Grundy ................................... 997,344,297 5.89% 664,445,230 6.15% Tama ..................................... 625,767,677 3.69% 419,526,058 3.88% Total ..................................... $16,946,038,302 $10,806,011,093 Note: (1) Source: the Iowa Department of Management.


19

The following shows the trend in the College’s tax extensions and collections.

Tax Extensions and Collections(1)

Levy Fiscal Amount Amount Percent Year Year Levied Collected(2) Collected 2009 ............... 2010-11 .............. $7,548,375 $7,565,783 100.23% 2010 ............... 2011-12 .............. 7,615,451 7,616,726 100.02% 2011 ............... 2012-13 .............. 8,152,213 8,125,536 99.67% 2012 ............... 2013-14 .............. 8,437,044 8,410,452 99.68% 2013 ............... 2014-15 .............. 8,308,869 8,262,008 99.44% 2014 ............... 2015-16 .............. 8,507,807 8,469,716 99.55% 2015 ............... 2016-17 .............. 8,801,396 8,793,825 99.91% 2016 ............... 2017-18 .............. 9,382,203 9,397,442 100.16% 2017 ............... 2018-19 .............. 9,923,617 9,901,875 99.78% 2018 ............... 2019-20 .............. 11,323,827 - - In Collection - - Notes: (1) Source: the State of Iowa Department of Management and the College.

Includes amounts for Utility Replacement. (2) Includes delinquent taxes.

Principal Taxpayers(1)

Levy Year 2018 Taxpayer Name Business/Service Taxable Valuation(2) Target Corporation ........................................................ Retail Store and Distribution Center ............................. $ 77,792,220 Deere and Company...................................................... Manufacturing .............................................................. 57,870,988 IOC Black Hawk County, Inc. ......................................... Casino/Hotel ................................................................ 48,954,195 Northern Natural Gas..................................................... Utility ........................................................................... 32,989,355 ConAgra ........................................................................ Food Processing .......................................................... 29,970,738 Century Link .................................................................. Utility ........................................................................... 23,463,774 Menard Inc. ................................................................... Retail ........................................................................... 21,062,871 Ferguson Enterprises, Inc. ............................................. Warehouse .................................................................. 18,636,903 VGM Management, Inc. ................................................. Commercial Property ................................................... 16,579,038 FDP WTC, LLC.............................................................. Commercial Property ................................................... 16,478,658 Total ................................................................................................................................................................. $343,798,740 Ten Largest Taxpayers as Percent of College’s 2018 Taxable Valuation ($10,597,632,416) ............................ 3.24% Notes: (1) Source: the Counties. (2) Every effort has been made to seek out and report the largest taxpayers. However, many of the taxpayers listed

contain multiple parcels and it is possible that some parcels and their valuations have been overlooked. Property Tax Rates

All taxable property within the Merged Area VII is taxed by each county at a rate not to exceed $0.2025 per $1,000 of assessed value on such property for the operation of the area vocational school or the area community college such as the College. In addition to the tax authorized for the operation of a merged area community college, the voters in any merged area may vote a tax not to exceed $0.2025 per $1,000 of assessed value for a period not to exceed ten years for capital improvements to the merged area (plant fund). The voters of the College approved, at an election held in September 2013, the Plant Levy for a $0.2025 per $1,000 of assessed valuation for ten years which will end with the 2025 fiscal year. Under certain conditions, the Board may by Resolution extend said tax for additional ten year periods. The College adopted a resolution on November 26, 2019 extending the Equipment Levy for an additional ten years beginning July 1, 2025 through June 30, 2035. The board of directors of a merged area may also certify a levy not to exceed $0.03 per $1,000 of assessed value for equipment replacement and they are authorized to levy to pay certain insurance expenses of the merged area. In addition, upon voter approval, the College can institute a property tax that generates $0.06 per $1,000 of assessed valuation. The voters of the College approved, at an election held in September 2015, the Equipment Levy for a $0.06 per $1,000 of assessed valuation for ten years which will end with the 2028 fiscal year. Under certain conditions, the Board may by Resolution extend said tax for additional ten year periods. The College adopted a resolution on November 26, 2019 extending the Equipment Levy for an additional ten years beginning July 1, 2028 through June 30, 2038. The additional $0.06 per $1,000 levy can only be used for Instructional Equipment.


20

The property tax rates for the College from levy year 2014 through levy year 2018 are shown below:

Property Tax Rates(1)

(Per $1,000 Actual Valuation)

Fiscal Year: 2015/16 2016/17 2017/18 2018/19 2019/20 Levy Year: 2014 2015 2016 2017 2018 College: Unrestricted General Fund ........................... $0.20250 $0.20250 $0.20250 $0.20250 $0.20250 Unemployment Compensation ...................... 0.00665 0.00665 0.00399 0.00125 0.00125 Tort Liability .................................................. 0.01705 0.01154 0.02049 0.01562 0.01562 Insurance ..................................................... 0.13686 0.14237 0.15920 0.19267 0.24588 Early Retirement ........................................... 0.04532 0.04532 0.04203 0.06249 0.11028 Equipment Replacement .............................. 0.09000 0.09000 0.09000 0.09000 0.09000 Standby ........................................................ 0.00000 0.00000 0.00000 0.00000 0.00000 Plant Funds .................................................. 0.20250 0.20250 0.20250 0.20250 0.20250 Bond and Interest Funds .............................. 0.25000 0.25000 0.25000 0.25000 0.25000 Total College .............................................. $0.95088 $0.95088 $0.97071 $1.01703 $1.11803 Note: (1) Source: Iowa Department of Management.

Tax Levy Procedures

The Certificates are general obligations of the College, payable from and secured by a continuing ad valorem tax levied against all of the property valuation within the College. As part of the budgetary process each fiscal year, the College will have an obligation to request a debt service levy to be applied against all of the taxable property within the College. A failure on the part of the College to make a timely levy request or a levy request by the College that is inaccurate or is insufficient to make full payments of the debt service of the Certificates for a particular fiscal year may cause Bond holders to experience delay in the receipt of distributions of principal of and/or interest on the Certificates. In the event of a default in the payment of principal of or interest on the Certificates, there is no provision for acceleration of maturity of the principal of the Certificates. Consequently, the remedies of the owners of the Certificates (consisting primarily of an action in the nature of mandamus requiring the College and certain other public officials to perform the terms of the resolution for the Certificates) may have to be enforced from year to year.

Notwithstanding the foregoing, Iowa Code section 76.2 provides when an Iowa political subdivision issues bonds, “the governing authority of these political subdivisions before issuing bonds shall, by resolution, provide for the assessment of an annual levy upon all the taxable property in the political subdivision sufficient to pay the interest and principal of the bonds within a period named not exceeding twenty years. A certified copy of this resolution shall be filed with the county auditor or auditors of the counties in which the political subdivision is located; and the filing shall make it a duty of the auditor(s) to enter annually this levy for collection from the taxable property within the boundaries of the political subdivision until funds are realized to pay the bonds in full.” Utility Property Tax Replacement Property owned by entities involved primarily in the production, delivery, service and sale of electricity and natural gas (“Utilities”) pay a replacement tax based upon the delivery of energy by Utilities in lieu of property taxes. All replacement taxes are allocated among local taxing bodies by the State Department of Revenue and the Department of Management. This allocation is made in accordance with a general allocation formula developed by the Department of Management on the basis of general property tax equivalents. Utility properties paying the replacement tax are exempt from the levy of property tax by political subdivisions. In addition to the replacement tax, Utility property will continue to be valued by a special method as provided in the statute and taxed at the rate of three cents per one thousand dollars for the general fund of the State.


21

By statute, the replacement tax collected by the State and allocated among local taxing bodies (including the College) shall be treated as property tax when received and shall be disposed of by the county treasurer as taxes on real estate. It is possible that the general obligation debt capacity of the College could be adjudicated to be proportionately reduced in future years if Utility property were determined to be other than “taxable property” for purposes of computing the College’s debt limit under Article XI of the Constitution of the State of Iowa. There can be no assurance that future legislation will not (i) operate to reduce the amount of debt the College can issue or (ii) adversely affect the College’s ability to levy taxes in the future for the payment of the principal of and interest on its outstanding debt obligations, including the Certificates. Approximately 3% of the College’s levy year 2019 taxable valuation currently is utility property. Tax Increment Financing

The Code of Iowa currently authorizes the use of two types of tax increment financing by local taxing districts in the State of Iowa. The first type allows local governments to establish TIF districts to be established for the purposes of financing designated urban renewal projects which contribute to the urban redevelopment and economic development of the immediate area. The taxable valuation used for this type of TIF district in the College for levy year 2019 was $661,159,866.

The second type of tax increment financing was authorized by state legislative action in the mid-1980’s. The area community colleges can establish TIF districts by contract with specific local businesses and industries to provide jobs training programming for new employees of existing expanding businesses or employees of new businesses. The revenues from these job training TIF districts then retires the debt incurred from the issuance of jobs training certificates which finance the cost of jobs training programming over a maximum of ten years. Upon payment of all jobs training certificates, the district dissolves and the incremental value from the new or expanded business reverts to the general tax base. There is no current valuation for this second type of TIF district. Legislation From time to time, legislative proposals are pending in Congress and the Iowa General Assembly that would, if enacted, alter or amend one or more of the property tax matters described herein. It cannot be predicted whether or in what forms any of such proposals, either pending or that may be introduced, may be enacted, and there can be no assurance that such proposals will not apply to valuation, assessment or levy procedures for taxes levied by the College or have an adverse impact on the future tax collections of the College. Purchasers of the Certificates should consult their tax advisors regarding any pending or proposed federal or state tax legislation. The opinions expressed by Bond Counsel are based upon existing legislation as of the date of issuance and delivery of the Certificates and Bond Counsel has expressed no opinion as of any date subsequent thereto or with respect to any pending federal or state tax legislation.

During the 2013 legislative session, the Iowa General Assembly enacted Senate File 295 (the “2013 Act”). Among other things, the Act (i) reduced the maximum annual taxable value growth percent, due to revaluation of existing residential and agricultural property to 3%, (ii) assigned a “rollback” (the percentage of a property’s value that is subject to tax) to commercial, industrial and railroad property of 90%, (iii) created a new property tax classification for multi-residential properties (apartments, nursing homes, assisted living facilities and certain other rental property) and assigned a declining rollback percentage to such properties for each year until the residential rollback percentage is reached in the 2022 assessment year, after which the rollback percentage for such properties will be equal to the residential rollback percentage each assessment year, and (iv) exempted a specified portion of the assessed value of telecommunication properties.

The Act includes a standing appropriation to replace some of the tax revenues lost by local governments, including tax increment districts, resulting from the new rollback for commercial and industrial property. Beginning in fiscal year 2018 the standing appropriation cannot exceed the actual 2017 appropriation amount. The appropriation does not replace losses to local governments resulting from the Act’s provisions that reduce the annual revaluation growth limit for residential and agricultural properties to 3%, the gradual transition for multi-residential properties from the residential rollback percentage (currently 53% of market value), or the reduction in the percentage of telecommunications property that is subject to taxation.


22

Given the wide scope of the statutory changes, and the State’s discretion in establishing the annual replacement

amount that is appropriated each year commencing in fiscal 2018, the impact of the 2013 Act on the College’s future property tax collections is uncertain and the College has not attempted to quantify the financial impact of the 2013 Act’s provisions on the College’s future operations.

Notwithstanding any decrease in property tax revenues that may result from the 2013 Act, Iowa Code section 76.2 provides that when an Iowa political subdivision issues bonds, "[t]he governing authority of these political subdivisions before issuing bonds shall, by resolution, provide for the assessment of an annual levy upon all the taxable property in the political subdivision sufficient to pay the interest and principal of the bonds within a period named not exceeding twenty years. A certified copy of this resolution shall be filed with the county auditor or the auditors of the counties in which the political subdivision is located; and the filing shall make it a duty of the auditors to enter annually this levy for collection from the taxable property within the boundaries of the political subdivision until funds are realized to pay the bonds in full."

From time to time, other legislative proposals may be considered by the Iowa General Assembly that would, if enacted, alter or amend one or more of the property tax matters described in this Official Statement. It cannot be predicted whether or in what forms any of such proposals may be enacted, and there can be no assurance that such proposals will not apply to valuation, assessment or levy procedures for the levy of taxes by the College.

FINANCIAL INFORMATION Financial Reports

The College’s financial statements are audited annually by certified public accountants. The College’s financial statements are prepared in conformity with U.S. generally accepted accounting principles as prescribed by the Governmental Accounting Standards Board. See APPENDIX A for more detail. No Consent or Updated Information Requested of the Auditor

The tables and excerpts (collectively, the “Excerpted Financial Information”) contained in this “FINANCIAL INFORMATION” section are from the audited financial statements of the College, including the audited financial statements for the fiscal year ended June 30, 2019 (the “2019 Audit”). The 2019 Audit has been prepared by Williams & Company, P.C., Certified Public Accountants, Spencer, Iowa, (the “Auditor”), and received by the Board of Directors. The College has not requested the Auditor to update information contained in the Excerpted Financial Information and the 2019 Audit; nor has the College requested that the Auditor consent to the use of the Excerpted Financial Information and the 2019 Audit in this Official Statement. The inclusion of the Excerpted Financial Information and the 2019 Audit in this Official Statement in and of itself is not intended to demonstrate the fiscal condition of the College since the date of the 2019 Audit. Questions or inquiries relating to financial information of the College since the date of the 2019 Audit should be directed to the College. Summary Financial Information

The following tables are summaries and do not purport to be the complete audits, copies of which are available upon request. See APPENDIX A for the College’s 2019 Audit. The College expects its Current Funds – Unrestricted Balance for the fiscal year ending June 30, 2020 decrease by approximately $200,000. The College has approved a balance budget for fiscal year 2021.


23

Statement of Net Position(1)(2)

Audited as of June 30 2015 2016 2017 2018 2019

ASSETS: Current Assets: Cash and Cash Equivalents........................................... $ 5,568,274 $ 2,555,596 $ 1,293,558 $ 9,321,304 $ 13,565,598 Certificates of Deposit.................................................... 0 0 1,159,617 468,801 436,971 Pooled Investments ...................................................... 28,715,165 18,367,694 15,170,194 9,990,233 18,394,546 Receivables Accounts Receivable (Net) ......................................... 0 27,660 0 0 0 Due From Other (Net) ................................................. 3,100,296 3,679,757 3,398,192 3,922,866 2,858,412 Grant Receivable, Current Portion .............................. 0 0 1,104,203 1,210,780 310,000 Accrued Interest ......................................................... 40,631 49,223 46,167 74,727 98,537 Property Taxes – Succeeding Year............................. 8,507,807 8,801,396 9,382,203 9,923,617 11,323,827 Student Loans ............................................................ 16,205 16,641 16,599 16,009 15,994 Loans Receivable (Net) .............................................. 41,180 31,639 28,920 29,170 54,985 Iowa Industrial New Jobs Training Program ................ 922,247 782,084 200,254 2,158,352 3,709,233 Due From Other Governments ..................................... 2,551,991 2,324,304 2,384,503 1,348,468 731,271 Prepaid Expenses ........................................................ 308,110 505,583 337,833 543,415 281,698 Inventories .................................................................... 151,880 153,479 173,170 177,817 298,969 Total Current Assets ................................................... $ 49,923,786 $ 37,295,056 $ 34,695,413 $ 39,185,559 $ 52,080,041 Noncurrent Assets Certificates of Deposit................................................... $ 0 $ 0 $ 250,733 $ 961,502 $ 1,020,667 Pooled Investments ...................................................... 12,793,855 27,305,803 26,165,953 24,240,554 14,356,909 Receivables: Life Insurance Cash Value .......................................... 25,448 27,048 28,755 12,110 12,449 Grant Receivables, Less Current Portion (Net) ........... 0 0 122,813 450,219 1,945,295 Pledges Receivable, Less Current Portion (Net) ......... 0 0 0 0 30,195 Capital Assets (Net) ...................................................... 58,694,486 58,726,717 58,683,092 64,540,261 65,742,027 Total Noncurrent Assets ............................................. $ 71,513,789 $ 86,059,568 $ 85,251,346 $ 91,544,947 $ 83,107,542 Total Assets ............................................................... $121,437,575 $123,354,624 $119,946,759 $130,730,506 $135,187,583 DEFERRED OUTFLOWS OF RESOURCES: OPEB Related Deferred Outflows ................................. $ 0 $ 0 $ 0 $ 13,270 $ 304,302 Pension Related Deferred Outflows .............................. 1,385,410 3,623,204 3,869,526 4,133,715 3,208,765 Total Deferred Outflows of Resources ....................... $ 1,385,410 $ 3,623,204 $ 3,869,526 $ 4,146,985 $ 3,513,067 LIABILITIES: Current Liabilities: Accounts Payable ......................................................... $ 2,457,600 $ 1,918,991 $ 2,168,546 $ 2,093,401 $ 1,001,158 Salaries and Benefits Payable ...................................... 2,678,422 3,366,933 2,172,342 2,557,210 2,285,953 Accrued Interest Payable .............................................. 34,509 36,503 26,277 38,456 41,291 Unearned Revenue ...................................................... 1,289,865 1,402,091 1,531,453 1,526,731 1,738,480 Compensated Absences ............................................... 575,000 587,500 612,500 632,500 645,000 Early Retirement Payable ............................................. 973,929 1,306,355 484,976 1,769,867 1,719,465 Assets Held in Custody For Others ............................... 760,071 840,854 544,452 430,157 478,261 Reported and Unreported Insurance Claims Payable ... 0 0 0 0 377,000 Insurance Reserve ....................................................... 0 0 0 0 477,097 Bonds Payable ............................................................. 0 2,371,918 1,426,106 2,380,000 2,190,000 Certificates Payable ...................................................... 3,170,000 3,091,646 2,770,000 2,050,000 2,320,000 Total Current Liabilities ............................................... $ 11,939,396 $ 14,922,791 $ 11,736,652 $ 13,478,322 $ 13,273,705 Noncurrent Liabilities: Unearned Revenue ...................................................... $ 447,235 $ 310,700 $ 253,809 $ 289,208 $ 383,027 Compensated Absences ............................................... 279,060 223,364 299,615 290,390 297,814 Early Retirement Payable ............................................. 56,356 0 107,904 250,419 527,891 Certificates Payable ...................................................... 11,895,000 9,719,811 7,913,103 9,193,166 11,901,519 Bonds and Capital Notes Payable ................................ 0 1,425,395 0 6,088,581 3,890,731 Net Pension Liability ..................................................... 5,159,327 7,517,459 9,817,186 10,834,554 9,996,520 Total OPEB Liability ...................................................... 298,708 291,245 272,161 417,641 769,060 Total Noncurrent Liabilities ......................................... $ 18,135,686 $ 19,487,974 $ 18,663,778 $ 27,363,959 $ 27,766,562 Total Liabilities ........................................................... $ 30,075,082 $ 34,410,765 $ 30,400,430 $ 40,842,281 $ 41,040,267 DEFERRED INFLOWS OF RESOURCES: Unavailable Property Tax Revenue .............................. $ 8,507,807 $ 8,801,396 $ 9,382,203 $ 9,923,617 $ 11,323,827 OPEB Related Deferred Inflows.................................... 0 0 0 21,139 18,960 Pension Related Deferred Inflows ................................. 1,967,619 1,750,410 117,163 207,036 774,483 Total Deferred Inflows of Resources ............................ $ 10,475,426 $ 10,551,806 $ 9,499,366 $ 10,151,792 $ 12,117,270


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Statement of Net Position(1)(2)

(continued)


NET POSITION: Net Invested in Capital Assets ...................................... $ 58,694,486 $ 60,813,358 $ 61,545,813 $ 61,732,927 $ 60,581,559 Restricted: Non Expendable .......................................................... 2,098,930 2,161,074 2,192,860 2,287,019 2,323,988 Expendable ................................................................. 14,189,624 12,739,191 13,330,722 12,847,707 14,123,932 Unrestricted .................................................................. 7,289,437 6,301,634 6,847,094 7,015,765 8,513,634 Total Net Position ....................................................... $ 82,272,477 $ 82,015,257 $ 83,916,489 $ 83,883,418 $ 85,543,113 Notes: (1) Source: Audited financial statements for the College for the fiscal years ended June 30, 2015 through 2019. (2) Includes the Hawkeye Community College Foundation.

Statement of Revenues, Expenses and Changes In Net Position(1)(2)

Audited Fiscal Year Ended June 30 2015 2016 2017 2018 2019

REVENUES: Operating Revenues: Tuition and Fees (Net) .................................................. $ 9,517,319 $ 11,142,773 $ 11,903,843 $ 12,011,056 $ 13,033,779 Federal Appropriations ................................................. 13,559,712 15,917,845 15,592,867 13,258,898 8,877,362 Iowa Industrial New Jobs Training Program .................. 3,813,684 2,658,380 1,314,290 3,934,818 3,547,900 Gifts and Grants ........................................................... 1,022,645 1,172,552 2,271,325 1,646,590 2,928,466 Auxiliary Enterprises Revenue (Net) ............................. 2,133,658 2,189,174 2,335,460 2,320,037 2,391,439 Miscellaneous ............................................................... 3,304,574 3,246,690 2,864,784 4,023,254 4,093,447 Total Operating Revenues .......................................... $ 33,351,592 $ 36,327,414 $ 36,282,569 $ 37,194,653 $ 34,872,393 EXPENSES: Operating Expenses: Education and Support: Liberal Arts and Sciences ........................................... $ 7,370,096 $ 7,582,396 $ 7,449,604 $ 7,569,480 $ 7,400,418 Vocational Technical................................................... 16,264,681 16,450,678 16,087,545 14,901,592 10,803,655 Adult Education .......................................................... 4,689,368 5,077,968 5,208,916 5,063,161 5,541,611 Cooperative Services .................................................. 5,345,385 5,275,000 4,764,827 6,114,339 5,151,920 General Administration ............................................... 1,953,527 2,319,533 1,733,911 1,507,921 1,984,060 Student Services ........................................................ 3,939,035 3,947,029 4,294,935 4,507,193 4,496,262 Learning Resources.................................................... 1,143,181 1,077,673 892,397 790,386 798,688 Physical Plant ............................................................. 3,679,968 4,286,328 4,461,584 4,787,050 5,354,770 General Institution ...................................................... 6,887,909 7,737,937 7,415,787 9,786,097 10,339,019 Auxiliary Enterprises ..................................................... 2,784,313 2,698,963 3,258,049 3,588,587 3,614,070 Scholarships and Grants .............................................. 1,372,699 1,470,061 1,518,189 1,559,133 1,666,136 Loan Cancellations and Bad Debts ............................... 43,694 52,265 49,807 4,791 25,851 Instructional and Departmental Support ........................ 0 0 259,420 223,056 282,270 Administrative ............................................................... 433,782 448,374 371,777 374,533 187,821 Capital/Facilities Assistance ......................................... 0 303,548 4,181 0 1,200 Program Costs ............................................................. 138,901 0 0 0 0 Fundraising Expenses .................................................. 50,492 143,354 66,313 27,327 134,997 Depreciation Expense................................................... 2,945,020 3,031,993 3,283,781 3,379,881 3,350,422 Total Operating Expenses .......................................... $ 59,042,051 $ 61,903,100 $ 61,121,023 $ 64,184,527 $ 61,133,170 Operating Income (Loss) .......................................... $(25,690,459) $(25,575,686) $(24,838,454) $(26,989,874) $(26,260,777) NON-OPERATING REVENUES (EXPENSES): State Appropriations ..................................................... $ 17,099,053 $ 17,149,114 $ 17,186,759 $ 17,185,170 $ 17,527,079 Property Taxes ............................................................. 8,262,008 8,469,716 8,793,825 9,397,442 9,901,875 Interest Income from Investments ................................. 483,621 315,767 768,844 960,915 1,621,243 (Loss) on Sale of Capital Assets ................................... (176,488) (144,420) (2,427) (136,688) (717,355) Interest on Indebtedness .............................................. (514,188) (471,711) (340,606) (324,000) (477,270) Net Non-Operating Revenues ..................................... $ 25,154,006 $ 25,318,466 $ 26,406,395 $ 27,082,839 $ 27,855,572 Contributions of Capital Assets ...................................... 0 0 0 0 64,900 Change In Net Position .................................................. $ (536,453) $ (257,220) $ 1,567,941 $ 92,965 $ 1,659,695 Net Position Beginning of Year ...................................... 82,808,930(3) 82,272,477 82,348,548(3) 83,790,453(3) 83,883,418 Net Position End of Year ............................................... $ 82,272,477 $ 82,015,257 $ 83,916,489 $ 83,883,418 $ 85,543,113 Notes: (1) Source: Audited financial statements for the College for the fiscal years ended June 30, 2015 through 2019. (2) Includes the Hawkeye Community College Foundation. (3) Includes a Prior Period Adjustment.


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Balance Sheet(1)

Current Funds - Unrestricted


ASSETS: Cash and Investment ..................................................... $15,142,708 $13,230,734 $11,980,456 $10,924,505 $12,522,972 Receivables Due From Other........................................................... 2,428,769 3,401,320 3,200,292 3,630,742 2,528,920 Accrued Interest .......................................................... 25,833 34,178 31,000 57,634 68,727 Property Taxes – Succeeding Year ............................. 1,776,609 1,836,259 1,926,372 1,944,418 2,023,628 Due From Other Governments ...................................... 115,139 123,229 195,650 128,445 101,254 Prepaid Expenses ......................................................... 308,110 505,583 337,833 543,415 281,698 Inventories ..................................................................... 151,880 153,479 173,170 177,817 298,969 Total Assets ................................................................ $19,949,048 $19,284,782 $17,844,773 $17,406,976 $17,826,168 LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCE: Liabilities: Accounts Payable ......................................................... $ 2,298,306 $ 1,801,691 $ 2,030,625 $ 1,573,287 $ 688,107 Salaries and Benefits Payable ...................................... 2,676,625 3,359,618 2,171,206 2,556,052 2,285,363 Unearned Revenue ...................................................... 977,335 1,053,924 1,063,882 867,433 1,006,073 Compensated Absences ............................................... 854,060 810,864 912,115 922,890 942,814 Reported and Unreported Insurance Claims Payable ... 0 0 0 0 377,000 Insurance Revenue ...................................................... 0 0 0 0 477,097 Total Liabilities ............................................................ $ 6,806,326 $ 7,026,097 $ 6,177,828 $ 5,919,662 $ 5,756,454 Deferred Inflows of Resources: Succeeding Year Property Tax .................................... $ 1,776,609 $ 1,836,259 $ 1,926,372 $ 1,944,418 $ 2,023,628 Fund Balance: Unrestricted .................................................................. $ 8,195,868 $ 7,579,395 $ 7,217,155 $ 6,899,656 $ 6,866,711 Unrestricted - Auxiliary Enterprises ............................... 3,170,245 2,843,031 2,523,418 2,643,240 3,179,375 Total Fund Balance .................................................... $11,366,113 $10,422,426 $ 9,740,573 $ 9,542,896 $10,046,086 Total Liabilities, Deferred Inflows of Resources and Fund Balance .................................. $19,949,048 $19,284,782 $17,844,773 $17,406,976 $17,826,168 Note: (1) Source: Audited financial statements of the College for the fiscal years ended June 30, 2015 through 2019.

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Schedule of Revenues, Expenditures and Other Changes in Fund Balances (1)

Current Funds – Unrestricted

Audited Fiscal Year Ended June 30

2015 2016 2017 2018 2019 REVENUES AND OTHER ADDITIONS: General: State Appropriations ..................................................... $13,717,409 $13,696,479 $13,620,583 $13,669,655 $14,121,214 Tuition and Fees ........................................................... 17,732,024 18,461,054 19,314,724 19,083,956 19,188,571 Property Taxes ............................................................. 1,742,218 1,750,945 1,835,393 1,927,954 1,940,188 Federal Appropriations ................................................. 210,861 208,699 204,228 8,905 550 Investment Earnings ..................................................... 274,026 240,897 112,502 207,272 734,200 Miscellaneous ............................................................... 1,621,105 1,788,352 1,760,513 2,435,902 2,383,563 Total General Revenues .............................................. $35,297,643 $36,146,426 $36,847,943 $37,333,644 $38,368,286 Auxiliary Enterprises Tuition and Fees ........................................................... $ 810,144 $ 970,083 $ 1,035,000 $ 717,146 $ 1,008,429 Sales and Services ....................................................... 1,585,821 1,358,039 1,410,611 1,572,930 1,501,224 Miscellaneous ............................................................... 84,344 218,663 269,165 292,505 212,241 Total Auxiliary Enterprises ........................................... $ 2,480,309 $ 2,546,785 $ 2,714,776 $ 2,582,581 $ 2,721,894 Total Revenues and Other Additions .......................... $37,777,952 $38,693,211 $39,562,719 $39,916,225 $41,090,180 EXPENDITURES AND OTHER DEDUCTIONS: Education and Support: Liberal Arts and Sciences ............................................. $ 7,251,599 $ 7,397,479 $ 7,304,338 $ 7,437,182 $ 7,107,389 Vocational Technical .................................................... 10,348,488 10,152,660 10,273,942 10,197,127 9,263,754 Adult Education ............................................................ 3,963,525 4,368,715 4,089,817 3,906,075 4,560,420 General Administration ................................................. 1,887,072 2,232,777 1,664,941 1,438,907 1,920,349 Student Services .......................................................... 3,709,559 3,710,232 4,103,103 4,254,574 4,254,313 Learning Resources ..................................................... 1,143,181 1,077,673 892,397 790,386 798,688 Physical Plant ............................................................... 2,798,289 2,956,840 3,115,651 2,976,009 3,206,206 General Institution ........................................................ 5,014,994 5,018,036 5,105,965 5,302,782 5,540,537 Total Education and Support ....................................... $36,116,707 $36,914,412 $36,550,154 $36,303,042 $36,651,656 Auxiliary Enterprises ...................................................... $ 2,799,975 $ 2,754,205 $ 3,314,589 $ 3,713,520 $ 3,733,042 Total Expenditures and Other Deductions ................... $38,916,682 $39,668,617 $39,864,743 $40,016,562 $40,384,698 Excess of Revenues and Other Additions Over (Under) Expenditures and Other Deductions ........ $ (1,138,730) $ (975,406) $ (302,024) $ (100,337) $ 705,482 Transfers ....................................................................... (140,955) $ 31,719 $ (379,829) $ (97,340) $ (202,292) Net Increase (Decrease) ................................................ $ (1,279,685) $ (943,687) $ (681,853) $ (197,677) $ 503,190 Fund Balance Beginning of Year ................................... 12,645,798 11,366,113 10,422,426 9,740,573 9,542,896 Fund Balance End of Year ............................................. $11,366,113 $10,422,426 $ 9,740,573 $ 9,542,896 $10,046,086 Note: (1) Source: Audited financial statements for the College for the fiscal years ended June 30, 2015 through 2019.

EMPLOYEE RETIREMENT AND OTHER POST EMPLOYMENT BENEFIT OBLIGATIONS Pensions The College participates in two public pension systems, Iowa Public Employee’s Retirement System (IPERS) and Teachers Insurance and Annuity Association – College Retirement Equities Fund (“TIAA”). Summary descriptions of each Plan follows, for more detail as to each available plan see APPENDIX A – Note 9.

In fiscal year 2019, pursuant to the IPERS’ required rate, the College’s Regular employees (members) contributed 6.29% of covered payroll and the College contributed 9.44% of covered payroll, for a total rate of 15.73%. The College’s contributions to IPERS for the year ended June 30, 2019 were $1,052,189. The College’s contribution to TIAA for year ended June 30, 2019 was $67,166. The College’s share of the contributions, payable from the applicable funds of the College, is provided by a statutorily authorized annual levy of taxes without limit or restriction as to rate or amount. The College has always made its full required contributions to IPERS and TIAA.


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At June 30, 2019, the College reported a liability of $9,996,520 for its proportionate share of the IPERS net pension

liability. The net pension liability was measured as of June 30, 2018 and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The discount rate used to measure the total pension liability was 7%. The College’s proportion of the net pension liability was based on the College’s share of contributions to the pension plan relative to the contributions of all IPERS participating employers. Other Post-Employment Benefits (OPEB)

The College administers a single-employer retiree benefit plan which provides medical and prescription drug benefits for employees, retirees and their dependents. Group insurance benefits are established under Iowa Code Chapter 509A.13. No assets are accumulated in a trust that meets the criteria in paragraph 4 of GASB Statement No. 75.

The following table shows the College’s changes to the total OPEB liability: Total OPEB Liability Beginning of Year ................................................. $417,641 Changes for the year: Service Cost .......................................................................... 45,668 Interest .................................................................................. 29,850 Differences Between Expected and Actual Experiences ........ 148,551 Changes in Assumptions ....................................................... 176,703 Benefit Payments .................................................................. (49,353) Net Changes ......................................................................................... 351,419 Total OPEB Liability End of Year ........................................................... $769,060

See APPENDIX A – Notes (9) (10) and (11) herein for further discussion of the College’s employee retirement

benefit obligations. Defined Contribution Pension Plan – Teachers Insurance and Annuity Association – (TIAA)

The College contributes to the TIAA retirement program, which is a defined contribution pension plan. TIAA administers the retirement plan for the District. The defined contribution retirement plan provides individual annuities for each plan participant. As required by the Code of Iowa, all eligible College employees much participate in a retirement plan form the date they are employed. Defined Benefit Pension Plan – Iowa Public Employee’s Retirement System

The College also contributes to the Iowa Public Employees’ Retirement System (“IPERS”). The College’s employees are provided with pensions through a cost-sharing multiple employer defined pension plan administered by IPERS. IPERS benefits are established under Iowa Code, Chapter 97B and the administrative rules thereunder. The College’s employee who completed seven years of covered service or has reached the age of 65 while in IPERS covered employment becomes vested. If the College’s employee retires before normal retirement age, the employee’s monthly retirement benefit will be permanently reduced by an early retirement reduction. IPERS provides pension benefits as well as disability benefits to College employees and benefits to the employees’ beneficiaries upon the death of the eligible employee. Additionally, copies of IPERS annual financial report may be obtained from www.ipers.org. However, the information presented in such financial reports or on such websites is not incorporated into this Official Statement by any reference.


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Although the actuarial contribution rates are calculated each year, the contribution rates were set by state law through

June 30, 2012 and did not necessarily coincide with the actuarially calculated contribution rate. As a result, from June 30, 2002 through June 30, 2013, the rate allowed by statute was less than the actuarially required rate. Effective July 1, 2012, as a result of a 2010 law change, IPERS contribution rates for the College and its employees are established by IPERS following the annual actuarial valuation (which applies IPERS’ Contribution Rate Funding Policy and Actuarial Amortization method.) State statute, however, limits the amount rates can increase or decrease each year to one (1) percentage point. Therefore, any difference between the actuarial contribution rates and the contributions paid is due entirely to statutorily set contributions that may differ from the actual contribution rates. As a result, while the contribution rate in the fiscal year ended June 30, 2017 equaled the actuarially required rate, there is no guarantee, due to this statutory limitation on rate increases, that the contribution rate will meet or exceed the actuarially required rate in the futures.

The following table sets forth the contributions made by the College and employees to IPERS for the period indicated.

% of Payroll % of Payroll Fiscal Year Paid by the College Paid by Employee

2016 ........................... 8.93% 5.95% 2017 ........................... 8.93% 5.95% 2018 ........................... 8.93% 5.95% 2019 ........................... 9.44% 6.29% 2020 ........................... 9.44% 6.29%

The College cannot predict the levels of funding that will be required in the future as any IPERS unfunded pension

benefit obligation could be reflected in future years in higher contribution rates. The investment of moneys, assumptions underlying the same and the administration of IPERS is not subject to the direction of the College. Thus, it is not possible to predict, control or prepare for future unfunded accrued actuarial liabilities of IPERS (“UAALs”). The UAAL is the difference between total actuarially accrued liabilities and actuarially calculated assets available for the payment of such benefits. The UAAL is based on assumptions as to retirement age, mortality, projected salary increases attributed to inflation, across-the-board raises and merit raises, adjustments, cost-of-living adjustments, valuation of current assets, investment return and other matters. Such UAAL could be substantial in the future, requiring significantly increased contributions from the College which could affect other budgetary matters.

The following table sets forth certain information about the funding status of IPERS that has been extracted from the comprehensive annual financial reports of IPERS for fiscal years ended June 30, 2015 through, and including, 2019 (collectively, the “IPERS CAFRs (2015-2019)”), and the actuarial valuation reports provided to IPERS by Cavanaugh MacDonald Consulting, LLC (collectively, the “IPERS Actuarial Reports (2015-2019)”). Additional information regarding IPERS and its latest actuarial valuations can be obtained by contacting IPERS administrative staff.

Funded Unfunded Funded UAAL as a

Unfunded Actuarial Ratio Actuarial Ratio Percentage of Accrued Liability (Actuarial Accrued Liability (Market Covered

Valuation Actuarial Value Market Value Actuarial Accrued (Actuarial Value) Value) (Market Value) Value) Covered (Actuarial Value) Date of Assets [a] of Assets [b] Liability [c] [c]-[a] [a]/[c] [c]-[b] [b]/[c] Payroll [d] {[b-a]/[c]} 2015 ..... $27,915,379,103 $28,429,834,829 $33,370,318,731 $5,454,939,628 83.65% $4,940,483,902 85.19% $7,326,348,141 74.46% 2016 ..... 29,033,696,587 28,326,433,656 34,619,749,147 5,586,052,560 83.86% 6,293,315,491 81.82% 7,556,515,720 73.92% 2017 ..... 30,472,423,914 30,779,116,326 37,440,382,029 6,967,958,115 81.39% 6,661,265,703 82.21% 7,863,160,443 88.62% 2018 ..... 31,827,755,864 32,314,588,595 38,642,833,653 6,815,077,789 82.36% 6,328,245,058 83.62% 7,983,219,527 85.37% 2019 ..... 33,324,327,606 34,010,680,731 39,801,338,797 6,477,011,191 83.73% 5,790,658,066 85.45% 8,151,043,468 79.46% Source: IPERS Reports.

According to IPERS, the market value investment return on program assets is as follows: Fiscal Year Ended Investment June 30 Return %

2015 ............................................................ 3.96% 2016 ............................................................ 2.15% 2017 ............................................................ 11.70% 2018 ............................................................ 7.97% 2019 ............................................................ 8.35%

Source: IPERS Reports


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Detailed information about the pension plan’s fiduciary net position is available in the separately issue IPERS

financial report which is available on IPERS’ website at www.ipers.org.

Bond Counsel, the College and the Municipal Advisor undertake no responsibility for and make no representations as to the accuracy or completeness of the information available from the IPERS discussed above or included on the IPERS website, including, but not limited to, updates of such information on the Auditor of State’s website or links to other website site or links to other websites through the IPERS website.

REGISTRATION, TRANSFER AND EXCHANGE

See also APPENDIX B - BOOK-ENTRY SYSTEM for information on registration, transfer and exchange of book-entry bonds. The Certificates will be initially issued as book-entry bonds.

The College shall cause books (the “Certificate Register”) for the registration and for the transfer of the Certificates to be kept at the principal office maintained for the purpose by the Registrar in West Des Moines, Iowa. The College will authorize to be prepared, and the Registrar shall keep custody of, multiple bond blanks executed by the College for use in the transfer and exchange of Certificates.

Any Certificate may be transferred or exchanged, but only in the manner, subject to the limitations, and upon payment of the charges as set forth in the Certificate Resolution. Upon surrender for transfer or exchange of any Certificate at the principal office maintained for the purpose by the Registrar, duly endorsed by, or accompanied by a written instrument or instruments of transfer in form satisfactory to the Registrar and duly executed by the registered owner or such owner’s attorney duly authorized in writing, the College shall execute and the Registrar shall authenticate, date and deliver in the name of the registered owner, transferee or transferees (as the case may be) a new fully registered Certificate or Certificates of the same maturity and interest rate of authorized denominations, for a like aggregate principal amount.

The execution by the College of any fully registered Certificate shall constitute full and due authorization of such Certificate, and the Registrar shall thereby be authorized to authenticate, date and deliver such Certificate, provided, however, the principal amount of outstanding Certificates of each maturity authenticated by the Registrar shall not exceed the authorized principal amount of Certificates for such maturity less Certificates previously paid.

The Registrar shall not be required to transfer or exchange any Certificate following the close of business on the fifteenth day of the month next preceding an interest payment date on such bond (known as the record date), nor to transfer or exchange any Certificate after notice calling such Certificate for redemption has been mailed, nor during a period of fifteen days next preceding mailing of a notice of redemption of any Certificates.

The person in whose name any Certificate shall be registered shall be deemed and regarded as the absolute owner thereof for all purposes, and payment of the principal of or interest on any Certificates shall be made only to or upon the order of the registered owner thereof or such owner’s legal representative. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Certificate to the extent of the sum or sums so paid.

No service charge shall be made for any transfer or exchange of Certificates, but the College or the Registrar may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer or exchange of Certificates except in the case of the issuance of a Certificate or Certificates for the unredeemed portion of a bond surrendered for redemption.


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TAXABILITY OF INTEREST

General The following discussion is a summary of certain Federal income tax consequences relating to the purchase, ownership, and disposition of the Certificates. This discussion does not purport to deal with all aspects of Federal income taxation that may affect particular investors in light of their individual circumstances, and is limited to investors who hold the Certificates as capital assets under Section 1221 of the Code, which generally means property held for investment. Prospective investors, particularly those subject to special rules, should consult their tax advisors regarding the consequences of purchasing, owning, and disposing of the Certificates for Federal income tax purposes, and for State and local tax purposes. Interest Income Taxable In general, interest on the Certificates is includable in the gross income of the owners thereof as ordinary interest income for Federal income tax purposes. Except for original issue discount, which accrues under special rules, interest income on the Certificates is so included in the gross income of the owners when accrued or received in accordance with the owner’s regular method of Federal tax accounting. Sale, Exchange, or Other Disposition In general, upon the sale, exchange, or redemption of a Certificate, an owner will recognize taxable gain or loss in an amount equal to the difference between the amount realized and the owner’s adjusted tax basis in the Certificate. An owner’s adjusted tax basis in a Certificate generally will equal the owner’s initial cost of the Certificate, plus any accrued original issue discount and accrued market discount previously included in the owner’s taxable income. Such gain or loss generally will be capital gain or loss. Such gain or loss generally will be long-term capital gain or loss if the owner has held the Certificate for more than one year. Subject to various special rules, the Code currently provides preferential treatment for certain net long-term capital gains realized by individuals and generally limits the use by any taxpayer of capital losses to reduce ordinary income. Backup Withholding and Information Reporting In general, information reporting requirements will apply to non-corporate owners of Certificates with respect to payments of the principal of and interest on the Certificates and proceeds of sale of such Certificates before maturity. Backup withholding at a rate of 28% generally will apply to such payments unless the owner: (i) is a corporation or other exempt recipient and, when required, demonstrates that fact, or (ii) provides a correct taxpayer identification number, certifies under penalties of perjury when required that such owner is not subject to backup withholding, and has not been notified by the IRS that it has failed to report all interest and dividends required to be shown on its Federal income tax returns. Purchasers of the Certificates should consult their own tax advisors with respect to impacts of the taxability of interest. Enforcement

Holders of the Certificates shall have and possess all the rights of action and remedies afforded by the common law, the Constitution and statutes of the State of Iowa and of the United States of America for the enforcement of payment of the Certificates, including, but not limited to, the right to a proceeding in law or in equity by suit, action or mandamus to enforce and compel performance of the duties required by Iowa law and the resolutions authorizing issuance of the Certificates (the “Certificates Resolutions”.)


31

The practical realization of any rights upon any default will depend upon the exercise of various remedies

specified in the Certificates Resolutions. The remedies available to the owners of the Certificates upon an event of default under the Certificates Resolutions, in certain respects, may require judicial action, which is often subject to discretion and delay. Under existing law, including specifically the federal bankruptcy code, certain of the remedies specified in the Certificates Resolutions may not be readily available or may be limited. A court may decide not to order the specific performance of the covenants contained in these documents. The legal opinions to be delivered concurrently with the delivery of the Certificates will be qualified as to the enforceability of the various legal instruments by limitations imposed by general principles of equity and public policy and by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally.

No representation is made, and no assurance is given, that the enforcement of any remedies with respect to such

assets will result in sufficient funds to pay all amounts due under the Certificates Resolutions, including principal of and interest on the Certificates.

Opinion

Bond Counsel’s opinion is not a guarantee of a result, or of the transaction on which the opinion is rendered, or of the future performance of parties to the transaction, but represents its legal judgment based upon its review of existing statutes, regulations, published rulings and court decisions and the representations and covenants of the College described in this section. No ruling has been sought from the Service with respect to the matters addressed in the opinion of Bond Counsel and Bond Counsel’s opinion is not binding on the Service. Bond Counsel assumes no obligation to update its opinion after the issue date to reflect any further action, fact or circumstance, or change in law or interpretation, or otherwise. See “APPENDIX C” for a draft form of legal opinion for the Certificates.

ALL POTENTIAL PURCHASERS OF THE CERTIFICATES SHOULD CONSULT WITH THEIR TAX ADVISORS WITH RESPECT TO FEDERAL, STATE AND LOCAL TAX CONSEQUENCES OF OWNERSHIP OF THE CERTIFICATES (INCLUDING BUT NOT LIMITED TO THOSE LISTED ABOVE).

CONTINUING DISCLOSURE

For the purpose of complying with Rule 15c2-12 of the Securities Exchange Commission, as amended and interpreted from time to time (the “Rule”), the College will covenant and agree, for the benefit of the registered holders or beneficial owners from time to time of the outstanding Certificates to provide reports of specified information and notice of the occurrence of certain events, as hereinafter described (the “Disclosure Covenants”). The information to be provided on an annual basis, and the events as to which notice is to be given, is set forth in “APPENDIX D – Form of Continuing Disclosure Certificate”. This covenant is being made by the College to assist the Underwriter(s) in complying with the Rule.

Breach of the Disclosure Covenants will not constitute a default or an “Event of Default” under the Certificates or Resolution, respectively. A broker or dealer is to consider a known breach of the Undertaking, however, before recommending the purchase or sale of the Certificates in the secondary market. Thus, a failure on the part of the College to observe the Undertaking may adversely affect the transferability and liquidity of the Certificates and their market price.

Pursuant to the Rule, in the last five years, the College believes it has complied in all material respects with regard to its prior Disclosure Covenants.

Bond Counsel expresses no opinion as to whether the Undertaking complies with the requirements of Section (b)(5) of the Rule.


32

OPTIONAL REDEMPTION

Certificates due June 1, 2021 - 2026 inclusive, are not subject to optional redemption. Certificates due June 1, 2027

- 2030, inclusive, are callable in whole or in part on any date on or after June 1, 2026, at a price of par and accrued interest. If selection by lot within a maturity is required, the Registrar shall designate the Certificates to be redeemed by random selection of the names of the registered owners of the entire annual maturity until the total amount of Certificates to be called has been reached.

If less than all of the maturity is called for redemption, the College will notify DTC of the particular amount of such maturity to be redeemed prior to maturity. DTC will determine by lot the amount of each Participant’s interest in such maturity to be redeemed and each participant will then select by lot the beneficial ownership interests in such maturity to be redeemed.

Thirty days’ written notice of redemption shall be given to the registered owner of the Certificate. Failure to give written notice to any registered owner of the Certificates or any defect therein shall not affect the validity of any proceedings for the redemption of the Certificates. All Certificates or portions thereof called for redemption will cease to bear interest after the specified redemption date, provided funds for their redemption are on deposit at the place of payment. Written notice will be deemed completed upon transmission to the owner of record.

LITIGATION

There is no litigation of any nature now pending or threatened restraining or enjoining the issuance, sale, execution or delivery of the Certificates, or in any way contesting or affecting the validity of the Certificates or any proceedings of the College taken with respect to the issuance or sale thereof. There is no litigation now pending, or to the knowledge of the College, threatened against the College that is expected to materially impact the financial condition of the College.

LEGAL MATTERS The Certificates are subject to approval as to certain legal matters by Ahlers & Cooney, P.C., Des Moines, Iowa, as Bond Counsel. Bond Counsel has not participated in the preparation of this Official Statement except for guidance concerning the sections regarding “TAX MATTERS”, and will not pass upon its accuracy, completeness, or sufficiency. Bond Counsel has not examined nor attempted to examine or verify any of the financial or statistical statements, or data contained in this Official Statement, and will express no opinion with respect thereto. A legal opinion in substantially the form set forth in APPENDIX C to this Official Statement will be delivered at closing.

The legal opinion to be delivered concurrently with the delivery of the Certificates expresses the professional judgment of the attorneys rendering the opinion as to legal issues expressly addressed therein. By rendering a legal opinion, the opinion giver does not become an insurer or guarantor of the result indicated by that expression of professional judgment, or of the transaction on which the opinion is rendered, or of the future performance of parties to the transaction. Nor does the rendering of an opinion guarantee the outcome of any legal dispute that may arise out of the transaction.

In addition, the enforceability of the rights and remedies of owners of the Certificates may be subject to limitation as set forth in the Bond Counsel’s opinion. The opinion will state, in part, that the obligation of the College with respect to the Certificates may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights heretofore or hereafter enacted to the extent constitutionally applicable, and to the exercise of judicial discretion in appropriate cases.

OFFICIAL STATEMENT AUTHORIZATION

This Official Statement has been authorized for distribution to prospective purchasers of the Certificates. All statements, information, and statistics herein are believed to be correct but are not guaranteed by the consultants or by the College, and all expressions of opinion, whether or not so stated, are intended only as such.


33

This Official Statement is not to be construed as a contract or agreement amongst the College, the Underwriter, or

the holders of any of the Certificates. Any statements made in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended merely as opinions and not as representations of fact. The information and expressions of opinions contained herein are subject to change without notice and neither the delivery of this Official Statement or the sale of the Certificates made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the College since the date hereof. The information contained in this Official Statement is not guaranteed.

UNDERWRITING

The Certificates were offered for sale by the College at a public, competitive sale on Tuesday, April 28, 2020. The best bid submitted at the sale was submitted by ________ (the “Underwriter”). The College awarded the contract for sale of the Certificates to the Underwriter at a price of $___________ (reflecting the par amount of $_______, plus a reoffering premium of $_______, and less an Underwriter’s discount of $_______). The Underwriter has represented to the College that the Certificates have been subsequently re-offered to the public initially at the yields or prices set forth in the Final Official Statement.

MUNICIPAL ADVISOR

The College has engaged Speer Financial, Inc. as municipal advisor (the “Municipal Advisor”) in connection with the issuance and sale of the Certificates. The Municipal Advisor is a Registered Municipal Advisor in accordance with the rules of the MSRB. The Municipal Advisor will not participate in the underwriting of the Certificates. The financial information included in the Official Statement has been compiled by the Municipal Advisor. Such information does not purport to be a review, audit or certified forecast of future events and may not conform with accounting principles applicable to compilations of financial information. The Municipal Advisor is not a firm of certified public accountants and does not serve in that capacity or provide accounting services in connection with the Certificates. The Municipal Advisor is not obligated to undertake any independent verification of or to assume any responsibility for the accuracy, completeness or fairness of the information contained in this Official Statement, nor is the Municipal Advisor obligated by the College’s continuing disclosure undertaking.

CERTIFICATION

I have examined this Official Statement dated April 14, 2020, for the $1,200,000* Taxable Industrial New Jobs Training Certificates, Series 2020-1, believe it to be true and correct and will provide to the purchaser of the Certificates at the time of delivery a certificate confirming to the purchaser that to the best of our knowledge, information and belief, information in the Official Statement was at the time of acceptance of the bid for the Certificates and, including any addenda thereto, was at the time of delivery of the Certificates true and correct in all material respects and does not include any untrue statement of a material fact, nor does it omit the statement of any material fact required to be stated therein, or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. /s/ DANIEL GILLEN Vice President Administration and Finance HAWKEYE COMMUNITY COLLEGE (Merged Area VII) Waterloo, Iowa *Subject to change.


APPENDIX A

HAWKEYE COMMUNITY COLLEGE, IOWA (MERGED AREA VII)

FISCAL YEAR 2019 AUDITED FINANCIAL STATEMENTS

State of Iowa - Area VII Community College

HAWKEYE COMMUNITY COLLEGE WATERLOO, IOWA

FOR THE FISCAL YEAR ENDED JUNE 30, 2019

HAWKEYE COMMUNITY COLLEGE 1501 EAST ORANGE ROAD

WATERLOO, IA 50701 www.hawkeyecollege.edu

TABLE OF CONTENTS Page

Schedule of Officials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . .. . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Independent Auditors' Report .......... ......... .. ..... ...... ........ .... ..... . ... .... ... .. ..... .... .......... .. .. .. ...... . ... ........... ..... ... . 2 - 3

Management's Discussion and Analysis . . . . .. . .. . . .. .. . ... . . .. . .. ... . ... . .. . . .. . .. . .... .... ... ....... .. . ... . . ... . .... . . . . . . ...... ... . .. . . .. 4 - 10

Basic Financial Statements: Exhibit Statements of Net Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. ... . .. . . . . . .. . ... . .... ... . ... ... . .. . ... . .. . .. . ... .... A .. . .. . ... . ... .. .. .. . . .. 11 - 12 Statements of Revenues , Expenses and

Changes in Net Position . . . . . . . . . . . . . . . . .. ... . . .. .. .. . .. . . . . . .. . . .. . ... . .. . . ... . .. . .. . .. . . .. . ... ... . ... B .. ...... .. .... .. ..... .. 13 Statement of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. .. . . .. . . . . . . . . . . . . . .. . .. . . .. . . . . . .. .. . . . . C . . . . . . . . . . . . . . ... . . . .. . 14 - 15 Notes to Financial Statements . . . . . . . . . . . . ... ... . .. . . .. . . .. . .. . . .. . . ... . .. . . .. ....... .. . ... ..... ... . ... .. . . . . . . . . ... . .. . .. .. ... . . .. ... ... .. . 16 - 38

Required Supplementary Information: Schedule of Changes in the College's Total OPEB Liability, Related Ratios and Notes .... ... ......... ... ..... 39 Schedule of the College's Proportionate Share of the Net Pension Liability .. .. . .. . .. .. .. ... ... .. ... ... . ..... ..... 40 Schedule of College Contributions - IPERS ..... ....... ........ .. ........................... ........ .... .. .... ........ ....... ...... ... . 41 - 42 Notes to Required Supplementary Information - Net Pension Liability .... ........ ........ ..... ..... ....... ..... ..... 43

Other Supplementary Information: Schedule Notes to Other Supplementary Information ..... .... ... .... ..... .. ..... .. .. .... .. ... .................. ...... .. ..... ..... ..... 44 Budgetary Comparison Schedule of Expenditures - Budget to Actual ..... ... .... . 1 ..... ... ............ ... 45 Note to Other Supplementary Information - Budgetary Reporting .. .... ....... ....... ........ .......... .. ... 46 Combining Balance Sheet .. .... .... .. .... ..... ..... ..... ....... .................. ....... ................... 2 ....................... 47 - 50

Combining Schedule of Revenues, Expenditures and Other Changes in Fund Balances .............. ...... .. ........ ........ ........ ................ ... . 3

Unrestricted Fund: Combining Schedule of Revenues, Expenditures and

Other Changes in Fund Balance -- Education and Support ... ...... .... ... .... .... 4 Combining Schedule of Revenues, Expenditures and

Other Changes in Fund Balance -- Auxiliary Enterprises .. .. .. . .. .. .... ..... .......... 5

Current Restricted Fund: Combining Schedule of Revenues, Expenditures and

Other Changes in Fund Balance .......... .... ...... ... .... ........... ......... .... ..... ...... .. . 6

Agency Funds - Combining Schedule of Changes in Deposits Held in Custody for Others ... ... ..... ... ..... ... ... .... . ..... ... .. .. .... .. .. .. .. .. .. .............. ... .. 7

Schedule of Tax and Intergovernmental Revenues ...................... .............. .. ... .... 8

Current Fund Revenues by Source and Expenditures by Function ......... .. ... ..... ... 9

Schedule of Expenditures of Federal Awards ..... .. ..... .. ..... .... .... ....... ... .. ... .. ... .. ..... 10

Independent Auditors' Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements

51 - 54

55-56

.......... ...... ....... 57

58-59

... .. ..... ......... .. .. 60

···· ······· ··· ····· •"· 61

62-63

64-65

Performed in Accordance with Government Auditing Standards . ... .. .. .. ... .. .... ........ ..... .... .... .... .. ... ... .... .... ... 66 - 67

Independent Auditors' Report on Compliance for Each Major Program and on Internal Control Over Compliance Required by Uniform Guidance ................. .......... ... .... .. .. ..... .. .... ...... .. .... 68 - 69

Schedule of Findings and Questioned Costs . ..... . ..... .. .. .... . .. .. .... .. . .. .. ... . .. .... ... .. ...... ............ . .. ..... .. .... ... .... ..... 70 - 72

Schedule of Prior Year Findings . .. .. .. .. . . ... . ... .. ... .. . ... .. .... .. .. . .. .. .. .. .. .. . ... .. .. .. .. . .. ... . ........ ................. ..... ... ........... 73

Corrective Action Plan for Federal Audit Findings .... ..... ... .... .... .. ... .. ...... .. ...... ...... ....... .... ..... .... .. .. ............ .. . 74 - 75

* * * * * *

Name

Jay A. Nardini Bruce R. Clark Teresa L. Meyer Casey P. McLaughlin Joan Webster-Vore Todd Rohlfsen John H Allan Shari M. Sell-Bakker Barbara McGregor

Linda Allen Daniel Gillen Julie Thomas Donna McNulty

HAWKEYE COMMUNITY COLLEGE OFFICIALS

Title

Board of Trustees (As of June 30, 2019)

Chairperson Vice Chairperson

Member Member Member Member Member Member Member

Community College (As of June 30, 2019)

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Term Expires

2019 2021 2019 2019 2021 2021 2021 2021 2019

President Vice President, Administration and Finance

Board Treasurer Board Secretary

-, , , WILLIAMS &COMPANYP.C.

CERTIFIED PUBLIC ACCOUNTANTS

INDEPENDENT AUDITORS' REPORT

Board of Trustees Hawkeye Community College Waterloo, Iowa

Report on the Financial Statements

We have audited the accompanying financial statements of Hawkeye Community College, Waterloo, Iowa, and its discretely presented component unit as of and for the year ended June 30, 2019 and the related notes to the financial statements, which collectively comprise the College's basic financial statements as listed in the table of contents.

Management's Responsibility for the Financial Statements

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

Auditors' Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of Hawkeye Community College Foundation (a discretely presented component unit of the Community College discussed in Note 1 }, which statements reflect total assets of $12,655,684 and total revenues of $3,586, 155 for the year then ended. Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for Hawkeye Community College Foundation, is based solely on the report of other auditors. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. The financial statements of Hawkeye Community College Foundation were not audited in accordance with Government Auditing Standards.

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

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

Opinions

In our opinion, based on our audit and the report of other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of Hawkeye Community College and its discretely presented component unit as of June 30, 2019, and the respective changes in financial position, and cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

203 North Grand Avenue P.O. Box 80B Spencer, Iowa 51301-080B

71 2-262-1 500 Fax 71 2-262-2820 - 2 -

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis , the Schedule of Changes in the College's Total OPEB Liability, Related Ratios, and Notes, the Schedule of the College's Proportionate Share of the Net Pension Liability, the Schedule of College Contributions-I PERS, and Notes to Required Supplementary Information - Net Pension Liability on pages 4 through 10 and 39 through 43 be presented to supplement the basic financial statements . Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquires of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements . We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise Hawkeye Community College's basic financial statements. We previously audited, in accordance with the standards referred to in the third paragraph of this report, the financial statements for the nine years ended June 30, 2018 (which are not presented herein) and expressed unmodified opinions on those financial statements . The other supplementary information included in Schedules 1 through 9, is presented for purposes of additional analysis and is not a required part of the basic financial statements. The Schedule of Expenditures of Federal Awards, Schedule 10, is presented for purposes of additional analysis as required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, and is also not a required part of the basic financial statements .

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

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated December 16, 2019, on our consideration of Hawkeye Community College's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of Hawkeye Community College's internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Hawkeye Community College's internal control over financial reporting and compliance.

Spencer, Iowa December 16, 2019

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\Nilli'~ ~,J r~ ,,8c_, Certified Public Ac~ou~ant0

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE YEAR ENDED JUNE 30, 2019

Hawkeye Community College provides this Management's Discussion and Analysis of the College's annual financial statements. This narrative overview and analysis of the financial activities of Hawkeye Community College is for the fiscal year ended June 30, 2019. We encourage readers to consider this information in conjunction with the College's financial statements, which follow.

FINANCIAL HIGHLIGHTS

• College operating revenues totaled $31,931 ,147 for fiscal year 2019, and decreased $3,645,827, as compared to fiscal year 2018 operating revenues of $35,576,974.

• College operating expenses totaled $60,073,588 for fiscal year 2019 and decreased $3,169,940, as compared to fiscal year 2018 operating expenses of $63,243,528.

• The College's net position decreased 1.2%, or $866,878, from the year ended June 30, 2018.

USING THE ANNUAL REPORT

The annual report consists of a series of financial statements and other information, as follows:

Management's Discussion and Analysis introduces the basic financial statements and provides an analytical overview of the College's financial activities.

The Basic Financial Statements consist of a Statement of Net Position, a Statement of Revenues, Expenses, and Changes in Net Position and a Statement of Cash Flows. These provide information about the activities of the College as a whole, and present an overall view of the College's finances .

Notes to Financial Statements provide additional information essential to a full understanding of the data provided in the basic financial statements.

Required Supplementary Information presents the College's proportionate share of the net pension liability and related contributions, as well as presenting the Changes in the College's Total OPEB Liability, Related Ratios and Notes.

Other Supplementary Information provides detailed information about the individual funds. The Budgetary Comparison Schedule of Expenditures - Budget to Actual further explains and supports the financial statements with a comparison of the College's budget for the year. In addition, the Schedule of Expenditures of Federal Awards provides details of various federal programs benefiting the College.

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REPORTING THE COLLEGE'S FINANCIAL ACTIVITIES

The Statement of Position

The Statement of Net Position presents the assets, deferred outflows of resources, liabilities, deferred inflows of resources, and net position of the College as a whole, as of the end of the fiscal year June 30, 2019. The Statement of Net Position is a point-in-time financial statement. The purpose of this statement is to present a fiscal snapshot of the College to the readers of the financial statements. The Statement of Net Position includes year-end information concerning current and non-current assets, deferred outflows or resources, current and non-current liabilities, deferred inflows of resources, and net position. Over time, readers of the financial statements will be able to determine the College's financial position by analyzing the increases and decreases in net position. This statement is a useful source for readers to determine how much the College owes to outside vendors and creditors. The statement also presents the available assets that can be used to satisfy those liabilities.

Net Position

Current and Other Assets Capital Assets, Net of Accumulated Depreciation

Total Assets

Deferred Outflows of Resources

Current Liabilities Non-current Liabilities

Total Liabilities

Deferred Inflows of Resources

Net Position: Net ln"9stment in Capital Assets Restricted Unrestricted

Total Net Position

140,000,000

120,000,000

100,000,000

80,000,000

60,000,000

40,000,000

20,000,000

0 2019 2018

$

$

June 30, 2019 June 30, 2018 57,192,162 $ 55,117,817 65,339,737 65,475,753

122,531,899 120,593,570

3,513,067 4,146,985

13,271 ,242 13,468,034 27,766,562 27,363,959 41,037,804 40,831,993

12,117,270 10,151,792

60,179,269 61,328,118 6,798,200 7,728,434 5,912,423 4,700,218

72,889,892 $ 73,756,770

IJ Total Assets

C Total Deferred Outflows

IITotal Liabilities

IITotal Deferred Inflows

IIITotal Net Position

Comparison of Net position

A portion of the College's net position (82.6%) is invested in capital assets (e .g., land, buildings and equipment), less the related debt. The debt related to the invested in capital assets is liquidated with resources other than capital assets. The restricted portion of the net position (9.3%) includes resources that are subject to external restrictions. The remaining net position (8.1 %) are the unrestricted net position that can be used to meet the College's obligations as they come due.

- 5 -

Statement of Revenues, Expenses and Changes in Net Position

Changes in total net position as presented on the Statement of Net Position are based on the activity presented in the Statement of Revenues, Expenses and Changes in Net Position. The purpose of the statement is to present the revenues earned by the College, both operating and non-operating, and the expenses incurred by the College, operating and non-operating, and any other revenues, expenses, gains and losses received or spent by the College.

In general, a public college, such as Hawkeye Community College, will report an operating loss since the financial reporting model classifies state appropriations and property taxes as non-operating revenues. Operating revenues are received for providing goods and services to the various students, customers and constituencies of the College. Operating expenses are those expenses paid to acquire or produce the goods and services provided in return for the operating revenues, and to carry out the mission of the College. Non-operating revenues are revenues received for which goods and services are not provided. The utilization of capital assets is reflected in the financial statements as depreciation, which allocates the cost of an asset over its expected useful life.

Changes in Net Position

Operating Rewnues: Tuition and Fees Less: Scholarship Allowances Tuition and Fees, net of scholarship allowances Federal Appropriations Iowa Industrial New Jobs Training Program Auxiliary Enterprises Rewnue, net of scholarships Gifts and Grants Miscellaneous

Total Operating Rewnues

Total Operating Expenses

Operating (Loss)

Non-Operating Rewnues (Expenses) State Appropriations Property Taxes Interest Income from lnwstments (Loss) on Sale of Capital Assets Interest on Indebtedness

Net Non-Operating Rewnues

Contributions of Capital Assets

(Decrease) in Net Position

Net Position Beginning of Year

Net Position End of Year

Year Ended June 30, 2019

$ 19,188,571 (6,154,792) 13,033,779

8,877,362 3,547,900 2,391,439

23,166 4,057,501

31,931,147

60,073,588

(28,142,441)

17,527,079 9,901,875

976,334 (717,355) (477,270)

27,210,663

64,900

(866,878)

73,756,770

$ 72,889,892

Net position decreased $866,878 as a result of operations during fiscal year 2019.

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$ 19,083,956 (7,072,900) 12,011,056 13,258,898 3,934,818 2,320,037

67,402 3,984,763

35,576,974

63,243,528

(27,666,554)

17,185,170 9,397,442

409,528 (136,688) (324,000)

26,531,452

(1,135,102)

74,891,872

$ 73,756,770

Operating Revenues

In fiscal year 2019, the major fluctuations in revenues were a result of the following changes:

• Decrease in Federal Appropriations for workforce development programs and for a Department of Labor TAACCCT grant which ended during the year.

• Decrease in Pell grants and scholarships.

Operating Expenses

Education and Support: Liberal Arts and Sciences Vocational Technical Adult Education Cooperatiw Services General Administration Student SeNces Leaming Resources Physical Plant General Institution

Sub-total Auxiliary Enterprises Scholarships and Grants Depreciation Expense

Total

64,000,000

63,000,000 •

62,000,000

61,000,000

60,000,000

59,000,000

58,000,000 •


$ 7,400,418 10,803,655 5,541,611 5,151,920 1,984,060 4,496,262

798,688 5,354,770

10,339,019 51,870,403

3,614,070 1,241,212 3,347,903

$ 60,073,588

2019 2018

Year Ended June 30, 201 B

$ 7,569,480 14,901,592 5,063,161 6,114,339 1,507,921 4 ,507,193

790,386 4,787,050 9,786,097

55,027,219 3,588,587 1,250,360 3,377,362

$ 63,243,528


In fiscal year 2019, the major fluctuations in operating expenses were a result of the following factors:

• Vocational Technical decreased due to the end of the Department of Labor T AACCT grant and also an overall decrease in salaries and benefits.

• Cooperative Services decreased due to reduced 260E NJTP reimbursements .

- 7 -

Statement of Cash Flows

The Statement of Cash Flows is an important tool in helping the users to assess the College's ability to generate future net cash flows, its ability to meet its obligations as they come due, and its need for external financing. The Statement of Cash Flows presents information related to cash inflows and outflows, summarized by operating, noncapital financing, capital financing and investing activities.

Cash Flows

Year Ended Year Ended June 30, 2019 June 30, 2018

Cash and Cash Equivalents PrO\Aded (Used) by: Operating Acti\Aties $ (23,747,911) $ (22,862,173) Non-Capital Financing Acti\Aties 30,141,162 26,582,611 Capital and Related Financing Acti\Aties (6,412,943) (3,983,386) lm.esting Acti\Aties 2,750,562 8,202,489

Net Increase in Cash and Cash Equivalents 2,730,870 7,939,541

Cash and Cash Equivalents at Beginning of Year 8,930,787 991,246

Cash and Cash Equivalents at End of Year $ 11,661,657 $ 8,930,787

Cash used by operating activities includes tuition, fees, grants and contracts, net of payments to employees and to suppliers. Cash provided by non-capital financing activities includes state appropriations and local property taxes received by the College. Cash used by capital and related financing activities represents the principal and interest payments on debt and the purchase of capital assets. Cash provided by investing activities includes investment income earned.

CAPITAL ASSETS AND DEBT ADMINISTRATION

Capital Assets

As of June 30, 2019, the College had $65,339,737 invested in capital assets, which was net of accumulated depreciation of $45,022,988. Depreciation expense totaled $3,347,903 for fiscal year 2019. Details of the capital assets are shown below.

Capital Assets, Net, at Year-End

Land Construction in Progress

Capital Assets Not Depreciated

Buildings Other Structures and lmprm.ements Furniture and Equipment

Capital Assets, Net of Depreciation Total Capital Assets

June 30, 2019 $ 926,675

$

13,234,030 14,160,705

26,518,839 19,633,747 5,026,446

51,179,032 65,339,737

June 30, 2018 $ 926,675

$

10,373,638 11,300,313

27,697,057 20,980,795

5,497,588 54,175,440 65,475,753

Major capital expenses in the fiscal year ended June 30, 2019 were for construction on the Adult Learning Center. More detailed information about the College's capital assets is presented in Note 6 to the basic financial statements.

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Long-Term Debt

As of June 30, 2019, the College had $20,302,250 in debt outstanding, an increase of $590,503 from June 30, 2018. The table below summarizes these amounts by type.

Certificate Payable General Obligation Bonds Total

Outstanding Debt


$ 14,221,519 6,080,731

$ 20,302,250


$ 11,243,166 8,468,581

$ 19,711,747

More detailed information about the College's outstanding debt is presented in Note 7 to the basic financial statements.

ECONOMIC FACTORS

Hawkeye Community College continues to take steps in anticipation of enrollment decreases experienced by most of Iowa's Community Colleges due to demographic and economic fluctuations. Cost cutting measures in the past few years have helped mitigate the loss of tuition revenue due to declining enrollment. Some challenges that are facing the College are:

• Population as a whole and the number of high school graduates are continuing to decline in our service region.

• Historically, community colleges will experience a decline in enrollment as the labor market improves. The current availability of jobs and a relatively low unemployment rate in parts of Hawkeye's service region are viewed as possible threats to enrollment. Iowa continues to experience record low unemployment.

• Forecasts for the State of Iowa indicate extremely modest revenue growth of less than 2% for the next two years. This will likely have an impact on funding allocated to education including the community colleges. Issues affecting revenue growth include uncertainties over trade, sluggish farm commodity prices, energy costs and a shortage of skilled workers.

• Ongoing efforts by the Regents Universities to recruit Iowa students, particularly the University of Northern Iowa, has created a challenge for Hawkeye Community College due to the close proximity to University of Northern Iowa.

• The amount of property taxes collected to fund the general operations of the College is capped at a 20.25 cent millage rate. This results in a contribution of approximately 5% of general operating fund resources. The original funding formula for Iowa's Community Colleges intended for local funding to contribute 33% with State General Aid (SGA) and tuition covering one-third each. While SGA contributes nearly 35%, the shortfall in local funding has shifted the burden to tuition and fees which now accounts for approximately 50% of the general operating fund .

• Hawkeye Community College has the 6th highest mandatory tuition and fees rate per credit hour of the 15 Iowa Community Colleges and charges nearly $7 more than the state average.

• Salaries, wages and fringe benefits comprise approximately 72% of annual Educational and Support expenses. Providing competitive packages to attract and retain the best employees in an area of relatively low unemployment continues to be an issue facing the College.

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• Facilities at the College require constant upkeep and maintenance at increasing costs. The addition of space through new construction and remodeling over the past several years has added an additional burden to maintenance costs. Hawkeye Community College uses a Plant Fund Levy to help fund the cost of upkeep and repair.

• The use of technology continues to expand with current equipment quickly becoming outdated. The College faces the challenge of maintaining and upgrading technology at a reasonable cost.

CONTACTING THE COLLEGE'S FINANCIAL MANAGEMENT

This financial report is designed to provide our customers, taxpayers in the community college, and our creditors with a general overview of the College's finances and to demonstrate the College's accountability for the resources it receives. If you have questions about the report or need additional financial information, contact Hawkeye Community College, 1501 E. Orange Road, Waterloo, Iowa 50701 .

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Basic Financial Statements

HAWKEYE COMMUNITY COLLEGE STATEMENTS OF NET POSITION

JUNE 30, 2019

Primary Component Government Unit

ASSETS

Current Assets Cash and Cash Equivalents $ 11,661,657 $ 1,903,941 Certificates of Deposit 436,971 Pooled Investments 12,768,053 5,626,493 Receivables:

Due from Others, Net of Allowance for Uncollectible Accounts of $8,037,383 2,823,878 34,534

Grant Receivable, current portion 310,000 Accrued Interest 81,433 17,104 Property Taxes - Succeeding Year 11,323,827 Student Loans 15,994 Loans Receivable, Net 54,985 Iowa Industrial New Jobs Training Program 3,709,233

Due From Other Governments 731,271 Prepaid Expenses 281,698 Inventories 298,969

Total Current Assets 44,132,984 7,947,057

Noncurrent Assets Certificates of Deposit 1,020,667 Pooled Investments 12,038,511 2,318,398 Receivables: Life Insurance Cash Value 12,449 Grant Receivable, less current portion, net 1,945,295 Pledges Receivable, less current portion, net 30,195 Capital Assets:

Land 926,675 375,841 Land Improvements 37,785 Construction in Progress 13,234,030 Buildings 48,890,572 Other Structures and Improvements 30,337,130 Furniture and Equipment 16,974,318 Accumulated Depreciation (45,022,988) (11,336)

Total Noncurrent Assets 78,398,915 4,708,627

TOTAL ASSETS 122,531 ,899 12,655,684

DEFERRED OUTFLOWS OF RESOURCES

OPEB Related Deferred Outflows 304,302 Pension Related Deferred Outflows 3,208,765

TOTAL DEFERRED OUTFLOWS OF RESOURCES $ 3,513,067 $

- 11 -

LIABILITIES

HAWKEYE COMMUNITY COLLEGE STATEMENTS OF NET POSITION

JUNE 30, 2019

Primary

Government

Current Liabilities Accounts Payable $ 998,695 Salaries and Benefits Payable Accrued Interest Payable Unearned Revenue Compensated Absences Early Retirement Payable Assets Held in Custody for Others Reported and Unreported Insurance Claims Payable Insurance Reserve Bonds Payable Certificates Payable

Total Current Liabilities

Noncurrent Liabilities Unearned Revenue Compensated Absences Early Retirement Payable Certificates Payable Bonds and Capital Notes Payable Net Pension Liability Total OPEB Liability

Total Noncurrent Liabilities

TOTAL LIABILITIES

DEFERRED INFLOWS OF RESOURCES

Unavailable Property Tax Revenue OPEB Related Deferred Inflows Pension Related Deferred Inflows

TOTAL DEFERRED INFLOWS OF RESOURCES

NET POSITION

Net Investment in Capital Assets Restricted:

Nonexpendable: Endowment

Expendable: Economic Development Iowa New Jobs Training Scholarships and Departmental Programs Loans Debt Service Cash Reserve Other

Unrestricted

TOTAL NET POSITION

2,285,953 41,291

1,738,480 645,000

1,719,465 478,261 377,000 477,097

2,190,000 2,320,000

13,271,242

383,027 297,814 527,891

11 ,901,519 3,890,731 9,996,520

769,060

27,766,562

41 ,037,804

11 ,323,827 18,960

774,483

12,117,270

60,179,269

2,967,335 1,547,525

60,700 98,810

363,573 366,380

1,393,877 5,912,423

$ 72,889,892

See Accompanying Notes to Financial Statements

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Component

Unit

$ 2,463

2,463

2,463

402,290

2,323,988

914,707 213,339

6,197,686 2,601,211

$ 12,653,221

EXHIBIT A

HAWKEYE COMMUNITY COLLEGE STATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION

YEAR ENDED JUNE 30, 2019

REVENUES Operating Revenues:

Tuition and Fees, net of scholarship allowances of $6,154,792

Federal Appropriations Iowa Industrial New Jobs Training Program Gifts and Grants Auxiliary Enterprises Revenue, net of scholarship

allowances of $330,455 Miscellaneous

Total Operating Revenues

EXPENSES Operating Expenses:

Education and Support: Liberal Arts and Sciences Vocational Technical Adult Education Cooperative Services General Administration Student Services Learning Resources Physical Plant General Institution

Auxiliary Enterprises Scholarships and Grants Loan Cancellations and Bad Debts Instructional & Departmental Support Administrative Capital/Facilities Assistance Fundraising Expenses Depreciation Expense


Operating Income (Loss)

NON-OPERATING REVENUES (EXPENSES) State Appropriations Property Taxes Interest Income from Investments (Loss) on Sale of Capital Assets Interest on Indebtedness

Net Non-Operating Revenues

CONTRIBUTIONS OF CAPITAL ASSETS

Change in Net Position

Net Position Beginning of Year

Net Position End of Year

Primary Government

$ 13,033,779 8,877,362 3,547,900

23,166

2,391,439 4,057,501

31 ,931 ,147

7,400,418 10,803,655 5,541,611 5,151,920 1,984,060 4,496,262

798,688 5,354,770

10,339,019 3,614,070 1,241,212

3,347,903

60,073,588

(28,142,441)

17,527,079 9,901,875

976,334 (717,355) (477,270)

27,210,663

64,900

(866,878)

73,756,770

$ 72,889,892

See Accompanying Notes to Financial Statements - 13 -

Component Unit

$

2,905,300

35,946

2,941,246

424,924 25,851

282,270 187,821

1,200 134,997

2,519

1,059,582

1,881,664

644,909

644,909

2,526,573

10,126,648

$12,653,221

EXHIBIT B

HAWKEYE COMMUNITY COLLEGE STATEMENT OF CASH FLOWS


CASH FLOWS FROM OPERATING ACTIVITIES: Tuition and Fees Grants and Contracts Iowa Industrial New Jobs Training Program Payments to Employees Payments to Suppliers Payments to NJTP Recipients Collection of Loans to Students Auxiliary Enterprise Net Activity Other Receipts

Net Cash (Used) by Operating Activities

CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES: State Appropriations Property Taxes Principal Paid on Debt Certificates Issued Interest Paid on Debt Miscellaneous Agency Fund Receipts Miscellaneous Agency Fund Disbursements

Net Cash Provided from Non-Capital Financing Activities

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Proceeds from Sale of Capital Assets Purchases of Capital Assets Principal Paid on Debt and Leases Interest Paid on Debt and Leases

Net Cash (Used) from Capital and Related Financing Activities

CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from Sales and Maturities of Investments Purchase of Investments Interest on Investments

Net Cash Provided by Investing Activities

Net Increase in Cash

Cash at Beginning of Year

Cash at End of Year

Noncash, Capital and Related Financing Activities: The College received donated capital assets with a fair market value of $64,900.

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Primary Government

$ 21,867,724 8,116,737 1,848,636

(33,763,120) (25,451,203)

(1,727,571) 15

496,813 4,864,058

(23,747,911)

17,527,079 9,901,875

(2,050,000) 5,030,000 (315,328)

1,669,120 (1,621,584)

30,141,162

62,200 (3,926,543) (2,380,000)

p68,600)

(6,412,943)

2,230,611 (436,000) 955,951

2,750,562

2,730,870

8,930,787

$ 11,661,657

HAWKEYE COMMUNITY COLLEGE STATEMENT OF CASH FLOWS YEAR ENDED JUNE 30, 2019

Reconciliation of Operating (Loss) to Net Cash (Used) by Operating Activities:

Operating (Loss) Adjustments to Reconcile Operating {Loss) to Net Cash (Used) by Operating Activities:

Depreciation {Increase) Decrease in Operating Assets:

Due From Others Notes Receivable Due From Other Governments Inventories Prepaid Expenses Deferred Outflows

Increase (Decrease) in Operating Liabilities: Accounts Payable Salaries and Benefits Payable Compensated Absences Unearned Revenue Early Retirement Payable Reported and Unreported Insurance Claims Payable Insurance Reserve Total OPEB Liability Net Pension Liability Deferred Inflows

Total Adjustments

Net Cash (Used) by Operating Activities

See Accompanying Notes to Financial Statements - 15 -

EXHIBIT C

$ (28,142,441)

3,347,903

(1,875,484) 15

617,197 (121,152) 261,717 633,918

(1,084,418) 220,072

19,924 305,569 227,070 187,000 176,336 351,419

(838,034) 1,965,478

4,394,530

$ (23,747,911)

HAWKEYE COMMUNITY COLLEGE NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2019

Note 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Hawkeye Community College is a publicly supported school established and operated by Merged Area VII under the provisions of Chapter 260C of the Code of Iowa. Hawkeye Community College may offer programs of adult and continuing education, lifelong learning, community education, and up to two years of liberal arts , pre-professional or occupational instruction partially fulfilling the requirements for a baccalaureate degree but confers no more than an associate degree. Hawkeye Community College may also offer up to two years of vocational or technical education, training or retraining to persons who are preparing to enter the labor market. Hawkeye Community College maintains six sites throughout Waterloo, Cedar Falls, and the surrounding areas, and has its administrative offices in Waterloo. Hawkeye Community College is governed by a Board of Trustees whose members are elected from each trustee district within Merged Area VII.

The College's financial statements are prepared in conformity with U.S. generally accepted accounting principles as prescribed by the Governmental Accounting Standards Board.

A. Reporting Entity

For financial reporting purposes, Hawkeye Community College has included all funds, organizations, agencies, boards, commissions and authorities. Hawkeye Community College has also considered all potential component units for which it is financially accountable, and other organizations for which the nature and significance of their relationship with Hawkeye Community College are such that exclusion would cause Hawkeye Community College's financial statements to be misleading or incomplete. The Governmental Accounting Standards Board has set forth criteria to be considered in determining financial accountability. These criteria include appointing a voting majority of an organization's governing body, and (1) the ability of the College to impose its will on that organization or (2) the potential for the organization to provide specific benefits to or impose specific financial burdens on Hawkeye Community College.

These financial statements present Hawkeye Community College (the primary government) and its component unit. The component unit discussed below is included in Hawkeye Community College's reporting entity because of the significance of its operational or financial relationship with the Community College. Certain disclosures about the component unit have been audited separately and a report has been issued under a separate cover. The audited financial statements are available at the College.

Discretely Presented Component Unit

Hawkeye Community College Foundation is a non-profit corporation, whose purpose is to support the Community College through donations to provide scholarships to students, and for the enhancement and extension of facilities, equipment and services. The Foundation is governed by a Board of Trustees, two of which are appointed by the Board of Trustees of the Community College. The Foundation operates on a June 30 fiscal year end. The financial statements of Hawkeye Community College Foundation, Inc. can be obtained from : Business Services, Hawkeye Community College, 1501 E. Orange Road, Waterloo, IA 50701.

The Foundation is a non-profit organization which has adopted the Financial Accounting Standards Board (FASB) reporting requirements for not-for-profit organizations and the FASB requirements for contributions. As such, certain revenue recognition criteria and presentation features are different from FASB revenue recognition criteria and presentation features. No modifications have been made to the Foundation's financial information in the College's financial reporting for these differences. The Foundation reports net assets, which is equivalent to net position reported by the college.

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JUNE 30, 2019

Note 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

B. Basis of Presentation

GASS Statement No. 35 establishes standards for external financial reporting for public colleges and universities and requires resources to be classified for accounting and reporting purposes into the following net position categories/components :

Net Investment in Capital Assets: Capital assets, net of accumulated depreciation and outstanding debt obligations attributable to the acquisition, construction or improvement of those assets.

Restricted Net Position:

Nonexpendable - Net position subject to externally imposed stipulations that they be maintained permanently by the College, including the College's permanent endowment funds .

Expendable - Net position whose use by the College is subject to externally imposed stipulations that can be fulfilled by actions of the College, pursuant to those stipulations or that expire by the passage of time.

Unrestricted Net Position: Net position not subject to externally imposed situations. Resources may be designated for specific purposes by action of management or by the Board of Trustees or may otherwise be limited by contractual agreements with outside parties . Substantially all unrestricted net position is designated for academic and general programs of the College.

GASB Statement No. 35 requires the Statements of Net Position, Revenues, Expenses, and Changes in Net Position and Cash Flows be reported on a consolidated basis. These basic financial statements report information on all of the activities of the College. For the most part, the effect of interfund activity has been removed from these statements.

C. Measurement Focus, Basis of Acc0untinq, and Financial Statement Presentation

For financial reporting purposes, Hawkeye Community College is considered a special-purpose government engaged only in business type activities as defined in GASB Statement No. 34. Accordingly, the basic financial statements of the College have been prepared using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows . Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met.

D. Assets, Deferred Ou tflows of Resources, Liabilities, Deferred Inflows of Resources and Net Position

The following accounting policies are followed in preparing the balance sheets:

Cash, Cash Equivalents and Pooled Investments -- Investments are stated at fair value .

For the purposes of the statement of cash flows, all short-term investments that are highly liquid are considered to be cash equivalents. Cash equivalents are readily convertible to known amount of cash, and at the day of purchase, they have a maturity date no longer than three months.

- 17 -


JUNE 30, 2019


Due From Other Governments -- This represents state aid, grants and reimbursements due from the State of Iowa, and grants and reimbursements due from the Federal government.

Inventories -- Inventories are valued at lower of cost (first-in, first-out method) or market, except for the livestock and grain from the farm operations, which is valued at market value. Inventories consist of supplies and materials held for consumption, livestock and merchandise held for resale. The cost is recorded as an expenditure at the time individual inventory items are consumed or sold .

Property Tax Receivable - Property tax receivable is recognized on the levy or lien date, which is the date that the tax asking is certified by the Board of Trustees to the appropriate County Auditors . The succeeding year property tax receivable represents taxes certified by the Board of Trustees to be collected in the next fiscal year for the purposes set out in the budget for the next fiscal year. By statute, the Board of Trustees is required to submit to the state board by May 1 of each year for the subsequent fiscal year. However, by statute, the tax asking and budget certification for the following fiscal year becomes effective on the first day of that year. Although the succeeding year property tax receivable has been recorded, the related revenue is deferred and will not be recognized as revenue until the year for which it is levied.

Receivable for Iowa Industrial New Jobs Training Program (NJTP)- This represents the amount to be remitted to the College for training projects entered into between the College and employers under the provisions of Chapter 260E of the Code of Iowa. The receivable amount is based on expenditures incurred through June 30, 2019 on NJTP projects, including interest incurred on NJTP certificates, less revenues received to date.

Capital Assets - Capital assets, which include property, plant, equipment, and infrastructure assets (i.e., roads, curbs, gutters, sidewalks, and similar items which are immovable and of value only to the College), are reported at historical cost if purchased or constructed. Donated capital assets are recorded at acquisition value at the date of donation.

The costs of normal maintenance and repairs that do not add to the value of the assets or materially extend asset lives are not capitalized.

Capital assets are defined by the College as assets with initial, individual costs in excess of $5,000 and estimated useful lives in excess of one year.

Depreciation is computed using the straight-line method over the following estimated useful lives:

Assets

Buildings and Other Structures and Improvements Furniture and Equipment

Years

25- 50 3 - 10

The College does not capitalize or depreciate library books. The value of each book falls below the capital asset threshold and the balance was deemed immaterial to the financial statements .

- 18 -


JUNE 30, 2019

Note 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES {Continued)

Deferred Outflows of Resources - Deferred outflows of resources represent a consumption of net position that applies to a future period(s) and will not be recognized as an outflow of resources (expense/expenditure) until then. Deferred outflows of resources consist of unrecognized items not yet charged to pension and OPEB expense and contributions from the College after the measurement date but before the end of the College's reporting period .

Salaries and Benefits Payable - Payroll and related expenses for instructors with annual contracts corresponding to the current school year, which are payable in July and August, have been accrued as liabilities.

Unearned Revenue - When assets are recognized in connection with a transaction before the earnings process is complete, those assets must be offset by a corresponding liability for unearned revenue. Unearned revenue consists of tu ition deposits, tuition and fees for a portion of summer classes, fees and registration for fall , unearned revenue on 260E projects and unearned revenue on federal and state funds .

Compensated Absences - College employees accumulate a limited amount of earned but unused vacation hours for subsequent use or for payment upon termination, death or retirement. Amounts representing the cost of compensated absences plus related benefits are recorded as liabilities. These liabilities have been computed based on rates of pay in effect at June 30, 2019.

Pensions - For purposes of measuring the net pension liability, deferred outflows of resources related to pensions, deferred inflows of resources related to pensions, pension expense, information about the fiduciary net position of the Iowa Public Employees' Retirement System (IPERS), and additions to/deductions from !PERS' fiduciary net position have been determined on the same basis as they are reported by IPERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.

Total OPEB Liability - For purposes of measuring the total OPEB liability, deferred outflows of resources related to OPEB and OPEB expense, information has been determined based on the College's actuary report. For this purpose, benefit payments are recognized when due and payable in accordance with the benefit terms.

Deferred Inflows of Resources - Deferred inflows of resources represents an acquisition of net position that applies to a future period(s) and will not be recognized as an inflow of resources (revenue) until that time. Deferred inflows of resources in the Statement of Net Position consists of succeeding year property tax receivable which will not be recognized as revenue until the year for which it is levied and the unamortized portion of the net difference between projected and actual earnings on pension plan investments and the difference between projected and actual experience related to OPEB.

Auxiliary Enterprise Revenues - Auxiliary enterprise revenues primarily represent revenues generated by career education, adult education, farm operations, and food service.

Summer Session - The Community College operates summer sessions during May, June, and July. Revenues and expenses for the summer sessions are recorded in the appropriate fiscal year. Tuition and fees are allocated based on the summer session class schedule.

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JUNE 30, 2019


Tuition and Fees - Tuition and fees revenues are reported net of scholarship allowances, while stipends and other payments made directly to students are presented as scholarship expenses.

Operating and Non-Operating Activities - Operating activities, as reported in the Statement of Revenues, Expenses and Changes in Net Position, are transactions that result from exchange transactions, such as payments received for providing services and payments made for services or goods received. Non-operating activities include state appropriations, property tax, and interest income.

E. Scholarship Allowances and Student Aid

Financial aid to students is reported in the financial statements under the alternative method, as prescribed by the National Association of College and University Business Officer (NACUBO). Certain aid (loans and funds provided to students as awarded by third parties) is accounted for as third-party payments ( credited to the student's account as if the student made the payment). All other aid is reflected in the financial statements as operating expenses or scholarship allowances, which reduce revenues. The amount reported as operating expenses represents the portion of aid that was provided to the student in the form of cash. Scholarship allowances represent the portion of aid provided to the student in the form of reduced tuition . Under the alternative method, these amounts are computed on a total College basis by allocating the cash payments to students, excluding payments for services, on the ratio of all aid to the aid not considered to be third party aid.

Note 2 - CASH, CASH EQUIVALENTS, AND POOLED INVESTMENTS

The College's deposits in banks at June 30, 2019, were entirely covered by federal depository insurance or by the State Sinking Fund in accordance with Chapter 12C of the Code of Iowa. This chapter provides for additional assessments against the depositories to insure there will be no loss of public funds .

The Community College is authorized by statute to invest public funds in obligations of the United States government, its agencies and instrumentalities; certificates of deposit or other evidences of deposit at federally insured depository institutions approved by the Board of Trustees; prime eligible bankers acceptances; certain high rated commercial paper; perfected repurchase agreements; certain registered open-end management investment companies; certain joint investment trusts; and warrants or improvement certificates of a drainage district. The College's investment policy additionally limits investments in commercial paper to obligations that mature within 270 days and that is rated within the two highest classifications, as established by at least one of the standard rating services, with no more than five percent at the time of purchase placed in the second highest classification. At the time of purchase not more than ten percent of the investment portfolio can be in these investments and no more than five percent of the investment portfolio can be invested in the securities of a single issuer.

Investments are stated at fair value. Securities traded on a national or international exchange are valued at the last reported sales price at current exchange rates.

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JUNE 30, 2019

Note 2 - CASH, CASH EQUIVALENTS, AND POOLED INVESTMENTS (Continued)

At June 30, 2019, the Community College had the following investments:

Current Pooled Investments Noncurrent Pooled Investments

Investment Type

Money Market Mutual Fund U.S Government Securities U.S Agency Securities

Fair Value

$ 2,745,626 12,020,672 10,040,266

$ 24,806,564

$ 12,768,053 12,038,511

$ 24,806,564

Investment Maturities (in years) Less than 1 1 to 5

$ 2,745,626 5,992,925 4,029,502

$ 12,768,053

$ 6,027,747 6,010,764

$ 12,038,511

The College categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the assets. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs.

The recurring fa ir value measurement for the Money Market Mutual Fund, U.S. Government Securities and U.S. Agency Securities were determined using quoted market prices (Level 1 inputs) .

Interest rate risk - The Community College's investment policy limits the investment of operating funds (funds expected to be expended in the current budget year or within 15 months of receipt) in instruments that mature within 397 days. Funds not identified as operating funds may be invested in investments with maturities longer than 397 days, but the maturities shall be consistent with the needs and use of the Community College.

Credit risk - The Community College's investments in Money Market Mutual Funds are unrated .

Concentration of credit risk - The College's investment policy seeks to provide safety of the principal, maintain the necessary liquidity to match expected liabilities, and obtain a reasonable rate of return. The policy allows for investments of up to 100% in interest bearing savings, money market and checking accounts, certificates of deposits, repurchase agreements, money market mutual funds, bonds, notes, certificates of indebtedness, treasury bills or other securities issued by the United States of America, its agencies and allowable instrumentalities; up to 10% in prime bankers' acceptances; and up to 10% in commercial paper. The pol icy does not allow the College to invest in futures, options or reverse purchase agreements.

Component Unit Investments. Investments are managed by the Foundation and external managers, in accordance with Board policy, and stated at fair value and categorized according to the generally accepted accounting principles described above. Fair value of the investments has been determined as of June 30. Values have not been adjusted for market fluctuations subsequent to June 30. Accounting principles generally accepted in the United States of America require adjustment of year end values only when the value has been permanently impaired . Management does not feel market fluctuations after year end have caused permanent impairment to its investment portfolio. A summary of the investments held at June 30, 2019 is presented on the following page:

- 21 -


JUNE 30, 2019

Note 2 - CASH, CASH EQUIVALENTS, AND POOLED INVESTMENTS (Continued)

Fair Value Level 1

Common Stocks $ 3,075,641 Corporate Bonds 184,822 U.S. Government Agency Bonds 729,786 Mutual Funds - Equity 949,714 Mutual Funds - Foreign 1,426,782 Mutual Fund 1,578,146

$ 7,944,891

Reported under current assets $ 5,626,493 Reported under noncurrent assets 2,318,398

$ 7,944,891

Note 3 - ENDOWMENT FUNDS (Component Unit)

The Foundation's endowment consists of approximately 42 individual funds established for a variety of purposes. The endowment includes only donor-restricted funds. As required by generally accepted accounting principles, net assets associated with endowment funds are classified and reported based on existence of donor-imposed restrictions .

Absent expl icit donor stipulations to the contrary, the Board of Directors of the Foundation has interpreted the State Prudent Management of Institutional Funds Act (SPMIFA) as requiring the preservation of the fair value of the original gift as of the gift date of the donor-restricted endowment funds . As a result of this interpretation, the Foundation retains in perpetuity and classifies as net assets with donor restrictions (a) the original value of gifts donated to the perpetual endowment, (b) the original value of subsequent gifts to the perpetual endowment, and (c) accumulations to the perpetual endowment made in accordance with the direction of the applicable donor gift instrument at the time the accumulation is added to the fund. The remaining portion of the donor-restricted endowment fund that is not retained in perpetuity is subject to appropriation for expenditure by the Foundation in a manner consistent with the standard of prudence prescribed by SPMIFA. In accordance with SPMIFA, the Foundation considers the following factors in making a determination to appropriate or accumulate donor-restricted endowment funds: (1) the duration and preservation of the various funds, (2) the purposes of the donor-restricted endowment funds, (3) general economic conditions , (4) the possible effect of inflation and deflation, (5) the expected total return from income and the appreciation of investments, (6) other resources of the Foundation, and (7) the Foundation's investment policies.

Investment Return Objectives, Risk Parameters and Strategies. The foundation has adopted investment and spending policies, approved by the Board of Directors, for endowment assets that attempt to provide a predictable stream of funding to programs supported by its endowment funds while also maintain the purchasing power of those endowment assets over the long-term. Accordingly, the investment process seeks to achieve an after-cost total real rate of return, including investment income as well as capital appreciation, which exceeds the annual distribution with acceptable levels of risk. Endowment assets are invested in a well-diversified asset mix, which includes equity and debt securities. The Foundation expects its endowment assets, over time, to produce an average rate of return of approximately 4% to 5% annually. Actual returns in any given year may vary from this amount. Investment risk is measured in terms of the total endowment fund; investment assets and allocation between asset classes and strategies are managed to prevent exposing the fund to unacceptable levels of risk.

- 22 -


JUNE 30, 2019

Note 3 - ENDOWMENT FUNDS (Component Unit- Continued)

Spending Policy. The Foundation has a policy of allocating the investment income earned less investment fees each quarter. Earnings and losses are allocated to each participating fund based on the end of the quarter balance as long as the fund maintains a balance of $1,000. No allocation is made if it would bring the balance in the account below zero. Scholarship disbursements are calculated each semester by Foundation staff and approved by the Executive Director in accordance with the Foundation's finance policy. Certain endowment funds established by the board and other endowments as agreed to by the donors follow the spending policy established by the Foundation. As determined and approved by the Foundation Board of Directors, the policy appropriates for distribution each year 3% - 5% of the twenty-quarter average market value of the endowments as of March 31 each year. This is consistent with the objectives of the policy to preserve purchasing power of these funds and provide a predictable and steady stream of support.

Funds with Deficiencies. From time to time, certain donor-restricted endowment funds may have fair values that are less than the amount required to be maintained by donors or by law (underwater endowments). The Foundation has interpreted UPMIFA to permit spending from underwater endowments in accordance with prudent measures required under law. During the year, the Foundation did not have any underwater endowments.

Endowment net position composition by type of fund as of June 30, 2019 is as follows:

Restricted Restricted Total Net Expendable: Nonexpendable: Endowment

Unrestricted Other Endowment Net Position

Donor-restricted endowment funds $ $ 853,978 $ 2,323,988 $ 3,177,966

Total Funds $ $ 853,978 $ 2,323,988 $ 3,177,966

Changes in endowment net assets as of June 30, 2019 are as follows :

Restricted Restricted Total Net Expendable: Nonexpendable: Endowment

Unrestricted Other Endowment Net Position Beginning endowment net assets $ $ 777,533 $ 2,287,019 $ 3,064,552 Investment return, net of fees 167,576 167,576 Transfer of funds in 546 546 Contributions 2,520 36,684 39,204 Pledges 600 119 719 Increase value-life insurance 166 166 Appropriation of endowment assets

for expenditures 94,797 (94,797) Expenditures (94,797) (94,797)

Ending endowment net assets $ $ 853,978 $ 2,323,988 $ 3,177,966

- 23 -


JUNE 30, 2019

Note 4 - LOANS RECEIVABLE (Component Unit)

The Foundation, a component unit to the College, makes loans to students of the College to be used primarily for the cost of tuition and books. These loans generally become payable upon the student's completion of or withdrawal from higher education programs. John Deere, and Tyson loans become forgivable upon the completion of the program and two or three years of employment with the respective companies.

Loans receivable are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectible or forgivable amounts through a charge to expense and a credit to a valuation allowance based on its assessment of the current status of individual accounts. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to loans receivable. Interest rates and terms vary by program. Below is a summary of loans receivable:

Note 5 -- INVENTORIES

Loans Receivable Less Allowance for Uncollectible Loans Less Allowance for Forgivable Loans

Net Loans Receivable

2019

$ 178,701 (10,665)

(113,051)

$ 54,985

The Community College's inventories at June 30, 2019 are as follows :

Type

Supplies and Materials Farm Operations Merchandise Held for Resale Sustainable Construction House

Total

- 24 -

Amount

$ 36,308 146,505 32,286 83,870

$298,969


JUNE 30, 2019

Note 6 -- CAPITAL ASSETS

A summary of changes in capital assets is as follows:

Balance Beginning

of Year Additions

Capital assets not being depreciated: Land $ 926,675 $ Construction in progress 10,373,638 2,860,392 Total capital assets not being depreciated 11,300,313 2,860,392

Capital assets being depreciated: Buildings 49,585,572 29,000 Other structures and improvements 31,148,453 259,363 Furniture and equipment 17,012,721 842,688 Total capital assets being depreciated 97,746,746 1,131,051

Less accumulated depreciation for: Buildings 21,888,515 978,829 Other structures and improvements 10,167,658 1,178,058 Furniture and equipment 11 ,515,133 1,191,016 Total accumulated depreciation 43,571,306 3,347,903

Total capital assets being depreciated, net 54,175,440 (2,216,852}

Capital assets, net $ 65,475,753 $ 643,540

Balance End of

Deletions Year

$ $ 926,675 13,234,030 14,160,705

(724,000) 48,890,572 (1,070,686) 30,337,130

(881,091} 16,974,318 (2,675,777) 96,202,020

(495,611) 22,371,733 (642,333) 10,703,383 (758,277} 11,947,872

(1,896,221) 45,022,988

(779,556} 51,179,032

$ (779,556) $ 65,339,737

On June 30, 2019, the Community College had future construction commitments of $1,218,471. Construction in Progress projects as of June 30, 2019 include construction of a new adult education building, and design of a new health science building.

Reconciliation Net Investment in Capital Assets:

Land Buildings Construction in Progress Other Structures and Improvements Furniture and Equipment Accumulated Depreciation

Capital Assets (Net of Accumulated Depreciation) Less: Bonds Payable Plus: Unspent Bond Proceeds

Net Investment in Capital Assets

- 25 -

$ 926,675 48,890,572 13,234,030 30,337,130 16,974,318

(45,022,988} 65,339,737 (6,080,731)

920,263

$60,179,269


JUNE 30, 2019

Note 6 -- CAPITAL ASSETS (Continued)

Capital Assets for the College's Foundation, a component unit, for the year ended June 30, 2019 is as follows:

Balance Balance Beginning End of

of Year Additions Deletions Year

Capital assets not being depreciated: Land $ 375,841 $ $ $ 375,841 Total capital assets not being depreciated 375,841 375,841

Capital assets being depreciated: Land Improvements 37,785 37,785 Total capital assets being depreciated 37,785 37,785

Less accumulated depreciation for: Land Improvements 8,817 2,519 11,336 Total accumulated depreciation 8,817 2,519 11,336

Total capital assets being depreciated, net 28,968 (2,519) 26,449

Capital assets, net $ 404,809 $ (2,519~ $ $ 402,290

Note 7 -- LONG-TERM LIABILITIES

A summary of changes in long-term liabilities for the year ended June 30, 2019 is as follows:

Balance Beginning Ending Due Within

of Year Additions Reductions Balance One Year

Primary Government: Unearned Revenue $ 1,815,939 $ 2,636,596 $ (2,331,028) $ 2,121,507 $ 1,738,480 Compensated Absences 922,890 1,273,272 (1,253,348) 942,814 645,000 Early Retirement Payable 2,020,286 1,996,937 (1,769,867) 2,247,356 1,719,465 Certificates Payable 11,230,000 5,030,000 (2,050,000) 14,210,000 2,320,000 General Obligation School Bonds 8,430,000 (2,380,000) 6,050,000 2,190,000 Net Pension Liability 10,834,554 (838,034) 9,996,520 Total OPES Liability 417,641 351,419 769,060

Total Primary Government $ 35,671 ,310 $ 11 ,288,224 $ {10,622,277) $ 36,337,257 $ 8,612,945

General Obligation School Bonds listed on the Statement of Net Position include Unamortized Premium of $48,850 and Unamortized Discount of $18,119. Certificates Payable listed on the Statement of Net Position include Unamortized Premium of $11,519.

- 26 -


JUNE 30, 2019

Note 7 -- LONG-TERM LIABILITIES (Continued)

Certificates Payable

In accordance with agreements dated between June 30, 1996 and June 30, 2019, the Community College issued certificates with a June 30, 2019 outstanding balance of $14,210,000 with interest rates ranging from 0.40% to 5.35%. The debt was incurred to fund the development and training costs incurred relative to implementing Chapter 260E of the Code of Iowa, Iowa Industrial New Jobs Training Program (NJTP). NJTP's purpose is to provide tax-aided training for employees of industries which are new to or are expanding their operations within the State of Iowa. Interest is payable semi-annually, while principal payments are due annually. The certificates are to be retired by proceeds from anticipated job credits from withholding taxes, incremental property tax, budgeted reserves, and, in the case of default, from standby property taxes. During 2019, Hawkeye Community College recorded $320,486 of interest expense from the certificates payable.

The certificates will mature as follows:

Year Ending

June 30, Principal Interest Total

2020 $ 2,320,000 $ 375,261 $ 2,695,261 2021 2,185,000 320,970 2,505,970 2022 2,020,000 265,885 2,285,885 2023 1,755,000 215,307 1,970,307 2024 1,505,000 169,757 1,674,757

2025-2029 4,425,000 339,045 4,764,045

Total $ 14,210,000 $ 1,686,225 $ 15,896,225

Bonds Payable

On February 20, 2018, Hawkeye Community College issued $9,500,000 in general obligation school bonds, to finance the improvement of its Main Campus and construct, remodel, erect and equip buildings thereon, and construct, lease, or acquire and improve and equip new or existing facilities. Annual principal payments began June 1, 2018. Interest payments are due semi-annually each June and December. The capital loan notes will mature June 2023. The balance of the general obligation school bonds at June 30, 2019, was $6,050,000.

- 27 -


JUNE 30, 2019

Note 7 -- LONG-TERM LIABILITIES (Continued)

Details of the Community College's June 30, 2019 bonded indebtedness maturities are as follows:

Year Ending

June 30, Principal Interest Total

2020 $ 2,190,000 $ 121,000 $ 2,311,000 2021 1,260,000 77,200 1,337,200 2022 1,300,000 52,000 1,352,000 2023 1,300,000 26,000 1,326,000

$ 6,050,000 $ 276,200 $ 6,326,200

Note 8 -- OPERATING LEASES

The College has leased various facilities within the area to house different divisions of the College. These leases have been classified as operating leases and, accordingly, all rents are expensed as incurred. The leases expire between 2020 and 2021 and require various minimum annual rentals. Certain leases are renewable for additional periods. Some of the leases also require the payment of normal maintenance and insurance on the properties. In most cases, management expects the leases will be renewed or replaced by other leases.

The following is a schedule by year of future minimum rental payments required under operating leases which have initial or remaining non-cancelable lease terms in excess of one year as of June 30, 2019:

Year Ending

June 30, Amount

2020 $ 323,439 2021 192,404 2022 2,000 Total $ 517,843

Rents for the year ended June 30, 2019 for all operating leases, except those with terms of a month or less, totaled $325,494.

Note 9 -- IOWA PUBLIC EMPLOYEES' RETIREMENT SYSTEM (IPERS)

Plan Description -IPERS membership is mandatory for employees of the College except for those covered by another retirement system. Employees of the College are provided with pensions through a cost-sharing multiple employer defined benefit pension plan administered by IPERS. IPERS issues a stand-alone financial report which is available to the public by mail at 7401 Register Drive P.O. Box 9117, Des Moines, Iowa 50306-9117 or at www.ipers.org.

IPERS benefits are established under Iowa Code chapter 97B and the administrative rules thereunder. Chapter 97B and the administrative rules are the official plan documents. The following brief description is provided for general informational purposes only. Refer to the plan documents for more information.

- 28 -


JUNE 30, 2019

Note 9 -- IOWA PUBLIC EMPLOYEES RETIREMENT SYSTEM (IPERS) (Continued)

Pension Benefits - A Regular member may retire at normal retirement age and receive monthly benefits without an early-retirement reduction. Normal retirement age is age 65, any time after reaching age 62 with 20 or more years of covered employment, or when the member's years of service plus the member's age at the last birthday equals or exceeds 88, whichever comes first. These qualifications must be met on the member's first month of entitlement to benefits. Members cannot begin receiving retirement benefits before age 55. The formula used to calculate a Regular member's monthly !PERS benefit includes:

• A multiplier based on years of service. • The member's highest five-year average salary, except members with service before June 30, 2012

will use the highest three-year average salary as of that date if it is greater than the highest five-year average salary.

If a member retires before normal retirement age, the member's monthly retirement benefit will be permanently reduced by an early-retirement reduction. The early retirement reduction is calculated differently for service earned before and after July 1, 2012. For service earned before July 1, 2012, the reduction is 0.25 percent for each month that the member receives benefits before the member's earliest normal retirement age. For service earned starting July 1, 2012, the reduction is 0.50 percent for each month that the member receives benefits before age 65.

Generally, once a member selects a benefit option, a monthly benefit is calculated and remains the same for the rest of the member's lifetime. However, to combat the effects of inflation, retirees who began receiving benefits prior to July 1990 receive a guaranteed dividend with their regular November benefit payments.

Disability and Death Benefits -A vested member who is awarded federal Social Security disability or Railroad Retirement disability benefits is eligible to claim !PERS benefits regardless of age. Disability benefits are not reduced for early retirement. If a member dies before retirement, the member's beneficiary will receive a lifetime annuity or a lump-sum payment equal to the present actuarial value of the member's accrued benefit or calculated with a set formula, whichever is greater. When a member dies after retirement, death benefits depend on the benefit option the member selected at retirement.

Contributions - Contribution rates are established by !PERS following the annual actuarial valuation which applies !PERS' Contribution Rate Funding Policy and Actuarial Amortization Method . State statute limits the amount rates can increase or decrease each year to 1 percentage point. !PERS Contribution Rate Funding Policy requires that the actuarial contribution rate be determined using the "entry age normal" actuarial cost method and the actuarial assumptions and methods approved by the !PERS Investment Board. The actuarial contribution rate covers normal cost plus the unfunded actuarial liability payment based on a 30-year amortization period. The payment to amortize the unfunded actuarial liability is determined as a level percentage of payroll based on the Actuarial Amortization Method adopted by the Investment Board.

In fiscal year 2019, pursuant to the required rate, Regular members contributed 6.29 percent of covered payroll and the Community College contributed 9.44 percent of covered payroll, for a total rate of 15. 73 percent.

The Community College's contributions to !PERS for the year ended June 30, 2019 were $1,052,189.

Net Pension Liabilfty. Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions - At June 30, 2019, the Community College reported a liability of $9,996,520 for its proportionate share of the net pension liability. The net pension liability was measured as of June 30, 2018, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date.

- 29 -


JUNE 30, 2019


The Community College's proportion of the net pension liability was based on the Community College's share of contributions to IPERS relative to the contributions of all IPERS participating employers . At June 30, 2018, the Community College's collective proportion was 0.1579666 percent, which was a decrease of 0.004683 percent from its proportion measured as of June 30, 2017.

For the year ended June 30, 2019, the Community College recognized pension expense of $1 ,706,552. At June 30, 2019, the College reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Differences between expected and actual experience

Changes of assumptions

Net difference between projected and actual earnings on IPERS' investments

Changes in proportion and differences between Community College contributions and proportionate share of contributions

Community College contributions subsequent to the measurement date

Total

Deferred Outflows of Resources

$

$

54,809

1,426,064

675,703

1,052,189

3,208,765

Deferred Inflows of Resources

$ 225,937

274,671

273,875

$ 774,483

$1,052,189 reported as deferred outflows of resources related to pensions resulting from the Community College contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2020. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows :

Year Ending June 30, Amount

2020 $ 1,003,222 2021 482,106 2022 (41 ,791) 2023 (38,199) 2024 ~23,245}

$ 1,382,093

There are no non-employer contributing entities at IPERS.

- 30 -


JUNE 30, 2019


Actuarial Assumptions - The total pension liability in the June 30, 2018 actuarial valuation was determined using the following actuarial assumptions applied to all periods included in the measurement, as follows:

Rate of Inflation (effective June 30, 2017)

Rates of salary increase (effective June 30, 2017)

Long-term investment rate of return (effective June 30, 2017)

Wage growth (Effective June 30, 2017)

2.60% per annum

3.25% to 16.25%, average, including inflation. Rates vary b~ membership program.

7.00%, compounded annually, net of investment expense, including inflation

3.25% per annum, based on 2.60% inflation and 0.65% real wage inflation.

The actuarial assumptions used in the June 30, 2018 valuation were based on the results of an actuarial experience study dated March 24, 2017 and a demographic assumption study dated June 28, 2018.

Mortality rates used in the 2018 valuation were based on the RP-2014 Employee and Healthy Annuitant Tables with MP-2017 generational adjustments.

The long-term expected rate of return on IPERS' investments was determined using a building-block method in which best-estimate ranges of expected future real rates (expected returns, net of investment expense and inflation) are developed for each major asset class . These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:

Long-Term Expected Real

Asset Class Asset Allocation Rate of Return

Domestic Equity 22.0% 6.01% International equity 15.0 6.48 Global smart beta equity 3.0 6.23 Core plus fixed income 27.0 1.97 Public credit 3.5 3.93 Public real assets 7.0 2.91 Cash 1.0 -0.25 Private equity 11.0 10.81 Private real assets 7.5 4.14 Private credit 3.0 3.11

Total 100%

Discount Rate - The discount rate used to measure the total pension liability was 7.00 percent. The projection of cash flows used to determine the discount rate assumed employee contributions will be made at the contractually required rate and contributions from the College will be made at contractually required rates, actuarially determined. Based on those assumptions, IPERS' fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore, the long-term expected rate of return on IPERS' investments was applied to all periods of projected benefit payments to determine the total pension liability.

- 31 -


JUNE 30, 2019


Sensitivity of the Community College's Proportionate Share of the Net Pension Liability to Changes in the Discount Rate - The following presents the College's proportionate share of the net pension liability calculated using the discount rate of 7.00 percent, as well as what the College's proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1 % lower (6 .00%) or 1 % higher (8.00%) than the current rate .

College's proportionate share of the net pension liability

1% Decrease (6.00%)

$16,966,093

Discount Rate (7.00%)

$ 9,996,520

1 % Increase (8.00%)

$4,150,073

IPERS Fiduciary Net Position - Detailed information about IPERS' fiduciary net position is available in the separately issued IPERS financial report which is available on IPERS' website at www.ipers.org.

Payables to I PERS-At June 30, 2019, the College reported payables to IPERS of $66,806, for legally required employer contributions.

Note 10 --TEACHERS INSURANCE AND ANNUITY ASSOCIATION -- COLLEGE RETIREMENT EQUITIES FUND (TIAA-CREF)

The Community College contributes to the TIAA-CREF retirement program, which is a defined contribution plan. TIM administers the retirement plan for Hawkeye Community College. The defined contribution retirement plan provides individual annuities for each plan participant. As required by the Code of Iowa, all eligible College employees must participate in a retirement plan from the date they are employed.

Benefit terms, Includ ing contribution requirements, for TIAA-CREF are established and specified by the contract with TIAA-CREF, and in accordance with the Code of Iowa. For each employee in the pension plan, the College is required to contribute 9.44 percent of annual salary, including overtime pay, to an Individual employee account. Each employee is required to contribute 6.29 percent. Contributions made by both the Community College and employees vest immediately. For the year ended June 30, 2019, employee contributions totaled $719,140 and the College recognized pension expense of $1,057,826.

At June 30, 2019, the College reported payables to the defined contribution pension plan of $67,166, for legally required employer contributions.

Note 11 - OTHER POSTEMPLOYMENT BENEFITS (OPEB)

Plan Description- The College administers a single-employer retiree benefit plan which provides medical and prescription drug benefits for employees, retirees and their dependents. Group insurance benefits are established under Iowa Code Chapter 509A.13. No assets are accumulated in a trust that meets the criteria in paragraph 4 of GASB Statement No. 75.

OPEB Benefits - Individuals who are employed by the College are eligible to participate in the group health plan are eligible to continue healthcare benefits upon retirement. Retirees under age 65 pay the same premium for the medical and prescription drug benefits as active employees, Which results in an implicit rate subsidy and an OPES liability.

- 32 -


JUNE 30, 2019

Note 11 - OTHER POSTEMPLOYMENT BENEFITS (OPEB) (Continued)

Retired participants must be age 55 or older at retirement. At June 30, 2019, the following employees were covered by the benefit terms:

Inactive employees or beneficiaries currently receiving benefit payments Active employees

Total

11 326

337

Total OPEB Liability - The College's total OPEB liability of $769,060 was measured as of June 30, 2019 and was determined by an actuarial valuation as of July 1, 2018.

Actuarial Assumptions - The total OPEB liability in the June 30, 2019 actuarial valuation was determined using the following actuarial assumptions and the entry age normal actuarial cost method , applied to all periods included in the measurement.

Rate of Inflation (effective June 30, 2019) 3.00% per annum

Rates of salary increase (effective June 30, 2019) 3.00% per annum, including inflation.

Discount Rate (effective June 30, 2019) 3.87%, compounded annually, including inflation

Healthcare Cost Trend Rate (effective June 30, 2019) 5.00% per annum

Discount Rate - The discount rate used to measure the total OPEB liability was 3.87% which reflects the index rate for 20-year tax-exempt general obligation municipal bonds with an average rating of AA/Aa or higher as of the measurement date.

Mortality rates are from the RP 2014 annuitant distinct mortality table adjusted to 2006 with MP-2018 generational projection of future mortality improvement.

The actuarial assumptions used in the June 30, 2019 valuation were based on the results of an actuarial experience study with dates corresponding to those listed above.

Changes in the Total OPEB Liability

Total OPEB liability beginning of year

Changes for the year: Service Cost Interest Differences between and actual experiences Changes in assumptions Benefit Payments

Net Changes

Total OPEB liability end of year

$ 417,641

45,668 29,850

148,551 176,703 {49,353}

351,419

$ 769,060

Changes of assumptions reflect a change in the discount rate from 3.58% in fiscal year 2018 to 3.87% in fiscal year 2019.

- 33 -


JUNE 30, 2019

Note 11 - OTHER POSTEMPLOYMENT BENEFITS (OPEB) (Continued)

Sensitivity of the College's Total OPEB Liability to Changes in the Discount Rate - The following presents the total OPEB liability of the College, as well as what the College's total OPEB liability would be if it were calculated using a discount rate that is 1% lower (2.87%) or 1% higher (4 .87%) than the current discount rate.

Total OPEB Liability

1% Decrease

(2.87%)

$ 815,212

Discount Rate

(3.87%)

$ 769,060

1% Increase

(4.87%)

$ 726,580

Sensitivity of the College's Total OPES Liability to Changes in the Healthcare Cost Trend Rates - The following presents the total OPES liability of the College, as well as what the College's total OPEB liability would be it were calculated using healthcare cost trend rates that are 1 % lower (4.00%) or 1 % higher (6.00%) than the current healthcare cost trend rates .

Total OPES Liability

1% Decrease (4.00%)

$ 713,753

Healthcare Cost Trend

Rate (5.00%)

$ 769,060

1% Increase (6.00%)

$ 831,913

OPEB Expense and Deferred Outflows of Resources Related to OPES - For the year ended June 30, 2019, the College recognized OPES expense of $107,561. At June 30, 2019, the College reported deferred outflows of resources and deferred inflows of resources related to OPES from the following resources:

Deferred Outflows Deferred Inflows of Resources of Resources

Differences between expected and actual experience $ 133,546 $ 18,960

Changes in assumptions 170,756 Total $ 304,302 $ 18,960

The amount reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized as OPES expense as follows :

Year Ending June 30, Amount

2020 $ 32,043 2021 32,043 2022 32,043 2023 32,043 2024 32,043

Thereafter 125,127 $ 285,342

- 34 -

Note 12 -- RISK MANAGEMENT


JUNE 30, 2019

The Community College has secured insurance purchased from commercial insurance carriers to provide coverage and protection in the following categories: general liability, automobile liability, group excess liability, linebacker, pollution liability, professional services, property and inland marine, workers compensation and employers' liability, and crime insurance. There have been no reductions in insurance coverage from prior years. Settled claims resulting from the risks have not exceeded commercial insurance coverage in any of the past three years .

Note 13 -- NEW JOBS TRAINING PROGRAMS

Hawkeye Community College administers the Iowa Industrial New Jobs Training Program (NJTP) in Merged Area VII in accordance with Chapter 260E of the Code of Iowa. NJTP's purpose is to provide tax-aided training or retraining for employees of industries which are new to or are expanding their operations within the State of Iowa. Certificates are sold by the Community College to fund approved projects and are to be retired by proceeds from anticipated jobs credits from withholding taxes, incremental property taxes, budgeted reserves and in the case of default, from standby property tax. The Community College is currently administering 74 projects receiving project funding or in the repayment stage.

Hawkeye Community College also administers the Iowa Small Business New Jobs Training Program (SBNJTP) in Merged Area VII in accordance with Chapter 260F of the Code of Iowa. SBNJTP's purpose is to provide tax-aided training or retraining for employees of small businesses which are new to or are expanding their operations within the State of Iowa. Approved small businesses receive loans from the Iowa Employment Training Fund, a State administered fund. The Community College received funding for 11 projects during fiscal year 2019.

Note 14 - EARLY RETIREMENT PROGRAM

During fiscal year 2019, a Voluntary Early Retirement Plan was offered. All full-time staff that were 55 years of age by the end of the contract year and who had at least 10 years of full-time service with the Community College were eligible for early retirement remuneration. Early retirement was effective at the end of the employee's contract year, unless otherwise negotiated between the College and the employee.

The benefits for fiscal years 2019 and 2018 were equal to the College making a cash payment of $59,655 and $58,772, respectively, the equivalent to six years of health insurance coverage at the College's current least expensive single health insurance premium with five percent compounded inflation, plus four percent for 2019 and 2018 of the contract year salary at the time of retirement election for each complete year based on the employee's full-time employment anniversary date.

Payments will be made for both years on the following schedule: the first payment, equal to 30% of the total, paid on the second pay period of the month following the date of retirement; the second payment, equal to the remaining 70% of the total, paid on the second pay period in January of the following calendar year. Eligible employees retiring before reaching 65 year of age are entitled to continue their participation in the College's health insurance program, at their own expense, until they reach 65 years of age.

At June 30, 2019, there were 18 participants expecting to receive payments under the 2019 and 2018 plan, with total liability of payments of $2,247,356. The Community College's early retirement expense for the year ended June 30, 2019 was $2,000,365.

- 35 -

Note 15-TAX ABATEMENTS


JUNE 30, 2019

Governmental Accounting Standards Statement No. 77 defines tax abatements as a reduction in tax revenues that results from an agreement between one or more governments and an individual or entity in which (a) one or more governments promise to forgo tax revenues to which they are otherwise entitled and (b) the individual or entity promises to take a specific action after the agreement has been entered into that contributes to economic development or otherwise benefits the governments or the citizens of those governments.

College Tax Abatements

260E Projects - The College provides tax abatements for industrial new jobs training projects with the tax increment financing as provided for in section 403.19 of the Code of Iowa and/or state income tax withholding as provided for in section 260E.5 of the Code of Iowa. Community Colleges enter into training agreements with eligible businesses to establish single or multiple projects to provide training to employees in new jobs. A final agreement executed between the Community College and a business is a binding contract. To fund training, the College borrows money from investors in the form of bond certificates . These certificates are repaid by capturing a portion of the state withholding dollars generated by the new jobs' payroll and diverting these dollars into special funds controlled by the College. These payments are equal to 1.5 percent of the gross wages paid to employees in the new jobs. An additional payment equivalent to 1.5 percent of the gross wages paid on new jobs is authorized by 15A.7 of the Code of Iowa. In essence, this program enables a business to divert the equivalent of 3 percent of the new jobs gross payroll. No other commitments were made by the College as part of these agreements.

For the year ended June 30, 2019, the College had no abatements of property tax and $1,902,619 of state income tax withholding under the projects.

260G Projects - The College also provides tax abatements for training programs with tax increment financing as provided for in section 403.19 of the Code of Iowa and/or state income tax withholding as provided for in section 260G.4A of the Code of Iowa. For this type of program, a Community College will enter into an agreement with a business to establish or expand a training program for occupations most needed by Iowa business. A business must be engaged in interstate or intrastate commerce for the purpose of manufacturing, processing, or assembling products, construction, conducting research and development or providing services in interstate or intrastate commerce. Retail, health and professional services are excluded. At a minimum, a business must match 20 percent of the program costs and an agreement shall not exceed a period of 5 years. The remaining program costs are diverted to the College through state withholding dollars. These dollars are paid into a special fund of the College to pay, in part, the program costs. No other commitments were made by the College as part of these agreements.

For the year ended June 30, 2019, the College had no abatements of property tax and $218,024 of state income tax withholding under the projects.

Tax Abatements of Other Entities

Property tax revenues of the College were reduced by the amounts on the following page for the year ended June 30, 2019 under agreements entered into by entities on the following page:

- 36 -


JUNE 30, 2019

Note 15 - TAX ABATEMENTS (Continued)

Entity Tax Abatement Program

City of Waterloo Urban renewal and economic development projects

City of Evansdale Urban renewal and economic development projects

City of Cedar Falls Urban renewal and economic development projects

City of La Porte City Urban renewal and economic development projects

City of Jesup Urban renewal and economic development projects

City of Janesville Urban renewal and economic development projects

City of Hudson Urban renewal and economic development projects

City of Dunkerton Urban renewal and economic development projects

City of Gilbertville Urban renewal and economic development projects

City of Waverly Urban renewal and economic development projects

City of Denver Urban renewal and economic development projects

City of Sumner Urban renewal and economic development projects

City of Tripoli Urban renewal and economic development projects

City of Readlyn Urban renewal and economic development projects

Bremer County Urban renewal and economic development projects

City of Fairbank Urban renewal and economic development projects

City of Independence Urban renewal and economic development projects

City of Aplington Urban renewal and economic development projects

City of Parkersburg Urban renewal and economic development projects

City of Allison Urban renewal and economic development projects

City of Shell Rock Urban renewal and economic development projects

Butler County Urban renewal and economic development projects

City of New Hartford Urban renewal and economic development projects

City of Nashua Urban renewal and economic development projects

City of Dike Urban renewal and economic development projects

City of Reinbeck Urban renewal and economic development projects

Grundy County Urban renewal and economic development projects

City of Grundy Center Urban renewal and economic development projects

City of Dysart Urban renewal and economic development projects

City of Elk Run Heights Urban renewal and economic development projects

- 37 -

Amount of Tax Abated

$ 47,224

8,890

130

1,324

4,288

1,677

4,487

3,828

2,277

12,220

1,035

2,727

855

5,932

134

5,793

$ 102,821


JUNE 30, 2019

Note 16- SELF-FUNDED HEAL TH INSURANCE PROGRAM

During fiscal year 2018, the Community College implemented a self-funded health insurance program. Hawkeye Community College pays the actual claims and has a stop-loss arrangement whereby the total losses cannot exceed the contractual maximum liability with the insurer, which is $3,634,472.

The Community College's monthly contributions to the program fund current operations and provide capital for future claims. Monthly operating contributions are those amounts necessary to fund, on a cash basis, the program's general and administrative expenses and claims. The College uses reinsurance to reduce its exposure for losses that carries a specific stop loss of $50,000 per covered individual and an aggregate stop loss of 125% of total estimated claims. Claims payable include all known claims and an amount for claims that have been incurred but not reported (IBNR).

The changes in the aggregate liabilities for claims included in Reported and Unreported Insurance Claims Payable and insurance Reserve for the year ended June 30, 2019 are as follows:

Medical Reserve Fund Balance, Beginning of Year $ 490,761 Claims Recognized 3,995,986 Claim Payments (3,822,330) Additional Funds for Catastrophic Claims 189,680 Medical Reserve Fund Balance, End of Year $ 854,097

Reported and Unreported Insurance Claims Payable $ 377,000 Insurance Reserve 477,097

$ 854,097

Note 17- PROSPECTIVE ACCOUNTING CHANGE

The Governmental Accounting Standards Board has issued Statement No, 84, Fiduciary Activities. This statement will be implemented for the fiscal year ending June 30, 2020. The revised requirements of this statement will enhance the consistency and comparability offiduciary activity reporting by state and local governments by establishing specific criteria for identifying fiduciary activities and clarifying whether and how business-type activities should report their fiduciary activities.

- 38 -

Required Supplementary Information

HAWKEYE COMMUNITY COLLEGE SCHEDULE OF CHANGES IN COLLEGE'S TOTAL OPEB LIABILITY, RELATED RATIOS AND NOTES

REQUIRED SUPPLEMENTARY INFORMATION FOR THE LAST TWO YEARS

Total OPEB Liability

Service Cost

Interest Cost

Difference between Expected and Actual Experiences

Changes of assumptions or other inputs

Benefit Payments

Net Change in Total OPEB Liability

Total OPEB Liability - Beginning

Total OPEB Liability - Ending

Covered-Employee Payroll

Total OPEB Liability as a percentage of covered-employee payroll

$

$

$

2019

45,668

29,850

148,551

176,703

(49,353)

351,419

417,641

769,060

18,388,603

4.18%

$

$

$

2018

33,117

15,186

(23,318)

14,638

(20,179)

19,444

398,197

417.641

18,497,014

2.26%

Note: GASB Statement No. 75 requires 10 years of information to be presented in this table. However, until this

information is available, the College will present information from those years for which information is available.

Notes to Schedule of Changes in the College's Total OPEB Liability, Related Ratios and Notes

Changes in benefit terms:

There were no significant changes in benefit terms.

Changes in assumptions:

Changes in assumptions and other inputs reflect the effects of changes in the discount rate each period. The following are the discount rates used in each period.

Year ended June 30, 2019 3.87% Year ended June 30, 2018 3.58% Year ended June 30, 2017 4.25%

See Accompanying Independent Auditors' Report - 39 -

HAWKEYE COMMUNITY COLLEGE SCHEDULE OF THE COLLEGE'S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY

IOWA PUBLIC EMPLOYEES' RETIREMENT SYSTEM REQUIRED SUPPLEMENTARY INFORMATION

FOR THE LAST FIVE YEARS"

2019 2018 2017 2016

College's Proportion of the Net Pension Liability 0.157967% 0.162650% 0.155994% 0.152160%

College's Proportionate Share of the Net Pension Liability $ 9,996,520 $ 10,834,554 9,817,186 $ 7,517,459

College's Covered Payroll $ 11,872,441 $ 12,109,485 $ 11,062,638 $ 10,051,937

College's Proportionate Share of the Net Pension Liability as a Percentage of Its Covered Payroll 84.20% 89.47% 88.74% 74.79%

IPERS' Net Position as a Percentage of the Total Pension Liability 83.62% 82.21% 81.82% 85.19%

2015

0.130092%

$ 5,159,327

$ 8,502,676

60.68%

87.61%

* In accordance with GASB Statement No. 68, the amounts presented for each fiscal year were determined as of June 30 of the preceding year.

Note: GASB Statement 68 requires 10 years of information to be presented in this table. However, until this information is available, the College will present information from those years for which information is available.

See Accompanying Independent Auditors' Report - 40 -

Statutorily Required Contribution

Contributions in Relation to the Statutorily Required Contribution

Contribution Deficiency

College's Covered Payroll

Contribution as a Percentage of Covered Payroll

$

$

HAWKEYE COMMUNITY COLLEGE SCHEDULE OF COLLEGE CONTRIBUTIONS - IPERS

REQUIRED SUPPLEMENTARY INFORMATION FOR THE LAST TEN YEARS

Years Ended June 30, 2019 2018 2017 2016

1,052,189 $ 1,060,209 $ 1,081,377 $ 987,894

1,052,189 1,060,209 1,081,377 987,894

$ $ $

$11 , 146,069 $11,872,441 $12,109,485 $11,062,638

9.44% 8.93% 8.93% 8.93%

- 41 -

2015

$ 897,638

897,638

$

$10,051,937

8.93%

2014

$ 759,289 $

759,289

$ $

$ 8,502,676 $

8.93%

2013 2012 2011 2010

696,670 $ 571,237 $ 475,282 $ 503,571

696,670 571 ,237 475,282 503,571

$ $ $

8,035,409 $ 7,078,525 $ 6,838,590 $ 7,572,496

8.67% 8.07% 6.95% 6.65%

See Accompanying Independent Auditors' Report -42-

HAWKEYE COMMUNITY COLLEGE NOTES TO REQUIRED SUPPLEMENTARY INFORMATION - NET PENSION LIABILITY

JUNE 30, 2019

CHANGES OF BENEFIT TERMS:

Legislation enacted in 2010 modified benefit terms for Regular members. The definition of final average salary changed from the highest three to the highest five years of covered wages. The vesting requirement changed from four years of service to seven years. The early retirement reduction increased from 3% per year measured from the member's first unreduced retirement age to a 6% reduction for each year of retirement before age 65.

CHANGES OF ASSUMPTIONS:

The 2018 valuation implemented the following refinements as a result of a demographic

assumption study dated June 28, 2018:

• Changed mortality assumptions to the RP-2014 mortality tables with mortality improvements modeled using Scale MP-2017.

• Adjusted retirement rates. • Lowered disability rates. • Adjusted the probability of a vested Regular member electing to receive a deferred benefit. • Adjusted the merit component of the salary increase assumption.

The 2017 valuation implemented the following refinements as a result of an experience study dated March 24, 2017:

• Decreased the inflation assumption from 3.00% to 2.60%. • Decreased the assumed rate of interest on member accounts from 3.75% to 3.50% per year. • Decreased the discount rate from 7.50% to 7.00%. • Decreased the wage growth assumption from 4.00% to 3.25%. • Decreased the payroll growth assumption from 4.00% to 3.25%.

The 2014 valuation implemented the following refinements as a result of a quadrennial experience study:

• Decreased the inflation assumption from 3.25% to 3.00%. • Decreased the assumed rate of interest on member accounts from 4.00% to 3.75% per year. • Adjusted male mortality rates for retirees in the Regular membership group. • Moved from an open 30-year amortization period to a closed 30-year amortization period for the UAL

(unfunded actuarial liability) beginning June 30, 2014. Each year thereafter, changes in the UAL from plan experience will be amortized on a separate closed 20-year period.

The 2010 valuation implemented the following refinements as a result of a quadrennial experience study:

• Adjusted retiree mortality assumptions. • Modified retirement rates to reflect fewer retirements. • Lowered disability rates at most ages. • Lowered employment termination rates. • Generally increased the probability of terminating members receiving a deferred retirement benefit. • Modified salary increase assumptions based on various service duration.

- 43 -

Other Supplementary Information

HAWKEYE COMMUNITY COLLEGE NOTES TO OTHER SUPPLEMENTARY INFORMATION SCHEDULES

JUNE 30, 2019

Other Supplementary information of the College is presented on the basis of funds, each of which is considered to be a separate accounting entity. The operations of each fund are accounted for by providing a separate set of self-balancing accounts which comprise its assets, deferred outflows of resources, liabilities, deferred inflows of resources, fund balance, revenues and expenditures. The various fund groups and their designated purposes are as follows:

Current Funds - The Current Funds are utilized to account for those economic resources that are expendable for the purpose of performing the primary and supporting missions of the Community College and consist of the following:

Unrestricted Fund -- The Educational and Support subgroup of the Unrestricted Fund accounts for the general operations of the Community College.

The Auxiliary Enterprises subgroup accounts for activities which are intended to provide non-instructional services for sales to students, staff and/or institutional departments, and which are supplemental to the educational and general objectives of the Community College.

Restricted Fund -- The Restricted Fund is used to account for resources that are available for the operation and support of the educational program, but which are restricted as to their use by donors or outside agencies.

Plant Funds -- The Plant Funds are used to account for transactions relating to investment in the Community College properties, and consist of the following selfbalancing sub-funds:

Unexpended -- This account is used to account for the unexpended resources derived from various sources for the acquisition or construction of plant assets.

Retirement of Indebtedness -- This account is used to account for the accumulation of resources for principal and interest payments on plant indebtedness.

Investment in Plant -- This account is used to account for the excess of the carrying value of plant assets over the related liabilities.

Agency Funds -- The Agency Funds are used to account for assets held by the Community College in a custodial capacity or as an agent for others. Agency Funds' assets equal liabilities.

The Budgetary Comparison Schedule of Expenditures - Budget to Actual provides a comparison of the budget to actual expenditures for those funds and/or levies required to be budgeted. Since the College uses the Business-Type Activities reporting, this budgetary comparison information is included as other supplementary information.

Schedules presented in other supplementary information are reported using the current financial resources measurement focus and the accrual basis of accounting with modifications for depreciation and other items included in the adjustments column. The schedule of revenues, expenditures and changes in fund balances is a schedule of financial activities related to the current reporting period. It does not purport to present the results of operations or net income or loss for the period as would a statement of income or a statement of revenues and expenses.

- 44 -

SCHEDULE 1 HAWKEYE COMMUNITY COLLEGE

BUDGETARY COMPARISON SCHEDULE OF EXPENDITURES BUDGET (NON-GAAP BASIS) AND ACTUAL- OTHER SUPPLEMENTARY INFORMATION


Variance between

Original Amended Actual and Funds/Levy Budget Budget Actual Budget

Unrestricted $ 38,574,788 $ 39,461,460 $ 36,651 ,656 $ 2,809,804

Restricted 14,770,000 14,770,000 8,184,529 6,585,471 Early Retirement 1,243,540 1,243,540 2,000,365 (756,825) Unemployment 25,000 25,000 49,813 (24,813) Tort Liability 200,000 200,000 252,253 (52,253) Insurance 1,900,000 1,900,000 1,959,099 (59,099) Equipment Replacement 900,000 900,000 470,533 429,467

Total Restricted 19,038,540 19,038,540 12,916,592 6,121,948

Plant 5,351,056 7,000,000 4,681,329 2,318,671 Bonds and Interest 2,617,862 2,617,862 2,540,384 77,478

Total $ 65,582,246 $68,117,862 $ 56,789,961 $ 11,327,901

- 45 -

HAWKEYE COMMUNITY COLLEGE NOTE TO OTHER SUPPLEMENTARY INFORMATION -BUDGETARY REPORTING

JUNE 30, 2019

While the College reports financial position, results of operation and changes in net position on the basis of generally accepted accounting principles (GMP), the Board of Trustees annually prepares a budget designating the proposed expenditures for operation of the Community College on a budgetary basis that is accrual basis with the exception of capital outlay and debt service payments . Following required public notice and hearing, and in accordance with Chapter 260C of the Code of Iowa, the Board of Trustees certifies the approved budget to the appropriate county auditors and then submits the budget to the State Board of Education for approval. The budget may be amended during the year utilizing similar statutorily prescribed procedures. Formal and legal budgetary control is based on total operating expenditures.

Budgets are not required to be adopted for the Auxiliary Enterprises subgroup, Scholarships and Grants Accounts, Workforce Act, Loan Funds, Endowment Funds and Agency Funds.

The major differences between the budget basis and GMP are as follows :

Total Actual Expenditures, Budgetary Basis Items Not Required to be Budgeted:

Auxiliary Enterprises Scholarships and Grants Accounts Workforce Act Investment in Plant

Combining Adjustments GMP Basis

$

$

Total Funds

56,789,961

3,733,042 7,575,936 1,248,134 2,675,777

{10,754,637} 61,268,213

Expenses from the Statement of Revenues, Expenses, and Changes in Net Position :

Total Operating Expenses Loss on Sale of Capital Assets Interest on Indebtedness

- 46 -

$ 60,073,589 717,354 477,270

$ 61 ,268,213

HAWKEYE COMMUNITY COLLEGE COMBINING BALANCE SHEET

JUNE 30, 2019

Current Funds

Unrestricted Restricted ASSETS AND DEFERRED OUTFLOWS OF RESOURCES:

Assets: Cash and Investments $ 12,522,972 $ 19,016,946 Receivables:

Due From Others 2,528,920 294,958 Accrued Interest 68,727 Property Taxes - Succeeding Year 2,023,628 4,627,163 Student Loans 15,994 Iowa Industrial New Jobs Training Program 3,709,233

Due From Other Governments 101,254 598,873 Prepaid Expenses 281,698 Inventories 298,969 Capital Assets:

Land Buildings Construction in Progress Other Structures and Improvements Furniture and Equipment Accumulated Depreciation

Total Assets 17,826,168 28,263,167

Deferred Outflows of Resources: OPEB Related Deferred Outflows Pension Related Deferred Outflows

Total Deferred Outflows of Resources

Total Assets and Deferred Outflows of Resources $ 17,826,168 $ 28,263,167

- 47 -

Unexpended

$ 5,519,230

12,706 2,023,628

31,144

7,586,708

$ 7,586,708

Plant Funds Retirement of

Indebtedness

$ 373,656

2,649,408

3,023,064

$ 3,023,064

$

Investment

in Plant

926,675 48,890,572 13,234,030 30,337,130 16,974,318

110,362,725

$ 110,362,725

- 48 -

$

$

Agency

Funds

493,055

493,055

493,055

$

Adjustments

(45,022,988)

(45,022,988)

304,302 3,208,765

3,513,067

$ (41,509,921)

$

SCHEDULE 2

Total

37,925,859

2,823,878 81,433

11,323,827 15,994

3,709,233 731,271 281,698 298,969

926,675 48,890,572 13,234,030 30,337,130 16,974,318

(45,022,988)

122,531,899

304,302 3,208,765

3,513,067

$ 126,044,966

HAWKEYE COMMUNITY COLLEGE COMBINING BALANCE SHEET

JUNE 30, 2019

Current Funds

LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCE:

Liabilities: Accounts Payable Salaries and Benefits Payable Accrued Interest Payable Unearned Revenue Early Retirement Payable Compensated Absences Assets Held in Custody For Others Reported and Unreported Insurance Claims Payable Insurance Reserve Certificates Payable Bonds and Capital Notes Payable Net Pension Liability Total OPEB Liability

Total Liabilities

Deferred Inflows of Resources: Succeeding Year Property Tax OPEB Related Deferred Inflows Pension Related Deferred Inflows

Total Deferred Inflows of Resources

Fund Balance: Invested in Capital Assets, Net of Related Debt Restricted:

Expendable: Economic Development Property Tax Levies Iowa New Jobs Training Scholarships Loans Debt Service Cash Reserve Other

Unrestricted Unrestricted - Auxiliary Enterprises

Total Fund Balance

Total Liabilities, Deferred Inflows of Resources, and Fund Balance

- 49 -

$

Unrestricted

668,107 2,285,363

1,006,073

942,814

377,000 477,097

5,756,454

2,023,628

2,023,628

6,866,711 3,179,375

10,046,086

$ 17,826,168

$

Restricted

31,208 1,115,434 2,247,356

14,221,519

17,615,517

4,627,163

4,627,163

2,967,335 (414,140)

1,547,525 60,700 98,810

366,380 1,393,877

6,020,487

$ 28,263,167

Unexpended

$ 316,384

316,384

2,023,628

2,023,628

920,263

4,326,433

5,246,696

$ 7,586,708

Plant Funds Retirement of Indebtedness

$

10,083

10,083

2,649,408

2,649,408

363,573

363,573

$ 3,023,064

$

Investment in Plant

6,080,731

6,080,731

104,281,994

104,281 ,994

$ 110,362,725

- 50 -

$

$

Agency Funds

14,204 590

478,261

493,055

493,055

Adjustments

$

9,996,520 769,060

10,765,580

18,960 774,483

793,443

(45,022,988)

(8,045,956)

(53,068,944)

$ (41,509,921)

$

SCHEDULE 2

Total

998,695 2,285,953

41,291 2,121,507 2,247,356

942,814 478,261 377,000 477,097

14,221,519 6,080,731 9,996,520

769,060

41,037,804

11,323,827 18,960

774,483

12,117,270

60,179,269

2,967,335 (414,140)

1,547,525 60,700 98,810

363,573 366,380

1,393,877 3,147,188 3,179,375

72,889,892

$ 126,044,966

HAWKEYE COMMUNITY COLLEGE COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND

OTHER CHANGES IN FUND BALANCES YEAR ENDED JUNE 30, 2019

Current Funds Unrestricted Restricted

REVENUES AND OTHER ADDITIONS: General:

State Appropriations $ 14,121,214 $ 2,914,919 Tuition and Fees 19,188,571 Property Taxes 1,940,188 3,468,548 Federal Appropriations 550 8,876,812 Gifts and Grants 23,166 Investment Earnings 734,200 Iowa Industrial New Jobs Training Program 3,547,900 Expended for Plant Facilities (Including $828,207

charged to current funds) Principal Retired Miscellaneous 2,383,563 1,799,838

38,368,286 20,631 ,183

Auxiliary Enterprises Tuition and Fees 1,008,429 Sales and Services 1,501,224 Miscellaneous 212,241

2,721,894

Total Revenues and Other Additions $ 41,090,180 $ 20,631,183

- 51 -

Unexpended

$ 440,699

1,940,188

242,134

1,200 2,624,221

$ 2,624,221


$ 50,247

2,552,951

2,603,198

$ 2,603,198

$

$

Investment in Plant

3,991,443 2,380,000

6,371,443

6,371,443

SCHEDULE 3

Adjustments Total

$ $ 17,527,079 (6,154,792) 13,033,779

9,901,875 8,877,362

23,166 976,334

3,547,900

(3,991,443) (2,380,000)

{62,200} 4,122,401 (12,588,435) 58,009,896

(330,455) 677,974 1,501,224

212,241 (330,455) 2,391,439

$ (12,918,890) $ 60,401,335

• 52 -

HAWKEYE COMMUNITY COLLEGE COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND

OTHER CHANGES IN FUND BALANCES YEAR ENDED JUNE 30, 2019

Current Funds Unrestricted Restricted

EXPENDITURES AND OTHER DEDUCTIONS: Educational and Support:

Liberal Arts and Sciences $ 7,107,389 $ 349,852 Vocational Technical 9,263,754 1,923,863 Adult Education 4,560,420 1,183,991 Cooperative Services 5,151,920 General Administration 1,920,349 63,711 Student Services 4,254,313 241,949 Learning Resources 798,688 Physical Plant 3,206,206 2,214,126 General Institution 5,540,537 2,564,305

Total Education and Support 36,651 ,656 13,693,717 Auxiliary Enterprises 3,733,042 Scholarships and Grants 7,726,459 Plant Asset Acquisitions Retirement of Indebtedness Disposal of Plant Assets Interest on Indebtedness 320,486 Loss on Sale of Capital Assets Depreciation

Total Expenditures and Other Deductions 40,384,698 21,740,662

Excess of Revenues and Other Additions Over (Under) Expenditures and Other Deductions 705,482 (1,109,479)

TRANSFERS: Non-mandatory Transfers {202,292) {297,709}

Total Transfers (202,292) {297,709)

Net Increase (Decrease) for the Year 503,190 (1,407,188)

Fund Balance June 30, 2018 9,542,896 7,427,675

Fund Balance June 30, 2019 $ 10,046,086 $ 6,020,487

- 53 -

Unexpended

$

87 1,518,006 1,518,093

3,163,236

4,681,329

(2,057,108)

492,151

492,151

(1,564,957)

6,811,653

$ 5,246,696


$

3,600 3,600

2,380,000

156,784

2,540,384

62,814

62,814

300,759

$ 363,573

$

Investment in Plant

2,675,777

2,675,777

3,695,666

7,850

7,850

3,703,516

100,578,478

$ 104,281,994

SCHEDULE 3

Adjustments Total

$ (56,823) $ 7,400,418 (383,962) 10,803,655 (202,800) 5,541,611

5,151,920 1,984,060 4,496,262

798,688 (65,649) 5,354,770 712,571 10,339,01 9

3,337 51,870,403 (118,972) 3,614,070

(6,485,247) 1,241,212 (3, 163,236) (2,380,000) (2,675,777)

477,270 717,355 717,355

3,347,903 3,347,903

(10,754,637) 61,268,213

(2,164,253) (866,878)

(2,164,253) (866,878)

(50,904,691) 73,756,770

$ (53,068,944) $ 72,889,892

- 54 -

HAWKEYE COMMUNITY COLLEGE UNRESTRICTED FUND

COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND OTHER CHANGES IN FUND BALANCE EDUCATION AND SUPPORT YEAR ENDED JUNE 30, 2019

Education

Liberal Arts Vocational Adult General and Sciences Technical Education Administration

REVENUES: State Appropriations $ $ 11,361 $ 128,738 $ 40,700 Tuition and Fees 10,757,534 5,357,774 3,071,789 Property Taxes 1,940,188 Federal Appropriations 550 Investment Earnings 734,200 Miscellaneous 90,009 136,815 203,086

Total Revenues 10,757,534 5,459,144 3,337,342 2,918,724

EXPENDITURES: Salaries and Benefits 6,669,620 8,529,772 2,931,939 1,464,344 Services 50,137 178,940 956,734 256,628 Materials and Supplies 55,276 317,216 64,605 51,783 Travel 37,290 33,022 24,564 40,487 Expended for Plant Facilities 62,400 202,800 Miscellaneous 295,066 142,404 379,778 107,107

Total Expenditures 7,107,389 9,263,754 4,560,420 1,920,349

Excess (Deficiency) of Revenues Over (Under) Expenditures 3,650,145 (3,804,610) (1,223,078) 998,375

TRANSFERS: Non-mandatory Transfers (33,294) 42,381 91,624 (63,158)

Total Transfers (33,294) 42,381 91,624 (63,158)

Net Increase (Decrease) for the Year $ 3,616,851 $ (3,762,229) $ ( 1,131,454) $ 935,217

Fund Balance June 30, 2018

Fund Balance June 30, 2019

- 55 -

SCHEDULE 4

Support

Student Learning Physical General Services Resources Plant Institution Total

$ $ 176 $ $ 13,940,239 $ 14,121,214 1,474 19,188,571

1,940,188 550

734,200 17,959 1,653 3,529 1,930,512 2,383,563

19,433 1,829 3,529 15,870,751 38,368,286

3,790,013 509,635 394,113 3,647,015 27,936,451 350,188 23,643 2,557,091 969,152 5,342,513

86,452 262,207 178,516 617,285 1,633,340 27,188 3,203 3,472 44,849 214,075

73,014 338,214 472 262,236 1,187,063

4,254,313 798,688 3,206,206 5,540,537 36,651,656

(4,234,880) (796,859) (3,202,677) 10,330,214 1,716,630

67,317 8,011 (1,862,456) {1,749,575~

67,317 8,011 (1 ,862,456} (1,749,575)

$ (4,167,563) $ {796,859~ $ (3,194,666) $ 8,467,758 (32,945)

6,899,656

$ 6,866,711

- 56 -

HAWKEYE COMMUNITY COLLEGE UNRESTRICTED FUND

COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND OTHER CHANGES IN FUND BALANCE AUXILIARY ENTERPRISES


Career Adult Farm Food Education Education O~erations Service Athletics Other

REVENUES: Sales and Services $ 1,007,687 $ $ 131,858 $ 29,845 $ $ 331,834 Tuition and Fees 644,899 12,175 351,355 Miscellaneous 1,476 32,089 10,029 82,313 86,334

Total Revenues 1,009,163 676,988 141,887 29,845 94,488 769,523

EXPENDITURES: Salaries and Benefits 50,629 5,799 18,183 652,412 123,012 Services 395,264 115,580 65,534 2,341 173,179 543,489 Materials and Supplies 279,367 312,228 78,093 7,921 129,156 288,174 Cost of Goods Sold 104,993 7,883 3,488 Travel 6,902 1,886 81 57,098 17,136 Expended for Plant Facilities 4,845 27,500 10,029 7,090 29,000 40,508 Miscellaneous 4,190 21 168,837 1,194

Total Expenditures 846,190 457,194 159,536 43,439 1,213,170 1,013,513

Excess (Deficiency) of Revenues Over (Under) Expenditures 162,973 219,794 (17,649) (13,594) (1,118,682) (243,990)

TRANSFERS: Non-mandatory Transfers 14,389 (19,578} 1,118,228 434,244

Total Transfers 14,389 (19,578) 1,118,228 434,244

Net Increase (Decrease) for the Year 177,362 200,216 (17,649) (13,594) (454) 190,254

Fund Balance June 30, 2018 1,203,459 225,726 19,905 369,432 454 824,264

Fund Balance June 30, 2019 $ 1,380,821 $ 425,942 $ 2,256 $ 355,838 $ $ 1,014,518

- 57 -

SCHEDULE 5

Total

$ 1,501,224 1,008,429

212,241

2,721,894

850,035 1,295,387 1,094,939

116,364 83,103

118,972 174,242

3,733,042

(1,011,148)

1,547,283

1,547,283

536,135

2,643,240

$ 3,179,375

HAWKEYE COMMUNITY COLLEGE CURRENT RESTRICTED FUND

COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND OTHER CHANGES IN FUND BALANCE YEAR ENDED JUNE 30, 2019

Scholarships and Early Equipment

Grants Retirement Replacement Insurance REVENUES:

State Appropriations $ 883,333 $ 12,560 $ 18,089 $ 41,864 Property Taxes 598,662 862,305 1,995,603 Federal Appropriations and Grants 5,744,514 Scholarships, Grants, and Gifts Iowa Industrial New Jobs Training Program Miscellaneous 833,780 11,463

Total Revenues 7,461,627 611,222 880,394 2,048,930

EXPENDITURES AND OTHER DEDUCTIONS: Salaries and Benefits 20,230 1,996,865 2,000 Services 384 3,500 82,419 2,209,352 Materials and Supplies 232,596 Travel Expended for Plant Facilities 155,518 Interest on Indebtedness Federal Pell Grant Program 5,602,414 Federal Supplemental Educational Opportunity Grant 142,600 Private Scholarships 1,810,224 Miscellaneous 84

Total Expenditures and Other Deductions 7,575,936 2,000,365 470,533 2,211,352

Excess (Deficiency) of Revenues Over (Under) Expenditures and Other Deductions (114,309) (1,389,143) 409,861 (162,422)

TRANSFERS: Non-mandatory Transfers 165,841 {489,251) (31,512)

Total Transfers 165,841 (489,251) (31,512)

Net Increase (Decrease) for the Year 51,532 (1,389,143) (79,390) (193,934)

Fund Balance June 30, 2018 9,168 (230,060) 614,170 631,823

Fund Balance June 30, 2019 $ 60,700 $ (1 ,619,203) $ 534,780 $ 437,889

- 58 -

SCHEDULE 6

Iowa Workforce Industrial

Act and other New Jobs Unemployment Cash JTPA Training Contracted Economic Compensation Reserve Programs Pro9ram Training Development Miscellaneous Total

$ 251 $ $ 14,912 $ $ 202,309 $ 882,383 $ 859,218 $ 2,914,919 11,978 3,468,548

1,222,051 1,910,247 8,876,812 (637) 23,803 23,166

3,329,876 218,024 3,547,900 11,813 880,014 62,768 1,799,838

12,229 1,236,326 3,341,689 202,309 1,762,397 3,074,060 20,631,183

49,813 883,504 480,565 2,479,135 5,912,112 150,009 1,727,571 204,380 57,472 623,692 5,058,779 20,818 276,322 1,592 228,722 760,050 21,337 24,978 17,064 68,814 132,193

215,502 371,020 320,486 320,486

5,602,414 142,600

150,523 1,960,747 172,466 980,850 148,384 178,477 1,480,261

49,813 1,248,134 3,330,207 204,380 705,077 3,944,865 21,740,662

(37,584) (11,808) 11,482 (2,071) 1,057,320 (870,805) (1,109,479)

2,729 (1,041,314) 158,932 936,866 (297,709) (1,041,314) {2,071) 158,932 936,866 {297,709)

(37,584) (9,079) (1,029,832) (2,071) 1,216,252 66,061 (1,407,188)

269,978 366,380 35,619 2,577,357 193,502 1,751,083 1,208,655 7,427,675

$ 232,394 $ 366,380 $ 26,540 $ 1,547,525 $ 191,431 $ 2,967,335 $ 1,274,716 $ 6,020,487

- 59 -

SCHEDULE 7 HAWKEYE COMMUNITY COLLEGE

AGENCY FUNDS COMBINING SCHEDULE OF CHANGES IN DEPOSITS HELD IN CUSTODY FOR OTHERS


Student Organizations Miscellaneous Total

Balance June 30, 2018 $ 162,098 $ 268,059 $ 430,157

ADDITIONS: Tuition and Fees 328,525 328,525 Sales and Services 8,562 1,306,672 1,315,234 Miscellaneous 25,361 25,361

Total Additions 362,448 1,306,672 1,669,120

DEDUCTIONS: Salaries and Benefits 29,539 29,539 Services 253,527 253,527 Materials and Supplies 24,792 1,306,672 1,331,464 Travel 3,146 3,146 Miscellaneous 3,340 3,340

Total Deductions 314,344 1,306,672 1,621,016

Balance June 30, 2019 $ 210,202 $ 268,059 $ 478,261

- 60 -

Local (Property Tax)

State

Federal

Total

Local (Property Tax)

State

Federal

Total

HAWKEYE COMMUNITY COLLEGE SCHEDULE OF TAX AND INTERGOVERNMENTAL REVENUES

FOR THE LAST TEN YEARS

Years Ended June 30, 2019 2018 2017 2016

$ 9,901,875 $ 9,397,442 $ 8,793,825 $ 8,469,716

17,527,079 17,185,170 17,186,759 17,149,114

8,877,362 13,258,898 15,592,867 15,917,845

$ 36,306,316 $ 39,841,510 $ 41,573,451 $ 41,536,675

Years Ended June 30, 2014 2013 2012 2011

$ 8,410,452 $ 8,125,536 $ 7,616,726 $ 7,565,783

16,097,835 15,606,493 12,860,686 12,435,369

12,217,312 12,662,733 13,900,279 15,210,266

$ 36,725,599 $ 36,394,762 $ 34,377,691 $ 35,211,418

- 61 -

SCHEDULE 8

2015

$ 8,262,008

17,099,053

13,559,712

$ 38,920,773

2010

$ 6,890,306

12,927,107

16,573,673

$ 36,391,086

HAWKEYE COMMUNITY COLLEGE CURRENT FUND REVENUES BY SOURCE AND EXPENDITURES BY FUNCTION

FOR THE LAST TEN YEARS

Years Ended June 30, 2019 2018 2017 2016

Revenues:

State Appropriations $ 17,036,133 $ 16,689,049 $ 16,685,742 $ 16,646,151

Tuition and Fees 19,188,571 19,083,956 19,314,724 18,461,054

Property Tax 5,408,736 4,934,422 4,517,218 4,395,144

Federal Appropriations 8,877,362 13,258,898 15,592,867 15,917,845

Interest on Investments 734,200 207,272 112,502 240,897

Iowa Industrial New Jobs Training Program 3,547,900 3,934,818 1,314,290 2,658,380

Auxiliary Enterprises 2,721,894 2,582,581 2,714,776 2,546,785

Miscellaneous 4,206,567 4,054,574 2,926,344 3,057,614

Total $ 61,721,363 $ 64,745,570 $ 63,178,463 $ 63,923,870

Expenditures:

Liberal Arts and Sciences $ 7,457,241 $ 7,569,480 $ 7,467,620 $ 7,622,796

Vocational Technical 11,187,617 15,461,859 17,220,635 17,498,651

Adult Education 5,744,411 5,068,211 5,208,916 5,224,566

Cooperative Services 5,151,920 6,114,339 4,779,167 5,275,000

Administration 1,984,060 1,507,921 1,733,911 2,319,533

Student Services 4,496,262 4,507,193 4,317,192 3,947,029

Learning Resources 798,688 790,386 892,397 1,077,673

Physical Plant 5,420,332 5,005,134 4,582,244 4,406,740

General Institution 8,104,842 7,692,085 6,217,623 6,780,574

Auxiliary Enterprises 3,733,042 3,713,520 3,314,589 2,754,205

Scholarships and Grants 7,726,459 8,585,804 9,037,209 8,882,216

Interest on Indebtedness 320,486 286,011 332,466 419,827

Total $ 62,125,360 $ 66,301,943 $ 65,103,969 $ 66,208,810

· 62 -

2015

$ 16,647,722

17,732,024

5,365,833

13,559,712

275,357

3,813,684

2,480,309

2,872,136

$ 62,746,777

$ 7,370,096

16,309,298

4,694,368

5,345,385

1,953,527

3,939,035

1,143,181

4,118,217

6,209,544

2,799,975

9,669,299

468,355

$ 64,020,280

SCHEDULE 9

2014 2013 2012 2011 2010

$ 15,697,835 $ 13,549,640 $ 12,424,445 $12,295,053 $12,268,793

19,168,702 19,133,475 18,571,387 19,021,047 17,097,104

4,277,771 3,276,900 3,066,894 3,333,037 2,671,573

12,217,312 12,662,733 13,900,279 15,184,989 16,008,293

173,207 86,313 109,604 177,646 432,153

1,194,342 2,809,463 3,930,802 2,868,437 3,294,700

2,186,038 2,116,873 2,396,957 2,925,415 3,132,030

1,958,797 1,829,326 2,099,885 2,031,041 2,346,239

$ 56,874,004 $ 55,464,723 $ 56,500,253 $57,836,665 $57,250,885

$ 6,690,837 $ 7,576,779 $ 7,143,778 $ 6,530,382 $ 6,034,637

9,850,670 9,856,494 9,435,893 9,557,818 8,571,867

4,761,973 3,067,166 2,580,395 2,429,625 1,705,003

3,899,676 4,599,275 5,389,973 4,117,198 7,318,191

2,265,799 2,607,332 3,541,248 2,549,778 4,767,847

3,399,493 3,072,403 2,970,292 2,633,091 2,358,329

878,858 790,155 819,601 713,523 762,633

4,297,787 4,324,389 4,595,790 3,547,685 3,415,783

6,583,374 6,555,564 7,434,657 7,163,263 6,415,669

2,792,120 2,441,526 2,646,111 2,963,456 2,314,838

9,939,104 10,637,681 11,688,960 12,378,999 10,573,721

625,214 605,633 776,146 907,771 990,577

$ 55,984,905 $ 56,134,397 $ 59,022,844 $55,492,589 $55,229,095

- 63 -

HAWKEYE COMMUNITY COLLEGE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS


Grantor/Program

DIRECT: U.S. Department of Education:

Student Financial Aid - Cluster: Federal Supplemental Educational Opportunity Grants (FSEOG) Federal Work-Study Program (FWS) Federal Pell Grant Program Federal Direct Student Loans

Total Student Financial Aid Cluster

Child Care Access Means Parents in School (C-Campis) TRIO Cluster:

TRIO - Student Support Services Total Direct U.S. Department of Education

Corporation for National and Community Services: Foster Grandparent/Senior Companion Cluster:

Senior Companion Program

U.S. Department of Labor: Trade Adjustment Assistance Community College and Career Training

U.S. Department of Transportation: Commercial Motor Vehicle Operator Safety Training Grants

Total Direct Expenditures INDIRECT:

U.S. Department of Education: Indirect through the Iowa Department of Education:

Adult Education - Basic Grants to States Career and Technical Education - Basic Grants to States

Indirect through Iowa Vocational Rehabilitation Services Rehabilitation Services Vocational Rehabilitation Grants to States

Total Indirect U.S. Department of Education

U.S. Department of Labor: Indirect through Iowa Workforce Development:

Employment Service Cluster: Employment Service/Wagner-Peyser Funded Activities Employment Service/Wagner-Peyser Funded Activities

Workforce Innovation and Opportunity Act - Cluster (WIOA): WIOA Adult Program WIOA Youth Activities WIOA Dislocated Worker Formula Grants

Total Indirect U.S. Department of Labor

CFDA Number

84.007 84.033 84.063 84.268

84.335

84.042

94.016

17.282

20.235

84.002 84.048

84.126

17.207 17.207

17.258 17.259 17.278

Pass-through Entity Identifying

Number

NIA NIA NIA NIA

P335A 180116

P042A150297

16SCNIA001

NIA

NIA

G70024/G70039 NIA

NIA

16-W-PF-DE-1-02 16-W-PF-DE-1-02

17-W--07-Wl-OA 17-W-07-Wl-OA

17-W-07-WI-OA, 18-W-PF-ID-2-22, 18-W-PF-ID-0-31

-64-

Passed Through to Subrecipients

$

70.492

70,492

$

Program Expenditures

142,600 146,252

5,602,414

5,891,266

78,706

240,894 6,210,866

291 .833

277.282

95,137

6,875,118

254,726 338,028

87,972 680,726

167,804 15,948

183,752

230,974 247,141

369,822 847,937

1,031,689

$

New Loans and New Loan

Guarantees

10,201,191 10,201,191

10,201,191

10,201,191

Grantor/Program

INDIRECT: U.S. Department of Health and Human Services:

Indirect through Iowa Work.force Development: Head Start- Child Care Head Start - Preschool

HAWKEYE COMMUNITY COLLEGE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS


CFDA Number

93.600 93.600

Pass-through Entity Identifying

Number

07HP0002-04 07CH7073-5

Total Indirect U.S. Department of Health and Human Services

U.S. Department of Agriculture: Indirect through Iowa Department of Education:

Child and Adult Care Food Program SNAP Cluster:

State Administrative Matching Grants for the Supplemental Nutrition Assistance Program

Total Indirect U.S. Department of Agriculture

National Science Foundation Indirect through Iowa State University

Education and Human Resources

Total Indirect Expenditures

Total Direct and Indirect Expenditures

10.558 NIA

10.561 N/A

47.076 4201809G

NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

Note 1 - BASIS OF PRESENTATION

Passed Through to Subrecipients

$ 70,492 $

Program Expenditures

217,380 42,614

259,994

19,451

6,545 25,996

22,529

2.020.934

8.896.052 $

SCHEDULE10

New Loans and New Loan

Guarantees

10,201 ,191

The accompanying schedule of expenditures of federal awards (the schedule) includes the federal award activity of Hawkeye Community College under programs of the federal government for the year ended June 30, 2019. The information in this schedule is presented in accordance with the requirements of Title 2 U.S. Code Qf Federal Regulations, Part 200, Uniform Administrative Requirements. Cost Principles. and Audit Requirements for Federal Awards (Uniform Guidance). Because the schedule presents only a selected portion of the operations of Hawkeye Community College, it is not intended to and does not present the financial position, changes in net assets, or cash flows of Hawkeye Community College.

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Expenditures reported on the schedule are reported on the accrual basis of accounting. Such expenditures are recognized following, as applicable, either the cost principles in 0MB Circular A-87, Cost Principles of State. Local and Indian Tribal Governments, or the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement.

Note 3 - INDIRECT COST RATE

Hawkeye Community College has elected not to use the 10-percent de mini mis indirect cost rate allowed under the Uniform Guidance.

-65-

' '

' WILLIAMS &COMPANYP.C.


INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT

OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS


We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of Hawkeye Community College, Waterloo, Iowa, and its discretely presented component unit as of and for the year ended June 30, 2019, and the related notes to the financial statements, which collectively comprise Hawkeye Community College's basic financial statements and have issued our report thereon dated December 16, 2019. Our report includes a reference to other auditors who audited the financial statements of Hawkeye Community College Foundation, as described in our report on Hawkeye Community College's financial statements. The financial statements of Hawkeye Community College Foundation were not audited in accordance with Government Auditing Standards. This report does not include the results of the other auditors' testing of internal control over financial reporting compliance and other matters that are reported on separately by those auditors.

Internal Control Over Financial Reporting

In planning and performing our audit of the financial statements, we considered Hawkeye Community College's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Hawkeye Community College's internal control. Accordingly, we do not express an opinion on the effectiveness of the Community College's internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis . A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of the internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. We did identify a certain deficiency in internal control, described in the accompanying Schedule of Findings and Questioned Costs, 2019-001 , that we consider to be a significant deficiency.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether Hawkeye Community College's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

203 North Grand Avenue P. 0 . Box 90B Spencer, Iowa 51 301 -090B

71 2-262-1 500 Fax 71 2-262-2920 - 66 -

Hawkeye Community College's Response to Findings

Hawkeye Community College's response to the finding identified in our audit is described in the accompanying Schedule of Findings and Questioned Costs. The College's response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on the response.

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

We would like to acknowledge the many courtesies and assistance extended to us by personnel of Hawkeye Community College during the course of our audit. Should you have any questions concerning any of the above matters, we would be pleased to discuss them with you at your convenience.


- 67 -

' '

' WILLIAMS &COMPANVP.C.


INDEPENDENT AUDITORS' REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED

BY THE UNIFORM GUIDANCE


Report on Compliance for Each Major Federal Program

We have audited Hawkeye Community College's compliance with the types of compliance requirements described in the 0MB Compliance Supplement that could have a direct and material effect on each of Hawkeye Community College's major federal programs for the year ended June 30, 2019. Hawkeye Community College's major federal programs are identified in Part I, Summary of Auditors' Results, of the accompanying Schedule of Findings and Questioned Costs.

Management's Responsibility

Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs.

Auditors' Responsibility

Our responsibility is to express an opinion on compliance for each of Hawkeye Community College's major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about Hawkeye Community College's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinions on compliance for each major federal program. However, our audit does not provide a legal determination on Hawkeye Community College's compliance.

Opinion on Each Major Federal Programs

In our opinion, Hawkeye Community College complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2019.

Report on Internal Control over Compliance

Management of Hawkeye Community College is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above.

203 North Grand Avenue P. 0. Box SOB Spencer, Iowa 51 301 -0908

71 2-2B2-1 500 - 68 Fax 71 2-262-2920

In planning and performing our audit of compliance, we considered Hawkeye Community College's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of Hawkeye Community College's internal control over compliance.

A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designated to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.


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Vv'1 l I\~~ ~~ ,Pl~ . Certified Public ,:C~~unfantsO

HAWKEYE COMMUNITY COLLEGE SCHEDULE OF FINDINGS AND QUESTIONED COSTS


PART I - SUMMARY OF AUDITORS' RESULTS

(A) An unmodified opinion was issued on the financial statements.

(B) A significant deficiency in internal control over financial reporting was disclosed by the audit of the financial statements.

(C) The audit did not disclose any non-compliance which is material to the financial statements.

(D) No significant deficiencies in internal control over major programs were disclosed by the audit of the financial statements.

(E) An unmodified opinion was issued on compliance with requirements applicable to each major program.

(F) The audit did not disclose audit findings which were required to be reported in accordance with Office of Management and the Uniform Guidance, Section 200.516(a).

(G) Major programs were as follows:

• Student Financial Aid Cluster • Foster Grandparent/Senior Companion Cluster • Workforce Innovation and Opportunity Act Cluster (WIOA)

(H) The dollar threshold used to distinguish between Type A and Type B was $750,000.

(I) Hawkeye Community College did not qualify as a low-risk auditee.

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PART 11- FINDING RELATED TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

SIGNIFICANT DEFICIENCY:

2019-001 Criteria - The College is responsible for the accuracy of the financial statements.

Cond ition - During the audit, we identified immaterial amounts of revenue and payroll reimbursements not properly recorded in the College's financial statements.

Cause - Review procedures did not allow for all misstatements to be identified.

Effect - As a result of these misstatements, the financial statements had the potential to be misstated related to the areas identified above.

Recommendation - The College should continue to implement procedures to ensure the identified areas above are properly identified, classified, and included in the College's financial statements.

Response - We will continue to refine procedures to ensure the proper amounts are recorded in the financial statements in the future.

Conclusion - Response accepted .

INSTANCES OF NON-COMPLIANCE: No matters were reported.

PART Ill - FINDINGS AND QUESTIONED COSTS FOR FEDERAL AWARDS

INSTANCES OF SIGNIFICANT DEFICIENCIES: No matters were reported

INSTANCES OF NON-COMPLIANCE: No matters were reported .

PART IV - OTHER FINDINGS RELATED TO REQUIRED STATUTORY REPORTING

IV-A-19: Certified Budget - Expenditures for the year ended June 30, 2019, did not exceed the amounts budgeted .

IV-B-19: Questionable Disbursements - No expenditures we believe did not meet the requirement of public purpose as defined in an Attorney General's opinion dated April 25, 1979 were noted .

IV-C-19: Travel Expense - No expenditures of Hawkeye Community College money for travel expenses of spouses of College officials or employees were noted. No travel advances to College officials or employees were noted.

IV-D-19: Business Transactions - Business transactions between the Community College and the Community College officials or employees are detailed as follows :

Name, Title, and Business Connection

Katrina Nagle, Adjunct Professor Spouse of Owner of Nagle Signs

Transaction Description

Signage and Lettering

Amount

$ 10,696

In accordance with the Code of Iowa, the above transactions may represent a conflict of interest because the total received during the fiscal year is greater than $2,500.

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PART IV - OTHER FINDINGS RELATED TO REQUIRED STATUTORY REPORTING (Continued)

IV-E-19: Bond Coverage - Surety bond coverage of Community College officials and employees is in accordance with statutory provisions. The amount of coverage should be reviewed annually to ensure that the coverage is adequate for current operations.

IV-F-19: Board Minutes - No transactions were found that we believe should have been approved in the Board minutes but were not.

IV-G-19: Publication - The Community College published a statement showing the receipt and disbursement of all funds, including the names of all persons, firms or corporations to which disbursements were made, as required by Section 260C.14(12) of the Code of Iowa.

IV-H-19: Deposits and Investments - No instances of noncompliance with the deposit and investment provisions of Chapters 12B and 12C of the Code of Iowa and the College's investment policy were noted.

IV-I-19: Self-Funded Health Insurance Plan - The actuarial opinion and annual financial report were filed with the Insurance Commissioner within 90 days of year end.

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FINANCIAL STATEMENT AUDIT:

SIGNIFICANT DEFICIENCY:

HAWKEYE COMMUNITY COLLEGE SCHEDULE OF PRIOR YEAR FINDINGS

JUNE 30, 2019

2018-001 Finding - During the audit, we identified immaterial amounts of expended fixed assets, Early Retirement Payable, Accrued Interest Receivable and NJTP funds not properly recorded in the College's financial statements.


Current Status - Although the amounts identified in the FY18 audit were not repeated during the FY19 audit, a significant deficiency related to journal entries was identified. See finding 2019-001. The College continues to look at its processes in order to ensure all amounts and adjustments are properly recorded.

FEDERAL AWARD PROGRAMS AUDIT:

Corporation for National and Community Services

INSTANCES OF NON-COMPLIANCE:

2018-002 Finding - During our review of compliance requirements of the Senior Companion Program, we identified that earmarking requirements were not met for the current year.

Recommendation - The College should review grant monitoring procedures to ensure the earmarking requirements are being met in the future.

Current Status - Effective for fiscal year 2019, the earmarking requirement has been removed from required testing.

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1501 East Orange Road • P.O. Box 8015 • Waterloo, Iowa 50704-8015 • 319-296-2320 • www.hawkeyecollege.edu

HAWKEYE COMMUNITY COLLEGE CORRECTIVE ACTION PLAN FOR FEDERAL AUDIT FINDINGS

JUNE 30, 2019

Corporation for National and Community Services:

Hawkeye Community College respectfully submits the following corrective action plan for the year ended June 30, 2019.

The audit was performed by Williams & Company, P.C., P.O. Box 908, Spencer, Iowa, for the fiscal year ended June 30, 2019.

The findings from the June 30, 2019 Schedule of Findings and Questioned Costs are discussed below. The findings are numbered consistently with the numbers assigned in the schedule.

FINDINGS- FINANCIAL STATEMENT AUDIT

SIGNIFICANT DEFICIENCY

2019-001 Criteria - The College is responsible for the accuracy of the financial statements.

Condition - During the audit, we identified immaterial amounts of revenue and payroll reimbursements not properly recorded in the College's financial statements.

Cause - Review procedures did not allow for all misstatements to be identified.

Effect - As a result of these misstatements, the financial statements had the potential to be misstated related to the areas identified above.


Response - We will continue to refine procedures to ensure the proper amounts are recorded in the financial statements in the future.

Conclusion - Response accepted.

INSTANCES OF NON-COMPLIANCE: No matters were reported .

FINDINGS- FEDERAL AWARD PROGRAMS AUDIT

INSTANCES OF SIGNIFICANT DEFICIENCIES: No matters were reported

INSTANCES OF NON-COMPLIANCE: No matters were reported.

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HAWKEYE COMMUNITY COLLEGE CORRECTIVE ACTION PLAN FOR FEDERAL AUDIT FINDINGS (Continued)

JUNE 30, 2019

If the Corporation for National and Community Services has questions regarding this plan, please call Todd Holcomb, Ed.D. at 319-296-4201 .

Sincerely yours,

HAWKEYE COMMUNITY COLLEGE

Todd Holcomb, Ed.D. President

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APPENDIX B

DESCRIBING BOOK-ENTRY-ONLY ISSUANCE

1. The Depository Trust Company (“DTC”), New York, New York, will act as securities depository for the

Certificates (the “Securities”). The Securities will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Security certificate will be issued for each issue of the Securities, each in the aggregate principal amount of such issue, and will be deposited with DTC.

2. DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a S&P Global Ratings rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com.

3. Purchases of Securities under the DTC system must be made by or through Direct Participants, which will

receive a credit for the Securities on DTC’s records. The ownership interest of each actual purchaser of each Security (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities, except in the event that use of the book-entry system for the Securities is discontinued.

4. To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.

http://www.dtcc.com/


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5. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Securities may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.

6. Redemption notices shall be sent to DTC. If less than all of the Securities within an issue are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.

7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Securities unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the College as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy).

8. Redemption proceeds, distributions, and dividend payments on the Securities will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the College or the Paying Agent, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, the Paying Agent, or the College, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the College or the Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.

9. A Beneficial Owner shall give notice to elect to have its Securities purchased or tendered, through its Participant, to any Tender/Remarketing Agent, and shall effect delivery of such Securities by causing the Direct Participant to transfer the Participant’s interest in the Securities, on DTC’s records, to any Tender/Remarketing Agent. The requirement for physical delivery of Securities in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Securities are transferred by Direct Participants on DTC’s records and followed by a book-entry credit of tendered Securities to any Tender/Remarketing Agent’s DTC account.

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

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

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


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APPENDIX C

DRAFT FORM OF OPINION OF BOND COUNSEL


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D-1

APPENDIX D

DRAFT CONTINUING DISCLOSURE CERTIFICATE

This Continuing Disclosure Certificate (the "Disclosure Certificate") is executed and delivered by Hawkeye Community College, State of Iowa (the "Issuer"), in connection with the issuance of $________ Taxable Industrial New Jobs Training Certificates, Series 2020-1 (the "Certificates") dated June 1, 2020. The Certificates are being issued pursuant to a Resolution of the Issuer approved on April 28, 2020 (the "Resolution"). The Issuer covenants and agrees as follows:

Section 1. Purpose of the Disclosure Certificate; Interpretation. This Disclosure Certificate is being executed and delivered by the Issuer for the benefit of the Holders and Beneficial Owners of the Certificates and in order to assist the Participating Underwriters in complying with S.E.C. Rule 15c2-12(b)(5). This Disclosure Certificate shall be governed by, construed and interpreted in accordance with the Rule, and, to the extent not in conflict with the Rule, the laws of the State. Nothing herein shall be interpreted to require more than required by the Rule.

Section 2. Definitions. In addition to the definitions set forth in the Resolution, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings:

"Annual Financial Information" shall mean financial information or operating data of the type included in the final Official Statement, provided at least annually by the Issuer pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate.

"Beneficial Owner" shall mean any person which (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Certificates (including persons holding Certificates through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Certificates for federal income tax purposes.

"Business Day" shall mean a day other than a Saturday or a Sunday or a day on which banks in Iowa are authorized or required by law to close.

"Dissemination Agent" shall mean the Issuer or any Dissemination Agent designated in writing by the Issuer and which has filed with the Issuer a written acceptance of such designation.

"Financial Obligation" shall mean a (i) debt obligation; (ii) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of (i) or (ii). The term "Financial Obligation" does not include municipal securities as to which a final official statement has been provided to the MSRB consistent with S.E.C. Rule 15c2-12.

"Holders" shall mean the registered holders of the Certificates, as recorded in the registration books of the Registrar.

"Listed Events" shall mean any of the events listed in Section 5(a) of this Disclosure Certificate.

"Municipal Securities Rulemaking Board" or "MSRB" shall mean the Municipal Securities Rulemaking Board, 1300 I Street NW, Suite 1000, Washington, DC 20005.

"National Repository" shall mean the MSRB's Electronic Municipal Market Access website, a/k/a "EMMA" (emma.msrb.org).

"Official Statement" shall mean the Issuer's Official Statement for the Certificates, dated ____________, 2020.

"Participating Underwriter" shall mean any of the original underwriters of the Certificates required to comply with the Rule in connection with offering of the Certificates.

"Rule" shall mean Rule 15c2-12 adopted by the Securities and Exchange Commission (S.E.C.) under the Securities Exchange Act of 1934, and any guidance and procedures thereunder published by the S.E.C., as the same may be amended from time to time.


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"State" shall mean the State of Iowa.

Section 3. Provision of Annual Financial Information.

a) The Issuer shall, or shall cause the Dissemination Agent to, not later than the 15th day of April each year, commencing with information for the 2019/2020 fiscal year, provide to the National Repository an Annual Financial Information filing consistent with the requirements of Section 4 of this Disclosure Certificate. The Annual Financial Information filing must be submitted in such format as is required by the MSRB (currently in "searchable PDF" format). The Annual Financial Information filing may be submitted as a single document or as separate documents comprising a package. The Annual Financial Information filing may cross-reference other information as provided in Section 4 of this Disclosure Certificate; provided that the audited financial statements of the Issuer may be submitted separately from the balance of the Annual Financial Information filing and later than the date required above for the filing of the Annual Financial Information if they are not available by that date. If the Issuer's fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(c).

b) If the Issuer is unable to provide to the National Repository the Annual Financial Information by the date required in subsection (a), the Issuer shall send a notice to the Municipal Securities Rulemaking Board, if any, in substantially the form attached as Exhibit A.

c) The Dissemination Agent shall:

i. each year file Annual Financial Information with the National Repository; and

ii. (if the Dissemination Agent is other than the Issuer), file a report with the Issuer certifying that the Annual Financial Information has been filed pursuant to this Disclosure Certificate, stating the date it was filed.

Section 4. Content of Annual Financial Information. The Issuer's Annual Financial Information filing shall contain or incorporate by reference the following:

a) The last available audited financial statements of the Issuer for the prior fiscal year, prepared in accordance with generally accepted accounting principles promulgated by the Financial Accounting Standards Board as modified in accordance with the governmental accounting standards promulgated by the Governmental Accounting Standards Board or as otherwise provided under State law, as in effect from time to time, or, if and to the extent such financial statements have not been prepared in accordance with generally accepted accounting principles, noting the discrepancies therefrom and the effect thereof. If the Issuer's audited financial statements for the preceding years are not available by the time Annual Financial Information is required to be filed pursuant to Section 3(a), the Annual Financial Information filing shall contain unaudited financial statements of the type included in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Financial Information when they become available.

b) A table, schedule or other information prepared as of the end of the preceding fiscal year, of the type contained in the final Official Statement under the captions "Debt Information"; "Property Assessment and Tax Information" but only for the following tables: "Percentages for Taxable Valuation After Rollbacks", "Actual (100%) Valuations for the College", "Taxable (Rollback) Valuations for the College", and "Tax Extensions and Collection"; and "Financial Information".

Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the Issuer or related public entities, which have been filed with the National Repository. The Issuer shall clearly identify each such other document so included by reference.

Section 5. Reporting of Significant Events.

a) Pursuant to the provisions of this Section, the Issuer shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Certificates in a timely manner not later than 10 Business Days after the day of the occurrence of the event:


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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 relating to the Certificates reflecting financial difficulties;

v. Substitution of credit or liquidity providers, or their failure to perform;

vi. 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 Series Certificates, or material events affecting the tax-exempt status of the Certificates;

vii. Modifications to rights of Holders of the Certificates, if material;

viii. Certificate calls (excluding sinking fund mandatory redemptions), if material, and tender offers;

ix. Defeasances of the Certificates;

x. Release, substitution, or sale of property securing repayment of the Certificates, if material;

xi. Rating changes on the Certificates;

xii. Bankruptcy, insolvency, receivership or similar event of the Issuer;

xiii. The consummation of a merger, consolidation, or acquisition involving the Issuer or the sale of all or substantially all of the assets of the Issuer, 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 trustee or the change of name of a trustee, if material;

xv. Incurrence of a Financial Obligation of the Issuer, if material, or agreement to covenants, events of default, remedies, priority rights, or other terms of a Financial Obligation of the Issuer, any of which affect security holders, if material; and

xvi. Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a Financial Obligation of the Issuer, any of which reflect financial difficulties.

b) Whenever the Issuer obtains the knowledge of the occurrence of a Listed Event, the Issuer shall determine if the occurrence is subject to notice only if material, and if so shall as soon as possible determine if such event would be material under applicable federal securities laws.

c) If the Issuer determines that knowledge of the occurrence of a Listed Event is not subject to materiality, or determines such occurrence is subject to materiality and would be material under applicable federal securities laws, the Issuer shall promptly, but not later than 10 Business Days after the occurrence of the event, file a notice of such occurrence with the Municipal Securities Rulemaking Board through the filing with the National Repository.


D-4

Section 6. Termination of Reporting Obligation. The Issuer's obligations under this Disclosure Certificate with respect to each Series of Certificates shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Certificates of that Series or upon the Issuer's receipt of an opinion of nationally recognized bond counsel to the effect that, because of legislative action or final judicial action or administrative actions or proceedings, the failure of the Issuer to comply with the terms hereof will not cause Participating Underwriters to be in violation of the Rule or other applicable requirements of the Securities Exchange Act of 1934, as amended.

Section 7. Dissemination Agent. The Issuer may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the Issuer pursuant to this Disclosure Certificate. The initial Dissemination Agent shall be the Issuer.

Section 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the Issuer may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied:

a) If the amendment or waiver relates to the provisions of Section 3(a), 4, or 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature or status of an obligated person with respect to the Certificates, or the type of business conducted;

b) The undertaking, as amended or taking into account such waiver, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the original issuance of the Certificates, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and

c) The amendment or waiver either (i) is approved by the Holders of the Certificates in the same manner as provided in the Resolution for amendments to the Resolution with the consent of Holders, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the Holders or Beneficial Owners of the Certificates.

In the event of any amendment or waiver of a provision of this Disclosure Certificate, the Issuer shall describe such amendment in the next Annual Financial Information filing, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the Issuer. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements, (i) notice of such change shall be given in the same manner as for a Listed Event under Section 5(c), and (ii) the Annual Financial Information filing for the year in which the change is made will present a comparison or other discussion in narrative form (and also, if feasible, in quantitative form) describing or illustrating the material differences between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles.

Section 9. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the Issuer from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Financial Information filing or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the Issuer chooses to include any information in any Annual Financial Information filing or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the Issuer shall have no obligation under this Certificate to update such information or include it in any future Annual Financial Information filing or notice of occurrence of a Listed Event.


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Section 10. Default. In the event of a failure of the Issuer to comply with any provision of this Disclosure Certificate, any Holder or Beneficial Owner of the Certificates may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Issuer to comply with its obligations under this Disclosure Certificate. Direct, indirect, consequential and punitive damages shall not be recoverable by any person for any default hereunder and are hereby waived to the extent permitted by law. A default under this Disclosure Certificate shall not be deemed an event of default under the Resolution, and the sole remedy under this Disclosure Certificate in the event of any failure of the Issuer to comply with this Disclosure Certificate shall be an action to compel performance.

Section 11. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the Issuer agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys' fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's negligence or willful misconduct. The obligations of the Issuer under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Certificates.

Section 12. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the Issuer, the Dissemination Agent, the Participating Underwriters and Holders and Beneficial Owners from time to time of the Certificates, and shall create no rights in any other person or entity.

Section 13. Rescission Rights. The Issuer hereby reserves the right to rescind this Disclosure Certificate without the consent of the Holders in the event the Rule is repealed by the S.E.C. or is ruled invalid by a federal court and the time to appeal from such decision has expired. In the event of a partial repeal or invalidation of the Rule, the Issuer hereby reserves the right to rescind those provisions of this Disclosure Certificate that were required by those parts of the Rule that are so repealed or invalidated.

Date: 28th day of April, 2020. HAWKEYE COMMUNITY COLLEGE, STATE OF

IOWA

By: President of the Board of Directors ATTEST:

By: Secretary of the Board of Directors


D-1

EXHIBIT A

NOTICE TO NATIONAL REPOSITORY OF FAILURE TO FILE ANNUAL FINANCIAL INFORMATION Name of Issuer: Hawkeye Community College, Iowa. Name of Certificate Issue: $______ Taxable Industrial New Jobs Training Certificates,

Series 2020-1 Dated Date of Issue: June 1, 2020

NOTICE IS HEREBY GIVEN that the Issuer has not provided Annual Financial Information with respect to the above-named Certificates as required by Section 3 of the Continuing Disclosure Certificate delivered by the Issuer in connection with the Certificates. The Issuer anticipates that the Annual Financial Information will be filed by ____________________. Dated: __________ day of _______________, 20___. HAWKEYE COMMUNITY COLLEGE, STATE OF

IOWA

By: Its: 01696118-2\10567-278

OFFICIAL BID FORM

Hawkeye Community College Tuesday, April 28, 2020 1501 E. Orange Road Speer Financial, Inc. P.O. Box 8015 Facsimile: (319) 291-8628 Waterloo, IA 50704 Members of the Board of Directors:

For the $1,200,000* Taxable Industrial New Jobs Training Certificates, Series 2020-1 (the “Certificates”), of the Hawkeye Community College, (Merged Area VII), Iowa (the “College”), as described in the annexed Official Terms of Offering, which is expressly made a part of this bid, we will pay you $_____________ (no less than $1,190,400). The Certificates are to bear interest at the following respective rates (each a multiple of 1/8 or 1/100 of 1%) for the Certificates of each designated maturity. AMOUNTS* AND MATURITIES – JUNE 1 $130,000 ............ 2021 % $120,000 ............ 2024 % $115,000 ............ 2028 % 125,000 ............ 2022 % 120,000 ............ 2025 % 115,000 ............ 2029 % 125,000 ............ 2023 % 120,000 ............ 2026 % 115,000 ............ 2030 % 115,000 ............ 2027 % Any consecutive maturities may be aggregated into term certificates at the option of the bidder, in which case the mandatory redemption provisions shall be on the same schedule as above.

Maturities: ____________ Term Maturity _______ Maturities:___________ Term Maturity _______

Maturities: ____________ Term Maturity _______ Maturities:___________ Term Maturity _______ *Subject to principal adjustment in accordance with the Official Terms of Offering.

In submitting this bid, we represent that (i) this bid constitutes a firm offer to purchase the Certificates, and (ii) we have an established industry reputation for underwriting new issuances of municipal bonds and notes.

The Certificates are to be executed and delivered to us in accordance with the terms of this bid accompanied by the approving legal opinion of Ahlers & Cooney, P.C., Des Moines, Iowa. The College will pay for the legal opinion. The Purchaser agrees to apply for CUSIP numbers and pay the fee charged by the CUSIP Service Bureau and will accept the Certificates with the CUSIP numbers as entered on the Certificates.

As evidence of our good faith, if we are the winning bidder, we will wire transfer the amount of TWO PERCENT OF PAR (the “Deposit”) WITHIN TWO HOURS after the bid opening time to the College’s good faith bank and under the terms provided in the Official Terms of Offering for the Certificates. Alternatively, we have wire transferred or enclosed herewith a check payable to the College in the amount of the Deposit under the terms provided in the Official Terms of Offering for the Certificates.

Attached hereto is a list of members of our account on whose behalf this bid is made.

Form of Deposit (Check One) Account Manager Information Bidders Option Insurance Prior to Bid Opening: Underwriter/Bank Certified/Cashier’s Check [ ] Wire Transfer [ ] Address Within TWO Hours of Bid Opening: Authorized Rep Wire Transfer [ ] City State/Zip Amount: $24,000 Direct Phone ( ) FAX Number ( ) E-Mail Address

The foregoing bid was accepted and the Certificates sold by resolution of the College on Tuesday, April 28, 2020, and receipt is hereby

acknowledged of the good faith Deposit which is being held in accordance with the terms of the annexed Official Terms of Offering. ATTEST: HAWKEYE COMMUNITY COLLEGE, IOWA (MERGED AREA VII) ____________________________________________ _______________________________________________ Board Secretary President, Board of Directors

---------------NOT PART OF THE BID--------------- (Calculation of true interest cost)

Gross Interest $

Less Premium/Plus Discount $

True Interest Cost $

True Interest Rate %

TOTAL BOND YEARS 6,465.00

AVERAGE LIFE 5.388 Years

We have purchased insurance from:

Name of Insurer

(Please fill in) __________________________ Premium: _________________ Maturities: (Check One) [__] _________________Years [__] All


OFFICIAL TERMS OF OFFERING

$1,200,000* HAWKEYE COMMUNITY COLLEGE, IOWA (Merged Area VII) Taxable Industrial New Jobs Training Certificates, Series 2020-1 Hawkeye Community College, (Merged Area VII), Iowa, (the “College”), will receive electronic bids on the SpeerAuction (“SpeerAuction”) website address “www.SpeerAuction.com” for its $1,200,000* Taxable Industrial New Jobs Training Certificates, Series 2020-1 (the “Certificates”), on an all or none basis between 10:00 A.M. and 10:30 A.M., C.D.T., Tuesday, April 28, 2020. To bid electronically, bidders must have: (1) completed the registration form on the SpeerAuction website, and (2) requested and received admission to the College’s sale (as described below). Award will be made or all bids rejected at a meeting of the College on that date. The College reserves the right to reject all bids, to reject any bid proposal not conforming to this Official Terms of Offering, and to waive any irregularity or informality with respect to any bid. Additionally, the College reserves the right to modify or amend this Official Terms of Offering; however, any such modification or amendment shall not be made less than twenty-four (24) hours prior to the date and time for receipt of bids on the Certificates and any such modification or amendment will be announced on the Amendments Page of the SpeerAuction webpage and through Thomson Municipal News. The Certificates will constitute valid and legally binding obligations of the College and the Certificates are payable from the Net Revenues as more fully described herein under “DESCRIPTION OF THE CERTIFICATES - Security”. In the event such Net Revenues are insufficient, the Certificates are payable from a special standby tax levied upon all taxable property within the Merged Area without limitation as to rate or amount, all except as limited by bankruptcy, insolvency, moratorium, reorganization and other similar laws relating to the enforcement of creditors’ rights generally and except that enforcement by equitable and similar remedies, such as mandamus, is subject to the exercise of judicial discretion. Additional security for the Certificates is provided by a Debt Service Reserve Fund (the “Reserve Fund”) to be applied, until depleted, to pay interest and principal payments due on the Certificates. *ADJUSTMENTS TO PRINCIPAL AMOUNT AFTER DETERMINATION OF BEST BID. The aggregate principal amount of the Certificates, and each scheduled

maturity thereof, are subject to increase or reduction by the College or its designee after the determination of the Winning Bidder. The College may increase or decrease each maturity in increments of $5,000, but the total amount to be issued will not exceed $1,200,000. Interest rates specified by the Winning Bidder for each maturity will not change. Final adjustments shall be in the sole discretion of the College.

The dollar amount of the purchase price proposed by the Winning Bidder will be changed if the aggregate principal amount of the Certificates is adjusted as described above. Any change in the principal amount of any maturity of the Certificates will be made while maintaining, as closely as possible, the Winning Bidder’s net compensation, calculated as a percentage of bond principal. The Winning Bidder may not withdraw or modify its bid as a result of any post-bid adjustment. Any adjustment shall be conclusive, and shall be binding upon the Winning Bidder.

Certificate Details

The Certificates will be in fully registered form in the denominations of $5,000 and integral multiples thereof in the name of Cede & Co. as nominee of The Depository Trust Company (“DTC”), New York, New York, to which principal and interest payments on the Certificates will be paid. Individual purchases will be in book-entry form only. Interest on each Certificate shall be paid by check or draft of the Registrar to the person in whose name such Certificate is registered at the close of business on the fifteenth day of the month next preceding an interest payment date on such bond. The principal of the Certificates shall be payable in lawful money of the United States of America at the principal office maintained for the purpose by the Registrar in West Des Moines, Iowa. Semiannual interest is due June 1 and December 1 of each year, commencing December 1, 2020 and is payable by UMB Bank, n.a., West Des Moines, Iowa (the “Registrar”). The Certificates are dated the date of delivery (expected to be on or about June 1, 2020).


AMOUNTS* AND MATURITIES – JUNE 1

$130,000 ........................ 2021 $120,000 ........................2024 $115,000 ....................... 2028 125,000 ........................ 2022 120,000 ........................2025 115,000 ....................... 2029 125,000 ........................ 2023 120,000 ........................2026 115,000 ....................... 2030 115,000 ........................2027

Any consecutive maturities may be aggregated into term bonds at the option of the bidder, in which case the mandatory redemption provisions shall be on the same schedule as above.

The Certificates due June 1, 2021 - 2026, inclusive, are non-callable. The Certificates due June 1, 2027 - 2030, inclusive, are callable in whole or in part and on any date on or after June 1, 2026, at a price of par and accrued interest. If less than all the Certificates are called, they shall be redeemed in any order of maturity as determined by the College and within any maturity by lot. Method of Bidding Electronically Notwithstanding the fact that the College permits receiving bids electronically using SpeerAuction, all bidders must have a signed, but uncompleted, Official Bid Form delivered to Speer Financial, Inc., Suite 608, 531 Commercial Street, Waterloo, Iowa, (319) 291-8628 facsimile, prior to the close of bidding to which a printout of the electronic bid will be attached and delivered to the College. If bidding electronically, all-or-none bids must be submitted via the internet address www.SpeerAuction.com. The use of SpeerAuction shall be at the bidder’s risk and expense and the College shall have no liability with respect thereto, including (without limitation) liability with respect to incomplete, late arriving and non-arriving bids. To bid via the SpeerAuction webpage, bidders must first visit the SpeerAuction webpage where, if they have not previously registered with either SpeerAuction, Grant Street Group (the “Auction Administrator”) or any other website administered by the Auction Administrator, they may register and then request admission to bid on the Certificates. Bidders will be notified prior to the scheduled bidding time of their eligibility to bid. Only registered broker-dealers and dealer banks with DTC clearing arrangements will be eligible to bid electronically. The “Rules” of the SpeerAuction bidding process may be viewed on the SpeerAuction webpage and are incorporated herein by reference. Bidders must comply with the Rules of SpeerAuction in addition to the requirements of the College’s Official Terms of Offering. In the event the Rules of SpeerAuction and this Official Terms of Offering conflict, this Official Terms of Offering shall be controlling. All electronic bids must be submitted on the SpeerAuction webpage. Electronic bidders may change and submit bids as many times as they choose during the sale period but may not delete a submitted bid. The last bid submitted by an electronic bidder before the deadline for receipt of bids will be compared to all other final bids to determine the winning bidder. During the bidding, no bidder will see any other bidder’s bid nor the status of their bid relative to other bids (e.g., whether their bid is a leading bid). The electronic bidder bears all risk of transmission failure. Any questions regarding bidding on the SpeerAuction website should be directed to Grant Street Group at (412) 391-5555 x 370. Each bidder shall be solely responsible for making necessary arrangements to access SpeerAuction for purposes of submitting its internet bid in a timely manner and in compliance with the requirements of the Terms of Offering. The College is permitting bidders to use the services of the SpeerAuction solely as a communication mechanism to conduct the internet bidding and the SpeerAuction is not an agent of the College. Provisions of the Terms of Offering and Official Bid Form shall control in the event of conflict with information provided by the Internet Bid System.


Bidding Parameters and Award of the Certificates All interest rates must be in multiples of one-eighth or one one-hundredth of one percent (1/8 or 1/100 of 1%), and not more than one rate for a single maturity shall be specified. The rates bid shall be in non-descending order. The differential between the highest rate bid and the lowest rate bid shall not exceed six percent (6%). All bids must be for all of the Certificates and must be for not less than $1,190,400. Award of the Certificates: The Certificates will be awarded on the basis of true interest cost, determined in the following manner. True interest cost shall be computed by determining the annual interest rate (compounded semi-annually) necessary to discount the debt service payments on the Certificates from the payment dates thereof to the dated date and to the bid price. For the purpose of calculating true interest cost, the Certificates shall be deemed to become due in the principal amounts and at the times set forth in the table of maturities set forth above. In the event two or more qualifying bids produce the identical lowest true interest cost, the winning bid shall be the bid that was submitted first in time on the SpeerAuction webpage or if all such bids are not submitted electronically, the winning bid shall be determined by lot. The Certificates will be awarded to the bidder complying with the terms of this Official Terms of Offering whose bid produces the lowest true interest cost rate to the College as determined by the College’s Registered Municipal Advisor, which determination shall be conclusive and binding on all bidders; provided, that the College reserves the right to reject all bids or any non-conforming bid and reserves the right to waive any informality in any bid. Electronic bidders should verify the accuracy of their final bids and compare them to the winning bids reported on the SpeerAuction Observation Page immediately after the bidding. The premium or discount, if any, is subject to pro rata adjustment if the maturity amounts of the Certificates are changed, maintaining, as close as possible, the same dollar amount of profit per $1,000 bond as bid. The true interest cost of each electronic bid will be computed by SpeerAuction and reported on the Observation Page of the SpeerAuction webpage immediately following the date and time for receipt of bids. These true interest costs are subject to verification by the College’s Municipal Advisor, will be posted for information purposes only and will not signify an actual award of any bid or an official declaration of the winning bid. The College or its Municipal Advisor will notify the bidder to whom the Certificates will be awarded, if and when such award is made. The winning bidder will be required to make the standard filings and maintain the appropriate records routinely required pursuant to MSRB Rules G-8, G-11 and G-36. The winning bidder will be required to pay the standard MSRB charge for Certificates purchased. In addition, the winning bidder who is a member of the Securities Industry and Financial Markets Association (“SIFMA”) will be required to pay SIFMA’s standard charge per Certificate. Good Faith Deposit and Other Matters

The winning bidder is required to a wire transfer from a solvent bank or trust company to the College’s good faith bank the amount of TWO PERCENT OF PAR (the “Deposit”) WITHIN TWO HOURS after the bid opening time as evidence of the good faith of the bidder. Alternatively, a bidder may submit its Deposit upon or prior to the submission of its bid in the form of a certified or cashier’s check on, or a wire transfer from, a solvent bank or trust company for TWO PERCENT OF PAR payable to the Treasurer of the College. The College reserves the right to award the Certificates to a winning bidder whose wire transfer is initiated but not received within such two hour time period provided that such winning bidder’s federal wire reference number has been received. In the event the Deposit is not received as provided above, the College may award the Certificates to the bidder submitting the next best bid provided such bidder agrees to such award.


If a wire transfer is used for the Deposit, it must be sent according to the following wire instructions:

Amalgamated Bank of Chicago

Corporate Trust 30 North LaSalle Street

38th Floor Chicago, IL 60602 ABA # 071003405

Credit To: 3281 Speer Bidding Escrow RE: Hawkeye Community College, (Merged Area VII), Iowa bid for

$1,200,000* Taxable Industrial New Jobs Training Certificates, Series 2020-1 If the wire shall arrive in such account prior to the date and time of the sale of the Certificates. Contemporaneously with such wire transfer, the prospective purchaser shall send an email to [email protected] with the following information: (1) indication that a wire transfer has been made, (2) the amount of the wire transfer, (3) the issue to which it applies, and (4) the return wire instructions if such prospective purchaser is not awarded the Certificates. The College and any prospective purchaser who chooses to wire the Deposit hereby agree irrevocably that Speer Financial, Inc. (“Speer”) shall be the escrow holder of the Deposit wired to such account subject only to these conditions and duties: (i) if the bid is not accepted, Speer shall, at its expense, promptly return the Deposit amount to the unsuccessful prospective purchaser; (ii) if the bid is accepted, the Deposit shall be forwarded to the College, (iii) Speer shall bear all costs of maintaining the escrow account and returning the funds to the prospective purchaser; (iv) Speer shall not be an insurer of the Deposit amount and shall have no liability except if it willfully fails to perform, or recklessly disregards, its duties specified herein; and (v) income earned on the Deposit, if any, shall be retained by Speer.

The College covenants and agrees to enter into a written agreement, certificate or contract, constituting an undertaking (the “Undertaking”) to provide ongoing disclosure about the College for the benefit of the beneficial owners of the Certificates on or before the date of delivery of the Certificates as required under Section (b)(5) of Rule 15c2-12 (the “Rule”) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934. The Undertaking shall be as described in the Official Statement, with such changes as may be agreed in writing by the Underwriter. The Underwriter’s obligation to purchase the Certificates shall be conditioned upon the College delivering the Undertaking on or before the date of delivery of the Certificates.

The Certificates will be delivered to the successful purchaser against full payment in immediately available funds as soon as they can be prepared and executed, which is expected to be on or about June 1, 2020. Should delivery be delayed beyond sixty (60) days from the date of sale for any reason beyond the control of the College except failure of performance by the purchaser, the College may cancel the award or the purchaser may withdraw the good faith deposit and thereafter the purchaser’s interest in and liability for the Certificates will cease.

The Official Statement, when further supplemented by an addendum or addenda specifying the maturity dates, principal amounts, and interest rates of the Certificates, and any other information required by law or deemed appropriate by the College, shall constitute a “Final Official Statement” of the College with respect to the Certificates, as that term is defined in the Rule. By awarding the Certificates to any underwriter or underwriting syndicate, the College agrees that, no more than seven (7) business days after the date of such award, it shall provide, without cost to the senior managing underwriter of the syndicate to which the Certificates are awarded, up to 50 copies of the Final Official Statement to permit each “Participating Underwriter” (as that term is defined in the Rule) to comply with the provisions of such Rule. The College shall treat the senior managing underwriter of the syndicate to which the Certificates are awarded as its designated agent for purposes of distributing copies of the Final Official Statement to each Participating Underwriter. Any underwriter executing and delivering an Official Bid Form with respect to the Certificates agrees thereby that if its bid is accepted by the College it shall enter into a contractual relationship with all Participating Underwriters of the Certificates for purposes of assuring the receipt by each such Participating Underwriter of the Final Official Statement.


By submission of its bid, the senior managing underwriter of the successful purchaser agrees to supply all necessary

pricing information and any Participating Underwriter identification necessary to complete the Official Statement within 24 hours after award of the Certificates. Additional copies of the Final Official Statement may be obtained by Participating Underwriters from the printer at cost.

The College will, at its expense, deliver the Certificates to the purchaser in New York, New York (or arrange for “FAST” delivery) through the facilities of DTC and will pay for the bond attorney’s opinion. At the time of closing, the College will also furnish to the purchaser the following documents, each dated as of the date of delivery of the Certificates: (1) the legal opinion of Ahlers & Cooney, P.C., Des Moines, Iowa, that the Certificates are lawful and enforceable obligations of the College in accordance with their terms and (2) a no litigation certificate by the College. The College intends to designate the Certificates as “qualified tax-exempt obligations” pursuant to the small issuer exception provided by Section 265(b) (3) of the Internal Revenue Code of 1986, as amended.

The College has authorized the printing and distribution of an Official Statement containing pertinent information relative to the College and the Certificates. Copies of such Official Statement or additional information may be obtained from Mr. Daniel Gillen, Vice President of Administration and Finance, Hawkeye Community College, 1501 E. Orange Road, P.O. Box 8015 Waterloo, Iowa 50704 or an electronic copy of this Official Statement is available from the www.speerfinancial.com website under “Official Statement Sales/Competitive Calendar” or from the Registered Municipal Advisor to the College, Speer Financial, Inc., 531 Commercial Street, Suite 608, Waterloo, Iowa 50701 (telephone (319) 291-2077), and One North LaSalle Street, Suite 4100, Chicago, Illinois 60602 (telephone (312) 346-3700). /s/ DANIEL GILLEN Vice President Administration and Finance HAWKEYE COMMUNITY COLLEGE (Merged Area VII) Waterloo, Iowa

Hawkeye Community College, (Merged Area VII), Iowa $5,030,000 Taxable Industrial New Jobs Training Certificates, Series 2019-1

E-1

APPENDIX E

IOWA COMMUNITY COLLEGES

$1,200,000* hawkeye community college, iowa (merged … hawkeye cc 1.2m tax... · taxable...

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