Billings Public Schools

$2,000,000 Elementary QZAB$2,420,000 Elementary QSCB$7,580,000 High School QSCB

September 27, 2010 – School Board Meeting

Bridget EkstromBridget EkstromVice PresidentVice President402 East Main Street402 East Main StreetSuite 202Suite 202Bozeman, MT 59715Bozeman, MT 59715Phone: (406) 556-6965Phone: (406) 556-6965E-mail: bekstrom@dadco.comE-mail: bekstrom@dadco.com

Building Fund

Estimated Sources of FundsElementary District QZABs

Federal SubsidyState AidInvestment Earnings*Elementary District

$2,000,000

$811,241.0022.25%

$1,646,111.1145.15%$456,250.00

12.51%

$732,509.0020.09%

Building Fund♦for purposes of paying Project Costs♦

Debt Service Fund♦for purposes of repaying principal & interest on the Bonds♦

The outer layer represents possible investment earnings the Elementary District may earn in the Building Fund. *Represents investment earnings on the Sinking Fund.

Building Fund

Estimated Sources of FundsElementary District QSCBs

Federal SubsidyState AidInvestment Earnings*Elementary District

$2,420,000

$981,601.0022.25%

$1,991,794.4445.15%$552,063.00

12.51%

$886,336.0020.09%

The outer layer represents possible investment earnings the Elementary District may earn in the Building Fund.

Building Fund♦for purposes of paying Project Costs♦

Debt Service Fund♦for purposes of repaying principal & interest on the Bonds♦

*Represents investment earnings on the Sinking Fund.

Building Fund

Estimated Sources of FundsHigh School District QSCBs

Federal SubsidyState AidInvestment Earnings*Elementary District

$7,580,000

$3,583,038.0025.93%

$6,238,761.1145.15%

$1,729,188.0012.51%

$2,267,775.0016.41%

The outer layer represents possible investment earnings the High School District may earn in the Building Fund.

Building Fund♦for purposes of paying Project Costs♦

Debt Service Fund♦for purposes of repaying principal & interest on the Bonds♦

*Represents investment earnings on the Sinking Fund.

Summary for Billings SchoolsQSCB and QZAB Bond Issuance

Advantages of Issuing Bonds Right Away:

Bond Market Conditions are Currently Favorable Increasing Probability of Locking Rates At or Under Tax Credit Rate. Interest Rates on the Bonds At or Under the Tax Credit Rate Mean $0 Interest Cost to the Districts’ Taxpayers.

Maximize the Term of the Bonds (16 years of tax levies rather than 15 years as projected). Maximum Bond Term as Set by the Federal Government Changes Every Month.

Deposit Bond Proceeds By Year End to Begin Projects and Pay Costs. Minimize Need to Reimburse Other District Funds.

Maximize Investment Earnings on Bond Proceeds During the Term of the Project. Such Investment Earnings are Utilized for the Project/Reduction of Bonds Outstanding.

By Bond Closing, the Elementary and High School Districts Reasonably Expect:

Enter into Binding Commitments with 3rd Parties to Spend 10% of Bond Proceeds and Earnings within 6 months of Closing (June 29, 2011)

- $200,000 (10%) of the $2,000,000 Elementary QZAB - $242,000 (10%) of the $2,420,000 Elementary QSCB - $758,000 (10%) of the $7,580,000 High School QSCB

Work on the Project will Proceed with Due Diligence through Completion

Spend 100% of Bond Proceeds and Earnings within Three (3) Years of Closing (by December 29, 2013) or Pay Down Bonds

Billings Elementary and High School Districts General Obligation School Building Bonds, Series 2010 (QSCB - QZAB)

PRELIMINARY FINANCING TIME SCHEDULE

SEPTEMBER 2010

OCTOBER 2010

NOVEMBER 2010

DECEMBER 2010

SU M T W TH F S 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

SU M T W TH F S 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31

SU M T W TH F S 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

SU M T W TH F S 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31

DATE ACTION RESPONSIBLE PARTY

September 7 • Bond Elections Pass! Wait to issue Bonds until after the 60-day window that voters have to contest the Election by State Law, which is November 6.

Districts

September 22 • Request Disclosure/Official Statement Information from the Districts and the County

• Distribute Preliminary Financing Time Schedule

D.A. Davidson & Co. (DAD)

DAD

September 27 • Discuss Preliminary Financing Time Schedule and Bond Issuance (regular meeting)

Districts/DAD

September 30 • Provide Requested Disclosure Information Districts

October 7 • Provide Draft Preliminary Official Statement (POS) to the Districts and Bond Counsel (BC) for Review

DAD

October 13 • Provide Comments to POS All

October 15 • Distribute second draft Preliminary Official Statement (POS) to the Districts and BC for Review

DAD

Continued

Billings Elementary and High School Districts General Obligation School Building Bonds, Series 2010 (QSCB - QZAB)

PRELIMINARY FINANCING TIME SCHEDULE

SEPTEMBER 2010

OCTOBER 2010

NOVEMBER 2010

DECEMBER 2010

SU M T W TH F S 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

SU M T W TH F S 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31

SU M T W TH F S 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

SU M T W TH F S 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31

DATE ACTION RESPONSIBLE PARTY

October 18 • Board Adopts Resolutions Authorizing Issuance of the Bonds (regular meeting)

Districts/BC

October 21 • Send Rating Presentation Materials (draft POS and Resolution and audit reports) to Standard & Poor’s Rating Agency (S&P)

DAD

October 28 • S&P Bond Rating Agency Meeting DAD/Districts

November 11 • Receive Bond Ratings for the Districts from S&P Districts

November 16 • Print and Distribute POS to prospective investors DAD

November 30 • Pricing Call with Districts (2:00 p.m. MT) DAD/Districts

December 2 • Finalize Terms/Lock Interest Rates DAD/Districts

December 13 • Board Adopts Bond Resolutions (special meeting) Districts/BC

December 15 • Distribute Closing Documents • Distribute Closing Instructions

BC DAD

December 21 • Return Closing Documents All

December 29 • Closing/Delivery of Bond Proceeds All