Dr. Sue Johnson Savanna School District Superintendent 1330 South Knott Avenue August 20, 2014*

Taxpayers in the Westminster, Cypress and Savanna Elementary School Districts will potentially be faced with significantly higher tax rates in future years to repay school construction bonds. District Response to Finding 1: This finding is very speculative. The District is unable to determine whether there is a factual basis for this finding. Based on historical data, no school districts in Orange County have exceeded their general obligation bond tax rates for the past 40 years. Based on the Grand Jury's own data, the use of the term "significantly higher" with respect to tax rates is misleading. Even using the Grand Jury's data and projections, the projected and speculative tax increases are, on an annual basis, very small ranging from $15.70 in the Westminster School District to $50.63 in the Savanna School District. Based on the foregoing, the District is unable to agree or disagree with this finding.

The funds raised through these school bonds for the Westminster, Cypress and Savanna Elementary School Districts have been spent on much needed capital improvements. All three of these districts were faced with schools that in some cases had not been renovated in over 50 years. These districts are making tremendous progress in bringing their schools up to a 21st Century standard. District Response to Finding 2: The District agrees with this finding.

Savanna Elementary School District received a waiver from the State Board of Education in July 2012 to exceed the bonded indebtedness limit of 1.25% of assessed values (AVs). Savanna applied for the waiver before exceeding the bonded indebtedness limit. District Response to Finding 3: The District agrees with this finding.

The 20 year average for growth in AVs for the Savanna, Cypress and Westminster Elementary School Districts are approximately 4% per year. Honorable Glenda Sanders, Presiding Judge, Orange County Superior Court Response to 2013-14 Orange County Grand Jury Report August 20, 2014 District Response to Finding 5: The District agrees that over a 20 year period, the average assessed value growth rate within the District was approximately 4% per year. However, a more appropriate time period to consider would be 30 to 40 years.

The assumptions made for the expected growth in AVs in the future years has a very significant effect on the corresponding tax rates. For example, in the Savanna Elementary School District, the tax rate will be $60.74 per $100,000 of AV in the year 2052 if the AVs continue to grow at an average of 4% per year. The tax rate falls to $20.04 per $100,000 of AV in the year 2052 if the AVs grow at an average rate of 7%. District Response to Finding 6: The District disagrees with this finding. The District is unable to verify the accuracy of the information contained in the Finding.

The homeowners and property owners will pay additional taxes of $2,025, $809 and $628 per $100,000 of AV over the term of the bonds in the Savanna, Cypress and Westminster Elementary School Districts respectively if AVs continue to grow at the historical rate of 4%. District Response to Finding 7: The District disagrees with this finding. The District is unable to verify the accuracy of the information contained in the Finding. The District also points out that this "Finding" is highly speculative and based on extremely limited criteria.

The methodology used by the Savanna, Cypress and Westminster Elementary School Districts to estimate the future growth rates for AVs does not appear to be reliable to the Grand Jury. Savanna and Cypress relied on average growth of AVs over a 35-year period. The first 10 to 15 years of this historical data includes a considerable amount of original development, thereby inflating the average AV growth rate. Westminster developed an estimate of AV growth that appears to have no historical or factual basis. AV growth is projected to average around 6% from the years 2017 - 2041, and then tails off dramatically for the last 10 years of the bonds, averaging less than 2%. Using this estimate, Westminster projects the district will never exceed the legal tax rate of $30 per $100,000. District Response to Finding 8: The District disagrees with this finding. The District is unable to verify the accuracy of the information contained in this Finding. The District is of the view that the data that it used to project future assessed value changes was factual and historically grounded and was, and is, reasonable.