PRELIMINARY OFFICIAL STATEMENT DATED AUGUST 24, 2020 THIS COVER PAGE CONTAINS CERTAIN INFORMATION FOR QUICK REFERENCE ONLY. IT IS NOT A SUMMARY OF …

PRELIMINARY OFFICIAL STATEMENT DATED AUGUST 24, 2020

THIS COVER PAGE CONTAINS CERTAIN INFORMATION FOR QUICK REFERENCE ONLY. IT IS NOT A

SUMMARY OF THIS ISSUE. INVESTORS MUST READ THE ENTIRE OFFICIAL STATEMENT TO OBTAIN

INFORMATION ESSENTIAL TO THE MAKING OF AN INFORMED INVESTMENT DECISION.

NEW ISSUE RATING: S&P: “A2”

BOOK-ENTRY ONLY See “Rating” herein.

In the opinion of Gilmore & Bell, P.C., Special Counsel, under existing law and assuming continued compliance with certain requirements

of the Internal Revenue Code of 1986, as amended, (1) the interest component of the Rental Payments paid by The Junior College District of

Metropolitan Kansas City, Missouri (the “District”) with respect to the Series 2020 Certificates (including any original issue discount properly

allocable to an owner thereof) is excludable from gross income for federal and Missouri income tax purposes, and is not an item of tax preference for

purposes of the federal alternative minimum tax, and (2) the Series 2020 Certificates are not “qualified tax-exempt obligations” within the meaning

of Section 265(b)(3) of the Code. See “TAX MATTERS” in this Official Statement.

$44,230,000

THE JUNIOR COLLEGE DISTRICT OF METROPOLITAN KANSAS CITY, MISSOURI

CERTIFICATES OF PARTICIPATION

SERIES 2020 Due: July 1,

Dated: Date of Delivery as shown on inside cover

The Series 2020 Certificates are deliverable only as fully registered certificates, without coupons, and, when delivered, will be registered in

the name of Cede & Co., as registered owner and nominee for The Depository Trust Company (“DTC”), New York, New York. DTC will act as

securities depository for the Series 2020 Certificates. Purchases of the Series 2020 Certificates will be made in book-entry form, in authorized

denominations. Purchasers will not receive certificates representing their interests in Series 2020 Certificates purchased. So long as Cede & Co. is

the registered owner of the Series 2020 Certificates, as nominee of DTC, references herein to the owners or registered owners shall mean Cede & Co.,

as aforesaid, and shall not mean the Beneficial Owners (herein defined) of the Series 2020 Certificates. Principal Components and Interest components

of Rental Payments represented by the Series 2020 Certificates will be payable at maturity or upon earlier prepayment at the payment office of UMB

Bank, N.A., Kansas City, Missouri, as trustee and paying agent (the “Trustee” and “Paying Agent”). So long as DTC or its nominee, Cede & Co., is

the owner, such payments will be made directly to such owner. DTC is expected, in turn, to remit such payments to the DTC Participants (herein

defined) for subsequent disbursement to the Beneficial Owners.

The Series 2020 Certificates will be delivered in the denomination of $5,000 or any integral multiple thereof. Principal Components of

Rental Payments will be payable each July 1, beginning July 1, 2021, and semiannual Interest Components of Rental Payments will be payable each

January 1 and July 1, beginning January 1, 2021. Principal Components of Rental Payments will be payable by check or draft mailed by the Trustee

upon presentation and surrender of the Series 2020 Certificates by the registered owners thereof at the payment office of the Trustee. Interest

Components of Rental Payments will be payable by check or draft mailed (or by electronic transfer in certain circumstances as described herein) by

the Trustee to the person in whose name each Series 2020 Certificate is registered on the 15th day of the month next preceding each interest payment

date.

The Series 2020 Certificates evidence undivided ownership interests in the right to receive Rental Payments from the District under an

annually renewable Lease Agreement dated as of September 1, 2020 (the “Lease Agreement”), between the Trustee, as lessor and the District, as

lessee. The Series 2020 Certificates are to be executed and delivered pursuant to a Trust Indenture dated as of September 1, 2020 (the “Indenture”).

The net proceeds from the Series 2020 Certificates, together with other available funds of the District, will be used to (1) finance the costs of certain

improvements for the District as further described herein and (2) to pay the costs related to the delivery and sale of the Series 2020 Certificates.

Neither the Series 2020 Certificates nor the Lease Agreement shall constitute a liability or obligation of the District beyond the Lease Term

in effect at any time. The District is under no obligation to renew the Lease Agreement at the end of the Original Term or any Renewal Term. Neither

the Series 2020 Certificates nor the Lease Agreement will constitute a general obligation or indebtedness of the District within the meaning of any

constitutional or statutory debt limitation or restriction.

Series 2020 Certificates shall be subject to payment prior to maturity as more fully described herein.

The Series 2020 Certificates will be offered when, as and if delivered and approved by the Underwriter, subject to prior sale, modification or withdrawal of

the offer without sale, and subject to the approval of validity and certain other matters by Gilmore & Bell, P.C., Kansas City, Missouri, Special Counsel, and certain

other conditions. Certain legal matters related to this Official Statement will be passed upon by Gilmore & Bell, P.C. It is expected that the Series 2020 Certificates will

be available for delivery in New York, New York on or about September ___, 2020.

Bids for the Series 2020 Certificates will only be received electronically through PARITY electronic bid submission system until 10:00 A.M.,

Central Time, on Wednesday, September 9, 2020.

The date of this Official Statement is September __, 2020.

Preliminary, subject to change.

$44,230,000



SERIES 2020

MATURITY SCHEDULE*

Serial Certificates

Maturity Date Principal Interest

July 1 Amount Rate Price

2029 $2,185,000

2030 2,255,000

2031 2,290,000

2032 2,320,000

2033 2,365,000

2034 2,405,000

2035 2,460,000

2036 2,515,000

2037 2,575,000

2038 2,630,000

2039 2,690,000

2040 2,750,000

2041 2,815,000

2042 2,885,000

2043 2,955,000

2044 3,030,000

2045 3,105,000


(i)


3200 Broadway

Kansas City, Missouri 64111

DISTRICT BOARD OF TRUSTEES

Trent Skaggs, President

Michael Brown, Vice President

Ellen Martin, Member

Holmes Osborne, Member

Jermaine Reed, Member

Barbara Washington, Member

DISTRICT OFFICERS

Administrative Center

Dr. Kimberly Beatty, Chancellor

Dr. John M. Chawana, Vice Chancellor for Institutional Effectiveness, Research & Technology

Dr. Donald Chrusciel, Vice Chancellor of Administrative Services & Chief Financial Officer

Ms. Suzanne Gochis, Vice Chancellor of Instruction and Chief Academic Officer

Dr. Katherine Swanson, Vice Chancellor of Student Success and Engagement

Campuses

Dr. Thomas W. Meyer, President, MCC-Blue River & MCC-Business & Technology

Dr. Dan Hocoy, President, MCC-Longview

Dr. Larry Rideaux Jr., President, MCC-Maple Woods

Dr. Tyjaun A. Lee, President, MCC-Penn Valley

COUNSEL TO THE DISTRICT SPECIAL COUNSEL

Davis, Sands & Collins Gilmore & Bell, P.C.

Kansas City, Missouri Kansas City, Missouri

MUNICIPAL ADVISOR

Piper Sandler & Co.

Leawood, Kansas

(ii)

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER ALLOT OR

EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES

2020 CERTIFICATES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE

OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

THE SERIES 2020 CERTIFICATES HAVE NOT BEEN REGISTERED WITH THE SECURITIES

AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR HAS

THE INDENTURE BEEN QUALIFIED UNDER THE TRUST INDENTURE ACT OF 1939, IN RELIANCE

UPON EXEMPTIONS CONTAINED IN SUCH ACTS.

The Underwriter has reviewed the information in this Official Statement in accordance with, and as

part of, its responsibilities to investors under the federal securities laws as applied to the facts and

circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of that

information.

No dealer, broker, salesperson or other person has been authorized by the District or the Underwriter

to give any information or to make any representation with respect to the Series 2020 Certificates offered

hereby other than those contained in this Official Statement, and, if given or made, such other information or

representations must not be relied upon as having been authorized by any of the foregoing. This Official

Statement does not constitute an offer to sell or the solicitation of an offer to buy nor may there be any sale of

the Series 2020 Certificates offered hereby by any person in any jurisdiction in which it is unlawful for such

person to make such offer, solicitation or sale. The information set forth herein has been obtained from the

District and from other sources believed to be reliable, but it is not guaranteed as to accuracy or completeness

and is not to be construed as a representation by the Underwriter. The information and expressions of opinion

herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale

made hereunder will, under any circumstances, create any implication that there has been no change in the

affairs of the District since the date hereof.

IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN

EXAMINATION OF THE TERMS OF THIS OFFERING, INCLUDING THE MERITS AND RISKS

INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE

SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING

AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF

THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

CAUTIONARY STATEMENTS REGARDING FORWARD-

LOOKING STATEMENTS IN THIS OFFICIAL STATEMENT

Certain statements included or incorporated by reference in this Official Statement constitute “forward-

looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section

21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities

Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as “plan,” “expect,”

“estimate,” “anticipate,” “projected,” “budget” or other similar words.

THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH

FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND

OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS

DESCRIBED TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR

ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THESE

FUTURE RISKS AND UNCERTAINTIES INCLUDE THOSE DISCUSSED IN THE “RISK FACTORS AND

INVESTMENT CONSIDERATIONS” SECTION OF THIS OFFICIAL STATEMENT. NEITHER THE DISTRICT

NOR ANY OTHER PARTY PLANS TO ISSUE ANY UPDATES OR REVISIONS TO THOSE FORWARD-

LOOKING STATEMENTS IF OR WHEN THEIR EXPECTATIONS, OR EVENTS, CONDITIONS OR

CIRCUMSTANCES UPON WHICH SUCH STATEMENTS ARE BASED OCCUR.

(iii)

TABLE OF CONTENTS

_______________________

Page

INTRODUCTION ........................................................................................................................................ 1

THE SERIES 2020 CERTIFICATES .......................................................................................................... 3

THE BOOK-ENTRY ONLY SYSTEM ...................................................................................................... 5

SECURITY FOR THE SERIES 2020 CERTIFICATES ............................................................................ 7

THE TRUSTEE .......................................................................................................................................... 8

RISK FACTORS AND INVESTMENT CONSIDERATIONS ................................................................ 9

PLAN OF FINANCE ................................................................................................................................... 17

LITIGATION .......................................................................................................................................... 18

TAX MATTERS .......................................................................................................................................... 18

UNDERWRITING ....................................................................................................................................... 20

RATING ....................................................................................................................................................... 20

FINANCIAL STATEMENTS ..................................................................................................................... 21

LEGAL MATTERS ..................................................................................................................................... 21

CONTINUING DISCLOSURE ................................................................................................................... 21

MISCELLANEOUS ..................................................................................................................................... 23

APPENDIX A - THE DISTRICT

APPENDIX B – COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE DISTRICT

FOR THE YEAR ENDED JUNE 30, 2019

APPENDIX C - DEFINITIONS OF TERMS AND SUMMARIES OF CERTAIN DOCUMENTS

OFFICIAL STATEMENT

$44,230,000



SERIES 2020

INTRODUCTION

This introduction is only a brief description and summary of certain information contained in this Official

Statement and is qualified in its entirety by reference to the entire Official Statement and should be read in

conjunction with the more detailed information and financial statements of the District contained in the specific sections of this Official Statement and a full review should be made of the entire Official Statement and the

documents summarized or described herein.

Purpose of this Official Statement

This Official Statement, including its appendices, is furnished to provide information relating to the The

Junior College District of Metropolitan Kansas City, Missouri (the “District”) and $44,230,000* aggregate

principal amount of The Junior College District of Metropolitan Kansas City, Missouri Certificates of Participation,

Series 2020 (the “Series 2020 Certificates”).

The District

The District is a community college district and political subdivision organized and existing under the laws

of the State of Missouri. See “GENERAL AND DEMOGRAPHIC INFORMATION” in Appendix A to this

Official Statement.

Purpose of the Series 2020 Certificates

The proceeds from the sale of the Series 2020 Certificates will be used, together with other available funds

of the District, to (1) construct, improve, renovate, furnish and equip the District’s Engineering Technology Center

at MCC-Penn Valley, the Advanced Manufacturing Institute to be located near MCC-Penn Valley and additional

facilities located on the MCC-Blue River campus, (2) construct, renovate, repair, improve, furnish and equip new

and existing facilities, (3) acquire, construct, renovate, improve, furnish and equip real property and other facilities

to accommodate current and future programs (collectively, the “Project”) and (2) to pay the costs related to the

delivery of the Series 2020 Certificates. See the caption “PLAN OF FINANCE” herein.

Security and Source of Payment

Pursuant to the terms of a Lease Agreement dated as of September 1, 2020 (the “Lease Agreement”),

between the District and UMB Bank, N.A., as trustee (the “Trustee”), a Trust Indenture dated as of September 1,

2020 (the “Indenture”) between the District and the Trustee, and the terms of a Base Lease dated as of September

1, 2020 (the “Base Lease”) between the District and the Trustee, (a) the District will lease certain real estate and

the improvements thereon (the “Site”) to the Trustee, (b) the proceeds of the Series 2020 Certificates will be used

to finance the costs of the Project, and (c) the Trustee will lease the Site and the improvements thereon and the

remaining portions of the Project (collectively, the “Facilities”) to the District for an initial term ending June 30,

2021 (the “Original Term”), with successive one-year renewal options, provided that the final renewal term does

not extend beyond June 30, 2045 (the “Renewal Terms”), which Renewal Terms are subject to the District’s annual

budget appropriations.


- 2 -

The Series 2020 Certificates evidence undivided ownership interests in the right to receive lease payments

(the “Rental Payments,” consisting of “Principal Components” and “Interest Components”) under the Lease

Agreement. The Series 2020 Certificates are being executed and delivered pursuant to the Indenture, which will

be executed by the District and the Trustee.

The Series 2020 Certificates will be payable solely from the rents, revenues and receipts received by the

Trustee, as lessor under the Lease Agreement, for the use of the Facilities and not from any other fund or source of

the Trustee, from certain proceeds of insurance policies or condemnation awards, from interest earnings on moneys

in certain funds held by the Trustee, from money derived from the sale or lease of the Facilities or portions thereof

and not from any other fund or source of the Trustee. Pursuant to the Indenture, the Trustee will pledge and assign

such rents, revenues and receipts and other moneys to the payment of the Series 2020 Certificates and the Interest

Component due thereon.

Parity Obligations

The Indenture provides for the future delivery of additional certificates (“Additional Certificates”) which,

if delivered, would rank on a parity with the Series 2020 Certificates and any other certificates then outstanding

under the Indenture. See the caption “SECURITY FOR THE SERIES 2020 CERTIFICATES – Parity Obligations”

herein. The Series 2020 Certificates and any future Additional Certificates delivered under the Indenture are

hereinafter referred to collectively as the “Certificates.”

Limited Obligations

The payments scheduled to be made by the District under the Lease Agreement are payable solely from

amounts which may but are not required to be appropriated annually by the District. See “SECURITY FOR THE

SERIES 2020 CERTIFICATES” herein. The Series 2020 Certificates, the Lease Agreement and any payments

required under the Lease Agreement shall not constitute a mandatory payment obligation of the District in any year

beyond the year during which the District is a lessee under the Lease Agreement, or constitute or give rise to a

general obligation or other indebtedness of the District. The District is not legally obligated to budget or appropriate

moneys for any fiscal year beyond the current fiscal year or any subsequent fiscal year in which the Lease

Agreement is in effect, and there can be no assurance that the District will appropriate funds to make Rental

Payments or renew the Lease Agreement after the Original Term or any Renewal Term of the Lease Agreement.

The District may terminate its obligations under the Lease Agreement on an annual basis. The District will have

the option to purchase the Trustee’s title and interest in the Facilities as provided in the Indenture and the Lease

Agreement.

Except for its duties as Trustee to make payments from the funds and accounts created and held under the

Indenture, UMB Bank, N.A. has no obligation to make any debt service payment on the Series 2020 Certificates

or any payments under the Lease Agreement.

Risk Factors

Payment of the Principal Component and Interest Component distributable with respect to the Series

2020 Certificates is subject to certain risks. See the caption “RISK FACTORS AND INVESTMENT

CONSIDERATIONS.”

Continuing Disclosure Information

The District has covenanted in its Continuing Disclosure Certificate to provide certain financial

information and notices of material events to the Municipal Securities Rulemaking Board, in compliance with

Rule 15c2-12 promulgated by the Securities and Exchange Commission.

- 3 -

Other Information

This Official Statement includes financial and other information about the District and also contains

descriptions of the Series 2020 Certificates, the Base Lease, the Lease Agreement and the Indenture. See

“DEFINITIONS OF TERMS AND SUMMARIES OF CERTAIN DOCUMENTS” in Appendix C hereto. The

descriptions of the Series 2020 Certificates, the Base Lease, the Lease Agreement, the Indenture and other

documents described in this Official Statement do not purport to be definitive or comprehensive, and all references

to those documents are qualified in their entireties by reference to the approved form of those documents, copies

of which may be viewed at the offices of the District’s municipal advisor, Piper Sandler & Co. (the “Municipal

Advisor”), 11635 Rosewood Street, Leawood, Kansas 66211, (913) 345-3373, or will be provided to any

prospective purchaser requesting the same, upon payment by such prospective purchaser of the cost of complying

with such request.

THE SERIES 2020 CERTIFICATES

General

The Series 2020 Certificates will be dated as of their date of delivery, will mature on July 1 in the years

and in the respective principal amounts (subject to prior prepayment as described herein) and shall bear interest at

the respective rates per annum, as set forth on the inside cover page hereof. The Series 2020 Certificates will be

delivered in fully registered form in the denominations of $5,000 or any integral multiple thereof. The Principal

Component and prepayment premium, if any, of Rental Payments represented by Series 2020 Certificates shall be

payable by check or draft mailed to the registered owner thereof at the payment office of the Trustee upon

presentation and surrender thereof. The Interest Components of Rental Payments represented by the Series 2020

Certificates shall be payable semiannually on January 1 and July 1, beginning January 1, 2021, to the registered

owner of each Certificate, determined as of the close of business on the Record Date (which shall be the fifteenth

day of the calendar month next preceding the Certificate Payment Date) (a) by check or draft mailed to such

registered owner at the address appearing on the registration books of the Trustee or its successor, as registrar, or

(b) in the case of an interest payment to the Securities Depository or to any other Registered Owner of $500,000 or

more in aggregate principal amount of the Series 2020 Certificates, by electronic transfer to such Registered Owner

upon written request given to the Trustee by such Registered Owner, not less than 5 days prior to the Record Date

for such interest, containing the electronic transfer instructions including the bank (which shall be in the

continental United States), ABA routing number and account name and account number to which such

Registered Owner wishes to have such transfer directed. All such payments shall be made in lawful money of the

United States of America.

Prepayment of Series 2020 Certificates

Optional Prepayment. The Series 2020 Certificates are subject to prepayment on and after July 1, 2028,

as a whole or in part at any time at 100% of the Principal Component represented thereby, plus the Interest

Component accrued thereon to the prepayment date.

Extraordinary Optional Prepayment. The Series 2020 Certificates shall be subject to extraordinary

optional prepayment prior to the stated maturity thereof, upon instructions from the District, as a whole or in part

at any time at a price of 100% of the Principal Component represented thereby, plus the Interest Component accrued

thereon to the prepayment date, upon the occurrence of any of the following conditions or events:

(a) if title to, or the use for a limited period of, all or substantially all of the Facilities is condemned

by any authority having the power of eminent domain (other than the District or any entity

controlled by or otherwise affiliated with the District);

(b) if title to all, or substantially all, of the Facilities is found to be deficient or nonexistent to the

extent that the efficient utilization of such Facilities by the District is impaired;

(c) if all, or substantially all, of the Facilities are damaged or destroyed by fire or other casualty; or

- 4 -

(d) if as a result of changes in the Constitution of the State of Missouri or of legislative or

administrative action by the State of Missouri or any political subdivision thereof, or by the United

States, or by reason of any action instituted in any court, the Indenture, the Lease Agreement, or

the Base Lease shall become void or unenforceable, or impossible of performance without

reasonable delay, or in any other way by reason of such change of circumstances, unreasonable

burdens or excessive liabilities are imposed on the District with respect to the Indenture, the Lease

Agreement or the Base Lease.

Selection of Series 2020 Certificates to be Prepaid

Series 2020 Certificates shall be prepaid only in the principal amount of $5,000 or any integral multiple

thereof. When less than all of the Outstanding Series 2020 Certificates are to be paid prior to maturity (other than

by mandatory sinking fund prepayment, if any), such Series 2020 Certificates shall be prepaid from such maturities

selected by the District, with Series 2020 Certificates of less than a full maturity to be selected by the Trustee in

$5,000 units of face value by lot or in such other equitable manner as the Trustee may determine.

Notice of Prepayment

Notice of the prepayment identifying the Series 2020 Certificates or portions thereof to be prepaid shall

be given by the Trustee to the Owners of Series 2020 Certificates by mailing a copy of the notice by first-class

mail, postage pre-paid, at least 20 days prior to the date of prepayment to the Owner of each Certificate to be prepaid

at the address shown on the registration books maintained by the Trustee or at such other address as is furnished in

writing by such Owner to the Trustee; provided, however, that any defect in giving such notice by mailing as

aforesaid shall not affect the validity of any proceedings for the prepayment of Series 2020 Certificates. Any notice

of prepayment shall state the date and place of prepayment, the maturities and the CUSIP numbers of the Series

2020 Certificates or portions of Certificates to be prepaid (and in the case of the prepayment of a portion of any

Series 2020 Certificates, the amount of Principal Component being paid), the prepayment price and that interest

will cease to accrue from and after the prepayment date.

Prepayments

Prior to the date fixed for prepayment, funds shall be deposited with the Trustee to pay, and the Trustee is

authorized and directed to apply such funds to the prepayment of, the Series 2020 Certificates, together with the

Interest Component accrued thereon to the prepayment date, and any required premium. Upon the giving of notice

and the deposit of such funds or government securities as may be available for prepayment pursuant to the

Indenture, the Interest Components of Rental Payments represented by the Series 2020 Certificates or portions

thereof thus called shall no longer accrue after the date fixed for prepayment.

Registration, Transfer and Exchange of Series 2020 Certificates

Any Series 2020 Certificate may be transferred or exchanged only upon the Register upon surrender

thereof at the payment office of the Trustee duly endorsed for transfer or accompanied by an assignment or

authorization for exchange duly executed by the registered owner or his attorney or legal representative in such

form as shall be satisfactory to the Trustee. Upon any such transfer or exchange, the Trustee shall execute and

deliver in exchange for such Series 2020 Certificate a new fully registered Series 2020 Certificate or Certificates,

registered in the name of the transferee, of the same series and maturity, of any denomination or denominations

authorized by the Indenture, and bearing interest at the same rate.

In all cases in which Series 2020 Certificates shall be exchanged or transferred, the Trustee shall execute

and deliver Series 2020 Certificates in accordance with the Indenture. All Series 2020 Certificates surrendered in

any such exchange or transfer shall forthwith be cancelled by the Trustee. The Trustee may make a charge to the

Registered Owner requesting the same for every such exchange or transfer of Series 2020 Certificates sufficient to

reimburse it for any tax or other governmental charge required to be paid with respect to such exchange or transfer,

and such charge shall be paid before any such new Certificate shall be delivered. The fees and charges of the

- 5 -

Trustee for making any transfer or exchange hereunder and the expense of any certificate printing necessary to

effect such transfer or exchange shall be paid by the District.

THE BOOK-ENTRY ONLY SYSTEM

The Depository Trust Company (“DTC”), New York, New York, will act as securities depository for

the Series 2020 Certificates. The Series 2020 Certificates will be delivered 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 Certificate will be issued for each maturity of the

Series 2020 Certificates.

DTC 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, in turn, is owned by a number of Direct

Participants of DTC and Members of the National Securities Clearing Corporation, Fixed Income Clearing

Corporation, and Emerging Markets Clearing Corporation (NSCC, FICC and EMCC, also subsidiaries of

DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National

Association of Securities Dealers, Inc. 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 Standard & Poor’s rating of AA+. The DTC Rules applicable to its Participants are

on file with the Securities and Exchange Commission. More information about DTC can be found at

www.dtcc.com.

Purchases of Series 2020 Certificates under the DTC system must be made by or through Direct

Participants, which will receive a credit for the Series 2020 Certificates on DTC’s records. The ownership

interest of each actual purchaser of each Certificate (“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 Series 2020 Certificates

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

Series 2020 Certificates, except in the event that use of the book-entry system for the Series 2020 Certificates is

discontinued.

To facilitate subsequent transfers, all Series 2020 Certificates 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 Series 2020 Certificates 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 Series 2020 Certificates; DTC’s records reflect only

the identity of the Direct Participants to whose accounts such Series 2020 Certificates 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/

- 6 -

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 Series 2020 Certificates may wish to take certain steps to augment the

transmission to them of notices of significant events with respect to the Series 2020 Certificates, such as

prepayments, defaults, and proposed amendments to the related documents. For example, Beneficial Owners of

Series 2020 Certificates may wish to ascertain that the nominee holding the Series 2020 Certificates 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.

Prepayment notices shall be sent to DTC. If less than all of the Series 2020 Certificates 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.

Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Series

2020 Certificates unless authorized by a Direct Participant in accordance with DTC’s Procedures. Under its usual

procedures, DTC mails an Omnibus Proxy to the District 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 Series

2020 Certificates are credited on the record date (identified in a listing attached to the Omnibus Proxy).

Payments of Principal Components and Interest Components on the Certificates 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

District or the Trustee, on each 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 nor its nominee, the Trustee, or the

District, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of

prepayment 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 District or the Trustee,

disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of

such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.

DTC may discontinue providing its services as depository with respect to the Series 2020 Certificates

at any time by giving reasonable notice to the District or the Trustee. Under such circumstances, in the event

that a successor depository is not obtained, Series 2020 Certificates are required to be printed and delivered.

The District may decide to discontinue use of the system of book-entry transfers through DTC (or a

successor securities depository). In that event, Series 2020 Certificates will be printed and delivered.

The information in this section concerning DTC and DTC’s book-entry system has been obtained

from sources that the District believes to be reliable, but the District takes no responsibility for the

accuracy thereof, and neither the DTC Participants nor the Beneficial Owners should rely on the

foregoing information with respect to such matters but should instead confirm the same with DTC or the

DTC Participants, as the case may be.

Transfer Outside Book-Entry Only System

If the Book-Entry Only System is discontinued the following provisions would apply. The Series 2020

Certificates are transferable only upon the Register upon presentation and surrender of the Series 2020

Certificates, together with instructions for transfer. Series 2020 Certificates may be exchanged for other Series

2020 Certificates of any denomination authorized by the Indenture in the same aggregate principal amount,

series, payment date and interest rate, upon presentation to the Trustee, subject to the terms, conditions and

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limitations and upon payment of any tax, fee or other governmental charge required to be paid with respect to

any such registration, exchange or transfer.

SECURITY FOR THE SERIES 2020 CERTIFICATES

Nature of Series 2020 Certificates; Limited Obligations

Each Series 2020 Certificate evidences the undivided interest of the Owner thereof in the right to receive

Rental Payments from the District under the Lease Agreement, and other payments, revenues and receipts derived

under the Lease Agreement (including, in certain circumstances, Certificate proceeds and income from the

temporary investment thereof and proceeds from insurance and condemnation awards), and are secured by a pledge

and assignment of the Trust Estate granted by the Trustee in favor of the Owners of the Series 2020 Certificates, as

provided in the Indenture.

Neither the Lease Agreement nor the Series 2020 Certificates shall constitute a liability or obligation of

the District beyond the Lease Term in effect at any time. The Series 2020 Certificates shall not constitute a general

obligation or indebtedness of the District within the meaning of any constitutional or statutory debt limitation or

restriction. The Lease Agreement is subject to termination on an annual basis at the option of the District.

The Original Term of the Lease Agreement shall commence on the date of its delivery (the

“Commencement Date”), and subject to earlier termination pursuant to the provisions thereof, shall terminate on

the last day of the District’s current fiscal year (i.e., June 30, 2021). The Lease Term may be extended, solely at

the option of the District, at the end of the Original Term or any Renewal Term for an additional one-year Renewal

Term for up to the final Renewal Term to expire not later than June 30, 2045. Under the terms of the Lease

Agreement, if the District elects to renew the Lease Agreement at the end of the Original Term or any Renewal

Term, it is obligated to budget, appropriate and set aside a portion of its revenues derived from property taxes and

other sources, which appropriation shall be sufficient to make the Rental Payments coming due during the ensuing

fiscal year.

The District is obligated to make two annual Rental Payments to the Trustee at least 15 days prior to each

Certificate Payment Date during each fiscal year in which the Lease Agreement is in effect, which payments

represent the Principal Components, redemption premium, if any, and Interest Components of Rental Payments

represented by the Series 2020 Certificates becoming due during such fiscal year (but only if the District elects to

renew the Lease Agreement for each Renewal Term). THERE CAN BE NO ASSURANCE THAT THE

DISTRICT WILL APPROPRIATE FUNDS FOR RENTAL PAYMENTS OR RENEW THE LEASE

AGREEMENT AFTER THE ORIGINAL TERM. NEITHER THE SERIES 2020 CERTIFICATES NOR THE

LEASE AGREEMENT CONSTITUTE A GENERAL OBLIGATION OR OTHER INDEBTEDNESS OF THE

DISTRICT, NOR A MANDATORY PAYMENT OBLIGATION IN ANY FISCAL YEAR SUBSEQUENT TO

A FISCAL YEAR IN WHICH THE LEASE AGREEMENT IS IN EFFECT. THE DISTRICT IS NOT

LEGALLY REQUIRED TO BUDGET OR APPROPRIATE MONEYS FOR ANY SUBSEQUENT FISCAL

YEAR BEYOND THE CURRENT FISCAL YEAR.

The District will have the option to purchase the Trustee’s title and interest in the Facilities as provided in

the Indenture and the Lease Agreement. See “DEFINITIONS OF TERMS AND SUMMARIES OF CERTAIN

DOCUMENTS – SUMMARY OF THE LEASE AGREEMENT - Option to Purchase the Facilities,” and

“SUMMARY OF THE INDENTURE - Satisfaction and Discharge of the Indenture” in Appendix C hereto.

Property Subject to the Base Lease and the Lease Agreement

Pursuant to the provisions of the Base Lease and the Lease Agreement between the Trustee and the District,

(a) the District will lease the Site to the Trustee for a term ending June 30, 2070, (b) the proceeds of the Series 2020

Certificates will be used to pay the costs of the Project and pay costs related to the delivery of the Series 2020

Certificates as described in this Official Statement, and (c) the Trustee will lease the Facilities (including of the Site

and the improvements thereon, as described below) to the District for an initial term ending June 30, 2021 (the

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“Original Term”), with successive one-year renewal options, provided that the final renewal term does not extend

beyond June 30, 2045 (the “Renewal Terms”), which Renewal Terms are subject to annual budget appropriations.

The Site includes approximately 20 acres located on a portion of the MCC Penn Valley campus generally

bounded by 31st St. on the North, Pennsylvania Avenue on the east, 33rd St. on the south, and Southwest

Trafficway on the west. The Site includes several connected buildings and other buildings constructed with

brick veneer and provide educational facilities related to approximately 10 different fields of education or

training. The Site also includes some surface parking lots. The buildings located on the Site are insured for

approximately $108,562,000.

Parity Obligations

Additional Certificates may be delivered without the consent of the Owners of the Certificates (a) to

refund the Certificates of any series in a manner which provides present value debt service savings to the District

or (b) to make additional improvements as the District may deem necessary, so long as the total principal amount

of all Certificates then Outstanding under the Indenture does not exceed $60,000,000.

All Additional Certificates will be secured by the lien of the Indenture, the Lease Agreement and the

Base Lease, and will rank on parity with the Series 2020 Certificates and any Additional Certificates. Unless

provided otherwise in a supplement to the Indenture, any Additional Certificates will be in substantially the same

form as the Series 2020 Certificates, but will bear such date or dates, bear such interest rate or rates, have such

payment date or dates, prepayment dates and prepayment premiums, and be issued at such prices as are approved

in writing by the District, subject to the requirements of the Indenture.

THE TRUSTEE

UMB Bank, N.A., Kansas City, Missouri, a national banking association authorized to transact business in

the State of Missouri, will be the Trustee under the Indenture and a party to the Lease Agreement and the Base Lease.

The Trustee may consult with counsel, and the opinion of such counsel will be full and complete authorization and

protection with respect to any action taken or suffered by the Trustee in good faith in accordance with such opinion.

The Trustee may execute any trusts or powers or perform the duties required by the Indenture, the Lease Agreement

or the Base Lease by or through attorneys, agents or receivers and will not be answerable for the default or

misconduct of any such attorney, agent or receiver selected by it in good faith.

The Series 2020 Certificates are executed by the Trustee, not individually or personally but solely as Trustee

under the Indenture, in the exercise of the power and authority conferred upon and invested in it as such Trustee.

Except for its negligence or willful misconduct, nothing contained in the Indenture, the Lease Agreement or the Base

Lease is to be construed as creating any liability on the Trustee, individually or personally, to perform any covenant

either expressed or implied in the Certificates, the Indenture, the Lease Agreement or the Base Lease, all such

liability, if any, being expressly waived by the Owners of the Certificates by the acceptance thereof and by each and

every person now or hereafter claiming by, through or under the Trustee or the Owners of the Certificates. Insofar

as the District is concerned, the Trustee and the Owner of any Certificate and any person claiming by, through or

under the Trustee or the Owner of any Certificate may look solely to the Trust Estate described in the Indenture for

payment of the interests evidenced by the Certificates.

As security for the compensation, expenses, disbursements and indemnification to which it is entitled upon

the occurrence of an Event of Default under the Indenture or an Event of Nonappropriation under the Lease

Agreement, the Trustee will have a first lien with right of payment prior to payment on account of any Principal

Components or Interest Components with respect to the Certificates for such compensation, expenses, disbursements

and indemnification.

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RISK FACTORS AND INVESTMENT CONSIDERATIONS

The purchase of the Series 2020 Certificates involves certain investment risks that are discussed

throughout this Official Statement. Each prospective purchaser of the Series 2020 Certificates should make an

independent evaluation of all of the information presented in this Official Statement in order to make an informed investment decision. Certain risk factors relating to the Series 2020 Certificates are described below.

General

The following is a discussion of certain risks that could affect the Rental Payments and other payments

to be made by the District with respect to the Lease Agreement and the Series 2020 Certificates. In order to

identify risk factors and make an informed investment decision, potential investors should be thoroughly familiar

with this entire Official Statement (including the Appendices hereto) in order to make a judgment as to whether

the Series 2020 Certificates are an appropriate investment. Prospective purchasers of the Series 2020 Certificates

should consider carefully all possible factors that may result in a default in the payment of the Principal

Component or Interest Component of Rental Payments represented by the Series 2020 Certificates, by the

District under the Lease Agreement, the prepayment of the Series 2020 Certificates prior to maturity or the

determination that the Interest Component of the Rental Payments represented by the Series 2020 Certificates

might be includible in gross income for purposes of federal and Missouri income taxation. The following list of

possible factors, while not setting forth all the factors that must be considered, contains some of the factors that

should be considered prior to purchasing the Series 2020 Certificates. This discussion of risk factors is not,

and is not intended to be, comprehensive or exhaustive.

Right of the District to Terminate the Lease Agreement Annually by Declining to Appropriate Funds

The District’s obligations under the Lease Agreement may be terminated on an annual basis by the District

without any penalty and there is no assurance that the District will renew the Lease Agreement. The likelihood that

the District will renew the Lease Agreement throughout the Lease Term is dependent upon certain factors which

are beyond the control of the owners of the Series 2020 Certificates, including (a) the continuing need of the District

for facilities such as the Facilities, (b) the demographic conditions within the District, and (c) the ability of the

District to generate sufficient funds from taxes and other sources to pay its obligations under the Lease Agreement

and the other obligations of the District.

The Board of Trustees of the District has declared its current intention and expectation that the Lease

Agreement will be renewed annually until the Trustee’s leasehold interest in the Facilities is acquired by the

District. Such a declaration cannot be construed as contractually obligating or otherwise binding the District.

Neither the payment of the Rental Payments by the District under the Lease Agreement nor any payments under

the Series 2020 Certificates constitutes a general obligation or other indebtedness of the District or a mandatory

payment obligation of the District in any fiscal year subsequent to a fiscal year in which the Lease Agreement is in

effect.

The obligation of the District to pay Rental Payments and Additional Payments is limited to those District

funds which are specifically budgeted and appropriated annually by the Board of Trustees of the District for such

purpose. The failure to renew the Lease Agreement would mean the loss of occupancy of the Facilities by the

District for the remainder of the term of the Base Lease, which terminates no later than June 30, 2070.

Upon the occurrence of an Event of Default or an Event of Nonappropriation, the Trustee would exercise

its available remedies under the Base Lease, the Lease Agreement and the Indenture against the District including

the sale or lease of its interest in the Facilities on behalf of the owners of the Series 2020 Certificates. The Trustee’s

interest in the Facilities is the leasehold estate in the Site and the improvements thereon granted by the Base Lease.

The moneys derived from any sale or lease of its interest in the Facilities, along with other moneys then held by the

Trustee under the provisions of the Indenture (with certain exceptions as provided in the Lease Agreement and the

Indenture), are required to be used to pay the Rental Payments to the extent moneys are available. Owners of the

Series 2020 Certificates are cautioned, however, that due to the nature of the Site and the limited uses that can be

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made of the improvements located thereon, the ability of the Trustee to relet or sell its leasehold interest in the Site

will be extremely limited. Such limitations may impair the Trustee’s ability to sell any portions of the Site or assign

or sublease the Site upon the occurrence of an Event of Default or Event of Nonappropriation or to obtain an amount

that would be sufficient to pay the Rental Payments related to the Certificates then Outstanding.

Delays in Exercising Remedies

A termination of the District’s right of possession of the Facilities under the Lease Agreement as a result

of an Event of Default or an Event of Nonappropriation or expiration of the term of the Lease Agreement at the

end of the Original Term or any Renewal Term without an extension for the next succeeding Renewal Term will

give the Trustee the right to possession of, and the right to sell, relet or assign its interest in the Facilities in

accordance with the provisions of the Base Lease, the Lease Agreement and the Indenture. However, the

enforceability of the Base Lease, the Lease Agreement and the Indenture is subject to applicable bankruptcy

laws and trust instruction procedures available under the laws of certain states, equitable principles affecting the

enforcement of creditors’ rights generally and liens securing such rights, the exercise of judicial authority by

State of Missouri, jurisdictions other than the State of Missouri potentially having jurisdiction under trust

instruction procedure laws, or federal courts and the exercise by the United States of America of the powers

delegated to it by the U.S. Constitution.

Further, the Facilities are used by the District for the performance of its governmental functions. Due

to the governmental use of the Facilities and the delays inherent in obtaining possession of the Facilities and

other judicial remedies, no assurance can be given that (1) a court, in the exercise of judicial discretion, would

enforce these remedies in a timely manner, or (2) any money realized by the Trustee upon an exercise of any

remedies would be sufficient to pay in full the Principal Components and Interest Components of Rental

Payments with respect to the Series 2020 Certificates. The legal opinions to be delivered with the delivery of the

Series 2020 Certificates will be qualified as they relate to the enforceability of the various legal instruments by

reference to the limitations on enforceability of those instruments under (1) applicable bankruptcy, insolvency,

reorganization or similar laws affecting the enforcement of creditors’ rights, (2) general principles of equity, and

(3) the exercise of judicial discretion in appropriate cases. If such money is insufficient to pay all outstanding

Series 2020 Certificates in full, the Series 2020 Certificates would be paid in part on a pro rata basis. Any delays

in the ability of the Trustee to obtain possession of the Facilities will, of necessity, result in delays in any payment

of Principal Components and Interest Components of Rental Payments with respect to the Series 2020

Certificates.

Changes in Economic, Demographic and Market Conditions

Changes in real estate market conditions in the Kansas City area, as well as changes in general or local

demographic or economic conditions, could adversely affect the value of the property located within the District

and the level of economic activity in the District and, consequently, the amounts of real estate taxes and other

revenues generated by the District. Such changes could also have an adverse impact on the financial condition

of the District and, thus, the District resources available for appropriation for the payment of the Rental Payments

with respect to the Series 2020 Certificates.

Destruction of the Facilities

The Lease Agreement requires certain portions of the Facilities to be insured as described in

“SUMMARY OF THE LEASE AGREEMENT – Insurance” in Appendix C hereto. If the Facilities are damaged

or destroyed, the District is nevertheless required to continue to make payments under the Lease Agreement,

subject to the exercise of its option to extend the term of the Lease Agreement for each next succeeding Renewal

Term and to the application of Net Proceeds from insurance, if any, and certain other sources to repair, restore,

modify, improve or replace the affected portions of the Facilities. If the Net Proceeds from insurance and such

other sources are sufficient to repair, restore, modify, improve or replace the affected portion of the Facilities,

such proceeds are to be so applied. If the Net Proceeds are insufficient for such purpose, (1) the District is

obligated to commence and thereafter complete the work and pay any cost in excess of such net proceeds, but

only from Additional Payments appropriated by the District, in order for the affected portion of the Facilities to

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be repaired, restored and replaced, (2) if the failure to repair or restore does not materially detract from the value

of the Facilities, such net proceeds may be deposited into the Certificate Fund, or (3) the District may apply net

proceeds to the payment of the Option Purchase Price applicable on the next available Optional Payment Date

and, if such net proceeds are insufficient to pay such Option Purchase Price, the District is required under the

Lease Agreement to pay such amounts as are necessary to equal the full Option Purchase Price.

There can be no assurance either as to the adequacy of or timely payment under property damage

insurance in effect at that time or that the District will elect to extend the term of the Lease Agreement for the

next Renewal Term succeeding such damage or destruction. See “SUMMARY OF THE LEASE AGREEMENT

— Damage, Destruction and Condemnation” in Appendix C hereto.

Construction Risks

Weather, labor disputes, availability of materials and supplies, casualty damages, unanticipated subsoil

conditions, unanticipated construction difficulties and other “force majeure” occurrences or events or financial

failure or failure to perform by a contractor, subcontractor or supplier may affect the timely construction of the

Project. No assurance can be given that the acquisition, construction and installation of the Project will be

completed on schedule, within budget or without material errors and defects. Any such failure could affect the

District’s decision to continue appropriations under the Lease Agreement.

Potential Impacts Resulting from Coronavirus (COVID-19)

In December 2019, a novel strain of coronavirus (which leads to the disease known as “COVID-19”),

was discovered in Wuhan, China. Since that date, the virus has spread throughout the world and was

characterized by the World Health Organization as a pandemic on March 11, 2020. The impact of the COVID-

19 pandemic on the U.S. Economy has been broad based and has negatively impacted national, state and local

economies. In response to such expectations, President Trump on March 13, 2020, declared a “national

emergency” which, among other effects, allows the executive branch to disburse disaster relief funds to address

the COVID-19 pandemic and related economic disruption. On March 13, 2020, Governor Parson declared a

State of Emergency in Missouri because of the spread of COVID-19. In an effort to lessen the risk of

transmission of COVID-19, the United States government, state governments, local governments and private

industries have taken measures to limit social interactions, affecting business activities and impacting global,

state and local commerce and financial markets. The Jackson County Executive issued orders for Jackson County

residents on March 22, 2020, as amended April 16, 2020, that includes the District to stay at home except for

essential activities. On April 3, 2020, the Missouri Governor issued a statewide “Stay Home Missouri” Order

effective Monday, April 6, 2020 until April 24, 2020, which states that residents of the State of Missouri are to

avoid leaving their homes or places of residence unless necessary. On April 16, 2020, the Missouri Governor

extended the “Stay Home Missouri” Order until May 3, 2020. Prior to the expiration of the Stay Home Missouri

order, the Governor developed and released a “Show Me Strong Recovery Plan” containing guidelines to reopen

Missouri’s economy. Pursuant to the plan, the Missouri Department of Health and Senior Services issued an

order on April 27, 2020, which is effective May 4, 2020 through May 31, 2020. The order expired on May 31,

2020, but the State of Missouri still recommends that Missourians limit activity and interaction and continue to

maintain social distancing and practice good hygiene to protect its citizens and others, which allows businesses

to open subject to any more restrictive local orders, rules and guidelines. The Jackson County Executive has

amended its order to move to a Phase 2.5 recovery plan that allows most businesses to resume operations at 50%

capacity and to slowly reopen the communities, with more restrictive requirements for large or mass gatherings,

special events and retail operations to resume limited operations and to slowly reopen the communities.

The emergency of COVID-19 and the spread thereof is an emerging and evolving issue. As the federal,

state, and local governments, including the District, continue efforts to contain and limit the spread of COVID-

19 disease, future tax and other revenue collections may deviate from historical or anticipated collections and

may have an adverse impact on the financial position and operations of the District and its ability to fund debt

obligations, including the Series 2020 Certificates, in accordance with their terms. While the District is not able

to predict and makes no representations as to the economic impact of the unprecedented COVID-19 pandemic

on the District or its financial position, management has been taking steps to estimate revenue reductions and

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identify offsetting expenditure reductions. In anticipation of the COVID-19 pandemic, the District has taken

proactive measures to address potential revenue shortfalls. Both the state revenue (26% of General Fund

revenues) and the tuition & fees (36% of General Fund revenues) are expected to be influenced by the pandemic.

Both were adjusted downward 8.33% and 3.56% respectively in the FY 2020-2021 Adopted Budget. It should

also be noted that the District has been designated eligible for in excess of $10 million dollars of Cares Act

funding to address these shortfalls, and any others that have not been identified to date. In addition, the District

has strong fund balance reserves which are designed to allow for continued core operations while the District

learns the true extent of the effects on revenues. This financial flexibility will then facilitate management taking

a measured approach to controlling discretionary spending during the recovery.

Results of a Termination of the Lease Term

In the event that the Board of Trustees of the District does not budget and appropriate, specifically with

respect to the Lease Agreement, on or before July 1 of each year, moneys sufficient to pay all Rental Payments and

the reasonably estimated Additional Payments coming due for the next Lease Term, an “Event of

Nonappropriation” shall be deemed to have occurred.

Special Counsel has rendered no opinion with respect to the applicability or inapplicability of the

registration requirements of the Securities Act of 1933, as amended, to any Certificate subsequent to a termination

of the Lease Term by reason of an Event of Nonappropriation or an Event of Default. If the Lease Term is

terminated by reason of either such event, there is no assurance that the Series 2020 Certificates may be transferred

by a holder thereof without compliance with the registration provisions of the Securities Act of 1933, as amended,

or the availability of an exemption therefrom.

Special Counsel has rendered no opinion with respect to the income tax consequences applicable to the

Interest Component of Rental Payments represented by the Series 2020 Certificates subsequent to a termination of

the Lease Term by reason of an Event of Nonappropriation or an Event of Default. If the Lease Term is terminated

by reason of either such event there is no assurance that the Interest Component of such Rental Payments will

remain excludable from gross income for federal or Missouri income tax purposes.

See “DEFINITIONS OF TERMS AND SUMMARIES OF CERTAIN DOCUMENTS – SUMMARY OF

THE LEASE AGREEMENT” in Appendix C hereto for a discussion of the results of an Event of Nonappropriation,

and the ability of the Trustee to waive, under certain circumstances, the effects of the occurrence of an Event of

Nonappropriation without notice to or the consent of the registered owners of the Series 2020 Certificates.

Cybersecurity Risks

The District relies on its information systems to provide security for processing, transmission and

storage of confidential and other credit information. It is possible that the District’s security measures will not

prevent improper or unauthorized access or disclosure of personally identifiable information resulting from

cyber-attacks. Security breaches, including electronic break-ins, computer viruses, attacks by hackers and similar

breaches can create disruptions or shutdowns of the District and the services it provides, or the unauthorized

disclosure of confidential and other credit information. If personal or otherwise protected information is

improperly accessed, tampered with or distributed, the District may incur significant costs to remediate possible

injury to the affected persons, and the District may be subject to sanctions and civil penalties if it is found to be

in violation of federal or state laws or regulations. Any failure to maintain proper functionality and security of

information systems could interrupt the District’s operations, delay receipt of revenues, damage its reputation,

subject it to liability claims or regulatory penalties and could have a material adverse effect on its operations,

financial condition and results of operations.

Parity Obligations

The Indenture provides for the future delivery of Additional Certificates that, if delivered, would rank

on a parity with the Series 2020 Certificates and any other Additional Certificates then Outstanding under the

Indenture. Additional Certificates may be delivered for any purpose without the consent of or notice to the

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Registered Owners of the Series 2020 Certificates (i) if the Additional Certificates are being issued to refund

Certificates to provide present value debt service savings for the District, or (ii) if Additional Certificates to be

issued are in an amount, together with all other Certificates then Outstanding, not to exceed $60,000,000. There

is no requirement to provide additional property in connection with the delivery of Additional Certificates that

would be subject to the terms of the Base Lease or the Lease Agreement. The delivery of Additional Certificates

without a corresponding addition to the Facilities could reduce the likelihood that, in the Event of Default or

Event of Nonappropriation by the District, the Trustee would be able to relet or assign its interest in the Facilities

for the amount necessary (after taking into account money legally available from other sources) to pay in full

the Principal Components and Interest Components of Rental Payments then due with respect to the Certificates.

Bankruptcy

In addition to the limitations on remedies contained in the Indenture, the Base Lease and the Lease

Agreement, the rights and remedies provided in the Indenture and the Lease Agreement may be limited by and

are subject to bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance, moratorium and

other laws affecting creditors’ rights, to the application of equitable principles, to the exercise of judicial

discretion in appropriate cases and to limitations on legal remedies against public agencies.

Pension and Other Postemployment Benefits

The District contributes to the state-wide retirement systems created by Chapter 169 of the Revised

Missouri Statutes to provide retirement allowances for substantially all of its employees. Teachers and

administrators are covered by the Public School Retirement System of Missouri (PSRS), and staff are covered by

the Public Education Employee Retirement System of Missouri (PEERS). See “THE DISTRICT – GENERAL

– Pension and Employee Retirement Plans” in Appendix A of this Official Statement. See “FINANCIAL

INFORMATION CONCERNING THE DISTRICT – Pension and Employee Retirement Plans” in

Appendix A of this Official Statement. Future required contribution increases beyond the current fiscal year may

require the District to increase its revenues, reduce its expenditures, or some combination thereof, which may

impact the District’s operations or limit the District’s ability to generate additional revenues in the future.

For more information specific to the District’s participation, including the District’s past contributions,

net pension liability, and pension expense, see Note 6 to the District’s financial statements included in Appendix

B to this Official Statement.

The District also sponsors a single-employer defined benefit other postemployment benefit plan that

provides life insurance, medical, vision and dental benefit to all qualifying retirees and their dependents. Under

the plan, an employee who meets the retirement criteria must have opted to retire before July 1, 2013 to receive

these benefits. The criteria for retirement is the active employee must either be at least 55 with 10 years of

consecutive full-time service, or have 30 years of full-time service. No assets are accumulated in a trust that

meets the criteria in paragraph 4 of GASB Statement No. 75. For more information about the other

postemployment benefits for the District’s employees, see Note 5 to the District’s financial statements included

in Appendix B to this Official Statement.

Amendment of the Indenture, the Lease Agreement and the Base Lease

Certain amendments to the Indenture, the Base Lease and the Lease Agreement may be made without

notice to or the consent of the owners of the Certificates (including amendments relating to the delivery of

Additional Certificates). Certain other amendments to the Indenture and the Lease Agreement may be made

with the consent of the owners of not less than a majority in principal amount of the Certificates (including any

Additional Certificates which may be hereafter issued) then outstanding affected by such supplemental

indentures or supplemental leases. Such amendments may adversely affect the security of the owners of the

Certificates. In addition to the foregoing, in some jurisdictions outside the State of Missouri, there are a variety

of trust instruction procedure (“TIP”) statutes, which generally allow judicially supervised remedies for trust

estates of trustees that have a nexus, such as the Trustee’s office, with such jurisdiction. Under such TIP statutes,

such jurisdictions may allow or order the Trustee to amend the documents relating to the Certificates, including

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the Base Lease, the Lease Agreement and the Indenture, in contravention of the manner provided for in these

documents, including without limitation allowing the Trustee to disregard provisions requiring the consent of

the holders of the Certificates prior to certain amendments of these documents.

The Hancock Amendment

An amendment to the Missouri Constitution limiting taxation and government spending was approved

by Missouri voters on November 4, 1980. This amendment limits the ability of the District to impose new or

increased taxes to provide funding for the payment of the Series 2020 Certificates, or other governmental

purposes of the District, without voter approval. The amendment (commonly known as the Hancock

Amendment) limits the rate of increase and the total amount of taxes which may be imposed in any Fiscal Year,

and the limit may not be exceeded without voter approval. The tax rate ceiling, determined annually, is the rate

of levy which, when charged against the newly assessed valuation of the District for the current year, excluding

new construction and improvements, will produce an amount of tax revenues equal to tax revenues for the previous

year increased by 5% or the Consumer Price Index, whichever is lower. The limitation on local governmental

units does not apply to taxes imposed for the payment of principal of and interest on general obligation bonds

approved by the requisite percentage of voters.

The Hancock Amendment also requires political subdivisions of the State to obtain voter approval in

order to increase any “tax, license or fee.” The precise meaning and application of the phrase “tax, license or

fee” is unclear, but decisions of the Missouri Supreme Court have indicated that it does not apply to traditionally

set user fees. The limitations imposed by the Hancock Amendment restrict the District’s ability to increase many

but not all taxes, licenses and certain fees without obtaining voter approval.

In 2008, through the enactment of Senate Bill 711 (“SB 711”), the Missouri General Assembly approved

further limitations on the amount of property taxes that can be imposed by a political subdivision such as the

District. Prior to the enactment of SB 711, a Hancock rollback would not necessarily result in a reduction of the

District’s property tax levy if its current tax levy was less than its current tax levy ceiling, due to the District’s

voluntary rollback from the maximum authorized tax levy. The property tax levy is the levy actually imposed

by a political subdivision while the tax rate ceiling is the maximum levy the political subdivision may impose

under the provisions of the Hancock Amendment. Under SB 711, in reassessment years (odd-numbered years),

the Hancock rollback is applied to a political subdivision’s actual property tax levy, regardless of whether that

levy is at the political subdivision’s tax levy ceiling. This further reduction is sometimes referred to as an

“SB 711 rollback.” In non-reassessment years (even-numbered years), the property tax levy may be increased

to the political subdivision’s tax levy ceiling (as adjusted by the Hancock rollback), only after a public hearing

and adoption of a resolution or policy statement justifying the action.

Other Factors

One or more of the following factors or events could adversely affect the District’s operations and

financial performance to an extent that cannot be determined at this time:

1. Changes in Administration. Changes in key administrative personnel could affect the capability of

the management of the District.

2. Future Economic Conditions. Adverse economic conditions or changes in demographics in the

District, increased unemployment and inability to control expenses in periods of inflation, could

adversely impact the District’s financial condition.

3. Gifts, Grants and Bequests. The District solicits gifts and bequests for both current operating

purposes and other needs. In addition, the District and its students receive various grants from

private foundations and from agencies of the state and federal governments. There can be no

assurance that the amount of girls, grants and bequests received by the District and its students will

remain stable or increase in the future.

- 15 -

4. Enrollment. No assurance can be given that enrollment will remain at current levels. A significant

decrease in the District’s enrollment could adversely affect the District’s financial position and

results of operations.

5. Financial Aid. A significant percentage of the District's students receive financial support in the

form of federally supported loans and scholarships and grants. There can be no assurance that the

amount of federally supported loans or other financial aid will remain stable or increase in the

future. Any change in the availability of financial aid could adversely affect the District's

enrollment. Any significant decrease in enrollment could adversely affect the District's financial

position and results of operations.

6. Tuition. A significant portion of the District's operating revenues is provided through tuition and

related fees. The District has increased tuition recently, and anticipates that tuition will continue to

increase in future years. Although the District in the past has been able to raise tuition and related

fees without adversely affecting enrollment, there can be no assurance that it will continue to be

able to do so in the future. Future tuition increases could adversely affect enrollment, which could

adversely affect the District's financial position and results of operations.

7. State Aid. A significant portion of the District's revenues is provided from the State of Missouri.

There is no assurance that state aid will remain stable or continue to increase. The budgetary

pressures experienced by the State in recent years due to overall declines, coupled with increases in

spending in other areas, have resulted in lower State appropriations for the District and many other

governmental institutions and agencies in the State than previous years. Future changes in state

aid or reductions in state aid, as have occurred in recent years, could adversely affect the District's

financial position and results of operations.

8. Competition from Other Educational Providers. Increased competition from other educational

facilities, which may offer comparable programs, which could adversely affect the ability of the

District to maintain enrollment, or which could adversely affect the ability of the District to attract

faculty and other staff.

9. Organized Labor Efforts. Efforts to organize employees of the District into collective bargaining

units could result in adverse labor actions or increased labor costs.

10. Insurance Claims. Increases in the cost of general liability insurance coverage and the amounts

paid in settlement of liability claims not covered by insurance could adversely impact the District’s

financial performance.

11. Environmental Hazards. The District has covenanted in the Lease Agreement to comply with all

applicable environmental laws. No environmental studies have been performed with respect to the

Facilities. The District is not aware of any environmental condition at the Facilities or any of the

District’s other property that requires any present remedial action. The discovery of such a

condition with respect to the Facilities may adversely affect the District’s willingness to renew the

Lease Agreement after the expiration of any Renewal Term and the discovery of such a condition

with respect to any of the other property of the District could adversely impact the District’s

financial performance.

12. Natural Disasters. The occurrence of natural disasters, such as tornadoes, earthquakes, pandemics,

floods or droughts, could damage the facilities of the District, interrupt services or otherwise impair

operations and the ability of the District to produce revenues.

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No Reserve Fund or Credit Enhancement

No debt service reserve fund, financial guaranty insurance policy, letter of credit or other credit

enhancement will be issued to insure payment of the Principal Component or Interest Component due with respect

to the Series 2020 Certificates. Accordingly, any potential purchaser of the Series 2020 Certificates should

consider the financial ability of the District to pay Rental Payments under the Lease Agreement.

Taxability

The Series 2020 Certificates are not subject to prepayment nor is the interest rate subject to adjustment

in the event of a determination by the Internal Revenue Service or a court of competent jurisdiction that the

Interest Component paid or to be paid on any Series 2020 Certificate is or was includible in the gross income of

the Owners of the Series 2020 Certificates for federal income tax purposes. It may be that Owners of the

Series 2020 Certificates would continue to hold their certificates, receiving Principal Components and

Interest Components as and when due, but would be required to include such payments of Interest

Component in gross income for federal income tax purposes. Special Counsel expresses no opinion as to

the federal tax exemption of Interest Component on the Series 2020 Certificates in the event of payment

thereof (a) if the District fails to budget and appropriate sufficient moneys to pay the Rental Payments

under the Lease Agreement or (b) the Lease Agreement terminates for any reason.

Risk of Audit

The Internal Revenue Service has established an ongoing program to audit tax-exempt obligations to

determine the legitimacy of the tax status of such obligations. No assurance can be given that the Internal

Revenue Service will not commence an audit of the Series 2020 Certificates. Owners of the Series 2020

Certificates are advised that, if an audit of the Series 2020 Certificates were commenced, in accordance with its

current published procedures, the Internal Revenue Service is likely to treat the District as the taxpayer, and the

Owners of the Series 2020 Certificates may not have a right to participate in such audit. Public awareness of

any audit could adversely affect the market value and liquidity of the Series 2020 Certificates during the

pendency of the audit, regardless of the ultimate outcome of the audit.

Loss of Premium from Prepayment

Any person who purchases a Series 2020 Certificate at a price in excess of its principal amount or who

holds such Certificate trading at a price in excess of par should consider the fact that the Series 2020 Certificates

are subject to prepayment prior to maturity at the prepayment prices described herein in the event such Series

2020 Certificates are prepaid prior to maturity. See the section herein captioned “THE SERIES 2020

CERTIFICATES – Prepayment Provisions.”

Secondary Market

The Underwriter will not be obligated to repurchase any of the Series 2020 Certificates, and no

representation is made concerning the existence of any secondary market for the Series 2020 Certificates. No

assurance is given that any secondary market will develop following the completion of the offering of the Series

2020 Certificates and no assurance is given that the initial offering price for the Series 2020 Certificates will

continue for any period of time.

The lowering or withdrawal of the investment rating initially assigned to the Series 2020 Certificates

could adversely affect the market price for and the marketability of the Series 2020 Certificates. Prices of

municipal securities in the secondary market are subject to adjustment upward and downward in response to

changes in the credit markets and changes in operating performance of the entities operating its facilities subject

to the municipal securities. From time to time the secondary market trading in selected issues of municipal

securities will fluctuate as a result of the financial condition or market position of the underwriter, prevailing

market conditions, or a material adverse change in the operations of the District, whether or not the subject

securities are in default as to principal and interest payments, and other factors which may give rise to uncertainty

- 17 -

concerning prudent secondary market practices. Municipal securities are generally viewed as long-term

investments, subject to material unforeseen changes in the investor’s circumstances, and may require

commitment of the investor’s funds for an indefinite period of time, perhaps until maturity.

Defeasance Risks

When all Certificates are deemed paid as provided in the Indenture (See “SUMMARY OF THE

INDENTURE – Satisfaction and Discharge of the Indenture” and “– Certificates Deemed to be Paid” in

Appendix C hereto), the Indenture will be released and terminated and the Facilities encumbered by the Base

Lease and the Lease Agreement as security for the Certificates will be released. Any Certificate shall be deemed

to be paid when (a) payment of the Principal Component of Rental Payments evidenced by such Certificate and

premium, if any, thereon and the Interest Component of Rental Payments payable with respect thereto, whether

such payment is by reason of the stated payment date or upon prepayment as provided in the Indenture, either

(i) has been made in accordance with the terms thereof, or (ii) has been provided by irrevocably depositing, in

trust and irrevocably set aside exclusively for such payment, (1) cash sufficient to make such payment and/or

(2) Defeasance Obligations, maturing as to principal and interest in such amounts and at such time as will insure

the availability of sufficient moneys to make such payment. Defeasance Obligations include, in addition to cash

and obligations pre-refunded with cash, bonds, notes, certificates of indebtedness, treasury bills and other

securities constituting direct obligations of, or obligations the principal of and interest on which are fully and

unconditionally guaranteed as to full and timely payment by, the United States of America. Historically, such

United States obligations have been rated in the highest rating category by the rating agencies. There is no legal

requirement in the Indenture, the Base Lease or the Lease Agreement that Defeasance Obligations consisting of

such United States obligations be or remain rated in the highest rating category by any rating agency. Prices of

municipal securities in the secondary market are subject to adjustment upward and downward in response to

changes in the credit markets and that could include the rating of Certificates defeased with Defeasance

Obligations to the extent the Defeasance Obligations have a change or downgrade in rating.

PLAN OF FINANCE

Sources and Uses of Funds

In connection with the sale and delivery of the Series 2020 Certificates, it is contemplated that funds will

be obtained and applied as follows:

Sources of Funds

Principal Amount of Series 2020 Certificates $44,230,000.00*

Net Original Issue Premium

Available funds from the District

Total Sources $

Uses of Funds

Project Costs $

Costs of Delivery including Underwriter’s Discount

Total Uses $

The Project

The Project consists of improvements to the District’s Engineering Technology Center at MCC-Penn Valley, which will include improvements to the facility that includes engineering technology (ETEC),

fabrication lab, and the 3D printing laboratory; improvements to the Advanced Manufacturing Institute to be

* Preliminary, subject to change.

- 18 -

located near MCC-Penn Valley, which will include renovations of an existing structure to house the following

programs: Welding, Heating Ventilation Air Conditioning (HVAC), Industrial Technology (INTE), Building

Maintenance & Construction (BLDM), Computer Integrated Machining Manufacturing (CIMM), and

construction management (CM); and additional facilities located on the MCC-Blue River campus, which will

include improvements for a facility for the following programs: Lineman, Commercial Driver’s License,

Logistics (to accommodate forklift training), and Public Safety Storage for Police and Fire Academy vehicles

and gear.

Additionally, the District intends to construct, renovate, repair, improve, furnish and equip new and

existing facilities and acquire, construct, renovate, improve, furnish and equip real property and other facilities

to accommodate current and future programs.

LITIGATION

There is no action, suit, proceeding or litigation pending against the District, or to the knowledge of the

District or of its officials threatened, which in any way questions or affects the validity of the Lease Agreement,

the Base Lease, the Indenture, the Series 2020 Certificates or any proceedings or transactions relating to their

authorization, sale or delivery, or which would affect the validity of the agreements related to the construction,

operation or management of the Project.

From time to time, claims and litigation against the District arises in the ordinary course of business. The

District, after consultation with counsel, does not believe that the outcome of these matters will have a material

impact on the financial condition of the District, and the District does not believe that such exposure would

materially affect the District’s ability to meet its obligations to pay the Series 2020 Certificates.

TAX MATTERS

The following is a summary of the material federal and State of Missouri income tax consequences of

holding and disposing of the Series 2020 Certificates. This summary is based upon laws, regulations, rulings and judicial decisions now in effect, all of which are subject to change (possibly on a retroactive basis). This

summary does not discuss all aspects of federal income taxation that may be relevant to investors in light of their

personal investment circumstances or describe the tax consequences to certain types of owners subject to special treatment under the federal income tax laws (for example, dealers in securities or other persons who do not hold

the Series 2020 Certificates as a capital asset, tax-exempt organizations, individual retirement accounts and

other tax deferred accounts, and foreign taxpayers) and, except for the income tax laws of the State of Missouri, does not discuss the consequences to an owner under any state, local or foreign tax laws. The summary does

not deal with the tax treatment of persons who purchase the Series 2020 Certificates in the secondary market. Prospective investors are advised to consult their own tax advisors regarding federal, state, local and other tax

considerations of holding and disposing of the Series 2020 Certificates.

Opinion of Special Counsel

In the opinion of Gilmore & Bell, P.C., Special Counsel, under the law existing as of the issue date of

the Series 2020 Certificates:

Federal and Missouri Tax Exemption. The Interest Component of the Rental Payments paid by the

District under the Lease Agreement and distributed to the owners of the Series 2020 Certificates (including any

original issue discount properly allocable to an owner thereof) is excludable from gross income for federal and

Missouri income tax purposes and is exempt from income taxation by the State of Missouri.

Alternative Minimum Tax. The Interest Component is not an item of tax preference for purposes of

computing the federal alternative minimum tax.

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Bank Qualification. The Series 2020 Certificates are not “qualified tax-exempt obligations” within the

meaning of Section 265(b)(3) of the Code.

Special Counsel’s opinions are provided as of the date of the original delivery of the Series 2020

Certificates, subject to the condition that the District comply with all requirements of the Code that must be

satisfied subsequent to the delivery of the Series 2020 Certificates in order that the Interest Component be, or

continue to be, excludable from gross income for federal and Missouri income tax purposes. The District has

covenanted to comply with all such requirements. Failure to comply with certain of such requirements may

cause the inclusion of the Interest Component in gross income for federal and State of Missouri income tax

purposes retroactive to the date of delivery of the Series 2020 Certificates. Special Counsel is expressing no

opinion regarding other federal, state or local tax consequences arising with respect to the Series 2020

Certificates but has reviewed the discussion under the section herein captioned “TAX MATTERS.”

Other Tax Consequences

Original Issue Discount. For federal income tax purposes, original issue discount (“OID”) is the excess

of the stated redemption price at maturity of a Series 2020 Certificate over its issue price. The issue price of a

Series 2020 Certificate is the first price at which a substantial amount of the Series 2020 Certificates of that

maturity have been sold (ignoring sales to bond houses, brokers, or similar persons or organizations acting in the

capacity of underwriters, placement agents, or wholesalers). Under Section 1288 of the Code, OID on tax-

exempt obligations accrues on a compound basis. The amount of OID that accrues to an owner of a Series 2020

Certificate during any accrual period generally equals (1) the issue price of that Series 2020 Certificate, plus the

amount of OID accrued in all prior accrual periods, multiplied by (2) the yield to maturity on that Series 2020

Certificate (determined on the basis of compounding at the close of each accrual period and properly adjusted

for the length of the accrual period), minus (3) any Interest Component payable on that Series 2020 Certificate

during that accrual period. The amount of OID accrued in a particular accrual period will be considered to be

received ratably on each day of the accrual period, will be excludable from gross income for federal income tax

purposes, and will increase the owner’s tax basis in that Series 2020 Certificate. Prospective investors should

consult their own tax advisors concerning the calculation and accrual of OID.

Original Issue Premium. If a Series 2020 Certificate is issued at a price that exceeds the stated

redemption price at maturity of the Series 2020 Certificate, the excess of the purchase price over the stated

redemption price at maturity constitutes “premium” on that Series 2020 Certificate. Under Section 171 of the

Code, the purchaser of that Series 2020 Certificate must amortize the premium over the term of the Series 2020

Certificate using constant yield principles, based on the purchaser’s yield to maturity. As premium is amortized,

the owner’s basis in the Series 2020 Certificate and the amount of tax-exempt Interest Component received will

be reduced by the amount of amortizable premium properly allocable to the owner. This will result in an increase

in the gain (or decrease in the loss) to be recognized for federal income tax purposes on sale or disposition of the

Series 2020 Certificate prior to its maturity. Even though the owner’s basis is reduced, no federal income tax

deduction is allowed. Prospective investors should consult their own tax advisors concerning the calculation

and accrual of premium.

Sale, Exchange or Retirement of Series 2020 Certificates. Upon the sale, exchange or retirement

(including redemption) of a Series 2020 Certificate, an owner of the Series 2020 Certificate generally will

recognize gain or loss in an amount equal to the difference between the amount of cash and the fair market value

of any property received on the sale, exchange or retirement of the Series 2020 Certificate (other than in respect

of accrued and unpaid Interest Component) and such owner’s adjusted tax basis in the Series 2020 Certificate.

To the extent a Series 2020 Certificate is held as a capital asset, such gain or loss will be capital gain or loss and

will be long-term capital gain or loss if the Series 2020 Certificate has been held for more than 12 months at the

time of sale, exchange or retirement.

- 20 -

Reporting Requirements. In general, information reporting requirements will apply to certain

payments of Principal Component, Interest Component and prepayment premium paid on the Series 2020

Certificates, and to the proceeds paid on the sale of the Series 2020 Certificates, other than certain exempt

recipients (such as corporations and foreign entities). A backup withholding tax will apply to such payments if

the owner fails to provide a taxpayer identification number or certification of foreign or other exempt status or

fails to report in full dividend and interest income. The amount of any backup withholding from a payment to

an owner will be allowed as a credit against the owner’s federal income tax liability.

Collateral Federal Income Tax Consequences. Prospective purchasers of the Series 2020 Certificates

should be aware that ownership of the Series 2020 Certificates may result in collateral federal income tax

consequences to certain taxpayers, including, without limitation, financial institutions, property and casualty

insurance companies, individual recipients of Social Security or Railroad Retirement benefits, certain S

corporations with “excess net passive income,” foreign corporations subject to the branch profits tax, life

insurance companies, and taxpayers who may be deemed to have incurred or continued indebtedness to purchase

or carry or have paid or incurred certain expenses allocable to the Series 2020 Certificates. Special Counsel

expresses no opinion regarding these tax consequences. Purchasers of Series 2020 Certificates should consult

their tax advisors as to the applicability of these tax consequences and other federal income tax consequences of

the purchase, ownership and disposition of the Series 2020 Certificates, including the possible application of

state, local, foreign and other tax laws.

UNDERWRITING

Based upon bids received by the District on September 9, 2020, the Series 2020 Certificates were

awarded to ____________ (the “Underwriter”) for reoffering by the Underwriter. The Underwriter has agreed

to purchase the Series 2020 Certificates at an aggregate purchase price equal to $_________ (the principal amount

of the Series 2020 Certificates plus a net original issue premium of $____________, less an underwriter’s discount

of $____________), plus accrued interest, if any. The Underwriter is purchasing the Series 2020 Certificates for

resale in the normal course of the Underwriter’s business activities. The Underwriter reserves the right to offer any

of the Series 2020 Certificates to one or more purchasers on such terms and conditions and at such price or prices

as the Underwriter shall determine. The Underwriter reserves the right to join with dealers and other purchasers

in offering the Series 2020 Certificates to the public. The Underwriter may offer and sell Series 2020 Certificates

to certain dealers (including dealers depositing Series 2020 Certificates into investment trusts) at prices lower

than the public offering prices.

The Underwriter has reviewed the information in this Official Statement in accordance with, and

as part of, its responsibilities to investors under the federal securities laws as applied to the facts and

circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness

of that information.

RATING

Standard & Poor’s Ratings Services is expected to give the Series 2020 Certificates a rating of “A2”.

Such rating reflects only the view of such organization and an explanation of the significance of such rating may

be obtained from the rating agency. There is no assurance that such rating will continue for any given period of

time or that it will not be revised downward or withdrawn entirely by said rating agency if, in its judgment,

circumstances so warrant. Any such downward change or withdrawal of the rating may have an adverse effect

on the market price and marketability of the Series 2020 Certificates.

The District has furnished the rating agency with certain information and materials relating to the Series

2020 Certificates and the District that have not been included in this Official Statement. Generally, rating agencies

base their ratings on the information and materials so furnished and on investigations, studies and assumptions

made by the rating agencies. There is no assurance that a particular rating will be maintained for any given period

of time or that it will not be lowered or withdrawn entirely if, in the judgment of the rating agency originally

establishing such rating, circumstances so warrant. The Underwriter has not undertaken any responsibility to bring

- 21 -

to the attention of the holders of the Series 2020 Certificates any proposed revision or withdrawal of the rating of

the Series 2020 Certificates or to oppose any such proposed revision or withdrawal. Pursuant to the Continuing

Disclosure Certificate, the District is required to bring to the attention of the holders of the Series 2020 Certificates

any revision or withdrawal of the rating of the Series 2020 Certificates but has not undertaken any responsibility to

oppose any such revision or withdrawal. See the section herein captioned “CONTINUING DISCLOSURE.” Any

such revision or withdrawal of the rating could have an adverse effect on the market price and marketability of the

Series 2020 Certificates.

FINANCIAL STATEMENTS

The District maintains its financial records on the basis of a fiscal year ending June 30. Set forth in

Appendix B are the audited financial statements of the District for the fiscal year ended June 30, 2019. Such

financial statements have been examined by BKD CPAs & Advisors, independent certified public accountants

located in Kansas City, Missouri.

LEGAL MATTERS

Certain legal matters incident to the authorization and execution by the District of the Indenture, the Base

Lease and the Lease Agreement and the delivery and sale of the Series 2020 Certificates and with regard to the

tax-exempt status of the Interest Component of Rental Payments to be made on the Series 2020 Certificates are

subject to the approving opinion of Gilmore & Bell, P.C., Special Counsel. Special Counsel has participated in the

preparation of this Official Statement, but the factual and financial information appearing herein has been supplied

or reviewed by certain officials of the District.

CONTINUING DISCLOSURE

The District is executing a Continuing Disclosure Certificate for the benefit of the owners and Beneficial

Owners of the Series 2020 Certificates in order to comply with Rule 15c2-12 of the Securities and Exchange

Commission (the “Rule”). The District is the only “obligated person” with responsibility for continuing

disclosure.

Pursuant to the Continuing Disclosure Certificate, the District will, not later than six months after the

end of the District’s fiscal year, provide to the Municipal Securities Rulemaking Board (the “MSRB”) the

following financial information and operating data (the “Annual Report”):

(1) The audited financial statements of the District for the prior fiscal year prepared in

accordance with accounting principles generally accepted in the United States of America. If

audited financial statements are not available by the time the Annual Report is required to be

filed, the Annual Report shall contain unaudited financial statements in a format similar to the

financial statements contained in this Official Statement, and the audited financial statements

will be filed in the same manner as the Annual Report promptly after they become available.

The audited financial statements of the District are currently prepared in conformity with

accounting principles generally accepted in the United States of America as applied to

government units. If the District changes the format of its financial statements, (1) notice of

such change shall be given in the same manner as for a Material Event, and (2) the Annual

Report for the year in which the change is made should present a comparison (in narrative form

and also, if feasible, in quantitative form) 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.

(2) Updates as of the end of the fiscal year of the financial information and operating data

contained in Appendix A of this Official Statement under the following sections:

- 22 -

GENERAL INFORMATION OF THE DISTRICT

Enrollment (the table “History of Enrollment”)

DEBT STRUCTURE OF THE DISTRICT

Current Long-Term General Obligation Indebtedness

Lease Obligations

FINANCIAL INFORMATION CONCERNING THE DISTRICT

Sources of Revenue

Student Tuition and Fees (the table “Tuition and Fee Income”)

Property Tax Information

History of Property Valuations Tax Collection Record

Pursuant to the Continuing Disclosure Certificate, the District also will file notice with the MSRB of the

occurrence of any of the following events with respect to the Series 2020 Certificates, no later than 10 business

days after the occurrence of such event (“Material Events”):

(1) principal and interest payment delinquencies;

(2) non-payment related defaults, if material;

(3) unscheduled draws on debt service reserves reflecting financial difficulties;

(4) unscheduled draws on credit enhancements reflecting financial difficulties;

(5) substitution of credit or liquidity providers, or their failure to perform;

(6) adverse tax opinions; the issuance by the Internal Revenue Service of proposed or final

determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other

material notices or determinations with respect to the tax status of the Series 2020

Certificates, or other material events affecting the tax status of the Series 2020

Certificates;

(7) modifications to rights of certificate holders, if material;

(8) certificate calls, if material, and tender offers;

(9) defeasances;

(10) release, substitution or sale of property securing repayment of the Series 2020

Certificates, if material;

(11) rating changes;

(12) bankruptcy, insolvency, receivership or similar event of the District;

(13) the consummation of a merger, consolidation, or acquisition involving the District or

the sale of all or substantially all of the assets of the District, other than in the ordinary

course of business, the entry into a definitive agreement to undertake such an action or

the termination of a definitive agreement relating to any such actions, other than

pursuant to its terms, if material;

(14) appointment of a successor or additional trustee or the change of name of the trustee,

if material;

(15) incurrence of a Financial Obligation of the obligated person, if material, or agreement

to covenants, events of default, remedies, priority rights, or other similar terms of a

Financial Obligation of the obligated person, any of which affect security holders, if

material; and

(16) default, event of acceleration, termination event, modification of terms, or other similar

events under the terms of a Financial Obligation of the obligated person, any of which

reflect financial difficulties.

- 23 -

Notwithstanding any other provision of the Continuing Disclosure Certificate, the District may amend

the Continuing Disclosure Certificate and any provision of the Continuing Disclosure Certificate may be waived,

provided Special Counsel or other counsel experienced in federal securities law matters provides the District

with its opinion that the undertaking of the District, as so amended or after giving effect to such waiver, is in

compliance with the Rule and all current amendments thereto and interpretations thereof that are applicable to

the Continuing Disclosure Certificate.

In the event of a failure of the District to comply with any provision of the Continuing Disclosure

Certificate, the Underwriter or any owner or Beneficial Owner of the Series 2020 Certificates may take such

actions as may be necessary and appropriate, including seeking mandamus or specific performance by court

order, to cause the District to comply with its obligations under the Continuing Disclosure Certificate. A default

under the Continuing Disclosure Certificate will not be deemed an event of default under the Lease Agreement,

the Indenture or the Series 2020 Certificates, and the sole remedy under the Continuing Disclosure Certificate

in the event of any failure of the District to comply with the Continuing Disclosure Certificate will be an action

to compel performance.

The District is not currently engaged in any undertakings similar to the Continuing Disclosure

Certificates and has not been required to provide audited financial statements and operating data over the last

five fiscal years.

Electronic Municipal Market Access System (EMMA)

All Annual Reports and notices of Material Events required to be filed by the District pursuant to the

Continuing Disclosure Certificate must be submitted to the MSRB through the MSRB’s Electronic Municipal

Market Access system (“EMMA”). EMMA is an internet-based, online portal for free investor access to

municipal bond information, including offering documents, material event notices, real-time municipal securities

trade prices and MSRB education resources, available at www.emma.msrb.org. Nothing contained on EMMA

relating to the District or the Series 2020 Certificates is incorporated by reference in this Official Statement.

MISCELLANEOUS

Municipal Advisor

Piper Sandler & Co. (the “Municipal Advisor”) has acted as Municipal Advisor to the District in

connection with the sale of the Series 2020 Certificates. The Municipal Advisor has assisted the District in

matters relating to the planning, structuring and delivery of the Series 2020 Certificates and various other debt

related matters. The Municipal Advisor will not be a manager or a member of any purchasing group submitting

a proposal for the purchase of the Series 2020 Certificates.

Certification and Other Matters Regarding Official Statement

Information set forth in this Official Statement has been furnished or reviewed by certain officials of the

District, certified public accountants, and other sources, as referred to herein, which are believed to be reliable.

Any statements in this Official Statement involving matters of opinion, whether or not expressly so stated, are

intended as such and not as representations of fact. This Official Statement is not to be construed as a contract or

agreement between the District and the purchasers or registered owners of any of the Series 2020 Certificates.

References herein to the Indenture, the Lease Agreement, the Base Lease and certain other matters are

brief discussions of certain provisions thereof. Such discussions do not purport to be complete, and reference is

made to such documents for full and complete statements of such provisions.

http://www.emma.msrb.org/

- 24 -

The form of this Official Statement and its distribution and use by the Underwriter has been approved

by the District. However, neither the District nor any of its officers, directors or employees, in either their official

or personal capacities, has made any warranties, representations or guarantees regarding the District’s financial

condition or its ability to make payments required under the Lease Agreement and the Indenture other than those

expressly imposed on the District by the Indenture, the Base Lease or the Lease Agreement.

THE JUNIOR COLLEGE DISTRICT OF

METROPOLITAN KANSAS CITY, MISSOURI

By: ______________________________

President of the Board of Trustees

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APPENDIX A

GENERAL INFORMATION OF THE DISTRICT

History

The Board of Directors of Kansas City, Missouri School District established the predecessor to the District

in 1915 and operated it as a part of the School District until 1964. At that time, the voters of seven suburban school

districts (Belton, Center, Grandview, Hickman Mills, Lee's Summit, North Kansas City and Raytown) joined with

the Kansas City, Missouri School District voters to approve the creation of the District. The District is now

comprised of twelve school districts in the metropolitan Kansas City area (the original seven school districts plus

the following school districts: Kansas City, Missouri, Blue Springs, Independence, Fort Osage and Park Hill) and

covers parts of four counties (Jackson, Clay, Platte and Cass) with an area in excess of 600 square miles. The

District is committed to providing comprehensive educational programs through its campuses: Blue River,

Business & Technology, Longview, Maple Woods and Penn Valley. By effectively utilizing federal, state and

local resources, the District provides quality, convenient and economical educational courses. It awards associate

degrees and certificates of completion for the accomplishment of prescribed courses of study. The District also

offers courses which meet the needs of persons who desire enrichment or retraining in the areas of liberal arts,

occupational education, continuing education and community services. The District is one of the largest institutions

of higher education in the Kansas City metropolitan area, serving a total student population of approximately

25,000, including students enrolled for continuing education and others pursuing degrees in career programs.

Governance

The District currently exists as a community college district organized and governed pursuant to Sections

178.770 through 178.890 of the Revised Statutes of Missouri, as amended. The District is governed by a six-

member Board of Trustees, consisting of six trustees elected from subdistricts for six-year terms, with two trustees

elected every other year. The Board of Trustees is responsible for all policy decisions. In order to accomplish its

goals, the Board of Trustees has empowered the Chancellor, as executive officer, to implement its policies. The

Chancellor, with other officers of the District, provides leadership in the implementation of the goals of the District.

Additional members of the administrative staff and all other employees are appointed by the Board of Trustees.

The District has a total of approximately 3,153 employees, including 822 full-time personnel and 2,331 part-time

employees.

Current members of the Board of Trustees are as follows:

Trent Skaggs President and Member

Michael Brown Vice President and Member

Jermaine Reed Member

Ellen Martin Member

Holmes Osborne Member

Barbara Washington Member

Cindy Johnson and Dr. Donald Chrusciel serve as secretary and treasurer, respectively, to the Board of

Trustees.

Administrative Organization

The chief executive officer of the District is the Chancellor. Reporting directly to the Chancellor are

the Vice Chancellor of Instruction and Chief Academic Officer, the Vice Chancellor of Institutional

Effectiveness, Research and Technology, the Vice Chancellor of Administrative Services and Chief Financial

Officer, and the Vice Chancellor of Student Success and Engagement.

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The Chancellor of the District, Dr. Kimberly Beatty, received a B.A. in English, an M.A. in English and

an Ed. D. in Higher Education, with a specialization in community college leadership, from the Morgan State

University in Baltimore. Dr. Beatty has 28 years of teaching experience and administrative experience, including

21 years of progressive leadership experience at community colleges in California, Virginia and Texas. She

most recently served as the vice chancellor for instructional services and chief academic officer at Houston

Community College. Dr. Beatty began her tenure as chancellor on July 1, 2017, and at an inauguration ceremony

on August 24, 2018 was formally installed as the eighth chancellor of the District.

The Vice Chancellor of Instruction and Chief Academic Officer, Ms. Suzanne Gochis, received her

Bachelor of Science in Education degree in Psychology and Mathematics from Pittsburg State University,

Pittsburg, Kansas; and a Master of Science in Higher Education degree from Southwestern College, Winfield,

Kansas. Ms. Gochis’ recent professional profile includes Assistant Superintendent/Vice President of Student

Services of Cabrillo College, Aptos, California since 2017. Prior to that role she served as Executive Dean of

Student Success for Lake Tahoe Community College, South Lake Tahoe, California.

The Vice Chancellor of Institutional Effectiveness, Research and Technology, Dr. John M. Chawana,

earned his master’s degree in city and regional planning and his doctoral degree in urban planning from the

University of Texas at Arlington. He also holds a master’s degree in sociology and public administration from

the University of North Texas. He has been employed by the District since October 2017. He was previously

the executive director of institutional effectiveness and compliance at Tarrant County College in Fort Worth,

Texas.

The Vice Chancellor of Administrative Services and Chief Financial Officer, Dr. Donald Chrusciel,

holds a doctorate in industrial education and technology from Iowa State University, a master’s in management

information systems and operations management from the University of Wisconsin-Milwaukee, and a master’s

degree in business administration from California State University. His undergraduate degrees include a

bachelors in biochemistry from Michigan State University in Lansing and an associate in science from Grand

Rapids Community (Junior) College in Michigan. He joined the District in June 2018 and came to the District

from Bakersfield College in California, where he served as vice president of finance and administrative services.

The Vice Chancellor of Student Success and Engagement, Dr. Katherine Swanson, holds a bachelor’s

degree in business management from Northern Michigan University, a master’s in adult and higher education

from Montana State University and a doctorate in higher education administration from the University of North

Texas.

The District operates as five campuses consisting of the Metropolitan Community College-Blue River,

Metropolitan Community College-Business & Technology, Metropolitan Community College-Longview,

Metropolitan Community College-Maple Woods and Metropolitan Community College-Penn Valley.

The President of MCC-Penn Valley, Dr. Tyjaun A. Lee, holds three degrees from Ohio University in

Athens, Ohio: a bachelor’s in specialized studies; a master’s in education; and a doctorate of philosophy in

educational leadership with an emphasis in higher education administration. She became the president of Penn

Valley Community College in August 2017 and assumed the presidency of Maple Woods Community College

in July 2018. Dr. Lee has more than 20 years of progressive experience in higher education.

The President of MCC-Blue River and MCC-Business & Technology, Dr. Thomas W. Meyer, holds a

B.A. in English literature, an M.S. in Teaching English to Speakers of Other Languages, and a Ph.D. in

educational linguistics, all from the University of Pennsylvania in Philadelphia. Dr. Meyer became president of

Blue River Community College and Business & Technology College in June 2019. He came to the District from

Lehigh Carbon Community College in Lehigh Valley, Pennsylvania, where he was vice president for academic

services and student development.

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Recently, the District named Dr. Dan Hocoy as President of MCC-Longview. Dr. Hocoy holds bachelor

of science from the University of Toronto and an M.A. and Ph.D. in psychology from Queen’s University in

Canada. He is also a graduate of Harvard University’s Management and Leadership in Education executive

program as well as the Harvard Seminar for New Presidents. He joined the District from State University of

New York’s Erie Community College, where he served as president. He started his new position with the District

on July 1, 2020.

The District also recently appointed that Dr. Larry Rideaux Jr. as President of MCC-Maple Woods. Dr.

Rideaux earned a bachelor of science in psychology from Lamar University in Beaumont, Texas, an M.A. in

counseling from Prairie View A&M University, and an Ed.D. in educational administration from the University

of Texas (Austin) Community College Leadership Program. He has additionally completed the Thomas Lakin

Institute for Mentored Leadership and the American Association of Community Colleges’ (AACC) Future

Leaders Institute. He most recently served as vice president of student services at Texas Southmost College in

Brownsville, Texas. He started his new position with the District on June 1, 2020.

Missouri Coordinating Board for Higher Education

The Missouri Coordinating Board for Higher Education (the “Coordinating Board”) was authorized

by an amendment to the Missouri Constitution in 1972 and established by statute in the Omnibus State

Reorganization Act of 1974. The Coordinating Board has nine board members, one from each congressional

district and a member at large, which are appointed by the Governor and confirmed by the Senate. The

Coordinating Board has oversight responsibilities for certain activities of the 12 publicly-supported community

college districts in the State. Those responsibilities include approval of new academic programs, annual reviews

of existing academic programs, formulating budgetary and accounting policies, and accreditation. The

Coordinating Board is also responsible for establishing the level of State support for community colleges to be

recommended to the Governor and General Assembly and is responsible for the distribution of State aid to each

institution.

Programs

In serving its students enrolled in academic or career programs, the District offers Associate Degrees in

Applied Science, the Arts, Computer Science, Engineering and Science. The District offers over 120+ associate

degree and certificate programs.

Enrollment

The following tables show the enrollment of the District for the Fall semester in each of the last five

academic years; the tables do not include high school vocational education students.

Included in the enrollment figures are students at the MCC-Blue River campus in Independence,

Missouri, which had 2,393 students enrolled in the District’s college-credit courses in Fall 2019; the MCC-

Business & Technology campus located in Kansas City, Missouri, which had 887 students enrolled in the

District’s college-credit courses in Fall 2019; the MCC-Longview campus located in Lee’s Summit, Missouri,

which had 4,070 students enrolled in the District’s college-credit courses in Fall 2019; the MCC-Maple Woods

campus in north Kansas City, Missouri, which had 4,278 students enrolled in the District’s college-credit courses

in Fall 2019; the MCC-Maple Woods campus located in St. Joseph, Missouri, which had 12 non-credit students

enrolled for the session running July 1, 2019 through June 30, 2020 and has approximately 147 students enrolled

in the District’s college-credit courses for Fall 2020; and the MCC-Penn Valley campus in Kansas City,

Missouri, which had 4,077 students enrolled in the District’s college-credit courses in Fall 2019.

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MCC Online began offering online courses in 1996. Currently, the District offers 5 different online

degrees. MCC Online had enrolled 5,356 students for Fall 2019.

HISTORY OF ENROLLMENT

Fall(1) Total Enrollment Full Time Equivalent

2019 16,063 10,008

2018 16,581 10,228

2017 17,059 10,519

2016 18,315 10,878

2015 18,269 10,821

____________________ (1) Enrollment is as of the Fall semester of each academic year.

Source: District

Comparable Enrollments

The District has grown to become the second largest community college in the State of Missouri

based on enrollment, as shown on the following table:

MISSOURI COMMUNITY COLLEGE ENROLLMENT, FALL 2018(1)

College Total Enrollment Full Time Equivalent

Saint Louis Community College 18,157 10,467

Metropolitan Community College (Kansas City) 16,351 9,841

Ozarks Technical Community College 12,221 7,762

St Charles Community College 6,269 4,208

Crowder College 4,521 2,809

Moberly Area Community College 5,202 3,215

Mineral Area College 2,885 2,126

State Fair Community College 4,731 3,110

Jefferson College 4,432 2,809

Three Rivers College 3,076 2,121

East Central College 2,629 1,692

North Central Missouri College 1,854 1,075

____________________ (1) Enrollment is based on data from the Integrated Postsecondary Education Data System (IPEDS).

Source: District

Enrollment Characteristics

The following table gives the percentage of students enrolled in the Spring semester who returned and

enrolled in the following Fall semester or completed a degree/certificate program.

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% OF SPRING ENROLLEES WHO RETURNED THE FOLLOWING FALL SEMESTER

2015 2016 2017 2018 2019

57% 59% 59% 59% 61%

The total student credit hours for most recent five academic years are as follows:

TOTAL STUDENT CREDIT HOURS

Year Total Credit Hours Percent Change

2018-2019 153,420 -2.8%

2017-2018 157,785 -3.3%

2016-2017 163,171 +.5%

2015-2016 162,321 -2.1%

2014-2015 165,834 -7.1%

Marketing

The marketing efforts of the District cross over many departments to provide comprehensive

marketing, which promotes the District to all of its constituencies including prospective students,

influencers, employers, and taxpayers.

The District employs a variety of marketing tools to implement a comprehensive marketing plan

via the following methods: newspaper, television, radio, and streaming services advertising; digital

advertising, social media, direct mail campaigns, and earned media through public relations. The college

promotes programs and services to prospective students via a customer relationship management (CRM)

tool, operationalizing both lifecycle and targeted enrollment campaigns. The District keeps a

comprehensive website regularly updated, and publishes both electronic and printed materials, including a

view book and an annual report. For transparency to the community, Board of Trustees agendas and

minutes, audit reports, consumer information, and institutional effectiveness reports are all published on

the website.

Present Facilities

MCC-Blue River Campus. PSI, Cybersecurity, Soccer, All for the Children

MCC-Business & Technology Campus. HVAC, Welding, Construction, KCCCA, ETEC, Fab

Lab, Computer Integrated Machine, Industrial Technology, CDL, OSHA, Lineman

MCC-Longview Campus. Automotive, Flights of Fancy

MCC-Maple Woods Campus (Kansas City).

MCC-Maple Woods Campus (St. Joseph).

MCC-Penn Valley Campus.

MCC Penn Valley Health Sciences Institute

MCC Penn Valley Manufacturing Institute

MCC Penn Valley Administrative Center & Broadway Plaza

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The portions of the District’s facilities that are subject to the Site Lease are described under the caption

“INTRODUCTION – Property Subject to Site Lease.”

Planned Facilities

As part of its ongoing facilities and capital planning, the District has identified the following facilities

needs. A portion of these identified projects will be funded with the proceeds of the Series 2020 financing.

MCC-Penn Valley Campus

Engineering Technology Center

Manufacturing Institute

Hospitality Institute (early stages)

MCC-Blue River Campus

East Campus (Lineman, CDL, Logistics, & Public Safety Storage)

West Campus (OSHA Training, Cyber Security, and Public Safety Institute)

MCC-Longview Campus

Automotive & Engine Technology (early stages)

MCC-Maple Woods Campus (Kansas City)

Agriculture Science Institute

MCC-Administrative Center & Broadway Plaza (reconfiguration)

MCC-Business & Technology (sale and/or repurpose)

Accreditation

In addition to MCC’s institutional accreditation by the Higher Learning Commission, the academic

programs listed below are individually accredited by the agencies indicated.

MCC- Blue River Campus

1. Police Academy - Peace Officer Standard and Training Program (POST)

2. Fire Academy - Missouri Division of Fire Safety International Fire Service Training Association

3. Cybersecurity - Center of Academic Excellence in Cyber Defense (CAE-CD)

MCC-Longview Campus

1. Automotive Technology - National Automotive Technicians’ Education Foundation (NATEF)

MCC-Maple Woods Campus

1. Veterinary Technology - American Veterinary Medical Association (AVMA)

MCC-Penn Valley Campus

1. Child Growth Development – National Association for Education of Young Children

2. Dental Assisting – American Dental Association Commission on Dental Accreditation

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3. Emergency Medical Technician, Paramedic – Commission on Accreditation of Allied Health

Education Programs (CAAHEP)

4. Health Information Technology – Commission on Accreditation of Allied Health Educations

Programs (CAAHEP) in cooperation with the Council on Accreditation of the American Health

Information Management Association

5. Practical Nursing – Program approved by Missouri State Board of Nursing

6. Professional Nursing – Program approved by Missouri State Board of Nursing, accredited by

Accreditation Commission for Education in Nursing

7. Occupational Therapy Assistant – Accreditation Council for Occupational Therapy Education,

American Occupational Therapy Association

8. Physical Therapist Assistant – Commission on Accreditation in Physical Therapy Education

9. Radiologic Technology (Radiography) – Joint Review Committee on Education in Radiologic

Technology

10. Surgical Technology – Accreditation of Allied Health Education Professionals (CAAHEP)

11. Virtual Hospital – Society for Simulation in Healthcare

Employee Relations

The District has never experienced a strike, work stoppage or any other breakdown in the

management-employee relationship. Only the faculty of the District are represented by a union (MNEA).

Faulty Staffing

The following table sets forth the full-time faculty staffing for the District for each of the last five years:

Fall Full-time

2018-2019 242

2017-2018 235

2016-2017 239

2015-2016 233

2014-2015 235

GENERAL INFORMATION CONCERNING THE DISTRICT

Demographic Information

The District is located in the Kansas City metropolitan region of Missouri and includes a part of Cass

County, Clay County, Jackson County and Platte County. The combined estimated 2019 population of the counties

which are a part of the District was estimated by the Census Bureau at 1,163,157.

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The following cities are located within the District and have a population, according to the 2000

Census and the 2010 Census and an estimate for 2018, as follows:

City 2000 Population 2010 Population 2018 Population Estimate

Avondale 529 440 502

Belton 21,730 23,116 23,348

Blue Springs 48,080 52,575 54,370

Buckner 2,725 3,076 3,058

Gladstone 26,365 25,410 26,995

Grandview 24,881 24,475 25,174

Greenwood 3,952 5,221 6,092

Houston Lake 284 235 379

Independence 113,288 116,830 117,207

Kansas City 441,545 459,787 481,417

Lake Lotawana 1,872 1,939 2,092

Lake Tapawingo 843 730 809

Lake Waukomis 917 870 846

Lee’s Summit 70,700 91,364 96,325

Levasy 108 83 82

North Kansas City 4,714 4,208 4,414

Northmoor 399 325 481

Parkville 4,059 5,554 6,524

Platte Woods 474 385 414

Pleasant Valley 3,321 2,961 3,033

Raytown 30,388 29,526 29,216

Riverside 2,979 2,937 3,255

Sugar Creek 3,839 3,345 3,309

Weatherby Lake 1,873 1,723 1,967

Total 809,865 857,115 891,309

Source: U.S. Bureau of the Census

The following is population information for the counties into which the District’s boundaries extend:

POPULATION BY COUNTY

County

1980 1990 2000 2010 2019

Population Population Population Population Population

Cass 51,029 63,808 82,092 99,478 105,780

Clay 136,488 153,411 184,006 221,939 249,948

Jackson 629,180 633,232 654,880 674,158 703,011

Platte 46,341 57,867 73,781 89,322 104,418

Total 863,038 908,318 994,759 1,084,897 1,163,157

Source: U.S. Bureau of the Census

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Demographic Information

The per capita personal income (in current dollars) for the counties into which the District’s

boundaries extend and for the State of Missouri was as set forth below:

PER CAPITA PERSONAL INCOME

County 2014 2015 2016 2017 2018

Cass $28,579 $28,907 $29,639 $31,261 $32,467

Clay 29,014 30,962 31,642 34,601 33,430

Jackson 26,444 28,037 29,322 30,419 31,037

Platte 34,823 35,863 38,337 30,419 41,833

Kansas City Metropolitan Statistical Area 30,369 32,147 32,849 38,449 35,354

State of Missouri 26,126 27,384 28,406 29,438 30,498

Source: U.S. Bureau of the Census; American Community Survey 1-Year Estimate.

Education

The District includes the following 12 school districts: Blue Springs R-IV, Belton School District #124,

Center, Fort Osage R-I, Grandview C-4, Hickman Mills C-1, Independence, Kansas City 33, Lee’s Summit R-

VII, North Kansas City, Park Hill, and Raytown C-2. For the 2019-2020 academic year, these school districts

had a total enrollment of approximately 127,309 students.

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The high school enrollment characteristics and school district classification for each of the school

districts within the boundaries of the District for the 2019-2020 academic year were as follows:

2019-2020 SCHOOL DISTRICT HIGH SCHOOL ENROLLMENT

Name 9th-12th Category(1)

Blue Springs 4,487 Accredited

Belton 2,084 Accredited

Center 676 Accredited

Fort Osage 1,467 Accredited

Grandview 1,232 Accredited

Hickman Mills 1,281 Accredited Independence 4,057 Accredited

Kansas City 4,172 Provisional

Lee’s Summit 5,905 Accredited

North Kansas City 6,057 Accredited

Park Hill 3,666 Accredited

Raytown 2,591 Accredited

TOTAL 37,675

(1) The Missouri Department of Elementary and Secondary Education evaluates each school district, and after the

evaluation each district is placed in one of the three following categories: “accredited,” “provisionally accredited” or

“unaccredited.” Accredited is for districts with scoring equal to or great than 70% of the points possible on the Annual

Performance Report (the “APR”); Provisional is for districts with equal to or greater than 50% but less than 70% of

the points possible on the APR; and Unaccredited is for districts scoring less than 50% of the points possible on the

APR.

Source: Missouri Department of Elementary and Secondary Education. Data is as of June 24, 2020.

Kansas City Metropolitan Statistical Area Economy

Kansas City is a regional center for transportation, telecommunications, manufacturing, health care,

trade, financial services, and government. Major companies headquartered in metropolitan Kansas City,

Missouri include Cerner Corp, HCA Midwest Health Systems, St. Luke’s Health System, T-Mobile, DST

Systems, Garmin International, Inc., and Hallmark Cards, Inc. Other major employers include the Public School

Systems, State/County/City Government, Federal Government, Ford Motor Company, The University of

Kansas Health System, and Children’s Mercy Hospitals.

Kansas City’s economy provides for a consistent and well distributed earnings and employment

environment for its business sectors.

Kansas City’s proximity and ready access to geographical and population centers throughout the nation

make the area an attractive location for industrial product distribution and trade. The City’s central location is

advantageous for commuting to all parts of the United States and has enhanced its development and posture as

a major transportation center with a complete range of transportation facilities, including a major highway

network, railroad trunk lines, and the Kansas City International Airport (KCI). KCI handled 11.9 million

passengers in fiscal year 2019. As of April 30, 2019, there were 10 passenger marketing airlines and 20

passenger operating carriers serving 48 cities with nonstop service. From May 2019 through July 2019, KCI

handled 3.3 million passengers and added nonstop service to four additional airports. Flight times from KCI are

about three hours to either coast.

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Employment

Listed below are the major employers, located in the Kansas City Metropolitan Statistical Area, which

includes 14 counties in both Missouri and Kansas, including Cass, Clay, Jackson and Platte Counties:

MAJOR KANSAS CITY MSA EMPLOYERS

Employer Type of Business Employees

Public School System (1) Education 39,048

State/County/City Government (2) Government 21,547

Federal Government Government 20,846

Cerner Corp Health Care Information Technology 14,000

The University of Kansas Health System Acute-Care Hospital 10,489

HCA Midwest Health Systems Health Care Provider 9,963

Saint Luke's Health System Health Care Provider 9,700

Children's Mercy Hospitals & Clinic Health Care Provider 7,189

Ford Motor Company Assembly Plant Automotive Assembly 6,600

Hallmark Cards, Inc. Greeting Cards, Gifts, and Media Networks 5,200

Honeywell Federal Manufacturing &

Technologies

Engineering and Manufacturing for US Dept. of

Energy 4,409

Garmin International, Inc. Communication and Navigation Products 3,759

Truman Medical Centers Health Care Provider 3,575

The University of Kansas Medical Center Medical, Nursing, and Health Professional

Education; Biomedical Research 3,566

Amazon Internet Retailer 3,200

Black & Veatch Global Engineering Consulting and Construction

Company 2,981

Burns & McDonnell Engineering, Architecture, Construction,

Environmental & Consulting Firm 2,924

University of Missouri – Kansas City Four-year Public University 2,851

North Kansas City Hospital Health Care Provider 2,810

United Health Group Health Care Coverage & Benefits 2,700

Olathe Health Health Care Provider 2,550

(1) The number of employees for the public school system is made up of twenty-two (22) public school systems & school districts. (2) The number of employees for the State/County/City government is made up of eleven (11) employers.

Source: KC’s Biggest Public-Sector Employers, Kansas City Business Journal, July 26, 2019 and KC’s Biggest Private Sector

Employers, Kansas City Business Journal, July 19, 2019. The data compiled is self-reported.

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The following tables set forth employment figures for the counties into which the District’s

boundaries extend.

CASS COUNTY

Total Labor

Average for

Year

Force

Employed

Unemployed

Unemployment

Rate

2020* 54,683 51,992 2,691 5.0%

2019 54,895 53,239 1,656 3.0

2018 54,386 52,726 1,660 3.1

2017 54,254 52,346 1,908 3.5

2016 55,014 52,753 2,261 4.1

CLAY COUNTY

Total Labor

Average for

Year

Force

Employed

Unemployed

Unemployment

Rate

2020* 136,954 129,336 7,617 5.6%

2019 136,610 132,701 3,909 2.9

2018 134,903 130,999 3,904 2.9

2017 134,872 129,987 4,885 3.6

2016 134,971 129,742 5,229 3.9

JACKSON COUNTY

Total Labor

Average for

Year

Force

Employed

Unemployed

Unemployment

Rate

2020* 362,482 340,917 21,565 6.0%

2019 363,539 350,008 13,531 3.7

2018 363,146 349,588 13,558 3.7

2017 362,774 346,798 15,976 4.4

2016 369,804 351,092 18,712 5.1

PLATTE COUNTY

Total Labor

Average for

Year

Force

Employed

Unemployed

Unemployment

Rate

2020* 58,544 55,808 2,736 4.7%

2019 58,805 57,239 1,566 2.7

2018 57,812 56,330 1,482 2.6

2017 57,741 55,902 1,839 3.2

2016 56,664 54,613 2,051 3.6 (*) Average January through May 2020.

Source: Missouri Economic Research and Information Center, in cooperation with the U.S. Department of Labor, Bureau of

Labor Statistics.

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DEBT STRUCTURE OF THE DISTRICT

Overview

The following table summarizes certain financial information concerning the District. This

information should be reviewed in conjunction with the information contained in this section and the financial

statements of the District in Appendix C.

2019 Assessed Valuation (1) ......................................................................................... $ 17,386,492,989

2019 Estimated Actual Valuation (2) ............................................................................ $ 99,116,566,012

Outstanding General Obligation Bonds (Direct Debt) ................................................ $ 0

Direct Debt and Lease Obligations(3) ............................................................................ $ 79,350,000

Estimated Population (2019) (4) ..................................................................................... 1,163,157

Per Capita Direct Debt and Lease Obligations ............................................................ $ 68.21

Ratio of Direct Debt and Lease Obligations to Assessed Valuation .......................... 0.46%

Ratio of Direct Debt and Lease Obligations to Estimated Actual Valuation ............. 0.08%

Overlapping and Underlying General Obligation Debt and Lease

Obligations (Indirect Debt and Lease Obligations) (5) ............................................ $ 1,588,793,425

Total Direct and Indirect Debt and Lease Obligations ................................................ $ 1,668,143,425

Per Capita Direct and Indirect Debt and Lease Obligations ....................................... $ 1,434.15

Ratio of Direct and Indirect Debt and Lease Obligations to Assessed Valuation ..... 9.59%

Ratio of Direct and Indirect Debt and Lease Obligations to Estimated Valuation ......... 1.68%

(1) Includes final real and personal property as provided for 2019 by the County Clerks for each county in which a portion of the

District is located, excluding railroad and utility property located within the District. For further details see “FINANCIAL

INFORMATION CONCERNING THE DISTRICT - Property Tax Information.” (2) Estimated actual valuation is calculated by dividing different classes of property by the corresponding assessment ratio. For

a detail of these different classes and ratios see “FINANCIAL INFORMATION CONCERNING THE DISTRICT -

Property Tax Information.” (3) Includes the Certificates as of the closing date. For further details see “DEBT STRUCTURE OF THE DISTRICT –

Lease Obligations.” (4) Estimate includes only population within cities located within the District. See “GENERAL INFORMATION

CONCERNING THE DISTRICT – Demographic Information.” (5) For further details see “DEBT STRUCTURE OF THE DISTRICT – Overlapping Indebtedness.”

Current Long-Term General Obligation Indebtedness

The District has not issued and does not have outstanding any general obligation indebtedness.

Lease Obligations

Building Corporation Lease Revenue Bonds. The Kansas City Metropolitan Community Colleges

Building Corporation (the “Building Corporation”) constructs education facilities for the District and then leases

them to the District on annually renewable leases. On September 25, 2014, the Building Corporation issued

$37,895,000 principal amount non-taxable Leasehold Revenue Refunding Bonds, Series 2014A, all of which are

currently outstanding, and $27,450,000 principal amount taxable Leasehold Revenue Refunding Bonds, Series

2014B, currently outstanding in the principal amount of $2,455,000.

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TOTAL ANNUAL CAPITAL LEASE PAYMENTS

Fiscal Year

Ended June 30 Existing Debt(1)

Series 2020 Certificates Parity Debt

After

Refunding

Total Capital

Lease

Payments Principal Interest

2020 $5,760,147.50

2021 5,759,934.98

2022 5,760,633.00

2023 5,757,884.00

2024 5,760,851.00

2025 5,759,228.00

2026 5,758,015.00

2027 5,762,059.00

2028 5,761,054.00

2029 -

-

-

-

-

-

-

-

Totals $51,839,806.48

(1) Includes the Building Corporation’s Series 2014A and Series 2014B Certificates of Participation.

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Operating Leases.

For information regarding the District’s Operating Leases, see Note 4 to the District’s Audited Financial

Statements attached hereto as Appendix C.

Equipment Leases.

MCC leases copiers and printers from Sumner One. The current lease term with SumnerOne is one year

and it runs through 12/2020. The approximate annual payment is $195,000.

Other Obligations

The College’s total OPEB liability of $9,909,390 was measured as of June 30, 2019 and was determined

by an actuarial valuation as of July 1, 2018, rolled forward to June 30, 2019.

At June 30, 2019, the College recorded a liability of $14,053,319 for the Public Education Employee

Retirement System (“PEERS”) and $47,155,404 for Public School Retirement System (“PSRS”) for its

proportionate share of the net pension liability.

Future Obligations

There are no additional future obligations expected within the next six months.


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Overlapping Indebtedness. The following table sets forth overlapping general obligation indebtedness

of political subdivisions with boundaries overlapping the District as of the end of such political subdivision’s

most recently completed fiscal year, and the percent attributable (on the basis of assessed valuation) to the

District:

Taxing Jurisdiction

Outstanding

General

Obligation

Indebtedness

Percent

Applicable to

District

Amount

Applicable to

District

Cities

City of Belton, Missouri(1) $25,795,000 100% $25,795,000

City of Blue Springs, Missouri 18,580,000 8% 1,486,400

City of Gladstone, Missouri 800,000 100% 800,000

City of Grandview, Missouri 11,925,000 3% 357,750

City of Kansas City, Missouri 376,722,000 83% 312,325,463

City of Lake Winnebago, Missouri 2,220,000 100% 2,220,000

City of Lake Tapawingo, Missouri 1,430,000 100% 1,430,000

City of Lee’s Summit, Missouri 43,495,000 19% 8,264,050

City of Parkville, Missouri 8,960,000 100% 8,960,000

School Districts

Blue Springs R-IV 59,225,000 100% 59,225,000

Belton School District #124 195,375,000 100% 195,375,000

Center 16,469,973 100% 16,469,973

Fort Osage R-I 40,985,000 100% 40,985,000

Grandview C-4 31,279,555 100% 31,279,555

Hickman Mills C-1 40,040,000 100% 40,040,000

Independence 215,080,000 100% 215,080,000

Lee’s Summit R-VII 123,472,000 100% 123,472,000

North Kansas City 238,150,000 100% 238,150,000

Park Hill 167,910,000 100% 167,910,000

Raytown C-2 94,600,000 100% 94,600,000

Counties

Cass 17,992,000 25% 4,568,234

TOTAL $1,588,793,425

Legal Debt Limit

Under Article VI, Section 26(b) of the Constitution of Missouri, the District may incur indebtedness

for authorized school purposes not to exceed 15% of the valuation of taxable tangible property in the District

according to the last completed assessment upon the approval of four-sevenths of the qualified voters in the

District voting on the proposition at any municipal, primary or general election or two-thirds voter approval on

any other election date. The current legal debt limit of the District (based on the District’s 2019 assessed

valuation) is $2,607,873,648.

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FINANCIAL INFORMATION CONCERNING THE DISTRICT

Accounting, Budgeting and Auditing Procedures

The District operates on an accrual basis of accounting and has adopted the Uniform Accounting

System for Higher Education, as developed by the Missouri Department of Higher Education. The system is

based largely on material from the financial accounting and reporting section of the National Association of

College and University Business Officers (NACUBO), and the revised program classification structure of the

National Center for Higher Education Management System (NCHEMS). The system utilizes programs as

developed by NACUBO, and where possible, retains subprogram detail data used by the Division of Budget

and planning and the Missouri Department of Higher Education.

For financial reporting purposes, the District is considered a special purpose government engaged

only in business-type activities. Accordingly, the District’s financial statements are presented using the

economic resources measurement focus and the accrual basis of accounting, which is similar to that often

found in the private sector. The measurement focus is upon income determination, financial position and cash

flows.

The District prepared the financial statements in accordance with GASB Statement No. 35, Basic

Financial Statements and Management’s Discussion and Analysis – for Public Colleges and Universities.

GASB Statement No. 35 established standards for external financial reporting for public colleges and

universities, which is meant to present information in a format that more closely resembles that of the private

sector. The District adopted the provisions of GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, in 2018.

Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless

of the timing of related cash flows. Operating revenues and expenses are distinguished from non-operating

items. Operating revenues generally result from providing services in connection with the District’s principal

ongoing operations. The principal operating revenues of the District are tuition and fees, federal grants and

contracts, state and local grants and contracts and auxiliary service revenues. Operating expenses include the

cost of instruction, the learning resource center, academic support, student services, institutional support,

auxiliary services, scholarships and fellowships, plant expenses and depreciation on capital assets. All

revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. Certain

significant revenue streams relied upon for operations are recorded as non-operating revenues, as defined by

GASB Statement No. 35, including state appropriations and local property taxes.

The Chancellor and the Chief Financial Officer are responsible for handling all moneys of the District.

Moneys may be disbursed only for the purpose for which they are levied, collected or received, and all checks

must be signed by the Chancellor and the Chief Financial Officer.

An annual budget of estimated receipts and disbursements for the coming fiscal year is prepared by

the Chancellor and is presented to the Board of Trustees prior to July 1 for approval. The District’s fiscal year

is July 1 through June 30. The budget lists estimated receipts by funds and sources and estimated

disbursements by funds and purposes and includes a statement of the rate of levy per hundred dollars of

assessed valuation required to raise each amount shown on the budget as coming from District property taxes.

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The financial records of the District are audited annually by an independent certified public

accountant in accordance with generally accepted auditing standards. The most recent annual audit has been

performed by the firm of BKD, LLP, Kansas City, Missouri. The audited financial statements of the District

for the fiscal year ended June 30, 2019, together with the independent auditor’s report thereon, are included in

this Official Statement at Appendix C. A summary of significant accounting policies of the District is contained

in the notes accompanying the financial statements in Appendix C. The audited financial statements for earlier

years with reports by the certified public accountants are available on the EMMA website.

Sources of Revenue

The District finances its operations through tuition and fees, the local property tax levy, state aid and

federal programs. For the fiscal year ending June 30, 2019, the District has recorded the portion of its revenue

from various sources as follows:

SOURCES OF REVENUE FOR FISCAL YEAR ENDING JUNE 30, 2019 (Audited)

Source Amount %

Tuition and Fees $24,000,000 17.9%

Contract & Grants 8,800,000 6.6

Auxiliary Services 1,200,000 0.9

Local Revenue:

Property Taxes 36,500,000 27.2

State Revenue 30,800,000 23.0

Federal Revenue 20,900,000 15.6

Investment Income 2,200,000 1.6

Other Revenue 9,500,000 7.1

Total Revenue $133,900,000 100.0%

Source: District

State Revenue

Missouri statutes authorize publicly-supported community colleges to receive up to 50% of education

expenses from the State. An annual request for State aid is prepared by the Coordinating Board in consultation

with the District and other publicly-supported community colleges. This annual request is reviewed and a

budget recommendation for all community colleges in the state is made by Missouri Department of Higher

Education (MDHE). This recommendation is sent to the Missouri Governor’s office for review and

subsequent recommendation and then sent to the state General Assembly. The Governor’s recommendation

is taken up in the House and Senate Appropriations Committees for discussion and action then to a

House/Senate Appropriations Conference Committee for further discussion and “final” resolution before

submission to the full chambers of both houses for a binding vote.

The Missouri General Assembly has made general appropriations for higher education for the fiscal

year ending June 30, 2020. State appropriations of general revenue received for the fiscal year ending

June 30, 2020 are estimated at approximately 15% less than the appropriations for the fiscal year ending June 30,

2019.

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In addition to the general appropriation received by the District, the District also receives from the

State funds for particular programs provided by the District, including vocational education.

The following table shows for the next fiscal year, current fiscal year, and the last ten fiscal years the

amount of State general appropriation received by the District after holdback (a permanent withholding by the

Governor of the State under Missouri law in order to assure a balanced State budget), the amount of State

appropriations received for specific programs, the total amount of State funding, and the percentage change in

appropriations from the prior year.

TOTAL STATE REVENUE, 2009-2021

Fiscal Net General Additional State Total State Changes from

Year Appropriation Revenue Revenue Previous Year

2020-2021 $30,639,465 $(4,059,747) (1) $27,527,330 0%

2019-2020 30,639,465 $(4,070,263) (1) 27,516,814 -11

2018-2019 30,857,414 $0 30,857,414 -1

2017-2018 31,115,707 $0 31,115,707 -3

2016-2017 31,950,751 $0 31,950,751 -3

2015-2016 32,910,977 $0 32,910,977 4

2014-2015 31,678,098 $0 31,678,098 8

2013-2014 29,447,940 $0 29,447,940 -1

2012-2013 29,705,779 $0 29,705,779 -1

2011-2012 29,906,758 $0 29,906,758 -2

2010-2011 30,595,905 $0 30,595,905 -3

2009-2010 31,415,529 $0 31,415,529 -7

Source: The District (1) Additional State Revenue and Total State Revenue for the 2019-2020 and 2020-2021 fiscal years includes funding

restrictions as a result of the decline in revenue from COVID-19.

The budgetary pressures experienced by the State in recent years due to overall declines in the

economy and corresponding State tax revenues, coupled with increases in spending in other areas, have in

certain years resulted in lower State appropriations for the District and many other governmental institutions

and agents in the State than the preceding year. If State appropriations revenue declines, then District’s ability

to improve its facilities and expand and enhance its educational programs will be adversely affected.

State Aid as a Percentage of Total Revenue

Total State Percent of

Year Aid Revenue Total Revenue

2018-2019 $30,857,414 27%

2017-2018 31,115,707 26

2016-2017 31,950,751 26

2015-2016 32,910,977 27

2014-2015 31,678,098 26 __________

Source: The District

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Student Tuition and Fees

The following table sets forth the tuition and fee income of the District for each of the following

years:

TUITION AND FEE INCOME, 2014-2019

Tuition Fiscal Year In-District In-State Out-State Fees Total

2018-2019 $22,129,117 $13,382,907 $2,264,770 $5,722,505 $43,499,299

2017-2018 23,322,886 14,184,136 2,613,442 5,935,165 46,055,629

2016-2017 23,998,980 11,419,713 2,146,626 5,950,058 43,515,377

2015-2016 25,337,975 9,361,772 1,711,126 6,384,047 42,794,920

2014-2015 26,418,119 9,632,398 1,664,608 6,483,421 44,198,546

Tuition is assessed pursuant to an enrollee’s residential status and course selection. Rates are

established by the Trustees. The following table sets forth the tuition to be assessed per credit hour for

the 2019-2020 academic year:

TUITION RATES, 2019-2020 ACADEMIC YEAR

In-District

Missouri Resident

Out-of-District

Missouri Resident Out-of-State

$107 $190 $246

IN-DISTRICT, MISSOURI RESIDENT TUITION AND FEES, 2015-2020(1)

Fiscal Year

Tuition

Common Fees

Total Per Credit

Hour Rate

2019-2020 $100 $7 $107

2018-2019 100 7 107

2017-2018 96 7 103

2016-2017 90 5 95

2015-2016 90 5 95

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Tuition and Fee Revenue as a Percentage of Total Revenue

Current Opera- General Fund

tional Fund In-District

Tuition and Credit Hour Percentage of

Year Fee Revenue Rate Total Revenue

2018-2019 $43,499,299 $96 38%

2017-2018 46,055,629 96 36

2016-2017 43,515,377 95 36

2015-2016 42,794,920 90 38

2014-2015 44,198,546 90 36 ____________

Source: The District

Financial Aid Programs

The District's financial aid program is designed to assist students in their pursuit of a higher education.

The District is working to ensure that students of ability and desire have financial access to a higher education.

Several major categories of student aid are available including, but not limited to, federal grants, federal loan

programs, federal college work study, state grants and scholarships. The District awarded approximately

$41,758,158 in financial aid during the fiscal year ending June 30, 2019, with approximately 47.5% of the

District's students receiving some type of financial aid.

The number of students receiving financial aid over the last four academic years is as follows:

Dollar Amount

No. of Students of Financial Aid

2018-2019 9,951 $41,758,158

2017-2018 10,326 44,171,814

2016-2017 10,439 41,962,249

2015-2016 10,750 43,831,521


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Comparable Tuition

The District surveyed other Missouri Community Colleges to determine the per credit hour charges

for tuition for Missouri residents for 2019-2020. The institutions surveyed and their charges for in-district

students were as follows:

OTHER COMMUNITY COLLEGE INSTITUTIONS’ TUITION, 2019-2020 SCHOOL YEAR

College Per Credit Hour Tuition

State Fair Community College (Sedalia) $115

St. Louis Community College 114

Ozarks Technical Community College 113

Jefferson College (Jefferson County) 112

Mineral Area Community College (Flat River) 111

Metropolitan Community College (Kansas City) 107

St. Charles Community College 106

East Central Community College (Union) 102

Three Rivers Community College (Poplar Bluff) 96

Crowder College (Neosho) 92

Moberly Community College 91

North Central Community College (Trenton) 87

Property Tax Information

Assessment Procedure: All taxable real and personal property within the District is assessed annually

by the County Assessor of each county into which the District’s boundaries extend. Missouri law requires that

personal property be assessed at various levels up to 33-1/3% of true value and that real property be assessed at

the following percentages of true value:

Residential real property .........................................................................................19%

Agricultural and horticultural real property ....................................................12%

Utility, industrial, commercial, railroad and all other real property ............ 32%

A general reassessment of real property occurred statewide in 1985. In order to maintain equalized

assessed valuations following this reassessment, the state legislature adopted a maintenance law in 1986. On

January 1 in every odd-numbered year, each County Assessor must adjust the assessed valuation of all real

property located within the county in accordance with a two-year assessment and equalization maintenance

plan approved by the State Tax Commission.

The County Assessor is responsible for preparing the tax roll each year and for submitting the tax roll

to the Board of Equalization. The County Board of Equalization has the authority to adjust and equalize the

values of individual properties appearing on the tax rolls.

Current Assessed Valuation. The following table shows the total assessed valuation and the

estimated actual valuation, by category, of all taxable tangible property situated in the District (excluding state

assessed railroad and utility property) according to the assessment numbers as of January 1, 2019.

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2019 ASSESSED VALUATION OF ALL PROPERTY SITUATED IN THE DISTRICT

Type of Property

Total Assessed

Assessment Rate

Total Estimated

Valuation(1) Actual Valuation

Residential $9,533,982,441 19.00% $50,178,854,953

Agricultural 15,898,676 12.00% 49,683,363

Commercial 4,758,411,015 32.00% 39,653,425,125

Total Real Property $14,308,292,132 $89,881,963,441

Personal Property(2) $3,078,200,857 33.33% $9,234,602,571

Total Property $17,386,492,989 $99,116,566,012

_____________ (1) Includes value of personal and real property within tax increment financing districts. (2) Assumes all personal property is assessed at 33 1/3%; because certain subclasses of tangible personal property are

assessed at less than 33 1/3%, the estimated actual valuation for personal property would likely be greater than that

shown above. See “Assessment Procedure” discussed above.

History of Property Valuations: The total assessed valuation of all taxable tangible property situated

in the District, excluding railroad and utility property, according to the assessments of January 1 in each of the

following years, has been as follows:

HISTORICAL ASSESSED VALUATION, 2014-2018

Assessed Year Assessed Valuation1 Percent Change

Change

2019 $17,386,492,989 17.8%

2018 14,760,081,201 2.3

2017 14,431,115,610 7.2

2016 13,460,218,315 1.7

2015 13,230,142,135 --

____________________ (1) Includes value of personal and real property within tax increment financing districts.

Tax Collection Procedure: Property taxes are levied and collected for the District by each County,

for which the County receives a collection fee of 1.6% of the gross tax collections made.

The District is required by law to prepare an annual budget, which includes an estimate of the amount

of revenues to be received from all sources for the budget year, including an estimate of the amount of money

required to be raised from property taxes and the tax levy rates required to produce such amounts. Such

estimates are based on the assessed valuation figures provided by the County Clerks. The District must fix its

ad valorem property tax rates and certify them to the County Clerks not later than September first for entry in

the tax books.

Each County Clerk receives the county tax books from the respective County Assessor, which set

forth the assessments of real and personal property. Each County Clerk enters the tax rates certified by the

local taxing bodies in the tax books and assesses such rates against all taxable property in the District as shown

in such books. Each County Clerk forwards the tax books by October 31 to the respective County Collector, who is charged with levying and collecting taxes as shown therein. The County Collector extends the taxes on

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the tax rolls and issues the tax statements in early December. Taxes are due by December 31 and become

delinquent if not paid to the County Collector by that time. All tracts of land and city lots on which delinquent

taxes are due are charged with a penalty of eighteen percent of each year’s delinquency. All lands and lots on

which taxes are delinquent and unpaid are subject to sale at public auction in August of each year.

Each County Collector is required to make disbursements of collected taxes to the District each

month. Because of the tax collection procedure described above, the District receives the bulk of its moneys

from local property taxes in the months of December, January and February.

Operating Levy. The operating tax levy of the District (consisting of all ad valorem taxes levied except

the debt service levy) cannot exceed the “tax rate ceiling” for the current year without voter approval. The tax

rate ceiling, determined annually, is the rate of levy that, when charged against the District’s assessed valuation

for the current year, excluding new construction and improvements, will produce an amount of tax revenues

equal to tax revenues for the previous year increased by the lesser of actual assessment growth, 5% or the

Consumer Price Index. Without the required percentage of voter approval, the tax rate ceiling cannot at any time

exceed the greater of the tax rate in effect in 1980 or the most recent voter-approved tax rate (as adjusted pursuant

to the provisions of the Hancock Amendment, more fully explained below).

Article X, Section 22(a) of the Missouri Constitution (commonly known as the “Hancock

Amendment”), approved in 1980, places limitations on total state revenues and the levying or increasing of taxes

without voter approval. The Missouri Supreme Court has interpreted the definition of “total state revenues” to

exclude voter-approved tax increases. The Hancock Amendment also includes provisions for rolling back tax

rates. If the assessed valuation of property, excluding the value of new construction and improvements, increases

by a larger percentage than the increase in the Consumer Price Index from the previous year (or 5%, if greater),

the maximum authorized current levy must be reduced to yield the same gross revenue from existing property,

adjusted for changes in the Consumer Price Index, as could have been collected at the existing authorized levy

on the prior assessed value. This reduction is often referred to as a “Hancock rollback.” The limitation on local

governmental units does not apply to taxes levied in the debt service fund for the payment of principal and

interest on general obligation bonds.

In 2008, through the enactment of Senate Bill 711 (“SB 711”), the Missouri General Assembly approved

further limitations on the amount of property taxes that can be imposed by a local governmental unit. Prior to

the enactment of SB 711, a Hancock rollback would not necessarily result in a reduction of a district’s actual

operating tax levy if its current tax levy was less than its current tax levy ceiling, due to the district’s voluntary

rollback from the maximum authorized tax levy. Under SB 711, in reassessment years (odd-numbered years),

the Hancock rollback is applied to a district’s actual operating tax levy, regardless of whether that levy is at the

district’s tax levy ceiling. This further reduction is sometimes referred to as an “SB 711 rollback.” In non-

reassessment years (even-numbered years), the operating levy may be increased to the district’s tax levy ceiling

(as adjusted by the Hancock rollback), only after a public hearing and adoption of a resolution or policy statement

justifying the action.

While the District currently intends to satisfy in part its obligations to make rental payments under the

Lease with moneys received from the operating levy, such moneys are not required to be used for such

purpose, and neither such tax levy nor any other District funds are pledged to the making of such rental

payments or the payment of the Certificates.

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Tax Collection Record. The following table sets forth tax collection information for the District for

the five years indicated.

TAX COLLECTION RECORD, 2015-2019

Current and Delinquent

Taxes Collected

Fiscal Year

Ended June 30

Total Levy

Total Taxes

Levied

Amount

%(1)

2019 $0.2047 $34,668,405 $36,459,109 105%

2018 0.2305 33,148,273 35,529,587 107

2017 0.2297 32,383,415 34,145,207 105

2016 0.2339 31,215,211 32,723,095 105

2015 0.2343 30,316,805 32,527,980 107

____________________ (1) The collection percentage exceeding 100% is the result of the collection of back taxes, railroad and utility taxes, interest and penalty,

etc.

Major Property Taxpayers

The following table sets forth the taxpayers owning real property with the greatest amount of assessed

valuation within the City of Kansas City, the largest city within the District, based on the valuation of property

owned as of January 1, 2019.

Owner Type of Use Assessed Valuation

KC Power & Light Entertainment $233,605,409

Crown Power & Hallmark Retail 108,363,020

Country Club Plaza JV LLC Retail 83,363,125

Google Fiber MO LLC Internet Service 51,356,304

Cerner Properties Health Information & Technology 36,796,192

Federal Reserve Bank of KC Federal Bank 31,084,308

Southern Union d/b/a MO Gas Energy Natural Gas Company 27,223,084

Town Pavilion Holdings LLC Management Company 26,886,324

Union Pacific Railroad Company 21,738,509

Ward Parkway Center Association Retail 19,224,882

______________________ Source: Jackson County Collections Department

Summary of Receipts, Expenditures and General Fund Balances

The following summary statement of cash receipts, disbursements and changes in general fund

balances of the District has been obtained from the District’s annual audit reports, which, since the fiscal year

ended June 30, 2019 have been prepared by BKD, LLP. The audited financial statements of the District for the

fiscal year ended June 30, 2019, and the report of said Certified Public Accountants with respect thereto are

included in Appendix C of this Official Statement. The audited financial statements for earlier years with

reports by the certified public accountants are available for examination in the District’s office. The

statement set forth below should be read in conjunction with the other financial statements and notes

appertaining hereto set forth in Appendix C of this Official Statement and the financial statements on file at the

District’s office.

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SUMMARY STATEMENT OF CASH RECEIPTS, DISBURSEMENTS

AND CHANGES IN FUND BALANCES

Years Ending June 30

2015 2016 2017 2018 2019

Beginning Fund Balance $76,068,640 $88,982,316 $102,571,147 $114,086,233 $112,622,069

Revenues 136,711,530 139,236,832 140,467,827 140,183,245 133,938,756

Expenditures 123,797,854 125,648,001 128,952,741 128,466,761 125,281,525

Net Transfers - - - -

Restatement Adjustment - - (13,180,648) -

Ending Fund Balance $88,982,316 $102,571,147 $114,086,233 $112,622,069 $121,279,300

Risk Management

The District is exposed to various risks of losses related to torts; theft of, damage to, and destruction of

assets; errors and omissions; injuries to employees; and natural disasters. Since its inception, the District has

transferred its risk by obtaining coverage from commercial insurance companies or a public risk entity pool. For

additional information, see Note 11 to the District’s financial statements included in Appendix C to this Official

Statement.

Pension and Employee Retirement Plans

The District contributes to two cost-sharing multiple-employer defined benefit pension plans on behalf

of its employees: (i) The Public School Retirement System of Missouri (“PSRS”), which provides retirement,

disability and death benefits to full-time (and certain part-time) certificated employees of school districts and

certain other educational entities in Missouri and employees of certain related employers; and (ii) The Public

Education Employee Retirement System of Missouri (“PEERS”), which provides retirement and disability

benefits to employees of school districts and certain other educational entities in Missouri and of certain related

employers who work 20 or more hours per week and do not contribute to PSRS. Benefit provisions relating to

both PSRS and PEERS are set forth in Chapter 169 of the Revised Statutes of Missouri, as amended. The statutes

assign responsibility for the administration of both plans to a seven-member Board of Trustees of PSRS

(the “PSRS Board”). PSRS and PEERS had 533 and 530 contributing employers, respectively, during the fiscal

year ended June 30, 2019.

PSRS and PEERS issue a publicly available financial report that includes financial statements and

required supplementary information. The PSRS/PEERS Comprehensive Annual Financial Report for the fiscal

year ended June 30, 2019 (the “2019 PSRS/PEERS CAFR”), the comprehensive financial report for the plans,

is available at www.psrs-peers.org/About-Us/Resources/Annual-Report. The link to the 2019 PSRS/PEERS

CAFR is provided for general background information only, and the information in the 2019 PSRS/PEERS

CAFR is not incorporated by reference herein. The 2019 PSRS/PEERS CAFR provides detailed information

about PSRS and PEERS, including their respective financial positions, investment policy and performance

information, actuarial information and assumptions affecting plan design and policies, and certain statistical

information about the plans.

For information specific to the District’s participation in PSRS and PEERS, including the District’s past

contributions and proportionate share of the net pension liability of PSRS and PEERS, see Note 6 to the District’s

financial statements included in Appendix C to this Official Statement. For additional information regarding

PSRS and PEERS, see the 2019 PSRS/PEERS CAFR.

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Other Postemployment Benefits

In addition to pensions, many state and local governments, including the District, provide other

postemployment benefits (“OPEB”) as part of the total compensation offered to attract and retain the services of

qualified employees. For information specific to the District’s OPEB obligations, including the District’s past

contributions relative to its required contributions, its assumptions as to future healthcare and other costs and its

unfunded actuarial accrued liability, see Note 5 and the schedule included on page 42 to the District’s financial

statements included in Appendix C to this Official Statement.

* * *

APPENDIX B

COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE DISTRICT

FOR THE YEAR ENDED JUNE 30, 2019

The Metropolitan Community College

Independent Auditor’s Report and Financial Statements

June 30, 2019 and 2018

The Metropolitan Community College June 30, 2019 and 2018

Contents

Independent Auditor’s Report ............................................................................................... 1

Management’s Discussion and Analysis ...................................................................................... 4

Financial Statements

Statements of Net Position ............................................................................................................... 20

Statements of Revenues, Expenses and Changes in Net Position .................................................... 22

Statements of Cash Flows ................................................................................................................ 23

Financial Statements of The Metropolitan Community College

Foundation (Discretely Presented Component Unit)

Statements of Financial Position ...................................................................................................... 25

Statements of Activities .................................................................................................................... 26

Statements of Cash Flows ................................................................................................................ 28

Notes to Financial Statements ............................................................................................ 29

Required Supplementary Information

Schedule of Changes in the College’s Total OPEB Liability and Related Ratios ......................................................................................................... 79

Schedules of the College’s Proportionate Share of the Net Pension Liability and College Contributions ......................................................................... 80

Other Supplementary Information

Combining Schedule of Net Position .............................................................................................. 82

Combining Schedule of Revenues, Expenses and Changes in Net Position .................................... 83

Schedule of Revenues, Expenses and Changes in Fund Balances ................................................... 84

Schedule of Expenses by Functional and Natural Classification ..................................................... 86

Schedule of Fund Transfers From/(To) ............................................................................................ 87

Notes to Other Supplementary Financial Information ...................................................................... 88

The Metropolitan Community College June 30, 2019 and 2018

Contents (Continued)

Compliance

Schedule of Expenditures of Federal Awards .................................................................................. 89

Notes to the Schedule of Expenditures of Federal Awards .............................................................. 90

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 – Independent Auditor’s Report ................................................................... 91

Report on Compliance for the Major Federal Program and Report on Internal Control Over Compliance – Independent Auditor’s Report ............................ 93

Schedule of Findings and Questioned Costs .................................................................... 95

Summary Schedule of Prior Audit Findings ...................................................................... 98

Independent Auditor’s Report

Board of Trustees The Metropolitan Community College Kansas City, Missouri Report on the Financial Statements

We have audited the accompanying financial statements of the business-type activities and the discretely presented component unit of The Junior College District of Metropolitan Kansas City, Missouri (d/b/a The Metropolitan Community College, the “College”) as of and for the years ended June 30, 2019 and 2018, 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.

Auditor’s Responsibility

Our responsibility is to express opinions on these financial statements based on our audits. We conducted our audits 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 The Metropolitan Community College Foundation, the discretely presented component unit, 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.

Board of Trustees The Metropolitan Community College Page 2

Opinions

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the business-type activities and the discretely presented component unit of The Metropolitan Community College, as of June 30, 2019 and 2018, and the respective changes in financial position and, where applicable, cash flows thereof for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Other Matters


Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, pension and other postemployment information, as listed in the table of contents, 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 inquiries 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.

Supplementary Information

Our audits were conducted for the purpose of forming opinions on the financial statements that collectively comprise the College’s basic financial statements. The accompanying other supplementary financial information and the schedule of expenditures of federal awards as required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards, as listed in the table of contents, are presented for purposes of additional analysis and are not a required part of the basic financial statements.

The schedule of expenditures of federal awards is the responsibility of management and was derived from and relates 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, the information is fairly stated in all material respects in relation to the basic financial statements as a whole.


The other supplementary financial information listed in the table of contents has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 22, 2019, on our consideration of the 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 the 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 the College’s internal control over financial reporting and compliance.

Kansas City, Missouri November 22, 2019

The Metropolitan Community College Management’s Discussion and Analysis

Years Ended June 30, 2019 and 2018

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Introduction

This section of The Metropolitan Community College’s (the College or MCC) annual financial report presents a discussion and analysis of the financial performance of the College during the fiscal year ended June 30, 2019, with comparative data for the fiscal years ended June 30, 2018 and 2017. It should be read in conjunction with the financial statements and notes that follow.

The College prepared the financial statements in accordance with Government Accounting Standards Board (GASB) Statement No. 35, Basic Financial Statements – and Management’s Discussion and Analysis – for Public Colleges and Universities. GASB Statement No. 35 establishes standards for external financial reporting for public colleges and universities and requires that the financial statements be presented to focus on the College as a whole.

As defined by generally accepted accounting principles established by GASB, the financial reporting entity consists of the accompanying combined financial statements of the College including the accounts of The Junior College District of Metropolitan Kansas City, Missouri (the District), the Kansas City Metropolitan Community Colleges Building Corporation (the Building Corporation), as well as its discretely presented component unit, The Metropolitan Community College Foundation (the Foundation).

In 2018, the College adopted GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, which revises accounting and financial reporting standards for other post-employment benefits that are provided to the employees of state and local governmental employers through health care benefits that are administered through trusts and equivalent arrangements in which specific criteria are met. This statement establishes standards for measuring and recognizing liabilities, deferred outflows of resources, deferred inflows of resources and expenditures. For defined benefit postemployment benefits, this statement identifies the methods and assumptions that should be used to project benefit payments, discount projected benefit payments to the actuarial present value and attribute that present value to periods of employee service. Information for the year ended June 30, 2017, was not restated for the application of GASB Statement No. 75 as it was deemed impractical to do so.

Using This Annual Report

One of the most important questions asked about the College’s finances is whether the College, as a whole, is better off or worse off as a result of the year’s activities. The Statements of Net Position; the Statements of Revenues, Expenses and Changes in Net Position; and the Statements of Cash Flows provide information on the College as a whole and present a long-term view of the College’s finances. These statements present financial information in a form similar to that used by private corporations. Over time, increases or decreases in net position (the difference between assets and deferred outflows of resources and liabilities and deferred inflows of resources) is one indicator of the improvement or erosion of the College’s financial health when considered with nonfinancial facts such as enrollment levels and the condition of the facilities. In addition to these three basic financial statements, this report contains notes to the financial statements, required supplementary information and other supplementary schedules as appropriate.

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Financial Highlights for Fiscal Year Ended June 30, 2019

As of June 30, 2019, the College’s financial position improved with total assets and deferred outflows of resources increasing $1.3 million to $261.4 million on June 30, 2019 compared to $260.1 million as of June 30, 2018. Total liabilities and deferred inflows decreased by $7.3 million to $140.1 million at June 30, 2019 from $147.4 million at June 30, 2018.

The College’s operations were better than originally budgeted resulting in the College’s total net position increasing by $8.6 million, a 7.6 percent increase. This resulted in an increase of unrestricted net position, from $46.6 million to $57.5 million, an increase of $10.9 million. This is attributable to a higher investment income, lapsed salaries, the sale of the Longview Rec Center and a continued decline in spending across the District.


In fiscal year 2018, the College’s financial position declined slightly, with total assets and deferred outflows of resources at $260.1 million versus $261.2 million in 2017. Net position, which represents the residual interest in the College’s assets and deferred outflows of resources after liabilities and deferred inflows of resources are deducted, was $112.7 million at June 30, 2018. This represents a 1.2 percent decrease from 2017’s net position of $114.1 million. The College’s unrestricted net position showed a decrease from $50.2 million to $46.6 million.

Financial operations were better than originally budgeted, with an overall increase in net position of $11.7 million. The positive results can be attributed to increased revenue from local taxes and investments, additional contributions from the Institute for Workforce Innovation, lapsed salaries and continued conservative spending across the District. This increase in net position helped to offset the adoption of GASB 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, which increased the College’s liabilities by $13.2 million.


The College’s financial position improved at June 30, 2017, with total assets and deferred outflows of resources increasing $19.7 million to $261.2 million compared to $241.5 million at June 30, 2016. Total liabilities and deferred inflows of resources for the College also increased by $8.2 million, as of June 30, 2017, from $138.9 million to $147.1 million.

Net position, which represents the residual interest in the College’s assets and deferred outflows of resources after liabilities and deferred inflows of resources are deducted, was $114.1 million at June 30, 2017. This represents an 11.2 percent increase from 2016’s net position of $102.6 million. The College’s unrestricted net position showed an increase growing from $41.0 million to $50.2 million or 22.4 percent.

Financial operations were better than originally budgeted, with an overall increase in net position of $11.5 million. These positive results can be attributed to lapsed salaries, open vacant positions, continued conservative spending across the District and additional contributions from special projects and the Institute for Workforce Innovation.

Statements of Net Position

The Statements of Net Position presents the financial position of the College at the end of the fiscal year and includes all assets and liabilities of the College. Total assets and deferred outflows of resources less total liabilities and deferred inflows of resources – net position – is one indicator of the current financial condition of the College, while the change in net position is an indicator of whether the overall financial condition has improved or worsened during the year. Assets and liabilities are generally measured using current values or historical costs.

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From the data presented, readers of the Statements of Net Position are able to determine the assets available to continue the operations of the College. They are also able to determine how much the College owes vendors and lending institutions. Finally, the Statements of Net Position provide a picture of assets available for expenditure by the College.

Assets and liabilities are categorized as current or noncurrent. The difference is that current assets and liabilities mature or become payable within the normal 12-month accounting cycle versus noncurrent, which mature or become payable after 12 months. For example, at June 30, 2019, the College’s current assets consisted primarily of cash and cash equivalents, short-term investments, net accounts receivable and other assets. Noncurrent assets consist primarily of long-term investments and property and equipment. Property and equipment are the capital assets owned by the College and the Building Corporation.

Net position is presented in three major categories. The first category, net investment in capital assets, provides the College’s/Building Corporation’s equity in capital assets – the property, plant and equipment owned by the College/Building Corporation. The second category is restricted net position, which is restricted for debt retirement. With the bond refinancing in 2014, the College no longer has net position in this category. The third category is titled unrestricted net position, which includes amounts designated by board direction for specific purposes.

Condensed Statements of Net Position June 30, 2019, 2018 and 2017

(Dollars in Millions)

Change from Change from2019 Prior Year 2018 Prior Year 2017

AssetsCurrent 100.3$ 18.3$ 82.0$ (24.0)$ 106.0$ Capital 111.3 (6.5) 117.8 (1.9) 119.7 Other 26.9 (9.2) 36.1 29.4 6.7

Total assets 238.5 2.6 235.9 3.5 232.4

Deferred outflows of resources 22.9 (1.3) 24.2 (4.6) 28.8

Total assets and deferred outflows of resources 261.4$ 1.3$ 260.1$ (1.1)$ 261.2$

LiabilitiesCurrent 17.1$ (1.9)$ 19.0$ (0.9)$ 19.9$ Noncurrent 116.9 (4.1) 121.0 3.1 117.9

Total liabilities 134.0 (6.0) 140.0 2.2 137.8 Deferred inflows of resources 6.1 (1.3) 7.4 (1.9) 9.3

Total liabilities and deferred inflows of resources 140.1$ (7.3)$ 147.4$ 0.3$ 147.1$

Net PositionInvested in capital, net of related debt 63.8$ (2.3)$ 66.1$ 2.2$ 63.9$ Unrestricted 57.5 10.9 46.6 (3.6) 50.2

Total net position 121.3$ 8.6$ 112.7$ (1.4)$ 114.1$

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10

20

30

40

50

60

70

Net Investment in Capital Assets Unrestricted & Designated

In Millions

Comparison of Net Position

2019 2018 2017

Significant assets consist of cash and cash equivalents, short-term and long-term investments, accounts receivable and capital assets. Significant liabilities include accounts payable and accrued liabilities, long-term bonded debt, other postemployment benefit liability, net pension liability, compensated absences and deferred revenue.

Fiscal Year 2019 compared to Fiscal Year 2018

In fiscal year 2019, total assets and deferred outflows of resources increased $1.3 million while total liabilities and deferred inflows of resources decreased $7.2 million; for a total net position increase of $8.6 million.

The College’s total assets and deferred outflows of resources increase is due to an increase in investments of $20.3 million with an offsetting decrease in cash and cash equivalents of $8.9 million and overall decreases in accounts receivable, other assets and capital assets of $8.7 million. In addition, deferred outflows of resources decreased $1.3 million as a result of the annual GASB 68 actuarial evaluation.

The total liabilities and deferred inflows of resources decrease is a result of a decrease in bonds payable of $4.2 million and a decrease in accounts payable and other accruals of $1.5 million. In addition, deferred inflows of resources decreased $1.2 million as a result of the annual GASB 68 actuarial evaluation.

Net investment in capital assets, which represents 53.0 percent of total net position at June 30, 2019, represents the assets’ historical costs, net of accumulated depreciation and outstanding principal balances of debt attributable to the acquisition, construction or improvement of those assets.

The Board of Trustees has elected to designate a portion of unrestricted net position for the purpose of deferred maintenance and information technology. Designated net position is not subject to externally imposed restrictions and therefore is not considered restricted net position.

Unrestricted net position is not subject to externally imposed stipulations and is available to the College for any legal purpose.

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As of June 30, 2018, total assets and deferred outflows of resources decreased $1.1 million. The decrease in assets is due to a decrease of $28.7 million in short-term investments offset by an increase of $29.4 million in long-term investments. The GASB 68 actuarial evaluation of the College’s portion of the unfunded pension liability resulted in a decrease of $4.6 million in deferred outflows. Cash and cash equivalents also increased $5.6 million. The remaining changes were a decrease in other assets and a decrease in capital assets.

Total liabilities and deferred outflows of resources increased $.3 million in fiscal year 2018. The adoption of GASB 75 required the College to recognize $9.9 million in post-employment benefits (not related to pension). This was offset by the GASB 68 actuarial evaluation of the College’s portion of the unfunded pension liability resulting in a decrease of $1.8 million in the pension liability and a decrease of $1.9 million in the deferred inflows of resources. The annual bond payments for the Series 2014 bonds decreased the bonds payable by $4.2 million. The remaining changes were a decrease in accounts payable and capital lease liability.

Net investment in capital assets, which represents 58.7 percent of total net position at June 30, 2018, represents the assets’ historical costs, net of accumulated depreciation and outstanding principal balances of debt attributable to the acquisition, construction or improvement of those assets.

Expendable restricted net position is subject to externally imposed restrictions governing their use. This category of net position represents the debt service reserve funds as mandated by the trust indentures. The College is not required to maintain a debt service reserve with the Series 2014 bonds.

The Board of Trustees has elected to designate a portion of unrestricted net position for the purpose of deferred maintenance and information technology. Designated net position is not subject to externally imposed restrictions and therefore is not considered restricted net position.

Unrestricted net position is not subject to externally imposed stipulations and is available to the College for any legal purpose.

Statements of Revenues, Expenses and Changes in Net Position

The Statements of Revenues, Expenses and Changes in Net Position disclose the College’s financial results for each of the fiscal years presented. The purpose of the statements are to present the revenues earned by the College, both operating and nonoperating and the expenses incurred by the College, operating and nonoperating and any other revenues, expenses, gains and losses earned or incurred by the college. Under the accrual basis of accounting, all of the current year’s revenue and expenses are taken into account regardless of when the cash is received or paid.

Generally speaking, operating revenues are received for providing goods and services to the students and various constituencies of the College. Operating expenses are those expenses incurred to acquire or produce the goods and services provided in return for the operating revenues, and to carry on the mission of the College. Nonoperating revenues are revenues earned for which goods and services are not provided. For example, the state appropriations, Pell grant revenue and county property tax collections are nonoperating because they represent revenue provided to the College for which no direct goods or services were provided directly by the College to the state legislature or the local taxpayers.

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One of the College’s strengths is its diverse streams of revenue, which allow it the flexibility to weather difficult economic times. The statements below provide an illustration of revenues by source (both operating and nonoperating), which were used to fund the College’s operating activities for the years ended June 30, 2019, 2018 and 2017.

Condensed Statements of Revenues, Expenses and Changes in Net Position Years Ended June 30, 2019, 2018 and 2017



Operating revenues 38.7$ (7.5)$ 46.2$ (3.5)$ 49.7$ Operating expenses 123.4 (3.0) 126.4 - 126.4

Operating loss (84.7) (4.5) (80.2) (3.5) (76.7) Non-operating revenues, net 93.3 1.3 92.0 3.8 88.2

Increase in net assets 8.6 (3.2) 11.8 0.3 11.5 Net assets, beginning of year 112.7 (1.4) 114.1 11.5 102.6 Change in accounting principle - 13.2 (13.2) (13.2) -

Net assets, end of year 121.3$ 8.6$ 112.7$ (1.4)$ 114.1$

Total revenues 133.9$ (6.3)$ 140.2$ (0.2)$ 140.4$

Total expenses 125.3$ (3.1)$ 128.4$ (0.5)$ 128.9$

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The following table of revenues by source (both operating and nonoperating) shows revenues used to fund the College’s operating activities for the years ended June 30, 2019, 2018 and 2017.

Revenues by Source Years Ended June 30, 2019, 2018 and 2017



Operating revenuesStudent tuition and fees 24.0$ (1.1)$ 25.1$ 0.9$ 24.2$ Contract and grants 8.8 (5.7) 14.5 (5.5) 20.0 Auxiliary services 1.2 (0.5) 1.7 (0.2) 1.9 Other 4.7 (0.2) 4.9 1.3 3.6

Total operating revenues 38.7 (7.5) 46.2 (3.5) 49.7

Non-operating revenuesFederal Pell Grant 20.9 (0.8) 21.7 1.0 20.7 State appropriations 30.8 (0.3) 31.1 (0.9) 32.0 County property tax revenues 36.5 1.0 35.5 1.4 34.1 Investment income 2.2 0.9 1.3 0.7 0.6 Other non-operating revenue 4.8 0.4 4.4 1.1 3.3

Total non-operating revenues 95.2 1.2 94.0 3.3 90.7

Total revenue 133.9$ (6.3)$ 140.2$ (0.2)$ 140.4$


Total revenues decreased by $6.3 million from fiscal year 2018. The major contributor to this decline was in contracts and grants (excluding Federal Pell Grants) which decreased $5.7 million as a result of the completion of the MoSTEM and FOCUS grants. For the year ending June 30, 2019, the College increased tuition rates of 4 percent, projecting revenue from tuition and fees to remain flat. The tuition and fees revenue decreased by $1.1 million and now represents 18 percent of total revenue, which is consistent with the prior year. Tax revenue, which is 27 percent of total revenues, increased $1.0 million. Investment income increased $0.9 million or 69 percent from the prior year. Auxiliary services operating revenue declined by $.5 million which is related to the sale of the Longview Rec Center.

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The following graphic illustrates the College’s total revenues for the years ended June 30, 2019 and 2018.

Tax Revenue 27.2%

Investment 1.7%

Other Nonoperating3.6%

Tuition and Fees, Net17.9%

Grants and Contracts

22.3%

Auxi l iary Services0.9%

Other Operating 3.5%

State Appropriations23.0%

2019

Tax Revenue 25.3%

Investment 0.9%



Grants and Contracts25.7%




2018


Total revenues decreased by $.2 million from prior year. All tuition rates remained unchanged from prior year. The fiscal year enrollment was slightly below budget projections but tuition and fees revenue was up by $.9 million due to an increase in out-of-district tuition. This was offset by state appropriations which decreased $.9 million from prior year. Tax revenue increased by $1.4 million, or 4.1 percent, from fiscal year 2017 due to an increase in the collection of back taxes and an increase in new construction. Contracts and grants (excluding Federal Pell Grants), which comprise 10.3 percent and 14.2 percent of total revenue, respectively, decreased by $5.5 million from prior year.

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The following graphic illustrates the College’s total revenues for the years ended June 30, 2018 and 2017.

Tax Revenue 25.3%

Investment 0.9%







2018

Tax Revenue 24.3%

Investment 0.5%







2017

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Expenses

Operating expenses can be displayed in two formats, natural (object) classification and functional classification. Both formats are presented in the following tables for the years ended June 30, 2019, 2018 and 2017.

Operating Expenses by Natural Classification Years Ended June 30, 2019, 2018 and 2017



Operating expensesSalaries and benefits 86.0$ 0.9$ 85.1$ 0.4$ 84.7$ Supplies and services 27.1 (3.9) 31.0 (0.1) 31.1 Depreciation 6.5 (0.1) 6.6 0.3 6.3 Scholarships and fellowships 3.8 0.1 3.7 (0.6) 4.3

Total operating expenses 123.4$ (3.0)$ 126.4$ $ - 126.4$

Operating Expenses by Functional Classification Years Ended June 30, 2019, 2018 and 2017



Operating expensesInstructional 45.1$ 0.7$ 44.4$ -$ 44.4$ Academic support 13.0 (0.9) 13.9 - 13.9 Student services 14.1 (1.0) 15.1 (0.2) 15.3 Plant ops and maintenance 12.6 (0.2) 12.8 2.3 10.5 Institutional support 26.2 2.7 23.5 (0.1) 23.6 Scholarships and fellowships 3.8 0.1 3.7 (0.6) 4.3 Public service 1.4 (3.9) 5.3 (1.5) 6.8 Depreciation 6.5 (0.1) 6.6 0.3 6.3 Auxiliary enterprise 0.6 (0.5) 1.1 (0.2) 1.3

Total operating expenses 123.3$ (3.1)$ 126.4$ $ - 126.4$

Nonoperating Expenses Years Ended June 30, 2019, 2018 and 2017



Interest on debt relating to capital assets 1.9$ (0.1)$ 2.0$ (0.5)$ 2.5$

Total expenses 125.3$ (3.2)$ 128.4$ (0.5)$ 128.9$

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The College’s fiscal year 2019 total operating and nonoperating expenses decreased by $3.1 million or 2.5 percent from the prior year. Salaries and benefits are the largest categories and comprise 68.6 percent and 66.3 percent of total expenses for the fiscal years ended June 30, 2019 and 2018, respectively. The expenses in salaries decreased slightly due to vacant positions in fiscal year 2019. The Benefits category increased $1.1 million due to the effects of GASB 75 related to Other Post-Employment Benefits, pension expenses related to GASB 68 and the required payment of unrelated business income tax as a result of the tax changes. The second largest category, supplies and services decreased $3.4 million or 12.6 percent from the prior year primarily due to the completion of the MoSTEMWINs grant and less capitalized expenses.

The following graphic illustrates expenses by natural (object) classification for the years ended June 30, 2019 and 2018.

Benefits 18.3%

Supplies and Services 18.9%

Uti l ities2.7%

Scholarships 3.0%

Depreciation 5.1%

Interest 1.5%

Salaries50.3%

2019

Benefits 17.0%

Supplies and Services21.0%

Uti l ities3.1%

Scholarships 2.9%

Depreciation 4.9%

Interest 1.6%

Salaries49.3%

2018

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In fiscal year 2018, total operating and nonoperating expenses decreased by $.5 million or .4 percent from prior year. The salaries and benefits comprise 66.3 percent and 65.6 percent of total expenses for years ended June 30, 2018 and 2017, respectively. Supplies and services remained flat from the prior year.

The following graphic illustrates expenses by natural (object) classification for the years ended June 30, 2018 and 2017.

Benefits 17.0%

Supplies and Services21.0%

Uti l ities3.1%

Scholarships 2.9%

Depreciation 4.9%

Interest 1.6%

Salaries49.3%

2018

Benefits 16.9%

Supplies and Services 21.0%

Uti l ities 3.1%

Scholarships 3.4%

Depreciation 4.9%Interest 2.0%

Salaries 48.7%

2017

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Statements of Cash Flows

The Statements of Cash Flows provides information about cash receipts and cash payments during the year. This statement also assists users in assessing the College’s ability to generate net cash flows, its ability to meet its obligations as they come due and its need for external financing.

The Statements of Cash Flows is divided into five parts, each examining a different source of and use for cash. The first part, “Operating activities,” examines the source and use of cash from ordinary operating activities. The second part, “Noncapital financing activities,” reflects cash flows received and spent for nonoperating, noninvesting and noncapital financing activities. An example of this would be cash received from state appropriations and county property tax. The third section, “Capital and related financing activities,” deals with cash flows from capital and related financing activities. The section reflects the cash used in the acquisition, construction and financing of capital and related items. The fourth section, “Investing activities,” reveals the cash flows from investing activities and shows the purchases, proceeds and interest received from investing activities. The fifth and last section reconciles the net cash used in operating activities to the operating gain or (loss) reflected on the Statements of Revenues, Expenses and Changes in Net Position.

Condensed Statements of Cash Flows

Years Ended June 30, 2019, 2018 and 2017 (Dollars in Millions)

Change from Change from

2019 Prior Year 2018 Prior Year 2017Cash provided (used) by

Operating activities (77.5)$ (1.0)$ (76.5)$ (4.3)$ (72.2)$ Noncapital financing activities 91.0 (1.3) 92.3 3.2 89.1 Capital and related financing activities (4.3) 6.5 (10.8) 0.4 (11.2) Investing activities (18.1) (18.7) 0.6 (4.4) 5.0

Net change in cash (8.9) (14.5) 5.6 (5.1) 10.7 Cash, beginning of year 55.3 5.6 49.7 10.7 39.0

Cash, end of year 46.4$ (8.9)$ 55.3$ 5.6$ 49.7$

The major sources of cash included state aid, county property tax revenues, student tuition, federal contracts and grants and proceeds from maturities of investments. Significant uses of cash included payments to employees including benefits, payments to vendors and suppliers, payments for scholarships and financial aid, capital assets and purchases of investments.


The cash position of the College decreased by $8.9 million for the fiscal year ended June 30, 2019. Cash used for operating activities decreased $1.0 million, which can be attributed to a decrease in tuition fees, lapsed salaries offset by an increase to the benefits expense category. Cash provided by noncapital financing activities decreased by $1.3 million from the prior year related to a decrease in Pell grants, state appropriations and other nonoperating revenue. This was offset by an increased collection of local taxes. Capital and related financing activities decreased by $6.5 million which is attributable to reduced capital purchases and proceeds from the disposal of capital assets. Investing activities resulted in a decrease of $18.7 million compared to 2018. This is due to less proceeds from the maturity of investments based on an increase in long-term investments in fiscal year 2018. The College is moving toward a more laddered investment approach looking out to three to five years.

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The cash position of the College increased by $5.6 million for the fiscal year ended June 30, 2018. Cash used for operating activities increased $4.3 million which was attributable to an increase in contracts and grants, most notably is the MoSTEM grant. Noncapital financing activities were up $3.2 million due to an increase in Federal Pell grants and an increase in property tax collection. Capital and related financing activities decreased by $.4 million which is attributable to a decrease in purchase of capital assets. Investing activities used an additional $4.4 million over 2017. In fiscal year 2018, the College increased long-term investments as part of the continued three year laddering strategy.

Capital Assets

Net Capital Assets Years Ended June 30, 2019, 2018 and 2017


Change from Change fromCapital Assets - Net of Accumulated Depreciation 2019 Prior Year 2018 Prior Year 2017

Land 8.2$ (0.1)$ 8.3$ -$ 8.3$ Buildings and improvements 98.9 (5.4) 104.3 (1.0) 105.3 Equipment/Construction/Software in progress 0.8 (1.2) 2.0 (1.6) 3.6 Equipment 3.3 0.4 2.9 0.4 2.5 Software 0.1 (0.2) 0.3 0.3 -

Total capital assets 111.3$ (6.5)$ 117.8$ (1.9)$ 119.7$

Additional information concerning capital assets is provided in Note 3 to the financial statements.


As of June 30, 2019, the College had recorded $111.3 million in net capital assets, a decrease of $6.5 million from the prior year. The decline was primarily due to sale of Longview Rec Center building and land. Additions to capital assets consisted of roof repairs at Penn Valley Carter Center and Physical Ed buildings, installation of mass notification system districtwide and purchase of equipment across the District. No additional debt was issued to finance these projects.


As of June 30, 2018, the College had recorded $117.8 million in net capital assets, a decrease of $1.9 million from the prior year. Additions to capital assets consisted of improvements to boilers /chillers, an LED lighting project across the District and administrative center garage repairs. The Penn Valley Student Success Center was completed in fiscal year 2018 and placed into service. No additional debt was issued to finance these projects.

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Long-term Debt

Long‐term Debt Years Ended June 30, 2019, 2018 and 2017


Change from Change fromOutstanding Debt 2019 Prior Year 2018 Prior Year 2017

Capital lease purchase 0.5$ (0.4)$ 0.9$ (0.5)$ 1.4$ Leasehold revenue bonds 49.1 (4.3) 53.4 (4.2) 57.6

Total long-term debt 49.6$ (4.7)$ 54.3$ (4.7)$ 59.0$

Additional information concerning long-term debt is provided in Note 4 to the financial statements.

Economic Outlook

Based on the Missouri Economic Research & Information Center (MERIC) 2019 Economic and Workforce Report, from May 2018 to May 2019, Missouri added over 31,000 jobs, a 1.1 percent employment growth for Missouri. The Missouri unemployment rate grew .1 percent to 3.3 percent as of May 2019. The Kansas City region has had employment growth rates higher than the state average in five of the past six years. Missouri’s per capita personal income increased by 3.6 percent from 2017. The final fiscal year 2018 general revenue report for the Office of Administration for the State of Missouri indicated that net general revenue collections increased 1.0 percent from fiscal year 2018, from $9.47 billion to $9.57 billion.

MCC has three main revenue streams: state appropriations, local taxes and tuition. In fiscal year 2020, MCC is estimating that approximately 27 percent of general fund revenue will come from MCC’s state aid appropriation to Missouri Community Colleges. For this reason, MCC monitors statewide economic and political activity closely. State appropriations are estimated to decrease less than 1 percent in fiscal year 2020.

Local tax revenue collections, making up 32 percent of the general fund budget, are projected to remain flat for fiscal year 2020. The local levy rate for fiscal year 2020 is $0.2047 cents per $100 of assessed valuation which is down from the fiscal year 2019 rate of $0.2305 cents per $100 of assessed valuation. The decrease in the local levy rate was due to an increase in adjusted current year assessed valuation, which resulted in an increase to the tax base. Adjusted current year assessed valuation includes changes in assessed value for real estate, personal property and new construction. New construction has increased over the last several years. The last five years included new construction of $200.3 million, $217.7 million, $176.4 million, $156.0 million, and $94.5 million.

19

Enrollment has been trending downward for the last several years. In fiscal year 2019, MCC tuition and fees was projected to remain flat but MCC experienced an overall decrease in tuition revenue for the year. Tuition and fees are again projected to remain flat in fiscal year 2020. Tuition and fees are significant as this is the only major source of revenue driven by enrollment. Tuition and fees must support the growth in both teaching and other enrollment driven support costs, especially during periods of significant enrollment growth. MCC increased its tuition and fee structure by 4 percent in fiscal year 2019. The in-district credit hour tuition rate is $107, out-of-district credit hour tuition rate is $190, and out-of-state credit hour tuition rate is $246. The total credit hours for fiscal year 2020 are estimated at 312,606 in the general fund. Tuition and fee revenue in the general fund for fiscal year 2020 is estimated at approximately $41.3 million. This revenue source makes up approximately 37 percent of the general fund revenue.

Requests for Information

These financial statements and discussions are designed to provide a general overview of the College’s finances for all those with an interest in the entity’s finances. Questions concerning any information provided in this report should be addressed to Financial Services Department, 3200 Broadway, Kansas City, Missouri 64111.

The Metropolitan Community College Statements of Net Position

June 30, 2019 and 2018

See Notes to Financial Statements 20

2019 2018

AssetsCurrent Assets

Cash and cash equivalents 46,426,776$ 55,335,227$ Short-term investments 47,947,153 18,412,000 Accounts receivable, net of allowance; 2019 – $236,473,

2018 – $263,025 5,683,803 7,680,525 Other assets 281,207 569,456

Total current assets 100,338,939 81,997,208

Noncurrent AssetsLong-term investments 26,846,660 36,105,000 Capital assets

Nondepreciable 9,039,956 10,335,057 Depreciable, net 102,304,822 107,434,336

Total noncurrent assets 138,191,438 153,874,393

Total assets 238,530,377 235,871,601

Deferred Outflows of Resources

Loss on debt refundings 2,068,094 2,587,341Pensions 20,235,767 21,304,422Other postemployment benefits 601,425 259,628

22,905,286 24,151,391

Total $ 261,435,663 $ 260,022,992

The Metropolitan Community College Statements of Net Position (Continued)

June 30, 2019 and 2018


2019 2018

Liabilities Current Liabilities

Accounts payable, accrued and other liabilities $ 6,873,845 $ 8,414,086 Compensated absences 2,183,800 2,217,858 Current portion of long-term debt 4,350,000 4,250,000 Unearned revenue 3,185,497 3,627,666 Unearned revenue - contracts 50,000 50,000 Capital lease purchases 452,474 452,473

Total current liabilities 17,095,616 19,012,083

Noncurrent LiabilitiesBond payable 44,795,000 49,145,000 Compensated absences 740,598 508,704 Other postemployment benefit liability 9,909,390 9,868,047 Net pension liability 61,208,723 60,736,716 Capital lease purchases - 452,475 Unearned revenue - contracts 250,000 300,000

Total noncurrent liabilities 116,903,711 121,010,942

Total liabilities 133,999,327 140,023,025

Deferred Inflows of Resources

Pensions 5,665,805 6,794,502 Other postemployment benefits 491,231 583,396

6,157,036 7,377,898

Net Position

Net investment in capital assets 63,815,398 66,056,786 Unrestricted 57,463,902 46,565,283

Total net position $ 121,279,300 $ 112,622,069

The Metropolitan Community College Statements of Revenues, Expenses and Changes in Net Position



2019 2018Operating Revenues

Tuition and fees 44,685,598$ 46,918,390$ Less scholarship allowance 20,681,218 21,774,143

Student tuition and fees, net 24,004,380 25,144,247

Federal grants and contracts 5,377,436 11,317,308 State and local grants and contracts 3,400,793 3,172,059 Auxiliary services revenues 1,171,295 1,672,756 Other 4,716,824 4,871,673

Total operating revenues 38,670,728 46,178,043

Operating ExpensesSalaries and wages 63,051,424 63,306,546 Fringe benefits 22,910,599 21,819,736 Supplies and other services 23,630,222 27,038,160 Utilities 3,434,828 4,014,870 Scholarships and fellowships 3,780,074 3,698,154 Depreciation 6,541,915 6,559,048

Total operating expenses 123,349,062 126,436,514

Operating Loss (84,678,334) (80,258,471)

Nonoperating Revenues (Expenses)Federal Pell Grant revenue 20,936,002 21,666,105 State appropriations 30,857,414 31,115,709 County property tax revenue 36,459,109 35,529,587 Investment income 2,245,061 1,291,398 Other nonoperating revenues 4,770,442 4,402,403 Interest on debt related to capital assets (1,932,463) (2,030,247)

Net nonoperating revenues 93,335,565 91,974,955

Increase in Net Position 8,657,231 11,716,484

Net Position, Beginning of Year 112,622,069 100,905,585

Net Position, End of Year 121,279,300$ 112,622,069$

The Metropolitan Community College Statements of Cash Flows



2019 2018Operating Activities

Student tuitions and fees 23,638,547$ 25,424,779$ Payments to suppliers (24,128,877) (30,721,623) Payments to utilities (3,434,828) (4,014,870) Payments to employees (62,433,553) (63,412,062) Payments for benefits (23,525,227) (22,034,233) Payments for financial aid and scholarships (3,780,074) (3,698,154) Auxiliary enterprise charges, bookstore and vending 1,171,295 1,672,756 Contracts and grants 10,463,270 15,543,783 Other operating receipts 4,488,106 4,754,535

Net cash used in operating activities (77,541,341) (76,485,089)

Noncapital Financing ActivitiesFederal Pell Grant revenue 20,936,002 21,666,105 State aid and grants appropriations 30,857,414 31,115,709 County property tax 36,459,109 35,529,587 Other nonoperating revenue 2,711,682 4,053,412

Net cash provided by noncapital financing activities 90,964,207 92,364,813

Capital and Related Financing ActivitiesPurchases of capital assets (2,187,488) (4,655,958) Proceeds from disposal of capital assets 4,078,948 - Debt payments (4,702,474) (4,608,914) Interest paid on debt related to capital assets (1,461,124) (1,557,893)

Net cash used in capital and related financing activities (4,272,138) (10,822,765)

Investing ActivitiesProceeds from sales and maturities of investments 24,159,000 47,151,000 Interest on investments 2,430,821 1,238,043 Purchases of investments (44,649,000) (47,808,000)

Net cash provided by (used in) investing activities (18,059,179) 581,043

Increase (Decrease) in Cash and Cash Equivalents (8,908,451) 5,638,002

Cash and Cash Equivalents, Beginning of Year 55,335,227 49,697,225

Cash and Cash Equivalents, End of Year 46,426,776$ 55,335,227$

The Metropolitan Community College Statements of Cash Flows (Continued)



2019 2018Reconciliation of Operating Loss to Net Cash

Used in Operating ActivitiesOperating loss (84,678,334)$ (80,258,471)$ Depreciation 6,541,915 6,559,048 Changes in operating assets and liabilities

Accounts receivable 2,024,149 (475,808) Other assets 288,249 (30,574) Deferred outflows of resources 726,858 4,110,938 Accounts payable, accrued and other liabilities (1,294,497) (853,866) Unearned revenue (442,169) 24,991 Other postretirement benefits liability 41,343 (1,800,380) Net pension liability 472,007 (1,845,332) Deferred inflows of resources (1,220,862) (1,915,635)

Net Cash Used in Operating Activities (77,541,341)$ (76,485,089)$

Noncash Investing ActivityChange in fair value of investments 213,187$ 44,910$

The Metropolitan Community College Foundation (Discretely Presented Component Unit)

Statements of Financial Position

June 30, 2019 and 2018


2019 2018Assets

Cash and cash equivalents $ 697,304 $ 716,226 Marketable securities 13,068,587 12,593,683 Contributions receivable, net of allowance;

2019 - $831, 2018 - $1,527 44,835 74,075 Accrued interest receivable 48,565 33,327 Prepaid expense - 6,000

Total assets $ 13,859,291 $ 13,423,311

Liabilities and Net Assets

LiabilitiesDue to The Metropolitan Community College $ 370,924 $ 616,068 Accrued liabilities 32,519 1,265 Deferred revenues 231,946 -

Total liabilities 635,389 617,333

Net AssetsWithout donor restrictions 4,082,193 3,905,402 With donor restrictions 9,141,709 8,900,576

Total net assets 13,223,902 12,805,978

Total liabilities and net assets $ 13,859,291 $ 13,423,311


Statement of Activities

Year Ended June 30, 2019


Without Donor

RestrictionsWith Donor Restrictions Total

Revenues, Gains and Other SupportContributions $ 69,885 $ 391,911 $ 461,796 Contributed services 471,260 - 471,260 Investment return 270,938 409,937 680,875 Other income 75 262,845 262,920 Net assets released from restrictions 823,560 (823,560) -

Total revenues, gains and other support 1,635,718 241,133 1,876,851

ExpensesScholarships and grants 438,008 - 438,008 Foundation projects 549,659 - 549,659 Fundraising 188,504 - 188,504 Management and general 282,756 - 282,756

Total expenses 1,458,927 - 1,458,927

Change in Net Assets 176,791 241,133 417,924

Net Assets, Beginning of Year 3,905,402 8,900,576 12,805,978

Net Assets, End of Year $ 4,082,193 $ 9,141,709 $ 13,223,902





Without Donor

RestrictionsWith Donor Restrictions Total

Revenues, Gains and Other SupportContributions $ 162,902 $ 345,077 $ 507,979 Contributed services 490,536 - 490,536 Investment return 380,506 587,067 967,573 Other income 9,520 30,913 40,433 Net assets released from restrictions 1,594,425 (1,594,425) -

Total revenues, gains and other support 2,637,889 (631,368) 2,006,521

Expenses Scholarships and grants 568,183 - 568,183 Foundation projects 1,307,719 - 1,307,719 Fundraising 196,215 - 196,215 Management and general 294,321 - 294,321

Total expenses 2,366,438 - 2,366,438

Change in Net Assets 271,451 (631,368) (359,917)

Net Assets, Beginning of Year 3,633,951 9,531,944 13,165,895

Net Assets, End of Year $ 3,905,402 $ 8,900,576 $ 12,805,978


Statements of Cash Flows



2019 2018Operating Activities

Change in net assets $ 417,924 $ (359,917)Items not requiring (providing) operating activities cash flows

Contributions restricted for long-term investments (391,911) (26,266)Net realized and unrealized gains on investments (437,247) (736,216)

Changes inContributions receivable 29,240 285,602 Accrued interest receivable (15,238) (29,597)Prepaid assets 6,000 (6,000)Due to The Metropolitan Community College (245,144) 590,998 Accrued liabilities 31,254 (287)Deferred revenue 231,946 -

Net cash used in operating activities (373,176) (281,683)

Investing ActivitiesPurchase of marketable securities (2,212,787) (3,534,054)Sale of marketable securities 2,175,130 3,762,973

Net cash provided by (used in) investing activities (37,657) 228,919

Financing ActivitiesContributions restricted for long-term investments 391,911 26,266

Net cash provided by financing activities 391,911 26,266

Decrease in Cash and Cash Equivalents (18,922) (26,498)

Cash and Cash Equivalents, Beginning of Year 716,226 742,724

Cash and Cash Equivalents, End of Year $ 697,304 $ 716,226

The Metropolitan Community College Notes to Financial Statements

June 30, 2019 and 2018

29

Note 1: Summary of Significant Accounting Policies

Organization

The Junior College District of Metropolitan Kansas City, Missouri (the District) was created in May 1964 by the voters of seven suburban school districts and the Kansas City School District to provide comprehensive higher educational programs through its area colleges. The District also offers courses, which meet the needs of persons who desire enrichment or retraining in the areas of liberal arts, occupational education, continuing education and community services. The District is now comprised of twelve school districts: Belton, Center, Grandview, Hickman Mills, Lee’s Summit, North Kansas City, Raytown, Kansas City, Blue Springs, Independence, Fort Osage and Park Hill. Five primary colleges have been established to serve the patrons of the District: Blue River, Longview, Maple Woods, Penn Valley and the Business & Technology College.

The financial statements of The Metropolitan Community College (the College) for the years presented, include the combined accounts and operations of the District and the Kansas City Metropolitan Community Colleges Building Corporation (the Building Corporation), which is a blended component unit. This summary of significant accounting policies of the College is presented to assist in understanding the College’s financial statements. The financial statements and notes are representations of the College’s management, who are responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States as applicable to governmental colleges and universities and have been consistently applied in the preparation of the financial statements. The following is a summary of the more significant policies.

Reporting Entity

The College is governed by a six-member Board of Trustees. As required by accounting principles generally accepted in the United States, the College’s financial statements present the District (the primary government), its blended component unit (the Building Corporation) and its discretely presented component unit, The Metropolitan Community College Foundation (the Foundation). The component units are included in the College’s reporting entity because of the significance of their operations and financial relationships with the College.

Blended Component Unit

The Building Corporation is a not-for-profit corporation formed in 1984, which is governed by a four-member board. Although it is legally separate from the District, the Building Corporation is reported as if it were part of the primary government because its sole purpose is to provide for the construction and financing of educational facilities used by the College. The Building Corporation has the authority to issue Leasehold Development Bonds for the purposes of refunding previous bond issues or constructing new facilities. The buildings are owned by the Building Corporation, which, in turn, leases the buildings to the District under annually renewable lease agreements. The lease payments are equal to the principal and interest debt service payments required to service the related bond issuances. As the Building Corporation is a blended component unit, all balances and transactions between the District and Building Corporation have been eliminated. The Building Corporation has a June 30 fiscal year end.


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Discretely Presented Component Unit

The Foundation is a non-profit corporation and is considered to be a related organization to the District. The District’s Board of Trustees approves nominations to the Foundation’s Board of Directors, but the District’s accountability does not extend beyond approval of board members. The District is not financially accountable for the Foundation. Although the District does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon, which the Foundation holds and invests, is restricted to the activities of the District by the donors. As these restricted resources can only be used by, or for the benefit of, the District, the Foundation is considered a component unit of the College and is discretely presented in the College’s financial statements. During the years ended June 30, 2019 and 2018, the District received direct contributions from the Foundation of $47,315 and $154,929, respectively. The Foundation has a June 30 fiscal year end.

Separate financial statements for the Foundation can be obtained at The Metropolitan Community College, 3200 Broadway, Kansas City, Missouri, 64111. The Foundation is presented on the accrual basis of accounting.

Basis of Accounting

For financial reporting purposes, the College is considered a special purpose government engaged only in business-type activities. Accordingly, the College’s financial statements have been presented using the economic resources measurement focus and the accrual basis of accounting. Under the accrual basis, revenues are recognized when earned, and expenses are recorded when an obligation has been incurred. All significant inter-company transactions have been eliminated.

Cash Equivalents

Cash includes deposits held at banks and all highly liquid instruments purchased with an original maturity of three months or less. Cash equivalents represent excess operating cash swept into an overnight repurchase agreement account, which are readily converted back to cash, on a daily basis, as operating funds are needed.

Investments

It is the College’s policy to invest in obligations of the U.S. Treasury, repurchase agreements, bank certificates of deposit and agencies of the federal government and instrumentalities and top-rated commercial paper, which are permissible under Missouri statutes. The Building Corporation is allowed to invest in “permitted investments” as defined by applicable bond indentures. Investments are reported at fair value, except for investments in nonnegotiable certificates of deposit, which are carried at amortized cost.

In addition to the investment tools available to the College, the Foundation’s marketable securities consist of equity securities, mutual fund shares, corporate bonds and government notes reported at fair value.


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Accounts Receivable

Accounts receivable consists of tuition and fee charges to students and charges for auxiliary enterprise services provided to students, faculty and staff. Accounts receivable is recorded net of estimated uncollectible amounts. Accounts receivable also includes amounts due from the federal government, state and local governments or private sources, in connection with reimbursement of allowable expenditures made pursuant to the College’s grants and contracts.

Capital Assets

Land, construction in progress, buildings and improvements, software and equipment are recorded at cost for assets purchased and at appraised value at date of grant for items acquired by donation.

Capital assets are defined by the College as assets with an initial, individual cost in excess of $5,000 (equipment) or $50,000 (building and improvements; infrastructure and software) estimated useful lives in excess of one year. Interest costs on construction in progress are capitalized when amounts are significant.

Buildings and improvements and equipment are being depreciated on the straight-line basis over their estimated useful lives as follows: buildings-40 years, improvements-15 years, software- 3 years and equipment, 3 to 10 years and rental textbooks are capitalized at cost and depreciated over 3 years. The College’s investment in infrastructure assets, which is not material to the total of capital assets, is recorded at cost and included in the costs of the related property.

Deferred Outflows of Resources

The College reports the consumption of net position that is applicable to a future period as deferred outflows of resources in a separate section of its statements of net position.

Deferred Inflows of Resources

The College reports an acquisition of net position that is applicable to a future period as deferred inflows of resources in a separate section of its statements of net position.

Loss on Refunding of Bonds

Losses incurred on the refunding of bond issues have been deferred and are being amortized over the life of the bonds and are included in deferred outflows of resources. The net amount as of June 30, 2019 and 2018 was $2,068,094 and $2,587,341, respectively.


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Compensated Absences

College employees accumulate a limited amount of earned but unused vacation and sick leave for subsequent use. Earned, but unused vacation is paid to the employee upon termination, or retirement. Earned, but unused sick leave is paid to an active employee’s beneficiary upon death if occurring during active employment.

Unearned Revenue

Half of the summer school tuition revenue and all tuition for school sessions starting after June 30 have been deferred to the next fiscal year.

Unearned Revenue - Contracts

Unearned revenue – contracts includes the difference between rent on a straight-line basis, as required by generally accepted accounting principles, and the actual scheduled payments for the lease as well as unearned revenue on a bookstore vending contract.

Defined Benefit Other Postemployment Benefit Plan

The College participates in a single-employer other postemployment benefit plan (the OPEB Plan) that provides life insurance, medical, vision and dental benefits. For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information has been determined on the same basis as they are reported by the OPEB Plan. For this purpose, benefit payments are recognized when due and payable in accordance with the benefit terms. The College funds benefits on a pay-as-you-go basis and there are no assets accumulated in the Plan.

Classification of Revenues

The College has classified revenues as either operating or non-operating revenues according to the following criteria:

Operating Revenues Operating revenues include activities that have the characteristics of exchange transactions, such as (1) student tuition and fees, net of scholarship discounts and allowances, (2) sales and services of auxiliary enterprises and (3) federal, state and local grants and contracts.

Non-operating Revenues Non-operating revenues include activities that have the characteristics of non-exchange transactions, such as contributions and other revenue sources that are defined as nonoperating revenues by GASB No. 9, Reporting Cash Flows of Proprietary and Nonexpendable Trust Funds and Government Entities that use Proprietary Fund Accounting and GASB No. 34, such as state appropriations, investment income and county property taxes.


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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.

County Property Tax Revenues

The four counties in which the District lies, bill the residents for real and personal property taxes due the District. Bills are sent in November and are delinquent after December 31. The taxes are collected by the counties primarily from November through the end of January. Substantially all amounts are received by the end of March. Taxes are remitted to the District throughout the collection period net of a 1.6 percent charge for the years ended June 30, 2019 and 2018, for assessment and collection services on an as-collected basis and no accrual is made for delinquent property taxes.

State Appropriations

State appropriations earned for general operating purposes are determined on a fiscal year basis ending June 30 based upon the state aid funding formula. Using this formula, fiscal year 1991–92 is a base year and following years are adjusted for inflation or any major state-approved additions to programs.

Income Tax Status

The College is exempt from income tax as a local governmental unit. The Building Corporation and the Foundation have qualified for exemption from income tax under Section 501(c)3 of the Internal Revenue Code. However, the College is subject to federal income tax on any unrelated business taxable income.

Net Position

Net position represents the difference between assets and deferred outflows of resources and liabilities and deferred inflows of resources. Net position is presented in three major categories. The first is net investment in capital assets, which represents the College’s equity in property, plant and equipment. The second is restricted. The third is unrestricted, including amounts designated by the Board.

Net investment in capital consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowings used for the acquisition, construction or improvement of those assets. Net position is reported as restricted when there are limitations imposed on their use through enabling legislation or through external restrictions imposed by creditors, grantors or laws or regulations of other governments.

The College first applied restricted resources when an expense is incurred for purposes for which both restricted and unrestricted assets are available.


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Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and deferred outflows of resources and liabilities and deferred inflows of resources and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues, expenses and other changes in net position during the reporting period. Actual results could differ from those estimates.

Scholarship Allowances and Student Aid

Financial aid to students is reported in the financial statements, as prescribed by the National Association of College and University Business Officers (NACUBO). Certain aid (loans, funds provided to students as awarded by third parties and Federal Direct Lending) 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 revenue. 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.

Pensions

The College participates in two cost-sharing multiple employer defined benefit pension plans: the Public Education Employee Retirement System of Missouri (“PEERS”) and Public School Retirement System of Missouri (“PSRS”).

The fiduciary net position, as well as additions to and deductions from the fiduciary net position, of PEERS and PSRS have been determined on the same basis as they are reported by PEERS and PSRS. The financial statements were prepared using the accrual basis of accounting. Member and employer contributions are recognized when due, pursuant to formal commitments and statutory requirements. Benefits and refunds of employee contributions are recognized when due and payable in accordance with the statutes governing PSRS. Expenses are recognized when the liability is incurred, regardless of when payment is made. Investments are reported at fair value on a trade date basis. The fiduciary net position is reflected in the measurement of the College’s net pension liability, deferred outflows and inflows of resources related to pensions and pension expense.


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Note 2: Deposits and Investments

Missouri statutes require depository banks to pledge securities as collateral for public funds on deposit, except funds covered by federal depository insurance. Missouri statutes do not extend to the Building Corporation regarding collateralization of funds not covered by federal depository insurance. The College deposits were not exposed to custodial credit risk as of June 30, 2019 and 2018. The College has the following deposits and investments:

Deposits

2019 2018Carrying value

Cash 60,637$ 158,969$ Certificates of deposits 48,507,000 54,517,000

48,567,637$ 54,675,969$

Investments Maturities in Years

Cost or Less ThanFair Value 1 1 - 5

Year Ended June 30, 2019District

Repurchase agreement $ 41,655,000 $ 41,655,000 $ - Less outstanding checks

and deposits/withdrawals in transit (345,471) (345,471) - Federal Home Loan Bank 574,074 - 574,074 Federal National Mortgage Association 922,586 - 922,586 Treasury Bills 24,790,153 24,790,153 -

Total District 67,596,342 66,099,682 1,496,660

Building CorporationMoney market mutual funds 5,056,610 5,056,610 -

Total Building Corporation 5,056,610 5,056,610 -

Total investments $ 72,652,952 $ 71,156,292 $ 1,496,660


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Cost or Less ThanFair Value 1 1 - 5

Year Ended June 30, 2018District

Repurchase agreement 50,721,000$ $ 50,721,000 -$ Less outstanding checks

and deposits/withdrawals in transit (549,260) (549,260) - Total District 50,171,740 50,171,740 -

Building CorporationMoney market mutual funds 5,004,518 5,004,518 -

Total Building Corporation 5,004,518 5,004,518 -

Total investments 55,176,258$ 55,176,258$ -$

A summary of carrying values of investments and deposits at June 30 were as follows:

2019 2018

Deposits 48,567,637$ 54,675,969$ Investments 72,652,952 55,176,258

121,220,589$ 109,852,227$

The investments and deposits at June 30 are shown on the statements of net position as follows:

2019 2018

Cash and cash equivalents 46,426,776$ 55,335,227$ Short-term investments 47,947,153 18,412,000 Long-term investments 26,846,660 36,105,000

Total 121,220,589$ 109,852,227$

State law limits investments in government and municipal bonds and top-rated commercial paper as recognized by national rating organizations. The College has no investment policy that would further limit its investment choices. As of June 30, 2019, the College’s repurchase agreement is invested in government agencies that are all rated Aaa, AA+ and AAA by Moody’s Investors Services, Standards & Poor’s and Fitch’s ratings, respectively. The District’s and Building Corporation’s investments in money market mutual funds are invested in Treasury Obligations which is rated Aaa, AA+ and AAA by Moody’s Investors Services, Standard & Poor’s and Fitch’s ratings, respectively. All other investments held by the District and the Building Corporation are


June 30, 2019 and 2018

37

rated Aaa, AA+ and AAA by Moody’s Investors Service, Standard & Poor’s and Fitch’s ratings, respectively.

The College places no limit on the amount the College may invest in any one issuer. In fiscal year 2019, more than five percent of the College’s investments were invested in government agencies. These investments were 34 percent of total investments.

The College’s deposit and investment balances were not exposed to custodial credit risk as of June 30, 2019 and 2018.

Note 3: Capital Assets

Capital assets consist of the following categories:

Beginning Balance Additions Disposals Transfers

Ending Balance

Capital assets not being depreciatedLand 8,254,361$ -$ (20,067)$ -$ 8,234,294$ Art 56,000 - - - 56,000 Construction in progress 2,024,696 790,453 - (2,065,487) 749,662 Equipment in progress - 1,397,033 - (1,397,033) -

Total assets not being depreciated 10,335,057 2,187,486 (20,067) (3,462,520) 9,039,956

Capital assets being depreciatedBuilding and improvements 220,752,587 - (5,833,335) 2,065,487 216,984,739 Infrastructure 8,422,866 1,550 - - 8,424,416 Equipment 21,491,128 - (1,688,589) 1,397,033 21,199,572 Software 1,150,891 - - - 1,150,891

Total assets being depreciated 251,817,472 1,550 (7,521,924) 3,462,520 247,759,618

Less accumulated depreciationBuilding and improvements 121,233,205 5,020,252 (3,813,836) - 122,439,621 Infrastructure 3,642,534 421,365 - - 4,063,899 Equipment 18,654,996 944,564 (1,656,419) - 17,943,141 Software 852,401 155,734 - - 1,008,135

144,383,136 6,541,915 (5,470,255) - 145,454,796

Net capital assets 117,769,393$ (4,352,879)$ (2,071,736)$ -$ 111,344,778$

2019


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Beginning Balance Additions Disposals Transfers

Ending Balance

Capital assets not being depreciatedLand 8,254,361$ -$ -$ -$ 8,254,361$ Art 56,000 - - - 56,000 Construction in progress 2,836,649 3,589,017 - (4,400,970) 2,024,696 Equipment in progress 269,998 1,056,189 - (1,326,187) - Software in progress 467,202 - - (467,202) -

Total assets not being depreciated 11,884,210 4,645,206 - (6,194,359) 10,335,057

Capital assets being depreciatedBuilding and improvements 217,525,054 - - 3,227,533 220,752,587 Infrastructure 7,251,348 - (1,919) 1,173,437 8,422,866 Equipment 20,839,643 12,670 (687,372) 1,326,187 21,491,128 Software 683,689 - - 467,202 1,150,891

Total assets being depreciated 246,299,734 12,670 (689,291) 6,194,359 251,817,472

Less accumulated depreciationBuilding and improvements 116,272,765 4,960,440 - - 121,233,205 Infrastructure 3,248,993 393,541 - - 3,642,534 Equipment 18,306,014 1,036,355 (687,373) - 18,654,996 Software 683,689 168,712 - - 852,401

138,511,461 6,559,048 (687,373) - 144,383,136

Net capital assets 119,672,483$ (1,901,172)$ (1,918)$ -$ 117,769,393$

2018

The College elected not to capitalize their collection of library books. This collection adheres to the College’s policy to (a) maintain them for public exhibition, education or research; (b) protect, keep unencumbered, care for, and preserve them; and (c) require proceeds from their sale to be used to acquire other collection items. Generally accepted accounting principles permit collections maintained in this manner to be charged to operations at the time of purchase rather than be capitalized.


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Note 4: Long-term Liabilities

Long-term liability activity for the District and the Building Corporation were as follows:

Beginning Ending Current Balance Additions Deductions Balance Portion

DistrictCompensated absences 2,726,562$ 2,125,931$ 1,928,095$ 2,924,398$ 2,183,800$ Other postemployment benefit obligations 9,868,047 1,152,252 1,110,909 9,909,390 - Net pension liability 60,736,716 6,965,718 6,493,711 61,208,723 - Capital lease purchases 904,948 - 452,474 452,474 452,474 Unearned revenue - contracts 350,000 - 50,000 300,000 50,000

Building CorporationBonds payable

Leasehold revenue bonds, Series 2014APrincipal 37,895,000 - - 37,895,000 -

Leasehold revenue bonds, Series 2014B Principal 15,500,000 - 4,250,000 11,250,000 4,350,000

Total long-term liabilities 127,981,273$ 10,243,901$ 14,285,189$ 123,939,985$ 7,036,274$

2019

Beginning Ending Current Balance Additions Deductions Balance Portion

DistrictCompensated absences 2,886,142$ 1,942,070$ 2,101,650$ 2,726,562$ 2,217,858$ Other postemployment benefit obligations (1,512,221) 13,429,268 2,049,000 9,868,047 - Net pension liability 62,582,048 4,630,486 6,475,818 60,736,716 - Capital lease purchase 1,353,862 - 448,914 904,948 452,473 Unearned revenue - contracts 698,991 - 348,991 350,000 50,000

Building CorporationBonds payable

Leasehold revenue bonds, Series 2014APrincipal 37,895,000 - - 37,895,000 -

Leasehold revenue bonds, Series 2014BPrincipal 19,660,000 - 4,160,000 15,500,000 4,250,000

Total long-term liabilities 123,563,822$ 20,001,824$ 15,584,373$ 127,981,273$ 6,970,331$

2018

Insurance replacement cost for buildings subject to lien under the Building Corporation’s and the District’s debt agreements are $54,669,186. The Building Corporation constructs the educational facilities for the College and leases them to the College on annually renewable leases. The College has agreed to appropriate the amount required by the individual bond principal and interest requirements. This is subject to annual appropriation from the College’s budget. The Building Corporation’s Series 2014A and Series 2014B fall under this arrangement. Total principal and interest remaining on this debt was $56,896,418 and $62,607,542 as of June 30, 2019 and 2018, respectively, with final payment in fiscal 2029. Interest paid during the years ended June 30, 2019 and 2018 was $1,461,124 and $1,555,928, respectively.


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Building Corporation Series 2014

On September 25, 2014, the Building Corporation issued Leasehold Revenue Refunding Bonds Series 2014A, $37,895,000 non-taxable and Series 2014B, $27,450,000 taxable bond issuance, with a weighted average interest rate of 3.06 percent for Series 2014A and 2.2545 percent for Series 2014B. The bonds were issued for the purpose of the advance refunding and legal defeasance of the balances of the Leasehold Revenue and Improvement Bonds Series 2006 of $58,460,000 and Lease Certificates of Participation Bonds Series 2008 of $29,535,000.

At June 30, 2019 and 2018, the current outstanding balance of these defeased bonds was $46,410,000 and $52,055,000, respectively. In accordance with accounting principles generally accepted in the United States of America, the outstanding balances of the defeased bonds Series 2006 and Series 2008 bonds are not reflected on the statements of net position of Building Corporation.

As provided in the bond indenture and the certificates, the Series 2014A and Series 2014B shall be subject to the redemption and payment prior to the stated maturity, upon instructions from the District, due to certain conditions or events affecting title, as a whole or in part on any date, at par (100 percent), plus accrued interest (if any) to the redemption date. During the years ended June 30, 2019 and 2018, none of the Series 2014A and Series 2014B were retired.

Series 2014A

Total to Principal Interest InterestYear Ending be Paid Maturities Expense Rate

2020 $ 1,159,587 $ - $ 1,159,587 3.06%2021 1,159,587 - 1,159,587 3.06%2022 3,217,610 2,090,000 1,127,610 3.06%2023 5,689,259 4,665,000 1,024,259 3.06%

2024-2028 28,407,122 25,550,000 2,857,122 3.06%2029 5,675,529 5,590,000 85,529 3.06%

$45,308,694 $37,895,000 $ 7,413,694


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Series 2014B

Total to Principal Interest InterestYear Ending be Paid Maturities Expense Rate

2020 $ 4,554,596 $ 4,350,000 $ 204,596 2.25%2021 4,550,454 4,445,000 105,454 2.25%2022 2,482,674 2,455,000 27,674 2.25%

$11,587,724 $11,250,000 $ 337,724

Capital Lease

Capital lease purchases can be summarized as follows:

2019 2018

Dell Equipment (A) 332,287$ 664,573$ Dell Virus Protection Software (B) 120,187 240,375

452,474 904,948 Less current maturities (452,474) (452,473)

-$ 452,475$

(A) On March 27, 2014, the College entered into a capital lease agreement with Dell Financial Services. The lease includes an interest-free $1,976,942 agreement. The lease included wiring, wireless connectivity, security and other technology updates.

(B) In June 2017, the College entered into a capital lease agreement with Dell Financial Services. The lease includes an interest-free $360,562 agreement. The lease included virus protection software.

Aggregate future minimum lease payments at June 30, 2019 were:

PrincipalYear Ending Maturities

2020 452,474$


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Unearned Revenue - Contracts

Unearned revenue – contracts can be summarized as follows:

2019 2018

Follett agreement unearned revenue (A) 300,000$ 350,000$

300,000 350,000 Less current maturities (50,000) (50,000)

250,000$ 300,000$

(A) On July 1, 2015, the College entered into a 10-year agreement with Follett Higher

Education Group, Inc. (“Follett”) to outsource bookstores for the College on five campuses terminating in 2025. The agreement required Follett to provide a one-time payment of $500,000, which was received by the College during 2016. If the agreement is terminated before expiration, the College is to return the unamortized value of the one-time payment. As of June 30, 2019 and 2018, the unamortized value of the payment was $300,000 and $350,000, respectively.

Note 5: Other Postemployment Benefits

In 2018, the College adopted GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, and in 2017, the College reported under GASB Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions, which require the following measurement and recognition disclosures:

Plan Description

The College sponsors a single-employer defined benefit other postemployment benefit (OPEB) plan that provides life insurance, medical, vision and dental benefits to all qualifying retirees and their dependents. Under the College’s plan, an employee who meets the retirement criteria must have opted to retire before July 1, 2013 to receive these benefits. The criteria for retirement is the active employee must either be at least age 55 with 10 years of consecutive full-time service, or have 30 years of full-time service. Eligible retirees and their dependents receive coverage through a fully-insured plan, the same plans that are available for active employees. No assets are accumulated in a trust that meets the criteria in paragraph 4 of GASB Statement No. 75.

Benefits Provided

The life insurance benefit is two times final salary at retirement. The retiree pays no premiums on this coverage until age 65. If the retiree elects to continue this coverage from age 65 to age 70, they must pay the full premium. After age 70, this benefit is no longer available.


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The retiree is eligible to continue coverage of other benefits upon retirement by paying no premium until age 65 and the COBRA premium from age 65 onward. The employee can choose which benefits, medical, vision and/or dental they will continue to receive.

The employees covered by the OPEB Plan at June 30 are:

2019 2018Inactive employees or beneficiaries currently receiving

benefit payments 427 601 Active employees 777 801

1,204 1,402

Total OPEB Liability

The College’s total OPEB liability of $9,909,390 and $9,868,047 was measured as of June 30, 2019 and 2018, respectively, and was determined by an actuarial valuation as of July 1, 2018, rolled forward to June 30, 2019 and July 1, 2016 rolled forward to June 30, 2018, respectively.

The total OPEB liability in the July 1, 2018 and 2016 actuarial valuations was determined using the following actuarial assumptions, applied to all periods included in the measurement:

2018 2016Discount rate 3.36% per annum (end of period) 3.30% per annum (end of period)

3.30% per annum (beginning of period) 3.35% per annum (beginning of period)Salary increases 2.0% per year 2.0% per yearMedical cost trend rates 8.0% for 2019, decreasing 0.5% per year for 8.0% for 2018, decreasing 0.5% per year for

eight years ending at 4.5% five years then decreasing 0.25% per year for an ultimate rate of 5.0% for 2026 and later years

Dental cost trend rate 3.5% per year 3.5% per yearVision cost trend rate 2.5% per year 2.5% per yearH.S.A. and F.S.A. contribution trend rate 2.0% per year 2.0% per year

The discount rate used for the plan was the 20-year, tax-exempt municipal bond rate as there are no assets in the Plan.

Mortality rates were based on the RPH-2014 Adjusted to 2006 Total Dataset Headcount-weighted Mortality table with MP-2018 Full Generational Improvement.

The actuarial assumptions used in the July 1, 2018 valuation were based on the results of an actuarial experience study from 2016.


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Changes in Total OPEB Liability

Changes in total OPEB liability are:

2019 2018

Service cost 364,448$ 258,494$ Interest 335,517 365,040 Changes in assumptions or other inputs 452,287 (374,914)Benefit payments (1,110,909) (2,049,000)

Net change in OPEB 41,343 (1,800,380)

Net OPEB asset under GASB 45, beginning of year, as previously reported 9,868,047 (1,512,221)

Cumulative Effect of Change in Accounting Principle - 13,180,648

Total OPEB liability under GASB 75, beginning of year,as restated 9,868,047 11,668,427

Total OPEB liability, end of year 9,909,390$ 9,868,047$

Sensitivity of the Total OPEB Liability to Changes in the Discount Rate and Health Care Cost Trend Rates

The total OPEB liability of the College has been calculated using a discount rate of 3.36 percent (3.3 percent in prior year). The following presents the total OPEB liability using a discount rate 1 percent higher and 1 percent lower than the current discount rate.

1% Decrease Current Discount 1% Increase(2.36%) Rate (3.36%) (4.36%)

College's total OPEB liability 10,596,604$ $ 9,909,390 9,280,200$


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The total OPEB liability of the College has been calculated using health care cost trend rates of 8.50 percent decreasing to 4.50 percent. The following presents the total OPEB liability using health care cost trend rates 1 percent higher and 1 percent lower than the current health care cost trend rates.

Healthcare Cost Trend

Rate (8.5%1% Decrease decreasing to 4.5%) 1% Increase

College's total OPEB liability 9,174,436$ $ 9,909,390 10,753,973$

OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB

For the years ended June 30, 2019 and 2018, the College recognized OPEB expense of $718,292 and $572,386, respectively. For the years ended June 30, 2019 and 2018, the College recognized revenue of $0 for support provided by nonemployer contributing entities. At June 30, 2019 and 2018, the College reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:

Deferred Deferred Deferred DeferredOutflows of Inflows of Outflows of Inflows of Resources Resources Resources Resources

Differences between expected and actual experience $ 327,746 $ - $ 259,628 $ - Changes of assumptions 273,679 491,231 - 583,396

Total $ 601,425 $ 491,231 $ 259,628 $ 583,396

2019 2018

Amounts reported as deferred outflows of resources and deferred inflows of resources at June 30, 2019, related to OPEB will be recognized in OPEB expense as follows:

Fiscal Year Ending Amount

2020 18,327$ 2021 18,327 2022 18,327 2023 18,327 2024 18,327 Thereafter 18,559

$ 110,194


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Note 6: Retirement Plan and Net Pension Liability

General Information about the Pension Plan

All full-time and certain part-time employees of the College participate either in the Public School Retirement System (“PSRS”) or the Public Education Employee Retirement System (“PEERS”), both of which are cost sharing multiple-employer public employee retirement systems, as required by the retirement law set forth in Chapter 169, Revised Statutes of Missouri.

PEERS Plan Description. PEERS is a mandatory cost-sharing multiple-employer retirement system for all public school district employees (except the school districts of St. Louis and Kansas City), employees of the Missouri Association of School Administrators and community college employees (except the Community College of St. Louis). Employees of covered districts who work 20 or more hours per week on a regular basis and who are not contributing members of the Public School Retirement System of Missouri (PSRS) must contribute to PEERS. Employees of PSRS who do not hold Missouri educator certificates also contribute to PEERS. PEERS was established as a trust fund by an Act of the Missouri General Assembly effective October 13, 1965. Statutes governing the System are found in Sections 169.600-169.715 and Sections 169.560-169.595 RSMo. The statutes place responsibility for the operation of PEERS on the Board of Trustees of the Public School Retirement System of Missouri. A Comprehensive Annual Financial Report (“CAFR”) can be obtained at www.psrs-peers.org.

PSRS Plan Description. PSRS is a mandatory cost-sharing multiple employer retirement system for all full-time certificated employees and certain part-time certificated employees of all public school districts in Missouri (except the school districts of St. Louis and Kansas City) and all public community colleges. PSRS also includes certificated employees of PSRS, Missouri State Teachers’ Association, Missouri State High School Activities Association and certain employees of the state of Missouri who elected to remain covered by PSRS under legislation enacted in 1986, 1987 and 1989. The majority of PSRS members are exempt from Social Security contributions. In some instances, positions may be determined not to be exempt from Social Security contributions. Any PSRS member who is required to contribute to Social Security comes under the requirements of Section 169.070 (9) RSMo, known as the “2/3s statute.” PSRS members required to contribute to Social Security are required to contribute two-thirds of the approved PSRS contribution rate and their employer is required to match the contribution. The members’ benefits are further calculated at two-thirds the normal benefit amount. A CAFR can be obtained at www.psrs-peers.org.

PEERS Benefits Provided. PEERS is a defined benefit plan providing service retirement and disability benefits to its members. Members are vested for service retirement benefits after accruing five years of service. Individuals who (a) are at least age 60 and have a minimum of five years of service, (b) have 30 years of service or (c) qualify for benefits under the “Rule of 80” (service and age total at least 80) are entitled to a monthly benefit for life, which is calculated using a 1.61 percent benefit factor. Members qualifying for “Rule of 80” or “30-and-out” are entitled to an additional temporary 0.8 percent benefit multiplier until reaching minimum Social Security age (currently age 62). Actuarially age-reduced retirement benefits are available with five years of service at age 55. Members who are younger than age 55 and who do not qualify under the “Rule of 80” but have between 25 and 29.9 years of service may retire with a lesser benefit factor. Members that are three years beyond normal retirement can elect to have their lifetime monthly


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benefits actuarially reduced in exchange for the right to also receive a one-time partial lump sum (PLSO) payment at retirement equal to 12, 24 or 36 times the Single Life benefit amount. A Summary Plan Description detailing the provisions of the plan can be found on PSRS’ website at www.psrs-peers.org.

PSRS Benefits Provided. PSRS is a defined benefit plan providing retirement, disability and death/survivor benefits. Members are vested for service retirement benefits after accruing five years of service. Individuals who (a) are at least age 60 and have a minimum of 5 years of service, (b) have 30 years of service or (c) qualify for benefits under the “Rule of 80” (service and age total at least 80) are entitled to a monthly benefit for life, which is calculated using a 2.5 percent benefit factor. Beginning July 1, 2001, and ending July 1, 2014, a 2.55 percent benefit factor is used to calculate benefits for members who have 31 or more years of service. Actuarially age-reduced benefits are available for members with five to 24.9 years of service at age 55. Members who are younger than age 55 and who do not qualify under the “Rule of 80” but have between 25 and 29.9 years of service may retire with a lesser benefit factor. Members that are three years beyond normal retirement can elect to have their lifetime monthly benefits actuarially reduced in exchange for the right to also receive a one-time PLSO payment at retirement equal to 12, 24 or 36 times the Single Life benefit amount. A Summary Plan Description detailing the provisions of the plan can be found on PSRS’ website at www.psrs-peers.org. Since the prior valuation date, the benefit provisions were amended to make permanent an early retirement benefit allowing members to retire at any age after 25 years of service.

PEERS Cost-of-Living Adjustments (COLA). The PEERS Board has established a policy of providing a 0.00 percent COLA for years in which the CPI increases between 0.00 percent and 2.00 percent, a 2.00 percent COLA for years in which CPI increases between 2.00 percent and 5.00 percent, and a COLA of 5.00 percent if the CPI increase is greater than 5.00 percent. If the CPI decreases, no COLA is provided. For any member, such adjustments commence on the fourth January after commencement of benefits and occur annually thereafter. The total of such increases may not exceed 80 percent of the original benefit for any member.

PSRS Cost-of-Living Adjustments (COLA). The PSRS Board has established a policy of providing a 0.00 percent COLA for years in which the CPI increases between 0.00 percent and 2.00 percent, a 2.00 percent COLA for years in which CPI increases between 2.00 percent and 5.00 percent, and a COLA of 5.00 percent if the CPI increase is greater than 5.00 percent. If the CPI decreases, no COLA is provided. For any member retiring on or after July 1, 2001, such adjustments commence on the second January after commencement of benefits and occur annually thereafter. The total of such increases may not exceed 80 percent of the original benefit for any member.

PEERS Contributions. PEERS members were required to contribute 6.86 percent of their annual covered salary and employer cost of medical, dental and vision premiums during fiscal years 2019 and 2018. Employers were required to match the contributions made by employees. The contribution rate is set each year by the PSRS Board of Trustees upon the recommendation of the independent actuary within the contribution restrictions set in Section 169.030 RSMo. The annual statutory increase in the total contribution rate may not exceed 0.5 percent of pay.


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PSRS Contributions. PSRS members were required to contribute 14.5 percent of their annual covered salary and employer cost of medical, dental and vision premiums during fiscal years 2019 and 2018. Employers were required to match the contributions made by employees. The contribution rate is set each year by the PSRS Board of Trustees upon the recommendation of the independent actuary within the contribution restrictions set in Section 169.030 RSMo. The annual statutory increase in the total contribution rate may not exceed 1 percent of pay. Contributions for employees of the State of Missouri were made by the state in accordance with the actuarially determined contribution rate needed to fund current costs and prior service costs of state employees as authorized in Section 104.342.8 RSMo.

Contributions. The College’s contributions to PEERS were $2,075,850 and $2,097,934 and to PSRS were $4,417,861 and $4,377,884 for the years ended June 30, 2019 and 2018, respectively.

Pension Liabilities, Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions. At June 30, 2019 and 2018, the College recorded a liability of $14,053,319 and $14,518,955 for PEERS and $47,155,404 and $46,217,761, respectively, for PSRS for its proportionate share of the net pension liability. The net pension liability for the plan in total was measured as of June 30, 2018 and 2017 and determined by an actuarial valuation as of that date. At June 30, 2019 and 2018, the College’s proportionate share was 0.6336 percent and 0.6400 percent, respectively, for PSRS and 1.8187 percent and 1.9030 percent, respectively, for PEERS.

For the years ended June 30, 2019 and 2018, the College recognized a pension expense of $2,561,892 and $2,389,737 for PEERS and $4,295,145 and $4,130,286 for PSRS, respectively, its proportionate share of the total pension expense.


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At June 30, 2019, the College reported deferred outflows of resources and deferred inflows of resources from the following sources related to PEERS and PSRS pension benefits:

Deferred DeferredOutflows of Inflows ofResources Resources

Balance of deferred outflows and inflows due to:Differences between expected and actual

experience - PEERS $ 20,113 $ 329,217 Differences between expected and actual

experience - PSRS 2,456,359 2,224,617

Changes in assumptions - PEERS 2,165,521 - Changes in assumptions - PSRS 8,606,223 -

Net difference between projected and actual earnings onpension plan investments - PEERS - 190,625

Net difference between projected and actual earnings onpension plan investments - PSRS - 397,254

Changes in proportion and differences between employercontributions and proportionate share of contributions - PEERS 5,935 590,935

Changes in proportion and differences between employercontributions and proportionate share of contributions - PSRS 536,540 1,933,157

Employer contributions subsequent to themeasurement date - PEERS 1,997,125 -

Employer contributions subsequent to themeasurement date - PSRS 4,447,951 -

Total $ 20,235,767 $ 5,665,805


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At June 30, 2018, the College reported deferred outflows of resources and deferred inflows of resources from the following sources related to PEERS and PSRS pension benefits:

Deferred DeferredOutflows of Inflows ofResources Resources

Balance of deferred outflows and inflows due to:Differences between expected and actual

experience - PEERS $ 231,503 $ 588,160 Differences between expected and actual

experience - PSRS 2,745,258 2,942,781

Changes in assumptions - PEERS 2,499,604 - Changes in assumptions - PSRS 7,292,376 - Net difference between projected and actual earnings on

pension plan investments - PEERS 312,394 - Net difference between projected and actual earnings on

pension plan investments - PSRS 956,083 -

Changes in proportion and differences between employercontributions and proportionate share of contributions - PEERS 65,286 488,155

Changes in proportion and differences between employercontributions and proportionate share of contributions - PSRS 708,207 2,775,406

Employer contributions subsequent to themeasurement date - PEERS 2,075,850 -

Employer contributions subsequent to themeasurement date - PSRS 4,417,861 -

Total $ 21,304,422 $ 6,794,502


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Contributions subsequent to the measurement date of June 30, 2019 and 2018 of $6,445,076 and $6,493,711, respectively, were reported as deferred outflows of resources related to pensions and will be recognized as a reduction to the net pension liability in the years ending June 30, 2020 and 2019, respectively. Other amounts reported as collective deferred (inflows)/outflows of resources are to be recognized in pension expense as follows:

Year Ending June 30

2020 4,549,732$ 2021 2,820,712 2022 (1,305,267) 2023 1,226,472 2024 802,951 Thereafter 30,286

8,124,886$

Actuarial Assumptions. Actuarial valuations of PEERS and PSRS involves estimates of the reported amount and assumptions about probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality and future salary increases. Amounts determined regarding the total pension liability are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The actuarial assumptions used in the June 30, 2018 and 2017 valuations were based on the results of an actuarial experience study for the period 2010 to 2015 for both PEERS and PSRS dated June 2016.


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The total pension liability as of June 30, 2019 was determined based on an actuarial valuation prepared as of June 30, 2018 rolled forward one year, using the following actuarial assumptions:

Expected Return on Investments 7.50%, net of investment expenses and including 2.25% inflation.Inflation 2.25%Total Payroll Growth PEERS: 3.25% per annum, consisting of 2.25% inflation, 0.50% additional

inflation due to the inclusion of health care costs in pension earningsand 0.50% of real wage growth due to productivity.

PSRS: 2.75% per annum, consisting of 2.25% inflation, 0.25% additionalinflation due to the inclusion of health care costs in pension earningsand 0.25% of real wage growth due to productivity.

Future Salary Increases PEERS: 4.00% - 11.00%, depending on service and including 2.25%inflation, 0.5% additional inflation due to the inclusion of health carecosts in pension earnings and 0.5% of real wage growth.

PSRS: 3.00% - 9.50%, depending on service and including 2.25%inflation, 0.25% additional inflation due to the inclusion of health carecosts in pension earnings and 0.25% of real wage growth.

Cost-of-Living Increases The annual cost-of-living adjustment (COLA) assumed in the valuation increases from1.25% to 1.65% over eight years, beginning January 1, 2020. The COLA reflected forJanuary 1, 2019 is 2.00%, in accordance with the actual COLA approved by the Board.This COLA assumption reflects an assumption that general inflation will increase from1.85% to a normative inflation assumption of 2.25% over eight years. It is also based onthe current policy of the Board to grant a COLA on each January 1 as follows: If the Juneto June change in the CPI-U is less than 2% for consecutive one year periods, a cost-of-living increase of 2% will be granted when the cumulative increase is equal to or greaterthan 2%, at which point the cumulative increase in the CPI-U will be reset to zero. For thefollowing year, the starting CPI-U will be based on the June value immediately precedingthe January 1 at which the 2% cost-of-living increase is granted. If the June to Junechange in the CPI-U is greater than or equal to 2%, but less than 5%, a cost-of-livingincrease of 2% will be granted. If the June to June change in the CPI-U is greater than orequal to 5%, a cost-of-living increase of 5% will be granted. If the CPI decreases, no COLA is provided. The COLA applies to service retirements and beneficiary annuities.The COLA does not apply to the benefits for in-service death payable to spouses (wherethe spouse is over age 60), and does not apply to the spouse with children pre-retirementdeath benefit, the dependent children pre-retirement death benefit, or the dependent parentdeath benefit. The total lifetime COLA cannot exceed 80% of the original benefit. PSRSmembers receive a COLA on the second January after retirement, while PEERSmembers receive a COLA on the fourth January after retirement.


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Mortality AssumptionActives: PEERS: RP 2006 Total Dataset Employee Mortality Table, multiplied by an adjustment

factor of .75 at all ages for both males and females, with static projection using the 2014 SSA Improvement Scale to 2028.

PSRS: RP 2006 White Collar Employee Mortality Table, multiplied by an adjustmentfactor of .75 at all ages for both males and females, with static projection using the 2014 SSA Improvement Scale to 2028.

Non-Disabled Retirees,Beneficiaries and Survivors: PEERS: RP 2006 Total Dataset Employee Mortality Tables with plan-specific

experience adjustments and static projection to 2028 using the 2014 SSA Improvement Scale.

PSRS: RP 2006 White Collar Mortality Tables with plan-specific experienceadjustments and static projection to 2028 using the 2014 SSA Improvement Scale.

Disabled Retirees: RP 2006 Disabled Retiree Mortality Tables with static projection to 2028 using the2014 SSA Improvement Scale.

Changes in Actuarial Assumptionsand Methods PEERS and PSRS:

The investment return assumption was lowered from 7.6% to 7.50% per year.Fiduciary Net Position PEERS and PSRS issue a publicly available financial report that can be

obtained at www.psrs-peers.org.Long-term Expected Rate of Return The long-term expected rate of return on PEERS’ and PSRS’ investments was

determined using a building-block method in which best-estimate ranges of expectedfuture real rates of returns (expected returns, net of investment expense and inflation)are developed for each major asset class. These ranges are combined to produce thelong-term expected rate of return by weighting the expected future real rates of returnby the target asset allocation percentage and by adding expected inflation. Bestestimates of arithmetic real rates of return for each major asset class included in PEERS’ and PSRS’ target allocations as of June 30, 2018 are summarized below.

Target Asset Long-term Expected

Asset Class Allocation Real Rate of Return

U.S. public equity 27.0% 5.16%Public credit 7.0% 2.17%Hedged assets 6.0% 4.42%Non-U.S public equity 15.0% 6.01%U.S. Treasuries 16.0% 0.96%U.S. TIPS 4.0% 0.80%Private credit 4.0% 5.60%Private equity 12.0% 9.86%Private real estate 9.0% 3.56%

Total 100%


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The total pension liability as of June 30, 2018 was determined based on an actuarial valuation prepared as of June 30, 2017 rolled forward one year, using the following actuarial assumptions:

Expected Return on Investments 7.60%, net of investment expenses and including 2.25% inflation.Inflation 2.25%Total Payroll Growth PEERS: 3.25% per annum, consisting of 2.25% inflation, 0.50% additional

inflation due to the inclusion of health care costs in pension earningsand 0.50% of real wage growth.

PSRS: 2.75% per annum, consisting of 2.25% inflation, 0.25% additionalinflation due to the inclusion of health care costs in pension earningsand 0.25% of real wage growth.

Future Salary Increases PEERS: 4.00% - 11.00%, depending on service and including 2.25%inflation, 0.5% additional inflation due to the inclusion of health carecosts in pension earnings and 0.5% of real wage growth.

PSRS: 3.00% - 9.50%, depending on service and including 2.25%inflation, 0.25% additional inflation due to the inclusion of health carecosts in pension earnings and 0.25% of real wage growth.

Cost-of-Living Increases The annual cost-of-living adjustment (COLA) assumed in the valuation increases from1.20% to 1.65% over nine years, beginning January 1, 2019. The COLA reflected forJanuary 1, 2018 is 1.63%, in accordance with the actual COLA approved by the Board.This COLA assumption reflects an assumption that general inflation will increase from1.80% to a normative inflation assumption of 2.25% over nine years. It is also based on thecurrent policy of the Board to grant a COLA on each January 1 as follows: If the June toJune change in the CPI-U is less than 2% for consecutive one year periods, acost-of-living increase of 2% will be granted when the cumulative increase is equal to orgreater than 2%, at which point the cumulative increase in the CPI-U will be reset to zero.For the following year, the starting CPI-U will be based on the June value immediatelypreceding the January 1 at which the 2% cost-of-living increase is granted. If the June toJune change in the CPI-U is greater than or equal to 2%, but less than 5%, a cost-of-livingincrease of 2% will be granted. If the June to June change in the CPI-U is greater than orequal to 5%, a cost-of-living increase of 5% will be granted. If the CPI decreases, noCOLA is provided. The COLA applies to service retirements and beneficiary annuities.The COLA does not apply to the benefits for in-service death payable to spouses (wherethe spouse is over 60), and does not apply to the spouse with children pre-retirement deathbenefit, the dependent children pre-retirement death benefit, or the dependent parent deathbenefit. The total lifetime COLA cannot exceed 80% of the original benefit. PSRSmembers receive a COLA on the second January after retirement, while PEERSmembers receive a COLA on the fourth January after retirement.


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Mortality AssumptionActives: PEERS: RP 2006 Total Dataset Employee Mortality Table, multiplied by an adjustment

factor of .75 at all ages for both males and females, with static projection using the 2014 SSA Improvement Scale to 2028.

PSRS: RP 2006 White Collar Employee Mortality Table, multiplied by an adjustmentfactor of .75 at all ages for both males and females, with static projection using the 2014 SSA Improvement Scale to 2028.

Non-Disabled Retirees,Beneficiaries and Survivors: PEERS: RP 2006 Total Dataset Employee Mortality Tables with plan-specific

experience adjustments and static projection to 2028 using the 2014 SSA Improvement Scale.

PSRS: RP 2006 White Collar Mortality Tables with plan-specific experienceadjustments and static projection to 2028 using the 2014 SSA Improvement Scale.

Disabled Retirees: RP 2006 Disabled Retiree Mortality Tables with static projection to 2028 using the2014 SSA Improvement Scale.

Changes in Actuarial Assumptionsand Methods PEERS and PSRS:

The Board adopted a new COLA policy during fiscal 2017 resulting in a change in the future COLA assumption from an increasing assumption of 1.00%-1.50% over nineyears to an increasing assumption of 1.20%-1.65% over nine years, beginningJanuary 1, 2019.The investment return assumption was lowered from 7.75% to 7.60% per year.

Fiduciary Net Position PEERS and PSRS issue a publicly available financial report that can beobtained at www.psrs-peers.org.

Long-term Expected Rate of Return The long-term expected rate of return on PEERS’ and PSRS’ investments wasdetermined using a building-block method in which best-estimate ranges of expectedfuture real rates of returns (expected returns, net of investment expense and inflation)are developed for each major asset class. These ranges are combined to produce thelong-term expected rate of return by weighting the expected future real rates of returnby the target asset allocation percentage and by adding expected inflation. Bestestimates of arithmetic real rates of return for each major asset class included in PEERS’ and PSRS’ target allocations as of June 30, 2017 are summarized below.

Target Asset Long-term Expected

Asset Class Allocation Real Rate of Return

U.S. public equity 27.0% 5.16%Public credit 7.0% 2.17%Hedged assets 6.0% 4.42%Non-U.S public equity 15.0% 6.01%U.S. Treasuries 16.0% 0.96%U.S. TIPS 4.0% 0.80%Private credit 4.0% 5.60%Private equity 12.0% 9.86%Private real estate 9.0% 3.56%

Total 100%


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Discount Rate

The discount rate used to measure the total pension liability was 7.50 percent and 7.60 percent as of June 30, 2018 and 2017, respectively, and is consistent with the long-term expected geometric return on plan investments. The actuarial assumed rate of return was 8.0 percent from 1980 through fiscal year 2016. The Board of Trustees adopted a new actuarial assumed rate of return on 7.75 percent based on the actuarial experience studies and asset-liability study conducted during the 2016 fiscal year. The Board of Trustees further reduced the assumed rate of return to 7.60 percent effective with the June 30, 2017 valuation and then again to 7.5 percent effective with the June 30, 2018 valuation. The projection of cash flows used to determine the discount rate assumed that employer contributions would be made at the actuarially calculated rate computed in accordance with assumptions and methods stated in the funding policy adopted by the Board of Trustees, which requires payment of the normal cost and amortization of the unfunded actuarially accrued liability in level percent of employee payroll installments over 30 years utilizing a closed period, layered approach. Based on this assumption, the pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members.

Sensitivity of the College’s Proportionate Share of the Net Pension Liability to Changes in the Discount Rate

The sensitivity of the District’s net pension liability to changes in the discount rate is presented below. The District’s net pension liability calculated using the discount rate of 7.50 percent is presented as well as the net pension liability using a discount rate that is 1.0 percent lower (6.50 percent) or 1.0 percent higher (8.50 percent) than the current rate. The College’s net pension liability calculated using the discount rate of 7.6 percent is presented as well as the net pension liability using a discount rate that is 1.00 percent lower (6.6 percent) or 1.00 higher (8.6 percent) than the current rate as of June 30, 2018.

Proportionate Share of the NetPension Liability 1% Decrease Current Rate 1% Increase

As of June 30, 2019: (6.50%) (7.50%) (8.50%)

PEERS 26,463,996$ 14,053,319$ 3,644,534$ PSRS 84,529,587 47,155,404 16,093,560

As of June 30, 2018: (6.60%) (7.60%) (8.60%)

PEERS 26,745,722$ 14,518,955$ 4,263,254$ PSRS 82,085,306 46,217,761 16,398,809

The plans are multiemployer defined benefit plans. Both systems issue a publicly available financial report that includes financial statements and required supplementary information. That report may be obtained by writing to either system at: P.O. Box 268, Jefferson City, Missouri 65102 or by calling 1.800.392.6848.


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Note 7: Missouri United School Insurance Council

The Missouri United School Insurance Council (MUSIC) is a not-for-profit self-insurance association, which is designed to provide uniform property and casualty coverage under one comprehensive plan for participating school districts in Missouri. The College purchases insurance coverage for property, general liability, workers’ compensation and medical malpractice (for allied health students).

Members pay annual premiums, which are retained to pay losses, fund an administrative budget, buy risk management services and purchase reinsurance for excessive losses.

Because MUSIC is a pooling arrangement comprised of member districts, the members are owners of the loss fund. In the event that the loss fund and related reserves are unable to cover claims, the members would be assessed additional premiums by MUSIC to cover the deficit. The College is not aware of any deficit situation in the MUSIC loss fund, which would require the accrual of a liability as of June 30, 2019 and 2018.

Effective January 1, 1999, the terms of insurance coverage provided by MUSIC were revised, with the College increasing the level of its self-insurance for losses occurring below the amount of the MUSIC coverage stop-loss, which was $362,495 and $356,517 for calendar years 2019 and 2018, respectively. As of June 30, 2019 and 2018, an accrual of $353,475 and $340,468, respectively, has been made to cover the estimated exposure to claims the College would have to pay under its self-insurance agreement, including an estimate for claims incurred but not reported. This claims liability is based on estimates of the ultimate cost of claims including inflation factors and historical trend data. Other non-incremental costs are not included in the basis of estimating the liability.

Note 8: Designations of Unrestricted Net Positions

Unrestricted net position is designated for specific purposes by action of the Board or management. Designations for the use of unrestricted net position as of June 30, 2019 and 2018 are as follows:

2019 2018

Designated for deferred maintenance $ 1,797,733 $ 2,615,769 Designated for information technology 1,302,956 1,070,079 Unrestricted 54,363,213 42,879,435

Total $ 57,463,902 $ 46,565,283


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Note 9: Defined Contribution Plan

The College has a 403(b) defined contribution retirement plan covering all employees except for employees regularly attending classes at the College. The College matches contributions 66.67 percent per dollar, with an annual maximum limit of $1,000. The participant is fully vested in amounts attributable to the plan contributions when such plan contributions are made. The College’s expense under the plan was approximately $518,000 and $537,000 for the years ended June 30, 2019 and 2018, respectively.

Note 10: Federal Assistance

The College has received significant financial assistance from various federal agencies in the form of grants and entitlements. These programs are subject to audit by agents of the granting authority, or by independent public accountants under the Single Audit Act, the purpose of which is to ensure compliance with terms and conditions specified in these agreements. The College does not believe that liabilities for reimbursement, if any, will have a materially adverse effect upon the financial condition of the College.

Note 11: Contingencies

The College is named as a defendant in various legal actions arising in the normal course of operations. The College’s management believes the resolution of those actions will not have a material effect on the College’s financial statements.

Note 12: Governmental Accounting Standards Board (GASB) Statements

As of June 30, 2019, the GASB has issued statements that will require consideration and implementation by the College as follows:

In June 2017, GASB issued GASB Statement No. 87, Leases, which establishes a uniform approach to accounting for and reporting leases based on the principle that all leases are, in substance, financings. The provisions of Statement No. 87 are effective for fiscal years beginning after December 15, 2019 (College’s June 30, 2021 fiscal year). The effect of this Statement to the College has not yet been determined.


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Note 13: Disclosure About Fair Value of Assets

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs. There is a hierarchy of three levels of inputs that may be used to measure fair value:

Level 1 Quoted prices in active markets for identical assets or liabilities

Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities

Level 3 Unobservable inputs supported by little or no market activity and are significant to the fair value of the assets or liabilities

Recurring Measurements

The following table presents the fair value measurements of assets recognized in the accompanying financial statements measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at June 30, 2019 and 2018:

Description Total Level 1 Level 2 Level 3

2019Federal Home Loan Bank 574,074$ -$ 574,074$ -$ Federal National Mortgage Association 922,586 - 922,586 - Treasury Bills 24,790,153 - 24,790,153 - Money market mutual funds 5,056,610 5,056,610 - -

Total investments measuredat fair value $ 31,343,423 $ 5,056,610 $ 26,286,813 $ -

Description Total Level 1 Level 2 Level 3

2018Money market mutual funds $ 5,004,518 $ 5,004,518 $ - $ -

Total investments measuredat fair value $ 5,004,518 $ 5,004,518 $ - $ -

2019

2018

Federal Home Loan Bank and Federal National Mortgage Association securities classified as Level 2 of the fair value hierarchy are valued using third-party pricing services based on market observable information such as market quotes for similar assets, as well as normal market pricing considerations such as duration, interest rates and prepayment assumptions.


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Note 14: Tax Abatements

For the fiscal year ended June 30, 2019, the College’s property tax revenue was reduced through abatements and diversions through various incentive granting agencies and entities with an impact to the College totaling an estimated $4,355,769 under the following programs:

Amount of Taxes Abated

during theTax Abatement Program Fiscal Year

Tax Increment Financing 1,403,993$ Chapter 353 Abatement 449,248 Chapter 100 Bonds 274,421 Chapter 99 Abatement 73,992 EEZ 22,445 Multi-Abatement 2,131,670

$ 4,355,769

The College is subject to tax abatements and diversions granted or entered into by other government entities through various incentive granting agencies and entities as outlined below:

Tax Increment Financing – Grants tax diversion to promote new investment, infrastructure improvements and job growth by providing financial assistance and incentive to redevelopers. Created pursuant to Section 99.800 of the Revised Statutes of Missouri.

Chapter 353 Abatement – Grants tax abatement to encourage investment and assist in the removal of blight and blighting conditions within urban redevelopment areas. Created pursuant to Sections 353.010 to 353.190 RSMo and City Ordinance 140306.

Chapter 100 Bonds – The City of Kansas City can issue taxable bonds to assist with construction or rehabilitation of eligible commercial facilities. The City takes formal ownerships of the business assets and, therefore, provides property (real and personal) abatement for up to 10 years. Created pursuant to Sections 100.010 to 100.200 RSMo. Chapter 99 Abatement – Grants abatement through several programs to encourage investment and assist in redevelopment of designated real property resulting in real property tax abatement for certain projects. Created pursuant to Section 99 of the Revised Statutes of Missouri.

EEZ – Grants property tax abatement to encourage job creation and investment by providing tax credits and property tax abatement to new or expanding businesses located in an Enhance Enterprise Zone (EEZ). Created pursuant to Sections 135.950 to 135.973 RSMo and City Ordinances 051411, 051412 and 051413.

The Metropolitan Community College Foundation Notes to Financial Statements

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Note 15: Foundation

The following disclosures pertain to the discretely presented component unit.

Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Although these estimates are based on management’s knowledge of current events and actions it may undertake in the future, they may ultimately differ from actual results.

Cash and Cash Equivalents

The Foundation considers all liquid investments with original maturities of three months or less to be cash equivalents. At June 30, 2019 and 2018, cash equivalents consisted primarily of investments in money market mutual funds. At June 30, 2019, the Foundation’s cash accounts exceeded federally insured limits by approximately $179,000.

Net Investment Return

Investment return includes dividend, interest and other investment income; realized and unrealized gains and losses on investments carried at fair value; and realized gains and losses on other investments, less external and direct internal investment expenses. Gains and losses on the sale of securities are recorded on the trade date and are determined using the specific identification method.

Investment return that is initially restricted by donor stipulation and for which the restriction will be satisfied in the same year is included in net assets without donor restrictions. Other investment return is reflected in the statements of activities with or without donor restrictions based upon the existence and nature of any donor or legally imposed restrictions.

The Foundation maintains pooled investment accounts for its endowments. Investment income and realized and unrealized gains and losses from securities in the pooled investment accounts are allocated annually to the individual endowments based on the relationship of the fair value of the interest of each endowment to the total fair value of the pooled investments accounts, as adjusted for additions to or deductions from those accounts.

Deferred Revenue

Revenue from conditional grants for the Foundation is deferred and recognized over the periods to which the related expenses are incurred.


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Net Assets

Net assets, revenues, gains and losses are classified based on the existence or absence of donor restrictions. Net assets without donor restrictions are available for use in general operations and not subject to donor restrictions. The governing board has designated, from net assets without donor restrictions, net assets for a board-designated endowment, capital campaign and new initiatives.

Net assets with donor restrictions are subject to donor restrictions. Some restrictions are temporary in nature, such as those that will be met by the passage of time or other events stipulated by the donor. Other restrictions are perpetual in nature, where the donor stipulates that resources be maintained in perpetuity.

Contributions

Contributions are provided to the Foundation either with or without restrictions placed on the gift by the donor. Revenues and net assets are separately reported to reflect the nature of those gifts – with or without donor restrictions. The value recorded for each contribution is recognized as follows:

Nature of the Gift Value Recognized Conditional gifts, with or without restrictions Gifts that depend on the Foundation’s

overcoming a donor-imposed barrier to be entitled to the funds

Not recognized until the gift becomes unconditional, i.e., the donor-imposed barrier is met

Unconditional gifts, with or without restrictions Received at date of gift – cash and

other assets

Fair value

Received at date of gift – property, equipment and long-lived assets

Estimated fair value

Unconditional gifts, with or without restrictions Expected to be collected within one

year

Net realizable value

Collected in future years Initially reported at fair value determined using the discounted present value of estimated future cash flows technique


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In addition to the amount initially recognized, revenue for unconditional gifts to be collected in future years is also recognized each year as the present-value discount is amortized using the level-yield method. When a donor stipulated time restriction ends or purpose restriction is accomplished, net assets with donor restrictions are reclassified to net assets without donor restrictions and reported in the statements of activities as net assets released from restrictions. Absent explicit donor stipulations for the period of time that long-lived assets must be held, expirations of restrictions for gifts of land, buildings, equipment and other long-lived assets are reported when those assets are placed in service.

Gifts and investment income having donor stipulations which are satisfied in the period the gift is received are recorded as revenue and net assets without donor restrictions.

Contributed Services

The College provides the Foundation with office space and furniture and equipment without charge. The Executive Director and staff of the Foundation are employed by the College without compensation from the Foundation and the Financial Services Department of the College also provides accounting processing services to the Foundation. In connection with the personnel and services provided by the College, the Foundation recognized contributed services revenue and related offsetting expense in the amount of $471,260 and $490,536 for the years ended June 30, 2019 and 2018, respectively. Included in these amounts are payments to outside vendors/contractors for advisory services and other expenses supporting the Foundation.

No amounts have been reflected in the financial statements for donated services, which do not create or enhance nonfinancial assets or which do not require specialized skills; however, time and resources have been contributed by volunteers in furtherance of the Foundation’s mission.

Substantially all program expenses included in the statements of activities are reimbursed to the College as the result of College payments on behalf of the Foundation. Accordingly, the balances “Due to The Metropolitan Community College” on the statements of financial position of $370,924 and $616,068 at June 30, 2019 and 2018, respectively, represent amounts due to the College not yet reimbursed at year-end.

During the years ended June 30, 2019 and 2018, the Foundation contributed $47,315 and $1,105,095, which included the release of $950,000 for the Student Success Center project, respectively, to the College excluding any contributed services.

Income Taxes

The Foundation is exempt from income taxes under Section 501 of the Internal Revenue Code and a similar provision of state law. However, the Foundation is subject to federal income tax on any unrelated business taxable income. The Foundation files tax returns in the U.S. federal jurisdiction.


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Subsequent Events

Subsequent events have been evaluated through November 22, 2019, which is the date the financial statements were available to be issued.

Subsequent to June 30, 2019, the College and Foundation launched a significant capital campaign for the renovation and other projects related to the College’s campuses. No gifts related to this capital campaign have been recorded as of June 30, 2019.

Functional Allocation of Expenses

The costs of supporting the various programs and other activities have been summarized on a functional basis in the statements of activities. The statements of functional allocation of expenses within the notes present the natural classification detail of expenses by function. Certain costs have been allocated among the program and support services based on square footage and other methods.

Change in Accounting Principle

In 2019, the Foundation adopted ASU 2016-14, Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities. This change had no impact on the 2018 beginning of year net assets by restriction class and changes in net assets. A summary of the changes is as follows:

Statement of Financial Position

The statement of financial position distinguishes between two new classes of net assets—those with donor-imposed restrictions and those without. This is a change from the previously required three classes of net assets—unrestricted, temporarily restricted and permanently restricted.


Investment income is shown net of external and direct internal investment expenses. Disclosure of the expenses netted against investment income is no longer required.

Notes to the Financial Statements

Enhanced quantitative and qualitative disclosures provide additional information useful in assessing liquidity and cash flows available to meet operating expenses for one year from the date of the statement of financial position.

Amounts and purposes of governing board designations and appropriations as of the end of the period are disclosed.

Expenses are reported by both nature and function in one location.


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Contributions Receivable

Contributions receivable at June 30, 2019 and 2018 consisted of the following unconditional promises to give discounted using the discount rate for the year the receivable was originally pledged at 2.70 percent:

2019 2018

Due within one year $ 46,912 $ 53,301 Due in one to five years - 25,000

46,912 78,301 Less

Allowance for uncollectible contributions 831 1,527 Unamortized discount 1,246 2,699

44,835$ 74,075$

Net Assets With Donor Restrictions

Net assets with donor restrictions at June 30, 2019 and 2018 are restricted for the following purposes or periods:

2019 2018Subject to expenditure for specified purpose

Scholarships $ 319,990 $ 274,044 Foundation Projects

Other 230,475 278,115 MCC-Br Cyber Security Fund - 100,000 Kite Festival 81,309 73,863 Bloch Academic Coaching 74,692 72,010 Storytelling 27,901 - FI-Hall-Youth Development Curriculum (Fdn) 32,685 55,275 Book & Student Emergency Fund 51,280 41,942 Burns & McDonald Design Lab 30,092 36,000 MLK Event 67,810 - Visual Arts & I.T. Bldg 32,498 32,498 KC Construction Careers Academy 14,258 26,205

962,990 989,952


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2019 2018Endowments

Subject to endowment spending policy and appropriation Endowment funds restricted in perpetuity

Scholarships $ 3,497,538 $ 3,407,638 Foundation Projects Buchanan Fund 25,000 25,000 Pat Danner Endowment Student Emergency Fund 25,000 25,000 Polsky Business Development 116,179 116,179 Neeland J&A Student Assistance 1,531,856 1,531,856 Other 95,989 96,314

5,291,562 5,201,987

Accumulated gainsScholarships 614,512 627,588 Foundation Projects

Investment Income Payout Stabilization Fund 1,626,823 1,553,401 Neeland Jeanne M Award Fund 77,300 67,031 Polsky Business Development 77,288 67,678 Neeland J&A Student Assistance 430,992 341,081 Other 60,242 51,858

2,887,157 2,708,637

$ 9,141,709 $ 8,900,576


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Net Assets Released from Restrictions

Net assets were released from donor restrictions by incurring expenses satisfying the restricted purposes or by occurrence of other events specified by donors.

2019 2018

Satisfaction of purpose restrictionsScholarships $ 398,943 $ 461,157 MCC-BR Cyber Security Fund 100,000 - Student Success Center - 950,166 MLK Event 63,264 - Chancellor's Inauguration 44,466 - Kauffman Foundation KCCA 30,804 - Kauffman Foundation Astrumu 25,000 - Book & Student Emergency Fund - 5,214 Storytelling - 28,301 Longview Automotive Program - 7,519 Kite Festival - 7,473 Other 161,083 134,595

$ 823,560 $ 1,594,425

Net Assets Without Donor Restrictions

Net assets without donor restrictions at June 30, 2019 and 2018 have been designated for the following purposes:

2019 2018

Subject to expenditure for specified purposeBoard-designated quasi-endowment 307,375$ 280,802$

Undesignated 3,774,818 3,624,600

4,082,193$ 3,905,402$

Endowment

The Foundation’s governing body is subject to the Uniform Prudent Management of Institutional Funds Act (UPMIFA). As a result, the Foundation classifies amounts in its donor-restricted endowment funds as net assets with donor restrictions because those net assets are time restricted until the governing body appropriates such amounts for expenditures. Most of those net assets also are subject to purpose restrictions that must be met before being reclassified as net assets without donor restrictions.


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Additionally, in accordance with UPMIFA, the Foundation considers the following factors in making a determination to appropriate or accumulate donor-restricted endowment funds:

1. Duration and preservation of the fund 2. Purposes of the Foundation and the fund 3. General economic conditions 4. Possible effect of inflation and deflation 5. Expected total return from investment income and appreciation or depreciation of

investments 6. Other resources of the Foundation 7. Investment policies of the Foundation

The Foundation’s endowment consists of approximately 148 individual funds established for a variety of purposes. The endowment includes both donor-restricted endowment funds and funds designated by the governing body to function as endowments (board-designated endowment funds). As required by accounting principles generally accepted in the United States of America (GAAP), net assets associated with endowment funds, including board-designated endowment funds, are classified and reported based on the existence or absence of donor-imposed restrictions.

Without Donor With DonorRestrictions Restrictions Total

June 30, 2019Board-designated $ 307,375 $ - $ 307,375 Donor-restricted

Original donor-restricted gift amountand amounts required to bemaintained in perpetuity by donor - 5,291,562 5,291,562

Accumulated investment gains - 2,887,157 2,887,157

Total endowment funds $ 307,375 $ 8,178,719 $ 8,486,094

June 30, 2018Board-designated $ 280,802 $ - $ 280,802 Donor-restricted

Original donor-restricted gift amountand amounts required to bemaintained in perpetuity by donor - 5,201,987 5,201,987

Accumulated investment gains - 2,708,637 2,708,637

Total endowment funds $ 280,802 $ 7,910,624 $ 8,191,426


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Changes in endowment net assets for the years ended June 30, 2019 and 2018 were:

Without Donor With DonorRestrictions Restrictions Total

Endowment net assets,July 1, 2017 $ 247,500 $ 7,592,847 $ 7,840,347

Investment return, net 20,469 587,067 607,536 Contributions 46,925 26,266 73,191 Appropriation of endowment

assets for expenditures (34,092) (295,556) (329,648)

Endowment net assets,June 30, 2018 280,802 7,910,624 8,191,426

Investment return, net 29,740 397,195 426,935 Contributions - 83,911 83,911 Appropriation of endowment

assets for expenditures (3,167) (213,011) (216,178)

Endowment net assets,June 30, 2019 $ 307,375 $ 8,178,719 $ 8,486,094

From time to time, the fair value of assets associated with individual donor-restricted endowment funds may fall below the level the Foundation is required to retain as a fund of perpetual duration pursuant to donor stipulation or UPMIFA. In accordance with GAAP, there were no deficiencies of this nature reported at June 30, 2019 and 2018.

The Foundation has adopted investment and spending policies for its endowment fund. The objective of these policies is to provide the Foundation a predictable funding stream for its programs while protecting the purchasing power of the endowment fund. In accordance with the Foundation’s investment policy, the endowment fund shall be invested to provide for total return. Endowment assets include those assets of donor-restricted endowment funds the Foundation must hold in perpetuity or for donor-specified periods, as well as those of board-designated endowment funds. Under the Foundation’s policies, the endowment fund shall be invested in a diversified portfolio, consisting of common stocks, bonds, cash equivalents and other investments, which may reflect varying rates of returns. The overall rate of return objective of the portfolio is a reasonable “real” rate, consistent with the risk levels established by the Endowment and Investment Committee of the board of directors.


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The Foundation recognizes the need for spendable income by the beneficiaries of the endowment and long-term institutional funds under their custodianship. The spending policy reflects an objective to distribute as much total return as is consistent with overall investment objectives defined above while protecting the real value of the endowment fund principal. The board approved spending percentage, based on the average collected fund balance, was 6 percent for the fiscal year ended June 30, 2019 and 6 percent for the fiscal year ended June 30, 2018.

Liquidity and Availability

Financial assets available for general expenditure, that is, without donor or other restrictions limiting their use, within one year of June 30, 2019 comprise the following:

2019Financial Assets

Cash and cash equivalents $ 697,304 Marketable securities 13,068,587 Contributions receivable 44,835

Financial Assets, at year-end 13,810,726

Less those unavailable for general expenditures within one year, due to

Contractual or donor-imposed restrictions 9,141,709 Board designations 307,375

9,449,084

Financials assets available to meet cash needs for general expenditures within one year $ 4,361,642

The Foundation recognizes contributed services from The Metropolitan Community College in support of management and general and fundraising activities. Due to this support, the Foundation’s operating expenditures primarily consist of scholarships and donor restricted project expenditures.

The Foundation’s accumulated investment earnings related to endowment are reviewed annually for expenditure. Each year the board of directors approves a scholarship allocation for endowed scholarships and projects. Consideration is given to retain enough earnings to offset future negative market fluctuations and provide a payout for individual scholarships in those future periods when smaller/negative investment returns occur. As of June 30, 2019, the accumulated investment earnings in the endowment were $2,887,157 and are available for the scholarship allocation. The Foundation has determined that any donor restrictions are not considered available for general expenditure.


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Within the net assets without donor restrictions, the Foundation’s board of directors has reserved $307,375 for Board designated projects. These funds can be reallocated should the need arise.

Investments, Fair Value Measurements and Disclosures

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs. There is a hierarchy of three levels of inputs that may be used to measure fair value:

Level 1 Quoted prices in active markets for identical assets or liabilities

Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities

Level 3 Unobservable inputs supported by little or no market activity and are significant to the fair value of the assets or liabilities


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Recurring Measurements

The following tables present the fair value measurements of assets and liabilities recognized in the accompanying statements of financial position measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at June 30, 2019 and 2018:

Quoted Pricesin Active Significant

Markets for Other Significant Identical Observable Unobservable

Assets Inputs InputsFair Value (Level 1) (Level 2) (Level 3)

June 30, 2019Equity securities 763,799$ $ 763,799 $ - -$ Equity mutual funds 1,222,609 1,222,609 - - U.S. Treasury notes 784,563 784,563 - - Corporate bonds 2,664,877 - 2,664,877 - Fixed income mutual funds 99,265 99,265 - - Exchange traded funds (ETF)

Vanguard Growth ETF 1,102,883 1,102,883 - - Vanguard S&P 500 ETF 874,738 874,738 - - Vanguard Small-Cap ETF 930,560 930,560 - - Vanguard FTSE Developed Markets

ETF 1,524,918 1,524,918 - - Vanguard Value ETF 998,280 998,280 - - Vanguard Mid-Cap ETF 1,245,342 1,245,342 - - Other ETFs 465,815 465,815 - - Municipal bonds 390,938 - 390,938 -

$13,068,587 $ 10,012,772 $ 3,055,815 $ -

Fair Value Measurements Using


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73

Quoted Pricesin Active Significant

Markets for Other Significant Identical Observable Unobservable

Assets Inputs InputsFair Value (Level 1) (Level 2) (Level 3)

June 30, 2018Equity securities $ 796,559 $ 796,559 $ - $ - Equity mutual funds 1,684,873 1,684,873 - - U.S. Treasury notes 892,489 892,489 - - Corporate bonds 1,473,298 - 1,473,298 - Fixed income mutual funds 96,695 96,695 - - Exchange traded funds (ETF)

Vanguard Growth ETF 1,348,290 1,348,290 - - Vanguard S&P 500 ETF 810,908 810,908 - - Vanguard Small-Cap ETF 924,680 924,680 - - Vanguard FTSE Developed Markets

ETF 1,718,574 1,718,574 - - Vanguard Mid-Cap ETF 622,980 622,980 - - iShares 1-3 Year Credit Bond ETF 1,174,418 1,174,418 - - Other ETFs 556,068 556,068 - - Municipal bonds 493,851 - 493,851 -

$12,593,683 $ 10,626,534 $ 1,967,149 $ -

Fair Value Measurements Using

Following is a description of the valuation methodologies and inputs used for assets and liabilities measured at fair value on a recurring basis and recognized in the accompanying statements of financial position, as well as the general classification of such assets and liabilities pursuant to the valuation hierarchy. There have been no significant changes in the valuation techniques during the years ended June 30, 2019 and 2018.

Investments

Where quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. If quoted market prices are not available, then fair values are estimated by using quoted prices of securities with similar characteristics or independent asset pricing services and pricing models, the inputs of which are market-based or independently sourced market parameters, including, but not limited to, yield curves, interest rates, volatilities, prepayments, defaults, cumulative loss projections and cash flows. Such securities are classified in Level 2 of the valuation hierarchy.


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Functional Allocation of Expenses

The costs of supporting the various programs and other activities have been summarized on a functional basis. The allocation of functional expenses present the natural classification detail of expenses by function. Certain costs have been allocated among the program, management and general and fundraising categories based on the time estimates and other methods. Allocation of functional expense as of June 30, 2019 and 2018 were as follows:

Scholarships Foundation Total Program Management & Total Supportand Grants Projects Services Fundraising General Services Total

Scholarships $ 438,008 $ - $ 438,008 $ - $ - $ - $ 438,008 Contributed services - - - 172,384 224,088 396,472 396,472 Contracted service - 265,991 265,991 8,273 30,109 38,382 304,373 Supplies - 101,599 101,599 2,394 8,713 11,107 112,706 Events and other activity - 60,239 60,239 1,514 5,511 7,025 67,264 Equipment and software - 46,166 46,166 15 55 70 46,236 Professional development - 8,180 8,180 2,150 7,823 9,973 18,153 Office expense - 4,784 4,784 1,774 6,457 8,231 13,015 Other - 62,700 62,700 - - - 62,700

$ 438,008 $ 549,659 $ 987,667 $ 188,504 $ 282,756 $ 471,260 $ 1,458,927

Program Services Support Services2019


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Scholarships Foundation Total Program Management & Total Supportand Grants Projects Services Fundraising General Services Total

Scholarships $ 568,183 $ - $ 568,183 $ - $ - $ - $ 568,183 Contributed services - - - 182,420 258,851 441,271 441,271 Contracted service - 109,345 109,345 3,286 8,449 11,735 121,080 Supplies - 30,899 30,899 3,783 9,727 13,510 44,409 Events and other activity - 993,349 993,349 822 2,113 2,935 996,284 Equipment and software - 8,000 8,000 99 255 354 8,354 Professional development - 3,347 3,347 2,713 6,976 9,689 13,036 Office expense - 1,428 1,428 3,092 7,950 11,042 12,470 Other - 161,351 161,351 - - - 161,351

$ 568,183 $ 1,307,719 $ 1,875,902 $ 196,215 $ 294,321 $ 490,536 $ 2,366,438

Program Services Support Services2018


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Note 16: Condensed Combining Information

Condensed combining information for the College as of and for the fiscal year ended June 30 is as follows:

BuildingDistrict Corporation Eliminations Total

Condensed Statements of Net PositionAssets

Current assets 97,884,456$ 2,454,483$ -$ 100,338,939$ Noncurrent assets 63,647,362 74,544,076 - 138,191,438 Total assets 161,531,818 76,998,559 - 238,530,377 Deferred outflows 20,837,192 2,068,094 - 22,905,286

LiabilitiesCurrent liabilities 12,039,006 5,056,610 - 17,095,616 Noncurrent liabilities 72,108,711 44,795,000 - 116,903,711 Total liabilities 84,147,717 49,851,610 - 133,999,327 Deferred inflows 6,157,036 - - 6,157,036

Net positionNet investment in capital assets 36,348,228 27,467,170 - 63,815,398 Unrestricted 55,716,029 1,747,873 - 57,463,902

Total net position $ 92,064,257 $ 29,215,043 $ - $ 121,279,300

2019


Condensed Statements of Revenues, Expenses and Changes in Net Position

Operating revenues (expenses)Operating revenues 38,670,728$ -$ -$ 38,670,728$ Depreciation expense (2,684,306) (3,857,609) - (6,541,915) Other operating expenses (122,569,788) - 5,762,641 (116,807,147)

Operating loss (86,583,366) (3,857,609) 5,762,641 (84,678,334)

Nonoperating revenues (expenses)Nonoperating revenues 95,267,451 5,763,218 (5,762,641) 95,268,028 Interest on debt related to capital assets - (1,932,463) - (1,932,463)

Total nonoperating revenues, net 95,267,451 3,830,755 (5,762,641) 93,335,565

Change in net position 8,684,085 (26,854) - 8,657,231 Net position, beginning of year 83,380,172 29,241,897 - 112,622,069

Net position, end of year $ 92,064,257 $ 29,215,043 $ - $ 121,279,300

2019


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77


Condensed Statements of Cash FlowsNet cash used in operating activities (77,541,341)$ -$ -$ (77,541,341)$ Net cash provided by noncapital financing activities 81,966,994 8,997,213 - 90,964,207 Net cash provided by (used in) capital and related

financing activities 1,438,986 (5,711,124) - (4,272,138) Net cash provided by (used in) investing activities (18,059,756) 577 - (18,059,179)

(12,195,117) 3,286,666 - (8,908,451) Cash and cash equivalents, beginning of year 50,138,209 5,197,018 - 55,335,227

Cash and cash equivalents, end of year $ 37,943,092 $ 8,483,684 $ - $ 46,426,776

2019


Condensed Statements of Net PositionAssets

Current assets 80,815,153$ 1,182,055$ -$ 81,997,208$ Noncurrent assets 74,252,374 79,622,019 - 153,874,393 Total assets 155,067,527 80,804,074 - 235,871,601 Deferred outflows 21,564,050 2,587,341 - 24,151,391

LiabilitiesCurrent liabilities 14,007,565 5,004,518 - 19,012,083 Noncurrent liabilities 71,865,942 49,145,000 - 121,010,942 Total liabilities 85,873,507 54,149,518 - 140,023,025 Deferred inflows 7,377,898 - - 7,377,898

Net positionNet investment in capital assets 37,242,426 28,814,360 - 66,056,786 Unrestricted 46,137,746 427,537 - 46,565,283

Total net position $ 83,380,172 $ 29,241,897 $ - $ 112,622,069

2018


Condensed Statements of Revenues, Expenses and Changes in Net Position

Operating revenues (expenses)Operating revenue 46,178,043$ -$ -$ 46,178,043$ Depreciation expense (2,599,489) (3,959,559) - (6,559,048) Other operating expenses (125,636,304) - 5,758,838 (119,877,466)

Operating loss (82,057,750) (3,959,559) 5,758,838 (80,258,471)

Nonoperating revenues (expenses)Nonoperating revenues 94,005,005 5,759,035 (5,758,838) 94,005,202 Interest on debt related to capital assets (1,965) (2,028,282) - (2,030,247)


Change in net position 11,945,290 (228,806) - 11,716,484 Net position, beginning of year, as previously reported 84,615,530 29,470,703 - 114,086,233 Cumulative Effect of Change in Accounting Principle (13,180,648) - - (13,180,648) Net position, beginning of year 71,434,882 29,470,703 - 100,905,585

Net position, end of year $ 83,380,172 $ 29,241,897 $ - $ 213,527,654

2018


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78


Condensed Statements of Cash FlowsNet cash used in operating activities (76,485,089)$ -$ -$ (76,485,089)$ Net cash provided by noncapital financing activities 86,605,975 5,758,838 - 92,364,813 Net cash used in capital and related financing activities (5,106,836) (5,715,929) - (10,822,765) Net cash provided by investing activities 580,846 197 - 581,043

5,594,896 43,106 - 5,638,002 Cash and cash equivalents, beginning of year 44,543,313 5,153,912 - 49,697,225

Cash and cash equivalents, end of year $ 50,138,209 $ 5,197,018 $ - $ 55,335,227

2018


The Metropolitan Community College Schedule of Changes in the College’s Total OPEB

Liability and Related Ratios

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79

2019Total OPEB Liability

Service cost 364,448$ Interest 335,517 Changes in assumptions or other inputs 452,287 Benefit payments (1,110,909)

Net change in Total OPEB Liability 41,343

Total OPEB liability, beginning of year 9,868,047

Total OPEB liability, end of year 9,909,390$

Covered-Employee Payroll 44,296,752$

Total OPEB Liability as a Percentage of Covered-Employee Payroll 22.37%

Notes to Schedule:

Benefit Changes

There were no changes to benefit terms for the years ended June 30, 2019 and 2018.

Changes of Assumptions There was a change in the discount rate which had a net impact of $323,348 and $583,396 for

the years ended June 30, 2019 and 2018, respectively.

The Metropolitan Community College Schedules of the College’s Proportionate Share of the Net Pension

Liability and College Contributions

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80

Schedule of the College’s Proportionate Share of Net Pension Liability

District'sProportionate Share

District's of the Net Pension PlanDistrict's Proportionate Share of Liability as a Fiduciary Net Position

Proportion of the the Net Pension District's Percentage of as a PercentageYear Ended * Net Pension Liability Liability Covered Payroll it's Covered Payroll of Total Pension Liability

6/30/2019 PEERS 1.8187% $ 14,053,319 $ 30,260,202 46.44% 86.06%6/30/2019 PSRS 0.6336% 47,155,404 31,107,639 151.59% 84.06%6/30/2018 PEERS 1.9030% 14,518,955 30,582,111 47.48% 85.35%

6/30/2018 PSRS 0.6400% 46,217,761 30,878,787 149.67% 83.77%6/30/2017 PEERS 1.9260% 15,452,978 29,741,780 51.96% 83.32%6/30/2017 PSRS 0.6334% 47,129,070 29,987,632 157.16% 82.18%6/30/2016 PEERS 2.0643% 10,918,210 30,953,507 35.27% 88.28%6/30/2016 PSRS 0.6335% 36,571,069 29,482,161 124.04% 85.78%6/30/2015 PEERS 2.0233% 7,388,403 29,505,189 25.04% 91.33%6/30/2015 PSRS 0.6214% 25,493,403 28,345,963 89.94% 89.34%

Note: This schedule is intended to show information for 10 years. Additional years will be displayed

as they become available.

* The data provided in the schedule is based as of the measurement date of PSRS’ and PEERS’ net pension liability, which is as of the beginning of the College’s fiscal year.

Schedule of College’s Contributions

Contractually Actual Contribution District's Contributions asRequired Employer Deficiency Covered a Percentage of

Year Ended Contribution Contributions (Excess) Payroll Covered Payroll

6/30/2013 PEERS 2,107,749$ 2,107,749$ -$ 30,744,954$ 6.86%6/30/2013 PSRS 4,633,378 4,633,378 - 32,831,174 14.11%6/30/2014 PEERS 2,024,056 2,024,056 - 29,505,189 6.86%6/30/2014 PSRS 4,001,458 4,001,458 - 28,345,963 14.12%6/30/2015 PEERS 2,123,411 2,214,010 (90,599) 30,953,507 7.15%6/30/2015 PSRS 3,927,796 4,158,868 (231,072) 29,482,161 14.11%6/30/2016 PEERS 2,123,413 2,123,413 - 29,741,780 7.14%6/30/2016 PSRS 4,159,289 4,159,289 - 27,807,649 14.96%6/30/2017 PEERS 2,040,287 2,040,287 - 29,741,780 6.86%6/30/2017 PSRS 4,242,915 4,242,915 - 29,987,632 14.15%6/30/2018 PEERS 2,097,934 2,097,934 - 30,582,111 6.86%6/30/2018 PSRS 4,377,884 4,377,884 - 30,878,787 14.18%6/30/2019 PEERS 2,075,850 2,075,850 - 30,260,202 6.86%6/30/2019 PSRS 4,417,861 4,417,861 - 31,107,639 14.20%

Note: This schedule is intended to show information for ten years. Additional years will be displayed as they become available.

The Metropolitan Community College Schedules of the College’s Proportionate Share of the Net Pension

Liability and College Contributions (Continued)

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81

Notes to Schedules of the College’s Proportionate Share of the Net Pension Liability and College Contributions

See Note 6 for factors that affect trends in the amounts reported, such as changes in benefit terms or assumptions. Contribution rates for PEERS and PSRS remained the same for the College for years ended June 30, 2019, 2018 and 2017.

Other Supplementary Information

The Metropolitan Community College Combining Schedule of Net Position

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82


AssetsCurrent Assets

Cash and cash equivalents 37,943,092$ 8,483,684$ -$ 46,426,776$ Short-term investments 47,947,153 - - 47,947,153 Accounts receivable, net of allowance; $236,473 11,713,004 (6,029,201) - 5,683,803 Other assets 281,207 - - 281,207

Total current assets 97,884,456 2,454,483 - 100,338,939

Noncurrent AssetsLong-term investments 26,846,660 - - 26,846,660 Capital assets

Nondepreciable 8,233,861 806,095 - 9,039,956 Depreciable, net 28,566,841 73,737,981 - 102,304,822

Total noncurrent assets 63,647,362 74,544,076 - 138,191,438

Total assets 161,531,818 76,998,559 - 238,530,377

Deferred Outflows of Resources 20,837,192 2,068,094 - 22,905,286

Total assets and deferred outflows of resources 182,369,010$ 79,066,653$ -$ 261,435,663$

LiabilitiesCurrent Liabilities

Accounts payable, accrued and other liabilities 6,167,235$ 706,610$ -$ 6,873,845$ Compensated absences 2,183,800 - - 2,183,800 Current portion of long-term debt - 4,350,000 - 4,350,000 Unearned revenue 3,185,497 - - 3,185,497 Unearned revenue - contracts 50,000 - - 50,000 Capital lease purchases 452,474 - - 452,474

Total current liabilities 12,039,006 5,056,610 - 17,095,616

Noncurrent LiabilitiesBond payable - 44,795,000 - 44,795,000 Compensated absences 740,598 - - 740,598 Other postemployment benefit obligations 9,909,390 - - 9,909,390 Net pension liability 61,208,723 - - 61,208,723 Unearned revenue - contracts 250,000 - - 250,000

Total noncurrent liabilities 72,108,711 44,795,000 - 116,903,711

Total liabilities 84,147,717 49,851,610 - 133,999,327

Deferred Inflows of Resources 6,157,036 - - 6,157,036

Net PositionNet investment in capital assets 36,348,228 27,467,170 - 63,815,398 Unrestricted 55,716,029 1,747,873 - 57,463,902

Total net position 92,064,257$ 29,215,043$ -$ 121,279,300$

The Metropolitan Community College Combining Schedule of Revenues, Expenses and Changes in Net Position


83


Operating RevenuesTuition and fees 44,685,598$ -$ -$ 44,685,598$ Less scholarship allowance 20,681,218 - - 20,681,218

Student tuition and fees, net 24,004,380 - - 24,004,380

Federal grants and contracts 5,377,436 - - 5,377,436 State and local grants and contracts 3,400,793 - - 3,400,793 Auxiliary services revenues 1,171,295 - - 1,171,295 Other 4,716,824 - - 4,716,824

Total operating revenues 38,670,728 - - 38,670,728

Operating ExpensesSalaries and wages 63,051,424 - - 63,051,424 Fringe benefits 22,910,599 - - 22,910,599 Supplies and other services 29,392,863 - (5,762,641) 23,630,222 Utilities 3,434,828 - - 3,434,828 Scholarships and fellowships 3,780,074 - - 3,780,074 Depreciation 2,684,306 3,857,609 - 6,541,915

Total operating expenses 125,254,094 3,857,609 (5,762,641) 123,349,062

Operating Loss (86,583,366) (3,857,609) 5,762,641 (84,678,334)

Nonoperating Revenues (Expenses)Federal Pell Grant revenue 20,936,002 - - 20,936,002 State appropriations 30,857,414 - - 30,857,414 County property tax revenue 36,459,109 - - 36,459,109 Investment income 2,244,484 577 - 2,245,061 Other nonoperating revenues 4,770,442 5,762,641 (5,762,641) 4,770,442 Interest on debt related to capital assets - (1,932,463) - (1,932,463)


Increase (Decrease) in Net Position 8,684,085 (26,854) - 8,657,231

Net Position, Beginning of Year 83,380,172 29,241,897 - 112,622,069

Net Position, End of Year $ 92,064,257 $ 29,215,043 $ - $ 121,279,300

The Metropolitan Community College Schedule of Revenues, Expenses and Changes in Fund Balances


84

Business &Special Projects Designated Continuing Auxiliary Unexpended Invested in

Agency Fund General Fund Fund Fund Education Fund Enterprises Fund Student Aid Fund Restricted Fund Plant Fund Plant Fund TotalRevenues

Student tuition and fees, net $ 593,151 $ 38,451,407 $ 2,038,508 $ 593,149 $ 3,009,383 $ - $ (20,681,218) $ - $ - $ - $ 24,004,380 State aid - 30,857,414 - - - - - - - - 30,857,414 Government grants and contracts - 1,787,795 25,000 - 510,428 - 22,782,251 4,608,757 - - 29,714,231 State and county taxes - 36,459,109 - - - - - - - - 36,459,109 Investment income - 2,244,484 - - - - - - - - 2,244,484 Other income 75,466 3,014,410 231,478 - 1,153,006 2,661,864 283,603 204,260 3,034,474 - 10,658,561

Total revenues 668,617 112,814,619 2,294,986 593,149 4,672,817 2,661,864 2,384,636 4,813,017 3,034,474 - 133,938,179

ExpensesInstructional 108,939 41,635,230 985,630 - 1,772,077 - - 557,790 77,152 - 45,136,818 Academic support - 9,061,617 196,053 107 1,645,099 - - 2,115,550 - - 13,018,426 Student services 745,943 12,432,082 - - - - 318,998 558,004 85,000 - 14,140,027 Plant operation and maintenance 242,000 11,451,955 - - - 432,245 - - 8,333,234 - 20,459,434 Depreciation - - - - - - - - - 2,684,306 2,684,306 Institutional support 453 24,989,297 50,911 216,631 557,830 - (1) - 393,924 - 26,209,045 Scholarships and fellowships 1,288 1,480,208 6,963 - 3,711 - 2,049,739 238,165 - - 3,780,074 Public service - - - - - - - 1,343,819 - - 1,343,819 Auxiliary expenses - - - - - 635,356 - - - - 635,356

Total expenses 1,098,623 101,050,389 1,239,557 216,738 3,978,717 1,067,601 2,368,736 4,813,328 8,889,310 2,684,306 127,407,305

Revenues Over (Under) Expenses (430,006) 11,764,230 1,055,429 376,411 694,100 1,594,263 15,900 (311) (5,854,836) (2,684,306) 6,530,874

Add: Capitalized expenses 261,478 916,512 - - - - - 364,518 610,703 - 2,153,211 Total before fund transfers (168,528) 12,680,742 1,055,429 376,411 694,100 1,594,263 15,900 364,207 (5,244,133) (2,684,306) 8,684,085

Total fund transfers (261,478) (12,680,739) (1,055,429) - (694,101) (1,544,263) (15,899) (364,206) 14,462,904 2,153,211 -

Increase (Decrease) in Fund Balance (430,006) 3 - 376,411 (1) 50,000 1 1 9,218,771 (531,095) 8,684,085

Fund Balance, Beginning of Year 925,949 20,058,742 - 654,020 1 (350,000) (1) (1) 19,551,884 42,539,578 83,380,172

Fund Balance, End of Year $ 495,943 $ 20,058,745 $ - $ 1,030,431 $ - $ (300,000) $ - $ - $ 28,770,655 $ 42,008,483 $ 92,064,257

The Metropolitan Community College Schedule of Revenues, Expenses and Changes in Fund Balances (Continued)


85


RevenuesStudent tuition and fees 44,685,598$ -$ -$ 44,685,598$ Less scholarship allowance 20,681,218 - - 20,681,218

Student tuition and fees, net 24,004,380 - - 24,004,380

State aid 30,857,414 - - 30,857,414 Government grants and contracts 29,714,231 - - 29,714,231 State and county taxes 36,459,109 - - 36,459,109 Investment income 2,244,484 577 - 2,245,061 Other income 10,658,561 5,762,641 (5,762,641) 10,658,561

Total revenues 133,938,179 5,763,218 (5,762,641) 133,938,756

Operating ExpensesInstructional 45,136,818 - - 45,136,818 Academic support 13,018,426 - - 13,018,426 Student services 14,140,027 - - 14,140,027 Plant operation and maintenance 20,459,434 - (5,762,641) 14,696,793 Depreciation 2,684,306 3,857,609 - 6,541,915 Institutional support 26,209,045 - - 26,209,045 Scholarships and fellowships 3,780,074 - - 3,780,074 Public service 1,343,819 - - 1,343,819 Interest expense - 1,932,463 - 1,932,463 Auxiliary expenses 635,356 - - 635,356

Total operating expenses 127,407,305 5,790,072 (5,762,641) 127,434,736

Revenues over (under) expenditures 6,530,874 (26,854) - 6,504,020

Add: Capitalized expenses 2,153,211 - - 2,153,211

Net Increase (Decrease) in Fund Balance 8,684,085 (26,854) - 8,657,231

Fund Balance, Beginning of Year 83,380,172 29,241,897 - 112,622,069

Fund Balance, End of Year $ 92,064,257 $ 29,215,043 $ - $ 121,279,300

The Metropolitan Community College Schedule of Expenses by Functional and Natural Classification


86

Total Expensesby Functional

Salaries Supplies and Scholarships Classificationand Wages Fringe Benefits Other Services Utilities and Fellowships Depreciation Interest Expense (Fund Report)

Type of expenseInstructional $ 31,440,096 $ 8,870,525 $ 4,826,197 $ - $ - $ - $ - 45,136,818$ Academic support 7,332,093 2,654,414 3,031,919 - - - - 13,018,426 Student services 8,918,068 3,254,097 1,967,862 - - - - 14,140,027 Plant operation and maintenance 3,235,256 1,408,496 7,167,421 2,885,620 - - - 14,696,793 Institutional support 11,320,955 6,468,106 7,870,776 549,208 - - - 26,209,045 Public service 332,864 115,100 895,855 - - - - 1,343,819 Auxiliary expenses 472,092 139,861 23,403 - - - - 635,356 Scholarships and fellowships - - - - 3,780,074 - - 3,780,074 Depreciation - - - - - 6,541,915 - 6,541,915 Interest expense - - - - - - 1,932,463 1,932,463

Total expenses 63,051,424 22,910,599 25,783,433 3,434,828 3,780,074 6,541,915 1,932,463 127,434,736

Less: Capitalized expenses - - (2,153,211) - - - - (2,153,211)

Total expenses by natural classification (GASB Report) 63,051,424$ 22,910,599$ 23,630,222$ 3,434,828$ 3,780,074$ 6,541,915$ 1,932,463$ 125,281,525$

Natural Expense Classification

Func

tiona

l Exp

ense

Cla

ssifi

catio

n

The Metropolitan Community College Schedule of Fund Transfers From/(To)


87

Special Unexpended Invested inGeneral Projects IWI Student Fund Auxiliary Student Aid Restricted Plant Plant Total

Fund TransfersTransfer for capitalized equipment $ 916,512 $ - $ - $ 261,478 $ - $ - $ 364,518 $ 610,703 $ (2,153,211) $ -

Transfer to cover net bond payment 5,762,640 - - - - - - (5,762,640) - -

Transfer for designated maintenance projects 1,500,000 - - - - - - (1,500,000) - -

Transfer for designated IT projects 500,000 - - - - - - (500,000) - -

Transfer annual fund close-out (3,309,380) 1,055,429 694,101 - 1,544,263 15,899 (312) - - -

Transfer to match financial plan 7,310,967 - - - - - - (7,310,967) - -

Net fund transfers $ 12,680,739 $ 1,055,429 $ 694,101 $ 261,478 $ 1,544,263 $ 15,899 $ 364,206 $ (14,462,904) $ (2,153,211) $ -

Plant FundsRestricted FundsOperational

The Metropolitan Community College Notes to Other Supplementary Financial Information

June 30, 2019

88

Funds statements are still used to manage the colleges and for external reporting to various agencies and have been included in the “Other Supplementary Information” section of the accompanying report for informational purposes. The main difference between the Colleges’ primary audited financial statements and the funds statement presentations is the treatment of scholarship aid used for tuition and fees. The primary statements per GASB 35 require such aid to be offset against tuition and fees, whereas the funds statements reflect gross tuition and fees and scholarship aid.

Fund accounting is the procedure by which resources are classified for accounting and reporting purposes into funds that are maintained in accordance with activities or specific objectives. Separate accounts are maintained for each fund. Funds that have similar characteristics have been combined into fund groups. Accordingly, all financial transactions have been recorded and reported by fund groups.

The assets, liabilities and fund balances of the Colleges are reported in two self-balancing fund groups as follows:

Current Funds include two separate fund groups, unrestricted and restricted, both of which are currently expendable for purposes of meeting the primary objectives of the Colleges, i.e., instruction, public service and related supporting services. The unrestricted funds group, over which the College’s governing board retains full control to use in achieving any of its institutional purposes, includes the operational (general, business/continuing education and special projects), auxiliary enterprise and agency funds. The general fund is used for all operational-type charges that are not covered by the following two categories. The business/continuing education fund is utilized to account for contracted instructional activities with the business community and most other noncredit instruction. The special projects fund is used to account for programs, which have been internally designated by the College’s governing board as pilot projects or require special accountability. Resources restricted by donors or other outside agencies for specific current operating purposes are accounted for in the restricted funds group, which includes the restricted and student aid funds.

Plant Funds include resources available for future plant acquisitions, renewals and replacements, resources restricted for the retirement of indebtedness and funds which have been invested in the plant. These funds are broken into two separate sections: Plant Funds and Building Corporation plant funds.

Compliance

The Metropolitan Community College Schedule of Expenditures of Federal Awards


The accompanying notes are an integral part of this Schedule 89

Federal Pass-Through Passed TotalFederal Grantor/Pass-Through Grantor/ CFDA Entity Identifying Through to Federal

Program or Cluster Title Number Number Subrecipients Expenditures

U.S. Department of Education/Federal Supplemental EducationOpportunity Grants 84.007 N/A $ - $ 629,796

U.S. Department of Education/Federal Direct Student Loans 84.268 N/A - 8,201,825

U.S. Department of Education/Federal Work Study Program 84.033 N/A - 333,886

U.S. Department of Education/Federal Pell Grant Program 84.063 N/A - 20,967,385

Total Student Financial Assistance Cluster - 30,132,892

U.S. Department of Education/TRIO -Education Opportunity Center 84.066 N/A - 463,618

U.S. Department of Education/TRIO - Student Support Services 84.042A N/A - 389,910

Total TRIO Cluster - 853,528

U.S. Department of Labor/Missouri Department of Economic Development/WIOA Adult Program 17.258 N/A - 102,322

Total Workforce Investment Act Cluster - 102,322

U.S. Department of Education/Title III - Higher Education -Institutional Aid 84.031F N/A - 288,876

U.S. Department of Education/Title III - Higher Education -Institutional Aid 84.031A N/A - 1,257,758

Total Title III - Higher Education - Institutional Aid Grant - 1,546,634

U.S. Department of Education/Carl D. Perkins Vocational Educational 84.048 N/A - 814,114

U.S. Department of Education/Vocational Education-Pathway for Teachers 84.048A N/A - 9,617

Total Elementary & Secondary Education - 823,731

U.S. Department of Agriculture/Missouri Department of Social Services& Missouri Community College Assn./SkillUP Program 10.561 N/A - 153,473

U.S. Department of Labor/Trade Adjustment Assistance CommunityCollege & Career Training Missouri STEM 17.282 N/A 331,130 826,495

National Aeronautics & Space Administration/Missouri Universityof Science and Technology/Missouri Space Grant Consortium 43.001 0050027 - 5,108

National Endowment for the Humanities/Missouri Humanities Council/Metropolitan Community College Storytelling Celebration 45.129 1990 - 10,000

U.S. Department of Health and Human Services/Behavioral Health Workforce Education & Training for Professionals & Paraprofessionals 93.243 N/A - 4,843

U.S. Department of Health and Human Services/University of 0086291/Missouri-Kansas City/Kansas City Health Tracks 93.137 00064340 - 23,047

U.S. Department of Health and Human Services/Diabetes & Heart Disease &Stroke Prevention Programs-Improving the Health of Americans thruPrevention & Mgt of Diabetes & Heart Disease & Stroke 93.426 N/A - 32,181

Total $ 331,130 $ 34,514,254

The Metropolitan Community College Notes to the Schedule of Expenditures of Federal Awards


90

Notes to Schedule

1. The accompanying schedule of expenditures of federal awards (the “Schedule”) includes the federal award activity of The Metropolitan 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 of 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 The Metropolitan Community College, it is not intended to and does not present the financial position, changes in net position or cash flows of The Metropolitan Community College.

2. Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following, as applicable, either the cost principles contained in OMB Cost Circular A-110 or the cost principles contained in Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Negative amounts shown on the Schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. The Metropolitan Community College has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance.

91

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


Board of Trustees The Metropolitan Community College Kansas City, Missouri We have audited, 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, the financial statements of the business-type activities and the discretely presented component unit of The Junior College District of Metropolitan Kansas City, Missouri (d/b/a The Metropolitan Community College the “College”) 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, and have issued our report thereon dated November 22, 2019. The financial statements of The Metropolitan Community College Foundation, a discretely presented component unit, were not audited in accordance with Government Auditing Standards.

Internal Control Over Financial Reporting

In planning and performing our audit of the financial statements, we considered the 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 opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of College’s internal control. Accordingly, we do not express an opinion on the effectiveness of 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 a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the College’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 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. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.


92

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the 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.

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 College’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.


93

Report on Compliance for the Major Federal Program and Report on Internal Control Over Compliance


Board of Trustees The Metropolitan Community College Kansas City, Missouri Report on Compliance for the Major Federal Program

We have audited The Junior College District of Metropolitan Kansas City, Missouri’s (d/b/a The Metropolitan Community College the “College”) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on the College’s major federal program for the year ended June 30, 2019. The College’s major federal program is identified in the summary of auditor’s results section 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.

Auditor’s Responsibility

Our responsibility is to express an opinion on compliance for the College’s major federal program 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 the 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 opinion on compliance for the major federal program. However, our audit does not provide a legal determination of the College’s compliance.


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Opinion on the Major Federal Program

In our opinion, the College complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on its major federal program for the year ended June 30, 2019.

Report on Internal Control Over Compliance

Management of the College is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the College’s internal control over compliance with the types of requirements that could have a direct and material effect on the 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 the 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 a 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 designed 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.


The Metropolitan Community College Schedule of Findings and Questioned Costs


95

Summary of Auditor’s Results

Financial Statements

1. The type of report the auditor issued on whether the financial statements audited were prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) were:

Unmodified Qualified Adverse Disclaimer

2. The independent auditor’s report on internal control over financial reporting disclosed:

Significant deficiency(ies)? Yes None reported

Material weakness(es)? Yes No

3. Noncompliance considered material to the financial statements was disclosed by the audit?

Yes

No

Federal Awards

4. The independent auditor’s report on internal control over compliance for the major federal awards program disclosed:

Significant deficiency(ies)? Yes None reported

Material weakness(es)? Yes No

5. The opinion expressed in the independent auditor’s report on compliance for the major federal award was:

Unmodified Qualified Adverse Disclaimer

6. The audit disclosed findings required to be reported by 2 CFR 200.516(a)?

Yes

No

The Metropolitan Community College Schedule of Findings and Questioned Costs (Continued)


96

7. The College’s major program was:

CFDAName of Federal Program Number

Student Finanical Assistance ClusterU.S. Department of Education/Federal Supplemental Education

Opportunity Grants 84.007

U.S. Department of Education/Federal Direct Student Loans 84.268

U.S. Department of Education/Federal Work Study Program 84.033

U.S. Department of Education/Federal Pell Grant Program 84.063

8. The threshold used to distinguish between Type A and Type B programs was $1,035,428.

9. The College qualified as a low-risk auditee? Yes No

The Metropolitan Community College Schedule of Findings and Questioned Costs (Continued)


97

Findings Required to be Reported by Government Auditing Standards

No matters are reportable.

Findings Required to be Reported by Uniform Guidance

No matters are reportable.

APPENDIX C

DEFINITIONS OF WORDS AND TERMS

AND SUMMARY OF THE DOCUMENTS

In addition to words and terms defined elsewhere in this Official Statement, the following are definitions of certain words and terms used in the Indenture, the Base Lease, the Lease and this Official Statement unless

the context clearly otherwise requires. Reference is hereby made to the Indenture, the Lease and the Base Lease

for complete definitions of all terms.

“Additional Certificates” means any additional parity certificates of participation delivered pursuant

to the Indenture.

“Additional Payments” means the additional payments described in the Lease.

“Authorized District Representative” means the President of the Board of Trustees, the Chancellor

of the District, the Vice Chancellor of Administrative Services, or such other person at the time designated, by

written certificate furnished to the Trustee, as the person or persons authorized to act on behalf of the District.

“Business Day” means any day other than (a) a Saturday or Sunday or legal holiday or a day on which

banks located in the city in which the corporate trust office of the Trustee is required or authorized by law to remain

closed or (b) a day on which the Securities Depository is closed.

“Certificate Payment Date” means any date on which any amount representing the Principal

Component or the Interest Component with respect to any Certificate is payable.

“Certificate Register” means the books maintained by the Trustee for the registration, transfer and

exchange of Certificates as described in the Indenture.

“Certificate Registrar” means the registration books kept by the Trustee to evidence the registration,

transfer and exchange of Certificates.

“Certificates” means the Series 2020 Certificates delivered under the Indenture and any Additional

Certificates delivered pursuant to the Indenture.

“Code” means the Internal Revenue Code of 1986, as amended, and the applicable regulations of the

United States Treasury Department promulgated thereunder.

“Completion Certificate” means the certificate delivered to the Trustee pursuant to the Lease and the

Indenture evidencing substantial completion of the Project and acceptance of the Project by the District.

“Completion Date” means the date of completion of the acquisition, construction, improvement,

furnishing and equipping of the Project established as such pursuant to in the Lease.

“Construction Period” means the period from the beginning of construction of the Project to the

Completion Date.

“Contractor” means any contractor for the Project selected by the District, and its successors and

assigns.

“Counsel” means an attorney duly admitted to practice law before the highest court of any state and,

without limitation, may include legal counsel for the District or the Trustee.

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“Defaulted Interest” means interest on any Certificate that is payable but not paid on the date due.

“Defeasance Obligations” means any of the following obligations:

(a) Cash.

(b) U.S. Treasury Certificates, Notes and Bonds.

(c) Direct obligations of the Treasury that have been stripped by the Treasury itself.

(d) The interest component of Resolution Funding Corporation (REFCORP) strips that have been

stripped by request to the Federal Reserve Bank of New York in book entry form.

(e) Pre-refunded municipal bonds pre-refunded with cash or United States Government

Obligations.

“Event of Default” means (a) with respect to the Indenture, any Event of Default as described in the

Indenture, and (b) with respect to the Lease, any Event of Default as described in the Lease.

“Event of Nonappropriation” means a nonrenewal of the Lease by the District determined by the

failure of the District to appropriate and budget, or the election of the District not to so appropriate and budget,

on or before the date required by the laws of the State during the Initial Term or any Renewal Term, moneys

sufficient to pay the Rental Payments and reasonably expected Additional Payments due and payable during the

next Renewal Term.

“Facilities” means the Project Site, the Project and all additions, modifications, improvements,

replacements and substitutions made thereon and thereto, and any additional facilities financed with the

Certificates on the Project Site or other property of the District financed or refinanced pursuant to the Lease, as

they may at any time exist.

“Fiscal Year” means the fiscal year adopted by the District for accounting purposes, which as of the

execution of this Indenture commences on July 1 of each year and ends on June 30 of the following year.

“Full Insurable Value” means the actual replacement cost of the Facilities less physical depreciation

and exclusive of land, excavations, footings, foundations, parking lots and other parts of the Facilities that are

not insurable.

“Interest Component” means the Interest Component of Rental Payments as provided by the Lease.

“Initial Term” means the initial term of the Lease, which begins on the effective date of the Lease and

ends on the last day of the Fiscal Year in which such effective date occurs.

“Lease Term” means the period from the effective date of the Lease until the expiration thereof which

includes the Initial Term and any Renewal Term or Terms as provided in the Lease.

“Mandatory Prepayment Date” means any mandatory prepayment date established pursuant to the

Indenture.

“Maximum Lease Term” means the Initial Term and all Renewal Terms through the Renewal Term

ending June 30, 2045 (unless otherwise provided in a Supplemental Lease).

“Moody’s” means Moody’s Investors Service, Inc., a corporation organized and existing under the laws

of the State of Delaware, and its successors and assigns, and, if such corporation shall be dissolved or liquidated

C-3

or shall no longer perform the functions of a securities rating agency, “Moody’s” shall be deemed to refer to any

other nationally recognized securities rating agency designated by the District by notice to the Trustee.

“Net Proceeds” means the gross proceeds from any insurance or condemnation award with respect to

the Facilities, less the payment of all expenses (including attorneys’ fees and expenses, Trustee’s fees, costs,

charges and expenses, including any extraordinary expenses of the Trustee) incurred in the collection of such

gross proceeds.

“Opinion of Counsel” means a written opinion of counsel to the District or the Trustee.

“Option Purchase Price” means the price as specified in the Lease which the District may elect to pay

to the Trustee to purchase the Facilities from the Trustee on the Optional Prepayment Date.

“Optional Prepayment Date” means any optional prepayment date established pursuant to the

Indenture.

“Optional Purchase Date” means any date during the Lease Term as specified in the Lease upon which

the District, pursuant to the Lease, may elect to purchase the Facilities for the then applicable Option Purchase

Price.

“Outstanding” means, when used with reference to Certificates, as of any particular date of

determination, all Certificates theretofore authenticated and delivered under the Indenture, except the following

Certificates:

(a) Certificates theretofore canceled by the Trustee or delivered to the Trustee for

cancellation;

(b) Certificates paid or deemed to be paid in accordance with the provisions of the

Indenture;

(c) Certificates alleged to have been mutilated, destroyed, lost or stolen which have been

paid as provided in the Indenture;

(d) Certificates in exchange for or in lieu of which other Certificates have been

authenticated and delivered pursuant to the Indenture; and

(e) for purposes of any consent or other action to be taken by the Registered Owners of a

specified percentage of Certificates under the Indenture or the Lease, Certificates held by or for the

account of the District or any person controlling, controlled by or under common control of the District.

“Paying Agent” means the Trustee and any other bank or trust company designated pursuant to the

Indenture as paying agent for any series of Certificates and at which the principal, premium, if any, and interest

on any such Certificates shall be payable.

“Permitted Encumbrances” means, as of any particular time (a) liens for ad valorem taxes and special

assessments not then delinquent or if delinquent are being contested in accordance with the Lease, (b) the

Indenture, (c) the Lease, (d) the Base Lease, (e) any and all Uniform Commercial Code Financing Statements

executed to perfect any security interest created in connection with the delivery of the Certificates, (f) utility,

access and other easements and rights-of-way, street dedications, mineral rights, restrictions, exceptions and

encumbrances that the District certifies in writing will not materially interfere with or impair the operations being

conducted using the Project Site or easements granted to the Trustee, (g) such minor defects, irregularities,

encumbrances, easements, mechanic’s liens, rights-of-way and clouds on title as normally exist with respect to

properties similar in character to the Facilities and as do not in the aggregate materially impair the property

C-4

affected thereby for the purpose for which it was acquired or is held by the Trustee or the District, and (h) items

affecting the Project Site that are agreed to in writing by the Trustee (in reliance upon the written direction of

the Registered Owners of not less than a majority in aggregate Principal Components of the Certificates

Outstanding) and the District.

“Permitted Investments” means any of the securities and obligations described in the Indenture, if and

to the extent the same are at the time legal for investment of the District’s moneys held in the Funds referred to

in the Indenture.

“Person” means any individual, corporation, partnership, limited liability company, joint venture,

association, joint-stock company, trust, unincorporated organization, or government or any agency or political

subdivision thereof.

“Plans and Specifications” means the plans and specifications prepared for and showing the Project,

as amended by the District from time to time prior to the Completion Date, the same being duly certified by the

Authorized District Representative, which plans and specifications are on file at the principal office of the

District and shall be available for reasonable inspection by the Trustee and its duly appointed representatives.

“Prime Rate” means that rate of interest which has most recently been established by UMB Bank,

N.A., at its office in Kansas City, Missouri, as its prime rate, such Prime Rate to be adjusted on the effective

date of any change thereof as announced from time to time by UMB Bank, N.A.

“Principal Component” means the Principal Component of Rental Payments as provided by the Lease.

“Project” means the acquisition, construction, improvement, furnishing and equipping of the

improvements described in the Indenture or any Supplemental Indenture, pursuant to the Lease, paid for in whole

or in part from the proceeds of Certificates, and all replacements thereof and substitutions therefor made pursuant

to the Lease, and all additions, alterations, modifications and improvements thereof made pursuant to the Lease,

including, upon the delivery of Additional Certificates, including Project Additions financed with Additional

Certificates.

“Project Additions” means all additions, improvements, extensions, alterations, expansions or

modifications of the Facilities or any part thereof financed with the proceeds of Additional Certificates delivered

pursuant to the Indenture.

“Project Costs” means all costs of acquisition, construction, improvement, furnishing and equipping

of the Project.

“Project Site” means the real estate as described in the Indenture, the Base Lease and the Lease that

secures payment of the Certificates.

“Record Date” means the 15th day (whether or not a Business Day) of the calendar month next

preceding the month in which each Certificate Payment Date occurs.

“Registered Owner,” “Owner” or “Certificate Owner” when used with respect to any Certificate

means the Person in whose name such Certificate is registered on the Certificate Register.

“Renewal Term” means the optional renewal terms of the Lease, each being a duration of one year and

a term co-extensive with the District’s Fiscal Year.

“Rental Payment Date” means during the Lease Term, any day on or prior to each Certificate Payment

Date, and any other date on which any Rental Payments are payable pursuant to the Lease.

C-5

“Rental Payments” means the payments described in the Lease.

“S&P” or “Standard & Poor’s” means Standard & Poor’s Ratings Services, a separately identifiable

business unit within Standard & Poor’s Financial Services LLC, a Delaware limited liability company wholly

owned by the McGraw-Hill Companies, Inc., a corporation organized and existing under the laws of the State of

New York, its successors and assigns, and if such entity shall be dissolved or liquidated or shall no longer

perform the functions of a securities rating agency, “S&P” shall be deemed to refer to any other nationally

recognized securities rating agency designated by the Trustee.

“Series 2020 Certificates” means the District’s Certificates of Participation, Series 2020, delivered

pursuant to the Indenture.

“Special Counsel” means Gilmore & Bell, P.C. or any other attorney or firm of attorneys (which is

mutually acceptable to the District and the Trustee) of nationally recognized standing in matters pertaining to

the tax-exempt nature of interest on obligations issued by states and their political subdivisions, duly admitted

to the practice of law before the highest court of any state of the United States of America.

“Special Record Date” means the date fixed by the Trustee pursuant to the Indenture for the payment

of Defaulted Interest.

“Supplemental Indenture” means any indenture supplemental or amendatory to the Indenture entered

into by the District and the Trustee.

“Supplemental Lease” means any agreement supplemental or amendatory to the Lease entered into by

the District and the Trustee pursuant to the Indenture.

“Tax Compliance Agreement” means the Tax Compliance Agreement between the District and the

Trustee, entered into in connection with the delivery of each series of Certificates for which the interest

component of Rental Payments paid by the District and distributed to the registered owners of the Certificates is

excluded from gross income for federal income tax purposes, as from time to time amended in accordance with

the provisions thereof.

“Trust Estate” means the Trust Estate described in the Granting Clauses of the Indenture and in the

Granting Clauses of any Supplemental Indenture.

“United States Government Obligations” means bonds, notes, certificates of indebtedness, treasury

bills or other securities constituting direct obligations of, or obligations the principal of and interest on which

are fully and unconditionally guaranteed as to full and timely payment by, the United States of America,

including evidences of a direct ownership interest in future interest or principal payments on obligations issued

or guaranteed by the United States of America (including the interest component of obligations of the Resolution

Funding Corporation), or securities which represent an undivided interest in such obligations, and such

obligations are held in a custodial or trust account for the benefit of the District.

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SUMMARY OF THE INDENTURE

The following is a summary of certain provisions contained in the Indenture. The following is not a comprehensive description, however, and is qualified in its entirety by reference to the Indenture for a complete

recital of the terms thereof.

Trust Estate

The District and the Trustee, transfers in trust, pledges and assigns to the Trustee the property described

below (said property being in the Indenture called the “Trust Estate”) as security for the payment of the

Certificates:

(a) all right, title and interest of the District in, to and under the Base Lease and the Lease, including

all Rental Payments and other payments, revenues and receipts derived by the Trustee under

and pursuant to and subject to the provisions of the Lease (except for the rights of the Trustee

to receive money for its own account and to indemnity under the Lease and any amounts

required under Section 148(f) of the Code to be paid to the United States); and

(b) all money, property and securities from time to time held by the Trustee under the terms of the

Indenture, and any and all other real or personal property of every kind and nature from time

to time hereafter, by delivery or by writing of any kind, pledged, assigned or transferred as and

for additional security by or on behalf of the District, or with its written consent, to the Trustee,

which is authorized to receive any and all such property at any and all times and to hold and

apply the same subject to the terms of the Indenture.

Authorization of Additional Certificates

Additional Certificates may be delivered under and be equally and ratably secured by the Indenture on

a parity with the Series 2020 Certificates and any other Additional Certificates Outstanding, at any time and

from time to time while no Event of Default or Event of Nonappropriation has occurred and is continuing under

the Indenture, upon compliance with the conditions provided in the Indenture, for any lawful purpose for the

benefit of the District. The principal amount of any Additional Certificates may include an amount sufficient to

pay the costs and expenses of delivery, a funding of a reserve account, if required, and such capitalized amounts

as are permitted by law.

Additional Certificates may be delivered without the consent of the Registered Owners of the

Certificates (a) if the Additional Certificates are being delivered to refund Certificates providing present value

debt service savings for the District or (b) for Additional Certificates delivered in the principal amount, together

with other Certificates then Outstanding, not to exceed $60,000,000.

Creation of Funds

There are created and ordered to be established in the custody of the Trustee the following special trust

funds in the name of the District to be designated as follows:

(a) Certificate Fund; and

(b) Project Fund.

Disbursements from the Project Fund

So long as no Event of Default or Event of Nonappropriation has occurred and is continuing, the money

in the Project Fund shall be disbursed by the Trustee for the payment of remaining Project Costs upon receipt of

requisition certificates in substantially the form attached to the Lease and signed by an Authorized District

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Representative. All disbursements of Project Fund moneys shall, at the option of the District, be made either

directly to the appropriate payees or to the District for reimbursement of Project Costs. The Trustee covenants

and agrees to disburse such money in accordance with the provisions of the Indenture. In making disbursements

for Project Costs, the Trustee may conclusively rely as to the completeness and accuracy of all statements in

such requisition certificate without inquiry or investigation if such requisition certificate is signed by the

Authorized District Representative. The Trustee shall not make any inspections of the Project nor any

improvements thereon, make any provision to obtain completion certificates, mechanic’s or materialmen’s lien

releases or otherwise supervise any phase of the acquisition, construction, improvement, furnishing or equipping

of the Project. The receipt of a requisition signed by the Authorized District Representative shall constitute unto

the Trustee an irrevocable determination that all conditions precedent to the payment of the specified amounts

from the Project Fund have been completed.

Disposition Upon Completion of the Project

The completion of the Project and payment of all costs and expenses incidental thereto shall be

evidenced by the filing with the Trustee by the Authorized District Representative of the Completion Certificate

required by the Lease. As soon thereafter as practicable, any balance remaining in the Project Fund (other than

amounts retained by the Trustee as specified in said certificate) shall without further authorization be deposited

in the applicable subaccount of the Certificate Fund and applied by the Trustee as directed in writing by the

District solely (i) to pay amounts representing Principal Components or premium, if any, and Interest

Components with respect to the Certificates upon the payment or prepayment thereof at the earliest date

permissible under the terms of the Indenture, or (ii) at the option of the District, to purchase Certificates at such

earlier date or dates as the District may elect. The balance remaining in the Project Fund and transferred to the

Certificate Fund shall be invested in accordance with the written direction of the District. Any investment

direction of the District shall be in compliance with the Tax Compliance Agreement. Any earnings on such

investments may be applied to pay amounts representing Principal Components, premium, if any, or Interest

Components with respect to the Certificates. Any Certificates purchased by the Trustee with moneys from the

Certificate Fund will be deemed canceled. From time to time as the proper disposition of the amounts retained

by the Trustee and specified in said certificate shall be determined, to the extent that such amounts are not paid

out by the Trustee pursuant to the Indenture, the District shall so notify the Trustee by one or more certificates

as aforesaid and amounts from time to time no longer to be so retained by the Trustee shall be so deposited in

the applicable subaccount of the Certificate Fund and applied by the Trustee as aforesaid.

Disposition upon Acceleration

If the Certificates shall have become due and payable pursuant to the Indenture, upon the date of

payment by the Trustee of any money due as hereinafter provided in the Indenture, any balance remaining in the

Project Fund shall without further authorization be deposited in the applicable subaccount of the Certificate Fund

by the Trustee with written notice to the District of such action.

Deposits into the Certificate Fund

The Trustee shall deposit into the applicable subaccount of the Certificate Fund, as and when received,

the following moneys:

(a) All Rental Payments payable by the District to the Trustee specified in the Lease;

(b) Any amount remaining in the Project Fund to be transferred to the Certificate Fund pursuant to

the Indenture upon completion of the Project and any amount remaining in the Project Fund to

be transferred to the Certificate Fund pursuant to the Indenture upon acceleration of the

maturity of the Certificates;

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(c) The balance of any Net Proceeds of insurance or condemnation awards received by the Trustee

pursuant to the Lease;

(d) All interest and other income derived from investments of moneys required to be transferred to

the Certificate Fund as provided in the Indenture; and

(e) All other moneys received by the Trustee when accompanied by directions from the person

depositing such moneys that such moneys are to be paid into the Certificate Fund.

Application of Moneys in the Certificate Fund

Except as provided in the Indenture, moneys in the Certificate Fund shall be expended solely for (1) the

payment of the Principal Component, premium, if any, and Interest Component of the Rental Payments

represented by the Certificates as the same mature and become due or upon the prepayment thereof, or (2) to

purchase Certificates for cancellation prior to maturity.

Payments Due on Days Other than Business Days

In any case where any amount representing Principal Component, premium, if any, or Interest

Component with respect to any Certificate is payable on a day other than a Business Day, then such amounts

with respect to the Certificates need not be made on such date but may be made on the next succeeding Business

Day with the same force and effect as if made when due, and no interest shall accrue for the period after such

date.

Nonpresentment of Certificates

In the event that any Certificate is not presented for payment when the Principal Component and

premium, if any, with respect thereto becomes due, whether at maturity, upon prepayment or otherwise, or at the

date fixed for prepayment thereof, if funds sufficient to pay such Certificate shall have been made available to

the Trustee, all liability of the District to the Registered Owner thereof for the payment of such Certificate shall

forthwith cease, determine and be completely discharged, and thereupon it shall be the duty of the Trustee to

hold such funds, without liability for Interest Components with respect thereto, for the benefit of such Registered

Owner of such Certificate, who shall thereafter be restricted exclusively to such funds for any claim of whatever

nature on his part under the Indenture with respect to such Certificate. If any Certificate is not presented for

payment within one year following the date when such Certificate becomes due, whether by maturity, upon

prepayment or otherwise, the Trustee upon the request of the District shall repay to the District without liability

for interest thereon the funds theretofore held by the Trustee for payment of such Certificate, and such Certificate

shall, subject to the defense of any applicable statute of limitation, thereafter be an unsecured obligation of the

District, and the Registered Owner thereof shall be entitled to look only to the District for payment, and then

only to the extent of the amount so repaid, and the District shall not be liable for any interest thereon and shall

not be regarded as a trustee of such money.

Investment of Moneys in Funds

Money in the Funds held by the Trustee under the Indenture shall, pursuant to the District’s direction

given by the Authorized District Representative, confirmed in writing, and subject to the Tax Compliance

Agreement, be separately invested and reinvested by the Trustee in Permitted Investments which mature or are

subject to prepayment by the holder prior to the date when such money will be needed or, if such written

directions are not received, then the Trustee is authorized to hold such moneys in uninvested cash. After the

Trustee has notice pursuant to the Indenture of the existence of an Event of Default or an Event of

Nonappropriation, the Trustee shall direct the investment of money in the Funds held by it under the Indenture.

The Trustee shall sell and reduce to cash a sufficient amount of such Permitted Investments whenever the cash

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balance in any Fund is insufficient for the purposes of such Fund. The Trustee may make any and all investments

permitted by the Indenture through its own bond department or any affiliate or short-term investment department.

Any Permitted Investments shall be held by or under the control of the Trustee and will be deemed at

all times to be a part of the Fund in which such money is originally held. Any loss resulting from Permitted

Investments shall be charged to the applicable Fund. In determining the balance in any Fund, investments in

such Fund shall be valued at the lower of their original cost or their fair market value as of the most recent

Record Date, or as frequently as deemed necessary.

Events of Default

If any of the following events occur, it is defined as and declared to be and to constitute an Event of

Default under the Indenture:

(a) Default in the due and punctual payment of any amount representing Interest Components with

respect to any Certificate;

(b) Default in the due and punctual payment of any amount representing Principal Components or

premium, if any, with respect to any Certificate, whether at maturity, upon prepayment or otherwise;

(c) Default in the performance or observance of any other of the covenants, agreements or

conditions on the part of the District in the Indenture or in the Certificates contained (other than a default

described in (a) or (b) above) or in any other document or instrument that secures or otherwise relates to the

obligations secured, and the continuance thereof for a period of 30 days after written notice thereof shall have

been given to the District by the Trustee, or to the Trustee (which notice of default the Trustee shall be required

to accept) and the District by the Registered Owners of not less than 25% in aggregate principal amount of

Certificates then Outstanding; provided, however, if any default shall be such that it cannot be corrected within

such 30-day period, it shall not constitute an Event of Default if corrective action is instituted by the District

within such period and diligently pursued until the default is corrected, so long as said default is corrected within

60 days after written notice thereof was first given as provided in the Indenture unless the Trustee otherwise

consents; or

(d) An Event of Default as specified in the Lease shall have occurred.

Acceleration of Maturity

If an Event of Default or an Event of Nonappropriation shall have occurred and be continuing, (1) the

Trustee may, and (2) the Trustee shall, at the written direction of the Registered Owners of not less than 25% in

aggregate principal amount of Certificates then Outstanding, by notice in writing delivered to the District, declare

the Rental Payments and Additional Payments payable during the current Renewal Term immediately due and

payable, and such Rental Payments and Additional Payments shall thereupon become and be immediately due

and payable, anything in the Indenture or in the Certificates to the contrary notwithstanding.

If, at any time after such declaration, but before the Certificates shall have matured by their terms, all

overdue installments representing Principal and Interest Components with respect to the Certificates, together

with the reasonable and proper costs, charges, fees and expenses of the Trustee, and all other sums then payable

by the District under the Indenture either has been paid or provision satisfactory to the Trustee for such payment

has been made, then and in every such case the Trustee shall, upon the written request of the Registered Owners

of not less than a majority in aggregate Principal Components of the Certificates Outstanding, rescind such

declaration and annul such default in its entirety. In such event, the Trustee shall rescind any declaration of

acceleration of installments of Rental Payments made pursuant to the Lease.

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In case of any rescission, then and in every such case the District, the Trustee and the Registered Owners

shall be restored to their former position and rights respectively, but no such rescission shall extend to any

subsequent or other default or Event of Default or Event of Nonappropriation or impair any right consequent

thereon.

Exercise of Remedies by the Trustee

If an Event of Default or Event of Nonappropriation has occurred and is continuing, (1) the Trustee

may, and (2) the Trustee shall, upon the written request of the Registered Owners of not less than 25% in

aggregate principal amount of Certificates then Outstanding, and upon being indemnified as provided in the

Indenture, pursue and exercise any available remedy at law or in equity by suit, action, mandamus or other

proceeding or exercise such one or more of the rights and remedies conferred by the Indenture, the Lease and

the Base Lease as the Trustee, being advised by Counsel, shall deem most expedient in the interests of the

Registered Owners, to enforce the payment of the Principal Component, premium, if any, and Interest

Component of the Rental Payments represented by the Certificates then Outstanding and to enforce and compel

the performance of the duties and obligations of the District under the Lease.

Limitation on Exercise of Remedies by Registered Owners

No Registered Owner shall have any right to institute any suit, action or proceeding in equity or at law

for the enforcement of the Indenture or for the execution of any trust under the Indenture or for the appointment

of a receiver or any other remedy thereunder, unless (a) an Event of Default or Event of Nonappropriation has

occurred of which the Trustee has been notified or is deemed to have notice as provided in the Indenture, (b) the

Registered Owners of not less than 25% in aggregate principal amount of Certificates then Outstanding shall

have made written request to the Trustee and have furnished the Trustee reasonable opportunity either to proceed

to exercise the powers granted in the Indenture or to institute such action, suit or proceeding in its own name,

and have furnished to the Trustee indemnity as provided in the Indenture, and (c) the Trustee thereafter fails or

refuses to exercise the powers and remedies granted in the Indenture or to institute such action, suit or proceeding

in its own name. No one or more Registered Owners shall have any right in any manner whatsoever to affect,

disturb or prejudice the Indenture by its, his or their action or to enforce any right thereunder except in the manner

provided in the Indenture. All proceedings at law or in equity shall be instituted, had and maintained in the

manner provided and for the equal benefit of the Registered Owners of all Certificates then Outstanding. Nothing

in the Indenture contained shall, however, affect or impair the right of any Registered Owner to payment of

amounts representing Principal Component, premium, if any, and Interest Components of the Rental Payments

represented by any Certificate at and after the maturity thereof or the obligation of the District to provide for

payment of the Principal Component, premium, if any, and Interest Component of the Rental Payments

represented by any Certificate delivered under the Indenture to the respective Registered Owners thereof at the

time, place, from the source and in the manner expressed in the Indenture and in the Certificates.

Right of Registered Owners to Direct Proceedings

Anything in the Indenture to the contrary notwithstanding, the Registered Owners of not less than a

majority in aggregate Principal Components with respect to the Certificates then Outstanding shall have the right

at any time, upon an Event of Default or an Event of Nonappropriation, by an instrument or instruments in

writing executed and delivered to the Trustee, to direct the time, method and place of conducting all proceedings

to be taken in connection with the enforcement of the terms and conditions of the Indenture, or for the

appointment of a receiver or any other proceedings thereunder; provided that such direction shall not be

otherwise than in accordance with the provisions of law and to the extent not inconsistent with the Indenture.

Application of Moneys in Event of Default or Event of Nonappropriation

All moneys received by the Trustee pursuant to any right given or action taken under the provisions of

the Indenture shall, after payment of the costs, fees, charges, and expenses of the proceedings resulting in the

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collection of such moneys and of the fees, expenses, liabilities and advances incurred or made by the Trustee,

including any attorneys’ fees and expenses, be deposited in the applicable subaccount of the Certificate Fund.

All moneys so deposited in the Certificate Fund shall be applied as follows:

(1) Unless any of the Principal Components with respect to any Certificates shall have

become or shall have been declared due and payable, all such moneys shall be applied:

First -- To the payment to the persons entitled thereto of all installments of amounts

representing Interest Components then due and payable with respect to any Certificates, in the order in which

such interest installments became due and payable and, if the amount available shall not be sufficient to pay in

full any particular installment, then to the payment, ratably, according to the amounts due on such Interest

Component installment, to the persons entitled thereto, without any discrimination or privilege; and

Second -- To the payment to the persons entitled thereto of the unpaid amounts

representing Principal Components with respect to any of the Certificates which have become due and payable

(other than Certificates called for prepayment for the payment of which moneys are held pursuant to the

provisions of the Indenture), in the order of their due dates and, if the amount available shall not be sufficient to

pay in full amounts representing Principal Components due with respect to Certificates on any particular date,

then to the payment, ratably, according to the amount of Principal Components due on such date, to the persons

entitled thereto without any discrimination or privilege.

(2) If any of the Principal Component of the Rental Payments represented by the

Outstanding Certificates has become due or been declared due and payable, all such moneys shall be applied to

the payment of the amounts then due and unpaid with respect to such Certificates, without preference or priority

of Principal Component over Interest Component or of Interest Component over Principal Component or of any

installment of Interest Component over any other installment of Interest Component or of any Certificate over

any other Certificate, ratably, according to the amounts due respectively for the Principal Component and Interest

Component, to the persons entitled thereto, without any discrimination or privilege.

(3) If the Principal Component of the Rental Payments represented by any of the

Outstanding Certificates has been declared due and payable, and if such declaration thereafter has been rescinded

and annulled under the provisions of the Indenture, then, subject to the provisions of subsection (2) above in the

event that the Principal Component with respect to any of the Outstanding Certificates later becomes due or is

declared due and payable, the moneys shall be applied in accordance with the provisions of subsection (1) above.

Waivers of Event of Default or Event of Nonappropriation

Subject to the provisions of the Indenture, the Trustee may waive any Event of Default or any Event of

Nonappropriation under the Indenture and its consequences and rescind any declaration of maturity of Rental

Payments and Additional Payments, and shall do so upon the written request of the Owners of at least a majority

in aggregate principal amount of all Certificates then Outstanding. In case of any such waiver or rescission, or

in case any proceedings taken by the Trustee under the Indenture on account of any such Event of Default or

Event of Nonappropriation are discontinued or abandoned for any reason, or are determined adversely, then and

in every such case the Trustee and the Registered Owners shall be restored to their former positions, rights and

obligations thereunder, respectively, but no such waiver or rescission shall extend to any subsequent or other

Event of Default, or impair any right consequent thereon, and all rights, remedies and powers of the Trustee shall

continue as if no such proceedings had been undertaken.

Acceptance of the Trusts

The Trustee accepts the trusts imposed upon it by the Indenture, and agrees to perform said trusts as a

prudent person, but only upon and subject to the express terms and conditions contained in the Indenture, and

no implied covenants or obligations shall be read into the Indenture against the Trustee.

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Resignation of the Trustee

The Trustee and any successor Trustee may at any time resign from the trusts created by giving 30 days’

written notice to the District and the Registered Owners whose names and addresses are on file with the Trustee,

and such resignation shall take effect upon the earlier of (i) the end of such 30 days or (ii) the appointment of a

successor Trustee by the District or by the Owners of at least a majority in aggregate stated Principal Components

represented by the Certificates then Outstanding in accordance with the Indenture; provided, however, that in no

event shall the resignation of a Trustee or successor Trustee become effective until such time as a successor

Trustee has been appointed and has accepted the appointment in accordance with the Indenture. If at any time

the Trustee shall cease to be eligible to act as trustee in accordance with the provisions of the Indenture, the

Trustee shall immediately resign in the manner provided in the Indenture. In the event that the District or the

Registered Owners of at least a majority in aggregate Principal Components represented by the Certificates then

Outstanding fail to appoint a successor Trustee within 30 days after notice of resignation has been given by the

Trustee, the Trustee shall have the right to petition a court to appoint a successor Trustee.

Removal of the Trustee

The Trustee may be removed at any time for any breach of trust or by an instrument or concurrent

instruments in writing delivered (a) to the Trustee and the District and signed by the Registered Owners of not

less than a majority in aggregate Principal Components represented by the Certificates then Outstanding, or (b)

to the Trustee and the Registered Owners and signed by the District (so long as no Event of Default or Event of

Nonappropriation shall have occurred and being continuing). In no event shall the removal of a Trustee or

successor Trustee become effective until such time as a successor Trustee has been appointed and has accepted

such appointment. In the event that the District or the Registered Owners of at least a majority in aggregate

Principal Components represented by the Certificates then Outstanding fail to appoint a successor Trustee within

30 days after said instrument or concurrent instruments removing the Trustee are delivered to the Trustee, the

Trustee shall have the right to petition a court to appoint a successor Trustee.

Appointment of Successor Trustee

Any corporation or association into which the Trustee may be merged or converted or with or into which

it may be consolidated, or to which it may sell or transfer its corporate trust business and assets as a whole or

substantially as a whole, or any corporation or association resulting from any merger, conversion, sale,

consolidation or transfer to which it is a party, shall be and become successor Trustee under the Indenture and

shall be vested with all the trusts, powers, rights, obligations, duties, remedies, immunities and privileges as was

its predecessor, without the execution or filing of any instrument or any further act on the part of the District or

the Trustee.

In case the Trustee shall resign or be removed, or shall otherwise become incapable of acting, or in case

it shall be taken under the control of any public officer or officers or of a receiver appointed by a court, a

successor Trustee may be appointed by the Registered Owners of a majority in aggregate principal amount of

Certificates then Outstanding by an instrument or concurrent instruments in writing; provided, nevertheless, that

in case of such vacancy and so long as no Event of Default or Event of Nonappropriation under the Indenture

shall have occurred and be continuing, the District, by an instrument executed and signed by its President of the

Board of Trustees and attested by its Secretary under its seal, may appoint a temporary Trustee to fill such

vacancy until a successor Trustee shall be appointed by the Registered Owners or the District in the manner

provided in the Indenture; and any such temporary Trustee so appointed by the District shall immediately and

without further act be superseded by the successor Trustee so appointed by such Registered Owners. Every such

Trustee appointed shall warrant at the time of accepting such trust and exercising the powers of the Trustee under

the Indenture that (i) it is a trust company or bank in good standing located in or incorporated under the laws of

one of the states of the United States of America, (ii) it is duly authorized to exercise trust powers and is qualified

to accept such trust, (iii) it is subject to examination by a federal or state authority, (iv) it shall maintain a reported

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capital and surplus of not less than $75,000,000. If such institution publishes reports of conditions at least

annually pursuant to law or regulation, then the capital and surplus of such institution shall be deemed to be its

capital and surplus as set forth in its most recent report of condition so published.

Supplemental Indentures Not Requiring Consent of Registered Owners

The District and the Trustee may from time to time, subject to the provisions of the Indenture, without

the consent of or notice to any of the Registered Owners, enter into a Supplemental Indenture or Supplemental

Indentures not inconsistent with the terms and provisions of the Indenture, for any one or more of the following

purposes:

(a) To cure any ambiguity or formal defect or omission in the Indenture or make any other change

which in the judgment of the Trustee is not prejudicial to the Trustee or materially adverse to the security of the

Registered Owners (provided the Trustee is entitled to receive and rely upon an opinion of counsel in exercising

such judgment);

(b) To grant to or confer upon the Trustee for the benefit of the Registered Owners any additional

rights, remedies, powers or authority that may lawfully be granted to or conferred upon the Registered Owners

or the Trustee or either of them;

(c) To more precisely identify the Facilities or the Trust Estate or to add property thereto;

(d) To subject to the Indenture additional revenues, properties or collateral;

(e) To comply with the arbitrage rebate requirements of Section 148(f) of the Code; and

(f) To deliver Additional Certificates as provided in the Indenture.

Supplemental Indentures Requiring Consent of Registered Owners

Exclusive of Supplemental Indentures not requiring the consent of the Registered Owners and subject

to the terms and provisions contained in the Indenture, with the prior written consent of the Registered Owners

of not less than a majority in aggregate Principal Components represented by the Certificates then Outstanding,

the District and the Trustee shall have the right, from time to time, anything contained in the Indenture to the

contrary notwithstanding, to execute such other Supplemental Indenture or Supplemental Indentures as shall be

deemed necessary and desirable by the District for the purpose of modifying, amending, adding to or rescinding,

in any particular, any of the terms or provisions contained in the Indenture or in any Supplemental Indenture;

provided, however, that nothing shall permit or be construed as permitting without the consent of the Registered

Owners of 100% in aggregate Principal Components represented by the Certificates then Outstanding (1) an

extension of the maturity or mandatory prepayment date of any installment representing Principal Components

or Interest Components with respect to any Certificate delivered under the Indenture, (2) a reduction in the

Principal Component represented by any Certificate or the rate of interest with respect thereto, (3) a privilege or

priority of any Certificate or Certificates over any other Certificate or Certificates, (4) a reduction in the

aggregate Principal Components represented by the Certificates or (5) a change to the optional, extraordinary

optional or special mandatory prepayment provisions in the Indenture.

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Opinion of Counsel

Before the District and the Trustee enter into any Supplemental Indenture, there shall have been

delivered to the District and the Trustee an Opinion of Special Counsel stating that such Supplemental Indenture

is authorized or permitted by the Indenture, will upon the execution and delivery thereof be valid and binding

upon the District in accordance with its terms, and will not adversely affect the validity of the Certificates or the

exclusion from federal gross income of interest on any Certificates that have been delivered.

Amendments to the Base Lease or the Lease Not Requiring Consent of Registered Owners

The District and the Trustee shall, without the consent of or notice to any of the Registered Owners,

enter into any amendment, change or modification of the Base Lease or the Lease as may be required (a) by the

provisions of the Base Lease, the Lease or the Indenture, (b) for the purpose of curing any ambiguity or formal

defect or omission in the Base Lease or the Lease or in connection with any other change therein which, in the

judgment of the Trustee, is not to the prejudice of the Trustee or materially adverse to the security for the

Registered Owners (provided the Trustee is entitled to receive and rely upon an opinion of counsel in exercising

such judgment), (c) so as to more precisely identify the Facilities or add property thereto, or (d) in connection

with the delivery of Additional Certificates under the Indenture.

Amendments to the Base Lease or the Lease Requiring Consent of Registered Owners

Except for the amendments, changes or modifications not requiring the consent of the Registered

Owners, neither the District nor the Trustee shall execute any other amendment, change or modification of the

Base Lease or the Lease without the giving of notice and the obtaining of the written approval or consent of the

Registered Owners of not less than a majority in aggregate Principal Components represented by the Certificates

at the time Outstanding given and obtained as provided in the Indenture.

Opinion of Counsel

Before the District and the Trustee consent to any amendment, change or modification of the Base lease

or the Lease, there shall have been delivered to the District and the Trustee an Opinion of Special Counsel stating

that the amendment, change or modification of the Base Lease or the Lease is authorized or permitted by the

Indenture and the instrument amended, changed or modified, will upon the execution and delivery thereof be

valid and binding upon the District in accordance with its terms, and will not adversely affect the validity of the

Certificates or the exclusion from federal gross income of interest on any Certificates that have been delivered.

Satisfaction and Discharge of the Indenture

When the Principal Components, premium, if any, and Interest Components with respect to all the

Certificates shall have been paid in accordance with their terms or provision has been made for such payment,

as provided in the Indenture, and provision has also been made for paying all other sums payable under the

Indenture, including the fees, costs, charges and expenses of the Trustee and the Paying Agent to the date of

retirement of the Certificates and all sums payable under the Lease, then the right, title and interest of the Trustee

under the Indenture shall thereupon cease, determine and be void.

Certificates Deemed to be Paid

Certificates or any portion thereof shall be deemed to be paid when payment of the Principal

Component, premium, if any, and Interest Component of the Rental Payments represented by the Certificates

being paid to the due date thereof (whether such due date is by reason of maturity or upon prepayment as provided

in the Indenture, or otherwise), either (1) shall have been made or caused to be made in accordance with the

terms of the Indenture, or (2) provision therefor shall have been made by depositing with the Trustee or other

duly authorized escrow agent, in trust and irrevocably setting aside exclusively for such payment, (i) moneys

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sufficient to make such payment or (ii) Defeasance Obligations maturing as to principal and interest, without

reinvestment, in such amount and at such times as will ensure the availability of sufficient moneys to make such

payment. At such time as a Certificate shall be deemed to be paid under the Indenture as aforesaid, such

Certificate shall no longer be secured by or be entitled to the benefits of the Indenture, except for the purposes

of any such payment from such moneys or Defeasance Obligations. Notwithstanding the foregoing, in the case

of any Certificate which by its terms may be prepaid prior to the stated maturity thereof, no deposit of moneys

or Defeasance Obligations shall be deemed a payment of such Certificates as aforesaid until, as to all such

Certificates which are to be prepaid prior to their respective stated maturities, (1) proper notice of such

prepayment shall have been given in accordance with the Indenture or irrevocable instructions shall have been

given to the Trustee to give such notice and (2) in the case of Certificates which do not mature or will not be

prepaid within 90 days of such deposit, there shall have been delivered to the Trustee a verification report of an

independent certified public accounting firm as to the adequacy of the trust funds to fully pay the Certificates

deemed to be paid.

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SUMMARY OF THE LEASE

The following is a summary of certain provisions of the Lease. The following is not a comprehensive description, however, and is qualified in its entirety by reference to the Lease for a full recital of the provisions

thereof.

Lease Term

The Lease shall become effective upon its delivery, and subject to earlier termination pursuant to the

provisions of the Lease, shall have an Initial Term terminating on the last day of the District’s current Fiscal Year.

The Lease Term may be extended, solely at the option of the District, at the end of the Initial Term or any Renewal

Term for an additional Renewal Term up to the Maximum Lease Term. At the end of the Initial Term and at the

end of each Renewal Term, the District shall be deemed to have exercised its option to continue the Lease for the

next Renewal Term, unless the District delivers written notice to the Trustee no later than June 30 of each year

stating the District’s intention to not extend the Lease Term. The District’s option to renew or not to renew the

Lease shall be conclusively determined by whether or not the Board of Trustees of the District has, on or before

the June 30 immediately preceding the end of the Initial Term or any Renewal Term then in effect, budgeted and

appropriated, specifically with respect to the Lease, moneys sufficient to pay all the Rental Payments and

reasonably estimated Additional Payments for the ensuing Renewal Term. The chief financial officer of the

District (or any other officer at any time charged with the responsibility of preparing budget proposals) is to

include in the budget proposal submitted to the Board of Trustees, in any year in which the Lease shall be in

effect, items for all payments required for the next ensuing Renewal Term under the Lease; it being the intention

of the Board of Trustees that the decision to renew or not to renew the Lease shall be made solely by the Board

of Trustees and not by any other official of the District.

The District’s option to renew or not to renew the Lease may not be exercised at any time during which

an Event of Default has occurred and is then continuing under any of the terms of the Lease; provided, however,

that if such Event of Default (money payments excepted) is of such nature that the same is curable but not within

the period allowed for curing such Event of Default, then the right of the District to exercise the option granted

shall not be suspended if the District shall have promptly commenced within such period to comply with the

provisions of the Lease which shall have been breached by it and if so long as the District shall, with diligence

and continuity, proceed to cure such Event of Default.

The District intends, subject to the provisions above respecting the failure of the District to budget or

appropriate funds to make Rental Payments and Additional Payments, to continue the Lease Term and to pay

the Rental Payments and Additional Payments under the Lease. The District reasonably believes that legally

available funds in an amount sufficient to make all Rental Payments and Additional Payments during the Initial

Term and each Renewal Term can be obtained. The District further intends to do all things lawfully within its

power to obtain and maintain funds from which the Rental Payments and Additional Payments may be made,

including making provision for such Rental Payments and Additional Payments to the extent necessary in each

proposed annual budget submitted for approval in accordance with applicable procedures of the District and to

exhaust all available reviews and appeals in the event such portion of the budget is not approved.

Notwithstanding the foregoing, the decision to budget and appropriate funds or to continue the Lease Term is to

be made in accordance with the District’s normal procedures for such decisions.

The terms and conditions during any Renewal Term shall be the same as the terms and conditions during

the Initial Term, except that the Rental Payments and the Option Purchase Price shall be as provided in the schedules

set forth in the Lease, as such schedules may be revised as provided in the Indenture.

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Termination of the Lease Term

The Lease Term will terminate, and all of the District’s right, title and interest in and to the Lease (except

to the extent of any conveyance pursuant to the Lease) and its obligations under the Lease shall terminate without

penalty upon the earliest to occur of any of the following events:

(a) the expiration of the Initial Term or any Renewal Term and the nonrenewal of the Lease

Term resulting from an Event of Nonappropriation pursuant to the Lease (which is not thereafter waived

by the Trustee as provided in the Lease);

(b) the exercise by the District of the option to purchase the Facilities pursuant to the Lease;

(c) an Event of Default and the Trustee’s election to terminate the Lease as provided in the

Lease;

(d) the payment by the District of all Rental Payments and Additional Payments authorized

or required to be paid by the District under the Lease during the Maximum Lease Term; or

(e) June 30, 2045 (unless otherwise provided in a Supplemental Lease).

Possession and Use of the Facilities

The Trustee covenants and agrees that as long as the District shall not be in default under the Lease, the

District shall have sole and exclusive possession of the Facilities (subject to the Trustee’s right of access pursuant

to the Lease) and shall and may peaceably and quietly have, hold and enjoy the Facilities during the Lease Term.

The Trustee covenants and agrees that it will not take any action, except as expressly set forth in the Lease and

the Indenture, to prevent the District from having quiet and peaceable possession and enjoyment of the Facilities

during the Lease Term and will, at the request and expense of the District, cooperate with the District in order

that the District may have quiet and peaceable possession and enjoyment of the Facilities and will defend the

District’s enjoyment and possession thereof against all parties.

Acquisition, Construction, Improvement and Equipping of the Project

The District will acquire, construct, improve, furnish and equip the Project in accordance with the

Construction Contracts and the Plans and Specifications. The District may make minor changes in and to the

Construction Contracts and the Plans and Specifications incorporated therein, but major changes may only be

made with the approval of the Trustee. The District agrees that it will use its best efforts to cause the acquisition,

construction, improvement, furnishing and equipping of the Project to be completed as soon as practicable with

all reasonable dispatch. The District shall ensure that the Project conforms to all applicable health, safety,

environmental and building codes, regulations and standards.

Payment for Project Costs

All Project Costs shall be paid by the Trustee from moneys in the Project Fund upon receipt by the Trustee

of requisition certificates in accordance with the Indenture. If the Project Fund shall be insufficient to pay fully

all Project Costs and to complete fully the Project free of liens or claims, the District shall pay, but only from

legally available funds, the full amount of any such deficiency by making payments directly to the Contractors

and to the suppliers of materials and services as the same shall become due, and the District shall save the Trustee

whole and harmless from any obligation to pay such deficiency. The Completion Date shall be evidenced by

delivery to the Trustee of the Completion Certificate signed by the Authorized District Representative. Upon

receipt of the Completion Certificate, any remaining moneys then in the Project Fund shall be applied by the

Trustee as provided in the Indenture for deposit in the Certificate Fund.

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Changes or Amendments to Project Documents

The District may make, authorize or permit such changes or amendments in the Project Documents as

it may reasonably determine to be necessary or desirable; provided, however, that no such change or amendment

shall be made to the Project Documents that would cause a material change in the cost, scope, nature, or function

of the Project, unless the District files with the Trustee (1) a certificate of an Authorized District Representative

to the effect that such change or amendment will not result in the Project being used for any purpose prohibited

by the Lease or otherwise result in the District failing to comply with any provisions of the Lease, and (2) for

those Certificates with Interest Components of the Rental Payments which are excludable from gross income for

federal income tax purposes, an Opinion of Special Counsel to the effect that such change or amendment will

not result in the Interest Component of the Rental Payments for such Certificates becoming includable in gross

income for federal income tax purposes.

Title to Portions of the Project

Title to the personal property included in the Project and any and all additions and modifications to or

replacements of any such portion of the Project shall be held in the name of the District, subject to rights of the

Trustee under the Lease and the Indenture. If an Event of Default occurs as set forth in the Lease or if an Event

of Nonappropriation shall occur, title to the personal property included in the Project shall, at the option of the

Trustee, thereafter immediately and without any action by the District vest in the Trustee, and the District will,

upon the Trustee’s request, reasonably surrender possession of the Facilities to the Trustee. It is the intent of the

parties that any transfer of title to the Trustee shall occur automatically without the necessity of any bill of sale,

certificate of title or other instrument or conveyance.

Machinery and Equipment Purchased by the District

The District may from time to time at its own expense install machinery, equipment and other tangible

property at the Facilities. Any item of machinery or equipment the entire purchase price of which is paid by the

District with the District’s own funds, and no part of the purchase price of which is paid from funds deposited

pursuant to the terms of the Lease in the Project Fund nor from any other funds deposited with the Trustee

pursuant to the Indenture, shall be and remain the property of the District and shall not constitute part of the

Facilities; provided, however, that title to any such machinery, equipment and other tangible property which

becomes permanently affixed to real property shall be, subject to the Lease, and shall be included under the

terms of the Lease in the event that the Facilities would be damaged or impaired by the removal of such

machinery, equipment or other tangible property.

Rental Payments

The District covenants and agrees to make Rental Payments, exclusively from legally available funds,

in lawful money of the United States of America, to the Trustee at its corporate trust office or such other office

as the Trustee shall designate during the Initial Term and each Renewal Term, in the amounts and on or before

each Certificate Payment Date set forth in the Lease (or on any other date a Rental Payment is due with respect to

the Facilities whether at stated maturity, upon prepayment or declaration of acceleration or otherwise), in funds

which will be immediately available to the Trustee in the applicable subaccount of the Certificate Fund on the

due dates. All Rental Payments shall be paid by the District directly to the Trustee and shall be deposited in

accordance with the provisions of the Indenture into the applicable subaccount of the Certificate Fund. A portion

of each Rental Payment is to be paid as, and represents the payment of, interest and principal on an obligation

of the District. Each Rental Payment shall be applied first as a payment of the Interest Component and then as

a payment of the Principal Component and reduction of the Option Purchase Price as shown in the Lease. If the

District fails to make any portion of the Rental Payments which are due under the Lease, the District will

immediately quit and vacate the Facilities, and the Rental Payments (except for Rental Payments which have

been theretofore appropriated and then available for such purpose) shall thereupon cease, it being understood

between the parties that neither the District nor any agency or political subdivision thereof is obligated to make

C-19

any Rental Payments which are due to the Trustee or the Option Purchase Price under the Lease except as

provided therein. Should the District fail to pay any portion of the required Rental Payments or Additional

Payments and then fail to immediately quit and vacate the Facilities, the Trustee in accordance with the Indenture

may immediately bring legal action to evict the District from the Facilities (and the District shall, to the extent

permitted by law, pay as damages for its failure to quit and vacate the Facilities upon termination of the then

current term of the Lease in violation of the terms of the Lease an amount equal to the Rental Payments and

Additional Payments otherwise payable during such term prorated on a daily basis) and commence proceedings

to exercise available rights and remedies under the Lease or the Base Lease.

Additional Payments

The District shall pay as Additional Payments the following amounts:

(a) All fees, charges and expenses reasonably incurred, including agent and counsel fees and

expenses, of the Trustee and the Paying Agent incurred under the Indenture and the Lease, and in connection

with the performance of the Trustee’s obligations under the Lease, the Base Lease or the Indenture, as and when

the same become due.

(b) All costs incident to the payment of the Principal Component, premium, if any, and Interest

Component represented by the Certificates as the same become due and payable, including all costs and expenses

in connection with the call, prepayment and payment of Certificates.

(c) All expenses incurred in connection with the enforcement of any rights under the Lease, the

Base Lease or the Indenture by the Trustee or the Registered Owners.

(d) All arbitrage rebate required to be paid to the United States, if any, as provided in the Indenture

and the Tax Compliance Agreement.

(e) All other payments of whatever nature which the District has agreed to pay or assume under

the provisions of the Lease, the Indenture or the Base Lease.

Obligations Absolute and Unconditional

The obligation of the District to pay the Rental Payments from legally available funds appropriated for

such purpose shall be absolute and unconditional without notice or demand, and without abatement, deduction,

set-off, counterclaim, recoupment, diminution or defense whatsoever. Notwithstanding any dispute between the

District and the Trustee under the Lease, the District shall pay all Rental Payments and Additional Payments

when due and shall not withhold payment of any Rental Payments and Additional Payments pending the final

resolution of such dispute.

Event of Nonappropriation

The District agrees that the Rental Payments and Additional Payments under the Lease shall constitute

currently budgeted expenditures of the District, and shall not in any way be construed to be a general obligation

or debt of the District in contravention of any applicable constitutional or statutory limitation or requirement

concerning the creation of indebtedness by the District, nor shall anything contained therein constitute a pledge

of the general credit, tax revenues, funds or moneys of the District, except as expressly provided in the Lease.

The District’s obligations to pay Rental Payments and Additional Payments under the Lease shall be from year

to year only, and shall not constitute a mandatory payment obligation of the District in any ensuing Fiscal Year

beyond the then current Fiscal Year, except to the extent of funds pledged to or encumbered for the payment of

such obligations. Failure of the District to budget and appropriate said moneys on or before June 30 during any

year shall be deemed a conclusive determination of non-availability of funds for the purpose of the Lease. Upon

the expiration or termination of the Initial Term and any Renewal Term and failure by the District to renew the

C-20

Lease, the District shall be wholly discharged from any liability to make Rental Payments or Additional

Payments under the Lease other than Rental Payments or Additional Payments incurred prior to the expiration

or termination of such Initial Term or Renewal Term. In the event that the Board of Trustees of the District shall

not budget and appropriate, specifically with respect to the Lease, on or before the end of each Fiscal Year,

moneys sufficient to pay all Rental Payments and the reasonably estimated Additional Payments coming due for

the then current Renewal Term, an Event of Nonappropriation shall be deemed to have occurred. In the event

that during the Initial Term or any Renewal Term, any Additional Payments shall become due which were not

included in the District’s current budget, or which exceeded the amounts which were included therefor in the

District’s current budget, then, in the event that moneys are not specifically budgeted and appropriated to pay

such Additional Payments within 30 days subsequent to the date upon which such Additional Payments are due,

an Event of Nonappropriation shall be deemed to have occurred. If an Event of Nonappropriation occurs, the

District shall not be obligated to make payment of the Rental Payments or Additional Payments or any other

payments provided for in the Lease or from funds pledged to or encumbered for the payment of such obligations)

which accrue after the last day of the Initial Term or Renewal Term during which such Event of Nonappropriation

shall occur.

Prepayment of Certificates

If the District is not in default in making Rental Payments or Additional Payments under the Lease, the

Trustee, at the written direction of the District, at any time when the aggregate moneys in the funds held under

the Indenture are sufficient for such purposes, shall (i) if the Outstanding Certificates are then subject to

prepayment under the provisions of the Indenture, take all steps that may be necessary under the applicable

prepayment provisions of the Indenture to prepay all or such part of the Principal Component of Rental Payments

represented by the then Outstanding Certificates as may be specified by the District, on such date as may be

specified by the District, (ii) cause such moneys in the Certificate Fund or such part thereof as the District shall

direct, to be applied by the Trustee for the purchase of Certificates in the open market for the purpose of

cancellation at prices not exceeding the Principal Component represented by such Certificates plus accrued

interest thereon to the date of delivery for cancellation, or (iii) a combination of (i) and (ii) as provided in such

direction. Unless otherwise stated therein, such notice by the District shall be revocable by the District at any

time prior to the time at which the Certificates are to be prepaid or are deemed to be paid in accordance with the

Indenture. Any prepayment of the Principal Component of the Rental Payments shall be applied to reduce the

Option Purchase Price and shall be credited as a payment of Rental Payments from such maturities as are selected

by the District.

Maintenance, Repairs and Utilities

The District covenants and agrees that throughout the Lease Term and at its own expense it will

maintain, preserve and keep the Facilities and all parts thereof in good repair, working order and condition, and

will from time to time make all repairs, replacements and improvements necessary to keep the Facilities and all

parts thereof in safe condition and free from filth, nuisance or conditions unreasonably increasing the danger of

fire or other casualty. The Trustee shall have no responsibility for any of these repairs, replacements or

improvements. The District shall contract in its own name and pay for all utilities and utility services used by

the District in, on or about the Facilities, and the District, shall, at its sole cost and expense, procure any and all

permits, licenses or authorizations necessary in connection therewith.

Taxes, Assessments and Other Governmental Charges

The Facilities will be used for a governmental or proprietary purpose of the District and, therefore, the

Facilities will be exempt from all taxes presently assessed and levied with respect to real or personal property.

In the event that the use, possession or acquisition of the Facilities is found to be subject to taxation in any form,

the District will pay during the Lease Term, as the same respectively become due, all taxes and governmental

charges of any kind whatsoever that may at any time be lawfully assessed or levied against or with respect to the

Facilities and any facilities, equipment or other property acquired by the District in substitution for, as a renewal

C-21

or replacement of, or a modification, improvement or addition to the Facilities as well as all gas, water, steam,

electricity, heat, power, telephone, utility and other charges incurred in the operation, maintenance, use,

occupancy and upkeep of the Facilities; provided that, with respect to any governmental charge that may lawfully

be paid in installments over a period of years, the District shall be obligated to pay only such installments as are

accrued during such time as the Lease is in effect.

Property and Casualty Insurance

The District shall, at its sole cost and expense, maintain or cause to be maintained at all times throughout

the Lease Term, property and casualty insurance, or shall demonstrate pursuant to the Lease, that adequate self-

insurance is provided, to keep the Facilities insofar as the same may be of an insurable nature constantly insured

against loss or damage by fire, lightning and all other risks covered by the all risk extended coverage insurance

endorsement then in use in the State in an amount equal to the Full Insurable Value of the Facilities (subject to

reasonable loss deductible clauses not to exceed $25,000); provided, however, that during the Construction

Period, if the Contractor under the Construction Contracts maintains in full force and effect a policy or policies

of Builder’s Risk-Completed Value Form Insurance insuring the Project against fire, lightning and all other risks

covered by the extended coverage endorsement then in use in the State to the Full Insurable Value of the Facilities

(subject to reasonable loss deductible clauses not to exceed $25,000) then the insurance shall not be required for

such Construction Period with respect to the Project while the Project is so covered by such other insurance.

The Full Insurable Value of the Facilities shall be determined once in every three Fiscal Years, commencing

with the year ending June 30, 2024, by an architect, contractor, appraiser, appraisal company or one of the

insurers, to be selected and paid by the District and a report of such determination shall be filed with the District

and the Trustee within 180 days after the end of such third Fiscal Year. The insurance required pursuant to the

Lease shall be maintained at the District’s sole cost and expense. Such insurance may be maintained with the

Missouri United School Insurance Council or other generally recognized responsible insurance entity or entities

authorized to do business in the State as may be selected by the District. All such policies of insurance or

certificates evidencing such coverage, and all renewals thereof, shall name the District and the Trustee as

insureds and loss payees as their respective interests may appear, and shall contain a provision that such

insurance may not be canceled by the issuer thereof without at least 30 days advance written notice to the District

and the Trustee.

Public Liability Insurance

The District shall, at its sole cost and expense, maintain or cause to be maintained at all times during

the Lease Term general accident and public liability insurance (including but not limited to coverage for all

losses whatsoever arising from the ownership, maintenance, operation or use of any automobile, truck or other

motor vehicle), or shall demonstrate, pursuant to the Lease, that adequate self-insurance is provided, under which

the District and the Trustee shall be named as insureds, properly protecting and indemnifying the District and

the Trustee, in amounts equal to the District’s customary insurance practice for bodily injury (including death)

but in no event less than the limitation on awards for liability in effect from time to time under Section 537.610,

RSMo, and for property damage arising out of or in any way relating to the condition or the operation of the

Facilities (subject to reasonable loss deductible clauses not to exceed $25,000). Each insurance policy or

certificates evidencing such coverage shall contain a provision to the effect that the insurance company may not

cancel or materially modify the policy without first giving at least 30 days advance written notice to the District

and the Trustee.

In the event of a public liability occurrence, the Net Proceeds of liability insurance or self-insurance

program of the District shall be applied toward the extinguishment or satisfaction of the liability with respect to

which such proceeds have been paid.

C-22

Workers’ Compensation Insurance

The District shall maintain or cause to be maintained workers’ compensation insurance required by the

laws of the State covering all of its employees, or shall demonstrate, pursuant to the Lease, that adequate self-

insurance is provided, and shall require any other person or entity working for or on behalf of the District to

carry such coverage.

Blanket Insurance, Self-Insurance and Modifications

The District may satisfy any of the insurance requirements set forth in the Lease by using blanket

policies of insurance which cover not only the Facilities but other properties, provided that the District complies

with each and all of the requirements and specifications of the Lease respecting insurance.

The District represents that it currently maintains insurance that meets the requirements set forth in the

Lease. Without the consent of the Registered Owners, the District may, upon the recommendation of an

insurance consultant that the District will be adequately insured, make modifications to the insurance coverage,

including for the District to be self-insured, in whole or in part, for any such coverage, taking into account the

cost and availability of insurance and the effect of the terms and rates of such insurance upon the District’s costs

and charges for its services.

Hazardous Materials

The District shall not cause or permit the Facilities or any other property of the District to be used to

generate, manufacture, refine, transport, treat, store, handle, dispose, transfer, produce or process Hazardous

Materials, except in compliance with all applicable federal, state and local laws or regulations, nor shall the

District cause or permit, as a result of any intentional or unintentional act or omission of the District or any tenant

or subtenant, a release of Hazardous Materials onto the Facilities or any other property of the District, except in

compliance with all applicable federal, state and local laws or regulations. The District shall comply with and

ensure compliance by all tenants and subtenants with all applicable federal, state and local laws, ordinances,

rules and regulations, wherever and by whomever triggered, and shall obtain and comply with, and ensure that

all tenants and subtenants obtain and comply with, any and all approvals, registrations or permits required

thereunder. The District shall (a) conduct and complete all investigations, studies, sampling and testing, and all

remedial, removal, and other actions necessary to clean up and remove all Hazardous Materials, on, from, or

affecting the Facilities or any other property of the District (i) in accordance with all applicable federal, state and

local laws, ordinances, rules, regulations, and policies and (ii) in accordance with the orders and directives of all

federal, state and local governmental authorities, and (b) to the extent permitted by law and without waiving any

rights of sovereign immunity, defend, indemnify, and hold harmless the Trustee from and against any claims,

demands, penalties, fines, liabilities, settlements, damages, costs, or expenses of whatever kind or nature, known

or unknown, contingent or otherwise, arising out of or in any way related to, (i) the presence, disposal, release,

or threatened release of any Hazardous Materials which are on, from, or affecting the soil, water, vegetation,

buildings, personal property, persons, animals, or otherwise; (ii) any personal injury (including wrongful death)

or property damage (real or personal) arising out of or related to such Hazardous Materials, and/or (iii) any

violation of laws, orders, regulations, requirements or demands of government authorities, which are based upon

or in any way related to any such Hazardous Materials including, without limitation, attorney and consultant

fees, investigation and laboratory fees, court costs, and litigation expenses.

C-23

Additions, Modifications and Improvements to the Facilities

The District shall have and is given the right, at its sole cost and expense, to make such additions,

modifications and improvements in and to any part of the Facilities as the District from time to time may deem

necessary or desirable for its purposes; provided, however, the District shall not make any additions,

modifications or improvements which will in any way damage the Facilities or substantially reduce the value of

the Facilities. All additions, modifications and improvements made by the District shall (i) be made in a

workmanlike manner and in strict compliance with all laws and ordinances applicable thereto, (ii) when

commenced, be prosecuted to completion with due diligence, and (iii) when completed, be deemed a part of the

Facilities except as otherwise provided in the Lease.

No addition, modification or improvement to the Facilities made shall entitle the District to any

reimbursement of any Rental Payments or Additional Payments from the Trustee or the Registered Owners, nor

shall the District be entitled to any abatement or diminution in Rental Payments or Additional Payments under

the Lease, except such diminution as results from prepayment of the Principal Component of Rental Payments

represented by the Certificates pursuant to the Indenture.

Additional Improvements on the Project Site

The District shall have and is given the right, at its sole cost and expense, to construct on portions of the

Project Site not theretofore occupied by buildings or improvements such additional buildings and improvements

as the District from time to time may deem necessary or desirable for its business purposes. All additional

buildings and improvements constructed on the Project Site by the District shall become a part of the Facilities

and subject to the terms and conditions contained in the Lease and the Base Lease. The District covenants and

agrees (a) to make any repairs and restorations required to be made to the Facilities because of the construction

of, addition to, alteration or removal of said additional buildings or improvements, (b) to keep and maintain said

additional buildings and improvements in good condition and repair, ordinary wear and tear excepted, and (c) to

promptly and with due diligence either raze and remove from the Project Site in a good workmanlike manner,

or repair, replace or restore any of said additional buildings and improvements as may from time to time be

damaged by fire or other casualty.

Liens

The District shall not do or suffer anything to be done whereby the Facilities, or any part thereof, may

be encumbered by any mechanics’ or materialmen’s or other similar lien, other than Permitted Encumbrances.

Whenever and as often as any mechanics’ or materialmen’s or other similar lien is filed against the Facilities, or

any part thereof, purporting to be for or on account of any labor done or materials or services furnished in

connection with any work in or about the Facilities, the District shall discharge the same of record within 60

days after the date of filing.

Damage and Destruction

If during the Lease Term, the Facilities are damaged or destroyed, in whole or in part, by fire or other

casualty, to such extent that the claim for loss (including any deductible amount pertaining thereto) resulting

from such damage or destruction is greater than $100,000, the District shall promptly notify the Trustee in writing

as to the nature and extent of such damage or loss and whether it is practicable and desirable to rebuild, repair,

restore or replace such damage or loss.

If the District shall determine that such rebuilding, repairing, restoring or replacing is practicable and

desirable, the District shall proceed promptly with and complete with reasonable dispatch such rebuilding,

repairing, restoring or replacing of the property damaged or destroyed so as to place said Facilities in

substantially the same condition as existed prior to the event causing such damage or destruction, with such

changes, alterations and modifications (including the substitution and addition of other property) as may be

C-24

desired by the District and as will not impair the utility of the Facilities. If the Net Proceeds are less than or

equal to $100,000, the Net Proceeds may be retained by the District, and the Trustee will cause the Net Proceeds

of any insurance claim to be applied to the prompt repair, restoration, modification or improvement of the

Facilities. Any balance of the Net Proceeds remaining after such work has been completed shall be deposited

into the applicable subaccount of the Certificate Fund. If the Net Proceeds of casualty insurance required by the

Lease and received with respect to any such damage or loss to the Project exceeds $100,000, such Net Proceeds

shall be paid to the Trustee and shall be deposited into a separate account to be established in the applicable

subaccount of the Project Fund and shall be used and applied in accordance with the disbursement requirements

of the Indenture for the purpose of paying the cost of such rebuilding, repairing, restoring or replacing such

damage or loss. Any amount remaining in the applicable subaccount of the Project Fund after completion of

such rebuilding, repairing, restoring or replacing shall be deposited into the applicable subaccount of the

Certificate Fund which completion shall be evidenced by a certificate signed by an Authorized District

Representative and filed with the Trustee. If said Net Proceeds are not sufficient to pay in full the costs of such

replacement, repair, rebuilding or restoration, the District shall nonetheless complete the work thereof and shall,

subject to the Lease pay that portion of the costs thereof in excess of the amount of said Net Proceeds.

If the District shall determine that rebuilding, repairing, restoring or replacing the Facilities is not

practicable and desirable, then, in lieu of rebuilding, repairing, restoring or replacing the Facilities, the District

shall promptly purchase the Facilities by paying the Option Purchase Price to the Trustee and any Net Proceeds

of casualty insurance required by the Lease and received with respect to any such damage or loss to the Facilities

shall be applied to such payment. Any balance of the Net Proceeds remaining after paying the Option Purchase

Price to the Trustee shall belong to the District. The District agrees that any acquisition of the Facilities or rights

to their use by the District shall be pursuant to and in accordance with the Lease, including payment of Rental

Payments and the applicable Option Purchase Price.

The District shall not, by reason of its inability to use all or any part of the Facilities during any period

in which the Facilities are damaged or destroyed, or are being repaired, rebuilt, restored or replaced, or by reason

of the payment of the costs of such rebuilding, repairing, restoring or replacing, be entitled to any reimbursement

from the Trustee or the Registered Owners of the Certificates, or any abatement or diminution of the rentals

payable by the District under the Lease or of any other obligations of the District under the Lease except as

expressly provided in the Lease.

Condemnation or Deficiency of Title

Any Net Proceeds of title insurance or other award from a challenge or threat of legal or equitable action

related to the title or use of the Facilities shall be deposited with the Trustee and paid into the applicable

subaccount of the Certificate Fund and shall be used to prepay Certificates pursuant to the Indenture at the earliest

possible date. If during the Lease Term title to, or the temporary use of, all or part of the Facilities is condemned

by any authority having the power of eminent domain, the condemnation proceeds shall be deposited with the

Trustee and paid into the applicable subaccount of the Certificate Fund and shall be used by the Trustee to prepay

Certificates pursuant to the Indenture. The District agrees that any acquisition of the Facilities or rights to their

use by the District (whether pursuant to the exercise of its eminent domain powers or otherwise) shall be pursuant

to and in accordance with the Lease, including payment of Rental Payments and the applicable Option Purchase

Price.

The Trustee shall cooperate fully with the District in the handling and conduct of any prospective or

pending condemnation proceedings with respect to the Facilities or any part thereof, and shall, to the extent the

Trustee may lawfully do so, permit the District to litigate in any such proceeding in the name and on behalf of

the Trustee. So long as District shall not be in default under the Lease, in no event will the Trustee voluntarily

settle or consent to the settlement of any prospective or pending condemnation proceedings with respect to the

Facilities or any part thereof without the written consent of the District.

C-25

The District covenants and agrees, to the extent it may lawfully do so, that so long as any of the

Certificates remain Outstanding and unpaid, the District will not exercise the power of condemnation with

respect to the Facilities. The District further covenants and agrees, to the extent it may lawfully do so, that if for

any reason the foregoing covenant is determined to be unenforceable or if the District should fail or refuse to

abide by such covenant and condemns the Facilities, the appraised value of the Facilities shall not be less than

the greater of (i) if such Certificates are then subject to prepayment, the Principal Components and Interest

Components of the Certificates Outstanding through the date of their prepayment, or (ii) if such Certificates are

not then subject to prepayment, the amount necessary to defease such Certificates to the first available

prepayment date in accordance with the Indenture.

Granting of Easements

If no Event of Default or Event of Nonappropriation under the Lease shall have happened and be

continuing, the District may at any time or times (a) grant easements, licenses, rights-of-way (including the

dedication of public streets and highways) and other rights or privileges in the nature of easements with respect

to any property included in the Facilities, or (b) release existing easements, licenses, rights-of-way and other

rights or privileges, all with or without consideration and upon such terms and conditions as provided in the

Lease. The Trustee agrees that it will execute and deliver any instrument necessary or appropriate to confirm

and grant or release any such easement, license, right-of-way or other right or privilege or any such agreement

or other arrangement, upon receipt by the Trustee of: (1) a copy of the instrument of grant or release or of the

agreement or other arrangement, (2) a written application signed by the Authorized District Representative

requesting such instrument; and (3) a certificate executed by the Authorized District Representative stating that

such grant or release is not detrimental to the proper conduct of the business of the District, will be a Permitted

Encumbrance, will not impair the effective use or interfere with the efficient and economical operation of the

Facilities, and will not materially adversely affect the security intended to be given by or under the Indenture,

the Base Lease or the Lease. If the instrument of grant shall so provide, any such easement or right and the rights

of such other parties thereunder shall be superior to the right of the Trustee under the Lease and the Indenture

and shall not be affected by any termination of the Lease or by default on the part of the District under the Lease.

If no Event of Default or Event of Nonappropriation shall have happened and be continuing, any payments or

other consideration received by the District for any such grant or with respect to or under any such agreement or

other arrangement shall be and remain the property of the District, but, in the event of the termination of the

Lease subsequent to an Event of Default or an Event of Nonappropriation, all rights of the District then existing

with respect to or under such grant shall inure to the benefit of and be exercisable by the Trustee.

Assignment and Sublease by District

The District may not assign its interest in the Lease for any reason. The District may, however, sublease

the Facilities as a whole or in part, without the necessity of obtaining the consent of the Trustee, subject, however,

to each of the following conditions:

(a) The Lease and the obligations of the District under the Lease, shall, at all times during the Initial

Term and any Renewal Term, remain obligations of the District, and the District shall maintain its direct

relationship with the Trustee, notwithstanding any sublease;

(b) Before entering into any sublease of the Facilities or any portion thereof, the District shall

obtain and file with the Trustee an Opinion of Special Counsel to the effect that such sublease will not cause the

Interest Component of the Rental Payments payable pursuant to the Certificates to be included in gross income

for federal or Missouri income tax purposes.

(c) The District shall, within 30 days after the delivery thereof, furnish or cause to be furnished to

the Trustee a true and complete copy of each such sublease.

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The District may grant licenses not to exceed 90 days to use all or any of the Facilities in the normal

course of business without the consent of the Trustee.

Restrictions on Sale or Mortgage of the Facilities by the District

The District agrees that, except as set forth in the Lease or in other provisions of the Lease or the

Indenture, it will not sell, convey, mortgage, encumber or otherwise dispose of any part of the Facilities during

the Lease Term, nor otherwise create any encumbrance thereon other than Permitted Encumbrances. Except as

expressly provided in the Lease, the District shall promptly, at its own expense, take such action as may be

necessary to duly discharge or remove any such mortgage, pledge, lien, charge, encumbrance or claim if the

same shall arise at any time. The District shall reimburse the Trustee for any expense incurred by it in order to

discharge or remove any such mortgage, pledge, lien, charge, encumbrance or claim.

Events of Default

If any one or more of the following events shall occur and be continuing, it is defined as and declared to

be and to constitute an “Event of Default” under the Lease:

(a) Failure by the District to pay any Rental Payment required to be paid under the Lease at the

time specified therein; or

(b) Failure by the District to pay any Additional Payment or to observe or perform any other

covenant, agreement, obligation or provision of the Lease on its part to be observed or performed, and such

failure shall continue for 30 days after the Trustee has given the District written notice specifying such failure

or such longer period (but not to exceed 60 days unless the Trustee shall otherwise consent) as shall be reasonably

required to cure such default; provided that (1) the District has commenced such cure within said 30-day period,

and (2) the District diligently prosecutes such cure to completion; or

(c) Failure by the District to vacate the Facilities within 30 days after the occurrence of an Event

of Nonappropriation; or

(d) An Event of Default under the Indenture shall have occurred and be continuing.

Remedies on the Occurrence of an Event of Default or an Event of Nonappropriation

If an Event of Default or an Event of Nonappropriation shall have occurred and be continuing, then the

Trustee may at the Trustee’s election (subject, however, to any restrictions contained in the Indenture against

acceleration of the maturity of the Certificates or termination of the Lease), then or at any time thereafter, and

while such Event of Default or Event of Nonappropriation shall continue, take any one or more of the following

actions:

(a) With or without terminating the Lease take possession of the Facilities, in which event the

District shall take all actions necessary to authorize, execute and deliver to the Trustee all documents necessary

to vest in the Trustee for the remainder of the Lease Term, all of the District’s interest in and to the Facilities,

and sell the Trustee’s (or its assignee’s) interest in the Lease, or lease or sublease the Facilities and collect the

rentals therefor, for all or any portion of the remainder of its leasehold term upon such terms and conditions as

it may deem satisfactory in its sole discretion, with the District remaining liable, subject to the provisions of the

Lease, for the difference between (i) the Rental Payments and Additional Payments payable by the District under

the Lease to the end of the current Lease Term and (ii) the net proceeds or any purchase price, rents or other

amounts paid by the new purchaser, lessee or sublessee of such Facilities, and, provided further, that, in such

event, if the Trustee shall receive a payment for sale of its interest or total subrentals for sublease that are, after

payment of the Trustee’s expenses in connection therewith, in excess of the principal amount of Certificates then

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Outstanding and the interest due and to become due thereon and all other Additional Payments, then such excess

shall be paid to the District either by the Trustee, its assigns, or its sublessee; or

(b) By written notice to the District, declare all Rental Payments and Additional Payments payable

under the Lease for the remainder of the current Renewal Term to be immediately due and payable and the same

shall thereupon become immediately due and payable; or

(c) Give the District written notice of intention to terminate the Lease on a date specified in such

notice, which date may be the earlier of 30 days after such notice is given or the end of the current Renewal

Term, and if all defaults have not then been cured, on the date so specified, the District’s rights to possession of

the Facilities shall cease and the Lease shall thereupon be terminated, and the Trustee may re-enter and take

possession of the Facilities; or

(d) Exercise any of the rights of a secured party under the Uniform Commercial Code of Missouri,

as then in effect, with respect to property which is covered by such Code, including without limitation, the right

to take possession of any personal property or fixtures subject to the lien granted pursuant to the Lease and to

take such other measures as the Trustee may deem as necessary for the care, protection, preservation and

marketing of said personal property and fixtures. The Trustee may require the District to assemble any such

personal property or fixtures and make the same available to the Trustee at a place to be designated by the Trustee

which is reasonably convenient to the Trustee and the District. It is agreed that a commercially reasonable

manner of disposition of personal property includes, without limitation, disposition of the Facilities in the manner

provided in the Lease; or

(e) Take whatever action at law or in equity may appear necessary or desirable to collect the Rental

Payments and Additional Payments then due and thereafter to become due during the Lease Term and to enforce

its rights under the Lease and the performance and observance of any obligation, agreement or covenant of the

District under the Lease.

No remedy conferred upon or reserved to Trustee is intended to be exclusive and every such remedy

shall be cumulative and shall be in addition to every other remedy given under the Lease. No delay or omission

to exercise any right or power accruing upon any default shall impair any such right or power or shall be

construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often

as may be deemed expedient.

Amendments, Changes and Modifications

Except as otherwise provided in the Lease or in the Indenture, subsequent to the initial execution and

sale of Certificates and prior to the payment thereof having been made in accordance with the provisions of the

Indenture, the Lease may not be effectively amended, changed, modified, altered or terminated without the

written consent of the Trustee, given in accordance with the provisions of the Indenture.

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SUMMARY OF THE BASE LEASE

The following is a summary of certain provisions contained in the Base Lease. The following is not a comprehensive description, however, and is qualified in its entirety by reference to the Base Lease for a complete

recital of the terms thereof.

Base Lease Term

The term of the Base Lease shall commence as of its date of the delivery and shall end on June 30, 2070,

unless such term is sooner terminated as provided in the Base Lease.

Eminent Domain

In the event the whole or any part of the Project Site or the Project is taken by eminent domain

proceedings, the interest of the Trustee shall be recognized. The proceeds of said condemnation shall be applied

as provided in the Lease. The Trustee and the District have reached an agreement on the terms of the acquisition

of the Facilities at District’s option, and to the use of the Project, all as set forth in the Lease. Any acquisition

of the Facilities or rights to their use by the District (whether pursuant to the exercise of eminent domain powers

or otherwise) shall be pursuant to and in accordance with the Lease, including payment of Rental Payments and

the applicable Option Purchase Price as set forth in the Lease. If the District allows the Lease to expire without

exercising its option to purchase (whether by failure to exercise its option to extend the Lease for a Renewal

Term, failure to exercise its option to purchase at the conclusion of the Maximum Lease Term or failure to cure

an Event of Default under the Lease), that action shall constitute an irrevocable determination by the District

that the Facilities are not required by it for any public purpose for the term of the Base Lease.

Termination

The Base Lease shall terminate upon the completion of the Base Lease term; provided, however, in the

event (i) the District pays all Rental Payments and Additional Payments required by the Lease during the Maximum

Lease Term, or exercises the option to purchase the remaining Base Lease term of the Trustee and pays the then

applicable Purchase Price as provided in the Lease, and (ii) the Indenture has been discharged in accordance with

its terms, then the Base Lease shall be considered assigned to the District and terminated through merger of the

leasehold interest with the fee interest if the District is the owner of the fee interest and elects to terminate the

leasehold interest so acquired from the Trustee. The Trustee agrees, upon such assignment and termination of the

Base Lease term, to quit and surrender the Facilities as they then exist to the District free and clear of encumbrances,

except Permitted Encumbrances.

Default by the District

If an Event of Default or an Event of Nonappropriation under the Lease occurs for any reason, or if the

District terminates the Lease and fails to purchase the Trustee’s interest in the Facilities as provided in the Lease,

the Trustee, or its assignee, shall have the right to possession of the Facilities for the remainder of the Base Lease

term and shall have the right to sublease the same or sell its interest in the Base Lease upon whatever terms and

conditions it deems prudent. In the event the Trustee takes possession of the Facilities, the Trustee shall obtain, but

solely to the extent of funds available to it for such use under the Indenture, the same insurance coverage with

respect to the Facilities as the District is required to obtain under the Lease for the remainder of the Base Lease

term and will furnish the District with evidence thereof.

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Default by the Trustee

Notwithstanding any default by the Trustee under the Base Lease, the District shall not have the right to

exclude the Trustee from the Facilities or to take possession thereof (except pursuant to the Lease) or to terminate

the Base Lease prior to the termination of the Base Lease term; except that if, upon exercise of the option to purchase

the Trustee’s interest in the Facilities under the Lease granted to the District in the Lease and after the payment of

the purchase price specified therein and the other sums payable under the Lease, the Trustee fails to convey its

interest therein to the District pursuant to said option, then the District shall have the right to terminate the Base

Lease, such termination to be effective 30 days after delivery of written notice of such termination to the Trustee.

However, in the event of any default by the Trustee under the Base Lease, the District may maintain an action for

damages or, if permitted in equity, for specific performance. In no event shall the Trustee be liable for consequential

or punitive damages.

Amendments, Changes and Modifications

The Base Lease may not be effectively amended, changed, modified, altered or terminated, except as

provided in the Indenture.