OFFICIAL STATEMENT

NEW ISSUE: SERIAL BONDS FSA INSURED MOODY’S RATING: Aaa†BOOK-ENTRY-ONLY (SEE “RATING” HEREIN)NOT BANK QUALIFIED

In the opinion of Hawkins Delafield & Wood LLP, Bond Counsel to the District, under existing statutes and court decisions and assumingcontinuing compliance with certain tax certifications described herein, (i)!interest on the Bonds is excluded from gross income for Federal incometax purposes pursuant to Section!103 of the Internal Revenue Code of 1986, as amended (the “Code”), and (ii)!interest on the Bonds is not treated asa preference item in calculating the alternative minimum tax imposed on individuals and corporations under the Code; such interest, however, isincluded in the adjusted current earnings of certain corporations for purposes of calculating the alternative minimum tax imposed on suchcorporations. In addition, in the opinion of Bond Counsel to the District, under existing statutes, interest on the Bonds is exempt from personalincome taxes of New York State and its political subdivisions, including The City of New York. See “Tax Matters” herein.

The Bonds will not be designated by the District as “qualified tax-exempt obligations” pursuant to the provision of Section 265 of the Code.

$7,595,000COPIAGUE UNION FREE SCHOOL DISTRICT

SUFFOLK COUNTY, NEW YORK(the "District")

$7,595,000 SCHOOL DISTRICT SERIAL BONDS - 2008(the "Bonds")

DATE OF ISSUE: JUNE 15, 2008 DUE: DECEMBER 1, 2009-2022MATURITIES

Year Amount Coupon Yield Year Amount Coupon Yield Year Amount Coupon Yield2009 $415,000 3.250% 2.00% 2014 $505,000 3.50% 3.12% 2018 $590,000* 3.75% 3.66%2010 430,000 3.375 2.26 2015 525,000 3.75 3.26 2019 615,000* 3.75 3.802011 450,000 3.375 2.62 2016 545,000 3.75 3.40 2020 640,000* 3.75 3.902012 465,000 3.375 2.85 2017 570,000 3.75 3.53 2021 665,000* 4.00 4.002013 485,000 3.500 2.98 2022 695,000* 4.00 4.07

† The scheduled payment of principal of and interest on the Bonds when due will be guaranteed under an insurance policy to be issued concurrently with thedelivery of the Bonds by FINANCIAL SECURITY ASSURANCE INC. (“FSA”). See Appendix D relating to FSA insurance herein.

*Subject to redemption prior to maturity.The District has pledged its faith and credit for the payment of the principal of and interest on the Bonds and, unless paid from other sources, the

Bonds are payable from ad valorem taxes which, in the opinion of Bond Counsel, may be levied upon all the taxable real property within the Districtwithout limitation as to rate or amount.

The Bonds will be issued as registered bonds and, when issued, will be registered in the name of Cede & Co., as nominee of The DepositoryTrust Company, New York, New York, which will act as Securities Depository for the Bonds. Individual purchases will be made in book-entry formonly, in the principal amount of $5,000 or integral multiples thereof. Purchasers will not receive certificates representing their ownership interest inthe Bonds. Principal and interest on the Bonds will be payable semiannually on June 1 and December 1 in each year until maturity, commencingDecember 1, 2008. The Bonds will be subject to redemption prior to maturity as described herein. Principal and interest will be paid by the Districtto the Securities Depository, which will in turn remit such principal and interest to its Participants, for subsequent distribution to the BeneficialOwners of the Bonds, as described herein.

Hawkins Delafield & Wood LLP has not participated in the preparation of the demographic, financial or statistical data contained in this OfficialStatement, nor verified the accuracy, completeness or fairness thereof, and, accordingly, expresses no opinion with respect thereto.

The Bonds are offered subject to the final approving opinion of Hawkins Delafield & Wood LLP, New York, New York, Bond Counsel, andcertain other conditions. It is expected that delivery of the Bonds in definitive form will be made on or about June 17, 2008.

THIS REVISED COVER PAGE DATED JUNE 9, 2008, SUPPLEMENTS THE OFFICIAL STATEMENT OF THE DISTRICT DATEDMAY 30, 2008, RELATING TO THE BONDS BY INCLUDING CERTAIN INFORMATION OMITTED FROM SUCH OFFICIAL STATEMENTIN ACCORDANCE WITH SECURITIES AND EXCHANGE COMMISSION RULE 15c2-12 (THE “RULE”). OTHER THAN AS SET FORTHON THIS REVISED COVER PAGE, AND THE INCLUSION OF APPENDIX C (“RATING”) AND APPENDIX D (“BOND INSURANCE”),THERE HAVE BEEN NO REVISIONS TO SAID OFFICIAL STATEMENT. FOR A DESCRIPTION OF THE DISTRICT’S AGREEMENT TOPROVIDE CONTINUING DISCLOSURE AS DESCRIBED IN THE RULE, SEE “DISCLOSURE UNDERTAKING” HEREIN.

WACHOVIA SECURITIES, LLC.

BOARD OF EDUCATION

President Vice President 2nd Vice PresidentBRIAN J. SALES LAURA GAVEY MICHAEL L. GREB

Board Members:DORIS FISCHER

HENRY JOHNSONROSEMARY NATOLI

EVERETT E. NEWMAN III

* * *

Superintendent of SchoolsDR. WILLIAM R. BOLTON, Ed.D.

Assistant Superintendent for Finance & OperationsALLAN W. FRANK

District ClerkMARY ELLEN RUPPERT

Bond CounselHAWKINS DELAFIELD & WOOD LLP

New York, New York

PREPARED WITH THE ASSISTANCE OF

NEW YORK MUNIC IPAL ADVISORS CORPORATION50 Jackson Ave - Ste 301Syosset, New York 11791

(516) 364-6363 Fax (516) 364-9501

N Y M A C

No dealer, broker, salesman or other person has been authorized by the District to give any information or to make any representations, other thanthose contained in this Official Statement and if given or made, such other information or representations must not be relied upon as having beenauthorized by the foregoing. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale ofthe Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The information set forthherein has been obtained by the District from sources which are believed to be reliable but it is not guaranteed as to accuracy or completeness. Theinformation and expressions of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale madehereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the District since the date hereof.

TABLE OF CONTENTS Page

THE BONDS............................................................................................................................................................................................................................4Description of the Bonds ........................................................................................................................................................................................4Authority For and Purpose of Issue........................................................................................................................................................................4Optional Redemption ..............................................................................................................................................................................................4Nature of Obligation...............................................................................................................................................................................................5Book-Entry-Only System........................................................................................................................................................................................5

DESCRIPTION OF THE DISTRICT.......................................................................................................................................................................................6General Information...............................................................................................................................................................................................6Population Characteristics ......................................................................................................................................................................................7Unemployment Rate Statistics ................................................................................................................................................................................7Largest Taxpayers..................................................................................................................................................................................................7Transportation.........................................................................................................................................................................................................8Utilities and Services ..............................................................................................................................................................................................8District Organization ..............................................................................................................................................................................................8Financial Organization ...........................................................................................................................................................................................8District Facilities .....................................................................................................................................................................................................8Enrollment History and Projections........................................................................................................................................................................8

DISTRICT INDEBTEDNESS..................................................................................................................................................................................................9Constitutional and Statutory Requirements.............................................................................................................................................................9Statutory Procedure ................................................................................................................................................................................................9Computation of Debt Limit and Debt Contracting Margin ....................................................................................................................................10Remedies Upon Default .........................................................................................................................................................................................10Debt Ratios..............................................................................................................................................................................................................11Long-Term Debt Service Schedule .......................................................................................................................................................................12Outstanding Long-Term Bond Indebtedness .........................................................................................................................................................12Capital Project Plans ...............................................................................................................................................................................................12Bond Anticipation Notes.........................................................................................................................................................................................13Revenue and Tax Anticipation Notes ....................................................................................................................................................................13Estimated Overlapping Indebtedness.....................................................................................................................................................................13

FINANCIAL FACTORS..........................................................................................................................................................................................................13Real Property Tax...................................................................................................................................................................................................14Valuations, Tax Levy, Rates and Uncollected Taxes ...........................................................................................................................................14Real Estate Property Tax Collection Procedure ....................................................................................................................................................14STAR - School Tax Exemption ..............................................................................................................................................................................14Tax Limit.................................................................................................................................................................................................................14State Aid..................................................................................................................................................................................................................14Other Revenues ......................................................................................................................................................................................................15

BUDGETARY PROCEDURES...............................................................................................................................................................................................15FINANCIAL STATEMENTS AND ACCOUNTING PROCEDURES.................................................................................................................................15INVESTMENT POLICY.........................................................................................................................................................................................................16GENERAL FUND OPERATIONS..........................................................................................................................................................................................16EMPLOYEES...........................................................................................................................................................................................................................16EMPLOYEE PENSION BENEFITS........................................................................................................................................................................................17OTHER POST EMPLOYMENT BENEFITS..........................................................................................................................................................................17MARKET FACTORS AFFECTING FINANCINGS OF THE STATE AND........................................................................................................................18SCHOOL DISTRICTS OF THE STATE.................................................................................................................................................................................18LITIGATION...........................................................................................................................................................................................................................18TAX MATTERS.......................................................................................................................................................................................................................18

Opinion of Bond Counsel........................................................................................................................................................................................18Certain Ongoing Federal Tax Requirements and Certifications ...........................................................................................................................19Certain Collateral Federal Tax Consequences ......................................................................................................................................................19Original Issue Discount ..........................................................................................................................................................................................19Bond Premium.........................................................................................................................................................................................................20Information Reporting and Backup Withholding...................................................................................................................................................20Miscellaneous .........................................................................................................................................................................................................20

DOCUMENTS ACCOMPANYING DELIVERY OF THE BONDS.....................................................................................................................................21Absence of Litigation .............................................................................................................................................................................................21Legal Matters..........................................................................................................................................................................................................21Closing Certificates.................................................................................................................................................................................................21

DISCLOSURE UNDERTAKING...........................................................................................................................................................................................21ADDITIONAL INFORMATION...........................................................................................................................................................................................22REVENUES, EXPENDIUTRES AND FUND BALANCE-GENERAL FUND...............................................................................................APPENDIX ABUDGET RESULTS.........................................................................................................................................................................................APPENDIX A-1BALANCE SHEETS-GENERAL FUND.........................................................................................................................................................APPENDIX A-2AUDITED FINANCIAL STATEMENT-JUNE 30, 2007...................................................................................................................................APPENDIX BRATING................................................................................................................................................................................................................APPENDIX CBOND INSURANCE...........................................................................................................................................................................................APPENDIX D

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OFFICIAL STATEMENTSchool District Serial Bonds – 2008

This Official Statement including the cover page and appendices thereto has been prepared by the District and presentscertain information relating to the District's $7,595,000 School District Serial Bonds - 2008 (the "Bonds"). All quotationsfrom and summaries and explanations of provisions of the Constitution and laws of the State of New York (the "State") andacts and proceedings of the District contained herein do not purport to be complete and are qualified in their entirety byreference to the official compilations thereof and all references to the Bonds and the proceedings of the District relating theretoare qualified in their entirety by reference to the definitive forms of the Bonds and such proceedings.

THE BONDS

Description of the Bonds

The Bonds will be issued in fully registered form and when issued will be registered in the name of Cede & Co. asnominee of The Depository Trust Company, New York, New York ("DTC"). DTC will act as securities depository for theBonds. Individual purchases will be made in book-entry form only, in the principal amount of $5,000, or integral multiplesthereof. Purchasers will not receive certificates representing their interest in the Bonds.

The Bonds are dated June 15, 2008 and mature, as set forth on the cover page. Interest on the Bonds will be payablesemiannually on June 1 and December 1 in each year until maturity, commencing December 1, 2008. The Bonds will besubject to redemption prior to maturity as described herein. The record date for the Bonds will be the fifteenth day of thecalendar month preceding each interest payment date. Principal and interest will be paid by the District to the securitiesdepository, which will in turn remit such principal and interest to its Participants, for subsequent distribution to theBeneficial Owners of the Bonds, as described herein. The Bonds may be transferred in the manner described on the Bonds andas referenced in certain proceedings of the District referred to therein.

Authority For and Purpose of Issue

The Bonds are issued pursuant to the Constitution, the laws of the State, including, among others, the Local FinanceLaw and Education Law, and a bond resolution duly adopted by the Board of Education on February 12, 2007, followingapproval of a Bond Proposition by a majority of the qualified voters of the District present and voting at a Special DistrictMeeting duly called and held on January 25, 2007, authorizing the issuance of $11,300,000 serial bonds for the partialreconstruction of and construction of improvements to all District school buildings.

Proceeds of the Bonds will redeem $4,000,000 bond anticipation notes maturing June 18, 2008 and provide $3,595,000in additional financing for the abovementioned project. See “Capital Project Plans” herein.

Optional Redemption

The Bonds maturing on or before December 1, 2017 will not be subject to redemption prior to maturity. The Bondsmaturing on or after December 1, 2018 will be subject to redemption prior to maturity, at the option of the District, onDecember 1, 2017 and thereafter on any date, as a whole or in part, and if in part in any order of their maturity and in anyamount within a maturity (selected by lot within a maturity), at the price equal to the par principal amount, plus accruedinterest to the date of redemption.

If less than all the Bonds of any maturity are to be redeemed, the particular bonds of such maturity to be redeemed shallbe selected by the District by lot or in any customary manner of selection as determined by the President of the Board ofEducation of the District. Notice of such a call for redemption shall be given by mailing such notice to the registered ownerthereof not more than sixty (60) days nor less than thirty (30) days prior to such date by regular United States mail. Notice ofredemption having been given as aforesaid, the Bonds so called for redemption shall, on the date of redemption set forth insuch notice, become due and payable, together with interest accrued to such redemption date, and interest on such Bonds shallcease to be paid after such redemption date.

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Nature of Obligation

Each Bond when duly issued and paid for will constitute a contract between the District and the holder thereof.The Bonds will be general obligations of the District and will contain a pledge of the faith and credit of the District for

the payment of the principal thereof and the interest thereon. For the payment of such principal and interest the District haspower and statutory authorization to levy ad valorem taxes on all taxable real property in the District without limitation as torate or amount.

Under the Constitution of the State, the District is required to pledge its faith and credit for the payment of the principalof and interest on the Bonds, and the State is specifically precluded from restricting the power of the District to levy taxes onreal estate therefore.

Book-Entry-Only System

The Depository Trust Company (“DTC”), New York, New York, will act as securities depository for the Bonds(hereinafter in this section referred to as the "Securities"). The Securities will be issued as fully-registered securities registeredin the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorizedrepresentative of DTC. One fully-registered Security certificate will be issued for all Securities which bear the same rate ofinterest and CUSIP number, and will be deposited with DTC.

DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New YorkBanking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal ReserveSystem, 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 assetservicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and moneymarket instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC alsofacilitates 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 theneed for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokersand dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiaryof The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National SecuritiesClearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is ownedby the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain acustodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has Standard &Poor’s highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and ExchangeCommission. More information about DTC can be found at www.dtcc.com and www.dtc.org.

Purchases of Securities under the DTC system must be made by or through Direct Participants, which will receive acredit for the Securities on DTC’s records. The ownership interest of each actual purchaser of each Security (“BeneficialOwner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive writtenconfirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmationsproviding details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participantthrough which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities are to beaccomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners.Beneficial Owners will not receive certificates representing their ownership interests in Securities, except in the event that useof the book-entry system for the Securities is discontinued.

To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the name ofDTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC.The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do noteffect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC’srecords reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which may or maynot be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of theirholdings on behalf of their customers.

Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to IndirectParticipants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangementsamong them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of

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Securities may wish to take certain steps to augment the transmission to them of notices of significant events with respect tothe Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example,Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities for their benefit has agreed toobtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names andaddresses to the registrar and request that copies of notices be provided directly to them.

Redemption notices shall be sent to DTC. If less than all of the Securities within an issue are being redeemed, DTC’spractice 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 the Securities unlessauthorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails anOmnibus Proxy to the District as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’sconsenting or voting rights to those Direct Participants to whose accounts the Securities are credited on the record date(identified in a listing attached to the Omnibus Proxy).

Principal and interest payments on the Securities will be made to Cede & Co., or such other nominee as may berequested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’sreceipt of funds and corresponding detail information from Issuer or Agent, on payable date in accordance with their respectiveholdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructionsand customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “streetname,” and will be the responsibility of such Participant and not of DTC, the District, subject to any statutory or regulatoryrequirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments toCede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of theDistrict, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of suchpayments 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 Securities at any time by giving reasonablenotice to Issuer or Agent. Under such circumstances, in the event that a successor depository is not obtained, Securitycertificates 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 securitiesdepository). In that event, Security certificates will be printed and delivered to DTC.

The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that theDistrict believes to be reliable, but the District takes no responsibility for the accuracy thereof.! ! ! ! ! ! ! ! ! ! ! ! ! ! Source: The Depository Trust Company

THE DISTRICT WILL NOT HAVE ANY RESPONSIBILITY OR OBLIGATION TO PARTICIPANTS, TO INDIRECT PARTICIPANTS OR TOANY BENEFICIAL OWNER WITH RESPECT TO (I) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC, ANY PARTICIPANT, ORANY INDIRECT PARTICIPANT; (II) THE PAYMENTS BY DTC OR ANY PARTICIPANT OR INDIRECT PARTICIPANT OF ANY AMOUNTWITH RESPECT TO THE PRINCIPAL OF, OR PREMIUM, IF ANY, OR INTEREST ON THE SECURITIES; (III) ANY NOTICE WHICH ISPERMITTED OR REQUIRED TO BE GIVEN TO SECURITY-HOLDERS; (IV) THE SELECTION BY DTC OR ANY PARTICIPANT OR INDIRECTPARTICIPANT OF ANY PERSON TO RECEIVE PAYMENT IN THE EVENT OF A PARTIAL REDEMPTION OF THE SECURITIES; OR (V) ANYCONSENT GIVEN OR OTHER ACTION TAKEN BY DTC AS SECURITY-OWNER.

DESCRIPTION OF THE DISTRICTThere follows in this Official Statement a brief description of the District, together with certain information concerning

its economy and governmental organization, its indebtedness, current major revenue sources and general and specific funds.

General InformationThe District is located in the southern portion of the Town of Babylon, with an extensive frontage of more than two

miles on Great South Bay. The area of the District, which stretches back from the Bay to the central portion of the Town ofBabylon, is five square miles. The District is located about thirty-five miles by rail from New York City. A network ofcanals opens onto the Bay for boating.

The Sunrise Highway, Southern State Parkway and numerous other routes provide easy access to all parts of themetropolitan area, affording the residents convenient routes to employment opportunities both on Long Island and in themetropolitan area generally.

The District was primarily residential in character prior to the overall growth of Suffolk County. Business and industriesmoved into the District during the last twenty-five years. The District today, for all practical purposes, is saturated insofar assingle-family dwellings are concerned. The number of dwellings that could be built under existing zoning is very limited.

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The District has had a steady light-industrial growth coupled with commercial business over the last twenty-five years.Originally a residential community, the District is now balanced with light industry and general commercial business.Manufacturing activity is well diversified and is not heavily dependent upon specialized activity subject to wide swings inemployment.

Public police protection is provided by the Suffolk County Police Department. Volunteer fire departments operatingthrough fire and fire protection districts provide fire protection.

The Long Island Rail Road (MTA) (Montauk Division) serves the area, providing rail transportation to New York Cityand eastern Long Island.

Population CharacteristicsThe District’s current population according to the 2000 census is 28,605. The following table presents population trends

for the Town and County based upon recent census date.Town of County of

Year Babylon Suffolk1970 204,256 1,126,5301980 203,483 1,284,2311990 202,889 1,321,9772000 211,792 1,419,369______________Source: U.S. Census

Unemployment Rate StatisticsUnemployment statistics are not available for the District as such. The information set forth below with respect to the

County of Suffolk is included for information purposes only. It should not be implied from the inclusion of such data in thisOfficial Statement that the County is necessarily representative of the District, or vice versa.

Year Average 2003 2004 2005 2006 2007

Suffolk County 4.8% 4.7% 4.2% 4.0% 3.8%New York State 6.4% 5.8% 5.0% 4.6% 4.5%

2008 Monthly Figures Jan Feb Mar Apr May Jun

Suffolk County 4.7% 4.9% 4.8% 4.1% N/A N/ANew York State 5.6% 5.0% 5.1% 4.6% N/A N/A! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! Source: State of New York, Department of Labor. (Note: Figures not seasonally adjusted).

Largest Taxpayers12006-2007Assessed

Name Type ____ Value___Kir Copiague LP Shopping Center $300,820Long Island Power Authority Utility 251,238SM(NY)QRS Commercial 208,250Dayton Hudson Corp. Shopping Center 193,260Bunt Group Inc. Commercial 168,200Nu-Horizons Manor LLC Commercial 140,000Keyspan Utility 139,635Montauk Properties LLC Shopping Center 124,610Suffolk County Ind. Dev. Agency Manufacturing 122,020Bridge Stuart Inc Commercial 114,300______________1Includes applicable franchise assessments for utilities.Source: Town Assessment Rolls.

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Transportation

The following transportation facilities are available to residents of the District:

The District is traversed by New York State Routes 27 (Sunrise Highway) and 27A. The Southern State Parkwayprovides access to the other major Long Island road arteries. Rail transportation is provided by the Long Island Railroad.Local bus service provides access to surrounding areas.

Utilities and Services

Water, electric, gas, sewage collection, fire and police protection are provided to residents of the District as follows:

Water service is available throughout the District by Town water districts; gas and electric is provided by the Long IslandPower Authority and KeySpan Corporation.

District Organization

Subject to the provisions of the State Constitution, the District operates pursuant to the Education Law, the LocalFinance Law, other laws generally applicable to the District, and any special laws applicable to the District. Under suchlaws, there is no authority for the District to have a charter or adopt local laws.

The legislative power of the District is vested in the Board of Education. Under current law, an election is held withinthe District boundaries on the third Tuesday of May each year (May 20 in 2008) to elect members of the Board of Education.They are generally elected for staggered terms of three years.

In early July of each year, the Board of Education meets for the purpose of reorganization. At that time the Board elects aPresident and Vice President, and appoints a District Clerk and District Treasurer.

Financial Organization

Pursuant to the Local Finance Law, the President of the Board of Education is the chief fiscal officer of the District.However, certain of the financial functions of the District are the responsibility of the Superintendent of Schools and theAssistant Superintendent for Finance & Operations.

District Facilities

The District currently operates the following facilities:

Name Year Built Grades Present Capacity Walter G. O’Connell Sr. H.S. 1969 9-12 1,560Copiague Middle School 1957 6-8 1,053Deauville Gardens School 1957 K-5 910Great Neck Road School 1925 K-5 470Susan E. Wiley School 1958 K-5 702

Enrollment History and Projections

Projected Projected 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

K-12 4,821 4,911 4,759 4,660 4,633 4,679 4,702______________Source: District records and estimates.

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DISTRICT INDEBTEDNESS

Constitutional and Statutory Requirements

The New York State Constitution and Local Finance Law limit the power of the District (and other municipalities andschool districts of the State) to issue obligations and to contract indebtedness. Such constitutional and statutory limitationsinclude the following, in summary form, and are generally applicable to the District and the Bonds:

Purpose and Pledge . The District shall not give or loan any money or property to or in aid of any individual, or privatecorporation or private undertaking or give or loan its credit to or in aid of any of the foregoing or any public corporation.

The District may contract indebtedness only for a District purpose and shall pledge its faith and credit for the payment ofprincipal of and interest thereon.

Payment and Maturity . Except for certain short-term indebtedness contracted in anticipation of taxes or to be paid withinthree fiscal year periods, indebtedness shall be paid in annual installments commencing no later than two years after the datesuch indebtedness shall have been contracted and ending no later than the period of probable usefulness of the object orpurpose determined by statute; no installment may be more than fifty per centum in excess of the smallest prior installment,unless the District has authorized the issuance of indebtedness having substantially level or declining annual debt service. TheDistrict is required to provide an annual appropriation for the payment of interest due during the year on its indebtedness andfor the amounts required in such year for amortization and redemption of its serial bonds, bond anticipation notes and capitalnotes.

General . The District is further subject to constitutional limitation by the general constitutionally imposed duty on theState Legislature to restrict the power of taxation and contracting indebtedness to prevent abuses in the exercise of suchpower; however, as has been noted under "Nature of Obligation," the State Legislature is prohibited by a specificconstitutional provision from restricting the power of the District to levy taxes on real estate for the payment of interest on orprincipal of indebtedness theretofore contracted.

Statutory Procedure

In general, the State Legislature has, by the enactment of the Local Finance Law, authorized the powers and procedure forthe District to borrow and incur indebtedness subject, of course, to the constitutional provisions set forth above. The powerto spend money, however, generally derives from other law, including the Education Law.

The District is generally required by such laws to submit propositions for the expenditure of money for capital purposesto the qualified electors of the District. Upon approval thereby, the Board of Education may adopt a bond resolutionauthorizing the issuance of bonds and notes in anticipation of the bonds. No down payment is required in connection with theissuance of District obligations. With respect to certain school building construction projects, the District is not permitted tospend in excess of $100,000 until the plans and specifications for such project have been approved by the Commissioner ofEducation of the State.

The Local Finance Law also provides a twenty-day statute of limitations after publication of a bond resolution, togetherwith a statutory form of notice which, in effect, estops legal challenges to the validity of obligations authorized by such bondresolution except for alleged constitutional violations. The District has complied with such procedure with respect to thebond resolution adopted by the Board of Education authorizing the issuance of the Bonds.

The Board of Education, as the finance board of the District, also has the power to authorize the sale and issuance ofbonds and notes, including the Bonds. However, such finance board may delegate the power to sell the Bonds, to thePresident of the Board of Education, the chief fiscal officer of the District, pursuant to the Local Finance Law.

Debt Limit . Pursuant to the Local Finance Law, the District has the power to contract indebtedness for any schooldistrict purpose authorized by the Legislature of the State of New York provided the aggregate principal amount thereof shallnot exceed ten per centum of the full valuation of the taxable real estate of the District and subject to certain enumerateddeductions such as State aid for building purposes. The constitutional and statutory method for determining full valuationconsists of taking the assessed valuation of taxable real estate for the last completed assessment roll and applying thereto theratio (equalization rate) which such assessed valuation bears to the full valuation; such ratio is determined by the State Boardof Real Property Services. The Legislature also is required to prescribe the manner by which such ratio shall be determinedby such authority.

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The following table sets forth the computation of the debt limit of the District and its debt contracting margin:

Computation of Debt Limit and Debt Contracting Margin

As of May 22, 2008

Full valuation of taxable real property......................................................... $3,349,760,213 Debt limit (10% of full valuation) .............................................................. 334,976,021

Outstanding Indebtedness1 (Principal only):Bonds........................................................................ $9,135,000Bond Anticipation Notes............................................. 4,000,000Principal of This Issue (new money portion) .................... 3,595,000

Total Net Indebtedness2............................................................................. 16,730,000

Net Debt Contracting Margin............................................................ ........ $318,246,021

Percentage of Debt Contracting Power Exhausted .......................................... 4.99%______________1Tax Anticipation and Revenue Anticipation Notes are not included in the computation of the statutory debt limit of the District.2The District may exclude from gross indebtedness estimated State aid for school building purposes. However, because the Districthas not applied for a Building Aid Estimate from the Commissioner of Education, no exclusion for such aid is listed in the DebtStatement Summary. Under current law, State Building Aid is, however, currently estimated by the District to be approximately 48%of the total net indebtedness shown above.

Remedies Upon Default

Section 99-b of the State Finance Law ("SFL") provides for a covenant between the State of New York (the "State") andthe purchasers and the holders and owners from time to time of the bonds and notes issued by school districts in the State forschool purposes that it will not repeal, revoke or rescind the provisions of Section 99-b of the SFL, or amend or modify thesame so as to limit, impair or impede the rights and remedies granted thereby.

Said section provides that in the event a holder or owner of any bond or note issued by a school district for schoolpurposes shall file with the State Comptroller a verified statement describing such bond or note and alleging default in thepayment thereof or the interest thereon or both, it shall be the duty of the State Comptroller to immediately investigate thecircumstances of the alleged default and prepare and file in his office a certificate setting forth his determinations with respectthereto and to serve a copy thereof by registered mail upon the chief fiscal officer of the school district which issued the bondor note. Such investigation by the State Comptroller shall cover the current status with respect to the payment of principalof and interest on all outstanding bonds and notes of such school district issued for school purposes and the statement preparedand filed by the State Comptroller shall set forth a description of all such bonds and notes of the school district found to be indefault and the amount of principal and interest thereon past due.

Upon the filing of such a certificate in the office of the State Comptroller, he shall thereafter deduct and withhold fromthe next succeeding allotment, apportionment or payment of such State Aid or assistance due to such school district suchamount thereof as may be required to pay (a) the school district's contribution to the State teachers' retirement system, and (b)the principal of and interest on such bonds and notes of such school district then in default. In the event such State Aid orassistance initially so withheld shall be insufficient to pay said amounts in full, the State Comptroller shall similarly deductand withhold from each succeeding allotment, apportionment or payment of such State Aid or assistance due such schooldistrict such amount or amounts thereof as may be required to cure such default. Allotments, apportionments and paymentsof such State Aid so deducted or withheld by the State Comptroller for the payment of principal and interest on bonds andnotes shall be forwarded promptly to the paying agent or agents for the bonds and notes in default of such school district forthe sole purpose of the payment of defaulted principal of and interest on such bonds or notes. If any of such successiveallotments, apportionments or payments of such State Aid deducted or withheld shall be less than the amount of all principaland interest on the bonds and notes in default with respect to which the same was so deducted or withheld then the StateComptroller shall promptly forward to each paying agent an amount in the proportion that the amount of such bonds andnotes in default payable to such paying agent bears to the total amount of the principal and interest then in default on suchbonds and notes of such school district. The State Comptroller shall promptly notify the chief fiscal officer of such schooldistrict of any payment or payments made to any paying agent or agents of defaulted bonds or notes pursuant to said sectionof SFL.

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Under current law, provision is made for contract creditors (including the Bondholders) of the District to enforce paymentsupon such contracts, if necessary, through court action, although the present statute limits interest on the amount adjudgeddue to creditors to nine per centum per annum from the date due to the date of payment. As a general rule, property and fundsof a municipal corporation serving the public welfare and interest have not been judicially subjected to execution orattachment to satisfy a judgment, although judicial mandates have been issued to officials to appropriate and pay judgmentsout of current funds or the proceeds of a tax levy.

Remedies for enforcement of payment are not expressly included in the District's contract with holders of its bonds andnotes, although any permanent repeal by statute or constitutional amendment of a Bondholder’s remedial right to judicialenforcement of the contract should, in the opinion of Bond Counsel, be held unconstitutional.

In recent times, certain events and legislation affecting remedies on default have resulted in litigation. While courts offinal jurisdiction have upheld and sustained the rights of bondholders, such courts might hold that future events includingfinancial crises as they may occur in the State and in municipalities of the State require the exercise by the State of itsemergency and police powers to assure the continuation of essential public services.

No principal or interest payment on District indebtedness is past due. The District has never defaulted in the payment ofthe principal of and interest on any indebtedness.

Debt Ratios

The following table sets forth certain ratios relating to the District's net indebtedness as of May 22, 2008.

Debt Ratios

As of May 22, 2008Percentage

Per of Amount Capita 1 Full Value 2

Gross Indebtedness (see Computation of Debt Limit) ...........$16,730,000 $584.86 0.49%______________1The current estimated population of the District is 28,605.2The District's full value of taxable real estate for 2007-2008 is $3,349,760,213.

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Long-Term Debt Service Schedule

The following table sets forth all principal and interest payments presently required on all outstanding long-term bondindebtedness of the District.

Schedule of Principal and Interest on Long-Term Bond Indebtedness

Outstanding Long-Term Bond Indebtedness

The following table sets forth the total long-term bond indebtedness outstanding at the end of the fiscal years 2002-03through 2006-07.

Outstanding Long-Term Bond Indebtedness

As of June 30:

Year Total Bonded Debt 2003......................................... $ 4,490,0002004......................................... 13,450,0002005......................................... 12,640,0002006......................................... 11,245,0002007......................................... 9,830,000

Capital Project Plans

On January 25, 2007 the voters of the District approved the issuance of $11,300,000 in serial bonds to finance the partialreconstruction of and construction of improvements to all District school buildings. The District issued $4,000,000 in bondanticipation notes to commence this project. The proceeds of the Bonds will be used to redeem said notes maturing on June18, 2008 and provide $3,595,000 in new monies. After the issuance of the Bonds, the District will have $3,705,000remaining authorized but unissued pursuant to this authorization.

FiscalYear Total Principal Principal

Ending Principal This AllJune 30th Principal Interest and Interest Issue Issues

2008 $695,000 $438,513 $1,133,513 $0 $695,0002009 715,000 406,831 1,121,831 0 715,0002010 740,000 374,350 1,114,350 415,000 1,155,0002011 765,000 340,869 1,105,869 430,000 1,195,0002012 790,000 306,388 1,096,388 450,000 1,240,0002013 820,000 270,906 1,090,906 465,000 1,285,0002014 845,000 234,225 1,079,225 485,000 1,330,0002015 875,000 196,544 1,071,544 505,000 1,380,0002016 905,000 157,663 1,062,663 525,000 1,430,0002017 935,000 117,581 1,052,581 545,000 1,480,0002018 855,000 75,275 930,275 570,000 1,425,0002019 890,000 38,938 928,938 590,000 1,480,0002020 0 0 0 615,000 615,0002021 0 0 0 640,000 640,0002022 0 0 0 665,000 665,0002023 0 0 0 695,000 695,000

Totals $9,830,000 $2,958,083 $12,788,083 $7,595,000 $17,425,000

Excludes This Issue

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Bond Anticipation Notes

The District issued $4,000,000 bond anticipation notes dated December 6, 2007 maturing June 18, 2008. Part of theproceeds of the Bonds will be used to redeem the outstanding note issue.

Revenue and Tax Anticipation Notes

The following is a history of tax anticipation note borrowings since the 2003-2004 fiscal year. The District has notfound it necessary to borrow in anticipation of revenues during this period.

Fiscal Year Amount Type Issue Date Due Date2003-04 $12,000,000 TAN 7/1/03 6/29/04

2004-05 5,000,000 TAN 8/26/04 6/29/05

2005-06 4,250,000 TAN 9/1/05 6/29/06

2006-07 7,000,000 TAN 7/18/06 6/28/07

2007-08 9,500,000 TAN 8/23/07 6/27/08

2008-09 (Projected) 10,500,000 TAN 8/1/08 6/26/09

Estimated Overlapping Indebtedness

In addition to the District, the following political subdivisions have the power to issue debt and to levy taxes or causetaxes to be levied on taxable real property in the District.

ApplicableOutstanding Net Net

Unit Indebtedness Exclusions 1 Indebtedness Indebtedness County of Suffolk $884,428,295 $45,685,000 $838,743,295 $8,890,6792Town of Babylon 151,134,212 675,721 150,458,491 18,506,3943

______________1Pursuant to applicable constitutional and statutory provisions this indebtedness is deductible from gross indebtedness for debt limit

purposes.2Computed at 1.06% of County indebtedness.3Computed at 12.3% of Town indebtedness.Source: New York State Comptroller’s Special Report on Municipal Affairs for fiscal year ending in 2006.

FINANCIAL FACTORS

District finances are operated primarily through its General Fund. All taxes and most other revenues are paid into thisfund and all current operating expenditures are made from it. (A statement of revenues and expenditures for the five yearperiod ending June 30, 2007 is contained in the Appendices). As reflected in the Appendices, the District derives the bulk ofits annual revenues from a tax on real property and from State aid. Capital improvements are generally financed by theissuance of bonds and bond anticipation notes.

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Real Property Tax

The following table sets forth the assessed and full valuation of taxable real property, the District's real property tax levyand rates of tax per $1000 assessed valuation (exclusive of any library tax), and uncollected taxes for the five most recentfiscal years.

Valuations, Tax Levy, Rates and Uncollected Taxes 2003-04 2004-05 2005-06 2006-07 2007-08

Assessed Valuation $ 31,415,814 $ 31,393,342 $ 31,508,986 $ 31,403,433 $ 31,487,746Full Valuation 2,122,690,135 2,360,401,654 2,670,253,051 3,048,876,990 3,349,760,213Tax Levy1 39,612,810 43,094,026 44,941,659 47,812,578 48,779,303Tax Rate per $1,000 A.V. 1 1,260.95 1,372.71 1,426.31 1,522.53 1,549.15Uncollected Taxes2 None None None None N/A______________1General Fund2See “Real Estate Property Tax Collection Procedure.”

Real Estate Property Tax Collection Procedure

Property taxes for the District, together with town and County taxes are collected by the town tax receiver. Such taxesare due and payable in equal installments on December 1 and May 10, but may be paid without penalty by January 10 andMay 31, respectively. Penalties on unpaid taxes are 1% per month from the date such taxes are due and payable and 10% afterMay 31.

The District receives its full levy before the end of its fiscal year. Uncollected amounts are not segregated by the towntax receiver, and any deficiency in tax collection is the County's liability.

STAR - School Tax Exemption

The STAR (School Tax Relief) program provides State-funded exemptions from school property taxes to homeowners fortheir primary residences. School districts are reimbursed in full by the State for real property taxes exempted pursuant to theSTAR program no later than the first business day of January in each year.

Based on information furnished to the District, it is anticipated that approximately 16% of the District’s estimated 2008-2009 school tax levy will be exempted by the STAR program. The District expects to receive full reimbursement of suchexempt taxes from the State during the District’s 2008-2009 fiscal year.

Tax Limit

The Constitution does not limit the amount that may be raised by the District-wide tax levy on real estate in any fiscalyear.

State Aid

The District receives State aid for operating and other purposes at various times throughout its fiscal year, pursuant toformulas and payment schedules set forth by statute. In its adopted 2008-2009 General Fund Budget, the District expects toreceive approximately 44% of its operating revenues in the form of State aid.

In addition to the amount of State Aid budgeted by the District in its 2008-2009 fiscal year, the State is expected to makepayments of STAR aid representing tax savings provided by school districts to their taxpayers under the STAR (see “STAR-School Tax Exemption”) Program in the 2008-2009 fiscal year.

There can be no assurance that the State appropriation for State aid to school districts will be continued in future years,either pursuant to existing formulas or in any form whatsoever. State aid appropriated and apportioned to the District can bepaid only if the State has such monies available therefor. The availability of such monies and the timeliness of such paymentcould be affected by a delay in the adoption of the State budget. In any event, State aid appropriated and apportioned to theDistrict can be paid only if the State has such monies available therefore.

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No delay in payment of State aid for the District’s 2008-2009 fiscal year is presently anticipated although no assurancecan be given that there will not be a delay in payment thereof. Should the District fail to receive monies expected from theState in the amounts and at the times expected, the District is permitted to issue revenue anticipation notes in anticipation ofthe receipt of delayed State aid.

In January 2001, the State Supreme Court issued a decision in Campaign for Fiscal Equity ("CFE") v. New Yorkmandating that the current system of apportionment of state aid to school districts within the State be restructured by theGovernor and the State Legislature. On June 25, 2002, the Appellate Division of the State Supreme Court reversed thatdecision. On June 26, 2003, the State Court of Appeals, the highest court in the State, reversed the Appellate Division,holding that the State must, by July 30, 2004, ascertain the actual cost of providing a sound basic education, enact reforms tothe system of school funding and ensure a system of accountability for such reforms.!!The Court of Appeals further modifiedthe decision of the Appellate Division by deciding against a Statewide remedy and instead limited its ruling solely to the NewYork City school system. The Governor and legislative leaders did not meet the July 30, 2004 Court of Appeals deadline.As a result, on February 14, 2005, the State Supreme Court ordered the State to provide New York City schools with anadditional $5.6 billion for operating expenses over four years and $9.2 billion for facilities improvements. On April 18,2005 the Governor appealed such ruling. Campaign for Fiscal Equity’s motion to lift the automatic stay was denied on May3, 2005. On October 11, 2005, the appeal in this case was heard by the Appellate Division. On March 23, 2006 theAppellate Division modified the decision of the Supreme Court ordering the State to include as part of the State budget for thefiscal year commencing April 1, 2006, additional state aid of between $4.7 billion and $5.6 billion for operating expenses, tobe phased in over four years, and $9.2 billion for facilities improvements, over the next five years, for New York Cityschools. The State Budget for the fiscal year commencing April 1, 2006, included additional operating aid of approximately$400 million and approximately $1.8 billion for facilities improvements for New York City schools. On April 18, 2006,Campaign for Fiscal Equity filed an appeal with the New York State Court of Appeals stating that the Governor and the NewYork State Legislature failed to comply with the March 23, 2006 decision of the Appellate Division by enacting a budget thatdid not include the court-mandated increases in the amount of operating aid paid to New York City schools and for not takingaction to require the New York City Department of Education to adopt a comprehensive sound basic education plan. Theappeal sought an expedited review by the Court of Appeals. In response, the Governor filed a reply which asked the Court todeny the relief sought and provide the State with additional time to prepare a response. The Court of Appeals agreed to hearthe case on a modified schedule to determine whether the Governor has complied with the order of the Appellate Division. OnNovember 18, 2006, the Court of Appeals ordered the State to pay New York City Schools an additional $1.93 billion peryear to provide a sound basic education to the students of New York City Schools.

The resolution of this litigation will not affect the validity of any obligations issued by the District, including the Bonds,nor the ability of the District to levy taxes on the taxable real property in the District to pay the Bonds and the interestthereon as the same shall become due and payable.

Other Revenues

In addition to property taxes and State Aid, the District receives other revenues from miscellaneous sources as shown inAppendix A.

BUDGETARY PROCEDURES

The District's fiscal year begins on July 1 and ends on June 30. Starting in the fall or winter of each year, the District'sfinancial plan and enrollment projection are reviewed and updated and the first draft of the next year's proposed budget isdeveloped by the central office staff. During the winter and early spring the budget is developed and refined in conjunctionwith school building principals and department supervisors. Under current law, the budget is submitted to voter referendumon the third Tuesday of May each year. The 2008-2009 budget was approved by District voters on May 20, 2008 and asummary is included in Appendix A-1.

FINANCIAL STATEMENTS AND ACCOUNTING PROCEDURES

The financial accounts of the District are maintained in accordance with the New York State Uniform System ofAccounting for School Districts. Such accounts are audited annually by independent auditors, and are available for publicinspection upon request.

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INVESTMENT POLICY

Pursuant to State law, including Sections 10 and 11 of the General Municipal Law (the “GML”), the District is generallypermitted to deposit moneys in banks or trust companies located and authorized to do business in the State. All suchdeposits, including special time deposit accounts and certificates of deposit, in excess of the amount insured under the FederalDeposit Insurance Act, are required to be secured in accordance with the provisions of and subject to the limitations of Section10 of the GML.

The District may also temporarily invest moneys in: (1) obligations of the United States of America; (2) obligationsguaranteed by agencies of the United States of America where the payment of principal and interest are guaranteed by theUnited States of America; (3) obligations of the State of New York; (4) with the approval of the New York StateComptroller, in tax anticipation notes or revenue anticipation notes issued by any municipality, school district, or districtcorporation, other than those notes issued by the District; (5) certificates of participation issued in connection withinstallment purchase contracts entered into by political subdivisions of the State pursuant to Section 109-b(10) of the GML;(6) obligations of a New York public benefit corporation which are made lawful investments for municipalities pursuant tothe enabling statute of such public benefit corporation; or (7) in the case of moneys held in certain reserve funds establishedby the District pursuant to law, in obligations of the District.

All of the foregoing instruments and investments are required to be payable or redeemable at the option of the ownerwithin such times as the proceeds will be needed to meet expenditures for purposes for which the moneys were provided and,in the case of instruments or investments purchased with the proceeds of bonds or notes, shall be payable or redeemable inany event, at the option of the owner, within two years of the date of purchase. Unless registered or inscribed in the name ofthe District, such instruments and investments must be purchased through, delivered to and held in the custody of a bank ortrust company in the State pursuant to a written custodial agreement as provided in Section 10 of the GML.

The Board of Education of the District has adopted an investment policy and such policy conforms with applicable lawsof the State governing the deposit and investment of public moneys. All deposits and investments of the District are made inaccordance with such policy.

GENERAL FUND OPERATIONS

Appendix A sets forth the General Fund operations for the last five fiscal years which are derived from Audited FinancialStatements on file in the Superintendent's office.

EMPLOYEES

The number of persons employed by the District, the collective bargaining agents, if any, which represent them and thedates of expirations of the various collective bargaining agreements are as follows:

No. of Expiration Employees Unit ___Date__

46 Educational Secretaries Association 6/30/1215 Part-Time Custodial Workers 6/30/1235 Custodial Non-Supervisory Services 6/30/097 Custodial Supervisory Services 6/30/08

86 Cafeteria Workers and Part-Time Aides 6/30/0884 Teaching Assistants and Aides 6/30/0914 Copiague Association of Principals 6/30/0915 Copiague Supervisory Association 6/30/09

370 Copiague Teachers’ Association 6/30/086 New York State Nurses Association 6/30/08

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EMPLOYEE PENSION BENEFITS

Professional employees (teachers and administrators) are members of the New York State Teachers Retirement System(“TRS”). Payments to the TRS are generally deducted from State aid payments. All non-professional employees of theDistrict eligible for pension or retirement benefits under the Retirement and Social Security Law of the State of New York aremembers of the New York State and Local Employee's Retirement System (“ERS”). Both the TRS and ERS are non-contributory with respect to members hired prior to July 1, 1976. All members of the respective systems hired on or afterJuly 1, 1976 with less than 10 year’s full-time service contribute 3% of their gross annual salary toward the cost of retirementprograms.

Due to unfavorable capital market returns over recent years and negative returns in each of the past three years,Comptroller Hevesi has sent notice to every school district and municipality in New York State that beginning with the2003-04 fiscal year the employer contribution rate for the retirement systems may increase significantly. Comptroller Hevesihas further stated that he believes that the retirement contributions will continue to increase in subsequent years.

With regard to the ERS, a pension reform bill has been signed by the Governor into Law as Chapter 49 of the Laws of2003. Chapter 49 changes the cycle of billing to match budget cycles of the District. Under the previous method, theDistrict was unsure of how much it paid to the system until after its budget was implemented. Under the new system thecontribution for a given fiscal year will be based on the value of the pension fund on the prior April 1 instead of thefollowing April 1 so that the District will be able to more accurately include the cost of the contribution into its budget.Chapter 49 requires the District to make a minimum contribution of 4.5% of payroll every year, including years in which theinvestment performance of the fund would make a lower contribution possible.

On July 20, 2004 the New York State Legislature passed a bill amending the General Municipal Law, Local FinanceLaw and the Retirement and Social Security Law. On July 30, 2004, the Governor signed the new retirement systemlegislation into Law as Chapter 260 of the Laws of 2004. The bill moved the annual payment date for contributions fromDecember 15th to February 1st, effective December 15, 2004. It increased, from five to ten years, the maximum amortizationperiod of the portion of employer contributions that exceeds 7% of payroll for the 2004-2005 fiscal year of the RetirementSystem. It also allowed employers to bond for their 2005-2006 and 2006-2007 fiscal year contributions in excess of 9.5%and 10.5%, respectively. This amortization may be made with the Retirement System or the District could issue a maximumof 10 year general obligation bonds, the interest on which would be set at prevailing bond market rates on the date of sale andwould be taxable for federal income tax purposes.

OTHER POST EMPLOYMENT BENEFITS

It should also be noted that the District provides post-retirement healthcare benefits to various categories of formeremployees. These costs may be expected to rise substantially in the future. A recently enacted accounting rule, GASBStatement No. 45 (“GASB 45”) of the Governmental Accounting Standards Board (“GASB”), requires, governmental entities,such as the District, to account for post-retirement healthcare benefits with respect to vested pension benefits. AlthoughGASB 45 encourages earlier adoption, implementation is required by the following dates, based on the size of governmentmeasured by annual revenue:

Annual Revenue Effective for Fiscal Year Ending After:Greater than $100 million December 15, 2006Between $10 million and $100 million December 15, 2007Less than $10 million December 15, 2008

Since the implementation of Chapter 729 of the Laws of 1994, School Districts and Boards of Cooperative EducationServices, unlike other municipal units of government in the State, have been prohibited from reducing retiree health benefitsor increasing health care contributions received or paid by retirees below the level of benefits or contributions afforded to orrequired from active employees. This protection from unilateral reduction of benefits has been extended annually andcontinued through May 15, 2009 pursuant to Chapter 43 of the Laws of 2008. Legislative attempts to provide similarprotection to retirees of other local units of government in the State have not succeeded as of the date hereof. Nevertheless,many such retirees of all varieties of municipal units in the State do presently receive such benefits.

GASB 45 and OPEB. OPEB refers to “other post-employment benefits,” meaning benefits other then pension benefits.OPEB consists primarily of health care benefits and may include other benefits such as disability benefits and life insurance.Until now, these benefits have generally been administered on a pay-as-you-go basis and have not been reported as a liabilityon governmental financial statements.

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GASB 45 will require municipalities and school districts to account for OPEB liabilities in the same manner as theyalready account for pension liabilities. It will require them to adopt the actuarial methodologies used for pensions, withadjustments for the different characteristics of OPEB and the fact that most municipalities and school districts have not setaside any funds against this liability. Unlike GASB 27, which covers accounting for pensions, GASB 45 does not requiremunicipalities or school districts to report a net OPEB obligation at the start.

Under GASB 45, based on actuarial valuation, an annual required contribution (“ARC”) will be determined for eachmunicipality or school district. The ARC is the sum of (a) the normal cost for the year (the present value of future benefitsbeing earned by current employees) plus (b) amortization of the unfunded accrued liability (benefits already earned by currentand former employees but not yet provided for), using an amortization period of not more than 30 years. If a municipality orschool district contributes an amount less than the ARC, a net OPEB obligation will result, which is required to be recordedas a liability on its financial statements.

GASB 45 does not require that the unfunded liability actually be amortized nor that it be advance funded, only that themunicipality or school district account for its unfunded accrued liability and compliance in meeting its ARC. The Districtexpects to be incompliance with the requirements of GASB 45 by or before the applicable effective date.

Actuarial valuation will be required every 2 years for OPEB plans with more then 200 members, every 3 years if there areless then 200 members.

MARKET FACTORS AFFECTING FINANCINGS OF THE STATE ANDSCHOOL DISTRICTS OF THE STATE

The financial condition of the District as well as the market for the Bonds could be affected by a variety of factors, someof which are beyond the District's control. There can be no assurance that adverse events in the State, including, for example,the seeking by a municipality of remedies pursuant to the Federal Bankruptcy Act or otherwise, will not occur which mightaffect the market price of and the market for the Bonds. If a significant default or other financial crisis should occur in theaffairs of the State or at any of its agencies or political subdivisions thereby further impairing the acceptability of obligationsissued by borrowers within the State, both the ability of the district to arrange for additional borrowing and the market for andmarket value of the outstanding debt obligations, including the Bonds, could be adversely affected.

The District is dependent in part on financial assistance from the State in the form of State Aid. In some recent years,the District’s receipt of State aid was delayed as a result of the State’s delay in adopting its budget and appropriating State aidto municipalities and school districts. No delay in payment of State aid for the District’s current fiscal year is presentlyanticipated although no assurance can be given that there will not be a delay in payment thereof.

Should the District fail to receive monies expected from the State in the amounts and at the times expected, the Districtis authorized by the Local Finance Law to provide operating funds by borrowing in anticipation of the receipt of uncollectedState aid.

LITIGATION

In common with other school districts, the District from time to time receives notices of claim and is party to litigation.In the opinion of the School District Attorney, unless otherwise set forth herein and apart from matters provided for byapplicable insurance coverage, there are no claims or actions pending which, if determined against the District, would have anadverse material effect on the financial condition of the District.

TAX MATTERS

See “Miscellaneous” below for a discussion of certain litigation that may relate to this New York State tax exemption.

Opinion of Bond Counsel

In the opinion of Hawkins Delafield & Wood LLP, Bond Counsel to the District, under existing statutes and courtdecisions and assuming continuing compliance with certain tax certifications described herein, (i) interest on the Bonds isexcluded from gross income for Federal income tax purposes pursuant to Section 103 of the Internal Revenue Code of 1986,as amended (the “Code”), and (ii) interest on the Bonds is not treated as a preference item in calculating the alternativeminimum tax imposed on individuals and corporations under the Code; such interest, however, is included in the adjusted

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current earnings of certain corporations for purposes of calculating the alternative minimum tax imposed on suchcorporations. The arbitrage and use of proceeds certificate of the District (the “Tax Certificate”), which will be deliveredconcurrently with the delivery of the Bonds will contain provisions and procedures relating to compliance with applicablerequirements of the Code. In rendering its opinion, Bond Counsel has relied on certain representations, certifications of fact,and statements of reasonable expectations made by the District in connection with the Bonds, and Bond Counsel has assumedcompliance by the District with certain provisions and procedures set forth in the Tax Certificate relating to compliance withapplicable requirements of the Code to assure the exclusion of interest on the Bonds from gross income under Section 103 ofthe Code.

In addition, in the opinion of Bond Counsel to the District, under existing statutes, interest on the Bonds is exempt frompersonal income taxes of New York State and its political subdivisions, including The City of New York.

Bond Counsel to the District expresses no opinion regarding any other Federal or state tax consequences with respect tothe Bonds. Bond Counsel renders its opinion under existing statutes and court decisions as of the issue date, and assumes noobligation to update its opinion after the issue date to reflect any future action, fact or circumstance, or change in law orinterpretation, or otherwise. Bond Counsel expresses no opinion on the effect of any action hereafter taken or not taken inreliance upon an opinion of other counsel on the exclusion from gross income for Federal income tax purposes of interest onthe Bonds, or on the exemption from state and local tax law of interest on the Bonds.

Certain Ongoing Federal Tax Requirements and Certifications

The Code establishes certain significant ongoing requirements that must be met subsequent to the issuance and deliveryof the Bonds in order that interest on such Bonds be and remain excluded from gross income under Section 103 of the Code.These requirements include, but are not limited to, requirements relating to use and expenditure of gross proceeds of theBonds, yield and other restrictions on investments of gross proceeds, and the arbitrage rebate requirement that certain excessearnings on gross proceeds be rebated to the Federal government. Noncompliance with such requirements may cause intereston the Bonds to become included in gross income for Federal income tax purposes retroactive to their issue date, irrespectiveof the date on which such noncompliance occurs or is discovered. The District, in executing the Tax Certificate, will certifyto the effect that the District will comply with the provisions and procedures set forth therein and that it will do and performall acts and things necessary or desirable to assure the exclusion of interest on the Bonds from gross income underSection!103 of the Code.

Certain Collateral Federal Tax Consequences

The following is a brief discussion of certain collateral Federal income tax matters with respect to the Bonds. It does notpurport to address all aspects of Federal taxation that may be relevant to a particular owner of a Bond. Prospective investors,particularly those who may be subject to special rules, are advised to consult their own tax advisors regarding the Federal taxconsequences of owning and disposing of the Bonds.

Prospective owners of the Bonds should be aware that the ownership of such obligations may result in collateral Federalincome tax consequences to various categories of persons, such as corporations (including S corporations and foreigncorporations), financial institutions, property and casualty and life insurance companies, individual recipients of SocialSecurity and railroad retirement benefits, individuals otherwise eligible for the earned income tax credit, and taxpayers deemedto have incurred or continued indebtedness to purchase or carry obligations the interest on which is excluded from grossincome for Federal income tax purposes. Interest on the Bonds may be taken into account in determining the tax liability offoreign corporations subject to the branch profits tax imposed by Section 884 of the Code.

Original Issue Discount

“Original issue discount” (“OID”) is the excess of the sum of all amounts payable at the stated maturity of a Bond(excluding certain “qualified stated interest” that is unconditionally payable at least annually at prescribed rates) over the issueprice of that maturity. In general, the “issue price” of a maturity means the first price at which a substantial amount of theBonds of that maturity was sold (excluding sales to bond houses, brokers, or similar persons acting in the capacity asunderwriters, placement agents, or wholesalers). In general, the issue price for each maturity of the Bonds is expected to bethe initial public offering price set forth in this Official Statement. Bond Counsel further is of the opinion that, for any Bondhaving OID (a “Discount Bond”), OID that has accrued and is properly allocable to the owners of the Discount Bond underSection 1288 of the Code is excludable from gross income for Federal income tax purposes to the same extent as otherinterest on the Bonds.

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In general, under Section 1288 of the Code, OID on a Discount Bond accrues under a constant yield method, based onperiodic compounding of interest over prescribed accrual periods using a compounding rate determined by reference to the yieldon that Discount Bond. An owner’s adjusted basis in a Discount Bond is increased by accrued OID for purposes ofdetermining gain or loss on sale, exchange, or other disposition of such Discount Bond. Accrued OID may be taken intoaccount as an increase in the amount of tax-exempt income received or deemed to have been received for purposes ofdetermining various other tax consequences of owning a Discount Bond even though there will not be a corresponding cashpayment.

Owners of Discount Bonds should consult their own tax advisors with respect to the treatment of original issue discountfor Federal income tax purposes, including various special rules relating thereto, and the state and local tax consequences ofacquiring, holding, and disposing of Discount Bonds.

Bond Premium

In general, if an owner acquires a Bond for a purchase price (excluding accrued interest) or otherwise at a tax basis thatreflects a premium over the sum of all amounts payable on the Bond after the acquisition date (excluding certain “qualifiedstated interest” that is unconditionally payable at least annually at prescribed rates), that premium constitutes “bond premium”on that Bond (a “Premium Bond”). In general, under Section 171 of the Code, an owner of a Premium Bond must amortizethe bond premium over the remaining term of the Premium Bond, based on the owner’s yield over the remaining term of thePremium Bond, determined based on constant yield principles (in certain cases involving a Premium Bond callable prior to itsstated maturity date, the amortization period and yield may be required to be determined on the basis of an earlier call date thatresults in the lowest yield on such Premium Bond). An owner of a Premium Bond must amortize the bond premium byoffsetting the qualified stated interest allocable to each interest accrual period under the owner’s regular method of accountingagainst the bond premium allocable to that period. In the case of a tax-exempt Premium Bond, if the bond premium allocableto an accrual period exceeds the qualified stated interest allocable to that accrual period, the excess is a nondeductible loss.Under certain circumstances, the owner of a Premium Bond may realize a taxable gain upon disposition of the Premium Bondeven though it is sold or redeemed for an amount less than or equal to the owner’s original acquisition cost. Owners of anyPremium Bonds should consult their own tax advisors regarding the treatment of bond premium for Federal income taxpurposes, including various special rules relating thereto, and state and local tax consequences, in connection with theacquisition, ownership, amortization of bond premium on, sale, exchange, or other disposition of Premium Bonds.

Information Reporting and Backup Withholding

Information reporting requirements apply to interest on tax-exempt obligations, including the Bonds. In general, suchrequirements are satisfied if the interest recipient completes, and provides the payor with, a Form W-9, “Request for TaxpayerIdentification Number and Certification,” or unless the recipient is one of a limited class of exempt recipients, includingcorporations. A recipient not otherwise exempt from information reporting who fails to satisfy the information reportingrequirements will be subject to “backup withholding,” which means that the payor is required to deduct and withhold a taxfrom the interest payment, calculated in the manner set forth in the Code. For the foregoing purpose, a “payor” generallyrefers to the person or entity from whom a recipient receives its payments of interest or who collects such payments on behalfof the recipient.

If an owner purchasing a Bond through a brokerage account has executed a Form W-9 in connection with theestablishment of such account, as generally can be expected, no backup withholding should occur. In any event, backupwithholdin