TWO (2) SEPARATE NEW ISSUES/BOOK- ENTRY ONLY RATING: … · 2012 Bonds will be made in...

TWO (2) SEPARATE NEW ISSUES/BOOK- ENTRY ONLY RATING: S&P Series 2012A: “A+” Series 2012B: “A”

In the opinion of Baker, Donelson, Bearman, Caldwell & Berkowitz, PC, Jackson, Mississippi, and Betty A. Mallett, PLLC, Jackson, Mississippi (“Co‑Bond Counsel”), under existing laws, regulations, rulings and judicial decisions, interest on the Series 2012 Bonds (as defined below) is excludable from gross income for federal income tax purposes pursuant to Section 103 of the Code (as defined herein). Such exclusion is conditioned on continuing compliance with certain tax covenants of the Bank (as defined below) and the School District (as defined below). Co‑Bond Counsel are further of the opinion that under and pursuant to the Act (as defined herein), the Series 2012 Bonds and interest thereon are exempt from all income taxes imposed by the State of Mississippi. See “TAX MATTERS” herein and APPENDIX D ‑ FORMS OF OPINIONS OF CO‑BOND COUNSEL attached hereto.

$21,065,000 MISSISSIPPI DEVELOPMENT BANK

SPECIAL OBLIGATION BONDS, SERIES 2012A (JACKSON PUBLIC SCHOOL DISTRICT GENERAL OBLIGATION

REFUNDING PROJECT)


SPECIAL OBLIGATION BONDS, SERIES 2012B(JACKSON PUBLIC SCHOOL DISTRICT LIMITED TAx

REFUNDING NOTE PROJECT)

Dated: Date of Delivery Due: April 1 and October 1, as shown inside front cover

This Official Statement relates to the issuance by the Mississippi Development Bank (the “Bank”) of the $21,065,000 Special Obligation Bonds, Series 2012A (Jackson Public School District General Obligation Refunding Project) (the “Series 2012A Bonds”) and the $15,100,000 Special Obligation Bonds, Series 2012B (Jackson Public School District Limited Tax Refunding Note Project) (the “Series 2012B Bonds” and together with the “Series 2012A Bonds,” the “Series 2012 Bonds”). The Series 2012 Bonds will be dated the date of delivery thereof and will bear interest from that date to their respective maturities in the amounts and at the rates set forth on the inside cover of this Official Statement. The Series 2012 Bonds are issuable only as fully registered bonds and, when issued, will be registered in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York (“DTC”). Purchases of beneficial interests in the Series 2012 Bonds will be made in book-entry-only form, in the denomination of $5,000 or any integral multiple thereof. Purchasers of beneficial interests in the Series 2012 Bonds will not receive physical delivery of certificates representing their interests in the Series 2012 Bonds. Interest on the Series 2012 Bonds is payable semiannually on April 1 and October 1 of each year, commencing on April 1, 2013. So long as DTC or its nominee is the Registered Owner (as defined herein) of the Series 2012 Bonds, interest, together with the principal of and premium, if any, on the Series 2012 Bonds will be paid directly to DTC by Trustmark National Bank, Jackson, Mississippi, as trustee under the Indentures (as defined herein). See “DESCRIPTION OF THE SERIES 2012 BONDS - Book-Entry-Only System.”

The Series 2012 Bonds are issued by the Bank for the purposes of (i) purchasing the School District Bond and School District Note (each as defined herein and, collectively, the “School District Indebtedness” ) being issued by the Jackson Public School District (the “School District”) and (ii) to pay certain costs of issuance of both the Series 2012 Bonds and the School District Indebtedness, as more fully described in this Official Statement. Moneys received by the School District from the sale of the School District Bond and School District Note will be used by the School District to refund, defease and/or restructure and pay interest on certain prior indebtedness of the School District. See “PURCHASE OF THE SCHOOL DISTRICT INDEBTEDNESS – Refunding Project” herein.

The Series 2012 Bonds are subject to redemption prior to maturity as more fully described herein.

THE SERIES 2012 BONDS ARE LIMITED AND SPECIAL OBLIGATIONS OF THE BANK AND ARE PAYABLE SOLELY OUT OF THE TRUST ESTATE OF THE BANK PLEDGED THEREFOR UNDER THE INDENTURES, INCLUDING THE SCHOOL DISTRICT INDEBTEDNESS AND PAYMENTS DERIVED THEREFROM, AS MORE FULLY DESCRIBED HEREIN. THE SERIES 2012 BONDS DO NOT CONSTITUTE A DEBT, LIABILITY OR LOAN OF THE CREDIT OF THE BANK, THE STATE OF MISSISSIPPI OR ANY POLITICAL SUBDIVISION THEREOF UNDER THE CONSTITUTION AND LAWS OF THE STATE OF MISSISSIPPI, OR A PLEDGE OF THE FULL FAITH, CREDIT AND TAxING POWER OR MORAL OBLIGATION OF THE BANK, THE STATE OF MISSISSIPPI OR ANY POLITICAL SUBDIVISION THEREOF; PROVIDED HOWEVER THAT (I) THE SCHOOL DISTRICT BOND IS SECURED BY THE FULL FAITH, CREDIT AND TAxING POWER OF THE SCHOOL DISTRICT AND (II) THE SCHOOL DISTRICT NOTE IS SECURED BY CERTAIN SCHOOL DISTRICT TAxES AND EEF FUNDS AS DEFINED HEREIN. THE BANK HAS NO TAxING POWER.

THIS COVER PAGE CONTAINS CERTAIN INFORMATION FOR QUICK REFERENCE ONLY. IT IS NOT A SUMMARY OF THIS OFFICIAL STATEMENT. PROSPECTIVE INVESTORS MUST READ THIS ENTIRE OFFICIAL STATEMENT (INCLUDING THE APPENDICES) TO OBTAIN INFORMATION ESSENTIAL TO THE MAKING OF AN INFORMED INVESTMENT DECISION.

The Series 2012 Bonds are offered subject to the final approval of the legality thereof by Baker, Donelson, Bearman, Caldwell & Berkowitz, PC, Jackson, Mississippi, and Betty A. Mallett, PLLC, Jackson, Mississippi in their capacities as co-bond counsel. Certain legal matters will be passed upon for the Underwriters by Chambers & Gaylor Law Firm, PLLC, Jackson, Mississippi and Hunton & Williams LLP, Atlanta, Georgia, serving as co-underwriters’ counsel. Certain legal matters will be passed upon for the Bank by Balch & Bingham, LLP, Jackson, Mississippi, and for the School District by its in-house counsel, JoAnne Nelson Shepherd, Jackson, Mississippi. Malachi Financial Products, Inc., Atlanta, Georgia, serves as the Financial Advisor to the School District in connection with the sale and issuance of the School District Indebtedness. The Series 2012 Bonds are expected to be available in definitive form for delivery on or about January 15, 2013.

Rice Financial Products Company Wells Fargo SecuritiesThe date of this Official Statement is January 8, 2013.

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SERIES 2012A BONDS

MATURITY SCHEDULE

Maturity (April 1)

Principal Amount

Interest Rate Yield

Initial CUSIP1

2015 $1,050,000 5.000% 1.460% 60534TKN4 2016 1,115,000 5.000 1.710 60534TKP9 2017 1,185,000 5.000 1.940 60534TKQ7 2018 490,000 5.000 2.140 60534TKR5

$17,225,000 5.000% Term Bond due April 1, 2028, Priced at 112.414(c) to Yield 3.909%, Initial CUSIP1

60534TKS3

(c) = Priced to the April 1, 2023 call date.

SERIES 2012B BONDS

$10,000,000 5.000% Term Bond due October 1, 2023, Priced to Yield 3.330%, Initial CUSIP1 60534TKU8

$5,100,000 3.125% Term Bond due October 1, 2023, Priced to Yield 3.350%, Initial CUSIP1 60534TKT1

1 The CUSIP numbers listed above have been assigned by an organization not affiliated with the Bank or the School District and are being

provided solely for the convenience of the holders of the Series 2012 Bonds only, and the Bank, the School District and the Underwriters do not make any representation with respect to such CUSIP numbers or undertake any responsibility for their accuracy. The CUSIP numbers are subject to being changed after the issuance of the Series 2012 Bonds as a result of various subsequent actions, including but not limited to a refunding in whole or in part of the Series 2012 Bonds.

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THIS OFFICIAL STATEMENT DOES NOT CONSTITUTE AN OFFERING OF ANY SECURITY OTHER THAN THE ORIGINAL OFFERING OF THE SERIES 2012 BONDS IDENTIFIED ON THE COVER HEREOF. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THAT CONTAINED IN THIS OFFICIAL STATEMENT; AND IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS OFFICIAL STATEMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY, AND THERE SHALL NOT BE ANY SALE OF THE SERIES 2012 BONDS BY ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER, SOLICITATION OR SALE. THE INFORMATION AND EXPRESSION OF OPINIONS HEREIN ARE SUBJECT TO CHANGE WITHOUT NOTICE, AND NEITHER THE DELIVERY OF THIS OFFICIAL STATEMENT NOR THE SALE OF ANY OF THE SERIES 2012 BONDS SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF. ALL OPINIONS, ESTIMATES OR ASSUMPTIONS, WHETHER OR NOT EXPRESSLY IDENTIFIED, ARE INTENDED AS SUCH AND NOT AS REPRESENTATIONS OF FACT.

THE UNDERWRITERS HAVE PROVIDED THE FOLLOWING SENTENCE FOR INCLUSION IN THIS OFFICIAL STATEMENT. THE UNDERWRITERS HAVE REVIEWED THE INFORMATION IN THIS OFFICIAL STATEMENT IN ACCORDANCE WITH, AND AS A PART OF, THEIR RESPONSIBILITIES UNDER THE FEDERAL SECURITIES LAWS AS APPLIED TO THE FACTS AND CIRCUMSTANCES OF THIS TRANSACTION, BUT THE UNDERWRITERS DO NOT GUARANTEE THE ACCURACY OR COMPLETENESS OF SUCH INFORMATION.

INFORMATION HEREIN HAS BEEN OBTAINED FROM THE BANK, THE SCHOOL DISTRICT, DTC AND OTHER SOURCES BELIEVED TO BE RELIABLE, BUT THE ACCURACY OR COMPLETENESS OF SUCH INFORMATION IS NOT GUARANTEED BY THE UNDERWRITERS.

UPON ISSUANCE, THE SERIES 2012 BONDS WILL NOT BE REGISTERED BY THE BANK UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAW, AND WILL NOT BE LISTED ON ANY STOCK OR OTHER SECURITIES EXCHANGE. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER FEDERAL, STATE OR OTHER GOVERNMENTAL ENTITY OR AGENCY, OTHER THAN THE BANK AND THE SCHOOL DISTRICT (TO THE EXTENT DESCRIBED HEREIN), WILL HAVE PASSED UPON THE ACCURACY OR ADEQUACY OF THIS OFFICIAL STATEMENT OR APPROVED THE SERIES 2012 BONDS FOR SALE.

THIS OFFICIAL STATEMENT IS NOT TO BE CONSTRUED AS A CONTRACT OR AGREEMENT BETWEEN THE BANK AND THE PURCHASERS OR HOLDERS OF THE SERIES 2012 BONDS. ALL ESTIMATES AND ASSUMPTIONS CONTAINED HEREIN ARE BELIEVED TO BE REASONABLE, BUT NO REPRESENTATION IS MADE THAT SUCH ESTIMATES OR ASSUMPTIONS ARE CORRECT OR WILL BE REALIZED.

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES 2012 BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

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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.” Such statements are generally identifiable by the terminology such as “expects,” “forecasts,” “projects,” “intends,” “anticipates,” “estimates” or similar words.

THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH FORWARD-LOOKING STATEMENTS INVOLVES 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. NEITHER THE BANK NOR THE SCHOOL DISTRICT PLANS TO ISSUE ANY UPDATES OR REVISIONS TO THOSE FORWARD-LOOKING STATEMENTS IF OR WHEN CHANGES TO THEIR EXPECTATIONS, OR EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH SUCH STATEMENTS ARE BASED, OCCUR.

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TABLE OF CONTENTS

Page

INTRODUCTION ......................................................................................................................................................... 1 The Bank ................................................................................................................................................................... 1 Sources of Payment and Security for the Series 2012A Bonds ................................................................................ 1 Sources of Payment and Security for the Series 2012B Bonds ................................................................................. 2 Purpose of the Series 2012 Bonds............................................................................................................................. 3 Authority for Issuance .............................................................................................................................................. 3 Description of the Series 2012 Bonds ....................................................................................................................... 3 Tax Matters ............................................................................................................................................................... 4 Professionals Involved in the Offering ..................................................................................................................... 4 Offering and Delivery of the Series 2012 Bonds ...................................................................................................... 4 Risks to the Owners of the Series 2012 Bonds ......................................................................................................... 4 Other Information ..................................................................................................................................................... 5 Format of Official Statement .................................................................................................................................... 5

SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2012 BONDS ...................................................... 6 General ...................................................................................................................................................................... 6 The School District and the School District Indebtedness ........................................................................................ 6 Provisions for Payment of the School District Indebtedness .................................................................................... 6

RISKS TO THE OWNERS OF THE SERIES 2012 BONDS ....................................................................................... 8 General ...................................................................................................................................................................... 8 School District Indebtedness ..................................................................................................................................... 8 Tax Covenants .......................................................................................................................................................... 8 Ratings ...................................................................................................................................................................... 8 Remedies; Litigation; Bankruptcy ............................................................................................................................ 9 Failure to Compel the Levy of Taxes on the School District .................................................................................... 9 3 Mill Levy and EEF Funds are Limited Sources for Repayment of Series 2012B Bonds .................................... 10

DESCRIPTION OF THE SERIES 2012 BONDS ....................................................................................................... 11 General Description ................................................................................................................................................ 11 Book-Entry-Only System........................................................................................................................................ 11 Redemption and Redemption Prices and Terms for the Series 2012 Bonds ........................................................... 14

APPLICATION OF THE PROCEEDS OF THE SERIES 2012 BONDS................................................................... 16

DEBT SERVICE REQUIREMENTS FOR THE SERIES 2012 BONDS .................................................................. 16

THE MISSISSIPPI DEVELOPMENT BANK ............................................................................................................ 17 General .................................................................................................................................................................... 17 Organization and Membership of the Bank ............................................................................................................ 18 Prior Bonds of Bank ............................................................................................................................................... 18

PURCHASE OF THE SCHOOL DISTRICT INDEBTEDNESS ............................................................................... 19 General .................................................................................................................................................................... 19 Refunding Project ................................................................................................................................................... 19

FUNDS AND ACCOUNTS ........................................................................................................................................ 21 Creation of Funds and Accounts ............................................................................................................................. 21 Deposit of Net Proceeds of the Series 2012 Bonds and Other Receipts ................................................................. 21

OPERATION OF FUNDS AND ACCOUNTS .......................................................................................................... 22 General Accounts .................................................................................................................................................... 22

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Redemption Accounts ............................................................................................................................................. 22 Purchase Accounts .................................................................................................................................................. 22 Bond Issuance Expense Accounts........................................................................................................................... 22 Rebate Fund ............................................................................................................................................................ 23 Moneys to be Held in Trust .................................................................................................................................... 23 Amounts Remaining in Funds or Accounts ............................................................................................................ 23

THE SERIES 2012 BONDS AS LEGAL INVESTMENTS ....................................................................................... 23

LITIGATION .............................................................................................................................................................. 23

TAX MATTERS ......................................................................................................................................................... 24 Opinion of Co-Bond Counsel ................................................................................................................................. 24 Treatment of Original Issue Premium for Series 2012A Bonds ............................................................................. 25 Treatment of Original Issue Premium for Series 2012B Bonds .............................................................................. 25 Treatment of Original Issue Discount for Series 2012B Bonds .............................................................................. 25

LEGAL MATTERS .................................................................................................................................................... 26

CONTINUING DISCLOSURE ................................................................................................................................... 26

VERIFICATION OF ARITHMETICAL AND MATHEMATICAL COMPUTATIONS.......................................... 27

RATINGS .................................................................................................................................................................... 27

UNDERWRITING ...................................................................................................................................................... 28

FINANCIAL STATEMENTS ..................................................................................................................................... 28

FINANCIAL ADVISOR ............................................................................................................................................. 28

VALIDATION ............................................................................................................................................................ 29

MISCELLANEOUS .................................................................................................................................................... 29

CERTIFICATION ....................................................................................................................................................... 30 APPENDIX A - Information Concerning the School District APPENDIX B - Financial Information Concerning the School District APPENDIX C - Information Concerning the Bank Indentures, the School District Resolutions and the School

District Indebtedness APPENDIX D - Forms of Opinions of Co-Bond Counsel APPENDIX E - Definitions and Summary of Trust Indentures APPENDIX F - Form of Continuing Disclosure Agreement

OFFICIAL STATEMENT


SPECIAL OBLIGATION BONDS, SERIES 2012A (JACKSON PUBLIC SCHOOL DISTRICT GENERAL OBLIGATION

REFUNDING PROJECT)


SPECIAL OBLIGATION BONDS, SERIES 2012B (JACKSON PUBLIC SCHOOL DISTRICT LIMITED TAX

REFUNDING NOTE PROJECT)

INTRODUCTION

The purpose of this Official Statement, including the cover page and the appendices, is to set forth certain information concerning the sale and issuance by the Mississippi Development Bank (the “Bank”) of its Special Obligation Bonds, Series 2012A (Jackson Public School District General Obligation Refunding Project) (the “Series 2012A Bonds”) issued in the aggregate principal amount of $21,065,000 and its Special Obligation Bonds, Series 2012B (Jackson Public School District Limited Tax Refunding Note Project) (the “Series 2012B Bonds”) issued in the aggregate principal amount of $15,100,000 (together, the “Series 2012 Bonds”). All capitalized terms used herein and not otherwise defined herein are used with the meanings assigned thereto in “APPENDIX E – Definitions” attached hereto.

This introduction is not a summary of this Official Statement. It is only a brief description of and guide to, and is qualified by, more complete and detailed information contained in the entire Official Statement, including the cover page, the inside cover page and all appendices hereto, and the documents summarized or described herein. A full review should be made of the entire Official Statement. The offering of the Series 2012 Bonds to potential investors is made only by means of the entire Official Statement, including the appendices. No person is authorized to detach this Introduction from the Official Statement or otherwise use it without the entire Official Statement, including the appendices hereto.

The Bank

The Bank was established in 1986 as a separate body corporate and politic of the State of Mississippi (the “State”) for the public purposes set forth under the provisions of Sections 31-25-1 et seq., Mississippi Code of 1972, as amended (the “Bank Act”). The Bank is not an agency of the State, is separate from the State in its corporate and sovereign capacity and has no taxing power. The Bank is governed by a Board of Directors composed of nine members.

Pursuant to the Bank Act, the purpose of the Bank is to assist “local governmental units,” defined in the Bank Act to be (a) any county, municipality, utility district, regional solid waste authority, county cooperative service district or political subdivision of the State, (b) the State or any agency thereof, (c) the institutions of higher learning of the State, (d) any education building corporation established for institutions of higher learning, or (e) any other governmental unit created under state law, through programs of purchasing the bonds, notes or evidences of indebtedness of such local governmental units under agreements between such local governmental units and the Bank. The Jackson Public School District (the “School District”), as further described in APPENDIX A hereto, is a local governmental unit under the Bank Act.

Sources of Payment and Security for the Series 2012A Bonds

The Series 2012A Bonds will be issued by and under and secured by an Indenture of Trust, dated the date of delivery thereof (the “Series 2012A Indenture”), by and between the Bank and Trustmark National Bank, Jackson, Mississippi, as trustee (the “Trustee”). The principal of, premium, if any, and interest on the Series 2012A Bonds, are payable from those Funds and Accounts (as defined herein) of the Bank and from a general obligation bond issued by the School District and designated as the $21,065,000 Jackson Public School District, General

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Obligation Refunding Bond, Series 2012A (the “School District Bond”) assigned to the Trustee pursuant to the Series 2012A Indenture for the benefit of the owners of the Series 2012A Bonds equally and ratably without priority.

The Series 2012A Bonds are limited and special obligations of the Bank and are payable solely out of the Trust Estate (as defined herein) pledged therefor under the Series 2012A Indenture, including the School District Bond and payments derived therefrom, as more fully described herein. The Series 2012A Bonds do not constitute a debt, liability or loan of the credit of the Bank, the State or any political subdivision thereof under the constitution and laws of the State, or a pledge of the faith, credit, taxing power or moral obligation of the Bank, the State or any political subdivision thereof.

The School District Bond securing the Series 2012A Bonds is, however, a general obligation of the School District, secured by the full faith, credit and taxing power of the School District.

The School District Bond is being issued pursuant to Sections 31-15-1 et seq., Mississippi Code of 1972, as amended (the “Refinancing Act” and together with the Bank Act and the Refunding Act (as defined herein), the “Act”). The School District Bond will be purchased by the Bank with the proceeds of the Series 2012A Bonds. The sources of payment for the School District Bond is further described under the caption “SECURITY AND SOURCES OF PAYMENT FOR SERIES 2012 BONDS” herein and APPENDIX C hereto.

Sources of Payment and Security for the Series 2012B Bonds

The Series 2012B Bonds will be issued by and under and secured by an Indenture of Trust, dated the date of delivery thereof (the “Series 2012B Indenture” and, together with the Series 2012A Indenture, the “Indentures”), by and between the Bank and the Trustee. The principal of, premium, if any, and interest on the Series 2012B Bonds, are payable from those Funds and Accounts (as defined herein) of the Bank and from a limited tax refunding note issued by the School District and designated as the $15,100,000 Jackson Public School District, Limited Tax Refunding Note, Series 2012B (the “School District Note” and, together with the School District Bond, the “School District Indebtedness”) assigned to the Trustee pursuant to the Series 2012B Indenture for the benefit of the owners of the Series 2012B Bonds equally and ratably without priority.

The Series 2012B Bonds are limited and special obligations of the Bank and are payable solely out of the Trust Estate pledged therefor under the Series 2012B Indenture, including the School District Note and payments derived therefrom, as more fully described herein. The Series 2012B Bonds do not constitute a debt, liability or loan of the credit of the Bank, the State or any political subdivision thereof under the constitution and laws of the State, or a pledge of the faith, credit, taxing power or moral obligation of the Bank, the State or any political subdivision thereof.

The School District Note shall be secured by and payable as to principal of, premium, if any, and interest (a) out of the avails of a direct and continuing tax, not to exceed three mills on the dollar for payment of the School District Note and, on a parity basis with, with all other outstanding evidences of indebtedness issued pursuant to Sections 37-59-101 et seq., Mississippi Code of 1972, including, but not limited to, the School District’s $25,220,000 Limited-Tax Refunding Notes, Series 2005 (currently outstanding in the principal amount of $20,060,000), to be levied annually by the City of Jackson, Mississippi upon all of the taxable property within the geographical limits of the School District, and (b) from the School District’s Education Enhancement Funds for buildings and buses received from the State pursuant to Section 37-61-33, Mississippi Code of 1972, as amended; provided, however, any Education Enhancement Funds not required to pay principal of and interest on the School District Note may be used by the School District for any lawful purposes. The full faith and credit of the School District is not pledged to pay the principal of and interest on the School District Note.

The School District Note is being issued pursuant to Section 31-27-1 et seq., Mississippi Code of 1972, as amended (the “Refunding Act” and together with the Refinancing Act and the Bank Act, the “Act”). The School District Note will be purchased by the Bank with the proceeds of the Series 2012B Bonds. The sources of payment for the School District Note is further described under the caption “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2012 BONDS” herein and APPENDIX C hereto.

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Purpose of the Series 2012 Bonds

Series 2012A Bonds. The Series 2012A Bonds are being issued to provide funds to (a) purchase the School District Bond to provide funds to the School District in order to refund and defease and/or restructure (i) all of the outstanding maturities of the School District’s $9,311,945.25 (original principal amount) Custodial Receipts, Certificate of Participation, Series 2002-001, dated June 28, 2002 (the “Custodial Receipts”), (ii) certain maturities of the School District $36,000,000 (original principal amount) General Obligation Bonds Series 2007, dated October 2, 2007 (the “2007 Bonds”), (iii) certain maturities of the Bank’s $114,000,000 (original principal amount) Special Obligation Bonds, Series 2008 (Jackson Public School District, Jackson, Mississippi General Obligation Bond Project) dated July 23, 2008 (the “2008 Bank Bonds” and a corresponding portion of the District’s $114,000,000 (original principal amount) General Obligation Bond, Series 2008 (Capital Improvement Project), dated July 23, 2008 (the “2008 District Bond”), and (iv) to pay interest due through and including October 1, 2013 on 2007 Bonds maturing in the years 2015 through 2027, and on the 2008 Bank Bonds maturing in the years 2015 through 2028, and (b) to pay the Costs of Issuance (as defined herein) of the Series 2012A Bonds and the School District Bond (the “2012A Project”).

Series 2012B Bonds. The Series 2012B Bonds are being issued to provide funds (a) to purchase the School District Note to provide funds to the School District in order to advance refund and defease the outstanding maturities of the School District’s $8,175,000 (original principal amount) Jackson Public School District Limited Tax Notes, Series 2003-B, dated October 14, 2003 (the “Current Interest Notes”) and the $8,206,688.30 (original principal amount) Jackson Public School District Limited Tax Notes, Series 2003-B, dated October 14, 2003 (“the Capital Appreciation Notes” and together with the Current Interest Notes, the “2003 Notes”) and (b) to pay the Costs of Issuance (as defined herein) of the Series 2012B Bonds and the School District Note, (the “2012B Project” and together with the 2012A Project, the “Project”).

See “PURCHASE OF THE SCHOOL DISTRICT INDEBTEDNESS – Refunding Project” for a more detailed description of the use of the proceeds of the Series 2012 Bonds.

Authority for Issuance

The Series 2012 Bonds are issued pursuant to the provisions of the Act, the Series 2012A Indenture and the Series 2012B Indenture.

Description of the Series 2012 Bonds

Redemption. The Series 2012A Bonds (or any portions thereof in integral multiples of $5,000 each) which mature on April 1, 2028 are subject to optional redemption prior to their stated date of maturity in whole or in part, in principal amounts and maturities as selected by the Bank on any date on or after April 1, 2023, at par, plus accrued interest to the date of redemption thereof. Selection of the Series 2012A Bonds to be redeemed within a maturity will be made by lot by the Trustee. The Series 2012B Bonds are not subject to optional redemption.

The Series 2012 Bonds are also subject to mandatory sinking fund redemption, in part, as more particularly described under the caption “DESCRIPTION OF THE SERIES 2012 BONDS – Redemption” herein.

Denominations. The Series 2012 Bonds will be issued in denominations of $5,000 or any integral multiple thereof.

Registration, Transfers and Exchanges. The Series 2012 Bonds will be issued only as fully registered bonds and, when issued, will be registered in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York (“DTC”). Purchases of beneficial interests in the Series 2012 Bonds will be made in book-entry-only form. Purchasers of beneficial interests in the Series 2012 Bonds will not receive physical delivery of certificates representing their respective interests in the Series 2012 Bonds.

Payments. Interest on the Series 2012 Bonds is payable on April 1 and October 1 of each year, commencing April 1, 2013. So long as DTC or its nominee is the Registered Owner of the Series 2012 Bonds, interest, together with the principal of and premium, if any, on the Series 2012 Bonds will be paid directly to DTC by the Trustee. The final disbursement of such payments to a Beneficial Owner (as defined herein) of the Series

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2012 Bonds will be the responsibility of the DTC Participants and the Indirect Participants, all as more fully defined and described herein under the caption “DESCRIPTION OF THE SERIES 2012 BONDS -- Book-Entry-Only System.”

For a more complete description of the Series 2012 Bonds and the basic documentation pursuant to which the Series 2012 Bonds are being issued, see the captions “DESCRIPTION OF THE SERIES 2012 BONDS,” “FUNDS AND ACCOUNTS” and “OPERATION OF FUNDS AND ACCOUNTS” in this Official Statement.

Tax Matters

In the opinion of Baker, Donelson, Bearman, Caldwell & Berkowitz, PC, Jackson, Mississippi, and Betty A. Mallett, PLLC, Jackson, Mississippi (“Co-Bond Counsel”) under existing laws, regulations, rulings and judicial decisions, interest on the Series 2012 Bonds is excludable from gross income for federal income tax purposes, with such exclusion conditioned upon continuing compliance with certain tax covenants of the Bank and the School District. Interest on the Series 2012 Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes; however, it is included in adjusted current earnings in calculating corporate alternative minimum taxable income.

Co-Bond Counsel is further of the opinion that under existing laws, regulations, rulings and judicial decisions, interest on the Series 2012 Bonds is exempt from all income taxation in the State of Mississippi.

For a more complete description of the opinion of Co-Bond Counsel and certain other tax consequences incident to the ownership of the Series 2012 Bonds, see the caption “TAX MATTERS” herein. See APPENDIX D hereto for the proposed forms of opinions of Co-Bond Counsel.

Professionals Involved in the Offering

Trustmark National Bank, Jackson, Mississippi, will act as trustee under the Indentures for the Series 2012 Bonds. Malachi Financial Products, Inc., Atlanta, Georgia, is employed as the financial advisor to the School District with respect to the Series 2012 Bonds and the Bank’s purchase of the School District Bond and the School District Note (herein, collectively referred to as the School District Indebtedness”). Certain proceedings in connection with the issuance of the Series 2012 Bonds are subject to the approval of Co-Bond Counsel. Certain legal matters will be passed upon for the Bank by Balch & Bingham, LLP, Jackson, Mississippi. Certain legal matters will be passed upon for the Underwriters by Chambers & Gaylor Law Firm, PLLC, Jackson, Mississippi, and Hunton & Williams LLP, Atlanta, Georgia, serving as co-underwriters’ counsel, and for the School District by its in-house counsel, JoAnne Nelson Shepherd, Esq. See the captions “LEGAL MATTERS” and “FINANCIAL ADVISOR” in this Official Statement.

Offering and Delivery of the Series 2012 Bonds

Rice Financial Products Company, on behalf of itself and Wells Fargo Securities (the “Underwriters”) have agreed to purchase all of the Series 2012 Bonds subject to certain conditions set forth in a Bond Purchase Agreement by and among the Underwriters, the Bank and the School District (the “Bond Purchase Agreement”). The Series 2012 Bonds are expected to be available in definitive form for delivery in New York, New York on or about January 15, 2013.

Risks to the Owners of the Series 2012 Bonds

There are certain risks involved in the ownership of the Series 2012 Bonds which should be considered by prospective purchasers. The ability of the Bank to pay principal of, premium, if any, and interest on the Series 2012 Bonds depends upon the receipt by the Bank of payments of principal (and premium, if any) and interest on the School District Indebtedness. There can be no representation or assurance that the School District will realize sufficient revenues to make the required payments on the School District Indebtedness. See the caption “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2012 BONDS” herein. Failure of the Bank and/or the School District to comply with certain tax covenants may also adversely affect the exempt status of the

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interest on the Series 2012 Bonds. See the caption “RISKS TO THE OWNERS OF THE SERIES 2012 BONDS” in this Official Statement.

Other Information

This Official Statement speaks only as of its date, and certain information contained herein is subject to change.

Copies of other documents and information are available, upon request, and upon payment to the Bank of a charge for copying, mailing and handling, from William T. Barry, Executive Director, Mississippi Development Bank, 735 Riverside Drive, Suite 300, Jackson, Mississippi 39202, telephone (601) 355-6232.

NO DEALER, BROKER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS OFFICIAL STATEMENT; AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON. THIS OFFICIAL STATEMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY, AND THERE SHALL NOT BE ANY SALE OF THE SERIES 2012 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 FORTH HEREIN HAS BEEN OBTAINED FROM THE BANK, THE SCHOOL DISTRICT, DTC, AND OTHER SOURCES WHICH ARE BELIEVED TO BE RELIABLE, BUT IT IS NOT GUARANTEED AS TO ACCURACY OR COMPLETENESS. 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 SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE BANK OR THE SCHOOL DISTRICT SINCE THE DATE HEREOF.

THE SERIES 2012 BONDS HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

Format of Official Statement

There follows in this Official Statement a description of the security and sources of payment for the Series 2012 Bonds, the Project, the Bank, and summaries of certain provisions of the Series 2012 Bonds, the Indentures, and certain provisions of the Act. All discussions of the Act and the Indentures are qualified in their entirety by reference to the Act and the Indentures, copies of which are available from the Bank, and all discussions of the Series 2012 Bonds are qualified in their entirety by reference to the definitive form and the information with respect to the Series 2012 Bonds contained in the Indentures.

Certain information relating to the School District is set forth in APPENDIX A - INFORMATION CONCERNING THE SCHOOL DISTRICT; certain financial information relating to the School District is set forth in APPENDIX B - FINANCIAL INFORMATION CONCERNING THE SCHOOL DISTRICT; certain information concerning the School District Resolutions (as defined herein) and the School District Indebtedness are set forth in APPENDIX C – INFORMATION CONCERNING THE BANK INDENTURES, THE SCHOOL DISTRICT RESOLUTIONS AND THE SCHOOL DISTRICT INDEBTEDNESS; the proposed forms of opinions of Co-Bond Counsel with respect to the Series 2012 Bonds are set forth in APPENDIX D - FORMS OF OPINIONS OF CO-BOND COUNSEL; definitions of certain terms used in this Official Statement are set forth in APPENDIX E – DEFINITIONS; the form of the continuing disclosure agreement of the Bank and the School District is set forth in APPENDIX F - FORM OF CONTINUING DISCLOSURE AGREEMENT. Each of the Appendices to this Official Statement is an integral part of this Official Statement and should be read in its entirety by any and all owners or prospective owners of the Series 2012 Bonds.

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SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2012 BONDS

General

The Series 2012A Bonds are payable only out of the Trust Estate created under the Series 2012A Indenture. The Series 2012A Indenture creates a continuing pledge of and lien upon the Trust Estate to secure the full and final payment of the principal of, premium, if any, and interest on all of the Series 2012A Bonds. The Series 2012A Bonds do not constitute a debt, liability or loan of the credit of the Bank, the State or any political subdivision thereof under the constitution of the State or a pledge of the full faith and credit and taxing power or moral obligation of the Bank, the State or any political subdivision thereof other than the School District. The Bank has no taxing power. The School District Bond securing the Series 2012A Bonds is, however, a general obligation of the School District, secured by the full faith, credit and taxing power of the School District. The sources of payment of, and security for, the Series 2012A Bonds are more fully described below.

Under the Series 2012A Indenture, the Series 2012A Bonds are secured by a pledge to the Trustee of the School District Bond and all School District Bond Payments, as described herein. In addition, the Series 2012A Indenture pledges to the payment of the Series 2012A Bonds all proceeds of the Trust Estate, including without limitation all cash and securities held in the Funds and Accounts created by the Series 2012A Indenture, except for the Rebate Fund, together with investment earnings thereon and proceeds thereof (except to the extent transferred to the Rebate Fund or from such Funds and Accounts under the Series 2012A Indenture), and all other funds, accounts and moneys pledged by the Bank to the Trustee as security under the Series 2012A Indenture, to the extent of any such pledge.

The Series 2012B Bonds are payable only out of the Trust Estate created under the Series 2012B Indenture. The Series 2012B Indenture creates a continuing pledge of and lien upon the Trust Estate to secure the full and final payment of the principal of, premium, if any, and interest on all of the Series 2012B Bonds. The Series 2012B Bonds do not constitute a debt, liability or loan of the credit of the Bank, the State or any political subdivision thereof under the constitution of the State or a pledge of the full faith and credit and taxing power or moral obligation of the Bank, the State or any political subdivision thereof. The Bank has no taxing power. The School District Note securing the Series 2012B Bonds is however, secured by a limited three mill tax and certain “education enhancement funds” allocated by the State as further described herein.

The School District and the School District Indebtedness

From the proceeds of the Series 2012A Bonds, the Bank intends to purchase the School District Bond from the School District and, upon purchase, will pledge to the Trustee the School District Bond as described in APPENDIX C. From the proceeds of the Series 2012B Bonds, the Bank intends to purchase the School District Note from the School District and, upon purchase, will pledge to the Trustee the School District Note as described in APPENDIX C.

Provisions for Payment of the School District Indebtedness

School District Bond

The School District Bond securing the Series 2012A Bonds is a general obligation of the School District, secured by the full faith, credit and taxing power of the School District. The issuance of the School District Indebtedness has been authorized by resolutions adopted by the Board of Trustees of the Jackson Public School District (the “School Board”) on December 5, 2012, pursuant to the Act (the “School District Bond Resolution” and the “School District Note Resolution” and collectively “the School District Resolutions”).

In the School District Bond Resolution, the School District covenants to levy a direct, continuing special tax upon all of the taxable property within the geographical limits of the School District, adequate and sufficient, after allowance shall have been made for the expenses of collection and delinquencies in the payment of taxes, to produce sums required for the payment of the principal of, premium, if any, and the interest on the School District Bond, and any additional obligations of the School District under the School District Bond Resolution. Said tax shall be extended upon the tax rolls and collected in the same manner and at the same time as other taxes of the School District are collected, and the rate of tax which shall be so extended shall be sufficient in each year fully to produce the sums required as aforesaid, without limitation as to time, rate or amount; provided, however, that such

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tax levy for any year shall be abated pro tanto to the extent the School District on or prior to September 1 of that year has made other provisions for funds, to be applied toward the payment of the principal of, premium, if any, and interest on the School District Bond as the same shall mature and accrue in accordance with the provisions of the School District Bond Resolution. The avails of said tax are irrevocably pledged in the School District Bond Resolution for the payment of the principal of, premium, if any, and interest on the School District Bond as the same shall mature and accrue.

School District Note

In the School District Note Resolution, the School District provides that the School District Note shall be secured by and payable as to principal of, premium, if any, and interest (a) out of the avails of a direct and continuing tax, not to exceed three mills on the dollar for payment of the School District Note and, on a parity basis, all other outstanding evidences of indebtedness issued pursuant to Sections 37-59-101 et seq., Mississippi Code of 1972, as amended (currently outstanding in the principal amount of $20,060,000), to be levied annually by the City of Jackson, Mississippi upon all of the taxable property within the geographical limits of the School District, and (b) from the School District’s Educational Enhancement Funds (the “EEF Funds”) for buildings and buses received from the State pursuant to Section 37-61-33, Mississippi Code of 1972, as amended (the “EEF Act”); provided, however, any EEF Funds not required to pay principal of and interest on the School District Note may be used by the School District for any lawful purposes. The full faith and credit of the School District is not pledged to pay the principal of and interest on the School District Note. Unlike the Series 2012B Bonds, the School District’s $25,220,000 Limited Tax Refunding Notes, Series 2005 (currently outstanding in the principal amount of $20,060,000) are not legally secured by EEF Funds; however, the School District may (and does) use EEF Funds to pay the principal of, and interest on, the Series 2005 Notes.

Under the EEF Act, approximately sixteen million dollars ($16,000,000) of sales tax revenues is annually appropriated and distributed among all of the State school districts. The School District is awarded EEF Funds based on the proportion that its average daily attendance bears to the average daily attendance of all the school districts in the State. The School District’s EEF Funds can be used for a variety of purchases and can be pledged to pay debt service on certain School District debt; provided, however, that any EEF Funds not required to pay principal of and interest on the School District Note may be used by the School District for any lawful purposes. Once the School District pledges its EEF Funds to a certain debt, the annual amount of EEF Funds that the School District receives in the future cannot be reduced until the debt is no longer outstanding.

The following chart represents the EEF Funds received by the School District in each of the previous six years:

Year EEF Funds received

by the School District

2011 $960,629 2010 960,629 2009 960,629 2008 960,629 2007 960,629 2006 960,629

The School District Note is the only School District debt that is legally secured by its EEF Funds; however, it is expected that the School District will apply EEF Funds to pay debt service on the Series 2005 Notes. See: “APPENDIX A – “INFORMATION CONCERNING THE SCHOOL DISTRICT – Total Limited Tax Obligation Debt and Projected Debt Service Coverage,” herein.

See “APPENDIX A – INFORMATION CONCERNING THE SCHOOL DISTRICT – OTHER FINANCIAL INFORMATION; BUDGET AND SOURCES OF FUNDING -- State Funding” and “APPENDIX C – INFORMATION CONCERNING THE BANK INDENTURES, THE SCHOOL DISTRICT RESOLUTIONS AND THE SCHOOL DISTRICT INDEBTEDNESS” for further description of the School District Indebtedness.

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RISKS TO THE OWNERS OF THE SERIES 2012 BONDS

General

The Series 2012A Bonds will be payable solely from the payments to be made by the Bank under the Series 2012A Indenture. Pursuant to the Series 2012A Indenture, such payments are limited to School District Bond Payments payable by the School District on the School District Bond pursuant to the School District Bond Resolution. No reserve fund has been established for the payment of debt service on the Series 2012A Bonds or the School District Bond. Purchasers of the Series 2012A Bonds are advised of certain risk factors with respect to the School District Bond. The factors set forth below, among others, may affect the security for the Series 2012A Bond.

In addition, purchasers of the Series 2012A Bonds are advised of certain additional information in connection with the School District as set forth in APPENDIX A and APPENDIX B.

The Series 2012B Bonds will be payable solely from the payments to be made by the Bank under the Series 2012B Indenture. Pursuant to the Series 2012B Indenture, such payments are limited to School District Note Payments payable by the School District on the School District Note pursuant to the School District Note Resolution. No reserve fund has been established for the payment of debt service on the Series 2012B Bonds or the School District Note. Purchasers of the Series 2012B Bonds are advised of certain risk factors with respect to the School District Note. The factors set forth below, among others, may affect the security for the Series 2012B Bond.

In addition, purchasers of the Series 2012B Bonds are advised of certain additional information in connection with the School District as set forth in APPENDIX A and APPENDIX B.

School District Indebtedness

The ability of the Bank to pay the principal of, premium, if any, and interest on the Series 2012 Bonds depends upon the receipt by the Bank of School District Bond Payments and School District Note Payments from the School District which is obligated under the School District Resolutions to make such payments to the Bank. There is no Fund or Account established by the Series 2012A Indenture nor the Series 2012B Indenture which would be required to contain amounts to make up for any deficiencies in the event of one or more “defaults” by the School District in making either the School District Bond Payments and School District Note Payments, and there is no source from which the General Fund (as defined herein) will be replenished except from the School District Bond Payments and School District Note Payments and investment income on moneys in the Funds and Accounts.

Tax Covenants

The Bank has covenanted under the Indentures that it will comply with certain requirements under the Code (as defined herein) to ensure continuing exclusion from gross income for federal income tax purposes of interest on the Series 2012 Bonds. Failure by the Bank to comply with such covenants could cause the interest on the Series 2012 Bonds to be taxable retroactive to the date of issuance of the Series 2012 Bonds. Further, the School District has covenanted in the School District Resolutions that it will comply with certain requirements under the Code to ensure continuing exclusion from gross income for federal income tax purposes of interest on the Series 2012 Bonds. Failure by the School District to comply with such requirements could cause the interest on the Series 2012 Bonds to be taxable retroactive to the date of issuance of the Series 2012 Bonds. See also “TAX MATTERS” herein.

Ratings

Application has been made to Moody’s Investors Service, Inc. (“Moody's”) and Standard & Poor's Credit Market Services, a division of The McGraw Hill Companies, Inc. (“S&P”), for ratings. The School District is awaiting the outcome of Moody’s determination. No other ratings are being applied for by the School District or the Bank.

On May 23, 2012 Moody’s issued a report which downgraded the School District’s general obligation bonds (unlimited ad valorem tax backed) to Aa3 from Aa2, and downgraded the School District’s limited tax backed notes to A2 from A1. Subsequently Moody’s withdrew its Aa3 rating on the general obligation bonds and the A2

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rating on the limited tax backed notes. The Moody’s report cited as its rationale for the downgrade that the ratings were changed to reflect the School District’s below average wealth levels, declining population and high debt burden in addition to the School District’s narrow financial reserves. The Moody’s report cited as the reason for the withdrawal, “insufficient or otherwise inadequate information to support the maintenance of the rating.” See: http://www.moodys.com/research/Moodys-downgrades-Jackson-Public-School-District-MS-GOULT-rating-to--PR_246730. Moody’s will not be providing a rating on the Series 2012 Bonds.

It is the School District’s view that the Moody’s rating was withdrawn, in part, as a result of the recent transition between administrations within the School District and its failure to file the most recent financial information for the School District on the EMMA system. However, the School District has taken several steps to rectify this problem. Moreover, the School District intends to prevent the loss its credit rating in the future and has taken affirmative steps to ensure that its annual filings will be made on the EMMA system.

There is no assurance that the ratings assigned to the Series 2012 Bonds at the time of issuance (see “RATINGS” herein) will not be lowered or withdrawn at any time, the effect of which could adversely affect the market price for and marketability of the Series 2012 Bonds. If and when a Bondholder elects to sell a Series 2012 Bond prior to maturity, there is no assurance that a market will have been established, maintained and in existence for the purchase and sale of the Series 2012 Bonds, and there is no assurance as to the purchase price which a buyer would be willing to pay.

Remedies; Litigation; Bankruptcy

The remedies available to the Trustee, to the Bank or to the owners of the Series 2012 Bonds upon an event of default under the Indentures or under the terms of the School District Indebtedness purchased by the Bank are in many respects dependent upon judicial actions which are often subject to discretion and delay. Under existing constitutional and statutory law and judicial decisions, including specifically 11 U.S.C. Sections 101 et seq. (the “Bankruptcy Code”), the remedies provided in the Indentures and under the School District Indebtedness may not be readily available or may be limited.

The pledge of the full faith, credit and taxing power of the School District for payment of the School District Bond may be limited by a number of factors, including the ability to collect levied taxes. Under current law, such a pledge may be further limited by the following: (a) statutory liens; (b) rights arising in favor of the United States of America or any agency thereof; (c) prohibitions against assignment set forth in federal statutes; (d) constructive trusts, equitable liens or other rights which might be impressed or conferred by any state or federal court in the exercise of equitable jurisdiction; (e) the Bankruptcy Code affecting taxes and other revenues of the School District received within 90 days preceding and after any effectual institution of bankruptcy, liquidation or reorganization proceedings by or against the School District; (f) rights of third parties in revenues converted to cash and not in the possession of the Trustee; and (g) sales, liens and/or pledges made by the School District. If an event of default does occur, it is uncertain that the Trustee could successfully obtain an adequate remedy at law or in equity.

Furthermore, if a bankruptcy court concludes that the Trustee has “adequate protection,” it may enter orders affecting the security of the Trustee, including orders providing for the substitution, subordination and sale of the security of the Trustee. In addition, a reorganization plan may be adopted even though it has not been accepted by the Trustee if the Trustee is provided with the benefit of its original lien or the “indubitable equivalent.” Thus, in the event of the bankruptcy of the School District, the amount realized by the Trustee may depend on the bankruptcy court’s interpretation of “indubitable equivalent” and “adequate protection” under the then existing circumstances. The bankruptcy court may also have the power to invalidate certain provisions of the School District Resolutions and the School District Indebtedness or related documents that make bankruptcy and related proceedings by the School District an event of default thereunder. All of these events would adversely affect the payment of debt service on the Series 2012 Bonds.

Failure to Compel the Levy of Taxes on the School District

The School District Bond will be a general obligation of the School District payable as to principal, premium, if any, and interest out of and secured by an irrevocable pledge of the avails of a direct and continuing tax to be levied annually without limitation as to rate or amount upon the taxable property within the geographical limits

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of the School District. The School District Note is a limited obligation of the School District, secured in part by a limited tax not to exceed three mills on the dollar for payment of the School District Note and on a parity basis, with all other outstanding evidences of indebtedness also secured by such special tax. The School District will levy annually a special tax upon all taxable property within the geographical limits of the School District adequate and sufficient to provide for the payment of the principal of, premium, if any, and the interest on the Series 2012A Bonds as the same falls due and will levy a special tax up to the three mills on the dollar limit (as more particularly described herein) to pay the principal of, premium, if any and interest on the Series 2012B Bonds.

The qualified electors of the State voted in a general election held on November 7, 1995, to amend the Mississippi Constitution of 1890 (the “Constitution”) to add the following new Section 172A (the “Amendment”):

SECTION 172A. Neither the Supreme Court nor any inferior court of this state shall have the power to instruct or order the state or any political subdivision thereof, or an official of the state or any political subdivision, to levy or increase taxes.

The Amendment does not affect the underlying obligation to pay the principal of and interest on the School District Indebtedness as it matures and becomes due, nor does it affect the obligation to levy a tax sufficient to accomplish that purpose. However, even though it appears that the Amendment was not intended to affect remedies of a holder of the School District Indebtedness in the event of a payment default, it potentially prevents such holder from obtaining a writ of mandamus to compel the levying of taxes to pay the principal of and interest on the School District Indebtedness in a State court. It is not certain whether the Amendment would affect the right of a federal court to direct the levy of a tax to satisfy a contractual obligation. Other effective remedies are available to the holder of the School District Indebtedness in the event of a payment default with respect to the School District Indebtedness. For example, such holder can seek a writ of mandamus to compel the School District to use any legally available moneys to pay the debt service on the School District Indebtedness; and if such writ of mandamus is issued and public officials fail to comply with such writ, then such public officials may be held in contempt of court. In addition, pursuant to Section 175 of the Constitution, all public officials who are guilty of willful neglect of duty may be removed from office.

3 Mill Levy and EEF Funds are Limited Sources for Repayment of Series 2012B Bonds

The School District’s source of funds to pay the principal of, and interest on, the School District Note and the Bank’s ability to pay the principal of, and interest on, the related Series 2012B Bonds is limited to the avails of the 3 mill levy and EEF Funds. IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR EXAMINATION OF THE INFORMATION PRESENTED IN THIS OFFICIAL STATEMENT REGARDING THE SOURCES OF FUNDS FOR THE REPAYMENT OF THE SERIES 2012B BONDS AND INVESTORS SHOULD CONSIDER THE PROJECTED AVAILABILITY OF THOSE FUNDS FOR REPAYMENT OF SUCH BONDS.

The tax digest (for assessment years 2011- 2012) for the School District reflected a total assessed value of taxable property of $1,208,761,561. Assuming a $1.2 billion tax digest for the School District, the 3 mill levy would produce $3,600,000 annually. There is no assurance that the 3 mill levy will in the future produce this amount. EEF Funds have been approximately $960,000 in each of the past six (6) years.

Maximum annual debt service on the Series 2012B Bonds is $4,204,843.75. Combined projected maximum annual debt service on the Series 2012B Bonds and the Series 2005 Note is $4,276,473.13.

Combined maximum annual debt service coverage (based on current 3 mill levy and EEF Funds) on the Series 2012B Bonds and on the Series 2005 Note is 1.07x.

See APPENDIX A – “INFORMATION CONCERNING THE SCHOOL DISTRICT – Total Limited Tax Obligation Debt and Projected Debt Service Coverage” herein.

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DESCRIPTION OF THE SERIES 2012 BONDS

General Description

The Series 2012A Bonds are issuable under the Series 2012A Indenture as fully registered bonds. When issued, the Series 2012A Bonds will be registered in the name of and held by Cede & Co., as nominee for DTC. Purchases of beneficial interests from DTC in the Series 2012A Bonds will be made in book-entry-only form (without certificates) in the denomination of $5,000 or any integral multiple thereof. See “DESCRIPTION OF THE SERIES 2012 BONDS - Book-Entry-Only System” herein.

The Series 2012A Bonds will mature in the amounts and on the dates, and bear interest at the rates per annum, set forth on the cover page of this Official Statement. Interest on the Series 2012A Bonds shall be payable on April 1 and October 1 of each year, commencing April 1, 2013 (each, an “Interest Payment Date”). Interest will be calculated on the basis of a 360-day year consisting of 12 thirty-day months.

The Series 2012B Bonds are issuable under the Series 2012B Indenture as fully registered bonds. When issued, the Series 2012B Bonds will be registered in the name of and held by Cede & Co., as nominee for DTC. Purchases of beneficial interests from DTC in the Series 2012B Bonds will be made in book-entry-only form (without certificates) in the denomination of $5,000 or any integral multiple thereof. See “DESCRIPTION OF THE SERIES 2012 BONDS - Book-Entry-Only System” herein.

The Series 2012B Bonds will mature in the amounts and on the dates, and bear interest at the rates per annum, set forth on the cover page of this Official Statement. Interest on the Series 2012B Bonds shall be payable on April 1 and October 1 of each year, commencing April 1, 2013 (each, an “Interest Payment Date”). Interest will be calculated on the basis of a 360-day year consisting of 12 thirty-day months.

Each Series 2012 Bond will be dated the date of delivery thereof. If a Series 2012 Bond is authenticated on or prior to April 1, 2013, it shall bear interest from the initial date of delivery thereof. Each Series 2012 Bond authenticated after April 1, 2013, shall bear interest from the most recent Interest Payment Date to which interest has been paid as of the date of authentication of such Series 2012 Bond unless such Series 2012 Bond is authenticated after the fifteenth day of the calendar month preceding an Interest Payment Date (the “Record Date”) and on or prior to the next following Interest Payment Date, in which event the Series 2012 Bond will bear interest from such next succeeding Interest Payment Date.

The principal of the Series 2012 Bonds will be payable upon maturity or redemption at the corporate trust office of the Trustee in Jackson, Mississippi, and interest on the Series 2012 Bonds will be paid by check of the Trustee dated the due date and mailed or delivered on each Interest Payment Date to the Registered Owners of record as of the close of business on the most recent Record Date or, at the written election of the Registered Owner of $1,000,000 or more in aggregate principal amount of Series 2012 Bonds delivered to the Trustee at least one Business Day prior to the Record Date for which such election will be effective, by wire transfer to such Registered Owner or by such other method as is acceptable to the Trustee and the Registered Owner.

So long as DTC or its nominee is the Registered Owner of the Series 2012 Bonds, payments of the principal of, premium, if any, and interest on the Series 2012 Bonds will be made directly by the Trustee by wire transfer of funds to Cede & Co., as nominee for DTC. Disbursement of such payments to Direct Participants (as defined herein) will be the sole responsibility of DTC, and the ultimate disbursement of such payments to the Beneficial Owners of the Series 2012 Bonds will be the responsibility of the Direct Participants and the Indirect Participants (as defined below).

Book-Entry-Only System

The Bank has determined that it will be beneficial to have the Series 2012 Bonds held by a central depository system and to have transfers of the Series 2012 Bonds affected by book-entry on the books of DTC as such central depository system. Accordingly, Beneficial Ownership interests in the Series 2012 Bonds will be available in book-entry-only form, in the principal amount of $5,000 or integral multiples thereof. Purchasers of Beneficial Ownership interests in the Series 2012 Bonds (the “Beneficial Owners”) will not receive certificates representing their interests in the Series 2012 Bonds purchased.

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The information provided under this caption has been provided by DTC. No representation is made by the Bank, the School District or the Trustee as to the accuracy or adequacy of such information, or as to the absence of material adverse changes in such information subsequent to the date hereof.

DTC will act as securities depository for the Series 2012 Bonds. The Series 2012 Bonds will be initially issued as fully-registered bonds 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 bond certificate for each maturity will be issued for the Series 2012 Bonds in the aggregate principal amount of each maturity and will be deposited with DTC.

DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York, Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non–U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and, Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has an S&P 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 2012 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for such Series 2012 Bonds on DTC’s records. The ownership interest of each actual purchaser of each Series 2012 Bond (“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 2012 Bonds 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 2012 Bonds, except in the event that use of the book-entry system for the Series 2012 Bonds is discontinued.

To facilitate subsequent transfers, all Series 2012 Bonds 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 2012 Bonds with DTC and their registration in the name of Cede & Co. or such other nominee do not effect any change in Beneficial Ownership. DTC has no knowledge of the actual Beneficial Owners of the Series 2012 Bonds. DTC’s records reflect only the identity of the Direct Participants to whose accounts such Series 2012 Bonds 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.

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.

Redemption notices shall be sent to DTC. If less than all of the Series 2012 Bonds 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 Series 2012 Bonds to be redeemed.

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Neither DTC nor Cede & Co., (nor any other DTC nominee) will consent or vote with respect to the Series 2012 Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Trustee 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 the Series 2012 Bonds are credited on the Record Date (identified in a listing attached to the Omnibus Proxy).

Redemption proceeds, distributions, and dividend payments on the Series 2012 Bonds 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 Bank or the Trustee, on the 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, the School District or the Bank subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Bank, or 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 2012 Bonds at any time by giving reasonable notice to the Bank, the School District or the Trustee. Under such circumstances, in the event that a successor depository is not obtained, bond certificates are required to be printed and delivered.

The Bank may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, bond certificates are required to be printed and delivered to DTC.

THE BANK, THE TRUSTEE, THE SCHOOL DISTRICT AND THE UNDERWRITERS CANNOT AND DO NOT GIVE ANY ASSURANCES THAT THE DIRECT PARTICIPANTS OR THE INDIRECT PARTICIPANTS WILL DISTRIBUTE TO THE BENEFICIAL OWNERS OF THE SERIES 2012 BONDS (a) PAYMENTS OF PRINCIPAL OF OR INTEREST AND PREMIUM, IF ANY, ON THE SERIES 2012 BONDS; (b) CERTIFICATES REPRESENTING AN OWNERSHIP INTEREST OR OTHER CONFIRMATION OF BENEFICIAL OWNERSHIP INTERESTS IN THE SERIES 2012 BONDS; OR (c) REDEMPTION OR OTHER NOTICES SENT TO DTC OR CEDE & CO., ITS NOMINEE, AS THE REGISTERED OWNERS OF THE SERIES 2012 BONDS, OR THAT THEY WILL DO SO ON A TIMELY BASIS OR THAT DTC OR DIRECT OR INDIRECT PARTICIPANTS WILL SERVE AND ACT IN THE MANNER DESCRIBED IN THIS OFFICIAL STATEMENT. THE CURRENT “RULES” APPLICABLE TO DTC ARE ON FILE WITH THE SECURITIES AND EXCHANGE COMMISSION AND THE CURRENT “PROCEDURES” OF DTC TO BE FOLLOWED IN DEALING WITH DTC PARTICIPANTS ARE ON FILE WITH DTC.

NEITHER THE BANK, THE SCHOOL DISTRICT, THE TRUSTEE NOR THE UNDERWRITERS WILL HAVE ANY RESPONSIBILITY OR OBLIGATIONS TO SUCH DTC PARTICIPANTS OR THE BENEFICIAL OWNERS WITH RESPECT TO (a) THE SERIES 2012 BONDS; (b) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC OR ANY DTC PARTICIPANT; (c) THE PAYMENT BY ANY DTC PARTICIPANT OF ANY AMOUNT DUE TO ANY BENEFICIAL OWNER IN RESPECT OF THE PRINCIPAL AMOUNT OF OR INTEREST OR PREMIUM, IF ANY, ON THE SERIES 2012 BONDS; (d) THE DELIVERY BY ANY DTC PARTICIPANT OF ANY NOTICE TO ANY BENEFICIAL OWNER WHICH IS REQUIRED OR PERMITTED UNDER THE TERMS OF THE INDENTURES TO BE GIVEN TO BONDHOLDERS; (e) THE SELECTION OF THE BENEFICIAL OWNERS TO RECEIVE PAYMENT IN THE EVENT OF ANY PARTIAL REDEMPTION OF THE SERIES 2012 BONDS; OR (f) ANY CONSENT GIVEN OR OTHER ACTION TAKEN BY DTC AS BONDHOLDER.

So long as Cede & Co. is the registered holder of the Series 2012 Bonds as nominee of DTC, references herein to the Holders or holders, or registered owners of the Series 2012 Bonds means Cede & Co. and not the Beneficial Owners of the Series 2012 Bonds.

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Redemption and Redemption Prices and Terms for the Series 2012 Bonds

If the School District directs the Bank to redeem the Series 2012 Bonds pursuant to the provisions of Section 8 of each of the School District Resolutions, the Bank agrees to accept redemption and redeem the Series 2012 Bonds in the following instances:

Optional Redemption. The Series 2012A Bonds (or any portions thereof in integral multiples of $5,000 each) which mature on April 1, 2028 are subject to optional redemption prior to their stated date of maturity in whole or in part, in principal amounts and maturities as selected by the Bank on any date on or after April 1, 2023, at par, plus accrued interest to the date of redemption thereof. Selection of the Series 2012A Bonds to be redeemed within a maturity will be made by lot by the Trustee. The Series 2012B Bonds are not subject to optional redemption.

Mandatory Sinking Fund Redemption. The Series 2012A Bonds maturing on April 1, 2028 are term bonds subject to mandatory sinking fund redemption prior to their scheduled maturity on April 1 of the years listed below at a redemption price of 100% of the principal amount redeemed plus accrued interest to the redemption date from amounts on deposit in the General Account of the General Fund under the Series 2012A Indenture in accordance with the following schedule:

April 1, Year Principal Amount

2019 $1,370,000 2020 1,440,000 2021 1,510,000 2022 1,585,000 2023 1,665,000 2024 1,745,000 2025 1,835,000 2026 1,925,000 2027 2,025,000 2028* 2,125,000

*Final Maturity.

The Series 2012B Bonds maturing on October 1, 2023 with a stated coupon rate of 5.000% are term bonds subject to mandatory sinking fund redemption prior to their scheduled maturity on October 1 of the years listed below at a redemption price of 100% of the principal amount redeemed plus accrued interest to the redemption date from amounts on deposit in the General Account of the General Fund under the Series 2012B Indenture in accordance with the following schedule:

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October 1, Year Principal Amount

2015 $ 85,000 2016 400,000 2017 400,000 2018 420,000 2019 420,000 2020 440,000 2021 2,500,000 2022 2,610,000 2023* 2,725,000

*Final Maturity.

The Series 2012B Bonds maturing on October 1, 2023 and with a stated coupon rate of 3.125% are term bonds subject to mandatory sinking fund redemption prior to their scheduled maturity on October 1 of the years listed below at a redemption price of 100% of the principal amount redeemed plus accrued interest to the redemption date from amounts on deposit in the General Account of the General Fund under the Series 2012B Indenture in accordance with the following schedule:

October 1, Year Principal Amount

2015 $ 55,000 2016 205,000 2017 205,000 2018 215,000 2019 215,000 2020 220,000 2021 1,270,000 2022 1,325,000 2023* 1,390,000

*Final Maturity.

Notice of Redemption. Notice of the call for any redemption, identifying the Series 2012 Bonds to be redeemed (which may be a conditional notice of redemption), will be given by the Trustee at least 30 days but not more than 45 days prior to the date fixed for redemption by mailing a copy of the redemption notice by registered or certified mail to the Registered Owner of each Series 2012 Bond to be redeemed at the address shown on the registration records of the Bank. Failure to mail such notice to any particular owner of Series 2012 Bonds, or any defect in the notice mailed to any such owner of Series 2012 Bonds, will not affect the validity of the call for the redemption of any other Series 2012 Bonds.

Redemption Payments. The Trustee is authorized and directed under the Indentures to apply funds deposited with the Trustee by the Bank in an amount sufficient to pay the Redemption Price of the Series 2012 Bonds or portions thereof called, together with accrued interest thereon to the redemption date. If proper notice of redemption by mailing has been given as provided in the Indentures and sufficient funds for redemption shall be on deposit with the Trustee as aforesaid, interest on the Series 2012 Bonds or portions thereof thus called shall no longer accrue after the date fixed for redemption. No payment shall be made by the Trustee upon any Series 2012 Bonds or portion thereof called for redemption until such Series 2012 Bonds or portion thereof shall have been delivered for payment or cancellation or the Trustee shall have received the items required by the Indenture with respect to any mutilated, lost, stolen or destroyed Series 2012 Bonds.

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APPLICATION OF THE PROCEEDS OF THE SERIES 2012 BONDS

Estimated Sources of Funds Series 2012A Bonds Series 2012B Bonds

Par Amount $21,065,000.00 $15,100,000.00

Net Original Issue Discount/Premium 2,547,622.85 1,390,835.00

Total Sources of Funds $23,612,622.85 $16,490,835.00

Estimated Uses of Funds

For deposit to the Purchase Account for the purchase of the School District Indebtedness $23,183,133.89 $16,186,667.30

For deposit in the Bond Issuance Expense Account for payment of the Costs of Issuance* 429,488.96 304,167.70

Total Uses of Funds $23,612,622.85 $16,490,835.00

* Includes payments for Costs of Issuance, which include but are not limited to, legal fees and expenses, financial advisory fees and expenses, rating agency fees and the Underwriters’ Discount. The Underwriters’ Discount will be retained by the Underwriter from the proceeds of the Series 2012 Bonds.

DEBT SERVICE REQUIREMENTS FOR THE SERIES 2012 BONDS

The following table sets forth the principal and interest requirements on the Series 2012A Bonds:

Fiscal Year Ending June 30 Principal Interest1

Total Debt Service on the Series 2012A

Bonds

2013 $ $ 222,352.77 $ 222,352.77 2014 1,053,250.00 1,053,250.00 2015 1,050,000 1,053,250.00 2,103,250.00 2016 1,115,000 1,000,750.00 2,115,750.00 2017 1,185,000 945,000.00 2,130,000.00 2018 490,000 885,750.00 1,375,750.00 2019 1,370,000 861,250.00 2,231,250.00 2020 1,440,000 792,750.00 2,232,750.00 2021 1,510,000 720,750.00 2,230,750.00 2022 1,585,000 645,250.00 2,230,250.00 2023 1,665,000 566,000.00 2,231,000.00 2024 1,745,000 482,750.00 2,227,750.00 2025 1,835,000 395,500.00 2,230,500.00 2026 1,925,000 303,750.00 2,228,750.00 2027 2,025,000 207,500.00 2, 232,500.00 2028 2,125,000 106,250.00 2,231,250.00

TOTAL $21,065,000 $10,242,102.77 $31,307,102.77 __________________________________

1 Calculated based on interest rates set forth on the inside cover page hereof.

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The following table sets forth the principal and interest requirements on the Series 2012B Bonds:

Fiscal Year Ending June 30 Principal Interest1

Total Debt Service on the Series 2012B

Bonds

2013 $ $ 139,201.39 $ 139,201.39 2014 659,375.00 659,375.00 2015 659,375.00 659,375.00 2016 140,000 656,390.63 796,390.63 2017 605,000 640,203.13 1,245,203.13 2018 605,000 613,796.88 1,218,796.88 2019 635,000 586,734.38 1,221,734.38 2020 635,000 559,015.63 1,194,015.63 2021 660,000 530,718.76 1,190,718.76 2022 3,770,000 433,937.51 4,203,937.51 2023 3,935,000 265,640.63 4,200,640.63 2024 4,115,000 89,843.75 4,204,843.75

TOTAL $15,100,000 $5,834,232.69 $20,934,232.69 1 Calculated based on interest rates set forth on the inside cover page hereof.

THE MISSISSIPPI DEVELOPMENT BANK

General

The Bank was created in 1986 and is organized and existing under and by virtue of the Bank Act as a separate body corporate and politic of the State for the public purposes set forth in the Bank Act. The Bank is an independent public body created solely to accomplish the purposes of the State as contained in the Bank Act and has no taxing power.

The purpose of the Bank is to foster and promote, in accordance with the Bank Act, the provision of adequate markets and facilities for the borrowing of funds for public purposes and purposes of (a) any county, municipality, utility district, regional solid waste authority, county cooperative service district or political subdivision of the State, (b) the State, or any agency thereof, (c) the institutions of higher learning of the State, (d) any education building corporation established for institutions of higher learning, or (e) any other governmental unit created under State law, including the School District.

THE FULL FAITH AND CREDIT AND TAXING POWER OF THE STATE ARE NOT PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, AND INTEREST ON ANY OF THE SERIES 2012 BONDS, AND THE SERIES 2012 BONDS ARE NOT A DEBT, LIABILITY, LOAN OF THE CREDIT, MORAL OBLIGATION OR PLEDGE OF THE FULL FAITH AND CREDIT AND TAXING POWER OF THE STATE. THE BANK DOES NOT HAVE TAXING POWERS.

Under the Bank Act, the Bank is granted the power to borrow money and issue its bonds in such principal amounts as it shall deem necessary to provide funds to accomplish a public purpose or purposes of the State provided for under the Bank Act, including the purchasing of securities of local governmental units (as defined in the Bank Act) and the making of loans to such local governmental units.

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Organization and Membership of the Bank

The Bank is governed by a nine (9) member Board of Directors (the “Board of Directors”). The members of the Board of Directors are elected by the members of the Mississippi Business Finance Corporation (the “MBFC”) at the time and place fixed by the MBFC’s by-laws. Appointments are for terms of one year. Members of the Board of Directors serve until they are replaced or re-appointed. The members of the Board of Directors as of the date of this Official Statement are as follows:

NAME OCCUPATION TERM

Mack H. Brewer Retired Finance Manager McComb, Mississippi

07/1/12 – 6/30/13

N. L. Carson Owner, Carson Construction Company Carthage, Mississippi

07/1/12 – 6/30/13

Richard Devoe Certified Public Accountant Oxford, Mississippi

07/1/12 – 6/30/13

William L. Freeman, Jr. Adjutant General, State of MS Jackson, Mississippi

07/1/12 – 6/30/13

Kim Dillon President/CEO, TeleSouth Communications, Inc.

Jackson, Mississippi

07/1/12 – 6/30/13

Gary Harkins Businessman Brandon, Mississippi

07/1/12 – 6/30/13

Joel Horton Banker Vicksburg, Mississippi

07/1/12 – 6/30/13

Harold Lewis Businessman Philadelphia, Mississippi

07/1/12 – 6/30/13

William D. Sones Bank President & CEO Brookhaven, Mississippi

07/1/12 – 6/30/13

The operations of the Bank are administered by William T. Barry, Executive Director. Mr. Barry is a 1972

graduate of the University of Mississippi with a degree in Business.

Prior Bonds of Bank

The Bank has previously issued bonds for various purposes totaling in principal approximately $6,085,747,402. Of such amount, approximately $3,139,250,089.77 was outstanding as of December 1, 2012.

The Bank expects to issue additional special obligation bonds in the future for other purposes authorized under the Bank Act.

The faith, credit and taxing power of the State and the Bank are not pledged to the payment of the principal of, redemption premium, if any, and interest on any of the bonds issued or planned for issuance by the Bank and all such bonds are not a debt, liability, loan of the credit or pledge of the faith and credit of the State or the Bank.

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PURCHASE OF THE SCHOOL DISTRICT INDEBTEDNESS

General

The Bank has determined to purchase the School District Indebtedness from the proceeds received upon the issuance of the Series 2012 Bonds. Upon the execution by the School District of the Bond Purchase Agreement with the Bank prior to or as of the date of the approval of the sale of the Series 2012 Bonds, the School District will be obligated to sell the School District Indebtedness to the Bank in accordance with the requirements of the Act and in accordance with the Bond Purchase Agreement.

The Bank Act provides that the School District Indebtedness purchased by the Bank, upon delivery to the Bank, must be accompanied by all documentation required by the Board of Directors of the Bank, including the approving opinions of Co-Bond Counsel. The Bank will be prepared to cause the purchase price of the School District Indebtedness to be paid to the School District promptly after the receipt of such proceeds by the Bank. Under the Indentures, any purchase of the School District Indebtedness is subject to the receipt by the Trustee of certain documents and opinions as described in each Indenture.

Refunding Project

Series 2012A Bonds. Simultaneously with the delivery of the Series 2012A Bonds, a portion of the proceeds of the Series 2012A Bonds will be used to purchase the School District Bond. The proceeds received by the School District from the purchase by the Bank of the School District Bond shall constitute sufficient funds for the advance refunding, defeasance and/or restructuring of the principal of, and accrued interest on, all outstanding Custodial Receipts and certain maturities of the 2007 Bonds, the 2008 Bank Bonds (and a corresponding portion of the 2008 District Bond) and interest through October 1, 2013 on certain specified maturities of the 2007 Bonds and the 2008 Bank Bonds (together “the 2012A Refunded Indebtedness”).

The outstanding Custodial Receipts being refunded by the Series 2012A Bonds are shown in the table below:

Refunded Custodial Receipts

Maturity Principal Amount

Refunded Coupon Redemption

Date Redemption

Price

7/15/2015† $2,480,000.00 4.750% 1/15/2013 100.000 7/15/2016 1,015,000.00 5.300 1/15/2013 100.000 7/15/2017 1,025,000.00 5.400 1/15/2013 100.000

†$2,685,000 less 10/1/2012 sinking fund amount of $205,000.

The specific maturities and aggregate amount of principal and accrued interest on the 2007 Bonds and 2008 Bank Bonds to be refunded by the Series 2012A Bonds are identified in the charts below:

Refunded 2007 Bonds Par Amount

Maturity Refunded Coupon

4/1/2013 $1,440,000.00 4.250% 4/1/2014 1,440,000.00 4.250

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Refunded 2008 Bank Bonds Par Amount

Maturity Refunded Coupon

4/1/2013 $4,515,000.00 5.250% 4/1/2014 4,775,000.00 5.250

The Series 2012A Bonds will also refund the interest due through October 1, 2013 on the 2007 Bonds maturing in the years 2015 through 2027 and on the 2008 Bank Bonds maturing in the years 2015 through 2028.

Series 2012B Bonds. Simultaneously with the delivery of the Series 2012B Bonds, a portion of the proceeds of the Series 2012B Bonds will be used to purchase the School District Note. The proceeds received by the School District from the purchase by the Bank of the School District Note shall constitute sufficient funds for the refunding, defeasance and/or restructuring of the all outstanding 2003 Notes. The refunded 2003 Notes are shown in the table below.

Refunded 2003 Notes

Maturity Par Amount

Refunded Coupon Redemption

Date Redemption

Price

10/1/2013 $1,185,000.00 3.750% 10/1/2013 100.000 10/1/2014 1,230,000.00 3.850 10/1/2013 100.000 10/1/2015†† 728,351.80 4.600 10/1/2013 100.000 10/1/2016†† 684,462.50 4.700 10/1/2013 100.000 10/1/2017†† 624,798.60 4.850 10/1/2013 100.000 10/1/2018†† 585,047.75 5.000 10/1/2013 100.000 10/1/2019†† 532,742.95 5.125 10/1/2013 100.000 10/1/2020†† 496,092.30 5.250 10/1/2013 100.000 10/1/2021†† 1,628,764.70 5.350 10/1/2013 100.000 10/1/2022†† 1,516,743.50 5.450 10/1/2013 100.000 10/1/2023†† 1,409,684.20 5.550 10/1/2013 100.000

††Capital Appreciation Bonds

In order to effect the refunding, defeasance and/or restructuring of the 2012A Refunded Indebtedness in accordance with the Series 2012A Indenture and the School District Bond Resolution, a portion of the proceeds of the Series 2012A Bonds will be deposited in an irrevocable trust fund (the “2012A Escrow Account”) to be created pursuant to an escrow trust agreement to be dated as of the date of delivery thereof (the “2012A Escrow Agreement”) among the Bank, the School District and Trustmark National Bank, Jackson, Mississippi, as escrow trustee thereunder (the “Escrow Trustee”).

In order to effect the refunding, defeasance and/or restructuring of the 2003 Notes in accordance with the Series 2012B Indenture and the School District Note Resolution, a portion of the proceeds of the Series 2012B Bonds will be deposited in an irrevocable trust fund (the “2012B Escrow Account” and together with the 2012A Escrow Account, the “Escrow Accounts”) to be created pursuant to an escrow trust agreement to be dated as of the date of delivery thereof (the “2012B Escrow Agreement”) among the Bank, the School District and Trustmark National Bank, Jackson, Mississippi, as escrow trustee thereunder.

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The Escrow Trustee shall invest moneys on deposit in the Escrow Accounts in direct obligations of or obligations unconditionally guaranteed by the United States of America (the “Investment Securities”). The calculation of the adequacy of the maturing principal and interest payments from the Investment Securities to pay the principal of and interest on the 2012A Refunded Indebtedness and the 2003 Note when due will be verified by The Arbitrage Group (see “VERIFICATION OF ARITHMETICAL AND MATHEMATICAL COMPUTATIONS,” herein). Neither the principal of nor the interest on the Investment Securities will be available for payment of the Series 2012 Bonds.

FUNDS AND ACCOUNTS

Creation of Funds and Accounts

The Series 2012A Indenture and the Series 2012B Indenture each establish the following special Funds and Accounts to be held by the Trustee:

1. General Fund - comprised of the following:

(a) General Account (with respect to the Series 2012A Bonds),

(b) General Account (with respect to the Series 2012B Bonds),

(c) Redemption Account (with respect to the Series 2012A Bonds),

(d) Redemption Account (with respect to the Series 2012B Bonds),

(e) Purchase Account (with respect to the Series 2012A Bonds),

(f) Purchase Account (with respect to the Series 2012B Bonds),

(g) Bond Issuance Expense Account (with respect to the Series 2012A Bonds), and

(h) Bond Issuance Expense Account (with respect to the Series 2012B Bonds).

2. Rebate Funds (for the Series 2012A Bonds and the Series 2012B Bonds).

Deposit of Net Proceeds of the Series 2012 Bonds and Other Receipts

The Trustee will deposit the net proceeds from the sale of the Series 2012A Bonds as follows:

(a) To the Bond Issuance Expense Account (with respect to the Series 2012A Bonds), the amount of $250,436.46 (which does not include the Underwriters’ discount of $179,052.50) to pay the Costs of Issuance of the Series 2012A Bonds and the School District Bond; and

(b) To the Purchase Account (with respect to the Series 2012A Bonds), the sum of $23,183,133.89 to be used to purchase the School District Bond as more particularly described in the Series 2012A Indenture.

The Trustee will deposit the net proceeds from the sale of the Series 2012B Bonds as follows:

(x) To the Bond Issuance Expense Account (with respect to the Series 2012B Bonds), the amount of $175,817.70 (which does not include the Underwriters’ discount of $128,350.00) to pay the Costs of Issuance of the Series 2012B Bonds and the School District Note; and

(y) To the Purchase Account (with respect to the Series 2012B Bonds), the sum of $16,186,667.30 to be used to purchase the School District Note as more particularly described in the Series 2012B Indenture.

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OPERATION OF FUNDS AND ACCOUNTS

General Accounts

General Account. The Trustee will deposit into the respective General Account all amounts received for payment of principal and interest on the Series 2012 Bonds and required to be deposited therein pursuant to the provisions of the Indentures.

The Trustee will invest funds in the respective General Account in accordance with the Indentures and will make the following payments from the respective General Account on the specified dates and, if there are not sufficient funds to make all the payments required, with the following order of priority:

(a) On or before each Interest Payment Date, to the Registered Owners such amount (including Investment Securities held by the Trustee maturing or callable on or before the applicable Interest Payment Date) as will be necessary to pay the principal and interest coming due on the Series 2012 Bonds on such Interest Payment Date.

(b) At such times as will be necessary, to pay Program Expenses.

(c) On or before 30 days after each anniversary of the issuance of the Series 2012 Bonds, the amounts, if any, to be transferred to the respective Rebate Fund as provided in the respective Arbitrage Rebate Agreement.

(d) After making such payments in paragraphs (a) through (c) above, the Trustee will make a determination of the amounts reasonably expected to be received in the form of cash in the succeeding 12 months and will transfer all moneys in the respective General Account which, together with such expected receipts for the succeeding 12 months are in excess of the amounts needed to pay principal and interest on the Series 2012 Bonds within the immediately succeeding twelve-month period, to the School District at the request of the School District with the prior written approval of the Bank.

Redemption Accounts

The Trustee will deposit in the respective Redemption Account all monies received upon the sale or redemption prior to maturity of the School District Indebtedness and all other monies required to be deposited therein pursuant to the provisions of the Indentures, will invest such funds pursuant to the terms and provisions of the Indentures and will disburse the funds held in the Redemption Accounts to redeem the applicable Series 2012 Bonds. Such redemption will be made pursuant to a redemption under the provisions of the Indentures. The Trustee will pay the interest accrued on the Series 2012 Bonds so redeemed to the date of redemption from the applicable General Account and the Redemption Price from the applicable Redemption Account.

Purchase Accounts

Upon submission of duly authorized written requisitions of an Authorized Officer of the Bank stating that all requirements for purchase under the Indentures have been or will be met, the Trustee will disburse the amounts held in the applicable Purchase Account for the purchase of the School District Indebtedness.

Any amounts remaining in the respective Purchase Account after the purchase of the School District Indebtedness shall be transferred to the applicable General Account.

Bond Issuance Expense Accounts

Upon the Trustee’s receipt of invoices or requisitions acceptable to the School District and the Bank, the Trustee will disburse the amounts held in the respective Bond Issuance Expense Account for the payment of Costs of Issuance. On the date which is 60 days after the date of issuance of the Series 2012 Bonds, any amounts remaining in the respective Bond Issuance Expense Account will be transferred to the applicable General Account.

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Rebate Fund

The Trustee will establish and maintain, so long as any Series 2012 Bonds are outstanding and are subject to a requirement that arbitrage profits be rebated to the United States of America, a separate Rebate Fund (for each of the Series 2012A Bonds and the Series 2012B Bonds) and shall make deposits and disbursements from the respective Rebate Funds in accordance with the respective Arbitrage Rebate Agreement and the Indentures.

Not later than sixty (60) days following January 15, 2018, the Trustee shall, upon written request of the Bank in accordance with the respective Arbitrage Rebate Agreement, pay to the United States of America one hundred percent (100%) of the amount required to be on deposit in the respective Rebate Fund as of such payment date provided that direction from the Bank for transfer of such amount to the respective Rebate Fund has been previously received by the Trustee pursuant to the Indentures, and further provided that funds were available in the respective General Account to fund one hundred percent (100%) of the amount required to be on deposit in the respective Rebate Fund as of such payment date.

Moneys to be Held in Trust

All moneys required to be deposited with or paid to the Trustee for the account of any Fund or Account established under any provision of the Indentures will be held by the Trustee in trust and applied in accordance with the provisions of the Indentures, except for moneys held pursuant to any Rebate Fund and any Accounts created thereunder and will, while held by the Trustee, constitute part of the Trust Estate and be subject to the security interest created under the Indentures and will not be subject to any lien or attachment by any creditor of the Bank.

Amounts Remaining in Funds or Accounts

Any amounts remaining in any Fund or Account after full payment of the Series 2012 Bonds and the fees, charges (including any required rebate to the United States of America) and expenses of the Trustee and all other amounts due and owing under the Indentures will be distributed to the School District, except for any moneys owing to the Bank, which will be paid to such party, and except as otherwise provided in the Indentures.

THE SERIES 2012 BONDS AS LEGAL INVESTMENTS

The Series 2012 Bonds are legal investments in which all public officers and public bodies of the State, its political subdivisions, all municipalities and municipal subdivisions, all insurance companies and associations, trust companies, savings banks and savings associations, investment companies and other persons carrying on a banking business, all administrators, guardians, executors, trustees and other fiduciaries, and all other persons may invest. The Series 2012 Bonds may properly and legally be deposited with and received by all public officers and bodies of the State or any agency or political subdivisions of the State and all municipalities and public corporations for any purpose for which the deposit of bonds or other obligations of the State is now or may hereafter be authorized by law.

LITIGATION

There is not now pending or, to the Bank’s knowledge, threatened any litigation restraining or enjoining the issuance, sale, execution or delivery of the Series 2012 Bonds or prohibiting the Bank from purchasing the School District Indebtedness with the proceeds of the Series 2012 Bonds or in any way contesting or affecting the validity of the Series 2012 Bonds, any proceedings of the Bank taken with respect to the issuance or sale thereof or the pledge or application of any moneys or security provided for the payment of the Series 2012 Bonds. The creation, organization or existence of the Bank or the title of any of the present directors or other officers of the Bank to their respective offices is not being contested.

There is not now pending or, to the knowledge of the School District, threatened any litigation restraining or enjoining the issuance, sale, execution or delivery of the School District Indebtedness or prohibiting the School District from selling the School District Indebtedness to the Bank or in any way contesting or affecting the validity of the School District Indebtedness, any proceedings of the School District taken with respect to the issuance or sale thereof or the pledge or application of any moneys or security provided for the payment of the School District Indebtedness.

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TAX MATTERS

Opinion of Co-Bond Counsel

In the opinion of Baker, Donelson, Bearman, Caldwell & Berkowitz, PC, Jackson, Mississippi, and Betty A. Mallett, PLLC, Jackson, Mississippi, Co-Bond Counsel, interest on the Series 2012 Bonds is excludable from gross income for federal income tax purposes, pursuant to Section 103 of the Code. The opinions of Co-Bond Counsel are based on certain certifications, covenants and representations of the Bank and the School District and are conditioned on continuing compliance therewith.

In the opinion of Co-Bond Counsel, interest on the Series 2012 Bonds is exempt from income taxation in the State of Mississippi under existing laws, regulations, rulings and judicial decisions. The opinions address only the exemption of interest on the Series 2012 Bonds under the income tax laws of the State of Mississippi and do not address the tax treatment of the Series 2012 Bonds in any other state or jurisdiction.

The Code imposes certain requirements which must be met subsequent to the issuance of the Series 2012 Bonds as a condition to the exclusion from gross income of interest on the Series 2012 Bonds for federal tax purposes. Non-compliance with such requirements may cause interest on the Series 2012 Bonds to be included in gross income for federal income tax purposes retroactive to its date of issue irrespective of the date on which such noncompliance occurs. Should the Series 2012 Bonds bear interest that is not excludable from gross income for federal income tax purposes, the market value of the Series 2012 Bonds would be materially and adversely affected.

The Indentures and the School District Resolutions include covenants that (a) the Bank and the School District will not take or fail to take any action with respect to the Series 2012 Bonds if such action or omission would result in the loss of the exclusion from gross income for federal income tax purposes of interest on the Series 2012 Bonds, under Section 103 of the Code, and neither the Bank nor the School District will act in any other manner which would adversely affect such exclusion; (b) the Bank and the School District will not make any investment or do any other act or thing during the period that the Series 2012 Bonds are outstanding which would cause the Series 2012 Bonds to be “arbitrage bonds” within the meaning of Section 148 of the Code; and (c) if required by the Code, the Bank and the School District will rebate any necessary amounts to the United States of America. It is not an Event of Default under the Indentures if interest on the Series 2012 Bonds becomes includable in gross income for federal tax purposes due to a change in law or interpretation of law after the date of issuance of the Series 2012 Bonds.

The interest on the Series 2012 Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes. However, interest on the Series 2012 Bonds is included in adjusted current earnings in calculating corporate alternative minimum taxable income for purposes of the corporate alternative minimum tax.

Although Co-Bond Counsel have rendered their opinions that interest on the Series 2012 Bonds is excluded from federal gross income and that the Series 2012 Bonds are exempt from State income tax, the accrual or receipt of interest on the Series 2012 Bonds may otherwise affect a bondholder’s federal income tax or state tax liability. The nature and extent of these other tax consequences will depend upon the bondholder’s particular tax status and a bondholder’s other items of income or deduction. Taxpayers who may be affected by such other tax consequences include, without limitation, financial institutions, certain insurance companies, S corporations, certain foreign corporations, individual recipients of Social Security or railroad retirement benefits and taxpayers who may be deemed to have incurred (or continued) indebtedness to purchase or carry the Series 2012 Bonds. Co-Bond Counsel express no opinion regarding any other such tax consequences. Prospective purchasers of the Series 2012 Bonds should consult their own tax advisors with regard to the other tax consequences of owning the Series 2012 Bonds.

Future legislative proposals, if enacted into law, clarification of the Code or court decisions may cause interest on the Series 2012 Bonds to be subject, directly or indirectly, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent Registered Owners from realizing the full current benefit of the tax status of such interest. The introduction or enactment of any such future legislative proposals, clarification of the Code or court decisions may also affect the market price for, or marketability of, the Series 2012 Bonds. Prospective purchasers of the Series 2012 Bonds should consult their own tax advisors regarding any

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pending or proposed federal or state tax legislation, regulations or litigation, as to which Co-Bond Counsel express no opinion.

Treatment of Original Issue Premium for Series 2012A Bonds

The initial public offering prices of each maturity of the Series 2012A Bonds maturing in the years 2015 through and including 2028 (the “Premium Bonds”) are more than the amounts payable at the maturity dates thereof as set forth on the inside front cover of this Official Statement. Under the Code, the difference between the principal amount of a Premium Bond and the cost basis of such Premium Bond to its owner (other than an owner who holds such a Premium Bond as inventory, stock in trade or for sale to customers in the ordinary course of business) is “bond premium.” Bond premium is amortized over the term of such a Premium Bond for federal income tax purposes. The owner of a Premium Bond is required to decrease his basis in such Premium Bond by the amount of amortizable bond premium attributable to each taxable year he holds the Premium Bond. The amount of the amortizable bond premium attributable to each taxable year is determined on an actuarial basis at a constant interest rate compounded on each interest payment date. The amortizable bond premium attributable to a taxable year is not deductible for federal income tax purposes. Owners of Premium Bonds should consult their own tax advisors with respect to the precise determination for federal income tax purposes of the treatment of bond premium upon sale, redemption or other disposition of Premium Bonds and with respect to state and local tax consequences of owning and disposing of Premium Bonds.

Treatment of Original Issue Premium for Series 2012B Bonds

The initial public offering prices of the Series 2012B Bonds maturing in 2023 with a stated coupon rate of 5.000% (the “Premium Bonds”) are more than the amounts payable at the maturity dates thereof as set forth on the inside front cover of this Official Statement. Under the Code, the difference between the principal amount of a Premium Bond and the cost basis of such Premium Bond to its owner (other than an owner who holds such a Premium Bond as inventory, stock in trade or for sale to customers in the ordinary course of business) is “bond premium.” Bond premium is amortized over the term of such a Premium Bond for federal income tax purposes. The owner of a Premium Bond is required to decrease his basis in such Premium Bond by the amount of amortizable bond premium attributable to each taxable year he holds the Premium Bond. The amount of the amortizable bond premium attributable to each taxable year is determined on an actuarial basis at a constant interest rate compounded on each interest payment date. The amortizable bond premium attributable to a taxable year is not deductible for federal income tax purposes. Owners of Premium Bonds should consult their own tax advisors with respect to the precise determination for federal income tax purposes of the treatment of bond premium upon sale, redemption or other disposition of Premium Bonds and with respect to state and local tax consequences of owning and disposing of Premium Bonds.

Treatment of Original Issue Discount for Series 2012B Bonds

The Series 2012B Bonds maturing in 2023 with a stated coupon rate of 3.125% (the “Discount Bonds”) are being offered and sold to the public at an original issue discount (“OID”) from the amounts payable at maturity thereon. OID is the excess of the stated redemption price of a bond at maturity (the face amount) over the “issue price” of such bond. The issue price is the initial offering price to the public (other than to bond houses, brokers or similar persons acting in the capacity of underwriters or wholesalers) at which a substantial amount of bonds of the same maturity are sold pursuant to that initial offering. For federal income tax purposes, OID on bond will accrue over the term of the bond, and for the Discount Bonds, the amount of accretion will be based on a single rate of interest, compounded semiannually (the “yield to maturity”). The amount of OID that accrues during each semi-annual period will do so ratably over that period on a daily basis. With respect to an initial purchaser of a Discount Bond at its issue price, the portion of OID that accrues during the period that such purchaser owns the Discount Bond is added to such purchaser’s tax basis for purposes of determining gain or loss at the maturity, redemption, sale or other disposition of that Discount Bond and thus, in practical effect, is treated as stated interest, which is excludable from gross income for federal income tax purposes.

Holders of Discount Bonds should consult their own tax advisors as to the treatment of OID and the tax consequences of the purchase of such Discount Bonds other than at the issue price during the initial public offering and as to the treatment of OID for state tax purposes.

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LEGAL MATTERS

Certain legal matters incident to the authorization and issuance of the Series 2012 Bonds by the Bank are subject to the approval of Co-Bond Counsel, whose approving opinions will be delivered concurrently with the delivery of the Series 2012 Bonds. Co-Bond Counsel have not been requested to review any information contained in this Official Statement or the Appendices hereto, other than the information pertaining to the Series 2012 Bonds under the captions “TAX MATTERS,” and in APPENDIX D - FORMS OF OPINIONS OF CO-BOND COUNSEL, and express no opinion thereon and assume no responsibility in connection therewith. Certain legal matters will be passed upon for the Bank by its counsel, Balch & Bingham, LLP, Jackson, Mississippi. Other legal matters will be passed upon for the Underwriters by Chambers & Gaylor Law Firm, PLLC, Jackson, Mississippi and Hunton & Williams LLP, Atlanta, Georgia, serving as co-underwriters’ counsel.

The remedies available to the Trustee, to the Bank or to the owners of the Series 2012 Bonds upon an “event of default” under the Indentures or under the terms of the School District Indebtedness purchased by the Bank are in many respects dependent upon judicial actions which are often subject to discretion and delay. Under existing constitutional and statutory law and judicial decisions, including specifically the Bankruptcy Code, the remedies provided in the Indentures and under the School District Indebtedness may not be readily available or may be limited. The various legal opinions to be delivered concurrently with the delivery of the Series 2012 Bonds will be qualified as to the enforceability of the various legal instruments by limitations imposed by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally (regardless of whether such enforceability is considered in a proceeding in equity or in law), by general principles of equity (regardless of whether such proceeding is considered in a proceeding in equity or at law) and by the valid exercise of the constitutional powers of the State and the United States of America.

CONTINUING DISCLOSURE

At the request of the Underwriters and in order to assist the Underwriters in complying with paragraph (b)(5) of Rule 15c2-12 (the “Rule”) promulgated by the Securities and Exchange Commission (“SEC”), the Bank, the School District and the Trustee have agreed to enter into two substantially similar Continuing Disclosure Agreements, one each, with respect to the Series 2012A Bonds and the Series 2012B Bond (collectively, the “Continuing Disclosure Agreement”) in substantially the form set forth in “APPENDIX F – CONTINUING DISCLOSURE AGREEMENT” attached hereto. Pursuant to the Continuing Disclosure Agreement, the Bank and the School District will covenant for the benefit of the Registered Owners of the Series 2012 Bonds and the Beneficial Owners of such bonds to furnish certain financial and operating data relating to the School District (“Annual Financial Information”) by not later than 180 days after the end of each fiscal year of the School District, beginning with the fiscal year ended June 30, 2013, and to provide notices of the occurrence of certain enumerated events (“Listed Events”) in a timely manner not in excess of ten (10) business days after the occurrence thereof, if material. The School District will agree to file the Annual Financial Information and Listed Events with the Municipal Securities Rulemaking Board in an electronic format through the Electronic Municipal Market Access system (“EMMA”) found at http://emma.msrb.org. There have been instances in the previous five years in which the School District has failed to comply in all material respects with previous undertakings entered into pursuant to the Rule, including the following: (1) For its fiscal year ended June 30, 2007 the School District failed to timely file Annual Financial Information which was due on December 31, 2007 with respect to its outstanding bonds. The School District filed its annual financial report on June 10, 2009. (2) For its fiscal year ended June 30, 2008 the School District failed to timely file Annual Financial Information which was due on December 31, 2008 with respect to its outstanding bonds. The School District filed its annual financial report on June 11, 2010.

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(3) For its fiscal year ended June 30, 2009 the School District failed to timely file Annual Financial Information which was due on December 31, 2009 with respect to its outstanding bonds. The School District filed its annual financial report on May 26, 2011. (4) For its fiscal year ended June 30, 2010 the School District failed to timely file Annual Financial Information which was due on December 31, 2010 with respect to its outstanding bonds. The School District filed its annual financial report on June 1, 2011. (5) For its fiscal year ended June 30, 2011 the School District failed to timely file Annual Financial Information which was due on December 31, 2011 with respect to its outstanding bonds. The School District filed its annual financial report on December 20, 2012. For its fiscal years ended June 30, 2007, 2008, 2009 and 2010 the School District filed its annual financial reports with the Nationally Recognized Municipal Securities Information Repositories (NRMSIRs) as required by their continuing disclosure undertakings. On September 27, 2012 the School District posted each of the annual financial reports and operating data for its fiscal years ended June 30, 2009 and 2010 to EMMA. On December 20, 2012 the School District posted its audited financial report for the fiscal year ended June 30, 2011 to EMMA. The School District has not provided notice of Listed Events, including the ratings changes described in this Official Statement under the caption “RISKS TO THE OWNERS OF THE SERIES 2012 BONDS – Ratings.” Recent failures to timely file the Annual Financial Information and failure to provide notice of Listed Events with EMMA relates to a transition between administrations within the School District. The School District has taken several steps to rectify this problem to ensure that its annual filings will be made on the EMMA system, including designating staff in the School District’s finance department and employing Trustmark National Bank to assist in the dissemination of certain information. For a summary of the School District’s and the Bank’s undertakings, see “APPENDIX F - FORM OF CONTINUING DISCLOSURE AGREEMENT” attached hereto The Bank and the School District are currently in compliance with all prior undertakings, as applicable, for all municipal securities issued by the Bank and the School District, respectively.

VERIFICATION OF ARITHMETICAL AND MATHEMATICAL COMPUTATIONS

On or prior to the delivery of the Series 2012 Bonds, the accuracy of the mathematical computations supporting the conclusions (a) that the principal amounts and the interest thereon of the Investment Securities to be deposited in trust with the Escrow Trustee (see “PURCHASE OF SCHOOL DISTRICT INDEBTEDNESS – Refunding Project” herein) are adequate to provide for the payment when due, of the principal of, premium, if any, and interest on the 2012A Refunded Indebtedness and the 2003 Notes, and (b) that the Series 2012 Bonds are not “arbitrage bonds” under Section 148 of the Code will be verified by The Arbitrage Group, independent certified public accountants. Such verification will be based, in part, upon information supplied to the certified public accountants by the School District and the Underwriters.

RATINGS

S&P (the “Rating Agency”) has assigned its ratings of “A+” to the Series 2012A Bonds and “A” to the Series 2012B Bonds. Any desired explanation of the significance of such ratings should be obtained from the Rating Agency. Certain information and materials, including information and materials not included in this Official Statement, were furnished by the School District to the Rating Agency. Generally, the Rating Agency bases its ratings on the information and materials so furnished and on its respective investigations, studies and assumptions. Moody’s will not be providing a rating on the Series 2012 Bonds.

There is no assurance that present or future ratings will continue for any given period of time or that they will not be revised downward or withdrawn entirely by S&P, if, in its judgment, circumstances so warrant. Any

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such downward revision or withdrawal of such rating may have an adverse effect on the market price of the Series 2012 Bonds. Also see: “RISKS TO THE OWNERS OF THE SERIES 2012 BONDS – Ratings” herein.

UNDERWRITING

The Series 2012 Bonds are being purchased by the Underwriters listed on the cover page of this Official Statement. The Underwriters have agreed, subject to certain conditions, to purchase all of the Series 2012A Bonds from the Bank at a purchase price of $23,433,570.35 which is equal to the principal amount thereof, plus a net original issue premium of $2,547,622.85 minus the underwriters’ discount of $179,052.50. The Underwriters have agreed, subject to certain conditions, to purchase all of the Series 2012B Bonds from the Bank at a purchase price of $16,362,485.00 which is equal to the principal amount thereof, plus a net original issue premium of $1,390,835.00 minus the underwriters’ discount of $128,350.00.

The Underwriters have advised the Bank and the School District that they intend to make a public offering of the Series 2012 Bonds at the prices set forth on the inside front cover page hereof. Such prices may be changed from time to time by the Underwriters. The Underwriters reserve the right to join with other dealers and underwriters in offering the Series 2012 Bonds to the public. The Underwriters may offer and sell the Series 2012 Bonds to certain dealers (including dealers depositing the Series 2012 Bonds into investment trusts) and others at prices lower than the offering prices stated on the inside front cover page hereof. Although the Underwrites expect to maintain a secondary market in the Series 2012 Bonds after the initial offering, no guarantee or assurance can be made that such a market will develop or be maintained by the Underwriters or others.

The Underwriters are obligated to purchase all the Series 2012 Bonds, if any are purchased, the obligation to make such purchases being subject to certain terms and conditions set forth in the Bond Purchase Agreement with respect to the Series 2012 Bonds, the approval of certain legal matters by counsel and certain other conditions.

Wells Fargo Securities is the trade name for certain securities-related capital markets and investment banking services of Wells Fargo & Company and its subsidiaries, including Wells Fargo Bank, National Association.

Wells Fargo Bank, National Association (“WFBNA”), one of the underwriters of the Series 2012 Bonds, has entered into an agreement (the “Distribution Agreement”) with Wells Fargo Advisors, LLC (“WFA”) for the distribution of certain municipal securities offerings, including the Series 2012 Bonds. Pursuant to the Distribution Agreement, WFBNA will share a portion of its underwriting compensation, with respect to the Series 2012 Bonds with WFA. WFBNA and WFA are both wholly owned subsidiaries of Wells Fargo & Company.

FINANCIAL STATEMENTS

The basic financial statements of the School District for the fiscal year ended June 30, 2011 has been audited by Watkins, Ward and Stafford, Jackson, Mississippi, independent certified public accountants. See “APPENDIX B – Financial Information Concerning the School District” attached hereto. Watkins, Ward and Stafford did not participate in the preparation of this Official Statement nor did it provide its consent to the inclusion of the financial statements. As such, the accountants have not performed any review of the financial information since the date of their audit letter, December 7, 2012.

FINANCIAL ADVISOR

The School District has retained Malachi Financial Products, Inc., Atlanta, Georgia (the “Financial Advisor”), as its independent financial advisor in connection with the sale and issuance of the School District Indebtedness. In such case, the Financial Advisor has provided recommendations and other financial guidance to the School District with respect to the preparation of documents, the preparation for the sale of the Series 2012 Bonds and of the time of the sale, tax-exempt bond market conditions and other factors related to the sale of said Series 2012 Bonds and the purchase of the School District Indebtedness. Although the Financial Advisor may have performed an active role in the drafting of this Official Statement, it has not independently verified any of the information set forth herein. The Financial Advisor did not engage in any underwriting activities with respect to the issuance and sale of the Series 2012 Bonds.

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VALIDATION

The Series 2012 Bonds and the School District Indebtedness will be validated before the Chancery Court of the First Judicial District of Hinds County, Mississippi, as provided by Sections 31-13-1 to 31-13-11, Mississippi Code of 1972, as amended.

MISCELLANEOUS

The Bank’s offices are located at 735 Riverside Drive, Suite 300, Jackson, Mississippi 39202, telephone (601) 355-6232.

All quotations from, and summaries and explanations of, the Act, the Indentures and the School District Resolutions contained in this Official Statement do not purport to be complete, and reference is made to each such document or instrument for full and complete statements of their provisions. The attached Appendices are an integral part of this Official Statement and must be read together with all of the foregoing statements. Copies in reasonable quantity of the Act, the Indentures, the School District Resolutions and the supplemental materials furnished to the Bank by the School District may be obtained upon request directed to the Bank.

Neither any advertisement of the Series 2012 Bonds nor this Official Statement is to be construed as constituting an agreement with the purchasers of the Series 2012 Bonds. So far as any statements are made in this Official Statement involving matters of opinion, whether or not expressly so stated, they are intended merely as such and not as representations of fact.

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CERTIFICATION

This Official Statement has been duly approved, executed and delivered by the Bank and the School District. The Bank and the School District will provide copies of this Official Statement to be distributed to the purchasers of the Series 2012 Bonds.

MISSISSIPPI DEVELOPMENT BANK By: /s/ William T. Barry

Executive Director

Approved:

Jackson Public School District

By: /s/ Cedrick Gray School District Superintendent

APPENDIX A

INFORMATION CONCERNING THE SCHOOL DISTRICT

[THIS PAGE INTENTIONALLY LEFT BLANK]

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INFORMATION CONCERNING THE SCHOOL DISTRICT

General Description of the School District

The Jackson Public School District, Jackson, Mississippi (the “School District”) is a political subdivision of the State constituted as a public school district, and is a “local governmental unit” under the Act.

The School District is the second largest school district in the State with 57 schools: 7 high schools, 12 middle schools, 38 elementary schools, and 4 special schools (Capital City Alternative School, Career Academic Placement Center, Adult Education Center and the Career Development Center). Students are enrolled in grades K-12 (with 18 elementary schools offering pre-K classes). The School District offers special programs for its academically and artistically talented students at its Academic and Performing Arts Complex and at Bailey APAC Middle School. International Baccalaureate programs exist at one elementary, one middle and one high school. 50% of the schools in the School District are rated as successful “C”, high performing “B”, or star “A” by the Mississippi Department of Education, and every school in the School District is accredited by the Southern Association of Colleges and Schools.

Governing Body of the School District

The School District is governed by an appointed Board of Trustees (the “Board”) that consists of seven members. The Board has responsibility for setting policies for operation of the School District and has full control of the distribution, allotment and disbursement of all revenues provided for the School District’s support and operation. In addition, the Board is responsible for organizing the schools of the School District; introducing special subjects for instruction; serving as custodian of school property; erecting, repairing and equipping school facilities and improvements; maintaining pupil discipline; carrying out public health programs such as vaccination requirements; regulating the use of the schools by the public; prescribing rules and regulations for its own government and the government of the schools; maintaining and operating the schools under Board control for the time required by law; enforcing in the schools the courses of study and the use of textbooks prescribed by law; making orders directed to the Superintendent of Schools of the School District for the issuance of pay certificates for lawful purposes on any available funds of the School District; selecting superintendents, principals and teachers in the manner provided by law; providing and regulating athletic programs and other school activities; and performing other duties prescribed by law. The current members of the Board are as follows:

Name Term Began Term Expires Profession

Benita D. Burt 07/01/2012 06/01/2017 Executive Director Dr. Otha Burton 03/01/2011 01/01/2015 Associate Dean Timothy Collins 03/01/2011 03/31/2015 Executive Director

Monica Gilmore-Love 04/21/2010 03/01/2015 Environmental Engineer Kisiah Nolan 12/07/2009 03/01/2014 Retired Educator

Dr. George Schimmel 12/07/2009 05/01/2013 Retired Physician Linda Rush 03/01/2011 05/31/2014 Administrator

Administrative power is placed with the Superintendent of Schools. The current Superintendent, Dr.

Cedrick Gray, has served in this position since July 1, 2012. Dr. Gray holds a Bachelor of Science and Master’s degree from the University of Memphis as well as an Educational Specialist degree and a Doctorate of Philosophy degree from Union University. He has served as a teacher, an assistant principal, a middle school principal, and school district superintendent.

The Chief Financial Officer is Sharolyn Miller who has held this position since August 2010. Ms. Miller served as the Executive Director of Finance for the School District from November 2004 through September 2010. She holds a Bachelor of Science and Masters of Business Administration from Jackson State University.

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District Employment

The School District employs approximately 4,503 individuals, including 2,154 licensed employees. The average teacher’s salary is $45,590.

Enrollment of the School District

Enrollment figures for the School District for the 2011-2012 scholastic year and for the eight preceding years are as follows:

Scholastic Year Enrollment

2003-2004 31,636 2004-2005 31,608 2005-2006 32,400 2006-2007 31,936 2007-2008 31,191 2008-2009 30,583 2009-2010 30,617 2010-2011 30,366 2011-2012 29,898

—————————— SOURCE: Jackson Public School District, November 2012.

Revenues, Expenditures and Fund Balances of the School District

Revenues, expenditures, and fund balances for the School District’s General Fund for each of the last six years and the current fiscal year (budgeted) are shown below:

Unaudited BudgetDistrict Fiscal Year Ends June 30th 2007 2008 2009 2010 2011 2012 2013Revenues ($000)

Local $ 76,858 $ 75,467 $ 76,403 $ 74,685 $ 75,897 $ 73,585 $ 74,901Intermediate sources - 2 - - - - -State 122,776 130,418 128,747 115,977 112,062 120,932 119,907Federal 2,386 877 2,290 1,988 1,763 1,297 7,938

Total Revenues 202,020 206,764 207,440 192,650 189,723 195,814 202,746

Expenditures ($000) Instruction 117,560 119,705 118,923 111,463 111,555 111,116 111,056Support services 81,863 79,032 81,109 78,780 85,080 78,297 82,030Noninstructional 62 13 51 61 82 124 93Sixteenth section - - - - - - -Facilities acquisition and construction 1,333 493 - - - 1,552 845Debt service

Principal 1,452 1,661 1,456 990 636 1,427 1,665Interest 1,094 809 767 413 484 596 472Other - - 2 26 25 24 36Total Expenditures 203,364 201,713 202,308 191,733 197,862 193,136 196,298

Excess (Deficiency) of Revenues over (under) Expenditures

(1,344,301) 5,051,291 5,131,442 917,166 (8,099,905) 2,678,000 6,448,000

Total Other Financing Sources (Uses) (3,965) (5,203) (4,732) (3,421) 1,178 (2,697) (6,348)

Net Change in Fund Balance (5,309) (152) 400 (2,504) (6,921) 19 (100)

Fund Balances ($000) Beginning Balance 18,908 13,698 12,797 14,558 11,993 5,115 5,189Increase (Decrease) in reserve for inventory

99 (27) 108 (64) 120 93

Ending Balance 13,698 13,519 13,305 11,990 5,115 5,189 5,289Prior Period Adjustments - (722) 1,253 3 - 15 Final Ending Balance 13,698 12,797 14,558 11,993 5,191 5,189 4,189

Fund Balance % Expenditures 6.7% 6.3% 7.2% 6.3% 2.6% 2.7% 2.7%

SOURCE: Jackson Public School District Audited Financial Statements for fiscal years ended June 30, 2011 and June 30, 2012.

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Management’s Discussion and Analysis

From fiscal years 2007 through 2011, the General Fund Balance averaged 5.83% of total annual expenditures. There was a decline in total General Fund balance during fiscal year 2007 of approximately $5,209,979. This decrease was in part due to a reduction of State revenues during the fiscal year. There was a decline in total fund balance during fiscal year 2011 of approximately $6,801,608. This decrease was in part due to the costs associated with opening three new schools and the Board's decision to use fund balances for these one-time costs. This decision was in line with recommendations from the then Governor of Mississippi to draw down fund balances across all Mississippi school districts.

As of June 2007, total fund balance in the General Fund was $13,697,624.

As of June 2008, total fund balance in the General Fund was $12,797,112. As a result of operations in fiscal year 2008, the fund balance decreased by $900,512.

As of June 2009, total fund balance in the General Fund was $14,557,614. As a result of operations in fiscal year 2009, the fund balance increased by $1,760,52.

As of June 30, 2010, total fund balance in the General Fund was $11,992,810. As a result of operations in fiscal year 2010, the fund balance decreased by $2,564,804.

As of June 30, 2011, total fund balance in the General Fund was $5,191,202. As a result of operations in fiscal year 2011, the fund balance decreased by $6,801,608.

The total millage rate for the School District has remained stable at 74.99 for the past 5 fiscal years. The School District has operated efficiently within the available resources.

Expenditures decreased during the period presented by 3%. The majority of the decrease is attributable to a restructuring of School District operations by aligning employee paid days to adequately support instructional days, establishing more efficient operational structure and enacting more stringent expenditure guidelines.

Employee Benefits

All of the teachers, administrative and clerical personnel of the School District are covered by the Mississippi Public Employers Retirement System (“PERS”), a cost-sharing, multiple employer retirement system administered by the State for the benefit of its local government and State personnel. The Public Employees’ Retirement System of the State of Mississippi (the “Mississippi Retirement System”) Board of Trustees (the “PERS Board of Trustees”) administers the 24 programs and plans, including 22 defined benefit plans and two defined contribution plans. PERS was established in 1952.

Any political subdivision or judicial entity within the State may elect to have its employees covered by PERS. As of June 30, 2012, the Mississippi Retirement System covered 887 public entities with the State.

For those employees of political subdivisions and instrumentalities of the State, such as the School District, membership in PERS is contingent upon the PERS Board of Trustees’ approval of the entity's participation in the plan. If approved, membership is a condition of employment and eligibility is granted upon hiring. The School District and its employees are members of PERS.

Participating employees who retire at or after age 60 with four years of credited service if hired before July 1, 2007 or for those that were hired on July 1, 2007 or after, who retire at or after age 65 with eight years of credited service or those who retire regardless of age with at least 25 years of credited service if hired prior to July 1, 2011 or 30 years for those that were hired on July 1, 2011 or after are entitled to an annual retirement allowance, payable monthly for life. The retirement allowance is an amount equal to 2% of their average compensation for each year of credited service up to and including 25 years and 2.5 % for each year of credited service over 25 years, if hired prior to July 1, 2011. If hired on July 1, 2011 or after they are entitled to an annual retirement allowance, payable monthly for life, in an amount equal to 2% of their average compensation for each year of credited service up to and

A-4

including 30 years and 2.5 % for each year of credited service over 30 years. There is an actuarial reduction for each year of creditable service below 30 or for each year of age below age 65, whichever is less for those hired on July 1, 2011 or after. "Average compensation" is the average of the employee's earnings during the four highest compensated years of credited service. A member may elect an option for a reduced allowance payable for life with the provision that, after death, a beneficiary receives benefits for life or for a specified number of years. Benefits vest upon completion of four years of credited service for those hired prior to June 30, 2007 and vest with completion of eight years of credited service for those hired on or after July 1, 2007. PERS also provides certain death and disability benefits. Retirees and beneficiaries have the option of maintaining health and other coverage at their own expense. Benefit provisions are established by Section 25-11-1 et seq., Mississippi Code of 1972, as amended, and may be amended from time to time only by the State Legislature.

The Mississippi Retirement System incurs no expense for post-retirement health benefits.

The PERS Board of Trustees announced its decision to raise the percentage that an employer is required to contribute from 14.26% to 15.75% effective July 1, 2013.

Funding policies and annual pension costs at June 30, 2011 were:

(a) Rate of return on investment of 8.0%;

(b) Projected Wage inflation rates 4.25%;

(c) Projected salary increases of 4.5% to 20.0% per year for PERS, 5.0% to 10.52% for MHSPRS and 4.5% for SLRP attributable to seniority/merit;

(d) Assumption that post-retirement benefits will increase 3.0% per year for PERS and SLRP; calculated 3% simple interest to age 55, compounded each year thereafter; calculated 3% simple interest to age 60, compounded each year thereafter;

(e) Entry age for actuarial cost method; and

(f) Five-year smoothed market asset valuation method.

Employer contribution rates for PERS are set by State statute. The adequacy of these rates is assessed annually by actuarial valuation. Unfunded actuarial accrued liabilities are amortized as a level percent of the active member payroll, over the period of future years that produces the statutory employer contribution rate. Assuming the amortization period is reasonable, the employer contribution rate so computed, expressed as a percent of active member payroll, is designed to accumulate sufficient assets to pay benefits when due.

The defined benefit plans administered by the Retirement System were actuarially funded at an average of 62.4% as of June 30, 2011, a decrease from the comparative average of 65.1% as of June 30, 2010. The decrease in funding percentage was primarily due to recognition of investment losses from 2008 and 2009 and lower than expected payroll growth as a result of a decrease in active membership.

At June 30, 2011, the plans’ unfunded pension benefit obligations were as follows (in thousands).

PERS

Total actuarial accrued liability $32,654,465

Assets used in valuation 20,315,165

Unfunded (overfunded) actuarial accrued liability $12,339,300

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General Description of the Area

The City of Jackson, Mississippi (the “City”), the county seat of the First Judicial District of Hinds County, Mississippi (the “County”), is located in the northeastern section of the County and has a land area of approximately 110 square miles. The City was named after General Andrew Jackson. On November 28, 1821, when legislation was passed to locate a permanent seat of government for the State, the City became its capitol.

Today, the City is the largest municipality in the State and is considered to be Mississippi’s governmental, trade, financial, medical, educational and cultural center. It is also known as the “Distribution Center of the Deep South” because of its strategic location at the crossroads of Dallas/Houston, Atlanta, Memphis and New Orleans. In 2009, Forbes Magazine Jackson ranked third out of 100 of America’s largest Metro Areas for the best “Bang for Your Buck” in terms of overall affordability and quality of life. The City is the location of the University of Mississippi Medical Center, the state’s only academic health science center, encompassing six health science schools: medicine, nursing, dentistry, health related professions, graduate studies and pharmacy. UMMC includes four specialized hospitals, including the only children’s hospital in Mississippi, a women’s and infants’ hospital, a critical care hospital and a level one trauma center. The City is the location for three other hospital/medical centers: St. Dominic, Mississippi Baptist, and Central Mississippi Medical Center. The Jackson metropolitan area is home to several major industries including the Nissan automotive assembly plant in Canton, Cal-Maine Foods (largest fresh egg provider in the United States), C-Spire Wireless (eighth largest wireless provider in the United States), Trustmark National Bank, Ergon (refining and distribution of petroleum products) and Stuart C. Irby, Co. (electrical distribution).

The City is proud of its famed southern hospitality and quality of life. Community support is strong for the Mississippi Symphony Orchestra, the Mississippi Opera, Ballet Mississippi, the Mississippi Museum of Art, the Mississippi Natural Science Museum, the Mississippi Children’s Museum, the Mississippi Agriculture and Forestry Museum, the Smith-Robertson Museum and Cultural Center, the Old Capitol Museum, New Stage Theatre and numerous theatrical and musical performances that occur each year throughout the City. Mississippi Veterans Memorial Stadium, with a capacity of 65,000 seats, is the home field for Jackson State University and hosts numerous sporting events, including the Capital City Classic, Battle of the Bands and the Mississippi High School Football Championships. The State Fairgrounds and Coliseum hosts the Mississippi State Fair, numerous trade shows, agriculture and equine events, and performing concerts. For marketing purposes, the City has used the theme the “City with Soul.” Jackson is a city famous for its music – including gospel, blues, and rhythm and blues. Jackson is also home to the world famous Malaco Records recording studio. Many notable musicians hail from Jackson. In recent years the City has showcased such international exhibitions as the Palace of St. Petersburg, the Splendors of Versailles, the Majesty of Spain, and the Glory of Baroque Dresden. Highly acclaimed authors Richard Wright, Eudora Welty and Richard Ford have claimed Jackson as their home. In 2011, the Mississippi Legislature appropriated $40 million for the construction of the Museum of Mississippi History and the Mississippi Civil Rights Museum, to be located on adjoining sites near the Old Capitol Museum in downtown Jackson, at a total cost of $70 million. Groundbreaking for both museums is expected to occur in 2013 with an expected completion date in 2017.

The City is the permanent site in the United States for the USA International Ballet Competition, which was hosted in the City in the summers of 1982, 1986, 1990, 1994, 1998, 2002, 2006 and 2010. The USA International Ballet Competition is a two-week “Olympic-style” competition where up and coming ballet stars vie for gold, silver, and bronze medals; cash awards and scholarships. Designated as the official USA Competition by a 1982 Joint Resolution of Congress, the USA International Ballet Competition is held every four years, in the tradition of sister competitions in Varna, Bulgaria and Moscow, Russia.

In January 2009, the Jackson Convention Center Complex opened in downtown Jackson. In addition to offering the latest in conferencing capability, fiber optic technology and Wi-Fi capability, the Jackson Convention Center Complex offers 330,000 square feet of exhibit and meeting space conducive for hosting large regional and national conferences and trade shows, and entertainment events.

The Jackson medical community is implementing a medical corridor, facilitated by the Mississippi Legislature’s passage of the Health Care Industry Zone Act, which provides numerous tax incentives.

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The population of the City has been recorded as follows:

2000 2010

184,256 173,514

The five counties comprising the Jackson Metropolitan Statistical Area had a population of 539,057 according to the 2010 census and according to 2011 estimates the population has risen to 545,394.

—————————— SOURCE: United States Census Bureau,

Annual Estimates of the Population of Metropolitan and Micropolitan Statistical Areas: April 1, 2010 to July 1, 2011

City Government

The City operates under the Mayor-Council form of government. The City Council (the “Council”) is comprised of seven Council members who serve part-time and are elected for four-year terms from separate districts or wards. The Mayor, who serves full time and is elected at large for a four-year term, is the head of the executive branch of the City’s government, with veto power over actions of the Council (subject to override). The current Mayor and members of the Council are:

Name Occupation/Position Held Since Current Term

Expires

Harvey Johnson, Jr. Mayor 2009 1 July 1, 2013 Margaret Barrett Simon Council Member 1985 July 1, 2013 Frank Bluntson Council Member 2005 July 1, 2013 Charles Tillman Council Member 2005 July 1, 2013 Quentin Whitwell Council Member 2011 July 1, 2013 Chokwe Lumumba Council Member 2009 July 1, 2013 Tony Yarber Council Member 2009 July 1, 2013 Larita Cooper Stokes Council Member 2012 July 1, 2013

1 Mayor Johnson also served two previous terms as Mayor from 1997-2005.

Transportation

Two interstate highway systems intersect in the City. Interstate Highway 55 runs north and south and connects Memphis, Tennessee, to the north and to New Orleans, Louisiana, to the south. Interstate Highway 20 runs east and west and connects Birmingham, Alabama, and Atlanta, Georgia, to the east and Dallas, Texas, to the west. U.S. Highways 49, 51 and 80, State Highways 18 and 25 and a number of county highways provide access to all areas of the County and the State. U.S. Highway 49 connects the City to Hattiesburg, Mississippi, and the Mississippi Gulf Coast. The Natchez Trace Parkway, a two lane limited parkway maintained by the National Park Service extending 444 miles from Natchez, Mississippi to Nashville Tennessee, runs through Jackson.

Rail transportation is provided by Canadian National/Illinois Central Railroad Company, which operates two north-south lines, and Kansas City Railway Company, which operates one east-west line. Amtrak runs daily passenger service between Chicago, Illinois, and New Orleans, Louisiana. Numerous motor freight carriers are authorized to serve the City and offer interstate and intrastate shipping services.

Commercial air service is available at the Jackson-Medgar Wiley Evers International Airport (the “Airport”) located approximately 10 miles east of the City and administered by the Jackson Municipal Airport Authority (the “Airport Authority”). It is named after the late Medgar Wiley Evers, civil rights activist and field secretary of the Mississippi NAACP, assassinated in 1962 and buried with full military honors at Arlington National

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Cemetery. The Airport has a modem terminal and two 8,500-foot runways, has been designated as a general-purpose foreign trade zone, and is a U.S. Customs Port of Entry. The airport provides excellent facilities and service to private and corporate pilots, both transient and home-based. American, Delta, Continental, United, US Air and Southwest Airlines offer non-stop flights to Atlanta, Baltimore, Charlotte, Chicago, Dallas/Ft. Worth, Detroit, Houston-Hobby, Houston-Bush Intercontinental, Memphis, and Washington, D.C., with connecting service available to every major city in the United States. Air cargo carriers include United Parcel Service. The Mississippi Air Cargo Logistics Center provides the optimal location for air cargo and logistics management for consolidation and distribution. Trucking cargo is provided through BAX Global. The Airport has undergone a $15 million air cargo expansion program, which offers 450,000 square feet of aircraft parking, 60,000 square feet of warehousing distribution facilities and 125,000 square feet of warehouse space. Also, improvements to the facilities include a new covered garage and five new jetways installed in 2011. A smaller airport, Hawkins Field, is located near the City’s downtown and provides fixed-base operations for private and corporate flights, and is also administrated by the Airport Authority.

The nearest port, the Port of Vicksburg (the “Port”), is located 44 miles west of the City on the Mississippi River in Warren County, Mississippi and is ranked 11th among U.S. inland ports based on trip ton miles. The Port, which has a channel depth of 12 feet and a width of 300 feet, is a U.S. Customs Port of Entry and a designated general-purpose foreign trade zone. The Port maintains a 150-foot crane and two 15-foot overhead cranes for all weather loading and unloading. More than 3,000,000 tons of cargo pass through the Port each year.

Intercity bus service is provided by Greyhound, which provides more than 40 inbound and outbound buses daily. Citywide bus service, which includes 13 fixed routes and demand response handlift services, is provided by the City through its management company, JATRAN. Several vehicles for hire service providers are located in the metropolitan area, which supply the citizens with taxi, limousine and shuttle services. The City opened the renovated Union Station in 2004, which is a multi-modal transportation center for Amtrak, Greyhound, JATRAN and taxicab services.

Population of the County

The population of the County has been recorded as follows:

1990 2000 2010

254,441 250,800 245,285 —————————— SOURCE: United States Bureau of the Census; December 2012

Per Capita Income of Hinds County, Jackson and Jackson MSA

Year Hinds County Jackson Jackson MSA Mississippi United States Jackson as % of U.S.

2011 $ 35,473 $35,748 $37,544 $32,000 $41,560 86.0% 2010 34,645 34,960 36,227 30,841 39,791 87.9 2009 33,997 34,067 35,230 30,013 38,637 88.2 2008 36,324 37,071 34,748 30,945 40,947 90.5 2007 34,511 35,116 33,931 29,568 39,506 88.9 2006 33,866 34,153 28,819 27,917 37,725 90.5

—————————— SOURCE: United States Bureau of Economic Analysis, Last Updated: November 26, 2012

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GDP of Jackson, MS (MSA)

Set forth below is the gross domestic product for the Jackson, Mississippi Metropolitan Statistical Area for the years 2006 through 2010:

Year GDP

2010 $24,379 2009 23,711 2008 23,500 2007 23,226 2006 21,604

SOURCE: U.S. Bureau of Economic Analysis, Last Updated: November 26, 2012.

Retail Sales of the City

Year Total Retail Sales No. of Taxpayers Total Gross Sales Tax

2011 $2,677,040,723 4,260 $173,414,443 2010 2,573,052,215 4,274 167,072,197 2009 2,799,408,505 5,015 181,248,051 2008 3,042,419,980 5,021 196,269,070 2007 3,120,969,093 5,030 200,960,289

—————————— SOURCE: Mississippi Department of Revenue, Annual Report, Fiscal Years Ending June 30, 2011, 2010, 2009, 2008, 2007,

respectively; December 2012.

Unemployment Statistics for Hinds County

2007 2008 2009 2010 2011 2012

January 6.1% 5.8% 7.7% 10.7% 9.9% 9.0% February 6.1 5.1 7.7 10.0 9.7 8.4 March 5.9 5.3 7.6 9.5 9.3 7.5 April 5.3 4.9 7.3 9.0 8.8 7.6 May 5.3 5.9 8.3 9.6 9.2 8.2 June 6.1 6.9 8.8 10.0 10.3 9.1 July 6.3 7.2 9.1 10.3 10.3 9.5 August 5.1 6.4 8.4 8.6 9.2 7.7 September 5.5 6.4 8.7 9.2 9.7 8.5 October 5.4 6.3 9.0 9.1 9.6 7.7 November 5.0 5.8 8.7 8.9 8.8 December 5.4 6.5 9.4 8.8 8.9 Annual Average 5.6% 6.1% 8.4% 9.5% 9.5% —————————— SOURCE: Mississippi Department of Employment Security, Labor Market Information, Unemployment Rates, November

2012.

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Unemployment Statistics for Mississippi

2011 2012

January 11.0% 10.1% February 10.8 9.5 March 10.4 8.7 April 10.0 8.4 May 10.6 8.9 June 11.6 9.8 July 11.6 10.2 August 10.7 8.5 September 10.8 9.1 October 10.6 8.3 November 9.8 December 9.9 Annual Average 10.6% —————————— SOURCE: Mississippi Department of Employment Security, Labor Market Information, Unemployment Rates, November

2012.

Unemployment Statistics for Jackson’s MSA

2008 2009 2010 2011 2012

October 5.7% 9.7% 9.4% 9.1% 7.4% —————————— SOURCE: Mississippi Department of Employment Security, Labor Market Information, Unemployment Rates, November,

2012.

[Intentionally Left Blank]

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Banking Institutions in the City

Institution March 31, 2012 Total Assets

Regions Bank1 $120,832,228,000 BancorpSouth Bank2 13,224,587,000 Trustmark National Bank3 9,761,996,000 BankPlus4 2,274,558,000 Merchants and Farmers Bank5 1,545,084,000 State Bank & Trust Company6 909,814,000 Community Bank of Mississippi7 638,614,000 Liberty Bank and Trust Company8 545,019,000 First Commercial Bank9 265,715,000 Merchants and Planters Bank10 88,765,000 Omnibank11 69,267,000 1 Headquartered in Birmingham, Alabama 2 Headquartered in Tupelo, Mississippi 3 Headquartered in Jackson, Mississippi 4 Headquartered in Ridgeland, Mississippi 5 Headquartered in Kosciusko, Mississippi 6 Headquartered in Kosciusko, Mississippi 7 Headquartered in Forest, Mississippi 8 Headquartered in New Orleans, Louisiana 9 Headquartered in New Orleans, Louisiana 10 Headquartered in Raymond, Mississippi 11 Headquartered in Mantee, SOURCE: FDIC, September 30, 2012.

Construction Permits of the City

Commercial Construction Permits Residential Construction Permits

Fiscal Year Ending 9/30 Number Commercial Value Number Residential Value

2012 7 $2,751,044 43 $17,837,100 2011 12 32,985,136 38 6,675,925 2010 11 23,676,001 54 18,610,456 2009 33 97,045,540 41 4,588,909 2008 33 147,517,323 466 50,486,347 2007 24 94,626,677 268 33,309,878

—————————— SOURCE: Office of the Director of Administration of the City, July 2012. (Note: Fiscal Year 2012 is current through June

2012.)

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Employment Statistics of the County

2007 2008 2009 2010 2011 20121

Residence Based Employment

Civilian Labor Force 117,740 116,280 115,460 117,710 120,650 119,860

Unemployed 6,700 7,070 9,430 11,210 11,440 10,040

Employed 111,040 109,210 106,030 106,500 109,210 109,820

Establishment Based Employment

Manufacturing 5,350 4,810 4,020 3,620 3,550 3,590

Nonmanufacturing 133,390 132,720 130,470 128,570 129,520 130,150

Natural Resources and Mining 330 310 290 290 280 290

Construction 5,500 5,250 4,500 4,370 4,390 3,700

Trade, Transp. & Utilities 22,250 21,180 20,200 19,610 19,610 19,520

Information 2,760 3,050 2,910 2,540 2,170 2,150

Financial Activities 8,160 7,930 7,740 7,280 7,030 7,000

Professional & Business Services 18,730 17,960 16,450 15,740 16,000 16,310

Education & Health Services 21,980 23,110 24,160 24,750 24,790 24,710

Leisure and Hospitality 10,720 10,500 10,050 9,570 10,190 10,350

Other Services 6,460 6,130 5,840 5,680 5,980 6,030

Government 36,500 37,300 38,330 38,740 39,080 40,090

Public Education 13,270 13,430 13,260 14,040 15,480 15,950

1 Represents average amounts for ten-month period ending October 31, 2012. SOURCE: Mississippi Employment Security Commission, Labor Market Information Department, Annual Labor Force Report,

December 2012.

Employment Statistics of the City

2007 2008 2009 2010 2011 2012

Residence Based Employment

Civilian Labor Force 80,030 78,660 78,800 80,640 82,670 82,070

Unemployed 4,850 5,090 6,870 8,250 8,430 7,410

Employed 75,180 73,570 71,930 72,390 74,240 74,660

—————————— SOURCE: Mississippi Employment Security Commission, Labor Market Information Department, Annual Labor Force Report,

December 2012.

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Major Area Employers

The following is a partial listing of the major employers in the City’s MSA, their products or services and their approximate number of employees:

Employer Product/Service Employees

State of Mississippi State Government 31,556

University of Mississippi Medical Center Medical Center Academic and Health Science Center 8,000

United States Government Federal Government 5,500

Jackson Public School District Public Education 4,503

Nissan North America Inc. Manufacturing: Automobiles 3,673

Rankin County School District Public Education 3,039

Baptist Health Systems Healthcare Services 2,875

Wal-Mart Stores, Inc. Discount Stores 2,725

St. Dominic Health Services Healthcare Services 2,600

Mississippi State Hospital Psychiatric, medical/surgical, chemical dependency and nursing home care

2,500

City of Jackson City Government 2,323

Jackson State University Higher Education 1,667

Madison County School District Public Education 1,500

AT&T Local Exchange Service, Internet Access, Intrastate/Intralata Long Distance

1,300

River Oaks Health System Healthcare Services 1,236

Central Mississippi Medical Center Healthcare Services 1,200

Kroger Grocery Store 1,200

Trustmark National Bank Financial Services 1,075

Saks, Inc. Back Office Operations 800

Entergy Electric/Utility 765

Eaton Aerospace Aerospace 625 —————————— SOURCE: Metro Jackson Chamber of Commerce, July 2012.

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TAX INFORMATION

Although the School District is fiscally independent under State law, Section 37-57-1 and Section 37-59-23, Mississippi Code of 1972, as amended (together, the “School Act”) require the City to annually levy taxes for the School District’s benefit according to the budget request of the Board. Within certain limits on annual increases in the School District’s budget, the City must levy a tax sufficient to provide the funds requested by the School District. (See “OTHER FINANCIAL INFORMATION; BUDGET AND SOURCES OF FUNDING - School District Funding – Local Sources, District Maintenance Levy” herein.) The tax levied to pay debt service on the School District Bond is a mandatory, special, unlimited tax. With respect to the School District Note, the tax assessment shall not exceed three mills on the dollar for payment of the School District Note and, on a parity basis, all other outstanding evidences of indebtedness issued pursuant to Sections 37-59-101 et seq., Mississippi Code of 1972, as amended and supplemented from time to time, including, but not limited to, the School District’s $25,220,000 Limited-Tax Refunding Notes, Series 2005 (currently outstanding in the aggregate principal amount of $20,060,000, to be levied annually by the City of Jackson, Mississippi upon all of the taxable property within the geographical limits of the School District. The Tax Collector of the County pays tax receipts to the School District as monies are received.

Assessed Valuation of Property in the School District

Assessment Year Real Property Personal Property Public Utilities Property Total

2011-2012 $ 794,173,163.00 $ 305,481,868.00 $ 109,106,530.00 $ 1,208,761,561.00 2010-2011 792,836,696.00 305,923,949.00 105,518,089.00 1,204,278,734.00 2009-2010 793,259,615.00 305,112,834.00 101,783,244.00 1,200,155,693.00 2008-2009 790,807,762.00 319,619,890.00 104,100,225.00 1,214,527,877.00 2007-2008 658,218,184.00 339,466,465.00 136,987,148.00 1,134,671,797.00 1 The total assessed valuation is approved in June preceding the fiscal year of the School District and represents the value of real property, personal property and public utility property for the year indicated on which taxes are assessed for the following fiscal year’s budget. The School District includes real and personal property located outside of the boundaries of the City.

SOURCE: Office of the Hinds County Tax Assessor and Office of the City Administrator, June 2012.

Assessed Valuation of Property in the City1

Assessment Year Real Property Personal Property Public Utilities Total

2008 $ 658,357,211 $ 314,653,853 $ 145,341,826 $ 1,118,352,890 2009 733,942,673 315,525,190 116,858,076 1,166,325,939 2010 740,892,777 297,029,550 115,979,165 1,153,901,492 2011 748,861,444 170,938,976 235,070,641 1,154,871,061 2012 808,902,830 303,107,574 114,103,154 1,226,113,108

1 The total assessed valuation is approved in September preceding the fiscal year of the City/County and represents the value of real property, personal property and public utility property for the year indicated on which taxes are assessed for the following fiscal years budget. For example, the taxes for the assessed valuation figures for tax year 2010 were collected starting in January 2011 for the 2011-2012 fiscal year budgets of the City/County.

Source: Office of the Director of the Administration of the City, July 2012.

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Assessed Valuation of Property in the County1

Assessment Year Real Property Personal Property Public Utilities Total

2008 $868,643,068 $499,207,152 $173,768,808 $1,541,619,028 2009 1,062,577,805 491,567,497 146,342,260 1,700,487,562 2010 1,169,229,407 451,589,047 168,222,305 1,789,040,759 2011 1,171,580,961 454,625,981 168,222,305 1,794,429,247 2012 1,173,890,492 455,356,981 201,619,743 1,830,867,216

1 The total assessed valuation is approved in September preceding the fiscal year of the City/County and represents the value of real property, personal property and public utility property for the year indicated on which taxes are assessed for the following fiscal years budget. For example, the taxes for the assessed valuation figures for tax year 2010 were collected starting in January 2011 for the 2011-2012 fiscal year budgets of the City/County.

SOURCE: Office of the Hinds County Tax Assessor, July 2012.

Pursuant to Article 4 Section 112, Mississippi Constitution and Section 27-35-4, Mississippi Code of 1972, assessed valuations of property are based upon the following classifications and assessment ratios:

1. Real and personal property (excluding single-family, owner-occupied residential real property and motor vehicles): 15% of true value;

2. Single-family, owner-occupied residential real property: 10% of true value;

3. Motor vehicles and public utility property: 30% of true value.

The 1986 Session of the Mississippi Legislature adopted House Concurrent Resolution No. 41, pursuant to which an amendment was proposed to Mississippi Constitution of 1890 (the “Amendment”). The Amendment provided, inter alia, that the assessment ratio of any one class of property shall not be more than three times the assessment ratio of any other class of property.

The Amendment set forth five (5) classes of property and the assessment ratios, which would be applicable thereto upon adoption of the Amendment. The assessment ratios set forth in the Amendment are identical to those established by Section 27-35-4, Mississippi Code of 1972, as it existed prior to the Amendment, except that the assessment ratio for single-family, owner-occupied residential real property under the Amendment is set at 10% of true value as opposed to 15% of true value under existing law.

Procedure for Property Assessments

Real and personal property valuations for City and County property, other than motor vehicles and property owned by public utilities, are determined by the County Tax Assessor. All taxable real property situated in the County is assessed each year and taxes thereon paid for the ensuing year. Assessment rolls of such property subject to taxation are prepared by the County Tax Assessor and are delivered to the Board of Supervisors of the County on the first Monday in July. Thereafter, the assessments are equalized by the Board of Supervisors and notice is given to the taxpayers that the Board of Supervisors will meet to hear objections to the assessment. After objections are heard, the Board of Supervisors adjusts the rolls and submits them to the State Tax Commission, which examines the rolls on receipt. The State Tax Commission may then accept the rolls or, if it finds a roll incorrect in any particular, return the rolls to the Board of Supervisors to be corrected in accordance with the recommendations of the State Tax Commission. If the Board of Supervisors has any objections to the order of the State Tax Commission, it may arrange a hearing before the Commission. Otherwise, the assessment roll is finalized and submitted to the County Tax Collector for collection. The assessed value of motor vehicles is determined by an assessment schedule prepared each year by the State Tax Commission. With minor exceptions, the property of public utilities is assessed each year by the State Tax Commission. The tax levied to pay debt service on the School

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District Bond is a mandatory, special, unlimited tax. With respect to the School District Note, the tax assessment shall not exceed three mills on the dollar for payment of the School District Note and, on a parity basis, all other outstanding evidences of indebtedness issued pursuant to Sections 37-59-101 et seq., Mississippi Code of 1972, as amended and supplemented from time to time, including, but not limited to, the School District’s $25,220,000 Limited-Tax Refunding Notes, Series 2005, to be levied annually by the City of Jackson, Mississippi upon all of the taxable property within the geographical limits of the School District.

Procedure for Tax Collections

The City Council of the City, acting for and on behalf of the School District, is required by the provisions of the School Act, the School District Indebtedness and the School District Resolutions to levy annually a special tax upon all taxable property within the School District sufficient to provide for the School District’s school purposes and for the payment of the principal of, premium, if any, and the interest on the School District Bond and School District Note. If any taxpayer neglects or refuses to pay his taxes on the due date thereof, the unpaid taxes will bear interest at the rate of one percent per month or fractional part thereof from the delinquent date to the date of payment of such taxes. When enforcement officers take action to collect delinquent taxes, other fees, penalties and costs may accrue. Both real property and personal property are subject to being sold at public sale for nonpayment of taxes.

Ad valorem taxes on personal property are payable at the same time and in the same manner as on real property. Section 27-41-15, Mississippi Code of 1972, as amended, provides that upon failure of a taxpayer to make timely payment, the tax collector of each county is authorized to sell any personal property liable for unpaid taxes at the courthouse door of such county, unless the property is too cumbersome to be removed. Five days’ notice of the sale in an advertisement posted in three public places in such county, one of which must be the courthouse of such county, is required. If the sale is for delinquent municipal taxes, the advertisements must follow any special ordinance adopted by the municipality regarding personal property sales. Interest, fees, costs and expenses of sale are recoverable in addition to the delinquent taxes. If sufficient personal property cannot be found, the tax collector may make a list of debts due such taxpayer from other persons and sell such debts. The tax collector is further directed to distrain and sell sufficient other properties of such taxpayer to pay the delinquent taxes. Debts sold may be redeemed within six months from the sale in the same manner as redemption of land from tax sales.

Section 27-41-55, Mississippi Code of 1972, as amended, provides that after the fifth day of August in each year, the tax collector for each county shall advertise and sell all land in such county on which all taxes due and in arrears have not been paid as well as all land liable for other matured taxes. The sale is held at the door of the courthouse of such county on the last Monday of August following said advertisement. The owner, or any person interested in the land sold for taxes, may redeem the land at any time within two years after the date of sale by paying all taxes, costs, interest and damages due to the county’s chancery clerk. A valid tax sale will mature two years after the date of sale unless the land is redeemed and title will vest in the purchaser on such date.

At the option of the tax collector, advertisement for the sale of such county lands may be made after the fifteenth day of February in each year with the sale of such lands to be held on the first Monday of April following said advertisement. All provisions which relate to the tax sale held in August of each year shall apply to the tax sale if held in April.

County and municipal taxes assessed upon lands or personal property are entitled to preference over all judgments, executions, encumbrances or liens, however created.

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City’s Tax Levy Per $1,000 Valuation1

2012 2011 2010 2009 2008

City General Fund 45.68 45.81 42.53 43.69 44.72 City Parks & Recreation Fund 2.00 2.00 2.00 2.00 2.00 City Debt Service Fund 3.20 3.07 6.63 5.47 4.47 City Special Revenue Pension Fund 5.75 5.75 5.56 5.56 5.56 Jackson/Hinds Library System 1.40 1.40 1.31 1.31 1.28 Jackson Public School District 74.99 74.99 74.99 74.99 74.99

Total For Combined City Purposes Levy 133.02 133.02 133.02 133.02 133.02

1 Tax levy figures are given in mills. SOURCE: Office of the Director of Administration of the City, July 2012.

District Ad Valorem Tax Collections

Fiscal Year Ending 6/30 Total Tax Levy Amount Collected1

Collections as Percent of Levy

2007-2008 $78,313,048.26 $78,655,548.40 100.44% 2008-2009 86,440,089.00 85,084,670.00 98.43 2009-2010 87,397,664. 00 83,653,075.00 95.72 2010-2011 87,397,664.00 86,899,332.00 99.43 2011-2012 87,397,664.00 84,331,066.00 96.49

1 Does not include school taxes and automobile taxes.

SOURCE: Jackson Public School District, November 2012.

City Ad Valorem Tax Collections1

Fiscal Year Ending 9/30 Total Tax Levy Amount Collected2

Collections as Percent of Levy

2011 $59,020,780 $59,117,009 100.2% 2010 58,919,123 59,082,147 100.3 2009 59,890,601 59,595,270 99.5 2008 52,763,185 52,590,694 99.7 2007 53,067,311 53,335,167 100.5 2006 50,051,425 50,104,341 100.1

1 Does not include school taxes and automobile taxes. 2 Includes delinquent tax collections.

SOURCE: Office of the Director of Administration of the City, November 2012.

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Reappraisal of Property and Limitation on Ad Valorem Levies

Senate Bill No. 2672, General Laws of Mississippi, Regular Session 1980, codified in part as Sections 27 35 49 and 27-35-50, Mississippi Code of 1972 (the “Reappraisal Act”), provides that all real and personal property in the State shall be appraised at true value and assessed in proportion to true value. To ensure that property taxes do not increase dramatically as the counties complete reappraisals, the Reappraisal Act provides for the limit on increase in tax revenues discussed below.

The statute limits ad valorem tax levies by a city subsequent to October 1, 1980, to a rate which will result in an increase in total receipts of not greater than 10% over the previous year’s receipts, excluding revenue from ad valorem taxes on any newly constructed properties, any existing properties added to the tax rolls or any properties previously exempt which were not assessed in the next preceding year. This limitation does not apply to levies for the payment of the principal of and the interest on general obligation bonds issued by a city or to certain other specified levies. The limitation may be increased only if the proposed increase is approved by a majority of those voting in an election held on such question.

On August 20, 1980, the Mississippi Supreme Court rendered its decision in State Tax Commission v. Fondren, 387 So. 2d 712, affirming the decree of the Chancery Court of the First Judicial District of Hinds County, Mississippi, wherein the State Tax Commission was enjoined from accepting and approving assessment rolls from any county in the State for the tax year 1983 unless the State Tax Commission equalized the assessment rolls of all of the counties. Due to the intervening passage of the Reappraisal Act, the Supreme Court reversed that part of the lower court’s decree ordering the assessment of property at true value (although it must still be appraised at true value), holding instead that assessed value may be expressed as a percentage of true value. Pursuant to the Supreme Court modification of the Chancellor’s decree, on November 15, 1980, the State Tax Commission filed a master plan to assist counties in determining true value. On February 7, 1983, the Chancery Court granted an extension until July 1, 1984, of its previous deadline past which the State Tax Commission could not accept and approve tax rolls from counties which had not yet reappraised. The County has completed a number of reappraisals since 1984 and is currently conducting re-appraisals.

Homestead Exemption

The Mississippi Homestead Exemption Law of 1946 reduces the local tax burden on qualified homesteads and provides substitute revenues from other sources of taxation on the State level as a reimbursement to the local taxing units for such tax loss. Provisions of the homestead exemption law determine qualification, define ownership and limit the amount of property that may come within the exemption. The exemption is not applicable to taxes levied for the payment of the School District Indebtedness, except as hereinafter noted.

Those homeowners who qualify for the homestead exemption and who have reached the age of 65 years on or before January 1 of the year for which the exemption is claimed; service-connected, totally disabled American veterans who were honorably discharged from military service; and those qualified as disabled under the federal Social Security Act are exempt from any and all ad valorem taxes on qualified homesteads not in excess of $7,500 of assessed value.

The tax loss resulting to local taxing units from qualified homestead exemptions is reimbursed by the State Tax Commission. Beginning with the 1984 supplemental ad valorem tax roll and for each roll thereafter, no taxing unit shall be reimbursed an amount in excess of 106% of the total net reimbursement made to such taxing unit in the next preceding year.

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Largest Taxpayers in the School District

Taxpayer FY Ending 6/30/11 Assessed Valuation

Percentage of Assessed Valuation1

Total Tax

Entergy of MS $79,471,928 6.57% $5,239,791.57 Bellsouth Telecommunications

50,107,631 4.15 2,254,595.65

MidContinent Express Pipeline LLC

29,092,700 2.41 3,089,644.74

Gulf South Pipeline Co LP 26,849,337 2.22 2,806,126.79 Atmos Energy 12,267,967 1.01 559,529.70 Parkway Properties 10,232,898 0.85 1,654,678.20 A T & T Services 9,803,512 0.81 1,679,831.77 Entergy Services, Inc. 8,835,927 0.73 912,542.21 Walmart 8,280,392 0.69 1,009,634.79 Illinois Central Railroad 7,025,722 0.58 511,099.71

Total $241,968,014 20.02% $19,717,475.13 —————————— SOURCE: Hinds County Tax Collectors Office, November 2012. 1 Percentage based on $1,208,761,561 Assessed Valuation of Property in the School District for Assessment Year 2011-2012.

THE SCHOOL DISTRICT’S DEBT INFORMATION

Legal Debt Limit Statement (as of December 1, 2012)1

15% Limit 20% Limit

Authorized Debt Limit (Last Completed Assessment for Taxation - $1,208,761,561.00)

$181,314,234 $241,752,312

Present Debt Subject to Debt Limits 136,935,000 136,935,000 Margin for Further Debt Under Debt Limits $ 44,379,234 $104,817,312 1 Does not include the School District Indebtedness. SOURCE: Jackson Public School District, June 2012.

Statutory Debt Limits

School districts in the State are subject to a general statutory prohibition against issuing bonds in an amount which, when added to all of the then outstanding bonded indebtedness of such district, results in the imposition on any of the property in the district of more than 15% of the assessed value of the taxable property within such district, according to the then last completed assessment for taxation.

Such general limitation of indebtedness may be exceeded by a school district in the following instances:

(a) If the total number of pupils enrolled at any one time during the school year shall have increased by at least 20% or an average of 350 or more annually within the preceding five years, such district may issue bonds in an amount which, when added to all of its then outstanding bonded indebtedness, results in the imposition on any of the property in such district of an indebtedness for school purposes of up to 25% of the assessed value of the taxable property within such district, according to the then last completed assessment for taxation.

(b) If the total number of pupils enrolled at any one time during the school year shall have increased by at least 10% within the preceding five years, such district may issue bonds in an amount which, when added to all

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of its then outstanding bonded indebtedness, results in the imposition on any of the property in such district of an indebtedness for school purposes of up to 20% of the assessed value of the taxable property within such district, according to the then last completed assessment for taxation.

(c) In the event or circumstances set forth below, a school district may issue bonds for the purpose of constructing, reconstructing, repairing, equipping, remodeling or enlarging school buildings and related facilities, in an amount which, when added to all of its then outstanding bonded indebtedness, results in the imposition on any of the property in such district of an indebtedness for such school purposes of up to 20% of the assessed value of the taxable property within such district, according to the then last completed assessment for taxation:

(i) in the event of the damage to or destruction of any school building or school buildings, or related facilities of such district by fire, windstorm, flood or other providential and unforeseeable cause; or

(ii) in the event that such district has lost its accreditation and the constructing, reconstructing, repairing, equipping, remodeling or enlarging of such school buildings and related facilities is necessary for the restoration of such accreditation.

Outstanding Bonded Debt (as of November 1, 2012)1

Issue Original Principal

Amount Date of Issue Outstanding

Principal

General Obligation Bonded Debt General Obligation Bonds, Series 2007 $ 36,000,000 10/02/2007 $ 28,720,000 General Obligation Bonds, Series 2008 $ 114,000,000 07/23/2008 108,215,000

TOTAL $ 136,935,000

Issue1 Date of Issue

Original Principal

Maturity Date

Outstanding Principal

3 Mill Notes2 Limited Tax Notes Series 2003-B 10/14/2003 $ 16,381,688 10/1/2023 $ 10,621,688 Limited Tax Refunding Notes, Series 2005 05/05/2005 25,220,000 10/1/2020 21,995,000

TOTAL $ 32,616,688

1 Does not include the School District Indebtedness 2 Is not subject to the School District’s 15% Debt Limit addressed heretofore

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Total Limited Tax Obligation Debt and Projected Debt Service Coverage

Upon the issuance and delivery by the Bank of the Series 2012B Bonds and the School District Note, there will also be certain Series 2005 Notes issued by the School District that are also secured by the special limited three (3) mill levy that are outstanding in the approximate principal amount of $20,060,000 (the “Series 2005 Notes”). Unlike the Series 2012B Bonds, the Series 2005 Notes are not legally secured by EEF Funds; however, the School District may (and does) use EEF Funds to pay the principal of, and interest on, the Series 2005 Notes.

The following table sets forth for each fiscal year ending June 30 the total principal and interest payment requirements with respect to both the Series 2005 notes and the Series 2012B Bonds (the total of such principal and interest payments, the “Total Limited Tax Obligations”), the projected avails of a 3 mill levy (assuming a constant $1.2 Billion Digest value), the projected available EEF Funds and a combined coverage ratio.

THERE IS NO ASSURANCE THAT THE AVAILS OF THE 3 MILL LEVEL WILL GENERATE $3,600,000 IN FUTURE YEARS.

Fiscal Year

ending June 30

Debt Service for Series

2005 Notes

Debt Service for Series

2012B Bonds1

Total Debt Service for Limited Tax

Obligations2 Avails of

3 Mill Levy3 EEF

Funds4

Combined Coverage

Ratio5

2013 $2,979,295 $ 139,201.39 $3,118,496.39 $3,600,000 $960,000 1.462x 2014 3,004,420 659,375.00 3,663,795.00 3,600,000 960,000 1.245x 2015 3,003,795 659,375.00 3,663,170.00 3,600,000 960,000 1.245x 2016 3,027,170 796,390.63 3,823,560.63 3,600,000 960,000 1.193x 2017 3,031,270 1,245,203.13 4,276,473.13 3,600,000 960,000 1.066x 2018 3,053,745 1,218,796.88 4,272,541.88 3,600,000 960,000 1.067x 2019 3,047,370 1,221,734.38 4,269,104.38 3,600,000 960,000 1.068x 2020 3,080,060 1,194,015.63 4,274,075.63 3,600,000 960,000 1.067x 2021 3,075,000 1,190,718.76 4,265,718.76 3,600,000 960,000 1.069x 2022 4,203,937.51 4,203,937.51 3,600,000 960,000 1.085x 2023 4,200,640.63 4,200,640.63 3,600,000 960,000 1.086x 2024 4,204,843.75 4,204,843.75 3,600,000 960,000 1.084x

1Based upon actual debt service. 2Table excludes the Jackson Public School District Limited Tax Notes Series 2003-B, which will be refunded and redeemed in full with the proceeds of the Series 2012B Bonds and the School District Note. 3The Avails of 3 Mill was calculated assuming a constant $1.2 Billion Digest value. 4The amount available from the EEF Fund is assumed to be constant for purposes of the Combined Coverage Ratio. 5The Combined Coverage Ratio is calculated using certain assumptions about the avails of the 3 mill levy and the collection of EEF Funds.

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Other Long Term Debt (as of November 1, 2012)

Issue1 Date of Issue Original Principal Maturity

Date Outstanding

Principal

Other Long Term Debt QSCB Bonds 12/27/2009 $ 8,000,000 12/15/2024 $ 8,000,000 Energy Conservation Lease Purchase (Siemens)

06/17/2002 8,348,849 06/17/2017 3,900,120

Microcomputers Lease Purchase 02/17/2011 900,000 07/31/2015 615,303 Telephone System Lease Purchase 02/17/2011 1,222,747 07/31/2015 835,955 Buses Lease Purchase 06/13/2011 1,238,460 08/31/2020 1,073,194 State Aid Capital Improvement Refunding Bonds, Series 2006

2/22/2006 26,520,000 02/01/2018 13,475,000

TOTAL $ 27,899,572 1 Is not included in statutory debt limits.

Annual Debt Service Requirements1

General Obligation Bonds

Existing Debt

Fiscal Year Ending 6/30 Principal Interest

Total Debt Service

2013 $ 5,955,000 $ 3,436,375 $ 9,391,375 2014 6,195,000 6,574,513 12,769,513 2015 6,505,000 6,263,675 12,768,675 2016 6,825,000 5,925,913 12,750,913 2017 7,135,000 5,610,988 12,745,988 2018 7,495,000 5,240,475 12,735,475 2019 7,865,000 4,855,488 12,720,488 2020 8,210,000 4,533,269 12,743,269 2021 8,650,000 4,109,619 12,759,619 2022 9,115,000 3,660,681 12,775,681 2023 9,605,000 3,187,544 12,792,544 2024 10,125,000 2,686,145 12,811,145 2025 10,660,000 2,167,351 12,827,351 2026 11,225,000 1,621,038 12,846,038 2027 11,755,000 1,042,593 12,797,593 2028 9,615,000 516,806 10,131,806

TOTAL $ 136,935,000 $ 16,603,150 $ 198,367,473

1 Does not include the School District Indebtedness. SOURCE: Jackson Public School District, November 2012.

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Direct and Overlapping Debt Ratios

Jurisdiction 2011-2012 Net

Assessed Valuation G.O. Bond Debt

Amount Applicable to

District Taxpayers

% Applicable to District Taxpayers

District $1,208,761,561 $136,935,000 $136,935,000 100% City of Jackson 1,226,113,108 84,322,003 84,322,003 100 Hinds County 1,830,867,216 43,085,000 43,085,000 69 Total Direct and Overlapping G.O. Debt $250,985,6531 Direct and Overlapping Debt Per Capita (173,514) $1,446.49 Direct and Overlapping Debt to Assessed Valuation 20.8 % 1 Includes only that portion of the general obligation debt for the School District, the City and the County applicable to District taxpayers. SOURCE: Jackson Public School District and Hinds County Tax Assessor, November 2012.

OTHER FINANCIAL INFORMATION; BUDGET AND SOURCES OF FUNDING

Budgetary Process

The School District’s budgetary process is prescribed by Sections 37-61-9 to 37-61-21, Mississippi Code of 1972, as amended. Submission of a budget on forms prescribed by the State Auditor is a prerequisite to the distribution of school funds. On or before August 15 of each year, the school board of each school district within the State, with the assistance of the superintendent of schools, must prepare and file with the levying authority for the school district at least two copies of a budget of estimated expenditures for the support, maintenance and operation of the public schools of the school district for the coming fiscal year (commencing July 1). In addition, on or before August 15 of each year, each school board, with the assistance of the superintendent of schools of each district, shall prepare and file with the State Department of Education such budgetary information as the trustees of the State Board of Education may require.

Prior to the adoption of a budget, the school board must hold at least one public hearing to provide the public with an opportunity to comment on the budget. The public hearing must be held at least one week prior to the adoption of the budget, with advance notice. After final adoption of the budget, the budget must be published in a newspaper having general circulation in the school district.

The expenditure of school funds is limited to the budgeted amount, unless revised in the statutorily-prescribed manner. When the need arises, budgets may be revised upon the approval by the School District’s board of trustees. The superintendent of each school district is to maintain a set of books subject to reasonable inspection by any citizen. These books will be arranged according to the same headings contained in the approved budget, and will reflect a running total of all liabilities incurred during the fiscal year under each budget item.

Statutory Provisions Concerning Audits for School Districts

The State Auditor is directed by statute to prescribe and formulate for use by all school districts of the State adequate accounting systems and other essential financial records that shall be uniform for all districts. It is mandatory that the boards of trustees/education of all school districts install, utilize and follow said uniform system of accounts in keeping the financial records of such school district.

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School District Funding

There are three general categories of funding sources for public schools in Mississippi: State, local and federal.

State Funding

1. Mississippi Accountability and Adequate Education Program

Effective July 1, 2002, the Mississippi Accountability and Adequate Education Program Act of 1997 (MAEP) replaced the Minimum Education Program (MEP) as the primary method of State funding for public school districts. The MAEP provides a total overhaul of the funding formula for public education in Mississippi.

Under the MAEP, funds are distributed to each school district based upon a formula multiplying average daily attendance by the base student cost as established by the State Legislature. This yields the total base program cost for each school district. The base student dollar cost figure is established each year at current operation funding levels necessary for the programs of a school district to meet at least Level III of the accreditation system established by the trustees of the State Board of Education, regardless of the school district’s geographic location.

Additional funding is provided to the total base program cost using factors applicable to the percentage of children “at-risk,” supplemental grant funds based on average daily attendance and add-on program costs such as transportation costs, vocational or technical education, special education, gifted education, alternative school and extended school year programs.

The MAEP is financed jointly by local school district contributions and by the State. The formula for determining the cost of the MAEP and the local contribution is set forth in the statutes authorizing the MAEP.

2. State Public Schools Building Fund

The State also provides limited funding assistance to school districts for capital construction projects. A grant program was established in 1953 that has provided substantial assistance to local school districts. The program, formerly administered by the Education Finance Commission, is presently administered by the trustees of the State Board of Education and is known as the State Public Schools Building Fund (the “Building Fund”). The Building Fund is funded primarily through a fixed amount of annual funding from sales tax revenues of the State. The Building Fund is authorized to issue state bonds to produce funds that are redistributed to local districts based upon a formula allowing for credits for a certain dollar amount for each student for each year. A local district is allowed to borrow against those credits in order to provide funding assistance for the facilities needed. However, a school district is not obligated to repay any portion of its allocation or any portion of the underlying bonded indebtedness of the Building Fund.

3. State Public Schools Sales Tax Diversion

During the 1992 legislative session, the State enacted a law that, among other things, increased the sales tax in the state from six percent, to seven percent with the bulk of the increased sales tax revenues to be used for the benefit of the State’s public schools. In particular, the sales tax law created the Education Enhancement Fund (EEF), through which approximately Sixteen Million Dollars ($16,000,000) of sales tax revenues will be distributed to State school districts on an average daily attendance-based formula. These funds may be used to pay the costs of capital improvements or transportation equipment purchases or to pay debt service on debt issued to pay for these purposes. Section 37-61-33, Mississippi Code of 1972, as amended, allows the pledge of the EEF funds as security for long-term obligations issued by the School District. Any of the EEF funds not required to pay principal of and interest on the School District’s obligations may be used by the School District for any lawful purposes. The sales tax law also establishes other funds to distribute additional monies to school districts for transportation, instructional supplies and ad valorem tax reduction.

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Local Sources

The second source of funding of public schools in Mississippi is from local sources, primarily consisting of ad valorem tax revenues. The various types of local funding revenues may be categorized as follows:

1. District Maintenance Levy

All school districts in Mississippi are authorized to require the levy of an ad valorem tax to provide necessary local funding for operations. This is the primary source for a district’s local sources revenues. Beginning with Fiscal Year 1998, the operational levy of all school districts, excluding any debt service or other special debt levies, is limited to 55 mills. Any school district that exceeded that levy as of July 1, 1997, however, was allowed an increase of up to three mills between July 1, 1997, and June 30, 2002. Such increases are subject to the normal increase limitations imposed on school districts of not more than four percent, in the discretion of the School District’s board of trustees/education, or seven percent, subject to a public referendum, if a proper petition is filed requesting such referendum. The School District has exceeded the limit regarding its School District maintenance levy. As such, it will make a determination as to whether it will seek a referendum to address the matter.

2. Local Contribution to MAEP

A portion of the State’s MAEP is funded from local contributions from the local ad valorem tax levy. The calculation of the local contribution is set by the statute authorizing the MAEP.

Federal Sources

Federal funds have been granted to local school districts in Mississippi, primarily under entitlement programs designed to assist the economically disadvantaged and to assist in implementing desegregation programs as well as other special purpose programs. For the year ending June 30, 2012, federal sources provided $71,515,060 to the School District.

Financial Statements

The last year for which the School District’s audited financial statements are available is the year ended June 30, 2011. A copy of this financial statement is included in Appendix B to this Official Statement. In addition, Appendix B includes the School District’s fiscal year 2012-2013 budget.

Financial records of Mississippi school districts are maintained on a modified accrual basis. The local education agency is also required to employ the double-entry system for recording and control of accounting transactions.

APPENDIX B

FINANCIAL INFORMATION CONCERNING THE SCHOOL DISTRICT

JACKSON PUBLIC SCHOOL DISTRICT

Audited Financial Statements For the Year Ended June 30, 2011


TABLE OF CONTENTS INDEPENDENT AUDITOR’S REPORT 1 MANAGEMENT’S DISCUSSION AND ANALYSIS 4 BASIC FINANCIAL STATEMENTS 13

Government-wide Financial Statements Exhibit A – Statement of Net Assets 14 Exhibit B – Statement of Activities 15

Governmental Funds Financial Statements Exhibit C – Balance Sheet 16 Exhibit C-1 – Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets 17 Exhibit D – Statement of Revenues, Expenditures and Changes in Fund Balances 18 Exhibit D-1 – Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances to the Statement of Activities 19

Fiduciary Funds Financial Statements Exhibit E – Statement of Fiduciary Net Assets 20 Exhibit F – Statement of Changes in Fiduciary Net Assets 21

Notes to the Financial Statements 22 REQUIRED SUPPLEMENTAL INFORMATION 45

Budgetary Comparison Schedule – General Fund 46 Notes to the Required Supplemental Information 47

SUPPLEMENTAL INFORMATION 48

Schedule of Expenditures of Federal Awards 49 Schedule of Instructional, Administrative and Other Expenditures – Governmental Funds 50

OTHER INFORMATION 51

Statement of Revenues, Expenditures and Changes in Fund Balances – General Fund, Last Four Years 52

Statement of Revenues, Expenditures and Changes in Fund Balances – All Governmental Funds, Last Four Years 53

REPORTS ON INTERNAL CONTROL AND COMPLIANCE 54

Independent Auditor’s 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 55 Independent Auditor’s Report on Compliance with Requirements That Could Have a Direct and Material Effect on Each Major Program and on Internal Control Over Compliance in Accordance with OMB Circular A-133 57

INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE WITH STATE LAWS AND REGULATIONS 59 SCHEDULE OF FINDINGS AND QUESTIONED COSTS 64 AUDITEE’S CORRECTIVE ACTION PLAN AND SUMMARY OF PRIOR FEDERAL AUDIT FINDINGS 67

1 WATKINS, WARD AND STAFFORD, PLLC

CERTIFIED PUBLIC ACCOUNTANTS

INDEPENDENT AUDITOR’S REPORT



INDEPENDENT AUDITOR’S REPORT

Superintendent and School Board Jackson Public School District We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Jackson Public School District as of and for the year ended June 30, 2011, which collectively comprise the Jackson Public School District’s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Jackson Public School District’s management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to previously present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the Jackson Public School District, as of June 30, 2011, and the respective changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated December 7, 2012, on our consideration of the Jackson Public School District'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 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 internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and budgetary comparison information 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 supplemental 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

James L. Stafford, CPA Harry W. Stevens, CPA S. Keith Winfield, CPA William B. Staggers, CPA Aubrey R. Holder, CPA Michael W. McCully, CPA Mort Stroud, CPA R. Steve Sinclair, CPA Michael L. Pierce, CPA Marsha L. McDonald, CPA

Wanda S. Holley, CPA Robin Y. McCormick,CPA/PFS J. Randy Scrivner, CPA Kimberly S. Caskey, CPA Susan M. Lummus, CPA Thomas J. Browder, CPA Stephen D. Flake, CPA John N. Russell, CPA Thomas A. Davis, CPA Anita L. Goodrum, CPA

WATKINS, WARD AND STAFFORD Professional Limited Liability Company

Certified Public Accountants 120 North Congress, Suite 640

Jackson, MS 39201 Phone (601) 714-1956 Fax (601) 956-4720



with sufficient evidence to express an opinion or provide any assurance. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Jackson Public School District's basic financial statements. The accompanying Schedule of Expenditures of Federal Awards and the Schedule of Instructional, Administrative and Other Expenditures for Governmental Funds are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The 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 financial statements or to the 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. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Jackson Public School District's basic financial statements. The other information section, which includes the Statement of Revenues, Expenditures and Changes in Fund Balances—General Fund, Last Four Years and the Statement of Revenues, Expenditures and Changes in Fund Balances—All Governmental Funds, Last Four Years, is presented for purposes of additional analysis as required by the Mississippi Department of Education and is not a required part of the basic financial statements. Such information 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. Watkins, Ward and Stafford, PLLC Jackson, Mississippi December 7, 2012



MANAGEMENT’S DISCUSSION AND ANALYSIS

JACKSON PUBLIC SCHOOL DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS

FOR THE YEAR ENDED JUNE 30, 2011



The following discussion and analysis of Jackson Public School District’s financial performance provides an overview of the School District’s financial activities for the year ended June 30, 2011. The intent of this discussion and analysis is to look at the School District’s performance as a whole. Readers are encouraged to review the financial statements and the notes to the financial statements to enhance their understanding of the School District’s financial performance. FINANCIAL HIGHLIGHTS

Total net assets for 2011 decreased $8,548,125, including a prior period adjustment of $203,080, which represents a 35% decrease from fiscal year 2010. Total net assets for 2010 decreased $724,033, including a prior period adjustment of $(106,495), which represents a 3% decrease from fiscal year 2009.

General revenues amounted to $216,208,876 and $221,244,031, or 75% and 81% of all

revenues for fiscal years 2011 and 2010, respectively. Program specific revenues in the form of charges for services and grants and contributions accounted for $70,088,578, or 25% of total revenues for 2011, and $53,274,248, or 19% of total revenues for 2010.

The District had $295,048,659 and $275,135,817 in expenses for fiscal years 2011 and 2010;

only $70,088,578 for 2011 and $53,274,248 for 2010 of these expenses was offset by program specific charges for services, grants and contributions. General revenues of $216,208,876 for 2011 and $221,244,031 for 2010 were not adequate to provide for these programs.

Among major funds, the General Fund had $189,723,085 in revenues and $197,822,990 in

expenditures for 2011, and $192,649,992 in revenues and $191,732,826 in expenditures in 2010. The General Fund’s fund balance decreased by $6,801,608, including an increase in reserve for inventory of $120,365, from 2010 to 2011, and decreased by $2,564,804, including a prior period adjustment of $2,918 and a decrease in reserve for inventory of $63,861, from 2009 to 2010.

Capital assets, net of accumulated depreciation, increased by $22,534,350 for 2011 and

increased by $65,831,794 for 2010. The increase for 2011 was due primarily to the completion of various construction and classroom addition projects during the fiscal year and the ongoing construction of new school facilities at various school locations at fiscal year end.

Total long-term debt decreased by $5,408,845 for 2011 and increased by $1,230,499 for 2010. The decrease for 2011 was due primarily to principal payments on outstanding long-term debt. The liability for compensated absences increased by $61,118 for 2011 and increased by $145,575 for 2010.

OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis serves as an introduction to the District’s basic financial statements, which include government-wide financial statements, fund financial statements, and notes to the financial statements. This report also contains required supplemental information, supplemental information, and other information. Government-wide Financial Statements The government-wide financial statements are designed to provide the reader with a broad overview of the District’s finances. These statements consist of the Statement of Net Assets and the Statement of Activities, which are prepared using the flow of economic resources measurement focus and the accrual basis of accounting. The current year’s revenues and expenses are taken into account regardless of when cash is received or paid.





The Statement of Net Assets presents information on all the District’s non-fiduciary assets and liabilities, with the differences between the two reported as “net assets.” Over time, increases or decreases in the District’s net assets may serve as a useful indicator of whether its financial position is improving or deteriorating. The Statement of Activities presents information showing how the District’s net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods. The government-wide financial statements outline functions of the District that are principally supported by property taxes and intergovernmental revenues (governmental activities). The governmental activities of the District include instruction, support services, non-instructional, sixteenth section and interest on long-term liabilities. Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The District uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the District can be divided into two categories: governmental funds and fiduciary funds.

Governmental funds – Most of the District’s general activities are reported in its governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, governmental funds are accounted for using the modified accrual basis of accounting and the flow of current financial resources measurement focus. The approach focuses on near-term inflows and outflows of spendable resources, as well as balances of spendable resources available at year end. The governmental fund statements provide a detailed view of the District’s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, the reader may gain a better understanding of the long-term impact of the District’s near-term financing decisions. The governmental funds Balance Sheet is reconciled to the Statement of Net Assets, and the governmental funds Statement of Revenues, Expenditures, and Changes in Fund Balances is reconciled to the Statement of Activities to facilitate this comparison between governmental funds and governmental activities. The District maintains individual governmental funds in accordance with the Financial Accounting Manual for Mississippi Public School Districts. Information is presented separately in the governmental funds Balance Sheet and in the governmental funds Statement of Revenues, Expenditures, and Changes in Fund Balances for all major funds. All non-major funds are combined and presented in these reports as other governmental funds. Fiduciary funds – Fiduciary funds are used to account for resources held for the benefit of parties outside the District. Fiduciary funds are not reflected in the government-wide financial statements because resources of those funds are not available to support the District’s own programs. These funds are reported using the accrual basis of accounting. The school district is responsible for ensuring that the assets reported in these funds are used for their intended purpose.

Reconciliation of Government-wide and Fund Financial Statements The financial statements include two schedules that reconcile the amounts reported on the governmental





funds financial statements (modified accrual basis of accounting) with government-wide financial statements (accrual basis of accounting). The following summarizes the major differences between the two statements:

Capital assets used in governmental activities are not reported on governmental funds financial statements.

Capital outlay spending results in capital assets on government-wide financial statements, but is reported as expenditures on the governmental funds financial statements. Bond and note proceeds result in liabilities on government-wide financial statements, but are recorded as other financing sources on the governmental funds financial statements. Certain other outflows represent either increases or decreases in liabilities on the government-wide financial statements, but are reported as expenditures on the governmental funds financial statements.

Notes to the financial statements The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found immediately following the basic financial statements. Required Supplemental Information In addition to the basic financial statements and accompanying notes, this report also presents budgetary comparison schedules as required supplemental information. The District adopts an annual operating budget for all governmental funds. A budgetary comparison schedule has been provided for the General Fund as required by the Governmental Accounting Standards Board. Supplemental Information Additionally, a Schedule of Expenditures of Federal Awards as required by OMB Circular A-133 and a Schedule of Instructional, Administrative and Other Expenditures for governmental funds can be found in this report. Other Information Although not a required part of the basic financial statements, the Statement of Revenues, Expenditures and Changes in Fund Balances—General Fund, Last Four Years and the Statement of Revenues, Expenditures and Changes in Fund Balances—All Governmental Funds, Last Four Years, is presented for purposes of additional analysis as required by the Mississippi Department of Education. GOVERNMENT-WIDE FINANCIAL ANALYSIS Net assets Net assets may serve over time as a useful indicator of the District’s financial position. Assets exceeded liabilities by $16,298,646 as of June 30, 2011. The District’s financial position is a product of several financial transactions including the net result of activities, the acquisition and payment of debt, the acquisition and disposal of capital assets and the depreciation of capital assets.





Table 1 presents a summary of the District’s net assets at June 30, 2011 and June 30, 2010.

Table 1 Condensed Statement of Net Assets

June 30, 2011 June 30, 2010

Current assets $ 34,687,724 $ 34,851,134 (0.47) %Restricted and other assets 14,995,125 60,512,851 (75.22) %Capital assets, net 206,785,964 184,251,614 12.23 %

Total assets 256,468,813 279,615,599 (8.28) %

Current liabilities 18,227,791 27,062,465 (32.65) %Long-term debt outstanding 221,942,376 227,706,363 (2.53) %

Total liabilities 240,170,167 254,768,828 (5.73) %

Net assets:Invested in capital assets, net of

related debt 47,042,568 51,200,696 (8.12) %Restricted 9,496,990 7,050,045 34.71 %Unrestricted (40,240,912) (33,403,970) (20.47) %

Total net assets $ 16,298,646 $ 24,846,771 (34.40) %

Percentage Change

The following are significant current year transactions that have had an impact on the Statement of Net Assets.

Increase in net capital assets in the amount of $22,534,350. The principal retirement of $8,831,170 of long-term debt. Obligations under capital leases in the amount of $3,361,207.

Changes in net assets The District’s total revenues for the fiscal years ended June 30, 2011 and June 30, 2010 were $286,297,454 and $274,518,279, respectively. The total cost of all programs and services was $295,048,659 for 2011 and $275,135,817 for 2010.





Table 2 presents a summary of the changes in net assets for the fiscal years ended June 30, 2011 and June 30, 2010.

Table 2

Changes in Net Assets

Year Ended Year EndedJune 30, 2011 June 30, 2010

Revenues:Program revenues:

Charges for services $ 3,695,850 $ 2,979,527 24.04 %Operating grants and contributions 66,392,728 50,294,721 32.01 %

General revenues:Property taxes 87,417,809 84,171,551 3.86 %Grants and contributions not restricted 125,490,764 132,044,193 (4.96) %Investment earnings 210,144 2,078,809 (89.89) %Sixteenth section sources 1,244,155 1,205,304 3.22 %Other 1,846,004 1,744,174 5.84 %

Total revenues 286,297,454 274,518,279 4.29 %Expenses:

Instruction 153,406,470 148,431,656 3.35 %Support services 112,953,066 98,361,538 14.83 %Non-instructional 19,134,991 18,649,274 2.60 %Sixteenth section 70,194 86,185 (18.55) %Interest and other expenses on long-term liabilities 9,483,938 9,607,164 (1.28) %

Total expenses 295,048,659 275,135,817 7.24 %Increase (Decrease) in net assets (8,751,205) (617,538) (1,317.11) %Net Assets, July 1, as originally reported 24,846,771 25,570,804 (2.83) %Prior Period Adjustment 203,080 (106,495) 290.69 %Net Assets, July 1, as restated 25,049,851 25,464,309 (1.63) %Net Assets, June 30 $ 16,298,646 $ 24,846,771 (34.40) %

Percentage Change

Governmental activities The following table presents the cost of five major District functional activities: instruction, support services, non-instructional, sixteenth section, and interest on long-term debt. The table also shows each functional activity’s net cost (total cost less charges for services generated by the activities and intergovernmental aid provided for specific programs). The net cost presents the financial burden that was placed on the State and District’s taxpayers by each of these functions.





Table 3 Net Cost of Governmental Activities

2011 2010

Instruction $ 153,406,470 $ 148,431,656 3.35 %Support services 112,953,066 98,361,538 14.83 %Non-instructional 19,134,991 18,649,274 2.60 %Sixteenth section 70,194 86,185 (18.55) %Interest on long-term liabilities 9,483,938 9,607,164 (1.28) %

Total expenses $ 295,048,659 $ 275,135,817 7.24 %

2011 2010

Instruction $ (126,388,565) $ (126,283,856) 0.08 %Support services (89,626,869) (86,420,226) 3.71 %Non-instructional 609,485 535,862 13.74 %Sixteenth section (70,194) (86,185) (18.55) %Interest on long-term liabilities (9,483,938) (9,607,164) (1.28) %

Total net (expense) revenue $ (224,960,081) $ (221,861,569) 1.40 %

Total Expenses Percentage Change

Net (Expense) Revenue Percentage Change

Net cost of governmental activities ($224,960,081 for 2011 and $221,861,569 for 2010) was financed by general revenue, which is primarily made up of property taxes ($87,417,809 for 2011 and $84,171,551 for 2010) and state and federal revenues ($125,490,764 for 2011 and $132,044,193 for 2010). In addition, there was $1,244,155 and $1,205,304 in Sixteenth Section sources for 2011 and 2010, respectively.

Investment earnings amounted to $210,144 for 2011 and $2,078,809 for 2010.

FINANCIAL ANALYSIS OF THE DISTRICT’S FUNDS As noted earlier, the District uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental funds. The focus of the District’s governmental funds is to provide information on current inflows, outflows and balances of spendable resources. Such information is useful in assessing the District’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of the District’s net resources available for spending at the end of the fiscal year. The financial performance of the District as a whole is reflected in its governmental funds. As the District completed the year, its governmental funds reported a combined fund balance of $32,599,224, a decrease of $36,831,005, which includes a prior period adjustment of $203,080 and an increase in reserve for inventory of $210,126. This decrease is due primarily to expenditures incurred during the fiscal year for the construction and renovation of various school facilities. $3,226,947, or 10%, of the fund balance is unassigned, which represents the residual classification for the general fund’s fund balance that has not been assigned to other funds and that has not been restricted, committed, or assigned to specific purposes within the general fund. The remaining fund balance of $29,372,277, or 90%, is either non-spendable, restricted, committed or assigned to indicate that it is not available for spending except only for the purposes to which it is restricted, committed or assigned.





The General Fund is the principal operating fund of the District. The decrease in fund balance in the General Fund for the fiscal year was $6,801,608, which includes an increase in reserve for inventory of $120,365. The fund balance of Other Governmental Funds showed an increase in the amount of $400,200, which includes a prior period adjustment of $501,310 and an increase in reserve for inventory of $89,761. The increase (decrease) in the fund balances for the other major funds were as follows:

Major Fund Increase (Decrease)School Bond Series 2008 Fund $ (30,430,451) QSCB Series 2009 Fund $ 854

BUDGETARY HIGHLIGHTS During the year, the District revised the annual operating budget. Budget revisions were made to address and correct the original budgets to reflect more accurately the sources and uses of funding for the Jackson Public School District. Budget revisions during the year were routine in nature and insignificant when compared to total revenues and expenditures of the Jackson Public School District. A schedule showing the original and final budget amounts compared to the District’s actual financial activity for the General Fund is provided in this report as required supplemental information. CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets. As of June 30, 2011, the District’s total capital assets were $315,546,072, including land, construction in progress, school buildings, improvements other than buildings, buses, other school vehicles, furniture and equipment, and leased property under capital leases. This amount represents a gross increase of $27,836,902 from 2010, due primarily to the completion of various construction and classroom addition projects during the fiscal year and the ongoing construction of new school facilities at various school locations at fiscal year end. Total accumulated depreciation as of June 30, 2011, was $108,760,108, and total depreciation expense for the year was $6,094,641, resulting in total net capital assets of $206,785,964.

Table 4 Capital Assets, Net of Accumulated Depreciation

June 30, 2011 June 30, 2010

Land $ 5,445,362 $ 5,445,362 0.00 %

Construction in Progress 35,342,193 84,650,471 (58.25) %Buildings 138,989,486 76,062,273 82.73 %Improvements other than buildings 21,124,219 14,754,044 43.18 %Mobile equipment 2,237,124 2,378,472 (5.94) %Furniture and equipment 1,098,341 960,992 14.29 %Leased property under capital leases 2,549,239 - N/A %Total $ 206,785,964 $ 184,251,614 12.23 %

Percentage Change

Additional information on the District’s capital assets can be found in Note 5 included in this report.





Debt Administration. At June 30, 2011, the District had $215,935,445 in outstanding long-term debt, of which $9,939,080 is due within one year. During the fiscal year, the District issued obligations under capital leases in the amount of $3,361,207. The District also made principal payments on existing long-term debt in the amount of $8,831,170. The liability for compensated absences increased $61,118 from the prior year. The District maintains an A1 bond rating.

Table 5

Outstanding Long-Term Debt

June 30, 2011 June 30, 2010

General obligation bonds payable $ 140,415,000 $ 143,735,000 (2.31) %Limited obligation bonds payable 17,725,000 19,735,000 (10.18) %Three mill notes payable 36,766,688 39,631,688 (7.23) %Obligations under capital leases 3,361,207 - N/A %Obligations under energy efficiency leases 4,948,487 5,584,657 (11.39) %Qualified zone academy bonds payable 2,500,000 2,500,000 0.00 %Qualified school construction bonds payable 8,000,000 8,000,000 0.00 %Compensated absences payable 2,219,063 2,157,945 2.83 % Total $ 215,935,445 $ 221,344,290 (2.44) %

Percentage Change

Additional information on the District’s long-term debt can be found in Note 6 included in this report. CURRENT ISSUES The Jackson Public School District is financially stable. The District is proud of its community support of the public schools. The District has committed itself to financial excellence for many years. The District’s system of financial planning, budgeting and internal financial controls is well regarded. The District plans to continue its sound fiscal management to meet the challenges of the future. The District actively pursues grant funding to supplement the local, state and federal revenues. CONTACTING THE DISTRICT’S FINANCIAL MANAGEMENT If you have any questions about this report or need additional financial information, contact the Superintendent’s Office of the Jackson Public School District, Post Office Box 2338, Jackson, MS 39225-2338.



FINANCIAL STATEMENTS



Statement of Net Assets Exhibit AJune 30, 2011

GovernmentalActivities

AssetsCash and cash equivalents $ 12,496,819 Due from other governments 19,785,510 Other receivables, net 1,337,741 Inventories 1,067,654 Deferred debt issuance costs 1,303,441 Restricted assets 13,691,684 Capital assets, non-depreciable:

Land 5,445,362 Construction in progress 35,342,193

Capital assets, net of accumulated depreciation:Buildings 138,989,486 Improvements other than buildings 21,124,219 Mobile equipment 2,237,124 Furniture and equipment 1,098,341 Leased property under capital leases 2,549,239

Total Assets 256,468,813

LiabilitiesAccounts payable and accrued liabilities 15,662,100 Due to other governments 3,047 Unearned revenue 115,037 Interest payable on long-term liabilities 2,447,607 Long-term liabilities, due within one year:

Capital related liabilities 8,245,932 Non-capital related liabilities 1,693,148

Long-term liabilities, due beyond one year:Capital related liabilities 162,918,213 Capital related bond premium 6,006,931 Non-capital related liabilities 43,078,152

Total Liabilities 240,170,167

Net AssetsInvested in capital assets, net of related debt 47,042,568 Restricted for:

Expendable:School-based activities 3,558,557 Debt service 5,045,822 Forestry improvements 39,830 Unemployment benefits 556,410

Non-expendable:Sixteenth section 296,371

Unrestricted (40,240,912) Total Net Assets $ 16,298,646

The notes to the financial statements are an integral part of this statement.




Statement of Activities Exhibit BFor the Year Ended June 30, 2011

Net (Expense)Revenue and

Changes in Net Assets

Operating Capital Charges for Grants and Grants and Governmental

Functions/Programs Expenses Services Contributions Contributions Activities

Governmental Activities:Instruction $ 153,406,470 $ 1,376,671 $ 25,641,234 $ - $ (126,388,565) Support services 112,953,066 694,406 22,631,791 - (89,626,869) Non-instructional 19,134,991 1,624,773 18,119,703 - 609,485 Sixteenth section 70,194 - - - (70,194) Interest on long-term liabilities 9,483,938 - - - (9,483,938)

Total Governmental Activities $ 295,048,659 $ 3,695,850 $ 66,392,728 $ - $ (224,960,081)

General Revenues:Taxes:

General purpose levies 72,864,284 Debt purpose levies 14,553,525

Unrestricted grants and contributions:State 116,009,902 Federal 9,480,862

Unrestricted investment earnings 210,144 Sixteenth section sources 1,244,155 Other 1,846,004

Total General Revenues 216,208,876

Change in Net Assets (8,751,205)

Net Assets - Beginning, as originally reported 24,846,771 Prior Period Adjustments 203,080

Net Assets - Beginning, as restated 25,049,851

Net Assets - Ending $ 16,298,646


Program Revenues




Balance Sheet Exhibit CJune 30, 2011

School Bond QSCB Other TotalGeneral Series 2008 Series 2009 Governmental Governmental

Fund Fund Fund Funds FundsAssets

Cash and cash equivalents $ 1,448,439 $ 1,996,528 $ 31 $ 11,346,243 $ 14,791,241 Cash with fiscal agents - - 7,900,428 1,407,855 9,308,283 Investments - - - 2,088,979 2,088,979 Due from other governments 7,550,668 - 969 10,757,097 18,308,734 Other receivables, net 1,323,289 - - 14,452 1,337,741 Due from other funds 15,068,369 9,500,000 - 2,918,917 27,487,286 Inventories 723,516 - - 344,138 1,067,654

Total assets $ 26,114,281 $ 11,496,528 $ 7,901,428 $ 28,877,681 $ 74,389,918

Liabilities and Fund BalancesLiabilities:

Accounts payable and accrued liabilities $ 10,427,417 $ 2,212,204 $ - $ 3,022,479 $ 15,662,100 Due to other funds 10,495,662 - 1,000 15,516,895 26,013,557 Unearned revenue - - - 115,037 115,037

Total Liabilities 20,923,079 2,212,204 1,000 18,654,411 41,790,694

Fund Balances:Nonspendable:

Inventory 723,516 - - 344,138 1,067,654 Permanent fund principal - - - 296,371 296,371

Restricted:Debt service - - - 7,493,429 7,493,429 Capital projects - 9,284,324 7,900,428 242,928 17,427,680 Forestry improvement purposes - - - 39,830 39,830 Unemployment benefits - - - 556,410 556,410 Other purposes - - - 1,250,164 1,250,164

Assigned:School activity accounts 810,807 810,807 Other purposes 429,932 - - 429,932 Unassigned 3,226,947 - - - 3,226,947

Total Fund Balances 5,191,202 9,284,324 7,900,428 10,223,270 32,599,224 Total Liabilities and Fund Balances $ 26,114,281 $ 11,496,528 $ 7,901,428 $ 28,877,681 $ 74,389,918


JACKSON PUBLIC SCHOOL DISTRICTGovernmental Funds

Major Funds



Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets Exhibit C-1June 30, 2011

Total fund balances for governmental funds $ 32,599,224

1. Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds:

Land $ 5,445,362 Construction in progress 35,342,193 Buildings 197,907,419 Improvements other than buildings 40,020,373 Mobile equipment 17,206,382 Furniture and equipment 16,263,136 Leased property under capital leases 3,361,207 Accumulated depreciation (108,760,108) 206,785,964

2. Long-term liabilities and related accrued interest are not due and payable in the current period and therefore are not reported in the funds:

General obligation bonds (140,415,000) Limited obligation bonds (17,725,000) Other bonds payable (10,500,000) Notes payable (36,766,688) Capital and energy lease obligations (8,309,694) Compensated absences (2,219,063) Unamortized charges 1,303,441 Unamortized premiums (6,006,931) Accrued interest payable (2,447,607) (223,086,542)

Net assets of governmental activities $ 16,298,646


Amounts reported for governmental activities in the statement of net assets are different because:




Statement of Revenues, Expenditures and Changes in Fund Balances Exhibit DFor the Year Ended June 30, 2011

School Bond QSCB Other TotalGeneral Series 2008 Series 2009 Governmental Governmental

Fund Fund Fund Funds FundsRevenues:

Local sources $ 75,897,955 $ 35,508 $ 854 $ 16,475,554 $ 92,409,871 State sources 112,062,375 - - 8,342,138 120,404,513 Federal sources 1,762,755 - - 69,779,879 71,542,634 Sixteenth section sources - - - 1,244,155 1,244,155

Total Revenues 189,723,085 35,508 854 95,841,726 285,601,173

Expenditures:Instruction 111,555,634 - - 37,102,888 148,658,522 Support services 85,040,599 6,390,612 - 23,940,154 115,371,365 Noninstructional services 81,729 - - 19,253,224 19,334,953 Sixteenth section - - - 70,194 70,194 Facilities acquisition and construction - 23,777,117 - 983,515 24,760,632 Debt service:

Principal 636,170 - - 8,195,000 8,831,170 Interest 483,734 - - 9,378,062 9,861,796 Other 25,124 - - 15,985 41,109

Total Expenditures 197,822,990 30,167,729 - 98,939,022 326,929,741

Excess (Deficiency) of Revenuesover (under) Expenditures (8,099,905) (30,132,221) 854 (3,097,296) (41,328,568)

Other Financing Sources (Uses):Capital leases issued 3,361,207 - - - 3,361,207 Insurance recovery 369,098 - - 325,308 694,406 Payments held by escrow agent - - - 467,000 467,000 Payment to QZAB/QSCB debt escrow agent (467,000) - - - (467,000) Sale of other property 28,744 - - - 28,744 Operating transfers in 2,883,772 - - 6,055,096 8,938,868 Other financing sources - - - 1,875 1,875 Operating transfers out (4,996,014) - - (3,942,854) (8,938,868) Other financing uses (1,875) - - - (1,875)

Total Other Financing Sources (Uses) 1,177,932 - - 2,906,425 4,084,357

Net Change in Fund Balances (6,921,973) (30,132,221) 854 (190,871) (37,244,211)

Fund Balances:July 1, 2010, as originally reported 11,992,810 39,714,775 7,899,574 9,823,070 69,430,229

Prior period adjustments - (298,230) - 501,310 203,080 July 1, 2010, as restated 11,992,810 39,416,545 7,899,574 10,324,380 69,633,309

Increase (Decrease) in reserve for inventory 120,365 - - 89,761 210,126

June 30, 2011 $ 5,191,202 $ 9,284,324 $ 7,900,428 $ 10,223,270 $ 32,599,224


Major Funds




Reconciliation of the Governmental Funds Statement of Revenues, Exhibit D-1Expenditures and Changes in Fund Balances to the Statement of ActivitiesFor the Year Ended June 30, 2011

Net change in fund balances - total governmental funds $ (37,244,211)

1. Governmental funds report capital outlay as expenditures. However, in the statement of activities, the cost of capital assets is allocated over their estimated useful lives as depreciation expense. In the current period, these amounts are:

Capital outlay $ 28,763,230 Depreciation expense (6,094,641) 22,668,589

2. In the statement of activities, only the gain/loss on the sale of assets is reported, while in the governmental funds, the proceeds from the sale increases financial resources. Thus, the change in net assets differs from the change in fund balance by the cost of the assets sold. (134,239)

3. The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net assets. Also, governmental funds report the effect of issuance costs, premiums, discounts and the difference between the carrying value of refunded debt and the acquisition cost of refunded debt when debt is first issued. These amounts are deferred and amortized in the statement of activities:

Capital leases issued (3,361,207) Payments of debt principal 8,831,170 Accrued interest payable 63,825 5,533,788

4. Some items reported in the statement of activities do not provide or require the use of current financial resources and therefore are not reported as revenues/expenditures in governmental funds. These activities include:

Change in compensated absences (61,118) Change in inventory reserve 210,126 Amortization of deferred charges, premiums and discounts 275,860 424,868

Change in net assets of governmental activities $ (8,751,205)


Amounts reported for governmental activities in the statement of activities are different because:




Statement of Fiduciary Net Assets Exhibit EJune 30, 2011

Private-Purpose AgencyTrust Funds Funds

AssetsCash and cash equivalents $ 47,720 $ 2,159,345 Other receivables - 374,064 Due from other funds - 3,047

Total Assets 47,720 $ 2,536,456

LiabilitiesAccounts payable and accrued liabilities - $ 716,091 Due to other funds - 1,476,776 Due to student clubs - 343,589

Total Liabilities - $ 2,536,456

Net AssetsReserved for scholarships 153 Held in trust 47,567

Total Net Assets $ 47,720


JACKSON PUBLIC SCHOOL DISTRICTFiduciary Funds



Statement of Changes in Fiduciary Net Assets Exhibit FFor the Year Ended June 30, 2011

Private-PurposeTrust Funds

AdditionsContributions and donations from private sources $ 38,564

Total Additions 38,564

DeductionsEducational media services 78,007

Total Deductions 78,007 Change in Net Assets (39,443)

Net AssetsJuly 1, 2010 87,163 June 30, 2011 $ 47,720


JACKSON PUBLIC SCHOOL DISTRICTFiduciary Funds


Notes to the Financial Statements For Year Ended June 30, 2011



Note 1 – Summary of Significant Accounting Policies The accompanying financial statements of the school district have been prepared in conformity with generally accepted accounting principles (GAAP) as prescribed by the Governmental Accounting Standards Board (GASB). GASB is the accepted standard-setting body for governmental accounting and financial reporting principles. The most significant of the school district’s accounting policies are described below. A. Basis of Presentation

In February 2009, the GASB issued GASB Statement No. 54 Fund Balance Reporting and Governmental Fund Type Definitions. This statement enhances the usefulness of fund balance information by providing clearer fund balance classifications that can be more consistently applied and by clarifying the existing governmental fund type definitions. The fund balance amounts for governmental funds have been reclassified in accordance with GASB Statement No. 54. As a result, amounts previously reported as reserved and unreserved are now reported as non-spendable, restricted, committed, assigned, or unassigned.

B. Financial Reporting Entity

As defined by accounting principles generally accepted in the United States of America, the school district is considered an "other stand-alone government." The school district is a related organization of, but not a component unit of, the city of Jackson since the governing authority of the city selects a majority of the school district's board but does not have financial accountability for the school district.

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

C. Government-wide and Fund Financial Statements Government-wide Financial Statements – The Statement of Net Assets and the Statement of

Activities report information on all of the non-fiduciary activities of the District. For the most part, the effect of inter-fund activity has been removed from these statements. Governmental activities, which normally are supported by tax and intergovernmental revenues, are reported separately from business type activities, which rely to a significant extent on fees and charges for support.

The Statement of Net Assets presents the District’s non-fiduciary assets and liabilities, with the difference reported as net assets. Net assets are reported in three categories:





1. Invested in capital assets, net of related debt, consists of capital assets, net of accumulated depreciation, and reduced by outstanding balances of bonds, notes and other debt attributable to the acquisition, construction or improvement of those assets.

2. Restricted net assets result when constraints placed on net asset use are either externally

imposed or imposed by law through constitutional provisions or enabling legislation. 3. Unrestricted net assets consist of net assets not meeting the definition of the two preceding

categories. Unrestricted net assets often have constraints on resources imposed by management which can be removed or modified.

The Statement of Activities demonstrates the degree to which the direct expenses of a given function, or segment, are offset by program revenues. Direct expenses are those clearly identifiable with a specific function. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function and 2) grants, contributions and interest restricted to meeting the operational or capital requirements of a particular function. Property taxes and other items not included among program revenues are reported instead as general revenues.

Fund Financial Statements - Separate financial statements are provided for governmental and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds are reported in separate columns in the fund financial statements. All remaining governmental funds are aggregated and reported as other governmental funds.

The school district reports the following major governmental funds:

General Fund - This is the school district’s primary operating fund. The general fund is used to account for and report all financial resources not accounted for and reported in another fund.

School Bond Series 2008 Fund - This is a capital projects fund used to account for the proceeds from the issuance of general obligation bonds and expenditures incurred for the construction and/or renovation of school facilities. QSCB Series 2009 Fund - This is a capital projects fund used to account for the proceeds from the issuance of qualified school construction bonds and expenditures incurred for the construction and/or renovation of school facilities.

All other governmental funds not meeting the criteria established for major funds are presented in the other governmental column of the fund financial statements.

The school district also reports fiduciary funds which focus on net assets and changes in net assets.

The District’s fiduciary funds include the following: RN Fortenberry Scholarship Fund – This fund serves as a private-purpose trust fund used to report a trust arrangement, other than those properly reported elsewhere, in which scholarships are provided to students of the school district. Lake Memorial Library Fund – This fund serves as a private-purpose trust fund used to report a trust arrangement, other than those properly reported elsewhere, in which the principal and income benefit individuals, private organizations or other governments. Payroll Clearing Fund – This fund serves as a clearing fund for payroll type transactions.





Student Club Funds – These various funds account for the monies raised through school club activities and fund raisers and club related expenditures approved by the individual clubs.

Accounts Payable Clearing Fund – This fund serves as a clearing fund for accounts payable type transactions.

Additionally, the school district reports the following fund types: GOVERNMENTAL FUNDS

Special Revenue Funds - Special Revenue Funds are used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditure for specified purposes other than debt service or capital projects.

Capital Projects Funds - Capital Projects Funds are used to account for and report financial resources that are restricted, committed, or assigned to expenditure for capital outlays, including the acquisition or construction of capital facilities and other capital assets.

Debt Service Funds - Debt Service Funds are used to account for and report financial resources that are restricted, committed, or assigned to expenditure for principal and interest. Permanent Funds - Permanent Funds are used to account for and report resources that are restricted to the extent that only earnings, and not the principal, may be used for purposes that support the district’s programs.

FIDUCIARY FUNDS

Private-purpose Trust Funds - Private-purpose trust funds are used to report all trust arrangements, other than those properly reported elsewhere, in which the principal and income benefit individuals, private organizations or other governments.

Agency Funds - Agency Funds are used to report resources held by the district in a purely custodial capacity (assets equal liabilities) and do not involve measurement of results of operations.

D. Measurement Focus, Basis of Accounting, and Financial Statement Presentation

In the government-wide Statement of Net Assets and Statement of Activities, governmental

activities are presented using the economic resources measurement focus and the accrual basis of accounting, as are the Fiduciary Fund financial statements. Revenues are recorded when earned, and expenses are recorded when a liability is incurred or economic asset used, regardless of the timing of the related cash flows. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met.

Governmental fund financial statements are reported using the current financial resources

measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Measurable means knowing or being able to reasonably estimate the amount. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues to be available if they are collected within 60 days after year end. Expenditures (including capital outlay) are recorded when the related fund liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and judgments, are





recorded only when payment is due. Federal grants and assistance awards made on the basis of entitlement periods are recorded as

receivables and revenues when entitlement occurs. Federal reimbursement type grants are recorded as revenues when the related expenditures are recognized. Use of grant resources is conditioned upon compliance with terms of the grant agreements and applicable federal regulations, which include subjecting grants to financial and compliance audits.

Property taxes, intergovernmental revenues (shared revenues, grants and reimbursements from

other governments) and interest associated with the current fiscal period are all considered to be susceptible to accrual.

Ad valorem property taxes are levied by the governing authority of the city on behalf of the school

district based upon an order adopted by the school board of the school district requesting an ad valorem tax effort in dollars. Since the taxes are not levied and collected by the school district, the revenues to be generated by the annual levies are not recognized until the taxes are actually collected by the tax levying authority.

Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of

general long-term debt and acquisitions under capital leases are reported as other financing sources.

Under the terms of grant agreements, the District funds certain programs by a combination of

specific cost-reimbursement grants and general revenues. Thus, when program expenses are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the District’s policy to first apply cost-reimbursement grant resources to such programs and then general revenues.

The effect of inter-fund activity has been eliminated from the government-wide statements. Revenues from the Mississippi Adequate Education Program are appropriated on a fiscal year

basis and are recorded at the time the revenues are received from the State of Mississippi. The account classifications used in the financial statements conform to the broad classifications recommended in Governmental Accounting, Auditing, and Financial Reporting, issued in 2005 by the Government Finance Officers Association and are consistent with the broad classifications recommended in Financial Accounting for Local and State School Systems, 2003, issued by the U.S. Department of Education.

E. Encumbrances

An encumbrance system is not maintained to account for commitments resulting from approved purchase orders, work orders and contracts.

F. Assets, liabilities, and net assets/fund balances

1. Cash, Cash equivalents and Investments

Cash and cash equivalents

The district’s cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with original maturities of three months or less from the date of acquisition. The school district deposits excess funds in the financial institutions selected by the school board. State statutes specify how these depositories are to be selected.





Investments

The school district can invest its excess funds, as permitted by Section 29-3-113, Miss. Code Ann. (1972), in interest-bearing deposits or other obligations of the types described in Section 27-105-33, Miss. Code Ann. (1972), or in any other type investment in which any other agency, instrumentality or subdivision of the State of Mississippi may invest, except that 100% of said funds are authorized to be so invested.

For accounting purposes, certificates of deposit are classified as investments if they have an original maturity greater than three months when acquired.

Investments for the district are reported at fair market value.

2. Receivables and payables

Activities between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either “due to/from other funds” (i.e., the current portion of inter-fund loans) or “advances to/from other funds”(i.e. the non-current portion of inter-fund loans). All other outstanding balances between funds are reported as “due to/from other funds.”

Advances between funds, as reported in the fund financial statements, are offset by a fund balance reserve account in applicable governmental funds to indicate that they are not available for appropriation and are not expendable available financial resources.

3. Due from Other Governments

Due from other governments represents amounts due from the State of Mississippi and various grants and reimbursements from other governments.

4. Inventories and Prepaid Items

Donated commodities are received from the USDA and are valued at USDA cost. Other inventories are valued at cost (calculated on the first-in, first-out basis). The costs of governmental fund type inventories are reported as expenditures when purchased.

Prepaid items, such as prepaid insurance, are not reported for governmental fund types since the costs of such items are accounted for as expenditures in the period of acquisition.

5. Restricted Assets

Certain resources set aside for repayment of debt are classified as restricted assets on the Statement of Net Assets because their use is limited by applicable debt statutes, e.g. Qualified Zone Academy Bond sinking funds. Also, the nonexpendable portion of the Permanent Fund, if applicable, is classified as restricted assets because the 16th Section Principal fund is not available for use by the district except as provided for under state statute for loans from this fund. In addition, unspent proceeds from the issuance of long-term debt reported as cash and cash equivalents in a Capital Projects Fund is classified as restricted assets because the funds are to be spent for specific purposes outlined in resolutions approved by the board, bond documentation, etc.

6. Capital Assets

Capital assets include land, improvements to land, easements, water rights, timber rights,





buildings, building improvements, vehicles, machinery, equipment, works of art and historical treasures, infrastructure, and all other tangible or intangible assets that are used in operations and that have initial useful lives extending beyond a single reporting period. Capital assets are reported in the applicable governmental or business type activities columns in the government-wide Statement of Net Assets. Capital assets are recorded at historical cost or estimated historical cost based on appraisals or deflated current replacement cost. Donated capital assets are recorded at estimated fair market value at the date of donation. The costs of normal maintenance and repair that do not add to the value of the asset or materially extend asset lives are not capitalized. Capital assets are defined by the District as assets with an initial, individual cost in excess of the thresholds in the table below.

Capital acquisition and construction are reflected as expenditures in the Governmental Fund statements and the related assets are reported as capital assets in the governmental activities column in the government-wide financial statements.

Depreciation is calculated on the straight-line basis for all assets, except land.

The following schedule details the capitalization thresholds:

Capitalization Policy

Estimated Useful Life

Land $ 0 0 Buildings 50,000 40 years Building improvements 25,000 20 years Improvements other than buildings 25,000 20 years Mobile equipment 5,000 5-10 years Furniture and equipment 5,000 3-7 years Leased property under capital leases * *

(*) The threshold amount will correspond with the amounts for the asset classifications, as listed. See Note 5 for details.

7. Compensated Absences

Employees of the school district accumulate sick leave at a minimum amount as required by state law. A greater amount may be provided by school district policy provided that it does not exceed the provisions for leave as provided in Sections 25-3-93 and 25-3-95. Some employees are allowed personal leave and/or vacation leave in accordance with school district policy. The district pays for unused leave for employees as required by Section 37-7-307(5), Miss. Code Ann. (1972).

The liability for these compensated absences is recorded as a long-term liability in the government-wide statements. The current portion of this liability is estimated based on historical trends. In the fund financial statements, governmental funds report the liability for compensated absences from expendable available financial resources only if the payable has matured, for example, an employee retires.

8. Long-term Liabilities, Deferred Debt Expense, and Bond Discounts/Premiums

In the government-wide financial statements, outstanding debt is reported as liabilities. Bond issue cost, bond discounts or premiums, and the difference between reacquisition





price and the net carrying value of refunded debt are capitalized and amortized over the terms of the respective bonds using a method that approximates the effective interest method.

The governmental fund financial statements recognize the proceeds of debt and premiums as other financing sources of the current period. Issuance costs are reported as expenditures. See Note 6 for details.

9. Fund Balances

Fund balance for governmental funds is reported in classifications that comprise a hierarchy based primarily on the extent to which the government is bound to honor constraints on the specific purposes for which amounts in those funds can be spent.

Governmental fund balance is classified as non-spendable, restricted, committed, assigned or unassigned. Following are descriptions of fund classifications used by the district:

Non-spendable fund balance includes items that cannot be spent. This includes activity that is not in a spendable form (inventories, prepaid amounts, long-term portion of loans/notes receivable, or property held for resale unless the proceeds are restricted, committed, or assigned) and activity that is legally or contractually required to remain intact, such as a principal balance in a permanent fund.

Restricted fund balance includes amounts that have constraints placed upon the use of the resources either by an external party or imposed by law through a constitutional provision or enabling legislation.

Committed fund balance includes amounts that can be used only for the specific purposes pursuant to constraints imposed by a formal action of the School Board, the District’s highest level of decision-making authority. This formal action is a resolution approved by the School Board. Currently there are no committed fund balances.

Assigned fund balance includes amounts that are constrained by the District’s intent to be used for a specific purpose, but are neither restricted nor committed. For governmental funds, other than the general fund, this is the residual amount within the fund that is not restricted or committed. Assignments of fund balance are created by the Superintendent and the Chief Financial Officer pursuant to authorization established by the District's approved fund balance policy.

Unassigned fund balance is the residual classification for the general fund. This classification represents fund balance that has not been assigned to other funds and that has not been restricted, committed, or assigned to specific purposes within the general fund. The general fund should be the only fund that reports a positive unassigned fund balance amount. In other governmental funds, it may be necessary to report a negative unassigned fund balance. When an expenditure/expense is incurred for purposes for which both restricted and unrestricted (committed, assigned, or unassigned) resources are available, it is the District’s general policy to use restricted resources first. When expenditures/expenses are incurred for purposes for which unrestricted (committed, assigned, and unassigned) resources are available, and amounts in any of these unrestricted classifications could be used, it is the District’s general policy to spend committed resources first, followed by assigned amounts, and then unassigned amounts.





Note 2 – Cash and Cash Equivalents, Cash with Fiscal Agents, and Investments The district follows the practice of aggregating the cash assets of various funds to maximize cash management efficiency and returns. Restrictions on deposits and investments are imposed by statutes as follows: Deposits. The school board must advertise and accept bids for depositories no less than once every three years as required by Section 37-7-333, Miss. Code Ann. (1972). The collateral pledged for the school district’s deposits in financial institutions is held in the name of the State Treasurer under a program established by the Mississippi State Legislature and is governed by Section 27-105-5, Miss. Code Ann. (1972). Under this program, the entity’s funds are protected through a collateral pool administered by the State Treasurer. Financial institutions holding deposits of public funds must pledge securities as collateral against those deposits. In the event of failure of a financial institution, securities pledged by that institution would be liquidated by the State Treasurer to replace the public deposits not covered by the Federal Deposit Insurance Corporation. Investments. Section 29-3-113 and 37-59-43, Miss. Code Ann. (1972), authorizes the school board to invest excess funds in the types of investments authorized by Section 27-105-33(d) and (e), Miss. Code Ann. (1972). This section permits the following types of investments: (a) certificates of deposit or interest bearing accounts with qualified state depositories; (b) direct United States Treasury obligations; (c) United States Government agency, United States Government instrumentality or United States Government sponsored enterprise obligations, not to exceed fifty percent of all monies invested with maturities of thirty days or longer ; (d) direct security repurchase agreements and reverse direct security repurchase agreements of any federal book entry of only those securities enumerated in (b) and (c) above; (e) direct obligations issued by the United States of America that are deemed to include securities of, or other interests in, any open-end or closed-end management type investment company or investment trust approved by the State Treasurer and the Executive Director of the Department of Finance and Administration, not to exceed twenty percent of invested excess funds. Investment income on bond funds (Capital Projects), bond sinking funds (Debt Service Funds) and sixteenth section principal funds (Permanent Funds) must be credited to those funds. Investment income of $100 or more of any fund must be credited to that fund. Investment income of less than $100 can be credited to the General Fund. Cash and Cash Equivalents The carrying amount of the school district's deposits with financial institutions reported in the governmental funds and fiduciary funds was $14,791,241 and $2,207,065, respectively. The carrying amount of deposits reported in the government-wide financial statements was cash and cash equivalents of $12,496,819 and a portion of restricted assets in the amount of $2,294,422 (see Note 4). The bank balance was $27,362,067. Custodial Credit Risk - Deposits. Custodial credit risk is defined as the risk that, in the event of the failure of a financial institution, the district will not be able to recover deposits or collateral securities that are in the possession of an outside party. The district does not have a deposit policy for custodial credit risk. However, the Mississippi State Treasurer manages that risk on behalf of the district. Deposits above FDIC coverage are collateralized by the pledging financial institution’s trust department or agent in the name of the Mississippi State Treasurer on behalf of the district. As of June 30, 2011, none of the district’s bank balance of $27,362,067 was exposed to custodial credit risk. Cash with Fiscal Agents The carrying amount of school district’s cash with fiscal agents held by financial institutions was $9,308,283. Investments





As of June 30, 2011, the district had the following investments.

Investment Type RatingMaturities(in years) Fair Value

Federal Home Loan Bank one year $ 2,088,979

Total $ 2,088,979

Interest Rate Risk. The district does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. Credit Risk. State law limits investments to those prescribed in Sections 27-105-33(d) and 27-105-33(e), Miss. Code Ann. (1972). The district does not have a formal investment policy that would further limit its investment choices or one that addresses credit risk. Custodial Credit Risk - Investments. Custodial credit risk is defined as the risk that, in the event of the failure of the counterparty, the district will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The district does not have a formal investment policy that addresses custodial credit risk. As of June 30, 2011, the district did not have any investments to which this would apply. Concentration of Credit Risk. Disclosure of investments by amount and issuer for any issuer that represents five percent or more of total investments is required. This requirement does not apply to investments issued or explicitly guaranteed by the U.S. government, investments in mutual funds and external investment pools, and other pooled investments. Note 3 – Inter-fund Receivables, Payables and Transfers The following is a summary of inter-fund transactions and balances: A. Due From/To Other Funds

Receivable Fund Payable Fund AmountGeneral Fund QSCB Series 2009 Fund $ 1,000

Other governmental funds 13,590,593 Fiduciary funds 1,476,776

School Bond Series 2008 Fund General Fund 9,500,000

Other governmental funds General Fund 992,615 Other governmental funds 1,926,302

Fiduciary funds General Fund 3,047

Total $ 27,490,333

The inter-fund loans were made mainly to cover the initial payments of reimbursable expenditures

of federal programs and to eliminate deficit cash balances. In addition, inter-fund loans were made to reflect the payment of expendable resources from the Sixteenth Section Interest Fund to the General Fund, to record indirect costs from various federal program funds due to the General Fund, and to record an amount due the School Bond Series 2008 Fund from the General Fund.





B. Inter-fund Transfers

Transfers Out Transfers In Amount

General Fund Other governmental funds $ 4,996,014

Other governmental funds General Fund 2,883,772 Other governmental funds 1,059,082

Total $ 8,938,868

The transfers were primarily for the following: the funding of daily operations and routine

activities of funds other than District Maintenance, indirect cost transfers, transfers to Education Enhancement Fund to cover the costs of textbooks, transfers to cover vocational and special education expenditures, transfers from the EEF Buildings and Buses Fund to various debt services funds, transfers to cover unemployment costs, and the transfer of expendable sixteenth section sources from the Sixteenth Section Interest Fund to the General Fund. Note 4 – Restricted Assets The restricted assets represent the cash balance totaling $296,371 of the Sixteenth Section Principal Fund (Permanent Fund) which is legally restricted and may not be used for purposes that support the district’s programs. In addition, the restricted assets represent the cash with fiscal agent and investment balance, totaling $2,635 and $2,088,979, respectively, of the QZAB Bond Retirement Fund, the cash with fiscal agent balance totaling $325,015 of the QSCB Bond Retirement Fund, and the cash with fiscal agent balance totaling $1,080,205 of the MAEP Limited Obligation Bond Fund. Also, the restricted assets represent the cash with fiscal agent balance totaling $7,900,428 of the QSCB Series 2009 Construction Fund and the cash balance of other various Capital Projects Funds totaling $1,998,051 resulting from unspent bond proceeds at fiscal year end. Total restricted assets reported on the Statement of Net Assets is $13,691,684.





Note 5 – Capital Assets The following is a summary of changes in capital assets for governmental activities:

Balance7/1/2010 Increases Decreases

Completed Construction

Balance6/30/2011

Governmental Activities:Non-depreciable capital assets:

Land $ 5,445,362 $ $ $ $ 5,445,362 Construction in progress 84,650,471 24,760,632 (74,068,910) 35,342,193

Total non-depreciable capital assets 90,095,833 24,760,632 - (74,068,910) 40,787,555

Depreciable capital assets:Buildings 131,711,868 302,457 66,498,008 197,907,419 Improvements other than buildings 32,455,121 5,650 7,570,902 40,020,373 Mobile equipment 17,709,462 17,098 520,178 17,206,382 Furniture and equipment 15,736,886 624,293 98,043 16,263,136 Leased property under capital leases - 3,361,207 3,361,207

Total depreciable capital assets 197,613,337 4,002,598 926,328 74,068,910 274,758,517

Less accumulated depreciation for:Buildings 55,649,595 3,490,684 222,346 58,917,933 Improvements other than buildings 17,701,077 1,199,597 4,520 18,896,154 Mobile equipment 15,330,990 106,428 468,160 14,969,258 Furniture and equipment 14,775,894 485,964 97,063 15,164,795 Leased property under capital leases 811,968 811,968

Total accumulated depreciation 103,457,556 6,094,641 792,089 - 108,760,108 Total depreciable capital assets, net 94,155,781 (2,092,043) 134,239 74,068,910 165,998,409

Governmental activities capital assets, net $ 184,251,614 $ 22,668,589

$ 134,239

$ -

$ 206,785,964

Depreciation expense was charged to the following governmental functions:

Amount

Governmental activities:Instruction $ 4,771,679 Support services 1,299,319 Non-instructional 23,643 Total depreciation expense - Governmental activities $ 6,094,641

The capital assets above include significant amounts which have been valued at estimated historical cost. The estimated historical cost was based on replacement cost multiplied by the consumer price index implicit price deflator for the year of acquisition. Construction in progress is composed of:





Spent to RemainingJune 30, 2011 Commitment

Governmental Activities:New Construction - Kirksey Middle School $ 16,868,863 $ 40,000 New Construction - Blackburn Middle School 14,063,554 3,180,125 New Construction - Athletic Fieldhouses 4,409,776 165,653

Total construction in progress $ 35,342,193 $ 3,385,778

Construction projects included in governmental activities are funded with the proceeds of general obligation bonds. Note 6 – Long-term Liabilities The following is a summary of changes in long-term liabilities and other obligations for governmental activities:

Balance7/1/2010 Additions Reductions

Balance6/30/2011

Amounts due within

one yearA. General obligation bonds payable $ 143,735,000 $ $ 3,320,000 $ 140,415,000 $ 3,480,000 B. Limited obligation bonds payable 19,735,000 2,010,000 17,725,000 2,090,000 C. Three mill notes payable 39,631,688 2,865,000 36,766,688 2,990,000 D. Obligations under capital leases - 3,361,207 3,361,207 555,932 E. Obligations under energy efficiency leases 5,584,657 636,170 4,948,487 684,971 F. Qualified zone academy bonds payable 2,500,000 2,500,000 - G. Qualified school construction bonds payable 8,000,000 8,000,000 - H. Compensated absences payable 2,157,945 61,118 2,219,063 138,177

Total $ 221,344,290 $ 3,422,325

$ 8,831,170

$ 215,935,445

$ 9,939,080

A. General obligation bonds payable

General obligation bonds are direct obligations and pledge the full faith and credit of the school district. General obligation bonds currently outstanding are as follows:

Interest Rate

Issue Date

Maturity Date

1. General obligation bonds, Series 2007 4.0%-5.0% 10/2/2007 4/1/2027 $ 36,000,000 $ 30,040,000

2. General obligation bonds, Series 2008 4.0%-5.5% 7/23/2008 4/1/2028 114,000,000 110,375,000 Total $ 150,000,000 $ 140,415,000

DescriptionAmount

OutstandingAmount Issued

The following is a schedule by years of the total payments due on this debt:

1. General obligation bonds issued on October 2, 2007:





Year EndingJune 30 Principal Interest Total

2012 $ 1,320,000 $ 1,312,600 $ 2,632,600 2013 1,440,000 1,256,500 2,696,500 2014 1,440,000 1,195,300 2,635,300 2015 1,500,000 1,134,100 2,634,100 2016 1,560,000 1,059,100 2,619,100 2017 – 2021 8,910,000 4,121,250 13,031,250 2022 – 2026 11,320,000 2,060,863 13,380,863 2027 2,550,000 111,563 2,661,563

Total $ 30,040,000 $ 12,251,276 $ 42,291,276

This debt will be retired from the General Obligation Bond Series 2007 Debt Service Fund.

2. General obligation bonds issued on July 23, 2008:


2012 $ 2,160,000 $ 5,724,250 $ 7,884,250 2013 4,515,000 5,616,250 10,131,250 2014 4,755,000 5,379,213 10,134,213 2015 5,005,000 5,129,575 10,134,575 2016 5,265,000 4,866,812 10,131,812 2017 – 2021 30,445,000 20,228,587 50,673,587 2022 – 2026 39,410,000 11,261,894 50,671,894 2027 – 2028 18,820,000 1,447,838 20,267,838

Total $ 110,375,000 $ 59,654,419 $ 170,029,419

This debt will be retired from the General Obligation Bond Series 2008 Debt Service Fund. Total general obligation bond payments for all issues:


2012 $ 3,480,000 $ 7,036,850 $ 10,516,850 2013 5,955,000 6,872,750 12,827,750 2014 6,195,000 6,574,513 12,769,513 2015 6,505,000 6,263,675 12,768,675 2016 6,825,000 5,925,912 12,750,912 2017 – 2021 39,355,000 24,349,837 63,704,837 2022 – 2026 50,730,000 13,322,757 64,052,757 2027 – 2028 21,370,000 1,559,401 22,929,401

Total $ 140,415,000 $ 71,905,695 $ 212,320,695





The amount of bonded indebtedness that can be incurred by the school district is limited by Sections 37-59-5 and 37-59-7, Miss. Code Ann. (1972). Total outstanding bonded indebtedness during a year can be no greater than 15% of the assessed value of the taxable property within such district, according to the then last completed assessment for taxation, unless certain conditions, as set forth in Section 37-59-7, Miss. Code Ann. (1972) have been met. As of June 30, 2011, the amount of outstanding bonded indebtedness was equal to 12% of property assessments as of October 1, 2010.

B. Limited obligation bonds payable

Limited obligation bonds are direct obligations and pledge the full faith and credit of the school district. Limited obligation bonds currently outstanding are as follows:

Interest RateIssue Date

Maturity Date

State aid capital improvement refunding bonds, Series 2006 3.25%-5.0% 2/22/2006 2/1/2018 $ 26,520,000 $ 17,725,000 Total $ 26,520,000 $ 17,725,000

DescriptionAmount




2012 $ 2,090,000 $ 714,804 $ 2,804,804 2013 2,160,000 634,525 2,794,525 2014 2,260,000 537,365 2,797,365 2015 2,360,000 442,145 2,802,145 2016 2,430,000 353,512 2,783,512 2017 – 2018 6,425,000 361,775 6,786,775

Total $ 17,725,000 $ 3,044,126 $ 20,769,126

The state aid capital improvement bonds are secured by an irrevocable pledge of certain revenues the district receives from the State of Mississippi pursuant to the Mississippi Accountability and Adequate Education Program Act, Sections 37-151-1 through 37-151-7, Miss. Code Ann. (1972). The state aid capital improvement bonds are not included in the computation of the debt limit percentage.

This debt will be retired from the MAEP Debt Service Fund.





C. Three mill notes payable Debt currently outstanding is as follows:

Interest Rate Issue DateMaturity

Date

1. Limited Tax Notes, Series 2003-B 2.0%-5.55% 10/14/2003 10/1/2023 $ 16,381,688 $ 12,906,688

2. Limited Tax Notes Refunding Bonds, Series 2005 2.45%-5.0% 5/5/2005 10/1/2020 25,225,000 23,860,000 Total $ 41,606,688 $ 36,766,688

DescriptionAmount



1. Three mill notes payable issued on October 14, 2003:


2012 $ 1,125,000 $ 168,918 $ 1,293,918 2013 1,160,000 120,792 1,280,792 2014 1,185,000 69,574 1,254,574 2015 1,230,000 23,678 1,253,678 2016 728,352 526,648 1,255,000 2017 – 2021 2,923,144 3,161,856 6,085,000 2022 – 2024 4,555,192 8,059,807 12,614,999

Total $ 12,906,688 $ 12,131,273 $ 25,037,961

This debt will be retired from the Three Mill Series 2003-B Debt Service Fund.

2. Three mill notes payable issued on May 5, 2005:


2012 $ 1,865,000 $ 1,125,308 $ 2,990,308 2013 1,935,000 1,044,295 2,979,295 2014 2,060,000 944,420 3,004,420 2015 2,165,000 838,795 3,003,795 2016 2,300,000 727,170 3,027,170 2017 – 2021 13,535,000 1,752,445 15,287,445

Total $ 23,860,000 $ 6,432,433 $ 30,292,433

This debt will be retired from the Three Mill Series 2005 Retirement Fund.

Total three mill notes payable payments for all issues:






2012 $ 2,990,000 $ 1,294,226 $ 4,284,226 2013 3,095,000 1,165,087 4,260,087 2014 3,245,000 1,013,994 4,258,994 2015 3,395,000 862,473 4,257,473 2016 3,028,352 1,253,818 4,282,170 2017 – 2021 16,458,144 4,914,301 21,372,445 2022 – 2024 4,555,192 8,059,807 12,614,999

Total $ 36,766,688 $ 18,563,706 $ 55,330,394

D. Obligations under capital leases

The school district has entered into lease agreements, which qualify as capital leases for accounting purposes, for the acquisition of the following: 1. Computers at a cost of $900,000. 2. Telephone system at a cost of $1,222,747. 3. Buses at a cost of $1,238,460.

Title of the various equipment passes to the district upon final payment of the leases.

Interest Rate

Issue Date

Maturity Date

Computers 3.69% 2/17/2011 7/31/2015 $ 900,000 $ 900,000

Telephone system 3.69% 2/17/2011 7/31/2015 1,222,747 1,222,747 Buses 4.99% 6/13/2011 8/31/2020 1,238,460 1,238,460 Total $ 3,361,207 $ 3,361,207

DescriptionAmount







Year EndingJune 30 Principal

Interest andMaintenance

Charges Total

2012 $ 555,932 $ 113,582 $ 669,514 2013 567,178 112,636 679,814 2014 589,753 90,061 679,814 2015 613,243 66,571 679,814 2016 379,952 42,129 422,081 2017 – 2021 655,149 84,413 739,562

Total $ 3,361,207 $ 509,392 $ 3,870,599

This debt will be retired from the District Maintenance Fund (General Fund). E. Obligations under energy efficiency leases

Debt currently outstanding is as follows:

Interest Rate

Issue Date

Maturity Date

Siemens Energy Efficiency Lease 5.39% 6/17/2002 6/17/2017 $ 8,348,849 $ 4,948,487 Total $ 8,348,849 $ 4,948,487

DescriptionAmount




2012 $ 684,971 $ 253,033 $ 938,004 2013 736,652 215,080 951,732 2014 791,375 174,281 965,656 2015 849,309 130,467 979,776 2016 910,636 83,464 994,100 2017 975,544 33,084 1,008,628

Total $ 4,948,487 $ 889,409 $ 5,837,896

An energy efficiency lease agreement dated June 17, 2002, was executed by and between the district, the lessee, and First Security Leasing, Inc., the lessor.

The agreement authorized the borrowing of $8,348,849 for the purchase of energy efficiency equipment, machinery, supplies, building modifications and other energy saving items. Payments of the lease shall be made from the district maintenance fund and not exceed ten (10) years.

The district entered into this energy efficiency lease agreement under the authority of Section 31-7-14, Miss. Code Ann. (1972).





Upon written notice to the lessor, the lessee has the option of repaying the total amount due as set forth by the agreement.

F. Qualified zone academy bonds payable

As more fully explained in Note 15, debt has been issued by the school district that qualifies as Qualified Zone Academy bonds. Debt currently outstanding is as follows:

Interest Rate

Issue Date

Maturity Date

Qualified Zone Academy Bonds 0.00% 7/20/2000 7/1/2012 $ 2,500,000 $ 2,500,000 Total $ 2,500,000 $ 2,500,000

DescriptionAmount


G. Qualified school construction bonds payable

As more fully explained in Note 16, debt has been issued by the school district that qualifies as Qualified School Construction bonds. Debt currently outstanding is as follows:

Interest Rate Issue Date

Maturity Date

Qualified School Construction Bonds 0.00% 12/27/2009 12/15/2024 $ 8,000,000 $ 8,000,000 Total $ 8,000,000 $ 8,000,000

DescriptionAmount


H. Compensated absences payable

As more fully explained in Note 1(F)(7), compensated absences payable is adjusted on an annual basis as required by Section 37-7-307(5), Miss. Code Ann. (1972). Compensated absences will be paid from the fund from which the employees’ salaries were paid.

Note 7 – Prior Year Defeasance of Debt In prior years, the Jackson Public School District defeased certain general obligation and other bonds by placing the proceeds of new bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and liabilities for the defeased bonds are not included in the district's financial statements. On June 30, 2011, $23,770,000 of bonds outstanding are defeased. Note 8 – Short-Term Financing During the fiscal year ended June 30, 2011, the school district participated in the following short-term financing for the purpose of supplementing the district's resources until tax proceeds become available: A. Bank-financed short term debt.





The school district issued a tax and revenue anticipation note payable to Bancorpsouth Bank, and the proceeds from such issuance are accounted for as a current liability in the General Fund of the school district. Once the cash flow was available, the district made a payment consisting of principal and interest to the trustee.

All transactions related to participation in this program are accounted for as part of the school district's General Fund.

Changes in short-term debt activity recorded in the governmental activities during fiscal year 2011

are as follows:

Description Additions Reductions

Tax Anticipation Note, 1.288% $ - $ 20,000,000 $ 20,000,000 $ -

Total $ - $ 20,000,000 $ 20,000,000 $ -

Balance 7/1/2010

Balance 6/30/2011

Note 9 – Other Commitments Commitments under construction contracts are described in Note 5. Commitments under re-roofing and renovation contracts amount to $938,257. Note 10 – Defined Benefit Pension Plan Plan Description. The school district contributes to the Public Employees' Retirement System of Mississippi (PERS), a cost-sharing multiple-employer defined benefit pension plan. PERS provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. Benefit provisions are established by state law and may be amended only by the State of Mississippi Legislature. PERS issues a publicly available financial report that includes financial statements and required supplementary information. That report may be obtained by writing to Public Employees' Retirement System of Mississippi, PERS Building, 429 Mississippi Street, Jackson, MS 39201 or by calling (601) 359-3589 or 1-800-444-PERS. Funding Policy. PERS members are required to contribute 9.00% of their annual covered salary, and the school district is required to contribute at an actuarially determined rate. The employer’s rate for fiscal year ended June 30, 2011 was 12.00% of annual covered payroll. The contribution requirements of PERS members and employers are established and may be amended only by the State of Mississippi Legislature. The school district's contributions to PERS for the fiscal years ending June 30, 2011, 2010 and 2009 were $18,546,783, $18,892,894 and $18,156,987, respectively, which equaled the required contributions for each year. Note 11 – Sixteenth Section Lands Sixteenth section school lands, or lands granted in lieu thereof, constitute property held in trust for the benefit of the public schools. The school board, under the general supervision of the Office of the Secretary of State, has control and jurisdiction of said school trust lands and of all funds arising from any disposition thereof. It is the duty of the school board to manage the school trust lands and all funds arising therefrom as trust property. Accordingly, the board shall assure that adequate compensation is received for all uses of the trust lands, except for uses by the public schools. The following are the future rental payments to be made to the school district for the use of school trust lands. These future rental





payments are from existing leases and do not anticipate renewals or new leases.

Year EndingJune 30 Amount

2012 $ 1,136,673 2013 1,104,723 2014 973,223 2015 970,123 2016 649,323 2017 – 2021 3,119,005 2022 – 2026 3,034,440 2027 – 2031 2,245,848 2032 – 2036 1,681,415 Thereafter 1,523,635 Total $ 16,438,408

Note 12 – Prior Period Adjustments A summary of significant fund balance adjustments is as follows: Exhibit B - Statement of Activities

Explanation Amount

To reclassify prior year expenditures in capital project funds, to reclassify prior year payroll expenditures in various federal funds, and to record repayment of prior year revenues to State Treasurer fund at the governmental fund level

$ 203,080

Total $ 203,080





Exhibit D - Statement of Revenues, Expenditures and Changes in Fund Balances

Fund Explanation Amount

School Bond Series 2008 Fund To reclassify prior year expenditures from another capital projects fund

$ (298,230)

Other governmental funds To reclassify prior year expenditures in capital project funds

408,366

Other governmental funds To reclassify prior year payroll expenditures in various federal funds

105,480

Other governmental funds To record prior year repayment of funds to State Treasurer Fund

(12,536)

Total $ 203,080

Note 13 – Contingencies Federal Grants – The school district has received federal grants for specific purposes that are subject to audit by the grantor agencies. Entitlements to these resources are generally conditional upon compliance with the terms and conditions of the grant agreements and applicable federal regulations, including the expenditure of resources for allowable purposes. Any disallowances resulting from the grantor audit may become a liability of the school district. Litigation – The school district is party to legal proceedings, many of which occur in the normal course of governmental operations. It is not possible at the present time to estimate the outcome or liability, if any, of the school district with respect to the various proceedings. However, the school district’s legal counsel believes that ultimate liability resulting from these lawsuits will not have a material adverse effect on the financial condition of the school district. Note 14 – Risk Management The school district is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The district carries commercial insurance for these risks. Settled claims resulting from these insured risks have not exceeded commercial insurance coverage in any of the past three fiscal years. Note 15 – Qualified Zone Academy Bonds Section 226 of the Taxpayer Relief Act of 1997 (Public Law 105-34) provides for a source of capital at no or at nominal interest rates for costs incurred by certain public schools in connection with the establishment of special academic programs from kindergarten through secondary school, in partnership with the business community. The school district, in agreement with Trustmark National Bank, has entered into such an arrangement dated July 20, 2000. This agreement establishes a method of repayment for a qualified interest-free debt instrument. The agreement requires the school district to deposit funds annually into a sinking fund account on or before July 1. The amount on deposit at June 30, 2011 was $2,091,614. The amount accumulated in the sinking fund at the end of the ten-year period will be sufficient to retire the debt. The following schedule reports the annual deposits to be made to the sinking fund by the school district.






2012 $ 142,000 2013 120,000 Total $ 262,000

Note 16 – Qualified School Construction Bonds Section 1521 of the American Recovery and Reinvestment Act (ARRA) of 2009 provides for a source of capital at no or at nominal interest rates for costs incurred by certain public schools in connection with the construction, rehabilitation or repair of a public school facility or for the acquisition of land where a school will be built. Investors receive Federal income tax credits at prescribed tax credit rates in lieu of interest, which essentially allows state and local governments to borrow without incurring interest costs.

The school district makes equal annual payments into a sinking fund which is used to pay off the bonds at termination. The current maturity limit of tax credit bonds is 17 years, per the U. S. Treasury Department. Under this program, ten percent of the proceeds must be subject to a binding commitment to be spent within six months of issuance and 100% must be spent within three years. Up to two percent of bond proceeds can be used to pay costs of issuance. The amount on deposit at June 30, 2011 was $325,015. The amount accumulated in the sinking fund at the end of the seventeen-year period will be sufficient to retire the debt. The following schedule reports the annual deposits to be made to the sinking fund by the school district.


2012 $ 375,000 2013 400,000 2014 532,000 2015 532,000 2016 532,000 2017 – 2021 2,660,000 2022 – 2025 2,156,272 Total $ 7,187,272

Note 17 - Insurance loss recoveries The Jackson Public School District received $694,406 in insurance loss recoveries related to fire damage, damages resulting from accidents and damage to other property, and the settlement of lawsuits during the 2010-2011 fiscal year. In the government-wide Statement of Activities, the insurance loss recoveries were reported as charges for services and were allocated to the support services expense function.





Note 18 - Subsequent Events Events that occur after the Statement of Net Assets date but before the financial statements are available to be issued must be evaluated for recognition or disclosure. The effects of subsequent events that provide evidence about conditions that existed at the Statement of Net Assets date are recognized in the accompanying financial statements. Subsequent events which provide evidence about conditions that existed after the Statement of Net Assets date require disclosure in the accompanying notes. Management of the Jackson Public School District evaluated the activity of the district through December 7, 2012, and determined that there are no subsequent events have occurred requiring disclosure in the notes to the financial statements.



REQUIRED SUPPLEMENTAL INFORMATION



Budgetary Comparison Schedule General FundFor the Year Ended June 30, 2011

Actual Original FinalOriginal Final (GAAP Basis) to Final to Actual

Revenues:Local sources $ 77,449,063 $ 75,896,872 $ 75,897,955 $ (1,552,191) $ 1,083 State sources 114,099,680 112,062,375 112,062,375 (2,037,305) - Federal sources 2,351,694 1,726,802 1,762,755 (624,892) 35,953

Total Revenues 193,900,437 189,686,049 189,723,085 (4,214,388) 37,036

Expenditures: Instruction 106,980,435 111,555,634 111,555,634 (4,575,199) - Support services 78,676,674 82,986,449 85,040,599 (4,309,775) (2,054,150) Noninstructional services 181,425 81,729 81,729 99,696 - Facilities acquisition and construction 900,151 2,090,243 - (1,190,092) 2,090,243 Debt service:

Principal 21,103,170 21,103,170 636,170 - 20,467,000 Interest 877,110 483,734 483,734 393,376 - Other 57,000 26,999 25,124 30,001 1,875

Total Expenditures 208,775,965 218,327,958 197,822,990 (9,551,993) 20,504,968

Excess (Deficiency) of Revenues over (under) Expenditures (14,875,528) (28,641,909) (8,099,905) (13,766,381) 20,542,004

Other Financing Sources (Uses):

Bonds and notes issued 20,000,000 20,000,000 - - (20,000,000) Capital leases issued - 3,361,207 3,361,207 3,361,207 - Insurance recovery 60,000 369,098 369,098 309,098 - Payment to QZAB/QSCB debt escrow agent - - (467,000) - (467,000) Sale of other property 10,000 28,744 28,744 18,744 - Operating transfers in 6,038,129 9,778,539 2,883,772 3,740,410 (6,894,767) Operating transfers out (12,225,012) (12,579,747) (4,996,014) (354,735) 7,583,733 Other financing uses - - (1,875) - (1,875)

Total Other Financing Sources (Uses) 13,883,117 20,957,841 1,177,932 7,074,724 (19,779,909)

Net Change in Fund Balances (992,411) (7,684,068) (6,921,973) (6,691,657) 762,095

Fund Balances: July 1, 2010, as originally reported 11,992,810 11,992,810 11,992,810 - -

Prior period adjustments 120,365 120,365 - - (120,365) July 1, 2010, as restated 12,113,175 12,113,175 11,992,810 - (120,365)

Increase (Decrease) in reserve for inventory - - 120,365 - 120,365

June 30, 2011 $ 11,120,764 $ 4,429,107 $ 5,191,202 $ (6,691,657) $ 762,095

The notes to the required supplemental information are an integral part of this statement.

Budgeted Amounts

VariancesPositive (Negative)

JACKSON PUBLIC SCHOOL DISTRICTRequired Supplemental Information


Notes to the Required Supplemental Information For the Year Ended June 30, 2011



Budgetary Comparison Schedule (1) Basis of Presentation

The Budgetary Comparison Schedule presents the original legally adopted budget, the final legally adopted budget, the actual data on the GAAP basis, variances between the original budget and the final budget, and variances between the final budget and the actual data.

(2) Budget Amendments and Revisions

The budget is adopted by the school board and filed with the taxing authority. Amendments can be made on the approval of the school board. By statute, final budget revisions must be approved on or before October 15. A budgetary comparison is presented for the General Fund consistent with accounting principles generally accepted in the United States of America.



SUPPLEMENTAL INFORMATION



Federal Grantor/Pass-through Grantor/Program Title

Catalog ofFederal Domestic

Assistance No.Federal

ExpendituresU.S. Department of Agriculture

Passed-through Mississippi Department of Education:Child nutrition cluster:

School breakfast program 10.553 $ 4,148,999National school lunch program 10.555 12,850,955Summer food service program for children 10.559 360,062

Total child nutrition cluster 17,360,016Child Nutrition Discretionary Grants 10.579 10,767Fresh Fruit and Vegetable Program 10.582 333,461

Total passed-through Mississippi Department of Education 17,704,244Total U.S. Department of Agriculture 17,704,244

U.S. Department of DefenseDirect Program:

Reserve Officers' Training Corps 12.xxx 884,490Total U.S. Department of Defense 884,490

U.S. Department of Housing and Urban DevelopmentDirect Program:

Economic Development Initiative (EDI) - Special Projects 14.251 3,619Total U.S. Department of Housing and Urban Development 3,619

Federal Communications CommissionAdministered through the Universal Service Administrative Company:

The schools and libraries program of the universal service fund 32.xxx 1,317,091Total Federal Communications Commission 1,317,091

U.S. Department of EducationPassed-through Mississippi Department of Education:

Adult Education - Basic Grants to States 84.002 295,952Career and technical education - basic grants to states 84.048 358,734Safe and drug-free schools and communities- national programs 84.184 1,552,394Safe and drug-free schools and communities- state grants 84.186 187,401Fund for the Improvementof Education 84.215 341,103Twenty-first century community learning centers 84.287 511,764Transition to Teaching 84.350 404,568School Leadership 84.363 842,345English language acquisition grants 84.365 40,331Improving Teacher Quality State Grants 84.367 2,724,344

Subtotal 7,258,936Title I cluster:

Title I grants to local educational agencies 84.010 15,784,835ARRA - Title I grants to local educational agencies, Recovery Act 84.389 10,403,922

Total Title I cluster 26,188,757Special education cluster:

Special education - grants to states 84.027 5,041,728Special education - preschool grants 84.173 158,557ARRA - Special education grants to states, Recovery Act 84.391 3,552,157ARRA - Special education - preschool grants, Recovery Act 84.392 1,179

Total special education cluster 8,753,621Education Technology State Grants cluster: Education technology state grants 84.318 140,646

ARRA - Education Technology State Grants, Recovery Act 84.386 28,250Total Education Technology cluster 168,896

School Improvement Grants cluster:School Improvement Grants 84.377 278,589ARRA - School Improvement Grant, Recovery Act 84.388 755,696

Total School Improvement Grants cluster 1,034,285State Fiscal Stabilization Fund cluster:

ARRA - State Fiscal Stabilization Fund - Education state grants, Recovery Act 84.394 7,824,614Total State Fiscal Stabilization Fund cluster 7,824,614

Education for homeless children and youth cluster:Education for homeless children and youth 84.196 15,079ARRA - Education for homeless children and youth, Recovery Act 84.387 31,245

Total Education for homeless children and youth cluster 46,324Total passed-through Mississippi Department of Education 51,275,433

Total U.S. Department of Education 51,275,433

U.S. Department of Health and Human ServicesPassed-through the Mississippi Department of Education:

Medical assistance program 93.778 409,711Total passed-through Mississippi Department of Education 409,711

Total U.S. Department of Health and Human Services 409,711Corporation for National and Community Service

Passed-through the Mississippi Department of Education:Learn and serve America - school and community based programs 94.004 2,000

Total passed-through Mississippi Department of Education 2,000Total Corporation for National and Community Service 2,000

Total for All Federal Awards $ 71,596,588

NOTES TO SCHEDULE1. This schedule was prepared using the same basis of accounting and the same significant accounting policies,

as applicable, used for the financial statements. 2. The expenditure amounts include transfers out.3. The pass-through entities did not assign identifying numbers to the school district.

JACKSON PUBLIC SCHOOL DISTRICTSupplemental Information

Schedule of Expenditures of Federal AwardsFor the Year Ended June 30, 2011



Total

Instruction andOther StudentInstructionalExpenditures

GeneralAdministration

SchoolAdministration Other

Salaries and fringe benefits $ 211,310,488 152,892,829 7,227,413 15,218,874 35,971,372Other 115,619,253 29,778,329 1,849,573 128,693 83,862,658

Total $ 326,929,741 182,671,158 9,076,986 15,347,567 119,834,030

Total number of students * 29,898

Cost per student $ 10,935 6,110 304 513 4,008

For purposes of this schedule, the following columnar descriptions are applicable:

Instruction and Other Student Instructional Expenditures - includes the activities dealing directly with the interaction between teachers and students. Included here are the activities of teachers, teachers aides or classroom assistants of any type.

General Administration - includes expenditures for the following functions: Support Services - General Administration and Support Services - Business.

Schedule of Instructional, Administrative and Other Expenditures - Governmental FundsFor the Year Ended June 30, 2011

JACKSON PUBLIC SCHOOL DISTRICTSupplemental Information

Expenditures

School Administration - includes expenditures for the following function: Support Services - School Administration.

Other - includes all expenditure functions not included in Instruction or Administration Categories.

* includes the number of students reported on the ADA report submission for month 9, which is the final submission for the fiscal year



OTHER INFORMATION



2011 2010* 2009* 2008*Revenues:

Local sources $ 75,897,955 $ 74,685,120 $ 76,403,538 $ 75,466,636Intermediate sources 2,500State sources 112,062,375 115,977,267 128,746,595 130,418,382Federal sources 1,762,755 1,987,605 2,289,820 876,522

Total Revenues 189,723,085 192,649,992 207,439,953 206,764,040

Expenditures:Instruction 111,555,634 111,462,760 118,923,043 119,704,949Support services 85,040,599 78,780,347 81,109,164 79,031,804Noninstructional services 81,729 61,189 51,326 13,147Facilities acquisition and construction 493,458Debt service:

Principal 636,170 990,076 1,455,746 1,660,537Interest 483,734 412,579 767,357 808,854Other 25,124 25,875 1,875

Total Expenditures 197,822,990 191,732,826 202,308,511 201,712,749

Excess (Deficiency) of Revenuesover (under) Expenditures (8,099,905) 917,166 5,131,442 5,051,291

Other Financing Sources (Uses):Capital leases issued 3,361,207Insurance recovery 369,098 82,306 578,576 89,252Payment to refunded bond escrow agent (142,000) (142,000)Payment to QZAB/QSCB debt escrow agent (467,000)Sale of other property 28,744 1,073 1,480Operating transfers in 2,883,772 2,582,347 1,762,586 2,180,912Operating transfers out (4,996,014) (5,941,805) (6,932,280) (7,474,775)Other financing uses (1,875) (1,875)

Total Other Financing Sources (Uses) 1,177,932 (3,421,027) (4,732,045) (5,203,131)

Net Change in Fund Balances (6,921,973) (2,503,861) 399,397 (151,840)

Fund Balances:Beginning of period, as originally reported 11,992,810 14,557,614 12,797,112 13,697,624

Prior period adjustments 2,918 1,252,692 (722,019)Beginning of period, as restated 11,992,810 14,560,532 14,049,804 12,975,605

Increase (Decrease) in reserve for inventory 120,365 (63,861) 108,413 (26,653)

End of Period $ 5,191,202 $ 11,992,810 $ 14,557,614 $ 12,797,112

*SOURCE - PRIOR YEAR AUDIT REPORTS

UNAUDITED

JACKSON PUBLIC SCHOOL DISTRICTOther Information

Statement of Revenues, Expenditures and Changes in Fund BalancesGeneral FundLast Four Years



2011 2010* 2009* 2008*Revenues:

Local sources $ 92,409,871 $ 90,888,911 $ 93,261,934 $ 85,382,200Intermediate sources 2,500State sources 120,404,513 124,273,106 137,246,963 139,013,538Federal sources 71,542,634 58,065,808 42,321,333 44,609,797Sixteenth section sources 1,244,155 1,205,304 1,363,502 1,264,346

Total Revenues 285,601,173 274,433,129 274,193,732 270,272,381

Expenditures:Instruction 148,658,522 145,132,469 143,800,361 145,673,354Support services 115,371,365 97,864,860 101,780,961 93,279,094Noninstructional services 19,334,953 18,541,597 17,487,700 17,244,828Sixteenth section 70,194 86,185 97,183 61,811Facilities acquisition and construction 24,760,632 69,437,152 15,406,307 19,395,119Debt service:

Principal 8,831,170 6,915,076 8,775,746 8,435,537Interest 9,861,796 10,013,996 8,827,955 4,320,017Other 41,109 144,246 1,222,371 206,650

Total Expenditures 326,929,741 348,135,581 297,398,584 288,616,410

Excess (Deficiency) of Revenuesover (under) Expenditures (41,328,568) (73,702,452) (23,204,852) (18,344,029)

Other Financing Sources (Uses):Bonds and notes issued 114,000,000 36,000,000Capital leases issued 3,361,207Insurance recovery 694,406 82,306 673,576 314,252Payments held by escrow agent 467,000 142,000 142,000 142,000Proceeds of loans 8,000,000Premiums on bonds and refunding bonds issued 6,493,325Payment to refunded bond escrow agent (142,000) (142,000) (142,000)Payment to QZAB/QSCB debt escrow agent (467,000)Sale of transportation equipment 1,480Sale of other property 28,744 1,073Operating transfers in 8,938,868 8,957,339 8,773,706 9,798,861Other financing sources 1,875 2,844 0 579,031Operating transfers out (8,938,868) (8,957,339) (8,773,706) (9,798,861)Other financing uses (1,875) (1,875) (6,393) (5,073,825)

Total Other Financing Sources (Uses) 4,084,357 8,083,275 121,161,581 31,820,938

Net Change in Fund Balances (37,244,211) (65,619,177) 97,956,729 13,476,909

Fund Balances:Beginning of period, as originally reported 69,430,229 135,227,353 35,921,699 22,256,942

Prior period adjustments 203,080 (106,495) 1,327,058 257,920Beginning of period, as restated 69,633,309 135,120,858 37,248,757 22,514,862

Increase (Decrease) in reserve for inventory 210,126 (71,452) 21,867 (70,072)

End of Period $ 32,599,224 $ 69,430,229 $ 135,227,353 $ 35,921,699

*SOURCE - PRIOR YEAR AUDIT REPORTS

UNAUDITED

JACKSON PUBLIC SCHOOL DISTRICTOther Information

Statement of Revenues, Expenditures and Changes in Fund BalancesAll Governmental FundsLast Four Years



REPORTS ON INTERNAL CONTROL AND COMPLIANCE



INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF THE FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Superintendent and School Board Jackson Public School District We have audited the financial statements of the governmental activities, each major fund and the aggregate remaining fund information of Jackson Public School District as of and for the year ended June 30, 2011, which collectively comprise Jackson Public School District’s basic financial statements and have issued our report thereon dated December 7, 2012. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reporting

Management of Jackson Public School District is responsible for establishing and maintaining effective internal control over financial reporting. In planning and performing our audit, we considered the school district's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the school district’s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the school district’s internal control over financial reporting. Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control over financial reporting that might be significant deficiencies or material weaknesses and therefore, there can be no assurance that all deficiencies, significant deficiencies, or material weaknesses have been identified. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. We consider the deficiency described in the accompanying Schedule of Findings and Questioned Costs to be material weakness. [Finding 2011-01]. Compliance and Other Matters As part of obtaining reasonable assurance about whether the school district's financial statements are free of 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. However, we noted certain immaterial instances of noncompliance or other matters that we reported to management of the school district in a separate letter dated December 7, 2012, which is included in this report. Jackson Public School District’s responses to the findings identified in our audit are described in the








accompanying Auditee’s Corrective Action Plan. We did not audit Jackson Public School District’s responses and, accordingly, we express no opinion on them. This report is intended solely for the information and use of the school board and management, entities with accreditation overview, and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. Watkins, Ward, And Stafford, PLLC Jackson, Mississippi December 7, 2012



INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT

ON EACH MAJOR FEDERAL PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133

Superintendent and School Board Jackson Public School District Compliance We have audited the compliance of the Jackson Public School District with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2011. The Jackson Public School District's major federal programs are identified in the summary of auditor's results section of the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major federal programs is the responsibility of the school district's management. Our responsibility is to express an opinion on the school district's compliance based on our audit. 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 OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 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 school district'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. Our audit does not provide a legal determination on the school district's compliance with those requirements. In our opinion, Jackson Public School District complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2011. Internal Control Over Compliance The management of the Jackson Public School District is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to federal programs. In planning and performing our audit, we considered Jackson Public School District's internal control over compliance with the requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133, 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 school district’s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a








deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. Our consideration of the 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 deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. This report is intended solely for the information and use of the school board and management, others within the entity, entities with accreditation overview, and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. Watkins, Ward, and Stafford, PLLC Jackson, Mississippi December 7, 2012



INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE WITH STATE LAWS AND REGULATIONS



INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE WITH STATE LAWS AND REGULATIONS

Superintendent and School Board Jackson Public School District We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Jackson Public School District as of and for the year ended June 30, 2011, which collectively comprise Jackson Public School District’s basic financial statements and have issued our report thereon dated December 7, 2012. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Section 37-9-18(3)(a), Miss. Code Ann. (1972), states in part, “the auditor shall test to insure that the school district is complying with the requirements of Section 37-61-33(3)(a)(iii), Miss. Code Ann. (1972), relating to classroom supply funds.” As required by the state legal compliance audit program prescribed by the Office of the State Auditor, we have also performed procedures to test compliance with certain other state laws and regulations. However, providing an opinion on compliance with all state laws and regulations was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our procedures performed to test compliance with the requirements of Section 37-61-33(3)(a)(iii), Miss. Code Ann. (1972), disclosed no instances of noncompliance. The district reported $236,365 of classroom supply funds carried over from previous years. Section 37-9-18(3)(b), Miss. Code Ann. (1972), states in part, “the auditor shall test to insure correct and appropriate coding at the function level. The audit must include a report showing the correct and appropriate functional level expenditure codes in expenditures by the school district.” The results of our procedures performed to test compliance with the requirements of Section 37-9-18(3)(b), Miss. Code Ann. (1972), disclosed no instances of noncompliance related to incorrect or inappropriate functional level expenditure coding. As required by the state legal compliance audit program prescribed by the Office of the State Auditor, we have also performed procedures to test compliance with certain other state laws and regulations. However, providing an opinion on compliance with all state laws and regulations was not an objective of our audit and, accordingly, we do not express such an opinion. The results of procedures performed to test compliance with certain other state laws and regulations and our audit of the financial statements disclosed the following immaterial instances of noncompliance with other state laws and regulations. Our findings and recommendations and your responses are as follows: 1. The district should have the year-end financial statements available for audit on or before October 15,

2011. Finding Section 37-61-21(2), Miss. Code Ann. (1972), requires that Mississippi Public School Districts should have the year-end financial statements available for audit on or before October 15, 2011.








During our test work at Jackson Public School District, we noted that the district did not have the GASB 34 statements completed at the beginning of test work on September 8, 2011. The district provided copies of the old fund financial A’s and B’s, but the auditor was not provided the GASB 34 financial statements until March 28, 2012. This noncompliance occurred because the district lacked proper training with respect to preparing the financial statements and performing the conversion process into modified accrual from cash. Noncompliance with Section 37-61-21(2), Miss. Code Ann. (1972) could result in the district violating state laws regarding having year-end financial statements available for audit on or before October 15, 2010.

Recommendation We recommend that the district comply with Section 37-61-21(2), Miss. Code Ann. (1972), which requires the district to have the year-end financial statements available for audit on or before October 15 of each year. District’s Response While the District will still be in violation of this requirement for the year ended June 30, 2011, management has established a plan that will allow us to be in compliance with this requirement for the year ended June 30, 2012, and thereafter, by having year-end financial statements available for audit on or before October 15 of each year. 2. Monthly Financials should be presented to the board on the cash basis Finding Management is responsible for ensuring all assets of the school district are properly safeguarded. Proper internal controls require that all accounts should be reconciled on a monthly basis. The reconciliation process enables the Business Office to make adjusting journal entries to correct any mistakes in the district’s financial records. Section 37-9-18, Mississippi Code Ann. (1972) requires the superintendent of schools to furnish to the school board a financial statement of receipts and disbursements, by funds, on or before the last working day of the following month covering the prior month. During our testing of internal controls related to financial statement presentation, we noted that the district was providing financial reports to the school board on an accrual basis, instead of cash basis.

This noncompliance occurred because the district staff were unaware the monthly financial statements should be presented on a cash basis to the school board. The financial statements on a monthly accrual basis could misrepresent the district’s present financial position due to the fact of reporting revenues that the district has not yet received. This could cause accounts such as cash to have larger balances than they actually have at the present time of the financials. Recommendation We recommend the district implement procedures to ensure that the school board is presented with monthly financial statements on the cash basis that represents the current balances of that month. District’s Response The District has developed procedures to ensure that the board will be presented with cash basis month financial statements.



3. Forms 4Bs should be filed and reconciled at year end for all retirees Finding The Mississippi Public Employees Retirement System (PERS) requires, under the re-employment provisions of Section 25-11-127, Miss. Code Ann. (1972), school districts hiring PERS service retirees to file PERS Form 4B “Certification/Acknowledgment of Re-employment of Retiree” with the PERS office within five days from the date of employment of the retiree and within five days of termination of employment. During our testing of internal controls related to payroll expenditures, it was noted the district did not file the forms at the termination period of the rehired retirees or reconcile the employee’s salary at termination to prevent overpayment. Some employees tested were noted being over paid.

Lack of internal controls related to the payroll cycle resulted in district personnel not filing all of the necessary forms required for PERS service retirees. The retirees’ retirement income could be affected by the district not filing PERS Form 4B upon re-employment of PERS service retirees each year. In addition, the Mississippi Public Employees Retirement System may assess a penalty per occurrence payable by the district for not filing PERS Form 4B within five days of re-employment and within five days of termination of the service retiree. Recommendation We recommend the district implement procedures to ensure that the district files PERS Form 4B “Certification/Acknowledgment of Re-employment of Retiree” for all retirees rehired by the school district within five days of the employment and within five days of termination. District’s Response The District has developed procedures to ensure that the Form 4-B is timely completed within five days of employment and within five days of termination. 4. District should maintain an adequate cash balance in the Unemployment Compensation Fund 2820 Finding Section 71-5-359 Miss. Code Ann. (1972), requires that Mississippi Public School Districts maintain a cash or investment balance in Fund 2820, the Unemployment Compensation Fund, equal to 2% of applicable wages. During our testing, it was noted the district did not have an adequate balance to cover the minimum requirement. The district had a balance of $556,410 in cash and cash equivalents, but should have had a minimum of $604,698 of cash within the fund 2820. The district was under the minimum requirement by $48,288.

District staff did not allocate enough funds to cover minimum requirements. By not meeting the minimum balance requirement the district is not in compliance with Section 71-5-359 Miss. Code Ann. (1972). Recommendation We recommend the district comply with Section 71-5-359 Miss. Code Ann. (1972). District’s Response The District plans to comply with Section 71-5-359 Miss. Code Ann. (1972).



The Office of the State Auditor or a public accounting firm will review, on the subsequent year's audit engagement, the findings in this report to insure that corrective action has been taken. The Jackson Public School District’s responses to the findings included in this report were not audited and, accordingly, we express no opinion on them. This report is intended solely for the information and use of the school board and management, entities with accreditation overview, and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. Watkins, Ward and Stafford, PLLC Jackson, Mississippi December 7, 2012



SCHEDULE OF FINDINGS AND QUESTIONED COSTS


Schedule of Findings and Questioned Costs For the Year Ended June 30, 2011



Section I: Summary of Auditor’s Results Financial Statements:

1. Type of auditor’s report issued: Unqualified

2. Internal control over financial reporting:

a. Material weakness identified? Yes

b. Significant deficiency identified? None Reported

3. Noncompliance material to financial statements noted? No

Federal Awards:

4. Internal control over major programs:

a. Material weakness identified? No

b. Significant deficiency identified? None Reported

5. Type of auditor’s report issued on compliance for major programs: Unqualified

6. Any audit findings disclosed that are required to be reported in accordance with Section 510(a) of OMB Circular A-133?

No

7. Identification of major programs:

CFDA Numbers Name of Federal Program or Cluster

84.010; 84.389 Title I Cluster

84.027; 84.173; 84.391; 84.392 Special Education Cluster

84.394 State Fiscal Stabilization Fund – Education State Grants, Recovery Act

8. Dollar threshold used to distinguish between type A and type B programs: $ 2,147,898

9. Auditee qualified as low-risk auditee? No

10.

Prior fiscal year audit finding(s) and questioned costs relative to federal awards which would require the auditee to prepare a summary schedule of prior audit findings as discussed in Section__.315(b) of OMB Circular A-133.

Yes


Schedule of Findings and Questioned Costs For the Year Ended June 30, 2011



Section II: Financial Statement Findings Significant Deficiencies Considered to be Material Weaknesses: 2011-01 Finding Deficit Cash balances should be reconciled monthly Management is responsible for ensuring all assets of the school district are properly safeguarded. Proper internal controls require that all accounts should be reconciled on a monthly basis. The reconciliation process enables the Business Office to make adjusting journal entries to correct any mistakes in the district’s financial records. During our testing of internal controls related to financial statement presentation, we noted that the district had not reconciled cash balances within funds at year end. Two funds were noted to have negative cash balances. Fund 1120 (District Maintenance Fund) had a negative cash balance of ($366,998) and fund 2291 (Consolidated Administration Account) had a deficit cash balance of ($415,482).

This internal control error occurred because the district staff were unaware the funds should be reconciled and any deficit cash balance should be corrected through loans or transfers of cash from other funds. The deficit cash balances within the financial statements can make the financial statement unrepresentative of the district’s current financial position. Recommendation We recommend the district implement procedures to ensure that the financial statements do not have any deficit cash balances; so that, the financial statement are representative of the district’s current financial position. Section III: Federal Award Findings and Questioned Costs The results of our tests did not disclose any findings and questioned costs related to the federal awards.



AUDITEE’S CORRECTIVE ACTION PLAN AND / OR

SUMMARY OF PRIOR FEDERAL AUDIT FINDINGS



Jackson Public School District 662 South President Street

Jackson, MS 39225 Dr. Cedric Gray, Superintendent

Sharolyn Miller, Chief Financial Officer

AUDITEE’S SUMMARY OF PRIOR YEAR AUDIT FINDINGS As required by Section ___.315(b) of OMB Circular A-133, the Jackson Public School District has prepared and hereby submits the following summary of prior year audit findings as of June 30, 2011: Findings Status 2010-01 Corrected 2010-02 Corrected

APPENDIX C

INFORMATION CONCERNING THE BANK INDENTURES, THE SCHOOL DISTRICT RESOLUTIONS AND THE SCHOOL DISTRICT INDEBTEDNESS

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THE SCHOOL DISTRICT INDEBTEDNESS AND THE SCHOOL DISTRICT RESOLUTIONS

General; Authorization and Purposes for Issuance

In order to provide moneys for the Project, there has been authorized in accordance with the Act, the Jackson Public School District General Obligation Refunding Bond, Series 2012A, in the aggregate principal amount of $21,065,000 (the “School District Bond”), pursuant to a resolution of the Board of Trustees of the School District (the “Board of Trustees”) adopted on December 5, 2012 (the “School District Bond Resolution”) and the Jackson Public School District Limited Tax Refunding Note, Series 2012B, in the aggregate principal amount of $15,100,000 (the “School District Note” and together with the School District Bond, the “School District Indebtedness”), pursuant to a resolution of the Board of Trustees adopted on December 5, 2012 (the “School District Note Resolution” and together with the School District Bond Resolution, the “School District Resolutions”).

Security

The School District Bond will be a general obligation of the School District. The School District has covenanted to levy a special ad valorem tax upon all of the taxable property within the School District which will be adequate and sufficient, after allowance has been made for the expenses of collection and delinquencies in the payment of taxes, to produce sums required for the payment of the principal of, premium, if any, and the interest on the School District Bond and any additional obligations of the School District under the Series 2012A Indenture. Said special ad valorem tax shall be extended upon the tax rolls and collected in the same manner and at the same time as other taxes of the School District are collected, and the rate of tax which shall be so extended shall be sufficient in each year fully to produce the sums required as aforesaid, without limitation as to time, rate or amount; provided, however, that such tax levy for any year shall be abated pro tanto to the extent the School District on or prior to September 1 of that year has transferred money to the bond fund for the School District Bond, or has made other provisions for funds, to be applied toward the payment of the principal of and interest on the School District Bond due during the ensuing fiscal year of the School District, in accordance with the provisions of the School District Bond. The avails of said tax are irrevocably pledged for the payment of the principal of, premium, if any, and interest on the School District Bond as the same shall mature and accrue. The School District Bond will never constitute an obligation of the State or any political subdivision of the State other than the School District, and neither the full faith and credit nor taxing power of the State or any political subdivision thereof, other than the School District, is pledged to the payment of such principal of, premium, if any, and interest on the School District Bond.

The School District has pledged for the purpose of effectuating and providing for the payment of the principal of, premium, if any, and interest on the School District Note as the same shall mature and accrue, (a) the avails of a direct and continuing tax, not to exceed three mills on the dollar for payment of the School District Note and, on a parity basis with, all other outstanding evidences of indebtedness issued pursuant to Sections 37-59-101 et seq., Mississippi Code of 1972, as amended, including, but not limited to, the School District's $25,220,000 Limited-Tax Refunding Notes, Series 2005 to be levied annually by the City of Jackson, Mississippi, upon all of the taxable property within the geographical limits of the District, and (b) the EEF Funds received from the State pursuant to the EEF Act. The Board of Trustees has directed and authorized that the pledge of the EEF Funds to the School District Note be registered with the Mississippi State Department of Education in accordance with the EEF Act. The full faith and credit of the School District is not pledged to pay the principal and interest on the School District Note.

Procedure

Concurrently with the issuance of the School District Indebtedness, the Bank will issue the Series 2012 Bonds, and the proceeds of the Series 2012 Bonds will be used to purchase the School District Indebtedness in accordance with the Act and in accordance with the terms and conditions of the Series 2012A Indenture, the Series 2012B Indenture and the Bond Purchase Agreement. The proceeds of the School District Bond and School District Note are to be applied in accordance with the applicable Indenture by the Trustee to provide the funds necessary for the Project.

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Payment of Principal, Premium, if any, and Interest

The School District will duly and punctually pay the principal of, premium, if any, and interest on the School District Indebtedness pledged under the Indentures at the dates and the places and in the manner set forth in the School District Resolutions and Indentures. Notwithstanding any schedule of payments upon the School District Indebtedness pledged under the Indentures, the School District agrees to make payments upon such obligations and be liable therefor at such times and in such amounts (including principal, premium, if any, and interest) so as to provide for payment of the principal of, premium, if any, and interest on the Series 2012 Bonds Outstanding under the Indenture, at least five Business Days prior to when such amounts are due, whether upon a scheduled Interest Payment Date for the Series 2012 Bonds, at maturity, or upon redemption of the Series 2012 Bonds.

Redemption of School District Bonds

The School District shall only be permitted to redeem the School District Indebtedness pursuant to the School District Resolutions to the extent and in the manner required to redeem the Series 2012 Bonds pursuant to the provisions of the Indentures.

Flow of Funds

2012A Bond Fund. The School District will establish and maintain in its name with a qualified depository the “Jackson Public School District General Obligation Refunding Bond, Series 2012A Bond Fund” (the “2012A Bond Fund”) for the payment of the principal of, premium, if any, and interest on the School District Bond, and the payment of Agent's fees in connection therewith. There will be deposited into the 2012A Bond Fund as and when received:

(a) The avails of any of the taxes levied and collected pursuant to Section 13 of the School District Bond Resolution;

(b) Any income received from the investment of monies in the 2012A Bond Fund; and

(c) Any other funds available to the School District which may be lawfully used for payment of the principal of, premium, if any, and interest on the School District Bond or for other obligations of the School District which may be due under the Series 2012A Indenture, and which the Board of Trustees, in its discretion, may direct to be deposited into the 2012A Bond Fund.

As long as any principal of, premium, if any, and interest on the School District Bond or the Series 2012A Bonds remain outstanding and/or other obligations of the School District remain outstanding under the School District Bond Resolution or under the Series 2012A Indenture, the Chief Financial Officer of the School District is authorized and directed under the School District Bond Resolution to withdraw from the 2012A Bond Fund sufficient monies to make the payments necessary (the “School District Bond Payments”) to pay (i) the principal of, premium, if any, and interest coming due on the Series 2012A Bonds, and (ii) any additional payments necessary and required as obligations of the School District under the School District Bond Resolution or under the Series 2012A Indenture, including, but not limited to Program Expenses (as such term is defined in the Series 2012A Indenture), and to transfer same to the account of the Trustee in time to reach the Trustee at least five days prior to the date on which said interest, principal or premium, if any, on the Series 2012A Bonds shall become due, or in such time as may be required for any other payments regarding the Series 2012A Bonds shall become due. The Trustee shall deposit all School District Bond Payments received in the General Account of the General Fund of the Series 2012A Indenture (as such terms are defined in the Series 2012A Indenture), or such other fund or account as the Trustee is so directed in the Series 2012A Indenture.

2012B Bond Fund. The School District will establish and maintain in its name with a qualified depository the “Jackson Public School District Limited Tax Refund Note, Series 2012B Note Fund” (the “2012B Note Fund”) for the payment of the principal of, premium, if any, and interest on the School District Note, and the payment of Agent's fees in connection therewith. There will be deposited into the 2012B Bond Fund as and when received:

(a) The avails of any of the taxes levied and collected pursuant to Section 13 of the School District Note Resolution;

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(b) Any income received from the investment of monies in the 2012B Note Fund; and

(c) Any other funds available to the District which may be lawfully used for payment of the principal of, premium, if any, and interest on the School District Note or for other obligations of the School District which may be due under the Indenture, and which the Board of Trustees, in its discretion, may direct to be deposited into the 2012B Note Fund, including, but not limited to, the EEF Funds.

As long as any principal of, premium, if any, and interest on the School District Note or the Series 2012B Bonds remain outstanding and/or other obligations of the School District remain outstanding under the School District Note Resolution or under the Series 2012B Indenture, the Chief Financial Officer of the School District is authorized and directed under the School District Note Resolution to withdraw from the 2012B Note Fund sufficient monies to make the payments necessary (the “School District Note Payments”) to pay (i) the principal of, premium, if any, and interest coming due on the Series 2012B Bonds, and (ii) any additional payments necessary and required as obligations of the School District under the School District Note Resolution or under the Series 2012B Indenture, including, but not limited to Program Expenses (as such term is defined in the Series 2012B Indenture), and to transfer same to the account of the Trustee in time to reach the Trustee at least five days prior to the date on which said interest, principal or premium, if any, on the Series 2012B Bonds shall become due, or in such time as may be required for any other payments regarding the Series 2012B Bonds shall become due. The Trustee shall deposit all School District Note Payments received in the General Account of the General Fund of the Series 2012B Indenture (as such terms are defined in the Series 2012B Indenture), or such other fund or account as the Trustee is so directed in the Series 2012B Indenture.

2012A Escrow Account. A portion of the proceeds received upon the sale of the School District Bond as provided in the Series 2012A Indenture will be transferred by the Trustee and deposited in the Series 2012A Escrow Account created under and pursuant to the 2012A Escrow Agreement and used to pay when due and payable as provided for therein, principal and interest on the Custodial Receipts, certain maturities of the 2007 Bonds and certain maturities of the 2008 Bonds as such becomes due and payable and/or, upon redemption or maturity thereof, the principal of, premium, if any, and interest on the Custodial Receipts, certain maturities of the 2007 Bonds and certain maturities of the 2008 Bonds .

The balance of the proceeds derived from the sale of the School District Bond following the deposits referenced in the above paragraph, will be retained by the Bank and deposited with the Trustee under the Series 2012A Indenture to be used for the payment of the Costs of Issuance, all as provided in the Series 2012A Indenture.

2012B Escrow Account. A portion of the proceeds received upon the sale of the School District Note as provided in the Series 2012A Indenture will be transferred by the Trustee and deposited in the Series 2012B Escrow Account created under and pursuant to the 2012B Escrow Agreement and used to pay when due and payable as provided for therein, principal and interest on the 2003 Notes as such becomes due and payable and/or, upon redemption or maturity thereof, the principal of, premium, if any, and interest on the 2003 Notes.

The balance of the proceeds derived from the sale of the School District Note following the deposits referenced in the above paragraph, will be retained by the Bank and deposited with the Trustee under the Indenture to be used for the payment of the Costs of Issuance, all as provided in the Series 2012B Indenture.

APPENDIX D

FORMS OF OPINIONS OF CO-BOND COUNSEL

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Upon the delivery of the Series 2012 Bonds, Baker, Donelson, Bearman, Caldwell & Berkowitz, PC, and Betty A. Mallett, PLLC, propose to deliver opinions in substantially the following forms:

January 15, 2013

Mississippi Development Bank Jackson, Mississippi

Re: $21,065,000 Mississippi Development Bank Special Obligation Bonds, Series 2012A (Jackson Public School District General Obligation Refunding Bonds Project), dated the date of delivery thereof (the "Series 2012A Bonds")

Ladies and Gentlemen:

We have acted as Co-Bond Counsel in connection with the issuance by the Mississippi Development Bank (the "Issuer") of the above described Series 2012A Bonds, pursuant to an Indenture of Trust (the "Indenture"), dated as of January 15, 2013, by and between the Issuer and Trustmark National Bank, Jackson, Mississippi, as trustee (the "Trustee"). We have examined the law and a certified transcript of proceedings of the Issuer relative to the authorization, issuance and sale of the Series 2012A Bonds and such other papers as we deem necessary to render this opinion, including the Issuer’s tax covenants and representations made in the Indenture and tax certificates and the tax covenants and representations and certificates made by the Jackson Public School District of Jackson, Mississippi (the "District") in a resolution (the "District Bond Resolution") adopted by the Board of Trustees of the District on December 5, 2012 (collectively, the "Tax Representations and Covenants").

We have relied upon the certified transcript of proceedings and other certificates of public officials, including the Tax Representations and Covenants, and have not undertaken to verify any facts by independent investigation.

Based upon our examination, we are of the opinion, as of the date hereof, as follows:

(a) The Series 2012A Bonds are legal, valid and binding limited obligations of the Issuer enforceable in accordance with the terms thereof. The Series 2012A Bonds are payable from and secured only by the certain payments and funds to be received by the Issuer and the Trustee and pledged to the Series 2012A Bonds under the Indenture.

(b) The Indenture is a valid and binding agreement of the Issuer enforceable in accordance with its terms. The Indenture creates the valid pledge that it purports to create in the Funds and Accounts and the District Bond (as such terms are defined in the Indenture), including the investments and proceeds thereof (excepting therefrom the Rebate Fund) (as defined in the Indenture) and all other funds, accounts and moneys pledged (to the extent of that pledge), subject to the application thereof to the purposes and on the conditions permitted by the Indenture.

(c) Under the existing statutes, regulations, rulings and court decisions, subject to the assumption stated below, interest on the Series 2012A Bonds is excluded from gross income for federal income tax purposes. Furthermore, interest on the Series 2012A Bonds is not an item of tax preference for purposes of the federal alternative minimum tax imposed on corporations and taxpayers other than corporations; however, interest on the Series 2012A Bonds is taken into account in determining adjusted current earnings for purposes of computing the alternative minimum tax imposed on certain corporations. We express no opinion regarding other federal tax consequences resulting from the ownership of, receipt or accrual of interest on, or disposition of the Series 2012A Bonds. In rendering the opinion contained in this paragraph (c), we have assumed continuing compliance with the requirements of the Internal Revenue Code of 1986, as amended (the "Code") that must be met by the Issuer and the District after the issuance of the Series 2012A Bonds, including the Tax Representations and Covenants, in order that interest on the Series 2012A Bonds not be included in gross income for federal income tax purposes. The failure to meet such requirements may cause interest on the Series 2012A Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Series 2012A Bonds. The Issuer and the

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District have covenanted to comply with or to require compliance with the requirements of the Code in order to maintain the exclusion of interest on the Series 2012A Bonds from gross income for federal income tax purposes.

(d) Interest on the Series 2012A Bonds is exempt from all income taxation in the State of Mississippi under existing laws, regulations, rulings and judicial decisions.

It is to be understood that the rights of the owners of the Series 2012A Bonds and the enforceability of the Series 2012A Bonds, the Indenture, the District Bond and the District Bond Resolution may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights heretofore or hereafter enacted and that their enforcement may be subject to the exercise of judicial discretion in accordance with general principles of equity.

Very truly yours, BAKER, DONELSON, BEARMAN, CALDWELL & BERKOWITZ, PC

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January 15, 2013


Re: $21,065,000 Mississippi Development Bank Special Obligation Bonds, Series 2012A (Jackson Public School District General Obligation Refunding Bonds Project), dated the date of delivery thereof (the "Series 2012A Bonds")


I have acted as Co-Bond Counsel in connection with the issuance by the Mississippi Development Bank (the "Issuer") of the above described Series 2012A Bonds, pursuant to an Indenture of Trust (the "Indenture"), dated as of January 15, 2013, by and between the Issuer and Trustmark National Bank, Jackson, Mississippi, as trustee (the "Trustee"). I have examined the law and a certified transcript of proceedings of the Issuer relative to the authorization, issuance and sale of the Series 2012A Bonds and such other papers as I deem necessary to render this opinion, including the Issuer’s tax covenants and representations made in the Indenture and tax certificates and the tax covenants and representations and certificates made by the Jackson Public School District of Jackson, Mississippi (the "District") in a resolution (the "District Bond Resolution") adopted by the Board of Trustees of the District on December 5, 2012 (collectively, the "Tax Representations and Covenants").

I have relied upon the certified transcript of proceedings and other certificates of public officials, including the Tax Representations and Covenants, and have not undertaken to verify any facts by independent investigation.

Based upon my examination, I am of the opinion, as of the date hereof, as follows:

(a) The Series 2012A Bonds are legal, valid and binding limited obligations of the Issuer enforceable in accordance with the terms thereof. The Series 2012A Bonds are payable from and secured only by the certain payments and funds to be received by the Issuer and the Trustee and pledged to the Series 2012A Bonds under the Indenture.

(b) The Indenture is a valid and binding agreement of the Issuer enforceable in accordance with its terms. The Indenture creates the valid pledge that it purports to create in the Funds and Accounts and the District Bond (as such terms are defined in the Indenture), including the investments and proceeds thereof (excepting therefrom the Rebate Fund) (as defined in the Indenture) and all other funds, accounts and moneys pledged (to the extent of that pledge), subject to the application thereof to the purposes and on the conditions permitted by the Indenture.

(c) Under the existing statutes, regulations, rulings and court decisions, subject to the assumption stated below, interest on the Series 2012A Bonds is excluded from gross income for federal income tax purposes. Furthermore, interest on the Series 2012A Bonds is not an item of tax preference for purposes of the federal alternative minimum tax imposed on corporations and taxpayers other than corporations; however, interest on the Series 2012A Bonds is taken into account in determining adjusted current earnings for purposes of computing the alternative minimum tax imposed on certain corporations. I express no opinion regarding other federal tax consequences resulting from the ownership of, receipt or accrual of interest on, or disposition of the Series 2012A Bonds. In rendering the opinion contained in this paragraph (c), I have assumed continuing compliance with the requirements of the Internal Revenue Code of 1986, as amended (the "Code") that must be met by the Issuer and the District after the issuance of the Series 2012A Bonds, including the Tax Representations and Covenants, in order that interest on the Series 2012A Bonds not be included in gross income for federal income tax purposes. The failure to meet such requirements may cause interest on the Series 2012A Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Series 2012A Bonds. The Issuer and the District have covenanted to comply with or to require compliance with the requirements of the Code in order to maintain the exclusion of interest on the Series 2012A Bonds from gross income for federal income tax purposes.

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(d) Interest on the Series 2012A Bonds is exempt from all income taxation in the State of Mississippi under existing laws, regulations, rulings and judicial decisions.

It is to be understood that the rights of the owners of the Series 2012A Bonds and the enforceability of the Series 2012A Bonds, the Indenture, the District Bond and the District Bond Resolution may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights heretofore or hereafter enacted and that their enforcement may be subject to the exercise of judicial discretion in accordance with general principles of equity.

Very truly yours,

BETTY A. MALLETT, PLLC

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January 15, 2013


Re: $15,100,000 Mississippi Development Bank Special Obligation Bonds, Series 2012B (Jackson Public School District General Obligation Refunding Bonds Project), dated the date of delivery thereof (the “Series 2012B Bonds”)


We have acted as Co-Bond Counsel in connection with the issuance by the Mississippi Development Bank (the “Issuer”) of the above described Series 2012B Bonds, pursuant to an Indenture of Trust (the “Indenture”), dated as of January 15, 2013, by and between the Issuer and Trustmark National Bank, Jackson, Mississippi, as Trustee (the “Trustee”). We have examined the law and a certified transcript of proceedings of the Issuer relative to the authorization, issuance and sale of the Series 2012B Bonds and such other papers as we deem necessary to render this opinion, including the Issuer’s tax covenants and representations made in the Indenture and tax certificates and the tax covenants and representations and certificates made by the Jackson Public School District of Jackson, Mississippi (the “District”) in a resolution (the “District Note Resolution”) adopted by the Board of Trustees of the District on December 5, 2012 (collectively, the “Tax Representations and Covenants”).

We have relied upon the certified transcript of proceedings and other certificates of public officials, including the Tax Representations and Covenants, and have not undertaken to verify any facts by independent investigation.

Based upon our examination, we are of the opinion, as of the date hereof, as follows:

(a) The Series 2012B Bonds are legal, valid and binding limited obligations of the Issuer enforceable in accordance with the terms thereof. The Series 2012B Bonds are payable from and secured only by the certain payments and funds to be received by the Issuer and the Trustee and pledged to the Series 2012B Bonds under the Indenture.

(b) The Indenture is a valid and binding agreement of the Issuer enforceable in accordance with its terms. The Indenture creates the valid pledge that it purports to create in the Funds and Accounts and the District Note (as such terms are defined in the Indenture), including the investments and proceeds thereof (excepting therefrom the Rebate Fund) (as defined in the Indenture) and all other funds, accounts and moneys pledged (to the extent of that pledge), subject to the application thereof to the purposes and on the conditions permitted by the Indenture.

(c) Under the existing statutes, regulations, rulings and court decisions, subject to the assumption stated below, interest on the Series 2012B Bonds is excluded from gross income for federal income tax purposes. Furthermore, interest on the Series 2012B Bonds is not an item of tax preference for purposes of the federal alternative minimum tax imposed on corporations and taxpayers other than corporations; however, interest on the Series 2012B Bonds is taken into account in determining adjusted current earnings for purposes of computing the alternative minimum tax imposed on certain corporations. We express no opinion regarding other federal tax consequences resulting from the ownership of, receipt or accrual of interest on, or disposition of the Series 2012B Bonds. In rendering the opinion contained in this paragraph (c), we have assumed continuing compliance with the requirements of the Internal Revenue Code of 1986, as amended (the “Code”) that must be met by the Issuer and the District after the issuance of the Series 2012B Bonds, including the Tax Representations and Covenants, in order that interest on the Series 2012B Bonds not be included in gross income for federal income tax purposes. The failure to meet such requirements may cause interest on the Series 2012B Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Series 2012B Bonds. The Issuer and the District have covenanted to comply with or to require compliance with the requirements of the Code in order to maintain the exclusion of interest on the Series 2012B Bonds from gross income for federal income tax purposes.

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(d) Interest on the Series 2012B Bonds is exempt from all income taxation in the State of Mississippi under existing laws, regulations, rulings and judicial decisions.

It is to be understood that the rights of the owners of the Series 2012B Bonds and the enforceability of the Series 2012B Bonds, the Indenture, the District Note and the District Note Resolution may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights heretofore or hereafter enacted and that their enforcement may be subject to the exercise of judicial discretion in accordance with general principles of equity.

Very truly yours,

BAKER, DONELSON, BEARMAN, CALDWELL & BERKOWITZ, PC

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January 15, 2013


Re: $15,100,000 Mississippi Development Bank Special Obligation Bonds, Series 2012B (Jackson Public School District General Obligation Refunding Bonds Project), dated the date of delivery thereof (the “Series 2012B Bonds”)


I have acted as Co-Bond Counsel in connection with the issuance by the Mississippi Development Bank (the “Issuer”) of the above described Series 2012B Bonds, pursuant to an Indenture of Trust (the “Indenture”), dated as of January 15, 2013, by and between the Issuer and Trustmark National Bank, Jackson, Mississippi, as Trustee (the “Trustee”). I have examined the law and a certified transcript of proceedings of the Issuer relative to the authorization, issuance and sale of the Series 2012B Bonds and such other papers as I deem necessary to render this opinion, including the Issuer’s tax covenants and representations made in the Indenture and tax certificates and the tax covenants and representations and certificates made by the Jackson Public School District of Jackson, Mississippi (the “District”) in a resolution (the “District Note Resolution”) adopted by the Board of Trustees of the District on December 5, 2012 (collectively, the “Tax Representations and Covenants”).

I have relied upon the certified transcript of proceedings and other certificates of public officials, including the Tax Representations and Covenants, and have not undertaken to verify any facts by independent investigation.

Based upon my examination, I am of the opinion, as of the date hereof, as follows:

(a) The Series 2012B Bonds are legal, valid and binding limited obligations of the Issuer enforceable in accordance with the terms thereof. The Series 2012B Bonds are payable from and secured only by the certain payments and funds to be received by the Issuer and the Trustee and pledged to the Series 2012B Bonds under the Indenture.

(b) The Indenture is a valid and binding agreement of the Issuer enforceable in accordance with its terms. The Indenture creates the valid pledge that it purports to create in the Funds and Accounts and the District Note (as such terms are defined in the Indenture), including the investments and proceeds thereof (excepting therefrom the Rebate Fund) (as defined in the Indenture) and all other funds, accounts and moneys pledged (to the extent of that pledge), subject to the application thereof to the purposes and on the conditions permitted by the Indenture.

(c) Under the existing statutes, regulations, rulings and court decisions, subject to the assumption stated below, interest on the Series 2012B Bonds is excluded from gross income for federal income tax purposes. Furthermore, interest on the Series 2012B Bonds is not an item of tax preference for purposes of the federal alternative minimum tax imposed on corporations and taxpayers other than corporations; however, interest on the Series 2012B Bonds is taken into account in determining adjusted current earnings for purposes of computing the alternative minimum tax imposed on certain corporations. I express no opinion regarding other federal tax consequences resulting from the ownership of, receipt or accrual of interest on, or disposition of the Series 2012B Bonds. In rendering the opinion contained in this paragraph (c), I have assumed continuing compliance with the requirements of the Internal Revenue Code of 1986, as amended (the “Code”) that must be met by the Issuer and the District after the issuance of the Series 2012B Bonds, including the Tax Representations and Covenants, in order that interest on the Series 2012B Bonds not be included in gross income for federal income tax purposes. The failure to meet such requirements may cause interest on the Series 2012B Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Series 2012B Bonds. The Issuer and the District have covenanted to comply with or to require compliance with the requirements of the Code in order to maintain the exclusion of interest on the Series 2012B Bonds from gross income for federal income tax purposes.

(d) Interest on the Series 2012B Bonds is exempt from all income taxation in the State of Mississippi under existing laws, regulations, rulings and judicial decisions.

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It is to be understood that the rights of the owners of the Series 2012B Bonds and the enforceability of the Series 2012B Bonds, the Indenture, the District Note and the District Note Resolution may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights heretofore or hereafter enacted and that their enforcement may be subject to the exercise of judicial discretion in accordance with general principles of equity.

Very truly yours,

Betty A. Mallett, PLLC

APPENDIX E

DEFINITIONS AND SUMMARY OF TRUST INDENTURES

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DEFINITIONS AND RULES OF INTERPRETATION

In addition to terms defined elsewhere in this Official Statement, the following defined terms are used throughout this Official Statement with the meanings below.

Accounts

“Accounts” means the accounts created pursuant to the Indenture.

Act

“Act” means together the Bank Act, the Refinancing Act and the Refunding Act.

Arbitrage Rebate Agreement

“Arbitrage Rebate Agreement” means the Arbitrage Rebate Agreement among the Bank, the School District and the Trustee, dated as of January 15, 2013, in connection with the Series 2012A Bonds and Series 2012B Bonds.

Authorized Officer

“Authorized Officer” means the President, Vice President, Executive Director, Secretary or Assistant Secretary of the Bank or such other person or persons who are duly authorized to act on behalf of the Bank.

Bank

“Bank” means the Mississippi Development Bank, a body corporate and politic exercising essential public functions, or any successor to its functions organized under the Bank Act.

Bank Act

“Bank Act” means the provisions of Sections 31-25-1 et seq., Mississippi Code of 1972, as amended or supplemented from time to time.

Bankruptcy Code

“Bankruptcy Code” means 11 U.S.C. Section 100 et seq., as amended or supplemented from time to time.

Beneficial Owner

“Beneficial Owner” means, whenever used with respect to a Bond, the person in whose name such Bond is recorded as the beneficial owner of such Bond by a DTC Participant on the records of such DTC Participant.

Bond Counsel or Co-Bond Counsel

“Bond Counsel” or “Co-Bond Counsel” means an attorney or firm of attorneys approved by the School District and the Bank nationally recognized in the area of municipal law and matters relating to the exclusion of interest on state and local government bonds from gross income under federal tax law, including particularly compliance with Section 148(f) of the Code. Baker, Donelson, Bearman, Caldwell & Berkowitz, PC, Jackson, Mississippi, and Betty A. Mallett, PLLC, PLLC, Jackson, Mississippi, are serving as Co-Bond Counsel in connection with the sale and issuance of the Series 2012 Bonds.

Bond Issuance Expense Account

“Bond Issuance Expense Account” means the account by that name created by the Indenture.

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Bond Purchase Agreement

“Bond Purchase Agreement” means that certain Bond Purchase Agreement, dated January 8, 2013, among the Underwriters, the School District and the Bank in connection with the issuance and sale of the Series 2012 Bonds.

Bond Register

“Bond Register” means the registration records of the Bank kept by the Trustee to evidence the registration and transfer of the Bonds.

Bondholder

“Bondholder” or “holder of Bonds” or “owner of Bonds” or any similar term means the Registered Owner of any Bond.

Bonds

“Bonds” means the Series 2012 Bonds and any Refunding Bonds issued pursuant to the Indenture.

Business Day

“Business Day” means any day other than (a) a Saturday, (b) a Sunday, (c) any other day on which banking institutions in New York, New York or Jackson, Mississippi, are authorized or required not to be open for the transaction of regular banking business or (d) a day on which the New York Stock Exchange is closed.

Code

“Code” or “Internal Revenue Code” means the Internal Revenue Code of 1986, as amended, and all applicable Treasury Regulations promulgated thereunder.

Costs of Issuance

“Costs of Issuance” means items of expense payable or reimbursable, directly or indirectly, by the Bank and related to the authorization, sale, validation, issuance and/or delivery of the Series 2012 Bonds and the School District Indebtedness, which items of expense shall include, but not be limited to, printing costs, costs of reproducing documents, filing and recording fees, initial fees and charges of the Trustee, legal fees and charges, professional consultants’ fees, costs of credit ratings, fees and charges for execution, transportation and safekeeping of the Series 2012 Bonds, credit enhancements or liquidity facility fees, fees and expenses of the Underwriter, and other costs, charges and fees in connection with the foregoing.

Counsel

“Counsel” means an attorney or firm of attorneys duly admitted to practice law before the highest court of any state and approved by the Bank, the School District and the Trustee.

Default

“Default” means an event or condition the occurrence of which, with the lapse of time or the giving of notice or both, would become an Event of Default under the Indenture.

DTC

“DTC” means The Depository Trust Company, New York, New York.

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DTC Participants

“DTC Participants” shall have the meaning ascribed thereto in the Indenture.

DTC’s Blanket Letter of Representations

“DTC’s Blanket Letter of Representations” means the Blanket Letter of Representations, dated January 9, 1997, between the Bank and DTC.

Escrow Account

“Escrow Account” shall mean the account by that name established in the Escrow Agreement.

2012A Escrow Agreement

“2012A Escrow Agreement” shall mean the escrow trust agreement entered into among the Bank, the School District and the Trustee in connection with the Series 2012A Bonds.

2012B Escrow Agreement

“2012B Escrow Agreement” shall mean the escrow trust agreement entered into among the Bank, the School District and the Trustee in connection with the Series 2012B Bonds.

Escrow Agreement

“Escrow Agreement” shall mean the applicable Escrow Trust Agreement in connection with the Series 2012A Bonds and the Series 2012B Bonds and dated as of the date of delivery thereof, by and among the School District, the Escrow Trustee and the Bank.

Escrow Trustee

“Escrow Trustee” shall mean the state banking corporation or national banking association with corporate trust powers qualified to act as Escrow Trustee under the Escrow Agreement which shall initially be Trustmark National Bank , Jackson, Mississippi.

Event of Default

“Event of Default” means any occurrence or event specified in the Indenture.

Funds

“Funds” means the funds created pursuant to the Indenture (except for the Rebate Fund).

General Account

“General Account” means the account by that name created by the Indenture.

General Fund

“General Fund” means the fund by that name created by the Indenture.

Governmental Obligations

“Governmental Obligations” means to the extent permitted by State law (a) direct obligations of the United States of America; (b) obligations guaranteed as to principal and interest by the United States of America or any federal agency whose obligations are backed by the full faith and credit of the United States of America, including but not limited to: Department of Housing and Urban Development, Export-Import Bank, Farmers Home

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Administration (or successor thereto), Federal Financing Bank, Federal Housing Administration, Maritime Administration, Small Business Administration, which obligations include but are not limited to certificates or receipts representing direct ownership of future interest or principal payments on obligations described in clause (a) or in this clause (b) and which are held by a custodian in safekeeping on behalf of the holders of such receipts; and (c) obligations of any state of the United States of America or any political subdivision thereof, the full payment of principal of, premium, if any, and interest on which (i) is fully and unconditionally guaranteed or insured by the United States of America, or (ii) is provided for by an irrevocable deposit of the securities described in clause (i) to the extent such investments are permitted by State law.

Indenture

“Indenture” means the Series 2012A Indenture and the Series 2012B Indenture, and all supplements and amendments thereto entered into pursuant to the terms thereof.

Interest Payment Date

“Interest Payment Date” means any date on which interest is payable on the Bonds, and for the Series 2012 Bonds, means each April 1 and October 1, commencing April 1, 2013.

Investment Securities

“Investment Securities” means any of the following to the extent such investments are permitted by State law: (a) obligations of the State, any municipality of the State or the United States of America rated at least “A” by S&P or Moody’s; (b) obligations the principal and interest of which are fully guaranteed by the State or the United States of America; (c) obligations of any corporation wholly owned by the United States of America; (d) obligations of any corporation sponsored by the United States of America which are or may become eligible as collateral for advances to member banks as determined by the Board of Governors of the Federal Reserve System; (e) obligations of insurance firms or other corporations whose investments are rated “AA” or better by recognized rating companies; (f) certificates of deposit or time deposits of qualified depositories of the State as approved by the State Depository Commission, secured in such manner, if any, as the Bank shall determine; (g) contracts for the purchase and sale of obligations of the type specified in items (a) through (e) above; (h) repurchase agreements secured by obligations specified in items (a) through (e) above; or (i) money market funds, rated “AAm” or “AAm-G” or better by S&P, the assets of which are required to be invested in obligations specified in items (a) through (f) above.

Local Governmental Unit

“Local Governmental Unit” means (a) any county, municipality, utility district, regional solid waste authority, county cooperative service district or political subdivision of the State, (b) the State or any agency thereof, (c) the institutions of higher learning of the State, (d) any education building corporation established for institutions of higher learning, or (e) any other governmental unit created under state law, such as the School District. The School District is a Local Governmental Unit under the Bank Act.

Moody’s

“Moody’s” means Moody’s Investors Service, Inc., a Delaware corporation, its successors and assigns, and, if such corporation shall for any reason 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 School District (with the approval of the Bank), with written notice to the Trustee.

Opinion of Bond Counsel

“Opinion of Bond Counsel” means an opinion by a nationally recognized firm experienced in matters relating to the tax exemption for interest payable on obligations of states and their instrumentalities and political subdivisions under federal law, and which is acceptable to the Bank and the Trustee.

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Opinion of Counsel

“Opinion of Counsel” means a written opinion of Counsel addressed to the Trustee, for the benefit of the owners of the Bonds, who may (except as otherwise expressly provided in the Indenture) be Counsel to the Bank or Counsel to the owners of the Bonds and who is acceptable to the Trustee.

Outstanding

“Outstanding” or “Bonds Outstanding” means all Bonds which have been authenticated and delivered by the Trustee under the Indenture, including Bonds held by the Bank, except:

(a) Bonds canceled after purchase in the open market or because of payment at or redemption prior to maturity;

(b) Bonds deemed paid under Article IX of the Indenture; and

(c) Bonds in lieu of which other Bonds have been authenticated under the Indenture.

Paying Agent

“Paying Agent” means Trustmark National Bank, a national banking association organized and existing under the laws of the United States of America, or any successor thereto, acting as the Paying Agent under the School District Resolutions.

Principal Payment Date

“Principal Payment Date” means the maturity date or, if applicable, the mandatory sinking fund redemption dates of any Bond.

Prior Indebtedness

“Prior Indebtedness” means, collectively, the outstanding Custodial Receipts, certain maturities of the outstanding 2007 Bonds, certain maturities of the outstanding 2008 Bonds and certain maturities of the 2003 Notes.

Program

“Program” means the program for purchasing Securities of Local Governmental Units by the Bank pursuant to the Bank Act.

Program Expenses

“Program Expenses” means all of the fees and expenses of the Trustee relating to the Series 2012 Bonds or the School District Indebtedness and costs of determining the amount rebatable, if any, to the United States of America under the Indenture, all to the extent properly allocable to the Program and approved in writing by the Bank.

Project

“Project” means providing funds to provide financing for (a) the Refunding Project, and (b) paying Costs of Issuance for the School District Bonds and the Series 2012 Bonds.

Purchase Account

“Purchase Account” means the account by that name created by the Indenture.

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Rebate Fund

“Rebate Fund” means the fund by that name created by the Indenture.

Record Date

“Record Date” means, with respect to any Interest Payment Date, the fifteenth day of the calendar month next preceding such Interest Payment Date.

Redemption Account

“Redemption Account” means the account by that name created by the Indenture.

Redemption Price

“Redemption Price” means, with respect to any Bond, the principal amount thereof, plus the applicable premium, if any, and accrued interest payable upon redemption prior to maturity.

Refinancing Act

“Refinancing Act” means Sections 31-15-1 et seq., Mississippi Code of 1972, as amended or supplemented from time to time.

Refunding Act

“Refunding Act” means Sections 31-27-1 et seq., Mississippi Code of 1972, as amended or supplemented from time to time.

Refunding Bonds

“Refunding Bonds” means bonds issued pursuant to the Indenture and any Supplemental Indenture.

Refunding Project

“Refunding Project” means the refunding and/or restructuring (including the payment of certain interest) of the Prior Indebtedness with the proceeds of the Series 2012 Bonds.

Registered Owner

“Registered Owner” means the person or persons in whose name any Bond shall be registered on the Bond Register.

Revenues

“Revenues” means the Funds and Accounts (except for the Rebate Fund) and all income, revenues and profits of the Funds and Accounts (except for the Rebate Fund) referred to in the granting clauses of the Indenture including, without limitation, all School District Bond Payments and any additional amounts paid to the Trustee under the School District Resolutions or from any other source whatsoever.

S&P

“S&P” means Standard & Poor’s Credit Market Services, a division of The McGraw Hill Companies, Inc., a New York corporation, its successors and assigns, and, if dissolved or liquidated or if it no longer performs 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 School District (with the approval of the Bank), with written notice to the Trustee.

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School District

“School District” means the Jackson Public School District, Jackson, Mississippi, , a Local Governmental Unit under the Bank Act.

School District Bond

“School District Bond” means the $21,065,000 Jackson Public School District, General Obligation Refunding Bond, Series 2012A issued by the School District pursuant to the School District Bond Resolution and registered to the Trustee as assignee of the Bank pursuant to the Series 2012A Indenture.

School District Bond Interest Payment

“School District Bond Interest Payment” means the interest due or to become due on the School District Bond.

School District Bond Payment

“School District Bond Payment” means the amounts paid or required to be paid, from time to time, for principal, premium, if any, and interest on the School District Bond.

School District Bond Principal Payment

“School District Bond Principal Payment” means the principal due or to become due on the School District Bond.

School District Bond Resolution

“School District Bond Resolution” means that certain resolution adopted by the Board of Trustees of the School District on December 5, 2012, in connection with the issuance of the School District Bond.

School District Note

“School District Note” means the $15,100,000 Jackson Public School District, Limited Tax Refunding Note, Series 2012B issued by the School District pursuant to the School District Note Resolution and registered to the Trustee as assignee of the Bank pursuant to the Series 2012B Indenture.

School District Note Interest Payment

“School District Note Interest Payment” means the interest due or to become due on the School District Note.

School District Note Payment

“School District Note Payment” means the amounts paid or required to be paid, from time to time, for principal, premium, if any, and interest on the School District Note.

School District Note Principal Payment

“School District Note Principal Payment” means the principal due or to become due on each of the School District Note.

School District Note Resolution

“School District Note Resolution” means that certain resolution adopted by the Board of Trustees of the School District on December 5, 2012, in connection with the issuance of the School District Bond.

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School District Resolutions

“School District Resolutions” means the School District Bond Resolution and the School District Note Resolution.

Series 2012 Bonds

“Series 2012 Bonds” means, collectively, the Series 2012A Bonds and the Series 2012B Bonds.

Series 2012A Bonds

“Series 2012A Bonds” means the $21,065,000 Mississippi Development Bank Special Obligation Bonds, Series 2012A (Jackson Public School District General Obligation Refunding Bonds Project) issued pursuant to the Series 2012A Indenture.

Series 2012B Bonds

“Series 2012B Bonds” means the $15,100,000 Mississippi Development Bank Taxable Special Obligation Bonds, Series 2012B (Jackson Public School District General Obligation Refunding Note Project) issued pursuant to the Series 2012B Indenture.

Series 2012A Indenture

“Series 2012A Indenture” means the Indenture of Trust pursuant to which the Series 2012A Bonds are issued and all supplements and amendments thereto entered into pursuant to the terms thereof

Series 2012B Indenture

“Series 2012B Indenture” means the Indenture of Trust pursuant to which the Series 2012B Bonds are issued and all supplements and amendments thereto entered into pursuant to the terms thereof.

State

“State” means the State of Mississippi.

Supplemental Indenture

“Supplemental Indenture” means an Indenture supplemental to or amendatory of the Indenture, executed by the Bank and the Trustee in accordance with the Indenture.

Trust Estate

“Trust Estate” means the property, rights, and amounts pledged and assigned to the Trustee as security for the Bonds, pursuant to the granting clauses of the Indenture.

Trustee

“Trustee” means the state banking corporation or national banking association with corporate trust powers qualified to act as Trustee under the Indenture which may be designated (originally or as a successor) as Trustee for the owners of the Bonds issued and secured under the terms of this Indenture, and which shall initially be Trustmark National Bank, Jackson, Mississippi.

Underwriter

“Underwriter or Underwriters” means together, Rice Financial Products Company, New York, New York, and Wells Fargo Securities, Chicago, Illinois.

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THE INDENTURE

The following is a summary of certain provisions of the Indenture. This summary does not purport to be comprehensive or definitive. All references herein to the Indenture are qualified in their entirety by reference to such document, a copy of which may be obtained upon written request to the Bank. Capitalized terms used and not defined herein shall have the meanings ascribed to them in this APPENDIX E and the Indenture.

Provisions for Issuance of Refunding Bonds

(a) All or any part of one or more series of Refunding Bonds may be issued, authenticated and delivered upon original issuance to refund all or any part of the Outstanding Bonds. Refunding Bonds shall be issued in a principal amount sufficient, together with other monies available therefor, to accomplish such refunding and to make such deposits required by the provisions of the Act, this paragraph and by the Supplemental Indenture authorizing said Refunding Bonds.

(b) Refunding Bonds may be authenticated and delivered only upon receipt by the Trustee (in addition to the receipt by the Trustee of the documents required by Section 2.04 of the Indenture) of:

(i) Irrevocable instructions to the Trustee, satisfactory to it, to give due notice of redemption of all the Series 2012 Bonds to be refunded on the redemption date specified in such instructions;

(ii) Irrevocable instructions to the Trustee, satisfactory to it, to give due notice provided for in Section 4.05 of the Indenture to the owners of the Series 2012 Bonds being refunded (which may be a conditional notice of redemption); and

(iii) Either (A) monies in an amount sufficient to effect timely payment at the applicable Redemption Price or principal payment amount of the Series 2012 Bonds to be refunded or paid, respectively, together with accrued interest on such Series 2012 Bonds to the redemption or maturity date and all necessary and appropriate fees and expenses of the Trustee, which monies shall be held by the Trustee or an escrow agent approved by the Bank in a separate account irrevocably in trust for and assigned to the respective owners of the Series 2012 Bonds to be refunded or paid, or (B) Governmental Obligations in such principal amounts, of such maturities, bearing such interest, and otherwise having such terms and qualifications, as shall be necessary to comply with the provisions of Article IX of the Indenture which Governmental Obligations shall be held in trust and used only as provided in said Article.

Mutilated, Lost, Stolen or Destroyed Bonds

If any Bond is mutilated, lost, stolen or destroyed, the Bank shall execute and the Trustee shall authenticate a new Bond or Bonds of the same maturity and denomination, as that mutilated, lost, stolen or destroyed; provided that in the case of any mutilated Bond, it shall first be surrendered to the Trustee, and in the case of any lost, stolen or destroyed Bond, there shall be first furnished to the Trustee evidence of such loss, theft or destruction satisfactory to the Trustee, together with security and/or indemnity satisfactory to the Trustee. In the event any such Bond shall have matured, instead of issuing and authenticating a duplicate Bond, the Trustee may pay the same without surrender thereof; provided, however, that in the case of a lost, stolen or destroyed Bond, there shall be first furnished to the Trustee evidence of such loss, theft or destruction satisfactory to the Trustee together with security and/or indemnity satisfactory to the Trustee. The Trustee may charge the owner of such Bond its reasonable fees and expenses in connection with replacing any Bonds mutilated, lost, stolen or destroyed. Any Bond issued as described in this paragraph shall be deemed part of the original series of the Bonds in respect of which it was issued and a contractual obligation of the Bank replacing the obligation evidenced by such mutilated, lost, stolen or destroyed Bond.

Registration, Transfer and Exchange of Bonds; Persons Treated as Owners

The Bank shall cause the Bond Register to be kept by the Trustee at its Principal Office, and the Trustee is constituted and appointed the bond registrar of the Bank for the Bonds. At reasonable times and under reasonable regulations established by the Trustee, the Bond Register may be inspected and prepared by the Bank or by

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Beneficial Owners (or a designated representative thereof) of 5% or more in aggregate principal amount of the Bonds then Outstanding.

Upon surrender for transfer of any Bond at the Principal Office of the Trustee, duly endorsed by, or accompanied by a written instrument or instruments of transfer in a form satisfactory to the Trustee and duly executed by the Registered Owner or his attorney duly authorized in writing, the Bank shall execute and the Trustee shall authenticate and deliver in the name of the transferee or transferees a new Bond or Bonds of the same maturity for a like aggregate principal amount. The Bonds may be transferred or exchanged without cost to the Bondholders except for any tax or governmental charge required to be paid with respect to the transfer or exchange.

The Trustee shall not be required (a) to register, transfer or exchange any Bond during a period of 15 days next preceding mailing of a notice of redemption of any Bonds, or (b) to register, transfer or exchange any Bonds selected, called or being called for redemption in whole or in part after mailing notice of such call has been made.

The person in whose name a registered Bond shall be registered shall be deemed and regarded as the absolute owner thereof for all purposes, and payment of principal, premium, if any, and interest thereon, shall be made only to or upon the order of the Registered Owner thereof or his legal representative, but such registration may be changed as hereinabove provided. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid.

All Bonds delivered upon any transfer or exchange shall be valid obligations of the Bank, evidencing the same debt as the Bonds surrendered, shall be secured by the Indenture and shall be entitled to all of the security and benefits of the Indenture to the same extent as the Bonds surrendered.

Nonpresentment of Bonds

In the event any Bond shall not be presented for payment when the principal thereof comes due, either at maturity, or otherwise, if funds sufficient to pay such Bond shall have been made available to the Trustee for the benefit of the Registered Owner thereof, all liability of the Bank to the owner thereof for the payment of such Bond shall forthwith cease, terminate and be completely discharged, and thereupon it shall be the duty of the Trustee to hold such funds for four years for the benefit of the Registered Owner of such Bond, without liability for interest thereon to such owner, who shall thereafter be restricted exclusively to such funds, for any claim of whatever nature on his part under the Indenture or on, or with respect to, said Bond.

Any money so deposited with and held by the Trustee not so applied to the payment of Bonds within four years after the date on which the same shall become due shall be repaid by the Trustee to the Bank, and thereafter the Bondholders shall be entitled to look only to the Bank for payment, and then only to the extent of the amount so repaid, and the Bank shall not be liable for any interest thereon to the Bondholders and shall not be regarded as a trustee of such money.

Other Obligations Payable from Revenues

The Bank shall grant no liens or encumbrances on or security interests in the Trust Estate (other than those created by the Indenture), and, except for the Bonds, shall issue no bonds or other evidences of indebtedness payable from the Trust Estate.

Limitations on Obligations of Bank

Series 2012A Bonds. The Series 2012A Bonds, together with interest thereon, shall be limited obligations of the Bank payable solely from the Revenues and shall be a valid claim of the respective owners thereof only against the Funds and Accounts, other than the Rebate Fund and any Accounts created thereunder, established under the Series 2012A Indenture and the School District Bond acquired by the Trustee, all of which are assigned and pledged under the Series 2012A Indenture for the equal and ratable payment of the Series 2012A Bonds and any Refunding Bonds issued pursuant to the Series 2012A Indenture and shall be used for no other purpose than the payment of the Series 2012A Bonds and any Refunding Bonds issued pursuant to the Series 2012A Indenture, except as may be otherwise expressly authorized in the Series 2012A Indenture. The Series 2012A Bonds do not constitute a debt or liability or moral obligation of the State or of any political subdivision thereof under the

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constitution of the State or a pledge of the faith and credit or taxing power of the State or any political subdivision thereof (except for the School District), but shall be payable solely from the Revenues and funds pledged therefor in accordance with this Indenture, including, without limitation, the avails of the full faith and credit of the School District derived or to be derived from School District Bond payments made in respect of the School District Bond pursuant to the School District Bond Resolution. The issuance of the Series 2012A Bonds under the provisions of the Act does not directly, indirectly or contingently, obligate the State or any political subdivision thereof (except for the School District) to levy any form of taxation for the payment thereof or to make any appropriation for their payment and such Series 2012A Bonds and the interest payable thereon do not now and shall never constitute a debt of the State or any political subdivision thereof (except for the School District) within the meaning of the constitution of the State or the statutes of the State and do not now and shall never constitute a charge against the credit or taxing power of the State or any political subdivision thereof (except for the School District); provided, however, that the School District Bond is secured by the full faith and credit of the School District. Neither the State nor any agent, attorney, member or employee of the State or of the Bank, shall in any event be liable for the payment of the principal of, and premium, if any, or interest on the Series 2012A Bonds or damages, if any, for the nonperformance of any pledge, mortgage, obligation or agreement of any kind whatsoever which may be undertaken by the Bank. No breach by the Bank of any such pledge, mortgage, obligation or agreement may impose any liability, pecuniary or otherwise, upon the State or any of the State's or the Bank's agents, members, attorneys, and employees or any charge upon the general credit of the State or a charge against the taxing power of the State or any political subdivision thereof (except for the School District). In the Bank Act, the State has pledged and agreed with the holders of any Series 2012A Bonds that the State will not limit or alter the rights hereby vested in the Bank to fulfill the terms of any agreements made with the said Bondholders or in any way impair the rights and remedies of such holders until such Series 2012A Bonds, together with the interest thereon, with interest on any unpaid installments of interest, and all costs and expenses in connection with any action or proceeding by or on behalf of such holders of Series 2012A Bonds are fully met and discharged.

Series 2012B Bonds. The Series 2012B Bonds, together with interest thereon, shall be limited obligations of the Bank payable solely from the Revenues and shall be a valid claim of the respective owners thereof only against the Funds and Accounts, other than the Rebate Fund and any Accounts created thereunder, established under the Series 2012B Indenture and the School District Note acquired by the Trustee, all of which are assigned and pledged under the Series 2012B Indenture for the equal and ratable payment of the Series 2012B Bonds and any Refunding Bonds issued pursuant to the Series 2012B Indenture and shall be used for no other purpose than the payment of the Series 2012B Bonds and any Refunding Bonds issued pursuant to the Series 2012B Indenture, except as may be otherwise expressly authorized in the Series 2012B Indenture. The Series 2012B Bonds do not constitute a debt or liability or moral obligation of the State or of any political subdivision thereof under the constitution of the State or a pledge of the faith and credit or taxing power of the State or any political subdivision, but shall be payable solely from the Revenues and funds pledged therefor in accordance with the Series 2012B Indenture. The issuance of the Series 2012B Bonds under the provisions of the Act does not directly, indirectly or contingently, obligate the State or any political subdivision thereof, to levy any form of taxation for the payment thereof or to make any appropriation for their payment and such Series 2012B Bonds and the interest payable thereon do not now and shall never constitute a debt of the State or any political subdivision thereof within the meaning of the constitution of the State or the statutes of the State and do not now and shall never constitute a charge against the credit or taxing power of the State or any political subdivision thereof, except that the School District is required to levy the 3-mill tax for payment of the School District Note. Neither the State nor any agent, attorney, member or employee of the State or of the Bank, shall in any event be liable for the payment of the principal of, and premium, if any, or interest on the Series 2012B Bonds or damages, if any, for the nonperformance of any pledge, mortgage, obligation or agreement of any kind whatsoever which may be undertaken by the Bank. No breach by the Bank of any such pledge, mortgage, obligation or agreement may impose any liability, pecuniary or otherwise, upon the State or any of the State's or the Bank's agents, members, attorneys, and employees or any charge upon the general credit of the State or a charge against the taxing power of the State or any political subdivision thereof, except that the School District is required to levy the 3-mill tax for payment of the School District Note. In the Bank Act, the State has pledged and agreed with the holders of any Series 2012B Bonds that the State will not limit or alter the rights hereby vested in the Bank to fulfill the terms of any agreements made with the said Bondholders or in any way impair the rights and remedies of such holders until such Series 2012B Bonds, together with the interest thereon, with interest on any unpaid installments of interest, and all costs and expenses in connection with any action or proceeding by or on behalf of such holders of Series 2012B Bonds are fully met and discharged.

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Payment of Debt Service

The Bank covenants and agrees under the Indenture that it will promptly pay the principal of and interest on every Bond issued under the Indenture at the place, on the dates and in the manner provided in the Indenture and in said Bonds according to the true intent and meaning thereof, provided that the principal and interest are payable by the Bank solely from the Revenues and any other funds or assets constituting the Trust Estate pledged to the Trustee as security by the Bank to the extent of that pledge.

Performance of Covenants

The Bank covenants and agrees that it will faithfully perform at all times any and all covenants, undertakings, stipulations and provisions contained in the Indenture and every Bond executed, authenticated and delivered under the Indenture and in all of its proceedings pertaining thereto. The Bank covenants and agrees under the Indenture that it is duly authorized under the Constitution and laws of the State, including particularly the Act, to issue the Bonds authorized and to execute the Indenture and to pledge the Revenues and all other property pledged in the manner and to the extent set forth in the Indenture; that all action on its part for the issuance of the Bonds and the execution and delivery of the Indenture has been duly and effectively taken, and that the Bonds in the possession of the owners thereof are and will be valid and enforceable limited obligations of the Bank according to the terms thereof and of the Indenture.

Discharge of Indenture

Except as provided herein below, if payment or provision for payment is made to the Trustee, of the principal of, premium, if any, and interest due and to become due on the Bonds at the times and in the manner stipulated therein, and there is paid or caused to be paid to the Trustee all sums of money due and to become due according to the provisions of the Indenture and all other amounts due under the Indenture have been paid in full, then the Indenture and the Trust Estate and rights granted under the Indenture shall cease, terminate and be void, whereupon the Trustee shall cancel and discharge the lien of the Indenture, and execute and deliver to the Bank such instruments in writing as shall be requisite to cancel and discharge the lien of the Indenture, and release, assign and deliver unto the Bank any and all estate, right, title and interest in and to any and all rights assigned or pledged to the Trustee under the Indenture or otherwise subject to the lien of the Indenture, except moneys or securities held by the Trustee for the payment of the principal of, premium, if any, and interest on the Bonds.

Any Bond shall be deemed to be paid within the meaning of the Indenture when (a) payment of the principal of such Bond, premium, if any, and interest thereon to the due date thereof (whether such due date be by reason of maturity or upon redemption as provided in the Indenture or otherwise), either (i) shall have been made or caused to have been made in accordance with the terms thereof, or (ii) shall have been provided for by irrevocably depositing with the Trustee or other financial institution (which must meet the requirements of the Indenture) which provides services as escrow agent for the Bank (for purposes hereof, an “Escrow Agent”), in trust and exclusively for such payment, (A) moneys sufficient to make such payment or (B) Governmental Obligations maturing as to principal and interest in such amounts and at such times, without consideration of any reinvestment thereof, as will insure the availability of sufficient moneys to make such payment, or (C) a combination of such moneys and Governmental Obligations, and (b) all necessary and proper fees and expenses of the Trustee pertaining to the Bonds, including the amount, if any, required to be rebated to the United States of America in accordance with the Arbitrage Rebate Agreement and the Indenture, with respect to which such deposit is made, shall have been paid or deposited with the Trustee.

Notwithstanding the foregoing, in the case of Bonds which by their terms may be redeemed prior to their stated maturity, no deposit under the immediately preceding paragraph shall be deemed a payment of such Bonds as aforesaid until the Bank shall have given the Trustee, in a form satisfactory to the Trustee, irrevocable instructions:

(x) stating the date when the principal of each such Bond is to be paid, whether at maturity or on a redemption date (which shall be any redemption date permitted by the Indenture);

(y) to call for redemption pursuant to the Indenture any Bonds to be redeemed prior to maturity pursuant to (x) of this paragraph; and

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(z) to mail, as soon as practicable, in the manner prescribed by Article IV of the Indenture, a notice to the owners of such Bonds satisfying the requirements thereof.

Any monies so deposited with the Trustee as provided above may at the direction of the Bank also be invested and reinvested in Governmental Obligations, maturing in the amounts and at the times as hereinbefore set forth, and all income from all Governmental Obligations in the hands of the Trustee which is not required for the payment of the Bonds and interest thereon with respect to which such monies shall have been so deposited, shall be deposited in the applicable General Account, as and when and collected for use and application as are other monies deposited in such General Account.

Notwithstanding any provision of the Indenture to the contrary, all moneys or Governmental Obligations set aside and held in trust pursuant to the Indenture for the payment of Bonds (including interest thereon but excluding any amounts, if any, set aside for rebate to the United States of America in accordance with the Arbitrage Rebate Agreement and the Indenture) shall be applied to and used solely for the payment of the particular Bonds (including interest thereon) with respect to which such moneys or obligations have been set aside in trust.

Upon the deposit with the Trustee or Escrow Agent, in trust, at or before maturity, of money or Governmental Obligations in the necessary amount to pay or redeem all Outstanding Bonds as aforesaid, the Indenture, to the extent it relates to such Bonds, may be discharged in accordance with the provisions of the Indenture; and the limited liability of the Bank in respect of such Bonds shall continue provided that the owners thereof shall thereafter be entitled to payment only out of the moneys or Governmental Obligations deposited with the Trustee or Escrow Agent as aforesaid.

Defaults; Events of Default

If any of the following events occurs, 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 interest on any Bond; or

(b) Default in the due and punctual payment of the principal or redemption premium of any Bond whether at the stated maturity thereof or on any date fixed for redemption; or

(c) Failure of the Bank to remit to the Trustee within the time limits prescribed in the Indenture any moneys which are required by the Indenture to be so remitted; or

(d) Default in the performance or observance of any other of the covenants, agreements or conditions on the part of the Bank contained in the Indenture or in the Bonds and failure to remedy the same within the time provided in, and after notice thereof pursuant to the Indenture; or

(e) Any warranty, representation or other statement by or on behalf of the Bank contained in the Indenture or in any instrument furnished in compliance with or in reference to the Indenture is false or misleading, when made, in any material respect, and failure to remedy the same within the time provided in, and after notice thereof pursuant to, the Indenture; or

(f) A petition is filed against the Bank under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation law of any jurisdiction whether now or hereafter in effect and is not dismissed within 60 days after such filing; or

(g) The Bank files a petition in voluntary bankruptcy or seeking relief under any provisions of any bankruptcy, reorganization, arrangement, insolvency, adjustment of debt, dissolution or liquidation law of any jurisdiction whether now or hereafter in effect, or consents to the filing of any petition against it under such law; or

(h) The Bank is generally not paying its debts as such debts become due, or becomes insolvent or bankrupt, or makes an assignment for the benefit of creditors, or a liquidator or trustee of the Bank or any of its property is appointed by court order or otherwise takes possession of such property and such order remains in effect or such possession continues for more than 60 days; or

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(i) Default in the due and punctual payment of any principal of, premium, if any, and interest on the School District Bond or School District Note, as applicable; or

(k) There is a default under the School District Indebtedness or the School District Resolutions.

Remedies; Rights of Bondholders

Upon the occurrence of an Event of Default, the Trustee shall notify the owners of all Bonds Outstanding of such Event of Default by registered or certified mail, and will have the following rights and remedies:

(a) The Trustee may pursue any available remedy at law or in equity or by statute to enforce the payment of the principal of, premium, if any, and interest on the Bonds then Outstanding, including enforcement of any rights of the Bank or the Trustee under the School District Indebtedness, as applicable.

(b) The Trustee may by action or suit in equity require the Bank to account as if it were the trustee of an express trust for the holders of the Bonds and may take such action with respect to the School District Indebtedness, as applicable and as the Trustee deems necessary or appropriate and in the best interest of the Bondholders, subject to the terms of the School District Indebtedness.

(c) Upon the filing of a suit or other commencement of judicial proceedings to enforce any rights of the Trustee and of the Bondholders under the Indenture, the Trustee will be entitled, as a matter of right, to the appointment of a receiver or receivers of the Trust Estate and of the Revenues, issues, earnings, income, products and profits thereof, pending such proceedings, with such powers as the court making such appointment shall confer.

Upon the occurrence of an Event of Default, (a) if requested to do so by the holders of 25% or more in aggregate principal amount of all Bonds Outstanding, and (b) if secured and/or indemnified as provided in the Indenture, the Trustee shall be obligated to exercise such one or more of the rights, remedies and powers conferred by the Indenture as set forth above as the Trustee, being advised by Counsel, shall deem most expedient in the interests of the Bondholders.

No right or remedy by the terms of the Indenture conferred upon or reserved to the Trustee (or to the Bondholders) is intended to be exclusive of any other right or remedy, but each and every such right or remedy shall be cumulative and shall be in addition to any other right or remedy given to the Trustee or to the Bondholders under the Indenture or now or hereafter existing at law or in equity or by statute. The assertion or employment of any right or remedy shall not prevent the concurrent or subsequent assertion or employment of any other right or remedy.

No delay or omission to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or shall be construed to be a waiver of any such Event of Default or acquiescence therein, and every such right or remedy may be exercised from time to time and as often as may be deemed expedient.

No waiver of any Event of Default under the Indenture, whether by the Trustee or by the Bondholders, shall extend to or shall affect any subsequent Event of Default or shall impair any rights or remedies consequent thereon.

Rights of Bondholders to Direct Proceedings

Anything in the Indenture to the contrary notwithstanding, the Beneficial Owners of a majority in aggregate principal amount of Bonds Outstanding shall have the right, at any time during the continuance of an Event of Default, 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 under the Indenture; provided that such direction shall not be otherwise than in accordance with the provisions of law and of the Indenture.

Application of Moneys

All moneys received by the Trustee pursuant to any right or remedy given or action taken under the provisions of the Indenture (including moneys received by virtue of action taken under provisions of the School District Indebtedness), shall, after payment of the costs and expenses of the proceedings resulting in the collection of

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such moneys and payment of the expenses, liabilities and advances incurred or made by the Trustee and any other moneys owed to the Trustee under the Indenture, be deposited in the applicable General Account and all moneys in such Account shall be applied as follows:

(a) Unless the principal of all the Bonds shall have become due and payable, all such moneys shall be applied:

FIRST - To the payment of any amount owed the United States of America under the Arbitrage Rebate Agreement;

SECOND - To the payment to the persons entitled thereto of all installments of interest then due on the Bonds, including interest on any past due principal of any Bond at the rate borne by such Bond, in the order of the maturity of the installments of such interest and, if the amount available shall not be sufficient to pay in full any particular installment, then to such payment ratably, according to the amounts due on such installments, to the persons entitled thereto, without any discrimination or privilege;

THIRD - To the payment to the persons entitled thereto of the unpaid principal of any of the Bonds that shall have become due either at maturity or pursuant to a call for redemption (other than Bonds called for redemption for the payment of which other 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 the principal of Bonds due on any particular date, together with such interest, then to such payment ratably, according to the amount of principal due on such date, to the persons entitled thereto without any discrimination or privilege; and

FOURTH - To be held for the payment to the persons entitled thereto as the same shall become due of the principal of and interest on the Bonds that may then become due either at maturity or upon call for redemption prior to maturity and, if the amount available shall not be sufficient to pay in full the principal of and interest on Bonds due on any particular date, such payment shall be made ratably according to the amount of principal and interest due on such date to the persons entitled thereto without any discrimination or privilege.

(b) If the principal of all the Bonds shall have become due or shall have been declared due and payable, all such moneys shall be applied to the payment of the principal and interest then due and unpaid upon the Bonds, without preference or priority of principal over interest or of interest over principal, or of any installment of interest over any other installment of interest, or of any Bond over any other Bond, ratably, according to the amounts due respectively for principal and interest, to the persons entitled thereto without any discrimination or privilege.

Whenever moneys are to be applied as set forth above, such moneys shall be applied at such times, and from time to time, as the Trustee shall determine, having due regard for the amount of such moneys available for application and the likelihood of additional moneys becoming available for such application in the future. Whenever the Trustee shall apply such funds, it shall fix the date (which shall be an Interest Payment Date unless the Trustee shall deem another date more suitable) upon which such application is to be made, and upon such date interest on the amounts of principal to be paid on such dates shall cease to accrue. The Trustee shall give such notice as it may deem appropriate of the deposit with it of any such moneys and of the fixing of any such date, and shall not be required to make payment of principal to the owner of any Bond until such Bond shall be presented to the Trustee for appropriate endorsement or for cancellation if fully paid.

Whenever all principal of and interest on all Bonds have been paid under the provisions of the Indenture and all expenses and charges of the Trustee have been paid and all other amounts due under the Indenture have been paid in full, any balance remaining in the General Accounts shall be paid as provided in Article VI of the applicable Indenture.

Remedies Vested in the Trustee

All rights of action (including the right to file proof of claims) under the Indenture or under any of the Bonds may be enforced by the Trustee without the possession of any of the Bonds or the production thereof in any trial or other proceeding related thereto and any such suit or proceeding instituted by the Trustee shall be brought in its name as Trustee without the necessity of joining as plaintiffs or defendants any owners of the Bonds, and any recovery of judgment shall be for the equal and ratable benefit of the owners of all the Outstanding Bonds.

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Rights and Remedies of Bondholders

No owner of any Bond shall have any right to institute any suit, action or proceeding at law or in equity for the enforcement of the Indenture or for the execution of any trust of the Indenture or for the appointment of a receiver or any other remedy under the Indenture, unless (a) a Default has occurred, (b) such Default shall have become an Event of Default and the Beneficial Owners of not less than 25% in aggregate principal amount of Bonds Outstanding shall have made written request to the Trustee and shall have offered it reasonable opportunity either to proceed to exercise the remedies granted under the Indenture or to institute such action, suit or proceeding in its own name, (c) such Beneficial Owners of Bonds have offered to the Trustee security and/or indemnity as provided in the Indenture, and (d) the Trustee has refused or for 60 days after receipt of such request and offer of security and/or indemnification has failed to exercise the remedies granted under the Indenture or to institute such action, suit or proceeding in its own name, and such request and offer of security and/or indemnity are declared under the Indenture in every case at the option of Trustee to be conditions precedent to the execution of the powers and trusts of the Indenture, and to any action or cause of action for the enforcement of the Indenture, or for the appointment of a receiver or for any other remedy under the Indenture; it being understood and intended that no one or more owners of the Bonds shall have any right in any manner whatsoever to affect, disturb or prejudice the lien of the Indenture by its, his, her or their action or to enforce any right under the Indenture except in the manner provided in the Indenture, and that all proceedings at law or in equity shall be instituted, had and maintained in the manner provided in the Indenture and for the equal and ratable benefit of the owners of all Bonds Outstanding. However, nothing contained in the Indenture shall affect or impair the right of any Bondholder to enforce the payment of the principal of, premium, if any, and interest on any Bond at and after the maturity thereof, or the limited obligation of the Bank to pay the principal of, premium, if any, and interest on each of the Bonds issued under the Indenture to the respective owners thereof at the time and place, from the source and in the manner expressed in the Bonds.

Termination of Proceedings

In case the Trustee or any owner of any Bonds shall have proceeded to enforce any right under the Indenture by the appointment of a receiver or otherwise, and such proceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely, then and in every such case the Bank, the Trustee and the Bondholders shall be restored to their former positions and rights under the Indenture, respectively, and with regard to the property subject to the Indenture, and all rights, remedies and powers of the Trustee and the owners of the Bonds shall continue as if no such proceedings had been taken.

Waivers of Events of Default

The Trustee may, at its discretion, waive any Event of Default under the Indenture and its consequences, and shall do so upon the written request of the Beneficial Owners of (a) more than 66 2/3% in aggregate principal amount of all the Bonds then Outstanding in respect of which an Event of Default in the payment of principal or interest exists, or (b) more than 50% in aggregate principal amount of all Bonds then Outstanding in the case of any other Event of Default; provided, however, that there shall not be waived (x) any Event of Default in the payment of the principal of any Outstanding Bond at the date of maturity specified therein or (y) any Event of Default in the payment when due of the interest on any Outstanding Bond unless prior to such waiver all of the interest or all payments of principal when due, as the case may be, with interest on overdue principal at the rate borne by such Bond, and all expenses of the Trustee in connection with such Event of Default shall have been paid or provided for or (z) any Event of Default for nonpayment of Program Expenses. In case of any such waiver or rescission, or in case any proceeding taken by the Trustee on account of any such Event of Default shall have been discontinued or abandoned or determined adversely, then and in every such case the Bank, the Trustee and the Bondholders shall be restored to their former positions and rights under the Indenture, respectively, but no such waiver or rescission shall extend to any subsequent or other Event of Default or impair any rights consequent thereon.

Trustee as Paying Agent and Registrar

The Trustee is designated in the Indenture and agrees to act as paying agent and registrar for and in respect to the Bonds.

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Supplemental Indentures not Requiring Consent of Bondholders

The Bank and the Trustee may, without the consent of, or notice to, any of the Bondholders, enter into an indenture or indentures supplemental to the Indenture for any one or more of the following purposes:

(a) To cure any ambiguity or formal defect or omission in the Indenture;

(b) To grant to or confer upon the Trustee for the benefit of the Bondholders any additional benefits, rights, remedies, powers or authorities that may lawfully be granted to or conferred upon the Bondholders or the Trustee, or to make any change which, in the opinion of Bond Counsel, does not materially and adversely affect the interest of the owners of Outstanding Bonds and does not require unanimous consent of the Bondholders pursuant to the Indenture;

(c) To subject to the Indenture additional Revenues, properties or collateral;

(d) To modify, amend or supplement the Indenture or any indenture supplemental to the Indenture in such a manner as to permit the qualification of the Indenture and thereof under the Trust Indenture Act of 1939 or any similar federal statute hereafter in effect or to permit the qualification of the Bonds for sale under the securities laws of the United States of America or of any of the states of the United States of America, and, if they so determine, to add to the Indenture or any indenture supplemental to the Indenture such other terms, conditions and provisions as may be permitted by said Trust Indenture Act of 1939 or similar federal statute;

(e) To evidence the appointment of a separate or co-trustee or the succession of a new Trustee under the Indenture or the succession of a new registrar and/or paying agent; and

(f) In connection with issuance of Refunding Bonds.

Supplemental Indentures Requiring Consent of Bondholders

Exclusive of Supplemental Indentures provided for by the Indenture and subject to the terms and provisions contained in this paragraph, and not otherwise, the owners of not less than a majority in aggregate principal amount of the Bonds Outstanding which are affected (exclusive of Bonds held by the Bank), shall have the right, from time to time, anything contained in the Indenture to the contrary notwithstanding, to consent to and approve the execution by the Bank and the Trustee of such other indenture or indentures supplemental to the Indenture as shall be deemed necessary and desirable by the Trustee for the purpose of modifying, altering, 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 in the Indenture contained shall permit, or be construed as permitting, without the consent of the owners of all then Outstanding Bonds, (a) an extension of the maturity of the principal of or the interest on any Bond issued under the Indenture, or (b) a reduction in the principal amount of any Bond or change in the rate of interest, or (c) a privilege or priority of any Bond or Bonds over any other Bond or Bonds, or (d) a reduction in the aggregate principal amount of the Bonds required for consent to such Supplemental Indenture, or (e) the creation of any lien securing any Bonds other than a lien ratably securing all of the Bonds Outstanding under the Indenture, or (f) any modification of the trusts, powers, rights, obligations, duties, remedies, immunities and privileges of the Trustee without the written consent of the Trustee.

If at any time the Bank shall request the Trustee to enter into any such Supplemental Indenture for any of the purposes set forth above, the Trustee shall, upon being satisfactorily secured and/or indemnified with respect to expenses, cause notice of the proposed execution of such Supplemental Indenture to be mailed by registered or certified mail to each owner of a Bond at the address shown on the registration records maintained by the Trustee. Such notice shall briefly set forth the nature of the proposed Supplemental Indenture and shall state that copies thereof are on file at the Principal Office of the Trustee for inspection by all Bondholders. If, within 60 days, or such longer period as shall be prescribed by the Bank, following the mailing of such notice, the owners of not less than 51% in aggregate principal amount of the Bonds Outstanding at the time of the execution of any such Supplemental Indenture (exclusive of Bonds held by the Bank) shall have consented to and approved the execution of such Supplemental Indenture as provided in the Indenture, no owner of any Bond shall have any right to object to any of the terms and provisions contained therein, or the operation thereof, or in any manner to question the propriety of the execution thereof, or to enjoin or restrain the Trustee or the Bank from executing the same or from

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taking any action pursuant to the provisions thereof. Upon the execution of any such Supplemental Indenture as permitted and provided above, the Indenture shall be and be deemed to be modified and amended in accordance therewith.

APPENDIX F

FORM OF CONTINUING DISCLOSURE AGREEMENT

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CONTINUING DISCLOSURE AGREEMENT BY AND AMONG THE MISSISSIPPI DEVELOPMENT BANK,

THE SCHOOL DISTRICT OF JACKSON, MISSISSIPPI AND TRUSTMARK NATIONAL BANK, AS TRUSTEE

DATED AS OF JANUARY 15, 2013

THIS CONTINUING DISCLOSURE AGREEMENT (this “Disclosure Agreement”) is executed and delivered by the Mississippi Development Bank (the “Bank”), Jackson Public School District (the “School District”) and Trustmark National Bank, as trustee (the “Trustee”), in connection with the issuance of $21,065,000 Mississippi Development Bank Special Obligation Bonds, Series 2012A (Jackson Public School District General Obligation Refunding Project) (the “Series 2012A Bonds”), and $15,100,000 Mississippi Development Bank Special Obligation Bonds, Series 2012B (Jackson Public School District Limited Tax Refunding Note Project) (the “Series 2012B Bonds” and together with the Series 2012A Bonds, the “Series 2012 Bonds”).

The Series 2012A Bonds are being issued pursuant to an Indenture of Trust (the “Indenture”), dated the date of delivery thereof, between the Bank and the Trustee. The proceeds of the Series 2012A Bonds will be used by the Bank to purchase the School District's $21,065,000 General Obligation Refunding Bond, Series 2012A (the “2012A District Bond”). The proceeds of the Series 2012B Bonds will be used by the Bank to purchase the School District's $15,100,000 Limited Tax Refunding Note, Series 2012B (the “2012B District Note” and together with the 2012A District Bond, the “District Obligations”). The proceeds of the District Obligations will be used by the District to advance refund, defease and/or restructure certain prior indebtedness of the District. The Bank, the School District and the Trustee covenant and agree as follows:

SECTION 1. Purpose of this Disclosure Agreement. This Disclosure Agreement is being executed and delivered by the Bank, the School District and the Trustee for the benefit of the Registered Owners (defined below) and the Beneficial Owners (defined below) of the Series 2012 Bonds in order to assist the Participating Underwriter (defined below) in complying with the Rule (defined below).

SECTION 2. Definitions. In addition to the definitions set forth in the Indenture, which apply to any capitalized term used in this Disclosure Agreement unless otherwise defined herein, the following capitalized terms shall have the following meanings:

“Beneficial Owner” shall mean any person which (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Series 2012 Bond (including persons holding Series 2012 Bonds through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Series 2012 Bond for federal income tax purposes.

“EMMA” shall mean the Electronic Municipal Market Access System found at http://emma.msrb.org which is the electronic format prescribed by the MSRB pursuant to the Rule.

“Fiscal Year” shall mean, when used with respect to the School District, a period beginning on July 1 in any year and ending on June 30 of the following year or such other twelve-month period as may be adopted by the School District in accordance with law.

“Independent Accountant” shall mean any firm of certified public accountants appointed by the School District which is independent pursuant to the Statement on Auditing Standards No. 1 of the American Institute of Certified Public Accountants or the State Auditor.

“Listed Events” shall mean any of the events listed in Section 6 of this Disclosure Agreement.

“MSRB” shall mean the Municipal Securities Rulemaking Board. The electronic filings with the MSRB shall be through EMMA.

“Participating Underwriters” shall mean Rice Financial Products, New York, New York, and Wells Fargo Securities, Chicago, Illinois.

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“Registered Owner” shall mean the person or persons in whose name any Series 2012 Bond is registered on the registration records of the Bank held and maintained by the Trustee.

“Repository” shall mean the MSRB and each State Repository, if any.

“Rule” shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time.

“School District Annual Financial Information” shall mean the information summarized herein below under the heading “Annual Financial Information - School District Undertaking.”

“State” shall mean the State of Mississippi.

“State Repository” shall mean any public or private repository or entity designated by the State as a State repository for the purposes of the Rule. As of the date of this Disclosure Agreement, there is no State Repository.

SECTION 3. General. Nothing in this Disclosure Agreement shall prevent the Bank, or the School District from disseminating any information in addition to that required by this Disclosure Agreement. If the Bank or the School District disseminates any such additional information, neither the Bank nor the School District, respectively, shall have any obligation to update such information or include it in any further materials disseminated. All expenses and any other costs incurred by the Bank, the School District or the Trustee in complying with this Disclosure Agreement shall be paid by the School District.

SECTION 4. Bank Undertaking. The Bank hereby agrees for the benefit of the Registered Owners and the Beneficial Owners of the Series 2012 Bonds to provide to each Repository, in a timely manner, notice of any Listed Events.

SECTION 5. School District Undertaking. The School District hereby agrees for the benefit of the Registered Owners and the Beneficial Owners of the Series 2012 Bonds to provide:

(a) to each Repository, no later than 180 days after the end of each Fiscal Year, beginning with the Fiscal Year ended June 30, 2013.

(1) the School District Annual Financial Information relating to such Fiscal Year together with audited financial statements for such Fiscal Year if audited financial statements are then available; provided, however, that if audited financial statements are not then available, the School District shall deliver or cause to be delivered such audited financial statements, if any, to each Repository, when they become available (but in no event later than 350 days after the end of such Fiscal Year); or

(2) notice of the failure of the School District to provide the School District Annual Financial Information; and

(b) (1) to each Repository, within ten (10) business days of their occurrence, notice of any Listed Events; and

(2) to each Repository, in writing, in a timely manner, notice of any event which, in the opinion of an authorized officer of the School District had, or will have, a material effect on the financial condition or operations of the School District.

SECTION 6. (a) Pursuant to the provisions of Sections 4 and 5 above, the Bank and the School District shall give or cause to be given notice of the occurrence of any of the following Listed Events with respect to the Series 2012 Bonds, in a timely manner not in excess of ten (10) business days after the occurrence thereof, if material. All fifteen (15) events mandated by the Rule are listed below; however, some may not apply to the Series 2012 Bonds:

(1) Principal and interest payment delinquencies.

(2) Non-payment related defaults.

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(3) Unscheduled draws on debt service reserves reflecting financial difficulties.

(4) Unscheduled draws on the 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 security, or other material events affecting the tax status of the security.

(7) Modification to rights of security holders.

(8) Bond calls.

(9) Tender offers.

(10) Defeasances.

(11) Release, substitution or sale of property securing repayment of the securities.

(12) Rating changes.

(13) Bankruptcy, insolvency, receivership or similar event of the Bank or the School District.

(14) Consummation of a merger, consolidation, or acquisition involving the Bank or the School District or the sale of all or substantially all of the assets of the Bank or the School 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.

(15) The appointment of a successor or additional trustee or the change of name of a trustee.

(b) Any Listed Event under subsection (a)(1), (3), (4), (5), (6), (9), (10), (12), or (13) of this Section will always be deemed to be material.

SECTION 7. Annual Financial Information.

General. The contents, presentation and format of the School District Annual Financial Information may be modified from time to time as determined in the judgment of the School District to conform to changes in the Rule to disclosure principles or practices and legal requirements followed by or applicable to the School District, provided that such modifications shall comply with the requirements of the Rule.

School District Undertaking. School District Annual Financial Information is defined to include:

(a) a brief narrative discussion of the results of operations and financial condition of the School District for such Fiscal Year; and

(b) updated financial and operating information relating to the School District set forth in the tables and text in the following sections of the Official Statement: “APPENDIX A - INFORMATION CONCERNING THE SCHOOL DISTRICT” and “APPENDIX B – FINANCIAL INFORMATION OF THE SCHOOL DISTRICT.”

SECTION 8. Financial Statements. The annual financial statements for the School District for each Fiscal Year shall be prepared in accordance with generally accepted accounting principles in effect from time to time. Such financial statements shall be audited by an Independent Accountant.

SECTION 9. Remedies. This Disclosure Agreement is enforceable in accordance with its terms by any Registered Owner or Beneficial Owner of the Series 2012 Bonds either directly or as a third party beneficiary. Any Registered Owner or Beneficial Owner of the Series 2012 Bonds shall have the rights, for the equal benefit and

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protection of all Registered Owners and Beneficial Owners of the Series 2012 Bonds, by mandamus or other suit or proceeding at law or in equity, to enforce its rights against the Bank and the School District and any of the officers, agents and employees of the Bank and the School District, and to compel the Bank and the School District or any such officers, agents or employees to perform and carry out their duties under their respective undertakings; provided that such rights shall be limited to an action to compel specific enforcement of the obligations of the Bank and the School District hereunder and shall not include any rights to monetary damages.

The Trustee shall not be obligated or liable to any Registered Owner or Beneficial Owner of the Series 2012 Bonds or other party with respect to any aspect of the implementation, operation or enforcement of any undertaking set forth herein. If the Trustee is made a party to any litigation or legal action involving any undertaking, the School District shall pay the legal fees and related costs and expenses of the Trustee in connection with such litigation or legal action.

SECTION 10. Amendments. This Disclosure Agreement may be amended, changed or modified pursuant to a written instrument signed by the Bank, the School District and the Trustee, with the consent of the Insurer and without the consent of any of the Registered Owners and Beneficial Owners of the Series 2012 Bonds, (a) to comply with the provisions of the Rule, (b) to cure any ambiguity, remedy any omission, or cure or correct any defect or inconsistent provision in the undertakings of the Bank and the School District, or (c) if the Bank or the School District make a determination that any such amendment will not have a material adverse effect on the interests of the Registered Owners and Beneficial Owners of the Series 2012 Bonds; provided, that any such amendment, change or modification comply with the provisions of the Rule.

SECTION 11. Parties in Interest; Governing Law. This Disclosure Agreement is executed and delivered for the sole benefit of the Registered Owners and Beneficial Owners of the Series 2012 Bonds and shall be governed by the laws of the State.

SECTION 12. Termination. The undertaking of the Bank and the School District hereunder shall terminate on the earlier of (a) February 1, 2013, in the event that the Series 2012 Bonds have not been issued by such date; (b) such date that the Rule, or the provisions thereof are no longer effective; or (c) the date upon which there are no Series 2012 Bonds Outstanding (as defined in the Indenture).

SECTION 13. Counterparts. This Disclosure Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.

IN WITNESS WHEREOF, the Bank, the School District and the Trustee have caused this Disclosure Agreement to be executed by their respective officers, duly authorized, all as of this 15th day of January, 2013.

(SEAL) MISSISSIPPI DEVELOPMENT BANK By ________________________________________ Executive Director

ATTEST: By ________________________________ Secretary

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(SEAL) JACKSON PUBLIC SCHOOL DISTRICT By Superintendent of the Jackson Public

School District

ATTEST: By ___________________________________ Secretary to the Board of Trustees of the Jackson Public School District

ACCEPTED: TRUSTMARK NATIONAL BANK, as Trustee By____________________________________ Title __________________________________

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