Rating Presentation August 2005

MINNESOTA STATE COLLEGES AND UNIVERSITIES 1 Participants  Clarence Hightower, Chair, Finance/Facilities Committee, Board of Trustees  James H. McCormick, Chancellor  Laura M. King, Vice Chancellor – Chief Financial Officer  Allan W. Johnson, Associate Vice Chancellor for Facilities  William J. Breyfogle, Director, Construction and Support Services  Sieglinde A. Bier, Director, Facilities Support Services  Richard H. Martin, R. H. Martin Law, PC  Barry W. Fick, Senior Vice President, Springsted Inc.  Mark E. LeMay, Assistant Vice President, Springsted Inc.

MINNESOTA STATE COLLEGES AND UNIVERSITIES 2 Participants  Susan Fitzgerald, Senior Vice President, Moody’s Investors Service  Marianna Pisano, Analyst, Moody’s Investors Service

MINNESOTA STATE COLLEGES AND UNIVERSITIES 3 Participants  Susan Carlson, Associate Director, Standard & Poor’s  Jessica Matsumori, Analyst, Standard & Poor’s

MINNESOTA STATE COLLEGES AND UNIVERSITIES 4

5 Governance  MnSCU was formed in July 1995 by merger of State Universities (7), Community Colleges (14) and Technical Colleges (11)  Statutory Mission - public higher education services that are high quality, accessible and affordable, with promotion of economic development and citizenship  The System is governed by a 15-member Board of Trustees appointed to staggered terms by the Governor and confirmed by the Minnesota Senate  The Board hires the Chancellor and approves presidential appointments  The Board has policy responsibility for system planning, academic programs, fiscal management, personnel, and admissions requirements  The Board meets eight to ten times a year through the executive committee and six standing committees

MINNESOTA STATE COLLEGES AND UNIVERSITIES Strategic Plan  Increase Access and Opportunity  Expand High-Quality Learning Programs and Services  Strengthen Community Development and Economic Vitality  Fully Integrate the System Currently Under Review By an Ad Hoc Work Group of the Board of Trustees Designing the Future

MINNESOTA STATE COLLEGES AND UNIVERSITIES 7  Focus Area 1: Revenue  Develop a sustainable financial model & implement strategies to expand support  Focus Area 2: Productivity  Better management of expenses and increased productivity  Develop key measures in the System-level Accountability Framework  Create a seamless system based on Business Practice Alignment  Focus Area 3: Centers of Excellence  Identify distinct programs and partnerships among institutions  Attract faculty, respond to business and industry needs, and define and develop exceptional programs  Develop a process to select three to eight centers  Focus Area 5: Strategic Planning  Support the ad hoc work group of the board of Trustees to review the existing strategic plan  Focus Area 6: Serving the Underrepresented  Implement the Diversity Task Force plan  Create a standing committee on diversity in the Leadership Council Annual Work Plan for

MINNESOTA STATE COLLEGES AND UNIVERSITIES 8 Student Profiles and Market Position  Approximately 89% of MnSCU’s students are from Minnesota  About 81% of graduates remain in Minnesota after graduation  Students of color make up 12.8% of enrollment  Gender of students is 55.6% female and 44.5% male  Minnesota State Colleges and Universities attract a large number of non- traditional students  The average age of a student attending a MnSCU institution is 26.3 years  Approximately 38% are age 25 or older

MINNESOTA STATE COLLEGES AND UNIVERSITIES 9 Minnesota Demographics  High School Graduates peaked at 63,347 in 2004 for state as a whole  High School Graduates are projected to remain level through 2009  High School Graduates are projected to grow by 7.4% in the Twin Cities region through 2013

MINNESOTA STATE COLLEGES AND UNIVERSITIES 10 MnSCU Enrollment (FYE)

MINNESOTA STATE COLLEGES AND UNIVERSITIES 11 Financial Strategies  Campus autonomy within Board policies  Balanced budgets and sound financial management  Regionally competitive tuition policy  Development of outside revenue sources  Allocation of state aid based on efficiencies at the division and program level

MINNESOTA STATE COLLEGES AND UNIVERSITIES 12 MnSCU Financial Ratios * Less Foundation Assets

MINNESOTA STATE COLLEGES AND UNIVERSITIES 13 Tuition and Fees – Regional Comparisons

MINNESOTA STATE COLLEGES AND UNIVERSITIES 14 Diversification of Revenues  Institutions recommend tuition, room & board rates, and student fees for Board approval.

MINNESOTA STATE COLLEGES AND UNIVERSITIES 15 Operating Margins

MINNESOTA STATE COLLEGES AND UNIVERSITIES 16 Balance Sheet Ratios

MINNESOTA STATE COLLEGES AND UNIVERSITIES 17 Trends in State Funding

MINNESOTA STATE COLLEGES AND UNIVERSITIES 18 Development

MINNESOTA STATE COLLEGES AND UNIVERSITIES 19 MnSCU Facilities  MnSCU owns 25.6 million square feet of property: 21.0 million is State supported and 4.6 million is supported by the Revenue Fund  MnSCU’s property includes 800 buildings and 6,752 acres of land  Facility Condition Index for MnSCU academic buildings ranges between 0-30% (14% avg)  Comparable avg FCIs: Univ of California - 23%; Oregon System – 18%; Univ of Texas – 6%  Approximately 64 Revenue Fund facilities built between ; 67% between  Evaluation of Revenue Fund facilities in 2000 identified $92.0 million of high priority items. Projects funded from R&R and Revenue Fund bond proceeds  Facilities planning is campus based and follows academic and long range goals, including space utilization and condition assessment  2005 Legislature approved $213.6 million in General Obligation bond proceeds for capital program (excluding Revenue Fund)

MINNESOTA STATE COLLEGES AND UNIVERSITIES 20 General Fund Debt Outstanding: June 30, 2004

MINNESOTA STATE COLLEGES AND UNIVERSITIES 21 Revenue Fund Ratios

MINNESOTA STATE COLLEGES AND UNIVERSITIES 22 Room and Board Rates: Regional Comparison  Based on double room and full board (17 to 21 meals per week).

MINNESOTA STATE COLLEGES AND UNIVERSITIES 23 Revenue Fund Revenue FY 2004

MINNESOTA STATE COLLEGES AND UNIVERSITIES 24 Revenue Fund Bond Projects (1) Includes other funds (2) Operating Funds – Revenue Fund (3) Operating Funds – General Fund (4) Transfer of bond proceeds from previous sale

MINNESOTA STATE COLLEGES AND UNIVERSITIES 25 Credit Guarantee Debt Criteria for Credit Guarantee 1. Project importance to MnSCU Mission. 2. Self-supporting project on a campus basis. 3. Flow of funds structure manages risk of draw on the Credit Guarantee.

MINNESOTA STATE COLLEGES AND UNIVERSITIES 26 Conclusion  MnSCU governance and management is focused on the future  Enrollment of traditional age group is moderating, but there is growth potential in adult learners  Financial outlook is stable  Capital program administration is solid  This bond sale continues MnSCU’s long term revitalization of Revenue Fund facilities and programs  Future plans include an increase in debt authority from legislature and another sale in months

MINNESOTA STATE COLLEGES AND UNIVERSITIES 27 Thank You!