1. Summary of $475 million Bond Issue and Capital Financing Options Practiced By the State System of Higher Education in Oklahoma Practiced By the State System of Higher Education in Oklahoma

2. Types of Financing Currently Practiced Bonds – G.O., Revenue Master Lease – Equipment Master Lease – construction – new option General Obligation Bonding Authority: research universities and coordinating board Bonds – G.O., Revenue Master Lease – Equipment Master Lease – construction – new option General Obligation Bonding Authority: research universities and coordinating board

3. Issuance of Bond Debt General Obligation of the State of Oklahoma Does require a vote of the People Puts the full faith and credit of the State behind the bond Creates debt as authorized by the State Constitution Last used in 1992 to finance higher education projects. Does require a vote of the People Puts the full faith and credit of the State behind the bond Creates debt as authorized by the State Constitution Last used in 1992 to finance higher education projects.

4. Issuance of Bond Debt Revenue Bond Structure Does not require a vote of the People Deemed as limited and special obligations of the authorized issuer Must be “self-liquidating” or “profit- producing” Specific projects are approved by the legislature prior to the issuance of debt Does not require a vote of the People Deemed as limited and special obligations of the authorized issuer Must be “self-liquidating” or “profit- producing” Specific projects are approved by the legislature prior to the issuance of debt

5. Issuance of Bond Debt Revenue Bond Structure The revenue stream can be appropriated to pay lease for the improvement or construction Utilizes a lease-back use agreement until ownership transferred to the institution when the debt is retired Used in 1999 and 2005/2006 for higher education projects The revenue stream can be appropriated to pay lease for the improvement or construction Utilizes a lease-back use agreement until ownership transferred to the institution when the debt is retired Used in 1999 and 2005/2006 for higher education projects

6. Master Lease Equipment Program Purpose: to finance major personal property acquisitions through a cost effective method. Issued by Oklahoma Development Finance Authority $50,000 up to $10 million. Lease terms vary by useful life of equipment purchased; may not exceed 20 years. Governing board approval Issued by Oklahoma Development Finance Authority $50,000 up to $10 million. Lease terms vary by useful life of equipment purchased; may not exceed 20 years. Governing board approval

7. Master Lease Equipment Program Purpose: to finance major personal property acquisitions through a cost effective method. State Regents participate in 3 issues annually; average is $10 million The institution is invoiced monthly for its portion of the debt service May use operating funds budget to retire the debt. State Regents participate in 3 issues annually; average is $10 million The institution is invoiced monthly for its portion of the debt service May use operating funds budget to retire the debt.

8. In 2005, the legislature expanded equipment master lease program to include real property. In 2005, the legislature expanded equipment master lease program to include real property. $50,000 up to $25,000,000 No more than 30 years Anticipate two issuances per calendar year In 2005, the legislature expanded equipment master lease program to include real property. In 2005, the legislature expanded equipment master lease program to include real property. $50,000 up to $25,000,000 No more than 30 years Anticipate two issuances per calendar year Master Lease Construction Program

9. Participating institutions responsible for payment of their portion of the debt service requirement. The institutional governing boards must approve any construction or major renovation project prior to participation in a bond issuance. Participating institutions responsible for payment of their portion of the debt service requirement. The institutional governing boards must approve any construction or major renovation project prior to participation in a bond issuance. Master Lease Construction Program

10. Based on full revenue capacity of each research university, excluding General Revenue OU, OSU and OSRHE are “authorized” issuers of debt. Projects submitted for legislative approval by April 1 of each year, giving the Legislature a 45- day period in which to disapprove any project. Based on full revenue capacity of each research university, excluding General Revenue OU, OSU and OSRHE are “authorized” issuers of debt. Projects submitted for legislative approval by April 1 of each year, giving the Legislature a 45- day period in which to disapprove any project. General Obligation Bonding Authority

11. Total revenues, excluding revenues appropriated by the Legislature from tax receipts, are designated as lawfully available sources to be pledged for debt service obligations. General Obligation Bonding Authority

12. Total identified capital deferred maintenance needs: $1,300,000,000 Increases in student enrollment: 28,000 students over last five years Total enrollment in public college and universities: 232,000 13 years since significant investment in higher education facilities (1992 – 2005) Total identified capital deferred maintenance needs: $1,300,000,000 Increases in student enrollment: 28,000 students over last five years Total enrollment in public college and universities: 232,000 13 years since significant investment in higher education facilities (1992 – 2005) 2005/2006 $475 million Capital Bond Issue Need:Need:

13. ADA compliance and fire code compliance issues looming Need for more modern facilities and infrastructure Average age of public college and universities infrastructure was 1971, or 34 years. ADA compliance and fire code compliance issues looming Need for more modern facilities and infrastructure Average age of public college and universities infrastructure was 1971, or 34 years. 2005/2006 $475 million Capital Bond Issue Need:Need:

14. 141 projects in 36 locations statewide Estimated economic impact of $730 million Estimated economic impact of $730 million Primarily teaching and research classrooms and laboratories (80%) Emphasis on science, math, technology, and health-related programs Many renovations with increased efficiencies and energy savings 141 projects in 36 locations statewide Estimated economic impact of $730 million Estimated economic impact of $730 million Primarily teaching and research classrooms and laboratories (80%) Emphasis on science, math, technology, and health-related programs Many renovations with increased efficiencies and energy savings Summary of Projects

15. New Construction 63.0% Major Renovation 27.5% Infrastructure 6.3% Equipment 2.8% Land/Bldg. Purchase 0.4% New Construction 63.0% Major Renovation 27.5% Infrastructure 6.3% Equipment 2.8% Land/Bldg. Purchase 0.4% Types of Projects

16. Previous legislative intent – 14% Minimum floor to ensure that all institutions could fund at least one priority - $1.5 million – 8% Enrollment – total and growth – 30% Previous legislative intent – 14% Minimum floor to ensure that all institutions could fund at least one priority - $1.5 million – 8% Enrollment – total and growth – 30% Method of Allocation of Funds The State Regents staff and Presidents Council developed a data-driven allocation formula based upon the following components:

17. Building square footage and age -17% Research, non-college entities and special circumstances not addressed in previous components – 31% Building square footage and age -17% Research, non-college entities and special circumstances not addressed in previous components – 31% Method of Allocation of Funds The State Regents staff and Presidents Council developed a data-driven allocation formula based upon the following components:

18. 2 research universities 46.9% 11 regional universities 28% 12 community colleges 22.8% Non-college entities 2.4% 2 research universities 46.9% 11 regional universities 28% 12 community colleges 22.8% Non-college entities 2.4% Share of Bond Funds

19. Meetings with Legislative Committees Ad hoc meetings with individual legislators in “problem” districts Rotary and other service clubs Editorial boards Materials – t shirt – video - print Meetings with Legislative Committees Ad hoc meetings with individual legislators in “problem” districts Rotary and other service clubs Editorial boards Materials – t shirt – video - print Marketing

20. OKLAHOMA STATE SYSTEM OF HIGHER EDUCATION