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NJEFA Mission
Our mission is to support world-class higher education in New Jersey.
As a public fiduciary, our business is to help our college and university clients obtain low-cost financing for the development of their facilities.
We are helping our clients invest in the treasures that are our colleges and universities, so they can provide the opportunities for our citizens that will build the future of all of New Jersey.
Public Research UniversitiesNew Jersey Institute of TechnologyRutgers, The State UniversityUniversity of Medicine and Dentistry
State Colleges and UniversitiesThe College of New JerseyKean UniversityMontclair State UniversityNew Jersey City UniversityRamapo College of New JerseyThe Richard Stockton College of NJRowan UniversityThomas Edison State CollegeThe William Paterson University of NJ
County CollegesAtlantic Cape Community Bergen Community Brookdale Community Burlington County Camden County Cumberland County Essex County Gloucester County Hudson County Community Mercer County Community Middlesex County County College of Morris Ocean County Passaic County Community Raritan Valley Community Salem County Sussex County Union County Warren County Community
Independent Colleges and UniversitiesBeth Medrash GovohaBloomfield CollegeCaldwell CollegeCentenary CollegeCollege of Saint ElizabethDrew UniversityFairleigh Dickinson UniversityFelician CollegeGeorgian Court UniversityInstitute for Advanced StudyInstitute for Defense AnalysesMonmouth UniversityPrinceton UniversityPrinceton Theological SeminaryRabbinical College of AmericaRider UniversitySaint Peter’s CollegeSeton Hall UniversityStevens Institute of Technology
Public Private County
NJEFA Issuance Overview
By Par Amount (in Million $)
By Number of Issues
* Includes transactions issued to date in 2010
NJEFA Services• Financial Services:
• Tax-exempt bonds• Taxable bonds• State-supported bond programs• Tax-exempt leasing program
• Post-closing/Other Services:• Investment of bond funds• Monitoring for refunding opportunities• Arbitrage compliance• Swap monitoring• Escrow restructuring• Higher education finance conferences• Investor relations
2010 TransactionsPublic Institutions• The College of New Jersey
$44,500,000 (two issues)• Kean University
$10,000,000 (lease)• New Jersey City University
$42,375,000• Thomas Edison State College
$700,000 (lease)
Private Institutions• Princeton University
$250,000,000• Princeton Theological Seminary
$68,785,000
The College of New Jersey
Princeton Theological Seminary
Princeton University
Chemistry Building
Neuroscience and Psychology Building
Jadwin Hall
National Municipal Bond Volume
0
50
100
150
200
250
300
350
400
450
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010*
Bill
ions
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000Par Amount Number of Issues
* Through 3rd Quarter 2010
Source: Thomson Financial
# of
issu
es
Higher Education Volume
0
5
10
15
20
25
30
35
40
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010*
Bill
ions
0
100
200
300
400
500
600
700
800
900Par Amount Number of Issues
* Through 3rd Quarter 2010
Source: Thomson Financial
# of
issu
es
NJEFA Financings by Decade
0
2,000
4,000
6,000
8,000
10,000
1970s* 1980s 1990s 2000s
Variable Rate Issued
* Includes par amount financed in 1969
In M
illio
n ($
)
Moody’s US Higher Education Outlook -2009
Critical Risk Factors• Increased pressure on tuition and financial aid
• Impact of investment losses on operations and philanthropy
• Illiquidity of balance sheets
• Declines in state revenues
Source: Moody’s Investors Service
NACUBO – Commonfund Study
Total Institutions
842
FY2009 net annual total return -18.7
3-year net return -2.55-year net return 2.710-year net return 4.0
numbers in percent (%)
Source: 2009 NACUBO-Commonfund Study of Endowments
Average Net Returns
Largest Endowments Most Immediately Affected
0
1
2
3
4
5
Aaa Aa A Baa0%
10%
20%
30%
40%
50%
Expendable Financial Resources to DebtEndowment Spending as % of Operating Revenue
Source: Moody’s Investors Service
Resources to Debt
Endowment
% Revenue
43%
21%
9%5%
Endowment and Gift Performance
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
FY1999
FY2000
FY2001
FY2002
FY2003
FY2004
FY2005
FY2006
FY2007
FY2008
FY2009
-40%
-30%
-20%
-10%
0%
10%
20%
30%
Median Gift Revenue (Large) Median Gift Revenue (Small) NACUBO Endowment Return
* Moody’s rated institutionsSource: Moody’s Investors Service
State Government Funding on Long Term Decline…
State Funding % of University Operating Revenue
0%
10%
20%
30%
40%
50%
60%
1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009Single Campus UniversitiesLarge Research Systems
Source: Moody’s Investors Service
New Jersey Higher Education Operating Spending
• FY 2011 – $1.95 billion
• FY 2010* – $2.02 billion
• FY 2009 – $1.998 billion (2.9% cut over FY 2008)
* FY 2010 excludes one-time federal stimulus funding of $73.68 million
State Support for NJ State Colleges and Universities is Declining
$200,000
$225,000
$250,000
$275,000
$300,000
$325,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010Direct State Adjusted AppropriationsInflation-Adjusted Appropriations
Adjusted for CPI
Source: New Jersey Association of State Colleges and Universities; Governor’s Budget Recommendations; US Department of Labor’s CPI Detailed Report
Shifting the Burden of Investment
Source: New Jersey Association of State Colleges and Universities calculations; NJ Commission on Higher Education
0%
10%
20%
30%
40%
50%
60%
70%
FY92 FY01 FY05 FY06 FY07 FY08 FY09
State Student
Private Institutions
NJ Privates
All Privates
NJ Privates
All Privates
NJ Privates
All Privates
Median FTE Enrollment(number may be estimated)
5,150 3,062 5,013 3,034 4,902 2,987
Primary Selectivity (%) 52 58 62 54 59 55
Expendable Resources to Direct Debt .93 1.06 1.67 1.71 2.22 1.88
Expendable Resources to Operations .45 .73 .72 1.13 .98 1.3
Annual Operating Margin (%) 3.5 3.6 4.7 4.4 5.6 4.0
2009 2008 2007
* Moody’s rated institutionsSource: Moody’s Investors Service
Public Institutions
NJ Publics
AllPublics
NJ Publics
AllPublics
NJ Publics
All Publics
Median FTE Enrollment(number may be estimated) 7,651 12,661 6,808 11,492 6,793 11,423
Primary Selectivity (%) 61.3 69.8 52.9 69.4 53 70.9
Expendable Resources to Direct Debt .3 .7 .4 .9 .4 1.0
Expendable Resources to Operations .43 .37 .38 .44 .4 .43
Annual Operating Margin (%) 1.6 1.8 3.0 2.3 3.1 2.4
2009 2008 2007
* Moody’s rated institutionsSource: Moody’s Investors Service
NJ Enrollment: Degrees Conferred Total
EnrollmentsTotal Degrees/
Certificates2000 335,930 52,5792001 346,277 53,2052002 361,757 55,8662003 372,696 58,2772004 379,447 61,4282005 379,686 64,0072006 385,612 65,1052007 398,169 66,3642008 410,193 69,3572009 432,167 71,749
Cumulative Increase
96,237(28.65%)
19,170(36.45%)
Source: New Jersey Commission on Higher Education
Steady Demand for College
50,000
60,000
70,000
80,000
90,000
100,000
2000-0
1
2002-0
3
2004-0
5
2006-0
7
2008-0
9
2010-1
1
2012-1
3
2014-1
5
2016-1
7
2018-1
9
Actual or Currently Projected
Source: National Center for Education Statistics, September 2009
Figures for 2000-01 through 2005-06 are actual
Actual and Projected Number of NJ Public High School Graduates 2000-01 through 2018-19
Enrollment TrendsTotal Fall Enrollment Trends for U.S. Higher Education 1963-2009
Sources: Moody’s Investors Service; U.S. Department of Education, National Center for Education Statistics; Projected Fall 2008 and 2009 data based in Moody’s estimates assuming same growth rate in enrollment patterns as occurred during recession of 2002-2003
and American Association of Community Colleges “Community College Enrollment Surge” – December 2009
Responding to Demand
Sources: 2009-2010 Chronicle of Higher Education Almanac
Capacity –
New Jersey Trails States
with Similar Populations
PopulationFour-Year Public
EnrollmentEnrollment
per 1,000 pop.Indiana 6,376,792 209,562 32.8
Michigan 10,003,422 291,782 29.1
Virginia 7,769,089 201,921 25.9
Georgia 9,685,744 222,298 22.9
North Carolina 9,222,414 209,059 22.6
New Jersey 8,682,661 159,966 18.4
NJEFA Financing Expansion
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
Public Institutions Private Institutions State-Supported Programs
(Mill
ions
)
New Money Refunding
2000-2010
Moody’s Update – January 2010
Short Term Pressures Ease• Management action helps soften credit/financial
impact• Budget reductions
• Base budgets, furloughs, layoffs, early retirement packages
• Capital spending cuts and delays• May see more, longer-term restructurings and
reallocation of resources• Improved equity markets• Improved liquidity from increased values of liquid
portfoliosSource: Moody’s Investors Service
American Recovery and Reinvestment Act – Operating Relief
• State Fiscal Stabilization Fund– NJ’s share: $1.3 billion to restore
state aid to school districts and public colleges and universities for one year
American Recovery and Reinvestment Act
• College Affordability Spending - $31 billion– Pell Grant program - $17 billion– Federal Work-Study program - $200 million– American Opportunity Tax Credit - $13.8 billion
• Research Funding Through Federal Agencies - $16 billion– National Institutes of Health - $10 billion– National Science Foundation - $3 billion– Energy Department - $2 billion
• Build America Bonds
The College of New Jersey
• $44.5 million - hybrid structure for new academic building
– $3,410,000 Revenue Bonds, Series 2010 A (Tax Exempt)
– $41,090,000 Revenue Bonds, Series 2010 B (Build America Bonds)
• 4.745% all-in true interest cost, equating to $3.9 million estimated net present value savings over pure tax-exempt financing at the time of the sale.
Build America Bonds
• 35% Federal interest subsidy on taxable bonds for governmental issuers
• 100% of bond proceeds must go to new projects
• Authorization expires December 31, 2010
4 Pillars of the Knowledge Economy
Pillar IndicatorEconomic and institutional regime • Tariff and non-tariff barriers
• Regulatory quality• Rule of law
Education and skill of population • Adult literacy rate• Gross secondary enrollment rate• Gross tertiary enrollment rate
Information infrastructure • Telephones per 1,000 people• Computers per 1,000 people• Internet users per 1,000 people
Innovation system • Royalty payments and receipts, US$ per person
• Technical journal articles per million people• Patents granted to nationals by the U.S. Patent
and Trademark Office per million people
Source: World Bank
Current Economic PerformanceU.S.
Source: World Bank
KEI = Knowledge Economy Index
“In a global economy where the most valuable skill you can sell is your
knowledge, a good education is no longer just a pathway to opportunity –
it is a pre-requisite.”
Address to the Joint Session of Congress of the United States of America President Barack Obama
February 24, 2009
Higher Education a NJ Priority
• 41% of New Jersey adults hold at least an associate degree – the 11th highest rate in the nation
• Personal income in New Jersey is about 14% higher than the national average
NJ Presidents’ CouncilEmployment compared with selected New Jersey Industries, 2007Industry Annual Average EmploymentConstruction 171,077Hospitals (public and private) 158,346Food and beverage retailing 108,180Full-service restaurants 97,994Air, truck, private ground passenger transport 85,700New Jersey Presidents’ Council Members 80,260Banking 76,966Insurance 72,175Pharmaceutical & chemical manufacturing 70,704Real estate 59,317Arts, entertainment, and recreation 51,417Telecommunications 40,301Casino hotels 38,600
Sources: Partners for Prosperity: New Jersey and Higher Education, The NJ Presidents’ Council; New Jersey Department of Labor and Workforce Development
“Higher Education goes hand in hand with NJ’s long-term economic viability. Giving our
students and workers the skills they need to be competitive in today’s emerging industries will
ensure both New Jersey’s economic growth and job creation.”
“Stopping the Brain Drain: Connecting Higher Education with New Industry” Christie for Governor
July 28, 2009
Executive Order No. 26
• Signed by Governor Christie on May 7, 2010
• Creates Higher Education Task Force to review NJ higher education
• Recommendations due December 1, 2010
Forward Calendar - 2010Public Institutions
New Jersey Institute of Technology$69 million – refunding and acquisition and renovation of an
academic facilityPassaic County Community College
$13 million – new academic building Ramapo College of New Jersey
$32 million – refunding and renovation of the student center
Private InstitutionsSeton Hall University
$49.85 million – letter of credit bank replacement (remarketing)Drew University
$15 million – refunding and various capital improvementsCentenary College
$19 million – refinancing of a bank loan
* Deals and amounts as of 10/18/2010
“When the nation and the world emerge from this recession, the competitive knowledge-
based global economy will continue to demand more college-educated workers.”
“The Challenge to States: Preserving College Access and Affordability in a Time of Crisis”
The National Center for Public Policy and Higher EducationMarch 2009
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