Rating Presentation August 2005. MINNESOTA STATE COLLEGES AND UNIVERSITIES 1 Participants Clarence Hightower, Chair, Finance/Facilities Committee, Board

Rating Presentation August 2005

2MINNESOTA STATE COLLEGES AND UNIVERSITIES

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.


Participants

Susan Fitzgerald, Senior Vice President, Moody’s Investors Service

Marianna Pisano, Analyst, Moody’s Investors Service


Participants

Susan Carlson, Associate Director, Standard & Poor’s

Jessica Matsumori, Analyst, Standard & Poor’s



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


2002-2005 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


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 2005-2006


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 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

Number of High Schools Graduates

61,161 60,518 61,918 61,803 63,347 62,632 60,581 61,290 61,718 62,863

10,000

20,000

30,000

40,000

50,000

60,000

70,000

2000 2001 2002 2003 2004 2005* 2006* 2007* 2008* 2009*

* ProjectedSource: Minnesota Higher Education Servcies Of f ice


MnSCU Enrollment (FYE)

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

2000 2001 2002 2003 2004 2005* 2006* 2007* 2008* 2009*

Universities

Colleges*ProjectedSource: MnSCU Finance Divis ion.

Year

2000 114,199 2001 118,861 2002 126,215 2003 132,586 2004 135,819 2005* 135,531 2006* 136,910 2007* 138,458 2008* 140,085 2009* 141,901

EnrollmentTotal MnSCU FYE


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


MnSCU Financial Ratios

* Less Foundation Assets

CAPITAL RATIOS: FY 2003* FY 2004*Unrestricted operating resources to debt (x) 0.73 0.82

Expendable resources to debt (x) 1.29 1.18

Total resources to debt (x) 5.76 5.54

Gross debt service to operations (%) 0.01 0.02

BALANCE SHEET RATIOS:

Unrestricted operating resources to operations (x) 0.09 0.11

Expendable resources to operations (x) 0.16 0.16

Unrestricted operating resources to total resources (x) 0.13 0.15

Total resources per student ($) $4,281 $4,526

OPERATING RATIOS:

Operating margin (%) -1.75% -0.37%

Gross debt service coverage (x) 1.29 1.18

Gift and Investment 0.41% 0.27%


Tuition and Fees – Regional Comparisons

Mn

SC

U

- S

tate

Un

iv.

Bo

rde

r S

tate

Pu

blic

Un

iv.

No

n-B

ord

er

Mid

we

st

Pu

blic

Un

iv.

2002/03

2003/04

2004/05

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000($

) U

.S.

Do

lla

rs

(Years)

2002/03

2003/04

2004/05


Diversification of Revenues

Institutions recommend tuition, room & board rates, and student fees for Board approval.

Total MnSCU Revenues - FY 2004

Other0.9%

Net tuition and fees 33.8%

State appropriations

41.1%

Auxiliary enterprises

7.1%

Gifts and pledges1.0%

Grants and contracts

15.8%

Investment income0.3%


Operating Margins

MnSCU Revenue Fund Operating Margin

4.07%

7.61%

12.76%

9.46%

1.92%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

FY 2001 FY 2002 FY 2003 FY 2004 FY 2005

Total MnSCU Operating Margin

0.1%

1.6%

-0.4%

-1.7%-2.0%

-1.5%

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

FY 2001 FY 2002 FY 2003 FY 2004


Balance Sheet Ratios

Unrestricted Resources to Operations

0.09 0.11

0.41

0.48

0.38

0.00

0.10

0.20

0.30

0.40

0.50

0.60

MnSCU FY 2003 MnSCU FY 2004 MnSCU RevenueFund

FY 2003

MnSCU RevenueFund

FY 2004

MnSCU RevenueFund

FY 2005

(X)


Trends in State Funding

$579,674,000

$559,631,000

$602,194,000

$549,297,000 $546,444,000

$592,292,000

$601,583,000$600,694,000

8.92%

9.30%

10.94%

11.05%

8.97%9.09%

11.33%

9.84%

4.76%

3.83%

4.04%

4.72%

3.87%

4.00%

4.82%

4.13%

$510,000,000

$520,000,000

$530,000,000

$540,000,000

$550,000,000

$560,000,000

$570,000,000

$580,000,000

$590,000,000

$600,000,000

$610,000,000

FY 2000 FY 2001 FY 2002 FY 2003 FY2004 FY2005 FY2006 FY2007

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

State Appropriations to MnSCU

Percent of State's General FundBudget appropriated to allMinnesota Higher Education

Percent of State's General FundBudget appropriated to MnSCU


Development

Amount Percentage Amount Percentage

Alumni $3,655,816 12.4% $17,508 0.0%

Other Individuals $5,419,139 18.3% $26,386 0.1%

Corporations and Businesses $5,303,629 17.9% $829,912 1.6%

Organizations $870,626 2.9% $2,337,698 4.6%

Private Foundations $3,669,801 12.4% $2,679,451 5.3%

Matured Bequests $1,869,175 6.3% $0 0.0%

Endowment Interest Income $8,557,231 28.9% $1,300,775 2.6%

Government $213,557 0.7% $43,739,162 85.9%

TOTAL $29,558,973 100.0% $50,930,892 100.0%

FOUNDATIONS COLLEGES AND UNIVERSITIES

Gifts and Grants Received in FY 2004 by Source


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 1905-2005; 67% between 1960-

1970

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)


General Fund Debt Outstanding: June 30, 2004 July, 1990 3,111,153$

Aug, 1991 5,917,574

July, 1992 623,584

April, 1993 753,988

Aug, 1993 4,132,088

Oct, 1994 2,036,286

April, 1995 3,117,523

Aug, 1995 1,155,856

May, 1996 6,928,115

Oct, 1996 2,166,667

Aug, 1997 6,020,000

June, 1998 2,555,000

Nov, 1998 7,514,000

Aug, 1999 5,582,667

June, 2000 4,218,053

Nov, 2000 8,538,250

Oct, 2001 16,193,700

June, 2002 10,789,579

Nov, 2002 22,456,417 Aug, 2003 24,207,000

Total General Obligation Bonds 138,017,500$


Revenue Fund Ratios

MnSCU Revenue Fund

MnSCU Revenue Fund +$50M debt

2004 2004CAPITAL RATIOS:

Unrestricted operating resources to debt (x) 0.77 0.36

Expendable resources to debt (x) 0.91 0.42

Total resources to debt (x) 2.60 1.2

Net debt service to operations (%) 6.68% 12.33%

BALANCE SHEET RATIOS:

Unrestricted operating resources to operations (x) 0.55 n/a

Expendable resources to operations (x) 0.65 n/a

Unrestricted operating resources to total resources (x) 0.30 n/a

Total resources per student:

Per residence hall students ($) $9,804 n/a

Per all students ($) $2,378 n/a

OPERATING RATIOS:

Operating margin (%) 7.21% n/a

Debt service coverage (x) 2.90 1.57Return on net assets (%) 6.29% n/a


Room and Board Rates: Regional Comparison

Based on double room and full board (17 to 21 meals per week).

Room and Board Rates: Regional Comparison

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

($)

U.S

. D

oll

ars

2004-05

2005-06


Revenue Fund Revenue FY 2004

MnSCU Fund Revenues - FY 2004

1%

3%

75%

6%

15%

Room & Board

Student fees and operatingrevenuesMiscellaneous fees andcommissionsInterest income

Other income

Auxiliary Enterprise Breakdown Amount

Room & Board 49,228,000$

Student fees and operating revenues 9,995,000$

Miscellaneous fees and commissions 4,011,000$

Interest income 800,000$

Other income 2,187,000$

Total 66,221,000$


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

2005 Project Requests: Project Cost (1) Revenue Bonds

MSU, Mankato Residence Life New Student Housing 40,475,000$ (2) 39,475,000

St. Cloud SU Student Life Parking Ramp 9,600,000$ (3) 4,700,000

Winona SU Residence Life Acquisition of Maria Hall 3,000,000$ (4) 2,000,000

Planning Funds Residence/Student Life Planning and Design 3,000,000$ 3,000,000

Project Requests total: 56,075,000$ 49,175,000$

Planning Fund for Future Projects:

Bemidji SU Residence Hall Residence Hall Improvements

MSU, Mankato Residence Hall Residence Hall Replacement Phase 2

MSU Moorhead Residence Hall Student Activities Center


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.

Project Debt Date issued

MSU Moorhead 3,940,000$ 9/1/2001

Student Apartment Building

St. Cloud SU 16,515,000$ 3/1/2002

Stadium ProjectAtwood Memorial Center ProjectStudent Fitness and Recreational Center


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 12-18 months


Thank You!

Documents

Rating Presentation August 2005. MINNESOTA STATE COLLEGES AND UNIVERSITIES 1 Participants Clarence Hightower, Chair, Finance/Facilities Committee, Board