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University of Missouri System

University of Missouri System. Debt Capacity Report, UM. a. Debt Outstanding by Campus March 31, 2010. Columbia $ 592.3 million Kansas City 151.0 million St. Louis 81.2 million MO S&T 74.1 million UM Health System 267.7 million Total $1,166.3 million

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University of Missouri System

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  1. University of Missouri System Debt Capacity Report, UM a

  2. Debt Outstanding by CampusMarch 31, 2010 • Columbia $ 592.3 million • Kansas City 151.0 million • St. Louis 81.2 million • MO S&T 74.1 million • UM Health System 267.7 million • Total $1,166.3 million • Includes Series 2009 bond issue of $332 million b

  3. Series 2009 Debt IssuanceJuly 2009 • Build America Bonds and Tax Exempt bonds totaling $332.06 million • Build America Bonds - $256.3 million • Tax exempt bonds - $75.76 million • True Interest cost - 3.83% • BABs provided savings of $70 million ($40 million present value savings) over traditional tax exempt bonds c

  4. Future Debt Financing NeedsFY2011 – 2015 d

  5. Current Market Conditions Interest rates: 30 year tax exempt rates for “Aa” higher education credits - 4.50% range BABs - 5.85% range. Build America Bond (BAB) structure includes 35% federal subsidy Scheduled to end 12-31-10 House of Representatives Small Business and Infrastructure Jobs Tax Act of 2010 Extends BABS through 3-31-2013 Subsidy levels decline over time: 33%-2011, 31%-2012, and 30%- 2013 The President’s proposed 2011 budget included a proposal to reform and extend the BABs program, but with a reduced subsidy of 28%, effective 1/1/2011 The Senate has not yet taken up the issue e

  6. Credit Rating Issues Moody’s Investors Service – current rating Aa2 Stable • Moving to a global rating scale for its municipal bond issue ratings more in line with ratings for sovereign, financial and corporate debt • Existing municipal ratings will be replaced - Potentially, with a notch higher rating • Revised ratings within the sector are expected to be reviewed on the weekend of April 30th, 2010 and released publicly on May 10th, 2010 Standard and Poor’s – current rating AA Positive • S&P indicates no change to ratings scale, as municipal ratings are already equivalent to corporate scale in their current system f

  7. Estimated Debt Capacity After Series 2009A&B Bond Issue Based on Ratio Analysis Credit rating is based on ratio analysis plus subjective factors such as state support, market position and enrollment trends, liquid assets, and management For this analysis, the University’s potential debt capacity ranges were estimated using five different financial ratios (see Appendix for further detail)1 Estimated Current Debt Capacity based on Ratio Analysis – March 2010 Aa2/AA rating – current rating for UM System Additional net capacity of $0 to $165 million Aa3/AA- rating – capacity at the next lower rating Additional net capacity of $319 million to $1,202 million 1 Certain operating ratios are as of end of FY2009. g

  8. Projected Future Debt Capacity FY 2011 - 2014 Assumes additional $72.786 million in fiscal year 2011 as approved by Board. h

  9. Summary • UM has strong credit quality.  • Credit ratings and debt capacity are in part science and in part art.  • As long as our unrestricted and expendable net assets continue to grow, we have increasing debt capacity.  • If we are willing to risk a downgrade for strategic purposes, our capacity is even larger.  • If we want to maintain current rating, we need to be strategic about our use of debt financing. • Now is still a good time to issue debt because interest rates are at historic lows. i

  10. APPENDIX j

  11. System Facilities 2009Financed Projects • Columbia • Energy Management - $51,179,236 • Hudson/Gillett renovation - $35,172,398 • Mid-Campus Housing - $4,299,579 • UM Health System • Orthopedic Institute, Patient Care Tower and relocation of Children’s Hospital - $115,250,680 • Kansas City • Soccer/Track facility - $7,762,034 • Student Union - $36,180,171 • Interactive Learning Ctr Phase I South - $10,180,072 • Oak Street West Phase II - $17,474,983 • MO S&T • Thomas Jefferson Phase II South - $13,070,592 • Research Park Office Building - $3,274,490 • St. Louis • Flushing Meadows - $3,368,601 • System • Critical Repairs/Renovations/Adaptations - $34,847,164 • SERIES 2009A&B TOTAL - $332,060,000 k

  12. Future Debt Financing NeedsFY2011 – 2015 • Columbia • Energy Management - $51,050,000 (Board approved) • Wolpers Hall renovation – 15,979,000 • Mark Twain Hall renovation - $19,854,000 • Johnston Hall renovation - $16,057,000 • Jones Hall renovation - $17,236,000 • Parking Structure Number 8 - $25,413,000 • UM Health System • Orthopedic Institute and Patient Care Tower - $21,736,000 (Board approved) • Kansas City • Interactive Learning Center addition - $15,930,000 • Conservatory of Music and Dance - $20,000,000 • Med. Educ. Building & School of Medicine renovation - $20,000,000 • Interactive Learning Center parking structure - $9,240,000 • Oak Street East Parking Structure - $25,170,000 • Hospital Hill Parking Structure expansion - $9,610,000 • Health Sciences Research Building Phase II - $20,000,000 • MO S&T • Rec. & Intramural Building renovation - $1,580,000 • Thomas Jefferson Phase III - $7,141,342 • St. Louis • Athletic Fields - $6,440,000 • Wellness Center - $28,267,000 • West Drive Garage and Plaza - $10,438,000 • South Campus Residence Halls II & III - $20,432,000 l

  13. Estimate of Incremental Debt Capacity($ in millions) • FY 2009 medians derived from all public universities whose analyst adjusted ratios were available in the Moody’s Municipal Financial Ratio Analysis database as of March 23, 2010; the ‘Aa2’ sample includes 9 universities, and the ‘Aa3’ sample includes 14 universities. • Net additional debt reflects capacity remaining after Series 2009A&B issuance. m

  14. Additional Ratios Used to Calculate Implied Debt Capacity • FY 2009 medians derived from all public universities whose analyst adjusted ratios were available in the Moody’s Municipal Financial Ratio Analysis database as of March 23, 2010; the ‘Aa2’ sample includes 9 universities, and the ‘Aa3’ sample includes 14 universities. • Net additional debt reflects capacity remaining after Series 2009A&B issuance. n

  15. Debt Capacity Credit Profile$ in millions • FY 2009 medians derived from all public universities whose analyst adjusted ratios were available in the Moody’s Municipal Financial Ratio Analysis database as of March 23, 2010; the ‘Aa2’ sample includes 9 universities, and the ‘Aa3’ sample includes 14 universities • University of Missouri System data reflects data as reported by Moody’s. o

  16. Debt Capacity Credit Profile$ in millions • FY 2009 medians derived from all public universities whose analyst adjusted ratios were available in the Moody’s Municipal Financial Ratio Analysis database as of March 23, 2010; the ‘Aa2’ sample includes 9 universities, and the ‘Aa3’ sample includes 14 universities • University of Missouri System data reflects data as reported by Moody’s. p

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