University of CaliforniaStrategic Investment Program (UCSIP)

Cross-Campus Collaboration (C3)

July 11, 2013

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CFO Division Organizational Chart

EVP Chief Financial OfficerPeter J. Taylor

Strategic Initiatives

Financial Services & Controls

Financial Accounting

Risk Services

Procurement

UC PATH

Capital Markets Finance

Working Smarter

Investments

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I. Capital Markets Finance

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Organizational Chart

Sandra KimExecutive Director

Caroline BrossardSenior Finance

Officer

Pikka SodhiFinance Officer

Allen YinFinance Officer

Rafif IsmailFinance Officer

Tim LovingAdministrative

Assistant

Location1111 Franklin St., Oakland10th Floor, West Side, Between Accounting and Banking & Treasury Services

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Capital Markets Finance: Office of the President

We support capital-raising activities system wide through:

Financing systemwide

capital needs through short term and long term funding

programs

Managing the University's debt & loan portfolio

Providing financial advisory

services for campuses and

medical centers

Maintaining strong

relationships with investors, rating agencies

and other external parties

The staff of Capital Markets Finance is dedicated to providing efficient service with the highest standards of excellence

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University of California Revenue Debt

Par Outstanding By Credit Type (in millions) **

• The University of California is currently rated by Moody’s, Standard & Poor’s and Fitch*– General Revenue Bonds – Aa1/AA/AA+

• The University’s primary borrowing vehicles for financing of projects critical to the University’s mission of education and research

– Limited Project Revenue Bonds – Aa2/AA-/AA• Financing vehicle for auxiliary projects such as housing and parking

– Medical Center Pooled Revenue Bonds – Aa2/AA- • Financing vehicle for the University’s academic medical center projects

– State Public Works Board – Aa2/AA-/AA- • Bonds issued (lease/leaseback) for the University by the State

General Revenue Bonds

Limited Project Revenue Bonds

Medical Center Revenue Bonds

State Public Works Board

$- $1,000,000,000 $2,000,000,000 $3,000,000,000 $4,000,000,000 $5,000,000,000 $6,000,000,000 $7,000,000,000 $8,000,000,000 $9,000,000,000

7,253,905,000

1,991,610,0

00

2,171,035,0

00

2,406,740,0

00

*Negative Outlook (Moody’s), Stable Outlook (S&P, Fitch)**The University also currently has $77.73 million of Hospital Revenue Bonds outstanding

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University of California Debt Profile

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$100,000,000

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$700,000,000

$800,000,000

$900,000,000General Revenue BondsLimited Project Revenue BondsMedical Center Pooled Revenue BondsHospital Revenue Bonds

Notes:Does not include UC Irvine third party housing debt serviceDoes not include GRB Series AD principal due in 2112Variable rate bonds with swaps assume interest based on associated swap ratesGRB Series Y, Z and AH assumes principal is amortized 2037 – 2041 (Series Y-1 & Y-2 have a mandatory tender on 7/1/2014, AH matures on 7/1/2019) and variable rate Series Z pays interest at 2%

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UC Bondholder Relations Website

• A new investor relations website provides UC’s bond holders up-to-date information on UC debt:

http://www.ucop.edu/bondholder-information/index.html

• Available information:– Types of UC credit– UC ratings– Annual financial reports– Official statements– Outstanding par by credit– Debt profile

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II. UC Strategic Investment Program

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• In 2010, the CFO Division established UCSIP as a suite of internal-loan financing programs that leverage UC’s high credit rating to make low borrowing costs available for purposes other than capital construction

• UCSIP facilitates capital equipment acquisition, implementation of administrative efficiency projects and faculty recruitment/retention through the following funding programs

UC Strategic Investment Program (UCSIP)

Utilized for equipment acquisition in lieu of 3rd party leasing

Amortizing loans funded by CPLoan interest rate – 1.99%Term – 3-7 years

Campuses submit authorization requests to Regents annually (May). On average $150MM - $200MM auth. per year

Utilized for regional centers of excellence, systemwide efficiency initiatives

Amortizing loans funded by CPLoan interest rate – 0%Term – 3-7 years

Campuses competitively apply throughout yearApprox. $20-50MM auth. per year.

Utilized for lab renovations and/or equipment specific to a single faculty recruit

Amortizing loans funded by CPLoan interest rate – 0%Term –up to 7 yrs (equip), up to 15 yrs (renovations)

Campuses competitively apply throughout yearApprox. $30MM auth. per year.

* Strategic Teaching Acquisition and Retention: New program – Official launch date – FY 13-14

Cap Equip

C3

STARS*

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Cross-Campus Collaborations (C3)

• Cross-Campus Collaborations (C3) is an internal loan program whereby 0% loans are made to campuses, medical centres or labs for the implementation of administrative efficiency projects

• C3 program encourages collaboration between campuses in this effort, including systemwide efficiency initiatives

C3

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C3 Program Requirements – How to Participate

ApplicationComplete a C3 application* at least 60 days prior to the desired funding, It should include:• Desired total loan amount in $1,000 increments• Description of proposed C3 project• Potential risks and drawbacks• Expected fund source for repayment

ReviewCapital Markets Finance responds within 30 days

Funding Loans are funded at the end of each quarter only.• Participants may expend local funds anytime after C3 funding approval • Expenditures can be accumulated across multiple quarters before requesting

reimbursement

* Signed by the Chancellor or Lab Director

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C3 Loan Characteristics and Reimbursements

•Must be at least $100,000, in increments of $1,000

•Each loan will have its own uniform amortization schedule with principal due every May 15th

•Participants must execute a Promissory Note*

Loan Characteristics

•Submitted via EIAOnline before the end of each quarter

•Includes brief expenditure description, amortization term (3-7 years) and repayment source

•Each reimbursement is an individual loan, one project could have multiple loans

Reimbursement Requests

•Approval is subject to debt financing feasibility metrics

•Final approved C3 amount is the maximum funding authorization**

•Maximum funding authorization is counted against participant’s debt capacity until actual utilization is known

Approval

* Delineates loan terms and debt service schedule** Unused C3 authorization amounts remaining after three years after approval date will automatically lapse

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C3 Reimbursement Request Form*

* Participants complete the top half of this form and submit it to UCOP. UCOP then completes the bottom half and returns it to Participant for signature. After receiving Participant signature, UCOP will execute the loan and transfer funds to Participant on the designated transfer date.

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* Includes Online Education and Promise Platform

C3 Utilization Across UC

Total C3 authorizatio

n $106.6 million

New Financial System

Upgrades

Procurement Initiatives

Operational Excellence

Implementations

Other Initiatives*

Campus Participants:

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Goal

Support the University’s core

mission and maintain academic

excellence by directing more resources away

from administrative expenses and

toward teaching and research

Campus-wide

Initiative (1)

Manage administrative

costs aggressively

Create a reliable administrative

infrastructure for all departments

Streamline operations

Financing

Draw on C3 funds to finance the property’s

total acquisition cost of

$29,250,000

Benefits

Savings of $3,500,000 (2)

Reduction of cost and compliance risk created by redundant work and paper-based

systems

Simplification and standardization

of administrative tasks and processes

(1) Started in 2010; project was completed in April 2013(2) Under lease, the NPV cost of the University’s occupancy (at a 5% discount rate) over the next 10 years is $19.9 million. The NPV cost of a purchase (at a 5% discount rate, assuming financing at 4.6%, interest only for 5 years and then fully amortized for 5 years) over 10 years is $16.44 million, a savings of $3.5 million

Case Study: UC Berkeley’s Transition to Campus Shared Services (CSS)