Debt Capacity Review

1
Finance, Audit and CapitalStudy Session

• Debt Capacity Review
• Part I
• June 29, 2005

2
Universitys Long Term Obligations (s in
millions) Amount Outstanding as of 3/31/2005 -
529.1 MM
Obligations by Credit
Obligations by Campus
Enterprise 351.1
UCB 217.1
HSC 214.6
Other 127.4
40.5
66.4
24.1
41.0
COPS 47.8
9.0
12.0
5.4
1.1
RBRF 2.8
.5
System 5.6
DT Denver 28.3
UCCS 63.5
Other includes Williams Annuity (177K), the
Dravo Lease (8.8 MM), the Lawrence St. Center
(19.5MM), HSC CUP (29.8 MM), and UCB Williams
Village (69.1MM)
3
University of Colorado Obligations by Campus (s
in millions, comparing to last year)
221.0
221.5
217.1
214.6
200
100
63.5
47.1
29.1
28.3
0
9.1
5.6
UCB
UCCS
UCD
HSC
System
2004
2005
4
Debt Capacity Definition
Debt capacity assesses the ability to pay future
debt service with current resources
Debt Capacity Ratio
Maximum Future Debt Service
UCF Expenditures Mandatory Transfers
5
Debt Capacity Assumptions

• Based on campuses budget for FY 2006
• Increase base 3.5 per year for the period of the
  analysis
• UCHSC base increases _at_ 5.7
• Specific new project revenues or new student fees
  may be included at the request of the campus
• If no projections available, projects are assumed
  to generate sufficient new revenue to cover 125
  of debt service
• Debt service begins year after project
  completion, unless otherwise specified by the
  campus
• Debt service payments are level

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Rationale for 7 Limit
State Law Keeps CU well below the 10 limit
mandated by the enterprise statute and the 6
limit imposed by the research system
statute. Flexibility Provides room for new debt
when emergencies or opportunities arise Ensures
that CU can service debt in times of fiscal
stress. Any decision to exceed 7 should be
part of comprehensive strategic plan
7
University Debt Capacity Ratio
University Debt Capacity Ratio Effect of 1 Year
Plan

• Universitys 2005 Debt Capacity Ratio is 5.3
• With no new bond or COP transactions, ratio will
  decrease to 3.3 in 2014
• If CU finances all projects in new plan
• Ratio would remain at 5.3 in FY 2006
• Ratio decreases to 3.6 in FY 2014

Footnote Includes external obligations only
8
UCB Project List
New 1 Year Capital Plan Project Included in the
Debt Capacity Analysis
Total 5.7 M
9
UCB Debt Capacity Ratio
UCB Debt Capacity Ratio Effect of 1 Year Plan

• UCBs Debt Capacity Ratio is currently 5.0
• With no bond or COP transactions, ratio will
  decrease to 2.9 in 2014
• If UCB finances projects in new plan
• Ratio will stay at 5.0 in FY 2006
• Ratio drops to 3.0 in FY 2014

Footnote Includes external obligations only
10
UCCS Project List
New 1 Year Capital Plan Projects included in the
Debt Capacity Analysis
Total
13.3 M
11
UCCS Debt Capacity Ratio
UCCS Debt Capacity Ratio Effect of 1 Year Capital
Request

• UCCSs Debt Capacity Ratio is currently 6.8
• With no new bond or COP transactions, ratio will
  decrease to 4.7 in 2014
• If UCCS finances projects in new plan
• Ratio will increase to 7.8 in FY 2006
• Ratio drops to 7.0 in FY 2009
• Ratio drops to 5.7 in FY 2014

Footnote Includes external obligations only
12
UCD Project List
There are no new Capital Plan Projects on the DT
Denver campus included in the Debt Capacity
Analysis
13
UCD Debt Capacity Ratio
UCD Debt Capacity Ratio Effect of 1 Year Plan

• UCDHSC at DT Denver Debt Capacity Ratio is 5.4
• With no bond or COP transactions, ratio will
  decrease to 3.8 by 2014

Footnote Includes external obligations only
14
UCHSC Project List
New 1 Year Capital Plan Projects Included in the
Debt Capacity Analysis
Total
40.9 M
15
UCHSC Debt Capacity Ratio
HSC Debt Capacity Ratio Effect of 1 Year Plan

• HSCs Debt Capacity Ratio is 6.2
• With no bond or COP transactions, ratio will
  decrease to 3.6 by 2014
• If HSC finances projects in new plan
• Ratio will rise to 6.5 in FY 2006
• Ratio drops to 4.1 in FY 2014

Footnote Includes external obligations only
16
UCDHSC Debt Capacity Ratio
UCDHSC Combined Debt Capacity Ratio Effect of 1
Year Plan

• UCDHSCs Combined Debt Capacity Ratio is 5.9
• With no bond or COP transactions, ratio will
  decrease to 3.6 by 2014
• If all projects in new plan are financed
• Ratio will rise to 6.1 in FY 2006
• Ratio drops to 4.0 in FY 2014

Footnote Includes external obligation only
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Debt Capacity Conclusions

• Debt capacity increases slightly overall
• At higher debt capacity ratios
• The University will devote more financial
  resources to repay principal and interest on
  debt
• The Universitys financial flexibility will be
  reduced

18
Wrap-Up
Questions and Comments?