Transcript University of California Strategic Investment Program (UCSIP) Cross-Campus Collaboration (C3) July 11, 2013

University of California
Strategic Investment Program (UCSIP)
Cross-Campus Collaboration (C3)
July 11, 2013
CFO Division Organizational Chart
EVP Chief Financial Officer
UNIVERSITY OF CALIFORNIA
Peter J. Taylor
Capital Markets Finance
Financial Services
& Controls
Strategic Initiatives
Risk Services
Financial Accounting
UC PATH
Procurement
Working Smarter
Investments
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I. Capital Markets Finance
UNIVERSITY OF CALIFORNIA
Organizational Chart
Sandra Kim
Executive Director
UNIVERSITY OF CALIFORNIA
Tim Loving
Administrative
Assistant
Caroline Brossard
Senior Finance
Officer
Pikka Sodhi
Finance Officer
Allen Yin
Finance Officer
Rafif Ismail
Finance Officer
Location
1111 Franklin St., Oakland
10th 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:
UNIVERSITY OF CALIFORNIA
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
• 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
UNIVERSITY OF CALIFORNIA
Millions
Par Outstanding By Credit Type (in millions) **
$9,000
$8,000
7,254
$7,000
$6,000
$5,000
$4,000
$3,000
$2,000
1,992
2,171
2,407
$1,000
$General Revenue Bonds Limited Project Revenue Medical Center Revenue State Public Works Board
Bonds
Bonds
*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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Millions
University of California Debt Profile
$900
General Revenue Bonds
$800
$700
Limited Project Revenue Bonds
Medical Center Pooled Revenue Bonds
Hospital Revenue Bonds
$600
$500
$400
$300
$200
UNIVERSITY OF CALIFORNIA
$100
$0
Notes:
Does not include UC Irvine third party housing debt service
Does not include GRB Series AD principal due in 2112
Variable rate bonds with swaps assume interest based on associated swap rates
GRB 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/bondholderinformation/index.html
UNIVERSITY OF CALIFORNIA
• 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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UC Strategic Investment Program (UCSIP)
• 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
Cap Equip
UNIVERSITY OF CALIFORNIA
C3
STARS*
Utilized for equipment
acquisition in lieu of 3rd
party leasing
Amortizing loans funded
by CP
Loan 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 CP
Loan interest rate – 0%
Term – 3-7 years
Campuses competitively
apply throughout year
Approx. $20-50MM auth.
per year.
Utilized for lab
renovations and/or
equipment specific to a
single faculty recruit
Amortizing loans funded
by CP
Loan interest rate – 0%
Term –up to 7 yrs (equip),
up to 15 yrs (renovations)
Campuses competitively
apply throughout year
Approx. $30MM auth. per
year.
* Strategic Teaching Acquisition and Retention: New program – Official launch date – FY 13-14
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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
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• C3 program encourages collaboration between campuses in this effort, including
systemwide efficiency initiatives
C3
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C3 Program Requirements – How to Participate
Application
Complete 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
Review
Capital Markets Finance responds within 30 days
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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
Loan Characteristics
• Each loan will have its own uniform amortization schedule with
principal due every May 15th
• Participants must execute a Promissory Note*
• Submitted via EIAOnline before the end of each quarter
Reimbursement
Requests
• Includes brief expenditure description, amortization term
(3-7 years) and repayment source
• Each reimbursement is an individual loan, one project could
have multiple loans
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• Approval is subject to debt financing feasibility metrics
Approval
• Final approved C3 amount is the maximum funding
authorization**
• Maximum funding authorization is counted against participant’s
debt capacity until actual utilization is known
* 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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UNIVERSITY OF CALIFORNIA
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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C3 Utilization Across UC
Procurement
Initiatives
UNIVERSITY OF CALIFORNIA
New Financial
System Upgrades
Operational
Excellence
Implementations
Other Initiatives*
Total C3
authorization
$106.6
million
Campus Participants:
* Includes Online Education and Promise Platform
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Case Study: UC Berkeley’s Transition to Campus Shared Services (CSS)
UNIVERSITY OF CALIFORNIA
Goal
Support the
University’s core
mission and
maintain academic
excellence by
directing more
resources away
from
administrative
expenses and
toward teaching
and research
Campuswide
Initiative (1)
Financing
Manage
administrative costs
aggressively
Create a reliable
administrative
infrastructure for
all departments
Streamline
operations
Benefits
Savings of
$3,500,000 (2)
Draw on C3 funds
to finance the
property’s total
acquisition cost of
$29,250,000
Reduction of cost and
compliance risk
created by redundant
work and paperbased 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
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