1. Tax Exempt Bonds as a Financing Tool Cornell University Patricia A. Johnson Treasurer June 28, 2007

2. 2 Private research university which operates six endowed schools and four state supported schools in Ithaca, NY Medical College operated in New York, NY New York land grant institution 20,000 students Cornell University

3. 3 $8.4 billion in assets $5.3 billion in investments $1.8 billion in liabilities $3.0 billion in revenue $2.3 billion in expenses $6.6 billion in net assets Financial Data (as of June 30, 2006)

4. 4 Moody’sAa1 Standard & Poor’sAA+ There is little to no cost advantage to becoming AAA rated Cornell Debt Rating

5. 5 Projected Fixed vs. Variable Rate Allocation as of June 30, 2006 Underlying BondsNet of Swaps Fixed RateVariable Rate Series ($ in thousands)Fixed RateVariable RateLiability DASNY Series 1990B $57,800 DASNY Series 2000A 59,960$59,960 DASNY Series 2000B 78,615 DASNY Series 2004 92,100 DASNY Series 2006$248,570 248,570 IDA Series 20005,290 IDA Series 2002A 42,780 IDA Series 2002B 15,390 Tax-Exempt Commercial Paper 19,205 Taxable Commercial Paper 37,791 Bond Series 1987B11,760 Student Loan Marketing Association5,635 Urban Development Corporation2,875 Capitalized Leases11,836 Other3,152 Total Dollars$289,118$403,641$597,168$95,591 Total Percentage of Debt42%58%86%14%

6. 6 Daily Variable Rate Demand Bonds$57,8008% Tax-Exempt 7-Day Auctions$92,10013% Taxable Commercial Paper$37,7915% Tax-Exempt Fixed Rate Bonds/ Debt$289,11842% Tax-Exempt Commercial Paper$19,2053% Weekly Variable Rate Demand Bonds$196,74528% 692,759100% Cornell Core Debt Fixed/Variable Mix

7. 7 Forward Swaps ($200 million each) Fiscal Year Fixed RateVariable Rate Variable Rate Payer 20083.8420%BMAGoldman Sachs 20103.4520%68% of 1 month LiborMerrill Lynch 20123.4789%68% of 1 month LiborMerrill Lynch

8. 8 Estimated Budget Bridge Financing Long Term Financing Research $474,573 $214,620 $109,669 Program 220,573 63,701 12,400 Student Support 260,350 99,368 9,350 Renovations/Renewals 447,238 3,000 90,205 Infrastructure 294,775 5,000 93,285 Total Ithaca Campus $1,697,509 $385,689 $314,909 Weill Medical College 1,056,164 50,000 192,509 Total Approved Projects $2,753,673 $435,689 $507,418 Approved Projects (in thousands)

9. 9 Issue Process Timeline: Three to Four Months Issue long term bonds every two years Assemble the team –Issuing Agency –Bond Counsel –Underwriter –Underwriter’s Counsel –Internal Staff

10. 10 Issue Process (continued) Trustee approval of indebtedness and use of tax exempt funds Environmental studies Public hearings Reimbursements follow guidelines for approved costs

11. 11 Approved Project Approval Request (PAR) –Is financing needed? Forward to Treasurer’s Office Treasurer’s Office determines source of debt –Bridge financing –Long-term financing Quarterly meetings with University Budget Office Internal Loan Process

12. 12 Document all projects which received tax- exempt funding by reviewing closing documents and draw down schedules Contact (or assign) tax exempt coordinator for every project Exclude infrastructure projects such as utility projects not specific to a building, land improvements, etc. Due Diligence Process for Private Use

13. 13 Questionnaire to be filled out by coordinator at issuance of loan Follow-up with on-site visits Questionnaire will be updated every two years Site visits will occur as necessary Due Diligence Process for Private Use (continued)

14. 14 Questions? paj5@cornell.edu 607-254-1590