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Minutes of a Regular Meeting, June 22-23, 2004 - Digital Collections

Minutes of a Regular Meeting, June 22-23, 2004 - Digital Collections

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REGENTS’ POLICY MANUALSECTION 4—FINANCE AND MANAGEMENT3) Determine affordability <strong>of</strong> projects and allocate funds to meet the University’sobjectives.A fundamental determinant <strong>of</strong> the use <strong>of</strong> debt financing for a project will be the ability <strong>of</strong>the division that enjoys the benefit <strong>of</strong> the project and the University to afford it. Eachproject using debt must be supported by an achievable financial plan that includesservicing the debt, meeting any new or increased operating costs, and maintaining anacceptable debt service coverage ratio. The development and review <strong>of</strong> the financial planby management will be explicit and detailed.Generally, the following guidelines will be used, although they are not intended to be allinclusive.The Chief Financial Officer (Norman) and the Controller (Health SciencesCenter) will make recommendations to the Vice Presidents <strong>of</strong> Administrative Affairsregarding the uses and amounts <strong>of</strong> debt to be issued, for approval by the President andBoard <strong>of</strong> Regents.A. Only projects that relate to the University’s mission (e.g., teaching, researchand creative/scholarly activity, and pr<strong>of</strong>essional and University review andpublic outreach) will be considered for debt financing.B. Much <strong>of</strong> the University’s current strength is founded in the philanthropy <strong>of</strong>individuals, corporations, and foundations that enable the University to buildprograms, construct and renovate facilities, and aid students. It is expectedthat gifts will continue to be a major source <strong>of</strong> financing the University’sfacilities.In assessing the strategic use <strong>of</strong> debt, all possible revenue sources will be considered. Thefraction <strong>of</strong> a project’s cost financed by debt will vary from project to project. However,philanthropy, project-generated revenues, federal and state grants, expendable reserves,and other sources are expected to finance a portion <strong>of</strong> the cost <strong>of</strong> a project.4) Provide the Board <strong>of</strong> Regents with adequate materials for oversight <strong>of</strong> theUniversity’s entire debt portfolio, including not only direct obligations issued bythe University, but also any other transactions (e.g., <strong>of</strong>f balance sheet financings)that affect credit and debt capacity.To fulfill its respective fiduciary responsibilities, it is essential that the Board <strong>of</strong> Regentsand administration know the extent <strong>of</strong> debt obligations <strong>of</strong> the University.The Board <strong>of</strong> Regents’ and administration’s debt oversight responsibilities are supportedand enhanced by shared oversight provided by the State Legislature, Oklahoma StateRegents for Higher Education, Council <strong>of</strong> Bond Oversight, rating agencies (e.g., Standard& Poor, Moody’s, Fitch), and credit enhancement insurers (e.g., AMBAC or MBIA). Inaddition, Bond Counsel and Financial Advisor services will be retained to assist in thedevelopment and marketing <strong>of</strong> financial plans underlying debt issues.5) Maintain the highest acceptable credit rating that will permit the University tocontinue to use debt and finance capital projects at favorable interest rates whilemeeting its strategic objectives.THE UNIVERSITY OF OKLAHOMA <strong>22</strong>4

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