University of California Strategic Investment Program (UCSIP) Cross-Campus Collaboration (C3)

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

2. CFO Division Organizational Chart EVP Chief Financial Officer Peter J. Taylor Financial Services & Controls Capital Markets Finance Strategic Initiatives Risk Services Financial Accounting UC PATH Procurement Working Smarter Investments

3. I. Capital Markets Finance

4. Organizational Chart Location 1111 Franklin St., Oakland 10th Floor, West Side, Between Accounting and Banking & Treasury Services

5. The staff of Capital Markets Finance is dedicated to providing efficient service with the highest standards of excellence Capital Markets Finance: Office of the President

6. 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 Par Outstanding By Credit Type (in millions) ** *Negative Outlook (Moody’s), Stable Outlook (S&P, Fitch) **The University also currently has $77.73 million of Hospital Revenue Bonds outstanding

7. University of California Debt Profile 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%

8. 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

9. II. UC Strategic Investment Program

10. 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 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 C3 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 regional centers of excellence, systemwide efficiency initiatives STARS* 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

11. 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

12. C3 Program Requirements – How to Participate * Signed by the Chancellor or Lab Director

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

14. 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.

15. C3 Utilization Across UC Campus Participants: * Includes Online Education and Promise Platform

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