CAUBO Annual Conference CONSORTIA BORROWING Saskatoon,Saskatchewan

1. JUNE 12, 2004 CAUBO Annual ConferenceCONSORTIA BORROWINGSaskatoon,Saskatchewan

2. Agenda • OSBFC Story - Our Team • OSBFC’s Process • Benefits of OSBFC • Costs

3. “SIGNIFICANT FINANCIAL BENEFITS TO THE SECTOR” • $200,000,000 • (conservatively!!!)

4. “ROWING WITH THE PEOPLE” • 25 BOARDS • 25 CEO’S • 25 CFO’S • 235 TRUSTEES • 7 INVESTMENT BANKS • 3 LEGAL FIRMS • 2 MINISTRY’S • ONTARIO FINANCING AUTHOURITY SO FAR……..

5. HOW DID WE GET STARTED? • April 1998 – RESTRUCTURING OF BOARDS • Seed $ from Ministry of Education • Set up Catholic School Board Services Corporation; spun off OSBFC • Initiatives: • Purchasing • Construction, Facility & Energy • Utilities • Employee Benefits • IT • Consultants

6. Our Story - Our Team • Financing Structure Description • Ontario School Boards Financing Corporation (“OSBFC”) was formed as a vehicle to issue debt on behalf of Ontario School Boards • OSBFC is a non-share capital, not-for-profit, special purpose corporation • Each participating Board issues a debenture to OSBFC representing its debt obligation • The amount of the underlying debenture issued by each participating Board is based on that Board’s capital requirements • The liability of each Board is only for amounts owing under its own debenture. There is no joint and several liability • The underlying debenture for each participating Board ranks pari passu with all other debentures and financial instruments issued by that Board • OSBFC sells Ownership Interests that represent undivided co-ownership interests in the debentures issued by the participating boards

7. Our Story - Our Team • Financing Structure Diagram Participating School Boards Semi-Annual Payments on Debentures Net Proceeds of Offering Debentures Deposited Debentures OSBFC Custodian Ownership Interests Net Proceeds of Offering Semi-Annual Payments Investors

8. Series 2003 Offering • Credit Ratings • Prior to the 2003 offering, OSBFC obtained a third rating from Moody’s • Three ratings are preferred by investors for frequent and large issuers • OSBFC offerings enjoy the following strong credit ratings: • CIBC World Markets works with OSBFC and participating school boards to obtain and maintain the highest possible ratings

9. Our Story - Our Team OFA MILLER THOMSON PETER HOWARTH CSBSA Peter Derochie - President (Simcoe Muskoka Catholic District School Board) John Sabo - Vice President (York Catholic District School Board) Cathy Dempsey - Secretary-Treasurer (Halton Catholic District School Board) David Visser - Director (Durham Catholic District School Board) Terry Miller - Director (Dufferin-Peel Catholic District School Board) Paul McMahon - Director (Toronto Catholic District School Board) MINISTRY OF FINANCE MINISTRY OF EDUCATION CIBC WORLD MARKETS DAVIES WARD PHILLIPS & VINEBERG UNDERWRITING SYNDICATE: CIBC World Markets - Lead RBC-Dominion Securities National Bank Scotia Capital Markets BMO Nesbitt Burns Laurentian Bank TD Securities McMILLAN BINCH

10. OSBFC Board of Directors • GOVERNING BODY • CONTRACTING ORGANIZATION – Dealers, Lawyers, Trustee, Fund Manager, Executive Director • APPROVES FINANCING TERMS, STRUCTURE, PROJECTS • AUTHOURIZES THE EXECUTIVE (any 2) TO “PULL THE PIN” • REPRESENTS INTERESTS OF ALL PARTICIPANTS

11. OSBFC Executive DO THE DEAL AS APPROVED BY EACH TEAM • FACILITATE/APPROVE THE PARTICIPANTS ACCESS • DRIVE TO CONSENSUS TO MEET ALL NEEDS • MARKET OSBFC • LIASE WITH BOARDS, MINISTRY OF EDUCATION, OFA, SYNDICATE, LAWYERS • NEGOTIATE CONTRACTS • ASSESS PERFORMANCE OF DEALS, PARTICIPANTS & PARTNERS • RESPOND TO INVESTOR QUERIES • STRATEGIZE & RUN THE DAY TO DAY!

12. OSBFC Participants Team • HAVE MET CREDIT QUALITY • ESTABLISH VOLUME • SET TERM(S), STRUCTURE,TIMING • AUTHOURIZE OSBFC EXECUTIVE TO COMPLETE TRANSACTION WITHIN PARAMETERS • TELL OUR STORY!! • REALIZE SIGNIFICANT BENEFITS AND RISK SHARING

13. OTHER OSBFC PROGRAMS • POOLED MONEY MARKET INVESTMENTS • POOLED SINKING FUND & INVESTMENT FUND MANAGEMENT • INTER-BOARD BORROWING & INVESTING • EXPLORING A LEASING PROGRAM

14. Our Story - Our Team • The originating school boards had a number of key objectives to meet when assessing financing alternatives: • Cost • To minimize all-in funding costs for participating boards • To minimize cross subsidies between participating boards • Minimization of Risk • To ensure that participating boards are responsible only for their own debt • To ensure that debt servicing requirements are consistent with grant payments from the Province • To minimize refinancing risk

15. Our Story - Our Team • Flexibility • To avoid restrictive covenants • To minimize constraints on raising additional debt to meet future capital requirements • To maintain flexibility to add new boards • To enable participating boards to access the market as quickly as possible and with relative ease of execution • Legal and Regulatory • To ensure consistency with the current legal and regulatory framework • To ensure a default by one participant has no effect on the other participants

16. III. The OSBFC Story • Summary of OSBFC Issue Participation by School Board • 25 school boards (17 Catholic, 8 Public) have participated in OSBFC pools

17. Alternate Financing Approaches • Comparison of various long-term financing approaches

18. Alternate Financing Approaches • Comparison of financing approaches

19. Alternate Financing Approaches • One consideration for school boards is whether to develop a “pooled approach” or a “go it alone” approach • Over the past year, school boards in Ontario have demonstrated the viability of both approaches: • 25 school boards have raised debt through a pooled approach • 3 school boards have raised debt through individual debt issues • Many have “gone alone” to banks etc. • The choice of a pooled financing approach vs. individual financings will be influenced by: • Financing objectives • Size of financings • Relative cost • Risk minimization • Financing flexibility • Work effort required

20. Benefits of OSBFC • Multiple Member Benefits of Pooled Financing • Most competitive terms and conditions • Costs distributed over many participating members • Process Benefits of Pooled Financing • Efficient Process • Centralized negotiations • Centralized documentation • Limited time and resources committed by individual participating members • Individual participating member credit ratings not necessary • Only OSBFC, the special purpose funding corporation, is rated • Established framework for subsequent issues • Orderly, well understood risk profile • Ease of subsequent debt issues • Reduced costs of subsequent issues

21. Benefits of OSBFC • Size Benefits of Pooled Financing • Ability to negotiate attractive issuance costs • Legal fees • Marketing costs • Underwriting commissions • Increased liquidity • Wider investor base • Individual investors able to purchase larger amounts • Lower spreads • Regular issuance • Borrow only for current capital requirements • Borrow in small or large amounts on attractive terms • Participate only in subsequent issues if new capital is required • Intermediary Cost Benefits of Pooled Financing • No fees payable to municipalities for issuing debt on behalf of participating member

22. Benefits of OSBFC • A pooled financing results in a number of important benefits, including: • Provides participants with modest financing requirements an opportunity to efficiently access the capital markets • Provides participants with economies of scale by spreading issue costs among multiple parties • Creates a special purpose vehicle that can be used by different groups of participants at different times to access the capital markets • Pooled issues are generally more attractive to investors as the larger issue size results in better market liquidity and therefore tighter spreads • Enables investors to diversify their exposure to a particular market segment amongst multiple issuers, while only investing in a single instrument • In general, the pooled financing concept works best for groups of participants that have the following characteristics • Each participant’s borrowing requirements cannot be optimally achieved independently • Each participant has similar strong credit quality • Consensus among participants on financing structure

23. Benefits of OSBFC • Benefits for Investors • The OSBFC debt issues have many attractive features for investors: • Strong credit ratings • Strong provincial support of educational funding and OSBFC financing structure • Large issue size provides good liquidity • Pooled structure enables investors to diversify risk among participating school boards • Amortizing structure or sinking fund reduces refinancing risk • OSBFC debt issues are the benchmarks for school board financings

24. Syndicate • In order to create a liquid market for the OSBFC bonds, a syndicate of investment dealers is required • On a go forward basis, it’s expected that the syndicate will be adjusted based on those dealers that can add the most value

25. Costs • Objective of pooled financing is achieve the lowest rate of interest for school board debenture and to minimize all-in funding costs for participating school boards • The most significant expenses are: • Commission fees • Legal fees • Rating agency costs • Printing costs • Commission fees are calculated as a percentage of the total debenture issue • Legal fees are shared equally and were 50% lower in the second issue (savings will depend on the number of boards participating) • Rating agency fees are shared equally and totaled approximately $90,000 on the first issue and zero for the second issue • Printing costs were 50% lower in the second issue and were shared equally • All-in funding costs for OSBFC Issue #1 amounted to approximately 1.04% • Time commitments for each board to structure and bring an issue to market have not been included; however, pooling structure should reduce aggregate time commitment

26. Contacts

27. Questions and Answers