VIRGINIA COLLEGE BUILDING AUTHORITY

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1 NEW ISSUE BOOK ENTRY ONLY Rating: S&P: A (See RATING herein) Assuming compliance with certain covenants and subject to the qualifications described under TAX MATTERS herein, in the opinion of Bond Counsel, under current law, interest on the Series 2018 Bonds (a) will not be included in gross income of owners thereof for federal income tax purposes and (b) will not be treated as a specific item of tax preference in computing the federal alternative minimum income tax. Such interest is, however, taken into account in determining adjusted current earnings for purposes of computing the alternative minimum tax imposed on corporations for taxable years that began prior to January 1, Recipients of such interest may also be subject to other federal income tax consequences as described under TAX MATTERS herein. In the opinion of Bond Counsel, under existing laws of the Commonwealth of Virginia, interest on the Series 2018 Bonds is not subject to Virginia income taxation. Dated: Date of Issuance VIRGINIA COLLEGE BUILDING AUTHORITY $26,505,000 Educational Facilities Revenue Bonds (Randolph-Macon College), Series 2018 Due: January 15, as shown on inside cover The Series 2018 Bonds will be limited obligations of the Virginia College Building Authority (the Issuer ), will be issued under and secured by the provisions of a Trust Indenture dated as of July 1, 2018 (the Indenture ), between the Issuer and Wilmington Trust, National Association, as trustee (the Trustee ), and will be payable solely from and secured by pledge of the amounts payable under the Loan Agreement (as defined below) and a promissory note (the Series 2018 Note ) of Randolph-Macon College (the Borrower ), a Virginia nonstock corporation that is exempt from federal income taxation pursuant to Section 501(c)(3) of the Code. The Issuer will lend the proceeds of the sale of the Series 2018 Bonds to the Borrower pursuant to a Loan Agreement dated as of July 1, 2018 (the Loan Agreement ), between the Issuer and the Borrower. The proceeds of the Series 2018 Bonds will be used by the Borrower in (a) refunding the Economic Development Authority of the Town of Ashland, Virginia (i) Educational Facilities Revenue Note (Randolph-Macon College Project), Series 2012, (ii) Educational Facilities Revenue Refunding Note (Randolph-Macon College Project), Series 2013, and (iii) Educational Facilities Revenue Refunding Note (Randolph-Macon College Project), Series 2017, each of which financed or refinanced college facilities and capital improvements owned by the Borrower and located on its campus, (b) refinancing a commercial loan evidenced by the Borrower s Promissory Note dated June 24, 2014, which financed certain student housing facilities owned by the Borrower and located on its campus, and (c) financing costs of issuance. The Borrower expects to use sources of funds other than bond proceeds to pay the net costs of terminating certain related interest rate swaps. The Series 2018 Bonds are limited obligations of the Issuer payable solely from the Trust Estate created in the granting clauses of the Indenture, including the Loan Agreement and the Series 2018 Note and all payments received pursuant thereto, and the Funds, Accounts and moneys provided under the Indenture and under the Loan Agreement (except for Unassigned Rights), which Trust Estate is pledged and assigned to the Trustee to secure payment of the Series 2018 Bonds in the manner and to the extent described herein and in the Loan Agreement. THE SERIES 2018 BONDS DO NOT CONSTITUTE A DEBT, LIABILITY OR PLEDGE OF THE FAITH AND CREDIT OF THE COMMONWEALTH OF VIRGINIA OR ANY POLITICAL SUBDIVISION THEREOF. THE SERIES 2018 BONDS ARE PAYABLE SOLELY FROM THE FUNDS PROVIDED BY REVENUES DERIVED BY THE BORROWER. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE COMMONWEALTH OF VIRGINIA OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF OR THE INTEREST ON THE SERIES 2018 BONDS. THE ISSUANCE OF THE SERIES 2018 BONDS DOES NOT DIRECTLY, INDIRECTLY OR CONTINGENTLY OBLIGATE THE COMMONWEALTH OF VIRGINIA OR ANY POLITICAL SUBDIVISION THEREOF TO LEVY OR PLEDGE ANY FORM OF TAXATION FOR THE BONDS OR MAKE ANY APPROPRIATION FOR THEIR PAYMENT. The Series 2018 Bonds will be issued as fully registered Series 2018 Bonds in denominations of $5,000 or any integral multiple thereof. Interest on the Series 2018 Bonds is payable semi-annually on January 15 and July 15, beginning on January 15, The Series 2018 Bonds mature at the times and in the amounts shown on the inside cover hereof. The Series 2018 Bonds are issuable only as fully registered bonds and, when issued, will be registered in the name of Cede & Co., as registered owner and as nominee for The Depository Trust Company, New York, New York ( DTC ), which will act as securities depository for the Series 2018 Bonds. Purchases of Series 2018 Bonds may be made only in book-entry form through DTC Direct and Indirect Participants, and no physical delivery of the Series 2018 Bonds will be made to their Beneficial Owners (as defined herein), except as herein described. So long as Cede & Co. is the registered owner of the Series 2018 Bonds, references herein to the registered owners of the Series 2018 Bonds mean Cede & Co. and not their Beneficial Owners. Interest on the Series 2018 Bonds, together with principal thereof and any premium thereon, will be paid by the Trustee to Cede & Co. so long as Cede & Co. is their registered owner. DTC is responsible for the disbursement of those payments to DTC Participants, and DTC Participants are responsible for the disbursement of those payments to Beneficial Owners. See BOOK-ENTRY ONLY SYSTEM herein. The Series 2018 Bonds are offered when, as and if issued by the Issuer and received by the Underwriters, subject to the approval of Butler Snow LLP, Richmond, Virginia, Bond Counsel. Certain legal matters will also be passed upon for the Issuer by Kutak Rock LLP, Richmond, Virginia, for the Borrower by Butler Snow LLP, Richmond, Virginia, and for the Underwriters by McGuireWoods LLP, Richmond, Virginia. It is expected that the Series 2018 Bonds will be available for delivery through the facilities of DTC on or about July 11, BofA Merrill Lynch Davenport & Company LLC Dated: June 21, 2018

2 $26,505,000 EDUCATIONAL FACILITIES REVENUE BONDS (RANDOLPH-MACON COLLEGE), SERIES 2018 MATURITIES, INTEREST RATES, YIELDS, PRICES AND CUSIPS $23,280,000 Serial Bonds Due (January 15) Principal Amount Interest Rate Yield Price CUSIP 2019 $ 1,245, % 1.480% % 92778FAA , FAB , FAC ,030, FAD ,265, FAE ,375, FAF ,425, FAG ,505, FAH ,595, FAJ ,650, FAK , * * 92778FAL ,015, * * 92778FAM ,060, FAN ,105, FAP ,140, * * 92778FAQ ,195, FAR ,245, * * 92778FAS ,300, * * 92778FAT , FAU , FAV5 $1,890, % Term Bonds due January 15, 2041, Yield 3.770%*, Price %* - CUSIP 92778FAW3 $1,335, % Term Bonds due January 15, 2043, Yield 3.790%*, Price %* - CUSIP 92778FAX1 *Priced to the first optional redemption date of January 15, CUSIP is a registered trademark of the American Bankers Association. CUSIP numbers have been assigned by an independent company not affiliated with the Issuer, the Corporation, or the Underwriter and are included solely for the convenience of the holders of the Series 2018 Bonds. None of the Issuer, the Corporation, or the Underwriter is responsible for the selection or uses of these CUSIP numbers, and no representation is made as to their correctness on the Series 2018 Bonds or as indicated above. The CUSIP number for a specific maturity is subject to being changed after the issuance of the Series 2018 Bonds as a result of various subsequent actions including, but not limited to, a refunding in whole or in part of the Series 2018 Bonds.

3 REGARDING THIS OFFICIAL STATEMENT This Official Statement does not constitute an offering of any security other than the original offering of the Series 2018 Bonds identified on the cover. No person has been authorized by the Virginia College Building Authority (the Issuer ), or Randolph-Macon College (the Borrower ), or Merrill Lynch, Pierce, Fenner & Smith, Incorporated, as representative of a group of underwriters including itself and Davenport & Company LLC (collectively, the Underwriters ) to give any information or to make any representation with respect to the Series 2018 Bonds other than as contained in this Official Statement. Any other information or representation should not be relied upon as having been given or authorized by the Issuer, the Borrower, or the Underwriters. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, and there shall not be any sale of the Series 2018 Bonds, by any person in any jurisdiction in which it is unlawful to make such offer, solicitation or sale. This Official Statement has been approved, and its use and distribution for the purposes of offering and selling the Series 2018 Bonds have been authorized, by the Borrower and the Issuer. The information set forth herein has been obtained from the Issuer, the Borrower, The Depository Trust Company ( DTC ) and other sources that are believed to be reliable. Except for the information set forth herein under THE ISSUER and LITIGATION (but only as it relates to the Issuer), the Issuer has not confirmed, and does not assume any responsibility for, the accuracy, sufficiency, completeness or fairness of any statements in this Official Statement. The Underwriters have reviewed the information in this Official Statement in accordance with, and as part of, their responsibilities to investors under federal securities laws as applied to the facts and circumstances of the transaction, but the Underwriters do not guarantee the accuracy or completeness of such information. The information and expressions of opinion in this Official Statement are subject to change without notice. Neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, give rise to any implication that there has been no change since the date of this Official Statement in the affairs of the Issuer, the Borrower, or DTC. The Trustee has neither reviewed nor participated in the preparation of this Official Statement. NEITHER THE SERIES 2018 BONDS NOR ANY OTHER SECURITY RELATING TO THE SERIES 2018 BONDS HAS BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND NO TRUST INDENTURE HAS BEEN QUALIFIED UNDER THE TRUST INDENTURE ACT OF 1939, AS AMENDED, IN RELIANCE UPON EXEMPTIONS CONTAINED IN THOSE ACTS. THOSE EXEMPTIONS FROM REGISTRATION AND FROM QUALIFICATION UNDER APPLICABLE PROVISIONS OF FEDERAL OR STATE SECURITIES LAWS SHOULD NOT BE REGARDED AS A RECOMMENDATION THEREOF. NO STATE OR ANY AGENCY THEREOF HAS PASSED UPON THE MERITS OF THE SERIES 2018 BONDS OR ANY RELATED SECURITY OR THE ACCURACY OR COMPLETENESS OF THIS OFFICIAL STATEMENT. ANY REPRESENTATION TO THE CONTRARY MAY BE A CRIMINAL OFFENSE. CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS IN THIS OFFICIAL STATEMENT Certain statements included or incorporated by reference in this Official Statement constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as plan, project, anticipate, expect, estimate, budget or other similar words. Such forward-looking statements include, among others, certain of the information in BONDHOLDERS RISKS herein and various portions of APPENDIX A hereto. THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS INVOLVES KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS THAT MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS DESCRIBED TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THE BORROWER DOES NOT PLAN TO ISSUE ANY UPDATES OR REVISIONS TO THOSE FORWARD-LOOKING STATEMENTS IF OR WHEN ITS EXPECTATIONS CHANGE OR EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH SUCH STATEMENTS ARE BASED OCCUR OR FAIL TO OCCUR.

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5 TABLE OF CONTENTS INTRODUCTORY STATEMENT... 1 THE ISSUER... 2 THE BORROWER... 3 PLAN OF FINANCE... 3 ESTIMATED SOURCES AND USES... 3 ESTIMATED ANNUAL DEBT SERVICE REQUIREMENTS... 4 THE SERIES 2018 BONDS... 5 SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2018 BONDS... 7 BOOK-ENTRY ONLY SYSTEM... 8 BONDHOLDERS RISKS LITIGATION APPROVAL OF LEGALITY TAX MATTERS UNDERWRITING FINANCIAL STATEMENTS FINANCIAL ADVISOR RATING CONTINUING DISCLOSURE RELATIONSHIPS OF PARTIES MISCELLANEOUS APPENDIX A - Information Concerning Randolph-Macon College APPENDIX B - Audited Financial Statements of the Borrower for the Fiscal Year Ended June 30, 2017 APPENDIX C - Definitions of Certain Terms and Summaries of the Indenture and the Loan Agreement APPENDIX D - Form of Opinion of Bond Counsel APPENDIX E - Form of Continuing Disclosure Agreement Page -i-

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7 OFFICIAL STATEMENT VIRGINIA COLLEGE BUILDING AUTHORITY $26,505,000 Educational Facilities Revenue Bonds (Randolph-Macon College), Series 2018 INTRODUCTORY STATEMENT The descriptions and summaries of various documents hereinafter set forth do not purport to be comprehensive or definitive, and reference is made to each document for the complete details of all terms and conditions. All statements herein regarding any such documents are qualified in their entirety by reference to such documents. This Introductory Statement is intended only to serve as a brief description of certain information set forth in this Official Statement and is expressly qualified by reference to the Official Statement as a whole, as well as the documents summarized or described herein. All references to this Official Statement include the cover pages and the appendices. Each capitalized word or term used as a defined term in this Official Statement, unless otherwise defined or the context otherwise requires, has the meaning assigned to it in APPENDIX C DEFINITIONS OF CERTAIN TERMS AND SUMMARIES OF THE INDENTURE AND THE LOAN AGREEMENT. For more detailed descriptions of the matters summarized below, see the information set forth in the specific sections of this Official Statement to which cross references are made. Purpose of this Official Statement This Official Statement sets forth information in connection with the primary offering, sale and issuance by the Virginia College Building Authority (the Issuer ) of its $26,505,000 Educational Facilities Revenue Bonds (Randolph-Macon College), Series 2018 (the Series 2018 Bonds ). The Issuer is a public body corporate and a political subdivision, agency and instrumentality of the Commonwealth of Virginia (the Commonwealth ), organized under the Act. See THE ISSUER herein. The Series 2018 Bonds will be issued pursuant to (i) a Trust Indenture dated as of July 1, 2018 (the Indenture ), by and between the Issuer and Wilmington Trust, National Association as trustee (the Trustee ), (ii) a resolution adopted by the Issuer on June 1, 2018, and (iii) Title 23.1, Chapter 12, Article 2 of the Code of Virginia of 1950, as amended (the Act ). Purpose of the Series 2018 Bonds The proceeds of the sale of the Series 2018 Bonds will be loaned by the Issuer to Randolph-Macon College (the Borrower ) pursuant to a Loan Agreement dated as of July 1, 2018 (the Loan Agreement ), between the Issuer and the Borrower. The Borrower is a nonprofit institute of higher education within the Commonwealth and a corporation duly organized and validly existing under the laws thereof. See THE BORROWER herein. The proceeds of the Series 2018 Bonds will be used by the Borrower in (a) refunding the Economic Development Authority of the Town of Ashland, Virginia (i) Educational Facilities Revenue Note (Randolph- Macon College Project), Series 2012 (the Series 2012 Note ), (ii) Educational Facilities Revenue Refunding Note (Randolph-Macon College Project), Series 2013 (the Series 2013 Note ), and (iii) Educational Facilities Revenue Refunding Note (Randolph-Macon College Project), Series 2017 (the Series 2017 Note ), each of which financed or refinanced various college facilities and capital improvements owned by the Borrower and located on its campus, (b) refinancing a commercial loan evidenced by the Borrower s Promissory Note dated June 24, 2014, which financed certain student housing facilities owned by the Borrower and located on its campus (the Series 2014 Taxable Note ), and (c) financing all or a portion of the costs of issuance of the Bonds. In addition, the Borrower expects to use sources of funds other than the Series 2018 Bonds to pay the net costs of terminating certain interest rate swaps that partially hedged the risk of interest rate changes on the Series 2012 Note, the Series 2013 Note, and the Series 2014 Taxable Note.

8 The Series 2012 Note, the Series 2013 Note, the Series 2014 Taxable Note, and the Series 2017 Note (collectively, the Prior Obligations ) each financed or refinanced college facilities and capital improvements owned by the Borrower and located on its campus (collectively, the Facilities ). See PLAN OF FINANCE herein. Security for the Series 2018 Bonds The Series 2018 Bonds are limited obligations of the Issuer payable from loan payments required to be made by the Borrower under the Loan Agreement in amounts and at such times as will be sufficient to pay in full, when due, the principal of and interest and any premium on the Series 2018 Bonds and, thereby, to repay in full the loans made by the Issuer to the Borrower. To evidence and secure those obligations, the Borrower will execute and deliver to the Issuer, for assignment to the Trustee under the Indenture, a promissory note (the Series 2018 Note ) issued pursuant to the Loan Agreement. The Series 2018 Note is a general obligation of the Borrower that is not secured by any revenue pledge or security interest. See SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2018 BONDS herein. Bondholders Risks There are risks associated with the purchase of the Series 2018 Bonds. See BONDHOLDERS RISKS herein for a discussion of certain of these risks. Rating S&P Global Ratings, a division of S&P Global, Inc. ( S&P ), has assigned a long-term rating of A to the Series 2018 Bonds prior to their original delivery date. Any desired explanation of the meaning or significance of this rating should be obtained from S&P. See RATING herein. Underlying Documents The descriptions and summaries of various documents hereinafter set forth do not purport to be comprehensive or definitive, and reference is made to each document for the complete details of all terms and conditions. All statements herein are qualified in their entirety by reference to each such document. Copies of the Indenture and the Loan Agreement are available in reasonable quantities upon request to the Trustee at the designated corporate trust office of the Trustee in Richmond, Virginia. THE ISSUER The Issuer is a public body corporate and a political subdivision, agency and instrumentality of the Commonwealth, created pursuant to the Act. The Act empowers the Issuer to issue its revenue bonds and lend the proceeds thereof to participating institutions, as defined in the Act, for the benefit of the people of the Commonwealth of Virginia, the increase of their commerce, welfare, and prosperity, and the improvement of their health and living conditions. The Act further authorizes the Issuer to pledge the revenues and receipts from the repayment of the loans made with the proceeds of its bonds, or from any other source, to the payment of such bonds. The Issuer has determined that the issuance of the Series 2018 Bonds and the use of their proceeds as described herein will accomplish the purposes of the Issuer as described in the Act. The Series 2018 Bonds will not be general obligations of the Issuer, the Commonwealth or any other public body, but will be limited obligations of the Issuer payable solely from the sources of payment described herein. The governing board of the Issuer authorized the issuance of the Series 2018 Bonds, and the execution and delivery by the Issuer of certain bond documents, by resolution adopted on June 1, The issuance of the Series 2018 Bonds remains subject to the Issuer s receipt from the Governor of the Commonwealth of a written consent approving the Series 2018 Bonds for purposes of Section 147(f) of the Internal Revenue Code of 1986, as amended (the Code ). The Issuer expects to receive such consent prior to July 11,

9 THE BORROWER The Borrower is a Virginia nonstock corporation that is exempt from federal income taxation pursuant to Section 501(c)(3) of the Code and is a nonprofit private institute of higher education within the Commonwealth. The Borrower s campus is located in the Town of Ashland, Virginia, which is approximately 20 miles north of Richmond, Virginia, and approximately 90 miles south of Washington, D.C. The Borrower s total undergraduate enrollment for the academic year was 1,453 students. See APPENDIX A INFORMATION CONCERNING RANDOLPH-MACON COLLEGE STUDENT ENROLLMENT. PLAN OF FINANCE The proceeds of the Series 2018 Bonds will be loaned by the Issuer to the Borrower, as provided in the Loan Agreement. The proceeds of the Series 2018 Bonds will be used by the Borrower to (a) redeem the Prior Obligations by paying the outstanding principal balance of, and accrued interest on, the Prior Obligations on the Closing Date, and (b) pay costs of issuance. In addition, the Borrower expects to use sources of funds other than the Series 2018 Bonds to pay the net costs of terminating certain interest rate swaps that partially hedged the risk of interest rate changes on the Series 2012 Note, the Series 2013 Note, and the Series 2014 Taxable Note. The Borrower expects that the net costs of terminating such swaps will not exceed $300,000 in the aggregate. ESTIMATED SOURCES AND USES below. The proceeds from the sale of the Series 2018 Bonds are currently anticipated to be applied as provided Sources of Funds Par Amount of Bonds $26,505, Net Original Issue Premium 1,442, Total Sources $27,947, Uses of Funds Refunding of Series 2012 Note $ 9,769, Refunding of Series 2013 Note 7,385, Refinancing of Series 2014 Taxable Note 1,179, Refunding of Series 2017 Note 9,273, Costs of Issuance (1) 338, Total Uses $27,947, (1) Including, but not limited to, underwriters discount, professional fees and costs. -3-

10 ESTIMATED ANNUAL DEBT SERVICE REQUIREMENTS The following table sets forth, for each fiscal year ending June 30, the amounts required to be made available for the payment of debt service by the Borrower (rounded to the nearest dollar). See APPENDIX A INFORMATION CONCERNING RANDOLPH-MACON COLLEGE OUTSTANDING INDEBTEDNESS for a description of the obligations of the Borrower for which debt service is shown below under Other Debt Service. Fiscal Year Ending June 30 Series 2018 Bonds Principal Interest Other Debt Service (1) Total Debt Service 2019 $ 1,245,000 $ 551,457 $ 1,137,304 $ 2,933, ,000 1,029,138 1,142,966 3,107, , ,388 1,143,179 3,120, ,030, ,488 1,143,008 3,135, ,265, , ,962 3,148, ,375, , ,400 3,166, ,425, , ,755 3,178, ,505, , ,533 3,194, ,595, , ,798 3,206, ,650, , ,550 3,220, , , ,140 1,917, ,015, , ,497 2,274, ,060, ,888 73,132 1,564, ,105, ,088 73,132 1,577, ,140, ,175-1,503, ,195, ,575-1,512, ,245, ,750-1,520, ,300, ,950-1,525, , , , , , , , , , , , , ,000 78, , ,000 53, , ,000 27, ,200 Total $26,505,000 $11,838,714 $11,646,356 $49,990,070 (1) Other Debt Service does not include debt service on any of the Prior Obligations. See APPENDIX A INFORMATION CONCERNING RANDOLPH-MACON COLLEGE OUTSTANDING INDEBTEDNESS for a debt service table that includes the debt service on the Prior Obligations together with the debt service shown above under Other Debt Service as of December 31,

11 THE SERIES 2018 BONDS The following is a summary of certain provisions of the Series 2018 Bonds. Reference is made to the Series 2018 Bonds for the complete text thereof and to the Indenture for all of the provisions relating to the Series 2018 Bonds. The description herein is qualified by such reference. General The Series 2018 Bonds will be issued as fully registered bonds without coupons in denominations of $5,000 and any integral multiple of $5,000. The Series 2018 Bonds will be dated the date of initial delivery and will mature on the dates and bear interest at the rates shown on the inside cover of this Official Statement. Interest on the Series 2018 Bonds will be payable semiannually on each January 15 and July 15 (each an Interest Payment Date ), commencing on January 15, Interest will be calculated on the basis of a 360-day year comprised of twelve (12) 30-day months. The record date for the payment of interest on the Series 2018 Bonds is the first (1st) day (whether or not a Business Day) of the month preceding each Interest Payment Date. The Series 2018 Bonds will be subject to the redemption provisions set forth below. The Series 2018 Bonds will be transferable and exchangeable as set forth in the Indenture, and when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ( DTC ). DTC will act as securities depository for the Series 2018 Bonds. The Series 2018 Bonds will be registered in the book-entry system maintained by DTC. Payment of the principal of, and interest and redemption premium, if any, on, the Series 2018 Bonds will be made to the Beneficial Owners of the Series 2018 Bonds by DTC as described under BOOK-ENTRY ONLY SYSTEM herein. Redemption of Series 2018 Bonds Optional Redemption. The Series 2018 Bonds maturing on or before January 15, 2028, are not subject to optional redemption prior to maturity. The Series 2018 Bonds maturing on or after January 15, 2029, are subject to redemption prior to maturity from any money that may be made available for such purpose, at the option of the Issuer upon direction of the Borrower, on or after January 15, 2028, in whole or in part, at any time in such manner as the Borrower shall direct, at par plus accrued interest to the redemption date. Mandatory Sinking Fund Redemption. The Series 2018 Bonds maturing on January 15, 2041, are subject to mandatory sinking fund redemption by the Issuer at a redemption price equal to 100% of the principal amount redeemed plus accrued interest to the redemption date without premium, in the principal amounts and on January 15 of the years set forth below: Year Amount 2039 $ 655, , (final maturity) 630,000 The Series 2018 Bonds maturing on January 15, 2043, are subject to mandatory sinking fund redemption by the Issuer at a redemption price equal to 100% of the principal amount redeemed plus accrued interest to the redemption date without premium, in the principal amounts and on January 15 of the years set forth below: Year Amount 2042 $ 655, (final maturity) 680,000 Manner of Redemption. Except as otherwise specifically provided in the Indenture, if less than all of the Series 2018 Bonds shall be called for redemption, the particular Series 2018 Bonds or portions of Series 2018 Bonds to be redeemed shall be selected by the Borrower in such manner as the Trustee and the Borrower shall deem fair; -5-

12 provided, however, that the portion of any Series 2018 Bond to be redeemed shall be in the principal amount of $5,000 or some multiple thereof, and that, in selecting Series 2018 Bonds for redemption, the Trustee shall treat each Series 2018 Bond as representing that number of Series 2018 Bonds which is obtained by dividing the principal amount of such Series 2018 Bond by $5,000. Notice of Redemption. Not less than twenty (20) days, nor more than sixty (60) days, before the redemption date of any Series 2018 Bonds, the Trustee shall cause a notice of any such redemption to be mailed by first-class mail, postage prepaid, to all registered owners of Series 2018 Bonds as of the immediately preceding record date to be redeemed in whole or in part at their addresses as they appear on the registration books of the Trustee (which will be DTC or its nominee so long as the Bonds are issued in book-entry form), but failure so to mail any such notice or any defect therein shall not affect the validity of the proceedings for such redemption with respect to any Bondholders to whom notice was properly mailed. Each such notice shall set forth the date fixed for redemption, the redemption price to be paid, state any conditions to such redemption, state that such notice is conditional, if applicable, state that on the redemption date, and upon the satisfaction of any such conditions, the Series 2018 Bonds shall cease to bear interest, and, if less than all of the Series 2018 Bonds then Outstanding shall be called for redemption, the distinctive numbers, years and letters, if any, of such Series 2018 Bonds to be redeemed and, in the case of Series 2018 Bonds to be redeemed in part only, the portion of the principal amount thereof to be redeemed. In case any Series 2018 Bond is to be redeemed in part only, the notice of redemption which relates to such Series 2018 Bond shall state also that on or after the redemption date, upon surrender of such Series 2018 Bond, a new registered Series 2018 Bond without coupons in principal amount equal to the unredeemed portion of such Series 2018 Bond will be issued. Effect of Calling for Redemption. On the date so designated for redemption, notice having been given in the manner and under the conditions hereinabove described, the Series 2018 Bonds, or portions thereof, so called for redemption shall become and be due and payable at the redemption price provided for redemption of such Series 2018 Bonds or portions thereof on such date and, if moneys for payment of the redemption price shall be held by the Trustee in trust for the owners of the Series 2018 Bonds or portions thereof to be redeemed, and all other conditions to such redemption described in the notice of such redemption have been satisfied, all as provided in the Indenture, interest on the Series 2018 Bonds or portions of Series 2018 Bonds called for redemption shall cease to accrue, such Series 2018 Bonds or portions of Series 2018 Bonds shall cease to be entitled to any benefit or security under the Indenture, and the owners of such Series 2018 Bonds or portions of Series 2018 Bonds shall have no rights in respect thereof except to receive payment of the redemption price thereof, and, to the extent provided in the Indenture, to receive replacement Series 2018 Bonds for any unredeemed portion of such Series 2018 Bonds. Acceleration Upon Default All principal and accrued interest on the Series 2018 Bonds may become immediately due and payable, without premium, upon an Event of Default under the Indenture if the Trustee (1) exercises its option to so declare or (2) is directed to so declare by the Bondholders of not less than 25% in aggregate principal amount of Series 2018 Bonds. See APPENDIX C DEFINITIONS OF CERTAIN TERMS AND SUMMARIES OF THE INDENTURE AND THE LOAN AGREEMENT. Defeasance and Discharge When the interest on, and the principal or redemption premium (if any) of, all Bonds have been paid, or there have been deposited with the Bond Trustee an amount of moneys or Defeasance Obligations the interest on and maturing principal of which, when due and payable, shall provide sufficient amounts to pay the principal of, premium, if any, and interest due and to become due on the Bonds on or prior to the redemption date or maturity date thereof, then all right, title and interest of the Trustee in the Trust Estate shall cease and become discharged and the Bonds shall be no longer deemed outstanding under the Bond Indenture and the Bond Trustee shall cancel the obligations of the Issuer to the holders of the Bonds. See APPENDIX C DEFINITIONS OF CERTAIN TERMS AND SUMMARIES OF THE INDENTURE AND THE LOAN AGREEMENT. -6-

13 SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2018 BONDS The Series 2018 Bonds are the only bonds to be issued pursuant to the Indenture. All of the Series 2018 Bonds shall be limited obligations of the Issuer, payable solely from and secured solely by the Trust Estate established in the Indenture. The Trust Estate includes all property pledged and assigned to the Trustee by the Issuer under the granting clauses of the Indenture for the benefit of the owners of the Series 2018 Bonds. The Trust Estate specifically includes (i) the Series 2018 Note and all payments received pursuant thereto, (ii) the Loan Agreement, and (iii) all Funds, Accounts and moneys to the extent provided under the Indenture and the Loan Agreement as security for the payment of the Series 2018 Bonds and the interest thereon and the redemption premium, if any, thereof, and all other obligations in connection with the Series 2018 Bonds. The sources of payment for the Series 2018 Bonds include all payments made by the Borrower to the Trustee pursuant to the Series 2018 Note and the Loan Agreement, all moneys on deposit with the Trustee in the Funds and Accounts established under the Indenture, and all income derived from the investment of such funds. All payments required to be made to the Issuer under the Series 2018 Note and the Loan Agreement (other than the Unassigned Rights) are to be made to the Trustee as a result of the Issuer s assignment of the Series 2018 Note to the Trustee and of the Issuer s pledge of the Trust Estate as described above. The Series 2018 Note is a general obligation of the Borrower that is not secured by any revenue pledge or security interest. See APPENDIX C DEFINITIONS OF CERTAIN TERMS AND SUMMARIES OF THE INDENTURE AND THE LOAN AGREEMENT SUMMARY OF THE INDENTURE. Loan Agreement Covenants Pursuant to the Loan Agreement, the Issuer will loan the proceeds of the Series 2018 Bonds to the Borrower. While any Series 2018 Bonds are outstanding under the Indenture, and until all rebate payments due with respect to the Series 2018 Bonds, if any, and other amounts due under the Series 2018 Note, Loan Agreement and Indenture have been satisfied, the Borrower will be obligated to make payments in amounts sufficient, together with other available funds held under the Indenture, to provide for the timely payment of the principal of and interest on the Series 2018 Bonds that are outstanding, and to perform certain other obligations set forth therein. Pursuant to the Loan Agreement, the Borrower has agreed to certain affirmative covenants and negative covenants. Such affirmative covenants include, among other things, (i) insurance coverage requirements, (ii) reporting requirements, including annual financial statements, (iii) compliance with laws, (iv) use of the Facilities in accordance with the Act and the Tax Agreement, and (v) maintenance of accreditations. The negative covenants preclude the Borrower from making fundamental changes in its business, accounting method, fiscal year or name except in limited circumstances, and provide that the Borrower shall not perform any act or enter into any agreement that would jeopardize its status as a 501(c)(3) Organization. See APPENDIX C DEFINITIONS OF CERTAIN TERMS AND SUMMARIES OF THE INDENTURE AND THE LOAN AGREEMENT SUMMARY OF THE LOAN AGREEMENT. Limited Obligation of the Issuer The Series 2018 Bonds are limited obligations of the Issuer payable solely from the Trust Estate created in the granting clauses of the Indenture, including the Loan Agreement and the Series 2018 Note and all payments received pursuant thereto, and the Funds, Accounts and moneys provided under the Indenture and under the Loan Agreement (except for Unassigned Rights), which Trust Estate is pledged and assigned to the Trustee to secure payment of the Series 2018 Bonds in the manner and to the extent described herein and in the Loan Agreement. THE SERIES 2018 BONDS DO NOT CONSTITUTE A DEBT, LIABILITY OR PLEDGE OF THE FAITH AND CREDIT OF THE COMMONWEALTH OF VIRGINIA OR ANY POLITICAL SUBDIVISION THEREOF. THE SERIES 2018 BONDS ARE PAYABLE SOLELY FROM THE FUNDS PROVIDED BY -7-

14 REVENUES DERIVED BY THE BORROWER. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE COMMONWEALTH OF VIRGINIA OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF OR THE INTEREST ON THE SERIES 2018 BONDS. THE ISSUANCE OF THE SERIES 2018 BONDS DOES NOT DIRECTLY, INDIRECTLY OR CONTINGENTLY OBLIGATE THE COMMONWEALTH OF VIRGINIA OR ANY POLITICAL SUBDIVISION THEREOF TO LEVY OR PLEDGE ANY FORM OF TAXATION FOR THE BONDS OR MAKE ANY APPROPRIATION FOR THEIR PAYMENT. BOOK-ENTRY ONLY SYSTEM The information in this section concerning DTC and the book-entry system has been obtained from DTC and such information is not guaranteed as to accuracy or completeness by, and is not to be construed as a representation by, the Issuer, the Underwriters, the Trustee, or the Borrower. DTC will act as securities depository for the Series 2018 Bonds (the Securities Depository ). The Series 2018 Bonds will be delivered as fully registered certificates registered in the name of Cede & Co. (DTC s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully registered certificate will be issued for each series and maturity of the Series 2018 Bonds in the aggregate principal amount of the Series 2018 Bonds, and will be deposited with DTC. So long as Cede & Co. is the registered owner of the Series 2018 Bonds, as DTC s partnership nominee, references herein to the owners or registered owners of the Series 2018 Bonds shall mean Cede & Co. and shall not mean the Beneficial Owners of the Series 2018 Bonds. The following description of DTC, of procedures and record keeping of beneficial ownership interests in the Series 2018 Bonds, payment of interest and other payments on the Series 2018 Bonds to DTC Participants (as such term is defined herein) or to Beneficial Owners, confirmation and transfer of beneficial ownership interests in the Series 2018 Bonds and of other transactions by and between DTC, DTC Participants and Beneficial Owners is based on information furnished by DTC. DTC, the world s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a banking organization within the meaning of the New York Banking Law, a member of the Federal Reserve System, a clearing corporation within the meaning of the New York Uniform Commercial Code, and a clearing agency registered pursuant to the provisions of Section 17A of the Securities Exchange Act of DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-u.s. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC s participants ( Direct Participants ) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized bookentry transfers and pledges between Direct Participants accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U. S. and non-u.s. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ( DTCC ). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U. S. and non-u.s. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ( Indirect Participants ). DTC has a Standard & Poor s rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at Purchases of Series 2018 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Series 2018 Bonds on DTC s records. The ownership interest of each actual purchaser of a Series 2018 Bond ( Beneficial Owner ) is in turn to be recorded on the Direct and Indirect Participants records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial -8-

15 Owner entered into the transaction. Transfers of ownership interests in the Series 2018 Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Series 2018 Bonds, except in the event that use of the book-entry system for the Series 2018 Bonds is discontinued. To facilitate subsequent transfers, all Series 2018 Bonds deposited by Direct Participants with DTC are registered in the name of DTC s partnership nominee, Cede & Co. or such other name as may be requested by an authorized representative of DTC. The deposit of Series 2018 Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Series 2018 Bonds; DTC s records reflect only the identity of the Direct Participants to whose accounts such Series 2018 Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of the Series 2018 Bonds may wish to take certain steps to augment transmission to them of notices of significant events with respect to the Series 2018 Bonds, such as redemptions, tenders, defaults, and proposed amendments to documents related to the Series 2018 Bonds. For example, Beneficial Owners of the Series 2018 Bonds may wish to ascertain that the nominee holding the Series 2018 Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of the notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Series 2018 Bonds within an issue are being redeemed, DTC s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Series 2018 Bonds unless authorized by a Direct Participant in accordance with DTC s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Trustee as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co. s consenting or voting rights to those Direct Participants to whose accounts the Series 2018 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Principal and interest payments on the Series 2018 Bonds will be made to Cede & Co. or such other nominee as may be requested by an authorized representative of DTC. DTC s practice is to credit Direct Participants accounts, upon DTC s receipt of funds and corresponding detail information from the Issuer or the Trustee on the payable date in accordance with their respective holdings shown on DTC s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in street name, and will be the responsibility of such Participant and not of DTC, the Trustee, the Issuer, or the Borrower, subject to any statutory or regulatory requirements as may be in effect from time to time. Payments of principal and interest to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) are the responsibility of the Trustee, disbursement of such payments to Direct Participants is the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its service as securities depository with respect to the Series 2018 Bonds at any time by giving reasonable notice to the Trustee and the Issuer and discharging its responsibilities with respect thereto under applicable law. Under such circumstances, or in the event the Issuer desires to use a similar bookentry system with another securities depository, there may be a successor securities depository (all references to DTC include any such successor). The Issuer may also decide to discontinue participation in the system of bookentry transfer through DTC (or a successor securities depository) at any time by giving reasonable notice to DTC. If the book-entry system is discontinued and there is no successor securities depository, bond certificates are required to be printed and delivered to the Beneficial Owners. The Beneficial Owners of the Series 2018 Bonds, upon -9-

16 registration of certificates held in the Beneficial Owners names, will become the registered owners of the Series 2018 Bonds. The Issuer, the Trustee, the Borrower, and the Underwriters cannot and do not give any assurances that Direct Participants or Indirect Participants will distribute to the Beneficial Owners of the Series 2018 Bonds (i) payments of principal of or interest or any premium on the Series 2018 Bonds, (ii) confirmation of their ownership interests in the Series 2018 Bonds, or (iii) redemption or other notices sent to DTC or Cede & Co., its nominee, as the registered owner of the Series 2018 Bonds, or that they will do so on a timely basis or that DTC, the Direct Participants or the Indirect Participants will serve and act in the manner described in this Official Statement. The information in this section concerning DTC and DTC s book-entry system has been obtained from sources that the Issuer, the Borrower and the Underwriters believe to be reliable, but neither the Issuer, the Borrower, nor the Underwriters take any responsibility for the accuracy thereof. NEITHER THE ISSUER, THE BORROWER, THE TRUSTEE, NOR THE UNDERWRITERS WILL HAVE ANY RESPONSIBILITY OR OBLIGATION TO THE DIRECT PARTICIPANTS, THE INDIRECT PARTICIPANTS OR THE BENEFICIAL OWNERS WITH RESPECT TO (1) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC, ANY DIRECT PARTICIPANT OR ANY INDIRECT PARTICIPANT; (2) THE PAYMENT BY DTC OR ANY DIRECT PARTICIPANT OR ANY INDIRECT PARTICIPANT OF ANY AMOUNT DUE TO ANY BENEFICIAL OWNER IN RESPECT OF THE PRINCIPAL AMOUNT OR REDEMPTION PRICE OF OR INTEREST ON THE SERIES 2018 BONDS; (3) THE DELIVERY BY ANY DIRECT PARTICIPANT OR ANY INDIRECT PARTICIPANT OF ANY NOTICE TO ANY BENEFICIAL OWNER THAT IS REQUIRED OR PERMITTED TO BE GIVEN TO HOLDERS UNDER THE TERMS OF THE INDENTURE; (4) THE SELECTION OF THE BENEFICIAL OWNERS TO RECEIVE PAYMENT IN THE EVENT OF ANY PARTIAL REDEMPTION OF THE SERIES 2018 BONDS; OR (5) ANY CONSENT GIVEN OR OTHER ACTION TAKEN BY DTC AS HOLDER. BONDHOLDERS RISKS PURCHASE OF THE SERIES 2018 BONDS INVOLVES CERTAIN RISKS. No person should purchase any of the Series 2018 Bonds without carefully reviewing the following information, which summarizes some, but not all, of the factors that should be carefully considered prior to such a purchase. Each prospective investor should carefully examine this Official Statement and his or her own financial condition in order to make a judgment as to whether the Series 2018 Bonds are an appropriate investment. Identified and summarized below are a number of Bondholders Risks that could adversely affect the operation of the Borrower and/or the Series 2018 Bonds and that should be considered by prospective purchasers. The following discussion is not intended to be exhaustive, but includes certain major factors that should be considered along with other factors set forth elsewhere in this Official Statement, including the Appendices hereto. Limited Assets of the Borrower The ability of the Issuer to make timely payments of principal and interest on the Series 2018 Bonds depends solely on the ability of the Borrower to make timely payments of principal and interest on the Series 2018 Note and on its other Indebtedness. See ESTIMATED ANNUAL DEBT SERVICE REQUIREMENTS above. The Borrower expects that revenues derived from its ongoing operations, when taken together with other funds available to the Borrower for such purposes, will at all times be sufficient to make payments on the Series 2018 Note and such other Indebtedness, and the Borrower has covenanted under the Loan Agreement to make all such payments as and when the same become due. However, a number of factors, including those set forth below, may adversely affect the Borrower s ability to make timely payments on the Series 2018 Note and its other Indebtedness. In general, the Borrower s assets and revenues available to make such payments are limited by the success of the Borrower s operations and by factors outside the Borrower s control. -10-

17 Factors Impacting Higher Education and Enrollment No representation or assurance can be given to the effect that the Borrower will generate sufficient revenues to meet its debt service obligations. There are a number of factors affecting institutions of higher education in general that could have an adverse effect on the Borrower s ability to make such payments. These factors include, but are not limited to, the continuing rising costs of providing higher education services; increasing costs of compliance with federal or state laws or regulations, including, without limitation, laws or regulations concerning healthcare insurance, environmental quality, work safety, and accommodations for people with disabilities; legislation or regulations which may affect the amount and timing of student aid and other educational program funding; economic conditions in the areas from which the Borrower traditionally draws students; increased competition from other educational institutions; competition from online learning platforms and other media in which Borrower has not chosen to introduce significant innovations; difficulties with recruiting and retaining faculty members or with maintaining a competitive level of faculty compensation; the significant challenges and costs of student retention from freshman year through graduation; changes in the demand for higher educational services generally, including shifting perspectives on the value of a liberal arts education in the employment marketplace; demographic changes; and unanticipated litigation or negative publicity. See APPENDIX A INFORMATION CONCERNING RANDOLPH-MACON COLLEGE STUDENT ENROLLMENT. Revenues from Tuition and Fees The Borrower derives a substantial portion of its total operating revenues from tuition, fees and other charges to its students. Although the Borrower has been able to generate student demand for its academic programs at current tuition and fee levels, there is no assurance that it will be able to continue to do so in the future or to sustain student demand at increasing tuition and fee levels. Tuition and fees at the Borrower, as at other private colleges and universities, are generally higher than at state-supported colleges and universities. To compete with state-supported institutions, the Borrower supports payers through scholarship programs, grants and other discounts from the full price of tuition and fees. Demand for attendance at the Borrower may be subject to fee-related factors beyond its control, including, but not limited to, general economic and demographic conditions, funding levels at state-supported and competing private colleges and universities and the levels of public and private funding of financial aid programs. In addition, revenues from tuition and fees may be negatively impacted by any significant increases in the average discount rate of tuition and fees received from students, as well as by variability in enrollment numbers and retention. Revenues from tuition and fees net of financial aid constituted approximately 47.4% of the Borrower s operating revenues for the fiscal year ended June 30, See BONDHOLDER S RISKS Factors Impacting Higher Education and Enrollment and BONDHOLDER S RISKS Availability to Students of Financial Assistance for additional information on enrollment and federal funding of financial aid programs. Student Housing Revenues The Borrower has a policy to require students to live on campus absent a waiver. Such policy is intended to maintain the residential character of the Borrower s campus but is also important for maintaining a portion of the Borrower s cash flow. To the extent that the Borrower is unable to control or limit the amount of waivers, or if other factors cause student departures from campus housing contrary to policy, the Borrower could face material financial difficulties. See APPENDIX A INFORMATION CONCERNING RANDOLPH-MACON COLLEGE MANAGEMENT DISCUSSION for a more detailed description of student housing revenues and retention. Availability to Students of Financial Assistance Many of the Borrower s undergraduate students received some amount of financial assistance in the form of scholarships, grants, loans or employment in academic year Financial assistance is a significant factor in the decision of many students to attend a particular college or university. The level of financial assistance is directly affected by funding levels of federal and state financial aid programs, the level of private giving to the Borrower and the amount of income derived from the investment of endowment and similar funds. Any reduction in the level of scholarship, grant or loan assistance offered to prospective students could reduce the number of qualifying applicants and have a significant negative impact on both enrollment and student retention. See -11-

18 APPENDIX A INFORMATION CONCERNING RANDOLPH-MACON COLLEGE FINANCIAL ASSISTANCE for a more detailed description of financial assistance programs available to the Borrower s students. Variability of Investment Income Investment income earned on the Borrower s endowment and similar funds is a significant revenue source for the Borrower. Although the Borrower believes that those investments are being managed prudently and has adopted policies designed to ensure the prudent management of those investments in the future, there is no assurance that unforeseen developments in the securities markets will not adversely affect the market value of those investments and the income generated therefrom. Investment income constituted approximately 14.7% of the Borrower s operating revenues for the fiscal year ended June 30, Fund Raising Factors The Borrower has historically demonstrated an ability to raise funds from a variety of benefactors for its operations, capital development programs and endowment. The ability to raise funds in the future may be affected adversely by a number of factors outside the Borrower s control, including demographic changes, changes in general economic conditions and tax law changes affecting the deductibility of charitable contributions. Revenues from fundraising constituted approximately 8.5% of the Borrower s operating revenues for the fiscal year ended June 30, Additional Debt The Loan Agreement imposes no restrictions on the ability of the Borrower to incur additional debt. The possible incurrence by the Borrower of additional debt, secured or unsecured, in the future may have an adverse effect on: (a) the ability of the Borrower to make payments required under the Borrower s Series 2018 Note and its other Indebtedness, and (b) the market price of the Series 2018 Bonds. Unsecured Obligations Payment of the Series 2018 Note, and therefore the Series 2018 Bonds, is not secured by any mortgage or pledge of any of the Borrower s assets and is thus dependent upon the Borrower s revenues, fund raising and earnings on investments. The Loan Agreement imposes no restrictions on the ability of the Borrower to pledge any of its property or revenues, or create liens or encumbrances thereon, as security for further debt. Bankruptcy Any attempt by the Trustee to enforce payment of the Series 2018 Note or other rights provided in the Loan Agreement may be limited by bankruptcy proceedings and usual equity principles, which may restrict the ability of the Trustee to seek payment from property of the Borrower. Because the Series 2018 Bonds and the Series 2018 Note are not secured by any lien or security interest, the Trustee would be an unsecured creditor with no special claim in a bankruptcy proceeding to revenues or particular assets of the Borrower. Bankruptcy proceedings by the Borrower could have adverse effects on holders of the Series 2018 Bonds, including (a) delay in the enforcement of their remedies, (b) subordination of their claims to claims of those supplying goods and services to the Borrower after the initiation of bankruptcy proceedings and to the administrative expenses of bankruptcy proceedings, and (c) imposition without their consent of a plan of reorganization reducing or delaying payment of the Series 2018 Bonds. The United States Bankruptcy Code contains provisions intended to ensure that, in any plan of reorganization not accepted by at least a majority of any class of creditors such as the holders of the Series 2018 Bonds, such class of creditors will have the benefit of their original claim or the indubitable equivalent thereof; however, such plan may not provide for payment in full of the Series 2018 Bonds. The effect of these and other provisions of the United States Bankruptcy Code cannot be predicted and may be affected significantly by judicial interpretation. -12-

19 Enforceability of Remedies The remedies available to the Trustee or the owners of the Series 2018 Bonds upon an Event of Default under the Indenture or the Loan Agreement are in many respects dependent upon judicial actions which are often subject to discretion and delay. The enforceability of remedies or rights with respect to the Series 2018 Bonds may be limited by state and federal laws, rulings and decisions affecting remedies and by bankruptcy, insolvency or other laws affecting creditors rights or remedies heretofore or hereafter enacted. Under existing constitutional and statutory law and judicial decisions, including specifically Title 11 of the United States Code (federal bankruptcy code), certain remedies specified by the Indenture or the Loan Agreement may not be readily available or may be limited. The various legal opinions to be delivered concurrently with the delivery of the Series 2018 Bonds, the Indenture and the Loan Agreement will be qualified as to the enforceability of the various legal instruments by limitations imposed by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally. Limited Obligations The Series 2018 Bonds are limited obligations of the Issuer payable solely from the Trust Estate created in the granting clauses of the Indenture, including the Loan Agreement and the Series 2018 Note and all payments received pursuant thereto, and the Funds, Accounts and moneys provided under the Indenture and under the Loan Agreement (except for Unassigned Rights), which Trust Estate is pledged and assigned to the Trustee to secure payment of the Series 2018 Bonds in the manner and to the extent described herein and in the Loan Agreement. THE SERIES 2018 BONDS DO NOT CONSTITUTE A DEBT, LIABILITY OR PLEDGE OF THE FAITH AND CREDIT OF THE COMMONWEALTH OF VIRGINIA OR ANY POLITICAL SUBDIVISION THEREOF. THE SERIES 2018 BONDS ARE PAYABLE SOLELY FROM THE FUNDS PROVIDED BY REVENUES DERIVED BY THE BORROWER. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE COMMONWEALTH OF VIRGINIA OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF OR THE INTEREST ON THE SERIES 2018 BONDS. THE ISSUANCE OF THE SERIES 2018 BONDS DOES NOT DIRECTLY, INDIRECTLY OR CONTINGENTLY OBLIGATE THE COMMONWEALTH OF VIRGINIA OR ANY POLITICAL SUBDIVISION THEREOF TO LEVY OR PLEDGE ANY FORM OF TAXATION FOR THE BONDS OR MAKE ANY APPROPRIATION FOR THEIR PAYMENT. Tax-Related Factors Change in Law Future legislation, if enacted into law, or clarification of the Code, or court decisions, may cause interest on the Series 2018 Bonds to be subject, directly or indirectly, to federal income taxation or to be subject to state income taxation, or otherwise prevent beneficial owners from realizing the full current benefit of the tax status of such interest. Purchasers should consult their own tax advisers regarding any pending or proposed federal or state tax legislation, regulations or litigation, as to which Bond Counsel expresses no opinion. Dependence Upon Tax-Exempt Status By virtue of a letter from the Internal Revenue Service, the Borrower has been determined to be an exempt organization as described in Section 501(c)(3) of the Code, and is not classified as a private foundation. To maintain the Borrower s tax-exempt status and to avoid treatment as a private foundation, the Borrower is subject to a number of requirements affecting its operations. The Internal Revenue Service has increased its auditing and scrutiny of 501(c)(3) organizations in general and their use of tax-exempt financing in particular. A possible modification or repeal of certain existing federal income tax laws, a change in Service policies, a change of the method of operations, purposes or character of the Borrower, or other factors could result in a loss by the Borrower of its status of an exempt organization under Section 501(c)(3) of the Code. -13-

20 The tax-exempt status of nonprofit corporations and the exclusion of income earned by them from taxation has been the subject of review by various federal, state and local legislative, regulatory and judicial bodies. This review has included proposals to broaden and strengthen existing federal tax law with respect to the taxation of unrelated business income of nonprofit corporations such as the Borrower. Risk of Audit The Internal Revenue Service has an ongoing program to audit tax-exempt obligations to determine whether interest on such obligations should be included in gross income for federal income tax purposes. Bond Counsel cannot predict whether the Internal Revenue Service will commence an audit of the Series 2018 Bonds. Owners of the Series 2018 Bonds are advised that, if the Internal Revenue Service does audit the Series 2018 Bonds, under current Internal Revenue Service procedures, at least during the early stages of an audit, the Internal Revenue Service will treat the Issuer as the taxpayer, and the owners of the Series 2018 Bonds may have limited rights to participate in the audit. Public awareness of any audit could adversely affect the market value and liquidity of the Series 2018 Bonds during the pendency of the audit, regardless of the ultimate outcome thereof. The Issuer is not responsible for paying or reimbursing the Borrower or any owner or beneficial owner of the Series 2018 Bonds for any audit or litigation costs relating to the Series 2018 Bonds. Secondary Markets and Prices The Underwriters will not be obligated to repurchase any of the Series 2018 Bonds, and no representation is made concerning the existence of any secondary market. There can be no assurance that any secondary market will develop following the completion of the offering of the Series 2018 Bonds. Further, there can be no assurance that the initial offering prices for the Series 2018 Bonds will continue for any period of time. The Series 2018 Bonds are not readily liquid, and no person should invest in the Series 2018 Bonds with funds such person may need to convert readily into cash. Bondholders should be prepared to hold their Bonds to the stated maturity date. Failure To Provide Ongoing Disclosure The Borrower will enter into the Continuing Disclosure Agreement pursuant to the Rule (as such terms are defined herein). Failure to comply with the Continuing Disclosure Agreement and the Rule may adversely affect the transferability and liquidity of the Series 2018 Bonds and their market price. See CONTINUING DISCLOSURE herein and APPENDIX E FORM OF CONTINUING DISCLOSURE AGREEMENT. The Trustee is not required to enforce any provisions of the Continuing Disclosure Agreement and the Borrower s failure to comply with the Continuing Disclosure Agreement will not, by its terms, cause any default under the Loan Agreement, the Series 2018 Note, the Indenture or the Series 2018 Bonds. Limited Legal Opinions The various legal opinions to be delivered concurrently with the delivery of the Series 2018 Bonds express the professional judgment of the attorneys rendering the opinions on the legal issues explicitly addressed therein. By rendering a legal opinion, the opinion giver does not become an insurer or guarantor of that expression of professional judgment, of the transaction opined upon, or of the future performance of the parties to that transaction. Nor does the rendering of an opinion guarantee the outcome of any legal dispute that may arise out of the transaction. LITIGATION There is no controversy or litigation of any nature now pending or threatened restraining or enjoining the issuance, sale, execution or delivery of the Series 2018 Bonds, or in any way contesting or affecting the validity of the Series 2018 Bonds or any proceedings of the Issuer taken with respect to the issuance or sale thereof, or the pledge or application of any money or security provided for the payment of the Series 2018 Bonds or the existence or powers of the Issuer. -14-

21 There is no controversy or litigation of any nature now pending or threatened against the Borrower that, in the judgment of the Borrower, would materially adversely affect the operations or financial condition of the Borrower or the ability of the Borrower to perform its obligations under the Loan Agreement or to accomplish the transactions contemplated by this Official Statement. APPROVAL OF LEGALITY The validity of the Series 2018 Bonds will be passed upon by Butler Snow LLP, Richmond, Virginia, Bond Counsel, and the Underwriters obligation to purchase the Series 2018 Bonds is subject to, among other things, the issuance of Bond Counsel s approving opinion, which will be substantially in the form set forth in APPENDIX D to this Official Statement. Certain legal matters will also be passed upon for the Underwriters by McGuireWoods LLP, Richmond, Virginia, for the Borrower by Butler Snow LLP, Richmond, Virginia, and for the Issuer by Kutak Rock LLP, Richmond, Virginia, none of which in such capacities is passing on the validity of the Series 2018 Bonds. Copies of such opinions will be available from the Underwriters at the time of delivery of the Series 2018 Bonds. TAX MATTERS The Code establishes certain requirements which must be met concurrently with, and subsequent to, the issuance of the Series 2018 Bonds, in order that the interest on the Series 2018 Bonds be and remain excluded from the gross income of the recipients thereof for federal income tax purposes. At the time of issuance and delivery of the Series 2018 Bonds, the Issuer, the Borrower and the Trustee will make certain representations, certifications and covenants which are intended to assure compliance with such requirements. In the event of the inaccuracy of such representations and certifications, or the non-compliance with such covenants, interest on the Series 2018 Bonds may be required to be included in the gross income of the recipients thereof, retroactively to the date of issuance of the Series 2018 Bonds under certain circumstances. Opinion of Bond Counsel On the date of issuance and delivery of the Series 2018 Bonds, Butler Snow LLP, Bond Counsel, will deliver its opinion to the effect that the interest on the Series 2018 Bonds, under existing statutes, regulations and judicial decisions, is excluded from the gross income of the owners of the Series 2018 Bonds for federal income tax purposes. In addition, in the opinion of Bond Counsel, interest on the Series 2018 Bonds will not be treated as an item of tax preference for purposes of calculating the federal alternative minimum tax; however, with respect to corporations (as defined for federal income tax purposes), such interest is taken into account in determining adjusted current earnings for purposes of computing the alternative minimum tax imposed on corporations for taxable years that began prior to January 1, Except as may be necessary to address any OID (as hereinafter defined), no opinion will be expressed by Bond Counsel with respect to any other federal tax consequences of the receipt or accrual of interest on the Series 2018 Bonds. The opinion of Bond Counsel will be given in reliance upon certifications by representatives of the Borrower and the Issuer as to certain facts relevant to both the opinion and requirements of the Code. The opinion of Bond Counsel is subject to the condition that there is compliance subsequent to the issuance of the Series 2018 Bonds with all requirements of the Code that must be satisfied in order for interest thereon to remain excludable from gross income for Federal income tax purposes. The opinion of Bond Counsel with respect to the Series 2018 Bonds will also state that interest on the Series 2018 Bonds is not subject to income taxation by the Commonwealth of Virginia or any political subdivision thereof. Prospective purchasers of the Series 2018 Bonds should consult their own tax advisors as to the status of interest on the Series 2018 Bonds under the tax laws of any state other than the Commonwealth of Virginia. Original Issue Premium Any Series 2018 Bonds purchased, whether upon issuance or otherwise, for an amount (excluding any amount attributable to accrued interest) in excess of their principal amount will be treated for federal income tax purposes as having amortizable bond premium. A holder s basis in such a Series 2018 Bond must be reduced by the -15-

22 amount of premium which accrues while such Series 2018 Bonds is held by the holder. No deduction for such amount will be allowed, but it generally will offset interest on the Series 2018 Bonds while so held. Purchasers of such Series 2018 Bonds should consult their own tax advisors as to the calculation, accrual and treatment of amortizable bond premium and the state and local tax consequences of holding such Series 2018 Bonds. Original Issue Discount Any Series 2018 Bonds purchased at initial public offering prices that are less than their stated principal amount shall be OID Bonds. The difference between the stated principal amount and the initial offering price of each maturity of the OID Bonds to the public (excluding bond houses and brokers) at which a substantial amount of such maturity of such Bonds is sold will constitute original issue discount ( OID ). Under the Code, for purposes of determining the holder s adjusted basis in an OID Bond, OID treated as having accrued while the holder holds the Series 2018 Bonds will be added to the holder s basis. OID will accrue on a constant yield-to-maturity method. The adjusted basis will be used to determine taxable gain or loss upon the sale or other disposition (including redemption or payment at maturity) of an OID Bond. Prospective purchasers of the OID Bonds should consult their own tax advisors with respect to the calculation of accrued OID and the state and local tax consequences of owning or disposing of OID Bonds. Other Tax Matters In addition to the matters addressed above, prospective purchasers of the Series 2018 Bonds should be aware that the ownership of tax-exempt obligations may result in other federal income tax consequences to certain taxpayers, including, but not limited to, financial institutions, property and casualty insurance companies, individual recipients of Social Security or Railroad Retirement Benefits, foreign corporations engaged in a trade or business in the United States, certain S Corporations, and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry tax-exempt obligations. Prospective purchasers should consult their own tax advisors as to the applicability and impact of such consequences. From time to time, there are legislative proposals in Congress that, if enacted, could cause interest on the Series 2018 Bonds to be subject, directly or indirectly, to federal income taxation, adversely affect the market value of the Series 2018 Bonds or otherwise prevent owners of the Series 2018 Bonds from realizing the full current benefit of the tax status of such interest. It cannot be predicted whether or in what form any such proposal might be enacted or whether, if enacted, such legislation would apply to bonds issued prior to enactment. Purchasers of the Series 2018 Bonds should consult their tax advisors regarding the effect of any such legislation. The opinions expressed by Bond Counsel are based upon existing legislation and regulations as interpreted by relevant judicial and regulatory authorities as of the date of issuance and delivery of the Series 2018 Bonds, and Bond Counsel has expressed no opinion with respect to any proposed legislation or as to the tax treatment of interest on the Series 2018 Bonds or as to the consequences of owning or receiving interest on the Series 2018 Bonds, in each case as of any future date. Bond Counsel has not agreed to notify the Issuer or the owners of the Series 2018 Bonds as to any event subsequent to the issuance of the Series 2018 Bonds that might affect the tax treatment of interest on the Series 2018 Bonds, the market value of the Series 2018 Bonds or the consequences of owning or receiving interest on the Series 2018 Bonds. The opinion of Bond Counsel will also state that interest on the Series 2018 Bonds is exempt from all present Commonwealth of Virginia income taxes. Interest on the Series 2018 Bonds, however, may or may not be subject to state or local income taxation in other jurisdictions under applicable state or local tax laws. Each purchaser of the Series 2018 Bonds should consult his or her own tax advisor regarding the taxable status of the Series 2018 Bonds in a particular state or local jurisdiction. Information reporting requirements will apply to interest paid on tax-exempt obligations, including the Series 2018 Bonds. In general, such requirements are satisfied if the interest recipient completes, and provides the payor with, a Form W-9, Request for Taxpayer Identification Number and Certification, or unless the recipient is one of a limited class of exempt recipients, including corporations. A recipient not otherwise exempt from information reporting who fails to satisfy the information reporting requirements will be subject to backup withholding, which means that the payor is required to deduct and withhold a tax from the interest payment, -16-

23 calculated in the manner set forth in the Code. For the foregoing purpose, a payor generally refers to the person or entity from whom a recipient receives its payments of interest or who collect such payments on behalf of the recipient. If an owner purchasing Series 2018 Bonds through a brokerage account has executed a Form W-9 in connection with the establishment of such account, as generally can be expected, no backup withholding should occur. In any event, backup withholding does not affect the excludability of the interest on the Series 2018 Bonds from gross income for federal income tax purposes. Any amounts withheld pursuant to backup withholding would be allowed as a refund or a credit against the owner s federal income tax once the required information is furnished to the Internal Revenue Service. UNDERWRITING The Underwriters will purchase the Series 2018 Bonds at a price equal to the principal amount of the Series 2018 Bonds plus a net original issue premium of $1,442, and less an Underwriters discount of $147, (approximately % of the principal amount of the Series 2018 Bonds). The obligation of the Underwriters to pay for the Series 2018 Bonds is subject to certain terms and conditions set forth in the Bond Purchase Agreement, including the delivery of specified opinions of counsel and of a certificate of the Borrower that there has been no material adverse change in its condition (financial or otherwise) from that set forth in this Official Statement. The Underwriters may offer and sell the Series 2018 Bonds to certain dealers (including dealer banks and dealers depositing the Series 2018 Bonds into investment trusts) and others at prices different from the public offering prices stated on the inside cover page of this Official Statement. Such initial public offering prices may be changed from time to time by the Underwriters. The Underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include sales and trading, commercial and investment banking, advisory, investment management, investment research, principal investment, hedging, market making, brokerage and other financial and non-financial activities and services. In the course of their various business activities, the Underwriters and their respective affiliates, officers, directors and employees may purchase, sell or hold a broad array of investments and actively trade securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments for their own account and for the accounts of their customers, and such investment and trading activities may involve or relate to assets, securities and/or instruments of the Issuer (directly, as collateral securing other obligations or otherwise) and/or persons and entities with relationships with the Issuer. The Underwriters and their respective affiliates may also communicate independent investment recommendations, market color or trading ideas and/or publish or express independent research views in respect of such assets, securities or instruments and may at any time hold, or recommend to clients that they should acquire, long and/or short positions in such assets, securities and instruments. FINANCIAL STATEMENTS The consolidated financial statements of the Borrower as of June 30, 2017, and for the fiscal year then ended, included in APPENDIX B of this Official Statement, have been audited by Brown, Edwards & Company, LLP, independent auditors, as stated in their report appearing in APPENDIX B herein. Brown, Edwards & Company, LLP, the Borrower s independent auditors, have not been engaged to perform and have not performed, since the date of their report included herein, any procedures on the financial information addressed in that report. Brown, Edwards & Company, LLP also has not performed any procedures relating to this Official Statement. FINANCIAL ADVISOR The Borrower has retained Raymond James & Associates, Inc., Richmond, Virginia (the Financial Advisor ) in connection with the issuance of the Series 2018 Bonds. The Financial Advisor is not obligated to undertake, and has not undertaken to make, an independent verification or to assume responsibility for the accuracy, completeness, or fairness of the information contained in this Official Statement. -17-

24 RATING S&P has assigned a long-term rating of A to the Series 2018 Bonds prior to their original delivery date. The rating assigned by S&P reflects only the current view of such rating agency, as discussed more fully in the rating report issued by S&P. Reference is made to such report for a discussion by such rating agency of its analysis and the assumptions upon which its assigned rating is based and any conditions attached to maintenance of such rating. Explanation of the significance of such rating may be obtained, from time to time, from the firm giving such rating. A rating is not a recommendation to buy, sell or hold the Series 2018 Bonds. There is no assurance that such rating will not be withdrawn or revised downward. Such action, if taken, could have an adverse effect on the market price of the Series 2018 Bonds. CONTINUING DISCLOSURE In accordance with the requirements of Rule 15c2-12 (the Rule ) promulgated by the Securities Exchange Commission, the Borrower has agreed to make a continuing disclosure undertaking pursuant to a Continuing Disclosure Agreement to be executed and delivered by the Borrower with respect to the Series 2018 Bonds for the benefit of the Underwriters, the Trustee and the holders of the Series 2018 Bonds. Pursuant to the Continuing Disclosure Agreement, the Borrower has agreed to provide or cause to be provided certain annual financial information and operating data and notice of the occurrence of certain events with respect to the Series 2018 Bonds within ten (10) business days of the occurrence of any such event. The proposed form of Continuing Disclosure Agreement is attached as APPENDIX E. Failure by the Borrower to comply with the Continuing Disclosure Agreement will not constitute a Default under the Loan Agreement or an Event of Default under the Indenture. The Bondholders of the Series 2018 Bonds are limited to the remedies described in the Continuing Disclosure Agreement. Failure of the Borrower to comply with the Continuing Disclosure Agreement must be reported in accordance with the Rule. The Issuer is not contractually obligated to supplement or update the information included in the Official Statement after the delivery of the Series 2018 Bonds. The Underwriters have not undertaken and are not obligated either to supplement or update the information included in the Official Statement. In the past five years, the Borrower has not had any outstanding Bonds subject to the continuing disclosure obligations of the Rule; therefore, in the past five years the Borrower has not failed to comply with any continuing disclosure requirements as described in Section (b)(5)(i) of the Rule. RELATIONSHIPS OF PARTIES Butler Snow LLP, Bond Counsel and counsel to the Borrower, also provides legal services from time to time to the Underwriters, the Trustee and the Financial Advisor on matters unrelated to the issuance of the Series 2018 Bonds. McGuireWoods LLP, counsel to the Underwriters, also provides legal services from time to time to the Trustee and the Financial Advisor. Kutak Rock LLP, counsel to the Issuer, also provides legal services from time to time to the Underwriters, the Trustee and the Financial Advisor. MISCELLANEOUS The references in this Official Statement to provisions of the Indenture and the Loan Agreement are brief descriptions of certain provisions thereof. Those descriptions do not purport to be complete and, for full and complete statements of those provisions, reference is made to those documents, copies of which will be on file at the principal office of the Trustee. -18-

25 The Issuer has authorized the execution and delivery of, and the Borrower has approved, this Official Statement. The Trustee has neither reviewed nor participated in the preparation of this Official Statement. This Official Statement is in a form deemed final as of its date within the meaning of the Rule. VIRGINIA COLLEGE BUILDING AUTHORITY By: /s/ Lane B. Ramsey Chairman Approved: RANDOLPH-MACON COLLEGE By: /s/ Paul T. Davies Vice President of Administration and Finance -19-

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27 APPENDIX A INFORMATION CONCERNING RANDOLPH-MACON COLLEGE

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29 APPENDIX A INFORMATION CONCERNING RANDOLPH-MACON COLLEGE OVERVIEW OF THE COLLEGE Randolph-Macon College (the College or Randolph-Macon ) is a private, nonprofit, nonsectarian, coeducational, four-year liberal arts college located in the Town of Ashland, Virginia, approximately 20 miles north of Richmond, Virginia, and approximately 90 miles south of Washington, D.C. The College, which was founded in 1830 and is the oldest Methodist-related institution of higher education in continuous operation in the United States, is situated on 125 acres with 71 buildings, 2 of which are on the National Register of Historic Places. The oldest of these buildings is Washington-Franklin Hall that was built in In addition to the main campus, the College owns a 70-acre horse farm in Hanover County, Virginia. The College s physical plant includes 28 residential facilities, 13 academic facilities, 16 support facilities, an observatory, a 50,000 square-foot library housing 547,747 total books (print, e-books, and microforms), and 9 student recreational facilities. The recreation facilities include a 72,000 square-foot sports center and a 2,500-seat athletic stadium. The College ranks 126th in Best National Liberal Arts Colleges, according to the US News and World Report, and is categorized as a Carnegie Baccalaureate College Arts & Sciences. As envisioned in its Strategic Plan, the College has been increasing its student body every year, with the most recent Fall headcount at 1,453 students representing 24 states and 19 countries. The College s student body is approximately 54% female and 46% male, and the majority of these full-time students live on campus. The College awards both Bachelor of Arts and Bachelor of Science degrees and offers 34 different academic majors. The College s most popular fields of study are Communications Studies, Business, Biology, Political Science, and Psychology. The College is one of only 10% of all colleges and universities in the nation with a Phi Beta Kappa chapter. Although the College prepares its students for entering the national job market immediately upon graduation, about 20% of the College s degree recipients begin to pursue advanced degrees within six months of graduation. The College is accredited by the Southern Association of Colleges and Schools and is completing its decennial reconfirmation, with public announcement of reconfirmation expected June The College is a member of the National Association of Independent Colleges and Universities, the Association of American Colleges & Universities, the Virginia Foundation for Independent Colleges, the Council of Independent Colleges, the Council of Independent Colleges in Virginia, the American Council on Education, the National Association of Schools and Colleges of the United Methodist Church, the College Entrance Examination Board and the National Collegiate Athletic Association (competing in Division III). BOARD OF TRUSTEES The College is governed by its Chairman, President and other officers and a Board of Trustees (the Board ) consisting of a maximum of 42 Trustees elected for three-year terms by the incumbent Trustees. In addition, there are five ex-officio members: the President of the College (without vote), the presiding Bishop of the United Methodist Church of Virginia or, subject to approval of the Board, the Bishop s designee (with vote), the President of the Society of Alumni (with vote), the Chair of the Board of Directors of the Parents Association (with vote), and the Chair of the Board of Associates (with vote). The consent of the Trustees is required for certain acts of the College, including academic and administrative appointments and the awarding of degrees. The Trustees also review the academic, financial and administrative performance of the College through committees composed of Trustees and others. The following persons are the current officers and members of the Board of Trustees: A-1

30 Officers Alan B. Rashkind Robert R. Lindgren Dr. Jan M. Carter Lee B. Spencer, Jr. Jennifer L. Thompson Paul T. Davies Chairman President of the College Vice Chair Secretary Assistant Secretary & Executive Assistant to the President Treasurer of the College / Vice President of Administration and Finance Members Name Elected Principal Affiliation Gilbert T. Bland 2016 Chairman, GilJoy Group, Virginia Beach, Virginia Roland B. Boney 2016 President, LXVII, Atlantic Beach, Florida Dr. Yvonne W. Brandon 2010 Associate Professor/Executive in Residence, Virginia Commonwealth University, Richmond, Virginia L. Preston Bryant, Jr Senior Vice President, McGuireWoods Consulting, Richmond, Virginia Dr. Jan M. Carter, Vice Chair 2012 Neonatologist, Cape Fear Medical Center, Fayetteville, North Carolina J. Peter Clements 2014 CEO, Bank of Southside Virginia, Carson, Virginia The Rev. William A. Davis, Jr Pastor, Trinity United Methodist Church, Alexandria, Virginia Malinda E. Dunn 2014 Executive Director, American Inns of Court Foundation, Alexandria, Virginia Robin Anne Floyd 2006 Civic Volunteer, Washington, D.C. F. Gillis Green 2014 Attorney, Private Practice, Baltimore, Maryland R. Earl Johnson 2014 Vice President, Leaf Spring School, Henrico, Virginia Sabra L. Klein, Ph.D Associate Professor, Molecular Microbiology and Immunology, Johns Hopkins University, Baltimore, Maryland Frank E. Laughon, Jr Retired Chairman and CEO, Richmond Cold Storage Company, Inc., Richmond, Virginia Cynthia H. Lee 2011 Civic Volunteer, Philomont, Virginia David G. Meleski 2013 President & CEO, Aurafin, New York, New York T.C. Melton 2016 Director, Ziegler & Company Investment Bank, Glen Allen, Virginia Thomas L. Millner 2017 Retired President & CEO, Cabela s, Inc., Monticello, Georgia Frank J. Murphy III 2010 President, Realty 1 Companies and Murphy Enterprises, Gainesville, Virginia R. Geoffrey Neville, Jr Portfolio Manager, ZWJ Investment Counsel, Atlanta, Georgia Wesley A. Nichols 2012 Board Partner, Upfront Ventures, Los Angeles, California A-2

31 Name Elected Principal Affiliation Allison M. O Brien 2009 Business Development Manager, Relocation Division, Long & Foster Companies, Richmond, Virginia Timothy P. O Brien 2012 Partner, MeriStar Holdings, LP, Silver Spring, Maryland The Rev. Mark V. Ogren 2007 Director of Congregational Excellence, Virginia Conference, United Methodist Church, Glen Allen, Virginia Susan P. Quinn 2017 President and CEO, Circle S Studio, Richmond, Virginia Alan B. Rashkind, Chairman 2004 Attorney, Furniss, Davis, Rashkind and Saunders, P.C., Norfolk, Virginia Mary Lynn Reed 2015 Senior Counsel, George Washington University Medical Center, Washington, D.C. Dr. Dianne L. Reynolds-Cane 2007 Physician, Greater Fulton Medical Center (GFMC), Capital Area Health Network, Richmond, Virginia Benjamin S. Schapiro 2008 Chairman and CEO, QuestMark Partners, Baltimore, Maryland Susan D. Schick 2011 Chief Growth Officer, United Healthcare Community and State, Wayne, Pennsylvania Lee B. Spencer, Jr., Secretary 2011 President, West Hill Properties, LLC, New York, New York Harold E. Starke, Jr Retired Partner, Troutman Sanders LLP, Richmond, Virginia Linwood A. Staub 2014 President, CMJ Medical Ltd., Williamsburg, Virginia Sanjay Tandon 2012 Director, Knowledge Services, Global Support, KLA-Tencor Corp., Milpitas, California Dr. Samuel E. Vichness 2010 Owner, Gynpine, LLC, New York, New York R. Douglas White 2014 Partner, Whitestone Partners, Inc., Midlothian, Virginia Charles W. Wornom 2006 President, Abbitt Realty Company, Newport News, Virginia David E. Yawars 2009 Cattle Farmer, Laughing Place Farm, Lexington, Virginia Ex-Officio Member Name Elected Principal Affiliation Robert R. Lindgren 2006 President, Randolph-Macon College, Ashland, Virginia D. Calloway Whitehead III 2017 Board of Associates Representative; Partner, Commonwealth Strategy Group, Richmond, Virginia Anne Cabell Pearce 2015 Parents Board of Directors Representative; Civic Volunteer, Norfolk, Virginia Thomas Hunter Leemon 2017 Society of Alumni Representative; Executive Director, Sportable, Richmond, Virginia The Rev. Dr. John B. Peters 2016 Representative for the Bishop; Virginia Conference, United Methodist Church, Richmond, Virginia A-3

32 The Board of Trustees meets three times per year. To assist the Board of Trustees in reviewing the activities of the College, the Board has established several committees, which meet throughout the year. The standing Committees of the Board are: Executive Committee, Committee on Trustees, Academic Affairs Committee, Student Affairs Committee, Finance Committee, Investment Committee, Buildings & Grounds Committee, College Advancement Committee, Audit Committee, Enrollment Committee, and Athletics Committee. The Executive Committee is empowered during the intervals between meetings of the Board of Trustees to exercise certain powers of the Board of Trustees in the management of the affairs of the College. COLLEGE OFFICERS Set forth below are the College s chief academic, administrative and financial officers and a brief biographical sketch of each. Robert R. Lindgren, President of the College, has served in that position for 12 years and has 39 years of experience in higher education. President Lindgren came to Randolph-Macon from The Johns Hopkins Institutions in Baltimore, Maryland, where he served as Vice President for Development and Alumni Relations for both the University and health system for nearly 12 years. Prior to Johns Hopkins, he served both as Vice President for Developmental and Alumni Affairs for 6 years and the Chief Development Officer at the University of Florida for a total of 10 years and held prior positions at the University of Florida as Assistant to the President and Assistant Dean in the College of Law. A native of Muskegon, Michigan, President Lindgren earned undergraduate and law degrees from the University of Florida in 1976 and 1981, respectively, and a Master of Philosophy degree in management studies from Oxford University in England in 1978, where he was the recipient of a Rotary Fellowship. He was awarded an Honorary Doctorate by the University of Florida in August The following individuals serve on the President s cabinet: William T. Franz, Provost and Vice President for Academic Affairs, the chief academic officer of the College, has served in that position for 10 years, has a tenure of 35 years at the College, and has 42 years of experience in higher education. He came to Randolph-Macon as an Assistant Professor of Physics in He was promoted to Associate Professor in 1989 and Full Professor in Provost Franz chaired the Physics Department from and served as Associate Dean of the College from He was awarded a Ph.D. in Physics from the University of Delaware in 1981, an M.S. in Physics in 1978, and received a B.S. in Physics and Mathematics, magna cum laude, from Muhlenberg College in Diane M. Lowder, Vice President for College Advancement, has served in that position for 11 years and has 16 years of experience in higher education. Ms. Lowder currently oversees Randolph-Macon s Office of College Advancement which encompasses the offices of Development, Alumni Relations, and Marketing & Communications. She serves as the Chief Development Officer for the College and led its recently completed capital campaign, Building Extraordinary, which raised in excess of $125 million. Before coming to Randolph- Macon, Ms. Lowder practiced law for 9 years and in 1997 she began her career in higher education at the University of Richmond, where she served as director of Planned Giving and interim Director of Development. Diane earned a B.A. in Political Science and a J.D. from the University of Richmond. Paul T. Davies, C.P.A., Vice President of Administration and Finance, has served in that position for 8 years and has 31 years of experience in higher education. Mr. Davies oversees the Treasurer s Office, Business Office, Campus Store, Dining Facilities, Human Resources, Information & Technical Services, Risk Management, and the Physical Plant; managing over 90 employees. He is responsible for the College s annual budget of $48.4 million. He currently serves as the staff liaison to both the College s Audit and Buildings and Grounds committees and is an ex-officio member of both the Finance and Investment committees. Prior to arriving at Randolph-Macon College, Paul served at Sweet Briar College as its Vice President for Finance and Administration for 6 years. Prior to that, he served 17 years at Duke University in the Department of Medicine, A-4

33 Internal Audit Department, and Auxiliary Services Department. Paul also worked in public accounting and began his career as a Medicare auditor for Blue Cross of Texas. Paul earned a B.S. in Business Administration from the University of North Carolina at Chapel Hill. Grant L. Azdell, the Vice President for Student Affairs and Dean of Students and a Professor at the College, has served in that position for 10 years and has 20 years of experience in higher education. He is the senior Student Affairs officer, overseeing residence life, non-academic student activities and campus safety. He previously served on the President s Cabinet at Lynchburg College as Associate Vice President of Student Development and Dean of Religious Life. Dr. Azdell received a Ph.D. in Educational Leadership from the University of Virginia, an M.Div. from Vanderbilt University and a B.A. in Religious Studies and Political Science from Lynchburg College. David Lesesne, Vice President for Enrollment and Dean of Admissions and Financial Aid, overseeing all aspects of recruiting students, has served in that position for 9 years and has 27 years of experience in higher education. Prior to his appointment at Randolph-Macon, Dean Lesesne served as the Dean of Admission and Financial Aid at the University of the South in Sewanee, Tennessee from 2001 to Before his time at Sewanee, he served as the Director of Admission at Jacksonville University, as the Dean of Admissions and an Adjunct Professor of American History at Newberry College and as an admissions counselor at Erskine College. Dean Lesesne received a B.A. in History and Government from Wofford College and completed a doctorate in Higher Education Leadership Policy and Organization at Vanderbilt University s Peabody College of Education. Jennifer L. Thompson, Executive Assistant to President Lindgren, has served in that position for 4 years and has 15 years of experience in higher education. Thompson provides support to the President in all areas and serves as the primary liaison to the College s Board of Trustees. She also offers leadership in strategic planning, policy and budget initiatives and represents the President with various internal and external constituencies. Thompson came to Randolph-Macon from Virginia Commonwealth University where she was Director of External Relations at the L. Douglas Wilder School of Government and Public Affairs for 8 years. Thompson received a B.A. in Anthropology from Southern Illinois University and earned a J.D. from Saint Louis University School of Law. Charles Gowan is Professor of Biology and Environmental Studies and has been a faculty member at the College for 22 years. He serves as the faculty s elected representative to the President s Cabinet and to the Board of Trustees. He received a Ph.D. in Fisheries Science from Colorado State University in 1995, an M.S. in Fish and Wildlife Biology in 1985 from Michigan State University, and a B.S. in 1982 from the College of Environmental Science and Forestry at Syracuse. Additional academic officers: Lauren C. Bell is Dean of Academic Affairs and Professor of Political Science. Dr. Bell holds a B.A. from the College of Wooster and M.A. and Ph.D. degrees from the Carl Albert Congressional Research and Studies Center at The University of Oklahoma. Susan Parker is Associate Dean of Academic Affairs and Professor of Psychology. Dr. Parker holds a Bachelor of Arts degree from the University of Richmond and a Ph.D. in Developmental Psychology from the University of Minnesota. Alana R. Davis is Registrar at the College. Ms. Davis holds a B.A. from the College of William and Mary and an M.A. from Virginia Commonwealth University. Additionally, Ms. Davis is a doctoral student at the College of William and Mary. A-5

34 FACULTY AND STAFF The College employs 108 full-time faculty members, 21 (Full Time Equivalent) part-time faculty members, and 254 full-time staff members and 12 (Full Time Equivalent) part-time staff members. Of the fulltime faculty members, 103 hold doctorate or other terminal degrees and 63% of the full-time faculty members are tenured. The current student-faculty ratio is approximately 11:1. Maintaining such ratio, along with the predominately full-time status of the faculty, is a focus of the institution. Based on national surveys, the faculty salaries paid by the College average in the 60th percentile nationally. The College believes its salary and benefits package is competitive to its peer group and that the College enjoys favorable relationships with its faculty, staff and other personnel. None of the College s faculty or staff are represented by any organized labor group. STUDENT ENROLLMENT The College s Strategic Plan called for controlled, intelligent growth of the student body toward the goal of 1,500 students. The following table shows the number of students attending the College during the five academic years indicated below, as measured by the fall student enrollment: Fall Semester Enrollment Full-time Degree 1,286 1,357 1,383 1,409 1,424 Full-time Non-Degree Part-time Degree Part-time Non-Degree Total Students 1,315 1,394 1,418 1,446 1,453 Total Full-Time Equivalent (FTE) 1,302 * 1,375 * 1,400 * 1,424 * 1,417 ** 1,436 * 1,430 ** * FTE = full-time students (12 or more credit hours) + 1/3 part-time students (<12 credit hours). ** IPEDS formula: FTE = full-time degree-seeking students (12 or more credit hours) + (part-time degree seeking * ). The composition by class of the student enrollments for the Fall semester for the same five academic years was as follows: Fall Semester Enrollment by Class * New Freshmen Freshmen 389 (4) 436 (3) 417 (5) 404 (4) 384 (5) Sophomores 306 (11) 282 (13) 326 (24) 332 (22) 316 (20) Juniors 288 (12) 275 (6) 286 (20) 314 (15) 327 (19) Seniors 311 (1) 384 (0) 376 (9) 379 (1) 412 (0) Non-degree Total 1,315 1,394 1,418 1,446 1,453 Note: Parentheses indicate number of new transfers in each class. * Transfers in 2015 include students accepted in teach-out agreement from Sweet Briar College, which was temporarily closed. A-6

35 Enrollment and Discount Rate Since Fiscal Year 2012, the College s total net revenue from tuition and net auxiliary revenue has grown from $22.6 million to $29.1 million in Fiscal Year 2017 (an increase of $6.5 million, or 28.8%). During the same period, the College s headcount grew from 1,257 (Fall of 2012) to 1,453 (Fall of 2017) (an increase of 15.6%). The College has used financial aid to strategically grow its enrollment and net revenue, and has worked with its financial aid consultant to create a model incorporating a targeted annual increase in rates for tuition, fees, room and board, together with a target discount rate. The College expects to report a discount rate of 54.9% for Fiscal Year The Vice President of Admissions and the Vice President of Administration and Finance work together throughout the year to review the College s targets and the actual discount rate, and provide updates to the Board of Trustees and its Finance Committee at each of its meetings. During the Fall Board of Trustees meeting, the Finance Committee and full Board review the financial assumptions used in setting annual increases, discount rate, and enrollment target, and review comparisons to competitors in Virginia. The College is currently projecting a Fall 2018 entering class of 460. This is compared to a budget of 450 and Fall 2017 actual of 418 (combining all new freshmen and transfers). The increase is attributed to changes in Admissions Office personnel, new recruitment programs and modifications to the College s financial aid model. The College s entering Fall 2018 class discount rate is currently under the College s target of 56%. The Edge Program The Edge Program, launched by the College in 2012, is designed to give students a competitive advantage for jobs or advanced study after they graduate. One of the signature features is an annual two-day offsite immersion event which provides training on networking, interview skills and the art of communication. Each student participates in five different mock interviews. Over 130 faculty, alumni, and employer-partners participate in these interviews, an etiquette dinner, and networking events. The College believes the Edge Program has been a success, based on employment surveys and annual assessments. The Edge has been well received by students and provides a draw for students and parents, who are interested in job market preparation. Geographical Distribution The geographical distribution of all students for the Fall semester for each of the last five academic years is as follows: Geographical Distribution of Students (Fall Semester) Virginia 962 1,028 1,053 1,075 1,086 Maryland North Carolina Pennsylvania New Jersey Florida Texas South Carolina Delaware New York Other States Outside the US A-7

36 Retention Rate The College s retention rate has improved over the past few years, following programmatic changes introduced by a special Retention Committee made up of faculty, staff and Board members. Since Fall 2013, the College s student retention rates have been as follows (measured as the percentage of students in each Spring Semester class who return the following Fall): Student Retention Rate Freshman to Sophomore Sophomore to Junior Junior to Senior Fall 2013 Fall % (Fall 2013 freshmen) 89% (Fall 2012 freshmen) 93% (Fall 2011 freshmen) Fall 2014 Fall % (Fall 2014 freshmen) 90% (Fall 2013 freshmen) 95% (Fall 2012 freshmen) Fall 2015 Fall % (Fall 2015 freshmen) 88% (Fall 2014 freshmen) 96% (Fall 2013 freshmen) Fall 2016 Fall % (Fall 2016 freshmen) 89% (Fall 2015 freshmen) 95% (Fall 2014 freshmen) APPLICATIONS / ACCEPTANCES / MATRICULATIONS The College has historically received applications for admission exceeding the number of students it can accept based on its enrollment targets. Set forth in the following table are the number of first-year students completing applications for admittance, the number of students offered admission, the percent of acceptances to applications, the number of students enrolled in the freshman class and the percent of enrollments to acceptances for the past four and the current academic years: Academic year Applications Received First Time Applicants Applications Accepted A-8 Percent accepted Number enrolled Yield (% of accepted students who enrolled) ,997 1, % % ,955 1, % % ,968 1, % % ,842 1, % % ,820 1, % % The following table shows applications, acceptances and enrollment for transfer students for the past four and the current academic years: Transfer Students Academic year Applications Received Applications Accepted Percent accepted Number enrolled Yield (% of accepted students who enrolled) % % % % * % % % % % % * Transfers in 2015 include students accepted in teach-out agreement from Sweet Briar College, which was temporarily closed.

37 Mean Educational Testing Service Scholastic Aptitude Test (SAT) scores for entering classes at the College for the four previous and the current academic years are as follows: Scholastic Aptitude Test Results Randolph-Macon College Mean National Mean Academic year English Reading & Writing Math Combined Combined ,092 1, ,090 1, ,091 1, ,083 1,002 (Test revised in Evidence-based Math Combined Combined 2017) Reading & Writing ,143 1,060 Source: College Entrance Examination Board (available at and STUDENT FEES The following table shows approved tuition and fees and room and board charges for the past four years, the current academic year, and charges for the upcoming year: Tuition and fees $34,850 $35,360 $37,600 $38,730 $40,000 $41,300 Room and board $10,220 $10,300 $10,880 $11,180 $11,480 $11,860 Tuition, fees, room & board total % Change from Previous Year $45,070 $45,660 $48,480 $49,910 $51,480 $53, % 1.30% 6.20% 2.95% 3.15% 3.26% FINANCIAL ASSISTANCE During the academic year approximately 1,449 students (over 99% of the student body) received approximately $53,982,834 in financial assistance in the form of scholarships, grants, loans and employment. The sources for financial assistance for the academic year are as follows: the College provided approximately $31,536,214; the Virginia programs (Virginia Tuition Assistance Grant, VaTransfer, and VTSLP) provided approximately $3,447,612; federal programs such as the Federal Perkins Student Loan Program, the Federal Stafford Student Loan Program, the Federal Work-Study Program (joint federal and College funding), Federal Pell Grants and Federal Supplemental Education Opportunity Grants, provided approximately $13,565,925; and external sources such as private scholarships, grants and loans provided approximately $5,433,083. A-9

38 General Financial Aid Statistics Over Time Number of students with demonstrated need ,037 1,053 Number of students receiving aid from all sources 1,290 1,373 1,402 1,402 1,436 Percent of need met 77% 78% 78% 82% 79% Percent of students receiving Pell Grants 25% 24% 23% 23% 23% Percent of enrolled degree students with aid 99% 99% 99% 99.79% 100% Average need-based package $28,078 $29,290 $30,960 $28,588 $29,069 Perkins Loan Default Rate (6-year cohort) 9.2% 12.5% 14.2% 10.0% 11.7%* Stafford Loan Default Rate (3-year average) 6.5% 6.5% 5.7% 4.4% 5.5% * Includes students accepted in teach-out agreement from Sweet Briar College, which was temporarily closed. COMPETING INSTITUTIONS The College annually obtains from the National Student Clearinghouse a list of colleges and universities that enroll the most students who were also offered admission to the College. These colleges and universities for the academic year are as follows: Name Count Location Virginia Commonwealth University* 114 Richmond, VA James Madison University* 107 Harrisonburg, VA Christopher Newport University* 72 Newport News, VA University of Mary Washington* 67 Fredericksburg, VA Virginia Polytechnic Institute & State University* 59 Blacksburg, VA Old Dominion University* 43 Norfolk, VA Hampden-Sydney College 40 Farmville, VA Longwood University* 36 Farmville, VA George Mason University* 32 Fairfax, VA University of Virginia* 31 Charlottesville, VA Bridgewater College 26 Bridgewater, VA Roanoke College 23 Roanoke, VA Lynchburg College 21 Lynchburg, VA Radford University* 21 Radford, VA College of William & Mary* 18 Williamsburg, VA McDaniel College 15 Westminster, MD Shenandoah University 15 Winchester, VA J. Sargeant Reynolds Community College* 11 Richmond, VA Virginia Wesleyan College 11 Norfolk, VA Coastal Carolina University* 10 Conway, SC Randolph College 10 Lynchburg, VA * Public college or university. A-10

39 MANAGEMENT DISCUSSION Financial Reporting The financial statements of the College for the Fiscal Year ended June 30, 2017, with comparisons to the Fiscal Year ended 2016, are set forth in APPENDIX B of the Official Statement. The financial statements are prepared in accordance with generally accepted accounting principles for colleges and universities and are accompanied by the Independent Accountants Report of Brown, Edwards & Company, LLP, the College s independent certified public accountants. The notes to the financial statements are an integral part of the financial statements and should be read in conjunction therewith. College s Discussion of Financial Results of Operations General The College s management, in concert with the College s Board of Trustees, has a proven track record of maintaining a balanced budget including debt service payments for principal and interest, while continuing to fund items critical to the College s future. The College does not borrow funds in order to meet its annual operating cash flow needs. The College manages its financial operations with policies that emphasize (i) balanced operating budgets achieved through a disciplined budget-setting process and (ii) stable cash flow that eliminates any need for interim borrowing. The College prepares internal monthly financial statements on a cash basis which are shared with the Board of Trustees at every quarterly Board meeting. Expenditure management is achieved through budgets that are administered at the program or department level with the expectation that individual budgets are maintained in-balance. Significant expenditures, including utilities, food costs, overtime, and other auxiliary enterprise expenses, are reviewed monthly. The College also manages its enrollment process so that it is closely tied to its operating budget. The College employs a total return endowment spending policy that establishes the amount of endowment investment return that is available to support current needs and restricted purposes. This policy is designed to insulate program spending from capital market fluctuations and to increase the amount of return that is reinvested in the corpus of the fund in order to enhance its long-term value. The Board-approved spending formula provides for an annual spending rate of 5% of the averaged market values of the prior 12 quarters ending December 31 of the prior fiscal year. For Fiscal Year 2017 the Board approved a special draw from the endowment in the amount of $380,250 and for Fiscal Year 2018 it approved a special draw of $230,250. These draws were part of a strategic decision to support the College s Advancement Office after finishing a successful $125 million capital campaign. For Fiscal Year 2019, the annual draw will be 5%. Fiscal Year 2017 Financial Results Positive operating results paired with strong investment returns resulted in a positive change in net assets of $15.1 million in Fiscal Year The unrestricted operating margin was positive for the fourth consecutive year. Student-driven revenues increased by approximately $1.1 million dollars (2.94%). Overall operating expenses increased approximately $1 million or by 2.1%. On a per full-time equivalent ( FTE ) student basis, overall expenses increased by 1.4% compared to the consumer price index ( CPE ) of 1.6% and higher education price index ( HEPI ) of 3.7%. The College continues to actively manage its operating expenses, which helped contribute to an $1.5 million unrestricted operating margin. The endowment value was $149 million and the endowment per average FTE student was approximately $108,000. As of June 30, 2017, the College had 603 days cash on hand. A-11

40 Fiscal Year 2018 Projections For Fiscal Year 2018, the College is projecting a revenue shortfall to budget of approximately $1,000,000. This was due to a smaller than budgeted entering class coming in at a higher discount rate than anticipated. Revenue was further impacted by a smaller percentage of new students living in residential halls than budgeted (freshmen living within 30 miles of the College are allowed to live at home). The College has a practice of granting one-year off campus waivers to upperclassmen based on the anticipated freshman class. The College s residential halls were approximately 92% occupied for Fiscal Year Overall enrollment has continued to grow even with the smaller entering class, due to retention of 85% for the freshmen 2015 class and 84% for the freshmen 2016 class and to increased enrollment in transfer students. Upon learning of the projected revenue shortfall the President s Cabinet met to identify ways to rebalance the budget without impacting recruitment or retention of students. The Cabinet identified $450,000 of on-going savings, $220,000 of one-time budget reductions and $230,000 use of discretionary funds to mitigate the revenue shortfall. The College anticipates finishing Fiscal Year 2018 with an operating surplus on both a cash and a GAAP basis. Fiscal Year 2019 Budget For Fiscal Year 2019 the College is anticipating an entering class of 460 new students (compared to 418 in Fiscal Year 2018 and a budget of 450 for the Fall of 2018). This is primarily due to changes in the College s admissions office and to offering new academic programs. During Fiscal Year 2018 the College hired a new Director of Admissions and a Director of Enrollment Operations. The College also began using SLATE admissions software which has helped enhance the processing of and communication with applicants. The College also added men s volleyball (13 new students), purchased a revenue-producing horse farm (100% from gifts and largely responsible for 31 new student enrollment deposits) and created the Alumni Referral Program (which accounted for 91 of new student enrollment deposits). The College is also projecting an 84% retention rate for the Fall 2017 freshmen class and anticipates that enrollment will grow to 1,465. To ensure that dorms are at capacity for the Fall of 2018, the Student Affairs Office reached out to all incoming freshmen to confirm who would be living in residential halls before granting off campus waivers to upperclassmen. The College also delayed the granting of off campus waivers until later in the Spring. As a result, the College is projecting that the dorms will return to 99% occupancy for the Fall of The College is currently projecting that it will achieve its target discount rate of 56%. For Fiscal Year 2019 it is also anticipating positive operating results on both a cash and a GAAP basis. Looking beyond Fiscal Year 2019 Brock Venture Fund Macon Brock (Class of 1964) and Joan Brock established the Brock Venture Fund at the College in June This fund was established to specifically fund new programs designed to increase enrollment. In Fiscal Years 2017 and 2018, total gifts of $33.6 million have been contributed to the Venture Fund. With the resources of the Venture Fund, the College will be adding a Nursing Program and creating a new studio theatre and a rehearsal hall for a new Show Choir Program and a new orchestral music program. The College anticipates 40 new students per year for the Nursing Program and students per year for the Show Choir Program beginning with the Fall 2019 semester. In addition, the College recently hired an Executive Director of Strategic Planning and Initiatives to work with a small subcommittee of the Strategic Planning Committee (including two members of the Board of Trustees) to evaluate and establish new programs to grow the College s enrollment. A-12

41 Future Capital Expenditures and Future Indebtedness The College has invested over $79 million in capital projects since 2010, including $63.7 million in new facilities (including three residential facilities, the Estes Baseball field, the new football/lacrosse turf field, the Banks Tennis Center, the Werner Library Pavilion, and the Brock Commons). The College s most recent projects completed for the Fall of 2017 are a $17.5 million science building (Brock Hall) and new Keeble Observatory, the $2 million purchase of 70-acre revenue producing horse farm, and $3.2 million of property acquisitions contiguous to the campus (houses and offices buildings), none of which required borrowing because of the use of alumni gifts and other income. The College is currently planning $27.3 million in new capital projects to include $10.9 million for the new nursing facility (this includes a shelled third floor that could be utilized to double the size of the nursing program from a cohort of 40 to 80 or for other critical needs of the College), $6.6 million for the studio theatre and rehearsal space, $2 million for a second new turf field, and $7.8 million for new and renovated athletic and academic facilities. With $22.7 million designated cash in hand, the College will solicit $2.1 million and make an internal loan for the remaining $2.5 million. Board policy is that a project cannot be initiated until funds are 100% committed (cash on hand or pledges). The College has no current plans to incur additional debt at this time. [Remainder of Page Intentionally Left Blank] A-13

42 COLLEGE FINANCES Set forth below is a summary of the College s Statement of Activities for the fiscal years ending June 30, 2013 through 2017, that has been derived from the College s audited financial statements for the years ended June 30, 2013 through Statements of Activities Years Ended June 30, 2013 through Operating Revenues Tuition and Fees $ 42,735,925 $ 44,404,833 $ 49,162,149 $ 51,627,776 $ 54,188,869 Less financial aid (22,152,597) (23,129,933) (26,030,027) (27,389,789) (29,134,757) Net tuition and fees $ 20,583,328 $ 21,274,900 $ 23,132,122 $ 24,237,987 $ 25,054,112 Contributions 3,380,940 3,419,405 2,793,624 2,129,283 4,473,965 Investment income, endowment and other 6,135,013 7,123,920 6,967,811 7,386,122 7,675,916 Investment income, temporary investments 105,996 88,891 80,740 96,561 94,817 Government grants 618, , ,747 1,667, ,134 Auxiliary services 11,908,522 12,137,955 13,187,905 14,199,565 14,515,396 Other income 466, , , , ,560 Net assets released from restrictions and reclassifications Total Operating Revenues $ 43,198,323 $ 45,051,883 $ 47,102,329 $ 50,226,288 $ 52,843,900 Operating Expenses Educational and general: Instruction $ 12,342,794 $ 12,893,208 $ 13,730,300 $ 14,836,508 $ 15,240,862 Academic support 3,619,938 3,606,868 3,818,772 3,836,329 4,082,084 Student services 9,471,158 9,564,980 10,273,575 10,905,153 11,415,152 Institutional support 10,022,864 9,857,132 9,646,213 10,008,931 9,897,630 Auxiliary services $ 8,440,323 $ 8,861,079 $ 10,098,989 10,451,277 $ 10,463,354 Total Operating Expenses $ 43,897,077 $ 44,783,267 $ 47,567,849 $ 50,038,198 $ 51,099,082 Change in net assets from operating activities $ (698,754) $ 268,616 $ (465,520) $ 188,090 $ 1,744,818 A-14

43 Non-Operating Income Contributions $ 5,413,703 $ 5,956,442 $ 10,296,486 $ 6,564,960 $ 4,267,136 Investment Income 84, ,128 86,896 71,034 53,707 Investment return, net of amount available to support current 8,265,535 16,828, ,221 (13,176,319) operations 7,241,121 Other 160, ,808 48, , ,059 Change in value of split-interest agreements (95,176) 230,651 (72,592) (69,952) (67,441) Change in postretirement benefit obligation 1,141,040 (429,604) (1,359,851) (920,620) 780,811 Change in fair value of swap agreements (872,297) 34,829 (90,509) (583,626) 843,006 Expense funded by surpluses accumulated in prior years - (44,000) (333,406) (293,371) (176,641) Net assets released from restrictions and reclassifications Change in net assets from non-operating activities $ 14,097,636 $ 22,970,949 $ 8,829,957 $ (8,274,207) $ 13,358,758 Change in Net Assets $ 13,398,882 $ 23,239,565 $ 8,364,437 $ (8,086,117) $ 15,103,576 Net Assets Beginning $167,218,215 $180,617,097 $203,856,662 $212,221,099 $204,134,982 Ending $180,617,097 $203,856,662 $212,221,099 $204,134,982 $219,238,558 A-15

44 Operating Budget Shown below are summary operating budgets (cash basis) of the College for fiscal years ending June 30, 2017, and June 30, The College believes the current operating budget reflected below is still appropriate based on revenues and expenditures incurred to date. The budget has been approved for upcoming fiscal year ending June 30, 2019, and is also provided. Budget Budget Budget OPERATING REVENUES Tuition $ 50,762,870 $ 54,126,000 $ 56,280,000 Less financial aid (28,427,207) (30,310,560) (32,642,400) Net tuition $ 22,335,663 $ 23,815,440 $ 23,637,600 Student fees, including summer session 1,762,206 1,864,573 1,928,573 Net tuition and fees $ 24,097,869 $ 25,680,013 $ 25,566,173 Contributions 1,430,000 1,430,000 1,430,000 Endowment Draw - Operating 4,847,595 4,954,495 5,054,136 Endowment Draw - Debt Service 837, , ,016 Endowment Draw - Campaign & Marketing 380, ,250 - Auxiliary services 13,699,493 14,121,816 14,501,436 Other income 286, , ,000 Transfers for salary support 597,933 1,056,327 1,031,064 Revenue Contingency - (183,285) (317,200) Total Operating Revenues $ 46,176,470 $ 48,424,632 $ 48,400,625 OPERATING EXPENSES Educational and general Instruction $ 11,866,909 $ 12,383,309 $ 12,414,100 Academic Support 2,363,141 2,428,706 2,541,177 Student services 8,469,321 8,866,308 9,034,220 Institutional Support 9,430,040 9,824,948 9,990,498 Operation and maintenance of plant 4,919,599 4,999,403 5,039,485 Auxiliary services 5,934,814 6,134,846 6,222,004 Debt Service 2,987,731 3,095,981 3,091,719 Transfers to Plant Funds 42,422 21,422 42,422 Transfers to other funds 94,250 94,250 25,000 Total Operating Expenses $ 46,108,227 $ 47,849,172 $ 48,400,625 Contingency 68, Budget amendment - 575,460 - Grand Total Operating Expenses $ 46,176,470 $ 48,424,632 $ 48,400,625 A-16

45 Tuition and Fees, Net of Financial Aid Tuition and fees include regular-session tuition for the College s undergraduate regular and summer sessions, as well as the student comprehensive fee, overload and class fees. Revenues received for student tuition and fees, net of financial aid, consists of the following for the years ended June 30: Tuition and fees $ 42,735,925 $ 44,404,833 $ 49,162,149 $ 51,627,776 $ 54,188,869 Less financial aid: Non-funded $(20,342,936) $(20,989,759) $(23,713,180) $(24,903,638) $(26,652,691) Funded (1,809,661) (2,140,174) (2,316,847) (2,486,151) (2,482,066) Total Financial Aid $(22,152,597) $(23,129,933) $(26,030,027) $(27,389,789) $(29,134,757) Tuition and fees, net of financial aid $ 20,583,328 $ 21,274,900 $ 23,132,122 $ 24,237,987 $ 25,054,112 Private Gifts, Grants and Bequests For the fiscal years ended June 30, 2013 through 2017, audited financial statements indicate the totals shown below as private gifts, grants, and bequests. The classification of contributions is shown below: Unrestricted $1,188,704 $1,373,614 $1,160,355 $1,337,510 $1,530,347 Temporarily Restricted 4,837,608 5,413,295 9,779,392 5,710,846 6,163,405 Permanently Restricted 2,768,331 2,588,938 2,150,363 1,645,887 1,047,349 Total $8,794,643 $9,375,847 $13,009,110 $8,694,243 $8,741,101 Contributions Receivables As of June 30, 2016, and June 30, 2017, the College had recorded Unconditional Promises to Give of $6,692,174 and $4,641,290, which have been discounted to the present value of gifts to be received more than one year in the future and have been further reduced by an amount equal to the College s expectation of the collection probability and the inherent credit risk of collecting any funds in the future. The breakdown of these Unconditional Promises to Give and the resulting discount and allowance for collection is as follows: Expected to be collected in: In One Year or less $ 4,126,582 $ 2,712,765 Between One and Five Years 2,356,720 1,718,667 More than Five Years 208, ,858 $ 6,692,174 $ 4,641,290 Discounts for Actuarial present value, net present value and allowance for uncollectibles. $ (976,982) $ (697,704) Totals $ 5,715,192 $ 3,943,586 A-17

46 Classification of Expenses Operating expenses incurred for the years ended June 30 are classified two ways, as follows: Salaries and Wages $19,734,151 $19,882,047 $20,405,707 $21,347,212 $22,019,119 Employee benefits, including payroll taxes 5,600,500 5,811,366 6,026,016 7,277,776 7,593,834 Depreciation and amortization 2,677,987 2,975,791 3,560,183 3,663,387 3,758,893 Interest 981, ,274 1,130,440 1,218,966 1,183,605 Other 14,903,009 15,189,789 16,445,503 16,530,857 16,543,631 Total $43,897,077 $44,783,267 $47,567,849 $50,038,198 $51,099,082 Program services $37,619,795 $38,266,340 $42,038,366 $44,455,397 $44,576,023 Support services 6,277,282 6,516,927 5,529,483 5,582,801 6,523,059 Total $43,897,077 $44,783,267 $47,567,849 $50,038,198 $51,099,082 Net Assets Released from Restrictions and Reclassifications Net assets were released from donor restrictions when expenses were incurred to satisfy the restricted purposes, or by occurrence of other events as specified by donors. Restrictions were satisfied as follows for the years ended June 30: Operating: Financial aid $ 1,460,299 $ 1,731,984 $ 1,826,383 $ 2,032,235 $ 2,014,037 General operations and maintenance 2,796,545 2,836,448 2,619,487 2,577,765 2,975,107 Buildings and equipment 849,010 1,158,690 1,191,065 1,230,309 Expiration of time restrictions 349, , , , ,466 Total operating $ 4,606,840 $ 5,706,603 $ 5,872,266 $ 6,018,604 $ 6,352,919 Non-operating: Buildings and equipment $10,959,088 $ (28,328) $ (223,613) $ 522,757 $ 1,167,534 Reclassify matured unitrust - 1,464, Reclassifications for underwater endowments (21,045) 71,549 38,443 (554,474) 503,457 Total non-operating $10,938,043 $ 1,507,687 $ (185,170) $ (31,717) $ 1,670,991 Total $15,544,883 $ 7,214,290 $ 5,687,096 $ 5,986,887 $ 8,023,910 Investment Policy The College has a formal investment policy that has been approved by the Board of Trustees and utilizes the services of an independent consulting firm to assist the College and the Investment Committee in the management of these funds. The investment policy provides guidance as to the actual composition of the investment portfolio, and also as to the amount of funds that will be made available to the College for current operations. The College employs a total-return, endowment spending policy that establishes the amount of endowment investment return that is available to support current needs and restricted purposes. This policy is A-18

47 designed to insulate program spending from capital market fluctuations and increase the amount of return that is invested in the corpus of the fund in order to enhance its long-term value. For the years ended June 30, 2016 and 2017, the Board-approved spending formula for the endowment was an annual spending rate of 5.0% of the averaged trailing twelve quarter s market values, with certain modifications. If cash yield (interest and dividends) is less than the spending rate, realized gains can be used to make up the deficiency. Any income in excess of the spending rate is to be reinvested in the endowment. Investments The estimated current values of all College investments as of June 30, 2013 through 2017, are summarized in the following table. Current value is quoted market price for debt and equity securities and cost, which approximates market, for cash, temporary investments and mortgages. The market value of land and real estate held by the College is considered to be cost until an appraisal is performed in contemplation of a transfer of interest. The College s investment policy currently targets an asset allocation of 49% in equities (including 24.5% domestic equities and 24.5% foreign equities), 25% in alternative assets (including 18% marketable alternative assets and 7% private equity), 15% in fixed income funds, and 11% in real estate Equities, domestic $38,340,166 $40,297,599 $39,345,030 $36,678,576 $39,976,973 Equities, international and emerging 29,943,220 35,148,991 33,442,171 31,428,669 37,325,800 Total equities $68,283,386 $75,446,590 $72,787,201 $68,107,245 $77,302,773 Fixed income, domestic $18,715,859 $21,222,866 $21,587,309 $20,028,660 $20,036,682 Fixed income, cash and cash equivalents 1,016,552 4,149,973 4,228, ,184 2,329,589 Total Fixed income $19,732,411 $25,372,839 $25,815,343 $20,862,844 $22,366,271 Marketable hedging strategies $22,792,789 $26,508,176 $28,687,587 $25,808,549 $26,778,711 Real estate, marketable 8,450,303 10,563,867 8,980,354 9,222,284 7,850,475 Real assets 3,801,246 4,441,430 5,698,420 7,048,281 8,714,325 Venture capital 4,016,827 4,904,173 6,446,065 7,311,213 7,429,359 Private equity 2,938,352 2,876,486 2,534,721 2,047,209 1,581,292 Total $130,015,314 $150,113,561 $150,949,691 $140,407,625 $152,023,206 The ownership of investments for each class of net assets is as follows: Unrestricted $ 65,792,924 $ 73,316,000 $ 71,099,346 $ 63,997,078 $ 66,910,125 Temporarily Restricted 21,996,929 30,768,904 32,249,314 26,963,785 34,100,157 Permanently Restricted 42,225,461 46,028,657 47,601,031 49,446,762 51,012,924 Total $130,015,314 $150,113,561 $150,949,691 $140,407,625 $152,023,206 A-19

48 The market value of investment asset classifications are as follows: Endowment Held by Trustees $124,674,188 $145,622,489 $147,442,877 $137,438,119 $146,415,675 Held by College 20,246 21,780 22,466 26,380 26,822 Trusts and annuities 3,891,303 3,009,829 2,928,977 2,785,434 2,987,880 Unrestricted current funds 58, ,237 7,202 7, ,295 Restricted current funds 63,525 73,631 64,029 74,832 2,411,734 Loan funds 823, , Plant funds 484, , ,140 75,800 75,800 $130,015,314 $150,113,561 $150,949,691 $140,407,625 $152,023,206 Investment activity for the years ended June 30 is reflected in the table below: Investment activity: Investment, beginning $119,933,141 $130,015,314 $150,113,561 $150,949,691 $140,407,625 Funds available for investment 2,893,817 3,699,893 1,777,414 2,776,996 4,423,876 $122,826,958 $133,715,207 $151,890,975 $153,726,687 $144,831,501 Investment returns: Dividends, interest and other income (net of expenses) $ 1,751,981 $ 1,307,254 $ 1,637,230 $ 1,677,639 $ 1,283,011 Investment return, net of amount available to support current operations per statement of activities $ 8,265,535 $ 16,828,695 $ 254,221 $(13,176,319) $ 7,241,121 Add spending in excess of yield 4,570,272 6,027,209 5,533,616 5,876,078 6,542,341 Net realized and unrealized gains (losses) $ 12,835,807 $ 22,855,904 $ 5,787,837 $ (7,300,241) $ 13,783,462 Total return on investment $ 14,587,788 $ 24,163,158 $ 7,425,067 $ (5,622,602) $ 15,066,473 Amounts appropriated for operations, net transfers to operational accounts, debt payment and other activity (7,399,432) (7,764,804) (8,366,351) (7,696,460) (7,874,768) Investments, ending $130,015,314 $150,113,561 $150,949,691 $140,407,625 $152,023,206 A-20

49 The following table shows the value and performance summary for investments at the time and for the periods indicated. Value as of Value as of Value as of Investment Performance as of 3/31/2018 Asset Class 06/30/16 06/30/17 03/31/18 1 Year 3 Year 5 Year Equities, domestic $36,678,576 $39,976,973 $38,213, % 9.9% 11.4% Equities, international and emerging 31,428,669 37,325,800 41,136, % 6.8% 8.4% Total equities $68,107,245 $77,302,773 $79,349,102 Fixed income, domestic $20,028,660 $20,036,682 $20,213, % 1.8% 6.2% Cash and cash equivalents 834,184 2,329,589 1,203,052 Total Fixed income $20,862,844 $22,366,271 $21,416,155 Marketable hedging strategies 25,808,549 26,778,711 28,282, % 4.3% 13.7% Real estate, marketable 9,222,284 7,850,475 7,550,140 (9.0)% (5.6)% (0.3)% Real assets 7,048,281 8,714,325 10,321, % 8.0% 5.2% Venture capital/private equity 9,358,422 9,010,651 9,977, % 9.1% 13.4% $140,407,625 $152,023,206 $156,897, % 5.7% 9.9% Endowment Net Assets Endowment Net Assets were classified as follows as of June 30 for the years reported: Unrestricted: Quasi endowment $ 64,327,734 $ 70,929,318 $ 69,885,842 $ 63,246,004 $ 65,283,063 Accumulated losses resulting in underwater funds (233,045) (161,496) (123,053) (677,527) (174,070) Trust and annuities 181, , , , ,358 $ 64,276,633 $ 71,134,573 $ 70,104,824 $ 62,861,761 $ 65,544,351 Temporarily restricted: Accumulated endowment investment return, net of amounts spent $ 19,412,675 $ 29,422,791 $ 30,985,793 $ 25,787,611 $ 30,610,903 Trust and annuities 1,876, , , , ,571 $ 21,289,062 $ 30,377,638 $ 31,877,241 $ 26,624,688 $ 31,485,474 Permanently restricted: True endowment funds $ 40,981,957 $ 45,098,609 $ 47,120,194 $ 48,938,001 $ 50,120,510 Trust and annuities 105, , , , ,815 Funds held in trust by others 1,821,733 1,967,808 1,900,109 1,836,112 1,834,882 Contributions receivable 1,284,667 1,171,885 1,136, , ,721 $ 44,194,191 $ 48,421,604 $ 50,339,789 $ 51,750,736 $ 52,737,928 Total net assets $129,759,886 $149,933,815 $152,321,854 $141,237,185 $149,767,753 A-21

50 Plant Assets The following tabulation presents carrying values of the College s land, buildings, furniture and equipment, before and after depreciation, for the past five fiscal years: Buildings and leasehold improvements $ 84,492,495 $ 98,911,977 $115,786,058 $116,433,356 $118,828,076 Vehicle, furniture and equipment 17,557,395 18,365,753 19,618,015 20,409,146 20,608,834 $102,049,890 $117,277,730 $135,404,073 $136,842,502 $139,436,910 Less accumulated depreciation (44,394,875) (47,204,507) (50,660,507) (54,263,830) (57,588,591) $ 57,655,015 $ 70,073,223 $ 84,743,566 $ 82,578,672 $ 81,848,319 Land 4,319,610 4,390,651 4,390,651 4,390,651 4,390,651 Construction in progress 11,416,754 13,090, ,705 3,954,933 17,094,915 Art collection 1,422,488 1,506,320 1,506,320 1,506,320 1,506,250 $ 74,813,867 $ 89,060,329 $ 91,096,242 $ 92,430,576 $104,840,135 The College presently carries, under blanket and other policies, property insurance on its buildings, furniture, fixtures and equipment, excluding land, in the aggregate amount of $164,736,830. Properties are insured for replacement value less a deductible provision per loss. Other Real Property The College recently purchased Coventry Horse Farm for use in the College s Equestrian Program. It contains 70 acres of land and is located approximately 7 minutes from campus in Hanover County, Virginia. The farm was purchased entirely by gifts to the College. The farm includes a main barn with stalls for 33 horses, an indoor riding arena, and two large outdoor riding arenas. In addition, it has an outdoor barn with 20 stalls. Since its founding in December 2010, the College s Equestrian Program has grown to include 39 student equestrians. [Remainder of Page Intentionally Left Blank] A-22

51 Net Assets The composition of the College s Net Assets as of the fiscal years ended June 30, 2013, through 2017, is as follows: Unrestricted Funds functioning as endowment: Quasi endowment $ 64,327,734 $ 70,929,318 $ 69,885,842 $ 63,246,004 $ 65,283,063 Accumulated losses resulting in underwater funds (233,045) (161,496) (123,053) (677,527) (174,070) Amounts held for trust and annuity payments 181, , , , ,358 Investment in land, buildings and equipment, net of debt 45,088,371 11,269,478 11,276,755 10,661,320 13,564,542 College contributions to student loan funds 650, , , , ,088 Other (8,786,741) (8,499,251) (9,808,481) (9,821,601) (8,355,762) $101,229,035 $ 74,596,806 $ 72,260,310 $ 64,160,296 $ 70,873,219 Temporarily Restricted Funds functioning as endowment: Accumulated endowment investment return net of amounts spent $ 19,412,675 $ 29,422,791 $ 30,985,793 $ 25,787,611 $ 30,610,903 Amounts held for trust and annuity payments 1,876, , , , ,571 Restricted for future operations 5,266,283 5,487,452 5,522,278 5,512,449 9,238,996 Restricted for buildings and equipment 5,538,633 42,241,210 49,436,337 52,562,569 51,133,693 $ 32,093,978 $ 78,106,300 $ 86,835,856 $ 84,699,706 $ 91,858,163 Permanently Restricted Restricted in perpetuity, only the income is expendable: Endowment principal $ 40,981,957 $ 45,098,609 $ 47,120,194 $ 48,938,001 $ 50,120,510 Trusts and annuities 105, , , , ,815 Funds held in trust by others 1,821,733 1,967,808 1,900,109 1,836,112 1,834,882 Contributions receivable 1,284,667 1,171,885 1,136, , ,721 Student loan funds 3,099,893 2,731,952 2,785,144 3,524,244 3,769,248 $ 47,294,084 $ 51,153,556 $ 53,124,933 $ 55,274,980 $ 56,507,176 Total Net Assets $180,617,097 $203,856,662 $212,221,099 $204,134,982 $219,238,558 A-23

52 OUTSTANDING INDEBTEDNESS As of December 31, 2017 the projected Annual Debt Service Costs of the College for the fiscal years ending June 30 are as follows: Annual Debt Service on Debt Outstanding Fiscal Year Principal Interest Total 2018 $1,056,474 $ 566,172 $1,622, ,088,180 1,115,570 3,203, ,203,958 1,051,257 3,255, ,325, ,855 3,308, ,446, ,811 3,357, ,327, ,150 3,165, ,184, ,272 3,952, ,374, ,087 3,047, ,465, ,046 3,065, ,551, ,325 3,076, ,668, ,795 3,114, ,281, ,745 1,652, ,672, ,609 2,005, ,019, ,302 1,303, ,056, ,715 1,310, ,020, ,894 1,242, ,055, ,696 1,247, ,095, ,391 1,256, ,130, ,981 1,258, ,000 95, , ,000 81, , ,000 68, , ,000 53, , ,000 38, , ,000 23, , ,000 7, ,949 Total $38,522,059 $10,793,276 $49,315,336 The above numbers include approximately $38 million in total debt service on the Series 2012 Note, Series 2013 Note, Series 2014 Note, and Series 2017 Note that are expected to be redeemed with proceeds of the Series 2018 Bonds. A-24

53 GIFTS TO THE COLLEGE Alumni and other private donors to the College provide significant support. Due to the generosity of donors, the College has been able to undertake ambitious building efforts over the last decade. Birdsong Residence Hall, Brock Commons, new Football, Lacrosse and Baseball facilities, an Alumni House, a Library Pavilion, and a new Science Building and Observatory were among the projects completed with extraordinary alumni support through a capital campaign that concluded on December 31, The College s $100 million Capital Campaign known as Building Extraordinary concluded with total gifts of $125 million ($14 million of which were planned gifts). As of March 31, 2018, 97% of the gifts were collected from 12,129 donors. The College has one of the highest percentages of alumni giving among colleges and universities in the country. According to the Council for Aid to Education, for Fiscal Year 2017, 38% of the College s alumni donated to the College, ranking 22nd nationally in the percentage of alumni making a gift to the College during the Fiscal Year. This is compared to 40% in Fiscal Year 2016 and Fiscal Year In addition, 91% of the 2018 graduating class made gifts to the College, totaling over $11,000. CAPITAL EXPENDITURES AND FUTURE INDEBTEDNESS The College intends to continue making capital improvements to its campus to support strategic initiatives, including those identified below: Sources of Funding* Cash On Hand Fundraising Loan Project Estimated Cost Targeted Completion New Nursing Facility $ 10,900,000 $ 8,400,000 $ - $ 2,500,000 12/31/2019 New Performing Arts Theatre 6,600,000 5,600,000 1,000,000-12/31/2019 New Turf Field 2,000,000 2,000, Summer 2019 Renovation of Athletic Facilities 5,775,000 4,700,000 1,075,000 - TBD Renovation of Library 2,000,000 2,000, Summer 2019 New Dorm** TBD TBD TBD TBD TBD Total $ 27,275,000 $ 22,700,000 $ 2,075,000 $ 2,500,000 * Subject to change. ** Randolph-Macon is a residential community with approximately 82% of its students living on campus. The College grants off campus waivers to upper classmen when the dorms are full one year at a time. The College would not add additional beds until the waivers reached enough to fill up the new residential space. The College has not decided on the type of units or size. Retirement Plans RETIREMENT PLANS Retirement benefits are provided for eligible faculty and staff employees by a contributory pension plan for annuity contracts with Teachers Insurance and Annuity Association (TIAA), MetLife Resources, and/or College Retirement Equities Fund. All participants have a fully-vested interest in the total contributions made on their behalf. Under the plan, the College contributed approximately $1.6 million in 2017, which was charged to operating expenses. The Board has approved a Retirement Investment Policy Statement which includes a committee consisting of the Vice President of Administration and Finance, Director of Human Resources and two faculty representatives appointed by the President. The investment committee meets with the College s advisors once a quarter to review fund performance. A-25

54 Multiple Employer Plans The Council of Independent Colleges in Virginia ( CICV ) recently established a Multiple Employer Retirement Plan ( MEP ) that is still in the course of being implemented. Randolph-Macon College, along with 13 other CICV schools, signed a participation agreement indicating their commitment to the program and will be joining the consortium in Fall One of the primary objectives of the MEP is to ensure that all CICV institutions are in compliance with current federal regulations concerning retirement plans. The MEP will assume almost all the work functions required by the colleges Human Resources Offices relating to 403(b) retirement plans. College employees will have a much more robust retirement program with lower fees and a noticeable increase in advice and financial planning services. LITIGATION In the opinion of the College s administration, there are no legal actions pending or threatened against the College that, even if adversely determined against the College, would have a material adverse effect on the College s financial position. A-26

55 APPENDIX B AUDITED FINANCIAL STATEMENTS OF THE BORROWER FOR THE FISCAL YEAR ENDED JUNE 30, 2017

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57 FINANCIAL REPORT JUNE 30, 2017