Tuition and fee proposals will be presented at this meeting. A summary of the proposed increases is enclosed.

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1 April 29, 2011 Members of the Board Finance Committee John Simmons Marquita Wiley Dear Members of the Finance Committee: There will be a meeting of the Finance Committee immediately following the Academic Matters Committee on Thursday, May 12, 2011, in the Conference Center, 2 nd Floor, in the Delyte W. Morris University Center, Southern Illinois University Edwardsville, Edwardsville, IL. Tuition and fee proposals will be presented at this meeting. A summary of the proposed increases is enclosed. The following items have been suggested for the agenda: 1. Approval of Minutes of the April 14, 2011, meeting (enclosure). 2. SIUC Fee Items: Proposed Increase: Facilities Maintenance Fee, Carbondale Campus, SIUC [Amendment to 4 Policies of the Board Appendix A-6] (Board Agenda Item J). Proposed Increase: Flight Training Charges, SIUC [Amendment to 4 Policies of the Board Appendix A-4] (Board Agenda Item K). Proposed Increase: Intercollegiate Athletic Fee, SIUC [Amendment to 4 Policies of the Board Appendix A-6] (Board Agenda Item L). Proposed Increase: Residence Hall Rates and Apartment Rentals, SIUC [Amendment to 4 Policies of the Board Appendix A-18] (Board Agenda Item M). Proposed Increase: Student Center Fee, SIUC [Amendment to 4 Policies of the Board Appendix A-6] (Board Agenda Item N). Proposed Increase: Student Medical Benefit (SMB): Extended Care Fee and Change in the Name of the SMB Extended Care Fee, SIUC [Amendments to 4 Policies of the Board Appendix A-6] (Board Agenda Item O).

2 Finance Committee Page 2 April 29, 2011 Proposed Increase: Student Recreation Fee, SIUC [Amendment to 4 Policies of the Board Appendix A-6] (Board Agenda Item P). Proposed Increase: Information Technology Fee, SIUC [Amendment to 4 Policies of the Board Appendix A-6] (Board Agenda Item Q). 3. SIUE Fee Items: Proposed Increase: Athletic Fee, SIUE [Amendment to 4 Policies of the Board Appendix B-4] (Board Agenda Item R). Proposed Increase: Facilities Fee, SIUE [Amendment to 4 Policies of the Board Appendix B-4] (Board Agenda Item S). Proposed Increase: Information Technology Fee, SIUE [Amendment to 4 Policies of the Board Appendix B-4] (Board Agenda Item T). Proposed Increase: Student Fitness Center Fee, SIUE [Amendment to 4 Policies of the Board Appendix B-4] (Board Agenda Item U). Proposed Increase, Consolidation of Sub Fees and Sub Fee Name Change: Student Welfare and Activity Fee, SIUE [Amendment to 4 Policies of the Board Appendix B-4] (Board Agenda Item V). Proposed Increase: University Housing Occupancy Fee Rates, SIUE [Amendment to 4 Policies of the Board Appendix B-11] (Board Agenda Item W). Alternate Tuition Rate: Doctorate of Nursing Practice Degree, SIUE [Addition to 4 Policies of the Board Appendix B, 1 Note 7] (Board Agenda Item X). Alternate Tuition Rate: International Students, SIUE [Addition to 4 Policies of the Board Appendix B, 1 Note 6] (Board Agenda Item Y). Alternate Tuition Rate: Istanbul Technical University, SIUE [Addition to 4 Policies of the Board Appendix B, 1 Note 4] (Board Agenda Item Z). 4. Proposed Tuition Rates for FY 2012 [Amendments to 4 Policies of the Board Appendices A and B] (Board Agenda Item AA). 5. Temporary Financial Arrangements for Fiscal Year 2012 (Board Agenda Item BB). 6. Proposed Board of Trustees Identity Protection Policy [Creation of 7 Policies of the Board H] (Board Agenda Item CC). 7. Approval of Purchase: Bus Services, Carbondale Campus, SIUC (Board Agenda Item GG).

3 Finance Committee Page 3 April 29, Approval of Purchase: Fish Meal Derived From Asian Carp, SIUC (Board Agenda Item HH). 9. Approval of Purchase: Marketing Communications Services, Carbondale Campus, SIUC (Board Agenda Item II). 10. Other business. Also enclosed is the FY 2011 Third Quarterly Investment Report. Yours truly, Duane Stucky Senior Vice President for Financial and Administrative Affairs and Board Treasurer Enclosures cc: Jeff Harrison Donald Lowery Rita Cheng Roger Herrin Donna Manering Vaughn Vandegrift Ed Hightower Alex Vansaghi Constituency Heads Mark Hinrichs Glenn Poshard Other Interested Parties

4 BOARD OF TRUSTEES SOUTHERN ILLINOIS UNIVERSITY Minutes of the Finance Committee Meeting April 14, 2011 The Finance Committee met following the Audit Committee in the Auditorium of the Southern Illinois University School of Medicine, Springfield, IL. Present were: Marquita Wiley (Chair Pro Tem), Frank William Bonan II (Member Pro Tem) and John Simmons. Other Board members present were: Jeff Harrison, Ed Hightower, Donna Manering and Alex Vansaghi. Executive Officers present were: President Glenn Poshard; Chancellor Rita Cheng, SIUC; Chancellor Vaughn Vandegrift, SIUE; Vice President for Academic Affairs Paul Sarvela; and Senior Vice President for Financial and Administrative Affairs and Board Treasurer Duane Stucky. Minutes Frank William Bonan II recommended approval of the minutes of the February 10, 2011, meeting as submitted. The motion was seconded by Marquita Wiley and passed by the Committee. SIUC Notice Items: Notice of Proposed Increase: Facilities Maintenance Fee, Carbondale Campus, SIUC [Amendment to 4 Policies of the Board Appendix A-6] (Board Agenda Item H). Notice of Proposed Increase: Flight Training Charges, SIUC [Amendment to 4 Policies of the Board Appendix A-4] (Board Agenda Item I). Notice of Proposed Increase: Intercollegiate Athletic Fee, SIUC [Amendment to 4 Policies of the Board Appendix A-6] (Board Agenda Item J). Notice of Proposed Increase: Residence Hall Rates and Apartment Rentals, SIUC [Amendment to 4 Policies of the Board Appendix A-18] (Board Agenda Item K). Notice of Proposed Increase: Student Center Fee, SIUC [Amendment to 4 Policies of the Board Appendix A-6] (Board Agenda Item L). Notice of Proposed Increase: Student Medical Benefit (SMB): Extended Care Fee and Change in the Name of the SMB Extended Care Fee, SIUC [Amendments to 4 Policies of the Board Appendix A-6] (Board Agenda Item M).

5 Minutes of the April 14, 2011, Board Finance Committee Meeting Page 2 Notice of Proposed Increase: Student Recreation Fee, SIUC [Amendment to 4 Policies of the Board Appendix A-6] (Board Agenda Item N). Notice of Proposed Increase: Information Technology Fee, SIUC [Amendment to 4 Policies of the Board Appendix A-6] (Board Agenda Item O). Chancellor Cheng reviewed the proposed increase in the Facilities Maintenance Fee. Dr. Hightower stated that the Board had previously directed the administration to move forward with a process to address deferred maintenance issues. In response to a question by Mr. Bonan, Dr. Cheng confirmed the amount the proposed fee increase would raise and the amount of total deferred maintenance needed at SIUC. On the proposed Flight Training increase, Dr. Cheng confirmed to Mr. Bonan that only Aviation Flight students pay this fee. Chancellor Cheng reviewed the remainder of the SIUC proposed fee increases. She reported that the following constituencies* support the proposed fee increases: Facilities Maintenance Fee USG & GPSC Residence Hall Rates and Apartment Rentals Residence Hall Association Student Center Fee Student Center Advisory Board Student Medical Benefit Student Health Advisory Board Student Recreation Fee Recreation Sports & Services Advisory Board, USG & GPSC Information Technology Fee USG & GPSC *USG Undergraduate Student Government; GPSC Graduate and Professional Student Council. SIUE Notice Items Notice of Proposed Increase: Athletic Fee, SIUE [Amendment to 4 Policies of the Board Appendix B-4] (Board Agenda Item P). Notice of Proposed Increase: Facilities Fee, SIUE [Amendment to 4 Policies of the Board Appendix B-4] (Board Agenda Item Q). Notice of the Proposed Increase: Information Technology Fee, SIUE [Amendment to 4 Policies of the Board Appendix B-4] (Board Agenda Item R). Notice of Proposed Increase: Student Fitness Center Fee, SIUE [Amendment to 4 Policies of the Board Appendix B-4] (Board Agenda Item S). Notice of Proposed Increase, Consolidation of Sub Fees and Sub Fee Name Change: Student Welfare and Activity Fee, SIUE [Amendment to 4 Policies of the Board Appendix B-4] (Board Agenda Item T).

6 Minutes of the April 14, 2011, Board Finance Committee Meeting Page 3 Notice of Proposed Increase: University Housing Occupancy Fee Rates, SIUE [Amendment to 4 Policies of the Board Appendix B-11] (Board Agenda Item U). Notice of Alternate Tuition Rate: Doctorate of Nursing Practice Degree, SIUE [Addition to 4 Policies of the Board Appendix B, 1 Note 7] (Board Agenda Item V). Notice of Alternate Tuition Rate: International Students, SIUE [Addition to 4 Policies of the Board Appendix B, 1 Note 6] (Board Agenda Item W). Notice of Alternate Tuition Rate: Istanbul Technical University, SIUE [Addition to 4 Policies of the Board Appendix B, 1 Note 4] (Board Agenda Item X). Chancellor Vandegrift presented an overview of the process for SIUE fee increase proposals and reviewed Items P through X. In response to a question by Trustee Manering, Dr. Vandegrift confirmed that all the SIUE fee proposals are endorsed by their Student Senate. Notice of Proposed Tuition Rates for FY 2012 [Amendments to 4 Policies of the Board Appendices A and B] (Board Agenda Item Y). President Poshard presented the proposed increases: 9.9% for SIUE and 9% for SIUC. He stated that SIUE currently has the lowest public university tuition in the State. Increases are requested at this time due to: continuing problems with State appropriations and cash flow; concern for the FY 12 budget; and declining enrollment at SIUC. Dr. Hightower commended Dr. Poshard for limiting increases in the past. However, he stated that he can t support a 9.9% increase and asked Dr. Poshard to provide information on what other Illinois universities are proposing for tuition increases. Dr. Poshard responded that he believes the University of Illinois is the only institution which has stated their proposed increase - 6.9%. Dr. Hightower asked the trustees to join him in requesting that a proposal be considered at a lower rate than 9.9%. Trustee Wiley commented on the amount of increase the market can bear due to: total cost to students; the amount of debt incurred by graduating students and their families; the job market; and the value of the student s degree in securing a job. Trustee Bonan stated that student loan defaults are at a record level. He asked whether the structure and mission of SIU might need to be changed due to the lack of State and federal support. Trustee Wiley concurred with Dr. Hightower in asking the President and the Chancellors to look at other alternatives to the proposed tuition increase amounts. Dr. Poshard stated that the proposals will be reviewed again. Trustee Manering agreed with the concern with the proposed amount. She is also concerned with remaining competitive in the recruitment/retention of students and staff, maintaining quality programs, and resolving labor issues. Jeff Harrison confirmed that the proposed tuition rates would take effect for incoming freshmen in the Fall of He commended President Poshard for his leadership and challenged the President and Chancellors to look for further efficiencies. He concurred with Trustee Manering on the importance of

7 Minutes of the April 14, 2011, Board Finance Committee Meeting Page 4 increasing the retention rates. Dr. Hightower stated that it would be unfair for the Board to request another 0% increase, but he asked that the President reconsider the current tuition proposal. FY 2012 Operating and Capital Budgets Planning Guidelines (Board Agenda Item CC) (Joint discussion with the Architecture and Design Committee). Vice President Stucky stated that these general Guidelines allow the campuses to begin FY 2012 budget planning. Frank William Bonan II recommended approval of the matter and that it be placed on the Board s omnibus motion. The motion was duly seconded by Marquita Wiley and was passed by the Finance and Architecture and Design Committees. Proposal to Change the Name of the SMB Primary Care Fee, SIUC [Amendment to 4 Policies of the Board Appendix A-6 and Housing and Auxiliary Facilities System Revenue Bond Resolution] (Board Agenda Item DD). Chancellor Cheng summarized the reason for the name change. Frank William Bonan II recommended approval of the matter and that it be placed on the Board s omnibus motion. The motion was duly seconded by Marquita Wiley and was passed by the Finance Committee. Approval of Purchase Agreement: Agenda Item NN). Pepsi Beverages Company, SIUE (Board Vice President Stucky reviewed the proposed purchase. John Simmons recommended approval of the matter and that it be placed on the Board s omnibus motion. The motion was duly seconded by Frank William Bonan II and was passed by the Finance Committee. Approval of Purchase: Broadband-Based Economic and Community Development Services, Southern Illinois University (Board Agenda Item OO). Vice President Stucky reviewed the proposed purchase. Frank William Bonan II recommended approval of the matter and that it be placed on the Board s omnibus motion. The motion was duly seconded by John Simmons and was passed by the Finance Committee. Other Business. There being no further business, the meeting was adjourned. DS/lap

11 Southern Illinois University Quarterly Investment Report March 31, 2011

12 Performance Analysis Treasury yields rose modestly during the 1st Quarter of 2011, as the Federal Reserve Board "stayed the course" on keeping short-term interest rates low. Treasury yields in the 2 yr. to 30 yr. range increased 10 to 21 basis points for the quarter, while the 90-day T-Bill rate actually dropped 5 bp. This compares to a much steeper increase in medium to long Treasury yields of up to 80 bp. during the 4th Quarter of The yield curve is still maintaining a sharp upward sloping contour which has been characteristic of the post-credit crisis market. The yield curve will likely remain steep until the domestic economy improves on all fronts and the Fed shifts its policy to tightening. 5.0% 4.0% Recent U.S. Treasury Yield Curves The modest increase in medium term interest rates in the 2 to 10-year range inhibited SIU's overall return to just 0.04% for the quarter ending 3/31/2011, after factoring in capital losses on the intermediate portfolio which offset income. This modest quarterly return of 0.04% did outperform the weighted benchmark return of 0.01%. The Western Asset Intermediate Fund posted a modest gain of 0.07% for the quarter with most of its income offset by capital losses in February and March due to rising interest rates. This return exceeded the Barclay's benchmark for the quarter of 0.02%, primarily due to a heavier weighting of higher yielding Agency securities in the Western Asset Intermediate portfolio. As in recent quarters, SIU's modest 0.024% return on the Illinois Funds continued to outperform the money market benchmark of 0.000% in this low short-term interest rate environment. This 0.024% quarterly return equates to an annual return of approximately 0.096%, or about 10 basis points on SIU's liquid funds. 3.0% 2.0% 1.0% 0.0% 3 Mo 2 Yr 5 Yr 10 Yr 30 Yr 3/31/ /31/2010 3/31/2011 John S. Vincent & Company LLC Page 1

13 Operating Investments

14 Operating Investment Position Investment Balance Market Value ($ in millions) 3/31/2010 6/30/2010 9/30/ /31/2010 3/31/2011 State Treasury Fund- Money Market $ $ 57.3 $ $ 73.2 $ Western Asset - Intermediate Portfolio Total Portfolio $ $ $ $ $ Due from State Total Portfolio including Due from State $ $ $ $ $ Market Value Change ($ in millions) 3/31/2010 6/30/2010 9/30/ /31/2010 3/31/2011 Beginning Market Value $ $ $ $ $ Deposits (Withdrawals) 56.2 (72.0) 65.9 (50.0) 76.9 Interest Income, Net of Fees Realized Gain (Loss) (0.2) Unrealized Gain (Loss) (0.6) (2.2) (0.2) Ending Market Value $ $ $ $ $ Page 3

15 Operating Performance Quarterly Performance State Treasury Fund Rate of Return 3/31/2010 6/30/2010 9/30/ /31/2010 3/31/2011 State Treasury Portfolio 0.02% 0.04% 0.05% 0.04% 0.02% Merrill Lynch Ready Assets 0.00% 0.00% 0.00% 0.00% 0.00% Intermediate Portfolio Rate of Return 3/31/2010 6/30/2010 9/30/ /31/2010 3/31/2011 Western Asset Intermediate Portfolio 1.06% 3.15% 2.12% -1.48% 0.07% Barclays Capital Intermediate U.S. Govt 1.12% 3.26% 2.13% -1.55% 0.02% Total Fund Rate of Return 3/31/2010 6/30/2010 9/30/ /31/2010 3/31/2011 Total Portfolio 0.51% 1.61% 1.10% -0.78% 0.04% Benchmark 0.48% 1.69% 1.13% -0.92% 0.01% Historical Annual Performance Fiscal YTD ending Total Fund Rate of Return FY 2007 FY 2008 FY2009 FY2010 3/31/2011 Total Portfolio 5.29% 5.95% 3.80% 3.01% 0.37% Benchmark 5.12% 6.40% 3.51% 2.97% 0.21% Page 4

16 Asset Allocation Asset Allocation Target Asset As of March 31, 2011 Market Value Allocation Allocation (in millions) Percentage (in millions) State Treasury Fund $ % $40 Minimum Western Asset - Intermediate Term Portfolio % $ $248.4 Page 5

17 Fees Investment Manager Fees* Basis Points As of 12/31/10 3/31/2010 6/30/2010 9/30/ /31/2010 Total State Treasury Fund- Money Market 9.3 $25, $21, $22, $20, $90, Western Asset - Intermediate Term Portfolio , , , , , Total Investment Manager Fees $85, $81, $84, $82, $333, Custody Bank Fees* 3/31/2010 6/30/2010 9/30/ /31/2010 Total JP Morgan Chase $4, $4, $4, $4, $19, * Fees for the current quarter were not available at the time this report was prepared. All fees are reflected on an accrual basis. Page 6

18 Capital Investments

19 Capital Investments Position Investment Balance Market Value ($ in millions) 3/31/2010 6/30/2010 9/30/ /31/2010 3/31/2011 Housing & Auxiliary Facilities System Construction Proceeds Interest Sinking Fund Debt Service Reserve Total HAFS Medical Facilities System Construction Proceeds Interest Sinking Fund Debt Service Reserve Total MFS Certificates of Participation Construction Proceeds Interest Sinking Fund Debt Service Reserve Total COPS Total Capital Investment Portfolio $ 65.0 $ 44.9 $ 37.4 $ 29.0 $ 37.8 Capital Investments are managed internally and are invested in high quality, low risk government securities. The investment maturity, rate of return and type are limited by covenants in the debt financing documents. Page 8

STATE OF ILLINOIS SOUTHERN ILLINOIS UNIVERSITY FINANCIAL AUDIT

STATE OF ILLINOIS SOUTHERN ILLINOIS UNIVERSITY FINANCIAL AUDIT For the Year Ended June 30, 2012 Performed as Special Assistant Auditors for the Auditor General, State of Illinois Board of Trustees and