Bank-Qualified NEW ISSUE. of tax $7,615,000. will be. Registered Owners as of. obligation of BONDS. by Armstrong. University by.

Transcription

1 NEW ISSUE Bank-Qualified BOOK-ENTRY ONLY Rating: Standard & Poor s A- See RATING herein. In the opinion of Armstrong Teasdale LLP, Bond Counsel, under existing law and assuming continued compliance with certain requirements of the Internal Revenue Code of 1986, as amended (the Code ), (1) the interest on the Bonds (including any original issue discount properly allocable to an owner thereof) is excludable from gross incomee for federal income tax purposes, and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations but may be included in the adjusted current earnings of certain corporations for purposes of computing alternative minimum tax on such corporations; and (2) the interest on the Bonds is exempt from Missourii income taxation by the State of Missouri. The Bondss have been designated as qualified tax-exempt obligations within the meaning of Section 265(b) of the Code. See TAX MATTERS herein. MISSOURI SOUTHERN STATE UNIVERSITY $7,615,000 AUXILIARY ENTERPRISE SYSTEM REFUNDING REVENUE BONDS, SERIES 2015 Maturities, Principal Amounts, Interest Rates, CUSIP Numbers, and Prices or Yields as Shown on Inside Front Cover Dated: Date of Delivery Due: October 1, as shown on inside cover page The Auxiliary Enterprise System Refunding Revenue Bonds, Series (the Bonds ) issued by Missouri Southern State University (the University ) will be registered in the name of Cede & Co., as registered owner and nominee forr The Depository Trust Company ( DTC ), New York, New York. DTC will act as securities depository for the Bonds. Purchases of beneficial ownership interests in the Bonds will be made in book-entry only form in denominations of $5,000 or any integral multiple thereof. Purchasers will not receive certificates representing their beneficial interests in the Bonds. See THE BOOK-ENTRY ONLY SYSTEM herein. Thee principal of, redemption premium, if any, and interest on the Bonds will be paid by UMB Bank, N.A., St. Louis, Missouri, ass Paying Agent and Bond Registrarr (the Paying Agent ) to Cede & Co., as long as Cede & Co. is the sole holder of the Bonds. Disbursement of such payments to the DTC Participants is the responsibility of DTC and disbursement of such payments to the purchasers of beneficial ownership interests inn the Bonds is the responsibility of DTC Participants and Indirect Participants, as more fully described herein. Interest on the Bonds (computed on the basis of a 360-day year consistingg of twelve 30-dayy months) will be payable to the Registered Owner thereof on each April 1 and October 1, beginning April 1, 2016, by check or draft mailed to the persons who are Registered Owners as of the close of business on the 15th day of the calendar month next preceding the month in which an interest payment on any Bond is to be made (the Record Date ). The Bonds are subject to optional and mandatory sinking fund redemptionn prior to maturityy as described herein. See THE BONDS - Redemption Provisions herein. The Bonds are special obligations of the University, payable solely from the net income and revenues derived by the University from the operation of its Auxiliary Enterprise System as described herein, after payment of costs of operation and maintenance. The Bonds are secured on a parity with certain outstanding obligations of the University. See PLAN OF FINANCING herein. The Bonds do not constitute a general obligation of the University and do not constitute an indebtedness of the University within the meaning of any constitutional or statutory provision, limitation or restriction. The University has no taxing power. See SECURITY AND SOURCES OF PAYMENT FOR THE BONDS. The Bonds are subject to certain risks. See BONDOWNERS RISKS herein. The Bonds are offered when, as and if delivered by the University, and accepted by the Underwriter, subject to the approval of legality by Armstrong Teasdale LLP, St. Louis, Missouri, Bond Counsel, and certain other conditions. Certain legal matters will be passed upon for the University by Blanchard, Robertson, Mitchell & Carter, P.C., Joplin, Missouri, as counsel to the University. Certain legal matters relating to the Official Statement will be passed upon by Armstrong Teasdale LLP, St. Louis, Missouri. Certain legal matters will be passed upon for the Underwriter by its counsel, Thompson Coburn LLP, St. Louis, Missouri. It is expected that the Bonds in definitive form will be available for delivery at The Depository Trust Company in New York, New York on or about July 7, THIS COVER PAGE CONTAINS CERTAIN INFORMATION FOR QUICK REFERENCE ONLY. IT IS NOT A SUMMARY OF THE ISSUE. INVESTORS MUST READ THE ENTIRE OFFICIAL STATEMENT TO OBTAIN INFORMATION NECESSARY TO THE MAKING OF AN INFORMED INVESTMENT DECISION. This Official Statement is dated June 24, 2015.

2 Maturity Oct. 1 MATURITY SCHEDULE $7,615,000 AUXILIARY ENTERPRISE SYSTEM REFUNDING REVENUE BONDS, SERIES 2015 Serial Bonds Principal Amount Interest Rate Price CUSIP 2016 $530, % % FN , FP , FQ , FR , FS , FT , FU , FV , FW , FX , FY , FZ , GA , GB1 Term Bonds $165, % Due October 1, 2033, Price: %, CUSIP: GF2 $3,205, % Due October 1, 2038, Price: %, CUSIP: GL9

3 MISSOURI SOUTHERN STATE UNIVERSITY 3950 East Newman Road Joplin, Missouri BOARD OF GOVERNORS James B. Fleischaker, Chair and Member Glenn M. McCumber, Vice-Chair and Member Rod Anderson, Member Sherry L. Buchanan, Member Lynn M. Ewing III, Member Tracy Combs Flanigan, Member William L. Bill Gipson, Member Keith C. Hankins, Member UNIVERSITY ADMINISTRATION Dr. Alan Marble, President Dr. Brad Hodson, Executive Vice President Dr. Paula Carson, Provost/Vice President for Academic Affairs Robert J. Yust, Vice President for Business Affairs Darren Fullerton, Vice President of Student Affairs and Enrollment Management Jared Bruggeman, Athletic Director Linda Eis, Treasurer Sharon Odem, Secretary to President and Board UNIVERSITY S COUNSEL Blanchard, Robertson, Mitchell & Carter, P.C. Joplin, Missouri INDEPENDENT AUDITORS BKD, LLP Springfield, Missouri BOND COUNSEL Armstrong Teasdale LLP St. Louis, Missouri PAYING AGENT AND REGISTRAR UMB Bank, N.A. St. Louis, Missouri UNDERWRITER Edward D. Jones & Co., L.P. St. Louis, Missouri UNDERWRITER S COUNSEL Thompson Coburn LLP St. Louis, Missouri

4 REGARDING USE OF THIS OFFICIAL STATEMENT No dealer, broker, salesman, or other person has been authorized by the University or the Underwriter to give any information or to make any representations with respect to the Bonds other than those contained in this Official Statement, and, if given or made, such other information or representations must not be relied upon as having been authorized by any of the foregoing. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation, or sale. The information set forth herein has been furnished by the University and other sources which are believed to be reliable, but such information is not guaranteed as to accuracy or completeness and is not to be construed as a representation by the Underwriter. Statements contained in this Official Statement which involve estimates, forecasts, or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as a representation of fact. The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the University since the date hereof. The Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER ALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE BONDS HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN RELIANCE UPON AN EXEMPTION CONTAINED THEREIN. IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE UNIVERSITY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THESE BONDS HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS OFFICIAL STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. CAUTIONARY STATEMENTS REGARDING FORWARD- LOOKING STATEMENTS IN THIS OFFICIAL STATEMENT The statements included or incorporated by reference in this Official Statement that are not purely historical, including statements regarding the University s expectations, hopes, intentions, or strategies regarding the future, constitute forward-looking statements within the meaning of the United State Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as plan, expect, estimate, anticipate, budget, or other similar words. Such forward looking statements include, among others, certain statements under the section in this Official Statement captioned BONDOWNERS RISKS in this Official Statement.

5 THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES, AND OTHER FACTORS WHICH 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 FORWARD-LOOKING STATEMENTS HEREIN ARE NECESSARILY BASED ON VARIOUS ASSUMPTIONS AND ESTIMATES AND ARE INHERENTLY SUBJECT TO VARIOUS ASSUMPTIONS AND ESTIMATES AND TO VARIOUS RISKS AND UNCERTAINTIES. INCLUDED IN SUCH RISKS AND UNCERTAINTIES ARE (i) THOSE RELATING TO THE POSSIBLE INVALIDITY OF THE UNDERLYING ASSUMPTIONS AND ESTIMATES, (ii) POSSIBLE CHANGES OR DEVELOPMENTS IN SOCIAL, ECONOMIC, BUSINESS, INDUSTRY, MARKET, LEGAL, AND REGULATORY CIRCUMSTANCES, AND (iii) CONDITIONS AND ACTIONS TAKEN OR OMITTED TO BE TAKEN BY THIRD PARTIES, INCLUDING CUSTOMERS, SUPPLIERS, BUSINESS PARTNERS, AND COMPETITORS, AND LEGISLATIVE, JUDICIAL, AND OTHER GOVERNMENTAL AUTHORITIES AND OFFICIALS. ASSUMPTIONS RELATED TO THE FOREGOING INVOLVE JUDGMENTS WITH RESPECT TO, AMONG OTHER THINGS, FUTURE ECONOMIC, COMPETITIVE, AND MARKET CONDITIONS AND FUTURE BUSINESS DECISIONS, ALL OF WHICH ARE DIFFICULT OR IMPOSSIBLE TO PREDICT ACCURATELY. FOR THESE REASONS, THERE CAN BE NO ASSURANCE THAT THE FORWARD-LOOKING STATEMENTS INCLUDED IN THIS OFFICIAL STATEMENT WILL PROVE TO BE ACCURATE. UNDUE RELIANCE SHOULD NOT BE PLACED ON FORWARD-LOOKING STATEMENTS. ALL FORWARD-LOOKING STATEMENTS INCLUDED IN THIS OFFICIAL STATEMENT ARE BASED ON INFORMATION AVAILABLE TO THE UNIVERSITY ON THE DATE HEREOF, AND THE UNIVERSITY ASSUMES NO OBLIGATION TO UPDATE ANY SUCH FORWARD-LOOKING STATEMENTS IF OR WHEN THE EXPECTATIONS OR EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH SUCH STATEMENTS ARE BASED OCCUR OR FAIL TO OCCUR, OTHER THAN AS INDICATED UNDER THE CAPTION CONTINUING DISCLOSURE.

6 TABLE OF CONTENTS Page INTRODUCTION... 1 Purpose of the Official Statement... 1 The University... 1 The Bonds... 1 Sources of Revenue and Security for the Bonds... 2 Financial Information... 2 Bondowners Risks... 2 Summary of the Bond Resolution... 2 PLAN OF FINANCING... 2 Authorization and Purpose of the Bonds... 2 The Refunding... 3 Sources and Uses of Funds... 3 Parity Bonds... 4 THE BONDS... 4 Description of the Bonds... 4 Redemption Provisions... 5 THE BOOK-ENTRY ONLY SYSTEM... 8 SECURITY AND SOURCES OF PAYMENT FOR THE BONDS Special Obligations The Bond Resolution THE UNIVERSITY THE AUXILIARY ENTERPRISE SYSTEM. 12 General Description Housing Facilities Student Union; Student Life Center Athletic Center Condensed Statement of Revenues, Expenses, and Changes in Net Position Management s Discussion and Analysis of Results of Operations State Appropriations Auxiliary Enterprise System Debt Debt Service Requirements of the Auxiliary Enterprise System Historical Debt Service Coverage No Prior Defaults BONDOWNERS RISKS General Withholdings of and Shortfalls in State Appropriations Enrollment Financial Aid Student Fees Page Increasing Operating Costs Other Factors Affecting the Operations of the University Risk of Taxability of Interest on the Bonds Risk of Audit Secondary Market TAX MATTERS Opinion of Bond Counsel Other Tax Consequences LITIGATION LEGAL MATTERS FINANCIAL STATEMENTS CONTINUING DISCLOSURE CERTAIN RELATIONSHIPS RATING UNDERWRITING MISCELLANEOUS Appendix A Missouri Southern State University Organization, Operations, and Financial Information Appendix B Independent Auditor s Report and Audited Financial Statements Appendix C Definitions and Summary of the Bond Resolution Appendix D Form of Opinion of Bond Counsel i

7 OFFICIAL STATEMENT MISSOURI SOUTHERN STATE UNIVERSITY $7,615,000 AUXILIARY ENTERPRISE SYSTEM REFUNDING REVENUE BONDS SERIES 2015 INTRODUCTION The following introductory statement is subject in all respects to more complete information contained elsewhere in this Official Statement. The order and placement of materials in this Official Statement, including the Appendices hereto, are not to be deemed to be a determination of relevance, materiality, or relative importance, and this Official Statement, including the Cover Page and Appendices, should be considered in its entirety. All capitalized terms used in this Official Statement that are not otherwise defined herein shall have the meanings ascribed to them in Appendix C hereto. Purpose of the Official Statement The purpose of this Official Statement is to furnish information relating to (1) Missouri Southern State University (the University ), (2) the University s Auxiliary Enterprise System (as herein defined), and (3) the University s Auxiliary Enterprise System Refunding Revenue Bonds, Series 2015 to be issued in the aggregate principal amount of $7,615,000 (the Bonds ). See PLAN OF FINANCING herein. The University The University is a public institution of higher education of the State of Missouri (the State ) and a political subdivision of the State. The University owns and operates a revenue producing system of residence hall, dining room, telecommunications, social, recreational, athletic, and auxiliary enterprise facilities that serve the University and its students (the Auxiliary Enterprise System ). See THE UNIVERSITY and THE AUXILIARY ENTERPRISE SYSTEM herein. The Bonds The Bonds are being issued pursuant to Chapter 176 of the Revised Statutes of Missouri, as amended (the Act ), and a bond resolution (the Bond Resolution ) adopted by the Board of Governors of the University (the Board ). The Bonds are being issued for the purpose of providing funds, together with other funds of the University, to (1) (a) redeem the University s outstanding Auxiliary Enterprise System Refunding Revenue Bonds, Series 2005A (the Series 2005A Bonds ), maturing on October 1, 2015 (the Redeemed Series 2005A Bonds ) and refund the Series 2005A Bonds maturing on October 1 in the years 2016 through 2022 (the Refunded Series 2005A Bonds ), aggregating the principal amount of $4,290,000, and (b) refund all of the University s outstanding Auxiliary Enterprise System Refunding and Improvement Revenue Bonds, Series 2008 (the Series 2008 Bonds ), being portions of those Series 2008 Bonds maturing on October 1 in the years 2015 through 2028, inclusive, and in the years 2033 and 2038, aggregating the principal amount of $4,375,000 (the Refunded Series 2008 Bonds and, together with the Redeemed Series 2005A Bonds and the Refunded Series 2005A Bonds, the Refunded Bonds ), and (2) pay certain costs of issuing the Bonds. See PLAN OF FINANCING and THE BONDS herein. 1

8 Sources of Revenue and Security for the Bonds The Bonds are special obligations of the University, payable solely from the net income and revenues derived by the University from the operation of the Auxiliary Enterprise System after payment of costs of operation and maintenance of the Auxiliary Enterprise System. The University has no taxing power. See SECURITY AND SOURCES OF PAYMENT FOR THE BONDS herein. After the issuance of the Bonds and the application of the proceeds thereof, the University will have outstanding, in addition to the Bonds, other bonds in the aggregate principal amount of $28,785,000 that are payable from the revenues of the Auxiliary Enterprise System on a parity with the Bonds, as described in this Official Statement. The University has the right under the Bond Resolution to issue additional revenue bonds payable from the revenues of the Auxiliary Enterprise System on a parity with the Bonds, but only in accordance with and subject to the terms and conditions set forth in the Bond Resolution. The bonds and obligations presently outstanding and payable from the revenues of the Auxiliary Enterprise System on a parity basis with the Bonds and any additional parity bonds hereafter issued by the University are collectively referred to as the Parity Bonds. See PLAN OF FINANCING-Parity Bonds. Financial Information Financial statements of the University, as of and for the years ended June 30, 2014 and 2013, are included in Appendix B to this Official Statement. These financial statements have been audited by BKD, LLP, independent auditors, to the extent and for the period indicated in their report, which is also included in Appendix B. Certain summary financial information for the University for the Fiscal Year ended June 30, 2014 and the three prior Fiscal Years is set forth in Appendix A. Certain summary financial information for the Auxiliary Enterprise System for the Fiscal Year ended June 30, 2014 and the three prior Fiscal Years, is set forth herein under THE AUXILIARY ENTERPRISE SYSTEM - Condensed Statement of Revenues, Expenses, and Changes in Net Position herein. Bondowners Risks Payment of the principal of and interest on the Bonds is dependent on revenues to be derived by the University from the operation of the Auxiliary Enterprise System. Certain risks inherent in the production of such revenues are discussed under BONDOWNERS RISKS herein. Summary of the Bond Resolution A summary of the Bond Resolution, including definitions of certain words and terms used herein and in the Bond Resolution, is included in Appendix C to this Official Statement. Such summary and definitions do not purport to be comprehensive or definitive. All references herein to the Bond Resolution are qualified in their entirety by reference to the Bond Resolution. A copy of the Bond Resolution may be viewed at the office of the Underwriter, at Manchester Rd., St. Louis, Missouri 63131, (314) , or will be provided at no charge to any prospective purchaser requesting the same. Authorization and Purpose of the Bonds PLAN OF FINANCING The Bonds are being issued pursuant to and in full compliance with the Constitution and statutes of the State of Missouri, including particularly the Act and the Bond Resolution adopted by the Board of 2

9 Governors on June 4, The Series 2015 Bonds are being issued for the purpose of providing funds to refund the Refunded Bonds and pay certain costs of issuing the Bonds. The Refunding Redeemed Series 2005A Bonds and Refunded Series 2005A Bonds. The University will use a portion of the proceeds of the Bonds to redeem the Redeemed Series 2005A Bonds and to refund the Refunded Series 2005A Bonds. In order to do so, on the date of delivery of the Bonds, pursuant to a direction letter to UMB Bank, N.A., Kansas City, Missouri, as paying agent for the Refunded Series 2005A Bonds (the Prior Paying Agent ), the University will deposit with the Prior Paying Agent a portion of the proceeds of the Bonds as indicated below under the caption Sources and Uses of Funds. Pursuant to such direction letter, on October 1, 2015 the Prior Paying Agent will apply the moneys so deposited to redeem the Redeemed Series 2005A Bonds and to refund the Refunded Series 2005A Bonds, at a redemption price of 100% of the principal amount thereof, plus accrued interest thereon to the date of redemption for the Refunded Series 2005A Bonds. After the issuance of the Bonds and the deposit of the proceeds thereof with the Prior Paying Agent pursuant to the direction letter, the Redeemed Series 2005A Bonds and the Refunded Series 2005A Bonds will be payable from moneys held for such purpose by the Prior Paying Agent. The moneys will be held by the Prior Paying Agent under the resolution adopted by the Board on May 6, 2005, pursuant to which the Series 2005A Bonds were issued, and such moneys are irrevocably pledged to the payment of the Redeemed Series 2005A Bonds and the Refunded Series 2005A Bonds and the interest thereon and may be applied only to such payment. Refunded Series 2008 Bonds. The University will use a portion of the proceeds of the Bonds to refund the Refunded Series 2008 Bonds. In order to do so, on the date of delivery of the Bonds, pursuant to a direction letter to UMB Bank, N.A., Kansas City, Missouri, as paying agent for the Refunded Series 2008 Bonds (the Prior Paying Agent ), the University will deposit with the Prior Paying Agent a portion of the proceeds of the Bonds as indicated below under the caption Sources and Uses of Funds. Pursuant to such direction letter, the Prior Paying Agent will apply the moneys so deposited to redeem and pay the Refunded Series 2008 Bonds on or about August 7, 2015, at a redemption price of 100% of the principal amount thereof, plus accrued interest thereon to the date of redemption for the Refunded Series 2008 Bonds. After the issuance of the Bonds and the deposit of the proceeds thereof with the Prior Paying Agent pursuant to the direction letter, the Refunded Series 2008 Bonds will be payable from moneys held for such purpose by the Prior Paying Agent. The moneys will be held by the Prior Paying Agent under the resolution adopted by the Board on April 18, 2008, pursuant to which the Series 2008 Bonds were issued, and such moneys are irrevocably pledged to the payment of the Refunded Series 2008 Bonds and the interest thereon and may be applied only to such payment. Sources and Uses of Funds The following tables summarize the estimated sources of funds, including the proceeds from the sale of the Bonds, and the expected uses of such funds in connection with the plan of financing: 3

10 Parity Bonds Sources of Funds: Par amount of Bonds... $ 7,615,000 Plus: Net Original Issue Premium ,358 Funds from Prior Debt Service Accounts... 1,209,170 Total... $ 8,989,528 Uses of Funds: Transfer to Series 2005A Account of the Escrow Fund... $ 4,387,082 Transfer to Series 2008 Account of the Escrow Fund... 4,442,422 Costs of issuance * ,024 Total... $ 8,989,528 After the issuance of the Bonds and application of the proceeds thereof, the University will have outstanding, in addition to the Bonds, the following Parity Bonds, which are payable from the revenues of the Auxiliary Enterprise System: Series of Bonds Auxiliary Enterprise System Refunding Revenue Bonds, Series 2014A (the Series 2014A Bonds ) Auxiliary Enterprise System Improvement Revenue Bonds, Series 2014B (the Series 2014B Bonds ) Amount Outstanding $14,465,000 14,320,000 Total Parity Bonds Outstanding $28,785,000 The Parity Bonds are payable from and secured by the herein defined Net Revenues of the Auxiliary Enterprise System on a parity with the Bonds and any additional Parity Bonds hereafter issued by the University. THE BONDS The following is a summary of certain terms and provisions of the Bonds. Reference is hereby made to the Bonds and the provisions with respect thereto in the Bond Resolution for the detailed terms and provisions thereof. See Appendix C attached to this Official Statement. Description of the Bonds The Bonds are being issued pursuant to and in full compliance with the Constitution and statutes of the State of Missouri, including the Act and the Bond Resolution. The Bonds of each series will be issuable in the form of fully registered bonds without coupons, in the denomination of $5,000 or any integral multiple thereof. Purchasers will not receive certificates; the Bonds will be available only in book-entry form. The Bonds will be issued as fixed rate bonds in the principal amounts set forth on the inside cover page of this Official Statement, will be dated the date of original issuance and delivery thereof and will mature on October 1 in the years and in the principal amounts set forth on the inside cover page hereof. * Includes the Underwriter s discount and other costs of issuance. 4

11 Each Bond will bear interest (computed on the basis of a 360-day year consisting of twelve 30- day months) from the dated date of the Bonds at the rates per annum set forth on the cover page hereof, which interest will be payable semiannually on April 1 and October 1 in each year, commencing on April 1, The principal of, redemption premium, if any, and interest on each Bond shall be paid at maturity or upon earlier redemption to the person in whose name such Bond is registered at maturity or redemption date thereof, upon presentation and surrender of such Bond at the payment office of UMB Bank, N.A., St. Louis, Missouri, as paying agent (the Paying Agent ) and bond registrar (the Bond Registrar ). Payment of interest on the Bonds shall be made to the Owner thereof on the applicable payment date by check mailed by the Paying Agent and Bond Registrar to the persons in whose names the Bonds are registered at his address as it appears on the registration books maintained by the Paying Agent and Bond Registrar at the close of business on the Record Date for such interest. Notwithstanding the foregoing, the principal of, the redemption price of, and the interest on the Bonds is payable by electronic transfer in immediately available federal funds pursuant to the instructions from any owner of $500,000 or more in aggregate principal amount of Bonds given to the Paying Agent no later than the Record Date preceding a payment date (which notice shall remain effective until modified by such owner). The Bonds, when issued, will be initially registered in the name of Cede & Co., as nominee for DTC and no beneficial owner will receive certificates representing its interest in the Bonds. Payment of the principal of, premium, if any, and interest on each Bond will be made, and notices and other communications to Bondholders will be given, directly to DTC or its nominee, Cede & Co., by the Paying Agent. If the Bonds are not in a book-entry only system, payment of principal of, premium, if any, and interest on the Bonds will be made and such notices and communications will be given as described below and in the Bond Resolution. See THE BOOK-ENTRY ONLY SYSTEM. Redemption Provisions Optional Redemption. At the option of the University, the Bonds or portion thereof maturing on October 1, 2023, and thereafter, may be called for redemption and payment prior to maturity on October 1, 2022, and thereafter, in whole or in part, at any time in the maturities selected by the University (Bonds of less than a full maturity to be selected in multiples of $5,000 principal amount by the Paying Agent by lot or in such other equitable manner as it shall designate), at a redemption price equal to 100% of the principal amount thereof, plus accrued interest to the redemption date. Mandatory Sinking Fund Redemption. The Bonds maturing October 1, 2033 and October 1, 2038 (together, the Term Bonds ), are subject to mandatory sinking fund redemption and payment prior to maturity in each of the years set forth below at a redemption price equal to 100% of the principal amount thereof plus accrued interest to the redemption date: Term Bonds Maturing on October 1, 2033 Year Principal Amount 2030 $40, , , * 45,000 * Final Maturity 5

12 Term Bonds Maturing on October 1, 2038 Year Principal Amount 2034 $ 45, , , , * 835,000 * Final Maturity At its option, to be exercised on or before the 45th day next preceding any mandatory sinking fund redemption date, the University may (1) deliver to the Paying Agent for cancellation Term Bonds, in any aggregate principal amount desired; or (2) furnish the Paying Agent funds, together with appropriate instructions, for the purpose of purchasing any Term Bonds from any Registered Owner thereof whereupon the Paying Agent shall expend such funds for such purpose to such extent as may be practical; or (3) receive a credit with respect to the mandatory sinking fund redemption obligation of the University for any Term Bonds, which prior to such date have been redeemed (other than through the operation of the requirements of this provision) and cancelled by the Paying Agent and not theretofore applied as a credit against any redemption obligation under this provision. Each Term Bond so delivered or previously purchased or redeemed shall be credited at 100% of the principal amount thereof on the obligation of the University to redeem Term Bonds of the same stated maturity on such redemption date, and any excess of such amount shall be credited on future mandatory sinking fund redemption obligations for Term Bonds of the same stated maturity in the order designated by the University, and the principal amount of Term Bonds of the same stated maturity to be redeemed by operation of the requirements of this provision shall be accordingly reduced. If the University intends to exercise any option granted by the provisions of clauses (1), (2) or (3) above, the University will, on or before the 45th day next preceding each mandatory sinking fund redemption date, furnish the Paying Agent a written certificate indicating to what extent the provisions of said clauses (1), (2) and (3) are to be complied with respect to such mandatory sinking fund redemption payment. Notice of Redemption. Notice of the selection or call for optional redemption identifying the Bonds or portions thereof to be redeemed, shall be given by the Paying Agent and Bond Registrar by mailing a copy of the optional redemption notice by first class mail not less than thirty (30) nor more than sixty (60) days prior to the date fixed for optional redemption to the Owner of each Bond to be redeemed in whole or in part at the address shown on the registration books; and a second notice of optional redemption shall be sent by first class mail at such address to the Owner of any Bond who has not submitted his Bond to the Paying Agent for payment on or before the date sixty (60) days following the date fixed for optional redemption; provided, however, that neither any defect in giving such notice by mailing as aforesaid nor any defect in any notice so mailed shall affect the validity of any proceeding for the redemption of any Bond. Any notice mailed as provided in this Section shall be conclusively presumed to have been duly given, whether or not the owner receives the notice. Selection of Bonds to be Redeemed. The Bonds shall be redeemed in any order of maturity as directed by the University and only in the principal amount of $5,000 or any integral multiple thereof. When less than all of the Outstanding Bonds of any series and maturity are to be redeemed and paid prior to maturity, such Bonds shall be selected by the Paying Agent and Bond Registrar by lot in multiples of $5,000 unites of face value or in such equitable manner as the Paying Agent and Bond Registrar may determine. 6

13 Effect of Call for Redemption. Whenever any Bond is called for redemption and payment as provided in the Bond Resolution, funds shall be deposited with the Paying Agent and Bond Registrar on or prior to the fifth day preceding the redemption date sufficient to pay the Bonds called for redemption plus accrued interest and any premium required, and all interest on such Bond shall cease from and after the date for which such call is made, provided funds are available for its payment at the price specified in the Bond Resolution. Any Bonds which have been called for redemption but not redeemed due to the unavailability of funds therefor shall continue to be outstanding under, and entitled to all benefits of, the Bond Resolution. Registration, Transfer, and Exchange of Bonds. The University will, as long as any of the Bonds remain Outstanding, cause to be kept at the corporate trust operations office of the Paying Agent and Bond Registrar books for the registration, transfer and exchange of Bonds as provided in the Bond Resolution. Each Bond when issued shall be registered in the name of the Owner thereof on the registration books kept by the Paying Agent and Bond Registrar. Each Bond shall be transferable only upon the registration books maintained by the Paying Agent and Bond Registrar by the Registered Owner thereof in person or by his attorney duly authorized in writing, upon surrender thereof at the corporate trust operations office of the Paying Agent and Bond Registrar or at such other office as the Paying Agent and Bond Register may designate, together with a written instrument of transfer satisfactory to the Paying Agent and Bond Registrar duly executed by the Registered Owner or his duly authorized attorney. Upon the transfer of any such Bond and the payment of any fee, tax, or governmental charge, the Paying Agent and Bond Registrar shall issue in the name of the transferee a new registered Bond or Bonds of the same aggregate principal amount, series, and maturity as the surrendered Bond, registered in the name of the transferee, in any authorized denomination. Bonds, upon surrender thereof at the corporate trust operations office of the Paying Agent and Bond Registrar or at such other office as the Paying Agent and Bond Register may designate, together with a written instrument of transfer satisfactory to the Paying Agent and Bond Registrar duly executed by the Owner or his duly authorized attorney, may, at the option of the Owner thereof, and upon payment of any fee, tax, or governmental charge required to be paid, be exchanged for an equal aggregate principal amount of Bonds of the same maturity and series, in any authorized denomination. The Paying Agent and Bond Registrar shall not be required to exchange or register a transfer of (a) any Bonds during the 15 day period next preceding the selection of Bonds to be redeemed and thereafter until the date of the mailing of a notice of redemption of Bonds selected for redemption, or (b) any Bonds selected, called, or being called for redemption in whole or in part except, in the case of any Bond to be redeemed in part, the portion thereof not so to be redeemed. The University, the Board, and the Paying Agent and Bond Registrar may deem and treat the person in whose name any Bond shall be registered as the absolute Owner of such Bond, whether such Bond shall be overdue or not, for the purpose of receiving payment of, or on account of, the principal of, redemption premium, if any, and interest on said Bond and for all other purposes, and all such payments so made to any such Registered Owner or upon his order shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid, and none of the Board, the University, or the Paying Agent and Bond Registrar shall be affected by any notice to the contrary, but such registration may be changed as provided in the Bond Resolution. In all cases in which the privilege of transferring or exchanging Bonds is exercised, the Paying Agent and Bond Registrar shall authenticate and deliver Bonds in accordance with the provisions of the Bond Resolution. The University shall pay the fees and expenses of the Paying Agent and Bond 7

14 Registrar for the registration, transfer, and exchange of Bonds provided for by the Bond Resolution and the cost of printing a reasonable supply of registered bond blanks. Any additional costs or fees that might be incurred in the secondary market, other than fees of the Bond Registrar, are the responsibility of the Owners. THE BOOK-ENTRY ONLY SYSTEM General. When the Bonds are issued, ownership interests will be available to purchasers only through a book-entry only system (the Book-Entry Only System ) maintained by The Depository Trust Company ( DTC ), New York, New York. DTC will act as securities depository for the Bonds. Initially, the Bonds will be issued as fully-registered securities 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 Bond certificate will be issued for each maturity of the Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC or with the Paying Agent as its agent. The following discussion will not apply to any Bonds issued in certificate form due to the discontinuance of the DTC Book-Entry Only System, as described below. DTC and its Participants. 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 book-entry 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 Purchase of Ownership Interests. Purchases of the Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Securities on DTC s records. The ownership interest of each actual purchaser of each Security ( 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 Owner entered into the transaction. Transfers of ownership interests in the 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 Bonds, except in the event that use of the book-entry system for the Securities is discontinued. 8

15 So long as Cede & Co., as nominee of DTC, is the registered owner of the Bonds, the Beneficial Owners of the Bonds will not receive or have the right to receive physical delivery of the Bonds and will not be or be considered to be owners thereof under the Bond Resolution, and references herein to the Bond owners or registered owners of the Bonds shall mean Cede & Co. and shall not mean the Beneficial Owners of the Bonds. Transfers. To facilitate subsequent transfers, all 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 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 Bonds. DTC s records reflect only the identity of the Direct Participants to whose accounts such 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. Notices. 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 Bonds may wish to take certain steps to augment transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the documents relating to the Bonds. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. The Paying Agent and the University, so long as a book-entry only system is used for the Bonds, are to send any notice of prepayment or other notices required to be sent to Owners, including notices of redemption, only to DTC. Any failure by DTC to advise any Participant, or by any Participant to notify the Beneficial Owner, of any such notice and its content or effect shall not affect the validity of the prepayment of the Bonds called for prepayment or of any other action premised on such notice. If less than all of the Bonds within an issue are being redeemed, DTC s practice is to determine by lot the amount of interest of each Direct Participant in such issue to be redeemed. Voting. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC s MMI procedures. Under its usual procedures, DTC mails an omnibus proxy ( Omnibus Proxy ) to the University 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 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Payments of Principal and Interest. So long as any Bond is registered in the name of DTC s nominee, all payments of principal of, premium, if any, and interest on such Bond 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 University or the Paying Agent and Bond Registrar, on 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 Paying Agent, or the University, subject to any statutory and regulatory requirements as may be in effect from time to time. Payment of principal of, premium, if any, and interest on the Bonds to Cede & Co. (or such other nominee as may be requested by an authorized 9

16 representative of DTC) is the responsibility of the University or the Paying Agent, disbursement of such payments to Direct Participants is the responsibility of DTC, and disbursement of such payments to the Beneficial Owners is the responsibility of Direct and Indirect Participants. Discontinuation of Book-Entry Only System. DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the University or the Paying Agent. Under such circumstances, in the event that a successor depository is not obtained, Bond certificates are required to be printed and delivered as described in the Bond Resolution. The University may decide to discontinue use of the Book-Entry-Only System through DTC (or a successor securities depository). In that event, the Bond certificates will be printed and delivered as described in the Bond Resolution. The Paying Agent and Bond Registrar is entitled to rely on information provided by DTC and the Participants as to the names and principal amounts in which the Bonds are to be registered. The Beneficial Owner, upon registration of a Bond held in the Beneficial Owner s name, shall become the owner of the Bond under the Bond Resolution. None of the Underwriter, the Paying Agent, or the University will have any responsibility or obligations to any Direct Participants or Indirect Participants or the persons for whom they act with respect to (i) the accuracy of any records maintained by DTC or any such Direct Participant or Indirect Participant; (ii) the payment by any Participant of any amount due to any Beneficial Owner in respect of the principal of, premium, if any, or interest on the Bonds; (iii) the delivery by any such Direct Participant or Indirect Participant of any notice to any Beneficial Owner that is required or permitted under the terms of the Bond Resolution to be given to Owners of the Bonds; (iv) the selection of the Beneficial Owners to receive payment in the event of any partial redemption of the Bonds; or (v) any consent given or other action taken by DTC as Bondholder. The information in this Section concerning DTC and DTC s Book-Entry-Only System has been obtained from sources that the University and the Underwriter believe to be reliable, but the University and the Underwriter take no responsibility for the accuracy thereof and neither the Participants nor the Beneficial Owners should rely on the foregoing information with respect to such matters but should, instead, confirm the same with DTC or the Participants, as the case may be. The University, the Paying Agent, and the Underwriter make no assurances that DTC, Direct Participants, Indirect Participants, or other nominees of the Beneficial Owners will act in accordance with the procedures described above or in a timely manner. There can be no assurance that DTC will abide by its procedures or that such procedures will not be changed from time to time. Special Obligations SECURITY AND SOURCES OF PAYMENT FOR THE BONDS The Bonds and the interest thereon shall constitute special obligations of the University payable solely from, and secured on a parity with the other Parity Bonds, as to the payment of principal and interest by a first lien on and pledge of, the Net Revenues derived from the operation and ownership of the Auxiliary Enterprise System (excluding amounts payable to the United States pursuant to Section 148 of the Code) and other funds pledged in the Bond Resolution. The Bonds will not be or constitute a general obligation of the University, nor will they constitute an indebtedness of the University or the State of Missouri within the meaning of any constitutional or statutory provision, limitation, or restriction. The University has no taxing power. 10

17 The Bond Resolution Pledge of Revenues. The Bonds and the interest thereon shall constitute special obligations of the University payable solely from, and secured on a parity with the other Parity Bonds, as to the payment of principal and interest by a first lien on and pledge of, the Net Revenues derived from the operation and ownership of the Auxiliary Enterprise System (excluding amounts payable to the United States pursuant to Section 148 of the Code) and other funds pledged in the Bond Resolution. The Net Revenues are, for any period of time for which calculated, (1) the total revenues of the Auxiliary Enterprise System, determined in accordance with generally accepted accounting principles, plus, to the extent not included in the revenues of the Auxiliary Enterprise System, (a) investment income from both the operating and debt service reserve funds, (b) the scholarship allowances deducted from Auxiliary Enterprise System revenues, and (c) transfers to, net of transfers from, the general operating fund of the University for payment or reimbursement of operating expenses of the Auxiliary Enterprise System, less (2) the total expenses of the Auxiliary Enterprise System incurred during such period, determined in accordance with generally accepted accounting principles, other than (a) depreciation and amortization expense, (b) interest expense, and (c) expenditures that have been capitalized under the University s capitalization policy. The covenants and agreements of the Board contained in the Bond Resolution are for the equal benefit, protection, and security of the legal owners of any or all of the Bonds, all of which Bonds will be of equal rank and without preference or priority of one Bond over any other Bond in the application of the Net Revenues pledged to the payment of the principal of and the interest on the Bonds, or otherwise, except as to rate of interest, date of maturity, and right of prior redemption as provided herein and in the Bond Resolution. The Bonds will stand on a parity and be equally and ratably secured with respect to the payment of principal and interest from the net income and revenues derived from the operation of the Auxiliary Enterprise System and in all other respects with any other Parity Bonds. The Bonds will not have any priority with respect to the payment of principal or interest from said net income and revenues or otherwise over any other Parity Bonds, and no other Parity Bonds will have any priority with respect to the payment of principal or interest from said net income and revenues or otherwise over the Bonds. See DEFINITIONS AND SUMMARY OF THE BOND RESOLUTION Authorization of the Bonds Security for the Bonds in Appendix C hereto. Parity Obligations. The Bonds will stand on a parity with the other Parity Bonds in the aggregate outstanding principal amount of $28,785,000 and any other Parity Bonds hereafter issued by the University. The University has the right under the Bond Resolution to issue additional Parity Bonds on a parity with the Bonds and the outstanding Parity Bonds payable from the revenues of the Auxiliary Enterprise System, but only in accordance with and subject to the terms and conditions set forth in the Bond Resolution. Such terms and conditions include a requirement that the chief financial officer of the University certify that the Net Revenues derived by the University from the operation of the Auxiliary Enterprise System for the two Fiscal Years immediately preceding the issuance of such additional Parity Bonds shall have been equal to at least 125% of the average amount required to be paid out of said revenues in any succeeding Fiscal Year on account of both principal (at maturity or upon mandatory redemption) and interest becoming due with respect to all revenue bonds of the University payable from the Net Revenues, including the additional Parity Bonds proposed to be issued. See DEFINITIONS AND SUMMARY OF THE BOND RESOLUTION Additional Bonds Parity Lien Bonds and Other Obligations in Appendix C hereto. 11

18 Rate Covenant. The University agrees to continuously operate and maintain the Auxiliary Enterprise System and the facilities and services afforded by the same and to fix, establish, maintain, and collect such reasonable rates, fees, and charges for the use and services furnished by or through the Auxiliary Enterprise System as, in the judgment of the University, will produce revenues sufficient (if no other funds are available) to (1) pay the reasonable costs of operating and maintaining the Auxiliary Enterprise System; (2) provide and maintain the Revenue Fund and the Debt Service Account in amounts adequate to pay promptly the principal of and interest on the Bonds as due; (3) enable the University to have in each Fiscal Year revenues in excess of Current Expenses for the Auxiliary Enterprise System in an amount that will be not less than the amount required to be paid by the University in such Fiscal Year on account of both principal of and interest on all Parity Bonds at the time outstanding; and (4) provide reasonable and adequate reserve funds for the payment of the Parity Bonds and the interest thereon as provided in the Bond Resolution. See DEFINITIONS AND SUMMARY OF THE BOND RESOLUTION Particular Covenants of the University Rate Covenant in Appendix C hereto. THE UNIVERSITY The University is a public institution of higher education of the State of Missouri organized under the laws of the State of Missouri, including particularly Chapters 172 and 174 of the Revised Statutes of Missouri, as amended. The University was founded in 1937 as Joplin Junior College, and was expanded to a full four-year college in University status was granted by the Missouri State legislature in 2003 and, effective August 28, 2003, the University s name changed from Missouri Southern State College to Missouri Southern State University Joplin. The University s name was subsequently changed to Missouri Southern State University. The main campus of the University is located on approximately 340 acres in Joplin, Missouri, which is located in the southwest portion of the State of Missouri. In the fall of 2014, the University had a headcount enrollment of 5,613 students. See Appendix A attached hereto. General Description THE AUXILIARY ENTERPRISE SYSTEM The University owns and operates the Auxiliary Enterprise System serving the University and its students. The Auxiliary Enterprise System presently consists of the following facilities of the University: housing facilities, the Billingsly Student Union and related operations, the Beimdiek Recreation Center, the Diane Mayes Student Life Center, and the Leggett & Platt Athletic Center. The revenues of the Auxiliary Enterprise System include the student fees designated by the University as residence hall fees, health center fees, and student imposed recreation center fees, collected by the University and dedicated to the payment of the expenses (including debt service) of the Auxiliary Enterprise System. The Board of Governors of the University may exclude from the Auxiliary Enterprise System (1) any facilities hereafter constructed or acquired that are financed with funds other than the proceeds of revenue bonds payable from the revenues of the Auxiliary Enterprise System and for which the University maintains separate and distinct operations, facilities, and records, and (2) any facilities abandoned, disposed of, or deleted in accordance with the provisions of the Bond Resolution. Housing Facilities The following table sets forth certain information with respect to each of the housing facilities that comprise a part of the Auxiliary Enterprise System: 12

19 Facility Type Designed Capacity Year Constructed Blaine Hall Dormitory McCormick Hall Dormitory Five Apartment-Type Dormitories Apartment (Gockel, Stegge, Dishman, Dryer, Headlee) Two Two-Story Apartment-Type Apartment Residences (Maupin, Mitchell) One Apartment-Type Dormitory (Stone) Apartment East Hall Apartment Apartments (name to be determined) * Apartment TOTAL 924 The housing facilities of the Auxiliary Enterprise System have had an average occupancy (the average of the occupancy as of the beginning of Fall and Spring Semesters) for each of the last five Fiscal Years as follows: Housing Facilities and Occupancy Rates Year Designed Capacity Occupancy Percent % The occupancy of the housing facilities of the Auxiliary Enterprise System may be affected in part by the University s charges for room and board. The following table summarizes the historical trend of room and board costs for nine months at the housing facilities of the Auxiliary Enterprise System: Five-Year Trend of Room and Board Costs Residence Hall Room and Board Year Double Occupancy Apartments East Hall $2,510 $2,750 $2, ,610 2,860 3, ,660 2,910 3, ,730 2,980 3, ,800 3,056 3,292 Students at the University have housing alternatives to the facilities of the Auxiliary Enterprise System. The following table sets forth the living choices of full-time undergraduate students for the fall semester, 2014: Housing Selection Type Percent Residence Halls 11% Off Campus 89 Total 100% * Student apartments funded with proceeds of Series 2014 Bonds. Construction to be complete in June or July,

20 Student Union; Student Life Center The Auxiliary Enterprise System also includes the Billingsly Student Union (the Student Union ), which opened in The Student Union houses many student service offices, including the University bookstore and the snack bar. The dining room facilities are operated under a contract between the University and Sodexo. The Student Union was renovated and a wellness center constructed with the proceeds of the Series 2008 Bonds. The wellness center is a 3-story, approximately 71,000 square foot building attached to the Student Center containing a three-court gymnasium, locker rooms, two aerobics rooms, room for weight and fitness equipment, and a 150-seat theater. It also contains a student health center, a jogging track, the University bookstore, meeting rooms, offices, and a grand ballroom. The Diane Mayes Student Life Center was constructed in 1993 and provides meeting and recreational space for the students living in the dormitories. The Student Life Center also includes a cafeteria, which opened in 1999, with seating for approximately 500 persons. Athletic Center The Auxiliary Enterprise System also includes the Leggett & Platt Athletic Center. The Athletic Center, which opened in 1999, accommodates varsity and intramural track (indoor), volleyball, tennis and basketball. It also includes locker rooms, a weight room, classrooms and a training room. The basketball portion of the Athletic Center has seating for 3,200. Condensed Statement of Revenues, Expenses, and Changes in Net Position The following Condensed Statement of Revenues, Expenses, and Changes in Net Position sets forth the results of operations of the Auxiliary Enterprise System for the Fiscal Year ended June 30, 2014 and the three prior Fiscal Years. See Note 11 of Notes to Financial Statements included as Appendix B for additional financial information concerning the Auxiliary Enterprise System. (The remainder of this page is intentionally left blank.) 14

21 Operating Revenues $7,578,686 $7,454,036 $7,617,385 $7,503,504 Depreciation Expense (1,787,891) (1,810,446) (1,702,557) (1,705,937) Other Operating Expenses (3,744,561) (4,066,511) (4,413,068) (4,610,715) Operating income (loss) 2,046,234 1,577,079 1,501,760 1,186,852 Nonoperating Revenues (Expenses) Interest expense (1,273,682) (1,229,272) (1,230,259) (1,593,186) Other nonoperating revenues (expenses) 240, ,459 7, ,484 Total nonoperating revenues (expenses) (1,032,775) (1,038,813) (1,222,420) (1,137,702) Income Before Other Revenues, Expenses, Gains or Losses 1,013, , ,340 49,150 Capital Grants and Gifts ,088 Change in net assets 1,013, , , ,238 Beginning Net Position 12,019,255 13,032,714 12,817,096 13,096,436 Ending Net Position $13,032,714 $13,570,980 $13,096,436 $13,202,674 Management s Discussion and Analysis of Results of Operations University Management has provided a discussion and analysis providing an overview of the financial position and activities of the University for the years ended June 30, 2014 and These statements provide both long-term and short-term financial information on the University campus as a whole. Management has prepared the financial statements and the related footnote disclosures along with this discussion and analysis. See Appendix B Independent Auditor s Report and Audited Financial Statements. State Appropriations While State appropriations do not directly affect the revenues and expenses of the Auxiliary Enterprise System, they have a direct impact on the overall University budget and the level of services the University can offer its students. These influences, over time, can have a direct impact on student enrollment, which in turn directly affects the Auxiliary Enterprise System. In recent years, the University received less in State appropriations than anticipated due to overall declines in the economy and corresponding State tax revenues, coupled with increases in State spending in other areas. See BONDOWNERS RISKS-Withholdings of and Shortfalls in State Appropriations for additional information relating to State appropriations for the University. Article IV, Section 27 of the State Constitution authorizes the Governor to control the rate at which any appropriation is expended during the period of the appropriation by allotment or other means. 1 An adjustment of $753,884 applicable to years ended June 30, 2012 and prior has been included in the restated 2013 beginning net position balance. The adjustment reflects the removal of debt issuance costs related to the Series 2000, 2005A, 2005B, and 2008 revenue bonds. See Note 1 to Appendix B Independent Auditor s Report and Audited Financial Statements. 15

22 This section also authorizes the Governor to reduce the expenditures of the State or any of its agencies below their appropriations whenever the actual revenues are less than the revenue estimates upon which the appropriations were based. The normal Governor s reserve from appropriated funds is 3%, and the University budgets with the expectation that the actual funds received by the University will always be 3% less than the amount appropriated due to the withholding of the normal Governor s reserve. The effect of the withholdings in any year is to reduce the State s overall budget. The following table sets forth the State appropriations received by the University in the last five Fiscal Years and the percentage increase (decrease) from the preceding Fiscal Year. State Appropriations Fiscal Year Amount Received % Change 2015 $23,459, % ,097,064 (0.578) ,225, ,948,530 (6.749) ,536,930 - Reductions in recurring State appropriations received in fiscal years 2011 and 2012 were directly related to overall reductions in federal stabilization funds received by the State following the recession in 2008 and The State received federal stabilization funds of $546.6 million for Fiscal Year 2011 and $0 in Fiscal Year Specific to Fiscal Year 2012, the Governor placed additional spending restrictions on operations beyond the normal 3% withholding, in response to concerns over State revenue projections concurrent with the elimination of federal stabilization funds from the State s budget. Near the end of Fiscal Year 2012, a small portion of this additional spending restriction was released by the Governor, resulting in net operating appropriations for the University that was a 6.749% decrease from Fiscal Year For Fiscal Year 2013, State appropriations received for University operations increased by $276,940 or 1.262%. This stabilization of funding for University operations was consistent with the overall stabilization of the State s budget coming out of the recession in 2008 and In Fiscal Year 2014, the extent of any increase in State operating appropriations for higher education institutions was determined in large part by the level of success in meeting certain performance funding metrics that had previously been identified by each institution. The University successfully met four out of five of its performance funding metrics and was thus eligible for 80% of the increase in State appropriations for higher education in Fiscal Year However, there was a base withholding of $433,000 due to reduced lottery revenues. Upon signing the Fiscal Year 2014 State appropriations bill for higher education, the Governor made immediate across the board withholdings, beyond the normal 3%, that essentially held back any increases in State appropriations for higher education (in addition to other special withholdings throughout the State s budget). This was in response to concerns over State revenues, after the legislature had passed significant tax cut legislation. The Governor vetoed the tax cut legislation, but withheld these funds from the State s budget pending the outcome of a legislative veto session. In September 2013, the legislature was unable to override the Governor s veto of the tax cut legislation and the Governor subsequently released substantially all of the special withholdings, including those that specifically impacted the University. 16

23 The Governor s preliminary budget proposal for Fiscal Year 2016 reflects a requested increase in State appropriations for higher education, including approximately $23.6 million for the University. Auxiliary Enterprise System Debt The University is authorized under Chapter 176 of the Revised Statutes of Missouri, as amended, to issue revenue bonds without voter approval for the purpose of acquiring, constructing, erecting, equipping, and furnishing one or more dormitories, dining room facilities, social and recreational buildings, or any other revenue producing facilities, or combinations thereof. Following the issuance of the Bonds, the University will have outstanding, in addition to the Bonds, the Series 2014 Bonds in the aggregate principal amount of $28,785,000, which are payable from the Net Revenues of the Auxiliary Enterprise System on a parity with the Bonds. See PLAN OF FINANCING. Debt Service Requirements of the Auxiliary Enterprise System The following table sets forth the annual amounts required to pay scheduled principal, including mandatory sinking fund payments, and interest on the Bonds and the Series 2014 Bonds during each Fiscal Year of the University. The table does not include the debt service on the University s outstanding long-term indebtedness that is payable from sources other than the revenues of the Auxiliary Enterprise System. (The remainder of this page is intentionally left blank.) 17

24 Fiscal Year Ending June 30 Series 2014 Bonds Debt Service Requirements 2 Series 2015 Bonds Principal Interest Principal Interest Total 2016 $540,000 $910,380 $194,314 $1,644, ,050, ,093 $530, ,674 2,744, ,070, , , ,274 2,751, ,085, , , ,774 2,756, ,100, , , ,899 2,742, ,365, , , ,724 2,984, ,415, , , ,724 3,009, ,465, , , ,061 3,007, , ,848 30, ,305 1,615, , ,598 30, ,484 1,633, , ,291 30, ,606 1,643, , ,720 35, ,605 1,657, , ,820 35, ,463 1,673, , ,623 35, ,260 1,681, , ,950 35, ,018 1,697, , ,532 40, ,638 1,716, ,045, ,531 40, ,138 1,726, ,100, ,762 40, ,638 1,739, ,155, ,065 45, ,044 1,754, ,215, ,546 45, ,300 1,765, , , , ,500 1,838, , , ,000 81,100 1,851, , , ,000 49,500 1,861, , , ,000 16,700 1,872, , ,028 1,038, , ,638 1,047, , ,919 1,064, , ,969 1,074, ,025,000 67,681 1,092, ,080,000 22,950 1,102,950 Total $28,785,000 $15,857,255 $7,615,000 $3,533,740 $55,790,995 Historical Debt Service Coverage The following table sets forth for the Fiscal Years ended June 30, 2011, 2012, 2013, and 2014 the actual revenues of the Auxiliary Enterprise System as reflected in the financial statements of the University available to pay debt service on indebtedness of the Auxiliary Enterprise System and the extent to which those revenues covered debt service requirements on the actual long-term indebtedness of the Auxiliary Enterprise System outstanding during each of those Fiscal Years. This summary should be read in conjunction with the financial information of the Auxiliary Enterprise System included in this Official Statement under THE AUXILIARY ENTERPRISE SYSTEM - Condensed Statement of Revenues, Expenses, and Changes in Net Position. Reference is hereby made to such financial information. There can be no assurance that the University will generate the revenues set forth below in subsequent Fiscal Years. 2 All amounts shown in this table are rounded to the nearest dollar. 18

25 Auxiliary Enterprise System Fiscal Year Ended June 30, Excess of revenues over expenses 1 $2,046,234 $1,577,079 $1,501,760 $1,186,852 Add back: Depreciation expense 1,787,891 1,810,446 1,702,557 1,705,937 Other non-operating revenue 240, ,459 7, ,484 Net revenues available for debt service 4,075,032 3,577,984 3,212,156 3,348,273 Actual debt service 2 2,391,298 2,402,715 2,412,220 2,400,084 Historical debt service coverage ratio % 1.489% 1.332% 1.395% 1 Computed in accordance with the Bond Resolution. 2 Debt service on revenue bonds payable from the revenues of the Auxiliary Enterprise System, which does not include payments of capital lease obligations payable from the Net Revenues of the Auxiliary Enterprise System. 3 The ratio is determined by dividing Net Revenues available for debt service during each period by actual debt service requirements on Outstanding Parity Bonds during that period. No Prior Defaults The University has never defaulted on any of its debt obligations. BONDOWNERS RISKS The following is a discussion of certain risks that could affect payments to be made by the University with respect to the Bonds. Such discussion is not, and is not intended to be, exhaustive and should not be considered as a complete description of all risks that could affect such payments. Prospective purchasers of the Bonds should analyze carefully all the information contained in this Official Statement, including the Appendices hereto, and additional information in the form of the complete documents summarized herein and in the Appendices hereto, copies of which are available as described herein. General The Bonds are special obligations of the University payable by the University solely from the Net Revenues of the Auxiliary Enterprise System. No representation or assurance can be given that the University will realize Net Revenues from the Auxiliary Enterprise System in amounts sufficient to make such payments with respect to the Bonds and the other Parity Bonds. The realization of future Net Revenues is dependent upon, among other things, student enrollment, the capabilities of the management of the University responsible for the Auxiliary Enterprise System, and future changes in economic and other conditions that are unpredictable and cannot be determined at this time. Withholdings of and Shortfalls in State Appropriations Article IV, Section 27 of the Missouri Constitution authorizes the Governor to control the rate at which any appropriation is expended during the period of the appropriation by allotment or other means. This section also authorizes the Governor to reduce the expenditures of the State or any of its agencies below their appropriations whenever the actual revenues are less than the revenue estimates upon which the appropriations were based. The normal Governor s reserve from appropriated funds is 3% and the University budgets with the expectation that the actual funds received by the University will always be 3% less than the amount appropriated due to the withholding of the normal Governor s reserve. The effect of the withholdings in any year is to reduce the State s overall budget. 19

26 State appropriations to the University generally decreased in Fiscal Years 2009 through 2012 due to overall declines in the economy and corresponding declines in State tax revenues, coupled with increases in State spending in other areas. For Fiscal Year 2010, the Governor agreed to level appropriations so long as there were no tuition increases by the public universities in Missouri. Then in Fiscal Year 2011, in exchange for more moderate reductions in State operating support, the public universities agreed to freeze in-state undergraduate tuition again. Missouri law currently limits annual tuition and required fee increases to a rate no greater than the consumer price index. If tuition and fees are increased by more than the consumer price index, the University could be subject to a penalty of up to 5% of the current year State operating appropriation, unless a waiver is granted by the Commissioner of the Missouri Department of Higher Education. The University may receive less in State appropriations in future years due to future revenue shortfalls for the State, increased spending pressures for the State in other areas, or a combination of the two. In addition, the Governor may exercise his discretionary withholding authority in excess of the customary 3% to respond to these and other contingencies. Enrollment The University believes that the addition of graduate programs in fall 2014 and the relatively low tuition costs compared to other competitive institutions indicate that a stable demand for its educational programs will continue; no assurance can be given, however, that enrollment at the University will remain at historical levels. A significant decrease in the University s enrollment could adversely affect the University s financial position and results of operations of the Auxiliary Enterprise System. Financial Aid A significant percentage of the University s undergraduate and graduate students receive financial support in the form of federally supported loans and scholarships and grants from the University. There can be no assurance that the amount of federally supported loans will remain stable or increase in the future. If the amount of such loans decreases in the future, there can be no assurance that the University will be able to increase the amount of financial aid provided for it. Any changes in the availability of financial aid could adversely affect the University s enrollment and student demand for the Auxiliary Enterprise System. Student Fees A portion of the Auxiliary Enterprise System Revenues is derived from student fees dedicated to the Auxiliary Enterprise System. Although the University has been able to raise student fees in the past at levels at least commensurate with inflation, there can be no assurance that the University will be able to do so in the future or that any future increases in educational or general student fees will not adversely affect enrollment and student demand for the Auxiliary Enterprise System. Increasing Operating Costs The University has experienced and expects to continue to experience increases in operating costs particularly in the areas of employee compensation and benefits, and utilities. For example, the required MOSERs retirement funding is a significant expense to the University. In Fiscal Year 2014, MOSERs expense was $3.7 million. In addition, health care expense continues to increase significantly each year. As the University increases its physical plant with the addition of new facilities, utilities will also increase. The University has also made recent investments to enhance services to students which have resulted in increased costs in the areas of compensation, software maintenance, and contract services. 20

27 These increases and any unanticipated future cost increases are likely to continue to have an adverse effect on the operating costs of the University and the Auxiliary Enterprise System. See also FINANCIAL INFORMATION Pension Liabilities in Appendix A and Note 6 of Independent Auditor s Report and Audited Financial Statements included as Appendix B. Other Factors Affecting the Operations of the University One or more of the following factors or events, or the occurrence of other unanticipated factors or events, could adversely affect the University s operations and financial performance (and thereby the operations and financial performance of the Auxiliary Enterprise System) to an extent that cannot be determined at this time: 1. Changes in Management. Changes in key administrative personnel could affect the capability of administration of the University and the Auxiliary Enterprise System. Dr. Alan Marble was named President of the University in June See also GOVERNANCE AND ADMINISTRATION - Administration in Appendix A attached hereto. 2. Future Economic Conditions. Adverse economic conditions or changes in demographics in the service area of the University could increase the proportion of students who are seeking financial aid. Any inability to control expenses in periods of inflation or difficulties in increasing educational and general student fees and other fees could affect the quality of educational services. 3. Competition from Other Educational Providers. There is increased competition from other educational facilities and programs, which may offer comparable programs at lower prices, which could adversely affect the ability of the University to maintain enrollment, or which could adversely affect the ability of the University to attract faculty and other staff. Many nonprofit, for profit, and governmental institutions of higher educations are developing and commercializing internet based education programs and classes, including widely publicized massive open online courses. The impact of these initiatives are unknown at this time, but have the potential to affect the delivery of higher education in dramatic ways. 4. Tuition Increases. In the past, increases in tuition and fees have been necessary to partially offset the increasing costs of the University and have been effected without adversely affecting enrollment. Future efforts to increase tuition or fees could adversely affect enrollment and thereby student demand for the facilities of the Auxiliary Enterprise System. 5. Gifts, Grants, and Bequests. Any decrease in the annual gifts, bequests, and grants to the University could adversely affect the financial condition of the University and result in the need to increase tuition or reduce services, either of which could adversely affect enrollment. 6. Organized Labor Efforts. Efforts to organize employees of the University into collective bargaining units could result in adverse labor actions or increased labor costs. 7. Environmental Matters. Legislative, regulatory, administrative, or enforcement action involving environmental controls that could adversely affect the operation of the facilities of the University. For example, if property of the University is determined to be contaminated by hazardous materials, the University could be liable for significant clean up costs even if it were not responsible for the contamination. 8. Natural Disasters. On May 22, 2011, a catastrophic EF5 tornado struck Joplin, Missouri, which claimed 158 lives and destroyed approximately 7,000 homes and 553 businesses. The community 21

28 rebuilding process has been strong. Over 90% of the businesses have been rebuilt, along with many new businesses locating to Joplin since that time. The occurrence of natural disasters, such as floods, droughts, earthquakes, or tornadoes in the future, could damage the facilities of the University, interrupt services, or otherwise impair operations and the ability of the Auxiliary Enterprise System to produce revenue. Risk of Taxability of Interest on the Bonds The failure of the University to comply with certain covenants set forth in the Bond Resolution and the Federal Tax Certificate could cause the interest on the Bonds to become includable in federal gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. The Bond Resolution does not provide for the payment of any additional interest or penalty if the interest on the Bonds becomes includable in gross income for federal income tax purposes. See TAX MATTERS herein. Risk of Audit The Internal Revenue Service (the Service ) has established an ongoing program to audit taxexempt obligations to determine whether interest on such obligations should be included in gross income for federal income tax purposes. No assurance can be given that the Service will not commence an audit of the Bonds resulting in a negative determination with respect to the Bonds causing the loss to the owners thereof of the tax exemption of the interest on the Bonds for federal income tax purposes. Owners of the Bonds are advised that in the event of an audit of the Bonds, in accordance with its current published procedures, the Service is likely to treat the University as the taxpayer and the owners of the Bonds may not have a right to participate in such audit. Public awareness of any audit could adversely affect the market value and liquidity of the Bonds during the pendency of the audit, regardless of the ultimate outcome thereof. Secondary Market There is no assurance that a secondary market will develop for the purchase and sale of the Bonds. Prices of municipal securities in the secondary market are subject to adjustment upward and downward in response to changes in the credit markets and changes in operating performance of the entities operating the facilities subject to the municipal securities. From time to time the secondary market trading in selected issues of municipal securities as a result of the financial condition or market position of the Underwriter, prevailing market conditions, or a material adverse change in the operations of that entity, whether or not the subject securities are in default as to principal and interest payments, and other factors which may give rise to uncertainty concerning prudent secondary market practices. Municipal securities are generally viewed as long-term investments, subject to material unforeseen changes in the investor s circumstances, and may require commitment of the investor s funds for an indefinite period of time, perhaps until maturity. TAX MATTERS The following is a summary of the material federal and State of Missouri income tax consequences of holding and disposing of the Bonds. This summary is based upon laws, regulations, rulings, and judicial decisions now in effect, all of which are subject to change (possibly on a retroactive basis). This summary does not (1) discuss all aspects of federal income taxation that may be relevant to investors based upon their personal investment circumstances; (2) describe the tax consequences of certain types of owners subject to special treatment under the federal income tax laws (for example, 22

29 dealers in securities or other persons who do not hold the Bonds as a capital asset, tax-exempt organizations, individual retirement accounts, and other tax deferred accounts, and foreign taxpayers); (3) except for the income tax laws of the State of Missouri, discuss the consequences to an owner under any state, local, or foreign tax laws; or (4) deal with the tax treatment of persons who purchase the Bonds in the secondary market. Prospective investors are advised to consult their own tax advisors regarding federal, state, local and other tax considerations of holding and disposing of the Bonds. Opinion of Bond Counsel Federal and Missouri Tax Exemption. In the opinion of Armstrong Teasdale LLP, Bond Counsel, under law existing as of the issue date of the Bonds, the interest on the Bonds (including any original issue discount properly allocable to an owner thereof) is excludable from gross income for federal income tax purposes and is exempt from income taxation by the State of Missouri and interest on the Bonds is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, but is taken into account in determining adjusted current earnings for the purpose of computing alternative minimum tax imposed on certain corporations. The Bonds have been designated as qualified tax-exempt obligations within the meaning of Section 265(b)(3) of the Code, and, in the case of certain financial institutions (within the meaning of Section 265(b)(5) of the Code), a deduction is allowed for 80 percent of that portion of such financial institution s interest expense allocable to interest on the Series 2015 Bonds. Bond Counsel s opinions are provided as of the date of the original issue of the Bonds, subject to the condition that the University comply with all requirements of the Code that must be satisfied subsequent to the execution and delivery of the Bonds in order that interest thereon be, or continue to be, excludable from gross income for federal and Missouri income tax purposes. The University has covenanted to comply with all such requirements. Failure to comply with certain of such requirements may cause the interest on the Bonds to be included in gross income for federal and Missouri income tax purposes retroactive to the date of the execution and delivery of the Bonds. See Appendix D attached hereto. Other Tax Consequences Original Issue Discount. For federal income tax purposes, original issue discount ( OID ) is the excess of the stated redemption price at maturity of a Bond over its issue price. The issue price of a Bonds is the first price at which a substantial amount of the Bonds of that maturity have been sold (ignoring sales to bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents, or wholesalers). Under Section 1288 of the Code, OID on tax-exempt bonds accrues on a compound basis. The amount of OID that accrues to an owner of a Bond during any accrual period generally equals (1) the issue price of such Bond, plus the amount of OID accrued in all prior accrual periods, multiplied by (2) the yield to maturity on such Bond (determined on the basis of compounding at the close of each accrual period and properly adjusted for the length of the accrual period), less (3) any interest payable on such Bond during such accrual period. The amount of OID so accrued in a particular accrual period will be considered to be received ratably on each day of the accrual period, will be excludable from gross income for federal income tax purposes, and will increase the owner s tax basis in such Bond. Any gain realized by an owner from a sale, exchange, payment, or redemption of a Bond will be treated as gain from the sale or exchange of such Bond. Prospective investors should consult their own tax advisors concerning the calculation and accrual of OID. Original Issue Premium. If a Bond is issued at a price that exceeds the stated redemption price at maturity of such Bond, the excess of the purchase price over the stated redemption price at maturity constitutes premium on such Bond. Under Section 171 of the Code, bond premium is amortized over 23

30 the term of a Bond (i.e., to the maturity date of a Bond or its earlier call date) using constant yield principles, based on the owner s yield to maturity. An owner of a Bond is required to decrease its basis in such Bond by the amount of the amortizable bond premium attributable to each taxable year (or portion thereof). This will result in an increase in the gain (or decrease in the loss) to be recognized for federal income tax purposes on the sale or disposition of the Bond prior to its maturity. The amortizable bond premium attributable to a taxable year is not deductible for federal income tax purposes. Prospective investors should consult their own tax advisors concerning the calculation and accrual of bond premium. Sale, Exchange, or Retirement of Bonds. Upon the redemption, sale, exchange, or other disposition of a Bond, an owner of such Bond generally will recognize taxable gain or loss for federal income tax purposes equal to the difference between the amount realized on the redemption, sale, exchange, or other disposition (other than in respect of accrued and unpaid interest) and such owner s adjusted tax basis in the Bond. An owner s adjusted tax basis in a Bond generally will equal such owner s initial investment in such Bond, increased by any OID included in such owner s gross income and decreased by the amount of any payments received, other than qualified stated interest payments, and bond premium amortized with respect to such Bond by such owner. To the extent a Bond is held as a capital asset, such gain or loss will be capital gain or loss and will be long-term capital gain or loss if the Bond has been held for more than 12 months at the time of the sale, exchange, redemption, or other disposition. Reporting Requirements. Information reporting requirements will generally apply to certain payments of principal of, and interest and premium on, the Bonds, and the proceeds paid on the sale of the Bonds, other than certain exempt recipients. A backup withholding tax may apply to such payments if the owner fails to provide a taxpayer identification number or certification of exempt status or fails to report in full dividend and interest income. The amount of any backup withholding from a payment to an owner will be allowed as a credit against the owner s federal income tax liability. Other Federal Income Tax Consequences. Prospective purchasers of the Bonds should be aware that ownership of the Bonds may result in other federal income tax consequences to certain taxpayers, including, without limitation, financial institutions, property and casualty insurance companies, individual recipients of Social Security or Railroad Retirement benefits, certain S corporations with excess net passive income, foreign corporations subject to the branch profits tax, life insurance companies, and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry or have paid or incurred certain expenses allocable to the Bonds. Bond Counsel expresses no opinion regarding these tax consequences. No Other Opinions. Bond Counsel expresses no opinion regarding other federal, state, or local tax consequences arising with respect to the Bonds. Purchasers of Bonds should consult their own tax advisors as to the applicability of these tax consequences and other federal tax consequences of the purchase, ownership, and disposition of the Bonds, including the possible application of state, local, foreign, and other tax laws. LITIGATION There is not now pending or, to the knowledge of the University, threatened, any controversy, suit or other proceeding of any kind: (1) wherein any question is raised disputing or affecting in any way the legal organization of the University, or the right or title of any of its officers to their respective offices, or the legality of any official act in connection with the authorization, issuance, and sale of the Bonds; (2) questioning or affecting the validity of or materially affecting the security for such Bonds, or the proceedings or authority under which the Bonds are to be issued and sold; or (3) which otherwise would 24

31 materially adversely affect the University s ability to pay the principal of and interest on the Bonds or otherwise materially adversely affect the business of the University. LEGAL MATTERS Legal matters incident to the authorization, issuance, and sale of the Bonds are subject to the approving opinion of Armstrong Teasdale LLP, St. Louis, Missouri, Bond Counsel. Certain legal matters relating to the Official Statement will be passed upon by Armstrong Teasdale LLP, St. Louis, Missouri. The factual and financial information appearing herein has been supplied or reviewed by certain officials of the University, as referred to herein. Certain legal matters will be passed upon for the University by Blanchard, Robertson, Mitchell & Carter, P.C., Joplin, Missouri, as Counsel to the University, and for the Underwriter by Thompson Coburn LLP, St. Louis, Missouri, as Underwriter s Counsel. The various legal opinions to be delivered concurrently with the delivery of the Bonds express the professional judgment of the attorneys rendering the opinions as to 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 transactions opined upon, or of the future performance of parties to such transaction, nor does the rendering of an opinion guarantee the outcome of any legal dispute that may arise out of the transaction. FINANCIAL STATEMENTS Financial statements of the University, as of and for the years ended June 30, 2014 and 2013, are included in Appendix B to this Official Statement. These financial statements have been audited by BKD, LLP, independent auditors, to the extent and for the period indicated in their report, which is also included in Appendix B. Certain summary financial information for the University is set forth in Appendix A hereto. Certain summary financial information for the Auxiliary Enterprise System for the Fiscal Year ended June 30, 2014 and the three prior Fiscal Years, is set forth herein under THE AUXILIARY ENTERPRISE SYSTEM - Condensed Statement of Revenues, Expenses, and Changes in Net Position. CONTINUING DISCLOSURE The University and UMB Bank, N.A., as dissemination agent (the Dissemination Agent ), are entering into the Continuing Disclosure Agreement for the benefit of the Owners and Beneficial Owners of the Bonds and in order to assist the Underwriter in complying with Rule 15c2-12 of the Securities and Exchange Commission (the Rule ). Pursuant to the Continuing Disclosure Agreement, the University will, or will cause the Dissemination Agent to, not later than 180 days after the end of the University s Fiscal Year, provide to the Municipal Securities Rulemaking Board (the MSRB ) through the Electronic Municipal Market Access system ( EMMA ) the following financial information and operating data (the Annual Report ): (1) The audited financial statements of the University for the prior Fiscal Year, beginning with the Fiscal Year ended June 30, 2015, prepared in accordance with accounting principles generally accepted in the United States of America. If audited financial statements of the University are not available by the time the Annual Report is required to be filed, the Annual Report may contain unaudited financial statements in a format similar to the financial statements contained in this Official Statement, and the audited financial statements will be filed in the same manner as the Annual Report promptly after they become available. 25

32 (2) Updates as of the end of each Fiscal Year, beginning with the Fiscal Year ending June 30, 2015, of the following financial information and operating data contained in this Official Statement in substantially the same format contained in this Official Statement: (i) THE AUXILIARY ENTERPRISE SYSTEM All tables shown under the heading Housing Facilities, and the following financial information and operating data contained in Appendix A to this Official Statement in substantially the same format: (ii) (iii) (iv) (v) OPERATIONS - Enrollment; OPERATIONS - Student Applications and Admission; FINANCIAL INFORMATION - Tuition and Fees; and FINANCIAL INFORMATION Missouri Southern Foundation. Pursuant to the Continuing Disclosure Agreement, no later than 10 business days after the occurrence of any of the following events, the University will give, or cause the Dissemination Agent to give, notice of the occurrence of any of the following events with respect to the Bonds ( Material Events ): (1) principal and interest payment delinquencies; (2) non-payment related defaults, if material; (3) modifications to rights of bondholders, if material; (4) bond calls, if material, and tender offers; (5) defeasances; (6) rating changes; (7) adverse tax opinions; the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form TEB) or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds; (8) unscheduled draws on debt service reserves reflecting financial difficulties; (9) unscheduled draws on credit enhancements reflecting financial difficulties; (10) substitution of credit or liquidity providers, or their failure to perform; (11) release, substitution or sale of property securing repayment of the Bonds, if material; (12) bankruptcy, insolvency, receivership, or similar event of the University (which shall be deemed to occur as provided in the Rule); (13) the consummation of a merger, consolidation, or acquisition involving the University or the sale of all or substantially all of the assets of the University, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and (14) appointment of a successor or additional paying agent or the change of name of the paying agent, if material. If the Dissemination Agent has been instructed by the University to report the occurrence of a Material Event, the Dissemination Agent will promptly file a notice of such occurrence with the MSRB, with a copy to the University. 26

33 The University may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under the Continuing Disclosure Agreement, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent may resign at any time upon giving 30 days prior written notice to the University. The Dissemination Agent shall not be responsible in any manner for the content of any notice or report (including, without limitation, the Annual Report) prepared by the University pursuant to the Continuing Disclosure Agreement. The initial Dissemination Agent is UMB Bank, N.A. Notwithstanding any other provision of the Continuing Disclosure Agreement, the University and the Dissemination Agent may amend the Continuing Disclosure Agreement (and the Dissemination Agent shall agree to any amendment so requested by the University), and any provision of the Continuing Disclosure Agreement may be waived, provided Bond Counsel or other counsel experienced in federal securities law matters provides the University and the Dissemination Agent with its opinion that the undertaking of the University contained in the Continuing Disclosure Agreement, as so amended or after giving effect to such waiver, is in compliance with the Rule and all current amendments thereto and interpretations thereof that are applicable to the Continuing Disclosure Agreement. All Annual Reports and notices of Material Events required to be filed by the University or the Dissemination Agent under the Continuing Disclosure Agreement must be submitted to the MSRB through EMMA. EMMA is an internet-based, online portal for free investor access to municipal bond information, including offering documents, material event notices, real-time municipal securities trade prices and MSRB education resources, available at Nothing contained on EMMA relating to the University, the Bonds, or any other Parity Bonds is incorporated by reference into this Official Statement. The University has made similar undertakings with respect to its outstanding obligations to file certain financial information and operating data for each Fiscal Year of the University. The University covenanted to include the University s audited financial statements for the previous year in addition to updated information relating to the University and its operations. In the last five years, the University has timely filed its annual audited financial statements for Fiscal Years 2010, 2011, 2012, and 2014, but the audited financial statements for fiscal year 2013 were approximately 4 days late. In 2014, the University discovered that the operating data portion of its annual report for fiscal years 2010, 2011, 2012, and 2013 had not been filed and subsequently filed the required operating data on the MSRB s EMMA website, which resulted in such filings being from approximately 3 months to 3 years late. Additionally, the University did not file event filings with respect to changes in ratings reflecting the credit quality of its bond insurers. The University believes, however, that notice of such changes was widely disseminated by, and therefore publicly available in, both the popular and financial media. Since the annual report required to be provided by the University in connection with its Fiscal Year ended June 30, 2014, the University has been in substantial compliance with its continuing disclosure obligations under the Rule. The University has further reviewed its obligations under the Rule with Bond Counsel and established internal procedures to reduce the likelihood of a recurrence of prior inadvertent failures to comply with its undertakings with regard to the Rule. CERTAIN RELATIONSHIPS Armstrong Teasdale LLP represents the Underwriter and the Paying Agent from time to time but is not representing the Underwriter or the Paying Agent in the current financing. Thompson Coburn LLP, Underwriter s Counsel, has represented the Paying Agent in transactions unrelated to the issuance of the Bonds, but is not representing it in connection with the issuance of the Bonds. 27

34 Donald Swanson, an employee of the Underwriter, serves on the Missouri Southern Foundation, a nonprofit corporation organized to foster, cooperate, and assist in the growth, development, and advancement of the University, primarily by providing scholarships and faculty, departmental, and other general support. See FINANCIAL INFORMATION - Missouri Southern Foundation in Appendix A attached hereto. RATING Standard & Poor s Ratings Services, a division of McGraw-Hill Financial Inc. (the Rating Agency ), has assigned the Bonds the rating of A-. Such rating reflects only the views of that organization at the time such rating was given. An explanation of the significance of this rating may be obtained only from the Rating Agency. Generally, a rating agency bases its rating on the information and materials furnished to it and on investigations, studies, and assumptions of its own. There is no assurance that the rating will be maintained for any given period of time or that it will not be revised downward or withdrawn entirely by the Rating Agency if, in the judgment of the rating agency, circumstances so warrant. Any such downward revision or withdrawal of the rating may have an adverse effect on the market price and marketability of the Bonds. UNDERWRITING The Underwriter has agreed, subject to certain conditions, to purchase the Bonds from the University at a purchase price equal to $7,688, (which gives effect to an Underwriter s discount of $92, and a net original issue premium of $165,358.05) plus accrued interest to the date of delivery, if any. The Underwriter is purchasing the Bonds from the University for resale in the normal course of the Underwriter s business activities. The Underwriter reserves the right to offer any of the Bonds to one or more purchasers on such terms and conditions and at such price or prices as the Underwriter, in its discretion, shall determine. MISCELLANEOUS Information set forth in this Official Statement has been furnished or reviewed by certain officials of the University, certified public accountants, and other sources, as referred to herein, which are believed to be reliable. The references herein to the Bond Resolution are brief summaries of certain provisions thereof. Such summaries do not purport to be complete and for full and complete statements of the provisions thereof reference is made to the Bond Resolution. Copies of such document are on file at the offices of the University and following the delivery of the Bonds will be on file at the offices of the Paying Agent. All estimates and other statements in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended as such and not as representations of fact. The attached appendices are integral parts of this Official Statement and must be read together with all of the foregoing statements. The form of this Official Statement, and its distribution and use by the Underwriter, have been approved by the Board. None of the University, the Board or any of its officers, directors, or employees, in either their official or personal capacities, has made any warranties, representations, or guarantees regarding the financial condition of the University or the University s ability to make payments required of it; and further, none of the University, the Board, or its officers, directors, or employees assumes any 28

35 duties, responsibilities, or obligations in relation to the issuance of the Bonds other than those either expressly or by fair implication imposed on the University by the Bond Resolution. (The remainder of this page is intentionally left blank.) 29

36 This Official Statement has been duly authorized and approved by the University and duly executed and delivered on its behalf by the official signing below. MISSOURI SOUTHERN STATE UNIVERSITY By /s/ James B. Fleischaker Chair, Board of Governors

37 Appendix A Missouri Southern State University Organization, Operations, and Financial Information

38 APPENDIX A MISSOURI SOUTHERN STATE UNIVERSITY ORGANIZATION, OPERATIONS, AND FINANCIAL INFORMATION TABLE OF CONTENTS HISTORY AND BACKGROUND... A-1 GOVERNANCE AND ADMINISTRATION... A-1 Board of Governors... A-1 Administration... A-2 OPERATIONS... A-4 Academic Programs... A-4 Accreditation, Licenses, Approvals, Memberships... A-4 Faculty and Staff... A-5 Demographics of Student Population... A-5 Enrollment... A-5 Student Applications and Admissions... A-6 FINANCIAL INFORMATION... A-6 Accounting, Budget, and Audit Procedures... A-6 Tuition and Fees... A-7 Tuition and Fee Comparison... A-8 Summary Statement of Revenues, Expenses and Changes in Net Position... A-8 Outstanding Debt... A-10 Missouri Southern Foundation... A-10 Risk Management and Insurance... A-10 Pension Liabilities... A-11 Other Post-Employment Obligations (OPEB)... A-12 Litigation... A-12

39 HISTORY AND BACKGROUND Missouri Southern State University (the University ) is a state-supported university with an enrollment of approximately 5,600 students. The academic programs at the University are organized under four schools: Robert W. Plaster School of Business, School of Arts and Sciences, School of Education and School of Health Sciences and offers programs leading to nearly 200 degree options (graduate, bachelor s, associate s, certificates). In addition, the University offers graduate programs, distance/online learning, an honors program, an institute of international studies, and a small business and technology development center. The University is located in the City of Joplin, Missouri, which is located in southwestern Missouri, ten miles from the corner of the states of Missouri (the State ), Kansas, and Oklahoma and approximately 160 miles south of Kansas City, Missouri. In 1937, the Joplin School District organized a junior college (the Junior College ) in conjunction with its school system, with an initial enrollment of 114 students and nine faculty members. In April 1964, the Junior College District of Jasper County, Missouri (the Junior College District ), was organized and assumed control of the Junior College, operating it under the name of Missouri Southern College. In 1965, the Missouri Legislature authorized the establishment of Missouri Southern State College, which would offer third and fourth year college courses when certain criteria were met. These requirements were satisfied in 1967, and in June of that year, the University moved to the new campus at its present site on the corner of Newman and Duquesne Roads near the northeast edge of Joplin, Missouri, and commenced operations as a four-year state college. At that time, the 320-acre campus included five new buildings and opened to 2,399 students and 95 faculty members. In 2003, the Governor signed a bill elevating the status of the institution from College to University and changing the name to Missouri Southern State University-Joplin. Currently, the 373-acre campus consists of 35 buildings constructed since 1967, several remodeled older buildings, an 4,200 seat stadium, and other facilities. Board of Governors GOVERNANCE AND ADMINISTRATION The University is governed by a nine-member Board of Governors, consisting of eight voting members and one nonvoting student member. The Board typically meets a minimum of ten times each year. The primary functions of the Board of Governors are policy-making and responsibility for sound resource management of the University. Under the terms of the Bylaws, the Board members are appointed by the Governor of the State for terms of six years or until a successor is duly appointed, except for the student member who serves a term of two years. The officers of the Board of Governors are elected by the Board for one-year terms and serve until a successor is duly elected. The members of the University s Board of Governors serve in a voluntary capacity and receive no remuneration for service rendered in such capacity. At this time, the student representative seat is currently vacant, pending appointment by the Governor. In the interim, a representative from the Student Senate attends and reports at the monthly Board meetings. As of the date hereof, the members of the University s Board of Governors are as follows: (The remainder of this page is intentionally left blank.) A-1

40 Name Board Office Residence Occupation Term Expiration James B. Fleischaker Chair & Member Joplin, MO Attorney 2017 Glenn M. McCumber Vice-Chair & Noel, MO Chief Executive Officer, 2018 Member New-Mac Electric Cooperative Rod Anderson Member Monett, MO Vice President, Produce 2009 Broker Sherry L. Buchanan Member Joplin, MO Retired Psychologist 2014 Lynn M. Ewing III Member Nevada, MO Vernon County Prosecutor 2015 Tracy Combs Flanigan Member Carthage, MO Attorney 2019 William L. Bill Gipson Member Shell Knob, Director, Empire District 2017 MO Keith C. Hankins Member Stockton, MO General Manager, 2016 Pennington Seed Vacant Student Member N/A N/A N/A Administration The University s Board of Governors has delegated authority for the management and daily operations of the University to the President and the administrative staff. The President and the principal members of the executive management staff, who are appointed by the Board of Governors or the President, and selected biographical information, are as follows: Dr. Alan Marble, President, age 60. Dr. Marble was named President in June 2014 after serving as interim President for one year. Prior to his tenure at the University, Dr. Marble enjoyed a 27-year career at Crowder College, where he served as Continuing Education Director, Dean of Development, and Chief Financial Officer before being named the 6 th President of that institution in Dr. Marble is a lifelong resident of southwest Missouri. He received an Associate of Arts degree from Crowder College, a Bachelor of Arts degree from the University, a Master s of Science degree from Pittsburg State University, and Ph.D. from the University of Nebraska. At various times he has served as a Board of Directors member for the Neosho Area Chamber of Commerce, Freeman Southwest Family YMCA and the Tri-State Economic Development Commission. He is a former member of the Presidents and Chancellors Council for the Missouri Community College Association, sits on the Board of the Missouri Energy Initiative and serves as a member of Missouri Department of Economic Development Strategic Initiatives Task Force. In 2009, he was appointed to the Missouri Tax Credit Review Commission and Chaired the Agriculture and Environment committee. Dr. Brad Hodson, Executive Vice President, age 45. Dr. Hodson was appointed Executive Vice President in February Dr. Hodson also serves as the Executive Director of the Missouri Southern Foundation. Dr. Hodson earned his Bachelor of Science degree in Economics and Finance from Missouri Southern State University in He earned a Master s in Business Administration degree from Pittsburg State University in 1993 and a Ph.D. in Higher Education Administration from the University of Nebraska-Lincoln in He served as Director of Development for the Eastern Michigan University College of Business from before becoming Pittsburg State University s Director of University Development. In 2006, he became PSU s Vice President for University Advancement, providing oversight of fundraising, alumni relations, public relations and marketing, and career services, while also serving as president and CEO of the PSU Foundation. Dr. Paula Carson, Provost/Vice President for Academic Affairs, age 48. Dr. Carson will begin her new appointment as Provost/Vice President for Academic Affairs in July Dr. Carson graduated A-2

41 from Loyola University of the South in New Orleans, La., with a Bachelor s in Business Administration in She received her Master s in Business Administration in 1988 from Milsaps College in Jackson, Miss., and her Ph.D. in Management in 1992 from Louisiana State University. Dr. Carson has been with the University of Louisiana at Lafayette since 1991, and has served as their Assistant Vice President for Institutional Planning and Effectiveness since Her other previous posts include serving as Special Assistant to the Provost and Vice President for Academic Affairs and Dean of the B.I. Moody III College of Business Administration. Robert J. Yust, Vice President for Business Affairs, age 56. Mr. Yust was appointed as Vice President for Business Affairs in April He served as Interim Vice President for Business Affairs since September 2007 before his appointment as Assistant Vice President for Business Affairs in February He previously served as Treasurer of the University for ten years. Prior to that time, he was the Director of Accounting at the University beginning in Mr. Yust holds a C.P.A. certificate and obtained a Bachelor of Science in Business Administration with a major in Accounting and an Associate of Science in Computer Programming from the University in Prior to his employment with the University, he worked in public accounting for 13 years, specializing in auditing. Darren Fullerton, Vice President of Student Affairs and Enrollment Management, age 49. Mr. Fullerton joined the University in October, He was appointed Vice President for Student Affairs and Enrollment Management in He previously served as the University s Director of Student Life. Prior to coming to the University, he held positions at the University of Arkansas and the University of Missouri Kansas City. He holds a Bachelor of Science degree from the University and a M.Ed. from the University of Arkansas. During his career in education, Mr. Fullerton has worked on securing approximately 19 national and state grants, totaling approximately $1.1 million dollars. At the University he has served on over 26 university committees, chairing several. Mr. Fullerton has completed numerous state and regional presentations, and has given over 18 national presentations. He also has four publications in national refereed journals. Jared Bruggeman, Director of Athletics, age 44. Mr. Bruggeman became the new Director of Athletics at the University in June He became the fifth director the University has employed and is in his fifth year as head of the Athletics Department. Mr. Bruggeman previously served as the Associate Director of Athletics at Northern Arizona University for four years, working as the school s compliance director, as well as overseeing the men s and women s track and field and cross country programs and equipment room. Prior to that, he served as an Assistant Director of Athletics for Compliance and Student Life at the University of North Dakota for four years. He earned a Bachelor of Science in Natural Science and a Bachelor of Science in Education, with an emphasis in Physics, from the University of North Dakota in Mr. Bruggeman went on to earn a Master s of Education in Educational Leadership from University of North Dakota. Linda Eis, Treasurer, age 50. Ms. Eis served as interim Treasurer of the University since September 2007 before her appointment as Treasurer in February She previously worked as the Compliance Officer in the Business Office since Prior to coming to the University she worked in the Grants office at Arizona State University and prior to that as a Compliance Tax Auditor for the State for nine years. She graduated from the University in 1989 with a Bachelor of Science in Business Administration with a major in Accounting and during that time worked in the financial aid office while attending school. Sharon E. Odem, Secretary to President and Board, age 59. Mrs. Odem became secretary to the President of the University and was appointed secretary to the University s Board of Governors in January She began employment at the University in June of 1994 as a clerical assistant for the Director of the Police Academy in the Criminal Justice Department. In November of 1995, she became A-3

42 the departmental secretary for the Psychology Department. In March of 2002 she became secretary to the Assistant Vice President for Academic Affairs and remained in that position until becoming secretary to the President. Mrs. Odem received her Associate of Science Degree in Data Processing from the University in May of 1975 and has been employed by the University for 20 years. Academic Programs OPERATIONS The University offers bachelor degrees in Arts and Sciences, Business Administration, Education, and Health Sciences, as well as select online master s degrees in collaboration with other universities. Associate degrees are also available. Accreditation, Licenses, Approvals, Memberships The University has the following major accreditation, licenses, approvals and memberships related to its programs and facilities: Accreditation - The Higher Learning Commission (Member-North Central Association) Accreditation Council for Business Schools and Programs American Board of Engineering and Technology Commission on Collegiate Nursing Education Commission on Dental Accreditation, American Dental Association Accreditation Commission for Education in Nursing (ACEN) Commission on Accreditation of Allied Health Education (CAAHEP) Committee on Accreditation for Respiratory Care Council for the Accreditation of Educator Preparation (CAEP) Engineering Technology Accreditation Commission of ABET Joint Review Committee on Education in Radiologic Technology Missouri State Board of Nursing Missouri Department of Elementary and Secondary Education Missouri Department of Health and Senior Services Bureau National Accrediting Agency for Clinical Laboratory Science National Council for Accreditation of Teacher Education (NCATE) National Environmental Health Science and Protection Accreditation Council Peace Officer Standards and Training (P.O.S.T.) American Association of Colleges for Teacher Education American Association of Colleges of Nursing American Association of State Colleges and Universities American Institute of Indian Studies (AIIS) Association to Advance Collegiate Schools of Business Association of Collegiate Business Schools and Programs Association of Environmental Health Academic Programs Association of Governing Boards of Universities & Colleges Council for the Advancement and Support of Education Council on Public Higher Education Institute of International Education Mid-America Intercollegiate Athletics Association (MIAA) Missouri Academy of Science Missouri Association of Colleges for Teacher Education Missouri Biotechnology Association A-4

43 Missouri Consortium for International Programs and Studies Missouri Math and Science Coalition NAFSA: Association of International Educators National Collegiate Athletic Association (NCAA) National League for Nursing Baccalaureate and Higher Degree Programs Southwest Center for Educational Excellence Association of American Colleges & Universities American Association of State Colleges and Universities North Central Association Teacher Education Council of State Colleges and Universities Faculty and Staff In the fall of 2014, the University had 578 full-time employees and 290 part-time employees. Of these, 199 were full-time faculty members, consisting of 34.2% professors, 21.6% associate professors, 37% assistant professors and 7% instructors. Approximately 62.8% of the full-time faculty hold a doctorate degree. Approximately 57.3% of the ranked faculty are tenured. Besides the faculty, another 316 full-time employees serve in administrative, professional, technical, clerical, skilled crafts and service/maintenance positions. Demographics of Student Population The University has a fall Semester 2014 enrollment of 5,613. The current student population is comprised of 66% from southwest Missouri counties, 13% from other areas in the State, and 21% from other states and foreign countries. The University s student mix consists largely of undergraduate students (99.1%), with the remaining enrolled in graduate programs. Approximately 26% of students are enrolled on a part-time basis. The changes in enrollment over the period of fall 2010 to fall 2013 reflect the community impact from the May 2011 tornado that struck the City of Joplin (the City ). The tornado was ranked as EF5, the highest level assigned by the National Weather Service, meaning that wind speeds were estimated at greater than 200 miles per hour. The 2011 tornado claimed 158 lives and destroyed approximately 7,000 homes and 553 businesses in the City. However, the community rebuilding effort has been strong. Over 90% of the businesses have been rebuilt, along with many new businesses having located in the City since The Joplin area K-12 school systems also continue to rebuild. The University has implemented a program called the Lion Pride Tuition Discount, which provides in-state tuition rates for residents of the States of Arkansas, Kansas, and Oklahoma and thirty counties in Illinois. The following table sets forth the student enrollment by geographic breakdown for the University for each of the last five school years In-State 81% 82% 82% 82% 80% Out-of-State 19% 18% 18% 18% 20% (The remainder of this page is intentionally left blank.) A-5

44 Enrollment The following table sets forth the University s fall semester enrollment for each of the last five school years: Headcount 5,802 5,591 5,417 5,616 5,613 FTE 4,599 4,358 4,295 4,400 4,415 Full-Time 74% 72% 74% 73% 74% Part-Time 26% 28% 26% 27% 26% Mean ACT Score Student Applications and Admissions The following table sets forth the University s fall semester statistics for student applications and admissions for each of the last five school years: Student Applications and Admissions Freshmen and Transfer Degree-Seeking Students Applications 2,952 2,830 2,909 2,635 2,921 Accepted 2,798 2,762 2,801 2,570 2,810 Percent Accepted 95% 98% 96% 98% 96% Enrolled 1,504 1,351 1,383 1,390 1,437 Yield 54% 49% 49% 54% 51% Accounting, Budget, and Audit Procedures FINANCIAL INFORMATION The University maintains its financial records on the basis of a fiscal year ending June 30 and follows the accrual basis of accounting for external financial reporting purposes. The University s financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. An annual budget of estimated revenues and expenditures for the coming fiscal year of the University is prepared by the University s Budget Director and presented to the President, for adoption by the Board of Governors. The financial records of the University are audited annually by a firm of independent certified public accountants in accordance with auditing standards generally accepted in the United States of America. In recent years, the annual audit has been performed by BKD, LLP, Springfield, Missouri, independent auditors ( BKD ). Set forth as Appendix B to this Official Statement are the financial statements of the University for the fiscal years ended June 30, 2014 and These financial statements have been audited by BKD to the extent and for the period indicated in their report, which is also included in Appendix B. A-6

45 The University s website at also contains copies of the University s audited financial statements for fiscal years ended June 30, 2014 and The University accounts for the operation of the Auxiliary Enterprise System on the accrual basis of accounting for external financial reporting purposes. The funds to be maintained with respect to the Auxiliary Enterprise System are described in DEFINITIONS AND SUMMARY OF THE BOND RESOLUTION in Appendix C hereto. Tuition and Fees The University meets the costs of its educational programs primarily through state appropriations, tuition, and fees. The following table sets forth the base tuition charged to students and certain other fees for the past four school years and the upcoming school year: Tuition and Incidental Fees Tuition (In-State)* $ $ $ $ $ Tuition (Out-of-State)* Technology Fee Full-time (12+ credit hours)** Technology Fee Part-time (less than 12 credit hours/summer)** Activity Fee Full-time (12+ credit hours)** Activity Fee Part-time (less than 12 credit hours/summer)** Student Recreation Center Fee (7+ credit hours)** Student Recreation Center Fee (6 or fewer hours)** Student Recreation Center Fee (Summer)** Parking Fee** Student Health Center Fee** Textbook Rental*** Distance Learning Fee* Distance Learning Library Fee* *Per credit hour. **Per semester. ***Per credit hour/per book includes a mid-year on-the-books in-state increase to $ However, the in-state rate of $ is charged to students. A full listing of the University s current tuition and fees is available on the University s website at (The remainder of this page is intentionally left blank.) A-7

46 Tuition and Fee Comparison The University competes primarily with the other State colleges and universities. The following table sets forth for State universities the total charges for undergraduate tuition and required fees for residents of the State for a typical full-time student for fiscal year University Tuition and Fees Missouri Southern State University $5, Harris-Stowe State University 5, Missouri Western State University 6, Lincoln University 6, Missouri State University 7, Southeast Missouri State University 7, University of Central Missouri 7, Truman State University 7, Northwest Missouri State University 8, University of Missouri Columbia 9, University of Missouri St. Louis 9, University of Missouri Kansas City 9, Missouri University of Science and 9, Technology Source: Missouri Department of Higher Education Summary Statement of Revenues, Expenses, and Changes in Net Position The table below presents a summary of historical statements of revenues, expenses, and changes in net position of the University for the last four fiscal years. Such information has been derived from the financial statements of the University audited by BKD. With respect to the fiscal year ended June 30, 2014, such information should be read in conjunction with the audited financial statements of the University, including the notes thereto, contained in Appendix B of this Official Statement. In the opinion of the University s management, there has been no material adverse change in the financial condition of the University since June 30, (The remainder of this page is intentionally left blank.) A-8

47 Operating Revenues Tuition & fees, net of scholarship allowances & bad debt expense $16,149,336 $17,353,425 $16,582,114 $17,033,534 Federal grants & contracts 3,360,360 3,109,452 2,999,614 2,586,459 State grants & contracts 1,597,772 1,640,881 1,706,055 1,752,570 Other grants & contracts 9, , Interest on loans to students 330,226 93, , ,965 Housing, net of scholarship allowances & bad debt expense 2,591,473 2,626,281 2,585,270 2,522,126 Student recreation and health center 1,698,555 1,636,887 1,600,046 1,624,835 Bookstore and other 3,305,643 3,207,077 3,337,180 3,331,761 Other operating revenues 1,126,846 1,046,667 1,312,001 1,159,406 Total operating revenues 30,169,214 30,819,419 30,227,844 30,148,656 Operating Expenses Compensation & benefits 37,341,169 36,541,448 37,464,561 39,320,644 Contractual services 2,787,658 3,352,413 3,278,958 3,256,077 Supplies & materials 3,343,254 3,823,773 3,936,140 4,343,485 Scholarships & fellowships 9,372,602 9,321,838 8,560,761 8,215,503 Depreciation & amortization 4,414,045 5,374,254 5,468,644 5,640,552 Utilities 2,309,852 2,319,071 2,375,882 2,614,822 Other 5,076,908 4,686,825 5,647,524 5,724,840 Total operating expenses 64,645,488 65,419,622 66,732,470 69,115,923 Operating Loss (34,476,274) (34,600,203) (36,504,626) (38,967,267) Nonoperating Revenues (Expenses) State appropriations 23,536,930 21,948,530 22,225,470 22,097,064 Federal PELL grants 12,332,657 12,155,425 12,052,791 11,971,457 Contributions 2,008,750 1,864,971 2,199,603 2,052,838 Loss on disposal of capital assets and construction-in-progress (90,502) (1,821) (574,202) (35,326) Investment income 77,245 76, ,598 56,724 Interest on capital asset-related debt (1,275,655) (1,231,449) (1,233,252) (1,595,252) Other nonoperating revenues 390, , , ,883 Net nonoperating revenues (expenses) 36,979,625 35,429,069 35,483,628 35,222,388 Income (Loss) Before Other Revenues, Expenses, Gains, or Losses 2,503, ,866 (1,020,998) (3,744,879) Other Revenues, Expenses, Gains, or Losses Capital appropriations - State 2,150, Capital grants and gifts 346, , ,120 2,404,638 Total other revenues, expenses, gains, or losses 2,496, , ,120 2,404,638 Increase (Decrease) in Net Position 4,999, ,172 (914,878) (1,340,241) Net Position, Beginning of Year 84,234,244 89,234,120-88,518,530 Net Position, Beginning of Year, as Previously Reported ,187,292 - Cumulative Effect of Change in Accounting Principle - - (753,884) - Net Position, Beginning of Year, as Restated ,433,408 - Net Position, End of Year $89,234,120 $90,187,292 $88,518,530 $87,178,289 1 An adjustment of $753,884 applicable to years ended June 30, 2012 and prior has been included in the restated 2013 beginning net position balance. The adjustment reflects the removal of debt issuance costs related to the Series 2000, 2005A, 2005B, and 2008 revenue bonds. See Note 1 to Appendix B Independent Auditor s Report and Audited Financial Statements. A-9

48 Outstanding Debt The Series 2005A Bonds and the Series 2008 Bonds will be paid off with the proceeds of the Bonds, leaving the University with long-term debt and long-term commitments currently outstanding of the Series 2014 Bonds in the amount of $28,785,000. In addition, the University entered into a $2,000,000 capital lease agreement in February of 2014 for the purchase of equipment and furnishings to be used in residence halls. The lease agreement is payable in four semiannual installments including interest at 0.93%, of which the initial payment due August 10, 2014 was made in June As of June 30, 2014, the University had accrued compensated absences of $1,302,579 and an unsecured demand line of credit with a borrowing limit of $2,000,000. There was no outstanding balance on the line of credit as of June 30, 2014, nor had any borrowing activity taken place during the 2014 fiscal year. The University has not guaranteed any outstanding indebtedness of any other corporation or entity. The University currently has no plans to issue additional bonds. Missouri Southern Foundation Missouri Southern Foundation (the Foundation ) is a nonprofit corporation organized to foster, cooperate, and assist in the growth, development, and advancement of the University, primarily by providing scholarships and faculty, departmental, and other general support. The Foundation s primary sources of revenue are private contributions and earnings on investments. The Foundation is exempt from income taxes under Section 501(c)(3) of the Internal Revenue Code. The following table sets forth the Foundation s net assets for each of the last five fiscal years: At June 30 Unrestricted Foundation Net Assets Temporary Restricted Permanently Restricted Total 2010 $874,335 $10,482,436 $14,426,692 $25,783, ,607,544 13,695,556 15,939,924 31,243, ,237,222 13,714,566 15,677,022 30,628, ,641,518 14,038,777 16,298,234 31,978, ,418,228 15,951,046 17,928,588 36,297,862 Risk Management and Insurance The property owned by the University, including the facilities which are a part of the Auxiliary Enterprise System, are presently insured against damage in an aggregate blanket limit of $100 million for damage to the buildings and contents. The State maintains a State Legal Expense Fund under Section of the Revised Statutes of Missouri, as amended, under which moneys are available for the payment of certain claims against the State, or any agency of the State including the University, and any officer or employee of the State or any agency of the State, arising out of and performed in connection with his or her official duties on behalf of the State, or any agency of the State, as provided in the statute. A-10

49 Pension Liabilities The University participates, through the State, in two retirement plans covering all employees of the University. The majority of University employees are enrolled in the Missouri State Employees Plan ( MSEP ) administered by the Missouri State Employees Retirement System ( MOSERS ), a noncontributory, defined benefit plan. All faculty on full-time, regular appointment are enrolled in the College and University Retirement Plan ( CURP ) if they have not previously been enrolled in MOSERS. CURP is a non-contributory 401(a) defined contribution retirement plan, which uses TIAA- CREF as its third party administrator. The University s retirement contribution to CURP is 6.16% of covered payroll for fiscal year 2015 and will decrease to 5.89% for fiscal year As a defined contribution plan, CURP does not have an overfunded or underfunded status and each participant s account balance belongs to that participant subject to any applicable vesting requirements for University contributions. See Note 6 of Notes to Financial Statements included as Appendix B. Information relating to the funding status of MSEP is available on the MOSERS website at The University has no means to independently verify any of the information set forth on the MOSERs website or in the MOSERS Comprehensive Annual Financial Report for the year ended June 30, 2014, which is the most recent financial and actuarial information available on that website. As of June 30, 2014, MSEP had an actuarial value of assets of $8.637 billion, an actuarial accrued liability of $ billion and an unfunded actuarial accrued liability of $2.856 billion, or 75.1% funded status, down from 86.8% as of June 30, Reference is made to the MOSERS 2014 Comprehensive Annual Financial Report for the assumptions and related disclosures. See Note 6 of Notes to Financial Statements included as Appendix B. The University will implement GASB Statement 68, Accounting and Financial Reporting for Pensions An Amendment of GASB Statement No. 27, in fiscal year This Statement will require the University to record its proportional share of the net pension liability of MSEP. MSEP has two benefit structures known as MSEP (closed plan) and MSEP 2000, including the MSEP 2011 tier of MSEP Each benefit structure, including the MSEP 2011 tier, reflects changes in benefits for covered employees, including a required member contribution of 4% of pay for participants first employed on or after January 1, MOSERS also makes periodic review of the actuarial assumptions for the MSEP plan and made adjustments in July 2012, including a reduction of the nominal investment return assumption from 8.5% to 8.0%, and reductions in assumptions for wage inflation and price inflation to 3.0% and 2.5%, respectively, from 4.0% and 3.2%, respectively. Since 1999, the annual employer contributions to MSEP have been 100% of the actuarially required contributions to that plan. The actuarial value of assets is based on a method that fully recognizes expected investment return and averages unanticipated market return over a five-year period. The actuarially required contributions include contributions for the unfunded accrued actuarial liability, which is amortized over an open 30-year period (which also has been the amortization practice for over 10 years). The following table sets forth for the University the annual contributions to MSEP in dollars and as a percent of covered payroll for the past five fiscal years and the announced actuarially required contribution rates for fiscal 2015 (based on the MOSERS Comprehensive Annual Financial Report for the year ended June 30, 2013) and fiscal 2016 (based on the report for the year ended June 30, 2014). (The remainder of this page is intentionally left blank.) A-11

50 University Contributions to MSEP Year Ended June 30 Annual Contribution ($) Actuarially Required Contribution (% of Payroll) 2010 $2,707, % ,937, ,866, ,057, ,719, N/A (1) N/A (1) (1) Dollar contribution for fiscal years 2015 and 2016 will be the actuarially required contribution percentage specified times the covered payroll for that fiscal year. The following table is excerpted from the MOSERS Comprehensive Annual Report for the year ended June 30, 2014, and sets forth the actuarial valuation of the assets and liabilities of MSEP and the unfunded liabilities and funded ratio for the past five fiscal years. Year Ended June 30 Actuarial Value of Assets Funded Status of MSEP ($ in billions) Actuarial Accrued Liabilities (AAL) Unfunded AAL Funded Ratio 2010 $7.923 $9.853 $ % The present value and unfunded AAL attributable to the University is not determinable at the University level. Other Post-Employment Obligations (OPEB) The University provides certain medical benefits to eligible retirees and their spouses under the Missouri Southern State University Employee Benefit Plan. The post-employment healthcare benefits are funded on a pay-as-you-go basis. The plan was established effective January 1, For fiscal year 2014, the University contributed approximately $46,000 which was approximately 43% of total contributions. No assets have been segregated and restricted to provide post-employment benefits. See Note 7 of the Notes to Financial Statements included as Appendix B to this Official Statement. Litigation The University is not currently involved in any legal action not protected by the state legal defense fund or liability insurance. It experiences such claims and legal actions from time to time, related to matters arising from the ordinary conduct of business. * * * A-12

51 Appendix B Independent Auditor s Report and Audited Financial Statements

52 Missouri Southern State University (A Component Unit of the State of Missouri) Independent Auditor s Reports and Financial Statements June 30, 2014 and 2013

53 Missouri Southern State University (A Component Unit of the State of Missouri) June 30, 2014 and 2013 Contents Independent Auditor s Report... 1 Management s Discussion and Analysis... 4 Financial Statements Statements of Net Position Missouri Southern Foundation Statements of Financial Position Statements of Revenues, Expenses and Changes in Net Position Missouri Southern Foundation Statements of Activities Year Ended June 30, Year Ended June 30, Statements of Cash Flows Notes to Financial Statements Required Supplementary Information Schedule of Funding Progress for Postemployment Health Care Plan... 46

54 Independent Auditor s Report Board of Governors Missouri Southern State University Joplin, Missouri Report on the Financial Statements We have audited the accompanying financial statements of the business-type activities and aggregate discretely presented component unit of Missouri Southern State University, collectively a component unit of the state of Missouri, as of and for the years ended June 30, 2014 and 2013, and the related notes to the financial statements, which collectively comprise Missouri Southern State University s basic financial statements, as listed in the table of contents. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express opinions on these financial statements based on our audits. We did not audit the financial statements of Missouri Southern Foundation, a discretely presented component unit of the University, which statements reflect total assets of $36,438,826 and $32,223,163 as of June 30, 2014 and 2013, respectively, and total revenues of $6,334,464 and $3,319,588, respectively, for the years then ended. Those statements were audited by other auditors whose report thereon has been furnished to us, and our opinions, insofar as they relate to the amounts included for Missouri Southern Foundation, are based solely on the report of the other auditors. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

55 Board of Governors Missouri Southern State University Page 2 An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, based on our audit and the report of the other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the business-type activities of Missouri Southern State University and of its discretely presented component unit as of June 30, 2014 and 2013, and the respective changes in financial position and cash flows, where applicable, thereof for the years then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter As discussed in Note 1 to the financial statements, in 2014, The University changed its method of accounting for certain items previously reported as assets and liabilities in accordance with GASB Statement No. 65, Items Previously Reported as Assets and Liabilities. Our opinions are not modified with respect to this matter. OTHER MATTER Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management s discussion and analysis and other postemployment benefit information listed in the table of contents be presented to supplement the basic financial statements. Such information, although not part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States

56 Board of Governors Missouri Southern State University Page 3 of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Springfield, Missouri October 14, 2014

57 Missouri Southern State University (A Component Unit of the State of Missouri) Management s Discussion and Analysis Years Ended June 30, 2014 and 2013 Overview Missouri Southern State University (MSSU) has a long and rich history of excellence in academics, student services and community service. Located in Southwest Missouri on a beautiful 373-acre campus, MSSU is a public institution with a liberal arts foundation that fulfills its mission by educating students of all ages and socioeconomic backgrounds. Missouri Southern State University offers more than 100 majors and degree options, two graduate programs and additional graduate programs through cooperative partnerships. Our extensive distancelearning program allows flexibility to our students. Faculty and staff at MSSU work diligently to provide their students with a successful academic experience. A diverse student body adds to the fine higher education offered at MSSU where quality academic programs, modern state-of-the-art facilities, small classes and excellent, accessible professors complete the unique community. The curriculum at Missouri Southern State University focuses on professional orientation and is committed to preparing students for a successful career in a rapidly changing global economy. Programs begin with general education requirements for all students leading to bachelor s degrees and providing a strong foundation for lifelong study. Academic Programs The academic programs at the University are organized under four schools: Robert W. Plaster School of Business, School of Arts and Sciences, School of Education and School of Health Sciences. Each school has varied degree programs that offer extensive opportunities. MSSU also has strong programs in Honors and International Studies. Management Discussion and Analysis The following discussion and analysis provides an overview of the financial position and activities of Missouri Southern State University for the years ended June 30, 2014 and These statements provide both long-term and short-term financial information on the Missouri Southern State University campus as a whole. Management has prepared the financial statements and the related footnote disclosures along with this discussion and analysis. 4

58 In 2014, the University adopted GASB Statement No. 65, Items Previously Reported as Assets and Liabilities, which establishes accounting and financial reporting standards that reclassify certain items previously reported as assets and liabilities to deferred outflows of resources or deferred inflows of resources and recognize certain items that were previously reported as assets and liabilities as expenses and revenues. Information included in this discussion and analysis for the year ended June 30, 2013, has been restated for the application of GASB Statement No. 65. Information for the year ended June 30, 2012, has not been restated for the application of GASB Statement No. 65 based on the immaterial impact. Basic Financial Statements The University s financial report includes three financial statements: the Statement of Net Position, the Statement of Revenues, Expenses and Changes in Net Position and the Statement of Cash Flows. These statements focus on the University as a whole, with resources classified for accounting and reporting purposes into four net position categories. Net position is one way to measure the University s financial position. Over time, increases or decreases in the University s net position are indicators of whether its financial position is improving. Nonfinancial factors are also important to consider including trends in student enrollment, condition and upgrades to facilities and competency and excellence of the work force. Financial Highlights 2014 At June 30, 2014, the University s net position was $87.2 million. Operating revenues were $30.1 million, which include tuition and fees of $17.0 million, grants of $4.3 million, auxiliary revenues of $7.5 million and other revenues of $1.3 million. Operating expenses amounted to $69.1 million resulting in an operating loss of $39.0 million before state appropriations and other nonoperating revenues and expenses. The 2014 operating loss, net nonoperating revenue of $35.3 million and capital gifts and grants of $2.4 million resulted in a decrease in net position of $1.3 million and included depreciation and amortization expense of $5.6 million At June 30, 2013, the University s net position was $88.5 million. Operating revenues were $30.2 million, which include tuition and fees of $16.6 million, grants of $4.7 million, auxiliary revenues of $7.5 million and other revenues of $1.4 million. Operating expenses amounted to $66.7 million resulting in an operating loss of $36.5 million before state appropriations and other nonoperating revenues and expenses. The 2013 operating loss, net nonoperating revenue of $35.5 million and capital gifts and grants of $0.1 million resulted in a decrease in net position of $0.9 million and included depreciation and amortization expense of $5.5 million. 5

59 Analysis of Changes in Net Position The following table summarizes the University s assets, liabilities and net position at June 30, 2014, 2013 and Net Position, End of Year (In Millions) (Restated Note 1) 2012 Current Assets $ 10.2 $ 15.0 $ 11.4 Capital Assets Net Other Noncurrent Assets Deferred Outflows of Resources Total assets and deferred outflows of resources $ $ $ Current Liabilities $ 7.9 $ 6.3 $ 6.7 Noncurrent Liabilities Total liabilities $ 47.7 $ 31.8 $ 33.2 Net Position Net investment in capital assets $ 70.6 $ 72.3 $ 75.0 Restricted Unrestricted Total net position $ 87.2 $ 88.5 $ 90.2 Of the $7.7 million in restricted net position in 2014, $3.8 million of capital contributions in the federal student loan program is classified as nonexpendable. The expendable portion, $3.9 million, is held for scholarships, capital projects and debt payments. Of the $6.5 million in restricted net position in 2013, $4.0 million of capital contributions in the federal student loan program is classified as nonexpendable. The expendable portion, $2.5 million, is held for scholarships, capital projects and debt payments. 6

60 The following table summarizes the University s revenues, expenses and changes in net position for the years ending June 30, 2014, 2013 and 2012: Change in Net Position (In Millions) (Restated Note 1) 2012 Operating Revenues Tuition and fees $ 17.0 $ 16.6 $ 17.4 Grants and contracts Interest on loans to students Auxiliary enterprises Other Total operating revenues Operating Expenses Operating Loss (39.0) (36.5) (34.6) Nonoperating Revenue (Expense) State appropriations Federal grants and contracts Contributions Investment income Interest on capital asset related debt (1.6) (1.2) (1.2) Loss on disposal of capital assets and construction in progress 0.0 (0.6) 0.0 Other nonoperating revenues Net nonoperating revenues Income (Loss) Before Other Revenues (3.7) (1.0) 0.8 Capital gifts and grants Total other revenues, expenses, gains or losses Increase (Decrease) in Net Position (1.3) (0.9) 1.0 Net Position, Beginning of Year Net Position, End of Year $ 87.2 $ 88.5 $ Total operating revenues decreased 0.33% from $30.2 to $30.1 million during fiscal year ended June 30, Federal grants decreased due to close of PTAC grant and completion of the Project Speak grant. Tuition increases provide an offset with additional revenue from the expansion of LionPride in-state tuition program. LionPride tuition allows for reduced in-state tuition to students who live in designated counties of Arkansas, Kansas and Oklahoma as well as a few counties in Illinois. 7

61 2013 Total operating revenues decreased 1.9% from $30.8 to $30.2 million during fiscal year ended June 30, Tuition decrease is from the implementation of LionPride tuition. The overall net effect was a reduction in tuition from decreased out-of-state tuition revenue coupled with increased in-state tuition revenue. The following graph summarizes the University s operating revenues for the year ended June 30, 2014: Operating expenses increased by $2.4 million (3.6%). Increases in compensation and benefits were the result of an across the board raise, increase in health insurance and MOSERS expense and recognition of OPEB expense. Supplies increase is a result of a change in asset thresholds, from $1,000 to $5,000. Scholarships decreased due to expansion of LionPride tuition. Students who now receive the LionPride in-state tuition rate no longer need to receive the nonresidence scholarship that discounted tuition to the in-state rate. 8

62 The following table summarizes the University s operating expenses by natural classifications for the years ended June 30, 2014, 2013 and 2012: Operating Expenses (In Millions) (Restated Note 1) 2012 Compensation and benefits $ 39.3 $ 37.5 $ 36.5 Contractual services Supplies and materials Scholarships Depreciation and amortization Utilities Other Total operating expenses $ 69.1 $ 66.7 $ 65.4 The following graph summarizes the University s operating expenses by natural classification for the year ended June 30, 2014: 9

63 The following table summarizes the University s operating expenses by functional classifications for the years ended June 30, 2014, 2013 and 2012: Operating Expenses by Functional Classification (In Millions) (Restated Note 1) 2012 Instruction $ 23.0 $ 21.6 $ 22.0 Public service Academic support Student service Institutional support Operations and maintenance of plant Scholarships Auxiliary Total operating expenses $ 69.1 $ 66.7 $ 65.4 The following graph summarizes the University s operating expenses by functional classification for the year ended June 30, 2014: 2014 Functional expenses for fiscal year 2014 saw an increase over the prior year due to increased costs from an across the board raise, MOSERS retirement and OPEB expense. Supplies increase is a result of a change in asset thresholds, from $1,000 to $5,000. Scholarships decreased due to expansion of LionPride tuition. Students who now receive the LionPride in-state tuition rate no longer need to receive the nonresidence scholarship that discounted tuition to the in-state rate. 10