Board of Trustees, Minnesota State Colleges and Universities

Transcription

1 The information contained in this Preliminary Official Statement is deemed by the Board to be final as of the date hereof; however, the pricing and underwriting information is subject to completion or amendment. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. PRELIMINARY OFFICIAL STATEMENT DATED JANUARY 26, 2017 NEW AND REFUNDING ISSUES NOT BANK QUALIFIED Ratings: Moody s Investors Service: Aa3 S&P Global Ratings: AA- In the opinion of Bond Counsel, based on present federal and Minnesota laws, regulations, rulings and decisions, and assuming compliance with certain covenants, at the time of their issuance and delivery to the original purchaser(s), interest on the Series 2017A Bonds is excluded from gross income for purposes of United States income tax and is excluded, to the same extent, in computing both gross and taxable net income for purposes of State of Minnesota income tax (other than Minnesota franchise taxes measured by income and imposed on corporations and financial institutions). Interest on the Series 2017A Bonds is not an item of tax preference for purposes of the alternative minimum tax imposed on individuals and corporations; however, interest on the Series 2017A Bonds is taken into account in determining adjusted current earnings for purposes of computing the federal alternative minimum tax imposed on corporations. No opinion will be expressed by Bond Counsel regarding other state or federal tax consequences caused by the receipt or accrual of interest on the Series 2017A Bonds or arising with respect to ownership of the Series 2017A Bonds. In the opinion of Bond Counsel, the interest to be paid on the Series 2017B Bonds is includable in the income of the recipient for purposes of United States and State of Minnesota income taxation. See TAX EXEMPTION SERIES 2017A BONDS, TAXABILITY OF INTEREST SERIES 2017B BONDS and OTHER FEDERAL TAX CONSIDERATIONS herein. Board of Trustees, Minnesota State Colleges and Universities $52,955,000* Revenue Fund and Refunding Bonds, Series 2017A (the Series 2017A Bonds ) $3,225,000* Revenue Fund and Refunding Bonds, Taxable Series 2017B (the Series 2017B Bonds ) (Book Entry Only) Dated Date: Date of Delivery Interest Due: April 1 and October 1, commencing October 1, 2017 The Series 2017A Bonds and the Series 2017B Bonds (collectively, the Bonds ) will mature as shown on the inside front cover of this Official Statement. Common to Both Issues Proposals for the Bonds may contain maturity schedules providing for a combination of serial bonds and term bonds. All term bonds shall be subject to mandatory sinking fund redemption at a price of par plus accrued interest to the date of redemption and must conform to the maturity schedule set forth within. The Bonds are special, limited obligations of the Board of Trustees (the Board ) of Minnesota State Colleges and Universities ( Minnesota State ). The Bonds shall be issued pursuant to an Amended and Restated Master Indenture of Trust dated as of June 1, 2009, as amended (the Indenture ) between the Board and U.S. Bank National Association, Saint Paul, Minnesota, as trustee (the Trustee ), and a Series Resolution (the Series Resolution ) adopted by the Board on January 25, The Bonds are issued pursuant to Minnesota Statutes, Section 136F.90 et seq. and are secured by the net revenues accruing to the Minnesota State Colleges and Universities Revenue Fund (the Net Revenues ) on a parity of lien with the Board s Prior Bonds (defined herein) and by the covenants and provisions set forth in the Indenture. The Bonds and the Prior Bonds are collectively referred to herein as the Revenue Fund Bonds. The Bond proceeds will be used to finance various capital improvements at a Minnesota State institution, to refund Minnesota State s outstanding Series 2007A Bonds, Series 2007C Bonds, and Series 2008A Bonds, for Minnesota State system-wide capital planning, and to fund a debt service reserve. THE BONDS ARE NOT SECURED BY THE FULL FAITH AND CREDIT OF THE BOARD, MINNESOTA STATE, THE STATE OF MINNESOTA OR ANY AGENCY OR POLITICAL SUBDIVISION THEREOF. A separate bid must be submitted for each issue for not less than the amounts shown below. No good faith deposit is required for these issues. Bidders shall specify rates in integral multiples of 5/100 or 1/8 of 1%. The initial price to the public for each maturity of each issue must be 98% or greater. Award of each Issue will be made on the basis of True Interest Cost (TIC). Minimum Bid The Series 2017A Bonds $52,160,075 The Series 2017B Bonds $3,192,750 The Board will not designate the Bonds as qualified tax-exempt obligations pursuant to Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. The Bonds will be issued as fully registered bonds without coupons and, when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company ( DTC ). DTC will act as securities depository for the Bonds. Individual purchases may be made in book entry form only, in the principal amount of $5,000 and integral multiples thereof. Investors will not receive physical certificates representing their interest in the Bonds purchased. (See Book Entry System herein.) The Trustee will serve as paying agent and registrar (the Paying Agent and Registrar ) for the Bonds. Delivery of the Bonds is subject to receipt of the legal opinion of Kennedy & Graven, Chartered, Minneapolis, Minnesota. Bonds will be available for delivery at DTC on or about February 23, This cover page contains certain information for quick reference only. It is not a summary of these issues. Investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision. PROPOSALS RECEIVED: February 8, 2017 (Wednesday) until 11:00 A.M., Central Time AWARD: February 8, 2017 (Wednesday) subsequent to bid opening * Preliminary, subject to change Further information may be obtained from SPRINGSTED Incorporated, Municipal Advisor to the Board, 380 Jackson Street, Suite 300, Saint Paul, Minnesota (651)

2 Board of Trustees, Minnesota State Colleges and Universities $52,955,000* Revenue Fund and Refunding Bonds, Series 2017A The Series 2017A Bonds will mature October 1 as follows: Year Principal* Rate Yield 2017 $3,160, $3,540, $3,685, $3,845, $4,015, $4,220, $4,435, $4,660, $4,900, $5,145, $3,010,000 CUSIP 60414F Year Principal* Rate Yield 2028 $3,165, $ 470, $ 490, $ 515, $ 545, $ 570, $ 600, $ 630, $ 660, $ 695,000 CUSIP 60414F At the Board s option, Series 2017A Bonds scheduled to mature on or after October 1, 2027 are subject to optional redemption prior to maturity in whole on April 1, 2027 and on any date thereafter, or in part on April 1, 2027 and any Interest Payment Date thereafter. $3,225,000* Revenue Fund and Refunding Bonds, Taxable Series 2017B The Series 2017B Bonds will mature October 1 as follows: Year Principal* Rate Yield 2017 $285, $300, $300, $310, $315,000 CUSIP 60414F Year Principal* Rate Yield 2022 $330, $330, $340, $355, $360,000 CUSIP 60414F The Board may not optionally redeem the Series 2017B Bonds prior to maturity. * The Board reserves the right, after proposals are opened and prior to award, to increase or reduce the principal amount of the Series 2017A Bonds and/or the Series 2017B Bonds offered for sale as described in the Terms of Proposal.

3 For purposes of compliance with Rule 15c2-12 of the Securities and Exchange Commission, this document, as the same may be supplemented or corrected by the Board from time to time (collectively, the Official Statement ), may be treated as an Official Statement with respect to the Bonds described herein that is deemed final as of the date hereof (or of any such supplement or correction) by the Board. By awarding the Bonds to any underwriter or underwriting syndicate submitting a Proposal therefor, the Board agrees that, no more than seven business days after the date of such award, it shall provide without cost to the senior managing underwriter of the syndicate to which the Bonds are awarded copies of the final Official Statement in the amount specified in each of the Terms of Proposal. No dealer, broker, salesman or other person has been authorized by the Board to give any information or to make any representations with respect to the Bonds, other than as contained in the Official Statement, and if given or made, such other information or representations must not be relied upon as having been authorized by the Board. Certain information contained in the Official Statement may have been obtained from sources other than records of the Board and, while believed to be reliable, is not guaranteed as to completeness or accuracy. THE INFORMATION AND EXPRESSIONS OF OPINION IN THE OFFICIAL STATEMENT ARE SUBJECT TO CHANGE, AND NEITHER THE DELIVERY OF THE OFFICIAL STATEMENT NOR ANY SALE MADE THEREUNDER SHALL CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE BOARD SINCE THE DATE THEREOF. References herein to laws, rules, regulations, resolutions, agreements, reports and other documents do not purport to be comprehensive or definitive. All references to such documents are qualified in their entirety by reference to the particular document, the full text of which may contain qualifications of and exceptions to statements made herein. Where full texts of documents prepared by or on behalf of the Board have not been included as appendices to the Official Statement, they will be furnished on request. THIS OFFICIAL STATEMENT CONTAINS STATEMENTS WHICH SHOULD BE CONSIDERED FORWARD-LOOKING STATEMENTS, MEANING THEY REFER TO POSSIBLE FUTURE EVENTS OR CONDITIONS. SUCH STATEMENTS ARE GENERALLY IDENTIFIABLE BY WORDS SUCH AS PLAN, EXPECT, ESTIMATE, BUDGET OR SIMILAR WORDS. 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. NEITHER MINNESOTA STATE NOR ANY OTHER PARTY EXPECTS OR INTENDS TO ISSUE ANY UPDATES OR REVISIONS TO THOSE FORWARD-LOOKING STATEMENTS IF OR WHEN EXPECTATIONS, OR EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH SUCH STATEMENTS ARE BASED, OCCUR. Any CUSIP numbers for the Bonds included in the Official Statement are provided for convenience of the owners and prospective investors. The CUSIP numbers for the Bonds are assigned by an organization unaffiliated with the Board. The Board is not responsible for the selection of the CUSIP numbers and makes no representation as to the accuracy thereof as printed on the Bonds or as set forth in the Official Statement. No assurance can be given by the Board that the CUSIP numbers for the Bonds will remain the same after the delivery of the Official Statement or the date of issuance and delivery of the Bonds. CUSIP is a registered trademark of the American Bankers Association. CUSIP data herein are provided by Standard & Poor s CUSIP Service Bureau, a division of The McGraw-Hill Companies, Inc.

4 MINNESOTA STATE COLLEGES AND UNIVERSITIES BOARD OF TRUSTEES Name Congressional District No. Term Expiration* Basil Ajuo Comm. College Student 2018 Ann Anaya Elise Bourdeau University Student 2017 Alexander Cirillo, Jr., at large member John Cowles, Treasurer Dawn Erlandson Amanda Fredlund Tech. College Student 2018 Robert Hoffman Jerry Janezich Roger Moe Rudy Rodriguez Louise Sundin Cheryl Tefer Michael Vekich, Chair, at large member * Terms expire on June 30 of the given years. There is currently one vacancy on the Board. PRINCIPAL ADMINISTRATORS Name Steven J. Rosenstone* Rod Anderson Laura M. King Mark Carlson Ramon Padilla, Jr. Gary Cunningham Noelle Hawton Toyia Younger Dave Pyland Inge Chapin Nancy Joyer Title Chancellor Vice Chancellor for Academic and Student Affairs Vice Chancellor, Chief Financial Officer Vice Chancellor for Human Resources Vice Chancellor, Chief Information Officer General Counsel Chief Marketing and Communications Officer Chief Diversity Officer Executive Director for Internal Auditing Board Secretary Chief of Staff * Chancellor Rosenstone has proffered his intent to retire as Chancellor effective July 31, A national search is underway to fill the Chancellor s position with an anticipated start date of August 1, See APPENDIX I MINNESOTA STATE COLLEGES AND UNIVERSITIES Governance and Administration herein.

5 CONSULTANTS Municipal Advisor Springsted Incorporated Saint Paul, Minnesota Bond Counsel Kennedy & Graven, Chartered Minneapolis, Minnesota For additional information regarding Minnesota State Colleges and Universities, please contact: Minnesota State Colleges and Universities 30 7th Street East, Suite 350 Saint Paul, Minnesota (651) or (888) Springsted Incorporated 380 Jackson Street, Suite 300 Saint Paul, Minnesota (651)

6 TABLE OF CONTENTS Terms of Proposal: $52,955,000 * Revenue Fund and Refunding Bonds, Series 2017A... i $3,225,000* Revenue Fund and Refunding Bonds, Taxable Series 2017B... v Introductory Statement... 1 Continuing Disclosure... 2 The Bonds... 3 Use of Proceeds... 5 Estimated Sources and Uses of Funds... 7 Source of Payment for the Bonds... 8 Future Financing Litigation Legality Tax Exemption Series 2017A Bonds Taxability of Interest Series 2017B Bonds Other Federal Tax Considerations the Series 2017A Bonds Not Bank-Qualified Tax-Exempt Obligations Ratings Municipal Advisor Certification Minnesota State Colleges and Universities... Appendix I Proposed Form of Legal Opinion... Appendix II Excerpts of the Series Resolution Regarding Continuing Disclosure... Appendix III Summary of Certain Provisions of the Indenture and the Series Resolution... Appendix IV The Depository Trust Company... Appendix V Excerpt of 2014 Minnesota State Revenue Fund Annual Financial Report... Appendix VI Page * Preliminary, subject to change

7 SUMMARY STATEMENT The following information is furnished solely to provide limited introductory information regarding the Board s $52,955,000 * Revenue Fund and Refunding Bonds, Series 2017A (the Series 2017A Bonds ), and $3,225,000* Revenue Fund and Refunding Bonds, Taxable Series 2017B (the Series 2017B Bonds ) and does not purport to be comprehensive. All such information is qualified in its entirety by reference to the more detailed descriptions appearing in this Official Statement, including the appendices hereto. The Issuer: Purpose of Issue: The Board of Trustees (the Board ) of Minnesota State Colleges and Universities ( Minnesota State ). Minnesota State is comprised of 31 institutions of higher education, including 7 four-year state universities and 24 two-year community and technical colleges. The central administrative office of Minnesota State is in Saint Paul, Minnesota. The proceeds from the sale of the Series 2017A Bonds will be used (i) to refund on a current refunding basis Minnesota State s outstanding Revenue Fund Bonds, Series 2007A, (ii) to refund on an advance refunding basis Minnesota State s outstanding Revenue Fund Bonds Series 2008A, and (iii) for capital improvements at one of Minnesota State s universities. The proceeds from the sale of the Series 2017B Bonds will be used (i) to refund on a current refunding basis Minnesota State s outstanding Revenue Fund Bonds, Taxable Series 2007C, and (ii) for Minnesota State system-wide capital planning. Proceeds from the sale of each series of Bonds will additionally be used for each respective series to pay certain costs of issuance and to fund a deposit to the Reserve Fund. Denominations: Principal Payments: Interest Payments: Security: The Bonds will be fully registered bonds in denominations of $5,000 or any integral multiple thereof. Principal on the Bonds will be payable on October 1 of each year beginning in The Series 2017A Bonds will have a final maturity of October 1, 2037 and the Series 2017B Bonds will have a final maturity of October 1, The Bonds will bear interest from the date of delivery. Interest will be paid semiannually on each April 1 and October 1, commencing October 1, The Bonds are secured by the Net Revenues accruing to the Minnesota State Colleges and Universities Revenue Fund (the Net Revenues ) and by the covenants and provisions set forth in the Indenture relating to Minnesota State s Revenue Fund Bonds. The Bonds are payable from the Net Revenues on a parity of lien with the Board s Series 2007 Bonds, Series 2008 Bonds, Series 2009 Bonds, Series 2011 Bonds, Series 2012 Bonds, Series 2013 Bonds, Series 2015 Bonds, and any additional bonds issued under the Indenture (all as defined herein). THE BONDS ARE NOT SECURED BY THE FULL FAITH AND CREDIT OF THE BOARD, MINNESOTA STATE, THE STATE OF MINNESOTA OR ANY AGENCY OR POLITICAL SUBDIVISION THEREOF, BUT ARE SPECIAL, LIMITED OBLIGATIONS OF THE MINNESOTA STATE REVENUE FUND. * Preliminary, subject to change

8 Tax Status: Not Bank Qualified: Redemption: Interest on the Series 2017A Bonds is excludable from gross income for federal income tax purposes, and from gross and net taxable income for State of Minnesota tax purposes. Interest on the Series 2017A Bonds is not a preference item for federal alternative minimum tax computation. The Series 2017B Bonds are taxable obligations. The Bonds will not be designated as qualified tax-exempt obligations. At the Board s option, Series 2017A Bonds scheduled to mature on or after October 1, 2027 are subject to optional redemption prior to maturity in whole on April 1, 2027 and on any date thereafter or in part on April 1, 2027 and any Interest Payment Date thereafter. Series 2017B Bonds are not subject to optional redemption prior to maturity. Delivery: It is anticipated that the Bonds will be delivered on or about February 23, Payment Record: Neither Minnesota State nor its predecessor organizations has ever defaulted on any bond obligation.

9 THE BOARD HAS AUTHORIZED SPRINGSTED INCORPORATED TO RECEIVE BIDS ON THIS ISSUE ON ITS BEHALF. PROPOSALS WILL BE RECEIVED ON THE FOLLOWING BASIS: TERMS OF PROPOSAL $52,955,000 * BOARD OF TRUSTEES, MINNESOTA STATE COLLEGES AND UNIVERSITIES REVENUE FUND AND REFUNDING BONDS, SERIES 2017A (BOOK ENTRY ONLY) Proposals for the Series 2017A Bonds ( Proposals ) will be received on Wednesday, February 8, 2017, until 11:00 A.M., Central Time (the Sale Date ), at the offices of Springsted Incorporated, 380 Jackson Street, Suite 300, Saint Paul, Minnesota 55101, after which time they will be opened and tabulated. Consideration for award of the Series 2017A Bonds will be by the Board subsequent to bid opening on the same day. SUBMISSION OF PROPOSALS Springsted will assume no liability for the inability of the bidder to reach Springsted prior to the time of sale specified above. All bidders are advised that each Proposal shall be deemed to constitute a contract between the bidder and the Board to purchase the Series 2017A Bonds regardless of the manner in which the Proposal is submitted. (a) Facsimile Bidding. Proposals may be submitted by fax (651) to Springsted. Signed Proposals, without final price or coupons, may be submitted to Springsted prior to the time of sale. The bidder shall be responsible for submitting to Springsted the final Proposal price and coupons, by telephone (651) or fax (651) for inclusion in the submitted Proposal. OR (b) Electronic Bidding. Notice is hereby given that electronic Proposals will be received via PARITY. For purposes of the electronic bidding process, the time as maintained by PARITY shall constitute the official time with respect to all Bids submitted to PARITY. Each bidder shall be solely responsible for making necessary arrangements to access PARITY for purposes of submitting its electronic Bid in a timely manner and in compliance with the requirements of the Terms of Proposal. Neither the Board, its agents nor PARITY shall have any duty or obligation to undertake registration to bid for any prospective bidder or to provide or ensure electronic access to any qualified prospective bidder, and neither the Board, its agents nor PARITY shall be responsible for a bidder s failure to register to bid or for any failure in the proper operation of, or have any liability for any delays or interruptions of or any damages caused by the services of PARITY. The Board is using the services of PARITY solely as a communication mechanism to conduct the electronic bidding for the Series 2017A Bonds, and PARITY is not an agent of the Board. If any provisions of the Terms of Proposal conflict with information provided by PARITY, the Terms of Proposal shall control. Further information about PARITY, including any fee charged, may be obtained from: PARITY, 1359 Broadway, 2 nd Floor, New York, New York Customer Support: (212) * Preliminary, subject to change - i -

10 DETAILS OF THE SERIES 2017A BONDS The Series 2017A Bonds will be dated as of the date of delivery and will bear interest payable on April 1 and October 1 of each year, commencing October 1, Interest will be computed on the basis of a 360- day year of twelve 30-day months. The Series 2017A Bonds will mature October 1 in the years and amounts as follows: Year Principal* 2017 $3,160, $3,540, $3,685, $3,845, $4,015, $4,220, $4,435,000 Year Principal* 2024 $4,660, $4,900, $5,145, $3,010, $3,165, $ 470, $ 490,000 Year Principal* 2031 $ 515, $ 545, $ 570, $ 600, $ 630, $ 660, $ 695,000 The Board reserves the right, after proposals are opened and prior to award, to increase or reduce the principal amount of the Series 2017A Bonds or the amount of any maturity in multiples of $5,000. In the event the amount of any maturity is modified, the aggregate purchase price will be adjusted to result in the same gross spread per $1,000 of Series 2017A Bonds as that of the original proposal. Gross spread is the differential between the price paid to the Board for the new issue and the prices at which the securities are initially offered to the investing public. Proposals for the Series 2017A Bonds may contain a maturity schedule providing for a combination of serial bonds and term bonds. All term bonds shall be subject to mandatory sinking fund redemption at a price of par plus accrued interest to the date of redemption and must conform to the maturity schedule set forth above. In order to designate term bonds, the proposal must specify Years of Term Maturities in the spaces provided on the Proposal Form. BOOK ENTRY SYSTEM The Series 2017A Bonds will be issued by means of a book entry system with no physical distribution of Series 2017A Bonds made to the public. The Series 2017A Bonds will be issued in fully registered form and one bond, representing the aggregate principal amount of the Series 2017A Bonds maturing in each year, will be registered in the name of Cede & Co. as nominee of The Depository Trust Company ( DTC ), New York, New York, which will act as securities depository of the Series 2017A Bonds. Individual purchases of the Series 2017A Bonds may be made in the principal amount of $5,000 or any multiple thereof of a single maturity through book entries made on the books and records of DTC and its participants. Principal and interest are payable by the registrar to DTC or its nominee as registered owner of the Series 2017A Bonds. Transfer of principal and interest payments to participants of DTC will be the responsibility of DTC; transfer of principal and interest payments to beneficial owners by participants will be the responsibility of such participants and other nominees of beneficial owners. The purchaser, as a condition of delivery of the Series 2017A Bonds, will be required to deposit the Series 2017A Bonds with DTC. TRUSTEE AND REGISTRAR U.S. Bank National Association, Saint Paul, Minnesota, will serve as Trustee, which shall also act as registrar, and which shall be subject to applicable Securities and Exchange Commission regulations. The Board will pay for the services of the Trustee. OPTIONAL REDEMPTION The Board may elect to prepay Series 2017A Bonds maturing on or after October 1, Redemption may be in whole on any date on or after April 1, 2027, or in part on any Interest Payment Date on or after April 1, 2027, and if in part in such amount and selected from such maturities as the Board shall determine. If fewer than all Series 2017A Bonds of a maturity are called for redemption, the Board will notify DTC of - ii -

11 the particular amount of such maturity to be prepaid. DTC will determine by lot the amount of each participant s interest in such maturity to be redeemed and each participant will then select by lot the beneficial ownership interests in such maturity to be redeemed. All optional prepayments shall be at a price of par plus accrued interest. SECURITY AND PURPOSE The Series 2017A Bonds will be secured by the net revenues accruing to the Minnesota State Colleges and Universities Revenue Fund (the Net Revenues ) and by the covenants and provisions set forth in the Amended and Restated Master Indenture of Trust, dated as of June 1, 2009, as amended (the Indenture ) between the Board and the Trustee, and a Series Resolution adopted by the Board on January 25, The Series 2017A Bonds are payable from the Net Revenues on a parity of lien with the Board s Prior Bonds and any additional Revenue Fund Bonds issued under the Indenture. The Series 2017A Bonds are not secured by the full faith and credit of the Board, Minnesota State, the State of Minnesota or any agency or political subdivision thereof. The proceeds will be used to finance a capital improvement project at one of Minnesota State s universities and to refund a portion of Minnesota State s outstanding bond indebtedness. BIDDING PARAMETERS Proposals shall be for not less than $52,160,075 plus accrued interest, if any, on the total principal amount of the Series 2017A Bonds. No proposal can be withdrawn or amended after the time set for receiving proposals on the Sale Date unless the meeting of the Board scheduled for award of the Bonds is adjourned, recessed, or continued to another date without award of the Bonds having been made. Rates shall be in integral multiples of 1/100 or 1/8 of 1%. The initial price to the public for each maturity must be 98% or greater. Series 2017A Bonds of the same maturity shall bear a single rate from the date of the Series 2017A Bonds to the date of maturity. No conditional proposals will be accepted. AWARD The Series 2017A Bonds will be awarded on the basis of the lowest interest rate to be determined on a true interest cost (TIC) basis. The Board s computation of the interest rate of each proposal, in accordance with customary practice, will be controlling. The Board will reserve the right to: (i) waive non-substantive informalities of any proposal or of matters relating to the receipt of proposals and award of the Series 2017A Bonds, (ii) reject all proposals without cause, and (iii) reject any proposal that the Board determines to have failed to comply with the terms herein. BOND INSURANCE AT PURCHASER S OPTION The Board has not applied for or pre-approved a commitment for any policy of municipal bond insurance with respect to the Series 2017A Bonds. If the Series 2017A Bonds qualify for municipal bond insurance and a bidder desires to purchase a policy, such indication, the maturities to be insured, and the name of the desired insurer must be set forth on the bidder s proposal. The Board specifically reserves the right to reject any bid specifying municipal bond insurance, even though such bid may result in the lowest TIC to the Board. All costs associated with the issuance and administration of any such policy and associated ratings and expenses (other than any independent rating requested by the Board) shall be paid by the successful bidder. Failure of the municipal bond insurer to issue the policy after the award of the Series 2017A Bonds shall not constitute cause for failure or refusal by the successful bidder to accept delivery of the Series 2017A Bonds. CUSIP NUMBERS If the Series 2017A Bonds qualify for assignment of CUSIP numbers such numbers will be printed on the Series 2017A Bonds, but neither the failure to print such numbers on any Series 2017A Bond nor any error with respect thereto will constitute cause for failure or refusal by the purchaser to accept delivery of the - iii -

12 Series 2017A Bonds. The CUSIP Service Bureau charge for the assignment of CUSIP identification numbers shall be paid by the Purchaser. SETTLEMENT Within 40 days following the date of their award, the Series 2017A Bonds will be delivered without cost to the Purchaser through DTC in New York, New York. Delivery will be subject to receipt by the purchaser of an approving legal opinion of Kennedy & Graven, Chartered, Minneapolis, Minnesota, and of customary closing papers, including a no-litigation certificate. On the date of settlement, payment for the Series 2017A Bonds shall be made in federal, or equivalent, funds that shall be received at the offices of the Board or its designee not later than 12:00 Noon, Central Time. Unless compliance with the terms of payment for the Series 2017A Bonds has been made impossible by action of the Board or its agents, the Purchaser shall be liable to the Board for any loss suffered by the Board by reason of the Purchaser s non-compliance with said terms for payment. CONTINUING DISCLOSURE Pursuant to the Series Resolution, the Board has entered into a Continuing Disclosure Undertaking (the Undertaking ) whereunder the Board will covenant for the benefit of the owners of the Series 2017A Bonds to provide certain financial and other information about Minnesota State and notices of certain occurrences to information repositories as specified in and required by SEC Rule 15c2-12(b)(5). OFFICIAL STATEMENT The Board has authorized the preparation of a Preliminary Official Statement containing pertinent information relative to the Series 2017A Bonds, and said Preliminary Official Statement will serve as a nearly final Official Statement within the meaning of Rule 15c2-12 of the Securities and Exchange Commission. For copies of the Preliminary Official Statement or for any additional information prior to sale, any prospective purchaser is referred to the Municipal Advisor to the Board, Springsted Incorporated, 380 Jackson Street, Suite 300, Saint Paul, Minnesota 55101, telephone (651) A Final Official Statement (as that term is defined in Rule 15c2-12) with respect to the Series 2017A Bonds will be prepared, specifying the maturity dates, principal amounts and interest rates of the Series 2017A Bonds, together with any other information required by law. By awarding the Series 2017A Bonds to the Purchaser, the Board agrees that, no more than seven business days after the date of such award, it shall provide without cost to the Purchaser up to 25 copies of the Final Official Statement. The Board designates the Purchaser as its agent for purposes of distributing copies of the Final Official Statement to each syndicate member, if applicable. The Purchaser agrees thereby that if its proposal is accepted by the Board (i) it shall accept such designation and (ii) it shall enter into a contractual relationship with its syndicate members for purposes of assuring the receipt by each such Participating Underwriter of the Final Official Statement by each such syndicate member. Dated January 26, 2017 BY ORDER OF THE BOARD OF TRUSTEES MINNESOTA STATE COLLEGES AND UNIVERSITIES /s/ Laura M. King Vice Chancellor Chief Financial Officer - iv -

13 THE BOARD HAS AUTHORIZED SPRINGSTED INCORPORATED TO RECEIVE BIDS ON THIS ISSUE ON ITS BEHALF. PROPOSALS WILL BE RECEIVED ON THE FOLLOWING BASIS: TERMS OF PROPOSAL $3,225,000 * BOARD OF TRUSTEES, MINNESOTA STATE COLLEGES AND UNIVERSITIES REVENUE FUND AND REFUNDING BONDS, TAXABLE SERIES 2017B (BOOK ENTRY ONLY) Proposals for the Series 2017B Bonds ( Proposals ) will be received on Wednesday, February 8, 2017, until 11:00 A.M., Central Time (the Sale Date ), at the offices of Springsted Incorporated, 380 Jackson Street, Suite 300, Saint Paul, Minnesota 55101, after which time they will be opened and tabulated. Consideration for award of the Series 2017B Bonds will be by the Board subsequent to bid opening on the same day. SUBMISSION OF PROPOSALS Springsted will assume no liability for the inability of the bidder to reach Springsted prior to the time of sale specified above. All bidders are advised that each Proposal shall be deemed to constitute a contract between the bidder and the Board to purchase the Series 2017B Bonds regardless of the manner in which the Proposal is submitted. (a) Facsimile Bidding. Proposals may be submitted by fax (651) to Springsted. Signed Proposals, without final price or coupons, may be submitted to Springsted prior to the time of sale. The bidder shall be responsible for submitting to Springsted the final Proposal price and coupons, by telephone (651) or fax (651) for inclusion in the submitted Proposal. OR (b) Electronic Bidding. Notice is hereby given that electronic proposals will be received via PARITY. For purposes of the electronic bidding process, the time as maintained by PARITY shall constitute the official time with respect to all Bids submitted to PARITY. Each bidder shall be solely responsible for making necessary arrangements to access PARITY for purposes of submitting its electronic Bid in a timely manner and in compliance with the requirements of the Terms of Proposal. Neither the Board, its agents nor PARITY shall have any duty or obligation to undertake registration to bid for any prospective bidder or to provide or ensure electronic access to any qualified prospective bidder, and neither the Board, its agents nor PARITY shall be responsible for a bidder s failure to register to bid or for any failure in the proper operation of, or have any liability for any delays or interruptions of or any damages caused by the services of PARITY. The Board is using the services of PARITY solely as a communication mechanism to conduct the electronic bidding for the Series 2017B Bonds, and PARITY is not an agent of the Board. If any provisions of this Terms of Proposal conflict with information provided by PARITY, this Terms of Proposal shall control. Further information about PARITY, including any fee charged, may be obtained from: PARITY, 1359 Broadway, 2 nd Floor, New York, New York Customer Support: (212) * Preliminary, subject to change - v -

14 DETAILS OF THE SERIES 2017B BONDS The Series 2017B Bonds will be dated as of the date of delivery and will bear interest payable on April 1 and October 1 of each year, commencing October 1, Interest will be computed on the basis of a 360- day year of twelve 30-day months. The Series 2017B Bonds will mature October 1 in the years and amounts as follows: Year Principal* 2017 $285, $300, $300, $310,000 Year Principal* 2021 $315, $330, $330, $340,000 Year Principal* 2025 $355, $360,000 The Board reserves the right, after proposals are opened and prior to award, to increase or reduce the principal amount of the Series 2017B Bonds or the amount of any maturity in multiples of $5,000. In the event the amount of any maturity is modified, the aggregate purchase price will be adjusted to result in the same gross spread per $1,000 of Series 2017B Bonds as that of the original proposal. Gross spread is the differential between the price paid to the Board for the new issue and the prices at which the securities are initially offered to the investing public. Proposals for the Series 2017B Bonds may contain a maturity schedule providing for a combination of serial bonds and term bonds. All term bonds shall be subject to mandatory sinking fund redemption at a price of par plus accrued interest to the date of redemption and must conform to the maturity schedule set forth above. In order to designate term bonds, the proposal must specify Years of Term Maturities in the spaces provided on the Proposal Form. BOOK ENTRY SYSTEM The Series 2017B Bonds will be issued by means of a book entry system with no physical distribution of Series 2017B Bonds made to the public. The Series 2017B Bonds will be issued in fully registered form and one bond, representing the aggregate principal amount of the Series 2017B Bonds maturing in each year, will be registered in the name of Cede & Co. as nominee of The Depository Trust Company ( DTC ), New York, New York, which will act as securities depository of the Series 2017B Bonds. Individual purchases of the Series 2017B Bonds may be made in the principal amount of $5,000 or any multiple thereof of a single maturity through book entries made on the books and records of DTC and its participants. Principal and interest are payable by the registrar to DTC or its nominee as registered owner of the Series 2017B Bonds. Transfer of principal and interest payments to participants of DTC will be the responsibility of DTC; transfer of principal and interest payments to beneficial owners by participants will be the responsibility of such participants and other nominees of beneficial owners. The purchaser, as a condition of delivery of the Series 2017B Bonds, will be required to deposit the Series 2017B Bonds with DTC. TRUSTEE AND REGISTRAR U.S. Bank National Association, Saint Paul, Minnesota, will serve as Trustee, which shall also act as registrar, and which shall be subject to applicable Securities and Exchange Commission regulations. The Board will pay for the services of the Trustee. OPTIONAL REDEMPTION Series 2017B Bonds are not subject to optional redemption prior to maturity. - vi -

15 SECURITY AND PURPOSE The Series 2017B Bonds will be secured by the net revenues accruing to the Minnesota State Colleges and Universities Revenue Fund (the Net Revenues ) and by the covenants and provisions set forth in the Amended and Restated Master Indenture of Trust, dated as of June 1, 2009, as amended (the Indenture ) between the Board and the Trustee, and a Series Resolution adopted by the Board on January 25, The Series 2017B Bonds are payable from the Net Revenues on a parity of lien with the Board s Prior Bonds and any additional Revenue Fund Bonds issued under the Indenture. The Series 2017B Bonds are not secured by the full faith and credit of the Board, Minnesota State, the State of Minnesota or any agency or political subdivision thereof. The proceeds will be used to refund a portion of Minnesota State s outstanding bond indebtedness and for Minnesota State system-wide capital planning. BIDDING PARAMETERS Proposals shall be for not less than $3,192,750 plus accrued interest, if any, on the total principal amount of the Series 2017B Bonds. No proposal can be withdrawn or amended after the time set for receiving proposals on the Sale Date unless the meeting of the Board scheduled for award of the Bonds is adjourned, recessed, or continued to another date without award of the Bonds having been made. Rates shall be in integral multiples of 1/100 or 1/8 of 1%. The initial price to the public for each maturity must be 98% or greater. Series 2017B Bonds of the same maturity shall bear a single rate from the date of the Series 2017B Bonds to the date of maturity. No conditional proposals will be accepted. AWARD The Series 2017B Bonds will be awarded on the basis of the lowest interest rate to be determined on a true interest cost ( TIC ) basis. The Board s computation of the interest rate of each proposal, in accordance with customary practice, will be controlling. The Board will reserve the right to: (i) waive non-substantive informalities of any proposal or of matters relating to the receipt of proposals and award of the Series 2017B Bonds, (ii) reject all proposals without cause, and (iii) reject any proposal that the Board determines to have failed to comply with the terms herein. BOND INSURANCE AT PURCHASER S OPTION The Board has not applied for or pre-approved a commitment for any policy of municipal bond insurance with respect to the Series 2017B Bonds. If the Series 2017B Bonds qualify for municipal bond insurance and a bidder desires to purchase a policy, such indication, the maturities to be insured, and the name of the desired insurer must be set forth on the bidder s Proposal. The Board specifically reserves the right to reject any bid specifying municipal bond insurance, even though such bid may result in the lowest TIC to the Board. All costs associated with the issuance and administration of any such policy and associated ratings and expenses (other than any independent rating requested by the Board) shall be paid by the successful bidder. Failure of the municipal bond insurer to issue the policy after the award of the Series 2017B Bonds shall not constitute cause for failure or refusal by the successful bidder to accept delivery of the Series 2017B Bonds. CUSIP NUMBERS If the Series 2017B Bonds qualify for assignment of CUSIP numbers such numbers will be printed on the Series 2017B Bonds, but neither the failure to print such numbers on any Series 2017B Bond nor any error with respect thereto will constitute cause for failure or refusal by the purchaser to accept delivery of the Series 2017B Bonds. The CUSIP Service Bureau charge for the assignment of CUSIP identification numbers shall be paid by the Purchaser. - vii -

16 SETTLEMENT Within 40 days following the date of their award, the Series 2017B Bonds will be delivered without cost to the Purchaser through DTC in New York, New York. Delivery will be subject to receipt by the Purchaser of an approving legal opinion of Kennedy & Graven, Chartered, Minneapolis, Minnesota, and of customary closing papers, including a no-litigation certificate. On the date of settlement, payment for the Series 2017B Bonds shall be made in federal, or equivalent, funds that shall be received at the offices of the Board or its designee not later than 12:00 Noon, Central Time. Unless compliance with the terms of payment for the Series 2017B Bonds has been made impossible by action of the Board or its agents, the Purchaser shall be liable to the Board for any loss suffered by the Board by reason of the Purchaser s non-compliance with said terms for payment. CONTINUING DISCLOSURE Pursuant to the Series Resolution, the Board has entered into a Continuing Disclosure Undertaking (the Undertaking ) whereunder the Board will covenant for the benefit of the owners of the Series 2017B Bonds to provide certain financial and other information about Minnesota State and notices of certain occurrences to information repositories as specified in and required by SEC Rule 15c2-12(b)(5). OFFICIAL STATEMENT The Board has authorized the preparation of a Preliminary Official Statement containing pertinent information relative to the Series 2017B Bonds, and said Preliminary Official Statement will serve as a nearly final Official Statement within the meaning of Rule 15c2-12 of the Securities and Exchange Commission. For copies of the Preliminary Official Statement or for any additional information prior to sale, any prospective purchaser is referred to the Municipal Advisor to the Board, Springsted Incorporated, 380 Jackson Street, Suite 300, Saint Paul, Minnesota 55101, telephone (651) A Final Official Statement (as that term is defined in Rule 15c2-12) with respect to the Series 2017A Bonds will be prepared, specifying the maturity dates, principal amounts and interest rates of the Series 2017B Bonds, together with any other information required by law By awarding the Series 2017B Bonds to the Purchaser, the Board agrees that, no more than seven business days after the date of such award, it shall provide without cost to the Purchaser up to 25 copies of the Final Official Statement. The Board designates the Purchaser as its agent for purposes of distributing copies of the Final Official Statement to each syndicate member, if applicable. The Purchaser agrees thereby that if its proposal is accepted by the Board (i) it shall accept such designation and (ii) it shall enter into a contractual relationship with its syndicate members for purposes of assuring the receipt by each such syndicate member. Dated January 26, 2017 BY ORDER OF THE BOARD OF TRUSTEES MINNESOTA STATE COLLEGES AND UNIVERSITIES /s/ Laura M. King Vice Chancellor Chief Financial Officer - viii -

17 PRELIMINARY OFFICIAL STATEMENT BOARD OF TRUSTEES, MINNESOTA STATE COLLEGES AND UNIVERSITIES $52,955,000 * REVENUE FUND AND REFUNDING BONDS, SERIES 2017A $3,225,000* REVENUE FUND AND REFUNDING BONDS, TAXABLE SERIES 2017B (BOOK ENTRY ONLY) INTRODUCTORY STATEMENT This Official Statement contains certain information pertaining to the Board of Trustees (the Board ) of Minnesota State Colleges and Universities ( Minnesota State ) and its issuance of $52,955,000* Revenue Fund and Refunding Bonds, Series 2017A (the Series 2017A Bonds ), and $3,225,000* Revenue Fund and Refunding Bonds, Taxable Series 2017B (the Series 2017B Bonds ), collectively referred to as the Bonds. The Bonds will be secured by the net revenues accruing to the Minnesota State Colleges and Universities Revenue Fund (the Net Revenues ) and by the covenants and provisions set forth in the Amended and Restated Master Indenture of Trust dated as of June 1, 2009, as amended (the Indenture ) between the Board and U.S. Bank National Association, Saint Paul, Minnesota, as Trustee, and a Series Resolution (the Series Resolution ) adopted by the Board on January 25, The Bonds are being issued on a parity of lien with the following Revenue Fund Bonds of the Board: * $33,770,000 Revenue Fund Bonds, Series 2007A (the Series 2007A Bonds ), currently outstanding in the aggregate principal amount of $21,595,000 The Series 2007A Bonds will be refunded with proceeds of the Series 2017A Bonds. * $3,320,000 Revenue Fund Bonds, Taxable Series 2007C (the Series 2007C Bonds ), currently outstanding in the aggregate principal amount of $2,140,000 The Series 2007C Bonds will be refunded with proceeds of the Series 2017B Bonds. * $39,885,000 Revenue Fund Bonds, Series 2008A (the Series 2008A Bonds ), currently outstanding in the aggregate principal amount of $27,555,000 The Series 2008A Bonds will be refunded with proceeds of the Series 2017A Bonds. * $1,135,000 Revenue Fund Bonds, Taxable Series 2008B (the Series 2008B Bonds ), currently outstanding in the aggregate principal amount of $275,000 * $31,770,000 Revenue Fund Bonds, Series 2009A (the Series 2009A Bonds ), currently outstanding in the aggregate principal amount of $23,530,000 * $4,040,000 Revenue Fund Bonds, Taxable Series 2009B (the Series 2009B Bonds ), currently outstanding in the aggregate principal amount of $1,625,000 * $82,400,000 Revenue Fund Bonds, Series 2011A (the Series 2011A Bonds ), currently outstanding in the aggregate principal amount of $66,660,000 * $3,400,000 Revenue Fund Bonds, Taxable Series 2011B (the Series 2011B Bonds ), currently outstanding in the aggregate principal amount of $1,845,000 * $12,000,000 Revenue Fund Bonds, Series 2011C (the Series 2011C Bonds ), currently outstanding in the aggregate principal amount of $10,160,000 * Preliminary, subject to change - 1 -

18 * $12,190,000 Revenue Fund Refunding Bonds, Series 2012A (the Series 2012A Bonds ), currently outstanding in the aggregate principal amount of $7,680,000 * $8,195,000 Revenue Fund Refunding Bonds, Taxable Series 2012B (the Series 2012B Bonds ), currently outstanding in the aggregate principal amount of $5,140,000 * $55,315,000 Revenue Fund Bonds, Series 2013A (the Series 2013A Bonds ), currently outstanding in the aggregate principal amount of $51,250,000 * $3,480,000 Revenue Fund Bonds, Taxable Series 2013B (the Series 2013B Bonds ), currently outstanding in the aggregate principal amount of $2,760,000 * $35,340,000 Revenue Fund Bonds, Series 2015A (the Series 2015A Bonds ), currently outstanding in the aggregate principal amount of $32,140,000 * $41,280,000 Revenue Fund Bonds, Taxable Series 2015B (the Series 2015B Bonds ), currently outstanding in the aggregate principal amount of $40,835,000 This Official Statement will reference Minnesota State s bonds described above as follows: Bonds Series: Series 2007A and Series 2007C Series 2008A and Series 2008B Series 2009A and Series 2009B Series 2011A, Series 2011B, and Series 2011C Series 2012A and Series 2012B Series 2013A and Series 2013B Series 2015A and Series 2015B Referred to herein as: Series 2007 Bonds Series 2008 Bonds Series 2009 Bonds Series 2011 Bonds Series 2012 Bonds Series 2013 Bonds Series 2015 Bonds The Series 2007 Bonds, Series 2008 Bonds, Series 2009 Bonds, Series 2011 Bonds, Series 2012 Bonds, Series 2013 Bonds, and Series 2015 Bonds are collectively referred to herein as the Prior Bonds, and the Prior Bonds, along with the Bonds, together with bonds that may hereafter be issued under the Indenture, are collectively referred to herein as the Revenue Fund Bonds. THE BONDS ARE NOT SECURED BY THE FULL FAITH AND CREDIT OF THE BOARD, MINNESOTA STATE, THE STATE OF MINNESOTA OR ANY AGENCY OR POLITICAL SUBDIVISION THEREOF, BUT ARE SPECIAL, LIMITED OBLIGATIONS OF THE MINNESOTA STATE REVENUE FUND. Inquiries may be directed to Springsted Incorporated, 380 Jackson Street, Suite 300, Saint Paul, Minnesota , by telephoning (651) If information of a specific legal nature is desired, requests may be directed to Kennedy & Graven, Chartered, Bond Counsel, 200 South Sixth Street, Suite 470, Minneapolis, Minnesota 55402, or by telephoning (612) Certain capitalized terms used herein and not required by proper grammar to be so capitalized are used with the definitions set forth in summary form in the text hereof. All references to documents described herein are qualified in their entirety by reference to such documents, copies of which are available for inspection at the principal offices of the Trustee. CONTINUING DISCLOSURE In order to assist the Underwriter(s) in complying with SEC Rule 15c2-12 promulgated by the Securities and Exchange Commission, pursuant to the Securities Exchange Act of 1934, as amended (the Rule ), the Board will enter into an undertaking as part of the Series Resolution (the Continuing Disclosure Undertaking ) for the benefit of beneficial owners of the Bonds to provide certain financial information and operating data relating to the Board to certain information repositories annually, and to provide notices of the occurrence of any of the events enumerated in the Rule to the Municipal Securities Rulemaking Board. The specific nature of the undertaking, as well as the information to be contained in the annual - 2 -

19 report or the notices of material events is set forth in the Series Resolution, a copy of which is available from the Board or the Trustee. Appendix III, EXCERPTS OF THE SERIES RESOLUTION REGARDING CONTINUING DISCLOSURE, contains a summary of the financial information and operating data to be provided annually. The Continuing Disclosure Undertaking may be amended under certain circumstances as permitted by the Rule. Furthermore, the Board has reserved its right to discontinue providing information required by the Continuing Disclosure Undertaking or the Rule if a final determination is made by a court of competent jurisdiction that the Rule is invalid or otherwise unlawful and to modify the terms of the Continuing Disclosure Undertaking if a court of competent jurisdiction or the Board determines that such modification is required by the Rule. A failure by the Board to comply with the Continuing Disclosure Undertaking will not constitute an event of default on the Bonds (although holders may have other remedies at law or in equity). Nevertheless, such a failure must be reported in accordance with the Rule and must be considered by any broker, dealer or municipal securities dealer before recommending the purchase or sale of the Bonds in the secondary market. Consequently, such a failure, or the information supplied by the Board pursuant to the Undertaking, may adversely affect the transferability and liquidity of the Bonds and their market price. Any filing under the Continuing Disclosure Undertaking may be made solely to the Municipal Securities Rulemaking Board (the MSRB ) as provided at Minnesota State has complied for the past five years in all material respects in accordance with the terms of its undertakings entered into pursuant to the Rule, except as follows: Within the past five years, Moody s Investors Service and S&P Global Ratings have changed the credit ratings of certain municipal bond insurance firms, which resulted in the change of the insured ratings of certain debt issues of Minnesota State. Material event and failure to timely file notices regarding certain insurance rating changes have not been filed; however, the information was publicly available through other sources. General Description THE BONDS The Bonds will be dated as of their delivery date and are issued in book entry form. The Bonds will mature in the amounts and on the dates shown inside the front cover of this Official Statement. Interest on the Bonds is payable October 1, 2017, and semiannually thereafter on each April 1 and October 1. Interest will be payable to the holder (initially Cede & Co.) registered on the books of the Registrar as of the fifteenth day of the calendar month next preceding such interest payment date. Principal of and interest on the Bonds will be paid as described in the section herein entitled Book Entry System. The Board has named U.S. Bank National Association, Saint Paul, Minnesota as Trustee, which shall also act as Registrar and Paying Agent for the Bonds. The Board will pay for the services of the Trustee, Registrar and Paying Agent. Bond interest will be calculated on the basis of a 360-day year comprised of twelve 30-day months. Optional Redemption At the Board s option, Series 2017A Bonds scheduled to mature on and after October 1, 2027 are subject to optional redemption prior to maturity in whole on April 1, 2027 and any date thereafter or in part on April 1, 2027 and any Interest Payment Date thereafter. If the Series 2017A Bonds are redeemed in part, they shall be redeemed in such amount and selected from such maturities as the Board shall determine. If fewer than all Series 2017A Bonds of a maturity are called for redemption, the Board will notify DTC of the particular amount of such maturity to be prepaid. DTC will determine by lot the amount of each participant s interest in such maturity to be redeemed and each participant will then select by lot the - 3 -

20 beneficial ownership interests in such maturity to be redeemed. All optional prepayments shall be at a price of par plus accrued interest. The Series 2017B Bonds are not subject to optional redemption prior to maturity. Damage, Destruction or Condemnation In the event of damage to or destruction of any Facility financed or refinanced by the Bonds, the Bonds are subject to redemption in whole or in part at the principal amount thereof plus accrued interest to the date of redemption, without premium, on the first day of any month for which timely notice of redemption can be given, whether or not an Interest Payment Date, from proceeds of any insurance claim payment or condemnation award or portion thereof not applied to repair, restore, or replace the damaged or taken Facility. Notice of Redemption At least 30 days prior to the date fixed for any redemption of Bonds or portions thereof prior to maturity, the Trustee shall cause a notice of such redemption to be sent by United States mail, first-class postage prepaid, to the Holders of the Bonds to be redeemed. NOTICE HAVING BEEN SO GIVEN, THE BONDS CALLED FOR REDEMPTION SHALL BECOME DUE AND PAYABLE ON THE SPECIFIED REDEMPTION DATE, AND NOTWITHSTANDING THAT ANY BOND OR PORTION THEREOF HAS BEEN SURRENDERED FOR PAYMENT, INTEREST ON SUCH BOND OR PORTION THEREOF SHALL CEASE TO ACCRUE. At least three business days prior to the date fixed for any such redemption, the funds required for such redemption shall be provided to the Trustee for payment of the required redemption price for the Bonds or portions thereof which are to be so redeemed. If such notice of redemption is given and if due provision for such payment is made, all as provided above, the Bonds or portions thereof which are to be redeemed thereby automatically shall be treated as redeemed prior to their scheduled maturities, and they shall not bear interest after the date fixed for redemption, and they shall not be regarded as being outstanding except for the right of the registered owner to receive the redemption price from the Paying Agent and Registrar out of the funds provided for such payment. During any period in which ownership of the Bonds is determined by a book entry at a securities depository for the Bonds, if fewer than all of the Bonds of the same series and maturity and bearing the same interest rate are to be redeemed, the particular Bonds of such maturity and bearing such interest rate shall be selected in accordance with the arrangements between the Board and the securities depository. Book Entry System The Depository Trust Company ( DTC ), New York, New York, will act as securities depository for the Bonds. 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 certificate will be issued for each maturity of each series of the Bonds, in the aggregate principal amount of such maturity, and will be deposited with DTC. For further information on DTC, see Appendix V, THE DEPOSITORY TRUST COMPANY

21 USE OF PROCEEDS Authority and Purpose The Bonds are being issued pursuant to Minnesota Statutes, Sections 136F.90 et seq., the Indenture and the Series Resolution adopted by the Board on January 25, The following table indicates the projects for which the Bonds are being issued and the estimated amount of proceeds to be applied to each project. Proceeds include amounts available that relate to the Series 2007A Bonds, the Series 2007C Bonds, and the Series 2008A Bonds, such as debt service reserve funds and amounts to be applied to scheduled debt service (See ESTIMATED SOURCES AND USES herein). With regard to the refundings, all of the outstanding Series 2007A, Series 2007C, and Series 2008A Bonds will be refunded. Institution Project Series 2017A Series 2017B MSU Moorhead Residence hall renovation $ 9,300,000 Bemidji State Refund Series 2007A Bonds 6,700,000 Southwest MN State Refund Series 2007A Bonds 10,555,000 MSU Moorhead Refund Series 2007A Bonds 4,715,000 Winona State Refund Series 2008A Bonds 29,520,000 Minnesota State Minnesota State system-wide capital planning $1,000,000 Minnesota State Refund Series 2007C Bonds 2,200,000 TOTAL PROJECT COSTS FINANCED BY SERIES 2017 $60,790,000 $3,200,000 COMBINED TOTAL FINANCED PROJECT COSTS $63,990,000 The amounts actually used for the listed projects may vary from the figures shown based on bids received, changes in design and other factors. Minnesota State reserves the right to reprogram funds within projects, or to add or delete projects, in order to best meet the needs of its campuses. The Refundings Tax Exempt A portion of the proceeds of the Series 2017A Bonds, along with certain amounts on deposit in the Debt Service Reserve Accounts and the Debt Service Accounts for the Series 2007A Bonds and the 2008A Bonds and certain other available funds of Minnesota State, will be deposited into the Series 2017A Refunding Account of the Refunding Fund at closing, and from there transferred by the Trustee to the appropriate subaccounts established in the Escrow Account established under the terms of the Master Indenture for the purpose of redeeming and prepaying the Series 2007A Bonds and the Series 2008A Bonds (the Series 2007A Escrow Subaccount and the Series 2008A Escrow Subaccount, respectively). The amounts deposited in the Series 2007A Escrow Subaccount will be sufficient to pay the principal of, and interest on, the Series 2007A Bonds on or about April 1, The amounts deposited in the Series 2008A Escrow Subaccount shall be thereafter transferred to an escrow fund (the Escrow Fund ) established under the terms of an Escrow Agreement, dated as of February 1, 2017 (the Escrow Agreement ), between Minnesota State and U.S. Bank National Association, acting in its capacity as escrow agent (the Escrow Agent ) and invested and applied in accordance with the terms of the Escrow Agreement. The amounts transferred by the Trustee to the Escrow Fund established pursuant to the Escrow Agreement will be sufficient, along with earnings on permitted investments in the Escrow Fund, to pay the interest and principal as it comes due on the Series 2008A Bonds on each April 1 and October 1 through October 1, 2018, and redeem the outstanding balance of the Series 2008A Bonds on such date

22 The Series 2007A Bonds to be refunded, identified by CUSIP, are as follows: Maturity Date October 1: CUSIP: 60414F Principal 2017 $ 1,795,000 DU $ 1,860,000 DV $ 1,940,000 DW $ 2,020,000 DX $ 2,105,000 DY $ 2,185,000 DZ $ 2,275,000 EA $ 2,370,000 EB $ 2,470,000 EC $ 2,575,000 ED 8 Total: $21,595,000 The Series 2008A Bonds to be defeased, paid, and refunded and prepaid, identified by CUSIP, are as follows: The Refundings Taxable Maturity Date October 1: CUSIP: 60414F Principal 2017 $ 1,790,000 GB $ 1,860,000 GC $ 1,935,000 GD $ 2,020,000 GE $ 2,115,000 GF $ 2,210,000 GG $ 2,310,000 GH $ 2,415,000 GJ $10,900,000 GN 4 Total: $27,555,000 Term bonds A portion of the proceeds of the Series 2017B Bonds, along with certain amounts on deposit in the Debt Service Reserve Account and the Debt Service Account for the Series 2007C Bonds, and certain other available funds of Minnesota State, will be deposited into the Series 2017B Refunding Account of the Refunding Fund at closing, and from there transferred by the Trustee to an appropriate subaccount established in the Escrow Account established under the terms of the Master Indenture for the purpose of redeeming and prepaying the Series 2007C Bonds (the Series 2007C Escrow Subaccount ). The amounts deposited in the Series 2007C Escrow Subaccount will be sufficient to pay the principal of, and interest on, the Series 2007C Bonds on or about April 1,

23 The Series 2007C Bonds to be refunded, identified by CUSIP, are as follows: New Money Projects Maturity Date October 1: CUSIP: 60414F Principal 2017 $ 165,000 FH $ 360,000 FK $ 400,000 FM $ 450,000 FP $ 765,000 FS 4 Total: $2,140,000 Minnesota State University, Moorhead College Project Term bonds Minnesota State University Moorhead ( MSU Moorhead ) will be using a portion of Series 2017A Bond proceeds to renovate East Snarr Hall, a residential facility, on its campus. This is the third and final phase of a complete renovation of all the three Snarr Hall wings, which began with West Snarr financed with proceeds from the Series 2013A Bonds. The Snarr Hall complex was originally constructed in 1963 and represents about 24 percent of the total residence hall square footage on campus. Minnesota State Capital Planning Minnesota State will use a portion of the proceeds from the Series 2017B Bonds in the approximate amount of $1,000,000 to advance design on projects or fund smaller revenue bonded projects. ESTIMATED SOURCES AND USES OF FUNDS * Sources Series 2017A Series 2017B Bond Proceeds $52,955,000 $3,225,000 Estimated net premium 6,175,000 Transfers from prior issue Debt Service Funds 1,070,000 60,000 Transfers from prior issue Debt Service Reserve Funds 5,805, ,000 Total Sources $66,005,000 $3,578,000 Uses MSU Moorhead residence hall renovation $ 9,300,000 Bemidji State Series 2007A Refunding 6,700,000 SW MN State Series 2007A Refunding 10,555,000 MSU Moorhead Series 2007A Refunding 4,715,000 Winona State Series 2008A Refunding 29,520,000 Minnesota State capital planning $1,000,000 Minnesota State Series 2007C Refunding 2,200,000 Debt Service Reserve 4,365, ,000 Costs of Issuance, including Underwriter discount 850,000 55,000 Total Uses $60,790,000 $3,578,000 * Preliminary, subject to change - 7 -

24 SOURCE OF PAYMENT FOR THE BONDS Security and Financing The Minnesota State Revenue Fund The Minnesota State Colleges and Universities Revenue Fund (the Revenue Fund ) is established by Section 136F.94 of the Act. Within the Revenue Fund there are established special bookkeeping accounts on Minnesota State s official books and records designated as follows: a Capital Expenditures Account; a Revenue Receipts Account; an Escrow Account; an Operating Reserve Account; a Debt Service Account; a Debt Service Reserve Account; a Surplus Account; and a Rebate Account. The Minnesota State Revenue Fund was authorized by the State Legislature to finance revenue-producing auxiliary facilities, including, among others, dormitories, student unions and parking facilities, located on or used in connection with Minnesota State campuses and for the primary benefit of the students, faculty and staff of those institutions. The Indenture and Series Resolution The Indenture or Master Indenture is that certain Amended and Restated Master Indenture of Trust dated as of June 1, 2009, as amended by the First Amendment to Amended and Restated Indenture, dated as of March 1, 2013, between the Board and the Trustee, relating to Minnesota State s State College and University Revenue Fund Bonds. The Indenture and the Series Resolutions adopted pursuant to the Indenture have replaced and superseded in their entirety the Master Resolution and any and all other prior resolutions of the Board or its predecessors with respect to bonds or other obligations issued or to be issued and secured by the Revenue Fund. The Master Resolution means the Master Resolution of the Board of Trustees of Minnesota State Colleges and Universities relating to State College and University Revenue Fund Bonds, adopted September 21, 2001, which Master Resolution has been replaced and superseded in its entirety by the Indenture. The Indenture establishes general terms for bonds to be issued as authorized by the State Legislature to finance revenue-producing facilities ( Facilities ) located on or in connection with Minnesota State campuses. The Indenture governs both initial financings and refundings. The Indenture also governs guarantees of debt or lease payments, credit enhancement for bonds, and the issuance of subordinate bonds. The Legislature has authorized the Board to have outstanding at any one time no more than $405,000,000 principal amount of revenue bonds issued to finance the cost of the Facilities. The debt limit covers both Senior Bonds and Subordinate Bonds, but does not limit the amount of debt guaranteed through the Revenue Fund. Upon the issuance of the Bonds and the refunding of the Series 2007A Bonds, the Series 2007C Bonds, and the Series 2008A Bonds, $300,080,000 of the current $405,000,000 debt ceiling amount will be outstanding. The Minnesota Legislature may increase the Revenue Fund debt ceiling amount at any time. The Series Resolution authorizes and sets the specific terms and conditions for the issuance of the Bonds. For a summary of the Indenture and the Series Resolution see Appendix IV, SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE AND THE SERIES RESOLUTION. Minnesota State Revenue Fund Pledged Revenues The Minnesota State Revenue Fund pledged revenues consist of Net Revenues, defined to be all revenues received during any period less all maintenance and operation costs for the period and less direct appropriations. Maintenance and operation costs during any period of use and occupancy of any or all Facilities includes that portion of the salaries, wages and charges incurred by the Board in connection with Preliminary, subject to change - 8 -

25 the operation, administration and maintenance of the Facilities, and in the collection, safekeeping, investment, accounting and disbursement of the Revenues thereof; premiums for insurance and fidelity bonds required or authorized by or pursuant to the Indenture; the cost of utility services not paid directly by occupants of the Facilities; and without limitation, all other expenditures and allowances for reserves for recurring expenditures which, according to accepted accounting practice with respect to similar properties, constitute current, normal and reasonable expenses of the maintenance and operation of such Facilities. Maintenance and operation costs do not include depreciation on facilities and equipment, amortization of other capital expenditures, and interest and principal payments on indebtedness, and the cost of food and other merchandise deducted in determining gross profit on sales. Revenues do not include tuition revenue or state-appropriated funds. No deduction is made for repair and replacement reserves (for capital expenditures) although such reserves are funded from Net Revenues remaining after provision is made current for debt service and for debt service reserves and current expense reserves. Revenues include student fees and activity fees related to Facilities, as received, and, during any period of use and occupancy of any Facility, the gross total receipts and income derived from charges or fees, rentals, and all other revenue established for the use and service thereof, as defined in the Indenture. Revenues include gross profits derived from the sale of food or merchandise, but exclude both the cost of the items sold and any sales taxes on revenues. Revenues generally include investment income on balances in the funds and accounts of the Revenue Fund to the extent not excluded in the Indenture or the Series Resolution. Revenues include gifts, bequests or donations for Facilities when applied as required by the deed of gift or similar instrument, if applicable. Facilities include all dormitory, residence hall, food service, student union and other revenue-producing buildings (or physically separable portions thereof, or that portion the use and related cost thereof allocable to revenue producing use rather than educational use) and related facilities at Minnesota State Institutions, which now exist or which shall hereafter be financed in whole or in part by the issuance of Minnesota State Revenue Fund Bonds; and, all other buildings, improvements, structures and lands, the revenues of which are pledged and appropriated by resolution of the Board to the Revenue Fund; subject to certain rights reserved by the Board in the Indenture. Facility financial management operates through a Local Account maintained and administered at the campus level. All the Local Accounts are part of the Revenue Fund, and all funds and assets held herein, less maintenance and operation costs, are pledged to secure bonds issued pursuant to the Indenture. Funds Under the Indenture, a Debt Service Reserve Account is maintained in an amount equal to the Reserve Requirements for each series of Revenue Fund Bonds. The Reserve Requirement for each series of Revenue Fund Bonds is the least of (i) 10% of original bond principal, (ii) 100% of maximum annual debt service, and (iii) 125% of average annual debt service. Minnesota State also maintains debt service reserve funds equal to one year s debt service for the outstanding guaranteed debt. By each March 1, Minnesota State will have received revenues in an amount at least equal to all principal and interest due on the following three Interest Payment Dates (April 1 and October 1 of the current year and April 1 of the following year). On each March 1, therefore, debt service will be funded 13 months in advance. On each March 1 and September 1, Minnesota State will transfer moneys to the Trustee in an amount which, along with moneys held by the Trustee, will equal principal and interest due on the immediately following Interest Payment Dates. THE OPERATIONS OF MINNESOTA STATE AND ITS CAMPUSES ARE DEPENDENT ON STATE APPROPRIATIONS FOR APPROXIMATELY 33.4% OF THE FUNDS NEEDED FOR ITS ACTIVITIES BASED ON MINNESOTA STATE S FISCAL YEAR 2016 FINANCIAL STATEMENTS

26 THERE CAN BE NO ASSURANCE THAT STATE APPROPRIATIONS WILL CONTINUE AT THE SAME OR INCREASED LEVELS OR THAT FUNDING AT THE CURRENT LEVELS WILL BE ADEQUATE TO MEET THE SYSTEM S FINANCIAL NEEDS. STATE APPROPRIATIONS DO NOT SUPPORT THE MINNESOTA STATE REVENUE FUND. REVENUE FUND FACILITIES ARE NOT DIRECTLY DEPENDENT ON STATE APPROPRIATIONS. TO THE CONTRARY, THE STATE LEGISLATURE SHALL NOT APPROPRIATE MONEY FROM THE GENERAL FUND TO PAY FOR THESE BONDS. NONETHELESS, THE FINANCIAL HEALTH OF THE REVENUE FUND AND ITS COMPONENT FACILITIES DEPENDS ON THE NUMBER OF STUDENTS ATTENDING THE CAMPUSES WHICH HOUSE THE FACILITIES AND WHO ARE USING THE FACILITIES. THE REVENUE FUND AND ITS FACILITIES ARE THEREFORE DEPENDENT ON THE HEALTH OF THE MINNESOTA STATE SYSTEM. THE BONDS ARE NOT GENERAL OBLIGATIONS OF THE BOARD, THE STATE, OR ANY POLITICAL SUBDIVISION OF THE STATE BUT ARE SPECIAL, LIMITED OBLIGATIONS OF THE MINNESOTA STATE REVENUE FUND. THE BOARD HAS NO TAXING POWER, AND NEITHER THE FULL FAITH AND CREDIT NOR THE TAXING POWER OF THE STATE OR ANY POLITICAL SUBDIVISION OF THE STATE IS PLEDGED AS SECURITY FOR THE BONDS. THE BREACH OF ANY COVENANT, AGREEMENT, OR OBLIGATION CONTAINED IN THE SERIES RESOLUTION WILL NOT IMPOSE OR RESULT IN GENERAL LIABILITY ON OR A CHARGE AGAINST THE GENERAL CREDIT OF THE BOARD OR MINNESOTA STATE OR ANY ASSETS OTHER THAN THE REVENUE FUND. Revenue Bond Debt Service The Bonds will be paid on a parity of lien with Minnesota State s outstanding Revenue Fund Bonds. Minnesota State s outstanding Revenue Fund Bonds consist of the following: Principal outstanding as of Issue: January 1, 2017 $33,770,000 Revenue Fund Bonds, Series 2007A $ 21,595,000* $3,320,000 Revenue Fund Bonds, Taxable Series 2007C 2,140,000** $39,885,000 Revenue Fund Bonds, Series 2008A 27,555,000* $1,135,000 Revenue Fund Bonds, Taxable Series 2008B 275,000 $31,770,000 Revenue Fund Bonds, Series 2009A 23,530,000 $4,040,000 Revenue Fund Bonds, Taxable Series 2009B 1,625,000 $82,400,000 Revenue Fund Bonds, Series 2011A 66,660,000 $3,400,000 Revenue Fund Bonds, Taxable Series 2011B 1,845,000 $12,000,000 Revenue Fund Bonds, Series 2011C 10,160,000 $12,190,000 Revenue Refunding Bonds, Series 2012A 7,680,000 $8,195,000 Revenue Refunding Bonds, Taxable Series 2012B 5,140,000 $55,315,000 Revenue Fund Bonds, Series 2013A 51,250,000 $3,480,000 Revenue Fund Bonds, Taxable Series 2013B 2,760,000 $35,340,000 Revenue Fund Bonds, Series 2015A 32,140,000 $41,280,000 Revenue Fund Bonds, Taxable Series 2015B 40,835,000 Total Outstanding $295,190,000 * The Series 2007A Bonds and the Series 2008A Bonds will be refunded with proceeds of the Series 2017A Bonds. ** The Series 2007C Bonds will be refunded with proceeds of the Series 2017B Bonds

27 The following table shows the scheduled payments on outstanding Revenue Bonds for the following fiscal years. Outstanding Revenue Fund Debt Service by Fiscal Year* Fiscal Year Principal Interest Total Payment 2017 $ 16,315,000 $ 11,633,198 $ 27,948, ,095,000 11,071,064 29,166, ,730,000 10,448,943 29,178, ,220,000 9,792,483 29,012, ,250,000 9,116,300 28,366, ,905,000 8,412,290 28,317, ,170,000 7,660,447 27,830, ,510,000 6,921,091 25,431, ,750,000 6,193,344 24,943, ,550,000 5,402,237 24,952, ,785,000 4,572,630 24,357, ,650,000 3,775,683 21,425, ,460,000 2,995,955 21,455, ,170,000 2,255,801 18,425, ,370,000 1,631,571 16,001, ,895,000 1,052,806 15,947, ,225, ,579 9,830, ,635, ,956 6,975, ,855, ,588 3,027, ,965,000 58,250 3,023,250 $311,505,000 $104,113,216 $415,618,216 * Totals may vary slightly from column sums due to rounding. Debt service includes the Series 2007A Bonds and the Series 2008A Bonds that are being refunded by the Series 2017A Bonds and the Series 2007C Bonds that are being refunded by the Series 2017B Bonds. (The Balance of This Page Has Been Intentionally Left Blank)

28 Revenue Fund Guaranteed Debt Service The Revenue Fund has guaranteed two other obligations, specifically $10,220,000 of bonds issued by the St. Cloud Economic Development Authority as of May 30, 2012 on behalf of the St. Cloud State University Foundation (the St. Cloud Bonds ), and a $3,940,000 Student Housing Facility Revenue Fund Note issued by Clay County, Minnesota on behalf of the Minnesota State University Moorhead Alumni Foundation (the Moorhead Note ). As of January 1, 2017, the St. Cloud Bonds were outstanding in the principal amount of $6,815,000 and the Moorhead Note had an outstanding balance of approximately $2,724,099. Debt service on these obligations is a contingent liability of the Revenue Fund. The following table shows debt service on these two obligations by fiscal year for the fiscal years listed below. The combined total below is the sum of the total for the Moorhead Note and the St. Cloud Bonds. Outstanding Revenue Fund Guaranteed Debt by Fiscal Year* Moorhead Note St. Cloud Bonds Combined Fiscal Year Principal Interest Total Principal Interest Total Total 2017 $ 120,838 $ 144,115 $ 264,953 $ 910,000 $ 254,050 $ 1,164,050 $ 1,429, , , , , ,750 1,171,750 1,436, , , , , ,400 1,148,400 1,413, , , , , ,400 1,140,400 1,405, , , ,953 1,000, ,200 1,121,200 1,386, , , ,953 1,010,000 81,200 1,091,200 1,356, ,565 99, ,953 1,020,000 40,800 1,060,800 1,325, ,244 90, , , ,884 81, , , ,796 71, , , ,244 60, , , ,123 49, , , ,851 38, , , ,080 25, , , ,969 12, , , ,953 1, , ,396 $ 2,793,388 $ 1,291,298 $ 4,084,686 $ 6,815,000 $ 1,082,800 $ 7,897,800 $ 11,982,486 * Totals may vary slightly from column sums because of rounding. (The Balance of This Page Has Been Intentionally Left Blank)

29 Revenue Fund Estimated Series 2017A and Series 2017B Bond Debt Service The following table sets forth the principal and estimated debt service on the Bonds for each fiscal year during the term of the Bonds. The debt service is based on an estimated True Interest Cost on the Series 2017A Bonds of 3.22% and an estimated True Interest Cost on the Series 2017B Bonds of 3.07%. The estimated rates on the Bonds may not correspond to rates the Bonds receive on the sale date and the actual debt service on the Bonds may vary from the table below. Estimated Series 2017A and Series 2017B Bond Debt Service by Fiscal Year* Fiscal Year Principal Interest Total 2018 $ 3,445,000 $ 2,737,075 $ 6,182, ,840,000 2,383,381 6,223, ,985,000 2,233,706 6,218, ,155,000 2,076,906 6,231, ,330,000 1,892,346 6,222, ,550,000 1,678,176 6,228, ,765,000 1,452,544 6,217, ,000,000 1,215,065 6,215, ,255, ,061 6,220, ,505, ,155 6,207, ,010, ,250 3,502, ,165, ,875 3,502, , , , , , , , , , , , , , , , , , , ,000 83, , ,000 51, , ,000 17, ,375 $56,180,000 $19,415,663 $75,595,663 * Totals may vary slightly from column sums because of rounding. (The Balance of This Page Has Been Intentionally Left Blank)

30 Combined Projected Debt Service The following table shows for the listed fiscal years the combined outstanding Revenue Fund Bond debt service, the debt service on the guaranteed debt, and the estimated debt service on the Bonds. Combined Revenue Fund Projected Debt Service by Fiscal Year* Fiscal Year Outstanding Revenue Fund Bond Debt Outstanding Guaranteed Debt Series 2007A, Series 2008A, Series 2007C Refunded Estimated Series 2017A and Series 2017B Debt All Minnesota State Debt 2017 $ 27,948,198 $ 1,429,003 $ 29,377, ,166,064 1,436,703 $ (5,933,869) $ 6,182,075 30,850, ,178,943 1,413,353 (5,923,419) 6,223,381 30,892, ,012,483 1,405,353 (5,926,619) 6,218,706 30,709, ,366,300 1,386,153 (5,931,606) 6,231,906 30,052, ,317,290 1,356,153 (5,941,500) 6,222,346 29,954, ,830,447 1,325,753 (5,939,084) 6,228,176 29,445, ,431, ,953 (5,935,284) 6,217,544 25,978, ,943, ,953 (5,931,128) 6,215,065 25,492, ,952, ,953 (5,927,969) 6,220,061 25,509, ,357, ,953 (5,917,825) 6,207,155 24,911, ,425, ,953 (3,001,125) 3,502,250 22,191, ,455, ,953 (3,003,250) 3,502,875 22,220, ,425, , ,000 19,407, ,001, , ,000 16,979, ,947, , ,875 16,771, ,830, ,375 10,546, ,975, ,500 7,689, ,027, ,250 3,741, ,023, ,500 3,736, , , , ,375 $415,618,216 $11,982,486 $(65,312,678) $75,595,663 $437,883,685 * Totals may vary slightly from column sums because of rounding. (The Balance of This Page Has Been Intentionally Left Blank)

31 Debt Service Coverage The following table shows the amount available to Minnesota State for debt service for the Fiscal Years ended June 30, 2015 and 2016 and debt service coverage when compared to the maximum combined projected annual debt service displayed in the prior table. Fiscal Years 2015 and 2016 Amounts Available for Debt Service ($1,000 s) Revenue Fund Net Income $ 5,643 $ 9,262 Adjust: Depreciation 18,371 19,643 Interest expense 10,427 11,164 Private grants (20) (11) Amount available for debt service $34,421 $40,058 Maximum Annual Debt Service at Fiscal Year End 2015 $29,523 Estimated Maximum Annual Debt Service (including the Bonds and excluding the refunded bonds) $30,892 Coverage FUTURE FINANCING The Board plans for future Revenue Fund and other capital improvements through campus-specific Capital Improvement Plans presented to the Board that identify long term needs for capital improvements. Future needs will include both new facilities and continued upgrading and renovation of existing facilities. Only facilities which generate revenues for the Revenue Fund are included in the Revenue Fund plan for this purpose. General purpose educational facilities are built, improved and maintained using State appropriations, proceeds of State general obligation bonds, and other contributions. The Board does not anticipate issuing any additional Revenue Fund debt in the next six months. LITIGATION Lawsuits and other claims furnish a basis for potential liability. The following matters, in which Minnesota State, its officers or employees are respondents, may constitute a material claim, litigation or assessment in excess of $500,000. Central Lakes College A former nursing student brought an action in federal district court claiming first amendment and due process violations in Central Lakes College's decision to academically dismiss him from the nursing program after he posted inappropriate comments on Facebook. In August 2014, the federal district court granted Central Lakes College's motion for summary judgment. On October 26, 2016, the Eighth Circuit Court of Appeals affirmed the district court s grant of summary judgment. The district court found in favor of Central Lakes College. Plaintiff may seek further review. If summary judgment were reversed Plaintiff has requested approximately $2 million in damages, readmission to the nursing program and attorney's fees

32 Metropolitan State University Minnesota State initiated an eminent domain action to acquire real property adjacent to Metropolitan State University known as 393 Bates Avenue, Saint Paul, Minnesota, to accommodate new parking requirements. The system pursued a quick take procedure, and the district court awarded title and possession of the property to Minnesota State on October 26, The court also appointed condemnation commissioners to determine just compensation. On October 19, 2016, the commissioners issued an award to the defendant in the amount of $210,000 for the property. The defendants appealed the condemnation commissioners award, and the case remains pending. St. Cloud State University A group of female student athletes initiated a lawsuit against St. Cloud State University after it decided to eliminate certain sports programs in March The federal district court issued a preliminary injunction prohibiting the university from eliminating two female sports teams. If the matter is not resolved before trial, the federal district court could issue a permanent injunction, and award damages and attorneys fees. By statute, tort claims against the Board are limited as to both allowable causes of action, and as to maximum damages. These limitations apply to Revenue Fund facilities as well as other Minnesota State facilities and operations. LEGALITY The Bonds are subject to approval as to certain matters by Kennedy & Graven, Chartered, Minneapolis, Minnesota, as Bond Counsel. Bond Counsel has not participated in the preparation of this Official Statement and will not pass upon its accuracy, completeness, or sufficiency. Bond Counsel has not examined, nor attempted to examine or verify, any of the financial or statistical statements or data contained in this Official Statement and will express no opinion with respect thereto. Legal opinions in substantially the forms set out in Appendix I herein will be delivered at closing. Certain legal matters will be passed upon for the Board by its counsel, the Attorney General s office of the State of Minnesota, Saint Paul, Minnesota. TAX EXEMPTION THE SERIES 2017A BONDS At closing, Bond Counsel will render an opinion that, at the time of their issuance and delivery to the original purchaser, under present federal and State of Minnesota laws, regulations, rulings and decisions (which excludes any pending legislation which may have a retroactive effect), the interest on each Series 2017A Bond is excluded from gross income for purposes of United States income tax and is excluded, to the same extent, in computing both gross income and taxable net income for purposes of State of Minnesota income tax (other than Minnesota franchise taxes measured by income and imposed on corporations and financial institutions), and that interest on the Series 2017A Bonds is not an item of tax preference for purposes of computing the federal alternative minimum tax imposed on individuals and corporations or the Minnesota alternative minimum tax applicable to individuals, estates or trusts; provided that interest on the Series 2017A Bonds is subject to federal income taxation to the extent it is included as part of adjusted current earnings for purposes of computing the alternative minimum tax imposed on certain corporations. No opinion will be expressed by Bond Counsel regarding other federal or state tax consequences caused by the receipt or accrual of interest on the Series 2017A Bonds or arising with respect to ownership of the Series 2017A Bonds. Preservation of the exclusion of interest on the Series 2017A Bonds from federal gross income and state gross and taxable net income, however, depends upon compliance by the Board with all requirements of the Internal Revenue Code of 1986, as amended, (the Code ) that must be satisfied subsequent to the issuance of the Series 2017A Bonds in order that interest thereon be (or continue to be) excluded from federal gross income and state gross and taxable net income

33 The Board will covenant to comply with requirements necessary under the Code to establish and maintain the Series 2017A Bonds as tax-exempt under Section 103 thereof, including without limitation, requirements relating to temporary periods for investments and limitations on amounts invested at a yield greater than the yield on the Series 2017A Bonds. TAXABILITY OF INTEREST THE SERIES 2017B BONDS The Series 2017B Bonds are taxable obligations. No opinion will be expressed by Bond Counsel regarding other federal or state tax consequences caused by the receipt or accrual of interest on the Series 2017B Bonds or arising with respect to ownership thereof. OTHER FEDERAL TAX CONSIDERATIONS THE SERIES 2017A BONDS Property and Casualty Insurance Companies Property and casualty insurance companies are required to reduce the amount of their loss reserve deduction by 15% of the amount of tax-exempt interest received or accrued during the taxable year on certain obligations acquired after August 7, 1986, including interest on the Series 2017A Bonds. Foreign Insurance Companies Foreign companies carrying on an insurance business in the United States are subject to a tax on income which is effectively connected with their conduct of any trade or business in the United States, including net investment income. Net investment income includes tax-exempt interest such as interest on the Series 2017A Bonds. Branch Profits Tax A foreign corporation is subject to a branch profits tax equal to 30% of the dividend equivalent amount for the taxable year. The dividend equivalent amount is the foreign corporation s effectively connected earnings and profits adjusted for increase or decrease in U.S. net equity. A branch s earnings and profits may include tax-exempt municipal bond interest, such as interest on the Series 2017A Bonds. Passive Investment Income of S Corporations Passive investment income, including interest on the Series 2017A Bonds, may be subject to federal income taxation under Section 1375 of the Code for an S corporation that has Subchapter C earnings and profits at the close of the taxable year if more than 25% of the gross receipts of such S corporation are passive investment income. Financial Institutions For federal income tax purposes, financial institutions are unable to deduct any portion of the interest expense allocable to the ownership of certain tax-exempt obligations acquired after August 7, 1986, including the Series 2017A Bonds. See Not Bank-Qualified Tax-Exempt Obligations below

34 Legislative Proposals The opinion of Bond Counsel is given as of its date and Bond Counsel assumes no obligation to update, revise, or supplement such opinion to reflect any changes in facts or circumstances or any changes in law that may hereafter occur. Proposals are regularly introduced in both the United States House of Representatives and the United States Senate that, if enacted, could alter or affect the tax-exempt status of municipal bonds. For example, legislation has been proposed by President Obama that would, among other things, limit the amount of exclusions (including tax-exempt interest) or deductions that certain higherincome taxpayers could use to reduce their tax liability. The likelihood of adoption of this or any other such legislative proposal relating to tax-exempt bonds cannot be reliably predicted. If enacted into law, current or future proposals may have a prospective or retroactive effect and could affect the value or marketability of tax-exempt bonds (including the Series 2017A Bonds). Prospective purchasers of the Series 2017A Bonds should consult their own tax advisors regarding the impact of any such change in law. General The preceding is not a comprehensive list of all federal tax consequences which may arise from the receipt or accrual of interest on the Series 2017A Bonds. The receipt or accrual of interest on the Series 2017A Bonds may otherwise affect the federal income tax (or Minnesota income tax or franchise tax) liability of the recipient based on the particular taxes to which the recipient is subject and the particular tax status of other items of income or deductions. All prospective purchasers of the Bonds are advised to consult their own tax advisors as to the tax consequences of, or tax considerations for, purchasing or holding the Bonds. NOT BANK-QUALIFIED TAX-EXEMPT OBLIGATIONS Minnesota State will not designate the Bonds as qualified tax-exempt obligations for purposes of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended, relating to the ability of financial institutions to deduct from income for federal income tax purposes the interest expense that is allocable to carrying and acquiring tax-exempt obligations. RATINGS As noted on the cover page of this Official Statement, the Bonds have received a rating of Aa3 from Moody s Investors Service ( Moody s ), 7 World Trade Center, 250 Greenwich Street, New York, New York and AA- from S&P Global Ratings ( S&P ), 55 Water Street, New York, New York (collectively, the Rating Agencies ). The ratings reflect only the opinions of the Rating Agencies. Any explanation of the significance of the ratings may be obtained only from the Rating Agencies. There is no assurance the ratings will continue for any given period of time, or that the ratings will not be revised or withdrawn if, in the judgment of the Rating Agencies, circumstances so warrant. A revision or withdrawal of the ratings may have an adverse effect on the market price of the Bonds. MUNICIPAL ADVISOR Minnesota State has retained Springsted Incorporated, Public Sector Advisors, of Saint Paul, Minnesota, as municipal advisor (the Municipal Advisor ) in connection with the issuance of the Bonds. In preparing the Official Statement, the Municipal Advisor has relied upon Minnesota State officials and other sources who have access to relevant data to provide accurate information for the Official Statement, and the Municipal Advisor has not been engaged, nor has it undertaken, to independently verify the accuracy of such information. The Municipal Advisor is not a public accounting firm and has not been engaged by Minnesota State to compile, review, examine or audit any information in the Official Statement in accordance with accounting standards. The Municipal Advisor is an independent advisory firm, registered

35 as a municipal advisor, and is not engaged in the business of underwriting, trading or distributing municipal securities or other public securities. The Municipal Advisor is under common ownership with Springsted Investment Advisors, Inc. ( SIA ), an investment advisor registered in the states where services are provided. SIA may provide investment advisory services to Minnesota State from time to time in connection with the investment of proceeds from the Bonds as well as advice with respect to portfolio management and investment policies for Minnesota State. SIA pays the Municipal Advisor a referral fee from the fees paid to SIA by Minnesota State. CERTIFICATION Minnesota State has authorized the distribution of the Preliminary Official Statement for use in connection with the initial sale of the Bonds and a Final Official Statement following award of the Bonds. The Purchaser(s) will be furnished with a certificate signed by the appropriate officers of Minnesota State stating that Minnesota State examined each document and that, as of the respective date of each and the date of such certificate, each document did not and does not contain any untrue statement of material fact or omit to state a material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. (The Balance of This Page Has Been Intentionally Left Blank)

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37 APPENDIX I MINNESOTA STATE COLLEGES AND UNIVERSITIES GENERAL INFORMATION Background and History System On May 18, 1991, the Minnesota Legislature passed a bill that merged the community colleges, the state universities, and the technical colleges effective July 1, The bill was signed into law on June 4, As the legal successor to the three boards that had previously governed the former systems, all statutory powers, duties and responsibilities were transferred to the Board of Trustees of the Minnesota State Colleges and Universities ( Minnesota State ). On July 1, 1995, the new system consisted of 21 Community Colleges, 7 State Universities, and 34 Technical Colleges. The reasons for the merger included simplifying transfer among programs and institutions and reducing duplication of services in the three systems, particularly those campuses located in the same community. The system now consists of 31 institutions, each headed by a president. Some of these institutions have locations at multiple sites, and some separate campuses are now under consolidated regional management. Community Colleges These junior colleges were part of the school districts and were created because educators formulated the idea that the first two years of college were better taught at the secondary level. The earliest junior colleges were established before World War I in Cloquet, Faribault, Rochester, Hibbing, and Jackson. Eveleth, Virginia, Ely, Coleraine, and Pipestone followed. Duluth, established in 1927, was the last junior college started for many years. After World War II, students returned to college in larger numbers than could easily be accommodated. A Legislative Commission recommended that the junior colleges absorb some of the functions of the area technical institutes that had been authorized in 1945 and were also overflowing. In addition, the commission recommended the establishment of six new junior colleges, which would result in post-secondary education being available within 35 miles of nine tenths of Minnesota s youth. The final report of the commission also argued for State support for both the junior colleges and the area vocational technical institutes. The 1957 Legislature finally appropriated direct State aid to junior colleges and, in the following years, several new schools were established with State appropriations. In 1963 the Legislature created the Junior College Board and gave it oversight and budgetary responsibility for the 15 junior colleges, thereby removing them from the control of individual school districts and establishing a new system of post-secondary education. In the next ten years several more junior colleges were opened, and in 1973 the legislature changed their name to community colleges to reflect their changed mission. State Universities Five of the seven state universities were established as normal schools by the Minnesota Legislature. These were two-year institutions designed to produce elementary and secondary teachers for rural schools. Winona, founded in 1858, became the first teacher preparatory institution west of the Mississippi. Mankato was started in St. Cloud opened its doors to students in 1869, Moorhead in 1888, and Bemidji in In 1921 the schools were authorized to offer a four-year curriculum and their designation was changed to state teacher colleges. I-1

38 In 1955 the legislature created the Revenue Fund, an auxiliary enterprise fund with the authority to sell revenue bonds for residence halls, dining services, and student unions. An office with an executive director and one accountant was established to administer the Fund. At the same time the legislature made a single biennial appropriation to the State Teacher College Board, but with no real staff, the funds were simply passed through this office and on to the individual schools. It was not until 1967 that a staff was hired and began to function as a system office. In 1957 the word teacher was deleted from the name of the schools. Southwest State University in Marshall opened its doors in 1967, followed by Metropolitan State University in Then in 1975, in recognition of their status as comprehensive, multi-purpose educational institutions, the state colleges were designated state universities by the Minnesota Legislature. In the 1990s, several of the universities changed their names so the town designation was last. Technical Colleges Prior to the end of World War II, public vocational education in Minnesota was limited in both programs and availability. In 1945 the Minnesota Legislature passed a bill that allowed the establishment of the areavocational technical institutes ( AVTIs ). This was a deliberate action to bring trade and technical training to out-state regions and to develop a source for skilled craftsmen. The original intent was that AVTIs would serve high school students in a large area surrounding the designated AVTI. Because there were no other public post-secondary institutions willing to meet the training needs of adults, particularly returning veterans, the new AVTIs were immediately swamped with adult learners. Long waiting lists developed for training at the schools, and as a result they almost immediately became postsecondary in nature. In 1947 the first Minnesota area vocational-technical school was established in Mankato. It, like those to follow, was intended to serve the surrounding counties. Others soon followed in St. Cloud and Winona, (1948), Thief River Falls (1949), Duluth (1950), Austin (1951), Saint Paul (1952), and Minneapolis (1955). Most of these institutions were not the freestanding comprehensive facilities that can now be found around the State, but were rented or shared facilities and utilized war surplus equipment and supplies. The AVTIs were legally part of their school districts with most of the funding from that source with additional funds coming from the federal government. The oversight of the programs and operations rested in the Division of Vocational Education, part of the State Department of Education. The division worked closely with business, industry, and labor to design programs that would meet the needs of these constituencies. Since 1917 the federal funding of vocational education had focused on the national security/defense requirements of the United States. However, in the 1960s it started to be used as a tool to combat unemployment. Also at this time, the funding was shifted from specific programs to special geographic regions. On January 1,1984, the State Board of Vocational Education took over the responsibility for oversight of the AVTIs from the Department of Education. In 1989 the Legislature changed the names of the schools to technical colleges; the colleges, however, were still legally a part of their school districts until the merger with the other two systems on July 1, Governance and Administration Minnesota State is governed by a Board of Trustees with 15 members. Of the 15, eight are appointed from the Congressional districts (one member per district), four are appointed at-large, and three are students. One student representative comes from a technical college, one from a community college and one from a state university. Student members serve two-year terms and other members serve six-year terms. All trustees are appointed by the governor and confirmed by the State Senate. There is currently one vacancy on the Board. I-2

39 The Board appoints the Chancellor of the system. Presidents are appointed by the Board upon recommendation of the Chancellor. The president appoints other college and university administrators. The Chancellor recommends candidates for deputy and vice chancellor positions for appointment by the Board. The general authority of the Board of Trustees is set forth in Minnesota Statutes which give the Board all powers necessary to govern the institutions and all related property. The Board prescribes conditions of admission, sets tuition and fees, approves requirements for completion of programs, approves the awarding of appropriate degrees, enters into contracts and other agreements and adopts suitable policies for the institutions it governs. To the extent practicable, the Board provides autonomy to the campuses while holding them accountable for their decisions. The Board may delegate authority to the Chancellor to act on behalf of the Board in accordance with policies or positions adopted by the Board. The Chancellor may delegate authority to deputy and vice chancellors, presidents, and other system employees consistent with Board policy. A list of the current members of the Board of Trustees and certain principal administrative officers of Minnesota State appears immediately prior to the Table of Contents at the front of this Official Statement. Set forth below is biographical information for certain of the principal administrative officers. Dr. Steven J. Rosenstone began his term as Chancellor for the Minnesota State Colleges and Universities system on August 1, Chancellor Rosenstone has announced his retirement as of July 31, A national search is underway for his successor with an anticipated start date of August 1, Dr. Rosenstone has had a distinguished career in higher education. He graduated summa cum laude with a bachelor s degree from Washington University, then earned his M.A. and Ph.D. from the University of California, Berkeley. He was professor of political science at Yale University until 1986 when he joined the University of Michigan as professor of political science and program director in the Center for Political Studies. He was also a visiting professor at Centro de Estudios Avanzados en Ciencias Sociales, Instituto Juan March de Estudios e Investigaciones in Madrid in A member of the American Academy of Arts and Sciences, Dr. Rosenstone is the author of numerous books and scholarly articles on elections, political participation, and higher education. Recruited to the University of Minnesota in 1996 to serve as dean of the College of Liberal Arts, Dr. Rosenstone earned a reputation as a visionary and effective leader. In recognition of his service to the University of Minnesota, he was awarded the McKnight Presidential Leadership Chair in 2004 and was promoted to vice president for Scholarly and Cultural Affairs in Laura M. King was appointed Vice Chancellor Chief Financial Officer of Minnesota State in She is responsible to the Chancellor and the Board of Trustees of Minnesota State for a $2 billion annual operating budget, $100-$175 million annual capital budget, all financial reporting, annual audits and executive and legislative branch coordination. Prior to joining Minnesota State, Ms. King served as Commissioner of Finance for the State of Minnesota under Governor Arne Carlson. She has received national and regional recognition for leadership in public financial administration, planning and management. In 2005 Ms. King was selected to be a participant in the Harvard Institute for Educational Management. In 2008 Ms. King was recognized as the CFO of the Year for non-profit organizations by the Minneapolis/St. Paul Business Journal for her contributions to Minnesota State s financial well-being. Ms. King also serves on various civic and nonprofit commissions and boards. She is a graduate of the University of Minnesota and earned a master s in business administration at the University of St. Thomas. Mark Carlson became the Vice Chancellor for Human Resources in December In his role as Vice Chancellor, he has responsibility for providing vision and leadership in the development of systemwide I-3

40 strategies for organization design, effectiveness, and change, and leading the strategic planning, development, and administration of human resources initiatives. Mr. Carlson joined Minnesota State after serving as director of human resources for the Minnesota Department of Public Safety. Previously, he served as president of Watermark Designs, Inc.; director of human resources for the Minnesota Department of Transportation; and director of human resources and organizational development for C-K Corporation. In addition, he is a veteran of the United States Air Force. Mr. Carlson holds a bachelor s degree in Communication from Texas Lutheran University and an MBA from Central Michigan University. Noelle Hawton became Minnesota State s Chief Marketing and Communications Officer on September 1, 2015, and is responsible for marketing and communications for the system. She brought her experience as senior vice president at Tunheim, a Minneapolis based strategic communication firm and, previously, a senior account executive at Weber Shadwick, one of the world s top PR agencies. Ms. Hawton is a graduate of both South Central College and Minnesota State University, Mankato. Ramon Padilla, Jr. joined Minnesota State as Vice Chancellor for Information Technology in February Mr. Padilla works with IT executives and professionals from Minnesota State colleges and universities in developing and implementing IT strategies, ensuring the effective use of technology to achieve organizational goals and objectives, and building a more powerful, cost-effective IT system throughout Minnesota State. Previously, he served as Associate Vice Chancellor and Deputy CIO at the University of North Carolina Chapel Hill ( ) and as Assistant Vice Chancellor and CIO for the Board of Governors, State University System of Florida (2005 to 2010). He also was a senior project manager for Keane Corporation/Kyra Infotech, assigned to the Kentucky Department of Education from 2003 to 2005, and in a variety of information services roles for Jefferson County/Louisville Metro Government, Louisville, Kentucky from 1988 to 2003, culminating in five years as Chief Information Officer. Mr. Padilla holds a bachelor s degree in psychology from the University of Kentucky and an MBA from the University of Louisville. Ron Anderson currently serves as Minnesota State s Vice Chancellor for Academic and Student Affairs. Prior to assuming that role in July 2015, he served as President of Century College in White Bear Lake. Mr. Anderson s career in higher education spans more than 25 years, during which time he has served in senior leadership roles including chief executive officer, chief academic officer, chief student affairs officer, and chief financial officer. In addition, he has experience as a faculty member teaching applied statistics and psychology at the University of Minnesota, the College of St. Catherine, and Minneapolis Community College. Mr. Anderson holds a Bachelor s in psychology from St. Olaf College, a master s in Higher Education, and a doctorate in Educational Psychology (psychometrics) from the University of Minnesota. Gary Cunningham began serving as general counsel effective July 1, 2015, and joined the Office of General Counsel in Prior to joining Minnesota State in-house, Mr. Cunningham represented Minnesota State in employment matters as an Assistant Attorney General for over 20 years. With respect to the Office of General Counsel, Mr. Cunningham has concentrated on employment issues and training. In addition to his employment law practice at the Attorney General s Office, Mr. Cunningham was counsel to the Minnesota Public Utilities Commission and a consumer advocate. Previously, he was an attorney in private practice in Atlanta, Georgia and Chicago, Illinois. Mr. Cunningham received his B.S. in Mathematics from Purdue University and his J.D. magna cum laude from the University of Illinois. I-4

41 Population STATE OF MINNESOTA ECONOMIC AND DEMOGRAPHIC INFORMATION Based on figures from the US Census Bureau and the Minnesota State Demographic Center, the population of the State of Minnesota for the past three census years and projections for years thereafter is presented in the following table. Population State of Year Minnesota ,375, ,919, ,303, * 5,344, ** 5,368, ** 5,420, ** 5,453, ** 5,502, ** 5,541, ** 5,579, ** 5,616, ** 5,562, ** 2,687,161 * U.S. Census Bureau, 2013 estimate ** Projected Minnesota State Demographic Center, released August 2015 Immigration The State of Minnesota, particularly the Minneapolis/Saint Paul metropolitan area, has had a dramatic increase in the number of legal immigrants coming into the State. The influx of immigrants from the former Soviet Union, Vietnam, Laos, and Somalia has helped give the Twin Cities one of the fastest growth rates of legal immigration among the nation s 100 largest metropolitan areas. According to the State Demographic Center, Minnesota has the largest population of Somali immigrants, the second largest population of Hmong (Southeast Asian) immigrants and the highest proportion of refugees in the United States. The outlook for continued growth in immigration is mixed. Post-9/11 issues and a slowdown in job growth may reduce the flow of immigrants, but since current immigrants can bring in families the trend may continue. (The Balance of This Page Has Been Intentionally Left Blank) I-5

42 Public High School Enrollment Total enrollment in Minnesota and United States high schools (grades 9-12) are shown in the table below. State and National Public High School Enrollment Year Minnesota United States ,000 14,984, ,000 14,639, ,000 14,689, ,000* 14,771,000* ,000* 15,116,000* ,000* ,000* ,000* 15,241,000* ,000* 15,304,000* ,777* 15,410,000* * Projected Sources: nces.ed.gov/programs/projections/projections2018/tables/table_01.asp?referrer=list National Center of Education Statistics High School Graduation Annual High School Graduates in Minnesota Year Graduates , , , , * 56, * 56, * 57, * 58, * 57,927 Actual figures from Minnesota Department of Education. These figures do not include students receiving GED certificates. * Projected figures from the Minnesota Office of Higher Education I-6

43 Labor Force Statistics The following table presents average annual employment statistics for the State of Minnesota and for the United States for the years 2012 through 2015, and for the period to October Average Annual Employment Statistics State of Minnesota United States Year Labor Force Unemployment Rate Unemployment Rate ,969, % 8.10% ,973, % 7.40% ,988, % 5.80% ,997, % 5.00% 2016 (Oct) 2,974, % 4.90% Source: shared/assets/mn_workforce_facts16494.pdf (The Balance of This Page is Intentionally Left Blank) I-7

44 MINNESOTA STATE COLLEGES AND UNIVERSITIES COMPONENT INSTITUTIONS The following table alphabetically lists the component institutions of Minnesota State Colleges and Universities. A brief description for each of Minnesota State s institutions follows the table. Minnesota State Colleges and Universities Two-Year State Colleges: Alexandria Technical and Community College (Alexandria) Anoka Technical College (Anoka)* Anoka-Ramsey Community College (Cambridge, Coon Rapids)* Central Lakes College (Brainerd, Staples) Century College (White Bear Lake) Dakota County Technical College (Rosemount) Fond du Lac Tribal and Community College (Cloquet) Hennepin Technical College (Eden Prairie, Brooklyn Park) Hibbing Community College (Hibbing)** Inver Hills Community College (Inver Grove Heights) Itasca Community College (Grand Rapids)** Lake Superior College (Duluth) Mesabi Range College (Eveleth, Virginia)** Minneapolis Community and Technical College (Minneapolis) Minnesota State College Southeast (Red Wing, Winona) Minnesota State Community and Technical College (Detroit Lakes, Fergus Falls, Moorhead, Wadena) Minnesota West Community and Technical College (Canby, Granite Falls, Jackson, Pipestone, Worthington) Normandale Community College (Bloomington) North Hennepin Community College (Brooklyn Park) Northland Community and Technical College (East Grand Forks, Thief River Falls) Northwest Technical College (Bemidji)*** Pine Technical & Community College (Pine City) Rainy River Community College (International Falls)** Ridgewater College (Hutchinson, Willmar) Riverland Community College (Albert Lea, Austin, Owatonna) Rochester Community and Technical College (Rochester) Saint Paul College (Saint Paul) South Central College (Faribault, North Mankato) St. Cloud Technical and Community College (St. Cloud) Vermilion Community College (Ely)** Four-Year State Universities: Bemidji State University (Bemidji) Metropolitan State University (Saint Paul) Minnesota State University, Mankato (Mankato) Minnesota State University Moorhead (Moorhead) Southwest Minnesota State University (Marshall) St. Cloud State University (St. Cloud) Winona State University (Winona) * Anoka Technical College is aligned with Anoka-Ramsey Community College. ** Hibbing, Itasca, Mesabi Range, Rainy River and Vermilion make up the Northeast Higher Education District, a consortium of five state colleges. *** Northwest Technical College is aligned with Bemidji State University. Two-Year State Colleges Participants in Revenue Fund Financings (locations in bold below are campuses with Revenue Fund Facilities) Anoka-Ramsey Community College is a two-year community college with two separate campuses totaling 218 acres. Its Coon Rapids campus is located in the northwest Twin Cities metro area. The other campus, in Cambridge, is located slightly north of the metro area. The number of full-time students attending the college in 2016 was 6,048. I-8

45 Century College is a two-year consolidated college located in the northeast Twin Cities metropolitan area. It sits on 162 acres of land and was originally a community college and a school district technical college. The college sits on 162 acres of land. In ,662 full-time students were enrolled in the college. Minneapolis Community and Technical College is a two-year consolidated institution located in downtown Minneapolis, Minnesota State s most urban campus. In addition to its Minneapolis campus, the college operates one aviation center building at Flying Cloud airport and a parking ramp in Minneapolis. The college occupies 16 acres in total. Campus space is shared with Metropolitan State University which offers a full array of courses at the Minneapolis campus. In ,963 full-time students were enrolled in the college. Minnesota State Community and Technical College is an alliance of four two-year colleges in rural communities in northwestern Minnesota. The consolidated college is a merger of one former community college in Fergus Falls and three former technical colleges in Detroit Lakes, Moorhead and Wadena. The college exists on a total of 341 acres located across the four campuses. In ,056 full-time students were enrolled. Normandale Community College is a two-year community college located in the southwest Twin Cities metropolitan area. The college, Minnesota State s largest two-year college, focuses on transfer education. The campus sits on 110 acres of land. In ,131 full-time students enrolled in the college. Saint Paul College is a two-year technical college located in Saint Paul, the capital of Minnesota. The college is located on 30 acres. In ,729 full-time students enrolled in the college. Vermilion Community College is a residential college located on the edge of the Boundary Waters Canoe Area Wilderness in Ely. The college occupies 86.5 acres. In 2016 the college enrolled 649 full-time students. Four-Year State Universities -- Participants in Revenue Fund Financings Bemidji State University, established in 1919, is a four-year university on 324 acres of land in northwestern Minnesota. In ,634 full-time students enrolled at the university. Metropolitan State University is Minnesota s newest four-year institution, located in both of the State s urban districts. It currently maintains and uses 14 acres in Saint Paul, and offers courses at Minneapolis Community and Technical College in downtown Minneapolis. In 2016 there were 6,086 full-time students enrolled in the university. Minnesota State University, Mankato is a four-year university established by the State in 1868, and is located on 305 acres. A total of 14,443 full-time students attended the university in Minnesota State University Moorhead is a four-year university located in the northwest part of Minnesota. The university, which was established by the State in 1885, is located on 419 acres. The number of fulltime students enrolled in the university in 2016 was 6,574. St. Cloud State University is a four-year university located on the banks of the Mississippi River in central Minnesota and encompasses 921 acres. The university s full-time enrollment in 2016 was 13,938. Southwest Minnesota State University, established in 1963, is the newest of Minnesota State s traditional four-year residential universities. Located in Marshall, the university sits on 216 acres of land. In ,681 full-time students enrolled in the university. Winona State University was the first Normal School established by the State of Minnesota in It is now a four-year university located on 62 acres on the Minnesota-Wisconsin border in southeastern Minnesota. The enrollment in 2016 was 8,544 full-time students. I-9

46 Below is a map locating the campuses of all 31 Minnesota State institutions. Student Profiles and Market Position Minnesota State serves the population of the State of Minnesota and the Upper Midwest Region. As the fifth largest higher education system of its kind in the United States, more than 375,000 students from all walks of life attend Minnesota State colleges and universities for undergraduate and graduate degrees, certificate and diploma programs, and training and retraining classes. Minnesota State educates 57 percent of Minnesota s undergraduates. In addition, Minnesota State partners with employers throughout the state to provide customized training to more than 120,000 employees. Eighty-seven percent of all Minnesota State students are from Minnesota. More than 80% of graduates remain in the state after graduation and 85% of graduates get jobs related to their field of study. Minnesota State students include not only a significant number of immigrants or the children of immigrants in the metropolitan area, but also students from farms and small communities in rural Minnesota. Minnesota State s colleges and universities attract a large number of non-traditional students. The average age of a Minnesota State student is 26 years. Minnesota State students include 63,400 students of color and I-10

47 10,000 veterans, 59% of Minnesota State college students and 37% of university students are enrolled part time. Top Ten Academic Programs The table below sets forth the top ten program choices of Minnesota State graduates. The table lists the program and the percentage of students who graduate with a degree in the program. Top Programs of Minnesota State Graduates: Fiscal Year 2015 Program Majors Percentage Agriculture, Conservation, Park & Recreation 1, % Business and Marketing 5, % Child Development and Personal Services % Communication and Communication Technology % Computer Science and Engineering 3, % Education 2, % Health Professions 10, % Liberal Arts and Sciences 11, % Protective Services, Public Administration, and Law 3, % Trades, Mechanics, Transportation 3, % Total Majors 42, % Total Awards 41,225 Total Graduates 38,485 Source: System Office Research, Academic and Student Affairs Division R:\Graduate Trends\Graduate Trend Reportion.accdb, Current Year Top 10 Majors Status of Academic Programs The report from which past data were derived (new courses, closed courses, etc.) has been unavailable for some time. Minnesota State has continued to report active programs. The following table describes the count of active programs within Minnesota State by fiscal year. Count of Active Programs (as of January 1) by Fiscal Year Count of Programs* Fiscal Year Active January , , , , , ,650 * A program is defined as the combination of fiscal year, institution, program name and degree abbreviation/level of award. Enrollment The following table presents full-year-equivalent enrollment for each Minnesota State institution, with subtotals for State Colleges and State Universities, and a total for all Minnesota State institutions. I-11

48 Full-Year-Equivalent (FYE) Enrollment by Institution STATE COLLEGES Alexandria Technical & Community College 2,268 2,324 2,170 2,046 1,993 Anoka-Ramsey Community College 6,048 5,918 5,684 5,654 5,683 Anoka Technical College 1,692 1,602 1,530 1,469 1,387 Central Lakes College 3,434 3,371 3,206 2,993 2,710 Century College 7,662 7,393 6,955 6,410 6,204 Dakota County Technical College 2,475 2,478 2,235 2,069 2,004 Fond du Lac Tribal & Community College 1,388 1,301 1,251 1,223 1,188 Hennepin Technical College 4,678 4,515 4,214 3,927 3,739 Inver Hills Community College 4,140 4,049 3,944 3,809 3,550 Lake Superior College 3,749 3,768 3,603 3,431 3,292 Minneapolis Community & Technical College 6,963 6,726 6,484 6,026 5,658 Minnesota State College-Southeast Technical 1,796 1,701 1,597 1,454 1,316 Minnesota State Community &Technical College 5,056 4,863 4,527 4,398 4,319 Minnesota West Community & Technical College 2,287 2,225 2,099 1,948 1,858 Normandale Community College 7,131 7,048 6,740 6,799 6,837 North Hennepin Community College 4,928 4,957 4,813 4,644 4,446 Northeast Higher Education District 4,399 4,208 4,034 3,742 3,589 Hibbing Community College 1,246 1,129 1,115 1,042 1,014 Itasca Community College 1,074 1,028 1, Mesabi Range College 1,128 1,087 1, Rainy River Community College Vermilion Community College Northland Community & Technical College 2,659 2,717 2,558 2,299 2,220 Northwest Technical College (Bemidji) Pine Technical and Community College Ridgewater College 3,381 3,288 3,077 2,860 2,737 Riverland Community College 2,406 2,321 2,200 2,078 1,998 Rochester Community & Technical College 4,438 4,444 4,296 4,134 3,948 St. Cloud Technical and Community College 3,447 3,493 3,483 3,462 3,373 Saint Paul College 4,729 4,778 4,825 4,642 4,546 South Central College 2,912 2,726 2,590 2,490 2,212 SUBTOTAL 95,549 93,663 89,541 85,410 82,185 STATE UNIVERSITIES Bemidji State University 4,634 4,347 4,296 4,274 4,295 Metropolitan State University 6,086 6,266 6,192 6,052 6,102 Minnesota State University, Mankato 14,443 14,194 14,180 13,861 13,752 Minnesota State University Moorhead 6,574 6,167 5,987 5,697 5,316 St. Cloud State University 13,938 13,053 12,381 11,851 11,837 Southwest Minnesota State University 3,681 3,769 3,679 3,679 3,712 Winona State University 8,544 8,459 8,267 8,149 7,890 SUBTOTAL 57,899 56,254 54,983 53,564 52,904 TOTAL 153, , , , ,089 Change from Prior Year -2.82% -2.30% -3.60% -3.84% -2.79% Totals may vary slightly from column sum due to rounding. I-12

49 Enrollment Trend (10 years) Registrations Minnesota State institutions offer non-credit contracted courses, such as customized training and/or noncredit open enrollment courses. With over 16,000 classes, the colleges and universities serve more than 120,000 workers per year. These organizations include: 3M; Abbott Northwestern; MnCPA; Archer Daniels Midland; Arctic Cat Inc.; Blandin Paper Company; ConAgra Foods; Inc.; Honeywell; IBM; Mayo Clinic; and hundreds of other large and small employers in the State. Set forth in the following table are the annual non-credit enrollments for the fiscal years 2012 through (The Balance of This Page Has Been Intentionally Left Blank) I-13

50 Full Year Unduplicated Headcount in Non-Credit Courses Institutions Colleges Alexandria Technical and Community College 6,389 7,089 6,246 6,971 4,443 Anoka-Ramsey Community College 1,031 1,333 1,343 1,655 1,065 Anoka Technical College 2,652 2,547 2,694 2,958 2,673 Central Lakes College 3,470 2,395 1,916 2,042 1,698 Century College 10,181 8,823 8,291 8,220 7,753 Dakota County Technical College 4,485 4,575 4,901 5,255 5,379 Fond du Lac Tribal and Community College , Hennepin Technical College 11,689 13,062 12,341 11,314 10,913 Inver Hills Community College 4,333 4,307 6,855 7,616 7,605 Lake Superior College 4,109 3,972 4,763 5,012 4,357 Minneapolis Community and Technical College 3,673 3,275 2,547 3,240 1,767 Minnesota State College Southeast 2,132 2,137 2,241 2,588 2,229 Minnesota State Community and Technical College 4,183 5,130 5,449 5,895 5,392 Minnesota West Community and Technical College 6,772 6,884 6,353 5,610 5,989 Normandale Community College 3,183 3,591 3,165 2,760 3,196 North Hennepin Community College 1, Northeast Higher Education District 15,727 16,210 15,179 14,916 10,787 Hibbing Community College 11,732 14,216 14,914 14,697 10,660 Itasca Community College Mesabi Range College 3,121 1,636 Rainy River Community College Vermilion Community College Northland Community and Technical College 3,408 3,702 3,363 2,990 2,990 Northwest Technical College - Bemidji Pine Technical and Community College 1,171 1,643 1,520 1, Ridgewater College 8,782 7,801 7,529 7,654 7,581 Riverland Community College 4,991 5,173 5,073 4,963 4,946 Rochester Community and Technical College 4,161 3,520 4,098 5,137 4,744 St. Cloud Technical and Community College 5,919 5,244 5,299 4,979 4,513 Saint Paul College 2,301 2,040 1,768 1,955 2,318 South Central College 13,657 13,361 12,951 11,692 10,810 Subtotal: Colleges 130, , , , ,153 Universities Bemidji State University Metropolitan State University Minnesota State University, Mankato 2,423 1,424 1,010 1,768 2,611 Minnesota State University Moorhead St. Cloud State University 32,554 41,343 25,808 15,383 13,139 Southwest Minnesota State University Winona State University 1,457 2,148 1,796 1,378 1,782 Subtotal: Universities 37,974 45,834 29,919 19,618 18,997 Total: Colleges and Universities 168, , , , ,150 I-14

51 Tuition Set forth below is a schedule of the average tuition rates for full time students at Minnesota State institutions. Tuition rates are shown in two categories: Undergraduates in Minnesota Colleges and in Minnesota Universities. Statistics are shown for the last four completed fiscal years and for the next fiscal year. Average Undergraduate Tuition Rates for Full Time Students Fiscal Year Undergraduate Colleges Undergraduate Universities 2013 $4,816 $6, $4,816 $6, $4,816 $6, $4,821 $6, $4,779 $6,782 Tuition Averages The following table shows the average tuition and average percentage increase in tuition for all Minnesota State institutions. Statistics are shown for the last five completed fiscal years and for the next fiscal year. Minnesota State System Averages: Tuition Rates and Increases/Decreases Fiscal Year Average Tuition Average Tuition Increase/Decrease 2012 $4, % 2013 $5, % 2014 $5, % 2015 $4, % 2016 $5, % 2017 $5, % Faculty Salaries The following table presents the average annual salaries for Minnesota State professors versus the average salaries provided by American Association of University Professors ( AAUP ) faculty salary surveys for Public Master s universities. Average Minnesota State Professor salaries are obtained using IPEDs data. Year Comparison of Minnesota State Faculty s Average Annual Salaries Minnesota State Professor AAUP Professor Minnesota State Associate Professor AAUP Associate Professor Minnesota State Assistant Professor AAUP Assistant Professor $83,089 $88,940 $66,605 $71,025 $59,682 $60, $85,181 $88,988 $69,975 $71,343 $61,373 $61, $87,464 $90,517 $71,879 $72,869 $63,311 $62, $89,792 $91,389 $75,019 $73,918 $65,670 $63, $91,055 $92,982 $75,970 $74,907 $67,423 $65,584 Collective bargaining contracts for have been completed. Negotiations are beginning for contracts for I-15

52 Faculty by Category The following table shows the faculty head count for four-year universities, two-year community colleges, and two-year technical colleges, and totaled for each category for the last five fiscal years. The final row totals the number of faculty for all Minnesota State institutions. Faculty Head Count by Category for Minnesota State Institutions University Faculty: Professor Associate Professor Assistant Professor Instructor University Total: 1,916 1,828 1,871 1,804 1,816 Two-Year College Faculty: Full-time 2,752 2,642 2,586 2,507 2,429 Part-time 3,275 3,249 3,222 2,887 2,344 Two-Year College Faculty Total: 6,027 5,891 5,808 5,394 4,773 Total Faculty (All Institutions): 7,943 7,719 7,679 7,198 6,589 Numbers are as of November 1 in each fiscal year. Tenured Faculty The following table presents the percentage of Minnesota State university tenured faculty for the last five fiscal years. Technical and Community Colleges do not have tenure for their faculty. Percentage of Minnesota State University Faculty Tenured Professor 99% 100% 100% 100% 100% Associate Professor 91% 92% 92% 91% 89% Assistant Professor 10% 10% 9% 6% 7% Instructor 0% 0% 0% 0% 0% (The Balance of This Page has been Intentionally Left Blank) I-16

53 Faculty Degree Attainment The graph below illustrates the degree attainment of Minnesota State faculty as of Fiscal Year Diversification of Revenues OPERATING FUND FINANCIAL INFORMATION Minnesota State s total revenues for Fiscal Year 2016 are listed in the following table, with the percentage that each source comprises of the total. Source Total Revenues by Source % of Total State appropriations 36.0% Net tuition and fees 35.0% Grants and contracts 22.0% Auxiliary enterprises 6.0% Gifts and pledges 0.5% Investment income 0.5% Other Negligible The Minnesota legislature has recently commenced its budget process for the next biennium. No representation can be made at this time regarding the level of State appropriations for Minnesota State general operations. I-17

54 All Funds The following table presents a statement of revenues, expenses, and changes in net assets of Minnesota State s General Fund for the combined system for the years ended June 30, 2016 and 2015 (amounts in $1,000s). Statements of Revenues, Expenses, and Changes in Net Assets for the General Fund (Years Ended June 30) Operating Revenues Tuition, net $ 524,301 $ 509,462 Fees, net 69,660 67,853 Sales and room and board, net 115, ,525 Restricted student payments, Net 113, ,067 OtheriIncome 11,625 13,523 Total operating revenues 835, ,430 Operating Expenses Salaries and benefits 1,276,821 1,268,526 Purchased services 231, ,533 Supplies 138, ,156 Repairs and maintenance 26,853 27,056 Depreciation 119, ,814 Financial aid, net 38,451 42,088 Other Expense 43,694 43,539 Total operating expenses 1,874,940 1,870,712 Operating loss (1,039,493) (1,056,282) Nonoperating Revenues (Expenses) Appropriations 676, ,988 Federal grants 317, ,865 State grants 92, ,146 Private grants 28,353 24,891 Interest income 7,735 6,304 Interest expense (23,618) (22,619) Grants to other organizations (11,877) (11,436) Total nonoperating revenue (expenses) 1,087,851 1,061,139 Income (Loss) Before Other Revenues, Expenses, Gains, or Losses 48,358 4,857 Capital appropriations 59,367 52,283 Capital grants 7,489 4,780 Donated assets 1,723 5,486 Gain on disposal of capital assets 1, Change in net position 117,972 67,554 Total Net Position, Beginning of Year 1,609,365 2,098,711 Cumulative Effect of Change in Accounting Principle - (556,900) Total Net Position, Beginning of Year, as Restated 1,609,365 1,541,811 Total Net Position, End of Year $ 1,727,337 $ 1,609,365 Source: Minnesota State audited financial statements for the Fiscal Year I-18

55 Minnesota State Debt Outstanding The State of Minnesota issues General Obligation Bonds to finance the acquisition and construction of certain Minnesota State capital projects that are not part of the Minnesota State Revenue Fund Facilities. In addition, Minnesota State has outstanding certain Energy Notes issued for projects funded by local utility companies where the savings in energy costs are used to repay the notes. The following table lists and totals the debt outstanding for Minnesota State s General Fund as of January 1, General Fund Debt Outstanding: January 1, 2017 August 1997 $ 430,000 June ,000 November ,001,867 August ,046,750 June ,051,384 November ,009,000 October ,498,250 June ,997,105 November ,091,500 August ,472,450 August ,133 November ,970,925 October ,864,900 August ,825,000 November ,458,333 August ,264,812 August ,327,576 January ,714,000 August ,329,167 November ,250 August ,716,667 October ,897,059 August ,888,889 August ,908,194 November ,027,307 August 2014A 13,033,103 August 2014C 6,873,333 August 2014D 4,868,333 August 2015A 16,949,475 August ,051,003 Total General Obligation Bonds $226,395,766 Total may vary slightly from column sum due to rounding. I-19

56 Grants Fiscal Year 2016 Grants Received* Grants Amount Percentage Federal Grants $317,606, % State Grants 92,802, % Private Grants 28,353, % Total Grants $438,761, % * The information is no longer available with an itemization of Colleges, Universities, and Foundations. Source: Minnesota State Financial Statements State Appropriations The following table presents the State appropriations received for the past five fiscal years ( ) and to be received for fiscal year State Appropriations Year Appropriation 2012 $545,366, $545,822, $587,915, $622,143, $672,925, $673,516,000 University Residence Hall Fees The table set forth below shows the room fees exclusive of board for each Minnesota State four-year university for the and school years. Individual University Residence Hall University Percentage Change Bemidji State $4,830 $4, % MSU Moorhead $4,848 $5, % MSU, Mankato $5,097 $5, % St. Cloud State $4,890 $5, % Southwest State $4,822 $4, % Winona State $5,450 $5, % Rates are based on the most common traditional style room. I-20

57 Student Union Fees Minnesota State Universities and two community colleges collect student union fees for use of campus facilities. Individual schools set the fee rates within Board-established maximums. Set forth below are the average student union fee and the average percentage change for the previous five years. Average Student Union Fees Year Average Fee Percentage Change $ % $ % $ % $ % $ % REVENUE FUND FINANCIAL INFORMATION The Minnesota State Revenue Fund The Minnesota State Colleges and Universities Revenue Fund is established by Minnesota Statutes Section 136F.94, in which there have been or are established special bookkeeping accounts on Minnesota State s official books and records designated as follows: a Capital Expenditures Account; a Revenue Receipts Account; an Escrow Account; an Operating Reserve Account; a Debt Service Account; a Debt Service Reserve Account; a Surplus Account; and a Rebate Account. The Minnesota State Revenue Fund was authorized by the State Legislature to finance revenue-producing auxiliary facilities, including dormitories, student unions and parking facilities, etc. located on Minnesota State campuses. (The Balance of This Page Has Been Intentionally Left Blank) I-21

58 Minnesota State Revenue Fund Statement of Net Assets The following table presents the Statement of Net Position of the Minnesota State Revenue Fund for fiscal years 2014 and 2013 (amounts in $1,000s). Assets Current Assets: Cash and cash equivalents $ 88,069 $ 83,025 Accounts receivable, net 4,697 4,687 Total current assets 92,766 87,712 Current Restricted Assets: Cash and cash equivalents 78, ,701 Total current restricted assets 78, ,701 Noncurrent Restricted Assets: Construction in progress 18,787 30,351 Total noncurrent restricted assets 18,787 60,351 Total restricted assets 96, ,052 Noncurrent Assets: Land and construction in progress 7,469 7,473 Capital assets, net 378, ,292 Total noncurrent assets 386, ,765 Total Assets 575, ,529 Deferred Outflows of Resources 2,085 1,012 Total Assets and Deferred Outflow of Resourced 578, ,541 Liabilities Current Liabilities Salaries and benefits payable 959 1,225 Accounts payable 3,131 3,313 Unearned revenue 2,648 2,572 Payable from restricted assets 3,010 4,878 Interest payable 3,000 3,225 Current portion of long-term debt 16,727 14,783 Other compensation benefits Total current liabilities 29,786 30,276 Noncurrent Liabilities Other liabilities Noncurrent portion of long-term debt 307, ,035 Other compensation benefits 2,198 2,157 Net pension liability 5,974 5,582 Total noncurrent liabilities 315, ,916 Total Liabilities 345, ,192 Deferred Inflows of Resources 4,473 4,771 Total Liabilities and Deferred Inflows of Revenues 350, ,963 Net Position Net investment in capital assets 133, ,131 Restricted expendable 20,761 22,078 Unrestricted 73,161 65,369 Total Net Position $227,827 $217,578 I-22

59 Minnesota State Revenue Fund Statement of Revenues, Expenses, and Changes in Net Assets The following table presents the Revenues, Expenses, and Changes in Net Position of the Minnesota State Revenue Fund for fiscal years 2014 and 2013 (amounts in $1,000s) Operating Revenues Room and board $ 84,305 $ 80,932 Fees 25,237 22,129 Sales and services 6,755 6,212 Other income 2,885 3,389 Total operating revenues 119, ,662 Operating Expenses Salaries and benefits 26,114 25,574 Food service 27,163 26,312 Other purchased services 13,005 12,803 Supplies 5,180 4,643 Repairs and maintenance 3,734 3,915 Depreciation 19,643 18,371 Other expense 4,835 5,609 Total operating expenses 99,674 97,227 Operating income 19,508 15,435 Nonoperating Revenues (Expenses) Private grants Interest income Interest expense (11,164) (10,427) Total nonoperating revenues (expense) (10,246) (9,792) Income Before Other Revenues, Expenses, Gains, or Losses 9,262 5,643 Capital contributions 1,455 4,803 Gain (loss) on disposal of capital assets (468) 0 Change in net assets 10,249 10,446 Total Net Position, Beginning of Year 217, ,556 Cumulative Change in Accounting Principle 0 (10,424) Total Net Position, Beginning of Year, as Restated 217, ,132 Total Net Position, End of Year 227, ,578 Revenue Fund Revenues Minnesota State s Revenue Fund revenues are received from a wide-range of sources. The table below lists the sources of revenues and the percentage for which each source accounts. Sources of Revenue Fund Revenues Source % of Total Room and board 70.20% Student fees and operating revenues 21.01% Sales and commissions 5.62% Interest income 0.76% Other 2.40% Private grants 0.01% I-23

60 Summary of Financial Operations The table below illustrates the Minnesota State Revenue Fund operating margin for the last five fiscal years. Minnesota State Revenue Fund Credit Guarantee Program Minnesota State intends to use direct debt primarily for upgrading existing facilities. For new Minnesota State Revenue Fund projects and for certain refurbishing and upgrades, Minnesota State has developed a credit guarantee program under the Indenture for what might otherwise be off balance sheet projects. As of June 30, 2001, the Minnesota State Revenue Fund had no debt outstanding and no credit guarantees had been provided for Revenue Fund projects. On October 17, 2001, Minnesota State University Moorhead received the first Minnesota State Revenue Fund credit guarantee for a $3,940,000 privately placed bank note. On February 19, 2002, Revenue Fund Bonds were issued totaling $36,275,000. On March 1, 2002, St. Cloud State University ( SCSU ) received a Revenue Fund credit guarantee for $16,515,000. On May 30, 2010, St. Cloud State University received a Revenue Fund credit guarantee for $10,220,000 in conjunction with the refunding of the outstanding balance of the March 1, 2002, $16,515,000 obligation and retirement of the Minnesota State guarantee related to that obligation. See Appendix IV, SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE AND THE SERIES RESOLUTION for a further explanation of the Minnesota State credit guarantee. I-24

61 APPENDIX II PROPOSED FORM OF LEGAL OPINION $ Board of Trustees, Minnesota State Colleges and Universities Revenue Fund and Refunding Bonds Series 2017A $ Board of Trustees, Minnesota State Colleges and Universities Revenue Fund and Refunding Bonds Taxable Series 2017B We have acted as Bond Counsel to the Board of Trustees (the Board ), Minnesota State Colleges and Universities (the Issuer or Minnesota State ) in connection with the issuance by the Issuer of its: (i) Revenue Fund and Refunding Bonds, Series 2017A, in the aggregate principal amount of $ (the Series 2017A Bonds ), and (ii) Revenue Fund and Refunding Bonds, Taxable Series 2017B, in the aggregate principal amount of $ (the Series 2017B Bonds, and together with the Series 2017A Bonds, the Series 2017 Bonds ), dated as of February 8, In connection with the issuance of the Series 2017 Bonds, we have examined: (i) the Amended and Restated Master Indenture of Trust, dated as of June 1, 2009, between Minnesota State and U.S. Bank National Association, as trustee (the Trustee ), as amended by the First Amendment to Amended and Restated Indenture of Trust, dated as of March 1, 2013 (the Indenture ), by and between Minnesota State and the Trustee; (ii) the Series Resolution (the Series Resolution ), adopted by the Board on January 25, 2017; (iii) the Series 2017 Bonds; and (iv) such other documents as we deem relevant and necessary in rendering this opinion, including, but not limited to, certifications as to the use of Series 2017 Bond proceeds. Terms capitalized but not defined in this opinion have the meanings assigned to those terms in the Indenture and Series Resolution. Based upon such examinations, and assuming the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified or photostatic copies and the authenticity of the originals of such documents, and the accuracy of the statements of fact contained in such documents, and based upon present federal and State of Minnesota laws, regulations, rulings and judicial or other decisions in effect on the date hereof, we are of the opinion that: 1. The Issuer is a duly organized and existing system of public higher education of the State of Minnesota with full power and authority under Minnesota Statutes, Chapter 136F, as amended (the Act ) to: (a) issue the Series 2017 Bonds secured by the Revenue Fund, and (b) perform its obligations under the Indenture and the Series Resolution. 2. The Indenture and Series Resolution are a valid and binding agreement and resolution, respectively, of the Issuer for the benefit of the Bondholders and, pursuant to their terms, may not be amended or terminated except in accordance with the respective applicable terms of the Indenture and Series Resolution and are enforceable by the Bondholders in accordance with the terms of the Indenture and Series Resolution. II-1