September 22, 2004


Chairperson Roth called the meeting to order at 12:00 a.m. in the Lincoln Room of the Memorial Union on the University's campus.

Present were: Mr. Engel, *Mr. Ferguson, *Mrs. Lee, *Mrs. Parks, Mrs. Paul, *Mr. Roth and Mrs. Warren.

* Participated in the meeting via telephone conference call.

President Farley reminded the Board that in the Spring of 2001 the administration and Board were exploring the possibility of issuing refunding bonds for the 1999 Series LLC Bonds in order to realize some additional savings projected at some $800,000 over the life of the bond or present value of approximately $450,000. He asked the financial advisor, John MacArthur, to explain the process to date.

Mr. MacArthur reported that the Federal government allows entities to subscribe to the purchase of government securities and used to defease previously issued bonds. The securities are placed in escrow and pay the interest on the existing bonds up to July 1, 2009. At that time, all other bonds will be called in and paid off. He said it is the tax free aspects on the government securities which allows this to happen. He reported that in August the firm subscribed to some government securities the option on which to purchase needs to be exercised on or before September 30. He said this has worked out to be a perfect scenario as the sale of the bonds will now save the University $1,010,900, or a net present value of $632,000. He said this works out to be a savings of approximately 5.016 percent.

President Farley noted that a rule of thumb is that it is a good situation when the savings is around or better than 3 percent.

Mr. MacArthur noted that he has rarely seen a situation where the percentage savings has been as high as 5 percent.

Dr. Farley said this would result in annual savings of some $42,000-$43,000 annual and debt service payments.

Mr. MacArthur interjected that were the University to try to buy government securities today the savings on the refunding issue would only be some $615,000.

Regent Engel noted that the net savings and present value savings on this issue exceeds what was anticipated in August of 2001 and appeared to be a good situation.

It was moved and seconded to approve a resolution for the issuance of the bonds. Secretary to the Board of Regents read into the record the caption for the resolution authorizing and directing the issuance of the building refunding revenue bonds:

"a resolution of the board of regents of washburn university of topeka, shawnee county, kansas, authorizing and directing the issuance of building refunding revenue bonds, series 2004, in the principal sum of $14,250,000 for the purpose of providing funds to pay the costs to refund a portion of the university's outstanding building revenue bonds, and doing all things necessary and incidental thereto; prescribing the form and details of said building refunding revenue bonds; providing for the collection, segregation and application of funds and revenues of the buildings and other lawfully available funds of the university for the purposes authorized by law; and paying the principal of and interest on said bonds, under the authority of k.s.a. 76-6a13 et seq., as amended and supplemented."

Mr. Engel noted there is a potential conflict of interest and announced he would absent himself from the meeting and abstain from voting on the bond issuance. Mr. Engel excused himself at 12:15 p.m.

Regents Paul and Warren both expressed concerns and interest in the amount of the bond counsel fees identified in the documentation.

Secretary to the Board, Mr. Hackler, noted that the information furnished to the Regents earlier was the bid information from five years ago which reported that for general obligation and revenue bonds, the cost per thousand was less than 31 cents per thousand. The issue up for action today differs from the GO or revenue bonds as this is an advance refunding bond.

Bond Counsel, Mr. Jensen, noted that the issue today is a very different issue from the GO or revenue bonds noting that over the years he has developed for the University a series of linked bond issues which have realized some very substantial savings. In this case it's an advance refunding bond requiring three additional legal opinions, a review of arbitrage and the need to do specific computations. He noted that when he was approached by Financial Advisor, Mr. MacArthur, for a number to be used in computations to be able to calculate potential savings, the number $50,000 was inserted because, among other things, there was a need to do this issue in less than thirty days and the legal fees will be net of all the in-house costs being borne including printing the bonds in house, hand delivery of materials to the paying agent, the issuance of CUSIPS all of which need be done in advance of closing. In response to questions, Mr. Jensen reported he would not know the actual expenditures incurred until approximately sixty days past the closing of the issue.

Regent Paul asked that a detailed accounting of the expenditures be performed so that it could be used in making decisions in the future.

Upon call of question, the Resolution was adopted with Mr. Ferguson, Mrs. Lee, Mrs. Parks, Mrs. Paul, and Mrs. Warren voting for, with Mr. Roth and Mr. Engel abstaining.

It was moved and seconded to adopt a resolution authorizing the call of certain Washburn University of Topeka, Shawnee County Building Revenue Bonds Series 1999 dated November 1, 1999 and authorizing the University to give notice of redemption. Motion passed unanimously.

It was moved and seconded to adjourn. The meeting adjourned at 12:32 p.m.


Kenneth P. Hackler

Secretary, Board of Regents

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