Approve Resolution Regarding Transition Audit
(24) Whereas, the University of Illinois is of immense value to the people of Illinois, an- nually producing more than $13.0 billion in direct and indirect economic impact on the State while educating more than 71,000 students and awarding 18,500 degrees, and
Whereas, the University is governed by a newly reconstituted Board of Trustees, and Whereas, it is a governing board’s basic responsibility to preserve the integrity of the institution by meeting the highest standards of stewardship in the conduct of its affairs as it meets expectations for board accountability and transparency, and
Whereas, it is also a governing board’s basic responsibility to follow a thoughtful pro- cess for assessment of the board’s own performance, and
Whereas, it is common practice to conduct a transition audit when a material change takes place in the composition of the board and the leadership of the University, and
Whereas, the University of Illinois Board of Trustees has been reconstituted, and Whereas, the objective of a Board of Trustees transition audit includes a determina- tion of whether the University has conducted all financial and business processes ad- hering to accepted and adequate systems of internal control, as required by State law, University policy and procedures, and good business practice, and has complied with same, and
Whereas, the majority of financial and business processes for which the Board of Trustees has responsibility are within the areas of purchasing, finance and investment, and construction.
Therefore, Be It Resolved:
1. That the Board of Trustees of the University of Illinois, in ful- filling its fiduciary responsibility, requests that the Legislative Audit Commission authorize and direct that a transition audit be performed and for transparency and independence direct that the Office of the Auditor General be directed to conduct an independent external audit and report its conclusions to the Board, and
2. That the Board of Trustees requests that the audit focus on pur- chasing, finance and investment, and construction transactions that required Board approval during the period 2007 through 2009, to determine whether the approval process followed all applicable laws, rules, practices, and procedures, and
3. That the Board of Trustees affirms that the University will reim- burse the Office of the Auditor General for all allowable costs associated with the audit and does hereby express appreciation to the Legislative Audit Commission for its prompt consider- ation of this request.
On motion of Dr. Carroll, seconded by Ms. Strobel, this resolution was
adopted by the following vote: Aye, Dr. Carroll, Ms. Hasara, Mr. Kennedy,
Dr. Koritz, Mr. McMillan, Mr. Montgomery, Mr. Oliver, Ms. Strobel, Mr.
Tortolero, Mr. Zavorotny; no, none; absent, Governor Quinn.
(The student advisory vote was: Aye, Mr. Felix, Mr. Reschke; no, none.)
Approve Issuance of Auxiliary Facilities System Revenue Bonds, Series 2010A
(25) At its meeting of September 11, 2008, the Board approved the project for Stanley O. Ikenberry Commons Phases C and D, Residence Hall West and Garner Hall Demoli- tion, Urbana. The funding source for the project was restricted funds operating budget with anticipated reimbursement from the proceeds of a future sale of Auxiliary Facili- ties System Revenue Bonds. The vice president/chief financial officer and comptrol- ler now recommends approving the actions leading to the issuance of approximately $47.0 million of Auxiliary Facilities System Revenue Bonds, Series 2010A (the “Series 2010A Bonds”) to fund the project and to pay related costs of issuance. He further rec- ommends that both traditional and synthetic structures be considered. The structure chosen will be within the parameters contained in the Board’s Debt Policy adopted in March 2004.
Accordingly, in order to proceed with the preparation of documents and to take other actions needed prior to the issuance of the Series 2010A Bonds, the vice president/ chief financial officer and comptroller and the university counsel recommend that the Board take the following actions:
1. Retain Pugh, Jones, Johnson & Quandt, P.C., to serve as bond counsel to the University.
2. Retain Public Financial Management, Inc., to serve as finan- cial advisor and swap advisor to the University, to the extent required.
3. Retain Loop Capital Markets, LLC, to serve as managing un- derwriter and/or placement agent and/or initial remarketing agent, as required. Additional co-managers and selling group members may be added to assist in the marketing of the bonds. 4. Retain Katten Muchin Rosenman LLP, to serve as special issuer’s counsel and as swap counsel to the University, to the extent required.
5. Appoint The Bank of New York Mellon Trust Company, N.A., as bond registrar and trustee.
6. Prepare the Preliminary Official Statement and/or the Official Statement.
7. Negotiate for credit enhancement and/or liquidity support, as needed and deemed economically beneficial following consul- tation with the managing underwriter and the financial advisor. 8. Analyze the economic benefit of the purchase of bond insur- ance in consultation with the financial advisor and managing underwriter. If such purchase is deemed economically benefi- cial, the bond insurance would be purchased by the managing underwriter.
9. Take actions to pursue and obtain a credit rating or ratings on the bonds.
10. Prepare the Bond Purchase Agreement.
11. Prepare additional documents including the Supplemental Bond Resolution, the Continuing Disclosure Agreement (if needed), and any related documents.
12. Prepare, to the extent required, standard ISDA agreements including the Master Agreement, Schedule, Credit Support Annex and Confirmation, and any related documents.
The recommended firms are on the approved list of providers maintained by the University. The managing underwriter also will be instructed to select its counsel from the University’s approved list. Prior to the sale and delivery of the Series 2010A Bonds, the Board will be asked to approve the substantially final form of the above referenced documents and ratify and confirm all actions taken or to be taken by the officers and members of the Board in connection with such sale and delivery.
The Board action recommended in this item complies in all material respects with applicable State and federal laws, University of Illinois Statutes, The General Rules Concerning University Organization and Procedure, and Board of Trustees policies and directives.
Funding will be available from the proceeds of the Series 2010A Bonds. The interim president of the University concurs.