Table of Contents
I. UCONN 2000: THE UPDATE

II. ACTIVITIES COMPLETED OR UNDERWAY:

• PLANNING, DESIGN AND MANAGEMENT
• CONSTRUCTION
• CONNECTICUT CONTRACTOR SUMMARY
• FINANCE
• PRIVATE FINANCIAL SUPPORT
• PREVAILING WAGE COMPLIANCE REPORT

III. CURRENT PROJECT STATUS – PHASE I (as of April 2005)
IV. CURRENT PROJECT STATUS – PHASE II (as of April 2005)
V. CURRENT PROJECT STATUS – PHASE III (as of April 2005)
VI. CURRENT PROJECTS FUND SOURCES: PHASE I (as of April 2005)
VI. CURRENT PROJECTS FUND SOURCES: PHASE II (as of April 2005)
VII. CURRENT PROJECTS FUND SOURCES: PHASE III (as of April 2005)

Attachments & Exhibits:

• Attachment A – Alphabetical Listing of Contractors and Subcontractors
• Attachment B – Contractor Compliance
• Attachment C – Support Initiatives
• Attachment D – Testimony before the Finance, Revenue and Bonding Committee by President Philip E. Austin
• Attachment E – Construction Program Initial Improvement Plan
• Exhibit A – UConn 2000 Year 10 Proposed FY 2005 Authorized Projects
• Exhibit B – UConn 2000 Phase III Project List/State Debt Service Commitment
• Exhibit C – Policies: Selection and Acquisition of Professional Services
• Exhibit D – Policies: Pre-Qualification and Selection of Contractors
• Debarment List

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UCONN 2000: THE UPDATE

This is the twentieth in a series of semi-annual reports to the Governor and the General Assembly pursuant to the provisions of Sections 10a-109 through 10a-109y of the Connecticut General Statutes, originally An Act to Enhance the Infrastructure of the University of Connecticut, now known as UCONN 2000. These reports have been issued each October and April since passage of UCONN 2000 on June 7, 1995. The law also requires a four-year progress report, which was filed on January 15, 1999.

UCONN 2000: Problems and Corrective Actions

Since the issuance of the last report, problems in the construction program have been identified by the University and reported by the media. In April, the Finance, Revenue and Bonding Committee of the General Assembly held an informational hearing on the programand invited testimony from the Auditors of Public Accounts and from the University. UConn President Philip E. Austin, accompanied by Vice President and Chief Operating Officer Linda Flaherty-Goldsmith and Vice President and Chief Financial Officer Lorraine M. Aronson, explained the problems and the corrective action plan developed to prevent recurrence. Testimony submitted that day is found in Attachment D.

Also in April, Governor Rell announced the formation of a special panel to take an in-depth look at UConn’s administration of contracts and oversight of on-campus construction. In order to continue the renewal and revitalization occurring at UConn, the Governor charged the Commission on UConn Review and Accountability to report to her by October 1, 2005, on any changes in laws, regulations, personnel or policies that are needed to ensure state resourcesare being used ethically and effectively.

UCONN 2000: ACTIVITIES COMPLETED OR UNDERWAY

• PLANNING, DESIGN AND MANAGEMENT
  • The University has almost completed the update of its 1998 Master Plan. In view of the extensive physical changes on all the campuses resulting from the UCONN 2000 investment and the forthcoming 21st Century UConn initiative, it is necessary to update the plan so that the University can manage its capital resources most effectively. The plan, when complete, will adjust the planning baseline to reflect the current physical plant, assess current and projected space needs relative to available facilities, assess the overall parking and transportation system including its financial and operational aspects, and refine the campus’ physical composition toadvance improvements already in place. The planning effort includes activities on the West Hartford, Torrington and Avery Point campuses. Additionally, a plan is being developed for athletic facilities. The consultant for the Master Plan revision is Smith Group/JJR of Ann Arbor, Michigan. It is anticipated the plan will be complete in the summer of 2005.
  • The Law School Library has experienced an on-going series of leaks since opening in 1996. The project’s construction, which predates UCONN 2000, was managed by the Department of Public Works. Corrections undertaken did not resolve the situation, so the University hired its own consultants (Hoffman Architects of New Haven, and Simpson Gumpertz and Heger, Incorporated of Boston) to investigate, identify problems and propose solutions. The University is working with the Office of the Attorney General to address the issue. Funding for repairs is in the State’s FY 2005 Capital Budget with an expectation of recovery of funds as appropriate. The University is requesting that the Bond Commission approve the funding for design on corrections to the defects.• The University continues standardizing building systems and system components within its overall building and renovation program, (e.g., electrical circuitry, panel boxes, etc.). This process will reduce the number of replacement parts UConn needs to inventory, speed repairs, improve the level of maintenance and lower overall costs.
  • The Board of Trustees, at its February 3, 2005 meeting, approved modifications to the FY 2005 Capital Budget totaling $100 million for system-wide capital improvements, equipment, telecommunications and library acquisitions as shown in Exhibit A. This amount reflects $50 million for the final year of Phase 2 of UCONN 2000 and $50 million for the first year of Phase 3, also known as 21st Century UConn. Together these amounts total the FY 2005 authorization “cap” of $100 million. The following is a brief description of the projectsincluded in the FY 2005 Capital Budget.

Storrs and Regional Campuses

Arjona and Monteith (New Classroom Buildings)
The architects have been selected for the Arjona and Monteith (new classroom buildings) Project. This project will include the construction of new facilities to replace the Arjona and Monteith buildings, the two most heavily used classroom buildings on campus. Included in the facility will be classrooms and offices for various departments within the College of Liberal Arts and Sciences. The architects for the project are Leers Weinzapfel Associates of Boston, MA.

Natural History Museum Completion
Programming activities are continuing on the Connecticut State Museum of Natural History completion project. The Connecticut State Museum of Natural History plans to establish a new Connecticut Archaeology Center to provide support for UConn graduate and undergraduate students and operate archaeology field schools. It also will provide elementary and secondary school teachers with training, curriculum guides and teaching resources; technical training and assistance to Connecticut municipalities; an active Web presence; and access for professional archaeologists, students and the public to maps, collections and an archaeology library. The Center will expand the museum’s ability to promote an appreciation of cultural and natural history, with a focus on New England. It will also provide access to the State’s largest collection of Connecticut artifacts and increase support of the Office of State Archaeology that is mandated by the State to protect some 1,000 archaeological sites on State land and over 3,000 sites on private land. (The State Archaeologist provides technical assistance to municipalities, cares for anthropological collections, and oversees sites of Native American burials and the return of sacred materials.) This share of the project, estimated at $700,000, will create space for work and display for these activities. Part of the funding, $200,000, will be from private donors. The architects for the project are Arbonies King Vlock, P.C. of Stony Creek, CT.

North Hillside Road Completion
Design and permitting activities are underway on the North Hillside Road completion project. This project will extend Hillside Road by 3,400 linear feet from it’s current terminus to Route 44 and will include related utilities such as gas, electrical, water, sewer and telecommunications. The new extension will allow enhanced access to campus and sorely needed relief from traffic congestion on Route 195. Also, the road and accompanying utilities will permit future development of this key parcel. The University’s Master Plan envisions the North Campus as a critical area for expansion of the main campus, permitting new science buildings, recreational residential capacity, public/private partnerships (including incubator space) and other initiatives. The Town of Mansfield is supportive of the road project. The engineers for the project are Fuss & O’Neill, Inc. of Manchester, CT.

Torrey Renovation Completion & Biology Expansion
Architects have been selected for the Torrey Renovation completion and Biology Expansion project that includes research labs, classrooms, and office space for Ecology and Evolutionary Biology programs and Physiology and Neurobiology Departments. The new building will be constructed in the area of the current site of the Torrey Life Sciences Building. The preliminary program for the building has been developed and will be finalized prior to start of the schematic design. Architects for this project are The Hillier Group of New York City, NY.

Lakeside Renovation
Programming activities have been completed and schematic design activities are underway on the Lakeside Renovation Project. When complete the building will be occupied by University Communications, Governmental Relations and University Events. The architect for the project is Allan Dehar Associates of New Haven, CT.

Law School Renovations/Improvements
Planning, design and bidding are currently underway to install an elevator in the Hartranft Building at the University’s Law School. The project is scheduled to be completed by fall 2005.

Stamford Campus Improvements
Design is underway for the repair of the interior ramps to the Stamford Campus Parking Garage. Design and construction are scheduled to be complete by December 2005.

West Hartford Campus Renovations/Improvements
Design is complete and bids are being solicited for the repair of the major parking lot at the West Hartford Campus. Construction is planned to be completed by fall 2005.

Farm Buildings Repairs/Replacements
Two projects are in progress for the upgrade of the various farm buildings. Demolition of two wings of the Yellow Barn is complete. The next phase, stabilization and exterior repairs, is currently in the planning stage. The second construction project of the Consolidated Poultry Facility was recently completed.

Health Center

Research Tower
Architects have been selected for the new research building at the Health Center campus. The project will include new research laboratories, offices and support space and will be constructed in the “research zone” of the campus as defined by the 2002 Campus Master Plan. Programming of the building is being developed at this time. The firm of CUH2A, Architecture, Engineering and Planning of Princeton, New Jersey is the architect for the project.

CLAC Renovation Biosafety Level 3 Lab
The planning study for the Health Center’s Center for Laboratory Animal Care (CLAC), in anticipation of the planned FY 2009 renovations, is complete. The planning document evaluates the existing vivarium facilities including conditions and capacities, projects volumes based on expected research growth, and recommends short and long term actions to provide adequate vivarium facilities and the creation of a Bio Safety level 3 containment facility to support current and expanded research programs. The planning study was prepared by FLAD & Associates of Stamford, CT.

Main Building Renovation
A Planning Study for the Health Center’s Main Building Renovations project will begin in July 2005. The planning study will be prepared in anticipation of design funds for the project planned for FY 2007.

Medical School Academic Building Renovation
Design for a portion of the Health Center’s Academic Building Renovations project will begin in June 2005. The design will encompass renovations to the two main teaching auditoria and will include upgrades to the technology, seating and all finishes.

Dental School Renovation
The design of the Health Center’s School of Dental Medicine pre-clinical lab renovations will begin in November 2005 and will include essential upgrades to the labs to support the Dental School programs.

Deferred Maintenance/Code/ADA/Renovation Lump Sum – Health Center
Various Health Center deferred maintenance projects are scheduled for this year. The most critical among them is the cooling tower refurbishment project. Design has been completed and construction is scheduled to start in fall 2005.

CONSTRUCTION

• The University has received its permits, and construction activities have begun on the gas turbine of the Cogeneration/Central Chilled Water Facility that will produce electricity for the Storrs campus. Secondary waste heat will provide heating, hot water and cooling for a large segment of the Storrs campus as well. The bid process was undertaken as a prerequisite to determine the feasibility and advisability of moving to cogeneration. Independent analysis projected potential significant energy cost-savings, and data from the bid process informed a cost/benefit analysis that led the Board of Trustees to endorse proceeding with the project. A contract was awarded to Select Energy. The project is financed through Caterpillar Financial Services Corporation using a capital lease structure with an average interest rate of 4.5%.   Cost-avoidance achieved through the construction of the facility will generate funds to pay the debt and debt service. The project is anticipated to be completed in August 2005. Construction manager for the project is O & G Industries of Torrington, CT who is under contract with Select Energy, and Project Manager is Derick Dahlen of Dahlen, Berg & Co. of Minneapolis, MN.

• Construction is almost complete on the new School of Pharmacy/Biology Building that includes 120,000 square feet of space for teaching and research for the Pharmacy program and 80,000 square feet of research space for Biology. Also included is a consolidated 26,000 square foot animal care facility to support research programs in this area of campus. The architect for this construction project is Davis, Brody, Bond of New York City. Gilbane of Glastonbury, CT is the construction manager for the project. The building is to be completed in July 2005.

• Construction has begun on the Intramural, Recreational & Intercollegiate Facilities Project. This facility will house the football program including offices, training rooms, locker rooms and an indoor practice field. When not used by athletic teams, the indoor field will be used by the recreational programs. Funding for this project includes $31 million from Phase III of UCONN 2000, and the remainder from private fundraising. The Board of Trustees, at its August 3, 2004 meeting, approved the EIE for the project. Architects for the project are Jeter Cook Jepson of Hartford, CT and HOK of St. Louis, MO. Dimeo Construction of New Haven, CT is the construction manager for the project. Project completion is expected in July 2006.
• Renovations and deferred maintenance projects in facilities on the Avery Point Campus have been completed or are in the construction or design phase. This year’s projects include classroom renovations and interior work on several facilities. Work for this will be complete by fall 2005.
• Construction has begun on the second phase of the Student Union Project. This phase of the work includes the demolition of the south end of the building and the construction of a new facility, which includes space for a food court, retail space, cultural center facilities and a ballroom with occupancy capacity of 300. This phase of the project is scheduled for completion in summer 2006. The first phase of the project, now complete, included a 500-seat theater, student activity offices and meeting spaces, a central post office for all student mail, cultural centers and offices for student organizations. It also included space for the student-run radio and TV stations. The architect for the project is Cannon Associates of Boston, MA. The construction manager for the project is Konover Construction of West Hartford, CT.

• The Health Center’s Lyman Maynard Stowe Library renovations, funded by previously authorized bond funds, are scheduled for completion in November 2005. The funds allocated under UCONN 2000 were committed for the hazardous material component of the project.

UCONN 2000: SET-ASIDE CONTRACTOR SUMMARY

• Public Act 99-241 called for, among other things, information regarding use of Connecticut-owned businesses on UCONN 2000 program projects, including those owned by women and minorities (“set-aside” contractors). Since Fiscal Year 1996, construction and related contracts for the UCONN 2000 program totaled $1.177 billion. As of April 1, 2005, Connecticut businesses have accounted for $1.032 billion, or 88%, of the total contracted dollars. There have been $1.038 billion of projects completed to date. 23% of this total, or $239 million, has gone to “set-aside” general contractors and subcontractors. Overall, small business participation has amounted to $143.5 million, minority business participation has amounted to $31.9 million, and women-owned business participation has amounted to $63.5 million.

UCONN 2000: FINANCE
Pursuant to Connecticut General Statute Sec. 10A-109x the Semiannual Report to the General Assembly is to provide, among other things, information on the number of projects and securities authorized, approved and issued; the payment of debt service requirements, and the payment of principal and interest on the UCONN 2000 securities; and the amount of investment earnings. This section provides that information.

University of Connecticut General Obligation Bonds Secured by the State’s Debt Service Commitment – Bond Issues Completed
Section 10a-109 of the Connecticut General Statutes empowers the University to issue General Obligation Bonds secured by the State’s Debt Service Commitment (sometimes referred to as “General Obligation Debt Service Commitment Bonds” or “GO-DSC Bonds”). These Bonds are issued pursuant to the General Obligation Master Indenture of Trust, dated as of November 1, 1995, between the University of Connecticut, as Issuer, and Fleet National Bank of Connecticut as Trustee (now U.S. Bank N.A.). The University’s Board of Trustees on November 10, 1995, and the State Bond Commission approved the Master Indenture of Trust on December 21, 1995. UConn’s Board of Trustees and the Governor approve the subsequent Supplemental Indentures for each bond issue. The University and Office of the State Treasurer, working in conjunction, manage the Debt Service Commitment Bond sale process.

Pursuant to Connecticut General Statute Sec. 10A-109x the University General Obligation Debt Service Commitment Bonds authorized, approved and issued to date are listed below:

A.) GO-DSC Bonds: Project Fund

B.) Refunding GO-DSC Bonds

(2) The GO-DSC 2002A bonds provided $994,688.03 directly to the Office of the State Treasurer.

(3) The GO-DSC 2003 bonds par amount of $96,210,000 plus $3,790,000 of the original issue premium, totaled $100,000,000 available for projects.

(4) The GO-DSC 2004A New Money and GO-DSC 2004A Refunding Bonds were issued under a single Official Statement. The GO-DSC 2004 new money bonds totaled $100,000,000 for projects, funded by the $97,845,000 par amount plus $ 2,155,000 of the original issue premium.

(5) The GO-DSC 2005 bonds totaled $100,000,000 available for projects funded by the $98,110,000 par amount plus $1,890,000 of the original issue premium. Phase II authorizations accounted for $50 million and Phase III for $50 million.

 

The ten series of UConn General Obligation DSC bonds issued to fund projects total $1,010,592,146.50 in face value and provided $1,012,000,000 for UCONN 2000 project spending. (Excluding the $216,950,000 UConn General Obligation DSC Refunding Bonds Series 2004A issued to refund $223,160,000 of prior bonds.) The remaining balance, together with accrued interest and net original issue premium, funded the costs of issuance and deposits to the State Treasurer.

On March 16, 2005 the University issued $98,110,000 face amount of the University of Connecticut General Obligation Debt Service Commitment Bonds 2005 Series A, at a true interest cost of 4.20%, with a 10.3 Year Average Life and with favorable call redemption terms of 2015 @ Par. Selected maturities on and after February 15, 2011 carried FSA bond insurance.

UCONN 2000 Phase III – Financing Initiated

The GO-DSC2005A bond issue completed the $962,000,000 of Phase I and Phase II of UCONN 2000 project authorizations under the original UCONN 2000 Act that may be secured with the State’s Debt Service Commitment. The GO-DSC2005A $100 million represented the last $50million of Phase II and the initial $50 million of Phase III UCONN 2000 project authorizations.

UConn 2000 General Obligation Debt Service Commitment Bonded Projects
To date, seventy projects, totaling $1.012 million have been authorized to receive General Obligation Debt Service Commitment bond proceeds, as follows:

UCONN2000 GENERAL OBLIGATION BONDS SECURED
BY THE DEBT SERVICE COMMITMENT OF THE STATE

* Board of Trustees Added Project 2/22/2001 (Pre-UCONN 2000 Bond Authorization)

University Refunding Provides Debt Service Savings to State
UConn achieved $15.2 million in debt service savings for Connecticut taxpayers, on January 29, 2004 when the University closed on $216,950,000.00 of UCONN General Obligation DSC Refunding Bonds Series 2004-A. Institutions garnered most of the bonds. Proceeds pre-refunded $223,160,000 of the portions of the 1996, 1997, 1998, 2000, 2001, and 2002 UCONN 2000 General Obligation Debt Service Commitment Bonds. Debt Service savings amounted to $15,215,582.84 million on a gross cash debt service savings basis, or $10,117,718.77 on a net present value basis (4.53% savings of refunded bonds), spread across fiscal years 2004 to 2020. These are real dollar savings for Connecticut taxpayers.

University’s Financial Statements
The University’s financial statements reflect the UCONN 2000 program. The General Obligation and Special Obligation bonds and other debt are shown as liabilities on the University’s financial statements. The financed UCONN 2000 projects and any unspent debt proceeds are shown as assets. The State’s Debt Service Commitment to pay for the University’s General Obligation Bonds is also shown as an asset on the University’s financial statements.

Trustee Bank
The proceeds of the sale by the University of any bonds are part of the Trust Estate established under the General Obligation Master Indenture of Trust with the Trustee Bank as security for bondholders. Consequently, the University holds all of the bond proceeds at the Trustee Bank, with this exception: the Costs of Issuance account funded by the University’s General Obligation Bonds Debt Service Commitment bonds may be held and invested by the State Treasurer’s Office in a segregated account. The Special Obligation Master Indenture has similar Trust Estate provisions. The Trustee Bank holds all of the Special Obligation bond proceeds received at issuance including the Costs of Issuance account.

Prior to June 1998, all University General Obligation Debt Service Commitment Bond proceeds were deposited with the Office of the State Treasurer and treated like State bond proceeds, including payments made to vendors through the Office of the State Comptroller. Subsequently, the Office of the Attorney General opined that the University, and not the State, issues UCONN 2000 bonds. Accordingly, upon advice of bond counsel and in conformity with the Master Indenture of Trust, Debt Service Commitment Bond construction fund proceeds were deposited to the Trustee Bank and disbursed as directed by the University pursuant to the Indenture. Per the State’s preference, the University General Obligation Debt Service Commitment Bond proceeds for costs of issuance are still treated like State bond proceeds and deposited with the Office of the State Treasurer and disbursed through the Office of the State Comptroller.

The Indentures of Trust provide that the University is authorized and directed to order each disbursement from the Construction Account held by the Trustee upon a certification filed with the Trustee bank and, in the case of the Debt Service Commitment bonds, the State Treasurer. The Indentures provide that such certification shall be signed by an Authorized Officer of the University and include certain disbursement information. Once the Authorized Officer certification filings are made, the University can directly disburse payments.

University Special Obligation Revenue Bonds Secured by Pledged Revenues
UCONN 2000 also authorizes the University to issue Special Obligation Revenue bonds. Unlike the University’s General Obligation Debt Service Commitment Bonds that are paid from the State’s General Fund, debt on the Special Obligation Bonds are paid from certain pledged revenues of the University as defined in the particular bond series indenture.

A Special Capital Reserve Fund may be established for University Special Obligation bond issues only if the Board of Trustees determines that the Special Obligation bond issue is self-sufficient as defined in the Act. The self-sufficiency finding by the University must be submitted to and confirmed as not unreasonable or arbitrary by the State Treasurer prior to issuance of the bonds. Once approved, the Special Capital Reserve Fund is funded at issuance by the University to meet the minimum capital reserve requirement. However, subject to notification by the University on or before December 1, annually, if this amount falls below the required minimum capital reserve, there is deemed to be appropriated, from the state General Fund, sums necessary to restore each Special Capital Reserve Fund to the required minimum capital reserve.

Special Obligation Student Fee Revenue Bond Issues
Pursuant to Connecticut General Statute Sec. 10A-109x the University Special Obligation Student Fee Revenue Securities authorized, approved and issued to date are listed below.

Student Fee Revenue Bonds have been issued pursuant to the Special Obligation Indenture of Trust, dated as of January 1, 1997, between the University as Issuer and U.S. Bank N.A. as successor to State Street Bank & Trust as Trustee (“the Special Obligation Master Indenture”). The Board of Trustees approved the Master Indenture on November 8, 1996.

UConn’s Board of Trustees and the Governor approve the subsequent Supplemental Indentures for each Special Obligation bond issue. The University and Office of the State Treasurer, working in conjunction, manage the Special Obligation Bond sale process. University Special Obligation Student Fee Revenue Bonds issued to date are summarized below:

 

On February 4, 1998, the University issued $33,560,000 of University of Connecticut Student Fee Revenue Bonds 1998 Series A (“SFR 1998-A Bonds”) with a final maturity of November 15, 2027. The Special Obligation First Supplemental Indenture was also dated January 1, 1997 and authorized the issuance of bonds up to a principal amount not to exceed $30,000,000 for construction of the South Campus Residence and Dining Hall, plus amounts necessary to fund a Special Capital Reserve Fund (“SCRF”) and provide for costs of issuance. The University managed the issuance and sale of these bonds and realized a favorable true interest cost over the term. Debt service for these bonds is paid from the student Infrastructure Maintenance Fee, instituted in 1997, and other pledged revenues as further defined in the Indenture of Trust. Such pledged revenues also help support future operation and maintenance costs for facilities built or expanded through UCONN 2000.

On June 1, 2000, the University issued $89,570,000 of the University of Connecticut Student Fee Revenue Bonds 2000 Series A (“SFR 2000-A”) pursuant to the Special Obligation Master Indenture and the Special Obligation Student Fee Revenue Bonds Second Supplemental Indenture dated as of May 1, 2000. Bond proceeds funded $87,000,000 of construction for the Hilltop Dormitory, Hilltop Student Rental Apartments, and Parking Garage South. They also provided for capitalized interest and costs of issuance. The $89,570,000 SFR 2000 Bonds were defeased in substance on February 27, 2002, as further described below, and are no longer reflected as outstanding debt on the University’s financial statements.

On February 14, 2002, the University issued $75,430,000 of the University of Connecticut Student Fee Revenue Bonds 2002 Series A pursuant to the Special Obligation Master Indenture and the Special Obligation Student Fee Revenue Bonds Fourth Supplemental Indenture dated as of November 16, 2001. Bond proceeds funded $72,180,000 of construction for the Alumni Quadrant Renovations, Shippee/Buckley Renovations, East Campus North Renovations, Towers Renovations (including Greek Housing), and North Campus Renovations (including North Campus Student Suites and Apartments).

On February 27, 2002, the University issued $96,130,000 of the University of Connecticut Student Fee Revenue Bonds 2002 Refunding Series A pursuant to the Special Obligation Master Indenture and the Special Obligation Student Fee Revenue Bonds Third Supplemental Indenture, dated as of February 1, 2002. Bond proceeds were used to take advantage of favorable market conditions to advance refund and defease in substance all of the $89,570,000 of Student Fee Revenue Bonds 2000 Series A bonds outstanding. Proceeds were deposited with the Trustee bank in an irrevocable escrow fund sufficient to satisfy future debt service and call premiums on the prior issue.

UCONN 2000 Special Obligation Student Fee Revenue Projects
To date, nine projects have been authorized to receive $189,180,000 of the University’s Special Obligation Student Fee Revenue bond proceeds. Some of these projects were also supported by General Obligation or other funding, as follows:

UCONN 2000 SPECIAL OBLIGATION STUDENT FEE REVENUE BOND FUNDED PROJECTS

(1) Also partially funded with proceeds of the University’s General Obligation bonds.

UCONN 2000 Other Debt Financing – Heating Plant Upgrade Tax-Exempt Lease Purchase Agreement

To date, the UCONN 2000 Heating Plant Upgrade project has also been authorized to receive $75,000,000 of tax-exempt lease purchase funding secured by the University’s general obligation.

On December 18, 2003 the University entered into a privately placed $75,000,000 Governmental Tax-Exempt Lease Purchase Agreement with a reported nominal interest rate of 4.420% compounded monthly to finance the design and construction of a combined heat and powerplant. The financing is part of the UCONN 2000 Heating Plant Upgrade project, as defined under the UCONN 2000 Act, and is expected to generate substantially all of the needs for electrical power, heating and cooling on the main campus at Storrs. This tax-exempt lease purchase financing was not issued under the UCONN 2000 General Obligation or Special Obligation Indentures of Trust but was entered into under certain separately negotiated documents and agreements. Nonetheless, it is considered a $75,000,000 debt issuance of the University falling under UCONN 2000. The Heating Plant Upgrade has also been partially funded with UCONN 2000 General Obligation DSC bonds as listed above.

On April 12, 2005, the Board of Trustees authorized up to $6.9 million of additional borrowing pursuant to the Heating Plant Upgrade Tax-Exempt Lease Purchase Agreement, which, if approved by the Governor and others and if and when entered into, would increase the amount from $75,000,000 to $81,900,000.

The lease is not rated by the credit rating agencies but weighs in their credit rating of the University’s bond programs.

Current Credit Ratings

Since the inception of UCONN 2000, the University’s bond issues have experienced a favorable credit rating history, including several credit rating upgrades. For example, as of March 31, 2005 Moody’s assigned an “Aa3” rating to both the University’s General Obligation Bonds secured by the State’s Debt Service Commitment and the University’s Special Obligation Student Fee Revenue Bonds. It is a strong vote of confidence in the University that both these ratings are ranked the same as the State’s General Obligation Bond “Aa3” credit rating.

The capital markets have recognized the tangible benefits to the State’s economy of meeting the infrastructure and educational goals of the program, as well as the University’s success in implementing them. A high quality credit rating not only provides the State and the University with less expensive access to the capital markets but also supports the State’s quality reputation among investors. A University milestone occurred in 2002 with the achievement of the high-grade “double A” credit-rating category from Moody’s Investors Service for both its General Obligation and Special Obligation bonds.

March 2005: As of March 31, 2005, the UCONN 2000 General Obligation Debt Service Commitment bonds were rated “AA” by Standard & Poor’s; “Aa3” by Moody’s Investors Service; and “AA-” by Fitch Investors Service. Also the University’s Special Obligation Bonds not secured by SCRF were rated “AA-” by Standard & Poor’s and “Aa3” by Moody’s Investors Service. Fitch Investors Service does not rate the Special Obligation bonds not secured by SCRF. The Special Obligation Bonds Series 1998-A carry a Special Capital Reserve Fund and are rated “AA” by Standard & Poor’s, “Aa3” by Moody’s, and “AA-“by Fitch. In addition to the underlying credit ratings, “AAA” rated municipal bond insurance secures certain maturities of several of the above bond issues.

Credit Rating History
February 1996: the first issue of the University’s General Obligation Bonds secured by the State’s Debt Service Commitment carried underlying ratings of “A1” by Moody’s Investors Service, “AA-” by Standard & Poor’s and “AA-” by Fitch.

February 1998: the first issue of UCONN 2000 Special Obligation bonds depended upon the State’s SCRF credit rating. An underlying “stand-alone” credit rating was not available for this nascent program. At the time of issuance, the State SCRF enhancement allowed the bonds to obtain an “AA-” rating from Standard & Poor’s, “AA-” from Fitch Investors Service, and “A-1” from Moody’s Investors Service. The bonds were subsequently covered by municipal bond insurance and upgraded to “AAA” at Fitch and Standard & Poor’s and “Aaa” at Moody’s Investors Service.

October 1998: Standard & Poor’s upgraded the UCONN 2000 General Obligation DSC Bonds and the UCONN SFR 1998-A (SCRF) bonds to “AA” from “AA-”.

March 2000: Moody’s upgraded UCONN 2000 General Obligation DSC Bonds to “Aa3” from “A1”.

June 2000: the University achieved a milestone with its first underlying Special Obligation Bond “stand alone” credit rating of “AA-” Standard & Poor’s and an “A1” Moody’s.

February 2001: Moody’s upgraded UCONN 2000 General Obligation DSC Bonds to “Aa2” from “Aa3”. In April 2001, the General Obligation DSC 2001 Series A bonds were sold without any bond insurance security enhancement on any maturity, another successful first-time accomplishment for the UCONN 2000 bond program. Moody’s upgraded UConn’s SFR 1998-A Bonds, which are secured by the State SCRF, at this time to “Aa3” from “A1”.

January 2002: UConn’s 2000 Special Obligation Bonds (Non-SCRF) were upgraded to “Aa3” from “A1” by Moody’s. This graduated UConn’s Special Obligation bonds to Moody’s “high-grade” bond category and impacted the underlying credit on all outstanding Special Obligation Student Fee Revenue Bonds. (The $33.6 million Special Obligation Student Fee Revenue Series 1998-A bonds, additionally secured by the State’s SCRF, already carried the “Aa3” rating.) This high rating was assigned a stable outlook and represented a positive judgment by the capital markets regarding UConn’s financial strength, real and potential growth as an institution, and management.

August 2002: Reflecting the outlook changes for the State’s General Obligation Bonds, Moody’s and Standard and Poor’s both moved their outlook from “stable” to “negative” for UConn’s General Obligation DSC Bonds while retaining their respective credit rating levels at “Aa2” and “AA”. Fitch took no action. In a sign of confidence in the University’s management and growth potential, Moody’s and Standard & Poor’s kept UConn’s Special Obligation Bond ratings levels and stable outlook unchanged.

March 2003: During tougher economic times, the rating agencies confirmed the University’s General Obligation DSC bond ratings as follows: Fitch “AA-“; Standard & Poor’s “AA”; and Moody’s “Aa2”. Moody’s also confirmed UConn’s Special Obligation and Foundation bond ratings at “Aa3”. Holding the credit ratings was a good sign in light of Moody’s February 2003 move of the State General Obligation bonds and consequently the University’s DSC and SCRF security bonds to watch list for possible downgrade.

July 2003: On July 2, 2003, citing State budget problems, Moody’s downgraded the University’s General Obligation DSC bond ratings to “Aa3” from “Aa2” consistent with its action on the State General Obligation bond rating. The good news was that Moody’s confirmed UConn’s Special Obligation (non-SCRF) bond ratings at “Aa3”. Moody’s also briefly downgraded the University’s 1998 Special Obligation Bonds secured by the State’s SCRF to “A-1” following a general downgrade of any bonds backed by the State’s SCRF but then upgraded the University’s 1998 Special Obligation Bonds back to “Aa-3” on July 14, 2003.

January 2004: We were successful in confirming the credit ratings for the UCONN 2000 General Obligation Debt Service Commitment bonds at a time of State budget deficits and negative press reports. The unenhanced ratings for the UCONN 2000 GO DSC 2004 new money and refunding bond issues were as follows: Moody’s Investors Service “Aa3”, Standard & Poor’s “AA” and Fitch IBCA “AA-”. Several maturities also carried “AAA” rated MBIA bond insurance.

Debt Service
Pursuant to Connecticut General Statute Sec. 10A-109x, the Semiannual Report to the General Assembly is to list the payment of debt service requirements.

UCONN 2000 General Obligation Debt Service Commitment Bonds – Debt Service
The State General Fund pays the debt service on the University’s General Obligation Debt Service Commitment Bonds. The University pays the debt service on the Special Obligation Student Fee Revenue Bonds from its own resources. For all the UCONN 2000 General Obligation Debt Service Commitment securities issued since the program’s inception in 1996 to April 1, 2005 (including the GO-DSC2005 Refunding Bonds but net of refunded debt)debt service totals $1,490.9 million, representing $1,004.4 million of principaland $486.5 million of interest (including capital appreciation bonds).

As of April 1, 2005 there will be total debt service remaining of $1,085.6 representing $772.7 million of principal and $312.9 million of interest (including capital appreciation bonds).

For the Fiscal Year Ending June 30, 2004, the Debt Service Commitment paid for the University’s General Obligation Bonds amounted to $67.5 million (representing $42.9 million of principal and $24.6 million of interest).

UCONN 2000 Special Obligation Student Fee Revenue Bonds – Debt Service
UCONN 2000 Special Obligation Student Fee Revenue securities debt service amounts to $392.6 million, representing $205.1 million of principal and $187.5 million of interest over the course of the maturity spectrum, net of pre-refunded and defeased bonds. As of April 1, 2005 debt service remaining totals $338.5 million comprising $191.4 million of principaland $147.1 million of interest (including capital appreciation bonds). All other things equal, the Special Obligation bonds incur proportionally more interest expense because they are generally issued for terms of up to thirty years compared to twenty years for the Debt Service Commitment bonds.

For the Fiscal Year Ending June 30, 2004 the University paid from its own resources Special Obligation Bond debt service of $13.2 million (representing $3.8 million of principal and $9.4 million of interest).

UCONN 2000 Other Debt Financing – Heating Plant Upgrade Tax-Exempt Lease Purchase Agreement – Debt Service
The amortization schedule provided shows $471,254.40 to be paid monthly starting May 1, 2004 and ending April 1, 2005, comprising total debt service of $113,101,056 including $38,101,056 of interest and $75 million of principal.

UCONN 2000 Bond Proceed Investments
The investment of tax-exempt bond proceeds is heavily regulated by the Internal Revenue Service, the relevant Indentures of Trust with bondholders, Connecticut law, and other regulatory restrictions. In addition to meeting those requirements, the University’s general investment policy is to balance an appropriate risk-return level, heavily weighted towards safety of assets, with estimated cash flow needs and liquidity requirements. The University is also mindful that the rating agencies, bond buyers, and bond insurers often weigh the quality of an issuer’s investment portfolio.

Bond Proceeds form part of the Trust Estate established with the Trustee Bank as security for bondholders. To date, the University has directed the Trustee Bank to invest any Debt Service Commitment construction fund proceeds in the State Treasurer’s Short Term Investment Fund (“STIF”) which is “AAA” rated and offers daily liquidity and historically attractive risk-adjusted yields. The State Treasurer’s Office wishes to hold and invest the University’s General Obligation Bonds Debt Service Commitment funded Costs of Issuance account, a much smaller account.

The General Obligation Debt Service Commitment Refunding Series 2004-A proceeds, other than the costs of issuance, are held by the Trustee Bank in an irrevocable escrow fund, which is invested in U.S. Treasury State and Local Government Securities (“SLGS”) and cash pursuant to the Escrow Agreement.

The University has directed the Trustee Bank to invest all the Special Obligation new money bond proceeds in dedicated STIF accounts, with the exception of the 1998 Special Obligation Special Capital Reserve Fund which is invested in longer term “AAA” rated federal agencies’ fixed income Investment Obligations as defined in the Special Obligation Indenture of Trust.

The Special Obligation Student Fee Revenue Refunding Series 2002-A proceeds, other than the costs of issuance and debt service accounts that are invested in STIF, are held by the Trustee Bank in an irrevocable escrow fund, which is invested in U.S. Treasury State and Local Government Securities (“SLGS”), and cash pursuant to the Escrow Agreement.

UCONN 2000 Bond Proceed Investment Earnings
Pursuant to Conn.General Statute Sec. 10A-109x, the Semiannual Report to the General Assembly is to specify the amount of investment earnings from the funds.

The University’s General Obligation Debt Service Commitment bond proceeds investment earnings are retained by the State Treasurer’s Office and do not flow to the University or to the Trustee Bank.

The University’s Special Obligation bond investment earnings are part of the pledged revenues and are directly retained by the Trustee Bank to pay debt service on the bonds, and may also be used to flow to other Trustee bond accounts, if necessary, pursuant to the Indenture of Trust.

Fiscal Year End June 30, 2004 UCONN 2000 Special Obligation Student Fee Revenue Bonds investment earnings amounted to approximately $168,800 (cash basis). The investment earnings on the Special Obligation Student Fee Revenue Series 2002-A Refunding Escrow Account flow to the irrevocable escrow and are used by the Trustee Bank to meet debt service payments on the defeased bonds.

Similarly, investment earnings on the General Obligation Debt Service Commitment Series 2004-A Refunding Escrow Account flow to an irrevocable escrow and are used by the Trustee Bank to meet debt service payments on the defeased bonds.

Future UCONN 2000 Debt Issuance
The passage of 21st Century UConn provides for $1.3 billion of University General Obligation bonds backed by the State’s Debt Service Commitment to be issued during Phase III. The first $50 million of Phase III, along with the last $50 million of Phase I&II was issued on March 16, 2005. The University anticipates offering a Debt Service Commitment Bond issue during Fiscal Year 2006 to fund an expected $79 million of UCONN 2000 Projects.

Also, the University could issue Special Obligation Revenue bonds for certain projects that have a financial self-sufficiency capacity and/or if aggregate pledged revenues are sufficient to meet requirements of the Special Obligation Indenture. Market conditions and other factors might also lead to issuance of either General Obligation or Special Obligation refunding bonds in the future.

Additionally, on April 12, 2005, the Board of Trustees authorized up to $6.9 million of additional borrowing pursuant to the Heating Plant Upgrade Tax-Exempt Lease Purchase Agreement, which if entered into after appropriate approvals, would increase the project total amount from $75 million to $81.9 million.

Finally, the University may enter into other types of tax-exempt or taxable debt pursuant to the UCONN 2000 Act.

PRIVATE FINANCIAL SUPPORT
Private fund-raising totals for the University in fiscal year 2005 (as of March 1) are ahead of last year’s totals for the same period. New gifts and pledges stood at $34.54 million, or 57.6 percent of goal, versus $22.53 million in fiscal year 2004. Of this total, cash basis gift receipts were at $31.72 million, or 67.5 percent of goal, compared with $22.6 million in 2004. While the number of donors is down slightly from last year at this same time – 23,452 in 2005 vs. 26,708 in 2004 – the average gift size has increased by nearly 75 percent.

State Endowment Matching Funds
The University received $18.6 million in endowment matching funds from the state of Connecticut in November 2004. The funds, which had been delayed due to state budget difficulties, covered gifts made in calendar years 2000 through 2003. The request for $6.7 million in state matching funds to cover calendar year 2004 gifts to endowment was completed, in keeping with statutory regulations, in February 2005. So far in calendar year 2005, slightly more than $10.7 million in match-eligible gifts and anticipated pledge payments have been received for the University’s endowment.

Significant Commitments

The Aetna Foundation pledged $2 million to support the University of Connecticut Health Center’s Health Professions Partnership Initiative (HPPI).

The American Heart Association pledged $325,000 for cardiac research at the UConn Health Center.

The Andrew W. Mellon Foundation committed an additional $52,000 to the UConn/ANC Partnership Project.

An anonymous donor made a $262,750 gift to the Fine Arts Complex/Gehry Building Fund.

The Bakes Family Foundation pledged $250,000 to support the Burton Family Football Complex.

A $100,000 gift was received to support the Carlton and Ernestine Erikson Scholarship Fund.

Dr. and Mrs. Joseph M. Civetta provided a $100,000 gift to support the Joseph and Judith Civetta General Surgery Residency Program Directorship at the UConn Health Center.

The Connecticut Lions Eye Research Foundation made a $75,000 gift to support vision research at the UConn Health Center.

Mr. Peter S. Drotch has made an additional $75,000 pledge to the Lt. Paul L. Drotch, USMC, Class of 1957 Memorial Scholarship Fund.

Dunkin’ Donuts Franchisees of Connecticut made a $108,800 pledge to establish the Dunkin’ Donuts Franchisees Scholarship Fund.

The Estate of Horace C. Eriksson made a $350,000 bequest to establish the Horace C. Eriksson Forestry Scholarship Fund.

The Estate of Susan Adrienne Goldstein made a $100,000 bequest to the Susan A. Goldstein Trust for unrestricted support of the School of Medicine at the UConn Health Center.

The Estate of William Finkelstein provided a $50,000 gift to create the Dr. William Finkelstein Scholarship at the UConn Health Center.

Mr. and Mrs. Timothy K. Friar donated $55,000 for the Patricia H. ’80 and Timothy K. ’83 ’80 Friar Entrepreneurship Fund in the School of Business.

The Hartford Financial Services Group contributed a $50,000 gift for The Hartford-Alliance for Academic Achievement to provide scholarships to students from Hartford Public, Bulkeley and Weaver High Schools in Hartford.

Mr. and Mrs. Robert J. Lapidus pledged $125,000 to the Nihla and Bob Lapidus Football Scholarship Endowment.

The Lupus Foundation of America pledged $58,000 for a Rheumatology Fellowship in the School of Medicine.

The Mohegan Sun Company contributed $104,000 to the Calhoun Cardiology Golf Fund.

William and Diane Morlock pledged $150,000 to the Museum of Natural History Building Fund.

Munson Road, LLC donated a $2.34 million gift-in-kind of furniture and equipment at 16 Munson Road in Farmington to the UConn Health Center.

The Patrick & Catherine Weldon Donaghue Foundation continued its strong support of the UConn Health Center with $1.72 million in pledges for various research initiatives.

Pratt & Whitney provided a $50,000 gift to support the MEP Scholarship for minority students in the School of Engineering.

SBM Charitable Foundation, Inc. made a $70,000 unrestricted gift to the Department of Athletics.

The Stanley Works pledged $200,000 for the Stanley Works Endowed Engineering Scholarship.

PREVAILING WAGE COMPLIANCE REPORT

The attachments referred to below cover the reporting period from October 1, 2004 through March 31, 2005 and are issued pursuant to the requirements of subsection (f) of section (7) of Public Act 02-3, an Act Concerning 21 st Century UCONN, by providing the following information:

(1) The names and addresses of contractors and subcontractors performing repair, addition, alteration and new construction on the university’s campuses in the previous six months.

Attachment A provides the listing in alphabetical order. This is the sixth report, which is being filed in conjunction with the April 2005 Report Number twenty to provide a consolidated report for UCONN 2000 activities. There is no sub-grouping of contractors or subcontractors as the nature of their business makes each interchangeable with the other as business opportunities become available.

(2) The extent to which the listed contractors and subcontractors have been in compliance with the provisions of part III of Chapter 557 and provisions of chapter 558 [of the Connecticut General Statutes having to do with the payment of prevailing wage rates].

This information is provided in Attachment B, which is based on information from the State of Connecticut Department of Labor, Wage and Workplace Standards Division, Contract Compliance Unit and represents a combined sharing of information by the University of Connecticut and the Department of Labor.

(3) Any actions taken by the university to cooperate with the Labor department in the enforcement of said provisions [in item (2)].

Attachment C lists support initiatives by the University.

Attachment D is testimony before the Finance, Revenue and Bonding Committee by President Philip E. Austin

Attachment E is the Construction Program Initial Improvement Plan

III. CURRENT PROJECT STATUS – PHASE I (as of April 2005)

IV. CURRENT PROJECT STATUS – PHASE II (as of April 2005)

 
V. CURRENT PROJECT STATUS – PHASE III (as of April 2005)

VI. CURRENT PROJECTS FUND SOURCES: PHASE I (as of April 2005)

VI. CURRENT PROJECTS FUND SOURCES: PHASE II (as of April 2005)

VII. CURRENT PROJECTS FUND SOURCES: PHASE III (as of April 2005)

Attachments & Exhibits:

• Attachment A – Alphabetical Listing of Contractors and Subcontractors

 

• Attachment B – Contractor Compliance

• Attachment C – Support Initiatives

• Attachment D – Testimony before the Finance, Revenue and Bonding Committee by President Philip E. Austin

Testimony

Finance, Revenue and Bonding Committee

President Philip E. Austin

University of Connecticut

April 13, 2005

Thank you for the opportunity to appear before you today.   While we have had the chance over the last several weeks to meet separately with some of you, I welcome the opportunity for all of you to hear a full accounting of the recent problems in our construction program, to understand the initial improvement plan we have undertaken, and to ask any questions you may have.

As you know, the UCONN 2000 program has transformed the University of Connecticut, and we have you to thank for the remarkable success the University has seen in the intervening ten years.   All the important indicators are pointing upward: student enrollment, academic achievement and diversity, research productivity, private investment and national rankings.   We are achieving the goals you set for us, but we have also made some mistakes, which I deeply regret.   I would like to use this forum to explain to you the problems we have uncovered, what we have done to address those problems, and what safeguards we are putting in place to prevent their recurrence.

Let me begin with a brief description of the construction problem.   Last August, as a result of our routine air quality monitoring, we were alerted to elevated levels of carbon monoxide in two student apartments.   In the course of investigating and correcting the cause of the air quality problems, we discovered code compliance deficiencies in our three newest residential complexes.   Because student safety is our first and foremost concern,   we called upon the expertise of the State Department of Public Safety.   We were able to review all of the residences in question within 48 hours and determined, with the concurrence of the State Fire Marshal and State Building Inspector, that it was safe for students to remain in the dorms.

Since that time we have been engaged in a detailed assessment of the three residential building projects as well as a broader review to identify weaknesses in the construction program that allowed these problems to occur.   We secured external experts to assist us, both in the correction of the code violations and in improving the management of the program.   Our goal is to maintain the positives of the first 10 years and to make any changes necessary to establish a strong foundation for the next 10 years.

We immediately began to address the problems we found:

• An organizational structure for the construction program with inadequate checks and balances

• A reliance on architect and contractor certification with regard to code compliance, coupled with insufficient resources dedicated to code compliance

• Inadequate communication and controls to ensure timely and thorough reporting to senior administration and the Board of Trustees

• Personnel who failed to fulfill appropriately their professional responsibilities

Let me say at this juncture that it had already become clear to me that, with the post-UCONN 2000 growth of the University, the program needs of the University had outstripped the administrative structure.   Among other things, it became clear that the growth in infrastructure, enrollment, research and instruction required greater operational support.   As a result, I undertook an organizational restructuring that culminated in August 2003 with two new positions, a Chief Operating Officer and a Chief Financial Officer.   Soon thereafter, our Board of Trustees and I decided to strengthen the University’s audit, compliance and risk assessment function by restructuring and expanding the role of the Board’s Audit and Compliance Committee and expanding the University’s audit capabilities – an effort that was undertaken in consultation with the Auditors of Public Accounts.   Both of these actions led to additional organizational improvements.   Still, the events of last fall made it clear that, despite the many chances, there was more work to be done.

Over the course of several months, we have developed and begun to implement – and our Trustees have endorsed – what we believe is a good start on a comprehensive improvement plan that addresses each of the problems identified.   The elements of the plan fit into the following seven categories:

• Strengthened oversight

• Organizational restructuring

• Establishment of a new University Office of Fire Marshal and Building Inspector

• Revised project budgeting and reporting

• Enhanced contract and expenditure approval and administration

• Personnel action

• Financial recovery

You will find each of these detailed on the attached sheet, and Linda Flaherty-Goldsmith’s testimony will amplify further.

These are the measures we have undertaken to date.   This winter, our Board of Trustees initiated two reviews of the construction program, one by our internal audit function and another by an external independent firm.   The Board has also scheduled two additional meetings for the coming month to review findings and recommendations from those assessments, and to evaluate the adequacy of this preliminary plan.   Should the Board determine that additional measures are necessary, we will implement them as well.   I respect and appreciate the flexibility you have provided us to build and maintain a great University for the people of Connecticut.   I also understand the responsibility that comes with flexibility and take that responsibility very seriously.

Today we focus on the shortcomings of a program that otherwise has been an overwhelming success. The new South Campus, the new Information Technology Building, the new School of Business, the new Chemistry facility, our regional campuses–the list is too long to recite here.   If the overwhelming number of our efforts have been successful, however, we recognize the critical importance of addressing the small fraction that have not.   No system we design will ever overcome the possibility of human error.   But the changes we are putting in place will assure accountability, timely detection of error, the reinforcement of checks and balances and, where needed, the redundancy to protect the program, and to protect the University as it strives to accomplish its mission.

As you know, Governor Rell just announced a special panel to take an in-depth look at the University’s oversight of the construction program.   We welcome her decision to commission an independent review of the program and look forward to a cooperative and productive effort.

Yesterday, the Governor made reference to UConn’s “tremendous growth and improvement.”   In spite of our great progress, we at UConn view these construction issues with enormous concern.   As President of the University, I am accountable—to the Governor and our Board of Trustees, to our faculty and staff, to our students and their parents, to our alumni and donors, and importantly to you, the members of the General Assembly who represent the citizens and taxpayers of our state.   While our improvement plan is a necessary course adjustment, the University continues its positive trajectory – an institution transformed by your vision and dedicated to the aspirations of Connecticut and her sons and daughters.

I have been honored to lead UConn and I appreciate your longstanding and continuing support.

With me here today are Lori Aronson and Linda Flaherty-Goldsmith.   They will make brief statements and then we invite your questions.

 

• Attachment E – Construction Program Initial Improvement Plan

University of Connecticut
Construction Program
Initial Improvement Plan

1. Strengthened Oversight:   Audit, Compliance and Risk ManagementDuring the course of Fiscal Year 2004, the Board of Trustees restructured and expanded the role of its Joint Audit and Compliance Committee.   The Committee’s charge includes oversight of all University financial reporting and processes and internal control systems, as well as direct engagement in the approval of independent auditing services to augment the University’s internal audit capacity and the work performed by the Auditors of Public Accounts.   Since early in 2004, members of the state auditors’ staff have attended quarterly public meetings of the Committee and received all information disseminated in connection with these meetings.   State auditors have the opportunity to communicate directly with committee members through this process, and have been invited to discuss confidentially, as appropriate, any issue directly with the Committee with no University staff present.In addition, the University’s internal audit function has been reorganized and expanded with the infusion of additional resources.   The University recruited a new Chief Audit and Compliance Officer who began employment in January.   In addition to being a focus of internal audit activity and to the customary review of the state auditors, the construction program will be the subject of a more extensive annual audit by an independent audit firm.
2. Organizational RestructuringSeveral significant organizational changes have been implemented that better align reporting relationships, more clearly segregate duties, strengthen accountability and improve management reporting. Recognizing the importance of capital projects and contract administration and the necessity that this activity be even more diligently managed, the office responsible for this function will report directly to the VP & COO.   The office responsible for managing building construction and renovations (Architectural and Engineering Services) has, since November of 2004, reported directly to the VP & COO.   In addition, the accounting function supporting the construction program now reports administratively to the VP & CFO.
3. New University Office of Fire Marshal and Building Inspector under the University’s Division of Public SafetyThe plan for this office was developed in cooperation with the State Department of Public Safety and incorporates the procedures and documentation used by that Department to inspect threshold buildings.   The new office is responsible for administering a comprehensive inspection program prior to and during all new construction and major renovations at the University for all new non-threshold facilities.   This office became operational on February 1, 2005, and when fully staffed will be comprised of six inspectors.   One inspector will be an employee of the State Department of Public Safety’s State Fire Marshal’s Office, whose position is funded by the University through an agreement with the Commissioner of the State Department of Public Safety.
4. Revised Project Budgeting and ReportingUCONN 2000 vests in the Board of Trustees project budget authority.   In the existing system, the Board approves, and revises as necessary, a single project budget.   This will be replaced with Board review and action using a multi-tiered budget approval process.   A planning budget will serve as a preliminary budget (with a minimum10% contingency) that will permit the initial design phase to begin.   A design budget will serve as a more definitive estimate (with an minimum 8% contingency) based on the design.   A final budget (with a minimum 5% contingency) will be developed after completion of the bid process.   Because it is inevitable that there will be occasions when either program modifications or unforeseen conditions affect cost, a revised budget may still be presented for Board approval.With regard to construction project tracking and reporting, the current CAPSTAT project information system has limited capabilities.   Following a two-year evaluation and RFP process, the University will soon acquire a comprehensive capital asset system which will expand capacity including project forecasting.
5. Enhanced Contract and Expenditure Approval and AdministrationAlthough recent internal audits have not identified serious weaknesses in the contracting processes, the University has still found related processes that warranted strengthening.   The contract approval process has been augmented by requiring a review by the VP & COO prior to the execution of any construction contract.   Change order requests are also being subjected to increased scrutiny by requiring the CFO’s assurance of budget adequacy prior to the approval of any change.
6. Personnel Action      In the course of the past several months, personnel activity has included a staff departure, staff reassignment, the revision of job duties and changes in reporting relationships.   Additional actions and changes are anticipated.   A search is underway for a permanent leader of A&ES.
7. Financial Recovery:   Legal Action      The University is actively pursuing recovery of all costs associated with correcting the code violations identified at the three student residential complexes.   The procedural steps for pursuing recovery are specified in each of the three contracts and include mediation; if not successfully resolved, the process moves on to arbitration or litigation.   The University is being represented by legal expertise secured in consultation with the Office of the Attorney General, through the procedures contained in the UCONN 2000 legislation.

• Exhibit A – UConn 2000 Year 10 Proposed FY 2005 Authorized Projects

• Exhibit B – UConn 2000 Phase III Project List/State Debt Service Commitment

• Exhibit C – Policies: Selection and Acquisition of Professional Services

 

• Exhibit D – Policies: Pre-Qualification and Selection of Contractors

POLICIES: PRE-QUALIFICATION AND SELECTION OF CONTRACTORS

Section 10a-109n (c) (2) of the State Statutes authorizes the University to contract with construction firms for the building of UCONN 2000 projects and other capital projects.

1. The Vice President for Operations has the responsibility for the administration of these policies. Implementing authority may be delegated to appropriate operating departments.
2. Pre-qualification shall be required of all bidders for projects over $100,000.
3. Objective written criteria for pre-qualification of firms shall be developed.
4. A list of pre-qualified contractors shall be developed on a project basis. Firms will be evaluated on written criteria, including but not limited to: (1) the firm’s previous experience with similar projects, (2) the firm’s financial ability to complete the project, (3) the firm’s ability to post surety bonds, (4) evaluation of the firm’s integrity, (5) a determination that the firm has no conflict of interest in connection with the project, (6) technical ability, (7) managerial ability and (8) whether a contractor or one of their subcontractors on one of their previous projects has been in compliance with the provisions of Part III of Chapter 557 and Chapter 558 during the previous five calendar years.
5. Pre-qualified firms shall be invited to bid upon a specific contract. Contracts shall be awarded to the lowest responsible bidder who conforms to the University’s standards for the project.
6. If it is in the best interest of the University and the State of Connecticut, all bids may be rejected and the contracting process reopened.
7. The University may negotiate with any pre-qualified contractor that is currently under contract for incorporation work under exigent circumstance. This new work need not be related to the original contract. The new work shall be of a similar nature as the basic contract.
8. Exigent circumstances include work necessary to:
   1. Prevent loss of grant income or other revenue
   2. Produce additional revenue or grant income
   3. Ensure renovations are complete for new faculty and staff members
   4. Provide for safety and health of the University Community
   5. Comply with any Federal or State laws or regulations
   6. Ensure timely and orderly completion of UCONN 2000 or 21^st Century UConn Projects.
9. The Vice President for Operations shall approve use of the exigency provision for an individual job based upon a written recommendation from the Executive Director of Architectural and Engineering Services for Storrs, Law School and Regional Campuses, or by the Director, Campus Planning, Design and Construction as designee for the Health Center.
10. The negotiations may be conducted with any contractor or contractors currently performing one of the following types of contracts; lump sum, design build or construction manager at risk.
11. The Executive Director of Architectural and Engineering Services for Storrs, Law School and Regional Campuses or by the Director, Campus Planning, Design and Construction as designee for the Health Center will prepare a price negotiations memorandum detailing the basis for the award.
12. The Vice President for Operations shall also stipulate whether the added work shall be incorporated into the contract by change order or be consummated as a new contract.

• Debarment List

 

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