Arizona Board of Regents Arizona State University System Revenuebonds

This Preliminary Official Statement and the information contained herein are 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, qualification or filing under the securities laws of any such jurisdiction. will beavailablefordeliveryin book-entry-onlyforminNewYork,onoraboutApril 28,2021*. for theArizonaUniversitySystem andfortheUnderwritersbyGreenbergTraurig,LLP.It isexpectedthattheSeries2021Bonds applicable. Inaddition,certain legalmatterswillbepasseduponfortheBoardbySenior VicePresidentandGeneralCounsel “Underwriters”), subject to the approving opinion of BallardSpahr LLP, Bond Counsel, as to validity and tax exemption, as necessary tomakeaninformedinvestmentdecision. information obtain to Statement Official entire this read should Investors Bonds. 2021 Series the to respect with information material Bonds”), the$94,380,000*ArizonaStateUniversitySystemRevenueBonds,TaxableSeries2021B(the“SeriesBonds”)andth * ____, 2021 Revenues (asdefinedherein)oftheUniversity.See“SOURCESOFPAYMENTANDSECURITY”herein. Gross the on lien first and of pledge a by solely secured and from solely payable are therewith, parity a on issued subsequently bonds and (iv)payingcostsrelatedtotheissuanceofSeries2021Bonds.See“PLANOFFINANCE”REFUNDING”herein. Bonds, Series 2019A Bonds and Series 2020A Bonds; (iii) refunding in advance of Refunding maturity 2008 Series Outstanding the the except Bonds herein) defined Being (as Bonds Outstanding Refunded the on (as 2021 1, definedJuly on due herein); interest and principal renovation of research laboratories and classroom and academic facilities, all as more fully described herein; (ii) paying a portion of the (f) and technology; information of improvement (e) bridge; pedestrian Drive University the of construction (d) 7; Building Technology and Science Interdisciplinary the of equipping and construction (c) Management; Global of School Thunderbird the of equipping and Arena, including capitalizing interest on the Series 2021B Bonds issued for the Multipurpose Arena through June 30, 2022; (b) construction Redemption Provisions”herein. thereto, astrustee. redemption will be paid at the designated corporate trust office of The Bank of New York Mellon Trust Company, N.A., or any successor redemption attheratessetforthoninsidefrontcoverpagehereof.PrincipalofSeries2021Bondsmaturityorupon prior Interest ontheSeries2021BondsispayableJanuary1,2022*,andeachJuly1thereafteruntilmaturity orprior all paymentsofprincipalandinterestontheSeries2021BondswillbemadetosuchpurchasersthroughDTC,asdescribed herein. registration oftheSeries2021Bonds,nophysicaldeliveryBondswillbemadetoultimatepurchasersth ereof, and will beregisteredinthenameofDTCoritsnomineeasdescribedherein.Aslongbook-entry-onlysystemismaintained forthe maturity dates, only through the book-entry-only system maintained by The Depository Trust Company (“DTC”). The Series 2021 Bonds specified on due thereof series a of multiple integral any or $5,000 of amounts principal in purchasers to available be will issued, when (the “Board”)actingforandonbehalfofArizonaStateUniversity“University”)onlyinfullyregisteredformwithoutcouponsand, with theSeries2021ABondsand2021BBonds,“Series2021Bonds”),arebeingissuedbyArizonaBoardofRegents $118,025,000* ArizonaStateUniversitySystemRevenueBonds,Tax-ExemptSeries2021C(the“SeriesBonds,”andcollectively Dated: DateofDelivery is exemptfromArizonastateincometax.See“TAXMATTERS”herein. gross incomeforfederaltaxpurposes.BondCounselisalsooftheopinionthatinterestonSeries2021Bonds Bond CounselisoftheopinionthatinterestonSeries2021ABondsand2021Bnotexcludablefrom 2021C Bondsisnotanitemoftaxpreferenceforpurposesthefederalalternativeminimumimposedonindividuals. federal incometax,assumingcontinuingcompliancewiththerequirementsoftaxlaw.InterestonSeries NEW ISSUES–BOOK–ENTRY–ONLY BONDS DO NOT CONSTITUTE A DEBT OF THE BOARD, THE UNIVERSITY OR THE STATE WITHIN THE MEANING OF ANY OF MEANING THE CONSTITUTIONAL OR STATUTORY DEBT LIMITATION ORWITHIN RESTRICTION. THE BOARD STATEHAS NO TAXING POWER. THE OR UNIVERSITY THE BOARD, THE OF DEBT A CONSTITUTE NOT DO BONDS 2021SERIES THE2021 SERIES BONDS.THE OF PAYMENT THE FOR PLEDGED IS STATE THE OF POWER TAXING THE NOR

Preliminary, subjecttochange. The Series2021Bondsareoffered,when,asandifissued by theBoardandreceivedunderwriterslistedbelow(the This coverpagecontainsonlyabriefdescriptionoftheSeries 2021Bondsandthesecuritytherefor.Itisnotasummaryofll In theopinionofBondCounsel,interestonSeries2021CBondsisexcludablefromgrossincomeforpurposes The $67,440,000*ArizonaStateUniversitySystemRevenueBonds,TaxableSeries2021A(GreenBonds)(the“Series The Series2021BondsarelimitedobligationsoftheBoard.Bonds,togetherwithOutstandingand any The Series 2021 Bonds are being issued for the purpose of (i) providing funds for: (a) construction and equipping of the Multipurpose - BONDS 2021 SERIES “THE under described as maturities stated their to prior redemption to subject are Bonds 2021 Series The NEITHER THE FULL FAITH AND CREDIT OF THE BOARD, THE UNIVERSITY OR THE STATE OF ARIZONA (THE “STATE”) SYSTEM REVENUEBONDS, J.P. Morgan TAXABLE SERIES2021A (GREEN BONDS) Goldman Sachs&Co. LLC $67,440,000

PRELIMINARY OFFICIAL STATEMENT DATED MARCH 10, 2021

SEE INSIDEFRONTCOVERPAGEFORMATURITYSCHEDULES

ARIZONA BOARD OF REGENTS ARIZONA STATE UNIVERSITY SYSTEM REVENUEBONDS,

TAXABLE SERIES2021B $94,380,000* UBS

Due: July1,asshownontheinsidefrontcoverpage TAX-EXEMPT SERIES2021C Citigroup SYSTEM REVENUEBONDS, RATINGS: Wells Fargo Securities $118,025,000*

See“Ratings”Herein

e ARIZONA BOARD OF REGENTS ARIZONA STATE UNIVERSITY SYSTEM REVENUE BONDS

MATURITY SCHEDULES*

$67,440,000* TAXABLE SERIES 2021A (GREEN BONDS)

Maturity Principal Interest CUSIP (a) Maturity Principal Interest CUSIP (a) (July 1) Amount Rate Yield (040663) (July 1) Amount Rate Yield (040663) 2026 $ 345,000 2032 3,380,000 2027 2,800,000 2033 3,525,000 2028 2,895,000 2034 3,675,000 2029 3,005,000 2035 3,825,000 2030 3,125,000 2036 4,005,000 2031 3,245,000 2037 4,180,000

$29,435,000* __.__% Term Bond due July 1, 2043* at a yield of __.__% CUSIP (a) 040663__

$94,380,000* TAXABLE SERIES 2021B

Maturity Principal Interest CUSIP (a) Maturity Principal Interest CUSIP (a) (July 1) Amount Rate Yield (040663) (July 1) Amount Rate Yield (040663) 2022 $1,170,000 2030 3,015,000 2023 8,555,000 2031 3,070,000 2024 9,930,000 2032 2,745,000 2025 9,995,000 2033 3,130,000 2026 6,055,000 2034 3,190,000 2027 4,700,000 2035 2,725,000 2028 2,925,000 2036 2,045,000 2029 2,960,000 2037 2,100,000

$8,340,000* __.__% Term Bond (GREEN BOND) due July 1, 2043* at a yield of __.__% CUSIP (a) 040663__

$17,730,000* __.__% Term Bond (GREEN BOND) due July 1, 2053* at a yield of __.__% CUSIP (a) 040663__

(a) CUSIP® is a registered trademark of the American Bankers Association. CUSIP Global Services (“CGS”) is managed on behalf of the American Bankers Association by S&P Global Market Intelligence. Copyright© 2021 CUSIP Global Services. All rights reserved. CUSIP® data herein is provided by CUSIP Global Services. This data is not intended to create a database and does not serve in any way as a substitute for the CGS database. CUSIP® numbers are provided for convenience of reference only. None of the Board, the University, the Underwriters or the Financial Advisor or any of their counsel or agents take responsibility for the accuracy of such numbers.

* Preliminary, subject to change.

ARIZONA BOARD OF REGENTS ARIZONA STATE UNIVERSITY SYSTEM REVENUE BONDS

MATURITY SCHEDULE*

$118,025,000* TAX-EXEMPT SERIES 2021C

Maturity Principal Interest CUSIP (a) Maturity Principal Interest CUSIP (a) (July 1) Amount Rate Yield (040663) (July 1) Amount Rate Yield (040663) 2022 1,290,000 2032 3,175,000 2023 2,045,000 2033 3,335,000 2024 6,310,000 2034 3,495,000 2025 6,640,000 2035 3,670,000 2026 6,970,000 2036 3,850,000 2027 7,325,000 2037 4,050,000 2028 7,685,000 2038 4,255,000 2029 8,065,000 2039 4,460,000 2030 8,475,000 2040 4,690,000 2031 8,880,000 2041 4,925,000

$6,340,000* Term Bond ____% coupon and _____% yield with final maturity on July 1, 2046* and CUSIP 040663__

$8,095,000* Term Bond ____% coupon and _____% yield with final maturity on July 1, 2051* and CUSIP 040663__

* Preliminary, subject to change. ARIZONA BOARD OF REGENTS

Ex Officio Members

Doug Ducey Governor of Arizona Kathy Hoffman Superintendent of Public Instruction

Appointed Members

Term Expires Larry Penley, Chair January 2026 Lyndel Manson, Chair Elect January 2024 Karrin Taylor Robson, Secretary January 2028 Ronald Shoopman, Treasurer January 2022 Nikhil Dave, Student Regent June 2022 Kathryn Hackett King January 2028 Cecilia Mata January 2028 Anthony Rusk, Student Regent June 2021 William Ridenour January 2022 Fred DuVal January 2026

Staff

John Arnold Executive Director Jennifer Pollock, Esq. Senior Vice President and General Counsel

______

SPECIAL SERVICES

BOND COUNSEL

Ballard Spahr LLP Phoenix, Arizona

FINANCIAL ADVISOR INDEPENDENT AUDITORS

RBC Capital Markets, LLC State of Arizona Phoenix, Arizona Office of the Auditor General Phoenix, Arizona

TRUSTEE/DEPOSITORY TRUSTEE

The Bank of New York Mellon Trust Company, N.A. Houston, Texas

i ARIZONA STATE UNIVERSITY

ADMINISTRATION

Michael M. Crow President

Mark Searle Executive Vice President and University Provost

Nancy Gonzalez Provost Pro Tempore

Morgan R. Olsen Executive Vice President, Treasurer and Chief Financial Officer

Sally C. Morton Executive Vice President of Knowledge Enterprise

Maria Anguiano Executive Vice President of Learning Enterprise

José A. Cárdenas Senior Vice President and General Counsel

James W. O’Brien Senior Vice President for University Affairs and Chief of Staff, Office of the President

James A. Rund Senior Vice President for Educational Outreach and Student Services

Richard H. Stanley Senior Vice President and University Planner

Christine K. Wilkinson Senior Vice President and Secretary of the University

Joanne M. Wamsley Vice President for Finance and Deputy Treasurer

ii No dealer, broker, salesman or other person has been authorized to give any information or to make any representations, other than those contained in this Official Statement, including the cover page, inside front cover page and the Appendices hereto (the “Official Statement”), in connection with the offering made hereby, and, if given or made, such information or representation must not be relied upon as having been authorized by the State of Arizona (the “State”), the Arizona Board of Regents (the “Board”), Arizona State University (the “University”) or the underwriters identified on the cover page hereof (the “Underwriters”). This Official Statement does not constitute an offer to sell, or the solicitation of an offer to buy, any securities other than the original offering of the Board’s $67,440,000* Arizona State University System Revenue Bonds, Taxable Series 2021A (Green Bonds) (the “Series 2021A Bonds”), $94,380,000* Arizona State University System Revenue Bonds, Taxable Series 2021B (the “Series 2021B Bonds”) and $118,025,000* Arizona State University System Revenue Bonds, Tax-Exempt Series 2021C (the “Series 2021C Bonds” and collectively with the Series 2021A Bonds and the Series 2021B Bonds, the “Series 2021 Bonds”), or an offer to sell or solicitation of offers to buy, nor will there be any sale of the Series 2021 Bonds, by any person in any jurisdiction where such offer or solicitation or sale would be unlawful.

The information contained in this Official Statement has been provided by the Board, the University and other sources believed to be reliable, but the accuracy or completeness of such information is not guaranteed by any of the foregoing. The presentation of such information, including tables of receipts of revenues and other sources, is intended to show recent historic information and is not intended to indicate future or continuing trends. No representation is made that past experience, as shown by such financial and other information, will necessarily continue or be repeated in the future. This Official Statement contains, in part, estimates and matters of opinion, whether or not expressly stated to be such, which are not intended as statements or representations of fact or certainty, and no representation is made as to the correctness of such estimates and opinions, or that they will be realized. All estimates, projections, forecasts or matters of opinion are “forward looking statements,” which must be read with an abundance of caution and which may not be realized or may not occur in the future. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made pursuant hereto will, under any circumstances, create any implication that there has been no change in the affairs of the State, the Board or the University since the date hereof.

The information contained in Appendix F – “BOOK-ENTRY-ONLY SYSTEM” herein has been furnished by The Depository Trust Company and no representation is made by the Board, the University or the Underwriters, or any of their counsel or agents, as to the accuracy or completeness of such information.

A wide variety of other information, including financial information, concerning the Board and the University is available from publications and websites of the Board and the University and others. Any such information that is inconsistent with the information set forth in this Official Statement should be disregarded. No such information is a part of or incorporated into this Official Statement, except as expressly noted herein.

Reference to the University’s website in Appendix A is intended solely to provide access to a more detailed description of the degree programs and colleges offered at the University’s campuses and is not part of this Official Statement. Investors should not rely on information presented on the University’s website in determining whether to purchase the Series 2021 Bonds.

The Series 2021 Bonds will not be registered pursuant to the Securities Act of 1933, as amended, or any state securities law, and will not be listed on any stock or other securities exchange. None of the Securities and Exchange Commission or any other Federal, state or other governmental entity or agency has passed upon the accuracy of this Official Statement.

The Board has undertaken to provide continuing disclosure with respect to the Series 2021 Bonds to enable the Underwriters to comply with their obligations pursuant to Rule 15c2-12 promulgated by the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended. See “CONTINUING DISCLOSURE UNDERTAKING” and Appendix E – “FORM OF CONTINUING DISCLOSURE UNDERTAKING” herein.

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE SERIES 2021 BONDS AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

The Underwriters have provided the following sentence for inclusion in this Official Statement: The Underwriters have reviewed the information in this Official Statement in accordance with, and as part of, their respective responsibilities to investors in accordance with Federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriters do not guarantee the accuracy or completeness of such information.

* Preliminary, subject to change.

iii

TABLE OF CONTENTS

Page INTRODUCTION ...... 1 THE BOARD ...... 2 THE UNIVERSITY ...... 2 AUTHORIZATION AND USE OF FUNDS ...... 3 PLAN OF FINANCE ...... 3 Green Bond Projects ...... 4 PLAN OF REFUNDING ...... 5 VERIFICATION OF MATHEMATICAL COMPUTATIONS ...... 7 SOURCES AND USES OF FUNDS ...... 7 THE SERIES 2021 BONDS ...... 8 General Description ...... 8 Redemption Provisions ...... 8 Notice of and Procedures for Redemption ...... 11 SOURCES OF PAYMENT AND SECURITY ...... 11 Gross Revenue Pledge ...... 11 Schedule of Gross Historical Revenues ...... 12 Outstanding Obligations Payable from Gross Revenues ...... 12 Capital Infrastructure Fund ...... 14 Schedule of Debt Service Requirements for Parity Bonds and Subordinate Obligations ...... 15 Rate Covenant ...... 16 Additional Parity Bonds ...... 16 No Acceleration of Bonds ...... 16 FUTURE BORROWINGS ...... 16 LITIGATION ...... 17 TAX MATTERS ...... 17 Federal Tax Matters – Series 2021A Bonds and Series 2021B Bonds ...... 17 Federal Tax Matters – Series 2021C Bonds ...... 21 State of Arizona Tax Matters ...... 22 General ...... 22 ERISA CONSIDERATIONS ...... 22 General Fiduciary Matters ...... 22 Prohibited Transactions – In General ...... 22 Plan Asset Issues ...... 23 Prohibited Transaction Exemptions ...... 23 Representations ...... 24 FINANCIAL ADVISOR ...... 25 APPROVAL OF LEGAL MATTERS ...... 25 UNDERWRITING...... 25 INDEPENDENT AUDITORS ...... 26 RATINGS ...... 26 CONTINUING DISCLOSURE UNDERTAKING ...... 27 ADDITIONAL INFORMATION ...... 27

iv Appendix A — ARIZONA STATE UNIVERSITY Appendix B — ARIZONA STATE UNIVERSITY, AUDITED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 Appendix C — SUMMARY OF CERTAIN PROVISIONS OF THE BOND RESOLUTION Appendix D — FORM OF APPROVING OPINION OF BOND COUNSEL Appendix E — FORM OF CONTINUING DISCLOSURE UNDERTAKING Appendix F — BOOK-ENTRY-ONLY SYSTEM

v OFFICIAL STATEMENT

ARIZONA BOARD OF REGENTS ARIZONA STATE UNIVERSITY $67,440,000* $94,380,000* $118,025,000* SYSTEM REVENUE BONDS SYSTEM REVENUE BONDS SYSTEM REVENUE BONDS TAXABLE SERIES 2021A TAXABLE SERIES 2021B TAX-EXEMPT SERIES 2021C (GREEN BONDS)

INTRODUCTION

This Official Statement, which includes the cover page, the inside front cover page and the Appendices hereto (the “Official Statement”), provides certain information with respect to the issuance and sale by the Arizona Board of Regents (the “Board”) acting for and on behalf of Arizona State University (the “University”), of its $67,440,000* Arizona State University System Revenue Bonds, Taxable Series 2021A (Green Bonds) (the “Series 2021A Bonds”), $94,380,000* Arizona State University System Revenue Bonds, Taxable Series 2021B (the “Series 2021B Bonds”) and $118,025,000* Arizona State University System Revenue Bonds, Tax-Exempt Series 2021C (the “Series 2021C Bonds” and collectively with the Series 2021A Bonds and the Series 2021B Bonds, the “Series 2021 Bonds”), dated their date of initial delivery.

Capitalized terms used in this Official Statement and not otherwise defined herein have the meanings given to such terms in Appendix C – “SUMMARY OF CERTAIN PROVISIONS OF THE BOND RESOLUTION” under the caption “Definitions.”

The Series 2021 Bonds are being issued for the purpose of (i) providing funds for: (a) construction and equipping of the Multipurpose Arena including capitalizing interest on the Series 2021B Bonds issued for the Multipurpose Arena through June 30, 2022; (b) construction and equipping of the Thunderbird School of Global Management; (c) construction and equipping of the Interdisciplinary Science and Technology Building 7; (d) construction of the University Drive pedestrian bridge; (e) improvement of information technology; (f) renovation of research laboratories and classroom and academic facilities; (ii) paying a portion of the principal and interest due on July 1, 2021 on the Outstanding Bonds except the Outstanding Series 2008 Refunding Bonds, the Series 2019A Bonds and the Series 2020A Bonds; (iii) refunding in advance of maturity the Bonds Being Refunded (as defined herein); and (iv) paying costs related to the issuance of the Series 2021 Bonds, all as more fully defined and described herein. See “PLAN OF FINANCE” and “PLAN OF REFUNDING” herein.

The Series 2021 Bonds are limited obligations of the Board which, together with the Outstanding Series 2008 Refunding Bonds, Series 2010 Bonds, Series 2012 Bonds, Series 2013 Bonds, Series 2015 Bonds, Series 2015D Bonds, Series 2016A Bonds, Series 2016 Bonds, Series 2017 Bonds, Series 2019 Bonds, and the Series 2020 Bonds (collectively, the “Bonds”) and any additional Parity Bonds that the Board subsequently issues pursuant to the Bond Resolution, are payable solely from and secured solely by a pledge of and first lien on the Gross Revenues of the University. See “SOURCES OF PAYMENT AND SECURITY” herein.

Unless and until such system is discontinued, the Series 2021 Bonds will be held in book-entry-only form by The Depository Trust Company, a registered securities depository (“DTC”), and beneficial interests therein may only be purchased and sold, and payments of principal of and interest on the Series 2021 Bonds will be made only to the beneficial owners of the Series 2021 Bonds, through participants in the DTC system. Beneficial interests in the Series 2021 Bonds will be offered and sold in principal amounts of $5,000 or any integral multiple of a series thereof due on specified maturity dates. See Appendix F – “BOOK-ENTRY-ONLY SYSTEM.”

NEITHER THE FULL FAITH AND CREDIT OF THE BOARD, THE UNIVERSITY OR THE STATE OF ARIZONA (THE “STATE”) NOR THE TAXING POWER OF THE STATE IS PLEDGED FOR THE PAYMENT OF THE SERIES 2021 BONDS. THE SERIES 2021 BONDS DO NOT CONSTITUTE A DEBT OF

* Preliminary, subject to change. 1 THE BOARD, THE UNIVERSITY OR THE STATE WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION. THE BOARD HAS NO TAXING POWER.

For a discussion of the University, its programs, campuses, students, faculty, sources of revenues and financial condition, see “ARIZONA STATE UNIVERSITY” in Appendix A. The audited financial statements of the University for the Fiscal Year ended June 30, 2020, are included as Appendix B.

The descriptions and summaries of various documents contained herein do not purport to be comprehensive or definitive and reference is made to each document for the complete details of all its terms and conditions. All statements herein are qualified by reference to each such document in its entirety and are further qualified in their entirety by reference to laws and principles of equity relating to or affecting the enforceability of creditors’ rights.

Copies of the form of the Bond Resolution may be obtained, until the delivery of the Series 2021 Bonds, from the underwriters identified on the cover page hereof (the “Underwriters”) upon request to: Goldman Sachs & Co., 555 California Street, 45th Floor, San Francisco, CA 94101, Attention: Public Finance Department, and thereafter from the Vice President for Finance and Deputy Treasurer of the University.

THE BOARD

The Board is the governing body of the State’s three public universities. In 1885, the Territorial Legislature created the Governing Board of The University of Arizona at Tucson, Arizona. Separate boards were later formed to govern the schools established in Tempe, Arizona (“Tempe”) which eventually became the University, and Flagstaff, Arizona which became Northern Arizona University. In 1945, the State Legislature placed all three State institutions of higher learning under the control of one body, known today as the Arizona Board of Regents. The Board is comprised of eleven voting members and one non-voting member, eight of whom are appointed by the Governor to serve eight-year terms, and two of whom, the Governor and the State Superintendent of Public Instruction, serve ex officio and two students selected from among the three State universities are appointed by the Governor to serve staggered two-year terms, the first year as a non-voting member and the second year as a voting member.

The Constitution of the State provides that the State Legislature will appropriate moneys for the purpose of operating and maintaining all State institutions of higher learning. Such moneys are derived from taxation, as well as from other sources as determined by the State Legislature, to insure the proper maintenance of the institutions. The direction and control of all moneys appropriated for the use and benefit of State institutions is vested in the Board. Title 15, Chapter 13 of the Arizona Revised Statutes sets forth the general powers of the Board, which include the expenditure of State funds for the support and maintenance of State institutions of higher learning, their buildings and grounds, and for any other purpose the Board deems expedient, if not inconsistent with the provisions of any appropriations.

State Sunset Laws; No Sunset of the Board without a State Constitutional Amendment. In order to encourage systematic review of State agencies and statutes, State statutes (referred to as “Sunset Laws”) currently provide for the automatic termination of various State agencies, including the Board, and their related statutes. Under the Sunset laws, most agencies terminate unless the State Legislature takes affirmative action to continue their existence. However, the Sunset Law relating to the Board provides that the Board will not terminate unless the State’s voters approve an amendment to the State Constitution repealing the authority of the Board pursuant to Article XI, Section 5 of the State Constitution. The Board is not aware of any proposal to make such an amendment to the State Constitution.

THE UNIVERSITY

The University was initially established in 1885 as the Arizona Territorial Normal School at Tempe, pursuant to the provisions of a bill passed by the 13th Arizona Territorial Legislature. The school was opened in a four-room building on February 8, 1886, with 33 students in the first class. As the State grew in population, the school’s original mission of training teachers was steadily broadened and the institution passed through several changes in purpose and name. In 1945, it became Arizona State College at Tempe and was placed, along with the other two State public universities, under the authority of the Board. From an enrollment of less than 1,000 at the end of World War II, Arizona State College grew more than tenfold by November 1958, when the Arizona 2 electorate voted to change the name to Arizona State University. In 1994, the University was awarded the prestigious Research I University status, recognizing the University as a premier research institution. The 2000 Carnegie Classification recognized the University as a Doctoral/Research-Extensive University.

Today the University is a fully-accredited, four-year degree-granting institution of higher learning, supported by the State and governed by the Board. Total enrollment for the 2020 fall semester was 128,815, which includes 53,997 students enrolled in University degree programs offered completely online, making the University the largest institution of higher learning in terms of enrollment in the State and ranking it among the largest of America’s institutions of higher learning. The Tempe campus is in the City of Tempe, Arizona, a city with an estimated 2020 population of 192,008 and comprising a part of the greater Phoenix, Arizona, metropolitan area. The Downtown Phoenix campus, Polytechnic campus, and West campus are also located in the Phoenix, Arizona, metropolitan area. The Phoenix, Arizona, metropolitan area is the State’s major economic, political and population center, located in Maricopa County, Arizona which has an estimated 2020 population of 4,439,220.

See Appendix A for more detailed information concerning the University, its programs, campuses, students, faculty, sources of revenue and financial condition.

AUTHORIZATION AND USE OF FUNDS

The Series 2021 Bonds are being issued and offered by the Board pursuant to Title 15, Chapter 13, Article 5 of the Arizona Revised Statutes, and the provisions of a resolution adopted by the Board on November 7, 1985, as thereafter supplemented and amended, including by resolutions adopted by the Board on June 14, 2012, September 28, 2018, September 20, 2019, February 14, 2020, June 12, 2020, October 2, 2020 and November 20, 2020 authorizing the issuance of the Series 2021 Bonds (collectively, the “Bond Resolution”), the terms of which are summarized in Appendix C of this Official Statement. See Appendix C – “SUMMARY OF CERTAIN PROVISIONS OF THE BOND RESOLUTION.”

PLAN OF FINANCE

Approximately $208.60* million of the proceeds of the Series 2021 Bonds are expected to be primarily expended by the Board for the costs of the projects identified below (collectively, the “Project”).

– Providing the first phase of financing for constructing and equipping a multipurpose arena (the “Multipurpose Arena”) to be located on the Tempe campus for housing the NCAA men’s hockey team, wrestling, gymnastics and public events. The second phase of financing by the University for the Multipurpose Arena is expected to occur in Fiscal Year 2022, with completion of the facility expected by December 2022. Proceeds of the Series 2021 Bonds will also be used to capitalize interest on the Bonds issued for the Multipurpose Arena through June 30, 2022.

– Constructing and equipping an approximately 111,000 square foot building on the Downtown Phoenix campus to serve as the headquarters for the University’s Thunderbird School of Global Management. The building is nearing completion and is scheduled to open in the summer of 2021.

– Providing the third phase of financing for constructing and equipping the Interdisciplinary Science and Technology Building 7 on the Tempe campus. This major research facility is currently under construction, scheduled to open in December 2021, and will provide additional research laboratories, research support space, classrooms and an auditorium to meet the University’s growing research initiatives.

– Constructing a pedestrian bridge across University Drive, a major roadway that bisects a portion of the University’s Tempe campus. Construction of this pedestrian bridge, which is planned as an iconic feature on campus, is scheduled to be completed by December 2021.

– Making improvements in information technology, including upgrades to data center capacity and network infrastructure security and capacity, across all campuses of the University.

* Preliminary, subject to change. 3 – Renovating research laboratories, classrooms and other academic facilities across all University campuses as part of ongoing major renovations and repairs of the University’s capital assets.

Approximately $103.21* million of the proceeds of the Series 2021 Bonds will be used to refinance existing debt payments of the University due on July 1, 2021 or to refund and defease the Bonds Being Refunded in advance of their respective maturity dates as described under “PLAN OF REFUNDING.”

The remaining proceeds of the Series 2021 Bonds will be used to pay costs incurred in issuing the Series 2021 Bonds.

The University may allocate any portion of the proceeds of the Series 2021 Bonds not needed for the projects and purposes identified above to other projects that are not currently identified, subject to receiving all required approvals and reviews.

Completion of the projects described above or any other approved projects is not expected to have a significant impact on the collection of Gross Revenues pledged for payment of the Series 2021 Bonds.

Green Bond Projects

Approximately $93.10* million of the proceeds of the Series 2021 Bonds, consisting of all of the proceeds of the Series 2021A Bonds, and a portion (approximately $26.10* million) of the proceeds of the Series 2021B Bonds, will be expended by the Board for the construction of the third phase of the Interdisciplinary Science and Technology Building 7 and the first phase of the Multipurpose Arena project, both located on the Tempe campus (the “Green Bond Projects”).

The purpose of labeling the Series 2021A Bonds and the Term Bonds maturing July 1, 2043* and July 1, 2053* of the Series 2021B Bonds (the” Term Green Bonds”) as Green Bonds is to allow investors to invest directly in projects the University has identified as promoting environmental sustainability on the University's campuses. Consistent with this approach, the Green Bond Projects are being designed to meet LEED® (Leadership in Energy & Environmental Design) certification standards. LEED is a green building certification program offered by the U.S. Green Building Council. Projects submitted for LEED certification are reviewed by the Green Building Certification Institute, a third-party organization and assigned points based on the project's implementation of strategies and solutions aimed at achieving high performance in: sustainable site development, water efficiency, energy efficiency, materials selection and indoor environmental quality, among other sustainable qualities.

The University is committed to leading the world by example to a more sustainable and resilient future by achieving internal sustainability goals and related external commitments and generating the solutions, education, engagement and research that empowers the world to achieve sustainability. The University has set four formal, sustainability goals that include: advancements in technology and research, convergence of the University’s mission with operations in a living laboratory environment that extends to the broader world, increased urgency in addressing climate change and resource depletion, and learning from the practice of implementation.

Interdisciplinary Science and Technology Building 7. This new research building (of which approximately $67.0 million of proceeds of the Series 2021A Bonds is providing the third phase of financing for the building) will provide additional dry and wet research laboratories, along with research support space, to meet the University’s growing research initiatives. Additionally, the new five-story 281,000 gross square foot building will include classroom spaces and an auditorium in a round seating format for approximately 400 occupants. The area distributions within the new building are designed to promote active collaboration throughout all five levels and includes a courtyard that provides connectivity and opportunities to display ongoing research activities.

The building is designed to meet the specifications for LEED Gold certification. Project planning includes the following sustainable strategies:

• “Integrative Process” – energy use analysis will determine natural ventilation strategies within the courtyard.

* Preliminary, subject to change. 4 • “Location & Transportation” – the new building is in close proximity to public transportation and bike storage facilities. • “Heat Island Reduction” – inclusion of hardscape and landscape materials with high albedo characteristics will reduce heat collection. • “Water Efficiency” – the use of an existing canal for exterior irrigation will reduce water usage by at least 50%. Indoor water use is targeted for an approximate reduction of 40%. • “Energy & Atmosphere” – energy use and occupant comfort strategies are at the forefront of the design process for this building. The project will use water for indoor space cooling purposes at considerable energy savings and demand control ventilation has been integrated to monitor occupant loads to supply conditioned air on an as-needed basis. • “Materials & Resources” – the design and construction process includes strategies for waste diversion and recycling. The materials used will be sourced locally to the extent possible to reduce embodied energy and improve indoor air quality.

ASU Multipurpose Arena. The ASU Multipurpose Arena (the “Multipurpose Arena”) is designed to accommodate a wide range of community, entertainment and intercollegiate athletic uses. Working with industry design and construction experts, the arena can be transformed for concerts, lectures, large-scale meetings and a variety of Sun Devil athletic events. A community Ice Rink is also provided for local youth and recreational teams. The facility will include approximately 5,000 seats, locker rooms, press facilities and arena support spaces.

The building is designed to meet the specifications for LEED Silver certification. Project planning includes the following sustainable strategies:

• “Materials & Resources” – the design and construction process includes strategies for reuse of existing asphalt millings to divert landfill waste. Dynamic Compaction will be utilized to prevent disturbance of underground landfill waste by capturing the non-organic waste in place, reducing the need for imported fill by truck.

• “Location & Transportation” – the new building is in close proximity to public transportation, including bus and light rail, as well as bike storage facilities. • “Heat Island Reduction” – roofing materials with high albedo characteristics will reduce heat collection. • “Energy & Atmosphere” – energy use and occupant comfort strategies include insulated metal panels for greater insulating values at the roof and perimeter of the venue. • “Materials & Resources” – the design and construction process includes strategies for waste diversion and recycling. The materials used will be sourced locally to the extent possible to reduce embodied energy and improve indoor air quality.

PLAN OF REFUNDING

$53.54* million of the proceeds from the sale of the Series 2021B Bonds and the Series 2021C Bonds will be deposited into the Redemption Fund created pursuant to the Bond Resolution to be applied to the payment of 50% of the principal and 100% of the interest due on July 1, 2021 on the Outstanding Bonds except the Outstanding Series 2008 Refunding Bonds, the Series 2019A Bonds, and the Series 2020A Bonds. The Debt Service Fund is held by The Bank of New York Mellon Trust Company, N.A., as trustee and paying agent for the Outstanding Bonds.

$49.67* million of the proceeds from the sale of the Series 2021B Bonds will be used to provide funds to refund and redeem prior to maturity the Bonds described below (the “Bonds Being Refunded”), comprising certain maturities of the 2012A Bonds and the 2013A Bonds. Such portion of the proceeds will be deposited into a depository trust account (the “Depository Trust”) with The Bank of New York Mellon Trust Company, N.A., as depository trustee and as trustee and paying agent for the Bonds Being Refunded, to be applied to the payment of the Bonds Being Refunded. Amounts in the Depository Trust will be used to acquire United States Government

* Preliminary, subject to change. 5 Obligations (the “Government Obligations”), the maturing principal of and interest on which are calculated to be sufficient to pay interest on the Bonds Being Refunded to their redemption date and the redemption price of such Bonds Being Refunded, as follows:

Bonds Being Refunded*

Maturity Principal Bonds Issue Date Amount Being Redemption Series (July 1) Coupon Outstanding Refunded* Date CUSIP®(a) 2012A Bonds 2023 3.000% $ 80,000 $ 80,000 7/1/2022 04048RUJ1 2023 5.000 6,395,000 6,395,000 7/1/2022 04048RUT1 2024 3.000 180,000 180,000 7/1/2022 04048RUK0 2024 5.000 6,615,000 6,615,000 7/1/2022 04048RUU8 2025 5.000 7,140,000 7,140,000 7/1/2022 04048RUL8 2026 5.000 3,465,000 3,465,000 7/1/2022 04048RUM6 2027 3.375 610,000 610,000 7/1/2022 04048RUX2 2027 5.000 1,615,000 1,615,000 7/1/2022 04048RUV6 2028 5.000 480,000 480,000 7/1/2022 04048RUN4 2029 5.000 500,000 500,000 7/1/2022 04048RUP9 2030 5.000 525,000 525,000 7/1/2022 04048RUQ7 2031 5.000 550,000 550,000 7/1/2022 04048RUR5 2032 5.000 575,000 575,000 7/1/2022 04048RUW4 2037 4.000 5,000,000 5,000,000 7/1/2022 04048RGH3 Subtotal $33,730,000 $33,730,000

2013A Bonds 2023 4.000% $ 815,000 $ 815,000 7/1/2022 04048RVL7 2024 5.000 845,000 845,000 7/1/2022 04048RVM5 2025 5.000 885,000 885,000 7/1/2022 04048RVN3 2026 5.000 930,000 930,000 7/1/2022 04048RVP8 2027 5.000 975,000 975,000 7/1/2022 04048RVQ6 2028 5.000 1,025,000 1,025,000 7/1/2022 04048RVR4 2029 5.000 1,075,000 1,075,000 7/1/2022 04048RVS2 2030 5.000 1,130,000 1,130,000 7/1/2022 04048RVT0 2031 5.000 1,185,000 1,185,000 7/1/2022 04048RVU7 2032 5.000 1,245,000 1,245,000 7/1/2022 04048RVV5 2033 5.000 1,305,000 1,305,000 7/1/2022 04048RVW3 2037(b) 5.000 2,270,000 2,270,000 7/1/2022 04048RVX1 Subtotal $13,685,000 $13,685,000

TOTAL $47,415,000 $47,415,000

(a) CUSIP® is a registered trademark of the American Bankers Association. CUSIP Global Services (“CGS”) is managed on behalf of the American Bankers Association by S&P Global Market Intelligence. Copyright© 2021 CUSIP Global Services. All rights reserved. CUSIP® data herein is provided by CUSIP Global Services. This data is not intended to create a database and does not serve in any way as a substitute for the CGS database. CUSIP® numbers are provided for convenience of reference only. None of the Board, the University, the Underwriters or the Financial Advisor (as defined herein) or any of their counsel or agents take responsibility for the accuracy of such numbers. (b) Represents a portion of a term bond with a final maturity on July 1, 2037.

See “VERIFICATION OF MATHEMATICAL COMPUTATIONS” below.

To the extent the moneys and Government Obligations held in the Depository Trust are not sufficient to pay the principal of the Bonds Being Refunded thereby upon redemption prior to maturity and the accruing interest thereon, the Board will remain liable for payment of such Bonds Being Refunded. See “SOURCES OF PAYMENT AND SECURITY” and “VERIFICATION OF MATHEMATICAL COMPUTATIONS.”

* Preliminary, subject to change. 6

VERIFICATION OF MATHEMATICAL COMPUTATIONS

Concurrently with the delivery of and payment for the Series 2021B Bonds, Robert Thomas CPA, LLC, a firm of independent certified public accountants, will deliver to the Board its verification report indicating that it has verified, in accordance with standards established by the American Institute of Certified Public Accountants, the mathematical accuracy of computations. Such computations were prepared using certain information provided by the Financial Advisor, on behalf of the University, relating to (a) the sufficiency of the anticipated receipts from the Government Obligations, together with the initial cash deposit, to pay, when redeemed, the principal of, interest and applicable premiums, if any, on the Bonds Being Refunded and (b) the “yield” on the Government Obligations and the Bonds Being Refunded.

The report of Robert Thomas CPA, LLC will state that the scope of its engagement was limited to verifying the mathematical accuracy of the computations contained in schedules provided to it by the Financial Advisor and that it has no obligation to update its report because of events occurring, or data or information coming to its attention, subsequent to the date of its report.

SOURCES AND USES OF FUNDS

The following table sets forth the estimated sources and uses of funds for the Series 2021 Bonds.

Series 2021A Series 2021B Series 2021C Sources of Funds: Bonds Bonds Bonds Total

Principal Amount of Series 2021 Bonds

Net Original Issue Premium/(Discount)

Total Sources of Funds

Uses of Funds:

Deposit to the Construction Fund ______

Deposit to Redemption Fund for Capitalized Interest ______

Deposit to Redemption Fund for Paying July 1, 2021 Payments

Deposit to Depository Trust

Payment of Costs of Issuance (including Underwriters’ discount)

Total Uses of Funds

THE SERIES 2021 BONDS

General Description

The Series 2021 Bonds will be dated their date of initial delivery and will bear interest from that date until maturity or prior redemption. Subject to prior redemption, the Series 2021 Bonds will mature in the amounts and on the dates, and bear interest at the rates, set forth on the inside front cover page hereof. Interest on the Series 2021 Bonds will be payable semiannually on each January 1 and July 1, commencing January 1, 2022* (each such date being referred to herein as an “Interest Payment Date”).

The Series 2021 Bonds will be delivered in the form of fully-registered bonds without coupons registered in the name of Cede & Co., as registered owner and nominee for DTC. The Bank of New York Mellon Trust Company, N.A., as trustee (together with any successor thereto, the “Trustee”) will treat the registered owners as the absolute owners of the Series 2021 Bonds for all purposes, including making payments and sending notices.

Redemption Provisions*

Provided below are the redemption features for each of the series of the Series 2021 Bonds.

Series 2021A Bonds

[Make-Whole Optional Redemption*: The Series 2021A Bonds are subject to redemption prior to their respective maturity dates, at the option of the issuer, in whole or in part on any date, at a redemption price equal to the greater of:

(1) 100% of the principal amount of the Series 2021A Bonds to be redeemed; or

(2) The sum of the present value of the remaining scheduled payments of principal and interest to the stated maturity date of such Series 2021A Bonds to be redeemed, not including any portion of those payments of interest accrued and unpaid as of the date on which such Series 2021A Bonds are to be redeemed, discounted to the date on which such Series 2021A Bonds are to be redeemed on a semi-annual basis, assuming a 360-day year consisting of twelve 30-day months, at the Treasury Rate (described below) plus _____ basis points.

Plus, in each case, accrued interest on such Series 2021A Bonds to be redeemed to but not including the redemption date.

The “Treasury Rate” is, with respect to any redemption date for a particular Series 2021A Bond, the yield to maturity as of such redemption date of United States Treasury securities with a constant maturity, excluding inflation indexed securities (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) that has become publicly available at least two Business Days, but no more than 45 calendar days, prior to the redemption date or, if such Statistical Release is no longer published, any publicly available source of similar market date) most nearly equal to the period from the redemption date to the maturity date of the bond to be redeemed; provided, however, that if the period from the redemption date to such maturity date is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year will be used.

Optional Redemption of the Series 2021A Bonds*. The Series 2021A Bonds maturing on or after July 1, 2032* are subject to redemption at the option of the Board on July 1, 2031* or on any date thereafter, in whole or in part, in $5,000 increments, from such maturities as may be selected by the Board and by lot within a maturity, at a redemption price equal to the principal amount thereof plus interest accrued to the date of redemption, without premium.]

Mandatory Redemption of the Series 2021A Bonds. The Series 2021A Bonds maturing on July 1, 2043* are subject to mandatory redemption, by lot, on July 1 in the years and in the amounts set forth below, at a

* Preliminary, subject to change. 8 redemption price equal to the principal amount thereof (without premium) plus interest accrued to the date of redemption as follows:

Series 2021A Term Bond Maturing July 1, 2043*

Year Redemption Amount 2038 $4,365,000 2039 4,565,000 2040 4,785,000 2041 5,010,000 2042 5,235,000 2043** 5,475,000

** Final Maturity

Series 2021B Bonds

[Make-Whole Optional Redemption*: The Series 2021B Bonds are subject to redemption prior to their respective maturity dates, at the option of the issuer, in whole or in part on any date, at a redemption price equal to the greater of:

(3) 100% of the principal amount of the Series 2021B Bonds to be redeemed; or

(4) The sum of the present value of the remaining scheduled payments of principal and interest to the stated maturity date of such Series 2021B Bonds to be redeemed, not including any portion of those payments of interest accrued and unpaid as of the date on which such Series 2021B Bonds are to be redeemed, discounted to the date on which such Series 2021B Bonds are to be redeemed on a semi-annual basis, assuming a 360-day year consisting of twelve 30-day months, at the Treasury Rate (described below) plus _____ basis points.

Plus, in each case, accrued interest on such Series 2021B Bonds to be redeemed to but not including the redemption date.

The “Treasury Rate” is, with respect to any redemption date for a particular Series 2021B Bond, the yield to maturity as of such redemption date of United States Treasury securities with a constant maturity, excluding inflation indexed securities (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) that has become publicly available at least two Business Days, but no more than 45 calendar days, prior to the redemption date or, if such Statistical Release is no longer published, any publicly available source of similar market date) most nearly equal to the period from the redemption date to the maturity date of the bond to be redeemed; provided, however, that if the period from the redemption date to such maturity date is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year will be used.

Optional Redemption of the Series 2021B Bonds*. The Series 2021B Bonds maturing on or after July 1, 2032* are subject to redemption at the option of the Board on July 1, 2031* or on any date thereafter, in whole or in part, in $5,000 increments, from such maturities as may be selected by the Board and by lot within a maturity, at a redemption price equal to the principal amount thereof plus interest accrued to the date of redemption, without premium.]

Mandatory Redemption of the Series 2021B Bonds. The Series 2021B Bonds maturing on July 1, 2043* and July 1, 2053* are subject to mandatory redemption, by lot, on July 1 in the years and in the amounts set forth below, at a redemption price equal to the principal amount thereof (without premium) plus interest accrued to the date of redemption as follows:

* Preliminary, subject to change. 9

Series 2021B Term Bond Maturing July 1, 2043*

Year Redemption Amount 2038 $1,290,000 2039 1,330,000 2040 1,370,000 2041 1,410,000 2042 1,450,000 2043** 1,490,000

Series 2021B Term Bond Maturing July 1, 2053*

Year Redemption Amount 2044 $1,535,000 2045 1,585,000 2046 1,635,000 2047 1,685,000 2048 1,740,000 2049 1,795,000 2050 1,850,000 2051 1,910,000 2052 1,965,000 2053** 2,030,000

** Final Maturity

Series 2021C Bonds

Optional Redemption of the Series 2021C Bonds*. The Series 2021C Bonds maturing on or after July 1, 2031* are subject to redemption at the option of the Board on July 1, 2030* or on any date thereafter, in whole or in part, in $5,000 increments, from such maturities as may be selected by the Board and by lot within a maturity, at a redemption price equal to the principal amount thereof plus interest accrued to the date of redemption, without premium.

Mandatory Redemption of the Series 2021C Bonds. The Series 2021C Bonds maturing on July 1, 2046* and July 1, 2051* are subject to mandatory redemption, by lot, on July 1 in the years and in the amounts set forth below, at a redemption price equal to the principal amount thereof (without premium) plus interest accrued to the date of redemption as follows:

Series 2021C Term Bond Maturing July 1, 2046*

Year Redemption Amount 2042 $1,145,000 2043 1,205,000 2044 1,265,000 2045 1,330,000 2046** 1,395,000

Series 2021C Term Bond Maturing July 1, 2051*

Year Redemption Amount 2047 $1,465,000 2048 1,540,000 2049 1,615,000 2050 1,695,000 2051** 1,780,000

** Final Maturity

* Preliminary, subject to change. 10

Notice of and Procedures for Redemption

For purposes of any redemption of less than all Series 2021 Bonds of a single series and maturity, the particular Series 2021 Bonds to be redeemed will be selected randomly by the Trustee by such method of lottery as the Trustee deems fair and appropriate.

So long as the Series 2021 Bonds are registered in book-entry-only form in the name of a nominee of DTC, a partial redemption of the Series 2021 Bonds of any series and maturity will be determined in accordance with DTC’s procedures. While the Board intends that the foregoing random redemption provisions be implemented by DTC, the Direct Participants or such other intermediaries, selection of Series 2021 Bonds for redemption in the DTC book-entry-only system is subject to DTC’s practices and procedures as in effect from time to time, currently by lot. The Board can provide no assurance that DTC or the Direct Participants or any other intermediaries will allocate redemptions among Beneficial Owners in accordance with the foregoing random redemption provisions.

Notice of any redemption, identifying the redemption date, the redemption price, the particular Series 2021 Bonds, or portions thereof, to be redeemed and the place where the Series 2021 Bonds to be redeemed are to be surrendered for payment (which place will be the designated office of the Trustee) will be sent by first-class mail not less than 30 nor more than 60 days prior to the date fixed for redemption to the Registered Owner, initially DTC, of each Series 2021 Bond to be redeemed, in whole or in part, at the address shown on the registration books maintained by the Trustee or at such other address as may be furnished by such owners to the Trustee.

Any notice of redemption given as described in the preceding paragraph will also contain a statement that on the redemption date, the redemption price of the Series 2021 Bonds called for redemption will become due and payable and that, from and after such date, the Series 2021 Bonds being redeemed will cease to accrue interest; provided, that in the case of an optional redemption of any Series 2021 Bonds, such redemption notice will also state that the call for optional redemption is conditioned upon the deposit with the Trustee of an amount sufficient to pay the principal of, premium (if any) and interest due on the Series 2021 Bonds on the redemption date.

Failure to mail any such notice to a particular owner, or any defect therein, will not affect the validity of any proceedings for redemption of any other Series 2021 Bond for which notice was properly given. Such notice having been given and funds for such redemption having been timely deposited with the Trustee, the Series 2021 Bonds so called for redemption will, on the redemption date, become due and payable, and interest thereon will cease to accrue.

If a conditional redemption notice has been given and money sufficient to redeem all the Series 2021 Bonds or portions thereof called for redemption is not held by the Trustee on the day set for redemption, then such redemption shall be cancelled and be of no force or effect.

SOURCES OF PAYMENT AND SECURITY

Gross Revenue Pledge

The Series 2021 Bonds (together with any other Parity Bonds Outstanding from time to time) are payable from and secured solely by a pledge of and first lien on the Gross Revenues of the University.

The Gross Revenues of the University, as defined in the Bond Resolution and used in this Official Statement, means and includes all: (1) Student Tuition and Fees Revenues, which means all tuition, registration, matriculation, laboratory, admission and other activities and service fees and charges paid by students matriculated, registered or otherwise enrolled at and attending the University, and (2) Facilities Revenues, which means all fees, rentals and other charges from students, faculty, staff members and others using or being served by, or having the right to use or the right to be served by, or to operate, any revenue producing facility, building or project within the System of Building Facilities, or any auxiliary enterprise, including indirect cost recoveries from externally-funded grants and contracts for research or other sponsored projects and interest received on and profits realized from the sale of investments made with moneys derived from (i) any revenue-producing facility, building or project within the System of Building Facilities; (ii) Student Tuition and Fees Revenues and (iii) other University operating funds.

11 ARIZONA STATE UNIVERSITY SCHEDULE OF HISTORICAL GROSS REVENUES (Dollars in Thousands)

Receipts from other Major Non- Summer Total Sources Total Fiscal Resident Resident School & Tuition (Facilities Gross (1) (1) (2) (3) Year Tuition Tuition Other Fees and Fees Revenues) Revenues 2016 $357,455 $536,345 $263,735 $1,157,535 $293,117 $1,450,652 2017 367,699 592,958 290,171 1,250,828 304,859 1,555,687 2018 375,850 612,171 324,292 1,312,313 335,309 1,647,622 2019 384,249 672,330 366,472 1,423,051 358,231 1,781,282 2020 421,980 738,112 390,489 1,550,581 349,050 1,899,631

(1) Tuition is net of scholarship allowances. Scholarship allowances are the difference between the stated charge for services provided by the University, and the amount that is paid by the students (and/or third parties making payments on a student’s behalf). To the extent that revenues from programs such as Pell Grants and University funded scholarships are used to satisfy tuition and fees, and other student charges, the University has recorded a scholarship allowance. (2) Consists of summer school tuition, fees charged by certain undergraduate and graduate school programs, student activity/recreation center fees, and certain other miscellaneous fees and charges not included in the tuition and registration fees columns. Miscellaneous fees include fees for admission applications, transcripts, graduation, late registration, course dropping, special fees for certain classroom activities, and non-credit courses and programs. (3) For a further breakdown of receipts from other major revenue sources, see the schedule titled “ARIZONA STATE UNIVERSITY - RECEIPTS FROM OTHER MAJOR REVENUE SOURCES – UNIVERSITY WIDE” in Appendix A.

Source: Arizona State University, Financial Services.

Outstanding Obligations Payable from Gross Revenues

System Revenue Bonds

Pursuant to the laws of the State and the provisions of the Bond Resolution, the Board is authorized to issue system revenue bonds and other obligations which are payable solely from and secured solely by a pledge of and lien on the Gross Revenues of the University. The Board has issued and may in the future issue system revenue bonds secured by a first (or senior) lien on Gross Revenues (“Parity Bonds”) and other bonds and obligations secured by a subordinate lien on Gross Revenues (“Subordinate Obligations”). The Board currently has $1,524,310,000 principal amount of Parity Bonds Outstanding and $113,815,000(a) principal amount of Subordinate Obligations Outstanding. After the issuance of the Series 2021 Bonds, the Board will have $1,733,112,500* principal amount of Parity Bonds Outstanding.

* Preliminary, subject to change. 12 The following table sets forth the Outstanding Parity Bonds, including the effect of the issuance of the Series 2021 Bonds:

Final Original Maturity Principal Date Outstanding System Revenue Bonds Amount (July 1) Principal Amount Series 2008 Refunding Bonds $103,680,000 2034 $ 72,735,000 Series 2010 Bonds 178,350,000 2039 142,220,000 Series 2012 Bonds 213,370,000 2037 49,635,000 Series 2013 Bonds 110,950,000 2035 23,855,000 Series 2015 Bonds 362,260,000 2046 319,475,000 Series 2015D Bonds 102,665,000 2046 98,190,000 Series 2016A Bonds 37,105,000 2031 33,340,000 Series 2016 Bonds 226,230,000 2047 216,040,000 Series 2017 Bonds 199,870,000 2043 191,315,000 Series 2019 Bonds 194,450,000 2049 193,050,000 Series 2020 Bonds 184,455,000 2050 184,455,000 Subtotal $1,524,310,000 Less: Bonds Being Refunded (47,415,000)* Less: July 1, 2021 principal being refinanced (23,627,500) * Plus: Series 2021 Bonds 279,845,000* Total Outstanding Principal Amount of Parity Bonds $1,733,112,500*

(a) Reflects final maturity date of outstanding principal amount.

Subordinate Obligations

The Board has also pledged the Gross Revenues of the University on a subordinate basis to secure various Subordinate Obligations.

In May 2006, the Board entered into a debt service assurance agreement (the “Debt Service Assurance Agreement”) relating to $12,975,000 original principal amount of Arizona State University Research Park, Inc. Development Refunding Bonds, Series 2006 (referred to herein as the “2006 ASU Research Park Bonds”) of which $1,130,000 remains Outstanding. Payments by the Board under the Debt Service Assurance Agreement, which are pledged to pay debt service on the 2006 ASU Research Park Bonds, constitute Subordinate Obligations.

The Board has issued, and may in the future issue, SPEED Revenue Bonds (Stimulus Plan for Economic and Educational Development) (the “SPEED Bonds”) secured by a pledge of and lien on certain revenues of the Arizona State Lottery that are received by the Board and from unrestricted monies of the University. To the extent that these amounts are insufficient to make the required debt service payments on the SPEED Bonds, such SPEED Bonds are further secured by a pledge of Gross Revenues of the University on a basis subordinate to the Parity Bonds. Accordingly, the SPEED Bonds constitute Subordinate Obligations.

The following table sets forth the Outstanding principal amount of Subordinate Obligations of the University.

Original Final Principal Maturity Outstanding Subordinate Obligations (a) Amount Date Principal Amount Series 2006 ASU Research Park Bonds $12,975,000 7-1-2021 $ 1,130,000 Series 2010 SPEED Bonds 33,820,000 8-1-2030 24,420,000 Series 2011 SPEED Bonds 30,915,000 8-1-2031 23,485,000 Series 2014 SPEED Bonds 77,620,000 8-1-2044 64,780,000 Total Principal Amount of Subordinate Obligations $113,815,000

(a) Does not reflect the impact of approximately $39 million of SPEED Refunding Bonds the University plans to issue in April 2021 pursuant to a separate official statement.

* Preliminary, subject to change. 13

Capital Infrastructure Fund

Additional Source of Payment for Series 2021A Bonds. In addition to using Gross Revenues of the University as described above to pay debt service on the Series 2021A Bonds, the Board also intends to pay one- half of the annual debt service on the Series 2021A Bonds from the University’s Capital Infrastructure Fund (the “University’s CIF”). The University’s CIF was established pursuant to Section 15-1671 of the Arizona Revised Statutes (the “CIF Law”). Pursuant to the CIF Law, $12,381,200 of State General Fund monies were appropriated and deposited to the University’s CIF in Fiscal Year 2019-20, and additional State General Fund monies will be appropriated annually for deposit in the University’s CIF through Fiscal Year 2042-43. The amount appropriated per the CIF Law is to be adjusted annually by a growth rate of either 2% or the change in the U.S. Gross Domestic Product Price Deflator between the two prior Fiscal Years, whichever is less, but not less than the prior Fiscal Year’s appropriated amount. Amounts in the University’s CIF are available exclusively for either paying the costs of, or for paying up to one-half of the debt service on debt financing for, capital projects of the University. For debt financed capital projects, the CIF Law requires that the University deposit to the University’s CIF from University funds an amount equal to the amount of funds deposited in the University’s CIF from the State General Fund and that are used to pay debt service on University debt obligations.

The projects being financed with the proceeds of the Series 2021A Bonds are eligible for funding from the University’s CIF. As such, one-half (50%) of the debt service on the Series 2021A Bonds will be paid for from monies in the University’s CIF and the remaining 50% will be funded from Gross Revenues of the University. While funding for the payment of debt service on the Series 2021A Bonds will be made as described above, all of the Series 2021 Bonds, including all of the Series 2021A Bonds, will be secured by the Gross Revenues of the University.

Amounts in the University’s CIF are available only for the payment of principal of and interest on the Series 2021A Bonds and not for the Series 2021B Bonds or Series 2021C Bonds. Amounts in the University’s CIF are not pledged to, and do not secure, the payment of debt service of any of the Series 2021A Bonds, Series 2021B Bonds, or Series 2021C Bonds.

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14 ARIZONA STATE UNIVERSITY SCHEDULE OF DEBT SERVICE REQUIREMENTS FOR PARITY BONDS AND SUBORDINATE OBLIGATIONS (1)

Total Outstanding Outstanding Estimated Subordinate Parity Bonds Less: Debt Parity Bonds Obligations Total Fiscal Debt Service Direct Service Being Series 2021A Bonds* Series 2021B Bonds* Series 2021C Bonds* Debt Service Debt Service Direct Debt Service Year Requirements (2) Payments (3) Refunded* (4) Principal Interest (5) Principal Interest (5) Principal Interest (5) Requirements* Requirements (6) Payments (3) Requirements* (7) 2021 $127,963,178 $(3,050,298) $(53,537,016) $ 71,375,863 $13,562,479 $(498,970) $ 84,439,372 2022 129,589,884 (2,953,597) (2,297,488) $1,961,435 $1,170,000 $1,995,277 $1,290,000 $6,933,969 137,689,480 12,344,669 (462,383) 149,571,766 2023 129,538,216 (2,851,102) (9,587,488) 1,669,307 8,555,000 1,695,534 2,045,000 5,836,750 136,901,217 12,305,494 (421,284) 148,785,426 2024 129,741,505 (2,743,044) (9,582,738) 1,669,307 9,930,000 1,664,736 6,310,000 5,734,500 142,724,267 12,269,919 (378,645) 154,615,540 2025 129,070,980 (2,629,091) (9,589,338) 1,669,307 9,995,000 1,608,135 6,640,000 5,419,000 142,183,993 12,221,944 (334,467) 154,071,470 2026 131,587,613 (2,508,903) (5,558,088) $ 345,000 1,669,307 6,055,000 1,519,180 6,970,000 5,087,000 145,166,108 12,171,319 (288,748) 157,048,679 2027 123,625,208 (2,373,842) (4,143,338) 2,800,000 1,665,719 4,700,000 1,456,208 7,325,000 4,738,500 139,793,455 12,126,719 (235,461) 151,684,714 2028 117,789,439 (2,233,353) (2,298,250) 2,895,000 1,628,479 2,925,000 1,393,698 7,685,000 4,372,250 134,157,263 12,062,781 (180,007) 146,040,037 2029 106,182,814 (2,087,217) (2,293,000) 3,005,000 1,585,633 2,960,000 1,350,408 8,065,000 3,988,000 122,756,637 12,009,554 (122,387) 134,643,803 2030 105,545,954 (1,935,111) (2,294,250) 3,125,000 1,533,346 3,015,000 1,298,904 8,475,000 3,584,750 122,348,592 11,947,456 (62,385) 134,233,662 2031 105,920,777 (1,776,924) (2,291,500) 3,245,000 1,474,283 3,070,000 1,241,920 8,880,000 3,161,000 122,924,555 8,888,675 131,813,230 2032 105,488,778 (1,609,679) (2,289,750) 3,380,000 1,408,085 2,745,000 1,179,292 3,175,000 2,717,000 116,193,726 6,169,250 122,362,976 2033 105,053,790 (1,435,594) (2,618,750) 3,525,000 1,335,753 3,130,000 1,120,549 3,335,000 2,558,250 116,003,997 6,168,750 122,172,747 2034 104,598,696 (1,254,338) (2,606,100) 3,675,000 1,256,793 3,190,000 1,050,437 3,495,000 2,391,500 115,796,987 6,165,750 121,962,737 2035 97,088,471 (1,065,691) (2,064,200) 3,825,000 1,170,798 2,725,000 975,791 3,670,000 2,216,750 108,541,919 959,750 109,501,669 2036 89,616,119 (869,322) (1,119,400) 4,005,000 1,077,468 2,045,000 909,301 3,850,000 2,033,250 101,547,417 955,250 102,502,667 2037 85,483,028 (664,899) (1,118,000) 4,180,000 975,741 2,100,000 857,358 4,050,000 1,840,750 97,703,978 959,500 98,663,478 2038 85,789,412 (452,091) 4,365,000 865,389 1,290,000 801,918 4,255,000 1,638,250 98,552,877 957,000 99,509,877 2039 81,834,539 (230,569) 4,565,000 737,058 1,330,000 763,992 4,460,000 1,425,500 94,885,520 958,000 95,843,520 2040 69,582,765 4,785,000 602,847 1,370,000 724,890 4,690,000 1,202,500 82,958,002 957,250 83,915,252 2041 69,073,503 5,010,000 462,168 1,410,000 684,612 4,925,000 968,000 82,533,283 959,750 83,493,033 2042 69,639,676 5,235,000 314,874 1,450,000 643,158 1,145,000 721,750 79,149,458 955,250 80,104,708 2043 63,442,909 5,475,000 160,965 1,490,000 600,528 1,205,000 664,500 73,038,902 959,000 73,997,902 2044 33,999,234 1,535,000 556,722 1,265,000 604,250 37,960,206 955,500 38,915,706 2045 33,989,220 1,585,000 508,523 1,330,000 541,000 37,953,743 37,953,743 2046 33,999,915 1,635,000 458,754 1,395,000 474,500 37,963,169 37,963,169 2047 11,937,689 1,685,000 407,415 1,465,000 404,750 15,899,854 15,899,854 2048 5,574,291 1,740,000 354,506 1,540,000 331,500 9,540,297 9,540,297 2049 5,571,471 1,795,000 299,870 1,615,000 254,500 9,535,841 9,535,841 2050 2,636,046 1,850,000 243,507 1,695,000 173,750 6,598,303 6,598,303 2051 1,910,000 185,417 1,780,000 89,000 3,964,417 3,964,417 2052 1,965,000 125,443 2,090,443 2,090,443 2053 2,030,000 63,742 2,093,742 2,093,742

(1) Figures may not total due to rounding. (2) Outstanding Bonds include the Series 2008 Refunding Bonds (which bear interest at a variable rate, assumed to be 4.00% annually for purposes hereof), the Series 2010 Bonds, the Series 2012 Bonds, the Series 2013 Bonds, the Series 2015 Bonds, the Series 2015D Bonds, the Series 2016A Bonds, the Series 2016 Bonds, the Series 2017 Bonds, the Series 2019 Bonds, and the Series 2020 Bonds. (3) Direct Payments represent subsidy payments expected to be received by the University from the federal government with respect to its Build America Bonds. Such amounts are not pledged towards the repayment of any Parity Bonds and Subordinate Obligations, however, the University currently intends to expend the Direct Payments on debt service payments on such obligations. In addition, the amount of Direct Payments are subject to any reductions in such amounts made by the federal government. For Fiscal Year 2021, Direct Payments expected to be received by the University will be reduced by 5.7% due to sequestration reductions imposed by the federal government. Direct Payments received by the University for Fiscal Years 2017, 2018, 2019 and 2020 were reduced by similar amounts in each year. (4) Includes 50% of a portion of the July 1, 2021 principal and 100% of the interest due on July 1, 2021 on the Outstanding Bonds except the Outstanding Series 2008 Refunding Bonds, the Series 2019A Bonds, and the Series 2020A Bonds and debt service on the Bonds Being Refunded. (5) The first Interest Payment Date on the Series 2021 Bonds is January 1, 2022*. Interest is estimated. (6) Consists of $1,130,000 outstanding principal amount of Arizona State University Research Park, Inc. Development Refunding Bonds, Series 2006 and $112,685,000 outstanding principal amount of Arizona State University SPEED Revenue Bonds (Stimulus Plan for Economic and Educational Development) Series 2010, Series 2011 and Series 2014. Does not reflect the impact of approximately $39 million of SPEED Refunding Bonds the University plans to issue in April 2021 pursuant to a separate official statement. (7) The Gross Revenues of the University for Fiscal Year 2020, the most recently completed Fiscal Year, are 12.88* times greater than the highest aggregate annual debt service on the Parity Bonds, including the Series 2021 Bonds, and 11.88* times greater than the highest aggregate annual debt service on all Parity Bonds and Subordinate Obligations, in both cases not taking into consideration the Direct Payments expected to be received.

* Preliminary, subject to change. 15 Rate Covenant

Bond Resolution Covenant. The Board has covenanted in the Bond Resolution to fix, revise and collect tuition, registration, matriculation, health services, laboratory, and admission fees from students matriculated, registered or enrolled at or attending the University, and to fix, revise and collect all other fees, admissions, rentals and other charges received from students, faculty, staff members and others using or being served by the System of Building Facilities, in an aggregate amount so the Gross Revenues of the University for each Fiscal Year will be at least 150% of the Maximum Annual Debt Service due in any Fiscal Year on the Series 2021 Bonds and any Parity Bonds, and sufficient at all times to continually operate and maintain the System of Building Facilities and to make the necessary deposits at the times and in the amounts specified in the Bond Resolution.

Debt Service Assurance Agreement and SPEED Bond Resolution Covenant. The Board has further covenanted in the Debt Service Assurance Agreement entered into in connection with the 2006 ASU Research Park Bonds and in the bond resolution for the Board’s SPEED Revenue Bonds to fix, revise and collect Student Tuition and Fees Revenues and Facilities Revenues in an aggregate amount so that Gross Revenues of the University in any Fiscal Year will be at least equal to 100% of (i) the annual debt service due on all Outstanding Parity Bonds and the Subordinate Obligations in such Fiscal Year and (ii) the expense of operating and maintaining the System of Building Facilities.

Additional Parity Bonds

Bond Resolution Requirement. Pursuant to the Bond Resolution, the Board may issue additional Parity Bonds if the Gross Revenues of the University for the Fiscal Year preceding the issuance of such Parity Bonds are at least equal to 300% of Maximum Annual Debt Service on all Outstanding Parity Bonds and the Parity Bonds proposed to be issued.

Debt Service Assurance Agreement and SPEED Bond Resolution Requirement. In addition, pursuant to the Debt Service Assurance Agreement entered into in connection with the 2006 ASU Research Park Bonds and the bond resolution for the SPEED Bonds, the Board may issue additional Parity Bonds on a basis senior to the Subordinate Obligations if: (i) no defaults exist and all payments and deposits have been made with respect to Outstanding Parity Bonds and Subordinate Obligations and (ii) the Gross Revenues of the University for the Fiscal Year preceding the issuance of any such Parity Bonds were at least equal to 200% of the Maximum Annual Debt Service on all Parity Bonds and Subordinate Obligations Outstanding, including the proposed Parity Bonds. The Board must also demonstrate that these tests have been met before it can issue additional Subordinate Obligations.

Statutory Requirement. In addition, pursuant to State law, the Board has the power to issue bonds to acquire any project or projects, provided that: (i) as of the date of issuance of bonds for the benefit of any of the State’s universities, projected debt service on the bonds and certificates of participation then outstanding and proposed to be issued by or for the benefit of such State university, as shown in each Fiscal Year in the most recent capital improvement plan for such university reported to and certified by the Board, may not exceed, in any Fiscal Year shown therein, more than eight percent (8%) of such university’s total projected expenditures and mandatory transfers and (ii) the project to be acquired with the proceeds of the bonds is reviewed by the State Legislature’s Joint Committee on Capital Review.

No Acceleration of Bonds

Under no circumstances is the payment of principal of or interest on the Bonds, including the Series 2021 Bonds, subject to acceleration upon the occurrence of an Event of Default described in the Bond Resolution.

FUTURE BORROWINGS

The Board, on behalf of the University, presently plans to issue approximately $185 million in principal amount of additional Parity Bonds prior to the end of Fiscal Year 2022.

LITIGATION

On September 28, 2020, a current tenured faculty member, Deidre Meldrum, filed a civil lawsuit in state court against the Board and a number of current and former University administrators arising from reductions in funding and support for her research and changes to her title, which she claims constitute contractual breaches, torts, and/or violations of civil rights laws. In an underlying notice of claim, Dr. Meldrum asserted damages in the amount of $319 million in addition to attorneys’ fees and costs. A substantially similar lawsuit was filed by Dr. Meldrum in February 2016 and dismissed without prejudice in December 2018 for failure to state a claim, with fees and costs awarded to the Board as the prevailing party. The lawsuit has been removed to federal court and the Board has moved to dismiss it in its entirety. The University reasonably does not anticipate that this matter will be decided adversely against the University. The University reasonably believes that if there were an adverse determination, it would not have a material impact upon its financial condition.

In addition, the University is subject at any time to a variety of legal actions, some of which may be disclosed in the audited financial statements included in Appendix B and which collectively are not expected to have a material adverse effect on the University. See also “APPENDIX A- FINANCIAL CONDITION OF THE UNIVERSITY – Infectious Disease Outbreak” for additional litigation related matters.

Concurrently with the delivery of the Series 2021 Bonds, the Senior Vice President and General Counsel for the Arizona University System will render an opinion to the effect that, to the best of such counsel’s knowledge, the Board has not received service of process, or other official notice, except as described in this section, of actions, suits, proceedings, or investigations at law or in equity by or before any court or public board or body, pending or overtly threatened against or affecting the University or the Board that are reasonably expected to be determined adversely to the University or the Board, and if decided adversely to the University or the Board, that would materially and adversely (a) in any way question the Board’s right to set and collect tuition, fees, and charges for persons enrolled at or attending the University, its rights to collect fees, rentals, and charges for the use and occupancy of any other revenue producing facility of the University, the validity and enforceability, in accordance with their respective terms, of the Series 2021 Bonds or the Board Documents, the compliance by the Board with the provisions of the Bond Resolution or the Board Documents, or the ability of the Board to consummate the transactions described in the Official Statement or (b) affect the pledged Gross Revenues or the financial condition of the University.

TAX MATTERS

Federal Tax Matters – Series 2021A Bonds and Series 2021B Bonds

THE MATERIAL UNDER THIS CAPTION “TAX MATTERS” CONCERNING THE TAX CONSEQUENCES OF OWNERSHIP OF THE SERIES 2021A BONDS AND THE SERIES 2021B BONDS WAS WRITTEN TO SUPPORT THE MARKETING OF THE SERIES 2021C BONDS, AND EACH OWNER SHOULD SEEK ADVICE BASED ON THE OWNER’S PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR. THIS MATERIAL WAS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED BY ANY TAXPAYER, FOR THE PURPOSE OF AVOIDING PENALTIES THAT MAY BE IMPOSED ON THE TAXPAYER.

General

Interest on and profit, if any, on the sale of the Series 2021A Bonds and the Series 2021B Bonds (for purposes of this section, the “Taxable 2021 Bonds”) are not excludable from gross income for federal income tax purposes.

17 General Federal Tax Matters

The following discussion summarizes the material United States federal income tax consequences generally applicable to the purchase, ownership and disposition of the Taxable 2021 Bonds by the beneficial owners thereof (“Owners”). The discussion is limited to the tax consequences to the initial Owners of the Taxable 2021 Bonds who purchase the Taxable 2021 Bonds at the issue price within the meaning of Section 1273 of the Internal Revenue Code of 1986, as amended (the “Code”) and generally does not address the tax consequences to subsequent purchasers of the Taxable 2021 Bonds. The discussion does not purport to be a complete analysis of all of the potential United States federal income tax consequences relating to the purchase, ownership and disposition of the Taxable 2021 Bonds, nor does this discussion address any state, local, foreign taxes, or federal estate or gift tax consequences. Furthermore, the discussion does not address all aspects of taxation that might be relevant to particular purchasers in light of their individual circumstances. For instance, the discussion does not address the alternative minimum tax provisions of the Code or special rules applicable to certain categories of purchasers including dealers in securities or foreign currencies, insurance companies, regulated investment companies, real estate mortgage investment conduits, financial institutions, tax-exempt entities, persons required to accelerate the recognition of any item of gross income with respect to the Taxable 2021 Bonds as a result of such income being recognized on an applicable financial statement, Owners whose functional currency is not the United States dollar and, Foreign Owners (as defined below) that are classified for federal income tax purposes as “controlled foreign corporations,” “passive foreign investment companies,” “expatriates,” “surrogate foreign corporations,” “personal holding companies,” or corporations that accumulate earnings to avoid United States federal income tax.

The discussion also does not address the special rules applicable to purchasers who hold the Taxable 2021 Bonds as part of a hedge, straddle, conversion, constructive ownership or constructive sale transaction or other risk reduction transaction. The discussion is based on the Code, the regulations of the Department of the Treasury, and administrative and judicial interpretations, all as in effect today. Legislative, judicial and administrative changes may occur, possibly with retroactive effect, that could alter or modify the continued validity of the statements and conclusions set forth herein. The discussion assumes that the Taxable 2021 Bonds are held as capital assets within the meaning of Section 1221 of the Code.

Tax Consequences to United States Owners

The Taxable 2021 Bonds will be treated as debt instruments and, accordingly, stated interest payments on the Taxable 2021 Bonds will be taxable to a United States Owner as ordinary income at the time the interest accrues or is received in accordance with the United States Owner’s method of accounting for United States federal income tax purposes. A “United States Owner” is an Owner of a Taxable 2021 Bond that is, for United States federal income tax purposes: (1) a citizen or resident of the United States, (2) a corporation, or an entity treated as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States or of any political subdivision thereof, (3) an estate, the income of which is subject to United States federal income taxation regardless of its source, or (4) a trust, the administration of which is subject to the primary supervision of a court within the United States and which has one or more United States persons with authority to control all substantial decisions, or a trust that was in existence on August 20, 1996, and has elected to continue its then current treatment as a United States trust. If a partnership (or an entity taxable as a partnership) holds the Taxable 2021 Bonds, the United States federal income tax treatment of a partner generally will depend upon the status of the partner and the tax status of the partnership. Partners of partnerships holding the Taxable 2021 Bonds should consult their own tax advisors with regard to the U.S. federal income tax treatment of the purchase, ownership and disposition of the Taxable 2021 Bonds.

Original Issue Discount. A Taxable 2021 Bond will be treated as issued with original issue discount (“OID”) for U.S. federal income tax purposes if the stated principal amount of such Taxable 2021 Bond exceeds its issue price by at least the de minimis threshold amount of 1⁄4 of one percent of the stated principal amount of such Taxable 2021 Bond multiplied by the number of complete years from the issue date of such Taxable 2021 Bond to its maturity. If a Taxable 2021 Bond is issued with OID, United States Owners, regardless of their regular method of tax accounting, will have to include the OID in gross income (as ordinary income) as it accrues (on a constant yield to maturity basis), prior to their receipt of the cash corresponding to such OID, which ordinarily will result in the inclusion of increasing amounts of OID in income in successive accrual periods.

18 Bond Premium. A holder of a Taxable 2021 Bond who purchases such Taxable 2021 Bond at a cost that exceeds the stated principal amount of such Taxable 2021 Bond will have amortizable bond premium equal to such excess. If the holder elects to amortize the bond premium, such election will apply to all Taxable 2021 Bonds held by the holder on the first day of the taxable year to which the election applies, and to all Taxable 2021 Bonds thereafter acquired by the holder. The premium must be amortized using constant yield principles based on the purchaser’s yield to maturity. Amortizable bond premium is generally treated as an offset to interest income, but a reduction in basis is required for amortizable bond premium even though such premium is applied to reduce interest payments. Bond premium on a Taxable 2021 Bond held by a holder that has not elected to amortize bond premium will decrease the gain or loss otherwise recognized on the disposition the Taxable 2021 Bond.

Sale, Exchange, Redemption or Retirement of the Taxable 2021 Bonds. In general, unless a nonrecognition provision applies, upon the sale, exchange, redemption or retirement of a Taxable 2021 Bond, a United States Owner will recognize capital gain or loss equal to the difference between the amount realized on such sale, exchange, redemption or retirement (not including any amount attributable to accrued but unpaid interest that the United States Owner has not already included in gross income) and such United States Owner’s adjusted tax basis in the Taxable 2021 Bond. Any amount attributable to accrued but unpaid interest that the Owner has not already included in gross income will be treated as a payment of interest. A United States Owner’s adjusted tax basis in a Taxable 2021 Bond generally will equal the cost of the Taxable 2021 Bond to such United States Owner, reduced by principal payments received by such United States Owner and increased by any accrued but unpaid interest (including OID, if any) the United States Owner has included in taxable income.

Backup Withholding. Owners will be subject to “backup withholding” of federal income tax (currently at a rate of 24%) in the event they fail to furnish a taxpayer identification number to the paying agent or there are other, related compliance failures. Backup withholding is not an additional tax. The amount of any backup withholding from a payment to an Owner will be allowed as a credit against the Owner’s U.S. federal income tax liability and may entitle the Owner to a refund, provided that the required information is timely furnished to the IRS. Owners should consult their tax advisors concerning the application of information reporting and backup withholding rules.

Net Investment Income Tax. Certain United States Owners that are individuals, estates or trusts whose income exceeds certain thresholds are required to pay an additional 3.8% tax on, among other things, interest income and capital gains, subject to certain limitations and exceptions (the “Net Investment Income Tax”). United States Owners that are individuals, estates or trusts are urged to consult their tax advisors regarding the applicability of the Net Investment Income Tax to their income and gains from the Taxable 2021 Bonds.

Tax Consequences to Foreign Holders

Payments of interest (including OID) on a Taxable 2021 Bond to an Owner that is not a United States Owner (a “Foreign Owner”) are generally not subject to United States federal income tax or nonresident withholding tax, provided that:

– the Foreign Owner is not actually or constructively a “10-percent shareholder” as that term is defined in Section 871(h) or 881(c)(3)(B) of the Code;

– the Foreign Owner is not, for United States federal income tax purposes, a controlled foreign corporation (as that term is defined in the Code) with respect to which the Issuer is a “related person” within the meaning of Section 881(c)(3)(C) of the Code;

– the Foreign Owner is not a bank receiving interest described in Section 881(c)(3)(A) of the Code;

– the certification requirements under Section 871(h) or 881(c) of the Code and regulations (summarized below) are met; and

– the Taxable 2021 Bond interest is not effectively connected with the conduct by the Foreign Owner of a trade or business in the United States under Section 871(b) or Section 882 of the Code.

19 In order to obtain the exemption from income and withholding tax, either (1) the Foreign Owner must provide its name and address, and certify, under penalties of perjury on Internal Revenue Service Form W-8BEN, W-8BEN-E, W-8IMY or W-8EXP, as applicable, to the Issuer, its paying agent, or other applicable withholding agent as the case may be, that such Owner is a Foreign Owner or (2) a securities clearing organization, bank or other financial institution that holds customers’ securities in the ordinary course of its trade or business (“Financial Institution”) and holds a Taxable 2021 Bond on behalf of the Foreign Owner, must certify, under penalties of perjury, to the Issuer or its paying agent that such certificate has been received from the Owner by it or by any intermediary Financial Institution and must furnish the Issuer or its paying agent with a copy of the certificate. A certificate is generally effective only with respect to payments of interest made to the certifying Foreign Owner after issuance of the certificate in the calendar year of its issuance and the two immediately succeeding calendar years. A Foreign Owner who does not satisfy the exemption requirements is generally subject to United States withholding tax on payments of interest (including OID).

Interest on a Taxable 2021 Bond (including OID) that is effectively connected with the conduct of a United States trade or business by the Foreign Owner is generally subject to United States federal income tax in the same manner as with a United States Owner, except to the extent otherwise provided under an applicable tax treaty. Effectively connected interest income received by a corporate Foreign Owner may also, under certain circumstances, be subject to an additional branch profits tax. Effectively connected interest income will not be subject to withholding tax if the Foreign Owner delivers a properly completed Internal Revenue Service Form W- 8ECI to the Issuer or its paying agent.

U.S. Federal Estate Tax. A Taxable 2021 Bond that is held by an individual who, at the time of death, is not a citizen or resident of the U.S. will not be subject to U.S. federal estate tax as a result of such individual’s death, provided that, at the time of such individual’s death, payments of interest with respect to such Taxable 2021 Bond would not have been effectively connected to a trade or business conducted by such individual in the U.S.

Sale, Exchange, Redemption or Retirement of the Taxable 2021 Bonds. In general, a Foreign Owner of a Taxable 2021 Bond will not be subject to United States federal income or withholding tax on the receipt of payments of principal on a Taxable 2021 Bond and will not be subject to United States federal income tax on any gain recognized on the sale, exchange, redemption, retirement or other taxable disposition of such Taxable 2021 Bond unless:

• the Foreign Owner is a nonresident alien individual who is present in the United States for 183 or more days in the taxable year of disposition and certain other conditions are met under Section 871(a)(2) of the Code;

• the Foreign Owner is required to pay tax pursuant to the provisions of United States tax law applicable to certain United States expatriates; or

• the gain is effectively connected with the conduct of a United States trade or business by the Foreign Owner (or pursuant to an applicable tax treaty is attributable to a United States permanent establishment of the Foreign Owner).

Foreign Account Tax Compliance (FATCA)

Pursuant to the Foreign Account Tax Compliance Act (commonly referred to as “FATCA”), foreign financial institutions (which term includes most foreign banks, hedge funds, private equity funds, mutual funds, securitization vehicles and other investment vehicles) and certain other foreign entities generally must comply with certain information reporting rules with respect to their U.S. account holders and investors or confront a withholding tax on U.S.-source payments made to them (whether received as a beneficial owner or as an intermediary for another party). A foreign financial institution or such other foreign entity that does not comply with the FATCA reporting requirements will generally be subject to a 30% withholding tax with respect to any “withholdable payments.” For this purpose, withholdable payments generally include U.S.-source payments otherwise subject to nonresident withholding tax (e.g., U.S.-source interest including OID) and also include the entire gross proceeds from the sale or other disposition of any debt instruments of U.S. issuers, even if the payment would otherwise not be subject to U.S. nonresident withholding tax (e.g., because it is capital gain). Under the

20 applicable final Treasury regulations, withholding under FATCA, if required, generally will apply to payments of U.S.-source interest on the Taxable 2021 Bonds and to payments of gross proceeds from dispositions (including redemptions) of the Taxable 2021 Bonds. However, the IRS recently issued proposed Treasury regulations that eliminate withholding on payments of gross proceeds (but not on payments of interest). Pursuant to the proposed Treasury regulations, the Board and any applicable withholding agent may (but are not required to) rely on this proposed change to FATCA withholding until the final regulations are issued or the proposed regulations are withdrawn. Foreign financial institutions located in jurisdictions that have an intergovernmental agreement with the United States pursuant to FATCA may be subject to different rules with respect to information reporting and related requirements.

The Board will not pay any additional amounts in respect of any amounts withheld, including pursuant to FATCA. Under certain circumstances, a holder might be eligible for refunds or credits of such taxes. Holders are urged to consult with their own tax advisors regarding the effect, if any, of the FATCA provisions to them based on their particular circumstances. State, Local and Foreign Taxes

Owners may be subject to state, local, or foreign taxes with respect to an investment in the Taxable 2021 Bonds. Prospective investors are urged to consult their tax advisors with respect to the state, local and foreign tax consequences of an investment in the Taxable 2021 Bonds.

Federal Tax Matters – Series 2021C Bonds

General

In the opinion of Bond Counsel, interest on the Series 2021C Bonds (for purposes of this section, the “Tax- Exempt 2021 Bonds”) is excludable from gross income for purposes of federal income tax under existing laws as enacted and construed on the date of initial delivery of the Tax-Exempt 2021 Bonds, assuming the accuracy of the certifications of the Board and the University and continuing compliance by the Board and the University with the requirements of the Code. Interest on the Tax-Exempt 2021 Bonds is not an item of tax preference for purposes of federal alternative minimum tax imposed on individuals.

Original Issue Discount

The Tax-Exempt 2021 Bonds being offered at a discount (“original issue discount”) equal generally to the difference between the public offering price and the principal amount are referred to herein as the “Tax-Exempt 2021 Discount Bonds”. For federal income tax purposes, original issue discount on a Tax-Exempt 2021 Discount Bond accrues periodically over the term of such Tax-Exempt 2021 Discount Bond as interest which is excluded from the gross income for federal income tax purposes and subject to alternative minimum tax to the same extent as regular interest. The accrual of original issue discount increases the holder’s tax basis in the Tax-Exempt 2021 Discount Bonds for determining taxable gain or loss upon sale or redemption prior to maturity. Holders should consult their tax advisors for an explanation of the accrual rules.

Original Issue Premium

The Tax-Exempt 2021 Bonds may be offered at a premium (“original issue premium”) over their principal amount. For federal income tax purposes, original issue premium is amortizable periodically over the term of a Tax- Exempt 2021 Bond through reductions in the bondholder’s tax basis for the Tax-Exempt 2021 Bond for determining taxable gain or loss upon sale or redemption prior to maturity. Amortization of premium does not create a deductible expense or loss. Bondholders should consult their tax advisers for an explanation of the amortization rules.

No Other Opinions. Bond Counsel expresses no opinion regarding other federal tax consequences relating to ownership or disposition of, or the accrual or receipt of interest on, the Tax-Exempt 2021 Bonds.

21 State of Arizona Tax Matters

Interest on the Series 2021 Bonds is exempt from State of Arizona income tax. Bond Counsel will express no opinion regarding other tax consequences of ownership, disposition of, or the accrual or receipt of interest on the Series 2021 Bonds.

General

The opinions expressed by Bond Counsel are based upon existing legislation and regulations as interpreted by relevant judicial and regulatory authorities as of the date of issuance and delivery of the Series 2021 Bonds, and Bond Counsel will not express any opinion as of any date subsequent thereto or with respect to any proposed or pending legislation, regulatory initiatives or litigation.

The foregoing is only a general summary of certain provisions of the Code as enacted and in effect on the date hereof and does not purport to be complete; holders of the Series 2021 Bonds should consult their own tax advisors as to the effects, if any, of the Code in their particular circumstances.

See Appendix D hereto for the proposed Form of Approving Opinion of Bond Counsel.

ERISA CONSIDERATIONS

The following is a summary of certain considerations associated with the acquisition and holding of the Bonds by an “employee benefit plan” (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)) that is subject to Title I of ERISA, a “plan” covered by Section 4975 of the Code (including an individual retirement account or “IRA”), a benefit plan subject to provisions under applicable federal, state, local, non U.S. or other laws or regulations that are similar to the provisions of Title I of ERISA or Section 4975 of the Code (“Similar Laws”) and any entity whose underlying assets include “plan assets” by reason of such employee benefit or retirement plan’s investment in such entity (each of which we refer to as a “Plan”).

General Fiduciary Matters

ERISA imposes certain duties on persons who are fiduciaries of a Plan subject to Title I of ERISA, and ERISA and Section 4975 of the Code prohibit certain transactions involving the assets of a Plan subject to ERISA as well as the assets of “plans” covered by Section 4975 of the Code (including individual retirement accounts (“IRAs”) described in Sections 408 and 408A of the Code) with its fiduciaries or other interested parties (such plans are referred to herein as “Benefit Plans”). In general, under ERISA and the Code, any person who exercises any discretionary authority or control over the administration of such a Benefit Plan or the management or disposition of the assets of such a Benefit Plan, or who renders investment advice for a fee or other compensation (direct or indirect) to such a Benefit Plan, is generally considered to be a fiduciary of the Benefit Plan. Plans that are governmental plans (as defined in Section 3(32) of ERISA), certain church plans (as defined in Section 3(33) of ERISA or Section 4975(g)(3) of the Code) and non-U.S. plans (as described in Section 4(b)(4) of ERISA) are not subject to the requirements of ERISA or Section 4975 of the Code but may be subject to similar prohibitions under Similar Laws.

In considering the acquisition, holding and, to the extent relevant, disposition of Taxable 2021 Bonds with a portion of the assets of a Plan, a fiduciary should determine whether the investment is in accordance with the documents and instruments governing the Plan and the applicable provisions of ERISA, the Code or any Similar Law relating to a fiduciary’s duties to the Plan including, without limitation, the prudence, diversification, delegation of control and prohibited transaction provisions of ERISA, the Code and any other applicable Similar Laws.

Prohibited Transactions – In General

Section 406 of ERISA prohibits Benefit Plans from engaging in specified transactions involving plan assets with persons or entities who are “Parties in Interest,” within the meaning of Section 3(14) of ERISA, and Section 4975 of the Code imposes an excise tax on certain “Disqualified Persons,” within the meaning of

22 Section 4975 of the Code, who engage in similar prohibited transactions, in each case unless a statutory or administrative exemption is available.

A Party in Interest or Disqualified Person who engages in a non-exempt prohibited transaction may be subject to other penalties and liability under ERISA and the Code. In the case of an IRA, the occurrence of a prohibited transaction could cause the IRA to lose its tax-exempt status. Further, a separate prohibited transaction could arise if, subsequent to the acquisition, the Board or one of its affiliates becomes a Party in Interest or Disqualified Person with respect to such a Benefit Plan or a subsequent transfer of a Taxable 2021 Bond is between a Benefit Plan and a Party in Interest or Disqualified Person with respect to such Plan.

The definitions of “Party in Interest” and “Disqualified Person” are expansive. While other entities may be encompassed by these definitions, they include, most notably: (1) a fiduciary with respect to a Benefit Plan; (2) a person providing services to a Benefit Plan; and (3) an employer or employee organization any of whose employees or members are covered by a Benefit Plan.

Plan Asset Issues

Certain transactions involving the purchase, holding or transfer of the Taxable 2021 Bonds might be deemed to constitute a prohibited transaction under ERISA and the Code if assets of the Board or Bond Resolution assets were deemed to be assets of a Benefit Plan. Under final regulations issued by the United States Department of Labor at 29 C.F.R. Section 2510.3-101, as modified by Section 3(42) of ERISA (the “Plan Asset Regulations”), the assets of the Board or Bond Resolution would be treated as plan assets of a Benefit Plan for purposes of ERISA and the Code only if the Benefit Plan acquires an “equity interest” in the Board or Bond Resolution assets and none of the exceptions contained in the Plan Asset Regulations is applicable. An equity interest is defined under the Plan Asset Regulations as an interest in an entity other than an instrument which is treated as indebtedness under applicable local law and which has no substantial equity features.

Although there is little statutory or regulatory guidance on this subject, the Taxable 2021 Bonds should be treated as debt, without substantial equity features, for purposes of the Plan Asset Regulations. Accordingly, the assets of the Board or Bond Resolution should not be treated as plan assets of Benefit Plans investing in the Taxable 2021 Bonds. However, there can be no complete assurance that the Taxable 2021 Bonds will be treated as debt obligations without substantial equity features for purposes of the Plan Asset Regulations. If the Board’s or Bond Resolution’s assets were deemed to constitute “plan assets” pursuant to the Plan Asset Regulations, transactions that the Board or Trustee might enter into, or may have entered into in the ordinary course of business, might constitute non-exempt prohibited transactions under ERISA or the Code. Therefore, a Plan fiduciary should consult with its counsel prior to making such purchase.

Prohibited Transaction Exemptions

However, without regard to whether the Taxable 2021 Bonds are treated as debt obligations without substantial equity features for such purpose, the acquisition or holding of Taxable 2021 Bonds by or on behalf of a Benefit Plan could be considered to give rise to a prohibited transaction if the Board or Trustee, and other parties connected with the offering (such as the Underwriters), or any of their respective affiliates, is or becomes a Party in Interest or a Disqualified Person with respect to such Benefit Plan. In such case, certain status-based exemptions from the prohibited transaction rules could be applicable depending on the type and circumstances of the Plan fiduciary making the decision to acquire the Taxable 2021 Bonds. These are commonly referred to as prohibited transaction class exemptions or “PTCEs.” Included among these exemptions are:

• PTCE 75-1, which exempts certain transactions between a Benefit Plan and certain broker-dealers, reporting dealers and banks;

• PTCE 96-23, which exempts certain transactions effected at the sole discretion of an “in-house asset manager” (an “INHAM”));

• PTCE 90-1, which exempts certain investments by insurance company pooled separate accounts;

23 • PTCE 95-60, which exempts certain transactions effected on behalf of an “insurance company general account”;

• PTCE 91-38, which exempts certain investments by bank collective investment funds; and

• PTCE 84-14, which exempts certain transactions effected at the sole discretion of a “qualified professional asset manager” (a “QPAM”)).

Note that IRAs, and certain other plans described in Section 4975(e)(1) of the Code, are typically not represented by banks, insurance companies or registered investment advisors so that, practically speaking, these status-based exemptions may not be available.

There is also a statutory exemption in Section 408(b)(17) of ERISA and Section 4975(d)(20) of the Code (which may be available to IRAs and other Benefit Plans) which is commonly referred to as the “Service Provider Exemption”. The Service Provider Exemption covers transactions involving “adequate consideration” with persons who are Parties in Interest or Disqualified Persons solely by reason of their (or their affiliate’s) status as a service provider to the Benefit Plan involved and none of which is a fiduciary with respect to the Plan assets involved (or an affiliate of such a fiduciary).

The availability of each of these PTCEs and/or the Service Provider Exemption is subject to a number of important conditions which the Benefit Plan’s fiduciary must consider in determining whether such exemptions apply. Also, there can be no assurance that all the conditions of any such exemptions will be satisfied at the time that the Taxable 2021 Bonds are acquired by a purchaser, or thereafter, if the facts relied upon for utilizing a prohibited transaction exemption change, or that the scope of relief provided by these exemptions will necessarily cover all acts that might be construed as prohibited transactions. Therefore, a Benefit Plan fiduciary considering an investment in the Taxable 2021 Bonds should consult with its counsel prior to making such purchase.

Because of the foregoing, the Taxable 2021 Bonds (and any interest therein) may not be purchased or held by any person investing “plan assets,” of a Benefit Plan, unless such purchase or holding will not constitute or result in a non-exempt prohibited transaction under ERISA or the Code or similar violation of any applicable Similar Laws. Any Benefit Plan fiduciary considering whether to purchase the Taxable 2021 Bonds on behalf of a Benefit Plan should consult with its counsel regarding the applicability of the fiduciary responsibility and prohibited transaction provisions of ERISA and the Code to such investment and the availability of any of the exemptions referred to above. Persons responsible for investing the assets of employee benefit plans that are not subject to the requirements of ERISA or Section 4975 of the Code should seek similar counsel with respect to the application of similar prohibitions under Similar Laws.

Representations

BY ITS ACQUISITION OF THE TAXABLE 2021 BONDS (OR ANY INTEREST THEREIN) EACH PURCHASER AND SUBSEQUENT TRANSFEREE THEREOF WILL BE DEEMED TO HAVE REPRESENTED, WARRANTED AND AGREED THAT, ON EACH DAY IT HOLDS A TAXABLE 2021 BOND OR ANY INTEREST THEREIN, EITHER (a) IT IS NOT A PLAN, SUCH AS AN IRA, AND THAT NO PORTION OF THE ASSETS USED TO ACQUIRE OR HOLD THE TAXABLE 2021 BONDS CONSTITUTES ASSETS OF A PLAN OR (b) THE ACQUISITION, HOLDING AND DISPOSITION OF A TAXABLE 2021 BOND (OR AN INTEREST THEREIN) BY A PLAN WILL NOT CONSTITUTE A PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE OR SIMILAR VIOLATION UNDER ANY APPLICABLE SIMILAR LAWS FOR WHICH THERE IS NO APPLICABLE STATUTORY, REGULATORY OR ADMINISTRATIVE EXEMPTION.

The foregoing discussion is general in nature and is not intended to be all-inclusive. Due to the complexity of these rules and the penalties that may be imposed upon persons involved in non-exempt prohibited transactions, it is particularly important that fiduciaries, or other persons considering purchasing Taxable 2021 Bonds on behalf of, or with the assets of, any Plan, consult with their counsel regarding the potential applicability of ERISA, Section 4975 of the Code and any Similar Laws to such investment and whether an exemption would be applicable to the purchase and holding of the Taxable 2021 Bonds. The acquisition, holding and, to the extent relevant,

24 disposition of Taxable 2021 Bonds by or to any Plan is in no respect a representation by the Board or Underwriter (or any affiliates or representatives thereof) that such an investment meets all relevant legal requirements with respect to investments by such Plans generally or any particular Plan, or that such an investment is appropriate for Plans generally or any particular Plan.

FINANCIAL ADVISOR

RBC Capital Markets, LLC is employed as the Financial Advisor to the Board in connection with the issuance of the Series 2021 Bonds. The fees for Financial Advisor are contingent upon the issuance, sale and delivery of the Series 2021 Bonds.

The Financial Advisor is engaged by the Board to, among other things, coordinate the preparation of the Official Statement, but is not obligated to undertake, and has not undertaken, an independent verification, and does not guarantee or assume responsibility for the accuracy, completeness, or fairness, of the information in this Official Statement.

APPROVAL OF LEGAL MATTERS

Certain legal matters incident to the issuance of the Series 2021 Bonds are subject to the approving opinion of Ballard Spahr LLP, Bond Counsel. The proposed form of the opinion of Bond Counsel is set forth in Appendix D. Fees of Bond Counsel will be paid from Series 2021 Bond proceeds only upon issuance of the Series 2021 Bonds. Certain legal matters will be passed upon for the Board by the Senior Vice President and General Counsel for the Arizona University System and for the University by the Senior Vice President and General Counsel to the University. Certain legal matters will be passed upon for the Underwriters by their counsel, Greenberg Traurig, LLP.

UNDERWRITING

The Underwriters have agreed, subject to certain conditions, to purchase the Series 2021 Bonds from the Board at a price of $______(representing the par amount of the Series 2021 Bonds less Underwriters’ discount of $______plus original issue premium of $______). The public offering prices may be changed from time to time by the Underwriters. The Underwriters may subsequently offer and sell the Series 2021 Bonds to dealers (including dealers depositing the Series 2021 Bonds into investment trusts) and others at prices lower than such initial public offering prices. The Underwriters will be obligated to purchase all of the Series 2021 Bonds if any are purchased.

The Underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include sales and trading, commercial and investment banking, advisory, investment management, investment research, principal investment, hedging, market making, brokerage and other financial and non-financial activities and services. In the various course of their various business activities, the Underwriters and their respective affiliates, officers, directors and employees may purchase, sell or hold a broad array of investments and actively trade securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments for their own account and for the accounts of their customers, and such investment and trading activities may involve or relate to assets, securities and/or instruments of the Board and/or University (directly, as collateral securing other obligations or otherwise) and/or persons and entities with relationships with the Board and/or University. The Underwriters and their respective affiliates may also communicate independent investment recommendations, market color or trading ideas and/or publish or express independent research views in respect of such assets, securities or instruments and may at any time hold, or recommend to clients that they should acquire, long and/or short positions in such assets, securities and instruments.

Citigroup Global Markets Inc., an underwriter of the Series 2021 Bonds, has entered into a retail distribution agreement with Fidelity Capital Markets, a division of National Financial Services LLC (together with its affiliates, “Fidelity”). Under this distribution agreement, Citigroup Global Markets Inc. may distribute municipal securities to retail investors at the original issue price through Fidelity. As part of this arrangement, Citigroup Global Markets Inc. will compensate Fidelity for its selling efforts.

J.P. Morgan Securities LLC ("JPMS"), an underwriter of the Series 2021 Bonds, has entered into negotiated dealer agreements (each, a "Dealer Agreement") with each of Charles Schwab & Co., Inc. ("CS&Co.") and LPL Financial LLC (“LPL”) for the retail distribution of certain securities offerings at the original issue prices. Pursuant to each Dealer Agreement, if applicable to this transaction, each of CS&Co. and LPL will purchase Bonds from JPMS at the original issue price less a negotiated portion of the selling concession applicable to any Bonds that such firm sells.

UBS Financial Services Inc. ("UBS FSI"), an underwriter of the Series 2021 Bonds, has entered into a distribution and service agreement with its affiliate UBS Securities LLC ("UBS Securities") for the distribution of certain municipal securities offerings. Pursuant to such agreement, UBS FSI will share a portion of its underwriting compensation with UBS Securities. UBS FSI and UBS Securities are each subsidiaries of UBS Group AG.

Wells Fargo Securities is the trade name for certain securities-related capital markets and investment banking services of Wells Fargo & Company and its subsidiaries, including Wells Fargo Bank, National Association, which conducts its municipal securities sales, trading and underwriting operations through the Wells Fargo Bank, NA Municipal Finance Group, a separately identifiable department of Wells Fargo Bank, National Association, registered with the Securities and Exchange Commission as a municipal securities dealer pursuant to Section 15B(a) of the Securities Exchange Act of 1934.

Wells Fargo Bank, National Association, acting through its Municipal Finance Group ("WFBNA"), an underwriter of the Series 2021 Bonds, has entered into an agreement (the "WFA Distribution Agreement") with its affiliate, Wells Fargo Clearing Services, LLC (which uses the trade name “Wells Fargo Advisors”) ("WFA"), for the distribution of certain municipal securities offerings, including the Series 2021 Bonds. Pursuant to the WFA Distribution Agreement, WFBNA will share a portion of its underwriting or remarketing agent compensation, as applicable, with respect to the Series 2021 Bonds with WFA. WFBNA has also entered into an agreement (the “WFSLLC Distribution Agreement”) with its affiliate Wells Fargo Securities, LLC (“WFSLLC”), for the distribution of municipal securities offerings, including the Series 2021 Bonds. Pursuant to the WFSLLC Distribution Agreement, WFBNA pays a portion of WFSLLC’s expenses based on its municipal securities transactions. WFBNA, WFSLLC, and WFA are each wholly-owned subsidiaries of Wells Fargo & Company.

INDEPENDENT AUDITORS

The financial statements of the University as of June 30, 2020, and for its Fiscal Year then ended have been audited by the State Office of the Auditor General (the “Auditor General”), independent auditors, as indicated in its report thereon, and are included in Appendix B to this Official Statement. The University has advised the Auditor General of the inclusion of such audited financial statements, together with the Auditor General’s report thereon, in this Official Statement but has not requested or received the consent of the Auditor General to do so since such request and consent would have required the Auditor General to review all of the information contained herein. Therefore, the Auditor General has not reviewed this Official Statement, or performed any procedures with respect to the University’s audited financial statements subsequent to the date of its report thereon.

RATINGS

Moody’s Investors Service, Inc. (“Moody’s”) and Standard & Poor’s Financial Services LLC (“S&P”), have assigned the Series 2021 Bonds ratings of “Aa2” and “AA” respectively.

Such ratings reflect only the views of Moody’s and S&P, respectively. An explanation of the significance of such ratings may be obtained from Moody’s at 7 World Trade Center at 250 Greenwich Street, New York, New York 10007 and S&P at 55 Water Street, New York, New York 10041. The ratings are not a recommendation to buy, sell or hold the Series 2021 Bonds, and there is no assurance that such ratings will continue for any given period of time or that either will not be revised downward or withdrawn entirely by either Moody’s or S&P, or both, if, in their judgment, circumstances so warrant.

26 The Board expects to furnish each rating agency with any information and materials it may request. The Board, however, assumes no obligation to furnish requested information or materials, and may issue debt for which a rating is not requested. Failure to furnish requested information and materials, or the issuance of debt for which a rating is not requested, may result in the suspension or withdrawal of a rating on the Series 2021 Bonds. Any downward revision or withdrawal of a rating may have an adverse effect on the market price or marketability of the Series 2021 Bonds.

CONTINUING DISCLOSURE UNDERTAKING

The Board has undertaken for the benefit of the owners of the Series 2021 Bonds and to assist the Underwriters in complying with Rule 15c2-12 promulgated pursuant to the Securities Exchange Act of 1934, as amended, to provide certain financial information and operating data relating to the University from time to time pursuant to a Continuing Disclosure Undertaking in substantially the form set forth in Appendix E hereto.

ADDITIONAL INFORMATION

All of the summaries of the Series 2021 Bonds, the Bond Resolution, opinions, contracts, agreements, and other related documents described in this Official Statement are only brief descriptions of certain provisions thereof and do not constitute complete statements of such documents or provisions. Reference is hereby made to the complete documents, copies of which are available as set forth under “INTRODUCTION” herein. Any statements made in this Official Statement involving matters of opinion or estimates, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of such opinions or estimates will be realized.

The attached Appendices are integral parts of this Official Statement and must be read together with all of the foregoing.

The Board has approved and authorized the distribution of this Official Statement.

ARIZONA BOARD OF REGENTS

By: Vice President for Finance and Deputy Treasurer Arizona State University

27 [THIS PAGE INTENTIONALLY LEFT BLANK] APPENDIX A

ARIZONA STATE UNIVERSITY

TABLE OF CONTENTS

Page ARIZONA STATE UNIVERSITY ...... A-1 General Description ...... A-1 Organization and Administration ...... A-1 Faculty and Staff ...... A-5 Colleges and Degrees ...... A-5 The Campuses ...... A-6 ASU Online ...... A-7 Research Park...... A-7 Accreditation and Affiliations ...... A-7 Research at the University ...... A-7 Admission Policy ...... A-9 Student Enrollments ...... A-10 Degrees Conferred ...... A-12 FINANCIAL CONDITION OF THE UNIVERSITY ...... A-13 Introduction ...... A-13 Combined University and Component Units ...... A-13 Statement of Revenues, Expenses and Changes in Net Position ...... A-14 Tuition and Fees ...... A-17 State Budgeting and Appropriations Process ...... A-19 Gifts, Grants and Contracts ...... A-20 Gross Revenues ...... A-20 Receipts from Other Major Revenue Sources ...... A-21 Infectious Disease Outbreak………………………………………………………………………………. A-22 Arizona State University Pension and Retirement Plans ...... A-23 Health Care Benefits for Retired Employees ...... A-23 Outstanding Indebtedness of the University ...... A-24 Component Units ...... A-27 Future Financing Transactions ...... A-27

A-i [THIS PAGE INTENTIONALLY LEFT BLANK] ARIZONA STATE UNIVERSITY

General Description

The University (also referred to herein as “ASU”) is a fully-accredited, four-year degree-granting institution of higher learning, supported by the State and governed by the Board. Total enrollment for the 2020 fall semester was 128,815, which includes 53,997 students enrolled in ASU degree programs offered completely online, making the University the largest institution of higher learning in terms of enrollment in the State and ranking it among the largest of America’s institutions of higher learning. U.S. News and World Report’s 2021 college rankings, for the sixth consecutive year, named the University #1 on the list of Most Innovative Schools and also listed programs from the W.P. Carey School of Business, Mary Lou Fulton Teachers College, College of Public Service and Community Solutions, Sandra Day O’Connor College of Law, Ira A. Fulton School of Engineering, School of Earth and Space Exploration, School of Art in the Herberger Institute of Arts, and College of Nursing and Health Innovation on their list of the Best Graduate Schools. The Princeton Review ranked the University as one of the country’s top universities for undergraduate education in its 2021 edition of “The Best 386 Colleges” and the 2021 edition of the Fiske Guide to Colleges named the University as a top 10 “Best Buy” among public colleges in the U.S., Canada and the United Kingdom.

The University was initially established in 1885 as the Arizona Territorial Normal School at Tempe, pursuant to the provisions of a bill passed by the 13th Arizona Territorial Legislature. The school was opened in a four-room building on February 8, 1886, with 33 students in the first class. As the State grew in population, the school’s original mission of training teachers steadily broadened and the institution passed through several changes in purpose and name. In 1945, it became Arizona State College at Tempe and was placed, along with the other two State public universities, under the authority of the Board. From an enrollment of less than 1,000 at the end of World War II, the University grew more than tenfold by November 1958, when the State electorate voted to change its name to Arizona State University. In 1994, the University was awarded the prestigious Research I University status, recognizing the University as a premier research institution. Pursuant to the 2000 Carnegie Classification, the University has been recognized as a Doctoral/Research-Extensive University.

Organization and Administration

The University is governed by the Board. The general administrative powers of the Board include the enactment of ordinances for the governance of the institutions under its control, the setting of tuitions and fees, the appointment and employment of university administrative officers and faculty members, and the establishment of curricula. The administrative offices of the University are responsible for its operation and maintenance in accordance with the rules and policies established by the Board. The following table lists the names of principal administrators of the University followed by brief resumes.

Name Position Michael M. Crow President

Mark Searle Executive Vice President and University Provost

Nancy Gonzalez Provost Pro Tempore

Morgan R. Olsen Executive Vice President, Treasurer and Chief Financial Officer

Sally C. Morton Executive Vice President of Knowledge Enterprise

Maria Anguiano Executive Vice President of Learning Enterprise

José A. Cárdenas Senior Vice President and General Counsel

James W. O’Brien Senior Vice President for University Affairs and Chief of Staff, Office of the President

James A. Rund Senior Vice President for Educational Outreach and Student Services

Richard H. Stanley Senior Vice President and University Planner

A-1 Name Position Christine K. Wilkinson Senior Vice President and Secretary of the University

Joanne M. Wamsley Vice President for Finance and Deputy Treasurer

Dr. Michael M. Crow became the 16th president of the University on July 1, 2002. An academic leader and educator, designer of knowledge enterprises, and science and technology policy scholar, he is guiding the transformation of the University into one of the nation’s leading public metropolitan research universities, an institution that combines the highest levels of academic excellence, inclusiveness to a broad demographic, and maximum societal impact—a model he terms the “New American University.” Under his direction the nation’s youngest major research institution and one of the largest universities governed by a single administration pursues teaching, research, and creative excellence focused on the major challenges of our time, as well as those central to the quality of life, sustainable development, and economic competitiveness of Arizona and the nation. He has committed the University to academic enterprise, transdisciplinary, sustainability, social embeddedness, and global engagement, and championed initiatives leading to record levels of diversity in the student body. Under his leadership, the University has established more than a dozen new transdisciplinary schools and large-scale research initiatives such as the Biodesign Institute; Global Institute of Sustainability (GIOS), incorporating the School of Sustainability (SOS); Complex Adaptive Systems Initiative (CASI); Flexible Display Center; LightWorks; and initiatives in the humanities and social sciences, including the Center for the Study of Religion and Conflict. During his tenure, the University has nearly tripled research expenditures, completed an unprecedented infrastructure expansion, and announced the eight largest gifts in the history of the institution, including three $50 million gifts, endowing the W. P. Carey School of Business; Ira A. Fulton Schools of Engineering; and Mary Lou Fulton Teachers College. Prior to joining the University, Dr. Crow was executive vice provost of Columbia University, where he also was professor of science and technology policy in the School of International and Public Affairs. As chief strategist of Columbia’s research enterprise, he led technology and innovation transfer operations, establishing Columbia Innovation Enterprises (renamed Science and Technology Ventures), the Columbia Strategic Initiative Program, and Columbia Digital Media Initiative, as well as advancing interdisciplinary program development. He played the lead role in the creation of and served as the founding director of the Earth Institute at Columbia University, and in 1998 founded the Center for Science, Policy, and Outcomes (CSPO) in Washington, D.C., a consortium of scholars and policymakers dedicated to linking science and technology to optimal social, economic, and environmental outcomes. In 2003, CSPO was reconstituted at the University as the Consortium for Science, Policy, and Outcomes, based in both Phoenix and Washington, DC. In national service, Dr. Crow has been an adviser to the U.S. Departments of State, Commerce, and Energy, and various defense and intelligence agencies on matters of science and technology policy related to intelligence and national security. A fellow of the National Academy of Public Administration, and member of the National Advisory Council on Innovation and Entrepreneurship and Council on Foreign Relations, he is the author of books and articles relating to the design and analysis of knowledge enterprises, technology transfer, sustainable development, and science and technology policy.

Dr. Mark Searle became Executive Vice President and University Provost in November, 2015 and holds the rank of Professor in the School of Community Resources and Development. Dr. Searle coordinates the university’s international efforts, governing board relations, strategic goal setting, and other initiatives across the University. Prior to this current administrative appointment, Dr. Searle served as Interim University Provost, Deputy Provost and Chief of Staff and Vice-President for Academic Personnel. Earlier in his career at the University, Dr. Searle served as the Founding Dean of the College of Human Services and as Vice President and Provost of the University’s West campus. Dr. Searle joined the University after an extensive career in Canada where he was the Founding Director of the multidisciplinary Health, Leisure, and Human Performance Research Institute and head of an academic program in Recreation Studies at the University of Manitoba. Prior to his University appointment, Dr. Searle served in various management positions within municipal and provincial government. The Provincial Government of Manitoba, the National Therapeutic Recreation Society and the University of Manitoba have honored Dr. Searle for his achievements. He has been elected as a fellow of the Academy of Leisure Sciences and the Academy for Park and Recreation Administration. Dr. Searle is published on the relationship between leisure behavior and the psychological well-being of older adults. He holds a Ph.D. from the University of Maryland. On June 30, 2021, Dr. Searle will step down from his position as Provost and transition to the role of University Professor, assisting the president and next university provost with the implementation of strategic initiatives.

A-2 Dr. Nancy Gonzales is Provost Pro Tempore and Foundation Professor of psychology at the University. On July 1, 2021, she will become an Executive Vice President and University Provost. Prior to her current administrative appointment, Dr. Gonzalez served as dean of natural sciences, dean of faculty, director of the REACH (Research and Education Advancing Children’s Health) Institute, and co-director of the NIDA funded T32 training grant in substance abuse implementation science in The College. Her research examines culturally- informed models of family and youth resilience in low-income communities. Over the past 20 years, her research has been funded by the National Institutes of Health, the National Science Foundation, the Helios Education Foundation, and the Institute for Educational Sciences and has contributed important insights into the cultural strengths, challenges, and positive development of Latinx youth living in the varied communities in the U.S. Her research encompasses multiple collaborations and research studies that span across the lifespan, from birth to young adulthood. She also collaborates with community agencies and schools to develop and implement interventions to reduce minority health disparities and promote academic success in secondary and post-secondary educational settings. Dr. Gonzalez has earned numerous awards for her community-based research and she is an elected fellow of the American Psychological Association.

Dr. Morgan R. Olsen became the Executive Vice President, Treasurer and Chief Financial Officer of the University in November 2008. He came to the University from Purdue University, where he served as Executive Vice President and Treasurer. Before joining Purdue University, Dr. Olsen served at Southern Methodist University as Vice President for Business and Finance, Eastern Illinois University as Vice President for Business Affairs and Treasurer and Associate Professor in the college student personnel program, and as Vice President for Fiscal Affairs at Emporia University in Kansas. His responsibilities at the University include overseeing treasury and financial functions, capital projects, real estate, facilities operations, human resources, police, environmental health and safety, information technology and business and auxiliary services at the University’s four campuses. He serves on the board of directors of the United Educators insurance company and holds memberships in EDUCAUSE, the Association for the Study of Higher Education, and the Society for College and University Planning. In 2018, Dr. Olsen received the National Association of College and University Business Officers, NACUBO, Distinguished Business Officer Award. He is a former chair of the NACUBO board of directors, and a past president of the Central Association of College and University Business Officers, CACUBO. The Arizona chapter of Financial Executives International awarded Dr. Olsen its CFO of the Year award for a nonprofit in 2017. Dr. Olsen earned a bachelor's degree, summa cum laude, and a master's degree in public administration from the University of North Dakota, where he was inducted into Phi Beta Kappa, and holds a Ph.D. in higher education from the University of Kansas. He served as acting executive budget analyst for the North Dakota Office of Management and Budget before entering university administration in 1985.

Dr. Sally C. Morton, was appointed Executive Vice President of Knowledge Enterprise at the University in February 2021. In this capacity, she advances the University’s research priorities and oversees activities related to Knowledge Enterprise operations, as well as its institutes and initiatives. She also helps expand the university’s economic development, international development, and corporate engagement and strategic partnership agendas while identifying and pursuing high-level research opportunities. Morton is a professor in the College of Health Solutions and the School of Mathematical and Statistical Sciences, and holds the Florence Ely Nelson Chair. Prior to joining the University, Dr. Morton was dean of the College of Science and professor of statistics at Virginia Tech from 2016 to 2020, and interim director of the Fralin Life Sciences Institute in 2019. From 2010 to 2016, Dr. Morton was chair of the Biostatistics Department at the University of Pittsburgh, where she was the founding director of the Comparative Effectiveness Research Center in the Health Policy Institute. Prior to that, she was vice president for statistics and epidemiology at RTI International and head of the RAND Corporation Statistics Group. Dr. Morton was a member of the Committee on National Statistics and the National Advisory Council for the Agency for Healthcare Research and Quality. Actively involved in the scientific and academic communities, Dr. Morton was the 2009 president of the American Statistical Association and 2013 chair of Section U (Statistics) of the American Association for the Advancement of Science. She is a fellow of the ASA and of the AAAS and an elected member of the Society for Research Synthesis Methodology and the International Statistical Institute. Dr. Morton received the ASA Founders Award, the Janet L. Norwood Award and the ASA Founders Award and Health Policy Statistics Section Long-Term Excellence Award. She holds a PhD in statistics from Stanford University.

Ms. Maria Anguiano was appointed the Executive Vice President of the University’s Learning Enterprise – a premier lifelong learning global education brand in December 2020. Prior to this position, she was appointed Senior Vice President of Strategy for the University in August 2018. The University’s Learning Enterprise serves learners of all ages and backgrounds to inspire curiosity, wonder and hope, in alignment with the University’s charter and goals of advancing excellence in education, broadening access, and having a meaningful societal impact A-3 in a rapidly evolving, technology-fueled world. As a first-generation college graduate, Ms. Anguiano has dedicated her career to improving access to education for all learners. Prior to joining the University, Ms. Anguiano served as the chief financial officer for the ed-tech startup Minerva Project where she expanded access to the highest quality yet affordable education to students through an integrated, technology-enhanced curriculum focused on helping them succeed in a rapidly-changing, complex global environment. As the vice chancellor of planning & budget and chief financial officer at the University of California-Riverside, she led an $800+ million portfolio overseeing campus-wide strategic planning, financial planning and analysis; institutional research; and capital asset strategies. Ms. Anguiano has held a senior advisory role at the Bill and Melinda Gates Foundation, and finance roles at Barclays Capital and Deloitte. Ms. Anguiano is an appointed member of the Board of Regents for the University of California system. She is also a member of several other boards including the James Irvine Foundation, KIPP Foundation, and the Campaign for College Opportunity – organizations that advance access to opportunities to education and economic mobility for individuals from all backgrounds. Ms. Anguiano holds a Masters in Business Administration from the Stanford Graduate School of Business and a Bachelor of Arts degree from Claremont McKenna College. Ms. Anguiano grew up in National City and currently resides in San Diego, California.

Mr. José A. Cárdenas was named Senior Vice President and General Counsel effective January 2009. In addition to serving as chief legal officer of the University, he is responsible for management of University Athletics Compliance and serves as a University representative on and to the boards of directors of the University affiliated and related entities. Mr. Cárdenas also advances and supports the public service and outreach mission of the University by participating in community organizations, representing the University in the business community and before local, regional and state constituencies. Mr. Cárdenas received his Bachelor of Arts from the University of Nevada at Las Vegas in 1974. In 1977, he graduated from Stanford University Law School, where he served as an articles editor on the Stanford Law Review. He joined Lewis and Roca in 1978, following a one-year federal district court clerkship. After becoming a partner in the firm in 1982, Mr. Cárdenas served in numerous management roles, including as the firm's managing partner (CEO) from 1999 to 2003, at which point he was named the firm's first chairman. Mr. Cárdenas has an AV (“Preeminent Attorney”) rating from Martindale-Hubbell. He is listed in the 2007, 2008 and 2009 editions of Southwest Super Lawyers in the business litigation category, and in the 2009 edition of The Best Lawyers in America®, by Woodward/White, Aiken, S.C., in the category of commercial litigation. In 1995, he was elected to membership in the prestigious American Law Institute, and he is a member of The Fellows of the American Bar Foundation. Mr. Cárdenas has also been recognized for his many community activities including his selection in 2000 as the recipient of the Mexican government's Ohtli award given to U.S. residents of Mexican descent in recognition of their service to Mexican communities in the United States. He has been admitted to practice law in Arizona, California, the Ninth Circuit Court of Appeals, and the United States Supreme Court. In addition, he is a member of various bar associations including the Hispanic National Bar Association. He has been a member of Los Abogados Hispanic Bar Association since 1978, having served for many years on its board of directors and as president from 1985 to 1988.

Mr. James O’Brien became the Senior Vice President for University Affairs and Chief of Staff for the Office of the President in April 2013. He is responsible for implementing complicated strategic and tactical objectives of the Office of the President. He also works across the institution to identify, facilitate and coordinate opportunities and initiatives which involve multiple units within and affiliated with the institution. This includes advancing opportunities and initiatives with University public affairs, State and federal policy affairs, global engagement, corporate relations, and University athletics. Prior to his role as Senior Vice President, Mr. O’Brien was the Vice President and Chief of Staff (2008-2013) and Senior Advisor to the President and Chief of Staff (2003-2008). He joined the University in July 2003 after working as corporate counsel to several publicly traded and private companies as well as working in public affairs at the State and federal levels. He received a Bachelor of Arts from Iowa State University and Juris Doctor from Drake University.

Dr. James A. Rund is the Senior Vice President for Educational Outreach and Student Services at the University. His responsibilities include oversight of student services for all University campuses and locations and university outreach efforts including educational partnerships. Dr. Rund has served in various administrative capacities at the University including Dean of Student Development, Associate Vice President for Student Affairs, and Vice President for University Undergraduate Initiatives, and Interim Dean and Director of the Mary Lou Fulton Institute and Graduate School of Education. He is an associate professor in Higher Education, Division of Educational Leadership and Innovation in the Mary Lou Fulton Teachers College at the University. Dr. Rund holds his Doctor of Education in Higher and Adult Education from the University, a Master of Science in Counseling and Student Personnel Services from North Dakota State University, and a Bachelor of Arts in English from Moorhead State University. A-4 Mr. Richard H. Stanley was appointed as Senior Vice President and University Planner in February 2004. In this position, working with the existing academic and administrative units, he coordinates the interaction of program, facility, and financial planning activities across the University’s campuses and locations. The focus of the work is medium-term and long-term planning to implement the vision of the New American University. He is a member of the University’s Executive Committee and one of the five members of the University Budget Committee which coordinates budget planning for the University. Prior to joining the University, Mr. Stanley spent 24 years at New York University (“NYU”), most recently as Executive Vice Provost. During his tenure at NYU he had planning responsibilities in the areas of space and facilities, academic budgeting, enrollment management, and faculty resources and support. He also had operational responsibility for admissions and financial aid and for information technology services. Earlier in his career, he held positions in internal auditing and in the publishing industry. Mr. Stanley earned a Bachelor of Arts degree in Economics from Yale University.

Dr. Christine K. Wilkinson was appointed Senior Vice President and Secretary of the University in 2002 and is the first person to hold this title. She also holds the position of President and CEO of the ASU Alumni Association and managing director of the Trustees of ASU. Prior to these appointments, she served as the Vice President for Student Affairs for 13 years. Among her other administrative assignments, Dr. Wilkinson has served as the University’s interim athletic director on three separate occasions. She is a tenured faculty member in the Division of Educational Leadership & Innovation, Mary Lou Fulton Teachers College. Dr. Wilkinson’s current involvement in the community includes serving on boards of the Arizona Business Leadership Association, the Valley of the Sun United Way, and the Southwest Autism Research and Resource Center. She also serves on the Big Brothers Big Sisters of America National Leadership Council. She is a member of the Arizona Women’s Forum and ASU Foundation’s Women & Philanthropy Program. During 2017, for her leadership and contribution and commitment to service, Dr. Wilkinson received the Most Admired Leader Lifetime Achievement Award by the Phoenix Business Journal and she was inducted into the Arizona Women’s Hall of Fall. In prior years, Dr. Wilkinson received the Golden Saguaro Award in 2016 by the Japanese American Citizens League, the Tempe Business Woman of the Year in 2014, One of Arizona’s 48 Most Intriguing Women in 2012 as part of the Arizona Centennial Legacy Project and the Woman of the Year in 2009 by Valley Leadership. Her educational background includes: Bachelor of Arts in Education with distinction from the University, a Master of Arts in Education, Counseling Psychology from the University of California at Berkeley, and a Doctor of Philosophy in Higher Education Administration from the University.

Ms. Joanne M. Wamsley is the Vice President for Finance and Deputy Treasurer. Serving as the University’s chief accounting officer, she directs the Financial Services office, which is responsible for the accounting operations of the University, including issuance of the audit financial report, maintenance of accounting records, and establishing a comprehensive set of controls designed to mitigate risk and ensure compliance with generally accepted accounting principles. Financial Services is also responsible for treasury and investment management, capital finance, plant funds, capital asset management, student business services, tax compliance and operational areas including accounts payable, travel and payroll. Ms. Wamsley earned a bachelor’s degree in economics and accounting, as well as an MBA, from the University. She began her professional career in Denver, Colorado with KPMG, formerly Peat, Marwick, Mitchell & Co., prior to joining the Arizona State University Financial Services office in 1983. Since that time she has held progressively more responsible leadership positions within Financial Services. Ms. Wamsley is a certified public accountant, certified government financial manager, and chartered global management accountant. She is a member of the American Institute of Certified Public Accountants, the Arizona Society of Certified Public Accountants and the Association of Government Accountants.

Faculty and Staff

The full-time benefit-eligible faculty of the University totaled 3,743 during the fall semester 2019, of which 54% were tenured/ tenure-track, and part-time benefit-eligible faculty totaled 60. Approximately 8,396 benefit-eligible persons were employed on a full-time basis in a wide variety of staff support positions and 167 benefit-eligible part-time and temporary staff were employed.

Colleges and Degrees

The University offers more than 500 undergraduate and graduate degree programs, with more than 800 available degree concentrations, across all campuses led by expert faculty and highly ranked colleges and schools. Each distinctive academic program exemplifies the hallmark of ASU: an exceptional education inspired by vision,

A-5 scholarship and creativity. The University is organized into 16 Colleges, Schools and Institutes that operate various programs on all or some of the University’s campuses, as shown below:

1. Business, W. P. Carey School of 2. Design and the Arts, Herberger Institute for 3. Teachers College, Mary Lou Fulton 4. Engineering, Ira A. Fulton Schools of 5. Global Futures, College of 6. Health Solutions, College of 7. Honors-Barrett, The Honors College at ASU 8. Integrative Sciences and Arts, College of 9. Interdisciplinary Arts and Sciences, New College of 10. Journalism and Mass Communication, Walter Cronkite School of 11. Law, Sandra Day O’Connor College of 12. Liberal Arts and Sciences, The College of 13. Nursing and Health Innovation, College of 14. Public Service and Community Solutions, Watts College of 15. Thunderbird School of Global Management 16. University College

A more detailed description of the colleges and schools can be found on the ASU website at http://www.asu.edu/. A list of undergraduate and graduate degree programs and certificates may be found at https://students.asu.edu/programs.

The Campuses

Arizona State University at the Tempe campus: Arizona State University at the Tempe campus, located in Tempe, Arizona (the “Tempe campus”) is the University’s largest campus by size and enrollment. The Tempe campus lies within the City of Tempe, Arizona, a city with an estimated 2020 population of 192,008 that comprises a part of the greater Phoenix, Arizona, metropolitan area. The metropolitan area is the State’s major economic, political and population center, located in Maricopa County, Arizona which has an estimated 2020 population of 4,439,220. The campus encompasses approximately 700 acres and offers outstanding physical facilities to support the University’s educational programs. Buildings are modern and attractively designed, providing 19.1 million gross square feet of space. Broad pedestrian malls laid out in an easy-to-follow grid plan and spacious lawns and sub-tropical landscaping serve the physical, aesthetic, and educational needs of students, faculty, and staff. University students, scholars and partners operate in a rich new educational environment – one that is interdisciplinary, creative and hyper-connected to community trends and needs. The University has created new kinds of university spaces that promote academic partnerships with the community, industry and government, which enables the University to contribute in addressing the economic, social and cultural challenges facing society. The campus is also home to world class fine art venues including Grady Gammage Auditorium. This hall, with a seating capacity of approximately 3,000, was designed by Frank Lloyd Wright and named for the late University President Grady Gammage. The University is committed to sustainability and since 2007, the University has pursued LEED® (Leadership and Energy and Environmental Design) certifications for newly constructed facilities from the U.S. Green Building Council. The Tempe campus has certified six buildings to the Platinum level, twenty buildings to the Gold level, thirteen buildings to the Silver level and one LEED Certified building.

Arizona State University at the West campus: Arizona State University at the West campus (the “West campus”) was established in 1984 to serve the educational needs of residents in western Maricopa County, Arizona. Located on approximately 300 acres in northwest Phoenix and providing 1.1 million gross square feet of space, the comprehensive campus offers degrees in undergraduate, graduate and doctoral programs with a broad spectrum of professional and academic programs that share a liberal arts foundation and an interdisciplinary emphasis. Students can choose degree opportunities in high-demand areas such as applied computing, forensic science, natural sciences and teacher education and each year academic program offerings expand to meet increased work force and marketplace demands. Construction of the West campus began in 1986 with the core campus being completed in A-6 1991. In 2008, the campus was designated a Phoenix “Point of Pride”. The West campus has three LEED Gold certified buildings: the Verde Dining Pavilion, Sun Devil Fitness Complex and the Herberger Young Scholars Academy.

Arizona State University at the Polytechnic campus: Arizona State University at the Polytechnic campus (the “Polytechnic campus”) was created in 1994 to meet the growing demand in the State for additional university- level educational opportunities. The Polytechnic campus is home to programs in aviation, business, education, engineering, math, science and technology, complemented by arts, humanities and social sciences curricula. Students can earn ASU bachelor’s, master’s and doctoral degrees, in an environment characterized by intimate class sizes, an integrated curriculum and accessible faculty. The degrees incorporate practical and theoretical exercises throughout the programs. The Polytechnic campus has state-of-the-art facilities such as the Laboratory for Algae Research and Biotechnology where researchers are converting algae into biofuels, food supplements, and using algae in wastewater and air emission remediation. The Polytechnic campus is located on approximately 600 acres at the former Williams Air Force Base in southeast Mesa and provides 2.4 million gross square feet of academic programs and student services space. The Polytechnic campus has seven LEED Gold and one LEED Silver certified buildings.

Arizona State University at the Downtown Phoenix campus: In partnership with the City of Phoenix, the University opened its fourth campus in the heart of downtown Phoenix, Arizona in August 2006 (the “Downtown Phoenix campus”). Located on approximately 18 acres and providing 2.1 million gross square feet of space, the Downtown Phoenix campus provides an academically rigorous university experience that integrates academic, public, private and residential development in a diverse and dynamic living/learning environment for students. To support academic programs at the Downtown Phoenix campus, the City of Phoenix financed the acquisition of several buildings including the University Center, the Post Office and the Park Place South building. The City of Phoenix also constructed the Walter Cronkite School of Journalism and Mass Communication facility, which opened in fall 2008, and the College of Nursing & Health Innovations Building 2, which opened in fall 2009, providing new state-of-the art buildings that house classrooms, research labs and student facilities. In the fall of 2018, the Thunderbird School of Global Management was relocated from its campus in Glendale, Arizona, to the University’s Downtown Phoenix campus. The Downtown Phoenix campus has three LEED Gold and three LEED Silver certified buildings. In July 2010, the Cronkite School facility was awarded the International Architecture Award by The Chicago Athenaeum: Museum of Architecture, an award conferred on the world’s most significant new buildings.

ASU Online

ASU Online offers more than 250 undergraduate and graduate degree programs entirely online. The online programs hold the same accreditation as the University’s traditional programs. EdPlus, created in 2014, seeks to expand on the success of ASU Online to develop innovative programs that enrich the learning experience across all modalities. In 2021, U.S. News and World Report ranked the University first in the U.S. for innovation, sixth in the nation for best online bachelor’s degree programs, seventh in the nation for online graduate programs in criminal justice, sixth in the nation for online MBA degree program, tenth in the nation for graduate programs in engineering and sixth in the nation for masters programs in education tailored to veterans.

Research Park

Arizona State University Research Park, Inc., (ASURP), an independent nonprofit corporation and a financially-interrelated organization of the University, was formed in 1984 to manage a research park to promote and support research activities, in coordination with the University. The ASURP is located on approximately 324 (gross) acres (237 leaseable acres), ground leased by the University to ASURP and located southeast of the Tempe campus.

A-7

Accreditation and Affiliations

The University is accredited by the North Central Association of Colleges and Secondary Schools. Programs in the University's various colleges, schools, divisions and departments are accredited by or affiliated with appropriate national bodies. The University is a member of the National Association of State Universities and Land Grant Colleges, and is affiliated with the American Council on Education and other international, national and regional associations.

Research at the University

As outlined in its charter, the University measures its success by advancing research and discovery of public value and by assuming fundamental responsibility for the economic, social, cultural and overall health of the communities it serves. To achieve this, President Crow has outlined the following goals for establishing the University as a leading global center for interdisciplinary research, discovery and development:

Enhance research competitiveness in annual research expenditures.

The University is one of the fastest-growing research institutions in the U.S., more than doubling its research expenditures over the past 10 years. During Fiscal Year 2019, total research expenditures reported to the National Science Foundation’s (“NSF”) Higher Education Research and Development (“HERD”) survey grew to $639.6 million. In Fiscal Year 2019, the University submitted more than $1.89 billion in proposals and received $499.8 million in award obligations. In Fiscal Year 2020, the University submitted more than $2.40 billion in proposals and received $493 million in awards.

According to the most recent NSF HERD survey, the University ranks:

• #6 for total research expenditures among institutions without a medical school • #1 for geological and earth sciences expenditures • #1 for anthropology expenditures • #1 for transdisciplinary sciences • #4 for social sciences expenditures • #3 for National Aeronautics and Space Administration (NASA)–funded expenditures • #10 for U.S. Department of Health and Human Services (including the National Institute of Health)– funded expenditures among institutions without a medical school

The University is building on foundational research to secure national-scale research programs at an increasing rate. For example, the University now leads a NASA mission to the asteroid Psyche, two NSF-funded Engineering Research Centers, and the $20 million Department of Homeland Security–funded Center for Accelerating Operational Efficiency.

Become the leading American center for discovery and scholarship in the integrated social sciences and comprehensive arts and sciences.

The most critical challenges facing humanity — from clean energy to chronic disease to cybersecurity — are complex in nature. To be truly successful, solutions require not just scientific research and technology innovations, but also policy decisions, public communication, and cultural considerations. With this in mind, the University has established multiple interdisciplinary research institutes and initiatives designed to leverage the University’s key strengths in areas of societal need. The following examples highlight ways the University is making an impact. • As the novel coronavirus swept across the globe in early 2020, researchers in the Biodesign Institute sprang into action to fight the deadly pandemic, creating a clinically approved and certified COVID-19 testing lab in a mere two weeks. Biodesign researchers also developed the first publicly available saliva- based COVID-19 test in the nation. Joining forces with the state health department, hundreds of testing sites were deployed and the Biodesign Institute processed nearly 500,000 tests by the end of 2020.

A-8 • In 2020, the University launched the Julie Ann Wrigley Global Futures Laboratory, which convenes scientists and scholars from across the University to protect Earth’s habitability for generations to come. Building on a longstanding commitment to shaping a sustainable future for all humankind through innovation, the Laboratory encompasses the new College of Global Futures as well as a major research institute and a practice arm devoted to solutions, each significantly enhanced by and integrated with global partnerships. • The Global Security Initiative (“GSI”) convened a multidisciplinary team to create new technology to detect online disinformation, combining humanities and journalism expertise with computer science. GSI is partnering with Kitware, Inc., an international software research and development company, on an $11.9 million contract sponsored by the Defense Advanced Research Projects Agency (DARPA). The project seeks to combat the spread of false and misleading information that threatens our national security and everyday lives.

As a result of its cross-disciplinary approach to solving problems, the University now ranks #1 in the nation for transdisciplinary research expenditures, according to the most recent NSF HERD survey.

Transform regional economic competitiveness through research and discovery and value-added programs.

Research at the University solves critical challenges to improve human well-being. It also attracts and generates businesses that create stable, high-wage jobs and invest in their communities.

• Biodesign Institute researchers are testing a new technique for treating autism — microbial transplant therapy. In a small trial, children diagnosed with autism who received the treatment showed physical and behavioral improvements. The next step is a larger, placebo-controlled study. • Engineering researchers at the University have repeatedly broken records for improving solar cell efficiency. The cost of solar electricity is largely driven by the efficiency of the panels, so these advances offer the potential to lower the overall cost of solar energy.

University researchers partner with industry to enhance research capabilities and deploy solutions effectively. For instance, the University’s longstanding relationship with Mayo Clinic is accelerating discoveries, improving patient care and transforming medical education. The University recently teamed up with Amazon Web Services to open the ASU Smart City Cloud Innovation Center, which will empower cities to solve critical planning challenges through smart technologies such as machine learning, artificial intelligence and analytics.

Additionally, the University has created unique opportunities that allow companies to leverage University expertise and resources in mutually beneficial ways. For example, ASU Practice Labs™ allow companies to work with selected groups of students to solve key business challenges while providing hands-on experience for tomorrow’s workforce. Innovation Zones at ASU allow companies to co-locate at the University to collaborate with researchers and students and access the University’s facilities.

Become a leading American center for innovation and entrepreneurship at all levels.

The University has been ranked #1 in innovation by U.S. News and World Report for six consecutive years. Several robust pathways allow University researchers to bring their innovations to market for the public good.

In 2020, the University launched the J. Orin Edson Entrepreneurship + Innovation Institute (Edson E+I), with an endowed gift from the Edson family. Edson E+I allows the University to support entrepreneurs at the University and in the community through training, mentorship, spaces and funding opportunities — in perpetuity.

Skysong Innovations, the University’s exclusive technology transfer organization, was created as a separate corporate entity to increase speed and flexibility in its deal-making and venturing activities. The following are some examples of University innovations being brought to market:

• Carbon capture technology developed at the University’s Center for Negative Carbon Emissions is being commercialized by Dublin-based Silicon Kingdom Holdings. A single large “farm” of these MechanicalTrees can remove 3.8 million metric tons of CO2 from the air each year, equal to the emissions of 800,000 passenger cars. MechanicalTrees were named a top technology of 2019 by Popular Science. A-9 • SOURCE, a startup company based on University-developed technology, is delivering clean drinking water in more than 40 countries on six continents using specialized solar panels that extract moisture from air. • OncoMyx Therapeutics, a Biodesign Institute spinout company, raised $25 million in venture funding to help commercialize virus-based treatments for cancer. The company is using the funding to advance development of its platform to the stage when it can begin human clinical trials.

Admission Policy

Undergraduate Admissions:

Residents of the State may be admitted to the University as freshmen if they:

• rank in the top quarter of their graduation class from a recognized State high school, or • have a cumulative grade point average of 3.0 or higher, or • score 22 on the composite of the American College Testing Program (“ACT”)**, or • score 1040 on the Scholastic Aptitude Test (“SAT”)**, and • meet the basic academic competency requirements in high school of four years of English, four years of mathematics, two years of social sciences, one year in each of three laboratory sciences, two years of the same foreign language, and one year of fine arts.

Out-of-state residents may be admitted as freshmen to the University if they meet the following:

• rank in the top quarter of their graduation class from a recognized high school, or • have a cumulative grade point average of 3.0 or higher, or • score 24 on the composite of the ACT**, or • score 1110 on the SAT**, and • meet the basic academic competency requirements in high school listed above.

** The University does not require the writing portion of these tests.

Student Enrollments

The following tables set forth the fall semester enrollment for the past five years at the University:

Arizona State University Student Enrollment (1) Total Headcount University Wide

Total Fall Undergraduate Graduate Student Semester Students Students Enrollments 2016 79,447 18,730 98,177 2017 83,551 20,016 103,567 2018 89,898 21,393 111,291 2019 96,727 23,252 119,979 2020 103,617 25,198 128,815

(1) Fall semester 2016 through 2020 student enrollment includes 25,786 students, 30,583 students, 37,384 students, 44,253 students, and 53,997 students respectively, enrolled in degree programs offered completely online.

Source: Arizona State University Office of Institutional Analysis.

A-10 Arizona State University Student Enrollment Full Time Equivalent (FTE) (1) University Wide

Total Student Fall Undergraduate Graduate Enrollments Semester Students Students (FTE) 2016 77,937 16,140 94,077 2017 80,758 17,193 97,951 2018 85,519 18,135 103,653 2019 91,321 19,227 110,548 2020 96,688 20,317 117,005

(1) Fall semester 2016 through 2020 full time equivalent enrollment includes 17,536 students, 20,490 students, 24,914 students, 29,529 students, and 36,924 respectively, enrolled in degree programs offered completely online.

Source: Arizona State University Office of Institutional Analysis.

The following tables set forth the University wide undergraduate (freshman and transfer) and graduate new student application, admission and enrollment figures:

Arizona State University First Time Freshman Applications, Admissions and Enrollments University Wide (1)

Fall Semester Applications Admissions Enrollments 2016 42,396 32,653 12,119 2017 44,613 34,712 12,337 2018 45,327 36,856 13,974 2019 (2) 57,576 47,151 15,606 2020 (2) 59,075 51,325 15,161

(1) Includes completed applications based on Integrated Postsecondary Education Data System (“IPEDS”) reporting. (2) Beginning fall 2019, the University accepts the Common App for first time freshman applications.

Source: Arizona State University Office of Institutional Analysis.

Arizona State University Transfer Applications, Admissions and Enrollments University Wide (1)

Fall Semester Applications Admissions Enrollments 2016 21,136 17,886 10,796 2017 21,123 18,246 10,795 2018 21,513 19,387 12,769 2019 23,032 20,476 13,337 2020 23,401 20,950 13,996

(1) Includes completed applications based on IPEDS reporting.

Source: Arizona State University Office of Institutional Analysis.

A-11 Arizona State University Graduate Applications, Admissions and Enrollments University Wide

Fall Semester Applications Admissions Enrollments 2016 24,112 12,705 6,693 2017 22,719 13,621 6,700 2018 22,942 14,693 7,274 2019 24,952 15,927 7,988 2020 30,091 20,169 8,392

Source: Arizona State University Office of Institutional Analysis.

Degrees Conferred

Below is a history of the degrees conferred by the University:

Arizona State University Degrees Conferred University Wide

Total Academic Degrees Year Undergraduate Graduate Conferred 2015-16 15,264 6,689 21,953 2016-17 16,450 6,884 23,334 2017-18 18,178 7,796 25,974 2018-19 19,340 8,145 27,485 2019-20 20,308 9,081 29,389

Source: Arizona State University Office of Institutional Analysis.

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A-12 FINANCIAL CONDITION OF THE UNIVERSITY

Introduction

The audited financial statements of the University are presented in Appendix B as “Arizona State University Audited Financial Statements.” The statements provide audited information for the Fiscal Year ended June 30, 2020.

The University’s Audited Financial Statements presented in Appendix B include three financial statements, (1) the Statement of Net Position, (2) the Statement of Revenues, Expenses, and Changes in Net Position and (3) the Statement of Cash Flows. These statements were prepared in accordance with Governmental Accounting Standards Board (“GASB”) principles. GASB statements require that financial statements be presented on a consolidated basis to focus on the University as a whole, with resources classified for accounting and reporting purposes into three net asset categories (restricted, unrestricted and invested in capital assets). During the Fiscal Year ended June 30, 2004, the University implemented the provisions of GASB No. 39, which requires reporting as component units those organizations that raise and hold economic resources for the direct benefit of the University.

Combined University and Component Units

In reviewing and analyzing the overall financial status of the University, it is important to include the component units (such as ASU Enterprise Partners) due to their significant assets and annual revenues used in support of the University and/or its students. It is also important to know whether the combined net position of the University and its component units are increasing or decreasing and to know the composition of the net positions in order to determine the discretion available by the University or its component units in the use of these funds. A summary of Fiscal Years 2018, 2019 and 2020 financial activity of the University and its component units on a combined basis follows (dollars in millions):

2018 2019 2020 University University University

Component Component Component University Units Combined University Units Combined University Units Combined Net position/assets at $1,206.9 $869.7 $2,076.6 $1,270.0 $938.0 $2,208.0 $1,355.4 $1,109.4 $2,464.8 beginning of the year Increase/(decrease) in net 63.1 68.3 131.4 85.4 171.4 256.8 6.7 45.4 52.1 position/net assets Net position/assets at end of $1,270.0 $938.0 $2,208.0 $1,355.4 $1,109.4 $2,464.8 $1,362.1 $1,154.8 $2,516.9 year, as restated

Source: Arizona State University, Financial Services.

At the combined net assets (fund balance) level, there should be no significant accounting eliminations between the University and its component units. Eliminations would primarily be at the revenues/expenses and assets/liabilities level.

The University had an increase of $6.7 million in net position for Fiscal Year 2020. The University’s component units (principally the ASU Enterprise Partners) had a $45.4 million increase in net assets. On a combined basis of the University and its component units, there was a $52.1 million increase in net position/assets, equating to approximately 1.2% of total University and component unit revenues.

A-13 End of the year net position/assets for the Fiscal Years ended June 30, 2018, 2019 and 2020 consisted of the following (dollars in millions):

2018 2019 2020 University University University

Component Component Component University Units Combined University Units Combined University Units Combined Invested in capital assets $956.2 $ - $956.2 $985.1 $ - $985.1 $1,042.7 $ - $1,042.7 Restricted net position/assets: Nonexpendable/ Permanently 78.8 484.9 563.7 84.7 567.8 652.5 87.5 603.6 691.1 Expendable/ Temporarily 119.4 408.4 527.8 118.6 421.9 540.5 127.6 427.9 555.5 Unrestricted net position/assets 115.6 44.7 160.3 167.0 119.7 286.7 104.3 123.3 227.6 Net position/assets at end of year, as restated $1,270.0 $938.0 $2,208.0 $1,355.4 $1,109.4 $2,464.8 $1,362.1 $1,154.8 $2,516.9

Source: Arizona State University, Financial Services.

Statement of Revenues, Expenses and Changes in Net Position

The table on the following page provides a summary of actual Revenues, Expenses and Changes in Net Position for the University for Fiscal Years 2016 through 2020, based on audited financial statements. The subsequent page provides a Statement of Activities for the University’s Component Units for Fiscal Years 2016 through 2020, based on audited financial statements. The tables have not been subject to any audit procedures and should be read in conjunction with Appendix B.

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A-14 ARIZONA STATE UNIVERSITY STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION (1) (Dollars in Thousands) Fiscal Year Ended June 30 (Audited) 2016 2017 2018 2019 2020 OPERATING REVENUES Student tuition and fees, net of scholarship allowances ...... $1,157,535 $1,250,828 $1,323,268 $1,423,052 $1,550,581 Research grants and contracts - 253,158 271,730 313,558 344,128 365,498 Sales and services - Auxiliary enterprises, net of scholarship allowances ...... 149,734 161,797 166,057 183,534 170,182 Educational departments ...... 69,523 81,543 94,158 78,508 72,451 Other Revenues ...... 14,387 16,326 18,745 19,347 21,884 Total Operating Revenues ...... $1,644,337 $1,782,224 $1,915,786 $2,048,569 $2,180,596 OPERATING EXPENSES Educational and general - Instruction ...... 749,722 810,656 881,696 961,580 1,016,720 Research ...... 261,055 267,303 297,448 323,623 359,936 Public service ...... 36,807 35,378 37,524 36,140 38,415 Academic support ...... 265,540 294,706 299,208 304,645 371,378 Student services ...... 111,018 123,377 136,125 151,295 166,131 Institutional support ...... 155,172 152,226 159,109 171,016 188,937 Operation and maintenance of plant ...... 108,454 116,456 119,349 122,567 113,640 Scholarships and fellowships ...... 152,802 187,124 211,811 247,194 292,914 Auxiliary enterprises ...... 147,562 154,794 175,130 179,578 191,862 Depreciation ...... 116,381 123,705 132,814 137,064 143,587 Total Operating Expenses...... $2,104,513 $2,265,725 $2,450,214 $2,634,702 $2,883,520 Operating Loss ...... (460,176) (483,501) (534,428) (586,133) (702,924) NONOPERATING REVENUES (EXPENSES) State appropriations ...... 281,385 296,913 306,778 303,370 323,332 Share of state sales tax/technology and research initiatives fund ...... 31,075 31,326 32,540 34,604 34,075 Financial aid grants including Federal ...... 124,188 128,474 152,500 168,230 186,818 Grants and contracts including Federal ...... 56,743 56,233 58,624 57,365 56,494 CARES Act Reimbursements ...... - - - - 15,129 Private gifts ...... 99,612 74,282 75,791 82,731 76,803 Financial aid trust funds ...... 14,833(4) 16,019(4) - - - Net investment return ...... 9,382 23,038 12,778 60,603 44,756 Interest on debt ...... (59,972) (69,135) (61,903) (63,413) (65,342) Other expenses ...... (16,039) (7,610) (8,590) (22,341) (15,982) Net Nonoperating Revenues ...... $ 541,207 $ 549,540 $ 568,518 $621,149 $656,083 Income Before Other Revenues, Expenses, Gains, or Losses ...... 81,031 66,039 34,090 35,016 (46,841) OTHER REVENUE/(EXPENSES): Capital appropriation – research and infrastructure capital financing .. 11,422 11,190 13,479 25,406 25,622 Capital commitment including Arizona Lottery revenues...... 9,537 15,421 9,540 9,532 9,537 Capital grants including federal grants ...... - 320 109 62 1,165 Capital private gifts ...... 4,937 6,390 5,822 14,961 17,022 Additions to permanent endowments ...... 1,577 13 34 426 170

Net Other Revenues ...... $ 27,473 $ 33,334 $ 28,984 $50,387 $53,516 Increase in Net Position ...... 108,504 99,373 63,074 85,403 6,675 NET POSITION: Net Position at Beginning of Year ...... 1,112,612 1,234,459(2) 1,206,911(3) 1,269,985 1,355,388 (2) (3) Net Position at End of Year ...... $1,221,116 $1,333,832 $1,269,985 $1,355,388 $1,362,063

(1) Based on audited financial statements of the University. (2) The difference between the prior end of year net position and the subsequent beginning of the year net position amount is due to the inclusion of the Thunderbird School of Global Management as a blended component unit of the University as of July 1, 2016. (3) The difference between the prior end of year net position and the subsequent beginning of the year net position amount is due to the implementation of GASB No.75, Accounting and Financial Reporting for Postemployment Benefits Other than Pensions, which establishes financial reporting standards for measuring and recognizing various categories on the statement of net position related to postemployment benefits (“OPEB”) provided through defined benefit OPEB plans as well as provide guidance on disclosure requirements. The implementation of GASB Statement No. 75, as amended by GASB Statement NO. 85, requires the inclusion of the University's OPEB liability and related transactions which resulted in the restatement of the University's net position posted as of June 30, 2017. (4) For fiscal year 2018 and thereafter, the University recorded the tuition-funded portion of financial aid trust funds with student tuition and fees, net of scholarship allowances, and the state appropriations-funded portion with state appropriations.

Source: Arizona State University, Financial Services.

A-15 ARIZONA STATE UNIVERSITY COMPONENT UNITS’ STATEMENT OF ACTIVITIES (1) (Dollars in Thousands)

Fiscal Year Ended June 30 (Audited) 2016 2017 2018 2019 2020 REVENUES Contributions $ 164,753 $ 151,107 $ 201,836 $234,974 $227,215 Rental revenue 36,606 25,984 26,876 27,793 29,206 Sales and services 57,757 37,244 43,115 42,928 44,612 Net investment return (16,296) 69,389 18,758 100,656 (1,447) Grants and aid 17,344 17,417 19,465 29,545 38,407 Other revenues 20,776 13,584 12,004 15,429 11,591 Total Revenues $ 280,940 $ 314,725 $ 322,054 $451,325 $349,584 EXPENSES Payments to the benefit of ASU - Cash donation transfers to ASU $ 108,015 $ 91,420 $ 107,943 $119,454 $114,459 Scholarship funds transfers to ASU 7,426 8,523 8,958 9,538 28,995 Vendor payments 10,176 12,788 8,976 11,473 11,632 Rent payments to ASU 2,812 8,035 4,145 5,717 7,590 Management and general 95,581 73,888 87,612 103,839 105,636 Interest expense 20,909 10,871 9,541 9,972 9,616 Depreciation/amortization 17,334 12,939 11,899 10,533 11,968 Other expenses 18,136 9,619 13,889 12,698 14,078 Total Expenses $ 280,389 $ 228,083 $ 252,963 $283,224 $303,974 Increase in Net Assets, before Transfers, Gains and Losses 551 86,642 69,091 168,101 45,610 Loss on disposal of assets - - - - (182) Restructuring Transfer 746,413 - - - Cost of bond refunding - (998) (766) - - Gain on Acquisition - - - 3,334 - Increase/(Decrease) in Net Assets, after Transfers and Losses 551 832,057 68,325 171,435 45,428 Net Assets at Beginning of Year 772,165 37,613(2) 869,670 937,995 1,109,430 Net Assets at End of Year(2) $772,716(2) $ 869,670 $ 937,995 $1,109,430 $1,154,858 The breakdown of Net Assets is as follows: Unrestricted ($ 2,912) $ 54,955 $ 44,688 $119,675 $123,335 Temporarily Restricted 341,524 363,620 408,384 421,912 427,888 Permanently Restricted 434,104 451,095 484,923 567,843 603,635 $772,716 $ 869,670 $ 937,995 $1,109,430 $1,154,858

(1) Based on audited financial statements of the University’s component units as presented in the University’s Financial Report. (2) The blending of Thunderbird School of Global Management (“TSGM”) resulted in a decrease to the net assets of the component units as TSGM is reported with University activity. The restructuring of the ASU Foundation into ASU Enterprise Partners resulted in a decrease to the component units’ beginning net assets. However, the net impact of the restructuring did not result in any economic gain or loss and did not impact the component units’ ending net assets as all assets were transferred. Elimination of Downtown Phoenix Student Housing LLC from the reporting entity resulted in an increase to net assets. The Sun Angel Endowment merger with Sun Angel Foundation resulted in a decrease in beginning net assets. However, it did not result in an economic gain or loss and did not impact component unit ending net assets as all assets were transferred.

Source: Arizona State University, Financial Services.

A-16 Tuition and Fees

Resident and non-resident tuition collections are a significant source of revenue to the University. These amounts are included in both “Current Operating Revenues”, as reflected in the preceding pages, and in Gross Revenues described under “Outstanding Indebtedness of the University – System Revenue Bonds.”

The following table summarizes undergraduate and graduate tuition charges for the Fiscal Years from 2016 through 2021.

ARIZONA STATE UNIVERSITY SCHEDULE OF TUITION PER STUDENT (1)

Resident Tuition Undergraduate Graduate Full-Time Part-Time Full-Time Part-Time Fiscal Year (Per Semester)(2) (Per Credit Hour)(2) (Per Semester)(2) (Per Credit Hour)(2) 2016 (3)(4) $4,742 $677 $5,305 $758 2017 (3)(4) 4,842 692 5,405 772 2018 (3)(4) 4,917 702 5,485 784 2019 (3)(4) 4,917 702 5,568 795 2020 (3)(5) 5,355 765 5,860 837 2021 (3)(5) 5,355 765 5,860 837

Nonresident Tuition Undergraduate Graduate Full-Time Part-Time Full-Time Part-Time Fiscal Year (Per Semester)(2) (Per Credit Hour)(2) (Per Semester)(2) (Per Credit Hour)(2) 2016 (3) $12,392 $1,033 $13,543 $1,129 2017 (3) 12,892 1,074 14,093 1,174 2018 (3) 13,342 1,112 14,588 1,216 2019 (3) 13,809 1,151 15,099 1,258 2020 (3)(5) 14,400 1,200 15,700 1,308 2021 (3)(5) 14,400 1,200 15,700 1,308

International Tuition Undergraduate Graduate Full-Time Part-Time Full-Time Part-Time Fiscal Year (Per Semester)(2) (Per Credit Hour)(2) (Per Semester)(2) (Per Credit Hour)(2) 2017 $13,788 $1,149 $14,993 $1,249 2018 14,412 1,201 15,668 1,306 2019 14,917 1,243 16,217 1,351 2020 (5) 15,600 1,300 16,800 1,400 2021 (5) 15,600 1,300 16,800 1,400

(1) Certain graduate and undergraduate programs assess differential tuition, program tuition, or a college fee. Additionally, all students pay student-initiated fees. (2) Resident students carrying seven or more hours pay full-time tuition. Nonresident students carrying 12 or more hours pay full-time tuition. (3) For Fiscal Years 2016 through 2021, ASU Online tuition was $490, $500, $510, $520 $530, and $541 per credit hour for undergraduate students and $492, $502, $512, $522, $532 and $543 per credit hour for graduate students, respectively. Effective in 2019, ASU Online tuition for undergraduate resident students was capped at $5,052 and for Fiscal Years 2020 and 2021, it was capped at $5,355. ASU Online tuition for graduate resident students was capped at $5,703 in 2019 and at $5,860 in 2020 and 2021. There was no cap for non-resident online students. (4) For Fiscal Year 2016, a resident surcharge was assessed to undergraduate and graduate students of $160 per semester or $23 per credit hour, in addition to tuition rates shown above. In Fiscal Year 2017, the resident surcharge rate was reduced to $135 per semester or $19 per credit hour and this rate was maintained for Fiscal Years 2018 and 2019. The surcharge was eliminated beginning in Fiscal Year 2020. (5) For Fiscal Year 2020, class fees, technology fees, and tuition surcharges were eliminated for immersion students. For Fiscal Year 2021, class fees and technology fees were eliminated for undergraduate online students.

Source: Arizona State University, Financial Services. A-17

The following table summarizes tuition collections for the University for Fiscal Years 2016 through 2020.

ARIZONA STATE UNIVERSITY TOTAL COLLECTED TUITION (1) UNIVERSITY WIDE (Dollars in Thousands)

Fiscal Resident Nonresident Total (2) (2) (2) Year Enrollment Tuition Enrollment Tuition Enrollment Tuition 2016 50,350 $357,455 41,007 $536,345 91,357 $893,800 2017 51,438 367,699 46,739 592,958 98,177 960,657 2018 53,158 375,850 50,409 612,171 103,567 988,021 2019 54,861 384,249 56,430 672,330 111,291 1,056,579 2020 57,552 421,980 62,427 738,112 119,979 1,160,092

Source: Arizona State University, Office of the Registrar and Financial Services.

The following table summarizes fees received by the University for summer school and various other programs for Fiscal Years 2016 through 2020.

ARIZONA STATE UNIVERSITY SUMMER SCHOOL & OTHER FEES (1) UNIVERSITY WIDE (Dollars in Thousands)

Fiscal Summer School Year & Other Fees 2016 $263,735 2017 290,171 2018 324,292 2019 366,472 2020 390,489

(1) Consists of summer school registration, fees charged by certain undergraduate and graduate school programs, student activity/recreation center fees, and certain other miscellaneous fees and charges not included in tuition. Miscellaneous fees include fees for admission application, transcripts, graduation, late registration, course dropping, special fees for certain classroom activities, and non-credit courses and programs.

Source: Arizona State University, Financial Services.

State Budgeting and Appropriations Process

The State Constitution provides that the State Legislature shall appropriate moneys for the purpose of operating and maintaining Arizona’s public state universities. Such moneys are derived from taxation, as well as from other sources as determined by the State Legislature to insure the proper maintenance of the State public universities. The direction and control of all moneys appropriated for the use and benefit of State universities is vested in the Board. Arizona Revised Statutes, Title 15, Chapter 13, sets forth the general powers of the Board, which include the expending of State funds for the support and maintenance of State universities, their buildings

A-18 and grounds and for any other purpose the Board deems expedient, if not inconsistent with provisions of any appropriations.

The University derives its financial support primarily from tuition and fees, State-appropriated general funds, governmental and private grants and contracts, private gifts and income from the operation of auxiliary enterprises. The existing constitutional provisions relating to State support of educational institutions and the policies of the Board have ensured that the State’s public universities have continued to be recipients of State appropriated general funds.

The University prepares its annual budget in two steps. A budget request to the Governor’s Office of Strategic Planning and Budgeting consisting of State general fund monies and a projection of tuition revenues earned by the University is submitted in late summer with a copy concurrently submitted to the State Legislature's Joint Legislative Budget Committee. The State Legislature and the Governor subsequently enact an appropriation to the University of general fund monies in support of the University. While the approval of such appropriation is vested in the State Legislature and the Governor, once the appropriation has been enacted, the responsibility and authority for its allocation and expenditure is vested in the Board. Specifically, Section 35-173 of the Arizona Revised Statutes exempts State universities from the appropriation allocation and budget transfer process, thereby effectively converting the State's appropriation to a “lump sum” appropriation to the University. The remainder of the University's budget, consisting of tuition, auxiliary, unrestricted and restricted funds revenues and expenditures, as well as, the non-current operating budget for plant funds, is approved solely by the Board as is the approval and allocation of expenditures of this portion of the budget.

Appropriated general funds in the five completed Fiscal Years 2016 through 2020, represented 12.8%, 12.6%, 12.4%, 11.7% and 11.5% of the University’s total audited revenues. The table below indicates State appropriations to the University for the Fiscal Years 2016 through 2020.

STATE APPROPRIATIONS TO THE UNIVERSITY UNIVERSITY WIDE (Dollars in Millions)

Fiscal Operations Research Capital Total Year Appropriation Infrastructure(4) Infrastructure (5) Appropriation 2016 (1) (2) $281.4 $11.4 $ - $292.8 2017(1) (2) 296.9 11.2 - 308.1 2018(1) 306.8 13.5 - 320.3 2019(1) 303.4 13.5 11.9 328.8 2020(1) (6) 323.3 13.5 12.2 349.0 2021(3) (6) 306.3 13.5 12.4 332.2

(1) Figures shown for Fiscal Years 2016 through 2020 are from audited financial information. (2) Excludes appropriations for the Arizona Financial Aid Trust. (3) Reflects the appropriation amount enacted by the State Legislature and signed by the Governor, which can be adjusted during the Fiscal Year by action of the State Legislature and the Governor. (4) Research Infrastructure appropriations are equal to actual debt service for certain certificates of participation which financed research infrastructure at the University. (5) The University first received Capital Infrastructure Funding from the State of Arizona in Fiscal Year 2019. Legislation dictates that this appropriation shall continue for 25 years with appropriations increasing annually by the lesser of 2 percent or the change in the U.S. gross domestic price deflator. See “SOURCES OF PAYMENT AND SECURITY – Capital Infrastructure Fund.” (6) Beginning in Fiscal Year 2020, the University received Operations Appropriations from the Arizona Teachers Academy Fund in Fiscal Year 2020 ($7.1M) and Fiscal Year 2021 ($7.5M) to provide scholarships to incentivize students to enter the teaching profession and to commit to teach in Arizona public schools.

Source: Arizona State University, Financial Services.

A-19

NO ASSURANCES CAN BE GIVEN THAT THE AMOUNT OF STATE APPROPRIATIONS TO THE UNIVERSITY WILL NOT BE REDUCED BY THE STATE LEGISLATURE IN THE FUTURE, ESPECIALLY DURING PERIODS OF ECONOMIC UNCERTAINTY. ANY SUCH REDUCTIONS MAY BE SUBSTANTIAL.

Gifts, Grants and Contracts

Gifts, grants and contracts are an important source of revenues to the University and direct revenues therefrom are reflected in the foregoing tables and in the Audited Financial Statements. A significant portion of the University's research programs (including graduate student participation therein) is supported by Federal grants and contracts. Agreements are principally with Federal government agencies but significant support of the University's research laboratories, students and faculty also comes in the form of research and education agreements with state and local government agencies, and private foundations and corporations.

The following summarizes the University’s receipts from gifts, grants and contracts during Fiscal Years 2016 through 2020.

ARIZONA STATE UNIVERSITY SUMMARY OF GIFTS, GRANTS & CONTRACTS UNIVERSITY WIDE (Dollars in Thousands)

Financial Fiscal Grants & Aid Year Contracts Grants(1) Gifts Total 2016 $309,901 $124,189 $106,125 $540,215 2017 328,283 128,474 80,685 537,442 2018 372,291 152,500 81,647 606,438 2019 401,555 168,230 98,118 667,903 2020 423,157 186,818 93,995 703,970

(1) Includes Pell grants.

Source: Arizona State University, Financial Services.

Gross Revenues

Certain of the University’s revenues, consisting primarily of tuition and facilities revenues, constitute “Gross Revenues” of the University, which have been pledged to the payment of the University’s bonds and other obligations. The information below presents the Gross Revenues for the years indicated. The University apportions tuition and fee revenue and scholarship allowances among Resident Tuition, Non-Resident Tuition, and Summer School and Other Fees as shown in the table based on methodologies that are reviewed and modified periodically.

ARIZONA STATE UNIVERSITY SCHEDULE OF HISTORICAL GROSS REVENUES (Dollars in Thousands)

A-20 (1) Tuition is net of scholarship allowances. Scholarship allowances are the difference between the stated charge for services provided by the University, and the amount that is paid by the students (and/or third parties making payments on a student’s behalf). To the extent that revenues from programs such as Pell Grants and University funded scholarships are used to satisfy tuition and fees, and other student charges, the University has recorded a scholarship allowance. (2) Consists of summer school tuition, fees charged by certain undergraduate and graduate school programs, student activity/recreation center fees, and certain other miscellaneous fees and charges not included in the tuition and registration fees columns. Miscellaneous fees include fees for admission applications, transcripts, graduation, late registration, course dropping, special fees for certain classroom activities, and non-credit courses and programs. (3) For a further breakdown of receipts from other major revenue sources, see the schedule titled “Receipts from Other Major Revenue Sources”.

Source: Arizona State University, Financial Services.

Receipts from Other Major Revenue Sources (Facilities Revenues)

The following table provides a detailed breakdown of the receipts from other major resources (Facilities Revenues) that are included in Gross Revenues of the University as noted in the table above.

ARIZONA STATE UNIVERSITY RECEIPTS FROM OTHER MAJOR REVENUE SOURCES UNIVERSITY WIDE (Dollars in Thousands)

Indirect Inter- Residential Commissions/ Fiscal Cost collegiate Life/Food Other Parking Conferences/ Investment Other Year Recovery(1) Athletics (2) Service (3) Auxiliary (4) Operations (5) Services (6) Income (7) Revenue (8) Total 2016 $65,167 $46,706 $59,406 $31,918 $22,911 $39,923 $8,692 $18,394 $293,117 2017 66,797 58,799 56,792 32,261 24,253 39,968 11,621 14,368 304,859 2018 78,289 59,134 59,792 36,164 24,875 44,486 13,087 19,482 335,309 2019 84,029 60,864 71,002 36,701 26,065 37,890 23,446 18,234 358,231 2020 88,123 63,236 65,338 26,869 23,404 38,420 25,866 17,794 349,050

(1) Indirect Cost Recovery reflects amounts received as indirect cost reimbursements in conjunction with Federal, State, and other externally funded grants and contracts. The reimbursement rate is negotiated with Federal and State agencies and is based on audited allowable costs. (2) Inter-collegiate Athletics is comprised primarily of football related revenues. The increase year over year is due primarily to an increase in funding from PAC-12 conference revenue sharing and/or corporate sponsorship payments. (3) Residential Life and Food Service revenues include revenues from facilities included in the System of Building Facilities and from the University's food service contract. The decrease in Fiscal Year 2017 was due to a lower volume of students participating in meal plans as a result of the closure of Cholla and the non-renewal of certain off-campus housing master leases. The Fiscal Year 2019 increase is due to increased on-campus housing occupancy and students participating in meal plan programs. The Fiscal Year 2020 decrease reflects increased occupancy and meal plan participation, offset by a $1,500 university housing credit provided to students who moved out of university housing early during the spring 2020 semester to mitigate the spread of the coronavirus. (4) Commissions and Other Auxiliary revenues include revenues received from University services agreements as well as revenues derived by the Student Health Center, Student Publications, Student Recreation Center, and Public Events. The Fiscal Year 2020 decrease was due to cancellation of the spring 2020 Broadway series in response to the coronavirus, the planned closure of the Karsten Golf Course, and one-time contractual bonuses that offset bookstore commissions. (5) Parking Operations include parking permit sales, pay lot and parking meter fees, and fines from parking violations. The Fiscal Year 2020 decrease was due to a decline in visitor and event parking due to the coronavirus. (6) Conferences and Services is comprised of revenues related to conference and registration fees, continuing education activities and facility rentals. The increase in Fiscal Year 2018 is primarily due to increased external sales activities across multiple units and increased executive education services enrollment in Global Launch, A-21 Ed Plus and Health Solutions. The Fiscal Year 2019 decrease is related to the discontinuance of certain recharge center activities and the cyclical nature of conferences and continuing education revenues. (7) Investment Income is generated on working capital cash balances invested on a short- term basis. The increase in Fiscal Year 2019 is primarily related to significant unrealized investment gains and an increased base of investments from which investment income is derived. The increase in Fiscal Year 2020 was primarily due to the sale of bonds held for investment at a gain. (8) Other Revenue includes other sales and services revenues comprised of a large number of individual cost centers.

Source: Arizona State University, Financial Services.

COVID-19 Pandemic

The information set forth below is current as of the date of this Official Statement. Because of the evolving nature of the circumstances described below, it is very likely those circumstances will continue to change. Although the University may provide additional information to the public from time to time regarding the matters described below, it does not anticipate providing such information in the form of a supplement to the Official Statement after the delivery of the Series 2021 Bonds.

COVID -19 in Arizona

As widely reported, the outbreak of COVID-19, a new strain of coronavirus that can result in severe respiratory disease, was first detected in December of 2019, and has spread across six continents impacting many countries, including the United States. COVID-19 has been declared a pandemic by the World Health Organization. The COVID-19 outbreak has altered the behavior of businesses and people in a manner that has had, and is expected to continue to have, negative effects on global and local economies, including the State’s. In response to the public health crisis, the Governor of Arizona and the Arizona Department of Health Services (“ADHS”) have taken certain actions designed to limit the spread of the virus and its impact on the State’s local communities and health care services. On March 11, 2020, the Governor of Arizona issued a declaration of Public Health Emergency in order to prepare for, prevent, respond to, and mitigate the spread of COVID-19. Other executive actions taken in March of 2020 included the closing of public schools in the State (ultimately through the end of the school year), cancellation of large gatherings, suspension of elective surgeries, and closing of non-essential services. Following these actions, on March 30, 2020, the Governor issued a “Stay home, Stay healthy, Stay connected” Executive Order that was designed to promote physical distancing, while also encouraging social connectedness. The policy built on actions the State had already undertaken, and further memorialized some that were already in effect, to help slow the spread of COVID-19. On April 29, 2020, the Governor issued the ‘Returning Stronger’ amendment to the original ‘Stay home, Stay Healthy, Stay connected’ Executive Order. The amendment extended the current standing Executive Order through May 15, 2020 with modifications.

In partnership with public health officials and guidance from the Center for Disease Control and Prevention (CDC), the State began to gradually phase in formerly restricted operations through the months of May and June. Effective May 16, 2020, the Governor instituted the ‘Stay Healthy, Return Smarter, Return Stronger’ policy which allowed businesses to gradually and safely open in compliance with federal guidelines while promoting physical distancing and encouraging social connectedness. Provisions of all other orders issued and still in effect since the March 11, 2020 Declaration of Public Health Emergency remained in place unless guidance was provided by ADHS on how to safely reopen or operate, while mitigating COVID-19. Due to an increase in the number of COVID-19 cases in the State as the month of June progressed, the Governor issued Executive Order ‘Pausing of Arizona’s Reopening’ which took effect on June 29, 2020 and was to remain in place until further notice, subject to being reconsidered for repeal or revision every two weeks after July 27, 2020. The order prohibited organized public events of more than 50 people without approval from the city, town, or county in unincorporated areas, and only if adequate safety precautions were implemented, including physical distancing measures. The order also paused operations for establishments such as bars, indoor gyms and fitness clubs or centers, indoor movie theaters, and water parks and tubing operators until at least July 27, 2020 and delayed the start of in-person K-12 education until August 17, 2020. Due to increasing COVID-19 cases and hospitalizations in the State, the Governor announced and issued on July 9, 2020 an Executive Order limiting indoor dining at restaurants to less than 50% occupancy and the previous order pausing operations of previously specified activities was extended for further review in two weeks. This order was extended further on July 23, 2020. On August 6, for schools, and on August 10, for paused businesses, the ADHA released benchmarks for achieving phased, safe in- A-22 person reopenings. Most recently, on March 3, 2021, the Governor ordered all K-12 schools in Arizona to return to in-person, teacher-led instruction and on March 5, 2021, the Governor issued an executive order that rescinded all prior capacity limit orders for businesses in the State.

Distribution of COVID-19 vaccines in the State is currently ongoing. As of March 3, 2021, the State had provided more than 1.8 million doses of vaccine and continues to ensure vaccines are distributed expeditiously as supply is available.

The University’s Response to Date

In an effort to minimize the risk of the spread of COVID-19 on its campuses, the University initially activated a plan that included transitioning in-person classes to a digital teaching and learning environment beginning mid-March of 2020 for the remainder of the spring 2020 semester and for summer 2020 classes. During this period, the University remained open, providing modified in-person classes, on-campus housing, meal service, health services, library services and other support and assistance as appropriate to meet the University community’s needs and the continuity of education for the University’s students.

On April 30, 2020, the University announced plans to resume in-person classes for fall 2020. Key steps taken to support these plans included:

• Offering three options for on-campus immersion classes to provide students with heightened safety, service, and flexibility.

o ASU immersion: On-campus, in-person, instruction. o ASU Sync: Blend of in-person and synchronous, technology-enhanced, fully interactive remote learning. o iCourses: On-campus immersion courses delivered entirely online with lectures available on demand.

• Equipping learning spaces with updated technology and launching a laptop and hotspot loaner program to support ASU Sync delivery.

• Developing training, workshops and tools to support faculty in transitioning to ASU Sync.

• Instituting a mandatory on-campus face mask policy and launching a Health Check app that is completed daily by all employees and immersion students.

• Recognizing early the importance of a robust testing program. The University’s Biodesign Institute developed a COVID-19 saliva test that is easier to administer, but is as reliable as nasal swab tests, and the University built the capacity to administer and return test results quickly. The University is providing free COVID-19 saliva testing to students and employees, and is performing random sample testing of the on-campus University population, allowing the University to identify early and get ahead of potential outbreaks. Mandatory testing was required of students moving into resident halls for both the fall 2020 and spring 2021 semesters.

• Developing a “Community of Care” training program to inform, educate and encourage healthy living and learning on campus and as a member of the University community. Distributing “Community of Care” kits containing face coverings, a thermometer, hand sanitizer and other items for use in maintaining health and wellness on campus.

• Implementing campus safety protocols such as enhanced cleaning, installation of plexiglass, and hiring staff to support contact tracing.

• Constructing new, shaded, Wi-Fi enabled, outdoor learning areas and installing additional outdoor furniture to support social distancing.

A-23 • Consulting with public health officials and national associations on recommended housing configurations, providing both shared housing spaces and single-room requests. Converting dining services to take out and delivery.

• Providing students with opportunities to safely engage in extracurricular activities and reopening fitness centers on all four University campuses utilizing a reservation system.

The University recently announced that fall 2021 instruction will be delivered to students by faculty in person and on campus unless otherwise indicated. For select courses, instruction will also be available to students digitally through ASU Sync and iCourses. However, the University will continue to monitor and respond to health conditions and local, state and federal guidelines.

Impact of COVID-19 Pandemic on the University’s Financial Position

The University is receiving funding under the Coronavirus Aid, Relief, and Economic Security (CARES) Act totaling $64.8 million and the Coronavirus Response and Relief Supplemental Appropriations Act (CRRSA) totaling $112.9 million, inclusive of both the institutional and student portions. Additionally, the Arizona Governor’s Office allocated Governor’s Emergency Education Relief funding of $46 million to the University. While these funds are not directly included in the University’s Gross Revenues, the additional federal funding along with growth in tuition revenue is expected to offset COVID-19 related costs and reductions in auxiliary revenues, contributing to overall positive net financial position growth in Fiscal Year 2021.

The financial impact of the COVID-19 pandemic on the University’s finances and on its Gross Revenues for Fiscal Year 2019-20 is reflected in the tables in this Appendix A. The full impact of COVID-19 and the scope of any adverse impact on University finances and operations in Fiscal Year 2021 and beyond cannot be fully determined at this time. Adverse consequences of the COVID-19 pandemic may include, but are not limited to: decline in enrollment (including a possible disproportional decline in enrollment by international students); decline in demand for University housing; decline in demand for University programs that involve travel or that have international connections; postponement or cancellation of athletic events; a decrease in availability of student loan funds or other financial aid; reductions in funding support from donors or other external sources; a decline in research funding, including research funding form the U.S. government; a significant decline in the University’s investments based on market declines or other external factors; and a decrease in financial support from the State whether through decreased appropriations or otherwise. Such impacts may adversely impact University finances and operations, including (i) potentially adversely affecting the University’s expenditures or revenues, including Gross Revenues and (ii) potentially adversely affecting the secondary market for and value of the Series 2021 Bonds.

In addition, the University and/or the Board has been served with various complaints and notices of claims alleging that certain students and/or classes of students are entitled to refunds for at least a portion of amounts paid to the University, including tuition and housing/meal fees, due to the impacts of COVID-19 on the delivery of University services to its students. The University has prevailed on several of these claims, including obtaining an order to dismiss the lawsuit filed in the United States District Court for the District of Arizona by Andrew Rosenkrantz, Susan Bishop and Christopher Bishop, on July 29, 2020. Almost all cases have been resolved. The University denies the allegations and will continue to actively defend the claims. The University reasonably does not anticipate that any of these matters will be decided adversely against the University. The University reasonably believes that if there were an adverse determination, it would not have a material impact upon its financial condition.

Cybersecurity

The University is committed to security, risk mitigation, and digital trust across the University community. The University recognizes that this extends across a complex and fast-moving ecosystem, with a deep reliance on technology systems. The complexity of cyber threats is ever evolving, including malware, phishing, hacking, and ransomware. Recently, industry has seen these threats reach across entire supply chains, where vulnerabilities in one system can laterally move in unanticipated ways to other systems. Because of this, the University treats information security as an effort that is deeply embedded across the campuses. The Chief Information Security and Digital Trust officer partners with the Chief Operations Officer in seeking to ensure that the University’s efforts address security consideration in both our development and operations teams. Under the guidance of the Chief Information Officer, they collaborate with leaders across the campuses in working to ensure the University’s distributed network of A-24 technologists and data stewards have the support they need to protect the University’s digital assets. While no assurance can be given that all threats will be without impact, the University’s commitment to a pervasive effort across the University is designed to provide a proactive and resilient in our security approach.

Arizona State University Pension and Retirement Plans

Substantially all permanent employees of the University are covered either by the State-administered retirement program, the Arizona State Retirement System, or by one of two private defined contribution plans approved by the Board. The two private defined contribution plans are sponsored by TIAA and Fidelity Investments. A brief description of the various retirement programs in which University employees participate is located in Footnote K – Retirement Plans in the 2020 Audited Financial Statements in Appendix B.

The Arizona State Retirement System (“ASRS”) is a cost-sharing, multiple employer defined benefit plan in which the University participates. The most recent annual reports for ASRS may be accessed at: https://www.azasrs.gov/content/annual-reports. For the year ended June 30, 2020, active plan members were required by statute to contribute at the actuarially determined rate of 12.11 percent (11.94 percent for retirement and 0.17 percent for long-term disability) of the members’ annual covered payroll. The University was also required by statute to contribute at the actuarially determined rate of 12.11 percent (11.45 percent for retirement, 0.49 percent for health insurance premium, and 0.17 percent for long-term disability) of the active members’ annual covered payroll. For Fiscal Year 2021, the rate, including retirement, long-term disability, and the health benefit supplement will be adjusted to 12.22 percent for the University and to 12.22 percent for employees. In addition, for the year ended June 30, 2020, the University was required by statute to contribute at the actuarially determined rate of 10.41 percent (10.29 percent for retirement, 0.05 percent for health insurance premium benefit, and 0.07 percent for long- term disability) of annual covered payroll of retired members who worked for the University in positions that would typically be filled by an employee who contributes to the ASRS. For Fiscal Year 2021, the rate, including retirement and long-term disability, was adjusted to 10.21 percent (10.14 percent for retirement, 0.00% for health insurance premium, 0.07% for long-term disability).

In June 2012, the Government Accounting Standards Board issued GASB Statement 68, effective for the University’s Fiscal Year ended June 30, 2015. This statement revises existing standards for measuring and reporting pension liabilities for pension plans provided to University employees and requires recognition of a liability equal to ASU’s proportionate share of net pension liability, which is measured as the total pension liability less the amount of the pension plan’s fiduciary net position. The total pension liability is determined by discounting projected benefit payments based on the benefit terms and legal agreements existing at the pension plan’s Fiscal Year end. For Fiscal Year 2019, the University reported a net pension liability of $558.8 million, which included $26.6 million of reclassified optional retirement plan liability, $44.1 million of net deferred outflows, $10.5 million of incremental pension expense, and a $10.5 million reduction in unrestricted net position. For Fiscal Year 2020, the University reported a net pension liability of $606.8 million, which includes $27.9 million of reclassified optional retirement plan liability, $57.2 million of net deferred outflows, $33.7 million of incremental pension expense, and a $33.7 million reduction in unrestricted net position.

Health Care Benefits for Retired Employees

University employees, their spouses and survivors may be eligible for other postemployment benefits other than pensions (OPEB) such as retiree health care benefits under health care programs provided through the State. Employees on long-term disability and their spouses may also qualify for retiree health care benefits through the State. It is expected that substantially all University employees that reach normal or early retirement age while working for the University will become eligible for such benefits. Currently, a retiree may obtain the health care benefits offered by the State by paying 100% of the applicable health care insurance premium available to all participants, whether retired or not, in the State’s health care program. The University makes no payments for OPEB costs for such retirees. Even though the retirees are paying 100% of the insurance premiums, an implicit rate subsidy exists because the retirees are paying a lower premium than what would be paid if the insurance premiums were based on the retiree’s age. A brief description of the various health care programs for retired employees is located in Footnote K – Other Postemployment Benefits (OPEB) in the 2020 Audited Financial Statements in Appendix B.

GASB Statement Number 75, Accounting and Financial Reporting for Postemployment Benefits Other than Pensions, as amended by GASB Statement Number 85, Omnibus 2017, requires the University to recognize a A-25 liability equal to the University’s proportionate share of the total OPEB liability. The State has commissioned actuarial valuations of the OPEB costs associated with the health care programs available to retirees through the State and has allocated the financial impacts to the State agencies having separately audited financial statements. In Fiscal Year 2020, the University reported a total OPEB liability of $254.1 million. Additional information on the University’s OPEB is located in Footnote L – Other Postemployment Benefits (OPEB) in the 2020 Audited Financial Statements in Appendix B.

Outstanding Indebtedness of the University

The following information sets forth the outstanding bonds payable and capitalized lease obligations of the University.

System Revenue Bonds

Pursuant to the laws of the State and the provisions of the Bond Resolution adopted by the Board, the Board is authorized to issue system revenue bonds (also referred to herein as the Parity Bonds) which are payable from and secured by a pledge of and a lien on the Gross Revenues of the University. The Gross Revenues, as defined in the Bond Resolution and used in this Official Statement, means and includes all: (1) Student Tuition and Fees Revenues, which means all tuition, registration, matriculation, laboratory, admission and other activities and service fees and charges paid by students matriculated, registered or otherwise enrolled at and attending the University, and (2) Facilities Revenues which means all fees, rentals and other charges from students, faculty, staff members and others using or being served by, or having the right to use or the right to be served by, or to operate, any revenue producing facility, building or project within the System of Building Facilities, or any auxiliary enterprise, including indirect cost recoveries from externally-funded grants and contracts for research or other sponsored projects and interest received on and profits realized from the sale of investments made with moneys derived from (i) any revenue-producing facility, building or project within the System of Building Facilities; (ii) Student Tuition and Fees Revenues and (iii) other University operating funds. The University has outstanding System Revenue Bonds secured by a first (or senior) lien on Gross Revenues and other Subordinate Obligations secured by a subordinate lien on Gross Revenues as shown below.

Parity Bonds

The following table sets forth the outstanding Parity Bonds of the Board:

Final Original Maturity Principal Date Outstanding System Revenue Bonds Amount (July 1)(a) Principal Amount Series 2008 Refunding Bonds $103,680,000 2034 $ 72,735,000 Series 2010 Bonds 178,350,000 2039 142,220,000 Series 2012 Bonds 213,370,000 2037 49,635,000 Series 2013 Bonds 110,950,000 2035 23,855,000 Series 2015 Bonds 362,260,000 2046 319,475,000 Series 2015D Bonds 102,665,000 2046 98,190,000 Series 2016A Bonds 37,105,000 2031 33,340,000 Series 2016 Bonds 226,230,000 2047 216,040,000 Series 2017 Bonds 199,870,000 2043 191,315,000 Series 2019 Bonds 194,450,000 2049 193,050,000 Series 2020 Bonds 184,455,000 2050 184,455,000 Subtotal $1,524,310,000 Less: Bonds Being Refunded (47,415,000)* Less: July 1, 2021 principal being refinanced (23,627,500)* Plus: Series 2021 Bonds 279,845,00* Total Outstanding Principal Amount of Parity Bonds $1,733,112,500*

(a) Reflects final maturity date of outstanding principal amount.

* Preliminary, subject to change. A-26 Subordinate Obligations

The Board has also pledged the Gross Revenues of the University on a subordinate basis to secure various Subordinate Obligations.

The following table sets forth the Outstanding principal amount of Subordinate Obligations of the University. Original Final Principal Maturity Outstanding Subordinate Obligations (a) Amount Date Principal Amount Series 2006 ASU Research Park Bonds $12,975,000 7-1-2021 $ 1,130,000 Series 2010 SPEED Bonds 33,820,000 8-1-2030 24,420,000 Series 2011 SPEED Bonds 30,915,000 8-1-2031 23,485,000 Series 2014 SPEED Bonds 77,620,000 8-1-2044 64,780,000 Total Principal Amount of Subordinate Obligations $113,815,000 (a) Does not reflect the impact of approximately $39 million of SPEED Refunding bonds the University plans to issue in April 2021 pursuant to a separate official statement.

Certificates of Participation

The following table sets forth the outstanding certificates of participation of the Board, which are payable from annually appropriated unrestricted monies of the University, which may include payments from Gross Revenues:

Original Final Outstanding Principal Maturity Principal Certificates of Participation Amount Date Amount 2006 Certificates $15,810,000 6-1-2031 $8,980,000 2011A Refunding Certificates 8,465,000 7-1-2024 3,045,000 2013 Refunding Certificates 64,780,000 9-1-2026 45,230,000 2014 Refunding Certificates (Private Placement) 84,525,000 9-1-2030 59,565,000 2017 Refunding Certificates (Bank Loan) 44,815,000 7-1-2026 24,735,000 Total Outstanding Principal Amount $141,555,000

A-27 The following table sets forth the Board’s total annual debt service requirements on its outstanding bonds and certificates of participation issued on behalf of the University, including the Series 2021 Bonds.

ARIZONA STATE UNIVERSITY DEBT SERVICE REQUIREMENTS (1)

Outstanding Less: Debt Outstanding Outstanding Fiscal Parity Direct Service Being Series 2021A Bonds* Series 2021B Bonds* Series 2021C Bonds* Subordinate Direct Certificates of Combined Year Bonds (2) Payments (3) Refunded (4) Principal Interest (5) Principal Interest (5) Principal Interest (5) Obligations (6) Payments (3) Participation (7) Total* 2021 $127,963,178 $(3,050,298) $(53,537,016) $13,562,479 $(498,970) $21,772,225 $106,211,596 2022 129,589,884 (2,953,597) (2,297,488) $1,961,435 $1,170,000 $1,995,277 $1,290,000 $6,933,969 12,344,669 (462,383) 18,047,426 167,619,192 2023 129,538,216 (2,851,102) (9,587,488) 1,669,307 8,555,000 1,695,534 2,045,000 5,836,750 12,305,494 (421,284) 18,060,482 166,845,909 2024 129,741,505 (2,743,044) (9,582,738) 1,669,307 9,930,000 1,664,736 6,310,000 5,734,500 12,269,919 (378,645) 18,069,690 172,685,230 2025 129,070,980 (2,629,091) (9,589,338) 1,669,307 9,995,000 1,608,135 6,640,000 5,419,000 12,221,944 (334,467) 17,215,798 171,287,268 2026 131,587,613 (2,508,903) (5,558,088) $ 345,000 1,669,307 6,055,000 1,519,180 6,970,000 5,087,000 12,171,319 (288,748) 17,202,739 174,251,418 2027 123,625,208 (2,373,842) (4,143,338) 2,800,000 1,665,719 4,700,000 1,456,208 7,325,000 4,738,500 12,126,719 (235,461) 13,450,074 165,134,788 2028 117,789,439 (2,233,353) (2,298,250) 2,895,000 1,628,479 2,925,000 1,393,698 7,685,000 4,372,250 12,062,781 (180,007) 13,436,233 159,476,270 2029 106,182,814 (2,087,217) (2,293,000) 3,005,000 1,585,633 2,960,000 1,350,408 8,065,000 3,988,000 12,009,554 (122,387) 13,430,827 148,074,630 2030 105,545,954 (1,935,111) (2,294,250) 3,125,000 1,533,346 3,015,000 1,298,904 8,475,000 3,584,750 11,947,456 (62,385) 13,423,536 147,657,198 2031 105,920,777 (1,776,924) (2,291,500) 3,245,000 1,474,283 3,070,000 1,241,920 8,880,000 3,161,000 8,888,675 13,428,760 145,241,990 2032 105,488,778 (1,609,679) (2,289,750) 3,380,000 1,408,085 2,745,000 1,179,292 3,175,000 2,717,000 6,169,250 122,362,976 2033 105,053,790 (1,435,594) (2,618,750) 3,525,000 1,335,753 3,130,000 1,120,549 3,335,000 2,558,250 6,168,750 122,172,747 2034 104,598,696 (1,254,338) (2,606,100) 3,675,000 1,256,793 3,190,000 1,050,437 3,495,000 2,391,500 6,165,750 121,962,737 2035 97,088,471 (1,065,691) (2,064,200) 3,825,000 1,170,798 2,725,000 975,791 3,670,000 2,216,750 959,750 109,501,669 2036 89,616,119 (869,322) (1,119,400) 4,005,000 1,077,468 2,045,000 909,301 3,850,000 2,033,250 955,250 102,502,667 2037 85,483,028 (664,899) (1,118,000) 4,180,000 975,741 2,100,000 857,358 4,050,000 1,840,750 959,500 98,663,478 2038 85,789,412 (452,091) 4,365,000 865,389 1,290,000 801,918 4,255,000 1,638,250 957,000 99,509,877 2039 81,834,539 (230,569) 4,565,000 737,058 1,330,000 763,992 4,460,000 1,425,500 958,000 95,843,520 2040 69,582,765 4,785,000 602,847 1,370,000 724,890 4,690,000 1,202,500 957,250 83,915,252 2041 69,073,503 5,010,000 462,168 1,410,000 684,612 4,925,000 968,000 959,750 83,493,033 2042 69,639,676 5,235,000 314,874 1,450,000 643,158 1,145,000 721,750 955,250 80,104,708 2043 63,442,909 5,475,000 160,965 1,490,000 600,528 1,205,000 664,500 959,000 73,997,902 2044 33,999,234 1,535,000 556,722 1,265,000 604,250 955,500 38,915,706 2045 33,989,220 1,585,000 508,523 1,330,000 541,000 37,953,743 2046 33,999,915 1,635,000 458,754 1,395,000 474,500 37,963,169 2047 11,937,689 1,685,000 407,415 1,465,000 404,750 15,899,854 2048 5,574,291 1,740,000 354,506 1,540,000 331,500 9,540,297 2049 5,571,471 1,795,000 299,870 1,615,000 254,500 9,535,841 2050 2,636,046 1,850,000 243,507 1,695,000 173,750 6,598,303 2051 1,910,000 185,417 1,780,000 89,000 3,964,417 2052 1,965,000 125,443 2,090,443 2053 2,030,000 63,742 2,093,742 (1) Figures may not total due to rounding. (2) Outstanding Bonds include the Series 2008 Refunding Bonds (which bear interest at a variable rate, assumed to be 4.00% annually for purposes hereof), the Series 2010 Bonds, the Series 2012 Bonds, the Series 2013 Bonds, the Series 2015 Bonds, the Series 2015D Bonds, the Series 2016A Bonds, the Series 2016 Bonds, the Series 2017 Bonds, the Series 2019 Bonds and the Series 2020 Bonds. (3) Direct Payments represent subsidy payments expected to be received by the University from the federal government with respect to its Build America Bonds. Such amounts are not pledged towards the repayment of any Parity Bonds and Subordinate Obligations, however, the University currently intends to expend the Direct Payments on debt service payments on such obligations. In addition, the amount of Direct Payments are subject to any reductions in such amounts made by the federal government. For Fiscal Year 2021, Direct Payments expected to be received by the University will be reduced by 5.7% due to sequestration reductions imposed by the federal government. Direct Payments received by the University for Fiscal Years 2017, 2018, 2019, and 2020 were reduced by similar amounts for each year. Such reductions in Direct Payments to issuers of Build America Bonds are expected to continue. (4) Includes 50% of a portion of the July 1, 2021 principal and 100% of the interest due on July 1, 2021 on the Outstanding Bonds except the Outstanding Series 2008 Refunding Bonds, the Series 2019A Bonds, and the Series 2020A Bonds and debt service on the Bonds Being Refunded. (5) The first Interest Payment Date on the Series 2021 Bonds is January 1, 2022*. Interest is estimated. (6) Consists of $1,130,000 outstanding principal amount of Arizona State University Research Park, Inc. Development Refunding Bonds, Series 2006 and $112,685,000 outstanding principal amount of Arizona State University SPEED Revenue Bonds (Stimulus Plan for Economic and Educational Development) Series 2010, Series 2011 and Series 2014. Does not reflect the impact of approximately $39 million of SPEED Refunding Bonds the University plans to issue in April 2021 pursuant to a separate official statement. (7) Includes payments on the University’s Series 2006 Certificates, Series 2011A Refunding Certificates, Series 2013 Refunding Certificates, Series 2014 Refunding Certificates and Series 2017 Refunding Certificates.

* Preliminary, subject to change.

A-28

Component Units

For a description of bonds and other obligations of the University’s component units, see footnote P in the June 30, 2020 audited financial statements in Appendix B.

Future Financing Transactions

System Revenue Bonds

The Board, on behalf of the University, presently plans to issue approximately $185 million in principal amount of additional Parity Bonds prior to the end of Fiscal Year 2022.

Component Units

The Board does not currently anticipate that any of its Component Units will issue any additional, new money obligations prior to the end of Fiscal Year 2022.

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A-29 [THIS PAGE INTENTIONALLY LEFT BLANK] APPENDIX B

ARIZONA STATE UNIVERSITY AUDITED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020

[THIS PAGE INTENTIONALLY LEFT BLANK] Arizona State University Compiled and edited by the ASU Financial Services Office. Financial Services © 2020 Arizona Board of Regents. All rights reserved. Comprehensive Annual University Services Building Printed in the U.S. 1551 South Rural Road PO Box 875812 Arizona State University vigorously pursues affirmative action and Financial Report 2020 Tempe, Arizona 85287-5812 equal opportunity in its employment, activities, and programs. 480-965-3601 Year Ended June 30, 2020 | An Enterprise Fund of the State of Arizona. cfo.asu.edu/fs Photography by: Andy DeLisle, Anya Magnuson, FJ Gaylor, Jarod Opperman, Jenny Dupuis, Laura Sposato Comprehensive Annual Financial Report Year Ended June 30, 2020

An Enterprise Fund of the State of Arizona Prepared by the ASU Financial Services Oﬃ ce

Table of Contents

Introductory Section 4 Message from President Michael Crow 6 Letter of Transmittal 7 Certiﬁ cate of Achievement for Excellence in Financial Reporting 11 ASU Organizational Chart 12 Arizona Board of Regents 13

Financial Section 14 Independent Auditors’ Report 16 Management’s Discussion and Analysis 20 Basic Financial Statements Statement of Net Position 28 Statement of Financial Position - Component Units 29 Statement of Revenues, Expenses, and Changes in Net Position 30 Statement of Activities - Component Units 31 Statement of Cash Flows 32 Notes to Financial Statements 33

Required Supplementary Information 62 Schedule of the University’s Proportionate Share of the ASRS Net Pension Liability and ADOA Total OPEB Liability 64 Schedule of University Contributions 65

Supplementary Information 66 Combining Statement of Financial Position - Nonmajor Discretely Presented Component Units 68 Combining Statement of Activities - Nonmajor Discretely Presented Component Units 69

Statistical Section 70 Narrative to the Statistical Section 72 Financial Trends Net Position by Component 73 Statement of Net Position 74 Statement of Net Position – Adjusted for Pensions and Other Postemployment Benefi ts 75 Changes in Net Position 76 Operating Expenses by Natural Classifi cation 79 Combined Sources and Uses 80 Revenue Capacity Principal Revenue Sources 81 Academic Year Tuition and Required Fees 82 Composite Financial Index 83 Debt Capacity Summary of Ratios 86 Debt Coverage for Senior and Subordinate Lien Bonds 88 Long-term Debt 89 Demographic and Economic Information Admissions, Enrollment, and Degrees Earned 90 Demographic Data 92 Principal Employers 93 Operating Information Faculty and Staff 94 Capital Assets 95

Introductory Section Message from President Michael Crow

Arizona State University was the top choice for more than 128,000 new and returning Sun Devils in fall 2020. ASU Online had its largest fall enrollment to date, representing over 53,000 students included in our total fall enrollment ﬁ gures. Despite the global COVID-19 pandemic challenges, ASU experienced a 7.6% growth over fall 2019. I believe our fall enrollment expansion represents our community’s resilience and a ﬁ xed focus on academic goals as the pandemic has bolstered our spirit and facilitated innovation.

Our fall physical spaces preparation included more than 800 learning areas equipped with Zoom capabilities. Zoom use drives ASU Sync, which provides students fully interactive remote learning. By mid-September, ASU hosted over 41,000 Zoom academic sessions.

In addition to the on-site challenges the pandemic presented, we worked nonstop to ensure our communities’ well-being. ASU Biodesign Institute researchers developed the Western United States’ ﬁ rst FDA-approved, saliva-based, COVID-19 test. We collected approximately 75,827 COVID-19 test results from students and employees as of August 1, 2020. ASU researchers quickly pivoted to develop a new, portable saliva-based testing device that can deliver results in as few as 20 minutes. The new test is supported by $5.2 million in CARES Act funds from the Arizona governor’s oﬃ ce and $860,000 from the Arizona Department of Health Services. ASU and ADHS additionally partnered to operate nearly 40 free COVID-19 testing sites across Arizona, including those in underserved and high-need communities. In addition to testing, we launched daily health checks via the ASU app and online, where our campus community reports their everyday well-being. We have gathered valuable details that help ASU Biodesign researchers analyze and track COVID-19 spread.

I am pleased to note that U.S. News & World Report named ASU the most innovative university for the sixth consecutive year and is among the top 50 public schools in the nation. It is an honor to be selected by peers and U.S. college presidents and provosts who nominate up to 15 schools that have made the most innovative improvements.

As our capacity to innovate advances, so have our leaders. Our executive vice president and chief research and innovation offi cer, Sethuraman “Panch” Panchanathan, was unanimously confi rmed by the U.S. Senate in June as the 15th director of the National Sci- ence Foundation. During his six-year appointment, Panch will direct the federal agency’s mission, including support for all fundamental science and engineering fi elds, to keep the U.S. at the forefront of discovery. Under his direction leading the Knowledge Enterprise at ASU, the university’s research enterprise expanded to more than $640 million in research expenditures, growing nearly four times in size. ASU was ranked seventh nationally in 2019 in total research expenditures for universities without a medical school and is currently ranked among the top universities globally for patents.

Innovative research enables us to be better ambassadors in our global community. During early September, ASU launched the Julie Ann Wrigley Global Futures Laboratory. I envision it as a medical school for the Earth. It will consist of a major research institute and practice arm devoted to environmental solutions enhanced with global partnerships. The new lab will also contain the new College of Global Futures, with three distinctive schools: School for the Future of Innovation in Society, School of Complex Adaptive Systems and the School of Sustainability. The new headquarters will thrive in the Interdisciplinary Science and Technology Building 7, and once complete, will be the most extensive research building on campus. ISTB7 will be the hub for more than 550 faculty and scholars and over 1,300 College of Global Futures students. The new Global Futures lab is a signiﬁ cant step in ASU’s evolution as one of the world’s leading centers for sustainability studies and the future of planetary life.

Our focus on a sustainable future is not always a singular enterprise but supported by our strategic partnerships like Dreamscape Learn. We have our sights set on transforming education through exploration with Dreamscape Immersive, a world-leading virtual reality company. Dreamscape Learn will add avatar-driven VR experiences to campus-based and online courses, starting with introductory biology and expanding through the sciences to other disciplines. Immersive, experiential Dreamscape Learn Labs also will become a part of our ASU campuses. The new labs will eliminate student learning gaps as they solve complex problems alongside pioneering faculty and explore virtual worlds and spaces. Dreamscape Learn will set the standard for how we learn in the 21st century.

I am optimistic for 2021 because of the steady progress ASU has made in redeﬁ ning how we learn and succeed. Despite the many challenges we have endured, we have continued our forward momentum. We will continue our perpetual evolution to help meet our learners’ needs, regardless of age, location or socioeconomic status, and those of other Arizona residents. I am grateful for the dedica- tion of all Sun Devils and their families who make ASU a tremendous institution.

6 Arizona State University 2020 CAFR Letter of Transmittal

October 30, 2020

Dear President Crow, Members of the Arizona Board of Regents, and University Stakeholders:

Enclosed is the Arizona State University Comprehensive Annual Financial Report (CAFR) for the year ended June 30, 2020. The report includes the annual ﬁ nancial statements, Management’s Discussion and Analysis (MD&A) and supplemental information to assist the reader in clearly understanding the University’s ﬁ nancial activities and outcomes.

University management is responsible for the accuracy and completeness of the information presented, including all disclosures. We believe our system of internal controls is robust and sufficient to disclose material defi ciencies in controls and to provide management with reasonable, although not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition. Because the cost of a control should not exceed the benefi ts that can be derived, the objective is to provide reasonable, rather than absolute, assurance that the fi nancial statements are free of material misstatements.

The University’s internal auditors also perform ﬁ scal, compliance, IT and operational audits. University Audit and Advisory Services prepares an annual audit plan based on ASU’s Enterprise Risk Assessment model. The audit plan is approved by the University President and reviewed by the Arizona Board of Regents Audit Committee.

State law, federal guidelines, and certain bond covenants require that the University’s accounting and fi nancial records be audited each year. The University’s annual audit is performed by the State of Arizona Office of the Auditor General. The reports resulting from the audit are shared with University management and the Arizona Board of Regents. The audit of the University’s federal assistance programs is performed by the Office of the Auditor General in conjunction with the Statewide Single Audit. For the year ended June 30, 2020, the State of Arizona Office of the Auditor General has issued an unmodifi ed opinion on Arizona State University’s fi nancial statements, the most favorable outcome possible. The independent auditors’ report is displayed in the front of the fi nancial section of the Report.

ASU remains committed to effective budgetary planning and sound fi nancial management as it pursues excellence in teaching, research and public service. We have prepared Management’s Discussion and Analysis (MD&A) to provide a narrative introduction, overview and analysis of the basic fi nancial statements, as well as information regarding the University’s fi nancial position and the results of operations for the year ended June 30, 2020. The MD&A immediately follows the independent auditors’ report, complements this letter of transmittal and should be read in conjunction with it.

Proﬁ le of the University ASU’s charter, mission and goals demonstrate leadership in both academic outcomes and program accessibility. ASU strives to establish national standing in academic quality and impact of all ASU colleges and schools; to establish ASU as a global center for interdisciplinary research, discovery and development; and to enhance our local impact and social embeddedness. These aspirations provide the framework for ASU’s continued development as a leading, global research university.

ASU oﬀers more than 800 degree programs and concentrations led by expert faculty from highly-ranked colleges and schools. Each distinctive academic program exempliﬁ es the hallmark of ASU— an exceptional education inspired by vision, scholarship and creativity. ASU is accredited by the North Central Association’s Higher Learning Commission and many programs also maintain additional accreditation through specialized accrediting agencies.

ASU was founded as the Territorial Normal School in 1885 by an act of the Thirteenth Territorial Legislature, in response to the growing demand for teachers and leaders in the region. In 1915, agriculture was added to the curriculum in response to the completion of the Roosevelt Dam and subsequent expansion of irrigated farming in the Valley. In 1958, after a series of name changes, the citizens of Arizona voted in favor of a ballot proposition to change the name of the institution to Arizona State University. ASU today is composed of four campuses in the metropolitan Phoenix area, ASU Online, and programs available across Arizona and around the world.

The Arizona Board of Regents (ABOR) governs Arizona State University, as well as the state’s other two public universities. ABOR is composed of twelve members, including appointed, ex-officio, and student regents. The Governor of Arizona appoints and the Arizona Senate confi rms the eight appointed regents to staggered, eight-year terms as voting members of ABOR. The Governor and Superintendent of Public Instruction serve as ex-officio, voting members while they hold office. Two student regents serve staggered two- year terms, the fi rst year as a nonvoting board member and the second year as a voting member.

The University is considered a part of the reporting entity for the State of Arizona’s fi nancial reporting purposes and is included in the State’s Comprehensive Annual Financial Report. The fi nancial reporting entity for ASU’s fi nancial statements is comprised of the University and eight component units. The University’s fi nancial statements and the fi nancial statements for the University’s two blended component units, the Thunderbird School of Global Management and the ASU Athletic Facilities District, are prepared in accordance with Governmental Accounting Standards Board (GASB) reporting requirements. Separate fi nancial statements for the University’s six

2020 CAFR Arizona State University 7 discretely presented component units are compiled in accordance with GASB Statement Nos. 39 and 61, and include ASU Enterprise Partners; Arizona Capital Facilities Finance Corporation; ASU Alumni Association; Arizona State University Research Park, Inc.; ASU Preparatory Academy, Inc. and Sun Angel Foundation. These component units are non-proﬁ t, tax-exempt organizations and are discretely presented based on the nature and signiﬁ cance of their relationships to the University.

The University is responsible for using its resources to fulfi ll its educational, research and public service mission. It also is responsible for planning, developing and controlling budgets within authorized allocations in accordance with University, Arizona Board of Regents, state and federal policies. The University submits its annual operating budget, which includes revenue from state investment, student tuition and fees, auxiliary enterprises, grants and contracts, private gifts and other income, to ABOR for approval. The state legislature reviews the University’s local funds budget and adopts and appropriates the general purpose funds budget through legislation. The University monitors budgets with controls incorporated into its enterprise fi nancial system. In addition, colleges and departments utilize fi nancial reports to review fi nancial transactions and monitor budgets. The University also provides periodic fi nancial reporting to the Arizona Board of Regents. The report includes a comparison of budget to actual revenue and expenses, projections for revenues, expenses and net position for the fi scal year end, and variance explanations.

Arizona Economy The following economic summary is based on the Arizona Oﬃce of Economic Opportunity Employment Projections, released on February 20, 2020 and data compiled by the JPMorgan Chase Economic Outlook Center at the ASU W.P. Carey School of Business.

In its February 2020 forecast, prior to the economic impacts of the COVID-19 pandemic, the Arizona Oﬃce of Economic Opportunity was forecasting gradual gains in Arizona nonfarm employment for the 2019-2021 projection time period, with 160,000 nonfarm jobs growth (2.6% annually) expected from 2019 through 2021. In the forecast, the educational and health services sector was expected to add the largest number of jobs (approximately 19,000), at an annualized rate of growth of 2.9%, while construction-related employment was expected to rise by the largest percentage growth among all sectors at 6.7% annually.

The COVID-19 pandemic has created signifi cant global economic disruptions in capital and debt markets, manufacturing capacities, supply chain deliveries and decreases in employment rates across all sectors. Pre-pandemic trends, which showed growth in real GDP, population, private sector wages, and labor force participation, encourage economists that a relatively short-term economic recovery can be expected barring unforeseen additional disruptions. On the national level, according to the U.S. Bureau of Labor Statistics, job losses due to the pandemic peaked with an unemployment rate of 14.7%, the highest rate in the post-World War II era, and as of August 2020, improved to an unemployment rate of 8.4%. The Arizona unemployment rate as of August 2020 continues to outperform the national average boosted by increased construction activity and signifi cant rebounding in most major employment sectors. Federal CARES Act programs assisted Arizona’s recovery eff orts by injecting $17 billion into the state’s economy through increased unemployment benefi ts, the federal Paycheck Protection Program and through economic recovery rebates. The continued low interest rate environment is expected to contribute to economic recovery and growth.

Despite economic trends that remain positive for Arizona’s continued economic recovery, constraints on budgets persist for state and local governments as well as for a large number of households. Long-term structural issues in the state economy continue to include low national rankings in per capita income, lagging levels of higher education attainment, education funding challenges, higher-than-average poverty rates and needed critical infrastructure improvements to match increasing population demands.

Planning and Initiatives As part of the Arizona Board of Regents’ strategic plan, Impact Arizona, key performance metrics are used to measure the success of ASU and the other state universities in achieving institutional and system-wide goals. Impact Arizona goals measure progress in delivering a high-quality university education; increasing the number of Arizonans with a college degree or certiﬁ cate; creating new knowledge, collaborations, inventions and technology to solve critical problems; and engaging our communities through initiatives and partnerships to improve Arizona’s economy and competitiveness. Key measures of progress toward achieving these goals are continually reviewed and monitored by ABOR and the universities. Overarching ASU goals as part of this strategic plan include demonstrating leadership in academic excellence and accessibility; achieving national standing in academic quality and impactful colleges and schools in every ﬁ eld; obtaining recognition as a global center for interdisciplinary research, discovery and development; and enhancing local impact and social embeddedness.

With our Charter as the guiding principle, Arizona State University continues to thrive and make progress toward the challenging goals set by the Arizona Board of Regents.

In the midst of recent world-wide disruptions, which have signiﬁ cantly impacted the higher education sector, ASU remains committed to redesigning the public research university, leaving an indelible mark on the communities we serve. FY 2020 was another successful year for ASU, with research playing an increasing role in ASU’s global engagement. The State of Arizona, the nation and the world at large all share the economic and societal beneﬁ ts of purpose-based research. Major milestones of the past year include:

• ASU has emerged as one of the country’s fastest-growing research universities among those with $100 million+ in annual research expenditures. According to the National Science Foundation Higher Education Research and Development survey, ASU is among the country’s top 10 universities for total research expenditures for those institutions without a medical school. Recognized by the Carnegie Classiﬁ cations of Institutions of Higher Education as a Research I Doctoral University, ASU continues to leverage its traditional research operations with its innovation zones and strategic partnerships with engaged corporate and international partners to advance its research activities. In addition to furthering global eﬀ orts to mitigate the impacts of the COVID-19 pandemic through

8 Arizona State University 2020 CAFR enhanced testing and community monitoring, ASU continues to grow its research portfolio including cameras developed for the new NASA Mars rover, plastic-eating bacteria development, mechanical trees to reduce carbon dioxide in the air, and ongoing cancer vaccine research eﬀ orts.

• To meet the increasing growth of immersion and hybrid student enrollment to over 128,000 students for fall 2020, the University continues to invest in necessary capital infrastructure to support its core mission of instruction, research and public engagement. Construction cranes continue to rise on major intersections around the City of Tempe and the ASU Tempe campus as the University and its Novus Innovation Corridor welcome new construction projects. Recently completed and ongoing projects represent tangible indicators of the ongoing growth of the enterprise and its commitment to meet the demands of the ever-changing landscape of higher education, including renovation of the Tempe campus historic Hayden Library, renovation of the prominently-located Durham Language and Literature Building and construction on the University’s largest research facility, ISTB 7.

• ASU continues to refl ect excellence in educational opportunity, providing students with access to a world-renowned faculty that includes 37 Guggenheim fellows, 23 National Academy of Sciences members, seven Pulitzer Prize winners, fi ve MacArthur fellows and fi ve Nobel laureates. In addition to our remarkable faculty, ASU’s signifi cant undergraduate online programs are rated in the top 10 by U.S. News & World Report and currently offer more than 110 undergraduate and 90 graduate degree programs online.

• ASU researchers continue to work on the front lines of COVID-19 response eff orts by developing expanded testing capabilities and researching the novel coronavirus to assist in treatment and cure eff orts worldwide. In May 2020, ASU developed the state’s fi rst saliva-based COVID-19 test, which returns accurate results in 24-48 hours and is a signifi cant component to the overall return to campus planning eff orts for students, faculty and staff . In September 2020, ASU received a $6.0 million grant from the State of Arizona to deliver a portable saliva-based testing device that will deliver results in as little as 20 minutes. In October 2020, ASU received a $4.7 million grant from the National Institutes of Health to bring rapid COVID-19 testing to underserved communities which is estimated to deliver more than 29,000 saliva tests to minority communities.

Awards and Acknowledgements The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certifi cate of Achievement for Excellence in Financial Reporting to the University for its CAFR for the fi scal year ended June 30, 2019. The Certifi cate of Achievement is a prestigious national award recognizing conformance with the highest standards for preparation of state and local government fi nancial reports.

To receive a Certifi cate of Achievement, a report issuer must publish an easily readable and efficiently organized CAFR, and must satisfy both generally accepted accounting principles and applicable legal requirements. The University will submit its CAFR for the fi scal year ended June 30, 2020 to the GFOA and anticipates this year’s report will continue to meet the requirements to receive the Certifi cate of Achievement.

Preparation of this CAFR in a timely manner would not have been possible without the coordinated efforts of the Financial Services Office and other University administrators, faculty and staff. In addition, the State of Arizona Office of the Auditor General provided invaluable assistance.

Sincerely,

Morgan R. Olsen Executive Vice President, Treasurer and Chief Financial Oﬃ cer Arizona State University

2020 CAFR Arizona State University 9 PAGE INTENTIONALLY BLANK

10 Arizona State University 2020 CAFR Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting

Presented to Arizona State University

For its Comprehensive Annual Financial Report For the Fiscal Year Ended

June 30, 2019

Executive Director/CEO ASU Organizational Chart As of June 30, 2020

Michael M. Crow

President

Mark Searle Morgan R. Olsen

Executive Vice President Executive Vice President, Treasurer and University Provost and Chief Financial Oﬃ cer

Neal Woodbury Maria Anguiano

Interim Executive Vice President and Senior Vice President for Strategy Chief Science and Technology Oﬃ cer

José A. Cárdenas James W. O’Brien

Senior Vice President and General Counsel Senior Vice President and Chief of Staﬀ

James A. Rund Richard H. Stanley

Senior Vice President for Educational Senior Vice President and University Planner Outreach and Student Services

Christine K. Wilkinson Raymond E. Anderson

Senior Vice President and Secretary Vice President and Athletic Director of the University

12 Arizona State University 2020 CAFR Arizona Board of Regents As of June 30, 2020

Ex-Oﬃ cio

Doug Ducey, Governor of Arizona

Kathy Hoﬀ man, Arizona Superintendent of Public Instruction

Appointed

Larry Penley, Chair Phoenix

Karrin Taylor Robson, Secretary Phoenix

Ron Shoopman, Treasurer Tucson

Lyndel Manson, Chair Elect Flagstaﬀ

Bill Ridenour Paradise Valley

Fred DuVal Phoenix

Kathryn Hackett King Phoenix

Ram Krishna Yuma

Anthony Rusk, Student Regent University of Arizona

Lauren L’Ecuyer, Student Regent Northern Arizona University

2020 CAFR Arizona State University 13

Salute toService gameagainsttheUniversity ofSouthernCalifornia. Attendees ofSparky’s Touchdown Tailgate checkoutaBlackhawk helicopterbeforethe

Financial Section Independent Auditors’ Report

ARIZONA LINDSEY A. PERRY MELANIE M. CHESNEY AUDITOR GENERAL AUDITOR GENERAL DEPUTY AUDITOR GENERAL

Independent auditors’ report

Members of the Arizona State Legislature

The Arizona Board of Regents

Report on the financial statements

We have audited the accompanying financial statements of the business-type activities and aggregate discretely presented component units of Arizona State University as of and for the year ended June 30, 2020, and the related notes to the financial statements, which collectively comprise the University’s basic financial statements as listed in the table of contents.

Management’s responsibility for the financial statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ responsibility

Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of the Thunderbird School of Global Management (TSGM) and the aggregate discretely presented component units, which account for the following percentages of the assets and deferred outflows of resources, liabilities and deferred inflows of resources, revenues, and expenses of the opinion units affected:

Assets and Liabilities and Opinion unit deferred outflows deferred inflows Revenues Expenses Business-type activities—TSGM 0.45% 0.06% 0.55% 0.45% Discretely presented component units 100% 100% 100% 100%

Those statements were audited by other auditors whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts included for TSGM or the aggregate discretely presented component units, is based solely on the other auditors’ reports. We conducted our audit in accordance with U.S. generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. The other auditors did not audit the aggregated discretely presented component units’ financial statements, except for the ASU Preparatory Academy, Inc., in accordance with Government Auditing Standards.

2910 N 44th St., Ste. 410 • PHOENIX, AZ 85018-7271 • (602) 553-0333 • WWW.AZAUDITOR.GOV

16 Arizona State University 2020 CAFR

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the University’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the University’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Opinions

In our opinion, based on our audit and the reports of the other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the business-type activities and aggregate discretely presented component units of Arizona State University as of June 30, 2020, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with U.S. generally accepted accounting principles.

Emphasis of matter

As discussed in Note A to the financial statements, the University’s financial statements are intended to present the financial position, the changes in financial position, and, where applicable, cash flows of only those portions of the business-type activities, major fund, and aggregate discretely presented component units of the State of Arizona that are attributable to the transactions of the University. They do not purport to, and do not, present fairly the financial position of the State of Arizona as of June 30, 2020, the changes in its financial position, or, where applicable, its cash flows for the year then ended in conformity with U.S. generally accepted accounting principles. Our opinion is not modified with respect to this matter.

Other matters

Required supplementary information

U.S. generally accepted accounting principles require that the management’s discussion and analysis on pages 20 through 26, schedule of the University’s proportionate share of the net pension liability and total OPEB liability on page 64, and schedule of university contributions on page 65 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with U.S. generally accepted auditing standards, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Supplementary and other information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the University’s basic financial statements. The combining statements on pages 68 and 69 and

2020 CAFR Arizona State University 17 Independent Auditors’ Report

the introductory and statistical sections listed in the table of contents are presented for purposes of additional analysis and are not required parts of the basic financial statements.

The combining statements are management’s responsibility and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with U.S. generally accepted auditing standards by us and the other auditors. In our opinion, based on our audit, the procedures performed as described above, and the reports of the other auditors, the combining statements are fairly stated, in all material respects in relation to the basic financial statements as a whole.

The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on them.

Other reporting required by Government Auditing Standards

In accordance with Government Auditing Standards, we will issue our report on our consideration of the University’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters at a future date. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the University’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the University’s internal control over financial reporting and compliance.

Lindsey Perry, CPA, CFE Auditor General

October 30, 2020

18 Arizona State University 2020 CAFR PAGE INTENTIONALLY BLANK

2020 CAFR Arizona State University 19 Management’s Discussion and Analysis

The Management’s Discussion and Analysis (MD&A) Tuition and fees are ASU’s primary revenue source (52 provides readers of Arizona State University’s financial percent), with grants and contracts, state appropriations, statements an understanding of the financial position fi nancial aid grants and auxiliary enterprise activities also and revenue and expense activities for the year ended providing signifi cant resources. Over $1.3 billion was spent June 30, 2020. This discussion has been prepared by on instruction related expenses in FY 2020, representing University management and should be read in conjunction one-half of the University’s total expenses. Scholarships with the financial statements and notes to the financial and fellowships combined with student services was the statements. second largest expense category with $459 million in Arizona State University Reporting Entity FY 2020 expenses, while research and public service Arizona State University (ASU, University) is a knowledge expenses were $398 million, with the categories reflecting enterprise committed to knowledge creation, innovation, fifteen and eleven percent increases over FY 2019, meaningful impact to our community and global engagement. respectively. The University is comprised of an educational network of Statement of Net Position more than 800 accredited undergraduate majors, highly The statement of net position presents the financial position ranked graduate degrees, and concentrations. ASU’s fall of the University at the end of the fiscal year and reports all 2019 enrollment was over 119,000 students comprised assets, deferred outflows, liabilities and deferred inflows, of 96,000 undergraduate students and 23,000 graduate and segregates assets and liabilities into current and students, including over 53,000 students participating in non-current categories. Assets are resources controlled ASU’s renowned online degree programs. The University by ASU that can be used to support its mission and goals. is classifi ed as a state instrumentality and since fi scal A deferred outflow of resources is a use of net position responsibility for the University remains with the State of that is applicable to future reporting periods. Liabilities are Arizona, the University is considered a part of the reporting obligations of the University. A deferred inflow of resources entity for the State’s fi nancial reporting purposes. is the acquisition of net position in future periods. The University’s financial report includes three basic The change in net position (assets plus deferred outflows financial statements: the Statement of Net Position; the of resources less liabilities plus deferred inflows of Statement of Revenues, Expenses, and Changes in Net resources) between years is one indicator of whether the Position; and the Statement of Cash Flows. Financial overall financial condition of the University has improved information for FY 2019 is included in Management’s or worsened during the fiscal year. Discussion and Analysis (MD&A) in order to illustrate increases and decreases with FY 2020 data. The A summary comparison of the University’s financial position financial statements and notes along with MD&A have as of June 30, 2020 and June 30, 2019 follows. been prepared in accordance with generally accepted Condensed Summary of Net Position (Dollars in millions) accounting principles as defined by the Governmental FY 2020 FY 2019 Accounting Standards Board (GASB) for public colleges and universities. Assets Current assets $ 615.9 $ 553.9 The University’s financial statements encompass the University and its two blended component units and six Noncurrent assets 1,131.8 1,134.2 discretely presented component units. MD&A focuses only Noncurrent capital assets, net 2,949.1 2,749.3 on the University and blended component units, unless Total assets $ 4,696.8 $ 4,437.4 otherwise stated. Information on the component units can Deferred outfl ows of resources $ 233.0 $ 160.2 be found in the component units’ Statement of Financial Liabilities Position and Statement of Activities, as well as Note B - ASU Current liabilities $ 592.0 $ 544.1 Component Units, Note O – Summary Financial Information Noncurrent liabilities 939.6 759.5 for ASU Component Units, and Combining Statements of the nonmajor discretely presented component units. Noncurrent long-term obligations 1,967.0 1,835.8 Total liabilities $ 3,498.6 $ 3,139.4 Financial Highlights for FY 2020 Deferred infl ows of resources $ 69.1 $ 102.9 The University strengthened its financial foundation in FY Net position 2020 with a $7 million increase in net position, compared Net investment in capital assets $ 1,042.7 $ 985.1 to a $85 million increase in FY 2019. This represents the 15th straight year in which ASU reported an increase in net Restricted: position. At June 30, 2020 the University had total assets of Nonexpendable 87.5 84.7 $4.7 billion and net position of almost $1.4 billion. Overall, Expendable 127.6 118.6 FY 2020 funding sources and uses increased six percent Unrestricted 104.3 167.0 and nine percent, respectively, from FY 2019. Total net position $ 1,362.1 $ 1,355.4

20 Arizona State University 2020 CAFR Total assets at June 30, 2020 of $4.7 billion refl ect a six between projected and actual earnings on pension plan percent increase from June 30, 2019. Current assets investments. The increase in OPEB liability resulted from are used to support operations and include cash and the increased subsidization of retiree health care costs by cash equivalents, short-term investments and accounts active employees and greater participation of ASU retirees receivables. Current assets increased $62 million in the ADOA OPEB plan. between years primarily due to increased cash and cash Deferred inflows of resources decreased $34 million equivalents as the University was strategically holding between years due to decreased pension and OPEB plan more liquid assets at June 30, 2020 due to the eff ects of deferrals due to actuarial changes in assumptions in the the COVID-19 pandemic economic disruptions. ASU’s measurement of the plan liabilities to be recognized in investment strategy continued to take advantage of the future periods. lack of spread between short-term and long-term rates, allowing for expanded shorter term investments available Net position increased $7 million between years to almost to fund current obligations as needed. $1.4 billion. ASU’s increase in net position over the last ten years has averaged $86 million annually refl ecting Noncurrent assets increased $197 million between years the University’s steady growth in net position allowing primarily due to a $200 million increase in net capital the University to accumulate unrestricted net position assets, a $6 million increase in endowment investments, suffi cient to absorb the reduction in net position related to partially off set by a $6 million decrease in restricted cash GASB pension plan and OPEB liability standards and still and cash equivalents and a $3 million decrease in other retain positive unrestricted net position to support strategic investments and student loans receivable. The increase in initiatives. Net position is reported as follows: net capital assets was largely due to ongoing construction of the Interdisciplinary Science and Technology Building • Net investment in capital assets represents the 7 (ISTB 7) project and the Health Futures Center, as well University’s investment in capital assets such as as the completion of the Hayden Library Reinvention equipment, buildings, land and infrastructure, net project. Restricted cash and cash equivalents decreased of accumulated depreciation and outstanding debt $6 million due to expenditures on capital projects off set obligations related to those capital assets. by the issuance of system revenue bonds in fi scal 2020 • Restricted-nonexpendable net position primarily to fund the Phase II of ISTB 7, the Durham Language and represents the University’s permanent endowment Literature renovation, phase two of the Health Futures funds received from donors for the purpose of creating Center, the Downtown Phoenix academic space prepaid permanent funding streams for specific programs or lease, IT infrastructure and other infrastructure and activities. These funds are held in perpetuity and are deferred maintenance projects. The bond proceeds will not available for expenditure by the University. The be spent as construction costs are incurred. earnings on these funds support the programs and Deferred outfl ows of resources increased $73 million activities as determined by donors. between years primary due to an increase in pension plan • Restricted-expendable net position is the resources and other postemployment benefi ts activity due to actuarial which the University is legally or contractually obligated diff erences between expected and actual experience as to spend in accordance with restrictions placed by well as changes in actuarial assumptions. donors and/or other external parties. Total liabilities increased $359 million for the year ended • Unrestricted net position is composed of all other funds June 30, 2020 to $3.5 billion, with current liabilities available to ASU for purposes related to its mission. increasing $48 million between years primarily due to Unrestricted net position is typically designated or increased unearned revenues and accounts payable. committed for specific academic programs or research Unearned revenues increased due to grant revenues initiatives. received prior to all grant obligations being fulfi lled resulting Statement of Revenues, Expenses, and Changes in in the recognition of the revenue in future periods. Accounts Net Position payable increased primarily related to outstanding obligations related to growth in outsourced services. The statement of revenues, expenses, and changes in net position presents the University’s operating results for Noncurrent liabilities increased $311 million between the fiscal year. A positive increase in net position would years with long-term debt increasing by $131 million and typically indicate the financial condition of the University has ASU’s allocated portion of pension and OPEB liabilities improved over the prior year. In accordance with GASB, the increasing $48 million and $113 million, respectively. University recognizes certain essential revenues such as Long-term debt increased due to the 2020 system revenue state appropriations, financial aid grants, and private gifts, bonds issue discussed above and the increased pension as nonoperating revenues even though those revenues are liability resulted from an increase in the University’s used to support the University’s core instructional mission. proportionate share of the ASRS plan and diff erences

2020 CAFR Arizona State University 21 Management’s Discussion and Analysis

A summary comparison of the University’s activities for FY provided to students in University housing and cancellation 2020 and FY 2019 follows. of Gammage Broadway Series events.

Condensed Summary of Revenues, Expenses, and Changes in Net Operating Expenses Position (Dollars in millions) Expenses are also categorized as operating or nonoperating FY 2020 FY 2019 per GASB. The University reports operating expenses Operating revenues by functional category (instruction, research, etc.) in the Tuition and fees, net $ 1,550.6 $ 1,423.1 statement of revenues, expenses, and changes in net Research grants and contracts 365.5 344.1 position and displays expenses by their natural classifi cation (personal services and benefits, supplies and services, etc.) Auxiliary enterprises, net 170.2 183.5 in Note I – Operating Expenses by Natural Classifi cation. Other operating revenues 94.3 97.9 Total operating revenues $ 2,180.6 $ 2,048.6 Operating expenses increased $249 million or nine percent in FY 2020 with the increase largely reflecting increased Operating expenses 2,883.5 2,634.7 instructional, student support and research activities. Operating loss $ (702.9) $ (586.1) Instruction and academic support expenses experienced the Net nonoperating revenues (expenses) largest increase, $122 million, spread across most academic State appropriations $ 323.3 $ 303.4 areas of the University, along with continued growth in online Other nonoperating revenues 414.1 403.5 programs and instructional support activities. Scholarship Nonoperating expenses (81.3) (85.8) and fellowships and student services increased $61 million largely due to increased Pell grants awards and institutional Income before other revenues, expenses, $ (46.8) $ 35.0 gains, or losses aid. Research and public service expenses increased $39 Capital appropriations and other revenues 53.5 50.4 million in correlation with the increased grants and contracts revenues. Increase in net position $ 6.7 $ 85.4 Net position at beginning of year 1,355.4 1,270.0 Pensions and OPEB expenses totaled $56 million in FY 2020 compared to an offsetting impact to operating expenses Net position at end of year $ 1,362.1 $ 1,355.4 ($5 million) in FY 2019, representing a $61 million increase Operating Revenues between years impacting all functional classifications. Operating revenues represent resources generated by the Pensions and OPEB expenses increased due to recognition University to fulfill its instruction, research, and public service of acturarial differences between expected and actual missions. Student tuition and fees, research grants and experience as well as changes in actuarial assumptions. contracts, and auxiliary enterprise activities are the primary Nonoperating Revenues and Expenses operating revenues of the University. Due to the required classifi cation of key revenue sources such Operating revenues increased $132 million, or six percent, as state appropriations, fi nancial aid grants, and private gifts to over $2.1 billion in FY 2020 with the most signifi cant as nonoperating revenues, operating expenses will typically increases occurring in net tuition and fees and research exceed operating revenues for public universities, resulting grants and contracts. The $128 million increase in tuition in an operating loss. Total nonoperating revenues increased and fee revenues is primarily the result of a three percent $34 million between years, primarily due to a $20 million increase in enrollment, including nonresident enrollment increase in state appropriations, $15 million in CARES Act growth of four percent, and a modest increase in tuition and assistance and $19 million in fi nancial aid grants, off set by fee rates due to the adoption of the tuition restructure plan decreases of $16 million in net investment income and $4 to simplify student billing. million in private gifts. The University received an increase Grants and contracts revenue, primarily funded by federal of $13 million in state investment and $7 million in funding agencies refl ected a six percent, or $21 million, increase from the Arizona Board of Regents for the Arizona Teachers between years to over $365 million. ASU has one of the Academy. Additionally, the University recognized a receivable fastest growing research enterprises in the U.S. and supports of $15 million as of June 30 out of the total of $64 million in several interdisciplinary research centers, institutes and awarded CARES Act funding due to the COVID-19 pandemic. initiatives. These university-wide research centers enable The increase in fi nancial aid grants is primarily related to Pell scientists and scholars to collaborate across disciplines; grant activity. Unrealized gains on investments decreased connect researchers with clinical, governmental and between fi scal years as did interest earnings on investments, corporate partners; and provide the teams and infrastructure primarily due to market impacts of the COVID-19 pandemic. to win signifi cant funding opportunities. Nonoperating expenses, primarily comprised of interest on debt and other related expenses decreased $4 million in part There was a $13 million, or seven percent, decrease in due to sale of real estate associated with the Thunderbird auxiliary revenues due to the impact of the COVID-19 School of Global Management. pandemic on auxiliary sales and services, particularly a credit

22 Arizona State University 2020 CAFR Combined Sources and Uses (Dollars in millions)

Percentage FY 2020 FY 2019 Change Sources

Tuition and fees, net $ 1,550.6 52% $ 1,423.1 51% 9% Grants and contracts 423.2 14% 401.5 14% 5% State appropriations (includes capital appropriations) 348.9 12% 328.8 12% 6% Financial aid grants 186.8 6% 168.2 6% 11% Auxiliary enterprises, net 170.2 6% 183.5 7% (7)% Private and capital gifts 93.8 3% 97.7 3% (4)% Sales and services 72.5 3% 78.5 3% (8)% Share of state sales tax (TRIF) 34.1 1% 34.6 1% (1)% Other sources 91.5 3% 89.9 3% 2% Total sources $ 2,971.6 100% $ 2,805.8 100% 6% Uses Instruction and academic support $ 1,388.1 47% $ 1,266.2 46% 10% Research and public service 398.4 13% 359.8 13% 11% Scholarships and fellowships and student services 459.0 16% 398.4 15% 15% Institutional support and operation of plant 302.6 10% 293.5 11% 3% Auxiliary enterprises 191.9 6% 179.6 7% 7% Depreciation 143.6 5% 137.1 5% 5% Interest on debt and other expenses 81.3 3% 85.8 3% (5)% Total uses $ 2,964.9 100% $ 2,720.4 100% 9%

Statement of Cash Flows University. Due to the categorization of operating and A summary comparison of cash fl ows for the University’s nonoperating revenues and expenses by GASB, cash FY 2020 and FY 2019 activities follows. flows from operating expenses are typically a net cash use. Major operating funding sources include student Condensed Summary of Cash Flows (Dollars in millions) tuition and fees, research grants and contracts, and FY 2020 FY 2019 auxiliary enterprises revenues. Operating expenses include Cash provided by/(used for): employee salaries and benefits and vendor payments for services and supplies. Net cash flows from noncapital Operating activities $ (465.9) $ (439.6) financing activities is a major funding source for operating Noncapital fi nancing activities 683.6 664.6 expenses and includes cash from state appropriations, Capital and related fi nancing (224.8) (138.8) financial aid grants, and private gifts. Cash flows from activities capital financing activities include all capital assets and Investing activities 34.1 139.1 related long-term debt activities, including proceeds from Net increase in cash and cash the issuance of debt, capital asset purchases, and principal $ 27.0 $ 225.3 equivalents and interest paid on long-term debt. Cash flows from Cash and cash equivalents at investing activities show the net sources and uses of cash 519.4 294.1 beginning of year related to purchasing or selling investments and income Cash and cash equivalents at end earned on those investments. $ 546.4 $ 519.4 of year Capital Assets and Debt Administration

The statement of cash ﬂows provides additional information The University is required by state statute and Arizona about the University’s ﬁnancial results by reporting the Board of Regents policy to prepare an annual Capital major sources and uses of cash and cash equivalents. Improvement Plan (CIP). The CIP details the University’s Cash flows from operating activities present the net three-year strategic plan of space use and capital cash generated or used by the operating activities of the investments to enable the success of current and future students and maintain the University’s commitment to

2020 CAFR Arizona State University 23 Management’s Discussion and Analysis

the people of Arizona regarding research discovery and Downtown Phoenix Campus and will add more than economic development. 500 beds for student housing. For fall 2021, programs The CIP also outlines any plans to issue debt to finance in popular music, fashion and design within the capital acquisitions or construction to address space Herberger Institute for Design and the Arts will transfer deficiencies in academic, research and student programs. to the Downtown Phoenix Campus to take advantage of proximity to the established and emerging arts ASU’s capital assets continue to grow in order to provide districts of downtown Phoenix. The fi rst three fl oors of facilities to support the University’s instruction, research the project will provide specialized space to support and public service missions. Overall the University’s capital these and other campus programs, with dynamic, assets, net of accumulated depreciation and deletions, creative space that includes workshops, design increased by $200 million in FY 2020, a seven percent studios, co-working space, fabrication labs, recording increase over FY 2019. Growth in FY 2020 primarily and photography studios and live events. resulted from completion of the Hayden Library renovation project and new projects to support the University’s Additional information about the University’s capital assets instruction, research and public service programs. is presented in Note D – Capital Assets. Signifi cant FY 2020 new capital projects included the A summary of the University’s outstanding debt including following: average interest rates, fi nal maturity and outstanding balances for its bonds, certifi cates of participation and • Thunderbird School of Global Management. This capital leases, is presented in Note E – Long-Term Debt new multi-level classroom and offi ce facility will be and Lease Obligations. In April 2020 the University issued located in Downtown Phoenix to accommodate the $184 million in system revenue bonds to fund Phase I of strategic relocation of the Thunderbird School of Global the Durham Language and Literature Renovation, Phase Management’s graduate programs. This 111,000 II of the Health Futures Center, Phase II of ISTB 7, IT and gross-square-foot classroom and offi ce building will other infrastructure and deferred maintenance projects provide a long-term location for these programs, and the prepaid lease portion of the Downtown Phoenix now located in leased Arizona Center space. The Residence Hall and Entrepreneurial Center. proximity of the facility’s location to other ASU schools and departments, as well as to valuable community partners in downtown Phoenix, will enhance the ASU’s current bond ratings are Aa2 by Moody’s Investor university’s access to resources that will enable the Services and AA by Standard and Poor’s. success of Thunderbird students, faculty and staff . ASU’s Component Units • Durham Language and Literature Building ASU has blended fi nancial activity for two of its component Renovation. This project provides needed renovations units, The Thunderbird School of Global Management to the Durham Language and Literature Building, (TSGM) and the ASU Athletic Facilities District. There was located prominently on the Tempe campus. This facility no fi nancial activity for the ASU Athletic Facilities District is over fi fty years old and requires modernization during FY 2020. and upgrades to all building infrastructure systems For its discretely presented component units, the University to comply with current building and life safety codes presents the financial statements on separate pages and to advance the University’s mission of academic from the University’s basic fi nancial statements. These excellence. In addition to extensive demolition of the component units are reported in distinct fi nancial statements original fl ooring, walls and ceilings, the project plan due to their use of diff erent fi nancial reporting models than includes the renovation of all exterior facades with the University and to emphasize their separation from the brick and the addition of building insulation and new University. ASU component units discretely presented in energy-effi cient windows which will infuse building these statements are ASU Enterprise Partners (ASUEP), spaces with natural light, reduce energy consumption Arizona Capital Facilities Finance Corporation (ACFFC), and create a healthier environment. ASU Alumni Association, Arizona State University Research • Downtown Phoenix Residence Hall and Park, Inc., Sun Angel Foundation, and ASU Preparatory Entrepreneurial Center. This third-party project Academy, Inc. Even though the component units support will construct a new student housing facility with the University, they are not subsidiaries of the University. academic, innovation and core student support space For more information on these component units, please for the Downtown Phoenix Campus. The 284,000 refer to Note B – ASU Component Units and Note O – gross-square-foot facility will be located on the ASU Summary Financial Information for ASU Component Units.

24 Arizona State University 2020 CAFR Condensed Summary of Financial Position for ASU Discretely Condensed Summary of Activities for ASU Discretely Presented Presented Component Units (Dollars in millions) Component Units (Dollars in millions) FY 2020 FY 2019 FY 2020 FY 2019 Assets Revenues Cash and investments $ 1,331.8 $ 1,288.4 Contributions $ 227.2 $ 235.0 Capital assets, net 155.0 165.6 Other revenues 122.4 216.3 Receivables, net 252.0 240.5 Total revenues $ 349.6 $ 451.3 Other assets 75.8 76.9 Expenses Total assets $ 1,814.6 $ 1,771.4 Payments to the beneﬁ t of $ 162.7 $ 146.2 Liabilities ASU Long-term debt $ 316.6 $ 333.8 Other expenses 141.3 137.0 Other liabilities 343.2 328.2 Total expenses $ 304.0 $ 283.2 Total liabilities $ 659.8 $ 662.0 Gains and losses (0.2) 3.3 Net assets Increase in net assets $ 45.4 $ 171.4 Without Donor Restrictions - $ 123.3 $119.7 Net assets at beginning of year 1,109.4 938.0 Unrestricted Net assets at end of year $ 1,154.8 $ 1,109.4 With Donor Restrictions - 427.9 421.9 Temporarily restricted With Donor Restrictions - 603.6 567.8 Permanently restricted Total net assets $ 1,154.8 $ 1,109.4

Combined ASU and ASU Component Units assets for the University/component units must be spent ASU and its component units combined for an increase in compliance with donor directions, and are typically in net position/net assets of $52 million in FY 2020, restricted for use by a specifi c academic department or including a $7 million increase for the University and its program. Revenues for the components units decreased blended component units and a $45 million increase for $102 million, or (23 percent), between years, primarily due the discretely presented component units. The net asset to a $102 million decrease in net investment return and a increase for ASU occurred in net investment in capital $8 million decrease in contributions, partially off set by a net assets, $58 million, and restricted net position $12 million, $8 million increase in sales and services, grants and aid, off set by a decrease in unrestricted net position of $63 rental and other revenues. Expenses for the component million. Component unit unrestricted net assets increased units increased by $21 million, or seven percent, between by $4 million while temporarily restricted and permanently years with payments to benefi t ASU representing over half restricted component unit net assets increased by $6 million of the increase. and $35 million, respectively. Restricted net position/ net

End of the Year Net Position of ASU and Net Assets of ASU Component Units on a Combined Basis (Dollars in millions) FY 2020 FY 2019

ASU ASU Component Component ASU Units Combined ASU Units Combined Net investment in capital assets $ 1,042.7 $ 1,042.7 $ 985.1 $ 985.1 Unrestricted net position/net assets without 104.3 $ 123.3 227.6 167.0 $ 119.7 286.7 donor restrictions Restricted net position/net assets with donor restrictions: Expendable/Temporarily 127.6 427.9 555.5 118.6 421.9 540.5 Nonexpendable/Permanently 87.5 603.6 691.1 84.7 567.8 652.5 Net position/net assets at end of year $ 1,362.1 $ 1,154.8 $ 2,516.9 $ 1,355.4 $ 1,109.4 $ 2,464.8

2020 CAFR Arizona State University 25 Management’s Discussion and Analysis

Economic Outlook The recognition of ASU’s academic, public service and ASU continues to deliver essential services to its students research eff orts are keystones to the university’s reputation and the broader community locally and nationally through among its peers as a leader in innovation and academic its research, teaching and service activities and meeting the quality. Recent recognition for ASU’s innovation and demand for education, which remains high from learners educational eff orts from external sources include: of all ages and all stages of life. In the environment of • #1 university in the U.S. for innovation, for the sixth the COVID-19 pandemic, ASU began its fall semester year in a row; (U.S. News and World Report) in August 2020 off ering courses in various immersion • #1 in the U.S. and top fi ve in the world for global impact modalities including: ASU immersion (on-campus, in- in research, outreach and stewardship (Times Higher person, technology-enhanced learning); ASU Sync Education) (synchronous, technology-enhanced and fully-interactive remote learning); and iCourses (courses delivered entirely • Top 10 in U.S. patents across universities worldwide; online with lectures and materials available on demand). To (U.S. National Academy of Investors and the address the numerous issues brought on by the pandemic, Intellectual Property Owners Association); the University developed the ASU COVID-19 management • Top 10 in the U.S. for fi rst-year student experience framework for its students, staff , faculty, and community (U.S. News and World Report) members, based upon evaluation of the best science, data • Top 10 “Best Buy” of public universities; (Fiske Guide and public health practices with a focus on adaptability to to Colleges) an ever-changing environment. For example, the University has operationalized easily-accessible saliva testing • Top 10 university in the U.S. chosen by international capacities for students and staff in conjunction with daily students (Institute of International Education) online health check solutions to ensure that individuals can • A top producer of Fulbright scholars; (Chronicle of be tested timely and effi ciently, and to detect the potential Higher Education) spread of infections. • A top university for undergraduate education; (U.S. Recognized by US News and World Report as the most News and World Report, Princeton Review) innovative higher education institution in the nation for the sixth straight year, ASU continues to lead in advancement ASU management expects that the ongoing economic and development of new learning technologies in a scalable impacts of the COVID-19 pandemic will present fi nancial manner to provide greater access to higher education. challenges to the enterprise, particularly to its auxiliary ASU continues to invest in its strong university-funded activities. Despite these challenges, compared to other scholarship programs focused on providing both merit- higher education entities around the country, ASU remains based and need-based aid to residents of Arizona, with well-positioned due to increased enrollment. continuing priority for need-based aid for talented fi rst- Looking to the future, the University embraces its role to generation low-income students. For fall 2019, 85 percent meet the demands of social transformation necessary of ASU undergraduate students received some level of to contribute to the national agenda for social justice. fi nancial assistance and 36 percent of ASU undergraduate The University’s commitment to its charter and to the students received federal Pell Grants. transformation of higher education will need to accelerate Even with the challenges of the pandemic, ASU has and learning options will need to diversify in order to keep experienced its largest enrollment. For the fall 2020 pace with rapidly changing workforce needs. In September semester, ASU has enrolled more than 128,000 students, 2020, the University released a 25-point plan to increase with over 74,000 enrolled in immersion, hybrid or Sync these eff orts to enhance diversity, growth and opportunity classes. ASU’s renowned online education degree for underrepresented groups and individuals to ensure programs are well-positioned economically and structurally, that all are provided an educational, work and living and they continue to enjoy double-digit growth in environment that is welcoming, supportive and empowering student enrollment. The University continues to achieve to their success. ASU is well-positioned administratively, improvements in student retention and degree completion structurally and fi nancially to confront these challenges despite the challenges posed by the increasingly and is honored to lead these eff orts within the higher complex and changing environment for learners who are education sector. experiencing economic, medical and daily disruptions due to the pandemic.

26 Arizona State University 2020 CAFR PAGE INTENTIONALLY BLANK

2020 CAFR Arizona State University 27 Statement of Net Position June 30, 2020 (Dollars in thousands)

Assets Current Assets: Cash and cash equivalents (Note C) $ 272,636 Short-term investments (Note C) 89,712 Accounts receivables, net 240,862 Other assets 12,664 Total Current Assets $ 615,874

Noncurrent Assets: Restricted cash and cash equivalents (Note C) $ 273,773 Endowment investments (Note C) 256,932 Other investments (Note C) 594,531 Student loans receivable, net 6,397 Other assets 195 Capital assets, net (Note D) 2,949,115 Total Noncurrent Assets $ 4,080,943

Total Assets $ 4,696,817

Deferred Outﬂ ows of Resources Interest rate swap (Note F) $ 20,107 Unamortized loss on refunding debt 27,536 Pensions related (Note J) and other postemployment beneﬁ ts (Note K) 185,322

Total Deferred Outﬂ ows of Resources $ 232,965

Liabilities Current Liabilities: Accounts payable and accrued liabilities $ 208,749 Compensated absences (Note H) 4,844 Unearned revenues 196,674 Funds held for others 13,338 Current portion of long-term debt (Note E) - Funded by: University operating revenues 127,878 State appropriations and other State monies 40,554 Total Current Liabilities $ 592,037

Noncurrent Liabilities: Compensated absences (Note H) $ 41,093 Other liabilities 17,496 Derivative instrument - Interest rate swap (Note F) 20,107 Net Pension (Note J) and other postemployment beneﬁ ts liability (Note K) 860,875 Long-term debt (Note E) - Funded by: University operating revenues 1,523,219 State appropriations and other State monies 443,799 Total Noncurrent Liabilities $ 2,906,589

Total Liabilities $ 3,498,626

Deferred Inﬂ ows of Resources Unamortized gain on refunding debt $ 1,607 Pensions related (Note J) and other postemployment beneﬁ ts (Note K) 67,486

Total Deferred Inﬂ ows of Resources $ 69,093

Net Position Net investment in capital assets $ 1,042,673 Restricted (Total of $215,111): Nonexpendable: Student aid 80,741 Academic department uses 6,756 Expendable: Student aid 36,071 Academic department uses 84,548 Capital projects and debt service 6,995 Unrestricted (Note G) 104,279 Total Net Position $ 1,362,063

See Notes to Financial Statements.

28 Arizona State University 2020 CAFR Component Units Statement of Financial Position June 30, 2020 (Dollars in thousands)

Assets Cash and cash equivalents $ 35,857 Pledges receivables, net 196,910 Other receivables, net 55,074 Investments in securities 1,214,492 Other investments 81,447 Net direct ﬁ nancing leases 54,242 Property and equipment, net 155,043 Other assets 21,559

Total Assets $ 1,814,624

Liabilities Accounts payable and accrued liabilities $ 38,703 Deferred revenue 14,193 ASU endowment trust liability 256,932 Other liabilities 33,324 Long-term debt 316,614

Total Liabilities $ 659,766

Net Assets Without Donor Restrictions - Unrestricted $ 123,335 With Donor Restrictions - Temporarily restricted 427,888 With Donor Restrictions - Permanently restricted 603,635

Total Net Assets $ 1,154,858

See Notes to Financial Statements.

2020 CAFR Arizona State University 29 Statement of Revenues, Expenses, and Changes in Net Position Year ended June 30, 2020 (Dollars in thousands)

Operating Revenues Student tuition and fees, net of scholarship allowances of $462,730 $ 1,550,581 Research grants and contracts, including $268,534 in federal funding and $93,530 in nongovernmental funding 365,498 Sales and services - Auxiliary enterprises, net of scholarship allowances of $22,891 170,182 Educational departments 72,451 Other revenues 21,884

Total Operating Revenues $ 2,180,596

Operating Expenses (Note I) Educational and general - Instruction $ 1,016,720 Research 359,936 Public service 38,415 Academic support 371,378 Student services 166,131 Institutional support 188,937 Operation and maintenance of plant 113,640 Scholarships and fellowships 292,914 Auxiliary enterprises 191,862 Depreciation 143,587

Total Operating Expenses $ 2,883,520

Operating Loss $ (702,924)

Nonoperating Revenues (Expenses) State appropriations $ 323,332 Share of state sales tax - technology and research initiatives fund 34,075 Financial aid grants, including $186,504 in federal funding 186,818 Grants and contracts, including $32,614 in federal funding 56,494 and $16,044 in nongovernmental funding CARES Act Reimbursements 15,129 Private gifts 76,803 Net investment return 44,756 Interest on debt (65,342) Other expenses (15,982)

Net Nonoperating Revenues $ 656,083

Loss Before Other Revenues, Expenses, Gains, or Losses $ (46,841)

Capital appropriations - Research Infrastructure and University Capital Infrastructure $ 25,622 Capital commitment - Arizona Lottery revenue 9,537 Capital private gifts 17,022 Capital grants 1,165 Additions to permanent endowments 170

Increase in Net Position $ 6,675

Net Position at Beginning of Year 1,355,388

Net Position at End of Year $ 1,362,063

See Notes to Financial Statements.

30 Arizona State University 2020 CAFR Component Units Statement of Activities Year ended June 30, 2020 (Dollars in thousands)

With Donor Restrictions Without Donor Temporarily Permanently Restrictions Restricted Restricted Totals

Revenues Contributions $ 54,325 $ 129,591 $ 43,299 $ 227,215 Rental revenues 29,206 29,206 Sales and services 44,612 44,612 Net investment return (34,411) 33,284 (320) (1,447) Net assets released from restrictions 165,156 (157,845) (7,311) Grants and aid 37,517 890 38,407 Other revenues 11,406 185 11,591

Total Revenues $ 307,811 $ 6,105 $ 35,668 $ 349,584

Expenses Payments to the beneﬁ t of ASU - Cash donation transfers to ASU $ 114,459 $ 114,459 Vendor payments 28,995 28,995 Scholarship fund transfers to ASU 11,632 11,632 Rent payments to ASU 7,590 7,590 Management and general 105,636 105,636 Interest expense 9,616 9,616 Depreciation/amortization 11,968 11,968 Other expenses 14,078 14,078

Total Expenses $ 303,974 $ 303,974

Increase in Net Assets, before Loss $ 3,837 $ 6,105 $ 35,668 $ 45,610

Loss on Disposal of Assets (182) (182)

Increase in Net Assets, after Loss $ 3,655 $ 6,105 $ 35,668 $ 45,428

Net Assets at Beginning of Year, restated (Note A) 119,680 421,783 567,967 1,109,430

Net Assets at End of Year $ 123,335 $ 427,888 $ 603,635 $ 1,154,858

See Notes to Financial Statements.

2020 CAFR Arizona State University 31 Statement of Cash Flows Year ended June 30, 2020 (Dollars in thousands)

Cash Flows from Operating Activities Student tuition and fees $ 1,526,078 Research grants and contracts 364,973 Sales and services of auxiliary enterprises 195,433 Sales and services of educational activities 68,050 Payments for employees’ salaries and beneﬁ ts (1,483,797) Payments to vendors for supplies and services (840,675) Payments for scholarships and fellowships (286,287) Student loans issued (195) Other payments (9,433) Net cash used for operating activities $ (465,853)

Cash Flows from Noncapital Financing Activities State appropriations $ 323,332 Share of state sales tax - technology and research initiatives fund 36,891 Grants and contracts 250,104 Private gifts for other than capital purposes 76,434 Direct lending program receipts 698,584 Direct lending program disbursements (695,544) Funds held for others received 215,073 Funds held for others disbursed (221,248) Net cash provided by noncapital ﬁ nancing activities $ 683,626

Cash Flows from Capital and Related Financing Activities Capital appropriations - Research Infrastructure and University Capital Infrastructure $ 25,622 Build America Bonds - federal subsidy 1,979 Capital commitments, including Arizona Lottery revenue 4,708 Capital gifts and grants 12,373 Proceeds from issuance of capital debt 223,939 Purchases of capital assets (343,720) Principal paid on capital debt and leases (70,261) Interest paid on capital debt and leases (79,475) Net cash used for capital and related ﬁ nancing activities $ (224,835)

Cash Flows from Investing Activities Proceeds from the sales and maturities of investments $ 26,823 Purchases of investments (19,820) Interest received on investments 27,098 Net cash provided by investing activities $ 34,101 Net increase in cash and cash equivalents 27,039 Cash and cash equivalents at beginning of year 519,370 Cash and cash equivalents at end of year $ 546,409

Reconciliation of operating loss to net cash used for operating activities: Operating loss $ (702,924) Adjustments to reconcile operating loss to net cash used for operating activities: Depreciation 143,587 Miscellaneous nonoperating expenses (10,987) Changes in assets, deferred outfl ows of resources, liabilities and deferred infl ows of resources: Net pension and other postemployment benefi ts liability 159,527 Deferred outfl ows of resources related to pensions and other postemployment benefi ts (69,984) Deferred infl ows of resources related to pensions and other postemployment benefi ts (33,637) Receivables, net 16,234 Accounts payable and accrued liabilities 16,170 Compensated absences 8,666 Unearned revenues 14,493 Other assets (6,998) Net cash used for operating activities $ (465,853)

Signiﬁ cant Noncash Transactions Amortization of bond premiums and discounts $ 19,260 CARES Act receivable 15,129

See Notes to Financial Statements.

32 Arizona State University 2020 CAFR Notes to Financial Statements

June 30, 2020 For financial reporting purposes under GASB, the Note A - Basis of Presentation and Significant University is considered a public institution engaged Accounting Policies only in business-type activities. Accordingly, the University’s fi nancial statements have been presented The accounting policies of Arizona State University (ASU, under the economic resources measurement focus and University) conform to U.S. generally accepted accounting the accrual basis of accounting. The economic resources principles applicable to public institutions engaged only measurement focus emphasizes the long-term eff ects of in business-type activities adopted by the Governmental operations on overall net resources (i.e., total assets, total Accounting Standards Board (GASB). deferred outfl ows of resources, total liabilities, and total Reporting Entity deferred infl ows of resources). The statement of revenues, expenses, and changes in net position prepared using the Arizona State University is one of the largest public economic resources measurement focus includes only research universities in the United States under a single transactions and events that increase or decrease net administration. Located on four campuses across position during the year. Under the accrual basis, revenues metropolitan Phoenix, ASU had fall 2019 enrollment of are recognized when earned and expenses are recorded 119,979 students. The accompanying statements of when an obligation has been incurred, or benefi t has been the University include the activity of the Tempe campus, received. All signifi cant intra-university transactions have West campus (located in northwest Phoenix adjacent to been eliminated. Glendale), Polytechnic campus (located in Mesa) and the Downtown Phoenix campus, and the University’s Restatement of Component Units Net Assets online degree programs, as well as its component units. Certain amounts have been restated in the component Information on component units can be found in Note B - unit fi nancial statements to conform to the FASB ASU ASU Component Units and Note O - Summary Financial 2018-18, Not-for-Profi t Entities (Topic 958) – Clarifying Information for ASU Component Units. the Scope and the Accounting Guidance for Contributions For fi nancial reporting purposes, the University’s portion Received and Contributions Made requirement to classify of the statements includes those funds directly controlled net assets to two categories: with donor restrictions and by the University. Control by the University is determined without donor restrictions. For ASU Enterprise Partners, on the basis of fi nancial accountability. The University the reclassifi cation includes adjustments for prior year is classified as a state instrumentality. Since fiscal investment fee amounts between the with donor restrictions responsibility for the University remains with the State of categories (increase of $124 thousand in permanently Arizona, the University is considered a part of the reporting restricted and decrease of $129 thousand in temporarily entity for the State’s fi nancial reporting purposes. restricted) and the without donor restrictions category (increase of $5 thousand). ASU’s Basis of Presentation and Accounting

The accompanying fi nancial statements of the University Summary of Signifi cant Accounting Policies include a statement of net position; a statement of revenues, Cash and cash equivalents. In accordance with GASB expenses, and changes in net position; and a statement Statement No. 9, Reporting Cash Flows of Proprietary and of cash fl ows, each of which provide a comprehensive, Nonexpendable Trust Funds and Governmental Entities entity-wide perspective of the University. The statement That Use Proprietary Fund Accounting, all highly liquid of net position provides information about the assets, investments with an original maturity of three months or deferred outfl ows of resources, liabilities, deferred infl ows less, are considered to be cash and cash equivalents. of resources, and net position of the University at the end of Funds invested in money market funds or through the State the fi scal year. Assets and liabilities are classifi ed as either Treasurer’s Local Government Investment Pool are also current or noncurrent. Net position is classifi ed according to considered cash equivalents. In accordance with GASB, external donor restrictions, or availability of assets to satisfy all restricted cash and cash equivalents, including funds the University’s obligations. The statement of revenues, held by a bond trustee, are shown as noncurrent cash and expenses, and changes in net position provides information cash equivalents. about the University’s fi nancial activities during the fi scal year. Revenues and expenses are classifi ed as either Endowment Spending Rate Policy. Arizona State law operating or nonoperating, and all changes in net position permits the University to expend the entire net appreciation are reported, including capital additions and additions of endowment fund investments. When determining to endowments. The statement of cash fl ows provides the spending rate for endowment funds, the University information about the University’s sources and uses of administration considers long and short-term needs, total cash and cash equivalents during the year. Increases investment return and price level trends, and general and decreases in cash and cash equivalents are classifi ed economic conditions. For FY 2020, the spending rate as operating, noncapital fi nancing, capital and related utilized the constant growth formula which increases fi nancing, or investing activities. spending distributions by the trailing one-year infl ation

2020 CAFR Arizona State University 33 Notes to Financial Statements

rate (as measured by CPI-U, Consumer Price Index for all years for equipment. The University does not depreciate Urban Consumers) mid-fi scal year, as long as distributions works of art and historical treasures that are considered do not exceed 4.25 percent or fall below 3.25 percent inexhaustible and are held for exhibition, education, of the trailing 12-quarter average market value of each research, and public service. endowment fund. The infl ation rate used was 2.3 percent The University utilizes the componentized depreciation for FY 2020. method for its research buildings, which is consistent with Investments. Short-term, endowment, and other the method used for government cost-reimbursement investments are stated at fair value at June 30, 2020. Fair purposes. Under the componentized depreciation value typically is the quoted market price for investments. method, building costs are segregated into component Investment returns include realized and unrealized gains categories with useful lives ranging from 10 to 50 years, and losses on investments. and depreciated on a straight line method basis. Receivables. Total receivables at June 30, 2020 were Compensated absences. Compensated absences are $240.9 million. Included in the receivables balance are employee vacation leave balances earned but not used $99.9 million related to tuition and fee payments due at fi scal year end. Vacation leave benefi ts are accrued as from students and others making payments on behalf a liability on the statement of net position and reported as of students. Additionally, there are $109.0 million in an expense in the statement of revenues, expenses, and receivables from grant and contract sponsors primarily changes in net position. for the reimbursement of allowable expenses made Deferred outfl ows and infl ows of resources. The statement pursuant to the University’s grants and contracts and of net position includes sections for deferred outfl ows of $15.1 million in receivables related to FY 2020 CARES resources and deferred infl ows of resources. Deferred Act reimbursements. outfl ows of resources represent a consumption of net Student loans receivable. Loans receivable from students position that applies to future periods that will be recognized bear interest primarily at 5 percent and are generally as an expense in future periods. Deferred infl ows of repayable in installments to the University over a ten-year resources represent an acquisition of net position that period commencing nine months from date of separation applies to future periods and will be recognized as a from the University. Student loans receivable is recorded revenue in future periods. net of an allowance for estimated uncollectible amounts Unearned revenues. Unearned revenues consist primarily and related collection costs. of student tuition and fees and sponsored grants activities Capital assets. Capital assets are recorded at cost at the related to the ensuing year. Also included are amounts date of acquisition. Capital assets that are gifted to the received from athletic events which have not yet been University are recorded at acquisition value at the date of earned. donation. The University’s capitalization policy includes all Pensions. For purposes of measuring the net pension equipment and works of art and historical treasures with liability, deferred outfl ows of resources and deferred infl ows a unit cost of $5,000 or more. In addition, all equipment of resources related to pensions, and pension expense, under a unit cost of $5,000 purchased in bulk for a newly information about the pension plan’s fi duciary net position constructed, acquired, or leased facility to become initially and additions to or deductions from the plan’s fi duciary operational is also capitalized on a vintage concept basis net position have been determined on the same basis as and depreciated over fi ve years. All library resources they are reported by the plan. For this purpose, benefi t acquired for use in University libraries are capitalized payments (including refunds of employee contributions) as a collection. Intangible assets with a unit price of are recognized when due and payable in accordance with $5,000,000 or more are capitalized. New construction, as the benefi t terms. Investments are reported at fair value. well as renovations to buildings, infrastructure, and land acquisitions and improvements that have a project cost of at Other postemployment benefi ts (OPEB). For purposes of least $100,000 are capitalized. Interest incurred during the measuring the OPEB liability, deferred outfl ows of resources construction phase of projects is capitalized, net of interest and deferred infl ows of resources related to OPEB, and earned on the invested proceeds over the same period. OPEB expenses, information about the OPEB plans and Non-capital equipment and facility costs, routine repairs, additions to or deductions from have been determined on and maintenance are charged to operating expenses in the same basis as they are reported by the plans. the year in which the expense was incurred. Investment earnings. Investment earnings is composed Depreciation is computed using the straight-line method of interest, dividends, and net changes in the fair value of over the estimated useful lives of the assets, generally applicable investments. 40 years for non-research buildings and infrastructure, 10 to 50 years for research buildings, 10 years for library resources, 7 years for intangible assets, and 5 to 12

34 Arizona State University 2020 CAFR Derivative instrument - Interest rate swap. In accordance benefi t). Other revenues, such as state appropriations, with GASB Statement No. 53, Accounting and Financial gifts and non-research grants and contracts not generally Reporting for Derivative Instruments, the University records generated from exchange transactions, are considered to the hedging derivative instrument on the statement of net be nonoperating revenues. position by presenting a liability for the fair value of the Nonexchange grants and contracts include those for derivative instrument at fi scal year end and a deferred the purpose of student financial aid, primarily Pell outfl ow of resources. fi nancial aid grants, and those for purposes other than Net position. The University’s net position is classifi ed organized research, since the providers of these grants based on the following three categories: and contracts do not typically receive direct benefi ts, of • Net investment in capital assets: includes capital equal or signifi cant value, for those grants and contracts. assets, net of accumulated depreciation and Operating expenses, in accordance with GASB Statement outstanding principal balances of debt and lease No. 35, Basic Financial Statements—and Management’s obligations attributable to the acquisition, construction, Discussion and Analysis—for Public Colleges and or improvement of those assets. Universities—an amendment of GASB Statement No. 34, include salaries, wages, benefi ts, supplies, services, • Restricted: and depreciation on capital assets, irrespective as to • Nonexpendable – gifts that have been whether the revenues associated with these expenses received for endowment purposes, the corpus are operating or nonoperating revenues. Other expenses, of which cannot be expended, and the balance such as interest expense on debt, are considered to be in the Perkins Loan program. nonoperating expenses. • Expendable – gifts, grants, contracts, earnings Scholarship allowances. Student tuition and fee revenues on endowments, expendable gifts that have and other student related revenues are reported net of been received for endowment purposes and scholarship allowances in the statement of revenues, other resources that have been externally expenses, and changes in net position. Scholarship restricted for specifi c purposes. allowances are the diff erence between the stated charge for services provided by the University, and the amount Unrestricted: all other resources, including those • that is paid by the students (and/or third parties making designated by management for specifi c purposes. payments on a student’s behalf). To the extent that Substantially all unrestricted resources are designated revenues from programs such as Pell grants and University for academic and research programs and initiatives, funded scholarships are used to satisfy tuition and fees, and capital projects. and other student charges, the University has recorded a When an expense is incurred that can be paid from either scholarship allowance. restricted or unrestricted resources, the University’s Not included in scholarship allowances is $28.8 million policy is to allow the department incurring the expense to in faculty and staff tuition waivers that are recorded determine the appropriate funding source. Factors used by as program expenses on the statement of revenues, departments to determine which resources to use include expenses, and changes in net position and as personal relative priorities of the department in accordance with services and benefi ts expenses, in Note I - Operating the University’s strategic initiatives, externally imposed Expenses by Natural Classifi cation. matching requirements of certain restricted funds, and any pertinent lapsing provisions of the available restricted or Share of state sales tax - technology and research unrestricted funding resources. Major capital purchases initiative fund (TRIF). As the governing board of the three are many times split funded from multiple restricted and state universities, the Arizona Board of Regents (ABOR) unrestricted funding sources. administers the portion of the Education 2000 (Proposition 301) sales tax which funds the universities’ TRIF initiatives. Revenues/Expenses. Revenues and expenses are ABOR receives funding requests from each university classified as operating or nonoperating. Operating and determines the amount and duration of awards. The expenses are those incurred in conducting the primary Governor and the Legislature receive an annual report programs and services of the University. Operating from ABOR which includes a detailed set of performance revenues generally result from exchange transactions. measures used to determine the overall eff ectiveness of Accordingly, revenues such as tuition, and residential each TRIF funded initiative. life charges are considered to be operating revenues. In addition, grants and contracts for the purposes of providing Other Disclosures research are considered operating revenues because of The University earned FY 2020 credit card rebates of $1.2 the exchange aspects commonly associated with this million from JP Morgan, $0.6 million from Commerce Bank, type of activity (i.e., fi nancial assistance is provided to and $0.3 million from U.S. Bank for the University’s travel acquire property or activity for the government’s direct card program.

2020 CAFR Arizona State University 35 Notes to Financial Statements

Note B - ASU Component Units units have a fi scal year end of June 30, 2020. Because ASU’s component units are separate legal entities the University’s discretely presented component units controlled and governed by independent boards of use a nongovernmental generally accepted accounting directors whose goals are to support the University or principles (GAAP) reporting model, the University has have a close affi liation with the University. Even though chosen to present the discretely presented component these organizations support the University or have a close units’ aggregated fi nancial information on pages separate affi liation with the University, they are not subsidiaries of from the fi nancial statements of the University. To obtain the University, and with the exception of the Thunderbird individual audited financial statements for any of the School of Global Management and the ASU Athletic University’s component units, please contact ASU Financial Facilities District, they are neither directly nor indirectly Services at (480) 965-3601. controlled by the University. The University does not have Blended Component Units ownership of the fi nancial and capital resources or assets Thunderbird School of Global Management of the component units and does not have the authority to mortgage, pledge, or encumber the assets of these The Thunderbird School of Global Management (TSGM), organizations. an Arizona nonprofit corporation, is reported as a blended component unit and included in the University’s Component units can be defined as legally separate fi nancial statements. TSGM primarily exists to benefi t the entities for which the University is considered to be University by providing a framework for global education fi nancially accountable. GASB Statement No. 14, The programming. Financial Reporting Entity and GASB Statement No. 61, The Financial Reporting Entity: Omnibus an amendment of ASU Athletic Facilities District GASB Statement Nos. 14 and No. 34, have set forth criteria The ASU Athletic Facilities District (AFD), a component unit to be considered in determining fi nancial accountability. For of the University, is reported as a blended component unit organizations that previously were required to be included and included in the University’s fi nancial statements. The as component units by meeting the fi scal dependency AFD is a university athletic facilities district formed pursuant criterion under GASB Statement No. 14, a fi nancial benefi t to the provisions of Arizona Revised Statutes (A.R.S.) or burden relationship also would need to be present Title 48, Chapter 26. The AFD supports the University’s between the primary government and the organization for eff orts to construct, reconstruct, fi nance, furnish, maintain it to be included in the reporting entity as a component unit. and improve intercollegiate athletic facilities located on Further, for organizations that do not meet the fi nancial ASU’s property, including utilities, roads, parking areas or accountability criteria for inclusion as component units but buildings necessary for full use of the athletic facilities. The that, nevertheless, should be included because the primary AFD resides within the Novus Innovation Corridor. Separate government’s management determines that it would be fi nancial statements for the AFD are not available as of misleading to exclude them. GASB Statement No. 61 June 30, 2020, as there was no fi nancial activity. clarifi es the manner in which that determination should Discretely Presented Component Units be made and the types of relationships that generally should be considered in making that determination. Arizona State University’s discretely presented component GASB Statement No. 39, Determining Whether Certain units, all Arizona nonprofi t corporations, include two major Organizations Are Component Units an amendment of component units, ASU Enterprise Partners (ASUEP) and GASB Statement No. 14, provides additional criteria for the Arizona Capital Facilities Finance Corporation (ACFFC), determining whether certain organizations are component and several smaller component units listed below. The units. Organizations that are legally separate, tax-exempt University has determined that ASUEP and ACFFC are entities and that meet all of the following criteria should also major component units based on an evaluation of (1) be considered component units, with discrete presentation. services provided by the component unit to the University These criteria are (1) the economic resources received or are such that separate reporting as a major component held by the separate organization are entirely or almost unit is considered to be essential to fi nancial statement entirely for the direct benefi t of the University, its component users, (2) signifi cant transactions with the University, or units, or its constituents; (2) the University or its component (3) signifi cant fi nancial benefi t or burden relationship with units, is entitled to, or has the ability to otherwise access, the University. a majority of the economic resources received or held by A description of the University’s discretely presented the separate organization; and (3) the economic resources component units and the basis for including each as a received or held by an individual organization that the component unit in the University’s fi nancial report follows. University, or its component units, is entitled to, or has the ability to otherwise access, are signifi cant to the University. • ASU Enterprise Partners (ASUEP) - disburses resources at the discretion of its independent board Financial statements of these component unit organizations of directors, in accordance with donor directions and are audited by independent auditors. All of the component ASU Enterprise Partners policy. The majority of assets

36 Arizona State University 2020 CAFR held by the ASU Enterprise Partners are endowments bonds guaranteed by the University. restricted for donor specifi ed programs and purposes, Per GASB Statement No. 14, as amended by GASB the principal of which may not be spent. The directors Statement No. 61, a fiscal dependency and financial of the ASU Enterprise Partners make all decisions benefi t/burden exists between the University and these regarding the ASU Enterprise Partners business two component units. ACFFC and the Park do not meet aff airs, including distributions made to the University. the blending requirements since each component unit has Affi liates of ASUEP include: Arizona State University a separate board of directors, services provided by the Foundation for a New American University (ASU component units do not exclusively benefi t the University Foundation), ASU Research Enterprise, Enterprise and the total debt outstanding of the component units is Collaboratory at ASU and Subsidiaries (formally not expected to be paid entirely or almost entirely with known as Research Collaboratory at ASU), Skysong University resources. Innovations (formally known as Arizona Science and Technology Enterprises, LLC), University Reality LLC ASU Preparatory Academy, Inc. (ASU Prep) - prepares and ASUEP Holdings, LLC. Arizona K-12 students for success with a university- embedded academic program that empowers them to • ASU Alumni Association - receives funds primarily complete college, compete globally and contribute to their through donations, dues, and affi nity partners, which communities. are used to promote the welfare of the University and its alumni. A fi scal dependency and fi nancial benefi t/burden does not exist between the University and ASU Prep, however, it • Sun Angel Foundation - receives funds primarily would be misleading to exclude as a component unit due to through donations and contributes funds to the the close affi liation between the University and ASU Prep. University in support of various athletic programs. ASU Prep does not meet the blending requirements in The three component units above meet all of the criteria for GASB Statement No. 14, as amended by GASB Statement a legally separate, tax-exempt organization to be reported No. 61, since it has a separate board of directors and discretely as a component unit. The economic resources services provided do not exclusively benefi t the University. held by these component units are for the direct benefi t of For fi nancial reporting purposes at the University level, the University and the University has the ability to access only the discretely presented component units’ statement their economic resources and the economic resources of of fi nancial position and statement of activities are included these component units are signifi cant to the University. in the University’s fi nancial statements as required by • Arizona Capital Facilities Finance Corporation - generally accepted accounting principles for public colleges provides facilities for use by students of the University and universities. In FY 2020, the ASU Enterprise Partners or the University itself. distributed $101.0 million in cash donation transfers to the • Arizona State University Research Park, Inc. (Park) University for both restricted and unrestricted purposes. - manages a research park to promote and support research activities, in coordination with the University. In developing the research park, the Park has issued

Note C - Cash and Investments funds are held in pooled endowment funds managed General under a service contract with the ASU Foundation and invested in the ASU Foundation Long Term Investment The University’s deposits and investments are discussed Pool and the Socially Responsible Investment Pool (Pool). below in our analysis of deposit and investment risk, Investment management of the Pool is delegated by the as required by GASB Statement No. 40, Deposit and ASU Foundation to its parent company, ASU Enterprise Investment Risk Disclosures—an amendment of GASB Partners, through an investment services agreement. Statement No. 3; and fair value of investment assets, as required by GASB Statement No. 72, Fair Value ASU Enterprise Partners is responsible for oversight Measurement and Application. establishing investment policies and management of the Pool. The University’s endowment assets are maintained Included in the University’s deposits and investments are separately on the fi nancial system of the ASU Foundation $273.8 million in capital projects and bond debt service and receive a proportional share of the Pool activity. As funds, which are held in trust and invested with the bond such, the ASU Foundation owns the assets of the Pool; the trustee, $272.6 million in cash and cash equivalents, and University has an interest in the Pool, which is considered $684.2 million in short-term and other investments.In an external investment pool to the University. The Pool addition, $256.9 million in endowment funds is managed invests in a variety of asset classes, including common by the ASU Foundation, an Arizona nonprofi t corporation, stocks, fi xed-income, foreign investments, private equity whose sole member is ASU Enterprise Partners. These

2020 CAFR Arizona State University 37 Notes to Financial Statements

and hedge funds. The ASU Foundation Endowment not covered by federal deposit insurance be secured Pool is not registered with the Securities and Exchange through participation in the State of Arizona Collateral Pool Commission as an investment company. administered by the State Treasurer’s Offi ce which holds The ASU Enterprise Partners Board of Directors-appointed pledged collateral of at least 102 percent of uninsured Investment Committee, which includes members of the deposits in eligible depositories. Further policy regarding ASU Foundation Board of Directors, is responsible for deposits is provided by the Arizona Board of Regents oversight of the Pool in accordance with ASU Enterprise (ABOR). The Statutes do not specifically address Partners policies. The fair value of the University’s position investment policy of the universities, rather ABOR policy in the Pool is based on the University’s proportionate governs in this area. ABOR policy requires that each share of the Pool, which is marked-to-market monthly. For university arrange for the safekeeping of securities by a additional information refer to Note O - Summary Financial bank or other fi nancial institutions approved by ABOR. Information for ASU Component Units. The University also ABOR and University investment policies applicable to participates in the Arizona Student Financial Aid Trust, University investments are consistent with the Arizona which was established by the Arizona Board of Regents and State Treasurer’s authorizing statutes and investment is funded by the Arizona State Legislature and student fees. policy. Investment of capital project funds are governed by the fi nancing indenture agreements. With regard to Statutory and Board of Regents’ Policies endowments, ABOR policy dictates that these funds are to For nonendowment (operating) funds, Arizona Revised be invested under the direction of an investment committee Statutes (Statutes) requires that deposits of the University designated by the president of each university.

Credit Quality Rating for Debt Securities at June 30, 2020 (Dollars in thousands) Standard and Poor’s A-1+/SP-1+ AAA /AAAm / Investment Description Fair Value Not Rated AAAf AA A BBB

At Arizona State University, the Investment Committee is and those established by Statute or ABOR, the University responsible for advising on the defi nition, development does not have a policy that specifi cally addresses custodial and implementation of investment objectives, policies, and credit risk. restrictions. However, if donors restrict the investments, ABOR policy requires that the University invest those funds Credit Risk. With regard to credit risk, ABOR policy requires separately as directed by the donor, and the individual that negotiable certifi cates of deposit, corporate bonds, endowments bear all changes in value. debentures and notes, bankers acceptances and State of ABOR policy addresses requirements for concentration of Arizona bonds carry a minimum BBB or better rating from credit risk and interest rate risk, but neither ABOR policy nor Standard and Poor’s Rating Service or Baa or better rating the Statutes include any specifi c requirements on foreign from Moody’s Investors Service at the time of purchase and currency risk for investments of the universities. The State that the investment will be sold in an orderly manner or held of Arizona Board of Investment provides oversight for the until maturity without further investments being made if it State of Arizona Treasurer’s pools. The fair value of a falls below this credit rating; and that commercial paper participant’s portion in the pool approximates the value of be rated by at least two nationally recognized statistical that participant’s pool shares and the participant’s shares rating organizations (NRSROs) and be of the two highest are not identifi ed with specifi c investments. rating categories for short-term obligations of at least two of the NRSROs. Capital projects and bond debt service Deposit and Investment Risk funds are invested by the bond trustee in accordance Custodial Credit Risk. University policy for its operating with the applicable fi nancing indenture, generally limited funds requires collateralization for all certifi cates of deposit to United States Treasury securities and other Federal and repurchase agreements. Beyond this requirement agency securities, certifi cates of deposit (minimum rating of

38 Arizona State University 2020 CAFR P-1/A-1), commercial paper (minimum rating of P-1/A-1+), Foreign Currency Risk. Non-endowment funds may not and money market funds rated AAAm or better invested in be invested in foreign-denominated securities, and the short-term debt securities. The University does not have University has no non-endowment investments exposed to a formal policy that specifi cally addresses credit risk over foreign currency risk. The University’s endowment funds endowment funds. The University’s endowment funds are are invested in an external investment pool managed by the invested in an unrated external investment pool managed ASU Foundation, which include U.S. dollar denominated by the ASU Foundation, subject to the ASU Enterprise foreign investments. Partners investment policy. For endowment funds, the Fair Value of Investment Assets investment committee that directs the investments held in the Pool manages the credit risk associated with the Pool The University measures and categorizes its investments by following the credit quality and guideline restrictions using the fair value measurement guidelines established by stated in the investment policy. generally accepted accounting principles. These guidelines establish a three-tier hierarchy of inputs to valuation Concentration of Credit Risk. Other than United States techniques used to measure fair value, as follows: Treasury securities and other federal agency securities, which can represent greater than fi ve percent of total • Level 1 - Quoted prices for identical investments in investments, University policy limits investment in a single active markets that are accessible at the measurement issuer to fi ve percent or less of the fair value of the total date; portfolio. Except for those issuers allowed by policy, the • Level 2 - Inputs, other than quoted market prices University does not have an investment in any single issuer included in Level 1, that are observable, either directly that exceeds fi ve percent of the overall portfolio. At June or indirectly; 30, 2020, the University had investments in the United Level 3 - Prices or valuations that require inputs that States Treasuries, $282.1 million or 18.5 percent of total • are signifi cant to the fair value measurement and investments, respectively. unobservable. Interest Rate Risk. ABOR and University policies do not Investments Classifi ed in Fair Value Hierarchy. Investments limit the overall maturity of the investments held by the categorized as Level 1 of the fair value hierarchy are operating and endowment funds, however, the operating valued using unadjusted prices quoted for identical fund investment policy includes guidelines addressing assets in active, exchange and brokered markets for diversifi cation and liquidity. The capital projects funds those securities. Investments categorized as Level 2 of portfolio is not limited as to the overall maturity of its the fair value hierarchy are valued using a matrix pricing investments, with the funds invested per the fi nancing technique. Matrix pricing is used to value securities based indentures to coincide with capital spending needs and on the securities’ relationship to benchmark quoted prices. debt service requirements, which are typically less than Investments categorized as Level 3 of the fair value three years, with the additional limitation that certifi cates of hierarchy are valued using various methods. Real estate deposit and commercial paper have maximum maturities is valued by using the income approach to measuring fair of 360 days and 270 days. value which discounts future amounts to a single current

amount. When the income approach is used, the fair value Interest Rate Risk for the University’s Debt Investments at measurement refl ects current market expectations about June 30, 2020 - utilizing the weighted average maturity method (Dollars in thousands) those future amounts. Weighted Other Investments at Fair Value. The fair value of a Average participant’s portion in the State of Arizona LGIP (Pool Maturity 5) approximates the value of that participant’s pool Investment Description Fair Value (Years) shares and the participant’s shares are not identifi ed with Corporate bonds $ 366,112 2.4 specifi c investments. Investments in the State Treasurer’s Money market mutual funds 396,666 0.1 investment pools are valued at the pool’s share price Federal agency securities 69,833 4.0 multiplied by the number of shares the University held. The Asset backed securities 48,333 3.3 fair value of the University’s position in the ASU Foundation Municipal bonds 22,545 6.7 Endowment Pool is based on the University’s proportionate share of the Pool, which is valued at marked-to-market Mortgage backed securities 10,771 26.0 monthly. Commercial paper 1,999 0.2 State of Arizona LGIP (Pool 5) 1,582 0.1 Subtotal, before U.S. Treasury $ 917,841 securities U.S. Treasury securities 282,114 1.2 Total $ 1,199,955

2020 CAFR Arizona State University 39 Notes to Financial Statements

University Investments Measured at Fair Value (Dollars in thousands) Hierarchy Fair Value Investments Classiﬁ ed in Fair Value Hierarchy As of 06/30/2020 Level 1 Level 2 Level 3 Corporate bonds $ 366,112 $ 366,112 Money market mutual funds 396,666 $ 3,767 392,899 U.S. Treasury securities 282,114 282,114 Federal agency securities 69,833 69,833 Real estate 64,519 $ 64,519 Asset backed securities 48,333 48,333 Municipal bonds 22,545 22,545 Mortgage backed securities 10,771 10,771 Commercial paper 1,999 1,999 Total Investments Classiﬁ ed in Fair Value Hierarchy $ 1,262,892 $ 285,881 $ 912,492 $ 64,519 Other Investments at Fair Value State of Arizona LGIP (Pool 5) $ 1,582 ASU Foundation Endowment Pool (ASU Portion) 256,932 Total Other Investments at Fair Value $ 258,514 Total University Investments at Fair Value $ 1,521,406

High-throughput automated liquid handler currently used for the COVID-19 testing at the ASU Biodesign Clinical Testing Laboratory.

40 Arizona State University 2020 CAFR Note D - Capital Assets Capital asset activity for the year ended June 30, 2020 follows:

Capital asset activity for the year ended June 30, 2020 (Dollars in thousands) Balance Additions/ Retirements/ Balance 07/1/2019 Increases Decreases 06/30/2020 Non-depreciated capital assets Land and Land improvements $ 142,501 $ 3,602 $ (9,628) $ 136,475 Construction in progress - Buildings 113,302 217,407 (91,252) 239,457 Works of art and historical treasures 22,330 5,691 (15) 28,006 Total $ 278,133 $ 226,700 $ (100,895) $ 403,938 Depreciated capital assets Infrastructure $ 196,069 $ 32,996 $ (1,315) $ 227,750 Buildings 3,305,188 145,645 (786) 3,450,047 Equipment 478,373 28,385 (10,731) 496,027 Software 48,984 48,984 Library books 136,071 12,557 (13,922) 134,706 Less accumulated depreciation Infrastructure (67,818) (5,253) 504 (72,567) Buildings (1,173,589) (93,828) 333 (1,267,084) Equipment (348,338) (29,409) 10,049 (367,698) Software (29,549) (3,406) (32,955) Library books (74,266) (11,689) 13,922 (72,033) Total $ 2,471,125 $ 75,998 $ (1,946) $ 2,545,177 Capital assets, net $ 2,749,258 $ 302,698 $ (102,841) $ 2,949,115

Construction in progress additions reflected above approved projects under construction at June 30, 2020. represent expenses for approved projects net of capital Construction in progress encumbrances committed through assets placed in service. It is estimated $329.8 million purchase orders at June 30, 2020, totaled $226.5 million. in additional expenses will be required to complete the

Note E - Long-Term Debt and Lease Obligations options at a prescribed date. Certain revenue bonds of the As of June 30, 2020 the University had issued a combination University have been defeased through advance refundings of fi xed and variable rate bonds, fi xed rate certifi cates of by depositing suffi cient U.S. Government securities in an participation (COPs), direct placements and other lease irrevocable trust to pay all future debt service. Accordingly, obligations, of which $2.1 billion is outstanding. The the liabilities for these defeased bonds are not included in University’s long-term obligations generally are structured the University’s fi nancial statements. The principal amount with level debt service, semi-annual interest, and call of defeased bonds outstanding at June 30, 2020 totaled $168.0 million.

2020 CAFR Arizona State University 41 Notes to Financial Statements

Bonds Payable, Certifi cates of Participation and Other Lease Obligations at June 30, 2020 (Dollars in thousands) Average Final Balance Balance Current Interest Rate Maturity 07/01/2019 Additions Reductions 06/30/2020 Portion Bonds: 2008A/B Variable Rate Demand System Refunding 0.14% 07/01/34 $ 79,645 $ (3,370) $ 76,275 $ 76,275 Bonds 2009A System Revenue Bonds 3.76% 07/01/19 1,305 (1,305) 2010A/B System Revenue Bonds 5.99%¹ 07/01/39 152,155 (4,890) 147,265 5,045 2010A/B SPEED Revenue Bonds 5.48%² 08/01/30 28,370 (1,945) 26,425 2,005 2010C System Revenue Bonds 4.51% 07/01/20 6,605 (3,220) 3,385 3,385 2011 SPEED Revenue Bonds 3.93% 08/01/31 26,605 (1,520) 25,085 1,600 2012 A/B System Revenue and Refunding Bonds 3.64% 07/01/37 58,455 (4,855) 53,600 3,965 2013 A/B System Revenue and Refunding Bonds 3.47% 07/01/35 31,970 (5,650) 26,320 2,465 2014 SPEED Revenue Bonds 3.72% 08/01/44 70,225 (2,655) 67,570 2,790 2015A/B/C System Revenue and Refunding Bonds 3.34% 07/01/46 351,255 (11,615) 339,640 20,165 2015D System Revenue Bonds 3.67% 07/01/46 100,520 (1,130) 99,390 1,200 2016A System Revenue Refunding Bonds 2.29% 07/01/31 36,165 (2,810) 33,355 15 2016B/C System Revenue Bonds 3.25% 07/01/47 222,685 (3,245) 219,440 3,400 2017A/B/C System Revenue and Refunding Bonds 3.38% 07/01/43 196,400 (1,850) 194,550 3,235 2019AB System Revenue Bonds 3.32% 07/01/49 194,450 194,450 1,400 2020ABC Bonds 2.84% 07/01/50 $ 184,455 184,455 Subtotal: Par Amount of Bonds $ 1,556,810 $ 184,455 $ (50,060) $ 1,691,205 $ 126,945 Certifi cates of Participation: 2006 Certifi cates of Participation 4.53% 06/01/31 9,595 (615) 8,980 650 2011A Mercado Refunding Certifi cates of Participation 4.27% 07/01/24 4,380 (655) 3,725 680 2013A/B Refunding Certifi cates of Participation 3.09% 09/01/26 56,465 (3,255) 53,210 7,980 Subtotal: Par Amount of COPs $ 70,440 $ (4,525) $ 65,915 $ 9,310 Direct Placements: 2014A/B Refunding Certifi cates of Participation 3.04% 09/01/30 64,280 (4,545) 59,735 170 2017 Refunding Certifi cates of Participation 1.87% 07/01/26 38,355 (6,740) 31,615 6,880 Subtotal: Par Amount of Direct Placements $ 102,635 $ (11,285) $ 91,350 $ 7,050 Capital Leases/Lease Purchases: Fulton Center 4.01% 06/15/34 20,035 (1,005) 19,030 1,040 Flexible Display Center 6.29%, 3.25% 03/01/34 26,657 (1,372) 25,285 1,453 Hassayampa Academic Village 3.24%, 5.36% 06/10/39 10,116 (189) 9,927 213 Nursing and Health Innovation 4.84% 01/01/36 8,560 (335) 8,225 350 Washington DC Facility 3.60% 06/15/35 30,900 (1,470) 29,430 1,520 Other Lease Purchases 3.60% 02/07/22 62 (20) 42 21 Subtotal: Capital Leases/Other Lease Purchases $ 96,330 $ (4,391) $ 91,939 $ 4,597 Total Par Amount of Bonds, COPs, Capital $ 1,826,215 $ 184,455 $ (70,261) $ 1,940,409 $ 147,902 Leases and Other Lease Purchases Premium/(Discount) on Sale of Bonds and COPs 174,817 39,484 (19,260) 195,041 20,530 Total Bonds Payable/COPs/ Capital Leases/ $ 2,001,032 $ 223,939 $ (89,521) $ 2,135,450 $ 168,432 Other Lease Purchases 1 The average interest rate net of the Build America bonds federal direct payment subsidy is 3.94%. 2 The average interest rate net of the Build America bonds federal direct payment subsidy is 3.74%.

42 Arizona State University 2020 CAFR System Revenue Bonds Direct Placements

The University has pledged gross revenues as defi ned in The University has outstanding two series of direct the bond indentures towards the payment of debt related placement Certifi cates of Participation (COPs), the Series to various senior lien system revenue bonds outstanding 2014 Refunding COPs and the 2017 Refunding COPs. at June 30, 2020. These related system revenue bonds The direct placement COPs were issued with similar are primarily for new academic and research facilities, terms to the University’s other outstanding COPs with no academic and laboratory renovations, and infrastructure acceleration or priority provisions. The University utilizes improvements. The pledged revenues include student COPs to acquire buildings, equipment and land. The COPs tuition and fees, certain auxiliary enterprise revenue, net are generally callable and collateralized by the acquired investment income, and indirect cost recovery revenue. asset which is subject to a leasehold interest by the trustee. Pledged revenues do not include state appropriations, In the event of a default the underlying asset value would gifts, endowment income, or other restricted revenues. For be removed from the University’s fi nancial statements. the year ended June 30, 2020, pledged revenues totaled $1.90 billion of which 6.1 percent ($115.1 million, net of Variable Rate Bonds federal direct payments) was required to cover current year debt service. The University has two series of variable rate demand system revenue refunding bonds outstanding, Series In April 2020, the University issued $184.5 million of 2008A and Series 2008B, totaling $76.3 million with fi nal system revenue bonds, Series 2020 A, B and C, with an maturities of July 1, 2034. The interest rate in eff ect on June average maturity of 16.7 years and an average interest 30, 2020 was 0.13 percent for the Series 2008A bonds and rate of 2.84 percent. The bonds were issued to fund the 0.14 percent for the Series 2008B bonds. construction of Phase II of the Interdisciplinary Science and Technology building 7, Phase II of the Health Futures The University’s variable rate demand bonds have Center, IT Infrastructure Improvements, Phase I of the remarketing features which allow bondholders to put Durham Language and Literature renovation project, debt back to the University. In accordance with GASB the Downtown Phoenix Academic Prepaid Lease and Interpretation No. 1, Demand Bonds Issued by State and infrastructure and deferred maintenance. In addition Local Government Entities, the total outstanding principal to using pledged revenues to pay the debt service, the balance for variable rate demand bonds is required to University will pay half the debt service of the 2020A bonds be classifi ed as a current liability. As of May 4, 2016 the from the Capital Infrastructure Fund (CIF) established by University executed a self-liquidity facility agreement to the State pursuant to ARS 15-1671. Pursuant to the CIF provide liquidity if the bonds are put by bondholders. It is Law, State General Fund monies will be appropriated and the University’s intent to repay its variable rate demand deposited into the University’s CIF for FY 2019 through FY bonds in accordance with the maturities set forth in the 2043. The annual deposit will be adjusted annually by a offi cial statement, however, in the absence of a “take growth rate of 2.0 percent or the change in the U.S. Gross out agreement” the University has classifi ed the total Domestic Product Price Defl ator between the two prior outstanding principal balance of the 2008 bonds as a fi scal years, whichever is less, but not less than the prior current liability. fi scal year’s appropriated amount. CIF funds are available Capital Leases exclusively for either paying the costs of, or paying up to one-half of the debt service on debt fi nancing for, capital In October 2003, the University entered into a 30-year projects of the University. While funding for the payment of lease agreement with ASUF, LLC, an Arizona limited liability debt service will be made as described, pledged revenues company, of which the sole member is the University secure all of the 2020 Bonds. Realty LLC, an Arizona limited liability company, whose sole member is ASU Enterprise Partners, an Arizona SPEED Revenue Bonds nonprofi t corporation and component unit of the University, In June 2008, the State of Arizona Legislature approved the to lease four fl oors of offi ce space in the Fulton Center Stimulus Plan for Economic and Educational Development and the related parking structure. In April 2004, the (SPEED) which provides Arizona universities with capital University entered into a 30-year sublease agreement with improvement funds for critical construction and deferred Nanotechnology Research, LLC, an Arizona limited liability maintenance projects. SPEED projects are debt fi nanced company, whose sole member is Arizona Capital Facilities with revenue bonds and repaid primarily with Arizona Finance Corporation (ACFFC), to lease the Flexible Display Lottery revenues. Specifi cally, up to 80 percent of SPEED Center located at the ASU Research Park. In July 2005, debt service is paid from Arizona Lottery revenues, with the University entered into a 34-year lease with McAllister the balance being the responsibility of the University Academic Village, LLC, an Arizona limited liability company, as evidenced by the subordinated pledge of University whose sole member is ACFFC, to lease the nonresidential revenues. portion of the McAllister Academic Village (MAV), which

2020 CAFR Arizona State University 43 Notes to Financial Statements

operates under the name of Hassayampa Academic same revenues on a subordinated basis to secure the ASU Village. ACFFC has overall responsibility for the residential SPEED revenue bonds and the Series 2006 Arizona State portion, comprising approximately 92 percent of the facility, University Research Park, Inc. Development Refunding with the University leasing the nonresidential portion of the Bonds. Research Park bonds outstanding at June 30, 2020 facility. In November 2008, the University committed to a totaled $1.1 million with a fi nal maturity of July 1, 2021. capital lease with the City of Phoenix related to construction of the fourth and fi fth fl oors of the Nursing and Health The Taxable Series 2010A System Revenue Bonds and Innovation building at ASU’s Downtown Phoenix campus. the Taxable Series 2010A SPEED Revenue Bonds were In December 2014, the University entered into a 20-year issued as Build America Bonds under the provisions of lease with ASUF DC, LLC, an Arizona limited liability the American Recovery and Reinvestment Act (ARRA). company, whose sole member is the University Realty LLC, As such, the University is eligible to receive Federal Direct an Arizona limited liability company, whose sole member Payments from the United States Treasury equal to 35 is ASU Enterprise Partners, to lease a multi-use offi ce percent of the interest owed on each interest payment building in Washington, D.C. Buildings under capital lease date. The amount paid to the University by the Federal are as follows: government may be reduced or limited due to such issues as failure by the University to submit the required information, off sets to refl ect any amounts owed by the Capital lease book value as of June 30, 2020 (Dollars in thousands) University to the Federal government, or changes in the law that would reduce or eliminate such payments. During Book Accumulated Net Book Value Depreciation Value FY 2020, ASU received Federal Direct Payments totaling Fulton Center $ 29,551 $ (12,126) $ 17,425 $3.5 million, net of a $0.2 million or 5.9 percent reduction due to the federal budget sequestration. For accounting Flexible Display Center 37,314 (14,867) 22,447 purposes, any direct payments received from the U.S. Hassayampa Academic 12,451 (4,242) 8,209 Treasury are recorded as nonoperating revenue. Village Nursing and Health 11,788 (2,990) 8,798 Securities and cash restricted for bonds and COPs debt Innovation service held by the trustee at June 30, 2020 totaled Washington DC Facility 35,000 (5,099) 29,901 $90.3 million and $8.0 million, respectively. Payment commitments to investors, including interest, for bonds, Future Payments COPs and other lease obligations, using the interest rate Future pledged revenues required to pay all remaining in eff ect at June 30, 2020 for variable rate issues, are debt service for the University’s senior and subordinate shown below: revenue bonds through fi nal maturity of July 1, 2050 total $2.7 billion. In addition to a senior pledge of revenues for ASU system revenue bonds, the University has pledged the

Bonds Payable, Certiﬁ cates of Participation and Other Lease Obligations at June 30, 2020 (Dollars in thousands) Certiﬁ cates of Capital Leases / System and SPEED Revenue Bonds Participation Direct Placements Lease Purchases

Net Payments Federal on Swap Direct FY Principal Interest Agreement Payments Principal Interest Principal Interest Principal Interest 2021 $ 54,210 $ 77,817 $ 2,735 $ (3,552) $ 9,310 $ 2,869 $ 7,050 $ 2,256 $ 4,597 $ 3,596 2022 58,155 75,205 2,595 (3,419) 9,780 2,388 7,170 2,120 4,818 3,393 2023 64,090 72,292 2,449 (3,276) 10,270 1,888 3,600 2,051 5,007 3,199 2024 67,065 69,179 2,295 (3,125) 10,795 1,360 3,670 1,980 5,205 3,014 2025 70,505 65,888 2,133 (2,967) 11,335 806 3,740 1,908 5,408 2,820 2026-2030 366,105 276,502 7,946 (12,051) 13,420 1,128 53,925 5,456 30,517 10,880 2031-2035 351,390 194,504 2,509 (7,147) 1,005 41 12,195 62 32,315 4,610 2036-2040 316,330 112,061 (2,217) 4,072 460 2041-2045 257,740 40,641 2046-2050 83,075 4,309 2051 2,540 Total $ 1,691,205 $ 988,398 $ 22,662 $ (37,754) $ 65,915 $ 10,480 $ 91,350 $ 15,833 $ 91,939 $ 31,972

44 Arizona State University 2020 CAFR Funding responsibility for the June 30, 2020 outstanding debt Herald Examiner Building (HEB). In August 2018, the and lease obligations (Dollars in thousands) University entered into a 12 year lease for 85,118 square feet of offi ce space known as Herald Examiner Building. Current Noncurrent Portion Portion Total The century-old former newspaper headquarters will From Arizona State $ 127,878 $1,523,219 $1,651,097 provide educational, community engagement and other University operating programming space for the Herberger Institute, the Walter revenues Cronkite School of Journalism and Mass Communication From State of Arizona and other University programs. appropriations and 40,554 443,799 484,353 other State monies Phoenix Biomedical Building (Wexford). In December $ 168,432 $1,967,018 $2,135,450 2018, the University entered into a 15 year lease for 113,615 square feet of the Wexford facility. Wexford is Subsequent Events the fi rst public-private development eff ort between the The University presently plans to issue up to $210.0 million city of Phoenix, the University and Wexford Science in system revenue bonds prior to fi scal year end 2021. and Technology and will serve as a global center for interdisciplinary research, discovery and development. Operating Leases The University portion of the facility will house academic research and clinical space. Brickyard. In July 2004, the University entered into a 25 year master lease of the Brickyard, owned by the ASUF Ryan Building (Ryan). In March 2019, the University Brickyard, LLC, an Arizona limited liability company, of entered into a 10 year lease with Ryan University Realty, which the sole member is University Reality, LLC, an LLC for 169,223 square feet of offi ce and ground fl oor retail Arizona limited liability company, whose sole member is space located within the Novus Innovation Corridor. The ASU Enterprise Partners. The majority of the facility is University intends to use the Ryan property for general being used by the University for classrooms, offi ces and offi ce, administrative and educational purposes including research areas, with the remaining portion being leased classrooms and collaborative spaces. by the University to various fi rms for retail and restaurant operations. In June 2018, the University entered into Other. The University has entered into other operating an additional 5 year lease in the interest of executing leases with various entities for classroom, offi ce, research mixed-use project of existing improvements consisting of and student housing and activity space. a parking garage and commercial building.

SkySong. In June 2006, the University entered into a 15 year lease, for approximately 80,000 square feet of offi ce space within a development known as SkySong. The University’s use of the leased space focuses on supporting entrepreneurial activities and interdisciplinary research programs in engineering-related fields and education technology. In July 2013, the University entered into a 12 year lease for an additional 15,000 square feet of offi ce space within the SkySong development. A third lease was entered into in December 2016 for an additional 12,452 square feet of offi ce space within the SkySong development for a 12 year period. In April 2019, the University entered into a 12.4 year lease for an additional 44,760 square feet of offi ce space within the SkySong development.

American Campus Communities OP (ACC). The University entered into two operating leases with American Campus Communities, a Delaware limited liability company. In August 2018, the University entered Starship Technologies’ autonomous food-delivery robots into a sublease agreement with ACC for student housing make their way across McAllister Avenue on the Tempe at Vista del Sol and Villas at Vista. In August 2020, the campus. University entered into a lease with Campus Investors 922 Apache Property Owners, LLC (922 Place) to expand student housing.

2020 CAFR Arizona State University 45 Notes to Financial Statements

The future minimum operating lease payments are as follows (Dollars in thousands):

Operating Lease Payments FY Brickyard SkySong ACC HEB Wexford Ryan Other Total 2021 $ 2,798 $ 6,559 $ 28,420 $ 4,206 $ 1,184 $ 1,788 $ 11,701 $ 56,656 2022 2,807 6,784 5,139 4,304 2,870 3,105 4,946 29,955 2023 2,810 6,873 125 4,405 2,942 3,175 4,158 24,488 2024 2,822 6,441 127 4,510 3,016 3,246 2,526 22,688 2025 2,830 6,552 119 4,617 3,091 3,319 1,625 22,153 2026-2030 14,307 25,306 24,816 16,655 17,750 4,748 103,582 2031-2035 11,680 3,147 10,800 18,843 1,560 378 46,408 2036-2040 2,342 2,342 Total $ 40,054 $ 61,662 $ 33,930 $ 57,658 $ 50,943 $ 33,943 $ 30,082 $ 308,272

Note F - Interest Rate Swap Agreement received from the counterparty versus the variable rate paid Eff ective January 1, 2007, the University entered into a to bondholders. The swap exposes the University to basis $103 million notional amount swap agreement (hedging risk should the weekly SIFMA rate paid by the counterparty derivative instrument) expiring on July 1, 2034, in fall below the weekly interest rate due on the bonds. As conjunction with the 2008 variable rate demand system of June 30, 2020, the University was not exposed to credit revenue refunding bonds (2008 Bonds). The outstanding risk because the swap had a negative fair value. However, $75.8 million notional amount at June 30, 2020 is not should interest rates change and the fair value of the swap exchanged; it is only the basis on which the interest become positive, the University would be exposed to credit payments are calculated and it decreases as principal risk in the amount of the derivative’s fair value. The swap payments are made on the 2008 Bonds. The intention of counterparty was rated AA- by Fitch, A+ by Standard & the swap is to eff ectively convert the variable rate interest Poor’s and Aa2 by Moody’s Investor Services as of June on the 2008 Bonds to a synthetic fi xed rate. Under the 30, 2020. terms of the swap agreement, the University pays the Based on current ratings, the counterparty was not required counterparty interest calculated at a fi xed rate of 3.91 to provide collateral. In the event a rating downgrade percent and receives payments from the counterparty occurs, the counterparty may be required to provide based on the Securities Industry and Financial Markets collateral if the University’s overall exposure exceeds Association (SIFMA) Municipal Swap Index set weekly. The predetermined levels. SIFMA rate at June 30, 2020 was 0.13 percent. At June 30, 2020, the synthetic fi xed interest rate on the bonds was: Collateral may be held by the University or a third party custodian. As of June 30, 2020, the swap had a fair Interest Rate Swap: Terms Rates (%) value of $(20.1) million, which represents the cost to the Fixed payment to counterparty Fixed 3.91 University to terminate the swap. The June 30, 2019 fair Variable payment from the counterparty SIFMA (0.13) value was $(15.3) million. The fair value was developed Net interest rate swap payments 3.78 by an independent third party, with no vested interest in the transaction, using the zero coupon discounting method. Variable rate bond coupon payments Spread to 0.14 SIFMA This method calculates the future payments required by the swap, assuming the current forward rates implied by Synthetic fi xed interest rate on bonds 3.92 the yield curve are the market’s best estimate of future The University continues to pay interest to the bondholders spot interest rates. These payments are then discounted at the variable rate provided by the bonds. However, during using the spot rates implied by the current yield curve for the term of the swap agreement, the University eff ectively a hypothetical zero-coupon rate bond due on the date of pays a fi xed rate on the debt. If the counterparty defaults each future net settlement on the swaps. In accordance or if the swap is terminated, the University will revert to with GASB 53, Accounting and Financial Reporting for paying a variable rate. A termination of the swap agreement Derivative Instruments, the fair value of the University’s may also result in the University making or receiving a hedging derivative instrument is reported on the statement termination payment. The University is exposed to interest of net position as a deferred outfl ow of resources and a rate risk based on the SIFMA indexed variable payment liability (derivative instrument).

46 Arizona State University 2020 CAFR Note G - Unrestricted Net Position As discussed in the Summary of Signifi cant Accounting For example, unrestricted net position may be designated Policies, the University follows accounting standards for specific purposes by actions of management or for external reporting purposes that require net position may otherwise be limited by contractual purchase to be classifi ed for accounting and reporting purposes obligation agreements with outside parties. As of into one of three net position categories according to June 30, 2020, substantially all of the University’s externally imposed restrictions. Unrestricted net position, unrestricted net position was from University-generated as defi ned by GASB, is not subject to externally imposed revenues and was internally designated for academic and stipulations; however, it is subject to internal designations. research programs and initiatives, and capital projects.

Note H - Compensated Absences Changes in accrued compensated absences for the year ended June 30, 2020 consisted of the following (Dollars The University has recorded a liability for accruals of in thousands): vacation leave earned, but not taken at ﬁ scal year end. At ﬁ scal year end the University accrued up to the maximum Beginning Balance $ 37,271 22 days allowed by University policy for which an employee can be paid upon termination of employment. Additions 53,643 Reductions (44,977) Ending Balance $ 45,937 Current Portion $ 4,844

Note I - Operating Expenses by Natural Classiﬁ cation Operating expenses by functional and natural classiﬁ cation for the year ended June 30, 2020, are summarized as follows (Dollars in thousands):

Year ended June 30, 2020 Personal Services Supplies and Beneﬁ ts and Services Student Aid Depreciation Total Instruction $ 756,048 $ 260,672 $ 1,016,720 Research 212,099 147,837 359,936 Public service 23,984 14,431 38,415 Academic support 263,011 108,367 371,378 Student services 114,737 51,394 166,131 Institutional support 110,572 78,365 188,937 Operation and maintenance of plant 31,072 82,568 113,640 Scholarships and fellowships $ 292,914 292,914 Auxiliary enterprises 91,349 100,513 191,862 Depreciation $ 143,587 143,587 Total Operating Expenses $ 1,602,872 $ 844,147 $ 292,914 $ 143,587 $ 2,883,520

Note J - Retirement Plans not been further disclosed due to its relative insignifi cance to the University’s fi nancial statements. The University participates in the Arizona State Retirement System (ASRS), a cost-sharing, multiple-employer defi ned The University’s net pension liability at June 30, 2020, was benefi t pension plan, and two defi ned contribution plans comprised of the following (Dollars in thousands): which are described on page 50. The University also contributes to the Public Safety Personnel Retirement ASRS $ 555,246 System (PSPRS), which is comprised of a state administered PSPRS 23,639 agent multiple-employer defi ned benefi t pension plan and a defi ned contribution plan. Although a PSPRS net pension Defi ned contribution pension plans 27,940 liability has been recorded at June 30, 2020, PSPRS has Total net pension liability $ 606,825

2020 CAFR Arizona State University 47 Notes to Financial Statements

Changes in the University’s net pension liability during the Contributions. In accordance with state statutes, annual fi scal year ended June 30, 2020, were as follows (Dollars actuarial valuations determine active member and employer in thousands): contribution requirements. The combined active member and employer contribution rates are expected to fi nance the Beginning balance $ 558,761 costs of benefi ts employees earn during the year, with an additional amount to fi nance any unfunded accrued liability. Increases 198,625 For the year ended June 30, 2020, active ASRS members Decreases (150,561) were required by statute to contribute at the actuarially Ending balance $ 606,825 determined rate of 11.94 percent of the members’ annual covered payroll, and the University was required by statute Defi ned Benefi t Plan to contribute at the actuarially determined rate of 11.45 percent of the active members’ annual covered payroll. In Arizona State Retirement System (ASRS). The ASRS addition, the University was required by statute to contribute administers a cost-sharing multiple-employer defined at the actuarially determined rate of 10.29 percent of annual benefi t pension plan. Certain eligible staff categories are covered payroll of retired members who worked for the required and eligible University faculty and other staff University in positions that would typically be fi lled by an categories have the option to participate in the ASRS employee who contributes to the ASRS. The University’s defi ned benefi t plan. The Arizona State Retirement System contributions to the pension plan for the year ended June Board governs the ASRS according to the provisions 30, 2020, were $47.8 million. of A.R.S. Title 38, Chapter 5, Article 2. The ASRS is a component unit of the State of Arizona. The ASRS issues Pension Liability. At June 30, 2020, the University reported a publicly available fi nancial report that includes its fi nancial a liability of $555.2 million for its proportionate share of statements and required supplementary information. That the ASRS’ net pension liability. The net pension liability report may be obtained by visiting www.azasrs.gov. (NPL) was measured as of June 30, 2019. The total pension liability used to calculate the net pension liability Benefi ts Provided. The ASRS provides retirement and was determined using update procedures to roll forward survivor benefi ts. Retirement benefi ts for members who the total pension liability from an actuarial valuation as of joined the ASRS prior to September 13, 2013, are subject June 30, 2018, to the measurement date of June 30, 2019. to automatic cost-of-living adjustments based on excess The University’s proportion of the net pension liability investment earning. Members with a membership date on was based on the University’s actual contributions to the or after September 13, 2013, are not eligible for cost-of- plan relative to the total of all participating employers’ living adjustments. Survivor benefi ts are payable upon a contributions for the year ended June 30, 2019. The member’s death. For retired members, the survivor benefi t University’s proportion measured as of June 30, 2019 is determined by the retirement benefi t option chosen. was 3.816 percent which was an increase of 0.149 from For all other members, the benefi ciary is entitled to the its proportion measured as of June 30, 2018. member’s account balance that includes the member’s contributions and employer’s contributions, plus interest earned. State statute establishes benefi t terms. Retirement benefits are calculated on the basis of age, average monthly compensation, and service credit as follows:

Retirement Initial Membership Date Years of service and age required to receive benefi t Before July 1, 2011 On or after July 1, 2011 Sum of years and age equals 80 30 years / age 55 10 years / age 62 25 years / age 60 5 years / age 50* 10 years / age 62 Any years / age 65 5 years / age 50* Any years / age 65 Final average salary is based on Highest 36 consecutive months of Highest 60 consecutive months of last 120 months last 120 months Benefi t percent per year of service 2.1% to 2.3% 2.1% to 2.3% *With actuarially reduced benefi ts

48 Arizona State University 2020 CAFR Pension Expense and Deferred Outflows/Inflows of Actuarial assumptions used in the June 30, 2018 valuation Resources. For the year ended June 30, 2020, the were based on the results of an actuarial experience study University recognized pension expense for ASRS of $80.4 for the 5-year period ended June 30, 2016. million. At June 30, 2020, the University reported deferred The long-term expected rate of return on ASRS pension outfl ows of resources and deferred infl ows of resources plan investments was determined to be 7.5 percent using related to pensions from the following sources (Dollars in a building-block method in which best-estimate ranges thousands): of expected future real rates of return (expected returns, Deferred Deferred net of pension plan investment expense and infl ation) Outfl ows of Infl ows of are developed for each major asset class. These ranges Resources Resources are combined to produce the long-term expected rate of Diff erences between return by weighting the expected future real rates of return expected and actual $ 10,031 $ 104 by the target asset allocation percentage and by adding experience expected infl ation. The target allocation and best estimates Changes in assumptions 2,347 22,111 of geometric real rates of return for each major asset class Net diff erence between are summarized in the following table: projected and actual earnings 12,480 Long-Term on pension plan investments Target Expected Real Changes in proportion Asset Class Allocation Rate of Return and diff erences between Equity 50% 6.09% University contributions 25,098 Credit 20% 5.36% and proportionate share of contributions Fixed income 10% 1.62% University contributions Real estate 20% 5.85% subsequent to the 47,835 Total 100% measurement date Discount Rate. At June 30, 2019, the discount rate used to Total $ 85,311 $ 34,695 measure the ASRS total pension liability was 7.5 percent. The projection of cash flows used to determine the The $47.8 million reported as deferred outfl ows of resources discount rate assumed that contributions from participating related to ASRS pensions resulting from University employers will be made based on the actuarially contributions subsequent to the measurement date will determined rates based on the ASRS Board’s funding be recognized as a reduction of the net pension liability in policy, which establishes the contractually required rate the year ended June 30, 2021. Other amounts reported under Arizona statute. Based on those assumptions, the as deferred outfl ows of resources and deferred infl ows of pension plan’s fi duciary net position was projected to be resources related to ASRS pensions will be recognized in available to make all projected future benefi t payments of pension expense as follows. (Dollars in thousands, positive current plan members. Therefore, the long-term expected amount indicates an increase in pension expense): rate of return on pension plan investments was applied to all periods of projected benefi t payments to determine the Year ending June 30, total pension liability. 2021 $ 9,778 Sensitivity of the University’s Proportionate Share 2022 (7,943) of the ASRS Net Pension Liability to Changes in 2023 (2,396) the Discount Rate. The following table presents the 2024 3,342 University’s proportionate share of the net pension Actuarial Assumptions. The signifi cant actuarial assumptions liability calculated using the discount rate of 7.5 used to measure the total pension liability are as follows: percent, as well as what the University’s proportionate share of the net pension liability would be if it were Actuarial valuation date June 30, 2018 calculated using a discount rate that is 1 percentage point Actuarial roll forward date June 30, 2019 lower (6.5 percent) or 1 percentage point higher (8.5 Actuarial cost method Entry age normal percent) than the current rate (Dollars in thousands): Investment rate of return 7.5% University’s proportionate Projected salary increases 2.7% - 7.2% share of the NPL Infl ation 2.3% 1% decrease (6.5%) $ 790,244 Permanent benefi t increase Included Current discount rate (7.5%) 555,246 Mortality rates 2017 SRA Scale U-MP 1% increase (8.5%) 358,849

2020 CAFR Arizona State University 49 Notes to Financial Statements

Pension Plan Fiduciary Net Position. Detailed information are made in accordance with the member’s contract with about the pension plan’s fi duciary net position is available the applicable insurance and annuity companies. in the separately issued ASRS fi nancial report. Funding Policy. The Arizona State Legislature establishes Pension Contributions Payable. The University reported the contribution rates for active plan members and the accrued payroll and employee benefi ts of $1.9 million for University. The Arizona Revised Statutes define the outstanding pension contribution amounts payable to ASRS authority under which benefi t terms are established or for the year ended June 30, 2020. may be amended. For the year ended June 30, 2020, plan Defi ned Contribution Plans members and the University were each required by statute to contribute an amount equal to 7 percent of a member’s Plan Description. In accordance with A.R.S. section 15- compensation. 1628, University faculty and most University staff have the option to participate in defi ned contribution pension Pension Liability. At June 30, 2020, the University reported plans. For the year ended June 30, 2020, plans off ered a liability of $27.9 million, of which $27.0 is non-vested by TIAA and Fidelity Investments Tax-Exempt Services defi ned contributions. If individuals terminate employment Company (Fidelity) were approved by the Arizona Board prior to vesting, any non-vested University contributions of Regents. Benefi ts under these plans depend solely are retained by the University. on the contributed amounts and the returns earned on Pension Expense. For the year ended June 30, 2020, investments of those contributions. Contributions made the University recognized pension expense for Defi ned by members vest immediately; University contributions Contribution Plans of $33.8 million, which excludes $1.9 vest after fi ve years of full-time employment. Non-vested million in forfeitures. contributions held by the University earn interest. Member Pension Contributions Payable. The University’s accrued and University contributions and associated returns earned payroll and employee benefi ts included $0.9 million of on investments may be withdrawn upon termination of outstanding pension contribution amounts payable to TIAA employment, death, or retirement. The distribution of and Fidelity for the year ended June 30, 2020. member contributions and associated investment earnings

Note K - Other Postemployment Benefi ts (OPEB) Single-Employer Plan Other postemployment benefits provided as part of Plan Description. The Arizona Department of Administration University employment include the Arizona Department of (ADOA) administers a single-employer defi ned benefi t Administration sponsored single-employer defi ned benefi t postemployment plan (ADOA Plan) that provides medical postemployment plan as well as the ASRS sponsored and accident benefi ts to retired state employees and cost-sharing, multi-employer defi ned benefi t plan for the their dependents, including University employees and Long-Term Disability and the Health Benefi t Supplement their dependents. For fi nancial reporting purposes, the Fund. University public safety personnel participate in the University presents its proportionate share of the ADOA Public Safety Personnel Retirement System (PSPRS). Plan total liability and the related note disclosures similar PSPRS administers an agent multi-employer defined to a multi-employer plan. Title 38, Chapter 4 of the benefi t health insurance premium benefi t plan. Although A.R.S. assigns the authority to establish and amend the an ASRS net OPEB liability and PSPRS net OPEB asset benefi t provisions of the ADOA Plan to the Arizona State has been recorded at June 30, 2020, these plans have not Legislature. The ADOA pays the medical costs incurred by been further disclosed due to the relative insignifi cance to retired employees, net of related premiums that are paid the University’s fi nancial statements. entirely by the retiree or on behalf of the retiree. These The University’s net OPEB liability at June 30, 2020, was premium rates are based on a blend of active employee $254.1 million. Changes in the University’s net OPEB and retiree experience, resulting in a contribution basis that liability during the fi scal year ended June 30, 2020, were is lower than the expected claim costs for retirees, creating as follows (Dollars in thousands): an implicit subsidization of retirees by the ADOA Plan. A portion of the ADOA Plan’s implicit rate subsidy represents an obligation of the University for its proportionate share Beginning balance $ 141,296 of the total OPEB liability. Increases 119,987 Funding Policy and Contributions. The ADOA’s current Decreases (7,233) funding policy is pay-as-you-go for OPEB benefi ts. There Ending balance $ 254,050 are no dedicated assets at this time to off set the actuarial accrued liability.

50 Arizona State University 2020 CAFR Benefits Provided. The ADOA provides medical and The $5.6 million reported as deferred outfl ows of resources accident benefi ts to retired University employees and their related to ADOA OPEB resulting from University benefi t dependents. The ADOA pays the medical costs incurred payments subsequent to the measurement date will be by retired employees who choose to participate in the recognized as a reduction of the OPEB liability in the plan minus a specifi ed premium amount which is paid for year ended June 30, 2021. Other amounts reported as entirely by the retiree or on behalf of the retiree. Premium deferred infl ows of resources related to ADOA OPEB will rates are based on a blend of active employee and retiree be recognized in pension expense as follows (Dollars in experience, resulting in a contribution basis which is lower thousands): than the expected claim costs for retirees only, which results Year ending June 30, in an implicit subsidization of retirees by the University. 2021 $ 6,274 Dental and vision benefi ts are also available, but are not valued as there is no implicit subsidization in the retiree 2022 6,274 rates. 2023 6,274 OPEB Liability. At June 30, 2020, the University reported 2024 6,274 a liability of $252.9 million for its proportionate share of 2025 9,507 the ADOA total OPEB liability. The total OPEB liability Thereafter 17,674 was measured as of June 30, 2019 and was determined Actuarial Assumptions. Projections of ADOA Plan benefi ts using update procedures to roll forward the liability from an for fi nancial reporting purposes include the types of benefi ts actuarial valuation as of June 30, 2018. The University’s provided at the time of each valuation and the pattern proportion of the total OPEB liability was based on the of sharing of cost between the employer and the ADOA University’s actual contributions to the plan relative to the Plan member to that point. The actuarial methods and total of all participating employers’ contributions for the assumptions used include techniques that are designed year ended June 30, 2019. to reduce short-term volatility in actuarial accrued The total OPEB liability as of June 30, 2019 reflects liabilities, consistent with the long-term perspective of the the following changes in benefit terms and actuarial calculations. Actuarial assumptions used in the June 30, assumptions: 2019, valuation were based on the results of an actuarial - The discount rate decreased due to changes in the tax- experience study for the 5-year period ended June 30, exempt municipal bond index rate. 2016. - Per capita costs and contributions and related trend rates The ADOA Plan’s actuarial methods and significant were adjusted to refl ect updated experience. assumptions for the most recent actuarial valuation are as follows: The University’s proportion measured as of June 30, 2018 was 16.16 percent and as of June 30, 2019 was 19.87 Actuarial valuation date June 30, 2019 percent. Actuarial cost method Entry Age Normal OPEB Expense and Deferred Outfl ow/Infl ows of Resources. Projected salary increases 2.70% - 7.2% varying by years For the year ended June 30, 2020, the University recognized of service ADOA OPEB expense of $28.5 million. At June 30, 2020, Healthcare cost trend rates: the University reported deferred outfl ows of resources and Medical (pre-65) 7.20% graded to 4.25% infl ows of resources related to OPEB from the following Medical (post-65) 6.50% graded to 4.25% sources (Dollars in thousands): Administrative costs 3.0% Deferred Deferred Discount rate 3.13% Outfl ows of Infl ows of Mortality rates: Level dollar, open Resources Resources Employees RP-2014 Employee Mortality University benefi t Tables projected generationally payments subsequent to $ 5,656 from 2014 with 1% the measurement date improvement rate per year Changes in assumptions 46,321 $ 25,252 Healthy retirees and 2017 State Retirees of Arizona or other inputs spouses Mortality Tables projected Diff erence between generationally from 2017 with expected and actual 35,199 3,991 1% improvement per year experience in the Total Disabled retirees RP-2014 Disabled Retiree OPEB Liability Mortality Tables projected Total $ 87,176 $ 29,243 generationally from 2014 with 1% improvement per year

2020 CAFR Arizona State University 51 Notes to Financial Statements

Discount Rate. The discount rate used to measure the total The following table presents the University’s proportionate OPEB liability was 3.13 percent which was set based on the share of the total OPEB liability calculated when using the Bond Buyer 20-Bond General Obligation (GO) Municipal current trend rate as well as what the University’s Bond Index as of the measurement date. proportionate share of the total OPEB liability would be if Sensitivity of the University’s Proportionate Share of the it were calculated using a trend rate that is 1 percentage ADOA total OPEB liability to Changes in the Discount Rate. point lower or 1 percentage point higher than the current The following table presents the University’s proportionate trend rates (Dollars in thousands): share of the total OPEB liability calculated when using the University’s discount rate of 3.13 percent, as well as what the proportionate share of University’s proportionate share of the total OPEB liability the total OPEB liability would be if it were calculated using a discount rate that is 1% decrease in trend rates $ 208,400 1 percentage point lower (2.13 percent) or 1 percentage Current rate trends 252,852 point higher (4.13 percent) than the current rate (Dollars in 1% increase in trend rates 311,619 thousands): University’s proportionate share of the total OPEB liability 1% decrease (2.13%) $ 303,660 Current discount rate (3.13%) 252,852 1% increase (4.13%) 213,489

Note L - ASU at the Downtown Phoenix Campus Purchase Option. The University may, prior to the In June 2005, the University and the City of Phoenix (City) satisfaction of the permanent fi nancing, purchase all or a entered into an intergovernmental agreement related to the portion of the Downtown Phoenix campus property from the development of an ASU campus in downtown Phoenix. Per City for the amount of the indebtedness applicable to the the terms of the agreement, the City has acquired land, property subject to full defeasance of any outstanding debt. existing buildings and constructed new facilities in support Upon satisfaction of the permanent fi nancing indebtedness, of the Downtown Phoenix Campus. ASU is responsible for the properties will be transferred to the University at no all operating costs at the campus as well as maintaining a additional cost, under the condition that the property will be reserve and replacement fund. used for the purpose of providing Arizona State University- related post-secondary education. Permanent Financing. In March 2006, Phoenix resident voters approved a bond program which included Mercado Property. The University will transfer property approximately $188 million in permanent funding for it owns in downtown Phoenix, known as the Mercado the development of facilities for ASU at the Downtown property, to the City when fi nal payment of outstanding Phoenix campus, and approximately $35 million for other debt on the property has been made, which is scheduled to investments in the campus districts. occur on July 1, 2024. The City has the option to purchase the Mercado property at any time after the construction of the new Downtown Phoenix campus facilities, and prior to June 15, 2024, subject to certain conditions.

Note M - Insurance Programs and Other Claims and scope of employment or authorization, except as Risk Management Insurance. Pursuant to A.R.S. section prescribed in A.R.S. section 41-621. Loss risks not 41-621, the University participates in a self-insurance covered by the Risk Management Section and where the program administered by the State of Arizona, Department University has no insurance coverage are losses arising of Administration, Risk Management Section. The State’s from contractual breaches and losses that arise out of and Risk Management Program covers the University, subject are directly attributable to an act or omission determined by to certain deductibles, for risks of loss related to such a court to be a felony. From time to time, various claims and situations as theft, damage and destruction of property, lawsuits associated with the normal conduct of University buildings, and equipment; errors and omissions; injuries business are pending or may arise against the University. to employees; natural disasters; and liability for acts In the opinion of University management, any losses from or omissions of any nature while acting in authorized the resolution of any other pending claims or litigation not governmental or proprietary capacities and in the course covered by the Risk Management Section should not have

52 Arizona State University 2020 CAFR a material eﬀ ect on the University’s ﬁ nancial statements. the State are determined on an actuarial basis and are Also, in accordance with the disclosure requirements included in the State of Arizona Comprehensive Annual of GASB Statement No. 10, Accounting and Financial Financial Report. Reporting for Risk Financing and Related Insurance Issues, all estimated losses for unsettled claims and actions of

Note N - Privatized Student Housing HRSE-Capstone Mesa, LLC. The University entered into American Campus Communities. The University has a group lease with HRSE-Capstone Mesa, LLC (HRSE) entered into ground lease agreements with American for development of student housing on the Polytechnic Campus Communities (ACC) for student housing projects campus. During the term of the ground lease, 65 years that provide approximately 7,700 beds and are located with two ten-year options to renew, HRSE is responsible on land owned by the University that is ground leased to for all costs and expenses of operating and maintaining ACC. Upon completion of the projects, ACC transfers title the housing project. The University has no obligation to to the facilities to the University, subject to a leasehold support the facility fi nancially or to guarantee occupancy. interest under which ACC will maintain and operate the • Lantana Hall, opened in August 2020 on the Polytechnic facilities. The ground leases are each for a period of 65 campus, features four-bedroom, single occupancy years with two ten-year options to renew. The University suites and double occupancy suite-style beds. has no obligation to support the facilities fi nancially or to Downtown Phoenix Student Housing, LLC. The University guarantee occupancy. entered into a ground sublease with Capstone Development • Vista del Sol, opened in August 2008 on the Tempe Corporation and Downtown Phoenix Student Housing, campus, consists of apartment-style beds, with LLC (DPSH) for development of student housing on amenities such as a pool, community center, parking the Downtown Phoenix campus. During the term of the garage and retail space. ground lease, the earlier of 40 years from the issuance • Villas at Vista del Sol, an expansion of the Vista del of the fi nancing for the project or the date on which the Sol complex, opened in August 2012 on the Tempe fi nancing and all obligations have been fully repaid, DPSH campus and includes a mix of apartment-style housing is responsible for all costs and expenses of operating and and townhome units. maintaining the housing project. The University has no obligation to support the facility fi nancially or to guarantee • Barrett Honors College, opened in August 2009 on the occupancy. Tempe campus, provides housing and academic space for the Barrett Honors College including classrooms, • Taylor Place, opened in August 2008 (South Tower) faculty offi ce and dining facilities. and January 2009 (North Tower) on the Downtown Phoenix campus, features double occupancy suite- • Casa de Oro, opened in August 2012 on the West style beds. campus, features double occupancy suite-style beds. Downtown Phoenix Student Housing II, LLC. The • Manzanita, a renovated facility, re-opened in August University entered into a ground sublease with Capstone 2013 on the Tempe campus and consists of double Development Corporation and Downtown Phoenix Student occupancy suite-style beds. Housing II, LLC (DPSH II) for development of student • Fulton Schools Residential Community at Tooker housing on the Downtown Phoenix campus. During the House, opened in August 2017 on the Tempe campus, term of the ground lease, up to 45 years, DPSH II is features double occupancy suite-style beds. responsible for all costs and expenses of operating and maintaining the housing project. The University has no The Greek Leadership Village, opened in August 2018 • obligation to support the student housing fi nancially or to on the Tempe campus, provides housing for ASU guarantee occupancy. fraternities and sororities. DPSH II, scheduled to open in August 2021 on the University House Mesa, LLC. The University entered into • Downtown Phoenix campus, features studio, two- a ground lease with University House Mesa, LLC (UHM) bedroom and four-bedroom apartment-style units. for development of student housing on the Polytechnic campus. During the term of the ground lease, 65 years with two ten-year options to renew, UHM is responsible for all costs and expenses of operating and maintaining the housing project. The University has no obligation to support the facility fi nancially or to guarantee occupancy. • Century Hall, opened in August 2012 on the Polytechnic campus, features double occupancy suite-style beds.

2020 CAFR Arizona State University 53 Notes to Financial Statements

Note O - Summary Financial Information for ASU Contributions. Contributions received are recorded Component Units as without donor restrictions - unrestricted, with donor Arizona State University’s discretely presented component restrictions - temporarily restricted, or with donor units are comprised of two major component units, ASU restrictions - permanently restricted support, depending on Enterprise Partners (ASUEP), and Arizona Capital Facilities the existence and/or nature of any donor restrictions. All Finance Corporation (ACFFC), and several smaller donor-restricted support is reported as an increase in with component units consisting of the ASU Alumni Association, donor restrictions - temporarily or with donor restrictions Arizona State University Research Park, Inc., Sun Angel - permanently restricted net assets, depending on the Foundation, and ASU Preparatory Academy, Inc. For nature of the restriction. When a restriction expires (that additional information refer to Note B – ASU Component is, when a stipulated time restriction ends, or the purpose Units. of the restriction is accomplished), with donor restrictions - temporarily or with donor restrictions - permanently Summary of Signifi cant Accounting Policies restricted net assets are reclassifi ed to without donor Basis of presentation. The component unit financial restrictions - unrestricted net assets and reported in statements have been prepared on the accrual basis of the Statement of Activities as net assets released from accounting according to generally accepted accounting restrictions. principles (GAAP). Information regarding their fi nancial Pledges Receivable position and activities is reported according to three classes of net assets: without donor restrictions - unrestricted net ASUEP pledges receivable (unconditional promises to give) assets, with donor restrictions - temporarily restricted net are recorded at their net realizable value, which is net of assets, and with donor restrictions - permanently restricted a discount and loss allowance. Pledges are discounted net assets. using the applicable risk free rate at the date the pledge was recognized. The discount rates range from 1.20 percent Income taxes. All of ASU’s component units, except to 6.00 percent. An allowance for uncollectible pledges is ACFFC, qualify as tax-exempt organizations under Section estimated based on the ASUEP’s collection history and is 501(c)(3) of the Internal Revenue Code and, therefore, recorded as a reduction to contribution support revenue there is no provision for income taxes. In addition, they and an increase in the allowance for uncollectible pledges. qualify for the charitable contribution deduction and have been classified as organizations that are not private The Sun Angel Foundation’s pledges receivable are foundations. Any income determined to be unrelated recorded at their net realizable value using a discount rate business taxable income would be taxable. ACFFC is determined by management ranging from 1.80 percent to classifi ed as a Section 501(c)(4) organization, a tax-exempt 5.14 percent for the year ended June 30, 2020. organization but not qualifi ed for the charitable contribution Members of the ASUEP’s Board of Directors and Board deduction. of Trustees have made contributions and pledges to Use of estimates. The preparation of the component units’ ASUEP in the current and prior years. At June 30, 2020, fi nancial statements, in conformity with U.S. generally net unconditional pledges receivable from these members accepted accounting principles, requires management to included approximately $314 thousand. The ASUEP had make estimates and assumptions that aff ect the reported conditional pledges receivable totaling $73.0 million at amounts of assets and liabilities, disclosure of contingent June 30, 2020; none are included in pledges receivable. assets and liabilities at the date of the fi nancial statements, Conditional pledges receivable are recorded when the and the reported amounts of revenues and expenses during conditions are substantially met. the reporting period. Actual results could diff er from those estimates.

Pledges receivable consist of (Dollars in thousands) ASU Enterprise Sun Angel Partners Foundation Total Gross pledges receivable $ 233,646 $ 35,758 $ 269,404 Present value discount (16,769) (1,707) (18,476) Allowance for uncollectible pledges (51,523) (2,495) (54,018) Net pledges receivable $ 165,354 $ 31,556 $ 196,910

54 Arizona State University 2020 CAFR Gross pledges are receivable as follows (Dollars in thousands) ASU Enterprise Sun Angel Partners Foundation Total Receivable in one year $ 79,619 $ 10,471 $ 90,090 Receivable in two to ﬁ ve years 57,406 19,611 77,017 Receivable after ﬁ ve years 96,621 5,676 102,297 Total gross pledges to be received $ 233,646 $ 35,758 $ 269,404

Investments ASUEP exercises due diligence in assessing the policies, ASUEP investments are recorded at fair value. Fair value procedures and controls implemented by external is defi ned as the price that would be received to sell an investment managers. Investment income is recorded on asset or paid to transfer a liability in an orderly transaction an accrual basis, and purchases and sales of investment between market participants at the measurement date. securities are refl ected on a trade-date basis. Realized US GAAP establishes a framework for measuring fair gains and losses are calculated using the average cost value, establishes a fair value hierarchy based on the for securities sold. Investment securities, in general, are inputs used to measure fair value and enhances disclosure exposed to various risks, such as interest rate, credit and requirements for fair value measurements. This guidance overall market volatility. maximizes the use of observable inputs and minimizes ASUEP spending policy for the consolidated investment the use of unobservable inputs by requiring that the pools follows the objectives of the investment policy and observable inputs be used when available. Observable establishes the amount made available for spending in the inputs that market participants would use in pricing the endowment pools. asset or liability are based on market data obtained • The current spending policy is based on a constant from independent sources. Unobservable inputs refl ect growth formula, in which the amount available for assumptions that market participants would use in pricing spending is based on the prior year spending amount the asset or liability based on the best information available plus an infl ation factor (2.3 percent), collared by a cap in the circumstances. The hierarchy is broken down into and fl oor of 4.25 percent and 3.25 percent, respectively, three levels based on the transparency of inputs as follows: of a 12-quarter moving average calculated mid-fi scal Level 1 – Quoted prices are available in active markets for year. identical assets or liabilities as of the report date. A quoted • In the event the current market value of the endowment price for an identical asset or liability in an active market is less than the historical gift value, spending will provides the most reliable fair value measurement because continue, unless the gift agreement does not permit it is directly observable to the market. spending in this circumstance. Level 2 – Pricing inputs are other than quoted prices ASUEP has ownership of certain cash and cash in active markets, which are either directly or indirectly equivalents that are not in the possession of ASUEP observable as of the report date. The nature of these but are held, along with other marketable securities, by securities include investments for which quoted prices are outside investment managers for the benefi t of the ASUEP. available but traded less frequently and investments that Although these cash and cash equivalents are readily are fair valued using other securities, the parameters of available to ASUEP, it is the intent of ASUEP to hold these which can be directly observed. cash and cash equivalents for investment purposes and, Level 3 - Securities that have little to no pricing observability accordingly, these cash and cash equivalents are classifi ed as of the report date. These securities are measured using as investment assets in the accompanying combined management’s best estimate of fair value, where the fi nancial statements. inputs included in the determination of fair value are not Investments, in general, are exposed to various risks, observable and require signifi cant management judgment such as interest rate, credit and market. Due to the level or estimation. of risk associated with certain investment securities, it is ASUEP reports investments in accordance with SFAS No. at least reasonably possible that changes in the near term 124, Accounting for Certain Investments Held by Not-for- could materially aff ect account balances and the amounts Profi t Organizations. The fair values of publicly traded reported in the accompanying consolidated financial securities are based on quoted market prices and exchange statements. rates, if applicable. The fair values of nonmarketable securities are based on valuations provided by external investment managers.

2020 CAFR Arizona State University 55 Notes to Financial Statements

Investment Summary

Investments consist of (Dollars in thousands) Other ASU Component Enterprise Partners ACFFC Units Total Money market funds and cash equivalents $ 36,022 $ 17,044 $ 53,066 Global equities 421,640 421,640 Global ﬁ xed income 326,128 326,128 Diversifying strategies 119,935 119,935 Real assets 137,161 137,161 Private capital 137,541 137,541 Other securities $ 19,021 19,021 Other investments 81,447 81,447 Total investments $ 1,259,874 $ 17,044 $ 19,021 $ 1,295,939

ASU Enterprise Partners Fair Value of Financial Instruments and Fair Value Measurements

(Dollars in thousands) NAV Level 1 Level 2 Level 3 Assets at fair value (recurring basis) Global equities $ 343,289 $ 78,351 Global fi xed income $ 90,916 192,817 $ 11,131 31,264 Diversifying strategies 105,725 326 13,884 Real assets 62 23,166 113,933 Private capital 137,541 Cash and cash equivalents 36,017 5 Total investments at fair value $ 196,703 $ 595,615 $ 11,131 $ 374,978 Charitable trust receivable 1,858 Land and buildings held for investment 81,447 Assets with limited use 9,660 Assets held under split-interest agreements 6,595 Total assets at fair value $ 196,703 $ 611,870 $ 11,131 $ 458,283 Liabilities at fair value (recurring basis) Assets held for other entities $ 275,953 Unrealized swap liability $ 8,712 Total liabilities at fair value $ 8,712 $ 275,953 Direct Financing Lease Agreements The University will make lease payments at times in ASU Enterprise Partners. ASUEP leases a portion of amounts suffi cient to pay all principal and interest on the Fulton Center building (ASUEP headquarters) to the the Series 2009B and 2017 Bonds. The Sublease has University under a direct fi nancing lease. At the end of successive annual renewals without action from either party the lease, ASUEP will gift their portion of the building to through March 31, 2034. The Sublease is subject to early the University and the University will receive title to the termination by Nano or the University upon the payment in building. ASUEP net investment in this direct fi nancing full of the Series 2009B and 2017 Bonds. Upon termination lease at June 30, 2020 is $19.0 million. or expiration of the Sublease, the ACFFC’s interest in the premises, including all buildings and improvements on Arizona Capital Facilities Finance Corporation (ACFFC). the leased premises, transfers to the University without Pursuant to a sublease agreement, dated April 7, 2004 further consideration. ACFFC’s net investment in the and amended on December 1, 2017 (the Sublease), Nanotechnology facility direct fi nancing lease is $25.3 Nanotechnology Research, LLC (Nano), a wholly-owned million at June 30, 2020. subsidiary of ACFFC, leases its interest in the ASU Research Park to the University.

56 Arizona State University 2020 CAFR In December 2017, Nano issued $24.4 million in Tax- Polytechnic Central Plant. In December 2008, the Exempt Lease Revenue Refunding Bonds (Nano 2017 University entered into a privatized/third party agreement Bonds). The proceeds of the Nano 2017 Bonds were used with ACFFC for the construction and operation by a third to refund and redeem $23.0 million of the Nano 2009A party energy management fi rm of a central plant on the Bonds, the proceeds of which were used to acquire, University’s Polytechnic campus to provide chilled water improve, renovate and equip the leasehold interest in the and emergency power for certain buildings on that campus. ASU Research Park. In October 2017, Energy Center LLC issued $11.3 million Pursuant to a University lease agreement, dated July in Tax-Exempt Revenue Refunding Bonds (Energy Center 1, 2005, McAllister Academic Village, LLC, a wholly- 2017 Bonds). The proceeds of the Energy Center 2017 owned subsidiary of ACFFC, leases its interest in the Bonds were used to refund and redeem $10.5 million of the non-residential portion of Hassayampa Academic Village Energy Center 2008 Bonds for savings. The contract with (Hassayampa, HAV) to the University which consists of the ACFFC is eff ective through 2028, along with the related academic, tutorial, retail and food service facilities. The ground lease, and calls for minimum annual purchase lease was amended eff ective July 1, 2016 to change the obligations by the University of approximately $1.8 million annual renewal period through June 30, 2039 to correspond to cover ACFFC’s fi xed management services and capital with the maturity of the Hassayampa 2016 Bonds. Any costs. Additional billing amounts will be based on a pass right, title or interest of Hassayampa in and to the academic through to the University of the service provider’s variable portions of the Hassayampa Project will pass to the costs, primarily electricity. University without further cost upon the payment in full of ASU Foundation Endowment and Net Asset the Hassayampa 2008 Bonds. Lease payments are based Classifi cation on the fi xed interest rates determined by the Hassayampa Management of the ASUEP’s endowment is governed 2008 and 2016 Bonds maturity schedules. ACFFC’s net by laws in the State of Arizona created under the Arizona investment in the McAllister (HAV) direct fi nancing lease Management of Charitable Funds Act (MCFA). The ASUEP is $9.9 million at June 30, 2020. has interpreted the statute as requiring the preservation of Contingent Agreements the fair value of the original gifts as of the gift date of the The University entered into a contingent agreement which donor-restricted endowment funds absent explicit donor allows the University to contribute funding to the extent stipulations to the contrary. As a result of this interpretation, a funding shortfall occurs during the fiscal year. The the ASUEP classifi es as permanently restricted net assets: agreement for Hassayampa Academic Village (ACFFC) (a) the original value of gifts donated to the permanent allows the University to fund defi ciencies for debt service endowment; (b) the original value of subsequent gifts and operating expense shortfalls. To date no support has to the permanent endowment; and (c) accumulations to been provided. the permanent endowment made in accordance with the direction of the applicable donor gift instrument at the Power Plant Agreements time the accumulation is added to the fund. From time to Sun Devil Energy Center. In November 2004, the time, the fair value of assets associated with the individual University entered into a privatized/third party agreement donor-restricted endowment funds may fall below the with ACFFC for the construction and operation by a third level required to be held in perpetuity. For these funds, party energy management fi rm of a co-generation power the change in value is shown as with donor restrictions - plant on the University’s Tempe campus with the power temporarily restricted net investment return and is reported plant providing to the University a portion of its energy in with donor restrictions - temporarily restricted net assets. (electrical, chilled water and steam) needs. In June 2018, The remaining portion of the donor-restricted endowment $23.6 million in additional Tax-Exempt Revenue Bonds fund that is not classifi ed as with donor restrictions - were issued by Sun Devil Energy Center LLC to add a permanently restricted net assets is classifi ed as with donor second turbine to the existing facility in order to meet restrictions - temporarily restricted net assets. the university’s heating, cooling and electric generating ASUEP endowment is invested in the Long Term needs for the new Biodesign C facility and future research Investment Pool (LTIP). ASUEP investment policies for facilities. The contract with ACFFC is eff ective through the LTIP are reviewed periodically. The long-term fi nancial 2038, along with the related ground lease, and calls for objectives of the Pool are to produce a relatively predictable minimum annual energy purchase obligations on the part and stable payout stream that increases over time at least of the University of approximately $8.7 million to cover as fast as the general rate of infl ation and to preserve ACFFC’s fi xed management services and capital costs. inter-generational equity by achieving growth of the Pool Additional billing amounts will be based on a pass through at a rate that at least keeps pace with the general rate of to the University of the service provider’s variable costs, infl ation, net of spending. primarily natural gas.

2020 CAFR Arizona State University 57 Notes to Financial Statements

ASU Enterprise Partners Endowment and Net Asset Classiﬁ cations

ASU Enterprise Partners endowments by net asset category (Dollars in thousands) With Donor Restrictions Without Donor Temporarily Permanently Restrictions Restricted Restricted Total Donor-restricted endowments $ 61,558 $ 526,437 $ 587,995 Quasi-endowments 82,406 82,406 Total funds $ 143,964 $ 526,437 $ 670,401

Changes in endowment net assets (Dollars in thousands) With Donor Restrictions Without Donor Temporarily Permanently Restrictions Restricted Restricted Total Endowment net assets, June 30, 2019 $ 143,651 $ 496,391 $ 640,042 Adjustment due to reclassiﬁ cation (176) 122 (54) Contributions and other additions 4,305 37,555 41,860 Investment return: Interest and dividends (8,255) 1,640 (6,615) Net realized and unrealized gains 43,809 (1,778) 42,031 Changes in assets due to other entities (12,813) (12,813) Total investment return 22,741 (138) 22,603 Appropriation for expenditure (23,645) (182) (23,827) Reclassiﬁ cation of donor intent (2,912) (7,311) (10,223) Endowment net assets, June 30, 2020 $ 143,964 $ 526,437 $ 670,401

Property and Equipment

Property and equipment consist of (Dollars in thousands) ASU Other Enterprise Component Partners ACFFC Units Total Cost or donated value: Buildings and improvements $ 17,397 $ 196,433 $ 4,628 $ 218,458 Furniture, ﬁ xtures, and equipment 11,235 79,026 1,689 91,950 Leasehold improvements 16,917 16,917 Land 1,530 1,530 Software 8,332 8,332 Total cost or donated value 28,632 275,459 33,096 337,187 Accumulated depreciation (14,167) (150,476) (17,501) (182,144) Net property and equipment $ 14,465 $ 124,983 $ 15,595 $ 155,043

58 Arizona State University 2020 CAFR Bonds and Obligations under Capital lease

Bonds payable consist of (Dollars in thousands) ASU Other Final Enterprise Component Maturity Partners ACFFC Units Total Series 2018 Tax-Exempt Revenue Bonds 2038 $ 22,730 $ 22,730 (Sun Devil Energy Center) Series 2017 Tax-Exempt Lease Revenue Refunding Bonds 2034 23,725 23,725 (Nanotechnology Research) Series 2017 Tax-Exempt Lease Revenue Refunding Bonds 2028 10,065 10,065 (ASU Energy Center) Series 2016 Tax-Exempt Revenue Refunding Bonds 2039 118,050 118,050 (Hassayampa Academic Village) Series 2014A Tax-Exempt Lease Revenue Bonds 2035 $ 30,900 30,900 (DC Project) Series 2014A Revenue Refunding Bonds (Fulton) 2034 33,885 33,885 Series 2012 Revenue Bonds (Phoenix Collegiate Academy 2042 $ 4,945 4,945 Project) Series 2009 Revenue Bonds 2024 17,890 17,890 (Energy Management Services) Series 2009B Lease Revenue Refunding Bonds 2022 2,035 2,035 (Nanotechnology Research) Series 2008 Variable Rate Demand Revenue Refunding 2030 27,185 27,185 Bonds (Sun Devil Energy Center) Series 2006 Development Refunding Bonds 2021 1,130 1,130 (ASU Research Park) Series 2004A Variable Rate Revenue Bonds (Brickyard) 2034 22,420 22,420 Series 2004B Variable Rate Revenue Bonds (Brickyard) 2022 2,455 2,455 JPMorgan Chase Loan 2024 433 433 Unamortized loan costs (2,221) (2,221) Deferred Cost of Refunding (14,588) (14,588) Unamortized bond premium (discount) (1,121) 16,994 (298) 15,575 $ 88,539 $ 221,865 $ 6,210 $ 316,614

The following schedule reﬂ ects future principal payment commitments to investors:

Future principal commitments consist of (Dollars in thousands) ASU Other Year Ending Enterprise Component June 30, Partners ACFFC Units Total 2021 $ 4,215 $ 10,710 $ 1,315 $ 16,240 2022 4,395 11,375 215 15,985 2023 4,600 12,035 220 16,855 2024 4,800 12,720 230 17,750 2025 5,010 13,420 168 18,598 Thereafter 65,519 161,605 4,062 231,186 $ 88,539 $ 221,865 $ 6,210 $ 316,614

2020 CAFR Arizona State University 59 Notes to Financial Statements

Financial Statement Information The following represents summary ﬁ nancial information for ASU’s two major component units (ASU Enterprise Partners and ACFFC) and all nonmajor component units combined:

Component Units Statement of Financial Position June 30, 2020 (Dollars in thousands) ASU Nonmajor Enterprise Component Partners ACFFC Units Total Assets Cash and cash equivalents $ 11,791 $ 4,714 $ 19,352 $ 35,857 Pledges receivables, net 165,354 31,556 196,910 Other receivables, net 7,747 138 47,189 55,074 Investments in securities 1,178,427 17,044 19,021 1,214,492 Other investments 81,447 81,447 Net direct ﬁ nancing leases 19,030 35,212 54,242 Property and equipment, net 14,465 124,983 15,595 155,043 Other assets 19,055 7 2,497 21,559 Total Assets $ 1,497,316 $ 182,098 $ 135,210 $ 1,814,624 Liabilities Accounts payable and accrued liabilities $ 23,315 $ 9,711 $ 5,677 $ 38,703 Deferred revenue 14,193 14,193 ASU endowment trust liability 256,932 256,932 Other liabilities 30,635 2,689 33,324 Long-term debt 88,539 221,865 6,210 316,614 Total Liabilities $ 399,421 $ 231,576 $ 28,769 $ 659,766 Net Assets Without Donor Restrictions - Unrestricted $ 103,903 $ (49,478) $ 68,910 $ 123,335 With Donor Restrictions - Temporarily restricted 390,357 37,531 427,888 With Donor Restrictions - Permanently restricted 603,635 603,635 Total Net Assets (Deﬁ cit) $ 1,097,895 $ (49,478) $ 106,441 $ 1,154,858

60 Arizona State University 2020 CAFR Component Units Statement of Activities Year ended June 30, 2020 (Dollars in thousands) ASU Nonmajor Enterprise Component Partners ACFFC Units Total Revenues Contributions $ 207,333 $ 19,882 $ 227,215 Rental revenues 1,911 $ 16,038 11,257 29,206 Sales and services 29,168 12,740 2,704 44,612 Net investment return (2,356) 202 707 (1,447) Grants and aid 38,407 38,407 Other revenues 4,981 4,389 2,221 11,591 Total Revenues $ 241,037 $ 33,369 $ 75,178 $ 349,584 Expenses Payments to the benefi t of ASU - Cash donation transfers to ASU $ 100,998 $ 13,461 $ 114,459 Vendor payments 28,995 28,995 Scholarship fund transfers to ASU 11,632 11,632 Rent payments to ASU $ 3,927 3,663 7,590 Management and general 45,718 10,669 49,249 105,636 Interest expense 1,479 8,020 117 9,616 Depreciation/amortization 1,187 10,376 405 11,968 Other expenses 12,643 2 1,433 14,078 Total Expenses $ 202,652 $ 32,994 $ 68,328 $ 303,974 Increase/(Decrease) in Net Assets before Loss 38,385 375 6,850 45,610 Loss on Disposal of Assets (182) (182) Increase/(Decrease) in Net Assets after Loss 38,385 375 6,668 45,428 Net Assets (Defi cit), Beginning of Year 1,059,510 (49,853) 99,773 1,109,430 Net Assets (Defi cit), End of Year $ 1,097,895 $ (49,478) $ 106,441 $ 1,154,858

2020 CAFR Arizona State University 61

Required Supplementary Information Pension and Other Postemployment Beneﬁ ts Liability

Schedule of the University’s Proportionate Share of the Net Pension Liability Arizona State Retirement System (Dollars in thousands) Reporting Fiscal Year (Measurement Date) 2020 2019 2018 2017 2016 2015 (2014) 2011 through (2019) (2018) (2017) (2016) (2015) (as restated) 2014 University’s proportion of the net pension liability 3.82% 3.67% 3.48% 3.39% 3.19% 3.05% University’s proportionate share of the net pension $ 555,246 $ 511,370 $ 542,354 $ 546,672 $ 497,351 $ 451,741 liability University’s covered payroll (trailing) $ 402,882 $ 365,389 $ 340,502 $ 318,111 $ 295,068 $ 276,395 Information not available University’s proportionate share of the net pension 137.82% 139.95% 159.28% 171.85% 168.55% 163.44% liability as a percentage of its covered payroll Plan ﬁ duciary net position as a percentage of the total 73.24% 73.40% 69.92% 67.06% 68.35% 69.49% pension liability

Schedule of the University’s Proportionate Share of the Total OPEB Liability Arizona Department of Administration OPEB Plan (Dollars in thousands) Reporting Fiscal Year (Measurement Date) 2020 2019 2018 2017 2011 through (2019) (2018) (2017) (2016) 2016 University’s proportion of the total OPEB liability 19.87% 16.16% 15.95% 15.95% University’s proportionate share of the total OPEB liability $ 252,852 $ 140,836 $ 134,500 $ 173,187 Information not Actuarially-determined University’s covered payroll $ 851,285 $ 731,068 $ 711,848 $ 781,648 available University’s proportionate share of the total OPEB liability as a percentage 29.7% 19.3% 18.9% 22.2% of its covered payroll

64 Arizona State University 2020 CAFR Schedule of University Contributions Arizona State Retirement System (Dollars in thousands)

2019 (1) 2018 (1) 2017 (1) 2016 (1) 2020 (as restated) (as restated) (as restated) (as restated) 2015 2014 2013 2012 2011 Statutorily required contribution $ 47,835 $ 44,992 $ 39,726 $ 36,607 $ 34,408 $ 32,026 $ 29,447 $ 26,714 $ 24,826 $ 23,825 University’s contributions in relation to the statutorily 47,835 44,992 39,726 36,607 34,408 32,026 29,447 26,714 24,826 23,825 required contribution University’s contribution $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 deﬁ ciency (excess)

University’s covered payroll $ 418,463 $ 402,882 $ 365,389 $ 340,502 $ 318,111 $ 295,068 $ 276,395 $ 261,965 $ 251,539 $ 264,429

University’s contributions as a 11.43% 11.17% 10.87% 10.75% 10.82% 10.85% 10.65% 10.20% 9.87% 9.01% percentage of covered payroll

(1) University contributions are based on the employer contributions in the University’s records. Each year there is an immaterial diﬀ erence between employer pension contributions ASRS recognized and the employer contributions in the University’s records due to timing diﬀ erences. Prior year University contributions have been restated using the employer contributions ASRS recognized.

2020 CAFR Arizona State University 65

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Supplementary Information Nonmajor Discretely Presented Component Units

Nonmajor Component Units Combining Statement of Financial Position June 30, 2020 (Dollars in thousands) Arizona State ASU Alumni ASU Preparatory University Research Sun Angel Association Academy, Inc. Park, Inc. Foundation Total Assets Cash and cash equivalents $ 530 $ 7,925 $ 4,384 $ 6,513 $ 19,352 Pledges receivables, net 31,556 31,556 Other receivables, net 120 3,443 43,468 158 47,189 Investments in securities 19,021 19,021 Property and equipment, net 10,281 5,314 15,595 Other assets 33 235 2,066 163 2,497 Total Assets $ 19,704 $ 21,884 $ 55,232 $ 38,390 $ 135,210 Liabilities Accounts payable and accrued $ 55 $ 5,467 $ 46 $ 109 $ 5,677 liabilities Deferred revenue 143 1,565 12,485 14,193 Other liabilities 26 2,663 2,689 Long-term debt 5,105 1,105 6,210 Total Liabilities $ 224 $ 12,137 $ 16,299 $ 109 $ 28,769 Net Assets Without Donor Restrictions - $ 19,396 $ 9,274 $ 38,933 $ 1,307 $ 68,910 Unrestricted With Donor Restrictions - 84 473 36,974 37,531 Temporarily restricted With Donor Restrictions - Permanently restricted Total Net Assets $ 19,480 $ 9,747 $ 38,933 $ 38,281 $ 106,441

68 Arizona State University 2020 CAFR Nonmajor Component Units Combining Statement of Activities Year ended June 30, 2020 (Dollars in thousands) Arizona State ASU Alumni ASU Preparatory University Research Sun Angel Association Academy, Inc. Park, Inc. Foundation Total Revenues Contributions $ 1,185 $ 2,987 $ 15,710 $ 19,882 Rental revenues $ 11,257 11,257 Sales and services 1,304 1,079 321 2,704 Net investment return 580 16 111 707 Grants and aid 38,407 38,407 Other revenues (2) 1,939 71 213 2,221 Total Revenues $ 3,067 $ 44,412 $ 11,344 $ 16,355 $ 75,178 Expenses Payments to the benefi t of ASU - Cash donation transfers to ASU $ 13,461 $ 13,461 Rent payments to ASU $ 3,663 3,663 Management and general $ 3,149 $ 44,102 1,134 864 49,249 Interest expense 117 117 Depreciation/amortization 405 405 Other expenses 79 150 1,204 1,433 Total Expenses $ 3,228 $ 44,102 $ 5,469 $ 15,529 $ 68,328 Increase/(Decrease) in Net Assets, (161) 310 5,875 826 6,850 before Loss Loss on Disposal of Assets (182) (182) Increase/(Decrease) in Net Assets (161) 128 5,875 826 6,668 after Loss Net Assets (Defi cit), Beginning of 19,641 9,619 33,058 37,455 99,773 Year Net Assets (Defi cit), End of Year $ 19,480 $ 9,747 $ 38,933 $ 38,281 $ 106,441

2020 CAFR Arizona State University 69

Statistical Section Narrative to the Statistical Section

Financial Trends 73 These schedules contain trend information to help the reader understand how the University’s ﬁ nancial performance has changed over time. • Net Position by Component • Net Position • Changes in Net Position • Operating Expenses by Natural Classiﬁ cation • Combined Sources and Uses

Revenue Capacity 81 These schedules contain information to help the reader assess the University’s revenue sources. • Principal Revenue Sources • Academic Year Tuition and Required Fees

Composite Financial Index 83 These schedule present information used to determine the Composite Financial Index which is a measurement of the Institution’s ﬁ nancial health based on four core ratios. • Primary Reserve Ratio • Return Net Position/Net Asset Ratio • Net Operating Revenues Ratio • Viability Ratio

Debt Capacity 86 These schedules present information to help the reader assess the University’s current level of outstanding debt. • Summary of Ratios • Debt Coverage for Senior and Subordinate Lien Bonds • Long-term Debt

Demographic and Economic Information 90 These schedules contain demographic and economic indicators to help the reader understand the environment in which the University’s ﬁ nancial activities take place. • Admissions, Enrollment, and Degrees Earned • Demographic Data • Principal Employers

Operating Information 94 These schedules contain service and infrastructure data to help the reader understand how the University’s ﬁ nancial information relates to the activities it performs. • Faculty and Staﬀ • Capital Assets

72 Arizona State University 2020 CAFR Net Position by Component

Net Position by Component Fiscal year ended June 30, 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 (Dollars in thousands) Net investment in capital assets (1) $ 1,042,673 $ 985,149 $ 956,220 $ 852,262 $ 778,867 $ 718,642 $ 695,591 $ 664,867 $ 643,008 $ 634,253 Restricted, Nonexpendable 87,497 84,714 78,813 74,102 70,544 64,833 59,476 55,572 52,941 49,513 Restricted, Expendable 127,614 118,626 119,410 124,703 117,977 109,664 113,948 104,880 92,661 87,244 Unrestricted (2) 104,279 166,899 115,542 282,765 253,728 161,623 563,307 511,298 462,958 359,430 Total Net Position $ 1,362,063 $1,355,388 $ 1,269,985 $ 1,333,832 $ 1,221,116 $ 1,054,762 $ 1,432,322 $ 1,336,617 $ 1,251,568 $ 1,130,440

Expressed as a percent of the total %%%%%%%%%% Net investment in capital assets 76.6 72.7 75.3 63.9 63.8 68.1 48.5 49.7 51.4 56.1 Restricted, Nonexpendable 6.4 6.3 6.2 5.6 5.8 6.2 4.2 4.2 4.2 4.4 Restricted, Expendable 9.4 8.8 9.4 9.3 9.6 10.4 8.0 7.8 7.4 7.7 Unrestricted 7.6 12.2 9.1 21.2 20.8 15.3 39.3 38.3 37.0 31.8 Total Net Position 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Percentage increase/(decrease) from prior year %%%%%%%%%% Net investment in capital assets 5.8 3.0 12.2 9.4 8.4 3.3 4.6 3.4 1.4 (4.1) Restricted, Nonexpendable 3.3 7.5 6.4 5.0 8.8 9.0 7.0 5.0 6.9 5.6 Restricted, Expendable 7.6 (0.7) (4.2) 5.7 7.6 (3.8) 8.6 13.2 6.2 (6.1) Unrestricted (37.5) 44.4 (59.1) 11.4 57.0 (71.3) 10.2 10.4 28.8 52.8 Total Net Position 0.5 6.7 (4.8) 9.2 15.8 (26.4) 7.2 6.8 10.7 9.0

(1) Balances prior to FY 2014 have not been adjusted for the implementation of GASB Statement No. 65, Items Previously Reported as Assets and Liabilities. Balances prior to FY 2016 have not been adjusted for the implementation of GASB Statement No. 72, Fair Value Measurement and Application. (2) Balances prior to FY 2015 have not been adjusted for the implementation of GASB Statement No. 68, Accounting and Financial Reporting for Pensions – an amendment of GASB Statement No. 27, as amended by GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date – an amendment of GASB Statement No. 68. Balances prior to FY 2016 have not been adjusted for the implementation of GASB Statement No. 72, Fair Value Measurement and Application. Balances prior to FY 2018 have not been adjusted for the implementation of GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Beneﬁ ts Other then Pensions, as amended by GASB Statement No. 85, Omnibus 2017.

2020 CAFR Arizona State University 73 Net Position

Statement of Net Position(1) (Dollars in thousands) June 30, 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 Assets Current Assets Cash and cash equivalents $ 272,636 $ 239,203 $ 78,147 $ 167,188 $ 72,543 $ 47,316 $ 33,551 $ 49,964 $ 125,473 $ 265,139 Short-term investments 89,712 70,908 43,789 45,739 68,527 30,775 71,760 118,330 103,282 34,186 Accounts receivables, net 240,862 238,119 134,045 143,601 120,235 110,561 92,554 72,510 62,826 49,459 Receivables from State of Arizona 90,575 90,575 90,575 90,575 90,575 Other assets 12,664 5,714 2,623 4,282 3,344 3,377 8,863 2,188 2,020 2,822 Total Current Assets $ 615,874 $ 553,944 $ 258,604 $ 360,810 $ 264,649 $ 282,604 $ 297,303 $ 333,567 $ 384,176 $ 442,181 Noncurrent Assets Restricted cash and cash equivalents $ 273,773 $ 280,166 $ 215,942 $ 298,730 $ 236,711 $ 247,270 $ 137,343 $ 140,110 $ 234,108 $ 175,659 Endowment investments 256,932 250,356 137,372 130,118 113,659 116,252 114,146 99,822 90,133 94,261 Other investments 594,531 595,537 814,098 732,745 729,729 572,558 501,779 360,591 212,058 79,309 Student loans receivable, net 6,397 7,820 8,185 10,365 10,923 10,668 11,262 10,872 10,916 11,487 Other assets/equity interest for Thunderbird 195 361 595 526 17,200 17,401 1,473 7,018 7,018 Capital assets, net 2,949,115 2,749,258 2,634,819 2,433,826 2,226,823 2,076,892 1,945,532 1,876,261 1,729,475 1,623,944 Total Noncurrent Assets $ 4,080,943 $ 3,883,498 $ 3,811,011 $ 3,606,310 $ 3,335,045 $ 3,041,041 $ 2,711,535 $ 2,494,674 $ 2,283,708 $ 1,984,660 Total Assets $ 4,696,817 $ 4,437,442 $ 4,069,615 $ 3,967,120 $ 3,599,694 $ 3,323,645 $ 3,008,838 $ 2,828,241 $ 2,667,884 $ 2,426,841 Deferred Outfl ows of Resources Interest rate swap $ 20,107 $ 15,298 $ 11,043 $ 15,379 $ 23,206 $ 16,772 $ 14,135 $ 14,078 $ 22,880 $ 10,028 Unamortized loss on refunding debt 27,536 29,594 31,968 30,449 40,912 42,475 17,763 Pensions related and other postemployment benefi ts 185,322 115,338 103,546 138,215 77,199 72,481 Total Deferred Outfl ows of Resources $ 232,965 $ 160,230 $ 146,557 $ 184,043 $ 141,317 $ 131,728 $ 31,898 $ 14,078 $ 22,880 $ 10,028 Liabilities Current Liabilities Accounts payable and accrued liabilities $ 208,749 $ 187,417 $ 149,666 $ 127,029 $ 131,156 $ 94,998 $ 80,259 $ 76,697 $ 64,703 $ 81,949 Compensated absences 4,844 3,919 3,723 3,286 3,235 3,167 3,297 3,057 2,778 2,720 Unearned revenues 196,674 167,545 78,192 65,619 51,385 55,176 61,964 42,645 30,455 29,150 Funds held for others 13,338 19,961 17,898 23,350 29,054 18,270 12,476 11,409 10,940 10,066 Current portion of long-term debt - Funded by: University operating revenues 127,878 132,433 124,356 118,910 127,881 54,904 53,246 37,669 35,414 32,515 State appropriations and other State monies 40,554 32,807 34,360 34,222 31,903 15,876 13,598 12,537 10,593 10,206 Total Current Liabilities $ 592,037 $ 544,082 $ 408,195 $ 372,416 $ 374,614 $ 242,391 $ 224,840 $ 184,014 $ 154,883 $ 166,606 Noncurrent Liabilities Compensated absences $ 41,093 $ 33,352 $ 31,570 $ 28,772 $ 27,441 $ 26,847 $ 24,476 $ 23,825 $ 21,434 $ 23,118 Other liabilities 17,496 10,819 11,614 2,577 3,558 25,815 39,158 12,574 10,603 8,975 Derivative instrument - Interest rate swap 20,107 15,298 11,043 15,379 23,206 16,772 14,135 14,078 22,880 10,028 Net Pension and other postemployment benefi ts liability 860,875 700,057 719,592 631,938 559,071 484,133 Long-term debt - Funded by: University operating revenues 1,523,219 1,441,660 1,350,987 1,335,986 1,104,411 1,111,056 891,081 917,810 863,255 746,197 State appropriations and other State monies 443,799 394,132 339,683 361,636 385,122 413,981 414,724 353,401 366,141 351,505 Total Noncurrent Liabilities $ 2,906,589 $ 2,595,318 $ 2,464,489 $ 2,376,288 $ 2,102,809 $ 2,078,604 $ 1,383,574 $ 1,321,688 $ 1,284,313 $ 1,139,823 Total Liabilities $ 3,498,626 $ 3,139,400 $ 2,872,684 $ 2,748,704 $ 2,477,423 $ 2,320,995 $ 1,608,414 $ 1,505,702 $ 1,439,196 $ 1,306,429 Deferred Infl ows of Resources Unamortized gain on refunding debt $ 1,607 $ 1,761 $ 1,894 $ 1,116 Pensions related and other postemployment benefi ts 67,486 101,123 71,609 67,511 $ 42,472 $ 79,616 Total Deferred Infl ows of Resources $ 69,093 $ 102,884 $ 73,503 $ 68,627 $ 42,472 $ 79,616 Net Position Net investment in capital assets $ 1,042,673 $ 985,149 $ 956,220 $ 852,262 $ 778,867 $ 718,642 $ 695,591 $ 664,867 $ 643,008 $ 634,253 Restricted Nonexpendable: Student aid 80,741 77,959 72,059 67,365 63,807 59,185 54,858 51,572 48,693 45,949 Academic department uses 6,756 6,755 6,754 6,737 6,737 5,648 4,618 4,000 4,248 3,564 Expendable: Student aid 36,071 33,821 33,024 40,962 38,907 44,109 46,498 37,777 35,705 37,042 Academic department uses 84,548 78,112 79,868 77,450 72,534 63,919 66,852 66,771 56,540 49,380 Capital projects and debt service 6,995 6,693 6,518 6,291 6,536 1,636 598 332 416 822 Unrestricted 104,279 166,899 115,542 282,765 253,728 161,623 563,307 511,298 462,958 359,430 Total Net Position $ 1,362,063 $ 1,355,388 $ 1,269,985 $ 1,333,832 $ 1,221,116 $ 1,054,762 $ 1,432,322 $ 1,336,617 $ 1,251,568 $ 1,130,440 (1)Balances prior to FY 2015 have not been adjusted for the implementation of GASB Statement No. 68, Accounting and Financial Reporting for Pensions – an amendment of GASB Statement No. 27, as amended by GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date – an amendment of GASB Statement No. 68. Balances prior to FY 2016 have not been adjusted for the implementation of GASB Statement No. 72, Fair Value Measurement and Application.Balances prior to FY 2018 have not been adjusted for the implementation of GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefi ts Other then Pensions, as amended by GASB Statement No. 85, Omnibus 2017.

74 Arizona State University 2020 CAFR Net Position (continued)

Statement of Net Position – Adjusted for Pensions and Other Postemployment Benefi ts(1) (Dollars in thousands) June 30, 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 Assets Current Assets Cash and cash equivalents $ 272,636 $ 239,203 $ 78,147 $ 167,188 $ 72,543 $ 47,316 $ 33,551 $ 49,964 $ 125,473 $ 265,139 Short-term investments 89,712 70,908 43,789 45,739 68,527 30,775 71,760 118,330 103,282 34,186 Accounts receivables, net 240,862 238,119 134,045 143,601 120,235 110,561 92,554 72,510 62,826 49,459 Receivables from State of Arizona 90,575 90,575 90,575 90,575 90,575 Other assets 12,664 5,714 2,623 4,282 3,344 3,377 8,863 2,188 2,020 2,822 Total Current Assets $ 615,874 $ 553,944 $ 258,604 $ 360,810 $ 264,649 $ 282,604 $ 297,303 $ 333,567 $ 384,176 $ 442,181 Noncurrent Assets Restricted cash and cash equivalents $ 273,773 $ 280,166 $ 215,942 $ 298,730 $ 236,711 $ 247,270 $ 137,343 $ 140,110 $ 234,108 $ 175,659 Endowment investments 256,932 250,356 137,372 130,118 113,659 116,252 114,146 99,822 90,133 94,261 Other investments 594,531 595,537 814,098 732,745 729,729 572,558 501,779 360,591 212,058 79,309 Student loans receivable, net 6,397 7,820 8,185 10,365 10,923 10,668 11,262 10,872 10,916 11,487 Other assets/equity interest for Thunderbird 195 361 595 526 17,200 17,401 1,473 7,018 7,018 Capital assets, net 2,949,115 2,749,258 2,634,819 2,433,826 2,226,823 2,076,892 1,945,532 1,876,261 1,729,475 1,623,944 Total Noncurrent Assets $ 4,080,943 $ 3,883,498 $ 3,811,011 $ 3,606,310 $ 3,335,045 $ 3,041,041 $ 2,711,535 $ 2,494,674 $ 2,283,708 $ 1,984,660 Total Assets $ 4,696,817 $ 4,437,442 $ 4,069,615 $ 3,967,120 $ 3,599,694 $ 3,323,645 $ 3,008,838 $ 2,828,241 $ 2,667,884 $ 2,426,841 Deferred Outfl ows of Resources Interest rate swap $ 20,107 $ 15,298 $ 11,043 $ 15,379 $ 23,206 $ 16,772 $ 14,135 $ 14,078 $ 22,880 $ 10,028 Unamortized loss on refunding debt 27,536 29,594 31,968 30,449 40,912 42,475 17,763 Total Deferred Outfl ows of Resources $ 47,643 $ 44,892 $ 43,011 $ 45,828 $ 64,118 $ 59,247 $ 31,898 $ 14,078 $ 22,880 $ 10,028 Liabilities Current Liabilities Accounts payable and accrued liabilities $ 219,696 $ 196,100 $ 157,300 $ 136,679 $ 137,378 $ 99,910 $ 80,259 $ 76,697 $ 64,703 $ 81,949 Compensated absences 4,844 3,919 3,723 3,286 3,235 3,167 3,297 3,057 2,778 2,720 Unearned revenues 196,674 167,545 78,192 65,619 51,385 55,176 61,964 42,645 30,455 29,150 Funds held for others 13,338 19,961 17,898 23,350 29,054 18,270 12,476 11,409 10,940 10,066 Current portion of long-term debt - Funded by: University operating revenues 127,878 132,433 124,356 118,910 127,881 54,904 53,246 37,669 35,414 32,515 State appropriations and other State monies 40,554 32,807 34,360 34,222 31,903 15,876 13,598 12,537 10,593 10,206 Total Current Liabilities $ 602,984 $ 552,765 $ 415,829 $ 382,066 $ 380,836 $ 247,303 $ 224,840 $ 184,014 $ 154,883 $ 166,606 Noncurrent Liabilities Compensated absences $ 41,093 $ 33,352 $ 31,570 $ 28,772 $ 27,441 $ 26,847 $ 24,476 $ 23,825 $ 21,434 $ 23,118 Other liabilities 34,490 28,786 27,427 17,229 18,206 38,302 39,158 12,574 10,603 8,975 Derivative instrument - Interest rate swap 20,107 15,298 11,043 15,379 23,206 16,772 14,135 14,078 22,880 10,028 Long-term debt - Funded by: University operating revenues 1,523,219 1,441,660 1,350,987 1,335,986 1,104,411 1,111,056 891,081 917,810 863,255 746,197 State appropriations and other State monies 443,799 394,132 339,683 361,636 385,122 413,981 414,724 353,401 366,141 351,505 Total Noncurrent Liabilities $ 2,062,708 $ 1,913,228 $ 1,760,710 $ 1,759,002 $ 1,558,386 $ 1,606,958 $ 1,383,574 $ 1,321,688 $ 1,284,313 $ 1,139,823 Total Liabilities $ 2,665,692 $ 2,465,993 $ 2,176,539 $ 2,141,068 $ 1,939,222 $ 1,854,261 $ 1,608,414 $ 1,505,702 $ 1,439,196 $ 1,306,429 Deferred Infl ows of Resources Unamortized gain on refunding debt $ 1,607 $ 1,761 $ 1,894 $ 1,116 Total Deferred Infl ows of Resources $ 1,607 $ 1,761 $ 1,894 $ 1,116 Net Position Net investment in capital assets $ 1,042,673 $ 985,149 $ 956,220 $ 852,262 $ 778,867 $ 718,642 $ 695,591 $ 664,867 $ 643,008 $ 634,253 Restricted Nonexpendable: Student aid 80,741 77,959 72,059 67,365 63,807 59,185 54,858 51,572 48,693 45,949 Academic department uses 6,756 6,755 6,754 6,737 6,737 5,648 4,618 4,000 4,248 3,564 Expendable: Student aid 36,071 33,821 33,024 40,962 38,907 44,109 46,498 37,777 35,705 37,042 Academic department uses 84,548 78,112 79,868 77,450 72,534 63,919 66,852 66,771 56,540 49,380 Capital projects and debt service 6,995 6,693 6,518 6,291 6,536 1,636 598 332 416 822 Unrestricted 819,377 826,091 779,750 819,697 757,202 635,492 563,307 511,298 462,958 359,430 Total Net Position $ 2,077,161 $ 2,014,580 $1,934,193 $ 1,870,764 $ 1,724,590 $ 1,528,631 $ 1,432,322 $ 1,336,617 $ 1,251,568 $ 1,130,440 (1) All balances for FY 2015 and thereafter have been adjusted to remove the impact of GASB Statement No. 68, Accounting and Financial Reporting for Pensions – an amendment of GASB Statement No. 27, as amended by GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date – an amendment of GASB Statement No. 68. Balances prior to FY 2016 have not been adjusted for the implementation of GASB Statement No. 72, Fair Value Measurement and Application. All balances for FY 2016 and thereafter have been adjusted to remove the impact of GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefi ts Other than Pensions, as amended by GASB Statement No. 85, Omnibus 2017.

2020 CAFR Arizona State University 75 Changes in Net Position

Changes in Net Position (Dollars in thousands)

Fiscal Year Ended June 30, 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011

Revenues

Operating Revenues

Student tuition and fees, net $ 1,550,581 $ 1,423,052 $ 1,323,268 $ 1,250,828 $ 1,157,535 $ 1,021,014 $ 896,921 $ 802,965 $ 757,217 $ 639,324

Research grants and contracts 365,498 344,128 313,558 271,730 253,158 237,489 244,293 238,031 229,801 217,012

Sales and services

Auxiliary enterprises 170,182 183,534 166,057 161,797 149,734 145,008 140,535 122,453 105,510 136,540

Educational departments 72,451 78,508 94,158 81,543 69,523 67,230 58,449 56,006 53,866 43,514

Other revenues 21,884 19,347 18,745 16,326 14,387 12,001 8,447 8,018 8,947 9,093

Total Operating Revenues $ 2,180,596 $ 2,048,569 $ 1,915,786 $ 1,782,224 $ 1,644,337 $ 1,482,742 $ 1,348,645 $ 1,227,473 $ 1,155,341 $ 1,045,483

Expenses

Operating Expenses

Educational and general

Instruction $ 1,016,720 $ 961,580 $ 881,696 $ 810,656 $ 749,722 $ 686,397 $ 617,091 $ 548,998 $ 519,117 $ 495,815

Research 359,936 323,623 297,448 267,303 261,055 244,763 235,720 225,453 211,569 201,255

Public service 38,415 36,140 37,524 35,378 36,807 36,201 40,209 44,860 46,938 48,208

Academic support 371,378 304,645 299,208 294,706 265,540 247,700 225,853 204,831 185,890 187,435

Student services 166,131 151,295 136,125 123,377 111,018 98,491 72,409 65,908 60,737 55,244

Institutional support 188,937 171,016 159,109 152,226 155,172 151,613 136,334 124,546 120,491 124,893

Operation and maintenance of plant 113,640 122,567 119,349 116,456 108,454 102,167 98,901 91,077 86,750 83,939

Scholarships and fellowships 292,914 247,194 211,811 187,124 152,802 136,675 127,468 112,363 113,171 120,428

Auxiliary enterprises 191,862 179,578 175,130 154,794 147,562 143,184 130,550 119,509 115,799 142,492

Depreciation 143,587 137,064 132,814 123,705 116,381 114,617 112,270 106,992 98,005 97,202

Total Operating Expenses $ 2,883,520 $2,634,702 $ 2,450,214 $ 2,265,725 $ 2,104,513 $ 1,961,808 $ 1,796,805 $ 1,644,537 $ 1,558,467 $ 1,556,911

Operating Loss $ (702,924) $ (586,133) $ (534,428) $ (483,501) $ (460,176) $ (479,066) $ (448,160) $ (417,064) $ (403,126) $ (511,428)

Nonoperating Revenues (Expenses)

State appropriations $ 323,332 $ 303,370 $ 306,778 $ 296,913 $ 281,385 $ 338,042 $ 314,493 $ 297,402 $ 307,765 $ 380,914

Federal ﬁ scal stabilization funds 867

Share of state tax - TRIF 34,075 34,604 32,540 31,326 31,075 26,526 27,785 25,225 23,799 21,770

Financial aid grants 186,818 168,230 152,500 128,474 124,188 115,070 106,855 104,415 110,222 104,498

Grants and contracts 56,494 57,365 58,624 56,233 56,743 49,037 35,863 42,195 49,237 50,133

CARES Act Reimbursements 15,129

Private gifts 76,803 82,731 75,791 74,282 99,612 57,651 64,928 59,807 55,329 50,584

Financial aid trust funds (1) 16,019 14,833 13,615 12,393 11,114 11,027 9,279

Net investment return (loss) 44,756 60,603 12,778 23,038 9,382 5,133 20,263 9,494 (1,629) 17,130

Interest on debt (65,342) (63,413) (61,903) (69,135) (59,972) (53,428) (52,674) (53,331) (48,101) (47,505)

Other expenses (15,982) (22,341) (8,590) (7,610) (16,039) (9,814) (9,642) (10,995) (8,358) (6,980)

Net Nonoperating Revenues $ 656,083 $ 621,149 $ 568,518 $ 549,540 $ 541,207 $ 541,832 $ 520,264 $ 485,326 $ 499,291 $ 580,690

Income (loss) before other revenues, $ (46,841) $ 35,016 $ 34,090 $ 66,039 $ 81,031 $ 62,766 $ 72,104 $ 68,262 $ 96,165 $ 69,262 expenses, gains, or losses

Capital appropriations $ 25,622 $ 25,406 $ 13,479 $ 11,190 $ 11,422 $ 15,000 $ 14,471 $ 14,472 $ 14,472 $ 14,472

Capital commitments 9,537 9,532 9,540 15,421 9,537 5,121 2,733 4,268 1,646 990

Capital grants 1,165 62 109 320 1 158 893 761 1,636 1,371

Capital private gifts 17,022 14,961 5,822 6,390 4,936 7,106 8,308 2,503 7,206 3,567

Additions to permanent endowments 170 426 34 13 1,577 2,089 904 77 3 99

Special Items (5,294)

Extraordinary Item - insurance recovery 3,900 3,884

Increase in Net Position $ 6,675 $ 85,403 $ 63,074 $ 99,373 $ 108,504 $ 92,240 $ 103,313 $ 85,049 $ 121,128 $ 93,645

Total Revenues $ 2,971,519 $2,805,859 $ 2,583,781 $ 2,441,843 $ 2,289,028 $ 2,117,290 $ 1,962,434 $ 1,799,206 $ 1,736,054 $ 1,705,041

Total Expenses $ 2,964,844 $2,720,456 $ 2,520,707 $ 2,342,470 $ 2,180,524 $ 2,025,050 $ 1,859,121 $ 1,714,157 $ 1,614,926 $ 1,611,396

Increase in Net Position $ 6,675 $ 85,403 $ 63,074 $ 99,373 $ 108,504 $ 92,240 $ 103,313 $ 85,049 $ 121,128 $ 93,645

(1) Balances prior to FY 2018 presented Financial Aid Trust funds as a nonoperating revenue source. In FY 2018 Financial Aid Trust fund activities were included in student tuition and fees, net and state appropriations.

76 Arizona State University 2020 CAFR Changes in Net Position (continued)

Changes in Net Position (Expressed as a percent of Total Revenues / Total Expenses)

Fiscal Year Ended June 30, 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011

%%%% % % % % % %

Revenues

Operating Revenues

Student tuition and fees, net 52.2 50.7 51.2 51.2 50.6 48.2 45.7 44.6 43.6 37.5

Research grants and contracts 12.3 12.3 12.1 11.1 11.1 11.2 12.4 13.2 13.2 12.7

Sales and services

Auxiliary enterprises 5.7 6.5 6.4 6.6 6.5 6.9 7.2 6.8 6.1 8.0

Educational departments 2.5 2.8 3.7 3.4 3.0 3.2 3.0 3.1 3.1 2.6

Other revenues 0.7 0.7 0.7 0.7 0.6 0.6 0.4 0.4 0.5 0.5

Total Operating Revenues 73.4 73.0 74.1 73.0 71.8 70.1 68.7 68.1 66.5 61.3

Expenses

Operating Expenses

Educational and general

Instruction 34.3 35.3 35.0 34.6 34.4 33.9 33.2 32.0 32.1 30.8

Research 12.1 11.9 11.8 11.4 12.0 12.1 12.7 13.2 13.1 12.5

Public service 1.3 1.3 1.5 1.5 1.7 1.8 2.2 2.6 2.9 3.0

Academic support 12.5 11.2 11.9 12.6 12.2 12.2 12.1 11.9 11.5 11.6

Student services 5.6 5.6 5.4 5.3 5.1 4.9 3.9 3.8 3.8 3.4

Institutional support 6.4 6.3 6.3 6.5 7.1 7.5 7.3 7.3 7.5 7.8

Operation and maintenance of plant 3.8 4.5 4.7 5.0 5.0 5.0 5.3 5.3 5.4 5.2

Scholarships and fellowships 9.9 9.1 8.4 8.0 7.0 6.7 6.9 6.6 7.0 7.5

Auxiliary enterprises 6.6 6.6 6.9 6.6 6.7 7.1 7.0 7.0 7.2 8.8

Depreciation 4.8 5.0 5.3 5.3 5.3 5.7 6.0 6.2 6.1 6.0

Total Operating Expenses 97.3 93.9 94.8 92.8 91.9 92.7 91.5 91.4 89.8 91.3

Operating Loss (23.6) (20.9) (20.7) (19.8) (20.1) (22.6) (22.8) (23.3) (23.3) (30.0)

Nonoperating Revenues (Expenses)

State appropriations 10.9 11.0 11.9 12.2 12.3 16.0 16.0 16.5 17.7 22.3

Federal ﬁ scal stabilization funds 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1

Share of state tax - TRIF 1.1 1.2 1.3 1.3 1.4 1.3 1.4 1.4 1.4 1.3

Financial aid grants 6.3 6.0 5.9 5.3 5.4 5.4 5.4 5.8 6.3 6.1

Grants and contracts 1.9 2.0 2.3 2.3 2.5 2.3 1.8 2.3 2.8 2.9

CARES Act Reimbursements 0.5

Private gifts 2.6 2.9 2.9 3.0 4.4 2.7 3.3 3.3 3.2 3.0

Financial aid trust funds 0.0 0.0 0.0 0.6 0.6 0.6 0.6 0.6 0.6 0.5

Net investment return (loss) 1.5 2.2 0.5 0.9 0.4 0.2 1.0 0.5 (0.1) 1.0

Interest on debt (2.2) (2.4) (2.5) (2.9) (2.8) (2.6) (2.8) (3.1) (3.0) (2.9)

Other expenses (0.5) (0.8) (0.3) (0.3) (0.7) (0.5) (0.5) (0.6) (0.5) (0.4)

Net Nonoperating Revenues 22.1 22.1 22.0 22.5 23.6 25.6 26.5 27.0 28.8 34.1

Income (loss) before other revenues, expenses, (1.5) 1.2 1.3 1.3 2.7 3.5 3.0 3.7 3.7 5.5 gains, or losses

Capital appropriations 0.9 0.9 0.5 0.5 0.5 0.7 0.7 0.8 0.8 0.8

Capital commitment 0.3 0.3 0.4 0.6 0.4 0.2 0.1 0.2 0.1 0.1

Capital grants 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.1

Capital private gifts 0.6 0.5 0.2 0.3 0.2 0.4 0.4 0.1 0.4 0.2

Additions to permanent endowments 0.0 0.0 0.0 0.0 0.1 0.1 0.0 0.0 0.0 0.0

Property additions 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Special Items 0.0 0.0 0.0 0.0 0.0 0.0 0.0 (0.3) 0.0 0.0

Extraordinary Item - insurance recovery 0.0 0.0 0.0 0.0 0.0 0.0 0.2 0.0 0.0 0.2

Increase in Net Position 0.3 2.9 2.4 4.1 4.7 4.4 5.3 4.7 7.0 5.5

Percent of Total Expense is italicized.

2020 CAFR Arizona State University 77 Changes in Net Position (continued)

Changes in Net Position (Percentage increase (decrease) from prior year)

Fiscal Year Ended June 30, 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011

%%%%%%%%%%

Revenues

Operating Revenues

Student tuition and fees, net 9.0 7.5 5.8 8.1 13.4 13.8 11.7 6.0 18.4 12.9

Research grants and contracts 6.2 9.7 15.4 7.3 6.6 (2.8) 2.6 3.6 5.9 8.6

Sales and services

Auxiliary enterprises (7.3) 10.5 2.6 8.1 3.3 3.2 14.8 16.1 (22.7) 1.2

Educational departments (7.7) (16.6) 15.5 17.3 3.4 15.0 4.4 4.0 23.8 15.7

Other revenues 13.1 3.2 14.8 13.5 19.9 42.1 5.4 (10.4) (1.6) (11.7)

Total Operating Revenues 6.4 6.9 7.4 8.4 10.9 9.9 9.9 6.2 10.5 10.2

Expenses

Operating Expenses

Educational and general

Instruction 5.7 9.1 8.8 8.1 9.2 11.2 12.4 5.8 4.7 4.8

Research 11.2 8.8 11.3 2.4 6.7 3.8 4.6 6.6 5.1 6.1

Public service 6.3 (3.7) 6.1 (3.9) 1.7 (10.0) (10.4) (4.4) (2.6) 17.0

Academic support 21.9 1.8 1.5 11.0 7.2 9.7 10.3 10.2 (0.8) 6.4

Student services 9.8 11.1 10.3 11.1 12.7 36.0 9.9 8.5 9.9 12.6

Institutional support 10.5 7.5 4.5 (1.9) 2.3 11.2 9.5 3.4 (3.5) 1.8

Operation and maintenance of plant (7.3) 2.7 2.5 7.4 6.2 3.3 8.6 5.0 3.3 8.2

Scholarships and fellowships 18.5 16.7 13.2 22.5 11.8 7.2 13.4 (0.7) (6.0) 10.1

Auxiliary enterprises 6.8 2.5 13.1 4.9 3.1 9.7 9.2 3.2 (18.7) 5.4

Depreciation 4.8 3.2 7.4 6.3 1.5 2.1 4.9 9.2 0.8 1.5

Total Operating Expenses 9.4 7.5 8.1 7.7 7.3 9.2 9.3 5.5 0.1 5.9

Operating Loss 19.9 9.7 10.5 5.1 (3.9) 6.9 7.5 3.5 (21.2) (1.8)

Nonoperating Revenues (Expenses)

State appropriations 6.6 (1.1) 3.3 5.5 (16.8) 7.5 5.7 (3.4) (19.2) 0.0

Federal ﬁ scal stabilization funds n/a n/a n/a n/a n/a n/a n/a n/a n/a (97.3)

Share of state tax - TRIF (1.5) 6.3 3.9 0.8 17.1 (4.5) 10.1 6.0 9.3 2.2

Financial aid grants 11.0 10.3 18.7 3.5 7.9 7.7 2.3 (5.3) 5.5 22.9

Grants and contracts (1.5) (2.1) 4.3 (0.9) 15.7 36.7 (15.0) (14.3) (1.8) 3.6

CARES Act Reimbursements 100.0 n/a n/a n/a n/a n/a n/a n/a n/a n/a

Private gifts (7.2) 9.2 2.0 (25.4) 72.8 (11.2) 8.6 8.1 9.4 10.3

Financial aid trust funds n/a n/a (100.0) 8.0 8.9 9.9 11.5 0.8 18.8 0.3

Net investment return (loss) (26.1) 374.3 (44.5) 145.6 82.8 (74.7) 113.4 (682.8) (109.5) 128.1

Interest on debt 3.0 2.4 (10.5) 15.3 12.2 1.4 (1.2) 10.9 1.3 11.1

Other expenses (28.5) 160.1 12.9 (52.6) 63.4 1.8 (12.3) 31.6 19.7 (30.2)

Net Nonoperating Revenues 5.6 9.3 3.5 1.5 (0.1) 4.1 7.2 (2.8) (14.0) 0.5

Income (loss) before other revenues, expenses, gains, (233.8) 2.7 (48.4) (18.5) 29.1 (13.0) 5.6 (29.0) 38.8 20.8 or losses

Capital appropriations 0.9 88.5 20.5 (2.0) (23.9) 3.7 0.0 0.0 0.0 0.0

Capital commitment 0.1 (0.1) (38.1) 61.7 86.2 87.4 (36.0) 159.3 66.3 n/a

Capital grants 1,779.0 (43.1) (65.9) n/a (99.4) (82.3) 17.3 (53.5) 19.3 (34.3)

Capital private gifts 13.8 157.0 (8.9) 29.5 (30.5) (14.5) 231.9 (65.3) 102.0 6.4

Additions to permanent endowments (60.1) 1,152.9 161.5 (99.2) (24.5) 131.1 1,074.0 2,466.7 (97.0) (77.7)

Property additions n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

Special Items n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

Extraordinary Item - insurance recovery n/a n/a n/a n/a n/a n/a n/a n/a n/a (45.1)

Increase (Decrease) in Net Position (92.2) 35.4 (36.5) (8.4) 17.6 (10.7) 21.5 (29.8) 29.3 10.5

78 Arizona State University 2020 CAFR Operating Expenses by Natural Classiﬁ cation

Operating Expenses by Natural Classiﬁ cation

Fiscal year ended June 30, 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011

(Dollars in thousands)

Personal services $ 1,166,804 $ 1,090,068 $1,019,332 $ 949,189 $ 888,936 $ 830,440 $ 761,778 $ 711,641 $ 679,715 $ 692,246

Beneﬁ ts 380,162 357,601 343,363 309,033 298,199 285,991 268,025 236,380 231,295 226,400

Pensions and OPEB (1) 55,906 (5,016) 355 33,458 29,605 4,069

Personal services and beneﬁ ts 1,602,872 1,442,653 1,363,050 1,291,680 1,216,740 1,120,500 1,029,803 948,021 911,010 918,646

Supplies and services 844,147 807,791 742,539 663,216 601,218 576,345 514,355 464,452 423,693 407,826

Student aid, net scholarship al- 292,914 247,194 211,811 187,124 170,174 150,346 140,377 125,072 125,759 133,237 lowance

Depreciation 143,587 137,064 132,814 123,705 116,381 114,617 112,270 106,992 98,005 97,202

Total Operating Expenses by $ 2,883,520 $ 2,634,702 $2,450,214 $2,265,725 $2,104,513 $1,961,808 $1,796,805 $ 1,644,537 $1,558,467 $1,556,911 Natural Classiﬁ cation

Expressed as a percent of the total

%%%%%%%%%%

Personal services 40.5 41.4 41.7 41.9 42.2 42.3 42.4 43.3 43.6 44.5

Beneﬁ ts 13.2 13.6 14.0 13.6 14.2 14.6 14.9 14.4 14.8 14.5

Pensions and OPEB (1) 1.9 (0.2) 0.0 1.5 1.4 0.2

Personal services and beneﬁ ts 55.6 54.8 55.6 57.0 57.8 57.1 57.3 57.7 58.4 59.0

Supplies and services 29.2 30.6 30.3 29.2 28.6 29.4 28.6 28.2 27.2 26.2

Student aid, net scholarship al- 10.2 9.4 8.7 8.3 8.1 7.7 7.8 7.6 8.1 8.6 lowance

Depreciation 5.0 5.2 5.4 5.5 5.5 5.8 6.3 6.5 6.3 6.2

Total Operating Expenses by 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Natural Classiﬁ cation

Percentage increase/(decrease) from prior year

%%%%%%%%%%

Personal services 7.0 6.9 7.4 6.8 7.0 9.0 7.0 4.7 (1.8) 4.1

Beneﬁ ts 6.3 4.1 11.1 3.6 4.3 6.7 13.4 2.2 2.2 4.5

Pensions and OPEB (1) 1,214.6 (1,513.0) (98.9) 13.0 627.6

Personal services and beneﬁ ts 11.1 5.8 5.5 6.2 8.6 8.8 8.6 4.1 (0.8) 4.2

Supplies and services 4.5 8.8 12.0 10.3 4.3 12.1 10.7 9.6 3.9 9.8

Student aid, net scholarship al- 18.5 16.7 11.8 10.0 13.2 7.1 12.2 (0.5) (5.6) 10.2 lowance

Depreciation 4.8 3.2 7.4 6.3 1.5 2.1 4.9 9.2 0.8 1.5

Total Operating Expenses by 9.4 7.5 8.0 7.7 7.3 9.2 9.3 5.5 0.1 5.9 Natural Classiﬁ cation

Scholarship allowance $ 462,730 $ 402,554 $ 389,890 $ 349,989 $ 313,064 $ 269,503 $ 231,124 $ 211,919 $ 203,501 $ 180,646

(1) Implementations of GASB 45/75 (OPEB) and GASB 68 (Pensions) resulted in recognition of beneﬁ t-related operating expenses each year. The impact of these implementations has been presented separately for comparability purposes.

2020 CAFR Arizona State University 79 Combined Sources and Uses

Combined Sources and Uses (Dollars in millions)

Fiscal Year Ended June 30, 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011

Sources

Student Tuition and Fees, net $ 1,550.6 $ 1,423.1 $ 1,323.3 $ 1,250.8 $ 1,157.5 $ 1,021.0 $ 896.9 $ 803.0 $ 757.2 $ 639.3

Gross Tuition and Fees 2,013.3 1,825.6 1,697.4 1,585.4 1,453.8 1,278.0 1,117.8 1,005.8 952.5 811.4

Scholarship Allowance 462.7 402.5 374.1 334.6 296.3 257.0 220.9 202.8 195.3 172.1

State Appropriation 348.9 328.8 320.3 308.1 292.8 353.0 329.0 311.9 322.2 395.4

Capital Appropriation 25.6 25.4 13.5 11.2 11.4 15.0 14.5 14.5 14.5 14.5

Federal Fiscal Stabilization Funds 0.8

Grants and Contracts 423.2 401.5 372.3 328.3 309.9 286.7 281.1 281.0 280.7 268.5

Federally Funded 301.1 304.5 262.0 238.3 242.3 229.9 247.9 225.4 232.3 219.8

Financial Aid Grants 186.8 168.2 152.5 128.5 124.2 115.1 106.9 104.4 110.2 104.5

Federally Funded 186.5 167.9 152.2 128.2 123.9 114.8 106.4 104.0 109.8 104.1

Auxiliary Enterprises, net 170.2 183.5 166.1 161.8 149.7 145.0 140.5 122.5 105.5 136.6

Private and Capital Gifts 93.8 97.7 81.6 80.7 106.2 66.8 74.1 62.3 62.6 54.2

Capital Gifts 17.0 15.0 5.8 6.4 4.9 7.1 8.3 2.5 7.2 3.6

Sales and Services 72.5 78.5 94.1 81.5 69.5 67.2 58.4 56.0 53.9 43.5

Technology and Research Initiatives Funds 34.1 34.6 32.5 31.3 31.1 26.5 27.8 25.2 23.8 21.8 (TRIF)

Other Sources 91.5 89.9 41.1 70.8 48.1 35.9 47.7 32.9 20.0 40.4

Total Sources $ 2,971.6 $ 2,805.8 $ 2,583.8 $ 2,441.8 $ 2,289.0 $ 2,117.2 $ 1,962.4 $ 1,799.2 $ 1,736.1 $ 1,705.0

Uses

Instruction $ 1,016.7 $ 961.6 $ 881.7 $ 810.6 $ 749.7 $ 686.4 $ 617.1 $ 549.0 $ 519.1 $ 495.8

Organized Research 360.0 323.6 297.5 267.3 261.1 244.8 235.7 225.5 211.6 201.3

Public Service 38.4 36.1 37.5 35.4 36.8 36.2 40.2 44.9 46.9 48.2

Academic Support 371.4 304.6 299.2 294.7 265.5 247.7 225.8 204.8 185.9 187.4

Student Services 166.1 151.2 136.1 123.4 111.0 98.4 72.4 65.9 60.7 55.2

Institutional Support 189.0 171.0 159.1 152.2 155.2 151.6 136.3 124.5 120.5 124.9

Operation and Maintenance of Plant 113.6 122.6 119.4 116.5 108.4 102.2 98.9 91.1 86.7 83.9

Scholarships and Fellowships 292.9 247.2 211.8 187.1 152.8 136.7 127.5 112.4 113.2 120.5

Auxiliary Enterprises 191.9 179.6 175.1 154.8 147.6 143.2 130.6 119.5 115.8 142.5

Depreciation 143.6 137.1 132.8 123.7 116.4 114.6 112.3 107.0 98.0 97.2

Academic and Research Buildings 93.8 84.9 80.6 73.8 69.4 67.6 63.9 60.0 52.1 50.3

Other Expenses 81.3 85.8 70.5 76.7 76.0 63.2 62.3 69.6 56.5 54.5

Total Uses $ 2,964.9 $ 2,720.4 $ 2,520.7 $ 2,342.4 $ 2,180.5 $ 2,025.0 $ 1,859.1 $ 1,714.2 $ 1,614.9 $ 1,611.4

80 Arizona State University 2020 CAFR Principal Revenue Sources

Principal Revenue Sources (Dollars in thousands) Fiscal year ended June 30, 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011

Tuition and Fees, net of scholarship allowance $ 1,550,581 $1,423,052 $1,323,268 $1,250,828 $1,157,535 $1,021,014 $ 896,921 $ 802,965 $ 757,217 $ 639,324

percent of total revenue 52% 51% 51% 51% 51% 48% 46% 45% 44% 37%

percent increase from prior year 9% 8% 6% 8% 13% 14% 12% 6% 18% 13%

State of Arizona Government

State appropriations $ 323,332 $ 303,370 $ 306,778 $ 296,913 $ 281,385 $ 338,042 $ 314,493 $ 297,402 $ 307,765 $ 380,914

Technology and research initiative fund 34,075 34,604 32,540 31,326 31,075 26,526 27,785 25,225 23,799 21,770

Capital appropriations and capital commitments 35,159 34,938 24,434 20,731 20,959 20,121 17,204 16,642 16,118 15,462

State grants and contracts 9,675 14,529 11,640 12,328 8,536 6,848 3,055 1,514 9,136 6,386

Financial aid trust fund 5,986 5,986 5,989 5,899 5,724 5,483 5,350 4,920 5,242 5,322

Capital grants

State of Arizona Government $ 408,227 $ 393,427 $ 381,381 $ 367,197 $ 347,679 $ 397,020 $ 367,887 $ 345,703 $ 362,060 $ 429,854

percent of total revenue 14% 14% 15% 15% 15% 19% 19% 19% 21% 25%

percent increase (decrease) from prior year 4% 3% 4% 6% (12%) 8% 6% (5%) (16%) (1%)

Federal Government

Federal grants and contracts $ 301,148 $ 304,503 $ 262,007 $ 238,293 $ 242,299 $ 229,925 $ 247,015 $ 224,603 $ 230,747 $ 218,704

Financial aid grants 186,504 167,931 152,238 128,207 123,945 114,816 106,360 103,965 109,779 104,057

Capital grants 859 761 1,517 1,142

Federal ﬁ scal stabilization funds 867

Federal Government $ 487,652 $ 472,434 $ 414,245 $ 366,500 $ 366,244 $ 344,741 $ 354,234 $ 329,329 $ 342,043 $ 324,770

percent of total revenue 16% 17% 16% 15% 16% 16% 18% 18% 20% 19%

percent increase (decrease) from prior year 3% 14% 13% 0% 6% (3%) 8% (4%) 5% 5%

Total from principal revenue sources $ 2,446,460 $2,288,913 $2,118,894 $1,984,525 $1,871,458 $1,762,775 $1,619,042 $1,477,997 $1,461,320 $1,393,948

percent of total revenue 82% 82% 82% 81% 82% 83% 83% 82% 85% 81%

percent increase from prior year 7% 8% 7% 6% 6% 9% 10% 1% 5% 7%

2020 CAFR Arizona State University 81 Academic Year Tuition and Required Fees

Academic Year Tuition and Required Fees

Fiscal year ended June 30, 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011

RESIDENT UNDERGRADUATE

Arizona State University (1) $11,338 $10,822 $10,792 $10,640 $10,478 $10,127 $ 9,861 $ 9,724 $ 9,720 $ 8,132

percent increase from prior year 4.8% 0.3% 1.4% 1.5% 3.5% 2.7% 1.4% 0.0% 19.5% 28.4%

PAC-12 Public Average $12,081 $11,821 $11,680 $11,175 $11,173 $10,972 $10,729 $10,484 $ 9,831 $ 8,990

percent increase from prior year 2.2% 1.2% 4.5% 0.0% 1.8% 2.3% 2.3% 6.6% 9.4% 15.2%

ABOR Peers Average $12,942 $12,671 $12,481 $12,166 $12,005 $11,871 $11,675 $11,440 $10,846 $10,146

percent increase from prior year 2.1% 1.5% 2.6% 1.3% 1.1% 1.7% 2.1% 5.5% 6.9% 7.4%

NON-RESIDENT UNDERGRADUATE

Arizona State University (1) $29,428 $28,336 $27,372 $26,470 $25,458 $24,503 $23,654 $22,977 $22,319 $20,596

percent increase from prior year 3.9% 3.5% 3.4% 4.0% 3.9% 3.6% 2.9% 2.9% 8.4% 8.9%

PAC-12 Public Average $35,344 $34,599 $33,962 $32,937 $31,810 $30,469 $29,436 $28,653 $27,510 $26,753

percent increase from prior year 2.2% 1.9% 3.1% 3.5% 4.4% 3.5% 2.7% 4.2% 2.8% 6.5%

ABOR Peers Average $35,567 $34,527 $33,421 $32,159 $31,061 $30,003 $29,146 $28,297 $27,066 $25,665

percent increase from prior year 3.0% 3.3% 3.9% 3.5% 3.5% 2.9% 3.0% 4.5% 5.5% 5.0%

RESIDENT GRADUATE

Arizona State University $12,608 $12,134 $11,938 $11,776 $11,624 $11,303 $10,818 $10,517 $10,220 $8,848

percent increase from prior year 3.9% 1.6% 1.4% 1.3% 2.8% 4.5% 2.9% 2.9% 15.5% 18.5%

PAC-12 Public Average $14,088 $13,544 $13,383 $13,086 $12,937 $12,676 $12,374 $12,039 $11,494 $10,321

percent increase from prior year 4.0% 1.2% 2.3% 1.2% 2.1% 2.4% 2.8% 4.7% 11.4% 5.1%

ABOR Peers Average $15,729 $15,212 $14,886 $14,540 $14,225 $13,955 $13,598 $13,207 $12,603 $11,843

percent increase from prior year 3.4% 2.2% 2.4% 2.2% 1.9% 2.6% 3.0% 4.8% 6.4% 7.4%

NON-RESIDENT GRADUATE

Arizona State University $32,288 $30,926 $29,874 $28,882 $27,780 $26,736 $25,804 $25,066 $24,345 $22,397

percent increase from prior year 4.4% 3.5% 3.4% 4.0% 3.9% 3.6% 2.9% 3.0% 8.7% 8.4%

PAC-12 Public Average $29,635 $28,610 $28,097 $27,491 $26,912 $26,281 $25,597 $24,952 $24,051 $22,722

percent increase from prior year 3.6% 1.8% 2.2% 2.2% 2.4% 2.7% 2.6% 3.7% 5.8% 4.1%

ABOR Peers Average $31,804 $30,874 $30,184 $29,367 $28,693 $27,958 $27,206 $26,485 $25,552 $24,435

percent increase from prior year 3.0% 2.3% 2.8% 2.4% 2.6% 2.8% 2.7% 3.7% 4.6% 4.3%

Sources: Integrated Postsecondary Education Data System (IPEDS), Arizona State University Fact Book, and Oﬃ ce of Institutional Analysis

(1)For FY 2020, class fees, technology fees and tuition surcharges were eliminated for undergraduate students and were replaced with undergraduate college fees.

ASU’s tuition rates are approved by the Arizona Board of Regents (ABOR).

PAC-12 Public Average and ABOR Peers Average comparisons do not include ASU. PAC-12 Public Average calculations include only public institutions.

Note: Data is not ﬁ nalized per IPEDS.

82 Arizona State University 2020 CAFR Composite Financial Index

Summary of Composite Financial Index Ratios(1)

Fiscal year ended June 30, 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011

COMPOSITE FINANCIAL INDEX

+ Primary Reserve Ratio 0.24 0.28 0.25 0.32 0.29 0.27 0.45 0.43 0.40 0.35

/ Strength Factor 0.133 0.133 0.133 0.133 0.133 0.133 0.133 0.133 0.133 0.133

= Ratio / Strength Factor 1.80 2.08 1.89 2.41 2.18 2.03 3.38 3.23 3.01 2.63

* Weighting Factor 35% 35% 35% 35% 35% 35% 35% 35% 35% 35%

= Ratio Subtotal 0.63 0.73 0.66 0.84 0.76 0.71 1.18 1.13 1.05 0.92

+ Return on Net Position/Net Assets 2.1% 11.6% 6.3% 9.2% 5.8% 10.3% 8.5% 8.3% 7.1% 10.5%

/ Strength Factor 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%

= Ratio / Strength Factor 1.06 5.81 3.15 4.60 2.90 5.15 4.25 4.15 3.55 5.25

* Weighting Factor 20% 20% 20% 20% 20% 20% 20% 20% 20% 20%

= Ratio Subtotal 0.21 1.16 0.63 0.92 0.58 1.03 0.85 0.83 0.71 1.05

+ Net Operating Revenues Ratio (1.3)% 3.3% 0.9% 4.1% 2.0% 3.4% 4.4% 3.9% 3.5% 4.9%

/ Strength Factor 1.30% 1.30% 1.30% 1.30% 1.30% 1.30% 1.30% 1.30% 1.30% 1.30%

= Ratio / Strength Factor (1.00) 2.51 0.69 3.15 1.54 2.62 3.38 3.00 2.69 3.77

* Weighting Factor 10% 10% 10% 10% 10% 10% 10% 10% 10% 10%

= Ratio Subtotal (0.10) 0.25 0.07 0.32 0.15 0.26 0.34 0.30 0.27 0.38

+ Viability Ratio 0.33 0.37 0.33 0.39 0.34 0.31 0.51 0.46 0.41 0.38

/ Strength Factor 0.417 0.417 0.417 0.417 0.417 0.417 0.417 0.417 0.417 0.417

= Ratio / Strength Factor 0.79 0.88 0.73 0.94 0.82 0.74 1.22 1.10 0.98 0.91

* Weighting Factor 35% 35% 35% 35% 35% 35% 35% 35% 35% 35%

= Ratio Subtotal 0.28 0.31 0.26 0.33 0.29 0.26 0.43 0.39 0.35 0.32

Composite Financial Index 1.02 2.45 1.62 2.41 1.78 2.26 2.80 2.65 2.38 2.67

The Composite Financial Index (CFI) provides a methodology for a single overall fi nancial measurement of the institution’s health based on the four core ratios. The CFI uses a reasonable weighting plan and allows a weakness or strength in a specifi c ratio to be off set by another ratio result, which provides a more balanced measure. The CFI provides a more holistic approach to understanding the fi nancial health of the institution. The CFI scores are not intended to be precise measures; they are indicators of ranges of fi nancial health that can be indicators of overall institutional well-being when combined with non-fi nancial indicators.

Composite Financial Index calculation includes component unit information. Detail of ratio calculations are on the following pages.

(1)Balances prior to FY 2015 have not been adjusted for the implementation of GASB Statement No. 68, Accounting and Financial Reporting for Pensions – an amendment of GASB Statement No. 27, as amended by GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date – an amendment of GASB Statement No. 68. Balances prior to FY 2016 have not been adjusted for the implementation of GASB Statement No. 72, Fair Value Measurement and Application. Balances prior to FY 2018 have not been adjusted for the implementation of GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Beneﬁ ts Other then Pensions, as amended by GASB Statement No. 85, Omnibus 2017.

2020 CAFR Arizona State University 83 Composite Financial Index (continued)

Detail of Composite Financial Index Ratios(1) (Dollars in thousands)

Fiscal Year Ended June 30, 2020 2019 2018 2017(2) 2016 2015 2014 2013 2012 2011

PRIMARY RESERVE RATIO

Unrestricted Net Position $ 104,279 $ 166,899 $ 115,542 $ 282,765 $ 253,728 $ 161,623 $ 563,307 $ 511,298 $ 462,958 $ 359,430

Without Donor Restrictions 123,335 119,675 44,688 54,955 (2,912) 29,112 (28,470) (51,915) (62,932) (34,119) - Unrestricted Net Assets - Component Units

Expendable Restricted Net 127,614 118,626 119,410 124,703 117,977 109,664 113,948 104,880 92,661 87,244 Position

With Donor Restrictions - Temporarily Restricted Net 427,888 421,912 408,384 363,620 341,524 323,456 286,599 260,101 232,312 214,130 Assets - Component Units

Expendable Net Position/ $ 783,116 $ 827,112 $ 688,024 $ 826,043 $ 710,317 $ 623,855 $ 935,384 $ 824,364 $ 724,999 $ 626,685 Net Assets

Operating Expenses $ 2,883,520 $ 2,634,702 $2,450,214 $2,265,725 $2,104,513 $1,961,808 $ 1,796,805 $ 1,644,537 $ 1,558,467 $ 1,556,911

Nonoperating Expenses 81,324 85,754 70,493 76,745 76,011 63,242 62,316 64,326 56,459 54,485

Component Unit Total 303,974 283,224 252,963 228,083 280,389 266,791 201,738 186,523 202,475 182,983 Expenses

Total Expenses $ 3,268,818 $ 3,003,680 $2,773,670 $2,570,553 $2,460,913 $2,291,841 $ 2,060,859 $ 1,895,386 $ 1,817,401 $ 1,794,379

Expendable Net Position/ $ 783,116 $ 827,112 $ 688,024 $ 826,043 $ 710,317 $ 623,855 $ 935,384 $ 824,364 $ 724,999 $ 626,685 Net Assets

Total Expenses $ 3,268,818 $ 3,003,680 $2,773,670 $2,570,553 $2,460,913 $2,291,841 $ 2,060,859 $ 1,895,386 $ 1,817,401 $ 1,794,379

Ratio 0.24 0.28 0.25 0.32 0.29 0.27 0.45 0.43 0.40 0.35

Measures the ﬁ nancial strength of the institution by indicating how long the institution could function using its expendable reserves to cover operations should additional net position not be available. A positive ratio and an increase in the ratio over time denotes strength.

RETURN ON NET POSITION/NET ASSETS RATIO

Change in Total Net Position/ $ 52,103 $ 256,838 $ 131,399 $ 185,017 $ 109,055 $ 170,423 $ 163,969 $ 148,312 $ 118,202 $ 159,068 Net Assets

Total Net Position/Net Assets $ 2,464,818 $2,207,980 $2,076,581 $2,018,485 $1,884,777 $1,656,504 $ 1,927,200 $ 1,786,613 $ 1,668,411 $ 1,509,343 (Beginning of Year)

Ratio 2.1% 11.6% 6.3% 9.2% 5.8% 10.3% 8.5% 8.3% 7.1% 10.5%

Return on Net Position/Net Assets Ratio calculation includes component unit information.

Measures total economic return. While an increasing trend reﬂ ects strength, a decline may be appropriate and even warranted if it represents a strategy on the part of the institution to fulﬁ ll its mission.

(2) The FY 2017 Return on Net Position/Net Assets ratio has been restated to adjust for the impact of the ASUEP restructure transfer.

84 Arizona State University 2020 CAFR Composite Financial Index (continued)

Detail of Composite Financial Index Ratios(1) (Dollars in thousands)

Fiscal Year Ended June 30, 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011

NET OPERATING REVENUES RATIO

Income (Loss) Before Other Revenues, $ (46,841) $ 35,016 $ 34,090 $ 66,039 $ 81,031 $ 62,766 $ 72,104 $ 68,262 $ 96,165 $ 69,262 Expenses, Gains, or Losses

Component Units Change in Unrestricted Net Assets Before Extraordinary or Special 3,837 65,965 (9,501) 44,861 (32,024) 17,131 23,577 8,169 (30,703) 23,517 Items

Adjusted Income (Loss) Before Other Revenues, Expenses, Gains or Losses and Component Units Change $ (43,004) $ 100,981 $ 24,589 $ 110,900 $ 49,007 $ 79,897 $ 95,681 $ 76,431 $ 65,462 $ 92,779 in Unrestricted Net Assets Before Extraordinary or Special Items

Total Operating Revenues $ 2,180,596 $ 2,048,569 $ 1,915,786 $ 1,782,224 $ 1,644,337 $ 1,482,742 $ 1,348,645 $ 1,227,473 $ 1,155,341 $ 1,045,483

State Appropriations and State Related 357,407 337,974 339,318 328,239 312,460 364,568 342,278 322,627 331,564 403,551 Revenues

Non-capital Gifts and Grants, net 335,244 308,326 286,915 258,989 280,543 221,758 207,646 206,417 214,788 205,215

Financial aid trust 16,019 14,833 13,615 12,393 11,114 11,027 9,279

Investment Income (Loss), net 44,756 60,603 12,778 23,038 9,382 5,133 20,263 9,494 (1,629) 17,130

Component Units Total Unrestricted 307,811 349,189 243,462 272,944 248,365 283,922 225,315 194,692 171,772 206,500 Revenue

Adjusted Net Operating Revenue $ 3,225,814 $ 3,104,661 $ 2,798,259 $ 2,681,453 $ 2,509,920 $ 2,371,738 $ 2,156,540 $ 1,971,817 $1,882,863 $ 1,887,158

Adjusted Income (Loss) Before Other Revenues, Expenses, Gains or Losses and Component Units Change in Unrestricted $ (43,004) $ 100,981 $ 24,589 $ 110,900 $ 49,007 $ 79,897 $ 95,681 $ 76,431 $ 65,462 $ 92,779 Net Assets Before Extraordinary or Special Items

Adjusted Net Operating Revenue $ 3,225,814 $ 3,104,661 $ 2,798,259 $ 2,681,453 $ 2,509,920 $ 2,371,738 $ 2,156,540 $ 1,971,817 $ 1,882,863 $ 1,887,158

Ratio (1.3)% 3.3% 0.9% 4.1% 2.0% 3.4% 4.4% 3.9% 3.5% 4.9%

Measures whether the institution is living within available resources. A positive ratio and an increase in the ratio over time, generally reﬂ ects strength; a decline may be appropriate and even warranted if it represents a strategy on the part of the institution to fulﬁ ll its mission.

VIABILITY RATIO

Unrestricted Net Position $ 104,279 $ 166,899 $ 115,542 $ 282,765 $ 253,728 $ 161,623 $ 563,307 $ 511,298 $ 462,958 $ 359,430

Without Donor Restrictions - Unrestricted 123,335 119,675 44,688 54,955 (2,912) 29,112 (28,470) (51,915) (62,932) (34,119) Net Assets - Component Units

Expendable Restricted Net Position 127,614 118,626 119,410 124,703 117,977 109,664 113,948 104,880 92,661 87,244

With Donor Restrictions - Temporarily 427,888 421,912 408,384 363,620 341,524 323,456 286,599 260,101 232,312 214,130 Restricted Net Assets - Component Units

Expendable Net Position/Net Assets $ 783,116 $ 827,112 $ 688,024 $ 826,043 $ 710,317 $ 623,855 $ 935,384 $ 824,364 $ 724,999 $ 626,685

University Long-Term Debt, net capital $ 2,071,885 $ 1,928,622 $ 1,768,827 $ 1,771,961 $ 1,573,804 $ 1,511,891 $ 1,319,199 $ 1,266,524 $ 1,227,702 $ 1,078,340 leases with Component Units

Component Unit Long-Term Debt 316,614 333,784 347,987 340,602 499,844 514,409 509,339 521,101 546,488 586,851

Total Adjusted University Debt $ 2,388,499 $ 2,262,406 $ 2,116,814 $ 2,112,563 $ 2,073,648 $ 2,026,300 $ 1,828,538 $ 1,787,625 $1,774,190 $ 1,665,191

Expendable Net Position/Net Assets $ 783,116 $ 827,112 $ 688,024 $ 826,043 $ 710,317 $ 623,855 $ 935,384 $ 824,364 $ 724,999 $ 626,685

Total Adjusted University Debt $ 2,388,499 $ 2,262,406 $ 2,116,814 $ 2,112,563 $ 2,073,648 $ 2,026,300 $ 1,828,538 $ 1,787,625 $ 1,774,190 $ 1,665,191

Ratio 0.28 0.31 0.26 0.33 0.29 0.26 0.43 0.39 0.35 0.32

Measures the ability of the institution to cover its debt as of the statement of net position date, should the institution need to do so.

2020 CAFR Arizona State University 85 Summary of Ratios

Summary of Ratios(1) (Dollars in thousands)

Fiscal Year Ended June 30, 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011

EXPENDABLE RESOURCES TO DEBT

Unrestricted Net Position $ 104,279 $ 166,899 $ 115,542 $ 282,765 $ 253,728 $ 161,623 $ 563,307 $ 511,298 $ 462,958 $ 359,430

Expendable Restricted Net Position 127,614 118,626 119,410 124,703 117,977 109,664 113,948 104,880 92,661 87,244

Expendable Net Position $ 231,893 $ 285,525 $ 234,952 $ 407,468 $ 371,705 $ 271,287 $ 677,255 $ 616,178 $ 555,619 $ 446,674

Total Bonds, COPS, and Capital Leases $2,135,450 $2,001,032 $1,849,386 $1,850,754 $1,649,317 $1,595,817 $1,372,649 $1,341,332 $1,287,784 $1,147,940

Ratio 0.1 0.1 0.1 0.2 0.2 0.2 0.5 0.5 0.4 0.4

Measures the ability of the institution to cover its debt using expendable resources as of the balance sheet date, should the institution need to do so.

TOTAL FINANCIAL RESOURCES TO DIRECT DEBT

Unrestricted Net Position $ 104,279 $ 166,899 $ 115,542 $ 282,765 $ 253,728 $ 161,623 $ 563,307 $ 511,298 $ 462,958 $ 359,430

Expendable Restricted Net Position 127,614 118,626 119,410 124,703 117,977 109,664 113,948 104,880 92,661 87,244

Nonexpendable Restricted Net Position 87,497 84,714 78,813 74,102 70,544 64,833 59,476 55,572 52,941 49,513

Total Financial Resources $ 319,390 $ 370,239 $ 313,765 $ 481,570 $ 442,249 $ 336,120 $ 736,731 $ 671,750 $ 608,560 $ 496,187

Total Financial Resources $ 319,390 $ 370,239 $ 313,765 $ 481,570 $ 442,249 $ 336,120 $ 736,731 $ 671,750 $ 608,850 $ 496,187

Total Bonds, COPS, and Capital Leases $2,135,450 $2,001,032 $1,849,386 $1,850,754 $1,649,317 $1,595,817 $1,372,649 $1,341,332 $1,287,784 $1,147,940

Ratio 0.2 0.2 0.2 0.3 0.3 0.2 0.5 0.5 0.5 0.4

A broader measure of the ability of the institution to cover its debt as of the balance sheet date, should the institution need to do so.

DIRECT DEBT TO ADJUSTED CASH FLOW

Net Cash Used for Operating Activities $(465,853) $(439,627) $ (384,847) $ (320,901) $ (315,803) $ (367,867) $ (319,052) $ (322,858) $ (346,453) $ (420,160)

State Appropriations, Federal Stabilization 338,461 303,370 306,778 296,913 281,385 338,042 314,493 297,402 307,765 381,781 Funds, and CARES Act Reimbursements

Share of State Sales Tax - TRIF 34,075 34,604 32,540 31,326 31,075 26,526 27,785 25,225 23,799 21,770

Non-capital Grants and Contracts, Gifts, 320,115 308,326 286,915 275,008 295,376 235,373 220,039 217,531 225,815 214,494 Other (1)

Adjusted Cash Flow from Operations $ 226,798 $ 206,673 $ 241,386 $ 282,346 $ 292,033 $ 232,074 $ 243,265 $ 217,300 $ 210,926 $ 197,885

Total Bonds, COPS, and Capital Leases $2,135,450 $2,001,032 $1,849,386 $1,850,754 $1,649,317 $1,595,817 $1,372,649 $1,341,332 $1,287,784 $1,140,940

Adjusted Cash Flow from Operations $ 226,798 $ 206,673 $ 241,386 $ 282,346 $ 292,033 $ 232,074 $ 243,265 $ 217,300 $ 210,926 $ 197,885

Ratio 9.4 9.7 7.7 6.6 5.6 6.9 5.6 6.2 6.1 5.8

(1) Includes ﬁ nancial aid grants, grants and contracts, private gifts, and ﬁ nancial aid trust funds.

Measures the ﬁ nancial strength of the institution by indicating how long (in years) the institution would take to repay the debt using the cash provided by its operations. A decreasing ratio over time denotes strength.

DEBT SERVICE TO OPERATIONS

Interest Paid on Debt and Leases $ 65,342 $ 63,413 $ 61,903 $ 69,135 $ 59,972 $ 53,428 $ 52,674 $ 53,331 $ 48,101 $ 47,505

Principal Paid on Debt and Leases (1) 70,261 62,161 252,076 62,596 99,285 305,910 50,596 137,349 124,871 50,626

Principal Paid from Reﬁ nancing Activities (2) (196,830) (1,153) (39,415) (243,340) (90,955) (82,130) (8,090)

Debt Service $ 135,603 $ 125,574 $ 117,149 $ 130,578 $ 119,842 $ 115,998 $ 103,270 $ 99,725 $ 90,842 $ 90,041

Operating Expenses $2,883,520 $2,634,702 $2,450,214 $2,265,725 $2,104,513 $1,961,808 $1,796,805 $1,644,537 $1,558,467 $1,556,911

Ratio 4.7% 4.8% 4.8% 5.8% 5.7% 5.9% 5.7% 6.1% 5.8% 5.8%

(1) Obtained from “Bonds Payable, Certiﬁ cates of Participation, Capital Leases, and Other Lease Obligations” disclosures included in the applicable ﬁ scal year’s audited Notes to Financial Statements.

(2) Obtained amount from refunding bonds oﬃ cial statements.

Measures the institution’s dependence on borrowed funds as a source of ﬁ nancing its mission and the relative cost of borrowing to overall expenditures. The ratio measures the relative cost of debt to overall expenses and a declining trend is generally desirable, however the ratio can increase during times of speciﬁ c funding activity to support the institution’s strategic mission.

86 Arizona State University 2020 CAFR Summary of Ratios (continued)

Summary of Ratios (Dollars in thousands)

Fiscal Year Ended June 30, 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011

RESEARCH EXPENSES TO TOTAL OPERATING EXPENSES

Operating Expenses $ 2,883,520 $ 2,634,702 $ 2,450,214 $ 2,265,725 $ 2,104,513 $ 1,961,808 $ 1,796,805 $ 1,644,537 $ 1,558,467 $ 1,556,911

Scholarships and Fellowships (292,914) (247,194) (211,811) (187,124) (152,802) (136,675) (127,468) (112,363) (113,171) (120,428)

Interest on Debt 65,342 63,413 61,903 69,135 59,972 53,428 52,674 53,331 48,101 47,505

Total Adjusted Operating Expenses $ 2,655,948 $ 2,450,921 $ 2,300,306 $ 2,147,736 $ 2,011,683 $ 1,878,561 $ 1,722,011 $ 1,585,505 $ 1,493,397 $ 1,483,988

Research Expenses $ 359,936 $ 323,623 $ 297,448 $ 267,303 $ 261,055 $ 244,763 $ 235,720 $ 225,453 $ 211,569 $ 201,255

Total Adjusted Operating Expenses $ 2,655,948 $ 2,450,921 $ 2,300,306 $ 2,147,736 $ 2,011,683 $ 1,878,561 $ 1,722,011 $ 1,585,505 $ 1,493,397 $ 1,483,988

Ratio 13.6% 13.2% 12.9% 12.4% 13.0% 13.0% 13.7% 14.2% 14.2% 13.6%

Measures the institution’s research expense to the total operating expenses.

NET TUITION PER STUDENT

Student Tuition and Fees, net $ 1,550,581 $ 1,423,052 $ 1,323,268 $ 1,250,828 $ 1,157,535 $ 1,021,014 $ 896,921 $ 802,965 $ 757,217 $ 639,324

Financial Aid Grants 186,818 168,230 152,500 128,474 124,188 115,070 106,855 104,415 110,222 104,498

Scholarships and Fellowships (292,914) (247,194) (211,811) (187,124) (152,802) (136,675) (127,468) (112,363) (113,171) (120,428)

Net Tuition and Fees $ 1,444,485 $ 1,344,088 $ 1,263,957 $ 1,192,178 $ 1,128,921 $ 999,409 $ 876,308 $ 795,017 $ 754,268 $ 623,394

Student FTE 110,548 103,654 97,950 94,077 88,742 81,254 76,376 73,062 72,558 69,459

Net Tuition per Student (whole dollars) $ 13,067 $ 12,967 $ 12,904 $ 12,672 $ 12,721 $ 12,300 $ 11,474 $ 10,881 $ 10,395 $ 8,975

Measures the institution’s net student tuition and fees received per student.

STATE APPROPRIATIONS PER STUDENT

State Appropriations $ 323,332 $ 303,370 $ 306,778 $ 296,913 $ 281,385 $ 338,042 $ 314,493 $ 297,402 $ 307,765 $ 380,914

Capital State Appropriations 25,622 25,406 13,479 11,190 11,422 15,000 14,471 14,472 14,472 14,472

Adjusted State Appropriations $ 348,954 $ 328,776 $ 320,257 $ 308,103 $ 292,807 $ 353,042 $ 328,964 $ 311,874 $ 322,237 $ 395,386

Student FTE 110,548 103,654 97,950 94,077 88,742 81,254 76,376 73,062 72,558 69,459

Adjusted State Appropriations per $ 3,157 $ 3,172 $ 3,270 $ 3,275 $ 3,300 $ 4,345 $ 4,307 $ 4,269 $ 4,441 $ 5,692 Student (whole dollars)

Measures the institution’s dependency on state appropriations.

2020 CAFR Arizona State University 87 Debt Coverage for Senior and Subordinate Lien Bonds

Summary of Ratios (Dollars in thousands)

Fiscal Year Ended June 30, 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011

Bond Resolution Covenant. The Board has covenanted in the Bond Resolution to fi x, revise and collect tuition, registration, matriculation, health services, laboratory, and admission fees from students matriculated, registered or enrolled at or attending the University, and to fi x, revise and collect all other fees, admissions, rentals and other charges received from students, faculty, staff members and others using or being served by the System of Building Facilities, in an aggregate amount so the Gross Revenues of the University for each fi scal year will be at least 150% of the Maximum Annual Debt Service due in any fi scal year on all outstanding senior lien bonds and suffi cient at all times to continually operate and maintain the System of Building Facilities and to make necessary deposits at the times and in the amounts specifi ed in the Bond Resolution.

Bond Resolution Requirement. Pursuant to the Bond Resolution, the Board may issue additional Parity Bonds if the Gross Revenues of the University for the ﬁ scal year preceding the issuance of such Parity Bonds are at least equal to 300% of the Maximum Annual Debt Service on all Outstanding Parity Bonds and the Parity Bonds proposed to be issued.

REVENUES AVAILABLE FOR DEBT SERVICE

Tuition and Fees, net of scholarship $ 1,550,581 $ 1,423,051 $ 1,312,313 $ 1,250,828 $ 1,157,535 $ 1,021,014 $ 896,921 $ 802,965 $ 757,217 $ 639,324 allowance

Receipts from Other Major Revenue 349,050 358,231 335,309 304,859 293,117 279,610 264,385 244,696 220,610 237,446 Sources (Facilities Revenue)

Net Revenues Available for Debt $ 1,899,631 $ 1,781,282 $ 1,647,622 $ 1,555,687 $ 1,450,652 $ 1,300,624 $ 1,161,306 $ 1,047,661 $ 977,827 $ 876,770 Service

SENIOR LIEN MAXIMUM BONDS DEBT SERVICE

Interest on Debt $ 60,598 $ 58,683 $ 54,954 $ 53,077 $ 42,451 $ 46,842 $ 40,342 $ 42,079 $ 38,702 $ 32,895

Principal Paid on Debt 70,990 61,425 53,455 51,555 46,525 40,155 42,635 44,770 43,020 39,670

Senior Lien Bonds Debt Service $ 131,588 $ 120,108 $ 108,409 $ 104,632 $ 88,976 $ 86,997 $ 82,977 $ 86,849 $ 81,722 $ 72,565 Requirement (1)

Coverage 14.44 14.83 15.20 14.87 16.30 14.95 14.00 12.06 11.97 12.08

Debt Service Assurance Agreement and SPEED Bond Resolution Covenant. The Board has further covenanted in the Debt Service Assurance Agreement entered into in connection with the 2006 ASU Research Park Bonds and in the bond resolution for the Board’s SPEED Revenue Bonds to fi x, revise and collect Student Tuition and Fees Revenues and Facilities Revenues in an aggregate amount so that Gross Revenues of the University in any fi scal year will be at least equal to 100% of (i) the annual debt service due on all Outstanding Parity Bonds and the Subordinate Obligations in such fi scal year and (ii) the expense of operating and maintaining the System of Building Facilities.

SENIOR LIEN BONDS DEBT SERVICE

Interest on Debt $ 60,598 $ 58,683 $ 54,954 $ 53,077 $ 44,482 $ 46,842 $ 38,584 $ 42,079 $ 38,702 $ 32,895

Principal Paid on Debt 70,990 61,425 53,455 51,555 43,435 40,155 42,640 44,770 43,020 39,670

Senior Lien Bonds Debt Service $ 131,588 $ 120,108 $ 108,409 $ 104,632 $ 87,917 $ 86,997 $ 81,224 $ 86,849 $ 81,722 $ 72,565 Requirement

SUBORDINATE LIEN BONDS DEBT SERVICE

Interest on Debt $ 3,836 $ 4,640 $ 5,374 $ 5,374 $ 5,757 $ 7,154 $ 7,154 $ 3,441 $ 3,441 $ 2,110

Principal Paid on Debt 8,335 7,630 6,970 6,970 7,805 6,440 6,440 845 845 845

Subordinate Lien Bonds Debt $ 12,171 $ 12,270 $ 12,344 $ 12,344 $ 13,562 $ 13,594 $ 13,594 $ 4,286 $ 4,286 $ 2,955 Service Requirements

Combined Senior/Subordinate Lien $ 143,759 $ 132,378 $ 120,753 $ 116,976 $ 101,479 $ 100,591 $ 94,818 $ 91,135 $ 86,008 $ 75,520 Debt Service (1)

Coverage 13.21 13.46 13.64 13.30 14.30 12.93 12.25 11.50 11.37 11.61

(1)Presents actual annual debt service through ﬁ nal bond maturity for the year with the highest debt service.

88 Arizona State University 2020 CAFR Long-Term Debt

Long-Term Debt (Dollars in thousands)

Fiscal year ended June 30, 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011

System Revenue Bonds $ 1,691,205 $ 1,556,810 $ 1,404,350 $ 1,392,795 $ 1,212,240 $ 1,157,535 $ 1,002,655 $ 959,000 $ 902,845 $ 769,285

Unamortized Premium 191,967 170,948 150,794 144,377 105,470 91,298 42,844 37,946 29,399 8,585

Net System Revenue Bonds $ 1,883,172 $ 1,727,758 $ 1,555,144 $ 1,537,172 $ 1,317,710 $ 1,248,833 $1,045,499 $ 996,946 $ 932,244 $ 777,870

Certiﬁ cates of Participation $ 157,265 $ 173,075 $ 188,325 $ 202,290 $ 213,710 $ 224,965 $ 235,505 $ 248,385 $ 261,910 $ 271,920

Unamortized Premium 3,074 3,869 4,666 6,470 7,574 8,731 9,892 11,202 4,582 5,458

Net Certiﬁ cates of Participation $ 160,339 $ 176,944 $ 192,991 $ 208,760 $ 221,284 $ 233,696 $ 245,397 $ 259,587 $ 266,492 $ 277,378

Total Bonds Payable $ 1,883,172 $ 1,727,758 $ 1,555,144 $ 1,537,172 $ 1,317,710 $ 1,248,833 $ 1,045,499 $ 996,946 $ 932,244 $ 777,870

COPS Payable 160,339 176,944 192,991 208,760 221,284 233,696 245,397 259,587 266,492 277,378

Capital and Other Leases Payable 91,939 96,330 101,251 104,822 110,323 113,288 81,753 84,799 89,048 92,692

Total $ 2,135,450 $ 2,001,032 $ 1,849,386 $ 1,850,754 $ 1,649,317 $ 1,595,817 $1,372,649 $1,341,332 $1,287,784 $ 1,147,940

Long-Term Debt

per Student FTE (whole dollars) $ 19,317 $ 19,305 $ 18,881 $ 19,673 $ 18,586 $ 19,640 $ 17,972 $ 18,359 $ 17,748 $ 16,527

per Dollar of State Appropriations $ 6.12 $ 6.09 $ 5.77 $ 6.01 $ 5.63 $ 4.52 $ 4.17 $ 4.30 $ 4.00 $ 2.90 and State Capital Appropriations

per Dollar of Total Grants and $ 5.05 $ 4.98 $ 4.97 $ 5.64 $ 5.32 $ 5.57 $ 4.88 $ 4.77 $ 4.59 $ 4.28 Contracts

Data Used in Above Calculations

Total Student FTE 110,548 103,654 97,950 94,077 88,742 81,254 76,376 73,062 72,558 69,459

State Appropriations and State $ 348,954 $ 328,776 $ 320,257 $ 308,103 $ 292,807 $ 353,042 $ 328,964 $ 311,874 $ 322,237 $ 395,386 Capital Appropriations

Grants and Contracts $ 423,157 $ 401,555 $ 372,291 $ 328,283 $ 309,902 $ 286,684 $ 281,049 $ 280,987 $ 280,674 $ 268,516

Student FTE based on fall enrollment of the ﬁ scal year.

2020 CAFR Arizona State University 89 Admissions, Enrollment, and Degrees Earned

Admissions, Enrollment, and Degrees Earned (Fall Enrollment) Fall enrollment of ﬁ scal year 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011

ADMISSIONS - FRESHMEN Applications (1) (2) 57,576 45,327 44,613 42,396 42,363 38,280 35,294 37,982 37,225 35,449 Accepted 47,151 36,856 34,712 32,653 32,400 30,028 26,915 26,986 26,425 25,795 Enrolled 15,606 13,974 12,337 12,119 12,004 11,079 10,232 9,265 9,254 9,544 Accepted as Percentage of Application 82% 81% 78% 77% 76% 78% 76% 71% 71% 73% Enrolled as Percentage of Accepted 33% 38% 36% 37% 37% 37% 38% 34% 35% 37%

Average SAT scores - Total (3) 1210 1210 1194 1184 1182 1182 1178 1182 1177 1171 Verbal 603 603 598 594 594 594 592 593 592 589 Math 608 608 599 591 589 590 589 591 588 585

ENROLLMENT Student FTE 110,548 103,654 97,950 94,077 88,742 81,254 76,376 73,062 72,558 69,459 Student Headcount 119,979 111,291 103,567 98,177 91,357 83,301 76,771 73,378 72,254 70,440

African American (Headcount) 6,404 5,695 5,152 4,785 4,439 4,002 3,663 3,491 3,521 3,452 Percentage of Total 5.3% 5.1% 5.0% 4.9% 4.9% 4.8% 4.8% 4.8% 4.9% 4.9% White (Headcount) 61,656 58,749 55,000 52,531 49,083 45,407 43,713 43,494 43,774 43,291 Percentage of Total 51.4% 52.8% 53.1% 53.5% 53.7% 54.5% 56.9% 59.3% 60.6% 61.5% Other (Headcount) 51,919 46,847 43,415 40,861 37,835 33,892 29,395 26,393 24,959 23,697 Percentage of Total 43.3% 42.1% 41.9% 41.6% 41.4% 40.7% 38.3% 35.9% 34.5% 33.6%

DEGREES EARNED Bachelor’s 20,308 19,340 18,178 16,450 15,264 14,842 14,381 13,913 13,210 12,194 Master’s 8,074 7,149 6,828 6,008 5,817 5,268 4,584 4,163 4,007 4,150 Doctoral 755 714 692 677 674 687 596 636 611 545 Professional 252 282 276 199 198 223 200 204 217 201 Total Degrees Earned 29,389 27,485 25,974 23,334 21,953 21,020 19,761 18,916 18,045 17,090

(1) Beginning in FY 2014, methodology revised to include all completed applications by campus.

(2) In fall 2020, the University began accepting the Common App for ﬁ rst-time freshman applications.

(3) SAT scores for all years have been adjusted to be comparable to scores on the redesigned test that began in March 2016.

Student information based on fall enrollment of the ﬁ scal year and degree information includes all graduations during ﬁ scal year.

90 Arizona State University 2020 CAFR Enrollment

110,548 103,654 97,950 94,077 88,742 81,254 76,376 73,062 72,558 69,459

Full-Time Equivalent Students

119,979

111,291

103,567 98,177 91,357

83,301 76,771 73,378 72,254 70,440

Total Headcount

Fall 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010

Enrollment (Fall Enrollment) Fall enrollment of ﬁ scal year 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011

ENROLLMENT (Headcount) Undergraduate 96,727 89,898 83,551 79,447 74,146 67,507 62,089 59,382 58,404 56,562 Graduate 23,252 21,393 20,016 18,730 17,211 15,794 14,682 13,996 13,850 13,878

Resident (Arizona) 57,552 54,861 53,158 51,438 50,350 49,940 49,537 50,400 51,235 51,128 Non-Resident 62,427 56,430 50,409 46,739 41,007 33,361 27,234 22,978 21,019 19,312

2020 CAFR Arizona State University 91 Demographic Data

Demographic Data Fiscal Year Ended June 30, 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011

Arizona Population 7,278,717 7,171,646 7,016,270 6,931,071 6,829,397 6,731,484 6,626,624 6,553,255 6,482,505 6,413,158 Arizona Personal Income (in 335,243 313,040 292,108 278,925 266,756 255,089 244,011 235,781 227,287 216,590 millions) Arizona Per Capita Personal 46,058 43,650 41,633 40,243 39,060 37,895 36,823 35,979 35,062 33,773 Income Arizona Unemployment Rate 4.70% 4.80% 4.90% 5.30% 6.10% 6.90% 8.00% 8.30% 9.50% 10.50%

Sources: U.S. Bureau of Economic Analysis and Arizona Department of Administration.

92 Arizona State University 2020 CAFR Principal Employers

Principal Employers Calendar Year Ended December 31, 2019 Calendar Year Ended December 31, 2010 Full-Time Percentage Full-Time Percentage Equivalent of Total State Equivalent of Total State Employer Employees Rank Employment Employees Rank Employment Banner Health 45,894 1 1.29% 28,220 3 0.89% State of Arizona 37,040 2 1.04% 49,282 1 1.55% Wal-Mart Stores, Inc. 33,619 3 0.95% 30,608 2 0.96% Fry’s Food Stores 20,165 4 0.57% Wells Fargo & Co. 16,700 5 0.47% 13,100 5 0.41% University of Arizona 15,967 6 0.45% Amazon.com Inc. 15,000 7 0.42% Arizona State University 14,889 8 0.42% 12,221 8 0.38% City of Phoenix 14,821 9 0.42% 15,544 4 0.49% Maricopa County 13,595 10 0.38% 12,458 7 0.39% Bank of America 12,000 9 0.38% Raytheon Missile Systems 12,000 10 0.38% Apollo Group Inc. 13,000 6 0.41% 227,690 6.41% 198,433 6.24%

Sources: Phoenix Business Journal, Book of Lists 2019 and Arizona Department of Transportation CAFR 2011 for employers: Arizona Commerce Authority website, https://www.azcommerce.com/oeo/labor-market/unemployment/.

2020 CAFR Arizona State University 93 Faculty and Staﬀ

Faculty and Staﬀ Fall employment of ﬁ scal year 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011

FACULTY Full-time 3,595 3,483 3,367 3,225 3,108 2,963 2,777 2,635 2,612 2,644 Part-time 320 291 310 330 394 515 375 276 253 231 Total Faculty 3,915 3,774 3,677 3,555 3,502 3,478 3,152 2,911 2,865 2,875

Percentage Tenured 52.9% 54.5% 55.0% 55.4% 55.9% 54.2% 58.0% 61.1% 61.2% 63.7%

STAFF Full-time 7,889 7,551 7,189 6,734 6,443 5,966 5,693 5,487 5,485 5,561 Part-time 4,925 4,819 4,519 4,414 4,168 4,183 3,565 3,684 3,699 3,838 Total Staﬀ 12,814 12,370 11,708 11,148 10,611 10,149 9,258 9,171 9,184 9,399

Total Faculty and Staﬀ 16,729 16,144 15,385 14,703 14,113 13,627 12,410 12,082 12,049 12,274

Sources: Arizona State University Fact Book and Institutional Analysis.

Percentage Tenured includes tenured and tenure track faculty.

94 Arizona State University 2020 CAFR Capital Assets

Capital Assets Fiscal Year Ended June 30, 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011

CAPITAL ASSETS (Number of Facilities) Academic/Support Facilities 226 227 249 251 252 248 224 223 221 235 Auxiliary Facilities 148 149 159 164 166 172 153 153 149 152 Total 374 376 408 415 418 420 377 376 370 387

Source: Arizona State University Capital Improvement Plans

Beginning in FY 2014, facility count includes ASU partnership facilities to align with the Capital Improvement Plan submitted to the Arizona Board of Regents. FY 2008 - 2013 have been restated to include ASU partnership facilities.

2020 CAFR Arizona State University 95 Right. Tempe Campus Palm Walk.

96 Arizona State University 2020 CAFR

Arizona State University Compiled and edited by the ASU Financial Services Office. Financial Services © 2020 Arizona Board of Regents. All rights reserved. Comprehensive Annual University Services Building Printed in the U.S. 1551 South Rural Road PO Box 875812 Arizona State University vigorously pursues affirmative action and Financial Report 2020 Tempe, Arizona 85287-5812 equal opportunity in its employment, activities, and programs. 480-965-3601 Year Ended June 30, 2020 | An Enterprise Fund of the State of the Arizona. cfo.asu.edu/fs Photography by: Andy DeLisle, Anya Magnuson, FJ Gaylor, Jarod Opperman, Jenny Dupuis, Laura Sposato [THIS PAGE INTENTIONALLY LEFT BLANK] APPENDIX C

SUMMARY OF CERTAIN PROVISIONS OF THE BOND RESOLUTION

The following are certain definitions and a summary of certain provisions contained in the Bond Resolution, but do not purport to be complete and reference is made to the Bond Resolution for the complete definitions and provisions thereof.

Definitions. The following words and terms have the meanings set forth below when used in the Bond Resolution and in the summary thereof which follows.

“Board” means the Arizona Board of Regents.

“Bond” means any one of the Bonds.

“Bond Register” means the registration books of the Board kept by the Trustee or the Trustee’s agent to evidence the registration and transfer of the Bonds.

“Bond Registrar” means The Bank of New York Mellon Trust Company, N.A., Houston, Texas, or any successor appointed and acting in such capacity with respect to any Bonds or Parity Bonds.

“Bond Resolution” means, collectively, the Master Resolution, as thereafter supplemented and amended through and including resolutions adopted on June 14, 2012, September 28, 2018, September 20, 2019, February 14, 2020, June 12, 2020, October 2, 2020 and November 20, 2020 , together with any amendatory or supplementary resolution hereafter adopted pursuant to Article XI of the Master Resolution.

“Bonds” means the Series 2008 Refunding Bonds, the Series 2010 Bonds, the Series 2012 Bonds, the Series 2013 Bonds, the Series 2015 Bonds, the Series 2015D Bonds, the Series 2016A Bonds, the Series 2016 Bonds, the Series 2017 Bonds, the Series 2019 Bonds, the Series 2020 Bonds, the Series 2021A Bonds, the Series 2021B Bonds, and the Series 2021C Bonds.

“Code” means the Internal Revenue Code of 1986, as amended, and any references to specific sections of the Internal Revenue Code of 1954, as amended, or the Internal Revenue Code of 1986, as amended, shall mean and include the corresponding or counterpart sections of the other.

“Construction Fund” means the fund of that name established pursuant to the Bond Resolution and the accounts therein.

“Depository Trust” means the special trust fund of that name established pursuant to the Depository Trust Agreement and the accounts therein.

“Depository Trust Agreement” means the Depository Trust Agreement, dated [______], 2021, between the Board and the Depository Trustee.

“Depository Trustee” means The Bank of New York Mellon Trust Company, N.A., Houston, Texas, or any successor appointed and acting in such capacity with respect to any Bonds.

“DTC” means The Depository Trust Company, New York, New York, and its successors and assigns.

“Enhanced Indebtedness” means any series of Parity Bonds the debt service on which is fully secured by an irrevocable letter of credit, surety bond, insurance policy or other credit facility or arrangement or any series of

C-1 Parity Bonds which provides an option on the part of the holders thereof to tender all or a portion of such Parity Bonds for purchase or payment prior to their specified maturity date.

“Escrow Obligations” means obligations issued or guaranteed by the United States of America, or any department, agency or instrumentality thereof, and evidences of ownership of proportionate interests therein, or certain municipal obligations which have been advance refunded by an escrow of obligations of the United States of America or which are insured by a policy of municipal bond insurance or a surety bond and are rated in the highest investment grade rating by S&P or Moody’s.

“Facilities Revenues” means all fees, rentals and other charges from students, faculty, staff members and others using or being served by, or having the right to use or the right to be served by, or to operate, any revenue producing facility, building or project within the System of Building Facilities or any auxiliary enterprise, including indirect cost recoveries from externally-funded grants and contracts for research or other sponsored projects and interest received on and profits realized from the sale of investments made with moneys derived from (i) any revenue producing facility, building or project within the System of Building Facilities, (ii) Student Tuition and Fees Revenues and (iii) other University operating funds.

“Fiscal Year” means each annual period commencing on July 1 and ending on June 30 of the succeeding calendar year.

“Gross Revenues” means and includes all Student Tuition and Fees Revenues and all Facilities Revenues.

“Interest Payment Date” means each July 1 and January 1 until maturity or prior redemption of the Series 2021 Bonds, commencing January 1, 2022*.

“Master Resolution” means the resolution of the Board adopted on November 7, 1985, as amended and restated December 13, 1985, together with any amendment thereto.

“Maximum Annual Debt Service” means, at the time of computation, the greatest amount required to be paid in any Fiscal Year ending then or thereafter for payment of principal of and interest on the Parity Bonds. Certain provisions are made for computing Maximum Annual Debt Service on Variable Rate Indebtedness, Enhanced Indebtedness and Parity Bonds having term maturities with mandatory scheduled sinking fund redemptions.

“Outstanding,” when used with reference to the Parity Bonds, means Parity Bonds which are outstanding and unpaid; provided, however, that such term shall not include Parity Bonds (a) which have matured and for which moneys are on deposit with the Trustee or Paying Agent, or are otherwise properly available, in an amount sufficient to pay all principal and interest then due and payable thereon, or (b) provisions for the payment of which have been made by the Board in accordance with Article X of the Master Resolution.

“Parity Bonds” means and includes all Bonds authorized, issued and Outstanding pursuant to the Bond Resolution, including the Series 2021 Bonds, and any other bonds or other obligations hereafter issued meeting the requirements of Section 5.02(b) of the Master Resolution, which share equally and ratably in the pledge of, lien on and security interest in the Gross Revenues of the University.

“Paying Agent” means The Bank of New York Mellon Trust Company, N.A., Houston, Texas, or any successor appointed and acting in such capacity with respect to any Bonds or Parity Bonds.

“Project” means, for purposes of the Thirty-Fifth Supplemental Resolution, collectively, pay (1) not exceeding $40,000,000 of the costs associated with the construction and equipping of the Multipurpose Arena on the University’s Tempe, Arizona campus; (2) not exceeding $67,000,000 of the costs associated with the construction and equipping of the Interdisciplinary Science and Technology Building 7 on the University’s Tempe, Arizona campus; (3) not exceeding $37,000,000 of the costs associated with the construction and equipping of the

* Preliminary, subject to change.

C-2 Thunderbird School of Global Management Building on the University’s Downtown Phoenix, Arizona campus; (4) not exceeding $16,000,000 of the costs associated with improvement of information technology on all of the University’s campuses; (5) not exceeding $13,600,000 of the costs associated with the construction of the University Drive pedestrian bridge on the University’s Tempe, Arizona campus; (6) not exceeding $35,000,000 of the costs associated with renovation of research laboratories and classroom and academic facilities on all of the University’s campuses (all such items 1 through 6 being collectively the “Project”); and (7) Costs of Issuance (as defined in the Bond Resolution) relating to the issuance of the Bonds;

“Redemption Fund” means the fund of that name established pursuant to the Bond Resolution and the accounts therein.

“Registered Owner” means the Registered Owner of any Bonds as shown on the Bond Register.

“Regulations” means regulations issued by the United States Department of the Treasury, as in effect from time to time, interpreting Sections 103, 54 through 54F, 141 through 149, 1391 through 1400U-3 and 6431 of the Code

“Revenue Fund” means the fund of that name established pursuant to the Bond Resolution and the accounts therein.

“Series 2008 Refunding Bonds” means collectively the $51,840,000 Arizona State University Variable Rate Demand System Revenue Refunding Bonds, Series 2008A, and the $51,840,000 Arizona State University Variable Rate Demand System Revenue Refunding Bonds, Taxable Series 2008B, authorized pursuant to the Nineteenth Supplemental Resolution.

“Series 2010 Bonds” means collectively the $165,980,000 Arizona State University System Revenue Bonds, Taxable Series 2010A (Federally Taxable – Build America Bonds – Direct Payment), and $12,370,000 Arizona State University System Revenue Bonds, Tax-Exempt Series 2010B, authorized pursuant to the Twenty- First Supplemental Resolution and Twenty-Second Supplemental Resolution.

“Series 2012 Bonds” means collectively the $207,130,000 Arizona State University System Revenue and Refunding Bonds, Tax-Exempt Series 2012A and $6,240,000 Arizona State University System Revenue and Refunding Bonds, Taxable Series 2012B, authorized pursuant to the Twenty-Fourth Supplemental Resolution and Twenty-Fifth Supplemental Resolution.

“Series 2013 Bonds” means collectively the $84,855,000 Arizona State University System Revenue and Refunding Bonds, Tax-Exempt Series 2013A and the $26,095,000 Arizona State University System Revenue Bonds, Taxable Series 2013B, authorized pursuant to the Twenty-Sixth Supplemental Resolution.

“Series 2015 Bonds” means collectively the $182,645,000 Arizona State University System Revenue and Refunding Bonds, Series 2015A (Green Bonds), the $164,615,000 Arizona State University System Revenue and Refunding Bonds, Series 2015B and the $15,000,000 Arizona State University System Revenue Bonds, Taxable Series 2015C, authorized pursuant to the Twenty-Seventh Supplemental Resolution, Twenty-Eighth Supplemental Resolution and Twenty-Ninth Supplemental Resolution.

“Series 2015D Bonds” means the $102,665,000 Arizona State University System Revenue Bonds, Series 2015D, authorized pursuant to the Thirtieth Supplemental Resolution.

“Series 2016A Bonds” means the $37,105,000 Arizona State University System Revenue Refunding Bonds, Series 2016A, authorized pursuant to a resolution adopted by the Board on June 14, 2012.

“Series 2016 Bonds” means collectively the $130,485,000 Arizona State University System Revenue Bonds, Series 2016B (Green Bonds), and the $95,745,000 Arizona State University System Revenue Bonds, Series 2016C, authorized pursuant to the Thirty-First Supplemental Resolution.

C-3 “Series 2017 Bonds” means collectively the $52,930,000 Arizona State University System Revenue Bonds, Series 2017A, the $140,880,000 Arizona State University System Revenue Refunding Bonds, Series 2017B and the $6,060,000 Arizona State University System Revenue Refunding Bonds, Taxable Series 2017C, authorized pursuant to the Thirty-Second Supplemental Resolution.

“Series 2019 Bonds” means collectively the Arizona State University System Revenue Bonds, Series 2019A (Green Bonds), in the original aggregate principal amount of $125,005,000, and the Arizona State University System Revenue Bonds, Series 2019B, in the original aggregate principal amount of $69,445,000, authorized pursuant to the Thirty-Third Supplemental Resolution.

“Series 2020 Bonds” means collectively the Arizona State University System Revenue Bonds, Tax-Exempt Series 2020A, in the original aggregate principal amount of $125,210,000, the Arizona State University System Revenue Bonds, Tax-Exempt Series 2020B, in the original aggregate principal amount of $29,245,000, and the Arizona State University System Revenue Bonds, Taxable Series 2020C, in the original aggregate principal amount of $30,000,000, authorized pursuant to the Thirty-Fourth Supplemental Resolution.

“Series 2021 Bonds” means collectively the Arizona State University System Revenue Bonds, Taxable Series 2021A (Green Bonds), in the original aggregate principal amount of $67,440,000*, the Arizona State University System Revenue Bonds, Taxable Series 2021B, in the original aggregate principal amount of $94,380,000*, and the Arizona State University System Revenue Bonds, Tax-Exempt Series 2021C, in the original aggregate principal amount of $118,025,000*, authorized pursuant to the Thirty-Fifth Supplemental Resolution.

“Series 2021A Bonds” means the Arizona State University System Revenue Bonds, Taxable Series 2021A (Green Bonds), in the original aggregate principal amount of $67,440,000*.

“Series 2021B Bonds” means the Arizona State University System Revenue Bonds, Taxable Series 2021B, in the original aggregate principal amount of $94,380,000*.

“Series 2021C Bonds” means the Arizona State University System Revenue Bonds, Tax-Exempt Series 2021C, in the original aggregate principal amount of $118,025,000*.

“State” means the State of Arizona.

“Student Tuition and Fees Revenues” means all tuition, registration, matriculation, health services, laboratory, admission and other activities and service fees and charges from students matriculated, registered or otherwise enrolled at and attending the University.

“System of Building Facilities” means, collectively, the projects, buildings, structures and facilities of any university under the jurisdiction and control of the Board, including administrative offices, exhibition and lecture halls, dormitories and residence facilities that generate revenues that are not subject to a pledge to secure payment of any bonds of the Board other than the Parity Bonds, classrooms, auditoriums, libraries, infirmaries, laboratories, museums, observatories, gymnasiums, activity centers, parking facilities, dining halls, stadiums, student unions and any and all improvements thereto, together with any building, structure or facility hereinafter authorized and designated for inclusion in the System of Building Facilities by the Arizona Legislature or the Board.

“Treasurer” means the Treasurer of the Board from time to time duly appointed by the Board and holding such office.

“Trustee” means The Bank of New York Mellon Trust Company, N.A., Houston, Texas, or any successor appointed and acting in such capacity with respect to such Bonds.

“University” means Arizona State University.

* Preliminary, subject to change.

C-4 “Variable Rate Indebtedness” means any series of Parity Bonds as to which a fixed rate or rates of interest applicable throughout the term thereof are not established at the time of issuance.

Pledge. The Bonds and all Parity Bonds are payable from a pledge of and secured by a lien on the Gross Revenues of the University to the extent necessary for the prompt and punctual payment of the Parity Bonds.

Application of Proceeds. Upon receipt, certain portions of the proceeds of the Series 2021 Bonds will be transferred to the Trustee for deposit in the applicable accounts of the Construction Fund to be used to pay the costs of the Project and costs of issuance of the Series 2021 Bonds.

Flow of Funds. The following funds and accounts have been established by the Treasurer with the Trustee and shall be maintained so long as any of the Parity Bonds are Outstanding:

(a) Revenue Fund. The Treasurer shall remit to the Trustee at or before the end of each six month period for deposit into the Revenue Fund such amounts of the Gross Revenues of the University received in each such period as are available and necessary to maintain the funds and accounts established in the Bond Resolution and to make the payments required with respect to the Bonds and any Parity Bonds. To the extent sufficient amounts of the Gross Revenues of the University have been deposited with the Trustee to satisfy the requirement set forth at the end of each six month period, the remaining Gross Revenues of the University that have been collected in any such period shall be surplus revenues and shall be available to the Board for any lawful purposes.

(b) Redemption Fund. Prior to each January 1st and July 1st, the Trustee shall transfer from the Revenue Fund to the Redemption Fund an amount which, together with any monies on deposit in the Redemption Fund, is equal to the next ensuing interest payment on the Bonds and any other Parity Bonds plus an amount equal to one-half of the principal amount coming due in the next ensuing Fiscal Year with respect to the Bonds and any other Parity Bonds.

(c) Construction Fund. Monies in the Construction Fund, and any income or gain realized from the investment thereof shall be utilized solely to construct or acquire improvements, expansions and replacements of the System of Building Facilities, to pay interest on the applicable series of Parity Bonds during the period of construction, or any combination of such purposes. Any proceeds deposited in any account within the Construction Fund, and investment proceeds therefrom, that exceed the cost of constructing and acquiring the corresponding project may be used by the Board for the payment of the costs of constructing and/or acquiring any other project or, at the direction of the Board, deposited in the Redemption Fund.

(d) Investments. Any money held by the Trustee in any account established pursuant to the Bond Resolution shall be invested and reinvested by the Trustee, except as otherwise permitted by law and directed by the Board, in obligations issued or guaranteed by the United States of America, or any department, agency or instrumentality thereof, or any other obligations in which the Board may lawfully invest in accordance with State law.

General Covenants. The Board covenants and agrees with the holders of any Parity Bonds as follows:

(a) That it holds title to the sites of the System of Building Facilities and that it will not sell, lease, mortgage, pledge or otherwise dispose of or encumber the System of Building Facilities of the University, or the sites thereof, or any part or facility necessary to the operation or use thereof, nor voluntarily cause or permit to be created any debt, lien, pledge, assignment or any other charge against the Gross Revenues of the University pledged for payment of the Parity Bonds. The Board reserves the right to dispose of any building or facility comprising a part of the System of Building Facilities of the University; provided, however, that if any such building or facility and related site to be disposed of has a fair market value equal to or greater than five percent (5%) of the principal amount of the Outstanding Parity Bonds (i) the Board must determine that such building or facility and related site is not necessary to the efficient operation of the System of Building Facilities of the University and will not adversely affect the production of revenues to meet the requirements of the Bond Resolution or (ii) the Board must simultaneously lease back such building or facility and related site from the purchaser or transferee pursuant to a lease treated as a capital lease in accordance with generally accepted accounting principles;

C-5 (b) That it will maintain, preserve and keep the System of Building Facilities of the University in good repair, working order and usable condition such that the System of Building Facilities of the University will at all times be available for maximum use and occupancy;

(d) That it will at all times fix, revise from time to time and collect tuition, registration, matriculation, health services, laboratory and admission fees from students matriculated, registered or enrolled at or attending the University, and fix, revise from time to time and collect all fees, admissions, rentals and other charges received from students, faculty, staff members and others using or being served by, or having the right to use or be served by the System of Building Facilities of the University in the aggregate amounts such that the Gross Revenues of the University for each Fiscal Year shall at least be equal to one hundred fifty percent (150%) of the Maximum Annual Debt Service on the Parity Bonds then Outstanding, and shall be sufficient at all times continually to operate and maintain the System of Building Facilities of the University;

(e) That it will not use or permit at any time or times any of the proceeds of the Parity Bonds or any monies of the Board to be used directly, or indirectly, to acquire any securities or obligations, the acquisition of which, or manner thereof, will cause any of the Parity Bonds to be “arbitrage bonds,” as defined in the Code and the Regulations; and

(f) That it will take all actions permitted by law and necessary at any time hereafter in order to assure that interest paid on any Parity Bonds, which was exempt from Federal income taxation as of the date of issuance, shall remain exempt from Federal income taxation under any valid provision of law.

Issuance of Parity Bonds. The Board shall have the right to issue Parity Bonds which shall be on complete equality with, and shall have a pledge of and a lien on Gross Revenues of the University equal to the Parity Bonds previously issued and shall share ratably and equally in the Gross Revenues of the University with any Parity Bonds now or hereafter Outstanding, provided the following conditions are met:

(a) All deposits in or obligations with respect to all funds and accounts created pursuant to the Bond Resolution are current;

(b) The aggregate amount of Gross Revenues of the University received by the Board during the Fiscal Year next preceding the date of issuance of any such Parity Bonds was at least equal to three hundred percent (300%) of the Maximum Annual Debt Service on all Outstanding Parity Bonds and on the Parity Bonds proposed to be issued; and

(c) If the Parity Bonds proposed to be issued constitute Variable Rate Indebtedness, as defined in the Bond Resolution, the resolution or other proceedings authorizing the issuance of such Parity Bonds shall specify a maximum interest rate which may be borne by such Parity Bonds.

Events of Default and Remedies. The following constitute Events of Default pursuant to the Bond Resolution:

(a) Default in payment of the principal of, interest on, or redemption premiums, if any, applicable to any Parity Bond as and when the same becomes due and payable;

(b) Default in remittance to the Trustee of any amounts required to be placed in the Revenue Fund pursuant to the Bond Resolution, which failure continues for a period of ten (10) days following receipt of written notice thereof by designated representatives of the University;

(c) Default in performance or observance of the terms of any of the covenants and agreements which are contained in the Bond Resolution, which default continues for a period of thirty (30) days following receipt of written notice thereof; provided, however, that such default shall not constitute an Event of Default thereunder, if

C-6 and so long as, in the judgment of the Trustee, the Board and the University have initiated and are diligently pursuing appropriate corrective action.

Upon the occurrence and continuance of an Event of Default under the Bond Resolution, the Trustee may, and upon request of registered owners of twenty-five percent (25%) of the aggregate principal amount of Parity Bonds then Outstanding, and upon receipt of indemnity as provided in the Bond Resolution, shall proceed to protect and enforce the rights of the registered owners of the Parity Bonds then Outstanding by suit, action or proceeding, at law or in equity, either for the specific performance of any covenant or agreement therein contained, or for the execution of any power herein granted or for the enforcement of any legal or equitable remedy, including application to any court of competent jurisdiction for the appointment of a receiver, who may be the trustee, with respect to the Gross Revenues of the University securing the Parity Bonds then Outstanding and having such powers and authority as the court may direct. No registered owner of any Parity Bonds shall have any right to institute or defend any such action, suit or proceeding unless written demand therefor and reasonable indemnity shall have been provided to the Trustee pursuant to the Bond Resolution and the Trustee shall have refused to institute or defend such action.

Defeasance. Any Parity Bonds, and the pledge of and lien on Gross Revenues securing such Parity Bonds, as the case may be, may be defeased and discharged as follows:

(a) by payment of the principal thereof and interest thereon when due, either at maturity or upon redemption prior to maturity, or

(b) by irrevocably depositing in trust with the Trustee moneys sufficient to make all payments of principal of and interest on such Parity Bonds, as the case may be, and/or Escrow Obligations maturing at such times and payable in such amounts as necessary to make such payments.

Trustee. The Board may appoint as trustee for any series of Parity Bonds a trust company or a bank having trust powers, which is a member of the Federal Deposit Insurance Corporation and of the Federal Reserve System with an officially-reported combined capital stock account, paid-in surplus and undivided profits of not less than $100 million. The Trustee is required to exercise the rights and duties vested in it by the Bond Resolution and to demonstrate the degree of skill and care in their exercise as a prudent person would employ in the conduct of his or her own affairs, with no liability in connection therewith except for its own negligence or willful misconduct.

The Trustee may resign or may be removed by holders of sixty-five percent (65%) or more of the aggregate principal amount of Outstanding Parity Bonds or by action of the Board, provided the Board is current in all deposits and payments required, and not in default, pursuant to the Bond Resolution. The holders of a majority of the aggregate principal amount of Outstanding Parity Bonds may appoint a successor Trustee, pending which the Board covenants to appoint an interim Trustee, in either case meeting the requirements set forth above, and each successor Trustee shall accept in writing, and thereupon become fully vested with, the rights, powers, duties and obligations of the predecessor Trustee.

Amendments and Supplements to the Bond Resolution. The Board may adopt, and the Trustee may accept, subject to restrictions and conditions contained in the Bond Resolution, without notice to or the consent of any registered owners of the Parity Bonds, but, in certain cases, with the consent of any credit facility provider, bond insurer, and any Reserve Fund Guarantor, a resolution amending or supplementing the Bond Resolution for any one or more of the following purposes:

(a) To cure any ambiguity, formal defect or omission or correct any inconsistent provisions in the Bond Resolution or make any other provisions which do not materially and adversely affect the interests of the registered owners of the Parity Bonds then Outstanding, or to confer ratably upon all the bondholders any additional rights or remedies or add to the Board’s covenants such further covenants, restrictions or conditions as the Board and the Trustee may consider necessary for the protection of the registered owners of the Parity Bonds or to add additional Events of Default and conditions thereof;

C-7 (b) To qualify the Bond Resolution under applicable Federal securities laws from time to time in effect; and

Otherwise, the registered owners of not less than sixty-five percent (65%) in aggregate principal amount of the Parity Bonds then Outstanding, and any bond insurer or credit facility provider, shall jointly have the right, from time to time, to consent to and approve the adoption by the Board and acceptance by the Trustee of such supplementary or amendatory resolutions as shall be deemed necessary and desirable for the purpose of modifying, altering, amending, adding to, or rescinding any of the particular terms or provisions contained in the Bond Resolution, with the exception of extending the date of maturity of or time for paying interest or reducing the rate of interest on any Parity Bond without the consent of the required owner of such Parity Bond, permitting the preference or priority of any Parity Bond over any other without the consent of the registered owner of such Parity Bond, or reducing the aggregate principal amount of Parity Bonds the consent of the registered owners of which is required to authorize such supplementary or amendatory resolution without the consent of the registered owners of all Parity Bonds then Outstanding.

Opinion of Bond Counsel. Certain terms, requirements and procedures contained or referred to in the Bond Resolution may be changed and certain actions may be taken under the circumstances and subject to the terms and conditions set forth in the Bond Resolution. The opinion of Ballard Spahr LLP, Phoenix, Arizona, bond counsel, that interest on the Series 2021C Bonds is excludable from gross income for purposes of Federal income tax, is qualified to the extent that bond counsel expresses no opinion as to whether, following any such change or the taking of any such action, interest on the Series 2021C Bonds will continue to be excludable from the gross income of the owners of the Series 2021C Bonds for Federal income tax purposes.

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APPENDIX D

FORM OF APPROVING OPINION OF BOND COUNSEL

______, 2021

Arizona Board of Regents Phoenix, Arizona

Re: $67,440,000* Arizona Board of Regents Arizona State University System Revenue Bonds, Taxable Series 2021A (Green Bonds), $94,380,000* Arizona Board of Regents Arizona State University System Revenue Bonds, Taxable 2021B and $118,025,000* Arizona Board of Regents Arizona State University System Revenue Bonds, Tax-Exempt Series 2021C

Ladies and Gentlemen:

We are members of the Arizona Bar and have acted as Bond Counsel in connection with the authorization, issuance and sale, and the initial delivery on the date hereof, by the Arizona Board of Regents, acting for and on behalf of Arizona State University (the “Board”), of $67,440,000* in aggregate principal amount of its Arizona State University System Revenue Bonds, Taxable Series 2021A (Green Bonds) (the “Series 2021A Bonds”), $94,380,000* in aggregate principal amount of its Arizona State University System Revenue Bonds, Taxable Series 2021B (the “Series 2021B Bonds,” and together with the Series 2021A Bonds, the “Taxable Bonds”), and $118,025,000* in aggregate principal amount of its Arizona State University System Revenue Bonds, Tax-Exempt Series 2021C (the “Tax-Exempt Bonds” and, collectively with the Series 2021A Bonds and the Series 2021B Bonds, the “Series 2021 Bonds”), each series dated ______, 2021, pursuant to the laws of the State of Arizona, and a resolution adopted by the Board on November 7, 1985, as thereafter supplemented and amended, including by resolutions adopted by the Board on June 14, 2012, September 28, 2018, September 20, 2019, February 14, 2020, June 12, 2020, October 2, 2020 and November 20, 2020 (collectively, the “Bond Resolution”).

Capitalized terms used, and not otherwise defined, herein have the respective meanings set forth in the Bond Resolution.

In connection with our engagement, we have examined the law, the Bond Resolution and such certified proceedings and other documents and matters as we deemed necessary to render this opinion. We have assumed and have not verified (i) the genuineness of the signatures on all documents, the authenticity of documents submitted to us as originals and the conformity to the originals of documents submitted to us as copies, and (ii) the legal capacity of each individual signing the documents and the Series 2021 Bonds. As to questions of fact material to our opinion, we have relied upon and assumed compliance with the provisions of the documents and have assumed the accuracy of the certified proceedings and other certifications and representations of public officials furnished to us without undertaking to verify the same by independent investigation.

Based upon the foregoing, it is our opinion, and we herewith advise you, as follows:

1. The Series 2021 Bonds have been duly authorized, issued, sold and delivered by the Board and are valid and binding special obligations of the Board, payable, together with any bonds issued and outstanding on a parity therewith, solely from and secured solely by a pledge of, a lien on and a security interest in the Gross Revenues (as defined in the Bond Resolution), consisting generally of student tuition and fees and fees, rents and

* Preliminary, subject to change.

D-1

charges from the operation of the System of Building Facilities (as defined in the Bond Resolution) at Arizona State University. 2. Interest [(including original issue discount)] on the Tax-Exempt Bonds is excludable from the gross income of the owners for federal income tax purposes under existing laws as enacted and construed on the date of initial delivery of the Tax-Exempt Bonds. Interest on the Tax-Exempt Bonds is not an item of tax preference for purposes of federal alternative minimum tax imposed on individuals.

The opinions set forth in paragraph 2 above assume the accuracy of the certifications of the Board relating to the Tax-Exempt Bonds and are subject to the condition that the Board comply with all requirements of the Internal Revenue Code of 1986, as amended, that must be satisfied in order for interest on the Tax-Exempt Bonds to be, or continue to be, excludable from the gross income of the owners thereof for federal income tax purposes. The Board has covenanted to comply with such requirements. Failure to comply with such requirements may cause the interest on the Tax-Exempt Bonds to be included in the gross income of the owners for federal income tax purposes retroactive to the date of issuance of the Tax-Exempt Bonds.

3. Interest on the Taxable Bonds is not excludable from gross income for federal income tax purposes.

4. Interest on the Series 2021 Bonds is exempt from taxable income for State of Arizona tax purposes.

Bond Counsel does not express any opinion regarding any other tax consequences of ownership or disposition of, or the accrual or receipt of interest, on the Series 2021 Bonds.

The rights of the holders of the Series 2021 Bonds and the enforceability thereof is subject to applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws relating to or affecting the rights of creditors generally and general principles of equity.

Certain terms, requirements and procedures contained or referred to in the Bond Resolution may be changed and certain actions may be taken under the circumstances and subject to the terms and conditions set forth in the Bond Resolution. The opinions set forth above are qualified to the extent that we express no opinion as to whether, following any such change or the taking of any such action, interest on the Tax-Exempt Bonds will continue to be excludable from the gross income of the owners of the Tax-Exempt Bonds for federal income tax purposes.

The opinions set forth above are based on an analysis of existing laws, regulations, rulings and court decisions and cover certain matters not directly addressed by such authorities. Such opinions may be affected by actions taken or omitted or events occurring after the date hereof, including subsequent interpretations of the applicable law by competent judicial, regulatory or administrative authorities that modify, revoke, supplement, reverse, overrule or otherwise change applicable law and current interpretations thereof. We have not undertaken to determine, or to inform any person, whether any such actions are taken or any such events do occur. Our engagement with respect to the Series 2021 Bonds and the opinions set forth herein concludes with the delivery of this opinion, and we disclaim any obligation to update this letter.

This opinion is addressed to and is solely for the benefit of the Board and may not be relied upon by any other person without our express written consent.

Respectfully submitted,

D-2

APPENDIX E

FORM OF CONTINUING DISCLOSURE UNDERTAKING

ARIZONA BOARD OF REGENTS ARIZONA STATE UNIVERSITY $67,440,000* $94,380,000* $118,025,000* SYSTEM REVENUE BONDS, SYSTEM REVENUE BONDS, SYSTEM REVENUE BONDS, TAXABLE SERIES 2021A TAXABLE SERIES 2021B TAX-EXEMPT SERIES 2021C (GREEN BONDS)

CONTINUING DISCLOSURE UNDERTAKING

This Continuing Disclosure Undertaking (this “Disclosure Undertaking”) is executed and delivered by the Arizona Board of Regents (the “Board”), in connection with the issuance, sale and delivery by the Board of its (i) Arizona State University System Revenue Bonds, Taxable Series 2021A (Green Bonds), in the original aggregate principal amount of $67,440,000* (the “Series 2021A Bonds”), (ii) Arizona State University System Revenue Bonds, Taxable Series 2021B, in the original aggregate principal amount of $94,380,000* (the “Series 2021B Bonds”), and (iii) Arizona State University System Revenue Bonds, Tax-Exempt Series 2021C, in the original aggregate principal amount of $118,025,000* (the “Series 2021C Bonds,” and together with the Series 2021A Bonds and the Series 2021B Bonds, the “Series 2021 Bonds”) for and on behalf of Arizona State University (the “University”). The Series 2021 Bonds are issued pursuant to a resolution of the Board adopted on November 7, 1985, as thereafter amended and supplemented, including by resolutions adopted by the Board on June 14, 2012, September 28, 2018, September 20, 2019, February 14, 2020, June 12, 2020, October 2, 2020 and November 20, 2020 (collectively, the “Bond Resolution”). Certain other terms are defined in Section 10 hereof.

The Board undertakes and agrees as follows:

SECTION 1 Purpose of the Disclosure Undertaking. This Disclosure Undertaking is being executed and delivered by the Board for the benefit of the Bondholders and in order to assist each Participating Underwriter in complying with the Rule.

SECTION 2 Annual Information and Audited Financial Statements. Subject to the provisions of Section 12 hereof, the Board agrees to provide or cause to be provided to the MSRB through its Electronic Municipal Market Access (EMMA) system at http://emma.msrb.org in a format required by the MSRB:

(a) Annual Information for the preceding Fiscal Year not later than the Filing Date for each Fiscal Year; and

(b) Audited Financial Statements for the preceding Fiscal Year not later than the later of the Filing Date for each Fiscal Year or promptly after becoming available to the Board.

Any or all of the items listed above may be included by specific reference to other documents; provided that if the document included by reference is not a final official statement, it must have been provided

* Preliminary, subject to change.

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previously to the MSRB or the Securities and Exchange Commission, and if the document included by reference is a final official statement, it must be available from the MSRB.

SECTION 3 Notice of Listed Events and Failure to Provide Annual Information. The Board agrees to provide or cause to be provided to the MSRB, in a timely manner:

(a) notice of the occurrence of any of the Listed Events with respect to the Series 2021 Bonds within ten (10) business days of the occurrence of such Listed Event; and

(b) notice of its failure to provide or cause to be provided the Annual Information on or before the applicable Filing Date.

Notwithstanding the foregoing, notice of Listed Events consisting of bond calls or defeasances need not be given pursuant to this subsection any earlier than the date on which notice of the underlying event is given to the registered owners of affected Series 2021 Bonds pursuant to the Bond Resolution, and notice of the occurrence of a mandatory, scheduled redemption, not otherwise contingent upon the occurrence of an event, is not required if the terms of the redemption pursuant to which the redemption is to occur are set forth in detail in the Official Statement and the only open issue is which Series 2021 Bonds will be redeemed in the case of a partial redemption.

SECTION 4 Termination of Reporting Obligation. The obligations of the Board pursuant to this Disclosure Undertaking will terminate at such time as no Series 2021 Bonds remain Outstanding (within the meaning of the Bond Resolution), all of the Series 2021 Bonds have been legally defeased, redeemed or paid in full or the Rule is no longer applicable to the Series 2021 Bonds. The Board will give prompt notice to the MSRB if this Section becomes applicable.

SECTION 5 Dissemination Agent. The Board may, from time to time, appoint or engage a dissemination agent to assist it in carrying out its obligations pursuant to this Disclosure Undertaking, and may discharge any such dissemination agent, with or without appointing a successor dissemination agent.

SECTION 6 Amendment; Waiver. Notwithstanding any other provision of this Disclosure Undertaking, the Board may amend this Disclosure Undertaking, and any provision of this Disclosure Undertaking may be waived; if:

(a) the amendment or waiver is made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature or status of an “obligated person” (within the meaning of the Rule) with respect to the Series 2021 Bonds, or the type of business conducted;

(b) this Disclosure Undertaking, as amended or taking into account such waiver, would, in the opinion of counsel of national reputation selected by the Board and experienced in bond or Federal securities law selected by the Board, have complied with the requirements of the Rule at the time of the original issuance of the Series 2021 Bonds, taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and

(c) the amendment or waiver either (i) is approved by the registered owners of the Series 2021 Bonds in the same manner as provided in the Bond Resolution for amendments to the Bond Resolution with the consent of registered owners of the Series 2021 Bonds, or (ii) does not materially impair the interests of the Bondholders as determined by the opinion of counsel of national reputation experienced in bond or Federal securities law unaffiliated with the Board but which may be selected by the Board, or as determined by another party unaffiliated with the Board but which may be selected by the Board.

SECTION 7 Additional Information. Nothing in this Disclosure Undertaking will be deemed to prevent the Board from disseminating any other information, using the means of dissemination set forth in this Disclosure Undertaking or any other means of communication, or including any other information in any Annual Information or notice of the occurrence of a Listed Event, in addition to that which is required by this Disclosure Undertaking. If the Board chooses to include any such other information in any Annual Information or notice of the

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occurrence of any Listed Event or any other event, in addition to that which is specifically required by this Disclosure Undertaking, the Board will have no obligation pursuant to this Disclosure Undertaking to update the information or include it in any future Annual Information or notice of the occurrence of any Listed Event.

SECTION 8 Failure to Perform. Any Bondholder may enforce the Board’s obligation to provide or cause to be provided information or notice pursuant to this Disclosure Undertaking by commencing an action for specific performance in a court of competent jurisdiction to compel the Board to provide or cause to be provided such information or notice; provided, however, that as a condition precedent to commencing any such action, a Bondholder must first provide at least thirty (30) days prior written notice to the Board of its failure to perform, giving reasonable detail of such failure, following which notice the Board will have 30 days to perform. Failure by the Board to perform its obligations pursuant to this Disclosure Undertaking will not be deemed an event of default with respect to the Series 2021 Bonds or the Bond Resolution or any other agreement or document and the sole remedy pursuant to this Disclosure Undertaking in the event of any failure of the Board to comply with this Disclosure Undertaking will be an action to compel performance.

SECTION 9 Beneficiaries. This Disclosure Undertaking is solely for the benefit of the Board and the Bondholders from time to time, and will create no rights in any other person or entity.

SECTION 10 Definitions. In addition to the definitions set forth in the Bond Resolution which apply to any capitalized term used in this Disclosure Undertaking unless otherwise defined in this Disclosure Undertaking, the following capitalized terms will have the following meanings:

(a) “Annual Information” means:

(1) quantitative financial information and operating data concerning the operations of the University of the type set forth in Appendix A to the Official Statement under the headings:

(i) “ARIZONA STATE UNIVERSITY – Student Enrollment – Total Headcount – University Wide”; – Full Time Equivalent (FTE) – University Wide”; and

(ii) “FINANCIAL CONDITION OF THE UNIVERSITY – ARIZONA STATE UNIVERSITY – Statement of Revenues, Expenses and Changes in Net Position”; – ARIZONA STATE UNIVERSITY – Schedule of Historical Gross Revenues”; – ARIZONA STATE UNIVERSITY – Receipts from Other Major Revenue Sources – University Wide”; and – ARIZONA STATE UNIVERSITY – Debt Service Requirements”.

(2) unaudited annual Financial Statements of the University unless Audited Financial Statements are provided at the same time.

In addition to the information described above, (A) if any part of the Annual Information described in (1) can no longer be generated because the operations to which it relates have been materially changed or discontinued, the Board will include a statement to that effect as part of the Annual Information for the year in which the change or discontinuation occurs, and (B) the Annual Information for the year in which any amendment or waiver of a provision of this Disclosure Undertaking occurs will describe and explain the amendment or waiver, the reason for it and its impact on the type of information being provided, and if the amendment relates to the accounting principles to be followed in preparing financial statements, the Annual Information for the year in which the change is made will present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles.

(b) “Audited Financial Statements” means audited annual Financial Statements of the University.

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(c) “Bondholder” means a beneficial owner of a Series 2021 Bond, with beneficial ownership determined on a basis consistent with the provisions of Rule 13d-3 adopted by the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended, or, if those provisions do not adequately address the situation in question (in the opinion of counsel of national reputation experienced in bond or Federal securities law selected by the Board), with beneficial ownership determined on the basis of ownership for Federal income tax purposes. Any assertion of beneficial ownership must be established by evidence in writing with full documentary support filed with the Board.

(d) “Filing Date” means the first business day of the eighth month following the end of each Fiscal Year, beginning February 1, 2022.

(e) “Financial Obligation” means a (i) debt obligation; (ii) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of (i) or (ii). The term “Financial Obligation” shall not include municipal securities as to which a final official statement has been provided to the MSRB consistent with the Rule.

(f) “Financial Statements” means annual financial statements of the University prepared in conformity with generally accepted accounting principles as reflected in the governmental accounting standards promulgated from time to time by the Government Accounting Standards Board of the American Institute of Certified Public Accountants.

(g) “Fiscal Year” means each Fiscal Year of the University, commencing with the Fiscal Year that began July 1, 2020, and ends on June 30, 2021.

(h) “Listed Events” means any of the following events:

i) principal and interest payment delinquencies;

ii) non-payment related defaults, if material;

iii) unscheduled draws on debt service reserves reflecting financial difficulties*;

iv) unscheduled draws on credit enhancements reflecting financial difficulties;

v) substitution of credit or liquidity providers, or their failure to perform;

vi) adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701- TEB) or other material notices or determinations with respect to the tax status of the Series 2021C Bonds, or other material events affecting the tax status of the Series 2021C Bonds;

vii) modifications to rights of holders of the Series 2021 Bonds, if material;

viii) bond calls, if material, and tender offers;

ix) defeasances;

x) release, substitution, or sale of property securing repayment of the Series 2021 Bonds, if material;

xi) rating changes;

xii) bankruptcy, insolvency, receivership or a similar event of the Board;

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xiii) the consummation of a merger, consolidation, or acquisition involving the Board or the sale of all or substantially all of the assets of the Board other than in the ordinary course of business, the entry into a definitive agreement to undertake any such action or the termination of a definitive agreement relating to any such action, other than pursuant to its terms, if material;

xiv) appointment of a successor or additional trustee or the change of name of a trustee, if material;

xv) the incurrence of a Financial Obligation of the Board, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the Board, any of which affect security holders, if material; and

xvi) a default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a Financial Obligation of the Board, any of which reflect financial difficulties.

* As of the date of this Disclosure Undertaking, there exists no, and the Board has no obligation or intention to provide, obtain or maintain any, debt service reserves with respect to the Series 2021 Bonds.

(i) “MSRB” means the Municipal Securities Rulemaking Board.

(j) “Official Statement” means the final Official Statement dated ______, 2021, with respect to the initial offering of the Series 2021 Bonds.

(k) “Participating Underwriter” means each broker, dealer, or municipal securities dealer acting as an underwriter in the primary offering of the Series 2021 Bonds, including Goldman Sachs & Co. LLC, Citigroup Global Markets Inc., J.P. Morgan Securities LLC, UBS Financial Services Inc., and Wells Fargo Bank, National Association.

(l) “Rule” means Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended, as applicable to the Series 2021 Bonds.

(m) “State” means the State of Arizona.

SECTION 11 Governing Law; Forum. This Disclosure Undertaking will be governed by the law of the State. Any action to enforce this Disclosure Undertaking against the Board may be brought only in a State court located in Maricopa County, Arizona.

SECTION 12 Budget Requirement. In accordance with the law of the State, no expenditures may be made by the Board in any Fiscal Year for a purpose not included in the budget, and no expenditure may be made or obligation or liability incurred or created by the Board in any Fiscal Year in excess of the amount specified for each purpose in the budget, for that Fiscal Year, except as otherwise provided by law, and the Board’s undertaking in this Disclosure Undertaking is subject to this limitation of State law on expenditures by the Board for costs of performing its obligations in accordance with this Disclosure Undertaking. In the event of non-compliance by the Board with its covenants herein due to a failure to budget for and appropriate the necessary funds, the Board agrees to provide prompt notice of such fact to the MSRB.

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Dated: ______, 2021.

ARIZONA BOARD OF REGENTS

By: ______Joanne Wamsley Vice President for Finance and Deputy Treasurer, Arizona State University

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APPENDIX F

BOOK-ENTRY-ONLY SYSTEM

THE FOLLOWING INFORMATION HAS BEEN PROVIDED BY DTC. NO REPRESENTATION IS MADE BY THE BOARD OR THE UNIVERSITY AS TO THE ACCURACY OR ADEQUACY OF THE INFORMATION PROVIDED BY DTC OR AS TO THE ABSENCE OF MATERIAL ADVERSE CHANGES IN SUCH INFORMATION SUBSEQUENT TO THE DATE HEREOF.

DTC, New York, New York, will act as securities depository for the Series 2021 Bonds. The Series 2021 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 Series 2021 Bond certificate will be issued for each maturity of each series of the Series 2021 Bonds, each in the principal amount of such maturity of the Series 2021 Bonds, and will be deposited with DTC.

DTC, the world’s largest depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book- entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. DTC is a wholly owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a Standard & Poor’s rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com.

Purchases of Series 2021 Bonds under the DTC system must be made by or through Direct Participants, which receive a credit for the Series 2021 Bonds on DTC’s records. The ownership interest of each actual purchaser of each Series 2021 Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase, but Beneficial Owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Series 2021 Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Series 2021 Bonds, except in the event that use of the book-entry-only system for the Series 2021 Bonds is discontinued.

To facilitate subsequent transfers, all Series 2021 Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Series 2021 Bonds with DTC and their registration in the name of Cede & Co. or such other nominee do not affect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Series 2021 Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Series 2021 Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.

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Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time.

Redemption notices will be sent to DTC. If less than all of the Series 2021 Bonds of a single maturity are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant to be redeemed.

Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to the Series 2021 Bonds. Under its usual procedures, DTC mails an Omnibus Proxy to the Trustee as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts the Series 2021 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).

Principal and interest payments on the Series 2021 Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the Trustee on the payment date in accordance with their respective holdings shown on DTC’s records. Payments by Direct and Indirect Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name”, and will be the responsibility of such Direct or Indirect Participant and not of DTC, the Board, the University or the Trustee, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Trustee, disbursement of such payments to Direct Participants is the responsibility of DTC, and disbursement of such payments to the Beneficial Owners is the responsibility of the Direct and Indirect Participants.

DTC may discontinue providing its services as securities depository with respect to the Series 2021 Bonds at any time by giving reasonable notice to the Board and the Trustee. Under such circumstances, in the event that a successor securities depository is not obtained, Series 2021 Bond certificates are required to be printed and delivered.

The Board or the Trustee may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Series 2021 Bond certificates will be printed and delivered.

NONE OF THE BOARD, UNIVERSITY, THE FINANCIAL ADVISOR, THE UNDERWRITERS, OR ANY OF THEIR COUNSEL OR AGENTS WILL HAVE ANY RESPONSIBILITY OR OBLIGATION TO DTC DIRECT PARTICIPANTS OR TO INDIRECT PARTICIPANTS WITH RESPECT TO (1) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC, ANY DIRECT PARTICIPANT, OR ANY INDIRECT PARTICIPANT; (2) ANY NOTICE THAT IS PERMITTED OR REQUIRED TO BE GIVEN TO THE OWNERS OF THE SERIES 2021 BONDS PURSUANT TO THE BOND RESOLUTION; (3) THE SELECTION BY DTC OR ANY DIRECT PARTICIPANT OR INDIRECT PARTICIPANT OF ANY PERSON TO RECEIVE PAYMENT IN THE EVENT OF A PARTIAL REDEMPTION OF THE SERIES 2021 BONDS; (4) THE PAYMENT BY DTC OR ANY DIRECT PARTICIPANT OR INDIRECT PARTICIPANT OF ANY AMOUNT WITH RESPECT TO THE PRINCIPAL OR REDEMPTION PREMIUM, IF ANY, OR INTEREST DUE WITH RESPECT TO THE SERIES 2021 BONDS; (5) ANY CONSENT GIVEN OR OTHER ACTION TAKEN BY DTC AS THE OWNER OF SERIES 2021 BONDS; OR (6) ANY OTHER MATTERS.

So long as Cede & Co. is the registered owner of the Series 2021 Bonds, as nominee for DTC, references herein to “Owner” or registered owners of the Series 2021 Bonds (other than under the caption “TAX MATTERS” herein) will mean Cede & Co., as aforesaid, not the Beneficial Owners of such Series 2021 Bonds.

When reference is made to any action which is required or permitted to be taken by the Beneficial Owners, such reference will only relate to those permitted to act (by statute, regulation or otherwise) on behalf of such Beneficial Owners for such purposes. When notices are given, they will be sent by the Board or the Trustee to DTC only.

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ARIZONA BOARD OF REGENTS ARIZONA STATE UNIVERSITY • SYSTEM REVENUE BONDS, TAXABLE SERIES 2021A (GREEN BONDS), 2021B and TAX-EXEMPT SERIES 2021C