NEW ISSUE; BOOK-ENTRY ONLY Ratings: Moody’s: “Aa3” S&P: “A+” See Ratings.

In the opinion of Roetzel & Andress, A Legal Professional Association, Bond Counsel, under existing law (i) assuming compliance with certain covenants and the accuracy of certain representations, interest on the Series 2012A Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; and (ii) the interest on, and any profit made on the sale, exchange or other disposition of, the Series 2012A Bonds are exempt from the Ohio personal income tax, the Ohio commercial activity tax, the net income base of the Ohio corporate franchise tax, and municipal, school district and joint economic development district income taxes in Ohio. For a more complete discussion of tax aspects, see Tax Matters herein.

OFFICIAL STATEMENT $170,000,000 KENT STATE UNIVERSITY (A State University of Ohio) GENERAL RECEIPTS BONDS, SERIES 2012A

Dated: Date of Issuance Due: May 1, as shown on the inside cover

The Bonds. The $170,000,000 General Receipts Bonds, Series 2012A (the “Series 2012A Bonds”) are special obligations issued by the University pursuant to a Trust Agreement, as supplemented by a Seventeenth Supplemental Trust Agreement, each between the University and the Trustee, to pay costs of certain University Facilities. See Project and Plan of Financing. Principal, interest and any premium payable on the Series 2012A Bonds, and on other General Receipts Bonds, are payable solely from the General Receipts of the University and the Special Funds, as defined in and subject to the provisions of a Trust Agreement. See Security and Sources of Payment. The Series 2012A Bonds are not obligations of the state of Ohio, are not general obligations of the University, and the full faith and credit of the University is not pledged to their payment. Bondholders shall have no right to have excises or taxes levied by the Ohio General Assembly for payment of principal of or interest on the Series 2012A Bonds. Book-Entry Only. The Series 2012A Bonds will be initially issued only as fully-registered bonds, one bond for each maturity and interest rate within a maturity of each series of bonds, issuable under a book-entry system, registered initially in the name of The Depository Trust Company or its nominee (“DTC”). There will be no distribution of Series 2012A Bonds to the ultimate purchasers. The Series 2012A Bonds in certificated form as such will not be transferable or exchangeable, except for transfer to another nominee of DTC or as otherwise described in this Official Statement. See Appendix D. Payment. Principal and interest, and any premium, will be payable to the registered owner (DTC), principal and any premium upon presentation and surrender at the designated office of The Huntington National Bank, Columbus, Ohio (the “Trustee”), and interest transmitted by the Trustee on each interest payment date (May 1 and November 1 of each year, beginning November 1, 2012) to the registered owner (DTC) as of the 15th day of the calendar month preceding that interest payment date. Prior Redemption. The Series 2012A Bonds maturing on or after May 1, 2023 are subject to optional redemption prior to maturity on any date on or after May 1, 2022, and the Series 2012A Bonds are subject to mandatory redemption, as described in this Official Statement. See Certain Terms of Series 2012A Bonds – Prior Redemption. The Series 2012A Bonds are offered by the Underwriters, when, as and if issued by the University and accepted by the Underwriters, subject to prior sale, withdrawal, or modification of the offer without any notice, and subject to the delivery of an approving opinion on certain legal matters relating to their issuance by Roetzel & Andress, A Legal Professional Association, Bond Counsel. Certain legal matters will be passed upon for the Underwriters by Peck, Shaffer & Williams LLP and for the University by Willis Walker, Chief University Counsel, and by Squire Sanders (US) LLP, Disclosure Counsel. The Series 2012A Bonds are expected to be available for delivery to DTC or its agent on June 21, 2012.

BofA Merrill Lynch KeyBanc Capital Markets Inc.

CastleOak Securities L.P. Fifth Third Securities, Inc. The Huntington Investment Company J.P. Morgan Morgan Stanley PNC Capital Markets LLC Sterne Agee & Leach Inc.

This Official Statement has been prepared by the University in connection with its original offering for sale of the Series 2012A Bonds. This cover page includes certain information for quick reference only. It is not a summary of the Series 2012A Bond issue. Investors should read the entire Official Statement to obtain information as a basis for making informed investment judgments.

The date of this Official Statement is June 7, 2012, and the information speaks only as of that date. PRINCIPAL MATURITY SCHEDULE ON MAY 1

CUSIP CUSIP Interest No. (a) Interest No. (a) Year Amount Rate Price 490728 Year Amount Rate Price 490728

2014 $2,915,000 3.000% 103.923% XD9 2024 $4,485,000 5.000% 115.849%(b) WR9 2015 3,005,000 5.000 110.953 XE7 2025 4,705,000 5.000 114.750(b) WS7 2016 3,155,000 4.000 110.253 WH1 2026 4,945,000 5.000 113.935(b) WT5 2017 3,280,000 5.000 116.041 WJ7 2027 5,190,000 3.500 97.838 WU2 2018 3,445,000 4.000 112.065 WK4 2028 5,370,000 5.000 112.502(b) WV0 2019 3,580,000 4.000 112.079 WL2 2029 5,640,000 5.000 111.882(b) WW8 2020 3,725,000 5.000 118.759 WM0 2030 5,920,000 5.000 111.266(b) WX6 2021 3,910,000 5.000 118.708 WN8 2031 6,220,000 5.000 110.655(b) WY4 2022 4,105,000 4.000 110.275 WP3 2032 3,280,000 4.500 104.535(b) XC1 2023 4,270,000 5.000 117.239(b) WQ1 2032 3,250,000 4.000 99.453 WZ1

$37,610,000 5.000% Term Bond due May 1, 2037 Price: 108.077%(b) CUSIP No. (a) 490728 XA5 $47,995,000 5.000% Term Bond due May 1, 2042 Price: 107.571%(b) CUSIP No. (a) 490728 XB3

______(a) Copyright ©2012, CUSIP Global Services (see Regarding This Official Statement) (b) Priced to May 1, 2022, the optional redemption date for the Series 2012A Bonds maturing on or after May 1, 2023. REGARDING THIS OFFICIAL STATEMENT This Official Statement does not constitute an offering of any security other than the original offering of the Series 2012A Bonds identified on the Cover. No dealer, broker, sales person or other person has been authorized by the Board of Trustees of the University to give any information or to make any representation other than as contained in this Official Statement, and if given or made, such other information or representation must not be relied upon as having been given or authorized by the University. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, and there shall not be any sale of the Series 2012A Bonds by any person, in any jurisdiction in which it is unlawful to make that offer, solicitation or sale. The information in this Official Statement is provided by the University in connection with the original offering of the Series 2012A Bonds. Reliance should not be placed on any other information publicly provided, in any format including electronic, by the University for other purposes, including general information provided to the public or to portions of the public. The information in this Official Statement is subject to change without notice. Neither the delivery of this Official Statement nor any sale made under it shall, under any circumstances, give rise to any implication that there has been no change in the affairs of the University since its date. This Official Statement contains statements that the University believes may be “forward-looking statements.” Words such as “plan,” “estimate,” “project,” “budget,” “anticipate,” “expect,” “intend,” “believe” and similar terms are intended to identify forward- looking statements. The achievement of results or other expectations expressed or implied by such forward-looking statements involves known and unknown risks, uncertainties and other factors that are difficult to predict, may be beyond the University’s control and could cause actual results, performance or achievements to be materially different from any results, performance or achievements expressed or implied by such forward-looking statements. The University undertakes no obligation, and does not plan, to issue any updates or revisions to such forward-looking statements. UPON ISSUANCE, THE SERIES 2012A BONDS WILL NOT BE REGISTERED BY THE UNIVERSITY UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAW, AND WILL NOT BE LISTED ON ANY STOCK OR OTHER SECURITIES EXCHANGE. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER FEDERAL, STATE OR OTHER GOVERNMENTAL ENTITY OR AGENCY WILL HAVE AT THE REQUEST OF THE UNIVERSITY PASSED UPON THE ACCURACY OR ADEQUACY OF THIS OFFICIAL STATEMENT OR APPROVED OR DISAPPROVED THE SERIES 2012A BONDS FOR SALE. CUSIP is a registered trademark of the American Bankers Association. CUSIP Global Services (CGS) is managed on behalf of the American Bankers Association by Standard & Poor’s. CUSIP data herein are provided by Standard & Poor’s, CUSIP Service Bureau, a division of The McGraw-Hill Companies, Inc. CUSIP numbers have been assigned by an independent company not affiliated with the University and are included solely for the convenience of the holders of the Series 2012A Bonds. The University is not responsible for the selection or use of these CUSIP numbers, and makes no representation as to their correctness on the Series 2012A Bonds or the Cover or as indicated above. The CUSIP number for a specific maturity is subject to change after the issuance of the Series 2012A Bonds as a result of various subsequent actions and events.

1 In connection with this offering, the Underwriters may overallot or effect transactions that stabilize or maintain the market price of the Series 2012A Bonds at a level above that which might otherwise prevail in the open market. Such stabilizing, if commenced, may be discontinued at any time. The Underwriters may offer and sell the Series 2012A Bonds to certain dealers and dealer banks and banks acting as agent at prices lower than the public offering price stated on the Cover, which public offering price may be changed from time to time by the Underwriters.

2 TABLE OF CONTENTS Page Regarding this Official Statement...... 1 Table of Contents...... 3 Introductory Statement...... 5 General ...... 5 Authorization ...... 6 Amendment of Trust Agreement ...... 6 The General Receipts Bonds...... 7 Project and Plan of Financing...... 8 Sources and Uses of Funds ...... 9 Certain Terms of Series 2012A Bonds ...... 9 General; Book-Entry System ...... 9 Prior Redemption...... 9 Mandatory Sinking Fund Redemption of Series 2012A Bonds ...... 9 Optional Redemption of Series 2012A Bonds...... 10 Selection of Series 2012A Bonds and Book-Entry Interests to be Redeemed ...... 10 Notice of Call for Redemption; Effect...... 10 Security and Sources of Payment ...... 11 General ...... 11 General Receipts Pledged to the Bonds...... 11 Covenant as to Sufficiency of General Receipts...... 12 Annual Bond Service Charges and Coverage...... 14 The Agreement...... 15 Funds and Accounts...... 15 Eligible Investments of Amounts in the Bond Service Account and Project Fund...... 16 Covenants of the University...... 19 Events of Default and Remedies...... 19 Enforcement by Mandamus ...... 21 Defeasance ...... 21 Additional Bonds ...... 22 Nonpresentment; Uncashed Checks ...... 23 Supplemental Trust Agreements...... 24 Annual Reports and Records ...... 25 Pledge of General Receipts...... 26 Trustee...... 26 Limitations on Enforceability of Remedies ...... 26 Tax Matters ...... 27 Original Issue Discount/Original Issue Premium ...... 28 Legal Opinions...... 29 Litigation...... 29 Ratings ...... 29 Transcript and Closing Documents...... 30 Continuing Disclosure Agreement...... 30 Underwriting...... 30 Financial Advisor...... 31 Eligibility for Investment and as Public Moneys Security ...... 31 Concluding Statement...... 32

3 Appendix A – Kent State University Appendix B – Audited Financial Statements for Fiscal Year 2011 Appendix C – Definitions of Certain Terms of the Agreement Appendix D – Book-Entry System; DTC Exhibit A – Proposed Text of Opinion of Bond Counsel Exhibit B – Proposed Form of Continuing Disclosure Agreement

4 INTRODUCTORY STATEMENT General This Official Statement has been prepared by Kent State University (the “University”), a state university of Ohio, in connection with the University’s original issuance and sale of its General Receipts Bonds, Series 2012A (the “Series 2012A Bonds”). Certain information concerning the Series 2012A Bonds, including their authorization, purpose, terms, and security and source of payment is provided in this Official Statement. Information concerning the University appears in Appendix A. This Introductory Statement briefly describes certain information relating to the Series 2012A Bonds and supplements certain information on the Cover. It is not intended as a substitute for the more detailed discussions in this Official Statement. Investors should read the entire Official Statement to obtain information as a basis for making informed investment judgments. All financial and other information in this Official Statement has been provided by the University from its records, except for information expressly attributed to other sources and except for certain information on the Cover and under Underwriting. The presentation of information, including tables of receipts from taxes and other sources, is intended to show recent historical information, and is not intended to indicate future or continuing trends in the financial position or other affairs of the University. No representation is made that past experience, as is shown by that financial and other information, will necessarily continue or otherwise be predictive of future experience. See also Regarding This Official Statement. This Official Statement should be considered in its entirety and no one subject should be considered less important than another by reason of location in the text. Reference should be made to laws, reports or documents referred to for more complete information regarding their contents. References to provisions of Ohio law, including the Revised Code and the Ohio Constitution, are references to those current provisions. Those provisions may be amended, repealed or supplemented. As used in this Official Statement:

 “Act” means, collectively, Sections 3345.11 and 3345.12 of the Revised Code, and Sections 9.98 through 9.983 of the Revised Code made applicable by Section 3345.12(B) of the Revised Code, as the same may be amended, modified, revised, supplemented, or superseded from time to time, provided that no further action by the General Assembly shall alter the obligation of the University to pay the Bond Service Charges in the amount and manner, at the times, and from the sources provided in the Trust Agreement and the applicable Supplemental Trust Agreement, except as otherwise permitted therein.

 “Beneficial Owner” means the owner of a book-entry interest in the Series 2012A Bonds, as described in Appendix D.

 “Board of Trustees” means the Board of Trustees of Kent State University.  “Bond Service Charges” means, generally, principal (including any mandatory sinking fund redemption requirements) of and interest and any redemption premium payable on the obligations referred to as those payments come due and are payable; debt charges may also be referred to as “debt service.”

5  “Cover” means the cover page and inside cover of this Official Statement.  “Fiscal Year” means the University’s Fiscal Year, currently the 12-month period from July 1 to June 30. Reference to a particular Fiscal Year means the Fiscal Year that ends on June 30 in the indicated year: for example, “Fiscal Year 2011” refers to the Fiscal Year ending June 30, 2011.

 “Revised Code” means the Ohio Revised Code.  “State” means the state of Ohio. For definitions of other capitalized words and phrases used in this Official Statement, see Appendix C. Authorization The Series 2012A Bonds are authorized pursuant to the Act, enacted under authority of Section 2i of Article VIII of the Ohio Constitution which provides in relevant part that the General Assembly of the State may authorize the issuance of revenue obligations and other obligations for capital improvements for state-supported and state-assisted institutions of higher education, which obligations may be secured by a pledge under law of all or such portion of receipts of those institutions as the General Assembly authorizes. Section 2i further provides that the owners of those obligations, such as the Series 2012A Bonds, are not given the right to have excises or taxes levied by the General Assembly for the payment of principal or interest. The Act authorizes the issuance by the University of Bonds to pay all or part of the cost of “facilities” (referred to as “University Facilities” in the Trust Agreement) and to refund and retire obligations previously issued for such purpose; authorizes the pledge to the Bonds of all or such part of the “available receipts” of the University as the University determines in the Bond proceedings (being the General Receipts); and provides that the pledge of and lien on General Receipts may, as provided for in the Agreement, be made prior to all other expenses, claims or payments. The Series 2012A Bonds are being issued pursuant to the Act, the resolution adopted by the Board of Trustees on March 14, 2012 (the “Series 2012A Resolution”), an Amended and Restated Trust Agreement (Sixteenth Supplemental Trust Agreement) dated June 21, 2010 (the “Trust Agreement”), as supplemented by a Seventeenth Supplemental Trust Agreement dated as of June 1, 2012 (the “Seventeenth Supplemental Trust Agreement”), each between the University and The Huntington National Bank (the “Trustee”). The Trust Agreement, as supplemented by the Seventeenth Supplemental Trust Agreement, is referred to in this Official Statement as the “Agreement.” The Trust Agreement authorizes the issuance of General Receipts Bonds of the University (the “Bonds”) to finance costs of those authorized facilities (referred to in the Trust Agreement as “University Facilities”) and to refund outstanding Bonds, and the Series 2012A Resolution and Seventeenth Supplemental Trust Agreement specifically authorize the issuance of the Series 2012A Bonds. Amendment of Trust Agreement The University seeks to amend the Trust Agreement with the requisite percentage of owners of the Bonds to reduce the aggregate principal amount of the Bonds required for consent to certain agreements supplemental to the Trust Agreement from two-thirds to a majority. With

6 their purchase of the University’s $214,910,000 Kent State University General Receipts Bonds, Series 2009B (the “Series 2009B Bonds”), the purchasers of the Series 2009B Bonds consented to that amendment. By purchase of any Series 2012A Bonds or book-entry interests therein, all registered owners of the Series 2012A Bonds and all owners of book-entry interests shall be deemed to have consented to that amendment and those consents shall be binding on all subsequent bondholders. See The Agreement – Supplemental Trust Agreements. The General Receipts Bonds The Series 2012A Bonds are to be issued as General Receipts Bonds under the Series 2012A Resolution and the Trust Agreement. Upon issuance of the Series 2012A Bonds in the principal amount of $170,000,000 there will be outstanding $427,420,000 of General Receipts Bonds of the University. See Appendix A – Kent State University – Outstanding Indebtedness. The University’s General Receipts Bonds represent a type of financing of facilities by state universities of Ohio authorized by an amendment to the Ohio Constitution as implemented by the Act. Significant elements of the General Receipts Bonds financing are the broad scope and gross pledge character of the security afforded to the Bonds, and the simplicity and flexibility provided by permitting all authorized types of facilities to be financed under one open- ended trust agreement. Security provisions include the pledge to the Bonds, on a gross pledge and first lien basis, of the General Receipts of the University, which include the full amount of every type and character of receipts, excepting only those specifically excluded (such as State appropriations). For Fiscal Year 2011 the pledged General Receipts amounted to approximately $371 million. See Security and Sources of Payment – General Receipts Pledged to the Bonds. The Trust Agreement provides for the University’s mandatory budgeting and setting aside in a special trust fund as collected for each regular academic term required amounts of its General Receipts sufficient to pay Bond Service Charges when due in that Fiscal Year. Payments then are to be made by the University to the Trustee, not later than one business day preceding the date upon which any Bond Service Charges are due, for deposit into the Bond Service Account of the Bond Service Fund, a special trust fund held in the custody of the Trustee. This procedure for budgeting and setting aside General Receipts is intended to assure timely availability of required moneys, but does not limit or modify the first pledge of and lien on all General Receipts. Amounts in the Bond Service Account are to be applied by the Trustee to pay Bond Service Charges when due. See The Agreement – Bond Service Fund. Pursuant to the Act, the Bond Service Fund so pledged and, upon their receipt by the University, the pledged General Receipts are immediately subject to the lien of the pledge made by the Agreement, and the lien of any such pledge is valid and binding against all parties having claims of any kind, regardless of notice, and creates a perfected security interest without necessity for prior separation, physical delivery, filing or recording or further act by the University. In addition, the University has covenanted in the Trust Agreement that so long as any Bonds are outstanding under the Trust Agreement to fix, make, adjust and collect fees, rates, rentals, charges, and other items comprising General Receipts at least sufficient to pay Bond Service Charges on all Bonds when due, and to satisfy other requirements with respect to the Bonds and, together with other moneys available, to pay all other costs and expenses necessary for the proper maintenance and successful and continuous operation of the University. See Security and Sources of Payment – Covenant as to Sufficiency of General Receipts.

7 The Trust Agreement is the basic document pertaining to all General Receipts Bonds and prescribes the conditions for the issuance of additional bonds on a parity basis (“Additional Bonds”), including debt service coverage requirements. For a discussion of debt service coverage requirements, see The Agreement – Additional Bonds. For each issue of General Receipts Bonds, the Board of Trustees adopts a Series Resolution, setting forth certain terms for that issue and authorizing a Supplemental Trust Agreement to be entered into in connection with the Additional Bonds. The Series 2012A Bonds are to be authorized by the Series 2012A Resolution and the Seventeenth Supplemental Trust Agreement. The proceeds of all General Receipts Bonds are to be applied solely to pay costs of University Facilities, and to refund, fund or retire obligations issued for that purpose, as specifically provided and allocated in the applicable Series Resolution. Under the Trust Agreement, the term “University Facilities” has the meaning given to the term “facilities” in the Act, which is defined in the Act to include “auxiliary facilities” (student activity or student service facilities, housing and dining facilities, dining halls or other food service and preparation facilities, vehicular parking facilities, bookstores, athletic and recreational facilities, faculty centers, auditoriums, assembly and exhibition halls, hospitals, infirmaries and other medical and health facilities, research and continuing education facilities); “educational facilities” (classrooms, or other instructional facilities, libraries, administrative and office facilities, and other facilities, other than auxiliary facilities, to be used directly or indirectly for or in connection with the conduct of the institution of higher education); “housing and dining facilities” (dormitories or other living quarters and accommodations, or related dining halls or other food service and preparation facilities, for students, members of the faculty, officers, or employees of the institution of higher education, and their spouses and families); and site improvements, utilities, machinery, furnishing, and any separate or connected buildings, structures, improvements, sites, open space and green space areas, utilities or equipment to be used in, or in connection with the operation or maintenance of, or supplementing or otherwise related to the services or facilities to be provided by auxiliary, educational or housing and dining facilities; and includes any one, part of or any combination of those facilities. PROJECT AND PLAN OF FINANCING The proceeds of the Series 2012A Bonds will be used to pay “costs of facilities” as defined in Section 3345.12(A)(10) of the Revised Code, including, the costs of or a portion of the costs of (i) renovating, equipping and furnishing the chemistry, biology and physics program space located in the science mall area of the campus for existing classrooms, laboratories, seminar/lecture spaces and research laboratories, constructing new facilities as necessary for research laboratories and faculty offices, and upgrading the existing mechanical, electrical, plumbing and building shell systems for such program space; (ii) renovating and expanding the existing campus facilities or constructing new facilities for the School of Art, including classrooms, studios, faculty offices and lecture/seminar spaces; (iii) constructing, equipping and furnishing a facility for the College of Technology and Engineering, including classrooms, research laboratories, faculty offices and lecture/seminar spaces; (iv) constructing, equipping and furnishing a facility for the College of Architecture and Environmental Design, including classrooms, studios, research laboratories, faculty offices, lecture/seminar rooms, site development, pedestrian pathways and parking; (v) renovating the existing Olson Center for the College of Undergraduate Studies, including the abatement of asbestos-containing building materials, and the construction, equipping, and furnishing of offices, meeting rooms and study areas in such College; (vi) renovating existing campus facilities and spaces to comply with the Americans with Disabilities Act to provide appropriate access or services to those with disabilities, including toilet rooms, classrooms, elevators, ramps and door hardware, and the upgrading and replacement of various roofs and fire alarms and building shell repairs; and/or (vii) costs of improvements to rehabilitate other academic, administrative and campus buildings and energy conservation improvements, in furtherance of the University’s academic programs,

8 including facilities for centers of academic excellence, and the acquisition of furnishings and equipment, and other improvements to University Facilities approved by the Board of Trustees (collectively, the “Project”). The proceeds of the Series 2012A Bonds will also be used to pay costs relating to the issuance of the Series 2012A Bonds and may be used to pay interest on the Series 2012A Bonds during the construction period. Sources and Uses of Funds The proceeds of the Series 2012A Bonds (not including any accrued interest) are expected to be applied for the following uses and in the following respective amounts: Sources of Funds Principal Amount $170,000,000.00 Net Original Issue Premium 16,184,652.25 Total Sources $186,184,652.25 Uses of Funds Deposit to Project Fund $184,685,366.49 Issuance Costs(a) 1,499,285.76 Total Uses $186,184,652.25

(a) Issuance Costs includes Underwriters’ discount and legal and administrative fees related to the issuance of the Series 2012A Bonds.

CERTAIN TERMS OF SERIES 2012A BONDS General; Book-Entry System The Series 2012A Bonds will be dated, will be payable in the principal amounts and on the dates, will bear interest (computed on the basis of a 360-day year and twelve 30-day months) at the rates and will be payable on the dates, at the place and in the manner described on the Cover. The Trustee will keep all books and records necessary for registration, exchange and transfer of the Series 2012A Bonds. The Series 2012A Bonds will be delivered in book-entry-only form and, when issued, registered in the name of The Depository Trust Company (“DTC”), New York, New York, or its nominee Cede & Co., which will act as securities depository for the Series 2012A Bonds. For discussion of the book-entry system and DTC and the replacement of Series 2012A Bonds in the event that the book-entry system is discontinued, see Appendix D. Prior Redemption The Series 2012A Bonds are subject to mandatory sinking fund and optional redemption as follows. Mandatory Sinking Fund Redemption of Series 2012A Bonds The Series 2012A Bonds maturing on May 1, 2037 (the “2037 Term Bonds”) and May 1, 2042 (the “2042 Term Bonds,” and together with the 2037 Term Bonds, the “Term

9 Bonds”), are subject to mandatory sinking fund redemption in part by lot pursuant to the terms of the mandatory sinking fund redemption requirements of the Agreement at a redemption price equal to 100% of the principal amount redeemed, plus interest accrued to the redemption date, on May 1 of the years shown in, and according to, the following schedule.

2037 Term Bonds 2042 Term Bonds Year Amount Year Amount 2033 $6,805,000 2038 $ 8,685,000 2034 7,145,000 2039 9,120,000 2035 7,505,000 2040 9,575,000 2036 7,880,000 2041 10,055,000 2037 8,275,000(a) 2042 10,560,000(a) (a) Remaining principal balance scheduled to be paid at the stated maturity of the corresponding Term Bonds.

Term Bonds redeemed by other than mandatory sinking fund redemption, or purchased for cancellation, may be credited against the applicable mandatory sinking fund redemption requirement for the corresponding Term Bonds. Optional Redemption of Series 2012A Bonds The Series 2012A Bonds maturing on or after May 1, 2023 are subject to prior redemption on or after May 1, 2022 by and at the sole option of the University, in whole or in part, on any date, in integral multiples of $5,000, at a redemption price equal to 100% of the principal amount redeemed, plus interest accrued to the redemption date. Selection of Series 2012A Bonds and Book-Entry Interests to be Redeemed If fewer than all outstanding Series 2012A Bonds are called for redemption at one time, the Series 2012A Bonds to be called will be called as selected by, and selected in a manner as determined by, the University. If less than all of an outstanding Series 2012A Bond of one maturity and interest rate within a maturity under a book-entry system is to be called for redemption (in the amount of $5,000 or any whole multiple), the Trustee will give notice of redemption only to DTC as registered owner. The selection of the book-entry interests in that Series 2012A Bond to be redeemed is discussed below under Notice of Call for Redemption; Effect. If bond certificates are issued to the ultimate owners, and if fewer than all of the Series 2012A Bonds of a single maturity and interest rate within a maturity are to be redeemed, the selection of Series 2012A Bonds (or portions of Series 2012A Bonds in the amount of $5,000 or any whole multiple) to be redeemed will be made by lot in a manner determined by the Trustee. In the case of a partial redemption by lot when Series 2012A Bonds of denominations greater than $5,000 are then outstanding, each $5,000 unit of principal will be treated as if it were a separate Series 2012A Bond of the denomination of $5,000. Notice of Call for Redemption; Effect The Trustee is to cause notice of the call for redemption, identifying the Series 2012A Bonds or portions of Series 2012A Bonds to be redeemed, to be sent by first-class mail, at least 30 days prior to the redemption date, to the registered owner (initially, DTC) of each Series 2012A Bond to be redeemed at the address then shown on the Register on the 15th day preceding

10 that mailing. Any defect in the notice or any failure to receive notice by mailing will not affect the validity of any proceedings for the redemption of any Series 2012A Bonds. On the date designated for redemption, Series 2012A Bonds or portions of Series 2012A Bonds called for redemption shall become due and payable. If the Trustee then holds sufficient moneys for payment of debt service and any applicable premium payable on that redemption date, interest on each Series 2012A Bond (or portion of a Series 2012A Bond) so called for redemption will cease to accrue on that date. So long as all Series 2012A Bonds are held under a book-entry system by a securities depository (such as DTC), call notice is to be sent by the Trustee only to the depository or its nominee. Selection of book-entry interests in the Series 2012A Bonds called, and giving notice of the call to the owners of those interests called, is the sole responsibility of the depository and of its Direct Participants and Indirect Participants. Any failure of the depository to advise any Direct Participant, or of any Direct Participant or any Indirect Participant to notify the Beneficial Owners, of any such notice and in its content or effect will not affect the validity of any proceedings for the redemption of any Series 2012A Bonds or portions of Series 2012A Bonds. See Appendix D.

SECURITY AND SOURCES OF PAYMENT General The Series 2012A Bonds are being issued pursuant to, and will be secured by, the Agreement. All Bonds, including the Series 2012A Bonds and any Additional Bonds, are and will be payable from and secured by a first pledge of and lien on the General Receipts of the University and the Bond Service Fund, a special fund created under the Trust Agreement and held by the Trustee for the payment of Bond Service Charges on the Bonds. The University is to make payments to the Bond Service Account of the Bond Service Fund at least one business day prior to each date Bond Service Charges are payable. That payment is to include an amount that will, together with other moneys available, be sufficient to pay Bond Service Charges due and payable upon that date. The University covenants in the Agreement to include in its budget for each Fiscal Year amounts from its General Receipts at least sufficient to pay the Bond Service Charges on the Bonds when due and satisfy other requirements with respect to the Bonds. See The Agreement – Covenants of the University. The University may provide for bond insurance or other credit support instrument, or a reserve fund or account, with respect to any one or more Bonds or series of Bonds and not with respect to any other Bonds or series of Bonds. General Receipts Pledged to the Bonds General Receipts pledged to the security of the Bonds include virtually all the receipts of the University, excepting only receipts expressly excluded by the Agreement. The Trust Agreement defines General Receipts to include all moneys received by the University including but not limited to all gross fees, deposits, charges, receipts and income from all or any part of the students of the University, whether designated as tuition, instructional fees, tuition surcharges, general fees, activity fees, health fees or other special-purpose fees or otherwise designated; all gross income, revenues and receipts from the operation, ownership, or

11 control of University Facilities; all grants, gifts, donations and pledges and receipts therefrom; and the proceeds of the sale of obligations, including proceeds of obligations issued to refund obligations previously issued, to the extent and as allocated to the Bond Service Charges under the proceedings authorizing those obligations. The Trust Agreement excludes the following receipts from the definition of General Receipts: (a) moneys raised by taxation and State appropriations, until and unless the pledge thereof to the payment of Bond Service Charges is authorized by law and is made by a Supplemental Trust Agreement; (b) any grants, gifts, donations and pledges, and receipts from those sources, which under restrictions imposed in the grant or promise or as a condition of receipt are not available for payment of Bond Service Charges; and (c) any special fee charged pursuant to Section 154.21(D) of the Revised Code, and receipts from that fee (that fee, relating to bonds of the State issued by the Ohio Public Facilities Commission, has never been required to be imposed and is not anticipated to be required to be imposed). Pursuant to the Act, upon their receipt by the University the General Receipts are immediately subject to the lien of the pledge made by the Agreement, and the lien of that pledge is valid against all parties having claims of any kind, regardless of notice, and creates a perfected security interest without necessity for prior separation, physical delivery, filing or recording or further act by the University. General Receipts, including receipts from the University’s main and branch campuses, for the five most recent Fiscal Years for which audited numbers are available were as follows:

General Receipts Pledged to the Bonds (Dollars in Thousands)

Fiscal Years 2007 2008 2009 2010 2011 NetStudentTuitionandFees $203,544 $205,035 $205,682 $249,107 $274,994 Auxiliary Enterprises 79,877 82,831 84,404 78,702 83,164 SalesandCharges 6,325 7,806 8,127 8,969 9,658 Other General Income 56,281 836 3,977 2,910 3,093 TOTAL $346,027 $296,508 $302,190 $339,688 $370,909

The State appropriations act for the biennium beginning July 1, 2011 and ending June 30, 2013 allows for a maximum of a 3.5% increase in the instructional and general fees for in-state undergraduate students at State-assisted institutions of higher education for each Fiscal Year covered by that State appropriations act. The Board of Trustees authorized a 3.5% increase in such fees effective for the 2011-12 academic year and has approved a 3.5% increase in such fees for 2012-13 academic year. The Board of Trustees has also approved a phased-in credit hour charge for all Kent Campus students who take more than 16 credit hours per semester. The fees and surcharges charged by the University, including the general fees, are subject to change from time to time by action of the Board of Trustees. Covenant as to Sufficiency of General Receipts The Bonds are further secured by the University’s covenant in the Trust Agreement that so long as any Bonds are outstanding under the Trust Agreement the University will fix, make, adjust and collect fees, rates, rentals, charges, and other items comprising General Receipts at least sufficient to pay Bond Service Charges on all Bonds when due and to satisfy all other requirements with respect to the Bonds and, together with other available moneys, to pay

12 all other costs and expenses necessary for the proper maintenance and successful and continuous operation of the University. See Appendix A – Kent State University – Student Fees and Charges.

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13 Annual Bond Service Charges and Coverage The following table presents the estimated Bond Service Charges payable on the Series 2012A Bonds and the Outstanding Bonds, on a Fiscal Year basis.

Total Principal and Interest on Total Fiscal Series 2012A Bonds Outstanding Principal and Year Principal(a) Interest Bonds(b)(c) Interest(c)

2012 $ 0 $ 0 $20,342,044(d) $ 20,342,044 2013 0 7,037,086 20,286,469 27,323,555 2014 2,915,000 8,172,100 20,136,969 31,224,069 2015 3,005,000 8,084,650 19,974,469 31,064,119 2016 3,155,000 7,934,400 19,907,319 30,996,719 2017 3,280,000 7,808,200 19,782,819 30,871,019 2018 3,445,000 7,644,200 19,669,469 30,758,669 2019 3,580,000 7,506,400 19,532,275 30,618,675 2020 3,725,000 7,363,200 19,486,525 30,574,725 2021 3,910,000 7,176,950 19,258,025 30,344,975 2022 4,105,000 6,981,450 19,159,025 30,245,475 2023 4,270,000 6,817,250 18,802,275 29,889,525 2024 4,485,000 6,603,750 17,354,525 28,443,275 2025 4,705,000 6,379,500 16,457,088 27,541,588 2026 4,945,000 6,144,250 16,265,338 27,354,588 2027 5,190,000 5,897,000 16,141,838 27,228,838 2028 5,370,000 5,715,350 27,877,338 38,962,688 2029 5,640,000 5,446,850 25,456,888 36,543,738 2030 5,920,000 5,164,850 24,926,988 36,011,838 2031 6,220,000 4,868,850 24,250,838 35,339,688 2032 6,530,000 4,557,850 12,446,400 23,534,250 2033 6,805,000 4,280,250 11,085,250 2034 7,145,000 3,940,000 11,085,000 2035 7,505,000 3,582,750 11,087,750 2036 7,880,000 3,207,500 11,087,500 2037 8,275,000 2,813,500 11,088,500 2038 8,685,000 2,399,750 11,084,750 2039 9,120,000 1,965,500 11,085,500 2040 9,575,000 1,509,500 11,084,500 2041 10,055,000 1,030,750 11,085,750 2042 10,560,000 528,000 11,088,000 TOTAL $170,000,000 $158,561,636 $417,514,919 $746,076,555 (a) Includes mandatory sinking fund redemption requirements. (b) Remaining principal and interest due. The assumed interest rate used to calculate the remaining interest due on the Series 2008B Bonds is the fixed rate of interest simulated by the related swap. (c) Differences between the sum of the principal and interest payments for each Fiscal Year and the total is due to the rounding of the principal and interest payments for each Fiscal Year to the nearest dollar. (d) Includes principal and interest payments on the Outstanding Bonds, in the amount of $18,498,649.51, made through May 31, 2012.

The University’s General Receipts for Fiscal Year 2011 ($370,909,000) were 9.51 times greater than the maximum annual Bond Service Charges payable on the Series 2012A Bonds and the Outstanding Bonds in any future Fiscal Year ($38,962,688 in 2028).

14 THE AGREEMENT The following is a summary of certain provisions of the Agreement and does not purport to be complete. The term “Agreement” refers to the Trust Agreement, as supplemented by the Seventeenth Supplemental Trust Agreement. All capitalized terms in this section not otherwise defined in the body of this Official Statement shall have the meanings given to them in Appendix C hereto. The Trust Agreement, as supplemented by the Seventeenth Supplemental Trust Agreement, contains provisions as to special funds; Bond authentication, registration, transfer, exchange and replacement; redemption; events of default and remedies; duties of the Trustee (and any successor); supplemental trust agreements; and defeasance, among others. Certain provisions of the Agreement as to University budgeting requirements, special funds, University covenants, events of default and remedies, enforcement by mandamus, defeasance, nonpresentment of Bonds, supplemental trust agreements, Additional Bonds, annual reports and records, and the Trustee, are summarized below. So long as the Series 2012A Bonds are immobilized in a book-entry system with a securities depository, that depository or its nominee for all purposes of the Trust Agreement will be considered by the University and the Trustee to be the owner or holder of the Series 2012A Bonds, and (except as otherwise provided in the Continuing Disclosure Agreement) the owners of book-entry interests will not be considered owners or holders and have no rights as holders or owners under the Trust Agreement. Funds and Accounts Bond Service Fund; Payments of the University. The Trust Agreement establishes the Bond Service Fund, which will be maintained in the Trustee’s custody. The Bond Service Fund and the moneys and investments in it are pledged to and are to be applied exclusively to the payment of Bond Service Charges. The Trust Agreement also establishes the Bond Service Account, the Bond Service Reserve Account and the Bond Redemption and Purchase Account, as accounts of the Bond Service Fund, and permits other accounts to be established as special accounts in the Bond Service Fund as may be provided in any Supplemental Trust Agreement in connection with the issuance of Additional Bonds and in certain other circumstances. From General Receipts, the University will pay into the Bond Service Account, not later than one Business Day prior to a date when Bond Service Charges are due, an amount that will be sufficient to pay the Bond Service Charges payable from that Account on that date. In addition, if and to the extent required under the Bond Proceedings for a series of Bonds, the University is to pay from the General Receipts to the Bond Service Reserve Account any such amounts and at such times as may be required in accordance with the applicable Supplemental Trust Agreement. The Seventeenth Supplemental Trust Agreement establishes the Series 2012A Capitalized Interest Account, the Series 2012A Interest Account and the Series 2012A Principal Account as additional and separate accounts in the Bond Service Account. Moneys in the Series 2012A Interest Account and the Series 2012A Principal Account will be applied to the payment of the interest on and principal of the Series 2012A Bonds when due. The Seventeenth Supplemental Trust Agreement further establishes the Series 2012A Redemption Account as an account in the Bond Service Account for the deposit by the University of moneys to be used for the optional or extraordinary optional redemption of the Series 2012A Bonds. The University is obligated pursuant to the Seventeenth Supplemental Trust Agreement to make deposits to: (i) the Series 2012A Interest Account with respect to the payment of interest on the Series 2012A Bonds; (ii) the Series 2012A Principal Account with respect to the payment of principal of the

15 Series 2012A Bonds; and (iii) the Series 2012A Redemption Account with respect to the payment of principal of, premium, if any, and accrued interest, on Series 2012A Bonds called for optional or extraordinary optional redemption. Project Fund. As required by the Series 2012A Resolution and the Trust Agreement, the Seventeenth Supplemental Trust Agreement establishes the Project Fund, to be maintained by the Fiscal Officer as a separate account on the books of the University in a bank or trust company that is a member of the Federal Deposit Insurance Corporation, except when invested in Eligible Investments. Proceeds deposited into that Fund may be invested in such investments as may be identified in the applicable Supplemental Trust Agreement, or in Eligible Investments if no other provision is made, and are to be disbursed to pay Costs of Facilities financed by the applicable series of Bonds. The funds held in the Project Fund are to be used to pay “costs of facilities” as defined in Section 3345.12 of the Revised Code. Any amounts in the Project Fund certified by the Fiscal Officer to be in excess of the amount needed to pay costs of the Project may be used to pay principal of or interest on the Series 2012A Bonds if that expenditure will not, in the opinion of bond counsel to the University adversely affect the exclusion of interest on the Series 2012A Bonds from gross income for federal income tax purposes. Eligible Investments of Amounts in the Bond Service Account and Project Fund Amounts in the Bond Service Account of the Bond Service Fund may be invested by the Trustee in any Eligible Investments, subject to any orders of the Fiscal Officer with respect thereto. Investments of moneys in the Bond Service Account shall mature or be redeemable at the option of the holder at the times and in the amounts necessary to provide moneys to meet the payment of Bond Service Charges as they fall due. Subject to any orders of the Fiscal Officer with respect thereto, the Trustee may from time to time sell such investments and reinvest the proceeds therefrom in Eligible Investments so maturing or redeemable. Any such investments may be purchased from the Trustee. The Trustee shall sell or redeem investments standing to the credit of the Bond Service Account to produce sufficient moneys at the times required for the purposes of meeting Bond Service Charges when due, and shall do so without necessity for any order on behalf of the University and without restriction by reason of any such order. An investment made from moneys credited to the Bond Service Account shall constitute part of that Account. That Account shall be credited with all proceeds of sale and income from that investment. Those investments shall be valued at face amount or market value, whichever is less. Amounts in the Project Fund may be invested and reinvested by the Fiscal Officer in Eligible Investments, with notice periods for withdrawal, maturities or redemption provisions, and in amounts, as nearly as practicable, as will provide moneys when needed to pay those Costs of Facilities financed by the applicable series of Bonds. The investments and the proceeds of their sale shall constitute part of that Fund and shall be maintained separate from other investments of funds of the University, and income from those investments shall be credited to that Fund. The Seventeenth Supplemental Trust Agreement defines Eligible Investments as follows: (a) Cash (insured at all times by the Federal Deposit Insurance Corporation or otherwise collateralized with obligations described in paragraph (b) below); (b) Direct Obligations;

16 (c) Obligations of any federal agencies which represent the full faith and credit of the United States of America, including obligations of the Export-Import Bank, Rural Economic Community Development Administration, U.S. Maritime Administration, Small Business Administration, U.S. Department of Housing & Urban Development (PHAs), Federal Housing Administration and Federal Financing Bank; (d) Direct obligations of any of the following federal agencies which obligations are not fully guaranteed by the full faith and credit of the United States of America: senior debt obligations issued by the Federal National Mortgage Association (FNMA) or Federal Home Loan Mortgage Corporation (FHLMC), Obligations of the Resolution Funding Corporation (REFCORP), Senior debt obligations of the Federal Home Loan Bank System, and senior debt obligations of the Federal Farm Credit System; (e) U.S. Dollar-denominated deposit accounts, federal funds and bankers’ acceptances with domestic commercial banks which have a rating on their short-term certificates of deposit on the date of purchase of “P-1” by Moody’s or “A-1” or “A-1+” by S&P and maturing not more than 360 calendar days after the date of purchase (ratings on holding companies are not considered as the rating of the bank); (f) Commercial paper which is rated at the time of purchase at least “P-1” by Moody’s or “A-1” by S&P, and which matures not more than 270 calendar days after the date of purchase; (g) Investments in a money market fund rated “AAAm” or “AAAm-G” or better by S&P, provided that the fund is registered under the Federal Investment Company Act of 1940 and whose shares are registered under the Federal Securities Act of 1933; (h) Pre-refunded municipal obligations defined as follows: any bonds or other obligations of any state of the United States of America or of any agency, instrumentality or local governmental unit of any such state which are not callable at the option of the obligor prior to maturity or as to which irrevocable instructions have been given by the obligor to call on the date specified in the notice, and (i) which are rated, based on an irrevocable escrow account or fund (the “escrow”), in the highest rating category of Moody’s or S&P or any successors thereto, or (ii)(A) which are fully secured as to principal and interest and redemption premium, if any, by an escrow consisting only of cash or Direct Obligations which escrow may be applied only to the payment of such principal of and interest and redemption premium, if any, on such bonds or other obligations on the maturity date or dates thereof or the specified redemption date or dates pursuant to such irrevocable instructions, as appropriate, and (B) which escrow is sufficient, as verified by a nationally recognized independent certified public accountant, to pay principal of and interest and redemption premium, if any, on the bonds or other obligations described in this paragraph on the maturity date or dates specified in the irrevocable instructions referred to above, as appropriate; (i) Municipal obligations rated at least “Aa3/AA-” or general obligations of states with a rating of at least “A2/A” by Moody’s or S&P; (j) Investment agreements with providers rated not lower than the second highest rating category (without regard to gradations within such category) by at least one nationally recognized rating agency, provided that if the investment agreement is guaranteed by a third party, then such rating requirement shall apply to the guarantor only, and provided further that if the provider is downgraded by one or more nationally recognized rating agencies to below the second highest rating category, the agreement shall (i) be fully collateralized at 104% by Direct Obligations or 105% by securities outlined in clauses (b), (c), and (d) of this definition of Eligible Investments, or (ii) terminate;

17 (k) Collateralized investment agreements with providers rated not lower than the third highest rating category (without regard to gradations within such category) by at least one nationally recognized rating agency, provided that if the investment agreement is guaranteed by a third party, then such rating requirement shall apply to the guarantor only, and provided further that in all cases such rating requirements shall apply only at the time the investment agreement is executed; (l) The Ohio subdivision’s fund established by the Treasurer of the State of Ohio consistent with Revised Code Section 135.45; (m) Repurchase Agreements with a bank or trust company which has a capital and surplus of not less than $50,000,000 or a government bond dealer reporting to, trading with, and recognized as a primary dealer by the Federal Reserve Bank of New York, which sells to, and agrees to repurchase from the Trustee obligations issued or guaranteed by the United States; provided that the market value of such obligations is at the time of entering into the agreement at least one hundred and three percent (103%) of the repurchase price specified in the agreement and that such obligations are segregated from the unencumbered assets of such bank or trust company or government bond dealer; and provided further that unless the agreement is with a bank or trust company, such agreement shall require the repurchase to occur on demand or on a date certain which is not later than one (1) year after such agreement is entered into and shall expressly authorize the Trustee to liquidate the purchased obligations in the event of the insolvency of the party required to repurchase such obligations or the commencement against such party of a case under the federal Bankruptcy Code or the appointment of or taking possession by a trustee or custodian in a case against such party under the Bankruptcy Code. Any such investments may be purchased from or through the Trustee. (n) Certificates of deposit, demand deposits or time deposits of any state bank or trust company or national banking association (including the Trustee or any affiliate of the Trustee), which (i) has assets of not less than $1,000,000,000, provided that the senior debt obligations of the issuing institution are rated in the highest rating category by Moody’s or S&P, or (ii) funds are guaranteed by the Federal Deposit Insurance Corporation, or (iii) is a member of the Federal Deposit Insurance Corporation (including any successor to the FDIC), including any investment in pools of those certificates of deposit, demand deposits or time deposits owned by the bank, trust company or national banking association, provided that any such certificate of deposit, demand deposit or time deposit is: (i) Continuously and fully insured by the FDIC, or (ii) To the extent not insured by the FDIC, fully secured by Direct Obligations that have a market value at all times at least equal to the uninsured principal amount of the deposit, that are held by the Trustee (except in case of a certificate of deposit, demand deposit or time deposit of the Trustee) or any Federal Reserve Bank or depository of the United States of America, as custodian for the institution issuing the deposit, together with the undertaking of such institution, in form satisfactory to the Trustee, that the aggregate market value of the obligations securing the deposit at all times will be maintained in an amount meeting the requirements of this subparagraph (ii), and in which the Trustee has a prior perfected first lien and which are not subject to any third-party claims; The value of the above investments shall be determined as follows. For the purpose of determining the amount in any fund or account, all Eligible Investments credited to such fund or account shall be valued at fair market value. The Trustee shall determine the fair market value

18 based on accepted industry standards and from accepted industry providers. Accepted industry providers shall include but are not limited to pricing services provided by Financial Times Interactive Data Corporation or Merrill Lynch, Pierce, Fenner & Smith Incorporated. As to certificates of deposit and bankers’ acceptances, the value shall be the face amount thereof, plus accrued interest thereon, and as to any investment not specified above, the value shall be that established by prior agreement between the University and the Trustee. Covenants of the University In the Trust Agreement, the University covenants to pay, or cause to be paid, the Bond Service Charges on the dates, at the places and in the manner provided in the Trust Agreement and the applicable Bond Proceedings. The University covenants in the Trust Agreement to include in its budget for each Fiscal Year an amount sufficient to make all deposits required to be made in that Fiscal Year to the Bond Service Fund and to satisfy any payments to be made in that Fiscal Year with respect to any Parity Obligations. The University also covenants to determine and reflect in its budgets the amounts from the respective sources of General Receipts to be applied to meet those payments, in such manner that the amounts from such sources, in aggregate, will at all times be sufficient in amounts and times of collection to meet all payments required to be made with respect to Bonds and any Parity Obligations. For the further security of the Bonds, the University also covenants that so long as any Bonds are Outstanding the University will fix, make, adjust and collect fees, rates, rentals, charges, and other items comprising General Receipts at least sufficient to pay Bond Service Charges on all Bonds when due, to pay when due amounts owed with respect to any Parity Obligations, and to satisfy all other requirements of the Bond Proceedings with respect to the Bonds, and together with other moneys lawfully available therefor, to pay all other costs and expenses necessary for the proper maintenance and successful and continuous operation of the University. Events of Default and Remedies So long as the Series 2012A Bonds are held under a book-entry system with DTC (or any successor securities depository), that depository or its nominee is for all purposes of the Agreement considered the owner or holder of the Series 2012A Bonds, and, except as provided in the Continuing Disclosure Agreement, the owners of book-entry interests will not be considered owners or holders and have no rights as holders or owners under the Agreement to receive notices relating to Events of Default, to enforce remedies or to take other steps to protect or enforce the rights of bondholders. Under the Trust Agreement, each of the following is an “Event of Default”: (i) Failure to pay any interest on any Bond when and as due and payable and such failure shall have continued for a period of 30 days. (ii) Failure to pay the principal of or Accreted Amount or any redemption premium on any Bond, when and as due and payable, whether at maturity or by acceleration or by call for redemption and such failure shall have continued for a period of 30 days. (iii) Failure to perform or observe duly or punctually any other covenant, condition or agreement contained in the Bonds and in the Trust Agreement and to be performed by the University, continued for a period of 90 days after written notice

19 specifying the default and requiring the default to be remedied given to the University by the Trustee or by the holders of not less than 25% in aggregate principal amount of the Bonds then Outstanding (if, however, the failure is other than the payment of money and is of such nature that it can be corrected but not within the applicable period, then that failure shall not constitute an Event of Default so long as the University institutes curative action within the applicable period and diligently pursues that action to completion). The Trust Agreement does not require the furnishing of periodic evidence to the Trustee as to the absence of defaults or Events of Default under, or compliance with, the terms of the Trust Agreement. Waivers are authorized in connection with Events of Default. If an Event of Default has occurred and is continuing, the Trustee may, and upon the written request of the holders of not less than 25% of Aggregate Outstanding Principal Amount of Bonds shall, take appropriate actions to protect and enforce the rights of bondholders, including by mandamus, bringing suit upon the Bonds and enjoining any unlawful activities or activities in violation of the bondholders’ rights under the Trust Agreement. In the case of an Event of Default in the payment of Bond Service Charges, the Trustee may take those appropriate actions and, in addition, may, and upon the written request of the holders of not less than 25% of Aggregate Outstanding Principal Amount of Bonds shall, by notice in writing delivered to the University declare the principal of and interest (and any Accreted Amount) accrued on all then Outstanding Bonds to be immediately due and payable. If, after the Trustee has declared the principal, Accreted Amount and interest immediately due and payable and before the entry of a court judgment for enforcement under the Trust Agreement, all sums payable under the Bonds and the Trust Agreement (except the principal and Accreted Amount of the Bonds that have not reached their stated maturity dates and which are due and payable solely by reason of such declaration) plus interest (to the extent permitted by law) on any overdue installments of interest at the rate borne by the Bonds in respect of which such Event of Default has occurred, has been duly paid or provided for by deposit with the Trustee or Paying Agents and all existing defaults have been corrected, that Event of Default and its consequences will be considered to have been waived and the declaration of acceleration will be automatically rescinded and annulled. The holders of not less than a majority in Aggregate Outstanding Principal Amount of the Bonds will have the right at any time, by an instrument in writing executed and delivered to the Trustee, to direct the method and place of conducting any and all remedial proceedings under the Trust Agreement. That direction must be in accordance with the provisions of law and the Trust Agreement, and the Trustee must be indemnified to its satisfaction. The Trustee, however, will have the right to decline. Before taking certain actions under the Trust Agreement, the Trustee may require that a satisfactory indemnity bond be furnished for the reimbursement to it of all reasonable expenses to which it may be put and to protect it against all liability by reason of any action so taken, except liability which is adjudicated to have resulted from its negligence, bad faith or willful default by reason of any action so taken. The Trustee may take such action without such indemnity, and in that case the University will reimburse the Trustee for all such expenses from moneys available from General Receipts. Each bondholder will have a right of action to enforce the payment of the principal and Accreted Amount of and interest on any Bond owned by that holder at and after the due date thereof at the place, from the sources and in manner stated in that Bond. It is, however, understood and intended under the Trust Agreement that no one or more holders of the Bonds will have any right in any manner whatsoever to affect, disturb or prejudice the benefit of the

20 Trust Agreement by its or their action or to enforce any right under the Trust Agreement except in the manner provided in the Trust Agreement, and that the proceedings will be instituted, had and maintained in the manner provided in the Trust Agreement and for the benefit of the holders of all Bonds then Outstanding. Enforcement by Mandamus The Act provides that the duties of the University, the Board of Trustees and its members, and University officers and employees provided for by the Agreement, the Series 2012A Bonds and other resolutions and agreements regarding the issuance, sale and security of the Series 2012A Bonds are duties enforceable by mandamus. Defeasance If the University pays or causes to be paid all of the Outstanding Bonds or if Bond Service Charges due or to become due on the Outstanding Bonds are paid or caused to be paid and provision is made for paying all other sums payable under the Trust Agreement, the Trust Agreement (with certain exceptions) will cease, determine and become null and void, and the University’s covenants, agreements and other obligations under it will be released, discharged and satisfied. Upon such discharge of the Trust Agreement, the Trustee is to assign and deliver to the University any funds at the time subject to the lien of the Trust Agreement which may then be in its possession except for funds for the payment of Bond Service Charges (subject to certain provisions in the Trust Agreement for unclaimed moneys). Bonds will be deemed to have been paid or caused to be paid for the purpose of defeasance (and for the purpose of particular Bonds being refunded and no longer deemed Outstanding under the Trust Agreement) if: (i) the Trustee and any Paying Agents have received, in trust for and irrevocably committed thereto, sufficient moneys, or (ii) the Trustee holds, in trust for and irrevocably committed thereto, non-callable Direct Obligations which are certified by an independent certified public accountant or firm of such accountants or such other verifier as shall be acceptable to the Trustee to be of such maturities or redemption dates and to have payment dates, and to bear such interest or other investment income, as will be sufficient without further investment or reinvestment of either the principal amount of or the interest or other investment earnings from them (likewise to be held in trust and so committed, except as otherwise provided in the Trust Agreement), together with any moneys referred to above in paragraph (i), for the payment when due of all applicable Bond Service Charges to the date of maturity or redemption, as the case may be. If any Bonds are to be redeemed prior to their maturity, notice of that redemption must have been given or provision satisfactory to the Trustee have been made for the giving of that notice. Any moneys held in cash may be invested only in Direct Obligations the maturities or redemption (at the holder’s option) dates of which will coincide as nearly as practicable with, but will not be later than, the times at which those moneys will be required for the payment of Bond Service Charges. Any income or interest earned by, or increment to, those investments, to the extent not required for the applicable purposes, will be transferred to the University, at the University’s request.

21 The Trust Agreement authorizes partial defeasance as to any series of Bonds or as to certain of the Bonds of any series upon deposits described above. Any Bond Proceedings providing for a series of Additional Bonds may vary the Trust Agreement’s defeasance provisions. Additional Bonds Additional Bonds, as they may from time to time be authorized by series resolutions, are issuable on a parity with then Outstanding Bonds. The University may provide for bond insurance or other credit support instrument, or a reserve fund or account, with respect to any one or more Bonds or series of Bonds and not with respect to any other Bonds or series of Bonds. Besides the conditions of authentication, the Trust Agreement requires that the following conditions be satisfied before the University may issue a series of Additional Bonds: (i) The University is not in default, and as a result of the authentication and delivery of the Additional Bonds will not be in default, of any of its covenants or obligations under the Trust Agreement, and (ii) The General Receipts during each of the two preceding Fiscal Years adjusted to reflect, if applicable, changes in the fees and charges of the University approved by the Board of Trustees before that date of authentication, were at least equal to two times the maximum amount required to be paid from General Receipts into the Bond Service Account in any subsequent Fiscal Year for Bond Service Charges on all Bonds to be Outstanding upon the original delivery of the Additional Bonds. For purposes of computing the required coverage of General Receipts over Bond Service Charges, the Trust Agreement provides: (i) Bond Service Charges that are to be or have been funded or refunded by such Additional Bonds or by Obligations previously issued are to be excluded from Bond Service Charges and the proceeds of the Additional Bonds applied or committed thereto are not to be counted in General Receipts. (ii) Proceeds from the sale of any Obligations, excepting any portion representing accrued interest or capitalized interest on Bonds, are not to be counted in the General Receipts. (iii) The University may, at its option, exclude from Bond Service Charges that portion of those Charges to be provided by payments from the United States of America or any office, department, agency, instrumentality or corporation thereof or created thereby under programs established by law or under a then- existing agreement with the University. In such case, there is to be subtracted from the amount of General Receipts in the coverage calculation being made the amount, if any, then received under such program or agreement but not exceeding an amount equal to the amount so excluded from Bond Service Charges for the Fiscal Year in which the maximum Bond Service Charges are required. (iv) The General Receipts are to be adjusted to reflect changes in fees and charges of the University theretofore approved by the Board of Trustees.

22 (v) Any Bonds that are or are to be issued bearing interest at a variable rate are to be assumed to bear interest as follows: (1) if the University has entered into a Hedge Agreement with respect to such Bonds under which the University will make fixed interest rate payments in exchange for a counterparty making variable rate payments, then the fixed rate of interest simulated by such Hedge Agreement is to apply to that calculation for the period of such Hedge Agreement; (2) with respect to any Outstanding Bonds bearing interest at a variable rate for which there is no related Hedge Agreement, the rate of interest on the Bonds is to be deemed to be the average rate of interest borne by such variable rate Bonds during the preceding 12 months or such shorter period of time that such variable rate Bonds have been Outstanding; and (3) with respect to any proposed variable rate additional Bonds for which there is no related Hedge Agreement, the rate of interest on the Bonds is to be deemed to be the rate shown in the most recently published SIFMA Municipal Swap Index. (vi) Any Bonds 25% or more of the principal payment of which is due in a single year, excluding any such principal payments that are subject to mandatory sinking fund requirements in a prior year, shall be assumed to have Bond Service Charges amortized on the basis of level debt service over the Assumed Amortization Period and bearing interest at the Assumed Interest Rate. The authentication of Bonds by the Trustee shall be conclusive evidence that the requirements of the Trust Agreement for the issuance of Additional Bonds have been met for purposes of the validity and binding effect of those Bonds and the rights of the Bondholders. Nonpresentment; Uncashed Checks If a Bond is not presented for payment when due in whole or in part, whether at maturity, prior redemption or otherwise, or a check for interest is uncashed, and if moneys for the purpose of paying and sufficient to pay the amount involved have been made available to the Trustee for the benefit of the bondholder, all liability of the University to that holder for that payment will be discharged completely, and it will then be the duty of the Paying Agents to hold those moneys in trust, without liability for interest on them, for the exclusive benefit of that holder. That bondholder (and successive owners of that Bond) will then be restricted exclusively to those moneys for any claim of whatever nature on that Bondholder’s part under the Trust Agreement or on or with respect to that amount then due on that Bond or that check. Any moneys so held by the Paying Agents and remaining unclaimed by the holder (or successive holders) of that Bond, for a period of three years after the date on which that Bond became payable as provided above or on which that check was issued, will be paid to the University. Thereafter, the holder (or successive holders) of that Bond will look only to the University for payment and then only to the amounts so received by the University without any interest on those amounts, and the Paying Agents and Trustee will have no further responsibility with respect to those moneys. The moneys so paid to the University will be credited to a special account. The Fiscal Officer will keep a record of the amounts with respect to each series of Bonds, and to Bonds of such series, so deposited in the special account, and moneys in that account will be applied to payment of Bond Service Charges on the Bonds with respect to which such moneys are transferred to the University. Investment income from moneys in that account will be credited to the University’s general fund.

23 Supplemental Trust Agreements A Supplemental Trust Agreement will be entered into in connection with the issuance of each series of Additional Bonds. Supplemental Trust Agreements (other than those described above and in the next paragraph) adding any provisions to, changing or eliminating any of the provisions of the Trust Agreement or any Supplemental Trust Agreement or restricting the rights of the holders, require the consent and approval of the owners of not less than a majority in Aggregate Outstanding Principal Amount of the Bonds (excluding the principal amount of any Bonds owned by the University). No Supplemental Trust Agreement, however, may be entered into for the following purposes, unless the required consent, as noted below, is given: (i) Without the consent of the holder of each Bond so affected, an extension of the maturity of the principal of or the interest on any Bond, or a reduction in the principal amount of any Bond or the rate of interest or premium thereon, or the creation of a right in the University to call any Bond for redemption prior to its maturity, or the advancement of the time or reduction of the redemption price at which any existing right of the University to call Bonds for redemption may be exercised, or a reduction in the amount or extension of the time of payment of any Mandatory Sinking Fund Requirements or Mandatory Redemption Obligations, or (ii) Without the consent of the holders of all Bonds then Outstanding, a reduction in the aggregate principal amount of the Bonds required for consent to a Supplemental Trust Agreement. The University and the Trustee may enter into agreements supplemental to the Trust Agreement without the consent of or notice to any of the holders, but with notice to any Credit Support Provider, for the following purposes: (a) To cure any ambiguity, inconsistency or formal defect or omission in the Trust Agreement. (b) To grant to or confer upon the Trustee for the benefit of the holders any additional rights, remedies, powers or authority that lawfully may be granted to or conferred upon the holders or the Trustee. (c) To submit additional General Receipts to the lien and pledge of the Trust Agreement. (d) To add to the University’s covenants and agreements under the Trust Agreement other covenants and agreements thereafter to be observed for the protection of all or particular holders, or to surrender or limit any right, power or authority under the Trust Agreement reserved to or conferred upon the University in the Trust Agreement. (e) To evidence any succession to the University and the assumption by that successor of the University’s covenants and agreements in the Bonds and the Trust Agreement.

 Until the holders of all of the Outstanding Bonds consent to the amendment of the provision in Section 8.02 of the Original Trust Agreement reducing the aggregate principal amount of the Bonds required for consent to agreements supplemental to the Original Trust Agreement from two-thirds to a majority, the term “majority” will mean “two-thirds.” Upon achieving such consent, the term “majority” will mean 51%.

24 (f) To make necessary or advisable amendments or additions in connection with the issuance of Additional Bonds as do not adversely affect the interests of holders of then Outstanding Bonds. (g) To facilitate (i) the transfer of Bonds held in book-entry form from one depository to another, (ii) the succession of depositories, or (iii) the withdrawal of Bonds issued to a depository for use in a book-entry system and the issuance of replacement Bonds in fully- registered form to others than a depository. (h) To permit the Trustee to comply with any obligations imposed upon it by law. (i) To specify further the duties and responsibilities of, and to define further the relationship among, the Trustee, the Registrar and any Authenticating Agents or Paying Agents. (j) To permit compliance with any applicable federal securities or tax law or regulations. (k) To adopt or amend procedures or agreements for the disclosure of information to holders and others with respect to the Bonds and the University in accordance with any applicable State or federal regulations. (l) To accept additional security and instruments and documents of further assurance, including any provision for a Credit Support Provider. (m) To limit the Eligible Investments of moneys in the Bond Service Account, or to add to that list of Eligible Investments other investments. If there be such a Rating Service at the time, the addition of Eligible Investments must be approved for the purpose by each Rating Service that has at the University’s request assigned a rating to, and at the time maintains a rating on, Outstanding Bonds. (n) Any other amendment which, in the judgment of the Trustee, is not to the material prejudice of the Trustee or the holders of Outstanding Bonds. Annual Reports and Records The Trust Agreement requires the University to keep or cause to be kept proper books of record and account (separate and distinct from all other records and accounts of the University) in such manner as is necessary to show the complete financial results of operation of the University, all capital expenditures for improvements, General Receipts, and amounts deposited in the Special Funds. The University is required by the Trust Agreement to permit the authorized representative of the Trustee, of the holders of at least 25% in Aggregate Outstanding Principal Amount of the Bonds, or of any Credit Support Provider, to inspect the University and all records, accounts and data of the University at all reasonable times. If the Auditor of State of Ohio (the “State Auditor”), or an independent certified public accounting firm at the direction of the State Auditor, has not commenced such audit on or before 180 days after the end of the Fiscal Year with respect to which audited financial statements are required to be produced, the University agrees that it shall request the State Auditor to immediately commence such an audit, and if the State Auditor is unable to so commence such an audit, shall request the State Auditor to authorize the University to engage an independent certified public accounting firm to conduct the required audit. If so authorized, the

25 University agrees that it shall engage an independent certified public accounting firm to conduct the required audit. Pledge of General Receipts The University may pledge the General Receipts to the payment of “Bond Service Charges” on “Obligations,” each as defined in Revised Code Section 3345.12. Obligations as so defined include bonds, notes or other evidences of obligation authorized to be issued under applicable provisions of the Revised Code. Bond Service Charges as so defined include principal, including any mandatory sinking fund or redemption requirements for the retirement of obligations, interest or interest equivalent and other accreted amounts and any call premium required to be paid on Obligations. Interest or interest equivalent means those payments or portion of payments, however denominated, that constitute or represent consideration for forbearing the collection of money, or for deferring the receipt of payment of money to a future time. TRUSTEE The Trustee, The Huntington National Bank, with its main offices and principal corporate trust office located in Columbus, Ohio, is a national bank organized and existing under the laws of the United States, and is authorized to exercise corporate trust powers in the State of Ohio and regularly acts as trustee for revenue bond issues of Ohio issuers. The Trustee will, prior to the occurrence of an Event of Default and after the cure of any Event of Default which may have occurred, undertake to perform only such duties as are specifically set forth in the Trust Agreement. At the time of an Event of Default and during its continuation, the Trustee will exercise such of the rights and powers vested in the Trustee by the Agreement, and is to use the same degree of care and skill in their exercise as a prudent corporate trustee would exercise or use under a trust agreement securing securities of a public entity. The Trust Agreement contains provisions for the Trustee’s removal by the holders of not less than a majority in aggregate principal amount of Bonds then Outstanding, or by the University. No resignation or removal of the Trustee will be effective until the appointment of a successor Trustee. LIMITATIONS ON ENFORCEABILITY OF REMEDIES Enforcement of the Agreement may be limited or delayed in the event of application of federal bankruptcy laws or other laws affecting creditors’ rights and may be substantially delayed and subject to judicial discretion in the event of litigation. The enforceability of the pledge of the General Receipts may be subject to subordination of prior claims in addition to those arising from bankruptcy proceedings. Examples of cases of possible limitations on enforceability, and of possible subordination or prior claims are (i) rights arising in favor of the United States of America or any agency thereof, (ii) constructive trusts, equitable liens or other rights impressed or conferred by any court in the exercise of its equitable jurisdiction, and (iii) rights of third parties in General Receipts converted to cash and not in the custody of the Trustee. All rights and remedies provided for in the Agreement may be exercised only to the extent that the exercise thereof does not violate any applicable law, and are limited to the extent necessary so that they will not render the General Receipts invalid or unenforceable.

26 TAX MATTERS In the opinion of Roetzel & Andress, A Legal Professional Association, Bond Counsel, under existing law (i) interest on the Series 2012A Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986, as amended (the “Code”), and is not an item of tax preference under Section 57 of the Code for purposes of the federal alternative minimum tax imposed on individuals and corporations and (ii) the interest on, and any profit made on the sale, exchange or other disposition of, the Series 2012A Bonds are exempt from Ohio personal income tax, the Ohio commercial activity tax, the net income base of the Ohio corporate franchise tax, and municipal, school district and joint economic development district income taxes in Ohio. An opinion to those effects with respect to the Series 2012A Bonds will be included in the legal opinion attached as Exhibit A. Bond Counsel will express no opinion as to any other tax consequences regarding the Series 2012A Bonds. The opinion on federal tax matters will be based on and will assume the accuracy of certain representations and certifications, and compliance with certain covenants, of the University to be contained in the transcript of proceedings and which are intended to evidence and assure the foregoing, including that the Series 2012A Bonds are and will remain obligations the interest on which is excluded from gross income for federal income tax purposes. Bond Counsel will not independently verify the accuracy of the certifications and representations made by the University. The Code prescribes a number of qualifications and conditions for the interest on state and local government obligations to be and remain excluded from gross income for federal income tax purposes, some of which, including provisions for potential payments by the issuer to the federal government, require future or continued compliance after issuance in order for the interest to be and to continue to be so excluded from the date of issuance. Noncompliance with these requirements by the University may cause the interest on the Series 2012A Bonds to be included in gross income for federal income tax purposes and thus to be subject to federal income tax retroactively to the date of their issuance. The University has covenanted to take actions required of it for the interest on the Series 2012A Bonds to be and to remain excluded from gross income for federal income tax purposes, and not to take any actions that would adversely affect that exclusion. A portion of the interest on the Series 2012A Bonds earned by certain corporations may be subject to a federal corporate alternative minimum tax. In addition, interest on the Series 2012A Bonds may be subject to a branch profits tax imposed on certain foreign corporations doing business in the United States and to a tax imposed on excess net passive income of certain S corporations. Under the Code, the exclusion of interest from gross income for federal income tax purposes may have certain adverse federal income tax consequences on items of income, deductions or credit for certain taxpayers, including financial institutions, certain insurance companies, recipients of Social Security and Railroad Retirement benefits, those that are deemed to incur or continue indebtedness to acquire or carry tax exempt obligations, and individuals otherwise eligible for the earned income credit. The applicability and extent of these or other tax consequences will depend upon the particular tax status or other tax items of the owner of the Series 2012A Bonds. Bond Counsel will express no opinion regarding those consequences. From time to time there are legislative proposals in Congress that, if enacted, could alter or amend the federal tax matters referred to above or adversely affect the market value of the Series 2012A Bonds. It cannot be predicted whether or in what form any such proposal may be enacted or whether, if enacted, it would apply to obligations (such as the Series 2012A Bonds) issued prior to enactment.

27 The discussion of tax matters in this Official Statement applies only in the case of purchasers of the Series 2012A Bonds at their original issuance and at the respective prices indicated on the Cover. It does not address any other tax consequences, such as, among others, the consequence of the existence of any market discount to subsequent purchasers of the Series 2012A Bonds. Prospective purchasers of the Series 2012A Bonds are advised to consult their own tax advisors prior to any purchase of the Series 2012A Bonds as to the impact of the Code upon their acquisition, holding or disposition of the Series 2012A Bonds. Original Issue Discount/Original Issue Premium Certain of the Series 2012A Bonds (“Discount Bonds”) as indicated on the Cover were offered and sold to the public at an original issue discount (“OID”). OID is the excess of the stated redemption price at maturity (the principal amount) over the “issue price” of such Series 2012A Bond. The issue price of a Discount Bond is the initial offering price to the public (other than to bond houses, brokers or similar persons acting in the capacity of underwriters or wholesalers) at which a substantial amount of the Discount Bonds of the same maturity are sold pursuant to that offering. For federal income tax purposes, OID accrues to the owner of a Discount Bond over the period to maturity based on the constant yield method, compounded semiannually (or over a shorter permitted compounding interval selected by the owner). The portion of OID that accrues during the period of ownership of a Discount Bond (i) is interest excludable from the owner's gross income for federal income tax purposes to the same extent and subject to the same considerations discussed above as to other interest on the Series 2012A Bonds, and (ii) is added to the owner's tax basis for purposes of determining gain or loss on the maturity, redemption, prior sale or other disposition of that Discount Bond. A purchaser of a Discount Bond at its issue price in the initial public offering who holds that Bond to maturity will realize no gain or loss upon the retirement of that Bond. Certain of the Series 2012A Bonds (“Premium Bonds”) as indicated on the Cover were offered and sold to the public at a price in excess of their stated redemption price (the principal amount) at maturity. That excess constitutes bond premium. For federal income tax purposes, bond premium is amortized over the period to maturity of a Premium Bond, based on the yield to maturity of that Premium Bond (or, in the case of a Premium Bond callable prior to its stated maturity, the amortization period and yield must be determined on the basis of the earliest call date that results in the lowest yield on that Premium Bond), compounded semiannually. No portion of that bond premium is deductible by the owner of a Premium Bond. For purposes of determining the owner’s gain or loss on the sale, redemption (including redemption at maturity) or other disposition of a Premium Bond, the owner’s tax basis in the Premium Bond is reduced by the amount of bond premium that accrues during the period of ownership. As a result, an owner may realize taxable gain for federal income tax purposes upon the sale or other disposition of a Premium Bond for an amount equal to or less than the amount paid by that owner for that Series 2012A Bond. A purchaser of a Premium Bond at its issue price in the initial offering who holds that Series 2012A Bond to maturity (or, in the case of a callable Premium Bond, its earlier call date that results in the lowest yield on that Series 2012A Bond) will realize no gain or loss upon the retirement of that Series 2012A Bond. Owners of Discount Bonds or Premium Bonds (or book entry interests in them) should consult their own tax advisers as to the determination for federal income tax purposes of the amount of OID or bond premium properly accruable in any period with respect to the Discount Bonds or Premium Bonds and as to other federal tax consequences and the treatment of OID and bond premium for state and local tax purposes.

28 LEGAL OPINIONS Legal matters incident to the issuance of the Series 2012A Bonds and with regard to the tax-exempt status of the interest on the Series 2012A Bonds (see Tax Matters) are subject to the legal opinions of Roetzel & Andress, A Legal Professional Association, whose legal services as bond counsel have been retained by the University. The legal opinion, dated and premised on law in effect as of the respective date of original delivery of the Series 2012A Bonds, will be delivered to the Underwriters and the University at the time of original delivery. The proposed text of the legal opinion is set forth as Exhibit A. The legal opinions to be delivered may vary from those texts if necessary to reflect facts and law on that date of delivery. The opinion will speak only as of its date, and subsequent distribution of them by recirculation of this Official Statement or otherwise shall create no implication that Bond Counsel has reviewed or expresses any opinion concerning any of the matters referred to in those opinions subsequent to their date. In addition to rendering the legal opinion, Bond Counsel will assist in the preparation of and advise the University concerning documents for the bond transcript. Certain legal matters will be passed upon for the Underwriters by their counsel, Peck, Shaffer & Williams LLP, and for the University by Willis Walker, Chief University Counsel, and by Squire Sanders (US) LLP, Disclosure Counsel. LITIGATION To the knowledge of the appropriate officials of the University and Board of Trustees, no litigation or administrative action or proceeding is pending restraining or enjoining, or seeking to restrain or enjoin, the issuance and delivery of the Series 2012A Bonds or contesting or questioning the proceedings and authority under which the Series 2012A Bonds have been authorized and are to be issued, sold, signed or delivered, or the validity of the Series 2012A Bonds. The University will deliver to the Underwriters a certificate to that effect at the time of original delivery of the Series 2012A Bonds to the Underwriters. The University is a party to various legal proceedings seeking damages or injunctive or other relief and generally incidental to its operations. These proceedings are unrelated to the Bonds, including the Series 2012A Bonds, or the security for the Bonds, or the permanent improvements being financed. The ultimate disposition of these proceedings is not now determinable, but will not, in the opinion of the appropriate University officials, have a material adverse effect on the Bonds, the security for the Bonds or those improvements. RATINGS The Series 2012A Bonds have been rated “Aa3” by Moody’s Investors Service and “A+” by Standard & Poor’s Ratings Services. No application for a rating has been made by the University to any other rating service. The ratings reflect only the respective views of the rating services, and any explanation of the meaning or significance of the ratings may only be obtained from the respective rating service. The University furnished to each rating service certain information and materials, some of which may not have been included in this Official Statement, relating to the Series 2012A Bonds and the University. Generally, rating services base their ratings on such information and materials and on their own investigation, studies and assumptions.

29 There can be no assurance that a rating when assigned will continue for any given period of time or that it will not be lowered or withdrawn entirely by a rating service if in its judgment circumstances so warrant. Any lowering or withdrawal of a rating may have an adverse effect on the marketability or market value of the Series 2012A Bonds. The University expects to furnish the rating services with information and materials that may be requested. The University, however, assumes no obligation to furnish requested information and 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 2012A Bonds. TRANSCRIPT AND CLOSING DOCUMENTS A complete transcript of proceedings and a certificate (described under Litigation) relating to litigation will be delivered by the University when the Series 2012A Bonds are delivered by the University to the Underwriters. The University at that time will also provide to the Underwriters a certificate, signed by the University officials who sign this Official Statement and addressed to the Underwriters, relating to the accuracy and completeness of this Official Statement and to its being a “final official statement” in the judgment of the University for purposes of SEC Rule 15c2-12(b)(3). CONTINUING DISCLOSURE AGREEMENT The University has agreed, for the benefit of the holders and Beneficial Owners from time to time of the Series 2012A Bonds, in accordance with SEC Rule 15c2-12 (the Rule), to provide or cause to be provided to the Municipal Securities Rulemaking Board such annual financial information and operating data, audited financial statements and notices of the occurrence of certain events in such manner as may be required for purposes of paragraph (b)(5)(i) of the Rule (the Continuing Disclosure Agreement). See Exhibit B for the proposed form of the Continuing Disclosure Agreement. The performance by the University of the Continuing Disclosure Agreement will be subject to the annual appropriation by the Board of Trustees of any funds that may be necessary to perform it. The Continuing Disclosure Agreement will remain in effect only for such period that the Series 2012A Bonds are outstanding in accordance with their terms and the University remains an Obligated Person with respect to the Series 2012A Bonds within the meaning of the Rule. Within the last five years, the University has in a timely manner made all filings and given all notices required under its prior continuing disclosure agreements. UNDERWRITING The Series 2012A Bonds are being purchased by Merrill Lynch, Pierce, Fenner & Smith Incorporated, on behalf of itself and as representative of KeyBanc Capital Markets Inc., CastleOak Securities L.P., Fifth Third Securities, Inc., The Huntington Investment Company, J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, PNC Capital Markets LLC and Sterne Agee & Leach Inc. (collectively, the “Underwriters”), at a purchase price of $185,175,366.49, which is equal to the aggregate principal amount of the Series 2012A Bonds, $170,000,000.00, plus net original issue premium of $16,184,652.25, less the Underwriters’ discount of $1,009,285.76. The Underwriters have provided the information in this Official Statement pertaining to the offering prices and to the offering of the Series 2012A Bonds in the sixth paragraph of Regarding This Official Statement. As noted in that paragraph, the Underwriters may offer the Series 2012A Bonds to certain dealers (including dealers depositing into

30 investment trusts) and others at a price lower than that offered to the public. The public offering prices of the Series 2012A Bonds set forth on the Cover may be changed after the initial offering by the Underwriters. The purchase of the Series 2012A Bonds by the Underwriters is subject to certain conditions and requires that the Underwriters will purchase all of the Series 2012A Bonds, if any are purchased. The Underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, principal investment, hedging, financing and brokerage activities. Certain of the Underwriters and their respective affiliates have, from time to time, performed and may in the future perform, various investment banking services for the University, for which they received or will receive customary fees and expenses. In the ordinary course of their various business activities, the Underwriters and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (which may include bank loans and/or credit default swaps) for their own account and for the accounts of their customers and may at any time hold long and short positions in such securities and instruments. Such investment and securities activities may involve securities and instruments of the University. J.P. Morgan Securities LLC (“JPMS”), an Underwriter of the Series 2012A Bonds, has entered into negotiated dealer agreements (each, a “Dealer Agreement”) with each of UBS Financial Services Inc. (“UBSFS”) and Charles Schwab & Co., Inc. (“CS&Co.”) 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 UBSFS and CS&Co. will purchase Series 2012A Bonds from JPMS at the original issue price less a negotiated portion of the selling concession applicable to any Series 2012A Bonds that such firm sells. Morgan Stanley, the parent company of Morgan Stanley & Co. LLC, one of the underwriters of the Series 2012A Bonds, has entered into a retail brokerage joint venture with Citigroup Inc. As part of the joint venture, Morgan Stanley & Co. LLC will distribute municipal securities to retail investors through the financial advisor network of a new broker-dealer, Morgan Stanley Smith Barney LLC. This distribution arrangement became effective on June 1, 2009. As part of this arrangement, the Morgan Stanley & Co. LLC will compensate Morgan Stanley Smith Barney LLC for its selling efforts with respect to the Series 2012A Bonds. FINANCIAL ADVISOR The University has retained Public Financial Management, Inc. (the “Financial Advisor”) in connection with the University’s issuance of the Series 2012A Bonds. The Financial Advisor is not obligated to undertake, and has not undertaken to make, an independent verification or to assume responsibility for the accuracy, completeness or fairness of the information contained in this Official Statement. The Financial Advisor is an independent advisory firm and is not engaged in the business of underwriting, trading or distributing municipal securities or other public securities. ELIGIBILITY FOR INVESTMENT AND AS PUBLIC MONEYS SECURITY To the extent that the matter as to the particular investor is governed by Ohio law, and subject to any applicable limitations under other provisions of Ohio law, under the Act the Series 2012A Bonds are lawful investments for banks, societies for savings, savings and loan associations, deposit guarantee associations, trust companies, trustees, fiduciaries, insurance companies (including domestic life and domestic not for life), trustees or other officers having charge of sinking and bond retirement or other special funds of political subdivisions and taxing districts of the State, the Commissioners of the Sinking Fund, the Administrator of Workers’

31 Compensation, in accordance with the investment policy established pursuant to applicable State law, and State retirement systems (Teachers, Public Employees, School Employees, and Police and Fire), notwithstanding any other provisions of the Revised Code or rules adopted pursuant thereto by any State agency with respect to investments by them. The Act provides that the Series 2012A Bonds are acceptable under Ohio law as security for the deposit of public moneys. Beneficial Owners of the Series 2012A Bonds should make their own determination as to such matters as legality of investment in or pledgeability of book-entry interests. CONCLUDING STATEMENT To the extent that any statements made in this Official Statement involve matters of opinion or estimates, whether or not expressly stated to be such, they are made as such and not as representations of fact or certainty and no representation is made that any of those statements have been or will be realized. Information in this Official Statement has been derived by the University from official and other sources and is believed by the University to be accurate and reliable. Information other than that obtained from official records of the University has not been independently confirmed or verified by the University and its accuracy is not guaranteed. Neither this Official Statement nor any statement that may have been or that may be made orally or in writing is to be construed as or as part of a contract with the original purchasers or subsequent holders or Beneficial Owners of the Series 2012A Bonds. This Official Statement has been prepared and delivered by the University and signed for and on behalf of the Board of Trustees and the University by the officials identified below.

KENT STATE UNIVERSITY

/s/ Dr. Lester A. Lefton President

/s/ Gregg S. Floyd Senior Vice President for Finance and Administration

32 APPENDIX A KENT STATE UNIVERSITY

(This Page Intentionally Left Blank) TABLE OF CONTENTS

INTRODUCTION...... A-1

GOVERNANCE AND ADMINISTRATION...... A-1 Board of Trustees...... A-1 Administrative Officers ...... A-2

PROGRAMS...... A-4 Academic Programs...... A-4 Accreditations ...... A-5 Faculty and Employees...... A-7

ENROLLMENT ...... A-8 General...... A-8 Student Admissions ...... A-9 Student Fees and Charges ...... A-9 Student Financial Aid ...... A-12

PHYSICAL PLANT – KENT CAMPUS...... A-13 General...... A-13 Housing and Dining Facilities ...... A-14 Student Activity and Service Facilities...... A-14 Other Facilities...... A-15

REGIONAL CAMPUSES...... A-15 Enrollment...... A-16 Student Admissions ...... A-16 Student Fees and Charges ...... A-16 Physical Plant...... A-17

OTHER INSTITUTIONS; UNIVERSITY SYSTEM OF OHIO...... A-17

FINANCIAL OPERATIONS AND RESULTS ...... A-18 General...... A-18 General Budgeting Procedures ...... A-21 Operating Budgets ...... A-22 State Appropriations to the University ...... A-22 Operating Appropriations ...... A-22 Capital Appropriations...... A-23 Grants and Contracts...... A-24 Gifts and Endowment ...... A-25 Investment Policy...... A-25 Insurance Coverage...... A-26 Capital Programs...... A-27 Outstanding Obligations ...... A-27 Retirement Plans ...... A-28

i INTRODUCTION The University is one of the 13 state universities in Ohio. Based on Fall 2011 enrollment at the University’s main campus in Kent (the “Kent Campus”) and its seven regional campuses, the University is the second largest of those state universities. The combined enrollment for Fall 2011 at the Kent Campus and the Regional Campuses aggregated 42,185. The University was established in 1910 by State legislation. Fall semester headcount enrollment at the Kent Campus for the 2011-12 academic year was 26,938, which consisted of 21,351 undergraduate and 5,587 graduate students. Ohio residents comprised approximately 82% of that enrollment. The University attracts students from a variety of geographical locations with the greatest number of out-of-state American students coming from Pennsylvania and just under 1,900 international students from 99 countries, including 772 students from China. In addition to the Kent Campus, the University has seven regional campuses: Ashtabula, East Liverpool, Geauga, Salem, Stark, Trumbull and Tuscarawas (the “Regional Campuses”). The University’s seven Regional Campuses offer associate degree and certificate programs. Fall 2011 enrollment at the Regional Campuses aggregated 15,247. The University offers more than 8,500 courses leading to degrees in over 50 instructional departments. Faculty and instructional staff for the Kent and Regional Campuses aggregated 2,521 on a full-time equivalent (“FTE”) basis for the 2011-12 academic year. In addition to the classes that the University offers on the Kent Campus and at its Regional Campuses, the University delivers distance learning education via the Internet, offering approximately 425 distance learning courses, with over 30% of University students enrolled in at least one distance learning course. Scholars and researchers from across the country and more than 99 foreign countries are attracted to the University’s 56 academic institutes and centers at its Kent Campus and Regional Campuses. These include the internationally respected Glenn H. Brown Liquid Crystal Institute, the Lyman L. Lemnitzer Center for NATO and European Union Studies and the Institute for Applied Linguistics. The Kent Campus is located in the City of Kent, which has a population of 28,904 (based on the 2010 U.S. Census) excluding nonresident students. Kent is approximately 15 miles east of Akron and 40 miles southeast of Cleveland. The University is the largest employer in Portage County. Crain’s Cleveland Business newspaper ranks the University as the 16th largest employer in the Cleveland-Akron area (consisting of Cuyahoga, Geauga, Lake, Lorain, Medina, Portage and Summit counties).

GOVERNANCE AND ADMINISTRATION

Board of Trustees

The University is currently governed by a nine-voting-member Board of Trustees which, under Ohio law, is directed and granted authority to do all things necessary for the proper maintenance and successful and continuous operation of the University. The members of the Board of Trustees are appointed by the Governor with the advice and consent of the State Senate for overlapping nine-year terms.

A-1 The current voting members and officers of the Board, the years in which their respective terms expire, all on May 16, and vocation in private life are as follows:

Stephen Colecchi (2017) President and CEO, Robinson Memorial Hospital

Margot J. Copeland (2019) Executive Vice President and Director, Corporate Diversity and Philanthropy, KeyCorp

Dennis E. Eckart, Secretary (2016) President, North Shore Associates, LLC

Emilio Ferrara (2015) Oral and Maxillofacial Surgeon, E.D. Ferrara, Inc.

Richard H. Marsh (2020) Retired Senior Vice President and Chief Financial Officer, FirstEnergy Corp.

Patrick S. Mullin (2012) Retired Partner, Deloitte & Touche*

Lawrence Pollock (2018) Partner, Lucky Stars Partners, LLC (Cleveland)

Jane Murphy Timken, Vice Chair (2014) Attorney, Stark County, Ohio

Jacqueline F. Woods, Chair (2013) Former President, AT&T Ohio

*No one has been appointed to succeed Mr. Mullin, at this time. Under Section 3341.02(F) of the Revised Code, “[a]ny trustee shall continue in office subsequent to the expiration date of the trustee's term until a successor takes office, or until a period of sixty days has elapsed, whichever occurs first.”

Administrative Officers

The administrative direction of the University has been delegated by the Board of Trustees to the President and administrative staff. The administrative staff is appointed by the President subject to Board approval. The current administrative officers are:

Lester A. Lefton President Todd Diacon Senior Vice President for Academic Affairs and Provost Gregg S. Floyd Senior Vice President for Finance and Administration Willis Walker Vice President for Human Resources and Chief University Counsel Iris E. Harvey Vice President for University Relations Gregory I. Jarvie Vice President for Enrollment Management and Student Affairs Edward G. Mahon Vice President for Information Services and Chief Information Officer W. Grant McGimpsey Vice President for Research Eugene J. Finn Vice President for Institutional Advancement Alfreda Brown Vice President for Diversity, Equity and Inclusion

Dr. Lester A. Lefton became the eleventh President of the University on July 1, 2006. He previously served as Senior Vice President for Academic Affairs and Provost at Tulane University. Dr. Lefton has over 35 years of experience in higher education, having served for over 25 years at public institutions and nine at private institutions. He has been a psychology professor, dean and provost, as well as author of a best-selling psychology textbook. Dr. Lefton

A-2 received his undergraduate degree at Northeastern University in Boston, and studied at the University of Rochester where he held a U.S. Public Health Service Pre-doctoral Fellowship and earned his doctorate degree. Dr. Todd Diacon became the Senior Vice President for Academic Affairs and Provost on April 2, 2012. Dr. Diacon previously served as Deputy Chancellor of the University of Massachusetts. Prior to his service at the University of Massachusetts, Dr. Diacon held various positions at the University of Tennessee. Dr. Diacon received his bachelor’s degree in history from Southwestern College in Winnfield, Kansas and his master’s and doctoral degrees in history from the University of Wisconsin-Madison. Gregg S. Floyd joined the University as Vice President for Finance and Administration on September 15, 2008, and became Senior Vice President for Finance and Administration on September 1, 2011. From 2002 to 2008 he served as Vice President for Business Affairs, Finance, and University Treasurer at Indiana State University. Mr. Floyd also served Indiana University from 1975 to 2002 in various financial capacities. In addition to being a certified public accountant, he holds undergraduate and graduate degrees from Indiana University. Mr. Floyd also holds a Juris Doctorate from Indiana University. Willis Walker was appointed Vice President for Human Resources on September 29, 2008. He also retains his title and duties as Chief University Counsel, a position he has held since October 1999. Prior to joining Kent State University, Mr. Walker served as Vice President/General Counsel/Corporate Secretary for Lockheed Martin Idaho Technologies, Inc. in Idaho Falls, Idaho and Assistant Chief Counsel for Lockheed Martin Energy Systems, Inc. in Oak Ridge, Tennessee. He also served as Special Counsel to the state of Ohio, Office of Attorney General; Assistant Law Director, City of Chillicothe; and private practice attorney in Chillicothe, Ohio. He holds a Juris Doctorate from the University of Akron Law School and Master’s of Law from Boston University School of Law. Iris E. Harvey joined the University as Vice President for University Relations on November 10, 2008. She had previously been Associate Vice President for marketing and communications at Wright State University. From 1993 to 2004, Ms. Harvey was founder and chief executive of Market Strategies and Solutions Inc., which served a clientele of large multinational organizations and emerging enterprises and was based in Tokyo and Washington, D.C. She earned her bachelor’s and master’s degrees from the University of Southern California, as well as an education specialist degree from George Washington University. Gregory I. Jarvie was appointed Vice President for Enrollment Management and Student Affairs on May 26, 2010. He has been with Kent State University since 1987 and has held numerous administrative positions, most recently serving as Interim Vice President for Enrollment Management and Student Affairs since August 1, 2009. Mr. Jarvie was appointed the University Student Ombuds in 1997; one year later he also assumed the title of Dean of Students and Student Ombuds. In 2007, he was promoted to Associate Vice President and Dean of Students for Enrollment Management and Student Affairs. Mr. Jarvie received his undergraduate degree from Marshall University and his master’s degree in higher education administration from Kent State University. Edward G. Mahon was named Vice President for Information Services/Chief Information Officer in 2004. Prior to joining the University, Mr. Mahon was the Chief Information Officer and Associate Vice President for information technology activities at the University of Missouri. He also served as director of Telecommunications and Network Services at the University of Tennessee. Mr. Mahon’s undergraduate degree is from Eckerd College in Florida and his master’s degree is from the University of Tennessee, Knoxville.

A-3 Eugene J. Finn became the University’s first Vice President for Institutional Advancement in 2007. He served as the Associate Vice President of Advancement for The George Washington University in Washington, D.C., and also has served as their Interim Vice President of Advancement. Mr. Finn received his master’s degree from The George Washington University. Dr. W. Grant McGimpsey joined the University on August 1, 2011, as its Vice President for Research. Dr. McGimpsey previously was at Worcester Polytechnic Institute (“WPI”) in Worcester, Massachusetts, where he served as the Director of the WPI Bioengineering Institute, Professor of Chemistry and Biochemistry and Professor of Biomedical Engineering. Dr. McGimpsey earned both a bachelor’s of science and master’s of science in chemistry from Brock University in St. Catharines, Ontario. He received his doctorate in physical chemistry from Queen’s University in Kingston, Ontario. Dr. Alfreda Brown joined the University on October 1, 2009 as its first Vice President for Diversity, Equity and Inclusion. She previously was at the Rochester Institute of Technology (“RIT”) in Rochester, New York, where she had served in various positions since 1987. During her last three years at RIT, Dr. Brown served as interim chief diversity officer and assistant dean of the College of Applied Arts and Sciences. Dr. Brown holds a bachelor’s degree from Roberts Wesleyan College, a master’s degree from RIT and a doctorate from Nova Southeastern University.

PROGRAMS Academic Programs The University is recognized by the Carnegie Foundation for the Advancement of Teaching as one of 74 public research universities that maintain “high research activity.” Approximately 47 academic units at the University offer 39 degrees in over 205 majors at the associate, bachelor’s, master’s and doctoral levels. The University’s academic degree programs are administered by the following 11 colleges and independent schools: College of Architecture and Environmental Design College of the Arts College of Arts and Sciences College of Business Administration College of Communication and Information College of Education, Health and Human Services College of Nursing College of Public Health College of Technology Regional College School of Digital Science The Division of Research and Graduate Studies has responsibility for supervision of policies and standards for graduate programming, graduate assistant budget allocation, admissions processes, English language testing and remediation, recruitment of minority and nontraditional students for graduate programs, promotion of college teaching skills, and advocacy for graduate programming. Additionally, the Division has responsibility for sponsored program development and administration, patents and copyrights, technology transfer, research support and services, regulatory compliance, and advocacy for research. Since the University was authorized to award its first master’s degrees in 1935 and its first doctoral degrees in 1961, it has evolved into a major center for graduate education and

A-4 research. In Fall 2011, 5,587 students were enrolled in graduate education, 21% of the total student body on the Kent Campus. The University offers 111 master’s majors in 38 academic units and 48 doctoral majors in 24 academic units. As a member of the Northeast Ohio Medical University (“NEOMED”), a consortium of the University, the University of Akron, Cleveland State University and Youngstown State University, the University offers students the opportunity to earn a combined Bachelor of Science and Doctor of Medicine degree in six years, a Master of Public Health degree, or a Doctor of Pharmacy degree. The University is not fiscally responsible for NEOMED, and NEOMED revenues are not included in the General Receipts. The University’s Board of Trustees and the Board of Trustees of Ohio College of Podiatric Medicine (“OCPM”) have approved a transaction, under which the University would acquire the curriculum, faculty, staff, and most of the assets of OCPM on July 1, 2012. Founded in 1916, OCPM is the only accredited podiatry school in Ohio and one of eight accredited podiatric schools in the United States. OCPM is a private, not-for-profit, four-year graduate level medical college, granting the degree of Doctor of Podiatric Medicine (“DPM”). OCPM has graduated more than 5,000 podiatrists. Currently, the school maintains an average four-year total enrollment of 430 students. OCPM annually graduates approximately 110 students with the DPM degree. In addition, OCPM operates with a certificate of authorization from the Ohio Board of Regents. After closing the transaction, the Kent State University College of Podiatric Medicine will be created and the podiatric medicine academic program will be offered by the newly created College. One of the assets being acquired is the current OCPM building located in Independence, Ohio, which is approximately 30 miles northwest of the Kent Campus. The building, which has an appraised value of $13,450,000, has been equipped and customized for the unique offering of podiatric medicine, and the University intends that it will continue to house the podiatric medicine program. The University is also acquiring OCPM’s curriculum program and plans to assume OCPM’s $5.5 million of outstanding debt issued through the Ohio Higher Education Facilities Commission (“OHEFC”). The assumption of the debt is subject to the prior consent of OHEFC. In the event that OHEFC does not consent, the University will use available funds to retire the outstanding debt and pay the termination payment of the related interest rate swap, estimated in OCPM’s Fiscal Year 2011 audited financial statements to be $744,903. The OCPM students will have a seamless transition, remaining in the same location and with the same faculty and administrators, which will be employed by the University. Accreditations The University is accredited by The Higher Learning Commission of the North Central Association of Colleges and Schools. In addition, the University is an affiliate of the National Association of State Universities and Land Grant Colleges. The professional programs and their accrediting agencies include: College of Architecture & Environmental Design National Architectural Accrediting Board Council for Interior Design Accreditation College of the Arts National Association of Schools of Art and Design National Association of Schools of Music National Association of Schools of Dance National Association of Schools of Theatre

A-5 College of Arts and Sciences American Chemical Society American Psychological Association American Bar Association National Association of Schools of Public Affairs Administration College of Business Administration Association to Advance Collegiate Schools of Business College of Communication and Information Accrediting Council on Education for Journalism and Mass Communication American Library Association College and Graduate School of Education, Health & Human Services National Council for Accreditation of Teacher Education Commission on the Accreditation of Allied Health Education Programs Council for Academic Accreditation of Audiology and Speech-Language Pathology of the American Speech-Language-Hearing Association Ohio Department of Education Council for Accreditation of Counseling and Related Educational Programs American Psychological Association National Association of School Psychologists Council on Education of the Deaf Commission on Accreditation for Dietetics Education National Association for the Education of Young Children National Recreation and Park Association American Dietetics Association Accreditation Council for Occupational Therapy Education Commission on Accreditation in American Physical Therapy Education Council on Rehabilitation Education Council for Higher Education Accreditation Council on Rehabilitation Counseling Joint Review Committee on Education in Radiologic Technology Joint Review Committee on Education in Nuclear Medicine Program Accreditation Commission for Programs in Hospitality Administration Commission on Accreditation of Athletic Training Education Committee on Accreditation of Exercise Sciences – Commission on Accreditation of Applied Health Education Programs College of Nursing National League for Nursing Accrediting Commission Ohio Board of Nursing Commission on Collegiate Nursing Education College of Technology American Veterinary Medical Association Association of Collegiate Business Schools & Programs Council of Aviation Accreditation Association of Technology, Management, and Applied Engineering (formerly known as National Association of Industrial Technology) Technology Accreditation Commission Accreditation Board for Engineering and Technology

A-6 Research and Graduate Studies Council on Accreditation of the Association for Assessment and Accreditation of Laboratory Animal Care Faculty and Employees As of November 1, 2011, the University had 4,877 (3,736.91 FTE) Kent Campus employees, of which the faculty and instructional staff numbered 1,598 (1,126.32 FTE). The Regional Campuses had 1,427 (1,005.64 FTE) employees, of which faculty and instructional staff numbered 923 (563.90 FTE). The FTE staff by employment category for the Kent and Regional Campuses for academic year 2011-12 was as follows: Regional Kent Campus Campuses Total

Professor 186 16 202 Associate Professor 269 100 369 Assistant Professor 179 97 276 Instructor 242 159 401 Other Teaching Staff 722 551 1,273 Total Faculty/Instructors 1,598 923 2,521

Graduate Assistants 1,047 0 1,047

Clerical/Secretarial Worker 470 126 596 Executive/Administrator 387 67 454 Non-Faculty Professional 860 172 1,032 Service/Maintenance Worker 376 114 490 Skilled Crafts Worker 72 0 72 Technical/Paraprofessional 67 25 92 Total Support Staff 2,232 504 2,736

Total 4,877 1,427 6,304

Of the full-time Kent Campus faculty, 53.38% are tenured. Of the full-time Regional Campuses faculty, 24% are tenured. Members of the faculty are active in the University setting and in community programs, research projects and the publication of professional articles and textbooks. A statewide public employee collective bargaining law applies generally to public employee relations and collective bargaining. The University is a party to collective bargaining agreements with: (i) the American Association of University Professors (“AAUP”) for tenure/tenure-track faculty (current agreement expired on August 22, 2011); (ii) the AAUP for non-tenure track faculty (current agreement expires August 16, 2012); and (iii) the American Federation of State, County, and Municipal Employees (“AFSCME”) for certain service and maintenance staff (skilled and unskilled) (current agreement expires September 30, 2014). The University and AAUP for tenure/tenure-track faculty have reached an agreement but that agreement must be ratified by the University and by the members of AAUP for tenure/tenure- track faculty. AAUP for tenure/tenure-track faculty has been working under and is continuing to work under the terms of the expired agreement.

A-7 The remaining University employees have not elected to join a bargaining unit. There have been no strikes or job actions undertaken by any bargaining unit representing employees of the University. The University considers its relationship with its employees to be good.

ENROLLMENT General The University attracts students from a variety of backgrounds and geographical locations, with Fall Semester 2011 representation on the Kent Campus from 50 states and 99 foreign countries. Ohio residents represented 82% of all students enrolled that semester. The University’s Fall Semester headcount enrollment, including both full-time and part- time students, as well as FTE enrollment for recent academic years at the Kent Campus are as follows: Academic Year Undergraduate Graduate Total FTE 2007-08 17,653 4,699 22,352 18,784 2008-09 17,685 4,893 22,578 18,911 2009-10 19,297 5,272 24,569 20,746 2010-11 20,470 5,378 25,848 21,862 2011-12 21,351 5,587 26,938 23,072 In the 2011-12 academic year, approximately 75% of the undergraduates enrolled were full-time and 25% were part-time, while approximately 51% of the graduate students were full- time and 49% were part-time. For more than 25 years, the State has legislated fall term undergraduate enrollment limits at the residential state universities. The limit for undergraduate students for the Kent Campus was originally 15,000 FTE and is now 22,000 FTE.

 Headcount enrollment is based on a “preponderance method” so that a student taking courses at more than one of the University’s campuses is reported in the headcount enrollment at the Kent Campus only if the majority of the student’s classes are taken at the Kent Campus. FTE enrollment is not affected.

A-8 Student Admissions The table below shows, for the academic years indicated, the total number of freshman applications received, the number and percentage of those applicants accepted for admission, the number of freshmen enrolled, and the percentage of the accepted applicants that became enrollees at the Kent Campus.

Academic Applications Applicants Percent Applicants Percent Year Received Accepted Accepted Enrolled Enrolled

2007-08 12,053 9,603 80.0% 3,635 37.9% 2008-09 12,916 9,576 74.1 3,589 37.4 2009-10 14,514 10,498 72.3 3,991 38.0 2010-11 15,118 10,667 70.5 3,840 35.9 2011-12 18,140 11,295 62.2 4,156 36.7

As of May 23, 2012, the University has received 20,695 applications for admissions, which is 14% or 2,555 more applications than the prior year and the highest number of applications received in the University’s history. For the 2011-12 academic year, the average University freshman composite score on the American College Test (“ACT”) was 22.3, compared to the national average of 21.1. The average University freshman combined score on the Scholastic Aptitude Test (“SAT”) was 1,025, compared to the national average of 1,011. For the past five academic years, the average University freshman composite scores on the ACT and SAT were 22.1 and 1,022, compared to the national averages of 21.1 and 1,016 for those years. Student Fees and Charges The University operates its programs on the basis of a two-semester academic year and a summer session. Payment in full of all fees is required to be made by students prior to official enrollment in any class of instruction. The per-full-time student instructional and general fees for recent regular (two semesters) academic years, based on full-time charges (11 credit hours or more), are as follows: 2007-08 2008-09 2009-10 2010-11 2011-12 Ohio Resident Undergraduate $ 8,430 $ 8,430 $ 8,726 $ 9,030 $ 9,346 Graduate 8,968 8,968 9,282 9,606 9,942 Nonresident Undergraduate $ 15,862 $ 15,862 $ 16,418 $ 16,990 $ 17,306 Graduate 15,980 15,980 16,542 17,122 17,458 Past and current State appropriation acts have prohibited or limited the amount of the increase in the instructional and general fees for undergraduate students at the State’s public institutions of higher education. The State appropriations act for the 2007-09 State budget biennium froze the instructional and general fees for in-state undergraduate students at the 2007 level for academic years in that budget biennium. The State appropriations acts for both the 2009-11 State budget biennium and the 2011-13 State budget biennium permitted a maximum

A-9 3.5% increase from one academic year to the next academic year in the instructional and general fees for in-state undergraduate students. The Board of Trustees of the University authorized a 3.5% increase in such fees for each of the four academic years from the 2009-10 academic year through the 2012-13 academic year. Fees charged for distance-learning courses are the same as the fees charged for standard courses at the corresponding campus at which the courses are conducted. In addition to paying course fees, students enrolled in distance-learning courses pay a $10 per-credit-hour fee. The Board of Trustees of the University has approved a phased-in per-credit-hour fee for all Kent Campus students. Beginning in Fall 2012, students taking over 17 credit hours will be charged the per-credit-hour fee for each credit hour above 17 credit hours. Beginning in Fall 2013, students will be charged the per-credit-hour fee for all credit hours over 16 credit hours. The University estimates that the change in the fee structure will generate approximately $3.5 million in the first year and approximately $6.4 million in subsequent years. The State appropriations act does not freeze, cap or limit increases in special fees, graduate instructional fees, nonresident tuition surcharges, or room and board charges.

The University has covenanted in the Trust Agreement that so long as any Bonds are outstanding under the Trust Agreement to fix, make, adjust and collect fees, rates, rentals, charges, and other items comprising General Receipts at least sufficient to pay Bond Service Charges on all Bonds when due, and to satisfy other requirements with respect to the Bonds and, together with other moneys available, to pay all other costs and expenses necessary for the proper maintenance and successful and continuous operation of the University. See Security and Sources of Payment – Covenant as to Sufficiency of General Receipts.

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A-10 Comparative information concerning the academic year 2011-12 instructional and general fees charged Ohio residents by the University and the other State universities, and room and board charges is set forth below.

Institution Instructional and General Fees* Room and Undergraduate Graduate** Board***

Miami University $13,080 $12,419 $10,640 University of Cincinnati 10,419 13,701 9,780 Bowling Green State University 10,044 11,598 7,694 Ohio University 9,936 9,510 9,753 Ohio State University 9,735 11,823 9,378 University of Akron 9,546 8,312 9,586 Kent State University 9,346 9,942 8,830 University of Toledo 8,926 13,647 9,922 Cleveland State University 9,002 12,881 10,398 Wright State University(a) 7,488 11,088 8,511 Wright State University(b) 7,785 11,406 8,511 Wright State University(c) 8,070 11,826 8,511 Youngstown State University 7,450 9,909 7,900 Shawnee State University 6,762 8,508 8,012 Central State University 5,672 5,400 8,484

* Based on Fall 2011 full-time charges or 15 credit hours and either two semesters or three quarters. Amounts shown include both instructional and general/facilities fees. ** Graduate fees reflect tuition for general master’s- and doctoral-level programs; medical, law and specialty programs are not listed. *** Rates are computed on average Fall 2011 double-occupancy room rates, the minimum/general package of meal plans, and either two semesters or three quarters. (a) Denotes fees charged to continuing students who enrolled prior to Summer Term 2003. (b) Denotes fees charged to new students entering Summer Term 2003, if different than fees charged to continuing students. (c) Denotes fees charged to new students entering Fall Term 2004 or later.

Source: Ohio Board of Regents Fall Survey of Student Charges for Academic Year 2011-2012.

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A-11 The following student budget represents estimated average undergraduate student costs for a full-time, in-state undergraduate living in a dormitory for the regular 2011-12 academic year. This is based on estimates currently used by the office of Student Financial Aid. Fees and charges that are the basis for these estimates are subject to change by action of the Board of Trustees. Tuition and Fees $ 9,346 Room and Board 8,830 Books/Supplies 1,380 Miscellaneous 1,972 Transportation 2,592 Loan Fees 20 Total $24,140

Out-of-state undergraduate residents are charged an additional $7,960 per academic year tuition surcharge. The room and board charge of $8,830 for the 2011-12 academic year (a 5.4% increase over the prior year) represents the average cost for a double occupancy room and the average board contract ($1,695 food credit per semester). See Physical Plant – Housing and Dining Facilities for additional information concerning the University’s residence and dining halls. Student Financial Aid During the 2011-12 academic year, approximately 88% of students receive financial aid. The primary responsibility for this function is placed with the Office of Student Financial Aid. During Fiscal Year 2011, students were awarded total assistance amounting to $408,165,050. The primary sources included Guaranteed Student Loans, Pell Grants, Perkins Loans, College Work Study, Supplemental Educational Opportunity Grants, Ohio Instructional Grants and University scholarships, loans and graduate student fee waivers.

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A-12 The following table summarizes the amounts of financial aid provided to University students for recent Fiscal Years. All programs assisted by the federal and State governments are subject to appropriation and funding by those governments.

Fiscal Year __ 2007 2008 2009 2010 2011

Scholarships and Grants UniversityFunds $ 23,392,035 $ 25,877,761 $ 28,116,034 $ 31,791,488 $ 32,492,996 UniversityFeeWaivers 16,666,147 16,943,417 17,241,672 17,092,654 19,128,435 ExternalFunds 8,092,140 7,481,726 6,187,699 6,172,265 6,238,669 StateFunds(a) 11,212,753 11,133,312 10,912,335 6,115,139 6,558,102 PellGrants 24,177,134 27,244,779 32,692,417 56,199,652(b) 73,802,885(b) Other Federal Grants 7,115,355 7,015,120 5,530,904 4,906,488 6,579,785 TotalScholarships&Grants $ 90,655,564 $ 95,696,115 $100,681,061 $122,277,686 $144,800,872

Loans Federal(Perkins) $ 5,350,065 $ 5,914,612 $ 1,811,487 $ 1,316,856 $ 1,277,958 Federal(GSL) 128,417,462 136,352,303 166,517,177 218,632,811(c) 243,083,206(c) Other (State/Private) 29,318,883 29,662,733 28,400,501 20,523,387 17,166,598 TotalLoans $163,086,410 $171,929,648 $196,729,165 $240,473,054 $261,527,762

Student Employment FederalCollegeWorkStudy $ 1,631,084 $ 1,685,374 $ 1,538,132 $ 1,554,873 $ 1,836,417 University Student Payroll(d) 21,776,956 23,506,408 24,069,449 23,688,490 24,460,592 TotalStudentEmployment $23,408,040 $ 25,191,782 $ 25,607,581 $25,243,363 $ 26,297,009

Total Financial Assistance $277,150,014 $292,817,545 $323,017,807 $387,994,103 $432,625,643

(a) State Funds for 2010 decreased due to state budget cuts. (b) Increase over prior years is attributed to increased enrollment, expansion of the grant eligibility, economic downturn, and the implementation of the Year Round Pell Grant (that has now been repealed) for the years of 2010 and 2011. (c) Increase over prior years is attributed to increased enrollment and the economic downturn. (d) Includes graduate stipend.

Federal reports show a Guaranteed Student Loan program default rate of University students (as of Fiscal Year 2009) of 5.9%, compared to a national average of 8.8% and an equivalent University-administered Perkins loan default rate of 17.53% (as of June 30, 2011).

PHYSICAL PLANT – KENT CAMPUS General Physical property owned by or otherwise available to and utilized by the University on the Kent Campus consists of 114 buildings and approximately 940 acres of land. In addition, the University’s 291-acre airport and 190-acre 18-hole golf course are nearby. The University has approximately 6.5 million square feet in the buildings at the Kent Campus. The physical plant is estimated by the University to have a replacement value of approximately $1,494,725,496 with a current contents value of an additional $622,416,846. Thirty-six major buildings are used for academic instruction, research, and administration.

A-13 The University’s 13 libraries (the main library and five branches at the Kent Campus along with the seven branches at the Regional Campuses) have more than 2.9 million volumes of books, bound periodicals and government publications. In addition, the libraries’ collections include over 1.5 million microforms, 300,000 maps and 122,000 nonbook materials (e.g., computer files and audiovisuals). The University libraries’ collections are insured for a total of $346 million (i.e., 72% of their calculated value of $479 million). The Special Collections and Archives Division includes 12,000 linear feet of archives, manuscripts, and rare books. The University’s libraries subscribe to more than 200 online research databases, more than 48,000 electronic journals, and well over 32,000 electronic books. The Fiscal Year 2012 budget for library materials is $4.9 million. Housing and Dining Facilities The University provides traditional housing on its Kent Campus for approximately 23% of its students. Most of the remaining noncommuting students live in off-campus housing in the City of Kent. As of September 12, 2011, the 25 traditional residence halls on campus had an official Fall 15th-day occupancy of 6,204 students (6,346 with the inclusion of 142 Resident Assistants), representing a revenue generating occupancy rate of 99.11%. All noncommuting freshmen and sophomores are required to live in a residence hall. All rooms are furnished, wired for cable television, and provide wireless internet access. These facilities, the number of students housed in each, and the date each was placed in service are as follows: Residence Hall Capacity Placed in Service Centennial Court - Building 149 217 2003 Centennial Court - Building 150 208 2003 Centennial Court - Building 151 202 2004 Centennial Court - Building 152 223 2004 Centennial Court - Building 153 258 2004 Centennial Court - Building 154 232 2004 Johnson Hall (Honors College Dorm) 243 2006 Stopher Hall (Honors College Dorm) 203 2006 The University also has apartment housing for students with families, the Allerton Student Family housing complex (the “Allerton”). Students who are 21 years of age or older, or have earned at least 60 undergraduate credits, are also eligible to live at the Allerton. The Allerton has 129 apartments with both one-bedroom and two-bedroom apartments available. Occupants of residence halls and the Allerton have access to five computer labs in the residence halls equipped with 59 personal computers, with printers and software. Twenty-four dining facilities located throughout the campus provide student meals. All freshmen and sophomore students who live in University housing must participate in the University board program. The goal of the University-managed dining halls is to provide a high standard of dining service at a reasonable price. Student Activity and Service Facilities The Kent Student Center (the “Student Center”) is the community center for the University and the hub of student activities. The Student Center covers 6.5 acres of floor space and provides extensive facilities and services, including the University Bookstore, banking services, post office, lockers, and student organization offices. A ballroom, multipurpose theater,

A-14 meeting rooms, lounges, several food service establishments, a cyber café and computer labs are available to students and the community in the Student Center. The University has a 30,000-seat stadium, an athletic and convocation center with 6,300 seats, a 120,000-square-foot field house, two practice football fields, one all-weather track, one varsity baseball stadium, a softball diamond, and a cross-country course. Other athletic and physical education facilities include an 18-hole golf course and an ice arena with two ice rinks and seating for 1,500 spectators. The 153,000-square-foot Student Recreation and Wellness Center offers cardio equipment and group fitness space along with an indoor 1/6-mile running track, climbing wall, basketball and racquetball courts, and a natatorium featuring lap and leisure pools as well as a vortex and hot water spa. Other outdoor facilities include the Allerton Sports Complex with four lighted softball fields and various tennis, basketball and sand volleyball courts located throughout the campus. Other Facilities Other University facilities include an airport, power plant, campus environment and operations building, greenhouse, WKSU-FM radio station, and an electrical substation. The Kent State University Foundation, Inc. (a separate legal entity from the University) (the “Foundation”) is building a hotel/conference center as part of an approximately $100 million revitalization of downtown Kent, which is expected to be completed in Spring 2013. See Gifts and Endowment. The Foundation’s commitment, consisting of only the construction of the hotel/conference center is estimated to be $15.5 million. Once the hotel/conference center is constructed, the Foundation will retain ownership of the facility but will hire a company to manage it. Other entities involved in the project include the City of Kent, Portage Area Regional Transit Authority, and three private development partners. The University is constructing a walkway connecting the Kent Campus to the downtown area on property that it owns, including property that it has purchased for this purpose in recent years.

REGIONAL CAMPUSES The University’s seven Regional Campuses offer associate (two-year) degree and certificate programs. Certain upper division (junior/senior) level courses are available at the Regional Campuses, and certain Regional Campuses offer bachelor’s and master’s degrees, in addition to associate degrees. The Regional Campuses are located in the cities of Ashtabula, East Liverpool and Salem and in the counties of Geauga, Stark, Trumbull and Tuscarawas. Information shown below is based on the preponderance method. FTE enrollment is not affected. As of November 1, 2011, the Regional Campuses had 1,427 (1,005.64 FTE) employees, of which faculty and instructional staff numbered 923 (563.90 FTE).

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A-15 Enrollment Fall Semester headcount enrollment (full-time and part-time students), as well as FTE enrollment for recent academic years at the Regional Campuses are shown below: Year Total* FTE 2007-08 11,704 8,196 2008-09 11,833 8,354 2009-10 13,888 10,093 2010-11 15,517 11,213 2011-12 15,247 11,026 Student Admissions The table below shows for the fall semester of the academic years indicated, the applications received and accepted, the applicants enrolled and the percent enrolled. Admissions to the Regional Campuses are open to all who apply; consequently, 100% of the applications are accepted.

Academic Applications Applicants Percent Year Received Enrolled Enrolled 2007-08 5,161 3,581 69.4% 2008-09 6,047 3,755 62.1 2009-10 6,369 3,707 58.2 2010-11 6,887 3,770 54.7 2011-12 6,892 3,623 52.6 Student Fees and Charges The University operates Regional Campus programs on the basis of a two-semester academic year and a summer session. Payment in full of all fees is required to be made by students prior to enrollment in any class of instruction. The per-full-time student instructional and general fees for recent regular (two semesters) academic years at the Regional Campuses were as follows: 2007-08 2008-09 2009-10 2010-11 2011-12 Undergraduate Resident $ 4,770 $ 4,770 $ 4,938 $ 5,110 $ 5,288 Nonresident 12,202 12,202 12,630 13,070 13,248 Graduate Resident $ 8,968 $ 8,968 $ 9,282 $ 9,606 $ 9,942 Nonresident 15,980 15,980 16,542 17,122 17,458

 Headcount enrollment is based on the preponderance method so that a student taking classes at more than one of the University’s campuses is reported in the headcount enrollment only at the campus where the majority of the student’s classes are taken. FTE enrollment is not affected.

A-16 Effective fall semester 2000, the University adopted a two-tier fee structure. Shown above are the fees for lower division courses. For upper division (junior/senior) courses, the 2011-12 fees are $6,196 and $14,156 for residents and nonresidents, respectively. For a discussion of the restrictions on the annual increase in instructional and general fees for in-state undergraduate students at state-assisted institutions of higher education imposed by the Ohio General Assembly, see the information concerning Kent Campus fees and charges presented above under the caption Enrollment – Student Fees and Charges. Starting with the 2010 fall semester, the undergraduate students living in specific counties in western Pennsylvania (Allegheny, Beaver, Butler, Crawford, Erie, Lawrence and Mercer) and northern West Virginia (Brooke, Hancock and Ohio) and enrolled in courses only at the Regional Campuses are granted an 80% reduction in the nonresident fee. As a result, academic year fees for those students enrolled full-time in lower division courses are $6,880 compared to the regular fee of $13,248, and academic year fees for those students enrolled full- time in upper division courses are $7,788 compared to the regular fee of $14,156. Physical Plant The Regional Campuses’ facilities include: Ashtabula - four buildings on an 83-acre site; East Liverpool - three buildings on a three-acre downtown site; Geauga - one building and a greenhouse on an 87-acre site; Salem - one building and a greenhouse on a 98-acre site and an additional building on a downtown site; Stark - nine buildings on a 201-acre site; Trumbull - four buildings on a 193-acre site; and Tuscarawas - three buildings on a 142-acre site. In addition, each Regional Campus, except Ashtabula and East Liverpool, has at least one maintenance building, and the Geauga Campus has an extension located in Twinsburg, Ohio, called the Twinsburg Academic Center. The University is currently building the Kent State University Regional Academic Center, which will replace the existing the Twinsburg Academic Center. As is the case with the Twinsburg Academic Center, the Kent State University Regional Academic Center will be an extension of the Geauga Campus and will be located in Twinsburg, Ohio.

OTHER INSTITUTIONS; UNIVERSITY SYSTEM OF OHIO There are other institutions of higher education in the University’s region. The University of Akron, Cleveland State University and Youngstown State University are state- supported urban universities that have primarily commuting student populations. Northeastern Ohio Medical University in Rootstown is a state-supported medical school which offers a combined program with the University that allows students to earn the combined degrees of Bachelor of Science in Integrated Life Sciences and Doctor of Medicine. In addition to the two- year degree programs offered by the University at its Regional Campuses, other two-year schools in the region include Cuyahoga Community College (with three campuses in the Cleveland area) and Lakeland Community College in Lake County. Nearby private institutions include Case Western Reserve University, John Carroll University, Baldwin-Wallace University and Ursuline College in Cleveland; Hiram College in Hiram; Malone University and Walsh University in Canton; and University of Mount Union in Alliance. Public higher education institutions in Ohio now include 13 state universities (with a total of 23 branches), one medical college (in addition to five at state universities), six community colleges operated by local community college districts and supported in substantial part by locally voted property taxes, nine state community colleges, eight technical colleges, and the

A-17 Agricultural Research and Development Center. Those institutions all receive State assistance and conduct full-time educational programs in permanent facilities. The Chancellor, a member of the Governor’s cabinet, has statewide powers to coordinate, advise and direct state-supported and state-assisted institutions of higher education. These powers were formerly exercised by the Ohio Board of Regents. The General Assembly adopted legislation in 2007 providing for the appointment of a Chancellor by the Governor, with the advice and consent of the Senate, and the re-establishment of the Board of Regents to, among other duties, serve as an advisory board to the Chancellor. The Chancellor’s powers and responsibilities include: formulation and revision of a State master plan for higher education; the proposal of recommendations to the Governor and General Assembly concerning the development of state-financed capital plans for higher education; preparation of a State plan for, and responsibility for participation in, federal programs relative to the construction of higher education academic facilities; approval or disapproval of the establishment of technical colleges, state institutions of higher education, community colleges and new branches or academic centers of state universities; approval or disapproval of all new degree programs at higher education institutions; and the review of appropriation requests of those institutions and proposal of recommendations to the General Assembly concerning the biennial higher education operating and capital appropriations. The Board of Regents consists of nine members also appointed by the Governor with the advice and consent of the Senate. The 2007 legislation provides for a reduction in members’ terms to six years from the prior nine-year terms. The new term limits are being phased in through September 21, 2012, commencing with the terms that expired on September 20, 2008. The Board of Regents is responsible for submitting to the General Assembly and the Governor an annual report on the condition of higher education of the State and the performance of the Chancellor. The Board of Regents may have such other duties as the Chancellor may prescribe.

FINANCIAL OPERATIONS AND RESULTS General University financial records are maintained in accordance with the standards prescribed by the Governmental Accounting Standards Board, the American Institute of Certified Public Accountants and the National Association of College and University Business Officers. The Ohio Auditor of State (the “State Auditor”) is charged by law with the responsibility of inspecting and supervising the accounts and records of each taxing subdivision and most public agencies and institutions. Audits are performed by the State Auditor, or by Certified Public Accountants at the direction of that officer, pursuant to Ohio law and under certain federal program requirements. No other independent examination or audit of the University’s financial records is made. The most recent audit (including compliance audit) of the University’s accounts was completed through Fiscal Year 2011. The Basic Financial Statements of the University for Fiscal Year 2011, set forth as Appendix B, have been audited by Plante & Moran, PLLC, independent auditors, as stated in their report included therein. Annual financial reports are prepared by the University and are filed as required by law with the State Auditor after the close of each Fiscal Year. The audited financial statements are public records, no consent to their inclusion is required, and no bring-down procedures have been undertaken by the State Auditor, Plante &

A-18 Moran, PLLC or any other certified public accounting firm since the date of the independent auditor’s report. State laws impose additional financial reporting requirements on state supported and assisted institutions, and provide for the Board of Regents to declare an institution to be in a state of “fiscal watch” if certain financial circumstances are determined to exist. Upon any such declaration, and until the Board of Regents determines that an institution is no longer in that state and terminates the fiscal watch, an institution must comply with special restrictions, prohibitions and additional reporting requirements. If appropriate, an institution under fiscal watch may be placed in “conservatorship.” This legislation is a general law applicable to all such institutions, although developed because of particular fiscal problems at one of the smaller state universities. The Board and University staff are not aware of any facts that would warrant the University being considered for a declaration of fiscal watch under currently known facts and law.

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A-19 The following table summarizes the University’s revenues and expenses with respect to operations at its Kent Campus and Regional Campuses for the five Fiscal Years ended June 30, 2011. Summary of Revenues, Expenses and Changes in Net Assets (Dollars in Thousands)

2007 2008 2009 2010 2011 OPERATING REVENUES Studenttuitionandfees $237,736 $242,114 $247,285 $304,911 $340,274 Less scholarship allowances (34,192) (37,079) (41,603) (55,804) (65,280) Netstudenttuitionandfees 203,544 205,035 205,682 249,107 274,994

Federalgrantsandcontracts 48,195 53,011 57,955 84,368 101,605 State grants and contracts 10,772 12,160 20,806 9,746 9,119 Local grants and contracts 320 621 654 565 394 Nongovernmental grants and contracts 3,072 3,595 6,266 7,616 11,873 Sales and services of educ. departments 6,325 7,806 8,127 8,969 9,658 Auxiliary activities 79,877 82,831 84,404 78,702 83,164 Other operating revenues 4,312 8,960 7,547 4,332 4,121

Total operating revenues 356,417 374,019 391,441 443,405 494,928

OPERATING EXPENSES Instruction 170,509 180,911 190,587 197,230 202,592 Research 14,726 15,456 20,798 18,993 20,532 Publicservice 15,184 15,969 18,192 19,158 16,733 Academicsupport 40,429 41,947 45,116 45,418 53,678 Studentservices 25,402 24,418 25,731 25,953 28,375 Institutionalsupport 32,245 47,090 52,606 53,276 55,067 Scholarships and fellowships 20,555 24,149 27,062 37,642 43,600 Operation and maintenance of plant 32,432 32,470 46,471 38,426 43,556 Auxiliary activities 76,056 78,827 78,763 80,305 86,651 Depreciation 29,263 40,315 40,190 40,217 37,304 Total operating expenses 456,801 501,552 545,516 556,618 588,088 Operating loss (100,384) (127,533) (154,075) (113,213) (93,160)

NONOPERATING REVENUES (EXPENSES) State appropriations 121,317 128,504 138,552 118,275 120,067 Federal Fiscal Stabilization Funds ------19,371 20,187 Gifts 6,268 6,668 13,556 10,617 9,080 Investmentincome 50,202 (12,310) (51,959) 32,450 42,795 Transfer of workers’ compensation liability to the State of Ohio ------Interestoncapitalasset-relateddebt (13,006) (15,447) (20,738) (35,814) (10,433) Other nonoperating expenses (1,799) (1,730) (1,961) (8,266) (927) Net nonoperating revenues (expenses) 162,982 105,685 77,450 136,633 180,769 Income before other revenues, expenses,gains,orlosses 62,598 (21,848) (76,625) 23,420 87,609

Capital appropriation 16,951 20,365 13,126 17,225 4,417

Increase in net assets 79,549 (1,483) (63,499) 40,645 92,026

Net Assets $ 612,638 $ 611,155 $ 547,656 $ 588,301 $ 680,327

A-20 In Fiscal Years 2008 and 2009, the University incurred increased interest expense on its outstanding variable rate General Receipts Bonds over amounts incurred in the previous Fiscal Years. In response to that increased interest expense, the University refunded all of that variable-rate debt with General Receipts Bonds bearing interest at fixed rates, with the exception of the Series 2008B Bonds, which are hedged with an interest rate swap. See Outstanding Obligations. The following table summarizes the University’s year-end fund balances for the last five Fiscal Years. Summary of Year-End Fund Balances (Dollars in Thousands)

2007 2008 2009 2010 2011

Invested in Capital Assets, $278,926 $299,576 $312,422 $310,124 $297,649 Net of Related Debt

Restricted, Nonexpendable 883 883 5,883 5,833 5,883

Restricted, Expendable 24,341 26,379 26,713 24,318 25,201

Unrestricted(a) 308,488 284,317* 202,638* 247,976 351,594

(a) Includes the University’s “quasi-endowment,” which is distinct from the endowment held by the Kent State University Foundation, Inc. See Gifts and Endowment.

* The decline in the Unrestricted Fund Balance from the previous Fiscal Year can be attributed primarily to the decline in the fair market value of the University non-endowment investments during this same period.

General Budgeting Procedures The University adopts an operating budget for each Fiscal Year based on the prior years’ budgets, budget requests submitted by each of the University’s departments and colleges, and guidelines developed by the President and other administrative officers. These requests are reviewed by the appropriate executive officers and consolidated by the Vice President for Finance and Administration and presented to a University-wide committee. The committee advises the President and other University officers as to overall University priorities and provides a link between the University’s strategic plan and the University’s operating budgets. The committee’s recommendations are forwarded to the President. The President and other executive officers decide which priorities receive funding, and a budget is then submitted to the Board of Trustees for approval. The University’s operating revenues are derived from two primary sources: State appropriations and student fees. In the Fiscal Year 2012 unrestricted operating budget, State appropriations comprise approximately $123,610,795 or 21.53% of the total funds available including auxiliary operations. See State Appropriations to the University. The majority of these funds are obtained through a formula-driven model based on enrollment. There are other amounts distributed based on performance in certain areas. The University also receives appropriations from the State that are to be used for specific purposes including research and academic programs. These amounts are recorded in the restricted fund. The University’s Board

A-21 of Trustees considers the expected amount of State appropriations along with the University’s budget requirements and other revenue sources in establishing student fees and other fees and charges for each academic year. Operating Budgets The University divides its operating budget into a general fund budget (Kent Campus and, separately, Regional Campuses), a designated fund, an auxiliary fund budget and a restricted fund. The general fund budget includes instruction and departmental research, separately budgeted research, public service, student services, general administration, plant operation and maintenance, student aid and reserves. The designated fund is essentially self-funding, but is combined with other current unrestricted funds for reporting purposes. The auxiliary fund budget includes all expenditures supported mainly by student-generated revenues, including room and board, parking, intercollegiate athletics and related income. The restricted fund budget includes all expenditures supported by revenues from grants, contracts, gifts and donations. The Board of Trustees adopts annual operating budgets for the general fund and auxiliary fund. The President and other administrative officers review revenues and expenditures monthly and inform the Board of Trustees periodically of the budget position. Appropriate action is taken by the President and other administrative officers to adjust expenditures should revenues fall short of projections and the Board of Trustees is informed of these actions. On September 14, 2011, the Board approved a general fund budget for Fiscal Year 2012. The budget anticipated total funds available of $574,165,859, including $123,610,795 in State appropriations, $351,665,518 in student fees, and $13,839,238 in investment and other income. Also approved was an auxiliary fund budget of $85,050,308. State Appropriations to the University All state universities in Ohio receive State financial assistance for both operations and designated capital improvements through appropriations by the General Assembly. These appropriations contribute substantially to the successful maintenance and operation of the University. Amounts received in the form of State appropriations are not included in the General Receipts pledged to secure payment of the Bonds. Operating Appropriations The University receives State appropriations for most operating purposes based on a formula administered by the Ohio Board of Regents. The formula for the State Share of Instruction (“SSI”) appropriations for the Kent Campus has two main components: course completion and degree completion. Course completion (i.e., a grade of “D” or better) is based on FTE students (excluding undergraduates who are not Ohio residents) multiplied by both a course completion factor and the legislated subsidy allowances that vary by program. The number of FTE students is calculated by dividing the completed credit hours for the summer, fall, and spring term by 30. Included in the formula are additional funds for successfully educating students who are considered “at risk.” Until Fiscal Year 2010, funds in addition to SSI appropriations were provided to the University by the State under Access Challenge and Success Challenge funding programs intended to help more Ohioans enroll in higher education and better serve “at-risk” students. With the modification of the SSI funding formula to include degree completion and students “at risk” within the core formula, Access Challenge and Success Challenge funding was eliminated.

A-22 Until Fiscal Year 2010, funding for Ohio’s state-assisted doctoral programs was determined based on historical FTE enrollments. Each institution’s share was calculated based on weighted FTE enrollments from Fiscal Years 1994 through 1998. These shares were used to distribute the amount set aside in the State appropriations for the doctoral allocation. Fiscal Year 2010 marked the first year of a ten-year change in the doctoral allocation as the formula moves away from the historical FTE model to add successful degree completion, research attainment and quality components to the formula. In Fiscal Year 2012, 70% of the doctoral allocation was still based on the historical model. In Fiscal Year 2012, the University received approximately $12 million or 7.8% of the total amount allocated to all State universities. The following table shows unrestricted State operating appropriations to the University for both the Kent Campus and Regional Campus for recent Fiscal Years. Performance funding included the Access Challenge and Success Challenge funding described above. Fiscal Years 2012 and 2013 amounts are estimated. Fiscal State Share of Performance Year Instruction Funding Total 2007 $109,738,975 $9,528,862 $119,267,837 2008 116,874,942 9,762,852 126,610,794 2009 128,166,944 8,348,747 136,515,691 2010 136,241,569 -0- 136,241,569 2011 139,530,590 -0- 139,530,590 2012 123,846,400 -0- 123,846,400 2013 126,408,800 -0- 126,408,800 Approximately 14.2% and 14.5% of SSI appropriations for Fiscal Years 2010 and 2011, respectively, were funded by federal stimulus funds received by the State. The federal stimulus program ended December 31, 2010. There is no expectation that further federal fiscal stabilization funds will be received by the State in Fiscal Year 2012 or thereafter. The State’s operating budget for the budget biennium that began July 1, 2011 and ends June 30, 2013, does not replace the federal stimulus funds used for higher education in the prior budget biennium. For the University, the anticipated reduction from Fiscal Year 2011 to Fiscal Year 2012 is approximately $15.7 million or 11.2%. In Fiscal Year 2013, the University anticipates an increase of approximately $2.6 million or 2.1% above the Fiscal Year 2012 amount; however, this amount is $13.1 million or 9.4% less than the amount received in Fiscal Year 2011. The University has been able to respond adequately to the reductions in State support while experiencing increases in health care costs for employees and rising utility costs. Through strategic planning, the University has reduced or reallocated operating funds while continuing to plan for targeted investments to maintain competitiveness in academic offerings to students. Capital Appropriations The University also receives State capital improvement appropriations. Capital appropriations and operating appropriations are made by separate legislation and in alternate years. The General Assembly has not enacted any capital appropriations legislation for the capital budget biennium that began on July 1, 2010 and ends on June 30, 2012. The Governor assembled the Higher Education Capital Funding Commission (the “Commission”) to develop a set of principles for future capital allocations. Using the principles outlined by the Commission, the University submitted a capital improvement plan that targets improvements to the general sciences (i.e., biology, chemistry and physics) and the construction of a multidisciplinary science facility that will be used collaboratively by all research schools, including engineering and public health. The Commission accepted the University’s capital improvement plan, which was

A-23 subsequently submitted to and approved by the General Assembly as part of a capital appropriations bill that includes capital appropriations for other State universities and community colleges. The University’s share of the funding from this bill, approximately $21 million, will be available after July 3, 2012. The following table shows cash funds distributed from prior State capital appropriations to the University during recent Fiscal Years:

State Capital Appropriations Distributed to the Fiscal Year University

2007 $16,950,848 2008 20,365,069 2009 13,776,869 2010 17,224,865 2011 4,416,900

There can be no assurance that State-appropriated funds for operating or capital improvement purposes will be made available in the amounts from time to time requested or required by the University. The General Assembly has the responsibility of determining such appropriations biennially. State income and budget constraints may from time to time compel a stabilization or reduction of the level of State assistance and support for higher education in general and the University in particular. In addition, subsidy appropriations (and other similar appropriations) are subject to subsequent limitation pursuant to a law, implemented by the Governor from time to time in the past, which provides in part that if the Governor ascertains that the available revenue receipts and balances for the current fiscal year will in all probability be less than the appropriations for the year, he shall issue such orders to State agencies as will prevent their expenditures and incurred obligations from exceeding those revenue receipts and balances. Grants and Contracts During Fiscal Year 2011, the University was awarded $31,995,501 in research grants and contracts. Federal agencies accounted for approximately $24,008,428 (75.0%), and State and local agencies, foundations and business and industry accounted for approximately $7,987,073 (25.0%). Primary federal sponsors were: Department of Defense ($926,503); Department of Health and Human Services ($4,290,307); Department of Education ($6,939,069); National Science Foundation ($4,491,443); and Department of Energy ($1,164,000).

The awarded amount of funds for externally funded research activity over the last five years has been as follows: Fiscal Year Amount 2007 $32,629,145 2008 32,425,410 2009 46,323,361 2010 36,384,344 2011 31,995,501

A-24 Gifts and Endowment The Kent State University Foundation, Inc. (a separate legal entity from the University) (the “Foundation”) is the official, University-designated fund-raising and gift-receiving organization for the University. Through the Foundation, contributions can be made for current or endowment purposes. The Foundation accepts gifts and bequests of cash, securities, real estate, tangible and intangible property, life insurance, and life income programs such as charitable remainder annuity trusts or charitable remainder unitrusts. The following table shows the amounts of gifts and bequests to the Foundation from individuals, business and other organizations for recent Fiscal Years. Fiscal Total Year Reported(a) Total Received 2007 $22,173,570 $19,726,576 2008 19,804,236 19,125,487 2009 16,901,619 18,594,482 2010 12,656,629(b) 17,307,132 2011 12,368,296(c) 14,132,516

(a) Includes changes in amounts pledged but not necessarily received during each year, and adjustments in value of gifts from previous years. (b) Reflects the write-off of $1,263,000 in pledge receivables relating to prior years that were determined to be uncollectable. (c) Reflects the write-off of $719,000 in pledge receivables relating to prior years that were determined to be uncollectable.

The market values of the Foundation Endowment funds and Foundation total assets, as of June 30 for recent Fiscal Years, were as follows: Fiscal Market Value Year Endowment Fund Foundation Assets(a) 2007 $87,820,844 $144,189,264 2008 80,641,156 140,409,549 2009 68,350,983 117,376,926 2010 76,699,164 124,576,694 2011 90,451,963 140,447,419

(a) Total Foundation Assets prior to 2009 were adjusted to exclude the collection of the Kent State University Museum.

Investment Policy As of June 30, 2011, the University’s long-term investment portfolio was comprised of approximately 40% equity securities and 32% fixed income securities and 28% alternative investments. Investments of University funds are made in compliance with the written policies of the University which have been approved by the Board of Trustees. The University’s investments are broken into two pools – short-term and long-term. The short-term pool is available to cover daily liquidity needs and expenditures within one year. The primary objective of the short-term pool is to provide preservation of capital with a secondary emphasis on maximizing income. The

A-25 long-term pool represents funding not necessary for working capital in any single year. The primary objective of the long-term investment pool is long-term growth of principal and income. The Board of Trustees receives quarterly reports which disclose the investment balances by investment type and by investment manager. As of June 30, 2011, the Foundation’s long-term investment portfolio was comprised of approximately 61% equity securities and 20% fixed income securities and 19% alternative investments. Investments of Foundation funds are made in compliance with the written policies of the Foundation’s Board of Directors. Non-endowed gifts and contributions for specific designated activities, which are available on demand, are managed in a separate investment pool with short- term or intermediate term investment goals. Because these funds must remain somewhat liquid and are short term, the investment objectives emphasize the safety and preservation of capital. The long-term investment pool is invested to maximize long-term total returns. For purposes of safety, investments are to be broadly diversified and consist of high-grade, marketable securities. The Foundation’s Investment Committee receives monthly reports disclosing investment transactions and balances which have been reconciled to custodial statements. Quarterly reports disclosing changes in the endowment funds arising from contributions, earnings, capital gains and distributions are also provided to the Investment Committee. Insurance Coverage The University is insured for damage to all real and personal property at replacement value, except for University-owned aircraft which it self-insures. Coverage includes direct damage resulting from fire, flood, tornado or earthquake, as well as indirect damage from chain of causation or consequential reduction in value. The maximum amount recoverable for property damage per occurrence under the pooled insurance program in which the University participates exceeds the replacement value of all University properties. Coverage is subject to a $100,000 deductible. A pool is responsible for claims between $100,000 and $350,000. The University carries liability insurance for its trustees and officers, automobile fleet, and general liability. The University participates in a pool insurance program and is responsible for the first $100,000 of any claim. The pool is responsible for claims between $100,000 and $1,000,000. The University maintains excess umbrella liability coverage of $4,000,000. Additionally, it also has excess umbrella liability coverage of $45,000,000 in a shared limit under the pooled insurance program. A separate liability program is maintained for the University’s aircraft ($5,000,000). A separate crime coverage is provided for money and securities ($5,000,000). Ohio law provides with respect to the State and its agencies, such as the University, for a waiver of immunity from liability. The liability of the State and its agencies is determined in the Ohio Court of Claims. Judgments rendered by the Court of Claims are payable from (and in the following order) (i) unencumbered appropriated funds of the agency against which the determination of liability has been made, (ii) certain emergency purpose appropriations, or (iii) special additional appropriation that may be made by the General Assembly pursuant to a request by the agency. Ohio law also provides that no execution for the purpose of collecting a judgment shall issue against the State or its agencies upon any judgment for the payment of money. For Ohio workers’ compensation purposes, the University is covered by the State Insurance Fund.

A-26 In addition to the insurance described above, the University maintains insurance coverage for employee health and life insurance plans, comprehensive crime, intercollegiate sports and employee group travel. Capital Programs The University has an ongoing capital improvement program consisting of new construction and the renovation of existing facilities. Capital improvement projects are expected to be funded from a variety of sources, including gifts, State appropriations, financings and University funds. The University has authorization for the following projects:

Projected Total Status Number Cost In Design 39 $ 58,571,385 Under Construction 42 35,591,756 Total 81 $ 94,163,141 Outstanding Obligations The Official Statement for the Series 2012 Bonds contains information regarding the University’s outstanding indebtedness assuming the issuance of the Series 2012 Bonds. Current outstanding indebtedness of the University is as follows:

General Receipts Year Principal Amount Final Bonds, Series Issued Issued Outstanding Maturity

2008B 2008 $ 60,000,000 $ 60,000,000 2032 2009B 2009 214,910,000 197,420,000 2031

All principal and interest payments on the above bond issues are current. The University has no other bonds or notes outstanding. The Series 2008B Bonds bear interest at a variable rate determined weekly by Barclays Capital Inc., as remarketing agent. In September 2009, the University entered into a swap agreement with regard to the Series 2008B Bonds with Loop Financial Products I LLC as the counterparty, with credit enhancement from Deutsche Bank AG, New York Branch. This swap agreement replaced a prior swap agreement between the University and Lehman Brothers Commercial Bank. Under the replacement swap, the University is the fixed rate payer, paying a fixed rate of 3.340%, and the counterparty pays the University a floating rate intended to approximate the interest rate borne by the Series 2008B Bonds. However, the actual interest expense on those Bonds may exceed the payments the University receives from the counterparty. The University’s obligation to make periodic payments under the interest rate swap relating to the Series 2008B Bonds is secured by a pledge of the General Receipts on parity with the pledge of the General Receipts given to secure payment of the Bonds. Any obligation of the University to make any payment on any early termination of that interest rate swap is subordinate to payment of the Bonds. The University has obligations under various equipment lease-purchase agreements. The most significant of those leases is a master tax-exempt lease-purchase agreement from Key

A-27 Government Finance Inc. for the financing of various assets for the Kent Campus and the seven Regional Campuses. The remaining balance of that lease is $3,198,185, the maximum annual obligation for lease and maintenance payments is $1,497,296, and lease payment obligations under that lease extend through July 2014. During Fiscal Year 2010, the University entered into a loan agreement with the Ohio Air Quality Development Authority (“Authority”) for a total of $1,344,260 for the repayment of bonds issued by the Authority to fund the University’s energy efficiency and conservation project at the Stark campus. The outstanding amount that the University owes under that loan agreement totals $1,112,679. During Fiscal Year 2011, the University entered into two additional loan agreements with the Ohio Air Quality Development Authority. The proceeds of the first loan agreement, totaling $5,387,224, will be used to fund the University’s energy efficiency and conservation projects at the Ashtabula, East Liverpool, Geauga, Salem, and Trumbull campuses. The outstanding amount that the University owes under this loan agreement totals $5,067,545. The proceeds of the second loan agreement, totaling $20,000,000, will be used to fund the University’s energy efficiency and conservation projects for the residence hall and dining service auxiliary units. The outstanding amount that the University owes under this loan agreement totals $18,971,531. In Fiscal Year 2011, the University entered into a lease-purchase agreement with Fairmount Properties, LLC to construct a building for its Twinsburg location (programs will be operated out of the University’s Geauga Campus, as is the case with the University’s existing Twinsburg location), which the University will lease for a period of 30 years. The total payments due under the lease equal $13,991,977, with payments beginning on September 2012. The University has plans to issue an additional series of General Receipts Bonds within the next 12 to 18 months, in an amount of approximately $30 million, for the purpose of improving residence halls. By Fall 2012, the University also plans to enter into an additional loan agreement with the Ohio Air Quality Development Authority in the amount of $35 to $50 million to finance energy conservation improvements at all of the Kent Campus buildings, except dining and residence halls. Retirement Plans The University participates in State contributory retirement plans administered by the State Teachers Retirement System of Ohio (“STRS”) and the Ohio Public Employees Retirement System (“OPERS”). STRS (faculty) and OPERS (classified and unclassified Ohio staff) are funded from both employer and employee contributions. In addition, several optional tax deferred annuity programs are available to employees for which the University provides administrative services only. For the fiscal year ended June 30, 2011, OPERS provided coverage for 2,472 University employees, and STRS provided coverage for 2,457 University employees. Currently employees contribute at a statutory rate of 10.00% (OPERS) and 10.00% (STRS) of earnable salary or compensation. As the employer, the University contribution rate was 14.00% (OPERS) and 14.00% (STRS) of the same base. These employee and employer contribution rates are the maximums permitted under State law. For further information on these pension plans, see Note 7 to the Basic Financial Statements included in Exhibit B. Financial and other information for OPERS and STRS can also be found on the respective website for each retirement system including its Comprehensive Annual Financial Report.

A-28 OPERS and STRS are two of five statewide public employee retirement systems created by and operating pursuant to Ohio law, all of which currently have unfunded actuarial accrued liabilities. The General Assembly has the power to amend (and in the past has amended) the format of those systems and could revise rates or methods of contributions to be made by the University and its employees to OPERS and/or STRS and could also revise benefits or benefit levels. As an example, legislation has been introduced in the current session of the General Assembly proposing certain changes to all of the statewide public retirement systems, including OPERS and STRS. If enacted, this legislation would, depending on the retirement system, increase minimum retirement age and service requirements, reduce certain benefits, require increased employee contributions and decreased employer contributions and make other changes. The University cannot predict whether, when or in what form this legislation will be enacted into law. The University’s obligation to contribute to OPERS and STRS, however, is currently limited as described above, including with respect to their unfunded actuarial accrued liabilities. Federal law requires University employees hired after March 31, 1986 to participate in the federal Medicare program, which requires matching employer and employee contributions, each being 1.45% of the wage base. Otherwise, University employees covered by a State retirement system are not currently covered under the federal Social Security Act. OPERS and STRS are not subject to the funding and vesting requirements of the federal Employee Retirement Income Security Act of 1974. The University’s current employer contributions to OPERS and STRS have been treated as current expenses and included in the University’s operating expenditures. Legislation enacted in 1997 required all Ohio public universities and colleges to offer at least three Alternative Retirement Plans (“ARP”) to full-time faculty and unclassified administrative employees. In January 1999, the University offered a 401(a) defined contribution (ARP) through eight vendors approved by the Ohio Department of Insurance. All faculty and eligible staff not vested in an existing defined benefit plan were offered a one-time election to join the ARP. New employees from these groups also may make a one-time election to participate in the ARP or the respective state retirement system. Effective August 1, 2005, the ARP option was extended to full-time classified employees of the University as a result of a legislative change. As of June 30, 2011, the University had 304 OPERS eligible employees participating in the ARP and 362 STRS-eligible faculty members participating in the ARP. The Board of Trustees has authorized early retirement plans, the most recent of which was approved in 1997.

A-29 APPENDIX B

Audited Financial Statements for Fiscal Year 2011

B-1

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Independent Auditor's Report

To the Board of Trustees Kent State University

We have audited the accompanying statement of net assets of Kent State University (the “University”) as of June 30, 2011 and June 30, 2010 and the related statements of revenue, expenses, and changes in net assets and cash flows for the years then ended. These financial statements are the responsibility of the University’s management. Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of Kent State University Foundation (the “Foundation”), which represent all the assets and revenues of the discretely presented component unit. Those financial statements were audited by other auditors whose report thereon has been furnished to us and our opinion, insofar as it relates to the amounts included for the Foundation, is based on the report of the other auditors. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and 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 of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. As explained in Note 3, the financial statements include investments valued at approximately $118,000,000 (17 percent of net assets) and $100,000,000 (10 percent of net assets) as of June 30, 2011 and 2010, respectively, whose fair values have been estimated by management in the absence of readily determinable fair values. Management’s estimates are based on information provided by the fund managers or the general partners. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Kent State University as of June 30, 2011 and 2010 and the results of its operations and cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued a report dated October 14, 2011 on our consideration of Kent State University’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements, and other matters for year ended June 30, 2011. The purpose of that report is 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 opinions on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit.

9

To the Board of Trustees Kent State University

The management’s discussion and analysis presented on pages 1 through 8 is not a required part of the basic financial statements but is supplemental information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management, regarding the methods of measurement and presentation of the supplemental information. However, we did not audit the information and express no opinion on it.

The accompanying schedule of expenditures of federal awards is presented for the purpose of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects, in relation to the basic financial statements taken as a whole.

Toledo, Ohio October 14, 2011

10

STATEMENT OF NET ASSETS as of June 30, 2011 and 2010 (in thousands) University Related University Foundation 2011 2010 2011 2010 A S S E T S Current assets: Cash and cash equivalents $ 83,792 $ 81,276 $ 864 $ 2,236 Short-term investments 146,366 112,768 122,811 105,691 Accounts and pledges receivable, net 44,350 36,087 2,586 5,115 Inventories 1,923 1,989 - - Deposits and prepaid expenses 4,153 3,706 - - Accrued interest receivable 807 727 - - Total current assets 281,391 236,553 126,261 113,042 Noncurrent assets: Restricted cash 24,467 - - - Student loans receivable, net 20,762 22,562 - - Long-term investments 185,524 152,861 7,322 5,618 Long-term pledges receivable, net - - 4,921 4,160 Capital assets, net 600,990 579,676 1,464 1,258 Other assets 2,988 3,182 481 499 Deferred outflow of resources 293 2,233 - - Total noncurrent assets 835,024 760,514 14,188 11,535 Total assets $ 1,116,415 $ 997,067 $ 140,449 $ 124,577

LIABILITIES Current liabilities: Accounts payable and accrued liabilities 30,437 32,364 620 668 Accrued payroll 12,350 12,187 - - Payroll taxes and accrued fringe benefits 14,769 13,526 - - Deferred revenue and deposits 30,980 31,923 - - Derivative instrument - swap liability 293 2,233 - - Current portion of long-term debt 13,455 7,522 - - Total current liabilities 102,284 99,755 620 668 Noncurrent liabilities: Accrued compensated absences 19,363 18,222 - - Accrued liabilities - - 3,669 3,411 Long-term unearned fees and deposits 1,882 1,742 7,089 6,715 Long-term debt 312,559 289,047 - - Total noncurrent liabilities 333,804 309,011 10,758 10,126 Total liabilities 436,088 408,766 11,378 10,794

NET ASSETS Invested in capital assets, net of related debt 297,649 310,124 1,464 1,258 Restricted, nonexpendable 5,883 5,883 31,367 30,377 Restricted, expendable 25,201 24,318 90,585 80,069 Unrestricted 351,594 247,976 5,655 2,079 Total net assets 680,327 588,301 129,071 113,783 Total liabilities and net assets $ 1,116,415 $ 997,067 $ 140,449 $ 124,577

The accompanying notes are an integral part of these financial statements.

11

KENT STATE UNIVERSITY STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS for the years ended June 30, 2011 and 2010 (in thousands)

Universi ty Related University Foundation 2011 20102011 2010 OPERATING REVENUES Student tuition and fees $ 340,274 $ 304,911 $ - $ - Less scholarship allowances (65,280) (55,804) - - Net student tuition and fees 274,994 249,107 - - Federal grants and contracts 31,115 28,553 - - State grants and contracts 9,119 9,746 - - Local grants and contracts 394 565 - - Nongovernmental grants and contracts 11,873 7,616 - - Sales and services of educational departments 9,658 8,969 - - Auxiliary activities - Net 83,164 78,702 - - Other operating revenues - - 28 135 Total operating revenues 420,317 383,258 28 135

OPERATING EXPENSES Instruction 202,592 197,230 - - Research 20,532 18,993 - - Public service 16,733 19,158 - - Academic support 53,678 45,418 - - Student services 28,375 25,953 - - Institutional support 55,067 53,276 14,725 15,776 Scholarships and fellowships 43,600 37,642 2,792 2,292 Operation and maintenance of plant 43,556 38,426 - - Auxiliary activities 86,651 80,305 - - Depreciation 37,304 40,217 1 4 Total operating expenses 588,088 556,618 17,518 18,072 Operating loss (167,771) (173,360) (17,490) (17,937)

NONOPERATING REVENUES (EXPENSES) State appropriations 120,067 118,275 - - Federal Fiscal Stabilization funds 20,187 19,371 - - Federal Pell Grant revenue 70,490 55,815 - - Gifts 9,080 10,617 12,368 12,657 Investment income 42,795 32,450 21,176 11,031 Interest on capital asset-related debt (10,433) (35,814) - - Other nonoperating revenues/expenses 3,194 (3,934) (766) (151) Net nonoperating revenues 255,380 196,780 32,778 23,537 Income before other revenues, expenses, gains or losses 87,609 23,420 15,288 5,600 Capital appropriation 4,417 17,225 - - Increase in net assets 92,026 40,645 15,288 5,600

NET ASSETS Net assets, beginning of year 588,301 547,656 113,783 108,183 Net assets, end of year $ 680,327 $ 588,301 $ 129,071 $ 113,783

The accompanying notes are an integral part of these financial statements.

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KENT STATE UNIVERSITY STATEMENT OF CASH FLOWS for the years ended June 30, 2011 and 2010 (in thousands)

2011 2010 CASH FLOWS FROM OPERATING ACTIVITIES Cash received from students for tuition and fees $ 215,300 $ 196,573 Cash received from auxiliary activities 83,174 79,323 Cash received from other sources 8,930 6,402 Grants and contracts 50,799 48,212 Federal student loan funds received - 14 Student loans granted, net of repayments 1,956 1,591 Cash paid to employees (268,783) (255,972) Cash paid to suppliers (228,814) (210,093) Net cash used in operating activities (137,438) (133,950)

CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale and maturities of investments 84,873 95,317 Purchases of investments (121,584) (86,149) Interest received 13,164 2,440 Net cash (used in) provided by investing activities (23,547) 11,608

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Net proceeds from bond issuance 25,388 235,710 Early extinguishment of bonds - (205,915) Principal payments under debt obligations, net (7,522) (8,763) Interest and swap termination fee paid (12,863) (43,185) Capital appropriations 1,787 125 Purchases of capital assets (41,779) (28,642) Other payments 3,171 (3,934) Net cash used in capital and related financing activities (31,818) (54,604)

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Cash received from State appropriations and Federal Fiscal Stabilization Funds 140,254 137,646 Gifts received from KSU Foundation 9,042 10,596 Cash received from Federal Pell grants 70,490 55,815 Net cash provided by noncapital financing activities 219,786 204,057

Net increase in cash and cash equivalents 26,983 27,111

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 81,276 54,165

CASH AND CASH EQUIVALENTS, (INCLUDING RESTRICTED CASH), $ 108,259 $ 81,276 END OF YEAR

The accompanying notes are an integral part of these financial statements.

13

KENT STATE UNIVERSITY STATEMENT OF CASH FLOWS--CONTINUED for the years ended June 30, 2011 and 2010 (in thousands)

2011 2010

Reconciliation of net operating revenues (expenses) to net cash used in operating activities:

Operating loss $ (167,771) $ (173,360) Adjustments to reconcile operating loss to net cash used in operating activities: Depreciation expense 37,304 40,217 Change in assets and liabilities: Accounts receivable, net (8,225) (4,021) Inventories 66 (127) Deposits and prepaid expenses (446) (77) Student loans receivable, net 1,800 2,074 Accounts payable and accrued liabilities (1,910) (4,316) Accrued payroll 163 662 Payroll taxes and accrued fringe benefits 1,243 603 Un earned fees and dep osits (803) 3,530 Accrued compensated absences 1,141 865 Total change in assets and liabilities (6,971) (807)

Net cash used in operating activities $ (137,438) $ (133,950)

The accompanying notes are an integral part of these financial statements.

14

KENT STATE UNIVERSITY

Notes to Financial Statements June 30, 2011 and 2010 (in thousands)

(1) Reporting Entity and Basis of Presentation

(a) Reporting Entity

Kent State University ("University") is an institution of higher education and is considered to be a component unit of the State of Ohio ("State") because its Board of Regents is appointed by the Governor of the State. Accordingly, the University is included in the State’s financial statements as a discrete component unit. Transactions with the State relate primarily to appropriations, grants from various state agencies, and payments to the State retirement program for certain University employees.

The University is classified as a state instrumentality under Internal Revenue Code Section 115, and is therefore exempt from federal income taxes. Certain activities of the University may be subject to taxation as unrelated business income under Internal Revenue Code Sections 511 to 514.

The accompanying financial statements consist of the accounts of the University and the accounts of the Kent State University Foundation ("Foundation"). The Foundation, which is a component unit of the University as determined in accordance with the provisions of the Governmental Accounting Standards Board ("GASB") Statement 39, is described more fully in Note 10. The Foundation is exempt from federal income taxes under the provisions of Internal Revenue Code Section 501(c)(3).

The Foundation is a private organization that reports under FASB standards. As such, certain revenue recognition criteria and presentation features are different from those under GASB. No modifications have been made to the Foundation financial information included in the University’s financial report to account for these differences.

Furthermore, in accordance with GASB Statement No. 39, the Foundation is reported in a separate column on the University’s financial statements to emphasize that it is legally separate from the University. The Foundation is a not-for-profit organization supporting the University. The Foundation acts primarily as a fundraising organization to supplement the resources that are available to the University in support of its programs. Although the University does not control the timing or amount of receipts from the Foundation, the majority of resources, or income thereon, which it holds and invests are restricted to support the activities of the University. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the University, it is considered a component unit of the University. Financial statements for the Foundation may be obtained by writing to Kent State University Foundation, Kent, Ohio 44242.

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KENT STATE UNIVERSITY

Notes to Financial Statements June 30, 2011 and 2010 (in thousands)

(b) Basis of Presentation

The accompanying financial statements have been prepared in accordance with generally accepted accounting principles as prescribed by the Governmental Accounting Standards Board. Pursuant to GASB Statement No. 20, the University has elected to apply the provisions of all relevant pronouncements of the Financial Accounting Standards Board, statements and interpretations issued after November 30, 1989, which do not conflict or contradict GASB pronouncements.

As required by the GASB, resources of the University are classified into one of four net asset categories, as follows:

 Invested in capital assets, net of related debt - Capital assets, net of accumulated depreciation and outstanding principal balances of debt attributable to the acquisition, construction or improvement of those assets.

 Restricted, nonexpendable - Net assets subject to externally imposed stipulations that the University maintains such assets permanently.

 Restricted, expendable - Net assets whose use is subject to externally imposed stipulations that can be fulfilled by actions of the University pursuant to those stipulations or that expire by the passage of time.

 Unrestricted - Net assets that are not subject to externally imposed stipulations. Unrestricted net assets may be designated for specific purposes by action of the Board of Regents or may otherwise be limited by contractual agreements with outside parties. Substantially all unrestricted net assets are designated for academic and research programs, capital projects and other initiatives.

(c) Upcoming Accounting Pronouncements

Service concession arrangements: In December 2010 the GASB issued Statement Number 60, Accounting and Financial Reporting for Service Concession Arrangements (SCA). An SCA is an agreement between a College/University and another legally separate College/University or private sector entity in which two things happen. First, the College/University transfers to the other entity the right and related obligation to provide public services through the use of a public asset (such as using a part of a university facility as a bookstore) in exchange for significant consideration from the other entity. In the context of these agreements the College/University that transfers rights and obligations is referred to as the transferor. The entity to which these rights and obligations are transferred is referred to as the operator. Second, this operator—whether it is in the public or private sector—collects fees from the users or customers of the public asset (for example, students at the university/college). Finally, the transferor maintains control over the services provided. For example, the College/University has the ability to modify or approve the rates that can be charged for the services and the type of services that are provided.

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KENT STATE UNIVERSITY

Notes to Financial Statements June 30, 2011 and 2010 (in thousands)

For an SCA that involves an existing facility, the transferor should continue to report the capital asset. For a new facility or an improvement to an existing facility, the transferor should report the new facility or the improvement as a capital asset at fair value when the facility is placed in operation. The transferor should also report any related contractual obligations as liabilities. Finally, the transferor should report the difference between those two amounts as a deferred inflow of resources. This pronouncement must be applied for years that begin after December 15, 2011.

Reporting Entity Standards: In December 2010, the GASB issued Statement Number 61, Financial Reporting Entity: Omnibus. This standard is intended to improve the information presented about the financial reporting entity, which is made up of the College/University financial reporting entity and related entities (component units). The statement modifies certain requirements for inclusion of component units in the financial reporting entity. For organizations that previously were required to be included as component units by meeting the fiscal dependency criteria, a financial benefit or burden relationship is also needed between the College/University and that organization for it to be included in the reporting entity as a component unit. The statement also modifies the criteria for reporting component units as if they were part of the College/University (ie: blending). Blending should be used when the College/University and the component unit have a financial benefit or burden relationship, or management has operational responsibility for the component units. Additionally, for equity interests in legally separate organizations, the entity is required to report its interest as “restricted net assets – nonspendable.” This standard is effective for financial statements for reporting periods beginning after June 15, 2012; however, earlier application is encouraged.

Private sector accounting rules: In December 2010, the GASB issued Statement No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements. This changes the requirement for the College/University to apply any private sector accounting guidance that existed as of November 30, 1989 and instead incorporates all such guidance in this statement. The College/University will no longer have the ability to choose to continue to follow FASB statements written after that date, although such guidance still qualifies as “other accounting literature” in the GAAP hierarchy. This pronouncement must be applied for years that begin after December 15, 2011.

Deferred inflows/outflows and Net Position: In June 2011, the GASB issued Statement No. 63 Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position. This standard provides financial reporting guidance for deferred inflows and outflows of resources. Concepts Statement No. 4, Elements of Financial Statements, introduced and defined those elements as a consumption of net assets by the College/University that is applicable to a future reporting period, and an acquisition of net assets by the College/University that is applicable to a future reporting period, respectively. Previous financial reporting standards do not include guidance for reporting those financial statement elements, which are distinct from assets and liabilities. The standard also incorporates deferred outflows of resources and deferred inflows of resources into the definitions of the required components of the residual measure and by renaming that measure as net position, rather than net assets. The provisions for this standard are effective for financial statements for periods beginning after December 15, 2011.

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KENT STATE UNIVERSITY

Notes to Financial Statements June 30, 2011 and 2010 (in thousands)

Derivative Instruments – Termination Provisions: In June 2011, the GASB issued Statement No. 64, Derivative Instruments: Application of Hedge Accounting Termination Provisions—an amendment of GASB Statement No. 53. This Statement clarifies whether an effective hedging relationship continues after the replacement of a swap counterparty or a swap counterparty’s credit support provider and sets forth criteria that establish when the effective hedging relationship continues and hedge accounting should continue to be applied. The requirements of this Statement enhance comparability and improve financial reporting by clarifying the circumstances in which hedge accounting should continue when a swap counterparty, or a swap counterparty’s credit support provider, is replaced. The provisions of this Statement are effective for financial statements for periods beginning after June 15, 2011.

(2) Summary of Significant Accounting Policies

The accompanying financial statements have been prepared on the accrual basis. The University reports as a business-type activity. As defined by GASB Statement No. 35, business-type activities are those activities that are financed in whole or in part by fees charged to the external parties for goods or services.

(a) Cash and Cash Equivalents

The University considers cash, time deposits and all other highly liquid investments with an original maturity of three months or less to be cash equivalents. Restricted cash is the unspent bond proceeds held in trust related to the energy conservation projects.

(b) Investments

Investments in marketable securities are carried at fair market value as established by the major securities markets. Investment income includes realized and unrealized gains and losses on investments, interest income and dividends.

(c) Accounts Receivable

Accounts receivable are for transactions relating to tuition and fees, auxiliary enterprise sales, grants and contracts, and miscellaneous sales and services. Accounts receivable are recorded net of contractual allowances and allowances for uncollectible accounts.

(d) Inventories

Inventories are stated at the lower of cost (first-in, first-out basis) or market.

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KENT STATE UNIVERSITY

Notes to Financial Statements June 30, 2011 and 2010 (in thousands)

(e) Estimates

The preparation of the accompanying financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

(f) Revenue Recognition

State appropriations are recognized when received or made available. Restricted funds are recognized as revenue only to the extent expended. Gifts and interest on student loans are recognized when received. The University’s policy for defining operating activities as reported on the statement of revenues, expenses, and changes in net assets are those that generally result from exchange transactions such as payments received for providing services and payments made for services or goods received. Nearly all of the University’s expenses are from exchange transactions.

(g) Accrued Liabilities

Accrued liabilities consist primarily of accrued employee compensation and benefits. Accrued compensated absences are classified as non-current liabilities on the Statement of Net Assets because the current portion cannot be closely estimated.

(h) Deferred Revenue

Deferred revenue includes tuition and fees relating to summer sessions that are conducted in July and August. Deferred revenue also includes amounts received in advance from grant and contract sponsors that have yet been earned under the terms of the agreements. The amounts which are deferred are recognized as revenue in the following fiscal year.

(i) Capital Assets

Capital assets are stated at cost at the time of purchase or fair value at date of gift. Depreciation of plant physical properties is provided on a straight-line basis over the estimated useful lives (3 to 40 years) of the respective assets. The University does not capitalize works of art or historical treasures that are held for exhibition, education, research and public service. These collections are neither disposed of for financial gain nor encumbered in any means. Accordingly, such collections are not recognized or capitalized for financial statement purposes.

(j) Operating Versus Nonoperating Revenues and Expenses

The University defines operating activities as reported on the statement of revenues, expenses, and changes in net assets as those that generally result from exchange transactions such as payments received for providing goods or services. All of the University’s expenses are from exchange transactions. Certain significant revenue streams relied on for operations are reported as non- operating revenues as required by GASB Statement No. 35, including state appropriations, investment income, and state capital grants.

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KENT STATE UNIVERSITY

Notes to Financial Statements June 30, 2011 and 2010 (in thousands)

(k) Reclassification

Certain amounts from the prior year have been reclassified to conform with the current year’s presentation.

(3) Investments

The University’s investment policy authorizes the University to invest non-endowment funds in the following investments:

 Obligations of the US Treasury and other federal agencies and instrumentalities  Municipal and state bonds  Certificates of deposit  Mutual funds and mutual fund pools  Money market funds

US Government and Agency securities are invested through trust agreements with banks that internally designate the securities as owned by or pledged to the University. Common stocks, corporate bonds, money market instruments, mutual funds and other investments are invested through trust agreements with banks that keep the investments in their safekeeping accounts at the Depository Trust Company or Huntington Bank in “book entry” form. The banks internally designate the securities as owned by or pledged to the University.

Custodial credit risk on deposits with banks is the risk that in the event of a bank failure, the University’s deposits may not be available or returned. The University does not have a deposit policy for custodial credit risk. At June 30, 2011 and 2010, the bank amount of the University’s deposits was $64,930 and $36,438, respectively. Of that amount, $31,862 and $4,947, respectively, was insured. The remaining $33,068 and $31,491 at June 30, 2011 and 2010, respectively, was uninsured and uncollateralized. The University does not require deposits to be insured or collateralized.

The values of investments at June 30, 2011 and 2010 are as follows:

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KENT STATE UNIVERSITY

Notes to Financial Statements June 30, 2011 and 2010 (in thousands)

2011 Market Value Cost Common stock$ 175,411 $ 155,751 US government agency obligations 3,638 4,055 US government obligations 8,322 7,640 Corporate bonds and notes 2,242 2,224 Equity mutual funds 27,107 12,277 Bond mutual funds 79,091 76,461 State Treasury Asset Reserve of Ohio 36,079 36,079 Total$ 331,890 $ 294,487

2010 Market Value Cost Common stock$ 141,650 $ 145,863 US government agency obligations 7,238 7,024 US government obligations 6,269 6,205 Corporate bonds and notes 1,845 1,827 Equity mutual funds 21,756 11,946 Bond mutual funds 77,674 75,716 State Treasury Asset Reserve of Ohio 9,197 9,197 Total$ 265,629 $ 257,778

Included in common stock above are alternative investments of approximately $118 million and $100 million as of June 30, 2011 and June 30, 2010, respectively. The alternative investments are primarily private equity and hedge funds. Alternative investments do not have readily available market prices. These investments are carried at estimated fair value provided by the fund’s management. The University believes that the carrying amounts are reasonable estimates of fair value as of the year end. Because these investments are not readily marketable, the estimated value is subject to uncertainty and, therefore, may differ from the value that would have been used had a ready market for the investments existed. Such differences could be material.

Net appreciation/depreciation in the fair value of investments includes both realized and unrealized gains and losses on investments. During the year ended June 30, 2011 the University realized a net loss of ($608). During the year ended June 30, 2010 the University realized a net gain of $18,862. The calculation of realized gains and losses is independent of the net depreciation in the fair value of investments held at year end. Realized gains and losses on investments that had been held for more than one fiscal year and sold in the current year were included as a change in the fair value of investments reported in the prior year and the current year. The net appreciation in the fair value of investments during the year ended June 30, 2011 was $36,795. In fiscal year 2010, the net appreciation was $37,403. This amount includes all changes in fair value, both realized and unrealized, that occurred during the year.

21

KENT STATE UNIVERSITY

Notes to Financial Statements June 30, 2011 and 2010 (in thousands)

The unrealized appreciation on investments for the year ended June 30, 2011 was $47,950. The unrealized appreciation on investments for the year ended June 30, 2010 was $7,850.

The components of the net investment income are as follows:

Interest and Net appreciation (depreciation) Net investment dividends, net in market value of investments income (loss) Total 2011 $6,000 $36,795 $42,795 Total 2010 $5,738 $26,712 $32,450

Additional Disclosures Related to Interest-bearing Investments

Statement Nos. 3 and 40 of the Governmental Accounting Standards Board require certain additional disclosures related to the interest-rate, credit and foreign currency risks associated with interest-bearing investments.

Interest-rate risk - Interest-rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. Investments with interest rates that are fixed for longer periods are likely to be subject to more variability in their fair values as a result of future changes in interest rates.

The maturities of the University’s interest-bearing investments at June 30, 2011 are as follows:

Investment Maturities (in years) Fair Value Less than 1 1 to 5 6 to 10 More than 10 US government obligations$ 8,322 $ 3,054 $ 4,681 $ - $ - US government agency obligations 3,638 166 1,575 486 1,998 Corporate bonds and notes 2,242 869 927 - 446 Bond mutual funds 79,091 12,448 31,432 23,456 11,755 Total$ 93,293 $ 16,537 $ 38,615 $ 23,942 $ 14,199

The maturities of the University’s interest-bearing investments at June 30, 2010 are as follows:

Investment Maturities (in years) Fair Value Less than 1 1 to 5 6 to 10 More than 10 US government obligations$ 6,269 $ 1,954 $ 4,315 $ - $ - US government agency obligations 7,238 1,455 5,218 565 - Corporate bonds and notes 1,845 732 817 296 - Bond mutual funds 77,674 2,610 13,454 31,269 30,341 Total$ 93,026 $ 6,751 $ 23,804 $ 32,130 $ 30,341

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KENT STATE UNIVERSITY

Notes to Financial Statements June 30, 2011 and 2010 (in thousands)

Credit risk – Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. Credit quality information – as commonly expressed in terms of the credit ratings issued by nationally recognized statistical rating organizations such as Moody’s Investors Service, Standard & Poor’s, or Fitch Ratings – provides a current depiction of potential variable cash flows and credit risk.

The credit ratings of the University’s interest-bearing investments at June 30, 2011 are as follows:

Credit Rating Government US Agency Corporate Bond Mutual (Moody's) Total Obligations Obligations Bonds Funds AAA $ 43,910 $ 8,322 $ 3,638 $ 371 $ 31,579 AA+ 3,092 - - 36 3,056 AA 6,060 - - 11 6,049 AA- 1,966 - - 223 1,743 A+ 3,416 - - 186 3,230 A 7,040 - - 461 6,579 OTHER 27,809 - - 954 26,855 Total $ 93,293 $ 8,322 $ 3,638 $ 2,242 $ 79,091

The credit ratings of the University’s interest-bearing investments at June 30, 2010 are as follows:

Credit Rating Government US Agency Corporate Bond Mutual (Moody's) Total Obligations Obligations Bonds Funds AAA $ 45,393 $ 6,269 $ 7,238 $ 474 $ 31,412 AA+ 8,839 - - - 8,839 AA 5,297 - - 40 5,257 AA- 4,052 - - 181 3,871 A+ 4,565 - - - 4,565 A 4,450 - - 349 4,101 OTHER 20,430 - - 801 19,629 Total $ 93,026 $ 6,269 $ 7,238 $ 1,845 $ 77,674

Foreign currency risk – Foreign currency risk is the risk that changes in exchange rates will adversely affect the fair value of an investment or deposit. At June 30, 2011 and June 30, 2010, the University had no exposure to foreign currency risk.

Concentration of credit risk - Concentration of credit risk is the risk of loss attributed to the magnitude of investment in a single issuer. The University held the following investments that had fair values of 5 percent or more of total investments as of June 30, 2011 and 2010:

June 30, 2011 June 20, 2010 PIMCO Total Return $20,031 $24,680 Met West Total return Fund $20,222 $27,556 Western Asset Institutional Government Reserve $21,134 $21,118

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KENT STATE UNIVERSITY

Notes to Financial Statements June 30, 2011 and 2010 (in thousands)

(4) Accounts Receivable

Accounts receivable consist of the following, as of June 30, 2011 and 2010: 2011 2010 Sponsor acc ounts$ 9,041 $ 7,544 Student accounts 25,916 19,906 Other 12,293 11,537 $ 47,250 $ 38,987 Less allowances for loss on accounts receivable (2,900) (2,900) Accounts receivable, net$ 44,350 $ 36,087

In addition, the University has student loans receivable of $25,561 and $27,517 as of June 30, 2011 and 2010, respectively. The related allowances as of June 30, 2011 and 2010 are $4,799 and $4,955, respectively.

(5) Capital Assets

Capital assets are recorded at cost or, if acquired by gift, at the fair market value as of the date of donation.

Capital assets consist of the following as of June 30, 2011:

Additions/ Net 2010 Transfers Retirements 2011 Land $ 11,679 $ 2,124 $ 186 $ 13,617 Infrastructure 95,761 5,212 - 100,973 Buildings 702,712 3 9,424 480 741,656 Equipment 197,397 8,977 3,552 202,822 CIP 22,956 3,729 573 26,112 $ 1,030,505 $ 59,466 $ 4,791 $ 1,085,180 Less accumulated depreciation 450,829 3 6,789 3,428 484,190 Capital assets, net$ 579,676 $ 22,677 $ 1,363 $ 600,990

Included in depreciation expense of $37,304 for the year ended June 30, 2011 is a loss of $515 from the disposal of obsolete capital assets.

24

KENT STATE UNIVERSITY

Notes to Financial Statements June 30, 2011 and 2010 (in thousands)

Capital assets consist of the following as of June 30, 2010:

Additions/ Net 2009 Transfers Retirements 2010 Land $ 11,322 $ 357 -$ 11,679 Infrastructure 91,992 3,769 - 95,761 Buildings 664,882 38,013 183 7 02,71 2 Equipment 197,268 10,394 10,265 197,397 Construction-in-progress 30,080 (7,124) -22,956 $ 995,544 $ 45,409 $ 10,448 $ 1,030,505 Less accumulated depreciation 421,060 39,717 9,948 4 50,82 9 Capital assets, net$ 574,484 $ 5,692 $ 500 $ 579,676

Included in depreciation expense of $40,217 for the year ended June 30, 2010 is a loss of $500 from the disposal of obsolete capital assets.

(6) Long-term Liabilities

Long-term Debt

In August 2008, the University issued $60,000 in Series 2008B General Receipts bonds. The proceeds from the bond sale were used for the early redemption of Series 2002 General Receipts bond with an outstanding principal balance of $60,000. As of June 30, 2011, the outstanding principal of the 2008B General Receipts bonds was $60,000.

In September, 2009, the University issued $214,910 in Series 2009B General Receipts bonds. The proceeds from the bond sale were used for a current refunding of the Series 2009A General Receipts bonds and the Series 2008A General Receipts bonds, as well as an advance refunding of the Series 2000 General Receipts bonds. As a result, the bonds are considered to be defeased and the liability for the bonds has been removed from the University’s long-term obligations. The total refunding was undertaken to achieve debt service savings, as well as allowing the University to convert the synthetic fixed rate bonds to natural fixed rates, thereby eliminating risk associated with interest rate hedge arrangements and stabilizing the interest expenses incurred by the University. The total refunding transaction reduced debt service payments by $34,210 and resulted in an economic gain of $22,092. Of the total refunding, debt service was reduced by $1,271 and resulted in an economic gain of $887 from the advance refunding. For the advance refunding of the Series 2000 General Receipts bonds, the reacquisition price exceeded the net carrying amount of the old debt by $520. This amount is being netted against the new debt and amortized over the remaining life of the refunded debt, which is shorter than the life of the new debt issued. As of June 30, 2011, the outstanding principal of the 2009B General Receipts bond was $205,700.

In fiscal year 2010, the University terminated the interest rate swap agreements associated with the Series 2009A General Receipts bonds and the Series 2008A General Receipts bonds. This resulted in a termination payment totaling $23,864, which has been included in the Interest on Capital Asset – Related Debt line in the Statement of Revenues, Expenses, and Changes in Net Assets. In connection with the issuance of the Series 2009B General Receipts bonds, the University also recognized a net bond premium totaling $19,456 which will be amortized against interest expense over the life of the bond. As of June 30, 2011, the unamortized net bond premium was $15,618.

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KENT STATE UNIVERSITY

Notes to Financial Statements June 30, 2011 and 2010 (in thousands)

In accordance with the General Receipts bonds Trust Agreement, the Series 2008B and Series 2009B General Receipts bonds are subject to mandatory or optional redemption.

The indebtedness created through the issuance of General Receipt’s bonds is collateralized by a pledge of all general receipts, excluding state appropriations and monies received for restricted purposes. The primary source of funds being deposited to service the principal and interest requirements is student facilities fees.

During fiscal year 2010, the University entered into a loan agreement with the Ohio Air Quality Development Authority for a total of $1,344. The Ohio Air Quality Authority has issued $672 in 2010 Series A bonds and $672 in 2010 Series B bonds; the proceeds of which will be used to fund the University’s energy efficiency and conservation project at its Stark campus. As of June 30, 2011, the outstanding principal of the Series A and Series B bonds was $565 and $672, respectively.

During fiscal year 2011, the University entered into two additional loan agreements with the Ohio Air Quality Development Authority. The first loan agreement totals $5,388; $2,694 in Series A bonds and $2,694 in Series B bonds. The proceeds will be used to fund the University's energy efficiency and conservation projects at its Ashtabula, East Liverpool, Geauga, Salem and Trumbull campuses. The second loan agreement totals $20,000; $13,000 in Series A bonds, and $7,000 in Series B bonds. The proceeds will be used to fund the University's energy efficiency and conservation projects for its Residence Hall and Dining Services auxiliary units.

In fiscal year 2011, the University entered into an agreement with Fairmount Properties, LLC to construct a building for its Twinsburg location (programs are operated out of the University's Geauga campus) which the University will lease for a period of 30 years. The total capital lease is $13,992 and lease payments will begin in September 2012.

26

KENT STATE UNIVERSITY

Notes to Financial Statements June 30, 2011 and 2010 (in thousands)

Long-term debt consists of the following as of June 30, 2011:

Rates Maturity 2010 Additions Retirements 2011 General Receipts Bonds of 2009B 2.0-5.0 2009-2032$ 210,280 $ - $ 4,580 $ 205,700 General Receipts Bonds of 2002/now 2008B 4.32 2028-2032 60,000 - - 60,000 Air Quality Dev. Tax Exempt Rev. Bond - Stark (A) 2.99 2011-2016 672 - 107 565 Air Quality Dev. Tax Credit Rev. Bond - Stark (B) 5.63 2011-2020 672 - - 672 Air Quality Dev. Tax Exempt Rev. Bond - Reg. Campuses (A) 2.75 2012-2019 - 2,694 - 2,694 Air Quality Dev. Tax Credit Rev. Bond - Reg. Campuses (B) 4.86 2012-2019 - 2,694 - 2,694 Air Quality Dev. Tax Exempt Rev. Bond - Res. Halls & Din. Svcs. (A) 2.62 2019-2025 - 13,000 - 13,000 Air Quality Dev. Tax Credit Rev. Bond - Res. Halls & Din. Svcs. (B) 5.32 2012-2025 - 7,000 - 7,000 Other various various 7,373 13,992 2,835 18,530 $ 278,997 39,380 7,522 $ 310,855 Plus unamortized discount and premium 18,066 - 2,448 15,618 Less unamortized call premium on Series 2000 bonds (494) - 35 (459) Subtotal$ 296,569 $ 39,380 $ 10,005 326,014 Less current portion long-term debt 7,522 13,455 $ 289,047 $ 312,559

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KENT STATE UNIVERSITY

Notes to Financial Statements June 30, 2011 and 2010 (in thousands)

Long-term debt consists of the following as of June 30, 2010:

Rates Maturity 2009 Additions Retirements 2010 General Receipts Bonds of 2009B 2.0-5.0 2009-2032$ - $ 214,910 $ 4,630 $ 210,280 General Receipts Bonds of 2009A 6.75 2009-2031 156,605 - 156,605 - General Receipts Bonds of 2008A 4.5-4.96 2009-2028 41,515 - 41,515 - General Receipts Bonds of 2008B 4.32 2028-2032 60,000 - - 60,000 General Receipts Bonds of 2000 5.0-6.0 2004-2024 7,795 - 7,795 - Air Quality Dev. Tax Exempt Rev. Bond (2010 Series A) 2.99 2010-2016 - 672 - 672 Air Quality Dev. Tax Credit Rev. Bond (2010 Series B) 5.63 2010-2020 - 672 - 672 Other various various 10,104 12 2,743 7,373 $ 276,019 216,266 213,288 $ 278,997 Plus unamortized discount and premium - 19,456 1,390 18,066 Less unamortized call premium on Series 2000 bonds - (520) 26 (494) Subtotal $ 276,019 $ 235,202 $ 214,704 296,569 Less current portion long-term debt 5,847 7,522 $ 270,172 $ 289,047

Principal and interest on long-term debt are payable from operating revenues, allocated student fees and the excess of revenues over expenditures of specific auxiliary activities. The obligations are generally callable.

Hedging derivative instrument payments and hedged debt

As of June 30, 2011, aggregate debt service requirements of the University’s debt (fixed-rate and variable- rate) and net receipts/payments on associated hedging derivative instruments are shown below. These amounts assume that current interest rates on variable-rate bonds and the current reference rates of hedging derivative instruments will remain the same for their term. As these rates vary, interest payments on variable-rate bonds and net receipts/payments on the hedging derivative instruments will vary. Refer below for information on derivative instruments (interest rate swap).

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KENT STATE UNIVERSITY

Notes to Financial Statements June 30, 2011 and 2010 (in thousands)

The future amounts of principal and interest payments required by the debt agreements are as follows:

Derivatives, Principal Interest Net Total 2012$ 11,084 $ 11,348 $ 2,178 $ 24,610 2013 11,993 11,424 2,178 25,595 2014 11,911 11,078 2,178 25,167 2015 11,068 10,633 2,178 23,879 2016 11,193 10,148 2,178 23,519 2017-2021 62,836 42,688 10,890 116,414 2022-2026 67,054 26,901 10,890 104,845 2027-2031 105,025 10,846 8,276 124,147 2032-2036 14,811 1,176 436 16,423 2037-2041 3,157 470 - 3,627 2042-2043 723 19 - 742 Total$ 310,855 $ 136,731 $ 41,382 $ 488,968

Interest Rate Swap

The University has entered into a 30-year interest rate swap agreement for $60,000 of the variable rate 2002 Series General Receipts bonds. The University entered into this agreement at the same time and for the same amount of the variable rate debt, with the intent of creating a synthetic fixed rate debt, at an interest rate that was lower than if fixed rate debt would have been issued directly. During 2009, the interest rate swap agreement was re-identified in connection with refunding of the 2002 Series General Receipt bonds through the issuance of 2008B Series General Receipt bonds. During fiscal year 2010, the counterparty on the agreement was changed from Woodlands Commercial Bank (formerly known as Lehman Brothers Commercial Bank) to Loop Financial Products LLP. Based on the swap agreement, the University owes interest calculated at a fixed rate of 3.72% to the counter-party to the swap. In return, the counter-party owes the University interest based on a variable rate. The $60,000 in bond principal is not exchanged; it is only the basis on which the interest payments are calculated. The University continues to pay interest to the bondholders at the variable rate provided by the bonds. The debt service requirements to maturity for these bonds, as presented in this note, are based on that fixed rate.

As of June 30, 2011 and 2010, the University has recorded a deferred outflow of resources and a related swap liability in the amount of $293 and $2,233, respectively, which represents the accumulated changes in fair value of the interest rate swaps.

The interest rate swap has been determined to be an effective hedge and the fair value was estimated using the regression analysis method. The regression analysis method evaluates effectiveness by considering the statistical relationship between the cash flows or fair values of the potential hedging derivative instrument and the hedgeable item.

The interest rate swap is subject to the following risks:

Interest rate risk – The University is exposed to interest rate risk. On the pay-fixed, receive- variable interest rate swap, as LIBOR or the Securities Industry and Financial Markets Association (SIFMA) decreases, the University’s net payment on the swap increases. 29

KENT STATE UNIVERSITY

Notes to Financial Statements June 30, 2011 and 2010 (in thousands)

Basis risk – The University is exposed to basis risk due to variable rate payments received being based on a rate or index other than interest rates that the University pays on its variable rate debt. As of June 30, 2011, the interest rate on the University’s hedged variable rate debt is 0.09 percent, while the SIFMA swap index rate is 0.09 percent and 67 percent of LIBOR is 0.13 percent.

Termination risk – The swap agreement may be terminated prior to its stated termination date under certain circumstances. Upon termination, a payment may be owed depending on the prevailing economic circumstances at the time of the termination.

Accrued Compensated Absences

Per University policy, faculty and staff earn vacation up to a maximum of 25 days per year with a maximum accrual of 75 days. Upon termination, they are entitled to a payout of their accumulated balance. The maximum accrual is equal to the amount earned in three years, which is subject to payout upon termination. The liability for accrued vacation at June 30, 2011 and 2010 is $14,399 and $13,584, respectively.

All University employees are entitled to a sick leave credit equal to 15 days per year (earned on a pro rata monthly basis for salaried employees and on a pro rata hourly basis for classified hourly employees). Employees with 10 or more years of service are eligible to receive a payout upon retirement of up to 25% of unused days (maximum of 30 days). The liability for accrued sick leave at June 30, 2011 and 2010 is $4,964 and $4,638, respectively.

A summary of accrued compensated absences at June 30, 2011 and 2010 is as follows:

For the year ended Balance Additions Reductions Balance June 30, 2011$ 18,222 $ 2,830 $ 1,689 $ 19,363 June 30, 2010 17,357 2,108 1,243 18,222

(7) Retirement Benefits

(a) Basic Retirement Benefits

Employee retirement benefits are available for substantially all employees under contributory retirement plans administered by the Ohio Public Employees Retirement System (“OPERS”) and the State Teachers Retirement System of Ohio (“STRS Ohio”). These retirement programs are statewide, cost-sharing, multiple-employer defined benefit plans. STRS Ohio and OPERS provide retirement and disability benefits, annual cost-of-living adjustments, and death benefits for plan members. The University also offers eligible employees an alternative retirement program. The University is required to contribute to STRS Ohio 3.5% of earned compensation for those employees participating in the alternative retirement program. The University’s contribution to the alternative retirement fund for the years ended June 30, 2011, 2010 and 2009 were $945, $919, and $827, respectively.

30

KENT STATE UNIVERSITY

Notes to Financial Statements June 30, 2011 and 2010 (in thousands)

The Ohio Public Employees Retirement System’s Comprehensive Annual Financial Report may be obtained by writing to OPERS, 277 East Town Street, Columbus, Ohio 43215-4642. The Ohio Revised Code provides statutory authority for employee and employer contributions. The employee contribution rate is 10% of covered payroll and the University is required to contribute 14% of covered payroll. The University’s contributions to OPERS for the years ended June 30, 2011, 2010 and 2009 were $14,005, $13,312 and $12,906, respectively, equal to the required contributions for each year.

The State Teachers Retirement System of Ohio’s Comprehensive Annual Financial Report may be obtained by writing to STRS Ohio, 275 East Broad Street, Columbus, Ohio 43215-3371. The Ohio Revised Code provides statutory authority for employee and employer contributions. The employee contribution rate is 10% of covered payroll and the University is required to contribute 14% of covered payroll. The University’s contributions to STRS Ohio for the years ended June 30, 2011, 2010, and 2009 were $14,270, $13,821 and $12,987, respectively, equal to the required contributions for each year.

(b) Post-Retirement Health Care Benefits

OPERS - Plan Description

Ohio Public Employees Retirement System (OPERS) administers three separate pension plans: The Traditional Pension Plan - a cost-sharing, multiple-employer defined benefit pension plan; the Member-Directed Plan - a defined contribution plan; and the Combined Plan - a cost sharing, multiple-employer defined benefit pension plan that has elements of both a defined benefit and defined contribution plan.

OPERS maintains a cost-sharing multiple employer defined benefit post-employment healthcare plan, which includes a medical plan, prescription drug program and Medicare Part B premium reimbursement, to qualifying members of both the Traditional Pension and the Combined Plans. Members of the Member-Directed Plan do not qualify for ancillary benefits, including post- employment health care coverage.

In order to qualify for post-employment health care coverage, age-and-service retirees under the Traditional Pension and combined Plan must have 10 or more years of qualifying Ohio service credit. Health care coverage for disability benefit recipients and qualified survivor benefit recipients is available. The health care coverage provided by OPERS meets the definition of an Other Post Employment Benefit (OPEB) as described in GASB Statement 45.

The Ohio revised Code permits, but does not mandate, OPERS to provide OPEB benefits to its eligible members and beneficiaries. Authority to establish and amend benefits is provided in Chapter 145 of the Ohio Revised Code.

OPERS issues a stand-alone financial report. Interested parties may obtain a copy by writing OPERS, 277 East Town Street, Columbus, OH 43215-4642, or by calling 614-222-5601 or 800- 222-7377.

31

KENT STATE UNIVERSITY

Notes to Financial Statements June 30, 2011 and 2010 (in thousands)

OPERS - Funding Policy

The Ohio Revised Code provides the statutory authority requiring public employers to fund post retirement health care through their contributions to OPERS. A portion of each employer's contribution to OPERS is set aside for the funding of post retirement health care benefits.

Employer contribution rates are expressed as a percentage of the covered payroll of active members. In 2010, state and local employers contributed at a rate of 14.00% of covered payroll and public safety and law enforcement employers contributed at 17.87%. The Ohio Revised Code currently limits the employer contribution to a rate not to exceed 14.0% of covered payroll for state and local employers units and 18.1% of covered payroll for law and public safety employer units. Active members do not make contributions to the OPEB Plan.

OPERS' Post Employment Health Care plan was established under, and is administered in accordance with, Internal Revenue Code 401(h). Each year, the OPERS Board of Trustees determines the portion of the employer contribution rate that will be set aside for funding of post employment health care benefits. The portion of employer contributions allocated to health care for members in the Traditional Plan was 5.5% from January 1 through February 28, 2010 and 5.0% from March 1 through December 31, 2010. The portion of employer contributions allocated to health care for members in the Combined Plan was 4.73% from January 1 through February 28, 2010, and 4.23% from March 1 through December 31, 2010. The OPERS Board of Trustees is also authorized to establish rules for the payment of a portion of the health care benefits provided, by the retiree or their surviving beneficiaries. Payment amounts vary depending on the number of covered dependents and the coverage selected. The University's contributions allocated to post retirement health care for the years ended June 30, 2011, 2010, and 2009 were $4,975, $5,052, and $6,085, respectively.

STRS - Plan Description

STRS Ohio administers a pension plan that is comprised of: a Defined Benefit Plan; a self-directed Defined Contribution Plan, and a Combined Plan that is a hybrid of the Defined Benefit Plan and the Defined Contribution Plan.

Ohio law authorizes STRS Ohio to offer a cost-sharing, multiple-employer health care plan. STRS Ohio provides access to health care coverage to eligible retirees who participated in the Defined Benefit or Combined Plans. Coverage under the current program includes hospitalization, physicians' fees, prescription drugs and reimbursement of monthly Medical Part B premiums.

Pursuant to Chapter 3307 of the Revised Code, the Retirement Board has discretionary authority over how much, if any, of the associated health care costs will be absorbed by STRS Ohio. All benefit recipients, for the most recent year, pay a portion of the health care costs in the form of a monthly premium.

STRS Ohio issues a stand-alone financial report. Interested parties can view the most recent Comprehensive Annual Financial Report by visiting www.strs.oh.org or by requesting a copy by calling toll-free 1-888-227-7877.

32

KENT STATE UNIVERSITY

Notes to Financial Statements June 30, 2011 and 2010 (in thousands)

STRS - Funding Policy

Under Ohio law, funding for post-employment health care may be deducted from employer contributions. Of the 14% employer contribution rate, 1% of covered payroll was allocated to post- employment health care for the years ended June 30, 2010, 2009 and 2008. The 14% employer contribution rate is the maximum rate established under Ohio law. The University's contribution to post-employment health care for the years ended June 30, 2011, 2010, and 2009 was $928, $987, and $1,019, respectively.

(c) Ohio Public Employees Deferred Compensation Program

The University’s employees may elect to participate in the Ohio Public Employees Deferred Compensation Program (the "Program"), created in accordance with Internal Revenue Code Section 457. The Program permits deferral of a portion of an employee’s compensation until termination, retirement, death, or unforeseeable emergency. The deferred compensation and any income earned thereon are not subject to income taxes until actually received by the employee.

In 1998, the Ohio Public Employees Deferred Compensation Program Board implemented a trust to hold the assets of the Program in accordance with Internal Revenue Code Section 457. The program assets are the property of the trust, which holds the assets on behalf of the participants.

Therefore, in accordance with GASB Statement No. 32, Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans, the assets of this program are not reported in the accompanying financial statements.

At June 30, 2011 and 2010, the amounts on deposit with the Ohio Public Employees Deferred Compensation Board were $9,638 and $7,666, respectively, which represents the fair market value at such dates.

(8) Contingencies and Commitments

In the normal course of its activities, the University is a party to various legal actions. The University intends to vigorously defend itself against any and all claims and is of the opinion that the outcome of current legal actions will not have a material effect on the University's financial position.

The University is a defendant in a lawsuit filed by one of its construction contractors for alleged construction delays and inefficiencies. In July, 2009, a judgement in favor of the plaintiff was rendered in the amount of $4,080. The University recorded this amount as a liability at June 30, 2009. At June 30, 2011, the liability is $4,374, due to the University accruing interest. The balance as of June 30, 2010 was $4,223.

The University is also self-insured for workers' compensation, unemployment compensation and substantially all employee health benefits. The University’s risk exposure is limited to claims incurred.

33

KENT STATE UNIVERSITY

Notes to Financial Statements June 30, 2011 and 2010 (in thousands)

Total claims paid during the years ended June 30, 2011 and 2010 were $40,133 and $39,303, respectively. A liability for unpaid claims (including incurred but not reported claims) in the amount of $6,175 and $5,480 has been accrued as of June 30, 2011 and 2010, respectively. This estimate is based on an analysis of historical claims paid.

In March 2009, the University approved a University Employee Separation Plan (UESP) offered to select employees. The UESP is a one-time offer to full-time faculty, unclassified and classified (represented and unrepresented) employees who achieved 15 or more years of service with the University as of June 30, 2009. Part-time employees and employees who had retired and were subsequently re-hired by the University were not eligible to participate in the plan. Eligible employees who chose the UESP left the University on June 30 with a separation package that included a base amount plus an amount equivalent to a portion of the employee’s accrued sick leave pay. The University contracted with Educators Preferred Corp. (EPC) to administer the leave plan. Total costs including the base payout, accrued sick leave, and administrative costs associated with the implementation and administration of the plan were recorded as a liability as of June 30, 2010 in the amount of $2,539. The accrued liability as of June 30, 2011 is $0.

The University has operating leases for the use of real property and moveable equipment. Total expenditures during 2011 and 2010 for operating leases amounted to approximately $1,345 and $781, respectively.

Future minimum payments on non-cancelable operating leases subsequent to June 30, 2011 are as follows:

Operating Leases 2012 $ 1,548 2013 1,439 2014 1,391 2015 650 Total future minimum payments $ 5,028

As of June 30, 2011, the University construction projects will cost an estimated $35,940, of which 68% or $24,467 is funded from bond proceeds.

(9) Related Party Transactions

The University, together with The University of Akron and Youngstown State University, created a consortium to establish and govern Northeastern Education Television of Ohio, Inc. ("NETO"), Channels 45 and 49, Kent, Ohio. This organization is legally separate from the University; accordingly, its financial activity is not included within the accompanying financial statements. The University has no contractual financial obligations to this consortium.

34

KENT STATE UNIVERSITY

Notes to Financial Statements June 30, 2011 and 2010 (in thousands)

(10) Component Unit

The University is the sole beneficiary of the Foundation; a separate not-for-profit entity organized for the purpose of promoting educational and research activities. The Foundation is a legally separate entity from the University and maintains a self-appointing Board of Trustees. The Foundation reimburses the University for substantially all operating expenses paid by the University on behalf of the Foundation. Accordingly, management historically concluded that the Foundation was not a component unit of the University as defined by GASB Statement No. 14, The Financial Reporting Entity. However, under GASB Statement No. 39, Determining Whether Certain Organizations are Component Units, the Foundation now meets the revised definition as a component unit.

Assets totaling approximately $140,449 and $124,577 at June 30, 2011 and 2010, respectively, most of which have been restricted by donors for specific purposes, are presented separately. Amounts received by the University from the Foundation are included in the accompanying financial statements. The University received approximately $9,080 and $10,617 of financial support during the years ended June 30, 2011 and 2010, respectively, from gifts to the Foundation specifically restricted by donors for University use and from private grants. Additionally, at June 30, 2011 and 2010, the University had outstanding receivables from the Foundation of approximately $68 and $30, respectively.

The value of investments for the Foundation at June 30, 2011 and 2010 are as follows:

Market Value Market Value 2011 2010 Corporate stocks$ 7,319 $ 5,613 Government bonds 4 5 Limited partnership hedge fund 10,917 7,711 Mutual funds: Large capitalization equity funds 31,319 29,462 Small / middle capitalization equity funds 5,635 5,385 International equity funds 25,280 9,389 Other mutual funds 18,148 5,533 Fixed-income funds 31,511 48,211 $ 130,133 $ 111,309

(11) Subsequent Events

As mentioned in footnote #8 Contingencies and Commitments, the University is a defendant in a lawsuit filed by one of its construction contractors. In July 2011, the construction contractor and the University filed an agreed judgment entry and the University paid $2,090 to the plaintiff. The remaining portion of the case is in the appeal process and the University will continue to carry the remaining liability and accrue interest.

35

Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards

To the Board of Trustees Kent State University

We have audited the financial statements of Kent State University (the "University") as of and for the year ended June 30, 2011 and have issued our report thereon dated October 14, 2011. Our report was modified to include reference to other auditors. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Other auditors audited the financial statements of Kent State University Foundation (the "Foundation"), as described in our report on the University's financial statements. This report does not include the results of the other auditors’ testing of internal control over financial reporting or compliance and other matters that are reported on separately by those auditors. The financial statements of the Foundation were not audited in accordance with Government Auditing Standards. Internal Control Over Financial Reporting In planning and performing our audit, we considered Kent State University's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the entity's internal control over financial reporting. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented or detected and corrected on a timely basis. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above.

36 To the Board of Trustees Kent State University

Compliance and Other Matters As part of obtaining reasonable assurance about whether Kent State University’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. This report is intended solely for the information and use of management, the board of trustees, others within the entity, federal awarding agencies, and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.

October 14, 2011

37 Report on Compliance with Requirements That Could Have a Direct and Material Effect on Each Major Program and on Internal Control Over Compliance in Accordance with OMB Circular A-133

To the Board of Trustees Kent State University

Compliance We have audited the compliance of Kent State University with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2011. The major federal programs of Kent State University are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its major federal programs is the responsibility of Kent State University's management. Our responsibility is to express an opinion on Kent State University's compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about Kent State University's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on Kent State University's compliance with those requirements. This report is replacing a previously issued report in order clarify the reconciliation provided in Note 5. In our opinion, Kent State University complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2011.

38 To the Board of Trustees Kent State University

Internal Control Over Compliance The management of Kent State University is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts, and grants applicable to federal programs. In planning and performing our audit, we considered Kent State University's internal control over compliance with requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the entity's internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented or detected and corrected on a timely basis. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. However, we identified a certain deficiency in internal control over compliance that we consider to be a significant deficiency as described in the accompanying schedule of findings and questioned costs as 2011-1. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Kent State University’s response to the finding identified in our audit is described in the accompanying schedule of findings and questioned costs. We did not audit Kent State University’s response and, accordingly, we express no opinion on it. This report is intended solely for the information and use of management, the board of trustees, others within the entity, federal awarding agencies, and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.

October 14, 2011

39 Kent State University Schedule of Expenditures of Federal Awards Year Ended June 30, 2011

Catalog of Federal Domes tic Assistance Federal Grantor/Program Title Number Pass-through Identifying Number Expenditures

STUDENT FINANCIAL AID CLUSTER Department of Education Direct Programs Federal Supplemental Educational Opportunity Grants 84.007 $1,184,177 Federal Work-Study Program 84.033 1,620,961 Federal Perkins Loan Program 84.038 23,243,604 Federal Pell Grant Program 84.063 70,489,502 Fund for the Improvement of Postsecondary Education 84.116 197,126 Academic Competitiveness Grants 84.375 2,127,108 National Science and Mathematics Access to Retain Talent 84.376 1,141,031 (SMART) Grants Teacher Education Assistance for College and Higher 84.379 1,703,332 Education Grants (TEACH Grants) Federal Direct Loans 84.268 242,939,574 Total Department of Education 344,646,415

De par tm e nt of He alth and Hum an Se r vice s Direct Program Nursing Student Loans 93.364 2,088,236

Total Student Financial Aid Cluster 346,734,651

RESEARCH AND DEV ELOPM ENT CLUSTER Department of Agriculture Pass-through Program Miami University - Grants for Agricultural Research 10.206 USDA-2007-35320-18349 42,412 Competitive Research Total Department of Agriculture 42,412

Department of Commerce Direct Programs Climate and Atmospheric Research 11.431 137,139 Measurement and Engineering Research and Standards 11.609 378,703 Pass-through Programs Ohio State Research Foundation - Sea Grant Support 11.417 60008574 3,030 Ohio Sea Grant Program - Sea Grant Support 11.417 NA06OAR4170020 5,174 Total 8,204 Total Department of Commerce 524,046

Department of Defense Direct Programs Air Force Defense Research Sciences Program 12.800 1,235,590 Mathematical Sciences Grants Program 12.901 3,995 Research and Technology Development 12.910 159,791 Pass-through Programs Dynamic Eye Inc - Dual Mode Eye Shields NONE W911QY-08-C-0049 (9,742) Cornerstone Research Group Inc. - STTR Phase II NONE FA9550-05-C-0036 2,222 Dynamic Eye Inc - Segmented Flash Blindness Lenses NONE SA1-PO014 5,354 Pixel Optics Inc - Super Vision Project NONE 1FA7014-07-C-0013 6,521 Lincoln Lab-MIT - LC Based LWIR Optical Transducer NONE 7000111657 49,490 Battelle Memorial Institute - Alternative Energy Fuel Cell Pow er NONE #220300 6,193 Generator Battelle Memorial Institute - Alternative Energy Fuel Cell Pow er NONE 233632 141,398 Generator Total 201,436 Total Department of Defense 1,600,812

See Notes to Schedule of Expenditures of Federal Awards. 40 Kent State University Schedule of Expenditures of Federal Awards (Continued) Year Ended June 30, 2011

Catalog of Federal Domes tic Assistance Federal Grantor/Program Title Number Pass-through Identifying Number Expenditures

Department of Housing and Urban Development Pass-through Programs City of Cleveland - Community Development Block 14.218 69883 $22,565 Grants/Entitlement Grants Center for Community Solutions - Community Development 14.218 68-318 PRIME 1,005 Block Grants/Entitlement Grants Total Department of Housing and Urban Development 23,570

Department of the Interior Pass-through Programs Central Michigan University - Fish and Wildlife Management 15.608 444594KSU 1,873 Assistance Arkansas Game and Fish Commission - Cooperative 15.615 KSU444587 8,827 Endangered Species Conservation Fund

Minnesota Department of Natural Resources - State Wildlife 15.634 A89365 2,633 Grants Research Foundation at State University of New York - State 15.634 KSU444588 10,143 Wildlife Grants Total 12,776

Ohio State Research Foundation - Assistance to State Water 15.805 RF01193084 22,600 Resources Research Institutes Total Department of the Interior 46,076

Department of Justice Pass-through Programs The Urban Institute - Part E - Developing, Testing and 16.541 08208-000-00-KSU-01 47 Demonstrating Promising New Programs Research Triangle Institute - Part D - Research, Evaluation, 16.542 9-312-0209835 20,306 Technical Assistance and Training City of Cleveland - Edw ard Byrne Memorial State and Local 16.580 PO CLEVE-SG67943A (162) Law Enforcement Assistance Discrtionary Grants Program

Ohio Criminal Justice Studies - Project Safe Neighborhoods 16.609 2009-PS-PSN-366 25,033 Ohio Criminal Justice Studies - Project Safe Neighborhoods 16.609 2008-PS-PSN-366 78,775 Total 103,808

NEOUCOM - Edw ard Byrne Memorial Justice Assistance 16.738 2007-JG-E0R-6583 1,309 Grant Program Cuyahoga County Department of Justice Affairs - 16.753 KSU 445575 45,584 Congressionally Recommended Aw ards

Ohio Criminal Justice Studies - Recovery Act - Edw ard Byrne 16.803 2009-RA-EA01-2212 28,735 Memorial Justice Assistance Grant (JAG) Program/ Grants to States and Territories

ARRA - NEOUCOM - Recovery Act - Edw ard Byrne Memorial 16.803 34341-A 16,860 Justice Assistance Grant (JAG) Program/ Grants to States and Territories

ARRA - City of Cleveland- Recovery Act - Edw ard Byrne 16.803 KSU 448023 73,212 Memorial Justice Assistance Grant (JAG) Program/ Grants to States and Territories

Total 118,807 Total Department of Justice 289,699

See Notes to Schedule of Expenditures of Federal Awards. 41 Kent State University Schedule of Expenditures of Federal Awards (Continued) Year Ended June 30, 2011

Catalog of Federal Domestic Assistance Federal Grantor/Program Title Number Pass-through Identifying Number Expenditures

Department of Transportation Pass-through Programs Ohio Department of Transportation - Highw ay Planning and 20.205 21436 $30,010 Construction Arkansas State Highw ay & Transportation Dept. - Highw ay 20.205 061134 756 Planning and Construction Arkansas State Highw ay & Transportation Dept. - Highw ay 20.205 080379 4,975 Planning and Construction Total 35,741

University of Akron - University Transportation Centers 20.701 DTRT06-G-0037 4,685 Program Total Department of Transportation 40,426

National Aeronautics and Space Administration Pass-through Program ATK Space Systems - Development of Particle-Based Flow NONE 0023531 14,746 Diagnostic Techniques Total National Aeronautics and Space Administration 14,746

National Endowment for the Humanities Pass-through Programs Promotion of the Humanities - Office of Digital Humanities 45.169 HD-51129-10 11,520 Total National Endowment for the Humanities 11,520

Institute of Museum and Library Services Direct Program National Leadership Grants 45.312 36,246 Pass-through Program Cleveland Metroparks Zoo - Museums for America 45.301 MFA-FY08 3,283 Total Institute of Museum and Library Services 39,529

National Science Foundation Direct Programs Engineering Grants 47.041 146,373 Mathematical and Physical Sciences 47.049 1,984,426 Geosciences 47.050 263,076 Computer and Information Science and Engineering 47.070 296,056 Biological Sciences 47.074 462,965 Social, Behavioral, and Economic Sciences 47.075 255,928 Education and Human Resources 47.076 604,809 Polar Programs 47.078 126,269 International Science and Engineering (OISE) 47.079 54,924 ARRA - Trans-NSF Recovery Act Research Support 47.082 1,138,335 Pass-through Programs LXD Inc. - Engineering Grants 47.041 LXD1046893 24,622 Kent Displays Inc. - Engineering Grants 47.041 IIP0750379 0 LXD Inc. - Engineering Grants 47.041 LXD 1010368 53,302 Total 77,924

Institute for Complex Adaptive Matter - Mathematical and 47.049 DMR-0645461 0 Physical Sciences Institute for Complex Adaptive Matter - Mathematical and 47.049 KSU-440660 12,928 Physical Sciences Institute for Complex Adaptive Matter - Mathematical and 47.049 KSU-444321 480 Physical Sciences

See Notes to Schedule of Expenditures of Federal Awards. 42 Kent State University Schedule of Expenditures of Federal Awards (Continued) Year Ended June 30, 2011

Catalog of Federal Domes tic Assistance Federal Grantor/Program Title Number Pass-through Identifying Number Expenditures

National Science Foundation (Continued) Direct Programs (Continued) Institute for Complex Adaptive Matter - Mathematical and 47.049 KSU444580 $13,322 Physical Sciences Institute for Complex Adaptive Matter - Mathematical and 47.049 KSU444581 2,750 Physical Sciences Ohio State Research Foundation - Mathematical and Physical 47.049 60004660 10,579 Sciences Case Western Reserve University - Mathematical and 47.049 DMR-0423914 1,116 Physical Sciences Total 41,175

Illinois State Museum Society - Geosciences 47.050 KSU440504 15,241 University of Florida - Computer and Information Science and 47.070 UF-EIES-0914033-KSU 46,254 Engineering Indiana University - Biological Sciences 47.074 PO # 419481 71,467

University of Florida - Education and Human Resources 47.076 UF1009 33,944 Cleveland State University - Education and Human Resources 47.076 DELAT37L 9,186

Eastern Michigan University - Education and Human 47.076 KSU 446448 18,545 Resources Stark State College of Technology - Education and Human 47.076 NSFFC-0802536-10-10 440 Resources Total 62,115

A RRA - DePaul Univ ers ity - Trans -NSF Rec ov ery A c t 47.082 500733SG069 60,543 Research Support Total National Science Foundation 5,707,880

Environmental Protection Agency Dir e ct Pr ogr am Assessment and Watershed Protection Program Grants 66.480 AW-83414901 39,653 Pass-through Programs SUNY - Great Lakes Program 66.469 GL00E7530-KENT 2,267 SUNY - Great Lakes Program 66.469 GL-00E00503-KSU 9,302 Total 11,569

Total Environmental Protection Agency 51,222

Department of Energy Dir e ct Pr ogr am Office of Science Financial Assistance Program 81.049 1,272,640 Pass-through Program UT-Battelle, LLC - Electron Beam Grafting NONE 4000095139 19,102 Total Department of Energy 1,291,742

Department of Education Dir e ct Pr ogr am s National Institute on Disability and Rehabilitation Research 84.133 H133G080158 143,898 Education Research, Development and Dissemination 84.305 R305A080316 355,489 Research in Special Education 84.324 R324A090145 224,888 Transition Programs for Students w ith Intellectual Disabilities 84.407 P407A100057 140,238 into Higher Education

See Notes to Schedule of Expenditures of Federal Awards. 43 Kent State University Schedule of Expenditures of Federal Awards (Continued) Year Ended June 30, 2011

Catalog of Federal Domes tic Assistance Federal Grantor/Program Title Number Pass-through Identifying Number Expenditures

Department of Education (Continued) Pass-through Programs Ohio Department of Education - Special Education Grants to 84.027 EDU01-0000006008 $300,355 States Ohio Department of Education - Special Education Grants to 84.027 EDU01-0000003002 (1,123) States Ohio Department of Education - Special Education Grants to 84.027 EDU-01-0000004703 104,163 States Ohio Department of Education - Special Education - Grants to 84.027 H027A090111A 32,223 States Total 435,618

Hattie Larlham Foundation - Fund for the Improvement of 84.215 HLR1092509 838 Education

ARRA - Springfield Local Schools - Education Technology 84.386 ARRA TITLE II-D 5,899 State Grants, Recovery Act ARRA - Ravenna School District - Education Technology 84.386 TITLE II-D 5,435 State Grants, Recovery Act ARRA - Ravenna School District - Education Technology 84.386 ARRA TITLE II-D 5,435 State Grants, Recovery Act ARRA - Kent City School District - Education Technology 84.386 TITLE II-D 2,938 State Grants, Recovery Act Total 19,707

Virginia Commonw ealth University - National Institute on 84.133 PT101165-SC100174 53,475 Disability and Rehabilitation Research Total Department of Education 1,374,151

National Archives and Records Administration Pass-through Program National Historical Publications and Records Grants 89.003 25-0512-0023-003 4,514 Total National Archives and Records Administration 4,514

Department of Health and Human Services Direct Programs Oral Diseases and Disorders Research 93.121 1R21DE019704-01A1 149,413 Injury Prevention and Control Research and State and 93.136 367,347 Community Based Programs Research and Training in Complementary and Alternative 93.213 1R21AT003913-01A2 32,374 Medicine Research on Healthcare Costs, Quality and Outcomes 93.226 1R03HS019795-01 2,355 Mental Health Research Grants 93.242 247,446 Drug Abuse and Addiction Research Programs 93.279 1R15DA023349 50,077 Nursing Research 93.361 245,105 Cancer Cause and Prevention Research 93.393 7,194 ARRA - Trans-NIH Recovery Act Research Support 93.701 416,501 Cardiovascular Diseases Research 93.837 1,333,989 Diabetes, Digestive, and Kidney Diseases Extramural 93.847 140,300 Research Digestive Diseases and Nutrition Research 93.848 R01DK075119-01 48,727 Extramural Research Programs in the Neurosciences and 93.853 438,417 Neurological Disorders Biomedical Research and Research Training 93.859 1R15GM086782-01A1 51,283 Child Health and Human Development Extramural Research 93.865 225,993 Aging Research 93.866 230,293 Dept of HHS - N268200900371P NONE HHSN268200900371P 10

See Notes to Schedule of Expenditures of Federal Awards. 44 Kent State University Schedule of Expenditures of Federal Awards (Continued) Year Ended June 30, 2011

Catalog of Federal Domes tic Assistance Federal Grantor/Program Title Number Pass-through Identifying Number Expenditures

Department of Health and Human Services (Continued) Pass-through Programs Health Research Inc - Environmental Public Health and 93.070 3792-01 $16,825 Emergency Response Health Research Inc - Environmental Public Health and 93.070 3792-02 42,269 Emergency Response Total 59,094

Hospital for Special Surgery - Oral Diseases and Disorders 93.121 2R04 DE004141-31A1 56,373 Res earc h Children's Hospital of Philadelphia - Mental Health Research 93.242 950481RSUB 5,022 Grants

HUMADAOP - Substance Abuse and Mental Health Services- 93.243 KSU 440470 (4) Projects of Regional and National Significance Stark County Mental Health & Recovery Service Bd - 93.243 KSU 440522 42,218 Substance Abuse and Mental Health Services Projects of Regional and National Significance Stark County Mental Health & Recovery Service Bd - 93.243 KSU 440880 12,476 Substance Abuse and Mental Health Services Projects of Regional and National Significance HUMADAOP - Substance Abuse and Mental Health Services- 93.243 5H79TI017071-04 6,564 Projects of Regional and National Significance Catholic Charities Services - Substance Abuse and Mental 93.243 KSU 445573 26,983 Health Services-Projects of Regional and National Significance Total 88,237

St. John's University - Occupational Safety and Health 93.262 35496SC1 9,307 Pr ogr am

Ohio State Research Foundation - Alcohol Research Programs 93.273 RF01219228 19,872 University of Tennessee - Alcohol Research Programs 93.273 OR14350-001.01 / 1R01AA017898 90,352 Total 110,224

Ohio Department of Alcohol & Drug Addiction Services - 93.275 KSU 440879 239 Substance Abuse and Mental Health Services-Access to Rec ov ery Case Western Reserve University - Nursing Research 93.361 RES502761 / 1R01-NR010787-01A2 8,803 Wayne State University - Cancer Treatment Research 93.395 WSU10005 15,571 ARRA - Trans-NIH Recovery Act Research Support 93.701 USD-0909 1R01AA17433-01A2 105,910 Butler Hospital - Heart and Vascular Diseases Research 93.837 9279-8344 12,417

Stanford University - Biomedical Research and Research 93.859 22747060-41598-A 111,561 Training California State University San Marcos Foundation - 93.859 F-77330 36,713 Biomedical Research and Research Training Total 148,274

University of Minnesota Applied Psychology - Population 93.864 S2986113101 10,761 Res earc h University of Pennsylvania - Aging Research 93.866 G-42-682-G3 (1,414)

Ohio Department of Alcohol and Drug Abuse Services - 93.959 99-3402-HEDUC-P-10-0007 1,159 Block Grants for Prevention and Treatment of Substance Abuse

See Notes to Schedule of Expenditures of Federal Awards. 45 Kent State University Schedule of Expenditures of Federal Awards (Continued) Year Ended June 30, 2011

Catalog of Federal Domes tic Assistance Federal Grantor/Program Title Number Pass-through Identifying Number Expenditures

Department of Health and Human Services (Continued) Pass-through Programs (Continued) Ohio Department of Alcohol and Drug Abuse Services - 93.959 99-3402-HEDUC-P-11-0007 $15,640 Block Grants for Prevention and Treatment of Substance Abuse Total 16,799

Carroll County General Health District - Maternal and Child 93.994 KSU 444505 6,124 Health Services Block Grant to the States Total Department of Health and Human Services 4,638,565

Total Research and Development Cluster 15,700,910

CDBG - ENT IT L EM ENT GRANT S CL UST ER Department of Housing and Urban Development Pass-through Program Stark County Regional Planning Commission - Community 14.218 KSU 445043 27,967 Development Block Grants/Entitlement Grants Total CDBG - Entitlement Grants Cluster 27,967

HIGHWAY SAFETY CLUSTER Department of Transportation Pass-through Programs Ohio Department of Public Safety - Incentive Grant Program to 20.612 MOPI-2001-15-00-00-00822-00 2,453 Increase Motorcyclist Safety Ohio Department of Public Safety - Incentive Grant Program to 20.612 MOPI-2001-78-00-00-00832-00 404 Increase Motorcyclist Safety Total Highway Safety Cluster 2,857

TRIO PROGRAM S CLUSTER Department of Education Direct Programs TRIO Student Support Services 84.042 376,973 TRIO Upw ard Bound 84.047 874,400 TRIO McNair Post-Baccalaureate Achievement 84.217 P217A070027 296,762 Total TRIO Programs Cluster 1,548,135

VOCATIONAL REHABILITATION CLUSTER Department of Education Pass-through Programs Ohio Rehabilitation Services Commission - Vocational 84.126 RSC01-0000005451 39,467 Rehabilitation Grants to States Ohio Rehabilitation Services Commission - Vocational 84.126 VRP3 61,329 Rehabilitation Grants to States Ohio Rehabilitation Services Commission - Vocational 84.126 KSU 446451 77,230 Rehabilitation Grants to States Ohio Rehabilitation Services Commission - Vocational 84.126 RSC01-000005325 151,831 Rehabilitation Grants to States Ohio Rehabilitation Services Commission - Vocational 84.126 KSU 446453 66,591 Rehabilitation Grants to States Total 396,448

ARRA - Ohio Department of Development - Rehabilitation 84.390 ECDD11-295 1,888 Services-Vocational Rehabilitation Grants to States, Rec ov ery A c t Total Vocational Rehabilitation Cluster 398,336

See Notes to Schedule of Expenditures of Federal Awards. 46 Kent State University Schedule of Expenditures of Federal Awards (Continued) Year Ended June 30, 2011

Catalog of Federal Domestic Assistance Federal Grantor/Program Title Number Pass-through Identifying Number Expenditures

STATE FISCAL STABILIZATION FUND (SFSF) CLUSTER Department of Education Pass-through Program ARRA - State Fiscal Stabilization Fund - Education State $20,187,196 Grants Recovery Act 84.394 Total State Fiscal Stabilization Fund Cluster 20,187,196

TANF CLUSTER Department of Health and Human Services Pass-through Program Licking County Children and Family First Council - Temporary 93.558 KSU 440514 433 Assistance for Needy Families Total TANF Cluster 433

SUBTOTAL OF CLUSTERS 384,600,485

Department of Agriculture Direct Programs Rural Cooperative Development Grants 10.771 265,292 Total Department of Agriculture 265,292

Department of Commerce Direct Programs Public Telecommunications Facilities Planning and Construction 11.550 143,095 Total Department of Commerce 143,095

Department of Defense Direct Programs Flood Plain Management Services 12.104 DACW59-99-M-0072 149 Language Grant Program 12.900 77,223 Mathematical Sciences Grants Program 12.901 89,237 Total Department of Defense 166,609

Department of Justice Direct Program Bulletproof Vest Partnership Program 16.607 none (2,438) Pass-through Program Ohio Department of Youth Services - Second Chance Act 16.812 1AS2140 10,471 Prisoner Reentry Initiative Total Department of Justice 8,033

Department of Labor Direct Program WIA Pilots, Demonstrations, and Research Projects 17.261 65,777 Pass-through Programs Community Action Organization - WIA Pilots, Demonstrations, 17.261 WIRED H1 B FUNDS 76,178 and Research Projects

Ohio Board of Regents- Incentive Grants - WIA Section 503 17.267 062976-AB-WIA-2010 2,438 Ohio Department of Education - Incentive Grants - WIA 17.267 062976-LR-S1-93 109 Section 503 17.267 KSU 446629 50,000 Ohio Board of Regents - Incentive Grants - WIA Section 503 Total 52,547 Total Department of Labor 194,502

See Notes to Schedule of Expenditures of Federal Awards. 47 Kent State University Schedule of Expenditures of Federal Awards (Continued) Year Ended June 30, 2011

Catalog of Federal Domestic Assistance Federal Grantor/Program Title Number Pass-through Identifying Number Expenditures

Department of State Pass-through Programs International Research & Exchange Board - Academic 19.408 FY09-ILEP-KENT-01 $219 Exchange Programs - Teachers International Research & Exchange Board - Academic 19.408 FY10 ILEP-KENT-01 156,115 Exchange Programs - Teachers International Research & Exchange Board - Academic 19.408 FY08-ILEP-KENT-01 0 Exchange Programs - Teachers Total Department of State 156,334

Department of Transportation Pass-through Program The University of Akron - University Transportation Centers 20.701 ODOT DTRT06-G-0037 MOD NO. 5 10,106 Program Total Department of Transportation 10,106

Appalachian Regional Commission Direct Program Appalachian Area Development 23.002 85,688 Total Appalachian Regional Commission 85,688

National Endowment for the Arts Pass-through Program Arts Midw est - Promotion of the Arts - Partnership Agreements 45.025 KSU 447036 4,100 Total National Endowment for the Arts 4,100

National Endowment for the Humanities Pass-through Programs Ohio Humanities Council - Promotion of the Humanities - 45.130 OHC #09-122 7,116 Challenge Grants Eastern Illinois University - Promotion of the Humanities - 45.163 10-04 14,810 Professional Development Total National Endowment for the Humanities 21,926

Institute of Museum and Library Services Direct Programs Laura Bush 21st Century Librarian Program 45.313 154,446 Pass-through Program State Library of Ohio - Grants to States 45.310 VIII-10-09 15,218 Total Institute of Museum and Library Services 169,664

National Science Foundation Direct Programs Education and Human Resources 47.076 144,472 Pass-through Programs Missouri State University - Education and Human Resources 47.076 SRP 08050 21,132 Capital University - Education and Human Resources 47.076 NSF-CCLI AWARD #0618252 38 Total 21,170

Total National Science Foundation 165,642

See Notes to Schedule of Expenditures of Federal Awards. 48 Kent State University Schedule of Expenditures of Federal Awards (Continued) Year Ended June 30, 2011

Catalog of Federal Domes tic Assistance Federal Grantor/Program Title Number Pass-through Identifying Number Expenditures

Small Business Administration Pass-through Programs Ohio Department of Development - Small Business 59.037 $200 Development Center PROGRA M INCOME Kent Regional Business Alliance - Small Business 59.037 KSU 445039 FY10 25,982 Development Center Ohio Department of Development - Small Business 59.037 SBDC FY11 45,980 Development Center Ohio Department of Development - Small Business 59.037 ECDD10-210 24,541 Development Center Ohio Department of Development - Small Business 59.037 334 Development Center PROGRA M INCOME Ohio Department of Development - Small Business 59.037 ECDD 11-287 45,894 Development Center Ohio Department of Development - Small Business 59.037 KSU 447049 FY10 74,232 Development Center Ohio Department of Development - Small Business 59.037 FY11 106,658 Development Center Total 323,821

NorTech - FlexMatters Regional Innovation Cluster NONE NOR-SBA-10C0030 2,029

Total Small Business Administration 325,850

Department of Education Direct Programs Rehabilitation Long-Term Training 84.129 H129Q080005 94,033 National Institute for Literacy 84.257 X257S060001 287,039 Special Education - Personnel Development to Improve 84.325 889,504 Services and Results for Children w ith Disabilities Pass-through Programs Ohio Department of Education - Adult Education - Basic 84.002 062976-AB-SL-2010 43,783 Grants to States Ohio Department of Education - Adult Education - Basic 84.002 062976-AB-SL-2009C 8,931 Grants to States Ohio Board of Regents - Adult Education - Basic Grants to 84.002 062976-AB-SL-2011 532,814 States Ohio Department of Education - Adult Education - Basic 84.002 062976-AB-SL-2010C 37,421 Grants to States Total 622,949

Ohio Department of Education - Career and Technical 84.048 VEPD-CB-10-062976 8,606 Education - Basic Grants to States Ohio Department of Education - Career and Technical 84.048 VEPD-CB-11-062976 104,212 Education - Basic Grants to States Total 112,818

Ohio Rehabilitation Services Commission - Rehabilitation 84.235 H235U070024 35,757 Services Demonstration and Training Programs Ohio Department of Education - Tech-Prep Education 84.243 KSU 446754 156,750

World Education - National Institute for Literacy 84.257 X257T060001 117,300 Pennsylvania State University - National Institute for Literacy 84.257 3322-KSU-DOE-0004 30,197

Total 147,497

See Notes to Schedule of Expenditures of Federal Awards. 49 Kent State University Schedule of Expenditures of Federal Awards (Continued) Year Ended June 30, 2011

Catalog of Federal Domestic Assistance Federal Grantor/Program Title Number Pass-through Identifying Number Expenditures

Department of Education (Continued) Pass-through Programs Summit County Educational Service Center - Foreign 84.293 FLAP GRANT $47,091 Language Assistance University of Akron - Special Education-Personnel 84.325 5-32471-KSU 61,385 Development to Improve Services and Results for Children w ith Disabilities (B)

Ohio Department of Education - Mathematics and Science 84.366 C1667-MSP-10-415 5,169 Partnerships Ohio Department of Education - Mathematics and Science 84.366 CI667-MSP-10-415 149,775 Partnerships Total 154,944

Ohio Board of Regents - Improving Teacher Quality State 84.367 08-18 748 Grants (A) Ohio Board of Regents - Improving Teacher Quality State 84.367 09-21 98,413 Grants (A) Ohio Department of Education - Improving Teacher Quality 84.367 062976-OFEA 19,725 State Grants Ohio Department of Development - Improving Teacher Quality 84.367 EDU01-0000006825 19,000 State Grants Ohio Board of Regents - Improving Teacher Quality State 84.367 08-15 4,951 Grants (A) Ohio Board of Regents - Improving Teacher Quality State 84.367 09-20 73,228 Grants (A) Ohio Board of Regents - Improving Teacher Quality State 84.367 09-17 101,278 Grants (A) Miami University - Improving Teacher Quality State Grants (A) 84.367 HERSHBERGER-OBOR-KENT-G 9,085

Ohio Board of Regents - Improving Teacher Quality State 84.367 10-22 2,524 Grants (A) Ohio Board of Regents - Improving Teacher Quality State 84.367 10-18 14,159 Grants (A) Ohio Board of Regents - Improving Teacher Quality State 84.367 10-19 15,032 Grants (A) Total 358,143

National Writing Project Corp - National Writing Project 84.928 97-OH03 19,765 National Writing Project Corp - National Writing Project 84.928 97-OH03 AMEND 17 19,821 National Writing Project Corp - National Writing Project 84.928 97-OH03 AMEND 18 7,000 Total 46,586

Total Department of Education 3,014,496

De par tm e nt of He alth and Hum an Se r vice s Direct Programs Advanced Nursing Education Traineeships 93.358 A10HP18230-01-00 76,129 Health Care and Other Facilities 93.887 138,468

See Notes to Schedule of Expenditures of Federal Awards. 50 Kent State University Schedule of Expenditures of Federal Awards (Continued) Year Ended June 30, 2011

Catalog of Federal Domestic Assistance Federal Grantor/Program Title Number Pass-through Identifying Number Expenditures

Department of Health and Human Services (Continued) Pass-through Programs Tuscaraw as County General Health District - Public Health 93.069 KSU 444503 $29,707 Emergency Preparedness Canton Regional Area Health Education Center - Area Health 93.107 32-C-2 18,686 Education Centers Point of Service Maintenance and Enhancement Aw ards

Center for Research to Practice - Mental Health Research 93.242 KSU 440403 23,374 Grants Center for Research to Practice - Mental Health Research 93.242 1 R01 MH076158 4,084 Grants Total 27,458

Ohio Department of Mental Health - Substance Abuse and 93.243 TSG1-10-013-02-001 26,264 Mental Health Services - Projects of Regional and National Significance Ohio Department of Mental Health - Substance Abuse and 93.243 TSG10-10-017-02 18,000 Mental Health Services - Projects of Regional and National Significance Total 44,264

Ohio Department of Mental Health - Block Grants for 93.958 BG-10-411-02-001 1,263 Community Mental Health Services Ohio Department of Mental Health - Block Grants for 93.958 BG-11-411-02-001 352,769 Community Mental Health Services Total 354,032

Total Department of Health and Human Services 688,744

Corporation for National and Community Service Pass-through Programs Ohio Campus Compact - Learn and Serve America Higher 94.005 KSU 444807 9,000 Education Ohio Campus Compact - Learn and Serve America Higher 94.005 KSU 444808 5,094 Education Total Corporation for National and Community Service 14,094

Social Security Administration Pass-through Program Boston College - Social Security - Research and 96.007 5001251-13 (BC10-S3) 29,603 Demonstration Total Social Security Administration 29,603

Total Other Programs 5,463,778

Total Federal Awards $390,064,263

See Notes to Schedule of Expenditures of Federal Awards. 51 Kent State University Notes to Schedule of Expenditures of Federal Awards Year Ended June 30, 2011

Note 1 - Significant Accounting Policies Basis of Presentation - The accompanying schedule of expenditures of federal awards (the "Schedule") includes the federal grant activity of Kent State University under programs of the federal government for the year ended June 30, 2011. Expenditures reported on the Schedule are reported on the same basis of accounting as the basic financial statements, although the basis for determining when federal awards are expended is presented in accordance with the requirements of OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. In addition, expenditures reported on the Schedule are recognized following the cost principles contained in OMB Circular A-21, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Therefore, some amounts presented in this Schedule may differ from amounts presented in, or used in the preparation of, the basic financial statements. Because the Schedule presents only a selected portion of the operations of Kent State University, it is not intended to and does not present the financial position, changes in net assets, or cash flows, if applicable, of Kent State University. Pass-through entity identifying numbers are presented where available. Subrecipients - Certain funds are passed through to subgrantee organizations by the University. Expenditures incurred by the subgrantees and reimbursed by the University are presented in the schedule. The University is also the subrecipient of federal funds which have been subject to testing and are reported as expenditures and listed separately as pass-through programs. Facilities and Administrative Costs - The University has approved predetermined facilities and administrative cost rates, which are 47.2 percent from July 1, 2010 to June 30, 2014 for on-campus research and instruction and 26 percent from July 1, 2009 to June 30, 2014 for off-campus research. Note 2 - Loans Outstanding The University had the following loan balances outstanding at June 30, 2011: CFDA Amount Cluster/Program Title Number Advances Outstanding Perkins Loan Program 84.038 $ 1,277,076 $ 23,243,604 Nursing Student Loan Program 93.364 273,231 2,088,236

52 Kent State University Notes to Schedule of Expenditures of Federal Awards Year Ended June 30, 2011

Note 3 - Federal Direct Loan Program During the year ended June 30, 2011, the University processed applications for the following loan amounts under the federal direct loan program which includes Stafford Loans, Unsubsidized Stafford Loans, and Parent Plus Loans for undergraduate students. CFDA Number Advances Federal direct loan advances 84.268 $ 242,939,574

53 Kent State University Notes to Schedule of Expenditures of Federal Awards Year Ended June 30, 2011

Note 4 - Subrecipient Awards Of the federal expenditures presented in the schedule, federal awards were provided to subrecipients as follows: Amount Provided to Federal Program Title CFDA Number Subrecipients Air Force Defense Research Sciences Program 12.800 $ 854,770 ARRA - Edward Byrne Memorial Justice Assistance Grant (JAG) Program/Grants to States and Territories 16.803 8,418 Highway Planning and Construction 20.205 12,954 Biological Sciences 47.074 23,382 Social, Behavioral, and Economic Sciences 47.075 13,185 Education and Human Resources 47.076 220,330 ARRA - Trans-NSF Recovery Act Research Support 47.082 271,005 Small Business Development Center 59.037 35,176 Assessment and Watershed Protection Program Grants 66.480 12,161 Office of Science Financial Assistance Program 81.049 212,895 Tech-Prep Education 84.243 29,000 National Institute for Literacy 84.257 181,080 Research in Special Education 84.324 157,628 Special Education - Personnel Development to Improve Services and Results for Children with Disabilities 84.325 72,580 Improving Teacher Quality State Grants (A) 84.367 13,492 Oral Diseases and Disorders Research 93.121 49,021 Injury Prevention and Control Research and State and Community Based Programs 93.136 153,601 Substance Abuse and Mental Health Services - Projects of Regional and National Significance 93.243 6,000 Nursing Research 93.361 49,973 ARRA - Trans-NIH Recovery Act Research Support 93.701 3,101 Heart and Vascular Diseases Research 93.837 634,209 Diabetes, Digestive, and Kidney Diseases Extramural Research 93.847 56,359 Digestive Diseases and Nutrition Research 93.848 23,620 Extramural Research Programs in the Neurosciences and Neurological Disorders 93.853 71,713 Child Health and Human Development Extramural Research 93.865 2,119 Aging Research 93.866 146,979

Total $ 3,314,751

54 Kent State University Notes to Schedule of Expenditures of Federal Awards Year Ended June 30, 2011

Note 5 - Federal Expenditure Reconciliation The following schedule is a reconciliation of total expenditures as shown on the Schedule to the revenue shown as federal grants and contracts on the statement of revenue, expenses, and changes in net assets (the “Statement”), which is included as part of the University’s financial statements: Expenditures per the Schedule $ 390,064,263 Perkins loan funds excluded from federal grants on the Statement (23,243,604) Nursing student loan funds excluded from the federal grants on the Statement (2,088,236) State share of instruction excluded from federal grants on the Statement (20,187,196) Federal Pell Grant funds shown seperately on the Statement (70,489,502) Federal Direct Loans excluded from the federal grants on the Statement (242,939,574) Total $ 31,116,151

Current restricted funds derived from appropriations, gifts, or grants may be used only to meet current expenditures for the purposes specifically identified by sponsoring agencies. The appropriations, gifts, or grants are recognized as revenue in the University’s financial statements as expended. Therefore, expenditures per the Schedule agree with federal grants and contracts revenue on the Statement, except as noted above. Note 6 - Adjustments and Transfers As allowable and in accordance with federal regulations issued by the U.S. Department of Education, The University can transfer Federal Supplemental Education Opportunity Grant (SEOG) Program (84.007) award funds to the Federal Work Study (FWS) Program (84.003). The University transferred $4,080 for the 2010-2011 award year. In addition, the University carried forward $24,080 of the 2010-2011 SEOG award to the 2011-2012 award year. The University spent $118,469 of carried forward SEOG funds from the 2009-2010 award year during the 2010-2011 award year. The University spent $163,470 of carried forward FWS funds from the 2009-2010 award year during the 2010-2011 award year.

55 Kent State University Schedule of Findings and Questioned Costs Year Ended June 30, 2011

Section I - Summary of Auditor's Results Financial Statements Type of auditor's report issued: Unqualified Internal control over financial reporting:  Material weakness(es) identified? Yes X No  Significant deficiency(ies) identified that are not considered to be material weaknesses? Yes X None reported Noncompliance material to financial statements noted? Yes X No Federal Awards Internal control over major programs:  Material weakness(es) identified? Yes X No  Significant deficiency(ies) identified that are not considered to be material weaknesses? X Yes None reported Type of auditor's report issued on compliance for major programs: Unqualified Any audit findings disclosed that are required to be reported in accordance with Section 510(a) of Circular A-133? X Yes No Identification of major programs:

CFDA Numbers Name of Federal Program or Cluster 84.007, 84.033, 84.038, 84.063, 84.116, 84.375, 84.376, 84.379, 93.364 Student Financial Aid Cluster 84.394 State Fiscal Stabilization Fund Cluster

Dollar threshold used to distinguish between type A and type B programs: $1,299,888 Auditee qualified as low-risk auditee? X Yes No

56 Kent State University Schedule of Findings and Questioned Costs (Continued) Year Ended June 30, 2011

Section II - Financial Statement Audit Findings None

57 Kent State University Schedule of Findings and Questioned Costs (Continued) Year Ended June 30, 2011

Section III - Federal Program Audit Findings Reference Number Finding 2011-1 Program Name - Student Financial Aid Cluster - CFDA # 84.007, 84.033, 84.038, 84.063, 84.116, 84.375, 84.376, 84.379, 93.364 Pass-through Entity - N/A Finding Type - Significant deficiency Criteria - The University has 45 days from the date the University determines a student’s withdrawal date to calculate a return of Title IV funds for the student and return the funds. Withdrawal dates are defined as the time when the student officially withdraws or expresses notification to withdraw or, if the student does not officially withdraw, the date that the University determines the student is no longer in attendance (34 CFR Section 668.173(b)). Condition - Of the 40 students selected for return to Title IV testing, the University used the correct withdrawal date for all samples selected and reviewed. However, The University used the incorrect date of one student in the original calculation when determining the percentage of Title IV aid earned. During the University's normal review process, the error in the percentage calculation of Title IV aid earned was found. The original calculated amount (based on the correct official withdrawal date) of funds to return was returned within the 45 day deadline; however, the additional returned Title IV funds (based on the corrected calculation) was not returned within 45 days of official withdrawal, as required. Questioned Costs - None Context - Out of the sample of 40 students, one student's return resulted in a return of additional funds outside the 45 day deadline. A total of approximately 2,142 returns were prepared during the school year. Cause and Effect - The University performs the original return to Title IV calculations and returns funds within the 45 day window. In addition, the University reviews 100 percent of its Title IV calculations for accuracy and compliance. As a result of its 100 percent review, the University found the error identified in the noncompliance instance and made the necessary correction by returning additional funds to the Federal Aid program. However, the additional return of funds back to the Federal Aid program was done after the 45 day deadline to return funds had passed. Therefore, the additional funds that were returned as a result of the review were not in compliance with the 45 day requirement. Recommendation - The University should change its procedures to ensure the review process always occurs before the the 45-day deadline.

58 Kent State University Schedule of Findings and Questioned Costs (Continued) Year Ended June 30, 2011

Section III - Federal Program Audit Findings (Continued)

Reference Number Finding 2011-1 Views of Responsible Officials and Planned Corrective Actions - The University will change the review process to ensure that a review performed on a completed R2T4 (return to Title IV) calculation will be done before the 45 day deadline.

59 Kent State University National Collegiate Athletics Association

Agreed-upon Procedures Report June 30, 2011

Independent Accountant’s Report on the Application of Agreed-upon Procedures

Dr. Lester A. Lefton President Kent State University Kent, OH 44242

We have performed the procedures enumerated below, which were agreed to by Kent State University (the “University”), solely to assist you in evaluating whether the accompanying Intercollegiate Athletics Program statement of revenue and expenditures of Kent State University is in compliance with the National Collegiate Athletics Association (NCAA), Constitution 3.2.4.16 for the year ended June 30, 2011. Kent State University’s management is responsible for the statement of revenue and expenditures (the “statement”) and the statement’s compliance with those requirements. This agreed-upon procedures engagement was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants and National Collegiate Athletic Association Financial Audit Guidelines. The sufficiency of these procedures is solely the responsibility of those parties specified in this report. Consequently, we make no representation regarding the sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other purpose.

Agreed-upon Procedures Related to the Statement of Revenue and Expenditures

The procedures that we performed and our results are as follows:

Internal Control Structure

A. In preparation for our procedures related to the University’s internal control structure, we met with the director of intercollegiate athletics and inquired about the general control environment over intercollegiate athletic finances, the level of control consciousness in the University, the competence of personnel, and the protection of records and equipment; we obtained and inspected the draft audited financial statements for the year ended June 30, 2011 and any additional reports regarding internal controls and any corrective action taken in response to comments concerning the internal control structure; we obtained and inspected any documentation of the accounting systems and procedures unique to the intercollegiate athletics department; and we then performed the following procedures relating to accounting systems and procedures unique to the intercollegiate athletics departments or that were not addressed in connection with the audit of the University’s financial statements. The following procedures were performed:

1 Dr. Lester A. Lefton President Kent State University

1) Procedure - We selected three games and tested the ticket collection receipting process by comparing the total receipts for such games to the reconciliation and documenting the related cash deposit amount with the bank.

Result - We concluded that the internal control structure was the same as the University’s internal control structure for the cash disbursement, cash receipt, and employee pay processes. Therefore, the only procedure listed that is unique to intercollegiate athletics is the ticket collection receipt process. We selected one football game, one men’s basketball game, and one women’s basketball game during the year and agreed the gate sales for such events, as documented by the University’s ticket reconciliation procedures, to deposit slips of the related cash deposit amount with the bank. The reconciliations agreed to actual ticket sales per the Ticketmaster report and to the revenue reported on the statement of revenue and expenditures. We noted no exceptions.

Capital Expenditure Survey and Related Debt

B. In preparation for our procedures related to the capital expenditure survey, we obtained the capital expenditure survey for the reporting period, prepared by management; we obtained the University’s policies and procedures for acquiring, approving, depreciating, and disposing of intercollegiate athletics-related assets; and we obtained repayment schedules for all outstanding intercollegiate athletics debt maintained by the University during the reporting period. We then performed the following procedures:

1) Procedure - We agreed the data provided on the capital expenditure survey to the University’s general ledger and disclosed additions, deletions, and book values in the report.

Result - No exceptions were noted. See Note 1 for additions, deletions, and book values.

2) Procedure - We recalculated the annual maturities (consisting of principal and interest) provided in the obtained schedules. We then agreed the total annual maturities to supporting documentation and the University’s general ledger, as applicable and disclosed in the report.

Result - Per inquiry with management, there is no debt related to intercollegiate athletics. Outstanding debt of the University was agreed to the maturity schedule obtained from management and to the audited financial statements. We noted no exceptions.

2 Dr. Lester A. Lefton President Kent State University

Intercollegiate Athletics Restricted and Endowment and Plant Funds

C. Procedure - We obtained a summary of significant additions exceeding 10 percent and $50,000 of restricted funds related to intercollegiate athletics, as well as significant changes exceeding 10 percent and $50,000 of endowment and plant funds related to intercollegiate athletics, prepared by management. We disclosed the significant additions in the report.

Result - See Note 3 for these significant additions and changes.

Statement of Revenue and Expenditures

D. Procedure - We obtained the Intercollegiate Athletics Program statement of revenue and expenditures for the reporting period, prepared by management, and agreed all amounts back to the University’s general ledger. We also agreed the current year amounts to prior year amounts and to current year budgeted amounts, noting reasons for variances exceeding 10 percent and $50,000.

Result - No exceptions were noted upon performing the above procedures. Explanations for variances in excess of 10 percent and $50,000 can be found in appendix A. Explanations for variances in excess of 10 percent and $50,000 can be found in appendix B.

Revenue

E. Revenue Procedures - We agreed each revenue category reported in the statement during the reporting period to supporting schedules provided by the University. We performed the following procedures for the indicated revenue category:

1) Ticket Sales

Procedure - We agreed tickets sold during the reporting period, complimentary tickets provided during the reporting period, and unsold tickets to the related revenue reported by the University in the statement and related attendance figures and recalculated totals. We agreed a sample of three revenue receipts obtained from the above revenue supporting schedules to supporting documentation.

Result - We completed the procedure steps without exception, including agreeing tickets sold per the summary report totals to the revenue reported on the statement of revenue and expenditures and agreeing revenue receipts for the sample of three games to bank deposit slips.

3 Dr. Lester A. Lefton President Kent State University

2) Student Fees

Procedure - We agreed student fees reported by the University in the statement for the reporting to student enrollments during the same reporting period. We obtained and documented the University’s methodology for allocating student fees to intercollegiate athletics programs and recalculated totals.

Result - We agreed the student fees revenue to the University’s allocation calculation, without exception. We obtained the calculation and noted it was consistently applied compared to the prior year.

3) Guarantees

Procedure - We selected a sample of three contractual agreements pertaining to revenue derived from guaranteed contests during the reporting period and agreed each selection to the University’s general ledger and/or the statement, and recalculated totals. We agreed a sample of three revenue receipts obtained from the above revenue supporting schedules to supporting documentation.

Result - We completed the procedure steps without exception, including agreeing the sample of three contractual agreements to deposit slips and copies of checks received.

4) Contributions

Procedure - We obtained supporting documentation for each contribution of monies, goods, or services received directly by an intercollegiate athletics program for any affiliated or outside organization, agency, or group of individuals that constitutes more than 10 percent of all contributions received for intercollegiate athletics during the reporting periods. We disclosed the source and dollar value of these contributions in the report. We agreed a sample of three revenue receipts obtained from the above revenue supporting schedules to supporting documentation.

Result - We obtained copies of checks and the related gift form for each contribution over the threshold listed above and agreed to the amount recorded in the GL, without exception (see Note 3).

5) NCAA/Conference Distributions Including All Tournament Revenue

Procedure - We obtained and inspected a sample of three agreements related to the University’s participation in revenue from tournaments during the reporting period. We agreed the related revenue to the University’s general ledger and/or the statement, and recalculated totals. We agreed a sample of three revenue receipts obtained from the above revenue supporting schedules to supporting documentation.

Result - We completed the procedure steps without exception, including agreeing the sample of three revenue receipts to bank deposit slips.

4 Dr. Lester A. Lefton President Kent State University

Expenditures

F. Expenditure Procedures - We compared each expenditure category reported in the statement during the reporting period to supporting schedules provided by the University. We performed the following procedures for the indicated expenditure category:

1) Athletic Student Aid

Procedure - We selected a sample of 30 student athletes from the listing of University student aid recipients during the reporting period. We obtained individual student- account detail for each selection and agreed total aid allocated from the related aid award letter to the student’s account and recalculated totals. We agreed a sample of 30 expenses obtained from the above expense supporting schedules to supporting documentation.

Result - For the sample of 30 students selected, each student’s account detail agreed to the student’s award letter and was recalculated except for the book voucher, which is offered but not disbursed to the student’s account. We agreed a sample of 30 expenses and agreed expense amount to the offered and accepted award summary by student. No exceptions were noted.

2) Guarantees

Procedure - We obtained and inspected three contractual agreements pertaining to expenses recorded by the University from guaranteed contests during the reporting period. We agreed related amounts expensed by the University during the reporting period to the University’s general ledger and/or the statement and recalculated totals. We agreed a sample of three expenses obtained from the above expense supporting schedules to supporting documentation.

Result - We agreed the sample of three contractual agreements to copies of checks paid out, without exception.

3) Coaching Salaries, Benefits, and Bonuses Paid by the University and Related Entities

Procedure - We obtained and inspected a listing of coaches employed by the University and related entities during the reporting period. We selected a sample of five coaches’ contracts, which included football and men’s and women’s basketball, from the above listing. We agreed the financial terms and conditions of each selection to the related coaching salaries, benefits, and bonuses recorded by the University and related entities in the statement during the reporting period. We obtained and inspected W-2s or 1099s for each selection. We agreed related W-2s or 1099s to the related coaching salaries, benefits, and bonuses paid by the University and related entities expense recorded by the University in the statement during the reporting period, and recalculated totals. We agreed a sample of five expenses obtained from the above expense supporting schedules to supporting documentation. 5 Dr. Lester A. Lefton President Kent State University

Result - We agreed a sample of five expenses to the coach’s contract, W-2, and payroll personal action forms. There were no 1099s issued to the coaches by the University for the sample selected.

Affiliated and Outside Organizations

G. Procedure - We inquired of management as to whether they have identified any affiliated and outside organizations that meet any of the following criteria:

1) Booster organizations established by or on behalf of an intercollegiate athletics program

2) Independent or affiliated foundations or other organizations that have as a principal purpose, generating or maintaining of grants-in-aid or scholarships funds, gifts, endowments or other monies, goods, or services to be used entirely or in part by the intercollegiate athletics program

3) Alumni organizations that have as one of its principal purposes the generating of monies, goods, or services for or on behalf of an intercollegiate athletics program and that contribute monies, goods, or services directly to an intercollegiate athletics program, booster group, or independent or affiliated foundation as previously noted

We obtained documentation of the University’s practices and procedures for monitoring the internal controls in place and financial activities of these organizations. We inquired of management regarding the procedures for gathering information on the nature and extent of affiliated and outside organization activity for or on behalf of the University’s Intercollegiate Athletics Program.

We noted there were no audited financial statements for any affiliated or outside organization.

Result - We inquired and obtained documentation for the University’s practices and procedures for monitoring affiliated and outside organizations, which include the Blue and Gold Fund, the Varsity “K” Club, and the National Athletic Development Council. We agreed each organization’s activity for the reporting period to the general ledger of the University. No exceptions were noted.

We were not engaged to and did not conduct an examination, the objective of which would be the expression of an opinion on the accompanying Intercollegiate Athletics Program statement of revenue and expenditures. Accordingly, we do not express such an opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you.

6 Dr. Lester A. Lefton President Kent State University

This report is intended solely for the information and use of Kent State University management and the National Collegiate Athletics Association and is not intended to be and should not be used by anyone other than these specified parties.

October 10, 2011

7 Kent State University National Collegiate Athletics Association Report Intercollegiate Athletics Program Statement of Revenue and Expenditures Year Ended June 30, 2011

Men's Women's Nonprogram Football Basketball Basketball Other Sports Specific Total

Operating Revenue Ticket sales $ 426,468 $ 161,366 $ 10,594 $ 26,681 $ (3,528) $ 621,581 Student fees - - - - 12,151,130 12,151,130 Guarantees 725,000 80,000 - 17,050 - 822,050 Contributions 194,109 30,429 12,007 175,386 23,406 435,337 Facility rentals and memberships - - - - 110,058 110,058 Sponsorship sales - - - - 302,226 302,226 NCAA/Conference distributions - Including - - - - 1,147,776 1,147,776 all tournament revenue Royalties, adv., sponsorships - - - - 122,097 122,097 Sports camp revenue - - - - 63,929 63,929 Other - - - 28,300 111,677 139,977

Total operating revenue 1,345,577 271,795 22,601 247,417 14,028,771 15,916,161

Operating Expenditures Athletic student aid (1,873,009) (341,340) (299,354) (2,631,688) (142,405) (5,287,796) Personnel services (1,122,012) (523,851) (414,429) (1,506,694) (2,615,449) (6,182,435) Staff benefits (316,709) (114,847) (33,319) (496,753) (1,172,571) (2,134,199) Recruiting (75,953) (61,770) (46,450) (100,194) (672) (285,039) Team travel (326,732) (205,331) (82,542) (707,482) (484,011) (1,806,098) Equipment, uniforms, and supplies (297,215) (64,462) (28,606) (245,162) (895,139) (1,530,584) Printing and postage (35,372) (6,438) (2,388) (20,521) (113,479) (178,198) Direct facilities, maintenance, and rental (57,732) (9,367) (7,373) (57,501) (1,129,107) (1,261,080) Other operating expenses (675,774) (275,024) (44,891) (132,148) (963,479) (2,091,316)

Total operating expenditures (4,780,508) (1,602,430) (959,352) (5,898,143) (7,516,312) (20,756,745)

Excess of Revenue (Under) Over Expenditures $ (3,434,931) $ (1,330,635) $ (936,751) $ (5,650,726) $ 6,512,459 $ (4,840,584)

See Notes to Intercollegiate Athletics Program 8 Statement of Revenue and Expenditures. Kent State University National Collegiate Athletics Association Report Notes to Intercollegiate Athletics Program Statement of Revenue and Expenditures Year Ended June 30, 2011

Note 1 - Intercollegiate Athletics-related Assets

Property and equipment are recorded at cost or, if donated, the fair value at the time of donation. Expenditures for maintenance and repairs are charged to current expenditures as incurred. Depreciation is computed using the straight-line method. No depreciation is recorded on land. Expenditures for major renewals and betterments that extend the useful lives of the assets are capitalized. Estimated service lives range from 3 to 40 years depending on class.

The current year capitalized additions and deletions to facilities during the year ended June 30, 2011 are as follows:

Current Year Current Year Additions Deletions Football athletics facilities $ - $ -

Other University facilities$ 44,636,433 $ 480,000

The total estimated book values of property, plant, and equipment, net of depreciation, of the University as of the year ended June 30, 2011 are as follows:

Estimated Book Value

Athletically related property, plant, and equipment balance $ 16,654,992

University's total property, plant, and equipment balances $ 586,986,436

9 Kent State University National Collegiate Athletics Association Report Notes to Intercollegiate Athletics Program Statement of Revenue and Expenditures Year Ended June 30, 2011

Note 2 - Intercollegiate Athletics-related Debt

The annual debt service and debt outstanding for the University as of the year ended June 30, 2011 are as follows:

Annual Debt Debt Service Outstanding

Athletically related facilities $ - $ -

University's total $ 17,329,424 $ 292,324,605

Note 3 - Restrictive and Endowment Athletic Funds

The University has several restrictive and endowment athletic funds held for the benefit of the athletics program. For the year ended June 30, 2011, the following funds have grown over 10 percent and $50,000 due to new contributions and earnings during the year:

Value at Restrictive Fund Source of Funds Contribution June 30, 2011

Schoonover Baseball Stadium Project Schoonover Foundation $ 225,000 $ 135 Football Enhancement Fund Mr. David J. Bronczek 99,242 60,366

Value at Endowment Fund Source of Funds Contribution June 30, 2011

Bruno Santone Wrestling Bruno Gregory Santone Scholarship Administrative Trust $ 196,331 $ 1,136,600 William Drypolcher Wrestling Endowment Schwab Charitable Fund 225,000 219,595

10 Kent State University National Collegiate Athletics Association Report Appendix A Intercollegiate Athletics Program Significant Variations and Explanations - Actual Versus Actual ear Ended June 30, 2011 2010-2011 2009 -2010 Total Total $ Change % Change Explanation Provided by Intercollegiate Athletics Senior Fiscal Manager Revenue Student fees $ 12,151,130 $ 10,516,660 $ 1,634,470 16% The variance is the result of an increase in both enrollment and fees charged to students in 2011.

Guarantees 822,050 675,325 146,725 22% The variance is due to a $225,000 increase in football for better paying guarantee games in 2011 and an $80,000 decrease in men's basketball due to the fact that men's basketball was paid more to play in nonconference games in 2010. Sponsorship sales 302,226 383,279 (81,053) (21%) The variance is a result of there being less money spent to buy football tickets to meet NCAA attendance requirements in 2011 than in 2010. Football ticket sales in 2010 were around 46,000 and in 2011, football ticket sales increased to over 90,000. These dollars are used to purchase those tickets. NCAA reimbursement 121,928 38,640 83,288 216% The variance is due to NCAA increasing its funding in 2011 from 2010. The amount NCAA reimburses universities is dependent upon team travel to NCAA championships, which is determined by the number of teams that advance in competition beyond the regular season. Men's basketball saw an increase of $63,396 in travel expenses due to increases in regular travel and air travel costs. Other 117,717 186,154 (68,437) (37%) The variance is related mainly to three events. First, activity related to football pre-games, tailgating activity, is included in this classification. The revenue related to this is dependent on attendance and what the University is selling. There was a decrease in revenue of approximately $8,000 in 2011. Also, the golf training center offered a class in 2010 that was highly attended and brought in $18,000 of revenue that was included in this account. In 2011, the golf training class only brought in $9,200 of revenue. Finally, revenue of $45,000 from the Coco-Cola advertising campaign was recorded in this account in 2010, which was the last year for this contract.

Expenditures Salaries and wages 6,182,435 5,551,965 630,470 11% This variance is due to numerous increases in salaries and wages and employee benefits. There was a $150,605 increase in salaries and wages resulting from hiring a new athletic director and associate AD. Benefits also increased by $132,416 due to new staff and the University having to pay the retired AD unused sick time. Football salaries increased by $299,771 due to hiring new coaching staff and having to pay the old coaching staff 90 days of severance pay. There was also an increase to staff benefits of $68,430, which is associated with the increased salaries of the new football coaching staff. There was a decrease in salaries and wages relating to men's basketball as the new head basketball coach is being paid less than the former head coach and men's basketball was without an operations position for a couple months during 2011. Staff benefits for women's basketball decreased by $85,831 due to there being a vacation accrual and other benefits pool adjustment booked for $135,919 in 2011. Travel 1,806,098 1,563,526 242,572 16% The variance is a result of increased travel by the newly hired AD of $68,340 to raise new funds for the University, as well as the increased travel that the men's basketball team incurred of $63,396. Also in 2011, the entertainment expenses, which totaled $114,573, were included in the travel expenses instead of entertainment expenses. Entertainment - 91,185 (91,185) (100%) The variance is a result of all of the entertainment expenses for 2011, which total $114,573, being included in travel expenses. 11 Kent State University National Collegiate Athletics Association Report Appendix B Intercollegiate Athletics Program Significant Variations and Explanations - Budget Versus Actual Year Ended June 30, 2011

2010-2011 2010-2011

Budget Actual $ Change % Change Explanation Revenue Ticket sales $ 307,600 $ 621,581 $ 313,981 51% The variance is due to an increase in football ticket sales in 2011. Over 90,000 tickets were bought, which is a significant increase from 2010. NCAA revenue distribution 890,205 1,025,848 135,643 13% The variance is caused by an increase in NCAA revenue. NCAA revenue increases are controlled by the NCAA and will fluctuate from year to year. Sponsorship sales 367,450 302,225 (65,225) (22%) The variance is due to the use of sales revenue to cover tickets sold to meet NCAA attendance requirements. This revenue is recorded in ticket sales revenue for 2011. NCAA reimbursement - 121,928 121,928 100% The variance is due to the fact that there was no original budget for NCAA reimbursement because the amount is based on team travel to NCAA championships, which is not easily predicted. Foundation gift transfers 525,000 435,337 (89,663) (21%) The variance is due to less amounts being received by donors than anticipated.

Expenditures Travel 1,570,369 1,806,098 235,729 13% The variance is the result of an unanticipated increase in the amount of travel that the new athletic director would have related to soliciting donations. Also, the men's basketball team participated in the NCAA tournament, for which there is no expense budgeted. Recruiting 390,376 285,038 (105,338) (37%) The variance due to lower expenses than expected for most sports teams and other operations.

Student athletic aid 4,666,887 5,287,796 620,909 12% The variance is due to an error in the budget. The budgeted amount should have been higher based on 2010 expenses. Printing and postage 239,570 178,198 (61,372) (34%) This variance is due to intercollegiate athletics no longer printing media guides for each sport.

12

Board of Trustees Kent State University 103 Michael Schwartz Center P.O. Box 5190 Kent, Ohio 44242

We have reviewed the Independent Auditor’s Report of the Kent State University, Portage County, prepared by Plante & Moran, PLLC, for the audit period July 1, 2010 through June 30, 2011. Based upon this review, we have accepted these reports in lieu of the audit required by Section 117.11, Revised Code. The Auditor of State did not audit the accompanying financial statements and, accordingly, we are unable to express, and do not express an opinion on them.

Our review was made in reference to the applicable sections of legislative criteria, as reflected by the Ohio Constitution, and the Revised Code, policies, procedures and guidelines of the Auditor of State, regulations and grant requirements. The Kent State University is responsible for compliance with these laws and regulations.

Dave Yost Auditor of State

April 18, 2012

88 East Broad Street, Fifth Floor, Columbus, Ohio 43215‐3506 Phone: 614‐466‐4514 or 800‐282‐0370 Fax: 614‐466‐4490 www. auditor.state.oh.us

(This Page Intentionally Left Blank) APPENDIX C

Definitions of Certain Terms of the Agreement

The following terms are used in the documents and have the meanings given below unless the context clearly requires otherwise. “Accreted Amount” means, as of any date, the amount or portion of the amount payable on Bonds at maturity that is accrued to or payable on the particular date in accordance with the applicable Bond Proceedings and that is in excess of the Aggregate Outstanding Principal Amount described in clauses (i), (ii) and (iii) of the definition of that term. Accreted Amount does not include interest payable on the Outstanding principal amount of a Bond, except for interest on a Bond that is payable only at that Bond’s principal maturity. “Act” means Sections 3345.11 and 3345.12 of the Revised Code, and Sections 9.98 through 9.983 of the Revised Code made applicable by Section 3345.12(B) of the Revised Code, as the same may be amended, modified, revised, supplemented, or superseded from time to time, provided that no further action by the General Assembly shall alter the obligation of the University to pay the Bond Service Charges in the amount and manner, at the times, and from the sources provided in the Trust Agreement and the applicable Supplemental Trust Agreement, except as otherwise permitted therein. “Additional Bonds” means additional Bonds issued pursuant to the Trust Agreement. “Aggregate Outstanding Principal Amount” means, with respect to Bonds Outstanding as of any date: (i) With respect to any Outstanding Bonds on which no interest is payable, the aggregate discounted offering price at which the Bonds are initially sold to the public, disregarding any purchase price discount to the Original Purchaser; (ii) With respect to any Outstanding Bonds on which no interest is payable prior to principal maturity, their aggregate face amount; (iii) With respect to any Outstanding Bonds involving other compound Accreted Amounts or accreted values, the Aggregate Outstanding Principal Amount of those Bonds as defined in and calculated in accordance with the Bond Proceedings authorizing them or, if no such definition or provision for that calculation is so provided, then in accordance with generally accepted accounting principles; and (iv) With respect to any other Outstanding Bonds, their aggregate face amount. “Assumed Amortization Period” means the period of time specified in paragraph (a) or paragraph (b) below, as selected by the Fiscal Officer: (a) Five (5) years; or (b) The period of time exceeding five (5) years, set forth in a written opinion delivered to the University of a nationally recognized firm of investment bankers or financial advisors, selected by the University and experienced in the underwriting of indebtedness of the character of the Bonds, as being not longer than the maximum period of time over which indebtedness having comparable terms and security issued or incurred

C-1 by similar issuers of comparable credit standing would, if then being offered, be marketable on reasonable and customary terms. “Assumed Interest Rate” means the rate per annum specified in paragraph (a) or paragraph (b) below, as selected by the Fiscal Officer: (a) the rate shown in the 30-year Revenue Bond Index as published in The Bond Buyer as of a recent date not later than seven days preceding the date the determination of the Assumed Interest Rate is being made (or, if the Revenue Bond Index is no longer published, then the rate shown in another nationally recognized index of long term fixed rate bonds of state and local governments selected by the University); or (b) the rate per annum (determined as of a recent date not later than seven days prior to the date on which the determination of Assumed Interest Rate is being made) set forth in a written opinion delivered to the University of a nationally recognized firm of investment bankers or financial advisors, selected by the University and experienced in the underwriting of indebtedness of the character of the Bonds, as being not lower than the lowest rate of interest at which indebtedness having comparable terms, security and federal income tax status amortized on a level debt service basis over a period of time equal to the Assumed Amortization Period, and issued or incurred by similar issuers of comparable credit standing would, if then being offered, be marketable on reasonable and customary terms. “Authenticating Agent” means the Trustee and any other bank, trust company or other person designated as an Authenticating Agent for a series of Bonds by or in accordance with the Bond Proceedings, each of which must be a transfer agent registered in accordance with Section 17A(c) of the Securities Exchange Act of 1934 as amended. “Authorized Officer” means any officer or employee of the University authorized by or pursuant to the Act or the Bond Proceedings to perform the particular act or sign the particular document, and if there is no specific authorization means the President or the Fiscal Officer. “Board of Trustees” means the Board of Trustees of the University. “Bond Proceedings” means the Trust Agreement, the applicable Bond Legislation, Supplemental Trust Agreement, and any Credit Support Instruments for the series of Bonds, and any amendments of and supplements to or any combination of them, authorizing or providing for the terms and conditions and agreements applicable to, or providing for the security for, liquidity or sale of, or the terms contained in, the applicable Bonds. “Bond Redemption and Purchase Account” means the account, so designated, in the Bond Service Fund further described in Article V of the Trust Agreement. “Bond Reserve Requirement” or “Required Reserve” means as to any series of Bonds (as of the date of any calculation), an amount that is at least equal to the amount of Bond Service Charges as required by the Bond Proceedings applicable to that series. The Bond Reserve Requirement for any series of Bonds may be provided for by deposit of moneys or Eligible Investments or by Credit Support Instrument or by any combination of the foregoing. “Bond Service Charges” means the principal (as payable at stated maturity, or by acceleration or otherwise), Accreted Amount, interest and any redemption premium required to be paid by the University on the Bonds, and includes any Mandatory Sinking Fund Requirements. In determining Bond Service Charges for a Fiscal Year or any other period, Mandatory Sinking Fund Requirements for that Fiscal Year or period must be taken into account, and principal maturities or

C-2 interest or Accreted Amount payments for which Mandatory Sinking Fund Requirements are imposed and complied with in a prior Fiscal Year or period, to that extent, will be excluded. “Bond Service Fund” means the Bond Service Fund as further described in Article V of the Trust Agreement. “Bond Service Reserve Account” means the account so designated in the Bond Service Fund further described in Article V of the Trust Agreement and which may or may not be funded as to any series of Bonds as provided in the applicable Supplemental Trust Agreement. “Bonds” means all series of Bonds issued and secured under the Trust Agreement. “Business Day” means any day, other than a Saturday or Sunday, and other than a day on which the Trustee or a Paying Agent (other than the Trustee), as applicable, is required, or authorized or not prohibited, by law (including without limitation, executive orders) to close and is closed. “Costs of Facilities” means “costs of facilities” as defined in Revised Code Section 3345.12, being costs related to University Facilities including costs of issuance and other financing costs (as defined in Revised Code Section 133.01), for the payment of which Bonds may be issued under the Act. “Credit Support Instrument” means a policy of bond insurance, a surety, a letter of credit, a standby bond purchase agreement or other credit enhancement, support or liquidity device provided pursuant to an agreement to which the University is a party and which is used to enhance the security or liquidity of any Bonds or to provide, in whole or in part, any Bond Reserve Requirement. “Credit Support Provider” means any provider of a Credit Support Instrument relating to provision of all or part of any Bond Reserve Requirement, or relating to any series of Bonds so long as that Credit Support Instrument is in effect. “Direct Obligations” means direct obligations of the United States of America (including obligations issued or held in book-entry form on the books of the U.S. Department of the Treasury), or obligations of any agency, corporation or public body that is controlled or supervised by and acting as an instrumentality of the United States of America, the timely payment of the principal of and interest on which is fully guaranteed by the United States of America, provided that the full faith and credit of the United States of America is pledged to any such direct obligations or guarantee. “Eligible Investments” means, unless otherwise provided in a Supplemental Trust Agreement, any of the following: (a) Direct Obligations, including certificates that evidence ownership of the right to receive future payments of principal of and interest on such obligations or specified portions thereof, including portions consisting solely of the principal thereof or solely of the interest thereon, provided that with respect to an investment in any such certificates: a bank or trust company acts as custodian and holds the underlying obligations; the University or the Trustee has the right to proceed directly and individually against the obligor of the underlying obligations; and the underlying obligations are held in a special account separate from the custodian’s general assets, and are not available to satisfy any claim of the custodian, any person claiming through the custodian or any person to whom the custodian may be obligated.

C-3 (b) Certificates of deposit, demand deposits or time deposits of any state bank or trust company or national banking association (including the Trustee or any affiliate of the Trustee) that is a member of the Federal Deposit Insurance Corporation (including any successor to the FDIC), including any investment in pools of those certificates of deposit, demand deposits or time deposits owned by the bank, trust company or national banking association, provided that any such certificate of deposit, demand deposit or time deposit is: (i) Continuously and fully insured by the FDIC, or (ii) To the extent not insured by the FDIC, fully secured by Direct Obligations that have a market value at all times at least equal to the uninsured principal amount of the deposit, that are held by the Trustee (except in case of a certificate of deposit, demand deposit or time deposit of the Trustee) or any Federal Reserve Bank or depository of the United States of America, as custodian for the institution issuing the deposit, together with the undertaking of such institution, in form satisfactory to the Trustee, that the aggregate market value of the obligations securing the deposit at all times will be maintained in an amount meeting the requirements of this subparagraph (ii), and in which the Trustee has a prior perfected first lien and which are not subject to any third-party claims; (c) Repurchase agreements collateralized by Direct Obligations with any registered broker/dealer under the jurisdiction of the Securities Investors’ Protection Corporation (including any successor to the SIPC) or any state bank or trust company or national banking association (including the Trustee) if such broker/dealer, bank or trust company has unsecured, uninsured and unguaranteed commercial paper rated in its highest rating category or unsecured, uninsured and unguaranteed long-term obligations rated in its third highest or higher rating category by a Rating Service, or each Rating Service that maintains a rating on such obligations, if the obligations are rated by more than one Rating Service, provided that: (i) A master repurchase agreement or specific written repurchase agreement governs the transaction, (ii) The Direct Obligations are held by the Trustee or an independent third party acting solely as agent for the Trustee free and clear of any lien, and the third party is a Federal Reserve Bank, or a bank that is a member of the FDIC and that has combined capital, surplus and undivided profits of not less than $50,000,000, and the Trustee must have received written confirmation from the third party that it holds such securities, free of any lien, and as agent for the Trustee, (iii) A perfected first security interest in the Direct Obligations under the Uniform Commercial Code or book entry procedures prescribed by federal regulations, is created for the benefit of the Trustee (as demonstrated by an opinion of counsel upon which the Trustee may rely as to perfection and priority), (iv) The repurchase agreement has a term of 30 days or less, or the Trustee will value the collateral securities no less frequently than monthly and will liquidate the collateral Direct Obligations if any deficiency in the required collateral percentage is not restored within two Business Days of such valuation,

C-4 (v) If an investment of the Bond Service Fund the proceeds of which are needed to pay Bond Service Charges, the repurchase agreement matures prior to a date on which Bond Service Charges are due and payable, and (vi) The fair market value of the Direct Obligations in relation to the amount of the repurchase obligation, including principal and interest, is equal to at least 100%; (d) General obligations of any state of the United States of America or any political subdivision of any state for the payment of which the full faith and credit of the state or political subdivision is pledged, provided that such obligations are rated in one of the three highest rating categories by a Rating Service, or by each Rating Service that maintains a rating on such obligations if the obligations are rated by more than one Rating Service; (e) An investment in a money-market fund or other pooling arrangement (including those for which the Trustee or any of its affiliates provide services for a fee, whether as an investment advisor, custodian, transfer agent, registrar, sponsor, distributor, manager or otherwise) or similar investment accounts which invest solely in Eligible Investments specified in clauses (a) and (c) above and are rated, at the time of purchase, in one of the four highest rating categories by a Rating Service; (f) Investments in the State Treasurer’s pooled investment program under Section 135.45 of the Revised Code; provided (i) that any of the foregoing investments or deposits is not prohibited by law and (ii) that any investment or deposit is in compliance with or not in violation of the Code. In determining whether the rating assigned by a Rating Service to an investment complies with the rating categories provided in this definition of Eligible Investments, the rating category must be determined at the time of investment without regard to any numerical or “+” or “-” modifier, unless otherwise expressly provided above. “Event of Default” means any of the Events of Default described in Section 7.01 of the Trust Agreement. “Fiscal Officer” means such officer of the University as may be, or be designated by the Board of Trustees as, the chief financial officer of the University, as shown in a written certification maintained by the University on file with the Trustee, signed by the President or an officer of the Board of Trustees and currently identifying the Fiscal Officer, and will also mean any officer of the University identified in that certificate as an alternate to that officer. “Fiscal Year” means a period of 12 consecutive months commencing on the first day of July of any year and ending on the last day of June of the following year, or, as to be evidenced for purposes of the Bond Proceedings by a certificate of an Authorized Officer filed with the Trustee, such other consecutive 12-month period as may hereafter be established as the University’s fiscal year. “General Receipts” means all moneys received by the University including but not limited to all gross fees, deposits, charges, receipts and income from all or any part of the students of the University, whether designated as tuition, instructional fees, tuition surcharges, general fees, activity fees, health fees or other special purpose fees or otherwise designated; all gross income, revenues and receipts from the operation, ownership, or control of University Facilities; all grants, gifts, donations and pledges and receipts therefrom; and the proceeds of the sale of obligations, including

C-5 proceeds of obligations issued to refund obligations previously issued, to the extent and as allocated to the Bond Service Charges under the proceedings authorizing those obligations. However, there will be excluded from General Receipts all of the following: (a) Moneys raised by taxation and state appropriations, until and unless the pledge thereof to the payment of Bond Service Charges is authorized by law and is made by a Supplemental Trust Agreement. (b) Any grants, gifts, donations and pledges, and receipts therefrom, which under restrictions imposed in the grant or promise or as a condition of receipt are not available for payment of Bond Service Charges. (c) Any special fee charged pursuant to Section 154.21(D) of the Revised Code, and receipts from that fee. “Hedge Agreement” means interest rate swap, swap option, rate cap, rate collar and other arrangements undertaken with respect to Bonds or Notes to reduce costs of borrowing or optimize relative amounts of fixed and variable rate obligations or reduce the risk of variations in debt service costs, including without limitation, arrangements by which different interest costs or receipts at, between or among fixed or variable interest rates, or at different fixed or variable interest rates or maturities are exchanged in respect of Bonds or Notes. “Mandatory Redemption Obligation” or “Mandatory Redemption” or “Mandatory Sinking Fund Redemption” means mandatory prior redemption of Bonds pursuant to Mandatory Sinking Fund Requirements. “Mandatory Sinking Fund Requirements” means amounts required by any Bond Proceedings to be deposited to the Bond Service Account in any Fiscal Year for the purpose, as provided in those Bond Proceedings, of retiring, at their stated maturities or by mandatory prior redemption or other prior retirement, principal of Bonds or of paying interest or interest equivalent on Bonds, which by the terms of the Bonds are due and payable in any subsequent Fiscal Year. “Moody’s” means Moody’s Investors Service, Inc., New York, New York, or any successor Rating Service. “Obligations” means bonds or notes or other evidences of obligation authorized to be issued by the University under the Act to provide money to pay costs of Facilities, or to fund, refund or retire Obligations previously issued. “Original Trust Agreement” means the Trust Agreement, dated as of November 1, 1971, between the University and the Trustee. “Outstanding Bonds” or “Bonds outstanding” or “outstanding” as applied to Bonds, means, as of any date, all Bonds which have been authenticated and delivered, or are then being delivered, by the Trustee under the Trust Agreement except: (a) Bonds surrendered for exchange or transfer or cancelled because of payment or redemption at or prior to such date; (b) Bonds for the payment, redemption or purchase for cancellation of which sufficient moneys have been deposited prior to such date with the Trustee or Paying Agents (whether upon or prior to the maturity or redemption date of any such Bonds), or which are deemed to have been paid and discharged pursuant to the provisions of the Trust Agreement; provided that if such Bonds are to be redeemed prior to the maturity

C-6 thereof, notice of such redemption shall have been given or arrangements satisfactory to the Trustee shall have been made therefor, or waiver of such notice satisfactory in form to the Trustee shall have been filed with the Trustee, and provided, further, that if such Bonds are to be purchased for cancellation, a firm offer for sale stating the price has been received and accepted; and (c) Lost, stolen, mutilated or destroyed Bonds in lieu of which others have been authenticated (or payment, when due, of which is made without replacement) under the Trust Agreement. “Parity Obligations” means obligations of the University secured by a pledge of the General Receipts on a parity with the pledge of General Receipts given under the Trust Agreement to secure Bonds as permitted under the conditions set forth in Section 4.04 of the Trust Agreement. “Paying Agent” means the Trustee and any other bank, trust company or other person designated as a Paying Agent for a series of Bonds by or in accordance with the Bond Proceedings, each of which must be a transfer agent registered in accordance with Section 17A(c) of the Securities Exchange Act of 1934 as amended. “Project” or “Projects” means those University Facilities or portions of University Facilities, the costs of which are to be financed or refinanced by Obligations. “Project Fund” means the Project Funds established by the Fiscal Officer in accordance with the Bond Proceedings for a series of Bonds issued under the Trust Agreement. “Rating Service” means either Moody’s or S&P and will include at any time any Rating Service then having a rating on the Outstanding Bonds. “Register” means the books kept and maintained by the Bond Registrar pursuant to the Bond Proceedings for the registration, exchange and transfer of Bonds. “Registrar” means the Trustee and any other bank, trust company or other person designated as a Registrar for a series of Bonds by or in accordance with the Bond Proceedings, each of which must be a transfer agent registered in accordance with Section 17A(c) of the Securities Exchange Act of 1934 as amended. “SIFMA Municipal Swap Index” means the Securities Industry and Financial Markets Association Municipal Swap Index as disseminated by Municipal Market Data, a Thompson Financial Services Company, or a comparable successor index selected by the University if the SIFMA Municipal Swap Index is no longer published or nationally recognized as an index of short-term obligations of state and local government issuers. “S&P” means Standard & Poor’s Ratings Services, New York, New York, or any successor Rating Service. “Special Funds” means the Bond Service Fund and accounts in that fund, and any fund or account established under and identified as a Special Fund or Account in the Trust Agreement or a Supplemental Trust Agreement. “Supplemental Trust Agreement” means a Supplemental Trust Agreement approved or authorized by the Board of Trustees and entered into by the University and the Trustee pursuant to the Trust Agreement.

C-7 “Trustee” means The Huntington National Bank, a national banking association organized and existing under the laws of the United States and authorized to exercise corporate trust powers in the state of Ohio, with its designated corporate trust office located in Columbus, Ohio. “University” means Kent State University, established and existing under Chapter 3341 of the Ohio Revised Code, and every part and component thereof as from time to time existing, and when the context admits, includes its Board of Trustees. “University Facilities” means facilities as defined in Section 3345.12 of the Revised Code.

C-8 APPENDIX D

Book-Entry System; DTC

Book-Entry System

The information set forth in the following numbered paragraphs is based on information provided by The Depository Trust Company in its “Sample Offering Document Language Describing DTC and Book-Entry-Only Issuance” (December 2007). As such, the University believes it to be reliable, but the University takes no responsibility for the accuracy or completeness of that information. It has been adapted to the Bond issue by substituting “Series 2012A Bonds” for “Securities,” “University” for “Issuer” and “Trustee” for “registrar” and by the addition of the italicized language set forth in the text. See also the additional information following those numbered paragraphs: 1. The Depository Trust Company, New York, New York (“DTC”), will act as securities depository for the Series 2012A Bonds. The Series 2012A 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 2012A Bond certificate will be issued for each maturity of the Bonds (and interest rate within a maturity), each in the principal amount of such maturity, and will be deposited with and retained in the custody of DTC or its agent. 2. DTC, the world’s largest securities 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 and 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 Standard & Poor’s highest rating: AAA. 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 and www.dtc.org. (These internet sites are included for reference only, and the information in these internet sites is not incorporated by reference in this Official Statement.) 3. Purchases of Series 2012A Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Series 2012A Bonds on DTC’s records. The ownership interest of each actual purchaser of each Series 2012A 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. Beneficial

D-1 Owners are, however, 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 2012A 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 2012A Bonds, except in the event that use of the book-entry system for the Series 2012A Bonds is discontinued. 4. To facilitate subsequent transfers, all Series 2012A 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 2012A Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Series 2012A Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Series 2012A 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. 5. 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. Beneficial Owners of Series 2012A Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Series 2012A Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Series 2012A Bond documents. For example, Beneficial Owners of Series 2012A Bonds may wish to ascertain that the nominee holding the Series 2012A Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the Trustee and request that copies of the notices be provided directly to them. 6. Redemption notices shall be sent to DTC. If less than all of the Bonds within an issue are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. 7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Series 2012A Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the University 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 2012A Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). 8. Redemption proceeds, distributions and dividends (debt charges payments) on the Series 2012A 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 University or Trustee, on the payable date in accordance with their respective holdings shown on DTC’s records. Payments by 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 Participant and not of DTC, the Trustee or the University, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions and dividends (debt charges) to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the University or the

D-2 Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. 9. (Not Applicable to the Series 2012A Bonds.) 10. DTC may discontinue providing its services as depository with respect to the Series 2012A Bonds at any time by giving reasonable notice to the University or the Trustee. Under such circumstances, in the event that a successor depository is not obtained, Series 2012A Bond certificates are required to be printed (or otherwise produced) and delivered. 11. The University may decide to discontinue use of the system of book-entry- only transfers through DTC (or a successor securities depository). In that event, Series 2012A Bond certificates will be printed (or otherwise produced) and delivered to DTC. (See also Revision of Book-Entry System; Replacement Bonds.) 12. The information above in this section concerning DTC and DTC’s book-entry system has been obtained from sources that the University believes to be reliable, but the University takes no responsibility for the accuracy thereof. Direct Participants and Indirect Participants may impose service charges on Beneficial Owners in certain cases. Purchasers of book-entry interests should discuss that possibility with their brokers. The University and the Trustee have no role in the purchases, transfers or sales of book-entry interests. The rights of Beneficial Owners to transfer or pledge their interests, and the manner of transferring or pledging those interests, may be subject to applicable state law. Beneficial Owners may want to discuss with their legal advisors the manner of transferring or pledging their book-entry interests. The University and the Trustee have no responsibility or liability for any aspects of the records or notices relating to, or payments made on account of, beneficial ownership, or for maintaining, supervising or reviewing any records relating to that ownership. The University and the Trustee cannot and do not give any assurances that DTC, Direct Participants, Indirect Participants or others will distribute to the Beneficial Owners payments of debt service charges on the Series 2012A Bonds made to DTC as the registered owner, or redemption, if any, or other notices, or that they will do so on a timely basis, or that DTC, Direct Participants or Indirect Participants will serve or act in a manner described in this Official Statement. For all purposes under the Series 2012A Bond proceedings (except the Continuing Disclosure Agreement under which others as well as DTC may be considered an owner or holder of the Series 2012A Bonds, see Continuing Disclosure Agreement), DTC will be and will be considered by the University and the Trustee to be the owner or holder of the Series 2012A Bonds. Beneficial Owners will not receive or have the right to receive physical delivery of Series 2012A Bonds, and, except to the extent they may have rights as Beneficial Owners or holders under the Continuing Disclosure Agreement, will not be or be considered by the University and the Trustee to be, and will not have any rights as, owners or holders of Series 2012A Bonds under the Series 2012A Bond proceedings.

D-3 Reference herein to “DTC” includes when applicable any successor securities depository and the nominee of the depository.

Revision of Book Entry System; Replacement Bonds

The Bond proceedings provide for issuance of fully-registered Bonds (Replacement Bonds) directly to owners of the Series 2012A Bonds other than DTC only in the event that DTC (or a successor securities depository) determines not to continue to act as securities depository for the Series 2012A Bonds. Upon occurrence of this event, the University may in its discretion attempt to have established a securities depository book-entry relationship with another securities depository. If the University does not do so, or is unable to do so, and after the Trustee has made provision for notification of the Beneficial Owners of the Series 2012A Bonds by appropriate notice to DTC, the University and the Trustee will authenticate and deliver Replacement Bonds of any one maturity and interest rate within a maturity, in authorized denominations, or any integral multiple of $5,000, to or at the direction of any persons requesting such issuance, and, if the event is not the result of University action or inaction, at the expense (including legal and other costs) of those requesting. Debt service charges on Replacement Bonds will be payable when due without deduction for the services of the Trustee as paying agent. Principal of and any premium on Replacement Bonds will be payable when due to the registered owner upon presentation and surrender at the designated corporate trust office of the Trustee. Interest on Replacement Bonds will be payable on the interest payment date by the Trustee by transmittal to the registered owner of record on the Bond Register as of the 15th day of the calendar month preceding the interest payment date. Replacement Bonds will be exchangeable for other Replacement Bonds of authorized denominations, and transferable, at the designated corporate trust office of the Trustee without charge (except taxes or governmental fees). Exchange or transfer of then-redeemable Replacement Bonds is not required to be made: (i) between the 15th day preceding the mailing of notice of redemption of Replacement Bonds and the date of that mailing, or (ii) of a particular Replacement Bond selected for redemption (in whole or part).

D-4 EXHIBIT A

Proposed Text of Opinion of Bond Counsel

We have examined the transcript of proceedings (the “Transcript”) relating to the issuance by Kent State University (the “University”) of its $170,000,000 General Receipts Bonds, Series 2012A (the “Series 2012A Bonds”) dated June 21, 2012 and issued to (i) pay costs of the acquisition, construction, reconstruction, rehabilitation, furnishing and equipping of various University “facilities” as defined in Section 3345.12 of the Revised Code and (ii) pay costs of issuance of the Series 2012A Bonds. The Transcript includes (i) a conformed copy of the Amended and Restated Trust Agreement dated June 21, 2010 (the “Trust Agreement”) between the University and The Huntington National Bank, Columbus, Ohio (the “Trustee”), (ii) an executed counterpart of the Seventeenth Supplemental Trust Agreement dated as of June 1, 2012 (the “Seventeenth Supplemental Trust Agreement,” and, together with the Trust Agreement, the “Agreement”) between the University and the Trustee and (iii) an executed counterpart of the resolution of the Board of Trustees of the University (the “Board”) adopted by the Board on March 14, 2012 authorizing the issuance of the Series 2012A Bonds. We have also examined a conformed copy of a signed and authenticated Series 2012A Bond of the first maturity. The Series 2012A Bonds are issued under and pursuant to Section 2i of Article VIII of the Ohio Constitution, Sections 3345.12 and 3354.121 of the Revised Code, and the Agreement. Based on this examination we are of the option that, under existing law: 1. The Series 2012A Bonds constitute valid and legally binding special obligations of the University in accordance with their terms. The principal of and interest on the Series 2012A Bonds and Additional Bonds of the University heretofore or hereafter issued pursuant to the Agreement (collectively, with the Series 2012A Bonds, the “Bonds”), are payable equally and ratably from and secured by a first pledge of and lien on the Bond Service Fund established by and as provided in the Agreement, and the gross amount of “General Receipts” of the University as defined in and subject to the provisions of the Agreement. The owners of the Bonds are given no right to have any excises or taxes levied by the Ohio General Assembly for the payment or principal of or interest on the Bonds. 2. The interest on the Series 2012A Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986, as amended (the “Code”), and is not an item of tax preference under Section 57 of the Code for purposes of the federal alternative minimum tax imposed on individuals and corporations. 3. The interest on the Series 2012A Bonds, and any profit made on their sale, exchange or other disposition, are exempt from the Ohio personal income tax, the Ohio commercial activity tax, the net income base of the Ohio corporate franchise tax, and municipal, school district and joint economic development district income taxes in Ohio. We express no opinion as to any other tax consequences regarding the Series 2012A Bonds. In giving the foregoing opinion with respect to the treatment of the interest on the Series 2012A Bonds and the status of those Series 2012A Bonds under the federal tax laws, we have assumed and relied upon compliance by the University of its covenants and the accuracy, which we have not independently verified, of the University’s representations and certifications, contained in the Transcript. The accuracy of those representations and certifications, and compliance by the University with those covenants, may be necessary for the interest on the Series 2012A Bonds to be and to remain excluded from gross income for federal income tax

EX. A-1 purposes and for the other tax effects stated above. Failure to comply with certain of those covenants subsequent to issuance of the Series 2012A Bonds could cause the interest on the Series 2012A Bonds to be included in gross income for federal income tax purposes retroactively to the date of issuance of those Series 2012A Bonds. The rights of the owners of the Series 2012A Bonds and the enforceability of the Series 2012A Bonds are subject to bankruptcy, insolvency, arrangement, fraudulent conveyance or transfer, reorganization, moratorium and other laws affecting creditors’ rights, to the application of equitable principles, to the exercise of judicial discretion, and to limitations on legal remedies against public entities. The opinions rendered in this letter are stated only as of this date, and no other opinion shall be implied or inferred as a result of anything contained in or omitted from this letter. Our engagement as bond counsel with respect to the Series 2012A Bonds has concluded on this date.

EX. A-2 EXHIBIT B Proposed Form of Continuing Disclosure Agreement THIS CONTINUING DISCLOSURE AGREEMENT, dated as of June 21, 2012 (the “Agreement”), is made, signed and delivered by the KENT STATE UNIVERSITY, a state university of Ohio, duly organized and existing under the Constitution and laws of the state of Ohio (the “University”), for the benefit of the Holders and Beneficial Owners (as defined herein) from time to time of the University’s $170,000,000 General Receipts Bonds, Series 2012A (the “Series 2012A Bonds”), authorized by a resolution passed by the Board of Trustees of the University on March 14, 2012 (the “Series 2012A Resolution”). RECITAL The University, by passage of the Series 2012A Resolution, has determined to issue the Series 2012A Bonds to provide funds for University purposes, and Merrill Lynch, Pierce, Fenner & Smith Incorporated, on behalf of itself and as representative of KeyBanc Capital Markets Inc., CastleOak Securities L.P., Fifth Third Securities, Inc., The Huntington Investment Company, J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, PNC Capital Markets LLC and Sterne Agee & Leach Inc. (collectively, the “Participating Underwriters”) have agreed to provide those funds to the University by purchasing the Series 2012A Bonds. As a condition to the purchase of the Series 2012A Bonds from the University and the sale of Series 2012A Bonds to Holders and Beneficial Owners, the Participating Underwriters are required to reasonably determine that the University has undertaken, in a written agreement for the benefit of Holders and Beneficial Owners of the Series 2012A Bonds, to provide certain information in accordance with the Rule (as defined herein). NOW, THEREFORE, in accordance with the Series 2012A Resolution, the University covenants and agrees as set forth in this Continuing Disclosure Agreement. Section 1. Purpose of Continuing Disclosure Agreement. This Agreement is being entered into, signed and delivered for the benefit of the Holders and Beneficial Owners of the Series 2012A Bonds and in order to assist the Participating Underwriters of the Series 2012A Bonds in complying with Rule 15c2-12(b)(5) promulgated by the Securities and Exchange Commission (SEC) pursuant to the Securities Exchange Act of 1934, as may be amended from time to time (the “Rule”). Section 2. Definitions. In addition to the definitions set forth above, the following capitalized terms shall have the following meanings in this Agreement, unless the context clearly otherwise requires. Reference to “Sections” shall mean sections of this Agreement. “Annual Filing” means any Annual Information Filing provided by the University pursuant to, and as described in, Sections 3 and 4. “Audited Financial Statements” means the audited basic financial statements of the University, prepared in conformity with generally accepted accounting principles. “Beneficial Owner” means any person that (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Series 2012A Bonds (including persons holding Series 2012A Bonds through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Series 2012A Bonds for federal income tax purposes.

EX. B-1 “EMMA” means the Electronic Municipal Market Access system of the MSRB; information regarding submissions to EMMA is available at http://emma.msrb.org. “Filing Date” means the last day of the ninth month following the end of each Fiscal Year (or the next succeeding business day if that day is not a business day), beginning March 31, 2013. “Fiscal Year” means the 12-month period beginning on July 1 of each year or such other 12-month period as the University shall adopt as its fiscal year. “Holder” means, with respect to the Series 2012A Bonds, the person in whose name a Bond is registered in accordance with the Series 2012A Resolution. “MSRB” means the Municipal Securities Rulemaking Board. “Obligated Person” means, any person, including the issuer of municipal securities (such as the Series 2012A Bonds), who is generally committed by contract or other arrangement to support payment of all or part of the obligations on the municipal securities being sold in an offering document (such as the Official Statement); the University is the only Obligated Person for the Series 2012A Bonds. “Official Statement” means the Official Statement for the Series 2012A Bonds dated June 7, 2012. “Participating Underwriters” means any of the original underwriters of the Series 2012A Bonds required to comply with the Rule in connection with offering of the Series 2012A Bonds. “Specified Events” means any of the events with respect to the Series 2012A Bonds as set forth in Section 5(a). “State” means the State of Ohio. Section 3. Provision of Annual Information. (a) The University shall provide (or cause to be provided) not later than the Filing Date to the MSRB an Annual Filing, which is consistent with the requirements of Section 4. The Annual Filing shall be submitted in an electronic format and contain such identifying information as is prescribed by the MSRB, and may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in Section 4; provided that the Audited Financial Statements of the University may be submitted separately from the balance of the Annual Filing and later than the Filing Date if they are not available by that date. If the University’s Fiscal Year changes, it shall give notice of such change in the same manner as for a Specified Event under Section 5. (b) If the University is unable to provide to the MSRB an Annual Filing by the Filing Date, the University shall, in a timely manner, send a notice to the MSRB in an electronic format as prescribed by the MSRB. Section 4. Content of Annual Filing. The University’s Annual Filing shall contain or include by reference the following: (a) Financial information and operating data of the type included in the Official Statement under the captions: Security and Sources of Payment – General Receipts Pledged to the Bonds and in Appendix A under the captions Enrollment – General, Student Admissions, and Student Fees and Charges, Regional Campuses – Enrollment, Admissions,

EX. B-2 and – Fees and Charges, Financial Operations and Results – General, State Appropriations to the University, – Grants and Contracts, – Gifts and Endowment, and – Outstanding Obligations. (b) The Audited Financial Statements of the University utilizing generally accepted accounting principles applicable to public colleges and universities as described in the Official Statement, except as may be modified from time to time and described in such financial statements. The foregoing shall not obligate the University to prepare or update projections of any financial information or operating data. Any or all of the items listed above may be included by specific reference to other documents, including annual informational statements of the University or official statements of debt issues of the University or related public entities, which have been submitted to the MSRB or the Securities and Exchange Commission. The University shall clearly identify each such other document so included by reference. Section 5. Reporting Specified Events. (a) The University shall provide to the MSRB, in an electronic format and containing such identifying information as is prescribed by the MSRB and in a timely manner but not later than ten business days after the occurrence of the event, notice of any of the following events with respect to the Bonds, as specified by the Rule: (1) Principal and interest payment delinquencies; (2) Non-payment-related defaults, if material; (3) Unscheduled draws on debt service reserves reflecting financial difficulties; (a) (4) Unscheduled draws on credit enhancements reflecting financial difficulties; (a)

(5) Substitution of credit or liquidity providers, or their failure to perform; (a) (6) (Issuance of) 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 security (i.e., the Bonds), or other material events affecting the tax status of the security; (7) Modifications to rights of security holders, if material;

(8) Bond calls, if material, and tender offers; (b) (9) Defeasances; (10) Release, substitution, or sale of property securing repayment of the securities, if material; (c) (11) Rating changes;

EX. B-3 (12) Bankruptcy, insolvency, receivership or similar event of the Obligated Person; Note: For the purposes of the event identified in this subparagraph, the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for an Obligated Person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the Obligated Person, or if such jurisdiction has been assumed by leaving the existing governmental body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the Obligated Person. (13) The consummation of a merger, consolidation, or acquisition involving an Obligated Person or the sale of all or substantially all of the assets of the Obligated Person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and (14) Appointment of a successor or additional trustee or the change of name of a trustee, if material. Note: (a) The University has not obtained or provided, and does not expect to obtain or provide, any debt service reserves, credit enhancements or credit or liquidity providers for the Series 2012A Bonds. (b) Any scheduled redemption of Series 2012A Bonds pursuant to mandatory sinking fund redemption requirements does not constitute a specified event within the meaning of the Rule. (c) Repayment of the Series 2012A Bonds is not secured by a lien on any property capable of release or sale or for which other property may be substituted. For the Specified Events described in Section 5(a) (2), (6, as applicable), (7), (8, as applicable), (10), (13) and (14), the University acknowledges that it must make a determination whether such Specified Event is material under applicable federal securities laws in order to determine whether a filing is required. Section 6. Amendments. The University reserves the right to amend this Agreement, and noncompliance with any provision of this Agreement may be waived, as may be necessary or appropriate to achieve its compliance with any applicable federal securities law or rule, to cure any ambiguity, inconsistency or formal defect or omission, and to address any change in circumstances arising from a change in legal requirements, change in law, or change in the identity, nature, or status of the University, or type of business conducted by the University. Any such amendment or waiver shall not be effective unless the University shall have received a written opinion of qualified independent special counsel selected by the University that the Agreement (as amended or taking into account such waiver) would have materially complied with the requirements of the Rule at the time of the primary offering of the Series 2012A Bonds, after taking into account any applicable amendments to or official interpretations of the Rule, as well as any change in circumstances. An Annual Filing containing any revised operating data or financial information shall explain, in narrative form, the reasons for any such amendment or

EX. B-4 waiver and the impact of the change on the type of operating data or financial information being provided. If the amendment relates to the accounting principles to be followed in preparing Audited Financial Statements, the University shall provide notice of such change in the same manner as for a Specified Event under Section 5. Section 7. Additional Information. Nothing in this Agreement shall be deemed to prevent the University from disseminating any other information, using the means of dissemination set forth in this Agreement or providing any other means of communication, or including any other information in any Annual Filing or providing notice of the occurrence of an event, in addition to that which is required by this Agreement. If the University chooses to include any information in any document or notice of occurrence of an event in addition to that which is specifically required by this Agreement, the University shall have no obligation under this Agreement to update such information or include it in any future Annual Filing or notice of occurrence of a Specified Event. Section 8. Remedy for Breach. This Agreement shall be solely for the benefit of the Holders and Beneficial Owners from time to time of the Series 2012A Bonds. The exclusive remedy for any breach of the Agreement by the University shall be limited, to the extent permitted by law, to a right of Holders and Beneficial Owners to institute and maintain, or to cause to be instituted and maintained, such proceedings as may be authorized at law or in equity to obtain the specific performance by the University of its obligations under this Agreement in a court in Portage County, Ohio. Any such proceedings shall be instituted and maintained only in accordance with Section 133.25(B)(4)(b) or (C)(1) of the Revised Code (or any like or comparable successor provisions); provided that any Holder or Beneficial Owner may exercise individually any such right to require the University to specifically perform its obligation to provide or cause to be provided a pertinent filing if such a filing is due and has not been made. Any Beneficial Owner seeking to require the University to comply with this Agreement shall first provide at least 30 days’ prior written notice to the University of the University’s failure, giving reasonable detail of such failure, following which notice the University shall have 30 days to comply. A default under this Agreement shall not be deemed an event of default under the Trust Agreement, and the sole remedy under this Agreement in the event of any failure of the University to comply with this Agreement shall be an action to compel performance. No person or entity shall be entitled to recover monetary damages under this Agreement. Section 9. Appropriation. The performance by the University of its obligations under this Agreement shall be subject to the availability of funds and their annual appropriation to meet costs that the University would be required to incur to perform those obligations. The University shall provide notice to the MSRB in the same manner as for a Specified Event under Section 5 of the failure to appropriate funds to meet costs to perform the obligations under this Agreement. Section 10. Termination. The obligations of the University under the Agreement shall remain in effect only for such period that the Series 2012A Bonds are outstanding in accordance with their terms and the University remains an Obligated Person with respect to the Series 2012A Bonds within the meaning of the Rule. The obligation of the University to provide the information and notices of the events described above shall terminate, if and when the University no longer remains such an Obligated Person. If any person, other than the University, becomes an Obligated Person relating to the Series 2012A Bonds, the University shall use its best efforts to require such Obligated Person to comply with all provisions of the Rule applicable to such Obligated Person. Section 11. Dissemination Agent. The University may, from time to time, appoint or engage a dissemination agent to assist it in carrying out its obligations under this Agreement, and may discharge any such agent, with or without appointing a successor dissemination agent.

EX. B-5 Section 12. Beneficiaries. This Agreement shall inure solely to the benefit of the University, any dissemination agent, the Participating Underwriters and Holders and Beneficial Owners from time to time of the Series 2012A Bonds, and shall create no rights in any other person or entity. Section 13. Recordkeeping. The University shall maintain records of all Annual Filings and notices of Specified Events and other events including the content of such disclosure, the names of the entities with whom such disclosures were filed and the date of filing such disclosure. Section 14. Governing Law. This Agreement shall be governed by the laws of the State. IN WITNESS WHEREOF, the University has caused this Continuing Disclosure Agreement to be duly signed and delivered to the Participating Underwriters, as part of the Series 2012A Bond proceedings and in connection with the original delivery of the Series 2012A Bonds to the Participating Underwriters, on its behalf by its officials signing below, all as of the date set forth above, and the Holders and Beneficial Owners from time to time of the Series 2012A Bonds shall be deemed to have accepted this Agreement made in accordance with the Rule.

KENT STATE UNIVERSITY

By: ______

By: ______

CERTIFICATE – CONTINUING DISCLOSURE AGREEMENT As fiscal officer of Kent State University, I certify that the money required to meet the obligations of the University under the Agreement made by the University in accordance with the Rule, as set forth in the Series 2012A Resolution and the attached Continuing Disclosure Agreement, during Fiscal Year 2012, has been lawfully appropriated by the Board of Trustees of the University for those purposes and is in the University treasury or in the process of collection to the credit of an appropriate fund, free from any previous encumbrances. This Certificate is given in compliance with Sections 5705.41 and 5705.44 of the Revised Code.

Dated: June 21, 2012 ______Senior Vice President for Finance and Administration Kent State University

EX. B-6

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