This Preliminary Official Statement and the information contained herein are subject to change, completion and amendment without notice. The Bonds may not be sold nor may an offer to buy be accepted prior to the time the Official Statement is delivered in final form. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Bonds in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. through thefacilitiesofDTC oritscustodialagent,onabout______,2018. the Underwriters by their counsel, Kaufman & Canoles, P.C. The Bonds are expected to be available for delivery for and Counsel University Interim Esquire, Belue, A. Jacob by University the for upon passed be will matters legality by McGuireWoods LLP, Richmond, Virginia, Bond Counsel, and certain other conditions. Certain legal informed investmentdecision. an of making the to essential information obtain to Statement Official entire the read should Investors Statement. incident costs other or Bonds the on interest or thereto. TheUniversityhasnotaxingpowers. of principal the to political pledged any is or Virginia, thereof, therefor. of subdivision assigned Commonwealth the and of power pledged taxing receipts the nor and credit revenues and faith the the Neither from except Bonds the on interest or of Virginia, nor any political subdivision thereof, nor the of University, Commonwealth shall be the obligated to Neither pay the principal therefor. pledged funds the from solely payable be shall Bonds the on interest and of principal The herein. described as all University, the of receipts and revenues certain Wilmington Trust,N.A.willserveastheinitialPayingAgentforBonds. and November1commencingonMay1,2019. 1 principal May each on the semi-annually payable in is Bonds the made on Interest be thereof. multiple integral may any or $5,000 Bonds of amount the in interests ownership beneficial of purchases Individual page. cover available totheUniversity. See certificates. bond of delivery physical receive not will Bonds the of F) Appendix in defined (as Owners Beneficial Company ("DTC"), which will act as securities depository for the Bonds as fullyregisteredbondsandwillbeinthenameofCede&Co.,nomineeforTheDepository Trust under a book-entry only system. Accordingly, "TAX MATTERS–SERIES2018BBONDSregardingothertaxconsiderations. the by taxation "TAX MATTERS–SERIES2018ABONDSand titled income herein sections the of See Virginia. purposes of Commonwealth for income gross from excludable is Bonds the on interest the of that further opinion is Counsel Bond purposes. tax income federal for income gross in includible is Bonds 2018B Series the on interest Counsel, Bond of opinion the In tax. minimum alternative federal the of purposes for under purposes tax income federal for preference tax of item specific a not (ii) is and amended, as 1986, of Code Revenue Internal the thereof of Section 103 owners the of income gross the from excludable (i) is Bonds described inthesectionherein"TAX and the accuracy of certain representations and certifications of the University and other persons and entities * Dated: Date ofDelivery NEW ISSUE–FULLBOOKENTRY Preliminary, subjectto change. General RevenuePledgeRefundingBonds, attached hereto. The Bonds are payable solely from Pledged Revenues (as hereinafter defined) hereinafter (as Revenues Pledged from solely payable are Bonds The hereto. attached F Appendix The Bonds are offered when, as and if issued and accepted by the Underwriters subject to the approval of approval the to subject Underwriters the by accepted and issued if and as when, offered are Bonds The Official this of summary a not is It only. reference quick for information certain contains page cover This of pledge a by secured be will and University the of obligations limited constitute will Bonds The herein. described as maturity to prior redemption extraordinary and optional to subject are Bonds The inside the on forth set yields or prices the at offered be will and rates fixed at interest bear will Bonds The "Bonds") (the above identified bonds the issue will "University") (the University Commonwealth Virginia In theopinionofBondCounsel,undercurrentlawandassumingcompliancewithcertaincovenantsby Series 2018A (Tax-Exempt) Davenport & CompanyLLC PRELIMINARY OFFICIAL STATEMENT DATED OCTOBER 9, 2018 $49,425,000*

VIRGINIA COMMONWEALTH UNIVERSITY

" interest on the Series 2018A Series 2018A the on interest MATTERS –SERIES2018ABONDS" BofA MerrillLynch

General RevenuePledgeRefundingBonds, Series 2018B (Taxable) $53,260,000* Wells Fargo Securities Due: See InsideCoverPage (See "RATINGS"herein) Ratings: Moody’s:Aa2 S&P: AA-

VIRGINIA COMMONWEALTH UNIVERSITY

$49,425,000∗ General Revenue Pledge Refunding Bonds, Series 2018A (Tax-Exempt)

Principal Interest Due∗ Amount∗ Rate Yield Price CUSIP† 11/1/2020 $1,020,000 % % % 11/1/2021 2,210,000 11/1/2022 2,315,000 11/1/2023 2,420,000 11/1/2024 2,530,000 11/1/2025 2,645,000 11/1/2026 2,765,000 11/1/2027 2,895,000 11/1/2028 3,030,000 11/1/2029 3,165,000 11/1/2030 3,385,000 11/1/2031 1,505,000 11/1/2032 1,580,000 11/1/2033 1,660,000 11/1/2034 1,745,000 11/1/2035 1,835,000 11/1/2036 1,930,000 11/1/2037 2,030,000 11/1/2038 2,130,000 5/1/2048 6,630,000

$53,260,000∗ General Revenue Pledge Refunding Bonds, Series 2018B (Taxable)

Principal Interest Due∗ Amount∗ Rate Yield Price CUSIP† 11/1/2019 $2,065,000 % % % 11/1/2020 1,100,000 5/1/2048 50,095,000

∗ Preliminary, subject to change.

† CUSIP is a registered trademark of the American Bankers Association. CUSIP Global Services (CGS) is managed on behalf of the American Bankers Association by S&P Global Market Intelligence. Copyright © 2017 CUSIP Global Services. All rights reserved. The CUSIP numbers are not intended to create a database and do not serve in any way as a substitute for the CUSIP Service. CUSIP numbers have been assigned by an independent company not affiliated with the University and are included solely for the convenience of the registered owners of the Bonds. None of the University, the Financial Advisor (as hereinafter defined) nor the Underwriters (as hereinafter defined) are responsible for the selection or uses of these CUSIP numbers, and no representation is made as to their correctness on the applicable Bonds or as included herein. The CUSIP number for a specific maturity is subject to being changed after the issuance of the Bonds as a result of various subsequent actions including, but not limited to, a refunding in whole or in part or as a result of the procurement of secondary market portfolio insurance and other similar enhancement by investors that is applicable to all or a portion of certain maturities of the Bonds.

The information set forth herein has been obtained from the University, DTC and other sources that are deemed to be reliable. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale of the Bonds shall under any circumstances create any implication that there has been no change in the affairs of the parties referred to above since the date hereof.

The Underwriters have provided the following sentence for inclusion in this Official Statement. The Underwriters have reviewed the information in this Official Statement in accordance with, and as part of, their responsibilities to investors under federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriters do not guarantee the accuracy or completeness of such information, and such information is not to be construed as a representation of the Underwriters. The information herein is subject to change without notice and neither the delivery of this Official Statement nor any sale hereunder shall under any circumstances create any implication that there has been no change in the affairs of the University since the date hereof.

No dealer, broker, salesperson or other person has been authorized 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 authorized by the University or the Underwriters. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale.

The Bonds are exempt from registration under the Securities Act of 1933, as amended. The Bonds are also exempt from registration under the securities laws of the Commonwealth of Virginia.

All quotations from, and summaries and explanations of, provisions of law and documents herein do not purport to be complete and reference is made to such laws and documents for full and complete statements of their provisions. Any statements made in this Official Statement involving estimates or matters of opinion, whether or not expressly so stated, are intended merely as estimates or opinions and not as representations of fact.

This Official Statement contains statements which, to the extent they are not recitations of historical fact, constitute "forward-looking statements." In this respect, the words, "estimate," "project," "anticipate," "expect," "intend," "believe" and similar expressions are intended to identify forward-looking statements. A number of important factors affecting the University's financial results could cause actual results to differ materially from those stated in the forward-looking statements.

References to web site addresses presented herein are for informational purposes only and may be in the form of a hyperlink solely for the reader's convenience. Unless specified otherwise, such web sites and the information or links contained therein are not incorporated into, and are not part of, this Official Statement for purposes of, and as that term is defined in Rule 15c2-12; therefore, no representation or warranty is given as to the accuracy or completeness of such information.

This Official Statement is not to be construed as a contract with the purchasers of the Bonds. Statements contained in this Official Statement that involve estimates, projections, forecasts or matters of opinion, whether or not expressly so described, are intended solely as such and are not to be construed as a representation of facts.

In making any investment decision, investors must rely on their own examination of the University and the terms of the offering, including the merits and risks involved. These securities have not been recommended by any federal or state securities commission or regulatory authority.

In connection with this offering, the Underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of the Bonds, including transactions to (1) overallot in arranging the sale of the Bonds, and (2) make purchases and sales of the Bonds for long or short account, on a when-issued basis or otherwise at such prices, in such amounts and in such manner as the Underwriters may determine.

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TABLE OF CONTENTS Page

INTRODUCTION ...... 1 Purpose ...... 1 The University ...... 1 Appendices ...... 1 Document Summaries ...... 1 THE BONDS ...... 2 General ...... 2 Redemption ...... 2 Exchange and Transfer ...... 3 APPLICATION OF BOND PROCEEDS ...... 4 Plan of Finance ...... 4 Estimated Sources and Uses of Funds ...... 5 SECURITY FOR THE BONDS ...... 5 Pledge of Pledged Revenues ...... 6 Qualifying Senior Obligations ...... 6 Existing and Permitted Parity Credit Obligations ...... 7 Defeasance ...... 7 No Liens or Reserves; Disposition of Assets ...... 7 Operating Covenants; Amendments ...... 8 ENFORCEABILITY OF REMEDIES ...... 8 INVESTMENT CONSIDERATIONS ...... 8 Student Fees; Faculty; Grants and Other Support ...... 8 Fund Raising and Endowment ...... 8 Support of the Commonwealth ...... 9 Pledged Revenues; Transfer of Property ...... 9 The Foundations and the Bonds ...... 9 Tax-Exempt Status of the Foundations ...... 9 Pension Liabilities ...... 9 Loss of Tier 3 Status and Management Agreement with the Commonwealth ...... 9 CERTAIN LEGAL MATTERS ...... 9 LITIGATION ...... 10 TAX MATTERS – SERIES 2018A BONDS ...... 10 Opinion of Bond Counsel – Federal Income Tax Status of Interest ...... 10 Reliance and Assumptions; Effect of Certain Changes ...... 10 Certain Collateral Federal Tax Consequences ...... 11 Original Issue Discount ...... 11 Bond Premium...... 12 Effects of Future Enforcement, Regulatory and Legislative Actions ...... 12 Opinion of Bond Counsel – Virginia Income Tax Consequences ...... 13 TAX MATTERS – SERIES 2018B BONDS ...... 13 Opinion of Bond Counsel – Federal Income Tax Status of Interest ...... 13 Summary ...... 13 Tax Status of the Series 2018B Bonds ...... 14 Defeasance ...... 15 Additional Medicare Tax ...... 16 Opinion of Bond Counsel – Virginia Income Tax Consequences ...... 16

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FINANCIAL ADVISOR ...... 16 UNDERWRITING ...... 16 FINANCIAL STATEMENTS ...... 17 RATINGS ...... 17 CONTINUING DISCLOSURE ...... 17 RELATIONSHIPS ...... 18 MISCELLANEOUS ...... 18

Appendix A – Virginia Commonwealth University ...... A-1 Appendix B – Financial Statements for the University for Fiscal Year Ended June 30, 2017 and Management's Discussion and Analysis ...... B-1 Appendix C – Proposed Form of Bond Resolution ...... C-1 Appendix D – Proposed Form of Opinions of Bond Counsel ...... D-1 Appendix E – Form of Continuing Disclosure Undertaking ...... E-1 Appendix F – Book-Entry Only System ...... F-1

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OFFICIAL STATEMENT OF

VIRGINIA COMMONWEALTH UNIVERSITY

relating to

$49,425,000∗ $53,260,000∗ General Revenue Pledge Refunding Bonds, General Revenue Pledge Refunding Bonds, Series 2018A (Tax-Exempt) Series 2018B (Taxable)

INTRODUCTION

Purpose

Virginia Commonwealth University (the "University") is furnishing this Official Statement, including the cover page and the Appendices, for the sale of $49,425,000* aggregate principal amount General Revenue Pledge Refunding Bonds, Series 2018A (Tax-Exempt) (the "Series 2018A Bonds") and $53,260,000* aggregate principal amount General Revenue Pledge Refunding Bonds, Series 2018B (Taxable) (the "Series 2018B Bonds" and together with the Series 2018A Bonds, the "Bonds"). The Bonds will constitute valid and binding limited obligations of the University and will be secured by a pledge of certain revenues and receipts of the University, all as described herein. The principal of and interest on the Bonds shall be payable solely from the funds pledged therefor in accordance with the terms of the respective Bond Resolution, as hereinafter defined. See "SECURITY FOR THE BONDS" herein. Terms capitalized but undefined in the body of this Official Statement are defined in the form of the Bond Resolution attached as Appendix C hereto.

The University will use the proceeds of the Bonds, together with other available funds, to finance and refinance the costs of certain University-used facilities, certain swap termination payments, and pay costs of issuance all as more particularly described in "APPLICATION OF BOND PROCEEDS."

The University

The University is classified and constituted pursuant to Title 23.1 of the Code of Virginia of 1950, as amended, as an educational institution of the Commonwealth of Virginia (the "Commonwealth"). See Appendix A attached hereto for a description of the University. The University is issuing the Bonds pursuant to the Restructured Higher Education Financial and Administrative Operations Act, Chapter 10, Title 23.1, Code of Virginia of 1950, as amended (the "Act"); and under an authorizing resolution adopted by the Executive Committee of the Board of Visitors of the University on October 8, 2018; and bond resolutions of the University for each of the Series 2018A Bonds and the Series 2018B Bonds, executed pursuant thereto (each bond resolution is referred to herein as a "Bond Resolution").

Appendices

In addition to Appendix A describing the University, attached hereto as Appendix B are the University's audited financial statements for the fiscal year ended June 30, 2017. Attached hereto as Appendix C is a form of Bond Resolution. Attached hereto as Appendix D are the proposed forms of Opinions of Bond Counsel. Attached hereto as Appendix E is the proposed form of Continuing Disclosure Undertaking. Attached hereto as Appendix F is a description of the DTC Book-Entry Only System.

Document Summaries

This Official Statement contains summaries of certain provisions of the financing documents, including without limitation, the Bond Resolutions. Reference is hereby made to each of such financing documents for the detailed provisions thereof, and the summaries and other descriptions of the provisions of such instruments and other

∗ Preliminary, subject to change.

1

documents contained in this Official Statement, including the Appendices hereto, are qualified in their entirety by such reference.

THE BONDS

The following is a summary of certain provisions of the Bonds. For definitions of certain terms and additional detailed information relating to the Bonds, see Appendix C attached hereto.

General

The Series 2018A Bonds will be issued in the aggregate principal amount of $49,425,000.* The Series 2018A Bonds will be dated the date of their delivery and will mature on the dates and in the amounts as set forth on the inside cover page. Interest on the Series 2018A Bonds will be payable semi-annually on May 1 and November 1, commencing on May 1, 2019, at the rates per annum shown on the inside cover page hereof, calculated on the basis of a 360-day year consisting of 12 months of 30 days each.

The Series 2018B Bonds will be issued in the aggregate principal amount of $53,260,000.* The Series 2018B Bonds will be dated the date of their delivery and will mature on the dates and in the amounts as set forth on the inside cover page. Interest on the Series 2018B Bonds will be payable semi-annually on May 1 and November 1, commencing on May 1, 2019, at the rates per annum shown on the inside cover page hereof, calculated on the basis of a 360-day year consisting of 12 months of 30 days each.

The Bonds will be offered in denominations of $5,000 and integral multiples thereof ("Authorized Denominations").

Each Bond Resolution establishes April 15 and October 15 as the record dates for May 1 and November 1 payment dates.

The Bonds initially will be issued as fully registered bonds, and shall be delivered to and registered in the name of Cede & Co., as registered owner and nominee for The Depository Trust Company ("DTC"). Purchases of beneficial interests in the Bonds will be made in book-entry-form, in denominations of $5,000. Purchasers will not receive certificates representing their beneficial ownership interest in the Bonds purchased. As long as DTC or its nominee, Cede & Co., is the registered owner of the Bonds, such payments will be made directly to Cede & Co. See Appendix F.

Redemption*

Optional Redemption. The Bonds are subject to redemption, at the option of the University, in whole or in part on any date not earlier than ______, _____, upon payment of a redemption price equal to 100% of the principal amount of the Bonds to be redeemed, plus interest accrued to the redemption date.

Extraordinary Optional Redemption. The Bonds shall also be subject to redemption in whole or in part on any date, at the option of the University, from the proceeds of casualty insurance or condemnation awards, at a redemption price equal to 100% of the principal amount of the Bonds to be redeemed, without premium, plus accrued interest to the redemption date, if all or any part of the Project financed or refinanced with the Bonds is damaged or destroyed or is taken through the exercise of the power of eminent domain and the Authorized Officer of the University has delivered a certificate to the Custodian to the effect that the University has determined not to use such proceeds to replace or rebuild the damaged, destroyed or taken property.

Purchase in Lieu of Redemption. By their acceptance of the Bonds, the owners of the Bonds, irrevocably grant to the University, the option to purchase, at any time and from time to time, when the Bonds are subject to optional redemption or extraordinary optional redemption under the provisions of a Bond Resolution described above, any Bonds at a purchase price equal to the redemption price then applicable thereto. To exercise such option with respect to the Bonds, the University must give the Paying Agent a written request exercising such option within the

* Preliminary, subject to change.

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time period specified in the Bond Resolution as though such written request were a written request of the University for redemption, and the Paying Agent is thereupon required to give the owners of such Bonds to be purchased notice of such purchase in the manner specified under the subcaption, "Notice of Redemption and Other Notices" below as though such purchase were a redemption, and the purchase of such Bonds will be mandatory and enforceable against the owners of the Bonds. On the date fixed for purchase under any exercise of such option, the University is required to pay the purchase price of the Bonds then being purchased to the Paying Agent in immediately available funds, and the Paying Agent is required to pay the same to the owners of such Bonds against delivery thereof. Following such purchase, the Paying Agent is required to cause such Bonds to be delivered to and registered in the name of, or as directed by, the University. In the case of the purchase of less than all of the Bonds, the particular Bonds to be purchased are to be selected in accordance with the provisions of the Bond Resolution as though such purchase were a redemption. No purchase of the Bonds under the provisions of the Bond Resolution summarized under this heading will operate to extinguish the indebtedness of the University evidenced thereby.

Notice of Redemption and Other Notices. So long as DTC, or its nominee is the Bondholder, the University and the Paying Agent will recognize DTC or its nominee as the Bondholder for all purposes, including notices and voting. Conveyance of notices and other communications by DTC to Direct Participants (as defined in Appendix F), by Direct Participants to Indirect Participants (as defined in Appendix F), and by Direct Participants and Indirect Participants to Beneficial Owners (as defined in Appendix F) will be governed by arrangements among them, subject to any statutory and regulatory requirements as may be in effect from time to time. See Appendix F attached hereto.

The Paying Agent will, not less than 30 nor more than 60 days prior to the redemption date, mail notice of redemption to all registered owners of all the Bonds to be redeemed at their registered addresses. Any such notice of redemption will identify the Bonds to be redeemed, will specify the redemption date and the redemption price, and will state that on the redemption date the Bonds called for redemption will be payable at the designated office of the Paying Agent and that from that date interest will cease to accrue. Failure by the Paying Agent to give any notice of redemption or any defect in such notice as to any particular Bonds shall not affect the validity of the call for redemption of any Bonds in respect of which no such failure or defect has occurred. So long as DTC or its nominee is the registered owner of the Bonds, any failure on the part of DTC or failure on the part of a nominee of a Beneficial Owner, having received notice from a Direct Participant or otherwise, to notify the Beneficial Owner so affected, will not affect the validity of the call for redemption. Any notice mailed as provided in the Bond Resolution will be conclusively presumed to have been given whether or not actually received by any Holder. If at the time of mailing of notice of any optional redemption the University will not have caused to be deposited with the Paying Agent money sufficient to redeem all the Bonds called for redemption, such notice may state that it is conditional in that it is subject to the deposit of such moneys with the Paying Agent not later than the redemption date, and such notice will be of no effect unless such moneys are so deposited.

Selection for Redemption. Subject to applicable procedures of DTC while the Bonds are held in book-entry form by DTC, if less than all of the Bonds are to be called for redemption, the Bonds to be redeemed shall be selected by the University in such manner as the University in its discretion may determine.

Exchange and Transfer

If for any reason the book-entry only system is discontinued, the Bonds may be transferred upon the registration books of the Registrar, by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such Bond for cancellation, accompanied by delivery of a written instrument of transfer, duly executed in a form approved by the Registrar. The Registrar will not be required to transfer or exchange any Bond selected or called for redemption pursuant to the provisions therein or from a Record Date through the next succeeding Interest Payment Date. Whenever any Bond is surrendered for registration of transfer, the University will execute and the Registrar will authenticate and deliver a new Bond, of authorized denominations of the same maturity and interest rate and for a like aggregate principal amount. Such transfer will be without charge to the Bondholder, except that the Registrar will require the Bondholder requesting such transfer to pay any tax or other governmental charge required to be paid with respect to such transfer.

The Bonds may be exchanged at the office of the Registrar for a like aggregate principal amount of the Bonds of other authorized denominations of the same maturity and interest rate. Such exchange will be without charge to

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the Bondholder, except that the Registrar will require the Bondholder requesting such exchange to pay any tax or other governmental charge required to be paid with respect to such exchange.

APPLICATION OF BOND PROCEEDS

Plan of Finance

Proceeds of the Bonds will be used, together with other available funds (a) to finance the acquisition, construction and equipping of one or more engineering research facilities; (b) to refund the University's note evidencing the University's obligations related to an existing line of credit, which financed the acquisition, construction, expansion, renovation and equipping of certain of the University's basketball practice facilities; (c) to refund all or a portion of the University's (i) General Revenue Pledge Refunding Bonds, Series 2012A (the "Series 2012A Bonds"), the proceeds of which were used to refinance the costs associated with East Hall of the University's Engineering School (the "2012A Project") and (ii) General Revenue Pledge Refunding Bonds, Series 2012B (the "Series 2012B Bonds"), the proceeds of which were used to refinance the costs associated with Snead Hall of the University's School of Business (the "2012B Project"); (d) to finance all or a portion of the termination payments due from the University to Deutsche Bank AG or an affiliate in connection with the termination of two interest rate swaps associated with the Series 2012A Bonds and Series 2012B Bonds; and (e) to finance, if and as needed, costs of issuance related to the issuance of the Bonds, working capital, routine capital expenditures for any of the foregoing described projects, and other related costs.

The 2012A Project is owned by the Virginia Commonwealth University School of Engineering Foundation (the "Engineering Foundation"). The Engineering Foundation is a Virginia nonstock corporation exempt from federal taxation under Section 501(c)(3) of the Code (as hereinafter defined). In connection with the Series 2012A Bonds, the University and the Engineering Foundation entered into an agreement under which the Engineering Foundation pays to the University an amount equal to debt service on the Series 2012A Bonds as it becomes due. The University and the Engineering Foundation will amend such agreement to obligate the Engineering Foundation to pay a portion of the debt service on the Bonds. The Engineering Foundation will have no obligation to make payments on the Bonds to the holders thereof. The Engineering Foundation leases all or parts of the 2012A Project to the University, either directly or indirectly through a related entity.

The 2012B Project is owned by the Virginia Commonwealth University School of Business Foundation (the "Business Foundation" and together with the Engineering Foundation, the "Foundations"). The Business Foundation is a Virginia nonstock corporation exempt from federal taxation under Section 501(c)(3) of the Code. In connection with the Series 2012B Bonds, the University and the Business Foundation entered into an agreement pursuant to which the Business Foundation pays to the University an amount equal to debt service on the Series 2012B Bonds as it becomes due. The University and the Business Foundation will amend such agreement to obligate the Business Foundation to pay a portion of the debt service on the Bonds. The Business Foundation will have no obligation to make payments on the Bonds to the holders thereof. The Business Foundation leases all or parts of the 2012B Project to the University, either directly or indirectly through a related entity.

Neither the Engineering Foundation nor the Business Foundation is obligated to make payments of debt service on the Bonds, and no assets of the Engineering Foundation or the Business Foundation are pledged as security for the Bonds.

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Estimated Sources and Uses of Funds

The proceeds of the Bonds are expected to be applied on the date of issue in the estimated amounts as follows (rounded to the nearest dollar):

Estimated Sources of Funds Series 2018A Bonds Series 2018B Bonds Total

Principal Amount of the Bonds $ $ $ Plus/Less Net Original Issue Premium/Discount University Funds

Total Sources $ $ $

Estimated Uses of Funds

Refunding of Prior Debt $ $ $ Deposit to Construction Fund Swap Termination Payments Costs of Issuance(1)

Total Uses $ $ $

(1) Including, but not limited to, Underwriter's discount, professional fees and costs.

Below is a description of the bonds and note anticipated to be refunded with the proceeds of the Bonds and other available funds. The University expects to use other available funds to redeem on the below-referenced redemption date, the remaining outstanding portions of the Series 2012A Bonds and the Series 2012B Bonds so that none of those bonds will be outstanding after the closing of the Bonds.

The University's General Revenue Pledge Refunding Bonds, Series 2012A

Maturity Refunded Principal Amount* Interest Rate Redemption Date* November 1, 2030 $29,840,000 Variable 11/01/2018

The University's General Revenue Pledge Refunding Bonds, Series 2012B

Maturity Refunded Principal Amount* Interest Rate Redemption Date* November 1, 2030 $18,970,000 Variable 11/01/2018

The University's taxable note related to its line of credit.

Maturity Refunded Principal Amount* Interest Rate Redemption Date* July 17, 2019 $6,645,504 Variable 11/01/2018

SECURITY FOR THE BONDS

The following summary of the security for the Bonds is qualified in its entirety and reference is hereby made to Appendix C hereto. For definitions of certain capitalized terms used but not defined herein, see Appendix C attached hereto.

* Preliminary, subject to change.

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Pledge of Pledged Revenues

Under the Bond Resolution, the University is required to pay the principal of and interest on the Bonds as they become due upon redemption, acceleration, maturity or otherwise. The Bonds are secured, together with the Outstanding General Revenue Pledge Bonds (as hereinafter defined) and other Credit Obligations of the University secured on a parity basis with the Bonds (collectively, "Parity Credit Obligations"), by a pledge of Pledged Revenues. See "Existing and Permitted Parity Credit Obligations" below.

"Pledged Revenues" means any or all of the revenues now or hereafter available to the University which are not required by law, by binding contract entered into prior to the date of the Bond Resolution, or by the provisions of any Qualifying Senior Obligation (as hereinafter defined) to be devoted to some other purpose, and will include, without limitation, all revenues pledged to the payment of any Qualifying Senior Obligation net of amounts necessary to pay it or any operating or other expenses, the payment of which is required or permitted to be made with such revenues prior to payment of such Qualifying Senior Obligation.

"Qualifying Senior Obligation" means any existing Credit Obligation (other than Outstanding General Revenue Pledge Bonds or any other Parity Credit Obligation) secured by a pledge of any portion of the University's revenues, any additional Credit Obligation to which a portion of the University's revenues are pledged on a superior basis to the pledge of Pledged Revenues securing the Bonds, and any additional Credit Obligations issued to refund any such Qualified Senior Obligation, all as described in the Bond Resolution. See "Qualifying Senior Obligations" and "Existing and Permitted Parity Credit Obligations" below.

Qualifying Senior Obligations

The Bond Resolution permits the University, within the limitations described below and subject to certain other restrictions, to pledge in the future the revenues from certain revenue producing facilities or systems to the payment of future Qualifying Senior Obligations, with such pledge being superior to the pledge securing the Bonds and with operating expenses of such facilities or systems also having a prior claim to such revenues. For example, Qualifying Senior Obligations may include those secured by a pledge of net revenues from certain dormitory, dining hall, parking or student fees. All such pledges would be (1) prior and superior to the pledge of those specific revenues securing the Bonds, and (2) net of operating expenses for the related facility or system, and those specific revenues would be available to pay debt service on the Bonds and other Parity Credit Obligations only to the extent such revenues are not required for either operating expenses of the facility or system involved or debt service on the related Qualifying Senior Obligations.

Under the Bond Resolution, the University may incur, assume, guarantee or otherwise become liable on certain Qualifying Senior Obligations and may pledge and apply such portion of the Pledged Revenues as may be necessary to provide for (1) the payment of any such Credit Obligation, (2) the funding of reasonable reserves therefor and (3) the payment of operating and other reasonable expenses of the facilities financed in whole or in part with the proceeds of such Credit Obligation or facilities reasonably related to such facilities, and such pledge shall be senior and superior in all respects to the pledge of Pledged Revenues securing the Bonds and any other Parity Credit Obligations, but only if, prior to the incurrence of each such Credit Obligation, an Authorized Officer of the University certifies in writing that (1) taking into account the incurrence of such proposed Credit Obligation, (a) the University will have sufficient funds to meet all of its financial obligations, including its obligations to pay principal of and interest on all Credit Obligations, for all Fiscal Years to and including the second full Fiscal Year after the later of (i) the issuance of such proposed Credit Obligation and (ii) the completion of any facility financed with its proceeds, and (b) such Authorized Officer has no reason to believe that the University will not have sufficient funds to pay all amounts due under all indebtedness of the University during the term of such proposed Credit Obligation, (2) to the best of the Authorized Officer's knowledge, the University is not in default in the performance and observance of any of the provisions of the Bond Resolution, and (3) in connection with the issuance of such proposed Credit Obligation, the University has received an opinion of counsel nationally recognized in matters concerning municipal bonds to the effect such proposed Credit Obligation has been validly issued under the relevant provisions of the Constitution of Virginia.

The Bond Resolution further permits the University to issue bonds to refund any Qualifying Senior Obligations and to secure such refunding bonds with the same source of revenues securing the Qualifying Senior

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Obligations being refunded. Upon the defeasance of the refunded Qualifying Senior Obligations pursuant to any such refunding, the refunding bonds will be considered Qualifying Senior Obligations under the Bond Resolution.

Currently, other than the University's portion (which as of June 30, 2018, was approximately $55 million) of certain general revenue bonds previously issued by the Commonwealth, there are no Qualifying Senior Obligations and the University has no plans to issue any Qualifying Senior Obligations.

Existing and Permitted Parity Credit Obligations

The University previously has issued Parity Credit Obligations, the outstanding principal amount of which as of June 30, 2018, was approximately $420 million (which figure includes the amount of the indebtedness of the University being refunded with the proceeds of the Bonds) (collectively, the "Outstanding General Revenue Pledge Bonds"). All of the Outstanding General Revenue Pledge Bonds are secured by a pledge of Pledged Revenues on a parity with the pledge securing the Bonds. See "Financial and Related Information of the University" and "Outstanding University Indebtedness" in Appendix A attached hereto.

The Bond Resolution permits the University to incur, assume, guarantee or otherwise become liable on other indebtedness that may be secured by a pledge of the Pledged Revenues ranking on a parity with the pledge of Pledged Revenues securing the Outstanding General Revenue Pledge Bonds and the Bonds, but only if an Authorized Officer of the University certifies in writing that (1) taking into account the incurrence of such proposed Parity Credit Obligation, (a) the University will have sufficient funds to meet all of its financial obligations, including its obligations to pay principal of and interest on all Credit Obligations, for all Fiscal Years to and including the second full Fiscal Year after the later of (i) the issuance of such Parity Credit Obligation and (ii) the completion of any facility financed with the proceeds of such Parity Credit Obligation, and (b) such Authorized Officer has no reason to believe that the University will not have sufficient funds to pay all amounts due under all indebtedness of the University during the term of such Parity Credit Obligation, and (2) to the best of such Authorized Officer's knowledge, the University is not in default in the performance and observance of any of the provisions of the Bond Resolution.

The Bonds and the interest thereon shall not be deemed to constitute a debt or liability of the Commonwealth, legal, moral or otherwise. Neither the Commonwealth nor the University shall be obligated to pay the principal of or interest on the Bonds or other costs incident thereto except from sources pledged therefor in the Bond Resolution, and neither the faith and credit nor funds of the University are pledged to the payment of the principal of or the interest on the Bonds or other costs incident thereto. The University has no taxing power.

Defeasance

If the University provides to the Paying Agent cash or noncallable Government Obligations sufficient to provide for payment of all or part of the Bonds and meets certain other requirements, such Bonds will no longer be secured by the pledge of Pledged Revenues but instead by such cash or noncallable Government Obligations. Such requirements are described more fully in "DEFEASANCE" in Appendix C attached hereto.

No Liens or Reserves; Disposition of Assets

The Bonds are not secured by any lien on or security interest in any property of the University or any reserves. The University is generally free to sell, encumber or otherwise dispose of its property if such disposition is either in the ordinary course of business, or if an Authorized Officer certifies in writing that taking into account such disposition (1) the University will have sufficient funds to meet all of its financial obligations, including its obligations to pay principal of and interest on all Credit Obligations for all Fiscal Years, to and including the second full Fiscal Year after such disposition and (2) such Authorized Officer has no reason to believe that the University will not have sufficient funds to pay all amounts due under all indebtedness of the University then outstanding.

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Operating Covenants; Amendments

In the Bond Resolution, the University has entered into certain operating covenants, which, along with other provisions relating to the security for the Bonds, may be amended with or without the consent of the holders of a majority of the principal amount of the Bonds then outstanding. See Appendix C attached hereto.

ENFORCEABILITY OF REMEDIES

The remedies available to the registered holders of the Bonds upon an event of default under the Bond Resolution are in many respects dependent upon regulatory and judicial actions, which are often subject to discretion and delay. Under existing law, the remedies provided under the Bond Resolution may not be readily available or may be limited. The various legal opinions to be delivered concurrently with the delivery of the Bonds will be qualified as to enforceability of the various legal instruments, limitations imposed by bankruptcy, reorganization, insolvency or similar laws affecting the rights of creditors generally and by judicial discretion applicable to equitable remedies and proceedings generally. See Appendix C attached hereto.

INVESTMENT CONSIDERATIONS

The ability of the University to pay debt service on the Bonds may be affected by a wide variety of factors, including the level of appropriations to the University made by the Commonwealth, and the University's ability to attract students, contributions, grants and other funds. The following are some of the factors that may affect the economic well-being of the University or its ability to provide for payment of the Bonds.

Student Fees; Faculty; Grants and Other Support

A substantial portion of the University's revenues is derived from tuition and other fees paid by students, including students from states other than the Commonwealth. Students from states other than the Commonwealth pay higher fees than those paid by residents of the Commonwealth. The University's ability to collect student tuition and fees could be affected by general economic conditions and the general reputation of the University or particular program offerings and any requirements that it reduce its attractiveness to both in-state and out-of-state students. Such changes could also affect the ability of the University to attract and retain high quality faculty, who in turn affect the University's ability to attract students, grants and other forms of financial support.

The University's ability to collect student tuition and fees is further affected by policies of the Virginia General Assembly. It is also the objective of the Virginia General Assembly that public colleges and universities establish a tuition and fee policy whereby Virginia undergraduate students pay not more than one-third of the cost of their education at senior institutions.

The University's revenues include a wide variety of federal funds, including contracts for services, grants, scholarships, loans and other forms of federal assistance. Current economic conditions and legislative response thereto, including any future federal shutdown, may reduce federal funds available for such federal assistance to the University, and further restrictions on a number of such programs or a reduction in the amount of indirect costs the University can recover under some programs could have an adverse effect on the University. See Appendix A.

Fund Raising and Endowment

The University receives funds from alumni and other private donors and from earnings on various endowments and other funds. See "Other Sources of Funding" in Appendix A attached hereto. General economic conditions could affect the University's ability to receive donations at recent levels, and a wide variety of factors could affect the generation of income from endowments and other funds producing income for the University. Current and future legislative tax proposals may reduce the amount of donations received by the University or the Foundations by capping deductions for charitable contributions or otherwise affecting the after-tax cost of donations.

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Support of the Commonwealth

The University is dependent upon tax revenues of the Commonwealth for a portion of its revenues. General economic conditions in the Commonwealth, tax revenue collections and a variety of other factors could affect future appropriations to the University from such revenues, which have declined in recent years. See "General - Relationship with the Commonwealth of Virginia," "Enrollment - Tuition and Fees," "Financial and Related Information on the University - Management's Discussion of Operational and Financial Performance" and "Appropriations from the Commonwealth," all in Appendix A attached hereto.

Pledged Revenues; Transfer of Property

As described more fully in "SECURITY FOR THE BONDS," the University may grant pledges of certain Pledged Revenues that will be superior to or on parity with the pledge securing the Bonds and may dispose of property affecting the generation of such revenues.

The Foundations and the Bonds

The failure of the Foundations to meet their contractual obligations with respect to the Bonds could have an adverse effect on the University's financial condition, although it would not affect the University's legal obligation to pay debt service on the Bonds. Except for the information in "Cash and Investments – University Foundations" in Appendix A attached hereto, no financial information is being provided regarding the Foundations.

Tax-Exempt Status of the Foundations

A portion of the Series 2018A Bonds are being issued as "qualified 501(c)(3) bonds" under the Code. While the Foundations have received letters from the IRS (as hereinafter defined) confirming their status as tax-exempt "501(c)(3) organizations," the Foundations must conduct their operations consistent with applicable tax regulations to maintain such status. Any loss of tax-exempt status by the Foundations could adversely affect the tax-exempt status of the Series 2018A Bonds.

Pension Liabilities

As a state institution, all full-time, salaried employees of the University are enrolled in the Virginia Retirement System. The University cannot predict the effect of future gains or losses on the pension investment assets, which could have an adverse effect on the University's finances. In addition, changes in assumptions or methodology for calculating funding levels could increase the amount of annual pension payments that the University makes. See Appendix B for information regarding the University's pension liabilities and related information.

Loss of Tier 3 Status and Management Agreement with the Commonwealth

The University operates as a "Tier 3" institution of higher education in Virginia, which entitles it to certain autonomy in operations, including the setting of tuition and fees. Under state law, to exercise this autonomy the University must enter into a management agreement with the Commonwealth. See "General – Relationship with the Commonwealth of Virginia" in Appendix A attached hereto. If the University loses its Tier 3 status or otherwise fails to maintain its management agreement with the Commonwealth, the finances of the University could be materially adversely affected because, among other things, the University may not be able to set tuition and fees at rates that would allow it to maintain its current ratings or pay debt service on the Bonds.

CERTAIN LEGAL MATTERS

All legal matters incident to the authorization, issuance, sale and delivery of the Bonds are subject to the approval of McGuireWoods LLP, Richmond, Virginia, Bond Counsel to the University ("Bond Counsel"). Certain legal matters will be passed upon for the University by Jacob A. Belue, Esquire, Interim University Counsel, and for the Underwriters by their counsel, Kaufman & Canoles, P.C., Richmond, Virginia.

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LITIGATION

There is no threatened or pending litigation against or affecting the University that, to the knowledge of the University, seeks to restrain or enjoin the issuance, sale or delivery of the Bonds, or to in any way contest or affect the validity of the Bonds, the Bond Resolution, or any proceedings of the University taken with respect to the issuance or sale of the Bonds or with respect to the Bond Resolution, or in any way contesting the existence or powers of the University.

There is no threatened or pending litigation against or affecting the University that, to the knowledge of the University would materially and adversely affect the University's ability to collect the Pledged Revenues or otherwise materially and adversely affect the University's ability to make payments or principal and interest on the Bonds.

TAX MATTERS – SERIES 2018A BONDS

Opinion of Bond Counsel – Federal Income Tax Status of Interest

Bond Counsel's opinion regarding the Series 2018A Bonds will state that, under current law and assuming the compliance with the Covenants, as hereinafter defined, by the University and certain other persons and entities, interest on the Series 2018A Bonds (including any accrued "original issue discount" properly allocable to the owners of the Series 2018A Bonds) (i) is excludable from the gross income of the owners of the Series 2018A Bonds for purposes of federal income taxation under Section 103 of the Code, and (ii) is not a specific item of tax preference for purposes of the federal alternative minimum tax. See Appendix D for the proposed form of the opinion of Bond Counsel for the Bonds.

Bond Counsel will express no opinion regarding other federal tax consequences arising with respect to the Series 2018A Bonds.

Bond Counsel's opinion speaks as of its date, is based on current legal authority and precedent, covers certain matters not directly addressed by such authority and precedent, and represents Bond Counsel's judgment as to the proper treatment of interest on the Series 2018A Bonds for federal income tax purposes. Bond Counsel's opinion does not contain or provide any opinion or assurance regarding the future activities of the University or about the effect of future changes in the Code, the applicable regulations, the interpretation thereof or the enforcement thereof by the IRS. The University has covenanted, however, to comply with the requirements of the Code.

Reliance and Assumptions; Effect of Certain Changes

As to questions of fact material to its opinion, Bond Counsel is relying upon and assuming the accuracy of certifications and representations of the University, public officials and certain other third parties, which Bond Counsel has not independently verified.

In addition, Bond Counsel is assuming continuing compliance with the Covenants by the University and certain other persons and entities. The Code and the regulations promulgated thereunder contain a number of requirements that must be satisfied after the issuance of the Series 2018A Bonds in order for interest on the Series 2018A Bonds to be and remain excludable from gross income for purposes of federal income taxation. These requirements include, by way of example and not limitation, restrictions on the use, expenditure and investment of the proceeds of the Series 2018A Bonds and the use of the property financed or refinanced by the Series 2018A Bonds, limitations on the source of the payment of and the security for the Series 2018A Bonds, and the obligation to rebate certain excess earnings on the gross proceeds of the Series 2018A Bonds to the Treasury. Prior to the issuance of the Series 2018A Bonds, the University, the Engineering Foundation, and the Business Foundation will enter into a tax certificate for the Series 2018A Bonds (the "Tax Certificate") that contains covenants (the "Covenants") under which each has agreed to comply with such requirements. A failure to comply with the Covenants could cause interest on the Series 2018A Bonds to become includible in gross income for federal income tax purposes retroactively to their date of issue. In the event of noncompliance with the Covenants, the available enforcement remedies may be limited by applicable provisions of law and, therefore, may not be adequate to prevent interest on the Series 2018A Bonds from becoming includible in gross income for federal income tax purposes.

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Bond Counsel has no responsibility to monitor compliance with the Covenants after the date of issue of the Series 2018A Bonds.

Certain requirements and procedures contained, incorporated or referred to in the Tax Certificate, including the Covenants, may be changed and certain actions may be taken or omitted under the circumstances and subject to the terms and conditions set forth in such document. Bond Counsel expresses no opinion concerning any effect on the excludability of interest on the Series 2018A Bonds from gross income for federal income tax purposes of any such subsequent change or action that may be made, taken or omitted upon the advice or approval of counsel other than Bond Counsel.

Certain Collateral Federal Tax Consequences

The following is a brief discussion of certain collateral federal income tax matters with respect to the Series 2018A Bonds. It does not purport to address all aspects of federal taxation that may be relevant to a particular owner thereof. Prospective purchasers of such Series 2018A Bonds, particularly those who may be subject to special rules, are advised to consult their own tax advisors regarding the federal tax consequences of owning or disposing of the Series 2018A Bonds.

Prospective purchasers of the Series 2018A Bonds should be aware that the ownership of tax-exempt obligations may result in collateral federal income tax consequences to certain taxpayers including, without limitation, financial institutions, certain insurance companies, certain corporations (including S corporations and foreign corporations), certain foreign corporations subject to the "branch profits tax," individual recipients of Social Security or Railroad Retirement benefits, taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry tax-exempt obligations and taxpayers attempting to qualify for the earned income tax credit.

In addition, prospective purchasers should be aware that the interest paid on, and the proceeds of the sale of, tax-exempt obligations, including the Series 2018A Bonds, are in many cases required to be reported to the IRS in a manner similar to interest paid on taxable obligations. Additionally, backup withholding may apply to any such payments made to any Series 2018A Bond owner who fails to provide an accurate Form W-9 Request for Taxpayer Identification Number and Certification, or a substantially identical form, or to any Series 2018A Bond owner who is notified by the IRS of a failure to report all interest and dividends required to be shown on federal income tax returns. The reporting and withholding requirements do not in and of themselves affect the excludability of such interest from gross income for federal income tax purposes or any other federal tax consequence of purchasing, holding or selling tax-exempt obligations.

Original Issue Discount

The "original issue discount" ("OID") on any Series 2018A Bond is the excess of such bond's stated redemption price at maturity (excluding certain "qualified stated interest" that is unconditionally payable at least annually at prescribed rates) over the issue price of such bond. The "issue price" of a bond is the initial offering price to the public at which price a substantial amount of such bonds of the same maturity was sold. The "public" does not include bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers. The issue price for each maturity of the Series 2018A Bonds is expected to be the initial public offering price set forth on the inside front cover page of this Official Statement, but is subject to change based on actual sales. Accrued OID on the Series 2018A Bonds with OID (the "OID Bonds") is excludable from gross income for purposes of federal and Virginia income taxation. However, the portion of the OID that is deemed to have accrued to the owner of an OID Bond in each year may be included in determining the alternative minimum tax with respect to the Series 2018A Bonds and the distribution requirements of certain investment companies and may result in some of the collateral federal income tax consequences mentioned in the preceding subsection. Therefore, owners of OID Bonds should be aware that the accrual of OID in each year may result in alternative minimum tax liability, additional distribution requirements or other collateral federal and Virginia income tax consequences although the owner may not have received cash in such year.

OID is treated under Section 1288 of the Code as accruing under a constant yield method that takes into account compounding on a semiannual or more frequent basis. If an OID Bond is sold or otherwise disposed of between semiannual compounding dates, then the OID which would have accrued for that semiannual compounding

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period for federal income tax purposes is to be apportioned in equal amounts among the days in such compounding period.

In the case of an original owner of an OID Bond, the amount of OID that is treated as having accrued on such OID Bond is added to the owner's cost basis in determining, for federal income tax purposes, gain or loss upon its disposition (including its sale, redemption or payment at maturity). The amounts received upon such disposition that are attributable to accrued OID will be excluded from the gross income of the recipients for federal income tax purposes. The accrual of OID and its effect on the redemption, sale or other disposition of OID Bonds that are not purchased in the initial offering at the initial offering price may be determined according to rules that differ from those described above.

Prospective purchasers of OID Bonds should consult their own tax advisors with respect to the precise determination for federal income tax purposes of the OID accrued upon sale or redemption of such OID Bonds and with respect to state and local tax consequences of owning OID Bonds.

Bond Premium

In general, if an owner acquires a bond for a purchase price (excluding accrued interest) or otherwise at a tax basis that reflects a premium over the sum of all amounts payable on the bond after the acquisition date (excluding certain "qualified stated interest" that is unconditionally payable at least annually at prescribed rates), that premium constitutes "bond premium" on that bond (a "Premium Bond"). In general, under Section 171 of the Code, an owner of a Premium Bond must amortize the bond premium over the remaining term of the Premium Bond, based on the owner's yield over the remaining term of the Premium Bond, determined based on constant yield principles. An owner of a Premium Bond must amortize the bond premium by offsetting the qualified stated interest allocable to each interest accrual period under the owner's regular method of accounting against the bond premium allocable to that period. In the case of a tax-exempt Premium Bond, if the bond premium allocable to an accrual period exceeds the qualified stated interest allocable to that accrual period, the excess is a nondeductible loss. Under certain circumstances, the owner of a Premium Bond may realize a taxable gain upon disposition of the Premium Bond even though it is sold or redeemed for an amount less than or equal to the owner's original acquisition cost. Prospective purchasers of any Premium Bond should consult their own tax advisors regarding the treatment of bond premium for federal income tax purposes, including various special rules relating thereto, and state and local tax consequences, in connection with the acquisition, ownership, amortization of bond premium on, sale, exchange, or other disposition of such Premium Bond.

Effects of Future Enforcement, Regulatory and Legislative Actions

The IRS has established a program to audit tax-exempt obligations to determine whether the interest thereon is includible in gross income for federal income tax purposes. If the IRS does audit the Series 2018A Bonds, the IRS will, under its current procedures, treat the University as the taxpayer. As such, the beneficial owners of the Series 2018A Bonds will have only limited rights, if any, to participate in the audit or any administrative or judicial review or appeal thereof. Any action of the IRS, including but not limited to the selection of the Series 2018A Bonds for audit, or the course or result of such audit, or an audit of other obligations presenting similar tax issues, may affect the marketability or market value of the Series 2018A Bonds.

Legislation affecting tax-exempt obligations is regularly considered by the U.S. Congress and various state legislatures. Such legislation may effect changes in federal or state income tax rates and the application of federal or state income tax laws (including the substitution of another type of tax), or may repeal or reduce the benefit of the excludability of interest on the tax-exempt obligations from gross income for federal or state income tax purposes. The Treasury and the IRS are continuously drafting regulations to interpret and apply the provisions of the Code and court proceedings may be filed the outcome of which could modify the federal or state tax treatment of tax-exempt obligations. There can be no assurance that legislation proposed or enacted after the date of issue of the Series 2018A Bonds, regulatory interpretation of the Code or actions by a court involving either the Series 2018A Bonds or other tax-exempt obligations will not have an adverse effect on the Series 2018A Bonds' federal or state tax status, marketability or market price or on the economic value of the tax-exempt status of the interest on the Series 2018A Bonds.

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Prospective purchasers of the Series 2018A Bonds should consult their own tax advisors regarding the potential consequences of any such pending or proposed federal or state tax legislation, regulations or litigation, as to which Bond Counsel expresses no opinion.

Opinion of Bond Counsel – Virginia Income Tax Consequences

Bond Counsel's opinion regarding the Series 2018A Bonds also will state that, under current law, interest on the Series 2018A Bonds is excludable from the gross income of the owners thereof for purposes of income taxation by the Commonwealth. Bond Counsel will express no opinion regarding (i) other tax consequences arising with respect to the Series 2018A Bonds under the laws of the Commonwealth or (ii) any consequences arising with respect to the Series 2018A Bonds under the tax laws of any state or local jurisdiction other than the Commonwealth. Prospective purchasers of the Series 2018A Bonds should consult their own tax advisors regarding the tax status of interest on the Series 2018A Bonds in a particular state or local jurisdiction other than the Commonwealth.

TAX MATTERS – SERIES 2018B BONDS

Opinion of Bond Counsel – Federal Income Tax Status of Interest

In the opinion of Bond Counsel, under existing law, interest on the Series 2018B Bonds is includible in the gross income of the owners thereof for federal income tax purposes.

Summary

The following is a summary of certain of the United States federal income tax consequences of the ownership and disposition of the Series 2018B Bonds as of the date hereof. Each prospective purchaser of the Series 2018B Bonds should consult with its own tax advisor regarding the application of United States federal income tax laws, as well as any state, local, foreign or other tax laws, to its particular situation.

This summary is based on the Internal Revenue Code of 1986, as amended (the "Code"), as well as U.S. Treasury Department regulations and administrative and judicial rulings and practice. Legislative, judicial and administrative changes may occur, possibly with retroactive effect, that could alter or modify the continued validity of the statements and conclusions set forth herein. This summary is intended as a general explanatory discussion of the consequences of holding the Series 2018B Bonds generally and does not purport to furnish information in the level of detail or with the prospective purchaser's specific tax circumstances that would be provided by a prospective purchaser's own tax advisor. For example, this summary deals only with Series 2018B Bonds held as capital assets within the meaning of Section 1221 of the Code and does not address tax consequences to owners that may be relevant to investors subject to special rules, such as trusts, estates, tax-exempt investors, cash method taxpayers, dealers in securities, currencies or commodities, banks, thrifts, insurance companies, electing large partnerships, mutual funds, regulated investment companies, real estate investment trusts, S corporations, persons that hold Series 2018B Bonds as part of a straddle, hedge, integrated or conversion transaction, and persons whose "functional currency" is not the U.S. dollar. In addition, this summary does not address alternative minimum tax issues or the indirect consequences to a holder of an equity interest in an owner of Series 2018B Bonds.

As used herein, a "U.S. holder" is a U.S. person that is a beneficial owner of a Series 2018B Bond. For these purposes, a "U.S. person" is a citizen or resident of the United States, a corporation, partnership or other entity created or organized in or under the laws of the United States or any political subdivision thereof (except, in the case of a partnership, to the extent otherwise provided in U.S. Treasury Department regulations), an estate the income of which is subject to United States federal income taxation regardless of its source or a trust if (i) a United States court is able to exercise primary supervision over the trust's administration and (ii) one or more U.S. persons have the authority to control all of the trust's substantial decisions. A "non-U.S. holder" is a holder (or beneficial owner) of a Series 2018B Bond that is not a U.S. person.

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Tax Status of the Series 2018B Bonds

U.S. Holders

Interest. Interest on the Series 2018B Bonds generally will be taxable to a U.S. holder as ordinary interest income, at the time such amounts are accrued or received, in accordance with the U.S. holder's method of accounting for federal income tax purposes.

To the extent that the issue price of any maturity of the Series 2018B Bonds is less than the amount to be paid at maturity of such Series 2018B Bonds (excluding amounts stated to be interest and payable at least annually over the term of such Series 2018B Bonds), the difference may constitute OID. U.S. holders of Series 2018B Bonds will be required to include OID in income for federal income tax purposes as it accrues, in accordance with a constant yield method, based on a compounding of interest (which may be before the receipt of cash payments attributable to such income). Under this method, U.S. holders generally will be required to include in income increasingly greater amounts of OID in successive accrual periods.

Series 2018B Bonds purchased for an amount in excess of the principal amount payable at maturity (or, in some cases, at their earlier call date) will be treated as issued at a premium. A U.S. holder of a Series 2018B Bond issued at a premium may make an election, applicable to all debt securities purchased at a premium by such U.S. holder, to amortize such premium, using a constant yield method over the term of such Bond.

Sale or Other Taxable Disposition of the Series 2018B Bonds. Unless a non-recognition provision of the Code applies, the sale, exchange, redemption, retirement or other disposition of a Series 2018B Bond will be a taxable event for federal income tax purposes. In such event, in general, a U.S. holder of a Series 2018B Bond will recognize gain or loss equal to the difference between (i) the amount of cash plus the fair market value of property received (except to the extent attributable to accrued but unpaid interest on the Series 2018B Bond, which will be taxed in the manner described above) and (ii) the U.S. holder's adjusted U.S. federal income tax basis in the Series 2018B Bond (generally, the purchase price paid by the U.S. holder for the Series 2018B Bond, decreased by any amortized premium, and increased by the amount of any OID previously included in income by such U.S. holder with respect to such Series 2018B Bond). Any such gain or loss generally will be capital gain or loss. In the case of a non-corporate U.S. holder of Series 2018B Bonds, the maximum marginal federal income tax rate applicable to any such gain will be lower than the maximum marginal federal income tax rate applicable to ordinary income if such U.S. holder's holding period for the Series 2018B Bonds exceeds one year. The deductibility of capital losses is subject to limitations.

Information Reporting and Backup Withholding. Payments on the Series 2018B Bonds generally will be subject to U.S. information reporting and possibly to "backup withholding." Under Section 3406 of the Code and applicable U.S. Treasury Department regulations issued thereunder, a non-corporate U.S. holder of the Series 2018B Bonds may be subject to backup withholding at the current rate of 24% with respect to "reportable payments," which include interest paid on the Series 2018B Bonds and the gross proceeds of a sale, exchange, redemption, retirement or other disposition of the Series 2018B Bonds. The payor will be required to deduct and withhold the prescribed amounts if (i) the payee fails to furnish a U.S. taxpayer identification number ("TIN") to the payor in the manner required, (ii) the Internal Revenue Service ("IRS") notifies the payor that the TIN furnished by the payee is incorrect, (iii) there has been a "notified payee underreporting" described in Section 3406(c) of the Code or (iv) the payee fails to certify under penalty of perjury that the payee is not subject to withholding under Section 3406(a)(l)(C) of the Code. Amounts withheld under the backup withholding rules may be refunded or credited against the U.S. holder's federal income tax liability, if any, provided that the required information is timely furnished to the IRS. Certain U.S. holders (including among others, corporations and certain tax-exempt organizations) are not subject to backup withholding. A holder's failure to comply with the backup withholding rules may result in the imposition of penalties by the IRS.

Non-U.S. Holders

Interest. Subject to the discussion below under the headings "Information Reporting and Backup Withholding" and "FATCA," payments of principal of, and interest on, any Series 2018B Bond to a Non-U.S. holder, other than (i) a controlled foreign corporation (as such term is defined in the Code), (ii) a "10-percent shareholder" (within the meaning of Section 871(h) of the Code) and (iii) a bank which acquires such Series 2018B Bond in

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consideration of an extension of credit made pursuant to a loan agreement entered into in the ordinary course of business, will not be subject to any U.S. federal withholding tax provided that the non-U.S. holder of the Series 2018B Bond provides a certification completed in compliance with applicable statutory and regulatory requirements, which requirements are discussed below under the heading "Information Reporting and Backup Withholding," or an exemption is otherwise established.

Disposition of Series 2018B Bonds. Subject to the discussion below under the headings "Information Reporting and Backup Withholding" and "FATCA," any gain realized by a Non-U.S. holder upon the sale, exchange, redemption, retirement or other disposition of a Series 2018B Bond generally will not be subject to U.S. federal income tax, unless (i) such gain is effectively connected with the conduct by such Non-U.S. holder of a trade or business within the United States; or (ii) in the case of any gain realized by an individual Non-U.S. holder, such holder is present in the United States for 183 days or more in the taxable year of such sale, exchange, redemption, retirement or other disposition and certain other conditions are met.

U.S. Federal Estate Tax. A Series 2018B Bond that is held by an individual who at the time of death is not a citizen or resident of the United States will not be subject to U.S. federal estate tax as a result of such individual's death, provided that, at the time of such individual's death, payments of interest with respect to such Series 2018B Bond would not have been effectively connected with the conduct by such individual of a trade or business within the United States.

Information Reporting and Backup Withholding. Subject to the discussion below under the heading "FATCA," under current U.S. Treasury Department regulations, payments of principal and interest on any Series 2018B Bonds to a Non-U.S. holder will not be subject to any backup withholding tax requirements if the Non- U.S. holder or a financial institution holding the Series 2018B Bond on behalf of the Non-U.S. holder in the ordinary course of its trade or business provides an appropriate certification to the payor and the payor does not have actual knowledge that the certification is false. If a Non-U.S. holder provides the certification, the certification must give the name and address of such holder, state that such holder is not a United States person, or, in the case of an individual, that such holder is neither a citizen nor a resident of the United States, and the holder must sign the certificate under penalties of perjury. The current backup withholding tax rate is 24%.

Foreign Account Tax Compliance Act ("FATCA"). Sections 1471 through 1474 of the Code impose a 30% withholding tax on certain types of payments made to foreign financial institutions, unless the foreign financial institution enters into an agreement with the U.S. Treasury Department to, among other things, undertake to identify accounts held by certain U.S. persons or U.S.-owned entities, annually report certain information about such accounts, and withhold 30% on payments to account holders whose actions prevent it from complying with these and other reporting requirements, or unless the foreign financial institution is otherwise exempt from those requirements. In addition, FATCA imposes a 30% withholding tax on the same types of payments to a non-financial foreign entity unless the entity certifies that it does not have any substantial U.S. owners or the entity furnishes identifying information regarding each substantial U.S. owner. Failure to comply with the additional certification, information reporting and other specified requirements imposed under FATCA could result in the 30% withholding tax being imposed on payments of principal of and interest on the Series 2018B Bonds and sales proceeds of Series 2018B Bonds held by or through a foreign entity. In general, withholding under FATCA currently applies to payments of U.S. source interest (including OID) and will apply to (i) gross proceeds from the sale, exchange or retirement of debt obligations paid after December 31, 2018 and (ii) certain "pass-thru" payments no earlier than January 1, 2019. Prospective investors should consult their own tax advisors regarding FATCA and its effect on them.

Defeasance

Defeasance of any Series 2018B Bond may result in a deemed disposition of such Series 2018B Bond and a deemed reissuance of a "new" Series 2018B Bond to the holder for U.S. federal income tax purposes, in which case a holder would recognize taxable gain or loss equal to the difference between the amount realized from the deemed exchange and the holder's adjusted tax basis in the Series 2018B Bond. The "new" Series 2018B Bond deemed reissued in such a defeasance may be treated as issued with original issue discount in an amount equal to the excess, if any, of the stated redemption price at maturity of the "new" Series 2018B Bond over its deemed issue price. Prospective investors are urged to consult their own tax advisors regarding the tax consequences of a defeasance of the Series 2018B Bonds.

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Additional Medicare Tax

For taxable years beginning after December 31, 2012, an additional 3.8% tax will be imposed on the "net investment income" of certain individuals, estates and trusts that have "modified adjusted gross income" above a certain threshold. Net investment income includes, but is not limited to, interest on a Series 2018B Bond and gains from the sale or disposition of a Series 2018B Bond. Prospective investors should consult their tax advisors regarding the possible applicability of this tax to an investment in the Series 2018B Bonds.

Opinion of Bond Counsel – Virginia Income Tax Consequences

Bond Counsel's opinion regarding the Series 2018B Bonds also will state that, under current law, the income on the Series 2018B Bonds, including any profit made on the sale thereof, is exempt from all taxation by the Commonwealth or any political subdivision thereof. Bond Counsel will express no opinion regarding (1) other tax consequences arising with respect to the Series 2018B Bonds under the laws of the Commonwealth or (2) any consequences arising with respect to the Series 2018B Bonds under the tax laws of any state or local jurisdiction other than the Commonwealth. Prospective purchasers of the Series 2018B Bonds should consult their own tax advisors regarding the tax status of interest and other income on the Series 2018B Bonds in a particular state or local jurisdiction other than the Commonwealth.

FINANCIAL ADVISOR

Raymond James & Associates, Inc. ("Raymond James") has acted as financial advisor to the University in connection with the issuance of the Bonds. Raymond James is not obliged to undertake, and has not undertaken, an independent verification of, nor has assumed responsibility for the accuracy, completeness or fairness of the information contained in this Official Statement.

UNDERWRITING

The Bonds are being purchased by Merrill Lynch, Pierce, Fenner & Smith Incorporated, Davenport & Company LLC and Wells Fargo Bank, National Association (collectively, the "Underwriters"). The bond purchase agreement for the Bonds (the "Bond Purchase Agreement") sets forth the Underwriters' obligation to purchase the Bonds at an aggregate purchase price of $______, representing the par amount of the Series 2018A Bonds, plus [an original issue premium] of $______on the Series 2018A Bonds, and less an Underwriters' discount of $______on the Series 2018A Bonds (approximately ______% of principal amount of the Series 2018A Bonds) and the par amount of the Series 2018B Bonds, and less an Underwriters' discount of $______on the Series 2018B Bonds (approximately ______% of principal amount of the Series 2018B Bonds), and is subject to certain terms and conditions, including the approval of certain legal matters by counsel. The Bond Purchase Agreement provides that the Underwriters will purchase all of the Bonds if any are purchased. The Underwriters may offer and sell the Bonds to certain dealers (including dealers depositing the Bonds into investment trusts) and others at prices or yields different from the public offering prices and yields stated on the inside cover of this Official Statement. The public offering prices and yields may be changed from time to time at the discretion of the Underwriters.

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

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

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

FINANCIAL STATEMENTS

The audited financial statements of the University for the fiscal year ended June 30, 2017, have been audited by the Commonwealth's Auditor of Public Accounts and are included in Appendix B. Also included in Appendix B is the University's Management's Discussion and Analysis, which provides an overview of the financial position and results of activities of the University for the fiscal year ended June 30, 2017. Such financial statements have been included in reliance upon the report of the Auditor of Public Accounts. The Auditor of Public Accounts has not and will not be reviewing any matters related to the issuance and sale of the Bonds.

RATINGS

Moody's Investors Service ("Moody's") and S&P Global Ratings ("S&P") have assigned long-term ratings of "Aa2" and "AA-," respectively, to the Bonds.

The ratings express only the views of the rating agencies. The explanation of the significance of the ratings may be obtained from Moody's and S&P, respectively. There is no assurance that any rating will continue for any period of time or that it will not be revised or withdrawn. Any revision or withdrawal of ratings on the Bonds may have an effect on the market price thereof.

CONTINUING DISCLOSURE

The offering of the Bonds is subject to Rule 15c2-12 under the Securities Exchange Act of 1934, as amended ("Rule 15c2-12"), and the University will enter into a continuing disclosure undertaking (the "Continuing Disclosure Undertaking") for the Bonds for the benefit of the registered and Beneficial Owners of the Bonds, substantially in the form attached as Appendix E to this Official Statement. As provided in the Continuing Disclosure Undertaking, the University will agree to provide or cause to be provided the following: (i) certain annual financial information; (ii) timely notice of the occurrence of certain events with respect to the Bonds; and (iii) timely notice of a failure by the University to provide the required annual financial information on or before the date specified in the Continuing Disclosure Undertaking. The University is not contractually obligated to supplement or update the information included in this Official Statement after the delivery of the Bonds except as provided in the Continuing Disclosure Undertaking. The Underwriters have not undertaken either to supplement or update the information included in this Official Statement.

In the last five years, the University has complied in all material respects with its prior continuing disclosure undertaking, except that certain operating data was inadvertently omitted from the annual filings for fiscal year 2013 and fiscal year 2014 and not timely linked to all applicable CUSIPs for the fiscal year 2014 filing.

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RELATIONSHIPS

Jacquelyn E. Stone, a member of the University's Board of Visitors, is a partner with McGuireWoods LLP, which serves as Bond Counsel for the Bonds.

McGuireWoods LLP, Bond Counsel, represents the Paying Agent, Raymond James & Associates, Inc. and each Underwriter in matters unrelated to this financing.

Kaufman & Canoles, P.C., counsel to the Underwriters represents the Paying Agent and Raymond James & Associates, Inc. in matters unrelated to this financing.

MISCELLANEOUS

The summaries or descriptions herein, including the Appendices hereto, of the Bonds, the Bond Resolution and the Continuing Disclosure Undertaking, and all references to other materials not purporting to be quoted in full, are only brief outlines of some of the provisions thereof and do not purport to summarize or describe all of the provisions thereof. So far as any statements are made in this Official Statement involving matters of opinion, whether or not expressly so stated, they are intended merely as such and not as representations of fact.

The attached Appendices are integral parts of this Official Statement and should be read in their entirety together with all of the foregoing information.

The University has reviewed the information contained in this Official Statement and has approved this Official Statement.

The University has authorized the distribution of this Preliminary Official Statement. For purposes of compliance with Rule 15c2-12, this Preliminary Official Statement constitutes an official statement of the University that has been deemed final by the University as of its date except for the omission of information permitted to be omitted by Rule 15c2-12.

VIRGINIA COMMONWEALTH UNIVERSITY

By: Title: Senior Vice President and Chief Financial Officer

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APPENDIX A

VIRGINIA COMMONWEALTH UNIVERSITY

TABLE OF CONTENTS

Page

General ...... A-1 University Governance and Management ...... A-6 Academic Programs ...... A-8 Enrollment ...... A-13 Financial and Related Information on the University ...... A-18 Other Sources of Funding ...... A-21 Cash and Investments ...... A-22 Appropriations from the Commonwealth ...... A-26 Outstanding University Indebtedness ...... A-27 Future Plans ...... A-28

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VIRGINIA COMMONWEALTH UNIVERSITY

General

Virginia Commonwealth University ("VCU" or the "University") is a public, urban research university, located in Richmond, Virginia. The University is composed of two campuses in the City of Richmond: the Medical College of Virginia Campus, located near the financial, governmental and retail district in downtown Richmond, and the Monroe Park Campus, situated two miles to the west and adjacent to the historic Fan District. The two campuses comprise approximately 173 acres of the downtown Richmond area.

In addition to its two Richmond campuses, VCU has a branch campus known as the VCU School of the Arts in Qatar located in Education City, Doha, Qatar, and a branch campus known as The VCU School of Medicine and the VCU School of Pharmacy INOVA campus located at INOVA Fairfax Hospital in Falls Church, Virginia. The VCU School of Pharmacy also has a partnership with the University of Virginia Medical Center in Charlottesville, Virginia.

The University was founded in 1838 as the medical department of Hampden-Sydney College, becoming independent in 1854 as the Medical College of Virginia ("MCV") and state-affiliated in 1860.

The University's Monroe Park Campus began in 1917 as the Richmond School of Social Work and Public Health. In 1925, it became the Richmond Division of the College of William and Mary. In 1939, its name was changed to Richmond Professional Institute ("RPI"). RPI separated from William and Mary in 1962 to become an independent state institution. In 1968, MCV and RPI merged to become Virginia Commonwealth University, the major urban university in the Commonwealth and one of the three major research institutions in Virginia. See "General - Relationship with the Virginia Commonwealth University Health System Authority."

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Enrollment, Faculty and Degree Programs

The University's headcount enrollment includes more than 31,000 students for the 2017-2018 academic year. Through its 11 schools and three colleges, the University offers 217 undergraduate, graduate, professional degree and certificate programs.

In the 2011-2012 academic year, VCU created one of the most effective strategic plans of its history — Quest for Distinction (2012-2018) ("Quest"). Quest became part of the University's vernacular and highlighted VCU's collective vision as a premier, urban public research university. As Quest nears its end and VCU embarks on its new strategic plan for 2018-2025, the following achievements highlight VCU's progress and success since 2012:

 Four-year graduation rate increased from 34% to 45%.  Baccalaureate degrees awarded increased 12% from 4,666 to 5,207.  Underrepresented minority enrollment increased from 25% to 29%.  Number of full-time teaching and research positions increased 14% from 2,048 to 2,338.

The University has approximately 2,338 full-time faculty members. The faculty has won national and international recognition in a wide variety of fields, including the arts, business, science, humanities, education, social work and health care disciplines. The University's academic programs have won national acclaim. The School of the Arts, with programs ranging from theater to sculpture, is consistently the number one ranked public university graduate arts and design program in the country, according to U.S. News & World Report ("U.S. News"). The nationally-ranked School of Social Work has more than 90 years of history. The University's School of Engineering is the site of the $11 million Virginia Microelectronics Center. This semiconductor research facility is designed to give engineering students a dynamic learning environment. The School of Engineering is also the first in the Commonwealth to offer a nuclear engineering program. The award-winning da Vinci Center for Innovation is a unique collaboration of students from the Schools of the Arts, Business and Engineering that advances interdisciplinary innovation and technology-based entrepreneurship. Students at VCU's Brandcenter, a master's degree program for advertising professionals, have, in recent years, taken the top three college competition honors at The One Show, a prestigious New York competition.

In 2018, U.S. News ranked 19 of the University's graduate programs in the top tier of research institutions. Among them, the nurse anesthesia and sculpture programs have been ranked No. 1 in the country. U.S. News also ranked VCU's academic medical center as the No. 2 hospital in Virginia. The University is ranked among the top 100 in National Science Foundation research rankings, and its academic medical centers earned the dual distinction from the Carnegie Foundation for the Advancement of Teaching of Research University, Highest Research Activity and Community Engagement classifications. VCU has also been named one of the top 50 employers for workers over 50 by the AARP.

A further description of VCU's academic programs is provided below in "Academic Programs."

Research

Research at the University covers a broad array of disciplines, including basic and health sciences, public affairs, the humanities, behavioral sciences and business. The University is designated a Carnegie R1 Doctoral University (Highest Research Activity), one of only three in Virginia to be ranked in this top tier of national research universities. The University is ranked in the top 100 in National Science Foundation research rankings in both federal and total research expenditures. The University holds a Clinical and Translational Science Award (CTSA) from the National Institutes of Health making it part of a nationwide consortium of 60 research institutions. This national network seeks to advance science and foster partnerships to speed innovation, working together to turn laboratory discoveries into treatments for patients. Researchers from across the University are supported by the Wright Center for Clinical and Translational Research, established in 2007 to enhance research infrastructure and promote collaboration. The VCU Massey Cancer Center has been a National Cancer Institute designated center since 1975. VCU is one of only 20 public institutions to be part of the CTSA consortium and to hold National Cancer Institute designation, showing VCU's strong commitment to clinical research. See "Other Sources of Funding."

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Relationship with the Virginia Commonwealth University Health System Authority

The University has been involved in providing quality medical care for more than a century and a half. This commitment continues through the Virginia Commonwealth University Health System Authority (the "Authority"). The Authority is a public body corporate, political subdivision and instrumentality of the Commonwealth of Virginia, created by the Medical College of Virginia Hospitals Authority Act (now, the Virginia Commonwealth University Health System Authority Act), Chapter 905 and 1046 of the Acts of Assembly of 1996, as amended. Collectively, the teaching, research and treatment facilities of the Authority, the University and related entities constitute the VCU Medical Center, a major academic medical center located in the City of Richmond, Virginia. The Authority operates approximately 1,079 licensed beds at VCU Medical Center and other related health care facilities.

The VCU Medical Center constituted an operating division of the University until July 1, 1997. At that time, substantially all of the University's non-real estate assets and liabilities relating to VCU Medical Center were transferred to the Authority. The Board of Directors of the Authority (the "Authority Board") consists of 21 members. Pursuant to the legislation governing the Authority, the Rector of the Board of Visitors (the "Board of Visitors") of the University appoints five members of the Authority Board, all of whom must be members of the Board of Visitors while serving on the Authority Board. In addition, the President of the University and the Vice President of Health Sciences of the University serve as ex-officio voting members of the Authority Board during their respective terms of office. Six of the remaining 14 members of the Authority Board are appointed by the Governor of the Commonwealth, while five members are appointed by the Speaker of the Virginia House of Delegates and three by the Committee on Rules of the Virginia Senate.

The VCU Medical Center is located on the MCV Campus in downtown Richmond and includes the North, Main, and Critical Care hospitals, as well as the Ambulatory Care Center, Nelson Clinic, and Children's Pavilion. The VCU Medical Center offers state-of-the-art care in more than 200 specialty areas, many of national and international reputation. The VCU Medical Center is the site of the Commonwealth's only Level 1 Trauma Center, verified in adult, pediatric and burn trauma care. As a leader in healthcare research, the VCU Medical Center offers patients the opportunity to choose to participate in programs that advance evolving treatment, such as those sponsored by the National Cancer Institute through the Massey Cancer Center, a center that combines research undertaken by the University with patient care provided by the Authority.

Other affiliates associated with the Authority include:

MCV Physicians is a Virginia non-stock corporation that is exempt from taxation under Section 501(c)(3) of the Internal Revenue Code. The Authority Board has the exclusive power to appoint and remove members of the Board of Directors of MCV Physicians and to amend its articles of incorporation and bylaws. It is the organization through which physicians on the faculty of the University practice medicine. MCV Physicians bills patients and third party payers directly for the services provided by its physicians at hospitals and clinics operated by the Authority, while the Authority bills for services provided by the Authority and its employees.

VCU Community Memorial Hospital ("CMH"), located in South Hill, Virginia, is a not-for-profit healthcare facility that provides inpatient, outpatient, emergency care, and long-term care for residents of Southside Virginia. CMH became an affiliate of the Authority effective July 1, 2014, at which time the Authority became the sole member of CMH. On November 11, 2017, CMH opened its new 167,000 square foot hospital with 70 private patient beds. A new medical office building opened in February 2018. CMH also operates outpatient clinics in South Hill, Clarksville, and Chase City, Virginia. The Hundley Center is a 179 bed nursing facility on the site of the previous hospital and CMH owns and operates a home health agency. CMH offers a broad range of services including more than a dozen medical specialties, modern imaging modalities, endoscopic modalities, radiation therapy, rehabilitation, occupational health, hospice, and home health. The Community Memorial Foundation ("CMH Foundation") was established to solicit, administer, and distribute funds to support the charitable purpose of CMH and is consolidated on the CMH financial statements.

The Brook Road Children's Facility is controlled and operated by the Authority. It is a specialty rehabilitation facility for children located on Brook Road in the City of Richmond, approximately three miles from the downtown campus. This facility is owned by a separate not-for-profit, Virginia nonstock corporation (the "Crippled Children's Hospital"), which is controlled by the Authority. The facility was originally built in 1928 and has been maintained

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and expanded since that time. It currently operates 47 beds certified by the Center for Medicare and Medicaid Services for long-term pediatric care. Ambulatory services include outpatient rehabilitation therapies, specialty medical clinics, dental clinics and a specialized feeding program. The Brook Road Children's Facility also operates four rehabilitation therapy centers located in Richmond, Petersburg and Fredericksburg, Virginia. Also on the Brook Road campus, the Authority operates the Virginia Treatment Center for Children, which opened in a new facility in April 2018. The VTCC is a 32 licensed bed children's mental and behavioral health facility offering a large range of inpatient and outpatient services.

Virginia Premier Health Plan, Inc. ("Virginia Premier") is a Virginia nonstock corporation wholly owned by the Authority. Virginia Premier is a licensed Medicaid health maintenance organization serving approximately 209,000 members in Virginia. On January 1, 2018, Virginia Premier expanded to include a Medicare Advantage Program.

The revenues of the Authority are not pledged as security for the Bonds.

Relationship with the Commonwealth of Virginia

In 2005, the General Assembly passed legislation known as the Restructured Higher Education Financial and Administrative Operations Act (the "Act"). The Act provides a framework for redefining relationships between public higher education institutions and the Virginia state government. The legislation is founded upon the principles of long- term planning. In exchange for additional authority, institutions must commit to fulfilling specific state goals in areas of access, affordability, breadth of academics, academic standards, student retention and graduation rates, articulation agreements with the Virginia Community College System, economic development, research, elementary and secondary education, and campus safety and security. One of the benefits of the Act is the eligibility of institutions to receive financial incentives if they meet certain performance standards. The most significant of these financial incentives is retaining interest on tuition previously credited to the general fund of Virginia. Upon being certified as having met the performance standards, the University is credited with the interest earned on tuition and fees deposited in the previous year. The University has met the performance standards every year since such standards were implemented in 2005.

The Act also provides for greater autonomy to universities that are able to meet certain standards. The greatest autonomy is afforded to institutions categorized as "Tier 3" institutions. Tier 3 institutions enter into individual Management Agreements with Virginia which specify the institution's increased authority within certain categories. Pursuant to the Act, the University entered into a Management Agreement (the "Management Agreement") that became effective July 1, 2008.

The Management Agreement improves the University's ability to plan over a multi-year time frame; reaffirms the Board of Visitors' authority to set tuition and fees, providing a more predictable funding stream; and provides increased delegated authority in the areas of procurement, financial administration, capital outlay, information technology, and human resources. Pursuant to further legislation enacted by the General Assembly, the University renewed its Management Agreement with the Commonwealth, which renewal became effective on July 1, 2009, after approval by the Governor. Pursuant to the Virginia Acts of Assembly, the Management Agreement will continue to in effect unless the Governor, the General Assembly or the University determines that it needs to be renegotiated or revised. The Management Agreement is currently in full force and effect. Legislation passed during the 2007 General Assembly Session provides the University with broader authority to manage investments of non-general fund reserves and balances. Previously, non-general funds were deposited and held in the State Treasury and the University was credited with interest only on select balances (e.g., state auxiliary money) with the investments generally being restricted to cash and fixed income securities.

As an agency and instrumentality of Virginia, the University is obligated to conform its financial procedures to various Virginia Constitutional and statutory provisions. Except for gifts and endowment income, substantially all the funds received by the University, including grants and contract income, constitute state revenues, which must in all cases be appropriated for the University's use by the General Assembly before the University can spend such revenues. These revenues consist of general fund revenues, primarily derived from tax revenues, appropriated to cover both capital expenditures and a portion of operating expenses, and non-general fund revenues primarily derived from collections by the University itself, such as tuition, room, board and fees. See "Financial and Related

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Information on the University." The Constitution of Virginia provides that once non-general fund revenues are deposited into the State Treasury, and subsequently returned to the University to manage, they cannot be paid out for any purpose "except in pursuance of appropriations made by law."

Under the budgetary procedure followed by Virginia, all state revenues are appropriated by the General Assembly pursuant to appropriation acts adopted at least every two years. Before adopting appropriation acts, the General Assembly receives the recommendation of the Governor contained in the executive budget for the biennium. The Governor prepares the budget on the basis of revenue estimates submitted by the Department of Taxation and reviewed by the Governor's Advisory Board of Economists and Advisory Council on Revenue Estimates. The Governor is assisted in the preparation of the executive budget by the Secretary of Finance and the Department of Planning and Budget, which review and approve the expense estimates and capital outlay requests received from state agencies.

Before any state agency can expend any amount appropriated to it in an appropriation act, the Department of Planning and Budget must allot such funds to such agency. Under the terms of Virginia Acts of Assembly 2018, Special Session I, Chapter 2 ("2018 Appropriation Act"), the Governor must reduce general fund appropriations to avoid a deficit if estimated general fund revenues (mainly state tax revenues) will be insufficient to pay such general fund appropriations in full. The Governor is similarly authorized to reduce non-general fund appropriations by the amount necessary to ensure that expenditures do not exceed supporting revenues for such appropriations.

The State Treasurer receives, maintains custody of, and disburses all state funds. The financial control procedures utilized by Virginia may be generally summarized as follows. Initially, the General Assembly appropriates funds for a particular program. These funds must then be allotted by the Governor and the Department of Planning and Budget. Then, these funds are accounted for by the State Comptroller for certain specific personnel and non- personnel transactions. The Auditor of Public Accounts audits such financial transactions to ensure the reporting of such transactions is in compliance with generally accepted accounting principles.

The General Assembly has historically appropriated to the University all non-general fund revenues collected by the University. While the General Assembly has provided in Section 23.1-1116 of the Code of Virginia of 1950, as amended, that it "will not limit or alter" the right of the University to pledge any revenues to the payment of obligations issued by the University and that it will not act "in any way to impair the rights and remedies" of the holders of such obligations, the power to appropriate funds is entirely within the discretion of the General Assembly. The General Assembly historically has also appropriated general fund revenues to the University for a variety of purposes. See "Appropriations from the Commonwealth."

Like other state agencies dependent wholly or partially upon legislative appropriations for operating revenues, the University has no assurance that the General Assembly will continue to make appropriations of general fund revenues or non-general fund revenues derived from operations of the University, either for operating expenses or capital expenditures, or, if such appropriations are made, that they will be made in a timely fashion or in adequate amounts to enable the University to pay debt service on the Bonds.

The current 2018 Appropriation Act, like previous annual appropriation acts, provides that "when the payment of authorized obligations for operating or capital expenses is required prior to the collection of non-general fund revenues," any state agency may, with the approval of the Secretary of Finance, borrow from the State Treasury the required sum, provided "such loans shall not exceed the amount of the anticipated collections of such revenues and shall be repaid only from such revenues when collected." There can be no assurance that the Secretary of Finance will consent to any such loans requested by the University or that the General Assembly will continue to authorize such loans in future appropriation acts.

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University Governance and Management

Board of Visitors

The powers of the University are exercised by the Board of Visitors, consisting of 16 members appointed by the Governor and confirmed by the Senate of Virginia. The usual term is four years and, except in limited circumstances, service is limited to two full terms. The current members of the Board of Visitors with their term expiration dates and occupations are noted below.

Name Occupation

Ms. Phoebe P. Hall RECTOR, Richmond, VA (2022) Co-founder, CEO and senior partner, Hall & Hall PLC Mr. John A. Luke Jr. VICE RECTOR, Richmond, VA (2020) Chairman, Westrock Ms. Colette W. McEachin SECRETARY, Richmond, VA (2022) Deputy Commonwealth's Attorney, City of Richmond Mr. H. Benson Dendy III, Richmond, VA (2020) President, Vectre Corporation Mr. Todd Haymore, Richmond, VA (2021) Managing Director, Global Economic Development, Commerce Relations, Hunton Andrews Kurth LLP Dr. Robert D. Holsworth, Richmond, VA (2020) Managing Principal, DecideSmart Dr. Gopinath Jadhav, Richmond, VA (2022) Internal Medicine Specialist Mr. Edward McCoy, Glen Allen, VA (2021) President and CEO, Eheart Industrial Service, Inc. Dr. Carol S. Shapiro, Fairfax Station, VA (2019) Physician, group practice, and Instructor, Georgetown University Hospital Mr. Ronald McFarlane, Raleigh, NC (2019) Group President of Specialty Infusion Services, Diplomat Pharmacy Rev. Tyrone E. Nelson, Henrico, VA (2021) Pastor, Sixth Mount Zion Baptist Church Mr. Keith T. Parker, Decatur, GA (2020) General Manager and CEO, Metropolitan Atlanta Rapid Transit Authority Mr. Stuart C. Siegel, Richmond, VA (2022) Former CEO and Chair of the board of S&K Famous Brands Inc. Ms. Jacquelyn E. Stone, Richmond, VA (2019) Partner, McGuireWoods LLP Dr. Shantaram Talegaonkar, North Chesterfield, VA (2019) Board-certified Ophthalmologist Mr. G. Richard Wagoner Jr., Birmingham, MI (2021) Former Chairman and CEO, General Motors

Administration

The names, positions and brief biographies of the principal administrative personnel of the University are as follows:

Michael S. Rao Ph.D., President (52 years old). Dr. Rao became the fifth president of the University, as well as the president of the Authority on July 1, 2009. He holds a tenured appointment as professor of education. Dr. Rao came to VCU with the experience of serving as the senior executive at three universities of increasing size and complexity. Immediately before joining VCU, Dr. Rao served nine years as president and professor at Central Michigan University, a public doctoral research institution with 28,000 students and an operating budget of more than $400 million. From 1998 to 2000, Dr. Rao was chancellor and tenured professor at Montana State University Northern. Dr. Rao served as President of Mission College in Santa Clara, California, where he had also been Dean of Cultural and Technical Arts. Dr. Rao has considerable experience in providing government and higher education consultation services and has written on a range of issues in higher education, including shared governance, diversity and accountability. He holds a bachelor's degree in chemistry from the University of South Florida and a doctorate in higher education administration from the University of Florida.

Gail Hackett, Ph.D., Provost and Vice President - Academic Affairs (66 years old). Dr. Hackett was appointed as Provost and Vice President for Academic Affairs on March 1, 2015. Immediately before joining VCU, Dr. Hackett served as Provost and Executive Vice Chancellor at the University of Missouri, Kansas City, a position

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she has held since 2008. Previously, Dr. Hackett served in a number of administrative positions during her 20-year career at Arizona State University, including university vice provost and founding dean of University College. Dr. Hackett also held faculty positions at the University of California, Santa Barbara, and The Ohio State University. Dr. Hackett holds a bachelor's degree in psychology, a master's degree in counseling, and a doctorate in counseling psychology, all from the Pennsylvania State University.

Marsha D. Rappley, M.D., Vice President - Health Sciences (66 years old). Dr. Rappley was appointed as VCU Vice President for Health Sciences and VCU Health System Chief Executive Officer on August 15, 2015. Immediately before joining VCU, Dr. Rappley, a pediatrician, served as dean of Michigan State University's College of Human Medicine. During her 10 years as dean, NIH and other federal research funding doubled. Endowments grew by 80% in a four-year time span, and the medical school expanded to serve virtually every corner of Michigan. She is a national leader in academic medicine, having recently been elected as chair of the board of directors of the Association of American Medical Colleges. She also serves on the Research Advisory Panel of the AAMC, advocating for support of NIH and the anchor academic institutions like VCU, where this work is carried out in our health system and laboratories every day. Dr. Rappley previously served on the board of directors for the Association for Accreditation of Human Research Protection Programs, the American Board of Pediatrics sub-board for developmental and behavioral pediatrics and chair of the U.S. Food and Drug Administration's pediatric advisory committee. She recently completed six years on the Liaison Committee on Medical Education, which accredits U.S., Puerto Rican and Canadian medical schools. Dr. Rappley was also a tenured professor of pediatrics and human development at Michigan State University and was consistently named a Top Doc and one of the Best Doctors in America by her peers. She has been recognized for distinguished service by the American Academy of Pediatrics. Her research has focused on children with ADHD, learning problems and other serious mental health challenges. Dr. Rappley rose through the ranks at Michigan State University, as a director of various clinics, interim chair of the Pediatrics and Human Development Department, associate dean for academic affairs and then dean. She holds a nursing degree from the University of Michigan and a medical degree from Michigan State University.

Karol K. Gray, Senior Vice President and Chief Financial Officer (64 years old). Ms. Gray became the Senior Vice President and Chief Financial Officer on July 1, 2018. Before assuming the position, Ms. Gray served as Vice President for Finance and Budget since May 2, 2016. Ms. Gray has more than 30 years' experience in higher education finance, operations and management. Immediately before joining VCU, at the University of North Carolina at Chapel Hill, she served as vice chancellor for finance and administration, overseeing a $2.5 billion budget with responsibilities ranging from financial operations, treasury function and auxiliary operations to facilities services. At Stony Brook University in New York, she rose through the ranks to become vice president for finance and administration where she served as chief fiscal officer, responsible for the financial, budget and administrative operations of the university, including its health science center. After leaving UNC at Chapel Hill, Ms. Gray served as chief financial officer at Applied DNA Sciences Inc., a public biotech company headquartered in Stony Brook. Ms. Gray is the recipient of the 2011 Long Island's Top 50 Most Influential Women in Business Award. She is a board member of the Coram Center for Developmentally Disabled Adults Inc. and a member of several professional organizations, such as the National Association of College and University Business Officers, Council for the Advancement and Support of Education and a past member of the State University Business Officers Association. Ms. Gray holds a bachelor's of science degree in business administration with a concentration in accounting from Hofstra University, Hempstead, N.Y.

P. Srirama Rao, Ph.D., Vice President for Research and Innovation (56 years old). Dr. Rao became Vice President for Research and Innovation on October 1, 2018. Dr. Rao came to VCU from the University of Minnesota, where he is professor and associate dean for research in the College of Veterinary Medicine and holds a joint appointment in the medical school as professor of medicine in the Division of Pulmonary, Allergy, Critical Care and Sleep Medicine. He has served as the chair of the University of Minnesota system-wide Council of Research Associate Deans as well as chair of the university's Academic Health Center Council of Research Deans. Prior to joining the University of Minnesota in 2007, Dr. Rao was vice president of research and professor and head of the division of vascular biology at the La Jolla Institute for Molecular Medicine in San Diego, California. Dr. Rao holds a doctorate in allergy and immunology from the Indian Institute of Science in Bangalore, India, and he conducted postdoctoral studies at Pharmacia-Experimental Medicine in La Jolla, California. His laboratory research focuses on understanding the pathogenesis of allergic inflammation including asthma and food allergy.

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Aashir Nasim, Ph.D., Vice President for Inclusive Excellence (47 years old). Dr. Nasim, a respected scholar and academic administrator, joined VCU as the Vice President for Inclusive Excellence on April 2, 2018. Previously, Dr. Nasim served as Interim Senior Vice Provost for Faculty Affairs and Director of the Institute for Inclusion, Inquiry & Innovation (iCubed) at VCU. As Senior Vice Provost, Dr. Nasim served as Chief Administrator for the Office of Faculty Affairs and led faculty development and success initiatives on the university's academic, medical and international campuses. He arrived at VCU in 2008 as an Associate Professor with a joint appointment in the Department of Psychology and the Department of African American Studies in the College of Humanities and Sciences and was promoted to Professor in 2017. His administrative appointments also have included tenures as Chair of the Department of African American Studies, Special Assistant to the Provost, and interim Vice Provost for Faculty Recruitment and Retention. Dr. Nasim is a National Institute for Minority Health and Health Disparities Scholar and a VCU Massey Cancer Center Research Program member. His research has focused on topics involving tobacco and other drug behaviors, sexual risk behaviors, and culture, identity and behavior. Dr. Nasim began his academic career in 2001 as an Assistant Professor in the Department of Psychology at James Madison University. Dr. Nasim holds a doctorate in psychology from Howard University.

Jay E. Davenport, Vice President for Development and Alumni Relations (47 years old). Mr. Davenport became Vice President for Development and Alumni Relations on September 25, 2017. Mr. Davenport had previously served as associate vice president of individual giving and campaign management at Wake Forest University, where he had served in several roles since 2010. Before joining Wake Forest University, Mr. Davenport was director of development and team leader at Rice University and held fundraising positions as a college development director at the University of Memphis College of Business and Wright State University College of Engineering. He began his higher education career as an assistant dean of admissions at Wittenberg University in 1995. Mr. Davenport holds a bachelor's degree in political science from Xavier University and a master's degree in higher education administration from Ball State University.

Strategic Plan VCU's goal to become a premier, urban public research university formed the foundation of its current strategic plan, Quest for Distinction. Some of Quest's successes have included surpassing a six-year graduation rate goal of 60%, achieving 67% in 2017-2018; surpassing the goal of 2,200 full-time faculty by 6%, reaching 2,338 as of fall 2017; and having $275 million in total sponsored awards in fiscal year 2017. Quest is currently being transitioned into its successor plan, Quest 2025: Together We Transform. This new strategic plan, expected to be adopted in December 2018, is expected to encompass four major themes: transforming the lives of our distinctive and diverse students; achieving preeminence as a 21st century public, urban research university; committing to inclusive excellence and an all-encompassing culture; and creating collective community change. The proceeds of the Bonds will be used for ground breaking research for the College of Engineering, providing a work environment for faculty and students to excel.

Academic Programs

The University offers 59 bachelors, 69 masters, three first professional, and 42 doctoral degree programs. The University also offers 44 post-graduate certificate programs. The University is accredited by the Southern Association of Colleges and Schools. Re-accreditation occurs every 10 years with the next re-accreditation visit scheduled for 2024, following on the University's submission of its 10-year compliance certification in January 2015. The University's three degree-granting colleges, 11 schools, and five interdisciplinary programs are:

College of Humanities and Sciences

The College of Humanities and Sciences comprises the Richard T. Robertson School of Media and Culture, School of World Studies, and twenty-two departments or programs, housing most of the core disciplines in the natural sciences, social sciences, and humanities at VCU. The College of Humanities enrolls over 14,000 undergraduate and graduate students and has over 52,000 alumni. It has responsibility for approximately 50% of VCU's enrollment in undergraduate programs and delivers eight of the 12 largest undergraduate degree programs at VCU. The College of Humanities is home to the core curriculum courses for all VCU undergraduates, preparatory programs for the health sciences, and education in the liberal arts and sciences for future teachers. It offers 22 baccalaureate degree programs, 12 master's degree programs, and 10 Ph.D. graduate programs. Interdisciplinary Ph.D. programs are available in

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chemical biology; media, art, & text; nanoscience and nanotechnology; and systems modeling and analysis. The B.S. and M.S. in forensic science are accredited by the Forensic Science Education Program Accreditation Commission, and the Ph.D. programs in clinical psychology and counseling psychology are accredited by the American Psychological Association.

College of Health Professions

The College of Health Professions consists of 11 departments, including Clinical Laboratory Sciences, Gerontology, Health Administration, Nurse Anesthesia, Occupational Therapy, Patient Counseling, Physical Therapy, Radiation Sciences, Rehabilitation Counseling, the Virginia Center on Aging, and the Dean's Office. Academic offerings range from bachelor degree programs in Clinical Laboratory Sciences and Radiation Sciences to doctoral programs offered in Health Administration, Nurse Anesthesia, Occupational Therapy, Physical Therapy and Health Related Sciences. Many of the programs offered by the College of Health Professions are unique in Virginia. Programs offered only at the University include the Ph.D. in Rehabilitation and Movement Science offered jointly by the Department of Physical Therapy, and the Department of Kinesiology and Health Sciences in the College of Humanities and Services; the joint Master of Health Administration/Juris Doctorate degree offered in cooperation with the University of Richmond; the M.S. in Patient Counseling; the master's program in Gerontology; the Ph.D. in Health Services Organization and Research; and the distance learning, interdisciplinary Ph.D. program in Health Related Sciences. All programs offered by the College of Health Professions for which accreditation exists are fully accredited. The College of Health Professions is home to five programs ranked in the Top 20 by U.S. News, with the Nurse Anesthesia program ranked No. 1.

College of Engineering

The VCU College of Engineering, an innovation front-runner in academics and research, brings real-world education to Central Virginia. The VCU College of Engineering's collaborative and multidisciplinary partnerships prepare undergraduate, masters and doctoral students for leadership. Part of a premier research university, the VCU College of Engineering enhances regional and global prosperity through cutting-edge developments in tissue engineering, drug delivery, bioinformatics, cybersecurity, mechanical systems and particle science. The College of Engineering makes it real by turning great ideas into breakthrough technologies. Our facilities are hubs of discovery, powered by an expanding student body and faculty committed to excellence. The College of Engineering encourages partnering with industry and the community, bringing new collaborators into our projects. The College of Engineering's key research areas include: sustainability and energy engineering; micro and nano electronic systems; pharmaceutical engineering; mechanobiology and regenerative medicine; big data mining; and device design and development.

School of the Arts

The School of the Arts began in 1928 with a single painting class taught by Theresa Pollak (1899-2002). Initially known as the "School of Art" at Richmond Professional Institute, it grew to become a major southern arts program when the University was formed from RPI in 1968. Today, VCUarts is consistently ranked by U.S. News as the No. 1 public art school in the country. VCUarts offers degrees in undergraduate programs spanning the departments of Art Education, Art History, Cinema, Communication Arts, Craft/Material Studies, Dance and Choreography, Fashion Design and Merchandising, Graphic Design, Interior Design, Kinetic Imaging, Music, Painting and Printmaking, Photography and Film, Sculpture and Extended Media, and Theatre. In addition to the Bachelor of Fine Arts, Bachelor of Arts and Bachelor of Music degrees, VCUarts is home to graduate programs conferring Master's degrees in Design, Fine Arts, Theatre, Music, and Art Education, with Art History offering M.A. and Ph.D. programs. For 20 years, VCU has also operated a campus in Qatar's Education City—the first American university to do so—with Bachelor's degree programs in Fashion Design, Graphic Design, Interior Design, Painting and Printmaking, and Art History, as well as a Master's degree program in Design. VCUarts is accredited by the National Association of Schools of Art and Design, National Association of Schools of Dance, National Association of Schools of Music, National Association of Schools of Theatre, Virginia Department of Education, Council for Interior Design Accreditation, National Council for Accreditation for Teacher Education, and the Southern Association of Colleges and Schools Commission on Colleges.

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School of Business

The School of Business is a major participant in the economic development of the region through its centers and institutes, including the Center for Corporate Education, Center for International Business Advancement, Controllers Executive RoundTable, da Vinci Center for Innovation, Information Systems Research Institute, Kornblau Institute, Risk and Insurance Studies Center, Sales Manager Forum, VCU Center for Economic Education, Virginia Council on Economic Education, Virginia Family and Private Business Forum, and Virginia Real Estate Center. The School of Business also performs many service activities for businesses, non-profit organizations and governmental agencies. The School of Business is accredited at all degree levels by the Association to Advance Collegiate Schools of Business ("AACSB International"). The accounting programs are separately accredited by AACSB International and the undergraduate information systems program is separately accredited by the Accrediting Body for Engineering and Technology ("ABET"). At the undergraduate level, the School of Business offers bachelor's degrees in accounting, economics, information systems, marketing, real estate, supply chain, and financial technology. The School of Business also offers a bachelor's degree in business with concentrations in human resource management, business administration/management, and finance.

At the graduate level, the School of Business offers master's degrees in business administration, accountancy, economics and information systems, as well as a variety of dual degrees. The School of Business also offers a master's degree in business with concentrations in business analytics, finance, global marketing management, and real estate valuation. The Brandcenter offers a graduate program with five tracks. The Center for Sport Leadership offers a master's degree or joint masters/MBA. At the doctoral level, the School of Business offers a Ph.D. in business with concentrations in accounting, information systems, and management. Post-baccalaureate certificate programs are offered in accounting, business administration, human resource management, information systems, and real estate/urban land development.

School of Dentistry

The School of Dentistry began in 1893 as a department of the College of Medicine. The Commonwealth's only dental school, the School of Dentistry has graduated over 5,000 dentists, dental hygienists and specialists. 40% of the dentists practicing in Virginia are graduates of the School of Dentistry. The School's largest education program is a four-year predoctoral dental program from which graduates receive a D.D.S. degree for the general practice of dentistry. The School also offers a bachelor's degree in Dental Hygiene and a master's degree in Dentistry. Advanced dental education areas include Endodontics, General Dentistry, Oral and Maxillofacial Surgery, Orthodontics, Pediatric Dentistry, Periodontics and Prosthodontics. The School has four areas of externally-funded research, including cancer, infectious disease and inflammation, bioengineering, and dental public health. The school offers a research focused Ph.D. in Oral Health Research. The School's dental educational programs are fully accredited by the Commission on Dental Education. The School has an active Dental Practice Plan, which is a separate 501(c)(3) corporation generating over $12 million in revenue annually.

School of Education

The VCU School of Education prepares teachers, counselors, administrators and other education professionals to be successful in urban and high needs schools. School faculty, staff and students think boldly, creatively and aspire to find effective ways of addressing the complex challenges faced by these schools, families, and communities. Classroom learning is combined with real-world experience. Community-engaged and culturally-agile research focuses on today's education issues. Within the school, more than 880 students are pursuing masters and doctoral degrees, as well as post-baccalaureate and post-master's certificates. Through the school's accredited programs, students enter careers in fields such as P-12 teaching, educational leadership, counselor education, special education, research and evaluation, adult learning and more. With more than 115 full-time teaching and research faculty and an average of $27 million in external funding each year, the School of Education is among the top research schools in the country and is recognized by U.S. News as the 16th best public graduate school of education in the country. The School of Education's academic programs are accredited by the NCATE, CACREP and the school is a member of the American Association of Colleges of Teacher Education, the Holmes Partnership, and the Urban Serving Universities. In addition, the School of Education has seven affiliated centers that provide training and technical assistance, direct services for children and adults, community outreach, and research and evaluation. One example is the Metropolitan Educational Research Consortium, a collaborative research and evaluation center

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comprised of seven school districts in the Richmond metropolitan area. Another is the Rehabilitation Research and Training Center that provides research, training, and supported employment for adults with significant disabilities.

VCU Honors College

The VCU Honors College promotes academic excellence through an innovative curriculum integrated with experiential learning. Students in the VCU Honors College acquire a foundation for future success wherever their dreams and passions may lead them. 910 honors students pursue studies in 72 different majors. The Honors College is designed to provide a small, intimate classroom feel in a large university setting. Students are offered classes on diverse topics to emphasize dynamic discussion and foster community. Advisors provide guidance in integrating Honors courses into any major.

L. Douglas Wilder School of Government and Public Affairs

VCU's L. Douglas Wilder School of Government and Public Affairs has approximately 1,300 undergraduate and graduate students and more than 10,000 alumni. The Wilder School was formed in 2003 as part of the College of Humanities and Sciences and became independent in 2013. It offers graduate and undergraduate degrees in criminal justice, homeland security and emergency preparedness (the first program of its type in the nation when it was created in 2005), urban and regional studies and planning, and public administration, as well as a doctorate in public policy and administration. The Wilder School also offers graduate certificates in those academic areas in addition to gender violence intervention, nonprofit studies and public management. The Wilder School moved up 12 spots to No. 44 for best graduate public affairs program in the 2018 U.S. News rankings. The homeland security and emergency preparedness program was ranked the 10th best online master's in emergency management program in the U.S. by bestcolleges.com in 2018. The Wilder School's Center for Public Policy provides applied research in the areas of state and local government, social equity, and leadership and a range of services to clients in state and local government, nonprofit organizations, businesses and the general public, across Virginia and beyond. It comprises five units: the Center for Urban and Regional Analysis, The Grace E. Harris Leadership Institute, the Office of Public Policy Outreach, Performance Management Group, and the Survey Evaluation and Research Lab.

VCU Graduate School

The mission of the Graduate School is to foster the nurturing of aspiring scholars and the maturing of established scholars by creating an intellectual, social and humanistic environment for teaching, learning, research, creative expression and public service at the University. The Graduate School provides leadership in all matters relating to graduate education at the University, where over 1,200 graduate faculty teach graduate courses and advise graduate students. The Graduate Council is the representative body of the faculty of the Graduate School. The primary functions of the Graduate School are to promote graduate education at the University, advance the well-being and professional development of its graduate students, ensure the integrity of the University's graduate degrees, and provide administrative support for graduate education. The Graduate School also coordinates the Master of Interdisciplinary Studies, the Preparing Future Faculty Program, the Leaders and Entrepreneurs Academy for Professional Development Program and the Graduate School Mentorship Program.

Richard T. Robertson School of Media and Culture

Formerly the School of Mass Communications, the School was renamed in January 2014 after Richard T. "Dick" Robertson, former president of Warner Bros. Domestic Television Distribution and a VCU alumnus (B.S. '67/MC). The Robertson School is one of the largest programs in VCU's College of Humanities and Sciences, with an enrollment of more than 1,100 undergraduates. The School offers a bachelor's degree in mass communications with three sequences of specialized studies for undergraduates: advertising (with concentrations in creative or strategic), journalism (with concentrations in broadcast or digital) and public relations. It offers a master's degree in mass communications with concentrations in multimedia journalism or strategic public relations. With VCU's Department of English and School of the Arts, the School also offers an interdisciplinary Ph.D. program in media, art and text. The School is one of 118 select programs accredited by the Accrediting Council on Education in Journalism and Mass Communications and was provisionally re-accredited in 2018, to be reviewed in two years.

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School of Medicine

The School of Medicine, the oldest school at the University (founded in 1838), has more than 3,000 full- time, part-time and affiliate faculty members composed of clinicians (M.D./D.O.'s) and basic scientists (Ph.D.'s), who teach almost 2,000 medial students, resident physicians and graduate students. The medical education program is accredited by the Liaison Committee on Medical Education, which is sponsored by the Association of American Medical Colleges and the American Medical Association. In 2013, the School moved into a new, state-of-the-art, medical education facility. In addition to the professional Doctor of Medicine (M.D.) degree, the School of Medicine offers degree programs leading to M.S. and Ph.D. degrees in Anatomy, Biochemistry, Biostatistics, Human Genetics, Microbiology, Pharmacology and Toxicology, Physiology and Pathology. The School also offers master's degrees in Public Health and Genetic Counseling and pre-professional certificates in the basic health sciences. Physician- scientist training is provided in combined M.D./Ph.D. and M.D./M.S. programs. The School also offers combined D.D.S./Ph.D., D.D.S./M.S., and M.D./M.H.A. degrees and a coordinated M.D./M.P.H. degree program. In addition to its educational activities, the School is the major driver of biomedical research at the university. Total research award amounts regularly exceed $100 million annually. The faculty provide innovative patient care within the healthcare enterprise including VCU Health System and MCV Associated Physicians.

School of Nursing

The School of Nursing offers educational programs at the undergraduate, masters and doctoral levels. To prepare individuals for initial licensure as nurses, the School of Nursing provides a traditional B.S. track and offers an Accelerated B.S. track for second degree students who have a non-nursing B.S. Additionally, the School offers a RN to B.S. program of study for registered nurses who are graduates of accredited associate degree and diploma programs. At the master's level, the School of Nursing provides a program of study for registered nurses who hold undergraduate degrees in nursing. The areas of concentration are family nurse practitioner, adult-gerontology primary care nurse practitioner, adult-gerontology acute care nurse practitioner, psychiatric-mental health nurse practitioner, and nursing administration and leadership (an online format). In addition, the School offers a post-master's certificate for RNs with a master's in nursing who seek eligibility to apply for national certification in a designated concentration. At the doctoral level, the School offers a Ph.D. with a choice between a bio behavioral research or health care quality research track, and a Doctor of Nurse Practice (DNP) that emphasizes patient safety and quality improvement, leadership, health policy, and organizational systems. The School of Nursing is accredited by the Commission on Collegiate Nursing Education (CCNE) and the pre-licensure program is approved by the Virginia Board of Nursing.

School of Pharmacy

The School of Pharmacy, founded in 1898, is the oldest pharmacy school in Virginia. It offers a doctor of pharmacy program, graduate curricula in the pharmaceutical sciences and post-graduate training programs. The mission of the school is to provide a professional pharmacy curriculum to train graduates to provide patient-centered inter-professional collaborative services. The school's professional program is fully accredited by the Accreditation Council for Pharmacy Education and is the only pharmacy school in Virginia with a full eight-year accreditation. The school is a member of the American Association of Colleges of Pharmacy. Since 2007, the school has operated in partnership with Inova Health Care systems with programs at a distance campus in Northern Virginia. The school also operates a satellite campus with the University of Virginia. Students are eligible for placement at these sites in their P3 and P4 years.

School of Social Work

The School of Social Work was established in 1917 as the Richmond School of Social Economy. Later renamed School of Social Work and Public Health, it became the first unit of Richmond Professional Institute. The School developed initially in response to community manpower needs to work with World War I veterans and their social and health problems. Subsequent development of the School has expanded activity into all areas of human and social services. The School offers bachelors and master's degrees in Social Work, as well as a Ph.D. in Social Work, and is accredited by the Commission on Accreditation of the Council on Social Work Education. The School is nationally ranked, 30th among all public and private schools by U.S. News.

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School of World Studies

The School of World Studies is an interdisciplinary unit that was formed in 2003 by combining departments and programs in anthropology, foreign languages, international studies, and religious studies. The School addresses topics vital to human understanding such as human origins, evolution, and social development; the diversity and unity of cultures, languages, and religions; the social, cultural, linguistic, and religious impact of globalization on society and the environment; and the formation of new ways of responding to the urgent human challenges of the 21st century. The School offers a Bachelor of Science in Anthropology, and Bachelor of Arts in Foreign Languages, International Studies, and Religious Studies, and is committed to providing students with the knowledge and skills to practice and promote global citizenship and to build a generous and sustainable society.

VCU Life Sciences

VCU Life Sciences is a university-wide matrix organization started in 2000. VCU Life Sciences is comprehensive, with resources spanning the University, from the Monroe Park Campus to the Medical Center to the Rice Rivers Center, which is a 350-acre field station on the James River in nearby Charles City County. VCU Life Sciences has expanded VCU's large-scale life sciences research infrastructure by establishing academic centers that include the Center for Biological Data Science, the Center for Environmental Studies and the Center for Integrative Life Sciences Education. Life Sciences offers bachelor's degrees, combined bachelor's/master's degrees, master's degrees and doctoral degrees in topics such as Bioinformatics and Environmental Studies. The Integrative Life Sciences doctoral program is an exemplar of the flexible academic programming offered by VCU Life Sciences that spans all disciplines.

VCU da Vinci Center

A collaboration between VCU's Schools of Arts, Business, and the Colleges of Engineering and Humanities & Sciences, the VCU da Vinci Center is a catalyst for innovation and entrepreneurship through cross-disciplinary collaboration. Committed to access and diversity, the da Vinci Center is a 21st century leader in education, innovation, and entrepreneurship through the integration of a multi-discipline project-based curriculum with experiential learning opportunities to bring ideas out of the classroom and laboratory and into the real world. The da Vinci Center is home to the first masters of product innovation degree in the United States and offers undergraduate certificates in product innovation, venture creation, and human centered design.

University College

University College (UC) enhances student engagement and success through curricular innovation, interdisciplinary studies, and support for excellence in teaching. It is the home of the Focused Inquiry Department, the Bachelor of Interdisciplinary Studies, and the Common Book Program. University College offers first-year students an innovative, cohort-based first-year seminar experience designed to foster critical thinking, curiosity, and shared learning opportunities. By providing students with a common experience, these courses make the first year of college more engaging and provide a strong foundation for integrative learning at VCU and beyond. The foundation provided by these courses forms the foundation for the Bachelor of Interdisciplinary Studies program, which provides undergraduate students the opportunity to work closely with advisors and faculty members to develop an individually designed program that emphasizes interdisciplinary problem-solving.

Enrollment

The University's total enrollment for the fall 2018 semester is expected to be substantially similar to the total enrollment for fall 2017 with similar numbers of in-state students and out-of-state students. Below are enrollment tables with actual data from fall 2014 to fall 2017. Estimates for fall 2018 have also been included. Fall 2018 estimates are as of October 5, 2018 and are subject to change.

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For fall 2018, it is estimated that matriculating out-of-state students came primarily from Maryland (445 students), North Carolina (267 students), Pennsylvania (183 students), California (172 students), and New York (139 students) with the remaining out-of-state students coming from all other states. The international student population is approximately 1,249. These estimates are provided by the Office of Planning and Decision Support and are approximated based upon high schools attended or permanent addresses of matriculating students as of September 10, 2018.

The following table shows the fall semester headcount enrollment at the University for each of the last five academic years.

Total Enrollment and Residency

Fall 2018 Fall 2014 Fall 2015 Fall 2016 Fall 2017 (Estimated) Total 31,163 31,242 31,231 31,036 31,049 Enrollment Status Full-time Number 25,284 25,563 25,644 25,436 25,569 Percent 81% 82% 82% 82% 82% Part-time Number 5,879 5,679 5,587 5,600 5,480 Percent 19% 18% 18% 18% 18% Residency In-state Number 26,388 26,209 26,399 26,619 26,792 Percent 85% 84% 85% 86% 86% Out-of-state Number 4,775 5,033 4,832 4,417 4,257 Percent 15% 16% 15% 14% 14%

The following table shows the fall semester full-time equivalent enrollment at the University for each of the last five academic years. The estimated full-time equivalent enrollment as of Fall 2018 is 27,639. The full-time equivalent enrollment calculation is made in accordance with the methods used by the United States Department of Education.

Full-Time Equivalent Enrollment Fall 2018 Fall 2014 Fall 2015 Fall 2016 Fall 2017 (Estimated) Full-Time Equivalent 27,776 27,709 27,702 27,397 27,639 Enrollment

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Applications

The following table shows the number of applications, acceptances and enrollments for the fall semester of each of the last five academic years for first-time undergraduate freshmen.

Freshmen Applications, Acceptances and Enrollments

Ratio of Ratio of Academic Applications Acceptances to Enrollments to Term Received Accepted Applications Enrolled Acceptances Fall 2014 15,126 10,426 69% 3,586 34% Fall 2015 16,293 11,798 72 4,090 35 Fall 2016 17,176 12,805 75 4,234 33 Fall 2017 16,848 12,902 77 4,201 33 Fall 2018 (Estimated) 18,625 14,353 77 4,546 32

The following table sets forth information on applications, acceptances and enrollments for undergraduate transfer students for the fall semester of each of the last five academic years.

Undergraduate Transfer Applications, Acceptances and Enrollments

Ratio of Ratio of Academic Applications Acceptances to Enrollments to Term Received Accepted Applications Enrolled Acceptances Fall 2014 4,953 3,340 67% 2,287 68% Fall 2015 4,922 3,143 64 2,022 64 Fall 2016 4,731 3,145 66 2,069 66 Fall 2017 4,538 3,023 67 1,911 63 Fall 2018 (Estimated) 4,100 2,655 65 1,707 64

The following tables show the number of applications, acceptances and enrollments for the fall semester of each of the last five academic years for graduate and professional students.

Graduate Students Applications, Acceptances and Enrollments

Ratio of Ratio of Academic Applications Acceptances to Enrollments to Term Received Accepted Applications Enrolled Acceptances Fall 2014 6,244 2,565 41% 1,595 62% Fall 2015 5,710 2,589 45 1,670 65 Fall 2016 5,478 2,475 45 1,521 61 Fall 2017 5,264 2,543 48 1,499 59 Fall 2018 (Estimated) 5,241 2,575 49 1,551 60

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Professional Students Applications, Acceptances and Enrollments

Ratio of Ratio of Academic Applications Acceptances to Enrollments to Term Received Accepted Applications Enrolled Acceptances Fall 2014 10,794 759 7% 449 59% Fall 2015 11,838 785 7 441 56 Fall 2016 12,181 826 7 445 54 Fall 2017 11,566 851 7 439 52 Fall 2018 (Estimated) 10,216 782 8 422 55

SAT Scores

The following table presents the median College Board SAT scores for the University's entering fall semester freshmen in each of the past five academic years (only math and verbal). The national SAT score median range in 2017 was 1000 - 1190 putting VCU's incoming freshmen right at the national average.

Academic Median Term SAT Score Fall 2013 1100 Fall 2014 1100 Fall 2015 1090 Fall 2016 1080 Fall 2017 1150 Fall 2018 (Estimated) 1169

Tuition and Fees

VCU's Board of Visitors sets tuition and course fee rates for the University annually. The University is a state-supported institution. In fiscal year 2001 the Commonwealth provided approximately 68% of the University's overall operating educational and general (E&G) revenues and tuition and fees provided 32%. In fiscal year 2018, this proportion changed to 69% tuition and fees and 31% state appropriations. This was due in part to revenue shortfalls experienced at the state level, a national trend.

In fiscal year 2018, the Governor and General Assembly addressed state revenue shortfalls by implementing further across-the-board reductions for all agencies including public colleges and universities. While these cuts are very significant, it is important to note that VCU's emphasis on access and service to Virginia students resulted in a slightly lower reduction compared to other state institutions. Reductions at VCU totaled $11.1 million including:

· $8.0 million in a permanent General Funds reduction. · $2.1 million loss in one-time support related to Virginia Retirement System. · $1.0 million in continued loss of rebates.

Offset by those cuts were actions by the General Assembly which provided for:

· $4.0 million funded by the state for a planned 3% salary increase · $2.0 million in increased funding for student equity and access. · $4.4 million in a continuation of funding from last year for financial aid.

While the recognition by the state through appropriations is positive, VCU's current financial picture is heavily impacted by the fiscal realities of the budgets from fiscal year 2008 to fiscal year 2012. VCU's transition to an undergraduate per credit tuition model which began in fiscal year 2014 fully concluded in fiscal year 2018. This transition allowed the University to further its strategic plan, Quest for Distinction.

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Tuition and required fees vary from school to school within the University and, in the case of the Schools of Medicine, Dentistry and Pharmacy, and Allied Health Professions, vary among the class level, program, and program year. The following tables show typical charges for full-time undergraduate, graduate, and doctoral students for the last five academic years:

Typical Student Charges: Undergraduate Students

2014-2015 2015-2016 2016-2017 2017-2018 2018-2019 In-State Tuition $10,223 $10,586 $10,846 $11,340 $12,094 Fees 2,175 2,186 2,284 2,284 2,396 Subtotal $12,398 $12,772 $13,130 $13,624 $14,490 Room & Board 9,318 9,586 9,919 10,187 10,428 Total $21,716 $22,358 $23,049 $23,811 $24,918

Out-of-State Tuition $27,672 $28,652 $29,378 $30,712 $32,742 Fees 2,787 2,811 2,909 2,944 3,056 Subtotal $30,459 $31,463 $32,287 $33,656 $35,798 Room & Board 9,318 9,586 9,919 10,187 10,428 Total $39,777 $41,049 $42,206 $43,843 $46,226

Typical Student Charges: Graduate Students

2014-2015 2015-2016 2016-2017 2017-2018 2018-2019 In-State Tuition $10,258 $10,627 $10,893 $11,383 $12,134 Fees 2,141 2,152 2,250 2,250 2,362 Subtotal $12,399 $12,779 $13,143 $13,633 $14,496 Room & Board 9,318 9,586 9,919 10,187 10,428 Total $21,717 $22,365 $23,062 $23,820 $24,924

Out-of-State Tuition $21,091 $21,850 $19,594 $23,404 $24,949 Fees 2,753 2,777 2,875 2,910 3,022 Subtotal $23,844 $24,607 $25,271 $26,314 $27,971 Room & Board 9,318 9,586 9,919 10,187 10,428 Total $33,162 $34,193 $35,190 $36,501 $38,399

Typical Student Charges: Doctoral Students

2014-2015 2015-2016 2016-2017 2017-2018 2018-2019 In-State Tuition $8,464 $8,769 $8,988 $9,392 $10,012 Fees 2,141 2,152 2,250 2,250 2,342 Subtotal $10,605 $10,921 $11,238 $11,642 $12,354 Room & Board 9,318 9,586 9,919 10,187 10,428 Total $19,923 $20,507 $21,157 $21,829 $22,782

Out-of-State Tuition $18,042 $18,692 $19,159 $20,021 $21,342 Fees 2,753 2,777 2,875 2,910 3,002 Subtotal $20,795 $21,469 $22,034 $22,931 $24,344 Room & Board 9,318 9,586 9,919 10,187 10,428 Total $30,113 $31,055 $31,953 $33,118 $34,772

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Undergraduate Aid

During the last five years, on average, approximately 60% of the undergraduate student body has demonstrated financial need as measured by the Federal Needs Analysis methodology. The Federal Needs Analysis is the process of determining a student's Expected Family Contribution (EFC). The Federal Needs Analysis formula is used to determine eligibility for all federal aid, including Pell Grants, Stafford Loans, Work-study, and most state scholarship aid. The EFC is determined from the data provided on the Free Application for Federal Student Aid (FAFSA) and verified using data from federal tax returns and other supplemental documents. The Federal Methodology excludes some forms of income and expenses and eliminates some assets from consideration when calculating the EFC. During the same period, the University met on average approximately 65% of that need with federal, state, and institutional grant, loan and work-study funds. Students at the University also utilize many other sources for financial assistance, including state educational assistance agencies, local scholarship programs and privately endowed scholarships. The unmet portion of demonstrated need is supplemented by family sources such as income from jobs or alternative and parent loans. In the 2016-2017 academic year, 24% of student financial aid was provided in the form of grants, 70% from loans, 2% from scholarships, 1% from work-study funds, and 3% from other sources. The following chart sets forth financial aid for undergraduates for the past five years and the estimated financial aid for the current academic year. The increase in financial aid reflects increases in student enrollment and tuition and fee rates as well as some programs granting larger loans and grants.

Undergraduate Financial Aid

Academic Year Total 2013-2014 $258,421,096 2014-2015 188,476,508 2015-2016 195,616,414 2016-2017 238,472,010 2017-2018 248,730,553 (estimate)

Financial and Related Information on the University

Budgeting

The University budget is approved by the Board of Visitors annually. The University's expenditure budget for fiscal year 2018 totaled over $1.15 billion, of which $218 million or 18% is projected to be provided from state general fund appropriations, $425 million or 37% from tuition and fees in educational and general programs, $210 million or 18% from sponsored programs (grants and contracts), $136.6 million or 12% from auxiliary enterprises and the remaining roughly 15% from gifts, endowment income and other sources.

The University submits a budget request to the Governor for inclusion in the biennial budget bill the Governor submits for approval by the legislature. Amendment requests may be made to the Governor and to the legislature each year. The General Assembly appropriates all funds expended by the University except for gifts and endowment income. Unless specifically approved by the Governor, unused state general funds revert to the state general fund on June 30 of each year. However, institutions of higher education that meet management standards may request the carry forward of unexpended general fund appropriation from one fiscal year to the next. The University has historically met those standards every year. See "General - Relationship with the Commonwealth of Virginia."

Audited Financial Statements

Attached hereto as Appendix B are the consolidated audited financial statements of the University for the year ended June 30, 2017, audited by the Auditor of Public Accounts of the Commonwealth of Virginia. In accordance with Governmental Accounting Standards Board ("GASB") Statement 39, the University's consolidated financial statements reflect the operations and assets of the Authority and the Foundations as component units. Thus, the financial statements include assets and revenues that are not available to make payments on the Bonds since neither the Authority nor the Foundations have any obligation to make payments on the Bonds. The financial statements, however, do identify the assets, liabilities, revenues and expenses separately for the University, the Authority and the Foundations.

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Audited Statements of Revenues, Expenses and Changes in Net Position

Set forth below are statements of revenues, expenses and changes in net position for the University for each of the five fiscal years ending on June 30, 2017. The statements relate exclusively to the revenues and expenses of the University, and do not include the revenues and expenses of the Authority or the Foundations.

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Summary of Revenues, Expenses and Changes in Net Position

Operating Revenues 6/30/2013 6/30/2014 6/30/2015 6/30/2016 6/30/2017 Student tuition and fees, Net of scholarship allowances of $70,722,028, $76,948,166, $78,609,087, $86,151,881, and $92,997,456 in 2013, 2014, 2015, 2016, and 2017 respectively $ 274,977,715 $ 289,330,651 $ 312,809,796 $ 323,586,088 $ 336,426,527 Federal grants and contracts 148,822,892 148,909,111 157,324,526 156,469,687 162,312,674 State grants and contracts 5,496,201 5,589,033 6,872,715 5,660,631 5,618,592 Local grants and contracts 416,840 222,736 235,824 326,755 645,013 Nongovernmental grants and contracts 17,399,824 17,343,870 20,060,331 22,652,284 26,512,443 Sales and services of educational departments 49,371,529 47,560,702 54,621,138 56,026,293 54,181,959 Auxiliary enterprises: Sales and services 70,936,046 78,316,296 83,181,922 89,768,961 84,784,680

Student fees, Net of scholarship allowances 43,437,114 45,138,355 44,935,729 44,621,863 46,899,906 Hospital services 24,177,564 25,307,640 25,477,514 26,221,997 24,841,325 Other revenues 8,950,794 11,218,499 11,832,855 12,517,881 18,342,444 Total operating revenues $ 643,986,519 $ 668,936,893 $ 717,352,350 $ 737,852,440 $ 760,565,563 Operating Expenses Instruction $ 316,610,242 $ 315,804,249 $ 334,137,776 $ 351,995,761 $ 360,175,020 Research 149,129,815 164,344,662 174,404,481 173,505,082 186,645,480 Public service 7,342,623 6,746,887 9,406,629 8,005,757 8,575,248 Academic support 79,989,054 88,836,157 85,077,134 92,954,207 99,489,870 Student services 13,537,214 14,867,958 15,812,123 16,419,682 16,333,593 Institutional support 60,891,874 64,727,454 73,499,605 78,938,499 81,917,827 Operations and maintenance of plant 68,482,327 78,093,843 67,860,490 87,652,524 81,186,479 Student aid 31,185,637 31,891,138 29,762,299 32,528,941 35,293,701 Auxiliary enterprises 82,374,894 88,834,229 85,342,919 89,640,703 96,632,623 Hospital services 21,995,207 21,340,298 21,792,401 23,206,390 22,892,598 Depreciation expense 54,492,573 58,782,641 61,176,426 61,455,985 63,742,468 Other expenses - - 64,688 - 16,262 Total operating expenses $ 886,031,460 $ 934,269,516 $ 958,336,971 $1,016,303,531 $1,052,901,169 Operating gain/(loss) $(242,044,941) $(265,332,623) $(240,984,621) $(278,451,091) $(292,335,606) Nonoperating revenues (expenses) State appropriations $ 194,224,452 $ 204,694,945 $ 203,698,844 $ 213,480,174 $ 230,833,619 Gifts 44,112,296 41,986,817 45,709,554 44,103,060 44,154,958

Investment income, Net of investment expense respectively 4,872,882 29,418,428 8,118,453 (3,524,930) 20,823,798 Interest on capital asset-related debt (15,965,593) (19,560,890) (18,062,836) (18,803,229) (17,857,726) Pell Revenue 27,533,692 28,069,470 28,816,334 28,614,178 29,314,061 Other (1,751,767) 3,902,925 (259,384) 644,229 4,562,710 Total nonoperating revenues $ 253,025,962 $ 288,511,695 $ 268,020,965 $ 264,513,482 $ 311,831,420 Income (loss) before other revenues and expenses $ 10,981,021 $ 23,179,072 $ 27,036,344 $ (13,937,609) $ 19,495,814 Additions to permanent endowments 8,056,528 1,017,847 1,547,342 369,269 7,206 Capital appropriations 44,888,551 34,724,245 27,170,822 42,692,933 47,259,566 Capital gifts and grants - 1,211,327 11,436,779 8,716,485 17,595,081 Increase (decrease) in net position $ 63,926,100 $ 60,132,491 $ 67,191,287 $ 37,841,078 $ 84,357,667 Net position - beginning of year $ 884,890,644 $ 946,328,456 $ 695,655,947 $ 762,847,234 $ 800,688,312 Net position - end of year $ 948,816,744 $1,006,460,947 $762,847,234 $ 800,688,312 $ 885,045,979

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Management's Discussion of Operational and Financial Performance

General. Due to the classification of certain revenues as nonoperating revenue, VCU shows a loss from operations. State appropriations, while budgeted for operations, are considered nonoperating revenues according to GASB 35 standards and are reflected accordingly in the nonoperating section of the Statement of Revenues, Expenses and Changes in Net Position, even though these funds are used solely for operating purposes.

In each fiscal year from 2013 through 2017 the University reported an increase in net position, as the sum of nonoperating revenues (net of nonoperating expenses) and other revenues more than offset reported operating losses in each year. The University's net position was restated in 2015 to reflect the Net Pension Liability pursuant to GASB 68. From fiscal year 2015 to 2017 the University's Capital Assets increased by $123 million, reflecting the commitment to a comprehensive program of capital initiatives in support of the University's strategic plan.

2017 Financial Results. Operating revenues increased $22.7 million, or 3.1%, in 2017 compared to the prior year, primarily due to increases in tuition and fees and the receipt of additional grants and contracts. An increase in the transfer fee of $4.4 million for license rights received by the Intellectual Property Foundation contributed to the increase in operating revenues. Operating expenses increased $36.6 million, or 3.6%, over 2016 to $1.052 billion. Instruction expense increased $8.2 million, or 2.3%, primarily due to additional faculty members and salary increases. Research expense, supporting services, and auxiliary enterprises expenses all increased by 7% to 8%, due to higher personnel costs, increased costs of services and supplies, and other factors. Operations and maintenance of plant expense was lower due a decrease in the amount of equipment purchased on capital projects that was below the capitalization threshold and there was reduced spending on renovation projects.

Expected Fiscal Year 2018 Financial Results. Based on preliminary, unaudited information, the University expects that 2018 operating revenues grew by approximately 0.3% in 2018 versus the prior year, which is less than budgeted. Increases in tuition and fees contributed to the growth, but were partially offset by a decline in sponsored revenue. A lower than anticipated undergraduate retention rate as well as lower non-resident enrollment is expected to result in a small decline versus the budgeted tuition growth for the year. These conditions were known as of early fall and addressed almost immediately with pro-active changes in the advisement structure (retention) as well as an enhancement in non-resident financial aid. The fall 2018 (fiscal year 2019) freshman class is now anticipated to be the largest in the school's history. Other new initiatives to specifically enhance international and on-line enrollment also have begun in fiscal year 2018 and the University implemented additional support for advising and student services to further improve retention. Operating expenses are expected to increase by 5%. Increases in expenditures are within budget and include one-time expenditures (such as payment of a one-time employee bonus) as well as planned annual increases (such as increases in need-based financial aid, increases for subscriptions to academic journals and contractual increases for university security). The annual budget planning process extends from late fall through spring and includes a careful review of both strategic and unavoidable expenditure growth within the context of planned operating and nonoperating revenue growth. Overall, the University expects to report an increase in net position. The foregoing information is based on preliminary and unaudited results and, therefore, is subject to change.

Other Sources of Funding

Sponsored Program Awards

The University received $214.1 million in grants, research stipends, and other sponsored program awards (collectively "Sponsored Program Awards") during fiscal year 2017, an increase of 4% from fiscal year 2016. To promote future growth, the University continues to invest substantial funds in research related facilities and equipment.

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The following chart sets forth the dollar value of the awards granted for the last five fiscal years:

Sponsored Program Awards 2012-2013 $186,755,648 2013-2014 206,330,887 2014-2015 211,232,450 2015-2016 209,166,255 2016-2017 214,099,237

VCU's sponsored awards portfolio is heavily dependent on federal grants, which typically comprise 70-75% of all investigator-initiated awards. VCU continues to value and cultivate the federal relationship but has been working to diversify the source of awards to include more industry and non-profit funding.

In May 2018, VCU received its second Clinical and Translational Science Award (CTSA), a $21.5 million federal grant to promote and expand research and improve access for Virginians to cutting-edge treatments for diseases, including cardiac disease, pulmonary disease and addiction. This is the largest NIH grant ever awarded to VCU. VCU also recently received a $25 million grant from the Bill and Melinda Gates Foundation to increase access to lifesaving medications and to fund work on a wide range of essential global health treatments.

Private Support and Development Efforts

Private Support and Development Efforts. The University continues to benefit from the generosity of alumni and friends, foundations, and corporations. During fiscal year 2017, the University received over $55.3 million in private gifts and pledges made through the University, the Foundations and private sponsored programs. Over the past five fiscal years, giving has averaged $57.8 million.

Gifts and Additions to Permanent Endowments 2012-2013 $66,193,838 2013-2014 53,688,731 2014-2015 52,943,123 2015-2016 60,724,161 2016-2017 55,382,653

The gifts noted above made through the University and the Foundations reflect the cash gifts received by all entities and the present value of new pledges received by the Foundations, as reported on the audited financial statements. These numbers also includes the additions to permanent endowments that are reported in the financial statements as a separate line item. Any transfers of gifts between the related parties are eliminated.

The University is in the midst of its fundraising campaign, the Make it Real for VCU campaign. The goal of this campaign is $750 million. As of August 9, 2018, the University and the Foundations have received approximately $637.9 million in cash, pledges, and planned gifts towards the campaign goal. The campaign commenced on July 1, 2012 and will run through June 30, 2020. The campaign seeks to back the Quest strategic plan by attracting, supporting, and retaining the finest students and faculty through scholarships, professorships, and endowed chairs. The Make it Real for VCU campaign will help fund creative learning environments, world-class research facilities, and the tools necessary to increase the impact of VCU's partnership with the community through education, health, and workforce development.

Cash and Investments

The University, the Authority and affiliated Foundations held cash and investments of approximately $3.1 billion as of June 30, 2017. Cash and investments as of June 30, 2017, increased approximately $240.7 million or 8.4% since June 30, 2016.

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As discussed in detail in the section below titled "VCIMCO", the University and the Health System created the VCU Investment Management Company ("VCIMCO") to help better leverage university-wide resources to improve the oversight and performance of cash and investments. The balances in the Ram Fund, LP and Ram Private Assets Fund, LP are investment partnerships managed by VCIMCO. Fiscal Year 2017 was VCIMCO's first full year managing assets.

Investment & Cash Summary - June 30, 2017

($ in Millions)

VCU School of School of Health MCV VCU Real Estate Business Engineering VCU(1) System Foundation Foundation Foundation Foundation Foundation Total Cash & Cash Equity $ 133.8 $533.4 $85.5 $22.8 11.7 $11.1 3.1 $801.4 Fixed Income 188.4 160.7 24.3 - - 6.9 - 380.3 Equities - 130.7 84.3 - - 23.9 - 238.9 Alternatives 1.7 536.0 302.1 3.8 - 8.5 73.8 1,415.5 Ram Fund, LP 182.2 476.6 - 71.1 - - - 253.3 Ram Private Assets Fund, LP 1.6 12.9 - 2.2 - - - 3.8 Total investments and cash equivalents $507.7 $1,850.4 $496.2 $99.9 $11.7 $50.4 $76.9 $3,093.2 ______(1) Only the University has an obligation to pay debt service on the Bonds. See "Audited Financial Statements," above.

Investment & Cash Summary (Estimated, Unaudited) - June 30, 2018 ($ in Millions)

VCU School of School of Health MCV VCU Real Estate Business Engineering VCU(1) System Foundation Foundation Foundation Foundation Foundation Total

Cash & Cash Equity $119.9 $451.9 $14.0 $23.6 $4.8 $10.4 $3.8 $628.4 Fixed Income 228.8 419.3 99.0 - - 8.4 - 755.6 Equities - 218.9 83.8 - - 25.3 - 328.0 Alternatives 1.4 431.1 342.8 2.5 - 9.5 19.7 807.0 Ram Fund, LP 141.8 521.3 - 75.2 - - 55.4 793.7 Ram Private Assets Fund, LP 3.6 20.0 - 3.4 - - - 27.0 Total investments and cash equivalents $495.5 $2,062.5 $539.6 $104.7 $4.8 $53.6 $78.9 $3,339.7 ______(1) Only the University has an obligation to pay debt service on the Bonds. See "Audited Financial Statements," above.

University Foundations

The University and its programs are supported by six related foundations (the "Foundations") created to enhance fund-raising and to provide other services to the University, including holding endowments or other investment funds that are used to assist the University by supplementing state appropriations. Five of the Foundations, the VCU Foundation, the Medical College of Virginia Foundation (the "MCV Foundation"), the VCU School of Engineering Foundation (the "Engineering Foundation"), the VCU School of Business Foundation (the "Business Foundation") and the VCU Intellectual Property Foundation are associated with the main components of the University and are involved primarily in fundraising and alumni relations activities. A sixth foundation, the Real

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Estate Foundation, is involved in real estate activities. The relationship between the University and the Foundations is governed by the University's "Policy on University Related Foundations," which requires that operations are consistent with the University's purpose, mission policies and procedures. Each Foundation has entered into an agreement with the University that covers restrictions on the activities of the Foundations, liabilities and obligations of parties, public procurement requirements, financial reporting requirements and other pertinent matters. Annually, the Finance, Budget and Investment Committee of the Board of Visitors receives a summary report on the activities of the Foundations. All of the Foundations are exempt from taxation under Section 501(c) (3) of the Internal Revenue Code of 1986, as amended.

The net assets of the Foundations are shown below for the last five fiscal years.

Net Assets of the Foundations

Intellectual Fiscal MCV VCU Real Estate Engineering Property Business Year Foundation Foundation Foundation Foundation Foundation Foundation Total 2013 $424,620,000 $71,839,422 $25,318,069 $37,099,952 $1,847,821 $27,978,674 $588,703,938 2014 467,018,000 88,775,207 26,183,534 43,827,181 1,906,414 31,332,136 659,042,472 2015 478,093,000 86,344,554 28,889,555 42,997,188 2,444,876 31,581,571 670,350,744 2016 460,594,000 84,004,107 30,632,080 36,421,469 2,646,559 28,579,501 642,877,716 2017 515,044,000 75,680,836 33,262,337 50,157,568 5,038,243 32,667,202 711,850,186

The composition of the net assets of the Foundations as of June 30, 2017, is shown below.

Intellectual MCV VCU Real Estate Engineering Property Business Foundation Foundation Foundation Foundation Foundation Foundation Total Unrestricted $ 59,651,000 $ 2,945,333 $33,262,337 $24,974,807 $5,038,243 $ 8,373,090 $134,244,810

Temporarily Restricted 236,205,000 43,922,225 - 10,448,314 - 12,901,466 303,477,005

Permanently Restricted 219,188,000 28,813,278 - 14,734,447 - 11,392,646 274,128,371 Total Net Assets $515,044,000 $75,680,836 $33,262,337 $50,157,568 $5,038,243 $32,667,202 $711,850,186

While the assets and activities of the Foundations are reflected in the financial statements of the University, they are separate non-stock corporations, and none of the Foundations has any obligation to bondholders to make payments on the Bonds.

VCIMCO

VCU Investment Management Company ("VCIMCO" or "Company") is a non-profit, Virginia nonstock corporation organized to provide investment management and related services to VCU, the Authority, and affiliated foundations and entities (collectively, the "VCU Entities").

The Company resulted from a process undertaken by VCU in 2011 to analyze the financial structure of VCU. This culminated in a 2012 recommendation that VCU work to create an in-house investment function over a 2 to 3- year time frame as a best practice for large and complex institutions similar to VCU. A centralized investment function enables the VCU Entities to leverage the size and scale of pooling their assets to achieve an optimized return while providing greater investment oversight, clarity, transparency, communication and focus. In addition, VCU Entities can take advantage of efficient fee structures, common due diligence and reporting, standard liquidity analysis, coordinated policies (where appropriate) and procedures.

In mid-2015, the VCU Board of Visitors and the Authority Board each approved the creation of VCIMCO and its Articles of Incorporation and By-Laws. These governing documents were approved by VCIMCO's Board of Directors (the "VCIMCO Board") on July 29, 2015. Additionally, VCU and the Authority, according to the Articles

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of Incorporation, each appointed two members to the VCIMCO Board and the President of VCU appointed its Chairperson. The VCIMCO Board then appointed the required majority of additional board members and hired a Chief Executive Officer to manage VCIMCO. The Company officially began operations on October 1, 2015, and began managing assets as of May 1, 2016.

As of August 1, 2018, VCIMCO's total assets under management is approximately $1.45 billion. Of that amount, approximately $916 million is managed through The Ram Fund, LP, VCIMCO's pooled investment vehicle. The remainder of the assets are held in The Ram Private Assets Fund, LP, separate accounts and other directly-held manager investments by the VCU Entities.

The representative asset allocation as of June 30, 2018, is provided below:

The historical annual returns as of June 30, 2018, for the VCIMCO representative portfolio are as follows:

VCIMCO Representative Portfolio Historic Annual Returns (as of June 30, 2018)

1 Year 2 Year Since Inception May 1, 2016 4.3% 6.6% 6.5%

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Appropriations from the Commonwealth

The University receives financial support from the Commonwealth in two ways: cash contributions from General Fund Revenues and funds derived from Commonwealth debt to fund both capital expenditures and a portion of its operating expenses. The appropriations to the University are outlined in the following table and include appropriations made by the 2017 General Assembly for the biennium ending June 30, 2018. Such appropriations for the fiscal year ended June 30, 2018, are still subject to legislative change.

Historical General Fund Appropriations Capital Year Educational & General Operating Appropriations(1) 2012-2013 $150,550,115 $44,888,551 2013-2014 154,889,637 34,724,245 2014-2015 159,724,370 27,170,822 2015-2016 163,015,325 42,692,933 2016-2017 175,892,134 47,259,566 2017-2018 170,040,472 59,680,807

(1) Capital appropriations are made on a biennial basis and appear in the first year of the biennium. The amounts shown are one-half the biennial appropriation.

In recent years the Commonwealth has not appropriated significant amounts of general fund cash in support of capital projects, relying instead on debt authorizations. The most recent authorization for capital for institutions of higher education was included in the 2012-2014 Appropriation Act, as amended and reenacted by Chapter 806, 2013 Acts of Assembly, Item 39.05, which provided the University, and other specified institutions, the authority to move forward with detailed planning on projects from their own operating funds to be repaid by the Commonwealth when the Commonwealth authorizes the project to move to the construction phase. Included in that list is the construction and renovation of the University's Information Commons and Library project, estimated at $52.4 million, the renovation of Sanger Hall, Phase II project, estimated at $24.3 million ($12.2 million state funded) and the renovation of Raleigh Building project, estimated at $8.4 million. In addition, Item C-39.40 provides the Commonwealth's Comprehensive Capital Outlay Program, totaling $1.155 billion, which provides $1.099 billion in state bond authority for the authorized projects. See "General – Relationship with the Commonwealth of Virginia."

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Outstanding University Indebtedness

The following chart lists the University's outstanding long-term indebtedness as of June 30, 2018, not including the Bonds and not including debt of the Authority. Outstanding Description Principal as of June 30, 2018 Final (Unaudited) Maturity Bonds Payable General Revenue Pledge Bonds, Series 2012A(2) $31,745,000 2031 General Revenue Pledge Bonds, Series 2012B(2) 20,170,000 2031 General Revenue Pledge Bonds, Series 2013A 16,025,000 2033 General Revenue Pledge Bonds, Series 2013B 12,824,232 2033 General Revenue Pledge Bonds, Series 2013C 1,552,349 2033 General Revenue Pledge Bonds, Series 2014A 36,635,000 2043 General Revenue Pledge Bonds, Series 2014B 5,400,000 2021 General Revenue Pledge Bonds, Series 2015A 22,185,000 2030 General Revenue Pledge Bonds, Series 2015B 10,926,517 2035 Commonwealth of Virginia General Obligation Bonds (Section 9(c) Bonds) 54,752,364 2037 Virginia College Building Authority Notes 203,179,999 2033

Capital Leases(1) Brand Center Lease 3,387,173 2028

Installment Purchases 1,712,846 2025 Total $420,495,480 (3) ______(1) While the University's obligations under capital leases are not constitutional debt, such leases are treated as indebtedness for accounting purposes and the University expects to pay such obligations. (2) A portion of the proceeds of the Bonds are to be used to refund all or a portion of the Series 2012A Bonds and the Series 2012B Bonds. (3) Does not include up to $60,000,000 that can be borrowed under a line of credit.

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Debt Service Requirements The following chart shows the total amount of principal and interest payable on all currently outstanding long-term indebtedness of the University as of the issuance of the Bonds.

Commonwealth General Fiscal Obligation General Installment Year Bonds Revenue Obligations Ending Series 2018 (Section 9(c) Pledge and Capital June 30 Bonds(1) Bonds) Bonds(2) VCBA Notes Leases Total(3)

2019 $ $4,579,696 $10,086,715 $26,982,450 $1,082,439 $42,731,300 2020 4,565,517 10,090,043 26,005,868 641,116 41,302,544 2021 4,537,199 10,074,427 25,860,356 641,116 41,113,098 2022 4,589,761 8,225,909 24,864,205 641,116 38,320,991 2023 4,575,703 8,222,382 24,879,426 641,116 38,318,627 2024 4,559,361 8,224,545 22,187,946 641,116 35,612,968 2025 4,544,863 8,226,898 20,685,206 572,811 34,029,778 2026 4,713,354 7,675,453 18,909,688 436,200 31,734,695 2027 4,712,647 7,676,883 14,801,263 436,200 27,626,993 2028 4,503,751 7,670,501 14,620,075 218,100 27,012,427 2029 4,462,808 7,672,020 10,345,316 - 22,480,144 2030 4,374,908 7,670,664 6,993,128 - 19,038,700 2031 4,356,197 5,572,796 6,967,675 - 16,896,668 2032 4,366,387 5,573,346 5,735,950 - 15,675,683 2033 4,297,080 5,568,614 912,000 - 10,777,694 2034 3,872,015 2,961,929 697,900 - 7,531,844 2035 3,853,650 2,964,567 699,300 - 7,517,517 2036 2,069,800 2,436,135 695,175 - 5,201,110 2037 278,100 2,432,823 695,525 - 3,406,448 2038 - 2,435,638 695,275 - 3,130,913 2039 - 2,433,606 - - 2,433,606 2040 - 2,433,075 - - 2,433,075 2041 - 2,436,275 - - 2,436,275 2042 - 2,435,200 - - 2,435,200 2043 - 2,434,850 - - 2,434,850 Total $ $82,430,390 $143,635,293 $254,233,727 $5,951,330 $481,633,147

(1) Debt service on the Bonds will be provided in the Final Official Statement (2) Excluding debt service on the Series 2012A and Series 2012B bonds to be refunded by the Bonds (3) Does not include up to $60,000,000 that can be borrowed under a line of credit.

Future Plans

Capital projects undertaken by the University, other than those completely funded by non-general funds, require the approval of the General Assembly. Additionally, various state level approvals may be required to authorize the issuance of future debt by a state university. Before a state university submits a request for a capital project or debt financing, its governing board must approve the action. Because the University has entered into a Management Agreement with the Commonwealth, it has the ability to issue board-approved debt without the required General Assembly authorization. See "General – Relationship with the Commonwealth of Virginia."

A-28

The University is in the final phases of developing its Campus Master Plan. This Plan will contain the University's desired capital projects over the next several years from a variety of funding sources including state appropriations, auxiliary balances, fundraising, public-private-partnerships, and debt. The University will take its Master Plan to the Board of Visitors for approval at its December 7, 2018 meeting, at which time it will have a list of capital projects that will be prioritized over the next several years, but at this time the Board has not yet approved any debt-financed capital projects beyond those being financed with this bond issuance. No matter which projects are prioritized as a part of this process, the University's current expectation is that it may issue up to $100 million in total additional bonds by fiscal year end 2021.

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APPENDIX B

FINANCIAL STATEMENTS FOR THE UNIVERSITY FOR FISCAL YEAR ENDED JUNE 30, 2017 AND MANAGEMENT'S DISCUSSION AND ANALYSIS

See Financial Statements Attached

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FINANCIAL STATEMENTS FOR THE YEAR ENDED June 30, 2017

TABLE OF CONTENTS

Pages Management Discussion and Analysis 2-11

Financial Statements Statement of Net Position 12-15 Statement of Revenues, Expenses and Changes in Net Position 16-18 Statement of Cash Flows 19-20 Notes to the Financial Statements 21-84

Required Supplementary Information 85-87

Independent Auditor’s Report 88-90

University Officials 91

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MANAGEMENT DISCUSSION AND ANALYSIS

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MANAGEMENT DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2017 (unaudited)   Virginia Commonwealth University’s Management Discussion and Analysis (MD&A) provides a discussion and overview of the financial performance during the fiscal year ended June 30, 2017, with comparative information presented for the fiscal year ended June 30, 2016. While maintaining its financial health is crucial to the long-term viability of the University, the primary mission of a public institution of higher education is to provide education, research and public service.

This discussion has been prepared by management along with the financial statements and related note disclosures and should be read in conjunction with the accompanying financial statements and notes. The financial statements, notes and this discussion are the responsibility of management.

Understanding the Financial Statements

The MD&A focuses on VCU and is intended to foster a greater understanding of VCU’s financial activities. Since this presentation includes summarized formats it should be read in conjunction with the financial statements which have the following four components:

Statement of Net Position presents a snapshot of VCU’s assets and liabilities under the accrual basis of accounting at the end of each fiscal year presented. The Statement of Net Position helps the reader understand the type and amounts of assets available to support operations, how much VCU owes to vendors and bond holders and net position delineated based upon their availability for future expenditures.

Statement of Revenues, Expenses and Changes in Net Position presents VCU’s revenues and expenses categorized between operating, non-operating and other related activities. The Statement of Revenues, Expenses and Changes in Net Position reports VCU’s operating results for each fiscal year presented.

Statement of Cash Flows (SCF) provides information about VCU’s sources (receipts) and uses (payments) of cash during the fiscal year. The SCF classifies sources and uses of cash into four categories, assists in determining whether VCU has the ability to generate future net cash flows to meet its obligations as they come due and in determining the need for external financing.

Notes to the Financial Statements (Notes) provide additional information to clarify and expand on the financial statements.

The MD&A provides objective analysis of VCU’s financial activities based on currently known facts, decisions and conditions. The MD&A discusses the current year results in comparison to the prior year. To see discussions relating to the prior year, refer to last year’s annual financial report on VCU’s website.

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Statement of Net Position

The term “Net Position” refers to the difference between total assets and deferred outflows to total liabilities and deferred inflows, as an indicator of VCU’s financial condition. Changes in net position that occur over time indicate improvement or deterioration in VCU’s financial condition.

Assets and liabilities are generally measured using current values with capital assets as the one notable exception because they are stated at historical cost less an allowance for depreciation.

Condensed Statement of Net Position as of June 30, 2017 2016 $ Change % Change

Current and other assets $749,499,335 $734,988,019 $14,511,316 2% Deferred outflows 77,363,899 60,985,446 16,378,453 27% Capital assets – net 1,106,415,065 1,066,711,977 39,703,088 4% Total assets and deferred outflows 1,933,278,299 1,862,685,442 70,592,857 4%

Current liabilities 205,146,970 198,969,399 6,177,571 3% Noncurrent liabilities 825,868,255 835,994,750 (10,126,495) (1%) Deferred inflows 17,217,095 27,032,981 (9,815,886) (36%) Total liabilities and deferred inflows 1,048,232,320 1,061,997,130 (13,764,810) (1%)

Net Position: Net investment in capital assets 736,646,107 682,111,502 54,534,605 8% Restricted 92,439,933 79,959,340 12,480,593 16% Unrestricted 55,959,939 38,617,470 17,342,469 45% Total net position $885,045,979 $800,688,312 $84,357,667 11%

 Deferred outflows increases include changes in proportion, differences in expected verses actual experience and changes in proportionate share of contributions related to pension obligations and pension contributions.  Deferred inflows decreased due to a change in the fair market value of a derivative instrument, the net difference between projected and actual investments earnings and actual investment experience on pension plan investments. 







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Total Net Position

Net position is divided into three major categories:

Net investments in capital assets provide the University’s equity in property, plant and equipment owned by the University.

Restricted net position is divided into two categories: nonexpendable and expendable. The corpus of nonexpendable restricted assets is only available for investment purposes. Expendable restricted assets are available for expenditure by the University but must be spent for purposes as determined by donors and/or external entities that have placed time or purpose restrictions on the use of the assets.

Unrestricted net position is available resources to the University for any lawful purpose.

The following graph and table illustrates the changes in the make-up of net position, between 2017 and 2016:

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Total Net Position as of June 30, 2017 2016 $ Change % Change Net investment in capital assets $736,646,107 $682,111,502 $54,534,605 8% Restricted 92,439,933 79,959,340 12,480,593 16% Unrestricted 55,959,939 38,617,470 17,342,469 45% Total net position $885,045,979 $800,688,312 $84,357,667 11%

 Net invested in capital assets increased due to investments in land, buildings, equipment and library book purchases.  Restricted net position increased due to increases in the value of investments.  Unrestricted net position is also increased due to increases in the value of investments. 

Statement of Revenues, Expenses and Changes in Net Position

Due to the classification of certain revenues as non-operating revenue, VCU shows a loss from operations. State appropriations, while budgeted for operations, are considered non-operating revenues according to Governmental Accounting Standards Board (GASB) 35 standards and are reflected accordingly in the non- operating section of the Statement of Revenues, Expenses and Changes in Net Position, even though these funds are used solely for operating purposes.

The following is a summarized schedule of the revenues and expenses for the University

Condensed Statement of Revenues, Expenses and Changes in Net Position For the Year Ended June 30, 2017 2016 $ Change % Change Operating revenue $760,565,563 $737,852,440 $22,713,123 3% Operating expense 1,052,901,169 1,016,303,531 36,597,638 4% Operating loss (292,335,606) (278,451,091),, (13,884,515) 5%

Non-operating revenues, net of expenses 311,831,420 264,513,482 47,317,938 18% Other revenues 64,861,853 51,778,687 13,083,166 25% Increase in net position 84,357,667 37,841,078 46,516,589 123% Net position - beginning of year 800,688,312 762,847,234 37,841,078 5% Net position - end of year $885,045,979 $800,688,312 $84,357,667 11% 











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Revenues

Operating revenues increased $22.7 million, or 3%, in 2017 compared to the prior year.

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Total Operating Revenues For the Year Ended June 30, 2017 2016 $ Change % Change Student tuition $336,426,527 $323,586,088 $12,840,439 4% Grants & contracts 195,088,722 185,109,357 9,979,365 5% Auxiliary enterprises 131,684,586 134,390,824 (2,706,238) -2% Hospital services 24,841,325 26,221,997 (1,380,672) -5% Other revenues 72,524,403 68,544,174 3,980,229 6% Total operating revenues $760,565,563 $737,852,440 $22,713,123 3%

 Operating revenues grew due to increases in tuition and fees and the receipt of additional grants and contracts. The increase in other revenues is largely due to a transfer fee for license rights received by the Intellectual Property Foundation.

Expenses

Operating expenses increased $36.6 million, or 4%, over 2016 to $1.052 billion. The following chart summarizes operating expenses by functional classification:

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Operating Expenses by Function For the Year Ended June 30, 2017 2016 $ Change % Change Instruction $360,175,020 $351,995,761 $8,179,259 2% Research 186,645,480 173,505,082 13,140,398 8% Public service 8,575,248 8,005,757 569,491 7% Supporting services 197,741,290 188,312,388 9,428,902 5% Operations and maintenance of plant 81,186,479 87,652,524 (6,466,045) (7%) Student aid 35,293,701 32,528,941 2,764,760 8% Auxiliary enterprises 96,632,623 89,640,703 6,991,920 8% Hospital services 22,892,598 23,206,390 (313,792) (1%) Depreciation expense 63,742,468 61,455,985 2,286,483 4% Other expense 16,262 - 16,262 100% Total operating expenses $1,052,901,169 $1,016,303,531 $36,597,638 4%

 Instruction expense increased due to additional faculty members and salary increases.  Research expense increased due to personnel cost and sub-grants.  Supporting services increased due to personnel and increased costs of services.  Operations and maintenance of plant expense was lower in the current fiscal year due to decreased spending on supplies and services for maintenance due to the increase in capital projects.  Auxiliary enterprises expenses have increased due to increased cost of services, supplies and personnel costs.

Capital Assets and Related Financing Activities Capital Assets

At June 30, 2017, VCU had $1.911 billion in capital assets, less accumulated depreciation of $805.3 million, for net capital assets of $1.106 billion. VCU is committed to a comprehensive program of capital initiatives in support of the University’s strategic plan. As of June 30, 2017 the balance of construction contract obligations totaled $87,130,461 for the University. The projects include replacement, renovations and new construction of auxiliary, academic and research facilities.  Capital Assets, Net as of June 30, 2017 2016 $ Change % Change Land $60,470,270 $52,817,956 $7,652,314 14% Land improvements and infrastructure 1,281,278 1,624,750 (343,472) (21%) Buildings 833,990,115 859,508,212 (25,518,097) (3%) Equipment 71,152,208 72,433,967 (1,281,759) (2%) Intangible (computer software) 5,380,598 3,000,584 2,380,014 79% Library books 24,209,472 22,110,823 2,098,649 9% Construction in progress 109,931,124 55,215,685 54,715,439 99% Total $1,106,415,065 $1,066,711,977 $39,703,088 4% 

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  Construction in progress increased due to ongoing replacement of facilities, renovations, upgrades and expansions  Buildings decreased due to depreciation and the demolition of a student housing building.  Debt  At June 30, 2017, the University had $464 million in long-term debt outstanding.

No additional long-term debt was issued in the year ending June 30, 2017.

Statement of Cash Flows

The Statement of Cash Flows provides information about cash receipts and cash payments during the year. This statement assists users in assessing the University’s ability to generate net cash flows and meet its obligations as they come due and its need for external financing.

The statement is divided into four sections:

1. Cash used by operating activities shows operating cash flows of the University. 2. Cash provided by noncapital financing activities reflects cash received and disbursed for purposes other than operating, investing and capital financing. GASB requires general appropriations from

| 2016-17 Financial Report

the Commonwealth and noncapital gifts be shown as cash flows from noncapital financing activities. 3. Cash used by capital and related financing activities presents cash used for the acquisition and construction of capital and related items. Plant fund and related long-term debt activities (except depreciation and amortization), as well as gifts to endowments, are included in cash flows from capital financing activities. 4. Cash used by investing activities reflects cash generated from investments which included purchases, proceeds and interest.

The following is a summary Statement of Cash Flows for the University for the years ended June 30, 2017 and 2016. University 2017 2016 $ Change % Change Cash provided (used) by: Operating activities ($246,960,661) ($223,877,300) ($23,083,361) 10% Noncapital financing activities 299,654,498 286,003,880 13,650,618 5% Capital and related financing activities (72,939,934) (93,662,858) 20,722,924 (22%) Investing activities 8,679,503 38,185,178 (29,505,675) (77%) Net increase (decrease) in cash (11,566,594) 6,648,900 (18,215,494) (274%) Cash and cash equivalents, beginning of year 103,337,806 96,688,906 6,648,900 7% Cash and cash equivalents, end of year $91,771,212 $103,337,806 ($11,566,594) (11%)

For more detailed information, see the accompanying Statement of Cash Flows.

 The change in operating activities is due mainly to increased pension and other personnel liabilities.  The change in capital and related financing activities is due to less issuances of debt over the prior year.  The change investing activities is due to the reduction of sales processed over the prior year. 

Economic Outlook

The following are known facts and circumstances that will affect future financial results:

 State General Fund appropriations are projected to be $214.1M, reflecting an $8M permanent budget reduction, which was partially offset by a $2M increase in funding for student equity and access.  The legislature approved a 3% salary increase for faculty and staff effective on July 10, 2017.  Tuition and fees are projected to increase $25.7M in fiscal year 2018 based on Board of Visitors approved increases in tuition and mandatory fees.

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          FINANCIAL STATEMENTS

!| 2016-17 Financial Report

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NOTES TO THE FINANCIAL STATEMENTS







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 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Virginia Commonwealth University (VCU) is supported by the Commonwealth of Virginia to serve the Richmond area, the state and the nation through teaching, research, service and patient care. The VCU Health System supports the University’s health care education, research and patient care mission.

VCU is a public research university located in Richmond, the state capital of Virginia. Founded in 1838 as the medical department of Hampden-Sydney College, VCU became the Medical College of Virginia in 1854. In 1968, the General Assembly merged MCV with the Richmond Professional Institute, founded in 1917, to create Virginia Commonwealth University.

Today, more than 31,000 students pursue 225 degree and certificate programs through VCU’s 13 schools and one college. VCU is designated as a research university with very high research activity by the Carnegie Foundation. A broad array of university-approved centers and institutes of excellence, involving faculty from multiple disciplines in public policy, biotechnology and health care discoveries, supports the University’s research mission. Nineteen graduate and first- professional programs are ranked by U.S. News & World Report as among the best in the country.

VCU and VCU Health System Authority’s accounting policies conform to generally accepted accounting principles as prescribed by the Governmental Accounting Standards Board (GASB), including all applicable GASB pronouncements. The accounting policies of the Medical College of Virginia Foundation, Virginia Commonwealth University Foundation, Virginia Commonwealth University Real Estate Foundation, Virginia Commonwealth University School of Business Foundation and Virginia Commonwealth University School of Engineering Foundation conform with the generally accepted accounting principles as prescribed by FASB, which are comparable to the GASB accounting principles except for certain disclosures.

The accompanying financial statements are prepared in accordance with generally accepted accounting principles as prescribed by GASB Statement 34 Basic Financial Statements - and Management’s Discussion and Analysis - for State and Local Governments, and GASB Statement 35 Basic Financial Statements and Management’s Discussion and Analysis of Public College and Universities. Because the University is a component unit of the Commonwealth of Virginia, it is included in the Comprehensive Annual Financial Report of the Commonwealth.

A. Reporting Entity

The accompanying financial statements include the accounts of all organizational units of Virginia Commonwealth University and the Virginia Commonwealth University Intellectual Property Foundation, a component unit which is blended (consolidated) with University operations. These statements are presented as stand-alone statements of the University.

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The Virginia Commonwealth University Intellectual Property Foundation functions as a nonprofit charitable foundation solely to assist inventors, mainly from VCU, in licensing and patenting technologies. The sole purpose of this foundation is to promote, encourage and aid scientific investigation and research and to manage intellectual property developed at VCU for the benefit of the University.

In accordance with GASB Statement 39, Determining Whether Certain Organizations Are Component Units and GASB Statement 61, The Financial Reporting Entity Omnibus, amendments to GASB Statement 14, the financial statements include the Medical College of Virginia Foundation, Virginia Commonwealth University Foundation, Virginia Commonwealth University Real Estate Foundation, Virginia Commonwealth University School of Engineering Foundation, Virginia Commonwealth University School of Business Foundation and Virginia Commonwealth University Health System Authority which are presented discretely in the accompanying financial statements. Statement 39 provides additional guidance to determine whether certain organizations, for which the University is not financially accountable, should be reported as component units. Generally, it requires that an organization that raises and holds economic resources for the direct benefit of the University be reported as a component unit. As a result, where in the past the University presented summary financial information of certain of its foundations in the notes to the financial statements, the University is required under Statement 39 to include selected foundations in the body of its financial statements.

Virginia Commonwealth University Health System Authority (the Authority) is a public corporate body and political subdivision of the Commonwealth of Virginia created and established by an Act of the General Assembly of the Commonwealth of Virginia during 1996. The Authority is a tax-exempt as an integral part of the Commonwealth of Virginia.

The Authority’s principal activity is the operation of the Medical College of Virginia Hospitals (MCVH), Medical College of Virginia Associated Physicians (MCVAP), Community Memorial Health-center (CMH), Virginia Premier Health Plan (VA Premier), Children’s Hospital (Children’s) and University Health Services, Inc. (UHS). MCVH is an approximately 800-bed teaching hospital, which provides inpatient and outpatient services primarily to patients in the Commonwealth of Virginia.

MCVAP, formed in 1991 as a non-stock, not-for-profit charitable educational organization with the Authority as sole corporate member, functions as the group practice plan for those physicians and health care professionals who have faculty appointments in the VCU School of Medicine (SOM).

CMH located in South Hill, Virginia, is a not for profit healthcare facility. CMH provides inpatient, outpatient, emergency care and long-term care of residents of Southside Virginia. Effective July 1, 2014, the Authority and CMH entered in to an affiliation agreement. The Authority became sole member of CMH and, in addition to other contractual obligation, has committed to invest $75,000,000 in facility replacements and enhancements to assist

!"| 2016-17 Financial Report

CMH in carrying out certain strategic projects and initiatives to improve and enhance the delivery of health care services to communities it serves as an affiliate of the Authority. In accordance with the affiliation agreement, the Authority paid $25,000,000 of the investment commitment in 2015 and $35,300,000 in 2017. CMH also operates outpatient clinics in South Hill, Clarksville and Chase City, Virginia. Community Memorial Foundation (CMF Foundation) was established to solicit, administer and distribute funds to support the charitable purpose of CMH.

VA Premier is a Medicaid health maintenance organization (HMO) whose primary purpose is to provide quality health care within a managed care framework.

Children’s was created in 1920 and is a Virginia not-for-profit corporation. The 47-bed hospital provides pediatric specialty care to both inpatients and outpatients.

UHS is a not-for-profit, non-stock, tax-exempt corporation, which was incorporated on January 26, 1995 to support the educational, scientific, and charitable purpose and activities of the University and, in particular, the activities of the SOM and MCVH. These activities include, but are not limited to, activities undertaken pursuant to Section 23-50.16B of the Code of Virginia.

The Medical College of Virginia Foundation (MCV Foundation) is a not-for-profit corporation organized to aid, strengthen and extend the work, services and objectives of the MCV Campus of the University. This mission is achieved by receiving contributions, investing and managing funds, disbursing current funds and a portion of the total return on endowment and providing information about the activities of the MCV Campus and the MCV Foundation. The MCV Foundation is exempt from federal income taxes under Internal Revenue Code Section 501(c) (3).

The Virginia Commonwealth University Foundation (VCU Foundation) is a Virginia corporation, which functions as a nonprofit charitable foundation solely to assist, support, and foster VCU in all proper ways that may, from time to time, be approved by the trustees of the VCU Foundation with the guidance of VCU. The VCU Foundation manages and distributes current and endowment gifts for schools, departments and programs throughout VCU with major emphasis on programs for the Monroe Park Campus. The VCU Foundation is exempt from federal income taxes under Internal Revenue Code Section 501(c) (3).

The Virginia Commonwealth University Real Estate Foundation is a Virginia corporation, which functions as a nonprofit charitable foundation solely to assist and support VCU by holding and managing real estate for its benefit. The Virginia Commonwealth University Real Estate Foundation is exempt from federal income taxes under Internal Revenue Code Section 501(c) (3).

The Virginia Commonwealth University Real Estate Foundation’s subsidiary, the Art Station, LLC (“Art Station”), was established on April 30, 2013 for the purpose of

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incurring rehabilitation expenditures eligible for historic tax credits. Additional subsidiaries include 535 West Broad Street LLC, 800 West Broad Street LLC and Venture Development LLC.

The Virginia Commonwealth University School of Engineering Foundation is a Virginia corporation, which functions as a nonprofit charitable foundation solely to provide financial and other support to the School of Engineering for the benefit of VCU. The Foundation is exempt from federal income taxes under Internal Revenue Code Section 501(c) (3).

The Virginia Commonwealth University School of Business Foundation is a Virginia corporation, which functions as a nonprofit charitable foundation solely to provide financial and other support to the School of Business for the benefit of VCU. The Foundation is exempt from federal income taxes under Internal Revenue Code Section 501(c) (3).

The University also benefits from a number of organizations that exist mainly to support the various purposes and activities of the University and the Authority. The assets of these affiliated organizations, which are separately incorporated and managed by their own Boards, are not included in these statements. The affiliated organizations are listed below and are described in Note 11:

 Virginia Biotechnology Research Park Partnership Authority  Virginia Commonwealth University Alumni Association  Medical College of Virginia Alumni Association of VCU  MCV/VCU Dental Faculty Practice Association  VCU Investment Management Company  Dentistry@VCU

Complete financial statements for the foundations can be obtained by writing the VCU Controller’s Office, P.O. Box 843035, Richmond, VA 23284-3035.

B. Basis of Accounting

The financial statements of the University have been prepared using the economic resources measurement focus and the accrual basis, including depreciation expense relating to capitalized fixed assets. Under the accrual basis, revenues are recognized when earned and expenses are recorded when an obligation has incurred. All significant intra-agency transactions have been eliminated.

Revenues, as reflected on the Statement of Revenues, Expenses and Changes in Net Position, include all exchange and non-exchange transactions earned in which all eligibility requirements have been satisfied, if measurable and probable for collections. Unearned revenue represents revenue collected, but not earned, as of June 30, 2017. This is primarily composed of revenue for grants and contracts and tuitions and fees. Revenues for

!$| 2016-17 Financial Report

the summer term are prorated on the basis of student class days occurring before and after June 30.

The preparation of financial statements, in conformity with accounting principles generally accepted in the United States, require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Estimates also affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

C. Allowance for Uncollectible Receivables

The allowance for uncollectible receivables is based on management’s evaluation of the collectability of individual receivables. Receivables are charged against the allowance when deemed to be uncollectible. Subsequent recoveries are added to the allowance.

D. Pledges Receivable

Unconditional gifts are recognized when the donor makes a promise to give that is, in substance, unconditional. Unconditional gifts expected to be collected within one year are recorded at their net realizable value. Unconditional gifts expected to be collected in future years are recorded at the net present value of the estimated future cash flows.

Donations or contributions of land, buildings, equipment and gifts-in-kind except contributed services are recorded at fair market value when received or pledged, if earlier.

E. Investments

Investments in open-end mutual funds, debt securities and equity securities that have readily determinable fair values are carried at fair value. The fair values of marketable equity securities, bonds and other investments are based on quoted market prices. Investments held in the liquidity fund (securities with a maturity of less than one year) of the University are reported as current assets with the remaining investments reported as noncurrent assets.

F. Inventories

Inventories are valued at the lower of cost (generally determined on the first-in, first-out method) or market.

G. Investment Income

Investment income, including net realized and unrealized gains or losses on investment transactions and investment expense, is recorded as non-operating revenue.

It is the practice of the VCU Foundation, MCV Foundation, Virginia Commonwealth University School of Engineering Foundation and Virginia Commonwealth School of

!%| 2016-17 Financial Report

Business Foundation to annually distribute a set percentage of each endowment corpus to be utilized for the purpose of the fund as stipulated by the donor and/or established by the Foundation. Any excess net investment income over the distribution percentage is added to the individual endowment fund corpus.

H. Accrued Compensated Absences

University full-time classified, part-time classified and faculty employed on or after January 1, 1999, who are also active members of the Virginia Retirement System (VRS), are covered under the “Virginia Sickness and Disability Program” (VSDP). The plan provides for sick leave, family and personal leave, short-term disability benefits and long-term disability benefits. Full-time classified, part-time classified and faculty employed prior to January 1, 1999, who are active members of VRS, participate in VSDP under one of two options or remain under the traditional sick leave program in which classified employees and twelve month faculty earn 5 hours of leave each pay period regardless of the length of state service and nine month faculty accrue 48 hours per semester. One VSDP option permitted eligible employees to convert accumulated sick leave balances to short-term disability credits. The other allowed for the conversion of sick leave balances to VRS service credit. The University was not required to currently fund the cost of conversion to VRS service credit. Enrollment in the VSDP is irrevocable and no additional enrollments are planned. Under VSDP, unused VSDP sick leave and family and personal leave balances do not carry forward from one year to the next and employees are not paid for unused balances upon termination. The converted short-term disability credits of classified employees are payable upon termination in accordance with the Commonwealth of Virginia’s sick leave payout policy discussed below. Faculty who converted sick leave balances to short-term disability credits are not compensated for these balances at termination.

Full-time and part-time, twelve-month faculty and classified employees earn annual leave based upon the number of years of continuous state service. Faculty and classified employees carry forward annual leave balances from one year to the next based on the years of service. Upon termination, the payout of unused annual leave balances is subject to the maximum payout policy for each category of employee.

Employees who are not subject to the overtime provisions of the Fair Labor Standards Act may be eligible to earn compensatory leave. Leave is earned on an hour-for-hour basis for having worked additional hours in a workweek, holidays or scheduled days off. Compensatory leave may be used for paid time off and is payable upon termination. Accrued compensatory leave lapses, within 12 months from the date it is earned, and once lapsed may not be used or paid upon termination.

The University records a liability for all unused annual, non-VSDP sick and compensatory leave and unused short-term disability credits, as well as related fringe benefits. Compensatory leave balances are paid in full upon termination. Annual leave balances are

!&| 2016-17 Financial Report

paid in full up to a maximum number of hours, depending upon length of service. Non- VSDP sick leave and short-term disability credits are payable upon employment termination and are limited to 25 percent of the value accumulated or $5,000, whichever is less, under the Commonwealth of Virginia's sick leave pay-out policy for employees with 5 or more years of service.

The Authority records a liability for all paid time off and related payroll taxes expected to be paid.

I. Capital Assets

Capital assets are stated at cost or, if donated, at acquisition value; however, transfers between related reporting entities are recorded at the carrying value at time of transfer. Equipment costing $5,000 or more with a useful life of 2 or more years is capitalized. Infrastructure assets are included in the financial statements and are depreciated. The University and the Authority record depreciation on property, plant and equipment, including capital leases and excluding land and construction in progress, computed over the estimated useful lives of the assets based on the straight-line method. The general range of estimated useful lives is 10 to 40 years for buildings and fixtures and 5 to 20 years for equipment. The estimated useful life of library books is 5 years. The general range of estimated useful lives is 10 to 25 years for land improvements and infrastructure. Expenditures for construction in progress are capitalized as incurred and reflected in net investment in plant. Interest expense, relating to construction, is capitalized net of interest income earned on resources set aside for this purpose. Capital assets at the time of disposal revert to the Commonwealth of Virginia for disposition.

The VCU School of Engineering Foundation, VCU School of Business Foundation and VCU Foundation record the acquisition of real estate at cost, or if donated, at fair market value at the time of donation; however, transfers between related reporting entities are recorded at the carrying value at time of transfer. Depreciation is provided for properties that are actively rented, using the straight-line method, at rates adequate to amortize the cost of the property over its estimated useful life. The estimated lives of these properties are between 10 and 40 years.

The VCU Real Estate Foundation records the acquisition of equipment at cost, or if donated, at fair market value at the time of donation; however, transfers between related reporting entities are recorded at the carrying value at time of transfer. Depreciation is computed using the straight-line method over the estimated lives of the equipment. The estimated useful lives for equipment are between 5 and 20 years.

The MCV Foundation records property and equipment at cost for purchased items and at fair value for donated items; however, transfers between related reporting entities are recorded at the carrying value at time of transfer. Acquisitions of fixed assets, with a cost less than $5,000, are expensed as acquired. Depreciation is computed on a straight-line

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basis over the estimated useful life of the asset. The estimated useful lives range between 3 and 39 years.

J. Hospital Services

In addition to the services provided by the Authority to patients, the University provides facilities, graduate medical education, clinical support and administrative support to hospitals. The revenues and expenditures necessary to provide the services are classified as hospital services.

K. Uncompensated Care

The Authority provides care to patients who meet certain criteria under its indigent care policy without charge or at amounts less than its established rates. Because the Authority does not pursue collection of charges determined to qualify as uncompensated care from the patients, they are not reported as revenue. The costs of providing these services are included in the Authority’s operating expenses. Medicaid reimburses the Authority for a substantial portion of its costs of providing services to Medicaid and indigent patients. The Authority’s estimated costs for the services provided for this care, net of reimbursement from the Commonwealth of Virginia, approximated $17,482,000 in 2017.

L. Net Patient Service Revenue

Net patient service revenue is reported in hospital services at the estimated net realizable amounts from patients, third-party payors and others for services rendered, including estimated retroactive adjustments under reimbursement agreements with third-party payors. Retroactive adjustments are accrued on an estimated basis in the period the related services are rendered and adjusted in future periods as adjustments and settlements become known or as years are no longer subject to such audits, reviews, appeals and investigations. The effect of these settlement adjustments was to increase the Authority’s net patient service revenue by approximately $33,100,000 in 2017. Settlements due to and from third-party payors include amounts that are currently under appeal with various federal and state agencies. Net patient service revenue includes an estimate of uncollectable charges which is a deduction from gross revenue. The Authority’s estimated cost associated with these charges is approximately $36,035,000 for the year ended June 30, 2017.

A summary of the payment arrangements with major third-party payers follows:  Anthem – Inpatient acute care services rendered to Anthem subscribers are paid at prospectively determined rates per discharge or discounted rates. Outpatient services rendered to Anthem subscribers are reimbursed at discounted rates or applicable fee schedule. The rates can be subject to retroactive adjustments based on quality standards or calculations above a predetermined charge increase percentage.

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 Medicare – Inpatient acute care services and defined capital costs rendered to Medicare program beneficiaries are paid at prospectively determined rates per discharge. These rates may vary according to a patient classification system that is based on clinical, diagnostic and other factors. Inpatient non-acute services, certain outpatient services and education related to Medicare beneficiaries are paid based on prospectively determined rates and a discounted cost reimbursement methodology. The Authority is reimbursed for cost reimbursable items at a tentative rate with final settlement determined after submission of annual cost reports by the Authority and audits thereof by the Medicare fiscal intermediary. The Authority’s Medicare cost reports have been final audited by the Medicare fiscal intermediary through June 30, 2010.

 Medicaid – Inpatient acute care services rendered to Medicaid program beneficiaries are paid at a per diem rate and APDRG (rates per discharge) on an interim basis but eventually settle to a percentage of cost. Outpatient services rendered to Medicaid program beneficiaries are reimbursed on prospectively determined rates and a cost reimbursement methodology. In addition to inpatient and outpatient services provided to Medicaid program beneficiaries, Medicaid reimburses the Authority most of its costs related to services provided to indigent patients and its education mission up which resulted in total Medicaid and indigent reimbursement to the Authority of approximately $521,402,000 in 2017. The Authority’s Medicaid cost reports have been audited by the Medicaid program representative through June 30, 2014.

M. Premiums Earned

VA Premier has contracts with the Virginia Department of Medical Assistance Services (DMAS) wherein VA Premier provides health care services to the Low Income Families with Children (LIFC), the Family Access to Medical Insurance Security (FAMIS) and Aged, Blind and Disabled (ABD) and Acute Care Program (HAP) residents of Virginia on a prepaid basis through a health maintenance organization (HMO). VA Premier recognizes premiums received from DMAS for members in the period to which health care coverage relates.

In 2014, VA Premier began participating in the Medicare-Medicaid Coordination program. This is a three year demonstration designed to increase the level of service and quality of service provided to members who are eligible for both Medicare and Medicaid (Duals). These members carry a higher level of revenues, a higher level of risk and a higher level of costs than traditional Medicaid members.

N. Uncollectible Accounts

A provision for uncollectible accounts is recorded during the period in which collection is considered doubtful.

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O. Estimated Medical Claims Payable

Estimated medical claims payable is comprised of billed and unbilled medical obligations for VA Premier Members that are unpaid at year-end. The estimate of costs incurred for unbilled services is based upon historical experience and actuarial calculations. Although considerable variability is inherent in such estimates, management believes that adequate provision has been made.

P. Net Position

GASB standards require the classification of net position into three components: net investment in capital assets, amounts that are restricted and amounts that are unrestricted. These classifications are defined as follows:

 Net investment in capital assets represents the net value of capital assets (property, plant and equipment) less the debt incurred to acquire or construct the asset. Deferred outflows of resources and deferred inflows of resources that are attributable to the acquisition, construction or improvement of those assets or related debt are included in this component.  Nonexpendable restricted consists of gifts that have been received for endowment purposes, the corpus of which cannot be expended.  Expendable restricted represents restricted assets reduced by liabilities and deferred inflows of resources related to those assets. Assets may be restricted through external constraints imposed by grantors, contributors or creditors through bond covenants.  Unrestricted is the net amount of assets, deferred outflows of resources, related liabilities and deferred inflows of resources that do not have external restrictions on the use of the funds.

Unexpended appropriations for capital projects are included in expendable restricted net position as they are not available for general operating purposes.

When an expense is incurred when both restricted and unrestricted resources are available that are properly chargeable to the restricted resources, the University’s policy is to apply the expense towards restricted resources before unrestricted resources.

The Authority’s investment balances include resources restricted for debt service under bond indenture agreements, by insurance regulations of the Commonwealth of Virginia and unrestricted resources appropriated or designated by the Board of Directors for quasi- endowment, capital acquisition, medical malpractice program and workers’ compensation programs are reported as assets whose use is limited and are carried at fair value.

The Authority’s restricted net position consists principally of beneficial interests in perpetual trust funds established by split interest agreements. Split interest agreements are trust agreements established by donors under which the Authority receives benefits that are

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shared with other beneficiaries. The trust agreements established by donors provide for a third party to hold the trust assets. These trusts do not permit donors to revoke their charitable contributions. Trust assets of $17,620,929 are restricted by donors for MCVH in perpetuity and are included in assets whose use is limited at June 30, 2017 at fair value.

Q. Scholarship Allowances and Student Aid

Financial aid to students is reported in the financial statements under the alternative method as prescribed by the National Association of College and University Business Officers (NACUBO). Certain aid (loans, funds provided to students as awarded by third parties and Federal Direct Lending) is accounted for as third party payments (credited to the student’s account as if the student made the payment). All other aid is reflected in the financial statements as operating expenses or scholarship allowances, which reduce revenues. The amount reported as operating expense represents the portion of aid that was provided to the student in the form of cash. Scholarship allowances represent the portion of aid provided to the student in the form of reduced tuition. Under the alternative method, these amounts are computed on a total University basis by allocating the cash payments to students, excluding payments for services, on the ratio of all aid to the aid not considered to be third party aid.

R. Revenue and Expense Classifications

Operating revenues include activities that have the characteristics of exchange transactions such as: (1) student tuition and fees, net of scholarship discounts and allowances; (2) sales and services of auxiliary enterprises, net of scholarship allowances; and (3) federal, state, and nongovernmental grants and contracts.

Non-operating revenues include activities that have the characteristics of non-exchange transactions such as gifts, and other revenue sources that are defined as non-operating revenues by GASB 9, Reporting Cash Flows of Proprietary and Nonexpendable Trust Funds and Governmental Entities That Use Proprietary Fund Accounting, and GASB 34, such as state appropriations and investment and interest income.

Non-operating expenses include interest on debt related to the purchase of capital assets and losses on the disposal of capital assets. All other expenses are classified as operating expenses.

S. Noncurrent Cash and Investments

Cash and investments that are externally restricted to make debt service payments, reserve funds, or purchase or construct capital and other noncurrent assets are classified as noncurrent assets in the Statement of Net Position.

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T. Cash and Cash Equivalents

Cash represents cash with the Treasurer of Virginia, on deposit, in receivable and undeposited receipts. This classification includes all highly liquid investments with an original maturity of 90 days or less.

U. Discounts, Premiums and Bond Issuance Costs

Notes and bonds payable on the Statement of Net Position are reported net of related discounts and premiums which are amortized over the life of the note or bond. Bond issue costs are expensed as incurred.

V. Deferred Outflows and Deferred Inflows

The University classifies gains on retirement of debt as deferred inflows of resources and losses as deferred outflows of resources and amortizes such amounts as a component of interest expense over the remaining life of the debt. An increase in the fair value of hedging derivatives is classified as deferred inflows of resources while a decrease is deferred outflows of resources. Changes in net pension liability, not included in pension expense, are reported as deferred outflows of resources or deferred inflows of resources. Employer contributions subsequent to the measurement date of the net pension liability are reported as deferred outflows of resources.

The composition of deferred outflows and inflows of resources at June 30, 2017 is summarized as follows:

Gain / Loss on Debt Interest Rate Swap Pension Related Refunding Agreements Total At June 30, 2017 Deferred outflows of resources $57,287,355 $20,076,544 - $77,363,899 Deferred inflows of resources $9,204,000 $1,613,706 $6,399,389 $17,217,095

The composition of deferred outflows and inflows of resources at June 30, 2017 for the Authority is summarized as follows:

Gain / Loss on Debt Interest Rate Swap Pension Related Refunding Agreements Total At June 30, 2017 Deferred outflows of resources $7,471,430 $31,922,210 $3,835,149 $43,228,789 Deferred inflows of resources $9,038,000 - - $9,038,000

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W. Pensions

The Virginia Retirement System (VRS) State Employee Retirement Plan and the Virginia Law Officer’s System (VaLORS) Retirement plan are single employer pension plans that are treated like cost-sharing plans. For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Virginia Retirement System (VRS) State Employee Retirement Plan and the Virginia Law Officers’ System (VaLORS) Retirement Plan; and the additions to/deductions from the VRS State Employee Retirement Plan’s and the VaLORS Retirement Plan’s net fiduciary position have been determined on the same basis as they were reported by VRS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.

X. Recently Adopted Accounting Pronouncements

The information provided for the state retirement plans reflects an early adoption of GASB Statement No. 82, Pension Issues – An Amendment of GASB No. 68 and No.73. The early implementation resolved two outstanding issues from GASB Statement No. 68 – the Presentation of Payroll Related Measures in RSI and the Classification of Employer- paid Member Contributions.

2. CASH, CASH EQUIVALENTS AND INVESTMENTS

The University’s deposits and investments may be subject to the following risks:

 Custodial Credit Risk – This is the risk that in the event of the failure of a depository financial institution or financial counterparty, the agency will not be able to recover the value of its deposits or investments or recover collateral securities that are in the possession of an outside third party. The University had no exposure to custodial risk as of June 30, 2017.  Interest Rate Risk – Interest rate risk is the risk that interest rate changes will adversely affect the fair value of an investment. The University holds investments where fair value may be adversely affected by changes in interest rates. The University invests in accordance with its Investment Policy, which establishes appropriate levels of interest rate exposure for each fixed-income fund through the use of a duration methodology. The Investment Policy regulates maximum duration of non-endowed funds, as outlined in the chart below.

Duration Maturity Primary liquidity pool < 9 months < 5 years Extended duration fund Per applicable benchmark < 5 years

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 Credit Risk – This is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The University holds investments which carry varying levels of credit risk. The University invests in accordance with its Investment Policy, which establishes appropriate levels of credit risk though the use of minimum credit rating restrictions for individual securities in each fixed income fund. The Authority’s investment portfolio is monitored and evaluated on a quarterly basis by the Authority’s investment advisor and Finance Committee of the Board of Directors to ensure credit risk is kept at an appropriate level.  Concentration of Credit Risk – This is the risk of loss attributed to the magnitude of investments in a single issuer of fixed income securities. As of June 30, 2017, the University does not have investments in any one issuer (excluding investments issued or explicitly guaranteed by the U.S. Government and mutual fund or pool investments) representing 5 percent or more of its total investments.  Foreign Currency Risk – This is the risk that investments denominated in foreign currencies may lose value due to adverse fluctuations in the value of the U.S. dollar relative to foreign currencies. The University may, at times, be exposed to limited amounts of currency risk through its investments in emerging market debt. Local denominated currency investments may total no more than one fourth of the University’s Emerging Market Debt Fund and are limited to investment grade sovereign debt in highly liquid currencies.

Cash and Cash Equivalents

All cash of the University, except as described below, is maintained in accounts collateralized in accordance with the Virginia Security for Public Deposits Act, Section 2.2-4400 et seq. of the Code of Virginia or covered by federal depository insurance. At June 30, 2017 the carrying value of deposits totaled $83,434,365 and the account balances reported by the depositories or custodial financial institutions totaled $88,490,020. Of this total $250,000 is covered by federal depository insurance, $82,166,101 is collateralized in accordance with the Virginia Security for Public Deposits Act, $545,907 is held by investment managers and $5,528,012 is held in Qatar.

Investments

Professional investment managers manage the University’s investments. The University's investments are governed by an Investment Policy, adopted by its Board of Visitors. The primary investment objective is to provide a framework for prudent investment management, while allowing for sufficient flexibility to capture investment opportunities as they may incur. The investment policy is established by the Board of Visitors and is monitored by its Finance, Budget and Investment Committee. Investment managers may invest in the following types of investments: direct obligations of the United States, obligations unconditionally guaranteed by the United States, including collateralized mortgage obligations, obligations of any agency or instrumentality of the United States, repurchase agreements, banker’s acceptances, commercial paper issued by domestic corporations, money market funds, corporate notes of domestic corporations, fully

"$| 2016-17 Financial Report hedged debt obligations of sovereign governments and companies, obligations of the Commonwealth of Virginia, asset backed securities with AAA ratings, negotiable certificates of deposit and negotiable bank notes of domestic banks, equities, hedge funds, alternative investments and private equities. The University engaged the VCU Management Company as its new investment advisor in the year ending June 30, 2016. As part of this transition, assets were moved to the VCIMCO Ram Fund, LP and are managed by VCIMCO.

The Authority’s investments are governed by an Investment Policy Statement, adopted by its Board of Directors. In accordance with this policy, MCVH’s investment portfolio assets are allocated among the following asset classes: global equity, absolute strategies, fixed income, real estate, real assets, private equity and cash.

For management purposes, endowment funds and funds internally designated to function as an endowment, except the Glasgow Trust, are held in the investment pools of the VCU Foundation, VCU School of Business Foundation, VCU School of Engineering Foundation and MCV Foundation. These funds remain the property of the University. The investment pools consist of cash equivalents, bonds, preferred and common stocks, fixed asset instruments, hedge funds and real estate. The University’s equity in the investment pools is based on units or shares in the investment pools. The University’s share of the investments is shown as a Due from Component Unit on the Statement of Net Position.

The University received $31.230 million from the Margaret Branch Glasgow Trust on January 4, 2012 and $4.057 million from the Arthur Glasgow Trust on February 6, 2012. Additional contributions of $1.339 million and $8.036 million were received during fiscal years 2015 and 2013, respectively. This endowment is managed by VCIMCO. Net appreciation of the Margaret Glasgow Trust is recorded in the restricted-expendable net position to reflect the fact that the net appreciation must be spent in accordance with the stipulations set forth in the underlying endowment agreement. The Arthur Glasgow Trust placed no restrictions on spending so the net appreciation is recorded as unrestricted net position. At June 30, 2017, net appreciation for the Glasgow Trust was $3,243,557.

The Glasgow Trust is governed by a separate Investment Policy, adopted by the VCU Board of Visitors. The long-term objective of the spending policy is to maintain the purchasing power of the Glasgow Endowed Fund with the goal of providing a predictable and sustainable level of income to support current operations. The rule should reflect best industry practices among endowment institutions. Under this policy, spending for a given year equals the sum of (i) 70% of spending in the previous year, adjusted for inflation as measured by the Higher Education Price Index (HEPI) for the 12 months prior to the start of the fiscal year, and (ii) 30 % of the trailing three-year average market value of the endowment investment pool multiplied by the long-term spending rate (currently 4.5%). Spending on gifts received in the previous fiscal year will receive a pro-rated amount based on the number of whole months each gift was included in the fund.

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If the Glasgow Endowment falls underwater, the payout and distribution would be in compliance with Virginia's Uniform Prudent Management of Institutional Funds Act (§ 55-268.11 et seq., "UPMIFA").

As of June 30, 2017, the University held the following investments:

Investment Maturities (in years) Credit Rating Fair Value <1 1 to 5 6 to 10 >10 U.S. Treasury and agency securities Aaa $35,293,473 $13,190,562 $22,102,911 - - Corporate notes Aa2 1,404,902 400,272 1,004,630 - - Aa3 2,013,350 - 2,013,350 - - A1 12,223,777 2,352,501 9,871,276 - - A2 4,861,079 - 4,861,079 - - A3 6,712,230 1,499,700 5,212,530 - - Corporate bonds Aaa 3,023,547 619,467 2,404,080 - - Aa1 1,146,326 - 1,146,326 - - Aa2 4,168,665 701,386 3,048,905 418,374 - Aa3 6,181,696 1,499,985 4,681,711 - - A1 11,222,021 659,294 10,562,727 - - A2 5,561,933 4,014,094 1,547,839 - - A3 14,986,819 5,166,033 9,820,786 - - Asset backed securities Aaa 85,975,583 331,096 75,652,766 4,351,973 5,639,748 Municipal securities Aaa 1,407,416 - 407,416 - 1,000,000 Aa1 450,000 - 450,000 - - Aa3 84,912 84,912 - - - Agency unsecured bonds and notes Aaa 10,348,535 2,002,720 8,345,815 - - Agency mortgage backed securities Aaa 16,593,601 1,445,911 9,301,583 825,228 5,020,879 Mutual and money market funds Aaa 4,620,833 4,620,833 - - - A1 2,110,682 2,110,682 - - - Other Assets: Alternative assets N/A 1,746,423 - - - - Ram Private Assets Fund, LP N/A 1,628,712 - - - - Ram Fund, LP N/A 182,209,855 - - - - Total $415,976,370 $40,699,448 $172,435,730 $5,595,575 $11,660,627

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As of June 30, 2017, the Authority held the following investments, which includes assets whose use is limited:

Investments Maturities (in years) Investment Type: Fair Value <1 1-5 6-10 >10 Cash and cash equivalents $188,489,384 $188,489,384 - - - U.S. Treasury notes 20,892,937 11,689,185 3,381,906 3,357,165 2,464,681 Asset backed securities 37,867,771 1,658,926 35,703,548 252,885 252,412 Agency backed mortgages 18,029,364 697,104 8,266,429 1,001,977 8,063,854 Certificate of deposits 3,982,900 2,482,900 1,500,000 - - Corporate bonds and notes 104,813,858 55,144,460 42,339,134 3,514,786 3,815,478 Beneficial interest in perpetual trust 17,620,929 N/A N/A N/A N/A Equity interest in foundation 3,921,929 N/A N/A N/A N/A Index funds 85,502,680 N/A N/A N/A N/A Marketable equity securities 45,245,883 N/A N/A N/A N/A Real estate 21,893,529 N/A N/A N/A N/A Investment companies 1,003,701,054 N/A N/A N/A N/A Total $1,551,962,218 $260,161,959 $91,191,017 $8,126,813 $14,596,425

N/A-Investment maturity not applicable to type of investments noted.

At June 30, 2017 the credit quality ratings for the Authority’s fixed income investments were 38.0% AAA, 19.3% AA, 34.9% A and 7.8% below A.

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As of June 30, 2017, the foundations held the following investments:

VCU School of VCU School of Medical College of VCU Business Engineering Virginia Investment Type: Foundation Foundation Foundation Foundation US Treasury and agency securities - - - $64,791,000 Common & preferred stocks - 23,854,890 - 84,319,000 Corporate bonds - 6,917,009 - 16,091,000 Asset backed securities - - - 8,208,000 Alternative investments International fund - - - 71,737,000 Real estate funds 3,191,145 1,591,669 - 15,851,000 Private equity - - - 40,768,000 Hedge funds - International fund - - 24,186,417 - Opportunistic/macro - 1,049,326 - - Long only equities - - - 39,426,000 Long/short equities - 1,531,005 49,641,599 69,379,000 Event driven/merger arbitrage 66,373 485,769 - - Multi-strategy - - - 64,965,000 Distressed credit - 1,107,014 - - Relative value 95,166 1,917,396 - - Diversified strategies 479,273 823,548 - - Other assets Ram Fund Private Assets Fund, LP 2,241,307 - - - Ram Fund, LP 71,049,126 - - - Life income investment 942,648 - - 2,338,000 Total $78,065,038 $39,277,626 $73,828,016 $477,873,000

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Fair value measurements are categorized within the fair value hierarchy established by generally accepted accounting principles.

Level 1: Inputs are quoted prices in active markets for identical assets.

Level 2: Inputs are significant other observable inputs. These can include quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full contractual term of the assets or liabilities.

Level 3: Inputs are significant unobservable inputs. These can require management’s judgement or estimation of assumptions that market participants would use in pricing the assets or liabilities. Therefore, the values are determined using factors that involve considerable judgement and interpretations, including but not limited to private and public comparable, discounted cash flow models and fund manager estimates.

The University establishes the fair value of its investments in funds that do not have a readily determinable fair value by using net asset value (NAV) per share, or its equivalent, as reported by the external fund manager when NAV per share is calculated as of the measurement date in a manner consistent with FASB’s measurement principles for investment companies. The classifications of fair value measurements within the valuation hierarchy as of June 30, 2017 are as follows:

University measured at the Investment Type: Total Level 1 Level 2 Level 3 NAV U.S. Treasury and agency securities $35,293,473 $35,293,473 - - - Corporate notes 27,215,338 - 27,215,338 - - Corporate bonds 46,291,007 - 46,291,007 - - Asset backed securities 85,975,583 - 85,975,583 - - Municipal securities 1,942,328 - 1,942,328 - - Agency unsecured bonds and notes 10,348,535 - 10,348,535 - - Agency backed mortgages 16,593,601 - 16,593,601 - - Mutual and money market funds 6,731,515 3,279,045 3,452,470 - - Other assets Equity long only hedge funds 10,886 - - - 10,886 Event-driven hedge funds 516,059 - - - 516,059 Opportunistic/macro 22,022 - - - 22,022 Relative value/credit 114,757 - - - 114,757 Private investments/real estate 1,053,051 - - - 1,053,051 Alternative investments 29,648 - 29,648 - - Ram Private Assets Fund, LP 1,628,712 - - - 1,628,712 Ram Fund, LP 182,209,855 - - - 182,209,855

Total $415,976,370 $38,572,518 $191,848,510 $0 $185,555,342

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Authority Investments Measured at the Investment Type: Total Level 1 Level 2 Level 3 NAV Investments by fair value level Cash and cash equivalents $188,489,384 $188,489,384 - - - Beneficial trust 17,620,929 - - 17,620,929 - Equity interest 3,921,929 - - 3,921,929 - Debt securities US treasury notes 20,892,937 20,892,937 - - - Asset backed securities 37,867,771 - 37,867,771 - - Agency backed mortgages 18,029,364 - 18,029,364 - - Certificates of deposit 3,982,900 3,982,900 - - - Corporate bonds and notes 104,464,593 - 104,464,593 - - Municipal securities 349,265 - 349,265 - - Equity securities Consumer discretionary 9,838,983 9,838,983 - - - Consumer staples 1,933,964 1,933,964 - - - Financials 11,512,738 11,512,738 - - - Health care 3,357,719 3,357,719 - - - Industrials 6,315,114 6,315,114 - - - Information technology 7,518,352 7,518,352 - - - Energy 873,782 873,782 - - - Material 2,239,889 2,239,889 - - - Telecommunication 1,560,416 1,560,416 - - - Utilities 94,926 94,926 - - - Real estate 1,385,045 1,385,045 - - - Equity mutual funds 112,874,868 112,874,868 - - - Fixed income bond fund 83,224,252 83,224,252 - - - Investments measured at NAV Equity long only hedge funds 100,034,394 - - - 100,034,394 Equity long/short hedge funds 86,540,591 - - - 86,540,591 Event-driven hedge funds 26,109,220 - - - 26,109,220 Relative value/credit 10,827,032 - - - 10,827,032 Opportunistic/macro 6,682,004 - - - 6,682,004 Absolute strategies funds 126,780,465 - - - 126,780,465 Private investments 51,993,750 - - - 51,993,750 Multi-strategy investment fund 476,643,032 - - - 476,643,032 Bond funds 28,002,610 - - - 28,002,610

Total $1,551,962,218 $456,095,269 $160,710,993 $21,542,858 $913,613,098

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VCU School of Business Foundation Measured at Investment Type: June 30, 2017 Level 1 Level 2 Level 3 NAV Common & preferred stocks $23,854,890 $23,854,890 - - - Corporate bonds 6,917,009 6,917,009 - - - Alternative investments Real estate funds 1,591,669 - - 1,591,669 - Hedge funds Opportunistic/macro 1,049,326 - - - 1,049,326 Long/short equities 1,531,005 - - - 1,531,005 Event driven/merger arbitrage 485,769 - - - 485,769 Distressed credit 1,107,014 - - - 1,107,014 Relative value 1,917,396 - - - 1,917,396 Diversified strategies 823,548 - - - 823,548 Total $39,277,626 $30,771,899 $0 $1,591,669 $6,914,058

VCU Foundation Measured at Investment Type: June 30, 2017 Level 1 Level 2 Level 3 NAV Alternative investments Real estate funds $3,191,145 - - $3,191,145 - Hedge funds Event driven/merger arbitrage 66,373 - - - 66,373 Relative value 95,166 - - - 95,166 Diversified strategies 479,273 - - - 479,273 Other assets Ram Fund Private Assets Fund, LP 2,241,307 - - - 2,241,307 Ram Fund, LP 71,049,126 - - - 71,049,126 Life income investment 942,648 - - 942,648 - Total $78,065,038 $0 $0 $4,133,793 $73,931,245

VCU School of Engineering Foundation Measured at Investment Type: June 30, 2017 Level 1 Level 2 Level 3 NAV Hedge funds International fund $24,186,417 - - - $24,186,417 Long/short equities 49,641,599 - - 41,959,584 7,682,015 Total $73,828,016 $0 $0 $41,959,584 $31,868,432

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MCV Foundation

Investment Type: June 30, 2017 Level 1 Level 2 Level 3 US Treasury and agency securities $64,791,000 $10,644,000 $54,147,000 - Common & preferred stocks 84,319,000 46,323,000 37,996,000 - Corporate bonds 16,091,000 - 16,091,000 - Asset backed securities 8,208,000 - 8,208,000 - Alternative investments International fund 71,737,000 - 19,505,000 52,232,000 Real estate funds 15,851,000 - - 15,851,000 Private equity 40,768,000 - - 40,768,000 Hedge funds Long only equities 39,426,000 - - 39,426,000 Long/short equities 69,379,000 - - 69,379,000 Multi-strategy 64,965,000 - - 64,965,000 Life income investment 2,338,000 - - 2,338,000 Total $477,873,000 $56,967,000 $135,947,000 $284,959,000

For investments in entities that calculate net asset value or its equivalent whose fair value is not readily determinable, the following tables provide information about the liquidity of these investments as of June 30, 2017:

University Unfunded Redemption Redemption Investment Type: June 30, 2017 Commitments Frequency Notice Period Equity long only hedge funds $10,886 - Quarterly 45 days Event-driven hedge funds 516,059 - Annually/ quarterly 60-105 days Opportunistic/macro 22,022 - Annually/ semi-annually 90 days Relative value/credit 114,757 - Quarterly 65 days Private investments/real estate 1,053,051 - Illiquid N/A Ram Private Assets Fund, LP 1,628,712 6,994,948 N/A N/A Ram Fund, LP 182,209,855 - Quarterly 120 days Total $185,555,342 $6,994,948

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Authority Unfunded Redemption Redemption Investment Type: June 30, 2017 Commitments Frequency Notice Period Equity long only hedge funds $100,034,394 - Annually/quarterly/monthly/daily 10-90 days Equity long/short hedge funds 86,540,591 - Annually/semi annually/quarterly 45-90 days Event-driven hedge funds 26,109,220 - Annually/quarterly 60-180 days Relative value/credit 10,827,032 - Quarterly/monthly 60-180 days Opportunistic/macro 6,682,004 - Annually/quarterly/monthly 60-180 days Absolute strategies funds 130,198,998 - Annually/semi annually/quarterly/monthly 60-180 days Private investments 48,575,217 28,733,749 N/A N/A Multi-strategy investment fund 476,643,032 - Quarterly 120 days Bond funds 28,002,610 - Monthly 10-60 days Total $913,613,098 $28,733,749

VCU School of Business Foundation Unfunded Redemption Redemption Investment Type: June 30, 2017 Commitments Frequency Notice Period Opportunistic/macro $1,049,326 - Annually/ quarterly 45-65 days Long/short equities 1,531,005 - Annually/quarterly/monthly 30-90 days Event driven/merger arbitrage 485,769 - Semi annually/quarterly 45-60 days Distressed credit 1,107,014 - Annually/quarterly 60-120 days Relative value 1,917,396 - Quarterly/monthly/other/N/A 30-75 days or N/A Diversified strategies 823,548 - Quarterly/monthly 45-90 days Total $6,914,058 $0

VCU Foundation Unfunded Redemption Redemption Investment Type: June 30, 2017 Commitments Frequency Notice Period Event driven/merger arbitrage $66,373 - Annually 95 days Relative value 95,166 - Quarterly 65 days Diversified strategies 479,273 - Quarterly/N/A 70 days or N/A Ram Fund Private Assets Fund, LP 2,241,307 - N/A N/A Ram Fund, LP 71,049,126 - Quarterly 120 days Total $73,931,245 $0

VCU School of Engineering Foundation Unfunded Redemption Redemption Investment Type: June 30, 2017 Commitments Frequency Notice Period International Fund $24,186,417 - Monthly 60 days Long/Short Equities 7,682,015 - N/A N/A Total $31,868,432 $0

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3. JOINT VENTURES AND EQUITY INVESTMENTS

Investment in 7th and Marshall Corporation

Included in other long-term assets on the accompanying Statement of Net Position is a capital contribution to 7th and Marshall Corporation of $500,000. UHS and The Doorways (formerly known as Hospital Hospitality House, Inc.) are the sole members of the 7th and Marshall Corporation, a not-for-profit corporation formed to support the charitable, educational and scientific activities of UHS and The Doorways. The investment is carried at $242,940.

Investment in Spotsylvania Radiation Therapy Center, LLC

Included in other long-term assets on the accompanying Statement of Net Position is a capital contribution to Spotsylvania Radiation Therapy Center, LLC in the amount of $4,113,316. VCUHS and Spotsylvania Medical Center, Inc. formed this joint venture for the purpose of developing, owning and managing a radiation therapy center to provide access to high quality radiation therapy services to patients in the Spotsylvania region. The investment is carried at $1,767,037.

Rehab Institute JV, LLC

Sheltering Arms Rehab Institute is a joint venture between Sheltering Arms Hospital and VCU Health System for the purpose of combining inpatient rehabilitation programs of Sheltering Arms and VCU Heath System, to provide comprehensive and innovative physical rehabilitative inpatient care for people who have sustained a stroke, brain injury, spinal cord injury or similar illnesses and injuries. As of June 30 2017, no investments have been made.

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4. CAPITAL ASSET

Capital asset activity for the year ended June 30, 2017 was as follows:

University: Beginning Balance Additions Reductions Ending Balance Nondepreciable capital assets: Land $52,817,956 $7,652,314 - $60,470,270 Construction in progress 55,215,685 70,951,905 16,236,466 109,931,124 Total nondepreciable capital assets 108,033,641 78,604,219 16,236,466 170,401,394 Depreciable capital assets: Land improvements and infrastructure 19,948,165 - 86,831 19,861,334 Buildings 1,300,884,780 13,058,459 8,537,363 1,305,405,876 Equipment 206,161,109 16,907,278 7,620,660 215,447,727 Intangible assets 11,147,327 3,565,729 97,347 14,615,709 Library books 175,083,077 10,937,471 94,510,842 91,509,706 Total depreciable capital assets 1,713,224,458 44,468,937 110,853,043 1,646,840,352 Less accumulated depreciation for: Land improvements and infrastructure 18,323,415 343,472 86,831 18,580,056 Buildings 441,376,568 36,642,224 6,603,031 471,415,761 Equipment 133,727,142 16,742,747 6,174,370 144,295,519 Intangible assets 8,146,743 1,175,203 86,835 9,235,111 Library books 152,972,254 8,838,822 94,510,842 67,300,234 Total accumulated depreciation 754,546,122 63,742,468 107,461,909 710,826,681 Total depreciable capital assets, net 958,678,336 (19,273,531) 3,391,134 936,013,671

Total capital assets - net $1,066,711,977 $59,330,688 $19,627,600 $1,106,415,065

Interest capitalized as part of construction in progress was $217,323. In the current fiscal year the capitalization policy changed to exclude the capitalization of books acquired through subscription services.

Authority: Beginning Balance Additions Reductions Ending Balance Nondepreciable capital assets: Land $16,249,840 - - $16,249,840 Construction in progress 91,192,109 176,596,770 121,695,946 146,092,933 Total nondepreciable capital assets 107,441,949 176,596,770 121,695,946 162,342,773 Depreciable capital assets: Land improvements 3,225,860 - - 3,225,860 Buildings 928,763,217 88,542,796 44,034 1,017,261,979 Equipment 444,426,102 33,430,379 640,809 477,215,672 Intangible assets 111,555,588 7,407,112 288,971 118,673,729 Total depreciable capital assets 1,487,970,767 129,380,287 973,814 1,616,377,240 Less accumulated depreciation 802,913,982 96,476,710 936,815 898,453,877 Total depreciable capital assets, net 685,056,785 32,903,577 36,999 717,923,363

Total capital assets - net $792,498,734 $209,500,347 $121,732,945 $880,266,136

An impairment loss of $6,138,375 is included in the current year.

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MCV Foundation: Beginning Balance Additions Reductions Ending Balance Land $365,000 - - $365,000 Construction in progress - - - - Total nondepreciable capital assets 365,000 - - 365,000 Depreciable capital assets: Property and equipment 2,521,000 105,000 - 2,626,000 Less accumulated depreciation 943,000 74,000 - 1,017,000 Total depreciable capital assets, net 1,578,000 31,000 - 1,609,000

Total capital assets - net $1,943,000 $31,000 $0 $1,974,000

VCU Real Estate Foundation: Beginning Balance Additions Reductions Ending Balance Nondepreciable capital assets: Land $20,465,731 - - $20,465,731 Construction in progress 1,925,700 5,133,683 6,924,486 134,897 Total nondepreciable capital assets 22,391,431 5,133,683 6,924,486 20,600,628 Depreciable capital assets: Buildings 67,760,452 4,823,939 - 72,584,391 Equipment 3,184,102 - - 3,184,102 Total depreciable capital assets 70,944,554 4,823,939 - 75,768,493 Less accumulated depreciation 17,274,400 2,799,756 - 20,074,156 Total depreciable capital assets, net 53,670,154 2,024,183 - 55,694,337 Total before eliminations 76,061,585 7,157,866 6,924,486 76,294,965 Less included on University 8,249,795 - 274,523 7,975,272

Total capital assets - net $67,811,790 $7,157,866 $6,649,963 $68,319,693

VCU School of Business Foundation: Beginning Balance Additions Reductions Ending Balance Total nondepreciable capital assets $3,503,036 - $3,503,036 - Total depreciable capital assets, net 28,864,490 - 1,339,937 27,524,553

Total capital assets - net $32,367,526 $0 $4,842,973 $27,524,553

VCU School of Engineering Foundation: Beginning Balance Additions Reductions Ending Balance Total nondepreciable capital assets $5,912,659 - $2,055,342 $3,857,317 Total depreciable capital assets, net 41,288,324 2,393 2,301,223 38,989,494 Total before eliminations 47,200,983 2,393 4,356,565 42,846,811 Less included on University 11,464,229 - 861,252 10,602,977

Total capital assets - net $35,736,754 $2,393 $3,495,313 $32,243,834

GASB 42, Accounting and Reporting for the Impairment of Capital Assets and for Insurance Recoveries, effective for periods beginning after December 15, 2004, requires disclosure of insurance recoveries for circumstances other than impairment of capital assets. Fiscal year 2017 insurance recoveries of $751,195 are reported as other non-operating income.

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5. FUNDS HELD FOR OTHERS

At June 30, 2017, the University held deposits for others, which are composed of the following:

Funds Held for Others Federal loan programs $23,286,143 Student organizations and others 2,716,244 Total $26,002,387

6. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities consisted of the following as of June 30, 2017:

VCU Real MCV VCU Estate VCU School of VCU School of University Authority Foundation Foundation Foundation Business Engineering Vendor payable $35,659,127 $97,406,242 $392,000 $306,581 $54,936 $137,619 $122,089 Retainage payable 498,743 1,960,197 - - - - - Accrued wages 51,725,897 82,679,732 42,000 - - 25,425 - Interest payable 3,707,635 8,226,397 97,000 - - 72,684 - Estimated medical claims payable - 81,433,594 - - - - - Settlements due to third parties - 9,769,309 - - - - - $91,591,402 $281,475,471 $531,000 $306,581 $54,936 $235,728 $122,089

Total $374,317,207

7. UNEARNED REVENUE

Unearned revenue consisted of the following as of June 30, 2017:

Prepaid tuition and fees $13,438,057 Grants and contracts 16,944,354 Other cash advances 6,443,719 $36,826,130

8. LONG TERM LIABILITIES

Long term liabilities consist of bonds, notes payable, capital leases, installment purchases, delayed compensation, compensated absences and estimated losses on malpractice claims.

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Bonds Payable

The Commonwealth of Virginia issues bonds for agencies and institutions of the Commonwealth. The University has received a portion of the proceeds to fund capital construction. The University recognizes a liability associated with its share of the bonds and remits principal and interest payments related to this liability to the Treasurer of Virginia. The General Revenue Pledge Bonds, Section 9(d) Bonds, issued either by the Commonwealth or the University carry interest rates of 1.5% to 5% and are due through 2043. Included in the total General Revenue Pledge Bonds are outstanding bonds payable in the amount of $44,134,667, which will be repaid by the VCU Real Estate Foundation.

General Obligation Bonds

Section 9(c) bonds are general obligation bonds issued by the Commonwealth on behalf of the University, which are secured by the net revenues of the completed project and the full faith, credit and taxing power of the Commonwealth. The General Obligation Bonds carry interest rates of 2% to 5% and are due through 2037.

Virginia College Building Authority

The Virginia College Building Authority (VCBA) issues Educational Facilities Revenue Bonds (Public Higher Education Financing Program). As a participating institution in this program, the University issued a note payable to the VCBA. This note, along with the notes of other institutions, is held by the VCBA as security for the Educational Facilities Revenue Bonds. For accounting purposes, the financing arrangement is considered to represent a note payable. The notes have interest rates of 2% to 5%.

Virginia Public Building Authority

The University participates in a financing arrangement with the Virginia Public Building Authority to construct a steam plant adjacent to the MCV Campus. The University considers this financing arrangement to be a capital lease with imputed interest rates of 2% to 5.75%.

Ad Center Development LLC

The University leases space for the VCU Brand Center which is owned by the VCU Real Estate Foundation and leased through Ad Center LLC. For accounting purposes, this arrangement is considered to be a capital lease with an imputed interest rate of 4.3%.

Defeasance of Debt

In the current year, the Commonwealth of Virginia issued General Obligation Refunding bonds, Series 2016A to refund its General Obligation Bonds Series 2006A and 2007A, of which the University had a share. This refunding obtained a savings of $1,604,485 with the net present value of $1,397,589. The 2016A General Obligation Bonds were issued at a premium of $2,211,104 in

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excess of the face value of the bonds. The premium is reported in the long-term debt section of the financial statements.

In prior fiscal years, a portion of the Commonwealth of Virginia Revenue Bonds, of which the University has a share, has been defeased. Details relating to the current and prior years’ defeasances are reported in the Comprehensive Annual Financial Report of the Commonwealth. As of June 30, 2017, $57,115,000 of defeased bonds is outstanding.

The changes in long-term liabilities are as shown below:

Beginning Ending Due Within University: Balance Additions Reductions Balance One Year Bonds Payable: General revenue pledge bonds $176,175,500 - ($8,635,651) $167,539,849 $8,972,056 Commonwealth of Virginia revenue bonds 63,127,170 - (3,453,646) 59,673,524 2,275,521 Total bonds payable 239,302,670 - (12,089,297) 227,213,373 11,247,577 Notes Payable: Virginia College Building Authority 249,927,465 15,326,104 (34,095,257) 231,158,312 17,265,000 Capital Leases: AD Center Development LLC 3,941,144 - (271,063) 3,670,081 282,908 Installment purchases 2,951,290 - (634,868) 2,316,422 603,576 Total long-term debt 496,122,569 15,326,104 (47,090,485) 464,358,188 29,399,061 Compensated absences 34,739,466 30,769,881 (31,318,511) 34,190,836 25,474,538 Deferred compensation 3,331,678 1,316,904 (1,138,968) 3,509,614 1,088,818

Total $534,193,713 $47,412,889 ($79,547,964) $502,058,638 $55,962,417

Beginning Ending Due Within Authority: Balance Additions Reductions Balance One Year General revenue pledge bonds $501,871,578 - ($5,422,356) $496,449,222 $5,550,000 Notes payable 23,706,841 - (1,838,125) 21,868,716 1,847,650 Capital leases 1,243,282 - (679,223) 564,059 543,354 Total long-term debt 526,821,701 - (7,939,704) 518,881,997 7,941,004 Estimated losses on malpractice claims 25,665,741 171,453 (1,520,033) 24,317,161 3,500,000 Workers compensation 21,495,116 - (6,042,909) 15,452,207 2,400,000 Compensated absences 32,736,766 60,437,175 (58,085,177) 35,088,764 35,088,764

Total $606,719,324 $60,608,628 ($73,587,823) $593,740,129 $48,929,768

Beginning Ending Due Within Balance Additions Reductions Balance One Year MCV Foundation:

Note payable $7,340,000 $0 ($665,000) $6,675,000 $695,000



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Long-term debt matures as follows:

Fiscal Revenue Notes Capital Installment Year Bonds Payable Leases Purchases Total University: 2018 $11,247,577 $17,265,000 $282,908 $603,576 $29,399,061 2019 12,123,131 18,045,000 295,271 615,788 31,079,190 2020 12,498,886 17,920,000 308,173 184,699 30,911,758 2021 12,845,577 18,655,000 321,640 188,420 32,010,637 2022 11,472,713 18,575,000 335,696 192,216 30,575,625 2023-2027 62,974,255 81,925,000 1,911,763 531,723 147,342,741 2028-2032 62,753,269 37,855,000 214,630 - 100,822,899 2033-2037 25,462,144 210,000 - - 25,672,144 2038-2042 10,235,000 - - - 10,235,000 2043-2046 2,330,000 - - - 2,330,000 Add Premium 3,270,821 20,708,312 - - 23,979,133 Total $227,213,373 $231,158,312 $3,670,081 $2,316,422 $464,358,188

Fiscal Revenue Notes Capital Installment Year Bonds Payable Leases Purchases Total Authority: 2018 $5,550,000 $1,847,650 $543,354 - $7,941,004 2019 5,680,000 1,507,238 20,705 - 7,207,943 2020 5,955,000 998,460 - - 6,953,460 2021 6,170,000 1,220,560 - - 7,390,560 2022 6,440,000 1,314,345 - - 7,754,345 2023-2027 83,795,000 5,597,838 - - 89,392,838 2028-2032 70,895,000 3,137,058 - - 74,032,058 2033-2037 96,845,000 2,601,844 - - 99,446,844 2038-2042 49,350,000 2,802,271 - - 52,152,271 2043-2046 165,000,000 841,452 - - 165,841,452 Premium 769,222 - - - 769,222 Total $496,449,222 $21,868,716 $564,059 $0 $518,881,997

Fiscal Revenue Notes Capital Installment Year Bonds Payable Leases Purchases Total MCV Foundation: 2018 - $695,000 - - $695,000 2019 - 730,000 - - 730,000 2020 - 770,000 - - 770,000 2021 - 810,000 - - 810,000 2022 - 850,000 - - 850,000 Thereafter - 2,820,000 - - 2,820,000 Total $0 $6,675,000 $0 $0 $6,675,000

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A summary of future interest requirements is as follows:

Fiscal Revenue Notes Year Bonds Payable Total University: 2018 $6,753,827 $9,086,588 $15,840,415 2019 6,480,322 8,242,174 14,722,496 2020 6,175,418 7,386,844 13,562,262 2021 5,864,473 6,507,800 12,372,273 2022 5,534,029 5,590,305 11,124,334 2023-2027 22,567,012 16,048,279 38,615,291 2028-2032 13,164,179 3,319,088 16,483,267 2033-2037 5,296,785 3,150 5,299,935 2038-2042 1,938,794 - 1,938,794 2032-2046 104,850 - 104,850 Total $73,879,689 $56,184,228 $130,063,917

Fiscal Revenue Notes Year Bonds Payable Total Authority: 2018 $16,871,250 $412,941 $17,284,191 2019 16,723,636 367,877 17,091,513 2020 16,569,610 335,579 16,905,189 2021 16,409,627 294,288 16,703,915 2022 16,243,015 281,779 16,524,794 2023-2027 73,348,232 1,011,446 74,359,678 2028-2032 63,917,692 574,705 64,492,397 2033-2037 54,265,893 375,901 54,641,794 2038-2042 44,232,188 175,474 44,407,662 2032-2046 12,266,100 11,229 12,277,329 Total $330,847,243 $3,841,219 $334,688,462

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9. VIRGINIA COMMONWEALTH UNIVERSITY FACULTY EARLY RETIREMENT INCENTIVE PLAN

The University established the Virginia Commonwealth University Faculty Early Retirement Incentive Plan for Faculty (Plan) to provide a financial early retirement incentive for certain tenured faculty that will facilitate the release of tenured faculty resources for budget reallocation or reduction in accordance with the University Strategic Plan goals, changes in enrollment and other University needs. Tenure is a permanent appointment granted to associate professors and professors, which continues until the faculty member leaves the University, is dismissed for cause or is terminated due to a financial crisis.

The Plan provides an annuity for five years from the date of retirement equal to 20% of the average University salary of the faculty members eligible to participate in the Plan, not to exceed 30% of the participant’s base annual salary from University resources at the time the agreement was signed. In addition, the University provides a health care benefit supplement until the participant becomes Medicare eligible (currently age 65) if the participant retires, or up to 18 months of COBRA benefits if the participant does not retire.

As of June 30, 2017, 52 faculty members were enrolled in the plan. Payments during fiscal year 2017 were $1,138,968. The present value of the future plan payment schedule follows:

Fiscal Year Plan Obligations 2018 $1,088,818 2019 846,901 2020 738,890 2021 540,061 2022 268,247 2023 22,930 2024 3,468 2025 299 Total $3,509,614

10. RETIREMENT, PENSION PLANS, AND POST EMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS

University

Pension Plan Description

All full-time, salaried permanent employees of the University are automatically covered by the VRS State Employee Retirement Plan or the VaLORS Retirement Plan upon employment. These plans are administered by the Virginia Retirement System (the System) along with plans for other

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employer groups in the Commonwealth of Virginia. Members earn one month of service credit for each month they are employed and for which they and their employer pay contributions to VRS. Members are eligible to purchase prior service, based on specific criteria as defined in the Code of Virginia, as amended. Eligible prior service that may be purchased includes prior public service, active military service, certain periods of leave, and previously refunded service.

The System administers three different benefit structures for covered employees in the VRS State Employee Retirement Plan – Plan 1, Plan 2, and, Hybrid and two different benefit structures for covered employees in the VaLORS Retirement Plan – Plan 1 and Plan 2. Each of these benefit structures has a different eligibility criteria. The specific information for each plan and the eligibility for covered groups within each plan are set out in the table below:

Retirement Plan Provisions by Plan Structure Plan 1 Plan 2 Hybrid Retirement Plan About Plan 1 Plan 1 is a defined benefit plan. The About Plan 2 Plan 2 is a defined benefit plan. The About the Hybrid Retirement Plan The Hybrid Retirement retirement benefit is based on a member’s age, retirement benefit is based on a member’s age, Plan combines the features of a defined benefit plan and a creditable service and average final compensation at creditable service and average final compensation defined contribution plan. Most members hired on or after retirement using a formula. Employees are eligible at retirement using a formula. Employees are January 1, 2014 are in this plan, as well as Plan 1 and Plan 2 for Plan 1 if their membership date is before July eligible for Plan 2 if their membership date is on members who were eligible and opted into the plan during a 1, 2010, and they were vested as of January 1, or after July 1, 2010, or their membership date is special election window. (see “Eligible Members”) The 2013. before July 1, 2010, and they were not vested as of defined benefit is based on a member’s age, creditable service January 1, 2013. and average final compensation at retirement using a formula. The benefit from the defined contribution component of the plan depends on the member and employer contributions made to the plan and the investment performance of those contributions. In addition to the monthly benefit payment payable from the defined benefit plan at retirement, a member may start receiving distributions from the balance in the defined contribution account, reflecting the contributions, investment gains or losses, and any required fees. Eligible Members Employees are in Plan 1 if their Eligible Members Employees are in Plan 2 if their Eligible Members Employees are in the Hybrid Retirement membership date is before July 1, 2010, and they membership date is on or after July 1, 2010, or Plan if their membership date is on or after January 1, 2014. were vested as of January 1, 2013. their membership date is before July 1, 2010, and This includes state employees and members in Plan 1 or Plan they were not vested as of January 1, 2013. 2 who elected to opt into the plan during the election window held January 1-April 30, 2014; the plan’s effective date for opt-in members was July 1, 2014. Hybrid Opt-In Election VRS non-hazardous duty Hybrid Opt-In Election Eligible Plan 2 members Non-Eligible Members Some employees are not eligible to covered Plan 1 members were allowed to make an were allowed to make an irrevocable decision to participate in the Hybrid Retirement Plan. They include: irrevocable decision to opt into the Hybrid opt into the Hybrid Retirement Plan during a members of the Virginia Law Officers’ Retirement System Retirement Plan during a special election window special election window held January 1 through (VaLORS). Those employees eligible for an optional held January 1 through April 30, 2014. The April 30, 2014. The Hybrid Retirement Plan’s retirement plan (ORP) must elect the ORP plan or the Hybrid Retirement Plan’s effective date for eligible effective date for eligible Plan 2 members who Hybrid Retirement Plan. If these members have prior service Plan 1 members who opted in was July 1, 2014. If opted in was July 1, 2014. If eligible deferred under Plan 1 or Plan 2, they are not eligible to elect the eligible deferred members returned to work during members returned to work during the election Hybrid Retirement Plan and must select Plan 1 or Plan 2 (as the election window, they were also eligible to opt window, they were also eligible to opt into the applicable) or ORP. into the Hybrid Retirement Plan. Members who Hybrid Retirement Plan. Members who were were eligible for an optional retirement plan (ORP) eligible for an optional retirement plan (ORP) and and had prior service under Plan 1 were not have prior service under Plan 2 were not eligible to eligible to elect the Hybrid Retirement Plan and elect the Hybrid Retirement Plan and remain as remain as Plan 1 or ORP. Plan 2 or ORP.

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Retirement Contributions State employees, Retirement Contributions State employees Retirement Contributions A member’s retirement benefit is excluding state elected officials, and optional contribute 5% of their compensation each month funded through mandatory and voluntary contributions retirement plan participants, contribute 5% of to their member contribution account through a made by the member and the employer to both the defined their compensation each month to their member pre-tax salary reduction. benefit and the defined contribution components of the contribution account through a pre-tax salary plan. Mandatory contributions are based on a percentage of reduction. Member contributions are tax-deferred the employee’s creditable compensation and are required until they are withdrawn as part of a retirement from both the member and the employer. Additionally, benefit or as a refund. The employer makes a members may choose to make voluntary contributions to the separate actuarially determined contribution to defined contribution component of the plan, and the VRS for all covered employees. VRS invests both employer is required to match those voluntary contributions member and employer contributions to provide according to specified percentages. funding for the future benefit payment.

Creditable Service Creditable service includes Creditable Service Same as Plan 1. Creditable Service Defined Benefit Component: Under the active service. Members earn creditable service for defined benefit component of the plan, creditable service each month they are employed in a covered includes active service. Members earn creditable service for position. It also may include credit for prior each month they are employed in a covered position. It also service the member has purchased or additional may include credit for prior service the member has creditable service the member was granted. A purchased or additional creditable service the member was member’s total creditable service is one of the granted. A member’s total creditable service is one of the factors used to determine their eligibility for factors used to determine their eligibility for retirement and retirement and to calculate their retirement to calculate their retirement benefit. It also may count benefit. It also may count toward eligibility for the toward eligibility for the health insurance credit in health insurance credit in retirement, if the retirement, if the employer offers the health insurance credit. employer offers the health insurance credit. Defined Contributions Component: Under the defined contribution component, creditable service is used to determine vesting for the employer contribution portion of the plan. Vesting Vesting is the minimum length of service a Vesting Same as Plan 1. Vesting Defined Benefit Component: Defined benefit vesting member needs to qualify for a future retirement is the minimum length of service a member needs to qualify benefit. Members become vested when they have at for a future retirement benefit. Members are vested under the least five years (60 months) of creditable service. defined benefit component of the Hybrid Retirement Plan Vesting means members are eligible to qualify for when they reach five years (60 months) of creditable service. retirement if they meet the age and service Plan 1 or Plan 2 members with at least five years (60 months) requirements for their plan. Members also must be of creditable service who opted into the Hybrid Retirement vested to receive a full refund of their member Plan remain vested in the defined benefit component. contribution account balance if they leave Defined Contributions Component: Defined contribution employment and request a refund. Members are vesting refers to the minimum length of service a member always 100% vested in the contributions that they needs to be eligible to withdraw the employer contributions make. from the defined contribution component of the plan. Members are always 100% vested in the contributions that they make. Upon retirement or leaving covered employment, a member is eligible to withdraw a percentage of employer contributions to the defined contribution component of the plan, based on service. After two years, a member is 50% vested and may withdraw 50% of employer contributions. After three years, a member is 75% vested and may withdraw 75% of employer contributions. After four or more years, a member is 100% vested and may withdraw 100% of employer contributions. Distribution is not required by law until age 70½.

Calculating the Benefit The Basic Benefit is Calculating the Benefit See definition under Plan Calculating the Benefit Defined Benefit Component: See calculated based on a formula using the member’s 1. definition under Plan 1. Defined Contribution Component: average final compensation, a retirement multiplier The benefit is based on contributions made by the member and total service credit at retirement. It is one of and any matching contributions made by the employer, plus the benefit payout options available to a member net investment earnings on those contributions. at retirement. An early retirement reduction factor is applied to the Basic Benefit if the member retires with a reduced retirement benefit or selects a benefit payout option other than the Basic Benefit.

Average Final Compensation A member’s average Average Final Compensation A member’s average Average Final Compensation Same as Plan 2. It is used in the final compensation is the average of the 36 final compensation is the average of their 60 retirement formula for the defined benefit component of the consecutive months of highest compensation as a consecutive months of highest compensation as a plan. covered employee. covered employee.

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Service Retirement Multiplier VRS: The Service Retirement Multiplier VRS: Same as Plan Service Retirement Multiplier Defined Benefit Component: retirement multiplier is a factor used in the 1 for service earned, purchased or granted prior to VRS: The retirement multiplier for the defined benefit formula to determine a final retirement benefit. January 1, 2013. For nonhazardous duty members component is 1.00%. For members who opted into the The retirement multiplier for non-hazardous duty the retirement multiplier is 1.65% for creditable Hybrid Retirement Plan from Plan 1 or Plan 2, the members is 1.70%. VaLORS: The retirement service earned, purchased or granted on or after applicable multipliers for those plans will be used to multiplier for VaLORS employees is 1.70% or January 1, 2013. VaLORS: The retirement calculate the retirement benefit for service credited in those 2.00%. multiplier for VaLORS employees is 2.00%. plans. VaLORS: Not applicable. Defined Contribution Component: Not applicable. Normal Retirement Age VRS: Age 65. VaLORS: Normal Retirement Age VRS: Normal Social Normal Retirement Age Defined Benefit Component: VRS: Age 60. Security retirement age. VaLORS: Same as Plan 1. Same as Plan 2. VaLORS: Not applicable. Defined Contribution Component: Members are eligible to receive distributions upon leaving employment, subject to restrictions. Earliest Unreduced Retirement Eligibility VRS: Earliest Unreduced Retirement Eligibility VRS: Earliest Unreduced Retirement Eligibility Defined Benefit Age 65 with at least five years (60 months) of Normal Social Security retirement age with at least Component: VRS: Normal Social Security retirement age creditable service or at age 50 with at least 30 years five years (60 months) of creditable service or when and have at least five years (60 months) of creditable service of creditable service. VaLORS: Age 60 with at least their age and service equal 90. VaLORS: Same as or when their age and service equal 90. VaLORS: Not five years of creditable service or age 50 with at Plan 1. applicable. Defined Contribution Component: Members are least 25 years of creditable service. eligible to receive distributions upon leaving employment, subject to restrictions. Earliest Reduced Retirement Eligibility VRS: Age Earliest Reduced Retirement Eligibility VRS: Age Earliest Unreduced Retirement Eligibility Defined Benefit 55 with at least five years (60 months) of creditable 60 with at least five years (60 months) of Component: VRS: Age Members may retire with a reduced service or age 50 with at least 10 years of creditable creditable service. VaLORS: Same as Plan 1. benefit as early as age 60 with at least five years (60 months) service. VaLORS: 50 with at least five years of of creditable service. VaLORS: Not applicable. Defined creditable service. Contribution Component: Members are eligible to receive distributions upon leaving employment, subject to restrictions.

Cost-of-Living Adjustment (COLA) in Retirement Cost-of-Living Adjustment (COLA) in Retirement Cost-of-Living Adjustment (COLA) in Retirement Defined The Cost-of-Living Adjustment (COLA) matches The Cost-of-Living Adjustment (COLA) matches Benefit Component: Same as Plan 2. Defined Contribution the first 3% increase in the Consumer Price Index the first 2% increase in the CPI-U and half of any Component: Not applicable. Eligibility: Same as Plan 1 and for all Urban Consumers (CPI-U) and half of any additional increase (up to 2%), for a maximum Plan 2. Exceptions to COLA Effective Dates: Same as Plan 1 additional increase (up to 4%) up to a maximum COLA of 3%. Eligibility: Same as Plan 1. and Plan 2. COLA of 5%. Eligibility: For members who retire Exceptions to COLA Effective Dates: Same as with an unreduced benefit or with a reduced Plan 1. benefit with at least 20 years of creditable service, the COLA will go into effect on July 1 after one full calendar year from the retirement date. For members who retire with a reduced benefit and who have less than 20 years of creditable service, the COLA will go into effect on July 1 after one calendar year following the unreduced retirement eligibility date. Exceptions to COLA Effective Dates: The COLA is effective July 1 following one full calendar year (January 1 to December 31) under any of the following circumstances: The member is within five years of qualifying for an unreduced retirement benefit as of January 1, 2013. The member retires on disability. The member retires directly from short-term or long- term disability under the Virginia Sickness and Disability Program (VSDP). The member Is involuntarily separated from employment for Disability Coverage Members who are eligible to Disability Coverage Members who are eligible to Disability Coverage State employees (including Plan 1 and be considered for disability retirement and retire be considered for disability retirement and retire Plan 2 opt-ins) participating in the Hybrid Retirement Plan on disability, the retirement multiplier is 1.7% on on disability, the retirement multiplier is 1.65% are covered under the Virginia Sickness and Disability all service, regardless of when it was earned, on all service, regardless of when it was earned, Program (VSDP), and are not eligible for disability purchased or granted. Most state employees are purchased or granted. Most state employees are retirement. Hybrid members (including Plan 1 and Plan 2 covered under the Virginia Sickness and Disability covered under the Virginia Sickness and Disability opt-ins) covered under VSDP are subject to a one-year waiting Program (VSDP), and are not eligible for disability Program (VSDP), and are not eligible for disability period before becoming eligible for non-work-related retirement. VSDP members are subject to a one- retirement. VSDP members are subject to a one- disability benefits. year waiting period before becoming eligible for year waiting period before becoming eligible for non-work-related disability benefits. non-work related disability benefits.

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Purchase of Prior Service Members may be eligible Purchase of Prior Service Same as Plan 1. Purchase of Prior Service Defined Benefit Component: to purchase service from previous public Same as Plan 1, with the following exceptions: Hybrid employment, active duty military service, an Retirement Plan members are ineligible for ported service. eligible period of leave or VRS refunded service as The cost for purchasing refunded service is the higher of 4% creditable service in their plan. Prior creditable of creditable compensation or average final compensation. service counts toward vesting, eligibility for Plan members have one year from their date of hire or return retirement and the health insurance credit. Only from leave to purchase all but refunded prior service at active members are eligible to purchase prior approximate normal cost. After that on-year period, the rate service. When buying service, members must for most categories of service will change to actuarial cost. purchase their most recent period of service first. Defined Contribution Component: Not applicable. Members also may be eligible to purchase periods of leave without pay.

Contributions

The contribution requirement for active employees is governed by §51.1-145 of the Code of Virginia, as amended, but may be impacted as a result of funding provided to the University by the Virginia General Assembly. Employees are required to contribute 5.00% of their compensation toward their retirement. Prior to July 1, 2012, the 5.00% member contribution was paid by the employer. Beginning July 1, 2012 state employees were required to pay the 5.00% member contribution and the employer was required to provide a salary increase equal to the amount of the increase in the employee-paid member contribution. The University’s contractually required contribution rate for the year ended June 30, 2017 was 13.49% of covered employee compensation for employees in the VRS State Employee Retirement Plan. For employees in the VaLORS Retirement Plan, the contribution rate was 21.05% of covered employee compensation. These rates were based on actuarially determined rates from an actuarial valuation as of June 30, 2015. The contribution rate for the VRS State Employee Retirement Plan also reflects the transfer in June 2016 of $162,406,273 as an accelerated payback of the deferred contribution in the 2010-12 biennium. The contribution rate for the VaLORS Retirement Plan also reflects the transfer in June 2016 of $16,491,559 as an accelerated payback of the deferred contribution in the 2010-12 biennium. The actuarially determined rate, when combined with employee contributions, was expected to finance the costs of benefits earned by employees during the year with an additional amount to finance any unfunded accrued liability. Contributions from the University to the VRS State Employee Retirement Plan were $27,649,005 and $28,015,041 for the years ended June 30, 2017 and June 30, 2016, respectively. Contributions from the University to the VaLORS Retirement Plan were $856,350 and $751,154 for the years ended June 30, 2017 and June 30, 2016, respectively.

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions

At June 30, 2017, the University reported a liability of $337,179,000 for its proportionate share of the VRS State Employee Retirement Plan Net Pension Liability and a liability of $8,914,000 for its proportionate share of the VaLORS Retirement Plan Net Pension Liability. The Net Pension Liability was measured as of June 30, 2016 and the total pension liability used to calculate the Net Pension Liability was determined by an actuarial valuation as of that date. The University’s

$&| 2016-17 Financial Report proportion of the Net Pension Liability was based on the University’s actuarially determined employer contributions to the pension plan for the year ended June 30, 2016 relative to the total of the actuarially determined employer contributions for all participating employers. At June 30, 2016, the University’s proportion of the VRS State Employee Retirement Plan was 5.11595% as compared to 5.10176% at June 30, 2015. At June 30, 2016, the University’s proportion of the VaLORS Retirement Plan was 1.15150% as compared to 1.15136% at June 30, 2015.

For the year ended June 30, 2017, the University recognized pension expense of $30,348,000 for the VRS State Employee Retirement Plan and $1,098,000 for the VaLORS Retirement Plan. Since there was a change in proportionate share between June 30, 2015 and June 30, 2016, a portion of the pension expense was related to deferred amounts from changes in proportion and from differences between employer contributions and the proportionate share of employer contributions

At June 30, 2017, the University’s total reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Deferred Outflows of Deferred Inflows of Resources Resources Differences between expected and actual experience $1,484,000 $9,204,000 Net difference between projected and actual earnings on pension plan investments 21,859,000 - Change in assumptions - - Changes in proportion and differences between employer contributions and proportionate share of contributions 5,439,000 - Employer contributions subsequent to the measurement date 28,505,355 - Total $57,287,355 $9,204,000

The above $28,505,355 reported as deferred outflows of resources related to pensions, resulting from the University’s contributions subsequent to the measurement date, will be recognized as a reduction of the Net Pension Liability in the fiscal year ending June 30, 2018. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense in future reporting periods as follows:

Year Ended June 30, 2018 $907,000 2019 (1,009,000) 2020 10,737,000 2021 8,943,000 $19,578,000

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Actuarial Assumptions

The total pension liability for the VRS State Employee Retirement Plan was based on an actuarial valuation as of June 30, 2015, using the Entry Age Normal actuarial cost method and the following assumptions, applied to all periods included in the measurement and rolled forward to the measurement date of June 30, 2016.

Inflation 2.5 percent Salary increases, including Inflation 3.5 percent – 5.35 percent Investment rate of return 7.0 percent, net of pension plan investment expense, including inflation

Administrative expenses as a percent of the market value of assets for the last experience study were found to be approximately 0.06% of the market assets for all of the VRS plans. This would provide an assumed investment return rate for GASB purposes of slightly more than the assumed 7.0%. However, since the difference was minimal and a more conservative 7% investment return assumption provided a projected plan net position that exceeded the projected benefit payments, the long-term expected rate of return on investments was assumed to be 7.0% to simplify preparation of pension liabilities.

Mortality rates

Pre-Retirement: RP-2000 Employee Mortality Table Projected with Scale AA to 2020 with males set forward 2 years and females were set back 3 years.

Post-Retirement: RP-2000 Combined Mortality Table Projected with Scale AA to 2020 with females set back 1 year.

Post-Disablement: RP-2000 Disability Life Mortality Table Projected to 2020 with males set back 3 years and no provision for future mortality improvement.

The actuarial assumptions used in the June 30, 2015 valuation were based on the results of an actuarial experience study for the period from July 1, 2008 through June 30, 2012. Changes to the actuarial assumptions as a result of the experience study are as follows:

 Update mortality table  Decrease in rates of service retirement  Decrease in rates of withdrawals for less than 10 years of service  Decrease in rates of male disability retirement  Reduce rates of salary increase by 0.25% per year

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The total pension liability for the VaLORS Retirement Plan was based on an actuarial valuation as of June 30, 2015, using the Entry Age Normal actuarial cost method and the following assumptions, applied to all periods included in the measurement and rolled forward to the measurement date of June 30, 2016.

Inflation 2.5 percent Salary increases, including Inflation 3.5 percent – 4.75 percent Investment rate of return 7.0 percent, net of pension plan investment expense, including inflation

Administrative expenses as a percent of the market value of assets for the last experience study were found to be approximately 0.06% of the market assets for all of the VRS plans. This would provide an assumed investment return rate for GASB purposes of slightly more than the assumed 7.0%. However, since the difference was minimal and a more conservative 7% investment return assumption provided a projected plan net position that exceeded the projected benefit payments, the long-term expected rate of return on investments was assumed to be 7.0% to simplify preparation of pension liabilities.

Mortality rates:

Pre-Retirement: RP-2000 Employee Mortality Table Projected with Scale AA to 2020 with males set forward 5 years and females were set back 3 years.

Post-Retirement: RP-2000 Combined Mortality Table Projected with Scale AA to 2020 with females set back 1 year.

Post-Disablement: RP-2000 Disability Life Mortality Table Projected to 2020 with males set back 3 years and no provision for future mortality improvement.

The actuarial assumptions used in the June 30, 2015 valuation were based on the results of an actuarial experience study for the period from July 1, 2008 through June 30, 2012. Changes to the actuarial assumptions as a result of the experience study are as follows:

Update mortality table

 Adjustments to the rates of service retirement  Decrease in rates of withdrawals for females under 10 years of service  Increase in rates of disability  Decrease service related disability rate from 60% to 50%

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Net Pension Liability

The net pension liability (NPL) is calculated separately for each system and represents that particular system’s total pension liability determined in accordance with GASB Statement No. 67, less that system’s fiduciary net position. As of June 30, 2016, NPL amounts for the VRS State Employee Retirement Plan and the VaLORS Retirement Plan are as follows (amounts expressed in thousands):

State Employee VaLORS Retirement Retirement Plan Plan Total pension liability $22,958,593 $1,985,618 Plan fiduciary net position 16,367,842 1,211,446 Employers’ net pension liability (asset) $6,590,751 $774,172

Plan fiduciary net position as a percentage of the total pension liability 71.29% 61.01%

The total pension liability is calculated by the System’s actuary, and each plan’s fiduciary net position is reported in the System’s financial statements. The net pension liability is disclosed in accordance with the requirements of GASB Statement No. 67 in the System’s notes to the financial statements and required supplementary information.



Long-Term Expected Rate of Return

The long-term expected rate of return on pension System investments was determined using a log- normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected returns, net of pension System investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target asset allocation and best estimate of arithmetic real rates of return for each major asset class are summarized in the following table:



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Arithmetic Long- Weighted Average Term Expected Rate Long-Term Expected Asset Class (Strategy) Target Allocation of Return Rate of Return U.S. equity 19.50% 6.46% 1.26% Developed non U.S. equity 16.50% 6.28% 1.04% Emerging market equity 6.00% 10.00% 0.60% Fixed income 15.00% 0.09% 0.01% Emerging debt 3.00% 3.51% 0.11% Rate sensitive credit 4.50% 3.51% 0.16% Non rate sensitive credit 4.50% 5.00% 0.23% Convertibles 3.00% 4.81% 0.14% Public real estate 2.25% 6.12% 0.14% Private real estate 12.75% 7.10% 0.91% Private equity 12.00% 10.41% 1.25% Cash 1.00% -1.50% -0.02% Total 100.00% 5.83%

Inflation 2.50% Expected arithmetic nominal return 8.33%

Using stochastic projection results provide an expected range of real rates of return over various time horizons. Looking at one year results produce an expected real return of 8.33% but also has a high standard deviation, which means there is high volatility. Over larger time horizons the volatility declines significantly and provides a median return of 7.44%, including expected inflation of 2.50%.

Discount Rate

The discount rate used to measure the total pension liability was 7%. The projection of cash flows used to determine the discount rate assumed that System member contributions will be made per the VRS Statutes and the employer contributions will be madein accordance with the VRS funding policy at rates equal to the difference between actuarially determined contribution rates adopted by the VRS Board of Trustees and the member rate. Through the fiscal year ending June 30, 2018, the rate contributed by the University for the VRS State Employee Retirement Plan and the VaLORS Retirement Plan will be subject to the portion of the VRS Board-certified rates that are funded by the Virginia General Assembly. From July 1, 2018 on, all agencies are assumed to contribute 100% of the actuarially determined contribution rates. Based on those assumptions, the pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore the long-term expected rate of

%!| 2016-17 Financial Report return was applied to all periods of projected benefit payments to determine the total pension liability.

Sensitivity of the State University’s Proportionate Share of the Net Pension Liability to Changes in the Discount Rate

The following presents the University’s proportionate share of the VRS State Employee Retirement Plan net pension liability using the discount rate of 7%, as well as what the University’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is one percentage point lower (6%) or one percentage point higher (8%) than the current rate:

1% Decrease Current Discount 1% Increase (6%) Rate (7%) (8%) University’s proportionate share of the VRS state employee retirement plan net $474,520,000 $337,179,000 $221,873,000 pension liability

The following presents the University’s proportionate share of the VaLORS Retirement Plan net pension liability using the discount rate of 7%, as well as what the University’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is one percentage point lower (6%) or one percentage point higher (8%) than the current rate:

1% Decrease Current Discount 1% Increase (6%) Rate (7%) (8%) University’s proportionate share of the VaLORS retirement plan net pension $11,930,000 $8,914,000 $6,429,000 liability

Pension Plan Fiduciary Net Position

Detailed information about the VRS State Employee Retirement Plan’s Fiduciary Net Position or the VaLORS Retirement Plan’s Fiduciary Net Position is available in the separately issued VRS 2016 Comprehensive Annual Financial Report (CAFR). A copy of the 2016 VRS CAFR may be downloaded from the VRS website at http://www.varetire.org/Pdf/Publications/2016- annual- report.pdf, or by writing to the System’s Chief Financial Officer at P.O. Box 2500, Richmond, VA, 23218-2500.

Payables to the Pension Plan

Included in accounts payable and other liabilities is an outstanding liability as of June 30, 2017 of $1,675,273 due to VRS.

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Optional Retirement Plans

Full-time faculty and certain administrative staff are eligible to participate in other retirement plans. These are fixed-contribution programs where the retirement benefits received are based upon the employer (5.4%) and employee (5%) contributions (all of which are paid by the University for faculty hired before July 1, 2010) plus interest and dividends. For faculty hired on or after July 1, 2010, the 5% employee contribution is paid by the employee and the employer contribution, paid by the University, is 8.5%. The two providers are TIAA-CREF and Fidelity. The total pension expense for fiscal year 2017 related to these optional retirement plans was $20,235,576. Included in accounts payable and other liabilities is an outstanding liability as of June 30, 2017 of $1,178,374 related to these plans.

Certain employees of Virginia Commonwealth University are participating in The Select Plan. The Select Plan is a 401(a) defined contribution plan and participation is limited to executives (Dean and above) by invitation. It is primarily designed to continue defined contributions at the regular other retirement plan percentages of salary (as applicable depending upon the faculty member's plan) for executives whose base salaries exceed the compensation maximum for the other retirement plans (currently $265,000). Total pension expense related to The Select Plan for fiscal year 2017 was $48,041. Included in accounts payable and other liabilities is an outstanding liability as of June 30, 2017 of $767 related to this plan.

Individual contracts issued under these plans provide for full and immediate vesting of both the University's and the employee’s contributions. Contributions to other retirement plans were calculated using the base salary $212,202,907 in fiscal year 2017. Total pension costs under these plans were $20,283,617 in fiscal year 2017. Included in accounts payable and other liabilities is an outstanding liability as of June 30, 2017 of $1,179,141 related to these plans.

Other Post-Employment Benefits

The Commonwealth sponsors post-employment benefit programs that are administered by the VRS. These programs, a statewide group life insurance program and the Virginia Sickness and Disability Program’s long-term care plan, provide post-employment benefits to eligible retired and terminated employees. Health care credits are also provided to offset the monthly insurance premiums for retirees who have at least 15 years of service. Information related to these plans is available at the state-wide level on the Commonwealth’s Comprehensive annual Financial Report.

The Deferred Compensation Plan (DCP) gives full and part-time faculty and staff who contribute at least $10 each pay period through the Tax Deferred Annuity Program (TDA) a matching contribution of 50%, up to a maximum of $20 each pay period, of the amount faculty and staff contribute through the TDA Program. The Deferred Compensation Plan is a qualified defined contribution plan under Section 401(a) of the Internal Revenue Code. Total employer contributions under the Deferred Compensation Plan including both VRS and other retirement plan participants, were approximately $1,690,568 for the fiscal year ending 2017.

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Authority

MCVH Virginia Retirement System Plan (VRS Plan)

Prior to July 1, 1997, employees of MCVH were employees of the Commonwealth of Virginia (the Commonwealth). These employees were eligible to participate in a defined benefit pension plan administered by the Virginia Retirement System (VRS). After July 1, 1997, employees could choose to remain in the VRS Plan or enroll in the MCVH Authority Defined Contribution Plan (the Plan). As of June 30, 2017, approximately 355 employees remain enrolled in VRS. Participating MCVH employees are eligible for VRS’s Plan 1 benefit structure in which the retirement benefit is based on a member’s age, creditable service and average final compensation at retirement using a formula. The Commonwealth, not MCVH, has overall responsibility for these plans. The VRS also administers health-related plans for retired employees. A description of the pension plan, contributions, actuarial assumptions, net pension liability, long-term expected rate of return and discount rate can be found under the University’s section described previously.

The contribution requirement for active employees is governed by 51.1-145 of the Code of Virginia, as amended, but may be impacted as a result of funding provided to state agencies by the Virginia General Assembly. Employees are required to contribute 5% of their compensation toward their retirement. Prior to July 1, 2013, the 5% member contribution was paid by MCVH. Beginning July 1, 2013, MCVH employees were required to pay the 5% member contribution. Each state agency’s (including MCVH) contractually required contribution rate for the year ended June 20, 2017 was 13.49% of covered employee compensation for employees in the Plan. This rate was based on an actuarially determined rate from an actuarial valuation as of June 30, 2015. The contribution rate for the Plan also reflects the transfer in June 2016 of $162,406,273 as an accelerated payback of the deferred contribution in the 2010-12 biennium. The actuarially determined rate, when combined with employee contributions, was expected to finance the costs of benefits earned by employee during the year, with an additional amount to finance any unfunded accrued liability. Contributions from MCVH to the Plan were $3,926,430 for the year ended June 30, 2017.

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions

MCVH reported a liability of $52,121,000 for its proportionate share of the Net Pension Liability for the year ended June 30, 2017. The Net Pension Liability was measured as of June 30, 2016 and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. MCVH’s proportion of the Net Pension Liability was based on MCVH’s actuarially determined employer contributions to the pension plan for the year ended June 30, 2016, relative to the total of the actuarially determined employer contribution for all participating employers. At June 30, 2016, MCVH’s proportion of the VRS Plan was 0.79% as compared to 0.87% at June 30, 2015.

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MCVH recognized pension income of $220,000 for the Plan for the year ended June 30, 2017. Since there was a change in proportionate share between June 30, 2015 and June 30, 2016, a portion of the pension expense was related to deferred amounts from changes in proportion and from differences between employer contributions and the proportionate share of employer contributions. At June 30, 2017, MCVH reported deferred outflows of resources and deferred inflows of resources related to pension from the following sources:

Deferred Outflows of Deferred Inflows of Resources Resources Differences between expected and actual experience $223,000 $1,418,000 Change in assumptions - - Net difference between projected and actual earnings on pension plan investments 3,322,000 - Changes in proportion and differences between employer contributions and proportionate share of contributions - 7,620,000 Employer contributions subsequent to the measurement date 3,926,430 - Total $7,471,430 $9,038,000 

Deferred outflows of resources related to employer contributions subsequent to the measurement date totaling $3,926,430 will be recognized as a reduction of the net pension liability in the year ended June 30, 2018. Deferred inflows of resources related to pensions will be recognized in pension expense as follows:

Year ended June 30, 2018 $4,580,000 2019 2,844,000 2020 (570,000) 2021 (1,361,000) $5,493,000

Sensitivity of the Authority’s Proportionate Share of the Net Pension Liability to Changes in the Discount Rate

The following presents the MCVH’s proportionate share of the Plan’s net pension liability using the discount rate of 7%, as well as what the net pension liability would be if it were calculated using a discount rate that is one percentage point lower (6%) or one percentage point higher (8%) than the current rate:

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Current 1% Decrease Discount Rate 1% Increase (6%) (7%) (8%) The MVCH’s proportionate share of the VRS state $76,789,000 $53,472,000 $33,908,000 employee retirement plan net pension liability

VCUHS Retirement Plan (VCUHS 401(A) Plan)

The MCVH Authority Defined Contribution Plan (the Plan) was amended and restated effective January 1, 2002 and is now referred to as the VCUHS Retirement Plan (VCUHS 401(a) Plan). All employees, excluding house staff, working at least 20 hours a week in a benefit-eligible position are eligible to participate in the VCUHS 401(a) Plan. At June 30, 2017, there were 7,166 participants in the VCUHS 401(a) Plan. Per the VCUHS 401(a) Plan document as approved by the Authority’s Board of Directors, MCVH contributes up to 10% of the participant’s salary to the VCUHS 401(a) Plan not to exceed the lesser of (a) the amount in accordance with Code 415(d), or (b) one hundred percent (100%) of the Participant’s Compensation for such limitation year. Contributions are a function of the employee’s age plus years of service per the table below. Total contributions to the VCUHS 401(a) Plan for the year ended June 30, 2017 was approximately $24,157,000. MCVH shall have the right at any time, and without the consent of any party, to terminate the VCUHS 401(a) Plan in its entirety. Any changes to the provisions of the VCUHS 401(a) Plan, including the contribution requirements, must be approved in writing by the Authority’s Board of Directors.

MCVH also sponsors the VCUHS Savings Plan (VCUHS 457(b) Plan); a savings plan that represents employee contributions and employees may also receive a 2% matching contribution in their VCUHS 401(a) Plan based on heir 457(b) contribution.

Employer Age Plus Years of Contribution Service 401(a) Plan 65+ 10% 55-65 8 45-55 6 35-45 4 <35 2

MCVH also sponsors the VCUHS Savings Plan (VCUHS 157(b) Plan), a savings plan that represents employee contributions and employees may also receive a 2% matching contribution in their VCUHS 401(a) Plan based on their 157(b) contribution.

MCVH has also established the HCP Plan. All persons hired as a health care provider on or after July 1, 1993 and prior to July 1, 1997 and working at least 35 hours of service per week are eligible to participate in the HCP Plan. At June 30, 2017 there were 3 participants in the HCP Plan. All

%&| 2016-17 Financial Report significant provisions of the HCP Plan, including the contribution requirements, are similar to the VCUHS 401(a) Plan. Total contributions to the HCP Plan for the year ended June 30, 2017 was approximately $29,702.

The VCUHS 401(a) Plan and the HCP Plan use the accrual basis of accounting and the VCIHS 401(a) Plan assets, which consist of mutual funds, are carried at fair market value. The fair market values of the mutual funds are based on quoted market prices. Investments with investment managers are as follows:

2017 Fidelity Investments $225,486,754 TIAA/CREF 107,978,541 The Variable Annuity Life Insurance Company (VALIC) 11,672,834 $345,138,129

MCVAP

MCVAP sponsors the MCVAP 401(a) Retirement Plan (the 401(a) Plan), a noncontributory, defined contribution plan, which covers substantially all full-time clinical provider employees of MCVAP and the MCVAP 403(b) Salary Deferral Plan (the 403(b) Plan), a salary deferral plan that represents physician contributions. Contributions to the 401(a) Plan by MCVAP, as determined annually at the discretion of the Board of Directors, were approximately $20,117,000 for the year ended June 30, 2017.

MCVAP also participates in the VCUHS Retirement Plan (VCUHS 401(a) Plan), a defined contribution plan, which covers all benefited nonclinical provider employees of MCVAP; the VCUHS Savings Plan (VCUHS 457(b) Plan), a savings plan that represents employee contribution and the MCVAP 403(b) Supplemental Plan (the 403(b) Highly Compensated Plan), a noncontributory defined contribution plan for highly compensated employees. The VCUHS 401(a) Plan contributions (as a percentage of the employee’s salary) are a function of the employee’s age plus years of service per the table below. MCVAP employees may contribute to the VCUHS 457(b) Savings Plan. Employees may also receive a 2% matching contribution in their VCUHS 401(a) Plan based on their 457(b) contribution.

Age Plus Years of Employer Contribution Service VCUHS 401(a) Plan 65+ 10% 55-65 8 45-55 6 35-45 4 <35 2

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Contributions to the plans for the year ended June 30, 2017 was approximately $4,113,000.

CMH

CMH participants in the VCUHS 401(a) Plan and retirement plan expense were approximately $1,443,000 for the year ending June 30, 2017.

VA Premier

Effective August 1, 1999, VA Premier adopted a 401(k) plan for which Fidelity Investments is the trustee. Prior to January 1, 2015, employees become eligible to participate after completing one year of service, during which the employee completed 1,000 hours of service. Effective January 1, 2015, employees became eligible to participate following one month of service. There is no minimum service or age requirement to participate in the 401(k) plan. Employees may contribute 1% to 90% of their compensation. VA Premier will match 50% of the employee’s contributions up to 4% of the employee’s compensation. Matching will occur based on the biweekly pay periods.

In addition, VA Premier also contributes 3% of each employee’s compensation (Safe Harbor contribution). VA Premier also contributes 2% of each employee’s compensation (Non Elective base contribution). Virginia Premier made the Safe Harbor and Non Elective base contributions in an annual installment at the end of the calendar year through December 2014. Starting January 2015, Safe Harbor and Non Elective base contributions are made on the bi-weekly pay periods. Also starting January 2015, Virginia Premier may make additional contributions (Non Elective employer contributions) based on age plus years of service as of January 1st of the plan year. This additional Non Elective contribution was made after the end of calendar years 2016 and 2015. Employees are fully vested after four years of service in which the employee begins employment. The number of covered employees was 1,190 as of June 30, 2017. Virginia Premier’s expense for its contributions to this plan was approximately $4,076,000 for the ended June 30, 2017.

Employer Age Plus Years of Contribution Service 401(a) Plan 65+ 5% 55-65 3 45-55 1 <55

Employees are fully vested after four years of service in which the employee begins employment. The number of covered employees was 1,190 as of June 30, 2017. Virginia Premier’s expense for its contributions to this plan was approximately $4,076,000 for the ended June 30, 2017.

Children’s

Children’s has a noncontributory defined benefit pension plan (Pension Plan) covering substantially all Children’s employees. The Pension Plan provides benefits that are based on the

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five consecutive years for which an employee’s compensation is highest. Children’s funding policy is to make the minimum annual contribution that is required by applicable regulations, plus such amounts as Children’s may determine to be appropriate from time to time. Effective June 30, 2010, Children’s decided to freeze all future benefit accruals for those who were active plan participants. The Pension Plan is also frozen to new participants as of that date.

The measurement date for determining the Pension Plan’s funded status is June 30. The Pension Plan’s fair value of plan assets of $9,833,684 as of June 30, 2017, is recorded in other assets on the accompanying consolidated statements of net position. The Pension Plan’s liability of $11,390,181 as of June 30, 2017 in included in pension obligations on the accompanying consolidated statement of net position. Children’s participants in the VCUHS 401(a) Plan and retirement plan expense was approximately $1,238,000 for the year ended June 30, 2017.

11. RELATED PARTIES

The financial statements do not include the assets, liabilities or fund balances of affiliated organizations. All of these organizations are separately incorporated entities managed by their own Boards and audited by other independent certified public accounting firms. Each organization is described below.

Medical College of Virginia Alumni Association of VCU

The purpose of the Medical College of Virginia Alumni Association of VCU is to organize alumni activities for Virginia Commonwealth University. The University provided funding of $334,349 in 2017 as the principal source of funding for the Association's operation.

Virginia Commonwealth University Alumni Association

The Association was formed for educational purposes to further the best interests of the University, its alumni and students. The University provided funding of $729,000 in 2017 as the principal source of funding for the Association's operation.

MCV/VCU Dental Faculty Practice Association

The Association, also known as Dentistry@VCU, was established to support the education, research, service and patient care mission of the School of Dentistry (School) of Virginia Commonwealth University. The Association promotes and coordinates the delivery of superior patient care at the School.

The Association reimburses VCU for certain other expenses including personnel, telephone, postage, payroll, physical repairs for the building and supplies. These payments were $3,249,833 for the year ended June 30, 2017. The Association purchased equipment of $128,297 in the year ended June 30, 2017, which conveys to the University.

At times, the Association collects revenue on behalf of the VCU Dental School and either maintains those funds as cash and investments, or, periodically remits those funds to the VCU

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School of Dentistry as needed. For the year ended June 30, 2017, the Association collected funds totaling $3,361,592 and remitted funds totaling $973,424. At June 30, 2017, the Association held cash and investments totaling $2,406,880.

The Association also incurs expenses on behalf of the VCU Dental School. For the year ended June 30, 2017, the Association paid clinic and non-clinic expenses totaling $263,279. The Association paid for VCU Dental School related payroll and fringe totaling $2,499,993 for the year ended June 30, 2017. Additionally, the Association was reimbursed by the School for payroll and fringe in the amount of $2,686,310 in the year ended June 30, 2017.

Virginia Biotechnology Research Park Partnership Authority

The primary purpose of the Virginia Biotechnology Research Park Partnership Authority is to expand knowledge pertaining to scientific and technological research, and development among public and private entities and promote the economic and industrial development of the City of Richmond and the Commonwealth of Virginia. The Authority does not have taxing powers. Operations are funded from lease and ancillary service revenues. Bond issuances, long-term notes payable, line of credit debt, appropriations from the Commonwealth, voluntary assessments from property owners located in the Research Park and contract support payments from VCU have funded both the operations and the acquisition and construction of capital assets.

In November 2011, the Authority entered into a lease agreement with Virginia Commonwealth University for the use of the real property, building and improvements located at 800 East Leigh Street, otherwise known as Biotech Center. Biotech Center is the property from which the Authority conducts the majority of its operations. The rent under the lease agreement was $30 and was paid in a lump sum at the beginning of the lease; therefore, there is no related rent expense represented within these financial statements. The lease term ends November 2041.

VCU Investment Management Company

The VCU Investment Management Company, a non-profit, non-stock corporation, organized under Virginia law for exclusively charitable and educational purposes within the meaning of Section 501(c)(3) of the Internal Revenue Code was formed to advise the University and its affiliated foundations on the management of its investments. Approved by the VCU Board of Visitors and VCU Health Board of Directors in June 2015, the VCU Investment Management Company (VCIMCO) will provide investment and investment management services to VCU, VCU Health and affiliated foundations.

In May 2017, VCIMCO entered into a loan agreement with the University borrowing $875,000 at an interest rate of 4.67% with the loan maturing in 2021.

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12. LINE OF CREDIT

Beginning Ending Balance Additions Reductions Balance Uses: Construct basketball practice facility $8,600,000 - - $8,600,000 Construct allied health professional building - 9,744,502.00 - 9,744,502.00 Expansion School of Engineering research facility - 2,126,654.00 - 2,126,654.00

Total line of credit $8,600,000 $11,871,156 $0 $20,471,156

13. FUNDS HELD IN TRUST BY OTHERS

Under the provisions of the wills of certain benefactors, the University's portion of principal sums with market values of $14,089,353 at June 30, 2017, was held in trust by others. These assets are not included in the University's balance sheet.

14. COMMITMENTS

The University and the Authority are party to various construction commitments. At June 30, 2017, the remaining commitments were $87,130,461 for the University and approximately $163,842,000 for the Authority.

The University also is committed under various operating leases (for buildings, computer equipment, business equipment, etc.). The University has renewal options on the leased assets for another similar term. In most cases, the University expects that, in the normal course of business, these leases will be replaced by similar leases. Rental expense for the fiscal year ended June 30, 2017, was $9,671,894 for the University and $12,350,517 for the Authority.

The MCV Foundation entered into a contract on May 6, 2016 for a software package and conversion in the amount of $207,411. As of June 30, 2017, work had been performed and either paid or accrued in the amount of $156,538, leaving a remaining balance on the contract $50,873.

The VCU Real Estate Foundation has entered into 15 leases for residential properties located in Doha, Qatar for the purpose of providing housing for faculty and staff of VCU Qatar. The payments are approximately $909,000 (US Dollars) annually based upon the exchange rates as of June 30, 2017. The Qatar Foundation advances the funds to the University and the University makes all rent payments directly to the landlords.

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The University has, as of June 30, 2017, the following total future minimum rental payments due under the above leases:

Fiscal Year University Authority 2018 $8,857,474 $9,807,062 2019 7,831,327 7,989,391 2020 6,544,510 6,122,083 2021 5,815,502 4,222,430 2022 4,819,276 6,109,714 2023-2027 16,741,040 - 2028-2032 12,551,867 - 2033-2037 5,284,222 - 2038-2042 849,780 - 2043-2047 849,780 - 2048-2052 849,780 - 2053-2058 849,780 - 2059-2063 849,780 - 2064-2068 169,956 - $72,864,074 $34,250,680

15. LITIGATION

The University and Authority have been named as a defendant in a number of lawsuits. The final outcome of any of these lawsuits cannot be determined at this time. However, management is of the opinion that any ultimate liability to which the University and Authority may be exposed will not have a material effect upon the entity’s financial position.

On June 7, 2017, the bankruptcy trustee for a local business filed a complaint in bankruptcy court seeking recovery of certain past transfers made to the VCU Foundation and VCU School of Business Foundation during the applicable time period under current bankruptcy law. The case is ongoing. An adverse result is not probable and no estimate of loss, if any, can be determined at the date of the financial statements.

16. TRANSACTIONS BETWEEN COMPONENT UNITS

The University and its component units provide services and support to each other so as to avoid duplication of efforts as much as possible.

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The VCU Foundation, the VCU School of Business Foundation and the VCU School of Engineering Foundation hold the University’s investments that function as endowments, both true and quasi. As of June 30, 2017, the VCU Foundation and the VCU School of Engineering Foundation held University investments of $26,865,382 and $6,625,431, respectively. The VCU School of Business Foundation held investments of $1,165,722. The University has a due from component units for these investments, which is eliminated in the total column.

The VCU Foundation also holds investments for the VCU Intellectual Properties Foundation in the amount of $1,087,812 and for the VCU Real Estate Foundation in the amount of $7,580,318. The University has a due from component units for these investments, which is eliminated in the total column.

The VCU School of Engineering Foundation has constructed two buildings with the proceeds of debt issued by the University. The School of Engineering Foundation transfers sufficient funds to the University annually to fund the debt service. The annual transfer is recorded at the University as a gift received. The University includes one of the buildings and the liability for both buildings on the Statement of Net Position. The VCU School of Engineering Foundation has the phase I building, deferred bond issuance costs, prepaid bond interest, a liability and an accrued contribution to the University on their financial statements which are eliminated in the Statement of Net Position.

The VCU School of Business Foundation has constructed a building with the proceeds of debt issued by the University. The School of Business Foundation transfers sufficient funds to the University annually to fund the debt service. The University has the liability for the outstanding debt on the Statement of Net Position. The VCU School of Business Foundation has deferred issuance costs, a liability and an accrued contribution to the University on their financial statements which are eliminated in the Statement of Net Position.

The MCV Foundation, VCU Foundation, VCU School of Engineering Foundation and VCU School of Business Foundation solicit funds to benefit the University and transfer a portion of those funds to the University to support programs. These transactions have been eliminated from the Statement of Revenues, Expenses and Changes in Net Position from gift revenue and supporting services.

MCV Associated Physicians, a component of the VCU Health System, transfer a portion of their patient revenues to the University to support the academic and research missions. Those transfers are eliminated from hospital services expenses and other operating revenue.

The VCU Real Estate Foundation acquires facilities and rents them to the University and the VCU Health System. Those rental expenses are eliminated from operations and maintenance expenses and other revenues.

The University and the VCU Health System support each other through the sharing of capabilities and resources. Reimbursements of costs are made between the entities to ensure that each entity bears the proper portion of costs. Those transactions are eliminated between the revenue recorded

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and the expense category so that the expense is included in the expense category that reflects the service delivered to the student or public.

17. CONTINGENCIES

MCVH is self-insured for professional liability claims. There have been malpractice claims asserted against MCVH by various claimants. The claims are in various stages of processing and some may ultimately be brought to trial. There are also known incidents that have occurred through that may result in the assertion of additional claims. In addition, there may be other claims from unreported incidents arising from services provided to patients. Management of MCVH accrues estimated losses on malpractice claims to the extent they fall within the limits of the MCVH’s self-insurance program or exceed the limits of the excess insurance coverage in place at the date of the claim. The undiscounted liability is actuarially determined using industry data and MCVH’s historical experience.

Investments have been set aside based on actuarially determined reserves and are included in assets whose use is limited in the accompanying consolidated statements of net position. At June 30, 2017, the internally restricted funds for MCVH include $3,497,794 for claims and related legal expenses for reported and unreported incidents occurring since July 1, 1998.

The Authority believes that its consolidated financial position would not be materially affected by the difference between the amounts recorded and the ultimate cost related to asserted or un- asserted MCVH claims, if any, at June 30, 2017.

In addition, MCVAP is self-insured for all malpractice claims. There have been malpractice claims asserted against MCVAP by various claimants. The claims are in various stages of processing and some may ultimately be brought to trial. There are also known incidents that have occurred that may result in the assertion of additional claims. In addition there may be other claims from unreported incidents arising from services provided to patients. Management of MCVAP accrues estimated losses on malpractice claims. The undiscounted liability is actuarially determined using industry data and MCVAP’s historical experience. Assets whose use is limited of $20,819,367 have been internally restricted as of June 30, 2017, for payment of claims and related legal expenses for reported and unreported incidents.

The Authority believes that its combined financial position would not be materially affected by the difference between the amounts recorded and the ultimate cost related to asserted and unasserted MCVAP claims, if any, at June 30, 2017.

CMH is exposed to various risks of loss from torts, theft of, damage to and destruction of assets; business interruptions; errors and omissions; employee injuries and illness; natural disasters; malpractice; and employee health, dental and accidental benefits. Insurance coverage is purchased for claims arising from such matters. CMH can be involved in litigation during the ordinary course of business related to professional liability claims. Management and legal counsel believe all claims should be settled within the limits of insurance coverage, less a $250,000 deductible. The basic

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level of coverage limits are $1 million per event and $3 million aggregate with an Umbrella policy of $5.9 million per event and $5.9M aggregate.

VA Premier maintains general and professional liability policies. The general liability policy in force is occurrence-based. The coverage under the professional liability policy is on a claims-made basis and must be renewed or replaced with the equivalent insurance if claims were incurred during its terms, but asserted after its expiration, are to be insured. Coverage limits for the general liability policy are $1 million per occurrence and $3 million in the annual aggregate. The coverage limit for the professional liability policy is $10 million in the annual aggregate. Management does not believe the amount of liability for any claims incurred but unreported as of June 30, 2017 is significant.

Children’s maintains professional liability insurance coverage on the claims-made basis. Should Children’s not renew its policy or replace it with equivalent insurance, occurrences during its term but asserted after its term will be uninsured, unless Children’s obtains tail coverage.

The Authority believes that its combined financial position would not be materially affected by the ultimate cost related to unasserted claims, if any, at June 30, 2017.

18. STOP-LOSS COVERAGE

VA Premier has a stop-loss arrangement to limit losses on individual claims. These contracts provide stop-loss coverage for all enrollee claims. The VA Premier contract provides coverage for 90% of all inpatient and outpatient services, physician services and drug related services in excess of $375,000 subject to certain limitations and a lifetime limit of $5 million per enrollee. Premiums paid to the reinsurer for the year ended June 30, 2017 were approximately $5,817,000 and are included in other expenses in the accompanying consolidated statement of revenues, expenses and changes in net position. Benefits of approximately $6,673,000 were provided by the reinsurer for the year ended June 30, 2017 and are netted with medical claims expense in the accompanying consolidated statement of revenues, expenses and changes in net position.

19. INDEMNIFICATIONS

The MCV Foundation has certain obligations to indemnify its current and former officers and directors for certain events or occurrences while the officer or director is, or was serving, at the Foundation’s request in such capacities. The maximum liability under these obligations is limited by the Code of Virginia. The Foundation has a director and officer insurance policy that further limits its exposure and enables the organization to recover a portion of any future amounts paid.

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20. NET PATIENT SERVICE REVENUE

The Authority’s patient service revenue is as follows for the year ended June 30, 2017:

Gross Patient Revenue: Inpatient $2,973,435,500 Outpatient 2,208,939,867 5,182,375,367 Provision for uncompensated care and contractual adjustments (3,608,811,963) Net patient service revenue (hospitals) 1,573,563,404 MCVAP's net patient service revenue 257,143,617 CMH's net patient service revenue 89,072,799 Children's patient service revenue 30,097,943 Eliminations (42,701,290) Consolidated net patient service revenue $1,907,176,473

This balance is included in the hospital services line item of the Statement of Revenues, Expenses and Changes in Net Position along with other revenues earned by the Health System Authority.

21. ESTIMATED MEDICAL CLAIMS PAYABLE

Claim expenses and liabilities arising from services rendered to VA Premier’s HMO members are reported when it is probable that services have been provided and the amount of the claim can be reasonably estimated. The claims payable includes an estimate of claims that have been incurred but not reported. At June 30, 2017, the amount of these liabilities included in accounts payable and accrued liabilities was $81,433,594.

22. STATE APPROPRIATIONS

The University receives state appropriations from the General Fund of the Commonwealth. The Appropriations Act specifies that such unexpended appropriations shall revert at the end of the biennium, as specifically provided by the General Assembly, unless the University meets management standards.

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The following is a summary of the state appropriations for the year ended June 30, 2017:

Original Legislative Appropriation per Chapter 836: Educational and general programs $178,172,127 Higher education student financial assistance ch. 836 item 208 29,900,271 Governor's research initiative for biomedical engineering and regenerative medicine ch. 836 item 209 1,162,500 Higher education research initiative for cancer research ch. 836 item 209 12,500,000 Parkinson's and movement disorder center ch. 836 item 209 350,000 Supplemental Adjustments: Richmond teacher residency 896,000 Virtual Library of Virginia- VIVA 21,599 Central appropriations distributions 90,441 Virginia military survivors and dependent education program 342,216 Two year college transfer grant program 175,660 Higher education equipment trust fund 11 ch. 732 item 251 9,848,982 Capital fee for out of state students ch. 732 item 276 (2,626,177) Total $230,833,619

23. RISK MANAGEMENT

The University is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; nonperformance of duty; injuries to employees; and natural disasters. The University participates in insurance plans maintained by the Commonwealth of Virginia. The state employee health care and worker’s compensation plans are administered by the department of Human Resource Management and the risk management insurance plans are administered by the Department of Treasury, Division of Risk Management. Risk management insurance includes property, general liability, medical malpractice, faithful performance of duty bond, automobile, air and watercraft plans. The University pays premiums to each of these departments for its insurance coverage. The University also purchases certain contingency insurance coverage related to the VCU School of the Arts in Qatar. Information relating to the Commonwealth’s insurance plans is available in the Commonwealth of Virginia’s Comprehensive Annual Financial Report.



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24. CONTRIBUTIONS RECEIVABLE

MCV Foundation: Receivable in less than one year $11,451,000 Receivable in one to five years 12,203,000 Receivable in more than five years 1,110,000 24,764,000 Less: Discounts (758,000) Allowances (1,313,000) Net contribution receivable $22,693,000 Discount rate of 2.84% was used in determining the present value of the contributions receivable.

VCU Foundation: Receivable in less than one year $5,375,040 Receivable in one year or more 8,383,164 13,758,204 Less: Discounts (195,831) Allowances (871,503) Net contribution receivable $12,690,870 Discount rate between 0.11% and 1.88% were used in determining the present value of the contributions receivable.

VCU School of Business Foundation: Receivable in less than one year $372,699 Receivable in one to five years 535,043 907,742 Less: Discounts (14,437) Allowances (57,515) Net contribution receivable $835,790 Discount rate between 1.01% and 1.89% were used in determining the present value of the contributions receivable.

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VCU School of Engineering Foundation: Receivable in less than one year $2,156,672 Receivable in one to seven years 4,383,388 6,540,060 Less: Discounts (268,982) Allowances (62,710) Net contribution receivable $6,208,368 Discount rate between .10% and 1.89% were used in determining the present value of the contributions receivable.

25. DERIVATIVE INSTRUMENT

At June 30, 2017, the University had two fixed-payer interest rate swaps with a notional amount of $54,740,000, which declines to $4,835,000 at the termination date of November 1, 2030. The swaps are used as cash flow hedges by the University in order to provide a hedge against changes in interest rates on a similar amount of the University’s variable-rate debt. The fair value of the swaps was calculated by Deutsche Bank using undisclosed proprietary methods. The swaps were entered into at a zero market value and no payments were made or received when they were initiated.

The University pays a fixed rate of 3.436% and the counterparty pays 67% of LIBOR (0.82% as of June 30, 2017). The payments are settled monthly at the first of each month. Payments or receipts under the terms of the swap are recorded as non-operating revenue or expense. At June 30, 2017, the change in the fair market value of the swap, since reestablishing hedge accounting in November 2012, of $6,399,389 is included in deferred inflows in the accompanying consolidated balance sheets.

In November 2012, the University refunded the Series 2006 A and B General Revenue bonds associated with these swaps. At that time, the hedging relationship between the interest rate swap agreements and the 2006 Series A and B bonds was terminated, and the accumulated change in fair value of the interest rate swaps was included in the calculation of the deferred loss on refunding. With GASB 65, this deferred loss on refunding was reclassified as deferred outflows and is being amortized over the life of the swaps. Concurrently, the University reestablished hedge accounting by designating the 2012 Series A and B bonds as the hedged debt.

Risk

The use of derivatives may introduce certain risk for the University, including:

Credit risk is the risk that a counterparty will not settle an obligation in full, either when due or at any time thereafter. As of June 30, 2017, the $54,740,000 notional amount of swaps outstanding

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had a negative market value of $7,676,647 recorded in non-current liabilities, representing the amount the University would pay if the swaps were terminated on that date.

The fair values of the swaps were calculated by Deutsche Bank using undisclosed proprietary methods and were categorized as level 2 in the fair value hierarchy. The University would be exposed to credit risk of its swap counterparties any time the swaps had a positive market value. At June 30, 2017, the University had no credit risk related to its swaps.

Interest rate risk is the risk that an unexpected change in interest rates will negatively affect the collective value of a hedge and a hedged item. When viewed collectively, the hedges and the hedged item are subject to interest rate risk in that a change in interest rate will impact the collective market value of both the hedge and hedged item. Conversely, the collective effect of the hedges and the hedged item serve to reduce cash flow variability caused by changes in interest rates.

Basis risk arises when different indexes are used in connection with a derivative resulting in the hedge and hedged item not experiencing price changes in entirely opposite directions from each other. The University’s swaps are deemed to be effective hedges of its variable-rate debt with an amount of basis risk that is within guidelines for establishing hedge effectiveness.

Termination risk arises when the unscheduled termination of a derivative could have an adverse effect on the University’s strategy or could lead to potentially significant unscheduled payments. The University’s derivative contract uses the international Swap Dealers Association Master Agreement, which included standard termination events, such as failure to pay and bankruptcy. The University or the counterparty may terminate the swap if the other party fails to perform under the terms of the contract. If at the time of termination the swap has a negative market value, the University would be liable to the counterparty for a payment equal to the swaps’ market value.

Rollover risk arises when a derivative associated with a hedged item does not extend all the way to the maturity date of the hedged item, thereby creating a gap in the protection otherwise afforded by the derivative. The University’s hedges serve to hedge its variable rate Series 2012A and 2012B bonds maturing in November 2030.

Market-access risk arises when an entity enters into a derivative in anticipation of entering the credit market at a later date, but is ultimately prevented from doing so. The University has no market-access risk.

Foreign currency risk is the risk of a hedge’s value changing due to changes in currency exchange rates. The University’s derivatives have no foreign currency risk.

Below are debt service requirements of the University’s debt and net receipts/payments on associated derivative instruments. These amounts assume that current variable and reference rates on the hedging instruments will remain the same for their terms. As these rates vary, net receipt/payments on the hedging instruments will vary.

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Hedging Derivative Variable Instruments, Maturity Principal Interest Net Total 2018 $2,970,000 $854,171 $1,430,773 $5,254,944 2019 3,095,000 807,827 1,353,145 5,255,972 2020 3,225,000 759,532 1,272,249 5,256,781 2021 3,355,000 709,209 1,187,955 5,252,164 2022 3,500,000 656,857 1,100,264 5,257,121 2023-2027 19,810,000 2,418,097 4,050,417 26,278,514 2028-2031 18,785,000 742,992 1,244,543 20,772,535 Total $54,740,000 $6,948,684 $11,639,346 $73,328,030

In June 2007, MCVH entered into two interest rate swap agreements in anticipation of the issuance of the Series 2008 tax-exempt bonds. The swaps have a combined notional amount of $125,000,000 which declines over time to $15,700,000 at the termination date of July 1, 2037. The nominal amount as of June 30, 2017 was $117,930,000. MCVH pays a fixed rate of 3.84% and the counterparty pays 67% of LIBOR (0.82% as of June 30, 2017). The payments are settled monthly at the first of each month. Payments or receipts under the terms of the swap are recorded as interest expense. At June 30, 2017, the fair market value of the swap of $35,240,652 is included in other liabilities in the accompanying consolidated statements of net position. For the year ended June 30, 2017, the change in fair value of the swaps was $13,911,612.

In June 2013, MCVH refunded the Series 2008 Bonds using proceeds of the Series 2013A Bonds. At that time, the hedging relationship between the interest rate swap agreements and the Series 2008 bonds was terminated, and the accumulated change in fair value of the interest rate swaps was included in the calculation of the deferred loss on refunding. In June 2013, MCVH reestablished hedge accounting by designating the Series 2013A Bonds as the hedged debt.

In December 2005, MCVH entered into an interest rate swap agreement in conjunction with the issuance of its Series 2005 tax-exempt bonds. The swap has a notional amount of $75,000,000 which declines over time to $8,000,000 at the maturity date of July 1, 2030. The nominal amount as of June 30, 2017 was $65,125,000. MCVH pays a fixed rate of 3.50% and the counterparty pays 67% of LIBOR (0.82% as of June 30, 2017). The payments are settled monthly at the first of each month. Payments or receipts under the terms of the swap are recorded as interest expense. At June 30, 2017, the fair market value of the swap of $10,646,800 is included in other liabilities in the accompanying consolidated statements of net position. For the years ended June 30, 2017, the change in fair value of the swap was $5,186,036.

In June 2013, MCVH refunded the Series 2005 bonds using proceeds of the Series 2013B bonds. At that time, the hedging relationship between the interest rate swap agreement and the Series 2005 bonds was terminated, and the accumulated change in fair value of the interest rate swap was

'!| 2016-17 Financial Report

included in the calculation of the deferred loss on refunding. In June 2013, MVCH reestablished hedge accounting by designating the Series 2013B bonds as the hedged debt.

MCVH uses interest rate swap agreements to limit this exposure to rising interest rates on its variable-rate debt. Interest rate differentials to be paid or received as a result of the swap agreements are accrued and recognized as an adjustment of interest expense related to the associated debts. Derivatives are recognized on the statements of net position at their fair value. Fair value is calculated using the zero-coupon method, which considers known and projected contractual cash flows. MCVH assesses, both at the hedge’s inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are effective in offsetting changes in cash flows of hedged items. Changes in fair value of a derivative that are effective and are designated and qualify as cash flow hedges are recorded as deferred inflows or outflows on the accompanying consolidated statements of net position.

Below are debt service requirements of MCVH’s debt and net receipts/payments on associated derivative instruments. These amounts assume that current variable and reference rates on the hedging instruments will remain the same for their terms. As these rates vary, net receipt/payments on the hedging instruments will vary.

Hedging Derivative Maturity Principal Interest Instruments, Net Total 2018 $2,950,000 $2,313,244 $4,567,045 $9,830,289 2019 2,990,000 2,273,230 4,496,261 9,759,491 2020 3,160,000 2,231,004 4,424,600 9,815,604 2021 3,260,000 2,187,421 4,348,747 9,796,168 2022 3,415,000 2,141,809 4,270,534 9,827,343 2023-2027 31,740,000 9,613,063 19,781,278 61,134,341 2028-2032 49,685,000 6,633,004 15,078,399 71,396,403 2033-2037 70,155,000 2,733,904 7,699,405 80,588,309 2038-2042 15,700,000 - - 15,700,000 Total $183,055,000 $30,126,679 $64,666,269 $277,847,948

Per FASB rules, the School of Business Foundation and the School of Engineering Foundation have recorded unrealized gain and losses on the interest rate swap and reduced or increased their liability by the amount of the gain or loss. The University records this amount in other liabilities.

'"| 2016-17 Financial Report

Following is a reconciliation of the net assets of the foundations.

VCU School of Engineering Foundation Net assets per Foundation financial statements $50,157,568 Add: Unrealized loss on interest rate swap 4,718,817 Net assets as reported on University's financial statements $54,876,385

VCU School of Business Foundation Net assets per Foundation financial statements $32,667,202 Add: Unrealized loss on interest rate swap 2,957,829 Net assets as reported on University's financial statements $35,625,031

26. SUBSEQUENT EVENTS

On April 27, 2017, the Executive Committee of the VCU School of Engineering Foundation approved a resolution to engage the Virginia Commonwealth Investment Management Company (VCIMCO) as the investment advisor for the Foundation. On June 6, 2017 an advisory agreement was executed between the Foundation and VCIMCO, and effective July 1, 2017 investments valued at $73,828,016 were transferred to VCIMCO advisory oversight. Immediately prior to this transfer, the Foundation transferred $2.5M of cash from investments to liquid accounts to provide adequate funds for the next fiscal year.

Subsequent to year end, the VCU Real Estate Foundation entered into two purchase agreements for the acquisition of real property totaling $2,150,000. In connection with the renovation of one of its properties, the Foundation has entered into a contract for construction services for a total amount of $53,853.

'#| 2016-17 Financial Report

REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED)

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NOTES TO REQUIRED SUPPLEMENTARY INFORMATION

Changes of benefit terms – There have been no actuarially material changes to the system benefit provisions since the prior actuarial valuation. The 2014 valuation includes Hybrid Retirement Plan members for the first time. The hybrid plan applies to most new employees hired on or after January 1, 2014 and not covered by enhanced hazardous duty benefits. Because this is still a fairly new benefit and the number of participants was relatively small, the impact on the liabilities as of the measurement date of June 30, 2016 are not material.

Changes of assumptions – The following changes in actuarial assumptions were made for the VRS - State Employee Retirement Plan effective June 30, 2013, based on the most recent experience study of the System for the four-year period ending June 30, 2012:

 Update mortality table  Decrease in rates of service retirement  Decrease in rates of withdrawals for less than 10 years of service  Decrease in rates of male disability retirement  Reduce rates of salary increase by 0.25% per year

'%| 2016-17 Financial Report

The following changes in actuarial assumptions were made for the VaLORS Retirement Plan effective June 30, 2013, based on the most recent experience study of the System for the four year period ending June 30, 2012:

 Update mortality table  Adjustments to the rates of service retirement  Decrease in rates of withdrawals for females under 10 years of service  Increase in rates of disability  Decrease service related disability rate from 60% to 50%

'&| 2016-17 Financial Report

December 4, 2017

The Honorable Terence R. McAuliffe Governor of Virginia

The Honorable Robert D. Orrock, Sr. Chairman, Joint Legislative Audit and Review Commission

Board of Visitors Virginia Commonwealth University

INDEPENDENT AUDITOR’S REPORT

Report on Financial Statements

We have audited the accompanying financial statements of the business-type activities and aggregate discretely presented component units of Virginia Commonwealth University, a component unit of the Commonwealth of Virginia, as of and for the year ended June 30, 2017, and the related notes to the financial statements, which collectively comprise the University’s basic financial statements as listed in the table of contents.

Management’s Responsibility for the Financial Statements

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

Auditor’s Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of the aggregate discretely presented component units of the University, which are discussed in Note 1. Those financial statements were audited by other auditors

www.apa.virginia.gov | (804) 225-3350 | [email protected]

      whose reports thereon have been furnished to us, and our opinion, insofar as it relates to the amounts included for the component units of the University, is based on the reports of the 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. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The financial statements of the component units of the University that were audited by other auditors upon whose reports we are relying were audited in accordance with auditing standards generally accepted in the United States of America, but not in accordance with Government Auditing Standards.

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

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

Opinion

In our opinion, based on our audit and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the financial position of the business-type activities and aggregate discretely presented component units of the University as of June 30, 2017, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended, in accordance with accounting principles generally accepted in the United States of America.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis on pages 2 through 11, and the Schedule of Employer’s Share of Net Pension Liability, the Schedule of Employer Contributions, and the Notes to Required Supplementary Information on pages 85 through 87, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of the financial reporting for placing

      the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated December 4, 2017 on our consideration of Virginia Commonwealth University’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. 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 an opinion 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 in considering the University’s internal control over financial reporting and compliance.

AUDITOR OF PUBLIC ACCOUNTS

KKH/clj

      Board of Visitors

John A. Luke Jr., Rector

Phoebe P. Hall, Vice Rector

Carol S. Shapiro, Secretary

H. Benson Dendy III Keith T. Parker William M. Ginther John W. Snow Robert D. Holsworth Jacquelyn E. Stone Colette W. McEachin Shantaram Talegaonkar Ron McFarlane G. Richard Wagoner Jr. Alexander B. McMurtrie Jr. Steve L. Worley Tyrone E. Nelson

Administrative Officers

Michael Rao, President

Gail Hackett, Provost and Vice President for Academic Affairs

Marsha D. Rappley, Vice President for Health Sciences and Chief Executive Officer of the VCU Health System

Karol Gray, Vice President for Finance and Budget

Pamela D. Lepley, Vice President for University Relations

Ed Grier, Interim Vice President for Development and Alumni Relations

Francis L. Macrina, Vice President for Research and Innovation

Kevin Allison, Interim Vice President for Inclusive Excellence

Deborah Davis, Vice President for Clinical Affairs and Chief Executive Officer of VCU Health System

Meredith Weiss, Vice President for Administration

| 2016-17 Financial Report

APPENDIX C

FORM OF BOND RESOLUTION

[THIS PAGE INTENTIONALLY LEFT BLANK]

BOARD OF VISITORS OF

VIRGINIA COMMONWEALTH UNIVERSITY

______

BOND RESOLUTION ______

AUTHORIZING AND SECURING

$______

GENERAL REVENUE PLEDGE REFUNDING BONDS

SERIES 2018[A/B]

AUTHORIZED OCTOBER 8, 2018

ADOPTED ______, 2018

BOND RESOLUTION

ADOPTED ______, 2018

THE BOARD OF VISITORS OF VIRGINIA COMMONWEALTH UNIVERSITY GENERAL REVENUE PLEDGE REFUNDING BONDS SERIES 2018[A/B]

______

TABLE OF CONTENTS ______

Page ARTICLE I DEFINITIONS Section 1.1 Definitions...... 2 Section 1.2 Rules of Construction/Use of Words and Phrases ...... 5 ARTICLE II AUTHORIZATION, FORM, EXECUTION, DELIVERY, REGISTRATION AND PAYMENT OF THE SERIES 2018[A/B] BONDS Section 2.1 Authorization of the Series 2018[A/B] Bonds ...... 6 Section 2.2 Details of the Series 2018[A/B] Bonds ...... 6 Section 2.3 Form of the Series 2018[A/B] Bonds ...... 7 Section 2.4 Execution of the Series 2018[A/B] Bonds ...... 7 Section 2.5 Transfer of the Series 2018[A/B] Bonds ...... 7 Section 2.6 Exchange of the Series 2018[A/B] Bonds ...... 8 Section 2.7 Bond Register; Notices; Persons Treated as Owners ...... 8 Section 2.8 Temporary Series 2018[A/B] Bonds ...... 8 Section 2.9 Series 2018[A/B] Bonds Mutilated, Lost, Destroyed or Stolen ...... 9 Section 2.10 Terms and Conditions for Issuance and Delivery of the Series 2018[A/B] Bonds ...... 9 Section 2.11 Book Entry Provisions ...... 10 ARTICLE III REDEMPTION OF THE SERIES 2018[A/B] BONDS Section 3.1 Redemption of the Series 2018[A/B] Bonds ...... 12 Section 3.2 Notice of Redemption ...... 13 Section 3.3 Effect of Calling for Redemption ...... 13 Section 3.4 The Series 2018[A/B] Bonds Redeemed Not Deemed Outstanding ...... 13 Section 3.5 Purchase in Lieu of Redemption ...... 14

-i-

ARTICLE IV CUSTODY AND APPLICATION OF PROCEEDS OF THE SERIES 2018[A/B] BONDS Section 4.1 Custody and Application of Proceeds of the Series 2018[A/B] Bonds ...... 14 ARTICLE V REVENUES AND FUNDS Section 5.1 Construction Fund. A special fund is hereby created with the University as the Construction Fund, to the credit of which there shall be deposited a portion of the proceeds of the Series 2018[A/B] Bonds ...... 15 Section 5.2 Debt Service Fund...... 15 Section 5.3 Payments to Bondholders ...... 15 Section 5.4 Pledge of Funds and Accounts ...... 16 Section 5.5 Moneys Held in Trust ...... 16 Section 5.6 Cancellation of the Series 2018[A/B] Bonds Upon Payment ...... 16 Section 5.7 No Risk to Paying Agent Funds ...... 16 ARTICLE VI PARTICULAR COVENANTS Section 6.1 Payment of Principal and Interest; Pledge of Pledged Revenues ...... 16 Section 6.2 Additional Indebtedness and Encumbrances ...... 17 Section 6.3 Disposition of Assets ...... 19 Section 6.4 Insurance ...... 19 Section 6.5 Rights of Bondholders Not to Be Impaired ...... 19 Section 6.6 Further Instruments and Actions ...... 19 Section 6.7 Accurate Records and Accounts ...... 19 Section 6.8 Recognized Accounting Principles ...... 19 Section 6.9 [Tax Covenants ...... 19 ARTICLE VII EVENTS OF DEFAULT AND REMEDIES Section 7.1 Events of Default ...... 20 Section 7.2 Remedies ...... 21 Section 7.3 Pro Rata Application of Funds ...... 22 Section 7.4 Effect of Discontinuance of Proceedings ...... 23 Section 7.5 Proceedings for Equal Benefit of All Bondholders ...... 24 Section 7.6 No Remedy Exclusive...... 24 Section 7.7 No Delay or Omission Construed to Be a Waiver ...... 24 ARTICLE VIII EXECUTION OF INSTRUMENTS BY BONDHOLDERS AND PROOF OF OWNERSHIP OF THE SERIES 2018[A/B] BONDS Section 8.1 Execution of Instruments; Proof of Ownership ...... 24 ARTICLE IX SUPPLEMENTAL RESOLUTIONS Section 9.1 Supplemental Resolutions ...... 25

-ii-

Section 9.2 Modification of Resolution with Consent of Holders ...... 25 Section 9.3 Supplemental Resolutions Part of this Bond Resolution ...... 27 ARTICLE X DEFEASANCE Section 10.1 Defeasance ...... 27 Section 10.2 Liability of University Not Discharged ...... 28 Section 10.3 Provision for Payment of Particular Bonds ...... 28 ARTICLE XI MISCELLANEOUS PROVISIONS Section 11.1 Effect of Covenants ...... 29 Section 11.2 Successor Paying Agents or Registrars ...... 29 Section 11.3 Manner of Giving Notice ...... 30 Section 11.4 Alternative Notice ...... 30 Section 11.5 Effect of Partial Invalidity ...... 31 Section 11.6 Governing Law ...... 31 Section 11.7 Completion of and Amendments to Bond Resolution; Approval, Execution and Delivery of Necessary and Appropriate Documents ...... 31 Section 11.8 Bond Delivery ...... 32 Section 11.9 Repeal of Inconsistent Provisions ...... 32 Section 11.10 Paying Agent/Registrar/Custodian Reliance and Other Matters ...... 32

Exhibit A - Form of the Series 2018[A/B] Bonds [Exhibit B - Form of Requisition]

-iii-

A RESOLUTION AUTHORIZING THE ISSUANCE OF THE BOARD OF VISITORS OF VIRGINIA COMMONWEALTH UNIVERSITY GENERAL REVENUE PLEDGE REFUNDING BONDS, SERIES 2018[A/B]; PLEDGING TO THE PAYMENT OF THE PRINCIPAL OF AND THE INTEREST ON SUCH BONDS CERTAIN REVENUES OF THE UNIVERSITY AS PROVIDED HEREIN; AND SETTING FORTH THE RIGHTS AND REMEDIES OF THE HOLDERS OF SUCH BONDS.

RECITALS

A. By Chapter 23, Title 23.1 of the Code of Virginia of 1950, as amended, there is created a corporation under the name and style of Virginia Commonwealth University (the "University"); which is governed by a Board of Visitors (the "Board"), which is vested with the supervision, management and control of the University.

B. Pursuant to Title 23.1 of the Code of Virginia of 1950, as amended, the University is classified as an educational institution of the Commonwealth.

C. By Chapter 10, Title 23.1 of the Code of Virginia of 1950, as amended (the "Act"), the University entered into a management agreement with the Commonwealth which was enacted as Chapter 594 of the 2008 Virginia Acts of Assembly, as amended, pursuant to which the University is classified as a public institution of higher education and the University is empowered with the authority to undertake and implement the acquisition of any interest in land, including improvements on the acquired land at the time of acquisition, new construction, improvements or renovations and to borrow money and make, issue and sell bonds of the University for such purposes, including the refinancing of any such facilities.

D. In a resolution adopted on October 8, 2018 (the "Authorizing Resolution"), the Executive Committee of the Board determined to finance and refinance the costs of a series of projects, including (i) financing the acquisition, construction and equipping of one or more engineering research facilities; (ii) refunding the University's note evidencing the University's obligations related to an existing line of credit, which financed the acquisition, construction, expansion, renovation and equipping of certain of the University's basketball practice facilities; (iii) refunding all or a portion of the University's (a) General Revenue Pledge Refunding Bonds, Series 2012A, the proceeds of which were used to refinance the costs associated with East Hall of the University's Engineering School and (b) General Revenue Pledge Refunding Bonds, Series 2012B, the proceeds of which were used to refinance the costs associated with Snead Hall of the University's School of Business (collectively (i) – (iii), the “Project”); and (iv) financing[, if and as needed, capitalized interest on the Bonds (as defined below), a debt service reserve fund for the Bonds,] costs of issuance related to the issuance of the Bonds, working capital, routine capital expenditures for any of the foregoing described projects and other related costs (collectively (i) – (iv), the "Plan of Finance").

E. For the purpose of providing funds, together with other available funds, to undertake the Plan of Finance, the Executive Committee of the Board has determined to adopt this resolution authorizing the issue of one series of general revenue pledge refunding bonds of the University as Series 2018[A/B] Bonds (the "Series 2018[A/B] Bonds").

NOW, THEREFORE, BE IT RESOLVED BY THE BOARD:

ARTICLE I

DEFINITIONS

Section 1.1 Definitions. In addition to words and terms elsewhere defined in this Bond Resolution, the following words and terms as used in this Bond Resolution shall have the following meanings, unless some other meaning is plainly intended:

"Act" means Chapter 10, Title 23.1 of the Code of Virginia of 1950, as amended.

"Authorized Officer" means (i) in the case of the University, any of the President of the University, the Senior Vice President and Chief Financial Officer of the University and the Treasurer and Director of Treasury Services of the University and, when used with reference to any act or document also means any other person authorized by appropriate action of the Board to perform such act or execute such document on behalf of the University; and (ii) in the case of the Paying Agent or the Custodian (if not the State Treasurer), any President, any Vice-President, any Assistant Vice-President, any Corporate Trust Officer or any Assistant Corporate Trust Officer of the Paying Agent or the Custodian, and when used with reference to any act or document also means any other person authorized to perform such act or execute such document by or pursuant to a resolution of the governing body of the Paying Agent or the Custodian.

"Authorizing Resolution" means the resolution of the Executive Committee of the Board adopted October 8, 2018, authorizing general revenue pledge refunding bonds in one or more series in an aggregate amount not to exceed $[______], approving certain projects to be financed and refinanced with such bonds, identifying certain outstanding indebtedness of the University to be considered for refunding and establishing certain other parameters related to such bonds.

"Board" means the Board of Visitors of the University or, if such Board is abolished, the board or body succeeding to the principal functions thereof.

"Bond Counsel" means any firm of attorneys selected by the University and experienced in the issuance of municipal bonds and matters relating to the exclusion of the interest thereon from gross income for federal income tax purposes, which may be an attorney or firm regularly providing services to the University, the Paying Agent, the Underwriters or any Bondholder.

"Bond Purchase Agreement" means the Bond Purchase Agreement, dated as of the date of its execution and delivery, between the University and the Underwriters.

"Bondholder" or "Holder" means the registered owner of any Bond.

"Bond Resolution" or "Resolution" means this bond resolution adopted by the Board on ______, 2018, related to the issuance of the Series 2018[A/B] Bonds, as completed and amended pursuant to Section 11.7 hereof.

-2-

"Business Day" means a day other than (i) a Saturday, Sunday or other day on which banking institutions in the Commonwealth of Virginia or the city in which the Designated Office of the Paying Agent is located are authorized or required by law to close or (ii) a day on which the New York Stock Exchange is closed.

["Code" means the Internal Revenue Code of 1986, as amended. Each citation to a Code section shall include the applicable temporary and permanent regulations (and including only such proposed regulations which have proposed effective dates prior to the date the applicable opinion or determination is to be made), revenue rulings and revenue procedures.]

["Construction Fund" means the fund by such name created and designated by Section 5.1.]

"Commonwealth" means the Commonwealth of Virginia.

"Credit Obligation" of the University means any indebtedness incurred or assumed by the University for borrowed money and any other financing obligation of the University that, in accordance with generally accepted accounting principles consistently applied, is shown on the liability side of a balance sheet; provided, however, that Credit Obligation shall not include any portion of any capitalized lease payment directly appropriated from general funds of the Commonwealth or reasonably expected to be so appropriated as certified by the Authorized Officer, but only to the extent such appropriation is restricted by the Commonwealth to the payment of such capitalized lease obligation.

"Custodian" means ______, a national banking association organized under the laws of the United States of America, and its successors, or such other bank or financial institution designated by the University to hold funds under this Resolution.

"Debt Service Fund" means Virginia Commonwealth University General Revenue Pledge Refunding Bonds, Series 2018[A/B], Debt Service Fund, a special fund created and designated by Section 5.[1/2].

"Designated Office" means, when used in reference to the Paying Agent, the corporate trust office of the Paying Agent designated as such, which shall initially be Richmond, Virginia.

"DTC" means The Depository Trust Company and any successor company.

"Electronic Means" shall mean the following communications methods: e-mail, facsimile transmission, secure electronic transmission containing applicable authorization codes, passwords and/or authentication keys issued by the Paying Agent, or another method or system specified by the Paying Agent as available for use in connection with its services hereunder.

"Fiscal Year" means the period commencing on the first day of July in any year and ending on the last day of June of the following year.

"Fitch" means Fitch Ratings, and its successors and assigns, except that if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating

-3- agency, then the term "Fitch" shall be deemed to refer to any other nationally recognized securities rating agency selected by the University.

"Government Obligations" means:

(a) Certificates or interest-bearing notes or obligations of the United States, or those for which the full faith and credit of the United States are pledged for the payment of principal and interest, and

(b) Investments in any of the following obligations provided such obligations are backed by the full faith and credit of the United States (i) debentures of the Federal Housing Administration, (ii) certificates of beneficial interest of the Farmers Home Administration or (iii) project notes and local authority bonds of the Department of Housing and Urban Development.

"Interest Payment Dates" means the dates interest is due on the Series 2018[A/B] Bonds as described in Section 2.2.

"Moody's" means Moody's Investors Service, Inc., and its successors and assigns, except that if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, then the term "Moody's" shall be deemed to refer to any other nationally recognized securities rating agency selected by the University.

"Parity Credit Obligation" means any Credit Obligation of the University which may be incurred in accordance with the terms of this Bond Resolution or has been incurred that is secured on a parity with the pledge of Pledged Revenues herein.

"Paying Agent" means initially ______, a national banking association organized under the laws of the United States of America, and its successors and any other corporation that may at any time be substituted in its place in accordance with Section 11.2 of this Bond Resolution.

"Pledged Revenues" means any or all of the revenues now or hereafter available to the University which are not required by law, by binding contract entered into prior to the date of this Bond Resolution or by the provisions of any Qualifying Senior Obligation to be devoted to some other purpose, and shall include, without limitation, all revenues pledged to the payment of any Qualifying Senior Obligation net of amounts necessary to pay it or any operating or other expenses, the payment of which is required or permitted to be made with such revenues prior to the payment of such Qualifying Senior Obligation.

"Project" or "Projects" has the meaning set forth in the recitals.

"Qualifying Senior Obligation" means any existing Credit Obligation other than a Parity Credit Obligation secured by a pledge of any portion of the University's revenues, and any additional Credit Obligation issued pursuant to Section 6.2(b) or 6.2(c) or to refund any Qualifying Senior Obligation as described in Section 6.2(e).

"Rating Agency" means Moody's, S&P and/or Fitch, if any or all of such rating agencies have provided a rating for the Series 2018[A/B] Bonds. If any such corporation ceases to act as a

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securities rating agency, the University may appoint any nationally recognized securities rating agency as a replacement.

"Record Date" means the 15th day of the month preceding the applicable Interest Payment Date.

"Registrar" means initially ______, a national banking association organized under the laws of the United States of America, and any successor Registrar appointed pursuant to Section 11.2.

"Securities Depository" means The Depository Trust Company, a limited purpose trust corporation organized and existing under the laws of the State of New York, and any other securities depository for the Bonds appointed pursuant to Section 2.11.

"Series 2018[A/B] Bonds" or "Bonds" means the general revenue pledge refunding bonds of the University issued pursuant to the Series 2018[A/B] Resolutions.

"Series 2018[A/B] Resolutions" means this Bond Resolution, authorized by the Executive Committee of the Board on October 8, 2018, and adopted on ______, 2018, with respect to the Series 2018[A/B] Bonds, the Authorizing Resolution and any other resolutions supplemental to such resolutions.

"State Treasurer" means the State Treasurer of the Commonwealth.

"S&P" means S&P Global Ratings, and its successors and assigns, except that if such division shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, then the term "S&P" shall be deemed to refer to any other nationally recognized securities rating agency selected by the University.

"Underwriters" mean a group of underwriters managed or co-managed by Merrill Lynch, Pierce, Fenner & Smith Incorporated.

"University" means Virginia Commonwealth University, an educational institution and a public body and governmental instrumentality for the dissemination of education, and its successor or successors.

Section 1.2 Rules of Construction/Use of Words and Phrases. Words of the masculine gender shall be deemed and construed to include correlative words of the feminine and neuter genders. Unless the context shall otherwise indicate, the word "person" shall include corporations and associations, including public bodies, as well as natural persons. Singular words shall connote the plural number as well as the singular and vice versa.

All references in this Bond Resolution to particular Articles or Sections are references to Articles or Sections of this Bond Resolution unless otherwise indicated.

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The headings and table of contents as used in this Bond Resolution are solely for convenience of reference and shall not constitute a part of this Bond Resolution, nor shall they affect its meaning, construction or effect.

ARTICLE II

AUTHORIZATION, FORM, EXECUTION, DELIVERY, REGISTRATION AND PAYMENT OF THE SERIES 2018[A/B] BONDS

Section 2.1 Authorization of the Series 2018[A/B] Bonds. For the purpose of providing funds, together with other available funds, to undertake the Plan of Finance, there shall be issued, under the authority of the Act, Bonds of the University in the aggregate principal amount of [______DOLLARS] ($[______]). The Bonds shall be designated "Virginia Commonwealth University General Revenue Pledge Refunding Bonds, Series 2018[A/B]."

Section 2.2 Details of the Series 2018[A/B] Bonds. The Series 2018[A/B] Bonds authorized in Section 2.1 shall be issued initially in book-entry form only in denominations of $5,000 or any multiple thereof, shall be dated the date of their delivery, shall be numbered from R[A/B]-1 upward, and shall mature on ______1 in each of the years, in the amounts and shall bear interest, payable on ___ 1, 20__ and semi-annually thereafter on ______1 and ______1 in each year (each an "Interest Payment Date"), at the rate shown below:

Year of Principal Interest Maturity Amount Rate

All the Series 2018[A/B] Bonds shall bear interest (a) from their dated date, if authenticated prior to ____ 1, 20__, or (b) otherwise from the ______1 or ______1 that is, or that immediately precedes, the date on which such Bond is authenticated (unless payment of interest is

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Both principal of and interest on the Series 2018[A/B] Bonds shall be payable in lawful money of the United States of America, but only from the revenues lawfully available therefor pursuant to the Act and pledged to the payment thereof as hereinafter provided. Principal of the Series 2018[A/B] Bonds shall be payable upon presentation and surrender of the Series 2018[A/B] Bonds as they become due at the designated office of the Paying Agent. Interest on the Series 2018[A/B] Bonds shall be payable to the registered owners of the Series 2018[A/B] Bonds by check or draft mailed on the applicable Interest Payment Date to such owners at their addresses as they appear on the Record Date on registration books kept by the Registrar, or upon the written request of any Holder of at least $1,000,000 in aggregate principal amount of Series 2018[A/B] Bonds by wire transfer in immediately available funds to an account within the United States designated by such Holder at least three business days before the Record Date for the applicable Interest Payment Date.

Nothing herein shall be construed as prohibiting the University from issuing any maturity of the Series 2018[A/B] Bonds as one fully registered bond for the purpose of qualifying such Bonds for book entry registration by a Securities Depository or any similar arrangement whereby investors may hold a participation interest in such maturity of the Series 2018[A/B] Bonds.

Section 2.3 Form of the Series 2018[A/B] Bonds. The Series 2018[A/B] Bonds shall be substantially in the form set forth in Exhibit A, with such appropriate variations, omissions and insertions as permitted or required by this Bond Resolution.

Section 2.4 Execution of the Series 2018[A/B] Bonds. The Series 2018[A/B] Bonds shall be executed in the name and on behalf of the University by an Authorized Officer. The signatures on the Series 2018[A/B] Bonds may be by facsimile. In case any of the officers who shall have signed or attested any of the Series 2018[A/B] Bonds shall cease to be such officer or officers of the University before the Series 2018[A/B] Bonds so signed or attested shall have been issued by the University, such Series 2018[A/B] Bonds may nevertheless be delivered and issued and, upon such delivery and issue, shall be as binding upon the University as though those who signed and attested the same had continued to be such officers of the University. Any Series 2018[A/B] Bonds may be signed and attested on behalf of the University by such persons as at the actual date of execution of such Series 2018[A/B] Bonds shall be the proper officers of the University although at the nominal date of such Series 2018[A/B] Bonds any such person shall not have been such officer of the University.

Only such of the Series 2018[A/B] Bonds as shall bear thereon a certificate of authentication, manually executed by the Registrar, shall be valid or obligatory for any purpose or entitled to the benefits of this Bond Resolution, and such certificate of the Registrar shall be conclusive evidence that the Series 2018[A/B] Bonds so authenticated have been duly executed, authenticated and delivered hereunder and are entitled to the benefits of this Bond Resolution.

Section 2.5 Transfer of the Series 2018[A/B] Bonds. Any Series 2018[A/B] Bonds may, in accordance with its terms, be transferred, upon the books required to be kept pursuant to

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the provisions of Section 2.7, by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such Series 2018[A/B] Bonds for cancellation, accompanied by delivery of a written instrument of transfer, duly executed in a form approved by the Registrar. The Registrar shall not be required to transfer or exchange any Series 2018[A/B] Bond selected or called for redemption pursuant to the provisions therein or from a Record Date through the next succeeding Interest Payment Date.

Whenever any Series 2018[A/B] Bonds shall be surrendered for registration of transfer, the University shall execute and the Registrar shall authenticate and deliver a new Series 2018[A/B] Bonds, of authorized denominations of the same maturity and interest rate and for a like aggregate principal amount. Such transfer shall be without charge to the Bondholder, except that the Registrar shall require the Bondholder requesting such transfer to pay any tax or other governmental charge required to be paid with respect to such transfer.

Section 2.6 Exchange of the Series 2018[A/B] Bonds. The Series 2018[A/B] Bonds may be exchanged at the office of the Registrar for a like aggregate principal amount of the Series 2018[A/B] Bonds of other authorized denominations of the same maturity and interest rate. Such exchange shall be without charge to the Bondholder, except that the Registrar shall require the Bondholder requesting such exchange to pay any tax or other governmental charge required to be paid with respect to such exchange.

Section 2.7 Bond Register; Notices; Persons Treated as Owners. The Registrar will keep or cause to be kept, sufficient books for the registration and transfer of the Series 2018[A/B] Bonds, which shall at all times during regular business hours upon reasonable prior written notice be open to inspection by the University; and, upon presentation for such purpose, the Registrar shall, under such reasonable regulations as it may prescribe, register or cause to be registered, on such books, the transfer or exchange of the Series 2018[A/B] Bonds as hereinbefore provided. Notices sent to Bondholders pursuant to this Bond Resolution shall be sent to the addresses shown on the registration books maintained by the Registrar or such other address as may be filed with the Registrar for such purpose. All notices required to be given by mail shall be given by first class mail, postage prepaid.

In addition to the other obligations imposed on the Registrar hereunder, the Registrar shall agree to deliver upon request a list of the names and addresses of the registered owners of the Series 2018[A/B] Bonds, as follows:

(i) to any Bondholder, if an Event of Default (as hereinafter defined) shall have occurred and be continuing; and

(ii) to the Holders of 25% or more in aggregate principal amount of the Series 2018[A/B] Bonds then outstanding, at any time.

Prior to due presentment for registration of transfer of any Bond, the Registrar shall treat the registered owner as the person exclusively entitled to payment of principal, premium, if any, and interest and the exercise of all other rights and powers of the owner, except that interest

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payments shall be made to the person registered as owner on the registration books of the Registrar as of the Record Date.

Section 2.8 Temporary Series 2018[A/B] Bonds. The Series 2018[A/B] Bonds may be issued in temporary form exchangeable for definitive Series 2018[A/B] Bonds when ready for delivery. Any temporary Bond may be printed, lithographed or typewritten, shall be of such denomination as may be determined by the University and may contain such reference to any of the provisions of this Bond Resolution as may be appropriate. A temporary Bond may be in the form of a single Bond payable in installments, each on the date, in the amount and at the rate of interest established for the Series 2018[A/B] Bonds maturing on such date. Every temporary Bond shall be executed by the University and be authenticated by the Registrar upon the same conditions and in substantially the same manner as the definitive Series 2018[A/B] Bonds. If the University issues temporary Series 2018[A/B] Bonds it will execute and deliver definitive Series 2018[A/B] Bonds as promptly thereafter as practicable, and thereupon the temporary Series 2018[A/B] Bonds may be surrendered, for cancellation, in exchange therefor at the designated office of the Registrar and the Registrar shall authenticate and deliver in exchange for such temporary Series 2018[A/B] Bonds an equal aggregate principal amount of definitive Series 2018[A/B] Bonds of authorized denominations of the same maturity or maturities and interest rate. Until so exchanged, the temporary Series 2018[A/B] Bonds shall be entitled to the same benefits under this Bond Resolution as definitive Series 2018[A/B] Bonds authenticated and delivered hereunder.

Section 2.9 Series 2018[A/B] Bonds Mutilated, Lost, Destroyed or Stolen. If any Series 2018[A/B] Bond shall become mutilated, the University, at the expense of the Bondholder of such Series 2018[A/B] Bond, shall execute, and the Registrar shall thereupon authenticate and deliver, a new Series 2018[A/B] Bond of like tenor bearing a different number in exchange and substitution for the Series 2018[A/B] Bond so mutilated, but only upon surrender to the Registrar of the Series 2018[A/B] Bond so mutilated. Every mutilated Series 2018[A/B] Bond so surrendered to the Registrar shall be canceled by it and shall be delivered to, or upon the order of, the University. If any Series 2018[A/B] Bond shall be lost, destroyed or stolen, evidence of the ownership thereof and of such loss, destruction or theft may be submitted to the University and the Registrar, and, if such evidence be satisfactory to both of them and indemnity satisfactory to them shall be given, the University, at the expense of the Bondholder, shall execute, and the Registrar shall thereupon authenticate and deliver, a new Series 2018[A/B] Bond of like tenor bearing a different number in lieu of and in substitution for the Series 2018[A/B] Bond so lost, destroyed or stolen (or if any such Series 2018[A/B] Bond shall have matured or shall be about to mature, instead of issuing a substitute Series 2018[A/B] Bond, the Paying Agent may pay the same without surrender thereof). The University may require payment of a sum not exceeding the actual cost of preparing each new Series 2018[A/B] Bond issued under this Section and of the related expenses which may be incurred by the University, the Registrar, and the Paying Agent. Any Series 2018[A/B] Bond issued under the provisions of this Section in lieu of any Series 2018[A/B] Bond alleged to be lost, destroyed or stolen shall constitute an original additional contractual obligation on the part of the University whether or not the Bond so alleged to be lost, destroyed or stolen be at any time enforceable by anyone, and shall be entitled to the benefits of this Bond Resolution with all other Series 2018[A/B] Bonds secured by this Bond Resolution.

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Section 2.10 Terms and Conditions for Issuance and Delivery of the Series 2018[A/B] Bonds. The Series 2018[A/B] Bonds authorized by this Bond Resolution shall be executed in the form and manner hereinabove set forth and shall be deposited with the Registrar for delivery to the Underwriters pursuant to the Bond Purchase Agreement, but before the Series 2018[A/B] Bonds shall be delivered by the Registrar, there shall be filed with the Registrar the following:

(a) a copy, certified by the Secretary of the Board, of this Bond Resolution;

(b) an opinion of Bond Counsel (upon which the Registrar can rely) stating that the Series 2018[A/B] Bonds have been duly authorized, executed and delivered in accordance with the Act and this Resolution, that the Series 2018[A/B] Bonds and this Bond Resolution constitute valid and binding limited obligations of the University, payable solely from the Pledged Revenues and other property pledged therefor under this Resolution[, and that interest on the Series 2018[A/B] Bonds will be excluded from the gross income of the Holders thereof for federal and Virginia income taxation purposes.]

When the documents mentioned above in this Section shall have been filed with the Registrar and when the Series 2018[A/B] Bonds shall have been executed as required by this Bond Resolution, the Registrar shall authenticate and deliver such Bonds to or upon the order of the Underwriters pursuant to the Bond Purchase Agreement, but only upon payment to the Custodian of the purchase price of such Bonds. The Registrar shall be entitled to rely upon such Bond Purchase Agreement as to the names of the purchasers and the amount of such purchase price.

The proceeds of such Bonds shall be deposited as described by the Custodian in Section 4.1.

Section 2.11 Book Entry Provisions. The provisions of this Section 2.11 shall apply to the Series 2018[A/B] Bonds so long as all of the Series 2018[A/B] Bonds shall be maintained in book-entry form with a Securities Depository, any other provisions of this Bond Resolution to the contrary notwithstanding.

(a) The principal or redemption price of and interest on the Series 2018[A/B] Bonds shall be payable to the Securities Depository, or registered assigns, as the registered owner of the Series 2018[A/B] Bonds, in same day funds on each date on which the principal of, and premium, if any, or interest on the Series 2018[A/B] Bonds is due as set forth in this Bond Resolution and in the Series 2018[A/B] Bonds. Such payments shall be made to the offices of the Securities Depository specified by the Securities Depository to the University and Paying Agent in writing. Without notice to or the consent of the beneficial owners of the Series 2018[A/B] Bonds, the University and the Securities Depository may agree in writing to make payments of principal and interest in a manner different from that set out herein. If such different manner of payment is agreed upon, the University shall give the Paying Agent written notice thereof, and the Paying Agent shall make payments as if set forth herein. Neither the University nor the Paying Agent shall have any obligation with respect to the transfer or crediting of the appropriate principal, premium, if any, and interest payments to participants of the Securities Depository or the beneficial owners of the Series 2018[A/B] Bonds or their nominees.

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(b) The Paying Agent at the written direction of the University may replace any Securities Depository as the depository for the Series 2018[A/B] Bonds with another qualified securities depository or discontinue the maintenance of the Series 2018[A/B] Bonds in book-entry form at any time if the University determines to do so. Notice of any determination above shall be given to such Securities Depository at least 30 days prior to any such discontinuation (or such fewer number of days as shall be acceptable to such Securities Depository). The University may undertake to locate a qualified replacement Securities Depository and/or may discontinue the book-entry system of evidencing ownership of the Series 2018[A/B] Bonds.

(c) If the University discontinues the maintenance of the Series 2018[A/B] Bonds in book-entry form, the University will issue replacement Series 2018[A/B] Bonds directly to the participants in the former Securities Depository or, to the extent requested by any such participant, to the beneficial owners of the Series 2018[A/B] Bonds as further described in this Section. At the written direction of the University, the Paying Agent shall notify participants and the beneficial owners of the Series 2018[A/B] Bonds, by mailing an appropriate notice to the Securities Depository, or by other means deemed appropriate by either the Securities Depository or the Paying Agent, that the University will issue replacement Series 2018[A/B] Bonds directly to the participants shown on the records of the Securities Depository or, to the extent requested by any participant, to beneficial owners of the Series 2018[A/B] Bonds shown on the records of such participant, as of a date set forth in such notice, which shall be a date at least 10 days after receipt of such notice by the Securities Depository (or such fewer number of days as shall be acceptable to the Securities Depository).

In the event that replacement Series 2018[A/B] Bonds are to be issued to participants in the Securities Depository or to beneficial owners of the Series 2018[A/B] Bonds, the University shall promptly have prepared replacement Series 2018[A/B] Bonds registered in the names of the participants as shown on the records of the former Securities Depository or, to the extent requested by any participant, in the names of the beneficial owners of Series 2018[A/B] Bonds shown on the records of such participant, as of the date set forth in the notice delivered in accordance with the immediately preceding paragraph. Replacement Series 2018[A/B] Bonds issued to participants in the Securities Depository or to beneficial owners shall be in fully registered form substantially in the form of Exhibit A. The form set forth in Exhibit A may be modified to include any variations, omissions or insertions that are necessary or desirable in the delivery of replacement certificates in printed form. In delivering replacement certificates, the Paying Agent shall be entitled to rely, without independent investigation, on the records of the former Securities Depository as to its participants and the records of the participants acting on behalf of the beneficial owners. The Series 2018[A/B] Bonds will thereafter be registrable and exchangeable as set forth in Sections 2.6 and 2.7.

(d) So long as there is a Securities Depository for the Series 2018[A/B] Bonds, (1) such Securities Depository shall be the registered owner of the Series 2018[A/B] Bonds, (2) transfers of ownership and exchanges shall be effected on the records of the Securities Depository and its participants pursuant to rules and procedures established by such Securities Depository and its participants, and (3) references in this Bond Resolution to Bondholders, Holders or registered owners of the Series 2018[A/B] Bonds shall mean the Securities Depository and shall not mean the beneficial owners of the Series 2018[A/B] Bonds.

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(e) If the University replaces any Securities Depository as the depository for the Series 2018[A/B] Bonds with another qualified Securities Depository, replacement Series 2018[A/B] Bonds issued to such replacement Securities Depository shall have the same terms, form and content as the Series 2018[A/B] Bonds initially registered in the name of the predecessor Securities Depository or its nominee except for the name of the registered owner.

(f) Each Securities Depository and the participants thereof and the beneficial owners of the Series 2018[A/B] Bonds, by their acceptance of the Series 2018[A/B] Bonds, agree that the University and the Paying Agent shall have no liability or responsibility with respect to (1) the accuracy of any records maintained by such Securities Depository or any Securities Depository participant; (2) the payment by such Securities Depository to any Securities Depository participant or by any Securities Depository participant to any beneficial owner of any amount due in respect of the principal of and premium, if any, and interest on the Series 2018[A/B] Bonds; (3) the delivery or timeliness of delivery by such Securities Depository to any Securities Depository participant or by any Securities Depository participant to any beneficial owner of any notice which is given to Bondholders; (4) the selection of the beneficial owners to receive payment in the event of any partial redemption of the Series 2018[A/B] Bonds; or (5) any consent given or other action taken by such Securities Depository or any nominee of such Securities Depository, as Bondholder.

ARTICLE III

REDEMPTION OF THE SERIES 2018[A/B] BONDS

Section 3.1 Redemption of the Series 2018[A/B] Bonds. (a) The Series 2018[A/B] Bonds shall not be subject to prior redemption except as provided in this Article III.

(b) The Series 2018[A/B] Bonds are subject to redemption, at the option of the University, in whole or in part on any date not earlier than ______1, 20__, upon payment of a redemption price equal to 100% of the principal amount of the Series 2018[A/B] Bonds to be redeemed, plus interest accrued to the redemption date.

(c) Reserved for Mandatory Redemption Provisions.

(d) The Series 2018[A/B] Bonds shall also be subject to redemption in whole or in part on any date, at the option of the University, from the proceeds of casualty insurance or condemnation awards, at a redemption price equal to 100% of the principal amount thereof to be redeemed, without premium, plus accrued interest to the redemption date, if all or any part of the Project refinanced with the Series 2018[A/B] Bonds is damaged or destroyed or taken through the exercise of the power of eminent domain and the Authorized Officer has delivered a certificate to the Custodian to the effect that the University has determined not to use such proceeds to replace or rebuild the damaged, destroyed or taken property. In the event of a redemption in part pursuant to this paragraph, the University shall redeem the Series 2018[A/B] Bonds from each maturity then outstanding, to the extent practicable, in the proportion that the principal amount of the Series 2018[A/B] Bonds of such maturity bears to the total principal amount of the Series 2018[A/B] Bonds then outstanding.

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(e) Subject to applicable procedures of the Securities Depository while the Series 2018[A/B] Bonds are held in book-entry only form by the Securities Depository, if less than all of the Series 2018[A/B] Bonds are to be called for redemption, the Series 2018[A/B] Bonds to be redeemed shall be selected by the University in such manner as the University in its discretion may determine.

Section 3.2 Notice of Redemption. (a) Whenever the Series 2018[A/B] Bonds are to be redeemed under the provisions of this Bond Resolution, the Paying Agent shall, not less than thirty (30) nor more than sixty (60) days prior to the redemption date, mail notice of redemption to all registered owners of all Series 2018[A/B] Bonds to be redeemed at their registered addresses. The Paying Agent shall also mail a copy of any such notice of redemption to any Rating Agency. Any such notice of redemption shall identify the Series 2018[A/B] Bonds to be redeemed, shall specify the redemption date and the redemption price, and shall state that on the redemption date the Series 2018[A/B] Bonds called for redemption will be payable at the designated office of the Paying Agent and that from that date interest will cease to accrue. The Paying Agent may use "CUSIP" numbers in notices of redemption as a convenience to Bondholders, provided that any such notice shall state that no representation is made as to the correctness of such numbers either as printed on the Series 2018[A/B] Bonds or as contained in any such notice.

(b) If at the time of mailing of notice of any optional redemption the University shall not have caused to be deposited with the Paying Agent money sufficient to redeem all the Series 2018[A/B] Bonds called for redemption, such notice may state that it is conditional in that it is subject to the deposit of such moneys with the Paying Agent not later than the redemption date, and such notice shall be of no effect unless such moneys are so deposited. Failure by the Paying Agent to give any notice of redemption or any defect in such notice as to any particular Bonds shall not affect the validity of the call for redemption of any Bonds in respect of which no such failure or defect has occurred. Any notice mailed as provided in this Bond Resolution shall be conclusively presumed to have been given whether or not actually received by any Holder.

Section 3.3 Effect of Calling for Redemption. On the date designated for redemption, notice having been mailed in the manner and under the conditions hereinabove provided and moneys for payment of the redemption price being held in separate accounts by the Paying Agent in trust for the Holders of the Series 2018[A/B] Bonds to be redeemed, all as provided in this Bond Resolution, the Series 2018[A/B] Bonds so called for redemption shall become and be due and payable at the redemption price provided for redemption of such Bonds on such date, interest on the Series 2018[A/B] Bonds so called for redemption shall cease to accrue, such Bonds shall cease to be entitled to any benefit or security under this Bond Resolution and the Holders or registered owners of such Bonds shall have no rights with respect thereto except to receive payment of the redemption price.

Section 3.4 The Series 2018[A/B] Bonds Redeemed Not Deemed Outstanding. The Series 2018[A/B] Bonds which have been duly called for redemption under the provisions of this Article, or with respect to which irrevocable instructions to call for redemption have been given by the Board to the Paying Agent in form satisfactory to him or her, and for the payment of the redemption price of which moneys shall be held in separate accounts by the Paying Agent in trust for the Holders of the Series 2018[A/B] Bonds to be redeemed, all as provided in this Bond

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Resolution, shall not thereafter be deemed to be outstanding under the provisions of this Bond Resolution.

Section 3.5 Purchase in Lieu of Redemption. By their acceptance of the Series 2018 [A/B] Bonds, the owners of the Series 2018 [A/B] Bonds, irrevocably grant to the University, the option to purchase, at any time and from time to time, when the Series 2018 [A/B] Bonds are subject to optional redemption or extraordinary optional redemption under the provisions hereof, any Series 2018 [A/B] Bonds at a purchase price equal to the redemption price then applicable thereto. To exercise such option with respect to the Series 2018 [A/B] Bonds, the University shall give the Paying Agent a written request exercising such option within the time period specified herein as though such written request were a written request of the University for redemption, and the Paying Agent thereupon shall give the owners of such Series 2018 [A/B] Bonds to be purchased notice of such purchase as though such purchase were a redemption, and the purchase of such Series 2018 [A/B] Bonds will be mandatory and enforceable against the owners of the Series 2018 [A/B] Bonds. On the date fixed for purchase under any exercise of such option, the University shall pay the purchase price of the Series 2018 [A/B] Bonds then being purchased to the Paying Agent in immediately available funds, and the Paying Agent shall pay the same to the owners of such Series 2018 [A/B] Bonds against delivery thereof. Following such purchase, the Paying Agent shall cause such Series 2018 [A/B] Bonds to be delivered to and registered in the name of, or as directed by, the University. In the case of the purchase of less than all of the Series 2018 [A/B] Bonds, the particular Series 2018 [A/B] Bonds to be purchased are to be selected in accordance with the provisions hereof as though such purchase were a redemption. No purchase of the Series 2018 [A/B] Bonds under this provision will operate to extinguish the indebtedness of the University evidenced thereby.

ARTICLE IV

CUSTODY AND APPLICATION OF PROCEEDS OF THE SERIES 2018[A/B] BONDS

Section 4.1 Custody and Application of Proceeds of the Series 2018[A/B] Bonds. The proceeds of the Series 2018[A/B] Bonds (par amount ($[______]) plus original issue premium ($[______]), less the underwriter's discount ($[______]) shall be applied as follows:

(a) $[______] shall be transferred to the holder of the Refunded Bonds to provide for the refunding of the Refunded Bonds pursuant to separate instructions provided by the University;

(b) $[______] shall be transferred to the holder of the Refunded Note to provide for refunding the Refunded Note pursuant to separate instructions provided by the University;

(c) $[______] shall be transferred to the Construction Fund to be used to pay a portion of the costs of the Plan of Finance; [and]

(d) [$[______] shall be deposited into a special account created with the Custodian for the payment of expenses incident to the issuance of the Series 2018[A/B] Bonds. Any amounts

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remaining in the special account on February __, 2019, shall be deposited in the Debt Service Fund and applied to pay interest on such Series 2018[A/B] Bonds on the next Interest Payment Date.]

ARTICLE V

REVENUES AND FUNDS

Section 5.1 Construction Fund. A special fund is hereby created with the University as the Construction Fund, to the credit of which there shall be deposited a portion of the proceeds of the Series 2018[A/B] Bonds. The moneys in the Construction Fund shall be held in trust and applied to the payment of the cost of the Projects and issuance costs, and, pending such application, shall be subject to a lien and charge in favor of the Bondholders of the Series 2018[A/B] Bonds and for the future security of such Bondholders until paid out or transferred as herein provided.

(a) Payment of the costs of the Plan of Finance [and issuance costs] shall be made from the Construction Fund and other available funds, all as provided by law. All payments from the Construction Fund shall be subject to the provisions and restrictions set forth in this Section, and the Board covenants that it will not cause or permit to be paid from the Construction Fund any sums except in accordance with such provisions and restrictions.

(b) Moneys in the Construction Fund shall be paid out in accordance with requisitions substantially the form of Exhibit B hereto (or in such other form required by the University) and shall state each amount to be paid, the appropriate Account (if any), the name of the person, firm or corporation to whom each such payment is due and the purpose for which the obligation to be paid was incurred, and shall certify that the goods or services specified have been received, or performed, payment therefor has not been previously authorized and that the expenditure is a proper charge to the appropriation for the Construction Fund.

(c) When the Plan of Finance shall have been completed and placed in operation, as evidenced by a certificate signed by an Authorized Officer and filed with the Secretary of the Board, any balance in the Construction Fund not deemed by the Board to be necessary to be reserved for the payment of any remaining part of the cost of the Project shall be deposited to the credit of the Debt Service Fund for the Series 2018[A/B] Bonds, and used to pay interest on the Series 2018[A/B] Bonds on their next Interest Payment Date.

Section 5.2 Debt Service Fund. A fund shall be created by the Paying Agent designated "Virginia Commonwealth University General Revenue Pledge Refunding Bonds, Series 2018[A/B], Debt Service Fund" (the "Debt Service Fund"). All accrued interest, if any, received from the purchasers of the Series 2018[A/B] Bonds, as provided in Section 4.1, shall be transferred to the Paying Agent to the credit of the Debt Service Fund. On or before the day preceding each date on which payments of interest, premium or principal shall be due and payable on the Series 2018[A/B] Bonds (a "Payment Date"), the University shall transfer or cause to be transferred to the Paying Agent for deposit an amount of money sufficient to cause the amount held in the Debt Service Fund to be equal to the interest, premium and principal due on the Series 2018[A/B] Bonds on such Payment Date. The Paying Agent shall cause payment of the amounts due on the Series 2018[A/B] Bonds on each such Payment Date.

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Section 5.3 Payments to Bondholders. The Paying Agent shall, at appropriate times on or before each Payment Date, withdraw from the Debt Service Fund the amounts needed on such date to pay the principal of and premium, if any, and interest on the Series 2018[A/B] Bonds and shall pay or cause the same to be paid to the Bondholders as such principal, premium and interest become due and payable.

Section 5.4 Pledge of Funds and Accounts. The moneys in the Debt Service Fund shall be held in trust and applied as herein provided and, pending such application, shall be pledged to, and subject to a lien and charge in favor, of the Holders of the Series 2018[A/B] Bonds issued and outstanding under this Bond Resolution and for the further security of such Holders until paid out or transferred as herein provided.

Section 5.5 Moneys Held in Trust. All moneys from the funds of the University or that the University shall have received from any other source and set aside or deposited with any Paying Agent for the purpose of paying any of the Series 2018[A/B] Bonds hereby secured, either at the maturity thereof or upon call for redemption, shall be held in trust for the respective Holders of such Bonds. Any moneys which shall be so set aside or deposited and which shall remain unclaimed by the Holders of such Bonds for the period of five (5) years after the date on which such Bonds shall have become due and payable shall be disposed of by the University and the Paying Agent in accordance with The Uniform Disposition of Unclaimed Property Act, Chapter 11.1, Title 55, Code of Virginia of 1950, as amended (the "Unclaimed Property Act"). The Paying Agent shall be entitled to act in good faith in reliance on written direction from the University or its counsel in complying with the Unclaimed Property Act, absent the Paying Agent's negligence or willful misconduct.

Section 5.6 Cancellation of the Series 2018[A/B] Bonds Upon Payment. All Series 2018[A/B] Bonds paid, redeemed or purchased by the University, either at or before maturity, shall be canceled upon the payment, redemption or purchase of such Bonds and shall be delivered to the University when such payment, redemption or purchase is made. All Series 2018[A/B] Bonds canceled under any of the provisions of this Bond Resolution may be cremated or otherwise destroyed by the University or its designee.

Section 5.7 No Risk to Paying Agent Funds. No provision herein shall require the Paying Agent to expend its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers unless the Paying Agent shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is reasonably assured to it.

ARTICLE VI

PARTICULAR COVENANTS

Section 6.1 Payment of Principal and Interest; Pledge of Pledged Revenues. The University covenants that it will promptly pay or cause to be paid from the sources described herein the principal of and the interest on every Bond issued under the provisions of this Bond Resolution at the place or places, on the dates and in the manner provided herein and in such Bonds, and any

-16- premium required for the retirement of such Bonds by purchase or redemption, according to the true intent and meaning thereof. Except as otherwise provided in this Bond Resolution, such principal, interest and premium are payable solely from Pledged Revenues, which Pledged Revenues are hereby pledged to the payment thereof and to the payment of any Parity Credit Obligations issued by the University which may include any interest rate swaps or other hedge mechanisms and any dedicated line of credit, standby bond purchase agreement or other liquidity facility related to the Series 2018[A/B] Bonds.

THE UNIVERSITY SHALL NOT BE OBLIGATED TO PAY THE PRINCIPAL OF OR INTEREST ON THE SERIES 2018[A/B] BONDS EXCEPT FROM THE SOURCES NOTED HEREIN AS PLEDGED THEREFOR. THE SERIES 2018[A/B] BONDS AND THE INTEREST THEREON SHALL NOT BE DEEMED TO CONSTITUTE A DEBT OR LIABILITY OF THE COMMONWEALTH, LEGAL, MORAL OR OTHERWISE. NEITHER THE COMMONWEALTH NOR THE UNIVERSITY SHALL BE OBLIGATED TO PAY THE PRINCIPAL OF OR INTEREST ON THE SERIES 2018[A/B] BONDS OR OTHER COSTS INCIDENT THERETO EXCEPT FROM THE SOURCES NOTED HEREIN AS PLEDGED THEREFOR, AND NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE COMMONWEALTH ARE PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF OR INTEREST ON THE SERIES 2018[A/B] BONDS OR OTHER COSTS INCIDENT THERETO.

Section 6.2 Additional Indebtedness and Encumbrances. Except as otherwise provided in this Section, nothing in this Bond Resolution shall be construed as prohibiting or limiting in any way the right of the University to incur other Credit Obligations. Notwithstanding the foregoing, however, the University may only incur the following types of Credit Obligations in the event the conditions set forth below are met in each instance:

(a) Limitation on Parity Credit Obligations. The University may incur, assume, guarantee or otherwise become liable on any Parity Credit Obligation, but only if, prior to the incurrence of each such Parity Credit Obligation, an Authorized Officer of the University certifies in writing that (1) taking into account the incurrence of such proposed Parity Credit Obligation (i) the University will have sufficient funds to meet all of its financial obligations, including its obligations to pay principal of and interest on all Credit Obligations, for all Fiscal Years to and including the second full Fiscal Year after the later of (A) the issuance of such Parity Credit Obligation and (B) the completion of any facility financed with the proceeds of such Parity Credit Obligation, and (ii) such Authorized Officer has no reason to believe that the University will not have sufficient funds to pay all amounts due under all indebtedness of the University during the term of such proposed Parity Credit Obligation, and (2) to the best of his or her knowledge, the University is not in default in the performance and observance of any of the provisions of this Bond Resolution. Any such Parity Credit Obligation shall be secured by a pledge of Pledged Revenues on a parity with the pledge of Pledged Revenues herein, unless expressly subordinated to the pledge hereof.

(b) Limitation on Section 9(c) Credit Obligations. The University may incur, assume, guarantee or otherwise become liable on any Credit Obligation pursuant to the provisions of Article X, Section 9(c) of the Constitution of Virginia, as such section may be amended from time to time, and may pledge and apply such portion of the Pledged Revenues as may be necessary to

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provide for the payment of any such Credit Obligation, the funding of reasonable reserves therefor, or the payment of operating and other reasonable expenses of the facilities financed in whole or in part with the proceeds of such Credit Obligation or facilities reasonably related to such facilities, and such pledge shall be senior and superior in all respects to the pledge of Pledged Revenues securing the Series 2018[A/B] Bonds and any other Parity Credit Obligations, but only if, prior to the incurrence of each such Credit Obligation, an Authorized Officer of the University certifies in writing that (1) taking into account the incurrence of such proposed Credit Obligation (i) the University will have sufficient funds to meet all of its financial obligations, including its obligations to pay principal of and interest on all Credit Obligations, for all Fiscal Years to and including the second full Fiscal Year after the later of (A) the issuance of such proposed Credit Obligation and (B) the completion of any facility financed with the proceeds of such proposed Credit Obligation, and (ii) such Authorized Officer has no reason to believe that the University will not have sufficient funds to pay all amounts due under all indebtedness of the University during the term of such proposed Credit Obligation, (2) to the best of his or her knowledge, the University is not in default in the performance and observance of any of the provisions of this Bond Resolution, and (3) in connection with the issuance of such proposed Credit Obligation, the University has received an opinion of Bond Counsel to the effect that such proposed Credit Obligation has been validly issued under Article X, Section 9(c) of the Constitution of Virginia.

(c) Limitation on Other Credit Obligations, Including Section 9(d) Credit Obligations. The University may incur, assume, guarantee or otherwise become liable on any Credit Obligation not described elsewhere in this Section 6.2, including any Credit Obligation incurred pursuant to the provisions of Article X, Section 9(d) of the Constitution of Virginia, as such section may be amended from time to time, and may pledge and apply such portion of the Pledged Revenues as may be necessary for the payment of any such Credit Obligation, the funding of reasonable reserves therefor, or the payment of operating and other reasonable expenses of the facilities financed in whole or in part with the proceeds of such Credit Obligation or facilities reasonably related to such facilities and such pledge shall be senior and superior in all respects to the pledge of Pledged Revenues securing the Series 2018[A/B] Bonds and any other Parity Credit Obligations, but only if, prior to the incurrence of each such Credit Obligation, an Authorized Officer of the University certifies in writing that (1) taking into account the incurrence of such proposed Credit Obligation (i) the University will have sufficient funds to meet all of its financial obligations, including its obligations to pay principal of and interest on all Credit Obligations, for all Fiscal Years to and including the second full Fiscal Year after the later of (A) the issuance of such proposed Credit Obligation and (B) the completion of any facility financed with the proceeds of such proposed Credit Obligation, and (ii) such Authorized Officer has no reason to believe that the University will not have sufficient funds to pay all amounts due under all indebtedness of the University during the term of such proposed Credit Obligation, (2) to the best of his or her knowledge, the University is not in default in the performance and observance of any of the provisions of this Bond Resolution, and (3) the University has received an opinion of Bond Counsel to the effect that such proposed Credit Obligation has been validly issued under the relevant provisions of the Constitution of Virginia.

(d) Limitation on Issuance of Indebtedness on a Parity with Qualifying Senior Obligations. Except for Credit Obligations issued pursuant to subsections (b) or (c) above or to refund any Qualifying Senior Obligation as described in subsection (e) below, no additional bonds

-18- or other obligations may be issued or incurred by the University on a parity with any Qualifying Senior Obligation.

(e) Limitation on Additional Encumbrances. The University shall not encumber the Pledged Revenues in any manner (except as permitted in connection with Credit Obligations issued pursuant to subsections (a), (b) or (c) above or to refund any Qualifying Senior Obligation as described below), unless any such encumbrance is made junior and subordinate in all respects to the liens, pledges, covenants and agreements of this Bond Resolution. Notwithstanding anything to the contrary herein, however, the University may issue bonds to refund any Qualifying Senior Obligation and to secure such refunding bonds with the same source of revenues securing the Qualifying Senior Obligation being refunded. Upon the defeasance of the refunded Qualifying Senior Obligation pursuant to any such refunding, the refunding bonds will be considered Qualifying Senior Obligations for all purposes.

Section 6.3 Disposition of Assets. The University may convey, sell or otherwise dispose of any property of the University as long as (1) such conveyance, sale or encumbrance is in the ordinary course of business, or (2) an Authorized Officer certifies in writing that, taking into account the conveyance, sale or other disposition of such property (i) the University will have sufficient funds to meet all of its financial obligations, including its obligations to pay principal of and interest on all Credit Obligations for all Fiscal Years to and including the second full Fiscal Year after such conveyance, sale or other disposition and (ii) such Authorized Officer has no reason to believe that the University will not have sufficient funds to pay all amounts due under all indebtedness of the University then outstanding.

Section 6.4 Insurance. The University covenants that it will at all times carry or cause to be carried insurance policies with a responsible insurance company or companies, qualified to assume the risks thereof, or that it will maintain an adequate program of self-insurance, in either case sufficient to provide the University with insurance in such amount and covering such risks as the University shall deem to be reasonable and desirable.

Section 6.5 Rights of Bondholders Not to Be Impaired. Except as otherwise set forth herein, the University covenants that no contract or contracts will be entered into or any action taken which might impair or diminish the rights of the Bondholders.

Section 6.6 Further Instruments and Actions. The University covenants that it will, from time to time, execute and deliver such further instruments and take such further action as may be required to carry out the purposes of this Bond Resolution.

Section 6.7 Accurate Records and Accounts. The University covenants that it will keep accurate records and accounts of all items of cost and of all expenditures relating to Pledged Revenues collected and the application of such Pledged Revenues.

Section 6.8 Recognized Accounting Principles. The University covenants that all of the accounts and records of the University will be kept according to generally accepted accounting principles consistently applied.

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Section 6.9 [Tax Covenants. (a) The University shall not use or permit the use of any proceeds of Series 2018[A/B] Bonds or any other funds of the University, directly or indirectly, to acquire any securities or obligation, and shall not use or permit the use of any amounts received by the University or the Custodian with respect to the Series 2018[A/B] Bonds in any manner, and shall not take or permit to be taken any other action or actions, which would cause any Bond to be an "arbitrage bond" within the meaning of Section 148 of the Code. If at any time the University is of the opinion that for purposes of this subsection it is necessary to restrict or limit the yield on the investment of any moneys held under this Bond Resolution the University shall so instruct the Custodian, any trustee or the Paying Agent in writing, and such Custodian, trustee or Paying Agent shall take such action as may be reasonably necessary in accordance with such issuance.

(b) The University shall not use or permit the use of any proceeds of Series 2018[A/B] Bonds or any other funds of the University, directly or indirectly, in any manner, and shall not take or permit to be taken any other action or actions, which would result in any of the Series 2018[A/B] Bonds being treated as an obligation not described in Section 103(a) of the Code by reason of classification of such Bond as a "private activity bond" or an "arbitrage bond" or "bond not in registered form" within the meaning of Section 103(b) of the Code.

(c) The University shall at all times do and perform all acts and things permitted by law and this Bond Resolution which are necessary or desirable in order to ensure that interest paid on the Series 2018[A/B] Bonds or any of them will be excludable from gross income for federal income tax purposes and shall take no action that would result in such interest not being excludable from gross income for federal income tax purposes.

(d) The University covenants that it shall file the information report with respect to the Series 2018[A/B] Bonds required by Section 149(e) of the Code (currently Form 8038-G) within the time period provided in such Section.

(e) Notwithstanding the foregoing, the University may amend this section or alter or eliminate any actions or restrictions allowed or required by this section, if it receives an opinion of Bond Counsel that such amendments, alterations or eliminations would not alter the Bondholders' U.S. federal income tax treatment of principal and interest payments on the Series 2018[A/B] Bonds.]

ARTICLE VII

EVENTS OF DEFAULT AND REMEDIES

Section 7.1 Events of Default. Each of the following events is hereby declared to be an "Event of Default" under this Bond Resolution:

(a) due and punctual payment of the principal, purchase price or redemption premium, if any, of any of the Series 2018[A/B] Bonds is not made when the same become due and payable, either at maturity or by proceedings for redemption or otherwise;

(b) due and punctual payment of any interest on any of the Series 2018[A/B] Bonds is not made when the same becomes due and payable;

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(c) the University, for any reason, is rendered incapable of fulfilling its obligations hereunder;

(d) an order or decree is entered, with the consent or acquiescence of the University, appointing a receiver or receivers of the University or any part thereof or of the revenues thereof, or if such order or decree, having been entered without the consent or acquiescence of the University, is not vacated or discharged or stayed on appeal within sixty (60) days after the entry thereof;

(e) any proceeding is instituted, with the consent or acquiescence of the University, for the purpose of effecting a composition between the University and its creditors or for the purpose of adjusting the claims of such creditors pursuant to any federal or state statute now or hereafter enacted; or

(f) the University defaults in the due and punctual performance of any other of the covenants, conditions, agreements and provisions contained in the Series 2018[A/B] Bonds or in this Bond Resolution on the part of the University to be performed, and such default continues for thirty (30) days after written notice specifying such default and requiring same to be remedied is given to the Board by any Bondholder, provided that if such default is such that it can be corrected but cannot be corrected within such thirty (30) day period, it shall not constitute an Event of Default if corrective action is instituted by the University within such period and is diligently pursued until the default is corrected.

Section 7.2 Remedies. (a) Upon the happening and continuance of an Event of Default, hereunder, the Holders of not less than 25% in aggregate principal amount of the Series 2018[A/B] Bonds, by instrument or instruments filed with the University and proved or acknowledged in the same manner as a deed to be recorded, may appoint a trustee to represent the Holders of the Series 2018[A/B] Bonds for the purposes herein, which trustee may be the State Treasurer and shall be the same trustee so appointed with respect to all other outstanding Parity Credit Obligations. Such trustee may, and upon written request of the Holders of not less than 25% in principal amount of the Series 2018[A/B] Bonds then outstanding shall, in its own name:

(1) by mandamus or other suit, action or proceeding at law or in equity enforce all rights of the Holders of the Series 2018[A/B] Bonds, including the right to require the University and its Board to collect fees, rents, charges or other revenues adequate to carry out an agreement as to, or pledge of, such revenues, and to require the University and Board to carry out any other agreements with the Holders of the Series 2018[A/B] Bonds and to perform it and their duties under the Act;

(2) bring suit upon the Series 2018[A/B] Bonds;

(3) by action or suit in equity, require the University to account as if it were the trustee of an express trust for the Holders of the Series 2018[A/B] Bonds; or

(4) by action or suit in equity, enjoin any acts or things which may be unlawful or in violation of the rights of the Holders of the Series 2018[A/B] Bonds.

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(b) Any such trustee, whether or not all such Series 2018[A/B] Bonds have been declared due and payable, shall be entitled as of right to the appointment of a receiver who may enter and take possession of any property of the University and any of the revenues from which are pledged for the security of the Series 2018[A/B] Bonds and operate and maintain the same and collect and receive all fees, rents, charges and other revenues thereafter arising therefrom in the same manner as the University itself might do and shall deposit all such moneys in a separate account and apply the same in such manner as the court appointing such receiver shall direct. In any suit, action or proceeding by the trustee, the fees, counsel fees and expenses of the trustee and of the receiver, if any, shall constitute taxable costs and disbursements and all costs and disbursements allowed by the court shall be a first charge on any fees, rents, charges and other revenues of the University pledged for the security of the Series 2018[A/B] Bonds.

Such trustee shall, in addition to the foregoing, have and possess all of the powers necessary or appropriate for the exercise of any functions specifically set forth herein or incident to the general representation of the Holders of the Series 2018[A/B] Bonds in the enforcement and protection of their rights.

(c) To the extent permitted by law, upon the happening and continuance of any Event of Default, then and in every such case any Bondholder may proceed, subject to the provisions of Section 7.5, to protect and enforce the rights of the Bondholders by a suit, action or special proceeding in equity or at law, either for the specific performance of any covenant or agreement contained herein or in aid or execution of any power herein granted or for the enforcement of any proper legal or equitable remedy as such Bondholder shall deem most effectual to protect and enforce such rights.

Section 7.3 Pro Rata Application of Funds. Anything in this Bond Resolution to the contrary notwithstanding, if at any time the moneys available in the Debt Service Fund shall not be sufficient to pay the interest on or the principal of the Series 2018[A/B] Bonds as the same shall become due and payable, such moneys, together with any moneys then available or thereafter becoming available for such purpose, whether through the exercise of the remedies provided for in this Article or otherwise, shall be applied as follows:

(a) If the principal of all the Series 2018[A/B] Bonds shall not have become due and payable, all such moneys shall be applied first to the payment of any fees and expenses of the Custodian, Paying Agent and Registrar and thereafter shall be applied:

first: to the payment to the persons entitled thereto of all installments of interest then due and payable in the order in which such installments became due and payable and, if the amount available shall not be sufficient to pay in full any particular installment, then to the payment, ratably, according to the amounts due on such installment, to the persons entitled thereto, without any discrimination or preference except as to any difference in the respective rates of interest specified in the Series 2018[A/B] Bonds; and

second: to the payment to the persons entitled thereto of the unpaid principal of any of the Series 2018[A/B] Bonds which shall have become due and payable (other than Series 2018[A/B] Bonds called for redemption for the payment of which moneys are held pursuant to the provisions

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of this Bond Resolution), in the order of their due dates, with interest on the principal amount of such Series 2018[A/B] Bonds at the respective rates specified therein from the respective dates upon which such Series 2018[A/B] Bonds became due and payable, and, if the amount available shall not be sufficient to pay in full the principal of the Series 2018[A/B] Bonds due and payable on any particular date, together with such interest, then to the payment first of such interest, ratably, according to the amount of such interest due on such date, and then to the payment of such principal, ratably, according to the amount of such principal due on such date, to the persons entitled thereto without any discrimination or preference.

(b) If the principal of all the Series 2018[A/B] Bonds shall have become due and payable, all such moneys shall be applied to the payment of the principal and interest then due and unpaid on the Series 2018[A/B] Bonds, without preference or priority of principal over interest or interest over principal, or of any installment of interest over any other installment of interest, or of any Bond over any other Bond, ratably, according to the amounts due, respectively, for principal and interest, to the persons entitled thereto, without any discrimination or preference.

Whenever moneys are to be applied by the trustee pursuant to the provisions of this Section, such moneys shall be applied by the trustee at such times, and from time to time, as the trustee in his or her sole discretion shall determine, having due regard to the amount of such moneys available for application and the likelihood of additional moneys becoming available for such application in the future; the deposit of such moneys with any Paying Agent, or otherwise setting aside such moneys, in trust for the proper purpose shall constitute proper application by the trustee; and the trustee shall incur no liability whatsoever to the Board, to any Bondholder or to any other person for any delay in applying any such moneys, so long as the trustee acts with reasonable diligence, having due regard to the circumstances, and ultimately applies the same in accordance with such provisions of this Bond Resolution as may be applicable at the time of application by the trustee. Whenever the trustee shall exercise such discretion in applying such moneys, he or she shall fix the date (which shall be an Interest Payment Date unless the trustee shall deem another date more suitable) upon which such application is to be made and upon such date interest on the amounts of principal to be paid on such date shall cease to accrue. The trustee shall give such notice (or shall cause the Paying Agent to give such notice) as he or she may deem appropriate of the fixing of any such date and shall not be required to make payment to the Holder of any Bond until such Bond shall be surrendered to the trustee or any Paying Agent for appropriate endorsement, or for cancellation if fully paid.

Notwithstanding anything in this Bond Resolution to the contrary, this Section 7.3 shall be interpreted so that the term "Series 2018[A/B] Bonds" or "Bonds" shall include the Series 2018[A/B] Bonds and any Parity Credit Obligations. In each resolution authorizing the issuance of any Parity Credit Obligation, the University agrees to provide for the trustee or paying agent thereunder to be the same entity as under this Bond Resolution, and further agrees to include provisions substantially identical to those contained in this Section 7.3.

Section 7.4 Effect of Discontinuance of Proceedings. In case any proceeding taken by any Bondholder on account of any Event of Default shall have been discontinued or abandoned for any reason, then and in every such case the University and the Bondholders shall be restored

-23- to their former positions and rights hereunder, respectively, and all rights and remedies of the Bondholders shall continue as though no such proceeding had been taken.

Section 7.5 Proceedings for Equal Benefit of All Bondholders. No Bondholder shall have any right in any manner whatever to affect, disturb or prejudice the security of this Bond Resolution or to enforce any right hereunder, except in the manner herein provided, and all proceedings at law or in equity shall be instituted, had and maintained for the equal benefit of all Bondholders.

Section 7.6 No Remedy Exclusive. No remedy herein conferred on the Bondholders is intended to be exclusive of any other remedy or remedies, and each and every remedy conferred shall be cumulative and shall be in addition to every other remedy given hereunder and under the Act or now or hereafter existing at law or in equity or by statute.

Section 7.7 No Delay or Omission Construed to Be a Waiver. No delay or omission of any Bondholder to exercise any right or power accruing upon any Event of Default occurring and continuing as aforesaid shall impair any such right or power or shall be construed to be a waiver of any such Event of Default or an acquiescence therein; and every power and remedy given by this Article to the Bondholders may be exercised from time to time and as often as may be deemed expedient.

ARTICLE VIII

EXECUTION OF INSTRUMENTS BY BONDHOLDERS AND PROOF OF OWNERSHIP OF THE SERIES 2018[A/B] BONDS

Section 8.1 Execution of Instruments; Proof of Ownership. Any request, direction, consent or other instrument in writing required or permitted by this Bond Resolution to be signed or executed by Bondholders may be in any number of concurrent instruments of similar tenor and may be signed or executed by such Bondholders or their attorneys or legal representatives. Proof of the execution of any such instrument and of the ownership of the Series 2018[A/B] Bonds shall be sufficient for any purpose of this Bond Resolution and shall be conclusive in favor of the University and the Paying Agent with regard to any action taken by them under such instrument if made in the following manner:

(a) The fact and date of the execution by any person of any such instrument may be proved by the verification of any officer in any jurisdiction who, by the laws thereof, has power to take affidavits within such jurisdiction, to the effect that such instrument was subscribed and sworn to before him or her, or by an affidavit of a witness to such execution. Where such execution is by an officer of a corporation or association or a member of a partnership on behalf of such corporation, association or partnership such verification or affidavit shall also constitute sufficient proof of his or her authority.

(b) The fact of the holding of the Series 2018[A/B] Bonds hereunder by any Bondholder and the amount and the numbers of such Series 2018[A/B] Bonds and the date of its holding the same shall be proved by the registration books kept under the provisions of Section 2.7.

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ARTICLE IX

SUPPLEMENTAL RESOLUTIONS

Section 9.1 Supplemental Resolutions. The University may, from time to time and at any time, without the consent of any Holders of the Series 2018[A/B] Bonds, adopt such resolutions supplemental hereto as shall not be inconsistent with the terms and provisions hereof (which supplemental resolutions shall thereafter form a part hereof), as follows:

(a) to cure any ambiguity or formal defect or omission or to correct any inconsistent provisions in this Bond Resolution or in any supplemental resolutions;

(b) to provide for the issuance of certificated Series 2018[A/B] Bonds pursuant to Section 2.11 of this Bond Resolution, or to obtain or maintain a rating for the Series 2018[A/B] Bonds;

(c) to grant to or confer upon the Bondholders any additional rights, remedies, powers, authority or security that may lawfully be granted to or conferred upon the Bondholders;

(d) to add new conditions, limitations and restrictions on the issuance of other Credit Obligations by the University;

(e) to add to the covenants and agreements of the Board in this Bond Resolution other covenants and agreements thereafter to be observed by the Board or to surrender any right or power herein reserved to or conferred upon the Board;

(f) [to comply with any proposed, temporary or permanent regulations regarding the arbitrage rebate requirements of the Code]; or

(g) to modify, alter, amend, add to or rescind, in any particular, any of the terms or provisions contained in this Bond Resolution, if in the opinion of the Paying Agent, who may rely upon an opinion of counsel nationally recognized in matters concerning municipal bonds, such supplemental resolution shall not adversely affect or prejudice the interests of the Bondholders.

At least thirty (30) days prior to the adoption of any supplemental resolution for any of the purposes of this Section, the Secretary of the Board shall cause a notice of the proposed adoption of such supplemental resolution to be posted to the Municipal Securities Rulemaking Board's EMMA website (or its successor system). Such notice shall briefly set forth the nature of the proposed supplemental resolution and shall state that copies thereof are on file at the office of the Secretary of the Board for inspection by all Bondholders. Failure on the part of the Secretary of the Board to mail the notice required by this Section shall not affect the validity of such supplemental resolution.

Section 9.2 Modification of Resolution with Consent of Holders. Subject to the terms and provisions contained in this Section, and not otherwise, the Holders of not less than a majority in aggregate outstanding principal amount of the Series 2018[A/B] Bonds then outstanding shall have the right, from time to time, anything contained in this Bond Resolution to

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the contrary notwithstanding, to consent to and approve the adoption of such resolution or resolutions supplemental hereto as shall be deemed necessary or desirable by the Board for the purpose of modifying, altering, amending, adding to or rescinding, in any particular, any of the terms or provisions contained in this Bond Resolution or in any supplemental resolution; provided, however, that nothing herein contained shall permit, or be construed as permitting, (a) without the approval of all of the Series 2018[A/B] Bondholders, (i) an extension of the maturity of the principal of or the interest on any Series 2018[A/B] Bond, (ii) a reduction in the principal amount of any Series 2018[A/B] Bond or the redemption premium or the rate of interest thereon, (iii) except as otherwise provided herein, a preference or priority of any Series 2018[A/B] Bond or Bonds over any other Series 2018[A/B] Bond or Bonds, or (iv) except as otherwise provided herein, the release of the lien created by this Bond Resolution with respect to any Pledged Revenues, or (b) without the approval of all of the Series 2018[A/B] Bondholders, a reduction in the aggregate principal amount of the Series 2018[A/B] Bonds required for consent to such supplemental resolution. Nothing herein contained, however, shall be construed as making necessary the approval by Bondholders of the adoption of any supplemental resolution as authorized in Section 9.1 of this Article.

If at any time the Board shall determine that it is necessary or desirable to adopt any supplemental resolution for any of the purposes of this Section, the Secretary of the Board shall cause notice of the proposed adoption of such supplemental resolution to be mailed, not less than thirty (30) nor more than sixty (60) days prior to the date of such adoption, postage prepaid, to all registered owners of the Series 2018[A/B] Bonds at their addresses as they appear on the registration books held by the Registrar. Such notice shall briefly set forth the nature of the proposed supplemental resolution and shall state that copies thereof are on file at the office of the Secretary of the Board for inspection by all Bondholders. The Board shall not, however, be subject to any liability to any Bondholder by reason of a failure to cause the notice required by this Section to be mailed and any such failure shall not affect the validity of such supplemental resolution when consented to and approved as provided in this Section.

Whenever, at any time within one year after the date of such notice, the Board shall deliver to the Paying Agent an instrument or instruments in writing purporting to be executed by the Holders of not less than a majority or all, as appropriate, in aggregate principal amount of the Series 2018[A/B] Bonds then outstanding, which instrument or instruments shall refer to the proposed supplemental resolution described in such notice and shall specifically consent to and approve the adoption thereof in substantially the form of the copy thereof referred to in such notice, thereupon, but not otherwise, the Board may adopt such supplemental resolution in substantially such form, without liability or responsibility to any Holder of any Series 2018[A/B] Bond, whether or not such Holder shall have consented thereto.

If the Holders of not less than a majority or all, as appropriate, in aggregate principal amount of the Series 2018[A/B] Bonds outstanding at the time of the adoption of such supplemental resolution shall have consented to and approved the adoption thereof as herein provided, no Bondholder shall have any right to object to the adoption of such supplemental resolution, or to object to any of the terms and provisions contained therein or the operation thereof, or in any manner to question the propriety of the adoption thereof, or to enjoin or restrain the Board from adopting the same or from taking any action pursuant to the provisions thereof.

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Upon the adoption of any supplemental resolution pursuant to the provisions of this Section, this Bond Resolution shall be and be deemed to be modified and amended in accordance therewith, and the respective rights, duties and obligations under this Bond Resolution of the University, the Board, and all Holders of Series 2018[A/B] Bonds then outstanding shall thereafter be determined, exercised and enforced in all respects under the provisions of this Bond Resolution as so modified and amended.

Section 9.3 Supplemental Resolutions Part of this Bond Resolution. Any supplemental resolution adopted in accordance with the provisions of this Article shall thereafter form a part of this Bond Resolution, and all of the terms and conditions contained in any such supplemental resolution as to any provision authorized to be contained therein shall be and shall be deemed to be part of the terms and conditions of this Bond Resolution for any and all purposes. In case of the adoption and approval of any supplemental resolution, express reference may be made thereto in the text of any Series 2018[A/B] Bonds issued thereafter, if deemed necessary or desirable by the Board.

ARTICLE X

DEFEASANCE

Section 10.1 Defeasance. If the University shall pay or provide for the payment of the entire indebtedness on all Series 2018[A/B] Bonds outstanding in any one or more of the following ways:

(i) by paying or causing to be paid the principal of (including redemption premium, if any) and interest on all Series 2018[A/B] Bonds outstanding, as and when the same become due and payable;

(ii) by depositing with the Paying Agent, in trust, at or before maturity, moneys in an amount sufficient to pay or redeem (when redeemable) all Series 2018[A/B] Bonds outstanding (including the payment of premium, if any, and interest payable on such Bonds to the maturity or redemption date thereof), provided that such moneys, if invested, shall be invested at the written direction of the University in noncallable Government Obligations in an amount, without consideration of any income or increment to accrue thereon, sufficient to pay or redeem (when redeemable) and discharge the indebtedness on all Series 2018[A/B] Bonds outstanding at or before their respective maturity dates; it being understood that the investment income on such Government Obligations may be used for any other lawful purpose;

(iii) by delivering to the Paying Agent, for cancellation by it, all Series 2018[A/B] Bonds outstanding; or

(iv) by depositing with the Paying Agent, in trust, noncallable Government Obligations in such amounts as will, together with the income or increment to accrue thereon, without consideration of any reinvestment thereof, and any uninvested cash, be fully sufficient to pay or redeem (when redeemable) and discharge the indebtedness on all Series 2018[A/B] Bonds

-27- outstanding at or before their respective maturity dates, as certified to the Paying Agent's satisfaction in a report by an independent certified public accountant; and if the University shall pay or cause to be paid all other sums payable hereunder by the University, and, if any of the Series 2018[A/B] Bonds are to be redeemed before their maturity, notice of such redemption shall have been given as in Section 3.2 provided or provisions satisfactory to the Paying Agent shall have been made for the giving of such notice, this Bond Resolution and the estate and rights granted hereunder shall cease, determine, and become null and void, and thereupon the Paying Agent shall, upon written request of the University, and upon receipt by the Paying Agent of a certificate of the Authorized Officer, each stating that in the opinion of the signers all conditions precedent to the satisfaction and discharge of this Bond Resolution have been complied with, forthwith execute proper instruments acknowledging satisfaction of and discharging this Bond Resolution and the lien hereof.

The University may at any time surrender to the Paying Agent for cancellation by it any Series 2018[A/B] Bonds previously authenticated and delivered, which the University may have acquired in any manner whatsoever, and such Series 2018[A/B] Bonds, upon such surrender and cancellation, shall be deemed to be paid and retired.

Section 10.2 Liability of University Not Discharged. Upon the deposit with the Paying Agent, in trust, at or before maturity, of money or Government Obligations in the necessary amount to pay or redeem all Series 2018[A/B] Bonds outstanding (whether upon or before their maturity or the redemption date of such Series 2018[A/B] Bonds) and compliance with the other payment requirements of Section 10.1, provided that if such Series 2018[A/B] Bonds are to be redeemed before their maturity, notice of such redemption shall have been given as in Section 3.2 provided, or provisions satisfactory to the Paying Agent shall have been made for the giving of such notice, this Bond Resolution may be discharged in accordance with the provisions hereof but the University's liability in respect of the Series 2018[A/B] Bonds shall continue provided that the Holders thereof shall thereafter be entitled to payment only out of the moneys or the Government Obligations deposited with the Paying Agent as aforesaid.

Section 10.3 Provision for Payment of Particular Bonds. If the University shall pay or provide for the payment of the entire indebtedness on particular Series 2018[A/B] Bonds in any one or more of the following ways:

(a) by paying or causing to be paid the principal of (including redemption premium, if any) and interest on such Series 2018[A/B] Bonds, as and when the same shall become due and payable;

(b) by depositing with the Paying Agent, in trust, at or before maturity, moneys in an amount sufficient to pay or redeem (when redeemable) such Series 2018[A/B] Bonds (including the payment of premium, if any, and interest payable on such Series 2018[A/B] Bonds to the maturity or redemption date thereof), provided that such moneys, if invested, shall be invested at the written direction of the University in noncallable Government Obligations in an amount, without consideration of any income or increment to accrue thereon, sufficient to pay or redeem (when redeemable) and discharge the indebtedness on such Series 2018[A/B] Bonds at or before

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their respective maturity dates; it being understood that the investment income on such Government Obligations may be used for any lawful purpose;

(c) by delivering to the Paying Agent, for cancellation by it, such Series 2018[A/B] Bonds; or

(d) by depositing with the Paying Agent, in trust, noncallable Government Obligations in such amount as will, together with the income or increment to accrue thereon, and any uninvested cash, without consideration of any reinvestment thereof, be fully sufficient to pay or redeem (when redeemable) and discharge the indebtedness on such Series 2018[A/B] Bonds at or before their respective maturity dates, as an independent certified public accountant shall certify to Paying Agent's satisfaction;

and if the University shall also pay or cause to be paid all other sums payable hereunder by the University with respect to such Series 2018[A/B] Bonds, and, if such Series 2018[A/B] Bonds are to be redeemed before their maturity, notice of such redemption shall have been given as in Section 3.2 provided or provisions satisfactory to the Paying Agent shall have been made for the giving of such notice, such Series 2018[A/B] Bonds shall cease to be entitled to any lien, benefit or security under this Bond Resolution. The University's liability in respect of such Series 2018[A/B] Bonds, if any, shall continue but the Holders thereof shall thereafter be entitled to payment (to the exclusion of all other Bondholders) only out of the moneys or Government Obligations deposited with the Paying Agent as aforesaid.

ARTICLE XI

MISCELLANEOUS PROVISIONS

Section 11.1 Effect of Covenants. All covenants, stipulations, obligations and agreements of the University and the Board contained in this Bond Resolution shall be deemed to be covenants, stipulations, obligations and agreements of the University and the Board to the full extent authorized by the Act or permitted by the Constitution of Virginia. All such covenants, stipulations, obligations and agreements shall be binding upon the successor or successors thereof from time to time and upon any officer, board, body or commission to whom or to which any power or duty affecting such covenants, stipulations, obligations and agreements shall be transferred by or in accordance with law.

No covenant, stipulation, obligation or agreement herein contained shall be deemed to be a covenant, stipulation, obligation or agreement of any present or future director, member, agent or employee of the University or the Board in his or her individual capacity, and no agency of the Commonwealth nor any officer thereof or of the University, present or future, executing the Series 2018[A/B] Bonds shall be liable personally on the Series 2018[A/B] Bonds or be subject to any personal liability or accountability by reason of the issuance thereof.

Section 11.2 Successor Paying Agents or Registrars. Any bank or trust company authorized to do business in the Commonwealth may be appointed by the University as successor Paying Agent or Registrar hereunder and immediately upon acceptance of such appointment shall

-29- be deemed the successor of the Paying Agent or Registrar for the purposes of this Bond Resolution. The University shall give notice to any Rating Agency of its appointment of any successor Paying Agent or Registrar. The reasonable fees and expenses of any such successor Paying Agent or Registrar shall be the sole obligation of the University and shall constitute a pledge of the Pledged Revenues prior to the Series 2018[A/B] Bonds, to the extent such fees and expenses are unpaid. Each of the Paying Agent and Registrar may resign and thereby become discharged from its obligations hereunder, by written notice mailed to the University by registered or certified mail. Such resignation shall take effect upon the appointment of a successor hereunder and acceptance of the successor to the obligations hereunder. Each of the Paying Agent and Registrar shall continue to serve as such until a successor is appointed. Each of the Paying Agent and the Registrar may, after 60 days subsequent to its resignation, petition the Circuit Court of the City of Richmond, Virginia, for the appointment of a successor if one has not yet been appointed.

Section 11.3 Manner of Giving Notice. Any notice, demand, direction, request or other instrument authorized or required by this Bond Resolution to be given to or filed with the University, the Paying Agent, the Registrar, the Custodian or the Rating Agencies shall be deemed to have been sufficiently given or filed for all purposes of this Bond Resolution if and when sent by registered or certified mail, return receipt requested:

(1) to the University, if addressed to the Virginia Commonwealth University, 914 West Franklin Street, PO Box 843076, Richmond, Virginia 23284 (Attention: University Treasurer);

(2) to the Custodian, Paying Agent and/or Registrar, if addressed to ______, ______, (Attention: Corporate Trust Services);

(3) to Moody's, if addressed to Moody's Investor Services, 7 World Trade Center, 250 Greenwich Street, New York, New York 10007, Attention: Structured Finance, Telecopier: (212) 298-6442;

(4) to S&P, if addressed to S&P Global Ratings, at 55 Water Street, 38th Floor, New York, New York 10041, Attention: Public Finance Department (Surveillance), Telecopier: (212) 438-2152; and

(5) to Fitch, if addressed to Fitch Ratings, One State Street Plaza, New York, New York 10004, Attention: Municipal Structured Finance Group, Telecopier: (212) 635- 0466.

Section 11.4 Alternative Notice. If, because of the temporary or permanent suspension of publication of any newspaper or financial journal or suspension of the mails or for any other reason, the University, the Board or the Custodian shall be unable to give any notice required to be published or mailed by the provisions of this Bond Resolution, the University or the Custodian, as the case may be, shall give such notice in such other manner as in the judgment of the University or the Custodian shall most effectively approximate such publication thereof, and the giving of such notice in such manner shall for all purposes of this Bond Resolution be deemed to be in compliance with the requirement for the publication thereof.

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Section 11.5 Effect of Partial Invalidity. In case any one or more of the provisions of this Bond Resolution or of the Series 2018[A/B] Bonds issued hereunder shall for any reason be held to be illegal or invalid, such illegality or invalidity shall not affect any other provision of this Bond Resolution or of the Series 2018[A/B] Bonds, but this Bond Resolution and the Series 2018[A/B] Bonds shall be construed and enforced as if such illegal or invalid provision had not been contained therein. In case any covenant, stipulation, obligation or agreement contained in the Series 2018[A/B] Bonds or in this Bond Resolution shall for any reason be held to be in violation of law, then such covenant, stipulation, obligation or agreement shall be deemed to be the covenant, stipulation, obligation or agreement of the University to the full extent permitted by law.

Section 11.6 Governing Law. This Bond Resolution is adopted with the intent that the laws of the Commonwealth shall govern its construction without regard to conflict of law principles.

Section 11.7 Completion of and Amendments to Bond Resolution; Approval, Execution and Delivery of Necessary and Appropriate Documents. (a) Prior to the delivery of the Series 2018[A/B] Bonds, in accordance with the University's debt policy, the Authorized Officer, may authorize completion of and any revisions to this Bond Resolution which are not in conflict with the Authorizing Resolution or any future resolution by the Board, as shall be necessary to accurately reflect negotiations among the University, the Paying Agent, the Registrar, each applicable Rating Agency and the Underwriters, with respect to the Series 2018[A/B] Bonds, the undertaking of the Plan of Finance, including, specifically and without limitation, the terms and provisions of the Series 2018[A/B] Bonds, including without limitation, the original principal amount(s), their maturity dates and amounts, redemption provisions, prices, interest rates and interest provisions and any elections under the federal tax code. Certification of this Bond Resolution by the Secretary of the Board shall be conclusive evidence that the Authorized Officer has finally completed this Bond Resolution.

(b) The Authorized Officer is authorized to negotiate, execute and deliver, in necessary and appropriate form, the following documents:

(1) one or more Official Statement(s) in preliminary and final forms relating to the offering of the Series 2018[A/B] Bonds for sale;

(2) the Bond Purchase Agreement relating to the purchase of the Series 2018[A/B] Bonds; and

(3) such other documents and instruments as he or she deems necessary or appropriate in connection with the issuance of the Series 2018[A/B] Bonds, including without limitation any interest rate swaps or other hedge mechanisms and any dedicated line of credit, standby bond purchase agreement or other liquidity facility related to the Series 2018[A/B] Bonds, so long as such documents and instruments do not conflict with the intent of this Bond Resolution.

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The distribution of any Official Statement, in preliminary and final forms, by the Underwriters is hereby authorized and approved.

Section 11.8 Bond Delivery. All directors, officers and employees of the University are hereby authorized to take all actions necessary to accomplish the delivery of the Series 2018[A/B] Bonds to purchasers thereof.

Section 11.9 Repeal of Inconsistent Provisions. Any prior resolutions or provisions of resolutions of the Board inconsistent with any provisions of this Bond Resolution are hereby repealed.

Section 11.10 Paying Agent/Registrar/Custodian Reliance and Other Matters. For purposes of this Section 11.10 only, the term "Paying Agent" shall refer to the Paying Agent, the Registrar and the Custodian. The Paying Agent undertakes to perform only such duties as are expressly set forth herein. The duties and responsibilities of the Paying Agent hereunder shall be determined solely by the express provisions of this Bond Resolution, and no further duties or responsibilities shall be implied. The Paying Agent shall not have any liability under, nor duty to inquire into the terms and provisions of, any agreement or instructions, other than as outlined in the Series 2018[A/B] Resolutions. The Paying Agent may consult with counsel and may rely conclusively and shall be protected in acting or refraining from acting upon any written notice, opinion, electronically transmitted communication, instruction or request furnished to it hereunder and believed by it to be genuine and to have been signed or presented by the proper party or parties. The Paying Agent shall be under no duty to inquire into or investigate the validity, accuracy or content of any such document. The Paying Agent shall have no duty to solicit any payments that may be due it hereunder. The Paying Agent shall not be liable for any action taken or omitted by it in good faith unless a court of competent jurisdiction determines that any loss to the University was the result of the Paying Agent's negligent or willful misconduct. The Paying Agent shall not incur any liability for following the instructions herein contained or expressly provided for, or written instructions given by the University. In the administration of its duties under this Bond Resolution, the Paying Agent may execute any of its powers and perform its duties hereunder directly or through agents or attorneys and may consult with counsel, accountants and other skilled persons to be selected and retained by it. The Paying Agent shall not be liable for anything done, suffered or omitted in good faith by it in accordance with the advice or opinion of any such counsel, accountants or other skilled persons. The Paying Agent may resign and be discharged of its duties and obligations hereunder by giving notice in writing of such resignation specifying a date when such resignation shall take effect. Any corporation or association into which the Paying Agent in its individual capacity may be merged or converted or with which it may be consolidated, or any corporation or association resulting from any merger, conversion or consolidation to which the Paying Agent in its individual capacity shall be a party, or any corporation or association to which all or substantially all the corporate trust business of the Paying Agent in its individual capacity may be sold or otherwise transferred, shall be the Paying Agent hereunder without further act. The University covenants and agrees to pay the Paying Agent its fees and expenses (including reasonable attorney's fees, costs and expenses) as agreed upon by the University and the Paying Agent. Furthermore, the University shall pay the Paying Agent for any extraordinary services or expenses performed or incurred by the Paying Agent in connection with its duties under this Bond

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Resolution provided the University consents in writing prior to the performance of such services or the incurring of such expenses.

The Paying Agent shall not be responsible or liable for any failure or delay in the performance of its obligation under this Bond Resolution arising out of or caused, directly or indirectly, by circumstances beyond its reasonable control, including, without limitation, acts of God, earthquakes, fire, flood, hurricanes or other storms; wars, terrorism, similar military disturbances; sabotage; epidemic, riots, interruptions; loss or malfunctions of utilities, computer (hardware or software) or communications services; accidents; labor disputes; acts of civil or military authority or governmental action; it being understood that the Paying Agent shall use commercially reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as reasonably practicable under the circumstances.

The Paying Agent shall have the right to accept and act upon instructions, including funds transfer instructions ("Instructions") given pursuant to this Resolution and delivered using Electronic Means; provided, however, that the University shall provide to the Paying Agent an incumbency certificate listing Authorized Officers and containing specimen signatures of such Authorized Officers, which incumbency certificate shall be amended by the University whenever a person is to be added or deleted from the listing. If the University elects to give the Paying Agent Instructions using Electronic Means and the Paying Agent in its discretion elects to act upon such Instructions, the Paying Agent’s understanding of such Instructions shall be deemed controlling. The University understands and agrees that the Paying Agent cannot determine the identity of the actual sender of such Instructions and that the Paying Agent shall conclusively presume that directions that purport to have been sent by an Authorized Officer listed on the incumbency certificate provided to the Paying Agent have been sent by such Authorized Officer. The University shall be responsible for ensuring that only Authorized Officers transmit such Instructions to the Paying Agent and that the University and all respective Authorized Officers are solely responsible to safeguard the use and confidentiality of applicable user and authorization codes, passwords and/or authentication keys upon receipt by the University. The Paying Agent shall not be liable for any losses, costs or expenses arising directly or indirectly from the Paying Agent’s reliance upon and compliance with such Instructions notwithstanding such directions conflict or are inconsistent with a subsequent written instruction. The University agrees: (i) to assume all risks arising out of the use of Electronic Means to submit Instructions to the Paying Agent, including without limitation the risk of the Paying Agent acting on unauthorized Instructions, and the risk of interception and misuse by third parties; (ii) that it is fully informed of the protections and risks associated with the various methods of transmitting Instructions to the Paying Agent and that there may be more secure methods of transmitting Instructions than the method(s) selected by the University; (iii) that the security procedures (if any) to be followed in connection with its transmission of Instructions provide to it a commercially reasonable degree of protection in light of its particular needs and circumstances; and (iv) to notify the Paying Agent immediately upon learning of any compromise or unauthorized use of the security procedures.

[Remainder of Page Intentionally Left Blank]

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EXHIBIT A

No. R[A/B]-__

UNITED STATES OF AMERICA COMMONWEALTH OF VIRGINIA

VIRGINIA COMMONWEALTH UNIVERSITY

GENERAL REVENUE PLEDGE REFUNDING BOND SERIES 2018[A/B]

INTEREST RATE: MATURITY DATE: DATED DATE: CUSIP:

% ______, 20______, 2018 ______

REGISTERED OWNER: CEDE & CO.

PRINCIPAL AMOUNT: ______DOLLARS ($______)

Virginia Commonwealth University (the "University"), an educational institution established by the Commonwealth of Virginia, for value received, hereby promises to pay, solely from the revenues provided therefor, as hereinafter set forth, to the registered owner named above, on the maturity date set forth above (or earlier as hereinafter set forth), upon the presentation and surrender hereof, the principal sum set forth above and to pay, solely from such revenues, interest thereon from the date hereof at the rate per annum set forth above, until payment of said principal sum. Both the principal of and the interest on this Series 2018[A/B] Bond are payable in any coin or currency of the United States of America which on the respective dates of payment thereof is legal tender for the payment of public and private debts. The principal or redemption price of this Series 2018[A/B] Bond shall be payable, upon surrender of this Series 2018[A/B] Bond, at the office of ______, Richmond, Virginia, as Paying Agent, or at the designated corporate trust office of any successor Paying Agent appointed pursuant to the Series 2018[A/B] Resolutions (hereinafter defined). Payment of interest on this Series 2018[A/B] Bond shall be made by check or draft mailed on the applicable Interest Payment Date to the registered owner as of the close of business on the 15th date of the month immediately preceding such Interest Payment Date (a "Record Date") at its address as it appears in the registration books of the Registrar appointed pursuant to the Series 2018[A/B] Resolutions. The term "Interest Payment Date" with respect to the Series 2018[A/B] Bonds means each ______1 and ______1, commencing ____ 1, 20__.

This Series 2018[A/B] Bond shall bear interest from the Interest Payment Date next preceding the date on which it is authenticated, unless this Series 2018[A/B] Bond is (a) authenticated before the first Interest Payment Date following the initial delivery of the Series 2018[A/B] Bonds, in which case it shall bear interest from its dated date, or (b) authenticated upon an Interest Payment Date, in which case it shall bear interest from such Interest Payment Date;

A-1

provided, however, that if at the time of authentication of this Series 2018[A/B] Bond interest is in default, this Series 2018[A/B] Bond shall bear interest from the date to which interest has been paid. Interest on this Series 2018[A/B] Bond shall be computed on the basis of a 360-day year of twelve 30-day months.

The University shall not be obligated to pay the principal of or interest on this Series 2018[A/B] Bond except from the Pledged Revenues of the University and other legally available moneys, all as provided in the Series 2018[A/B] Resolutions. "Pledged Revenues" are all of the revenues now or hereafter lawfully available to the University which are not required by law, by binding contract entered into prior to the adoption of the Series 2018[A/B] Resolutions or, in certain circumstances described in the Series 2018[A/B] Resolutions, by binding contract entered into subsequent to the date of the Series 2018[A/B] Resolutions, to be devoted to some other purpose. This Series 2018[A/B] Bond and the interest hereon shall not be deemed to constitute a debt or liability of the Commonwealth of Virginia, legal, moral or otherwise. Neither the Commonwealth of Virginia nor the University shall be obligated to pay the principal of or interest on this Series 2018[A/B] Bond or other costs incident hereto except from the sources noted above, and neither the faith and credit nor the taxing power of the Commonwealth of Virginia are pledged to the payment of the principal of or interest on this Series 2018[A/B] Bond or other costs incident hereto.

This Series 2018[A/B] Bond is one of a duly authorized issue of Bonds of the University aggregating [______] DOLLARS ($[______]) in principal amount, known as "General Revenue Pledge Refunding Bonds, Series 2018[A/B]" (the "Series 2018[A/B] Bonds"), issued pursuant to an authorizing resolution adopted by the Executive Committee of the Board of Visitors of the University (the "Board") on October 8, 2018 and a bond resolution executed on ______, 2018 (the "Series 2018[A/B] Resolutions"). This Series 2018[A/B] Bond is issued and the Series 2018[A/B] Resolutions were adopted under and pursuant to the Constitution and laws of the Commonwealth of Virginia, particularly Chapter 10, Title 23.1, Code of Virginia of 1950, as amended (the "Act") to finance the Plan of Finance (as defined in the Series 2018[A/B] Resolutions). Reference is hereby made to the Series 2018[A/B] Resolutions for the provisions, among others, with respect to the custody and application of the proceeds of bonds issued under the Series 2018[A/B] Resolutions, the funds charged with and pledged to the payment of the interest on and the principal of the Series 2018[A/B] Bonds, the nature and extent of the security, the terms and conditions on which the Series 2018[A/B] Bonds are or may be issued, the rights, duties and obligations of the University and the rights of the holders of the Series 2018[A/B] Bonds. Capitalized terms not defined herein shall be as defined in the Series 2018[A/B] Resolutions. By the acceptance of this Series 2018[A/B] Bond, the Holder hereof assents to all of the provisions of the Series 2018[A/B] Resolutions.

The Series 2018[A/B] Bonds are subject to optional redemption by the University on or after ______1, 20__, in whole or in part at any time (in any integral multiple of $5,000) at a redemption price equal to 100% of the principal amount of Series 2018[A/B] Bonds to be redeemed plus accrued interest to the redemption date.

This Series 2018[A/B] Bond is also subject to redemption in whole or in part on any date, at the option of the University, from the proceeds of casualty insurance or condemnation awards,

A-2 at a redemption price equal to 100% of the principal amount thereof to be redeemed, without premium, plus accrued interest to the redemption date, if all or any part of the Project is damaged, destroyed or taken through the exercise of the power of eminent domain and the University has determined not to use such proceeds to replace or rebuild the damaged, destroyed or taken property.

Subject to applicable procedures of the Securities Depository while the Series 2018[A/B] Bonds are held in book-entry only form by the Securities Depository, if less than all of the Series 2018[A/B] Bonds are to be called for redemption, the Series 2018[A/B] Bonds to be redeemed shall be selected by the University in such manner as the University in its discretion may determine.

If any of the Series 2018[A/B] Bonds or portions thereof are called for redemption, the Paying Agent shall mail a notice of the call for redemption, identifying the Series 2018[A/B] Bonds or portions thereof to be redeemed, not less than 30 nor more than 60 days prior to the redemption date, to the registered owner of each Series 2018[A/B] Bond to be redeemed, at its address as it appears on the registration books kept by the Registrar. Provided funds for their redemption are on deposit at the place of payment on the redemption date, all Series 2018[A/B] Bonds so called for redemption shall cease to bear interest on such date, shall no longer be secured by the Pledged Revenues and shall not be deemed to be outstanding under the terms of the Series 2018[A/B] Resolutions. If a portion of this Series 2018[A/B] Bond is called for redemption, a new Series 2018[A/B] Bond in principal amount equal to the unredeemed portion hereof will be issued to the registered owner upon the surrender hereof.

This Series 2018[A/B] Bond is transferable by the registered owner, in person or by its attorney duly authorized in writing, at the designated office of the Registrar, upon presentation of a written instrument of transfer and surrender of this Series 2018[A/B] Bond to the Registrar for cancellation. Upon the transfer, a new Series 2018[A/B] Bond or Bonds of the same aggregate principal amount, maturity date and interest rate will be issued to the transferee. No transfer will be effective unless represented by such surrender and reissue. This Series 2018[A/B] Bond may also be exchanged at the designated office of the Registrar for a new Series 2018[A/B] Bond or Bonds of the same aggregate principal amount, maturity date and interest rate without transfer to a new registered owner. Exchanges and transfers will be without expense to the holder except for applicable taxes or other governmental charges, if any. The Registrar shall not be required to transfer or exchange any Series 2018[A/B] Bond selected or called for redemption pursuant to the provisions hereof or from a Record Date through the next succeeding Interest Payment Date. All Bonds delivered in exchange or transfer shall be dated so that neither gain nor loss results from the transfer or exchange.

The University, the Paying Agent and the Registrar may treat the registered owner as the absolute owner of this Series 2018[A/B] Bond for all purposes, notwithstanding any notice to the contrary.

Neither the members of the Board nor any person executing this Series 2018[A/B] Bond are liable personally hereon or subject to any personal liability or accountability by reason of the issuance hereof.

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This Series 2018[A/B] Bond will not be valid until the Certificate of Authentication has been signed by the Registrar.

The holder of this Series 2018[A/B] Bond shall have no right to enforce the provisions of the Series 2018[A/B] Resolutions or to institute action to enforce the covenants therein, or to take any action with respect to any Event of Default under the Series 2018[A/B] Resolutions, or to institute, appear in or defend any suit or other proceeding with respect thereto, except as provided in the Series 2018[A/B] Resolutions.

All acts, conditions and things required by the Constitution and laws of the Commonwealth of Virginia and by the rules and regulations of the Board to happen, exist and be performed precedent to and in the issuance of this Series 2018[A/B] Bond have happened, exist and have been performed as so required.

[Signature Page Follows]

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IN WITNESS WHEREOF, Virginia Commonwealth University has caused this Series 2018[A/B] Bond to be issued and caused this Series 2018[A/B] Bond to bear the manual or facsimile signatures of its Senior Vice President and Chief Financial Officer for the University and its official seal to be impressed, imprinted, reproduced or lithographed hereon, all as of the dated date hereof.

[SEAL]

______[Senior Vice President and Chief Financial Officer,] Virginia Commonwealth University

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CERTIFICATE OF AUTHENTICATION

This Series 2018[A/B] Bond is one of the Bonds described in the within mentioned Series 2018[A/B] Resolutions.

Date of Authentication: ______, as Registrar ______, 2018

______Authorized Signatory

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FORM OF ASSIGNMENT

FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto ______

[Please print or typewrite name and address, including zip code, of Transferee]

PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBERS OF TRANSFEREE

______

______the within Bond and all rights, thereunder, and hereby irrevocably constitutes and appoints ______attorney to transfer the within Bond on the books kept for registration thereof, with full power of substitution in the premises.

Dated: ______

______Registered Owner

The signature above must correspond to the name of the Registered Owner as it appears on the front of this Series 2018[A/B] Bond in every particular, without alteration or enlargement or any change whatsoever.

Signature Guaranteed:

______Notice: Signature(s) must be guaranteed by an approved eligible guarantor institution, an institution which is a participant in a Securities Transfer Association recognized signature guarantee program

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EXHIBIT B

FORM OF REQUISITION

Requisition No:

This Requisition is submitted in connection with the Bond Resolution – 2018B (the "Series 2018B Resolution") executed on ______, 2018, by the Board of Visitors of Virginia Commonwealth University (the "University"). The Series 2018B Resolution authorizes the issuance of general revenue pledge bonds of the University (the "Series 2018B Bonds"). The undersigned requests payment of the following obligation or obligations from the "Construction Fund" pursuant to Section 5.1 of the Series 2018B Resolution:

Payee: Address: Amount to be Paid: Paid from the following account and/or subaccount: Purpose (in reasonable detail) for which the obligations(s) to be paid was incurred: The undersigned certifies that:

(i) The obligation stated on the requisition has been incurred to pay the cost of the Project, each item is a proper charge against the Construction Fund and is a cost permitted under the Act and the obligation has not been the basis for a prior requisition which has been paid; and

(ii) At the date of this certificate, no Event of Default has occurred which has not been cured or waived, and no event exists which, with notice or lapse of time or both, would constitute an Event of Default.

Unless otherwise defined, each capitalized term used in this Requisition shall have the meaning given it in the Series 2018B Resolution.

Date: ______

VIRGINIA COMMONWEALTH UNIVERSITY

By:

Title:

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APPENDIX D

PROPOSED FORM OF OPINIONS OF BOND COUNSEL

Set forth below is the proposed form of the opinion of McGuireWoods LLP, Bond Counsel, regarding the Series 2018A Bonds. It is preliminary and subject to change prior to the delivery of the Series 2018A Bonds.

[Letterhead of McGuireWoods LLP]

______, 2018

Virginia Commonwealth University Richmond, Virginia

$______Virginia Commonwealth University General Revenue Pledge Refunding Bonds, Series 2018A (Tax-Exempt)

Ladies and Gentlemen:

We have acted as Bond Counsel in connection with the issuance by Virginia Commonwealth University (the "University") of its $______General Revenue Pledge Refunding Bonds, Series 2018A (Tax-Exempt) (the "Bonds") dated the date of their delivery.

The University issued the Bonds pursuant to (i) Chapter 10, Title 23.1 (the "Restructuring Act") of the Code of Virginia of 1950, as amended (the "Virginia Code"), (ii) a resolution adopted by the Executive Committee of the Board of Visitors of the University on October 8, 2018 (the "Authorizing Resolution"), (iii) the University's management agreement (the "Agreement") which was enacted as Chapter 594 of the 2008 Acts of Assembly, as amended, and (iv) a bond resolution of the University with respect to the Bonds (the "Bond Resolution" and, together with the Authorizing Resolution, the "Resolutions").

We refer you to the Bonds and the Bond Resolution for the definitions of capitalized terms not otherwise defined herein, and for a description of the purposes for which the Bonds are issued and the security therefor.

In connection with this opinion, we have examined (i) the Constitution of Virginia (the "Constitution"), (ii) the applicable laws of (A) the Commonwealth of Virginia (the "Commonwealth"), including without limitation the Restructuring Act and (B) the United States of America, including without limitation the Internal Revenue Code of 1986, as amended (the "Tax Code ") and (iii) copies of proceedings and other documents relating to the issuance and sale of the Bonds by the University as we have deemed necessary to render this opinion.

As to questions of fact material to our opinion, we have relied upon and are assuming the accuracy of certifications and representations of the University, University officers and other public officials and certain other third parties contained in certificates and other documents delivered at closing, including, without limitation, certifications as to the use of proceeds of the Bonds, without undertaking to verify them by independent investigation.

We have assumed that all signatures on documents, certificates and instruments examined by us are genuine, all documents, certificates and instruments submitted to us as originals are authentic, and all documents, certificates and instruments submitted to us as copies conform to the originals. In addition, we have assumed that all documents, certificates and instruments relating to this transaction have been duly authorized, executed, and delivered by all parties to them other than the University, and we have further assumed the due organization, existence, and powers of all parties other than the University.

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Based on the foregoing, in our opinion, under current law:

1. The University is a duly organized and validly existing public body constituted as a governmental instrumentality of the Commonwealth, having the powers and authority, among others, set forth in Chapter 23, Title 23.1 of the Virginia Code, the Restructuring Act and the Agreement.

2. The University has the requisite power and authority (i) to adopt the Authorizing Resolution, (ii) to execute and deliver the Bond Resolution, (iii) to issue the Bonds and (iv) to apply the proceeds from the issuance and sale of the Bonds as set forth in the Resolutions.

3. The University has duly and validly adopted the Authorizing Resolution. The Authorizing Resolution is binding upon the University and is enforceable against the University in accordance with its terms.

4. The University has duly authorized, executed and delivered the Bond Resolution and the Bonds in accordance with the Restructuring Act, the Agreement and the Authorizing Resolution. The Bonds constitute valid and binding limited obligations of the University, payable solely from the revenues pledged under the Bond Resolution (the "Pledged Revenues") and the other property pledged to the payment of the Bonds under the Bond Resolution. Except as provided in the Bond Resolution, the Bonds are not payable from the funds of the University, nor do they constitute a legal or equitable pledge, charge, lien or encumbrance upon any of the properties of the University or upon its income, receipts or revenues. The Bonds do not create or constitute a pledge of the faith and credit of the Commonwealth of Virginia.

5. As permitted by the Restructuring Act and the Agreement, the Bond Resolution validly and legally pledges the Pledged Revenues to the payment of the Bonds. We point out, however, that as provided in the Bond Resolution (i) the University has previously issued and may issue Parity Credit Obligations (as defined in the Bond Resolution) secured by Pledged Revenues on a parity basis with the Bonds and (ii) Pledged Revenues excludes certain revenues previously or subsequently pledged to the payment of Qualifying Senior Obligations (as defined in the Bond Resolution) or necessary to pay operating or other expenses related to facilities or systems financed in whole or in part with Qualifying Senior Obligations.

6. Interest on the Bonds, including any accrued "original issue discount" properly allocable to the owners of the Bonds, (i) is excludable from gross income for purposes of federal income taxation under Section 103 of the Tax Code and (ii) is not a specific item of tax preference for purposes of the federal alternative minimum income tax (a "Specific Tax Preference Item"). The "original issue discount" on any Bond is the excess of its stated redemption price at maturity over the initial offering price to the public at which price a substantial amount of the Bonds of the same series and maturity was sold. We express no opinion regarding other federal tax consequences arising with respect to the Bonds.

In delivering this opinion, we are assuming continuing compliance with the Covenants (as defined below) by the University, so that interest on the Bonds will remain excludable from gross income for federal income tax purposes under Section 103 of the Tax Code. The Tax Code and the regulations promulgated thereunder contain a number of requirements that must be satisfied after the issuance of the Bonds in order for interest on the Bonds to be and remain excludable from gross income for purposes of federal income taxation under Section 103 of the Tax Code and not become a Specific Tax Preference Item. These requirements include, by way of example and not limitation, restrictions on the use, expenditure and investment of the proceeds of the Bonds and the use of the property financed or refinanced by the Bonds, limitations on the source of the payment of and the security for the Bonds, and the obligation to rebate certain excess earnings on the gross proceeds of the Bonds to the United States Treasury. The tax certificate and related documents for the Bonds (the "Tax Certificates") delivered at closing by the University and certain other parties contain covenants (the "Covenants") under which each has agreed to comply with such requirements. A failure to comply with the Covenants could cause interest on the Bonds to become includible in gross income for federal income tax purposes retroactive to their date of issue. In the event of noncompliance with the Covenants, the available enforcement remedies may be limited by applicable provisions of law and, therefore, may not be adequate to prevent interest on the Bonds from becoming includible in gross income for federal income tax purposes.

We have no responsibility to monitor compliance with the Covenants after the date of issue of the Bonds.

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Certain requirements and procedures contained, incorporated or referred to in the Tax Certificates, including the Covenants, may be changed and certain actions may be taken or omitted under the circumstances and subject to the terms and conditions set forth in such document. We express no opinion concerning any effect on the excludability of interest on the Bonds from gross income for federal income tax purposes under Section 103 of the Tax Code of any such subsequent change or action that may be made, taken or omitted upon the advice or approval of counsel other than this firm.

7. The income from the Bonds, including any profit made on their sale or exchange, is exempt from taxation by the Commonwealth of Virginia and any of its political subdivisions.

The obligations of the University under the Bonds and the Bond Resolution are subject to the provisions of applicable bankruptcy, insolvency, reorganization, moratorium and similar laws, now or hereafter in effect, relating to or affecting the enforcement of creditors' rights generally. Such obligations are also subject to usual equitable principles, which may limit the specific enforcement of certain remedies but which do not affect the validity of the obligations. Certain indemnity provisions may be unenforceable pursuant to court decisions invalidating such indemnity agreements on grounds of public policy.

Our services as Bond Counsel to the University have been limited to rendering the foregoing opinion based on our review of such legal proceedings and other documents as we deem necessary to approve the validity of the Bonds and the income tax status of the interest on them. We express no opinion as to the accuracy, completeness or sufficiency of any offering material or information that may have been relied upon by any owner of the Bonds in making a decision to purchase the Bonds, including without limitation the Preliminary Official Statement of the University dated ______, 2018, and the Official Statement of the University dated ______, 2018. This opinion is given as of the date hereof, and we assume no obligation to revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention, or any changes in law that may hereafter occur.

Very truly yours,

[To be signed: MCGUIREWOODS LLP]

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Set forth below is the proposed form of the opinion of McGuireWoods LLP, Bond Counsel, regarding the Series 2018B Bonds. It is preliminary and subject to change prior to the delivery of the Series 2018B Bonds.

[Letterhead of McGuireWoods LLP]

______, 2018

Virginia Commonwealth University Richmond, Virginia

$______Virginia Commonwealth University General Revenue Pledge Refunding Bonds, Series 2018B (Taxable)

Ladies and Gentlemen:

We have acted as Bond Counsel in connection with the issuance by Virginia Commonwealth University (the "University") of its $______General Revenue Pledge Refunding Bonds, Series 2018B (Taxable) (the "Bonds") dated the date of their delivery.

The University issued the Bonds pursuant to (i) Chapter 10, Title 23.1 (the "Restructuring Act") of the Code of Virginia of 1950, as amended (the "Virginia Code"), (ii) a resolution adopted by the Executive Committee of the Board of Visitors of the University on October 8, 2018 (the "Authorizing Resolution"), (iii) the University's management agreement (the "Agreement") which was enacted as Chapter 594 of the 2008 Acts of Assembly, as amended, and (iv) a bond resolution of the University with respect to the Bonds (the "Bond Resolution" and, together with the Authorizing Resolution, the "Resolutions").

We refer you to the Bonds and the Bond Resolution for the definitions of capitalized terms not otherwise defined herein, and for a description of the purposes for which the Bonds are issued and the security therefor.

In connection with this opinion, we have examined (i) the Constitution of Virginia (the "Constitution"), (ii) the applicable laws of (A) the Commonwealth of Virginia (the "Commonwealth"), including without limitation the Restructuring Act and (B) the United States of America, including without limitation the Internal Revenue Code of 1986, as amended (the "Tax Code ") and (iii) copies of proceedings and other documents relating to the issuance and sale of the Bonds by the University as we have deemed necessary to render this opinion.

As to questions of fact material to our opinion, we have relied upon and are assuming the accuracy of certifications and representations of the University, University officers and other public officials and certain other third parties contained in certificates and other documents delivered at closing, including, without limitation, certifications as to the use of proceeds of the Bonds, without undertaking to verify them by independent investigation.

We have assumed that all signatures on documents, certificates and instruments examined by us are genuine, all documents, certificates and instruments submitted to us as originals are authentic, and all documents, certificates and instruments submitted to us as copies conform to the originals. In addition, we have assumed that all documents, certificates and instruments relating to this transaction have been duly authorized, executed, and delivered by all parties to them other than the University, and we have further assumed the due organization, existence, and powers of all parties other than the University.

Based on the foregoing, in our opinion, under current law:

1. The University is a duly organized and validly existing public body constituted as a governmental instrumentality of the Commonwealth, having the powers and authority, among others, set forth in Chapter 23, Title 23.1 of the Virginia Code, the Restructuring Act and the Agreement.

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2. The University has the requisite power and authority (i) to adopt the Authorizing Resolution, (ii) to execute and deliver the Bond Resolution, (iii) to issue the Bonds and (iv) to apply the proceeds from the issuance and sale of the Bonds as set forth in the Resolutions.

3. The University has duly and validly adopted the Authorizing Resolution. The Authorizing Resolution is binding upon the University and is enforceable against the University in accordance with its terms.

4. The University has duly authorized, executed and delivered the Bond Resolution and the Bonds in accordance with the Restructuring Act, the Agreement and the Authorizing Resolution. The Bonds constitute valid and binding limited obligations of the University, payable solely from the revenues pledged under the Bond Resolution (the "Pledged Revenues") and the other property pledged to the payment of the Bonds under the Bond Resolution. Except as provided in the Bond Resolution, the Bonds are not payable from the funds of the University, nor do they constitute a legal or equitable pledge, charge, lien or encumbrance upon any of the properties of the University or upon its income, receipts or revenues. The Bonds do not create or constitute a pledge of the faith and credit of the Commonwealth of Virginia.

5. As permitted by the Restructuring Act and the Agreement, the Bond Resolution validly and legally pledges the Pledged Revenues to the payment of the Bonds. We point out, however, that as provided in the Bond Resolution (i) the University has previously issued and may issue Parity Credit Obligations (as defined in the Bond Resolution) secured by Pledged Revenues on a parity basis with the Bonds and (ii) Pledged Revenues excludes certain revenues previously or subsequently pledged to the payment of Qualifying Senior Obligations (as defined in the Bond Resolution) or necessary to pay operating or other expenses related to facilities or systems financed in whole or in part with Qualifying Senior Obligations.

6. Interest on the Bonds is includible in the gross income of the owners of the Bonds for federal income tax purposes. We express no opinion regarding any other federal tax consequences with respect to the Bonds.

7. The income from the Bonds, including any profit made on their sale or exchange, is exempt from taxation by the Commonwealth of Virginia and any of its political subdivisions.

The obligations of the University under the Bonds and the Bond Resolution are subject to the provisions of applicable bankruptcy, insolvency, reorganization, moratorium and similar laws, now or hereafter in effect, relating to or affecting the enforcement of creditors' rights generally. Such obligations are also subject to usual equitable principles, which may limit the specific enforcement of certain remedies but which do not affect the validity of the obligations. Certain indemnity provisions may be unenforceable pursuant to court decisions invalidating such indemnity agreements on grounds of public policy.

Our services as Bond Counsel to the University have been limited to rendering the foregoing opinion based on our review of such legal proceedings and other documents as we deem necessary to approve the validity of the Bonds and the income tax status of the interest on them. We express no opinion as to the accuracy, completeness or sufficiency of any offering material or information that may have been relied upon by any owner of the Bonds in making a decision to purchase the Bonds, including without limitation the Preliminary Official Statement of the University dated ______, 2018, and the Official Statement of the University dated ______, 2018. This opinion is given as of the date hereof, and we assume no obligation to revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention, or any changes in law that may hereafter occur.

Very truly yours,

[To be signed: MCGUIREWOODS LLP]

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APPENDIX E

FORM OF CONTINUING DISCLOSURE UNDERTAKING

This CONTINUING DISCLOSURE UNDERTAKING dated ______, 2018 (the "Disclosure Undertaking"), is executed and delivered by Virginia Commonwealth University (the "University") in connection with the issuance by the University of its $______General Revenue Pledge Refunding Bonds, Series 2018A (the "Series 2018A Bonds") and its $______General Revenue Pledge Refunding Bonds, Series 2018B (the "Series 2018B Bonds" and together with the Series 2018A Bonds, the "Bonds"). The University hereby covenants and agrees as follows:

Section 1. Purpose. This Disclosure Undertaking is being executed and delivered by the University for the benefit of the holders of the Bonds and in order to assist the purchasers of the Bonds in complying with the provisions of Section (b)(5)(i) of Rule 15c2-12 (the "Rule") promulgated by the Securities and Exchange Commission by providing certain annual financial information and material event notices required by the Rule (collectively, "Continuing Disclosure"). The University acknowledges that it is an "obligated person" within the meaning of the Rule and that it is undertaking primary responsibility for any reports, notices or disclosures that may be required under this Disclosure Undertaking.

Section 2. Definitions. Capitalized terms used in this Disclosure Undertaking shall have the following meanings:

"Annual Disclosure Information" shall mean:

(i) audited financial statements of the University, prepared in accordance with generally accepted accounting principles; and

(ii) the financial and operating data with respect to the University of the type described in the tables and charts in Appendix A to the University's Official Statement dated ______, 2018, with respect to the Bonds (A) in the section captioned "Enrollment" and (B) in the section captioned "Appropriations from the Commonwealth," to the extent such items are not contained in the audited financial statements required by (i) above.

"Fiscal Year" shall mean the twelve-month period beginning on July 1 and ending on June 30 of each year.

"Holder" shall mean, for purposes of this Disclosure Undertaking, any person who is a record owner or beneficial owner of a Bond, from time to time.

"MSRB" means the Municipal Securities Rulemaking Board established in accordance with the provisions of Section 15B(b)(1) of the Securities Exchange Act of 1934, as amended, or any successor thereto or to the functions of the MSRB contemplated by this Disclosure Undertaking. Any information provided to the MSRB under this Disclosure Undertaking shall be transmitted for publication on the MSRB's Electronic Municipal Market Access system (EMMA) or any successor system.

Section 3. Obligations of the University. (a) The University agrees to provide to the MSRB its Annual Disclosure Information with respect to any Fiscal Year when and if available but in no case later than seven months following the end of each Fiscal Year, commencing with the Fiscal Year ended June 30, 2018.

(b) Any Annual Disclosure Information may be included by specific reference to other documents previously provided to the MSRB or filed with the SEC; provided, however, that any final official statement incorporated by reference must be available from the MSRB.

(c) The University shall provide in a timely manner to the MSRB notice specifying any failure of the University to provide the Annual Disclosure Information by the date specified.

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(d) The University shall provide to the MSRB, in a timely manner not in excess of ten business days after the occurrence of the event, notice of any of the following events that may from time to time occur with respect to the Bonds:

(i) principal and interest payment delinquencies;

(ii) non-payment related defaults, if material;

(iii) unscheduled draws on debt service reserves reflecting financial difficulties;

(iv) unscheduled draws on any credit enhancement reflecting financial difficulties;

(v) substitution of credit or liquidity providers, or their failure to perform;

(vi) adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds;

(vii) modifications to rights of Holders, if material;

(viii) bond calls, if material, and tender offers;

(ix) defeasances of all or any portion of the Bonds;

(x) release, substitution, or sale of property securing repayment of the Bonds, if material;

(xi) rating changes;

(xii) bankruptcy, insolvency, receivership or similar event of the University;

for the purposes of the event identified in this Section (3)(d)(xii), the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for the University 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 University, or if such jurisdiction has been assumed by leaving the existing governing 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 University;

(xiii) the consummation of a merger, consolidation, or acquisition involving the University or the sale of all or substantially all of the assets of the University, 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

(xiv) appointment of a successor or additional trustee or the change of name of a trustee, if material;

provided that nothing in this subsection (d) shall require the University to maintain any debt service reserve, credit enhancement or credit or liquidity providers with respect to the Bonds or to pledge any property as security for repayment of the Bonds.

(e) The University shall notify the MSRB of any change in its Fiscal Year not later than the first date on which it first provides any information to the MSRB after such change in Fiscal Year.

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Section 4. Termination. The obligations of the University hereunder will terminate upon the redemption, defeasance (within the meaning of the Rule) or payment in full of all the Bonds.

Section 5. Defaults. (a) If the University fails to comply with any covenant or obligation hereunder any Holder then outstanding may, by notice to the University, proceed to protect and enforce its rights and the rights of the Holders by an action for specific performance of the University's obligations under this Disclosure Undertaking.

(b) Notwithstanding anything herein to the contrary, a default under this Disclosure Undertaking (i) shall not be deemed to constitute an event of default under the Bonds or the resolution providing for the issuance of the Bonds, and (ii) shall not give rise to any right or remedy other than that described in Section 5(a) above.

Section 6. Additional Disclosure. The University may from time to time disclose certain information and data in addition to the Continuing Disclosure. Notwithstanding anything herein to the contrary, the University shall not incur any obligation to continue to provide, or to update, such additional information or data.

Section 7. Identifying Information. All documents provided to the MSRB hereunder shall be accompanied by identifying information as prescribed by the MSRB.

Section 8. Amendment. Notwithstanding any other provision of this Disclosure Undertaking, the University may amend this Disclosure Undertaking, if upon such amendment this Disclosure Undertaking satisfies the requirements of the Rule at the time of amendment. The University shall provide a copy of each amendment to the MSRB in a timely manner, not in excess of ten business days, from the effective date of the amendment.

Section 9. Governing Law. This Disclosure Undertaking shall be construed and enforced in accordance with the laws of the Commonwealth of Virginia.

VIRGINIA COMMONWEALTH UNIVERSITY

By: ______

Its: ______

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APPENDIX F

BOOK-ENTRY ONLY SYSTEM

Upon initial issuance, the Bonds will be available only in book-entry form, and will be available only in Authorized Denominations. DTC will act as securities depository for the Bonds. The 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 bond certificate will be issued for each maturity of the Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC.

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 Exchange Act of 1934, as amended. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has a Standard & Poor's rating of AA+. The DTC Rules applicable to its Direct and Indirect Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com.

Purchases of the Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of the Bonds (a "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 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 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 the Bonds, except in the event that use of the book-entry system for the Bonds is discontinued.

To facilitate subsequent transfers, all 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 the 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 Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such 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.

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 the Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, defaults, and proposed amendments to the Bond Resolution. For example, Beneficial Owners of the Bonds may wish to ascertain that the nominee holding the 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 Registrar and request that copies of notices be provided directly to them.

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Redemption notices shall be sent to DTC. If less than all of the Bonds within a maturity are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed.

Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the 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 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).

Principal and interest payments on the 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 the Paying Agent, on the payable date in accordance with their respective holdings shown on DTC's records. Payments by Direct and Indirect Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Direct and Indirect Participant and not of DTC (or its nominee), the Paying Agent or the University, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the University or the Paying Agent, 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.

DTC may discontinue providing its services as securities depository with respect to the Bonds at any time by giving reasonable notice to the University or the Paying Agent. Under such circumstances, in the event that a successor securities depository is not obtained, the Bond certificates are required to be printed and delivered.

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, the Bond certificates will be printed and delivered.

The information contained herein concerning DTC and DTC's book-entry system has been obtained from sources that the University believes to be reliable, but the University and the Paying Agent take no responsibility for the accuracy thereof.

Neither the University nor the Paying Agent will have any responsibility or obligation to such Direct or Indirect Participants or the persons for whom they act as nominees with respect to the payments to the Direct Participants, the Indirect Participants or Beneficial Owners.

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VIRGINIA COMMONWEALTH UNIVERSITY • General Revenue Pledge Refunding Bonds, Series 2018A (Tax-Exempt) and Series 2018B (Taxable)