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      Frankfort to explain to the State Controller and to other members
      of the Department of Finance how it would save the University
      and State a large sum of money if we would not deliver the bonds
      at once but encumber construction contracts against state alloca-
      tion and anticipated federal funds. I secured the approval of the
      federal government and at length secured the approval of the State
      Controller.

           The contracts were executed and encumbered against the
      state funds of $500, 000 which the State Property and Buildings Com-
      mission allocated for this project and anticipated proceeds from the
      sale of the bond issue. We spent the first $500, 000 before we de-
      livered any of the revenue bonds to the purchaser. In January I
      delivered $400, 000 of these bonds to the government. We still hold
      $1, 000, 000 of the bonds which have been authorized and executed.
      In this manner we permit the interest to accrue to the University
      and not to the federal government. I propose to continue to delay
      delivery of bonds to the federal government until such a time as we
      need another sum of money to pay monthly estimates for work
      completed by the contractors.

           Through delayed delivery of bonds, which is being done with the
      approval of the President and the Executive Committee, the Universi-
      ty will save, during construction of the dormitory, in excess of
      $43, 000. 00.

           There is another way we could farther save on interest if you
      and the Board approved.  We will need another $400, 000 or $500, 000
      in about May and perhaps the balance of the bond issue in about De-
      cember. In this manner we would be paying interest on $500, 000
      for May and June when we would only need perhaps $100, 000 for May
      and June commitments.  The same process would apply from month
      to month. We can borrow short-term money from the bank against
      the federal commitment in blocks of $100, 000 and save another $5, 000
      to $7, 000 in interest during the remaining period of construction of
      the boys' dormitory.

           I thought you might desire to report to the Executive Committee
      our method of financing the dormitory, the savings thus effected,
      and let them approve or disapprove the short-term financing herein
      suggested.

                                             Very truly yours,

                                  (Signed)  Frank D. Peterson
                                             Comptroller.


      The Comptroller further explained how interim borrowing for financing
payment of construction might save an additional amount in interest during the
construction period of the new Men' s Residence Hall. It was brought out that
short-term money could probably be borrowed for la% to 2%, whereas the
long-term coupon bonds purchased by the Federal Government bear an
interest rate of 3. 01%6 per annum.  It was further explained that the