University debt irks lawmakers
Senators seek to create a state authority to oversee bond projects.
By JAMES SALZER
The Atlanta Journal-Constitution
Published on: 03/08/05
Public college foundations have run up almost $1.4 billion in debt in recent years to finance housing, technology, parking and other campus facilities, without the knowledge of many Georgia legislators.
So state senators are considering legislation to create a Georgia Education Authority to oversee the revenue bond projects, which are fully or partly repaid with student or user fees, housing payments and other means. University officials worry that Senate Bill 250 could lead to delays and limits on how much schools could spend on badly needed buildings.
They also argue it is being pushed by a bond underwriter hoping to make big money off refinancing the debt and handling university revenue bonds in the future. The business could be worth millions to underwriters.
"The Legislature will eventually do this. If they wait until next year, it [the debt] will get to $2 billion," said Dan Lee, a former Senate floor leader for Gov. Sonny Perdue who lobbies for Goldman Sachs, which wants the underwriting business. "The state better get a hold of this debt."
Sen. Tommie Williams (R-Lyons), a co-sponsor of the bill, said, "It's not that they are bad projects. But there is no state oversight."
Colleges began using this method of borrowing in the mid-1990s as enrollment grew and lawmakers, despite a booming economy, could not keep up with all the money needed to build the projects schools wanted.
School foundations arrange for bonds to be issued through local development authorities. The idea is to pay off those bonds using revenue raised by the use of the facilities. The projects are approved by the University System of Georgia Board of Regents, which governs public colleges.
The projects are often too expensive to be approved by lawmakers during their annual three-month session. For instance, the Fulton County Development Authority issued $184 million worth of bonds for Georgia Tech's Technology Square project in 2002. That's more than Perdue has proposed for all University System bond projects for 2006. The Technology Square bonds are being repaid with revenue from the bookstores and parking decks, rent from businesses at the complex and private contributions, said Bob Harty, the school's communications director.
New buildings approved by lawmakers are typically $10 million to $30 million and are funded by selling bonds repaid with state tax revenue.
Several colleges used the foundation bond money to build housing, giving more students the chance to live on campus. From the fall of 1994 to last fall, enrollment in system colleges grew from 204,000 to 250,000.
Linda Daniels, vice chancellor for facilities at the Board of Regents, said the projects were approved in open meetings by the board. Officials didn't develop the funding strategy to circumvent the General Assembly, she said.
"If the state of Georgia had the [financial] capacity, we have no problem working with legislators," she said. "It's a real stretch to think it's a way to get around legislators."
Sen. Bill Hamrick (R-Carrollton), Senate Higher Education Committee chairman in 2003-2004, said he knew college foundations were using revenue bonds to fund projects, and he doesn't think it's a bad idea since tax money available for construction is limited.
Rep. Bill Hembree (R-Douglasville), House Higher Education Committee chairman, said he didn't know about the borrowing. "That kind of concerns me," he said.
Sens. Dan Weber (R-Dunwoody) and Williams are pushing the bill, which has passed the Senate Finance Committee. Essentially, the authority, which would include members appointed by the governor and legislative leaders, would replace the Board of Regents as the final word on the projects.
Weber said the schools could save $40 million by refinancing the projects because the state has the highest bond rating and could get the lowest interest rates.
University System lobbyists worry that a state authority would cap the amount of bonds, which in turn could delay projects. Harty said schools would have to wait years to get state funding for their projects. Using revenue bonds have sped up the process.
"Technology Square would have taken a decade," Harty said. "It allows you to utilize the strength of the private sector to do things."
...................................................................
Bunch of fawking crooks the whole lot of them.
Unbelieveable how they allow this to happen.
Guarantee alot of lined pockets in this mess
and politics. Its disgracefull.
Senators seek to create a state authority to oversee bond projects.
By JAMES SALZER
The Atlanta Journal-Constitution
Published on: 03/08/05
Public college foundations have run up almost $1.4 billion in debt in recent years to finance housing, technology, parking and other campus facilities, without the knowledge of many Georgia legislators.
So state senators are considering legislation to create a Georgia Education Authority to oversee the revenue bond projects, which are fully or partly repaid with student or user fees, housing payments and other means. University officials worry that Senate Bill 250 could lead to delays and limits on how much schools could spend on badly needed buildings.
They also argue it is being pushed by a bond underwriter hoping to make big money off refinancing the debt and handling university revenue bonds in the future. The business could be worth millions to underwriters.
"The Legislature will eventually do this. If they wait until next year, it [the debt] will get to $2 billion," said Dan Lee, a former Senate floor leader for Gov. Sonny Perdue who lobbies for Goldman Sachs, which wants the underwriting business. "The state better get a hold of this debt."
Sen. Tommie Williams (R-Lyons), a co-sponsor of the bill, said, "It's not that they are bad projects. But there is no state oversight."
Colleges began using this method of borrowing in the mid-1990s as enrollment grew and lawmakers, despite a booming economy, could not keep up with all the money needed to build the projects schools wanted.
School foundations arrange for bonds to be issued through local development authorities. The idea is to pay off those bonds using revenue raised by the use of the facilities. The projects are approved by the University System of Georgia Board of Regents, which governs public colleges.
The projects are often too expensive to be approved by lawmakers during their annual three-month session. For instance, the Fulton County Development Authority issued $184 million worth of bonds for Georgia Tech's Technology Square project in 2002. That's more than Perdue has proposed for all University System bond projects for 2006. The Technology Square bonds are being repaid with revenue from the bookstores and parking decks, rent from businesses at the complex and private contributions, said Bob Harty, the school's communications director.
New buildings approved by lawmakers are typically $10 million to $30 million and are funded by selling bonds repaid with state tax revenue.
Several colleges used the foundation bond money to build housing, giving more students the chance to live on campus. From the fall of 1994 to last fall, enrollment in system colleges grew from 204,000 to 250,000.
Linda Daniels, vice chancellor for facilities at the Board of Regents, said the projects were approved in open meetings by the board. Officials didn't develop the funding strategy to circumvent the General Assembly, she said.
"If the state of Georgia had the [financial] capacity, we have no problem working with legislators," she said. "It's a real stretch to think it's a way to get around legislators."
Sen. Bill Hamrick (R-Carrollton), Senate Higher Education Committee chairman in 2003-2004, said he knew college foundations were using revenue bonds to fund projects, and he doesn't think it's a bad idea since tax money available for construction is limited.
Rep. Bill Hembree (R-Douglasville), House Higher Education Committee chairman, said he didn't know about the borrowing. "That kind of concerns me," he said.
Sens. Dan Weber (R-Dunwoody) and Williams are pushing the bill, which has passed the Senate Finance Committee. Essentially, the authority, which would include members appointed by the governor and legislative leaders, would replace the Board of Regents as the final word on the projects.
Weber said the schools could save $40 million by refinancing the projects because the state has the highest bond rating and could get the lowest interest rates.
University System lobbyists worry that a state authority would cap the amount of bonds, which in turn could delay projects. Harty said schools would have to wait years to get state funding for their projects. Using revenue bonds have sped up the process.
"Technology Square would have taken a decade," Harty said. "It allows you to utilize the strength of the private sector to do things."
...................................................................
Bunch of fawking crooks the whole lot of them.
Unbelieveable how they allow this to happen.
Guarantee alot of lined pockets in this mess
and politics. Its disgracefull.
