Debt Payments
Growth with Debt
Debt payments include principal and interest payments made on outstanding bonds issued by the University. As building construction has taken place across campus, the amount of debt the University incurred to fund these building projects has increased. This debt is repaid from future earnings. Most of the debt has been in revenue bonds, with the source of funds for repayment coming from the students' pockets.
Outstanding Debt
The debt has grown from less than $3 million in FY 98-99 to over $32.5 million in FY 03-04. The additional debt during this period has been incurred for the following:
| Year | Amount | Purpose |
|---|---|---|
| 1999 | $16,205,000 | Living Learning Center, Memorial Union |
| 2001 | $ 8,700,000 | Wellness/Fitness Center, Moore Bowl, KTWU Tower |
| 2001 | $ 2,500,000 | Living Learning Center, Memorial Union |
| 2003 | $ 7,500,000 | Washburn Village |
As of June 30, 2003, no funds had been allocated for the KTWU Tower.
Bond Payments
The annual debt service payments have increased almost $2 million annually in that same time period, from $774,500 in FY99 to debt service payments in FY04 exceeding $2.7 million.
Where is this Money Coming From?
Most of the debt ($25.5 million) has been issued for auxiliary operations, the Living Learning Center, Washburn Village, and Memorial Union food operations. Revenues from these operations are supposed to support the debt.
Auxiliary Operations Not Self-Supporting
In FY04, $2.0 million of the bond payments were attributable to the auxiliary operations, although the administration excludes 45% of the LLC/Union Renovation as attributable to "non-revenue supporting areas." The auxiliary operations provided $1.24 million in funds for bond payments. Even that contribution was subsidized in part by the Educational & General (E&G) Funds, since the auxiliary operations no longer contribute to the University overhead expenses, as they did in the past. That means that housing and food service operations do not pay for the administrative support, such as IT, human resources, and payroll services. It is a shell game, with E&G forgoing revenue so it looks like the auxiliaries have provided the funds necessary to pay their own debts.
3 Mill Burden
The balance of the bond payments, almost $1.5 million, are provided by sales tax revenues and the 3 mill property tax assessment, almost doubling the $0.7 million debt burden that existed in FY99.