U of L saves $90 million by restructuring debt

By on June 1, 2016
The Louisville Cardinal News

By Kyeland Jackson —

U of L saved $90 million recently by restructuring its debt.

The university’s current debt is around $251 million. Revenue from Jim Patterson Stadium, the Home of the Innocents and the Health Sciences Campus parking garage is used to pay it down. Chief Financial Officer Harlan Sands reported U of L’s renegotiation cut interest rates in half to two percent. The previous rate was four percent.

“After reviewing our debt profile and our existing payment structure, we made (the) decision to take advantage of lower interest rates and refinance a significant amount of our existing debt,” Sands told The Cardinal in an email. “All sources of payment for our debt service is fully planned for and budgeted in our annual university budget plan.”

The debt was sold at a lower interest rate to Wells Fargo, NA. However, U of L must meet a $30 million debt payment during fiscal year 2017, an increase of $12.2 million from the current fiscal year. U of L’s new debt service schedule runs until 2036. If the debt is not fully paid by then Sands said it could be extended or renegotiated.

Debt savings come at an opportune time as U of L prepares for a nine percent cut in state funding next year. Because of litigation around Governor Matt Bevin’s ability to cut higher education funds, the university did not receive two percent of its annual allotment from the state this fiscal year. The budget anticipates the nine percent cut ordered by Bevin next fiscal year will reduce state allocations by $12.5 million.

U of L may fund a majority of those cuts from the students, as it proposes to draw $12 million from a five percent tuition rate increase. The increase, part of a budget scenario, has not been finalized by the board of trustees.

If the budget scenario passes, in-state undergraduates would pay an extra $527 yearly. Out-of-state tuition would rise $1,242. Full-time graduate students would pay $583 in-state and $1,213 out-of-state. President James Ramsey has proposed a program to refund $400 yearly to students taking more than 30 credit hours a year. The program would need approval from the board of trustees.

The board of trustees meets June 2 for a budget workshop. Next year’s budget will be discussed before it’s possibly finalized in the meeting.

 

About Kyeland Jackson

Editor-in-Chief at The Louisville Cardinal.

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