Governor Steve Beshear, joined by a bipartisan group of legislative leaders and state university presidents, today announced a plan to approve the issuance of bonds by Kentucky's public universities for campus improvements supported by university revenues.
These agency bonds will be issued by the individual universities over the coming months, and will allow the schools to fund critical renovation or construction projects at no cost to Kentucky taxpayers.
Gov. Beshear and the lawmakers plan to authorize $363.3 million in agency bonds, which will have an estimated economic impact of nearly $623 million and support 5,110 jobs. A bill will be filed soon to authorize the bonds.
"Agency bonds will meet the growing needs of our universities with no impact on the General Fund, as they will be paid for through existing revenue streams such as student fees and athletic revenues," said Gov. Beshear. "I appreciate the universities' continued good stewardship during these tough economic times. At a time when we are pushing our students to pursue higher education, it's imperative that they have adequate classrooms, housing and facilities, and the issuance of these bonds will accelerate those projects to meet those needs quickly."
General Fund support for the universities has been cut 15 percent over the last three biennial budgets. Universities need the authority to utilize other revenues to maximize student opportunities, including needed facilities that may be built or improved without general fund revenues from the state. The bonds were proposed in the last legislative session but were not authorized. No new fees are proposed to support the bonds.
"I appreciate the universities through donations and internal funds doing their part to develop better academic facilities, and especially applaud UK athletics for stepping up and funding the science center. The concept has been well-received by the Senate Majority Caucus," said Senate President Robert Stivers.
"I'm in favor of using these agency bonds to do these projects, and I'm particularly impressed at the way UK President Capilouto is using athletic revenues to help build an academic facility," said House Speaker Greg Stumbo.
Kentucky's eight university presidents are united in support of the plan, noting that accelerating these long-delayed projects will save money in construction costs and avoid additional cost burdens for students. Each school enjoys strong bond ratings, and the schools will be able to guarantee the bonds through existing revenue streams at a reasonable cost.
"The Council on Postsecondary Education and Kentucky's public universities are very grateful for the support of the Governor and legislative leaders for these projects," said Council on Postsecondary Education President Bob King. "We also appreciate the confidence this action expresses in the judgment and leadership our campus presidents demonstrate in meeting the needs of our students, faculty and staff."
The proposal includes eleven construction projects at six institutions that are ready to be financed and will move forward as soon as authorization is given by the General Assembly. Several projects will address outdated or inadequate student housing; others will improve existing classroom spaces. University presidents said these projects will provide a safer experience for students and faculty, improve campus quality of life, and avoid additional cost burdens for students.
"These 11 projects represent critical needs across our campuses," said WKU President Gary A. Ransdell. "All 11 have dedicated revenue streams that we generate at the universities, and all projects are shovel-ready, meaning they will be underway in the current biennium. The ability to make progress on these projects now is critical for higher education, and we are grateful for the leadership and support of Governor Beshear and House and Senate leaders who have all worked together to make this possible."
The University of Kentucky plans to issue bonds for three separate projects, and will utilize athletic revenues to help pay for construction of an academic building, which is a first for a Kentucky university. Athletics will fund $65 million of a $100 million, 263,000 square foot Academic Science Building, where the currently Donovan Residence Hall sits. The current Chemistry-Physics Building is the second most used facility on campus, but is not equipped with modern or technology-rich classroom and laboratory space. Private fund-raising efforts also will be utilized.
"In offering support for us to self-finance facilities that will help dramatically improve and transform our campuses, Gov. Beshear and our legislative leaders are voicing their faith in Kentucky's future," said UK President Eli Capilouto. "For the University of Kentucky, authorization to self-finance three facilities on our campus will improve our ability to educate tomorrow's leaders today. It will expand our capacity to conduct research that broadens scientific understanding, creates new scholarship, and extends and enhances life. It will strengthen the service we render on behalf of a Commonwealth and world that needs us to lead."
Each of these projects is already in some form of planning by the universities, and some have initiated design work. Construction for most projects will begin this calendar year.
"I am pleased and thankful that the Governor and legislative leaders support this initiative," said Morehead State University President Wayne Andrews. "It will enable Morehead State University to continue to update residence halls for our students at no cost to the taxpayers of Kentucky."
The projects to be supported by agency bonds include:
Morehead State University
Mignon Hall (residence hall) renovation, $9.2 million
Murray State University
Hester College dormitory renovation, $9.9 million
College Courts housing sprinkler system upgrade, $590,000
Capitol renewal projects (assorted facility improvements), $4.9 million
Northern Kentucky University
Residence hall acquisition and renovation, $12 million
Albright Health Center renovation, $45 million
University of Kentucky
Gatton College of Business and Economics renovation, $40 million (plus $25 million in cash raised by UK through private philanthropy)
Commonwealth Stadium renovation, $110 million
oAcademic Science Building construction, $100 million ($65 million of which will be supported by athletics revenue)
University of Louisville
Student Activities Center renovation, $9.6 million
*Western Kentucky University
Honors College and International Center construction, $22 million