Bismarck Tribune - North Dakota News - NDSU's debt more than doubles

NDSU's debt more than doubles

Nov 17, 2008 - 04:05:20 CST

FARGO (AP) - North Dakota State University's debt has more than doubled in the past five years, but officials say its bond rating and ability to pay off debt remain strong.

Financial figures show NDSU has $117.8 million in debt, compared with $51.4 million in 2003.

John Adams, NDSU's vice president for finance and administration, said a growing enrollment means more revenue and the ability to absorb more debt.

"As your financial picture expands, then your capacity to handle more debt expands as well," Adams said.

NDSU has had a major bonding project each year since 2004 for residence halls, its Memorial Union expansion or a fitness center addition. The projects were financed with 30-year revenue bonds, which are paid back using student fees and other revenue generated by the buildings.

NDSU will ask the Legislature this spring for permission to borrow another $20 million to build campus apartments to ease a housing shortage. A consultant's report says a $14 million parking ramp also is being discussed.

If the Legislature approves, state Board of Higher Education members will review the request more closely to look at bonding limitations, said Laura Glatt, the state university system's vice chancellor for administrative affairs.

"Obviously, NDSU is in a pretty good financial situation with growing enrollment, and they obviously have to solve their housing problem," Glatt said.

Adams said NDSU officials work closely with their financial adviser and Moody's Investor Services to determine how much borrowing is appropriate. The key factor is the university's ability to handle the debt, he said.

NDSU spent 2.3 percent of its operating budget on interest payments in fiscal year 2007, and the school seeks to keep that ratio under 5 percent, he said.

"The ratio has come down a little bit over the years as we've added debt, but it's still within tolerable limits," Adams said.

Moody's has assigned an A1 bond rating to NDSU, meaning upper-medium grade.

The most recent report from Moody's says NDSU's financial strengths are its enrollment growth, expected growth in state funding and an increase of resources during the past decade. The report says NDSU's growing debt as is financial challenge.

Other challenges are endowment assets that remain modest relative to the university's ambitions and a projected 23 percent decline in high school graduates through 2017.

The most recent financial review by the North Dakota University System said NDSU should carefully evaluate the impact of additional debt.

Similar advice was given to the University of North Dakota, which had $105 million of debt as of June 30. UND spent nearly 2.5 percent of its operating budget on interest payments in fiscal year 2007.

Valley City State University and Mayville State University spent slightly more of their operating budgets on debt that year, the financial reports said.

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Comments

wow wrote on Nov 17, 2008 6:06 PM:

" azhrei: Yes we may demand higher quality teachers but at what price. over 150 thousand dollars a year- I don't think so. Yet alone the chancellor might be making 300 to 400 thousand if not more a year. As for the comment on using our skills or mine which is a associate of art degree, some of us not earning over 30 thousand a year, yet I have to deal with everyone in the state listening to their little problems/complaints. Where is my pay. I deal with a whole lot more people then they do. This whole country is based on greed. Look at the problem we are having with the GM/Ford on down the line. Hourly wage at $73 per hour. Look where this is taking us. Bail them out. The people on Wall street (Greed). Lets not stop there, Lets look at Congress on some on the Congressmen what they have done. Greed has got us where we are today. "

Und fan wrote on Nov 17, 2008 2:50 PM:

" I may be mistaken, but doen't a portion of athletic revenue get thrown back into the schools general fund? Thus in most "healthy" schools athletics is paying for itself as well as piece of the academic side?

As for donors, in D1 schools I believe a majority contribute to the school based upon the tie to the sports teams which have created a strong loyalty to the school for alumni.... "

athletics wrote on Nov 17, 2008 12:23 PM:

" gerry: you need to know a little bit about how athletics works at NDSU and colleges in general. The athletic department has their own budget that is independent of the school's. They raise money through tickets, private donations, the Team Makers booster club, and coincidentally, those non-conference away games.

Since you'd be in charge of operations, I'm assuming you know that all of that debt that has been added for new buildings and student housing was financed through long term ventures with bonds that are backed by student fees, private donations, and a portion of tuition. You'd also know that that making this school a great institution doesn't happen overnight and they won't pay off those debt obligations through cost savings from an independent athletic department. "

azhrei wrote on Nov 17, 2008 12:10 PM:

" Wow,

The absolute stupidity of some people is shining brilliantly once again. To all those that believe instructors are overpaid...I would love to see you put your overpowering skills of education to the test. ND has some of the lowest paid instructors in the US, but yet, people still complain about paying them money. If everyone knew exactly what teachers have to put up with....you would be amazed and probably ashamed right along with it. Not only does the public DEMAND high quality instruction, they also expect teachers to be disciplinarians, accountants, moral judges and baby sitters. If parents helped out and did their part, the workload placed on these underpaid, underappreciated individuals would be greatly reduced, and they would not leave for other states that pay better. "

xx wrote on Nov 17, 2008 11:30 AM:

" quit building and paying these top teachers 100's of thousands of dollars. I don't feel sorry for them "

C3PO wrote on Nov 17, 2008 10:24 AM:

" Let's bail them out!!! I have a couple extra dollars this week, but next week I won't. "

JC wrote on Nov 17, 2008 10:23 AM:

" Why don't they try doing like private colleges, use your resources, alumni. Most private colleges rely soley on alumni for new buildings and projects. With the alumni base that UND and NDSU have, why are they borrowing so much money? Something needs to change. "

gerry wrote on Nov 17, 2008 7:18 AM:

" quit paying the top executives so much, and quit traveling so much with the sports,, you will cut the debt in 2 years, i should take over operations,, i would do it for 40,000 per year and make this school a great institution "

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