Herald-Leader Editorial

Legislature should trust colleges to spend own funds

new projects will not be financed by taxpayers

January 13, 2013 

Now hear this: The University of Kentucky's upcoming building blitz won't take money from public schools, state police or taxpayers.

It's understandable, though, that some people are upset and confused about who will pay to renovate Commonwealth Stadium.

After all, the big news last week was that Gov. Steve Beshear, House Speaker Greg Stumbo, Senate President Robert Stivers and a bunch of lawmakers had lined up behind $363 million in construction at UK and five other campuses, including the stadium upgrade.

You might expect a state bond issue and appropriation to accompany such an announcement. But that's not the case; the universities are financing and paying for these projects themselves with money they generate from students, fans and other sources.

The reason they even need gubernatorial and legislative approval is that Kentucky, more than most states, restricts the ability of public universities to independently issue bonds and even spend their own cash for buildings, maintenance and equipment.

This tight rein hobbles higher education's ability to carry out strategic plans and can be costly. UK's hospital project, for example, cost more because UK was required to issue bonds over several years. Interest rates rose, and financing fees had to be paid more than once.

We've long advocated more flexibility for Kentucky's public universities to finance construction. Legislation to that effect has cleared the House but never the Senate.

Giving the universities this one-time green light to issue debt, as the legislature should do, is a step in the right direction and a chance for universities to prove they can be trusted with their own money.

So, who will retire the debt for building a new chemistry-physics building at UK and renovating and expanding the business college?

Students will pay through their tuition. UK is also courting private donors and grants.

And, in an impressive display of unity, the athletics program will kick in two-thirds, or $65 million, toward the new $100 million chemistry-physics building.

UK also plans a $110 million renovation of its football stadium. The addition of more private suites and club seats will generate additional revenue as ticket sales and other football profits pay off the debt.

The three projects will require annual payments of $15 million, easily manageable in UK's $2.7 billion budget. Athletics will provide $10.5 million of the $15 million a year.

The need for the two academic buildings is indisputable and well established.

UK business dean David Blackwell said his college now lacks the physical capacity to meet student demand. He predicts a renovated building with added space will enable the college to grow from around 2,500 undergraduate majors to 4,000, attracting new students to UK and generating new tuition revenue.

In a perfect world, Kentucky taxpayers would pay to educate Kentucky's young scientists and 70,000 people would turn out for a lecture on quantum physics. In the real world of eroding state support for higher education, leveraging sports mania for education is a deft move.

Hats off to UK President Eli Capilouto for installing an academic funnel on the Southeastern Conference's money-making machine.

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