Lexington, KY – Last week a large chunk of the Kentucky General Assembly “crowded the winner’s circle” as Gov. Steve Beshear, Senate President Robert Stivers and House Speaker Greg Stumbo announced a bi-partisan agreement that amounts to allowing state universities to spend their own money.
Legislative leadership from both chambers and both sides of the aisle packed the governor’s press room to announce they’d agreed to pass legislation for $363.3 million in projects at the University of Kentucky, Morehead State, Murray State, Northern Kentucky, the University of Louisville and Western Kentucky.
“They want to build or substantially renovate facilities to meet the growing needs of their expanding campuses,” Beshear said at the press conference. “And they want to pay for that construction themselves, as in, they don’t want a dime from the general fund, music to all of our ears. All they need from statute is our formal approval.”
That begs a question.
If these universities, with accredited financial officers and large budgets of their own to manage have identified revenue streams that will allow them to finance the construction of a dormitory, the renovation of a health center or student activities center or even the addition of luxury accommodations to Commonwealth Stadium, why do they need to ask more than half of the legislature and the governor to sign off on it?
“I have been generally for the idea of giving the universities more flexibility in the agency bond area,” Beshear said when asked by a Business Lexington reporter. “Obviously the state does need to make sure the universities have the capacity to pay off the bonds, because if they don’t, guess who stands in line to pick up the tab? It’s the Commonwealth of Kentucky. So I think there has to be some sort of oversight or review to make sure that revenue flow is there.”
That’s a fair point, to an extent. For a university to bring a bond to market, it must clear a series of hurdles, all of which would block the issuance of bonds if the revenue stream they were predicated on appeared dubious.
Wall Street has excelled at eroding public confidence in the last decade, but rating agencies don’t need to know that a majority of a state’s legislature has signed off on the capital work and money being spent by universities.
In fact, in most states, this type of “formal approval” isn’t required. But Kentucky seems doomed to its fiefdoms. If the president of the University of Kentucky has identified a way to have the school’s athletic department fund 65 percent of the cost of a $100 million science building, why then does he need to go kiss the ring of legislators for final approval?
Is it for a reason of higher purpose than taking credit for the work of these presidents?
We hope so, but we doubt it.
Beshear isn’t closed to the idea of extending this right to the schools, with a few caveats. But don’t look for the change to be made any time soon.
“That’s been an issue that’s been debated over here for some time and I’m sure will be debated for some time to come. We’ll see if that issue comes up during the short session. We’ve got plenty to deal with without that, I think,” the governor said.
“That’ll be on the radar screen for sometime to come and we’ll continue to take a look at it,” he added.
Governor, it’s time to allow it. These university presidents shouldn’t be forced to make pilgrimages to Frankfort, hats in hand, to wait for the 138 members of the General Assembly, politicians all, to determine the value of advancing education in our Commonwealth.
Here’s the list of projects included in the governor’s announcement:
Morehead State University
o Mignon Hall (residence hall) renovation, $9.2 million
Murray State University
o Hester College dormitory renovation, $9.9 million
o College Courts housing sprinkler system upgrade, $590,000
o Capitol renewal projects (assorted facility improvements), $4.9 million
Northern Kentucky University
o Residence hall acquisition and renovation, $12 million
o Albright Health Center renovation, $45 million
University of Kentucky
o Gatton College of Business and Economics renovation, $40 million (plus $25 million in cash raised by UK through private philanthropy)
o Commonwealth Stadium renovation, $110 million
o Academic Science Building construction, $100 million ($65 million of which will be supported by athletics revenue)
University of Louisville
o Student Activities Center renovation, $9.6 million
Western Kentucky University
o Honors College and International Center construction, $22 million
Governor Beshear speaks in a press conference flanked by university presidents and a large contingent of legislators.