If higher-ed institutions don’t address fundamental challenges, their long-term debt may not be worth much more than these Confederate bearer bonds.
by James A. Bacon
Governor Ralph Northam has unveiled a higher-education refinancing plan that will allow Virginia’s public colleges and universities to reschedule more than $300 million in debt over the next two years.
The Commonwealth of Virginia would refinance bonds issued by the Treasury Board of Virginia and the Virginia College Building Authority. Under the Governor’s plan, which requires General Assembly cooperation, institutions would make no principal payments on their VCBA bonds through fiscal year 2023; the restructuring would extend institutions’ payment plans for two years beyond their current schedule for both types of bonds.
“The COVID-19 pandemic continues to have tremendous impacts on higher education, including the fiscal health of our colleges and universities,” said Governor Northam in a press release. “Families all over the country are taking advantage of record low interest rates to refinance their home mortgages, and we want our public institutions to benefit as well. Refinancing will free up millions of dollars in savings allowing our colleges and universities to make critical investments, meet the needs of Virginia students, and continue offering a world-class education.”
The headline of the Governor’s press release indicated that Virginia institutions would “save” more than $300 million over the next two years. That nomenclature was repeated in leads and/or headlines appearing in the Richmond Times-Dispatch, Roanoke Times, and Washington Post. The initiative will do no such thing. The vast majority of “savings” would come from deferring payments on $300 million, which still will would have to be repaid. Continue reading →
