- Associated Press - Tuesday, February 2, 2016

LAWRENCE, Kan. (AP) - Kansas lawmakers are criticizing an arrangement in which the University of Kansas borrowed hundreds of millions in out-of-state bonds to build facilities without the approval of the state Legislature.

The university used Wisconsin-based Public Finance Authority to issue nearly $327 million in bonds last month. Another $56 million was collected from premiums that investors paid for the bonds.

The Kansas Development Finance Authority typically handles Kansas bond issues.

The university also set up a private corporation in October to serve as the debtor so it wouldn’t have to seek legislative permission. The nonprofit, KU Campus Development Corporation, is led by university chancellor Bernadette Gray-Little and other high-level administrators.

University officials say they followed the law in these actions.

Tim Caboni, the university’s vice chancellor for public affairs, said that structuring the bonds this way “protects the state from liability for that debt.”

House Speaker and Republican Rep. Ray Merrick criticized the arrangement as avoiding legislative oversight and public view.

Lawmakers have also expressed concern that the students will be forced to pay off debt through tuition increases. University officials say that’s unfounded.

The Wichita Eagle reports (https://bit.ly/1KnQKzU ) that House Republicans are drafting legislation to prevent state universities from making similar arrangements in the future.

The money will finance the construction of buildings on the Lawrence campus, including a science building, dormitory and student union.

The corporation will have to pay back the bonds over 30 years at a 3.76 percent interest rate. It will get that money from the university, which will lease the newly constructed buildings from the corporation for nearly $22 million a year.


Information from: The Wichita (Kan.) Eagle, https://www.kansas.com

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