F. Funding Approval
Once the project has been approved by BOT, it is ready for funding. Depending on the source of funding proposed for the project, additional approvals may be needed. Below is a brief description of the types of funds available for academic projects.
F1. Fund Types:
Systemwide Revenue Bonds – Academic Program (SRB-AP)
In November 2014, the CSU Board of Trustees approved revisions to the CSU Policy for Financing Activities in order to implement capital financing authorities granted by state statute in June 2014 (Education Code Section 89770).
The authority permits the CSU to pledge its annual general fund support appropriation and any other revenues to secure CSU debt issued pursuant to the State University Revenue Bond Act of 1947 (Bond Act). Under this provision, CSU can use the existing Systemwide Revenue Bond (SRB) program in support of all forms of capital improvements and to refinance State Public Works Board bond debt. The prioritization of campus projects eligible for financing under the new authorities will remain a centrally managed function of the CSU Office of the Chancellor, which will evaluate campus needs and provide recommendations to the Board of Trustees on project priorities.
CSU Reserves (Pay-As-You-Go, or PAYGO)
The authority also allows for the use of cash on hand, whether from appropriated funds from the Budget Act, interest earnings, or other sources.
Designated Campus Reserves
Similar to CSU Reserves, a campus may use its local operating fund reserves, current year tuition fees, interest earnings, and donor funds, to support academic projects. Funds to construct improvements or new facilities are considered capital improvement funds, or Campus-I. Funds to replace or renew existing facilities are considered non-recurring Maintenance and Repair, or Campus-M.
General Obligation Bonds
General Obligation (GO) bonds are a form of long-term borrowing in which the state issues municipal securities and pledges its full faith and credit to their repayment. Bonds are repaid over many years through semi-annual debt service payments. The California Constitution requires that GO bonds be approved by a majority vote of the public and sets repayment of GO debt before all other obligations of the state except those for the public school system and public institutions of higher education.
State Public Works Board Lease Revenue Bonds
The State Public Works Board (PWB) is authorized to issue lease-revenue bonds to finance acquisition and construction projects when such projects are authorized by the Legislature. In a typical project, the department leases the site for a nominal fee to the PWB, although for some projects the PWB may acquire the site directly. The department then constructs the project as PWB’s agent. The PWB leases the completed facility back to the department for a rental fee equal to the amount needed to provide for the debt service on the revenue bonds and associated administrative expenses. Leases can be for periods up to 35 years, although 15 to 25 years is typical. The lease term cannot exceed the useful life of the capital asset.
References:
Forms/Templates: N/A