UNM has a balance of almost $438 million in bonds, which it uses to pay for University improvements, and the administration depends on student fees to repay some of these bonds.
Associate Vice President of Planning, Budget and Analysis Andrew Cullen said facilities fees, which make up almost half of $1,158 in fees per student per year, pay for construction on campus and students don’t have an official say in how those fees are spent.
He said the money students pay in facilities fees can be used as debt service to repay bonds.
Cullen said the University uses this money because there is no other way for them to earn the money.
“Student fees paid for the renovation of Mitchell Hall because there’s no individual identified revenue stream associated with you (students) attending class at Mitchell Hall, other than you’re a student here at UNM and you pay tuition and you pay fees,” he said.
UNM’s bond balance includes a proposed $35.2 million bond package for 2012. The Fall 2012 bonds package will include funds to renovate Clark Hall at $16 million, the biology building at $3 million and an upgrade to the Taos branch’s infrastructure at $3 million, among others.
The almost $438 million amount is for bonds issued from 1992 until 2012.
Cullen said multi-million dollar projects, such as campus infrastructure renovations, are funded by bonds, including the renovations made to Hodgin Hall and Logan Hall in 2007. He said bonds are similar to loans and are issued to the University through either the state or system revenue bonds.
“Big bond traders would go out and look at our bonds and buy our bonds,” he said. “They say we’re going to essentially fund you, so here’s the money and then you’re going to promise to pay us each year principal and interest over 30 years.”
He said there are different types of bonds, such as severance tax bonds, which are funded through natural gas and oil revenues, and general obligation bonds, which are funded through taxpayer money.*
He said every bond is funded differently.
According to the University and communication reports on University bonds, a $123.2 million bond package in 2007 included the renovation of Mitchell Hall, The Pit, Hodgin Hall and Logan Hall, as well as classroom modernization, building parking structures and football stadium improvements such as luxury boxes.
In 2005, a $125 million bond package funded projects such as compact shelving in Zimmerman Library and the renovation of the Communication and Journalism building.
*UPDATE: It has come to our attention this article needed clarification. Student fees are not used to pay back severance tax bonds or general obligation bonds. Student fees are used to pay back only revenue bonds.