Paging Dax, Paging Dr. Dax

[Fake Sugar Dick (WARNING, NOT THE REAL SUGAR DICK!)]

I need an analysis of this covert  by ku:

http://www.bizjournals.com/wichita/morning_call/2016/02/ku-move-on-out-of-state-bond-issue-draws-criticism.html

[The1BigWillie]

 

[sonofdaxjones]

If what KU says is correct they can certainly do what they did.   I'd have to go back and look at the Regents minutes to see if they got approval from the Regents to borrow the money.   

It's absolutely    for KU to say that the students aren't going to have to pay for this debt service.   Granted their Foundation/Donors might, but that's likely not going to be the case in most circumstances.   Clearly if they're building new dorms the people that live in those dorms are paying for the debt service, and I'm pretty confident that KU students will be seeing a number of fee tack ons on their tuition bills over the years. 

While unlikely . . .  if KU were to default on this debt, the bond holders et. al. would seek relief from whom?   The State of Kansas/Board of Regents in all probability.    I'm pretty confident in saying that this debt will count against the overall debt burden held by the State of Kansas and the entities that operate under the umbrella of the state of Kansas.    Possibly impacting the states overall credit rating.   So with that consideration in mind, it is pretty shitty of KU to do what they did without legislative approval. 

On a related note, KU athletics did use both operating revenues and capital giving to get their DOE Equity in Athletics total revenue number.   In their audited financial report, on an operational level, it was not pretty for KU athletics, as they operated well in the red, and it would have been worse if not for forgiven debt and institutional support from Strong Hall.

[sonofdaxjones]

I'm sure KU's move partially stems from the fact that the legislature wouldn't allow KU to have KU Housing take on the debt burden for the new basketball dorm.   KU got all butthurt about that.

[sonofdaxjones]

I wonder if they're going to use part of this debt for the football stadium?   If so, I thought all the big cigars at KU had millions in their couches??

[HerrSonntag]

‘They rushed’
Rep. Mark Hutton, R-Wichita, said he and other lawmakers had raised concerns about the project in recent months. The university issued the bonds in the first week of January, shortly before lawmakers returned for the session.

Give 'em hell, known EMAW and all around great person Representative Hutton.

[sonofdaxjones]

One last thing.   There's only been one project that I know of that has ever been denied by the Legislature, and that's the KU basketball dorms.   KU just handled that extremely poorly.  I'd be embarrassed for K-State if they handled a similar situation with the Legislature in the same way.  Otherwise, the Legislature (and Regents) have approved every debt serviced project at KU and K-State (and others) that I can remember.

It's    to think that there's some sort of conspiracy against KU in the legislature, particularly when the legislature just gave KU (and K-State) millions towards several projects (they should give a lot more, but that's another story for another time).    But we are talking about a constituency and fans at KU who are astonishingly paranoid.   Why wouldn't the legislature ask questions about projects that are going to be funded by a debt offering when the state's overall debt (which includes the debt of all state entities) is taken into consideration by the various rating agencies and related entities. 

[pissclams]

ku isn't going to default on that debt LOL

[sonofdaxjones]

ku isn't going to default on that debt LOL

"While unlikely"

Read it, learn it, live it . . .

[pissclams]

while unlikely... if the sun exploded tomorrow

[sonofdaxjones]

while unlikely... if the sun exploded tomorrow

Nah, it's happened to gov't entities before bro . . . but that sun exploding thing would be fun.

[sonofdaxjones]

As I read more about this, I am reminded at just how woefully uniformed, hyper paranoid and just plain stupid most KU people are about these types of things.

[deputy dawg]

Wow.  Did that freeze out local banks, or will they participate in a construction loan to be paid with the bond offering proceeds?  Not that the ag banks in Lawrentucky would have the sand to carry that kind of loan, even a shared participation loan.  What if they have to seize the collateral?  Can you imagine Wisconsin Public Finance having to seize the KU Student Union, and whatever the hell else is being built with this money?  The buildings will have to generate pretty healthy cash flow to service the bonds, so you bet KU students will be taking it in the shorts in fees, higher prices, etc.  This is actually pretty incredible.

[ChiComCat]

I like how he talks about backroom workarounds and dicking future KU students as innovation and becoming a national leader

Passing legislation to prevent state universities from doing this in the future would be an “awful message to be sending to the national business community that actually is looking at this project as an innovation,” Caboni said. “The way the university has done this has made us a national leader in the relationship between universities and private entities.”

[ednksu]

Dax maybe you'd know, but how can a university set up these shell corporations and be officially connected to the university without regents or state oversight?  This seems like a great way to get loans on cocktail napkins like your Bob Krause.

[pissclams]

Dax maybe you'd know, but how can a university set up these shell corporations and be officially connected to the university without regents or state oversight?  This seems like a great way to get loans on cocktail napkins like your Bob Krause.

the biggest reason why it was allowed is because the state never thought that one of its member institutions would go behind the state's back and procure funding in such a manner.  legislation is already being circulated to prohibit it from happening again.  ad astra.

[sonofdaxjones]

It was good thinking on their part.   But with that said, I'm stunned (and it takes a lot to stun me when it comes to the paranoid idiocy of the Phogistinians and the Slantites) at their conspiracy theories about how the state was out to get KU and thwart KU (I mean, if history is our guide it's historically been KU that's stood against progress if they weren't in some way involved.   For example they had an absolute crap fit about KSU-Olathe behind closed doors in Topeka).   The legislature was "giving" K-State money right and left, the legislature was approving bonding for K-State for projects that I've never heard of, the legislature was not approving all kinds of projects at KU blah, blah, blah.    I've personally seen the legislature stop one project at KU that was proposed and as we've discussed it was because KU athletics wanted KU housing to float the debt for the basketball dorm.

That said, KU housing or someone is still floating the debt for this new "athletic" dorm they want to build.   I'll give Cheyenne Zulu credit.   When it somes to stepping up and signing a lease or having someone else finance a project over at KU for KU athletics, Cheyenne Zulu is first in line.   He's yet to spearhead a capital campaign of any consequence.

 

[sonofdaxjones]

All of this still begs that the usual questions be asked.   Why does a school which supposedly has donors with millions falling out of their pockets consistently need to go borrow money and use taxpayer funds to get projects completed?

The latest greatness is that the "big cigars" are wanting to wait until the Business School is complete before any news comes out about football stadium renovations are discussed publicly.

K-State raised $60 million in private funds for a new business school building while raising $110 million towards athletic facilities.

[ednksu]

Dax can you give us a brief update on debt/donations/bond $/etc between the two universities and some of the projects?  You've always had the best organization on this.  Seems like this 300+mill gets them about equal in terms of dollars going into buildings, but from obviously different sources.

[sonofdaxjones]

I don't know what all KU is going to do.

At K-State there's about $300 to $350 million in construction going on right now.  Ya know, since the state "gave" K-State all that money since we own the legislature and all.

[pissclams]

they've got one foot out the regent's door

[sonofdaxjones]

they've got one foot out the regent's door

Fantastic, more for us.

Hell, K-State currently derives about 17% of it's budget from the state, so we might as well have one foot out the door as well.  The state has not funded the entirety of a new building at K-State in years and years.   The only thing the state has really done for K-State in the past twenty years is kind of fund the maintenance backlog, and floated some bonds to HELP pay for a couple of buildings (they did the same thing for KU).   

Set up our own board and move on with it.

[pissclams]

they aren't leaving, phoganistan just thinks they could/can

[sonofdaxjones]

While I'm not at all questioning KU's ability to manage the debt, there's some pretty  stuff in all of this.

KU just increased it's overall debt burden by 76% with a stroke of the pen.   While I'm certainly no fan of Kansas politicians, particularly many of the Kansas 'pubs and I can't stand Brownie (and never have liked the weirdo).   It's positively    for anyone to think it's some sort of vast conspiracy for legislators to be asking some questions of any entity operating under the umbrella of the state that want to increase their debt burden by 76% seemingly overnight and to the tune of hundreds of millions of dollars.   KU will now have an overall debt burn of nearly $800 million and since no state funds can be used to retire the debt that wasn't issued through the KDFA, it's positively within the legislators purview to ask how they plan on paying the money back and to ask about tuition increases. 

It's also  to read the KU officials talk around, over and through the tuition increases.   While the actual tuition may not increase because of the new debt, the mandatory fee schedules which are laughably not considered tuition are already being increased.   Apparently the plan is to really start sticking it to international students and possibly non-resident BiG KU as the safety school rejects.

Props again to Cheyenne "lease first ask questions later" Zulu for finding yet another backdoor for KU athletics to finance something in light of KU athletics $10 million dollar operating deficit in FY 2015. 

[meow meow]

this just isn't the same without beems