The UC system is expected to sell more than $2 billion in bonds later this month to help increase cash flow and provide itself with better operational stability.
In an effort to restructure its debt, the university received approval to sell General Revenue Bonds, which the university typically uses to borrow money for general expenses like education and research.
Between 1993 and 2013, the State Public Works Board of the State of California issued many series of lease-revenue bonds, according to a UC bond statement.
The lease-revenue bonds were originally used to fund capital projects, academic space, research facilities and seismic corrections at the University of California, said UC spokesperson Dianne Klein. Now, the university plans to refund all lease-revenue bonds issued through the SPWB, which are about $2.4 billion in total, she said.
The sale of General Revenue Bonds is planned to take place the week of Sept. 23 and be completed by Oct. 2, Klein said, and the restructuring of the debt should free up about $80 million per year for the next 10 fiscal years.
“The goal of the restructuring is to be as close to present-value neutral as possible,” Klein said.
In the past, the UC system has refinanced bonds in order to lower debt costs. In 2012, the refinancing and refunding of previously outstanding debt resulted in savings of $20.5 million, according to the university’s annual financial report from 2011-12. In 2011, the university saved $19.1 million from the refinancing and refunding of debt.
The savings from selling the bonds will be used to pay down the university’s existing unfunded pension liabilities and create greater operational stability, Klein said.
Mitchell Handler covers higher education. Contact him at [email protected] and follow him on Twitter @mitchellhandler.