The Southeast Missouri State University Board of Regents on Friday set in motion a plan to borrow $58.2 million for a massive campuswide maintenance and renovation plan.
How to pay for the project remains in question, although the answer in part could be through higher student fees.
The board unanimously approved a recommendation by Southeast president Dr. Ken Dobbins to pursue sale of general education bonds for a $58.25 million project, which would include a $22.78 million upgrade of the campus' century-old Academic Hall and a nearly $18 million renovation of Magill Hall, the university's science building. The proposal also calls for nearly $10 million in deferred maintenance projects and nearly $7 million in power plant upgrades.
An ad hoc committee had recommended a $56.73 million plan, which put off some deferred maintenance programs but would have offered a fully funded borrowing plan. The president's recommendation leaves the university about $60,000 short in annual debt service payments over the life of the 30-year bonds, according to Kathy Mangels, vice president for finance and administration.
With interest rates at historic lows and what regents describe as the urgent need of the renovation and maintenance work, board member Jim Limbaugh said the university needs to "load up."
"Long-term debt financed at 3.5 percent, I don't think that's going to happen in our lifetime," Limbaugh said, asking, "What's the cost of inaction?"
Southeast's showpiece Academic Hall is showing its age, university administrators say. The building, which houses administration offices, has its original plumbing, windows, roof and landmark dome. Dobbins calls the building a "crisis ready to happen." The 50-year-old Magill Hall is unequipped to handle the needs of 21st-century science classes and is in need of remediation of all hazardous materials in the building.
Deferred maintenance is where the ad hoc committee and the president differ. The committee recommended $6.12 million to take care of "Priority 1" projects, while Dobbins included another $3.52 million for "Priority 2" projects.
"We're so far behind the eight ball on deferred maintenance we've got to do it," Limbaugh said after the board viewed a consultant's presentation showing jury-rigged drainage systems, slipping transformers and moldy heating and ventilation systems around campus.
But to fill the funding gap the university may have to raise general student fees by $5 per credit hour. Faced with uncertainty on tuition costs and other financial constraints, Southeast student government is raising concerns about the fee structure.
"I think there is going to need to be a major [public relations] campaign if the fees are going to be accepted widely" among students, said Ben Hooe, a Southeast senior and member of the ad hoc committee. Hooe also is vice president of the university's student government.
Right now, Southeast students pay $184.80 per credit hour in incremental fees. They pay another $23.70 per credit hour in general fees, $3 of which is devoted to campus maintenance. That fee already is expected to climb $3 next year.
Mangels told the board that debt service payments also would come from projected savings at the campus' power plant, pegged at about $150,000 per year, and from freed up dollars currently paying off an earlier maintenance bond, expected to be paid in full by 2012.
The plan also relies on as much as $3 million from gifts. That funding stream could be problematic, too, Limbaugh said.
"In this crummy economy, reliance on that makes the situation more dicey," he said.
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