Cash Management - Debt Issuance and Monitoring

The Treasurer's Office oversees the issuance of all university debt. This includes:

• Debt Policy
• Capital Project Notes
• System Facilities Revenue Bonds
• Internal Borrowing Procedures
• Internal Loan Form

University of Missouri Financial Information

• 2008 Health System Audited Financials
• 2009 Health System Audited Financials
• 2008 System Facilities Revenue Bond Fund audited financials
• 2009 System Facilities Revenue Bond Fund audited financials
• 2008 University of Missouri audited financials
• 2009 University of Missouri audited financials
• System Facilities 2009A Offering Memorandum
• System Facilities 2009B Official Statement
• 2009-2010 Capital Project Notes

Capital Project Notes

• Short-term annual borrowing to finance various capital projects including small construction projects, furniture, fixtures, equipment and library books
• Notes are sold in mid-June and settle on the first business day in July
• Mature on the last business day of June

System Facilities Revenue Bonds 

In November 1993, the university consolidated its outstanding debt used for construction facilities and buying equipment for operations. The primary purposes of consolidation were to lower costs and to increase borrowing flexibility. The university decreased borrowing costs by: (1) strengthening long-term credit rating and achieving lower interest costs than issuing under separate enterprise; (2) spreading the fixed issuance costs across larger bond issues; and (3) reducing the fixed costs by simplifying the debt structure. Borrowing flexibility was accomplished by: (1) simplified marketing involving a single borrowing entity; (2) enhanced debt-capacity on a systemwide basis; and (3) increased current and future flexibility.

• Tax-exempt revenue bonds to finance facilities for auxiliary enterprises including residence halls, student centers, recreation centers and parking garages.
• Rated Aa1 by Moody's and AA by Standard & Poor's
• The bonds bear interest at fixed and variable rates ranging from 2.0% to 5.25% and mature at various dates through November 2039.

Internal Borrowing Procedures

From time to time, the university has leased equipment with an option to purchase, rather than purchasing the equipment outright. In general, these financing transactions carry interest rates in excess of the university’s cost of borrowing. Real estate purchases have also sometimes been financed with a third party. These transactions, too, can usually be financed cheaper by the university. In 1993, the university issued bonds to consolidate most of its outstanding debt. With the new consolidated debt structure, the university has a ready vehicle for financing such transactions at tax-exempt rates.

A Capital Pool has been established to manage the consolidated debt structure. To the extent there are balances in the Capital Pool, they may be used to finance borrowings within the university.

Since new bond issues will probably not be more than once per year, the following internal borrowing procedures will be available to finance purchases during the year. The internal loans may later be incorporated into debt borrowings.

Policy

Loans will be made under the following terms:

• Amount borrowed will not exceed the cost of the equipment or real estate.
• Minimum loan - $5,000; no maximum.
• Period of time will not exceed the useful life of the property or equipment being acquired.
• Amounts over $50,000, or financed longer than three years, must have special written justification.
• Interest will be charged at a rate determined annually, based upon market conditions. A rate will be established prior to the beginning of each fiscal year.
• Loans over $500,000 will require a chancellor’s approval. Such borrowings also may require review by the University of Missouri Board of Curators. The interest rate will be set based on current market conditions and, if eventually financed externally, will bear the actual interest rate of the external financing.
• All loans must be payable from either General Operating or Designated Funds. Level monthly payments will be charged against the appropriate account by mechanical entry in the accounting system.

 Procedures

For loans under $50,000, and no longer than three years, the following procedures apply:

• The campus will determine the appropriateness of the purchase and the need for financing in the normal manner. If financing is deemed necessary, the Treasurer’s Office at (573) 882-2968, will provide information on loan terms and estimated payments and will give preliminary approval for the loan.
• At the time the purchase order or contract is completed, a loan application form (copy attached) should be completed and sent to the Treasurer’s Office at 118 University Hall, Columbia, MO 65211. Fax: (573) 882-6595.
• The approved loan application form will be returned to the Purchasing Department.
• When the voucher is received and approved, a copy should be sent to the Treasurer’s Office at 118 University Hall, Columbia, MO 65211. Fax: (573) 882-6595.
• Funds will be transferred to the account from which the property is to be purchased.
• Monthly payments will commence as indicated on the loan application form.

For consideration of loans in excess of $50,000, or for a term longer than three years, the following procedures apply:

• A financial justification and plan for repayment must be provided.
• If the proposed loan exceeds $500,000 and/or five years in length, a complete financing plan and justification must be provided; the chancellor must approve the loan application. The aystem's Facilities Financial Advisory Committee will advise on the ability to finance the loan from the Capital Pool; system administration will determine the ability to finance such loans from external funds.