Oklahoma Gov. Brad Henry has signed a bill that authorizes the restructuring of a 2006 bond issue providing matching funds for endowed chairs at state colleges and universities. The state had planned to issue another $100 million in 2009, but debt service on the new bonds was not appropriated by the Legislature.
Treasurer Scott Meacham said the measure, HB 3031, would restructure $34.6 million of the bonds issued in 2006 by extending the term by another five years. That would allow the money appropriated for debt service on the 2006 bonds to also be used for additional bonds.
“The same money that’s going to support the old debt service is going to pay off these new bonds also,” he said. “We came up with a way to make a significant new investment in higher education in one of the toughest times in our economy without costing the taxpayers money.”
The taxable bonds will provide $6 million to match private donations for endowed chairs at 21 state schools and branches, with the remaining $94 million split evenly between Oklahoma State University and the University of Oklahoma.
Meacham expects the bonds to be sold this summer by the Oklahoma Capital Improvement Authority.
“The problem was the debt service wasn’t funded,” he said. “Obviously you don’t want to sell bonds unless you can pay them back.”
An analysis by legislative budget experts said extending the term of 2006 bonds to 20 years from 15 and issuing the $100 million of new bonds would result in annual debt service of $12.2 million.
The outstanding endowed chair bonds are rated Aa3 by Moody’s Investors Service.