LOS ANGELES — The Trustees of California State University will price $1.2 billion in revenue bonds next week for projects as the system grapples with 23% enrollment growth over the past four years.
The enrollment growth has been largely in-state with 94% of Cal State's students coming from within its borders, said Robert Eaton, Cal State's assistant vice chancellor.
The majority of the projects planned at several of the statewide system's 23 campuses have self-supporting revenue streams including student housing, parking and student union buildings, Eaton said.
The bond proceeds will go towards modernization and growth-driven projects like new student housing, student union buildings and academic buildings in areas like science, technology, math and engineering.
A retail order period is planned Tuesday for the $890 million tax-exempt Series A. Institutional sales for both Series A and $322 million Series B will follow Wednesday.
Series A incorporates a $116.8 million refunding component and Series B $9.6 million.
Cal State will also price a Series C $47 million taxable revenue bond refunding in a separate sale on Feb. 23. The preliminary official statement for those bonds will post Feb. 14.
Goldman Sachs & Co. and JPMorgan are lead managers in the 20-member syndicate. Orrick, Herrington & Sutcliffe is bond and disclosure counsel. KNN Public Finance is financial advisor.
The university system has $5.2 billion in outstanding long-term debt.
Moody's affirmed an Aa2 rating for the new bonds ahead of the sale, with a stable outlook. S&P Global Ratings currently assigns its AA-minus rating; it hasn't yet posted a rating for the upcoming bonds.
Cal State Chancellor Timothy White proposed a tuition increase of roughly 5% in September, but it will not go before the trustees for a vote until March to give students the opportunity to weigh in. California Gov. Jerry Brown approved $157 million for Cal State in his budget, which is less than half of the $344 million Trustees requested, but Eaton said the governor's budget was not the trigger for the tuition hike.
"There hasn't been a tuition increase in a number of years," Eaton said. "We look at the overall needs. Though the university system isn't receiving what it requested, state funding has grown the past several years, but we have enrollment needs, we want to improve the graduation rates and we have a need for capital renewal."
The state has two main funding sources to fund those expenses, Eaton said: the money it receives from the state and tuition.
He said the university turns away roughly 30,000 qualified applicants annually, because they don't have room.
The regents for the other statewide university system – the University of California – voted in mid-January to end its six-year freeze on tuition and approve a 2.5% increase.