Louisiana OKs Bonds For Technical College Projects

DALLAS – Twenty-nine technical and vocational training projects at two-year colleges in Louisiana will be funded with $251.6 million of state bonds that won final legislative approval Friday.

The Senate concurred, 27-4, on Friday with House amendments to Senate Bill 204 after the proposal was adopted Thursday by the House with 87 in favor and 11 opposed. The Senate approved the original measure in early May on a 30-to-6 vote.

The bonds designated for projects of the Louisiana Community and Technical College System will not count against the state constitutional cap on annual tax-supported debt service, which cannot exceed 6% of state general fund revenues.

Lawmakers can stipulate by a two-thirds vote that new bonds not be considered part of the net state tax-supported debt to avoid that 6% cap. SB 204 passed both legislative chambers with sufficient margins and will not be part of the calculation for the constitutional limit.

The bonds will be supported by annual appropriations by the Legislature. Debt service on the $251.6 million of bonds will begin in fiscal 2016 at $20 million a year, the Legislative Fiscal Office estimated in its analysis of the amended bill.

No projects can be funded with the bond proceeds until fiscal 2016. Projects must have private matches totaling 12% of total costs before state funds will be released.

The bill lists the specific projects and their estimated costs, but the measure provides for a 15% increase in funding if construction costs exceed expectations.

State Treasurer John N. Kennedy opposed the college bond bill at legislative hearings, and said he was disappointed that the measure was adopted.

Bond rating agencies will regard the bonds as state tax-supported debt, Kennedy said Friday, and it will lead to higher borrowing costs for the state.

"I love our community college system, but I hate busting our debt limit,” Kennedy said. “We're doing here what we criticize Washington, D.C., for doing every day, and it greatly concerns me."

The state’s capital outlay system is cumbersome and not designed to meet urgent needs on a timely basis, said Joe May, president of the community and technical college system.

“Some projects have been on the capital outlay list for decades,” May said. “There is no way in the process to identify and proceed with priority projects needed to meet urgent workforce and economic development needs.”

The community college system expects to sell approximately $80 million of the bonds in 2015, with sales of roughly the same size in 2016 and 2017 to close out the authorization, May said.

The bonds can be issued by the Louisiana Local Government Environmental Facilities and Community Development Authority or the Louisiana Public Facilities Authority.

Gov. Bobby Jindal supported the community college bond proposal, which funds work at the college system outside of the state’s capital outlay program.

Jindal said Louisiana has invested more than $700 million in higher education infrastructure since 2008, including $225 million of bonds for an earlier phase of LCTCS projects.

“These schools are a critical pipeline for workforce needs, and we are proud to fund them however we can,” Jindal said Friday.

Debt service payable on Louisiana’s net state tax-supported debt for fiscal 2012 was $540.6 million, or 5.45% of the estimated general fund and dedicated fund revenue expected in the official forecast by the Revenue Estimating Conference.

Debt service in fiscal 2014 is estimated at $554 million, almost 5.5% of the $10.1 billion of expected revenues, leaving little capacity for additional debt.

For reprint and licensing requests for this article, click here.
Higher education bonds Louisiana
MORE FROM BOND BUYER