University of Massachusetts officials last week unanimously approved a $2.56 billion, five-year capital plan that includes $1.45 billion of borrowing to support infrastructure improvements throughout the system's five campuses.
The new capital spending plan is larger than the $1.7 billion of infrastructure funding that the university spent in total over the past eight years. The increase is due in part to more state-level funding.
While state revenues helped support 16% of the previous $1.7 billion capital plan, the new $2.56 billion capital budget includes nearly $800 million of state revenues, accounting for 31% of the overall plan, according to a UMass press release.
The roughly $800 million of state support will come, in part, from two bond bills. Earlier this year, Massachusetts Gov. Deval Patrick signed into law a $2 billion higher education bond bill and a $1 billion life sciences bond measure, both of which will help finance capital projects throughout the UMass system.
"By ushering these two critical bills into law, the governor and the legislature make two things very clear - how important state-of-the-art facilities are to UMass and the critical role that the university plays in fueling and shaping the state's innovation economy," UMass president Jack M. Wilson said in a press release.
Along with the $1.45 billion of UMass borrowing and the $800 million of state support, the capital plan will tap into about $214 million of operating funds and $97.5 million of private and federal revenues.
Steve Dansby, chief financial officer at the University of Massachusetts Building Authority, the system's bond issuer, said he anticipates the agency's next sale to take place in the late spring or summer. That transaction could reach $200 million, depending on which projects get prioritized. The authority last sold $120.5 million of revenue bonds on June 25 with Lehman Brothers as book-runner.
"We're looking forward to a fairly aggressive next five years worth of improving the infrastructure of the university and taking care of some of the deferred maintenance issues," Dansby said. "And it's going to be enough to keep everybody busy, assuming the market doesn't crater on us and our bonds keep trading."
UMass has campuses in Amherst, Boston, Dartmouth, Lowell, and Worcester. Major infrastructure developments include a $333 million science building and a $115 million advanced education and clinical practice center at the Worcester campus and also a $152 million integrated sciences complex and a $100 million new academic building at the system's Boston campus.
Amherst will gain a $100 million laboratory science building and a $53.3 million student recreation center while Dartmouth improvements include $75 million of student housing renovations and a $20 million marine sciences building. The Lowell campus will gain a $90 million emerging technologies center and a new $40 million academic building. Other projects include renovations and capital maintenance upgrades throughout the five campuses.
Standard & Poor's and Fitch Ratings both rate the university's $1.36 billion of outstanding debt A-plus.
Fitch analyst Doug Kilcommons said that UMass has a solid history of "prudently" implementing large-scale multi-year capital budgets, yet said the system's high debt level is reflected in the single-A rating, which falls below the double-A rating that most state-wide public institutions carry.
"They've historically always had, for a public university, a fairly high debt load," Kilcommons said. "So that's one of their reasons that their rating at A-plus is somewhat below what you'd typically would find for a state public university flagship school."