DALLAS - The University of North Texas is preparing to return to the muni market with a $380 million bond issue after resolving a back-payment issue with the state, a UNT official said.
After making a $4.7 million payment to the Texas comptroller in February, UNT believes it has satisfied requirements raised by a state audit, according to a disclosure notice filed on the Municipal Securities Rulemaking Board's EMMA Web site.
The state audit report in September 2014 said UNT owed the state $75.6 million for improper reimbursement of UNT benefits dating back to 2012. However, the general appropriations bill approved by the 2015 Legislature prescribed a new process that reduced UNT's obligation.
"At the conclusion of this review, it was determined that no excess benefits were received in fiscal years 2013 and 2014, and that UNT received $4.7 million in excess state benefits in fiscal year 2012," according to the
After a series of reports, UNT System Board of Regents received a clean audit from Grant Thornton on May 21, the disclosure said. The Regents received the audit on July 31.
That clears the way for UNT to return to the bond market, according to Janet Waldron, UNT's recently named vice chancellor for finance.
"We expect to take a proposal to board next month," Waldron said. "We could be in the market in late October."
The deal is expected to provide long-term financing to take out commercial paper, Waldron said.
Moody's Investors Service shifted its outlook on UNT's Aa2 rating to negative on Sept. 29, 2014 after the audit report but noted that resolution of the issue through the Legislature would affect that. Fitch Ratings also placed a negative outlook on its AA rating. Analysts have, so far, not updated that opinion.
"Fitch's concern regarding the system's financial profile is compounded by management's recent discovery of certain internal administrative errors which may have resulted in UNT-Denton being historically overfunded by the State of Texas for employee benefits and could lead the state to seek reimbursement for previously expended funds," Fitch analysts noted.
Waldron, who was previously senior vice president for administration and finance at the University of Maine, joined the UNT System as vice chancellor for finance in April 2014. After the audit, a special task force created by the regents reported its recommendations to the board.
"Throughout the meetings of this Task Force, it was clear that the System did not have enough senior finance and accounting staff with sophisticated, high-level skills and training," the report said. "Staff with entry-level skills were, in some cases, promoted beyond their capabilities without sufficient training or policy guidance, and different finance offices did not communicate well internally."
In addition to resolving the back-payment issue, the state Legislature authorized nearly $3 billion of tuition revenue bonds for universities and colleges across the state, including about $270 million for the UNT System.
The TRBs were the first to receive legislative approval in nearly a decade. UNT plans to use the authority for $56 million of renovations for its new law school in downtown Dallas, $70 million for construction on the home campus in Denton, $63 million for the UNT Dallas campus, and $80 million for the UNT Health Science Center in Fort Worth.
