A newly signed state law now limits Oregon University System funding toward University land purchases and maintenance projects for the next half-decade.
Senate Bill 19 — sponsored by Oregon Treasurer Ted Wheeler — allows the state to switch to lower-cost bonds by reclassifying existing state borrowing and obtaining lower interest rates.
The Oregon University System’s budget supplied by such bonds has been reduced by $5 million, and thus University spending has been limited to 11 projects, including the Allen Hall remodel, Alumni Center Project and the Power Station’s Waste Gasification Demonstration Project.
The bill, which could save Oregon tens of millions of dollars by refinancing capital improvement costs, was signed into law by Gov. John Kitzhaber on April 12.
“Oregonians are calling on their leaders to make smart money decisions, and this makes common sense,” Wheeler said in a statement. “We will refinance many of our bonds and save taxpayers millions in interest costs.”
The bill does not authorize new borrowing, but it does allow for a cheaper bond-financing option.
The actual amount the state will save is directly connected to the interest rates at the time bonds are sold. In January, those saving would have been $70 million; currently, that figure would be around $25 million, according to a statement from the state treasury’s media contact, James Sinks.
The payment of expenses from bond proceeds and other revenues — including federal funds — collected or received by the Oregon University System were established for a six-year period starting July 1, 2009.
The projects on campus affected by this new piece of legislature are Straub Hall’s deferred maintenance and phase two of the Central Power Station’s upgrades. These are two projects using XI-Q bonds that will be refinanced or restructured.
The newly ratified bill was first introduced to the Oregon Senate on Jan. 12, and is a direct result of the cost-saving Measure 72, which passed in November.
The ballot measure started the discussion about cost-saving reforms and expanded the kind of projects that can be financed with general obligation debt. Previously, prisons and other facilities had to be financed with a more expensive category of debt known as “certificates of participation.”
The state is expected to sell $1 billion in bonds before June 30, which will mark the end of the 2009-11 biennium.
Government units besides OUS affected by the bill include the Oregon Department of Administrative Services and the Oregon State Treasury.
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