So is your degree:
"After building boom, UMass $3 billion in debt; Tab could hinder future growth, but trustees are undaunted" by Laura Krantz, Globe Staff March 22, 2015
From a gleaming science center in Boston to an honors college in Amherst, the University of Massachusetts has enjoyed an unprecedented building boom over the past decade, with new classrooms and dorms and long-delayed infrastructure improvements across its five campuses.
But all that spending has also left UMass with $3 billion of debt.
And that cloud could present a challenge as it seeks to continue the growth that in recent years helped bolster enrollment and raise the university’s profile from an affordable “safety” school for many students to a more expensive, desirable, and highly competitive one.
While the university’s financial health remains sound overall, it has nearly maxed out its ability to borrow, and its debt is far outpacing revenues. Financial documents also show that the university is so highly leveraged that as it continues to borrow, it is pushing big payments farther into the future to be able to afford current ones.
Don't worry. State will bail them out.
UMass, with revenue totaling around $2.9 billion, this year owes $203 million in debt and interest, up from $137 million five years ago. In 2020, the annual debt service payment will be $222 million, the university projects. The borrowing comes as part of a capital plan that extends through fiscal year 2019.
Almost $20 million a month (for you kids who can't do the math).
“The pace of debt increase has far surpassed the pace of asset growth,” said Kimberly Tuby, an analyst at Moody’s Investors Service who specializes in higher education in Massachusetts.
Instead of borrowing more, UMass officials say they are looking for creative ways to continue to expand, including by entering into public-private partnerships for new buildings without using taxpayer dollars.
It's looking more and more like a failed Wall Street firm full of fraud, isn't it?
“We all understood that we were taking on a considerable amount of debt in order to build new buildings, repair old buildings, and essentially modernize,” said UMass trustees chairman Victor Woolridge. “It’s a balance, there’s no question about it.”
Neglected maintenance is perhaps a bigger priority for the system than new buildings. More than half of UMass buildings were built between 1960 and 1985, and as they turn 50, repairs can’t be ignored much longer.
Trustees say they do not want to jeopardize the healthy credit rating enjoyed by the UMass Building Authority, which oversees projects and issues bonds on the university’s behalf. But now is not the time to stop investing, they say.
Moody's and other credit rating agencies last month gave UMass solid ratings, but it pointed out several red flags that suggest the school could be in trouble down the road if it does not successfully raise enough money to pay off the new debt.
Remember that the next time tuition and fees are hiked while services are cut. That and the oversized paychecks handed out down there. Never mind the whole $y$tem being predicated on unsustainable debt.
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The school plans to close next week on $300 million in bonds to pay for new projects and $192 million to refinance old debt. UMass will not begin to make principal payments on the $300 million until 2025, and until then will pay about $150 million in interest.
It will also use $50 million of that borrowing to refund short-term borrowing, financial statements show.
The rest of that money will pay for projects including a new pool at UMass Boston and a new sports training facility at UMass Amherst, as well as maintenance at academic buildings and utilities at Lowell, Amherst, and Boston, according to bond documents.
The recent construction boom has transformed the system.
Neon lights twinkle atop a science center at the water’s edge at UMass Boston that opened in January. Sunlight pours into the airy new student center at UMass Lowell. In Amherst, a new honors college is nestled at the heart of the campus. Perhaps more important, the system has made less visible but vital improvements to existing facilities that have long been neglected.
Much of the borrowing is necessary because the state has not helped maintain UMass, university officials said, adding that in the future, the state should do more.
What?
“A large part of the debt that the university has assumed is really what the Commonwealth should have been investing,” said Christine Wilda, senior vice president for administration and finance and treasurer at UMass....
I was told investment in higher education would the lasting legacy of the Patrick regime. WTF?!!
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UPDATES:
"The 10 richest universities, led by Harvard with its astounding endowment, hold more than a third of the total wealth in all of higher education, according to a study released Thursday by Moody’s Investors Service that examines growing wealth inequality in higher education.
Why should education be any different in AmeriKa?
Analysts studied the richest 20 public and richest 20 private schools, based on total cash and investments as of fiscal year 2014. Harvard tops the list, with $42.8 billion. The richest institutions, which also include MIT, Yale, and Dartmouth, have grown even richer in the years after the economic collapse at a pace that far outstrips that of less-wealthy schools, some of which are struggling to stay open, according to the study. Chancellor Keith Motley of the University of Massachusetts Boston is part of a state system looking increasingly to private support. Although he appreciates that the state has bolstered UMass funding in recent years, it does not come close to keeping the school competitive, he said. “We’re seeking private financial support in ways that my predecessors . . . would have never dreamed they would have to,” Motley said."
Not really a public university then, is it, and I was told the state had failed to invest? WTF?
"Unions for UMass workers file complaint over promised raises" by Laura Krantz Globe Staff April 10, 2015
Hey, they heave a building boom and debt to service first.
Seven unions representing UMass employees have filed complaints with the state alleging unfair labor practices by the university, saying it refuses to pay negotiated raises that were supposed to start last summer.
Labor negotiations now mean nothing; however, CEO and administrative contracts are ironclad. When will you guys learn?
The unions represent more than 5,700 faculty members, administrative staff, and maintenance workers at the Boston, Amherst, and Lowell campuses. They filed the complaints Wednesday with the state Department of Labor Relations.
UMass President Robert Caret has told the unions that the university would like to pay the raises, but that the Legislature did not allocate enough money to afford them. The combined cost of the raises is $13.1 million this fiscal year, which started June 30, 2014.
How many hundreds of thousands did he make before scooting off for a better deal?
In a new development, Caret sent a letter Wednesday to the Massachusetts Teachers Association, which oversees the seven unions, saying the university could pay the raises starting May 3 because it recently received a small additional amount of money. The contracts, however, took effect in July 2014, and the union complaints are demanding that workers receive all retroactive pay.
MTA President Barbara Madeloni called Caret’s offer to pay only two months of raises as the fiscal year winds down “disrespectful.’’
“President Caret needs to . . . do the right thing and fully implement the contracts,” Madeloni said in a statement.
The wage dispute hinges over whether, as Caret asserts, the Legislature should have appropriated extra money to pay the raises, or whether UMass should pay them from its existing budget, as the unions contend.
Caret's letter says the contracts are not valid absent additional money to pay them. His offer to pay starting in May comes after the Legislature last month appropriated $2.2 million toward the raises, but not the additional $10.9 UMass says it needs.
“It’s not enough,” Christine Wilda, UMass senior vice president for administration and finance and treasurer, said Thursday. “We needed $13.1 million. But we’re very pleased to finally have some recognition that the university does in fact need this separate, identifiable fund.”
The dispute has straddled a change in governors. Both Deval Patrick and Charlie Baker’s finance officials have said UMass does not need additional money to pay for the raises, a departure from how the process for funding contractual raises has worked in the past.
I was told the one thing Patrick did right amongst all the failures was higher education.
The state Department of Labor Relations will review the complaints and decide whether to investigate. One of the complaints, from the professors’ union at UMass Lowell, was filed in March, and an investigation is scheduled for June, the MTA said.
Unions at UMass Dartmouth, represented by the American Federation of Teachers, are still negotiating, according to an AFT spokesman.
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Also see:
"Three University of Massachusetts Amherst students were rescued on a New Hampshire mountain Tuesday night after one of them got hypothermia during a hiking trip, officials said."
Who cares about them?
