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Lawmakers question university reserves

Rep. Darrell Bolz, R-Caldwell, House Appropriations vice-chairman, questioned BSU President Bob Kustra about the university’s unrestricted net assets, just as he questioned University of Idaho President Duane Nellis about that a day earlier. “How much of that money could be used today to help us with this very difficult financial situation?” Bolz asked. Kustra noted that much is a debt service reserve - essentially the bond payments BSU must pay for new buildings, much of which is coming from a facility fee BSU imposed on students several years ago to allow buildings to be constructed to serve the growing student population. He noted that bond rating firms want to see reserves. “You’re saying find a way to get those reserves down, they’re saying find a way to get those reserves up,” Kustra said. “That’s how they’re evaluating our financial capabilities into the future.”

Senate Finance Chairman Dean Cameron, R-Rupert, said, “It’s not as if we’re wanting you to spend those reserves, except in times of difficulty such as we have now.” It’s difficult for lawmakers, he said, to hear how falling state appropriations are impacting class offerings and tuition “at the same time we see reserves growing - that’s a little bit contradictory. Obviously in good times you, like us, should be setting money aside in reserves.” But now, he said, “We would appreciate an open dialogue with you and other university presidents” on the topic.

Stacy Pearson, BSU’s vice president for finance and administration, noted that accounting rules classify as unrestricted net assets anything that’s not a legal reserve held by an external entity. But of BSU’s $91.6 million in unrestricted net assets as of June 30, 2009, $20.5 million was the debt service reserve; $30 million was departmental fund balances, a figure that’s decreasing as the university spends reserves to meet operating needs; and $36 million was capital projects. Just $4.58 million was unreserved funds. BSU has since dipped into its reserves to cover the 6 percent holdback ordered in September.


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Betsy Z. Russell covers Idaho news from The Spokesman-Review's bureau in Boise.

Named best state-based political blog in Idaho for 2013 by The Fix

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