RD374 - Estimated Impact of New 9(d) Debt on Student Fees and Financial Aid Need - 2008-10 Biennium


Executive Summary:
Chapter 781, 2009 Virginia Acts of Assembly requires that the State Council of Higher Education receive Financial Feasibility Studies from public institutions of higher education for each capital outlay request submitted for the 2008-10 Biennium whose funding consists in whole, or in part, of debt authorized under Article X, Section 9 (d), of the Constitution of Virginia.

This provision is set forth in § 4-4.01.j.2:

By August 15 of each year, institutions shall also prepare and submit copies of financial feasibility studies to the State Council of Higher Education for Virginia for 9(d) obligations where debt service is expected to be paid from project revenues or revenues of the institution. The State Council of Higher Education shall identify the impact of all projects requested by the institutions of higher education, and as described in § 4-4.01 j.1. of this act, on the current and projected cost to students in institutions of higher education and the impact of the project on the institution's need for student financial assistance. The State Council of Higher Education for Virginia shall report such information to the Secretary of Finance and the Chairmen of the House Appropriations and Senate Finance Committees no later than October 1 of each year.

In accordance with this provision, SCHEV has reviewed financial feasibility studies related to twenty-six projects requested by six senior institutions and one community college for the 2008-10 Biennium. The results are presented in Table 1.

A variety of funding sources have been identified by the institutions as providing the incremental revenues required to support the debt service and operating costs associated with these projects. The three primary sources are: 1) increases in required student fees, 2) user fees associated the project, and 3) other institutional fees such as indirect cost recoveries and/or gifts. This report provides a summary table which displays the requesting institution, the name of the project, the amount of debt requested and the major revenue source for debt service and operating costs. Further, it also displays the current level of required fees at the respective institution, the estimated dollar increase in those fees necessary to support the project, if any, and the percent increase this represents. Finally, the table displays the estimated impact of the fee increases on the institutions’ overall financial aid need as calculated using SCHEV’s financial aid guidelines.

Among the twenty-six project requests, totaling $227,140,840, eleven are financed, in whole or in part, by student fee increases. Consistent with our previous reports, we hope you find the information contained herein a valuable tool to assess the overall impact on the affordability and accessibility of the Commonwealth’s institutions of higher education that these fee increases may have.