How to Circumvent State Bonding Regulations
Or, Flim Flam Revealed
Mr. Michael W. McNabb has called this situation to my attention. He is a graduate of the University of Minnesota (B.A., 1971, J.D., 1974) and a lifetime member of the University of Minnesota Alumni Association. I have posted some material on the Periodic Table quoting him directly on the matter. I thank him for the information and permission to attribute it.
A questionable gimmick has been used in the past to circumvent limitations on state bonding authority.
The way this stunt works is that so-called University bonds are issued for this purpose. These beauties are paid from state revenues but they do not have the usual full faith and credit guarantee. If the state finds itself unable to pay, then the university is obligated to make up the difference.
And of course the University's source of revenue is...tuition!
The bonding session last Tuesday concluded in less than an hour and one billion dollars was approved without any input from persons who wished to testify.
During the bill's oral summary by staff, it was announced that bonding for the proposed biomedical research facilities would use the same mechanism as previously used for the stadium. Snickers and laughter could clearly be heard from the committee table.
The State does not have two tubs of money. One for football or soup du jour, and the other for the academic mission of the university. No one flagged this stunt for the football stadium so it is a fait accompli.
But now someone has finally blown the whistle:
"There is no doubt that these buildings would be part of the state's overall debt obligations and should be treated accordingly," he [Minnesota Finance Commissioner Tom Hanson] wrote to lawmakers, adding that "this proposal would appropriate roughly a half-billion dollars over more than 25 years without any further oversight."
Whether this attempt to circumvent statutory bonding limitations will be tolerated for a second time is an interesting question.