Big Taxpayer Bill to Come with College of Charleston Plans?

September 10, 2014

Investigative Reports

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College of CharlestonThe College of Charleston’s new president, Glenn McConnell, didn’t waste any time telling students that a state commission had given the 244-year-old college the go-ahead to offer doctoral degrees.

“This is a significant victory for the College of Charleston and the first step to shaping our boundless future, rather than being shaped by it,” McConnell wrote to students on Thursday – the same day the S.C. Commission on Higher Education approved the college’s new mission statement designating the college’s graduate division, formally called the “University of Charleston, South Carolina (UCSC),” as a research university.

“We now have control of our destiny and the sole responsibility to explore new opportunities and to define who we are, who we want to be, and how we are going to get there,” McConnell added.

But what the immediate past lieutenant governor and former state Senate president pro tempore didn’t mention in his written message was that being designated a research university could eventually allow the college to tap a multimillion-dollar, taxpayer-backed revenue source with a simple change in existing state law.

And McConnell ought to know, given that he co-sponsored the 2004 law while he was in the Senate.

Dubbed the “South Carolina Research University Infrastructure Act, (RUIA)” the law allows designated research universities to finance “research infrastructure projects” with state general obligation bonds, which have to be paid back entirely – with interest – by state taxpayers.

Under the RUIA, only the University of South Carolina’s main campus in Columbia, Clemson University and the Medical University of South Carolina are designated as “research universities.” But given the Commission on Higher Education’s approval, the College of Charleston’s UCSC division could easily join that list if the law is amended by the General Assembly.

Whether the Legislature has to sign off on the commission’s action last week is a matter of debate.

The Nerve on Tuesday left written questions with Mike Robertson, spokesman for the College of Charleston, seeking comment about whether McConnell intends to ask the Legislature, which reconvenes in January, to amend the RUIA to designate the college’s University of Charleston division as a research university, thereby allowing the issuance of taxpayer-backed bonds. No response was provided by publication of this story.

The college’s total budget, which includes state, federal and “other” funds (tuition and fees) for the fiscal year that started July 1 is $230.1 million –  a nearly $3 million increase over the previous fiscal year when McConnell was not the college president.

In his written statement Thursday to students, McConnell said no doctoral degree programs “should be approved unless new funds are made available for the sole purpose of supporting these programs.” Established in 1992, the college’s University of Charleston division houses master’s, though not doctoral, degree programs.

The RUIA requires that the state Joint Bond Review Committee and Budget and Control Board approve the issuance of general obligation bonds for research university capital-improvement projects, which have to be certified by the state Research Centers of Excellence Review Board. A total of no more than $250 million in general obligation debt for all approved projects can be outstanding at any given time under the law.

After the RUIA was enacted, the state issued nearly $204 million in general obligation bonds to fund approximately $70 million in projects each at USC, Clemson and MUSC, according to Rick Harmon, senior assistant state treasurer.

The amount of principal and interest owed by taxpayers for those bonds is in “roughly the $18-$19 million range annually for the next two fiscal years,” declining to $17.7 million annually through 2020, $5.8 million yearly until 2025, and $1.3 million per year until fully repaid in 2029, Harmon said in a written response to The Nerve. As of June 30, a total of approximately $128.7 million was outstanding, he said.

“The debt service is paid by the state general fund, not by the universities, and there is no obligation for any university to reimburse the general fund unless they lose the non-state match component required by the act,” Harmon said.

Nearly $197 million for all taxpayer-funded, debt-service payments is appropriated in this fiscal year’s total $24 billion state budget ($25 billion-plus if a projected $1.5 billion in federal food-stamp payments that the S.C. Department of Social Services no longer counts is included).

The Nerve this week sent written questions to spokespersons at USC, Clemson and MUSC seeking details on the amounts and purposes of the general obligation bonds issued to their respective schools under the RUIA. Only MUSC responded by publication of this story.

To date, MUSC has received $73.3 million in RUIA bond proceeds, with another $37.5 million in matching federal grants, university spokeswoman Heather Woolwine said in a written response. The funds were used primarily for construction, architectural and engineering fees, and equipment for the university’s Drug Discovery and Bioengineering buildings,she said.

Another $2.5 million was used for the renovation of the Greenville Research Education Innovation Institute, Woolwine said.

Under the RUIA, a “research infrastructure project” is defined as a project that would “advance economic development and create a knowledge based economy, thereby increasing job opportunities, or facilitate and increase externally funded research at the research universities.”

Bond proceeds can be used for such things as “land acquisition, acquisition or construction of buildings, equipment, furnishings, site preparation, road and highway improvements, water and sewer infrastructure, and other things necessary or convenient to advance economic development or to facilitate and increase research at the research universities,” according to the law.

Whether the College of Charleston would eventually go on a taxpayer-backed building spree with its new research-university designation – assuming state law is changed to include the college’s UCSC division – remains to be seen.

“Today’s events ensure the College of Charleston will remain an excellent liberal arts and sciences university and relevant for future generations of students,” McConnell said in his written message Thursday to students about the Commission on Higher Education’s approval of the college’s new mission statement. “Further it ensures continuity in the undergraduate experience for our students and for the great majority of our faculty.”

“At the same time,” McConnell concluded, “we now have the green light to move forward and a vehicle by which we can meet the needs of our community, region, and state.”

Reach Brundrett at (803) 254-4411 or rick@thenerve.org. Follow him on Twitter @thenerve_rick. Follow The Nerve on Facebook and Twitter @thenervesc.