Governor Northam Announces Refinancing Plan to Save Virginia Colleges and Universities More Than $300 Million Over Next Two Years
Press Release
Governor Ralph Northam today announced a higher education refinancing plan that will save Virginia's public colleges and universities more than $300 million over the next two years. The Commonwealth of Virginia will take advantage of low interest rates by refinancing bonds issued by the Treasury Board of Virginia (TBV) and the Virginia College Building Authority (VCBA), which institutions of higher education use for capital projects. The Governor was joined by George Mason University President Dr. Gregory Washington and state legislators for the announcement at the university's Fairfax campus.
"The COVID-19 pandemic continues to have tremendous impacts on higher education, including the fiscal health of our colleges and universities," said Governor Northam. "Families all over the country are taking advantage of record low interest rates to refinance their home mortgages, and we want our public institutions to benefit as well. Refinancing will free up millions of dollars in savings allowing our colleges and universities to make critical investments, meet the needs of Virginia students, and continue offering a world-class education."
Virginia has successfully avoided cuts to higher education during the pandemic. The Commonwealth has worked hard to maintain its valued AAA bond rating, which has allowed the state to be eligible for these favorable interest rates.
"Our public higher education institutions are critical to Virginia's success, and we know they are hurting right now," said Senate Finance Committee Chairwoman Janet Howell. "Allowing them to refinance some of their debt is an innovative way to save money when they need it most, and I look forward to supporting the legislative portion of this proposal next session."
Many Virginia colleges and universities have seen a decline in revenue traditionally used for bond payments. These institutions are also navigating uncertainty regarding in-person learning, with many unsure when or how students will return to campus. Under the Governor's plan, institutions will make no principal payments on their VCBA bonds through fiscal year 2023. The proposed restructuring would also extend institutions' payment plans for two years beyond their current schedule, for both VCBA and TBV bonds.
"As stewards of the Commonwealth's finances, we are always seeking creative solutions to financial issues," said House Appropriations Committee Chairman Luke Torian. "Helping public colleges and universities restructure their debt obligations allows them to focus their resources on the pressing needs they face right now as a result of the pandemic."
As part of his plan, Governor Northam will work with the General Assembly to allow additional flexibility for higher education refinancing during the 2021 General Assembly session.
"Governor Northam is committed to supporting Virginia's institutions of higher education," said Secretary of Finance Aubrey Layne. "These savings will make a tremendous difference for our colleges and universities as they navigate these challenging times."
The following savings are expected:
Christopher Newport University: $14.4 million
George Mason University: $58.3 million
James Madison University: $43.7 million
Longwood University: $8.2 million
Norfolk State University: $8.2 million
Old Dominion University: $29.8 million
Radford University: $5.1 million
Richard Bland College of William & Mary: $320,000
University of Mary Washington: $9.3 million
University of Virginia: $344,000
Virginia Commonwealth University: $23.1 million
Virginia Community College System: $9.7 million
Virginia Military Institute: $2.8 million
Virginia Polytechnic Institute and State University: $40.1 million
Virginia State University: $12.8 million
William & Mary: $33.7 million
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