Leader Blues

Saturday, October 28, 2006

EDITORIALS>>Be careful on school debt

Who wants to be known as a foe of higher learning? Certainly not us. Arkansas has underfunded its colleges and universities almost as badly as it has cheated its public schools for nearly all of the century and a half that the state has claimed to be offering a universal education. We know and mourn that.

But it should not follow that any and every proposition to increase appropriations for the state colleges and universities is wise.

That is the premise behind the near universal support of the college bond proposition that will appear on the ballot Nov. 7.
Voters narrowly defeated the plan in December 2005, and Gov. Huckabee has opted to put it before voters again, as the law permits. If it is defeated again, a future governor can submit it to voters again, ad infinitum.

We opposed it last year and do so again now for even better reasons.

If voters approve the proposition, the state will issue $250 million in general-improvement bonds. Some $100 million of the proceeds will be used to retire old college construction bonds and pay off the owners of the bonds, including all the interest that they would earn if the bonds remained outstanding until their maturity. The state will realize no savings from calling the bonds early as you would if you paid off your mortgage and installment debt immediately.

Roughly $150 million that remained would be used for new buildings and technical equipment, which would be divided among all the state-supported universities and two-year colleges.

Chancellor John White of the University of Arkansas at Fayetteville and the other presidents and chancellors say the new construction is needed because of growing enrollment at the institutions.

Chancellor White says Arkansas has fallen far behind schools in all the nearby states because they have invested in new buildings and equipment and Arkansas has not.

When he presented the universityís budget to lawmakers at the Capitol this week, he supplied the same figures that have been given to the media.

Since 1994, he said, Arkansas has spent only $142 million on construction at the schools, far less than other Southern states.
He missed the mark by a little over one billion dollars.

An examination of vouchered expenditures at the state treasurerís office shows that capital spending has been not a mere $142 million, but nearly 10 times that: about $1 billion from tax receipts, bonds and other revenues and still another $300 million or so from private philanthropy.

Anyone who has visited the medical sciences campus at Little Rock, the main university campus at Fayetteville or the University of Central Arkansas and seen the gleaming new buildings and the construction cranes need not examine the accounts to know that $142 million is not a true figure. Fayetteville spent that much alone on Reynolds Razorback Stadium.

But that little deceit is not enough to vote against the bonds. The schools could wisely spend for construction on several fast-growing campuses, though the greater need is for operating budgets and academic programs. That is where Arkansas is so far behind. The physical plants stack up nicely against other schools in the region.

Here is the reason the proposition should be defeated: The legislature next year will have at least $750 million and probably closer to $900 million in surpluses in various funds.

Traditionally, surpluses are used for precisely such needs. The legislature could appropriate $150 million for these projects and still another $200 million if the institutions can make the case.

It would still have funds for public school construction, prisons and all the other capital needs of the state. And it would have money left over.

But if the bonds are approved Nov. 7, the state will instead borrow $250 million to do the same thing and pay millions of dollars in needless underwriting and legal fees and interest to the bond lawyers, brokers and investors.

Where is the logic in that? No family confronted with similar options with their own budget would take the same course.
The argument by the institutions, Gov. Huckabee and the benefiting business partners in this enterprise is that lawmakers canít be trusted to spend the massive surplus for colleges and universities, although those institutions for the past 40 years have been the primary beneficiaries of surplus funds.

They say the lawmakers will want to spend all the money on their own little petty local projects to help them get elected and will ignore the universities and colleges .

Not if a strong and principled governor says no. We think Gov. Mike Beebe, the universitiesí best friend in the legislature in recent years, will tell them to do the right thing.

Letís trust state officials, including the lawmakers, to be both principled and economical.

The universities can have their new buildings and taxpayers can save $25 million or so over the next few years.
Where is there a better bargain than that? It starts with defeating the bonds.