page 12
daily nebraskan
monday, february 13, 1978
Bond . . .
Continued from page 9
If both the Bond and Interest and Bond
Reserve funds are full, money continues on
to the third highest priority level - the
Repair and Replacement Fund. If approved
by the NU Board of Regents, funds are
labeled from here to repair, refinish and
renovate campus buildings.
In September 1977, there was more
than $400,000 in Repair and Replacement.
After each audit, this fund must hold an
amount equal to 2 percent of the total of
the outstanding bond debt.
If the student fees and net revenue
monies exceed the amount needed to meet
the minimum bond requirements of the
first three levels, they are dumped into the
Surplus Fund.
Money from the Surplus Fund can make
up for shortages in the other three. It is
used to buy back bonds before they
mature, equip buildings or buy land and
build new structures.
Any use of the surplus funds must be
approved by the regents.
Hie regents recently approved the use
of Surplus Funds for construction of the
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We've got the whole story, and as important as salary is, it's more
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Talk to Navy officers Dick Sheets and Carl LeCroy
on Campus At The Student Union
Feb. 14,15,16,
Or call collect 221-9386 today.
i mmm m
ss portrayed by
JIM MITCHELL
in i dramatic
ese-EU skew
Nebraska
East Union
Brest Plains Eoos
7
J
f
Nebraska East Union. Hie student fees
used to pay for bond indebtedness were
increased for the fall semester 1977 from
$14.50 to $18.
Hie $3.50 increase created a surplus
which was used to finance construction of
the East Union. The $3.8 million was
taken from the Surplus Fund and an
additional $500,000 was kicked in from
a special union fund set up in 1974.
Some students have questioned the
increase in student fees to pay for East
Union. They argue the university often
buys back bonds at a reduced rate and
makes a lot of money off the interest First
National Bank pays for UNL for its
deposits.
They contend that profits from buying
back bonds and interest from the Surplus
Fund provide more than enough money to
cover construction costs. They contend an
increase in student fees is not necessary.
Bob Lovitt, assistant vice chancellor for
business and records, explained that under
the termsiM the bond agreement any
money taken from the Surplus Fund to
construct a new building can be returned
to the Surplus Fund in only one of two
ways.
The money has to be paid back by net
revenues from residence halls, the health
center or unions, or by student fees,
Lovitt said.
Lovitt said the conditions for paying
back money taken from the Surplus Fund
are standard procedure in all bond agree
ments. "Everything is set up for the protection
of the bondholder, he said. "If this clause
was not in the contract, we could replace
the money taken from the Surplus Fund
for the East Union in other ways.
"But, by law, we are required to use stu
dent fees or net revenues to replace it.'
UNL has retired bonds at a reduced rate
and is paid interest on the money deposit
ed at First National Bank. But this money,
Lovitt explained, goes through die exact
same process as student fees and net
revenues.
The money is dropped into the same
funnel and passes through each of the four
funds to meet each priority level, he said.
First National Bank can invest univer
sity deposits in treasury notes, bills and
bonds," he said.
The university, he said, Invests money
from the Surplus Fund to buy back bonds
before they mature, adding that any
purchase is subject to regents' approval.
"If the regents approve and the rate is
reasonable, we dip into the. Surplus Fund
and buy them back," he said. MIn 1972-73,
we bought back $2.1 million worth of
bonds for $1.4 million."
The interest UNL gets on the money it
deposits in the bank, Lovitt said, depends
on "if it is long stuff or short stuff."
"We get seven and one-eighth percent
on the deposits redeemable in two to three
years (long stuff) and five to five and one
fourth percent on any deposits redeem
able within 90 daysj(short stuff).
Is die whole concept of redeemable
deposits, interest rates, short and long
stuff, bond indebtedness, debt service and
capital construction costs 'all that compli
cated? "You bet it's complicated," said Jim
Knisely, UNL comptroller. "The univer
sity has to consult with investment bankers
and consult on the terms and conditions on
what type of bond is best for the market at
any given time.
"You have to know how much money is
available at the time and what the interest
rate is. You have to specify construction
costs and call in architects.
"Then the bonds are thrown Up for the
banks to bid on. AH contracts are Ultimate
ly subject to approval by the NU Board of
Regents." '
How does he see the future of UNL's
current program of bond indebtedness
versus recommendations made by the Task
Force fees report?
"Well, one possible scenario would call
for a student referendum to be held and
the results considered before the debt
service was increased any further by stu
dent fees," Knisely said.
"An example would be any future
union expansion. Say our report shows
students would need to be taxed $2. A
referendum would be put to the students
and the results would provide student in
put. 7
"A reaction would occur if students
said "no,' and the regents went ahead and -expanded
the union anyway." . .
Valentines Day
Treat your sweetheart and
yourself to something different
At
McDonald's
Dine in candle-light under the "Golden Arches"
Youll be served at your table by a waitress
You must make reservations Call 432-5017
So pin us for the sodal event of the season!
February 14 from 5-9 PM
at 865 N. 27th or 3330 S. 10th
u u u