University/Community College Bonds
Frequently Asked Questions

Q: If approved by voters in November, how will the $3.1-billion bond issue be used?

A: The funds will be used solely to construct new buildings and to renovate and modernize existing buildings on the state's 59 community college and 16 University of North Carolina campuses. These improvements are needed to meet skyrocketing enrollment demand and to ensure that our college and university buildings meet modern code requirements and are equipped to prepare graduates for 21st-century jobs.

The bond legislation passed by the General Assembly specifies the amount of bond funding that will flow to each community college and University campus. For each University campus, the legislation further details the level of bond funding intended for every building project listed in the act. Thus, voters will know precisely how the $3.1 billion bond issue will be distributed and used.

Q: How was the $3.1-billion bond amount determined?

A: At the direction of the General Assembly, both the community colleges and the University have conducted in-depth studies of their current and future building needs. Our University and community college systems each anticipate enrollment growth of about 50,000 students over the next 10 years-a total of almost 100,000 new students. These growth estimates are based on a combination of factors: the number of students already in North Carolina's public schools, historic college-going rates, and the escalating need for continuing workforce education. As documented by outside experts, enrollment-growth pressures have been compounded by decades of underfunding for upgrading existing buildings, and many classrooms and laboratories are in dire need of renovation to meet current safety codes and educational standards. The $3.1-billion bond issue would enable our two higher education systems to make significant headway in addressing their most pressing capital needs.

Q: When will the bond funds be spent, and when will they be repaid?

A: The bonds will be issued over a six-year period beginning in 2001, in amounts (regulated by law) that will enable community college and University campuses to manage the construction and renovation efficiently, while minimizing disruption for students. The bonds will be repaid over a 25-year period, allowing the state to pay for the buildings as they are used-just like a mortgage on your home.

Q: Will there be any oversight of this spending and construction?

A: Yes. The General Assembly has created a Higher Education Bond Oversight Committee, which will monitor progress on the capital plans and receive regular reports and updates from the University, the community colleges, the State Treasurer, and the Office of State Construction. To ensure that the construction program is carried out in the timely manner expected by the General Assembly, the Committee will advise relevant agencies and make recommendations on the timing and uses of bond issuances.

In addition, the bond legislation specifies the amount of bond funding that will flow to each University campus and to each community college. For each University campus, the legislation further details the level of bond funding intended for every building project listed in the act. Thus, voters will know precisely how the $3.1 billion bond issue will be distributed and used.

Q: Isn't this a large amount of debt for the state to carry?

A: No. North Carolina's current debt is one of the lowest in the nation. Even after all currently authorized debt is issued-including the University and community college bonds-the state's level of debt will be relatively low. Analysts project that between now and 2025, the state's annual required debt-service payment would exceed 3% of the state's General Fund budget in only three years [2004-05, 3.1%; 2005-06, 3.2%; and 2006-07, 3.3%]. Financial experts consider any amount under 5% to be conservative to moderate debt. State Treasurer Harlan Boyles supports the issuance of these bonds as a sound investment in valuable assets owned by the citizens of North Carolina.

Q: Will my taxes need to go up to pay for the bonds?

A: No. While no one can predict whether taxes will go up for other reasons, State Treasurer Harlan Boyles and many other state leaders have plainly stated that the state will be able to repay these bonds without the need to raise taxes.

Q: Will tuition and student fees go up to pay for the bonds?

A: No. Tuition and general student fees will not be used to repay the University and community college bonds. As it has always done, the University will continue to use designated fees to support construction and upkeep of certain student facilities. For example, rental fees paid by students living in campus residence halls help pay for the construction and maintenance of these buildings.

Q: Doesn't the state already provide funds to pay for building construction and renovation on University campuses?

A: University buildings belong to the state, and the General Assembly is the primary source of new building and renovation funds for the University. Still, over the past 75 years, the University has generated about 40% of all construction dollars spent from its own resources. Because of the General Assembly's historic pay-as-you-go approach to capital financing, the state's record on providing funds for University construction has been both erratic and inadequate, based on whether there was money left over after all operating needs have been met. This bond issue would provide a reliable stream of capital funding to meet enrollment growth, and would also enable the University to address the huge backlog of repair and renovation needs that has accumulated over many decades.

Q: Aren't the counties responsible for constructing and maintaining community college buildings?

A: Community college buildings do belong to the counties that sponsor them, and counties historically have been the principal source of funding for their construction and maintenance. Over the years, however, many community colleges have received special legislative appropriations for capital, and the entire community college system benefited from a 1993 statewide bond issue. Given shifting economies, many local governments-particularly rural and "low-wealth" counties-have found it increasingly difficult to keep their campuses up-to-date without supplemental state assistance. In fact, about 40% of the total capital investment in the community college system has come from state funds. The proposed 2000 bond issue would require many local governments to partially match funds targeted for new community college buildings. This matching requirement has been reduced or waived for low-wealth counties and eliminated for counties that have exceeded historic match requirements. There is no matching requirement for repair and renovation projects. Thus, the use of bond funds will permit expansion and renovation without the need to raise property taxes.

Q: Are the historically black University campuses getting their fair share of the bond funding?

A: Yes. While the consultant's findings and recommendations were based on actual needs as opposed to a pre-determined formula, on a per-student basis or other comparisons, the University's five historically black campuses will receive an equitable share of the bond proceeds. Moreover, since the HBU's-along with other smaller campuses-have less ability to generate their own funds for campus projects such as dormitories and similar student facilities, a much higher proportion of their identified five-year capital needs will be funded through the bonds than is the case with larger campuses.

Q: How did University and community college buildings get in a condition that requires such a large investment in repairs and renovations?

A: University buildings have been constructed over two centuries, and as they age, facilities inevitably become outdated or require building system repairs. Over the years, the University has regularly requested state appropriations to carry out needed repairs and renovations, but the General Assembly's ability or willingness to provide such funds has come nowhere close to meeting the documented need. Only since 1993 has the state provided a steady source of funds for the routine upkeep of state buildings, including University buildings. Also, many older University buildings are no longer suited for their original purposes. Nothing short of a major retrofit can adapt 1940s laboratories to accommodate 21st-century uses, for example. Consider the case of Hines Hall at North Carolina A&T, a 50-year-old chemistry building that is dilapidated, overcrowded, and lacks air conditioning and proper ventilation. Even if it were restored to pristine 1950 condition, this building would be completely inadequate for modern-day chemistry instruction.

Similarly, the Community College System is almost 40 years old, and many campus facilities are even older. Many community college buildings have undergone little or no renovation since they were first constructed, due to limited local resources.

Q: How can we be sure that our state-owned buildings won't fall into similar disrepair in the future?

A: While the Reserve for Repair and Renovations, established in 1993 to provide annual funds for the routine upkeep of state-owned buildings, is an excellent program, it can't begin to eliminate the University's backlog of renovation needs that accumulated over many years prior to 1993. Furthermore, it only works when it is funded. The bond issue will address this backlog, helping the state get and remain current on preserving its University assets.

Q: What happens to the community colleges and the University if this bond issue doesn't pass?

A: Access to a community college or University education will be significantly restricted, and the demonstrated economic benefits derived from our fine community college and University systems will be limited.

By law, community colleges maintain an "open door" policy, with space for everybody who can and wants to learn. If voters reject this bond issue, many colleges will be forced to turn people away who need to gain technical skills, prepare for further higher education, or earn high school credentials. The most dramatic impact is likely to be in fast-growing industries, which already demand more trained graduates than community colleges have room to produce.

Similarly, faced with enrollment growth of over 30% in the next decade, University campuses will be unable to admit many qualified North Carolina students. Some campuses already have had to limit admissions due to lack of space. The University's reputation for excellence in teaching and research gives North Carolina a competitive economic advantage, but unless we repair and renew our classrooms, laboratories, and other buildings, that competitive edge will be lost.