Overall Principles for the Use of Debt

The General principles the University will employ for the overall management of debt include the following:

  • The University will incur debt to maintain and enhance the physical plant and infrastructure.
  • Debt will be used as a financial tool to maximize the University resources.
  • Long-term debt will not be used to finance current operations.
  • The University’s debt capacity will be governed primarily by its ability to support all incremental costs – principal, interest payments, and annual operating costs of new space – within the University’s operating budget and the trustee discretionary fund.
  • The University will seek to maintain a high-quality credit rating and will target a number of key financial ratios used by rating agencies to evaluate the University’s credit.
  • The University will seek to maintain an acceptable balance between interest rate risk and the long-term cost of capital.
  • The University’s debt portfolio will be evaluated in the context of all its assets and liabilities. Diversification within the debt portfolio may be used to balance risk and liquidity across the institution.
  • The University will consider the use of capital and operating leases, especially for the acquisition of equipment, to the extent such transactions are compatible with and help achieve its overall objectives concerning the use of debt.