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Reality Check: You Can’t Build With Your Hands Tied

Stop me if you heard something similar before. Ready?

Kentucky limits on debt issuance have hindered high-priority university construction/renovation projects.  Detailing this is a great piece over at Inside Higher Ed, by Kevin Kiley. To wit:

Even though the university would fund its new debt through non-state revenues, lawmakers in the Kentucky state legislature, which wrapped up its budget process earlier this month, denied the state’s universities the authority to issue any bonds for the next two years, fearing that more debt by state institutions could hurt the state’s credit ratings.

Now the state’s universities will likely not be able to finance projects through debt until the legislature reconvenes in two years, and there is no guarantee that it lawmakers will approve bonds then. For the University of Kentucky, that means the university will put off several projects, and the already old infrastructure will continue to age, which administrators say could hinder student and faculty recruitment.

Clearly, the theme of the article is the challenges the University of Kentucky is facing with financing capital projects and expansion. But here’s the rub: it’s not just the University of Kentucky.  It’s every state and nearly every institution, both private and public, that are being asked to do more with less. We hear it literally every week. It’s such a common constriction that it’s almost assumed at this point.

PeopleSoft presents solutions for Capital Planning along with Asset Lifecycle Management.  Chances are, your role spans more than just figuring out how to get it done.  You must also figure out how to keep it running, for a long time, at a reasonable cost.  Construction is just a small piece of the puzzle and extending the life of an asset is just a small part of the answer.  The reality is that you cannot allow your hands to be tied if you are going to succeed.

It’s fun to think it’s a workable constraint, but it’s not. Reality is reality.

We work with organizations every day that are forced to engage this dilemma head on.  If you are curious and want to talk (or just vent), drop me an e-mail.

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