It would take until 2036 to pay off the current bond debt if no additional borrowing takes place, which is an unlikely scenario, said Barrie Wilkes, associate vice president of financial services and reporting.

The debt would be lower if the university had not taken on large building projects in the last five years, he said.

“Today, I’m not aware of any projects the university will take bonds out for,” he said. “That could change tomorrow.”

The bond debt in June of 2008 was $190,262,649.

The Education, Health and Human Services Building, Health Professions Building and the five newest residence halls are some of the recent projects financed by bonds.

Wilkes said CMU issues bonds when the university has a large project that cannot be financed when state appropriations and donations are not sufficient.

“Oftentimes if the project is really big, it needs to be bonded,” he said.

Wilkes likened the process of issuing bonds to taking out a mortgage. Like a mortgage, the university pays on both the principal and interest of the loan.

CMU is responsible to pay $6,762,000 in principle and $6,730,927 in interest for the current fiscal year, he said.

Who’s paying?

Carol Haas, director of Financial Planning and Budgets, said five entities on campus are paying off parts of the debt.

The general fund, Residences and Auxiliary Services, Telecommunications, Central Energy Facility and the Athletics Department pay because they contributed to the debt with past projects, Haas said. Each entity budgets for their portion of the debt by following a schedule provided by Accounting Services.

They present their budgets to Haas, who coordinates them with CMU’s operating budget.

Almost $3.5 million is coming from the general fund this year, she said. Haas refers to the bond repayment schedule often and plans five years in advance.

The costs are covered through state appropriations, tuition and miscellaneous revenues, she said. Hass said budgeting for the current debt-to-equity ratio is not difficult because the university is financially sound.

“I would not say that we are a debt-laden university,” she said.

Two agencies that rate higher education bonds have issued high credit ratings to CMU. S&P has given CMU an “A+” rating, and Moody’s has given an “A1,” rating, which the corporation considers “high quality.”

CMU only trails Michigan State University and the University of Michigan in terms of credit rating among public universities in Michigan, Wilkes said.

The agencies configure CMU’s credit rating by analyzing financial information, enrollment trends and the stability of upper financial management, he said.

He said CMU’s high rating yields lower interest rates and proves to bond holders they won’t default. CMU also goes through an annual external audit.

Andrews Hooper & Pavlik PLC completes CMU’s audit each summer. Their most recent report was submitted to the CMU Board of Trustees during their meeting Thursday.

In this report the firm said the financial statements at CMU positively represent the financial position of the university.

“This is a rock-solid place financially,” said CMU Board of Trustees Chairwoman Stephanie Comai, after Thursday’s meeting.