Approved by Board of Trustees
Effective Date: June 5, 2017
Responsible Division: Business and Finance
Responsible Office:  Business and Finance
Responsible Officer:  Associate Vice President, Business and Finance

I. Purpose

This policy provides written guidance about the amount and type of debt issued by governments, the issuance process, and the management of the debt portfolio. A properly developed debt management policy:

A.  Identifies policy goals and demonstrates a commitment to long-term financial planning;

B.  Improves the quality of decisions; and

C.  Provides justification for the structure of debt issuance.

Adherence to a debt management policy signals to rating agencies and the capital markets that the University is well-managed and should meet its obligations in a timely manner.

Debt levels and their related annual costs are important long-term obligations that must be managed within available resources. An effective debt management policy provides guidelines for Middle Tennessee State University (MTSU or University) and the Board of Trustees (Board) to manage its debt programs in line with those resources.

II. Introduction

A.  The Board adopts the following policies concerning debt management.

B.  Pursuant to T.C.A. § 49-3-1205(11), whenever the Board takes action under Chapters 4, 7-9, and 12 of Title 49 to borrow money for any purpose, the Board must first seek the approval of the Tennessee State School Bond Authority (Authority), created in 1965 under the Tennessee State School Bond Authority Act, T.C.A. § 49-3-1201 et seq. through the Tennessee Board of Regents (TBR). The Authority is a corporate governmental agency and instrumentality of the State of Tennessee, whose purpose is to finance capital projects for public institutions of higher education located in Tennessee by issuing its bonds and notes.TBR has entered into a Second Program Financing Agreement (Agreement) as of November 1, 1997, with the Authority for the financing of projects for public institutions.

C.  At this time, the Board chooses to borrow only through the Authority; however, with the approval of the Authority, the Board reserves the right to utilize other borrowing methods, should special circumstances arise.

D.  The Authority has financed a variety of higher education projects including, but not limited to, dormitories, athletic facilities, parking facilities, student activities/recreation centers, research laboratories, and major equipment purchases. These projects could be contrasted with capital projects for basic academic needs such as classrooms and libraries that are funded from the proceeds of the State’s general obligation bonds issued by the State Funding Board and for which the public institutions are not obligated to pay the debt service.

III. Goals and Objectives

A.  The Board is establishing this policy as a tool to ensure that financial resources are adequate to meet the University’s long-term debt program and financial planning.

B.  In addition, the policy helps to ensure that financings undertaken by the Board satisfy certain clear objective standard