Debt may be incurred for the purchase of high cost fixed assets and equipment in order to spread the cost of such items over their useful life. Debt will be periodically reviewed and carefully controlled. The use of debt for operating purposes is restricted to a level that is sustainable and ensures that decisions are made in consideration of college goals and operating budget needs.
The college may issue debt for the purpose of acquiring high cost fixed assets and equipment.
General Debt - Limit:
Clover Park Technical College shall issue debt through legally authorized instruments in such amounts that the annual debt service cost to the college in any one fiscal year for all outstanding debt shall not exceed seven percent (7%) of that year’s annual operating budget base allocation, as provided by the State Board of Community and Technical Colleges.
Criteria for use of debt:
- Debt shall be used solely for the acquisition of fixed assets and equipment.
- All constructed or purchased assets and equipment shall have an estimated useful life of three or more years.
- The college may issue debt only upon prior authorization by the Board of Trustees or appropriation in the annual operating budget.
Use of revenue supported debt:
The college may identify specific revenue sources for use in payment of annual debt service against debt issues for the purposes stated herein. Revenue supported debt may be considered as debt outside of the 7% general debt limit of the college.
In order to qualify as revenue supported debt, a debt issue must:
- Be supported by a stable funding source other than the college’s state allocation, tuition or laboratory fees.
- The supporting revenue source must generate total revenues equal to 125%, of anticipated annual debt service costs over the life of the debt schedule or be in accordance with State Treasurer guidelines.
- The supporting revenue source must be restricted in its use solely to repayment of said debt.
The college may issue revenue-supported debt only upon prior authorization of the Board of Trustees or appropriation in the annual operating budget.