The University of California announced this week that it will save $1 billion over the next decade after restructuring its debt through a series of bond sales.
Through the sale of taxable and tax-exempt bonds, UC restructured $2.39 billion in debt. The sales began Sept. 23 in New York and were expected to end Wednesday.
UC was authorized to do so as part of the state budget-approval process for 2013-14. The university had expected to manage $80 million in annual savings, but demand turned out to be greater than expected.
The university estimates that after achieving cash-flow savings of $100 million in each of the next 10 years, it will save an additional $17 million to $21 million annually over the seven years that follow.
“This bond restructuring accomplished two goals: Save taxpayer money over the life of the bonds and reduce financial stress on our operating budget in the coming years,” Peter Taylor, UC’s chief financial officer, said in a news release.
Restructuring will allow about $1 billion in additional revenue to be put toward UC’s unfunded pension liability. In turn, the university also will have more flexibility to invest in education instead of paying debt service.
The sales retired all lease revenue bonds the state had issued for capital projects, academic space, research facilities and seismic retrofits across the UC system.
— Reach Cory Golden firstname.lastname@example.org or 530-747-8046. Follow him on Twitter at @cory_golden