University revenue bond supplemental coverage.

11LSO-0095.C1

FISCAL NOTE

The fiscal impact is indeterminable.

The University of Wyoming (UW) anticipates that the supplemental bond coverage proposed in this bill would result in reduced interest rate payments on future bond issues, though the precise magnitude of the reductions is uncertain.  For example, if the $10 million in UW revenue bonds supported by UW’s current statutory distribution of federal mineral royalties (FMRs) for the Joint Casper Facility is authorized by the Legislature in the 2011 General Session, the cumulative interest savings over the life of a 20-year bond is estimated at $195,000.  If UW revenue bonds supported by student residence hall fees for the renovation of White Hall were to be approved prior to the sunset of November 1, 2015 in this legislation, the cumulative savings over a 20-year bond could be expected to be approximately $500,000.  Both of the above estimates assume a 20 basis point improvement in UW’s interest rate as a result of the proposed supplemental bond coverage.  The actual improvement could be higher or lower.

There is also the possibility, albeit remote, of an expenditure increase from over-the-cap FMRs that would otherwise be distributed to the Budget Reserve Account if UW defaulted on a covered bond payment.  This expenditure is limited to $18 million annually. Provisions within the bill require payback by UW of these expenditures, including interest, if the supplemental bond coverage were ever to be exercised.  These amounts would be repaid from revenues from UW’s general fund that are neither state appropriations to the university nor pledged revenues under W.S. 21-17-404(a)(xiv)(A).

Prepared by:   Dean Temte, LSO  Phone: 777-7881

(Information provided by Don Richards, University of Wyoming; (307)766-2238)