The Heartland Community College Board of Trustees voted Tuesday to move ahead with a debt swap that administrators hope will increase financial flexibility.
Vice President of Business Services Doug Minter said the $10.7 million in bonds that will be issued will help pay off a wind turbine, technology and infrastructure improvements, and a land purchase west of the college on Raab Road in Normal.
Minter said Heartland has been paying for those items out of operating cash until now.
"It allows us to take some pressure off of our operating budget, which is funded more directly by tuition and fees, and still maintain a level tax levy and a slightly reduced tax rate," said Minter.
Trustees last month approved a levy and a projected drop of one penny per $100 of assessed valuation in the tax rate.
Minter said the college has been waiting to issue the bonds until it could do so without affecting the tax rate. The bond auction will come next year with the deal closing in mid-February.
Bond Rating Service Examines Community Colleges
The state's financial situation could still be hurting institutions around Illinois.
Moody's Investors Service is looking at the bond rating for Heartland Community College. Minter said the institution is one of several Illinois community colleges Moody's is querying about its financial health. Minter said the bond rating is excellent, only one step below the maximum for community colleges, but he believes it's not about Heartland itself.
"From the questions we get, we understand they are skeptical about the state's ability to pay its bills even for the funds that have already been appropriated," said Minter.
Minter said the state has never failed to pay appropriated funds. He says there have been lots of instances of the state paying late. And, of course, the state failed to appropriate money or pass a budget for a couple years running. Even the most recent budget that did pass, is widely acknowledged to be a couple billion dollars out of balance."
Minter said Heartland's bond rating is Double-A Plus on Standard and Poor's service. Moody's rates Heartland at Double A two.
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