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Liberty Journal

Financing the future expansion

Spring 2012 : By Christi Gee

The comprehensive plan of new construction and renovation under way at Liberty University requires equally solid financial planning.  After careful consideration and with construction costs at historical lows, the administration decided to issue bonds to fund the expansion.

“Our Board of Trustees decided that Liberty should take advantage of its strong financial condition and historically low interest rates to finance its ambitious building plans over the next few years,” explained Chancellor Jerry Falwell, Jr.  “We believe it would be unwise to use our cash reserves for capital improvements.  Liberty is blessed.  We are thankful for how Liberty continues to thrive when many universities are struggling.”

Liberty made its initial public offering of $120 million of tax-exempt education facilities bonds in December 2010.  On Jan. 11, 2012, the university announced its second IPO, this time in the corporate bond market selling $100 million of taxable bonds.  Both bond sales allow the school to pay off construction costs over time, with the most recent issue not maturing until 2042.

Standard & Poor’s (S&P), a financial services company that publishes research on stocks and bonds, rated Liberty’s bonds “AA” in both 2010 and 2012. Qualifying for this rating places Liberty among the nation’s elite universities for financial stability and credibility.
In the latest report, S&P noted Liberty’s “exceptionally strong operating surpluses driven by continued growth in online enrollments and growing financial resources.”

Another company rating Liberty for the first time, Moody’s Investors Service, gave the university’s taxable bonds an “A1” rating and cited Liberty’s “uncommonly strong operating performance.”   

The Moody report explained that its stable outlook on Liberty was based in part on “expectation of steady student demand, strong operating cash flow, maintenance of a sound base of financial resources.”

Whereas the 2010 non-taxable bonds allowed only for construction of facilities not used for religious worship, the bond sale this year will provide more flexibility since the funds can be used for any projects deemed most beneficial to Liberty’s purpose and mission.

The recent bond sale will support a full slate of capital projects, including the new Jerry Falwell Library, the new medical school and additional student housing to accommodate the anticipated growth in residential enrollment to over 20,000 students. Renovations of several academic facilities will make the most efficient use of existing space and provide optimal learning environments.  

Now is a financially opportune time for these projects.

Having grown to be the world’s largest Christian university, Liberty strives to maximize its use of funds, resources and physical space to ensure academic excellence for every student.  The facilities and renovations afforded by the issued bonds will enable the university to maintain its high standards and place of prominence for current students as well as future Champions for Christ.T