Board approves $112M bond issue for UMMC
Published: January 20,2012
JACKSON — The state College Board has approved a $112 million bond issue for the University of Mississippi Medical Center, even though one board member questioned whether it was appropriate to borrow the money.
UMMC had originally proposed to use some of the money to buy software to comply with a federal requirement that it start using electronic health records or face reimbursement cuts. But that idea was shelved because the board was uneasy that long-term debt might outlive the software, even though an attorney general’s opinion said it was a legal use of debt.
Instead, the bond issue will reimburse the medical center for $34.3 million of work that UMMC has already paid for. Dr. James Keeton, UMMC’s vice chancellor for health affairs, said that money would not be used to buy the software.
The College Board waived its rule that a specific money source be earmarked to pay off the debt, because the projects aren’t expected to increase revenue. Instead, it required a report from UMMC showing it would increase revenue or cut expenses.
UMMC said earlier this month it would lay off 115 employees and leave 90 unfilled positions vacant, citing the costs of implementing the electronic health records as well an increase in uninsured and underinsured patients.
West Point Mayor Scott Ross was the lone College Board member to vote against the bond issue yesterday, saying he thought the money would only technically go to pay for construction and building equipment, and that he couldn’t remember the rule requiring a revenue stream ever being waived during his time on the board.
“I don’t believe it’s keeping with the spirit of our policy,” Ross said. “This thing has morphed itself into a way that it technically fits.”
The bonds will be issued by an educational building corporation, a state entity that can pledge university system revenue to repay bonds without getting approval from the Legislature. Often, a project is something like a dormitory or a football stadium, which will generate revenue once they are built.
“The projects are supposed to be self-supporting,” said Linda McFall, deputy commissioner of finance and administration. “What they were doing was trying to pay for some projects that didn’t have a revenue stream.”
Instead, the medical center will pledge its general patient revenue. Overall, UMMC has a $1.3 billion budget this year. McFall said it would cost about $5 million a year to pay off the new bonds. She said the College Board’s financial adviser was “absolutely” confident that UMMC could pay off the debt.
“It is different than what we typically do,” McFall said, but she said the deal is “perfectly legal.”
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