UF Trustees Seek Better Accounting On Shands Debt
University of Florida trustees will have more oversight over borrowing by UF Health Shands Hospital and its affiliated organizations under a policy adopted Monday.
The move is in response to an October report from the state Division of Bond Finance that showed while overall state debt has declined during the past five years, university system debt has risen by 41 percent.
The university system's Board of Governors and trustees at each of the state universities have been taking steps to increase their reviews of borrowing on the 12 university campuses.
The review and approval policies include not only health-care borrowing but debt incurred by "direct support organizations," university-based entities that have borrowed money for student housing, parking garages, fitness-wellness centers and athletic facilities.
More than 90 percent of the rise in university debt in the five-year period prior to June 2015 was related to direct-support organizations, according to the October report.
During that time, overall state borrowing dropped by $2.7 billion, for a total debt of $25.5 billion, while university debt rose $1.1 billion, for a total of $3.8 billion.
The bulk of the direct-support organization borrowing was for housing and health-care projects. University system health-care debt doubled over the five-year period, from $605 million to more than $1.2 billion and now accounts for 32 percent of the overall $3.8 billion in university debt.
The health-care debt involves projects at the University of Central Florida and the University of South Florida. But the bulk of the borrowing was related to the various groups tied to UF Health Shands Hospital, including facilities in Jacksonville and clinics.
More than 80 percent of UF's current $1.35 billion in debt is related to health-care borrowing, the October report showed.
But while university officials moved to increase their oversight of direct-support organization borrowing across the system, Shands was different since it is an older, private institution that borrows money under a framework established prior to the use of direct-support organizations.
In establishing a review system for Shands borrowing, Mori Hosseini, chairman of the University of Florida Board of Trustees' governance committee, said the intent was to recognize the Shands system's historic "independence," while complying with the state directive for more oversight on borrowing.
Under the new oversight system, university President Kent Fuchs, who serves on the boards of the various Shands entities, will appoint one of the university's trustees to serve with him on the Shands boards.
If one of the Shands groups seeks to borrow money, Fuchs will inform the university Board of Trustees and provide detailed information on the pending debt plan.
The directive also will require the various Shands boards to change their bylaws to state that a debt plan cannot go forward unless Fuchs and the UF trustee are in agreement.
Additionally, Shands will issue at least two reports a year detailing the status of the system's debt. The reports will be forwarded to the university's Board of Trustees, as well as the Board of Governors and the state Division of Bond Finance.
The Shands debt-review plan was unanimously approved by the UF Board of Trustees in a conference call Monday afternoon.