University of Virginia Library

De-linking External and Internal Debt Structures

The University has adopted a central loan program under which it provides funding for projects across schools and divisions (including the Health System) under the guidance of the VP & CFO. In this regard, the University has established a pool of financing resources, including debt, for a central source of capital.

The benefits of this program include:

• (i) Enabling the structuring of transactions in the best economic interests of the University that otherwise wouldn’t be possible on a project-specific basis;


• (ii) Providing continual access to capital for borrowers and permitting the University to fund capital needs on a portfolio basis rather than on a project-specific basis;


• (iii) Funding specific projects with predictable financial terms;

• (iv) Achieving the lowest average internal borrowing costs while minimizing volatility in interest rates;


• (v) Permitting prepayment of internal loans at any time without penalty; and


• (vi) Achieving equity for borrowers through a blended rate.

The central loan program can access funds from a variety of sources to originate loans to divisions. The University manages its funding sources on a portfolio basis, and therefore payments from divisions are not tied directly to a particular source of funds. (Note: Due to federal tax and reimbursement requirements, actual debt service for certain projects still must be tracked.)