Some recent reports about the university's financial position deserve to be clarified and put in context.
While true that OU's indebtedness is large, it is bonded indebtedness for physical facilities. Bonds are used very carefully to finance facilities that are needed for our core mission and to avoid deferred maintenance on aging facilities. Private gifts have been raised to cover a substantial part of the cost of these projects. The university's amount of debt is similar in scope to our fellow comprehensive public university in Oklahoma and similarly rated public universities, particularly those like OU that do not receive capital appropriations from their sponsoring state government.
The bonds all have minimum cash flows that exceed minimum debt service payments by 25 percent. The bonds were all carefully crafted pursuant to the OU Board of Regents' debt policy and provide for achievable financial plans and for the maintenance of investment-grade bond ratings. The total debt figure cited in recent reports includes such items as funding for the football stadium, for which adequate private funds-along with Athletics Department revenues like ticket sales and Big 12 distributions-have been identified to retire the bonds. Public funds were not used to build the stadium or finance the bonds. In addition, OU's Cross housing project is funded by private partners and did not incur any university debt. It also provided a $20 million cash reserve fund for the university to be available to take care of short-term cash demands. That fund remains intact.
OU's required annual debt service payments represent only approximately 6 percent of its total operating revenue. Neither its total debt outstanding nor its underlying funding sources are unusual.
As I warned the public several weeks ago, while the university is stronger than it has ever been in terms of its academic mission and its faculty, staff and students, it cannot be maintained at this level without adequate public support. It is clear that no public college or university can maintain the excellence that we have achieved unless state funding returns to normal. We are now operating with approximately the same state funding that we received more than 10 years ago.
Standard & Poor's and Fitch Ratings recently affirmed OU's bond ratings and maintained stable outlooks; however, both rating reports noted OU's declining support from the State of Oklahoma as diminishing its credit strength. In the past few years, higher education has been cut more than any other major state function. There is no doubt that the strengths of our educational system cannot be maintained unless our elected officials begin to reinvest in it. We all need to help my successor and OU obtain the necessary public support to build a strong future.