By J.T. Keith
Eastern New Mexico University students recently voted to increase their fees to help fund a new, on-campus, multipurpose stadium.
The approval, however, left many students with more questions than answers. Would students be on the hook for more than the $4 million they approved? Would the raise in student fees be intact for the full 30 years?
The Chase wanted to know what the vote means for students, faculty and administration, and the city of Portales, so Sports Editor J.T. Keith sat down with ENMU Vice President of Business Affairs Scott W. Smart to get answers.
Chase: How do the fees work? Will full-time students be charged $40 a semester and part-time students be charged $3.33 per credit hour?
Smart: It is based on $3.33 per credit hour, regardless of full-time or part-time student. For some of our students, the credit hours will not apply. We have dual enrollment with high-school students. We have an agreement with the state that we do not charge them tuition and fees. Their credit hours count in our overall credit hours, but they won’t count in this because they don’t pay fees. I’m using 100,000 credit hours for my estimate of annual revenue in fees times $3.33 a credit hour, which would be $333,000 a year that we would generate.
Chase: Are the students paying 30 years of $3.33 a credit hour?
Smart: The way to really look at it is, we are going to build the stadium, we need the $4 million up front. The students have committed $4 million, and we need it right away. To collect that from the students, it is going to take a number of years, so we essentially have to borrow the $4 million, then the $4 million gets paid back through student fees. There is an interest cost associated with that because the $4 million isn’t available upfront the day we start construction. My estimate is, depending on what interest rates are, that it is going to take somewhere between 15-20 years to pay the money back. Furthermore, depending on how successful the Foundation is in raising money, I guess in theory, we would not need the money from the students. It is hard to answer your questions until we know how much money the Foundation raises and what interest rates are going to be. Let’s assume the Foundation raises $8 million dollars, then the students put in $4 million. That would be a $12 million-dollar project. We would borrow some amount of money. I don’t know how much money we would borrow because some of the gifts might be paid right away, some might be paid out over a five-year period. We would structure a loan around all those different issues, and a lot of them are not known at this point.
Chase: Are fees based on full-time status or credit hours?
Smart: It is not based on full-time students; it is based on credit hours. A full-time student taking 12 hours will be charged $3.33 to equal $39.96. We have a full-time student who is taking 20 credit hours and is charged $3.33 a credit hour for a total of $66.60 in credit hours. Everything is based on credit hours.
Chase: When will these credit-hour fees take effect?
Smart: I talked to [ENMU President Steven] Gamble, and we will implement those charges the Fall of 2014.
Chase: Are students on the hook for 30 years of fees?
Smart: Oh no, I don’t think so. This fee as it relates to the stadium; in my estimate, the students will be paying it—and this is just a guess because all the facts are not known—but probably 15-20 years.
Chase: Will there be fees charged after the $4 million loan is paid?
Smart: That is an interesting question because we have not gone that far. What I would like to see is that the institution would go back to the students because they would have been paying that fee for a relatively long period of time. There will be two choices: one, the fees get removed, and the other is to see if that fee could stay in place and used to for an addition to Greyhound Arena. This is just my own opinion. I’d like to see the pool moved over there, or a better pool, and maybe a climbing wall, and some other indoor facilities for our students.
Chase: What about plans for stadium parking?
Smart: Right now, that is sort of what we call an alternate, depending on where the fundraising is at. If the fundraising along with the student contribution is large enough, we could have paid parking. If fundraising maybe is not as successful, a parking lot is not a priority. The first thing is to put our money into the stadium and seating.
Chase: Is there a set time for people to give contributions to this project?
Smart: Depending on the size of the gift, we are thinking about giving the donors anywhere from one to five years to pay that off. Take me, for example, say I decide to give $3,000. Personally, it would be easier for me to spread it out over 36 months. Once the pattern of giving is known, it will be easier to match that up with the student’s contributions, and that would be made public to everyone. Let’s assume for simplicity that the Foundation raised $8 million along with the students’ $4 million. We would borrow $12 million and put out what is known as a debt service schedule that shows the annual payments. Everyone can see when the students paid their $4 million. Once that was hit, there would be an agreement that on that anniversary date, say it was 17 years out, there would be an agreement to stop charging the fee.
Chase: In 2014, ENMU starts collecting fees, but ENMU cannot break ground until all the money is in the bank. What will you do with money you are charging students?
Smart: The money we collect from the students will be in a standalone interest-bearing account. Let’s assume for argument’s sake that we cannot collect the money to fund the project. It would be dead, and then we would have to return the money to the students who were charged. If we could not give money back to every individual student, then we would give it to the student fee committee, and they would determine how to allocate the money.
Chase: How will naming rights for the stadium work?
Smart: It has been talked about, and there are different levels. Two million dollars or more, and I suppose that a corporation or company could have it named after them. Additionally, there is talk about locker room naming rights. There was talk as well of some light pools with a plaque saying they gave $5,000 dollars, and that was their contribution to the stadium. One thing that is pretty popular, and you see it at the [KENW] Broadcast Center, is the bricks. There is talk that there could be a sidewalk by the stadium with bricks and their names on it.
Chase: Is there a formula for naming rights for the stadium? Does a donor have to give 80 percent?
Smart: I think it is different by institution. We don’t have a long history of large capital projects of this nature. The students have, thankfully, contributed $4 million, and so we are looking for $4 million more. Someone came up with the $2 million number based on that. The largest gift, unless someone extraordinary happens, is from the student fees.
Chase: If no one matches or surpasses the $4 million given, could the stadium be named Student Stadium?
Smart: That is a good question. I don’t know if anyone has contemplated that.
Chase: What about money for the upkeep of the stadium?
Smart: The fees are strictly for the construction of the stadium. The upkeep of the stadium will be picked up by the university.
Chase: What is the process for construction bids for the stadium project?
Smart: That process will be like any other process. As a matter of fact, we just awarded a contract for the Jack Williamson Liberal Arts, and it will be just like that—a public process. We have an evaluation process, and then we go with what we believe to be the most qualified contractor to build.
Chase: How will you do the banking? Are you going to keep your business locally, or are you searching for where you can get the best interest rate?
Smart: It would be, my guess, when we get to the point where we have to borrow money, it will be with the New Mexico Finance Authority. They are a quasi-state agency. They are very cheap when you borrow money, and there can be a high level of fees when you go through a bank. Because NMFA is a state agency, their fees are very low. We used NMFA when we did a $27 million loan about three years ago. Their fees were very low, and their interest rates were very low. Again, they are not in the business of making money. They are in the business of helping the state of New Mexico get construction projects done. My guess is that we will go that route, and it has proven to be one of the most costs-efficient methods of doing business.