It is a buyer’s market in higher education today. Top students and faculty have their pick of destinations, and universities must scramble to differentiate themselves. Every possible competitive advantage is critical, especially when it comes to the amenities the schools have to offer.
In this environment, top-quality school facilities are not just a nice-to-have but a requirement if universities wish to recruit the best of the best. But faced with budget constraints and limited capacity for capital improvements, administrators frequently find themselves in a conundrum —caught between the need to invest in their amenities and infrastructure, while also needing to minimize the budgetary and cash-flow impact such investments usually create.
In other words, what happens when deferred maintenance is no longer an option? Officials at a large southeastern state university system recently found themselves in exactly this situation.
Student athletic facilities are typically a major draw for this university system, but the athletic center at one campus had been the victim of budget deferrals for years. As a result, the gymnasium floor and scoreboard in the main arena were in dire need of attention.
Adding to the urgency, during the school year, the arena hosts basketball and volleyball games as well as commencements and convocations. This meant the project was not only highly visible, it needed to be completed during the summer months so the arena would be ready for use when students returned.
However, no funds had been allocated for the project, leaving the Director of Athletics in need of a fast, simple and cash-flow-friendly solution.
Fortunately, the university’s General Administration had already taken a strategic, forward-thinking approach to mitigate these challenges. Working with First American Education Finance, administration officials had established a Master Lease Agreement to serve as a central finance resource for all 16 schools within their university system.
Under this agreement, member schools could arrange structured financing to cover major expenditures. This financing allowed schools to translate the costs for large projects into predictable monthly expenses—smoothing out cash flows and eliminating the need to dip into capital budgets. The agreement also gave schools access to highly competitive rates and pre-arranged legal documentation that greatly simplified the application process.
On the administrative side, this simplified processes for the Procurement Department as well. Because individual projects could be rolled into the master agreement, separate financing arrangements for each new project were not needed. Additionally, a Project Manager from First American oversaw administration of the financed projects, right down to tracking and auditing individual contractor invoices.
To cover the over $500K price tag of the athletic center upgrades, First American implemented a fixed-rate financing structure that included all associated expenses for the project.
Rather than continue to defer the needed renovations, the university was able to move ahead and replace the arena floor and add a state-of-the-art video scoreboard featuring LED panels visible from every seat in the arena. Amazingly, this massive project was completed in time for the start of the new academic year.
As a result of the renovations, the university has been able to deliver a more dynamic experience for students, faculty and fans. The new facility features have also aided efforts to recruit student-athletes into the athletic program, positioning the school among state and national leaders, while also greatly enhancing the video production quality of athletic and other major university events.