University President Steven Knapp said this week that the school will use debt to fund a significant portion of initial construction on the $300 million Science and Engineering Complex.
Knapp and other administrators had said previously that the complex would be funded through donations, research grants and revenue from the multi-purpose complex at Square 54. But Knapp says he does not think these sources alone will be sufficient for the initial construction.
The University president told The Hatchet Tuesday that he was committed to keeping his promise of not using funds from the operating budget – which includes money from tuition – to construct the complex. They will instead use revenue from debt, in addition to the three other previously cited sources.
GW’s debt grew to just under $1 billion this year after the University issued and sold $200 million in corporate bonds to ensure liquidity in the tight credit market.
Knapp did not know how much extra debt would be needed since it is contingent upon the amount raised through fundraising.
“How much we need to borrow is dependent on how much we raise,” Knapp said. “But yes, borrowing is an important component of this.”
While he said he would prefer not to take out more debt, Knapp argued the Science and Engineering Complex is the most cost-efficient way to improve the University’s research labs and that the new building would “be worthy of the talents of faculty and students.”
The building, which would be the University’s most expensive construction project to date, could significantly alter GW’s academic focus and improve the school’s standing as a research institution.
The University anticipates receiving reimbursements from research grants, which are designed to partially pay schools back for facilities and administrative costs. When asked about the ultra-competitive environment for external and government grants, Knapp said he was not nervous about the faculty’s ability to win funding.
“This is not a shot in the dark,” he said. “It’s hard to explain because it’s hard to understand, but we can reasonably expect that if we had this much more lab space, we would get this much more funding.”
He added, “Given the terrible facilities we have now, we do very well, and that is a good sign for the future.”
Knapp said that while the fundraising and development departments were identifying potential donors for the complex, the University’s “immediate [fundraising] priority is financing student aid.” Vice President for Advancement Laurel Price Jones said last week that the formal fundraising campaign for the complex was on hold because of the poor state of the economy.
Knapp said it was misleading to say they will be fundraising just for the Science and Engineering Complex itself because “a lot of what is raised will go to programs inside.”
Clarification: (April 23, 2009) The sub-headline implied, incorrectly, that there was a new funding plan for the Science and Engineering Complex. University President Steven Knapp says the plan has not changed. The headline was referring to the difference between Knapp’s public statements and a recent interview – where he first explicitly mentioned borrowing as a major source of initial funding. The article also did not clearly state that the three major sources of revenue are intended to pay back debt over the long term.