Lawmakers move to restrict University of Kansas from spending certain funds

Kansas lawmakers struck back at the University of Kansas on Thursday by adding a provision to the state’s budget to restrict the university from spending certain money.

The provision is a response to the university decision to circumvent the Legislature’s authority last month when it issued $326.9 million in bonds. KU relied on a Wisconsin agency to carry out the January bond deal – instead of the Kansas Development Finance Authority – as a way to avoid the need for legislative approval on the bonds.

Both the size of the bonds, which will be paid off over 30 years at a 3.76 percent interest rate, and the university’s decision to bypass the Legislature have been a cause of concern for lawmakers.

Rep. Marc Rhoades, R-Newton, called KU’s actions egregious at a meeting of the House Appropriations Committee. He offered an amendment to restrict the university from spending beyond its approved budget in 2017 without legislative approval as a response.

“Why are we meeting? Why do we have an appropriations process?” Rhoades said. “That’s my question … if there’s no checks and balances and people and we’re not the appropriators and people can just bypass the spending of their dollars at their whim then we might as well just say that an have no limit on everything.”

“I think this is a way to say, wait a minute, let’s not bypass the process,” he added.

The amendment passed and was attached to SB 161, a budget bill which the House could vote on as early as next week.

Under current law KU faces no limit on how much money it can spend from its tuition fund, but Rhoades’ amendment would require the university to seek the Legislature’s permission if it wanted to spend beyond the amount that had been budget. The restriction would not apply to federal funds or grant money.

“This does not take one dime away from any university that isn’t in their budget,” said Rep. Mark Hutton, R-Wichita, who has been outspoken critic of the bond issue. “This is not a budget cut. This is simply putting some limitations on some funds.”

Rhoades’ amendment would apply to any university that used an out-of-state finance authority to issue bonds after July of 2015. The only state university to do that was KU.

Tim Caboni, KU’s vice chancellor of public affairs, called the amendment “a targeted attack on the University of Kansas” and said that the legislation “inserts the Legislature into the most basic of our budgeting and financial transactions and threatens our ability to conduct everyday business operations.”

“In addition to hamstringing KU’s ability to make basic budgeting and financial transactions and serve Kansans, this amendment sends a signal nationally that Kansas is not a state that’s receptive to business and development,” Caboni said. “While more than 30 states have passed legislation encouraging this type of financing model, Kansas now stands alone in being the only state trying to restrict it.”

Rep. Gene Suellentrop, R-Wichita, said passing the amendment would ensure that other universities did not follow KU’s example and that the Legislature remains the oversight body for bond issues.

Rep. Barbara Ballard, D-Lawrence, a member of the KU faculty, called the legislation punitive. Other lawmakers expressed concern that the proposal had not been properly vetted with a hearing.

“I’m not going to vote for something that I don’t completely know how it’s going to impact the school,” said Rep. Amanda Grosserode, R-Lenexa.

The committee was already planning to hold a hearing on the bond issue next week before it approved the amendment.

This story was originally published February 4, 2016 at 5:31 PM with the headline "Lawmakers move to restrict University of Kansas from spending certain funds."