FY22 financial report print.indd

Virginia Tech Financial Report 2021-2022

12. Summary of Long-term Indebtedness Bonds Payable The university has issued two categories of bonds pursuant to Article X, Section 9, Constitution of Virginia . Section 9(d) bonds are revenue bonds which are limited obligations of the university, payable exclusively from pledged general revenues, and which are not legal or moral debts of the Commonwealth of Virginia. Pledged general revenues include general fund appropriations, student tuition and fees, facilities and administrative (indirect) cost recoveries, auxiliary enterprise revenues, and other revenues not required by law to be used for another purpose. The university has issued section 9(d) bonds directly through underwriters and also participates in the Public Higher Education Financing Program (Pooled Bond Program) created by the Virginia Gen eral Assembly in 1996. Through the Pooled Bond Program, VCBA issues section 9(d) bonds with the proceeds used to purchase debt obligations (notes) of the university and other institutions of higher education. The notes are secured by pledged general revenues of the university. JP Morgan is the university’s dealer and BNY Mellon is the issuing and paying agent. This short-term debt finances capital projects on an interim basis pending long-term bond financing. 10. Commonwealth Capital Reimbursement Programs and Capital Gifts The commonwealth has established several programs to provide state-sup ported institutions of higher education with bond proceeds for financing the acquisition and replacement of instructional and research equipment and facilities. During fiscal year 2022, funding has been provided to the university from three programs (21st Century program, Central Main tenance Reserve program and the Equipment Trust Fund program) managed by the Virginia College Building Authority (VCBA). The VCBA issues bonds and uses the proceeds to reimburse the university and other institutions of higher education for expenses incurred in the acquisition of equipment and facilities. The university also receives capital funding for equipment and facilities from private gifts, grants, and contracts. The Statement of Revenues, Expenses, and Changes in Net Position includes the amounts listed below for the year ended June 30, 2022, in “Capital Grants and Gifts” line item for equipment and facilities. Part of the funding for these programs is a receivable from the commonwealth at June 30, 2022 as shown in the subsequent paragraph (all dollars in thousands) : VCBA 21st Century program $ 128,054 Private Gifts 26,611 VCBA Central Maintenance Reserve program 4,715 VCBA Equipment Trust Fund program 18,814 Grants and contracts 2,562 Total $ 180,756 The line items, “Due from the Commonwealth of Virginia”, on the Statement of Net Position for the year ended June 30, 2022, include pending reimbursements from the following programs (all dollars in thousands) : Current Noncurrent VCBA Equipment Trust Fund program $ 18,069 $ - VCBA 21st Century program - 10,696 Capital appropriations receivable - 2,424 Total $ 18,069 $ 13,120 11. Short-term Debt In August of 2021, the Board of Visitors authorized the university to issue its own commercial paper on a tax-exempt or taxable basis in an aggregate principal amount of up to $175,000,000. At June 30, 2022, the amount outstanding was $46,449,000. The average days-to-maturity was 44 days with a weighted average effective interest rate of 0.70%.

Section 9(c) bonds are general obligation revenue bonds issued by the Commonwealth of Virginia on behalf of the university and secured by the net revenues of the completed project and the full faith, credit, and taxing power of the Commonwealth of Virginia. Bond covenants related to some of these bonds, both 9(c) and 9(d), require the use of established groups of funds called systems. The Virginia Tech Foundation Inc. and investment firms BNY Mellon Investment Manage ment and Merganser Capital Management hold these funds in trust for managing the net revenues and debt service of certain university auxilia ries. The revenue bonds issued by the Dormitory and Dining Hall System, the Athletic Facilities System, the University Services System (includes Career and Professional Development, Center for the Arts, Health Ser vices, Recreational Sports, Student Engagement and Campus Life, Cultural and Community Centers, Student Organizations, and Rescue Squad), and the Utility System (includes Virginia Tech Electric Service) are secured by a pledge of each system’s net revenues generated from student or custom er fees, and are further secured by the pledged general revenues of the university. Notes Payable Notes payable are debt obligations between VCBA and the university. VCBA issues bonds through the Pooled Bond Program and uses the pro ceeds to purchase debt obligations (notes) of the university. The notes are secured by the pledged general revenues of the university. Finance Purchase Obligation The university has a finance purchase obligation with the Virginia Tech Foundation Inc. for the Kentland Farm dairy complex. Under the terms of the lease agreement, ownership of the property will be transferred to the university at the end of the lease. The university has accounted for the fi nanced purchases as additions to capital assets in the year of the agreement and recorded a corresponding financed purchase obligation in long-term debt, both of which are on the Statement of Net Position as of June 30, 2022. Revolving Lines of Credit The university has revolving lines of credit with First Bank and Trust Company, Truist Financial Corporation, and Wells Fargo Bank, N.A. with maximum principal amounts totaling $368,000,000. The $308,000,000 with Truist Bank includes a standby liquidity support agreement to provide a revolving line of credit as liquidity to support the university’s commercial paper program with a maximum principal amount of $175,000,000. As of June 30, 2022, there were no amounts outstanding on these revolving lines of credit as shown in the table below (all dollars in thousands) :

Maximum Principal Amount

$

308,000 30,000 30,000 368,000

Truist Financial Corporation First Bank and Trust Company

Wells Fargo Bank, N.A.

$

Total

28

Notes to Financial Statements