Among the decisions facing Gov. Henry McMaster as he considers the fiscal year 2017-18 Appropriations Act passed by the General Assembly is whether to veto a proviso that removes the duplicative step of review by the South Carolina Commission on Higher Education (CHE) for certain types of capital projects at the state’s public universities.

The CHE contends that its participation in this already extensive review process is needed to protect taxpayers and to control tuition. However, for the types of projects in question, CHE is merely adding a layer of bureaucracy and in some cases it is actually adding to the cost of higher education projects.

The most recent effort of CHE is to seek a one-size-fits-all approach to oversight of capital project financing for athletics and auxiliary capital projects. These are non-academic projects, which are paid for by self-generated funds, such as athletic revenues from ticket sales and media contracts. CHE has sought to impose an arbitrary standard of 50 percent cash down on these projects. This approach ignores the significant differences in size, mission and financial health among the state’s public universities, as well as the differences among individual projects.

It also demonstrates a lack of understanding of the realities of financing large and complex projects where issuing debt in the form of revenue bonds often is the prudent approach, especially in a low-interest rate environment such as the one in which we live today. Importantly, this type of financing is not guaranteed by the revenue or assets of the university, nor by the taxpayers of South Carolina. Thus, CHE’s significant efforts to control athletic and auxiliary financing are misplaced and do little, if anything, to protect the interest of those it claims to serve.

This CHE edict already has stalled the construction of a new tennis facility at Clemson for use by our student-athletes, the larger university community and city residents. CHE’s action in this case could well increase the cost of the project and cost the university millions in lost investment returns. All for a project, like all athletics projects at Clemson, that is not funded by taxpayer money. From an historical perspective, had such a rule been in place over the last several years vital improvements to the Clemson campus, such as our Core Campus residence and dining hall that opened last year, likely would not have been built.

With respect to oversight, CHE leadership is fond of saying “if not us, then who?” when asked about the organization’s continued push for more authority of the state’s public universities.

The answer is simple: The state, through the thoughtful and diligent efforts of the South Carolina General Assembly, the Joint Bond Review Committee, the State Fiscal Accountability Authority, the comptroller general and the governor’s office has become a model for effective oversight of higher education.
 
Such oversight, in addition to strong management from university Boards of Trustees, already ensures that capital projects are carefully vetted and prudently financed, as reflected by the fact that debt service is less than 4 percent of Clemson’s operating budget.

South Carolina is one of just eight states in the country that doesn’t use taxpayer dollars or broad-based student fees to fund athletic facilities. Clemson Athletics is a completely self-supporting enterprise. No taxpayer funds or student tuition and fees are used for the operations of Clemson’s 19 varsity sports nor for construction of athletics facilities. Additionally, Clemson’s overall financial health has never been better as evidenced by the university’s historically strong bond ratings.

Clemson welcomes appropriate oversight that adds value and protects the interests of the residents of South Carolina, and the university has a long history of working constructively with a full spectrum of regulatory bodies.

In the case of the Commission on Higher Education’s push for greater control over university capital projects, however, the only thing being added to the equation is an unnecessary layer of bureaucracy that neither supports the mission of our higher education institutions nor serves the interests of taxpayers.

It is Clemson’s hope that Gov. McMaster will agree with his colleagues in the General Assembly and allow Proviso 11.23 to stand.

Jim Clements is president of Clemson University