State of New Mexico slashes NMSU’s land grant fund
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The government of the State of New Mexico reduced New Mexico State University’s land grant permanent fund by $62 million, bringing the net position from $158 million to $92 million.
The New Mexico government shifted $62 million from NMSU’s land grant permanent fund to the state government’s ledgers. This shift changes the numbers NMSU reports as an asset.
“Recently, the state determined they wanted to put those assets from your side of the ledger over to their side of the ledger. And so they made a change in accounting at the state level. And when they made that change in accounting at the state level, that forced you to essentially change your accounting down at this level,” said John Kennedy, partner of the third-party auditing firm KPMG.
It should be noted, this change in the university’s assets will not affect the budget overall. This change will affect the total amount of assets the university reports when applying for things such as bonds. Furthermore, it is only a change in the way New Mexico State University manages its books.
NMSU utilizes different methods for reporting their assets in order to secure a bond. The general method is to pledge future revenues to legitimize the university’s ability to pay back the bond.
An example, given by the Senior Vice President for Administration and Finance Dr. Burke is, “They can be supported by housing revenue. We have a new dormitory coming on board, and that’s supported by pledging the revenue that we would receive. When I say pledging the revenue, it’s to pay off the debt payment in the form of an annualized payment.”
This example is one of many. There are still numerous sources of revenue and assets that the university can claim when applying for a bond.
“The land grant permanent fund was an asset on our books. It is also an asset that earns income for NMSU on an annual basis. So there is an investment income that is coming off of the land associated with what’s been assigned to NMSU,” said Dr. Andrew Burke.
However, with this shift in the permanent fund by the State Government, it could present a minor roadblock to the university’s overall ability to compete for and secure bonds.
