Governor, Cabinet caught offguard by UNF bond downgrade
AG Gancarski interviews former Jacksonville Mayor John Delaney. (File photo)

John Delaney

University of North Florida President John Delaney is calling the school’s recent bond downgrade “a blip.”

Delaney, a former Jacksonville mayor, spoke at Tuesday’s Florida Cabinet meeting about the slide.

“I’d prefer to not even be here,” he said, half-jokingly.

But Agriculture Commissioner Adam Putnam soon questioned the “the lack of notice of the downgrade,” saying “now we’ve got this black mark.”

Ben Watkins, the state’s Director of Bond Finance, told the panel that the school’s bond rating slipped two months ago. Moreover, the school didn’t promptly notify state officials of what had happened.

A bond is essentially money borrowed from investors. So in one sense, bond ratings are to organizations what credit ratings are to individuals.

Even a slight downgrade can make it harder for an organization to borrow more money – and can make money cost more to borrow. In this case, Delaney said it wouldn’t.

He explained to reporters that S&P Global Ratings, a bond rating agency, was reviewing bonds issued not by the school, but by its direct support organization, or DSO.

DSOs, which can include “booster” clubs, are separate nonprofit organizations allowed under state law.

They can “enter into agreements to finance, design and construct, lease, lease-purchase, purchase, or operate facilities necessary and desirable to serve the needs and purposes of the university,” according to state statute.


Delaney said the agency then reviewed another UNF bond issued through the state “without any prior notice.” It was to build a new fitness center six years ago.

That bond was reduced from an A+ to an A, Delaney said, translating that as a message to investors that “maybe there’s a slightly bigger risk than before.”

Such a downgrade is supposed to be quickly reported to the state’s Division of Bond Finance. It wasn’t.

“The rating agencies are supposed to alert them,” Delaney said. “The universities are not required to, but as a courtesy, we should have.”

UNF did eventually notify the state, but the email was misdirected and state bond finance officials didn’t find out for nearly two weeks.

To make the delay worse, the misdirected email was sent to a state employee who was on vacation, according to Delaney.

“We should have followed up, he said. “That’s not a great excuse.”

Watkins told Gov. Rick Scott and the Cabinet – Putnam, Attorney General Pam Bondi and Chief Financial Officer Jeff Atwater – that a new policy will require universities to tell the state as soon as they’re aware that they’re even being reviewed by a bond rating agency.

Marshall Criser III, chancellor of the State University System of Florida, said there’s “been a great deal of scrutiny to make sure debt being issued is of high quality and that we are thinking about the university and the state as a whole.”

“The system is sound,” he added.

Ultimately, the downgrade isn’t such a big deal, in Delaney’s view: “It’s not going to have an impact on other bonds issued … It’s pretty much a blip. It’s a technical thing.”

Jim Rosica

Jim Rosica is the Tallahassee-based Senior Editor for Florida Politics. He previously was the Tampa Tribune’s statehouse reporter. Before that, he covered three legislative sessions in Florida for The Associated Press. Jim graduated from law school in 2009 after spending nearly a decade covering courts for the Tallahassee Democrat, including reporting on the 2000 presidential recount. He can be reached at [email protected]


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