Like a consumer who runs a credit card up to the limit but keeps on spending by signing up for another account, California University of Pennsylvania hasn't learned to stop living on borrowed money.
The same campus within the State System of Higher Education that was rocked earlier this year by the firing of a president who had pursued an aggressive strategy of extensive building and escalating debt nonetheless is going ahead with plans for a $30 million expansion of its student center.
Although officials shaved $2 million off the cost by re-using equipment from other parts of the campus, very little of the total price tag -- just $2 million -- will be covered by campus funds. The rest will come from a $28 million bond that will be floated by the state system.
That is on top of the university's $99 million construction debt load, a reflection of borrowing that has grown almost eightfold in the past 10 years.
That heavy reliance on more debt seems like a reversal of the approach that CalU's new president, former provost Geraldine Jones, signaled in August, when she announced plans to tackle a $12 million operating deficit -- 10 percent of the campus budget -- by keeping some jobs vacant, furloughing managers, reducing bus service and making other cuts.
Anyone who has ever tried to keep costs under control knows that part of any austerity plan also must include reducing indebtedness. Officials at CalU and at the state system don't seem to get that.
A homeowner who already has taken out a second mortgage on the family dwelling probably should not be taking out a home equity loan to build an addition.
The system's total debt load is approaching $1 billion, double what it was a decade ago, and that doesn't include privately financed student housing and other projects that Moody's Investors Service says would add another $1 billion.
CalU is continuing down a perilous, debt-ridden path and state system officials just won't tell the Washington County school to knock it off.
First Published: December 7, 2012, 5:00 a.m.
