Fasano Statement on Auditors’ Report: UConn Burdens State with $77 Million in “Unnecessary Interest Costs”

July 29, 2015

Hartford – Sen Fasano released the following statement regarding the State Auditors’ report and findings concerning the financing of the UConn Health Center outpatient ambulatory care center.

“This is yet another example of the administration doing what they want to do without any regard for legislative input. The result is another heavy financial burden that the state cannot afford. Legislation made it clear that this project required private financing and included specific direction from the legislature. Instead, the governor’s administration took it upon itself to move the burden onto taxpayers. Borrowing to pay for these expenses increases the overall cost of the project to the tune of almost $77 million more in interest. Instead of running this by the legislature, the administration acted on its own, stepping out of line.

“The governor previously called this ‘partnership’ a win-win for Connecticut, when he knew it was going to be an added obligation on the state. This is not a win-win, because Connecticut loses when it’s time to pay back this overwhelming interest, and that can’t be ignored.

“The inclusion of private financing was very important to the legislature for a reason. But instead a loan was pursued that we cannot afford and that now falls on the backs of Connecticut taxpayers. Connecticut needs to make smarter decisions about how the state spends. We have to live within our means. Ignoring future obligations, and ignoring the legislature, is not the way to finance for our future,” said Fasano.

The auditors’ report described the TIAA-CREF loan secured for the project by the University of Connecticut Health Center Finance Corporation stating: “This transaction will burden the state with significant unnecessary interest costs.” It also points out that the UConn Health Center is subsidized from the state’s General Fund and, “Any profit or loss related to ancillary operations of the UConn Health Center, such as the ambulatory care center, will affect the amount that must be provided from the General Fund. Therefore, excessive costs incurred by ancillary operations of the UConn Health Center will, in the end, be borne by the state.”

The report also questions UConn’s authority to secure the $203 million loan as they did stating, “the propriety of issuing this promissory note without obtaining specific legislative approval seems questionable, given the existing legislative directive to proceed in a different fashion.”