Debt Policy

I.             Scope  

This policy applies to all debt financing activities of the University.

II.          Policy Statement


George Mason University’s mission as a public, comprehensive, research university in the National Capital Region in the Commonwealth of Virginia is to create an innovative and inclusive academic community committed to creating a more just, free, and prosperous world.

The use of debt is an important funding mechanism for the University’s capital plan. This policy links the use of debt to the University’s mission and strategic goals.

The objectives of the debt policy are to provide:

  1. guidelines for debt issuance and debt policy, oversight and reporting;
  2. framework for debt capacity and debt affordability to maintain the long-term financial health of the University; and
  3. considerations for debt management and risk management.

Debt Issuance and Debt Policy: Oversight and Reporting

The debt policy and any subsequent, material changes to the debt policy shall be submitted to the State Treasurer for review and comment prior to its adoption by the University’s Board of Visitors.   The Board of Visitors is to periodically review and approve policy guidelines. The Board of Visitors shall authorize the issuance of debt and execution of financing agreements giving consideration to policy guideline compliance. Additionally, federal tax law requires that the Board of Visitors pass a Reimbursement Resolution when required.

The Senior Vice President for Administration and Finance (“Senior Vice President”) is responsible for implementing this policy, all debt financing activities of the University and regular reporting to the Board of Visitors on the University’s debt plans and position.


The University seeks to manage its debt and overall financial profile as follows:

  1. Align the financial position of the University consistent with a minimum rating of AA-/Aa3.
  2. Optimize the University’s debt composition within its desired risk management profile.

Debt Capacity and Debt Affordability

In evaluating its debt capacity and debt affordability, the University will consider its current debt levels, future debt financings, and overall financial health of the University. Debt capacity is the University’s ability to leverage its financial resources to finance certain capital projects within a debt burden ratio limit of 10%.  Debt affordability considers the University’s ability to pay the debt service on an annual basis through its operating budget and identified revenue streams.  The University will benchmark financial indicators to the public higher education institution medians for the “Aa3/AA-“rating category published by nationally recognized rating agencies (such as Moody’s Investor Service, Fitch Ratings or S&P Global Ratings).

Debt Management and Risk Management

The University will manage its debt level, debt composition, and risk profile with an enterprise portfolio view. The University may actively manage its debt portfolio to take advantage of current market conditions, either to generate savings or utilize financing structures that would optimize its debt portfolio. The financing structures are reviewed within the context of the goals of this policy. The University recognizes there is a correlation between risk and cost, and there are risks it may assume in order to optimize its debt portfolio. The University recognizes the value and flexibility that short-term debt or variable rate financing may contribute to its debt portfolio. While interest rate risks associated with variable rate debt can be mitigated through asset/liability management, the University may consider the use of derivative products in order to achieve the goals outlined in this policy. Derivatives may be undertaken by the University only upon quantification and evaluation of their risks and in accordance with the University’s Interest Rate Swap Guidelines.

Post Issuance Compliance

The University’s Tax-Exempt Debt Post Issuance Compliance Guidelines will define compliance practices including compliance actions, records management, and process continuity. The University established a Private Business Use Policy 2115 for the ongoing use of facilities in order to ensure it meets federal tax law requirements for the use of tax-exempt debt financed facilities.  The University adheres to the post issuance compliance procedures established through the Treasury Board and the Virginia College Building Authority for their pool program debt issuances.


  1. Reimbursement Resolution – Board approved resolution declaring its intent to issue tax-exempt debt in order to reimburse the University for expenditures incurred more than sixty (60) days prior. The resolution does not obligate or authorize the University to issue tax-exempt debt for the identified projects. In accordance with federal tax law, the University may issue debt to reimburse itself up to three years after the adoption of a Reimbursement Resolution.
  2. Debt Composition – different types of financing structures that comprise the University’s outstanding debt obligations. The financing structures include but are not limited to fixed rate, variable rate, short-term, long-term, direct debt, indirect debt, public debt, private debt, and capital leases.
  3. Debt Service Burden Ratio [Debt Service to Operations] -This ratio measures the percentage of operating expenses that support debt service and is a determinant of the University’s operating flexibility to finance existing obligations and new initiatives. Total operating expense calculation includes interest expenses less student aid. Ratio limit is 10%.

Annual Debt Service

Total Operating Expense Times 100

III.             Dates:

A. Effective Date:         

This policy will become effective upon the date of approval by the Board of Visitors.

B. Timetable for Review:

This policy shall be reviewed by the Board of Visitors periodically but not less than every three years.

Date Approved: February 5, 2014

Revision Approved: March 1, 2018

        Reviewed: February 25, 2021

Revision Approved: February 24, 2022