Independent ministries have recently made allegations about La Sierra University’s use of tax-free bond financing. These include speculation about how such financing might impact the educational ministry of the university. These charges were made without giving La Sierra University an opportunity to offer information or verify facts and the result is that what has been published is not accurate.
La Sierra would like to set the record straight, university spokesman Larry Becker has told Adventist Today. La Sierra University’s Board of Trustees voted in May 2008 to issue a $24.4 million tax-free bond with two primary purposes: (1) Provide funding to complete much-needed capital improvement projects around the university; and (2) Refinance the debt and reduce the payments on the Price Science Complex construction financing.
Government-funded, tax-free bond financing for construction of academic buildings and other facilities has been used by a number Adventist colleges and universities across North America since 2003. The facts about these situations have long been on the record and reviewed by General Conference auditors.
Accepting bond financing does not preclude La Sierra faculty from teaching their disciplines from a strongly Adventist perspective and viewpoint. As it has for 90 years, La Sierra University’s Adventist heritage and affiliation informs all of its instructional efforts. With the support and encouragement of the Board of Trustees and administration, the faculty has been working for more than two years to refine the ways in which the university offers an excellent Seventh-day Adventist education across all academic disciplines.
Until very recently, there was no ability in California for the University and other nonprofit religious schools to engage in tax-exempt borrowing. But in 2007, the California Supreme Court ruled that any nonprofit religious school or university may now use tax-exempt bonds to finance qualified educational facilities.
“While this type of financing can raise issues of separation of church and state,” says Kent Hansen, university legal counsel, “La Sierra University has carefully and publicly addressed these issues throughout the bond development process. Repeated references to La Sierra University’s identity as a Christian, Seventh-day Adventist institution are made throughout the bond issue Official Statement. It also states La Sierra’s affiliation with the Adventist Church, and describes the university as a community of learning that is also a community of faith. These statements accurately describe La Sierra’s policies and practices.”
The California Supreme Court held that a school only needs to establish that “the academic content of its secular classes is typical of comparable courses at public or other nonreligious schools.” Once that is established, a teacher may “express an idea or viewpoint that may be characterized as ‘religious.’” The California Municipal Finance Authority, the issuer in the La Sierra University financing, has facilitated tax-exempt financing to refinance debt and enable new construction at a number of faith-based institutions in California, including Azusa Pacific University, Biola University, Mater Dei High School, and Westmont University. It has even issued bonds for the University Ministry Board of the Santa Barbara Presbytery and the Roman Catholic Bishops of San Jose.
"The university can teach in the Price Science Center the Adventist belief in creation as an explanation for the origins of earth and life as long as other alternative explanations of origins with claimed supporting evidence are also presented," says Hansen.
La Sierra University administration could not make a financial commitment of this size on its own. The Board of Trustees is responsible for authorizing any university financial commitment over the amount of $300,000.
The Board of Trustees acted to issue the bond after receiving counsel from financial advisors and legal assistance from bond specialists. The board’s finance committee voted to recommend issuance of the bond to the full board. Following lengthy discussion and careful questioning by the members present, the board approved the bond issuance. “This bond funding proposal moved through all appropriate channels,” says Ricardo Graham, Board Chair.
Throughout the postings on independent sites, individuals have taken isolated facts and surrounded those facts with conjecture. In many instances, these websites suggest interpretations of the law applicable to use of tax-exempt proceeds that is at a minimum not required by, and at times inconsistent with, the California Supreme Courts’ statements on this subject. While presented as fact, what appears on both of these web sites can only be characterized as unfounded speculation.
It is ironic that some of these accusations are made by organizations that have obtained a tax-exempt status from the Federal government and this is considered to be a kind of government subsidy by many policy and fiscal experts. It makes the organization eligible for a subsidized postage rate from the U.S. Postal Service.
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