Background
The Kansas Development Finance Authority (KDFA) was established by the Kansas Legislature in 1987 as a public organization to serve as the state’s full-service finance authority. The primary functions of KDFA are to offer financial expertise, simplify the process of issuing debt, and help the State, as well as other public and private entities, carry out financial transactions more efficiently.
Relevant Statutes
KSA 74-8901 created the KDFA Act (Act), which includes the following relevant statutes:
- KSA 74-8902 defines words and terms used in the Act, including “bonds,” which is defined as bonds, leases, notes, debentures, temporary certificates, grant or revenue anticipation notes, lease interests, certificates of participation in a lease, or any other type of debt, whether or not the interest is taxable under federal law;
- KSA 74-8905 authorizes agencies to issue bonds to raise money for certain projects, which can include a single project or multiple projects grouped together, for purposes such as educational facilities and health care facilities; and
- KSA 74-8905(b) authorizes the issuance of bonds for research facilities at state educational institutions and other state agencies upon request by the Secretary of Administration. Subsection (c) expands this authority, allowing bonds to be issued more broadly for educational and research facilities, including both public and private entities. The statute requires that any project financed through these bonds must provide a benefit to Kansas or its residents and that the institution or its affiliate maintains a presence or impact within the state.
Types of Bonding
There are generally four types of bonds used:
- User Fee Supported Revenue Bonds;
- Self-supporting Revenue Bonds;
- Tax-supported Revenue Bonds; and
- Units of University System.
State universities typically rely on User Fee Supported Revenue Bonds as their main source of bond funding, which are repaid using income generated by the facilities they help finance. For example, at state universities, the debt may be paid off using revenue from parking fees, housing fees, or other income generated by the institution.
These bonds are not backed by state tax revenues or the State General Fund (SGF). They also do not carry a general obligation pledge or rely on yearly funding approved by the Legislature.
Facts on University Bonding
According to the KDFA, university debt has grown at a rate of 15.4 percent from 2005 to 2016.
In FY 2024, $180.4 million of debt was authorized by the Legislature for six projects, four of which were at state universities.
Appropriations Bill—SB 125
During the 2025 Legislative Session, six projects were authorized for state universities for FY 2026 totaling $687.5 million through the passage of SB 125. State universities are required to uphold ongoing maintenance for any buildings or projects being bonded.
Kansas State University
In SB 125, the Legislature authorized $23.5 million for capital improvement projects including the Animal Science Arena, Agronomy Research and Innovation Center, Global Center for Grain and Food Innovation, and Call and Weber halls. Additionally, $128.0 million was authorized for the construction of a Veterinary Diagnostic Laboratory on the Manhattan campus.
SB 125 included a proviso requiring the Kansas State University (K-State) Veterinary Medical Center to secure $2.0 million in private donations prior to bond issuance for this project.
SGF Debt Service
During the 2024 Legislative Session, the Legislature approved a $45.0 million bond to support the development of the Pure Imagination facility, officially known as the Kansas Advanced Immersive Research and Emerging Systems (KAIRES) Center. Unlike most bonding arrangements, which are typically funded through special revenue sources, this bond is backed by SGF.
As part of the funding process, SB 125 included a reallocation of $3.1 million in SGF appropriations for both FY 2025 and FY 2026. These funds were removed from the K-State budget and transferred to the Department of Administration to support the bond issuance.
While the bond provides funding for construction, K-State will retain responsibility for the ongoing maintenance and operation of the facility once it is completed.
University of Kansas and University of Kansas Medical Center
SB 125 allocated $100.0 million for new student housing on the University of Kansas (KU) Lawrence campus in response to increased enrollment. Additionally, a $276.0 million bond was approved to support the KU Central District development project. This funding will be used for the construction of a new integrated sciences building, a new student residence hall, a parking structure, and other infrastructure improvements.
The Legislature authorized $100.0 million for the KU Medical Center’s Cancer Center project to fund construction and renovation efforts.
Wichita State University
SB 125 authorized $60.0 million for Wichita State University’s University Stadium project, which will replace the existing Cessna Stadium.
Other Funding
State universities utilize multiple funding sources beyond bonding authority to support capital improvement projects. These funds are often requested as enhancements through the Kansas Board of Regents’ (KBOR) budget. Most recently, the 2025 Legislature restructured previous funding for the Kansas Campus Restoration Act and appropriated $32.0 million from various funding sources.
Demolition Funds
The 2023 Legislature appropriated $10.0 million for the demolition of obsolete buildings on university campuses, with $750,000 allocated specifically for Washburn University, and the remaining funds designated for the state universities. This funding supports the removal of outdated facilities and helps reduce ongoing operating and maintenance costs. As a result of this appropriation, institutions have continued to identify additional obsolete structures.
Educational Building Funds
The Educational Building Fund (EBF) was established in 1941 primarily for the construction of new buildings at state universities. The EBF receives revenue from a mill levy on all tangible property in the state that is subject to ad valorem taxation. Currently, the EBF is primarily used for deferred maintenance projects at state universities. The KBOR calculates EBF appropriations using an adjusted square footage formula that considers the gross square footage, building age, and complexity of the physical plant.
State Capital Renewal Funds
The 2022 Legislature appropriated $35.0 million from the SGF to KBOR for the facilities capital renewal initiative at the state universities through House Sub. for Sub. for SB 267. The funding was designated for non-recurring investments to increase annual support for deferred maintenance, reduce the backlog, and maintain state university campuses in good repair. All projects supported by these funds required a dollar-for-dollar match from either the state educational institution or private sources.
Kansas Campus Restoration Act
The 2024 Kansas Campus Restoration Act (KCRA) supports capital renewal deferred maintenance at state universities and improvements at public coordinated institutions. Beginning in FY 2026, $32.7 million was to be transferred from the SGF to the Kansas Campus Restoration Fund for distribution by KBOR. Between FY 2026 and 2031, $30.0 million would be allocated to state universities, with $100,000 credited to each public community college, technical college, institute of technology, and municipal university. State universities must match expenditures dollar-for-dollar with non-state or private funds, except for demolition costs, while coordinated institutions have no matching requirement.
As noted previously, the 2025 Legislature adjusted the funding for $30.2 million, including $13.2 million transferred from Attracting Powerful Economic Expansion funds, $5.0 million transferred from American Rescue Plan Act interest funds, $5.0 million transferred from the water supply storage debt payment for Milford and Perry reservoirs, and $7.0 million SGF to the KCRA. This appropriation includes proviso language stating to distribute funds proportionately.
By Elaina Rudder and Dayton LaMunyon
See Education for more.