The University of California moved ahead with a municipal bond transaction this week, selling about $2 billion of general revenue bonds even as it contends with heightened federal scrutiny and legal action from the U.S. administration.
A bond document released by the university quoted the Regents saying, "The Regents (of the University of California) continue to monitor the federal government’s actions with respect to the higher education sector and, in particular, the university." The document added that the proceeds from the sale would be applied to finance or refinance university projects.
The sale follows a $2.2 billion municipal offering completed by the system in December. Officials described Wednesday’s move as part of the university’s regular issuance schedule, noting that the offering statement was posted earlier in the month and that the retail pricing process began on Tuesday, prior to the filing of the federal lawsuit.
Over recent months the University of California system has been at the center of federal actions focused on several campus issues. Last year, the federal government sought to withhold hundreds of millions of dollars in federal funds intended for the University of California, Los Angeles, over pro-Palestinian protests; a judge later ordered that those funds be restored. On Tuesday of this week, the administration filed a lawsuit against the University of California system alleging discrimination against Jewish and Israeli employees at UCLA. The university has said it has taken steps to combat discrimination.
Separate actions by the administration have included attempts to freeze federal funding and to initiate probes into universities tied to pro-Palestinian protests over Israel’s assault on Gaza, as well as inquiries related to transgender policies, climate programs and diversity initiatives. Those moves have raised concerns among academics and administrators about the potential impacts on academic freedom, free speech and due process.
While efforts to cut or withhold federal support have encountered legal hurdles, higher education institutions have been planning for continued uncertainty. The university system noted that its offering and pricing activities were underway before the federal lawsuit was filed, underscoring that the bond sale was part of routine financing rather than a response to immediate litigation.
The University of California system receives more than $17 billion a year in federal support, a revenue stream that federal actions could affect if they were to succeed. Market participants and institutions have been watching how such federal measures might influence cash flows, grant funding and broader university finances.
JPMorgan Chase and Siebert Williams Shank served as lead managers on the transaction for the Regents of the University of California.
Summary of developments:
- University sold roughly $2 billion of general revenue municipal bonds on Wednesday, as part of routine issuance.
- The Regents stated they continue to monitor federal actions affecting higher education and the university.
- Federal scrutiny includes prior attempts to freeze funds for UCLA and a recent lawsuit alleging discrimination at the campus; the university maintains it has taken steps to address discrimination.