1998-99 Overview Capital Improvement Program
The University of California's programs of instruction, research, and public service have been for decades an important factor in both the society and economy of the State. The University has been responsible for providing men and women from all segments of our society with the best of educational opportunities, and has prepared them for leadership in our communities, commerce and industry, science, and other endeavors. With knowledge and skills at the forefront of their fields, the University's graduates have been key to renewing and sustaining the economy of our State and will continue to be crucial in California's response to present and future challenges.
The University's capital program must respond to several categories of needs to sustain its mission. One results from the wear and decline associated with the age and intensive use of many of our buildings and infrastructure. The importance of facility renewal is obvious at a campus of the age of Berkeley or Los Angeles, but it should be noted that even the newest campuses of the University are now three decades old and are experiencing many of the same problems. This was compounded by a period of very limited funding in the 1970s and early 1980s. The University's backlog of deferred maintenance grew dramatically, and facility deficiencies remain a major constraint to program quality and innovation.
In addition, many of the University's older buildings were designed to meet building, fire, life safety, and accessibility codes that have changed dramatically in subsequent decades. Not only have the nation and State's understanding and expectations of appropriate design and essential safety changed, but the activities housed in the buildings (particularly science and engineering laboratory functions) have also become much more complex and problematic.
A third category of need is that of change and obsolescence. As commerce, industry and science constantly evolve in response to new knowledge and opportunities, so must the academic programs that are responsible for preparing graduates entering those fields and for conducting the research that advances knowledge and creates opportunities. Instruction and research objectives evolve and change direction, as do the methods and equipment used. To prepare students properly, academic programs must themselves be at the frontiers of knowledge, developing and using innovative processes and technologies that support discovery, expand knowledge, and give competitive advantage to California. Unless academic facilities are renovated and updated to meet continually changing program needs, they become constraints to the capability of the programs and ultimately limit the abilities of the graduates entering the California economy.
Of great concern in a period that has seen a series of devastating earthquakes, in California and abroad, is seismic safety. A number of University buildings have been identified in recent years with structural deficiencies that present a serious hazard to occupants and programs. Great strides have been taken in correcting these deficiencies, and the 1994 Northridge Earthquake was a further stimulus to accelerate efforts to complete this work. Over 60 percent of University buildings that had been rated seismically "Poor" or "Very Poor" have now received structural correction or are in progress, and the University anticipated having all such corrections completed or at least started by the year 2000 if funding levels were maintained. However, information from the Northridge and Kobe earthquakes and resulting changes in the structural code have led the University to initiate a new review of the condition of selected buildings. The studies are still underway but it appears at this time that a number of additional buildings, particularly at the Berkeley campus in close proximity to the Hayward fault, will require seismic correction. The Regents have given high priority to rapid completion of the University's program of seismic and other life-safety corrections, and the additional projects will be incorporated into the program as rapidly as possible. FEMA funding, existing State appropriations for California's matching share, and a major gift campaign are providing essential support for several projects at Los Angeles, including the first phase of reconstruction of the Center for Health Sciences.
There is an urgent requirement for substantial capital funding to address the pressures of these needs--seismic and life-safety corrections, building renewal, essential infrastructure, and program obsolescence. But these problems are compounded by the forces of demographics.
Although enrollment levels have remained relatively stable over the last five years, University application rates are already showing increased enrollment pressure. Demographic data indicate a steadily rising tide of student demand starting in 1999-00 that further accelerates by 2005-06. At that point, the children of the Baby Boomers will reach college age in masses that have been described by the dramatic term of "Tidal Wave II." These children are already in California's primary and secondary education pipeline and their impact on the higher educational system of the State must be recognized. This growth will expand the population of existing campuses to the limits of their capacity and adds urgency to development of a new campus now being planned in the San Joaquin Valley.
Many of our current problems are the outgrowth of a parallel experience in the past. While enrollment was relatively stable in the 1970s and early '80s, funding was also limited and significant problems developed in the condition of the University's buildings and infrastructure. As enrollment expanded in the mid-1980s, the State of California was able to increase capital funding substantially, reaching a level of $230 million in 1993-94. During the same period the University made every effort to expand non-State capital resources, and funding from sources other than the State grew from $163 million per year to an average of about $400 million per year in the 1990s. While the expansion of financial support was most welcome, the need for expanded facilities to accommodate over 28,000 new students within a ten year period was overwhelming. The result is that the University never caught up with many longstanding facility deficiencies.
State capital funding since the mid-1980s has relied on two major sources of financing. The primary source has been from general obligation bond measures, dependent on approval by voters at general elections every two years. General obligation bonds have been the only practical funding source for initial design of most projects and for construction of small projects and infrastructure. New revenue bond financing mechanisms approved by the State were also important in the last decade.
Unfortunately, State fiscal conditions, including debt capacity considerations, limit its present ability to support the University's capital and operating budget needs. The University has intensively pursued private fund-raising for capital projects and made increased use of debt financing, lease-purchase mechanisms, and land-lease arrangements with third-party developers. Many projects have multiple fund sources and creative funding approaches as the campuses have strained to try to fill the gap in State resources.
The financial challenge faced by the State and University at this time is critical. If the forecasted numbers of additional students are to be provided space at the University of California, additional resources must be made available.
The University intends to honor its commitment to access under the Master Plan for Higher Education in California. To that end, the campuses are continuing to plan for the expansion of facilities that will be necessary to accommodate additional students, and the University is proceeding with plans for the new tenth campus, relying on the provision of adequate State funding to meet these needs.
Each campus routinely prepares a five-year capital program based both on a practical assessment of facility needs and on realistic expectations of the amount of capital funding that can be expected. This allows detailed planning efforts to be focused on those projects which are most important for the campuses and thereby avoid wasting resources preparing unsuccessful funding requests. Projects proposed for State funding in the annual capital improvement budget are based on intensive, detailed planning and pre-design analysis that typically starts three years before initial State funding. This process supports effective internal decision-making, ensures that commitments are made that can be met, enables the University to explain the project effectively during State review, and improves project management during design and construction.
The 1998-99 Capital Improvement Budget and Five-year Capital Outlay Program
The 1998-99 Capital Improvement Budget request reflects the Governor's compact with higher education. The compact provides funding of about $150 million in 1998-99 with priority given to seismic and life-safety projects, essential infrastructure and building renewal that maintains the operation of existing facilities, and educational technology. The University is fully committed to the timely correction of seismic hazards and other life-safety deficiencies, as shown by the emphasis on those projects in the 1998-99 funding request and five-year program.
The $150 million per year defined by the Governor's compact would be the minimum required on a continuing basis to meet the University's essential capital needs for life-safety and code improvements, infrastructure, and building renewal and modernization, to preserve the value and usefulness of the State's existing physical plant investment.
Unfortunately, if the projected student enrollment is to be accommodated through 2005, the University must expand the capacity of its existing campuses. This will require funding at a level closer to $250 million per year than the $150 million now available. In addition, the establishment of the new tenth campus in the San Joaquin Valley will require the investment of a minimum of $400 million to support an enrollment of 5,000 students by the year 2010, with a disproportionate amount of this funding needed in the early years. Plans for the new campus are still conceptual and specific annual capital cost figures are not yet available and thus are not reflected in the capital program tables included in this document. Specific cost information will be provided in the future when available.
The University understands from conversations with State representatives that there is no assurance that any increase in funding will be possible because of the State's debt capacity ceiling. This is an issue of major proportions which seriously affects the ability of the University to accept the additional students expected to apply to University campuses in the next ten years. We will exert every effort to work with the State to resolve this problem and secure the funding support necessary to meet the demand for student access to the University.
Consonant with our commitment to the Master Plan for Higher Education, our campuses are diligently planning for new academic and related projects necessary to meet the enrollment increases. The five-year capital program defined in this budget document includes the first group of the series of major new facilities that will be needed. The level of funding proposed reflects a program balanced between the requirements for support of the University's existing physical plant and the pressures for expanded capacity. As new academic facilities are included, the level of proposed funding increases. The first year of the program reflects the Governor's compact at $150 million per year. In 1999-2000, this is increased to approximately $175 million, rising to $200 million the following year, $230 million in 2001-02, and $250 million thereafter. Ideally, we should initiate design for the first major projects earlier than shown, but this schedule acknowledges the need for time to address the serious problem of capital financing required to accommodate the anticipated tide of new students.
Organization of the Regents Budget For Capital Improvements
This budget document focuses on projects for which State funding is requested in 1998-99. As in previous years, the non-State funded capital improvement program is treated as a continuing entity, amended as required to include new projects as funding is obtained or financing plans are developed.
This capital budget document is organized as follows:
1. 1998-99 Budget for Capital Improvements: State Funds
The request for State capital outlay funds in 1998-99 totals $150.9 million. The program is presented in summary form for the University as a whole in the next section. The overview of the State budget request lists only those projects for which State funding is requested in 1998-99.
2. Campus Capital Improvement Programs
The five-year capital improvement program proposed for State funding is presented in more detail in an individual section for each existing campus, for the Division of Agriculture and Natural Resources, and for Universitywide facilities and programs. Each section begins with an introduction that outlines the goals and problems which drive the capital program for the campus. It is followed by a table presenting the five-year program for State funding and a descriptive summary of each project in the five-year program. Each section concludes with a review of the capital needs of the campus beyond those addressed in the State-funded five-year program; this includes both long-term needs that the University may propose for State funding in the future and needs that will be addressed from other funding sources.
The five-year program for State funding presented for each campus covers the years 1998-99 through 2002-03. Regental approval is requested only for projects for which State funding is proposed in 1998-99. These are listed first in the five-year budget schedule and are followed by additional projects for which funding will be requested in future years.
Projects that are listed here for funding in later years have already received substantial consideration and are likely to appear in future capital budgets. However, it must be noted that these five-year programs are planning documents which will change as needs, opportunities, and funding decisions unfold.
1998-99 BUDGET FOR CAPITAL
IMPROVEMENTS STATE FUNDS
The 1998-99 Capital Budget requests $150.9 million in State funds for the University's capital outlay program. This level of funding is essential to maintain progress on seismic and other life-safety improvements, to address essential infrastructure and building renewal needs, and to support unmet programmatic needs.
The attached summary budget schedule displays the 1998-99 State capital budget request in several categories. The first category constitutes funding to equip three projects for which construction has been approved and funded by the State, and totals $2.2 million. The second category, representing the bulk of the funding request at $148.7 million, presents 23 major capital projects in Universitywide priority order for which preliminary plans, working drawings, or construction funds are requested in 1998-99.
Of the 23 major capital improvement projects, funds are requested to support construction or complete design and undertake construction for 14 projects, and to begin or continue design on nine projects.
Eleven of the 23 major capital project funding requests in this 1998-99 budget involve seismic corrections and an additional three address other essential life-safety and code improvements. Life safety remains an urgent priority of the University. Renewal of existing facilities is the focus of two projects. Infrastructure renewal or expansion of essential capacity is the focus of four projects. Three others are proposed in response to unmet programmatic needs.
The 14 funding requests involving construction will provide important support for every campus. At Berkeley urgently needed seismic corrections and other improvements for Wurster Hall (priority 1) will benefit the College of Environmental Design. Two infrastructure projects, improving the water supply (17) to meet fire safety requirements and renewing critical parts of the sewer system (18), will be completed. At Davis, a new building will be constructed for plant and environmental science programs (8) to replace obsolete space they now occupy in Hunt and Hoagland Halls. At Irvine, seismic improvements to Med Surge I and II (4) will provide structural corrections to existing research space.
Construction at Los Angeles will improve fire life-safety in three high-rise buildings (7). At Riverside seismic reconstruction includes the main Rivera Library (2) and Boyce Hall (5) which houses biology-related programs. At San Diego, essential renewal of electrical, seawater and sewage systems will support the Scripps Institution of Oceanography (6). San Francisco's efforts to replace the seismically deficient UC Hall will be assisted with the construction of a replacement building at the new Mission Bay campus (3).
At Santa Barbara, the Environmental Sciences Building (9) will increase facility capacity to support expansion of academic programs. The new Interdisciplinary Sciences Building (10) at Santa Cruz will provide additional academic space to address deficiencies remaining from past enrollment growth. A second phase of construction for upgrades to utility and infrastructure systems will support the University's Lick Observatory facility at Mt. Hamilton (23), managed by Santa Cruz. The second construction phase for facilities for Alternative Pest Control (11) will provide Division of Agriculture space on the Davis campus.
Design will be completed for two projects: seismic corrections for Barker Hall (12) that houses Biochemistry at Berkeley, and life-safety and building systems improvements for Broida Hall (13) that houses Physics at Santa Barbara. Design work will begin on seven projects, including seismic corrections for LeConte Hall (14) which houses physics programs at Berkeley, and seismic corrections and other improvements for Humanities-Olmsted Hall (19) at Riverside and to four small Arts buildings (20) at Irvine. Design will be started to replace seismically hazardous facilities for the Health Sciences at Los Angeles (15) and for Entomology at Riverside (16). At the San Diego campus, design will begin to renew medical school teaching and research facilities in the Basic Science Building (21), and to improve the capacity and reliability of the campus electrical distribution system and related utilities (22).
The University's State-funded Capital Budget relies on financing anticipated to be provided by a new general obligation bond measure on the 1998 general election ballot. The continued support of the citizens of California at the voting booth for this bond measure is essential to accommodate the forecast increase in student enrollment. This budget documents the magnitude of funding needed in 1998-99 and subsequent years to address seismic and other life-safety requirements, the renewal of buildings and essential infrastructure, and the expansion of facilities necessary to accommodate enrollment growth. Action is required by the Legislature and Governor for passage of the necessary implementing legislation at a level of funding that will effectively maintain the safety and usefulness of the University's existing physical plant investment and support the burgeoning numbers of young Californians who strive to better themselves.
Actual assignment of the appropriate funding source for each proposed project will be made by the State as the annual State budget process continues. Thus, the capital budget proposed for State funding in 1998-99 does not identify a specific fund source for individual projects at this time.