1999-2000 Overview

The University of California's programs of instruction, research, and public service have been for decades an important factor in both the economic growth and the social fabric of the State.  The University has been responsible for providing young women and men 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 important issue at this time is that the number of these young people who are striving to enter the University is increasing rapidly.  Demographic data indicate a steadily rising tide of student demand that has already started arriving and that accelerates for the next decade.  The flood of children of the Baby Boom generation who will reach college age in the next few years will increase enrollment at a steady year-to-year growth rate of 2 to 2.5 percent per year.  By 2010, they are projected to add approximately 45,000 full-time equivalent (FTE) students to the 147,000 already enrolled on the University's general campuses in 1998-99.  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.  They will expand the population of existing campuses to the limits of their capacity and will add urgency to development of the new UC Merced campus now being planned in the San Joaquin Valley.

The arrival of this mass of new students presents a major challenge to the State and for the University's capital program.  Expansion of facilities to accommodate increased numbers of undergraduate and graduate students, and the faculty and staff necessary to support them, is only one of several categories of urgent need that must be balanced in the capital program.

An unavoidable, continuing need 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.  Recent increases in funding and the University-financed deferred maintenance bonds will address an essential first increment of this problem, but continued support through the deferred maintenance program and as capital renewal is necessary.

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.  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 are being incorporated into the current program as rapidly as possible.  The requirement to rebuild the UCLA Center for Health Sciences, damaged in the 1994 Northridge earthquake, and a similar massive seismic corrections program at the Berkeley campus present special problems.  State funds have been supplemented by major FEMA support at Los Angeles, but even there and particularly at Berkeley the level of additional funding necessary presents a serious challenge that will require an extraordinary level of donor support and over two decades will still stretch campus resources to their limit.

Our experience during the last development cycle is cautionary.  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 ($275 million at 1999-00 budget dollars).  During the same period the University made every effort to expand non-State capital resources.  While the increase in financial support was most welcome, the need for expanded facilities to accommodate over about 30,000 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 (or four, in the case of the 1998 bond measure).  General obligation bonds have been the only practical funding source for initial design and for construction of many categories of projects.  New revenue bond financing mechanisms approved by the State were also important in the last decade, and projects have occasionally been supported by special or general fund revenues.

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 forecast 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 UC Merced 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.

Development of the New UC Merced Campus

The University of California, Merced, the tenth campus of the UC system, is targeted to open in Fall 2005.  Currently, the San Joaquin Valley is the only major region of substantial population in California without a UC campus.  The University expects to enroll 5,000 students at UC Merced by 2010 as part of its effort to accommodate the surge of new students headed for higher education in California.  The 2,000-acre campus site is now undeveloped and used primarily for cattle grazing; it therefore will require full development of infrastructure and utilities.

Planning of academic programs and physical development is underway at this time.  The first funds for design and construction of the initial infrastructure projects at UC Merced will be needed in the 2000-01 year, with site grading and on-site development beginning in 2001.  A series of projects to provide roads, utilities and central plant facilities would follow.  Proposition 1A, the general obligation bond on the November ballot, if approved would provide $55 million to help fund that initial infrastructure development and the design of the first buildings.  Additional capital funding will be sought from State sources other than the 1998 bond measure (e.g., general fund appropriations or lease-revenue bonds) to support the full complement of buildings and infrastructure necessary to open the campus for the 2005-06 academic year, and funds from a future bond measure or other sources will be necessary in subsequent years to support expansion to the planned enrollment level of 5,000 students by 2010.

Organization of the Regents Budget For Capital Improvements

This budget document focuses on projects for which State funding is requested in 1999-00.  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. 1999-00 Budget for Capital Improvements:  State Funds

The request for State capital outlay funds in 1999-00 totals $208.3 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 1999-00.

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 1999-00 through 2003-04.  Regental approval is requested only for projects for which State funding is proposed in 1999-00.  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.

1999-2000 State Funds

The 1999-00 Capital Budget requests $208.3 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  upgrade and expand academic facilities necessary to support the resumption of enrollment growth, particularly in the sciences and engineering.

The attached summary budget schedule displays the 1999-00 State capital budget request in two categories.  The first constitutes funding to equip two projects for which construction has been approved and funded by the State, and totals $1.3 million.  The second category, representing the bulk of the funding request at $207 million, presents 19 major capital projects in Universitywide priority order for which preliminary plans, working drawings, or construction funds are requested in 1999-00.

Of the 19 major capital improvement projects, funds are requested to support construction or complete design and undertake construction for six projects, and to begin design or continue design on 13 projects.

Nine of the 19 major capital project funding requests in this 1999-00 budget address seismic life-safety hazards; life safety remains an urgent priority of the University.  Infrastructure renewal or expansion of essential capacity is the focus of four projects.  Six projects involve improvements supporting program needs, and address the shortage of academic space resulting from enrollment growth, including four projects that provide major new science and engineering buildings for the University.

The 1999-00 request includes funding in a single year for the full cost of design and construction of three of those four major growth projects, with authorization that reduces State processing requirements and allows accelerated implementation.  These three projects include new Natural Sciences buildings at Irvine (7) and San Diego (5), and a new Physical Sciences building at Santa Cruz (6).  Construction funds will also be requested for two projects to replace existing seismically-hazardous facilities at two campuses--the first of two health sciences laboratory buildings at Los Angeles (1) in the campus program to reconstruct academic facilities in the Center for Health Sciences, damaged in the 1994 Northridge earthquake, and the Entomology laboratory facility at Riverside (2).  The sixth project involving construction will expand the campus chilled water infrastructure system at Davis (16) to support continued growth.

Thirteen projects will begin or complete design.  Seven projects will address seismic hazards, including completion of design of projects for Berkeley's LeConte Hall (3) and for Riverside's Humanities-Olmsted Hall (4).  The five other projects to improve the seismic condition of UC campuses include a new Berkeley building (9) to replace two seismically deficient structures and a Davis project (12) that includes alteration of space for Landscape Architecture, removing that program from a seismically hazardous building that will be demolished.  At Los Angeles, design will proceed for the second CHS seismic laboratory replacement building (10).  At Irvine, two seismic corrections projects will proceed, including the second phase of renovation and seismic corrections for Arts programs (11) and the seismic correction of a facility for Physics (13).  The design of three infrastructure projects include a Santa Barbara project to renew the campus sewer system (15), a San Diego project to expand chilled water and emergency power (17) to support planned growth, and a Davis project to improve the campus electrical system (18) to support planned development.  At Davis, an alterations project will provide program improvements for Chemistry (14).  At Santa Barbara design of a major new academic building (8) to support growth in Engineering and related science programs will begin.  Design will begin on program improvements for an addition to the Northern Regional Library Facility (19), serving the four northern campuses.

The University's State-funded Capital Budget relies on financing anticipated to be provided by a new general obligation bond measure on the November 1998 election ballot (Proposition 1A).  The support of the citizens of California for that proposition in the election is essential.  The new bond measure is expected to provide approximately $210 million per year for the University's capital program in 1999-00, 2000-01, and 2001-02.  The bond measure will also fund the 1998-99 budget.

Unfortunately, this represents only about half the level of funding that is essential to adequately address the capital outlay needs of State-supportable programs.  That need is estimated at about $400 million per year.  The University is very concerned that the available capital resources will not be sufficient to support the renewal and modernization of existing facilities, correct urgent seismic hazards, and also accommodate enrollment growth.  The increase in undergraduate and graduate enrollment at the University will require expansion of academic programs and the facilities needed to house them.  Without adequate funding, there will not be sufficient space to effectively support the programs and their students, impacting the quality of the programs and the education they provide.  In addition, the magnitude of the seismic problem at Berkeley presents a serious funding issue.  The level of available State funding will provide only a fraction of the money Berkeley will need.  The campus is now preparing a more detailed seismic program implementation plan, including an analysis of funding measures to determine if the money can be found to accomplish these life-safety corrections within a reasonable time period.