Last Updated: | 5/3/2010 |
Budget Issue: | The Governor's April Letter proposals include $442 million in 2010-11 bond authorizations to fund capital outlay projects at UC and CSU. |
Program: | University of California and California State University |
Finding or Recommendation: | We recommend downsizing the Governor's proposal by funding only the highest-priority projects that address life-safety issues or provide equipment necessary to complete previously funded projects. Funding only these projects would reduce proposed 2010-11 bond authorizations by $222 million and out-year capital outlay obligations by $143 million. |
Governor’s Proposal. In the April letters, the Governor proposes $442 million in 2010-11 bond authorizations for UC and CSU. This would consist of $23 million in previously authorized GO bonds and $419 million in new lease-revenue bonds. Additionally, completing the projects started with these funds would require authorizing an additional $196 million in bond borrowing, most likely in 2011-12.
LAO Comments. Last year, the Governor proposed lease-revenue bonds to fund most of these same projects at UC and CSU, which the Legislature did not approve. In taking this approach, the Legislature was responding to a number of concerns. Since last year, the state’s access to the bond market has improved, but many of the concerns remain:
Recommend Downsizing Governor’s Proposal. Given the above issues, the Legislature may wish to take the same approach as last year. We would recommend, however, downsizing the Governor’s proposal by only funding the highest-priority projects that address life-safety issues or provide equipment necessary to complete previously funded projects. Limiting bond authorizations to only these projects would result in less borrowing compared to the Governor’s proposal while still funding the universities’ most critical capital outlay projects. As summarized in Figure 1, funding only the life-safety and equipment projects would reduce 2010-11 bond authorizations by $222 million and out-year capital outlay obligations by $143 million compared to the Governor’s proposal. Prioritizing the projects in this way is consistent with our past recommendations for how the Legislature should consider prioritizing higher education bond funds. The remaining projects—namely modernizations or projects to accommodate enrollment growth—would be able to seek funding in subsequent years.
Figure 1 |
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Estimated Costs of Proposed Life-Safety and Equipment Projects |
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(In Millions) |
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|
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CSU |
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Campus |
Project |
2010-11 |
|
2011-12 |
Northridge |
Performing Arts Center |
$1.4 |
|
— |
San Jose |
Spartan Complex Renovation (Seismic) |
3.2 |
|
$52.9 |
Stanislaus |
Science I (Seismic) |
18.8 |
|
— |
|
||||
UC |
||||
Campus |
Project |
2010-11 |
|
2011-12 |
Berkeley |
Campbell Hall Seismic Replacement |
65.2 |
|
— |
Los Angeles |
CHSSouth TowerSeismic Renovation |
129.0 |
|
— |
Irvine |
ArtsBuilding—Equipment |
2.7 |
|
— |
Totals |
$220.3 |
|
$52.9 |