LAO Analysis of the 1997-98 Budget Bill
Higher Education Crosscutting Issues

  1. Crosscutting Issues
    1. The State's Approach to Deferred Maintenance: Round Two
      1. Background
        1. Community Colleges
        2. The Four-Year Universities
      2. Recommendations

Crosscutting Issues

Higher Education

The State's Approach to
Deferred Maintenance: Round Two

Last year the higher education segments and the Legislature agreed on a multiyear program to resolve (1) existing backlogs in facility maintenance and (2) chronic underfunding of regular maintenance needs. We recommend that the Legislature continue the basic approach it adopted in last year's budget, including General Fund augmentations for the California State University and the University of California.


To keep the state's facilities at the University of California (UC), the California State University (CSU), and the California Community Colleges (CCC) functional, the state and the systems fund ongoing maintenance and special repair programs.

For the purposes of this discussion, "maintenance" refers to programs to maintain the condition of facilities and infrastructure/utility systems. "Special repair" refers to maintenance projects that are required periodically and are above the level of expenditures needed for routine maintenance. Examples of special repairs include replacing roofs, painting exteriors, and replacing mechanical/electrical equipment.

In the Analysis of the 1996-97 Budget Bill, we discussed the repeated deferral of needed maintenance and repairs of higher education facilities. In response, the systems and the Legislature adopted a plan to (1) reduce the backlog of deferred work and (2) fully meet ongoing maintenance/repair needs over a three- to four-year period and thereby avoid additional backlogs. We discuss these plans below. (For additional detail on the dimensions of the deferred maintenance problems, please see our discussion in the higher education section of the 1996-97 Analysis.)

Community Colleges

The CCC's maintenance problems have been easier to address because of the large amount of funds ultimately available for K-14 education under Proposition 98. Thus, in the 1996-97 Budget Act the Legislature augmented ongoing maintenance/repair funding for CCC by $39 million, with a requirement that the colleges provide up to $11 million in matching local funds. In addition, the Legislature provided $60 million of one-time Proposition 98 monies to address CCC's deferred maintenance backlog, matched by up to $17 million of local funds (Chapter 204, Statutes of 1996 [AB 3488, Ducheny]).

The 1997-98 Governor's Budget proposes to continue the augmented level of $39 million ongoing maintenance/repair funding--with local matches of up to $39 million--and to provide additional one-time monies for the deferred backlog as part of a proposed block grant. In view of the above, we believe the Legislature has placed the CCC on a sound fiscal footing regarding maintenance/repair needs.

The Four-Year Universities

Addressing the needs of the four-year universities has proved more difficult. In response to the issues we raised in last year's Analysis, CSU and UC each committed to augment their annual maintenance/repair expenditures by allocating, respectively, $9.6 million and $7.5 million from budget increases proposed for them by the Governor. To match these efforts, the Legislature added $7.5 million to each segment from the General Fund. These actions were seen as the first step in a multiyear effort to stop further growth of--and eventually eliminate--maintenance/repair backlogs.

The Governor, however, vetoed the legislative augmentations, stating that the segments should address their maintenance needs within the funding levels he has committed to provide under his "compact" with them. In response to the Governor's veto, UC withdrew the $7.5 million it committed as a "match" for the maintenance augmentation. The CSU did increase maintenance funding by $9.6 million in 1996-97 with "compact" funds.


The 1997-98 Governor's Budget proposes to increase maintenance spending by $8.5 million at CSU and $7.5 million at UC. These amounts reflect what each segment is willing to commit to additional maintenance, given the overall fiscal resources proposed for them by the Governor. While this commitment of additional resources to maintaining the state's university facilities is commendable, more needs to be done. We think the Legislature should follow its previous plan and augment the CSU and UC budgets for maintenance for the following reasons:

To protect the state's tremendous investment in higher education facilities, we recommend that the Legislature take the following budget actions:

Of the amount appropriated by this item ($63,018,000 for CSU and $82,711,000 for UC) is for building maintenance as that activity is defined and accounted for in the program budget detail in the Governor's annual budgets.

Deferred Maintenance Backlog. Last year's supplemental report reflects a commitment by CSU to address its deferred maintenance backlog with a combination of (1) the augmented levels of annual maintenance funding specified in the language and (2) capital outlay projects that involve renovation of existing facilities. We believe this commitment is a responsible approach for which CSU should be commended.

Under last year's supplemental report language, UC is preparing a plan (due to the Legislature in February 1997) for addressing its deferred maintenance backlog. We will comment on the plan, as appropriate, at budget hearings.

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