The budget proposes $288 million from general obligation bonds to fund 40 projects under the University of California's (UC) 2000-01 capital program. Of this amount, $213 million is for 39 projects from the Higher Education Capital Outlay Bond Fund of 1998. The estimated cost to complete these projects is $371 million. The budget also proposes $75 million from the General Fund for three Institutes for Science and Innovation at campuses to be determined. The Governor has proposed future funding for the institutes in the amount of $225 million--$75 million in each of the next three years.
We recommend the Legislature approve $172 million for 30 projects. Further, we recommend the Legislature delete $7.1 million for three projects (estimated future cost totals $109 million) and reduce funding for two projects consistent with our recommended construction cost guidelines discussed below. We withhold recommendation on the remaining five proposals because of insufficient information on the scope and cost of each project.
In the analysis below, we begin with a discussion of the appropriate cost guidelines which should be applied to proposed UC construction projects. We then discuss our concerns with ten specific projects.
We recommend the Legislature apply construction cost guidelines when funding University of California (UC) capital outlay projects. For classrooms, teaching laboratories, and other types of space for which California State University (CSU) has construction cost guidelines, we recommend CSU's cost guidelines be used when funding similar spaces at UC. Based on our review of nationwide data for comparable buildings, we recommend research space at the university be funded at 68 percent of the amounts proposed in the budget.
Construction cost guidelines for new buildings constructed for higher education have been used since the 1960s. Originally, all three segments used cost guidelines, but in recent years only the community colleges and CSU have continued to do so. The UC no longer uses construction cost guidelines. These guidelines, which are adjusted annually to reflect inflation, are used by the community colleges and CSU to identify a cost per square foot for various types of buildings.
The CSU and Community College Cost Guidelines Are Reasonable. Our review of construction costs at the three segments of public higher education indicates that the community college and CSU costs are in line with those for comparable buildings throughout the country. This conclusion is based on our review of data on 110 instructional buildings (96 containing primarily class laboratories and 14 mainly classrooms) throughout the country, along with reviews of CSU and community college projects. We see no reason why undergraduate classroom and class laboratory facilities and other space (such as faculty and administrative offices) at UC should be more costly to construct than those constructed for CSU. Consequently, for this type of space, we recommend funding UC projects at the CSU construction cost guidelines. In the following discussion, we recommend a separate funding level for UC research space.
To determine the appropriate funding level for UC research facilities, we first reviewed the construction costs of the fifteen new general research campus buildings funded by the state in 1998-99 and 1999-00 and included in the 2000-01 Governor's Budget. These buildings were all science and engineering research facilities. The average cost per assignable square foot (asf) for these buildings was $612.
Comparable Buildings. We then reviewed the construction cost for 192 new publicly (exclusive of UC, CSU, and community colleges) and privately owned research laboratory buildings constructed since 1980 across the country. About 60 percent of these buildings were public and private university buildings, 30 percent were owned by private companies and nonprofit institutions (such as medical centers), and 10 percent were government laboratories. Over 50 percent were used for biological sciences and biomedical research. (The construction costs for these projects were adjusted for inflation and geographic location when outside California). The cost of these buildings ranged from $159 to $904 per asf with a median cost of $354 per asf. The median cost is the level at which half of the buildings in the group are more costly and half are less costly. It can also be viewed as the cost of the building at the 50th percentile. Similarly, one could look at the cost of a more expensive building within the group--say a building at the 75th percentile (that is, the building that is costlier than 75 percent of the buildings in the group).
Figure 1 compares the cost of the 15 UC research laboratory buildings with these non-UC buildings. It shows that UC buildings are considerably more costly than the comparison group, at selected percentile levels.
Figure 2 shows the cost of the comparable groups' buildings as a percentage of UC's buildings. It shows that for high-cost research space (represented by the 75th percentile), the comparable group's costs are 68 percent of UC's buildings. In other words, UC research facilities cost 32 percent more than comparable buildings throughout the country. We would note that had we used the 50th percentile, the recommended reduction to UC's budgeted costs would be 42 percent. We have erred on the cautious side by using the figures for higher-cost facilities.
Based on this analysis, we recommend the Legislature reduce the budget requests for new UC research buildings by 32 percent. Of the UC projects in the budget, we recommend a reduction in the amount requested based on this construction cost guideline.
|Comparison of UC Research Building Costs
With Costs of 192 Comparable Buildings Nationwide
|(Dollars Per Assignable Square Foot)|
|Percentile||UC Research Building Costs||Comparable Research Buildings Costs||Comparable Building Costs as Percentage of UC Building Costs|
In the "Crosscutting Issues" section of this chapter, we recommend that the Legislature only fund those projects in higher education that bring a campus within 95 percent of state space guidelines for undergraduate instruction space and 90 percent of guidelines for research space. We recommend deletion of the three projects discussed below because the amount of space on these campuses exceeds the space guidelines. (In several cases, the amount of space exceeds 100 percent of the guidelines.) If, however, the Legislature elects to fund any of these projects, we recommend reducing the requested amount and future cost by 32 percent consistent with our recommendation discussed above.
We recommend the Legislature delete $4,174,000 to develop preliminary plans and working drawings for the Sciences Laboratory Building at the University of California, Davis, because the amount of space on campus exceeds the space guidelines. (Delete $4,174,000 from Item 6440-302-0574 .)
The budget includes $4.2 million for preliminary plans and working drawings for an 81,384 asf building that would add 73,144 asf of teaching laboratories, 1,200 asf of offices, and 7,040 asf of classrooms to the Davis campus. Estimated future construction cost is $43.1 million. The building is estimated to be finished in April 2005.
This instructional laboratory and related space would accommodate enrollment growth. According to UC, the Davis campus currently has about 200,000 asf of teaching laboratories and is projected to increase to 262,000 asf in 2003-04 (based on completion of projects already funded). Based on projected enrollments at the Davis campus, state space guidelines indicate that 214,000 asf of teaching laboratories space would be needed in 2003-04. Thus, under the space guidelines, available space will exceed the amount needed in 2003-04 by 22 percent. (As mentioned above, we have recommended that the Legislature fund projects up to 95 percent of the space guideline in order to maximize the use of limited bond funds. The Davis campus clearly exceeds this level.) Therefore, the Davis campus does not need additional teaching laboratories at this time. Furthermore, if the campus operated year-round or otherwise increased space utilization beyond the guidelines, there would be even less need for this proposal. Deletion of this project would free up $4.2 million in the current year and $43 million in future years for higher-priority projects.
We recommend the Legislature delete $1,714,000 for preliminary plans for this research building because the amount of space on campus exceeds the space guidelines. (Delete $1,714,000 from Item 6440-301-0574 .)
The budget includes $1.7 million for preliminary plans for an 87,000 asf building that would add 59,255 asf of research space, 16,495 asf of offices, and 11,250 asf of teaching laboratories to the San Diego campus. Estimated future costs include $2.1 million for working drawings, $34.3 million for construction, and $2 million for equipment. The building is estimated to be finished in September 2004.
Research Space. The UC advises that the San Diego campus--with current space and approved projectswill have 996,000 asf of research space by 2003-04. The space guidelines indicate a need for 991,000 asf of research space in 2003-04. (Ninety percent of this amount is 892,000 asf.) Thus, without construction of the proposed new building, the San Diego campus has over 100 percent of the guidelines and about 10 percent more than the level we recommend. If this building is constructed, the campus will have over 1,050,000 asf of research space in 2004. This is 59,000 asf (6 percent) more than the space guidelines and 158,000 asf (18 percent) more than the 90 percent level.
Teaching Laboratories. As mentioned above, we recommend the Legislature fund instructional space (classrooms and teaching laboratories) at no more than 95 percent of state space guidelines. According to UC, the San Diego campus--with current and approved projects--will have 142,000 asf of teaching laboratories space in 2003-04. Based on projected enrollments and the space guidelines, the campus would need 102,000 asf (97,000 at the 95 percent level) in 2003-04. Thus, the campus will have a healthy surplus of teaching laboratory space in 2003-04 and beyond without adding the 11,250 asf in the proposed project.
Based on the current amount of space at the San Diego campus, the proposed project is not needed. Therefore, we recommend the Legislature delete the $1,714,000 requested for preliminary plans. This would free up $1.7 million in this budget, and $38 million in future years for other priorities.
We recommend the Legislature delete $1,173,000 for preliminary plans for this research building because, except for classroom space, the amount of space on campus exceeds the space guidelines. (Delete $1,173,000 from Item 6440-301-0574 .)
The budget includes $1.2 million for preliminary plans for a 47,434 asf building that would add 30,166 asf of research space, 11,203 asf of offices, 3,283 asf of classrooms, and 2,782 asf of teaching laboratories to the Santa Barbara campus. Estimated future costs include $1.1 million for working drawings, $25.1 million for construction, and $1 million for equipment. The building is estimated to be finished in September 2004.
Research Space. As discussed above, we recommend that research space not be funded above 90 percent of that justified using historical space guidelines. UC advises that the Santa Barbara campus--with current space and approved projects--will have 852,000 asf of research space by 2003-04. Based on projected enrollment and the space guidelines, the campus would need about 784,000 asf (706,000 at the 90 percent level) of research space in 2003-04. Thus, the approved amount of research space exceeds the amount necessary under the space guidelines by 9 percent (21 percent at the 90 percent level). Therefore, based on the existing amount of research space, the additional 30,166 asf of research space in this building is not needed.
Teaching Laboratories. The amount of teaching laboratory space at Santa Barbara is similar to the situation discussed above for research space. By 2003-04, the campus will have 166,000 asf of teaching laboratory space while the guideline shows a need for 152,000 asf. Thus, the campus already has 14,000 asf (9 percent) above the guideline or 22,000 asf (14 percent) above the 95 percent level. Thus, additional teaching laboratory space is not justified.
Classrooms. Classroom space at the Santa Barbara campus is needed. According to UC, the Santa Barbara campus will have 94,000 asf of classroom space in 2003-04. This is 42,000 asf (31 percent) less than needed under the space guidelines and 35,000 asf (27 percent) below the 95 percent of guideline level. Clearly, there is a need for classroom space at the Santa Barbara campus and a project to address this need would warrant legislative consideration. This project, however, provides only 3,283 asf of classrooms in a 47,434 asf building and it is therefore not a cost-effective project to meet the need for classroom space. If the campus operated year-round or otherwise increased utilization of space, there would be less need for classroom space on the campus.
Based on the above, the proposed project is not needed and we recommend the Legislature delete the $1,173,000 requested for preliminary plans. This would free up $1.2 million in the budget and $27.3 million in future years for other priorities.
We recommend a reduction of 32 percent in the amounts requested in the budget and in the future cost for the two projects discussed below, in order to bring costs in line with the costs of comparable buildings (as discussed earlier in this item).
We recommend the Legislature reduce the amount requested for working drawings and construction for the Riverside Science Laboratories 1 project by 32 percent to bring the costs in line with comparable buildings. (Reduce Item 6440-302-0574  by $5,400,000.)
The budget includes $16,875,000 for working drawings and construction of a 25,600 asf building having 14,127 asf of research space, 8,531 asf of teaching laboratories, and 2,942 asf of offices for use by the chemistry and earth and environmental science departments. This amount of space is within the space guideline levels we have recommended for research and teaching laboratories. The building is scheduled for completion in April 2003. Based on our recommended construction cost guideline discussed above, we recommend the Legislature approve $11,475,000 for working drawings and construction instead of $16,875,000. As a result, construction costs would be reduced from $635 per asf to $432 per asf and total project cost from $702 per asf to $491 per asf.
We recommend the Legislature reduce the amount requested for preliminary plans (and the future costs) for the Riverside Physical Sciences 1 project by 32 percent to bring the costs in line with comparable buildings. (Reduce Item 6440-301-0574  by $429,000.)
The budget includes $1,341,000 for preliminary plans for a 73,250 asf building containing 58,403 asf of research space, 5,011 asf of teaching laboratories, and 9,836 asf of offices for use by the chemistry department. This amount of space is within the space guideline levels we have recommended for research and class laboratories. The project is scheduled for completion in May 2005. The budget recognizes future state costs of $2 million for working drawings and $45 million for construction.
Based on our recommended construction cost guideline discussed above, we recommend the Legislature reduce the proposal in the budget to $912,000 for preliminary plans, and recognize future costs of $1,361,000 for working drawings and $30,372,000 for construction. Based on this recommendation, the construction cost would be reduced from $610 per asf to $415 per asf and total project cost from $655 per asf to $466 per asf.
We withhold recommendation on $810,000 proposed in the budget for preliminary plans for this project because no information has been provided about the actual utilization and deposit rates for the facility, what measures the University of California is taking to weed out any of the seldom-used materials, and the impact electronic information storage technology will have on this facility.
The budget proposes $810,000 for preliminary plans for the Northern Regional Library Facility, Phase 3. Estimated future costs are $1,005,000 for working drawings, $15,735,000 for construction and $475,000 for equipment. The facility is intended to supply compact storage for seldom-used library material to be withdrawn from Northern California UC campus libraries, thereby reducing the need for more costly on campus storage. (The UC has agreed to accept deposits from non-UC libraries as well.) The existing facility (Phases 1 and 2) has a capacity to store about 5.45 million volume-equivalents, and UC indicates the facility will be filled in 2000. Phase 3 would add storage capacity for another 2.22 million volume-equivalents. A similar Southern Regional Library Facility is located in Los Angeles.
Information provided in support of this proposal indicates planned deposit rates, but it does not indicate if UC is weeding out any of the seldom-used material that has been in storage for a long time or if any consideration has been given to the impact electronic storage media will have on the need for expanding this facility. Consequently, we withhold recommendation on this project pending receipt of information from UC describing its program to weed out materials and how electronic storage media could be used to reduce or eliminate the need for this expansion.
We withhold recommendation on $14.3 million requested for three projects at the new Merced campus pending receipt of adequate scope and cost information. We also recommend deletion of budget bill language that would permit the University of California (UC) to establish the scope of work after the Legislature appropriates the funds and also would allow UC to change the funding for two projects without the approval of the Legislature. (Delete Provision 3 of Item 6440-301-0574.)
The budget proposes three projects for the new Merced campus: (1) $10 million for Site Development and Infrastructure, Step 1, project--which would include such work as grading and drainage, landscaping, vehicular and pedestrian circulation, central utility facilities, and utilities distribution; (2) $2.5 million for a 100,000 asf Science and Engineering Building; and (3) $1.8 million for a 120,000 asf Library/Information Technology Center. The UC has not provided information on the projects' scope, costs, or schedules for undertaking the work.
In fact, because of this lack of information, the Department of Finance (DOF) has proposed budget bill language (1) specifying that, prior to release of any of the funds, UC must provide the DOF a project planning guide for each project outlining the scope, cost, and schedule "in accordance with established procedure"; and (2) allowing UC to change the funding levels for the engineering building and library projects without legislative approval so long as the total appropriation is not increased. It is not clear what is meant by "established procedure." It is our view that an essential component of "established procedures" is for the Legislature to have information on proposals for which the administration is requesting an appropriation.
Clearly, the Legislature has no information on these projects and based on the proposed budget bill language, neither does the administration. If there is a need to expedite development of the Merced campus, we see no reason why UC cannot develop the necessary information detailing the proposed projects and costs prior to budget hearings. Accordingly, we withhold recommendation on these three projects pending receipt and review of additional information. In any case, we recommend the Legislature delete Provision 3 described above that would permit the establishment of the scope of work after the Legislature appropriates the funds and would allow UC to change the amount appropriated for two proposed projects.
We withhold recommendation on this $75 million General Fund proposal to establish three Institutes for Science and Innovation at undetermined University of California campuses, pending receipt of scope and cost information.
The budget proposes $75 million from the General Fund for three Institutes for Science and Innovation to be sited at UC campuses yet to be determined. These proposals were not in UC's 2000-01 Budget for Capital Improvements nor are they in UC's Five-Year Capital Outlay Plan. According to the Governor's budget, the administration is committed to an additional $75 million in capital outlay for these institutes in each of the next three years, for a total commitment of $300 million. The budget bill includes language indicating that the state's investment in the institutes would be matched by private and/or federal funds on a 2 to 1 basis. The site of the institutes apparently will be determined by the administration based on proposals that will be submitted by UC campuses.
No information has been received about the scope and cost of capital outlay projects that might be proposed for this funding. Accordingly, we withhold recommendation on this proposal, pending receipt of sufficient information about project scopes and costs. If additional information is received, the Legislature may wish to consider funding at that time. If the information is not forthcoming, we would recommend that the Legislature delete the requested $75 million.
We recommend the deletion of budget bill language permitting the procurement of the Central Heating Plant Expansion facility on the Santa Cruz campus using a design-build process. (Delete Provision 1 of Item 6440-302-0574.)
The budget proposes $2,879,000 for working drawings and construction of the Central Heating Plant Expansion, Phase 2 at the Santa Cruz campus. Proposed budget bill language for this project permits procurement by the design-build process. The design-build process is one in which the state would be contractually bound to pay a certain price for a facility that was not defined by working drawings and specifications. This provides opportunities for misunderstandings, cost overruns, and legal disputes. This process is in contrast to the design-bid process normally required by law, where the facility is fully defined and contractors submit competitive construction bids before the state incurs an obligation to pay a certain price for the work.
The campus has not identified any particular need or benefits to proceeding with this project in other than the normal design and competitively bid process. In view of the disadvantages of the design-build process and the lack of any apparent need to use this process in this instance, we recommend the Legislature not approve the proposed budget bill language.