Legislative Analyst's Office Analysis of the 2001-02 Budget Bill

California State University (6610)

The budget proposes $201.5 million to fund 27 major capital outlay projects and $5.5 million for minor capital outlay projects from general obligation bonds. The estimated cost to complete these projects is $82.3 million. Figure 1 summarizes these projects.

We recommend approval of $80.5 million for 22 major capital outlay projects and $5.5 million for minor capital outlay projects. The future cost for these projects is $73.3 million. We withhold recommendation on $72.1 million for three projects and recommend deletion of two projects costing $48.9 million. These five projects are discussed below. We begin, however, with a discussion of California State University's (CSU's) plans for implementation of year-round operation (YRO) and the "streamlined" funding process.

Year-Round Operation

We recommend California State University adjust its five-year capital outlay plan to reflect facility needs under year-round operation.

Using YRO, CSU campuses can accommodate about 90,000 more full time equivalent (FTE) students than under current operations. In its April 2000 report to the Joint Legislative Budget Committee, Feasibility Study on Year-Round Operations, CSU indicated it expects an additional
94,600 FTE over the next decade, and recognizes that YRO is a necessary alternative for addressing increased enrollment demand. The university also provided planning information showing how it proposes to increase summer enrollment at individual campuses in future years. This appears to indicate CSU's intent to initiate YRO. The CSU's 2001-02/2005-06 Capital Improvement Program, however, is not consistent with this intent. Instead, the capital program continues to call for construction of many new buildings that will add instructional capacity that will not be needed if the campuses are operated year-round. For example, the segment's plan called for projects that would add around 10,000 FTE of instructional capacity to CSU campuses in 2001-02 (the Governor's budget does not fund most of these requests). Through 2005-06, the CSU plan would construct facilities that would add a total of over 34,000 FTE to CSU's capacity.

As mentioned above, CSU expects an enrollment increase of 94,000 FTE over the next decade. Based on existing facilities and facilities funded for construction, the CSU can accommodate a systemwide enrollment growth of over 26,000 FTE. Also, an additional enrollment of about 90,000 FTE could be accommodated through the implementation of YRO. Thus, the combination of existing capacity and YRO could accommodate an enrollment growth of around 116,000 FTE—21,000 FTE above the expected ten-year growth. Clearly, under YRO the projects in the five-year Capital Improvement Program that add instructional capacity to CSU campuses would not be needed. This is not to imply that CSU will not need capital improvements. Many campus facilities and infrastructure systems are over 30 years old and in need of renovation or replacement. Implementation of YRO would allow CSU to turn its attention to address these other capital needs. Consequently, we recommend CSU revise its capital outlay program to reflect facilities needs based on implementation of YRO.

The Streamlined Process

We recommend the Legislature not fund the California State University projects using the streamlined process unless better project information is made available to the Legislature in time to be reviewed and evaluated before budget hearings.

We have generally recommended that, before approving funds for working drawings and/or construction, the Legislature have an opportunity to review major capital outlay projects to verify the project is within the legislatively approved scope and budget. This can be accomplished by appropriating funds for preliminary plans before appropriating construction funds.

Beginning with the 1998-99 Governor's Budget, the Legislature has authorized CSU to use a streamlined process for some projects whereby a single appropriation for preliminary plans, working drawings and construction has been proposed for a group of projects. Included in this approach has been budget language that eliminates the need for approvals by the Public Works Board, requires completion of all projects within both the approved scope of work and the total amount of the appropriation, and allows CSU to augment projects by up to 10 percent from savings realized on other projects in the same appropriation. We have encouraged this streamlined process with the understanding that CSU would provide fully defined and justified project information at the outset to ensure that (1) the Legislature would have the information it needs in order to consider the funding request and (2) the project can be completed successfully and in a more timely manner. We continue to support this effort but recommend the Legislature not fund projects under the streamline process if CSU has not provided the necessary information.

The information CSU has provided on three of the projects in the Governor's budget is not definitive and does not include enough information to justify funding them under the streamline process. In addition, it is not clear that the requests are justified under YRO. These projects are discussed below.

Projects on Which Recommendation Withheld

We withhold recommendation on Fresno: Science II Replacement Building, $22.8 million; Sacramento: Academic Information Resource Center, $25.7 million; and San Bernardino: Science Building Renovation/Addition, Phase I Annex, $23.6 million because (1) insufficient information has been provided to define and justify the projects under the streamline process and (2) the projects may not be justified under year-round operation. (Withhold recommendation on Items 6610-302-0574 [4], 6610-302-0574 [6], and 6610-302-0574 [7].)

The budget proposes:

• Fresno: Science II Replacement Building. This project would construct a 42,583 assignable square feet (asf) building that would replace 1,398 FTE of lecture space and 56 faculty office stations now located in temporary buildings known as San Ramon 2 and 6. It would also provide an additional 53 faculty office stations and 52 FTE of new laboratory space.
• Sacramento: Academic Resource Information Center. This project would construct a 67,807 asf building for administrative offices for the university computing and communication services and university telecommunications services. A 6,900 asf interactive learning center would be included in the building. It would increase the campus capacity by 130 FTE.
• San Bernardino: Science Building Renovation/Addition, Phase I Annex. This project would construct a 35,704 asf building for the College of Natural Sciences. The project would increase campus capacity by 1,015 FTE and add 37 faculty offices.

These projects have been proposed for streamlined funding (preliminary plans, working drawings, and construction from a single appropriation). The supporting information, however, does not show what the proposed facilities will consist of nor does it explain why they are needed—especially under YRO. There is also insufficient information to establish that less costly alternatives have been considered. Accordingly, we withhold recommendation on these projects pending receipt of additional information.

Channel Islands: Science Laboratory Facility

We recommend deletion of $10 million for preliminary plans, working drawings and construction for a Science Laboratory Facility because justification for the project has not been provided and the proposal is inconsistent with information the California State University has previously provided in support of its establishing the Channel Islands campus. (Delete $10 million from Item 6610-302-0574 [8].)

The Governor's budget proposes $10 million for a new 18,847 asf (30,013 gross square feet [gsf]) science building that would provide lecture capacity for 233 FTE and teaching laboratory capacity for 90 FTE at CSU Channel Islands. This campus is located at the former Camarillo State Hospital in Ventura. The current capacity of the campus is 1,909 FTE and enrollment is 939 FTE.

The budget proposal is inconsistent with information CSU has previously provided about the cost to develop a CSU campus at Camarillo. The CSU Channel Islands campus encompasses 629 acres and about 1.6 million gsf of existing buildings, approximately 1.2 million of which CSU has referred to as the "academic core." The 1998-99 Budget Act appropriated $11.3 million for renovation of existing buildings for CSU's use. In support of that proposal, CSU prepared a "Five-Year Improvement Program, 1998/99 - 2003/04," that estimated the first phase of development would renovate 100,000 gsf to accommodate 2,400 FTE at a capital cost of $4,733 per FTE. The five-year program planned to renovate an additional 100,000 gsf at a cost of less than $8,500 per FTE. The proposal in the Governor's budget for a new building, however, is to provide 30,013 gsf to accommodate 323 FTE, at a cost of $10 million. This is almost $31,000 per FTE. It is not clear that this expenditure for new construction is cost effective when CSU has indicated it can provide renovated space in the existing buildings for a fraction of that cost.

Also, CSU prepared and submitted a "needs analysis" to the California Post Secondary Education Commission in April 2000 for the necessary approval to establish a new campus at the Camarillo site. That report identified only two capital outlay projects to be funded in the
2001-03 period—an information resource center/library budgeted at $38 million ($10 million state-funded and $28 million from nonstate sources), and a science building ". . . that will be funded with $12,500,000 from nonstate sources." The proposal now before the Legislature is inconsistent with this information.

These inconsistencies raise questions about the cost to the state to develop the Channel Islands campus. Without better information about the full cost to develop the Channel Islands campus, we recommend the Legislature deny funding for this proposal.

Fullerton: Auditorium/Fine Arts Instructional Facility

We recommend deletion of $38.9 million for the auditorium/fine arts facility because (1) the campus has a sufficient amount of instructional space and (2) there are other priority instructional needs throughout higher education. (Delete $38.9 million from Item 6610-302-0574 [5].)

The budget proposes a new 1,200 seat, 60,992 asf theater with 359 FTE lecture capacity, 232 FTE fine arts laboratory capacity, and 14 faculty offices. Funds for preliminary plans and working drawings were appropriated by the 1992-93 Budget Act. The Governor's budget proposes $38.9 million for working drawings (to update earlier drawings) and construction. The project has a future state cost of $3,538,000 for equipment.

Instructional Space. This project would result in an increased campus classroom capacity of 359 FTE and teaching laboratory capacity of 232 FTE. Existing campus capacity is 19,702 FTE compared to an instructional capacity need of 19,121 FTE. Furthermore, if the campus operated year-round, it would have capacity to accommodate a total enrollment of about 25,400 FTE. In view of existing capacity and the capacity under YRO, the proposed additional instructional space is not justified.

Theater. The CSU has not identified what portion of the $38.9 million project cost is attributable to the 1,200 seat theater. The cost, however, would clearly exceed 50 percent of the request. In view of other statewide needs in higher education, we question the expenditure of a large amount of limited funds for this purpose. Even under CSU's priorities, this project is number 37 out of 39 projects. Moreover, without the instructional space component of the proposal, the theater would be even a lower priority. Consequently, we recommend the Legislature also delete this portion of the project. In its place the campus can continue to use its two existing dance studios—a 500 seat theater and a 200 seat recital hall.

Based on the above, we recommend the Legislature delete the $38.9 million requested for this project.