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

Funding Higher Education Capital Outlay

We recommend the Legislature provide funding for higher education capital outlay based on statewide priorities and criteria, using reasonable construction cost guidelines, and on the basis of year-round operations.

We have previously recommended the Legislature fund the capital outlay program for the three segments of higher education based on statewide priorities and criteria, making use of appropriate construction cost guidelines, and on the basis of year-round operation (YRO) of facilities. Our recommendations in this Analysis continue to be based on these principles, which are discussed below.

Priorities and Criteria

In our Analysis of the 1998-99 Budget Bill, we recommended the Legislature apply statewide priorities and criteria when funding higher education capital outlay. We continue to recommend this approach. We have, however, made two modifications to our recommended funding priorities. Previously, we included faculty and administrative offices and research facilities and support facilities in the last priority of project types. We have modified our earlier proposal by moving faculty and administrative offices and research facilities to a higher priority following directly after undergraduate academic programs. We made this change to recognize the link between undergraduate enrollment, faculty, and University of California (UC) faculty research. We have also incorporated the need to increase the efficient use of facilities through YRO. Our recommended priorities and criteria are summarized in Figure 1. Also, we recommend the Legislature appropriate funds on the basis of statewide priorities and criteria, not on the formula used in recent years that allocates one-third of available bond funds each to UC, California State University (CSU), and the community colleges.

 Construction Cost Guidelines

In our Analysis of the 2000-01 Budget Bill, we reported on our study of the cost of constructing community college, CSU, and UC buildings compared to those of similar buildings elsewhere. Based on our review of construction costs for over 550 classrooms, teaching laboratories, and research buildings, we have concluded that construction cost guidelines used by CSU and the community colleges are in line with construction costs elsewhere. However, for UC, which does not use construction cost guidelines, construction costs are extremely high. Thus, we recommended—and continue to recommend—that the Legislature fund UC facilities—other than research laboratories—based on the CSU guidelines.

With regard to UC research facilities, we updated our review of 357 research buildings comparable to those at UC. It shows that the construction cost of those at the 75^th percentile (that is, the building that is costlier than 75 percent of the buildings in the group) is $441 per assignable square foot. While UC research buildings can be expected to have a range of costs (depending on the research program to be housed), we recommend they be funded in an amount not exceeding the 75^th cost percentile. Figure 2 shows our recommended construction cost guidelines for the most common types of buildings. Our recommendations on projects in the Governor's budget are based on these construction cost guidelines.

Year-Round Operations

We recommend the Legislature fund capital outlay for higher education on the basis of YRO. Doing so can permit the segments to provide up to one-third more students with an opportunity to attend college without the need to build more instructional buildings. With YRO, UC could accommodate up to 50,000 additional full-time equivalent students in its existing facilities. The CSU campuses could accommodate up to an additional 90,000.

The community colleges say that they currently operate their campuses year round, but the state provides capital outlay funding to them on the basis of operating only three quarters of the year. This results in capital outlay funding in excess of what is needed. We, therefore, recommend the Legislature fund capital outlay for community colleges on the basis of YRO.

Construction of new facilities may be necessary under YRO, but it will be on an exception basis and for reasons other than enrollment growth. For example, new teaching laboratories may be needed because of shifts in academic programs, or new instructional facilities may be justified because they increase instructional efficiency (for example, using distance learning).