Analysis of the 2004-05 Budget Bill Legislative Analyst's Office February 2004

California State University (6610)

The Governor proposes $345 million from the Higher Education Capital Outlay Bond Fund of 2004 (on the March 2004 ballot) for 21 projects. Of this amount, $302 million is for 15 new projects and $43 million is for six previously approved projects. The future cost to complete all proposed projects is $264 million. We recommend the Legislature reduce $11.9 million from one project.

Infrastructure Plan

The 2003 California Five Year Infrastructure Plan indicates that California State University (CSU) identified a need for $2.8 billion of capital outlay between 2003-04 and 2007-08 (see Figure 1). As the figure shows, $200 million was approved in the 2003-04 Budget Act and $345 million has been proposed in the 2004-05 Governor's Budget.

Future Projects and Issues

Our major concern with the CSU capital outlay program is that it is based on underutilization of existing instructional facilities—most of which arises because classrooms and teaching laboratories are not being fully utilized in the summer term. We also note that there may be an opportunity for the state to sell surplus CSU land. These are discussed below.

Utilization of Existing Instructional Facilities  

There are two gauges of utilization of instructional facilities—hours-per-week and weeks-per-year. The CSU has made good progress by both measures, but there is room for improvement at all campuses.

Hours-Per-Week. Current state utilization standards address utilization only in terms of hours-per-week. They require classroom stations (typically, a desk) to be occupied 35 hours per week and teaching laboratory stations about 20 hours per week. During the fall-winter-spring terms, only one campus—San Luis Obispo—is meeting the state standard for classroom utilization. The CSU classrooms at all campuses are utilized about 85 percent of the state standard in terms of hours per week. The situation is much better with teaching laboratories—12 campuses meet the state standard. In fact, statewide, teaching laboratories are utilized overall 106 percent of the state standard in terms of hours per week. Figure 2 shows campuses with particularly low utilization (less than 80 percent of the state standard).

Weeks-Per-Year. The number of hours per week that instructional facilities are utilized tells only part of the utilization story; the other gauge is the number of weeks per year they are used. In response to the Legislature's initiatives, CSU has made substantial improvement in utilizing instructional facilities year-round as a way to accommodate enrollment growth without constructing new instructional buildings. In 2002 CSU campuses enrolled almost 45,000 full-time equivalent (FTE) students in summer term. This was about 15 percent of the physical capacity of the campuses (about 290,000 FTE students). Figure 3 shows 2002 campus enrollment in summer term compared to campus capacity.

Although CSU has made good progress in implementing year-round operation, there is still much more unused capacity.

Potential Channel Islands Surplus Property

Agricultural land originally intended to be the site of the California State University (CSU) Channel Islands campus (258 acres) may now be surplus property. We recommend CSU report at budget hearings on the status of this land and its potential for sale.

In anticipation of development of a campus in the Ventura area, the state funded the purchase by CSU of approximately 258 acres of land currently in agricultural use (usually referred to as the "lemon orchard parcel") located about eight miles from the Channel Islands campus. When Camarillo state hospital was closed, it was decided to develop the Channel Islands campus at that location instead, which in essence rendered the lemon orchard parcel surplus. This parcel has been appraised by CSU, and its value is estimated to be about $10.5 million.

Chapter 402, Statutes of 2001 (SB 323, O'Connell), authorized CSU to exchange a portion of the lemon orchard parcel for a specified parcel on Lewis Road adjacent to the Channel Islands campus. Any exchange could be for the Lewis Road land alone, or a combination of the land and money. No such exchange has been consummated. 

Given that no exchange has been completed, the lemon grove parcel may be a candidate for sale which in turn would provide revenue to the General Fund. To do this would require enabling legislation modifying the provisions of Chapter 402. So that the Legislature can consider all of its budget options, we recommend CSU report at budget hearings on its plans for the lemon grove parcel, the status of any negotiations for the Lewis Road property, and the potential marketability of this surplus property

Project Recommended for Increased Reimbursement Funding

Fullerton: College of Business and Economics

We recommend the Legislature shift partial funding for the College of Business and Economics at the Fullerton campus from state bonds to reimbursements because the amount of instructional space in the building exceeds state standards and other specialized space is not justified. (Delete $11,871,000 from Item 6640-302-6041[5] and add $11,871,000 from reimbursements for preliminary plans, working drawings and construction.)

The budget includes $47,417,000 for development of preliminary plans, working drawings, and construction for a 123,000 asf building. The university proposes to provide partial funding from nonstate sources as shown in Figure 4.

Figure 5 shows the space breakdown proposed by the university for the building. We are concerned with this project because the amount of classroom space in the building exceeds state space standards and there is substantial additional space that is only loosely defined and not justified.

Classroom Space Exceeds State Standard. The proposed building would provide 1,436 classroom stations (such as desks). Given a state space standard for classrooms of 15 asf per station, the standard indicates a maximum of 21,540 asf of classroom space is justified for that number of stations. As Figure 5 shows, however, the building is proposed to have 31,000 asf of classrooms—10,000 asf more than allowable. This means the building would have about 21 asf per classroom station—about 44 percent more than allowed by the state space standard. The university has provided no justification for exceeding the state space standard, so we recommend the state fund only the amount of classroom space allowed under the standard.

Research and Institutes. The university proposes about 9,000 asf of research space in the building. Although the University of California is designated by law as the state's primary research university, CSU faculty has historically engaged in applied research. Such CSU applied research has typically been conducted in faculty offices and teaching laboratories and the Legislature has not funded construction of space specifically for research at CSU campuses. In light of the high cost of specialized research space, we believe any research space CSU campuses deem necessary should be funded from nonstate sources. 

In addition, it is proposed that the building contain about 24,000 asf of space—about 19 percent of the whole building—for 11 "institutes." These institutes consist of faculty members and primarily graduate students who engage in studies and community outreach activities in areas such as insurance and small business. This space is similar to the proposed research space; we therefore recommend it also be funded from nonstate sources.

Recommended Funding. We recommend approval of the project, but with a partial shift of bond funding to reimbursements. We recommend the excess classroom space and space for research and institutes be funded from nonstate sources. We estimate this space to have a construction contracts cost about the same as CSU's construction cost guideline—$299 per asf. Taking all these factors into account, we recommend state funding be reduced by $11.9 million and reimbursements be increased by a like amount.