2009-10 Budget Analysis Series: Higher Education

Capital Outlay—California Community Colleges

The budget proposes to spend $194 million in previously approved general obligation bond funds for 28 CCC capital projects in the budget year. The proposed funding would support new phases of 10 projects previously funded by the state and 18 new projects. Of the 18 new projects, 16 would need additional state funds for completion in subsequent years at an estimated cost of approximately $144 million.

Existing Funding Inadequate To Complete New Projects

We recommend the Legislature reject most of the new CCC projects in the Governor’s proposal because the unappropriated balances in CCC existing bonds are not sufficient to complete these projects. The Governor’s proposal would provide funding for the preliminary plans and working drawings for 16 projects, while construction and equipment costs would require additional funding in later years. However, there are insufficient funds available to complete all of the projects in later years. The CCC has approximately $244 million remaining in existing bond funds, yet completing the proposed projects would cost approximately $338 million. The Governor’s proposal assumes that a new general obligation bond for higher education in 2010—proposed in the Governor’s state infrastructure plan—would provide funds to cover these additional costs. A new general obligation bond would require approval from the Legislature and the state’s voters—meaning its availability as a funding source is uncertain. In our view, the state should not invest in projects that lack sufficient funding for their completion. We therefore recommend that the Legislature target the available bond funds to projects which could be completed within the $244 million available and that the remaining projects in the Governor’s budget be delayed until a new funding source is secured. In allocating the available $244 million, we recommend the Legislature prioritize projects in the following way:

Funding these projects would leave an unallocated reserve of about $15 million in CCC bond funds. At the time of budget hearings, this amount could be greater or less depending on any augmentations or reversions of previous appropriations that may be approved through administrative actions. In addition, as discussed above, unallocated bonds might be needed for additional capital costs related to construction delays from the PMIB’s suspension of projects. Depending on the size of this unallocated balance, the Legislature may be able to fund additional projects.

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