Capital Improvement Program Overview 2000-01 Budget

Projections of enrollment growth at the University of California are currently being revised upward. This reflects new demographic data from the State Department of Finance that anticipates a major increase in students graduating from California high schools in the coming decade. The new projections indicate enrollment will increase by approximately 60,000 students, about 40 percent, from the 147,000 full-time equivalent (FTE) students budgeted for 1998-99 to about 210,000 FTE in 2010-11.

This is a major increase from the level of growth that had been forecast just last year. At that time, the University was planning for an increase of about 3,000 students per year; the new forecast has expanded to approximately 5,000 students per year. This increased level of growth presents a daunting challenge for capital funding and implementation, given the concurrent need to complete a major seismic life-safety corrections program, address the requirements of an aging existing physical plant, and upgrade facilities to support state-of-the-art academic teaching and research programs.

The capital funding required to support the needs of State-supportable programs-including enrollment growth, life safety, renewal and obsolescence-is estimated to be on the order of $500 million per year. The 1998 general obligation bond issue can provide approximately $210 million per year for the 2000-01 and 2001-02 budget years. Subsequent funding would require action by the Governor and Legislature to place a new bond measure on the 2002 election ballot for voter action. Current discussion suggests the new bond, if approved by the voters, would be at a level providing at least $250 million per year (in current dollars) for the University, certainly critical but still substantially less than needed. The University continues to search for ways to increase funding support, including working with the Legislature and Governor.

Extensive studies are underway to review the enrollment forecasts and assess the implications for the University as a whole and at each campus. Every campus is examining how its enrollment can be expanded to help meet this urgent public need, and studying associated environmental and other impacts to determine the most effective plan. The total enrollment capacity of the University as defined by existing campus Long Range Development Plans (LRDP), assuming a capacity for the new Merced campus of 5,000 FTE by 2010-11, is approximately 24,000 FTE less than the new forecast of enrollment demand; expansion at several campuses would be dependent upon amendment of their LRDPs.

The magnitude of increase in enrollment is such that there is no question that University must use opportunities to expand programs in ways that make the most effective use of resources. The University's eight general campuses are actively pursuing internal studies to examine a variety of options for accommodating expected enrollment growth. Among these options are expansion of LRDP targets, establishment of off-campus centers, expansion of the Education Abroad Program, and more efficient use of existing facilities, particularly during the summer. This latter proposal received a great deal of attention during negotiations on the 1999-00 budget. The University agreed with the Legislature on a set of planning assumptions for enrollment growth, as outlined in supplemental language for the 1999-00 Budget Act. These planning assumptions include the principle that the State would provide adequate resources to maintain the quality of academic programs regardless of the term in which enrollment growth occurs. The University will submit its report in response to the supplemental language by April 1, 2000.

Maintenance of academic quality is a serious issue, given the magnitude of expansion involved. The rapid growth experienced by the University during the 1980s demonstrated the serious strain on heavily impacted academic programs; the growth forecast now is even greater. Care must be exercised, particularly in the selection of faculty that are the core of the programs.

Appropriate facilities are an essential part of this effort. This is most clearly seen for science and engineering programs, heavily targeted by students in this surge of enrollment. Science and engineering programs are of particular concern because of the dependence on highly sophisticated laboratories and technologies to support "cutting-edge" teaching and research. The campuses are expecting those programs to grow by about 40 percent by 2005-06 alone. Much of the student learning process at institutions of the level of UC, for undergraduates as well as graduates, occurs in participatory research and related settings rather than the more passive traditional didactic classes. The faculty members who are most effective with their students-faculty essential in producing the graduates and breakthroughs that drive the California economy-will not come to the University of California unless they have the facilities they need to be successful in their teaching/research efforts. These facilities include state-of-the-art laboratories for teaching and research, a complex array of support services including sophisticated information systems and instructional support programs, an adequate campus utility infrastructure, and the administrative services needed to support the students and campus as an effectively functioning entity.

The ability to develop this system of people and facilities in a timely way, and the availability of funds to make possible the necessary investment, is a serious problem. However, these students are already in primary and secondary schools and soon will be at our door. The University is committed to meeting their needs.

Unfortunately, the issue of enrollment growth is only one of several categories of urgent need that must be addressed and balanced in the capital program.

The condition of the University's existing physical plant is a separate, serious problem, resulting from the wear and decline associated with the age and intensive use of many of our buildings and infrastructure. The importance of facility renewal is obvious at a campus of the age of Berkeley or Los Angeles, but even the newest existing campuses of the University are now three decades old and are experiencing many of the same problems. The University's backlog of deferred maintenance grew dramatically during the periods of budget reductions experienced during the 1970s and early 1980s. Deficiencies in existing facilities remain a major constraint to academic program quality and innovation. Recent State action to increase permanent maintenance funding and the University-financed bonds for deferred maintenance will address an essential first increment of this problem, but continued support through the deferred maintenance program and as capital renewal is necessary to preserve the value of the University's physical assets.

In addition, many of the University's older buildings were designed to meet building, fire, life-safety, and accessibility codes that have changed dramatically in subsequent decades. Not only have regulatory and public understanding and expectations of appropriate design and essential safety changed, but the activities housed in the buildings (particularly science and engineering laboratory functions) have also become much more complex and problematic.

A third category of need is that of change and obsolescence. As commerce, industry and science constantly evolve in response to new knowledge and opportunities, so must the academic programs that are responsible for preparing graduates entering those fields and for conducting the research that advances knowledge and creates opportunities. Instruction and research objectives evolve and change direction, as do the methods and equipment used. To prepare students properly, academic programs must themselves be at the frontiers of knowledge, developing and using innovative processes and technologies that support discovery, expand knowledge, and give competitive advantage to California. Unless academic facilities are renovated and updated to meet continually changing program needs, they become constraints to the capability of the programs and ultimately limit the abilities of the graduates entering the California economy.

The University's capital program is also seriously impacted by the critical need to ensure our facilities are safe in an earthquake. A series of devastating earthquakes in California and abroad have amply demonstrated the hazards inherent in many buildings designed under earlier structural codes and practices. The University has had an aggressive program of seismic corrections over the last two decades, and over 77 percent of University buildings that had been rated before 1994 as seismically "Poor" or "Very Poor" have now received structural correction or are in progress. The University anticipated having almost all such corrections completed or at least started by the year 2000 if funding levels were maintained. However, the Northridge Earthquake of 1994 and the subsequent Kobe earthquake added substantial new understanding of earthquake forces and building performance, and resulted in significant changes in structural design codes and practices. As a result, the University has re-evaluated many of its facilities, identifying a number of additional buildings that require action to protect the lives of occupants. The problem has been particularly serious at Berkeley, immediately adjacent to the Hayward Fault, because it is now understood that forces experienced close to such a fault can be much greater than previously estimated.

The Regents have continued to give high priority to completing the University's program of seismic and other life-safety corrections as rapidly as possible, and the new seismic projects are being rapidly incorporated into the capital program. This problem also has a significant impact on several campuses, competing for limited available funds when they are also anticipating a major increase in student enrollment. The requirement to rebuild the UCLA Center for Health Sciences and many other buildings on the general campus which were damaged in the 1994 Northridge earthquake, and the massive seismic corrections program at the Berkeley campus, present special problems. State funds have been supplemented by major FEMA support at Los Angeles, but even there, and particularly at Berkeley, the level of additional funding necessary presents a serious challenge and will require an extraordinary level of campus investment and donor support that will stretch campus resources to their limit for the next two decades.

State capital funding since the mid-1980s has relied on two major sources of financing. The primary source has been from general obligation bond measures, dependent on approval by voters at general elections. General obligation bonds have been the only practical funding source for initial design and for construction of many categories of projects. In addition, new revenue bond financing mechanisms approved by the State were important in the 1990s, but in recent years the Legislature has preferred to use general obligation bonds to fund capital outlay for higher education. Upon occasion, projects also have been supported by special or general fund revenues but this has not had significant impact on the University's needs.

Unfortunately, State fiscal conditions, including debt capacity considerations, limit its present ability to support the University's capital budget needs. The University has intensively pursued private fund-raising for capital projects and made increased use of debt financing, lease-purchase mechanisms, and land-lease arrangements with third-party developers. Many projects have multiple fund sources and non-traditional funding approaches, as the campuses have strained to try to fill the gap in State resources.

The financial challenge faced by the State and University at this time is critical. If the forecast number of additional students are to be provided space, more resources must be made available.

The University intends to honor its commitment to access under the Master Plan for Higher Education in California. To that end, the campuses are continuing to plan for the expansion of facilities that will be necessary to accommodate additional students, and the University is proceeding with plans for the new UC Merced campus, relying on the provision of adequate State funding to meet these needs.

Each campus routinely prepares a five-year capital program based both on a practical assessment of facility needs and on realistic expectations of the amount of capital funding that can be expected. This allows detailed planning efforts to be focused on those projects which are most important for the campuses and thereby avoid wasting resources preparing unsuccessful funding requests. Projects proposed for State funding in the annual capital improvement budget are based on intensive, detailed planning and pre-design analysis that typically starts three years before initial State funding. This process supports effective internal decision-making, ensures that commitments are made that can be met, enables the University to explain the project effectively during State review, and improves project management during design and construction.

Development of the New UC Merced Campus

The University of California, Merced, the tenth campus of the UC system, is targeted to open in Fall 2005. Currently, the San Joaquin Valley is the only major region of substantial population in California without a UC campus. The University expects to enroll 5,000 students at UC Merced by 2010-11 as part of its effort to accommodate the surge of new students headed for higher education in California. The 2,000-acre campus site is now undeveloped and used primarily for cattle grazing; it therefore will require full development of infrastructure and utilities.

Planning of academic programs and physical development is underway at this time. The current general obligation bond measure (Proposition 1A, 1998) designated $55 million to begin design and initial construction at the new campus. This will be used in 2000-01

($14.3 million is requested in this budget request) and 2001-02 for design and construction of the first phase of site development and infrastructure and for design of the first two academic buildings. This is described in greater detail in the Merced campus chapter of this capital budget document. A new and larger bond measure will be sought in 2002 to meet the needs of the University; approximately $200 million is required to complete development of the campus infrastructure and the full complement of buildings necessary to open the campus for the 2005-06 academic year. An additional $150 million will be needed to accommodate the full enrollment level of 5,000 students by 2010.

Organization of the Regents Budget For Capital Improvements

This budget document focuses on projects for which State funding is requested in 2000-01. As in previous years, the non-State funded capital improvement program is treated as a continuing entity, amended as required to include new projects as funding is obtained or financing plans are developed.

This capital budget document is organized as follows:

1. 2000-01 Budget for Capital Improvements: State Funds

The request for State capital outlay funds in 2000-01 totals $212.7 million, and is presented in summary form for the University as a whole in the next section. The overview of the State budget request lists only those projects for which State funding is requested in 2000-01.

2. Campus Capital Improvement Programs

The five-year capital improvement program planned for State funding (covering the years 2000-01 through 2004-05) is presented in more detail in an individual section for each campus (including UC Merced), for the Division of Agriculture and Natural Resources, and for Universitywide facilities and programs. Each section begins with an introduction that outlines the goals and problems which drive the capital program for the campus. It is followed by a table presenting the five-year program for State funding and a descriptive summary of each project in the five-year program. Each campus section concludes with a review of the capital needs of the campus beyond those addressed in the State-funded five-year program and approved non-State funded projects; this includes both long-term needs that the University may propose for State funding in the future and needs that will be addressed from other funding sources.

Regental approval is requested only for projects for which State funding is proposed in 2000-01 (summarized in the following section).

Projects that are listed here for funding in later years have already received substantial consideration and are likely to appear in future capital budgets. However, it must be noted that these five-year programs are planning documents which will change as needs, opportunities, and funding decisions unfold.

2000-01 Budget For Capital Improvement - State Funds

The 2000-01 Capital Budget requests $212.7 million in State funds for the University's capital outlay program. This level of funding is essential to expand and upgrade academic facilities to support enrollment growth, particularly in the sciences and engineering, and to maintain progress on seismic and other life-safety improvements while also addressing essential infrastructure and building renewal needs.

The attached summary budget schedule displays the 2000-01 State capital budget request in three categories. The first constitutes funding to equip four projects for which construction has been approved and funded by the State, and totals $3.1 million. The second category involves a request of $14.3 million for three projects to initiate design and construction of the new Merced campus. The third category, representing the bulk of the funding request at $195.3 million, includes 32 major capital projects in Universitywide priority order for which preliminary plans, working drawings, or construction funds are requested in 2000-01.

The $14.3 million in capital funds requested to start actual physical development of the new Merced campus includes design and construction of the first increment of site preparation and infrastructure for the campus, and design of the first two academic buildings-a science and engineering building and the campus library and information technology center. Both of those buildings and others that immediately follow will serve multiple uses during the initial period of campus development.

Of the 32 major capital improvement projects for existing campuses in this 2000-01 budget, funds are requested to support construction or complete design and undertake construction for 24 projects, and to begin or continue design on eight projects.

Twelve of those 32 project funding requests correct serious seismic life-safety hazards; life safety remains an important priority of the University. Fourteen additional projects are focused on urgent program improvements, including eight that will provide new buildings to expand instruction, research, and academic support facilities to address the requirements of enrollment growth. Essential infrastructure renewal or expansion is the focus of six projects.

Proposals needed to support enrollment growth include funding for design and construction of a Science Laboratory building for chemistry and environmental science programs at Riverside (priority 7), an Engineering-Science building with a nanofabrication facility at Santa Barbara (12), and a building that will support academic functions in the new Eleanor Roosevelt College complex at San Diego (19). Enrollment increases also will be supported by funding for construction of the third and last component of the Humanities/Fine Arts Facilities project at Irvine (31), and to start design for a Physical Sciences building at Riverside (18), an Engineering building at San Diego (22), a Life Sciences building at Santa Barbara (23), and a Sciences Laboratory building at Davis (26).

Funding is also requested for construction of a new laboratory facility to address accreditation deficiencies at the School of Veterinary Medicine at Davis (24), to design and construct a new greenhouse laboratory facility at the Kearney Agricultural Center (29), and to start design for the next increment of collection storage space at the Northern Regional Library Facility (32). Three projects are intended to meet the needs of programs in existing buildings-construction of alterations to the Life Sciences facility and Chemistry Annex at Davis (5 and 17), and design of alterations for Film and Digital Media programs at Santa Cruz (28).

Several projects will correct serious seismic life-safety hazards. This includes funding for construction of five projects-one project to upgrade four separate buildings at Berkeley where part of the budget is provided by Federal funds (1), the second phase of work at Los Angeles to replace health sciences academic facilities damaged in the Northridge Earthquake (2), corrections for the Humanities-Olmsted building at Riverside (3), correction of the Physical Sciences Research Facility at Irvine (4), and a new building to replace deficient space in two existing structures at Berkeley (6). Design will be completed and construction undertaken for the second phase of corrections to Arts facilities at Irvine (8), for an academic building at the Irvine Medical Center (16), for Irvine Hall at the Irvine central campus (20), and for the Archaeology building at Berkeley (25). Design will be completed for a new building to replace the hazardous Medical Research Buildings I and II of the San Francisco campus (9), for LeConte Hall at Berkeley (14), and for the Dance Building at Los Angeles (15).

Campus infrastructure deficiencies will be addressed by funding requested to construct the renewal of the campus sewer system at Santa Barbara (10) and the second phase of improvements to the campus electrical distribution system at Davis (21); to design and construct central plant facilities at San Diego (11), Santa Cruz (13), and Irvine (27); and to design and construct the renewal and expansion of the electrical distribution system at San Francisco (30).

The University's 2000-01 and 2001-02 State-funded capital budget requests rely on financing provided by the general obligation bond measure approved by the voters at the November 1998 election (Proposition 1A). Financing of subsequent budget requests is dependent on submittal of a new bond proposal to the citizens of California in 2002.

Unfortunately, the funding available through the 1998 bond measure represents less than half the level of the funding that is essential to adequately address the capital outlay needs of State-supportable programs at the University of California. That need is estimated at about

$500 million per year, and is increased by inflation each year. The University is very concerned that the available capital resources will not be sufficient to support the renewal and modernization of existing facilities, correct urgent seismic hazards, and also accommodate the massive enrollment growth forecast. The increase in undergraduate and graduate enrollment at the University will require expansion of academic programs and the facilities needed to house them, including establishment of the new campus at Merced. Without adequate funding, there will not be sufficient space to effectively support the programs and their students, impacting the quality of the programs and the education they provide. In addition, the magnitude of the seismic problem across the University, but at Berkeley in particular, presents a serious funding issue. The level of available State funding will provide only a fraction of the money Berkeley will need. The campus is completing a detailed seismic program implementation plan, but the availability of funding to supplement State support presents a serious challenge in accomplishing these life-safety corrections within a reasonable time period.