LAO Analysis of the 1997-98 Budget Bill
Higher Education Crosscutting Issues
- Crosscutting Issues
- The State's Approach to Deferred Maintenance: Round Two
- Community Colleges
- The Four-Year Universities
Last year the higher education segments and the Legislature agreed on
a multiyear program to resolve (1) existing backlogs in facility maintenance and (2) chronic underfunding of regular maintenance needs. We
recommend that the Legislature continue the basic approach it adopted
in last year's budget, including General Fund augmentations for the
California State University and the University of California.
The State's Approach to
Deferred Maintenance: Round Two
To keep the state's facilities at the University of California (UC), the
California State University (CSU), and the California Community Colleges (CCC) functional, the state and the systems fund ongoing maintenance and special repair programs.
For the purposes of this discussion, "maintenance" refers to programs
to maintain the condition of facilities and infrastructure/utility systems.
"Special repair" refers to maintenance projects that are required periodically and are above the level of expenditures needed for routine maintenance. Examples of special repairs include replacing roofs, painting
exteriors, and replacing mechanical/electrical equipment.
In the Analysis of the 1996-97 Budget Bill, we discussed the repeated
deferral of needed maintenance and repairs of higher education facilities.
In response, the systems and the Legislature adopted a plan to (1) reduce
the backlog of deferred work and (2) fully meet ongoing maintenance/repair needs over a three- to four-year period and thereby avoid
additional backlogs. We discuss these plans below. (For additional detail
on the dimensions of the deferred maintenance problems, please see our
discussion in the higher education section of the 1996-97 Analysis.)
The CCC's maintenance problems have been easier to address because
of the large amount of funds ultimately available for K-14 education
under Proposition 98. Thus, in the 1996-97 Budget Act the Legislature
augmented ongoing maintenance/repair funding for CCC by $39 million,
with a requirement that the colleges provide up to $11 million in matching local funds. In addition, the Legislature provided $60 million of one-time Proposition 98 monies to address CCC's deferred maintenance
backlog, matched by up to $17 million of local funds (Chapter 204, Statutes of 1996 [AB 3488, Ducheny]).
The 1997-98 Governor's Budget proposes to continue the augmented
level of $39 million ongoing maintenance/repair funding--with local
matches of up to $39 million--and to provide additional one-time monies
for the deferred backlog as part of a proposed block grant. In view of the
above, we believe the Legislature has placed the CCC on a sound fiscal
footing regarding maintenance/repair needs.
The Four-Year Universities
Addressing the needs of the four-year universities has proved more
difficult. In response to the issues we raised in last year's Analysis, CSU
and UC each committed to augment their annual maintenance/repair
expenditures by allocating, respectively, $9.6 million and $7.5 million from
budget increases proposed for them by the Governor. To match these
efforts, the Legislature added $7.5 million to each segment from the General Fund. These actions were seen as the first step in a multiyear effort to
stop further growth of--and eventually eliminate--maintenance/repair
The Governor, however, vetoed the legislative augmentations, stating
that the segments should address their maintenance needs within the
funding levels he has committed to provide under his "compact" with
them. In response to the Governor's veto, UC withdrew the $7.5 million
it committed as a "match" for the maintenance augmentation. The CSU
did increase maintenance funding by $9.6 million in 1996-97 with "compact" funds.
The 1997-98 Governor's Budget proposes to increase maintenance
spending by $8.5 million at CSU and $7.5 million at UC. These amounts
reflect what each segment is willing to commit to additional maintenance,
given the overall fiscal resources proposed for them by the Governor.
While this commitment of additional resources to maintaining the state's
university facilities is commendable, more needs to be done. We think the
Legislature should follow its previous plan and augment the CSU and UC
budgets for maintenance for the following reasons:
- Additional Funds Will Stop Deterioration of the State's Facilities
More Quickly. The state has invested heavily in higher education
facilities over the years. The value of this asset--many billions of
dollars--demands more rapid action. Both segments estimate that
maintenance funding falls short of established need by at least
$50 million annually. Matching the proposed budget increases, in
a series of cumulative annual augmentations as contemplated in
last year's legislative actions, will eliminate the deficits in three to
four years. Failure to match will double the time it takes to reach
an adequate level of ongoing maintenance. Moreover, each year of
delay will increase deferred maintenance backlogs, complicating,
rather than aiding, the state's already expensive efforts to solve
this related problem.
- It Sends the Right Signals to the Segments. As we pointed out in
last year's Analysis, the Legislature, Governor, and the segments
share responsibility for the existence of today's serious maintenance problems. By augmenting their maintenance budgets, the
Legislature can be a partner in the segments' efforts, and underscore its intent that higher education adequately maintain the public's facilities.
To protect the state's tremendous investment in higher education
facilities, we recommend that the Legislature take the following budget
Of the amount appropriated by this item ($63,018,000 for CSU and
$82,711,000 for UC) is for building maintenance as that activity is
defined and accounted for in the program budget detail in the
Governor's annual budgets.
- Match the amounts that CSU and UC have committed from their
1996-97 and 1997-98 "compact" increases for maintenance and
special repairs. (Augment General Fund amounts for CSU by
$18.1 million and for UC by $7.5 million.)
- Restate (with appropriate updating) last year's supplemental report language outlining the multiyear steps to resolve the deferred
- Include the following budget bill language in each segment's support item to ensure that the augmentations supplement, rather
than supplant, base spending on maintenance/repairs:
Deferred Maintenance Backlog. Last year's supplemental report reflects a commitment by CSU to address its deferred maintenance backlog
with a combination of (1) the augmented levels of annual maintenance
funding specified in the language and (2) capital outlay projects that
involve renovation of existing facilities. We believe this commitment is a
responsible approach for which CSU should be commended.
Under last year's supplemental report language, UC is preparing a
plan (due to the Legislature in February 1997) for addressing its deferred
maintenance backlog. We will comment on the plan, as appropriate, at
Return to 1997-98 Budget Analysis Table of Contents
Return to LAO Home Page