1997-98 OVERVIEW CAPITAL IMPROVEMENT PROGRAM

The University of California's programs of instruction, research, and public service have been for decades an important factor in both the society and economy of the State. The University has been responsible for providing young men and women from all segments of our society with the best of educational opportunities and accomplishments, and has prepared them for leadership in our communities, commerce and industry, and science. With knowledge and skills at the forefront of their fields, the University's graduates have been key to renewing and sustaining the economy of our State, and will be crucial to California's response to present and future challenges.

The University's capital program must respond to several types of needs to sustain this mission. One category is that of change and obsolescence. As commerce, industry and science are constantly changing to respond to new knowledge and opportunities, so must the academic programs that are responsible for preparing graduates to enter those fields and conducting the research to create many of those new opportunities. Instruction and research objectives evolve and change direction, as do the methods used. To prepare students properly, the responsible academic programs must themselves be at the frontiers of knowledge, developing and using innovative processes and technologies that generate discovery, expand knowledge, and give competitive advantage to California. Unless academic facilities are renovated and updated to meet continually changing program needs, those facilities become constraints to the capability of the programs and students.

A second category of need results from the wear and decline associated with the age of many of our buildings and infrastructure, and the intensive use they have received. The importance of facility renewal is obvious at a campus of the age of Berkeley or Los Angeles, but it should be noted that even the newest campuses of the University are now three decades old and are experiencing many of the same problems of deteriorated condition and increased facility operation cost. This problem was compounded by a period of very limited funding in the 1970s and early 1980s. The University's backlog of deferred maintenance grew dramatically, and the extent of facility deficiencies remain a major constraint to program quality and innovation.

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

But of greatest concern in a period that has seen a series of devastating earthquakes, in California and abroad, is seismic safety. As knowledge has grown about earthquake forces and building structural response, the University has learned that many of its buildings have structural deficiencies that present a serious hazard to occupants and programs. Great strides have been taken in correcting these deficiencies, but the January 17th Northridge Earthquake has served as a further stimulus to accelerate efforts to complete this work. Well over half the University buildings rated seismically "Poor" or "Very Poor" have received structural correction at this time, but many more remain to be addressed. The Regents of the University of California have given high priority to rapidly completing the University's program of seismic and other life-safety corrections. If funding support continues, projects to structurally correct all seismically "Poor" or "Very Poor" State-supported buildings will be started or already completed by the year 2000.

There is an urgent requirement for substantial capital funding to address the pressures of these seismic and life-safety corrections, building renewal, essential infrastructure, and program obsolescence needs. Many of these problems extend back into the period of very limited funding of the 1970s and early 1980s. Starting in the mid-1980s, the State of California was able to increase capital funding substantially, from $17 million in 1982-83 to $230 million in 1993-94. During that same period the University made every effort to expand non-State capital resources, and funding from sources other than the State grew from $145 million per year to about $400 million. While expansion of financial support in the 1980s was most welcome, it occurred in a period of rapid enrollment growth that continued until 1992-93 and for which many new facilities had to be provided. The result is that the University has never caught up with many long-standing facility deficiencies.

Funding arrangements also have became more complicated. In the early 1980s the primary source of the limited amount of State capital outlay funding was tideland oil revenues appropriated through the Capital Outlay Fund for Public Higher Education; the basic source of non-State funding was a modest amount of debt financing for facilities that housed revenue-producing enterprises like student housing. Now the mix of sources is much more complex. State capital funding has relied on two primary sources. General obligation bond measures, dependent on approval by voters at general elections every two years, have been a major source of funding for small projects and infrastructure. New revenue bond financing mechanisms approved by the State have been relied upon extensively for major buildings and, particularly recently, for urgent needs such as life-safety improvements. The University's private fund-raising for capital projects increased significantly over the last decade, as has the level of debt financing, the use of lease-purchase mechanisms, and land-lease arrangements with third-party developers. Many more projects were seen with multiple fund sources and creative funding approaches. Unfortunately, the economic problems experienced by the State in recent years have limited the State's ability to support the capital and operating budget needs of the University.

Because of this increasing complexity--of both needs and funding arrangements--and limits on the amount of available funds, careful planning is a necessity. The University's campuses have responded to this responsibility. A five-year capital program is routinely prepared instead of the three-year program that was normal during uncertain conditions in the past. This plan is based on realistic expectations of the amount of capital funding that can be expected, allowing detailed planning efforts to be focused on those projects that are most important for the campuses and thereby avoid wasting resources in preparation of unsuccessful funding requests. Projects proposed for State funding in the annual capital improvement budget are based on intensive, detailed planning and pre-design analysis. This process supports effective internal decision-making, ensures that commitments that are made can be met, enables the University to explain the project effectively during State review, and improves project management during design and construction.

The 1996-97 Capital Improvement Budget

The 1996-97 Capital Improvement Budget and the five-year program presented in this document reflects the Governor's compact with higher education. That compact provides funding of about $150 million a year with priority given to seismic and life-safety projects, essential infrastructure and building renewal that maintains the operation of existing facilities, and educational technology. The University is fully committed to the correction of seismic hazards and other life-safety deficiencies as shown by the emphasis on those projects in the 1996-97 funding request. The capital program also demonstrates the magnitude of campus need for essential infrastructure and building renewal.

No decisions have been made at this time by the Governor and Legislature regarding placement of a new general obligation bond issue on the 1996 election ballot. Therefore, this budget request anticipates relying primarily on revenue bonds for financing, with use of very limited general obligation bond funds remaining from past bond measures.

This budget has been prepared during a period when enrollment is relatively stable. However, demographic projections clearly indicate a resurgence of enrollment demand, starting in the late 1990s. The University has stated clearly that it will honor the mandate of the Master Plan for Higher Education in California. To that end, the campuses are continuing to plan for future expansion of facilities that will be necessary to accommodate additional students, assuming that State funding support will be provided. A limited number of academic program projects intended to support expanded enrollments are introduced in the last years of this five-year capital plan for initial design funding in anticipation of that need.

None the less, this interlude between cycles of enrollment growth is important for the opportunity it provides to "catch up" for a decade in which important building and infrastructure renewal and modernization was deferred in the face of an imperative demand for expanded facilities to support a massive increase in student enrollment. Such renewal and life-safety corrections are the focus of this 1996-97 capital funding request and the 1996-2001 five-year capital program.

Organization of the Regents Budget For Capital Improvements

This budget document focuses on projects for which State funding is being requested in 1996-97. As in previous years, the non-State funded capital improvement program will be treated as a continuing entity, amended to include new projects when required as funding is obtained or financing plans are developed.

The presentation of information in this capital budget document is organized as follows:

1. 1996-97 Budget for Capital Improvements: State Funds

The request for State capital outlay funds in 1996-97 totals $152.3 million. This program is presented in summary form for the University as a whole in the next section of this document. The overview of the State budget request lists only those projects for which State funding is requested in 1996-97.

2. Campus Capital Improvement Programs

The five-year capital improvement program proposed for State funding is presented in more detail in an individual section for each campus, 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 section concludes with a review of the capital needs of the campus beyond those addressed in the State-funded five-year program; 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.

The five-year program for State funding as presented for each campus covers the years 1996-1997 through 2000-2001. Regents approval is requested only for projects for which State funding is proposed in 1996-97. These are listed first in the five-year budget schedule, followed by additional projects for which funding will be requested in future years.

Projects that are listed here for funding in the later years have already had 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.