Recent enrollment forecasts, based on demographic analyses by the State Department of Finance and related studies by the University, project that general campus undergraduate and graduate student enrollment at the University of California will increase to 211,000 full time equivalent students (FTE) in 2010-11. In 1998-99, at the beginning of this new growth cycle, enrollment stood at 147,000 FTE students. The 64,000 new students to be served thus would result in a student population increase of over 43 percent for the University’s campuses. The University has already enrolled 11,400 FTE of these new students since 1998-99. Described by various names such as "Tidal Wave II" and "the Echo Boom," the massive increase in students constitutes a profound challenge to the University and the State of California.

The faculty and staff of the University have been working diligently to plan for this new cycle of growth. 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. Work is continuing on development of a new campus, UC Merced, located in the Central Valley. The Governor has accelerated the schedule for opening the new campus to allow the first students to be accepted in the Fall of 2004. UC Merced is expected to grow to an enrollment of 6,000 students in six years, by 2010-11. The total enrollment capacity of the existing nine campuses as defined by their Long Range Development Plans (LRDPs) plus UC Merced is approximately 24,000 FTE less than the new forecast of 2010-11 enrollment demand, a substantial shortfall of University capacity.

This has required that every campus explore ways of increasing its capacity above the limits that had been defined in the past. Enrollment targets have been set, and each campus is actively pursuing programmatic and physical options for accommodating the new students. Clearly, expansion at several campuses would be dependent upon amendment of their LRDPs with attendant public environmental review. Off-campus centers are under active consideration by the Santa Cruz campus and others, as is the expansion of Education Abroad programs and other off-campus study programs. Of

particular importance is the objective of making more efficient use of existing campus facilities, particularly during the summer.

The University has agreed with the Governor and Legislature to pursue the expansion of instructional programs during the summer with the target of a universitywide summer enrollment equivalent to about 40 percent of the average fall/winter/spring quarter credit workload. This presents serious problems, not simply in terms of ingrained student summer work and vacation patterns, but also concerning efficient scheduling of sequences of courses across four rather than three quarters, cost-effective class sizes, appropriate staffing to provide the quality essential to a University of California education, and the requisite funding. However, it is clear that the University must exert every effort to make this program succeed, and exploit all other opportunities for increased enrollment, if the projected demand is to be met.

A critical aspect of this challenge is the maintenance of the quality of University of California academic programs and the education received by its students. Under the Master Plan for Higher Education of the State of California, each of the three segments of public higher education has a focused role. The University of California is the graduate and research institution under the master plan, providing a distinct type of education for both undergraduates and graduate students that prepares them to take leadership positions in industry and the community, and supports the rapid advance of our economy that has been of great benefit for our citizens. However, high quality programs depend on hiring new, skilled faculty at the forefront of their fields, a curriculum and academic support system that meets student needs, learning environments that effectively serve the educational process, and a viable campus infrastructure that extends from utilities to living accommodations. The rapid growth experienced by the University during the 1980s demonstrated the serious strain put on heavily impacted academic programs; the growth forecast now is even greater. Care must be exercised, particularly in the selection of the faculty that are the core of the academic programs.

Appropriate facilities are an essential part of this effort. This is most clearly seen for science and engineering programs, which are heavily targeted by students in this surge of enrollment growth. Beginning in 1998-99, the University initiated an eight-year plan to expand enrollment in engineering and computer and information sciences by 50 percent, an increase of about 8,000 students by 2005-06. Student demand for these programs is so great that approximately 6,000 of the 8,000 student commitment has already been achieved at this time, three years ahead of schedule. Those programs are of particular concern because of their dependence on highly sophisticated laboratories and technologies to support "cutting-edge" teaching and research.

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 traditional, passively didactic classes. The faculty members who are most effective with their students—the first-rank faculty essential to 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 and research efforts. Such 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, are serious challenges. However, the Tidal Wave II 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 more than 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 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) also have become much more complex and demanding.

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 also is seriously impacted by the critical need to ensure our students, faculty, and staff 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 80 percent of University buildings that had been rated before 1994 as being seismically "Poor" or "Very Poor" have now received or are now receiving structural correction or corrections are underway. 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 provided 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, where the campus core is 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 also are 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.

The capital funding required to meet the needs of State-supportable programs—including enrollment growth, life safety, renewal and obsolescence—is estimated at no less than $500 million per year. This reflects projected student and faculty increases, California Postsecondary Education space guidelines, and related space allowances. It does not include seismic corrections required for the University’s acute care hospital facilities (separate funding support was provided in the 2000 Budget Act), nor does it include State-supportable deferred maintenance needs currently being funded through the operating budget at approximately $70 million per year.

The expansion of State-supportable facilities necessary to serve projected growth in enrollment is estimated to have a capital cost of approximately $250 million per year. This includes general facilities costs for the new UC Merced campus, although start-up and initial infrastructure costs for the new campus will add another $15 million per year for the first ten years (through 2013-14). The need for life-safety corrections, renewal and modernization of the University’s existing State-supportable physical plant is estimated at approximately $235 million per year. Assumed renewal requirements are based on a depreciation model reflecting roughly 2 percent of replacement cost per year. The need includes the ongoing seismic corrections program that is expected to address most seismic life-safety problems on our general campuses within the next five years, except for Berkeley where the most critical corrections will be done in approximately ten years, but completion of the seismic program may take an additional five to ten years.

The 1998 general obligation bond issue has provided approximately $210 million per year starting in 1998-99 and extending through the 2001-02 budget. Subsequent funding would require action by the Governor and Legislature to place a new bond measure on the 2002 election ballot for voter action. The California Postsecondary Education Commission (CPEC) has suggested that a bond measure of $1 billion per year is needed to support the State’s three segments of public higher education. Divided equally between the three segments, such a bond measure would provide the University with approximately $330 million per year for the capital program. This increase relative to the preceding bond would be critically important to the needs of the University, but still substantially less than the serious demands we face. We are proposing use of "one-time" General Fund monies in the 2001-02 Budget to address the current development needs of the new UC Merced campus, and it is hoped that additional support from that source will be made available to accelerate other urgent growth projects.

The University continues to search for ways to increase private and public funding support, and 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 nontraditional 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 is 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 the 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.

Organization of the Regents Budget For Capital Improvements

This budget document focuses on projects for which State funding is requested in 2001-02. The five-year capital improvement program for State-funded projects, reflecting anticipated funding requests through 2005-06, is also provided, as is a summary of other unfunded campus capital needs (including both State and non-State supportable facilities).

As in previous years, the non-State-funded capital improvement program is addressed separately, because it is managed as a continuing entity that is amended as required to include new projects when funding is obtained or financing plans are developed. In contrast, the State-funded capital improvement program reflects the once-per-year funding cycle of the State Budget process. However, we currently are developing a comprehensive statement of both State and non-State-funded capital needs and funding strategies for presentation to The Regents in the Spring of 2001.

This capital budget document is organized as follows:

1. 2001-02 Budget for Capital Improvements: State Funds

The request for State capital outlay funds in 2001-02 totals $438.6 million. This includes $203.2 million remaining from the 1998 general obligation bond measure for the needs of existing campuses, and $235.4 million from State general funds for support of the new UC Merced campus and the California Institutes for Science and Innovation program. The request is presented in summary form for the University as a whole in the following Overview section of this document. That Overview of the State budget request lists only those projects for which State funding is requested in 2001-02.

2. Campus Capital Improvement Programs

The five-year capital improvement program planned for State funding (covering the years 2001-02 through 2005-06) is presented in more detail in individual sections for each campus (including UC Merced), the Division of Agriculture and Natural Resources, and 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 2001-02 (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.

2001-02 State Funds