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Home » Strategic Planning

Policy Direction for Capital Priorities and Master Plans

Adopted by the Board of Regents, May 10, 1995

The University System of Georgia --which includes the Board of Regents, its Chancellor's Office, and all the institutions governed by the Board--

GOALS:

• Provide facilities that support academic program needs, quality and excellence, program demand, new technologies and innovation, and associated support services.
• Significantly reduce the backlog of both needed repair and rehabilitation, and major renovation projects Systemwide by 2000, and insure higher priority for protecting the state's significant capital assets on University System campuses in future capital decision-making.
• Insure that the Major Capital Outlay priority process accommodates changing needs, allows timely response to outside funding opportunities, encourages joint-use facilities that advance collaboration, and provides adequate continuity for planning, by FY 1998.
• Develop master plans, based on mission and driven by academic program needs, for every University System institution by 2000.

BACKGROUND:

Currently the University System separates its facilities projects into two funding streams: Major Capital Projects, and Major Repair and Rehabilitation (MRR).

Major Capital Projects (generally projects costing $5-30 million) are funded from two lists. The University System's annual budget request includes an unranked list of full pay-back projects and a Capital Priority List of other projects recommended by the Board of Regents. The General Assembly must authorize bonds for the pay-back projects. The Priority List typically requests approximately $200 million in state funds for about twenty projects, some to be partially funded from other sources. Up until 1992 the General Assembly was funding about $40-$50 million a year. Since then state support for Capital Projects has ranged widely--from $84 million to $219 million, except in FY 1995 when $3 million in design funds accompanied only $12 million in construction funds. Those design funds, supplemented by internal reallocation, allowed the Board of Regents to present plans for ten priority projects in its Capital Outlay request this year for the first time ever; more such funds were not provided for FY 1996, however.

The Capital Priority List is a single, cumulative ranking, developed by the Board of Regents and generally followed in state funding. Those listed projects that are not funded in any year move up the list in their original ranked order until they are funded. Each year, the institutions prepare annual five-year budget request plans, and the Regents Chancellor's Office recommends additions to the Priority List. The Board prioritizes any new projects for which it requests funding, and they are placed in that ranked order at the bottom of the Priority List. Last year was an exception. The new Chancellor chose not to recommend adding to the list, since it was already lengthy and there was considerable Board sentiment for revisiting the process for establishing capital priorities.

Major Repair and Rehabilitation (MRR) projects include everything from relatively small to very large repairs and rehabilitations, to land acquisitions and extensive renovations. MRR is funded from a formula request equal to 0.75% of the replacement value of University System facilities, calculated on a square-footage basis. Recently that has totalled about $30 million annually. A "target" allocation is developed for each institution based on its total square footage and the age and replacement value of its facilities. The Regents Chancellor's Office then selects projects from a prioritized list of MRR needs prepared by each institution, to match the institution's "target" as closely as possible. An institution allocated more than its "target" one year is likely to be allocated less the next, to keep its average funding near the "target" over time. Recent regulatory needs alone (ADA, code compliance, asbestos abatement, etc.) could probably exhaust the MRR appropriation each year, but many have been delayed in favor of other pressing needs for roof replacement, mechanical systems replacement, and general renovation.

Although the Capital Priority List can include land acquisition and major renovation project requests, both institutional and state politics tend to favor proposing new construction for the Priority List. So land acquisition and major renovations, along with regulatory needs, try to squeeze into the less rigidly delimited MRR process. Although the Chancellor's Office has tried to eliminate inappropriate encroachments on MRR, the MRR funds are still stretched and unable to meet the needs for which they were originally intended.

Renovation projects costing from $500,000 to $2-3 million, moreover, have fallen into the gap between the MRR fund and the Capital Priority List. The most critical such projects have been chopped up and handled in phases with MRR funds over several years. That's a disruptive and inefficient stop-gap. DeKalb's old library building, for example, has sat empty since its fine new library was completed. Reconfiguring the old building for other uses--much needed at the largest growing of the System's two-year colleges--requires $2-3 million; and doing the renovation piecemeal is eating up all DeKalb's MRR and special initiative money over several years. Accordingly the University System has developed a serious backlog of repair, rehabilitation, and renovation needs.

This is a national problem. Colleges and universities built more facilities--often in a quality-compromising rush--in 1959-65 than in the previous 200 years, and most of these facilities are now in need of renovation or replacement. New life-safety standards and other governmental codes exacerbate that need, as do also the greater energy and space needs of new learning technologies (15-18 square feet per student, compared to the 12 square-foot standard for a lecture/discussion class). The National Science Foundation has determined that "for every dollar institutions plan to spend on facilities, an additional four dollars of repairs and renovations are being deferred." In higher education nationwide there now exists a backlog of perhaps $60 billion in facilities renewal needs. A good third of those are probably urgent, jeopardizing the basic functionality and even safety of buildings, not to mention their ability to support state-of-the-art learning and the aesthetics so critical to recruitment. (Facilities were the most important factor in the final selection of colleges by incoming freshmen who had made campus visits, in a recent survey by the Carnegie Foundation for the Advancement of Teaching.)

In Georgia the backlog of needed repair and rehabilitation is sufficiently obvious that legislators expressed significant support for the doubled MRR allocation included in the University System's 1988 revision of the funding formula--a unilateral revision that otherwise elicited little enthusiasm from government leaders. Legislative support for the rehabilitation of older University System facilities was also evidenced in the last session when an additional $8 million beyond the MRR formula funding was provided through special initiatives funding for renovating distance learning classrooms and laboratories.

Master plans: For purposes of funding particular capital projects, the University System does not require that its institutions have a master plan--only a five-year budget request plan. Both the University System and the Southern Association of Schools and Colleges require budgeting to reflect institution-wide strategic planning priorities, but the System's capital priority process does not include any checks on that linkage.

Analyzing institutional facilities in light of current space and utilization standards, then developing master plans to support mission mandates, strategic planning, and projected enrollment pressures would require perhaps $50,000-400,000 per campus. With no external source to support such expenses, only a few campuses have up-to-date master plans for facilities development. The research universities' scale, specialized staffing, and extensive private fund-raising make such plans most common on their campuses, although several other campuses also have good master plans. The System's most notable recent master planning effort took place when Albany State College faced the necessity of rebuilding most of its facilities after the 1994 flood. Its model plan is based on academic program priorities, and its development joined the expertise of outside consultants with the planning perspectives of both institutional and System leadership.

IMPLEMENTATION:

The Board of Regents directs that the Chancellor's Office work with a small advisory committee of institutional representatives with expertise in finance and facilities, and--as appropriate--with state government to accomplish the following tasks, as many as possible in time for FY 1997 budgeting, all at least in time for FY 1998 budgeting:

• Double the funding base for Major Repair and Rehabilitation projects, and strengthen guidelines for its use, including at least the following:
  • Dollar range for eligible projects (e.g., up to $1 million)--with consideration given to extending the contract authority of the Facilities Office to that level;
  • Specification of kinds of eligible projects: e.g., repair and rehabilitation (including funding for needed engineering or architectural consultation), code compliance, and emergencies;
  • Provision for funding engineering or architectural consultation to insure code compliance and maximize cost estimates for large-scale MRR projects;
  • Articulation of criteria for allocation, and proportionate allocations to each institution by matching projects on its MRR priority list to a "target" amount based on the square footage of academic and support facilities, replacement value, and increased emphasis on the average age and (when not the result of institutional administrative priorities) condition of buildings;
  • A modified formula base to diminish the current incentive to expand square-footage. Eventual revision of the general System funding and allocations formulas should also include attention to the age, type, and condition of all buildings; and incentives for timely maintenance and repair, for renovation rather than new construction, and for development of facilities for joint use.
  
  
• Establish a ranked Minor Capital Projects Priority List, and guidelines for its development, including at least the following:
  • Dollar range for eligible projects (e.g., $1-5 million, with no basement for land acquisitions);
  • Specification of kinds of eligible projects, with some flexibility to protect the integrity of the MRR fund ( e.g., major renovation, minor new construction, and--when necessary--land acquisitions and other capital needs);
  • A flexible system of establishing priorities that generally puts:
    • emergency projects first (i.e. those essential to correct conditions that are exceptionally hazardous to life, safety, or property--perhaps defined in line with proposed federal legislation on risk exposure),
    • then projects that protect the state's investment in existing facilities--including older buildings with historic value--, with further prioritizing of renovation projects involving utilities, structural integrity, new program uses, and infra-structure;
    • then projects with positive cost-benefit ratios (such as energy conservation), which may be given higher priority when determined to be more cost- effective than renovation as a means of meeting particular needs.
    
    
  • Annual review by the Board of Regents of the list's priority ranking, with particular attention to time-sensitive factors and changing needs.
  
  
• Revise the guidelines for the Major Capital Projects Priority List to include the following:
  • Dollar level for eligible projects (e.g., over $5 million);
  • A strengthened requirement that listed projects meet institutional/System needs, priorities, and plans, as articulated by strategic plans and existent master plans, with a provision that the Board of Regents may single out particular strategic priorities to emphasize for several upcoming funding years in advance of the institutions' annual submissions of their capital requests (e.g., a focus on renovation for the next three fiscal years);
  • A prioritizing system that is flexible enough to encourage the proposal of "opportunistic" or "challenge" projects for which a significant amount of the funding is supported by already-received or anticipated matching gifts or grants, with larger institutions being expected to offer a larger match than smaller institutions.
  • Annual review by the Board of Regents of the list's priority ranking, with particular attention to time-sensitive factors and changing needs.
  
  
• Revise the guidelines for the unranked listing of full pay-back projects to strengthen requirements that such projects meet institutional/System needs, priorities, and plans, as articulated by strategic plans and existent master plans.
• Insure that the processes for allocating MRR funds, developing both Minor and Major Capital Project Priorities Lists, and including full pay-back projects on the unranked list submitted by the Regents for state bonding all promote--in general, with adequate flexibility to accommodate institutional differences and exceptional circumstances-- the following priorities:
  • In general, projects necessary to protect human life or safety first;
  • In general, then projects that honor contractual or legal obligations (including code compliance) and/or protect the state's investment in existing facilities;
  • In general, renovation projects over new construction, with particular attention given to correcting any facilities deficits found at historically black institutions and, at all institutions, to enhancing any special historical values consistent with improved facility function;
  • In general, projects for academic programming and services over non-academic projects;
  • In general, projects for meeting existing needs over those for meeting projected needs, with particular attention to projects to replace high-cost temporary and/or leased facilities in full use;
  • In general, projects involving existing programs over those involving new programs, unless the institution proposes to off-set the new programs with equivalent-cost cuts in existing programs through reallocation;
  • In general, projects for joint-usage facilities over single-institution usage whenever appropriate;
  • In general, projects planned to enhance energy efficiency, other environmental values, and/or community relations;
  • In general, projects involving significant partial external funding over those requiring full state funding.
  
  
• Establish guidelines for accepting a donated facility or purchasing an existing facility to insure that such facility meets a documented need consistent with System and institutional planning, promises to be cost-effective, has no major safety or environmental deficits, and serves the best interests of the System. If such a building has more square footage than would be required for a new building in the campus master plan, a compelling plan should be presented for making cost-effective use of the excess space, and future formula funding would be adjusted.
• Build up a revolving Design Fund--to be maintained, if possible under state law, by pay-back from funded projects--to enable the Board to deliver plans along with legislative requests for the projects at the top of its Capital Priority List.
• Consider a separate fund for land acquisitions, seeking funding and developing guidelines for its allocation based on projected System and institutional growth needs, and opportunities consonant with System and institutional planning priorities, with some off-setting MRR credit for institutions that do not use it.
• Seek state funding to establish a Systemwide requirement for institutional master plans, to be:
  • developed by each institution in consultation with the Regents Chancellor's Office, in keeping with both institutional and System planning projections;
  • based on the institution's mission, driven by its academic program needs, and integrated with its strategic planning priorities;
  • undergirded by a study analyzing existing facilities in relationship to current academic space and utilization standards and state standards, to be undertaken by appropriate professional experts on the institution's own staff, or by external consultants funded 50/50 by the institution and the Regents Chancellor's Office;
  • updated approximately every 5 years, as part of the institution's strategic planning cycle, and as a prerequisite for proposing projects for the Minor and Major Capital Projects Priority Lists. An institution's master plan would need to be certified by the Regents Chancellor's Office as adequate to fulfill that prerequisite, without implying any Regent commitment to facilities and capital projects included in the certified plan.
  
  
• Explore and develop recommendations concerning all possible funding mechanisms and opportunities, including: the use of county government bonds to construct high impact facilities (with phased state reimbursement); legislative allowance for carry-over of capital funds currently lapsed at the end of the fiscal year; and greater delegated authority for institutional management of projects (with appropriate System oversight ).

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