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Regents Endorse New Strategic Model For Allocation of Capital Funds To Campuses

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Atlanta — November 9, 2006

The Board of Regents today formally endorsed a new Strategic Capital Model that includes a method of determining the allocation of state funds for new facilities on the 35 campuses of the University System of Georgia (USG). System officials told the regents during a presentation today that the new model is designed to be more responsive and dynamic than the current process for addressing the USG’s facilities needs.

The new allocation model is data driven and is based upon each institution’s current enrollment, anticipated enrollment growth, square footage, the age and condition of current facilities, as well as the strategic priorities of the Board of Regents. Instead of the current system, in which campus officials annually request funding for individual “major” projects (more than $5 million) and “minor” projects (less than $5 million), the new model targets funding for a multi-year Capital Implementation Program, allowing campus officials to decide which individual projects best implement campus and System objectives. The University System’s Office of Facilities staff has been working on a comprehensive update of its existing capital request process for more than a year. A key goal of the update was to use the recently revised Regents Principles for Capital Resources Allocation to improve the “fit” between the state’s available general obligation (GO) bonds and the USG’s capital (facilities) program.

GO bonds represent debt that is backed by the full faith and credit of the state and is not tied to a specific source of revenue. Each year, the state authorizes the issuance of GO bonds to fund capital projects requested by a variety of state entities.

In today’s presentation, Vice Chancellor for Facilities Linda Daniels said that, through this update, five major issues emerged concerning the existing process – the lack of predictability for facilities funding from year to year; the absence of a strategic focus; the length of time from an institution’s request for a facility to the completion of construction; the need for more robust data in capital decision-making; and the need to consider all campus capital projects, even those not funded by GO bonds.

“The new model will address key issues, focus on strategic planning and allow us toimplement the new Regents Principles for capital allocation,” Daniels told the regents. “Our primary objective is to maximize the strategic value of all capital investment in the University System. This will be accomplished through enhanced, long-term capital planning and development made possible by consistent and predictable state capital funding.”

An underlying assumption of the new Strategic Capital Model is that a consistent and sustainable level of bond funding will be linked to the USG’s multi-year capital program. Built into the new model is a base of $250 million in GO bond funding that would increase 5 percent annually. At this rate, the total amount of GO bonds allocated to the USG for fiscal years 2009-2014 would be $1.7 billion.

The capital allocation model the regents endorsed today will allow the University System to do more effective capital planning, USG Director of Planning Alan Travis told the regents. He noted that USG campuses will benefit tremendously from having a predictable financial basis for facilities master-planning.

“The Board of Regents will determine, in advance, each institution’s target share of GO bond funding using the allocation model, which is driven by a variety of structural and strategic factors,” Travis said. “Although the state will continue authorizing USG GO bonds annually, the model will allow the Board of Regents to target the funds to institutions in multi-year cycles – six years initially, and three years thereafter – to increase their programming flexibility.”

Travis added that the new model factors in funding to cover strong enrollment growth, serious space deficits and the maintenance of aging buildings in a way that has not been feasible until now. “This is going to tie the needs of our institutions to the University System’s overall needs and goals and enable us to be more effective in facilities-related planning, budgeting and implementation,” he said.

Now that the Board of Regents has endorsed the Strategic Capital Model, the USG facilities staff will work with System campuses to develop and refine the institutional Capital Implementation Programs. These programs will be brought to the board for approval in Summer 2007.

The regents already have submitted the University System’s FY 2008 Budget Request to the Office of Planning and Budget for consideration by Gov. Sonny Perdue as part of the state budget he submits to the General Assembly at the start of the 2007 Legislative Session. Therefore, the first USG budget request to be developed using the newly endorsed Strategic Capital Model will be the FY 2009 budget request, which will be finalized for September 2007 submission to the Governor.

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