University System of Georgia

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Proposed Legislation Aimed At Meeting Public Higher Education Construction Needs

Atlanta — January 10, 2006

University System of Georgia (USG) officials announced plans today to have legislation introduced in the 2006 session of the Georgia General Assembly that would create a new state authority to address construction funding needs at the state’s public colleges, universities and technical colleges.

The proposed Georgia Higher Education Facilities Authority (GHEFA) would help both the USG and the Department of Technical and Adult Education (DTAE) keep pace with the rising demand for new facilities around the state, augmenting the state’s ability to support those needs, said University System Vice Chancellor for Fiscal Affairs William S. Bowes in a presentation to the Board of Regents.

“The benefits of the GHEFA would be threefold,” said Bowes. “The proposed authority would allow for better control over projects at the system level, would provide the ability to pool projects under a single bond issue and reduce transaction costs, and potentially help us obtain better financing rates.”

According to Bowes, the new authority would have the power to make and execute contracts and leases, and to extend credit or make loans for the planning, design, construction, acquisition, and refinancing of projects. The GHEFA would function in two key ways: one, it would own the facilities and thus have access to revenues generated in order to pay the debt service for construction and, two, as an issuer of bonds through agreements with corporations and similar to generate the dollars needed to construct facilities. Bowes told the regents that the total amount of revenue bonds the authority could issue would be set by statute at $300 million.

Once completed, the proposed legislation would amend Title 20 of the Georgia Official Code, was developed from a study group convened under the direction of Gov. Sonny Perdue. Membership in the new authority would consist of three individuals appointed by the governor; a member from the DTAE board, appointed by the Georgia House of Representatives; and a member of the Board of Regents, appointed by the Georgia Senate.

The regents also are considering a proposed revision of the policy document used in evaluating capital project requests from the USG campuses. Several changes have been proposed to the “System Principles for Capital Outlay Prioritization,” the evaluative process the Board uses to assess and rank major construction projects in the System. Currently, the process is based upon 10 principles and the proposed revision updates the criteria and consolidates them into seven principles. The proposed new principles are:

  1. Capital investment will support the USG strategic plan and its statewide mission.
  2. Capital investment will implement the strategic mission and goals of USG institutions.
  3. Capital will be allocated within a comprehensive program of integrated projects prioritized in adherence to systematic physical planning and sound financial models.
  4. Capital investment will be economically and environmentally sustainable, promote optimal stewardship of existing state resources and have a superior long-term benefit/cost ratio
  5. Capital investment should meet the following criteria to the greatest extent possible:

* Increase quality of instruction, research and public service; * Maintain or increase capacity (as strategically warranted); * Enhance regulatory compliance; and * Enhance productivity and operating efficiency. 6. Capital investment should enhance output to geographic areas and in occupations and technologies that support state workforce needs and economic development goals. 7. State capital investment should be leveraged and enhanced by external funds at a rate appropriate to the characteristics of the individual institution, program, and project.

The proposed revisions are a key outcome of Board of Regents Chair J. Timothy Shelnut’s four-point plan. One of the points under discussion is the way in which the System assesses and pursues funding for construction projects. A six-member committee from the University System Office and campuses developed the revised principles, which will be voted upon by the Regents at a future board meeting.

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