In January, Gov. Schwarzenegger’s proposed 2008-09 budget included approximately $1.6 billion to fund capital facilities and projects for the California State University (CSU) and University of California (UC). This proposal was dependent upon the passage of a November general obligation bond that would provide funding to address capital facility needs for all public sectors over the next two years.

Though this funding is imperative to address capital facility needs for the CSU and UC; during the subcommittee process, both houses of the legislature deleted most of the capital outlay projects from the state budget leaving only $72 million of the original $1.6 billion to address these needs.

In the past the CSU and UC have worked with our K-12 and community college partners to run successful bond campaigns. This year that partnership is highly unlikely as both K-12 and community colleges have billions in unspent bond funding from a voter approved 2006 bond measure. Without their help, a budget already stretched to the max and many competing bond measures on the November ballot, the CSU believes it would be infeasible to mount an effective campaign. However, we feel the funding to continue our capital outlay projects without interruption is essential to the states economic health. Due to ten years of unprecedented enrollment-growth and the ongoing needs to improve facilities related to life-safety, seismic, modernization, and infrastructure facilities the 2008-09 budget proposed by the Governor was essential to the CSU and UC. The state budget, as it currently stands, leaves important facility updates and construction needs of higher education unaddressed.

Delay in funding will increase the costs of capital outlay programs, and result in the loss of millions of dollars in matching private dollars that supplement state resources to fully fund facility projects. The CSU and UC are proposing lease-revenue bonds as a funding option over the next two years to invest in the universities’ capital infrastructure. The payments would be minimal in the first several years, with most of the debt service costs not incurred until the bonds are sold upon completion of the construction projects.

Many of the capital facility projects are essential to meet California’s workforce demands for all job sectors. All of these projects have been in the planning process for years in an effort to meet the growing demand for student access to essential education programs. The Governor showed his support for higher education in his original January 2008-09 budget, and the CSU and UC have respectfully asked for his continued support in this matter. The CSU and UC plan to meet with him and his staff in the near future to discuss support for an alternative funding plan that will gain the legislative approval necessary to be included in the 2008-09 Budget Act.