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March 30, 2012 5:18 PM Despite Massive Budget Cuts, There’s a Building Boom in U.S. Higher Education

By Jon Marcus

A multibillion-dollar building boom is under way at U.S. universities and colleges—despite budget shortfalls and endowment decline.

Some $11 billion in new facilities have sprung up on American campuses in each of the last two years—more than double what was spent on buildings a decade ago, according to the market-research firm McGraw-Hill Construction—even as schools are under pressure to contain costs.

“You can go into any community and talk to somebody whose son or daughter either can’t get in or can’t finish [college] because they can’t get this or that course,” says David Wolf, cofounder of the Campaign for College Opportunity, which lobbies for higher education in California. “Meanwhile, they go on campus and there’s all that fresh cement. That’s embarrassing, and it’s wrong.”

Much of the spending is occurring at cash-strapped public universities.

The University of California system has $8.9 billion in construction going up at its 10 campuses and five medical centers, and the California State University system has $161 million. Since 2008, California has cut $2.65 billion in operating money from its public universities, which have responded by reducing enrollment, dramatically increasing tuition and laying off employees. At UC campuses, student fees rose 18 percent this year. Since the beginning of the fiscal crisis, 4,400 employees have been laid off and 3,570 positions have been eliminated in the UC system.

More than $384 million in projects are in process and another $515 million are in the planning and design stages at the University of Buffalo, part of the State University of New York, a system whose budget has been cut by $1.1 billion over the last three years. Virginia Tech has $696 million in construction newly finished, under way or ready to start, and the University of Nebraska has nearly $600 million.

While critics concede that some of the construction is justified—at jam-packed community colleges, for instance, where enrollments are rising—many new buildings are going up on campuses just because donors want their names immortalized, university presidents like to leave legacies of brick and mortar, and admissions directors are battling for applicants they’re convinced are lured by shiny new amenities.

“People at universities want to leave a legacy, and you can leave a legacy in terms of improved rankings, you can leave a legacy in winning national football championships, and you can leave a legacy by building a lot of buildings so that people for decades will come to the campus and say, ‘Look at the buildings President X left,’ ” says Richard Vedder, director of the Center for College Affordability and Productivity, an independent national research organization. “Whereas money put into things like scholarships and salaries [is] less visible.”

The universities respond by pointing out that much of the ongoing construction was already in the pipeline before the 2008 economic downturn.

But the cost of paying interest on construction bonds does come out of operating funds—a staggering $1.1 billion a year in California alone, more than double the amount of 10 years ago, according to the state’s Legislative Analyst’s Office.

“People discuss bond money as if it’s free money that isn’t coming out of the taxpayers’ pockets, and that’s exactly where it is coming from,” says David Kline, spokesperson for the California Taxpayers Association.

New food courts, dorms, gyms and other facilities are paid for out of student fees, which also are increasing.

The added cost of maintaining new buildings comes at a time when universities have trimmed the proportion of their budgets that goes to maintenance from 11 percent to 10 percent, according to American School & University magazine, which tracks such spending. The amount of square feet maintained per full-time custodian has increased by 16 percent, and the amount per full-time maintenance worker by 13 percent.

Nor is it clear that universities are efficiently using the space they already have. California’s Legislative Analyst’s Office reported last summer that almost all California campuses could accommodate more students using existing space and scheduling more morning, evening, weekend and summer classes. And that report covered a period that ended before the state’s public institutions reduced enrollment by a combined 165,000 places last year alone because of budget cuts.

“It does point to a lack of focusing on the key priority, which is to educate the students in the most cost-effective ways,” Kline says.

Wolf sees the situation as a symptom of what he calls the “ossification” of America’s universities and colleges—their unwillingness to change the way they do things in the face of new realities by, for example, canceling or postponing construction.

“There’s no evil force on every campus that is creating what appears to be inefficiency and wasteful behavior,” he says. “What it is, is the result of a combination of things going on in a period of extraordinary change, when old systems need to be reexamined, and aren’t being reexamined. And you sum all that up and you get a situation that doesn’t make any sense.”

Lindsay Hogan, an economist at McGraw-Hill Construction, says there’s no sign that the building boom will stop. It may even accelerate. Philanthropy is rebounding, she says, “which has helped some colleges move forward with projects that were in the pipeline.”

But she also warns that, as state legislatures become stingier about paying for new buildings, public universities are shouldering increasing proportions of construction debt themselves, risking their bond ratings—and, if those bond ratings are lowered, facing even higher interest costs as a result.

This story was produced by The Hechinger Report, a nonprofit, nonpartisan education-news outlet based at Teachers College, Columbia University, in partnership with California Watch, where a version originally appeared.

Jon Marcus is a higher education editor at the Hechinger Report, a nonprofit, nonpartisan education news outlet based at Teachers College, Columbia University.

Comments

  • Petey on March 30, 2012 10:21 PM:

    Do you know how many buildings at Berkeley alone require earthquake retrofitting, or need to be replaced entirely? Berkeley is wrapping up a $3 billion campaign, since it gets only 10% of its total funding from the state (yes, ONLY TEN PERCENT). And still it is finding a way to pay the way for all middle class admittees.

    As for medical buildings at UCLA , etc., state law requires every hospital to be rebuilt to new earthquake code standards.

    Please, California taxpayers should thank their lucky stars Berkeley et al. are holding their own. If Cal had the resources it deserves, it would fully, and finally, leave Stanford and the rest in the dust.

  • Texas Aggie on March 31, 2012 12:00 PM:

    I didn't see anywhere that mentioned that prior to the "building boom," universities were in rough shape because their buildings were deteriorating due to lack of funds for maintenance. This is what happens when you don't spend money you don't have on maintenance. Eventually you have to spend a lot more money that you don't have on building.

    I don't think that this article was well thought out.

  • David Martin on March 31, 2012 12:06 PM:

    The University of North Carolina at Chapel Hill (excluding the huge medical school) more or less finished the biggest burst of construction in its history just in time for the Great Recession and the collapse of state funding. The construction had been badly needed. In particular, the physical sciences had lousy facilities.

  • Crissa on April 01, 2012 1:19 AM:

    Very few of the California campuses were building while letting facilities go empty. Most of my courses were in borrowed classrooms or overbooked halls - hard to have all the classes you need to graduate if there isn't a space for all of them to be held.

    The bond binge is a big problem, but I think it's bigger than just some buildings.