Report to the State Board of Higher Education

Prepared byOffice of the Chancellor

Finance and Administration

December 21, 2001

Part II: Capital Renewal /Deferred Maintenance

Funding Strategies to Reduce the Backlog

OUS Total GSF in 2000 (18.2M GSF) Grouped By Construction Date into 5 Year Cohorts

0

500000

1000000

1500000

2000000

2500000

3000000

1880 1885 1890 1895 1900 1905 1910 1915 1920 1925 1930 1935 1940 1945 19501955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

YEAR

GS

F

3

Summary of Findings

E & G Auxiliaries TOTAL

$40M $6M $46M

$488M $67M $555MBacklog of DM

Avg. Annual CR *

*average over next 50 years, varies by year

Current Needs:

E&G Only Deferred Maintenance by Subsystem

Total DM = $488M

Roofing2% Building Exteriors

8%

Elevator/Conveying2%

HVAC-Equipment/Controls

15%

HVAC-Distribution8%

Electrical-Equipment27%

Plumbing14%

Fire Protection2%

Bluilt-in Equipment13%

Interior Finishes9%

OSU33%

PSU28%

SOU5%

UO25%

WOU4%

OIT3%

EOU2%

Oregon University System- E&GDeferred Maintenance by Campus

6

Funding Strategies for DM

All approaches have 4 common steps

1. Assess the CR/DM needs

2. Build support3. Identify Funding Strategies4. Present Strategy to Legislators

7

Actions Taken to Date

2001-2007 OUS Capital Program detail

Updated Campus Master Plans

Updated Facilities Renewal Baseline Study

Presented to State Debt Advisory Commission

8

Actions Taken to Date2001 Legislative Session

OUS Goal: Sustained Funding for Annual Capital Renewal

OUS Action: Requested full annual CR funding portion of DM Backlog

Legislative Outcome: Approved $12 Million/year (4th biennium in a row)

9

Actions Taken to Date2001 Legislative Session

OUS Goal: Reduce DM Backlog

OUS Action: Sought Legislative support for G.O. Bond program for K-12, CCs, OUS, and OHSU

Legislative Outcome: Support for major new ballot measures for issuance of G.O. Bonds

- Seismic Rehab of Public Education - $500 Million

- OHSU Opportunity Program - $200 Million

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Common Funding Strategies

Direct state appropriations Bonds or debt financing Student fees Maintenance Reserve Reallocation through cost reductions Dedicated Tax Business Tax Credits (BTC) – State

program through Office of Energy

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Proposed Funding Strategy

- 2003 Legislative ActionReferral of general ballot measure to voters for approval of General Obligation (GO) Bond issuance.

Purpose: Substantially reduce OUS DM Backlog over 10-year period.

Bond amount: $500 Million

Term of bonds: 15-30 years

Limited term of bonding authority (sunset): 10 yrs.

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Recommendation

Board approves the strategy and authorizesChancellor and staff to test feasibility with prospective partners:

- Governor candidates - Legislative candidates- Legislative leaders - Labor organizations- Business associations - Other stakeholders

- Campus Alumni

Desired Outcome:

Gain support of Governor and Legislature for OUS Legislative Concept.

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Timeline:

12/01 Board approval of strategy & process; discuss Legislative Concept

2/02 Chancellor’s status report to Board; Board reviews/approves Legislative Concept

4/02 Chancellor submits Legislative Concept on behalf of Board

6 & 10/02 Status reports to Board

2003 Legislative Session: Legislature approves bill referring ballot measure to voters

11/03 General Election