JONESBORO — The state’s colleges and universities cannot afford to be shortsighted in their facilities plans, constructing new buildings without plans to fund their maintenance, higher-education leaders said Friday.
The Higher Education Coordinating Board approved a policy revision that will require the publicly funded institutions to set aside a designated amount of money for maintenance of new buildings before the board will approve financing on the projects.
Board members applauded the measure but said campuses are behind on maintenance and it will take additional state appropriations to help them dig out of that hole.
“This is a responsible first step, but certainly one that’s not gonna fix the problem,” board member Kaneaster Hodges said at the meeting, which was held on the campus of Arkansas State University at Jonesboro.
The policy is designed to slow the growth of maintenance costs at 22 colleges and 11 universities that rely on state support, said Jim Purcell, director of the Department of Higher Education.
Deferred maintenance costs have climbed to a total of $1.6 billion on those campuses, he said.
The original policy, enacted in October 2008, required colleges and universities to include “a plan for maintaining a new facility” in bond requests, suggesting maintenance endowments or annual budget lines without establishing any firm requirements.
“That was sort of vague, and there was no way to track it,” said Jackie Holloway, finance director for the Higher Education Department.
Under the revision, campuses will commit $2.50 per gross square foot annually for educational facilities and $1.25 per gross square foot annually for auxiliary buildings. In addition, campuses will provide an annual report, demonstrating that they are maintaining the maintenance fund for as long as the building is in use.
The funds will be used primarily to maintain the building for which they were set up, but they can be applied to other critical maintenance needs on campus as needed, Purcell said.
“We’re in a tight budget time,” he said. “If there’s big issues that come up, this provides some flexibility.”
The board’s approval isn’t required for a campus to sell bonds for a project, but agencies are unlikely to agree to finance projects unless the board deems them financially feasible, Purcell said.
University of Arkansas System President B. Alan Sugg called deferred maintenance needs one of the state’s most critical higher-education needs, second only to faculty salaries.
He applauded Friday’s revision, calling it an improvement over previous drafts, which would have required funds to be designated solely for a single building, stopping schools from using them for more urgent needs elsewhere on campus.
Campuses must do more than consider new structures,Sugg said. He highlighted the University of Arkansas at Fayetteville, which uses a student facilities fee to cover maintenance expenses and upgrades on outdated labs.
The student facilities fee, implemented in 2008, started as a $2-per-credit-hour assessment on students. It now stands at $6 per credit hour and will increase until it reaches $10 per credit hour in 2012.
The fee should raise about $2.7 million this fiscal year, Don Pederson, vice chancellor for finance and administration, said earlier this month.
Sugg encouraged that the board work cooperatively with campuses, seeking new sources of funding to cover the costs of keeping campuses upto-date.
“Right now, the only source we have in many cases falls on the backs of the students,” he said.
The board unanimously approved the revision. Three campuses seeking approval of financing plans for new facilities Friday included maintenance funds in their proposals.
Northwest Arkansas, Pages 19 on 10/31/2010