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An unprecedented multibillion-dollar building boom is under way at U.S. universities and colleges—despite budget shortfalls, endowment declines and seemingly stretched resources.
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 public 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. California has cut billions of dollars 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.
Private universities are building, too. Northwestern University has plans for $151 million in projects along Lake Michigan.
While critics concede that some of the construction is justified—at jam-packed community colleges, for instance, where enrollments are rising—they contend that many new buildings are going up on campuses 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 that much of the ongoing construction was already in the pipeline before the 2008 economic downturn. More importantly, they say, the money for construction—which comes from borrowing, private donations, government grants and student fees—is kept in strictly separate capital, not operating, accounts and can’t be used for such expenses as increasing salaries or enrollment.
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. And the cost of lighting, heating, cooling and cleaning new buildings once they’re finished is straining already depleted maintenance budgets. Over a building’s lifetime, maintenance and repairs cost twice the original construction price, says Lander Medlin, executive vice president of the national association of administrators whose members oversee campus buildings and grounds.
“The universities seem to treat this like a birthday gift or something,” Vedder says. “The notion that this is somehow being financed in some way that is not costing students or taxpayers money is disingenuous to the extreme.”
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.
“You’ll find that offices are no longer cleaned, except maybe once a week. Trash isn’t pulled,” says Medlin. “And all the stuff that’s behind the walls is not getting the kind of preventive maintenance it needs to, and that begins to reduce the lifecycle of that new building,” which costs even more down the road.
Nor is it clear that universities are efficiently using the space they already have. Medlin says universities use their existing academic buildings only about 40 percent of the time. “The optimum time for faculty and staff for classes is 10 to 2, or maybe let’s give it 9 to 3, and that’s Tuesday, Wednesday, Thursday,” she says.
California’s Legislative Analyst’s Office reported last summer that almost all California campuses could accommodate more students by making fuller use of 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.
“We understand that you do need to update and, in some cases, replace buildings on occasion, but the focus should really be on stretching every dollar, whether it comes from a bond or student charges or directly from the taxpayers,” he says. “And if they were able to teach students in the past with the buildings they have, in the absence of a building falling down, you’d think they’d try to stretch out the life of that building, and try to reduce the cost of education in these times when families are having a tough time paying.”
Some states are considering making universities factor in the expense of operating a new building when they estimate construction costs. Utah already does. But a 2011 audit found that Utah universities appeared to be violating state policy by siphoning $4.3 million from the maintenance budget for older buildings into operating 23 new ones.
“Donors have a tendency to be very excited about donating to a new building. They’re very rarely excited about donating to operating that building,” Medlin says.
“I asked a president one time, ‘How come you keep building new?’ And he said, ‘Because I can get money for new. I can’t get money for renovations or maintenance. I can’t make a steam-line replacement sexy or a roof replacement sexy enough to get a donor.’ ”
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 facing even higher interest costs over the long run.
Vedder says universities should follow the example of business.
“The private sector has a bottom line, and in calculating the bottom line, you have to calculate the cost of these buildings, and maintaining them, which cuts into profits,” he says. “So a businessperson says, ‘Do we really have to build this building?’ ”
“There’s no bottom line in higher education,” Vedder says.
But Wolf, of the Campaign for College Opportunity, 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.”
A version of this story appeared on the website of Washington Monthly on March 30, 2012.