2009-11 Capital Budget Development Training Prepared by Tom Henderson.

2009-11 Capital Budget Development Training

Prepared by Tom Henderson

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2007-09 Capital Budget4.3 Billion

$/millions

Govt. Operations $997.4Human Services 301.6Natural Resources 1,036.2Transportation 5.4K-12 1,000.1Universities 547.5CTC’s 518.4Statewide Total $4,296.6

K-1223.3%

Human Services

7.0%

Natural Resources

24.1%Transportation .01%

Universities12.7%

Govt. Operations

20.7%

CTC’s12.1%

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Growth Projects42.1%

Replacements21.5%

Renovations 13.1%

Locally Funded 4.6%

Minor Repairs 2.9%

Repairs 5.5%

SBCTC 2007-09 Capital BudgetTypes of Projects

M&O/Infrastructure 5.3%

Matching/Minor Imp 5.0%

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SBCTC Capital History93/9

5

95/9

7

97/9

9

99/0

1

01/0

3

03/0

5

05/0

7

07/0

9

$106 $116$171

$229$289

$426$471

$518

$$ in millions

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Target Assumptions ($ in millions)

Fund State Higher Ed

SBCTC

GO Bonds 057 $2,100

$900

$485

CTC Account 060 55 55

55

Ed Const Acct

253 200 80

30

$2,355 $1,035

$570

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SBCTC Percent of Higher Education G.O. Bonds

93/95

95/97

97/99

99/01

01/03

03/05

05/07

07/09

*Includes Gardner Evans Bonds

33.9%

40.9%

50.0%*

39.6%

22.0%

44.5%

57.4%*54.8%

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Capital Policy

Construct quality buildings Yakima Valley – Science and Instructional Building Highline – Higher Education Center Everett – Science and Art Building

Flexibility to respond to changing program requirementsKeep facilities from deteriorating and eliminate temporary structures on main campusesFocus on renovating and replacing the worst buildings first

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Capital Outlook

Budget level between $550M and $600M Evans-Gardner bonds not available in 2009-

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Greater focus on preservation and backlog reduction by Legislature2-year college priority system is well respected4-year universities still implementing a statewide priority systemDesign to State requirement for LEED Silver buildings

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Capital Process

Plan, plan, planSurvey repair needs and facility conditionSelect and prioritize new growth, renovation, replacement and matching fund projectsBuild a budget request that is reasonable and defensible

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Master Plan

Build better choices through strategic planning Short term 2-6 years Mid-term 7-12 years Long range 13-20 years

Recommended attachments to the master plan 10 year plan Facility Condition Survey (maintenance) CAM Model (integrates FTES, FAE and budget

actions – committed changes)

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Capital Impact

New facilities are transformationalChanging dynamics of student useDecisions may need to be reconsideredChanging demands and space utilization (expansion of online and hybrid courses)It may not be prudent to accelerate the capital facilities plan

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Evaluation of Campus Dynamics

Individual program issuesCoordination of programsStudent Services delivery and consolidationChanges in the center of activityCirculation – pedestrian and vehicleAdequacy of space for education

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Schedule

Major milestonesCritical deadlines December 5, 2007 – PRR’s due April 11, 2008 – Budget requests due July 2, 2008 – Predesigns due

Critical review and decision activitiesOFM and legislative process

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Changes in the Capital Budget

Matching funds raised to $2 million per projectIncorporated improvements to the selection and ranking process70,000 GSF maximum and 25,000 GSF minimum (exceptions approved by WACTC Capital Committee)

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Selling the Capital Budget

What is the problem being solved?What are the benefits to students and the college?What is driving the need for capital investment? Preservation Program

Will the project increase capacity? How many FTE?

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Predesign

Follow the OFM outline structureMake sure you have spelled out the programmatic needs and benefits of the projectSimplify sections that are not useful No site selection for renovation projects Analyze whether it is better to renovate or

replace Clearly identify reasons for replacement

Don’t copy the detailed appendices on predesigns sent to State Board for distribution to OFM and the Legislature

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C-100

OFM C-100 – use links to ensure you are using the latest documents (enable macros)Use consultants to help define scope, cost and schedule information on projects greater than $1 million (pay attention to Extra and Other Design Services)Make sure the estimate is complete – remember equipment, permits, bonds, etc.Review similar projects and check with colleges to help avoid omitting key elements

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Project Request Reports

Build the case for funding a projectEstablishes need, scope and costsDocument will be read by selection committee, OFM, HECB and legislative fiscal committeesPrimary decision tool for selecting and ranking new growth, renovation, replacement and matching fund projects

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Building the 2009-11 Request

Repair and Minor ImprovementsMatching FundsRenovationReplacementGrowthAlternative Financing

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Repair and Minor Improvements

Make permanent alterations to buildings that will be retainedWork to improve the useful remaining life of facilitiesCoordinate repair decisions with the facility master planUse ERF funds now to solve critical problems identified in the 2007 Facility Condition Survey (score over 60)

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Repair and Minor Improvements (cont’d)

Don’t make temporary component repairs on failed systemsDo a complete job – coordinate the work (e.g. roofing and HVAC)Use GA Energy office to assist with major mechanical and lighting projects (ESCO’s and Treasurer Lease Purchase Funding)Infrastructure repairs greater than $1M are requested separately, less than $1M are included with site repairs.

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Matching Funds

Up to $2 million in state matchProject should be able to start construction before the end of the bienniumMatching funds must be cash from non-state sourcesAdditional funds can be from college reserves

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Renovation

Have you owned the problem more than 20 years (as of 12/07)? Are you sure the building is worth renovating? Invest in investigation.Professional assistance and estimating is essential to a successful projectRenovation is costly - even with a higher contingency we often experience problems with cost and scale back projects

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Renovation (cont’d)

It is difficult to approach the Legislature twice on the same building. If unsure ask for design funding in 09-11 and construction funding in 11-13.If it will cost more than 80% of the replacement value to renovate, it is generally better to replace the facility.Can you maintain programs and renovate the proposed space? Do you have surge space?

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Replacement

Resolve problems of small space, inflexible, cheaply built facilities – inadequate power, data and communication, low ceilings, structural and energy problems, bad educational environmentsAggregate small buildings and portables into larger structures with internal circulationMinimum footprint 20,000 sf, look for economies of scale, 3 story, 65,000 sf buildings

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Replacement (cont’d)

Space doesn’t need to be replaced in-kind Right size spaces Use factor to provide internal circulation Coordinate replacement space with needs

identified in the master plan

Replacement and renovation allows for a 30% increase in area to improve program delivery and to add needed office space and support space

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Replacement (cont’d)

Locations need to be consistent with the master planBuild lasting, quality facilities that meet the program needs today but are flexible enough to be modified in the future.No, you cannot import failing portables to get a new buildingProject requests must be independent

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Growth

Need to show the FTE levels that will be served by the new facilityMust have a strong pattern of enrollment growthGenerally have a significant shortage of instructional and instructional related space

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Growth (cont’d)

The strategic and facilities master plan needs to identify the type and character of programs served by the proposed facilityMust clearly establish the programmatic drivers for building a new facilityRecognize the competitive nature of this category – only 2 to 3 projects may be selected to move forward

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Alternative Financing

Legislature is looking for C-2’s, C-100’s, and predesigns to support COP projects in the same way direct appropriations are requestedBe able to start construction within the biennium Must have bids in hand to sell Certificates of

Participation (COP’s) Work with State Treasurer to identify timing

of bond sales and prepare supporting data

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Alternative Financing (cont’d)

Smaller COP’s are only affordable if coordinated with other two-year college bonds. Asking for less than $1M may be a waste of timeTiming of bond sales is not always consistent with college needs File an intent to use COP funds Use of local funds to bridge COP

revenue

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Alternative Financing (cont’d)

Colleges need to self-fund predesign and design cost on COP’sLegislature and OFM are looking for more process in decision making from our Boards on satellite facilitiesAcquisition of buildings needs to include dollars to renovate and remodel the structure at the time of purchase

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Submitting the Budget

Narrative format from last biennium on the SBCTC website http://www.sbctc.edu/college/_f-capbgtmessage.aspx

One copy in a 3 ring binder and a CDUse the checklist to order the submittal and ensure all documents are transmittedAn additional copy of the PRR is not needed in the April 2008 submittal

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Submitting the Budget (cont’d)

C-100’s must match the predesign C-100’sWACTC has a financial penalty for late submittal (loss of $25,000 in RMI funds). Penalty may extend to end runs.If you have significant changes in projects, we need to know about them before April 11 (i.e. mitigation costs, potential overruns, etc.)Project costs must be reasonable and reflect the current market conditions.

Questions?