MSUSA Capital MSUSA Capital Bonding Request Bonding Request

Proposal 2008-2013Proposal 2008-2013

Bonding Proposal Overview Bonding Proposal Overview – “the what and the why”– “the what and the why” Maintaining Existing Facilities is a Key Focus of the Maintaining Existing Facilities is a Key Focus of the

MnSCU Bonding Request: MnSCU Bonding Request: As the steward of one-third of all state-owned buildings, As the steward of one-third of all state-owned buildings, MnSCU responsibly has made preservation of those MnSCU responsibly has made preservation of those buildings its top priority. MnSCU’s bonding proposals in buildings its top priority. MnSCU’s bonding proposals in Higher Education Asset Preservation and Repair Higher Education Asset Preservation and Repair (HEAPR) funds, which make the unglamorous, yet vital, (HEAPR) funds, which make the unglamorous, yet vital, repairs to leaky roofs, broken furnaces, outdated repairs to leaky roofs, broken furnaces, outdated electrical wiring and other critical safety repairs that electrical wiring and other critical safety repairs that extend the life of existing facilities.extend the life of existing facilities.

Moreover, every MnSCU campus generally receives Moreover, every MnSCU campus generally receives HEAPR funds, meaning that HEAPR investment will HEAPR funds, meaning that HEAPR investment will benefit all MnSCU campuses, not just a select few.benefit all MnSCU campuses, not just a select few.

Bonding Proposal OverviewBonding Proposal Overview- Continued- Continued

HEAPR funding can drastically increase the energy efficiency the HEAPR funding can drastically increase the energy efficiency the buildings on our campuses. Many of these buildings were built buildings on our campuses. Many of these buildings were built between 1950-1975, and were not built according to high efficiency between 1950-1975, and were not built according to high efficiency standards. In addition, HVAC systems across the system are leaking, standards. In addition, HVAC systems across the system are leaking, unable to adequately heat and cool classrooms, and waste enormous unable to adequately heat and cool classrooms, and waste enormous amounts of energy. New roofs and HVAC systems at many these amounts of energy. New roofs and HVAC systems at many these facilities will be insulation against fluctuating energy costs. facilities will be insulation against fluctuating energy costs.

HEAPR funds are also exempt from the traditional one-third debt HEAPR funds are also exempt from the traditional one-third debt service requirement, providing more direct value to students.service requirement, providing more direct value to students.

Since 2000, the HEAPR program has focused on reduction of the Since 2000, the HEAPR program has focused on reduction of the system-wide backlog of maintenance and repair, estimated in 1999 to system-wide backlog of maintenance and repair, estimated in 1999 to be $500 million. A 2005 study now estimates the backlog at $635 be $500 million. A 2005 study now estimates the backlog at $635 million. Backlog is defined as work not accomplished due to lack of million. Backlog is defined as work not accomplished due to lack of funding resources.funding resources.

Bonding Proposal Bonding Proposal OverviewOverview

- Continued- Continued Bonding funding is sometimes the only way our campuses Bonding funding is sometimes the only way our campuses

can renovate existing buildings, expand with new ones, and can renovate existing buildings, expand with new ones, and acquire new land:acquire new land:There are many projects proposed every year that benefit our There are many projects proposed every year that benefit our campuses (look at the hand out for the 2008-2013 request)campuses (look at the hand out for the 2008-2013 request)

A Bonding Investment Would Inject Cash into Local A Bonding Investment Would Inject Cash into Local Communities: Communities: Passing bonding bills provide a fresh infusion of cash into urban, Passing bonding bills provide a fresh infusion of cash into urban, suburban and rural communities, generating a high demand for suburban and rural communities, generating a high demand for construction services and energizing secondary industries that construction services and energizing secondary industries that serve the construction sector. Indeed, creating construction serve the construction sector. Indeed, creating construction projects would spur job creation and help sustain the state’s projects would spur job creation and help sustain the state’s economy.economy.

What is Debt Service?What is Debt Service?

Both MnSCU and the U of M must Both MnSCU and the U of M must contribute its own funds to help pay for a contribute its own funds to help pay for a project. project.

The formula requires that a campus must The formula requires that a campus must pay 1/6 of the project out of its budget pay 1/6 of the project out of its budget and the Office of the Chancellor must pay and the Office of the Chancellor must pay 1/6 of the cost.1/6 of the cost.

MnSCU’s 2008-2013 MnSCU’s 2008-2013 Bonding RequestBonding Request

At the MnSCU’s Board of Trustee meeting on At the MnSCU’s Board of Trustee meeting on May 16, 2007 the preliminary bonding request May 16, 2007 the preliminary bonding request was unveiled. The Proposed Capital Budget was unveiled. The Proposed Capital Budget includes $110 million for major repair and includes $110 million for major repair and replacement projects – HEAPR; and $237.3 replacement projects – HEAPR; and $237.3 million in line-item projects, property acquisition million in line-item projects, property acquisition and demolition. The request to the Legislature and demolition. The request to the Legislature and the Governor is for $271 million and $76.3 and the Governor is for $271 million and $76.3 million in debt service directly financed by the million in debt service directly financed by the System and each college and University gaining System and each college and University gaining a capital project. The total plan calls for a total a capital project. The total plan calls for a total appropriation of $347.3 million.appropriation of $347.3 million.

MnSCU Bonding MnSCU Bonding Appropriation History Appropriation History ($ in ($ in

Millions)Millions) 2007 – Requested $33.8 and received no funding2007 – Requested $33.8 and received no funding 2006 – Requested $280.4 and received $191.42006 – Requested $280.4 and received $191.4 2005 – Requested $292.6 and received $213.62005 – Requested $292.6 and received $213.6 2004 – Requested $274.9 and received no funding2004 – Requested $274.9 and received no funding 2003 – Huge budget cuts, no request2003 – Huge budget cuts, no request 2002 – Requested $251 and received $218.62002 – Requested $251 and received $218.6 2001 – No Request2001 – No Request 2000 – Requested $230 and received $131.12000 – Requested $230 and received $131.1

Bonding site visits this Bonding site visits this yearyear

Both the House and Senate Capital Investment Both the House and Senate Capital Investment committees will be conducting site visits to committees will be conducting site visits to some of our Universities starting in September some of our Universities starting in September and ending in October. and ending in October. The locations and The locations and schedules have not been scheduled yet.schedules have not been scheduled yet.

If your University is selected for a visit, the If your University is selected for a visit, the office would like to assist any students that office would like to assist any students that might be going along on the tour. We can might be going along on the tour. We can discuss talking points and details.discuss talking points and details.

What Next?What Next?

MSUSA staff will be working with the Office of MSUSA staff will be working with the Office of the Chancellor to discuss messaging and the Chancellor to discuss messaging and strategy in how to ‘sell’ the request at the strategy in how to ‘sell’ the request at the legislature. Our first meeting is scheduled for legislature. Our first meeting is scheduled for Thursday July 26. If you are interested in Thursday July 26. If you are interested in finding out more, please contact MSUSA.finding out more, please contact MSUSA.

Any Questions?Any Questions?