No One Likes to Talk About Them, but Deferred-Maintenance Costs Won’t Go Away

Ask college presidents about the health of their institutions, and they’re happy to rattle off enrollment figures or capital-campaign progress reports. Ask about how deferred-maintenance costs on their campuses are piling up, and they get a little quiet.

That’s because most colleges are crowded with aging buildings that will need to be replaced, renovated, or retrofitted, and the millions of dollars needed to tackle such projects are hard to come by when other urgent priorities beckon.

It’s a dilemma that the leaders of California’s public-college systems know well. The University of California, California State University, and California Community College systems need at least $47.2 billion to cover construction, renovation, and retrofitting over the next five years, according to a report released on Wednesday by the College Futures Foundation, which seeks to increase educational attainment in the state.

The need for capital financing for is “immense and overwhelming,” and finding the money to fill that need is challenging at best, writes Patrick J. Lenz, the report’s author.

How immense and overwhelming? Together the three systems encompass 147 campuses and nearly 14,000 buildings, many of them dating from California’s long postwar public-college building boom. (Most college buildings need to be renovated or replaced after 25 or 30 years, experts say.) The Cal State system alone has a backlog of more than $2 billion in deferred-maintenance work, a number that grows by more than $143 million every year, according to the report.

Unlike in many states, California’s public colleges can’t simply take faltering buildings offline. Demand for seats remains high, and many of the state’s public institutions are projected to increase their enrollments by several thousand students, on average, over the next five years. Every available square foot will count.

California’s public colleges are in an especially tight spot with capital financing because of recent changes in state law. Under legislation passed between 2013 and 2015, the University of California and Cal State systems are allowed to spend money from their operating budgets to pay for capital projects without waiting for money from, or seeking the approval of, the state. But the systems are expected to pay for capital projects out of their operating budgets, which are already tight.

Cal State has asked the state for a budget increase of about $283 million for the coming fiscal year, only $15 million of which would be spent on facilities. Historically, however, cuts in spending on facilities are among the easiest to make in the short term when money is scarce.

Philanthropy is not a good solution to long-term maintenance issues. Big donors can be coaxed to give money for new buildings, but they seldom want to make significant gifts to renovate old ones.

In lieu of a comprehensive solution from the state, the College Futures report suggests several alternatives to make good use of precious space and resources.

One alternative is joint ventures, such as the collaboration in the early 2000s between San Jose State University and the city of San Jose to fund and build a library on university property that serves both students and the public.

Another is public-private partnerships, in which colleges enter into long-term contracts with private developers, many of whom take responsibility for funding and construction in exchange for long-term payments from the institutions. The University of California at Merced, for example, is in the midst of a $1.3 billion public-private project to build 790,000 square feet of additional classrooms, housing, and other facilities.

Such partnerships have become increasingly common in higher education, especially to build new housing, which enjoys a clear revenue stream. The deals, which free colleges from additional debt or fund-raising challenges, appeal to both small colleges and some large institutions. This year the University of Kentucky finished construction on a $450-million public-private project to expand its housing by nearly 7,000 beds.

But no workarounds are in sight to pay for deferred maintenance. Public-private deals build new buildings but don’t fix up old ones. And every campus has an old building or two — or a dozen — with crumbling concrete or sagging ceilings or outdated infrastructure or all of the above. And those buildings aren’t getting any younger.

Lee Gardner writes about the management of colleges and universities, higher-education marketing, and other topics. Follow him on Twitter @_lee_g, or email him at lee.gardner@chronicle.com.