Updating Higher Education Capital Planning & Priority Setting Nyle Robinson, Deputy Director for Fiscal Affairs & Budgeting

Statutory Requirement & Current Practice IBHE is statutorily required to recommend a capital funding plan annually IBHE provides guidance on how it will collect and prioritize information on capital needs from universities & community colleges The current “Higher Education Statewide Capital Policies & Procedures” were approved on April 13, 2004 Current policies & procedures were developed based on a time when universities & community colleges received regular annual capital funding A key principle is that projects will be prioritized & once they are on the approved list they will move up the list as higher priority projects are funded Requests are divided into capital renewal & regular capital projects

History of Capital Funding Since FY 04 There has been no regular annual capital funding for higher education & only one major capital program, Illinois JobsNow! In FY 10 Many Illinois JobsNow! Projects were never released & remain uncompleted With no funding projects remain stuck on the list for years HOWEVER, THE RECENTLY PASSED BUDGET WILL CLEAR THIS LIST OF PROJECTS ON-HOLD! (If projects are funded and released.) In a few cases universities have identified funding to complete high priority projects but existing policies are not clear on how to deal with such eventuality As time passes university priorities & needs change but current policies & practices do not make it easy to address changes within a static list

Growing Needs Maintenance needs at community colleges and public universities doubled from $2.7B in FY 05 to $5.5B for FY 19 With declining state operations $, colleges & universities have had to increasingly draw on operations funding to cover emergencies & unavoidable maintenance The budget impasse made it even harder for schools to respond In the FY 19 budget request IBHE acknowledged that the maintenance backlog had gotten so severe that there now are projects that constitute emergencies, i.e.; a threat to health & safety or could threaten campus closure (such events have happened) The current process does not take into account problems getting to that point

Current Situation FY 19 capital funding will clear the books of projects on-hold, if they are released FY 19 capital renewal & emergency funding should allow universities & community colleges to address their most dire maintenance needs The maintenance backlog will remain large & new emergencies will arise unless there is a return to regular funding for maintenance The list of needs for other projects to modernize campuses & address shifting needs is also large Needs have grown unevenly between campuses during the drought in capital funding There still is the expectation for a larger capital bill as soon as next year A revised process & prioritization is needed to better reflect overall needs & to be more responsive to change

Plan for Process Update Promote return to universities ability to issue certificates of participation Update the Higher Education Statewide Capital Policies & Priorities manual Include a means to account for the emergency & health and safety needs within capital maintenance Include a more direct accounting for projects in process or on-hold Include a updated, empirical process for setting priorities Include a process for changing priorities annually as necessary Consider ways to garner more support for capital funding Start discussion with the University CFOs (July 31) then take the discussion to the Presidents & Chancellors & others

Goals and Expectations Create a system that is more in tune with current conditions Improve flexibility & responsiveness to changes in conditions Increase the opportunities to market capital needs, both individually & as a system Improve the FY 20 capital request Be better prepared whenever there is a significant, new capital funding program NOTE: Will need to work with CDB & the Governor’s office in regards to the distribution of $75M in emergency funding