PREREQUISITES OF CAPITAL BUDGETING IN EDUCATION SECTOR
SYED ALAMDAR ALI
Nov 17 - 23, 2008
Public universities consider the following objectives when developing their priority lists: preventing disruption in daily operations; maintaining and protecting the state's investment in educational facilities; providing a safe work area and adequately controlled environment for occupants; providing accessibility improvements; providing equipment to complete government funded facilities; and providing funds to complete projects where funds have been previously appropriated. In addition to maintaining and improving existing facilities and completing ongoing projects, universities consider the need to construct new facilities and to renovate existing space for instructional, public service, and research program activities. Requested projects may fund new facilities for new and expanding programs, or they may fund the renovation of existing facilities to provide necessary technology or specialized space for changing programs. Campus infrastructure also must be sufficient to support university programs and facilities.
Since a project's position on the approved priority list may increase or decrease the likelihood it will be funded, a number of factors are considered when developing the countrywide priority list, including whether:
A commitment for a project has been made through prior appropriation(s) or authorizations,
The status of an ongoing project for which planning or construction funds have been appropriated necessitates that funding is provided to complete the project in a timely fashion,
The project addresses an emergency infrastructure problem, e.g. problems caused by fire or tornado damage, construction defects, or compliance with life, health, and safety code requirements,
The project received a high ranking on a public university's priority list. While each factor listed above is important, occasionally the individual factors may conflict with one another. For example, institutions frequently change their priorities from year to year. If institutional priorities are followed, maintaining a 'living priority list' that reflects consistent countrywide priorities and long-term planning is compromised. These factors and a few factors mentioned hereunder make developing the priority list complex and challenging.
Completing prior commitments: Funds to complete ongoing projects are in high priority. These may include funds for construction where planning funds have been appropriated previously, funds to purchase equipment to complete a new building or major renovation project, and funds to address unforeseen conditions discovered during an ongoing project. In this area of consideration, institutions assess the current status of planning and construction for new facilities and major remodeling
Emergency infrastructure needs: Staff takes into consideration unforeseeable needs to address emergency infrastructure needs. Examples include the remedy of construction defects or damage caused by a fire or tornado.
Other considerations: Development of the educational capital budget Sand accompanying priority list is complicated by a number of factors, including an environment in which needs and expectations far exceed available revenues, where available funding may fluctuate drastically from one year to the next, and individual project costs are escalating.
CAPITAL IMPROVEMENT IMPACT ON OPERATING BUDGET:
As enrollment increases or school improvement plans change, more lecturers are added to the growing needs and operating expenses are increased to provide the institution with it's per scholar allocation of funding. When the government pays for the building or expansion of an institution, there is an impact on the Operating Budget in terms of staff expansion and building maintenance. As the CIP is implemented and facilities are expanded, the staffing additions will be determined based on:
• Enrollment Projections;
• Rated Capacities and Percentages of Utilization; and,
• Availability of operating funds.
While some of the capital improvements involve maintenance of facilities, which should help keep operational costs down, building expansions often involve shifting students from portable classrooms to permanent instructional facilities. This often minimizes the effect on the operating budget since the instructional support is already in place.