Deferred Maintenance Gets Mainstream Coverage Related to Cost of College

2015 State of Facilities report cover

Our 2015 State of Facilities report continues to receive media coverage.

Just as we’re beginning the process of creating our annual State of Facilities in Higher Education report, we got word that our 2015 report was cited in an article by a nonprofit organization that covers inequality and innovation in education. The Hechinger Report, an independent newsroom that seeks to reveal problems facing the education system and examines potential solutions, published an article titled “Long-Neglected Maintenance Threatens to Further Escalate the Cost of College.” The piece was republished by one of the Hechinger Report’s media partners, The Atlantic.

The article made four specific references to our 2015 report:

  • The author quoted our statistics on the increase of the maintenance backlog since 2007—18% at private, nonprofit campuses and 22% at public universities and colleges. (Page 16 of the 2015 report.)
  • Our discussion of the age profile of campus buildings was mentioned, noting that many buildings constructed during an enrollment spike between 1960 and 1975 have reached a critical age where major repairs and renovation are required for continued use. (Pages 5 and 6 of the report.)
  • The article pointed out that colleges and universities continue to take on debt to fund construction because of low interest rates even as budgets shrink and the number of square feet covered by each maintenance and custodial employees has generally declined. (Page 20 of the report.)
  • The writer echoed our conclusion that smaller, less selective institutions, both private and public, have borrowed money to build new or renovate existing space in the hope of attracting more students. In many cases, those students have not materialized and the institutions are now carrying more debt and earning less tuition revenue to repay it. (Page 3 of the report.)

A few different strategies for funding backlogged maintenance and repairs were discussed. Some universities have added a “capital renewal fee” to their student bill. Others have worked to address future repair needs of new construction by setting aside 15% of the each new building’s cost in an endowment used to cover maintenance. Texas and North Carolina have approved the issuance of higher education bonds, but much of that funding is targeted for new construction and not repairs or renovation.

NAV BPS

Net Asset Value represents the “percent good” of buildings on campus, which helps prioritize capital investment allocation.

Brian Swanson, the Assistant Vice President for University Services, Finance and Strategy at The University of Minnesota, described a color-coded map that the university produces called a “Facility Condition Needs Index.” The map provides an easy-to-understand visual reference for university executives as to which facilities are most in need of repair. (Our Building Portfolio Solutions provide institutions a visual breakdown of the net asset value of the buildings on campus to help make the problem smaller.)

The story also discussed the impact of debt and interest payments on institutional budgets. It cites a University of California, Berkeley study that shows public university and community college debt has more than doubled to $151 billion since before the recession. Interest payments on debt have grown from $6 billion a year before the economic downturn to $11 billion a year now.

While it’s certainly rewarding to see our study getting significant attention, the article also serves as a stark reminder of the problem of deferred maintenance at universities and colleges. Hopefully, as stories like this one reach a broader audience, more legislatures, boards and donors will recognize the importance of the problem and focus new efforts on finding creative solutions.

 

 

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