TO MEMBERS OF THE COMMITTEE ON FINANCE:

ITEM FOR ACTION

For Meeting of November 19, 1998

AUTHORIZATION TO SEEK ADDITIONAL FUNDING FOR DEVELOPMENT OF THE UC MERCED CAMPUS

Regent Johnson recommends that the Committee on Finance recommend to The Regents that The Regents (1) reaffirm the September 1997 resolution authorizing the continued planning and development of the Merced campus contingent upon the provision of state resources adequate both to develop the new campus and to ensure the continued health and enrollment expansion of the existing campuses; (2) endorse the President's recommendation, as proposed in the 1999-2000 Budget for Capital Improvements, to seek at least $50 million in state capital outlay funds for the Merced campus (in addition to the $55 million provided as a part of the 1998 Higher Education Capital Outlay Bond Fund) by 2001-02 and additional capital funding from future bond measures to fund the development of initial facilities needed to accommodate 1,000 students in Fall 2005 and 5,000 students in 2010; and (3) seek state funding to develop adequate long-term operating budget support for the projected enrollment capacity for UC Merced.

BACKGROUND

At the September 1997 meeting, The Regents authorized continued planning and program development for the tenth campus as follows:

"To enable the University to (1) maintain overall undergraduate access at the levels contemplated in the California Master Plan for Higher Education and (2) fulfill its teaching, research, and public service mission in the San Joaquin Valley, The Regents authorize continued planning for and development of a tenth campus of the University of California at the previously approved Lake Yosemite site in Merced County. This authorization recognizes the need to continue academic program planning in coordination with planning of the physical site and the adjacent campus community. In addition, this authorization will enable the University of California to proceed with the formal steps of the statewide approval process. It is understood that exercise of the option agreement to acquire the campus site and commencement of construction at the site is contingent on further action by The Regents and on the provision of state resources adequate both to develop the new campus and to ensure the continued health and enrollment expansion of the University's existing campuses."

Additional reviews of long-term University enrollment demand, undertaken since The Regents September 1997 authorization to continue planning for UC Merced, reaffirm the need to expand the University's enrollment capacity. Both internal and external studies conclude that student demand in 2010 will exceed the capacity of UC's existing campuses. Given the capacity of each campus as defined in its approved Long Range Development Plan, the University expects to be able to accommodate 40,000 new students at existing campuses and an additional 5,000 students at the Merced campus. Based on the latest projections of annual enrollment demand, there could be an additional 5,000 to 10,000 students who could not be accommodated, reaffirming the need to expand the University's enrollment capacity. The University is exploring options for accommodating this demand and will report to The Regents by February 1999. The University has pursued external reviews of the proposed development of UC Merced since September 1997, including a number of meetings with the California Post-secondary Education Commission which advises the Legislature and the Governor regarding the need for and location of new campuses of public higher education.

Quarterly status reports on planning and program development activities have been provided to the Special Committee on UC Merced at the January, April, and July 1998 meetings. The current schedule for campus development anticipates exercise of the option agreement when the Long Range Development Plan for the UC Merced campus is presented to The Regents for approval, now targeted for Fall 2000. Commencement of construction is targeted for Spring 2001, which involves initial site grading and infrastructure development, with capital project funding to be requested in The Regents' Budget for 2000-01.

Since the September 1997 authorization, considerable progress has been made in obtaining increased operating and capital resources from the state for both the UC Merced campus and the University system as a whole:

* The 1998-99 state budget provides the University with an increase of $270 million in permanent state general funds and an additional $70 million in one-time funds to address critical infrastructure needs. The result is a 15.6 percent increase in state general funds, which includes funding for 6,000 more students than were funded in 1997-98.

* A new, multi-year compact for the operating budget is anticipated, which would include predictable funding for annual enrollment increases.

* Core state operating support for UC Merced planning and development activities increased from $4.9 million in 1997-98 to $9.9 million in 1998-99. An additional one-time appropriation of $1.5 million was made in 1998-99 to support development of the network of distributed learning centers throughout the San Joaquin Valley.

* Proposition 1A , approved by the voters on November 3, 1998, provides a total of more than $830 million in general obligation bond funding for the University's capital program over the four-year period 1998-99 to 2001-02. Within this total, $55 million is designated for development of UC Merced beginning in 2000-01.

Despite these positive budget developments, additional funding will be required for construction of the UC Merced campus to support enrollment of the 1,000 students at the campus site beginning in Fall 2005 and a projected increase in capacity to 5,000 students by Fall 2010. The University has previously indicated that approximately $250 million in capital funding would be required to open the campus by 2005, with another $150 million required to support an enrollment capacity of 5,000 students by 2010. It is apparent that capital funding available through the recently-approved general obligation bond act and potential additional bonds approved after 2002 will not provide sufficient funding for construction of UC Merced or to meet the capital expansion and rehabilitation needs at the existing campuses. Additional state funding mechanisms need to be identified and non-state sources need to be secured to support construction of UC Merced.

This page was last updated on April 18, 2002

Back to University of California Information