TO THE REGENTS OF THE UNIVERSITY OF CALIFORNIA:

ITEM FOR DISCUSSION

For Meeting of July 18, 1997

STATUS REPORT ON PLANNING FOR A TENTH UNIVERSITY OF CALIFORNIA CAMPUS

Introduction

This report describes planning for a tenth University of California campus in the San Joaquin Valley, including activities undertaken since The Regents took action to approve the preferred tenth campus site on May 19, 1995. The report is divided into five sections: (1) rationale for a tenth campus in the San Joaquin Valley, (2) academic planning, (3) site planning, (4) budget planning, and (5) organization for tenth campus planning.

Rationale for a Tenth Campus in the San Joaquin Valley

Development of a tenth campus would enable the University to maintain overall undergraduate access at the levels contemplated in the California Master Plan for Higher Education. As part of its strategy to increase capacity, the University identified the San Joaquin Valley as the region in which a new campus should be located, because it is the only major region of substantial population without a University of California campus. There is an important statewide interest in increasing the educational attainment and diversity of the economy of this part of the State. At the same time, a tenth campus located in the Valley would bring with it the benefits of economic development that accompany a public graduate education and research university. Finally, the tenth campus would fulfill the University's public service mission under the Master Plan by adding to and building on public service activities already located in the Valley.

A. Accommodating Demand for University of California Enrollment

The latest Department of Finance (DOF) and University of California projections of demand for undergraduate enrollment in the University agree in showing steady increases to 2005, followed by even sharper increases between 2005 and 2010. Given the campus capacities included in approved long range development plans, some campuses should be able to continue to grow after 2005. However, the capacity for growth at those campuses appears to be insufficient to meet projected demand.

Between now and 2010, it is estimated that the University can enroll an additional 40,000 undergraduate and graduate students at existing campuses. Total University enrollment is expected to grow annually by about two percent, or 3,000 students in total, until the year 2005 and approximately 4,000 a year thereafter. Thus, by 2005, the existing University campuses would accommodate more than 20,000 additional students at existing campuses before the tenth campus opened -- nearly equivalent to the enrollment of an entire new campus -- and almost 20,000 additional students in the five years thereafter. In order to accommodate enrollment growth after 2005 and increase the University's total enrollment capacity before 2010, the tenth campus should begin enrolling students by 2005 and develop relatively quickly thereafter. A tenth campus is a critical element of the University's continued commitment to offer access to undergraduate students in keeping with the Master Plan.

B. Serving the Higher Education Needs of the San Joaquin Valley

California has a substantial interest in assuring that students in the San Joaquin Valley can fully participate in the advantages of higher education. Valley high school graduates have participated in University of California education at about half the statewide average rate. The Valley is a region of extraordinary ethnic diversity. By working closely with Valley schools to improve K-12 preparation, the tenth campus can influence improvements in eligibility and participation of all Valley students, including those from groups historically underrepresented in the University.

The tenth campus will improve access by San Joaquin Valley students to undergraduate education at the University of California in the following ways. Eligibility rates and participation rates for the University aregenerally higher in areas that contain University campuses. The visibility of a University campus within a region focuses the attention of students, families, and local K-12 educators on University admissions requirements. While attracting students from around the State, nation, and world, University of California campuses work most intensively with the schools in their areas, and will do so to an even greater extent following the recommendations of the current Outreach Task Force. When K-12 students achieve eligibility for admission at a nearby University of California campus, they are eligible at all University of California campuses.

C. Serving the State and Region through Graduate Education and Research

The tenth campus will also contribute to fulfilling the University's graduate education and research mission under the Master Plan. Moreover, these programs will provide a stimulus to regional economic development surrounding the campus. The University's contributions are manifested in several ways. Each campus has faculty and produces graduates with advanced training reflecting the latest knowledge and research techniques in their fields. The presence of the faculty and the pool of advanced degree holders attracts businesses and industries to locate in the vicinity of the campus for the interactions and stimulation they obtain thereby. New knowledge produced by University researchers leads to the creation of new or improved businesses and industries that are critical to expansion of the State's economy.

In addition, excellent research and graduate programs attract excellent undergraduates to the campus who may stay in the region and contribute to its development. The new campus would share in the Universitywide goal to give undergraduates many avenues for participating in the research mission of the University.

Academic Planning

A. Current University of California Programs in the San Joaquin Valley

The University has maintained a significant teaching, research, and public service presence in the San Joaquin Valley since the late nineteenth century. Its programs have been augmented in the last decade and are now centered in three broad categories: agriculture, medicine, and academic services. The academic services component includes outreach to the K-12 population, Extension, various kinds of professional education including programming for teachers, and a highly regarded joint UC and CSU doctoral program in educational leadership.

In 1986, the University opened its first regional office in Fresno to coordinate student outreach and university relations activities in the region. The UC Regional Office recently opened its own satellite officeat Merced College, the first such office on a California Community College campus.

B. Consolidation of Existing Programs and Transition Planning

Over 1,400 San Joaquin Valley residents are employed by the University, including full- and part-time faculty, other employees, graduate students, student interns, medical residents, researchers, and scientists. However, because programs are geographically dispersed, the magnitude of the University presence in the Valley often has not been apparent.

Steps are now being taken to consolidate some programs in a single location, add to their number, and then build on these programs in a strategic way to make the transition to academic programs for the tenth campus. As the first step in this transition planning, the University is creating a consolidated center in Fresno. The University has leased approximately 50,000 square feet near CSU Fresno to bring together a number of Fresno-based UC programs. The UC Regional Office and UC Educational Research Center, among other UC programs, will be housed in this space along with programs from CSU Fresno and the Fresno Unified School District, providing a new level of service to address Valley educational needs from kindergarten through graduate study.

A new Director of Academic Programs is being recruited to work with existing UC campuses to expand University Extension and degree programming in the Valley. Academic plans for the consolidated center include development and distribution of technology-assisted instructional programs in collaboration, not only with UC campuses, but also with California State University and California Community College campuses, and K-12 schools, in the San Joaquin Valley. For example, plans include improved access to UC electronic resources, development of course materials and distance learning methods, teacher training, expansion of joint doctoral programs with CSU, and collaboration on improved transfer with CCC.

An academic transition plan will provide for expanded research and additional areas of professional study. A research institute or "think tank" is under consideration as a means to bring outstanding researchers and graduate students from UC and CSU to work on selected topics of critical importance to the Valley. Developing a research agenda would make effective use of the Valley as a setting for research and would contribute to an understanding of Valley issues and potential solutions. This research effort, together with post-baccalaureate programs and other advanced professional education opportunities, would pave the way for the research and graduate study which must be an integral part of the tenth campus. A strong research core would attract outstanding founding faculty to develop undergraduate and graduate programs for the tenth campus.

C. Tenth Campus Academic Planning

When the University created three new campuses in the 1960s, it depended on the advice of faculty drawn from its existing campuses for help with developing academic plans and recruiting the founding faculty. In 1996, the President appointed a faculty advisory committee, chaired by UC Davis Law Professor Daniel Simmons, to advise on a preliminary academic plan for the tenth campus. This plan will have many uses, including guidance in recruiting a founding chancellor and faculty.

The advisory committee is considering a residential campus model, which will be the hub of the teaching, research, and public service activities and the home of faculty, students, and staff. This hub will, however, have the potential to provide educational programming throughout the Valley through a judicious combination of technologically-assisted instruction and on-site learning. For example, the consolidated center in Fresno, described above, might continue as a site for distributed education after the tenth campus opens its doors to students. The campus will be a product of the 21st century and, as such, will incorporate current and sophisticated technology throughout, from the library which will represent the digital age of information, to the laboratories which will be equipped in ways probably not yet invented, to the classrooms, residence halls, and wherever else students study and learn.

Academic planning for the campus requires a long time-frame. The academic strength of the tenth campus will depend on the excellence of the founding chancellor, faculty, and academic administration. The initial faculty will be critical to the overall strength of the campus for the first decades of its existence and a great deal of care must be exercised in recruiting and hiring these faculty. The Office of the President is initiating work on an academic transition plan that will lay out strategies for academic development of the campus, including student and academic support services, as well as the hiring of founding faculty and academic administration. A key element of the transition plan will be to use Valley program initiatives to lay a sound basis for tenth campus development over the next eight years.

The current enrollment planning assumption is that the tenth campus would open and enroll the first 1,000 on-campus students in Fall 2005. Enrollment is projected to increase by 800 students a year, resulting in an enrollment of 5,000 by Fall 2010.

Site Planning

A. Site Selection and Option Agreement

In November 1988, The Regents authorized initiation of planning for up to three new University of California campuses, in response to a comparison of forecasts of enrollment demand in the 21st century with the capacity of existing campuses to accommodate the demand. In February 1990, The Regents directed that the search for the first new campus site be focused in the central region of the state.

On May 19, 1995, The Regents selected the Lake Yosemite site near Merced as the preferred site for a tenth campus. The site is owned by the Virginia Smith Trust, an educational trust which owns a total of 7,000 acres and, under terms of the trust, uses income from that land to fund college scholarships for high school graduates from the city of Merced.

The Regents' action in 1995 was subject to criteria that included the right to acquire approximately 2,000 contiguous acres, at any time prior to June 30, 2007, at nominal or no cost and on terms and conditions acceptable to the President. An Option Agreement meeting The Regents' criteria was executed by the President and by officers of the Board of Education of the County of Merced, acting as Trustee of the Virginia Smith Trust, on July 1, 1996. It provides that the option can be exercised at any time prior to June 30, 2007, with provision for extending the term through June 30, 2009. The consideration for acquiring approximately 2,000 acres will be $10,000. The option agreement also contains provisions for leasing back any unused portion of the 2,000 acres to the Trust for cattle grazing and for reconveying any portion of the 2,000 acres not needed for campus purposes back to the Trust within the first fifty years of acquisition.

A 2,550-acre portion of the Trust's holdings (from which the 2,000 acres will be selected) has been designated as the "University Area." It is located approximately 6 miles north of the city of Merced and about two miles from Lake Yosemite Regional Park in an unincorporated area of Merced County (see map, attachment A). The site consists of a ridge of gently rolling hills, running in a southwest to northeast direction, and a series of bowl-shaped areas, each separated by higher land, sloping from the ridge to lower land to the east. Vegetation consists of native and introduced grasses and wildflowers. The site offers dramatic views of the foothills and peaks of the Sierra Nevada. The west boundary is contiguous to 4,000 acres owned by the Cyril Smith Trust, which is also an educational trust.

B. Community Planning Activities

Merced County: In 1996 the County of Merced established a University Community Specific Urban Development Plan (SUDP) boundary to define the area reserved for future urban development following a coordinated planning process involving local jurisdictions and the University. The 7,000 acres owned by the Virginia Smith Trust, including the "University Area", and the 4,000 acres owned by the Cyril Smith Trust are included within the SUDP boundary (see map, attachment A).

City of Merced: The City of Merced recently approved a revision of its General Plan. The plan continues to reflect major growth of the city to the north and towards the "University Area". The City's Sphere of Influence has been expanded to include the "University Area" and the adjacent trust lands, thus permitting the City to provide services to these areas and to initiate annexation if appropriate at a later date.

Roads: The Merced County Association of Governments has prepared a plan for major road and transit improvements in the Merced area. This plan envisions a parkway that would provide access to the campus and the adjacent trust lands for traffic approaching Merced from the north on Highway 99 and a "campus parkway" providing access for traffic approaching Merced from the south on Highway 99 (see map, attachment B). Portions of this parkway system and interchanges would be funded by State funds already identified; portions would be funded by local sources. A major portion could be funded from federal sources. Congressman Gary Condit has requested $55 million for the access roads as part of the Intermodal Surface Transportation Efficiency Act (ISTEA) now pending before Congress.

Water: The Merced Irrigation District (MID) and the City of Merced in 1996 completed a joint long-term plan for providing water for both continuing agricultural use and urban expansion, including provision of water for the tenth campus. The plan involves continued use of Merced River water for agriculture, recharging the underground water table with Merced River water, and expanding the existing well system on an incremental basis to support increased water use in cities. This plan is now being implemented. Initial projects include those which improve services to agricultural customers, construction of a test percolation basin in the City of Merced, and development of a regional groundwater management plan.

Joint Planning Process: Consistent with the action taken by the County in defining the area proposed for development adjacent to the proposed campus site (University Community SUDP), University staff has been exploring a process for preparing a University Community Plan with the Virginia Smith Trust, the Cyril Smith Trust, and local governments. It is anticipated that the plan would address such issues as land use, circulation, sensitive lands requiring mitigation, infrastructure, public service, and alternative funding mechanisms. The plan for community development adjoining the campus will provide information necessary for the final determination of boundaries for the 2,000-acre campus site and subsequent preparation of the initial Long Range Development Plan. Preparation of a University Community Plan would require, as an initial step, preparation of detailed technical surveys (such as geological, biological, and hydrology surveys) to identify physical constraints and development opportunities affecting both the campus and the surrounding trust properties.

C. Site Development Schedule

Planning and implementation steps must occur in sequence and within certain time frames in order for construction of the initial phase of the campus to be completed by Fall 2005. The first step is the University Community Plan, including those elements such as transportation access and funding of infrastructure and public services that will have a significant effect on planning for the specific campus site. This activity could take two to three years, given the size of the area and the scope and complexity of development issues, and would need to be completed some time during the 1999-2000 fiscal year. Following completion of the plan and necessary approvals, specific community infrastructure and public service projects could be initiated.

Much of this joint planning work must be completed in order for the University to complete its detailed planning of the campus site, which is the second phase of work related to site development. This work would include final designation of campus boundaries, preparation of the Long Range Development Plan for the initial phases of the campus, and mandated environmental assessments that would be closely coordinated with similar environmental assessments for the surrounding community development. Work on the LRDP would be initiated in 1998-99, with completion anticipated by late in the year 2000 so that design of initial building and infrastructure projects could proceed based on the development framework and building sites outlined in an approved LRDP.

Funding for design of the first campus buildings and on-site infrastructure would likely be requested from the State for 2000-01. The initial sequence of site development and building projects would be determined during the LRDP phase, based on plans for academic program development. Construction of the first site development projects would probably begin in 2001-02. New projects initiated in each of the first three years of this phase (through 2002-03) could be completed by Fall 2005 to support the initial enrollment of students on-campus. In this scenario, occupancy of the first campus buildings could occur during 2004. During this same period, significant development of the University Community and associated infrastructure required to support both the campus and community development would be expected.

Budget Planning

Planning is under way to identify funding strategies that would make it feasible to open the campus by 2005 or soon thereafter. From a financial point of view, the University's ability to build the tenth campus depends on adequate resources both to develop the new campus and to ensure the continued health and enrollment expansion of the University's existing campuses, as outlined in the earlier section on enrollment demand. As presented to The Regents at the June 1997 meeting, the long-term funding plan for the University is encompassed in AB 1415 (Bustamante), the Higher Education Partnership Act of 1997, now under consideration by the Legislature. The bill has been passed by the full Assembly (69-9) and subsequently by the Senate Education Committee (11-0) on July 2, 1997.

AB 1415 proposes a partnership in which the State would provide the University of California and the California State University with at least their current proportional share of the State's general fund budget. Under this plan, sufficient resources would be provided to: (1) accommodate projected enrollment growth; (2) fund annual increases to the base budget, adjusted by the growth in California per capita income, to stabilize funding for existing programs; and (3) provide annual increases to eliminate or limit the need to increase mandatory systemwide student fees. If there is insufficient State revenue to fund these provisions, mandatory student fees could be increased but would be limited to the percentage growth in California per capita personal income.

Operating Budget

Initial analysis indicates that approximately $50 million (current dollars) in State General Fund support would be required for a campus with 5,000 FTE students, the enrollment level estimated for the tenth campus in 2010. The funding agreement for State support for enrollment growth would provide $35 million for 5,000 FTE new students. This leaves a balance of $15 million as the core funding base for the tenth campus. Approximately $5 million of this amount would be associated with the annual operation and maintenance costs for campus buildings, grounds, and purchased utilities; funds for this purpose would be requested as facilities are constructed and opened for operation.

The balance of $10 million in the core funding base is the difference between average costs per student and funding provided for new enrollment on a marginal cost basis and would cover costs that are not included in the marginal cost per student funding calculation. For example, the marginal cost per student funding formula assumes faculty salaries at the Assistant Professor, Step 3 level; the core funding base would cover faculty salaries at a mix of levels from Assistant to Full Professor. At an enrollment of 5,000 students, the campus will have achieved some economies of scale and further growth in enrollment could be funded on the basis of marginal cost formulas.

As of this date, the Assembly and the Senate have approved a budget augmentation of $9.9 million for the University in 1997-98 to establish the core funding base for the tenth campus. In the years prior to 2005, these funds would support planning activities and program start-up costs on a one-time basis, as described below.

* Funds would be used on a one-time basis to support a variety of planning activities for the tenth campus, including initial site studies, joint infrastructure and community planning with the neighboring educational trusts, and further delineation of the academic program as the basis for planning initial campus facilities.

* Funds would be used to support start-up costs for the expansion of academic programs in the San Joaquin Valley as described earlier, to be offered in the period before the tenth campus opens in 2005.

* There will be significant one-time expenditures for start-up costs related to faculty recruitment, initial acquisition of library materials, acquisition of instructional equipment including computers and multi-media capability, and development of academic and administrative computing systems. Any unused portion of the core funding base in initial years would be carried forward to fund these extraordinary one-time costs that would occur in the two to three years before the campus opens.

* As the opening of the campus in 2005 draws near, a greater portion of the core funding base would be used to support the initial complement of faculty and staff as they are hired. The goal is to have 100 faculty in place by Fall 2005, ready to offer a range of lower division, upper division, and graduate programs.

In summary, the funding plan for State operating budget support has three elements:

1. a permanent augmentation of $9.9 million beginning in 1997-98 for the core funding base, to be used initially for planning and start-up costs;

2. support for enrollment growth on a per student basis as the campus develops; and

3. additional base funding for operation and maintenance of plant as new buildings are brought on line.

Capital Budget

The capital funding requirements for a campus that can support 5,000 students in its initial phase have been estimated based on a model which projects building requirements by space type over time based on estimated enrollment levels and number of faculty--for example, space needed for classrooms, offices, and laboratories. The model also includes a projection of infrastructure requirements by quantity--for example, linear feet of roads, underground utility distribution, and central plant equipment. The model includes unit costs for each type of space and category of infrastructure in order to calculate capital funding requirements based on the amount of space and quantity of infrastructure that would be constructed.

The current estimate is that approximately $400 million (expressed in 1997 dollars) in State capital funds would be required to develop a campus for 5,000 students. This includes approximately $250 million prior to the opening of the campus in 2005 and another $150 million in the period 2005 to 2010 to support growth to 5,000 students. Capital funding requirements are higher in the initial period because core space must be available on opening day for most programs and activities and because initial infrastructure requirements are not directly related to enrollment levels. The $400 million in funding averages about $35 million per year for the 12-year period 1998 to 2010 which would be required in addition to the capital funding needs to maintain, upgrade, and expand existing campuses.

In this context, it is estimated that the University needs about $350 million in State capital outlay funding a year to renew and upgrade existing facilities, address seismic and other life safety problems, and add facilities for enrollment growth at existing campuses. An additional ten percent, or $35 million a year in capital funding over 12 years, is required to develop the tenth campus for a capacity of 5,000 students.

Funding Actions

To move ahead with development of the tenth campus, three funding actions will be necessary:

1. Enactment of AB 1415, which would stabilize funding for existing campuses and provide a formula for funding future enrollment growth for both existing campuses and the tenth campus.

2. Provision of core funding to fund planning, new program initiatives, and start-up costs. Both the Assembly and Senate versions of the 1997-98 Budget Act include a $9.9 million appropriation for this purpose.

3. New bond funding to fund construction of buildings and infrastructure.

In addition, funding will need to be secured for development of off-site infrastructure to serve the campus, including funding for construction of access roads for which federal funding is currently being sought.

Office of the President Organization for Tenth Campus Planning

The Office of the President has formed several work groups focusing on various aspects of the tenth campus. Overall guidance is provided by a steering committee composed of Provost C. Judson King, Senior Vice President Wayne Kennedy (chair), Vice President Bruce Darling, Associate Vice President Lawrence Hershman, Vice Provost Carol Tomlinson-Keasey, and Professor Daniel Simmons. The committee is supported by an interoffice staff working group.

In addition, a faculty committee on tenth campus academic planning, described above, will be reporting its recommendations to the President in September. A committee to advise on the academic transition plan for opening the tenth campus will be appointed this fall.

The steering committee will continue to advise the President on tenth campus development issues and will prepare periodic update reports for The Regents.

(Attachment A, Attachment B)

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