Arizona’s public universities: built to last?

Friday, February 3rd, 2017

The average university building in Arizona is 26 years old. Now, that may not seem that old. After all, being 26 qualifies as a Millennial – and I’m sure many of us live, as I do, in a home that is Gen-X, if not older.

But, with living in an older home comes the responsibility to maintain and improve it. Our living situations change, as do our needs.

The same is true for Arizona’s public universities. Changes in educational practices, technological advancements and even changes in student tastes have placed new demands upon the capital needed to deliver a modern university education.

So has explosive enrollment. Between 2007-08 and 2016-17, full-time enrollment has increased more than 46 percent – from just over 113,000 students to more than 165,000. Well over half of those students are Arizona residents. We are now at record numbers of both undergraduate and graduate students, with more students living on our campuses than ever before.

Along the way, our research portfolios have grown, too. Importantly, they have leapfrogged in national and international prominence, all propelled by past state contributions.

Today, we have nearly 1,000 teaching, research and living facilities – in communities all over the state - that comprise nearly 28 million square feet.  These are significant assets, with a replacement value of more than $10 billion. Students have the opportunity for experiential learning, to take part in large- scale research projects and to learn from professors who are leaders in their respective fields.

What hasn’t changed in the past generation is the state’s approach to capital investment in our universities.

Until now.

With his FY 2018 budget proposal, Governor Doug Ducey has established an innovative means to fund necessary capital construction and improvements on our university campuses. This marks the first time in a generation that an Arizona governor has proposed a long-term funding source for this vital need.

For decades, the state has had a formula established in law designed to keep up with the building and maintenance needs of public university buildings. But, it is dependent on the availability of appropriations.Over the past 20 years, the state has accumulated a funding backlog of nearly $700 million for university capital repairs and improvements.

Arizona is one of only six states that taxes its universities on sales. The governor’s proposal would allow universities to recapture the taxes they currently pay each year on their purchases. Rather than subsidizing state operations, those dollars would pay for critical capital improvements. The dollars also provide a stable revenue source against which they can issue bonds to help tackle larger projects, without compromising the university balance sheets or strong bond ratings.

Not only will the new funds help remediate aged, crumbling and outmoded facilities, it will create the means to build new spaces and allow the state to wipe out the backlog of monies owed.

Despite the strength of this idea, it has its opponents – namely the Arizona League of Cities and Towns, whose communities receive a small share of the transaction privilege taxes generated by the universities.  In truth, this proposal would impact about $2.5 million of their near half billion in receipts - that is, one-half of one percent of their funding. In the past, cities have been good partners to the universities and have benefitted greatly from the resulting growth and renewal in communities statewide from the presence of universities. Sadly, the cities consider this proposal to be a non-starter.

Not investing in public higher education in Arizona is a non-starter.

The board and universities have developed aggressive plans, endorsed by business and community groups statewide, to meet the state’s ever growing demand for new graduates and public research.Those won’t be met without financial support to ensure our universities have the infrastructure capacity that is necessary.

For our students and for the benefit of our state, we need to ensure Arizona’s public universities are built to last.