REGENTS REPORT

South Dakota Higher Education: Good Investment. Great Future. NO. 67, 02/28/97

Maintenance and Repair for the University System

What it Pays For and How it is Paid

This document was produced by the South Dakota Board of Regents.

South Dakota's public university system manages over five million square feet of academic and administrative facilities. As might be expected there are many maintenance and repair projects that the universities identify as priorities on their campuses. Each university goes through its own prioritization of M&R projects in order to request funds. The Board of Regents utilizes a weighted formula to determine how much funding to grant each university for M&R projects. This report covers how this process works, as well as the dollar amounts available for M&R for the universities.

How M&R Projects are Funded

M&R projects for the university system are funded from three separate sources: M&R Bonds, Higher Education Facilities Fund (HEFF), and the M&R Fee assessed on a per credit hour basis on each university.

M&R Bonding-The Regents bonded for $7.5 million in September 1995 for M&R projects. The annual bond payment, about $730,000, is funded through the annual M&R allocation from the HEFF. Interest earned on the bond issue, $360,021, could be used to offset the bond payment.

HEFF M&R Allocation-The HEFF account is for facility related expenditures, 20 cents of every dollar collected in state support tuition is deposited in the interest earning HEFF account. In FY97, approximately $8 million will be deposited from state support tuition.

M&R Fee-The Board of Regents approved a $1 per credit hour fee in FY93 for M&R projects. This fee has been increased annually to account for inflation and for FY97 the M&R Fee is $1.09. This fiscal year the M&R Fee is expected to generate $681,639.

Sources Available for M&R Funding - FY97

SOURCE: Board of Regents

M&R Fund Distribution

Funds for M&R projects are distributed system-wide annually using a formula that was approved by the Board in 1985. The formula weighs two factors equally, (1) the institution's gross square footage of academic buildings, and (2) the institution's replacement value of academic buildings. The Regents are committed to 1% of replacement value of facilities for M&R. In recent years, the M&R allocations from the HEFF account have increased as shown in the chart below.

SOURCE: Board of Regents

Projected HEFF Revenue

In the years to come, the HEFF account is expected to grow from interest earnings, lower lease payments, and recent high enrollments. In FY92, the HEFF cash balance was $0.5 million and it has grown to $4.0 million this fiscal year. The chart below shows the growth in M&R funding from the HEFF account and projected growth available for additional M&R projects or buildings.

SOURCE: Board of Regents

Conclusion

The Regents recognize that M&R for the university system is important and use a weighted formula to determine reasonable funding amounts for campus M&R projects. This report shows that there are funds available for M&R projects now and into the future.