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Maintenance costs build up on college campuses

Records: Deferred maintenance at 10 schools totals $2.8 billion

Staff at the University of Cincinnati discovered in 2009 that a wall in its Old Chemistry building had “bowed.” If the wall had went unattended for much longer it could have collapsed.

“That was a scary experience,” said a University of Cincinnati official. “Best case scenario (if it had collapsed) is that it would have ruined a lot of offices, and made a big mess. The worst case — it would of kill somebody.”

An analysis by this newspaper finds that Ohio universities’ maintenance cost are mounting, while at the same time the state is allocating fewer funds for such projects.

The unexpected repair cost UC nearly $1 million.

The university says it knew the building was in need of repair, however, due to budget constraints those repairs had been pushed back — allowing the issue to “exacerbate.”

As a result, more universities are deferring maintenance. Indeed, records collected by this newspaper through public records request showed that 10 of the state’s 14 public universities collectively have at least $2.8 billion in deferred maintenance: everything from underground pipes, deteriorating bricks to electrical upgrades. That figure has inched up over the past decade. In 2003 the Ohio Board of Regents — now the Ohio Department of Higher Education — reported that the schools were looking at about a $2 billion deferred maintenance liability.

Ohio State University has the largest deferred maintenance backlog at $662 million. While Wright State University, a relatively younger campus, has the smallest total at $15.6 million.

Officials at Ohio universities say that the state stopped paying for “100 percent” of facility upkeep during the ’90s, and decreased funding further coming out of the Great Recession.

According to figures from the Ohio Office of Budget and Management, Ohio colleges and universities received $504 million for capital projects in fiscal years 2015 and 2016. When adjusted for inflation, the schools received $707 million for fiscal years 2001 and 2002. In addition, the school didn’t receive any capital funding in 2011 and 2012.

A few state legislators said that while the state has decreased its funding, they’re not exactly sympathetic.

“I think one of the things driving up the cost of education is the endless building of ‘first class luxury facilities.’ I think we need to reassess if we need to go in that direction,” said Sen. Peggy Lehner, R-Kettering.

In the coming weeks, the State Senate will introduce its biannual capital budget. Historically, around 1 in 5 of those capital dollars goes towards higher education.

Lehner says universities need to be better stewards of taxpayer money.

“I think it (the current level of university facility funding) may be more than adequate,” Lehner said.

More debt

To pay for repairs, several universities say they have taken on more debt.

For instance, in 2014 Ohio University took out a 100-year, $250 million bond to fund deferred maintenance projects.

Beth Green, OU’s director of debt management, previously told this newspaper that rather than pay to borrow new money every year or two, OU turned to a long-term solution.

The university, which in 2008 had somewhere between $350 million to $480 million in deferred maintenance, estimated it will be able to recycle the bond and invest a total $1.3 billion before the bill is due in year 2115.

OU officials say they plan to spend around $980 million on capital improvements over the next six years.

“We realized that we could lock in an extremely attractive interest rate over the next 100 years,” Green said. “The idea is we want to put a significant dent in our deferred maintenance backlog so we don’t become at a point where we are today in the future.”

Other universities say they’ve also taken on debt to trim down their maintenance backlog. From 2004 to 2014, debt at Ohio public universities climbed from $2.8 billion to $6.7 billion.

Students pick up tap

University officials say they’re pulling more from their general funds to pay for maintenance. That means that students and parents are increasingly picking up the tap for repairs buildings.

But even that revenue source has its limits.

“The trends are compelling — aging buildings, not enough capital investment, campuses hitting borrowing limits, backlogs growing, operating budgets stretching maintenance cycles…. The idea of ‘growing’ your way out of the problem through expanding enrollments, increased tuition and robust debt capacity is out of reach for nearly all but a few selective and well-endowed institutions,” wrote researchers at Boston-based consulting company Sightlines in its 2015 report.

Jay Pearlman, associate vice president of marketing at Sightlines, said universities need to address deferred maintenance with a long-term targeted investment strategy.

“Finally, it takes patience. Campuses were not built overnight, nor will they fall apart in a day,” he said.

Double Whammy

“There was a huge expansion (on college campuses) in the ’50s and ’60s, with the Baby Boomers, Sputnik, and a lot of investment into higher education. And another building boom in late ’90s,” Pearlman said.

Pearlman said the buildings built during the ’60s are entering a “second maintenance cycle” while the facilities built during the ’90s are needing its first repairs.

So while universities are receiving fewer dollars from the state, they’re also seeing a large uptick in maintenance cost.

David Creamer, vice president for finance and business at Miami University, said the Oxford campus went through a similar building boom during those decades. Opened in 1809, Creamer notes that university has an older building stock compared to some other universities in the state.

He says the state has slowly decreased its role in maintaining facilities. For example, in the ’50s the state stopped paying for residence halls and parking garages. Later, the state ceased funding for sports facilities and students centers.

Lehner, who chairs the Senate Education Committee, said that perhaps the state should give more of the funding to community colleges.

“While community colleges have 40 percent of state’s students, they get 20 percent of money,” she said

Meanwhile, Ohio public university officials argue that community colleges were built more recently, and need fewer funds for repairs.

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