Academic journal article
By Rudden, Michael S.
Planning for Higher Education , Vol. 39, No. 1
Whether an institution is a highly ranked Research I public university, a relatively well-endowed private liberal arts college, or an expanding community college, the current recession has negatively affected revenues. While Moody's Investors Service (1) noted in January 2010 that some of the most urgent financial pressures facing private and public colleges have receded as their investment income improved during the latter part of 2009 (Inside Higher Ed 2010), significant and fundamental challenges remain, including uncertainty over future state funding, enrollments, and net tuition revenue; liquidity to institutional debt ratios; and levels of endowment returns (2) and private donations. (3)
In response to revenue shortfalls, private and public colleges and universities of all sizes are actively pursuing short-term strategies with the goals of enhancing revenues and reducing facilities operating costs. These strategies include deferring or downsizing planned construction projects, using existing instructional space more intensively, reducing facilities operating costs by closing facilities, improving campus sustainability, and reducing information technology (IT) expenses. Another economic-driven initiative involves the recent increase in the acquisition of distressed properties by colleges and universities. Additionally, institutional mergers and partnerships are being developed to expand academic program offerings, extend geographic reach, improve diversity, improve student services, and reduce overhead costs. (4)
A review of ongoing campus facilities planning projects, coupled with a review of more than 30 recent campus master planning requests for proposals and the relevant literature, indicates that colleges and universities are finding innovative ways to do more with less in response to this challenging economic environment. The following discussion focuses on five economic-driven facilities planning and management strategies that have emerged in the current recession (see figure 1).
I. Defer Capital Expenditures and Reduce Facilities Operating Costs
Colleges and universities have revisited their campus capital improvement and facilities operating budgets during the recession to realign them with reduced funding resources. While new construction costs have been declining (5) for those institutions able to fund "shovel-ready" projects, others have experienced tighter credit markets and lower debt ceilings for their new projects. The National Association of Independent Colleges and Universities (2009b) survey (6) of 284 member institutions revealed that over 50 percent had slowed down or stopped construction/ renovation projects. According to the February 2010 national survey conducted by the journal College Planning & Management, the total reported U.S. higher education renovation/new construction volume completed in 2009 fell almost 30 percent from the 2006 peak of $15 billion to $10.7 billion, the lowest since 2001 (Abramson 2009). Projected 2010 and 2011 completed projects are anticipated to be significantly lower still due to the prolonged financial crisis that has diminished the number of campus projects in the construction pipeline.
Colleges and universities are finding viable ways to address pressing program needs despite postponing, or even avoiding, new construction altogether. For example, focusing resources on less costly renewal and renovation projects or phasing construction of new buildings over time reduces annual capital expenditures while still addressing pressing program and facilities renewal needs.
Institutions with current and flexible campus master plans are using them to re-evaluate and navigate alternative campus development scenarios. Several examples recently seen by this campus planner illustrate how institutions are exploring new planning approaches in response to recent economic challenges and, in the process, discovering opportunities. …