CAPITAL OUTLAY APPROPRIATIONS S.B. 78 (S-7):
SUMMARY OF SUBSTITUTE BILL
IN COMMITTEE
Senate Bill 78 (Substitute S-7)
CONTENT
The bill would appropriate $2,900 for 29 $100 capital outlay project planning authorizations. Eleven of these planning authorizations would be for projects at universities and 18 would be for community colleges. A list of these projects is provided in Table 1. If each of these projects were provided with a construction authorization as written, the total cost of the projects would be $803.7 million, of which $447.1 million would be funded by the State through the issue of State Building Authority (SBA) bonds, and $356.6 million would come from matching funds from the universities and community colleges receiving the projects.
The bill also would appropriate $250.0 million General Fund/General Purpose for a new Student and Talent Attraction and Retention Grant Program that would be administered by the Department of Technology, Management and Budget (DTMB). The Program would provide grants of up to $4.0 million for each community college and university that received a capital outlay planning authorization in the bill, and $6.0 million for those that did not. These grants would be allowed to be used for capital and student housing improvements and/or the purchase of technology or other equipment that would accomplish any of the following:
· Improve education outcomes for low-income students.
· Improve the health or safety of students, faculty, or others on campus.
· Improve student retention or increase enrollment.
Six months after receipt of the first grant application under the program, the DTMB would be required to issue a second round of grants with any remaining unspent or unobligated funds. No single institution would be allowed to receive a grant for more than 15.0% of any remaining funds under the second round of grants. Finally, the bill would establish the grant program as a work project, allowing funds to be spend through September 30, 2027.
The Governor did not recommend planning authorizations for any capital outlay project funded through the SBA in her fiscal year (FY) 2022-23 budget recommendation; however, all but one of the projects were reviewed, scored, and ranked by the State Budget Office (SBO). The project request that was not part of the SBO ranking process was the one for University of Michigan – Flint, which is a new request included in the bill. Three project requests (University of Michigan – Ann Arbor, Kellogg Community College, and Muskegon Community College) were not initially scored and ranked as they were deemed ineligible for SBA financing as submitted. The University of Michigan – Ann Arbor project has since been amended to make it eligible for SBA financing and is included in the bill. The other two unranked projects are not included in the bill.
The bill contains 29 $100 planning authorization line items so, strictly speaking, the fiscal impact of those projects would be limited to $2,900, plus any planning costs incurred by universities and community colleges that would receive a planning authorization under the bill. Section 242(9) of the Management and Budget Act specifies that an appropriation for a planning authorization does not represent a commitment by the Legislature to provide funds for the construction of a project, but for projects that eventually receive a construction authorization, the State would cover a portion of those planning costs. If all of the projects in the bill were given construction authorizations at their requested State share levels, the SBA would finance about $447.1 million of the total $803.7 million cost of the projects through bonding. These additional bonds would increase SBA rent payments (debt service) in the Department of Treasury by an estimated $30.0 million to $50.0 million annually. The actual SBA rent costs could vary significantly depending on bond market conditions if and when the projects ultimately receive final SBA financing following completion of the projects.
Because of recent increases in construction costs, it is likely that the total actual cost of the projects in the bill could eventually exceed the total authorized project costs listed in the bill. If this were to happen, each institution that had those excess costs would have to seek a cost adjustment approval in a supplemental appropriations bill. If approved, the institution would be responsible for 100% of those increased costs. An institution that did not wish to increase its financial obligation for its project could alternately elect to seek a reduction in the scope of its project using the same process as a cost adjustment.
Finally, the bill would appropriate $250.0 million for grants to universities and community colleges for technology, equipment, and capital improvements as a one-time appropriation.
Table 1
|
SB 78 (S-7) Capital Outlay Planning Authorizations |
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|
University |
Project |
Total Cost |
State Share1 |
Institution Share |
Rank2 |
|
Central |
Brooks Hall Renovation |
$29,800,000 |
$22,350,000 |
$7,450,000 |
10 |
|
Eastern |
Engineering and Technology Complex - Phase II - Roosevelt Hall |
42,500,000 |
30,000,000 |
12,500,000 |
1 |
|
Ferris |
Center for Interprofessional Health Sciences Education |
29,500,000 |
22,125,000 |
7,375,000 |
4 |
|
Grand Valley |
Blue Dot Lab |
75,000,000 |
29,900,000 |
45,100,000 |
9 |
|
Lake Superior |
Experiential Learning Center |
25,000,000 |
18,750,000 |
6,250,000 |
8 |
|
Michigan Tech |
Center for Convergence and Innovation - Phase I |
70,000,000 |
29,900,000 |
40,100,000 |
2 |
|
Northern |
Northern Enterprise Center (College of Business) |
19,100,000 |
13,370,000 |
5,730,000 |
5 |
|
Oakland |
Science Complex Renovation Project |
40,000,000 |
30,000,000 |
10,000,000 |
3 |
|
University of Michigan – Ann Arbor |
428 Church Street Building Renovation |
50,000,000 |
37,500,000 |
12,500,000 |
Unranked |
|
University of Michigan - Flint |
College of Innovation and Technology |
40,000,000 |
30,000,000 |
10,000,000 |
Unranked |
|
Western |
IF-1 Knauss Hall Renovation and Addition |
30,000,000 |
22,500,000 |
7,500,000 |
11 |
|
Subtotal Universities................................. |
$450,900,000 |
$286,395,000 |
$164,505,000 |
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|
Community College |
Project |
Total Cost |
State Share1 |
Institution Share |
Rank2 |
|
Alpena |
Charles R. Donnelly Natural Resources and STEM Innovation Center |
$8,500,000 |
$4,250,000 |
$4,250,000 |
8 |
|
Bay de Noc |
Manufacturing Hub and Safety Training Center |
1,675,000 |
837,500 |
837,500 |
11 |
|
Glen Oaks |
South Campus Renovation |
7,000,000 |
3,500,000 |
3,500,000 |
5 |
|
Grand Rapids |
Learning Resource Center Renovation & Expansion |
32,000,000 |
16,000,000 |
16,000,000 |
15 |
|
Henry Ford |
Energy Learning Center |
11,600,000 |
5,220,000 |
6,380,000 |
13 |
|
Jackson |
STEM Remodel of James McDivitt Hall |
45,000,000 |
22,400,000 |
22,600,000 |
14 |
|
Kalamazoo Valley |
Automotive Technology/Advanced Manufacturing Wing |
39,000,000 |
19,500,000 |
19,500,000 |
16 |
|
Kirtland |
Improved Programming for the Trades at Kirtland - Gaylord |
7,186,100 |
3,593,000 |
3,593,100 |
17 |
|
Lake Michigan |
Niles Campus Renovation & Upgrade |
8,600,000 |
4,300,000 |
4,300,000 |
3 |
|
Monroe |
Renovation and Addition to Welch Health Education Building |
13,100,000 |
6,550,000 |
6,550,000 |
4 |
|
Mott |
Prahl College Center Renovation |
25,000,000 |
12,500,000 |
12,500,000 |
9 |
|
North Central |
Career and Technical Education Enhancement (CATEE) Complex |
9,141,000 |
4,570,500 |
4,570,500 |
2 |
|
Northwestern |
Student Learning Support Services Renovation Project |
5,000,000 |
2,500,000 |
2,500,000 |
6 |
|
Oakland |
Skilled Trades and Industrial Tech. Building Renovation/Expansion |
60,000,000 |
15,000,000 |
45,000,000 |
1 |
|
Schoolcraft |
Forum Building Renovation and Expansion for Sciences and Fine Art |
33,450,000 |
16,725,000 |
16,725,000 |
18 |
|
Southwestern |
Dale A. Lyons Classroom Building Renovation |
12,000,000 |
6,000,000 |
6,000,000 |
12 |
|
Washtenaw |
Center for Success |
23,000,000 |
11,500,000 |
11,500,000 |
7 |
|
Wayne |
Center for Virtual Learning and Digital Careers |
11,564,200 |
5,782,100 |
5,782,100 |
10 |
|
Subtotal Community Colleges.................. |
$352,816,300 |
$160,728,100 |
$192,088,200 |
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|
Grand Total................................................ |
$803,716,300 |
$447,123,100 |
$356,593,200 |
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|
1For universities, the State share reflects a 75% State match, limited to $30.0 million by DTMB policy. The State share for community college projects is 50%. |
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|
2Total State funding rank for capital outlay projects financed through the State Building Authority. U of M - Flint's project is marked as "unranked" as it was not submitted during the normal priority project process. U of M – Ann Arbor’s project is marked “unranked” as the project as submitted would not have been eligible for bond financing through the SBA. The University has since amended the project request to make it eligible for SBA financing. |
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Date Completed: 9-28-22 Fiscal Analyst: Josh Sefton
This analysis was prepared by nonpartisan Senate staff for use by the Senate in its deliberations and does not constitute an official statement of legislative intent.