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Legislative committee looks at changes for higher ed capital funding

By Morgan Jacobsen | Posted - Jan. 28, 2015 at 1:40 p.m.

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SALT LAKE CITY — Members of the Office of the Legislative Auditor General recommended improvements Wednesday to how the Legislature funds the operation and maintenance of higher education buildings.

Many of those buildings are built with money from private donors and independent sources, but the state is often asked to provide funding for the operation and upkeep of those buildings.

Last month, auditors released a follow-up report to a 2011 audit that looked at whether state-appropriated operation and maintenance funds were being used for their designated purpose.

Auditors found that in some cases, operation and maintenance funding sources weren't identified before the buildings were built. Some institutions constructed buildings using private donations hoping that the state would provide for operations and maintenance, though such appropriations weren't yet authorized.

Auditors also determined that the records being kept on how the buildings are funded were inadequate.

"What we concluded was that inadequate funding information limits transparency and accountability," audit supervisor Kade Minchey told members of the Higher Education Appropriations Subcommittee.

Lawmakers will look at three recommendations from December's audit, the first of which would be to have an operation and maintenance funding plan in statute before state-funded higher education buildings are built.

The second recommendation suggests that the Legislature direct the Utah State Board of Regents to maintain a funding record for all of Utah's higher education buildings, regardless of whether they are funded by the state.

Auditors also recommended that the Legislature create an appropriation unit to better track operation and maintenance appropriations.

Sen. Steve Urquhart, R-St. George, is the Senate chairman of the Higher Education Appropriations Subcommittee. He raised the possibility of the Legislature getting "out of the building business" by appropriating capital funds on a per-student basis rather than approving entire projects.

"That way, the institutions would maybe manage the resources differently and they would have more impetus at that point to build smaller buildings, buildings that don't quite cost as much," Urquhart said. "Also, they would have motivation to go out and seek private funding for those buildings.

"That's something that this committee might also discuss this session," he said.

Dave Buhler, commissioner of the Utah System of Higher Education, said he wouldn't oppose alternative methods of funding so long as capital needs are met.

"It could work," Buhler said. "You'd have to look at what that means and how it would work for small rural institutions versus large urban ones, because there's a certain capital need that you have for those institutions that may not be exactly equal for each student."

The commissioner said that although many buildings are constructed from private donations, finding independent donors willing to fund operation and maintenance is difficult, especially when operation and maintenance can account for as much as two-thirds of the costs over the life of a building.

"It's close to impossible," he said. "They feel like the state should pick that up since it's a state purpose building."

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Morgan Jacobsen


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