California State University Halts Construction Projects
State Freeze of Bond Funds
(January 28, 2009) -- California State University has suspended construction on more than 130 projects including libraries, performing arts centers, lab facilities, classrooms and other major infrastructure as a result of the state’s freeze on disbursement of state General Obligation and Lease Revenue bonds used to finance such projects. A total of $848 million in CSU projects – including five approved as part of the state’s economic stimulus package – have been halted at all 23 CSU campuses. The projects represent a loss of an estimated 13,000 jobs associated with the construction.
Many of the CSU projects were well underway at every phase of design and construction, and are being suspended for what is hoped to be less than 90 days. The CSU had asked the Department of Finance to exempt 26 projects in order to complete work including the Northridge science building, Fresno State Library addition and renovation, the San Francisco joint library project, the Long Beach State Peterson Hall replacement building, as well as a number of smaller projects. While those projects were not exempted, the CSU has been notified that projects costs incurred during November and December 2008 – a total of $69 million – were approved for payment by the state.
The suspension of projects also puts into limbo $135 million in donor and self-support funds currently cofunding the state projects, and jeopardizes the completion of energy efficiency projects that the CSU has secured $4.4 million in grant funds to complete.
A complete listing of suspended projects is also available in the Board of Trustees Agenda.
The California State Pooled Money Investment Board recommended on Dec. 17, 2008 to freeze disbursements on General Obligation (GO) and Lease Revenue Bond (LRB) funded projects. The board is chaired by the State Treasurer, and includes the State Controller and the State Director of Finance. The Pooled Money Investment Board also provides cashflow loans to the General Fund. Typically, construction expenditures do not reduce the availability of cash for General Fund operations, but with the lack of access to the bond market, loans for state bond financed projects are competing with the same funds used for state operations.
About the California State University
The California State University is the largest system of senior higher education in the country, with 23 campuses, approximately 450,000 students and 46,000 faculty and staff. Since the system was created in 1961, it has awarded nearly 2.5 million degrees, about 90,000 annually. Its mission is to provide high-quality, affordable education to meet the ever-changing needs of the people of California. With its commitment to excellence, diversity and innovation, the CSU is the university system that is working for California.