CAPITAL OUTLAY APPROPRIATIONS S.B. 761 (S-1):
SUMMARY AS PASSED BY THE SENATE
Senate Bill 761 (Substitute S-1 as passed by the Senate)
Sponsor: Senator Darwin L. Booher
Date Completed: 12-12-14
CONTENT
The Joint Capital Outlay Subcommittee (JCOS) reviewed FY 2014-15 capital outlay project requests from universities and community colleges during four subcommittee hearings in September 2014. On December 3, 2014, JCOS approved 29 new planning authorizations for 12 universities and 17 community colleges. In order for these planning authorizations to be effective, legislative approval in an appropriation bill is required. Senate Bill 761 (S-1) includes planning authorizations for the 29 projects approved by JCOS.
Program development and schematic planning costs are initially born entirely by the institution. The State eventually pays a share of these planning costs only if the project is subsequently approved for construction. Planning authorizations for studies and initial plans for new capital outlay projects are not a commitment on the part of the Legislature to appropriate funds for the completion of plans or construction of any project. After planning documents are reviewed and approved by the Department of Technology, Management, and Budget (DTMB), the projects are submitted to JCOS. The Joint Capital Outlay Subcommittee and the Legislature then may authorize the project for final design and construction with a line-item appropriation in an appropriation bill.
Section 302 of Senate Bill 761 (S-1) would increase the total cost and the State share of funding for the Kalamazoo Valley Community College (KVCC) Healthy Living Campus project. The project was authorized for planning in Public Act 102 of 2013 and construction in Public Act 34 of 2014. As authorized for construction, the total project cost was $25,625,200, with a State share of $6.0 million and a college share of $19,625,200. The total cost of the project is now estimated at $26,573,800, an increase of $948,600. The increase is due to an error in the original estimate and the need to make additional accommodations related to the flood plain. Along with the request to increase the total authorized cost, the College is also requesting that the State increase its share of the project cost from $6.0 million to $12.0 million, which is close to the 50% match the State traditionally has provided to most community college projects.
Section 303 would increase the total authorized cost to construct the Lake Superior State University - school of business building, initially authorized for construction in 2013 PA 102, by $1,500,000.00 to a revised total authorized cost of $13,500,000.00. Lake Superior State University would fund the entire cost increase, changing their share of the project’s cost from $3.0 million to $4.5 million.
The Governor's FY 2014-15 capital outlay recommendation was included in the DTMB appropriation, not as a separate capital outlay appropriation bill. The recommendation was based on the new process for selecting capital outlay projects as provided for in 2012 capital outlay reform legislation (amendments to the Management and Budget Act). The Governor recommended planning authorizations for three projects: Ferris State University,
Lake Michigan College, and West Shore Community College. The Omnibus Budget approved by the Legislature in June 2014 did not include planning authorizations for the Governor's recommended projects.
FISCAL IMPACT
If all of the 29 planning authorizations eventually receive construction authorization, the total cost of the projects would be $841.7 million, with a State share of $370.4 million. Annual State Building Authority (SBA) rent payments would total between $25.9 million and $33.3 million until the bonds are retired (approximately 17 years).
Increasing the State share for the KVCC Healthy Living Campus by $6.0 million would result in annual SBA rent payments of $420,000 to $540,000 until the bonds are retired (approximately 17 years).
The cost increase for the Lake Superior State University School of Business building would be funded by the university and the State share would remain unchanged at $9.0 million.
Table 1 provides a summary of action on the FY 2014-15 Capital Outlay budget. Table 2 provides details of new planning authorizations contained in Senate Bill 761 (S-1), including a short description of the project, total cost, State share, and institution share. The descriptions and costs in Table 2 are based on requests as they were presented to JCOS in September 2014. Projects that have changed since the November 2013 submission to the DTMB (in scope and/or cost) are noted.
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.