Friday, September 21, 2018

Florida schools, colleges are growing, but state construction money has dried up

An unfinished university science lab. Leaky roofs in elementary schools. Plans for a new classroom put back on the shelf.

On campuses across Florida, these and other projects are stalled because the state fund that pays for school construction is broke. And it looks like there won't be any money for the next two years.

Blame all those people who gave up their land lines and bought energy efficient appliances. The fund known as PECO, used by schools exclusively for new buildings and maintenance, gets its money from a tax on telephones and electricity.

"We're probably never going to get back to where we were," state university system chancellor Frank Brogan told the Florida Board of Governors last week.

Despite the recession, Florida schools, colleges and universities are growing, and the state expects more than 30,000 new students next fall in the K-12 system. But no construction money.

All of those students will have to make do with what's there.

Public Education Capital Outlay is in a deficit — and it's rare for the D-word to be spoken aloud in the state Capitol, where deficit spending is prohibited under the state Constitution.

Gov. Rick Scott, who vetoed many PECO construction projects in last year's budget, has now asked the Department of Education, Florida College System and State University System to identify $250 million worth of previously authorized projects that could be put on hold.

He said he doesn't have an answer to the problem. But he's open to suggestions.

"I always listen to everybody's ideas. I try to," Scott said. "I am concerned about how much debt we have and I like the fact that last year, for the first time in 20 years, the debt of the state went down."

Florida's education leaders are compiling lists of all the projects either under way or about to get started. Then they'll have to choose which ones should be allowed to continue and which can wait. Scott asked for recommendations by Feb. 7.

Not everyone sees the situation as a crisis.

As influential chairman of the Senate Budget Committee, Sen. JD Alexander of Lake Wales shapes the budget's list of PECO projects. Last year, he secured $35 million for his personal priority, the USF Polytechnic campus in Lakeland, in his home county of Polk. The campus has gotten more than $60 million in PECO money since 2005.

Alexander said state universities have more than $1 billion in unobligated reserves carried over from previous years — money he says could be available for construction and maintenance. In the past three years, he said, the total doubled from $500 million.

"If they're so cash strapped that they can't repair the roofs, how do they go up $500 million in unobligated reserves?" Alexander said. "This is cash in the bank account that is not obligated in any way. So there's a lot of misstatements that have been made by some."

That's not exactly the whole story, university leaders say.

Yes, schools do have reserves, but they are required by law to keep a certain amount, 5 percent minimum, on hand. Money above the threshold goes toward other costs, such as salaries and multiyear contracts. And the healthier the reserves are, the better the bond rating schools get.

"There's not a great deal of flexibility for those accounts," said Tico Perez, chairman of the Board of Governors' budget and finance committee. "That's why each of the universities has been doing what it can do, scrimping and saving."

Using money set aside for student services to pay for buildings wouldn't be smart in the long run, said University of South Florida provost Ralph Wilcox. "We would potentially have to reduce our support for summer school, which would have the unfortunate consequence of fewer classes being offered and students not being able to graduate on time.

"It becomes a little bit of a vicious cycle."

PECO has allowed schools to grow and flourish. The University of Central Florida in Orlando, which opened 43 years ago, is now the second largest school in the nation with 58,000 students.

"And demand is still there," said Dan Holsenbeck, UCF's vice president for university relations. "There's no way we can serve that increased demand, serve it adequately, without that continued state support."

A $22 million classroom building awaits funding. "It would be impossible to build without PECO or some other public source," Holsenbeck said.

The same message echoes across the system.

In Tampa, USF still needs about $12 million to complete its new interdisciplinary science building. The top floor, intended to be student laboratory space, is just a bare shell, used in the meantime for office space, said Wilcox, the provost.

Florida International University in Miami needs $7 million to finish a consolidated academic services building and $7 million to expand a water chilling plant.

"We've outgrown our capacity," said Ken Jessell, FIU's senior vice president for finance and administration. "And we're still growing as an institution. There's an unmet need for higher education in South Florida."

The university system has also been cautious about spending dwindling PECO money on maintenance.

Chris Kinsley, the Florida Board of Governors director of facilities, said the current maintenance balance is $85 million. But only the most urgent upkeep is performed.

"We're just holding on to every dime," Kinsley said, "hoping to avoid the worst."

Some see a need for change.

Should the state find another funding source? Should lawmakers free up restrictions on how tuition money is spent? Those ideas have been raised.

Whatever the solution, it needs to come quickly, FIU president Mark Rosenberg told the Board of Governors.

"This," he said, "could be one of the most significant strategic challenges that our entire system will face."

Times/Herald staff writers David DeCamp and Kathleen McGrory contributed to this report. Kim Wilmath can be reached at [email protected] or (813) 226-3337.

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