October 21, 2014

Higher Education: Funding

Reven-U: Funding Higher Education

Here’s how Florida’s public universities plan to get the money they say they need to get better.

Mike Vogel | 6/27/2011

Edifice Complex?

FAU football stadium
FAU's new football stadium was funded in part through bonds tied to athletic fees. [Photo: Florida Atlantic University]

Parents and other observers may be forgiven if they see a disconnect: Come August, even as administrators decry a drop in taxpayer support, Florida Atlantic University will open housing for 1,200 more students and a 30,000-seat football stadium in Boca Raton. New university buildings are sprouting all over Florida campuses. There's so much building at UCF that some joke the school's initials could stand for Under Construction Forever.

So how can universities bemoan a lack of taxpayer support, shut down programs and cut faculty while spending millions to pour miles of concrete?

The answer is separate pots of money that keep buildings rising even as money for operations falls. Housing and other auxiliary departments such as parking are self-supporting. If a university convinces bond buyers it can fill a dorm with enough paying students to support operations and debt service, it can borrow to build.

Some campus construction is funded by donations specifically made for a building. But the deep well universities draw from to pay for classroom buildings is Florida's great innovation in financing education, a dedicated construction-only funding source. Called the Public Education Capital Outlay (PECO), it is funded by a gross utilities receipt tax on everything from trash collection to phone service. K-12 schools get 70% of the haul. State (community) colleges and the universities each take 15%. The universities have spent $3.5 billion in PECO money since 2000, according to the state Board of Governors. Changing the law so that the money could go to operations has been a non-issue — the topic hasn't been raised.

Stadiums? FAU's new one was partly financed by bonding a piece of student-paid athletic fees with the rest to be funded by naming rights, concessions, ticket sales and parking revenue. It's "not through state dollars," says Dennis Crudele, FAU senior vice president for financial affairs.

Operations: In the Red
Each year since 2007-08, the Legislature has reduced base funding for Florida's public universities.
Year Reduction in Base Funding
(in millions)
Base Total
(in billions)
2007-08 -$95.2 $1.91
2008-09 -129.6 $1.78
2009-10 -278.1 $1.50
2010-11 -36.6 $1.47
2011-12 -114.4 $1.35

Building: In the Black
Total building-related funding, including matching funds from general revenue.
Year Funding for Buildings
(in millions)
2007-08 $702.7
2008-09 576.7
2009-10 130.5
2010-11 311.1
Source: Florida Board of Governors

Tags: Education

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