State Budgets Present Challenge for New Higher Ed Buildings

Gary Paetau, Vice President, Carter

Atlanta (April 14, 2010) – Faced with major budget shortfalls, states, including Georgia, are making deep cuts in education, thus bringing to a virtual standstill new construction on academic buildings. We make the distinction here between academic buildings and other on-campus facilities because academic buildings produce no revenue in and of themselves, as opposed to student housing, athletic facilities or parking decks.

 AS-Alston-Student-Center This reduction in new construction is happening at a time when demand for higher education is growing. This is somewhat a result of the struggling economy. Students are choosing to stay in school longer or are trying to improve their skills through higher education while the economy continues to improve.

 

This growth is putting a strain on existing academic facilities. The existing facilities are also falling behind in terms of technology and building trends, which have changed drastically over the last decade.

 

For Carter, which has been in the business of building facilities for educational institutions since 1993, this challenge is a perplexing one, and one that is not easily answered by the private sector.  

To learn more, we invited education, government and finance leaders to a forum on the subject April 7. Joining the conversation were Mae Charles Barnes, Esq., Murray Barnes Finister LLP; Christine T. Holmes, Senior Vice President, Merchant Capital LLC; Corlis Cummings, Vice President for Business and Operations, Clayton State University;  John Hegman, Vice President for Business and Finance, Agnes Scott College (the Alston Student Center is pictured); Brad Alexander, Georgia 360 Public Affairs, Rob Nelson, Vice President for Finance, The University of North Carolina, retired; and Mara Holley, Regional Director, Government & Institutional Banking, Wells Fargo. Representing Carter were myself, John Jokerst, Michael Seton and Andy Feinour, who moderated the discussion.

Much of the discussion revolved around the challenges facing these institutions and the states, specifically on the funding side, including a restrictive state covenant that does not allow the university system to spend tuition dollars on facilities. But several ideas came to the forefront, including public-public partnerships, and how to achieve compromises to make the public-private partnerships more effective. 

In the end, we discussed a great many things, but the ultimate decision was made to continue the conversation and to revisit the challenges in the next few months. The goal is to continue to meet and work on solutions to these truly challenging issues, and to reach a consensus on the solutions. 

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