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Summary of estimated physical facilities costs, 1960 through 1970 Instructional

$12,900, 797, 950

$8, 413, 329, 600 3,083, 000,000

Additional students -
Graduate and professional school facilities_
Medical and dental.

$1, 143, 000, 000
Research...

1, 940, 000, 000 Replacements--Rehabilitation --

1, 004, 358, 180

400, 110, 170

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coST OF BUILDINGS NEEDED FOR ADDITIONAL STUDENTS The estimates in the above summary are based on the following computations: Instructional: Additional full-time students..

1, 952, 777 Less present additional capacity-

—200, 000

Net additional students requiring physical facilities--Times Square feet per student

1, 752, 777

X160

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Cost of buildings needing to be replaced

Instructional Gross area in square feet-

408, 275, 680 Percentage in need of replacement.

X 0.123

Residential 229, 925,000

X 0. 105

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Cost of buildings needing rehabilitation

Instructional Gross area in square feet-

408, 275, 680 Percentage in need of rehabilitation.--

X 0.098

Residential 229, 925, 000

X 0. 091

Area needing rehabilitation Cost per square foot--

40, 011, 017

X $10

20, 923, 175

X $10

Total cost

$400, 110, 170 $209, 231, 750 Graphic presentations derived from these same data are given in chart 1 and the top curve in chart 2.

CHART 1

ANNUAL NEED FOR PHYSICAL PLANT EXPENDITURES

HIGHER EDUCATION, BY FUNCTION, 1960-1970

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III. SOURCES OF FACILITIES FINANCING-PAST AND FUTURE

EXPENDITURES FOR HIGHER EDUCATION FACILITIES IN THE PAST

Fixpenditures for capital additions by colleges and universities increased rather steadily from 1949 through 1958, except for a slight dip (1952-53) caused by a curtailment of building supplies in the Korean war period. Capital expenditures estimated for 1959 indicate a tapering off from the rate of maximum construction which prevailed in the 3-year period, 1956-58.

In order to provide meaningful comparisons, the 9-year period, 1950–58, of: this 11-year period, 1949–59, has been separated into three equal parts to show the sharply increased burden assumed by the colleges and universities in recent years for the provision of physical facilities. Capital expenditures were as follows:

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More than $7.5 billion was spent by colleges and universities for capital additions during the 11 years, 1949–59, at an annual average rate slightly less than $683 million. More was spent during the 3-year period, 1956-58, than in the preceding 6-year period, 1950–55. Expenditures during these 11 years for buildings only were slightly in excess of $5.6 billion.

Over a period of time prior to 1949, colleges and universities spent an average of 75 percent of total capital costs for the construction of buildings and an average of 25 percent for other capital additions such as furniture and equipment, land, landscaping, and campus improvements (utility extensions, walks, roads, and parking areas). For the 11-year period, 1949–59, these other capital items amounted to about 33 percent of the cost of buildings. It is believed that the upward trend in these costs will continue and, as noted in the assumptions, will approximate 50 percent of the total cost of future construction.

SOURCES OF FINANCING USED IN THE PAST

Probably no other social institution receives funds from so large a variety of sources as does higher education. The construction of residential buildings during the 9-year period, 1951-59, of this 11-year period and the construction of auxiliary buildings during the 4-year period, 1956–59, was significantly enhanced by the college housing loan program. Up to December 31, 1959, 954 loans totaling about $936 million had been approved for residential and auxiliary facilities; bonds awarded to the Federal Government as of that date totaled $730,111,000. Since 1957 about $1 out of every $4 expended by colleges and universities for the construction of buildings has been obtained from the Federal Government under the college housing loan program.

The portion of the Office of Education's College and University Facilities Survey that dealt with sources of funds for the construction of buildings during 1951-55 showed that governmental appropriations provided the principal source of funds for the construction of instructional, research, and general buildings. The primary source for residential and auxiliary facilities was revenue bonds. In both instances, gifts and grants were the principal secondary source. Although sources of funds for capital additions, other than buildings, were not gathered in obtaining the data, it is assumed that the principal sources would be governmental appropriations or the revenue bonds, depending on whether the funds were to be used for instructional or residential purposes, and that gifts and grants would be the primary secondary source. Funds obtained from the Housing and Home Finance Agency under the provisions of the college housing loan program were not available for other capital purposes.

Additional data gathered by the Office of Education for its study, Higher Education Planning and Management Data, 1958–59, indicate changes in the proportion of funds obtained from various sources for the construction of buildings between the period 1951-55 and the academic year 1958–59. Table 1 indicates the trend toward reliance upon the college housing loan program for capital funds for the construction of residential and auxiliary facilities and a trend toward miscellaneous sources and direct tax levies for instructional, research, and general building funds. Of particular significance in table 1 is the percentage decrease, from the period 1951-55 to 1958–59, in the use of current funds for construction purposes.

EXPENDITURES AND SOURCES OF FUNDS FOR THE FUTURE

To meet the projected physical plant expansion needs described earlier will require greatly increased effort on the part of the American people. If only the present rate of expenditure were maintained throughout the decade, a deficiency of great proportions would develop.

TABLE 1.–Sources of funds used to finance capital facilities for the period 1951–55 and the year 1958–59

Residential and auxiliary

1958-59

1958-59

1951-55 average

Amount

Percent

Amount

Percent

Amount

Percent

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47.5

17, 747

13. 1

51, 039

11.0

6.9 1.4 2.6

.1

3, 116

1, 084
42, 809
18, 153
28, 178

9, 889 14, 495

2.3

.8
31.6
13.4
20.8

7.3
10.7

36, 457

5, 048
5% 721
200,038
40, 383
16, 263
61, 101

7.9 1.1 11.4 43. 2 8.7 3.5 13. 2

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(Dollar amounts are in thousands)

Combined total

Instructional, research, and general

Sources

1951-55 average

1958-59

1951-55 average

Total..

$395, 249

$1,050,000

$259, 778

100.0

$586, 950

100.0

$135, 471

100.0

141, 661

329, 840

123, 914

47.7

278, 801

Governmental appropriations and direct tax levies.
Bonds:

State and local obligation.
Institutional obligation
Revenue, non-HÉFA 1

Revenue, HHFA 1
Gifts and grants...
Current.
Other

18, 964
4, 156
6, 494

7.3
1.6
2.5

22, 080

5, 240
19, 303
18, 153
94, 421
28, 333
36, 058

76, 957
13, 265
67, 982
200, 364
186, 533

38, 567
136, 491

40, 500

8,217
15, 261

326
146, 150
22, 304
75, 390

66, 243
18, 444
21, 563

25.5
7.1
8.3

1 Housing and Home Finance Agency.

As shown in table 1, however, there is encouraging evidence that certain sources of support are growing, and there is ample reason to believe that they will continue to grow. The doubling of gifts and grants for capital facilities, for example, is an evidence of increasing support from the private sector of the Nation's economy, a form of support that can be expected to grow further. An effort has been made to project the future growth of support from existing sources, in order to measure better the actual extent of the facilities gap that may confront the Nation in 1965 and in 1970.

In table 2 are shown anticipated funds to finance capital facilities expansions to 1970, estimated on the basis of financing patterns followed from 1951 to 1959. The principal sources identified are State and local appropriations, gifts, and different types of borrowing. In making this projection, it has been assumed that sources that had declined in recent years would provide as much in the succeeding years as in 1959, that those increasing by an average of 10 percent or less per year from 1951 to 1959 would continue the same rate of increase, and that those that had increased at a greater rate than 10 percent would continue to increase 10 percent per year. This may be an optimistic viewpoint since it appears that investments in capital facilities have declined during the past year.

In this projection it was assumed that the college housing loan program, which has accounted for one-fourth of total expenditures for higher education construction during the past few years, will be extended at the rate of $250 million annually. The Congress has endorsed the principle of Federal assistance for both residential and academic facilities. Differences of opinion regarding the extent and method of Federal assistance have temporarily deferred action other than extension of the college housing loan program, but it seems likely at the time of this writing that additional Federal programs will be enacted. Direct Federal loans, direct grants for assistance in the retirement of debt, and matching grants are the three principal methods of Federal assistance that have been proposed.

In addition to general construction assistance there are several other established forms of Federal assistance in the construction of academic and/or related facilities. These include: (1) Matching funds for the construction of hospitals connected with colleges and universities under the Hospital Survey and Construction Act of 1946 (Hill-Burton program); (2) disposal of surplus properties—both real and personal-to public and private institutions on a nominal cash and/or donation basis; (3) grants-in-aid to public and private institutions for science research facilities, administered through the National Science Foundation; and (4) grants-in-aid to public and nonprofit institutions for constructing and equipping facilities for research in the sciences related to health (Health Research Facilities Act of 1956).

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