IU to defer renovation, rehabilitation costs

Due to decreased state funding for renovation and rehabilitation projects on Bloomington and other IU campuses, the University is currently facing roughly $700 million deferred maintenance for academic facilities.      

That number, including renovation and construction costs for campus auxiliary buildings such as residence halls and athletic facilities, adds to about $1 billion in total deferred maintenance costs for all of IU.

“It’s money that we have not spent, but that we need to spend in the next decade in terms of major renovations,” said Tom Morrison, vice president for capital planning and facilities. “Our challenge is to find how we can finance that over time and not create a fiscal liability for our institutions.”

Renovation and rehabilitation funding, commonly referred to as R&R, includes any maintenance, repair, renovation or construction on IU academic, administration and research facilities — whether it be a new lab in Swain Hall, a repaired roof on a library or a renovated classroom.

“The problem is that it’s a ‘pay me now or pay me later’ problem,” Morrison said. “If the roof on your house needs to be replaced, you try to replace it now. If you don’t have the money to do that, when the roof actually leaks, it’s going to be a lot worse. It’s the same thing with University R&R projects, just add zeroes on the cost.”

In the past 10 years, state funding for R&R projects gradually decreased until all
allocated funding was completely eliminated starting in fall 2011.

Following the cut, the Board of Trustees approved and implemented a temporary R&R student mandatory fee of $180 per Bloomington student, which is still in effect. Student mandatory fees include health, activity and technology fees that students pay each semester.

As major projects such as restoration of historic buildings in the Old Crescent have become a priority on the Bloomington campus by IU President Michael McRobbie,

Morrison said finding ways to fund these projects has been a major challenge.

The Bloomington campus alone spends roughly $25 million per year on renovation and rehabilitation projects. Of the $700 million being deferred, Bloomington accounts for roughly $480 million.

“The problem is we should be spending about twice that number on an annual basis,” Morrison said.

The value of academic buildings in Bloomington is about $4 billion. Morrison said the University should be spending at the very least 1 percent of that total on R&R, which would equal $40 million per year.

“We’ve figured out how to have a band-aid approach, but we’re not really healing the wound,” Morrison said. “What we want is when you go into a class, you’re not thinking about the building around you. How that happens is that we need to invest in these systems.”

Still, he said, there is hope for renewed state funding. The current Indiana state budget for fiscal years 2014 and 2015 recently passed by the House of Representatives includes revived funding for R&R projects. But with the Senate still left to approve of the bill, the question of whether state funding will return is up in the air.

“We hope there’s a good end to the story,” Morrison said. “There seems to be a
renewed interest in protecting the value of the buildings. We’re grateful that the House of Representatives made that investment.”

Whether students will still pay a mandatory fee for R&R, is not known. It will be determined this summer when the Board of Trustees approves the final budget.

The specifics of where and when these deferred maintenance projects are completed
is still unclear, Morrison said. The only inevitable factor is that major renovations — such as restoration of Franklin Hall, new labs in Swain Hall and a series of projects at Wells Library — need to be accomplished, eventually.

“We’ve got to figure out how we can finance them overtime,” Morrison said. “It doesn’t exist today, but the good thing is if you can spend an appropriation every year, you’re chipping away at it. You’re flowing in the right direction.”