Despite Massive Budget Cuts, There’s a Building Boom in U.S. Higher Education

A multibillion-dollar building boom is under way at U.S. universities and colleges—despite budget shortfalls and endowment decline.

Some $11 billion in new facilities have sprung up on American campuses in each of the last two years—more than double what was spent on buildings a decade ago, according to the market-research firm McGraw-Hill Construction—even as schools are under pressure to contain costs.

“You can go into any community and talk to somebody whose son or daughter either can’t get in or can’t finish [college] because they can’t get this or that course,” says David Wolf, cofounder of the Campaign for College Opportunity, which lobbies for higher education in California. “Meanwhile, they go on campus and there’s all that fresh cement. That’s embarrassing, and it’s wrong.”

Much of the spending is occurring at cash-strapped public universities.

The University of California system has $8.9 billion in construction going up at its 10 campuses and five medical centers, and the California State University system has $161 million. Since 2008, California has cut $2.65 billion in operating money from its public universities, which have responded by reducing enrollment, dramatically increasing tuition and laying off employees. At UC campuses, student fees rose 18 percent this year. Since the beginning of the fiscal crisis, 4,400 employees have been laid off and 3,570 positions have been eliminated in the UC system.

More than $384 million in projects are in process and another $515 million are in the planning and design stages at the University of Buffalo, part of the State University of New York, a system whose budget has been cut by $1.1 billion over the last three years. Virginia Tech has $696 million in construction newly finished, under way or ready to start, and the University of Nebraska has nearly $600 million.

While critics concede that some of the construction is justified—at jam-packed community colleges, for instance, where enrollments are rising—many new buildings are going up on campuses just because donors want their names immortalized, university presidents like to leave legacies of brick and mortar, and admissions directors are battling for applicants they’re convinced are lured by shiny new amenities.

“People at universities want to leave a legacy, and you can leave a legacy in terms of improved rankings, you can leave a legacy in winning national football championships, and you can leave a legacy by building a lot of buildings so that people for decades will come to the campus and say, ‘Look at the buildings President X left,’ ” says Richard Vedder, director of the Center for College Affordability and Productivity, an independent national research organization. “Whereas money put into things like scholarships and salaries [is] less visible.”

The universities respond by pointing out that much of the ongoing construction was already in the pipeline before the 2008 economic downturn.according to the state’s Legislative Analyst’s Office.

“People discuss bond money as if it’s free money that isn’t coming out of the taxpayers’ pockets, and that’s exactly where it is coming from,” says David Kline, spokesperson for the California Taxpayers Association.

New food courts, dorms, gyms and other facilities are paid for out of student fees, which also are increasing.reported last summer that almost all California campuses could accommodate more students using existing space and scheduling more morning, evening, weekend and summer classes. And that report covered a period that ended before the state’s public institutions reduced enrollment by a combined 165,000 places last year alone because of budget cuts.

“It does point to a lack of focusing on the key priority, which is to educate the students in the most cost-effective ways,” Kline says.

Wolf sees the situation as a symptom of what he calls the “ossification” of America’s universities and colleges—their unwillingness to change the way they do things in the face of new realities by, for example, canceling or postponing construction.

“There’s no evil force on every campus that is creating what appears to be inefficiency and wasteful behavior,” he says. “What it is, is the result of a combination of things going on in a period of extraordinary change, when old systems need to be reexamined, and aren’t being reexamined. And you sum all that up and you get a situation that doesn’t make any sense.”

Lindsay Hogan, an economist at McGraw-Hill Construction, says there’s no sign that the building boom will stop. It may even accelerate. Philanthropy is rebounding, she says, “which has helped some colleges move forward with projects that were in the pipeline.”

But she also warns that, as state legislatures become stingier about paying for new buildings, public universities are shouldering increasing proportions of construction debt themselves, risking their bond ratings—and, if those bond ratings are lowered, facing even higher interest costs as a result.

This story was produced by The Hechinger Report, a nonprofit, nonpartisan education-news outlet based at Teachers College, Columbia University, in partnership with California Watch, where a version originally appeared.

Jon Marcus

Jon Marcus is a higher education editor at the Hechinger Report, a nonprofit, nonpartisan education news outlet based at Teachers College, Columbia University.