Council on Postsecondary Education Asset Preservation Projects Overview

Detailed overview of the statutory authority and process for approving asset preservation projects by the Council on Postsecondary Education. It discusses the involvement of CPE in certifying projects, average certification time, and the current status of various project certifications. The statutory authority for CPE's role in asset preservation project approval, operationalization of that authority, and the approval process for capital projects are also covered.

• Education
• Asset Preservation
• Statutory Authority
• Council on Postsecondary Education
• Capital Projects

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Presentation Transcript

1. Council on Postsecondary Education Asset Preservation Update Budget Review Subcommittee on Education September 18, 2024

2. Overview What is the statutory or regulatory authority for CPE s involvement in approving asset preservation projects? What is the process by which CPE certifies asset preservation projects for the institutions and OSBD? What is the average length of time it takes for CPE to certify asset preservation projects? What is the current status of 2022-2024 Asset Preservation Pool project certifications? What is status of 2024-2026 certifications? 2

3. Statutory Authority 3

4. Statutory Authority What is the statutory authority for CPE s involvement in the asset preservation project approval process? How has CPE operationalized that authority? 4

5. Statutory Authority Capital Project Approval KRS 164.020(11)(a) states that the Council on Postsecondary Education shall: review and approve all capital construction projects covered by KRS 45.750(1)(f), including real property acquisitions, and regardless of the source of funding for projects or acquisitions. It specifies that approval be consistent with the strategic agenda: Approval of capital projects and real property acquisitions shall be on a basis consistent with the strategic agenda and the mission of the respective universities and the Kentucky Community and Technical College System. 5

6. Statutory Authority Capital Project Approval (Cont d) The Council has operationalized its authority to approve capital projects in one of three ways: 1) Capital projects can be approved as part of the Council s biennial budget recommendation to the Governor and General Assembly; 2) Projects not included in the budget recommendation can be approved by the Council on an interim basis; and 3) The Council can choose to delegate authority to CPE staff to review and approve capital projects. Most asset preservation projects submitted to CPE have not been previously approved by the Council, which is why staff requested a delegation of authority to approve those projects 6

7. Statutory Authority Capital Project Approval (Cont d) Included in the 2024-2026 Budget of the Commonwealth, Volume II, published by OSBD: A list of specific asset preservation projects to be completed must be identified by each institution and certified by the Council on Postsecondary Education. On June 21, 2024, the Council approved a delegation of authority for CPE staff to review and approve planned capital projects funded from the 2024-2026 Asset Preservation Pool This authority helps expedite the expenditure and reimbursement process used by OSBD to distribute pool funds 7

8. Project Review Process 8

9. Project Review Process What is the process by which asset preservation projects are reviewed and certified, and pool funds disbursed? 1) The Council adopts guidelines for the review of projects funded from the asset preservation pool 2) Institutions submit project lists to CPE for review and certification 3) Those that comply with eligibility criteria are certified to OSBD 4) Institutions submit funding requests to OSBD as expenditures made 5) OSBD reimburses institutions for expenditures on projects that CPE has pre-certified 9

10. Project Review Process Council Guidelines In any given biennium, if funding is authorized for an asset preservation pool, Council staff works with campus officials and OSBD staff to develop a set of guidelines Those guidelines facilitate: Identification and certification of eligible projects (CPE staff) The processing of reimbursement requests (OSBD) Guidelines were developed and adopted for both the 2022-2024 and 2024-2026 asset preservation pools Both sets of guidelines were vetted through campus CBOs and presidents prior to adoption and supported by all stakeholders 10

11. Project Review Process Project Lists Before seeking reimbursement, institutions submit lists of planned projects to CPE to determine eligibility. These listings include: A unique identifier, title, and description for each individual project; Building names and numbers associated with each project; The anticipated scope, state funds, and campus matching funds for each project; Source (or sources) of campus matching funds; and The anticipated start and completion dates for each project. Institutions can add to or modify project lists at their discretion 11

12. Project Review Process Eligibility Criteria The enacted 2024-2026 Budget of the Commonwealth (HB 6) stipulates that the Asset Preservation Pool: [P]rovides funding for individual asset preservation, renovation, and maintenance projects at Kentucky s public postsecondary institutions in Education, General, and state-owned and operated residential housing facilities. SB 91 (2024 RS) added that AP pool funds could be used for: [F]ixed asset pedestrian and student parking areas, and for the razing of university-owned buildings. 12

13. Project Review Process Eligibility Criteria(Cont d) CPE guidelines mirror language in the 2024-2026 budget bill and SB 91 in terms of eligibility criteria Specifically, CPE staff will certify individual projects that preserve, renovate, or renew: Education and General facilities, State-owned and operated residential housing facilities, Fixed asset pedestrian and student parking areas, Or that raze university-owned buildings 13

14. Project Review Process Reimbursement Requests As institutions undertake projects, they can begin requesting reimbursement from the Asset Preservation Pool Requests for reimbursement of asset preservation expenditures are submitted to OSBD (with copies to CPE) Request submissions include a certification letter with expenditures listed by project The letter identifies the total amount of project expenditures made during the request period, state funds requested, and campus matching funds Requests can be submitted on an ongoing basis, as asset preservation expenditures are made (i.e., the timing is flexible) 14

15. Project Review Process Distribution of Pool Funds OSBD staff distributes Asset Preservation Pool funds to institutions using an expenditure and reimbursement approach As expenditures are made, institutions submit reimbursement requests to OSBD with expenses listed by project OSBD staff reviews requests and remits funds to institutions for projects that CPE has pre-certified are eligible for reimbursement Once campus spending has been verified, OSBD staff will transfer funds to a requesting institution s Capital Projects Pool account Then institutions can request Statewide Accounting to wire them the funds 15

16. Processing Timeline 16

17. Processing Timeline What is the average length of time it takes for CPE to certify asset preservation projects? 17

18. Processing Timeline Five Step Process Processing time varies depending on size and complexity of request and sufficiency of documentation provided by the institution One to Two Weeks April 12 June 21 Step 2 Step 3 Step 5 Step 1 Step 4 General Assembly authorizes funds for asset preservation CPE staff works with CBOs and OSBD to develop guidelines OSBD reviews reimbursement requests Those that have been pre-certified by CPE are funded Campuses undertake planned projects Submit requests for reimbursement to OSBD as expenses are incurred Campus officials plan preservation projects Submit project lists to CPE staff using provided template CPE staff reviews planned project lists Requests additional information if needed CPE certifies eligible projects to OSBD 18

19. Current Status 19

20. Current Status What was the total appropriation for asset preservation in the 2022-2024 biennium? How much of that total has been certified? What was the total appropriation for asset preservation in the 2024-2026 biennium? How much of that total has been certified? 20

21. Current Status 2022-2024 Asset Preservation Pool In the enacted 2022-2024 state budget (22 RS, HB 1), the General Assembly authorized $700.0 million in General Fund supported bond funds for asset preservation projects Of that amount, $16.5 million was authorized for a stand-alone asset preservation project at KCTCS and $683.5 million was appropriated for an Asset Preservation Pool As of August 31, 2024, projects totaling $659.1 million out of $683.5 million or 96% have been certified as eligible for reimbursement 21

22. Current Status 2024-2026 Asset Preservation Pool In the enacted 2024-2026 state budget (24 RS, HB 6), the General Assembly authorized $656.0 million in General Fund supported bond funds for asset preservation projects Of that amount, $563.0 million was placed in an Asset Preservation Pool As of August 31, 2024, projects totaling $96.0 million out of $563.0 million or 17% have been certified as eligible for reimbursement It is important to keep in mind that funds for the current biennium have only been available for a little over two months Only project expenditures made after July 1, 2024, are eligible to be reimbursed from the 2024-2026 asset preservation pool 22

23. Processing Timeline Projects Certified to Date (2024-2026) Number of Projects Total Project Scope Date Date Certified to OSBD Time to Certify Campus Match (25% Research) Institution State Funds Submitted UofL 41 $86,132,000 $68,905,600 $17,226,400 7/16/2024 8/15/2024 ~1 month KCTCS (1) 2 $8,900,000 $8,900,000 $0 8/13/2024 8/22/2024 ~1 week MoSU 7 $14,050,000 $14,050,000 $0 8/21/2024 8/29/2024 ~1 week NKU 3 $4,100,000 $4,100,000 $0 8/21/2024 8/30/2024 ~1 week Total 53 $113,182,000 $95,955,600 $17,226,400 (1) Does not include two KCTCS projects totaling $31,395,000 that are currently pending Council approval. If approved, it will bring the total amount certified to $127,350,600 or 23% of the total 2024-2026 Asset Preservation Pool. 23

24. Current Status State Investment in Postsecondary Facilities State Investment in Postsecondary Education Facilities Biennial Totals 2008-10 Through 2024-26 Between 2008 and 2022, the state spent $280.7 million on facilities renovation and renewal (Dollars in Millions) $1,100 $1,000 $939 $900 $795 $800 $700 This represented about 3.8% of the projected $7.3 billion system total asset preservation need $656 $700 $600 $500 $368 $400 $300 $240 $200 Since 2022, the General Assembly has authorized $1.36 billion for asset preservation projects $100 $40 $24 $22 $19 $8 $0 $0 $0 $0 $0 $0 $0 $0 2008-10 2010-12 2012-14 2014-16 2016-18 2018-20 2020-22 2022-24 2024-26 Asset Preservation New and Expanded Space Source: Kentucky Budget of the Commonwealth, multiple biennia. 24

25. Questions? Twitter: CPENews and CPEPres Facebook: KYCPE Website: http://cpe.ky.gov