ACTION KS 2018-2020 BIENNIAL BUDGET Agenda Item J-4 BUDGET REQUEST September 15, 2017 Recommendation The KS Board of Regents approve the 2018-20 Biennial Budget requests, operating and capital, for KS to be submitted to the Council on Postsecondary Education (CPE). Statutorily, KS must submit its requests, operating and capital, by November 15, 2017. The KS operating and capital requests are developed in cooperation with the CPE guidelines. Operating Funds Request The Biennial Budget request for operating funds for KS per CPE guidelines are as follows: 2017-18 2018-19 2019-20 Base Appropriation $181,605,000 $181,605,000 $181,605,000 Performance Funding - 1. Performance Funding - Inflationary Increase* 2. Student Performance Metrics - Growth in Outcomes - 4,379,400 8,758,800 - - 4,159,700 Dual Credit Course Expense** - 11,700,000 11,700,000 Workforce Trust Funds*** - 5,000,000 5,000,000 Competitive Workforce Initiative**** - 19,100,000 19,100,000 KERS/KTRS Pension Support***** - 3,300,000 2,300,000 Total** **** $181,605,000 $225,084,400 $232,623,500 * Assumes that the State funds half of inflationary cost increases each year of the upcoming biennium, calculated by applying a 2.0% annual inflation factor to 2015-16 Educational and Related spending, and that the other half of the cost increases are funded with net tuition and fee revenue. Distribution of these funds would not be growth dependent, but distributed in their entirety, regardless of whether outcome levels increase, decrease, or remain the same. **Dual Credit Course Expense: KS is requesting consideration for funding to support the increasing costs of dual credit. The request for support is calculated by totaling expenses and foregone tuition and fees based on FY 2016-17actuals and adding in the FY 2017-18 tuition rate increase (3.85%). 147
*** CPE anticipates inclusion of a request of $5.0 million in bond funds earmarked for KS within the request for Bucks for Brains. The funds would establish a Workforce Endowment with KS to provide a dollar for dollar match. **** KS is requesting recurring funding to target the areas of Health Care, Advanced Manufacturing, Transportation/Logistics, Business Services/Information Technology, and Construction/Trades. As the only higher education institution in Kentucky statutorily mandated to provide workforce education and training, KS has a pivotal role in addressing Kentucky s skilled labor shortage and meeting the needs of business and industry. ***** This request reflects consideration for the fact that state pension costs continue to escalate at an ever-increasing rate. Discussion of increases as high as 66 percent for the KERS could occur by the end of 2018-2020 without pension reform. To offset this possible increase, KS assumed a KERS increase of 10.53% in FY 2019 and 6.0% increase in FY 2020. KS assumed a 3.0% increase for KTRS in FY 2019 and a 3.0% increase in FY 2020. ******Total reflects anticipated achievement of all performance funding measures, workforce trust funds, competitive workforce initiative, and KERS/ KTRS pension support. Capital Funds Request The 2018-2020 Capital Request is summarized in Attachment A, Agenda Item J-4. Rationale 2018-20 Capital Budget Request $514,500,000 The KS President worked with the CPE President and the university presidents to develop a Biennial Budget operating funds request approach that: Recognizes the economic situation facing the Commonwealth of Kentucky in the 2018-20 biennium. Recognizes the need for an additional general fund appropriation for each institution of postsecondary education. Provides opportunity for the institutions and the CPE to cooperatively seek additional funding. The KS President has worked with the 16 KS college presidents and the CPE President and staff to develop a biennial capital budget request that fully meets KS s capital needs for the 2018-20 biennia. The proposed KS 2018-20 biennial capital budget request is based on the KS 2018-24 Six-Year Capital Plan. The KS 2018-24 six-year capital plan is compiled from project information submitted by the 16 KS college presidents through a Strategic Needs Analysis (SNA) submitted pursuant to statute to the Legislative Capital Planning Advisory Board. 148
The KS 2018-20 capital budget request: Is ordered by project priority for the Bond/General Funds projects and in alphabetical order for the Other Funds projects. Encompasses asset preservation, new construction, maintenance, renovation and expansion of existing facilities, capital equipment, and information technology equipment. Recognizes the importance of maintaining the existing physical plant in a condition that enables the colleges to provide quality educational programs and services. Emphasizes new construction projects that expand instructional capacity and new construction projects that are continuations of initiatives begun in previous biennia. Consists of 57 projects, resulting in a KS 2018-20 capital budget request of approximately $515 million. The requests that follow are items developed in consultation with the KS President s Leadership Team and CPE Staff. KS s final requests, operating and capital, submitted in November to the legislature, governor and CPE, will depend on CPE Board approval at its September 11, 2017 meeting. At the time of the development of this agenda item, CPE Staff s final recommendations concerning KS requests were not yet known. Therefore, all requests, operating and capital, discussed with CPE Staff are included. Background The KS Board of Regents has an opportunity to present Biennial Budget requests, operating and capital, for consideration by the Council on Postsecondary Education, the Governor of Kentucky, and the Kentucky General Assembly in developing the 2018-20 appropriations to institutions of postsecondary education. The recommended Biennial operating and capital budget request was developed by the KS President working with the CPE President, the university presidents, and the KS President s Leadership Team. 149
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Attachment A, Agenda Item J-4 SUMMARY 2018-2020 CAPITAL BUDGET REQUEST KENTUCKY COMMUNITY & TECHNICAL COLLEGE SYSTEM PRIORITY* COLLEGE PROJECT TITLE TOTAL BUDGET BOND/ GENERAL FUNDS RESTRICTED/ OTHER FUNDS BOND/GENERAL FUNDS PROJECTS 1 Big Sandy 2 Somerset CC 3 Systemwide 4 Jefferson 5 Big Sandy Construct Expansion of Pikeville Campus "Additional Funding" $28,000,000 $28,000,000 Construct Arts & Humanities "Additional Funding" $25,600,000 $25,600,000 KS Deferred Maintenance Pool $31,600,000 $31,600,000 Renovate Hartford Building - Downtown Campus $24,300,000 $24,300,000 Renovate Welding Shop- Mayo Campus $1,500,000 $1,500,000 6 Owensboro Renovate Southeastern Campus $3,700,000 $3,700,000 7 8 Elizabethtown Renovate Occupational Technical Building - Main Campus $14,900,000 $14,900,000 Southcentral KY Renovate Main Campus $18,100,000 $18,100,000 9 Maysville Renovate Administration Building - Main Campus $13,000,000 $13,000,000 10 Owensboro Renovate Downtown Campus $2,500,000 $2,500,000 11 Ashland 12 Henderson CC 13 Ashland 14 Southeast KY Renovate Main Building Phase II - College Drive Campus $36,500,000 $36,500,000 Student Center Relocation - Main Campus $2,200,000 $2,200,000 Renovate Roberts Drive North Campus $5,600,000 $5,600,000 Renovate Administration Building - Whitesburg Campus $3,800,000 $3,800,000 15 Madisonville CC Renovate Technical Campus $3,000,000 $3,000,000 16 Hopkinsville CC 17 Bluegrass Renovate Auditorium Building - Main Campus $3,800,000 $3,800,000 Construct Student Commons/Classroom Building - Newtown Campus $30,000,000 $30,000,000 18 Gateway Renovate Urban Campus $15,200,000 $15,200,000 19 Elizabethtown Renovate Student Center - Main Campus $5,100,000 $5,100,000 151
20 Madisonville CC 21 Maysville Construct Muhlenberg Campus Phase II $12,900,000 $12,900,000 Construct and/or Procure Postsecondary Ed. Ctr. Phase II - Rowan Campus $10,000,000 $10,000,000 22 Maysville Renovate Maysville Campus $5,000,000 $5,000,000 23 Hazard Roof Repairs - Collegewide $2,000,000 $2,000,000 24 Jefferson 25 Hopkinsville CC 26 Southeast KY 27 Bluegrass 28 Somerset CC 29 Somerset CC 30 Hopkinsville CC 31 Somerset CC 32 Henderson CC Renovate Seminary Building - Downtown Campus $20,000,000 $20,000,000 Renovate Academic Building - Main Campus $6,000,000 $6,000,000 Renovate Falkenstine - Cumberland Campus $5,000,000 $5,000,000 Renovate Administration Building - Newtown Campus $4,500,000 $4,500,000 Construct Addition to Building 2 - South Campus $4,500,000 $4,500,000 Replace HVAC Units - South Campus $2,200,000 $2,200,000 Construct Student Learning Center - Main Campus $10,000,000 $10,000,000 Construct Extension Center- Russell County Campus $18,800,000 $18,800,000 Renovate Sullivan Technology Center - Main Campus $4,600,000 $4,600,000 33 Big Sandy HVAC Upgrades - Collegewide $2,000,000 $2,000,000 34 Jefferson Construct Bullitt County Campus $17,900,000 $17,900,000 35 Owensboro 36 Somerset CC 37 Ashland 38 Southeast KY HVAC Replacement Phase I - Main Campus $4,400,000 $4,400,000 Construct Technical Education Building - Laurel North $27,100,000 $27,100,000 Renovate Learning Resource Center - College Drive Campus $4,800,000 $4,800,000 Soil Stabilization Godbey - Cumberland Campus $1,500,000 $1,500,000 39 West KY Renovate Main Campus $2,700,000 $2,700,000 40 Hazard 41 Jefferson 42 West KY Soil Stabilization Technical Campus $2,000,000 $2,000,000 Parking Lot Acquisition and Improvements - Collegewide $2,500,000 $2,500,000 Upgrade Sprinkler System - Main Campus $1,500,000 $1,500,000 152
43 Systemwide Information Technology Pool $9,500,000 $9,500,000 44 Systemwide KS CEMCS Upgrades $2,000,000 $2,000,000 RESTRICTED/OTHER FUNDS PROJECTS Big Sandy Dental Hygiene/Assisting Renovation - Mayo Campus $3,000,000 $3,000,000 Big Sandy Roof Replacements - Collegewide $1,700,000 $1,700,000 Bluegrass Advanced Manufacturing Expansion - Danville Campus $5,000,000 $5,000,000 Elizabethtown Leitchfield Campus Expansion $7,400,000 $7,400,000 Fire Commission Construct and/or Procure Fire Commission System Office Bldg. $6,000,000 $6,000,000 Fire Commission Fire Commission Driver Simulator $1,000,000 $1,000,000 Fire Commission Fire Commission Fire Trucks $600,000 $600,000 Fire Commission NRPC Parking Lot $2,000,000 $2,000,000 Somerset CC System Office Replace Meece HVAC - North Campus $2,000,000 $2,000,000 Acquisition of System Office Building $4,000,000 $4,000,000 Systemwide KS Property Acquisition Pool $5,000,000 $5,000,000 Systemwide KS Equipment Pool $5,000,000 $5,000,000 Systemwide Energy Savings Performance Contracts $20,000,000 $20,000,000 2018-2020 TOTALS $514,500,000 $451,800,000 $62,700,000 153
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