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State halts construction funding for colleges and universities

The State of Michigan has withdrawn final approval for construction projects at colleges and universities around the state. The uncertainty of the pandemic is chiefly responsible for the change in the State’s willingness to provide construction funding. Affected colleges and universities could opt to fund the projects on their own. WCC is among the institutions with a building plan on hold by the State.

The planned Advanced Transportation Center was budgeted to receive about $2M in state aid. The delay in construction funding is set to last a year, but some construction experts say that could delay publicly funded building projects much longer.

The delay in construction will raise the final cost of the projects. Inflation, materials and labor costs, and changes in the lending environment can all add to the bottom line. Ratings agencies like Fitch’s and Moody’s have both soured on loans to the higher education sector. This may not make it more difficult to find bondholders, but it will make borrowing more expensive. The ratings agencies see the higher education sector as a riskier investment.

Recovering from COVID-19 is a relatively short-term problem. The longer-term outlook predicts ongoing revenue problems for higher education. The increasing cost of education and the number of students who will enroll are making educators nervous.

Another issue yet to play out is the impact of the pandemic on state governments, which serve as the ultimate loan guarantors for state-funded institutions.

WCC construction funding comes from the students

WCC students should be worried. If the State of Michigan will delay construction funding for a longer term, the administration may opt to fully self-fund the ATC. WCC’s construction funding strategy hasn’t been kind to students for quite some time.

The Board of Trustees refuses to apply any critical thought to the administration’s funding requests. In fact, the current Board has never turned down a request for money from the current administration. (Even when those requests created a structural deficit for the College.) If the administration requests Board approval to pass the ATC costs on to WCC students, then WCC students will be paying for the ATC. It’s really just that simple.

Worse, the Administration has planned a nearly $30M repair and renovation project for the Student Center Building. WCC expected to receive partial funding for that project from the State. Following years of neglect, the SC Building repairs cannot wait much longer. While the renovations will largely meet the needs of the Administration, the students will pick up the tab.

Construction on campus, and the accompanying tuition increases, will reduce student enrollment and increase each student’s cost of attendance.

We need to get out from under the hands-off oversight the current Board provides. It is not helping Washtenaw County taxpayers or WCC students. In fact, it’s costing both of us a fortune.

Photo Credit: Ben Curthoys , via Flickr