What UMass Boston And The MBTA Have In Common

According to a recent news story, Massachusetts Education Secretary Jim Peyser told the House Bonding Committee that “the state will use a new process to evaluate capital projects and allocate funds, starting with the fiscal 2019 capital budget. Under the framework, campuses will respond to a request for proposals and their plans will be reviewed by a committee that will make recommendations to the governor.”

This is a welcome development — a win for good government, UMass and taxpayers alike. 

Secretary Peyser noted that “uneven and episodic” maintenance has resulted in an “enormous deferred maintenance backlog that is getting worse, not better,” even going so far as to say that “the capital investment challenge facing higher education is similar to that of the MBTA.”

UMass’s capital planning and deferred maintenance problems are similar to the MBTA’s. When Pioneer stated as much a year ago, UMass President Martin Meehan bristled.

In a 2016 report, Pioneer Institute explained that the effect of UMass’s aggressive $3.8 billion capital expansion at its five campuses over the previous decade was an increase in the university system’s outstanding debt and future funding needs, even as it ignored deferred maintenance.  UMass’ maintenance backlog grew over this time from $2.7 billion to $3.3 billion.

UMass’s plans for its Boston campus were especially grandiose. The 2009 Campus Master Plan and the 2011 “Fulfilling the Promise” report on implementation of the strategic plan called for the campus to increase enrollment from 15,000 in 2009 to 25,000 by 2025.  According to UMass’s capital planning documents, it would require 41 construction projects costing $1.3 billion — a science complex, three academic buildings, two large dorms, two parking garages, a life science center, a sea wall and harbor walk, and a swimming facility — to achieve that goal.

The Master Plan would more than double the square footage of the university’s buildings, and this growth would be at the expense of addressing the $160 million substructure garage problem and other deferred maintenance on the campus.

This building spree was fully vetted and approved by the UMass Board of Trustees and President. Under UMass governance policies, the UMass capital plan requires approval of the University President and the Board of Trustees, as does any capital project with a total estimated cost greater than $2 million.

This policy of expansion before necessary maintenance has left UMass Boston in a particularly dire financial condition. The UMass Trustees, in their 2010-2014 Capital Plan for the Boston campus called for over half-a-billion-dollar capital investment in the campus, with only 17 percent of it going to deferred maintenance.

As early as the 2009 Master Plan process, a consultant to UMass Boston estimated that it would cost $160 million to repair the campus’s notorious substructure parking garage.  Not only did the university claim not to have funds to address the longstanding problems with the garage, but until its most recent FY2017-21 capital plan, UMass included only $15 million to address the $160 million substructure problem.

Now, seven years into its capital spending program, UMass Boston has all but exhausted its capacity to borrow. According to the UMass FY2017-2021 Capital Plan, even if UMass Boston achieves its expense reduction targets, it has maxed out its debt service-to-operating expense ratio of 8 percent for the year 2020.

With its capital finance resources now virtually exhausted, UMass Boston’s plans to expand campus enrollment to 25,000 headcount students in 2025— which would require a doubling of the campus’s assignable square feet of campus building space from 2009 to 2025 — has gone off the rails.  It has left the campus unable to address its current deferred maintenance backlog. UMass Boston’s future construction plans at this point are almost entirely dependent on state funding.

These issues were created by the UMass Trustees and the President. Secretary Peyser’s newly announced state process to evaluate capital projects and allocate funds is essential to putting order into UMass’ MBTA-like deferred maintenance and finance problems.

Greg Sullivan is Research Director at Pioneer Institute, a Boston-based think tank.