Capital Planning

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• Capital Funding
• CSU Five Year Plan
• SJSU Capital Plan

Capital Funding Sources

​The California State University (CSU) system uses a variety of funding mechanisms to finance its capital projects, which include the construction, renovation, and maintenance of campus facilities. The selection of a particular funding method depends on factors such as the project's nature, urgency, available financial resources, and prevailing economic conditions.​ The funding sources are primarily utilized (with some notable exceptions) on growth projects that expand a campuses portfolio either for academic or other functions. The primary capital funding options are:​

• Systemwide Revenue Bonds (SRB)
  • The CSU issues SRBs to finance capital improvements across its campuses. The Bond program is managed by the Office of the Chancellor (Chancellor's Office or CO) and their Finance and Treasury team. These bonds are repaid using the university's revenue streams, such as student tuition and fees. The SRB program supports both academic and self-supporting projects, including student housing, and parking facilities.
• Commercial Paper (CP)
  • As a form of short-term financing, the CSU employs tax-exempt commercial paper to provide interim funding for capital projects until long-term financing, like SRBs, is secured. Like with the Bond program, this is managed by CO Finance & Treasury. This approach offers flexibility in managing cash flow requirements during project development. CP is considered a type of bridge financing that provides some level of flexibility to create more favorable loan conditions.
• General Obligation Bonds (GO Bonds)
  • These bonds are issued by the state of California and require voter approval. The funds raised are allocated for public projects, including higher education facilities. The repayment of GO bonds is guaranteed by the state's general fund, reflecting a commitment to public infrastructure investment. The last GO Bond was floated for voter approval (and failed) in 2020.
• Lease Revenue Bonds
  • Authorized by the state Public Works Board, these bonds finance specific acquisition and construction projects approved by the Legislature. Repayment is typically sourced from lease payments made by the CSU for the use of the financed facilities.
• CSU and Campus Reserves
  • The CSU may allocate cash reserves, derived from sources such as operating fund reserves, tuition fees, interest earnings, and donor contributions, to fund capital projects directly. This method avoids incurring debt and is used when sufficient reserves are available. For larger projects (>$10 million), most campuses will combine this funding source with another source to implement a project. 

Maintenance - Preventative and Deferred

Addressing maintenance projects, whether preventative or deferred, within the California State University (CSU) system is a significant challenge, given the extensive backlog of necessary repairs and upgrades across each of the 23 universities. Most maintenance needs are considered, and are referred to, as deferred maintenance since they have been postponed past suggested timing due to recurring budget constraints delaying their implementation. SJSU’s deferred maintenance backlog has been growing exponentially over time. With an older portfolio of buildings (the current weighted age is over 47 years old) the need is significant and growing. Most systems are designed for a useful life of 20 years. Many of SJSU’s are operating at two to three times that long, putting the university and its programs at risk. 

Funding sources for deferred maintenance, include the following. However, only the final source has been regularly allocated in recent years. 

• State Appropriations
  • The CSU system receives funding from the state of California, which can include allocations specifically designated for maintenance and infrastructure projects. However, these funds are often limited and may not fully address the extensive deferred maintenance needs.​
• Campus Operating Budgets
  • Individual campuses may allocate portions of their operating budgets to address maintenance issues. However, competing priorities and limited resources can restrict the amount available for deferred maintenance projects.​
• Systemwide Revenue Bonds (SRBs)
  • As previously mentioned, the CSU issues SRBs to finance various capital improvements. While typically used for new construction or major renovations, a portion of these funds can be directed toward addressing deferred maintenance, particularly when bundled with larger capital projects.​
• One-Time State Funding Initiatives
  • Occasionally, the state may provide one-time funding to address deferred maintenance across public university systems. These allocations are not consistent and depend on the state's budgetary situation and legislative priorities.​  Past examples have included funding for energy efficiency and affordable student housing.  ​
• Student Success, Excellence and Technology Fee (SSETF)
  • In fall 2012, the university passed a mandatory student fee (like many other CSUs) to cover funding gaps in support of student success. This mandatory fee is separated into three components: Instructional-Related Activities (IRA), Course Support, and Student Success. In some cases this fee is used for fixture, furniture, equipment and technology upgrades in support of instruction and related activities.
• Total Return Portfolio (TRP)
  • In recent years, the CSU system has utilized the Total Return Portfolio (TRP) to address deferred maintenance and capital improvement needs. The TRP funding source has been the only reliable source (albeit small) to be allocated in recent years. 

Student Success, Excellence and Technology Fee (SSETF)

In 2012, SJSU established a mandatory fee as a mechanism to cover funding gaps in infrastructure investment. SSETF is used for the core purposes of continuing existing miscellaneous course requirements and instructionally-related programs and activities; provide enhanced and comprehensive support that leads to improved graduation and retention rates for all students; and provide innovative and effective technology-enabled learning experiences for students. Revenue from this fee cannot be used for general salary and benefits increases or for activities not related to aforementioned specific goals. In March of each year, the university puts out a Call for Proposals for one-time funding to support investment in projects achieving these goals. SSETF funds are intended to be used for the following six priorities. 

• Student Success Services and Graduation Pathways
• Academic Technology
• 21^st Century Teaching Spaces
• Retention and Graduation
• Course Support
• Instructionally-Related Activities

The university maintains a record of the projects funded each year: Student Success, Excellence, and Technology Fee Fund Information

Total Return Portfolio (TRP)

The TRP is an investment portfolio managed by the CSU, with annual distributions allocated to campuses specifically for general fund (sometimes referred to as “state-side”) supported, academic and other core services, deferred maintenance, and capital improvements. It is intended to be used for construction-related activities and may not be used for studies and/or ongoing operations, in accordance with California Education Code, Section 89726. Projects may include projects like renovating, improving, altering, and modifying land, buildings, other structures, nonstructural improvements of land, and fixed equipment. It is not intended for use of software and/or studies that are purely speculative in nature. Each year, the CSU Investment Advisory Committee determines the TRP distribution based on factors such as past General Fund allocations and total revenue collection. SJSU has received the following allocations for the last six years: 

Projects exceeding the minor capital threshold must adhere to the Delegation of Capital Outlay Management Authority requirements. TRP serves as a critical resource for campuses to address maintenance backlogs and infrastructure improvements, supplementing other funding sources such as state appropriations and Systemwide Revenue Bonds which have fallen woefully short in the last decade as infrastructure ages and pressures on our buildings continue to increase.

Project prioritization for TRP Funding Allocation - Criteria

• Qualified Project
  • Unlike some funding sources, TRP funding is restricted to those uses that are considered general fund functions and is intended to be used on construction activities targeting primarily deferred maintenance.  While these funds can be leveraged to support capital improvements, its primary purpose is to make incremental improvements towards deferred maintenance projects.
• Scope of Project
  • With limited funding allocated each year, it is important that the scope be such that, if funded, it can be reasonably completed with the TRP funding allocated, and other campus sources identified at that time.
• Urgency
  • How urgent is the project to meet university goals and/or avoid disruption?
• Improved Efficiency
  • How might the project help to achieve efficiency through reductions in cost, either through reduced energy use or reductions in reactive labor costs?
• Support of Campus Priorities
  • How well does the scenario support the goals of Transformation 2030? (Engage and Educate, Excel and Lead, Grow and Thrive, Connect and Contribute, Rebuild and Renew)
• Campus Transformation
  • How much will the project transform the physical campus, building and/or university organization? This may be organizationally, operationally, or physically.
• Community Impact
  • How positively will the project impact those beyond the campus community, including those neighborhoods directly adjacent to the campus or those that regularly visit the campus for university-sponsored events?
• Supplemental Funding Availability
  • How might the project better position the university to be able to attract supplementary fundings sources and/or partnerships to help stretch dollars invested.

CSU Five-Year Capital Outlay Program

The primary objective of the Five-Year Plan for the California State University (CSU) is to provide facilities appropriate to the CSU’s approved educational programs to create environments conducive to learning, and to ensure that the quality and quantity of facilities at the 23 universities serve the students equally well. The universities and the CSU Office of the Chancellor (Chancellor’s Office or CO) have enlisted broad participation by administrators, faculty, and students in the development of the Five-Year Plan. The Five-Year Plan has the following basis: 

1. Approved Academic Master Plans
2. Approved Campus Physical Master Plans
3. Full-Time Equivalent Student Allocations
4. Approved Space and Utilization Standards
5. Space and Facilities Database
6. Phasing Out of Leased and Temporary Facilities
7. Estimates of Cost Based on the ENR California Construction Cost Index 10461 and EPI 5000 
8. Seismic Policy and Program
9. Sustainable Building Practices
10. Projects Included in the Five-Year Plan

Read the Latest Five-Year Plan [pdf]

SJSU Capital and Physical Planning

Capital Planning at San José State University involves the systematic approach to identifying, prioritizing, and documenting projects relative to the physical environment to support the university's mission and goals. This process is iterative with updates typically happening annually, and as needed, as opportunities arise. This process and its implementation is what is required for the university to achieve the goals and projects set forth in the Campus Master Plan. The full process includes a combination of strategic planning, needs assessment, financial analysis, and decision-making to ensure that the university creates a plan that is strategic to meet its evolving needs. The following is a general description of the capital planning process

1. Strategic Vision and Planning (Biannual) 

The process begins with revisiting and aligning capital projects with the university's long-term mission, goals, and strategies. This includes considering future student enrollment, academic program changes and growth, technological advancement, strategic investment, sustainability, and other university or system initiatives. The foundation of this part of the planning process is the Campus Master Plan, but regular updates (typically biannually) are necessary to make sure that the campus maintains focus on achieving its highest priorities.

2. Campus Engagement & Outreach (Annual)

• Facility Conditions Assessment (FCA): Facilities Development & Operations (FD&O) maintains and regularly updates a campuswide FCA database. This database allows the university to track where systems investments may be needed next and to help advise where investments may be most necessary.  
• Stakeholder Input & Engagement: Each year, FD&O reaches out to each of the Campus Divisions to solicit feedback/information on their capital planning priorities for the following five year horizon. These meetings typically begin near the start of the fiscal year (August) to allow sufficient time to fully assess the proposal prior to the following fiscal year. This may include follow-up input from various campus departments, including academic, administrative, and student services, as information is gathered to ensure that all university needs are considered.

3. Project Identification and Prioritization

• Project Proposals: Based on the Campus Engagement & Outreach phase, a comprehensive list of potential capital projects will be developed and refined, these projects will include all major capital projects ranging from new buildings and renovations to infrastructure upgrades.
• Prioritization: Projects will then be prioritized based on factors such as urgency due to life safety, access or other concerns, cost, impact on the university's mission, return on investment, and alignment with strategic goals. Depending on the identified funding source, further detail and/or criteria may be applied that might influence the prioritization. 

4. Detailed Analysis

Near term projects (years 1 - 3) will engage in a detailed study to fully articulate the purpose, scope and need for the project studied. The type of study may vary based on the category, but may include a market demand analysis, feasibility study, programming study, or other analysis as required. This analysis will be managed as a partnership between FD&O and the sponsoring division.  

5. Financial Planning

• Budget Development: For each proposed project, detailed cost estimates are created. This includes initial construction costs, operating and maintenance costs, and the potential for revenue generation (e.g., through auxiliary services).
• Funding Sources: The university will consider various funding options for capital projects. These may include bonds, grants, philanthropy, state funding, or strategic partnerships.
• Cash Flow and Debt Management: Financial models are developed to assess the cash flow implications of funding the projects, as well as any debt incurred. Universities typically have limited budgets and must ensure projects are sustainable within their financial capacity.

6. Approval and Governance

Once prioritized projects and financial plans are developed, the proposals are reviewed and approved by senior leadership and ultimately by the CSU Board of Trustees.

7. Continuous Review and Updating 

The capital planning process is purposefully cyclical and iterative, with continuous assessments and opportunities for further refinement. The university should be focused on priorities but flexible enough to consider new developments as they arise, such as with sudden changes in system funding priorities, student demographics or expectations or external economic factors. 

Capital Planning Selection Criteria 

The demand for capital investment is regularly expected to well exceed the availability of actual capital available to complete the work.  In order to prioritize projects, the following criteria were identified to help the campus to focus investment in areas of greatest potential need/impact. While the final decision is ultimately the responsibility of university leadership (the President and their cabinet), the following criteria will be utilized to provide an initial ranking of where a project may be prioritized.

• Support of Campus Priorities: How well does the scenario support the goals of Transformation 2030? (Engage and Educate, Excel and Lead, Grow and Thrive, Connect and Contribute, Rebuild and Renew)
• Urgency: How urgent is the project to meet campus goals and/or avoid disruption?  
• Improved Efficiency: How might the project help to achieve efficiency through reductions in cost, either through reduced energy use or reductions in reactive labor costs?
• Campus Transformation: How much will the project transform the campus, building and/or organization? This may be organizationally, operationally, or physically.
• Community Impact: How positively will the project impact those beyond the campus community, including those neighborhoods directly adjacent to the campus or those that regularly visit the campus for university-sponsored events.
• Supplemental Funding Availability: How might the project better position the university to be able to attract supplementary funding sources and/or partnerships to help stretch dollars invested.

The Five-Year Plan

Each year, the Office of the Chancellor sends out a “Call Letter” requesting information regarding each of the 23 universities' respective “Five-Year Plans”. Each university's plan is described in a series of prescriptively formatted and organized documents that the Capital Planning, Design and Construction (CPDC) of the Office of Chancellor uses to aggregate information for the purposes of communicating the information to the Board of Trustees (BOT), state Department of Finance (DOF), and Legislative Analyst’s Office (LAO). The document does represent a broad list of projects, but typically well exceeds the potential for available funds, and may be strategically organized by CPDC to use in communicating systemwide needs for funding. The CSU Five-Year Plan should be based on each universities' annually-developed Capital and Physical Plan, but may be adjusted to satisfy systemwide needs.