SENATE BILL REPORT

2SSB 5383

BYSenate Committee on Ways & Means (originally sponsored by Senators Zimmerman, Saling, Gaspard, Rinehart and Lee)

Creating the capital projects incentive program for community colleges.

Senate Committee on Education

Senate Committee on Ways & Means

Senate Hearing Date(s):March 9, 1987; February 3, 1988; February 5, 1988

Majority Report:  That Third Substitute Senate Bill No. 5383 be substituted therefor, and the third substitute bill do pass.

      Signed by Senators McDonald, Chairman; Craswell, Vice Chairman; Bauer, Cantu, Deccio, Fleming, Gaspard, Johnson, Lee, Moore, Newhouse, Saling, Vognild, Warnke, Williams, Wojahn, Zimmerman.

Senate Staff:Lynn French (786-7715)

                  February 9, 1988

AS REPORTED BY COMMITTEE ON WAYS & MEANS, FEBRUARY 5, 1988

BACKGROUND:

The two major sources of capital funds for community colleges are the building fee portion of tuition and fees which were set in 1971-72 at $127.50 per year, and the general fund.  Both sources are used to retire general obligation bonds, the proceeds of which are appropriated by the Legislature.  It has been suggested that community colleges be encouraged to seek additional revenue from private contributors to help meet capital needs.

The Distinguished Professors program has been suggested as a model for creating a matching fund program to help meet community college capital funding needs.  It was created by the Legislature in 1985 to help four-year colleges and universities create endowments for distinguished scholars.  That program allows institutions to apply for $250,000 from trust funds when such institutions can match state funds with equally pledged contributed private donations.  This matching arrangement enables the state to double the impact of each dollar raised and spent in that program.

SUMMARY:

The capital projects incentive program for community colleges is created to encourage public two-year colleges to raise money from private sources for capital construction projects.  The program is intended to provide an additional funding source for capital projects but not to replace any other means of funding these projects.  The program is administered by the State Board for Community College Education (SBCCE) which will provide grants when funds are available to community colleges that apply for grants, demonstrate a need for capital projects, agree to conditions established by the SBCCE, obtain explicit project approval before any private fund-raising efforts, and match state funds with equal amounts of money pledged or contributed from private sources specifically for capital projects.

The SBCCE is responsible for adopting necessary rules, establishing a screening committee to evaluate proposals, publishing criteria for evaluating proposals, actively soliciting grants and providing information to community colleges about the program, establishing reporting and monitoring requirements for grant recipients, and approving projects prior to any fund-raising efforts.  The SBCCE is responsible for awarding grants in the order they are approved.  These grants must be equal to amounts contributed from private sources.  The SBCCE is prohibited from reducing the amount of promised grants and thereby distributing smaller grants to more projects.

Community colleges that receive funds for the capital incentive program may deposit such funds in their local funds but must use the funds only for purposes specified in their grants.

The SBCCE is empowered to receive and expend contributions to this program but must deposit all monies received in the capital projects incentive fund, which is assigned to the state treasurer.  The SBCCE authorizes all disbursements from the fund which is subject to allotment approval by the Office of Financial Management but does not require legislative appropriation for disbursement.

EFFECT OF PROPOSED THIRD SUBSTITUTE:

The third substitute bill allows equipment, land and materials to serve as private matching contributions, and it assures that the program established under the bill will not interfere with existing community college foundation and endowment programs.  In addition, the Legislature must appropriate the funds and authorize the projects under the program.

Appropriation:    none

Revenue:    none

Fiscal Note:      available

Senate Committee - Testified: WAYS & MEANS:  William Julius, Capital Budget Officer, State Board for Community Colleges