"NEW SECTION.  Sec. 1   The legislature finds that the state's public four-year institutions and the higher education coordinating board have made progress in developing a process to create a single prioritized list of capital project requests as required under RCW 28B.76.220. The legislature also finds that this process requires further refinement to achieve the state's policy objectives as outlined in the higher education coordinating board's strategic master plan for higher education in Washington. The legislature further finds the goal of creating additional, innovative facilities and programs that meet the learning needs of students throughout the state in a timely and cost-effective fashion requires a new approach to facility prioritization that emphasizes strategic planning. The legislature therefore intends to establish a new process for prioritizing capital project requests by the four-year institutions that utilizes the expertise and government- wide perspective of the office of financial management, and that is based upon the model that has been used successfully by the community and technical college system. The new process must emphasize objective analysis, a statewide perspective, and a strategic balance among facility preservation, new construction, and innovative delivery mechanisms. The legislature further recognizes that institutions of higher education are likely to require substantial new capital investments in order to continue to provide a wide range of high quality programs to students and the community, and that the state's ability to provide such resources is constrained by increasing capital expenditure needs within the K-12, public safety, social services, and community economic development arenas. The legislature therefore intends to identify and assess potential alternative means for increasing the capacity of public higher education institutions to meet the demands of the twenty-first century.

NEW SECTION.  Sec. 2   (1) By October 15th of each even-numbered year, the office of financial management shall complete an objective analysis and scoring of all capital budget projects proposed by the public four-year institutions of higher education and submit the results of the scoring process to the legislative fiscal committees, the higher education coordinating board, and the four-year institutions, except that, for 2008, the office of financial management shall complete the objective analysis and scoring by November 1st. Each project must be reviewed and scored within one of the following categories, according to the project's principal purpose. Each project may be scored in only one category. The categories are:
     (a) Access-related projects to accommodate enrollment growth at main and branch campuses, at existing or new university centers, or through distance learning. Growth projects should provide significant additional student capacity. Proposed projects must demonstrate that they are based on solid enrollment demand projections, more cost-effectively provide enrollment access than alternatives such as university centers and distance learning, and make cost-effective use of existing and proposed new space;
     (b) Projects that replace failing permanent buildings or renovate facilities to restore building life and upgrade space to meet current program requirements. Facilities that cannot be economically renovated are considered replacement projects. Renovation projects should represent a complete renovation of a total facility or an isolated wing of a facility. A reasonable renovation project should cost between sixty to eighty percent of current replacement value and restore the renovated area to at least twenty-five years of useful life. New space may be programmed for the same or a different use than the space being replaced or renovated and may include additions to improve access and enhance the relationship of program or support space;
     (c) Major stand-alone campus infrastructure projects;
     (d) Projects that promote economic growth and innovation through expanded research activity. The acquisition and installation of specialized equipment is authorized under this category; and
     (e) Other project categories as determined by the office of financial management in consultation with the legislative fiscal committees.
     (2) The office of financial management, in consultation with the legislative fiscal committees and the joint legislative audit and review committee, shall establish a scoring system and process for each four-year project category that is based on the framework used in the community and technical college system of prioritization. Staff from the state board for community and technical colleges, the higher education coordinating board, and the four-year institutions shall provide technical assistance on the development of a scoring system and process.
     (3) The office of financial management shall consult with the legislative fiscal committees in the scoring of four-year institution project proposals, and may also solicit participation by the joint legislative audit and review committee and independent experts.
     (a) For each four-year project category, the scoring system must, at a minimum, include an evaluation of enrollment trends, reasonableness of cost, the ability of the project to enhance specific strategic master plan goals, age and condition of the facility if applicable, and impact on space utilization.
     (b) Each four-year project category may include projects at the predesign, design, or construction funding phase.
     (c) To the extent possible, the objective analysis and scoring system of all capital budget projects shall occur within the context of any and all performance agreements between the office of financial management and the governing board of a public, four-year institution of higher education that aligns goals, priorities, desired outcomes, flexibility, institutional mission, accountability, and levels of resources.
     (4) In evaluating and scoring four-year institution projects, the office of financial management shall take into consideration project schedules that result in realistic, balanced, and predictable expenditure patterns over the ensuing three biennia.
     (5) The office of financial management shall distribute common definitions, the scoring system, and other information required for the project proposal and scoring process as part of its biennial budget instructions, except that, for the 2009-2011 budget development cycle, this information must be distributed by July 1, 2008. The office of financial management, in consultation with the legislative fiscal committees and the joint legislative audit and review committee, shall develop common definitions that four-year institutions must use in developing their project proposals and lists under this section.
     (6) In developing any scoring system for capital projects proposed by the four-year institutions, the office of financial management:
     (a) Shall be provided with all required information by the four-year institutions as deemed necessary by the office of financial management;
     (b) May utilize independent services to verify, sample, or evaluate information provided to the office of financial management by the four-year institutions; and
     (c) Shall have full access to all data maintained by the higher education coordinating board and the joint legislative audit and review committee concerning the condition of higher education facilities.
     (7) By August 15th of each even-numbered year, beginning in 2008, each public four-year higher education institution shall prepare and submit prioritized lists of the individual projects proposed by the institution for the ensuing six-year period in each category. On a pilot basis, the office of financial management shall require one research university to prepare two separate prioritized lists for each category, one for the main campus, and one covering all of the institution's branch campuses. The office of financial management shall report to the legislative fiscal committees by December 1, 2009, on the effect of this pilot project on capital project financing for all branch campuses. The lists must be submitted to the office of financial management and the legislative fiscal committees. The four-year institutions may aggregate minor works project proposals by primary purpose for ranking purposes. Proposed minor works projects must be prioritized within the aggregated proposal, and supporting documentation, including project descriptions and cost estimates, must be provided to the office of financial management and the legislative fiscal committees.

NEW SECTION.  Sec. 3   The office of financial management shall submit a higher education capital facility financing study to the governor and the appropriate legislative fiscal committees by December 1, 2008. In designing and conducting the study, the office of financial management shall consult with legislative and fiscal committee leadership, the department of revenue, the state investment board, the higher education coordinating board, the state board for community and technical colleges, and the public four-year institutions of higher education. The study must include:
     (1) A review of the methods that are used to fund higher education facility expansion and improvements in other states, with particular emphasis on Washington's global challenge states, and the relative portions of such expenditures that are borne by students, state taxpayers, federal grants, and private contributions;
     (2) An examination of alternatives for reducing facility construction and maintenance expenditures per student through strategies such as expansion of distance learning opportunities, increased scheduling of classes during evenings and weekends, the establishment of expected cost benchmarks by facility type, and other means; and
     (3) An assessment of the strengths and weaknesses of potential new revenue sources that might be applied to the funding of higher education facilities. These alternative sources must include, but not be limited to, adjusting student fees to support a larger share of the cost of such facilities, bonding against student fee revenues, utilizing local tax revenues to support local higher education capital needs, promoting business participation in the financing of programs strongly linked to area economic development, and other means.

Sec. 4   RCW 28B.76.210 and 2007 c 458 s 202 are each amended to read as follows:
     (1) The board shall collaborate with the four-year institutions including the council of presidents, the community and technical college system, and when appropriate the workforce training and education coordinating board, the superintendent of public instruction, and the independent higher educational institutions to identify budget priorities and levels of funding for higher education, including the two and four-year institutions of higher education and state financial aid programs. It is the intent of the legislature that recommendations from the board reflect not merely the sum of budget requests from multiple institutions, but prioritized funding needs for the overall system of higher education.
     (2) By December of each odd-numbered year, the board shall distribute guidelines which outline the board's fiscal priorities to the institutions and the state board for community and technical colleges.
     (a) The institutions and the state board for community and technical colleges shall submit an outline of their proposed operating budgets to the board no later than July 1st of each even-numbered year. Pursuant to guidelines developed by the board, operating budget outlines submitted by the institutions and the state board for community and technical colleges after January 1, 2007, shall include all policy changes and enhancements that will be requested by the institutions and the state board for community and technical colleges in their respective biennial budget requests. Operating budget outlines shall include a description of each policy enhancement, the dollar amount requested, and the fund source being requested.
     (b) Capital budget outlines for the two-year institutions shall be submitted by August 15th of each even-numbered year, and shall include the prioritized ranking of the capital projects being requested ((by two-year and four-year institutions, respectively.)), a description of each capital project, and the amount and fund source being requested((, shall be included for each capital project appearing in the prioritized ranking)).
     (c) Capital budget outlines for the four-year institutions must be submitted by August 15th of each even-numbered year, and must include: The institutions' priority ranking of the project; the capital budget category within which the project will be submitted to the office of financial management in accordance with section 2 of this act; a description of each capital project; and the amount and fund source being requested.
     (d) The office of financial management shall reference these reporting requirements in its budget instructions.
     (3) The board shall review and evaluate the operating and capital budget requests from four-year institutions and the community and technical college system based on how the requests align with the board's budget priorities, the missions of the institutions, and the statewide strategic master plan for higher education under RCW 28B.76.200.
     (4) The board shall submit recommendations on the proposed ((budgets)) operating budget and ((on the board's budget)) priorities to the office of financial management ((before)) by October 1st of each even-numbered year, and to the legislature by January 1st of each odd-numbered year. The board's capital budget recommendations for the community and technical college system and the four-year institutions must be submitted to the office of financial management by November 15th of each even-numbered year and to the legislature by January 1st of each odd-numbered year. The board's recommendations for the four-year institutions must include the relative share of the higher education capital budget that the board recommends be assigned to each project category, as defined in section 2 of this act, and to minor works program and preservation.
     (5) Institutions and the state board for community and technical colleges shall submit any supplemental budget requests and revisions to the board at the same time they are submitted to the office of financial management. The board shall submit recommendations on the proposed supplemental budget requests to the office of financial management by November 1st and to the legislature by January 1st.

NEW SECTION.  Sec. 5   RCW 28B.76.220 (Prioritized capital project lists for higher education institutions) and 2004 c 275 s 8 & 2003 1st sp.s. c 8 s 2 are each repealed.

NEW SECTION.  Sec. 6   Section 2 of this act constitutes a new chapter in Title 43 RCW."