Buildings and facilities are an important part of the identity of college campuses — former students vividly remember their dorms or where their favorite classes were held. But how and why do these spaces get built? And who pays for them?
Many of Minnesota’s private colleges are old — some are over 150 years old — and maintaining and renovating the colleges’ existing stock of buildings is a big job. This work is as simple and important as replacing new heaters to renovating an entire building.
“You can defer investing in maintenance and repairs to a degree,” said Angela Riley, executive vice president, chief financial officer, treasurer and corporate secretary at St. Catherine University. “If you are not continually making an investment in your infrastructure, you will get to a point where catching up on your deferred maintenance will cost as much as building new. It’s important to maintain and renovate if you want to preserve critical parts of your physical history.”
Renovating is a great way to preserve the important identity certain campus buildings have while providing new up-to-date learning spaces for students. “With students, faculty and staff becoming more technologically advanced we see demand for spaces to host up-to-date technology,” Riley said. “It’s important for spaces to accommodate current teaching methods and technology.”
Minnesota private colleges also decide at times that new construction is the only way to meet current student needs, whether that’s for classrooms, dorms or dining halls.
Options for funding building projects — both renovations and new construction — include using current cash flows, financing and donor support. One of the important ways private nonprofit colleges finance facilities projects is through the Minnesota Higher Education Facilities Authority. The authority provides low-interest financing to private nonprofit colleges to help colleges afford facility improvements.
“Public institutions finance through bonds but also get state appropriation for facilities — essentially cash the state issues,” said Barry Fick, executive director of the authority. “In general, private colleges do not receive state funding for capital projects. The average tax payer in Minnesota doesn’t pay a thing for these projects.”
There are a couple reasons an institution might build new, including changes in state or regulatory code, to take advantage of new more cost efficient technology or to provide the student with the best possible education. “If the student is going into science and they’re going to work for Medtronic or Abbott they’ll be using top-notch equipment,” Fick said. “And the employer is going to expect them to know how to use that equipment.”
When private nonprofit colleges want to build new, they can’t rely on state funds like public institutions can, so often the first thing they do is start a capital campaign to secure private funding. “Donors are and have always been a critical component in keeping private institutions up-to-date and competitive,” Riley said.
And these donors are privately supporting institutions that benefit the state. “These projects enhance the workforce of the state,” Fick said, “and ultimately improve the state as a whole.”
In addition, the spending on renovation and building projects has a positive immediate impact on the Minnesota’s economy, in terms of materials purchased and people hired to get the work done. In 2016 Minnesota private colleges spent more than $73 million on construction projects.
By Tom Lancaster