Despite financial concerns that threatened to derail its approval, a $17 million building for the optometry program at the University of Missouri-St. Louis won passage Friday, but not without reservations over how it will be paid for.
The new building on the university’s south campus will replace the current optometry classrooms, which are in a building originally designed as a residence hall for nuns. Chancellor Tom George told the university’s Board of Curators, meeting in Columbia, that the first phase of the construction will “jump start” what is designed eventually to be a “$90 million dream” project. Plans were first presented to the board at its November meeting in St. Louis.
To pay for the initial construction, the university will use $12 million in debt and $5 million from the campus. The UMSL money will come from not filling some jobs, a reduction in scholarship money and a fee that was strongly endorsed by optometry students. The fee for optometry students will begin at $450 a semester, then double when construction begins. The fee is set to last for 30 years.
The project's first phase will provide 35,000 square feet of space for eye care and support space, with an additional 13,000 square feet available initially for lease.
With the additional facilities, the university projects that enrollment in the optometry school will increase from its current 172 students to 192 students by 2019.
UMSL has the only optometry program in Missouri and one of just 21 nationwide.
George told the curators that an analysis showed that new construction would serve the school’s needs better than renovation of the current optometry school, which he characterized as “stuffed into a residence hall for nuns.”
“We can’t go into that hall, renovate that and have the kind of facility that will take us to the next level,” George added.
He noted that in October, the fee to help pay for the new building won approval by 79 percent of the students voting.
“What we have here is an opportunity,” George said. “The college and the students and the faculty have all come together to present the opportunity.”
Dean Larry Davis, who attended the meeting along with several optometry students, told the curators that new construction was not the school’s first choice, but an analysis showed that renovation would cost as much or more than starting from scratch.
Using a student fee to help finance the building was also not an ideal situation, he said, but with just 1,100 alumni, the school would not be able to raise enough money in donations to use alternative means of paying.
“We certainly didn’t want to go down this path,” he said, “but it is a way for us to get to where we want to go.”
Asked whether the $12 million in bond financing might be the tipping point that could lead to a lowering of the university’s credit rating, Tom Richards, the system’s interim vice president for finance, said that by itself, the bonds for the optometry project would not have that effect. But, he added, in the context of all the university’s other financial data, such a reduction could be possible. He said he scheduled to meet with the university’s financial partners next week.
Officials said that if the vote on the project were delayed until the curators’ April meeting, as one curator suggested, costs could increase and momentum could be lost.
In the end, with the recommendation of system President Tim Wolfe, the project won unanimous approval, but not without some reservations.
“I have misgivings about this form of financing,” said curator John Phillips of Kansas City. “But the older I get, the more I appreciate my optometrist.”
Buildings and students
The UMSL optometry discussion came after the curators heard Richards’ presentation on the large backlog of maintenance and repair projects on the university’s four campuses. He started with three numbers: 1,534 buildings, with 29,460,000 square feet and a replacement value of $8.49 billion.
In many cases, he said, the poor condition of the facilities has hurt the university system’s ability to teach and conduct research, and if the current trend continues, the deterioration would only get worse.
“While there are no good choices,” he said, “probably the worst choice of all is to do nothing.”
In the past, the university has gotten a good portion of statewide bonding packages passed by the legislature, but those have not been approved in recent years and no more are on the horizon. Nor have state appropriations for capital projects been available.
Steve Knorr, the system’s vice president for university relations, noted that another possible route to finance building projects would be a 50-50 matching program, in which the university could raise half the money and the legislature could provide the other half.
He noted that such a plan would be a good way to leverage private donations that are coming not just from Missourians. “We’re bringing in funds from California and New York,” he said. “It’s not just Missouri money.”
But to keep such money coming regularly, he added, contributors need to see that their money is being matched by state funds.
“We’re not asking for hundreds of millions of dollars,” he said. “It’s a rather modest $20 million to $40 million that we can put to work.”
Wolfe later told the curators that $40 million in matching funds from donors is available and could help create 4,000 jobs in the state. The money is contingent upon the legislature funding the 50-50 match program.
Without bonds or state appropriations, Richards said, another route to help fund capital projects would be the kind of student fees approved for the UMSL optometry project. But Wolfe said he did not want to have to resort to that approach if possible.
Referring to a list of possible sources to fund the building and repair projects, the system president said: “The last possible lever we should pull is that one on the bottom, a student facilities fee.”
Before the facilities presentation came another concern about students and money.
Curators voted on Wednesday to go along with a request from Gov. Jay Nixon and a recommendation from Wolfe to hold tuition flat for the 2014-15 school year. The governor said in return for such a move, he is asking the legislature for an increase in state money for higher education that UM system officials said would result in a net gain of $11 million.
And in his remarks to the board, Wolfe said that in light of declining state support, even with the promise of new money, the university should work toward creating a business-higher education-state triumvirate to make sure that the university’s needs are met, both short term and long term.
But even with such a tuition freeze, college costs remain a concern.
Hank Foley, executive vice president for academic affairs, used a series of charts that he said showed the University of Missouri system remains affordable, with the number of students receiving financial aid rising to more 18,000 from less than 15,000 four years ago.
But, he said, with an annual cost of attending totaling $22,827 – including tuition, fees, books, travel and living expenses – the average unmet need, after family contribution, grants, work study and loans, still is more than $7,800.
“They have to go to the bank, they have to go to their grandmother, they have to work more,” Foley said of students facing that financial gap. “But they are finding their way there. Even though we wish that number was much much smaller, they are making their way here….
“This is not a bad story. I wouldn’t want to tell everyone it’s a great story, because we still have a lot of work to do.”
He noted that such figures may be a little misleading because they include the costs of living that everyone must face, whether they are attending college or not. Still, he said, students could benefit from better financial counseling so they can make sure their money goes as far as it should.
“Don’t buy a car with your student loan,” Foley said. “You don’t need it. Take the bus."