$1 Billion University Capital Plan

March 9, 2017

Transcript:

TED SIMONS: GOVERNOR DUCEY'S PROPOSED BUDGET CALLS FOR THE STATE'S 3-UNIVERSITIES TO KEEP THE SALES TAX REVENUE THEY GENERATE TO FINANCE BORROWING FOR RESEARCH, DEVELOPMENT AND MAINTENANCE CONSTRUCTION PROJECTS. HERE TO TALK ABOUT THE GOVERNOR'S IDEA AND HOW IT WOULD EFFECT THE STATE'S UNIVERSITIES IS EILEEN KLEIN, PRESIDENT OF THE ARIZONA BOARD OF REGENTS. GOOD TO SEE YOU.

EILEEN KLEIN: THANK YOU, GOOD TO SEE YOU.

TED SIMONS: GIVE ME A BETTER DEFINITION OF THE GOVERNOR'S PLAN AND YOUR THOUGHTS.

EILEEN KLEIN: ABSOLUTELY. WELL, FIRST, YOU CAN'T NOT BE THRILLED. IT HAS BEEN A LONG HAUL FOR THE UNIVERSITIES OVER THE LAST DECADE WITH ALL OF THE STATE BUDGET CUTS SO WE ARE DELIGHTED THE GOVERNOR PUT FORWARD A PROPOSAL TO REINVEST AND REINVIGORATE OUR CAPITAL INFRASTRUCTURE.

TED SIMONS: IT IS A SALES TAXES BY THE UNIVERSITY OR IN A REGION? IS THIS A REGIONAL KIND OF THING?

EILEEN KLEIN: NOT AT ALL. IT'S QUITE SIMPLE. OUR UNIVERSITIES ARE ONE OF SIX STATES WHERE WE ARE REQUIRED TO PAY SALES TAX FOR THE PURCHASES WE MAKE, CONSTRUCTION OR UTILITIES WE ARE REQUIRED TO PAY THE SALES TAX. THIS PROPOSAL WOULD ALLOW US TO INSTEAD KEEP THOSE DOLLARS AND USE THEM TO REDEVELOP FACILITIES AND INVEST IN NEW FACILITIES.

TED SIMONS: WAS IT CAPPED AT 3738?

EILEEN KLEIN: YES, CURRENTLY WE ARE PAYING ABOUT $33 MILLION AND IT WOULD LET US KEEP THOSE PLUS THE GROWTH FROM THE FUTURE. WITH THE MATCHING DOLLARS FROM OUR OWN BUDGETS, WE COULD GENERATE A BILLION DOLLARS WORTH OF SUPPORT.

TED SIMONS: THAT'S A LOT OF SUPPORT. R & D, CONSTRUCTION PROJECTS, TALK TO US ABOUT WHAT NEEDS TO GET DONE AND WHAT YOU WOULD LIKE TO SEE GET DONE.

EILEEN KLEIN: WE HAVE NEEDS ON BOTH SIDES. BOTH TO REFURBISH FACILITIES. WE HAVE ABOUT $670 MILLION OF PENT UP DEMAND FOR REFURBISHMENT. THESE ARE THINGS LIKE ROOFS AND HVAC SYSTEMS AND OTHER SAFETY ELEMENTS. WE WANT TO TAKE CARE OF THOSE. THE STATE HASN'T KEPT UP WITH THAT. IT LET'S US INVEST IN NEW RESEARCH AND EDUCATIONAL FACILITIES. WE HAVE AGGRESSIVE GOALS TO GROW RESEARCH AND SOME PEOPLE WOULD SAY WELL WHO CARES BUT IT MATTERS A LOT. IT ALLOWS US TO GENERATE NEW KNOWLEDGE AND TRANSLATE THAT KNOWLEDGE INTO THE ECONOMY, ATTRACT NEW RESEARCH INVESTMENT FROM THE FEDERAL GOVERNMENT FOR SURE BUT ALSO FROM THE PRIVATE SECTOR. THEY WANT TO BE LOCATED NEAR LARGE RESEARCH FACILITIES AND THIS WOULD GIVE US THE DOLLARS SO WE CAN KEEP UP WITH OUR CAPITAL CONSTRUCTION.

TED SIMONS: IS THERE A TIME FRAME?

EILEEN KLEIN: IT WOULD ALLOW US TO KEEP THE DOLLARS RATHER THAN REMITTING THEM TO THE STATE AND RATHER THAN THEM HAVING TO GROW OTHER SOURCES OF STATE GOVERNMENT IT WOULD US TO KEEP THOSE DOLLARS AND INVEST THEM.

TED SIMONS: NOW, YOU KNOW, MUNICIPALITIES ARE NOT TOO CRAZY ABOUT THIS BECAUSE IF YOU KEEP THE DOLLARS WHAT USED TO GO TO THEM IS BEING STAYED AT THE UNIVERSITIES. IS THERE A WAY TO NOT HIT THE CITIES AND TOWNS AND KEEP THIS BOUNDING AUTHORITY POSSIBLE?

EILEEN KLEIN: THE TRUTH IS, IT IS A VERY SMALL PORTION OF THEIR FUTURE COLLECTIONS. MAYBE ONE HALF OF ONE PERCENT OF THEIR MONEY IS INSURED. CITIES HAVE THEIR CHALLENGES BUT THEY STAND TO BENEFIT FROM OUR ABILITY TO EDUCATE MORE INDIVIDUALS, FOR THE WORKFORCE, REJUVENATING CITY CENTERS AND THE CITIES WHO HAVE UNIVERSITIES FACILITIES COMING IN HAVE BEEN REVITALIZED. WE THINK IT IS A PRETTY SMALL AMOUNT TO QUIBBLE ABOUT.

TED SIMONS: THEY ARE SAYING $7 MILLION. TEMPE AND TUCSON HAVE NO PROBLEM WITH THIS BUT IF YOU'RE TALKING ABOUT PEORIA AND YUMA AND KINGMAN, THEY MIGHT HAVE SOME CONCERNS. BUT AGAIN IS THERE SOME WIGGLE ROOM HERE?

EILEEN KLEIN: IT IS THE LEGISLATURE'S PREROGATIVE TO DECIDE WHAT TO DO WITH SALE TAX RECEIPTS. AND ULTIMATELY THE LEGISLATURE NEEDS TO DECIDE THAT. IT'S NOT THE CITY'S MONEY, IT'S THE LEGISLATURE'S PREROGATIVE. WE WANT TO HAVE THAT CONVERSATION BECAUSE WE THINK THIS IS A REALLY BIG PLAY FOR ARIZONA. THIS BILLION DOLLARS IN CAPACITY IS GOING TO ALLOW US TO CONTINUE TO CATAPULT OUR OPPORTUNITIES IN HIGHER EDUCATION WHICH IS CRITICAL RIGHT NOW WITH TWO THIRDS OF ALL JOBS REQUIRING HIGHER EDUCATION.

TED SIMONS: YOU MENTION ARIZONA UNIVERSITIES PAY SALES TAX AND THAT IS UNUSUAL. HOW DID THAT HAPPEN?

EILEEN KLEIN: WE ARE ONE OF SIX STATES AND IT HAPPENS TO BE HOW WE DO THINGS. IT IS A CHANCE TO HAVE A TAX REFORM AT THE SAME TIME WE ALLOW DOLLARS TO BE DEPLOYED FOR SOMETHING OUR STATE CRITICALLY NEEDS WHICH IS TO INVEST IN ITS UNIVERSITIES.

TED SIMONS: SOME FOLKS ARE SAYING THAT THEY HEAR EXPANDING BONDING AUTHORITY AND THEY SAY DEBT AND MORE DEBT AND DON'T THINK WE SHOULD HAVE MORE DEBT AND THINK WE HAVE ENOUGH AS IT IS. DO THEY HAVE A POINT?

EILEEN KLEIN: THEY ARE ALWAYS KEEPING AN EYE ON THAT. THE MARKETS WILL DETERMINE IF WE CAN TAKE ON MORE DEBT. WE HAVE EXCELLENT BOND RATINGS AND THE PROJECTS WILL BE REVIEWED BY THE LEGISLATURE AND SUBJECT TO PUBLIC MARKET SCRUTINY. WE WILL FEEL VERY CONFIDENT THAT WE CAN AFFORD THIS AND OVER TIME WE'LL JUST GROW OUR CAPACITY AS THE MARKET ALLOWS. THE TRUTH IS WE'RE IN A GROWING STATE. WE HAVE TO TAKE CARE OF THIS FOR THE STUDENTS AND THE RESEARCH OPPORTUNITIES SO WE ARE VERY EXCITED.

TED SIMONS: WE SHOULD MENTION THE OVERALL DEBT IS RECEDING. STILL THE PAYMENT ON THAT DEBT IS SOME 326 MILLION DOLLARS. IT IS THE 8TH PRICEY SEGMENT OF THE BUDGET.

EILEEN KLEIN: WELL AS YOU POINT OUT THOUGH, THOSE PRIOR PROGRAMS ARE COMING TO AN END. IT HAS BEEN THE STATE'S INVESTMENT IN CAPITAL INFRASTRUCTURE IN OUR UNIVERSITIES THAT HAS CATAPULTED US IN THOSE RESEARCH RANKINGS. THE LAST TIME WE HAD THIS TYPE OF INVESTMENT WAS 2003. IT'S TIME FOR A NEW GENERATION. OUR BUILDINGS ARE ON AVERAGE 26 YEARS OLD. IF WE ARE GOING TO GET THE TOP RESEARCH TEAMS TO PARTICIPATE IN THE LARGE RESEARCH VENTURES AND BE COMPETITIVE WE WILL NEED THE STATE SUPPORT.

TED SIMONS: THE GOVERNOR WANTS TEACHING ACADEMIES AS WELL.

EILEEN KLEIN: YES.

TED SIMONS: NOW IS THIS PART OF THE DEAL HERE? IS THIS PART OF ONE THING?

EILEEN KLEIN: SOME OF THE DOLLARS WOULD BE EXTENDED FOR THAT PURPOSE AND WE ARE DELIGHTED TO PARTNER WITH THE GOVERNOR, K-12 SYSTEM AND COMMUNITY COLLEGES TO FIGURE OUT HOW TO DRAW INDIVIDUALS INTO TEACHING, REMOVE SOME OF THE BUREAUCRATIC BEARERS OF THE TEACHING PROFESSION. WE THINK IT'S AN OPPORTUNITY TO REALLY REINVIGORATE OUR TEACHING PROGRAMS. WE HAVE BEEN RENOVATING AND INNOVATING BUT IT IS IMPORTANT TO PLACE DEDICATED FOCUS ON THIS. WE SEE THE NEED TO INTRODUCE TECHNOLOGY AND PARTNERSHIPS TO GET STUDENTS CONNECTED TO THE CORE CURRICULUM TO BE SUCCESSFUL.

TED SIMONS: THE TEACHING ACADEMY IS HIGH ON THE LIST OF THINGS TO BE DONE?

EILEEN KLEIN: IT IS. IT IS A GREAT NEED AND WE ARE GLAD TO PARTNER ON THAT.

TED SIMONS: ONE LAST CONCERN THAT I HEAR THIS OPENS THE DOOR TO PLAYING FAVORITES. ENGAGEMENT DISTRICTS, ALL THESE KINDS OF THINGS WHERE THE TAX MONEY GOES BACK INTO THE DISTRICT AND DOESN'T GO OUT FURTHER AND IT IS SEEN AS AN UN-LEVEL PLAYING FIELD. DO THOSE FOLKS HAVE A POINT?

EILEEN KLEIN: EVERY YEAR THE BUDGET IS A RESHUFFLING OF PRIORITIES AND WITH THE CONTINUED INTEREST IN GROWING JOBS AND STIMULATING ARIZONA'S ECONOMY, POLICY MAKERS ARE SEARCHING FOR WAYS WHERE THEY'RE NOT JUST EXPANDING GOVERNMENT BUT THEY'RE FINDING WAYS TO INVEST IN THINGS THAT WILL BRING TRUE RETURNS. FOR INSTANCE IN OUR CAPITAL INFRASTRUCTURE PROPOSAL, EVERY SQUARE FOOT WE ADD IN NEW BUILDING SPACE RETURNS $350 TO THE STATE IN REAL MONEY FROM NEW BUSINESS INVESTMENT AND RESEARCH DOLLAR INVESTMENT. SO WE THINK THAT POLICYMAKERS ARE SMART TO THINK ABOUT HOW TO LEVERAGE VERY LIMITED RESOURCES AND WE'RE GOING TO CONTINUE TO SEE MORE OF THIS TYPE OF THING.

TED SIMONS: ARE THERE ACCOUNTABILITY MEASURES INVOLVED IN ALL THIS OR IS IT SAME AS USUAL?

EILEEN KLEIN: WE WILL CONTINUE TO BE SUBJECT TO LEGISLATIVE REVIEW. WE ARE PART OF THE STATE GOVERNMENT IN THE SENSE THAT WE ARE CONSIDERED TO BE A VITAL PART OF THE STATE'S PUBLIC EDUCATION SYSTEM. SO WE EXPECT WHEN THE STATE IS PUTTING UP DOLLARS WE WILL PROVIDE FULL ACCOUNTABILITY.

TED SIMONS: A BILLION DOLLARS--SOUNDS LIKE A LOT.

EILEEN KLEIN: IT SOUNDS LIKE A LOT BUT IN A GROWING STATE, I PROMISE YOU THIS IS THE BEGINNING GETTING BACK TO WHERE WE NEED TO BE.

TED SIMONS: IS THIS ENOUGH TO OFFSET THE CUTS IN THE RECENT YEARS? 49TH IN STATES AMONG UNIVERSITY FUNDING CUTS PER CAPITA AND IT DOESN'T SOUND LIKE THE CURRENT BUDGET HAS A LOT TO RESTORE THE CUTS. IS THE TRACK STILL MUDDY? WHAT'S GOING ON?

WELL, THE STATE IS CERTAINLY GOING TO CONTINUE TO PUSH FORWARD BUT WE EXPECT THE REVENUE GROWTH TO BE SLOW AND THAT IS WHY WE ARE HAPPY ABOUT THIS INNOVATIVE APPROACH IN THE GOVERNOR'S BUDGET. HE DEDICATED $15 MILLION FOR STUDENTS AND FOR ARIZONA RESIDENT STUDENTS FOR HIGHER EDUCATION OPPORTUNITIES. WE NEVER WANT TO LOOK BACK. WE HAVE BEEN CHALLENGED BY THE REDUCTION IN STATE SUPPORT BUT WANT TO MAKE SURE GOING FORWARD WE ARE FOCUSED ON GETTING MONEY FROM THE STATE IN PLACES WHERE IT CAN MAKE THE MOST DIFFERENCE AND THAT IS INVESTING IN THE STUDENTS, THE INDIVIDUALS AND HAVING THE STATE HELP WITH FACILITIES.

TED SIMONS: THE RESPONSE FROM LAWMAKERS QUICKLY.

EILEEN KLEIN: LAWMAKERS HAVE REALLY BEGUN TO APPRECIATE THE CONNECTION BETWEEN PUBLIC UNIVERSITIES AND ECONOMIC GROWTH IN ARIZONA WHICH IS A HUGE TURNING POINT. WE ARE EXCITED TO WORK WITH THEM. WHAT WE HAVE BEEN HEARING ABOUT IS THEY WANT TO TALK MORE ABOUT THIS MECHANISM. BUT ON THE WHOLE, THEY HAVE BEEN QUITE SUPPORTIVE OF MAKING SURE OUR UNIVERSITIES ARE GOING TO GET MONEY BECAUSE THEY REALIZE THEY ARE WORTH THE INVESTMENT.

TED SIMONS: GOOD TO SEE YOU. FRIDAY, IT IS THE JOURNALIST ROUNDTABLE AND WE WILL DISCUSS THE SUPREME COURT CHALLENGE ON THE MINIMUM WAGE AND THE COYOTES THREATEN TO LEAVE THE AREA IF THEY DON'T GET A NEW ARENA. AT 5:30 TOMORROW ON THE JOURNALIST ROUNDTABLE. I AM TED SIMONS AND THANK YOU SO MUCH FOR JOINING US. HAVE A GREAT EVENING.

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