Date: 12/02/2008
Final
Update on FML Revenue and COP Projects
COMMITTEE ON CAPITAL DEVELOPMENT
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10:04 AM -- Update on Federal Mineral Lease Revenue and Related Higher Education Certificates of Participation Projects
Ms. Lisa Esgar, Deputy Director, OSPB, and Ms. Mary Wickersham, Director of Initiatives, Office of the State Treasurer, gave an update on the FML revenue and the October 23 COP issuance. Ms. Esgar addressed an earlier question about construction cost inflation assumptions. She said that now that as projects proceed, the higher education institutions will draw down funds as needed for the construction costs. The higher education institutions will have the latitude to draw down the full project amount appropriated. Senator Penry asked whether the committee wants to allow the higher education institutions the discretion to spend the full project balance even if there might be cost savings due to lower-than-projected construction cost inflation. Ms. Wickersham addressed questions about extra money that may be available from construction cost inflation savings.
10:12 AM
Discussion continued about the possible implication of construction cost inflation savings. Senator Schwartz suggested that rather than allow institutions to spend their institutional share last, they should spend state dollars last so any surplus money can be used for other higher education projects. Ms. Wickersham explained that there are only three institutions that contributed institutional match funds. Ms. Esgar referenced page 1 of Attachment A to explain OSPB's projection of available FML revenue for future higher education projects. She said that the OSPB forecast of revenue available from this source is lower than its previous forecasts. She cautioned the committee that this revenue source is volatile and explained that OSPB is not recommending any FY 2009-10 higher education projects from this revenue source because it is concerned that there may not be sufficient revenue. Ms. Esgar continued with an explanation of how OSPB developed a prioritized list of FML projects, and referenced this FML list in Attachment A.
10:25 AM
Ms. Esgar further explained that OSPB's recommendation is to use the FML revenue from Higher Education Maintenance and Reserve Fund to offset the cost of Level 1 controlled maintenance. Ms. Wickersham talked about the two funds created by Senate Bill 08-218 for use for higher education capital projects. Ms. Esgar addressed a question about the use of the Higher Education Maintenance and Reserve Fund.