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Regents need millions of dollars for maintenance and repair costs

Stagnant enrollment at South Dakota's system of state universities, coupled with the continuous demand for new facilities to compete for students, has caused the state Board of Regents to look for a different way to pay for maintenance and repair.

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Stagnant enrollment at South Dakota's system of state universities, coupled with the continuous demand for new facilities to compete for students, has caused the state Board of Regents to look for a different way to pay for maintenance and repair.

The two percent that Gov. Dennis Daugaard and the Legislature want for M-and-R sounds small. But the number is huge applied to hundreds of millions of dollars of buildings at the six traditional campuses and the two university centers in Sioux Falls and Rapid City.

A special report a small group of regents, system officials and two university presidents prepared threw the board into more than one hour of subtly fierce argument Thursday over what to do and when to do it.

Neither the regents nor state lawmakers and governor required M-and-R plans for $162 million of new buildings approved in recent legislative sessions for Northern State at Aberdeen, Dakota State at Madison, South Dakota State in Brookings and the University of South Dakota at Vermillion.

The report says the two percent M-and-R after five years of operations would be nearly $2.6 million for the space added through the nine projects. At Northern State, for example, the new science building and the new athletic pavilion are on the list.

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Regent Kevin Schieffer of Sioux Falls and student regent Conrad Adam of Pierre urged a plan for the M-and-R on those buildings be developed.

But regents Randy Schaefer of Madison and Jim Thares of Aberdeen resisted, as did regent John Bastian of Belle Fourche. Schieffer lost three to six on a roll call vote.

Board President Bob Sutton of Sioux Falls said the study group would still consider it. Regent Pam Roberts of Pierre, who was the third "yes" in favor of Schieffer's push, chairs the group.

"We didn't do our jobs on a lot of these. This is our opportunity to go back and do it," Schieffer said at one point. "It's tough stuff but I think it needs to be done."

Sutton mentioned Northern State and Dakota State as examples. "That's a little change in course," he told Schieffer. "I don't disagree with your premise. It is sort of an epiphany."

"I'm not saying we hold up the project," Schieffer replied. "It's just, show the numbers."

There's already a funding gap of nearly $7.7 million. The addition of the approved new buildings takes the gap to $10.3 million.

Said the report: "A decision needs to be made whether or not we are going to increase our tuition across the system to fund the maintenance for these new facilities or if the institutions need to come up with their own plan to maintain the buildings after five years."

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State government added to the challenge when a different type of appraisal for facilities at the universities added nearly $5 million to the 2 percent target. The regent report is at https://bit.ly/2GWp6em .

The traditional approach to M-and-R was to use a portion of the state's health and educational facilities fund that levies a per-credit amount on state-university students. But credit hours are flat, according to Monte Kramer. He is the system vice president for finance and administration.

A full-time on-campus resident student currently pays $936 to HEFF. An off-campus student pays about $115 to HEFF for each course. Adding two dollars per credit for HEFF would generate about $1.4 million.

A chart in the report shows on-campus enrollments declined from 1997 to 2017, dropping from 23,469 to 21,107. Enrollments fell at Black Hills State in Spearfish, Northern State, Dakota State and USD. They rose at South Dakota State and South Dakota School of Mines and Technology in Rapid City.

During the same period, the six universities added space at faster rates than they demolished old buildings. Net additions of square feet were Black Hills State 40,326; Dakota State 122,661; Northern State 135,288; School of Mines 112,390; South Dakota State 934,346; and USD 442,002.

Kramer said an additional issue is the university centers aren't tied to a specific university for M-and-R. Square footage for Rapid City is 57,352 and for Sioux Falls is 106,589.

One potential solution identified in the report is to ask the Legislature for more support but state lawmakers on the whole haven't shown interest for decades. The regents voted unanimously to accept the report Thursday and to keep working on the issue.

"We've done a lot of work. The work is not done," Roberts said. "This is a work in process."

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Regent Joan Wink of Howes described it as the "most difficult" and "most important" task for the board this year.

"I don't want to use the term insolvent, but we are very close," Sutton said. "We have raised the gravity of the situation we are in for maintenance and repair."

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