The Money Pit

Although the gloomy economy and lagging state revenues have ended most state-funded construction on North Carolina campuses, that doesn’t mean that the jackhammers are entirely silent. At North Carolina State, for example, the Talley Student Center at North Carolina State is being gutted, renovated, and expanded—at a price of $120 million.

And students are paying for it. An annual per-student fee of $290, which they will pay for the next 25 years, is being phased in over four years. The fee represents nearly a 40 percent increase over the 2009 student fees. (Tuition and fees have already gone up 27 percent since 2007 at NC State.)

Is renovating the student center a wise decision in the middle of today’s economy? Perhaps. Construction projects put people to work, and it is often cheaper to build during a down economy because contractors will offer lower bids.

On the other hand, state government spending is way down just about everywhere else this year. The University of North Carolina system took a $406 million hit in operating appropriations from the state, and no new university capital projects were authorized by the General Assembly. The timing and magnitude of the Talley expense raise questions about whether the construction is a wise move—especially since a 2009 survey of NC State students revealed that 60 percent opposed raising fees to pay for renovating and expanding the center.

The Talley Student Center is small and rundown and clearly in need of renovation. Built in 1972, the center was designed for student activities and cultural resources at NC State.  It houses an art museum, university dining venues, and other campus organizations.

In 2007, a university committee was established to assess “all aspects of student life on campus,” said Sumayya Jones-Humienny, the architect at N.C.State who is overseeing the renovations, in an email. The committee agreed that the Talley Student Center failed to meet the needs of the student population, which has grown from 14,000 in 1972 to nearly 34,000 today.

Yet their decision conflicts with the desires expressed by students in the 2009 student survey. Student support of the project was mixed; 60 percent of students opposed the fee increase to pay for renovating and expanding the center.

But Jones-Humienny painted a different picture. She said that,  “when asked in the 2009 questionnaire whether a new Student Center was needed, the majority of students said yes.”

In fact, the actual language of the survey does not appear to have supported a new student center. According to the 2010-2011 Fee Proposal Recommendation Act by NC State’s Student Government, 57 percent of students “do see a need for increased funding in the Atrium Food Court and Talley Student Center.”  That may have meant improvements on a much more modest scale.

In that same questionnaire, the student body also rejected fee increases to pay for intercollegiate athletics, student publications, and the Student Union Activities Board. They approved a single fee—one for technology upgrades in classrooms. The implication is that increasing student fees to pay for anything except educational necessities was unacceptable. (However, only 5,752 out of 33,819 students voted—hardly constituting a mandate against the proposal.)

Some students were outspoken, though. Vidya Sankar and Dawn Iglesias addressed the NC State Board of Trustees in November 2009, asking if the university considered “quality of education a top priority.”  Both students suspected that NC State was “spending in areas that are not critical during a time when budgets are being cut.”

Further dissent arose with the creation of a Facebook group, “Rally Against Talley.” It still remains active with over 1,100 members.

Nevertheless, Jennifer Gilmore, communications manager for the Talley renovations, maintains that the chancellor, Board of Trustees, and UNC Board of Governors considered the students’ position along with the building’s current state and future costs before making their decision. Gilmore claimed that the construction costs would increase by $10 million annually if delayed. The project will also address structural and mechanical problems, including electrical plumbing, HVAC, and elevator systems. (NC State could have instead chosen to make these repairs with funding from an account that the legislature typically provides for serious structural deficiencies.)

Gilmore claims that students now seem more receptive to the plan, especially since 3-D renderings of the proposed building were released in March 2011. These renderings make it easier for students to “understand the benefits of such improved spaces and services,” Jones-Humienny explained.

The original plan for the renovations was even more expensive—$150 million. According to the Technician, NC State’s student newspaper, then-interim chancellor Jim Woodward backed off from asking the UNC Board of Governors for approval and insisted that it be cut down to $120 million. Jones-Humienny says that “as a result of the student vote, and given the conditions of the market, the project scope was reduced from $150 million to $120 million, thereby reducing the overall debt service fee that will help fund the project.”

But that reduction hardly means that the new Talley Center will be short on amenities.  Currently, NC State ranks second-to-last in per-capita student center space among UNC system schools, with only 3.13 square feet per student. In contrast, UNC Charlotte’s new student center, completed in 2009, averages 7.82 square feet per student. (It has 196,000 square feet for roughly 24,000 students.)

Now, Talley will be expanded from 169,000 to 284,000 square feet, which averages out to 8.35 square feet for each of the school’s 34,000 students. Yet UNC Charlotte completed its center for $65 million—just about half of what NC State is spending—Charlotte spent only $331 per square foot on its building while NC State is spending $422.

Nevertheless, it remains clear that the NC State believes that the university needs a bigger and better student center, on a scale with what it considers to be peer universities.  In what appears to be a proposal marketing the project (available online), the university compares Talley with modern, even glamorous, student centers at campuses across the nation, including Mercer, University of Georgia, Weber State University, and Minnesota State University.  The images reflect how dated and cramped Talley has become in relation to other centers.

Not so the for the new-and-improved Talley Center. It will boast improvements such as a new “marché-style” food court with vendors offering food from across the world, more lounges for relaxation, a bookstore and coffee shop, retail space, expanded and improved areas for student organizations, an amphitheater for outdoor movies and events, and more green space around the exterior of the building.

Still, the need for such an upscale student center must be questioned. Schools that are located in small college towns may need these amenities, since they provide virtually all of the students’ entertainment and cultural needs. But NC State is an urban campus in a thriving capital city, which has recently added a downtown amphitheater and spruced up its main drag, lining it with shops, bars, and restaurants.  In addition, the university resides alongside newly expanded Hillsborough Street, which is also hub for retail and eateries.

As for financing, the university maintains that increases in student fees will not exceed $290 per student. While the new Talley will increase the university’s annual operating budget by nearly half a million dollars, that will be financed by the student center’s operations fee, according to Lori Johnson, Director of Strategic Debt Management at NC State. Donations, retail rents and receipts, and other reductions to the Talley construction will cover any cost overruns.

The Talley Student Center project illustrates a recent trend for the UNC system toward non-academic construction projects. UNC capital projects can be paid for in two ways—by state appropriations of taxes or through collection of receipts (fees, ticket sales, and charges). Academic buildings do not raise much money on their own; therefore they must be paid for by appropriations.

In 2010 the UNC Board of Governors asked the North Carolina General Assembly to approve nearly $550 million in funding requests for improvements to North Carolina college campuses. Reflecting the reluctance of the legislature to appropriate state money for capital projects, most of these funding requests were for such revenue-producing projects as housing, parking, retail space, etc. (In the case of the Talley Student Center, the “revenue” is a combination of retail receipts and the $290 student fee.)

Not surprisingly, then, the majority of the 2010 funding, $465 million, went toward non-academic projects like Talley —student centers, gymnasiums, dormitories, dining halls, and athletic facilities across the state. (These projects will add $16 million in annual operating costs.)

The NC General Assembly hasn’t approved any state appropriations for capital projects for the UNC system since the ’07-’08 session. This means that universities will likely continue using student fees and receipts to pay for campus construction, and the schools will be adding more amenities than necessities.

Whether Talley proves to be a sound investment will remain an open question. It will undoubtedly become a centerpiece of NC State’s campus life and recruiting efforts, possibly attracting new students and serving the existing ones better. However, especially in the current economic climate, students will pay a stiff price for such luxury.