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California State Auditor Report Number : 2015-106

The University of California and the California State University
Several Campuses Recently Acquired Property, but Those Acquisitions Have Not Significantly Reduced Property Tax Revenue for Local Governments

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Appendix A   Appendix B

Appendix A

Construction Projects by Campuses We Reviewed

In its audit request, the Joint Legislative Audit Committee asked us to identify, to the extent possible, the current assessed value of all property constructed by a selection of campuses since January 1, 2010. However, staff at the assessors’ offices for the respective counties in which the campuses are located stated that their offices do not appraise properties that campuses own. As we discuss in the Introduction, properties owned by the University of California (UC) and the California State University (CSU) are exempt from property taxes. Consequently, improvement to or construction on these properties has no effect on property taxes because the properties are already exempt from taxation.

To determine the value of the campuses’ construction projects, we relied on the campuses’ records. None of the eight campuses we reviewed tracks the market value of the properties when it completes construction projects. However, CSU and UC campuses track the actual costs of construction, including planning and project management costs. CSU and UC campuses capitalize all costs related to new construction as buildings and building improvements. CSU and UC campuses also capitalize any construction that adds costs of at least $5,000 and $35,000, respectively, to an existing building or that extends the useful life of an existing building for at least one year. Table A provides the total number of completed construction projects that the CSU and UC campuses capitalized as buildings and building improvements, and the costs associated with those projects between January 1, 2010, and June 30, 2015, at each campus we reviewed.

Table A
Number and Cost of Completed Capitalized Construction Projects at Each Campus Reviewed
January 1, 2010, through June 30, 2015
Campus Number of Completed Construction Projects* Capitalized Construction Costs
California State University, Chico 119 $138,895,671
California State University, Dominguez Hills 18 62,437,372
California State University, San Diego 36 188,133,853
California State University, San José 19 52,464,672
California State University, Stanislaus 62 28,275,469
University of California, Berkeley 553 1,626,750,005
University of California, Merced 40 265,408,275
University of California, Santa Barbara 85 196,347,124

Sources: Accounting records from the California State University (CSU) and the University of California (UC) campuses.

* The projects included in this table represent the completed construction projects that the CSU and UC campuses capitalized as buildings and building improvements. These projects include all new construction and any construction on an existing building that has a cost of at least $5,000 or $35,000, respectively, or that extends the useful life of an existing building for at least one year.

CSU Chico could not identify only the projects completed for January 1, 2010, through June 30, 2015. Therefore, we provided the number of projects and total capitalized construction cost for July 1, 2009, through June 30, 2015.

Appendix B

The Campuses Have Identified Their Economic Benefits to the Local Economies

Over the years, two of the California State University (CSU) campuses we reviewed, all three University of California (UC) campuses we reviewed, the CSU Office of the Chancellor (Chancellor’s Office), and the University of California Office of the President (UCOP) have commissioned studies on the economic benefits their respective campuses bring to the regions where those campuses are located. In general, staff familiar with the circumstances of these studies explained that the studies were intended to highlight campuses’ positive impacts on their surrounding areas. Almost all of these studies used economic modeling software to measure the extent to which the campuses’ direct spending on such costs as capital expenditures and salaries, student spending, retiree spending, and visitor spending generate economic activity. UC Santa Barbara staff told us that the campus commissioned a private consultant to prepare the economic impact data the campus published on its website, but she did not believe the campus had the underlying support for the data. Although the common conclusion among the studies is that the campuses provide economic benefits to their region, the estimated total economic impact reported varies widely. The studies commissioned by the Chancellor's Office and UCOP identified annual benefits of $75 billion and about $25 billion, respectively, for all campuses within the individual university system. Further, the campuses also reported varying levels of benefits, ranging from $193 million in annual benefits provided by CSU Stanislaus to more than $4 billion in annual benefits provided by UC Berkeley.

Additionally, although these studies generally used accepted models to estimate campuses’ overall economic benefits, the manner in which the studies define the geographic areas of campuses’ impact does not allow us to isolate the economic benefit of the campuses to the specific local governments in which they reside. For example, a 2007 San Diego State study estimated the campus’s economic impact on all of San Diego and Imperial Counties, but the report does not specify an impact for the city of San Diego, where the campus is located. Only the 2013 report for UC Berkeley measures the campus’s total economic benefit on the associated local government—the city of Berkeley—as well as on the multicounty region. Only the studies from the Chancellor’s Office and San Diego State estimate the amount of tax revenue that the campuses’ economic activities generate. However, neither of those studies estimates the tax revenue for the specific local governments where the campuses are located. Table B summarizes the types of information available in each study with respect to identifying campuses’ economic impacts on local host governments.

Table B
Summary of Types of Economic Benefits Identified in Studies Related to Campuses We Reviewed
Office/Campus Date of Study Geographical Level at Which Economic Benefits Identified Types of Benefits Identified Amount of Annual Benefits Identified (in millions)*
California State University Office of the Chancellor 2010 Statewide and Regional General economic activity, state and regional tax revenue, research contributions, tourism $75,230
California State University, San Diego 2007 Regional General economic activity, regional employment, state and local tax revenue, workforce development, entrepreneurship 2,480
California State University, Stanislaus 2004 Regional General economic activity, public service, cultural contributions 193
University of California Office of the President 2011 Statewide and Regional General economic activity, employment 24,989
University of California, Berkeley 2013 Regional and city of Berkeley General economic activity, employment, research contributions 4,119
University of California, Merced 2015 Statewide, regional, and Merced County General economic activity, employment 400
University of California, Santa Barbara 2006 Regional and Santa Barbara County General economic activity, campus employment, charitable donations, research contributions, cultural contributions 1,000

Sources: Economic impact studies conducted or commissioned by University of California (UC) and the California State University (CSU) systems and by individual campuses we visited as well as interviews with staff familiar with those studies.

Note: Although these studies generally used accepted models to estimate the systemwide offices' and campuses' economic benefits, we did not attempt to validate the calculations the studies' authors performed, primarily because most of the offices and campuses were not able to produce the underlying data used in the studies. Further, the reported impacts are not comparable to one another because the studies did not always include the same types of spending in their calculations—some studies considered the impact of retiree or visitor spending while others only considered direct spending by the campuses themselves.

* Amounts shown are those that the studies identified at the highest geographical level. Further, amounts shown for the CSU Office of the Chancellor and the UC Office of the President are for all campuses within the respective university system.

In contrast to the formal studies published by the other entities included in this table, UC Santa Barbara’s economic benefit information consisted of statistics posted on the campus’s website and did not contain a description of the methodology used to estimate those impacts.

Staff at UC Santa Barbara were not able to provide the exact date the campus published the economic benefit information posted on its website. However, staff speculated that this information was published in 2006 or 2007.

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