The master plan New Jersey's Rutgers University approved last year is already taking shape.
The Rutgers 2030 initiative to expand and upgrade the infrastructure of New Jersey's flagship public higher education institution by 2030 is described as the most comprehensive physical master plan in Rutgers' 250-year history.
It calls for improvements to academic buildings, technology, transportation and athletic facilities throughout the school's three campuses.
In January the university's board of governors authorized $98.5 million of academic facility renovations as part of Rutgers 2030 with the intent of funding them through the state-supported Higher Education Capital Improvement Fund bond program.
If the projects receive grant CIF program grant approval from New Jersey's Secretary of Education, the university is required to pay one-third of the debt service on bonds to finance the construction.
"In order to fulfill its mission, the university must maintain a modern infrastructure to meet the rapid changes in technology and teaching," said Rutgers spokesman E.J. Miranda.
Miranda said neither the total cost for the Rutgers 2030 upgrades nor how much borrowing will be required is known at this time. Rutgers has a total fulltime student enrollment of around 59,000 on three campuses in New Brunswick, Newark and Camden. New Brunswick is the school's main campus.
The capital improvement fund, which was created in 1999 under then Gov. Christie Todd Whitman, authorized the New Jersey Educational Facilities Authority to issue up to $550 million in bonds to fund partial grants on behalf of the state's public and private colleges.
The authority issued $203.3 million in four series of bonds in 2014 under the program. Miranda said the NJEFA program recently enabled Rutgers to pay for a new academic building housing 2,400 classroom and lecture hall seats on its New Brunswick campus and a life sciences facility in Newark.
"The Higher Education Capital Improvement Fund has been a valuable resource to our institutions for over 17 years," said Michael Klein, executive director of the New Jersey Association of State Colleges & Universities. "One of the key reasons for the success of the program is that it allows for new construction, not just repairs, when projected renewal and renovation costs exceed the projected cost of replacement."
S&P Global Ratings in 2015 downgraded Rutgers one notch to A-plus citing diminished financial resources. The state university was cited for recording full accrual based operating deficits in both fiscal 2013 and 2014 attributed largely to depreciation and one-time expenses from activities related to assuming 72% ownership of the former University of Medicine and Dentistry of New Jersey.
Rutgers is rated Aa3 with a negative outlook by Moody's Investors Service and AA-minus by Fitch Ratings. Moody's noted concerns in a February 2016 report about the school relying on New Jersey for nearly a quarter of total operating revenue when the state is facing fiscal challenges and has the second lowest credit rating of the 50 U.S. states.
Miranda noted that the university's credit ratings were affirmed in March 2016 when it issued $165 million in refunding bonds. He also emphasized that the university has showed "real improvement" in its fiscal 2015 performance following the integration of the UMDNJ. Annual revenue was approaching $3.5 billion earlier this year, according to Moody's.
Moody's analyst Edie Behr said that upgrading facilities is important for Rutgers and other colleges because of the increased competition to attract prospective students. Behr said 23% of Rutgers' operating revenue is derived from the state and that makes tuition revenue that much more important for the university long-term.
"They depend on enrollment and tuition revenue in part to support operations," said Behr. "We think it's important that the university identify the facilities that need improvements to stay competitive in the marketplace."
A large component of the Rutgers 2030 plan involves upgrading athletic facilities, which took on more importance after the school joined the heavyweight Big Ten conference two years ago.
The Rutgers 2030 report outlines shortfalls in athletic space with the wrestling, volleyball and gymnastics teams using recreational centers on campus that are geared for ordinary student use.
The other Big Ten schools include Maryland, Penn State, Ohio State, Michigan, Wisconsin, Michigan State, Northwestern, Illinois, Nebraska, Purdue, Indiana, Iowa and Minnesota.
"They are at the lower half of the Big Ten in terms of facilities and fan support," said Robert Boland, a sports business and law professor at Ohio University, on Rutgers joining a league featuring large state schools with high revenue-producing athletic programs. "They are going to have to enhance their facilities across the board and that takes a big financial commitment that will include borrowing."
Boland noted that Rutgers received a financial boost of $55 million from the lucrative Big Ten television network, but that it had a history of athletic budget deficits in its pre-Big Ten history as a member of the Big East.
Data available under the Department of Education's Equity in Athletics Disclosure Act showed that the Rutgers athletics department achieved $65 million of revenue in 2015, which was down from the Big Ten average of $103.3 million. Eight of the 14 Big Ten schools were above $100 million in athletic revenue.
"To get more revenue they need to build," said Boland, who has advised schools on conference realignment issues. "More bonds will have to go to athletic facilities in order to make this transition successful."
Rutgers launched a targeted campaign in January to raise $100 million in donations for new or upgraded athletic facilities. The campaign, which was created in collaboration with the University Physical Master Plan, raised $56.5 million through mid-October and has scheduled a Nov. 1 groundbreaking for a new 295,244-square foot multi-sport training complex for men's and women's basketball, wrestling and gymnastics.
"Rutgers wants to provide the conditions for our student-athletes to excel on the playing field as well as in the classroom," said Miranda. "Competing in the Big Ten is important to Rutgers and facility improvements and renovations, like the rest of our campus infrastructure and physical plant, are ongoing."