Capital Funding

On this Page

• Funding Sources
• Maintenance
• Student Success, Excellence, and Technology Fee (SSETF)
• Total Return Portfolio (TRP)
  • Project Prioritization for TRP Allocation

Capital Funding Sources

​The California State University (CSU) system uses a variety of funding mechanisms to finance its capital projects, which include the construction, renovation, and maintenance of campus facilities. The selection of a particular funding method depends on factors such as the project's nature, urgency, available financial resources, and prevailing economic conditions.​ The funding sources are primarily utilized (with some notable exceptions) on growth projects that expand a campuses portfolio either for academic or other functions. The primary capital funding options are:​

• Systemwide Revenue Bonds (SRB)
  • The CSU issues SRBs to finance capital improvements across its campuses. The Bond program is managed by the Office of the Chancellor (Chancellor's Office or CO) and their Finance and Treasury team. These bonds are repaid using the university's revenue streams, such as student tuition and fees. The SRB program supports both academic and self-supporting projects, including student housing, and parking facilities.
• Commercial Paper (CP)
  • As a form of short-term financing, the CSU employs tax-exempt commercial paper to provide interim funding for capital projects until long-term financing, like SRBs, is secured. Like with the Bond program, this is managed by CO Finance & Treasury. This approach offers flexibility in managing cash flow requirements during project development. CP is considered a type of bridge financing that provides some level of flexibility to create more favorable loan conditions.
• General Obligation Bonds (GO Bonds)
  • These bonds are issued by the state of California and require voter approval. The funds raised are allocated for public projects, including higher education facilities. The repayment of GO bonds is guaranteed by the state's general fund, reflecting a commitment to public infrastructure investment. The last GO Bond was floated for voter approval (and failed) in 2020.
• Lease Revenue Bonds
  • Authorized by the state Public Works Board, these bonds finance specific acquisition and construction projects approved by the Legislature. Repayment is typically sourced from lease payments made by the CSU for the use of the financed facilities.
• CSU and Campus Reserves
  • The CSU may allocate cash reserves, derived from sources such as operating fund reserves, tuition fees, interest earnings, and donor contributions, to fund capital projects directly. This method avoids incurring debt and is used when sufficient reserves are available. For larger projects (>$10 million), most campuses will combine this funding source with another source to implement a project. 

Maintenance - Preventative and Deferred

Addressing maintenance projects, whether preventative or deferred, within the California State University (CSU) system is a significant challenge, given the extensive backlog of necessary repairs and upgrades across each of the 23 universities. Most maintenance needs are considered, and are referred to, as deferred maintenance since they have been postponed past suggested timing due to recurring budget constraints delaying their implementation. SJSU’s deferred maintenance backlog has been growing exponentially over time. With an older portfolio of buildings (the current weighted age is over 47 years old) the need is significant and growing. Most systems are designed for a useful life of 20 years. Many of SJSU’s are operating at two to three times that long, putting the university and its programs at risk. 

Funding sources for deferred maintenance, include the following. However, only the final source has been regularly allocated in recent years. 

• State Appropriations
  • The CSU system receives funding from the state of California, which can include allocations specifically designated for maintenance and infrastructure projects. However, these funds are often limited and may not fully address the extensive deferred maintenance needs.​
• Campus Operating Budgets
  • Individual campuses may allocate portions of their operating budgets to address maintenance issues. However, competing priorities and limited resources can restrict the amount available for deferred maintenance projects.​
• Systemwide Revenue Bonds (SRBs)
  • As previously mentioned, the CSU issues SRBs to finance various capital improvements. While typically used for new construction or major renovations, a portion of these funds can be directed toward addressing deferred maintenance, particularly when bundled with larger capital projects.​
• One-Time State Funding Initiatives
  • Occasionally, the state may provide one-time funding to address deferred maintenance across public university systems. These allocations are not consistent and depend on the state's budgetary situation and legislative priorities.​  Past examples have included funding for energy efficiency and affordable student housing.  ​
• Student Success, Excellence and Technology Fee (SSETF)
  • In fall 2012, the university passed a mandatory student fee (like many other CSUs) to cover funding gaps in support of student success. This mandatory fee is separated into three components: Instructional-Related Activities (IRA), Course Support, and Student Success. In some cases this fee is used for fixture, furniture, equipment and technology upgrades in support of instruction and related activities.
• Total Return Portfolio (TRP)
  • In recent years, the CSU system has utilized the Total Return Portfolio (TRP) to address deferred maintenance and capital improvement needs. The TRP funding source has been the only reliable source (albeit small) to be allocated in recent years. 

Student Success, Excellence and Technology Fee (SSETF)

In 2012, SJSU established a mandatory fee as a mechanism to cover funding gaps in infrastructure investment. SSETF is used for the core purposes of continuing existing miscellaneous course requirements and instructionally-related programs and activities; provide enhanced and comprehensive support that leads to improved graduation and retention rates for all students; and provide innovative and effective technology-enabled learning experiences for students. Revenue from this fee cannot be used for general salary and benefits increases or for activities not related to aforementioned specific goals. In March of each year, the university puts out a Call for Proposals for one-time funding to support investment in projects achieving these goals. SSETF funds are intended to be used for the following six priorities. 

• Student Success Services and Graduation Pathways
• Academic Technology
• 21^st Century Teaching Spaces
• Retention and Graduation
• Course Support
• Instructionally-Related Activities

The university maintains a record of the projects funded each year: Student Success, Excellence, and Technology Fee Fund Information

Total Return Portfolio (TRP)

The TRP is an investment portfolio managed by the CSU, with annual distributions allocated to campuses specifically for general fund (sometimes referred to as “state-side”) supported, academic and other core services, deferred maintenance, and capital improvements. It is intended to be used for construction-related activities and may not be used for studies and/or ongoing operations, in accordance with California Education Code, Section 89726. Projects may include projects like renovating, improving, altering, and modifying land, buildings, other structures, nonstructural improvements of land, and fixed equipment. It is not intended for use of software and/or studies that are purely speculative in nature. Each year, the CSU Investment Advisory Committee determines the TRP distribution based on factors such as past General Fund allocations and total revenue collection. SJSU has received the following allocations for the last six years: 

Projects exceeding the minor capital threshold must adhere to the Delegation of Capital Outlay Management Authority requirements. TRP serves as a critical resource for campuses to address maintenance backlogs and infrastructure improvements, supplementing other funding sources such as state appropriations and Systemwide Revenue Bonds which have fallen woefully short in the last decade as infrastructure ages and pressures on our buildings continue to increase.

Project prioritization for TRP Funding Allocation - Criteria

• Qualified Project
  • Unlike some funding sources, TRP funding is restricted to those uses that are considered general fund functions and is intended to be used on construction activities targeting primarily deferred maintenance.  While these funds can be leveraged to support capital improvements, its primary purpose is to make incremental improvements towards deferred maintenance projects.
• Scope of Project
  • With limited funding allocated each year, it is important that the scope be such that, if funded, it can be reasonably completed with the TRP funding allocated, and other campus sources identified at that time.
• Urgency
  • How urgent is the project to meet university goals and/or avoid disruption?
• Improved Efficiency
  • How might the project help to achieve efficiency through reductions in cost, either through reduced energy use or reductions in reactive labor costs?
• Support of Campus Priorities
  • How well does the scenario support the goals of Transformation 2030? (Engage and Educate, Excel and Lead, Grow and Thrive, Connect and Contribute, Rebuild and Renew)
• Campus Transformation
  • How much will the project transform the physical campus, building and/or university organization? This may be organizationally, operationally, or physically.
• Community Impact
  • How positively will the project impact those beyond the campus community, including those neighborhoods directly adjacent to the campus or those that regularly visit the campus for university-sponsored events?
• Supplemental Funding Availability
  • How might the project better position the university to be able to attract supplementary fundings sources and/or partnerships to help stretch dollars invested.