Public universities get state funding to support their building projects. In California, for instance, the University of California gets such funding from the state, raised through bond financing. The state specifies that the university has to use such bond proceeds specifically for its facilities projects. During the 2007 to 2008 year, the university recevied $520 million from the state for its facilities program. That declined to $261 million during the 2008 to 2009 period.
Universities could also raise funds through activities such as the issuance of commercial paper. Commercial paper is short-term debt that the issuer has to repay, including interest. The University of California has used such techniques. In one instance, the universityissued $200 million in commercial paper to fund its building projects. The university used the proceeds from the sale of the commercial paper to invest in government bonds. The government used this money from the sale of bonds to the university to fund the university's building projects.
Private donors, too, provide support for university building projects. Typically, they specify what activities they want the university to use their funding toward. For instance, the University of Oregon has received a $10 million gift from HEDCO Foundation, a California private foundation. The gift will support an education complex for the university's College of Education. Other private donors are supporting this project, which will add 100,000 square feet of space for teaching and research purposes.
Universities constantly need funding for their building projects since they have to keep updating their facilities to keep them modern. Safety concerns are also a factor. In California, for instance, the University of California has to make constant improvements to its buildings to protect against the risk of earthquakes. And as student enrollments at colleges nationwide goes up, the need grows for more space in academic buildings and student housing.