UCSD’s Rady School of Management, which was originally planned to be funded privately, will now pull from campus funds to expedite the facility’s construction.
UCSD’s newest graduate school is receiving a boost in its capital budget through changes approved by the University of California Board of Regents at its meeting last week.
The regents approved a $43.6 million budget for the first phase of the Rady School of Management, a total hike of approximately $12.1 million, to be spent on “preliminary plans, working drawings, construction and equipment,” according to the regents’ written approval. Almost all of the increase will come from campus funding, which jumped from $360,000 to $12.5 million. The change was requested to accommodate increases in unanticipated production costs when the project was originally planned in 2001.
The new building was originally to be funded entirely from charitable gifts. However, the attacks of Sept. 11, 2001, left difficult fundraising circumstances, according to Assistant Vice Chancellor of Design and Construction Boone Hellmann. Coupled with a soaring local real estate market, the project’s construction manager and general contractor estimated budget overruns $6 million earlier this year, Hellmann said. Since then, the university has implemented several cost-saving changes to the project’s bid, including allowing contractors more freedom in choosing materials, lowering the overage by $3 million.
“Coming from campus sources, [funding for the construction of facilities] will slow down current construction projects,” Chancellor Marye Anne Fox told the regents at the meeting. “But this is a large investment that we should make as soon as we can.”
The business school opened last week in temporary quarters at Pepper Canyon Hall. Troubles with the construction of the school were caused by San Diego’s super-heated real estate market, Fox said.
The saturation of the market, combined with contractors overloaded with projects and downtown San Diego’s urban high-rise development plan, is only one of the factors that has delayed construction and increased costs, according to Hellmann.
“We are dealing with an incredible set of circumstances,” he said at the meeting. “We don’t think the facility is toward the extravagant side in budget design, but rather toward the modest side, when compared to schools we are competing with.”
Despite rising costs, Fox emphasized the need to establish a well-funded facility for the school.
“We recognize that the business world is a very competitive sphere,” she said. “And the temporary housing that we have right now is not equivalent to the talent of the students we have and want to be attracting.”
Rady School of Management was first approved by the regents in 2001, and currently enrolls 174 students. Sixty of those are full-time MBA students, while 114 are in the FlexMBA program, which enrolls working professionals. The school currently has 11 faculty members.
The school will also eventually be self-funding, relying primarily on executive education, tuition, grants and contracts, as well as philanthropic support from donors, according to Dean Robert S. Sullivan. Students and faculty plan to move into new, more permanent facilities in spring 2007, he said.
Originally, the school was scheduled for a fall-2003 opening, with preliminary plans that placed the school in the northwest region of campus, according to a university press release.
A total of $31 million dollars was earmarked for the first phase of the school’s construction, and so far $27 million has been raised, with the bulk coming from businessman and investor Ernest Rady. The university is confident that it can obtain the remaining funds, Hellmann said.
The budget’s augmentation will not only allow the university to move Rady School of Management from its temporary quarters, but will spare space for a booming undergraduate population, Fox told the regents.
“Undergraduate growth has far outstripped our buildings to accommodate them,” she said. “We’re always playing catch-up, since we’ve increased 4,000 full-time [students] in over five years.”
In addition, the regents approved the design of UCSD’s east campus graduate housing project at their meeting. The project, with 800 beds for graduate students, will relieve burden on students, given the high cost of rent in San Diego, Hellmann said. The regents’ approval moves the project’s construction forward, with a groundbreaking held earlier this week.
