State of Alaska Deferred Maintenance Overview Senate Finance Committee

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1 State f Alaska Deferred Maintenance Overview Senate Finance Cmmittee April 19, 2017 Office f Management and Budget 1 Office f Management and Budget

2 What is Deferred Maintenance? Maintenance that is pstpned due t lack f resurces Replacement f building cmpnents as they reach end f useful life such as rfs r HVAC systems Deferred maintenance prjects are mstly items that entities cannt address thrugh preventative maintenance Preventative maintenance is imprtant t managing grwth and severity f future deferred maintenance Each entity manages maintenance independently Legislature apprpriates funding fr preventative maintenance annually - facilities management allcatins; Public Building Fund Maintenance decisins must cnsider changing business needs 2 Office f Management and Budget

3 Hw many Facilities des the State Maintain? Over 2,200 facilities 14 entities including University f Alaska and Curts 19 millin square feet f space Cmbined replacement value f $8.6B 700 Number f Facilities by Entity DOTPF Univ DNR DMVA DFG DOC DHSS DPS DOA DEED DOLWD Curts Gv DEC Cunt Office f Management and Budget

4 What d ur Facilities Lk Like? Types f facilities vary by entity 9,000,000 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 - DOA manages general ffice space DOC and DHSS bth manage 24 hur facilities DMVA manages base facilities and statewide armries DNR versees park service cabins, shelters, fire suppressin and preparedness shps Ttal Square Feet by Entity Univ DOTPF DOC DOA DMVA DHSS Curts DFG DNR DEED DOLWD DPS Gv DEC 4 Office f Management and Budget

5 Statewide Deferred Maintenance Ttals Ttal f $1.84 billin, including Executive agencies and Curts $1.6 billin Schl District Majr Maintenance $240 millin; $165 millin as the State share Ttal peaked at $2.3 billin in FY2012 Reduced significantly thrugh a five-year funding plan Expect t trend up withut cnsistent funding 5 Office f Management and Budget

6 FY2017 Deferred Maintenance Backlg by Entity The majrity f deferred maintenance backlg is within the University f Alaska ($1B) and the Department f Transprtatin and Public Facilities ($347M) Schl District Majr Maintenance requests ttal $240M All ther entities ttal $252M All Other 14% Schl District 13% Trans 19% FY2017 Univ 54% 6 Office f Management and Budget

7 FY2017 Deferred Maintenance Backlg by Entity $1,200,000.0 $1,000,000.0 $1,008,793.6 Backlg Amunt (Thusands) $800,000.0 $600,000.0 $400,000.0 $346,516.2 $239,762.4 $200,000.0 $- Univ Trans Schl Dist. Majr Maint. Nat Resurces $73,195.0 $60,199.1 $45,661.0 $29,101.0 $20,741.0 $12,895.0 $7,715.5 $2,000.0 $950.0 Admin Crrectins Health Edu Labr Curts Public Safety Fish & Game 7 Office f Management and Budget

8 $180,000,000 Deferred Maintenance Funding Histry Statewide DM and Schl District Statewide DM Schl Dist. 92% $160,000,000 $140,000, % 98% $120,000,000 68% 84% $100,000,000 44% $80,000,000 $60,000, % $40,000, % 100% 15% $20,000,000 $- 100% 100% 100% 100% 100% 100% 100% FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 Gv 8 89% 87% Amd Office f Management and Budget 0%

9 Deferred Maintenance Funding Histry Frm FY1998 t FY2010, DM funding was spradic and incnsistent Spikes in 1999 ($53M), 2006 & 2007 ($33M), 2009 ($127M) Lw years averaged $6.5M FY2011 began a five-year initiative t address DM backlg Gv initiative f $100M annually fr five years Actual average funding f $123M fr DM; $18.6M fr Schl Districts 9 Office f Management and Budget

10 $2,500,000.0 Deferred Maintenance Backlg Statewide Backlg $2,000,000.0 Ttal (Thusands) $1,500,000.0 $1,000,000.0 $500,000.0 $- FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 Statewide Backlg $2,318,000.0 $2,190,600.0 $2,051,093.8 $1,847,170.1 $1,807,793.1 $1,607, Office f Management and Budget

11 Example f DHSS Deferred Maintenance Management Annual facility cnditin audit Prjects are lgged n an nging basis in a Capital Asset Management system 4 prject categries Fire and Life Safety Security Building Integrity Cde Requirements and Missin Efficiency Pririty weight applied (high, medium, lw) Facility Cnditin Index factr 24 hur facility factr 11 Office f Management and Budget

12 Example f Schl District Majr Maintenance Management Eligibility Requirements: six-year district plan, fixed asset inventry system, prperty lss insurance, preventative maintenance and facility management prgram certified by DEED Applicatins evaluated n several factrs resulting in an verall ttal pints rating Cnditin survey District rating Weighted average age f facility Previus funding thrugh grant prgram Cmplete planning and design Effectiveness f preventative maintenance prgram Emergency cnditins and seriusness f life/safety and cde cnditins 12 Office f Management and Budget

13 What We ve Learned Pattern f funding DM backlg cincides with years f high revenues The SLA initiative reversed the trend f grwing DM backlg Gave entities predictability and cnfidence Withut a cnsistent level f funding, entities cannt effectively execute planned renewal Funding uncertainty leads t emergency nly spending In a cnstrained fiscal envirnment a statewide apprach prvides DM attentin t highest pririty needs acrss multiple agencies 13 Office f Management and Budget

14 Statewide Facilities Maintenance Timeline: 2015 EFMAC* Creatin & Recmmendatins *EFMAC = Executive Facilities Maintenance Advisry Cmmittee 2016 State Facilities Cuncil Frmed, Centralizatin Analysis Recmmendatin & Apprval 2017 Determinatin f lead agency fr Centralized Facilities Services Advantages t centralized peratins and maintenance f state facilities Enterprise apprach One lead agency (DOT&PF) Ecnmies f scale Cmmnality f prcesses, prcedures Cnslidate cntracts Juneau Pilt fur waves thru 2017 (apprximately 20 buildings) fllwed by expansin statewide 14 Office f Management and Budget

15 Opprtunities Ging Frward Opprtunity t cmprehensively plan recapitalizatin f State buildings Starts with inspectins t develp a Facilities Cnditin Index (FCI) Prvide hlistic view f all state building assets Baseline health f ur assets; priritize deferred maintenance needs Analyze backlg f existing deferred maintenance items in relatin t actual needs Develp a framewrk built n best practices: prcesses, prcedures; prvide data/metrics t measure prgress Implement a cmmn Cmputerized Maintenance Management System Assess risk and priritize wrk Strive fr a systematic funding prgram fr majr maintenance and system life cycle replacement ensure cnsistency, predictability 15 Office f Management and Budget

16 Best in Class State Examples Utah Divisin f Facilities Cnstructin and Management Prvides centralized facilities related services maintenance, peratins, design and cnstructin t 200 plus buildings. Facilities Cnditins Indices (FCIs) renewed every 5 years per facility. A cmputerized maintenance management system used t manage their prtfli, reactive and preventative maintenance and real estate management. Deferred maintenance funding apprpriated int the annual budget as percentage f the value f all state facilities Key Perfrmance Indicatrs are measured - FCIs, maintenance csts per sq. ft. Texas has benchmarked success as well 16 Office f Management and Budget

17 The Lng View Build n Successes f Juneau Pilt Advance in waves t bring in all state facilities Results-based reprting t investrs, stakehlders, public Cntinuus imprvement culture Best stewardship f public funds rted in cnsistency and predictability 17 Office f Management and Budget

18 Future Cnsideratins The Gvernr s 10 Year Plan includes $70M-$90M cmbined funding level fr DM and Schl Maintenance. DM shuld be a primary cmpnent f a GO Bnd package DM funding has strng lcal and in-state ecnmic impact DM distributin cnsideratins based n bjective rating system t address mst critical prjects statewide Cnstant attentin t Preventative Maintenance required 18 Office f Management and Budget

19 Fr mre infrmatin n the budget Office f Management and Budget Pat.Pitney@alaska.gv 19 Office f Management and Budget