Senate Fiscal Committee Central Distributions Subcommittee April 17, TOPIC: Physical Plant Assessment Rates (Plant Operation and Maintenance)

Transcription

1 Senate Fiscal Committee Central Distributions Subcommittee April 17, 2012 TOPIC: Physical Plant Assessment Rates (Plant Operation and Maintenance) CONTEXT: Consistent with the principles of budget restructuring, the cost of utilities, maintenance, and a basic level of custodial services are allocated on a uniform campus-wide average across general funds and earnings unit space. Units can choose to voluntarily contract for higher levels of service. As part of the previously approved plan to increase the deferred maintenance and renewal component to $1.00 per ASF by FY 2016, the maintenance and renewal rate has increased from $0.65 per assignable square foot to $0.75 per ASF for FY Similarly, as part of the previously approved plan to increase the preventive maintenance component to $0.75 per ASF by FY2015, the preventative maintenance rate has increased from $0.30 to $0.45 per ASF for FY This is to be used for maintenance to be performed when it is needed or scheduled, and therefore not delayed or deferred to a future period. Last year an additional maintenance component, Priority Deferred Maintenance Projects, was added to provide the funding for the university to catch up on certain major deferred maintenance projects that are currently necessary. The component is not funded in FY 13, because the total POM rate increases by $0.05 before it is added in. In contrast, last year s POM margin would have been negative without this component. Last year s total physical plant rate before adding Priority Deferred Maintenance Projects was $ This year s rate without this component is $15.53, for an increase of $0.44, or 3%. This increase is driven most significantly by the Utilities Debt Service rate, which is increasing by $0.46. Projects to be funded through this assessment include chiller plant buildout and renewal, steam and condensate distribution system, and boiler replacement. This year s proposed rate eliminates the previous $1M allocation to Utility Reserve, which has a current uncommitted cash balance of $29.4 million.

2 Colleges and support units are charged for increases in physical plant costs resulting from space increases and credited with costs of vacated space since FY 03. In FY 13, as in prior years, colleges will be: Charged an inflationary increase on space assigned to them prior to January 1, 2011 and charged the full physical plant rate for space newly assigned to them between January 1 and December 31, Credited with the costs associated with the physical plant for space vacated by the unit between January 1 and December 31, Cost allocations are adjusted at the close of the fiscal year to reflect changes in the units space assignments through mid-fiscal year. Costs for FY 12 will be favorably impacted by four facilities that ceased receiving PPA services between January 1, 2011 and December 31, 2011 and eventually were demolished: Boyd Lab, Johnston Lab, Haskett Hall, and the Aviation Building. In addition, the university is transferring its space in McCampbell Hall to the Medical Center in exchange for a slightly larger space in Starling Loving Hall. The costs resulting from additional space will be moved into the physical plant assessment. Please see Attachment A for details. As in previous years, several buildings were analyzed to determine if their estimated utility costs exceed the university s rate by more than 15%, which would initiate a recommendation to implement a surcharge. Based on this analysis, a surcharge will be charged again for BRT utilities, McCorkle, and RPAC. Please see Attachment B for details. RECOMMENDATIONS: The FY 13 university-wide average physical plant assessment is calculated to be $15.53 per assignable square foot, which is an increase of 0.3% from FY 12 s assessment. Please see Attachment C for details. This contrasts with last year s 0% increase, primarily as a result of increases in utilities debt service, as well as somewhat lower increases in purchased power and water & sewerage cost. Please see Attachment D for increases in previous years. CONSIDERATIONS: Are there unintended consequences from the implementation of this proposed increase? Who else should be consulted before the FY 13 rate is approved?

3 Attachment A The Ohio State University Projected Annual PBA Cost of New Facilities FY2013 PBA Project # OSU Building Name Demolitions Boyd/Johnston/ Aviation/ Haskett Transfer of McCampbell Hall to Medical Center Building # 027,036,074, Transfer of Starling Loving From Medical Center FY2013 PBA Total POM Date 7/1/2011 1/1/2012 1/1/2012 POM % 100% 100% 100% ASF Change (75,944) (50,912) 54,560 (72,296) ASF Custodial (75,944) (50,912) 54,560 (72,296) Maintenance (75,944) (50,912) 54,560 (72,296) Utilities (75,944) (50,912) 54,560 (72,296) Cost 2012 $/ASF Buildings (195,176.08) (130,843.84) 140, (185,801) Maintenance (187,581.68) (125,752.64) 134, (178,571) Utilities Operations (52,401.36) (35,129.28) 37, (49,884) Repair & Renovation (73,665.68) (49,384.64) 52, (70,127) Total Cost (508,824.80) (341,110.40) 365, (484,383.20)

4 Attachment B DRAFT Adequacy of PPA for BRT/McCorkle/RPAC Utilities Funding As Recommended by Central Distributions Subcommittee Projected FY 2013 Cost ASF PPA Rate Projected Funding Shortfall Surcharge/ ASF BRT Utilities $3,358, ,458 $8.08 $2,891,978 $466,736 $1.65 McCorkle Utilities $860,358 76,777 $8.08 $620,358 $240,000 $3.13 RPAC Utilities $1,635, ,519 $8.08 $1,345,474 $290,000 $1.74 Utilities surcharges are recommended for BRT, McCorkle, and RPAC because the projected FY 2013 utilities rates per ASF for these buildings are more than 15% in excess of the rate for the rest of the university.

5 Attachment C DRAFT Analysis of FY 2013 Physical Plant Assessment Rates (numbers in thousands) FY 2013 Proposed FY13 Budget Marginal Change $/ASF Change from 2012 Pcnt Change Utilities Utilities Revenues Heat & Power Income -26,798-2, % Water Income -3, % McCorkle Surcharge % RPAC Surcharge % BRT Utilities Surcharge % Subtotal Utilities Revenue -31,047-2, % Utilities Costs Gas, Fuel Oil 15,100-3, % Metering/Equipment Install % Purchased Power 36,000 1, % Water & Sewerage 10,397 1, % Utilities Chemicals NA Utilities Repair & Renov % Utilities Debt Service 22,991 3, % Utility Reserve 2 0-1, % Utilities Operations 3,4 6, % New Facilities NA Subtotal Utilities Costs 91,842 1, % Total Utilities 60, % ASF 7,421, % Maintenance Maintenance Operations 3,6 22, % Net Maint. Operations 22, % New Facilities NA Repair and Renovation 8, % Total Maintenance 30, % ASF 7,913, % Custodial Contract Services 7, % Custodial Operations 3 9, % New Facilities NA Total Custodial 17, % ASF 6,573, % Deferred Maintenance/Renewal Deferred Maint/Renewal 7 5, % ASF 7,177, % Preventive Maintenance Preventive Maintenance 8 3,230 1, % ASF 7,177, % Priority Deferred Maintenance Projects Priority Defer Maint Proj 0-2, NA ASF 7,177, % Total 117, % 1 BRT Utilities Surcharge is based partly on actual meter readings, partly on projections. 2 Utilties Reserve has a current uncommitted cash balance of $29.4 M. 3 FY 2013 Utilities, Maintenance, and Custodial Operations are based on 3.0% guidelines for salaries; 6.85% for benefits. 4 Utilities operations includes Chilled Water Staffing starting in FY New Facilities is shown as a separate line in each cost pool because new space is included in ASF figures, but increases/decreases in costs due to new/demolished space are not reflected in cost projections for utilities, maintenance, and custodial operations. 6 Maintenance operations includes Elevator Inspection II starting in FY Annual increases of $0.10 in the Deferred Maintenance/Renewal rate are planned until it reaches $ Annual increases of $0.15 in the Preventive Maintenance rate are planned until it reaches $0.75.

6 Attachment D DRAFT The Ohio State University Physical Plant Rates Trends from FY 2003 to FY 2013 Recommended by Central Distributions Subcommittee Actual Rec FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 Utilities $ 3.60 $ 4.19 $ 4.81 $ 5.54 $ 7.22 $ 7.97 $ 8.38 $ 8.69 $ 8.74 $ 8.07 $ 8.08 Maintenance $ 2.50 $ 2.52 $ 2.61 $ 2.73 $ 2.76 $ 2.97 $ 3.16 $ 3.32 $ 3.48 $ 3.50 $ 3.62 Custodial $ 2.09 $ 2.11 $ 2.15 $ 2.12 $ 2.19 $ 2.37 $ 2.47 $ 2.52 $ 2.56 $ 2.57 $ 2.63 Maintenance & Renewal $ $ $ 0.06 $ 0.12 $ 0.19 $ 0.25 $ 0.35 $ 0.45 $ 0.55 $ 0.65 $ 0.75 Preventive Maintenance $ $ $ $ $ $ $ $ $ 0.15 $ 0.30 $ 0.45 Priority Deferred Maint Projects $ $ $ $ $ $ $ $ $ $ 0.39 $ Total Rate $ 8.19 $ 8.82 $ 9.63 $ $ $ $ $ $ $ $ Percentage Change FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 Utilities 16.4% 14.8% 15.2% 30.3% 10.4% 5.1% 3.7% 0.6% 7.7% 0.1% Maintenance 0.8% 3.6% 4.6% 1.1% 7.6% 6.4% 5.1% 4.8% 0.6% 3.4% Custodial 1.0% 1.9% 1.4% 3.3% 8.2% 4.2% 2.0% 1.6% 0.4% 2.3% Maintenance & Renewal na na 100.0% 58.3% 31.6% 40.0% 28.6% 22.2% 18.2% 15.4% Preventive Maintenance na na na na na na na na 100.0% 50.0% Priority Deferred Maint Projects na na na na na na na na na 100.0% Total Rate 7.7% 9.2% 9.1% 17.6% 9.7% 5.9% 4.3% 3.3% 0.0% 0.3%