Legislature(2023 - 2024)ADAMS 519
02/01/2023 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| Presentation: Deferred Maintenance | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 39 | TELECONFERENCED | |
| *+ | HB 41 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
February 1, 2023
1:33 p.m.
1:33:01 PM
CALL TO ORDER
Co-Chair Edgmon called the House Finance Committee meeting
to order at 1:33 p.m.
MEMBERS PRESENT
Representative Bryce Edgmon, Co-Chair
Representative Neal Foster, Co-Chair
Representative DeLena Johnson, Co-Chair
Representative Julie Coulombe
Representative Mike Cronk
Representative Alyse Galvin
Representative Sara Hannan
Representative Andy Josephson
Representative Dan Ortiz
Representative Will Stapp
Representative Frank Tomaszewski
MEMBERS ABSENT
None
ALSO PRESENT
Neil Steininger, Director, Office of Management and Budget,
Office of the Governor; Jason Sakalaskas, Director,
Facilities Services, Department of Transportation and
Public Facilities; Sara Perman, State Relations Manager,
University of Alaska.
PRESENT VIA TELECONFERENCE
Alesia Kruckenberg, Director, Planning, Strategy, and
Budget, University of Alaska; Nathan Leigh, Director,
Facilities Services, University of Alaska Southeast;
Christopher McConnell, Director, Facilities, Planning, and
Construction, University of Alaska Anchorage.
SUMMARY
HB 39 APPROP: OPERATING BUDGET/LOANS/FUND; SUPP
HB 39 was SCHEDULED but not HEARD.
HB 41 APPROP: MENTAL HEALTH BUDGET
HB 41 was SCHEDULED but not HEARD.
PRESENTATION: DEFERRED MAINTENANCE BY:
OFFICE OF MANAGEMENT and BUDGET
DEPARTMENT OF TRANSPORTATION and PUBLIC FACILITIES
UNIVERSITY OF ALASKA
Co-Chair Edgmon reviewed the meeting agenda.
^PRESENTATION: DEFERRED MAINTENANCE
1:34:35 PM
NEIL STEININGER, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET,
OFFICE OF THE GOVERNOR, provided a PowerPoint presentation
titled "Office of Management and Budget: Deferred
Maintenance: House Finance Committee," dated February 1,
2023 (copy on file). He began with a definition of deferred
maintenance on slide 2:
Deferred maintenance is maintenance or repair projects
that have been delayed or postponed due to lack of
funds within an entity's normal operating budget
cycle.
State of Alaska property portfolio:
•2,400+ facilities (includes University)
•20 million square feet of space
•15 State Agencies
•Type varies by Agency
Mr. Steininger elaborated on slide 2. He relayed that each
department with responsibility for one or more facilities
generally had money in its operating budget for routine
maintenance; however, often projects could be put off
because they were too large in scope or were put off as a
result of short funding. Once that took place, the work
became deferred maintenance and moved to a backlog list.
He noted the need for deferred maintenance varied greatly
by agency. He highlighted examples including the capitol
building and a remote cabin used for field workers for the
Department of Fish and Game (DFG). Depending on the age,
use, and location, the facilities had very different
maintenance needs.
Co-Chair Edgmon asked for verification that the deferred
maintenance category and list did not include K-12 public
schools.
Mr. Steininger responded affirmatively. The list only
included state-owned facilities. He noted the only schools
included were Mount Edgecumbe and the University.
1:37:27 PM
Mr. Steininger turned to slide 3 titled "Funding
Recommendations and Targets." There was no one definitive
rule on the level of preventive maintenance necessary to
avoid deferred maintenance, but a 2012 National Research
Council publication referenced a range of 2 to 4 percent of
replacement cost value of the buildings. The total FY 21
replacement cost value (excluding University) was
$7,678,370.1. He explained that if the figure was extended
to the 2 to 4 percent range the replacement value cost was
between $150 million and $310 million. He noted that other
publications sometimes used 1 percent as a benchmark, which
would be about $76 million.
Co-Chair Edgmon recognized that Representative Ortiz had
joined the meeting.
Representative Hannan had seen an annual report published
in Alaska that used a letter grading scale (A-F) to rate
statewide facilities and maintenance. She wondered if the
engineers compiling the report used data from the Office of
Management and Budget (OMB). She noted that the state was
typically given a C to D rating on the maintenance of its
facilities.
Mr. Steininger replied that he was not familiar with the
specific report. He would follow up.
Representative Hannan relayed that she would find the
report and pass it along to OMB.
Co-Chair Edgmon believed Representative Hannan was
referring to a national publication that gave grades to
every state.
Representative Hannan agreed but noted the Alaska chapter
of the organization provided input from Alaskan engineers.
1:40:37 PM
Representative Tomaszewski observed that slide 2 included
the University; however, the information on slide 3 did
not. He asked for the reason.
Mr. Steininger answered that OMB did not have the data for
the University for slide 3. He explained that the
University's maintenance was generally budgeted separately,
and the University would provide its own presentation on
its facilities. He informed committee members that most of
his slides going forward in the presentation would exclude
the University.
Mr. Steininger moved to slide 4 titled "Governor's Budget
Maintenance Funding." The slide included deferred
maintenance and ongoing operating maintenance in the FY 24
budget. The capital budget included $35 million spread
across statewide deferred maintenance, court system
maintenance, corrections statewide security doors and
windows, courts maintenance, and DFG maintenance. The FY 24
maintenance and operating allocation for all agencies was
about $77.8 million. The total for capital and operating
shown on slide 4 was $112.6 million. He highlighted that
the total was greater than the 1 percent benchmark but fell
short of the 2 to 4 percent range.
Representative Galvin asked why there was a separation
between the executive agencies from the University. She
asked if it was typical for other states.
Mr. Steininger answered he was not sure if it was normal
for every state to separate their university from the rest
of the budget. He explained that in Alaska, the University
of Alaska budget was a recommendation of its Board of
Regents, which was independent from the governor's budget
process. He relayed that the University generally spoke to
its budget request separately from the rest of the state's
budget requests out of respect for the board's process.
Representative Galvin assumed the split was historically
typical in order for the Board of Regents to make their own
ask for their own needs.
Mr. Steininger responded that the University was included
in the governor's budget. The University was not under the
Division of Facilities Services and the Department of
Transportation and Public Facilities (DOT); it had its own
structure for deferred maintenance. He explained that the
University had its own structure for maintenance
activities. The state had historically provided a portion
of the deferred maintenance funding to the University to
ensure it could meet its highest needs. He remarked there
was some gray area.
1:45:30 PM
Representative Galvin asked for verification there was not
a higher value given to state facilities over the
University facilities. She surmised the separation occurred
for the sake of better communication.
Mr. Steininger replied, "Generally speaking, yes."
Representative Josephson believed Mr. Steininger had stated
something that was not entirely accurate. He referenced Mr.
Steininger's statement that occasionally a portion of
statewide deferred maintenance funding was given to the
University if there was not an appropriation. He remarked
that the legislature writ large had eagerly wanted to
provide the University with deferred maintenance funding,
but the governor had typically vetoed all or some of the
funding. He asked if his understanding was accurate.
Mr. Steininger confirmed that in prior years there had been
maintenance projects appropriated to the University by the
legislature that had subsequently been vetoed by the
governor. He stated in some of those years a portion of the
statewide deferred maintenance had been provided to the
University, but it did not occur every year.
Representative Ortiz referred to Mr. Steininger's statement
that the $112 million (maintenance and operations total) on
slide 4 was above the 1 percent [replacement cost value
shown on slide 3] but less than the 2 to 4 percent. He
asked if deferred maintenance costs would increase
significantly if work was not addressed in the near-term.
1:49:04 PM
Mr. Steininger answered there had been growth in the
deferred maintenance backlogs over time, especially
following the period a decade back where there had been
large appropriations for maintenance. During his time with
OMB he had seen efforts to dispose of state assets that
were no longer needed. The effort helped reduce the total
replacement cost value; however, the replacement value of
the existing buildings was appreciating. He highlighted
that as a result as a lack of resources at a statewide
level, the state was funding deferred maintenance as much
as possible, but maybe not as much as it should. The
strategy to address the issue included funding in addition
to assessing whether all of the state's existing facilities
were needed. There were a fairly large number of state
buildings and deferred maintenance was a need that needed
to be addressed. The funding allocated in the budget
reflected the means available to address the need and the
question was how to allocate the needs as best as possible
to address the highest priority projects.
1:51:07 PM
Co-Chair Johnson looked at the fourth line down in the
table on slide 4 pertaining to DFG vessel and aircraft
deferred maintenance. She asked if DFG was the only
department with vessels and aircrafts. She asked if there
was DOT deferred maintenance on vehicles. She asked if it
was typical to include equipment.
Mr. Steininger replied that the presentation should have
also included Alaska Marine Highway System (AMHS) vessel
maintenance as deferred maintenance of a significant asset.
Maintenance typically referred to buildings, but the state
also had some significant assets such as DFG vessels and
vessels in the Department of Public Safety (DPS) in
addition to AMHS vessels.
Co-Chair Johnson looked at slide 5 titled "Statewide DM
Appropriation by Agency" and asked if it should include an
FY 24 column.
Mr. Steininger clarified the slide pertained to prior year
appropriations. He explained that the proposed FY 24
distributions would not be made until the appropriations
were made. Slide 5 showed the deferred maintenance
distributions by agency beginning the first year the
distributions started taking place at a statewide level in
FY 18 through FY 23. Prior to FY 18 there were numerous
facilities in the state that did not receive appropriations
for maintenance on a consistent basis. Many of the
appropriations were made for good cause including
correctional facilities or a Pioneer Home, but there had
been facilities such as office buildings or labs saw
significant maintenance problems building up. The change
had been made in FY 18 to be more inclusive of all
facilities needing attention. The table showed where
distributions had been made over time, including
distributions to the university system.
Mr. Steininger highlighted unallocated funding in FY 23
shown on slide 5. He referenced increasing prices
associated with construction including steel and lumber.
The administration was anticipating projects funded in the
previous two years may come back with cost overages;
therefore, some reserve had been held back in FY 23 to
address cost overruns.
1:55:24 PM
Co-Chair Johnson asked for verification that the
distribution would come later on after there had been a
determination on need.
Co-Chair Edgmon believed the legislature appropriated $250
million the previous year for school major maintenance, the
University, and deferred maintenance. He estimated the
amount was around $150 million excluding public schools. He
looked at the FY 23 total of $27 million on slide 5. He
referenced the governor's vetoes of $100 million for
deferred maintenance and $50 million for the University. He
asked if it had been a carrying capacity issue in terms of
supply chain, workforce, and the ability to get projects
done on time.
Mr. Steininger replied that the preference with the
deferred maintenance distributions was to see projects that
could be started immediately in order to deploy the funding
and address facility maintenance needs as quickly as
possible. Another portion of the veto decision was to
ensure there was sufficient funding put into savings in the
event of oil price decline.
Co-Chair Edgmon stated that vetoes were at the prerogative
of the governor and every governor made them; however, a
good portion of the governor's $400+ million vetoes came
from deferred maintenance. He highlighted the importance of
the deferred maintenance issue. The current total was $7
billion and growing. He considered what happened on the
backend if the legislature appropriated the funding in a
significant way. There was a significant issue with a lot
of aged infrastructure that could go as far back as pre-
statehood. He elaborated that deferred maintenance had
lapsed in the 1990s when oil had been in the single digits.
He thought it was important to provide the context and
stated the importance of deferred maintenance but noted
down the road "we may not be able to get the funding to
it."
1:58:42 PM
Mr. Steininger turned to a chart on slide 6 titled "Backlog
$703,493.1 (excluding University)." The backlog of $703.5
million in deferred maintenance projects included
facilities under management of the Division of Facilities
Services. The vast majority of the projects were under DOT
in terms of dollar value (DOT had the majority of
facilities under management). He highlighted that DOC and
DNR also had fairly large backlogs. He pointed to a bar
titled "DOT&PF PBF" showing the Public Building Fund (PBF).
The PBF was separated from the main DOT bar because it
primarily represented state office buildings, which were
managed together under a single fund. The financing for the
state office buildings was managed a bit differently
related to federal rate management rules for leasing
buildings back to state agencies.
JASON SAKALASKAS, DIRECTOR, FACILITIES SERVICES, DEPARTMENT
OF TRANSPORTATION AND PUBLIC FACILITIES, addressed slide 7
titled "Statewide Funding Approach." The allocation process
was a collaborative effort between OMB and the department.
He reviewed the slide:
• OMB facilitates the collection of agency deferred
maintenance lists
• State Facilities Council reviews and prioritizes
deferred maintenance projects across executive branch
agencies
• Facilities Council deferred maintenance workshops
anticipated February through June, with goal of
Statewide prioritized list to OMB June 2023
• Projects to be prioritized based on combination of
significant factors including facility importance,
building system, and urgency to create a *Project
Index Value (PIV).
Mr. Sakalaskas discussed the DOT project ranking formula on
slide 8.
• Project prioritization a combination of the below to
create a Project Index Value (PIV):
PIV= (MAI) x (System Factor) x (Need)
o MAI-Mission Alignment Index, alignment of
facility to an Agency's mission
o System Factor -Scale related to various building
systems and their impact on building
o Need -The urgency and criticality for replacement
• If known, other attributes are also considered such as
anticipated return on investments, any matching funds,
or eligibility as a financed energy savings
performance project
Mr. Sakalaskas elaborated the Facilities Council held
multiple meetings between February and May where there were
discussions on projects including return on investment,
available matching funds, and eligibility as a financed
energy savings performance project.
2:03:12 PM
Representative Hannan stated that DOT's maintenance
building in Haines was leaking, noncompliant with
electrical, could not meet snow load needs, and the
breakroom was no longer useful because plumbing and sewage
backed up and yet the project had not qualified as a
significant project. She found the project need to be
critical. She elaborated all of the equipment was stored in
the space including computers that got bagged every day due
to leakage and unplugged due to the electrical system
problems. She shared she had been in the legislature for
five years and the building had been in the same condition
at the beginning of her tenure. She stated it was a small
building and would not cost millions of dollars. She was
fairly certain it was not unique across the state. She
believed there were many small buildings across the state
that a few people worked out of that were in horrible
shape. She asked how to make sure the buildings were
standing, the equipment was secured, and the equipment was
accessible when needed for airport maintenance, plow
maintenance, troopers, and other.
Mr. Sakalaskas answered that he would follow up on the
status of the project. He relayed that the project was in
active design status for a replacement building. He would
have to follow up to confirm whether the project was
included in the capital budget. He knew it was high on the
priority list and the department was working through
determining what was needed to potentially replace the
facility. He added it was a bit beyond a deferred
maintenance need.
Representative Hannan was glad to hear the information and
thought the building appeared to be condemnable.
2:06:01 PM
Mr. Sakalaskas moved to slide 9 titled "Mission Alignment
Index." The index ranked the importance of a facility to
the agency for completing its mission. The index ranked the
critical nature of the project in addition to whether a
facility was capable of delivering the needed service, how
it was being utilized, and the location (to determine
whether there were other facilities in the area that could
deliver the need if necessary). The mission alignment index
allowed the department to better look at risk management in
the program and guided invest or divest decisions. He noted
the rating factor was determined solely by the agency
occupying the facility.
Mr. Sakalaskas turned to slide 10 and reviewed mission
alignment index examples. The index was broken down into
critical, important, supportive, and other/non-mission
critical. He highlighted a key maintenance station,
correctional center, and a school as an example of a
critical ranking. An example of an important rating
included office buildings and supportive or non-mission
critical ratings included certain warehouses or storage
buildings.
Mr. Sakalaskas moved to slide 11 titled "Systems & Needs
Examples." The systems were first analyzed with a highest
priority of life, health, and safety. Some of the systems
under the specific category within the facility included
sprinklers, fire alarms, and structure. The department also
reviewed the envelope and shell of a structure including
the roof, exterior walls, and windows. Other items included
in the assessment of a facility included mechanical,
electrical, plumbing, interior, exterior grounds, and
furnishings. The need was broken out into three categories
including critical, important, and necessary. The
definition of critical was life, health, safety and looking
at any code hazards that may be present. Important projects
included facilities that needed action within the next five
years to prevent any further deterioration. Necessary
projects were those that required attention to prevent any
type of deterioration or downtime of a facility.
2:09:08 PM
Mr. Sakalaskas reviewed examples from the 2022
prioritization cycle on slide 12. He noted the information
was an example of information provided to OMB as a
prioritized list. The mission alignment index was
determined by the department that owned the facility. The
examples shown were classified as critical/essential
buildings to deliver the service of the department. He
reiterated an earlier statement that the factor was the
sole determination of the agency occupying the facility,
whereas the system factor and need was scored across the
Facilities Council and an average was taken to obtain the
project index value and ranking. He noted that the council
scored more than 100 projects in the past year.
Representative Galvin referenced the storage facility in
Haines (discussed by Representative Hannan earlier in the
meeting). She wondered about the routine maintenance
included in the budget. She wondered if routine maintenance
was sufficient to help prevent slipping to the higher need
of deferred maintenance. She used an example of basic
maintenance like clearing snow from a roof.
Mr. Steininger responded that one of the reasons much of
the deferred maintenance activity had been centralized
under the Division of Facilities Services was due to
disparity between different agencies in ongoing operating
maintenance. He explained that during the years of budget
constraint, agencies had to make decisions about what to
spend money on and sometimes facilities maintenance versus
ensuring a social worker was going out to see a child could
be a challenging decision to make. He relayed that
generally there were one or two projects per year that
could be achieved by ongoing maintenance. He stated it was
a prioritization issue that had to be confronted on a
fairly routine basis.
2:13:44 PM
Mr. Sakalaskas discussed deferred maintenance project
implementations on slide 13.
• Typical project efforts may include planning, design
and construction phases with varying durations
depending on scope and intensity
• Projects offer opportunities for local and statewide
design professionals and contractors through the
State's procurement processes
• Typical project cost impacts may include economic
markets of contracting, commodity prices, scope
increases due to unknown conditions or hazardous
materials.
o Projects can come in both under or above
estimates. In some cases the state has seen bids
exceeding estimates by ranges of 65-113%
o These challenges are shared within Facilities
Council forums and used to help inform future
projects
Mr. Sakalaskas elaborated on slide 13. The Facilities
Council actively discussed the cost overruns in order to
provide accurate information to OMB.
Co-Chair Edgmon stated it was a larger piece of the same
puzzle with inflation and supply chain issues. He
elaborated that if a project was included in the budget
with the knowledge there could be a 20 percent add-on in a
year or two it had to be a consideration. He stated it was
a consideration for school districts that were not part of
the current conversation. He highlighted an example of a
maintenance project at a school in his district. One year
after the project had started the district learned it would
cost a quarter more than what had been budgeted. The
district had come back to the state and had been unable to
get the additional funding; therefore, the district had to
scrounge around locally. He noted it was definitely a
consideration.
2:16:17 PM
Mr. Steininger moved briefly to slide 15 titled "State-
Owned Facilities Count by Agency" (including the
University). He highlighted that DOT had a large number of
facilities, which resulted in a much greater backlog when
compared to other agencies (excluding the University).
Slide 16 titled "State-Owned Facility Space by Agency"
indicated that while the University had about half as many
buildings as DOT, it had significantly more in square
footage, which drove the deferred maintenance needs and
backlog.
Representative Hannan observed that slide 15 specified the
governor's office owned three facilities. She asked for
detail on the facilities.
Mr. Steininger answered the facilities included the
governor's house and the lieutenant governor's house. He
would follow up on the third facility.
Mr. Steininger moved to slide 17 titled "State-Owned
Disposed Assets." He discussed the state's efforts to
dispose of assets that were no longer needed. The slide
showed a list of assets disposed of over the past several
years. The administration continued to look at the need for
an asset and the ability to dispose of an asset if it was
no longer necessary for the mission of an agency.
Co-Chair Edgmon asked if there were any Infrastructure
Investment and Jobs Act (IIJA) funds specifically
designated for deferred maintenance.
Mr. Steininger answered that there were none that he knew
of that would specifically go to deferred maintenance on a
state facility; however, there were some areas where the
state may be able to leverage a program out of the
infrastructure bill to do a replacement of a facility or
find a way to reduce some of the backlog.
Representative Hannan observed that the square footage for
DFG and the office of the governor were identical on slide
16. She suspected it was an error on the slide.
Mr. Steininger agreed it was likely an error. He would
follow up.
Representative Josephson asked if the ten-year outlook ever
used the more ambitious 4 percent of replacement cost
value.
Mr. Steininger responded that a significant portion of the
money funding deferred maintenance was designated general
funds (DGF) and the ten-year outlook generally only looked
at UGF. The outlook included inflation of 1.5 percent per
year, which would apply to some of the operating
maintenance. He stated the outlook did not reach the 4
percent level; it was a more constrained level the state
could afford.
2:21:17 PM
Representative Josephson looked at the total of $112
million in maintenance funding including $77 million in
maintenance and operations on slide 4. He remarked it
sounded like an annual event. He asked if Mr. Steininger
could make an argument that the $77 million was just like
the other $35 million. He stated they struck him as
different from each other.
Mr. Steininger answered the money in the operating budget
for maintenance and operations was different from deferred
maintenance. He elaborated that deferred maintenance were
things that the state should have ideally been able to
accommodate within the preventative maintenance and
operations budget in the operating budget but could not due
to a lack of resources. The two expenditures were
different, but the lack of one drove the other.
Co-Chair Edgmon thanked Mr. Steininger and Mr. Sakalaskas
for the presentation.
2:23:43 PM
AT EASE
2:25:21 PM
RECONVENED
SARA PERMAN, STATE RELATIONS MANAGER, UNIVERSITY OF ALASKA,
provided a PowerPoint presentation titled "University of
Alaska: Empower Alaska: Capital Budget Overview," dated
February 2023 (copy on file). She represented the entire
University of Alaska system. She described her role as
similar to a legislative liaison for the University. She
listed individuals available online.
Ms. Perman discussed detail about the University facilities
on slide 2:
UA Facility Profile
• Serve academic, research, and community service
mission
• Facility type varies from residential housing,
general offices, and classrooms to complex
laboratories
• 394 facilities, spanning 7.9 million square feet,
average age is 35 years
• $4.9 billion inflation adjusted value and $1.5
billion backlog of deferred maintenance and renewal
projects
Ms. Perman elaborated on slide 2. The University accounted
for 394 of the state's 2,400 facilities. The facilities
totaled 7.9 million square feet or two times any other
agency. She looked at the last bullet point and noted the
University was above and beyond the percentage of
replacement value discussed by Mr. Steininger. The
University received fairly consistent funding of
approximately $50 million per year through FY 13, which had
helped to maintain and flatline its deferred maintenance
backlog; however, declining maintenance budgets over the
past several years had caused the total to skyrocket up to
$1.5 billion. She reviewed efforts the University was
making to mitigate the situation on slide 2:
UA Facility Stewardship
• Leverage shrinking maintenance operations budgets to
lengthen the service life of buildings beyond the
typical age for major renewal, focusing on
renovation and renewal where viable
• Decrease overall footprint, through efforts to move
from leased to owned facilities and sell or demolish
underutilized facilities
Ms. Perman continued to review slide 2:
UA Facility Funding
• Due to the lack of sufficient maintenance funding
UA's backlog of projects continues to grow
• There have been numerous unplanned closures causing
significant hardship on student learning and
research activities, as well as the associated lost
productivity of university students,
faculty/researchers, and staff
• Within a couple of years, UA can plan and execute
$35 --$50 million a year on deferred maintenance,
renewal and repurposing projects
Ms. Perman elaborated that there had been unplanned
closures at times, which directly translated to students,
academic halls, administrative buildings, and residence
halls. She stated that without serious attention it could
be presumed the situation would continue. She highlighted
that facility types included residential housing, academic
buildings (i.e., classes, laboratories, administrative
offices, and career and technical centers).
2:30:51 PM
Ms. Perman turned to a chart on slide 3 titled "Capital
Budget DM/R&R Funding History Unrestricted General Funds &
Backlog." The flat green line on the chart reflected the
University's historical average funding request for
deferred maintenance. The red line reflected the backlog
beginning with FY 07 through FY 23, showing an upward
trajectory beginning in FY 15. She highlighted that the
increase coincided with decreasing state appropriations
shown in dark blue bars. The University had been receiving
approximately $50 million per year for a significant period
of time; as the numbers decreased, the backlog increased
from $800 million to $1.5 billion.
Ms. Perman referred to an earlier question about missed
opportunity by not funding maintenance needs right away.
She answered that consistent funding of deferred
maintenance had helped the University flatline. She stated
it would take about $50 million per year to get back to
flatlining and potentially decreasing the backlog (knowing
the University was selling off some of its facilities). She
stated that without the funding, the backlog would continue
to rise.
Representative Josephson looked at the last bullet point on
slide 2. He stated that one way to interpret the
information was that the University would internally have
the resources on its own to dedicate $35 million to $50
million per year. He asked for verification that was not
the intended message.
Ms. Perman deferred the question to a colleague.
2:32:50 PM
ALESIA KRUCKENBERG, DIRECTOR OF STRATEGY, PLANNING AND
BUDGET, UNIVERSITY OF ALASKA (via teleconference),
clarified that if the University received state funding it
could deploy $35 million to $50 million within the next
several years. She explained the University did not
currently have the employees to deploy that amount.
Representative Stapp considered the deferred maintenance
funding history [slide 3] and remarked that inconsistency
appropriations was not the best way to resolve the problem.
He wondered why the state appropriations were inconsistent
as far back as FY 07.
Ms. Kruckenberg replied that she could not answer the
question specifically. There had been periods of time where
the legislature and the governor had been more generous
with deferred maintenance funding for the University and
other state agencies. She suspected it had more to do with
the overall finances of the state.
Representative Stapp stated the previous presenters had a
methodology to rank deferred maintenance projects. He asked
if the University had a similar system.
2:35:37 PM
Ms. Perman answered it was her understanding that the
individual universities forwarded their priority projects
to the University's Office of Strategy, Planning, and
Budget. The office worked with University President Pat
Pitney to create the priority list, which was then
forwarded to the board of directors for review and feedback
to compile a final request for the legislature. She asked
Ms. Kruckenberg to elaborate.
Ms. Kruckenberg agreed. She expounded that each university
had a robust process where the chancellor compiled a list
of their priority projects. The lists were brought to the
system office where they were prioritized across the
university system as a whole.
Co-Chair Johnson referenced a list of deferred maintenance
items in members' packets [titled "University of Alaska FY
24 Priority Deferred Maintenance and Renewal and
Repurposing"] (copy on file). She asked if the projects
were in order of priority.
Ms. Perman replied affirmatively. She moved to slide 4
titled "FY 24 Capital Budget Summary." She relayed that
separate from the current presentation, committee members
had received a book complied by the University called the
Red Book, which included information and detail on the
University's operating and capital budgets including
deferred maintenance. The book included the deferred
maintenance prioritization list. The priority list had been
put together with the feedback and guidance of the Board of
Regents. The top priority was $17.5 million for the
University of Alaska Anchorage (UAA) for four buildings
including the Wendy Williamson Auditorium, the professional
sciences building, the social sciences building, and the
Consortium Library for heating systems and electrical
safety upgrades. The other two priorities included facility
modernization for Washington, Wyoming, Alaska, Montana, and
Idaho (WWAMI) capacity expansion and an additional $54.8
million in deferred maintenance across the entire
university system.
2:39:51 PM
Ms. Perman turned to slide 5 and provided additional detail
on the University's highest priority capital projects. She
discussed the $17.5 million request for UAA in more depth.
The project would replace boilers, fin tubes, water piping
in various buildings, and the HVAC system in the central
core of the Consortium Library. The items were beyond
useful life and had a high risk of failure. The other three
items were capital projects but not deferred maintenance.
There was $2 million for WWAMI renovations. Additionally,
there was an increment for $6 million in federal receipts
for an Alaska Leaders Archive renovation and $2.5 million
in federal receipts for the Fairbanks North Star Borough
for childcare facilities at a University of Alaska
Fairbanks (UAF) building.
2:41:06 PM
Ms. Perman advanced to slide 6 titled "UA Deferred
Maintenance Projects." In addition to the $17.5 million
request for UAA, another priority deferred maintenance
project was $3.6 million for the University of Alaska
Southeast (UAS) for the Technical Education Center by
Harris Harbor, the Sitka Hangar, and the Alaska Maritime
Training Center in Ketchikan. She elaborated that the three
buildings were in desperate need of roof replacements. The
slide also included $11.3 million for work on the UAF Patty
Pool including refinishing surfaces, electrical, repairing
the pool vessel, bleachers, lighting, and safety
compliance. The increment would also pay for the
replacement of 23 fire alarm systems and various other
electrical safety components throughout UAF.
Ms. Perman relayed that slide 7 pertained to facility
modernization and not deferred maintenance. She asked if
Co-Chair Edgmon would like her to review the slide.
Co-Chair Edgmon agreed.
Ms. Perman reviewed slide 7 titled "UA Facility
Modernization." The modernizations came from a perspective
of trying to increase student enrollment at the UA campuses
and increase and boost the workforce. She reviewed the
items on the slide:
• $8 million UAA Health Workforce Diversity Expansion
and Library Learning Commons renovate Sally Monserud
Hall for critical health workforce training and
relocates the learning commons into the UAA/APU
Consortium Library.
• $12.5 million UAF Lola Tilly modernized to create a
more welcoming, centralized area for student affairs
and public facing functions.
• $1 million UAS Natural Sciences relocate laboratory
programs from the Natural Science Research Lab
building to the Anderson Building, bringing all of our
Natural Sciences students, faculty, and staff into one
area for better continuity, economy, and synergy.
2:46:05 PM
Representative Hannan asked if the UA workforce Sally
Monserud Hall was the same facility that the WWAMI lab was
being built into for $2 million. She asked if the building
in total needed $10 million to modernize for other critical
health needs like training labs for nurses.
Ms. Perman confirmed that the Sally Monserud Hall had been
identified from the College of Health as the primary hub
for all medical related training. The building included
three different labs and associated simulation rooms for
the WWAMI program and an additional three facilities for
nurses including simulation and debriefing rooms. She
believed it was the intent to designate the west campus as
the College of Health hub the east campus would be the
academia hub. The project would relocate the student
commons from the Sally Monserud Hall to the Consortium
Library. The funding was $2 million UGF for WWAMI and $5.75
million for nursing. The additional $2.25 million was in
DGF funds. The total was just under $8 million UGF.
Representative Hannan asked if the $8 million included the
$2 million for WWAMI.
Ms. Perman answered that the $8 million was separate from
the $2 million for WWAMI.
Representative Hannan asked if the increment for UAS
natural sciences pertained to moving people out of the old
National Oceanic and Atmospheric Administration (NOAA)
facility in Juneau. She elaborated that when NOAA had built
the Ted Stevens facility in another location, UAS had
acquired the antiquated NOAA lab location.
Ms. Perman deferred to a colleague.
NATHAN LEIGH, DIRECTOR, FACILITIES SERVICES, UNIVERSITY OF
ALASKA SOUTHEAST (via teleconference), replied that the old
NOAA building had been torn down a couple of years back. A
new building was under construction in the same location as
it was cheaper than restoring the old facility. The $1
million increment would help move one lab out of the old
Natural Science Research Lab (NSRL) building near the city
bus barn (the old Department of Environmental Conservation
building). The lab would move to the old scuba locker in
the Anderson Building, which was located next to the
building currently under construction. The lab was highly
technical and required special ventilation, which was
already available in the Anderson Building. He explained
that moving the lab to the Anderson Building saved money
because it meant the new building would need an upgraded
ventilation system. He elaborated that most of the money
would go towards building a parking lot for the NSRL
building. The desire was to get rid of the old NSRL
building to reduce its square footage to help with
operations and maintenance and UAS's deferred backlog.
2:50:58 PM
Representative Hannan understood the explanation. She
thanked Mr. Leigh.
Representative Stapp referenced the UAA heating project for
facilities built in the 1970s to avoid a catastrophic
failure [slide 5]. He stated that in Fairbanks all of the
catastrophic failures always seemed to be at 4:00 a.m. on a
Saturday. He provided a hypothetical scenario of a
catastrophic failure during the fall semester finals week
at the four facilities housing the most students. He asked
for detail about the critical nature of the project.
Ms. Perman deferred to a colleague.
CHRISTOPHER MCCONNELL, DIRECTOR, FACILITIES, PLANNING, AND
CONSTRUCTION, UNIVERSITY OF ALASKA ANCHORAGE (via
teleconference), replied the facilities were critical and
supported multiple programs across the UAA campus. The
Professional Studies Building (PSB) and Wendy Williamson
Auditorium were integrated. The PSB supported many College
of Health programs including the dean's office, behavioral
health programs, human performance labs, and other. The
buildings were currently at risk of system failures. He
added that system failures occurred on a recurring basis.
Currently, UAA was tracking close to $2 million to $3
million in unplanned failures per year. He would follow up
with the precise figures. The University worked to triage
the issues as best as possible.
Mr. McConnell provided examples of system failures in
recent years including broken sprinkler systems, elevators,
a fire in an electrical room, and other. The issues were
becoming more frequent particularly with older facilities;
however, as the newer systems aged, the items would stack
up. He highlighted that the University was trying to be
creative in the way it advocated for the projects. He noted
the specific UAA project had been presented to the
legislature in the past. He explained that the University
tried to couple the requests with high return on investment
(ROI) investments. For example, the project included
lighting and mechanical upgrades to reduce operating costs
and promote capital cost avoidance. There was an estimated
savings of $300,000 per year if the project was completed.
He confirmed the campus was at risk of having the midnight,
midsemester, midwinter call and having to strategize around
how to quickly respond. The University continued to look at
contingency planning pertaining to the possibility of
system failures.
2:55:22 PM
Representative Josephson thought the legislature needed to
find a way to support the university and strategize on how
to convince the administration to accept the
appropriations.
Representative Galvin referenced Mr. McConnell's testimony
there had been annual emergencies costing $2 million to $3
million per year. She looked at the $17.5 million increment
and asked for the overall cost over time associated with
the past emergencies. She was interested in the information
as part of a strategy to secure the funding in the budget.
2:57:27 PM
Co-Chair Edgmon wondered if they were crossing over from
deferred maintenance to modernization to an outright
capital project request. He agreed the topic should come
before the committee at some point.
Ms. Perman thanked the committee members for highlighting
their concerns.
Representative Josephson requested to hear from the
University on its salary negotiations with professors at
some point.
Co-Chair Johnson stated they were still working on the
schedule, but she would keep the request in mind.
Co-Chair Edgmon thanked the presenters and reviewed the
schedule for the following day.
ADJOURNMENT
3:00:18 PM
The meeting was adjourned at 3:00 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| OMB DM Overview HFIN 23.02.01.pdf |
HFIN 2/1/2023 1:30:00 PM |
Deferred Maintenance |
| Attachment 1 - FY23 Deferred Maintenance Backlog Summary.pdf |
HFIN 2/1/2023 1:30:00 PM |
HFIN - DM Overview |
| FY24 UA Capital Budget One Pager 02.01.2023.pdf |
HFIN 2/1/2023 1:30:00 PM |
|
| UA FY24 Capital Overiew HFin 02.01.23.pdf |
HFIN 2/1/2023 1:30:00 PM |
UA Deferred Maintence - HFIN |
| OMB 2.1.23 HFIN Deferred Maintenance Responses.pdf |
HFIN 2/1/2023 1:30:00 PM |