Legislature(2021 - 2022)ADAMS 519
02/11/2022 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| Presentation: Village Safe Water Program | |
| Overview: Deferred Maintenance by the Office of Management and Budget | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
February 11, 2022
1:33 p.m.
1:33:16 PM
CALL TO ORDER
Co-Chair Merrick called the House Finance Committee meeting
to order at 1:33 p.m.
MEMBERS PRESENT
Representative Neal Foster, Co-Chair
Representative Kelly Merrick, Co-Chair
Representative Dan Ortiz, Vice-Chair
Representative Bryce Edgmon
Representative Andy Josephson
Representative Sara Rasmussen (via teleconference)
Representative Steve Thompson
MEMBERS ABSENT
Representative Ben Carpenter
Representative DeLena Johnson
Representative Bart LeBon
Representative Adam Wool
ALSO PRESENT
Ruth Kostik, Administrative Services Director, Department
of Environmental Conservation, Office of Management and
Budget, Office of the Governor; Neil Steininger, Director,
Office of Management and Budget, Office of the Governor.
PRESENT VIA TELECONFERENCE
Carrie Bohan, Facilities Services Program Manager, Division
of Water, Department of Environmental Conservation; Melanie
Arnolds, Director, Facilities Services, Department of
Transportation and Public Facilities.
SUMMARY
PRESENTATION: VILLAGE SAFE WATER PROGRAM
OVERVIEW: DEFERRED MAINTENANCE BY THE OFFICE OF MANAGEMENT
AND BUDGET
Co-Chair Foster reviewed the meeting agenda.
^PRESENTATION: VILLAGE SAFE WATER PROGRAM
1:33:55 PM
RUTH KOSTIK, ADMINISTRATIVE SERVICES DIRECTOR, DEPARTMENT
OF ENVIRONMENTAL CONSERVATION, OFFICE OF MANAGEMENT AND
BUDGET, OFFICE OF THE GOVERNOR, introduced herself and
staff.
CARRIE BOHAN, FACILITIES SERVICES PROGRAM MANAGER, DIVISION
OF WATER, DEPARTMENT OF ENVIRONMENTAL CONSERVATION (via
teleconference), introduced a PowerPoint presentation
titled "Department of Environmental Conservation House
Finance Committee," dated February 11, 2022 (copy on file).
She began on slide 2 and discussed the program's mission to
support rural communities in their efforts to develop
sustainable sanitation facilities. She discussed how the
mission was accomplished as follows:
• Funding planning, design and construction of water,
wastewater and solid waste projects
• Providing project management and oversight for grant
funded projects
Ms. Bohan moved to slide 3 and discussed rural sanitation
efforts. She read from the slide as follows:
• Work with partners to support communities in their
efforts to build technical, financial, and managerial
capacity
• Provide water and wastewater system operator training
and certification
• Remote Maintenance Workers
• Funded through federal grants from EPA and USDA and
associated state match in the operating budget
• 15 Remote Maintenance Workers at DEC and regional
health corporation provide onsite training and
technical assistance
• Emergency response and support
• Fund RUBA Program to provide technical assistance
regarding financial and managerial aspects of utility
operations Village Safe Water does not provide funding
for ongoing maintenance and operations of systems
1:39:26 PM
Ms. Bohan turned to a multicolored chart on slide 4 which
illustrated the funding sources for the Village Safe Water
(VSW) program. The first funding source was through a
capital improvement project (CIP), which was administered
by VSW. The CIP funding was comprised of State of Alaska
funds and federal funds, both of which required a 25
percent state match. Projects were evaluated every spring,
and some were selected for funding. Once projects were
selected for funding, funds were allocated to either the
Alaska Native Tribal Health Consortium (ANTHC) or VSW. She
elaborated that regardless of the funding source, the
agency could use the funds to support projects. The other
funding process was the Sanitation Deficiency System (SDS),
which combined funds from the Indian Health Service (IHS)
and "Indian and tribal set asides" from the Environmental
Protection Agency (EPA). In the systems, projects were
evaluated and scored, and once awarded, the fund was
distributed to either VSW or ANTHC depending on which was
providing support to the community.
Ms. Bohan moved to slide 5 titled "Village Safe Water:
Funding History." She explained that the colors on the
chart corresponded to the funding agencies that were
detailed in the previous slide. There had been a gradual
increase in funding primarily in the yellow category, which
reflected the EPA, and the light blue category, which
reflected IHS. Over the last few years, there had also been
some new contributions from the Denali Commission, in
addition to various COVID-related funding sources. She
highlighted the navy blue section, which showed an increase
in funding due to the American Rescue Plan Act (ARPA). The
ARPA funding was primarily being used by IHS and ANTHC to
develop comprehensive planning documents for the 30
unserved communities in Alaska as well as look at potential
alternatives for providing full service and developing cost
estimates for the projects.
1:43:51 PM
Ms. Bohan continued to discuss the funding history on slide
6. The light blue portion for FY 23 was IHS funding, which
had grown significantly as a result of the federal
infrastructure bill [Infrastructure Investment and Jobs Act
(IIJA)]. The program anticipated that funding for the next
five years would look similar to the federal amount in FY
23 (for the life of the infrastructure bill).
Representative Josephson referred to the federal
infrastructure funding for FY 23 and asked for more
information about the matching requirement.
Ms. Bohan replied that the funds would go through IHS and
there was no match requirement. She explained that VSW
would only become involved in the administration of the
funds if a community supported by VSW for engineering
services was a recipient of some of the funds.
Representative Josephson asked if it was the legislature's
job to offer support to the program. He asked how much the
legislature should be involved.
Ms. Bohan did not perceive that the legislature had a
specific involvement at the current time. She would share
some of the nuances of how the funding would be allocated
later on in the presentation. She noted that VSW funding
had a required state match.
1:47:02 PM
Ms. Bohan advanced to a pie chart on slide 7 showing the
rural Alaska sanitation funding need. The information was
collectively entered into the sanitation deficiency
database administered by IHS. As projects developed, the
projects would be ranked and scored within the system. The
chart identified the type of project and type of need
addressed by the project. The blue portion of the chart was
the greatest health-based need and reflected first time
service and the orange reflected upgrades to address
substantial health threats.
Co-Chair Foster noted that the sanitation need had
increased and the infrastructure had continued to
deteriorate since he started in the legislature in 2010;
however, the legislature had not been keeping up with
funding. The funding need amount had increased from $1
billion to close to $2.3 billion. He stated that people
were having to ration water, especially during the COVID-19
pandemic, and he hated to think of the situation. He added
that Unalakleet had experienced a problem with a low water
tank and everyone had not been able to wash their hands as
much as they should have. He stressed that the funding
should be a high priority in the budget.
Ms. Bohan turned to a list of unserved communities on slide
8. Some of the communities had asterisks next to the names,
which indicated that the community had been funded for full
service. In some situations, the service would come in the
form of wells and septic tanks because it was deemed the
most reasonable solution in the communities. There had been
some gradual progress and she expected to see more rapid
progress with the influx of IIJA funding. She moved to
slide 9 and referred to Handout 1 in members' packets
titled "Unserved Rural Alaska Communities," dated February
4, 2022 (copy on file). She explained that the handout gave
more detail on the unserved communities and the estimated
cost to provide pipe service to each of the communities.
She highlighted the estimated monthly user rate and noted
that the financial burden to customers was important to
consider when looking to provide a higher level of service.
1:53:32 PM
Ms. Bohan continued to address slide 9. She read from the
slide as follows:
• Cost to provide running water and sewer to individual
homes in a village for the first time
o $500 - $750 thousand per/home
• Projects typically last 5 -10 years to completion,
depending on
o Size and complexity of the project
o Availability of funds
o Ability of community to meet ongoing construction
funding conditions
Ms. Bohan explained that the short construction season,
weather, and transportation difficulties could be
challenging to overcome, particularly in communities that
had not yet been served. She turned to slide 10 and shared
some statistics on projects funded by VSW in FY 22. She
read the information on the slide as follows:
• Planning Projects
o $1.9 million funding made available
o 19 studies for 19 communities
o Project range: $75,000 - $180,000
• Construction Projects
o $69.7 million funding made available
o 9 ongoing construction projects and 10 new
construction projects
o Project range: $80,000 - $21.1 million
• IHS & EPA Tribal Construction Projects
o $55.2 million funding made available including
$1.3M from Denali Commission
o 17 construction projects
o Project range: $563,000- $8.8 million
Ms. Bohan highlighted that VSW made a $20 million
contribution to a project in Tununak, although the project
would likely be closer to $55 million in the end.
Additionally, Unalakleet had long suffered due to
challenges related to its drinking water system, which was
one of the oldest in the state. She reported that VSW had
provided over $10 million to begin the process of
completely replacing Unalakleet's water distribution
system.
Ms. Bohan turned to slide 11 and discussed VSW's funding
eligibility. The VSW statute offered a definition of
"village," which established eligibility for the program.
She read from the slide as follows:
• Communities are eligible for one VSW funded planning
project at a time
• An approved planning document and a demonstration of a
minimum level of capacity are required for design and
construction funding
o Ensure the community has the technical,
financial, and managerial capacity to operate and
maintain the facility in the long term
o Requirement of all new public water systems per
the Safe Drinking Water Act
• First time piped service projects also require an
approved Sustainability Plan
2:00:10 PM
Ms. Bohan spoke to funding eligibility on slide 12. She
shared that the Operations and Maintenance Best Practices
capacity assessment tool had been developed in conjunction
with ANTHC and the Rural Utility Business Advisor (RUBA)
program. The assessment tool took about two years to
develop and was implemented in 2015. In the past, there
were several assessment tools for rural sanitation
purposes, and communities found the differing criteria to
be confusing and frustrating. It took some communities
years to demonstrate a capacity level, which put funding in
jeopardy and often meant that funds had to be reallocated
to other communities. She explained that in developing best
practices, DEC wanted to craft one tool that would be used
for all rural sanitation funding and allow all of the
agencies to "speak one language." The tool that the
department developed involved a series of categories, and
she pointed to Handout 2 which showed the scoring criteria
for construction projects (copy on file). Many of the
previous capacity evaluation tools could be completed
without involving the community in any way. The department
wanted to ensure that the community was part of the
discussion and involved in the entire assessment process.
Under the new assessment tool, communities were scored
twice per year based on information provided to DEC and
RUBA. Project eligibility for VSW was determined by both
the type of project being proposed and the level of service
currently in place in the community. The eligibility
requirements were shown on the slide in a chart, and she
briefly discussed the criteria.
2:05:18 PM
Co-Chair Foster stated that he had heard concerns about the
RUBA scoring system. He stated it was necessary for the
legislature to ensure that money was being spent wisely and
for a community to demonstrate capacity and its ability to
maintain a system in the long run before receiving funds.
He had heard repeatedly from communities that the RUBA
system needed to be revamped and that it was too stringent.
He wondered where the line was as far as eligibility
requirements went and wished it could be more flexible. He
had heard some people say they would like to see the Denali
Commission in charge of sanitation for rural Alaska, but he
did not fully understand the intricacies of the suggestion.
He asked how many communities had recently been denied
because they did not meet RUBA scoring requirements.
Ms. Bohan did not have the details on hand. She could share
the recent scores and point to the communities that would
be eligible for VSW funding based on a best practice score.
She shared that it was not the program's goal to deny any
funding or improved service; however, it was necessary to
have some established rules in order to make fair and
equitable funding decisions. The federal safe drinking
water act required states to ensure that all public water
systems had adequate technical and managerial capacity
before the system was permitted to be constructed. She
imagined that in moving forward with the funding through
IHS, there would be an opportunity to look at how the
evaluation was conducted. She stated it was the program's
responsibility to set communities up for success in the
long run. She was not certain that lower expectations would
be in the best interest of the communities but examining
the evaluation process and considering alternatives was
something that the program was willing to entertain.
Co-Chair Foster agreed that the purpose of the system was
to provide health and safety in communities. He stated that
lack of adequate training could create larger problems for
a community. He did not have the answers but agreed that
there had to be a system in place to assess where funding
was most needed.
2:13:59 PM
Representative Thompson apologized for stepping out for an
emergency call. He referred to slide 11 and the statement
that communities were eligible for one VSW funded planning
project at a time. He asked if it would cost more money to
only focus on one project per year.
Ms. Bohan replied that it was a very interesting point. The
decision to limit the number of projects that were
allocated per community was made in order to spread the
money between multiple communities and ensure that one
community was not receiving the bulk of the money at any
given moment. She explained that planning documents were
intended to focus on one specific issue, and to delve into
great detail as to possible solutions and costs. She had
funding discussions with funding partners about broadening
the scope of the planning projects moving forward, and
there might be an opportunity to fund more than one project
at a time in a community. She stated it was early in the
process of understanding how the federal IIJA funding would
be allocated, but strategic discussion with the funding
team were already occurring in anticipation of the funds.
Representative Thompson was glad to hear the department was
considering the issue. He thanked the department for
working on the topic.
Ms. Bohan advanced to slide 13 which detailed the operation
and maintenance capacity tools broken down into three
categories: technical, managerial, and financial. She
reminded members that Handout 2 detailed the full scope of
the scoring criteria. Under the technical category, she
explained that DEC would begin by looking at requirements
that were already in place for communities for other
purposes, such as the requirement for public water systems
to have certified operators. Preventative maintenance was
the one component that a community had absolute control
over. The department looked at whether the system was in
compliance with drinking water regulations and specifically
whether the operators were conducting the required
monitoring and reporting.
Ms. Bohan continued that under the managerial category, the
utility management training program offered a wide range of
trainings each year. Although many trainings were now
offered online, travel reimbursements and scholarships were
provided to utility operators in the past. The trainings
were easy to access and were a valuable tool for anyone
working in the utility field. In the financial category,
actions such as passing a budget, collecting revenue,
collecting workers' compensation insurance, and compliance
with payroll liability regulations were existing
obligations of a community. Whenever possible, the
department tried to base its criteria on a community's
existing duties. She noted that best practices were used
for other purposes as well, such as analyzing trends in a
community over time.
2:21:30 PM
Ms. Bohan turned to slide 14 and discussed VSW project
assessments. The department collected applications for both
planning and construction projects every spring. All
projects were evaluated by a committee comprised of federal
funding partners, representatives from VSW, and
representatives from ANTHC. Projects were evaluated based
on criteria in Handout 3, titled "Capital Improvement
Project Construction Project Scoring Criteria" (copy on
file). She read from the slide as follows:
• Project grant applications are scored primarily on how
they address critical public health needs and the
community's capacity to operate and maintain
facilities
o Beneficial health impact provided by the project
o Current level of service
o Technical, financial and managerial capacity
o Relationship to other project phases
o Application quality
• High scoring projects added to the Multi-Year Priority
List
Ms. Bohan continued that the program may choose to only
fund the design phase of a construction project, which
would allow more than one project to be funded at a time as
well as offer a more concrete cost estimate for
construction projects. She added that once a project was
added to the multi-year priority list, it would be funded
to completion even if it had not received full funding in
the first year.
2:25:00 PM
Ms. Kostik reviewed VSW's capital budget request of $72.2
million for FY 23 on slide 15. The amount was made up of
$52.2 million in federal funds, a $19.5 million general
fund match, and $500,000 of statutory designated program
receipts (SDPR). The federal dollars reflected the funding
for both the EPA infrastructure grant and the United States
Department of Agriculture (USDA) rural development funding,
which would flow into Alaska through the CIP process.
Representative Josephson asked if the $19.5 million match
was typical.
Ms. Kostik replied that the match for the USDA and EPA was
25 percent. The $19.5 million match was a slight increase
from the previous year and had been growing in recent
years. She referred to slide 16 which showed the expected
EPA dollar amounts in future years, and relayed that the
EPA amounts should hold steady for the next three years and
increase in 2026 and 2027.
Ms. Kostik discussed the federal infrastructure bill [IIJA]
on slide 16. The bill appropriated $3.5 billion to IHS and
it was anticipated that about $2 billion would be allocated
to Alaska. It was enough money to cancel out IHS's need
discussed earlier in the presentation.
Vice-Chair Ortiz asked if the $19.5 million state match was
part of the governor's match of roughly $125 million as
seen in the capital budget.
Ms. Kostik answered the $19.5 million was currently in the
capital budget.
Vice-Chair Ortiz asked for confirmation that the match was
included in the $125 million figure in the capital budget.
Ms. Kostik responded that she assumed it was. She noted
that Mr. Neil Steininger from the Office of Management and
Budget (OMB) had confirmed the amount.
2:29:17 PM
Ms. Bohan elaborated on Ms. Kostik's information that the
$3.5 billion allocated to IHS was taken directly from the
sanitation deficiency system database. She assumed that the
U.S. Congress had seen that there was $3.5 billion in the
database in the prior year and that Alaska's portion was
about $2 billion. She explained that was where the
expectations had come from. She noted that the IHS funding
had historically held cost cap restrictions that limited
costs to a certain dollar amount per home. If a project
exceeded the cost cap, the project was not eligible for IHS
funding, and one of the primary reasons IHS funding had
been a challenge was due to the restriction. The
infrastructure bill had set aside the cost caps for $2
billion of the funding and it was fairly clear the intent
of the bill was to provide first time service to unserved
communities. However, there would be some ineligible
mechanisms and it was critical for other funders to provide
addition funding in order to ensure all components were
covered.
Ms. Bohan turned to slide 17 regarding the Alaska Water and
Sewer Challenge Project (AWSCP). She explained that the
project was established in an attempt to find alternative
solutions for pipe service. There had been an international
call for teams to develop in-home systems to take advantage
of water re-use in an effort to increase the amount of
water that was being used by individuals on a daily basis.
The increase in water use would also improve sanitation and
health. The goal was to create a system that could be
implemented at a cost of no more than $160,000 per home and
be easily maintained by the homeowner. The system that was
chosen was created by the team from the University of
Alaska Anchorage (UAA), and the next step was to install
the system in the university's dorm facilities. The
department had hoped to be further along in the process,
but COVID-19 had caused some delays. There were compelling
reasons to continue to move forward with the project,
especially because it had been a success thus far.
2:34:53 PM
Ms. Bohan reviewed other water infrastructure funding in
IIJA on slide 18. The state managed two revolving loan
funds: one for drinking water, and one for wastewater, also
known as clean water. She shared that the program provided
low interest loans for eligible clean water and drinking
water projects. Each year, the EPA provided capitalization
grants for drinking water and clean water that were
typically around $10 million each. The IIJA bill created
additional supplemental funding and would allocate $18
million for drinking water and $20.1 million for clean
water, each of which would require a 10 percent match.
Ms. Bohan turned to slide 19 and discussed other water
infrastructure funding in IIJA. She read through the slide
as follows:
• Emerging Contaminants
o Eligible projects that address contaminants such
as PFAS
o FY2023 Capitalization Grants
square4 $7.5m Drinking Water
square4 $1.1m Clean Water
o No State match
o 100% loan subsidy issued as loan forgiveness
• Lead Service Lines
o Eligible projects that address lead in drinking
water FY2023 Capitalization Grant
square4 $28.3m Drinking Water
o No State match
o 49% subsidy as principal loan forgiveness
Representative Josephson stated that the IIJA was generous
and helpful for safe water and less helpful for resolving
Per- and polyfluoroalkyl substances (PFAS) issues.
Ms. Bohan replied that she believed the statement was fair.
Co-Chair Merrick thanked the presenters.
2:39:09 PM
AT EASE
2:40:32 PM
RECONVENED
^OVERVIEW: DEFERRED MAINTENANCE BY THE OFFICE OF MANAGEMENT
AND BUDGET
2:40:42 PM
NEIL STEININGER, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET,
OFFICE OF THE GOVERNOR, provided a PowerPoint presentation
titled "State of Alaska Office of Management and Budget:
Deferred Maintenance," dated February 11, 2022 (copy on
file). He began on slide 2 and gave a deferred maintenance
overview:
• 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:
o 2,400+ facilities (includes University)
o 20 million square feet of space
o 14 State Agencies
o Type varies by Agency
Vice-Chair Ortiz asked if the 2,400 facilities included
public school facilities.
Mr. Steininger did not believe the number included public
school facilities. He would follow up to confirm.
Vice-Chair Ortiz asked if the state played a role in trying
to alleviate local communities' costs associated with
repairing school facilities.
Mr. Steininger agreed that the state played a role in
repair via deposits into the Regional Educational
Attendance Area (REAA) fund and school maintenance fund.
Mr. Steininger turned to slide 3 and reviewed funding
recommendations and targets as follows:
• There is no one definitive rule on the level of
preventive maintenance necessary to avoid deferred
maintenance, but a 2012 National Research Council
publication references a range of 2-4% of replacement
cost value
• FY2021 replacement cost value (excluding University):
$7,678,370.1
o 1% = $76.8 million
o 2% = $153.6 million
o 4% = $307.1 million
Co-Chair Merrick asked what percentage level of deferred
maintenance had actually been funded over the past 10
years.
Mr. Steininger replied that funding had been generally
towards the lower end of the range. He noted that he had an
upcoming slide that broke down the funding for FY 23, which
was comparable to prior years.
Mr. Steininger moved to slide 4 and highlighted the
governor's budget maintenance funding. In the FY 23 capital
bill, there was about $29.6 million in funding for
maintenance. The maintenance was made up of a few different
deferred maintenance components: natural resources
sanitation, fish and game and aircraft, courts, and general
statewide funding that was intended for state facilities.
Additionally, there was significant general obligation (GO)
bond funding for University of Alaska housing deferred
maintenance. The combined capital and GO bond totaled to
about $48.2 million.
Mr. Steininger moved to slide 5 and stated that the
deferred maintenance and GO funding was combined with the
funding in the operating budget. Across all agencies, the
amount that had been set aside in FY 23 for all routine
operating maintenance was about $76.4 million. The total
proposal for the funding was $134.6 million for FY 23.
2:47:20 PM
Mr. Steininger moved to slide 6 and reported that the
state's backlog was about $603 million excluding the
university. If the university was considered, the total
would be closer to $2 billion due to the university's
significant size and deferred maintenance needs. The slide
included a chart showing the breakdown of the backlog
across various agencies.
Mr. Steininger turned to slide 7 and explained the
statewide funding approach. He read through the slide as
follows:
• 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 May, with goal of
Statewide prioritized list to OMB May 2022
• 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. Steininger advanced to slide 8 and deferred to Ms.
Melanie Arnolds.
2:50:01 PM
MELANIE ARNOLDS, DIRECTOR, FACILITIES SERVICES, DEPARTMENT
OF TRANSPORTATION AND PUBLIC FACILITIES (via
teleconference), discussed slide 8 and the project ranking
formula. The formula considered several factors and
provided a ranking referred to as a Project Index Value
(PIV). The PIV was determined by multiplying the following
factors together: the Mission Alignment Index (MAI), which
was the alignment of facility to an agency's mission; the
system factor, which was the scale related to various
building systems and their impact on building; and the need
or the urgency and criticality for replacement. If known,
other attributes were also considered, such as anticipated
return on investments, matching funds, or eligibility as a
finance energy savings performance project.
Ms. Arnolds moved to slide 9 to review the MIV. She read
through the slide as follows:
• Mission Alignment Index (MAI) identifies the relative
importance of a facility in relation to an agency's
primary mission. Besides how critical the facility is
to the agency mission it considers:
o How capable is it to deliver services
o How utilized is it, how many people, citizens or
state services does it impact
o Availability of other facility options at that
location
• The most critical facilities of an agency are directly
aligned with the agency's purpose to exist
o Amongst multiple critical facilities within in an
agency, there are still varying degrees
• Allows better risk management to programs, and guides
investment and divestiture decisions
• Determined by the agency. Periodically revisited.
Ms. Arnolds continued that the most critical facilities
would have the highest ranking. The key to understanding
was that the alignment was determined by the agency with
which the facility was associated.
Ms. Arnolds advanced to slide 10 which showed MAI examples.
The purpose of the slide was to point out that there was an
index scale with defined categories, which were as follows
in order of importance: critical, important, supportive,
and other or non-mission critical. The index allowed the
department to have a transparent and consistent way of
evaluating facilities.
2:55:10 PM
Ms. Arnolds advanced to slide 11 to discuss some examples
of systems and needs. A system would be ranked at a 5 or
higher if it was a critical need, a 4 if it was important,
but not yet critical, and a 3 if it was necessary. She used
the example of an outdated fire alarm system where
maintenance workers were no longer able to get parts and
pieces for the system and it was no longer up to code. The
scenario would fall between the important and critical
categories depending on where the system was located. If it
was a system that was in failing mode it would have a very
high factor of 5 or 6. She explained that each project
would receive a score that would be averaged out to result
in consistent scoring.
Ms. Arnolds addressed examples from the previous
prioritization cycle on slide 12. She offered as an example
a project originating from the Department of Transportation
and Public Facilities (DOT) involving the Palmer Highway
Maintenance Station. The station was high-use and
facilitated the maintenance of multiple roads by DOT, and
therefore it had a high PIV. The issues at the station were
the trench drain failing and falling concrete that was
becoming corroded. She explained that the 4.91 need score
for the project reflected an average of how each agency
within the facilities council scored the need. The PIV was
then determined by multiplying the need score by the system
factor and MAI. The list was combined once the council was
satisfied with the overall prioritization and was then
presented and shared with OMB.
2:59:02 PM
Ms. Arnolds addressed the statewide management approach on
slide 13. She read from the slide as follows:
• Division of Facilities Services' (DFS) mission is to
deliver, improve, and maintain safe and reliable
facilities across Alaska. This work encompasses all
aspects of construction through maintenance during a
facility's life cycle. This centralization provides
consistency, expertise, care, and application of state
rules to manage integral real property assets.
• DFS's administrative costs and Department of
Transportation and Public Facilities overhead are
billed to agencies based on a federally-approved
indirect cost allocation plan rate of 9.28% for
FY2022.
Representative Josephson asked if the state viewed the
university as having to advocate and take care of itself as
far as deferred maintenance was concerned, or if the
university was viewed as part of the whole.
Mr. Steininger answered that the university had been
handled in different ways over the years. He elaborated
that in some years, the university had received direct
appropriations for its facility maintenance and in other
years it had not. In the years it had not received direct
appropriations, the department had tried to accommodate
some level of funding for the university through the
statewide monies being discussed by the facilities council.
The state saw the university as part of the overall
discussion, but it had been excluded from some of the
backlog discussions in order to focus on other facilities.
He indicated that there was a very large backlog at the
university and the issue was part of the broader
discussion.
Vice-Chair Ortiz referred to slides 5 and 6 related to the
backlog in deferred maintenance costs. He asked if the
$603.3 million backlog, excluding the university, was
continuing to increase over time.
Mr. Steininger answered that the number had grown over the
years. He would follow up with the history of the backlog,
which he believed was included in a large OMB spreadsheet.
The cost had grown especially in years where the funding on
the capital side had been minimal based on revenue
available to fund deferred maintenance.
Vice-Chair Ortiz referred to slides 4 and 5 and recalled
that Mr. Steininger had reported that resources were going
toward routine maintenance, and a more specific amount of
resources were dedicated to significant repair. He asked if
the recommendations included routine and regular
maintenance.
Mr. Steininger referred to slide 3 and explained that there
was no one definitive rule on the level of preventive
maintenance necessary to avoid deferred maintenance;
however, the National Research Council recommended spending
2 to 4 percent of replacement value of cost in order to
avoid a growing backlog. The grand total of $135 million
[on slide 5] reflected both the routine preventative
maintenance and deferred maintenance funding.
3:07:28 PM
Representative Josephson referred to the suggested
maintenance to avoid deferred maintenance on slide 3. He
stated that the $5 million for the university did not come
near meeting the objective.
Mr. Steininger answered that the $5 million was in addition
to the funds the university had in its annual operating
budget allocated toward maintenance. He did not have
specific details about the university's operating budget,
but he could follow up with the information.
Representative Josephson referred to the Department of
Commerce, Community and Economic Development (DCCED) and
the Department of Administration's (DOA) backlog amounts
[slide 6] and asked if the maintenance charges ran through
DOA.
Mr. Steininger answered yes, until recently. One of the
shifts that had been made due to the consolidation of
facilities maintenance into DOT was moving the public
building fund from DOA into DOT. He clarified that the DOA
deferred maintenance backlog had been zeroed out because
the responsibility had been transferred to DOT.
Vice-Chair Ortiz referred to slide 3 and recalled that Mr.
Steininger had reported the state was closer to the lower
end of the 2 to 4 percent [of replacement cost value] range
than the higher end. He asked if the state had been
addressing deferred maintenance at a more aggressive level
when the state had the resources to do so.
Mr. Steininger answered in the affirmative. There had been
a period of time where deferred maintenance spending had
been in excess of $100 million per year, which helped
reduce the backlog. However, due to the state's fiscal
situation, the process had slowed.
3:10:50 PM
Vice-Chair Ortiz asked if it would be Mr. Steininger's
recommendation to be more aggressive with deferred
maintenance spending due to increased revenue in the state,
even though much of the revenue was due to one-time
funding.
Mr. Steininger responded that the administration had looked
at the facilities the state could divest from in order to
bring down the deferred maintenance backlog. When the
administration originally crafted the FY 23 budget, the
state was still operating under constrained revenue. The
administration thought the replacement cost value in the
budget was still adequately managing the problem.
Representative Thompson referenced Vice-Chair Ortiz's
comment about the state addressing deferred maintenance
more aggressively when it had more resources. He had been
pleased to see changes in the way in which projects were
formulated and ranked. He thought it seemed like it had
been a "free for all" in the past when it came to funding
projects, and projects that did not seem necessary were
funded in the capital budget. He appreciated the change in
the formula as it allowed for more mindful funding.
Mr. Steininger encouraged committee members to review the
appendices provided by the department (copy on file). He
referenced Representative Thompson's remark and explained
that the transition to the facilities council's centralized
management of maintenance had enabled the state to focus on
the most necessary projects.
Co-Chair Merrick reviewed the schedule for the following
meeting.
ADJOURNMENT
3:14:27 PM
The meeting was adjourned at 3:14 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HANDOUT #1 Unserved Communities.pdf |
HFIN 2/11/2022 1:30:00 PM |
HB 283 |
| HANDOUT #3 CIPScoring-Criteria.pdf |
HFIN 2/11/2022 1:30:00 PM |
HB 283 HFIN VSW OVERVIEW DOCUMENT |
| HANDOUT #2 Best Practices Scoring Criteria.pdf |
HFIN 2/11/2022 1:30:00 PM |
HB 283 HFIN VSW OVERVIEW DOCUMENT |
| HANDOUT #4 MultiYear Priority List Oct-2021.pdf |
HFIN 2/11/2022 1:30:00 PM |
HB 283 HFIN VSW OVERVIEW DOCUMENT |
| HFC DEC VSW Overview 02.11.2022 .pdf |
HFIN 2/11/2022 1:30:00 PM |
HB 283 |
| OMB DM Overview HFIN 22.02.11.pdf |
HFIN 2/11/2022 1:30:00 PM |
Deferred Maintenance OMB - HFIN HB 283 |
| Attachment 1 - FY2022 Deferred Maintenance Backlog Summary 2-8-22.pdf |
HFIN 2/11/2022 1:30:00 PM |
Deferred Maintenance OMB HFIN HB 283 |
| Attachment 2 - UA Top Priority DM Summary.pdf |
HFIN 2/11/2022 1:30:00 PM |
HB 283 OMB Deferred Maintenace HFIN |