Legislature(2017 - 2018)SENATE FINANCE 532
01/26/2018 09:00 AM Senate FINANCE
Note: the audio ![]()
and video ![]()
recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.
| 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
| + | TELECONFERENCED | ||
SENATE FINANCE COMMITTEE
January 26, 2018
9:05 a.m.
9:05:04 AM
CALL TO ORDER
Co-Chair MacKinnon called the Senate Finance Committee
meeting to order at 9:05 a.m.
MEMBERS PRESENT
Senator Anna MacKinnon, Co-Chair
Senator Click Bishop, Vice-Chair
Senator Peter Micciche
Senator Donny Olson
Senator Gary Stevens
Senator Natasha von Imhof
MEMBERS ABSENT
Senator Lyman Hoffman, Co-Chair
ALSO PRESENT
Adam Bryan, Capital Budget Coordinator, Office of
Management and Budget.
PRESENT VIA TELECONFERENCE
Mark Davis, Department of Transportation and Public
Facilities, Anchorage; Chris Hodgin, Department of
Transportation and Public Facilities, Anchorage.
SUMMARY
^PRESENTATION: DEFERRED MAINTENANCE
9:06:20 AM
ADAM BRYAN, CAPITAL BUDGET COORDINATOR, OFFICE OF
MANAGEMENT AND BUDGET, introduced himself.
9:06:23 AM
MARK DAVIS, DEPARTMENT OF TRANSPORTATION AND PUBLIC
FACILITIES, ANCHORAGE (via teleconference), introduced
himself.
CHRIS HODGIN, DEPARTMENT OF TRANSPORTATION AND PUBLIC
FACILITIES, ANCHORAGE (via teleconference), introduced
himself.
Mr. Bryan discussed the presentation, "State of Alaska
Deferred Maintenance Update Senate Finance Committee" (copy
on file).
highlighted slide 2, "What is Deferred Maintenance?"
? Maintenance that is postponed due to lack of
resources
o Keep assets in safe, effective, working
condition
? Deferred maintenance projects are mostly items that
entities cannot address through preventative
maintenance
o Preventative maintenance is important to
managing growth and severity of future deferred
maintenance
o Each entity manages maintenance independently
o Legislature appropriates funding for
preventative maintenance annually - facilities
management allocations; Public Building Fund
o Maintenance decisions must consider changing
business needs
Mr. Bryan addressed slide 3, "How many Facilities does the
State Maintain?"
? Over 2,200 facilities
? 14 entities including University of Alaska and
Courts
? 19 million square feet of space
? Combined replacement value of $8.6B
Mr. Bryan highlighted slide 4, "What do our Facilities Look
Like?"
? Types of facilities vary by entity
o UA manages classroom, laboratory, research,
residential, and office space
o DOA manages general office space
o DOC and DHSS both manage 24 hour facilities
o DMVA manages base facilities and statewide armories
o DNR oversees park service cabins, shelters, fire
suppression and preparedness shops
Senator Stevens wondered whether the Department of
Transportation and Public Facilities (DOTPF) request
included the Marine Highway System. Mr. Bryan replied that
the terminals were included, but not the actual ferries. He
believed that there were currently ten ferries.
Senator Stevens surmised that it was not included in the
presentation. Mr. Bryan replied that it did not include the
ferries. He stated that it only included the structures for
the marine highway system.
9:11:38 AM
Mr. Bryan discussed slide 5, "Statewide Deferred
Maintenance Totals":
? Total of $1.87 billion, including
o Executive agencies and Courts $1.66 billion
o School District Major Maintenance $205.6
million;
$142.9 million as the State share
-Agency DM total is comprehensive
-School Major Maintenance total are only
district's highest priorities
Senator von Imhof noted that the school district leased the
headquarters in order to not pay for maintenance. She
recalled that money would be set aside for deferred
maintenance when she served on the Anchorage School Board.
She noted that it was standard to bond for that deferred
maintenance, and hope for a state match. She wondered
whether there was work with school districts to set money
aside for deferred maintenance. She asked about selling
asset and then leasing those assets back to the school
district. Mr. Bryan agreed to provide information.
Senator von Imhof stated that question would extend
statewide. She noted that DOTPF was referenced on slides 3
and 4, and had access to assets. She remarked that some of
those assets quickly depreciated. She asked whether the
assets could be sold in DOTPF, and reallocating those funds
to the more prioritized buildings. Mr. Bryan replied that
DOTPF had state equipment fleet schedules, so the non-
structure assets would have replacement schedules.
9:16:47 AM
Senator von Imhof noted that companies evaluated
circumstances about cash flow when determining between a
purchase or a lease. She remarked that the state chose to
own most of the assets. She noted that a paradigm shift in
a financial situation may result in change to leasing
rather than buying.
Co-Chair MacKinnon asked that the director of the Office of
Management and Budget provide a preventative list of the
ongoing maintenance in the operating budget, and someone
from the Department of Administration (DOA) could address
the overall look at the financing structure.
9:18:21 AM
Senator Micciche stated that he had continually asked the
same question as Senator von Imhof. He wondered how to
encourage DOTPF to examine which assets could be put for
sell to have a reset about the collection of real estate
that had been gathered throughout the year. Mr. Bryan
replied that there was work on some metrics based on a
facility condition index to move statewide.
Senator Stevens echoed the comments of Senator von Imhof
and Senator Micciche. He noted that he had worked to build
a new DOTPF building in Kodiak, but noted that the state
still owned the old DOTPF building.
9:25:04 AM
Vice-Chair Bishop noted that as time evolves we discover
different ways of doing things.
Senator von Imhof felt that each property had a unique
story, but the legislature was being asked to consider a
tax for deferred maintenance.
Senator Micciche echoed the comments about selling assets.
9:30:20 AM
Co-Chair MacKinnon stressed that there was limited time in
the committee meeting.
Co-Chair MacKinnon asked for a list of preventative
maintenance in the operating budget for each department for
ongoing maintenance. Mr. Bryan agreed to provide that
information.
Co-Chair MacKinnon queried how each department determined
their estimates of deferred maintenance. Mr. Bryan replied
that he would provide that information.
9:35:17 AM
Mr. Bryan continued to discuss slide 5:
? Total peaked at $2.3 billion in FY2012
o Reduced significantly through a five-year
funding plan
? Beginning to trend up
Mr. Bryan addressed slide 6, "FY2018 Deferred Maintenance
Backlog by Entity":
? The majority of deferred maintenance backlog is
within the University of Alaska ($1B) and the
Department of Transportation and Public Facilities
($302M)
? School District Major Maintenance requests total
$206M
? All other entities total $300M
Mr. Bryan discussed slide 7, "FY2018 Deferred Maintenance
Backlog by Entity." He noted that the University was at a
little over $1 billion; and the list drops to
transportation and school major maintenance from the
previous pie chart.
Co-Chair MacKinnon wondered whether power generation was
included in the maintenance. Mr. Bryan replied that the new
power plant would be included, if it was an older asset
with some deferred maintenance.
Co-Chair MacKinnon wanted information about the system
itself.
Senator Stevens wondered whether UA had their own
prioritized list of maintenance. Mr. Bryan replied in the
affirmative.
Senator Stevens wondered why there was not a prioritization
for the University projects. Mr. Bryan replied that the
requests from the school districts were considered the
school district's highest priorities. He stated that the
University subset of the $1 billion was $50 million
requesting for FY 19.
Co-Chair MacKinnon noted that the school district
maintenance would be much higher, if all the district's
requests were included.
9:40:16 AM
Mr. Bryan highlighted slide 8, "Deferred Maintenance
Funding History":
? From FY1998 to FY2010, DM funding was sporadic and
inconsistent
o Spikes in 1999 ($53M), 2006 and 2007 ($33M),
2009 ($127M)
o Low years 2000-2005 averaged $6.5M
? FY2011 began a five-year initiative to address Mr.
Mitchell backlog
o Gov initiative of $100M annually for five years
o Actual average funding of $123M for DM; $18.6M
for School Districts
Mr. Bryan addressed slide 9, "Deferred Maintenance Funding
History Statewide DM and School District."
Co-Chair MacKinnon wondered whether the school district
assets included those owned by local municipalities. Mr.
Bryan replied in the affirmative.
Mr. Bryan displayed slide 10, "What We've Learned and A
Plan Forward":
? Pattern of funding DM backlog coincides with years
of high revenues
? The SLA 2010-2014 initiative reversed the trend of
growing DM backlog
o Gave entities predictability and confidence
? Without a consistent level of funding, entities
cannot effectively execute planned renewal
o Funding uncertainty leads to emergency only
spending
? In a constrained fiscal environment a statewide
approach provides DM attention to highest priority
needs across multiple agencies
Co-Chair MacKinnon wondered whether a change in
administration may change the output of deferred
maintenance numbers, and to take that into consideration in
the review of the numbers. Mr. Bryan replied in the
negative.
Co-Chair MacKinnon stated that she had seen much higher
numbers related to the categorization of deferred
maintenance. She noted that the previous administration
showed deferred maintenance of up to $4 billion. She was
skeptical of the assertion that there was an increase in
deferred maintenance.
Mr. Bryan highlighted slide 11, "Deferred Maintenance
Backlog." He noted trend line of steady decrease.
9:45:36 AM
Mr. Bryan looked at slide 12, "Alaska Economic Recovery Act
Plan":
? Separate capital appropriation - SB140
? Funded by a 1.5 percent wage tax, sun setting after
2.5 years
SB139
? 3-year plan to address the growing maintenance
liability; put Alaskans back to work
? Statewide Agency; UA, and Courts DM:
o $113M in FY19; $106M in FY20; $94M in FY21
? School District Major Maintenance:
o $40M in FY19 and FY20; $38M in FY21
Co-Chair MacKinnon wondered whether the school district
major maintenance was for all schools through a formula, or
was it based on applications. Mr. Bryan replied that it was
proposed that the money be appropriated into the major
maintenance fund. Therefore, DEED would utilize their
prioritization process to fund down the prioritized list
based on the amount of appropriations in the fund.
Mr. Bryan looked at slide 13, "FY2018 Statewide
Appropriation Status":
? SB23, FY2018 Capital, funded $20M in statewide
Deferred Maintenance
? Distributed across 8 agencies, prioritizing:
o Life, health, and safety
o Assets at risk of imminent failure
o Timely project execution
o Maintenance to space to meet program mission
with demonstrated return on investment
Mr. Bryan highlighted slide 14, "FY2018 Statewide
Appropriation Status":
? 41 projects across the 8 agencies
? Common projects include roof replacements; fire and
sprinkler replacements; sewer and water repairs
Vice-Chair Bishop asked whether he said sewer water
repairs. Mr. Bryan replied in the affirmative.
Senator Micciche looked the document, "FY18 Mr. Mitchell
Distribution Detail", and stated that third from the last
was the facilities condition index with $300,000 budget.
9:50:22 AM
Co-Chair MacKinnon explained that the list referred to was
the funded list from the administration in 2018.
Mr. Davis discussed slide 15, "Statewide Facilities
Maintenance":
Timeline:
2015 EFMAC Creation and Recommendations
2016 State Facilities Council Formed, Centralization
Analysis Recommendation and Approval
2017 Determination of lead agency for Centralized
Facilities Services
? Advantages to centralized operations and maintenance
of state facilities
o One lead agency (DOT/PF)
o Commonality of processes, procedures
o Consolidate contracts
o Juneau Pilot four waves thru 2017 followed by
expansion statewide
Mr. Davis looked at slide 16, "Opportunities":
? Plan deferred maintenance of facilities in a
deliberate, comprehensive manner
? Starts with inspections to develop a Facilities
Condition Index (FCI)
o Provide holistic view of all state building
assets
o Baseline health of our assets; prioritize
deferred maintenance needs
o Analyze backlog of existing deferred
maintenance items in relation to actual needs
? Develop a framework built on best practices:
procedures; provide data/metrics to measure progress
? Implement a Computerized Maintenance Management
System (CMMS)
? Strive for a systematic funding program for major
maintenance and system life cycle replacement
Mr. Davis addressed slide 17, "Deferred Maintenance
Strategy":
The Vision: Establish an effective, continuous,
transparent and results based program of accomplishing
facilities deferred maintenance (DM) projects through:
Objective assessment and uniform analysis of existing
conditions and DM needs.
? Structured, consistent and predictable means of
prioritizing and selecting DM projects.
? Results based, measurable Key Performance
Indicators and reporting to show progress on
project execution, facility improvement and
return on investment.
Mr. Davis highlighted slide 18, "Assessing Conditions and
Needs":
Objective and data driven approach to assess
conditions and comprehensively plan
for recapitalization of state building assets:
? Begin with Facility Assessments to develop
Facilities Condition Indexes (FCIs) for each
facility:
? Measure conditions based on uniform criteria
? Also Incorporate:
? Building Safety Category Factor (Sf) (to be
further refined and developed perhaps weighted)
? Departmental Building Mission Critical Factor
(Mf) (to be further refined and developed)
? Other possible additional factors
Mr. Davis discussed slide 19, "Way ahead":
? Build on Successes of Juneau Pilot
? Advance in waves to bring in all state facilities
? Results-based reporting to investors, stakeholders,
public
? Assess facility utilization
? Stewardship based on consistency and predictability
9:55:58 AM
Co-Chair MacKinnon asked for more understanding on
assessing conditions and needs in regards to placing assets
in different categories for retention or deployment into
the private sector.
Mr. Bryan looked at slide 20, "Future Considerations":
? The Governor's Economic Recovery Plan addresses the
State's growing maintenance liability over a three
year period
? DM distribution considerations based on objective
rating system to address most critical projects
statewide
? Constant attention to Preventative Maintenance
required
Co-Chair MacKinnon discussed committee business.
ADJOURNMENT
9:57:33 AM
The meeting was adjourned at 9:57 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 012618 FY2018 Deferred Maintenance Distribution Detail (003).pdf |
SFIN 1/26/2018 9:00:00 AM |
SB 142 |
| 012618 OMB DM Presentation for SFC.pdf |
SFIN 1/26/2018 9:00:00 AM |
SB 142 |