FACILITIES MANAGEMENT
OCTOBER 1995
Management Audit Committee
Senator H. R. "Hank" Coe, Chairman
Representative Harry B. Tipton, Vice Chairman
Senator April Brimmer Kunz, Secretary
Senator Guy E. Cameron
Senator Gregory A. Phillips
Senator Jim Twiford
Representative E. Jayne Mockler
Representative Patricia Nagel
Representative George W. "Bud" Nelson
Representative Carolyn Paseneaux
Representative Rick Tempest
Staff
Barbara J. Rogers
Program Evaluation Manager
David J. Dean
Program Evaluator
Charles T. Solomon
Associate Program Evaluator
Wendy K. Madsen
Associate Program Evaluator
Introduction
A. Scope
W.S. 28-8-107 (b) authorizes the Legislative Service Office to
conduct program evaluations and performance audits. The general
purpose of a program evaluation is to provide a base of knowledge
from which policy makers can make informed decisions.
In February 1995, the Management Audit Committee chose the
Facilities Management Division (FMD) of the Department of
Administration and Information (A&I) as the subject of a review.
Further, the committee expressed an interest in statewide facility
maintenance and leasing issues.
This scope required us to draw information from FMD as well as
individual agencies which hold state facilities. We focused our
attention on six agencies with the largest portfolios of
state-owned facilities - - the Department of Administration and
Information, the Department of Transportation, the Adjutant
General, the Department of Health, the Department of Corrections,
and the Game and Fish Department.
It should be noted that the Department of Transportation and the
Game and Fish Department have autonomous facilities management
programs.
The research in our report centered around the following questions:
What is the extent of state-owned and leased facilities?
How much money does the state expend for upkeep of state-owned
facilities?
To which state entities do statutes assign facility management
responsibilities?
Are the state's facilities management activities supported by
adequate plans?
Does the state's budget process for facility maintenance,
capital construction, and leasing provide a reasonable basis
for decision making?
Have facility managers developed effective performance
measurement systems?
B. Methodology
This evaluation was conducted according to statutory requirements
and appropriate program evaluation standards and methods. We
conducted our research between March and June 1995.
We reviewed relevant Wyoming statutes, rules, policies, annual
reports, budget requests, academic literature, and a variety of
other reports and agency records.
To gain information about the condition of the state's more than
2,000 owned buildings, we did not attempt to inspect them.
Instead, we relied on interviews with managers and technicians from
FMD and from other agencies with large facility holdings.
Additionally, we interviewed officials from the Capitol Building
Commission, the Attorney General's Office, the Occupational Safety
and Health Administration, the Cheyenne Fire Department, and
professionals in fields related to facilities management.
Finally, we conducted telephone interviews and reviewed
documentation from several neighboring and western states,
including Idaho, Colorado, and Kansas.
C. Acknowledgements
The Legislative Service Office would like to express appreciation
to all the individuals who assisted us in researching this project,
and especially to officials from the Facilities Management
Division, the Capitol Building Commission, and the State Auditor's
Office.
Background
To provide space for government services, the state of Wyoming owns
and leases facilities throughout the state. According to the
Department of Administration and Information's (A&I) central
inventory system, the state owns 2,192 buildings with an estimated
replacement value of $466,481,335.
STATE-OWNED FACILITIES
Agency Number Replacement Percent
Owned Value
Admin. & Information 19 $104,996,833 23%
Transportation 343 $ 75,760,685 16%
Adjutant General 217 $ 63,973,555 14%
Health 129 $ 62,700,316 13%
Corrections 92 $ 45,045,143 10%
Game & Fish 624 $ 29,483,415 6%
Commerce 585 $ 28,125,466 6%
Family Services 62 $ 18,488,457 4%
All Other Agencies 121 $ 37,907,465 8%
Total 2,192 $466,481,335 100%
Source: A&I
Records show that state facilities vary substantially in size, from
major office buildings to picnic shelters, storage structures, and
residences. Also, facilities which are grouped for a single
purpose (e.g. penitentiary facilities in Rawlins) are included on
inventory records separately.
Of these state-owned facilities, 125 are located in Cheyenne. The
replacement cost of the Cheyenne facilities is $181,102,802, or 39
percent of the total replacement cost for all state-owned
facilities.
Facility management of all other state-owned buildings outside the
capitol complex is the responsibility of individual agencies. This
includes the state's institutions, correctional facilities,
Department of Transportation, Game and Fish, and Adjutant General.
Capitol Building Commission
The Capitol Building Commission (CBC) consists of the state's top
five elected officials -- Governor, Secretary of State, Auditor,
Treasurer, and Superintendent of Public Instruction. Additionally,
two members of the Legislature serve in a non-voting advisory
capacity. Statutes authorize CBC to set policy for the operation,
management, and use of any state-owned and leased buildings which
have not been assigned to other state agencies.
Facilities Management Division
The Facilities Management Division (FMD) of A&I is designated in
statutes as CBC's administrative arm. As such, FMD is responsible
for the maintenance of state-owned facilities in the capitol
complex and it oversees CBC's leases on a statewide basis. FMD's
administrator also serves as CBC's clerk.
FMD's organizational structure for facility management includes two
work groups, maintenance and administration. The maintenance
section provides maintenance and custodial services for the
buildings and grounds in the capitol complex. Administration
provides administrative and planning support to the maintenance
section and to the CBC. The administration section manages over
140 leases and operates information desks in the Herschler and
Capitol buildings.
FMD's operating budget includes a separate appropriation for
statewide leases, utility costs, and emergency repairs.
FMD AUTHORIZED STAFF AND OPERATING BUDGET
FY95/96
Section Staff Budget
Facilities Maintenance 89 FTE $4,861,103
Facilities Administration 9 FTE $738,411
Fixed Facilities Costs 0 FTE $9,200,780
Total 98 FTE $14,800,294
Source: Approved FMD budget requests for FY95/96.
In addition, during the FY95/96 biennium, FMD is administering
$18,491,520 for various capital construction projects around the
state, including funds for ADA access requirements ($5,000,000),
CBC contingencies ($200,000), various deferred maintenance needs
($2,891,520), a new state laboratory ($6,300,000), and renovations
to the Barrett Building ($4,100,000).
Commitment to Maintenance is Needed
An ongoing commitment to maintenance is necessary to preserve
taxpayers' investment in public buildings. According to a 1990
study from the National Academy of Sciences' Building Research
Board, an appropriate level of maintenance and repair spending
should range from 2 to 4 percent of the facilities' replacement
value.
According to the Board, in the absence of information about
specific needs upon which to base a maintenance and repair budget,
this 2 to 4 percent funding level should be an absolute minimum.
The Board argues that if this level of funding persists, facilities
should remain in a steady state condition - - facilities neither
decline nor improve and a backlog of deferred maintenance does not
develop.
Other studies use building replacement cost as a benchmark for
maintenance spending. In 1989, the U. S. Department of Defense
reviewed the maintenance funding levels of 16 major private sector
corporations and found that these corporations spent, on average,
3.5 percent of their facility replacement value on maintenance.
Maintenance Spending Has Been Within Suggested Guidelines
Our evaluation showed that Wyoming's overall financial commitment
to building maintenance has fallen within industry-suggested
guidelines. We reviewed expenditures for the upkeep of state-owned
buildings during fiscal years 1990 through 1994 and compared them
to the guidelines cited above.
We found that yearly spending for building upkeep (excluding
cleaning, alterations, and improvements) averaged $11.6 million,
which is 2.5 percent of the estimated cost to replace state-owned
buildings. Although this amount falls near the bottom of the
suggested range, it is within those guidelines.
Officials are Concerned About Facility Conditions
Nevertheless, agency managers and policy makers we interviewed told
us they are concerned about unmet facility maintenance needs. They
expressed interest in developing cost-effective solutions to
address such needs.
We did not assess the condition of each state building ourselves.
Rather, we relied on our observations within the capitol complex
and examples other facility managers provided of deteriorating
building conditions.
Our evaluation identified several problem areas which contribute to
ineffective facility management practices. Specifically, we found:
System-wide accountability for the state's investment in
facilities is lacking.
The state does not conduct long-term strategic facility
planning.
Wyoming's capital budgeting process does not support
effective decision making and facility management.
Information on the effectiveness of building management
practices is lacking.
As a consequence, we believe agencies are not consistently acting
as good stewards of the resources provided by prior taxpayers, and
the state is not adequately protecting this legacy for future
generations. The following sections of this report discuss the
specific problems we found, including recommendations to address
these matters.
Findings and Recommendations
Finding 1 System-wide accountability for the state's
investment in facilities is lacking.
Wyoming has not designated a single state agency or entity to be
responsible for its many buildings, nor has it created a process
for gathering data about them. The state's approach to facility
management has been haphazard and has allowed deterioration of some
fixed assets to take place.
Furthermore, policy makers have not been able to turn to a single
source to get answers for facility related questions.
Responsibility For Facilities is Diffused
Wyoming statutes fragment responsibility for care and maintenance
of the state's buildings among many entities. These include the
Capitol Building Commission (CBC), the Facilities Management
Division (FMD) of the Department of Administration and Information
(A&I), and individual agencies.
CBC's original statutory charge in 1888 was to care for the
capitol building. Over time, the Legislature expanded CBC's
mission to include state-owned properties in the vicinity of
the capitol building (capitol complex) and certain statewide
lease and maintenance expenditures. Currently, it has a mix
of statutory duties.
Capitol Building Commission Duties
Statewide Roles
Approve all leases over $5,000 [W.S. 9-2-1023(a)(i)].
Approve all maintenance, repair and replacement expenditures
over $10,000 [W.S. 9-2-1023(a)(ii)].
Semi-Statewide Role
Authorized to adopt rules and regulations relative to the
operation, management and use of any state leased or owned
building, excluding buildings, the operations, management and
use of which are assigned by statute to any other state agency
[W.S. 9-5-106(a)].
Cheyenne-Specific Roles
Control capitol building [W.S. 9-5-101(b)].
CBC may buy, take options to buy and lease property in the
vicinity of the state capitol [W.S. 9-5-102(a)].
Control Governor's residence [W.S. 9-5-103].
Maintain, operate, lease, manage and equip a state office
building in Cheyenne [W.S. 9-5-104(a)].
FMD's statutory charge is to:
1) lease all property for the state
2) maintain, repair, and replace all state property
3) support CBC by implementing its decisions
4) plan for all agency office and other space needs and
construction projects required for those space needs
[W.S. 9-2-1023(a)]
FMD's practices differ somewhat from its statutory
charges.
With the exception of handling leasing statewide, FMD's
activities focus primarily on the capitol complex.
FMD does not take a statewide leadership role in planning
for all agency space needs, and does not maintain,
repair, and replace all state facilities. Historically,
individual agencies and institutions have carried out
those responsibilities, without coordination by FMD.
Some agencies are not covered by CBC and FMD. Examples
include such major asset holders as the Department of
Transportation and the Game and Fish Department.
Other agencies have headquarters in Cheyenne housed in
facilities maintained by FMD. At the same time, several
of these departments, such as Family Services and
Corrections, are responsible for the state institutions
located outside of Cheyenne.
The institutions are not served by FMD.
Another entity with a key role in facilities management is the
Budget Division of A&I:
Budget Division prepares an annual budget request for
capital outlay projects. This request consolidates many agencies'
funding requests for major repairs and replacements in state-owned
facilities, as well as construction requests. The Budget Division
forwards the capital outlay request to the Governor, CBC, and the
Legislature.
Thus, the statutes disperse facility-related responsibilities among
many agencies. Further, they establish a structure under which FMD
has dual allegiances: it is a Division of A&I but at the same time
serves as staff to the CBC, and is accountable to the state's five
elected officials. This diffuse authority and decentralized
structure result in a fragmented management and funding approach to
state-owned buildings.
No Single Agency Is Accountable For Facility Management
No single entity consolidates facility condition and budget
information, or identifies priorities among competing projects.
The Budget Division may come closest to fulfilling the latter role,
insofar as it compiles an annual capital outlay budget request.
However, this is merely a list of those capital construction
projects requested by state agencies. The Budget Division does
prioritize among agencies' requests, but not according to a
strategic plan for statewide facility needs.
The statutes do not require CBC, FMD, the Budget Division, and the
agencies to work together to address the state's overall facility
management and budget issues. Without statutory direction to that
effect, none of these entities, individually, can be held
accountable for the condition of more than a portion of the state's
buildings.
The process generates insufficient information for decision makers
about the condition and needs of the state's owned facilities.
Without central responsibility and management, there is no logical,
orderly, and consistent flow of information to managers, who need
to make day-to-day decisions, and to policy makers, who must make
long-term policy decisions about facilities.
As a result, the Legislature and the Governor find themselves
making facility funding decisions for repairs, renovations, and
space acquisition on a case-by-case basis. Furthermore, the
Legislature and the Governor do not have assurance they are making
cost-effective decisions consistent with the state's overall
priorities and long-term needs.
While the statutes may have been sufficient 100 years ago, they
have been modified over time in a patchwork manner and the
modifications were not directed towards establishing a management
system. By 1995, the resulting structure is no longer adequate to
serve and support the current size and complexity of state
government, or protect the value of its facilities.
Centralization Is Beginning
In recent years, it appears practices have been evolving towards
concentrating more authority in FMD and CBC and requiring more
central information from them. The Legislature has given FMD
statewide responsibility for managing $5 million in ADA projects.
A new state laboratory is to be constructed in Laramie, and FMD
will have construction oversight responsibilities. In May 1995,
CBC directed FMD to conduct a statewide survey of long-term
facility needs.
These examples are consistent with FMD's statutory charge to
provide statewide planning, leasing, and maintenance services.
However, they are not consistent with FMD's organization and
staffing, or with its traditional focus on the capitol complex. A
statutory change is needed to more clearly define CBC's mission and
statewide responsibilities, as well as FMD's role as CBC's
administrative arm.
Recommendation: The Legislature should consider clarifying CBC's
authority, establishing it as the lead policy maker for state-owned
facilities.
The Governor, the Cabinet, and legislators need comprehensive
information about what the state's space needs are and are
projected to be, and about what it will cost to properly maintain
the facilities it owns. They also need to understand the likely
long-term consequences of under-funding facility maintenance. The
statutes do not charge CBC and FMD with systematically providing
that information.
CBC's current statewide responsibilities (for certain leases and
repairs) could be expanded. With clear statutory direction and
staff support from FMD, CBC could become the state's lead entity
for facilities. This change would bring more of a statewide
perspective to the long-term management of many of the state's
capital assets. CBC would create policy, gather information, and
take a leadership role in protecting the state's investment in
buildings.
At the same time, this would be a limited central role for CBC.
Day-to-day management and operating decisions would remain with
individual agencies; these responsibilities would not be shifted to
CBC or FMD. Furthermore, agencies such as Department of
Transportation and Game and Fish Department would continue to
manage their own facilities.
To signify the importance of enhancing CBC's role, the Legislature
may wish to consider changing the CBC's name from "capitol" to
"capital." This change would reflect CBC's new emphasis on matters
beyond the capitol complex. Since FMD's role and responsibilities
would also be enhanced, its staffing should be reviewed and
adjustments made, if appropriate.
Finding 2 Ineffective maintenance planning has
contributed to the deterioration of some state
facilities.
Wyoming's approach to facilities maintenance has been largely
short-term and reactive. Consequently, maintenance crews spend a
large amount of time reacting to emergencies and responding to
equipment breakdowns; preventive maintenance is neglected,
resulting in more costly repairs; and the health and safety of some
state employees and citizens is jeopardized.
Wyoming's Approach to Facilities Management Has Been
Reactive
Interviews with facility managers revealed that they frequently
lack complete, accurate, and reliable building condition
information. Because maintenance needs are not routinely
identified and addressed at an early stage, i.e. before extensive
deterioration occurs, repair costs are higher than necessary.
According to facility managers, the mechanical systems of many
state buildings have been extended beyond their expected life. As
a result, maintenance needs are extensive and breakdowns are
commonplace.
These conditions have resulted in maintenance programs that are
largely reactive in nature. Maintenance managers assign workload
priorities based on the urgency of daily crises, preventive work is
deferred, and a backlog of maintenance needs has accumulated. As
one manager put it, projects are prioritized "based on what blows
up first."
Our evaluation found that no one has clearly established the total
amount of funding necessary to bring all state-owned buildings up
to a steady state condition. Various estimates we reviewed placed
the statewide deferred maintenance need at between $19.7 million
and $65.9 million.
Results of Maintenance Programs are Inconsistent
Facility managers at some state agencies and institutions told us
their facilities have been successfully maintained in like new
condition.
However, others believe that facility conditions are deteriorating.
We observed some problems first hand.
During a tour of capitol complex facilities, we saw damage from
leaking water in the basement of the Herschler Building. This
problem resulted in several examples of damage to the building,
including an electrical system failure which closed the building
for a day. A&I estimated the cost of this closure, which occurred
on May 31, 1995, was nearly $88,000 in salaries and benefits due to
lost time.
Additionally, FMD reported that most of the office buildings in the
capitol complex leaked during the heavy spring rains of 1995,
including offices in the Capitol Building. The leaking roofs are
an example of an ongoing maintenance problem, not just a one-time
occurrence. Appendix B includes photographs of some of the
deferred maintenance needs we observed.
Deferred Needs Pose a Risk to Health and Safety
Unaddressed facility needs pose risks to the health and safety of
state employees and citizens. We reviewed documentation from a
1989 Cheyenne Fire Department inspection of the Barrett Building.
Inspectors noted a number of safety violations, the most serious of
which was a lack of adequate fire exits. In another instance, city
fire inspectors warned state officials as early as 1985 that the
location of the state health lab in the Hathaway Building was
unsafe. Although FMD made minor repairs to the Barrett Building
and the Legislature provided $10.4 million in 1995 to address both
matters, the city's basic safety concerns have not yet been
resolved.
Cost Savings Can be Achieved Through Planned Maintenance
We reviewed a large body of literature written by knowledgeable
facility management professionals regarding facility maintenance.
These experts contend that effective planned maintenance programs
can reduce costs by cutting down on incidents of expensive
breakdowns. One noted facility management professional has
estimated that for every dollar spent on planning, five dollars can
be saved in cost avoidance.
An American Management Association publication reported that some
facility management departments have saved or avoided up to 30 to
35 percent of facility costs through planning. Based on this
assumption, we estimate the potential cost-savings to the state of
Wyoming could be between $3.5 million and $4.1 million annually, if
a planned maintenance program were adhered to.
Officials are Responsible for Effective Maintenance
Public officials are responsible for safeguarding resources against
waste, loss, and misuse. State buildings, which are assets
acquired through the investment of tax dollars over the years, are
critical to the state's quality of life and contribute to a
productive environment. As stewards of these assets, public
officials bear the responsibility for their effective maintenance.
A lack of effective facility management can affect public health
and safety, reduce productivity of public employees, and cause
long-term financial losses when buildings must be prematurely
refurbished or replaced.
Formal Facility Assessment and Better Planning are Needed
The facility management literature we reviewed advises that
periodic reassessment of facility conditions is an essential step
for effective facilities management. The literature suggests that
agencies responsible for maintenance and repair budgets should
implement formal condition assessment programs.
Such programs require trained technicians and managers and should
be standardized to control their cost and to ensure consistency of
the results. To accomplish these objectives, facility managers
must first establish written guidelines. Because these kinds of
programs do not exist in the state of Wyoming, it has been
difficult to establish appropriate funding to reduce and eliminate
maintenance backlogs which have accumulated over the years.
To move beyond reactive facility management, planning must be
strengthened. Simply identifying maintenance needs would have no
effect unless managers develop an action plan to address these
needs. Moreover, given proper attention, planning will help ensure
that the state receives the maximum return on its investment in
labor and material resources.
CBC has recognized the need for long-range facilities management
planning. In May 1995, CBC adopted a policy requiring an annual
poll of agencies to identify their facility needs. While this is
an admirable first step, we believe a more structured and
systematic approach than polling is called for to ensure that the
information is consistent statewide.
Recommendation: FMD should coordinate an annual statewide
assessment of building repair and maintenance needs.
FMD should develop standards and procedures which will provide the
basis for a formal condition assessment of state-owned facilities.
These standards should be developed in consultation with other
state agencies that have large portfolios of state-owned buildings,
to address their specific building requirements. Using these
standards, agencies should complete assessments of the buildings
under their control. FMD should coordinate this annual statewide
assessment of building repair needs and compile the results.
The purpose of these efforts is to provide comprehensive, accurate,
and reliable information on building conditions to facility
managers, policy makers, and interested citizens. Condition
assessment should be an integral part of maintenance planning.
Information gathered from condition assessments can be used as a
benchmark, as a tool to plan work, and as a basis for action to
preserve state-owned facilities.
Recommendation: FMD should work with agencies to develop a
statewide facilities maintenance plan.
Once an assessment of statewide facility maintenance needs has been
completed, FMD should develop a strategic plan to eliminate
maintenance backlogs and to establish proactive maintenance
practices. FMD should consult with state agencies when identifying
specific goals and incremental steps to achieve those goals.
Authorities in facility management recognize that a maintenance
program will be ineffective unless backlogged maintenance is
identified and eliminated. Thereafter, planned maintenance
programs should ensure that facility needs are identified and
addressed at an early stage.
Finding 3 State government does not adequately plan for its
space needs.
State government does not have a systematic process to manage
its use of space. As a result, policy makers have little assurance
that space is managed efficiently and effectively.
No System to Assess Current Space Use
The state does not have a system to assess or control current space
use. No entity in the state gathers comprehensive space
information or determines how much space is allocated by agency or
per employee. The statutes charge FMD with planning for all agency
space needs, but FMD has not established standards for state-owned
facilities. CBC has a space allocation policy for statewide leased
space, but FMD does not apply the policy consistently when it
negotiates for leased space.
Because FMD and facility managers do not have standards to guide
them, there are substantial differences in how space is distributed
among agencies. For example, space allocations vary greatly among
agencies housed in the state's largest office building, the
Herschler Building. Average allocations range from 154 square feet
per employee in one department to 460 square feet per employee in
another. The nature of work activities in these two agencies is
not appreciably different.
Space Has Increased, While Number of Employees has Decreased
The amount and cost of leased space to house state employees in
Cheyenne has increased, even though the number of employees has
remained stable, as shown in the exhibit below. We limited our
space analysis to Cheyenne because it has the most leased space,
although the conclusions may have statewide applicability.
Currently, the state is leasing 84,680 square feet of office space
in Cheyenne at an annual cost of $885,494. This is up from fiscal
year 1987, when the state was leasing 17,500 square feet of office
space at an annual cost of $142,500. The amount of leased space
was not substantial at the time because the Herschler Building was
built in 1985, and by 1987, many employees who had been housed in
leased space were moved into the facility.
We were unable to determine the appropriateness of this increase.
There may be several reasons why additional space was acquired in
Cheyenne during recent years. However, without a system to assess
and manage space, the state, too, is unable to determine whether
space increases were justified. FMD's administrator has suggested
that the state may not be using its space effectively and that FMD
will look into the issue.
STATE EMPLOYEES AND LEASED OFFICE SPACE IN CHEYENNE
1987 through 1995
Source: LSO analysis of A&I data
The System Lacks Controls to Manage Growth
The current system lacks controls to manage and restrain growth.
The process of obtaining additional space is described below.
Process for Requesting Leased Space
Agency requests space through FMD.
Agency must demonstrate that it has sufficient funds to
cover lease costs for the current biennium.
FMD or the agency may locate appropriate space.
FMD finalizes the lease on behalf of the agency.
Agency pays lease costs until the end of the current
biennium; thereafter, FMD's standard budget request is
adjusted to include the ongoing cost of the lease.
After the initial biennium, lease costs should be deducted from the
agency's budget and transferred to FMD's budget. However, according
to a Budget Division analyst, the deduction from the agency's
budget does not always take place because the Budget Division does
not have a standard procedure for making such adjustments. Thus,
an agency may only need to produce money for a lease during the
first biennium of that lease. This arrangement provides little
incentive for agencies to restrict "space creep."
In addition, CBC and FMD do not systematically exert control over
agency space growth. There are no written criteria for determining
the merits of agencies' requests for new space. FMD's
administrator told us the division rarely rejects requests for
leased space. Statutes require CBC to approve leases over $5,000,
but our review of CBC minutes indicates CBC approves leases, but
does not scrutinize the need for additional space.
Costs and Benefits of Space Acquisition are Not Evaluated
CBC and FMD have not routinely compared the costs and benefits of
leasing to other methods of acquiring space. In the past, FMD has
made space acquisition decisions without criteria which would help
evaluate the costs and benefits of various options. As a result,
policy makers could not be assured that space was obtained in the
most cost-effective manner.
Recently, however, the Budget Division did a cost-benefit analysis
of Cheyenne leased space. This came about due to the need to
temporarily relocate employees during the Barrett Building
renovation. The analysis showed that if the state were to relocate
all agencies currently in leased space in Cheyenne to the U.S. West
Building, the combined funds currently allocated to rent could
purchase the building in eight years.
As of this writing, CBC has not taken formal action to pursue
purchase of the building. Nevertheless, it did consider this
analysis in a recent meeting and went on to request FMD to develop
a cost-benefit analysis policy. This policy requires FMD annually
to analyze the state's need to build, buy, or lease facilities.
Long-term Costs of Ownership are Not Routinely Considered
The state does not consistently consider the total costs of
ownership when obtaining space. According to facility management
experts, the actual construction of a facility can be a minor
expense when compared to the lifetime costs of maintaining a
facility.
W.S. 16-6-403 requires agencies to consider life-cycle costs prior
to the construction or renovation of any major facility. Life
cycle costs include the initial cost of a facility, energy
consumed, and projected operation and maintenance costs over the
life of the facility. FMD staff told us life-cycle cost analyses
were not prepared for any of the upcoming construction or
renovation projects.
The System Lacks Structure and Controls
The state has not developed an overall structure or a comprehensive
planning process to assist in managing and controlling its space
needs. No entity has taken the lead to determine current space
needs or plan for future needs. The system has not established
guidelines to allocate space, has few controls to manage growth,
and lacks criteria for determining the best method of space
acquisition.
Recommendation: CBC should develop a master plan to address
current and future space needs.
The state's space allocation and acquisition practices can be
improved by developing an ongoing master planning process. A
master plan, periodically updated, would include assessments of
current and future space needs, plans for growth or downsizing in
government, and methods for acquiring and disposing of facilities.
Before CBC can develop a space plan, it will need to determine how
space is currently allocated. FMD can gather baseline data from
the capitol complex and as suggested by W.S. 9-2-1023(a)(viii),
should also develop space standards. The space planning process
should be refined within the capitol complex, after which CBC could
expand it statewide.
CBC should use this plan as a basis for developing formal criteria
for agencies requesting additional space. The criteria should
require them to provide more justification for space requests than
their current ability to pay. If requests meet the criteria, CBC
can then analyze the costs and benefits of alternatives, including
the long-term costs of ownership, in order to select the best
option.
Finding 4 Wyoming's capital budgeting practices are
weak.
Wyoming's capital budgeting process does not provide policy makers
with information essential to prioritizing facility needs and
allocating capital outlay funds. Without this information, it is
difficult for CBC and the Legislature to effectively target the
most critical projects, set priorities among agencies, and make
appropriate funding decisions.
Overview of the Capital Outlay Process
There is little documentation guiding the capital outlay process;
over time, it has been a flexible and changing process. However,
the process generally proceeds as follows:
Annually, agencies wanting capital outlay funds submit
their requests to A&I's Budget Division. Each agency
prioritizes its own requests.
The Budget Division reviews requests and informally
prepares funding recommendations for the Governor.
The Budget Division transmits its funding recommendations
to the Governor and CBC. The extent and scope of the
CBC's review has varied over the years.
The Governor includes funding recommendations in the
Capital Outlay Budget Request, which goes to the
Legislature.
After review, the Joint Appropriations Committee
recommends to the Legislature which projects to fund by
incorporating those recommendations into the budget bill.
Legislature Lacks Information About Statewide Priorities
The Legislature does not receive a comprehensive list of proposed
capital outlay projects, ranked according to statewide criteria
from most critical to least critical. Instead, the Legislature
receives capital outlay requests that reflect the priorities of
individual agencies and the Governor.
Because capital outlay requests are not prioritized according to
agreed upon criteria, the Legislature makes case-by-case funding
decisions. According to a CBC member and two former JAC members,
the Legislature funds capital projects based on how persuasive
individual agencies' requests are, rather than on how the projects
fit in with the state's overall facility needs.
Legislature Lacks Information About the Consequences of Not Funding
Requests
Policy makers lack quantifiable information about the long-term
consequences of not funding capital outlay requests. Information
about this aspect of capital budgeting (e.g. the costs of delaying
or denying funding) could help the Legislature prioritize requests
and make deliberate funding decisions.
Generally, agencies briefly describe the consequences for not
funding requests in their budget narratives. For example, in the
1995/1996 Biennium Capital Outlay Budget, agencies made the
following assertions:
"Additional cost and damage will accrue the longer these jobs are
deferred."
"Deterioration of these roofs is to the point that valuable state
assets are going to be destroyed if we continue to ignore the
problem."
"The present situation presents a serious health hazard for
employees working under these conditions."
However, agencies usually do not quantify the projected additional
costs of delaying or denying funding. Often the costs of not
funding a request can be significant, due to increases stemming
from additional damage which occurs and from inflation.
In 1990, the Adjutant General requested $78,000 for a new roof for
the Laramie armory. The consequence identified for not funding the
new roof was that "it is time to replace it before extensive water
damage occurs to the interior of the building." The agency did not
estimate the additional cost of delaying funding. When the project
was finally funded in 1994, the Legislature appropriated $115,000,
or nearly 50 percent more than the original request. According to
an official at the Adjutant General's Office, the increase was due
primarily to inflation, but also to additional damage.
In 1989, FMD requested $5 million to renovate the Barrett Building.
Although the Legislature denied the request, it was resubmitted
each biennium until 1995, when the $4.1 million was appropriated to
start renovations. However, FMD estimates it could cost a total of
$10 million to complete the renovation work that was requested in
1990 at half the cost.
Good Capital Budget Practices
From our review of relevant literature and interviews with facility
management officials, we determined that effective capital budget
processes have certain characteristics. The following list
contains some of the most significant attributes:
Preparation of multi-year capital plans covering at least
five years.
Clear definitions of the criteria used to select capital
projects.
Establishment of priorities for long-range capital
improvements during the planning and budgeting process.
Selection of projects in a logical sequence from
multi-year plans.
Review on a continuous basis the status of ongoing
capital projects to ensure that previously established
targets of time, money, and scope are being met.
Other states which have a more formalized process for capital
outlay budgeting, such as Colorado and Idaho, have found the
process aids legislators in making informed budget decisions. Not
only are legislators made aware of the state's most critical
current facility needs, but they also have a framework for
anticipating long-term needs.
Recommendation: The Legislature should consider requiring CBC and
the Budget Division to strengthen capital budgeting procedures.
The Legislature should consider requiring CBC and the Budget
Division to adopt a more formal capital outlay budget process.
Specifically, they should take steps to:
Develop five year capital outlay plans.
Establish clear written standards for setting priorities.
Select projects based on priorities.
Monitor capital outlay appropriations.
It is unclear why Wyoming has not adopted effective capital outlay
budgeting practices. Managers and officials we interviewed
provided some possible explanations. First, some said that
adopting a more formalized process would be too time consuming.
Second, some managers believe that given Wyoming's small size,
there is no need for such a process since "everyone knows what the
problems are."
We believe a stronger capital budgeting process does not have to be
burdensome to the agencies involved, and would strengthen the
state's ability to manage its assets. Capital projects tend to
require relatively large appropriations in the short run, but they
also have long-term benefits. A strong capital budgeting process
would help policy makers adopt the long- term perspective required
to sustain the value of the state's capital assets.
Finding 5 Facility managers have not established systems for
measuring, reporting, and monitoring performance.
State facility managers have not established quantifiable goals and
performance measures which are necessary to ensure accountability.
Consequently, it is difficult to gauge the effectiveness and
economy of agencies' current facility management programs.
Moreover, managers lack information to make improvements and
citizens have few assurances that their tax dollars have been spent
wisely.
The basic goal of performance measurement is government that works
better and costs less. This requires managing with an eye on
results. Performance measurement promotes effectiveness through
ongoing feedback to managers and staff. This process also provides
data to help allocate increasingly limited public resources among
competing priorities. Wyoming statutes require agencies to measure
program results.
Work to Develop Performance Measures is in Preliminary Stages
As part of our evaluation, we reviewed agency efforts to implement
performance measures in the area of facilities management. We
spoke with responsible officials at FMD as well as several other
agencies with significant building portfolios. We found that
agency officials have not developed performance measures that are
relevant to their facilities management programs.
The managers cited various reasons for the lack of performance
measures. Although some were aware of the requirement, they said
they had not received clear direction from their agencies to
develop measures. Additionally, they did not consider their
development a work priority. Some managers were unfamiliar with
the concept and the potential benefits. We believe that this lack
of direction and expertise, as well as the pressures of daily work
priorities, were the main reasons facility-related performance
measures have not been developed.
Facilities Management Division has Completed Preliminary Steps
As the state's primary facility management agency, FMD has taken
some preliminary steps to develop performance measures. As part of
A&I's five- year strategic plan, which was completed in November
1994, FMD identified its mission, goals, and objectives. FMD
identified additional goals in its biennial budget request.
Excerpts of the pertinent sections of these documents are included
in Appendix C.
Our review showed that these documents were constructive first
steps for the development of performance measures. However, we
believe additional work is required before meaningful performance
measures can be established. We noted the following issues in our
review of FMD's mission, goals, and objectives:
The goals identified in FMD's five-year strategic plan do
not identify areas of potential cost savings. FMD
identified two facility management goals in its plan:
prepare a comprehensive long-range plan; and continue an
ongoing facilities maintenance process. Although these
are beneficial goals, they could be improved by
acknowledging a need for continuous improvements in
program economy and efficiency.
A lack of specificity and time frames may prevent FMD
from stretching and challenging itself. For example, FMD
has an objective to move from a work schedule dominated
by unscheduled repairs and emergencies to one of planned
preventive and predictive maintenance. While this
appears to be an appropriate objective, it could be
improved by including specific measurable benchmarks and
time frames for future performance. Similar specificity
problems exist with other FMD objectives.
Some of FMD's objectives do not provide clear targets
(how and when) for specific actions. For example, FMD
has objectives to complete a perpetual facilities
maintenance plan and complete a long-range plan. FMD
should rewrite these and other objectives to be clear
about who is responsible and when actions are expected.
Recommendation: Facility managers should develop systems for
measuring, reporting, and monitoring performance.
Our evaluation showed that additional work on performance measures
is needed in the area of facilities management. First, we believe
FMD should expedite its efforts to develop an effective performance
measurement system for its own programs. Additionally, we believe
FMD should assume a leadership role, working with other agencies
which have extensive facilities, to help ensure appropriate
measures are in place statewide.
Key facility management issues could be addressed through
performance measures, including: the size of the state's deferred
maintenance problem and whether it is increasing or decreasing; the
cost per unit of space for maintenance and differences among
agencies; the timeliness of repairs; and the portion of efforts
devoted to emergency repairs and whether this is increasing or
decreasing. These are only a few of the many possibilities for
helpful performance measures in this area.
Conclusion
The state of Wyoming does not act like the major facility owner and
manager it is. The state owns buildings with a replacement cost of
nearly half a billion dollars and spends almost $7 million dollars
per year on leased space. It spends another $11.6 million dollars
per year to maintain its facilities.
Despite annually investing millions of dollars on facilities, the
state has made no central authority accountable for their overall
condition. No entity has developed a statewide facility plan or
required that individual agencies in charge of state facilities
plan for maintenance or space needs.
As a result, the state's facilities are not consistently maintained
and in fact, some are deteriorating. Most state-owned buildings
are not new at present, and as they continue to age, will require
further investment to repair or replace major mechanical and
electrical systems. In addition, many of the older buildings lack
the capability to accommodate data and word processing technologies
on which state government now depends.
To meet these challenges, Wyoming must focus on being a good
steward of the taxpayers' investment in buildings. Equally
important is the need to continue to provide safe, adequate work
space for state employees as well as living space at the
correctional and charitable institutions.
Creating a proactive management strategy for the state's capital
facilities calls for forward thinking, determination, and concerted
effort from many levels of government. That effort should be
grounded by significant attention to facility planning: at
individual sites, within agencies, and statewide.
The findings and recommendations in this report appear to be
consistent with the Governor's emphasis on strategic planning.
Some reallocation of resources may be necessary, but nevertheless,
we believe the long-term benefits will more than pay for any
immediate costs.
Agency Response
Appendices
APPENDIX A
9-2-1023. Duties of department performed through facilities
management division.
(a) The department through the facilities management division
shall:
(i) Lease all property for the state. Leasing
expenditures in excess of five thousand dollars
($5,000.00) shall be approved by the capitol building
commission. Leasing of property by the state shall be
conducted on a bid and proposal basis with advertising of
space needs and square footage in community or local
newspapers. Leasing contracts may be entered into by
noncompetitive negotiation only if:
(A) The central services administrator determines
in writing that competitive bidding is not feasible
and the determination is approved by the capitol
building commission; or
(B) The lessor is a governmental agency.
(ii) Maintain, repair and replace all state
property. Maintenance, repair and replacement
expenditures in excess of ten thousand dollars
($10,000.00) shall be approved by the capitol
building commission;
(iii) and (iv) Repealed by Laws 1991, ch. 29,
6.
(v) Designate the administrator of the
facilities management division to function as
secretary to the capitol building commission
who will administratively implement the
commission's decisions;
(vi) Repealed by Laws 1989, ch. 178, 3.
(vii) Repealed by Laws 1991, ch. 29, 6.
(viii) Plan for all agency office and other
space needs and construction projects required
for those space needs, if any.
(b) and (c) Repealed by Laws 1989, ch. 178, 3.
(d) The facilities management division shall:
(i) Manage and control all state motor
vehicles and equipment including their
identification, purchase, lease, replacement,
repair and permanent assignment, except for
state owned or leased vehicles personally used
by or assigned to the governor, secretary of
state, state auditor, state treasurer or
superintendent of public instruction;
(ii) Establish, update and comply with
uniform standards and criteria promoting the
economic and effective maintenance and use of
motor vehicles consistent with the needs and
locations of agencies.
(e) Any state or county employee or officer using
a state vehicle without authorization or for
purposes other than official business is guilty of
a misdemeanor punishable by a fine of not less than
fifty dollars ($50.00) or more than two hundred
dollars ($200.00).
9-5-101. Capitol building commission; composition; general
powers and duties; conflicts of interest.
(a) The five (5) elected state officers constitute the
capitol building commission.
(b) The capitol building commission has charge and
control of the capitol building, may furnish and equip
the building and may arrange and contract for its
occupancy by federal officers and appointees as it deems
advisable. The commission shall designate the rooms in
the capitol building to be occupied by the various state
and other officers, shall keep the building in repair,
maintain the building in a suitable condition for
occupancy, employ and appoint competent janitors and
firemen and shall collect all rents arising from the
occupancy of the capitol building. All money collected by
the commission under this section shall be paid into the
general fund.
(c) No member of the capitol building commission shall
be interested in any contract entered into or made by the
commission, nor be a surety on any bond conditioned for
the performance of any contract, nor be an agent of any
contractor with the commission.
9-5-102. Capitol building commission; authority to buy and
lease property; acceptance of donations, grants and devises.
(a) In order to obtain building sites for additional
office space and state uses and to insure the proper
keeping of valuable state records and provide for the
expansion of functions of the state, the capitol building
commission may buy, take options to buy and lease
property in the vicinity of the state capitol building to
be used for building sites for future state office
buildings. The commission may lease acquired property
until it is needed. The state capitol building
commission, in cooperation with the department of
employment, may acquire lands and buildings in the name
of the state of Wyoming by purchase, lease agreement,
gift or devise to provide suitable quarters for the
administration of the Wyoming Employment Security Law and
to develop improvements, maintain and repair the lands
and buildings.
(b) To accomplish the purposes of subsection (a) of this
section the state capitol building commission may accept
donations, grants-in-aid and devises.
9-5-103. Capitol building commission; supervision and control
of governor's residence. The governor's residence and the
buildings, grounds and property thereto attached belonging to
the state of Wyoming are under the supervision and control of
the capitol building commission.
9-5-104. Capitol building commission; state office building;
authority to maintain; rental; use of proceeds.
(a) The capitol building commission may maintain,
operate, lease, manage and equip a state office building
in Cheyenne, Wyoming.
(b) Every department occupying space in the building
authorized under subsection (a) of this section shall, if
required by the capitol building commission to do so, pay
to the state treasurer an annual rental of not less than
three dollars ($3.00) per square foot of space occupied
plus a pro rata share of maintenance, janitorial
services, utilities and other overhead costs necessary to
maintain the building in as good a condition as
reasonable and proper use will permit. Payments shall be
kept by the state treasurer in the debt service fund and
shall be used to make the payments of principal and
interest on the bonds when the bonds fall due according
to the terms thereof and for no other purpose. The bonds
shall be payable only from and secured by an irrevocable
pledge of revenues provided by this subsection, and the
bonds shall so provide. If in any year the pledged income
exceeds the amount necessary to retire the bonds and
interest due during the year, the excess shall be used to
retire bonds with the largest numbers then outstanding on
any interest-paying date, and the bonds shall so provide.
9-5-105. Purchase or lease of state lands. Before purchasing
any land for any state purpose, the state agency or board
shall determine if any land owned by the state is available
and could be used for the state purpose. The agency or board
shall negotiate with the agency or board owning or controlling
the land for purchase or lease of the lands.
9-5-106. Capitol building commission; powers relative to use
of state buildings in Cheyenne; other state buildings; rules
authorized; exceptions.
(a) The capitol building commission is authorized to
adopt rules and regulations relative to the operation,
management and use of any state leased or owned building,
excluding any buildings, the operation, management and
use of which are assigned by statute to any other state
agency.
(b) The secretary to the commission under W.S.
9-2-1023(a)(v) shall administratively implement any rules
of the capitol building commission adopted under this
section. The director of the department of
administration and information may adopt rules and
regulations which make violation of rules adopted by the
commission under subsection (a) of this section grounds
for disciplinary action for any state employee violating
the rules of the capitol building commission regarding
operation, management or use of state buildings.
(c) Any state agency, board or commission having
authority for the supervision, control or management of
state leased or owned buildings located anywhere in the
state of Wyoming which are not within the provisions of
subsection (a) of this section, is authorized to adopt
rules and regulations for the operation, management and
use of state leased or owned buildings to the same extent
as provided by subsections (a) and (b) of this section.
(d) No rule promulgated under this act [this section]
shall apply to facilities occupied by:
(i) The legislature or the members thereof unless
the legislative management council has specifically
concurred therein; or
(ii) The judiciary or the members thereof unless
the judicial council has specifically concurred
therein.
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