The 4th meeting of the Capital Planning Advisory Board (CPAB) of the 2001 calendar year was held on Monday, September 17, 2001, at 9:00 AM, in Room 327 of the Capitol. Representative Perry Clark, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Representative Perry Clark, Chair; Bill Hintze, Vice Chair; Representative Brian Crall, Debra Gabbard (representing James Codell), Lou Karibo, Cicely Lambert, Glenn Mitchell, Sam Newcomb, Norma Northern, Laurel True, and Garlan Vanhook.
Guests: Armond Russ, Commissioner, Department for Facilities Management (DFM), Finance and Administration Cabinet.
LRC Staff: Pat Ingram, Staff Administrator; Mary Lynn Collins, Nancy Osborne, and Dawn Groves.
Ms. Northern's motion to approve the minutes of the August 24 meeting was seconded by Mr. True and approved by voice vote.
Chairman Clark asked the Board’s Staff Administrator, Pat Ingram, to review the Information Items included in the members’ folders. She said the first item included information provided by the University of Kentucky and the Council on Postsecondary Education in response to requests from CPAB members at the August meeting. The second item reported on recently submitted plan amendments from Murray State University and the University of Louisville. The third item was an updated report and prioritized project listing from the state's Chief Information Officer (CIO). The report includes postsecondary education since the review of those projects had not been completed when the report was initially presented to the Board in August. The final item was a report on the EMPOWER Kentucky initiative that was funded in the 1996-98 and 1998-2000 budgets.
Chairman Clark said given the amount of work remaining in order to complete the 2002-2008 Statewide Capital Improvements Plan by the November 1 statutory due date, it would be necessary to meet twice next month, on October 12 and on October 26. He explained that for today’s agenda, Ms. Ingram would provide an overview of each potential recommendation. The Board would then need to discuss and provide direction to staff as to how to proceed with each item.
At Chairman Clark’s request, Ms. Ingram reviewed the item concerning major capital renewal and maintenance of state facilities. She explained that it included the outlines for two programs that had been drafted and presented to members at the August meeting. The Facilities Maintenance and Renewal Fund for New Projects is intended to accumulate funds to address the future maintenance and capital renewal needs of new projects by setting aside into a building-specific account an amount equal to 2 percent of the project cost each year. The Facilities Maintenance and Renewal Fund for Existing Projects would set aside a percentage of the value of state-owned buildings to establish a pool from which funds would be allocated for major maintenance and renewal needs.
In response to Mr. Hintze’s questions, Ms. Ingram said based on the project authorizations in the 2000-02 budget, the annual cost of the fund for new projects would have been about $6.3 million. Additionally, she said existing state property with a value of over $400,000, excluding postsecondary education and transportation, totals $1.3 billion. If the existing facilities fund was phased in on the basis of 0.5 percent per year over a four year period, the first-year cost would be about $6.6 million.
Responding to Mr. Vanhook’s comments, Ms. Ingram said this program would apply only to state-owned facilities and would not cover court facilities which are owned by the counties. Mr. Vanhook said something similar needs to be considered to help maintain the courthouses.
Mr. True said this was a good management practice and should be done. When asked for his thoughts on these proposals, Department for Facilities Management (DFM) Commissioner Armond Russ also said it is good policy.
A motion by Mr. Hintze to approve the recommendation was seconded by Mr. Mitchell and approved by voice vote. Chairman Clark asked staff to proceed to have draft legislation prepared.
Ms. Ingram next reviewed the recommendation regarding a real properties database. She said it calls for KRS 42.027 to be amended to specify that development and maintenance of a comprehensive state facilities/real property management database is one of the duties of the DFM. Ms. Ingram said the recommendation also calls for a formal plan to be prepared on how the database will be developed and implemented, and it calls on the Secretary of the Finance and Administration Cabinet to allocate amounts from the Capital Construction and Equipment Purchase Contingency Fund to help finance planning and implementation of the database.
In response to Mr. True’s question about the cost of the database, Ms. Ingram said one purpose of the planning effort is to get a good estimate of the cost. Mr. Hintze and Mr. Mitchell expressed concerns about the provision calling for the Secretary of the Finance and Administration Cabinet to allocate amounts from the Contingency Fund for the database.
Responding to Ms. Northern’s question, Ms. Ingram said the recommendation provides for postsecondary education facilities to be included in the database so statewide data would be available on a consistent basis. Ms. Northern said she hoped there could be a provision for file transfers between the databases in order to avoid duplication of efforts.
Ms. Lambert noted that the Judicial Branch was establishing its own facilities database, and Ms. Ingram confirmed that the database addressed in the recommendation would apply only to the Executive Branch.
Mr. True made a motion to approve the policy but to revise the wording of the third item to say the Board “urges” the Secretary to allocate amounts from the Contingency Fund for this purpose. The motion was seconded by Mr. Mitchell and approved by voice vote.
Next, Ms. Ingram reviewed the third draft recommendation which addressed project authorizations. She said it was intended to address various issues identified in the Board’s review of the 2002-2008 agency capital plans. Those issues included amounts for design and infrastructure development being approved prior to authorization of the full project, projects that were funded at one-half or less of the identified project cost/need, and additional amounts being needed to complete projects that were thought to be fully funded when initially authorized. The recommendation calls for the three branches to be reminded that KRS 45.760 requires the capital construction budget request to report the total estimated cost of completing each recommended project. It also calls for KRS 45.760 to be amended: 1) to state that the recommended capital construction program may not include amounts for planning and infrastructure or other development beyond the work that would be undertaken during the schematic design phase of a project; 2) to require that if less than the full cost of the project is recommended for appropriation, the recommendation must clearly describe the work to be completed within that funding, and it must certify that, if additional amounts for the project are not forthcoming, the work described is sufficient to provide for a viable project that addresses the agency’s needs; and 3) to require that a pre-design study be completed prior to the authorization of a major new construction or renovation project costing $5 million or more where at least 50 percent of the cost is expected to be financed from the state General Fund or Road Fund.
Mr. True asked about the Eastern Kentucky University Activity Center which was funded for Phase I at $7 million of a total $20 million cost. Commissioner Russ said if no additional funding is provided, it will be a somewhat viable project but will not meet all of the institution’s needs. They are currently proceeding in anticipation of getting more funds.
Without having further input from the parties involved, Mr. Hintze said he is reluctant to endorse the item in the recommendation saying that the budget cannot fund a project beyond the schematic design phase, and the item requiring a pre-design study to be completed prior to project authorization. He said requiring the pre-design study would probably be good policy, but might be difficult to enforce. He said the material presented in the agenda item raises serious issues that warrant additional review and testimony.
Mr. Mitchell asked when pre-design would be done and how it would be affected by changing needs and priorities. Ms. Ingram explained that the intent was to allocate most of funds provided for pre-design immediately after the enactment of one budget in order to have the project needs and cost estimates defined for inclusion in the next capital plan and budget. The intent would also be to hold back some funds to be available to address unanticipated needs and changing priorities.
In response to concerns expressed by Ms. Northern, Ms. Ingram said the pre-design was not intended to be duplicative of other planning that is done for a project, rather it is intended to have the preliminary planning/design completed before the project is authorized. Ms. Northern said she, too, would like to have more testimony before endorsing this recommendation.
Mr. True said the architects who do the project cost estimates should be held responsible if those estimates prove to be inaccurate. Ms. Ingram explained that the cost estimates used as the basis for the project authorizations are usually done before an architect is engaged; they are often done in-house by agencies with differing levels of expertise. Mr. Vanhook said it is important for the agency to determine what its needs are and to establish a program and cost estimate based on those needs.
Commissioner Russ said a pre-design study is not a Phase A design, but can help determine what type of facility is required based on the identified needs, and the cost and other issues relating to obtaining that facility.
Mr. True said there should have to be a second opinion from someone like the Department for Facilities Management that a project can be completed within the funding being requested/provided.
Chairman Clark said it appears that the issues concerning pre-design and proceeding beyond schematic design cannot be resolved at this time and should be reviewed further after the current plan is completed. Mr. Mitchell’s motion to proceed with the first and third items in the recommendation was seconded by Mr. Vanhook and approved by voice vote.
The fourth policy recommendation reviewed by Ms. Ingram addressed agency maintenance pools which are used to finance maintenance and minor construction projects costing less than $400,000 each. The recommendation stated: 1) that the budget should include a maintenance pool for each agency with responsibility for administering/managing state property; 2) that funding for the maintenance pools should be calculated in an equitable manner across all agencies, with an offset to the calculated need for state funds for those agencies with other funds available for this purpose; 3) that a goal should be established to achieve maintenance pool funding of $1.50 per square foot annually for all agencies, with implementation over a four-year period; 4) that the Governor’s Office for Policy and Management and the Department for Facilities Management should work to develop a formula for maintenance pool funding that takes into account not only square footage but also other relevant factors such as age of facilities; and 5) that when investment income revenues are insufficient to adequately finance the agency maintenance pools, state General Fund revenues or other appropriate revenues should be used.
Mr. Hintze said he has no problems with this recommendation except that the goal is probably too low. In response to Mr. Mitchell’s question, Ms. Ingram clarified that the intent was to have funding of $1.50 per square foot for each agency, not that the across-the-board average for all agencies would be $1.50 per square foot. Mr. Mitchell said it needs to be taken into account that because of the condition of their buildings, some agencies need more funds for maintenance. Mr. Mitchell added that this is an important recommendation.
In response to Mr. True’s question, Ms. Ingram explained that this recommendation deals with pools used to fund projects costing less than $400,000 each, while the first policy recommendation that was considered addressed funding for projects that cost $400,000 or more each.
Mr. Hintze made a motion to adopt the recommendation with building condition, rather than age, to be identified as a factor in the distribution formula. Mr. True seconded the motion, which was approved by voice vote.
Referencing the next agenda item, Ms. Ingram reviewed the five “Recommendations and Comments” included in Chief Information Officer’s report to the Board on information technology (IT) projects and issues. The first item called for a redesigned process for IT capital plan review which would include prioritization of IT projects separate from construction and equipment in the agency plans, expanding the planning horizons for IT to the second and possibly third biennium of the planning period, and having the CPE assume primary responsibility for review and prioritization of IT items submitted by the postsecondary institutions.
Ms. Valicenti was asked to respond to Mr. Hintze’s question about the proposal for separately prioritizing IT projects. She said the intent was to provide higher visibility for these projects, but, of course, they would eventually have to be combined with other projects when making funding decisions. In response to a question from Representative Crall, Mr. Hintze said his concern about this proposal was that all projects (construction, equipment, and IT) must compete for amounts from the same pool of funds. He said he believes IT already is recognized as being important and that the Board already gets a separate statewide priority listing of IT projects from the CIO’s Office. Action on this item was deferred until the October meeting.
The second item called for revising the definition of an IT system to address all expenditures required to deploy a system, not just the hardware costs. Ms. Northern said she strongly supports doing this, and Chairman Clark asked staff to work with the CIO’s office to finalize a recommended definition.
The third item from the CIO’s report requested that the Board consider a funding pool approach for IT items that have either similar characteristics or that require significant maintenance dollars. Chairman Clark said sufficient information was not currently available on this proposal, so it would also be deferred.
The fourth and fifth items proposed that the Board endorse the importance of including appropriate security components in IT systems, and endorse the deployment of IT at the enterprise level where appropriate. Mr. Hintze said these issues were underlying concepts in the establishment of the CIO’s Office and the Governor’s Office for Technology, and the Board should support them. This action was approved by voice vote.
Ms. Ingram explained that the final recommendation addressed a long-standing interest of the Board which is that the Department for Facilities Management (DFM) should have appropriate authority to play a proactive role with regard to planning for the housing of state agencies and for the operation of state-owned facilities. Specifically, the recommendation proposed: 1) that KRS 42.027 be amended to specify that the DFM shall have the authority and primary responsibility for developing and implementing policies applicable to all state agencies which will ensure effective and efficient planning for the housing of state agencies and for the operation of state-owned facilities; 2) that additional resources be provided to the DFM to address its expanded role and to include the establishment of a planning section within the Office of the Commissioner to address aspects of the DFM’s work which require coordination among organizational units and among state agencies including the database and planning duties outlined in KRS 42.027; 3) that KRS 45.770 be amended to allow the Capital Construction and Equipment Purchase Contingency Fund to be used for moving/relocation expenses to facilitate achieving the goal of housing agencies in state-owned space (rather than leased facilities), and the goal of consolidation of agencies housed in multiple leased sites; 4) that the Finance and Administration Cabinet identify and propose other legislative changes for action by the 2002 General Assembly that would enhance the DFM’s ability to carry out its responsibilities relative to the housing of state agencies; and 5) that the DFM work with the Capital Planning Advisory Board to ensure that instructions for the six-year capital plans include the collection of agency space needs data and that such data is shared in order to benefit the planning efforts of both entities.
Mr. Mitchell said he agrees with the second through fifth items, but does have concerns about the first item which appears to expand the Department’s authority to cover programmatic facilities with which they have little experience. He said at this Board’s urging, the Department is making efforts to take on more responsibility with regard to office buildings. Commissioner Russ said the Department does assist all agencies in certain areas, such as energy management, but does not address programmatic issues and does not have the resources to do much planning. They have not been able to institutionalize some of the types of assistance they can provide to all agencies due to a lack of funding and staff.
Representative Crall asked what prompted this recommendation. Mr. Hintze said one reason was the Board’s feeling that office buildings should be operated by the DFM which has relevant expertise, and that agencies with primarily programmatic responsibilities should not have to serve as landlords for state office buildings. Ms. Ingram also referenced previous comments relative to the leasing of space for state agencies. DFM representatives have indicated that they only react to the needs that are brought to them rather than being aware of future needs and addressing them proactively.
Mr. True asked for clarification on the concerns about the first item in the recommendation. Mr. Mitchell said it appears to be overly broad, and to make the DFM responsible for facilities, including office buildings, that could be better addressed by the programmatic agency currently responsible for them. As an example, he said the Transportation Cabinet has staff to maintain its programmatic facilities and it is more efficient for them to also maintain the Cabinet’s office buildings rather than having two agencies responsible for the facilities. Mr. True said he thought the recommendation was directed toward having consistent policies across all agencies rather than toward who should maintain specific facilities. Ms. Northern asked that it be clearly stated when a recommendation is intended to encompass the postsecondary institutions as well as other state agencies.
Relative to the second item in the recommendation, Chairman Clark said the Board has asked the Department to undertake more responsibilities and said it should probably support a recommendation for adequate resources to carry out those duties. Mr. True expressed concerns about directing that a specific division be established in the Commissioner’s Office. Mr. Mitchell said the Cabinet is already working to establish a planning section in the Commissioner’s Office. The Board approved this item by voice vote.
The remaining items in this recommendation were also approved by voice vote.
Chairman Clark said the Board would now begin consideration of its project recommendations. Ms. Ingram first reviewed the agenda item addressing projects proposed to be financed from state funds. She added that in the agency and postsecondary plans, over 500 projects are proposed to be financed from approximately $2.7 billion in state funds in 2002-04. She also said the Secretary of the Finance and Administration Cabinet has indicated that $235 million of new debt could be authorized in the upcoming budget under the policy currently being applied which defines debt capacity as that amount where total debt service payments represent no more than six percent of total revenues.
Ms. Ingram listed several issues for consideration by the Board. They include whether to use the same three groupings as in the previous plans (maintenance, specific projects, assistance programs), whether cost should be a factor as well as project need and priority, and how replenishing the Budget Reserve Trust Fund should be addressed.
Relative to the maintenance of existing facilities, Ms. Ingram said this has traditionally been recommended as the Board’s highest priority and has included the agency maintenance pools, the pool for repair of state-owned dams, the three statutory pools (Emergency, Contingency, Statewide Deferred Maintenance), and the pool appropriated to the CPE for capital renewal and maintenance projects at the institutions. Issues to be addressed concerning this section of the recommendation include whether maintenance will continue to be the highest priority and how to address additional criteria the CPE has suggested relative to allocation of its pool.
Relative to the specific projects, Ms. Ingram said issues to be addressed included how many projects should be recommended and whether they should be prioritized.
Relative to the assistance programs, Ms. Ingram explained that in the past the Board has called for these programs to be recognized as a high priority, but specific funding amounts have not been recommended. For the current plan, the Board will need to decide how to address programs that were authorized in the 2000-02 budget but are coming through the planning process for the first time in the 2002-2008 plans, and already existing programs for which changes are being proposed.
In response to Representative Crall’s question, Mr. Hintze said the current balance in the Budget Reserve Trust Fund (BRTF) is $120 million which is down from a high of $278 million, and there is no authority for the Executive Branch to take any more from the Fund in the current fiscal year. He said the Executive Branch is looking at contingency actions in the event a further budget reduction is required when revised revenue estimates for the current year and preliminary estimates for next biennium are presented on October 15, but those actions do not involve the BRTF. Mr. Hintze said the administration feels it has a responsibility to propose a means of replenishing the Fund, and the rating agencies will be looking to see what is done in that regard.
Representative Crall said that given the revenue situation and the uncertainty caused by recent events nationally, continuing to decrease the BRTF while maintaining a high level of bonded indebtedness would put the state in a perilous position.
Chairman Clark noted that at the August meeting, it was reported that the state would be retiring $600 million of debt in 2002-04 and asked why the capacity for new debt would be only $235 million rather than $600 million. Mr. Hintze said debt retirement and new capacity do not equate on a dollar-for-dollar basis.
Mr. True asked how Kentucky compares to other states with regard to having debt service at six percent of total revenues. Mr. Hintze said the rating agencies look at a lot of different factors of which ability to pay is one. Other factors include the essential nature of the project being funded and the existence of a BRTF. He said Kentucky is considered a relatively high debt state partly because it handles at the state level a number of programs that elsewhere are handled at the local level. He noted that the six percent is an overall statistic, and problems are not expected as long as the state stays within a range of predictability and avoids abrupt changes in its policy and finances.
Mr. True made a motion to identify maintenance of existing state facilities as the Board’s top priority. The motion was seconded by Representative Crall and approved by voice vote. Chairman Clark suggested listing specific amounts for each of the pools.
Chairman Clark next asked Ms. Ingram to review the agenda item regarding projects proposed to be financed from other than state funds. Ms. Ingram said this recommendation has previously addressed projects proposed to be financed from restricted funds, federal funds, road funds, and other funds. The Board has occasionally listed specific projects, but has generally made a blanket endorsement of such projects, with some exceptions stated.
Mr. Hintze noted that a few of the projects listed in the agenda item might not proceed due to the lack of available funds. He cited specifically the Department for Criminal Justice Training’s proposal for Firing and Driving Ranges Expansion, which was proposed to be financed from agency bonds with debt service supported by the Kentucky Law Enforcement Foundation Program Fund.
Mr. Mitchell expressed concerns about endorsing all of the projects because of possible secondary impacts on the General Fund. He noted that many projects proposed by the Governor’s Office for Technology (GOT) are proposed to be financed from restricted funds, but the initial source of these funds is often the General Fund budgets of other agencies which pay for services provided by GOT. Mr. Hintze said these are important projects that support the ongoing core operations of technology for state government, not new initiatives.
Mr. Hintze said he did not see a problem with following the past approach of endorsing, as a group, the projects to be financed from other than state funds. Mr. Mitchell’s motion to do this was seconded by Mr. Hintze and approved by voice vote.
Chairman Clark next asked Deputy Secretary of the Finance and Administration Cabinet Glenn Mitchell and DFM Commissioner Armond Russ to make the presentations regarding the feasibility study on alternatives for constructing a state office building, the recommendations of the Energy Efficiency Solutions Team, and the responsibilities and resources of the DFM.
Mr. Mitchell reviewed “Part One – Architectural Concept Design” of the feasibility study for a new state office building, which was distributed to the members. He said the prototype building had been developed by CMW, Inc. of Lexington in conjunction with DFM staff. He said the design was intended to be flexible to meet agency needs, to be adaptable to various sites, to have a service life of at least 50 years, to have low maintenance requirements, and to be energy efficient. The prototype calls for two open office areas to be connected by a service core that would house items such as restrooms, elevators, and stairwells. It would have a grid-type flooring system to allow for easy access to wiring to adapt to technology changes, etc.
Commissioner Russ noted that there are two sizes of the prototype. One is approximately 65,000 gross square feet; the other is approximately 127,000 gross square feet. The modular construction would allow them to be combined to create larger buildings, but that is not being recommended. He said an important feature of prototypes is the ability to group the buildings together in a campus setting, where they could be connected by underground walkways. Another feature is that utilities would be housed in a separate, less expensive building.
Commissioner Russ said a study of state government space in Franklin County, completed by Fantus Consulting in 1997, recommended that approximately 1 million square feet of government-owned space should be constructed. He said several projects to address approximately 550,000 of this need have already been authorized – the Public Service Commission Building (50,000 square feet), the Transportation Cabinet Office Building (425,000 square feet), and the Kentucky Higher Education Assistance Authority Building (75,000 square feet). Constructing an additional 300,000 square feet based on the prototypes would address the remaining need.
Commissioner Russ noted that new construction has been the only response to many recent agency requests for space. He said this is a sign of a tight market, and costs can be expected to increase. Commissioner Russ added that Franklin County is unique in that state government is the only large user of office space, so it significantly influences the market.
Mr. Mitchell said the funding portion of the feasibility study was not being presented today because the Cabinet was not yet comfortable with the model that had been developed by the consultants. He said that information should be available for the Board’s October 12 meeting.
Mr. Mitchell referred members to information in their packets which updated financial data initially prepared in conjunction with the Fantus study. That data, as developed by Finance and Administration Cabinet staff, compared the cost of state construction of a new building to the cost of leasing privately-owned space. He noted that based on the assumptions outlined, the cumulative present value over 50 years of the lease option is approximately $42 million as compared to $24 million for the build option.
In response to a question from Mr. Hintze, Mr. Mitchell said the possibility of an outside entity financing the building is being examined. For example, he said the state’s debt capacity limits would not be an issue if the county or city were to sell the bonds and construct the building under a lease/purchase arrangement with the state. Mr. Mitchell said there have also been discussions about a state retirement system financing the project. He noted, however, that the retirement systems are not heavily invested in real estate and believe they can get a better rate of return elsewhere. In particular, they prefer property that would be expected to appreciate over the life of the investment.
Commissioner Russ reiterated his concern that if no new space is provided and state government space needs continue to increase, the cost of leasing space in Franklin County could inflate rapidly. He noted that the Fantus study had suggested the state should lease about 15 percent of the space its occupies in Franklin County. This should provide a balance such that the market is not too tight, nor would landlords be forced out of the market.
In response to Representative Crall’s question about the impact on Franklin County property tax revenues from constructing a state building rather than leasing privately-owned space, Mr. Mitchell explained that state government makes a payment to the County in lieu of property taxes and something could probably be worked out relative to that payment.
Representative Crall also commended the Cabinet for presenting a project with a per square foot cost much lower than many of the projects reviewed by the Board in July.
Chairman Clark noted that the Board has consistently recommended the construction of a new state office building, and suggested that a similar recommendation should be included in the 2002-2008 Statewide Capital Improvements Plan. Mr. Hintze made a motion to recommend the construction of a state-owned office building. His motion was seconded by Representative Crall and approved by voice vote.
Mr. Mitchell next moved to his presentation on the Energy Efficiency Solutions Team (EEST), and referenced a handout on this topic that had been distributed to members. He said an Energy Efficiency Program for State Government, administered by the Finance and Administration Cabinet, had been in statute since 1996. The program has two parts. Part 1 is low cost/no cost energy measures, and Part 2 is Energy Savings Performance Contracts (ESPCs). Relative to the state’s experience to date, Mr. Mitchell noted that low cost of energy in Kentucky had probably resulted in the program being a lower priority than it should have been and initial attempts to enter into ESPCs had not been financially viable because of the low energy costs. He noted, however, that utility costs for state government increased from $39.7 million in FY 1999/2000 to $45.9 million in FY 2000/01, which was a 15 percent increase. The primary source of the increase was natural gas prices. As a result, the EEST was formed in early 2001. Comprised of representatives from various state agencies with multiple buildings, the task of the EEST was to address existing hurdles to the use of ESPCs.
Mr. Mitchell reminded members that ESPCs allow for a private vendor to evaluate an agency’s buildings and recommend measures that will result in sufficient energy savings to pay for their cost over a period of 5 to 15 years. The private vendor installs the equipment and commits to pay for any costs not covered by the resulting energy savings.
Mr. Mitchell said the EEST reviewed the current legislation, evaluated the initial projects that could not be implemented, considered alternative approaches for financing energy improvements, looked at the process for implementing ESPCs, and looked at the available resources.
Mr. Mitchell said the preliminary recommendations of the EEST call for various legislative changes including the refinement of definitions, clarification of the ownership of ESPC improvements, making clear that the savings are guaranteed, addressing measurement and verification of savings, and creation of a Revolving Loan Fund. He said other issues to be addressed include the procedures for budgeting/approval of projects, procedures for tracking energy consumption, and Finance Cabinet resources for assisting agencies (e.g., staff support, use of the Master Lease Agreement, and seed funding for the Revolving Loan Fund).
Representative Crall said, given the current low interest rates and high utility costs, he would encourage moving forward with the program.
Mr. Mitchell said a draft recommendation will be prepared for the Board’s consideration at its next meeting, and that various legislators have already indicated a willingness to sponsor the proposed legislative changes.
Chairman Clark thanked Mr. Mitchell then asked Commissioner Russ to proceed with his report on the responsibilities and resources of his Department. Commissioner Russ first updated the Board on the status of the real properties database that had been discussed earlier in the meeting. He noted that implementation had been delayed due to budget uncertainties because of high energy costs, but they are now proceeding with the project. He said two approaches had been reviewed. Continuing to use the existing real properties database, which is in an Access format, has the advantage that staff already know how to use the program, but it has the disadvantage of limited capabilities. The other approach would implement a broader-based approach to include facilities management as well as property data.
Commissioner Russ said the specific program under consideration, Archibus, is currently being used by Kentucky’s Administrative Office of the Courts as well as the state of Tennessee. He said the DFM is seeking to partner with the Department of Insurance which also maintains a facilities database and does condition assessments on a biennial basis. He also said the Transportation Cabinet has already evaluated all 1,000 of its buildings using the assessment model developed by DFM and is interested in being an initial participant in the database. Commissioner Russ said he is committed to having a database on line by the end of the biennium and expressed appreciation for the Board’s patience in the effort.
Relative to other items in his report which was included in the members’ folders, Commissioner Russ noted that since he took over as head of the DFM in 1996, every division has been or is being reorganized and given expanded duties. He said the total number of staff has not increased, but the mix has changed. For example, there are now more staff in the Division of Engineering, and fewer staff in the building operations areas.
Commissioner Russ noted that the last two pages of the report list new initiatives of the DFM since 1996. He said there has been no increase in the number of staff in the Division of Contracting, but there has been a 20 to 25 percent increase in the number of staff in the Division of Engineering to deal with the increasing size of the capital construction program being managed by the Department in recent years.
Commissioner Russ noted that over the next three years, the square footage maintained by the DFM is expected to increase by 25 percent. A major initiative that will require a lot of staff time is relocating the psychiatric hospital functions to leased space at the Veterans’ Affairs Medical Center in Lexington, then mothballing the current Eastern State Hospital property and preparing it for a future use. Another new focus for the Department in the future will be helping to implement and monitor energy savings performance contracts.
Commissioner Russ said the Department is trying to broaden its view and responsibilities as the Board has asked, but he would respectfully request that more resources and staff be provided to assist in this effort. Chairman Clark noted that a recommendation in that regard had been approved by the Board early in the meeting.
There being no further business to discuss, Mr. Karibo's motion to adjourn the meeting was approved by voice vote. The meeting was adjourned at 12:05 p.m.