Call to Order and Roll Call
The 3rd meeting of the Capital Planning Advisory Board was held on Tuesday, July 18, 2017, at<MeetTime> 9:30 AM, in Room 131 of the Capitol Annex. Senator Stan Humphries, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Stan Humphries, Co-Chair; Representative Daniel Elliott, Co-Chair; Senator Whitney Westerfield, Representative DJ Johnson; Charles Byers, Carole Henderson, William Landrum, Dan Markwell, Mark Overstreet, Kaelin Reed, and Katie Shepherd.
Guests: Wendell Followell, Vice President, Ken Marks, System Director, Facilities Support Services and Capital Projects, and Sandy Adkins, Director of Capital Projects and Budgeting, Facilities Support Services, Kentucky Community and Technical College System; David T. McFaddin, Ed.D, Vice President, Office of Engagement, Regional Stewardship and Government Relations, Paul Gannoe, Associate Vice President, Facilities Services and Capital Planning, Capital Construction and Project Administration, and Ryan D. Green, Executive Director, Budgeting and Financial Planning, Eastern Kentucky University; Sue Hodges Moore, Senior Vice President for Administration and Finance, Mary Paula Schuh, Director of Campus and Space Planning, and Syed Zaidi, Assistant Vice President for Facilities Management, Northern Kentucky University; Kevin Appleton, Senior Vice President for Finance and Administration, and Joseph Gronefeld, Senior Project Manager, Kentucky State University; Lee Smith, Chief Operating Officer, and Jim Sears, Associate Vice President for Facilities Management, University of Louisville; Angela Martin, Vice President for Financial Operations, Chief Budget Officer, and Mary Vosevich, Vice President for Facilities Management, Chief Facilities Officer, University of Kentucky; Rick Linio, Assistant Vice President for Facilities, and Beth Patrick, Chief Financial Officer and Vice President for Administration, Morehead State University; Bryan Russell, Chief Facilities Officer, and Dr. Michelle Trawick, Associate Dean of the Gordon Ford College of Business, Western Kentucky University; Dr. Robert O. Davies, President, and Jackie Dudley, Vice President for Finance and Administrative Services, Murray State University, Sherron Jackson, Senior Fellow Finance and Budgets, and Ron Carson, Senior Fellow and Legislative Liaison, Council on Postsecondary Education.
LRC Staff: Shawn Bowen, Julia Wang, and Jennifer Luttrell.
Approval of Minutes
A motion to approve the minutes of the June 20, 2017 meeting was made by Senator Westerfield, seconded by Representative Johnson, and approved by voice vote.
Consideration of Agency Plans
The Capital Planning Advisory Board received testimony regarding 10 state agency capital plans: Kentucky Community and Technical College System (KCTCS), Eastern Kentucky University, Northern Kentucky University, Kentucky State University, University of Louisville, University of Kentucky, University of Kentucky Hospital, Morehead State University, Western Kentucky University, and Murray State University. The testimony included discussion of capital construction, information technology, and equipment needs for the period 2018-2024.
Kentucky Community and Technical College System
Wendell Followell, Vice President, Ken Marks, System Director, Facilities Support Services and Capital Projects, and Sandy Adkins, Director of Capital Projects and Budgeting, Facilities Support Services, gave a brief overview of the KCTCS capital plan. For the six-year period, the KCTCS capital plan included 132 proposed projects totaling $1,120,200,000.
In response to a question from Mr. Landrum, Mr. Followell stated that KCTCS has very limited resources, and when capital projects are not funded, maintenance pool funding is utilized to the extent possible to fix small projects.
In response to a question from Representative Johnson, Mr. Marks replied that KCTCS projects are solely funded with state funds, and there is no match from local sources. Mr. Marks said through the BuildSmart Initiative, they have reached out to local communities to help, and they have stepped up.
In response to a question from Senator Humphries regarding KCTCS’ deferred maintenance needs, Ms. Adkins said in the 2016-2022 Capital Plan, KCTCS requested $20 million for a deferred maintenance pool, and in the current capital plan, the request is $31.6 million. Mr. Followell said KCTCS’ could not afford to fund its total deferred maintenance needs, which amounts to over $100 million. Each KCTCS college was asked to present its top priority to include in the pool request. The projects focus on roof replacement projects, HVAC, and electrical repairs.
Eastern Kentucky University
David T. McFaddin, Ed.D, Vice President, Office of Engagement, Regional Stewardship and Government Relations, Paul Gannoe, Associate Vice President, Facilities Services and Capital Planning, Capital Construction and Project Administration, and Ryan D. Green, Executive Director, Budgeting and Financial Planning, discussed the university’s capital needs. The university’s capital plan, for the six-year period, included 47 proposed projects totaling $863,707,000.
In response to a question from Senator Westerfield, Dr. McFaddin said the unmanned aircraft program is not yet part of the Eastern Kentucky University Aviation Program, however, it will be included in the future. The FDA is writing regulations for such a program at this time.
In response to a question from Senator Humphries, Dr. McFaddin explained that “aeroready” refers the ability to move products, goods, and services via flight. He said EKU is “aeroready” to export products from Kentucky. The Aviation Program has 140 students enrolled and the program is growing quickly.
In response to a question from Mr. Reed concerning the Model Laboratory, Dr. McFaddin said EKU is the only model school left in the state. There are 750 students, kindergarten through grade 12, and the students are predominantly from Madison County. Constructed in 1962, the building is greatly in need of capital investment. The school also serves as critical laboratory space for the university’s students to hone their skills and be productive members of their profession.
In response to a question from Representative Johnson, Dr. McFaddin stated the university’s top strategic priority is the College of Education Complex project, which will include either renovation or new construction. The university’s second priority is the lease aviation project, which will be co-located with KCTCS partners in Ashland, Jeffersontown, Owensboro, and Somerset; and the infrastructure/maintenance pool is the third priority.
Northern Kentucky University
Sue Hodges Moore, Senior Vice President for Administration and Finance, Mary Paula Schuh, Director of Campus and Space Planning, and Sayed Zaidi, Assistant Vice President for Facilities Management, gave a brief presentation of Northern Kentucky University’s six-year capital plan. The university’s capital plan, for the six-year period, included 44 proposed projects totaling $683,600,000.
Mr. Landrum asked if there are significant safety concerns associated with the Repair Structural Heaving Landrum/Fine Arts project, the Replace Underground Gas Mains project, and the Replace Underground Water Mains project that should be addressed immediately. Mr. Zaidi stated that NKU has hired structural engineers to perform evaluations, and remedial steps have been taken to address safety issues. He added that there is no immediate threat, but long-term solutions to the problems are needed.
Kentucky State University
Kevin Appleton, Senior Vice President for Finance and Administration, and Joseph Gronefeld, Senior Project Manager, discussed the university’s capital needs. The university’s capital plan, for the six-year period, included 18 proposed projects totaling $244,587,000.
In regard to the Construct Health Sciences Center project, Senator Humphries asked where the new building will be sited. Mr. Gronefeld said there was discussion about locating the facility off campus, and there was an opportunity for some funding for an off campus location, but it did not work out. He added that there is land on campus, and with the funding from the state, there will not be any restrictions on locating the building on campus.
University of Louisville
Lee Smith, Chief Operating Officer and Jim Sears, Associate Vice President for Facilities Management, discussed the university’s capital plan. The university’s capital plan, for the six-year period, included 87 proposed projects totaling $1,405,190,000.
In response to a question from Senator Humphries about the Upgrade-STEM Instruction Building project (priority #1, $50 million), Mr. Sears said the project scope was formulated by in-house staff focusing on critical and deficient spaces in eight different buildings. He said 65 percent of the project budget will be invested in mechanical, electrical and plumbing upgrades in buildings over 50 years old. He said the VFA Study concluded that capital renewal needs for the Life Science, Natural Science, and Chemistry buildings totaled over $42 million.
University of Kentucky
Angela Martin, Vice President for Financial Operations, Chief Budget Officer, and Mary Vosevich, Vice President for Facilities Management, Chief Facilities Officer, presented the capital plan for the University of Kentucky. The university’s capital plan, for the six-year period, included 288 proposed projects totaling $7,089,800,000. The University of Kentucky Hospital plan contained a total of 67 proposed projects totaling $3,822,000,000.
In response to a question from Senator Westerfield, Ms. Vosevich stated that the Facilities Renewal and Modernization project will include renovation of the Grehan building. While the building is being renovated, the College of Communication and Information (located in Grehan), will be relocated to another facility on campus. Ms. Vosevich said the new location for the College of Communication and Information has not been determined yet. She stated that the Colleges of Communication and Information and Psychology are two of the university’s largest growing programs and they expect the growth to continue.
In response to a question from Mr. Reed about future use of the theological seminary, Mr. Vosevich stated no decision has been made yet as to the use of this building other than to use it as swing space.
Senator Humphries asked Sherron Jackson, Senior Fellow Finance and Budgets and former board member, and Ron Carson, Senior Fellow and Legislative Liaison, Council on Postsecondary Education, to brief the members on the VFA Study. In April 2007, the Council on Postsecondary Education entered into a contract for a study of the state's postsecondary education facilities. The study was undertaken by Vanderweil Facility Advisors Inc. (VFA) of Boston, Massachusetts. Mr. Jackson said since the completion of the VFA Study, CPE has sought to implement a process that blended VFA’s recommendations of asset preservation, major renovations, and construction of new/expanded education and general facilities to meet the needs of postsecondary institutions. The VFA Study estimated that by 2021 there would be a $12 billion need for asset preservation if the state did not address its postsecondary institution deferred maintenance needs.
Mr. Jackson said CPE has developed an approach and model to address the capital needs of postsecondary institutions. The model recommends that a pool of funds be established and administered by CPE, and funding be done in terms of an allocation of dollars to each postsecondary institution, rather than on a per-project basis. Postsecondary institutions select and rank their projects based on three priority areas: asset preservation, construction of new/expanded education and general research facilities, and information technology initiatives. Each institution submits a project list to CPE in order to be eligible to receive an allocation of funds, and the institutions must agree to meet a certain balance of the expenditures on asset preservation.
This multi-biennia funding approach provides a balanced investment as recommended by the VFA Study; allowing more flexibility for institutions to implement capital projects; allow campuses to better plan for construction; and provides for stronger protection of state-owned assets.
Morehead State University
Rick Linio, Assistant Vice President for Facilities, and Beth Patrick, Chief Financial Officer and Vice President for Administration, presented the university’s capital plan. The university’s capital plan, for the six-year period, included 59 proposed projects totaling $720,762,000.
In response to a question from Mr. Markwell about the decrease in project scope for the Bert T. Combs Building, Mr. Linio said the university staff worked with the architect to re-evaluate the renovation costs. He added that the scope of work was reduced, and the project is now more focused on asset preservation to keep the building functioning. Ms. Patrick added they came estimated the current project by using the CPE formula to lower the project funding request. [The project scope has decreased from $45,050,000 in the 2016-2022 capital plan to $31,761,000.]
In response to a question from Senator Humphries regarding the Repair Camden-Carroll Library Facade project, Ms. Patrick stated that the university used its own funds to address the stonework problems with the library. She said there has been no help from the Department of Library and Archives or the National Register of Historic Places.
Western Kentucky University
Bryan Russell, Chief Facilities Officer, and Dr. Michele Trawick, Associate Dean of the Gordon Ford College of Business, discussed Western Kentucky University’s capital plan. The university’s capital plan, for the six-year period, included 52 proposed projects totaling $831,900,000. There were no questions regarding the university’s plan.
Murray State University
Dr. Robert O. Davies, President, and Jackie Dudley, Vice President for Finance and Administrative Services, gave a brief overview of Murray State University’s capital plan. The university’s capital plan, for the six-year period, included 65 proposed projects totaling $576,397,000.
In response to a question from Senator Humphries concerning the gas explosion in New Richmond College and the need for additional funds to repair this building, Dr. Davies said the incident took place in a facility that was built in 2009 and it was most likely a gas explosion. The repairs will be covered by state insurance proceeds.
Senator Humphries stated the August meeting will conclude the review of all capital plans. At that meeting, there will also be two presentations – the state debt report and the Council on Postsecondary Education will present its project report on all postsecondary institution capital projects and capital IT projects.
Adjournment
The next meeting is scheduled for Tuesday, August 15, 2017, in Room 129 Annex starting at 9:30 AM. There being no further business, the meeting was adjourned at 11:55 a.m.