Vol. 38, No. 18

3-17-2004
By: Randy Gammage

University addresses funding for facilities maintenance

Ohio State’s Board of Trustees reviewed a recommendation during its March meeting to establish an endowment to address future maintenance and renewal needs of the university.

Recommended by the Office of Business and Finance, a surcharge is necessary to maintain the progress that has been made during the past 24 months toward assuring funding for maintenance and renewal of aging university facilities, said Associate Vice President for Physical Facilities Jim Stevens in a report to trustees. The endowment would be funded by a combination of a surcharge on all General Fund space and contributions from non-General Fund units.

Ensuring the ongoing maintenance and renewal of facilities is an important element of the Academic Plan, he said. Building renewal continues to be an important component of new capital project business plans.

The draft resolution was submitted for review and guidance, and is expected to be presented for action at the April 2 Board of Trustees meeting.

Key elements of the proposal, outlined by Stevens, are:
• For General Fund units, a University Endowment for Scheduled Maintenance and Renewal would be established, funded by a surcharge on all General Fund space, to provide for continuing renewal of new General Fund space added since fiscal year 2000. The endowment would be a restricted fund to be used only for this purpose.

• General Fund space constructed prior to FY 2000 will continue to have scheduled maintenance and renewal needs funded by centrally allocated capital funds, state capital appropriations or other sources.

• Major auxiliaries and regional campuses will be responsible for funding maintenance and renewal for their facilities. These areas are to have approved plans for scheduled maintenance and renewal on file by June 30. Major auxiliaries include Student Affairs, Health System, Athletics, Airport, Real Estate and Property Management, Business Operations, and Transportation and Parking.

• Funds in the proposed endowment, including funds through participation by auxiliaries and regional campuses, OARDC and ATI, and funds otherwise set aside by these areas, could be used only if the appropriate maintenance and renewal plan has been approved and only upon the specific approval of the university administration.

The draft proposes that, beginning in FY 2005, all General Funds units will be assessed a prorated surcharge per assignable square foot (ASF), for all of their assigned space, for scheduled maintenance and renewal as part of the annual Plant, Operations and Maintenance charges, Stevens said. The surcharge will be implemented at a rate of $0.06 per ASF the first year, $0.12 per ASF the second year and $0.19 per ASF the third year.

“We can continue to adjust the cost for renewal of each building and the assigned surcharge each year according to inflation, construction costs and what the endowment is earning,” Stevens said.

Endowment withdrawals for the first projects likely will not occur until 2015, he said.

Stevens said that significant progress has been made since 2001, when he began reporting annually to the Board of Trustees on deferred maintenance — an accumulated backlog of facilities needing renewal.

“Initially, 16 percent of the campus was in need of repair, while the average for our peer institutions was 12 percent,” Stevens said. “The goal was to get it down to 11 percent.”

Quantified deferred maintenance and renewal is currently $540 million (or 11.5 percent), he said, down from $553 million when he reported to trustees a year ago.

To accomplish that, Stevens said nine minor buildings were either removed or sold and 21 buildings received renovations during the past year. Whole building renovation and renewal is underway at Hagerty, Jennings, Larkins and Page halls, with Robinson Lab scheduled for renewal later this year. Major projects to be listed in the Fiscal Year 2005-06 Capital Plan — to be presented to trustees this spring — are the Lord Hall demolishment, the Main Library renovation and the Ohio Union replacement, he said.

Ongoing capital renovations and renewal will continue the progress achieved in 2003, Stevens said, however there will continue to be challenges.

“Twenty-seven major buildings built before 1954 are still in use with very little changed since construction, while the projected capital plans from 2005-2010 address only two of those 27,” Stevens said.

The university currently has 99 buildings older than 50 years, the age at which they normally require replacement or renovation to meet changing academic needs.

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