Colleges skimp on overdue repairs
ASU, UA and NAU $500 million behind
When nearly an inch of rain fell in Tempe on a Friday in early March, Arizona State University roofing supervisor Bob Backus and his full-time crew of three felt like they were in a game of Whac-AMole.
Plug a leak here. Fix a drainpipe there. In all they got 30 calls about problems on the sprawling campus, which has 154 roofs of varying ages, many of which have been patched repeatedly or should have been replaced years ago.
But the last time the Arizona Legislature funded its building-repair formula for the three universities was 2007, records show. And over the quarter century, the universities have received only 14 percent of the money they requested under the formula to repair, paint and patch buildings and equipment.
The result is that state universities now need more than half a billion dollars in pastdue maintenance to replace things like worn carpet, cracked tiles, corroded pipes and aging air chillers that no longer provide enough cold air to keep offices and classrooms comfortable.
The backlog takes time away from preventive maintenance as work crews spend more time running from emergency to emergency.
Since 2007, the only buildingrepair funding, $265 million, the universities have seen has come from bonds that are paid through state lottery funds, but the amount of money is capped, and the funding is expected to be exhausted within a few years.
Even though the need for repairs is evident to students and employees alike, state legislators say the money will have to wait until the economy fully recovers and other important state priorities are met, even as national facilities experts say Arizona has fallen down in its duty to fund repairs.
Concerned over the backlog, the Arizona Board of Regents, who oversee the universities, has launched a review in hopes of coming up with a strategy and potential funding sources.
The regents are working on a more detailed analysis but don’t have estimates on how much of the $511 million in past-due maintenance is considered urgent needs.
University officials say they ensure conditions are safe. Safety and fire hazards are either fixed or an area is closed until repairs can be made. But serious and costly problems have arisen. Among them:
» The University of Arizona grapples with microbes consuming cast-iron pipes. When Chris Kopach, who oversees facility management, first heard about the problem a few years ago, the scenario sounded like something out of the horror movie Dawn of except pipes were being eaten and not people. UA spent $1.2 million last year on chemical coatings for pipes, he said, and will need to spend several million dollars more.
» Before Northern Arizona University’s Skydome was renovated recently, the arena had gotten so bad someone fell through a seat. The 15,000-seat facility lacked handrails so people with front-row seats had to walk down multiple steps with no rails to guide them.
» Aging plumbing leads to unexpected floods. Last summer, a water valve broke in ASU’s Music Building. Water blanketed the floor, causing $36,000 in damage.
But why should universities worry about maintenance?
Students usually evaluate a university first based on whether the school has the faculty and academic programs they want, but research shows two-thirds consider overall quality of campus facilities to be “essential” or “very important.” About 16 percent of students said they rejected a school because of a poorly maintained facility, according to a 2006 national study by APPA, a national educational facilities group.
“We know students make decisions based on the quality and condition of these facilities,” said E. Lander Medlin, APPA’s executive vice president.
‘It doesn’t go away’
Combined, the universities have about 40 million square feet of building space. That’s equivalent to about 19,000 average-size homes.
Homeowners know not all deferred maintenance is bad. Often, they are just trying to stretch their dollars. A significant backlog, though, can lead to trouble. At universities, workers spend more time responding to emergencies, leaving less time for preventive maintenance. Delaying repairs can add to the price tag. A leaking roof, for instance, can damage walls and carpet.
“If you don’t take care of deferred maintenance, it doesn’t go away. It just gets worse,” said NAU President John Haeger, who is dealing with a $109 million backlog.
As NAUandthe other universities fell behind in fixing older structures, they also spent hundreds of millions of dollars on new buildings. Officials say the new space was necessary to meet student growth. Enrollment has increased 45 percent to about 139,500 students in 20 years. That creates competing priorities, ASU Chief Financial Officer Morgan Olsen said. Do you replace a 25-year-old roof? Refurbish a classroom that has 30-year-old desks and cracked chalkboards? Or create a new lab for a cancer professor?
“When you are short on resources overall as we are, it doesn’t matter what choice you make. You’re going to be wrong,” he said.
Arizona’s Constitution requires the state to make appropriations to ensure “proper maintenance” of state educational institutions and to fund their “development and improvement.” But “proper maintenance” isn’t defined. Nothing in the statutes requires the state to give universities money for buildings or repair.
There is a state law, though, that requires universities to calculate and report their capital and repair needs every year to the governor.
In 1986, the Arizona Legislature charged a committee of legislators with developing a formula for calculating building repairs. That formula is based on industry standards and takes into account building age, expected lifespan and estimated replacement cost. Each year, regents submit funding requests to the state using this formula.
But the Legislature has only funded the full formula amount once, in fiscal 1999. In total, the university system has since 1987 received $166.4 million, or Are the repair issues at Arizona’s universities an urgent matter? Vote by 3 p.m. at azcentral.com. $1 billion less than the formula. The last decade has been even worse. Lawmakers provided partial funding only one year, $20 million in 2007. The formula has not been funded since.
Legislators blame the recent recession, but even in good financial years the formula wasn’t fully funded. Other law-
CHARLIE LEIGHT/THE REPUBLIC makers say the state only has so much money. University funding requests contend with other needs, including the growing cost of state-funded health care for low-income residents.
The state may fund the building formula at some point “but not now,” said Rep. John Kavanagh, R-Fountain Hills, vice chairman of the Joint Committee on Capital Review, which makes recommendations on capital expenditures. Until the economy recovers and tax revenues catch up to other state expenses, including child-protective services and K-12 education, building-renewal money “is going to take a secondary position,” Kavanagh said.
The regents haven’t aggressively pursued building-renewal money. The request is noted but not listed as a priority in the fiscal 2014 budget request.
For a few years, the universities have relied on bonds to make repairs. The Arizona Legislature approved special bonds totaling $800 million. About half the money was earmarked in law for new construction, including development of the Phoenix Biomedical Campus. Of the remainder, the regents are putting $265 million toward repairs. State lottery funds pay 80 percent of the interest on the bonds; the universities pay the rest. The money has helped. But the repair funds are mostly spent, and there is still a backlog of up to half a billion dollars in deferred maintenance.
ASU, the largest state university, has the biggest backlog at $244 million. Facility experts say a good rule of thumb is to spend at least 1 percent of a building’s replacement cost on building maintenance each year. For ASU, that would be $26.3 million a year.
ASU allocated $8.5 million to building maintenance in fiscal 2012. This year, the budget is $9.8 million.
Not a new problem
Tour the Tempe campus, and
the maintenance issues are easy to spot.
Clint Lord, who oversees facilities management, pokes his head into an equipment room in the basement of the Bateman Physical Sciences Center. The room’s mechanical and electrical equipment supports a cavernous network of classrooms and labs dating to the 1960s.
Amid the hum of machinery is a corroded pipe attached to a fire pump. Equipment in that condition can develop a pinhole leak at any time and blow.
The massive air-handler units are original, making them about 46 years old.
“If this was newer, it would be much more efficient,” he says.
Then Lord hears something. Hebends over to examine a pump on a fire-sprinkler system.
“That sounds like it’s about to freeze up. I can hear the bearings grinding,” he says, making a note to have it checked.
Arizona’s universities are not alone. The University of California system has an estimated $1.1 billion in deferred maintenance on its 10 campuses, and Indiana University reports a $700 million backlog at its seven campuses.
During the recession, universities dealt with shrinking state funding and growing enrollments, said the APPA’s Medlin. Repair and maintenance budgets got squeezed. Besides, deferred maintenance isn’t sexy.
“If I’m a donor, do I want to fund a steam-line replacement or a roof replacement?” Medlin said. “I’m probably going to fund a new building that I can put my name on.”
The problem existed well before the recession.
In 1997, the regents board hired a national consultant, Harvey Kaiser, to analyze the problem. He estimated the backlog at $116 million, possibly more. In a recent interview, Kaiser called Arizona “one of the extreme violators of stewardship for higher-education facilities” because of the lack of money for repairs.
The state universities “really aggressively spent a lot of money expanding in Tempe and in Flagstaff and in Tucson. And they just haven’t taken care of their older buildings,” he said.
Regents President Eileen Klein said the regents are concerned about the backlog.
“And rightfully so. We have to make sure facilities are kept safe and operational,” she said.
But criticism that the universities have placed greater priority on new construction than repairs is perhaps unfair, she said. Officials had to balance maintaining older buildings with the need to construct new ones.
“If we weren’t a growing state, we’d probably only have to worry about maintenance,” she said.
Looking at options
The regents have asked each university to study the backlog in more detail. Later this year, the board plans to look at the university system’s overall capital needs.
Klein said it’s too early to talk about possible funding sources. But some ideas have already been floated. Facility experts say the regents could also look at past practice in Arizona and other states.
» Bonds: The universities could issue bonds to raise money for repairs. The interest is paid back from the university’s operating budget. In doing so, though, the regents would have to be careful. Incurring lots of debt can affect an institution’s bond rating, making it more expensive to borrow money. The higher the debt, the more money has to be paid back from the annual operating budget. That leaves less money for other expenses. The regents could also approach the Arizona Legislature and try to get approval for another special bond paid for with state-lottery money.
» Student fees: Some colleges in other states pass the cost onto students by tacking a mandatory fee onto tuition bills. The upside: a predictable income source. The downside: fees add to the cost and are unpopular.
» Tuition funds: The regents could direct the universities to set aside a percentage of their tuition revenue for building repairs each year. The regents do this now with financial aid. The strategy would provide steady income but would leave less money for other areas, unless the regents raised tuition to compensate.
» State funding or a tax initiative: The regents could lobby the Arizona Legislature to return to funding the building-renewal formula. A ballot initiative to raise taxes is also a possibility. While voters generally support education, last year they turned down an extension of an educational sales tax that expires May 31.
For now, the universities use the rest of their bond money and their operating budgets to chip away at deferred maintenance. But that’s not enough to eliminate the backlog, they say.
The Engineering Center on ASU’s Tempe campus is a good example.
The building’s mostly flat roof, which covers about 130,000 square feet, is prone to leaks.
The 26-year-old roof is overdue to be replaced. That would cost about $4.5 million. And that’s not in the budget. So workers patch it and recently replaced a section when a leak threatened mechanical and electrical equipment below.
Engineering is one of several buildings that roofing supervisor Bob Backus and three roofers keep an eye on during rainstorms.
Then, when the weather clears, they head out to patch the leaks.