changing the conversation: making the case for funding deferred maintenance [appa 2014]

Virginia State UniversityWagner College

Washburn UniversityWellesley College

Wesleyan UniversityWest Chester University of

PennsylvaniaWest Virginia Health Sciences Center

West Virginia University Western Connecticut State University

Western Oregon UniversityWestfield State University

Wheaton College (MA)Whitworth University

Widener UniversityWilliams College

Williston Northampton SchoolWorcester State University

Xavier UniversityYeshiva University

Youngstown State University

Changing the ConversationMaking the Case for Funding Deferred Maintenance.

July 22, 2014

University of San Francisco

Founded: 1855Control: Private, Jesuit TraditionCarnegie Class: Doctoral/

ResearchStudents: 10,130GSF: 2.2MBuildings: 28

San Diego State University

Founded: 1897Control: Public, CSU SystemCarnegie Class: Research-HighStudents: 32,759GSF: 8.5MBuildings: 111

4

Who Partners with Sightlines?Robust membership includes colleges, universities, consortia, and state systems

Serving the Nation’s Leading Institutions:

• 19 of the Top 25 Colleges*• 17 of the Top 25 Universities*• Flagship Public Universities in 32 States• 8 of the 12 Ivy Plus Institutions• 12 of the 14 Big 10 Institutions

* U.S. News 2014 Rankings

Sightlines is proud to announce that:

• 450 colleges, universities, and K-12 institutions are Sightlines clients, including over 300 ROPA members.

• 93% of ROPA members renewed in 2013

• We have clients in 44 states, the District of Columbia, and Canada

• 57 institutions became Sightlines members in 2013

Sightlines advises state systems in:

• Alaska• California• Connecticut• Hawaii• Maine• Massachusetts• Minnesota• Mississippi• Missouri• New Hampshire• New Jersey• New York• Oregon• Pennsylvania• Texas

The Sustainability of Higher Education is in Question

Federal and state funding levels for higher education have fallen to historic lows with no near term vision for recovery.

Demographic shifts have led to level or declining enrollments in traditional students

Affordability of education has expanded student debt, capped tuition growth, and increased dependency on Pell Grants.

Tuition dependency has grown, operating margins have fallen, and balance sheets have weakened.

Administrative and support costs have grown compared to education costs.

The Sustainability of Higher Education is in Question

Moody’s “Outlook”Tuition Growing as Government Support Diminishes

Traditional Student Enrollments Declining

2,000,000

2,200,000

2,400,000

2,600,000

2,800,000

3,000,000

3,200,000

3,400,000

Actual & Projected High School Graduates

Source: National Center for Higher Education Statistics (nces.ed.gov)

ProjectedActual

Moody’s “Outlook”US Higher Education Outlook Negative in 2013 – January 2013

Moody’s “Outlook”Growing Dependence on Financial Aid & Pell Grants

“Approximately one-third of all colleges and universities have financial statements that are significantly weaker than they were several years ago.”

Denneen & Dretler, The Financially Sustainable University

Higher Education’s Liquidity Crisis

Bain & Company’s PerspectiveThe Financially Sustainable University – October 2013

www.the sustainableuniversity.com

% Increase In Key

Components of Higher Ed.

Costs 2008-2012



Expenses as % of Revenue

Equity as % of

Assets

Delta Cost Project - February, 2014Labor Intensive or Labor Expensive?Changing Staffing and Compensation Patterns in Higher Education

Overview of Findings1. Growth in administrative jobs was widespread across higher

education2. Colleges and universities have invested in professional jobs that

provide non instructional student services, not just business support3. Part-time faculty/graduate assistants typically account for at least half

of the instructional staff in most higher education sectors4. Part-time faculty (and graduate assistants) provided additional

capacity but replaced new, full-time positions

Delta Cost Project - February, 2014Labor Intensive or Labor Expensive?Changing Staffing and Compensation Patterns in Higher Education

Conclusions1. As the ranks of managerial and professional

administrative workers grew, the number of faculty and staff per administrator continued to decline.

2. Administrative costs are rising faster than other costs.3. Faculty salaries were not the leading cause of rising

college tuitions during the past decade.

Prioritizing Academic Programs and ServicesRobert C. Dickeson & Stanley O. Ikenberry.

• Emphasis on Learning

• Concentrating on Public Purpose

• Focusing on Benefits

• Public & Private Economic Benefits

• Public & Private Social Benefits

• Focusing on Competencies

Keys for Future Mission Objectives

Setting PrioritiesConsider Academic Prioritization Directions

To permit a synthesis of quantitative and qualitative indicators that will facilitate meaningful prioritization, I recommend using ten criteria:

1. History, development, and expectations of the program2. External demand for the program3. Internal demand for the program4. Quality of program inputs and processes5. Quality of program outcomes6. Size, scope, and productivity of the program7. Revenue and other resources generated by the program8. Costs and other expenses associated with the program9. Impact, justification, and overall essentiality of the program10. Opportunity analysis of the programExcerpt From: Robert C. Dickeson & Stanley O. Ikenberry. “Prioritizing Academic Programs and

Services.” Wiley, 2010-05-11. iBooks.

Program Value

Economic Evaluation

Institutional Impact

Sightlines PerspectiveBalance Sheets Are UnderstatedFacilities Overhead Must Be ManagedCapital Investment Coordination to Mission

Your Largest AssetBalance Sheets Understate Importance of Physical Assets

0%

10%

20%

30%

40%

50%

60%

70%

80%

Selective LiberalArts

Private LargeUniv.

ComprehensiveUniv.

Public Univ.

PPE % of Assets PPE Adj. to Net Assets

21

Two waves of construction hitting major life cyclesFirst wave of buildings are now 50 years old; second wave nears 25 years old

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%GSF by Construction Year

Sightlines is tracking over 1.3B GSF annually

39% 21%

$-

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$/ G

ross

Sq.

Ft.

Annual Capital One-Time Capital

Capital Profile – Investment by Funding Source

Public Average Private Average

The Impact of Higher Annual Capital Investments:Slower Backlog Growth

$50

$60

$70

$80

$90

$100

$110

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Bac

klog

-$/

GSF

Private Public

Traditional Facilities PlanningKey Decisions have tended to be segregated rather than integrated

SpaceOpportunistic

More Driven by Funding and Program than Core Mission

SpaceOpportunistic

More Driven by Funding and Program than Core Mission

Capital $Annual Capital

Investments that React to Emerging

Needs

Capital $Annual Capital

Investments that React to Emerging

Needs

OperationsIncrease

Efficiencies &Reduce Services to Lower Costs

OperationsIncrease

Efficiencies &Reduce Services to Lower Costs

We Need to Change the ConversationLanguage that Drives Effective Policies for…

SpaceRelease The

Hidden Value in Balance Sheets

SpaceRelease The

Hidden Value in Balance Sheets

Capital $Multiyear Plans

that Align to Mission, & Risk

Capital $Multiyear Plans

that Align to Mission, & Risk

OperationsImprove

Effectiveness & Lower Facilities

Overhead Impact

OperationsImprove

Effectiveness & Lower Facilities

Overhead Impact

We Need to Change the ConversationLanguage that Drives Effective Policies Assures Long Term Change that “Sticks”

We need a conversation regarding facilities that:> Treats facilities management as core to the university

business model;> Integrate Space Management, Capital Investment &

Operations to align facilities operations and capital investment with institutional mission and finance;

> Uses concepts of endowment management to contextualize investment decisions, mitigate risk, and diversify the facilities portfolio;

> Use predictive analysis to focus on outcomes;> Constantly measure performance to goals and react quickly to

inevitable directional changes.

Vocabulary: Step One in Changing the Conversation

27

Operations Effectiveness

The effectiveness of the facilities

operating budget, staffing,

supervision, and energy

management

Service

The measure of service process, the maintenance quality

of space and systems, and the customers opinion of service delivery

Annual Stewardship

The annual investment needed to ensure buildings

will properly perform and reach their useful life

“Keep‐Up Costs”

Asset Reinvestment

The accumulated backlog of repair & modernization needs and the definition of

resource capacity to correct them.

“Catch‐Up Costs”

Ass

et V

alue

Cha

nge

Ope

ratio

ns S

ucce

ss

ROPA Radar ChartROPA Radar Chart

Annual Stewardship

Ass

et

Rei

nves

tmen

t

Operating

Effectiveness

Service

Building Portfolio Solution

Bottom Up, Top Down Approach

Project Identification• Inventory•Interviews•Other studies

Project Codification•Timeframe•Package•Investment Criteria

Project Selection•Project scores•Meet investment objectives

Building Portfolio Creation•Group Buildings•Outline investment strategies Funding

Identification•What financial resources are available?

Funding Allocation•By Portfolio•By Investment Criteria

Multi-year capital

investment plan

Developing a comprehensive Project Inventory

Spring 2013883 Projects in the original ISES database

$336 M in total project costsAssessing the total needs in 41 facilities on campus

• On-campus supervisor interviews• Phone call supervisor interviews• Integration of multiple campus needs reports

Summer 20131,320 Projects in the working Sightlines database

$351 M in total project costsAssessing the total needs in 31 facilities on campus

Project List DefinitionsReview of categorizations and terms

Project Category

> Repair/Maintenance: Replacement of components that have failed or are failing, or planned replacement at the end of a component’s life expectancy. (Facility Driven)

> Modernization: Replacement of components before the end of their life expectancy. (Program Driven, or Upgrades)

Timeframe> A: 1-3 years

> B: 4-7 years

> C: 8-10 years

> X: no work in the 10 year horizon

$152A

$125B

$74C

$0

$50

$100

$150

$200

$250

$300

$350

$400

Total

Mill

ions

$171

$180

$0

$50

$100

$150

$200

$250

$300

$350

$400

Total

Mill

ions

Repair/Maintenance

Modernization

Identified Needs by SystemTimeframes A, B, & C only – excluding new construction, infrastructure, and grounds

$0

$20

$40

$60

$80

$100

$120

HVAC Electrical Plumbing Safety/Code ExteriorShell

Interior Shell Mechanical

Tota

l Nee

d, $

in m

illio

ns

Identified Needs by System, by Timeframe

A (1-3 years) B (4-7 years) C (8-10 years)

A look at building needs over the next 10 yearsBuildings with the highest $/GSF need

$0$20$40$60$80

$100$120$140$160

$/G

SF

Building Needs Greater Than $100/GSF

A (1-3 years) B (4-7 years) C (8-10 years)

Building Portfolios

Defining a multi-year investment plan“Picking projects with a purpose”

ApplyBuilding Portfolio

& Timeframe

ApplyInvestment Criteria &

Timeframe

Multi-Year Project

Plan

Geographic, Program, Transitional, & Years

Reliability, Asset Preservation, Program, Economic Opportunity,

Safety/Code & Years

Full Inventory of Projects

Electrical, Plumbing, HVAC,

Mechanical, Exterior, Interior,

Safety…

How Do You Target

Projects

?

Building Portfolio Process

Cur

rent

Cha

lleng

eP

ropo

sed

Sol

utio

n Full Inventory of Projects

Electrical, Plumbing, HVAC,

Mechanical, Exterior, Interior,

Safety…

Pick Projects

Identifying Building PortfoliosDiversifying needs, risk/exposure and consequent investment

Not all buildings are created equal.

Campus is too complex to manage by a single strategy.

Break down the included buildings into “building portfolios” that are reflective of the program’s mission and strategic directions.

Guide investment to portfolios in a multi-year strategy, as opposed to “pay-as-you-go” project by project investment.

Clustering buildings based on the three broad institutional goals of student success, research & creative endeavors, and community & communication.

Strategic Campus Plan – Building on Excellence

Student Success

Research & Creative

Endeavors

13 Buildings Included:

• Chem. Science Lab• Engineering & Lab• Geology/Math• Life Science N.• Physics• Astronomy• Art N. and S.• Dramatic Arts• Little Theatre• Music

Community & Communication


• Fowler Athletics• Peterson Gym• Manchester Hall

Grounds Needs

Support


• Hardy Memorial Tower

• Administration

Utility Infrastructure

General Support:


•Adams Humanities •Arts & Letters•Communication•Education•Educ. & Business•Exercise/Nutrition•Geography•Hepner•Industrial Tech• Love Library•N. Education•Professional Studies

Evaluating a building’s valueResearch funding, usage, and total need

0

2

4

6

8

10

12

14

16

18

20

0 5 10 15 20 25 30

Res

earc

h Fu

ndin

g Va

lue

Station Capacity ValueLow research

funding

High research funding

Fewer stations

More stations

High Research High Use

High ResearchLow Use

Low ResearchHigh Use

Low ResearchLow Use

Adams HumanitiesArt NorthArt SouthPhysics -

Astronomy

Professional Studies & Fine Arts

Administration

Capital Planning Support

Total project spending – General SupportSpending $4.0M on average annually

$0.0

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

$7.0

$8.0

FY2008 FY2009 FY2010 FY2011 FY2012 FY2013

Millions

Total Capital Spending

Avg. $4.0M

FY2008-2013 Average Annual SpendingSDSU $1.69/GSF

National Average $5.09/GSF

Public Institutions $4.95/GSF

2013 SDSU $2.91/GSF

10 year funding strategy

$86$95

$46

$9$12

$9

$21$28

$21

$36

$48

$36

$0.0

$10.0

$20.0

$30.0

$40.0

$50.0

$60.0

$70.0

$80.0

$90.0

$100.0

1 to 3 Years 4 to 7 Years 8 to 10 years

Millions

Funding Opportunities

Historical Funding Strategy• $3M/Year• $30M over 10 years• Addressing 17% of the

Timeframe A & B projects

Aggressive Funding Strategy• $7M/Year• $70M over 10 years• Addressing 39% of the


National Average• $12M/Year• $120M over 10 years• Addressing 66% of the


2008… Identifying the Needs

44

Total campus needs740+ Projects Totaling $175M

Total Project Inventory$175M

Building & Infrastructure

Repair$35M

Modernization$65M

Life Cycle$75M

Total Project Inventory$175M

Timeframe assignment: Sightlines relied upon USF’s staff’s knowledge of campus asset conditions and age to assign timeframes to each project. All dollar amounts are shown in current dollars.

45

Identify and coordinate overlapTotal Building Portfolio Solution Needs

$175.3M

$154.6M

Projects where the repair and modernization work overlap

46

Profile of the identified need

Priority A B C Total

Repairs $26,188,500 $538,000 $1,147,000 $27,873,500

Modernization $12,869,600 $49,687,400 $1,673,000 $64,230,000

Life cycle $300,00 $33,196,500 $29,002,500 $62,499,000

Total $39,358,100 $83,421,900 $31,822,500 $154,602,500

Building Portfolio

Apartments

Lone Mountain

Main Campus

Renovation

Perimeter

College of Professional StudiesHarney Science CenterLone Mountain Pacific Rim Conference Center-Phelan HallPhelan/McLaren/MalloySchool of EducationUnderhill Classrooms

47

Defining the building portfolios

48

Portfolio investment plan - $7m / Yr.

Row Labels A B C Grand Total A % B % C % Total $Apartments 214,000$ 606,500$ 305,500$ 1,126,000$ 230,500$

Reliability 11,000$ 11,000$ 100% 11,000$ Asset Preservation 43,000$ 61,000$ 116,500$ 220,500$ 100% 50% 0% 73,500$ Space 160,000$ 519,500$ 189,000$ 868,500$ 75% 0% 0% 120,000$ Safety/Statutory 26,000$ 26,000$ 100% 26,000$

Lone Mountain 6,260,000$ 6,836,000$ 10,499,000$ 23,595,000$ 8,667,750$ Reliability 80,000$ 80,000$ 100% 80,000$ Asset Preservation 2,328,000$ 4,505,000$ 3,440,000$ 10,273,000$ 100% 50% 0% 4,580,500$ Economic Opportunity 450,000$ 700,000$ 1,150,000$ 100% 0% 450,000$ Space 3,147,000$ 1,852,000$ 5,677,000$ 10,676,000$ 75% 25% 0% 2,823,250$ Safety/Statutory 705,000$ 29,000$ 682,000$ 1,416,000$ 100% 100% 0% 734,000$

Perimeter 2,703,500$ 10,983,000$ 6,052,000$ 19,738,500$ 4,812,950$ Reliability 400,000$ 400,000$ 100% 400,000$ Asset Preservation 1,702,500$ 1,320,000$ 3,189,000$ 6,211,500$ 100% 50% 0% 2,362,500$ Economic Opportunity 750,000$ 750,000$ 0% -$ Space 9,663,000$ 1,950,000$ 11,613,000$ 15% 0% 1,449,450$ Safety/Statutory 601,000$ 163,000$ 764,000$ 100% 0% 601,000$

Main Campus 16,289,600$ 28,096,000$ 10,774,000$ 55,159,600$ 20,817,600$ Reliability 837,000$ 837,000$ 100% 837,000$ Asset Preservation 7,239,000$ 5,701,000$ 4,299,000$ 17,239,000$ 75% 50% 0% 8,279,750$ Economic Opportunity 34,000$ 1,198,000$ 2,833,000$ 4,065,000$ 100% 100% 25% 1,940,250$ Space 6,890,600$ 21,051,000$ 1,220,000$ 29,161,600$ 75% 15% 0% 8,325,600$ Safety/Statutory 1,289,000$ 146,000$ 2,422,000$ 3,857,000$ 100% 100% 0% 1,435,000$

Renovation 13,891,000$ 36,900,400$ 4,192,000$ 54,983,400$ 15,388,140$ Reliability 1,822,000$ 1,822,000$ 100% 1,822,000$ Asset Preservation 5,768,000$ 17,887,400$ 1,674,000$ 25,329,400$ 55% 10% 0% 4,961,140$ Economic Opportunity 1,540,000$ 1,540,000$ 25% 385,000$ Space 5,561,000$ 18,475,000$ 667,000$ 24,703,000$ 75% 15% 0% 6,942,000$ Safety/Statutory 740,000$ 538,000$ 311,000$ 1,589,000$ 100% 100% 0% 1,278,000$

Grand Total 39,358,100$ 83,421,900$ 31,822,500$ 154,602,500$ 49,916,940$

Total Investment Need Investment Plan of $7.1 Million / Yr

… 2013 Review

Summary of main points

• A larger percentage of campus is approaching the 25 year threshold, a point in which many major building systems reach the end of their useful life

• Heavier campus traffic adds to operational stress and can shorten life cycles• Higher regional cost influences resources needed to operate campus

Physical profile overview

• Similar staffing resources are producing competitive results in spite of regional costs

Operations performance remains competitive with peers

• Larger infusions of one-time capital have allowed USF to begin to stabilize and buy-down the backlog of deferred maintenance and modernization need

• USF has smartly directed a larger portion of capital toward core building assets, seeing results in electricity reductions

Spending practices stabilize backlog

Space Profile

Age profile shows shiftsLarge portions of space shifting to older age categories

31%25%

12%21%

11% 22%40% 25%

39% 27% 17% 30%

19%25%

30%25%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

USF 2004 USF 2009 USF 2013 Peers 2012*

% o

f Tot

al C

ampu

s G

SF

Campus Age by Category

Under 10 10-25 25-50 Over 50

*0%

29%

23%

48%

12%

40%

17%

30%

0%

10%

20%

30%

40%

50%

60%

0 - 10 10-25 25-50 50+

% o

f GSF

Construction vs. Renovation Age

Construction AgeRenovation Age: Adjusted age to reflect any major renovations

: Using the original date of construction

*Note: Schiavo does not come online until FY14

Construction Age >25 Years: 71%Renovation Age >25 Years: 47%

Age profile shows shiftsLarge portions of space shifting to older age categories

31%25%

12%21%

11% 22%40% 25%

39% 27% 17% 30%

19%25%

30%25%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

USF 2004 USF 2009 USF 2013 Peers 2012*

% o

f Tot

al C

ampu

s G

SF

Campus Age by Category

Under 10 10-25 25-50 Over 50

*0%

29%

23%

48%

12%

40%

17%

30%

0%

10%

20%

30%

40%

50%

60%

0 - 10 10-25 25-50 50+

% o

f GSF

Construction vs. Renovation Age

Construction AgeRenovation Age: Adjusted age to reflect any major renovations

: Using the original date of construction

*Note: Schiavo does not come online until FY14

Construction Age >25 Years: 71%Renovation Age >25 Years: 47%

58% 52% 47% 55%

0%

20%

40%

60%

80%

100%

USF B C D E F G H I

Construction Cost Comparison

0.00.51.01.52.02.53.03.5

USF B C D E F G H I

Tech Rating

Regional costs offset inherent efficiencies

Institutions arranged by increasing tech rating

0

20

40

60

80

100

USF B C D E F G H I

Building Intensity

Bui

ldin

gs/1

M G

SF

Tech

Rat

ing

(1-5

)

Construction-related labor & materials are 15% more

expensive for USF than for peers

Less air conditioning Fewer & larger buildings

0%

20%

40%

60%

80%

100%

USF B C D E F G H I

Cost of Living Comparison

Local cost of living averages 37% higher than peers

Campus remains more dense than peersHigher density impacts operational efficiency & building life cycles

- 50

100 150 200 250 300 350 400 450 500 550

2006 2007 2008 2009 2010 2011 2012

Density – FY13

USF

Peers

2006 2007 2008 2009 2010 2011 2012 2013

Liberal Arts Comprehensive University Large Urban Univ. Community College

Density FactorPeers University of San Francisco

Use

rs/1

00k

GSF

Operational Performance

Regional costs and campus profile impact expensesRegionally adjusting USF’s expenditures brings $/GSF closer to average

$-

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

$8.00

$9.00

$10.00

USF B C D E F G H I $-

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

$8.00

$9.00

$10.00

USF B C D E F G H I

Facilities Operating Expenditures Regionally Adjusted Expenditures

$/G

SF

Operations overview shows similar resources

Maintenance FY09 FY13 Peers

Staffing (GSF/FTE): 88,518 86,104 89,544

Supervision (FTE/Super): 10.1 11.4 12.0

Materials ($/GSF): $0.42 $0.29 $0.27

General Repair (1-5): 4.1 4.2 3.9

Custodial FY09 FY13 Peers

Staffing (GSF/FTE): 35,021 34,802 37,999


Materials ($/GSF $0.12 $0.16 $0.14

Cleanliness (1-5): 4.3 4.3 4.2

Grounds FY09 FY13 Peers

Staffing (Acres/FTE): 5.1 6.9 11.3


Materials ($/Acre): $1,411 $2,065 $742*

Grounds (1-5): 3.8 4.3 4.2

2

3

4

5

-

50,000

100,000

150,000

A B C D E F G H USF

Maintenance Coverage vs. General Repair

2

3

4

5

-

20,000

40,000

60,000

A B C D E F G H USF

Custodial Coverage vs. Cleanliness

2

3

4

5

-

5

10

15

20

A B C D E F G H USF

Grounds Coverage vs. Score

Scores have improved over 5 years, remain above peers

GSF

/FTE

GSF

/FTE

Acr

es/F

TE

*E&F are also urban institutions and average $1,800/Acre for grounds materials

Institutions arranged by density factor

Capital Profile

$10.8 $8.4 $14.9

$9.4

$25.0 $22.5

$8.9

$18.1

$26.3

$14.3

$4.4 $8.1

$6.0

$2.0

$0.1 $3.3

$2.6

$13.5

$20.3 $41.2

$0.0

$10.0

$20.0

$30.0

$40.0

$50.0

$60.0

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Mill

ions

Total Capital Spending

Existing Space

Total capital spending including new constructionSpending $26M on average

$15.2 $16.5 $20.9 $11.4 $25.1 $25.8 $11.5 $31.5 $46.6 $55.5

New Space/ Non-Facilities

Capital investment into existing facilitiesSpending nearly $16M on average – excludes new buildings

$2.9 $2.4 $2.4 $5.3 $5.7 $4.4 $3.8 $2.7 $5.6 $4.4$7.9 $6.0

$12.5 $4.1

$19.3 $18.1

$5.1$15.4

$20.7

$9.9

$0.0

$10.0

$20.0

$30.0

$40.0

$50.0

$60.0

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Millions

Reinvestment into Existing Facilities

Annual Stewardship Asset Reinvestment

10 Year Mix

75%

25%

$10.8 $8.4 $14.9 $9.4 $25.0 $22.5 $8.9 $18.1 $26.3 $14.3

Defining stewardship investment targets

$26.3

$9.7$7.3

$10.8

$5.4

$0

$5

$10

$15

$20

$25

$30

3% Replacement Value Life Cycle Need(Equilibrium)

Functional Obsolescence(Target)

Mill

ions

Calculated FY13 Stewardship Targets

Envelope/Mechanical Space/Program

Depreciation Model Sightlines Model

Current Replacement Value - $876M

Life cycle need is discounted to account for intentional

deferral and churn of space

Stewardship spending fluctuates more than peersUSF put 71% of Stewardship into envelope/mechanical vs. peers’ 58%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2006 2007 2008 2009 2010 2011 2012 2006 2007 2008 2009 2010 2011 2012 2013

Stewardship Investment vs. TargetPeers University of San Francisco

Avg.: 36% Avg.: 37%

$0.0

$5.0

$10.0

$15.0

$20.0

$25.0

$30.0

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Mill

ions

Reinvestment into Existing Facilities


One-time capital closes the gapSpikes in Asset Reinvestment spending help reduce backlog

Backlog decreased with higher spendingPeers’ backlog grows from lower spending

$-

$20

$40

$60

$80

$100

$120

2006 2007 2008 2009 2010 2011 2012 2006 2007 2008 2009 2010 2011 2012 2013

Backlog of Need – Regionally AdjustedPeers University of San Francisco

$/G

SF

$0.0

$5.0

$10.0

$15.0

$20.0

$25.0

$30.0

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Mill

ions

Total Project Spending


Is the funding mix sustainable?Investment targets will continue to grow – can capital keep up?

Stewardship projection

Currently projected capital

Target projections assume no changes in campus GSF

As targets increase, backlog will grow againWithout one-time capital, backlog would double 2009 figure by 2020

$-

$20

$40

$60

$80

$100

$120

$140

$160

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Total Backlog of Need

Projected backlog with elimination of one-time capital shows over $110M in growth

$/G

SF

Conclusions

Summary of main points

• San Francisco is one of the most expensive areas in the country, elevating costs for both campus operations & capital investment

• USF has more density compared with peer institutions

Regional factors influence campus profile

• Despite these stresses, campus appearance has improved in nearly every measure over the past 5 years, operating with similar resources as peer institutions

Operations remains competitive

• Reduced one-time capital will skew spending away from Space Renewal

• Lack of stewardship could reverse gains made through recent reinvestment

Anticipated trends in spending trigger alarms

Closing Thoughts from Panel

Questions & Comments

John FerrisDirector, Facilities and Business Services

San Diego State [email protected]

(619) 594‐4967

Michael LondonAssistant VP, Facilities Management

University of San [email protected]

(415) 422‐4400

Thomas HubertyRegional Account Executive

Sightlines, [email protected]

(763) 458‐2407

changing the conversation: making the case for funding deferred maintenance [appa 2014]

Education

education costs

higher education statistics

higher education sectors4

higher educationconclusions1

state systemsserving

administrative costs

flagship public universities

support costs