Facilities (Campus Spaces)

Pay Me Now or Pay Me Later: The Cost of Deferred Maintenance

• By Ellen Kollie
• 10/01/16

“The problem with the term ‘deferred maintenance’ is its perception,” says E. Lander Medlin, executive vice president of Alexandria, VA-based APPA, Leadership in Education Facilities, which supports educational excellence with quality leadership and professional management through education, research and recognition. “The term sounds like the maintenance team didn’t do its job in the first place, which we know isn’t true. It’s upsetting because it sheds a poor light on the quality and delivery of facility systems.”

The truth is that facility managers and campus management are doing all they can to maintain facilities. They know what needs to be done, how often and the cost to do it. What they don’t have is funding. “Higher education falls behind Medicare, K–12 education and, in many states, prisons in terms of funding,” says Medlin. “So we could be fourth on the list. A look at the 30-year cycle shows a drop in support from 50 to 60 percent of states’ budgets to 15 to 20 percent at best. In addition, funding for higher education is not a mandatory fund requirement; it’s part of the discretionary fund budget.”

The funding losses and subsequent stretching of funds across square footage to be maintained affects two areas. The first is actual cost of ownership. “If you’re not doing preventive maintenance because you don’t have the money or staff, then facilities’ life cycles will be reduced,” says Medlin. “For example, if there’s a roof failure, I need to repair it. If I can’t afford to repair it, it will negatively affect other systems inside the building that become wet and damaged from rain. In other words, if you don’t pay me now, you’ll pay me more later.” The second is the conscious decision to defer maintenance. “This is about looking at risk to reliability,” she says. “For example, do I want to change out expensive systems now if I believe I can tolerate the risk associated with a lesser reliability quotient in waiting two to three years when I know the facility will be fully renovated?”

Here’s a look at how managers at two campuses are rallying to reduce deferred maintenance and its negative connotation.

University of California, Riverside

“UC Riverside is an aging campus,” says Jeff Kaplan, associate vice chancellor, Capital Assets Strategies. “Most of it was built 50 to 60 years ago, and that is the prime sweet spot where deferred maintenance issues become issues.” To that end, administrators at this campus of 22,000 students have identified approximately 247 deferred maintenance projects. “Those projects have been deferred mostly because of funding,” he says. “The projects are of such a magnitude/size/impact that they had to be put off. For us, it totals around $268 million.”

The plan to reduce the amount of deferred projects is twofold. First, Kaplan looks for strategic opportunities to put projects into capital renewal programs, as Medlin previously mentioned. “For example,” he says, “if I have an opportunity to renovate a whole building, we’ll take the deferred maintenance roof replacement off that list and put it in the building renovation project. It gives us the ability to treat an asset holistically instead of by its components. That doesn’t happen a lot.”

Second, Kaplan is appropriating local campus funds in addition to state funds to buy down the deferred maintenance backlog. “But even the rate of buy down is challenging,” he admits. “We’re able to address the most immediate urgent needs. As we take things off the list, other things are added. We’re doing better than treading water, but it’s not a cure-all — it’s still challenging.”

Medlin notes that the trend to use campus funds is growing. “Facility managers have done everything they can to maintain quality,” she explains. “Now administrators are replenishing funding losses through tuition. This is a problem because we all believe access to education is important. However, there’s a point of no return where access will be limited to those who can afford it. That’s terrible because it will turn education into a private benefit rather than a public benefit. We’re at a crossroads here. I don’t know that institutions can increase tuition more. There’s pressure by all parties — students, parents, administrators, board members — to find a solution.”

Ithaca College

Deferred maintenance at New York-based Ithaca College, which has nearly 7,000 full- and part-time undergraduate and graduate students, has two causes. The first is new construction. “A preponderance of money is going to new building care,” says Dr. Tim Carey, associate vice president/chief facilities officer, “and the backlog builds, and buildings suffer.” The second is an aging infrastructure. “Most of our buildings were built in the 1960s and ’70s,” he says. “That vintage of construction was not of the highest quality. That’s a national norm, not just true on our campus. The buildings are reaching ages where things are beginning to fail. So it’s hitting all of our radar screens simultaneously.”

Carey is working to reduce deferred maintenance via a unique approach: combining a condition audit of the physical campus into the master plan. “I folded these two fairly monumental endeavors into one process,” he notes. “Our master plan, which will last 10 to 20 years, is informed and guided in a significant way by the condition of our current campus.”

In addition, Carey created a five-year strategic financial plan to address the most significant and emergent deferred maintenance items. It’s a living/breathing document, changing as needs change. “We have just begun year two of that plan,” he explains, “and the impact is already being recognized. For example, in the past, when there was significant rain in the forecast, we knew where to go to place buckets to collect rainwater from roof leaks. This has been addressed in the strategic plan. We’re in a better place today than we were two years ago, and I think it’s only going to get better.”

Finally, for two years now, there has been no new construction. Instead, Carey is allocating capital monies to deferred maintenance. As a result, the campus’ condition is greatly improving, and it’s becoming more energy efficient. For example, boilers and chillers are being replaced with more energy-efficient systems, roofs are being replaced with ones that have better insulation than the old ones and singlepane windows are being replaced with more energy-compliant windows.

Kaplan sums the deferred maintenance challenge well. “Maintenance and replacement should be budgeted,” he says, “so you have the money in a capital reserve to replace systems proactively and not reactively. Yet, how can you justify setting money aside for the future when you don’t have money for the past? You have to have your deferred maintenance at zero, and who has that?”

This article originally appeared in the issue of .