Ambitious Growth and Financial Realities

Deferred maintenance can lead to an endless cycle of need and expense.

Annually, campuses are judged and ranked by various sources as to which has the most diverse student body, the highest academic standards or the most beautiful campus. However, appearances can be deceiving especially when it comes to the bottom line and an aging infrastructure.

Campus Construction Boons

Twice in the past 75 years there’s been a construction boom on campuses. From 1960 to 1975 there was a spike in enrollment due to veterans returning home and enrolling in college, a rise in high-school graduates, and greater competition between public and private universities for the same students.

During this time around 40% of the buildings on current campuses were quickly constructed to support the influx of students. Then again in the post-recession years from 2009-2012, new construction increased to meet the demands of diverse program offerings and amenities to attract and retain high-quality students and faculty. Over the years these waves of necessary construction have stretched many campus budgets beyond capacity. As is the habit of time, new construction will eventually require renovation.

Buildings that are 25 years and older will need to have big-budget items such as roofs, electrical systems, exteriors, HVAC units, and plumbing replaced or repaired. Additionally, new building code safety requirements and ever-changing technological advances needed in existing buildings also vie for priority funding.

Deferred maintenance is the system of delaying maintenance projects with the intent of saving money, meeting budget funding levels, or realigning available financial resources. Sightlines “2018 State of Facilities in Higher Education Annual Report” states, “It is crucial for institutions to square their campus growth ambitions with their financial realities to make certain they can afford the long-term costs associated with maintaining their existing institutional assets and today’s ongoing expansion. Their survival may depend on it.”

The Never-ending Cycle

As stated by the EAB, a best practices firm that uses research, technology, and consulting to address challenges within the education industry, there are three interdependent stages of maintenance that can create a never-ending cycle of need and expense if not overcome through careful foresight and planning. As the list of deferred maintenance projects grows, there is an increased probability that a major system will fail sending the issue into a reactive maintenance state that must be immediately addressed.

While fires are being extinguished, preventative maintenance is often put on hold which in turn leads to the likelihood of further deferred maintenance costs. The combination of decreasing student enrollment revenue and reductions in state funding aligning with low-interest rate loans has created a steady buildup in college debt over the past 30 years. With each new construction project, universities should consider the estimated 25 to 35-year maintenance costs in their initial funding request.

With new construction and budget-cutting often being examined simultaneously, many campuses have seen a reduction in maintenance and custodial personnel, further hampering the college’s ability to discover and repair small problems before they become costly emergencies. Sightlines, a higher-education facilities consulting firm, explains this loss of custodial and maintenance employees can be somewhat off-set through the adoption of building automation technology, the hiring of workers with specialized training, and contracting with outside companies for specific needs on a temporary basis.

Handling the Growing Backlog

The challenge facing universities across the country is how to manage the growing backlog of deferred maintenance issues. Where does the funding come from? How do you prioritize projects? Or, as Jon Marcus remarks in “Long-neglected Maintenance Threatens to Further Escalate the Cost of College,” how do you convince donors that “$1 in maintenance today avoids $3 in restoration costs later?”

It’s more enticing for donors to fund a new wing of a science building than to cover the cost of re-roofing the current student center, but when campus facilities are comfortable, safe, and modernized to meet the needs of students and faculty, the campus furthers its educational mission, suggests Nancy Mann Jackson in “Balancing Act,” an article from Business Officer, a publication which addresses current challenges and emerging issues in higher education finance and administration.

Jackson states, “The return on investment is positive, not only because of the energy cost savings but more importantly, because people must be comfortable in order to teach and learn.” In 2010 Washington and Lee University initiated extensive renovations to five of its historic buildings designated as National Historic Landmarks. Fifty-million dollars was raised to make upgrades such as new fire alarms, sprinkler systems, elevators, automatic door openers, and handicapped-accessible toilets along with a new electrical system able to support the latest technology.

Jeff Hanna, in “Payne Hall Restoration: A Marriage of Old and New,” shares that Payne Hall was outfitted with fiber optics, classrooms and offices were enlarged to encourage student/teacher interaction, and corridors and stairways were altered to improve the flow of people. With the installation of storm windows and eco-friendly smart lighting, utility costs dropped significantly.

In an attempt to lessen possible deferred maintenance costs, Washington and Lee put 15% of the money raised into an endowment to cover the cost of regular maintenance. Randolph Hare, Washington and Lee’s director of maintenance and operations, said, “It sends a signal that we’re good stewards of the facility and concerned about the life of the building and maintaining it.”

Transparent Tracking

Many colleges have created extensive facilities and maintenance databases to research, catalog, and track deferred projects. Transparency with stakeholders allows everyone to be involved in the decision-making process from start to finish while helping keep the focus on the long-term strategic priorities and ensuring funds are being allocated as they were intended.

By providing administrators, professors, and patrons some level of informational access to desperately needed high-budget maintenance requests colleges can illustrate how specific demands in one area on campus compare in urgency with other requests. This allows for project prioritization when determining the overall cost while keeping lines of communication open.

Formidable but Attainable

Many colleges are looking at hundreds of millions of dollars in deferred maintenance costs. The expense alone can be a singularly staggering number, but once projects are prioritized the work can be broken down into more achievable stages with funding goals set at attainable amounts.

Projects can be categorized into long- and short-term needs, critical issues, and preventative measures and presented to multiple funding sources.

Opportunity to Go Green

Another incentive when reaching out for capital is the current focus on going green. “The most efficient or green building is the one you do not need to build because you are using your space effectively, which drives investments in renewal to improve the effective use of space,” offers Darryl Boyce of Carleton University.

In some cases, universities are even closing down older buildings that have become more of a liability than they are worth or are no longer able to safely meet program demands. By reducing the amount of space that needs to be heated, cooled, and cared for colleges can reallocate that money into the improvement of younger, healthier buildings.

It is often easier to convince capital lenders and donors to invest in creating a sustainable campus environment. The over-arching support from students and faculty for advancing sustainability initiatives also fosters a sense of community-that leadership values programs and policies that impact the quality of campus life and beyond.

Some private universities include annual capital renewal fees in tuition costs and those may be more tolerable if tied to green initiatives. The Office of Energy Efficiency & Renewable Energy offers universities Energy Savings Performance Contracting (ESPC) options.

This is a budget-neutral path to making improvements to existing buildings that will decrease energy and water use while increasing overall efficiency. Colleges can work with an energy service company (ESCO), and use an ESPC to pay for time-sensitive upgrades with future energy savings. According to Sightlines, positive trends in capital investment and stewardship funds have increased by 50% in the past 12 years.

It is clear that there is far-reaching support for building renovation needs. By compiling an accessible database on the condition of campus buildings and utilities, updating information on maintenance projects and cost, and keeping donors, students, leadership, and faculty in the loop colleges can begin to surmount the backlog of deferred maintenance projects. Identifying, prioritizing, and addressing infrastructure issues as they occur strengthens the sense of community and forwards the educational mission.

About the Author
Hilary Moreno is an alum of Birmingham-Southern College. Currently, she is the Creative Director and a staff writer for Flaherty Media.