Committee Meeting Information

September 16-17, 2009

Wy Contractors Assoc/McMurry Training Center

Casper, Wyoming

 

Committee Members Present

Representative Steve Harshman, Chairman

Senator Jim Anderson, Vice Chairman

Senator Henry H.R. “Hank” Coe

Senator Mike Massie

Representative Ross Diercks

Representative Mike Gilmore

Representative Elaine Harvey

 

Committee Members Not Present

Senator John Hastert

Senator Kit Jennings

Representative Owen Petersen

 

Legislative Service Office Staff

Dave Nelson, School Finance Manager

Matt Sackett, Research Analyst

Matt Willmarth, School Finance Analyst

Josh Anderson, Staff Attorney

 

Others Present at Meeting

Please refer to Appendix 1 to review the Committee Sign-in Sheet
for a list of other individuals who attended the meeting.

Executive Summary

The Committee met for two days in Casper.  The Committee heard a report on the findings of a statutorily required audit of the School Facilities Commission, together with the agency's response to the audit findings.  The Committee also received the Commission's 2011-2012 biennial budget request.  The Committee considered draft legislation on charter schools, school district formation and on treatment of district bond refunds under the mill levy supplement program.  The Committee voted to draft a letter urging the Commission to hire audit consultants to assist in implementing a plan responding to the audit findings.

 

Call To Order (9-16-09)

Representative Harshman, Select Committee Chair, called the meeting to order at 8:35 a.m.  The following sections summarize the Committee proceedings by topic.  Please refer to Appendix 2 to review the Committee Meeting Agenda.

 

Approval of Minutes

Senator Massie moved that the minutes from the June 10, 2009 meeting be approved with no changes.  The motion was seconded and passed by voice vote.

 

School Facilities Commission Audit Report

Mr. Jim Hearne and Ms. Amber Nuse of McGee, Hearne & Paiz provided a handout to the Committee on that portion of the required School Facilities Commission audit pertaining to an accounting of all project costs and cost reallocations (see Appendix 3 for a copy of the handout).  Mr. Hearne explained the report and noted that the auditors conducted interviews with Commission personnel and reviewed the WOLFS accounting system, the access system used by the agency and the agency's Maximus data system, although the Maximum system is not yet totally operational.  He stated that they selected 15 active projects and 5 minor cap projects for review.

 

Mr. Hearne stated that one of the recommendations from the audit is the full implementation of Maximus.  Ms. Nuse stated that in order to assess where projects are sitting it would be beneficial to look at one district or at the total across school districts but that Maximus does not yet have that reporting capability.  Mr. Hearne stated that there is a need to be able to view comprehensive data at any point in time, but noted that it is difficult under the current system to do so.  He also noted that there is a recommendation to reconcile the Maximus system with WOLFS on a timely basis in order to protect data integrity.  He also noted that another recommendation is for the agency to use standard capcon and data definitions.  Ms. Nuse stated that the word "project" sometimes is used to refer to a particular phase of a larger project and at other times is used to refer to whole projects with multiple phases.

 

Mr. Greg Maddox and Ms. Vallerie Carrillo of RSM McGladrey provided a handout to the Committee on that portion of the audit focusing on agency program management (see Appendix 4 for a copy of the handout).  Mr. Maddox noted that the audit was a collaboration between the accounting auditors and the program management auditors, and described the handout.  Mr. Maddox noted that they conducted numerous interviews with the director and staff, compared the practices of the Commission to the statutes and rules, and focused on major capital project decisions.  He stated that progress has been made and that they found that the Commission was generally in compliance with the statutes and rules.  He noted that they reviewed the agency's building scoring and prioritization process and found it to be accurate.  He stated that the process of reallocation of resources to address building needs was not as transparent as it should be and noted that there were some priority changes without a clear record of why they were changed.

Mr. Maddox stated that the Commission did not consistently evaluate other alternatives and that there was a predisposition for new construction.  He stated that it was difficult to identify exceptions and difficult to clearly define exceptions and local enhancements within the agency's process.  He recommended that attention be given to ensure the accuracy and integrity of all communications between the Commission and the school districts in order to manage expectations, and not to create false expectations.  He noted that the policies, processes and procedures of the Commission and the staff are not consistently documented.

 

Ms. Carrillo noted that some of the recommendations call for development of cost per square foot and other guidelines to identify and manage exceptions and establish a structured approach to alternatives to new construction.  She noted that they would recommend that planning and assessment begin earlier which may result in less reprioritization of needs.

 

Mr. Maddox noted that another audit recommendation is better integration and use of a single repository for agency documents and to develop a standardized reporting package.

 

After additional discussion of the recommendations in the report, Mr. Maddox stated that the suggested next steps are the prioritization of the action plan.  He suggested that the Commission determine what is most important, set milestones and assign responsibilities.  He described a partial preliminary plan outlined in the report which would include developing a standardized reporting package and noted that it would be a complicated process.

 

In response to a question, Mr. Maddox noted that Maximus is a complex system and that he thought it could not be done in a matter of weeks and would likely take months of work to optimize the system.  In response to a question, Mr. Maddox stated that the Commission would benefit from outside expertise and focused attention on the action plan.  Mr. Hearne noted that in the beginning, the Commission had to hit the ground running and that the agency did not have the opportunity to step back and develop processes, but at this time, he suggested there is now a need to step back and ensure the process is properly designed and functioning.

 

Agency Response and Implementation Plan Addressing Audit

Mr. Dave Nelson of the Legislative Service Office provided 3 handouts to the Committee pertaining to the audit.  (see Appendix 5 for a copy of the handouts).  Mr. Nelson noted that the handouts included a letter from the Chairman and Vice Chairman requesting certain information to assist the Select Committee in navigating the audit findings.

 

Mr. Ken Daraie, Director, School Facilities Commission, provided handouts to the Committee on the agency response to the audit (see Appendix 6 for a copy of the handouts).  Mr. Daraie stated that the Commission staff would first address the recommendations on Maximus.  Dr. Jim Lowham of the School Facilities Commission noted that the hardware is adequate but that the software and database are complex.  He stated that the next step would be an upgrade to GPS view format which would be much more user friendly.  He stated that one major issue would be getting the changes out to the users of the system in the 48 districts.  He noted that one of the next steps would be to work with the stakeholders to come up with a set of 15 standardized reports.

 

Mr. Daraie noted that the conversion would be time consuming and that there is a need for training and for staff.  He stated that all historical information has been input into the system through March of this year.  In response to a question, Dr. Lowham stated that the Commission will work to put dates on action items.

 

In response to a question, Mr. Daraie stated that the agency's website is dated and that although the information is there it is not user friendly.  He state that the Department of Transportation has a terrific system and that they have contacted the Department of Administration and Information.  Ms. Donna Murray stated that they have master contracts with a web design company and that they could have implementation of a new site by the end of the year.

 

In response to a question, Mr. Daraie noted that the Commission may not have all of the necessary expertise in house and noted that there is a need to recognize that and leverage outside resources if necessary.  He stated that in some agency functions expertise is as thin as one individual, suggesting a need for cross training.

 

Mr. Daraie stated that the Commission will publish a glossary of terms used in the capcon process and attach it when appropriate.  He stated that creation of the glossary was more complicated than he initially thought and stated that there is a need to have a clear understanding with constituents with what the Commission wants and needs to see in reports.  Mr. Daraie noted that they would not have to reinvent the wheel and that they could use or adapt some of the model reports that are available.

 

Mr. Daraie stated that they are using cost per square foot guidelines.  Ms. Nancy Thompson noted that they now have 7 years worth of construction data and that they can use internal data and the RS means index to come up with the guidelines.  Ms. Thompson noted that enhancements are different from building upgrades, and stated that additional square footage would be considered a building enhancement.  She indicated that if there is any additional square footage they would determine a percentage of the cost of the project which will result from that enhancement as the responsibility of the district.

 

Mr. Daraie stated that the preference for new construction found by the audit may not be entirely fair. He stated that it was about 75% new construction and 25% other, but noted that if pipeline or capacity schools were removed, the contracts were about fifty-fifty.  He noted that cost effectiveness is something the agency must consider and that because constructing a new building is faster than a remodel, it was difficult to get bids on some remodels a few years ago.

 

Ms. Thompson stated that they will establish what is an upgrade so that the guidelines are visible and transparent.  If a district wants an upgrade, payment of costs must be determined.  She stated that the process eliminates some of the conflict through value engineering.

 

Commissioner Jeffrey Carrier stated that there is a need and an opportunity to develop an evaluation system and to prioritize concerns.  Commissioner Jeff Marsh stated that the agency and Commission can look at the audit as a tool and that it gives the Commission a playbook from which to build upon.

 

Mr. Maddox noted that the Commission has made a lot of progress, action in response to some concerns are underway and the agency has set some fairly aggressive goals.  He stated that he had not heard an overarching strategic plan addressing the Commission holistically and how to get the complexities of the agency's mechanisms to all fit together.  He suggested that the agency's response plan should be in phases and that the Commission should not try to do it all at one time.

 

Mr. Hearne suggested that the Commission and the staff should take step back and prioritize the action plan.  He also reiterated the suggestion of Mr. Maddox and stated the Commission and staff should not attempt to respond to every audit recommendation at one time but to proceed in a planned approach one step at a time.

 

Mr. Daraie explained the handout detailing the $141 million of unfunded projects found in the audit.  He noted that the projects are detailed and funding requested in the proposed budget and that the projects are on the facility needs index.  In response to a question, Mr. Daraie noted that the major maintenance formula is a reasonable estimate of maintenance but noted that it is based on smaller than actual square footage because older schools have larger than allowable square footage.

 

Meeting Recess

The Committee recessed at 3:30 p.m.

 

Call To Order (9/17/2009)

Chairman Harshman called the meeting to order at 8:30 a.m.

 

Executive Session

The Committee resolved itself into an executive session at 8:30 a.m.  The Committee returned to open session at 9:30 a.m.

 

School Facilities Commission 2011-2012 Budget Request

Mr. Daraie noted that previously, the budget request of the Commission was based on the ability of the Commission to deploy dollars effectively.  He stated that the current rate of deployment is averaging $20 million a month.  He stated that currently, the are 22.7 million square feet of existing school buildings comprising the state inventory.  He stated that there are other entities which own, manage and operate large amounts of facility space, and the Commission investigated respective processes and mechanism employed to manage these properties.  He stated that it is important to understand that the initial construction is only part of the cost of ownership and that there is also a burden of maintenance and operations, recapitalization, major renovations and replacement of buildings.  He stated that using the approach of maintenance and recapitalization based on the total square footage in the state led the Commission to determine a budget of approximately $328 million for the biennium.  He stated that the budget request for the agency for the biennium is $300 million.

 

Mr. Daraie noted that they broke capital construction into three sub categories, planning and design, construction and component level projects.  He noted that up to 3% may be used for ancillary buildings and up to 1% for tracks.

 

Mr. Daraie noted that the budget document includes expectations for future biennia.  In response to a question, Mr. Daraie stated that they consider a project to be committed between the planning and design phase and noted that projects which are strictly in the planning phase are not currently considered a project.

 

Mr. Daraie stated that they are building on their facility reporting and tracking process abilities.  He stated that the needs index is a living document and is constantly changing due to the ever-changing facility needs and factors inherent in school district operations.  In response to a question, Mr. Daraie stated that if a project is funded for design, there is no commitment for construction.

 

Agency Response to June 10 Committee Inquiries

Mr. Daraie noted that as to consolidation options, intra-district consolidation is not without issues and inter-district consolidation has even larger issues.  He noted that county wide administration has surfaced periodically and suggested that there would likely be operational savings for the central office, but from a "building" stand point, there may be some impact but it would not be immediate.  Dr. Lowham suggested that if the elementary students at a small school were kept there to avoid transporting them over long routes and the older students were moved to a different school, the small school would still be there, just with less kids.  He stated that until the Commission and the district would have the opportunity to “right-size” the building there would not be a large savings on consolidation.

 

Senator Anderson requested that the Commission collaborate with the Department of Education on consolidation issues.

 

Mr. Daraie described the facility condition index which is being put into use. He noted that buildings are rated excellent to crisis-level and if everyone is above the line, the buildings are adequate.  He stated that if you set standards, you have to live by them.

 

Draft Legislation

Mr. Nelson provided 3 handouts to the Committee on draft legislation (see Appendix 7 for a copy of the handouts).  Mr. Nelson noted that the bills were drafted based on June Select Committee meeting discussions.  He explained the drafts briefly.  He noted that the bill addressing charter school facilities (10LSO-0045.W1) places facility requirements upon the school district and within the inventory of buildings under purview of the school facilities commission. Ms. Hill noted that as written, the bill would apply to all three charter high schools currently operating in Wyoming.

 

Mr. Nelson described 10LSO-0046.W1 and noted that it would limit consideration of refunding of school district bond issues under the mill levy supplement program originating prior to the creation of the school capital construction process currently operating under the Commission.

 

Finally, Mr. Nelson referenced 10LSO-0048.W1 and explained the proposal raises the number of pupils required for the creation of a new school district from 500 to 1000.

 

Mr. Tracy Renner of Park County School District 16 stated that consolidation of school districts could put kids at risk.

 

Dr. Gregory Cox of Fremont County School District 21 stated that the bill draft to increase the number of students required for a new district will adversely impact the two nonunified K-8 school districts. He noted that his school district is at 420 pupils and if the law is modified to increase the required pupil count to 1,000, the district will not be able to reorganize as a unified, K-12 school district.

 

Mr. Gene Meier also of  Fremont County School District 21, stated that he was appreciative of the bill to look at charter school facilities but noted that the district is trying to unify and that increasing the number of students required to unify would hinder student educational programs.

 

Committee Action

Chairman Harshman stated that the Select Committee acknowledges and agrees with the audit findings and requests that the agency implement the audit findings.  He noted that there has been a lot of progress made to date by the agency, but suggested it would be most beneficial and most effective to use the existing auditors as consultants to the agency in establishing a plan to respond to and implement the audit findings.  He stated that the Select Committee is scheduled to meet in October and possibly again in January, and would request the agency update the Select Committee on its progress in addressing the audit findings.

 

Senator Massie moved the Chairman and the Vice Chairman convey the recommendations and requests of the Select Committee with respect to implementation of audit findings to the Governor, the Commission and the Commission's staff.  The motion was seconded.  Vice Chairman Anderson stated that he would recommend continuing involvement of the auditors in plan development and implementation and that the Committee would like to act as partners with the Commission and the agency in proceeding with actions addressing the audit findings.

 

Chairman Harshman noted that use of outside expertise is not to be interpreted as oversight of the Commission and the agency, but rather is seen as providing third party objective insight into the process to assist with agency focus and assembling necessary processes and mechanisms to provide a system capable of operating at levels and at capacities envisioned by the audit.

 

Mr. Daraie noted that his office has been given a charge to accomplish certain requirements and has put in a great deal of time and effort to date in responding to the audit findings.  He noted that the agency is not more than a few months away from completion of developing a response.  He stated that it is appropriate for the Committee to give expectations but noted that the agency takes its oversight responsibility seriously and noted that it is his belief that the agency is in the best position to independently deliver results on the audit findings without any additional oversight.

 

Chairman Harshman expressed disappointment with the statements of Mr. Daraie, and noted that the Select Committee can only provide recommendations in this regard.  He pointed out the expertise available to the agency through the contracted auditors is not intended to usurp agency duties and responsibilities, but to provide needed expertise and manpower to accomplish necessary targets in order to function as recommended in the audit report.

 

After additional discussion, the original motion of Senator Massie passed by voice vote.

 

The Committee set their next meeting for October 28-29, 2009 in Casper.

 

Meeting Adjournment

There being no further business, Chairman Harshman adjourned the meeting at 1:00 p.m.

 

 

 

Respectfully submitted,

 

 

 

Representative Harshman, Chairman

 

 

 

 

 

 

 

 

 

Appendix		Appendix Topic		Appendix Description		Appendix Provider
1		Committee Sign-In Sheet		Lists meeting attendees		Legislative Service Office
2		Committee Meeting Agenda		Provides an outline of the topics the Committee planned to address at meeting		Legislative Service Office
3		Audit findings		Audit findings		McGee, Hearne and Paiz
4		Audit findings		Audit findings		RSM McGladrey
5		Audit response		Audit response		Legislative Service Office
6		Audit response		Audit response		School Facilities Commission
7		Draft legislation		Draft legislation		Legislative Service Office