An audit released Tuesday by the Office of the Legislative Auditor General says concerns persist with the tracking and use of operation and maintenance dollars of state-owned higher education buildings.
We take very seriously the responsibility to maintain and take care of the capital assets of the state. We're definitely following up on all these items. —David Buhler, commissioner of higher education

SALT LAKE CITY — A new audit shows the Utah System of Higher Education and the Legislature are starting to administer operation and maintenance funds for college buildings more transparently, but the work is far from over.

The audit, released Tuesday by the Office of the Legislative Auditor General, says concerns persist with the tracking and use of operation and maintenance dollars, inconsistent classification and funding of buildings, as well as policy questions over the use of research overhead funds to cover building costs.

The audit is one of three released since 2011 highlighting problems that exist for many of the hundreds of state-owned buildings on college and university campuses. And most of the recommendations from the reports are criticisms higher education administrators agree with.

"It's always helpful to have an outside look at things," said David Buhler, commissioner of higher education. "We certainly welcome the scrutiny and know that we have a responsibility to be accountable to elected officials of the state."

The report identifies inconsistency in the way operation and maintenance costs are estimated for some institutions. The University of Utah, for example, was granted a yearly appropriation of almost $1.7 million from the Legislature this year for the operation and maintenance of its new Orson Spencer Hall and Crocker Science buildings.

But instead of using a process established by the Board of Regents to calculate those costs, the U. used its own method, which produced a yearly operation and maintenance estimate almost $250,000 more than the board's formula would have, according to the report. The Legislature funded the higher amount.

Utah State, Weber State and Southern Utah universities all use the board's operation and maintenance estimation form, and it's unclear why the U. uses its own method, though Buhler said there was no intention to "inflate" the estimates.

The audit recommends that the Utah System of Higher Education make a definitive determination on how costs should be calculated, then enforce the policy.

"It's something that going forward, the regents are going to need to just make sure that everyone's on the same page with that," said audit supervisor Kade Minchey. "We think it's an issue that clearly needs to be resolved."

The report also calls for better consistency in the classification and record keeping for higher education structures, which impacts funding for capital improvement. USU's Dee Glen Smith Spectrum, for example, is designated as an auxiliary space by its insurance and the State Building Board, but the institution says it's an educational structure.

Discrepancies also exist in the inventory of higher education buildings between the State Building Board and risk management agencies, with differences in the classification and the number of buildings on record.

This year's report makes 11 recommendations in all. They include suggestions for calculating, tracking and spending operation and maintenance funds from the state, as well as creating policy to ensure consistent and transparent administration of those funds.

Auditors also recommended that the Legislature guide policy decisions on how research overhead grants are used for operation and maintenance at USU and the U.

But the report shows the Board of Regents and lawmakers have either implemented or are in the process of implementing most of the recommendations from previous audits, including a charge to have an operation and maintenance funding plan in place before construction begins on new buildings.

"Utah has some concern, but our conclusion was we weren't as bad as many other states. Our Legislature, they're aware of this issue, they're aware they need to take care of the buildings. They are trying," Minchey said. "A lot's been done."

Buhler said bringing more transparency to the system will require a partnership between higher education and lawmakers.

"We take very seriously the responsibility to maintain and take care of the capital assets of the state," he said. "We're definitely following up on all these items."

Higher education facilities account for 39 percent of the state's building inventory, but because of the size and cost of those facilities, 72 percent of the state's capital asset value is held within higher education. About 12 percent of the education and general fund is spent on operation and maintenance needs, according to the report.

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