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Audit recommends better tracking of project savings, condemns 10‑year maintenance estimate gaps at State Public Works Division
Summary
An audit of the State Public Works Division found missed opportunities to reallocate closed‑project savings, understatements in the 10‑year maintenance estimate and inconsistent use of facility condition assessments; the division accepted recommendations.
The Legislative Counsel Bureau reported to the Audit Subcommittee that the State Public Works Division (SPWD) can improve capital project financial management and the accuracy of maintenance‑need estimates for state buildings.
Auditors reviewed SPWD activity from July 1, 2020, through June 30, 2023, and tested capital improvement program (CIP) projects. They found more than $18 million in cost savings from 13 closed projects within a 20‑project sample from the 2019 CIP that were not presented to the interim finance committee for reallocation. Auditors said those unused funds could have completed additional projects sooner and reduced exposure to future inflation.
Auditors also noted that SPWD did not consistently use facility condition assessment (FCA) reports when developing CIP projects and that maintenance costs reported to the legislature were understated. The division reports a 10‑year estimated maintenance need for state buildings; auditors found some completed projects remained in that estimate and that the division only updates project costs when a facility is reassessed, an average of about five to seven years. Using SPWD’s own construction‑inflation factors, auditors estimated the 2023 maintenance cost estimate could be understated by as much as $220 million because costs were not updated between assessments.
SPWD did maintain an effective process for estimating project costs for new CIP projects but often did not retain documentation supporting those estimates, limiting oversight of the methodology.
"Of the 13 closed projects tested we found over $18,000,000 in cost savings that had not been reallocated to other approved projects," Deputy Legislative Auditor Lupita Cruz said during the presentation.
Auditors recommended SPWD improve internal processes to identify and reallocate project savings through the IFC where appropriate, expand an alternative budgeting method that the legislature approved for some agencies in 2023 so more maintenance projects could be included in the CIP and savings reused, ensure FCA reports are used in project development, update the database used to track recommended maintenance and retain documentation for cost estimates. The division accepted all recommendations.
The subcommittee approved the report. Auditors said implementing the recommendations could allow more timely completion of maintenance projects, improve cost transparency for decision makers and reduce future inflation risk.
Ending: SPWD accepted the audit’s recommendations and will update processes and documentation to help legislators and the Governor’s Office make more accurate funding decisions for building maintenance.
