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Suggested Citation:"Inadequate Funding for Maintenance and Repair." National Research Council. 2001. Deferred Maintenance Reporting for Federal Facilities: Meeting the Requirements of Federal Accounting Standards Advisory Board Standard Number 6, as Amended. Washington, DC: The National Academies Press. doi: 10.17226/10095.
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APPENDIX A 46 ownership, the so-called “first” costs. (The remaining 5 to 35 percent of the costs of ownership include land acquisition, planning, renewal/revitalization, and disposal.) The full life cycle costs of new facilities are not considered in the current federal budget process. Instead, only the projected design and construction costs appear as a separate line item for congressional consideration. The costs of operating and maintaining the new facility are not considered separately but become part of the agency's total operations and maintenance budget request, which includes funding for all existing facilities. The costs of designing and constructing a new facility, then, may receive considerable scrutiny during budget hearings, but the budget process is so structured that the 60 to 85 percent of the total costs, the costs of operating and maintaining the facility, do not receive the same scrutiny. Thus, the federal budget process is not structured to consider the total costs of facilities ownership. Inadequate Funding for Maintenance and Repair Inadequate funding for the maintenance and repair of public buildings at all levels of government and academia is a long-standing and well-documented problem. A report by the National Research Council in 1990, Committing to the Cost of Ownership: Maintenance and Repair of Public Buildings, found that “Underfunding is a widespread and persistent problem that undermines maintenance and repair of public buildings” (NRC, 1990). A 1996 study by the Civil Engineering Research Foundation reconfirmed this finding, noting that “underfunding of facilities maintenance and repair projects appear to be a widespread problem in both the public and private sectors” (CERF, 1996). On the subject of federal facilities, GAO has reported that, “mounting evidence shows that the federal government must also face up to the long-term consequences of inadequate capital investment in existing federal buildings” (GAO, 1991). More recently, GAO has found that “despite reductions in DoD's [ U.S. Department of Defense] basing infrastructure, various DoD and service officials have continued to indicate that they still have excess, aging facilities and insufficient funding to maintain, repair, and update them” (GAO, 1997). There is no single, agreed-upon guideline to determine how much money is adequate to maintain public buildings effectively. However, Committing to the Cost of Ownership: Maintenance and Repair of Public Buildings did recommend that, “An appropriate budget allocation for routine M&R [maintenance and repair] for a substantial inventory of facilities will typically be in the range of 2 to 4 percent of the aggregate current replacement value of those facilities” (NRC, 1990). This guideline has been widely quoted in the facilities management literature. During the course of this study, federal agency representatives who briefed the committee or completed questionnaires indicated that the funding they received annually for maintenance and repair was less than 2 percent of the aggregate current replacement value of their agencies' facilities inventories 1 . The National Aeronautics and Space Administration (NASA), for example, 1 Agencies responding to the questionnaire included the U.S. Department of Energy, the Department of the Army/ Installations, the International Broadcasting Bureau, the National Institute of Standards and Technology, the National Aeronautics and Space Administration, and the Office of the Air Force Civil Engineer.

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Deferred Maintenance Reporting for Federal Facilities: Meeting the Requirements of Federal Accounting Standards Advisory Board Standard Number 6, as Amended Get This Book
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In 1996 the Federal Accounting Standards Advisory Board (FASAB) 1 enacted Standard Number 6, Accounting for Property, Plant, and Equipment (PP&E), the first government-wide initiative requiring federal agencies to report dollar amounts of deferred maintenance annually. The FASAB has identified four overall objectives in federal financial reporting: budgetary integrity, operating performance, stewardship, and systems and control. FASAB Standard Number 6, as amended, focuses on operating performance and stewardship. The FFC Standing Committee on Operations and Maintenance has prepared this report to identify potential issues that should be considered in any future amendments to the standard and to suggest approaches for resolving them. The committee's intent is to assist the CFO Council, federal agencies, the FASAB, and others as they consider how best to meet the objectives of federal financial reporting for facilities.

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