Sonoma County Grand Jury
• 2018-2019
• Agency Response
Sonoaia County Caroline Judy Director Gen Eral Sery'ces Department Adminetrattvesermces. Energy&sustainabiuty
⚠️ Translation Notice: This content has been automatically translated. The original English text is the official version. Translation may contain errors.
⚠️ Este contenido ha sido traducido automáticamente. El texto original en inglés es la versión oficial. La traducción puede contener errores.
Findings and Recommendations 14 findings
F1
Page 1
Deferred maintenance of County buildings and other facilities has become so considerable that it requires extraordinary measures and limits management's ability to plan effectively for future facilities.
No recommendations for this finding
F2
Page 1
Sonoma County Capital Assets Policy FA-l fails to provide sufficient reporting for management to determine the extent to which normal maintenance and repairs of buildings and other County facilities are being deferred. 23OO COUNTY CENTER DRIVE, SUITE A2OO, SANTA ROSA, CALIFORNIA 95403 707-565-2550 FAX 707-565-2358 We disagree wholly with this finding. The purpose of Fiscal Policy FA-1, Accounting for Copitol Assets, is to ensure accurate and complete physical and financial records needed for financial reporting. The policy is not intended to address areas such as planning and budgeting for capital asset purchases and disposals, asset maintenanceactivities,ortheappropriateuseofCounty-ownedassets. Theseitemsshouldbeaddressedina separate policy to be developed by General Services and the County Administrator's Office. This separate policy would provide for the capture of maintenance and improvements and its impact to overall asset value. The condition of a facility in conjunction with the impacted asset value should be a greater consideration in the addressing funding and planning. We would agree that a policy revision would be in orderto capture the impact of deferring maintenance and conversely the extension of an asset's service life from repairs or replacement.
Related Recommendations (1)
R2
Page 4
The County Administrator obtain an independent cost analysis and justification of deferred maintenance on capitalassets from each department head and present to the Board of Supervisors by March 2O2O,and following on an annual basis. [F3] Response: The recommendation hos been implemented. The General Services Department is responsible for the maintenance and management of County property assets. lndividual departments do not manage capital assets. General Services contracted with VFA Associates in 20'J.4lo perform a facilities conditions analysis which is the industry standard baseline assessment of facilities. Best management practice is to perform a new or refreshed facilities condition assessment every five years. General Services intends to submit for approval a Capital lmprovement Project for FY 2O2Ol2t to update the facilities condition assessment and expand to buildings that are omitted from the original study. It should be noted that facilities condition assessments are not the same as cost estimates or analysis of individual projects. Cost estimates for capital projects are included in the Annual Capital lmprovement Plan. These cost estimates are generally developed by skilled staff within the department. Large projects such as the Behavioral Health Housing Unit require additional cost estimating services typically performed by one of the County's Master Service Agreement architectural and engineering firms.
F3
Page 1
There is no formal requirement that County departmental administrators inform the Board of Supervisors regarding current-year deferred maintenance decisions on capital assets including cost to the County budget.
Related Recommendations (1)
R3
Page 4
The County Administrator work with department heads to evaluate and take advantage of the EFS Capital Asset Management module to avoid duplication, consolidate data, provide cost savings, and report updates to the Board of Supervisors by December 31, 2019. [F4, F5] Response: The recommendotion requires further anolysis. The County purchased and implemented EFS Asset Management county-wide in July 2O!4in order to provide a centralized accounting system to track capital assets for the purpose of financial accounting. However there were additional asset management modules that were not purchased or implemented. . General Services requires a robust integrated asset management, cost accounting, and work order system with software capabilities providing space allocation information. The General Service Director will work with the County Administrator and ACTTC staff to determine if additional services are needed, and will provide an update to the Board of Supervisors as part of the Budget development process by June 30,2020.
F4
Page 2
Real asset records are scattered over an excessive number of record keeping and asset management systems. We disagree partially with this finding. All physical/financial asset records are maintained in the EFS Asset Management (AM) module, however General Services maintains separate asset management systems to track work orders, maintenance and repair of the assets. A greater level of access to the EFS Asset Management Module would be appropriate though this module does not contain desirable features of a modern property asset management software system.
No recommendations for this finding
F5
Page 2
General Services, as well as other departments, have yet to take advantage of integrating with the Enterprise Financial System's (EFS) Asset Management module which provides asset tracking, acquisition, maintenance, inventory, and cost-sha ring. We disagree partially with this finding. Although General Services would greatly benefit from an asset management software system, General Services requires a robust integrated asset management, cost accounting, and work order system with software capabilities providing space allocation information. lt is our understanding that EFS does not fulfil all ofthese needs.
Related Recommendations (1)
R5
Page 4
The Director of Health Services reduce employee and public exposure to hazards, minimize risks of OSHA and liability exposure by enforcing a higher level of maintenance by December 31, 2019. [F10] Response: The recommendotion will not be implemented becouse it is not worronted. Currently, General Services has been working closely with the Risk Management Division of Human Resources Department to identify and mitigate employee and public exposure to hazards, minimize risks of OSHA and liability exposure. Risk Management is responsible, in coordination with General Services, for the tracking and monitoring of all OSHA complaints, and consults and informs Health Services staff of issues, resolution and completion. Collaboration with Risk Management benefits the County in potentially providing insurance coverage for certain events and providing immediate assessment and recommendation by qualified safety specia lists.
F6
Page 2
The true cost of maintaining the County's facilities has been substantially understated for over a decade by deferring needed maintenance. We disagree partially with this finding. As the amount of funding for maintenance had remained flat since the economic downturn of 2006, unfunded maintenance projects have been identified and valued in the Annual Capital lmprovement Plan (ClP). However, competing needs of critical nature frequently occur in a limited budget.
Related Recommendations (1)
R6
Page 5
The County Administrator and the General Services Director assign resources such as sufficient staffing for determining and setting deferred maintenance valuations by December 3t,2019. IF t2l Response: The recommendotion requires further onolysis. General Services Facilities Development and Management includes staffwho are licensed architects, engineers and general contractors that have extensive experience in cost estimating. Because General Service's staffare 100% cost recoverable, other projects have been prioritized over updating deferred maintenance valuations. Further analysis will be needed to determine how many staff hours would be required to update and maintain deferred maintenance valuations, and how that would impact other projects. Best management practice is to reassess facility conditions every five years. As a part of that process, outstanding deferred maintenance items will be re-estimated. General Services will work with the County Administrator to continue to evaluate resource needs and report back to the Board of Supervisors byJune 30,2O2O as part of the FY 2O2O-27 Capital lmprovement Program (ClP) recommendations and Annual Budget. OTHER COMMENTS: , paragraph 4: e The May 2018 report was not prepared by a consultant but by County staff, collating data from past sources and documenting trends in maintenance of county facilities. Respectfully, Or,rfr* Caroline Judy Director, General Services Department County of Sonoma
F7
Page 1
Facility maintenance is persistently underfunded, at levels substantially below recommended industry sta nda rds.
No recommendations for this finding
F8
Page 2
Deferred maintenance costs are continuing to accumulate to an extent that they constitute a major reduction in asset value not reported in the County's financial statements. We partially disagree with this finding. The County is required to comply with Government Accounting Standards Board (GASB) Statement No. 42, Accounting and Financial Reporting for lmpairment of Copitol Assets and for lnsuronce Recoveries. ln order to record an impairment loss, GASB 42 requires that the impairment be significant, unexpected and permanent, and also result in a decline in service utility. Following the provisions of GASB 42, an outdated or decrepit office building that is still used as an office is not impaired, because there has been no decline in service utility. However, several financial and property asset management publications indicate deferred maintenance as a liability. For instance Standard & Poor's rate the debt issuances of thousands of infrastructure owners and view high deferred maintenance levels as a credit weakness (Deferrino Am e ri co's I nf rostr u ctu re Corries Risk. Anne SeIting, lnfrastructure Finonce Outlook, S&P Globol Rotings, Q2 2018 Review)
No recommendations for this finding
F9
Page 1
Deferred maintenance contributes to more rapid deterioration of facilities and therefore, in the long run, to higher facilities costs.
No recommendations for this finding
F10
Page 3
Public and employee safety are adversely affected by deteriorating building conditions brought about by deferred maintenance. We disagree partially with this finding. Building conditions would not be the only factor in public and employee safety. However, health and safety of employees and the public can be compromised by deteriorating building conditions such as a leaking roof that could be subject to mold, bacteria and fungus. Another example could include worn finishes which would only appear as aesthetic. However, wear on finishes such as carpet could be worn to the extent where frayed areas or unraveling seams become a tripping hazard as noted in some areas of County buildings.
No recommendations for this finding
F11
Page 3
The current condition of facilities creates a difficult environment for making future plans and decisions about used and new facilities. We disagree partially with this finding. While the current condition of existing aging buildings is a factor, the lack of vacant space, the costs of renovating facilities constructed in an era where asbestos and lead based paints were in common use, and the lack of financial resources to implement desired new uses and tenant improvements are far more significant factors impacting decision making.
No recommendations for this finding
F12
Page 3
The County lacks in-house capabilities for determining and setting deferred maintenance valuations. We disagree partially with this finding. General Services Facilities Development and Management includes staff who are licensed architects, engineers and general contractors that have extensive experience in cost estimating. The department contracted with VFA because the extensive scope of work would have detracted from staff resources committed to other projects. Staff effort must be fully reimbursable and as such it was more efficient to contract the effort to VFA.
No recommendations for this finding
F13
Page 1
Capital assets that suffer from significant accumulations of deferred maintenance may be impaired assets for accounting purposes. We disagree wholly or partially with these finding(s):
No recommendations for this finding
F14
Page 3
Board of Supervisors has not been able to fully implement the Capital lmprovement Plan due to appropriation of funding to other departments. We partially disagree with this finding. The Annual Capital lmprovement Plan (ClP) is a planning document used to identify capital needs and prioritize funding based on the criteria set forth in the Sonoma County Administrative Policy 5-2, Policy for Copital Project ond Asset Responsibility. New projects are added to the CIP each year, and it is not commonplace for all projects to be fully funded. An updated evaluation and inventory of deferred maintenance needs has not been completed since 2014 because of competing priorities. However, as it stands now, the County faces a $ZSg mlllion backlog of deferred maintenance on the County government center campus, and staff have determined it to be more cost efficient to build a new campus than to repair the existingbuilding. TheBoardofSupervisorshavedirectedstafftomoveforwardinexploringoptionsfor replacing existing County campus buildings or relocating to a new location. ln light of this, only critical investments on the County campus have been prioritized for funding.
No recommendations for this finding