Strategies to Renew Federal Facilities (2023) / Chapter Skim
Currently Skimming:
6 Budgeting: Impactful Resource Decision Making
6 Budgeting: Impactful Resource Decision Making
Pages 84-102
The Chapter Skim interface presents what we've algorithmically identified as the most significant single chunk of text within every page in the chapter.
Select key terms on the right to highlight them within pages of the chapter.
From page 84... ...
Federal agencies often view funding for facility repair, renewal, and disposal as an expense that they can defer with little or no consequences, and thus treat it as a lower priority than funding the operations of a business or program. This presents a specific and very important use case for federal facility renewal strategies: that is, how to develop budgeting strategies that can coordinate 84
|
From page 85... ...
This chapter establishes a basis and understanding for how to view federal facility renewal strategies through this lens in a way directly applicable to current and evolving policy. CAPITAL BUDGETS VERSUS OPERATING BUDGETS One specific hurdle that a federal facility renewal strategy must overcome is reconciling operating budgets with capital budgets.
|
From page 86... ...
. Federal Budget Formulation Process Reforms Despite volumes of guidance to the agencies on asset planning and management as described in Chapter 2, agencies still find it difficult to maintain accurate asset inventories or effective asset management systems.
|
From page 87... ...
The goal of budgeting is to optimize the allocation of constrained resources to maximize the return while ensuring that it can provide required functions, which is facilitated through applying the operational readiness and performance–budget integration principles also found in Chapter 3. Notwithstanding these investments, federal agencies remain challenged by the need to balance near-term budgetary funding constraints with the long-term capital investment requirements in the real property portfolio and adequately manage the risk this creates for the operating program budget.
|
From page 88... ...
Appendix J of the circular addresses "Principles of Budgeting for Asset Acquisitions," and Appendix K provides selected OMB "Guidance and Other References Regarding Capital Assets." Additionally Circular A-11's Supplement -- Capital Programming Guide recommends the following: Agencies must have a disciplined capital programming process that addresses project prioritization between new assets and maintenance of existing assets, risk management and cost estimating to improve the accuracy of cost, schedule and performance provided to management, and the other difficult challenges
|
From page 89... ...
M-20-03 offers detailed guidance for agencies to implement the Capital Programming Guide. M-20-10 is an "Addendum to the National Strategy for the Efficient Use of Real Property." The memorandum outlines eight actions that agencies should take to improve real property management.
|
From page 90... ...
using the Federal Buildings Fund. Aggregation of Financing for Capital Assets Capital investments occur episodically, as opposed to every year, and can create spikes in spending relative to the budget levels of annually recurring operating costs.
|
From page 91... ...
55000 standards in support of OMB Circular A-11 and A-123 policy and guidance would provide needed assurances that capital investment strategies are harmonized with agency facility operating strategies, as documented in agency real property capital plans submitted in justification of agency budgets. Furthermore, application of ISO 55000 would require agencies to document not only budget justification, but also risk mitigation strategies and plans for unfunded requirements.
|
From page 92... ...
Accumulating these payments in a fund allows property owners and managers to charge users the full facilities cost and allocate funds for major capital projects, reducing spikes in spending year to year. Facility users should include payments to the fund in their base budget and treat them like any current rents or other operating costs.
|
From page 93... ...
Or, the 12 individual appropriations subcommittees could include language in their respective appropriations bills requiring the FSGG subcommittee to appropriate all rent payments paid by those subcommittees for authorized space and services or return the difference to the agencies. Another approach would be for the Budget Committees, CBO, and OMB to adopt a budget enforcement rule that would not give the appropriations committee the offsetting credit for any rent collected by GSA that is not appropriated to be spent for the authorized purposes of providing space and related services.
|
From page 94... ...
would help agencies finance the cost of major acquisi tions or capital investments and spread the cost over time, making it easier to fund facility renewal in constrained annual budgets.
|
From page 95... ...
The next section discusses these partnerships. PUBLIC–PRIVATE PARTNERSHIPS A PPP -- a model for a public infrastructure project, such as a new telecommunications system, airport, or power plant -- offers governments another approach to asset management that considers all key stakeholder needs, such as a public desiring that the federal government make efficient and effective use of its real property assets (Hanna 2022)
|
From page 96... ...
. The private-sector partner, under contract, operates a publicly owned asset for a specific period of time.
|
From page 97... ...
Circular A-11, Appendix B -- Budgetary Treatment of Lease-Purchases and Leases of Capital Assets differentiates operating leases (the temporary use of an asset that is readily available in the private sector) from capital leases, leasepurchases, and construction or acquisitions.
|
From page 98... ...
Agencies must proactively seek to renew their facility inventories in order to avoid asset portfolios that are too large or antiquated and cannot be properly maintained, repaired, or replaced with available resources. Recognizing and accounting for the financial commitment necessary to manage a portfolio is a function of federal facility renewal strategies.
|
From page 99... ...
The Property Act requires agencies acquiring excess property to pay the agency disposing of the property full fair market value. If funds are not available or there are extenuating circumstances, OMB may waive reimbursement.
|
From page 100... ...
As mentioned, OMB Circular A-11, Appendix B -- Budgetary Treatment of Lease-Purchases and Leases of Capital Assets differentiates operating leases (the temporary use of an asset that is readily available in the private sector) from capital leases, lease-purchases, and construction or acquisitions.
|
From page 101... ...
Leasing affords the government flexibility to reduce, move, or change the location of an activity, flexibility that is not available in government-owned space. Lease costs for operating leases are spread throughout the lease and are easier to include in the budget than the up-front costs of significant capital investments.
|
From page 102... ...
, it tells us which buildings we neglected.2 CONCLUSION This chapter identified funding strategies that could be employed by federal agencies through facility renewal strategies for improving the amount of funding received for facility renewal. The next chapter will identify communication strategies necessary to ensure that these funding opportunities are realized.
|
Key Terms
This material may be derived from roughly machine-read images, and so is provided only to facilitate research.
More
information on Chapter Skim is available.