Committee hears that program rules are locking up capital outlay funds, hampering maintenance work

An agency official told the House Ways and Means Committee that $25 million allocated in the first year of a new capital program could not be spent because rules require full project sums to be reserved up front.

"We got $25,000,000 the first year," the official said, adding that for a representative $5,000,000 project the department would need only about 10% for design in the first year but was being forced to take the entire $5,000,000 and hold it in a savings account.

Committee members pressed the witness on the consequences. One member asked whether third-party evaluators gave special deference to deferred-maintenance needs; the agency official pointed to an LSU A&M assessment that identified about $1,100,000,000 in backlog and said projects are listed separately rather than bundled.

Panelists and lawmakers said the timing constraints built into the current protocol — which disallow using state funds for design without full appropriation — are especially problematic for maintenance projects such as HVAC or air-handler replacements, where design work will not be wasted if construction funding arrives later.

"Those plans will never be wasted on these deferred maintenance type projects," a committee member said, arguing the rule should be relaxed for long-lived equipment and repairs.

Officials described steps already taken to speed procurement, including passage of a job-order contracting law and proposals for indefinite-delivery/indefinite-quantity (IDIQ) agreements for architects. The agency official said LSU would implement a job-order contracting program approved by its board in April and that an IDIQ approach for architectural services was under consideration.

Lawmakers also asked for clearer distinctions among three funding buckets discussed during the hearing: HB 2 capital outlay projects, Act 35 bond financing for the community-technical college system (which requires a roughly 12.5% local match), and a deferred-maintenance cash bucket. Officials said the deferred-maintenance program has a capacity of $1 billion but had $100 million placed in P5 this session and that roughly $82 million of that cash remained unspent.

Members asked FP&C staff to return to the committee with homework: a list of dormant P1 projects, projects with cash sitting on completed work, and a readiness assessment distinguishing shovel-ready projects from those needing further design work. The committee sought those details to determine whether P1 cash lines could be trimmed or reallocated and to identify rules changes that would permit work to proceed without locking dollars for an entire multi-year project.

The committee closed the discussion without adopting a rule change; staff were directed to report back with the requested lists and an analysis of whether additional P5 commitments could satisfy federal-match requirements in some cases.