Capital Budgeting in the States
November 1999
National Association of State Budget Officers
THE NATIONAL ASSOCIATION OF STATE BUDGET OFFICERS,
founded in 1945, is the principal organization for the
professional development of its members; for improving the
capabilities of staff and information available to state budget
officers; and for the development of the national fiscal and
executive management policies of the National Governors’
Association. It is a self-governing affiliate of the National
Governor’s’ Association.
The National Association of State
Budget Officers is composed of the heads of state finance
departments, the states’ chief budget officers, and their
deputies.
All other state budget office staff are associate
members.
Association membership is organized into four
standing committees: Health, Human Services, and Justice;
Financial Management, Systems, and Data Reporting; Tax,
Commerce, Physical Resources, and Transportation; and
Training, Education, and Human Resources Management.
19991999-00 Executive Committee
Sheila Peterson, North Dakota, President
Robert Powell, North Carolina, President-Elect
Bob Bittenbender, Pennsylvania, Past President
Mark Brown, Indiana, Member-at-Large
Bill Newton, Alabama, Member-at-Large
John Noonan, Connecticut, Eastern Regional Director
Scott Pattison, Virginia, Southern Regional Director
Peggy Inginson, Minnesota, Midwestern Regional Director
Maureen Morris, Washington, Western Regional Director
Gerry Oligmueller, Nebraska, Health, Human Services, and
Justice
Theresa McHugh, Oregon, Financial Management, Systems, and
Data Reporting
John R. Nicholas, Jr., Tax, Commerce, Physical Resources, and
Transportation
Tom Betlach, Training, Education, and Human Resources
Management
Gloria Timmer, Executive Director
Copyright © November 1999 by the National Association of State
Budget
Officers.
All Rights Reserved.
National Association of State Budget Officers
States
Page ii
Capital Budgeting in the
444 North Capitol Street, NW, Suite 642
Washington, DC 20001-1511
Tel: (202) 624-5382 Fax: (202) 624-7745
States
Page iii
Capital Budgeting in the
Table of Contents
Acknowledgments _____________________________________________________________________ v
INTRODUCTION AND SUMMARY
PRACTICES
ES IN CAPITAL BUDGET
BUDGETING
ING __________ 6
SUMMARY OF GOOD PRACTIC
Defining Capital Expenditures and Protecting Maintenance Funds ______________________ 8
Table 2: Capital Versus Operating Budgets _______________________________________________________11
Table 3: Treatment of Maintenance _____________________________________________________________12
Table 4: Maintaining Facilities__________________________________________________________________13
Table 5: Rating Maintenance Projects ___________________________________________________________14
Organization of the Capital Planning Process __________________________________________ 15
Table 6: Organization of the Capital Budget ______________________________________________________17
Table 7: Organization of the Capital Budget (part 2) _______________________________________________19
Table 9: Role of Central Agency in Overseeing Projects_____________________________________________21
Table 10: Capital Budgeting Coordinated with Operating ___________________________________________22
Table 11: Recent Changes in Capital Planning Processes ____________________________________________23
Capital Project Selection, Cost Estimating, and Project Tracking _______________________ 24
Table 12: Setting Project Priorities ______________________________________________________________26
Table 13: Project Characteristics________________________________________________________________28
Table 14: Project Objectives Met Through Project Requests_________________________________________29
Table 15: Estimating Project Cost _______________________________________________________________30
Table 16: Cost Estimating Methods What Are The Methods Used To Estimate Costs? ___________________31
Table 18: Eligible Building Project Costs _________________________________________________________33
Table 19: Formal Reporting System To Track Capital Projects ______________________________________35
Table 20: Unexpected Portions of Appropriations __________________________________________________36
Capital Financing _____________________________________________________________________ 37
Table 21: Project Financing ____________________________________________________________________39
Table 22: Project Financing: Part 2______________________________________________________________41
Table 23: Debt Service_________________________________________________________________________42
Table 24: Debt Limits _________________________________________________________________________43
Table 25: Use of Bonds Versus Cash _____________________________________________________________44
Table 26: Treatment of Long-term Leases ________________________________________________________45
Table 27: Alternative Financing_________________________________________________________________46
Asset Management ___________________________________________________________________ 47
States
Page iv
Capital Budgeting in the
Table of Contents (Continued)
Table 28: Asset Management ___________________________________________________________________48
Table 29: Asset Management: Part 2_____________________________________________________________49
Table 30: Method To Inventory and Value Capital Assets ___________________________________________50
Appendix Table A: Size of Capital Budget ________________________________________________________51
Appendix Table B: Bond Ratings for General Obligational Debt _____________________________________52
States
Page v
Capital Budgeting in the
Acknowledgments
This project reflects the time, effort, and commitment from
members of the National Association of State Budget Officers
(NASBO). States took the effort to complete a questionnaire on
capital budgeting and to contribute additional information
about their capital budgeting practices.
This report is an
update of NASBO’s 1997 capital budgeting survey. Patrick
Casados served as staff analyst for this project and drafted the
report.
Page v
Capital Budgeting in the
States
INTRODUCTION AND SUMMARY
SUMMARY OF GOOD
PRACTICES IN CAPITAL BUDGETING
Introduction
Introduction
Although not always in the public eye, states’ decisions on what
to build, how to finance a project, and how to maintain existing
assets have implications for their long-range fiscal health. This
report provides information on how states approach capital
budgeting by covering topics such as preserving facilities,
managing the process, setting priorities, and financing projects.
The comparative information allows states to review their
processes in the context of a national perspective. Although
this report does not result in a "model capital process," good
practices applicable to all states are highlighted throughout this
report.
States have modified their processes since the last NASBO
report in 1997. These changes have emphasized planning over
a longer time horizon, developing formal mechanisms to set
aside funds for preserving existing facilities, increasing
automation of the process, and linking capital planning
decisions to statewide performance goals and strategic plans.
Highlights of a good capital budgeting process are summarized
below. These practices are described in further detail in each
section of the report.
Good Practices
In Capital
Budgeting
•
•
•
•
•
•
•
•
Establish a clear definition of capital expenditures.
Define maintenance expenditures and specify funding of
maintenance by formula or statute.
Develop a system to rate maintenance projects.
Include specific operating costs for each capital project over
a multi-year period.
Ensure that effective legislative involvement occurs
throughout the capital budgeting process.
Strengthen the review of the years beyond the budget year in
long-range capital plans.
Maintain centralized oversight for capital projects.
Identify the criteria used in selecting capital projects.
Page 6
Capital Budgeting in the States
•
•
•
•
•
•
•
Define all program outcomes for capital investments and
link them to overall state goals.
Evaluate cost estimating methods to measure their validity.
Establish a tracking system to keep projects on schedule and
within budget.
Develop a clear debt policy and integrate capital planning
with debt affordability.
Review cost-benefit comparisons for private sector
participation in capital projects.
Review long-term leases.
Maintain an updated inventory system of capital assets.
Page 7
Capital Budgeting in the States
Section One:
Defining Capital
Expenditures
and Protecting
Maintenance
Funds:
Funds: Tables
1-5
States define the types of expenditures allowed in capital
budgets to include such items as construction, improvements,
land acquisition, site improvements, major renovations, and
equipment. Definitions may also specify the anticipated useful
life of a project and a minimum level of expenditure, with
$25,000 being the most frequent minimum for capital budget
expenditures (see Tables 1 and 2).
The majority of states differentiate between routine
maintenance as an operating expenditure and deferred or major
maintenance as a capital expenditure.
In their quest to
preserve facilities, several states have formalized their
processes for setting aside maintenance funds. Arizona uses a
building renewal formula that is based on the building’s value,
age, and replacement cost. Other examples include Missouri’s
statutory reserve fund (transfers 1 percent of the previous
year’s revenue collections) for controlled maintenance,
Kentucky’s use of investment income on certain funds,
Minnesota’s pool of accounts established specifically for asset
preservation and repairs, North Carolina’s use of its credit
balance to maintain general fund supported buildings, Puerto
Rico’s maintenance fund, and Utah’s required funding for
replacement cost (see Tables 3 and 4).
As part of the effort to preserve facilities, some states have
developed a system to rate maintenance projects. These
rankings vary in terms of the number and type of criteria.
Maine, for example, used four criteria (mandatory, essential,
desirable, and deferrable), while Maryland categorizes projects
into nine separate criteria. Florida has a three-year facility
assessment that provides a priority listing of needed
corrections, Illinois rates projects by type, North Dakota uses a
formula to calculate the cost of adequately maintaining
buildings, and Washington has a backlog reduction plan (see
Table 5).
GOOD PRACTICES
•
Establish a clear definition
definition of capital expenditures. In
developing or refining capital expenditure definitions, states
should consider the implications of minimum requirements
and types of expenditures such as equipment and planning
studies. Certain activities, such as leasing, may fall within
the operating budget though be viewed as debt by rating
agencies in their credit analysis.
•
Define maintenance expenditures and specify funding of
maintenance by formula or statute. Maintenance funds are
often sacrificed for budget balancing purposes. A more
formal approach either in statute or a widely accepted
Page 8
Capital Budgeting in the States
formula helps to elevate decisions to preserve existing
facilities with funding for new projects.
•
Develop a system to rate maintenance projects. This would
assist in establishing priorities for preserving facilities and
minimize deferred maintenance.
Page 9
Capital Budgeting in the States
Table 1
Defining Capital Expenditures
State
How Do You Define Capital Expenditures?
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Renovations, repairs, major maintenance, new construction, land purchases, equipment with an anticipated life exceeding 1 year.
Asset with an anticipated life exceeding one year and a cost exceeding $25,000.
Building renewal, land acquisition, infrastructure, and capital projects.
Any assets costing $500 or more with a useful life of two years or more.
Facilities and land acquisition, development, and improvements. Includes related planning and fixed equipment costs.
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Real property, including additions, replacements, major repairs, and renovations which extends useful life.
Purchase of land, construction of new facility, replacement/major renovations, site improvement, and equipment.
Acquisition and development of land, the design and construction of new facilities, renovations or additions of existing facilities.
Construction, remodeling, and maintenance of buildings and other structures.
Repair, maintenance, renovation, remodeling, rehabilitation of existing facilities; construction of new facilities.
Construction, rehabilitation, repair, purchase and sale of land, equipment and grants to municipalities.
Construction, renovation, or improvement of buildings or grounds exceeding $50,000.
New construction, remodeling, razing, and rehabilitation and repair.
Capital construction above $400,000 and major equipment above $100,000.
Acquiring land, buildings, equipment or for permanent improvement.
Renovations, repairs, major maintenance, new construction, land purchases and equipment over $3,000.
Acquisitions, design, construction & equipment with a 15 year life, excluding vehicles and supplies an projects under $100,000.
New facilities/infrastructure and major renovations thereof and select major information technology initiatives
Planning, acquisition, construction of buildings and equipment and remodeling, repair.
Acquisition, pre-design, design, construction, demolition, original furnishings and equipment, renovations, and major repair.
Includes planning, design, land/building acquisition, demolition, new construction, furnishings, equipment.
Includes construction, acquisition of real property, demolition, restoration, rehabilitation, equipment purchase.
Building and construction defined in statute.
Capital construction is new projects and changes or renovations to existing facilities that transcends routine maintenance.
Planning, design, land/bldg. acquisition, demolition, new const., furnishings, equip.; remodeling, reconstruction and maint.
Assets with useful life of 5 years and cost exceeding $50,000.
Acquisition of land, construction, repairs, equipment above $50,000, lease purchase agreements.
Renovation and repairs, new construction, land acquisition, vehicles, and equipment.
Acquisition, construction, demolition of fixed asset, major repair/renovation, related equipment, and preliminary studies.
Renovations, major repairs, deferred maintenance, new construction, land, and major equipment exceeding $100,000.
Expenditures for new construction, additions, renovations, restorations, building demolitions, infrastructure over $1,500.
Ohio
Oklahoma
Renovations, new construction, land purchases, and equipment.
Purchase of land and buildings, construction or major repair, major purchase of equipment. Long-Range Planning Commission
reviews purchases above $25,000.
Improvements which prolong the life or add value to the property; tied to accounting capitalization principles.
Const., renov., improv., equip., furnish., land acq.. Est. life of 5 years or more depending on category & cost of $100,000 or more.
Construction, renovation, repair, land acquisition, equipment and rehabilitation in excess of $50,000.
Construction, renovation, repairs, demolition, and acquisitions over $100,000 with some exceptions.
Assets with useful life of one year and cost exceeding $5,000
Renovation, maintenance of certain size, additions, new facilities.
Renovation, major repairs, new construction, land, equipment purchases.
Acquisition, construction, and improvement of fixed public assets.
New construction, land acquisition, major maintenance and repairs above $25,000.
Real property acquisition, improvements of $250,000+ ,new construction of $250,000+ ,stand alone equipment.
Design, construction, renovation, and acquisition of long-term assets.
Acquisition, construction, renovation over $100,000. Equipment over $50,000.
Includes land, buildings, facilities, equipment, as well as remodeling, reconstruction, and maintenance.
New construction, acquisition of land, reconstruction, and major improvements above $10,000 for 10 years.
Infrastructure, renovation, restoration, new construction, land purchased, installation, and acquisition of certain equipment.
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Puerto Rico
Purchase of land; purchase, construction or demolition of buildings; purchase and installation of equipment.
Expenditures that result in acquisition or additions to fixed assets.
Major capital projects are those that are $250,000 or more and have a life of 20 years; minor capital projects are less than
$250,000 and have at least 10 years' life.
Page 10
Capital Budgeting in the States
Table 2
Capital Versus O perating Budgets
State
Capital Planning in
Capital Budget
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
D elaw are
Florida
Georgia
H aw aii
Idaho
Illinois
Indiana
Iow a
Kansas
Kentucky
Louisiana
M aine
M aryland
M assachusetts
M ichigan
M innesota
M ississippi
M issouri
M ontana
N ebraska
N evada
N ew H ampshire
N ew Jersey
N ew M exico
N ew York
N orth Carolina
N orth D akota
O hio
O klahoma
O regon
Pennsylvania
Rhode Island
South Carolina
South D akota
Tennessee
Texas
U tah
Vermont
Virginia
W ashington
W est Virginia
W isconsin
W yoming
Puerto Rico
No
Yes
No
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
No
Yes
Yes
Yes
Yes
No
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes
Yes/N o
Yes
Yes
Yes
Yes
Yes
Total
Yes= 42
M inimum Expenditure For Capital Budget
No
$25,000
No
$500
No
O ver capital outlay limit
No
No
No
No
No
$30,000
$25,000 (bondable project)
No
No
No
$400,000
$50,000
No
$100,000
$25,000
No
No
$150,000
$25,000
$25,000
No
> than $25,000 or structured in nature
$50,000
$50,000
$100,000
No
$100,000
$1,500
No
$25,000
Construction $500,000
$100,000 (bonds), $300,000 (Current Revenue)
Yes ($50,000 min. asset protection)
$25,000
No
M aintenance $100,000
No
$100,000
$25,000
No
$25,000
Equipment $50,000/O ther $100,000
$100,000 (no min. for leased equip.)
$10,000
No
Yes= 30
Page 11
Capital Budgeting in the States
Table 3
Treatment of Maintenance
State
How Is Maintenance Treated In The Capital Budget?
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Renovation and repair are capital items; maintenance is operating.
Renovation, repair, deferred maintenance are capital items; general maintenance is operating.
Routine maintenance excluded. Building renewal funds appropriated by formula in statute.
Treated like any other request.
In operating budget.
Deferred maintenance in capital; routine maintenance in operating.
In operating budget.
Deferred maintenance, routine maintenance and repairs are funded in the operating budget.
An annual inventory of state-owned buildings is conducted to determine maintenance needs.
Included if repair is relatively substantial cost and not recurring on a annual basis.
In operating budget.
Projects over $30,000 are included.
In operating budget.
In operating budget.
Deferred maintenance in capital; routine and ongoing maintenance is in operating.
Largely financed from dedicated funds.
Minor maintenance below $400,000 funded from pool of state funds.
In operating budget.
Included in operating budget.
Included if over $100,000, 15 year life.
In operating budget.
Lump sum maintenance appropriation.
Major maintenance projects above $25,000 in capital budget; recurring maintenance in operating budget.
Maintenance projects generally not recommended.
Ongoing maintenance to preserve a facility in operating; other maintenance and repair above minimum in capital.
Major maintenance included.
Renovation, repair, and deferred maintenance and deferred repair are capital items; maintenance is operating.
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Major maintenance is included.
Deferred maintenance in capital; usual maintenance in operating budget.
Maintenance in operating; deferred maintenance above $50,000 in capital.
In operating budget. In future, may plan to fund preventive maintenance in capital.
Ongoing maintenance in operating budget, capital improvements and major maintenance in capital budget.
In operating budget.
In operating budget.
Deferred maintenance in capital; routine maintenance in operating.
Routine maintenance is in operating budget. Major maintenance is in capital budget.
Major maintenance projects in capital; routine maintenance in operating.
In operating budget.
Major maintenance (deferred maintenance) in capital budget; routine maintenance in operating budget.
According to need.
In operating budget.
Major maintenance above $100,000 included.
In operating budget.
General maintenance operating budget. Capital improvements funded in capital budget and classified as major
alterations, repairs, or improve. costing less than $1 million. Maintenance costs shown in new building requests.
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Puerto Rico
Major maintenance and repair in capital; general maintenance in operating budget.
Specific maintenance reserve appropriation provided in capital budget. Routine maintenance in operating budget.
Renovation and major repairs are capital items; maintenance is operating.
In operating budget.
Major maintenance in capital budget. Recurring maintenance in operating budget.
In operating budget.
Public corporations have a renewal and replacement fund established by respective consulting engineers.
Page 12
Capital Budgeting in the States
Table 4
M aintaining Facilities
State
D o You H ave A M echanism For Setting Aside Funds To Preserve Facilities?
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
D elaw are
Florida
Georgia
H aw aii
Idaho
Illinois
Indiana
Iow a
Kansas
Kentucky
Louisiana
M aine
M aryland
Yes
Yes
Yes
Yes
No
Yes
No
Yes
Yes
No
Yes
No
Yes
No
Yes
No
Yes
No
No
Yes
M assachusetts
M ichigan
M innesota
M ississippi
M issouri
M ontana
N ebraska
N evada
Yes
Yes
Yes
No
Yes
Yes
Yes
No
N ew H ampshire
N ew Jersey
N ew M exico
N ew York
N orth Carolina
N orth D akota
O hio
O klahoma
O regon
Pennsylvania
Rhode Island
South Carolina
South D akota
Tennessee
Texas
U tah
No
Yes
Yes
Yes
Yes
No
No
Yes
Yes
Yes
Yes
No
Vermont
Virginia
W ashington
No
Yes
W est Virginia
W isconsin
W yoming
Puerto Rico
No
Yes
No
Yes
Yes
Yes
Earmarked funds.
In process; facilities rental structure of funds is being implemented.
Building renew al - Sherman-D ergis formula based on age and replacement cost.
Specific requests in the normal process.
O ffice building rents charged to agencies include O & M component
Statutory transfer from general fund and controlled maintenance trust fund.
Annual total of $23.6 million for statew ide deferred minor capital improvements & equipment program.
Capital improvement program contains maintenance planning and budgeting.
O perating budget includes funds for repairs and maintenance.
Amount set aside at beginning of budget development.
Rebuild Iow a Infrastructure Fund, gaming receipt revenues over a set amount, interest from cash reserves.
N o formal process; how ever, every year funds are made available for preserving facilities.
Investment income on certain funds in state accounting system.
Capital budget includes a fund for capital facilities renew al. O perating budget includes a statew ide
fund for critical maintenance.
Initial stages of developing program to set aside a percentage of select operating accounts for maintenance.
Lump sum appropriations made to the D epartment of M anagement and Budget.
Various pooled accounts established specifically for asset preservation and repairs.
Constitutional Facilities M aintenance Reserve Fund sets aside 1% prev. year' s net gen. revenue collections.
1979 Task force, w /cigarette funds for fire/life safety, deferred repair, energy conserv. handicap projects.
N o formal process; funds made available annually for bldg. preservation; must be included in biannual Capital
Improvement Project list.
Preservation is second only to life safety in funding criteria hierarchy.
Building use fees based on sq. footage occupancy; requires yearly appropriation. N ot Currently funded.
Capital budget includes separate appropriations for preservation of facilities.
3 percent of replacement cost of general fund supported buildings reserved from credit balance.
O perating budget includes funds for repairs and maintenance.
Routine maintenance/repairs are continued as part of base operating budget.
Renovations changing facility use/function included in capital budget/maint. funded in operating budget.
O ngoing Asset Protection program created by allocating a share of reserve funds.
Small amount of base funding for maintenance and repair projects
Facilities revolving fund. Agencies pay rent, maintenance funded from reserves and debt.
Statute requires that annual capital improvement funding equal at least 0.9 percent of the estimated replacement
cost of all state facilities.
M ust compete for maintenance and deferred maintenance funding.
Agencies receive maintenance reserve funding in a separate capital project earmarked for maintenance.
Requires agencies to distinguish betw een programmatic projects and preservation of facilities.
Assess surcharge based on square feet of occupancy.
Funds included in capital budget on a biennial basis.
Extraordinary maintenance fund, at least 5 percent of the capital improvement program.
Page 13
Capital Budgeting in the States
Table 5
Rating M aintenance Projects
State
D o You H ave A System to Rate M aintenance Projects?
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
D elaw are
No
Y/N
Yes
Yes
No
No
No
Yes
Florida
Georgia
H aw aii
Idaho
Illinois
Yes
No
Yes
No
Yes
Indiana
Iow a
Yes
Yes
Kansas
Kentucky
Louisiana
M aine
M aryland
M assachusetts
M ichigan
M innesota
M ississippi
M issouri
M ontana
N ebraska
N evada
N ew H ampshire
N ew Jersey
N ew M exico
N ew York
N orth Carolina
N orth D akota
O hio
O klahoma
O regon
Pennsylvania
Rhode Island
No
No
No
Yes
Four categories: mandatory, essential, desirable, and deferrable.
Yes
All projects are placed into one of nine priority categories.
Yes
O versight agency, Capital M anagement /M aintenance D ept. evaluates, makes recommendations.
Yes
U tilizing a computerized maintenance system.
Y/N
Varies; D ept. of Administration evaluates the condition and suitability of state buildings.
No
Yes
M aintenance projects are evaluated by need and ranked in priority order by the department.
Yes
Site inspections used to assess needs.
No
U se data to help make recommendations on funding levels for the task force.
No
Each department provides a ranking.
N o response
Yes
Projects are rated at the institutional level using a maintenance management system.
No
No
Agencies identify/prioritize maintenance projects base on asset condition and 5-year needs plan.
Yes
Priorities based on needs analysis.
Yes
U se the Sherman-D ergis formula and evaluation by state architect.
No
No
No
Yes
Biennial survey using urgency scale. W ork is done through agency operating budgets.
Yes
Capital D evelopment Planning and O versight Committee, chaired by Budget O fficer, established rating system
based on various criteria including life safety, legal liability and safety concerns.
South Carolina
South D akota
Tennessee
Texas
U tah
No
Yes
Projects are rated on an annual basis according to five criteria.
Yes
Budget analysts and project managers rank w ith quantitative and subjective methods.
N o response
Priorities based on needs analysis conducted by D ivision of Facilities Construction and M aintenance and
Yes
approved by the Building Board.
Vermont
Virginia
W ashington
W est Virginia
W isconsin
W yoming
Puerto Rico
No
Yes
Yes
No
Yes
Yes
No
Criteria varies by department.
U niversities have developed a cost matrix, but other state agencies do not have a rating system.
Administered by the State Building Services Agency.
Average 10 percent of all needs to total budget.
Rate by type of project, including life/safety code, mechanical/environmental comfort,
efficiencies, cosmetic.
A three-year facility assessment provides a prioritized deficiency corrections program.
Agencies identify and prioritize needs.
For these projects funded by the capital budget.
Rate by kind of project including protection of life and safety, protection of infrastructure and assets, and cost
savings.
Agencies identify and prioritize needs during budget development.
Each department provides a ranking. Governor' s recommendation created a citizen Infrastructure Board w hich
w ill prioritize all projects except higher education.
Cost per square foot frequently used to estimate budgets.
Agencies identify and prioritize needs during budget development. Roof repairs are top priority.
Agencies prepare preservation backlog reduction plans.
Rated by facilities, utilities, health and safety and energy categories, priority of maintenance need.
A 5-year facilities assessment identifies facility deficiencies.
Page 14
Capital Budgeting in the States
Section Two:
Organization of
the Capital
Planning
Process:
Process: Tables
6-11
A capital budget begins with the state budget office preparing
guidelines, forms, and procedures that are provided to
individual state agencies to complete. Some states also allow
non-profit agencies, boards and commissions, public
authorities, and elected officials to make requests for capital
projects. States are about evenly divided between having a
separate capital document and combining capital and operating
expenditures in one document. The types of documents vary
across states with project descriptions, multi-year planning
documents, and portions of the operating budget serving as
capital documents (see Tables 6 and 7).
Capital planning in most states is a multi-year process ranging
from three to ten years, with five years the most frequent timespan for capital plans. Often the budget office provides an
overall coordinating role for the long-range plan. Although
many states have long-range plans, estimates for the out-year
costs usually only provide a general trend for the project and
are not as detailed as the current year estimate.
One of the elements that makes capital budgets work includes a
clear understanding of the philosophy and the principles that
are the framework of a capital budget.
Without a clear
understanding of the principles, the process becomes
haphazard and much more political. Thorough documentation,
needs analysis and planning are a must. This includes requiring
agencies to document the need for each project.
The states which are most satisfied with their capital budgeting
process use some way to keep their legislatures informed
about the capital budget needs of the state. Some states have a
formal committee made up of individuals who are in charge of
financing projects, supervising construction of projects, or
budgeting for the state. Committees may include both the
executive branch and legislative branch members (see Table 7).
States that have a committee in place report that it lends
credibility to the capital budget process, it tends to take politics
out of the decision making process, and that it is perceived as a
fair and equitable approach for setting capital priorities for the
state. In states without a formal committee or commission to
evaluate the capital budget, the budget office or the person in
charge of the capital budget keeps key legislators informed.
Page 15
Capital Budgeting in the States
Central agencies that oversee capital projects also provide
statewide coordination and review of capital projects. These
central state agencies often develop budget requests, define
and manage projects, and prepare cost, schedule, and technical
reviews (see Tables 8 and 9).
The coordination of the capital and operating budget is a
significant feature of the capital budgeting process.
Coordination occurs in many states by including the impact on
the operating budget as part of every capital request. Since the
operating budget does not span as many years as the capital
plan, states need to integrate the long-term impact of capital
projects with shorter-term operating plans.
Budget analysts provide a key role in coordinating operating
and capital budgets.
Other approaches to coordinating
operating and capital budgets include a program planning
process in higher education used in Colorado and requiring
agencies to identify the impact on the operating budget over a
multi-year time span.
Several states have made significant changes to their capital
planning processes over the last two years. These changes
have emphasized a longer range outlook for capital planning,
such as in Virginia and North Carolina, greater automation in
the process (Alabama, Maryland, New Jersey), life-cycle cost
analysis (Washington), and a link to performance measures
(Colorado and Illinois) (see Table 11). Some states, such as
Illinois and Montana, have dedicated new, long-term, funding
sources for capital expenditures.
North Dakota has hired a
state architect to oversee capital projects and Wyoming has
begun to formalize the capital appropriation process.
GOOD PRACTICES
•
Include specific oper
operating
ating costs for each capital project
over a multimulti-year period. Although most states require that
operating costs accompany capital project requests, there
should be an enforcement mechanism that requires agencies
to develop operating cost estimates over several years. The
agencies' operating budget request should reflect the impact
of the capital projects over the multi-year period.
•
Ensure that effective legislative involvement occurs
throughout the capital budgeting process. Some states
have established specific oversight boards to help foster
communication between the legislative and executive
branches.
•
Strengthen the review of the years beyond the budget year
Page 16
Capital Budgeting in the States
in longlong-range capital plans. Although most states have
long-range capital plans, the years beyond the budget year
are often scrutinized much less than the budget year. More
scrutiny of long-range costs would help to assess the
financial commitments on both the operating and capital
budgets.
•
Maintain a centralized oversight for capital projects.
projects Most
states have a central construction agency that oversees the
capital process and often provides technical reviews and
cost analysis.
Page 17
Capital Budgeting in the States
Table 6
Organization of the Capital Budget
State
Legal
Authority
Who Makes
Requests
Documents
Produced
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Statute
Statute
Statute
Appropriations by Agency, Project
Annual Budget Acts, Statute
Statute
Statutes, Special & Public Acts
State Code, Budget Office
A
A
A
A
A,E,B,H,P,PA
A
A
A,H
Governor's Executive Budget
Project Description and Justification
Governor's Executive Budget
Biennial Budget Manual
Budget Change Proposals, five-year plan, ten-year needs survey, Budget Estimates.
Project Request, Prioritized Summary 10 year
Annual Capital Budget
Annual budget capital project descriptions ranked, chart summarizing requests, land
use questionnaire for new projects; Bond & Capital Improvement Act.
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Puerto Rico
Statute
State Code
Revised Statutes
State Code
Appropriations & Bond Auth. Bills
Statute
State Code
No requirement for Governor
State Revised Statutes
Statute
Biennial Budget
State Law and Appropriations
Statute
Annual Appropriations
Statute
Appropriation and revenue bills.
Statute
State Code
Statute
Statute
Statute
State Budget Law
Statute
State Finance Law
Appropriation
Agency's appropriation
Statute
Statute
Statute
Constitution, Statute
Statute
Statute
Individual bills
Statute
Part of appropriations process
Statute
Statute
Appropriation Act
Legislature
Annual Budget Act
Statute
Statute
Constitution, Statutes
A
A
A,E
A,B
A,B,E,H,PA
A,H
A
A
A
A,E, H, PA
A
A,E,P, H
A,B,H,PA
A,H
A,B,E,H,PA
A
A, H
A,H
A,H
A,H
A
A,B, H, PA
A,E,H
A,PA
A
A
A,B,E,H,P,PA
A, B, E, H
A
A
A,B,E,H,PA
A, H
A
A
A
A,H
A
A,H
A, B, E, H
A,B,E,H
A
A
A,E
Agency Capital Improvement Program, Governor's Capital Improvemnt Program.
Governor's Annual Budget Report, Amended Budget Report.
Multi-Yr. Program Financial Plan, Executive Budget
6-Year Plan Produced by Division of Public Works
Capital Budget
State Budget Committee Recommendations
Governor's Budget recommendation, Five-year statewide priority capital plan.
Governor's Budget Report
Executive Branch Budget
Capital Outlay Act and 5-year Budget Plan
Executive Branch Budget
Budget and 5-Year Capital Improvement Program
5-Year Capital Plan. Agencies annual spending plan.
Annual Budget Document
Governor's 6-year Strategic Capital Budget Plan
Governor's 5-year Capital Improvement Plan
Governor's Executive Budget, Long-Range Capital Improvement Plan
Capital Construction Program, Major Maintenance Plan
Governor's Budget and Legislature Appropriations Comm. Biennial Budget
Capital improvement Project list approved by legislature.
Governor's Executive Budget
Governor's Budget Recommendation and Capital Improvement Plan
Capital Improvement Plan and Forms
Capital Projects Bill, 5-year Capital Plan
Capital Improvement Document
Governor's Budget Recommendations
Governor's 6-Year Capital Improvement Plan
Long Range Capital Plan recommendation; Executive budget recommendation.
Budget Overview, 6-year Plan, Project info provided by Capital Advisory Board.
Governor's Executive Budget
Capital Development Budget/Operating Budget
Annual Permanent Improvement Plans
No capital budget
Budget, Project Description, Project Summary
Budget Requests-Construction Schedules
Budget Documents, 5-year plan
Capital Budget Recommendations
Budget Bill & Budget Document
Capital 10-year Program, Appropriation Bill
Governor's Executive Budget Report
Capital Budget Recommendations
Capital Outlay Budget Request
Capital Improvement Budget
Key: A= Agencies B= Boards E= Elected Officials H= Higher Education P= Private Organizations PA= Public Authorities
Page 18
Capital Budgeting in the States
Table 7
O rganization of Capital Budget: Part 2
State
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
D elaw are
Florida
Georgia
H aw aii
Idaho
Illinois
Indiana
Iow a
Kansas
Kentucky
Louisiana
M aine
M aryland
M assachusetts
M ichigan
M innesota
M ississippi
M issouri
M ontana
N ebraska
N evada
N ew H ampshire
N ew Jersey
N ew M exico
N ew York
N orth Carolina
N orth D akota
O hio
O klahoma
O regon
Pennsylvania
Rhode Island
South Carolina
South D akota
Tennessee
Texas
U tah
Vermont
Virginia
W ashington
W est Virginia
W isconsin
W yoming
Puerto Rico
N A indicates that data are not available.
Total
Joint Boards
for Capital
Review
No
No
Yes
No
Yes
Yes
Yes
Yes
No
No
No
Yes
No
Yes
No
Yes
Yes
No
Yes
Yes
No
Yes
No
No
Yes
No
No
No
Yes
Yes
Yes
No
No
No
No
Yes
Yes
No
No
Yes
No
Yes
No
Yes
No
No
No
No
Yes
Yes
Yes
Time-Line for Capital
Process
Span of Long-Range
Capital Budget
1 year
10 months
1 1/3 years
6 months
1 1/2 years
1 year
1 year
10 months
1 year
1 year
9-10 months
10 -12 months
1 year
10-12 months
1 year
1 year
1 year
1 year
10 months
9 months
1 year
9 months
1 year
9 months
1 year+
1 year
1 year
2 years + 2 years budget
9 months
1 year
9 months-1 year
10 months
1 1/2 years
1 year
1 year
14 months
1 1/2 years
10 months
1 year (approximate)
D etermined by legislature
N /A
1 year
2 years
9 months
6 months
1 1/2 years
6 months
8-10 months
2 years
10 months
1 year (approximate)
NA
6 years
4 years
N /A
5 years
3 years
2 to 5 years
3 years
5 years
5 years
6 years
6 years
5 years
N /A
5 years
5 years
6 years
5 years
5 years
5 years
5 years
5 years
6 years
5 years
5 years
6 years
NA
4 year plan
6 years
7 years
5 years
5 years
2-year budget, 6-year plan
6 years
6 years
5 years
2-year budget, 6-year plan
5 years
5 years
NA
NA
2 years
NA
5 years
5-10 years
6 years
10 years
NA
6 years
NA
4-5 years
Yes= 24
Page 19
Capital Budgeting in the States
Table 8
Central Oversight of Capital Projects
State
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Puerto Rico
Total
Central State Agency to
Higher Education
Hospitals
Oversee and Manage Projects
Included
Included
Yes (Building Commission has technical authority)
No Response
Yes/No (3 building system)
No
Yes (Department of General Services)
Yes
Yes
Yes
Yes
No Response
Yes
Not applicable
No
Yes
Yes
No
Yes
No Response
Yes
Not applicable
Yes (excluding university-run)
No
Yes
Yes (public, state-owned and
administered only)
Yes
Yes (Manages bond funded-projects).
No
Yes
Yes
Yes
Yes (except regents, transportation, natural resources)
Yes
Yes
No
Yes
Not applicable.
Yes
Yes
Yes
No
Yes
Yes (3 universities)
No
Yes
Not applicable.
Yes (state-owned)
No
Yes
No
Yes
Yes (except two largest state univ.)
Yes
Yes
Yes
Yes 8 entities reporting to the Sec. of Admin. & Finance.
Yes
Yes (joint review by Departments of Finance and Admin)
Yes
Yes
Yes
Yes (mainly oversight, review and technical assistance)
Yes, State Public Works Board
Yes (Division of Public Works)
Yes (Treasury Division of Building and Construction)
Yes
Yes
No
Yes
Yes
Yes (Dept. of Central Services & Office of State Finance
Yes (agencies manage their capital projects)
Yes
No
Yes
Yes
Yes
No Response
Yes
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes
No
No
Yes
Yes
Yes
Yes
No
Yes
No
Yes
No
No
Yes
Yes
N/A
Yes
Yes (some managed by institutions)
Oversee, but do not approve
No
Yes (state-owned and related)
Not applicable
Yes
Yes
Yes
No Response
Yes
Yes
Yes (some managed by institutions)
No
Yes (in budget)
Yes
No
Yes
Yes
No
Yes
Yes
No
No
Yes
Yes (state-run mental health)
No
No
Yes (state hospitals only)
No
No
No
Yes (state-owned)
N/A
Yes (state-run mental health hosp.)
No
Not applicable
No
Yes (state-owned)
Not applicable
No
Yes (state-owned)
Yes
No Response
Yes
No
Yes (state-owned)
No
Yes (in budget)
Yes
No
Yes
Yes=
Yes= 26
Yes= 14
Page 20
Capital Budgeting in the States
Table 9
Role of Central Agency O versight
State
W hat is the Role of the Central Agency O verseeing the Capital Process?
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
D elaw are
N /A
N o Response
D evelops requests, monitors, and implements projects.
N ot applicable.
Conducts studies, prepares budget packages, and manages projects; liaisons betw een agencies & oversight board.
Review s contracts and requests for maintenance only.
D efines, engineers, and monitors.
Assists w ith budget requests, cost estimates, schedule, and technical review s; defines projects; disburses funds to
contractors.
Evaluates budgets, provides advice on alternatives, and gives recommendations.
M anages construction of capital projects funded by general obligation bonds.
N ot applicable.
Builds budget requests, cost, schedule, tech. review s, project definition & oversight, disperses funds to contractors.
Florida
Georgia
H aw aii
Idaho
Illinois
Indiana
Iow a
Kansas
Kentucky
Louisiana
M aine
M aryland
M assachusetts
M ichigan
M innesota
M ississippi
M issouri
M ontana
N ebraska
N evada
N ew H ampshire
N ew Jersey
N ew M exico
N ew York
N orth Carolina
N orth D akota
O hio
O klahoma
O regon
Pennsylvania
Rhode Island
South Carolina
South D akota
Tennessee
Texas
U tah
Vermont
Virginia
W ashington
W est Virginia
W isconsin
W yoming
Puerto Rico
Cost estimates, administers construction projects and contracts, builds budget requests, cost/schedule review s.
Cost review s and analyzes budget requests.
Technical review , assists agencies in project development, oversight, administration of agency capital construction.
Builds budget requests, cost, schedule, and technical review s, and defines projects.
Cost estimates, assigns priorities, and identifies source of funds.
Review s requests and administers funded projects.
Review s requests, makes recommendations, coordinates, monitors, and implements projects.
Estimates costs, manages and oversees architectural and construction contracts (university excluded.
8 Entities review all agency requests, develop priorities, and recommend annual spending.
Cost, schedule and technical review s, assists in defining projects, and manages professional & construction contracts.
Builds budget requests, cost, schedule, and technical review s, and defines projects.
Complete authority (except appropriated funds) for maintaining, servicing, and protecting state-ow ned property. Includes
planning, design, land/blg. acquisition, demolition, new construction, furnishing, and equipment.
Cost and technical review , assists agencies in project development, oversight, admin. of agency capital construction.
Builds budget requests, cost, schedule, and tech. review s, project definition, Gov. Budget support testimony.
Builds budget requests, cost, schedule and tech.review s, project definition/recommendations for capital construction and task
force funding to Governor.
D evelops requests, monitors and implements projects; builds budget requests; costs, schedules, technical review s; bidding,
oversees projects, disperses funds to contractors.
Cost estimates, bidding, and construction oversight.
Complete contract authority including planning, design, and construction.
D evelops and sends instructions to agencies and higher educ. facilities; maintains 4-year capital plans, technical review .
Project review for consistency w ith program request, state' s priorities, finance capability.
N ot applicable
State architect assists agencies in defining projects, project review ,recommendations, oversight, technical assistance.
Estimates project costs, assists agencies in defining projects, manages bidding process, and supervises contracts.
O versight on requests, project scope, funding, and bidding process. Some construction oversight.
Budget requests, cost/schedule review s, project scope, program objectives.
Review s agency requests, selects priorities & projects for implementation and monitors funding and expenditures.
N o central oversight but status reporting to the Capital Committee/Budget O ffice required.
Cost review s and project definition, bidding, and construction oversight.
Cost, schedule, and technical review ; assist agencies in defining projects.
Cost, schedule, and technical review ; assists agencies in defining projects.
N o Response
Cost, schedule, and technical review s, assists agencies in defining projects and manages projects.
Provides cost estimates, coordinates agency requests, assists w ith priority determinations.
Review s requests, prepares cost estimates, technical review , finance capability.
Provides project management services for some agencies.
N ot applicable.
Review s programs, budgets, design; supervises construction; billings; provides recomm. to Governor & Bldg. Comisn.
Establishes and sets priorities for construction and renovation needs and estimates costs.
Analyzes and recommends agency budgets and monitors the physical and financial status of approved projects.
Page 21
Capital Budgeting in the States
Table 10
Capital Budgeting Coordinated with O perating
State
H ow Is Capital Budgeting Coordinated W ith The O perating Budget?
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
D elaw are
Combined in one appropriation bill.
Combined in one appropriation bill.
Capital project requests must include impact on operating budget.
Agency anticipates impact on operating budget from capital requests.
Capital and operating budgets developed simultaneously by D epart. of Finance. Combined in one appropriation bill.
H igher education has program planning process that links operating budget to capital.
Through analysis by budget and capital analysts.
Both budgets analyzed and produced by the state budget office. Analysts are encouraged to be familiar w ith capital projects
for accurate budgeting of operational impacts. Agencies integrate planning documents.
Each agency provides an overview in their budget explaining impact and budget request. The information is used to
develop the Governor' s budget recommendations for capital and operating.
Florida
Georgia
H aw aii
Idaho
Illinois
Indiana
Iow a
Kansas
Kentucky
Louisiana
M aine
M aryland
M assachusetts
M ichigan
M innesota
M ississippi
M issouri
M ontana
N ebraska
N evada
D eveloped simultaneously; included in one appropriation bill.
Capital projects include impact on operating costs.
By Governor' s budget analysts.
Through budget office instructions and cooperation of budget analysts.
Combined in one appropriation bill.
Both operating and capital developed simultaneously; impact of operations taken into account.
Budget analyst review of capital request includes impact on operating budget.
Prepared simultaneously w ith operating budget.
Budget analysts review capital budget requests.
Same process as operating budget except for general fund and highw ay bond projects.
Through capital/operating coordinator. Impact on operating budget part of capital budget presentation.
Fiscal Affairs D iv. Review s and approves capital spending plans and coordinates w ith operating budget.
Component of total budget process.
Capital requests include impact on operating budget; subsequent base adjustments allow ed.
M atch capital recommendations to agency' s operating mission; project change in operating costs.
Capital budget analyst coordinates analysis w ith operating budget analyst; and agency strategic plan.
Budget office review s capital projects and coordinates w ith operating.
Capital projects include impact on operating costs; agencies request additional operating costs for projects.
Budget office review s capital projects and coordinates w ith operating. Both operating and capital developed
simultaneously; impact of operations taken into account.
N ew H ampshire
N ew Jersey
N ew M exico
N ew York
N orth Carolina
N orth D akota
O hio
O klahoma
O regon
Budget office review s capital projects and coordinates w ith operating.
Both budgets produced by the State Budget office through staff interaction and by management review .
Capital budget includes operating budget impacts and operating budget references capital projects.
Capital budget requests must include impact on operating costs.
Through capital and operating budget analysts in the O ffice of State Budget.
Prepared simultaneously w ith operating budget. Capital requests must include impact on operating budget.
Capital bill is one year after the budget bill. Analysts review capital request for impact on operating budget.
Estimated operating costs calculated and included in operating budget recommendations.
Capital budget review ed as program delivery in budget development and appropriated as separate program by legislature.
Pennsylvania
Rhode Island
South Carolina
South D akota
Tennessee
Texas
U tah
Vermont
Virginia
W ashington
W est Virginia
W isconsin
W yoming
Puerto Rico
Capital and operating budgets are both developed by the O ffice of the Budget.
Capital requests required to include impact on operating; potential base adjustments determined by Budget O fficer.
Capital plans include 3 year operating expenditures.
Bond payments included in operating budget.
Architectural staff meets w ith budget analysts and departments to review capital and operating.
Part of the operating budget.
Through Governor' s O ffice of Planning and Budget. Capital requests must include impact on operating budget.
D eveloped at the same time; impact from capital projects must be included in operating budget.
D eveloped at same time. Capital requests must include impact on operating budget.
D ebt service part of operating budget, new program projects supported by operating performance measures.
Combined in one appropriation bill. Impact of capital projects on operating budget is considered.
Statement of operating costs included w ith each major project.
O perating and/or maintenance expenses referenced in capital request.
For each project, there is a component that establishes the effects the program w ill have on the operating budget.
Page 22
Capital Budgeting in the States
Table 11
Recent Changes In Capital Planning Processes
State
Have You Made Any Significant Changes In Capital Planning Since 1997?
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Yes
No
No
Yes
Yes
Yes
No
No
Yes
No
No
Yes
Indiana
Iowa
Kansas
Kentucky
Louisiana
Yes
Yes
No
Yes
Yes
M aine
M aryland
M assachusetts
No
Yes
Yes
M ichigan
M innesota
M ississippi
M issouri
M ontana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North D akota
Ohio
Yes
Yes
No
Yes
Yes
Yes
Yes
Oklahoma
Oregon
Yes
Yes
Pennsylvania
Rhode Island
Yes
Yes
South Carolina
South Dakota
Tennessee
Texas
Utah
No
Yes
No
Developed a priority system for M&R projects.
Yes
No Response
Improved request system, requiring agency need statement and central approval before new arch. programming. M ore use of
design/build to accelerate projects, reduce costs.
Vermont
Virginia
No
W ashington
No
W est Virginia
Yes
W isconsin
W yoming
Puerto Rico
No
Yes
Yes
Yes
Yes
No
Yes
Yes
Yes
Automated system implemented for the FY 1999 Budget request.
No Response
Currently reviewing changing the current 10-year needs and financing planning report, to 5-years.
Require requests to comply with agency master plans, facility master plans.
Continued automation via personal computers.
5-year capital planning and increased use of pre-design of major projects.
Developed 5-year, $12 billion Fund for Infrastructure, Roads, Schools, & Transit program, linked capital budgeting to
performance measurement, using automated system to project life of building systems.
Currently in the process of automating the capital budget request system.
Creation of Rebuild Iowa Infrastructure Fund. Governor proposing citizen infrastructure oversight board.
Increased statutory definition of capital projects to $400,000 and major equipment to $100,000.
Projects cannot be included in the budget unless the capital outlay budget request forms have been submitted to the Facility
Planning Section of the D ivision of Administration.
Increased automation and improved instructions and procedures. Tied more closely to master facility plan.
Improved capital reporting mechanisms for monitoring spending including implementation of a computerized debt
management system.
Statutory 5-year planning requirement for professional programming/planning before budget authorization.
Design/build used for some projects. Better project information required. Predesign required.
Adopted biennial budgeting for capital projects and automated the capital improvement request process.
Beginning in mid-fiscal 1996, 12 percent of annual coal tax revenue is allocated to capital account.
Individual agencies task force project requests are prioritized w ith other capital construction requests.
Legisl. mandate to complete all Capital Improv. Projects within 4 years. D esign/build process available.
No Response
Automated cap. budget request system, formalized op. cost impacts, allowed requests for data processing equipment.
Automated capital improvement plan request process.
State law requires 6-year capital improvement plan.
Hired a state architect.
Planning numbers are provided by higher ed at the time of release of the capital budget guidance to assist the institutions
with their capital allocation process.
Added a new committee for oversight of expenditures from a new central capital fund.
Integrated the capital investment section as part of the state-wide facility planning process to work with the central budget
management division to set up planning process and facilities database.
Established long-term plans for state-owned and state-related institutions of higher education.
Capital Development Committee established rating system for projects, statutorily-assigned responsibility for development of
inventory of state assets to determine need and prioritization of capital improvements.
Greater emphasis on long-range planning (6 years). Use of team approach (programmatic, technical, and financial
expertise) to review project during budget development and execution.
Automated tacking system, life-cycle cost anlalysis, backlog reduction program, 10-year budget link to performance
measurement.
Collecting information on capital expenditures as part of appropriation request process. Provides information on expenditure
categories, impact on operating budget and detailed justification.
Are in process of implementing computerized project tracking and work flow system.
Formalized process.
The formulation phase of the capital budget was computerized since fiscal 1997.
Page 23
Capital Budgeting in the States
Section Three:
Capital Project
Selection, Cost
Estimating, and
Project
Tracking:
Tracking:
Tables 1212-20
A central component of the capital budgeting process is the
establishment of
priorities within the extensive array of
proposed projects.
With scarce resources and limits on
financing options in many states, establishing a set of priorities
is a crucial task. Some states first look at the capacity for
financing projects from either debt or cash limits over a several
year time period and then set priorities.
More than one-third of the states set priorities on a functional
basis, such as higher education, natural resources, and local
government assistance. Other states use an approach based on
emergency, legal, and health reasons. Priorities are ranked by
categories such as health and safety, critical maintenance,
improvements, and new construction in states such as Montana,
New Hampshire, Ohio, and Virginia. Arizona specifies the use
of a formal ranking system to establish priorities in addition to
viewing the projects within the political and economic context
while Minnesota reviews projects in the context of review
guidelines and a capital scoring system (see Table 12).
An approach to setting priorities includes approving projects
with a cost savings component (see Table 13). When projects
are approved with a cost-savings component, often the
monitoring of the cost savings is informal. About two-thirds of
the states include emergency requests within the capital budget
process.
After establishing priorities, states are interested in ensuring
that program objectives are met through the project requests.
Some states, such as California, Delaware, Minnesota, and
Washington, link capital budget requests to agency strategic
plans and performance measures, while other reviews are
ongoing though less formal (see Table 14).
In carrying out the priorities established in the capital plan, a
successful outcome often rests upon the accuracy of cost
estimates. States use a variety of methods to develop cost
estimates usually relying on
architects, engineers, and
consultants to provide cost data. In most cases, either the
requesting agency or a general services or public works agency
is responsible for the review and/or development of the
estimates (see Table 15).
Techniques include value
engineering, life-cycle cost analysis, construction and material
indices, and square footage estimates. Almost all states use
cost standards according to a particular type of building and
Page 24
Capital Budgeting in the States
space utilization standards to estimate costs, while about onehalf to two-thirds of the states prepare cost options and use
life-cycle costs in cost estimating.
Although most states
project future operating costs, the costs do not necessarily
have any claim on future appropriations (see Tables 16 and 17).
Eligible building project costs usually include predesign fees,
site acquisition, general planning, and project management.
Inflation adjustments and computers are eligible building
project costs in over two-thirds of the states (see Table 18).
States use various methods to track projects once they are
underway with monitoring taking place in the budget office as
well as in agencies. Some states, such as California, Kentucky,
Minnesota, and Nebraska, require quarterly progress reports.
In other states, such as Missouri and Washington, a
computerized system provides information on each project.
Other states have a decentralized tracking system within the
specific agency overseeing the project (see Table 19).
Projects are usually multi-year and may take longer than
anticipated.
States often allow unexpended portions of
appropriations for projects at year end to carry over to
following years until the project is completed (see Table 20).
GOOD PRACTICES
•
Identify the criteria used in selecting capital projects.
States often determine their needs on a functional basis
such as higher education and aid to localities. While the
functional approach is used for needs assessment over time,
emergency or health and safety criteria often determine
immediate project selection.
States should have some
method to integrate needs assessment with project
selection. What constitutes an emergency or health reason
should be clearly defined. In reviewing the project selection
process, states should assess how actual project selection
compares to the priority list.
•
Define all program outcomes for capital investments.
Reviews of project requests often do not explicitly link the
program objective to the project in question. Projects may
be approved that meet financial criteria, but do not meet the
objectives of the program. Some states are beginning to
link performance measures to capital projects to mirror the
effort going on in operating budgets.
•
Evaluate cost estimating methods to measure their validity.
Even though the expertise for estimating methods is often
with the architects and engineers outside of the budget
department, budget analysts should be able to understand
the underlying assumptions and methods used in the cost
estimates in order to thoroughly review project requests.
•
Establish a tracking system to keep projects on schedule
and within budget. The tracking system should be ongoing
and should serve as an early warning device for projects that
Page 25
Capital Budgeting in the States
are exceeding projections for both cost and time.
Page 26
Capital Budgeting in the States
Table 12
Setting Project Priorities
State
Do You Set Priorities on a Functional Basis?
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
M aine
M aryland
M assachusetts
M ichigan
M innesota
M ississippi
M issouri
M ontana
Nebraska
Nevada
New Hampshire
New Jersey
Needs assessment.
Functional areas.
Based on an evaluation system.
Prioritized by law and then released according to need and funding availability.
Based on criticality of program and availability of resource; functional component also involved.
Needs assessment, project by project.
Functional areas.
Governor' s priorities, agency priorities, legal or federal mandate, and passage of public school referenda.
Functional areas.
Functional areas.
Functional areas.
According to need.
Needs assessment.
Project by project basis.
Functional areas.
W ithin dedicated funds for each functional area.
Life safety projects and maintenance receive priority over new construction.
Functional areas.
According to need.
Functional areas.
Administrative cap for each of eight major oversight areas.
Functional areas.
Project by project in the context of the governor' s priorities, review guidelines and capital scoring system.
Functional areas.
Each project evaluated on merits. Agencies with dedicated funds have more leeway.
Health & safety, critical maintenance, general maintenance, renovations, improvements, new construction.
Agencies and universities set priorities. Executive branch and legislature decide which projects are most necessary.
Life safety projects receive priority over maint.or new construction. Exec. Branch and legislature decide project necessity.
Priority categories are health and safety, critical maintenance, maintenance, and new construction.
Functional areas. Agencies set priorities in requests. Governor' s policies used as guideline; Capital Commission
evaluates project requests against funding criteria hierarchy.
Priorities based on urgency - life & safety and critical maintenance.
Budget Division analysis of critical needs.
Budget office analysis and review; Governor.
Budget office evaluates needs and sets priorities based on mandates, program needs, policy direction, and funding.
Urgency, life-health-safety projects, rehabilitation, new construction, depending on funding availability.
Functional area priorities set by legislature. Long Rng. Planning Comm. sets priorities for emergency/legal/health reasons.
Functional areas.
Functional areas.
Functional areas, health and safety, and policy staff input.
Project by project or immediate need.
Budget office analysis and review.
Project by project, prior years' funding and planning considered.
Requesting agency sets priorities within its request. Legislature determines priorities between agencies.
According to need.
Assess based on merit, financial returns, and statutory mandates.
Legal/judicial mandates; life safety codes; major repairs and improvements; new construction, expansions, acquisitions.
Functional areas. Historical spending and/or identified needs.
No, each project is assessed individually based on need and funding availability.
Evaluation of needs.
Priorities based on life/safety and critical emergency need.
Functional areas.
New M exico
New York
North Carolina
North Dakota
Ohio
O klahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
W ashington
W est Virginia
W isconsin
W yoming
Puerto Rico
Page 27
Capital Budgeting in the States
Table 13
Project Characteristics
State
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
D elaw are
Florida
Georgia
H aw aii
Idaho
Illinois
Indiana
Iow a
Kansas
Kentucky
Louisiana
M aine
M aryland
M assachusetts
M ichigan
M innesota
M ississippi
M issouri
M ontana
N ebraska
N evada
N ew H ampshire
N ew Jersey
N ew M exico
N ew York
N orth Carolina
N orth D akota
O hio
O klahoma
O regon
Pennsylvania
Rhode Island
South Carolina
South D akota
Tennessee
Texas
U tah
Vermont
Virginia
W ashington
W est Virginia
W isconsin
W yoming
Puerto Rico
Total
Approve Projects with a Cost
Savings Component
Separate Planning & Construction
Phases
Include Emergency Requests
in Capital Budget
No
Yes
N ot Automatically
No
Sometimes
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes
Yes
NA
Yes
Yes
Yes
Yes
Yes
Yes
No
Yes
U sually
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Cost Benefit Analysis
Yes
Yes
Yes
N /A
Yes
Yes
No
Yes
No
No
Varies
Yes
Yes
Yes
No
Varies
Yes
Yes
Yes
Sometimes
Yes
Yes
Sometimes
U sually
Yes
Sometimes
O ften
Yes
Yes
Yes
Sometimes
Yes
Yes
Yes
Yes
Yes
O ften
No
Sometimes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Sometimes
Sometimes
Yes
Yes
No
Yes
Yes
O ften
Yes
No
O ften
Yes
Yes
Yes (M ajor projects + $5 M illion
No
Yes
Yes
Yes
No
Yes
Yes
No
Sometimes
Yes
Yes
Yes/case basis
No
Yes
Yes
Yes
Seldom
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes/case basis
Yes
Yes/Life, safety
Yes
Yes
Yes
Sometimes
Yes
Sometimes
Yes
Yes
Yes
Yes
Sometimes
Yes
Yes
No
No
No
Yes
N /A
Yes
No
Yes/Consultants
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes= 36
Yes= 32
Yes= 32
Page 28
Capital Budgeting in the States
Table 14
Program Objectives Met Through Project Requests
State
How Do You Ensure That Program Objectives Are Met Through Project Requests?
Alabama
Alaska
Arizona
Arkansas
California
There is no formal process in place.
No process currently exists for measurement.
Budget office analyzes project requests in terms of program objectives and fiscal impact.
Monitoring by Office of the Budget.
Departments submit formal proposals relating needs to strategic plans.
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
There is no formal process in place.
Through agency input during preliminary design.
Track agency performance measures - linkage to operating budget.
Through a review of requests as well as a review of the agencies annual budget requests.
Budget analysts evaluate requests.
Budget and Finance analyzes request and evaluates project.
First planning phase determines program needs.
Bureau of Budget review.
Varies with project.
Monitored by executive and legislative branches.
Budget analysts make sure that program objectives are met.
Require written justification.
Budget analysts review requests.
Department of Administrative and Financial Services administers and monitors projects.
Review and analysis by the Department of Budget and Management.
Secretariats approve agency priorities submit capital spending plans to executive Office of Administrative & Finance.
A project program statement is reviewed before architecture plans are initiated.
Agencies define mission and develop comprehensive strategic capital budget plans. Review by budget analysts.
By performing two separate reviews per account.
Requests must fulfill program objectives and are thoroughly reviewed in relation to agency strategic plan.
Architect/Engineer reviews, prioritizes requests; budget office reviews; and Governor recommends action to legislature.
State Building Division and Budget Office conducts analysis.
Requests must show how program objectives are met. Budget office review project program objectives/fiscal impact. St.
Public Works Board manages the project, oversees design/constr., compares d/c with the objectives of the project.
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Puerto Rico
Budget office review.
Budget office conducts analysis, audits, studies.
Analyst reviews requests. Agencies starting to implement management system through goals and objectives.
Through annual budget request-budget recommendation process by budget staff.
Office of State Budget and Management reviews and analyzes requests.
Through careful review and comparison of agency master plans and request narrative.
Office of Budget and Management and legislative reviews.
Budget Office and legislative review of projects.
Major projects undergo a significant programming process using values and objectives as guides.
Budget office and agencies coordinate operating program and capital budget.
Budget analysts and policy staff review.
Review by analysts, engineers, Legislative Audit Council, and agency's internal auditors.
There is no formal process in place.
Through team and committee work.
Legislative Budget Office reviews analyses.
Analysis by Division of Facilities Construction and Management, Governor's Budget Office & Legislative Fiscal Office.
No formal process.
Requests explain how project supports agency goals, programs, and objectives.
Review by program analysts and technical budget staff. Evaluate performance measures.
Budget analysis during request and recommendation process.
Review by program analysts.
Through informal assessment.
By establishing carefully the fiscal and physical relationship between project and program objectives.
Page 29
Capital Budgeting in the States
Table 15
Estimating Project Cost
State
How Do You Estimate The Cost Of Capital Projects?
Alabama
Alaska
Arizona
By agencies with assistance of architects and engineers.
Based upon past history and/or engineering estimates.
Agencies prepare estimates & budget offices work with Facility Management Division to verify costs using reports and standards.
Arkansas
California
Cost estimates submitted by agencies and reviewed by the Building Services Agency and the Budget Office.
Cost estimates are prepared by professional estimators in the Department of General Service and; in some cases, line departments
have their own estimators.
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Puerto Rico
Usually square foot estimates with percentages for fees, contingency etc.
Cost estimates are prepared by the Department of Public Works and the requesting agency.
In-house and professional estimates.
Determined by agency based on national figures and revised by recommendations by Department of Management Services.
Estimates prepared by agencies, by business managers, or architects/engineers depending on project.
By user agency.
Agency staff and Division of Public Works staff work together.
Central construction agency makes estimates.
Primarily by entities submitting project requests.
Depending on type or size of project, agency or outside engineers and architects, or use standard industry est. procedures.
By agencies, architects and Division of Architectural Services using construction and material indices.
Finance, Division of Engineering projects most costs; agencies initiate; consultants refine.
By staff architects and engineers.
By staff and Department of Administrative and Financial Services architects and engineers.
Department of General Services reviews and modifies agency estimate based on comparable projects.
Oversight agencies responsible for capital projects conduct studies, develop estimates.
Costs are obtained through programming, schematics, and estimation of the program outcome.
Requesting agency either in-house or by consultants; reviewed by Division of Building Construction.
By using standard industry finance procedures.
Agency engineers and architects use standard industry estimating procedures. Division of Design & Construct reviews.
Cost guides generally provide the cost basis. Estimates vary from unit costs to square foot costs.
By agencies. State Building Division provides second opinion, Higher Ed. Coordinating Agency provides third opinion.
State Public Works Board architects and engineers estimate the cost of Capital Improvement Projects.
Governor selects projects to be formally estimated.
Agencies develop estimates with Division of Building and Construction or through own staff.
By agencies, w/cost estimators, architects, and engineers. Reviewed by Property Control Div. for bldgs. under its jurisdiction.
Design-construction agencies provide preliminary estimates based on surveys and review of facilities.
Office of State Construction estimates must accompany all requests.
Agencies prepare estimates which are then reviewed by state architect.
Initially by agencies with input from the state architect.
Initially by agencies, potential vendors, architects, engineers. Reviewed by construction staff and State Finance.
By consultant professional cost estimators.
Requesting agencies use various methods such as cost standards and agency architects/engineers staff.
Most agencies develop estimates through own staff.
By agency with assistance of architects and engineers.
By architectural and engineering estimates of project.
By departments, consultants, capital projects and Finance and Administration staff.
Requesting agencies submit project analyses to legislative and executive budget offices.
Professional consultants and Division of Facilities Construction and Management project managers project costs.
By state engineers and consultant engineers.
Requesting agency develops the estimate and Departments of Budget and General Services review it.
Life cycle cost analysis/value engineering, basis for estimates/professional estimators/required detailed cost estimate form.
Agencies develop estimates by working with outside engineers, architects, and consultants.
Estimates based on historical data on past projects, national estimating guides.
Estimates prepared both in-house and externally, assisted by architects and engineers.
By asking agencies and public corp. for architects or engineers' certification of individual projects capital cost.
Page 30
Capital Budgeting in the States
Table 16
Cost Estimating M ethods
W hat Are The M ethods U sed To Estimate Costs?
State
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
D elaw are
Florida
Georgia
H aw aii
Idaho
Illinois
Indiana
Iow a
Kansas
Kentucky
Louisiana
M aine
M aryland
M assachusetts
M ichigan
M innesota
M ississippi
M issouri
M ontana
N ebraska
N evada
N ew H ampshire
N ew Jersey
N ew M exico
N ew York
N orth Carolina
N orth D akota
O hio
O klahoma
O regon
Pennsylvania
Rhode Island
South Carolina
South D akota
Tennessee
Texas
U tah
Vermont
Virginia
W ashington
W est Virginia
W isconsin
W yoming
Puerto Rico
Total
Cost Standards
Space U tilization
Prepare Cost
Life-Cycle
Building Type
Standards
O ptions
Costs Considered
Yes
Yes
Yes
Agencies may use
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
No
N /A
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Agencies may use
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes
Yes
Sometimes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
Agencies may use
Yes
Sometimes
Yes
Yes
Yes
Sometimes
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Sometimes
Yes
Yes
No
Yes
Sometimes
Yes
Yes
Sometimes
Yes
Yes
Yes
Sometimes
Yes
Yes
Yes
No
No
N /A
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
Yes
Required/N ot Enforced
Yes
Yes
Yes
Sometimes
No
Yes
Yes
No
Yes
Yes
No
Yes
Yes
Yes
Sometimes
Yes
Sometimes
No
Yes
No
Sometimes
Yes
Yes
Sometimes
Sometimes
No
Yes
No
No
Sometimes
Yes
U sually
No
Yes
N /A
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes
No
Yes
Yes= 44
Yes= 47
Yes= 38
Yes= 29
Page 31
Capital Budgeting in the States
Table 17
Cost Estimating M ethods: Part 2
W hat Are The M ethods U sed To Estimate Costs?
State
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
D elaw are
Florida
Georgia
H aw aii
Idaho
Illinois
Indiana
Iow a
Kansas
Kentucky
Louisiana
M aine
M aryland
M assachusetts
M ichigan
M innesota
M ississippi
M issouri
M ontana
N ebraska
N evada
N ew H ampshire
N ew Jersey
N ew M exico
N ew York
N orth Carolina
N orth D akota
O hio
O klahoma
O regon
Pennsylvania
Rhode Island
South Carolina
South D akota
Tennessee
Texas
U tah
Vermont
Virginia
W ashington
W est Virginia
W isconsin
W yoming
Puerto Rico
Total
Project Future
Claims on
O perating Costs
Future Appropriations
No
Yes
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
N /A
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
No
No
Yes
No
No
No
Yes, N on-Binding
Yes
Yes
No
No
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes (agencies only)
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes
No
No
No
No
No
No
Yes
No
No
No
No
No
No
No
No
No
No
Yes
Yes
No
Yes
Yes= 48
Yes= 23
Page 32
Capital Budgeting in the States
Table 18
Eligible Building Project Costs
State
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
D elaw are
Florida
Georgia
H aw aii
Idaho
Illinois
Indiana
Iow a
Kansas
Kentucky
Louisiana
M aine
M aryland
M assachusetts
M ichigan
M innesota
M ississippi
M issouri
M ontana
N ebraska
N evada
N ew H ampshire
N ew Jersey
N ew M exico
N ew York
N orth Carolina
N orth D akota
O hio
O klahoma
O regon
Pennsylvania
Rhode Island
South Carolina
South D akota
Tennessee
Texas
U tah
Vermont
Virginia
W ashington
W est Virginia
W isconsin
W yoming
Puerto Rico
Total
Predesign
Fees
X
N o Response
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
N o Response
X
X
Site
Acquisition
General
Planning
Project
M anagement
Construction,
Renovation, and
Expansion
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
48
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Sometimes
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
43
48
41
47
Page 33
Capital Budgeting in the States
Table 18
Eligible Building Project Costs (continued)
State
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticu
D elaw are
Florida
Georgia
H aw aii
Idaho
Illinois
Indiana
Iow a
Kansas
Kentucky
Louisiana
M aine
M aryland
M assachus
M ichigan
M innesota
M ississipp
M issouri
M ontana
N ebraska
N evada
N ew H am
N ew Jersey
N ew M exi
N ew York
N orth Caro
N orth D ak
O hio
O klahoma
O regon
Pennsylvan
Rhode Isla
South Caro
South D ak
Tennessee
Texas
U tah
Vermont
Virginia
W ashingto
W est Virgi
W isconsin
W yoming
Puerto Ric
Total
D esign Furniture, Fixtures,
Fees and Equipment
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
N o Response
X
X
N ew Space O nly
X
X
X
X
X
X
X
X
X
X
Inflation
Project
Computers and Tech.
Adjustment Contingencies Related Equip.
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X (M ajor Projects)
X
X
X
X
X
X
X
X (Sep. Authorization)
X (N ew Facilities)
X
X
X
N o Response
X
X
X
X
X
X
X
X
48
42
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Ed. Pgm(N ew Space)
X
X
X
X
X
X
Sometimes
X
Sometimes
X
X (O ne-Time)
X
X
X
X
X
X (M ajor Projects)
X
X
Sometimes
X
X
X
Sometimes
X
X
Sometimes
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Sometimes (for ed.)
X (M ajor Projects)
X
X
X
X
X
X
34
48
28
Page 34
Capital Budgeting in the States
Table 19
Formal Reporting System To Track Capital Projects
State
Do You H ave A Formal Reporting System To Track Capital Projects?
Alabama
Alaska
Arizona
Arkansas
California
No formal system.
Agencies and the budget office complete a capital authorization status report.
Projects reviewed by legislature. Agencies meet with budget offices at least on an annual basis to review programs.
No formal system.
Quarterly reports (agencies), formal approval of preliminary plans (State Public W orks Board), and phase appropriation
(D epartment of Finance and legislature). Currently developing automated tracking program.
Colorado
Connecticut
Delaware
Department of Administration review s some contracts and verifies fund availability.
No formal system.
Div. of Facilities Management serves as construction managers, has contract, review s purchase orders and makes site visits.
Statewide financial management system tracks individual projects, produces monthly reports, and financial data.
Governor' s Budget Office and agency provide an annual analysis on progress of project at various phases; D ept. of Management
Services tracks projects on a electronic information management system.
Florida
Georgia
Haw aii
Idaho
Illinois
Indiana
Iow a
Kansas
Kentucky
Each agency has tracking process.
Planning, design, and project coordinator branches of agency.
Division of Public W orks tracks projects.
Central Construction Agency tracks projects.
Entity receiving appropriations has major tracking responsibility. Public W orks D ivision also tracks projects.
Entity receiving appropriation has major tracking responsibility.
Governor' s budget report includes descriptions of all projects. Architectural Services tracks all projects.
Governor' s O ffice for Policy and M anagement prepares annual report for legislature. Finance and Administration Cabinet submits
quarterly progress report on line-item projects to Legislative Oversight Committee.
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
Office of Facility Planning and Control oversees project.
Agencies and D epartment of Administrative and Financial Services track projects.
Dept. of General Services and U niversity report on status of projects.
Fiscal Affairs D ivision(State Budget O ffice)review s capital spending plans from agencies at various times throughout the year.
Department of Management and Budget review s architectural plans, monitors appropriations.
Division of Building Construction prepares quarterly status reports; cash flows review ed by Finance D epartment.
Bureau of Buildings tracks projects.
Computerized information system provides information on each project.
Architecture and Engineering administers all projects; budget office tracks appropriations.
Quarterly status reports are prepared.
Montly proj. status reports to Leg. Counsel Bureau and to Interim Finance Committee every 45-60 days. Reports include schedule
dates, const. dollars, percentage of completion, various comments on the progress of active projects.
New H ampshire
New Jersey
New M exico
New York
North Carolina
North D akota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South D akota
Tennessee
Texas
Utah
Vermont
Virginia
W ashington
W est Virginia
W isconsin
W yoming
Puerto Rico
Agencies prepare status reports.
A formal automated project tracking system is being used.
Capital project monitoring system tracks funds expended and progress to date on a semi-annual basis.
The design-construction agencies monitor design and construction, the client agency reviews.
Office of State Budget and M anagement and State Construction oversee fiscal and quality assurance.
Maintained by state architect.
No central system for all projects. Entity receiving appropriation has major tracking responsibility.
Office of Central Services and O ffice of State Finance administer funds and reports.
Management by agency, design review by Capitol Planning Commission. No formal tracking system.
Office of the Budget maintains a status report.
Periodic status reports required from agencies. Budget Analysts track expenditure of funds.
State Engineers O ffice assist in bidding and planning. Capital Improvements O ffice monitors and approves budget.
State Engineers O ffice and Commissioner of Administration monitor projects.
Project management and monitoring by Capital Projects Management and Finance and Administration.
Requesting agency oversees the project.
Division of Facilities Construction and Management, D iv. of W ater Resources, and D ept. of Transportation track projects.
Department of State Buildings tracks costs.
Agency and Department of General Services prepare a progress report on semi-annual basis for legislature.
Executive and legislature review , compare progress of cash disbursement to estimated cash flow.
Budget office compiles information annually as part of the appropriation request process.
Division of Facilities Development in process of developing a computerized database management system.
Facilities Planning and Construction oversees major capital projects
Planning Board, O ffice of Management and Budget, and agencies.
Page 35
Capital Budgeting in the States
Table 20
Unexpended Portions Of Appropriations
State
How Are Unexpended Portions Of Appropriations Handled For Projects Incomplete at Fiscal Year End?
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Capital appropriations are valid for the life of the project,unexpended balances are carried forward to subsequent fiscal years.
No Response
Capital monies are non-reverting appropriations.
They are tracked and reappropriated if necessary.
Encumbrance authority lasts three years, plus two for liquidation. Projects can be reappropriated as necessary.
Rollover for three years, then reverts to construction fund.
They are reviewed by executive and/or general assembly for cancellation.
Projects are authorized for a three-year period. If completed and unexpended funds remain, they are reverted and reauthorized to
new projects.
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
Dollars remaining are either reverted or certified forward.
Balance is carried forward until project is complete.
Appropriations are authorized for a maximum of three years, projects then lapse or are reappropriated as necessary.
Appropriations last until the project is completed.
Reappropriate.
They may be carried forward to the next period or used for other approved projects.
Funding can roll forward for up to three years or as designated in legislation.
Reappropriate to new fiscal year.
Forwarded until completion; subject to biennial legislative reauthorization if not started.
Statutes allow for appropriations to carry forward into subsequent fiscal years.
Unobligated balances and encumbrances carry forward.
Balances may be carried over, re-authorized for other projects, placed in construction contingency fund, or allowed to lapse.
Bond-funded appropriations available for 5 fiscal years and may be reauthorized annually thereafter.
Funding is carried forward to subsequent years.
Funds sunset after seven fiscal years. Unexpended balances are reviewed annually and may be carried forward.
Unexpended portions of appropriations are reappropriated.
Funds are reappropriated in the next biennium.
Carryover to the next biennium through Office of Budget and Program Planning action on the accounting system.
Agencies request a reappropriation for those projects. Generally, allowed to leave the account open for another two years.
Balance carried forward until project is complete (up to 4 years), with some exceptions. Once completed, unexpended funds are
reverted to the appropriate fund.
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Puerto Rico
Appropriations are available for two years, then must be reappropriated.
Funding is carried forward to subsequent fiscal years.
Multi-year appropriations, multi-year budgeting, reauthorizations.
Funds are reappropriated, consolidated, or repealed.
Funds remain available to the project.
Carried over to the next biennium.
Reappropriated if the funds are needed to complete the project.
Capital project funds appropriated for 30 months. Unused funds may be reappropriated for proj. completion other purposes.
In most cases, capital project appropriations can be carried forward to project completion.
Capital project authorizations have no termination until canceled, completed, or repealed in law.
Capital project funds automatically carry forward until project completion. Unused capital funds are used to pay down debt.
Most carryover from year to year.
They may be carried over to the next fiscal year or revert.
Indefinite carryover, may be reappropriated as necessary.
No Response
Funds and spending authority carry forward to ensuing fiscal years.
Funds and spending authority carry forward to ensuing fiscal years.
They are tracked and reappropriated if necessary. Unneeded funds revert.
Reappropriated unexpended balances automatically adjusted to actuals at end of biennium.
Funds are automatically reappropriated for two additional fiscal years.
Funds remain available to the project until completion.
Carried forward using original fiscal year designator.
Those portions constitute resources available for the same projects or others in the next fiscal period.
Page 36
Capital Budgeting in the States
Section Four:
Capital
Financing:
Financing:
Tables 2121-27
After priorities are established, states look at how to finance a
project. States' financing options are often dependent upon
legal limits on debt levels or the ability to incur debt. Other
restrictions include scarcity of general revenues for capital
projects as well as policy decisions to maintain certain debt
levels in light of bond ratings. States that actively manage their
debt often use debt service as a percent of annual revenues and
net tax-supported debt as a percent of personal income as
measures of debt capacity.
States often look at the amount of general fund resources
available for projects through an analysis of funding availability.
Decisions on the type of project financing depend on such
factors as funding availability, the size of the project, the type
and life of the project, tax laws, and the likelihood of voter
approval for the project (see Table 21).
Another financing decision states face is whether to own or
lease a facility. Most of the states that have a policy regarding
this decision compare the life-cycle costs of the two options in
deciding whether to own or to lease.
In Washington, a
decision-making model assists agencies in comparing the cost
of owning versus leasing space for facilities.
In addition to general obligation bonds, states include revenue
bonds in he regular capital budget process. From a debt
perspective, coordinating various debt issuances would provide
a state with a better picture of total debt. For states that use
debt financing, there is often the need to finance a project on
an interim basis until the bonds can be issued.
Interim
financing options used by the states include pooled
investments, bond anticipation notes, commercial paper,
treasury loans, and the general fund (see Table 22). In funding
capital projects through debt financing, debt service expense
becomes a fixed cost in the operating budget and, if excessive,
can limit future options.
States build discipline into their debt financing decisions
through such means as user fee financing whenever possible.
About half the states have the users of approved facilities
participate in paying for debt service. Some states allow for
private sector participation in certain capital projects (see Table
23). The types of projects most likely to have private sector
participation include economic development projects and buildto-suit projects with an option to buy.
States make decisions on the amount of general funds to
Page 37
Capital Budgeting in the States
allocate for debt service based on available revenues as well as
statutory/constitutional debt limits. About two-thirds of the
states have limits on the amount of debt service or authorized
debt.
The limits vary across states, with a range from no general
obligation debt to eighteen and one-half percent of available
revenues for debt service. Limits on authorized debt also range
from no allowable debt to a dollar amount such as $500,000 or
a percentage of income or revenues (see Table 24). Other limits
are waived with the requisite voter approval. Limits on revenue
bonds are less frequent and when they exist, the limits tend to
be dependent on various issuing authorities.
About one-fifth of the states have written guidelines on the use
of bonds versus cash for a project. States determine whether to
use bonds based on available funds, the type of projects, and
useful life (see Table 25). States use long-term leases as
another mechanism to acquire assets. In most cases, longterm leases are treated as operating rather than capital
expenditures and are usually not subject to the same selection
criteria as capital. Long-term leases are rarely included in
states’ debt levels (see Table 26).
Other than the use of bonds or cash, states also make use of
alternative financing arrangements. These often include the use
of authorities, other levels of government, lease-purchase
agreements, public-private partnerships, and earmarked funds
(see Table 27).
PRACTICES GOOD
•
Develop a clear debt policy and integrate capital planning
with debt affordability. With the trend towards more of
state expenditures in the entitlement or mandatory category,
states limit their flexibility when debt service exceeds a
comfortable portion of their operating budget. Debt service
limits should be viewed in light of anticipated overall growth
in the state’s revenues. Frequently used measures of debt
affordability include debt as a percentage of personal
income or debt service as a percentage of revenues.
•
Review costcost-benefit comparisons for private sector
participation in capital projects. Opportunities to involve
the private sector would help target the specific benefits and
costs of a project.
•
Review longlong-term leases. Although long-term leases are
generally operating expenditures, states should review lease
commitments along with their capital items to have a more
comprehensive view of their commitments.
Page 38
Capital Budgeting in the States
Page 39
Capital Budgeting in the States
Table 21
Project Financing
Amount of General
Determine Use of Bonds
Policy Own
State
Fund Dollars Used
Versus Cash
Alabama
Alaska
Arizona
Arkansas
California
Economic and political considerations.
Available revenue minus operating.
Economic and political considerations.
Financing structure, mechanism in law.
Economic and political considerations.
Project size.
Nature of project, availability of funding.
Constitutional limit.
Legal provisions, availability of bond finance.
Project type, funds avail., voter approval, debt ratio
Yes
Yes
Yes
No
Yes
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Puerto Rico
Transfers from general fund in statute.
Economic and political considerations.
Economic conditions, need versus funds available.
At least 5% of est. gen. fund growth over current app.
Availability of funds.
Availability of funds.
Surplus funds when available.
Prior years, affordability.
Type of project and availability of funds.
No general fund, separate infrastructure fund
Debt service commitment, statutory transfer highways.
Relative need versus dollar available.
Little general fund used.
Debt service commitment.
Availability of funds, type of project.
Surplus funds when available.
Project size-under $5 million.
Economic and political considerations.
No general fund.
Financial health of state/other priorities.
No general fund/Legislature may add general fund.
Availability of funds, project type.
Gen. obligation bonds, legislative approval.
Debt service only.
Consider mandated costs and revenue projection.
Availability of funds.
General fund "last in" source.
Projected general fund balance.
Funds available.
Funds available, type of project.
Funds available.
Yes, Debt Policy Advisory Commission
Debt Service, projects usually financed with bonds.
Funds available.
Allowable debt service.
No response.
Cash available after operating
Legislative priorities.
Executive recommendation, legislative approval.
Rarely use general funds.
Executive recommendations, legislative approval
Funds available.
Project priority; funding availability, executive recom.
Priorities of Governor, Legislature, and Commission.
Gubernatorial/legislative priorities.
Estimated costs and programmatic and capital needs.
Legislation.
Size of request.
Private purpose, estimated life of project.
Type of project.
Availability of funds.
Nature of project, availability of funds, debt limits.
Need, political appeal, available cash.
Bondability guidelines.
Availability of funds, statutory authority.
Cash availability.
Availability of funds, benefit spread.
Availability of cash, debt capacity, life-cycle of project.
Expected life of project.
Size of project.
Availability of funds, project type, federal restrictions.
Availability of funds.
Project size.
Constitutional bondability constraints.
All projects use bonds..
Available funds/amount of state debt.
Size of project.
Availability of funds, agency's ability to finance.
Budget Office, available funds, Amount of state debt.
Economic situation, life of project.
Cost, size, purpose of project.
In process of review.
Type of project.
Revenues produced and voter approved G.O. bonds.
Availability of funds.
Project type and size.
Amount of project, project type.
Cash availability.
Bond financed, spec.fund agencies use dedicated rev.
Total cost and life of project
Availability of funds.
Cash availability.
Cash availability.
Legislative priorities.
Executive recommendation, legislative approval.
Bonding guidelines and tax laws.
Financial feasibility, avail. of revenues, debt capacity.
Bondability guidelines, general fund debt limit.
Legislative authorization.
Building commission action.
Availability of funds.
Time, future cost of money, and operational budget.
No
Yes
Yes
Yes
No
No
No
Yes
No
No
No
No
No
No
No
No
No
Yes
Yes
Yes
No
No
Yes
Yes
Yes
No
No
No
No
No
No
Yes
No
No
No
Yes
Yes
Yes
Yes
No
No
Yes
Yes
Yes
No
Yes
Total
Vs. Lease
Yes= 23
Page 40
Capital Budgeting in the States
Table 22
Project Financing: Part 2
State
U se O f
Include Revenue Bonds
Treasury Loans
Via Capital Process
Alabam a
Alaska
Arizona
Arkansas
California
No
Yes
No
No
Yes
Yes
Yes
Yes
Yes
Yes
Colorado
Connecticut
D elaw are
Florida
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes
Georgia
H aw aii
Idaho
Illinois
Indiana
Illinois
Indiana
Iow a
Kansas
Kentucky
Louisiana
M aine
M aryland
M assachusetts
No
Yes
Yes
N
N
No
No
No
Yes
Yes
Yes
Yes
Yes
No
Yes
Yes
Yes
N
N
No
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
No
No
No
No
No
No
Yes
No
Yes
No
No
No
Yes
No
No
Yes
Yes
N /A
Yes
No
No
Rarely
Yes
No
Yes
Yes
No
Yes
Yes
Sometimes
No
Yes
Yes
No
No
Yes
No
Yes
Yes
Yes
Yes
No
Yes
Yes
No
No
Yes
N /A
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes= 23
Yes= 38
M ichigan
M innesota
M ississippi
M issouri
M ontana
N ebraska
N evada
N ew H ampshire
N ew Jersey
N ew M exico
N ew York
N orth Carolina
N orth D akota
O hio
O klahoma
O regon
Pennsylvania
Rhode Island
South Carolina
South D akota
Tennessee
Texas
U tah
Vermont
Virginia
W ashington
W est Virginia
W isconsin
W yoming
Puerto Rico
Total
Page 41
Interim
Financing M ethods
No
General fund.
No
No
Planning funds, pooled money loans, commercial paper,
bond anticipation notes, general fund.
No
Bond anticipation notes.
Interfund borrow ings.
General fund, w orking capital fund, general revenue service
charges, local sales surtaxes, and revenue notes.
No
Treasury loans
Permanent building fund, general fund.
N
N
No
No
N /A
No
Advance receivables, bond anticipation notes.
Loans.
Bond anticipation notes.
Advanced funds, consolidated bond proceeds.
Bond anticipation notes and grant anticipation notes,
commercial paper program.
General fund.
General fund.
No
No
Cash
No
General fund.
General fund.
Interfund borrow ing.
No
Taxable rate loan, commercial paper.
No
Yes
Bond anticipation notes.
Yes, statutory only.
Internal loans.
Bond anticipation notes.
Gen. Fund advances / Bond anticipation notes if needed.
Bond anticipation notes.
N /A
Bond anticipation notes.
No
Cash flow Treasurer.
Bond anticipation notes/commercial paper.
Tax exempt commercial paper
No
Treasury and bank loans, notes. Available funds.
Commercial paper, Interfund borrow ing
No
Interim financing by gov' t. dev. bank and other sources..
Capital Budgeting in the States
Table 23
Debt Service
State
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
W ashington
W est Virginia
W isconsin
W yoming
Puerto Rico
Total
Users Pay
Compare Debt Service
User Fee
Private Sector
Debt Service
to Revenues & Expend.
Financing
Participation
Sometimes
Yes
Yes
Yes
Yes
Yes
No
No
Yes
No
Yes
Sometimes
No
No
Sometimes
Yes
No
Sometimes
Sometimes
No
Sometimes
Yes
Sometimes
Yes
No
Sometimes
Yes
No
Sometimes
Transportation
No
Yes
No
Yes
No
Yes
Yes
Sometimes
No
Yes
Project by project
Yes
No
Sometimes
No
Yes
Yes
Sometimes
Yes
Yes
Yes
Yes/No
No
Yes
No
Yes
No response
No response
No
No
No
Yes
Yes
Yes/No
Yes
Yes
No
No
No
Yes
No
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Project by project
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
Yes
Sometimes
Yes
Sometimes
Yes
No
Sometimes
Yes
Yes
Yes
Sometimes
Yes
Sometimes
Yes
Sometimes
Yes
No
Yes
Yes
No
Sometimes
Transportation
No
Yes
Yes
Yes
No
Yes
Yes
No
Yes
Yes
Project by project
Yes
Yes
Sometimes
No
Yes
Yes
Sometimes
Yes
Yes
Yes
Yes
Yes
No
No
Yes, Lease purchase option
Yes
Sometimes
No
No
No
Yes
No
No
No
Sometimes
No
Yes
No
No
Sometimes
Sometimes
No
Sometimes
No
No
Sometimes
No
Yes
Yes
Sometimes
No
Yes
No
Yes
Sometimes
Yes
No
No
No
Sometimes
Project by project
Yes
No
Sometimes
Sometimes
No
Yes
Sometimes
Yes
No
Sometimes
Yes= 22
Yes= 34
Yes= 32
Yes= 13
Page 42
Capital Budgeting in the States
Table 24
Debt Limits
Policy to Limit
Policy to Limit
State
Debt Service
Authorized Debt
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
No
Based on oil revenues.
Yes
General obligation debt approved by voters
No
No general obligation debt allowed.
No
No
No
10% of general fund revenues.
18.5% of general fund revenues in past 3 years.
No
No
No
Yes
No
No
10% of 3 yr. average revenues bond & redempt fund.
Yes, issue up to 90% of that which was retired.
8% of available revenues.
Yes
No
3% of general fund unrestricted revenues.
5-8%
No
No
No
Treasure' s Office has no debt policy.
No-Informal
Yes
1% of taxable property subject to property tax.
No
Statutory limits.
No
General obligation debt limit of $350,000.
No/ Statutory limits can exist.
No
No general obligation debt allowed.
Debt limited to 1.6 times general fund tax receipts in last year.
New authorizations limited to 5% of revenues in given year.
50% of tax revenue preceding 2 years.
W orking limits established.
Total amount of principal & interest not to exceed debt limit.
No
Authorization for general obligation debt set by statutes.
No general obligation debt allowed.
General obligation bond limit of $250,000.
$1 million general obligation debt limit without voter approval.
General obligation bond limit of $500,000.
2 times 3 year average bond revenues & redemption funds.
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
No
10% of 1 cent sales tax
5% of annual general fund expenditures.
No
No
Constitution
Limit debt 7.5% of general revenues.
5% of prior year' s revenues.
No
Yes
Yes
No
Vermont
Virginia
W ashington
W est Virginia
W isconsin
W yoming
Puerto Rico
No
5% of taxable revenue
7% of general fund revenues.
No
3 to 4% of revenues.
1% of assessed value of taxable property.
State constitution.
Net tax-supported debt at 3.2% of personal income.
Statutory limits direct debt @105% of previous FY (FY1991 base)
Cap on bonds.
Limit debt of state agencies to 5 percent of personal income.
1.5 times largest revenue preceding 4 years.
State constitution and statute.
No
No
2% of assessed value or property.
10% of general fund revenue.
Yes/general obligation Yes/revenues based on issuing authority.
Yes
State constitution on general obligation bonds and statutory
limits on authority issued.
Voter approval.
General obligation bond limit of $10,000,000.
State constitution and statutes.
No
Statutory debt issuance authoriz.process, statutory const. limits.
Outstanding debt limited to 1.75 times avg. 5-year tax revenues
Limit debt to 6% of personal income .
Function of debt service.
$100,000 limit on general obligation debt.
Pledged revenues must be 150% of debt service requirements.
Limit of 5% general fund revenues previous 3 years.
Constitutional 1.5% of total fair market value of taxable
property/Statutory 20% of annual appropriation limit.
Debt Affordability Committee reviews debt.
1.15% times average annual revenues.
Legislative approval.
Legislative authorization.
Yes - Constitutional limit on debt issued.
1% of assessed value of taxable property.
Public corporations by-laws.
Page 43
Capital Budgeting in the States
Table 25
U se of Bonds Versus Cash
W ritten Guidelines For
State
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
D elaw are
Florida
Georgia
H aw aii
Idaho
Illinois
Indiana
Iow a
Kansas
Kentucky
Louisiana
M aine
M aryland
M assachusetts
M ichigan
M innesota
M ississippi
M issouri
M ontana
N ebraska
N evada
N ew H ampshire
N ew Jersey
N ew M exico
N ew York
N orth Carolina
N orth D akota
O hio
O klahoma
O regon
Pennsylvania
Rhode Island
South Carolina
South D akota
Tennessee
Texas
U tah
Vermont
Virginia
W ashington
W est Virginia
W isconsin
W yoming
Puerto Rico
Primary D eterminant To
U se of Bonds Vs. Cash
No
N o Response
No
No
No
Yes
No
No
No
No
No
No
Yes
No
Yes in project legislation
No
Yes (Agency projects @ + 1 million)
No
No
Yes
N o Response
No
Yes
No
No
No
No
No
No
Yes
No
No
Yes
No
No
No
No
No
No
No
No
No
N o Response
No
No
Yes
Yes
No
No
No
Yes
U se Bonds
Policy made by Governor w ith legislative approval.
N o Response
Any use of bonds for the construction of state facilities (w ith the exception of
highw ays) must be approved by the legislature.
Availability of statutory authority and revenue stream.
Availability of other fund sources, magnitude of need.
N eed statew ide voter approval.
D etermined by legislature based on availability of funds.
N ature of capital investment (i.e., average life exceeds ten years).
D epend upon the type of project.
Type and size of project., availability of general funds.
Projects intended for long-term use (20 years or longer)
Availability of money and need for project.
Cost, life, and long-term benefits of project.
Available funds.
General obligation bond limit.
Spreading costs over multiple years.
U seful life, debt capacity, funds availability, gubernatorial and legislative policy.
Life of project must be at least 20 years.
Legislative approval.
Project life of 15 years.
N o Response
Project magnitude and alternative to general fund/general purpose financing.
Bonds are primary funding mechanism, how ever, the state constitution limits
bondable expenses. W hen not eligible for bond financing, general funds are used.
State has recently used cash surpluses for capital budget.
Bonding has been done for only large groups of projects.
Larger projects exceeding cash account.
Inability to fund by other means and financial feasibility of an institution to bond.
Legislative authority is required.
U se, cost, useful life.
Availability of funds, life of project.
Type of project, program needs, availability of funds.
All general obligations bonds have to be approved state-w ide by voters.
Availability of cash.
If state law permits, projects are usually financed w ith bonds.
Legislative approval.
M ajor asset providing long-term benefits to future users.
Size of project (value).
Availability of funding from voter approved general obligation bonds.
Legislative authorization.
Available funds.
Life cycle of asset, project size, availability of funds.
N o Response
Recommendations by Governor w ith legislative authority.
Financial feasibility/debt capacity project priority, availability of cash.
Project life and cost.
Legislative authority is required.
Statutory authority.
Availability and cost/funding versus other financing alternatives.
Page 44
Capital Budgeting in the States
Table 26
Treatment of Long-term Leases
State
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Puerto Rico
Treated As Operating
Subject To Same Selection
Included In
Or Capital Expense
Criteria As Capital
Debt Levels
Operating
No Response
Operating
Varies depending upon specifications in contract.
Operating expense; may be subject to capital
planning requirements.
Operating
Operating
Operating (listed in financials as capital lease).
Operating/Capital (Depending on project).
Operating
Operating
Operating
Operating
Capital
Operating
Operating unless lease-purchase.
Capital (if exceeding $200,000 per year).
Operating
Operating
Capital if meets accounting definition of capital lease
No Response
Operating
Operating
Capital
Operating
Operating
Operating
Operating
Operating
Operating
Operating
Operating
Operating
Operating
Operating
Operating
Operating (Subject to capital planning requirements)
Operating
Operating
Operating
Operating
Operating
No Response
Operat. for budget purposes/GAAP for accounting
Operating/capital (GAAP determines)
Capital if accounted for as capital lease.
Operating
Operating
Operating
Operating
Operating
No
No Response
For state lease-purchase only
Yes
Sometimes
No
No Response
No
Yes
Sometimes
No
No
No
No
No
Yes
No
No
Yes
No
No
Yes
No
No
Yes
No Response
No
No
Yes
No
No
No
No
No
No
No
No
No
No
No
No
Sometimes
No
No
No
No
No
No Response
No
Yes
Yes
Yes
Yes
No
No
Yes
No
No
Yes
No
No
No
Yes
No
No
No
No
No
No
No
Yes
No Response
Yes
Yes
No
No
Sometimes
No
Sometimes
Yes
Yes
No
No
No
No
No
No
No
No
No
No
Yes
No
No Response
No
Yes
Yes
No
Yes
No
No
No
Yes= 10
Yes= 11
Total
Page 45
Capital Budgeting in the States
Table 27
Alternative Financing
State
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Certificates of participation for limited projects.
No Response
None.
None.
Authorities, other levels of government, public-private partnerships and, in the past, earmarked funds.
Public-private partnerships, earmarked funds, such as the controlled maintenance trust fund, intergovernmental agreements.
Use of authorities including development, housing finance, student loan, health and education, and resource recovery.
Awarded $220 million through litigation. Funds will be used to make long-term investments which will preserve the environment,
revitalize neighborhoods, and promote education and economic competitiveness.
Florida Buildings and Facilities Act in which operating appropriations for building rents are used to provide debt service on bonds
used to construct new buildings.
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
None.
Certificates of participation.
None.
None.
None.
Lease purchase, matching private donations, dedicated gaming revenues in excess of specified amount, interest cash reserves.
Not applicable.
Authorities, other levels of government, public-private partnerships, and earmarked funds.
None.
Building authority.
Beginning alternative financing of utility projects. Some privatization.
No Response
Legislature authorized the private development of facilities or the purchase of a privately built facility if such an arrangement is in
the best interest of the state.
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Revenue bonding authorized for some state agencies.
Not applicable.
Lease/purchase used for some large facilities (e.g. prisons). Some agencies have dedicated operating funds for capital improvement.
Coal severance tax revenue--12 percent earmarked for this purpose.
Use of lease-purchase agreements.
Privatization. Use of Certificates of Participation sor secure juvenile facilities, subject to legislative authority and debt limit.
No Response
Authorities, lease purchase agreements, line of credit.
Dedicated revenue from lottery for public school construction. Finance Authority finances state and local projects.
Deposit of percentage of statewide taxes to dedicated funds, fees, use of proceeds from seized property.
None.
None.
Certificates of Participation for limited projects.
Lease -purchase with legislative approval.
Use of certificates of participation for prison or other facility financing, subject to debt limit authorization process.
Limited use of lease-purchase of financing with bonds or certificates of participation.
Certificates of participation for limited projects.
Construction through RFPs where private sector may finance and be repaid through revenues collected (e.g. college dorms).
Authorities and cooperation with other levels of government.
None.
No Response
Many higher ed. projects receive funding from private donors or foundations; federal funds sometimes available (.e.g. prisons).
Use of lease-purchase agreements.
Public-private partnerships using lease acquisition arrangements; private ownership of certain types of facilities, such as bookstores,
roads, and prisons; and incremental economic development used to finance certain facilities.
Legislature authorizes lease development, long-term leases, and certificates of participation.
Numerous uses of political subdivision or other governmental entities.
Public/private through lease option arrangements. Master lease facility for equipment.
Washington
West Virginia
Wisconsin
Wyoming
Puerto Rico
Public-private partnerships in which the private sector is responsible for the development and or the administration of a project in
lieu of a fee, rent, or tax benefits.
Page 46
Capital Budgeting in the States
Section Five:
Asset
Management:
Management:
Tables
Tables 2828-30
States often use inventory systems to track the status of
existing capital assets. Almost all states maintain a data base
inventory for capital assets. In about one-third of the states,
the inventory systems assess the condition of facilities and
about two-thirds of the states use building maintenance
standards. The frequency of updating data bases ranges from
continuously to every three years (see Table 28).
Some states charge rent to departments in order to finance
maintenance and improvements to facilities. In about twothirds of the states, departments are charged rent and the rent
is used for building maintenance. Other funding mechanisms
available for maintenance include building renewal funds,
dedicated building funds, maintenance reserves, and revolving
funds in addition to general funds (see Table 29). In about
two-thirds of the states the current priority in appropriations is
for maintenance rather than new construction.
As part of their asset management, states use methods to
inventory and value their capital assets often relying on
historical cost and replacement cost. In most cases, lease
acquisitions are not included in this inventory (see Table 30).
GOOD PRACTICES
•
Maintain an updated inventory system of capital assets.
States should review the adequacy of the information and
include the condition of the facilities.
Page 47
Capital Budgeting in the States
Table 28
Asset M anagement
State
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
D elaw are
Florida
Georgia
H aw aii
Idaho
Illinois
Indiana
Iow a
Kansas
Kentucky
Louisiana
M aine
M aryland
M assachusetts
M ichigan
M innesota
M ississippi
M issouri
M ontana
N ebraska
N evada
N ew H ampshire
N ew Jersey
N ew M exico
N ew York
N orth Carolina
N orth D akota
O hio
O klahoma
O regon
Pennsylvania
Rhode Island
South Carolina
South D akota
Tennessee
Texas
U tah
Vermont
D ata Base
Inventory
H ow O ften D ata U pdated
Priority Between
M aintenance & N ew
Facilities
Charge Rent To D epartments
No
Yes
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
N o response
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
NA
N ow current
Yearly
Kept by Bldg. Services
O ngoing
NA
Yearly
Yearly
Yearly
Continuous
Q uarterly
Yearly
Constant
O ngoing
Yearly
Yearly
Continuous
Continuous
Yearly
Every 3 years
N o response
D epends on staff
Continuous
Every 2 years.
Yearly
N o response
Yearly
Continuous
NA
Periodically
N o response
Every 2 years.
Every 3 years.
Yearly
Yearly
O ngoing
Being developed
Biennial Survey
D eveloping/Continuous
As needed
Annually
Continuous
Continuous
Yearly
NA
Based on N eed
M aintenance
M aintenance
Based on need
Based on need
Project by project
M aintenance
M aintenance
Based on need
Based on need
Based in need
M aintenance
M aintenance/needs
D epends
Based on need
M aintenance
M aintenance
M aintenance
M aintenance
Project by project
N o response
M aintenance
Based on N eed
D epends on future impact
M aintenance
M aintenance
M aintenance
D epends
M aintenance
M aintenance
Based on need.
M aintenance
D epends
M aintenance
M aintenance
Based on need.
M aintenance
N ot established
Based on need
D epends
M aintenance
M aintenance
M aintenance
M aintenance
N eed based
N o regular schedule
Yearly
Annually
Yearly
M onthly
NA
M aintenance
N ew Construction
M aintenance
M aintenance
M aintenance
N eed based
In process
No
Yes
Yes
Yes
No
No
No
Yes
Yes
No
Yes
No
No
No
Yes
Yes
Yes
O ther than general fund
Yes
N o response
Yes
U sually
Yes
Yes
Yes
Yes
Yes, sometimes.
Yes
O ther than general fund
No
Yes
No
Yes
O ther than general fund
Yes
Yes
No
Yes
Yes
Yes
Yes
No
Sometimes
O ther than general fund/
transportation fund
Yes
Yes
Yes
Yes
No
Yes
Virginia
Yes
W ashington
Yes
W est Virginia
Yes
W isconsin
Yes
W yoming
Yes
Puerto Rico
Yes
N A indicates data are not available.
Total
Yes= 46
Yes= 29
Page 48
Capital Budgeting in the States
Table 29
Asset Management: Part 2
State
Other Mechanisms For Maintenance
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Budget and revolving funds through rent.
No
Building renewal funds.
Yes
Operating budget and dedicated building accounts.
No
No
Operating budget includes routine maintenance/repair funds plus appropriations for minor capital
improvements and equipment.
General revenue fund and trust funds.
Continuation and improvement operating funds.
Operating Budget
Op. budget for routine maint./repair, appropriations for capital Improv./equip. under $30,000.
No
Yes
Operating budgets and Rebuild Iowa Infrastructure Fund.
Dedicated building funds.
General fund.
Operating budget.
Operating budget, dedicated building funds.
Operating budget, dedicated funds for state parks.
No response.
Yes, operating budget for projects les than $500,000.
Operating budget and pooled accounts for asset preservation in capital budget.
Yes
Yes, operating maintenance and repair funds for capital improvement work less than $25,000.
Operating budget.
Task force for building renewal, funded with cigarette tax proceeds.1 year after the completion of
new construction, major renovation or building acquisition of non-revenue bond facilities, agencies
must place an amount equal to 2% of the cost/value into
Capital improvement projects, operating, performance-based contracts.
Operating budget.
Operating budget.
Operating budget.
No
No
Operating budget.
Operating budget.
Operating budget/ Revolving Fund / Rents.
Statutory authority permits agencies to designate funds for facilities maintenance and repair.
Operating budget
Operating budget
No
General fund and other appropriations.
Revolving fund through rent.
No
Operating budget for lower cost maintenance projects.
No
Maintenance reserve.
General fund and dedicated funds.
Some facilities have dedicated maintenance funds.
Yes
No
No
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Puerto Rico
Page 49
Capital Budgeting in the States
Table 30
Method To Inventory and Value Capital Assets
State
Methods Used
Lease/Acquisition Included In Equations
Alabama
Alaska
Arizona
Arkansas
California
Historical cost
No Response
Annual building inventory and inspection.
Historical cost.
Real property inventory system managed centrally and continually
updated.
Yes
No Response
Yes--Only if the state intends to purchase.
Yes
No--Appraisals are generally performed only at the time of
acquisition and time of sale.
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Each agency submits their own.
Replacement value.
Generally accepted accounting practices using cost data.
Physical statewide facilities inventory.
Separate properties and equipment inventories
Historical cost
Agencies and Division of Public Works estimate value.
Historical cost plus improvements to assets.
Agencies report to central repository the value at cost.
Decentralized inventory. Proposal to merge.
Based on a physical inventory and values at cost.
No
No
Yes
Yes for square foot rate.
No
No
Yes
Yes
No
No
Only lease-purchase items are included.
Kentucky
Louisiana
Actual Cost
Comp. data base w/ original cost and replacement values.
Yes
No
Maine
Maryland
Massachusetts
Michigan
Minnesota
Implemented fixed asset system .
Physical inventory and replacement value.
No Response
Historical cost / generally accepted accounting principles
Agencies and Div. of St. Bldg. Const.inventory/evaluate facilities.
Mississippi
Missouri
Montana
Nebraska
Agency level inventory at historical cost.
Land and buildings system database.
Dept. of Administration Asset Management System.
Agencies logs of st.-owned bldgs with replcmt. value data.
No
No
Yes
No
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
Facilities management database.
Follows generally accepted accounting principles (GAAP)
Periodic computerized building inventory & inspection.
Historical cost index by building type.
Inventoried at statewide level.
Yes
Yes
Yes
No
No
No
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
All buildings must be insured for replacement value.
General fixed assets valued at original cost.
Historical costs plus improvements, replacement cost.
Decentralized inventory, replacement value.
Biennial survey of asset condition.
Developing in response to new GASB rules.
Assets valued at replacement cost for insurance purposes.
Historical cost improvements
Original cost, risk management database.
No Response
Div. of Risk Management maintains database of capital facilities.
Independent agency annually determines replacement value.
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Manual inventory. Perform independent appraisal of values.
Central inventory of buildings, grounds, and leases.
Value based on local assessments.
Computerized inventory of all leased and owned facilities.
Historical cost.
Computerized inventory of all facilities, value, condition.
All assets inventoried. Value based on acquisition cost.
Puerto Rico
Modified accrual basis.
No
No
No Response
No
No
St. Const. Office assess conditon / St. Prop.Office keeps inventory.
No
Yes
Yes
Yes (lease-purchase acquisitions)
No
Not applicable.
No
No
No Response
Yes
No
Yes, at time of acquisition.
Yes
Yes
No
Internal service / non-expendable trust funds straight line
depreciation.
Yes--Only if the lease becomes government property.
Page 50
Capital Budgeting in the States
Appendix Table A
Size Of Capital Budget
State
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Puerto Rico
New Appropriation Level For Fiscal 1999
$1,202.6 million
$1,207.7 million ($85.4 million general fund)
$474.5 million
$760.2 million
$1.4 billion($1.0 billion bonds, excluding transportation.
$468.8 million
$1,547 million (authorization)
$347.2 million
$6,276 million ($1,752.8 million in bonds actual in FY 1999).
$1,280 million in bonds
$1,471.2 million (all funds)
$23.7 million
$865.7 million
$527.4 million
$135.0 million (excludes roads, federal funding, other contributions)
$604.8 million ($468.8 million for FY 2000 ).
$1,053 million ($1,733.674 million all funds)
$1,422.2 million (cash and non-general obligation bond debt)
$4.35 million
$1,833.1 million (includes transportation)
$6.0 million ($1.0 million general fund)
$726 million ( 519.2 million general fund support )
$999.0 million
$582.5 million
$547.1 million
$194.9 million
$31.8 million
$234.4 million
$64.8 million (47.6 general fund) incl. Transporation
$617.2 million not including bonds.
$119.3 million
$4,679 million
$77.1 million
$491.7 million (includes transportation)
$2,195 million
$30.899 million
$180.01 million
$5,600 million (authorized)
$419 million (all funds), $121 million (new general obligation debt)
$522.5 million
$47.12 million incl. bonds
$69.1 million
$240 million
$666.2 million
$46.1 million, of which $43 million is in general obligation bonds.
$778.3 million ($226.2 million general fund)
$1,836 million ($864 general fund supported, $972 dedicated funds)
$374 million
$668.2 million
$28.2 million
$3,895 million (consolidated)
Page 51
Annual Or Biennial
Annual
Annual
Annual
Biennial
Annual
Annual
Annual
Annual
Annual
Annual
Annual
Annual
Annual
Biennial
Annual
Annual
Annual
Annual
Annual
Annual
Annual
Annual
Biennial
Annual
Biennial
Biennial
Biennial
Biennial
Biennial
Annual
Annual
Annual
Annual
Biennial
Biennial
Annual
Biennial
Annual
Annual
Annual
Annual
Annual
Annual
Annual
Annual
Annual
Biennial
Annual
Biennial
Biennial
Annual
Capital Budgeting in the States
Appendix Table B
Bond Ratings for General O bligational D ebt
State
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
D elaw are
Florida
Georgia
H aw aii
Idaho
Illinois
Indiana
Iow a
Kansas
Kentucky
Louisiana
M aine
M aryland
M assachusetts
M ichigan
M innesota
M ississippi
M issouri
M ontana
N ebraska
N evada
N ew H ampshire
N ew Jersey
N ew M exico
N ew York
N orth Carolina
N orth D akota
O hio
O klahoma
O regon
Pennsylvania
Rhode Island
South Carolina
South D akota
Tennessee
Texas
U tah
Vermont
Virginia
W ashington
W est Virginia
W isconsin
W yoming
Puerto Rico
M oody's
Standard and Poor's
Fitch's
Investors Service
Corporation
Investors Service
N o general
N o general
N o general
N o general
N o general
N o general
N o general
N o general
N o general
Aa
Aa
obligational
Aa
A1
obligational
Aa
Aal
Aa2
Aaa
A1
obligational
Aa2
obligational
obligational
obligational
Aa2
A2
Aa2
Aaa
Aa3
AA1
Aaa
Aa
Aaa
Aa
obligational
Aa2
Aa
Aa1
Aa1
A2
Aaa
obligational
Aa1
Aa3
Aa2
Aa3
A1
Aaa
A1
Aaa
Aa
Aaa
Aa
Aa1
Aa
Aa3
Aa2
obligational
Baa1
debt
N o general
debt
N o general
debt
N o general
debt
debt
debt
N o general
N o general
N o general
debt
N o general
debt
N o general
debt
N o general
AA
AA
obligational
AA
A+
obligational
AAAA+
AA+
AAA
A+
obligational
AA
obligational
obligational
obligational
AA
AAA+
AAA
AAAA+
AAA
AAAAA
AAobligational
AA
AA+
AA+
AA
A
AAA
obligational
AA+
AA
AA
AA
AAAAA
A+
AA+
AA
AAA
AAAA+
AA
AAAA
obligational
A
debt
N o general
debt
N o general
debt
N o general
debt
debt
debt
N o general
N o general
N o general
debt
N o general
debt
N o general
debt
N o general
AA
*
obligational
*
A+
obligational
AA+
*
AA
AAA
AAobligational
AA
obligational
obligational
obligational
*
A
AA
AAA
AAAA+
AAA
AA
AAA
*
obligational
AA
AA+
AA+
*
A+
AAA
obligational
AA+
AA
AA
AA
AAAAA
*
AAA
AA+
AAA
AA
AA+
AA
AAAA+
obligational
*
debt
debt
debt
debt
debt
debt
debt
debt
debt
Sources: M oody' s Investors Service, Inc., Standard and Poor' s Corporation, and Fitch' s Investors Service
* = N o rating available
Page 52
Capital Budgeting in the States
Explanation of Bond Ratings
Although somewhat different in their letter usage, Standard & Poor's, Moody's, and Fitch rate bonds in
descending alphabetical order from A to D. Standard & Poor's rates some 2,000 domestic and foreign
companies; 8,000 municipal, state, and supranational entities; and 1,300 commercial paper-issuing
entities. Moody's rates 19,000 long-term debt issues; 28,000 municipals; and 2,000 commercial paper
issuers. Fitch Investor Services recently merged with Europe’s International Bonding group and is one of
the three largest rating agencies in the world.
Bond Rating Codes*
Rating
S&P
AAA
AA
A
BBB
BB
B
CCC
CC
D
Highest quality
High quality
Upper medium quality
Medium grade
Somewhat speculative
Low grade, speculative
Low grade, default possible
Low grade, partial recovery possible
Default, recovery unlikely
Fitch
AAA
AA
A
BBB
BB
B
CCC
CC
D
Moody's
Aaa
Aa
A
Baa
Ba
B
Caa
Ca
C
*Plus (+) or Minus (-) signs indicated relative standing within a rating.
States
Page 53
Capital Budgeting in the