House Interior Appropriations Subcommittee

questions for John F. Kennedy Center for the Performing Arts on FY1997 budget

Answers submitted May 13, 1996

1. Your budget justification contains an operational increase of $569,000. Should the subcommittee be unable to provide this increase how will you absorb these costs and what impact will this have on your programs and your staffing levels?

The increased operations and maintenance account request for FY 1997 provides for projected increases in utility rates, reduction of the extraordinary backlog of minor repairs, and increased preventative maintenance services.

The increase required to cover electrical, water and sewer rate increases is unavoidable. Therefore, should the subcommittee be unable to provide this increase, the Center would further defer action to address its long list of scheduled preventative maintenance and minor repair. This would result in unavoidable further increases in building operations and construction costs and possible curtailment of operations.

2. How much of this increase are fixed costs versus maintenance request?

Fixed Costs: $204,000 The Center's electric utility provider, PEPCO, implemented significant rate increases, effective July 11, 1995. While the charge per kWh has increased by only about 2.3 percent, the Maximum Demand Charge increased by 53 percent, and the Peak Charge increased by 18 percent. The Kennedy Center now estimates that these increases will amount to a minimum of $204,000 in additional costs in FY1997, after adjustments for reduced energy and water consumption expected to accrue from current capital improvements, including new chillers and lighting retrofit.

Maintenance Costs: $365,000 The remainder of the requested increase is distributed between increased necessary preventative maintenance services, $100,000; and $265,000 for a stepped-up program to reduce the Center's significant backlog of critical repair projects, as follows:

Preventive maintenance services: Improved maintenance of the elevators and escalators is absolutely required, as has been confirmed in a recent study by Leach, Bates & Associates. In the current fiscal year, elevator maintenance costs are $64,000 greater than budgeted. The increase will also allow the Center to provide for maintenance contracts on the building's new chillers.

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Building Emergency and Minor Repairs: Subsequent to the condition audits performed as a basis for the Center's July 1996 Comprehensive Building Plan, a more detailed study by our consulting architects and engineers has revealed a backlog of nearly $12 million in regular building and equipment maintenance and minor repairs. At the current rate of funding, elimination of this backlog will have to be stretched out over 15 years. In order to accelerate the rate of repair and avoid significant additional costs which attend delay, a total of $1.3 million is budgeted in the FY 1997 request. The increase of approximately $265,000 will allow the Board to begin to reverse the emergency, stop-gap manner in which systems and equipment are now kept functional.

3. Your FY 1997 budget request actually contains a decrease in personnel expenditures. What management actions did the Center take that led to these results?

The FY1997 expenditures for personnel under the operations and maintenance function are reduced due to a reduction in personnel by 3 FTE associated with abolishment of the Center's health unit in FY1996.

4. What is the status of the $36 million unobligated balance for critical capital repairs the Center inherited from the National Park Service?

$3.0 million of these funds were rescinded in P.L. 104-9. The balance of funds transferred now have been obligated, with appropriate provision for prudent reserves.

5. If there is a balance, will it be expended by the end of this fiscal year?

There is no balance.

6. What specific capital projects were completed with these funds?

In addition to associated planning, design, construction supervision and project management expenses, the construction projects include: replacement of leaky main roof and roof terrace; repair of obsolete cooling coils; replacement of chillers; replacement of obsolete dimmer systems; repair of plumbing systems and fan starters; basic security controls and systems; and building automation systems.

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7. What outstanding “critical repair" projects remain?

A complete description of critical repair projects is presented in the Kennedy Center Comprehensive Building Plan which was provided to the subcommittee upon its completion in July, 1995. Completion and periodic update of this plan is required under the Kennedy Center Act Amendments of 1994. The plan will be updated on an annual basis. Projects planned for Stage I of the Comprehensive Building Plan (FY 1995 through FY 1999) include the following:

Rehabilitation of the Concert Hall auditorium to meet life safety and ADA requirements; other interim interior accessibility modifications; repair to the leaky service tunnel and drive, including waterproofing of the electrical vaults and repairs to the air intake ducts; replacement of existing, obsolete fire alarm system with a new fire alarm system; construction of a security control center and extension of the security system; provi of fire separation between the garage and plaza level; provision of panic hardware a correction of serious egress deficiencies at stairs and exitways; partial phased renovat of existing office and support space; memorial exhibits and signage; renovation of garage ventilation and installation of garage piping insulation; restoration of site and site signage; energy retrofit of heating systems; renovation to correct life safety and accessibility deficiencies in the Opera House auditorium.

8. How many of these projects fall into the category of critical health and safety?

The majority of repairs in the Comprehensive Building Plan, Phase 1, are directly related to addressing critical health and safety issues, including bringing the building up to code for accessibility, life and fire safety, and egress.

9. How many National Park Service FTE's have been retained by the Kennedy Center?

55 FTE transferred to the Kennedy Center at the start of FY1995. Number of FTEs authorized has been reduced to 52 in FY1997.

10. At the present level of funding, how many years will it take to be in complete compliance with ADA?

According to the Comprehensive Building Plan of July, 1995, it will take approximately 15 years to bring the building up to current accessibility and other life safety standards.

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11. When will the garage project be complete?

The current phase of the restoration of the parking garage structure, under supervision of the National Park Service, is scheduled for completion by March, 1997. However, work related to other critical repair projects will take place in and around the garage, including security system repairs where overhead coil doors will be installed at all entrances and exits of the garage, and duress alarms will be installed in the garage. This work is expected to be complete by December, 1997. Other work in and around the garage includes minor repairs to the miscellaneous concrete elements not included in the major restoration work, repair of the dysfunctional garage ventilation system, installation of plumbing insulation, installation of signage and directional lighting to aid exiting, painting to improve lighting levels for garage security, and installation of CCTV monitoring and other security devices. All work associated with the interior of the garage is planned for stage I of the implementation plan. Repair and replacement of the exterior marble panels of the parking level A enclosure and the plaza overhang will be deferred to Stage II.

12. How many services are contracted out to the private sector and what is the management rationale for taking this action versus hiring full time federal employees? There are numerous companies providing services to the facility and performing minor repair work. This private sector activity for FY 1997 is budgeted for $4.6 million of the total operations and maintenance request, approximately 43 percent of the amount requested. The major services contracted out include janitorial, cleaning, security and emergency medical services, elevator maintenance, chiller and AC unit maintenance, other specialty equipment maintenance, and seasonal grounds maintenance. The minor repair work contracted out includes repairs to electrical and mechanical systems, minor space modifications, carpet repair, marble repair, painting, lock repair, and other miscellaneous repairs to the facility.

Were these facility services and repairs performed by proprietary full time appropriated fund employees, the size of the appropriated fund work force required at the Kennedy Center could be expected to reach an estimated 114 FTE. Facility service contracts are more cost effective than performing the services with full time proprietary personnel for several reasons: private sector personnel practices more readily allow a mix of full- and part-time personnel and expansion or reduction of the work force to adapt to dynamics of

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facility work, personnel with specialty skills and expertise are available when needed for only the time required -- avoiding the employment of full-time but under-utilized specialty staff, personnel compensation and performance levels are determined competitively, goods and support services are purchased by specialty contractors in greater volume and lower cost, and the additional administrative costs associated with inhouse services are avoided.

13. What programs are funded with non-appropriated funds?

As per the Kennedy Center's authorizing statute, "No funds appropriated pursuant to this section shall be used for any direct expense incurred in the production of a performing arts attraction, for personnel who are involved in performing arts administration (including any supply or equipment used by the personnel), or for production, staging, public relations, marketing, fundraising, ticket sales and education." These performancerelated activities are funded with non-appropriated funds.

14. How do you plan to develop performance standards for maintenance and operations?

The performance standards are being developed by the Galbreath Company, a major real property management company, and Technical Facility Management, Inc., a facility systems management consultant in association with Wiss, Janney & Eltsner, architects and engineers, as part of that firm's assessment of facility management operations.

15. Did you institute your own finance system when you separated from the Park Service or did you continue the one in place prior to the separation?

The Board elected not to use the NPS accounting and payroll systems and retained the General Services Administration for accounting, Federal financial reporting, payroll and making payments to vendors and contractors. The GSA uses the NEAR system for this purpose.

In addition, the Board maintains an internal tracking system for appropriated funds which is reconciled monthly with the GSA accounting information. Under this arrangement, the Board is in full control of its appropriated funds enabling it to make solid management and planning decisions. Financial statements on Federal and trust expenditures are also reviewed by the Finance Committee of the Board of Trustees every quarter.