A Veteran’s Day Look at the Oregon Military Department Budget

MILITARY DEPARTMENT

Agency Totals

2013-15

Actual

2015-17

Legislatively Approved

2017-19

Current Service Level

2017-19

Legislatively Adopted

General Fund 21,821,936 25,558,014 26,930,695 25,608,114
Other Funds 102,454,814 125,943,093 101,022,153 120,386,657
Other Funds (NL) 75,953 60,624
Federal Funds 151,411,508 284,615,518 261,708,475 271,814,624
Total Funds $275,764,211 $436,177,249 $389,661,323 $417,809,395
Positions 530 451 429 477
FTE 478.55 408.01 386.88 426.82

Overview

The Oregon Military Department (OMD) is responsible for administration of the Oregon Army National Guard, the Oregon Air National Guard, the Oregon State Defense Force, and the Office of Emergency Management (OEM).

The National Guard is a federal-state partnership with a dual mission:

  • Provide combat-ready units and equipment in support of national defense;

 

  • Provide units and equipment to protect life and property during natural disasters and civil unrest, as well as to provide backup support to law enforcement.

The National Guard serves on a day-to-day basis under the command of the Governor, and is available to the federal government upon order of the President of the United States. The Department is overseen by an Adjutant General, appointed by the Governor to a four-year term. The Adjutant General also serves as the Governor’s homeland security advisor and chief of staff of the Military Council.

 

The federal government directly funds federal employees, guard member salaries and wages, and all equipment and equipment maintenance. For the state, federal responsibility primarily centers on providing facilities and facility maintenance for the Oregon Guard. The federal government also is a major source of funds for new construction of facilities, and for Homeland Security.

 

The Department operates two National Guard Bureau-funded educational programs: the Youth Challenge program and the Science and Technology Academy Reinforcing Basic Aviation and Space Exploration (STARBASE) program.

Youth Challenge provides students at risk of dropping out of high school an opportunity to complete educational credits for graduation or to take the General Education Development (GED) examination.

The STARBASE program increases third through eighth grade students’ awareness of the importance of math and science through learning about flight operations, weather reporting and forecasting, and electronics maintenance at Oregon’s two military air bases.

Revenue Sources and Relationships

The Department’s state budget receives nearly two-thirds of its funding ($271.8 million in 2017-19) from the federal government. These funds are used to finance each of the Department’s four major program areas and are based on federal/state cooperative agreements and federal grants. Also included are Federal Funds for major construction projects.

Outside of the state budget, the Department receives direct federal support ($677.2 million in 2017-19) through the National Guard Bureau for funding federal employees (2,011 FTE), guard member salaries and wages, and equipment.

The level of federal support in the state budget varies by program, type of facility, and type of construction project. For example, troop training sites are entirely supported by Federal Funds, as are base security and the STARBASE program. Approximately 75% of the costs associated with logistical sites and between 75% and 85% of utility, maintenance, and supply expenditures of the Air National Guard are federally funded. Oregon Youth Challenge Program costs are covered by federal funding at the 75% level. Federal Funds converted to Other Funds provide most of the support for the Department’s administrative costs. OEM receives Federal Funds for emergency management, disaster recovery, and homeland security.

The federal and state expenditures for the National Guard in Oregon total over   $1 billion over the course of a biennium. General Fund supports wages and salaries of state employees, debt service, and state matching funds for various federal/state agreements.

Other Funds revenue received by the Department totals $111 million. Approximately $84.1 million is related to 9- 1-1 emergency telecommunications surcharge revenues. The Department also generates facility rental fees and miscellaneous sales revenue. Rental revenues earned from federally supported facilities are required by the federal government to be used in support of the facility that earned it. The Department’s facility rental revenue is estimated to be approximately $3 million in 2017-19. Miscellaneous sales revenues are derived from vending machine profit, coin operated telephones, and recycling programs.

Other Funds revenue includes approximately $27,000 in Oregon individual income tax check-off deduction revenue, which began with the 2006 tax year and is associated with the Emergency Financial Assistance Program.

The Oregon Youth Challenge Program receives Average Daily Membership (ADM) revenue from the Bend-LaPine School District totaling $2.1 million, as well as approximately $414,000 National School Breakfast and Lunch transfers from the Oregon Department of Education. Lastly, the budget includes Other Funds for bond proceeds for Capital Construction projects.

The following display shows total funds, by fund type, from 2009-11 through the 2017-19 legislatively adopted budget.

Source: State of Oregon

Legislatively Adopted Budget

The 2017-19 legislatively adopted budget of $417.8 million is 4.2% less than the 2015-17 legislatively approved budget and includes 477 positions (426.82 FTE).

The General Fund portion of the budget totals $25.6 million and is 0.1% less than the 2015-17 legislatively approved budget. Other Funds expenditure limitation is 4.3% less than the 2015-17 legislatively approved budget, and Federal Funds limitation is 4.5% lower. The following display shows the 2017-19 adopted budget by agency division.

Source: State of Oregon

Significant changes to this budget include:

  • A revenue reduction package of $500,000, to bring Other Funds expenditure limitation for armory operations and maintenance in line with estimated armory rental revenues. Armory rental revenues have fallen since early 2015, when twelve of the Military Department’s 38 armories were closed to rentals following the discovery of lead contamination in and around indoor firing ranges used by National Guard soldiers. Remediation activities are expected to continue through 2017-19.

 

  • $7.4 million Federal Funds and 21 permanent full-time positions (21.00 FTE) to operate a 7,500-acre National Guard training site on the former Umatilla Chemical Depot. Transfer of the property from the U.S. Army to the Oregon Military Department will be finalized in the second quarter of the 2017-19

 

  • $224,000 General Fund and $896,000 Federal Funds expenditure limitation to pay an annual storm water fee assessed by the City of Portland at the Portland Air National Guard

 

  • A reduction of $1.5 million General Fund from the fire protection programs operated at the two Air National Guard bases in Oregon. The National Guard Bureau has determined that fire protection programs at such bases are 100% federally

 

  • $181,178 General Fund, $181,178 Federal Funds, $5.1 million Other Funds, and two positions (2.00 FTE) for the Resiliency Grant Program created in HB The Resiliency grant fund will be capitalized with $5 million of Article XI-Q bond funds, authorized in SB 5505.

 

  • An increase of $256,000 Other Funds and $518,000 Federal Funds for the Youth Challenge program, following updated revenue estimates from the National Guard

 

  • An additional increase of $477,113 Other Funds, $600,322 Federal Funds, and 13 positions (4.94 FTE) for the Youth Challenge program to accommodate additional cadets expected in January, 2019.

 

  • An increase of $726,331 Federal Funds and the conversion of twelve limited duration positions to permanent full-time positions in the STARBASE program

 

  • Bond funding for the following projects:
    • Grants Pass Armory Service Life Extension: $3,270,356 Other Funds (Article XI-Q Bonds) was approved for a service life extension project to renovate the facility
    • Regional Armory Emergency Enhancement Project: $8,534,400 Other Funds (Article XI-Q Bonds) was approved for making structural improvements to bring the following three facilities to essential facility standards for seismic events: Coos Bay Armory, Newport Armory, and the Anderson Readiness Center in Salem.
    • Future Readiness Center Sites: $1,730,000 Other Funds (Capital Construction Account) was approved for the purchase of two parcels of land necessary to construct two new Readiness Centers as replacements for the Hillsboro and Redmond Armories.
  • The Legislature provided $1 million General Fund for construction or repair of the military museum at Camp Withycombe in Clackamas.

 

  • A net agency-wide reduction of $2.3 million total funds for statewide adjustments to personnel and services and supplies expenditures, and to state government service charges and Attorney General rates.

These and other budget changes are described further in the individual divisions’ sections.

The Department’s budget is composed of

$77.5 million personal services,

$58.7 million services and supplies,

$25.6 million capital outlay,

$245.9 million special payments, and

$10.1 million debt service.

Special Payments, the largest sector, are primarily in Emergency Management and are provided to local governments and state government to prevent, mitigate, prepare for, respond to, and recover from natural and man-made disasters. Additionally, 9-1-1 tax revenue is distributed to public safety answering points for operations and equipment maintenance.

The following display depicts the 2017-19 legislatively adopted budget by expenditure type.

Source: State of Oregon

Administration

2013-15

Actual

2015-17

Legislatively Approved

2017-19

Current Service Level

2017-19

Legislatively Adopted

General Fund 4,328,682 4,068,297 5,277,981 5,354,977
Other Funds 1,857,884 2,181,614 2,410,428 2,364,950
Total Funds $6,186,566 $6,249,911 $7,688,409 $7,719,927
Positions 26 24 25 25
FTE 24.88 22.88 23.88 23.88

 

Program Description

The Administration program consists of the office of the Adjutant General, the Command Group, Financial Administration, Personnel, and Public Affairs.

The program supports almost 2,500 state and federal Oregon Military Department and Oregon National Guard employees, commands over 8,100 soldiers and air personnel, and provides oversight for more than $4 billion worth of facilities and equipment.

Additionally, this program administers the Emergency Financial Assistance Program, which provides hardship grants and loans to National Guard members and their families. This program is funded with charitable check-off revenues from Oregon person income tax returns and occasional General Fund appropriations from the Legislature. Since its inception in the 2005-07 biennium, the fund has provided financial assistance to more than 1,000 individuals.

Revenue Sources and Relationships

The program is funded with a combination of General Fund and Federal as Other Funds. Other Funds revenue includes approximately $27,000 in Oregon individual tax check-off deduction revenue associated with the Emergency Financial Assistance Program.

Legislatively Adopted Budget

The 2017-19 legislatively adopted budget of $7.7 million is 23.5% greater than the 2015-17 legislatively approved budget and includes 25 positions (23.88 FTE). The considerable increase is due to price list adjustments of $1.2 million, which cover State Government Service Charge and Attorney General charge increases agency-wide.

Operations

2013-15

Actual

2015-17

Legislatively Approved

2017-19

Current Service Level

2017-19

Legislatively Adopted

General Fund 7,163,378 9,416,881 8,613,376 6,901,560
Other Funds 4,302,460 4,892,841 4,985,935 4,413,963
Federal Funds 78,228,668 83,998,181 79,532,712 86,560,079
Total Funds $89,694,506 $98,307,903 $93,132,023 $97,875,602
Positions 407 339 316 337
FTE 363.80 296.51 274.38 295.38

Program Description

The Operations program supports Oregon National Guard facilities operations and maintenance. There are fourteen programs within Operations, including the Army National Guard Facilities Operations and Maintenance, Construction Operations, Environmental, Electronic Security, and Wildland Fire Management programs; and the Air National Guard Administration, Civil Engineering, Security, Fire Protection, Environmental, Distributed Learning, and Counterdrug programs. These programs and their component sub-programs are almost entirely federally funded, some with state matching requirements from 10-25%, depending on the program.

Revenue Sources and Relationships

The program is funded primarily with Federal Funds. General Fund provides state matching payments for those programs with cooperative agreements requiring matching funds. The source of the Other Funds is primarily facility rental fees (approximately $3 million), but includes some Federal as Other Funds. Federal Funds are received through Federal/State Cooperative agreements to support the programs for which they are received.

Budget Environment

The Oregon National Guard currently has 559 buildings totaling 4.55 million square feet spread across the state in 27 counties. The largest of these facilities are fifteen training/logistical sites, two air bases, and 38 armories.

Major Oregon National Guard facilities include:

  • Air National Guard Installations – Portland Airbase and Kingsley Field
  • Army National Guard Installations – Armories, Readiness Centers, Armed Forces Reserve Centers, and two aviation
  • Unit Training Areas – Camp Rilea Armed Forces Training Center, Camp Adair, Central Oregon Training and Education Facility, Biak Training Center, Oregon Military Academy, Boardman Training Range, and the former Umatilla Chemical Weapons Army
  • Other – Oregon Youth Challenge educational facility and Christmas Valley energy

The age of some National Guard facilities makes them inefficient and expensive to operate and maintain. The Department reports that 28.9% of its facilities are in compliance with National Guard Bureau/ Department of Army standards and are in the best condition, 5.3% do not fully meet standards, and the remaining 65.8% are substandard and/or in very poor condition. Facility compliance with these standards has declined in recent biennia as resources have not been available for repairs, maintenance, and improvements. Twelve of the Department’s 38 armories were closed in 2015 to remediate lead contamination from indoor firing ranges. Two armories have been remediated, remodeled, and reopened for public and National Guard use, and ten remain to be completed in 2017-19.

Legislatively Adopted Budget

The 2017-19 legislatively adopted budget of $97.9 million is 0.4% less than the 2015-17 legislatively approved budget and includes 337 positions (295.38 FTE).

The legislatively adopted budget includes the following changes:

  • A revenue reduction package of $500,000, to bring Other Funds expenditure limitation for armory operations and maintenance in line with estimated armory rental revenues. Armory rental revenues have fallen since early 2015, when twelve of the Military Department’s 38 armories were closed to rentals following the discovery of lead contamination in and around indoor firing ranges used by National Guard soldiers. Remediation activities are expected to continue throughout 2017-19.

 

  • $7.4 million Federal Funds and 21 permanent full-time positions (21.00 FTE) to operate a 7,500-acre National Guard training site on the former Umatilla Chemical Depot.

 

  • $224,000 General Fund and $896,000 Federal Funds to pay an annual storm water fee assessed by the City of Portland at the Portland Air National Guard Base.

 

  • A reduction of $1.5 million General Fund from the fire protection programs operated at the two Air National Guard bases in Oregon. The National Guard Bureau has determined that fire protection programs at air national guard bases are 100% federally funded.

 

  • A reduction of $1.8 million total funds for statewide adjustments to personnel and services and supplies expenditures, and to state government service charges and Attorney General rates.

Oregon Emergency Management

2013-15

Actual

2015-17

Legislatively Approved

2017-19

Current Service Level

2017-19

Legislatively Adopted

General Fund 1,848,191 2,013,808 2,033,450 2,156,544
Other Funds 82,370,859 89,295,918 91,226,589 96,511,997
Federal Funds 56,358,897 162,077,091 168,157,586 169,347,449
Total Funds $140,577,947 $253,386,817 $261,417,625 $268,015,990
Positions 45 42 42 44
FTE 43.41 42.62 42.62 44.62

Program Description

The 2007 Legislature (HB 2370) expanded the Department’s statutory mission to include the responsibility for state emergency management. The Office of Emergency Management (OEM) coordinates statewide emergency services and maintains emergency communications systems used for public warnings, emergency notifications, and emergency support. OEM also provides cities, counties, and tribes throughout Oregon with planning, training, exercise and technical assistance for disaster preparedness, emergency response, recovery services, and hazard mitigation.

In addition to OEM Administration, the program has three primary responsibilities:

  • Executing planning, training, and exercise programs to raise awareness and preparedness for all hazard incidents. This section is responsible for Homeland Security grant programs, Emergency Operations Plans, the Geological Hazard Program, the National Incident Management System, and the State Emergency Coordination Center.

 

  • Operating the statewide Enhanced 9-1-1 system, including managing the network that delivers 9-1-1 emergency calls to Oregon’s 43 Public Safety Answering Points throughout the state. This section also oversees the state Search and Rescue program and the Oregon Emergency Response System.

 

  • Coordinating the development, planning, and adoption of local community hazard mitigation plans.

Revenue Sources and Relationships

The major funding source is Federal Funds received for state homeland security, Federal Emergency Management Agency (FEMA) disaster recovery, and Non-Disaster Emergency Management Performance grants. These funding sources are used for general OEM operations, development and administration of the emergency response infrastructure, training, and grants passed through to local governments for emergency management programs. Some of the funds require a 50% state or local match.

Oregon’s 9-1-1 toll-free emergency number to access safety services is a state and local partnership. The state’s portion is funded through an Emergency Communications Tax, a per-month $0.75 tax for any phone line capable of accessing 9-1-1 services, excepting federal, state, and local governments. During the 2013 legislative session, the 9-1-1 program’s statutory sunset was extended from January 1, 2014 to January 1, 2022 (HB 3317).

Additionally, prepaid cellphones were taxed at $0.75 per month, per customer until October 1, 2015, when the tax changed to $0.75 per retail transaction.

The Emergency Communications Account is distributed quarterly according to statute for the following purposes:

(1) up to 4% of the balance may be used by OEM for program administration costs;

(2) 35% is transferred into the Enhanced 911 subaccount; and

(3) the remaining balance is distributed to cities and counties. Local governments use the revenue to partially fund the expense of 43 Public Safety Answering Points (PSAPs) across city and county governments in Oregon. Revenue in the Enhanced 9-1-1 subaccount is primarily used by the Department to make direct payments to vendors for PSAP circuit charges and software upgrades. The subaccount may reimburse cities and counties on an actual cost basis for some costs.

Legislatively Adopted Budget

The 2017-19 legislatively adopted budget of $268 million is 5.8% higher than the 2015-17 legislatively approved budget and includes 44 positions (44.62 FTE). This budget includes the following changes:

  • $200,000 Other Funds expenditure limitation for a special payment to the Department of Public Safety Standards and Training for two additional telecommunicators training classes in 2017-19.

 

  • $1 million Federal Funds expenditure limitation to pass FEMA Pre-Disaster Mitigation and Hazard Mitigation grant funds through to the Department of Land Conservation and Development.

 

  • $181,178 General Fund, $181,178 Federal Funds, $5.1 million Other Funds expenditure limitation, and two positions (2.00 FTE) for the Resiliency Grant Program created in HB 2687. The Resiliency grant fund will be capitalized with $5 million of Article XI-Q bond funds, authorized in SB 5505.

 

  • A net reduction of $118,000 total funds for statewide adjustments to personnel and services and supplies expenditures, and to state government service charges and Attorney General rates.

 

Community Support

2013-15

Actual

2015-17

Legislatively Approved

2017-19

Current Service Level

2017-19

Legislatively Adopted

General Fund 206,062 197,383 205,448 197,358
Other Funds 4,328,920 4,893,349 2,296,660 3,010,201
Federal Funds 8,085,920 9,480,396 9,071,605 10,960,535
Total Funds $12,620,902 $14,571,128 $11,573,713 $14,168,094
Positions 52 46 46 71
FTE 46.46 46.00 46.00 62.94

 

Program Description

The Community Support program coordinates support for local education programs and emergencies that require assistance of the National Guard. The unit includes:

  • Oregon Youth Challenge Program (OYCP) – Since 1994, the Oregon National Guard has operated the OYCP through a federal/state agreement with the National Guard Bureau. OYCP is Oregon’s only accredited statewide alternative high school and its only public military school for at-risk students. It offers high school- aged youth, at risk of dropping out of school, an opportunity to complete educational credits with a goal of reintegrating into high school to earn a diploma or prepare for the General Education Development (GED) examination. The program is a 22-week residential training program followed by a 12-month nonresident mentored program. OYCP graduates approximately 250 students per year.

 

  • Science and Technology Academy Reinforcing Basic Aviation and Space Exploration (STARBASE) – STARBASE is designed to increase third through eighth grade students’ awareness of the importance of math and science. National Guard members demonstrate the applicability of math and science to flight operations, weather reporting and forecasting, electronics maintenance, and firefighting facilities. The STARBASE program operates at the Portland Air National Guard air base and at Kingsley Field air base in Klamath Falls.

 

  • Emergency Operations – In the event of a state emergency, the Governor can call upon the National Guard to provide personnel and equipment to help with the state’s response. For example, in August 2017, the Governor ordered 946 soldiers and air personnel to assist the Oregon Department of Forestry and the State Fire Marshal’s Office with wildland fire suppression efforts. The Office of Emergency Management is the coordinating entity for Department resources used for statewide emergencies.

The Emergency Operations budget structure is a “placeholder,” used only in the event of reimbursable emergency operations having taken place. The Department’s legislatively adopted budget does not include funding for Emergency Operation expenses, as they are difficult to predict. Therefore, the Department has, historically, requested expenditure limitation increases for amounts it is unable to absorb within its normal operating budget, as well as General Fund reimbursement of expenditures. Revenues for Emergency Operations come as Other Funds from state agencies the National Guard is supporting, most commonly the Department of Forestry.

Revenue Sources and Relationships

The program is funded almost entirely with Other Funds and Federal Funds. The STARBASE program is 100% federally funded through the National Guard Bureau. The Oregon Youth Challenge program is federally funded, with the required 25% state match funded through Average Daily Membership (ADM) revenues through the Bend- La Pine School District. A small amount of General Fund is available for budgeted expenditures not covered by Federal or Other Funds.

Budget Environment

In 2015, the Legislature approved $5 million of Article XI-Q bond funding to enlarge the OYCP facility to house 24 additional female cadets and 60 additional male cadets per 22-week residential class. Construction and program expansion is occurring in phases, with the additional female cadets first expected in the class starting in January, 2019, and the additional male cadets in the class starting in January, 2020.

Legislatively Adopted Budget

The 2017-19 legislatively adopted budget of $14.2 million is 2.8% less than the 2015-17 legislatively approved budget and includes 71 positions (62.94 FTE). The reduction is due to phasing out one-time Emergency Operations Other Funds expenditure limitation approved in February, 2016, for the cost of National Guard troops and flight crews deployed to fight wildfires in 2015.

The legislatively adopted budget incorporates the following changes:

  • An increase of $256,000 Other Funds and $518,000 Federal Funds for the Youth Challenge program, following updated revenue estimates from the National Guard Bureau.

 

  • An increase of $477,113 Other Funds, $600,322 Federal Funds, and 13 positions (4.94 FTE) for the Youth Challenge program, to accommodate additional cadets expected in January 2019,

 

  • An increase of $726,331 Federal Funds and the conversion of twelve limited duration positions to permanent full-time positions in the STARBASE program.

 

  • A net increase of $16,615 total funds for statewide adjustments to personnel and services and supplies expenditures, and to state government service charges and Attorney General rates.

Debt Service

2013-15

Actual

2015-17

Legislatively Approved

2017-19

Current Service Level

2017-19

Legislatively Adopted

General Fund 8,275,623 9,611,645 10,800,440 9,997,675
Other Funds 114,591 445,750 102,541 550,790
Other Funds (NL) 75,953 60,624
Total Funds $8,466,167 $10,118,019 $10,902,981 $10,548,465

 

Program Description

The Debt Service Program provides funding for principal, interest, and financing costs associated with the issuance of Article XI-Q bonds and previously issued certificates of participation (COPs), which are tax exempt government securities.

Budget Environment

The Department relies on bond proceeds to match National Guard Bureau Federal Funds when constructing, altering, or repairing National Guard installations. The percentage of state matching funds required varies by the type of installation. Bonds provide financing for federally non-allowable project costs, which, for example, include the cost of real property. Bonds also fund certain armory additions/alterations that are a 100% state responsibility. The Department’s debt service is funded primarily with General Fund.

Legislatively Adopted Budget

The 2017-19 legislatively adopted budget of $10.5 million is 4.5% more than the 2015-17 legislatively approved budget. General Fund for debt service is reduced by $802,765 as a result of both revised debt service estimates for new debt and reduced debt service requirements after refunding existing bonds. Other Funds expenditure limitation in the amount of $448,249 is added for the cost of issuance required for bonds to be issued in 2017-19.

Capital Improvements

2013-15

Actual

2015-17

Legislatively Approved

2017-19

Current Service Level

2017-19

Legislatively Adopted

General Fund 250,000 1,000,000
Other Funds 385,000 194,377
Federal Funds 1,866,025 4,770,599 4,946,572 4,946,561
Total Funds $2,251,025 $5,214,976 $4,946,572 $5,946,561

 

Program Description

This program provides for capital improvements to existing facilities. Capital improvement projects are those with a total cost of $1 million or less. The Department’s capital improvement projects are overseen and coordinated by agency construction staff budgeted in the Operations Program.

The Capital Improvement Program’s primary purpose is to address the Department’s backlog of deferred maintenance projects, currently estimated at approximately $134 million on 3.4 million square feet of facility space. Capital improvement expenditures delay, where possible, facility replacement. This is important for certain installations, especially armories, where the replacement schedule is dependent upon the National Guard Bureau’s Long-Range Construction Plan and Congressional funding of that plan.

Legislatively Adopted Budget

The 2017-19 legislatively adopted budget of $5.9 million is 14% higher than the 2015-17 legislatively approved budget. Changes to the budget include an additional $1 million General Fund (one-time only) for construction or repair of the military museum at Camp Withycombe in Clackamas.

Capital Construction

2013-15

Actual

2015-17

Legislatively Approved

2017-19

Current Service Level

2017-19

Legislatively Adopted

Other Funds 9,095,100 24,039,244 13,534,756
Federal Funds 6,871,998 24,289,251
Total Funds $15,967,098 $48,328,495 $13,534,756

 

Program Description

The Capital Construction program plans, designs, and constructs facilities projects with a cost of more than $1 million. Since 1986, the Department has undertaken 47 major construction projects totaling over $318 million with a federal/state funding ratio of 7:1. The Department currently has 18 projects identified in the National Guard Bureau’s Long-Range Construction Plan, which will bring additional federal construction dollars into the state through 2040.

Revenue Sources and Relationships

Typically, Federal Funds provide the majority of construction funding. In general, Other Funds and General Fund are used only for required matching funds for projects. State funds also pay for certain costs ineligible for federal match (e.g., real property, local permitting, etc.). The sources of Other Funds are either bonds or the Department’s Capital Construction Account, which is discussed below.

Depending on the type of facility constructed, the federal government pays between 67% and 100% of the approved construction cost. By emphasizing construction of Armed Forces Reserve Centers (AFRC) wherever possible, the Department can access Federal Funds for approximately 97% of the design and construction costs. Site improvements and multi-purpose accommodations outside the federal guidelines are 100% state obligations. Where possible, the Department partners with other federal, state, or county agencies to co-locate functions. This reduces the Department’s design and construction cost obligations, and reduces the long-term operations and maintenance burden of each agency.

The Military Department Capital Construction Account (CCA) is a statutory, interest-bearing account into which proceeds from the sale of Military Department real property are deposited. The Department requires legislative approval to dispose of surplus property. Moneys in the CCA can only be used for Capital Construction expenditures on legislatively approved projects, which include: (a) paying for construction costs that are a state obligation outside federal guidelines; (b) state matching requirements on federal Capital Construction funding; and (c) miscellaneous land acquisitions. The Capital Construction Account generally has an insufficient balance to meet matching fund requirements on major construction projects.

Other revenue sources are project management fees charged to the federal government and bond revenues transferred into the account. Some of the Department’s real property originally donated by counties is on a reversion clause, which requires that the land returns to the county if the Department determines it is no longer needed for military purposes.

Of all the Department’s programs, the Capital Construction program is the one most likely to be affected by shifting federal priorities. The Legislature is frequently requested to add projects or transfer limitation between existing projects; such changes may require additional state matching funds. The fluidity of the Department’s capital projects as compared to other state agencies’ capital projects underscores the uniqueness of this agency and the influence federal funding has over its budget. It also underscores the need for OMD to frequently communicate short- and long-term Capital Construction priorities to the Legislature.

Legislatively Adopted Budget

The 2017-19 legislatively adopted budget of $13.5 million is 72% less than the 2015-17 legislatively approved budget. While the period-to-period change can be significant, the legislatively approved expenditure limitation for any Capital Construction project has a six-year duration.

Funding for the following projects is included in the budget:

  • Grants Pass Armory Service Life Extension: $3,270,356 Other Funds (Article XI-Q Bonds) was approved for a service life extension project to renovate the facility. The project is for design and construction of additions and alterations to the Grants Pass Armory to bring the building into conformance with current building code. The project will upgrade mechanical, electrical, and plumbing systems; remodel the existing classrooms, administrative space, latrines and showers, equipment storage areas, kitchen, and assembly hall areas; replace failed paving areas; and replace existing site lighting, landscaping, and fencing.

 

  • Regional Armory Emergency Enhancement Project: $8,534,400 Other Funds (Article XI-Q Bonds) was approved for making structural improvements to bring the following three facilities to essential facility standards for seismic events: Coos Bay Armory, Newport Armory, and the Anderson Readiness Center in Salem. The project includes seismic structural upgrades, backup power and water systems, and emergency equipment and fuel storage for the three facilities.

 

  • Future Readiness Center Sites: $1,730,000 Other Funds (Capital Construction Account) was approved for the purchase of two parcels of land necessary to construct two new Readiness Centers as replacements for the Hillsboro and Redmond Armories. One property is located in Washington County and the other is located in Deschutes County.

The Legislature approved the extension of the project expiration date and expenditure limitation for The Dalles Readiness Center (Other Funds) to June 30, 2018 and The Dalles Readiness Center (Federal Funds) to June 30, 2018; and approved the proposal from the Oregon Military Department, as required by ORS 396.515 (4), for the sale of the Burns Armory and 40 acres of land in La Grande.