Meeting the Trillion-Dollar Challenge: Case Studies

by Camila Fonseca Sarmiento, Shreya Yashodhar, Jerry Zhao, Volcker Alliance, Oct 16, 2025 (excerpts)

Publicly owned infrastructure in the US is in a poor state of repair, with an estimated $1 trillion in accumulated deferred maintenance across states. Budget constraints and competing priorities often lead government agencies to postpone or delay planned maintenance to make funds available for other pressing needs. This failure to keep up with repairs results in increased long-term maintenance expenditures, and, in some cases, compromises public safety and health. Despite the growing concern, few states report deferred maintenance needs in their capital budgeting documents, and no comprehensive statewide system exists to assess, value, and fund the infrastructure gap. 

However, nine states—Alaska, California, Hawaii, Idaho, Illinois, Massachusetts, Montana, Oklahoma, and Pennsylvania—have implemented statewide efforts to assess and address deferred maintenance. This study explores their policies and methodologies for reporting, valuing, and funding their deferred maintenance needs. We also examine policies in Tennessee, which has reported infrastructure needs for decades, including new construction and deferred maintenance. While it does not provide a specific estimate for its deferred maintenance exposure, Tennessee is included as a case study because of its potential to inform future assessment efforts in other states. …

Hawaii is particular in defining deferred maintenance as the cost of catching up with maintenance that was delayed, which acknowledges additional costs incurred for not performing it on time. 

CLARIFYING THE PERIOD IN WHICH MAINTENANCE BECOMES DEFERRED. A certain amount of maintenance should be provided within a given period, and maintenance becomes deferred if not completed in that time frame. Two of the ten states specify such a period. In Hawaii, it is the repair and maintenance cycle; in Alaska, it is the state’s annual operating budget cycle. 

SPECIFYING THE TYPES OF INFRASTRUCTURE CONSIDERED AND THEIR OWNERSHIP. Two states refer to the type of infrastructure in their definition of deferred maintenance. Hawaii cites “state-owned building, facility, or other improvement,” while California pinpoints “state-owned facilities.”…

Policies at the State Level Enabling Deferred Maintenance Assessment and Reporting 

Hawaii 

Act 150 (SB 254—June 26, 2015) requires that each executive agency responsible for operating or maintaining a state-owned building, facility, or other improvements provide the Department of Budget and Finance with an estimate of the deferred maintenance costs for the building, facility, or other improvements. The department is not required to ensure the accuracy of the information in the reports (Haw. Rev. Stat. § 37-122). The act also requires a summary of deferred maintenance costs collected by the director of finance to be included in the multiyear program, financial plan, executive budget documents, and supplemental budget. The multiyear program, financial plan, and executive budget are submitted to the legislature before the regular session in each odd-numbered year. The supplemental budget is submitted to the legislature before the regular session of each even-numbered year.

Senate Bill 719 (Jan. 20, 2017) found the extent of the state deferred maintenance backlog to be substantial and requires the governor to prepare a deferred maintenance plan12 to gradually eliminate the gap for state-owned buildings, facilities, and other improvements. According to the legislation, the act was found necessary to preserve facilities for public use or benefit, decrease future unfunded state obligations, preserve public resources by making maintenance investments instead of incurring expensive capital replacement or renewal costs, and promote transparency.

SB 719 provides the characteristics that should be included in the plan for it to be a guide for eliminating deferred maintenance costs. These include a target date and alternatives to the target date to address and eliminate the accumulated deferred maintenance costs; standards and criteria, as well as the designation of a state executive agency responsible for calculating deferred maintenance costs; an estimate of the total amount of funds necessary to eliminate deferred maintenance costs; and a proposed schedule and alternatives to the proposed schedule to eliminate deferred maintenance costs. The bill also requires the governor to update the plan annually. …

Hawaii 

The Department of Budget and Finance (DB&F) shares with other state agencies a memorandum containing policies and guidelines to prepare the Executive Budget Request for the biennium. This document also contains additional requirements for completing and submitting a deferred maintenance costs form with a cover letter. In reporting deferred maintenance costs, departments must provide information, including the organization code of the program that would be responsible for the cost, the location of the deferred maintenance (island), type of asset (building, facility, or improvement), description of the deferred maintenance, estimated amount, and any additional comments.25 The DB&F compiles information from state departments and prepares budget documents, including an appendix with estimated deferred maintenance cost information. 

Infrastructure considered in the assessment includes assets such as a “state-owned building, facility, or other improvement” “owned by a state executive agency; provided that a building, facility, or other improvement shall not be deemed ‘owned’ by a state executive agency if leased by the agency to a person” (Senate Bill 719). In the 2023–25 biennium budget, all executive departments,26 including the University of Hawaii (UH), and the offices of the governor and lieutenant governor reported deferred maintenance information. 

Hawaii Department of Education and the University of Hawaii

While the statewide deferred maintenance reporting process is centralized at the DB&F, the information and execution of the deferred maintenance plan are handled by individual departments, whose deferred maintenance assessment and methodologies vary. For example, the Department of Education (DOE) and UH contribute the most to deferred maintenance in the state. DOE submits its biennial capital improvement program (CIP) budget to Hawaii’s Board of Education. The CIP budget encompasses nine major program areas, including the Deferred Maintenance Program. The DOE distinguishes the recommended amounts for deferred maintenance program projects from those of CIP projects. While deferred maintenance projects are largely major replacements or repairs of building components, CIP projects represent new additional space or major renovations of an existing structure.27

The Office of Facilities and Operations, the division in charge of managing maintenance of physical facilities at schools, developed the Hawaii Facilities Inspection Tool (HI-FIT) to evaluate the condition of each school facility in the state and better prioritize school needs. HI-FIT inspectors analyze conditions of various components of learning and administrative environments and assess the interiors and exteriors of buildings and building systems. This information is included in HI-FIT, which scores on a ten-point scale: good (10–8), fair (8–6), poor (6–4), and critical (4–1).28

UH, meanwhile, contracted with a unit of a specialized South Carolina company, Gordian, to update the facilities renewal reinvestment model (FRRM) costs for the entire university system. In 2018, the vendor populated the baseline information for each facility with the help of staff from each campus. A coordinated effort by the vendor and staff at the various campuses perform real-time upkeep of the FRRM. The system uses a “life-cycle approach” to determine the current replacement value of all campus buildings. This model generates an overview of current capital renewal needs and any accumulated backlog based on institution-specific information, including a building’s age and type, subsystem life cycles, infrastructure support requirements, and current cost of replacement.29…

Estimation of Deferred Maintenance Needs

This section presents estimated shortfalls in deferred maintenance needs over time. Patterns vary as the analyzed states consider different types of infrastructure and are at different stages in their assessment (see figure 1). 

In California and Hawaii, which consider a broad range of infrastructure types, deferred maintenance needs per capita are on average between $2,000 and $3,000 (in constant 2022 dollars). In both states, deferred maintenance needs per capita remained relatively unchanged from 2015-23, although Hawaii experience a spike between 2019-22. Across states that consider only building infrastructure, deferred maintenance needs per capita have higher variability, as some states are in the early stages of their assessment process and the definition of what constitutes infrastructure for the assessment may differ. For these states, deferred maintenance needs per capita range between $500 and $3,000 (constant 2022 dollars). …

Hawaii

Hawaii identifies in budget documents a deferred maintenance total of $3.5 billion in the 2023–25 biennium (figure 3). Between the 2017–19 and the 2023–25 bienniums, the education department’s deferred maintenance accounted for an average of 22.8 percent of the state’s total, followed by the University of Hawaii (19.2 percent) and the Department of Human Services (18.9 percent).…

Prioritization of Deferred Maintenance Projects

Hawaii

The Department of Budget and Finance does not have centralized prioritization criteria for deferred maintenance projects.132 Prioritization of deferred maintenance projects occurs primarily at the state agency level.

At the state Department of Education (DOE), prioritization of Capital Improvements Program (CIP) and deferred maintenance program projects follows Board Policy 301-10, Equitable Allocation of Facilities Resources.133 The DOE uses a scoring matrix to rank over 200 CIP and deferred maintenance projects and identify the highest-ranking ones for inclusion in the biennium budget. The ranking considers the following: health and safety, condition, compliance, building capacity, instructional impact, schools eligible for Title I funding, schools identified for comprehensive support and improvement, and shared use. 

The University of Hawaii (UH) uses the facility condition index to determine the condition of a facility. The index is calculated using the following formula.134

FCI = Deferred Maintenance Backlog (DMB)/Current Replacement Value (CRV)

DMB refers to the deferred maintenance backlog inflated at 5 percent per year that the university expects over a ten-year period.135 CRV is the current cost to replace a building of similar size and usage, including construction and related costs excluding land or site improvements. Facilities with a higher FCI are given increased priority, and older buildings typically have higher FCIs. In 2019, the UH system had a FCI of 0.1 (meaning 10 percent of the university’s spaces were in need of repair), while the various campuses have index levels of 0–1.13.…

Funding Deferred Maintenance Needs

Hawaii 

The Department of Budget and Finance prepares the budget request but does not track funding allocated by the legislature for deferred maintenance.156 Funding allocation for deferred maintenance projects may be found as line items scattered throughout the budget act document.…

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