Higher Education: Western New Mexico University Overcomes Budget Constraints through Energy Savings Performance Contract

Bowden Hall, Photo by WNMU

By Joshua Burnett

In October of 2018, the Center on Budget and Policy Priorities published a staggering statistic. It reported that “overall state funding for public two- and four-year colleges in the school year ending in 2018 was more than $7 billion below its 2008 level.” (Mitchell et al., 2018) Fast forward to 2020, and the same trajectory holds, but with an additional layer of uncertainty left in the wake of the global pandemic. Inside Higher Ed, a leading source for the latest news, analysis, and services for the higher education community, published this in May 2020:

“Seemingly daily lately, officials in states around the country have announced the need to make major cuts that could hit colleges and universities…When the pandemic hit, state budget and higher education experts predicted that colleges and universities, already facing their own financial problems during the pandemic, would face the additional blow of state budget cuts. States nationwide are seeing tax revenue drop as they have to pay additional costs”. (Murakami, 2020)

Higher education institutions are in a precarious situation. They must delicately maneuver through the ever-present fiscal uncertainty while providing the same world-class learning experience and environment their students have come to expect. Regardless of the funding situation, they must continually strive to create, plan, and implement programs, projects, and initiatives to mold a healthier future for coming generations. Western New Mexico University (WNMU) is an excellent example of a university that has pressed on during the difficult times and has been able to uphold many of its goals.

Paving a Way to a Prosperous Future

WNMU is inseparably intertwined with the deep-seated history and beautiful, vibrant landscape of Silver City, New Mexico. Established in 1893 as New Mexico’s Applied Liberal Arts and Sciences University, it is known for its talented people, quality academic offerings, and historic traditions. 

WNMU Campus, Photo by WNMU

Dr. Joseph Shepard, the current WNMU President, has crafted a direction for the university that will create long-term sustainability, growth, and prosperity. In 2016, he stated, “We are preparing to be a university of distinction – knowing our place in history while paving our way to a prosperous future.” (Shepard, 2016)

After being appointed to his role in 2011, he, alongside an incredible group of staff members, created and published a Master Plan in 2014. The roadmap focused on sustainability for the buildings, utilities, and campus landscape. This document drove detailed strategies and budgets to direct specific university changes over the next few years. 

Shortly after the publication of the Master Plan President Dr. Shepard announced a new goal, the university will be carbon neutral by 2025. 

In 2016, the General Obligation Bond (GO Bond C) was on the state ballot; this referendum asked voters to set aside more than $131 million in higher education funding for colleges and universities across the state without increasing taxes. When passed, $5 million was allotted to WNMU. This was a big win for the university, funding several large capital infrastructure projects around campus. 

Over the following two years, the university improved several buildings. The Facilities and Maintenance team concentrated on enhancing energy efficiency by installing new HVAC systems, building control mechanisms, and lighting systems while upgrading insulation, windows, and interior finishing. The renovations included exterior improvements to stairs, rails, walkways, parking lots, and green spaces.

As 2018 approached, several projects were nearing completion. Despite this encouraging progress, funds were running low, and the university’s goal of carbon neutrality by 2025 was still a top priority. The next opportunity to receive funds through a GO Bond C was two years away, the university knew it needed to find another solution. 

The Unexpected Solution

Kevin Matthes, Assistant Vice President of Facilities and Operations, joined WNMU in 2018. Matthes exudes a passion for the university and Silver City, having been a long-term resident of the city since 1980 and earning his MBA from WNMU in 2009. With thirty years of mechanical and electrical maintenance and reliability experience, he has worked in various roles throughout his career, including overseeing the operation and management of extensive electrical and pumping systems within the copper mining industry. The real-world knowledge Matthes brings to his role at WNMU is invaluable and, in large part, the reason the university has experienced so much success in accomplishing their infrastructure initiatives.

Matthes supports President Dr. Shepard’s goals for all things related to the university’s physical plant and infrastructure. His responsibility was to work with the WNMU leadership team to help take a challenging budgetary situation in 2018 and create a robust, healthy program to sustain current construction and prepare for the next wave of renovations the campus had planned. 

In 2019, Matthes informally met with Ryan Jewell, Business Development Manager for Yearout Energy, an energy service company based in Albuquerque, NM. It was during this conversation that Matthes first learned about Energy Savings Performance Contracting (ESPC). He was inspired by the possibility of using ESPCs as a mechanism to complete energy efficiency upgrades across campus, and particularly interested in the guaranteed energy savings, no capital dollars needed, and zero implications for taxpayers. In a recent interview with Energy Services Media, Matthes shared his initial thoughts on the ESPC model.

“After our first meeting with Yearout, Ron Reed, the Director of Maintenance and Facilities, and I looked at each other and thought, ‘This sounds too good to be true.’ The possibility of funding a major endeavor with such a wide range of benefits for the university was one thing—when you add in guaranteed energy savings, it seemed like a perfect option. Through the ESPC if the university doesn’t see the agreed-upon savings, the energy service company will actually pay you the difference. A part of me was a little skeptical. To learn more, I visited with former facilities directors of other universities and talked to the HED Capital Project Director.”As Matthes researched ESPCs, he continued to feel that a project like this was the right fit for WNMU. Budget cuts were hitting the university hard and, with a lingering backlog of deferred maintenance, he knew action was needed. 

“The more we talked about it, the more we thought about it, the more we felt this is something we could facilitate that the state supported. Both Reed and I knew that this was something we needed to bring to Dr. Shepard and the VP of Business Administration,” stated Matthes

Gaining Support

With the help of Yearout Energy, Matthes and the Facilities team started to increase the frequency of meetings surrounding the Energy Savings Performance Contracting project. They expanded the meeting attendees to include President Shepard in early conversations. The idea of using ESPCs on a large scale was met with substantial support, Dr. Shepard was enthusiastic about how this initiative supported his vision for the university.

Matthes described Dr. Shepard’s encouragement to see the project as a broader opportunity. “President Shepard asked me, ‘Kevin, is there anything else that we can do as a part of this project that you’d like to put on the list?’ The value of putting solar panels in parking lots and various places on campus was brought to me during my time at WNMU, so we added $2 million to the project, increasing the campus’ solar capacity by nearly half a megawatt.”

When the plan was first presented to the Board of Regents, it was initially tabled due to some economic and budgetary questions. The total contract value was roughly $7 million and would substantially impact the university for many years to come, so the Board wanted to ensure that they’d reviewed all the details. After each question was answered, the Board approved the ESPC project in June 2020. 

Saving Harlan Hall Renovations

During the initial internal preparatory stages of an ongoing renovation project, Harlan Hall Phase III, Matthes and team identified there was not enough funding to complete the state-mandated energy savings portion of the project. 

Matthes gave Yearout a call. 

“After understanding that we didn’t have a high likelihood of getting state, HED, or Board of Finance approval for the renovation, we turned to Yearout,” said Matthes. “We asked, ‘While you are completing the investment-grade audit, how quickly can you create a scope for Harlan?’ With assurance from Yearout that Harlan could achieve the necessary savings, the project was approved using an ESPC.” Matthes continued by stating, “I’m proud of the fact that we used a creative way of utilizing the process to facilitate a building renovation that needed to be done from a safety, utilization, cosmetic, and energy savings standpoint. This directly benefited the students and faculty.”

ooking Forward

The $7 million transformative ESPC project is currently underway, and the project should not see any delay due to the COVID-19 pandemic. Matthes and the WNMU team are actively staying on top of communication to staff, students, and faculty about the upcoming construction that will be ongoing throughout the next year. 

When Energy Services Media asked Matthes what advice he would give to others in his position who are pursuing energy efficiency projects with limited capital dollars, his response was this:

“I would adamantly encourage them to look into Energy Savings Performance Contracting. Start conversations, reach out, and talk to people who know or have participated in the process. Begin learning about it. Our campus dates back to 1893, so we have the full gamut of building age. It’s crucial to understand that old buildings bring challenges and unknowns that newer buildings don’t. Our campus is no exception in that respect, although that’s the beauty of Western: the landscape, Silver City, and the historical side of the university.

For those who haven’t done it or are thinking about it, call me. I can share my experiences, or I can have folks who work with me share what the process was like. All higher education universities in New Mexico have millions of dollars’ worth of deferred maintenance. Energy Savings Performance Contracting is a great approach to better your infrastructure’s health in an economically smart way.”

Ryan Jewell, Photo by Yearout Energy

“In these challenging times where we are all being asked to do more with less, WNMU did exactly that. They utilized ESPC to reduce their utility and operational expenditures across the entire campus and leveraged those savings to drive a more holistic renovation for Harlan Hall. The project also helped WNMU address many other deferred maintenance and infrastructure needs while making a huge leap toward achieving their sustainability and carbon neutrality goals.” 

– Ryan Jewell
Business Development Manager, Yearout Energy

Learn More:
Contact WNMU Assistant Vice President of Facilities and Operations, Kevin Matthes, [email protected]

Contact Yearout Energy, Ryan Jewell, [email protected]

Mitchell M., Leachman M., Masterson K. & Waxman S. (2018, October 4) Unkept Promises: State Cuts to Higher Education Threaten Access and Equity. Center on Budget and Policy Priorities. https://www.cbpp.org/research/state-budget-and-tax/unkept-promises-state-cuts-to-higher-education-threaten-access-and

Murakami K., (2020, May 15). State Cuts Grow Deep. Inside Higher Ed. https://www.insidehighered.com/news/2020/05/15/size-state-budget-cuts-becomes-clearer

Shepard J. (2016, August 17) President’s Blog: August 2016. Western New Mexico University. https://wnmu.edu/presidents-blog-august-2016/#gsc.tab=0