Transportation in Virginia VACO Conference November 8 2010

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Transportation in Virginia VACO Conference November 8, 2010 Gregory Whirley Commissioner

Transportation in Virginia VACO Conference November 8, 2010 Gregory Whirley Commissioner

Today’s Topics • • • VDOT Performance Audit Special Funding Programs Locally Administered Projects

Today’s Topics • • • VDOT Performance Audit Special Funding Programs Locally Administered Projects Program Other Issues What’s Next Q/A 2

Overview of Performance Audit • • Governor calls for performance audit of VDOT Purpose

Overview of Performance Audit • • Governor calls for performance audit of VDOT Purpose of the audit is to: • • • Provide an independent assessment of VDOT’s organizational structure, programs, and operations; Determine whether VDOT is operating efficiently and effectively in carrying out its mission; and Develop findings and recommendations designed to reduce duplication of effort, increase programmatic efficiencies, and effect cost savings wherever possible. Cherry, Bekaert & Holland selected to conduct the audit on April 26, 2010 – estimated cost = $424, 000 Audit identifies over 50 recommendations that may accelerate the planning and delivery of over $1 billion in maintenance and construction projects 3

Findings/Recommendations • Funding Obligate federal funds earlier during the year • • • Improve

Findings/Recommendations • Funding Obligate federal funds earlier during the year • • • Improve project monitoring of inactive projects ($130 million on average) Obtain FHWA approval to use toll credits (over $400 million in credits) • • 6 months into FFY 10, only 5% of federal funds obligated Not additional funds – allow VDOT to use 100% federal funds and eliminate state match requirement Portion of CPR bonds available for other uses Eliminate federal revenue reserve to allow better leveraging of existing resources ($524 million) Revise reserve cash and funding policies to reduce from 5 ½ month reserve to 60 -day reserve ($200 million) 4

Findings/Recommendations • • Maintenance VDOT spent $488 million less than available maintenance project allocations

Findings/Recommendations • • Maintenance VDOT spent $488 million less than available maintenance project allocations in FY 10 VDOT carried over $529 million in unspent maintenance allocations in FY 11 Formalize district budget review process to ensure strategic directions and condition assessments are addressed Monitor plans and budgets with objective of spending available funds • • • FY 10 – districts planned to spend $505 million less than allocated Revise policy to federalize only maintenance projects needed to meet federal funding goals Plan maintenance work to use budgets and accelerate maintenance work to reduce carryover • Carryover balances grew from $8 million in FY 05 to $529 million in FY 10 5

Carryover Trends 2002 -2010 (in millions) Fiscal Year Original Approved Allocation Final Allocation (including

Carryover Trends 2002 -2010 (in millions) Fiscal Year Original Approved Allocation Final Allocation (including carryover) Expenditures Balance Percent of Unspent Final Allocations 2002 $ 871. 9 $ 871. 0 $ 840. 1 $ 30. 9 3. 55% 2003 878. 5 935. 1 901. 8 33. 3 3. 56% 2004 933. 2 918. 4 879. 2 39. 2 4. 27% 2005 993. 8 1, 032. 4 1, 024. 4 8. 0 0. 77% 2006 1, 080. 0 1, 102. 8 1, 021. 0 81. 8 7. 42% 2007 1, 185. 7 1, 282. 8 971. 7 311. 1 24. 25% 2008 1, 257. 6 1, 583. 7 1, 197. 3 386. 4 24. 40% 2009 1, 186. 4 1, 578. 5 1, 230. 1 348. 4 22. 07% 2010 1, 312. 4 1, 660. 8 1, 131. 7 529. 1 31. 86% 6

Unspent Maintenance Balances to Unspent Maintenance Contracts (at June 30 th in millions) The

Unspent Maintenance Balances to Unspent Maintenance Contracts (at June 30 th in millions) The following graph shows the shift in policy of how VDOT manages maintenance projects: 7

Findings/Recommendations • • • Project Development and Execution Currently use same process regardless of

Findings/Recommendations • • • Project Development and Execution Currently use same process regardless of size or complexity Designate certain construction and maintenance project types for state funding only and develop risk-based approach to reduce time and costs Improve communication between districts and Central Office and the transportation industry Develop project management performance metrics and increase district and Central Office monitoring Shorten procurement time for obtaining consultant engineers 8

Findings/Recommendations • • • Operations relating to safety and congestion mitigation Analyze effects of

Findings/Recommendations • • • Operations relating to safety and congestion mitigation Analyze effects of reduction in safety service patrols to determine negative impact on congestion, safety, or environment Improve connectivity and redundancy between Transportation Operations Centers, and provide technology funding, better leverage and market available technologies and innovation Compliance with Blueprint Initiative Make business process improvements and design structure and staff size based on analysis Monitor and assess use of contractors and consultants for effective utilization, cost savings and outsourcing alternatives Implement Planning and Investment Management group in each district to plan and utilize resources to maximum benefit of Commonwealth 9

Actions Under Way to Address Audit Recommendations • • • Advertise/award $800 to $900

Actions Under Way to Address Audit Recommendations • • • Advertise/award $800 to $900 million of maintenance and construction contracts from June to December 31, 2010 Advertise/award 261 projects in the SYIP totaling $471 million from January 1, 2011 through June 30, 2011 Develop $450 million in paving- and maintenance-related projects to close gap between allocations available and awarded contracts • • • $200 million in contracts currently under development Remaining $250 million under contract by spring 2011 Improve process of obligating federal funds Obtain FHWA approval to use over $400 million in toll credits Revise Six-Year Improvement Program to add back $524 million of federal reserves Recommend to CTB that $60 million is dedicated annually to preliminary engineering to support construction program 10

Actions Under Way to Address Audit Recommendations • • Work with localities and MPOs

Actions Under Way to Address Audit Recommendations • • Work with localities and MPOs to advance locally administered projects and safety projects using federal funds Use $200 million of the construction cash balance to advance projects in the SYIP Monitor construction projects financed with federal funds and move unused balances to active projects - $130 million on average Implement staff changes to improve management team: • • • Districts report to new Chief Deputy New Chief of Planning and Programming – more emphasis on construction New Chief Financial Officer New PPTA office Restore emergency staff to proper levels 11

Recommendations to Better Leverage Current Resources (shown in millions) Proposed actions Immediate Impact (12

Recommendations to Better Leverage Current Resources (shown in millions) Proposed actions Immediate Impact (12 months or less) Longer Impact (longer than 12 months) Total Utilize excess construction cash $200 Add federal reserves to the SYIP 84 Let more maintenance project contracts 200 Release federal inactive balances 130 Total $614 Utilizing toll credits may allow more flexibility with CPR bonds Total with funding/credits $614 $200 $440 524 $440 $1, 054 Over $400 $840 $1, 454 12

Revenue Sharing Program Current Program: • 50/50 matching program • Open to Counties and

Revenue Sharing Program Current Program: • 50/50 matching program • Open to Counties and Cities and Towns in the Urban System • Program allocation between $15 M minimum and $50 M maximum • FY 11 allocations were $15 million state matching funds • $50 million allocation available 3 previous years • Max allocation of $1 Million per locality • Allocations provided via tiered approach • • Tier 1 – Project is Locally Administered Tier 2 – Locality provides funding greater than required match Tier 3 – Acceleration of existing project Tier 4 – All other eligible requests 13

Revenue Sharing Program Comparison of Past 3 Years Localities Eligible to Participate: # Localities

Revenue Sharing Program Comparison of Past 3 Years Localities Eligible to Participate: # Localities Participating 2011 2010 2009 Approved Requested Approved 176 176 47 (27%) 53 (30%) 57 (32%) 76 (43%) 9 (21%) 11 (26%) 15 (35%) - Cities (39 eligible to participate) 15 (38%) 17 (46%) 23 (59%) - Counties (95 eligible to participate) 23 (24%) 29 (30%) 38 (40%) - Towns (42 eligible to participate) Total # Projects 68 122 189 - Locally Administered 68 105 55 92 - VDOT Administered 0 17 67 97 VDOT Match Recommended/Requested: $15, 000 $37, 208, 609 $39, 497, 523 $49, 142, 359 Additional Locality Unmatched: $14, 092, 663 $16, 407, 103 $ 7, 811, 979 $24, 534, 763 $15, 000 $0 $0 $0 $32, 544, 746 $4, 523, 563 $0 $140, 300 $24, 893, 298 $13, 592, 225 $0 $1, 012, 000 Tier change effective with the FY 10 Program 14 Tier 1 amount recommended/requested: Tier 2 amount recommended/requested: Tier 3 amount recommended/requested: Tier 4 amount recommended/requested:

Revenue Sharing Program Current Discussion/Proposals • Possible legislative proposal to increase flexibility • Parallels

Revenue Sharing Program Current Discussion/Proposals • Possible legislative proposal to increase flexibility • Parallels VACO’s position (eliminate tiers) • Call for letters of intent to participate in FY 12 • Deadline – December 17, 1010 • Identify for budget planning • Maximize participation and leverage resources 15

Economic Development Access Road Program Annual Program Funding: $5. 5 M – Includes Economic

Economic Development Access Road Program Annual Program Funding: $5. 5 M – Includes Economic Development Access, Airport Access and Rail Industrial Access projects Economic Development Access – Maximum allocation of $500, 000 unmatched and $150, 000 matched – Allocation contingent on documentation of capital investment • $1 allocation available for every $5 of investment Projects can be: – Traditional (named business) – Bonded (speculative) • Bonded (speculative) projects require total or partial reimbursement by localities if capital outlay is not documented in 5 years. 16

Recent EDA Program Changes 2009: CTB policy amended in response to economic conditions –

Recent EDA Program Changes 2009: CTB policy amended in response to economic conditions – Increased maximum unmatched allocation to $500, 000 (up from $350, 000) – Reduced capital outlay documentation requirement from 10% of access program funding to 20% 2010: CTB policy discussion to provide relief to localities with bonded projects – Declared a moratorium on calling bonds from July 1, 2010 until July 1, 2012 provided locality extends its bond 17

Transportation Enhancement Program • Mandatory 10% STP Program Set-Aside –Receive ~ 150 -200 project

Transportation Enhancement Program • Mandatory 10% STP Program Set-Aside –Receive ~ 150 -200 project applications annually –CTB allocates funds to ~ 100 projects annually • 12 eligibility categories • Current CTB Policy (Updated November 2009) –Annual allocation (~$15 M-$20 M) divided equally among members –Funding requests limited to $1 M annually per project –Fund a minimum of 50% of requested amount –Fully fund projects requesting < $200, 000 –Projects must be complete within 4 yrs. of CTB allocation • Proposed CTB Policy Update (December 2010) –Additional focus on statewide tourism initiatives Application Deadline (Existing Projects Only) – December 1, 2010 18

Locally Administered Projects % of Locally Administered Projects Based on 36 Month Ad Schedule

Locally Administered Projects % of Locally Administered Projects Based on 36 Month Ad Schedule 19

Locally Administered Projects • Locally Administered Projects Manual - Risk Based Approach to Project

Locally Administered Projects • Locally Administered Projects Manual - Risk Based Approach to Project Delivery - State-Aid Project Certification • Core Curriculum Training - Web-based training for local decision makers – released 11/1 (12 minute high level overview) - Web-based training for project managers – anticipated 11/15 • Local Assistance Division Newsletters - Released Quarterly - Valuable information on special programs and events - Updates on locally administered program guidance 20

Other Issues • One Stop Statewide Customer Service Center – Call 1 -800 -FOR-ROAD

Other Issues • One Stop Statewide Customer Service Center – Call 1 -800 -FOR-ROAD from any location in the state – Staff available 24 hours a day, seven days a week – Maximize efficiency and respond to business needs as our organizational structure has changed • Proposal to clarify that CTB approval not needed for Locally Administered Projects • Reduce Bond Requirement Limit • Working with DCR to exempt Rural Rustic Road Projects from certain regulations to keep costs down 21

What’s Next • VDOT’s Action Plan in Response to the Performance Audit • Governor’s

What’s Next • VDOT’s Action Plan in Response to the Performance Audit • Governor’s Transportation Conference-Reforming and Revitalizing Transportation in Virginia – December 8 -10 th • Legislative Package to address Streamlining Initiatives that require statute changes 22