The Department of Transportation (Caltrans) is responsible for planning, coordinating, and implementing the development and operation of the state's transportation system. These responsibilities are carried out in five programs. Three programs--Highway Transportation, Mass Transportation, and Aeronautics--concentrate on specific transportation modes. Transportation Planning seeks to improve the planning for all travel modes, and Administration encompasses management of the department.
The budget proposes expenditures of $7.9 billion by Caltrans in 1999-2000. This is about $1.6 billion, or 25 percent, more than estimated current-year expenditures.
The budget proposes expenditures of $7.2 billion for the highway transportation program, about $1.6 billion, or 28 percent, more than in the current year. This increase is largely due to a $1.2 billion, or 47 percent, increase in projected capital outlay expenditures. The second largest increase in proposed expenditures is in local assistance, which is proposed to increase by 34 percent or $354 million.
Of the total expenditures proposed in the department's budget, $7.2 billion is for the Highway Transportation program. This is an increase of $1.6 billion, or 28 percent, over estimated current-year expenditures.
The major responsibilities of the highway program are to design, construct, maintain and operate state highways. In addition, the highway program provides local assistance funds and technical support for local roads.
As shown in Figure 1, Caltrans expects that state funds will support almost $3 billion (42 percent) of highway program expenditures. Federal funds would make up about $2.9 billion (40 percent) of the program budget, and the remaining $1.3 billion (18 percent) would be paid through reimbursements, primarily from local governments.
|Department of Transportation
Highway Transportation Budget Summary
|1997-98 Through 1999-00
(Dollars in Millions)
|Estimated 1998-99||Proposed 1999-00||Percent Change From 1998-99|
|Capital outlay support||$820.2||$983.1||$902.8||-8.2%|
|Capital outlay projects||2,274.8||2,619.2||3,859.5||47.4|
|a Beginning in 1998-99, the budget splits telecommunications between the maintenance and operations programs.|
Huge Increase in Capital Outlay Expenditure Projected. Caltrans proposes to increase its capital outlay expenditures by $1.2 billion, a 47 percent increase above the estimated expenditures for 1998-99. About $800 million of this is attributable to projected increases in spending for projects in the State Transportation Improvement Program (STIP) and the State Highway Operation and Protection Program (SHOPP). The majority of this increase is for construction of projects that were awarded in the current year. An additional $300 million is attributable to increased expenditures in the Toll Bridge Seismic Retrofit Account due to delays in projects that were originally scheduled for the current year.
Increase in Reimbursed Highway Activities. The budget projects significantly higher reimbursements for Caltrans' highway program in 1999-00. As shown in Figure 1 (see next page), total reimbursements are projected to increase by approximately $520 million, or 64 percent, in comparison to estimated current-year expenditures. Approximately two-thirds of this increase is attributable to expenditures related to a project in Orange County. The remaining one-third is attributable to expenditures for Bay Area Toll Authority (BATA) projects. Since BATA has the authority to program, administer and allocate toll revenue funds in the Bay Area Toll Account, these funds are treated as reimbursements (instead of state funds) for Caltrans' toll bridge operations, rehabilitation and other capital improvement projects.
We recommend the adoption of supplemental report language directing the Department of Transportation to provide information on staffing and expenditures on project planning work in order to provide the Legislature with a more complete picture of total resources used to deliver capital outlay projects.
Caltrans requests $902.8 million to support 10,425 personnel-year equivalents (PYEs) of staff effort for highway capital outlay support in 1999-00, as shown in Figure 2. This represents a 6 percent decrease from the number of estimated current-year staff. Capital outlay support staff provide environmental clearance, design and engineering, right-of-way acquisition, and construction oversight on highway capital improvements.
The decrease is largely the result of a technical realignment which shifts expenditures for project planning from capital outlay support in the Highway program to the Planning program. After accounting for this transfer, the budget proposes essentially the same level of capital outlay support expenditures as the current year.
|Department of Transportation
Capital Outlay Support Staffing
|1997-98 Through 1999-00
|Estimated 1998-99||Proposed 1999-00|
|Supervision and overhead||1,265.3||1,328.5||1,258.1|
|a STIP = State Transportation Improvement Program; SHOPP = State Highways Operation and Protection Program; TSM = traffic system management; CMAQ = congestion management and air quality; and SLTP = State Local Transportation Partnership.|
Shift in Staff From Capital Outlay Support to Planning. Beginning with the 1999-00 budget, Caltrans proposes to shift 601 PYEs from capital outlay support to the Planning program. These staff perform project planning work, including project study reports (PSRs) and project scope and summary reports (PSSRs). These studies are generally done to better define the scope, schedule, and costs of projects. The department maintains that since most of the work is planning in nature, it ought to be accounted for under the department's Planning program rather than as part of capital outlay support under the Highway program.
This realignment will make it more difficult to track Caltrans' total support expenditures related to the delivery of projects. Caltrans is required to provide details on its annual capital outlay support expenditures, but not its planning program. Through the current year, this capital outlay support information includes the costs associated with project planning work. These costs amount to about $48 million in 1999-00. With this realignment, these costs will no longer be reflected beginning in 1999-00 in the department's annual report.
In order to ensure that Caltrans is held accountable for the costs associated with the preparation of project planning documents, we recommend that the following supplemental report language be adopted to require Caltrans to identify staff resources used for project planning in its annual report on capital outlay support.
In its annual report to the Legislature on capital outlay support staffing and expenditures, the Department of Transportation shall separately identify the staffing and expenditures for project planning work, including work on project study reports (PSRs) and project scope and summary reports (PSSRs).
We withhold recommendation on $902.8 million and 10,425 personnel-year equivalents of staff to deliver projects in the 1998 State Transportation Improvement Program (STIP) because the California Transportation Commission plans to amend the STIP in March 1999 to program additional projects for delivery. Caltrans indicates that it will revise its capital outlay support request in April to accommodate any change in workload related to the STIP amendment.
Caltrans to Submit Finance Letter for Capital Outlay Support. After accounting for the transfer of the 601 PYEs to the Planning program, the budget proposes essentially the same level of capital outlay support staffing as the estimated current-year level. According to Caltrans, it will wait until the California Transportation Commission (CTC) amends the 1998 STIP in March 1999 before submitting a budget amendment to adjust the capital outlay support level for 1999-00. This decision is consistent with Chapter 622, Statutes of 1997 (SB 45, Kopp), which requires Caltrans to identify the amount of support costs needed for each capital outlay project that is expected to receive state funds. By waiting until after the 1998 STIP is amended, Caltrans can better estimate the support staff needed based on specific projects, and submit a request accordingly.
Withhold Recommendation. In view of the pending budget amendment request, we withhold recommendation on $902.8 million and 10,425 PYEs requested for 1999-00.
We withhold recommendation on $18.9 million for 287 PYEs for project study reports pending the department's re-estimation of its staffing needs in view of the new project study report guidelines under consideration by the California Transportation Commission.
Chapter 622 prohibits a transportation project from being included in the STIP for funding without a complete project study report (PSR). A PSR is required to include a definition of a project's scope, along with an estimate of its cost and the amount of time needed to get it ready for construction. By clearly identifying the risks of new projects (such as environmental factors that could cause delay), PSRs increase the information the department relies upon when programming new projects, thereby enhancing the likelihood that projects meet the STIP schedule. Indeed, Caltrans believes that the quality of a PSR is the most important factor in its ability to deliver a project on schedule and accurately estimate its cost. According to Caltrans, PSRs often become very lengthy studies, taking between one to two years and an average of 2.6 PYEs to prepare.
No Incentive to Contain Cost of Project Study Reports. While we concur that Caltrans should devote resources to PSRs to ensure an adequate flow of projects for inclusion in the STIP, the current system of budgeting for PSRs makes it difficult to hold Caltrans accountable for the amount of time or resources invested in them. This is because resources to work on PSRs are funded as a lump sum and are not project-specific. These resources are treated as part of overall planning activities and are taken "off the top" in the fund estimate before remaining resources are apportioned to counties as "county shares" for transportation projects.
Additionally, because these studies are funded through Caltrans, prior to the distribution of county shares, local agencies have an incentive to request that PSRs be expanded to address environmental or design issues that would otherwise be funded through county shares. By shifting some of this project support work into PSRs, a county can devote a larger portion of its county share of funds to other projects. To the extent that some counties are more successful at this than others, this undermines the distribution of funding established by Chapter 622. Moreover, as more resources are devoted to PSRs, the amount remaining for distribution among the counties shrinks.
Budget Proposes Additional Staff for Project Study Reports. PSRs are required for all projects prior to being programmed in the STIP. Thus, as funding for new projects increases, so does the need for PSRs. Based on the assumption that the new federal transportation act, TEA-21, will result in a $300 million increase in annual funding, Caltrans estimates that it will need to produce 20 additional PSRs per year, requiring an additional 50 PYEs. This would bring total staffing for PSR work to 287 PYEs ($18.9 million) in 1999-00. With this staffing level, Caltrans estimates it would produce about 105 PSRs.
Abbreviated Project Study Report Should Reduce Workload. We recognize that increased federal funds will likely require an increase in the number of PSRs produced annually. However, we think that the PSR workload may not be as large as the department currently projects for 1999-00. This is because CTC is developing guidelines, to be adopted by July 1999, for an abbreviated form of PSR. The abbreviated PSR would be used for projects that are programmed in the 1998 STIP period only for the environmental phase. Right-of-way acquisition and construction of these projects will not fall within the 1998 STIP period (1998-99 through 2003-04). The CTC's objective is to accelerate project delivery by eliminating the requirement to define scope, cost and schedule of construction for projects that are only being programmed for the environmental phase. More detailed project scoping and schedule estimates would be addressed at a later time. As more projects are programmed on this basis, the PSR workload should decrease as these PSRs will require less effort.
In view of CTC's plan to adopt abbreviated PSR guidelines, we withhold recommendation on $18.9 million for 287 PYEs until the department revises its PSR staffing request to reflect the reduced workload resulting from these new guidelines. The revised request should be based on an estimate of the number of projects the department anticipates to be programmed in the 2002 and 2004 STIP for environmental studies only. Although CTC does not plan to adopt the guidelines until July, we think that the department should be able to provide an estimate of how the guidelines would affect total PSR staffing need by the time it revises its overall capital outlay support request.
We recommend a reduction of $8.9 million and 136 PYEs for project scope and summary reports because the department's request is unjustified given the funding levels in the 1998 SHOPP and the department's Ten-Year State Highway System Rehabilitation Plan.
Role of PSSRs. Although not required by statute, Caltrans requires completion of a project scope and summary report (PSSR) before a project is programmed in the SHOPP. (SHOPP projects are mostly rehabilitation projects and projects to improve traffic safety and operations. These projects typically are smaller in scope and cost than STIP projects.) A PSSR contains the same basic project information as a PSR, however, it also addresses any environmental permits that projects may require. The PSRs, on the other hand, simply identify environmental factors that will need to be addressed after projects are programmed in the STIP.
Staffing for PSSRs Is Excessive. PSSRs serve an important role in Caltrans' ability to accurately estimate a project's cost, scope and schedule for programming in the SHOPP. Additionally, the department needs to produce enough PSSRs to allow for programming flexibility and, more importantly, to ensure a sufficient number of projects for programming in the SHOPP.
Currently, Caltrans has a total of 266 PYEs allocated to PSSR work. (This staffing level includes about 31 PYEs for oversight.) We believe, however, that Caltrans' current staffing level for PSSRs is higher than necessary given the amount of time and resources that PSSRs should require and the annual funding level of the SHOPP.
According to the department's Ten-Year State Highway System Rehabilitation Plan, which is the basis for SHOPP funding, the state will invest approximately $7.9 billion through 2007-08, or about $875 million annually on system rehabilitation. Allowing for annual funding of $900 million, and assuming that each PSSR requires one-half of a PYE to complete (Caltrans estimated that they require between one-third and one-half a PYE), the department would need no more than 130 PYEs to meet its current workload. This staff level includes 115 PYEs for PSSRs and 15 PYEs for staff oversight. Based on this information, we recommend a reduction of $8.9 million and 136 PYEs.
We recommend that the Department of Transportation submit a required supplemental report on minor projects to the Legislature by the time the department submits its revised request for capital outlay support staff in order that the Legislature may better evaluate the department's request for minor projects.
In addition to delivering STIP and SHOPP projects, the department also designs and constructs minor projects. Minor projects are essentially SHOPP projects, including roadway rehabilitation and traffic safety or operation projects, that cost under $750,000. Because of the relatively small size of the projects, projects are not defined in advance. Annual funding is provided to Caltrans as a lump sum.
The Supplemental Report of the 1998 Budget Act required the department to report to the Legislature by December 1, 1998, on the capital outlay and capital outlay support costs of minor projects completed in the prior fiscal year, as well as those to be completed in the current year and the budget year. The Legislature required the report because it was concerned about how Caltrans determined the amount of staffing needed to deliver minor projects, and wanted to have an account of the actual projects delivered by staff allocated for minor projects.
At the time this analysis was prepared, the department had not provided the report. Department staff indicated that internal review of the report has been delayed due to the change in administration. We recommend that the report be submitted to the Legislature by the time the department submits its revised request for capital outlay support staff in order that the Legislature may better evaluate the department's request for capital outlay support for the minor program.
Caltrans delivered 89 percent of State Transportation Improvement Program, State Highway Operation and Protection Program, and traffic system management projects proposed for delivery in 1997-98. Although 32 projects originally planned for delivery in 1997-98 were delayed, the department delivered 43 projects planned for later years, as well as 219 seismic retrofit and emergency projects. The total value of projects delivered by Caltrans was almost $1.9 billion.
Because of concerns over project delays, the Legislature has enacted various requirements to monitor Caltrans' delivery of state highway projects. Our office is required to report on the department's progress in delivering projects as they are scheduled for construction.
In 1997-98, the department delivered (defined as a project ready for award for construction) 528 projects, with a total construction value of almost $1.9 billion, as shown in Figure 3. The STIP projects delivered included 41 out of 50 planned for delivery in 1997-98, and 11 projects that were advanced from future years. The department delivered 228 SHOPP projects, including 196 (out of 219) that were planned for delivery in 1997-98, and 32 advanced from future years. For traffic system management (TSM) projects, the department delivered 29 projects, all planned for 1997-98.
|Department of Transportation
Highway Project Delivery
(Dollars in Millions)
|Number of Projects Planned||Number of
|NA - Not Available|
Project Delivery of Planned Projects Lower in 1997-98. In total, the department delivered about 89 percent of STIP, SHOPP, and TSM projects planned for delivery in 1997-98, compared to 93 percent for 1996-97. Caltrans indicates that this lower delivery rate was due to a variety of factors, including a redirection of staff to perform emergency work due to winter storms, and a court ruling restricting the use of contracting out. However, if the number of projects that were advanced from future years is included, Caltrans delivered 103 percent above its planned level.
As indicated in Figure 3, the department also delivered a number of seismic retrofit projects with a total value of about $532 million. This is 31 percent, or $128 million, more than in 1996-97. The increase reflects that most of the Phase 2 seismic retrofit projects are now in the construction phase.
Project Delivery Depends on How Fast Caltrans Hires New Staff. For the first time since 1992, the 1998 STIP had a significant amount of funds for new projects. According to the CTC's 1998 Annual Report, the 1998 STIP, together with the SHOPP, represent the largest capital outlay investment in the state highway system since Caltrans was created in 1973. In 1998-99, Caltrans received approval for 1,938 new positions for capital outlay support. By November 30, 1998 Caltrans had filled 1,709 of these positions.
As the next section discusses, Caltrans' ability to use contracting out as a tool for dealing with fluctuations in workload is limited as a result of a State Supreme Court ruling in 1997. Thus, the department's ability to keep projects on schedule will depend more than ever on how quickly it can hire and train new staff.
A recent court settlement regarding contracting out of the seismic retrofit program requires the Department of Transportation to transfer construction inspection and some design work to state staff. The state can continue to rely on consulting engineers to design the east span of the Bay Bridge.
In November 1998, the Business, Transportation and Housing (BT&H) Agency settled a court case regarding Caltrans' ability to contract out the seismic retrofit program. The settlement marks the conclusion of years of litigation regarding the use of private contracting as a way to improve Caltrans' ability to deliver projects in a timely manner. Specifically, the settlement affected 80 seismic design and engineering contracts. Thirty of these contracts will be phased out by March 1999, with related project work shifted to state staff.
Of the 30 contracts to be transferred to state staff, 24 are for construction inspection, while six are for design work. In order to accomplish the work planned for the current year, Caltrans estimates a need to hire 222 new full time positions.
To the extent that these additional staff cannot be brought onboard promptly, Caltrans indicates that it will likely transfer staff from existing projects in order to keep the delivery of toll bridge seismic retrofit projects on schedule. This would, in turn, delay nonseismic projects, including highway expansion or rehabilitation projects.
For the construction inspection contracts, state staff will simply replace the contracted staff with no disruption in schedule. However, for the six design contracts that are to be transferred to state staff, which are approximately 30 percent complete, Caltrans indicates that it has to redo most of the design work already done by consultants in order to ensure that all aspects of the design are consistent with assumptions made in the early stages. Caltrans acknowledges that this will result in some delay and inefficiency, but views it as a necessary precaution to ensure the integrity of the engineering.
Overall, Caltrans does not expect this settlement to result in great delay of the seismic retrofit program. This is because the settlement allows complex engineering contracts, such as design of the east span of the Bay Bridge, to proceed as scheduled.
Future Contracting Out Subject to State Supreme Court Ruling. The settlement regarding contracting out for the seismic retrofit program means that from now on, in order to contract out for engineering services, Caltrans must be able to factually demonstrate that the contracting out is in accordance with certain statutory criteria, as ruled by the State Supreme Court in a 1997 decision. Legislative efforts to increase Caltrans' authority to contract out on a programmatic basis, such as "seismic retrofit," that lack specific, factual justification are likely to be ruled unconstitutional. Short of providing such justification, the only mechanism for increasing the department's ability to contract out would be through a constitutional amendment. (For more detailed information about the BT&H settlement, see our January 1999 California Update.)
Phase 1 of the highway seismic retrofit program is 99 percent complete. Phase 2 is 94 percent complete, with most of the outstanding projects in the construction phase. The Department of Transportation now estimates that Phase 1 will be completed by mid-2000, while Phase 2 will not be complete until mid-2005 due to the complexity of several projects. Seismic retrofit of state-owned toll bridges will be complete by early 2005.
Caltrans inspects all state and local bridges at least once every two years. Since 1971, when the Sylmar earthquake struck the Los Angeles area, Caltrans has been engaged in an ongoing bridge retrofit program. The retrofit program involves a variety of different improvements, depending on the needs of the particular structure. The improvements include strengthening the columns of existing bridges by encircling certain columns with a steel casing, adding pilings to better anchor the footings to the ground, and enlarging the size of the hinges that connect sections of bridge decks to prevent them from separating during seismic activity.
Following the 1994 Northridge earthquake, Caltrans expanded its seismic retrofit program for state highway bridges, creating a Phase 1 and a Phase 2 program. Phase 1 includes 1,039 bridges identified for strengthening after the 1989 Loma Prieta quake at a cost of $815 million, as shown in Figure 4. As of January 4, 1999, 1,032 of those projects were completed. Phase 2 consists of an additional 1,155 bridges that were identified for strengthening following the 1994 Northridge earthquake. To date, Caltrans has completed the work on 1,092 of the Phase 2 bridges and estimates total Phase 2 costs to be $1.05 billion. Due to the complexity of several projects, Caltrans now estimates that all Phase 2 projects will not be completed until June 2005.
|Highway Seismic Retrofit Program
Scope and Progress
|As of January 4, 1999
(Dollars in Millions)
|Number of Bridges|
|Phase 1||Phase 2|
|Retrofit construction complete||1,032||1,092|
|Under contract for construction||7||36|
|Engineering not complete||0||27|
|Construction complete target||2000||2005|
Caltrans is also currently retrofitting seven of the state's toll bridges for seismic safety at an estimated cost of $2.62 billion, as shown in Figure 5 (see next page). Replacement of the east span of the Bay Bridge is the largest cost component, estimated at $1.28 billion. Caltrans currently estimates this to be completed in fall 2004, with the west span retrofit completed by spring 2005. The department's current target is to complete retrofit of all other bridges by 2003.
|Toll Bridge Seismic Retrofit Program|
|(Dollars In Millions)|
|San Francisco Bay Bridge|
|New East Span||2004||$1,285|
|San Francisco Bay Bridge Subtotal||($1,778)|
|San Diego Coronado||2002||93|
Evaluation of state-owned bridges for the effects of water erosion, referred to as "bridge scour," will not be complete until 2002. The cost of repairing state-owned bridges could be substantial. We recommend adoption of budget bill language directing the Department of Transportation to identify the ten-year need for repairs for bridge scour in its 2000 update of the State Highway System Rehabilitation Plan.
Federal Requirements of Bridge Scour Evaluation. Since 1991, the Federal Highway Administration (FHWA) has required the state to conduct an evaluation of all state and locally owned bridges over water for the effect of water erosion, referred to as "bridge scour." This requirement, however, does not apply to bridges with unknown foundations (where there are no records of the materials used in the bridge's construction). Caltrans was supposed to complete this evaluation by January 1, 1997, however, the department currently estimates that it will not be complete until 2002. This delayed schedule has been approved by FHWA.
Bridge Scour Main Cause of Bridge Failure. According to Caltrans, scour is the primary cause of bridge failure. Since 1993, California has experienced six bridge failures due to scour. Such failures have resulted in loss of life, as well as obstructing public mobility and commerce. Thus, the state has a direct interest in ensuring that scour evaluation of both state and local bridges is done in an efficient and expedient manner.
State's Role in Bridge Scour Evaluation. Approximately 15,260 of California's 24,000 bridges are over waterways and, thus, subject to federal scour evaluation requirements. About 4,630 of these are state-owned, while about 10,630 are under local jurisdiction. Caltrans is responsible for evaluating both state and locally owned bridges, unless local agencies opt to conduct their own evaluations. (Evaluation of locally owned bridges is discussed in the next section.)
Status of State-Owned Bridge Scour Evaluations. To date, Caltrans has conducted bridge scour evaluations of 2,299 (50 percent) state-owned bridges and estimates that it will complete its evaluation of the remaining bridges by 2002. Of the state-owned bridges evaluated, 123 (about 5 percent) have been identified as "scour critical"--requiring some type of corrective action. Repairs range from hydraulic solutions, such as modifying the stream, to structural responses such as foundation strengthening or entire bridge replacement.
Cost of Bridge Scour Repair Could Be Substantial. About half of the 123 "scour critical" bridges are scheduled to be repaired by 2005, while the remainder are still in the planning stage. The current SHOPP, which covers 1998-1999 through 2001-02, includes about 20 projects designed to correct for bridge scour. An additional 28 projects have been identified by Caltrans as candidates to be added to the SHOPP in March 1999.
The vast majority of bridge scour projects in the SHOPP call for the replacement of the bridge. The average cost of repair is about $3 million per bridge. If the remaining evaluations identify an equal percentage of scour critical bridges, and assuming the average repair cost of $3 million per bridge, the cost to the state could be about $700 million. This cost could be higher or lower, depending on the number and type of repairs needed. Nonetheless, the cost to the state could be substantial.
Cost for Repair Should Be Identified. Chapter 622 requires Caltrans to prepare a ten-year state highway system rehabilitation plan beginning in 1998. The plan must be updated every two years beginning in 2000. The current plan covers the period from 1998-99 through 2007-08. This plan has identified a need of $2.2 billion over ten years for bridge pavement and structure rehabilitation. However, it is not clear whether this amount reflects the potential need for all bridge scour repairs. Because Caltrans is required to update the plan in early 2000, we recommend the following budget bill language be adopted:
The Department of Transportation, in updating the ten-year state highway system rehabilitation plan, shall identify the ten-year need for bridge scour repairs, including the number of bridges and the cost of repairs.
The department currently plans to wait until 2002 before beginning evaluation of over 3,000 locally owned bridges with unknown foundations. In order to minimize risk to the public, we recommend the adoption of supplemental report language requiring the Department of Transportation to submit to the Legislature a schedule for evaluating these locally owned bridges.
As mentioned above, there are about 10,630 locally owned bridges over water. Caltrans is responsible for evaluating these bridges unless local agencies opt to do the evaluations themselves. Thus far, nine local agencies, including Los Angeles County, have expressed a desire to conduct their own inspections. This represents approximately 2,000 bridges that would be evaluated by local agencies. To date, Caltrans has completed evaluations for approximately 4,170 locally owned bridges. Of those, 23 have been identified as scour critical. Evaluation of an additional 3,070, by either Caltrans or local agencies, is scheduled to be competed by 2002.
The remaining 3,390 locally owned bridges have unknown foundations--that is, there are no records of the materials used in their construction. Caltrans has not yet developed a strategy for evaluating these bridges and, consequently, has placed them on a delayed schedule. (Only 2 percent of state-owned bridges have unknown foundations.) The department anticipates that it will not begin evaluation of these bridges until 2002.
Caltrans Should Develop a Strategy for Evaluating Bridges With Unknown Foundations. The FHWA does not yet require scour evaluation of bridges with unknown foundations. However, we believe that Caltrans should develop an evaluation strategy for these bridges in order to minimize risk to the public and prevent unnecessary costs due to further deterioration of bridges. To that end, we recommend that the following supplemental report language be adopted:
By December 1, 1999, the Department of Transportation shall report to the Legislature on a plan for evaluating bridges with unknown foundations for bridge scour. The report shall set a target date for completion of evaluations and identify how the department plans to set priorities for the evaluation schedule.
The mass transportation program provides operating and capital support for the implementation of urban, rural, and interregional public transportation services, primarily bus and rail transportation. The program has two main elements-state and federal mass transit which primarily provides federal funds to local agencies for bus and rail services, and rail transit capital which provides funds for intercity rail services and transit capital improvement grants to local agencies.
For 1999-00, the budget proposes $372.7 million for mass transportation, which is $44.3 million, or 11 percent, less than estimated current-year expenditures. As shown in Figure 6, this decrease is a result of a 26 percent drop in the state and federal mass transit element, somewhat offset by an 11 percent increase in rail transit capital expenditures.
|Department of Transportation
Mass Transportation Expenditures
|1997-98 Through 1999-00
(Dollars in Millions)
|Percent Change From
|State and federal mass transit||$22.9||$238.7||$175.3||-26.5%|
|Rail transit capital||290.8||178.1||197.2||10.7|
The reduction in projected expenditures in state and federal mass transit is mainly due to a change in the way in which federal funds are administered. Specifically, Caltrans has transferred much of the federal portion of mass transportation funding to the Federal Transit Agency (FTA), which directly administers the funds to local agencies. In addition, due to the condition of PTA, few transit capital improvement projects have been added for funding in the STIP in recent years.
Public Transportation Account Faces Shortfall: Budget Proposes State Highway Account Transfer. As we discussed in the "Crosscutting Issues" section of this chapter, the revised 1998 Fund Estimate projects a PTA shortfall through 2003-04, with the shortfall occurring as early as the budget year. To delay the onset of the shortfall, the budget proposes a $28 million transfer from the SHA to pay certain outstanding commitments to transit capital improvement projects. Even with the transfer, the account is projected to face a $38.4 million shortfall through 2003-04. As we discuss in that write-up, the problems facing this account are due to a combination of declining revenues and increased expenditures, particularly in the State Transportation Assistance program and the intercity rail program.
For 1999-00, the budget proposes $31 million in PTA expenditures to meet prior year commitments for transit capital improvements. Of this amount, $28 million is proposed to be paid through a transfer from the SHA as mentioned above. The SHA will be used to fund rail tracks and facilities-related projects, in compliance with the State Constitution's restriction on the use of fuel tax revenues. The remaining $3 million will come from PTA for projects that are ineligible for SHA funding, such as bus rehabilitation and rail acquisition.
We withhold recommendation on $62.9 million requested to continue existing intercity rail services, as well as to expand service in 1999-00, because the amount needed will likely be different from current estimates. Specifically, more current cost estimates will be forthcoming from Amtrak in March 1999. We recommend that the department provide the updated cost estimates at budget hearings. Based on that information, the Legislature should adjust the amount of support for intercity rail services accordingly.
The budget requests $62.9 million to support Amtrak's costs for continuation and expansion of intercity rail services in 1999-00. Of this amount, $750,000 is for a proposal to increase service on the Capitol Corridor by extending a fourth train, currently running between Sacramento and Oakland, to San Jose.
Updated Amtrak Cost Estimates Will Be Forthcoming. The budget request is based on cost estimates provided by Amtrak in 1998. We understand that Amtrak will provide Caltrans with updated estimates in March 1999. Accordingly, we withhold recommendation on $62.9 million for intercity rail services. We further recommend that Caltrans provide updated cost estimates at budget hearings and that the Legislature adjust the amount based on the updated information.
The California Highway Patrol (CHP) is responsible for ensuring the safe, lawful, and efficient transportation of persons and goods on the state's highway system and to provide protective services and security for state employees and property. To carry out its responsibilities, the department administers four programs: (1) Traffic Management, (2) Regulation and Inspection, (3) Vehicle Ownership Security, and (4) Protective Services. The first three programs are funded primarily with Motor Vehicle Account funds. Protective Services are funded by fees charged to most state agencies receiving CHP services.
The budget proposes $885.3 million to support CHP in 1999-00. This is approximately $51.7 million or 6.2 percent above estimated current-year expenditures. Most of this increase is necessary to fund traffic officers' retirement contributions. In 1998-99, $38.9 million in surplus Public Employees' Retirement System (PERS) funds was used to reduce the amount the state had to pay in retirement contributions. No surplus PERS funds are projected to be available for this purpose in the budget year, thus requiring a corresponding increase in the department's budget. The remainder of the proposed increase in the department's budget is primarily the result of increased equipment purchases, including $5 million to replace two helicopters, $3.2 million to purchase new and replacement laptop computers for use in patrol cars, and $1.8 million for increased costs of continuing the scheduled replacement of patrol cars.
A collective bargaining agreement, currently awaiting approval, would provide a staggered 7 percent salary increase and other benefit enhancements for patrol officers. The new agreement is estimated to cost $47.4 million over the current and budget years. This amount is not included in the proposed budget.
The collective bargaining agreement governing salaries and benefits for the department's 5,600 traffic officers expired on September 12, 1997. Nonetheless, the terms of that agreement remain in effect until a new agreement is approved.
A new collective bargaining agreement was negotiated in December 1998, but still must be approved by the union membership and the Legislature in order to become effective. Senate Bill 138 (O'Connell) incorporates that agreement and, when enacted, would provide the Legislature's approval. The proposed agreement would provide a 5 percent salary increase retroactive to July 1, 1998, and an additional 2 percent salary increase retroactive to November 1, 1998. Other benefits enhancements include increased state contributions for medical benefits and higher maximum retirement benefits. The terms of the new agreement would expire on July 1, 2000.
According to estimates from the Department of Personnel Administration, the agreement, if approved, would add $22.1 million to the department's costs in the current year and $25.3 million in the budget year, for a total cost of $47.4 million. This amount is not reflected in the department's proposed 1999-00 budget. The Department of Finance (DOF) anticipates current-year funding to be provided through legislation, most likely SB 138. Funding for 1999-00 would be requested through a budget amendment in the spring, after the agreement is approved.
The department's new methodology for allocating its protective services costs alters the amount most state agencies will pay for the same level of service. Repeated changes to the cost allocation methodology result in unnecessary complexity and inefficiencies in billing for protective services. Recognizing the general statewide benefit resulting from these services, we recommend the enactment of legislation to provide direct funding for protective services.
In 1995-96, the California State Police (CSP) was consolidated with CHP. The CSP had been responsible for protecting state dignitaries (such
as the Governor and legislators), as well as providing security for state personnel and property. Most state agencies are required to share in the
costs of these protective services. A small number of agencies are excluded from this requirement as a result of statutory exemptions or
decisions made by CHP. Many, but not all, of these agencies, including the University of California and the California State University, are
exempt because they provide their own security officers. Figure 1 lists the exempted agencies.
State Agencies Not Charged Pro Rata
Figure 1 Protective Services
California Exposition and State Fair California Highway Patrol California Science Center California State University Department of Corrections (administrative offices are charged) District Agriculture Associations Office of the Governor Legislature State Compensation Insurance Fund University of California Department of the Youth Authority (administrative offices are charged)
State Agencies Not Charged Pro Rata
Before CSP merged with CHP, several other agencies, which were outside of CSP's service districts (such as Veterans' Homes) were not charged a protective services pro rata. Because CHP provides service throughout the state, it chose to discontinue those particular exemptions.
New Cost Allocation Methodology Being Implemented. Until the current year, CHP continued CSP's policy of billing each nonexempt agency for protective services based on the total floorspace occupied by each agency. Beginning in the current year, however, CHP has begun to include the number of budgeted personnel in each agency in its cost allocation formula. The new formula is being implemented gradually over four years. In the current year, 25 percent of each agency's protective services charge is based on personnel and 75 percent is based on floorspace. The ratio will change to 50 percent and 50 percent in the budget year, 75 percent and 25 percent in 2000-01, and in 2001-02, costs will be allocated entirely on the basis of budgeted personnel.
The department claims that the new methodology will avoid problems inherent in the floorspace data it has been using. The department considers floorspace to be a poor indicator of relative workload, and further believes information in the floorspace database to be frequently outdated and inaccurate. The department therefore argues that allocating protective services costs on the basis of each agency's budgeted personnel will allow its billing to more accurately reflect relative service levels to each agency.
New Methodology Alters Costs for Same Service. Although the overall cost to the state for CHP's protective services is not affected, moving
from a floorspace-based to a personnel-year-based methodology has altered the costs paid by most agencies. By the time the new methodology
is fully implemented, a number of agencies will see their share of protective services costs increase--some by as much as 25 times (such as the
Department of Mental Health). Others will experience savings as their share of the costs is reduced to a fraction of last year's levels. Figure 2
shows some examples of agencies experiencing significant cost increases and decreases in this process.
Cost Impact to Selected Departments Actual Actual Projected
Figure 2 New Protective Services Methodology
$1,667.0 Forestry and Fire Protection
1,110.3 Parks and Recreation
621.1 Housing and Community
103.1 Industrial Relations
Cost Impact to Selected Departments
For 1999-00, some agencies' budgets have been adjusted to reflect higher or lower protective services charges. Other agencies, however, have not received such adjustments, and thus will either have freed up funds for other purposes as their allocated costs decrease, or will have to redirect resources to cover higher CHP assessments.
Cost Allocations Are Confusing, Controversial, and Inefficient. The new process of allocating protective services costs to various state agencies has resulted in confusion and controversy about the basis of these costs, and inefficiency in administering and utilizing protective services.
More Appropriate Funding Arrangements Available. In our view, alternative arrangements for funding protective services could avoid or mitigate the problems identified above. We believe that the arrangement used to fund other central services that benefit the entire government, such as state payroll, is a suitable model for funding protective services costs. We consider it important that any new funding system for protective services should:
Protective Service Functions Should Be Funded Directly. We believe direct funding of CHP's protective service duties would satisfy these criteria. Furthermore, we believe that funding protective services directly from the General Fund would be appropriate, as the protection of state property and personnel is of general statewide benefit. In order to ensure that the total cost to the General Fund is not increased, and that the General Fund does not end up shouldering all protective services costs, including costs of services to special or federally funded programs, proportionate amounts should be recovered from special and federal funds. Such cost recovery is currently achieved using the pro rata process and the Statewide Cost Allocation Plan (SWCAP) to fund the activities of central service agencies such as DOF, the State Controller, and the Legislature.
Since CHP would be funded for protective services directly from the General Fund, departmental budgets should be permanently reduced by a like amount to reflect the elimination of their protective services charges. This change would eliminate the need to calculate (by whatever methodology) how much of this cost should be borne by each state agency. As a result, questions about relative service benefits and the appropriateness of exemptions would be moot. In addition, the work of calculating assessments, adjusting agency budgets, making reimbursements, and accounting for payments would be avoided.
We therefore recommend that the Legislature enact the statutory changes necessary to fund CHP's protective services directly from the General Fund, and that the baseline budgets of all state agencies subsequently be reduced by the amount of their current share of protective services costs. We further recommend that appropriate costs be recovered from special and federal funds to ensure that the General Fund is not disadvantaged by this change.
We recommend approval of $43,000 to hire temporary help to eliminate a backlog of invoices. We further recommend that the department report at budget hearings how it intends to ensure that invoices will be paid on time after the expiration of this temporary augmentation.
The CHP, like many state agencies, purchases goods and services from vendors. For instance, the department purchases vehicle repairs, protective clothing, and utilities from vendors. The CHP's Accounts Payable Unit (APU) processes invoices for these goods and services by verifying claims, completing associated paperwork, and forwarding invoices to the State Controller for payment. State law requires that state agencies submit invoices to the Controller within 35 calendar days after the postmark date on the invoice. Agencies failing to meet this deadline must pay a late penalty to the vendor.
Department Accumulates Backlog of Over 6,000 Invoices. Increases in the number of annual automotive repairs, as well as the addition of facilities and area command sites, has expanded the number of invoices the APU must process. The APU has had difficulty meeting this increased workload, and the department estimates that a backlog of 6,022 invoices has resulted. The APU's inability to process invoices in a timely manner has strained the department's relations with vendors. The department reports that some vendors have suspended shipment of goods (such as tires) or threatened to halt the provision of services (including phone service) until outstanding invoices are paid.
Department Proposes 0.7 Personnel-Year to Eliminate Backlog. The CHP estimates that clearing the backlog will require 1,267 staff hours, or 0.7 personnel-year. The department is requesting $43,000 to hire temporary help in the budget year. We think the request is warranted.
Department Should Develop Plan to Ensure Timely Invoice Processing. While the temporary help should allow the department to eliminate its backlog, it will not address the causes of the backlog. We believe the department must take steps to ensure the continued timely payment of invoices. For example, the average time required to process an invoice (currently about 17.5 minutes) might be reduced by reorganizing the unit or by streamlining processes. We therefore recommend that the department report at budget hearings what steps it plans to take to ensure that its APU will be able to sustain a timely processing of invoices.
The Department of Motor Vehicles (DMV) is responsible for protecting the public interest in vehicle ownership by registering vehicles, and promoting public safety on California's roads and highways by issuing driver licenses. Additionally, the department licenses and regulates vehicle-related businesses such as automobile dealers and driver training schools, and also provides revenue collection services for state and local agencies.
The budget proposes total expenditures of $596.4 million for support of the DMV in 1999-00. This is a reduction of $21.1 million, or 3.4 percent, below estimated current-year expenditures. The reduction includes primarily adjustments for one-time expenditures in the current year for replacement of printers, facilities improvements, and for local assistance for fingerprint identification equipment.
About $311.7 million (52 percent) of the department's total support will come from the Motor Vehicle Account and $228.5 million (38 percent) from the Motor Vehicle License Fee Account. The remaining support will be funded primarily from the State Highway Account and reimbursements.
We recommend the adoption of budget bill language to prohibit the Department of Motor Vehicles from beginning procurement to replace its driver license database system until it has completed procurement to replace the vehicle registration system. We further recommend that the department be required to specify in a report to the Legislature by December 1, 1999, based on best available information, time lines and budgets for the completion of all significant components of its database redevelopment project, and that the department provide quarterly updates of that information along with explanations for any deviations from the schedule and costs.
In order to carry out its essential functions such as licensing drivers and registering vehicles, the DMV utilizes a number of large, complex databases. The technical infrastructure that manages these databases was developed in the 1960s, and since the 1980s has rapidly become obsolete. Given the age of the systems, they have proven unreliable and inefficient. Computer applications were developed in-house to meet DMV's specific needs and have been repeatedly modified and extended to accommodate changing demands. Personnel familiar with the customized systems have retired from the department, and no outside technical support is available for these systems. Therefore, it has become expensive and time-consuming to perform necessary modifications on DMV database systems in response to statutory changes and mandates.
$50 Million Redevelopment Effort Failed. Between 1988 and 1994, DMV undertook a massive effort to update and redevelop its aging database systems. After spending more than $50 million on new computer equipment, consultant fees, and other expenses, the department concluded that its effort was fatally flawed. The DMV suspended the project and hired an independent consultant (the Warner Group) to assess the department's situation and make recommendations.
New Plan Developed. Based on the Warner Group's 1995 report, DMV launched a new plan to address its aging information systems in a comprehensive fashion. The new plan involves two broad components:
1. Business Process Reengineering (BPR). This process evaluates the current business practices DMV uses to carry out its critical missions and determines how those practices might be performed more effectively. The objective of the process is to identify specific ways to improve the department's operations. The BPR would be done prior to the actual purchase of new information systems to support those practices.
2. System Development and Implementation. This component of the plan entails:
The overall database redevelopment effort remains an enormous undertaking that will require considerable time and resources to complete. In order to be able to manage the effort in smaller, more cohesive parts, the department is simultaneously pursuing three separate projects to replace its three major, mission-critical databases: occupational licensing (OL), vehicle registration (VR), and driver licensing (DL). Additional noncritical systems are also to be upgraded or replaced.
Strategy Generally Sound, But Time Frames Problematic. We believe the strategy DMV is now employing for its database redevelopment is generally sound. Its decisions to use alternative procurements for its larger systems, to divide the BPR into smaller, system-specific projects, and to hire quality assurance contractors, follow "best practices" utilized in the private sector for similar-type projects. (Please see our report, State Should Employ "Best Practices" on Information Technology Projects, for a fuller discussion of those practices.)
We are concerned, however, that DMV continues to set time frames that are unrealistic. It appears that, in some cases, the department has projected completion dates more out of concern for funding and budgeting deadlines than on the basis of a realistic assessment of tasks to be performed.
Current Effort Is Behind Schedule and Completion Date Unknown. The Warner Group's study projected that the development and installation of new systems for DMV's three mission-critical systems would begin in mid-1997. However, at the time this analysis was prepared, DMV had yet to complete the BPR work for its VR and DL databases.
When DMV requested funding for 1998-99, it provided updated milestones for all three database projects. The department now advises that those projected deadlines will not be met. The department's latest projections (as of January 1999) indicate:
Furthermore, the department cannot project at this time when either the VR or DL project will be complete.
The repeated delays have been caused by a number of factors. In part, they have been caused by DMV's periodic decisions to alter its approach to the redesign efforts. Some delays were due to difficulties in securing approval from oversight agencies, resulting from problems such as incomplete information and inadequate project definition. In addition, the department has had to divert resources to make its existing information systems Y2K compliant. Those efforts have taken longer than the department originally projected. Finally, we believe that DMV's projected milestone dates have frequently been unrealistic to begin with.
Department Requests $6.7 Million to Continue Redevelopment Effort. For 1999-00, DMV requests $6.7 million, including:
Database Redevelopment Costs and Progress Depend on Alternative Procurement Process. It has been almost four years since the Warner Group's 1995 report which laid out a revised process for the department to redevelop its databases. Since that time, funding has been provided on a year-by-year basis. In 1997-98 and 1998-99, the department expended a total of about $9.6 million on BPR and various procurement activities. However, the department is still far from completing the database redevelopment effort. As we indicated earlier, the department cannot project a completion date at this time. Neither can DMV provide cost estimates for the entire redevelopment effort. In fact, it most likely will not be able to do so until it has completed the "alternative procurement" process for both the vehicle registration and driver license databases. It is through the alternative procurement process that the department, with the assistance of outside consultants, will determine the hardware and software to use in the redevelopment of the two database systems.
Sequential Procurement of New Systems Is More Prudent. The department has started the alternative procurement process for the vehicle registration system. The process is currently projected to last through May 2000. The department is also planning to begin the alternative procurement process for the driver license database by March 2000. As a consequence, the alternative procurement processes for these two projects are projected to overlap by three months. Based on the department's track record so far, we expect that completion of the VR procurement will take longer than currently anticipated, and the overlap with the DL procurement will lengthen substantially.
Considering the amount of resources and time wasted in the first failed effort, we believe the current incremental approach is appropriate. However, we also believe that it is more prudent that DMV conduct the alternative procurement process for the two databases sequentially, without overlap in timing. This is because doing so would allow the department to incorporate any lessons learned from the vehicle registration procurement process into the driver license procurement. It would also allow the department to ensure that the hardware and software considered for the two database systems are compatible and consistent so as to maximize their flexibility and efficiency. To ensure this, we recommend the following budget bill language be adopted:
The Department of Motor Vehicles shall not expend any resources in alternative procurement activities related to its driver license database redevelopment until the Department of Information Technology certifies to the Joint Legislative Budget Committee and the Legislature's fiscal committees that the Department of Motor Vehicles has completed the alternative procurement for the vehicle registration database.
Legislature Should Have Better Information on Project Schedule and Costs. To enable the Legislature to monitor and hold the department accountable for the progress in the redevelopment of its databases, we further recommend that DMV provide the Legislature (1) major milestones in the procurement, development, and implementation of its mission-critical systems; and (2) the associated cost estimates. Further, the department should provide quarterly updates of these project schedules and costs, along with explanations for any deviations from these estimates. Accordingly, we recommend the following supplemental report language be adopted.
The Department of Motor Vehicles shall report to the Joint Legislative Budget Committee and the Legislature's fiscal committees no later than December 1, 1999, and quarterly thereafter, its projected dates for completion of each major segment of its projects to replace its occupational licensing, vehicle registration, and driver licensing database systems. The department shall include in each report the estimated cost of each identified segment. The department shall include explanations for any deviations in its estimates from the previous report.
We recommend a reduction of $668,000 requested for computer programming changes because performing nonessential upgrades on a computer system the department is currently working to replace may be duplicative and premature.
Chapter 322, Statutes of 1998 (AB 2797, Cardoza), reduced the vehicle license fee (VLF) paid annually on all registered automobiles by 25 percent, effective January 1, 1999. It also provided for further reductions in the fee if future state revenues exceed specified targets. The DMV is responsible for billing and collecting VLF revenues.
Initial Reprogramming Effort Not "Permanent." The department modified its vehicle registration computer programs in October 1998 so that notices for vehicle registration renewals due after December 31, 1998 would reflect the 25 percent VLF reduction. The department expended $1.6 million in programming and other costs to implement these changes. However, the department considers those efforts to be incomplete, and has embarked on a "Phase II" reprogramming effort. In essence, the Phase II effort will allow the department to better capture and maintain financial data connected with the VLF reduction. The department claims that the Phase II reprogramming must be completed by October 1999 in order to avoid losing these critical data.
The DMV expects to spend $330,000 on Phase II work by June 30, 1999, for a total of $1.9 million in the current year to implement the VLF reduction. The department will be requesting a deficiency appropriation for this amount in the spring.
Department Seeking Funds for More Extensive Reprogramming Effort in 1999-00. For the budget year, DMV is requesting an additional $891,000 for further reprogramming efforts. A portion of this amount is to complete Phase II by September 1, 1999. The department intends to use the remainder of this funding to embark on a "Phase III" reprogramming effort. Phase III is intended to make the department's vehicle registration database more "flexible," permitting more expeditious reprogramming in the event future VLF reductions are triggered or future legislative mandates necessitate changes to the database. The department expects Phase III to be complete by September 1, 2000.
Recommend Funding Only for Completion of Phase II. As discussed above, DMV is in the process of replacing its major databases, including its vehicle registration database. We believe, therefore, that long-term investments in the department's current vehicle registration database, such as the proposed Phase III, is not warranted. This is because the revenue thresholds established by Chapter 322 are substantially above current projections, meaning that it is unlikely that further VLF reductions beyond the 25 percent would be triggered. In the event that a further reduction were triggered, DMV would be able to accommodate any reprogramming changes as it did in 1998.
Similarly, we believe that any new statutory changes requiring DMV to modify its existing VR database--prior to its replacement--could prudently be performed as the need arises. We expect that the new database, which DMV plans to start developing in the budget year, will include the "flexibility" features the department is proposing to add to its existing database.
For these reasons, we believe that DMV should only implement changes to its VR database that are immediately necessary. The department has been unable to explain how the $891,000 will be allocated between Phases II and III. However, noting that the department expects to complete Phase II by September 1, 1999 (three months into the fiscal year), we believe one-quarter of the requested funding would permit completion of this phase. We recommend, therefore, that the request be reduced by $668,000 to eliminate funding for the proposed Phase III.
We recommend that departmental funding to implement the financial responsibility law be reduced by $6,954,000, because the law is due to sunset on January 1, 2000.
Chapter 1126, Statutes of 1996 (AB 650, Speier) requires vehicle owners to provide proof of financial responsibility in order to reregister a vehicle, effective January 1, 1997. In enforcing this statute, DMV requires vehicle owners to submit insurance information with their vehicle registration renewal application. The department spends about $15 million and almost 300 personnel-years to process this information annually.
Law to Sunset January 1, 2000. Chapter 1126 is due to expire on January 1, 2000. As DMV will not be required to obtain and process proof of financial responsibility information during the second half of the budget year, its associated costs in the budget year should decline accordingly. However, the department is requesting full-year funding for the program.
Funding Should End With Expiration of Law. Until the requirements of Chapter 1126 are extended by law, we believe it is premature to provide full-year funding for the program beyond the current sunset date. We therefore recommend that the department's budget be reduced by $6,954,000. We further recommend that any legislation to extend Chapter 1126 include an appropriation to cover the department's costs.
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