Monday, October 18

Road to ‘Better Service at a Better Price’ Runs Through KDOT and Kansas Turnpike

From Kansas Policy Institute.

Road to ‘Better Service at a Better Price’ Runs Through KDOT and Kansas Turnpike

By Steve Anderson

The Kansas Turnpike Authority (KTA) is one of those quasi state agencies that tend to fly under the radar with citizens and legislators. Despite being a component unit of the state, KTA is not included in the All Funds Budget of the state. Meaning the KTA budget is not reviewed and approved by the Legislature. Effective and efficient government will only exist when politicians and citizen begin to examine ALL state spending.

Reductions in spending are too often associated with service reductions (which government unfortunately often promulgates) but it doesn’t have to be that way. A “better service, better price” mentality finds ways to provide essential services at a better cost to taxpayers, and that’s exactly what can be done by examining overlaps or synergies in the operations of KTA and kansas Department of Transportation (KDOT).

Good stewardship of citizen’s dollars requires that wasteful spending be controlled in all state operated or sanctioned operations. This task is best accomplished by taking an approach that views Kansas Turnpike Logogovernment as a “whole” instead of viewing state agencies as individual stand-alone entities. The long standing approach to government where each function is considered a “silo” has created difficulties in identifying potential savings, synergy or unnecessary functions between agencies and other state entities.

The  most recent comparisons show that KTA was operating 238 miles of highway versus 9,503 miles of KDOT highways. KTA operated with approximately 500 employees while KDOT employed 2917 meaning every KDOT mile of road is “covered” by .3 employees while at KTA seven times as many per mile were required. Toll booth operators were the only different requirement in the work force and didn’t explain the size of the disparity. Similar large inequities in spending were found with maintenance at about 3 times the cost per mile for KTA versus KDOT (here and here).

These large cost differences coupled with visual examples such as identical maintenance yards just a few miles apart near Emporia showed that taking a bigger picture approach to the Kansas road system could generate savings.

After the legislature reacted to these red flags for waste by designating the Secretary of Transportation as Executive Director of KTA, more understanding of those disparities in maintenance costs came to light. An audit of KTA (Page 25) found that “In prior years, the Turnpike’s capitalization policy did not conform with generally accepted accounting principles for the following reasons: 1) cost of major repairs, replacements and improvements not financed by or expected to be financed in part by bond proceeds were paid by the replacement reserve fund and were not capitalized, 2) depreciation was not provided on capital assets, 3) the modified approach for reporting infrastructure assets had not been utilized in the absence of recording depreciation and certain capitalized costs, 4) interest costs were not capitalized, and 5) amortization was not applied to the other costs capitalized.” This required the unusual step of having to restate prior year’s KTA financial statements. In other words the “information” that citizens and legislators had been receiving to judge KTA operations all these years has been incorrect.

There are opportunities for significant savings for taxpayers and toll road users from a more coordinated approach to KTA and KDOT operations. A properly coordinated strategy does not require the loss of autonomy of either entity or major changes in operations. Here are a just a few examples:

  1. Coordination in planning to meet future needs. The ongoing expansion of Johnson County suburbs to the west and south could increase even further the congestion on I-435. Toll roads have filled the role in OKC and DFW of offering alternatives to congestion and been well received by citizens. A KTA loop which delivered faster access in the Johnson County and surrounding areas would allow KDOT to focus on keeping its roadways maintained rather than big bond issues for new road building.
  2. Coordination of resources. Both KTA and KDOT have significant physical resources. Re-purposing for short term projects, emergencies or major work would only require that each entity be fairly compensated as ‘renter or contractor’ when providing those assets for use by the other.
  3. Coordinate of purchasing. Bulk purchases of insurance, equipment, and supplies can reduce cost per mile of construction costs of both entities. Engineering software and shared research expenditures are just two examples of many opportunities of possible administrative function savings.
  4. Cooperative operations. KTA could pursue an aggressive path towards driving customers to their toll roads through cooperative maintenance and new construction of key KDOT feeder roads to KTA toll roads.

The ability to find savings in cooperation between KTA and KDOT operations has many possibilities but it is just one of many examples where savings and service gains can be found by rejecting the “silo” approach to government. Citizens and legislators need to continue to press for a more comprehensive approach that provides the state’s financier — the taxpayer — a delivery of “better services, at better prices.”