Texas Transportation Commission was complicit in keeping $1.1 billion accounting error from the Legislature and taxpayers
Audit knocks TxDOT for $1.1 billion error
State auditor says poor internal communication caused huge accounting glitch, and that TxDOT failed to make mistake public for several months.
August 29, 2008
By Ben Wear
Austin American-Statesman
Copyright 2008
The Texas Department of Transportation made a $1.1 billion accounting mistake last year through a mixture of "ineffective internal communication, a complex reporting structure and misunderstanding" of its data, according to a report by the state auditor's office released Thursday.
The agency kept the error out of public view for four months by failing to immediately report it to legislators, affected state and local officials and its governing commission, at least in a public forum, the audit found.
TxDOT staff said it gave private briefings to the five members of the Texas Transportation Commission after realizing in October that it had in effect double counted $1.1 billion that was expected to be available for highway work, the report says, but kept no record of the meetings as proof they occurred or to document what was said.
And in several monthly commission meetings that followed, despite considerable talk about tight agency finances and public moves to cut back on future road projects, neither the staff nor the commission members mentioned the accounting problem.
"Although the effects of the error were discussed, the specific error and the causes were not discussed," says the report, which the auditor's office initiated after a Feb. 19 request from Lt. Gov. David Dewhurst and House Speaker Tom Craddick. The existence of the error surfaced publicly for the first time at a Feb. 5 state Senate committee hearing.
"The Department (TxDOT) should ... brief the full Texas Transportation Commission on developments that occur and have a significant statewide impact, so that members of the commission can be involved in the process of making corrections," the 64-page report says.
Asked why the agency waited until February to announce the error, TxDOT spokesman Chris Lippincott said in an e-mail Thursday that the agency had told officials with metropolitan planning organizations around the state in November that TxDOT "had incorrectly projected how much money would be available" for road contracts in 2008.
"Did we call a press conference? No," Lippincott said. "When we had an explanation of what happened, we brought it to the Legislature ... in early February."
As for the broader criticisms in the audit about how the agency tracks its available money, TxDOT executive director Amadeo Saenz said in a statement that changes are "already well underway for several of the recommendations. I am committed to increasing the department's transparency, and the recommendations identified in this audit put us another step closer to realizing that goal."
TxDOT officials have said that the problem was that one TxDOT office was keeping track of money, while another was charged with allocating funds for future projects. Saenz has now brought those two functions under one person, TxDOT Chief Financial Officer James Bass.
Saenz did not become TxDOT's boss until late September, taking over for the retiring Michael Behrens. But as engineering director under Behrens, Saenz was among a handful of officials on his core team.
Until sometime in September, TxDOT had thought it had $4.2 billion available to spend on highway expansion and maintenance projects during the 2007-08 budget year, which began Sept. 1. But, according to the audit report, that total included $580.5 million to be borrowed from future gas tax funds and $487.8 million from the Texas Mobility Fund that were already a part of a $3.1 billion forecast of cash on hand made that July.
Those two amounts of money, thus, were counted twice. TxDOT, in fact, had $3.1 billion to spend this year, and much of that was already committed to road maintenance.
After the error was found — Bass has said in public meetings that he immediately realized there was a problem when he saw the $4.2 billion figure — agency officials at a late September meeting of the commission said there would be no money available for building new highways or adding lanes to existing highways in the coming year.
The squeeze, officials said at the time, was the result of lagging federal transportation grants, inflation of construction costs and diversions of gas tax revenue to other state needs.
The agency figured out the cause in October, according to a timetable of events included in the audit. In November, the agency announced cuts of 50 percent or more in money for engineering and right-of-way purchases for new highways, trims that emphasized the seriousness of the situation and heightened interest among legislators and local transportation officials.
Unaware of the error, some lawmakers accused TxDOT of crying wolf about its finances to pressure the Legislature to back off of limits on private toll road contracts instituted in the 2007 session. That led to the Senate hearing in February where news of the error emerged.
bwear@statesman.com; 445-3698
© 2008 Austin American-Statesman:www.statesman.com
To search TTC News Archives clickHERE
To view the Trans-Texas Corridor Blog clickHERE
State auditor says poor internal communication caused huge accounting glitch, and that TxDOT failed to make mistake public for several months.
August 29, 2008
By Ben Wear
Austin American-Statesman
Copyright 2008
The Texas Department of Transportation made a $1.1 billion accounting mistake last year through a mixture of "ineffective internal communication, a complex reporting structure and misunderstanding" of its data, according to a report by the state auditor's office released Thursday.
The agency kept the error out of public view for four months by failing to immediately report it to legislators, affected state and local officials and its governing commission, at least in a public forum, the audit found.
TxDOT staff said it gave private briefings to the five members of the Texas Transportation Commission after realizing in October that it had in effect double counted $1.1 billion that was expected to be available for highway work, the report says, but kept no record of the meetings as proof they occurred or to document what was said.
And in several monthly commission meetings that followed, despite considerable talk about tight agency finances and public moves to cut back on future road projects, neither the staff nor the commission members mentioned the accounting problem.
"Although the effects of the error were discussed, the specific error and the causes were not discussed," says the report, which the auditor's office initiated after a Feb. 19 request from Lt. Gov. David Dewhurst and House Speaker Tom Craddick. The existence of the error surfaced publicly for the first time at a Feb. 5 state Senate committee hearing.
"The Department (TxDOT) should ... brief the full Texas Transportation Commission on developments that occur and have a significant statewide impact, so that members of the commission can be involved in the process of making corrections," the 64-page report says.
Asked why the agency waited until February to announce the error, TxDOT spokesman Chris Lippincott said in an e-mail Thursday that the agency had told officials with metropolitan planning organizations around the state in November that TxDOT "had incorrectly projected how much money would be available" for road contracts in 2008.
"Did we call a press conference? No," Lippincott said. "When we had an explanation of what happened, we brought it to the Legislature ... in early February."
As for the broader criticisms in the audit about how the agency tracks its available money, TxDOT executive director Amadeo Saenz said in a statement that changes are "already well underway for several of the recommendations. I am committed to increasing the department's transparency, and the recommendations identified in this audit put us another step closer to realizing that goal."
TxDOT officials have said that the problem was that one TxDOT office was keeping track of money, while another was charged with allocating funds for future projects. Saenz has now brought those two functions under one person, TxDOT Chief Financial Officer James Bass.
Saenz did not become TxDOT's boss until late September, taking over for the retiring Michael Behrens. But as engineering director under Behrens, Saenz was among a handful of officials on his core team.
Until sometime in September, TxDOT had thought it had $4.2 billion available to spend on highway expansion and maintenance projects during the 2007-08 budget year, which began Sept. 1. But, according to the audit report, that total included $580.5 million to be borrowed from future gas tax funds and $487.8 million from the Texas Mobility Fund that were already a part of a $3.1 billion forecast of cash on hand made that July.
Those two amounts of money, thus, were counted twice. TxDOT, in fact, had $3.1 billion to spend this year, and much of that was already committed to road maintenance.
After the error was found — Bass has said in public meetings that he immediately realized there was a problem when he saw the $4.2 billion figure — agency officials at a late September meeting of the commission said there would be no money available for building new highways or adding lanes to existing highways in the coming year.
The squeeze, officials said at the time, was the result of lagging federal transportation grants, inflation of construction costs and diversions of gas tax revenue to other state needs.
The agency figured out the cause in October, according to a timetable of events included in the audit. In November, the agency announced cuts of 50 percent or more in money for engineering and right-of-way purchases for new highways, trims that emphasized the seriousness of the situation and heightened interest among legislators and local transportation officials.
Unaware of the error, some lawmakers accused TxDOT of crying wolf about its finances to pressure the Legislature to back off of limits on private toll road contracts instituted in the 2007 session. That led to the Senate hearing in February where news of the error emerged.
bwear@statesman.com; 445-3698
© 2008 Austin American-Statesman:www.statesman.com
To search TTC News Archives click
To view the Trans-Texas Corridor Blog click
posted by Porkus Maximus Tex: at Friday, August 29, 2008
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