Sunset review, Arizona Department of Transportation, sunset factors :a report to the Arizona Legislature

              Debra K. Davenport
Auditor General
Sunset Review
Arizona Department
of Transportation—
Sunset Factors
Performance Audit Division
JULY • 2007
REPORT NO. 07-04
A REPORT
TO THE
ARIZONA LEGISLATURE
The is appointed by the Joint Legislative Audit Committee, a bipartisan committee composed of five senators
and five representatives. Her mission is to provide independent and impartial information and specific recommendations to
improve the operations of state and local government entities. To this end, she provides financial audits and accounting services
to the State and political subdivisions, investigates possible misuse of public monies, and conducts performance audits of
school districts, state agencies, and the programs they administer.
The Joint Legislative Audit Committee
Audit Staff
Copies of the Auditor General’s reports are free.
You may request them by contacting us at:
Office of the Auditor General
2910 N. 44th Street, Suite 410 • Phoenix, AZ 85018 • (602) 553-0333
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www.azauditor.gov
Melanie M. Chesney, Director
Shan Hays, Manager and Contact Person
Brent Nelson, Team Leader
Jay Rasband
Senator Robert Blendu, Chair Representative John Nelson, Vice-Chair
Senator Carolyn Allen Representative Tom Boone
Senator Pamela Gorman Representative Jack Brown
Senator Richard Miranda Representative Peter Rios
Senator Rebecca Rios Representative Steve Yarbrough
Senator Tim Bee (ex-officio) Representative Jim Weiers (ex-officio)
DEBRA K. DAVENPORT, CPA
AUDITOR GENERAL
STATE OF ARIZONA
OFFICE OF THE
AUDITOR GENERAL
WILLIAM THOMSON
DEPUTY AUDITOR GENERAL
2910 NORTH 44th STREET • SUITE 410 • PHOENIX, ARIZONA 85018 • (602) 553-0333 • FAX (602) 553-0051
July 18, 2007
Members of the Arizona Legislature
The Honorable Janet Napolitano, Governor
Mr. Victor Mendez, Director
Arizona Department of Transportation
Transmitted herewith is a report of the Auditor General, a Sunset Review of the Arizona
Department of Transportation (ADOT). This report is in response to a May 22, 2006,
resolution of the Joint Legislative Audit Committee and was conducted as part of the
sunset review process prescribed in Arizona Revised Statutes §41-2951 et seq.
Included with this report is a written response from ADOT.
My staff and I will be pleased to discuss or clarify items in the report.
This report will be released to the public on July 19, 2007.
Sincerely,
Debbie Davenport
Auditor General
Enclosure
Office of the Auditor General
TABLE OF CONTENTS
concluded
page i
Introduction & Background 1
Sunset Factors 7
Table
1 Schedule of Operating Revenues and Expenditures, in Thousands
Fiscal Years 2005, 2006, and 2007
(Unaudited) 4
Agency Response
State of Arizona
page ii
The Office of the Auditor General has conducted a review of the Arizona Department
of Transportation (ADOT) using the 12 criteria in Arizona’s sunset law. The analysis of
the 12 sunset factors was conducted pursuant to a May 22, 2006, resolution of the
Joint Legislative Audit Committee and prepared as part of the sunset review set forth
in Arizona Revised Statutes (A.R.S.) §41-2951 et seq.
This sunset review is the last in a series of three reports on ADOT. The other two
reports were performance audits on aspects of construction management and the
highway maintenance program. ADOT’s Motor Vehicle Division (MVD) has its own
sunset date and was separately reviewed through three other audits (see Auditor
General Report Nos. 04-09, 04-10, and 04-11).
Organization
By statute, ADOT is divided into six divisions. As of December 27, 2006, ADOT
reported that it had 4,691 FTEs, of which 138 positions were vacant.
􀁺􇩉 Intermodal Transportation (2,223 FTEs, 89 vacancies)—This division is
responsible for constructing, maintaining, and operating all state-owned
highways, including interstates and U.S. routes.
􀁺􇩍 Motor Vehicles (1,730 FTEs, 19 vacancies)—MVD provides various services to
the public, including issuing driver’s licenses, vehicle registrations, and vehicle
titles. MVD oversees private third-party providers of MVD services, including
ServiceArizona, which provides MVD’s customers a convenient way to complete
a wide array of services, primarily through the Internet. In addition, MVD is
responsible for motor carrier and tax services, including collecting gasoline and
use fuel taxes, accounting for and distributing the Highway User Revenue Fund
(HURF) and other related revenues, and registering interstate motor carriers.
MVD is also responsible for enforcing transportation-related laws and
regulations at port-of-entry checkpoints at Arizona’s borders and at mobile
checkpoints.
Office of the Auditor General
INTRODUCTION
& BACKGROUND
page 1
􀁺􇩁 Administration (659 FTEs, 19 vacancies)—This area consists of four groups that
provide administrative support services for the other divisions. Specifically:
􀁺􇩔 Transportation Services Group (643 FTEs, 18 vacancies)—This group
includes units responsible for audit and analysis, civil rights, equipment
services, financial management, human resources, organization and
employee development, procurement, information technology, the
Arizona Highways magazine, physical plant operations, and health and
safety.
􀁺􇩃 Communication and Community Partnerships (13 FTEs, 1 vacancy)—
This group is responsible for government relations, building partnerships,
the Adopt-a-Highway litter control program, and for providing various
forms of media and public communication services.
􀁺􇩏 Office of the Inspector General (OIG) (1 FTE, 0 vacancies)—This group
was established in 2004 by Executive Order No. 2004-23. This Order
requires the OIG to conduct case investigations and audits designed to
prevent and deter fraud, abuse, and misconduct in ADOT programs;
evaluate the effectiveness and adequacy of program safeguards and
controls; make recommendations to ADOT’s Director and the Governor’s
Office on ways to strengthen and improve program procedures and
operations; and coordinate with law enforcement agencies and the
Governor’s Office of Homeland Security. According to ADOT officials, the
current Inspector General will retire at the end of June 2007, and the
position is under review to determine whether it will be retained or
abolished.
􀁺􇩐 Policy and Government Affairs (2 FTEs, 0 vacancies)—This group was
recently formed, according to ADOT officials, and its exact duties are still
being defined. At this time, its main duties will be to research and
coordinate policy issues impacting the agency; manage local, state,
federal, and international government relations; assist with inter-agency
coordination; and serve as the primary liaison for the State Transportation
Board and the 5-year planning process.
􀁺􇩔 Transportation Planning (42 FTEs, 8 vacancies)—This division is responsible for
providing research, plans, and programs to help identify current significant
transportation issues in Arizona as well as improve existing systems. According
to ADOT, the division is also responsible for developing the 5-Year Transportation
Facilities Construction Program.
􀁺􇩁 Aeronautics (33 FTEs, 4 vacancies)—This division administers state monies and
accepts federal monies available for airport improvement projects, and
produces an annual 5-Year Airport Development Program. The Division licenses
aircraft dealers and registers nonairline aircraft within the State. The Division also
oversees the administration and operation of the state-owned Grand Canyon
National Park Airport and provides other services to encourage and advance the
safe and orderly development of aviation in Arizona.
State of Arizona
page 2
􀁺􇩐 Public Transportation Division (4 FTEs, 1 vacancy)—This division administers
several Federal Transit Administration grant programs, provides technical
assistance and expertise to local transit agencies and decision-makers,
coordinates and funds state transit and rail planning efforts, and sets and
monitors light rail system safety standards.
In addition, the State Transportation Board, which
comprises seven governor appointees (see textbox), has
significant responsibility for the State’s transportation
system and serves in an advisory capacity to the ADOT
Director. The Board is required to develop and adopt a
state-wide transportation policy and adopt a long-range
plan. In addition, the Board is charged with adopting
uniform transportation planning practices, transportation
system performance measures, and data collection
standards for data collected to report system
performance measures. Further, the Board has authority
to designate which state routes are included within the
state highway system, award construction contracts for
transportation facilities, monitor the status of construction
projects, and establish policies to guide the development
or modification of ADOT’s 5-Year Transportation Facilities
Construction Program. Finally, the Board has exclusive
authority for issuing revenue bonds for financing
transportation improvements throughout the State.
Operating budget
ADOT’s operating budget, excluding MVD, is an estimated $340 million for fiscal year
2007 and consists mostly of revenues from the State Highway Fund, as shown in
Table 1 (see page 4). ADOT’s largest category of operating budget expenditures is
employee salaries and benefits, which are expected to total approximately $181.5
million in fiscal year 2007. The second largest category is other operating expenses,
which include various costs such as payments for utilities, traffic control, and
maintenance of highways and other state transportation system components. In
addition to monies from state and federal sources, ADOT received $5.9 million in
fiscal years 2006 and 2007 from the Maricopa County half-cent transportation excise
tax to assist in providing landscape maintenance and litter pickup of the regional
freeway system in Maricopa County.1 ADOT’s operating budget does not include
monies available for debt service payments or capital expenditures, such as costs of
highway construction projects, in the 5-Year Transportation Facilities Construction
Program. In addition to its operating budget, for fiscal year 2007, ADOT had $435.8
million in other nonappropriated monies and $445.9 million in federal monies.
Office of the Auditor General
page 3
State Transportation Board:
􀁺􇩓 State divided into six transportation districts
composed of one to four counties.
􀁺􇩏 One member appointed per district for a 6-
year term, except districts with 2,200,000 or
more population have two members
appointed (currently only one district with
two members).
􀁺􇩁 Appointees must have been a resident and
taxpayer of the county from which they are
appointed for at least 5 years prior to their
appointment.
􀁺􇩄 Districts with more than one county will have
the appointment rotated among counties.
Source: A.R.S. §§28-301 and 28-302.
1 The Maricopa Association of Governments (MAG) approved $5.9 million per year, but according to ADOT management,
$200,000 from each year’s allocation was returned to MAG for a litter prevention and education program. The remaining
$5.7 million was provided to the Intermodal Transportation Division for regional landscape maintenance, litter control, and
sweeping on state highways in Maricopa County.
State of Arizona
page 4
Table 1: Schedule of Operating Revenues and Expenditures, in Thousands1
Fiscal Years 2005, 2006, and 2007
(Unaudited)
2005 2006 2007
(Actual) (Actual) (Estimate)
Revenues:
Appropriations2
State Highway Fund $261,938.5 $277,690.6 $292,277.5
Transportation Department Equipment Fund 34,004.7 35,845.5 38,526.8
State Aviation Fund 1,967.0 2,057.8 2,188.8
Safety Enforcement and Transportation Infrastructure Fund 558.7 558.7 558.7
State General Fund 71.7 76.4 82.9
Transportation excise taxes3 5,900.0 5,900.0
Total revenues 298,540.6 322,129.0 339,534.7
Expenditures and operating transfers:
Personal services and related benefits 144,607.6 153,842.2 181,500.8
Professional and outside services 9,869.9 8,853.9 6,909.0
Travel 2,288.0 2,200.4 2,919.8
Other operating4 120,580.6 132,148.4 137,271.2
Equipment 20,975.7 19,684.5 14,296.1
Total expenditures 298,321.8 316,729.4 342,896.9
Operating transfers out5 200.0 200.0
Total expenditures and operating transfers out $298,321.8 316,929.4 343,096.9
Excess (deficiency) of revenues over expenditures and operating
transfers out6 $ 218.8 $ 5,199.6 $ (3,562.2)
1 This table only includes ADOT’s operating revenues and expenditures. Consequently, the table does not include debt service
payments or capital expenditures such as costs of construction projects included in ADOT’s 5-year construction program. It also does
not include financial activity of the Motor Vehicle Division (MVD) because MVD was not within the scope of ADOT’s sunset review.
MVD has a separate sunset review date. In addition, it is presented on a budgetary basis in which expenditures are reported in the
budget year incurred.
2 Consists of that portion of ADOT’s appropriations from each of the listed funds that are used to pay for its operations. These
appropriations primarily consist of monies collected from motor vehicle and fuel taxes, charges for services, and licenses and permit
fees.
3 Consists of monies from the special half-cent transportation excise tax authorized by voters as Proposition 400 in November 2004,
which is allocated by the Maricopa Association of Governments (MAG) for department operations.
4 Consists of various costs such as insurance, motor vehicle fuel and parts, telecommunication costs, utilities, landscaping, cable
barrier and guardrail repair, rest area maintenance, traffic control, building and land rental, general repair and maintenance, and
materials.
5 MAG approved $5.9 million per year (see footnote 3), but according to ADOT management, $200,000 from each year’s allocation
was returned to MAG for a litter prevention and education program. The remaining $5.7 million was provided to the Intermodal
Transportation Division for regional landscape maintenance, litter control, and sweeping on state highways in Maricopa County.
6 The estimated deficiency of revenues over expenditures for fiscal year 2007 will be funded with unexpended proposition 400 monies
carried forward from fiscal year 2006.
Source: Auditor General staff analysis of financial information provided by ADOT for fiscal years 2005, 2006, and 2007.
Office of the Auditor General
page 5
Scope and methodology
ADOT’s performance was analyzed in accordance with the 12 statutory sunset
factors and excluded MVD, which received a sunset review in 2004. Audit work in the
following areas provided a basis for response to the sunset factors:
􀁺􇩁 Aspects of Construction Management (Auditor General Report No. 06-05).
􀁺􇩈 Highway Maintenance (Auditor General Report No. 07-03).
This report also includes unaudited information obtained from ADOT officials, the
Governor’s Regulatory Review Council, the Secretary of State, the Office of the
Attorney General, the Federal Highway Administration Highway Statistics reports,
and ADOT’s Web site. Auditors also reviewed applicable state and federal laws and
regulations.
The audit was conducted in accordance with government auditing standards.
The Auditor General and staff express appreciation to ADOT’s Director and staff for
their cooperation and assistance throughout the audit.
State of Arizona
page 6
In accordance with A.R.S. §41-2954, the Legislature should consider the following 12
factors in determining whether ADOT, excluding MVD, should be continued or
terminated. The two performance audits identified areas where ADOT has operated
effectively and efficiently, as well as opportunities for ADOT to improve operations.
1. The objective and purpose in establishing ADOT.
ADOT was organized in 1974 by combining the Arizona State Highway
Department and the Arizona Department of Aeronautics.
ADOT’s mission is:
“To provide products and services for a safe, efficient, cost-effective
transportation system that links Arizona to the global economy, promotes
economic prosperity and demonstrates respect for Arizona’s
environment and quality of life.”
Statutes outline ADOT’s main duties, excluding those related to MVD:
􀁺􇩃 Conduct state-wide transportation system planning, cooperate and
coordinate planning with local governments, and establish an annually
updated priority program of transportation systems improvements;
􀁺􇩄 Design and construct transportation facilities in accordance with a priority
plan and maintain and operate state highways, state-owned airports, and
state public transportation systems;
􀁺􇩉 Investigate new transportation systems and cooperate with and advise
local governments in the development and operation of public transit
systems; and
􀁺􇩁 Administer and implement transportation safety programs in accordance
with law.
Office of the Auditor General
page 7
SUNSET FACTORS
2. The effectiveness with which ADOT has met its objectives and purposes and the
efficiency with which the agency has operated.
ADOT generally operates effectively and efficiently in performing its functions. As
of 2005 (most recent available data), ADOT was responsible for 18,503 travel
lane miles of roadway, according to the Federal Highway Administration’s
Highway Statistics report, which was an increase of approximately 8 percent in
the number of travel lane miles since 1996. Most of the growth came from lanes
added to increase existing road capacity. The state highway system includes
interstate highways, U.S. routes, and state routes. ADOT’s infrastructure assets,
which include bridges as well as roads, were valued at more than $9 billion in
ADOT’s 2006 Comprehensive Annual Financial Report. According to ADOT, it
has accelerated its progress in developing the Maricopa County Regional
Freeway system and in 2000 changed the urban freeway construction schedule
from 14 to 7½ years, which is now mostly completed. ADOT uses contractors
for building highways and employs field inspectors and independent quality
assurance inspectors to verify construction quality and compliance with
specifications. Finally, ADOT regularly measures pavement smoothness and
road quality factors, and overall, these measures showed that Arizona’s highway
system was in good condition as of 2005 (most recent data available) and had
improved since 1995.
Auditors found that ADOT can operate more effectively and efficiently in some
areas. For example:
􀁺􇩁 ADOT Highway Maintenance (Auditor General Report No. 07-03)—To
better ensure that the life expectancy, operational efficiency, appearance,
and safety of the state highway system are maximized, the Division
should develop and implement a more systematic approach for
identifying and addressing maintenance needs. It should establish
frequency schedules for various maintenance activities, identify all
needed maintenance state-wide, and estimate monies and resources
required to perform the needed state-wide maintenance. Further, it
should provide a prioritization method to ensure that the most important
and cost-effective maintenance is performed within resource constraints
and provide a systematic method for allocating resources to meet
maintenance needs.
􀁺􇩁 ADOT Aspects of Construction Management (Auditor General Report No.
06-05)—ADOT should optimize its internal resources to reduce
consultant usage when appropriate during completion of project design,
construction management, and other similar functions. Making greater
use of internal resources would help to reduce costs and maintain
employee core competency levels. In addition, to better ensure that
contractors meet construction standards, ADOT should take steps to
improve consistency, documentation, and followup on its inspections.
State of Arizona
page 8
Office of the Auditor General
page 9
Finally, ADOT was not completing enough audits of highway design and
construction contracts, and was not issuing reports in a timely manner.
ADOT reported in January 2007 that it had implemented or was in
process of implementing all recommendations made in this audit.
3. The extent to which ADOT has operated within the public interest.
ADOT has operated within the public interest by planning, designing,
constructing, and maintaining a state-wide transportation system. According to
data from the Federal Highway Administration’s Highway Statistics reports,
travel lane miles in the highway system increased from 17,407 in 2000 to 18,503
in 2005. In addition, the percentage of roadway miles in good or satisfactory
condition, based on measures collected by ADOT, was higher in 2005 than in
1995. ADOT operates a 24-hour Traffic Operations Center and Freeway
Management System to help manage congestion on urban freeways and to
inform motorists of highway conditions throughout the State.
4. The extent to which rules adopted by ADOT are consistent with the legislative
mandate.
ADOT has an extensive list of administrative codes in Title 17 of the Arizona
Administrative Code, which contains rules and regulations for various divisions
throughout the agency. In accordance with A.R.S. §41-1056, ADOT reviews its
promulgated rules every 5 years to assess consistency with statute.
However, according to the staff of the Governor’s Regulatory Review Council
(GRRC), ADOT has not promulgated all rules required by 12 statutes.
According to ADOT, one of these statutes, A.R.S. §28-1802, is obsolete, and a
bill will be introduced in the 2008 legislative session to repeal it. The statute
requires the Vehicle Equipment Safety Commission to adopt rules. Another
example of a statute where a rule is required but has not been promulgated is
A.R.S. §28-367, which requires that the ADOT Director make rules for the
application and expenditure of all public transit monies.
In addition, GRRC staff identified nine statutes with discretionary language that
allow ADOT to adopt rules as ADOT considers appropriate. ADOT reported that
it has initiated the rule-making process for one of these statutes, A.R.S. §28-
455(C)(14)(f), which pertains to disclosure of personal information.
5. The extent to which ADOT has encouraged input from the public before
adopting its rules, and the extent to which it has informed the public as to its
actions and their expected impact on the public.
ADOT uses several avenues to keep the public informed of its actions. It follows
statutory requirements for notifying the public, accepting written comments, and
holding oral proceedings.
State of Arizona
page 10
The State Transportation Board initiates numerous efforts to inform the public of
its intentions, and to obtain input prior to final adoption of the 5-Year
Transportation Facilities Construction Program, by holding:
􀁺􇩐 Public monthly State Transportation Board meetings at different locations
throughout the State.
􀁺􇩆 Focus sessions with local government officials to discuss the 5-year
program and the Long Range Transportation Plan and to obtain input on
regional transportation issues.
􀁺􇩆 Formal public hearings each year in Tucson, Flagstaff, and Phoenix
regarding the proposed 5-year program.
During the audit, ADOT took steps to improve compliance with the Open
Meeting Law by providing proper notification to the Secretary of State about
where public meeting notices are posted as required by A.R.S. §38-
431.02(A)(1). Auditors initially found that three of seven public bodies associated
with ADOT and within this audit scope had filed proper notices with the Secretary
of State. Three public bodies, the State Transportation Board, the Transportation
Enhancement Review Committee, and the Parkways Historic and Scenic Roads
Advisory Committee, had filed notices with the Secretary of State, but their filings
did not state the location where public notices would be posted. The remaining
public body, the Citizen’s Transportation Oversight Committee, had not filed a
notice with the Secretary of State about where its public meeting notices would
be posted. When auditors brought these noncompliance instances to ADOT’s
attention, ADOT prepared and filed the notices.
6. The extent to which ADOT has been able to investigate and resolve complaints
that are within its jurisdiction.
This factor does not apply because ADOT does not have statutory authority to
investigate and resolve complaints except in MVD. Sunset factors for MVD were
addressed in a separate report (see Auditor General Report No. 04-11). ADOT
is responsible for licensing aircraft dealers, but has no statutory authority to
investigate and resolve complaints regarding licensees. According to an
Aeronautics Division official, ADOT received one complaint about a licensee
between September 2004 and May 2007 and sought advice from the Attorney
General’s Office, which confirmed that ADOT had no authority to intercede
between the complainant and the licensee.
However, ADOT reported that it has a process to handle inquiries and
complaints from its customers. Specifically, ADOT reported that its Office of
Communication and Community Partnerships’ Constituent Services Officer
(CSO) is responsible for receiving, routing, and resolving customer complaints
Office of the Auditor General
page 11
and inquiries. ADOT’s CSO reported that he receives general questions,
suggestions for improvement, and complaints regarding various issues
including litter, debris, graffiti, and potholes. Complaints are received by phone
call, e-mail, and written correspondence. The CSO reported that he handles
phone calls on a case-by-case basis, resolving the issue, forwarding the call to
a specific specialist or expert, or forwarding the call to a division. The CSO
prepares weekly reports summarizing phone calls received, which show that
during approximately 4 months ending December 14, 2006, his office received
approximately 350 phone calls per month. Nearly 13 percent of these calls were
complaints. The CSO stated that there are no reports summarizing e-mails and
written correspondence, but he believes that these may be incorporated into a
new tracking system.
7. The extent to which the Attorney General or any other applicable agency of state
government has the authority to prosecute the actions under the enabling
legislation.
The Attorney General has the authority to prosecute all actions pursuant to Title
28 (Transportation) under A.R.S. §28-333. The Attorney General’s Transportation
Section represents ADOT in routine legal matters such as eminent domain
litigation, property damage claims, construction contracts, procurement
contracts, vehicle license suspensions, driver’s license revocations and
appeals, and personnel matters. In addition, the Attorney General’s Liability
Management Section works with ADOT to handle tort claims and litigation when
ADOT is sued by persons injured in highway accidents.
8. The extent to which ADOT has addressed deficiencies in its enabling statutes
which prevent it from fulfilling its statutory mandate.
According to ADOT officials, ADOT develops a legislative program every year
that identifies statutory changes needed to enable it to better fulfill its objectives
and mission. For example, over the last 4 years, from 2003 to 2006, ADOT
reported that it has supported the following changes to statute:
􀁺􇩌 Laws 2003, Chapter 201 (SB 1063)—Omnibus bill that allowed cities and
towns to designate roads as primitive, authorized ADOT’s Director to
license the name of Arizona Highways magazine to a private entity for
commercial purposes, and added Indian tribes to the list of entities ADOT
can cooperate with to receive full benefits for the State. According to an
Attorney General Opinion, this last provision was required to enable
ADOT to continue receiving federal grant monies for providing accessible
vehicles for the elderly and disabled. The bill also included provisions
related to MVD, such as adding new types of specialized license plates.
State of Arizona
page 12
􀁺􇩌 Laws 2004, Chapter 167 (HB 2626)—Amended A.R.S. §§11-269.03 and
28-334 to allow counties to enter into agreements with ADOT to
accelerate right-of-way acquisition, design or construct eligible projects,
and advance monies to ADOT pursuant to those agreements. Also, any
political subdivision may pledge excise taxes to the repayment on any
borrowing to fund the advance. Amendments also allowed ADOT to
exchange federal funds with local governments to receive local funds and
to include additional federal funds in the exchange to offset matching
costs required of local governments to receive full benefits available
under federal law.
􀁺􇩌 Laws 2005, Chapter 150 (HB 2123)—Amended A.R.S. §28-7678 to
extend the authority of the State Board of Transportation to sell Board
Fund Obligations (BFOs), which are nonnegotiable loans, to the Arizona
State Treasurer to provide money for the Highway Expansion and
Extension Loan Program (HELP) fund, which constitutes the state
infrastructure bank, until fiscal year 2020 in a principal amount not more
than $200 million in any one fiscal year and to mature no later than 4
calendar years after BFO date. Amendments also continued the HELP
Advisory Committee until 2024. This committee develops for the State
Board of Transportation a simplified application form for financial
assistance and guidelines for loans and financial assistance. The
committee also reviews and makes recommendations on requests for
loans and financial assistance. In addition, the committee is required to
submit an annual report on the HELP program to the Governor and the
Legislature.
􀁺􇩌 Laws 2005, Chapter 162 (HB 2579)—Amended numerous statutes
relating to the procurement of professional and construction services.
The changes permitted ADOT to continue using design-build projects
until December 31, 2025; limited contracts for job-order-contracting
construction services to 5 years and a maximum dollar amount per
individual job of $1 million; eliminated the requirement for any state entity
using construction-manager-at-risk, design-build, or job-order-contracting
to submit an annual report to the Secretary of State; clarified
the duties of the contractor selection committee; and provided
requirements for preconstruction services and payment to contractors.
􀁺􇩌 Laws 2006, Chapter 27 (SB 1024)—Amended A.R.S. §28-410 to allow
ADOT to share pertinent computer programs and Web-based
applications with out-of-state agencies, political subdivisions, and tribal
governments. For example, an ADOT official stated that in an effort to
share best practices in 2006, the Nevada Department of Transportation
requested that ADOT share the development of a safety database that
assists in tracking workers’ compensation. The official also stated that
ADOT has often utilized the experience and expertise of other states’
departments of transportation in obtaining information or resources
regarding best practices.
-b Contractor
furnishes design services in
addition to construction.
-o
Contract is for indefinite
quantities of construction, and
construction to be performed is
specified in job orders issued
during the contract.
-m -a -r
Construction contract is
separate from design contract.
Source: A.R.S. §28-7361.
9. The extent to which changes are necessary in the laws of ADOT to adequately
comply with the factors listed in the Sunset Law.
The Legislature has already taken action to address the only area auditors
identified during these audits where a statutory change appeared to be needed.
Specifically, Laws 2007, Chapter 77, Section 1, increased the limit for projects
that can be carried out by in-house crews. A.R.S. §28-6923 required ADOT to
obtain outside contractor bids for all construction or reconstruction projects
involving an expenditure of $50,000 or more. A similar statute, A.R.S. §34-201,
requires counties, cities, towns, and certain other entities to obtain outside
contractor bids for street, road, and bridge work, but set the limit at $150,000 in
fiscal year 1995 with subsequent year limits adjusted according to changes in
the GDP price deflator. The 2007 law raised ADOT’s limit to $189,000 with annual
increases for inflation starting in fiscal year 2009.
10. The extent to which termination of ADOT would significantly harm the public
health, safety, or welfare.
Termination of ADOT could harm the public welfare. Federal law requires state
transportation departments to adequately maintain transportation
improvements funded by federal monies. In addition, if ADOT were terminated,
alternatives would be needed for other duties including planning, constructing,
maintaining, and operating the State’s transportation infrastructure including
highways and airports.
11. The extent to which the level of regulation exercised by ADOT is appropriate and
whether less or more stringent levels of regulation would be appropriate.
ADOT has only limited regulatory authority other than in MVD. Sunset factors for
MVD were addressed in a separate report (see Auditor General Report No. 04-
11).
ADOT’s Aeronautics Division licenses aircraft dealers and registers nonairline
aircraft. ADOT reported that it exercises an appropriate level of regulation in the
areas in which it has been given regulatory authority. ADOT also reported that
regulatory activities are continually monitored, and whenever discrepancies are
discovered, appropriate corrective actions are taken.
12. The extent to which ADOT has used private contractors in the performance of its
duties and how effective use of private contractors could be accomplished.
ADOT, more than any other state department, extensively uses private
consultants and contractors to accomplish its duties. ADOT consultants and
contractors provide many types of services, including project design, project
management, roadway construction, project inspection, highway maintenance,
Office of the Auditor General
page 13
State of Arizona
page 14
and performing duties of vacant employee positions. The audit did not identify
any additional opportunities for ADOT to use private contractors. The Governor’s
Efficiency Review Team reported in June 2005 that ADOT spent more on
consultant contracts and used more consulting services than all other state
agencies combined. ADOT reported that consultants provide approximately 80
percent of its highway design efforts. According to ADOT, in fiscal year 2006 it
paid design consultants $115 million to assist in project assessments, location
studies, administration of projects, and preparation of reports. The total value of
active contracts held with design consultants was $611 million for fiscal year
2006. ADOT also reported that in fiscal year 2006, it made payments totaling
$590.5 million to private contractors in performing highway construction. In
addition, the Intermodal Transportation Division paid contractors more than
$17.5 million in fiscal year 2006 to provide highway maintenance services such
as median cable barrier repair, rest area maintenance, pavement sweeping,
landscape maintenance, and litter pickup.
Office of the Auditor General
AGENCY RESPONSE
State of Arizona
05-05 Department of Economic
Security—Service Integration
Initiative
05-06 Department of Revenue—Audit
Division
05-07 Department of Economic
Security—Division of
Developmental Disabilities
05-08 Department of Economic
Security—Sunset Factors
05-09 Arizona State Retirement
System
05-10 Foster Care Review Board
05-11 Department of Administration—
Information Services Division
and Telecommunications
Program Office
05-12 Department of Administration—
Human Resources Division
05-13 Department of Administration—
Sunset Factors
05-14 Department of Revenue—
Collections Division
05-15 Department of Revenue—
Business Reengineering/
Integrated Tax System
05-16 Department of Revenue Sunset
Factors
06-01 Governor’s Regulatory Review
Council
06-02 Arizona Health Care Cost
Containment System—
Healthcare Group Program
06-03 Pinal County Transportation
Excise Tax
06-04 Arizona Department of
Education—Accountability
Programs
06-05 Arizona Department of
Transportation—Aspects of
Construction Management
06-06 Arizona Department of
Education—Administration and
Allocation of Funds
06-07 Arizona Department of
Education—Information
Management
06-08 Arizona Supreme Court,
Administrative Office of the
Courts—Information
Technology and FARE Program
06-09 Department of Health
Services—Behavioral Health
Services for Adults with Serious
Mental Illness in Maricopa
County
07-01 Arizona Board of Fingerprinting
07-02 Arizona Department of Racing
and Arizona Racing
Commission
07-03 Arizona Department of
Transportation—Highway
Maintenance
Performance Audit Division reports issued within the last 24 months
Future Performance Audit Division reports
Arizona School Facilities Board
Structural Pest Control Commission