Sunset review, Arizona Department of Transportation, Motor Vehicle Division, sunset factors

              A REPORT
TO THE
ARIZONA LEGISLATURE
Debra K. Davenport
Auditor General
Arizona Department
of Transportation
Motor Vehicle Division—
Sunset Factors
Performance Audit Division
SEPTEMBER • 2004
REPORT NO. 04 – 11
Sunset Review
The Auditor General 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 servic-es
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
Representative John Huppenthal, Chair Senator Robert Blendu, Vice Chair
Representative Tom Boone Senator Gabrielle Giffords
Representative Ken Clark Senator Peter Rios
Representative Ted Downing Senator Thayer Verschoor
Representative Steve Yarbrough Senator Jim Weiers
Representative Jake Flake (ex-officio) Senator Ken Bennett (ex-officio)
Audit Staff
Shan Hays, Manager and Contact Person
Monique Cordova, Team leader
Pamelia Eck
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
Additionally, many of our reports can be found in electronic format at:
www.auditorgen.state.az.us
2910 NORTH 44 th STREET • SUITE 410 • PHOENIX, ARIZONA 85018 • (602) 553 -0333 • FAX (602) 553 -0051
DEBRA K. DAVENPORT, CPA
AUDITOR GENERAL
STATE OF ARIZONA
OFFICE OF THE
AUDITOR GENERAL
WILLIAM THOMSON
DEPUTY AUDITOR GENERAL
September 30, 2004
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, Motor Vehicle Division. This report is in response to a November
20, 2002, 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. This is the third
and final report to be issued on the Department.
As outlined in its response, the Arizona Department of Transportation plans to implement the
recommendation.
My staff and I will be pleased to discuss or clarify items in the report.
This report will be released to the public on October 1, 2004.
Sincerely,
Debbie Davenport
Auditor General
Enclosure
Services:
Customer Services is the largest of the three programs in the
Motor Vehicle Division (MVD) of the Arizona Department of
Transportation (ADOT). Customer Services carries out its
efforts through four major subprograms:
􀁺􇩃 Customer Service—Provides services to the public at
60 field offices state-wide in areas such as vehicle
titling and registration, driver’s license services, and
motor vehicle records provision.
􀁺􇩍 Motor Carrier and Tax Services—Collects fuel taxes,
accounts for and distributes Highway User Revenue
Fund (HURF) monies, provides testing and issuance
of commercial driver’s licenses, completes fleet and
interstate motor carrier registrations, and administers
the International Fuel Tax Agreement.
􀁺􇩃 Competitive Government Partnerships (CGP)—
Oversees functions related to private sector third-party
providers of MVD services ranging from vehicle
inspections to the e-government program known as
ServiceArizona, licenses motor vehicle dealers and
driving schools, oversees Renew-by-Mail, and pro-vides
record sales to commercial and government
entities.
􀁺􇩄 Division Operational Support Services (DOSS)—Has
diverse responsibilities supporting division-wide func-tions
such as MVD records management; employee
training; and policy and rule writing. DOSS also oper-ates
five customer information call centers, including
two call centers based in Phoenix and Tucson that
employ MVD personnel, and three call centers that
use inmate workers.
Facilities
All four subprograms have their main administrative offices in
the main state-owned MVD administration building at 1801 W. Jefferson in Phoenix. Additionally,
although most field offices are located in state-owned buildings around the State, MVD leases
building space for several of the offices. For example:
􀁺􇩔 The Customer Services subprogram provides services at 60 field offices, 33 of which are
state-owned. MVD leases 13 offices from the private or government sector at a total
PROGRAM FACT SHEET
Arizona Department of Transportation—Motor Vehicle Division
Customer Services Program
Program expenditures:
$50.9 million (fiscal year 2004)
Program staffing:
1,435 positions with 212 vacancies as of July 8, 2004.
Office of the Auditor General
$0
$10
$20
$30
$40
$50
$60
FY 2002 FY 2003 FY 2004
Millions of Dollars
Competitive Government
Partnerships—93
(12 vacancies)
Motor Carrier and Tax
Services—101
(28 vacancies)
Division Operational
Support Services—225
(36 vacancies)
Customer
Service—1,016
(136 vacancies)
annual cost of $145,660. Another 13 offices cost MVD less than $200 a year to lease
or have waived leases. One field office is located in a facility that ADOT leases for
multi-division uses.
􀁺􇩍 Motor Carrier and Tax Services Commercial Driver’s License operations share building
space in 10 of the Customer Services offices state-wide.
Equipment:
In addition to office furniture and equipment, Customer Service has the following unique equip-ment:
􀁺􇩁 A computerized monitoring system named Q-matic installed at 32 customer service
field offices. The Q-matic system allows staff to monitor customer wait times, transac-tion
times at a customer service window, and the type of transaction, such as driver’s
license or vehicle registration renewal.
􀁺􇩁 A recorder that records conversations between customers and service representatives
at both the prison call centers and the MVD office call centers.
􀁺􇩔 Two reader boards at the prison call centers that show the current hold-time for cus-tomers
to speak to MVD staff customer representatives.
􀁺􇩃 Computer software that allows MVD staff to view third party providers’ mainframe ses-sions;
for example, to assist them with transactions.
Mission:
To provide exemplary motor vehicle and driver’s license customer services and improve motor
vehicle-related products, services, and revenue collection through effective application of private
and public sector resources.
Program goals:
1. To improve customer service.
2. To promote the efficient generation, collection, and management of revenues to meet
public needs.
3. To increase the use of electronic service delivery.
4. To promote public safety and protection through regulation, licensing, and the adminis-tration
of transportation laws.
Adequacy of performance measures:
Customer Services’ performance measures appear well aligned with its goals. It has established
over 160 measures and tracks 16 key measures for the 4 subprograms. These key measures
provide information to MVD management on service outputs, program results or outcomes,
quality, and efficiency. For example, Customer Services has developed a quality measure to
assess customer satisfaction with field office services and an efficiency measure to track the
average time for customer visits to field offices.
Source: Auditor General staff compilation of unaudited information obtained from MVD’s Strategic Plan, Director’s update for March 2004;
lease reports; equipment inventory; and other information provided by MVD.
State of Arizona
Services:
Enforcement Services is one of three programs in the Motor Vehicle Division (MVD) of the Arizona
Department of Transportation (ADOT). It utilizes certified peace officers to enforce transportation-related
laws and regulations. To carry out its functions, Enforcement Services:
􀁺􇩃 Checks commercial vehicles at fixed ports of entry to the State and through mobile
enforcement for compliance, weight, and safety laws,
including laws relating to the transportation of haz-ardous
materials.
􀁺􇩉 Inspects vehicles to ensure their legality.
􀁺􇩉 Identifies stolen vehicles and vehicle parts.
Facilities:
Enforcement services has regional administrative offices as
well as state-wide field offices and ports of entry. For exam-ple:
􀁺􇩉 It has its main administrative office at the state-owned
MVD building at 1801 W. Jefferson in Phoenix, a
southern regional office at a state-owned building at
1225 N. 25th Avenue in Phoenix, and a northern
regional office in Flagstaff in privately leased space
for $28,481 per year.
􀁺􇩉 It has 43 field offices state-wide, including 40 in state-owned
buildings and 3 in privately leased building
space. Fifteen offices share building space with
Customer Service field offices, including the three
under lease.
􀁺􇩔 Twenty-two of the field offices are fixed ports-of-entry offices (POEs). Six POEs are
International Border Ports with Mexico: Douglas, Lukeville, Naco, Nogales, San Luis, and
Sasabe.
PROGRAM FACT SHEET
Arizona Department of Transportation—Motor Vehicle Division
Enforcement Services Program
Program expenditures:
$10.9 million (fiscal year 2004)
Program staffing:
301 positions with 87 vacancies as of July 8, 2004.
Office of the Auditor General
$0
$10
$20
$30
$40
$50
$60
FY 2002 FY 2003 FY 2004
Millions of Dollars
Equipment:
In addition to standard office equipment, Enforcement Services reports the following equipment,
which is unique to its MVD mission.
􀁺􇩆 Forty-five hand-held radios and 90 mobile radios distributed state-wide.
􀁺􇩆 Forty-eight 40 caliber semi-automatic weapons and 48 bullet-proof vests, purchased for
officers working in high-risk areas, such as the International Border Ports.
􀁺􇩁 A total of 114 vehicles, including 71 automobiles and SUVs and 43 trucks.
􀁺􇩔 Three mobile enforcement trailers.
􀁺􇩓 Seventy-six scales, including 18 used at ports of entry and 58 used for field inspections.
Mission:
To accomplish mandated enforcement and regulatory responsibilities and provide a system that
ensures public safety.
Program goals:
1. To promote public safety and protection through regulation, licensing, and the adminis-tration
of transportation laws.
2. To promote the efficient generation, collection, and management of revenues to meet
public needs.
Adequacy of performance measures:
Enforcement Services’ 82 performance measures are generally well-aligned with its goals.
Additionally, it has established input, output, quality, efficiency, and outcome measures that pro-vide
information on effectiveness as well as on program activity and workload.
Source: Auditor General staff compilation of unaudited information obtained from MVD’s Strategic Plan, Director’s update for March 2004;
lease reports; equipment inventory; and other information provided by MVD.
State of Arizona
Services:
Support Services is one of three programs in the Motor Vehicle Division (MVD) of the Arizona
Department of Transportation (ADOT). Support Services has four subprograms:
􀁺􇩄 Director’s Office—Provides leadership and assistance
in legislative, government, public information, and
community relations; constituent services; information
systems support; and organizational development.
􀁺􇩅 Executive Services Group—Provides management
support throughout the division in areas such as
strategic planning and budgeting, facility planning
and management, and other administrative functions.
􀁺􇩅 Executive Hearing Office—Hears requests related to
driver’s license suspension and revocation, auto deal-er-
related violations, motor carrier safety and tax
issues, and other areas. Approximately three-quarters
of all hearings are related to Driving Under the
Influence (DUI).
􀁺􇩏 Office of Special Investigations (OSI)—Investigates
cases of possible ADOT employee misconduct, com-plaints
against car dealers and title services, and
complaints of odometer, title, and driver’s license
fraud. OSI also performs background investigations
for ADOT peace officer applicants, customer service
representative applicants, and other applicants on
request.
Facilities:
MVD pays $211,717 annually to lease program space at two
adjacent buildings located in Phoenix at 3737 and 3877
North 7th Street. Support Services also has offices in the
main MVD administration building at 1801 W. Jefferson in
Phoenix, and two other state-owned buildings in Phoenix and
Peoria.
PROGRAM FACT SHEET
Arizona Department of Transportation—Motor Vehicle Division
Support Services Program
Program expenditures:
$22.6 million (fiscal year 2004)
Program staffing:
158 positions with 19 vacancies as of July 8, 2004.
Office of the Auditor General
$0
$10
$20
$30
$40
$50
$60
FY 2002 FY 2002 FY 2004
Millions of Dollars
Director's Office—13
(2 vacancies)
Executive Hearing
Office—23
(0 vacancies)
Office of Special
Investigations—40
(4 vacancies)
Executive Services
Group—82
(13 vacancies)
Equipment:
In addition to standard office equipment, Support Services’ Office of Special Investigations has
the following equipment: a camera system used to produce undercover driver’s licenses, 13
mobile radios, and 24 state-owned vehicles.
Mission:
To support the Motor Vehicle Division in its provision of services.
Program goals:
1. To promote public safety and protection through regulation, licensing, and the adminis-tration
of transportation laws.
2. To improve customer service.
3. To promote safety and security in the workplace.
Adequacy of performance measures:
Support Services has developed a total of 72 performance measures to support its three goals,
including input, output, outcome, efficiency, and quality measures. The measures are reasonably
aligned with the goals for these subprograms. For example:
􀁺􇩔 The Executive Services Group collects workplace injury data for all division programs,
and 12 of its measures focus on injury incidence rates.
􀁺􇩔 The Executive Hearing Office’s 14 measures focus on processing administrative law
hearings for DUI-related offenses.
􀁺􇩔 The Office of Special Investigation’s measures pertain to processing dealer investiga-tion
and internal affairs cases, and reducing the number of dealers repeatedly violating
motor vehicle laws.
However, the Support Services program could add more quality measures. For example, the
Office of Special Investigations should consider adding a quality measure such as the percent-age
of dealer violation cases submitted to the Executive Hearing Office that result in decisions to
suspend or revoke the dealer’s license.
Source: Auditor General staff compilation of unaudited information obtained from MVD’s Strategic Plan, Director’s update for March 2004; lease
reports; equipment inventory; and other information provided by MVD.
State of Arizona
Office of the Auditor General
TABLE OF CONTENTS
1
5
Introduction & Background
Sunset Factors
Agency Response
page i
State of Arizona
page ii
The Office of the Auditor General has prepared an evaluation of the Arizona
Department of Transportation Motor Vehicle Division (MVD) using the 12 criteria in
Arizona’s sunset law. The analysis of the 12 sunset factors was conducted pursuant
to Arizona Revised Statutes (A.R.S.) §41-3005.13 and prepared as a part of the
sunset review set forth in A.R.S. §41-2951 et seq.
MVD organization
MVD is divided into three programs as described below, and as of July 8, 2004, had
1,894 positions funded with state-appropriated monies.1
􀁺􇨠 Customer Services (1,223 filled positions; 212 vacancies)—The Customer
Services program was appropriated $50.9 million for fiscal year 2004 and
consists of the following four subprograms:
􀂍􈵃 Customer Service (880 filled positions; 136 vacancies)—Within this
subprogram, MVD has 60 field offices established throughout the State that
provide a variety of services to the public, including issuing driver’s
licenses, vehicle registrations, permits, and vehicle titles, and collecting
driver’s license and registration fees.
􀂍􈵍 Motor Carrier and Tax Services (73 filled positions; 28 vacancies)—
Responsibilities of the Motor Carrier and Tax Services subprogram include
collecting gasoline and use fuel taxes and issuing fuel tax refunds to eligible
claimants, accounting for and distributing the Highway User Revenue Fund
(HURF) and other related revenues, identifying fuel tax evasion activities,
helping to ensure motor carrier safety by overseeing medical reviews of
commercial and noncommercial drivers, registering interstate motor
carriers, issuing commercial driver’s licenses, and administering the
International Fuel Tax Agreement (IFTA).
1 This total does not include an additional 47 positions funded with federal and nonappropriated monies.
Office of the Auditor General
INTRODUCTION
& BACKGROUND
page 1
􀂍􈵃 Competitive Government Partnerships (81 filled positions; 12 vacancies)—
According to MVD, this subprogram oversees 488 contractors that have
agreements to provide MVD services to the public and businesses, such as
vehicle titles and registrations, driver’s license exams, and vehicle
inspections. Additionally, this subprogram oversees transactions
conducted via the Internet through a dedicated Web site; licenses and
oversees 424 professional driving schools, traffic survival schools, and
driver education programs; and licenses the over 3,800 motor vehicle
dealers in the State. Finally, Competitive Government Partnerships provides
record sales to 87 commercial and 150 government
agencies/departments, and oversees the Renew-by-Mail Unit, which
processes vehicle registration renewals.
􀂍􈵄 Division Operational Support Services (189 filled positions; 36 vacancies)—
Responsibilities of this subprogram include MVD policies and rule writing,
public information call center operations, records management, and
MVD’s technical training.
􀁺􇩍 Motor Vehicle Enforcement Services (214 filled positions; 87 vacancies)—Motor
Vehicle Enforcement Services was appropriated $10.9 million for fiscal year
2004. The program enforces transportation-related laws and regulations at both
mobile and fixed port-of-entry checkpoints. Currently, MVD maintains 22 ports of
entry on highways at Arizona’s borders. Port operations include enforcing
commercial vehicle compliance with weight, size, and safety laws, including
hazardous material requirements. In addition, this program enforces vehicle
registration compliance, conducts vehicle inspections to verify vehicle
identification numbers against ownership documentation and the vehicle, and
helps to identify stolen vehicles.
􀁺􇩍 Motor Vehicle Support Services (139 filled positions; 19 vacancies)—Support
Services was appropriated $22.6 million for fiscal year 2004, and consists of the
following:
􀂍􈵄 Director’s Office (11 filled positions; 2 vacancies)—The Director’s Office
provides leadership and assistance in legislative, government, public
information, and community relations, information systems support, and
organizational development.
􀂍􈴠 Executive Services Group (69 filled positions; 13 vacancies)—This Group
provides various support services, including budgeting, purchasing,
personnel services, facility management, procurement, and strategic
planning.
State of Arizona
page 2
􀂍􈵅 Executive Hearing Office (23 filled positions; no vacancies)—The Executive
Hearing Office conducts administrative hearings on issues such as DUI
offenses, motor vehicle titles, dealer licenses, and motor carrier safety.
􀂍􈴠 Office of Special Investigations (36 filled positions; 4 vacancies)—This
Office investigates cases of possible ADOT employee misconduct,
complaints against car dealers and title services, and complaints of
odometer, title, and driver’s license fraud. According to MVD officials, the
Office also performs background investigations for ADOT peace officer
applicants, customer service representative applicants, and other
applicants on request.
Scope and methodology
MVD’s performance was analyzed in accordance with the 12 statutory sunset factors.
Audit work in the following areas provided a basis for response to the sunset factors:
􀁺􇩒 Revenue, Collections, and Selected Enforcement Functions (Report No. 04-09).
􀁺􇩉 Information Technology and E-government Services (Report No. 04-10).
Auditors also relied on information obtained from MVD officials, the Governor’s
Regulatory Review Council, the Secretary of State, and the Office of the Attorney
General.
Office of the Auditor General
page 3
State of Arizona
page 4
In accordance with A.R.S. §41-2954, the Legislature should consider the following 12
factors in determining whether the Division of Motor Vehicles of the Arizona
Department of Transportation (MVD) should be continued or terminated. The
evidence assembled under these 12 factors indicates the continued need for MVD.
However, two performance audits identified opportunities for MVD to improve
operations in several ways.
1. The objective and purpose in establishing the Motor Vehicle Division.
The Department of Transportation (Department) was established pursuant to
Laws 1973, Chapter 146 (A.R.S. §28-101 et seq) when the Highway and
Aeronautics Departments were abolished and ADOT was set up as a single
department with six divisions, including the Motor Vehicle Division (MVD).
MVD’s purpose, as described in its mission statement, is to “support Arizona
through licensing, vehicle credentialing, revenue collection, safety programs,
and by promoting compliance with transportation laws.” MVD carries out its
purpose by issuing licenses to all Arizona drivers, including commercial driver’s
licenses; registering vehicles; collecting fuel taxes and managing debt
collections; overseeing third parties who perform some MVD functions such as
vehicle inspections; enforcing statutes regarding compliance with Arizona
vehicle title registration, size, and weight; and regulating the transportation of
hazardous materials.
2. The effectiveness with which MVD has met its objective and purpose and the
efficiency with which it is operated.
MVD has generally operated effectively and efficiently in performing its functions.
For example, it issued over 1 million driver’s licenses in fiscal year 2003, and its
records showed more than 4.3 million vehicles registered as of June 30, 2004.
Further, ADOT reports that MVD collected over $1.56 billion for fiscal year 2004,
including vehicle license tax, gas and use fuel taxes, motor carrier taxes, and
motor vehicle license and registration fees. Additionally, MVD has developed
effective programs for customers, such as its e-government program,
ServiceArizona, which allows customers to do transactions online.
Office of the Auditor General
SUNSET FACTORS
page 5
Auditors found that MVD can perform more cost-effectively in some areas. For
example:
􀁺􇩒 Report No. 04-09 found that MVD can use a more cost-effective approach
to administering its Vehicle Registration Compliance Program. For
example, automated letters generated from new driver’s license lists were
the most successful and cost-effective method in helping to enforce
compliance with Arizona’s vehicle registration law. Tips received from a
citizen hotline and the use of peace officers to identify and cite
noncompliant vehicles yielded fewer results and were less cost-effective.
MVD should build on the success of its automated letter approach by using
its title and registration system to automatically send letters to vehicle
owners who do not renew their vehicle registrations.
􀁺􇩒 Report No. 04-09 also found that MVD can improve its current fee structure
to be more cost-effective, and it has recently formed a working group to do
so. MVD has authority to assess more than 350 different fees for the
services it provides, and fees assessed by MVD generated over $150
million for the State in fiscal year 2003. MVD’s fees are either established in
statute or administrative rule. However, until recently, MVD did not have a
process in place to periodically review these fees. Some fees appear
outdated or too low to cover the cost of providing the associated service.
For example, vehicle title fees, which have remained at $4 for over 30 years,
may not reflect processing costs. In January 2004, MVD formed an internal
working group to begin reviewing the fees. The group should take steps to
prioritize, review, and systematically evaluate MVD’s fees. Additionally, the
group will also need to collect cost, revenue, and other data pertaining to
the fees it has prioritized for its review.
3. The extent to which MVD has operated in the public interest.
MVD has operated in the public interest in many of its activities. For example:
􀁺􇨠 MVD’s driver licensing and vehicle registration regulations serve the public
interest. MVD licenses drivers and may revoke or suspend a driver’s license
if an individual is determined to be an unsafe driver. Additionally, MVD
performs vehicle inspections and requires identification information for
titling and registering out-of-state vehicles in an effort to detect stolen
vehicles or vehicle parts. In addition, MVD is the primary source of vehicle
information to law enforcement agencies, other government entities, motor
carrier and vehicle dealer industries, the news media, and the general
public.
State of Arizona
page 6
􀁺􇨠 MVD has also provided customer service programs that allow customers to
complete their transactions without visiting field offices. For example, MVD
has authorized third-party organizations and businesses to perform some
MVD transactions such as vehicle inspections and licensing and title
services. One of these third-party providers is IBM Corporation, which
works in partnership with and under the auspices of MVD to jointly operate
MVD’s e-government program ServiceArizona. ServiceArizona allows
customers to perform many transactions over the Internet and using
Internet kiosks, and some using interactive voice recognition (IVR). MVD
also has a Renew-by-Mail program, which Arizona residents can use to
renew their vehicle registrations. (See Auditor General Report No. 04-10,
Finding 2 for information on ServiceArizona.)
􀁺􇨠 MVD’s Web site also provides information to the public on its activities and
regulations, which includes links to ServiceArizona, FAQs regarding
requirements for licensing and registration, the location of and schedules
for Arizona field offices, and the explanation of the “plate stays with owner”
program.
Although MVD has served the public interest in many ways, auditors identified
several other areas in which the agency could operate more fully in the public
interest. Specifically:
􀁺􇨠 Better protection of its data—ADOT should take steps to ensure that MVD’s
information systems and data are secured. ADOT has many data users
who have access to MVD data as part of their jobs. ADOT controls access
to MVD and other ADOT data through user accounts, and as of March 2004
there were nearly 4,500 such accounts. According to ADOT officials,
approximately 3,000 users had access to MVD data as of July 2004. Some
of these accounts are for MVD employees, while others are for state,
county, and local agencies involved in law enforcement, parking
enforcement, or other functions that use MVD information as permitted by
state and federal statute. Altogether, there are about 8 million inquiries or
transactions per week into MVD systems. However, MVD’s data may be at
risk because the ADOT Information Technology Group and MVD lack
adequate security controls, such as controlling access to systems and
information, controlling the implementation of program changes, and
formulating policies and procedures for an entity-wide information security
program. (See Auditor General Report No. 04-10, Finding 1.)
􀁺􇨠 Policies and procedures to ensure that fuel tax refunds are accurate—
Auditor General Report No. 04-09 found that MVD needs to improve its
processes for reviewing and issuing fuel tax refunds to help ensure that
claimants receive accurate amounts. According to statute, some suppliers
and users are eligible for refunds of fuel taxes for various specified reasons.
Office of the Auditor General
page 7
For example, they may be eligible for refunds because they do not use the
fuel on public roadways. During fiscal year 2003, MVD collected nearly
$649 million in fuel taxes and provided more than 6,600 refunds totaling
over $23 million. However, auditors found that some refund amounts are
not correct or are not supported by sufficient documentation. (See Auditor
General Report No. 04-09, Finding 2.)
􀁺􇩍 More timely and predictable service—A review of MVD’s automated wait
time information indicated that customers visiting field offices generally
waited an average of about 14 minutes to be served. However, auditors
found that customers frequently had problems contacting MVD employees
at public information call centers, and that some field offices had long waits
for service. For example, when auditors called the Phoenix and Tucson
information numbers over a 7-week period from March to May 2004, the
Phoenix number was busy 67 percent of the time, and the Tucson number
was busy about 45 percent of the time. Auditors who remained on the line
to speak to a representative during the last 3 weeks of that period held for
an average of about 22.5 minutes. Further, some field office customers,
mainly in the Phoenix and Tucson areas, had to wait up to 60 minutes or
longer to be served. (See Auditor General Report No. 04-10, Introduction
and Background.)
4. The extent to which rules adopted by the agency are consistent with the
legislative mandate.
According to the Governor’s Regulatory Review Council (GRRC), 39 statutes
require MVD to adopt rules. However, MVD has not adopted rules for 18 of these
statutes:
􀁺􇨠 A.R.S. §28-4537—States that the director shall prescribe rules for the
enforcement and administration of statutes relating to dealer and
manufacturer license plates.
􀁺􇩁 A.R.S. §28-2513(3)—States that the director shall adopt necessary rules to
provide for any tag, decal, plate, or other device in lieu of a license plate to
be attached to a moped to indicate that the moped is properly registered.
􀁺􇩁 A.R.S. §28-2356(I)—States that the director shall adopt rules necessary to
administer the statute, which pertains to the transfer of a license plate to
another vehicle.
MVD reports that it is in the process of developing rules for 11 of these statutes,
and that the remaining 7 need to be reviewed to determine if any are obsolete
or if MVD should also adopt rules for them.
State of Arizona
page 8
In addition, the GRRC review identified 63 statutes in which administrative rules
are not specifically required, but would be helpful in order to provide better
guidance to help comply with the statute. However, GRRC’s review found that
although MVD had developed rules for 21 of these statutes, MVD had not
developed rules for 42. For example:
􀁺􇨠 A.R.S. §28-5104(A)—States that a person applying to be an authorized
third party shall submit a bond in a form “approved by the director.”
􀁺􇨠 A.R.S. §28-2008—States that a person can obtain a duplicate certificate of
title, registration permit, or license plate by “furnishing information
satisfactory to the department.”
5. The extent to which the agency has encouraged input from the public before
promulgating its rules and regulations and the extent to which it has informed
the public as to its actions and their expected impact on the public.
MVD notifies the public when it writes new rules and regulations, and makes
policy changes, although it needs to ensure that one of its three advisory
councils complies with open meeting law provisions.
MVD provides notification to the public, as well as opportunities for public
comment in its rulemaking procedures. ADOT’s Administrative Rules Unit, which
develops rules for MVD and other divisions, provides information on the ADOT
Web site about the public comment process. Additionally, the unit responds to
internal agency or external requests for public hearings, which are received
during a 30-day period for public comment. For example, the unit informs the
public that a hearing has been requested by publishing a notice of the request
in the online Arizona Register at the Secretary of State’s Office. The unit
publishes a separate notice on the actual hearing date and time with the
Secretary of State’s Office 4 weeks prior to the hearing.
In addition, MVD has developed a detailed process for providing information to
the public about policy changes, including posting information on policy
changes on its Web site and sending notices to organizations or groups. For
example, it took the following actions when it changed its vehicle plate policy in
2001 to have the plate remain with the owner:
􀁺􇨠 Posted information about the change on its Web site.
􀁺􇨠 Sent brochures and inserts on the change to MVD staff and third-party
providers.
Office of the Auditor General
page 9
􀁺􇨠 Sent brochures, inserts, and posters on the change to organizations such
as the Arizona Department of Insurance, Chamber of Commerce offices,
and others.
􀁺􇩈 Held press conferences for MVD management to announce the change.
􀁺􇩄 Developed a video to run on city cable channels and to distribute to MVD
field offices, Arizona auto dealerships, DPS, and other organizations.
Although MVD informs the public of its proposed rules and policy changes, it
can improve public notification by ensuring that it notifies the Secretary of State
of meeting notices for one of its three advisory councils, as required by A.R.S.
§28-431. ADOT/MVD has three councils or boards: the Medical Advisory Board,
License Plate Commission, and Overdimensional Permit Advisory Council. MVD
has notified the Secretary of State’s Office where meeting notices for the first two
boards will be posted, as required by statute. However, it has not sent such a
notification regarding the Overdimensional Permit Advisory Council meetings,
and should do so. In addition, it has delegated responsibility to the Council’s
chairman, a private sector member, to send meeting announcements to a
distribution list of interested parties. By statute this task is assigned to ADOT or
one of its divisions, and therefore ADOT or MVD should send out these
announcements.
6. The extent to which the agency has been able to investigate and resolve
complaints within its jurisdiction.
MVD has sufficient authority to investigate and resolve complaints against
licensees in its jurisdiction. The Office of Special Investigations (OSI) is
responsible for investigating complaints or criminal violations involving new or
used auto dealers, auto recyclers, and other businesses regulated by MVD. As
an example, customers will call to complain about a dealer’s failure to provide a
vehicle’s title. OSI has the authority to issue a cease-and-desist order and to
pursue court action to restrain or enjoin the licensee from continuing the
violation. Auditor analysis of MVD’s fiscal year 2003 licensee database indicates
that OSI issued 190 cease-and-desist orders and 24 citations in fiscal year 2003.
Additionally, OSI may request that the MVD Executive Hearing Office schedule
a hearing if the licensee does not stop the violation. MVD hearing officers have
the authority to revoke or suspend licenses or to issue civil penalties up to
$3,000. MVD records indicate that the Executive Hearing Office revoked 3 dealer
licenses and 1 title company license, issued 3 dealer license suspensions, and
imposed 1 civil penalty during fiscal year 2003. Additionally, the Office ordered
12 full vehicle titles issued to customers. Finally, the Office canceled 1 vehicle
inspector third-party agreement and suspended another, and MVD issued a
cease-and-desist order that was later voided after the licensee came into
compliance.
State of Arizona
page 10
7. Extent to which Attorney General or any other applicable agency of state
government has the authority to prosecute actions under enabling legislation.
The Attorney General has the authority to prosecute cases that MVD brings.
According to MVD management, MVD usually refers criminal cases regarding
employee misconduct and others that involve auto dealers, such as odometer
fraud, to the Attorney General’s Office. However, MVD and the Attorney General
report that the Attorney General may not accept MVD cases because it lacks
resources. Additionally, MVD reported that the Attorney General did not accept
any MVD cases in the first 8 months of calendar year 2003.
8. The extent to which the agency has addressed deficiencies in its enabling
statutes, which prevent it from fulfilling its statutory mandate.
MVD requested changes to its statutes during both the 2003 and 2004
legislative session to clarify or bring them into compliance with changes in
mandates or federal laws. However, auditors found that MVD statutes on
releasing driver motor vehicle records are still not in complete compliance with
federal statutes on driver privacy protection.
􀁺􇨠 Laws 2004, Chapter 324, §§4 and 5—Amended §§28-3103 and 28-3223 by
bringing some statutory requirements into line with the federal Patriot Act
and the federal Motor Carrier Safety Improvement Act of 1999. The change
to A.R.S. §28-3223 established a 5-year renewal requirement for hazardous
materials (HAZMAT) licenses to conform with Patriot Act mandates, and this
renewal requirement also applies to all commercial driver’s licenses.
Additionally, the amendment to A.R.S. §28-3103 provided authority for
background checks on HAZMAT licenses in accordance with federal
procedures required by the Patriot Act and skill testing for school bus
drivers as required by the Motor Carrier Safety Improvement Act.
􀁺􇩌 Laws 2003, Chapter 258, §1—Amended A.R.S. §28-450(A) by allowing the
release of driver information to agents of government agencies, law
enforcement, the courts, and other entities to conform more closely to the
federal Drivers’ Privacy Protection Act (DPPA). In addition, Laws 2003,
Chapter 258, §3 amended A.R.S. §28-2051(A), which changed the
signature requirements on a title application from all owner signatures to
one signature when there has been no legal change in ownership. This
move was to enhance customer service by not requiring that all owner
signatures be on the application before applying for Arizona registration.
􀁺􇨠 Laws 2003, Chapter 191, §§2, 8, and 9—Clarified language in several
statutes. For example, Section 2 deleted the definition of “mobile medical
clinic” in A.R.S. §28-4301 because the term had been removed earlier
Office of the Auditor General
page 11
during a 2000 legislative session, and also amended the definition of “used
motor vehicle dealer” in A.R.S. §28-4301 to conform to the definition in
A.R.S. §44-1261. In addition, Laws 2003, Chapter 191, §8 amended A.R.S.
§28-5109 to change verbiage referencing mailing from “certified” to
“regular delivery.” Finally, Laws 2003, Chapter 191, §9 added A.R.S. §32-
2394, which allows the director to issue a cease-and-desist order for a
professional drivers’ training school. Although MVD is required to regulate
professional drivers’ training schools, it previously had no authority to
enforce regulations until the statutory change.
Although the Legislature has made several changes to bring statutes into
compliance or clarify them, it has not changed A.R.S. §§28-449, 28-450, 28-452,
or other statutes involving the release of driver information to be in compliance
with some provisions of the federal DPPA law. Except for exemptions covered in
DPPA and added to A.R.S. §28-450 in 2003 to cover law enforcement and other
entities, Arizona statutes do not conform to certain provisions of DPPA.
Specifically, DPPA requires a state to have a driver’s consent before it can
release or sell the driver’s personal information. MVD has changed its policies
and developed a driver consent form. However, the Legislature should consider
changing the actual statutes to be in compliance with DPPA. According to MVD
officials, the Legislature has asked MVD to work with it to prepare a bill for DPPA
changes.
9. The extent to which changes are necessary in the laws of the agency to
adequately comply with the factors listed in the sunset laws.
The Office of the Auditor General’s two performance audits did not identify any
needed statutory changes. However, as noted in sunset factor 8, the Legislature
is working with MVD to amend Arizona statutes to ensure that state laws that
deal with the release of a driver’s personal information conform to the federal
Drivers’ Privacy Protection Act.
10. The extent to which the termination of the agency would significantly harm the
public health, safety, or welfare.
The termination of this agency would harm the public safety and welfare due to
the service, enforcement, and revenue collection functions performed by MVD.
􀁺􇩍 MVD’s requirements for licensing drivers, issuing auto titles, and registering
cars help keep unsafe drivers off the road and ensure stolen vehicles and
vehicle parts are identified.
􀁺􇩍 MVD’s enforcement of laws governing the licensing of commercial drivers
helps to ensure that they have the necessary skill to operate commercial
vehicles, such as large trucks.
State of Arizona
page 12
􀁺􇩍 MVD provides various commercial vehicle enforcement services that work
closely with federal and state agencies to help ensure the safe movement
of commercial vehicle traffic traveling on Arizona’s highways, including
ensuring that commercial vehicles are in safe operating condition.
􀁺􇩆 Finally, MVD is a major collector of state revenues, which ADOT reported at
over $1.56 billion in fiscal year 2004.
11. The extent to which the level of regulation exercised by the Department is
appropriate and whether less or more stringent levels of regulation would be
appropriate.
MVD provides an appropriate level of regulation. Arizona, like all states, has
regulations for licensing drivers, vehicle registration, and related services,
although in some states vehicle registration is administered at the county level.
12. The extent to which the agency has used private contractors in the performance
of its duties and how effective use of private contractors could be accomplished.
MVD has made extensive use of private contractors as an additional resource to
perform some of its functions.
􀁺􇩍 MVD reports that it has authorized 488 third-party organizations and
businesses to provide services similar to those of field offices, such as
licensing drivers, vehicle title and registration services, and some vehicle
inspections. One third party, IBM Corporation, works in partnership with and
under the auspices of MVD to jointly operate ServiceArizona, the e-government
program established in 1997 to provide services via the
Internet, Internet kiosks, and an interactive voice recognition system.
􀁺􇩍 MVD also hires contractors to serve as computer system programmers.
These programmers work with MVD’s business analysts in a group called
Custom Systems Solutions to maintain all MVD computer programming.
􀁺􇩁 Additionally, MVD contracts with Arizona Correctional Industries of the
Department of Corrections for inmate workers. For example, inmate call
center workers at the Arizona State Prison Complex—Perryville in
Goodyear, and Arizona State Prison Complex—Tucson answer general
questions on licensing or registration over the phone. Inmate workers at
Perryville also help process Renew-by-Mail applications.
The audits did not identify additional opportunities for MVD to use private
contractors.
Office of the Auditor General
page 13
State of Arizona
page 14
Office of the Auditor General
AGENCY RESPONSE
02-11 Department of Health
Services—Health Start
Program
02-12 HB2003 Children’s Behavioral
Health Services Monies
02-13 Department of Health
Services—Office of Long Term
Care
03-L1 Competitive Electric Metering,
Meter Reading, and Billing
and Collections
03-01 Government Information
Technology Agency—
State-wide Technology
Contracting Issues
03-02 Registrar of Contractors
03-03 Water Infrastructure Finance
Authority
03-04 State Board of Funeral
Directors and Embalmers
03-05 Department of Economic
Security—Child Protective
Services—Foster Care
Placement Stability and
Foster Parent Communication
03-06 Arizona Board of Appraisal
03-07 Arizona Board for Charter
Schools
03-08 Arizona Department of
Commerce
03-09 Department of Economic
Security—Division of
Children, Youth and Families
Child Protective Services—
Caseloads and Training
04-L1 Letter Report—Arizona Board
of Medical Examiners
04-L2 Letter Report—Gila County
Transportation Excise Tax
04-01 Arizona Tourism and
Sports Authority
04-02 Department of Economic
Security—Welfare Programs
04-03 Behavioral Health Services’
HB2003 Funding for Adults
with Serious Mental Illness
04-04 Department of Emergency and
Military Affairs and State
Emergency Council
04-05 Department of Environmental
Quality—Water Quality Division
04-06 Department of Environmental
Quality—Waste Programs
Division
04-07 Department of Environmental
Quality—Air Quality Division
04-08 Department of Environmental
Quality—Sunset Factors
04-09 Arizona Department of
Transportation, Motor Vehicle
Division—State Revenue
Collection Functions
04-10 Arizona Department of
Transportation, Motor Vehicle
Division—Information
Security and E-government
Services
Performance Audit Division reports issued within the last 24 months
Future Performance Audit Division reports
Department of Economic Security—Unemployment Insurance