Value of TxDOT Audit Called Into Question

As the Texas Department of Transportation heads into a hearing today to review a highly critical 628-page audit with members of the House Transportation Committee, the very value of Chicago-based consulting agency Grant Thornton’s $2 million report is being called into question. 

The audit said TxDOT’s senior leaders were not inclined toward meaningful self-analysis due to “a deep-seated belief that TxDOT is doing all the right things.” But TxDOT Executive Director Amadeo Saenz appeared on Tuesday to welcome the report, saying in a special Transportation Commission meeting that the auditors had done “a good job of collecting and analyzing stakeholder expectations across a number of levels.” 

Not all observers of the Texas transportation scene agree. “[The report] was not as in-depth as I’d like to see,” said state Rep. Joe Pickett, D-El Paso, the chairman of the Transportation Committee. In a statement issued shortly after the report’s release, state Sen. Kirk Watson, D-Austin, said the document was hardly revelatory for those who follow transportation. It includes long-standing criticisms of the agency, including the widely held perception that its senior management is "not addressing the big issues … not trusting other TxDOT staff … not setting clear expectations or goals … not being open to feedback … [and] lacking respect for governing bodies."

“No surprises,” Pickett said. “It’s just ratifying what most of us already knew existed.”

Pickett said he would have liked a more detaied breakdown of TxDOT’s financing and a more thorough examination of “who does what to who” within the organization — concerns he will likely make known when representatives from Grant Thornton testify before his committee today. He also questions the auditors’ heavy reliance on employee interviews, which he says aren't likely to be objective and could have been done by TxDOT internally. And he’s frustrated that in a study "this in-depth and this long" — it's been nearly a year since TxDOT commissioned it — no updates were provided to TxDOT or legislators on the auditors' progress and findings prior to the release of the final report. Pickett was also surprised to see TxDOT administrators raked over the coals while the commission that oversees the agency got off comparatively easy.

“For the last six years, the commission has been dictating … to the administration,” he said. “I personally believe the administration is acting upon the commission’s desires, but the commission came out of this unscathed.”

Unlike Pickett, state Sen. John Carona, R-Dallas, was pleased with the report and encouraged by Saenz’s general acceptance of its findings, said Steven Polunsky, the staff director of the Senate Transportation Committee, which Carona chairs.

“[Carona] fully expects the commission to proceed immediately with the remedies recommended in the audit,” Polunsky said. “Change is a hard process. It takes the right leadership and some outside oversight.”

One of the audit’s central themes was a need to shake up the “singular, deeply entrenched culture” that has developed over the agency’s 93 years in operation. Saenz agreed with Grant Thornton that the traditional “TxDOT way” was failing to meet expectations, saying the agency will continue to make internal changes to better align its operations to its mission. “There are some things we should have recognized sooner and managed to adjust our operations to meet our customers’ expectations,” Saenz said. “As we move forward, we must commit to doing better.”

But he said some major issues — like future funding for roads — are beyond TxDOT’s control. “We’ve said it over and over again, but it bears repeating: Unless new funding sources are in place by 2012, no additional mobility projects will be added to the agency’s plans,” Saenz said.

How big a funding hole?

Like so much about TxDOT depicted in the Grant Thornton report, even the amount of funding needed is hazy. The audit posits that in 2040, Texas’ population will be roughly the same as present-day California's, with approximately 36 million people. But just how much road spending will be necessary to accommodate that growth remains a point of contention.

According to a review of future transportation funding needs by the 2030 Committee, a 12-member research team appointed two years ago by Transportation Commissioner Deirdre Delisi, Texas will need to invest about $315 billion within the next two decades to maintain current congestion levels. That amounts to roughly $14 billion a year — in 2008 dollars. Though careful not to speculate on the effects of future legislation, the 2030 Committee concedes that “available funding will not be adequate to address all of the needs identified,” including pavement, bridges, urban and rural mobility, and safety needs.

Yet a report released in 2009 by the House Research Organization, a legislative research agency, indicates TxDOT itself has projected an $86 billion funding gap by 2030. That figure was recalculated again by the state auditor, bringing the new estimate down to $77.4 billion. Even the House Research Organization auditors cautioned against using that figure to make policy or funding decisions, “because it contained costs that should not have been included, a mathematical error, and additional undocumented costs.” 

The Grant Thornton audit indicates this funding confusion contributes to the underlying mistrust the public and the Legislature holds toward the agency — specifically in its efforts to sustain its current funding levels or justify an increase. “Some stakeholders said that ‘TxDOT isn’t broken, it’s just broke,’” the audit notes. “Others said that TxDOT isn’t sufficiently high-functioning to know if it has the resources required to do the job needed.”

The audit offers still another view from skeptics who believe adequate funding is a secondary issue to TxDOT’s current internal operations. “If we can’t manage effectively the funds provided to us,” Saenz acknowledged, “then we cannot expect the trust to use the funds to follow.” 

Grant Thornton puts some of the blame for the funding confusion on lawmakers' increasing reliance on bond funding for roads. “The only specific question I have is about where it says the Legislature should not have gotten away from pay-as-you-go and done the bonding,” said state Rep. Jim Dunnam, D-Waco, a member of the House Transportation Committee. “I want to understand why that is. I’m not defensive about it. I’m willing to accept it. I just don’t understand. I thought the logic of borrowing money at today’s cost seemed to make sense.”

While Dunnam said he’s ready to hear what lawmakers might have done wrong, he also believes TxDOT needs to make some “fundamental changes” of its own. “It seems to me that it’s the structure of the agency that promotes this lack of transparency,” he said. “There are good people at TxDOT, but their organizational structure lends itself to all this.”

Not surprisingly, Dunnam, who's also the House Democratic Caucus chair, points the finger even higher. “At the end of the day it’s an executive agency that’s run ultimately by governor’s appointees,” he said. “But nobody sees it that way. Our governor has always been able to use that Chinese Wall to say, ‘Well, I didn’t know.’”

Perry spokeswoman Allison Castle said the governor has the ultimate confidence in his appointees, “who requested this review, to look at how best to implement the recommendations.”

And Saenz, for his part, believes the agency has the ability to adapt. “We’re making strides … but there are still many more bridges to cross with this,” he said. “I’m looking forward to making our agency even better.”  

That attitude will likely serve him well in front of the Transportation Committee. “We don’t need to beat them up too much,” Pickett said. “I’m looking for some action now.”

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