BILL ANALYSIS Ó
SB 1102
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Date of Hearing: June 11, 2012
ASSEMBLY COMMITTEE ON TRANSPORTATION
Bonnie Lowenthal, Chair
SB 1102 (DeSaulnier) - As Amended: May 31, 2012
SENATE VOTE : 36-0
SUBJECT : California Department of Transportation: capital
outlay support costs
SUMMARY : Modifies provisions governing the capital outlay
support (COS) function within the California Department of
Transportation (Caltrans). Specifically, this bill :
1)Prior to November 15, 2014, and annually thereafter, requires
Caltrans, for all State Transportation Inspection Program
(STIP) projects completed in the prior fiscal year and as a
part of its annual project delivery report, to report on the
difference between an original allocation made for a project
by the California Transportation Commission (CTC) and the
project's actual construction capital and support costs at the
project's close.
2)Subjects construction support costs to allocation by the CTC.
3)Clarifies that right-of-way and construction engineering, with
respect to project components required to be programmed in the
STIP, include right-of-way support and construction support.
4)Beginning January 1, 2013, requires CTC to allocate
construction support costs for STIP projects at the same time
it allocates construction capital costs.
5)Directs CTC to require a supplemental project allocation
request for construction support cost overruns that exceed
120% of the originally allocated amount and to reflect the
additional amounts in regional STIP share balances.
EXISTING LAW:
1)Sets forth the process and procedures to govern development of
the biennial STIP, including provisions that require the CTC
to program available funds for transportation capital
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improvement projects over the ensuing five years.
2)Requires Caltrans to submit an annual report to the Governor
and the Legislature that reflects Caltrans' efforts to deliver
programmed projects on the State Highway System.
3)Requires the STIP to include a listing of all programmed
capital improvement projects to be funded with interregional
and regional improvement funds; requires the STIP to specify
for each project the allocation or expenditure amount and year
for each of the following project components:
a) Completion of all permits and environmental studies;
b) Preparation of plans, specifications, and estimates;
c) Right-of-way acquisition, including support activities;
and,
d) Construction and construction management and
engineering, including surveys and inspection.
4)Of these project components, only right-of-way acquisition and
construction are subject to allocation by the CTC.
5)Requires CTC approval of supplemental allocations for any
project that has construction capital costs exceeding
allocated amounts by 20% or more.
FISCAL EFFECT : Unknown
COMMENTS : Existing law vests Caltrans with broad
responsibilities for design, construction, maintenance, and
operation of the State Highway System. The department's COS
Program is responsible for allocating funds and resources
necessary to develop (e.g., design) projects and oversee the
projects through construction. Typical support functions
including engineering, design, environmental studies,
right-of-way acquisition, and construction management. This
year, Caltrans' budget for COS amounted to $1.8 billion for
2,500 capital outlay projects, amounting to approximately 9,300
positions throughout Caltrans.
Caltrans' management of its COS function has been the focus of
legislative criticism over the past couple of years, primarily
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because of issues related to its difficulty in tying projected
workload to budget requests and because of COS-related cost
overruns. As a result, the Joint Legislative Audit Committee
requested the State Auditor to examine the performance,
management, efficiency, and budget of Caltrans' COS Program. In
response, the State Auditor released her report in 2011,
entitled, "California Department of Transportation: Its Capital
Outlay Support Program Should Strengthen Budgeting Practices,
Refine Its Performance Measures, and Improve Internal Controls."
The report's findings included:
1)Caltrans has done little analysis to determine the frequency
or magnitude of support cost budget overruns and to inform
stakeholders of the overruns.
2)Sixty-two percent of the projects that completed construction
during fiscal years 2007-08 through 2009-10 had support costs
budget overruns, which totaled more than $305 million of the
$1.4 billion of such cost expenditures made during that
period.
3)Although Caltrans has established a goal of reducing total
support costs to 32% of the total capital costs, it has
historically failed to use a consistent method to calculate
the ratio over time, and has generally not met its goal for
the last three fiscal years.
4)Caltrans' time-reporting system lacks strong internal
controls, and better project monitoring and the use of
performance metrics could help it minimize cost overruns.
In response to these findings, the Auditor recommended that
Caltrans take several steps to improve accountability internally
and with the public, including:
"Create and incorporate an analysis of support cost budget
variances in its quarterly report to the agency and in its
annual report to the Legislature and the Governor. The
analysis should report on the number of completed projects
with budget variances and on the number of open projects for
which the estimates at completion predict budget variances.
Further, the analysis should report on the overrun and
underrun ratios for those projects, and the portions of the
variances due to rates and hours. Also, Caltrans should
include in its strategic plan a measurable goal for reducing
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variances."
The Auditor also included recommendations for legislative
action, including:
1)To ensure that it receives more complete information on the
support program, the Legislature should require Caltrans to
include in its annual report an expanded methodology for
reporting support-to-capital ratios to include, in addition to
a support-to-cost ratio analysis based on costs incurred up to
the award of the construction contract of STIP projects, a
separate support-to-capital-ratio analysis for STIP projects
that have completed construction.
2)To increase accountability for budget overruns of support
costs, the Legislature should consider legislation that would
expressly require the commission to review and approve project
construction support costs when they differ from the amount
budgeted by 20% or more.
SB 1102 will improve Caltrans' COS Program by providing greater
transparency and accountability in the allocation of COS
resources.
Previous legislation : AB 105 (Chapter 6, Statutes of 2011) was
a budget trailer bill that required Caltrans to report annually
to the Legislature with supplemental information on the COS
budget request, including anticipated and realized project costs
and schedules for the COS Program.
REGISTERED SUPPORT / OPPOSITION :
Support
American Federation of State, County and Municipal Employees,
AFL-CIO
California Transportation Commission
Contra Costa Transportation Authority
Opposition
None on file
SB 1102
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Analysis Prepared by : Janet Dawson / TRANS. / (916) 319-2093