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NATIONAL NCHRP REPORT 522 COOPERATIVE HIGHWAY RESEARCH PROGRAM A Review of DOT Compliance With GASB 34 Requirements

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TRANSPORTATION RESEARCH BOARD EXECUTIVE COMMITTEE 2004 (Membership as of January 2004) OFFICERS Chair: Michael S. Townes, President and CEO, Hampton Roads Transit, Hampton, VA Vice Chair: Joseph H. Boardman, Commissioner, New York State DOT Executive Director: Robert E. Skinner, Jr., Transportation Research Board MEMBERS MICHAEL W. BEHRENS, Executive Director, Texas DOT SARAH C. CAMPBELL, President, TransManagement, Inc., Washington, DC E. DEAN CARLSON, Director, Carlson Associates, Topeka, KS JOHN L. CRAIG, Director, Nebraska Department of Roads DOUGLAS G. DUNCAN, President and CEO, FedEx Freight, Memphis, TN GENEVIEVE GIULIANO, Director, Metrans Transportation Center and Professor, School of Policy, Planning, and Development, USC, Los Angeles BERNARD S. GROSECLOSE, JR., President and CEO, South Carolina State Ports Authority SUSAN HANSON, Landry University Professor of Geography, Graduate School of Geography, Clark University JAMES R. HERTWIG, President, Landstar Logistics, Inc., Jacksonville, FL HENRY L. HUNGERBEELER, Director, Missouri DOT ADIB K. KANAFANI, Cahill Professor of Civil Engineering, University of California, Berkeley RONALD F. KIRBY, Director of Transportation Planning, Metropolitan Washington Council of Governments HERBERT S. LEVINSON, Principal, Herbert S. Levinson Transportation Consultant, New Haven, CT SUE MCNEIL, Director, Urban Transportation Center and Professor, College of Urban Planning and Public Affairs, University of Illinois, Chicago MICHAEL D. MEYER, Professor, School of Civil and Environmental Engineering, Georgia Institute of Technology KAM MOVASSAGHI, Secretary of Transportation, Louisiana Department of Transportation and Development CAROL A. MURRAY, Commissioner, New Hampshire DOT JOHN E. NJORD, Executive Director, Utah DOT DAVID PLAVIN, President, Airports Council International, Washington, DC JOHN REBENSDORF, Vice President, Network and Service Planning, Union Pacific Railroad Co., Omaha, NE PHILIP A. SHUCET, Commissioner, Virginia DOT C. MICHAEL WALTON, Ernest H. Cockrell Centennial Chair in Engineering, University of Texas, Austin LINDA S. WATSON, General Manager, Corpus Christi Regional Transportation Authority, Corpus Christi, TX MARION C. BLAKEY, Federal Aviation Administrator, U.S.DOT (ex officio) SAMUEL G. BONASSO, Acting Administrator, Research and Special Programs Administration, U.S.DOT (ex officio) REBECCA M. BREWSTER, President and COO, American Transportation Research Institute, Smyrna, GA (ex officio) GEORGE BUGLIARELLO, Chancellor, Polytechnic University and Foreign Secretary, National Academy of Engineering (ex officio) THOMAS H. COLLINS (Adm., U.S. Coast Guard), Commandant, U.S. Coast Guard (ex officio) JENNIFER L. DORN, Federal Transit Administrator, U.S.DOT (ex officio) ROBERT B. FLOWERS (Lt. Gen., U.S. Army), Chief of Engineers and Commander, U.S. Army Corps of Engineers (ex officio) EDWARD R. HAMBERGER, President and CEO, Association of American Railroads (ex officio) JOHN C. HORSLEY, Executive Director, American Association of State Highway and Transportation Officials (ex officio) RICK KOWALEWSKI, Deputy Director, Bureau of Transportation Statistics, U.S.DOT (ex officio) WILLIAM W. MILLAR, President, American Public Transportation Association (ex officio) MARY E. PETERS, Federal Highway Administrator, U.S.DOT (ex officio) SUZANNE RUDZINSKI, Director, Transportation and Regional Programs, U.S. Environmental Protection Agency (ex officio) JEFFREY W. RUNGE, National Highway Traffic Safety Administrator, U.S.DOT (ex officio) ALLAN RUTTER, Federal Railroad Administrator, U.S.DOT (ex officio) ANNETTE M. SANDBERG, Federal Motor Carrier Safety Administrator, U.S.DOT (ex officio) WILLIAM G. SCHUBERT, Maritime Administrator, U.S.DOT (ex officio) ROBERT A. VENEZIA, Program Manager of Public Health Applications, National Aeronautics and Space Administration (ex officio) NATIONAL COOPERATIVE HIGHWAY RESEARCH PROGRAM Transportation Research Board Executive Committee Subcommittee for NCHRP MICHAEL S. TOWNES, Hampton Roads Transit, Hampton, VA JOHN C. HORSLEY, American Association of State Highway (Chair) and Transportation Officials JOSEPH H. BOARDMAN, New York State DOT MARY E. PETERS, Federal Highway Administration GENEVIEVE GIULIANO, University of Southern California, ROBERT E. SKINNER, JR., Transportation Research Board Los Angeles C. MICHAEL WALTON, University of Texas, Austin

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NATIONAL COOPERATIVE HIGHWAY RESEARCH PROGRAM NCHRP REPORT 522 A Review of DOT Compliance With GASB 34 Requirements PB CONSULT, INC. New York, NY WITH PRICEWATERHOUSECOOPERS, LLP Ridgewood, NJ CAMBRIDGE SYSTEMATICS, INC. Cambridge, MA AND NUSTATS, INC. Austin, TX S UBJECT A REAS Planning and Administration Research Sponsored by the American Association of State Highway and Transportation Officials in Cooperation with the Federal Highway Administration TRANSPORTATION RESEARCH BOARD WASHINGTON, D.C. 2004 www.TRB.org

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NATIONAL COOPERATIVE HIGHWAY RESEARCH NCHRP REPORT 522 PROGRAM Systematic, well-designed research provides the most effective Project A19-4 FY'02 approach to the solution of many problems facing highway administrators and engineers. Often, highway problems are of local ISSN 0077-5614 interest and can best be studied by highway departments ISBN 0-309-08794-5 individually or in cooperation with their state universities and Library of Congress Control Number 2004106621 others. However, the accelerating growth of highway transportation develops increasingly complex problems of wide interest to 2004 Transportation Research Board highway authorities. These problems are best studied through a coordinated program of cooperative research. Price $19.00 In recognition of these needs, the highway administrators of the American Association of State Highway and Transportation Officials initiated in 1962 an objective national highway research program employing modern scientific techniques. This program is supported on a continuing basis by funds from participating member states of the Association and it receives the full cooperation and support of the Federal Highway Administration, United States NOTICE Department of Transportation. The project that is the subject of this report was a part of the National Cooperative The Transportation Research Board of the National Academies Highway Research Program conducted by the Transportation Research Board with the was requested by the Association to administer the research approval of the Governing Board of the National Research Council. Such approval program because of the Board's recognized objectivity and reflects the Governing Board's judgment that the program concerned is of national understanding of modern research practices. The Board is uniquely importance and appropriate with respect to both the purposes and resources of the suited for this purpose as it maintains an extensive committee National Research Council. structure from which authorities on any highway transportation The members of the technical committee selected to monitor this project and to review subject may be drawn; it possesses avenues of communications and this report were chosen for recognized scholarly competence and with due cooperation with federal, state and local governmental agencies, consideration for the balance of disciplines appropriate to the project. The opinions and universities, and industry; its relationship to the National Research conclusions expressed or implied are those of the research agency that performed the Council is an insurance of objectivity; it maintains a full-time research, and, while they have been accepted as appropriate by the technical committee, research correlation staff of specialists in highway transportation they are not necessarily those of the Transportation Research Board, the National matters to bring the findings of research directly to those who are in Research Council, the American Association of State Highway and Transportation a position to use them. Officials, or the Federal Highway Administration, U.S. Department of Transportation. The program is developed on the basis of research needs Each report is reviewed and accepted for publication by the technical committee identified by chief administrators of the highway and transportation according to procedures established and monitored by the Transportation Research departments and by committees of AASHTO. Each year, specific Board Executive Committee and the Governing Board of the National Research areas of research needs to be included in the program are proposed Council. to the National Research Council and the Board by the American Association of State Highway and Transportation Officials. Research projects to fulfill these needs are defined by the Board, and qualified research agencies are selected from those that have submitted proposals. Administration and surveillance of research contracts are the responsibilities of the National Research Council and the Transportation Research Board. Published reports of the The needs for highway research are many, and the National NATIONAL COOPERATIVE HIGHWAY RESEARCH PROGRAM Cooperative Highway Research Program can make significant contributions to the solution of highway transportation problems of are available from: mutual concern to many responsible groups. The program, however, is intended to complement rather than to substitute for or Transportation Research Board duplicate other highway research programs. Business Office 500 Fifth Street, NW Washington, DC 20001 and can be ordered through the Internet at: Note: The Transportation Research Board of the National Academies, the National Research Council, the Federal Highway Administration, the American Association of State Highway and Transportation Officials, and the individual http://www.national-academies.org/trb/bookstore states participating in the National Cooperative Highway Research Program do not endorse products or manufacturers. Trade or manufacturers' names appear herein solely because they are considered essential to the object of this report. Printed in the United States of America

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The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished schol- ars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. On the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and techni- cal matters. Dr. Bruce M. Alberts is president of the National Academy of Sciences. The National Academy of Engineering was established in 1964, under the charter of the National Acad- emy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achieve- ments of engineers. Dr. William A. Wulf is president of the National Academy of Engineering. The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public. The Institute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, on its own initiative, to identify issues of medical care, research, and education. Dr. Harvey V. Fineberg is president of the Institute of Medicine. The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy's purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Acad- emy, the Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The Council is administered jointly by both the Academies and the Institute of Medicine. Dr. Bruce M. Alberts and Dr. William A. Wulf are chair and vice chair, respectively, of the National Research Council. The Transportation Research Board is a division of the National Research Council, which serves the National Academy of Sciences and the National Academy of Engineering. The Board's mission is to promote innovation and progress in transportation through research. In an objective and interdisciplinary setting, the Board facilitates the sharing of information on transportation practice and policy by researchers and practitioners; stimulates research and offers research management services that promote technical excellence; provides expert advice on transportation policy and programs; and disseminates research results broadly and encourages their implementation. The Board's varied activities annually engage more than 4,000 engineers, scientists, and other transportation researchers and practitioners from the public and private sectors and academia, all of whom contribute their expertise in the public interest. The program is supported by state transportation departments, federal agencies including the component administrations of the U.S. Department of Transportation, and other organizations and individuals interested in the development of transportation. www.TRB.org www.national-academies.org

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COOPERATIVE RESEARCH PROGRAMS STAFF FOR NCHRP REPORT 522 ROBERT J. REILLY, Director, Cooperative Research Programs CRAWFORD F. JENCKS, Manager, NCHRP GWEN CHISHOLM-SMITH, Senior Program Officer EILEEN P. DELANEY, Managing Editor HILARY FREER, Associate Editor II BETH HATCH, Assistant Editor NCHRP PROJECT A19-4 PANEL Field of Administration--Area of Finance MICHAEL R. SHINN, Tennessee DOT (Chair) JAMES R. FOUNTAIN, General Accounting Standards Board DAVID L. HUFT, South Dakota DOT MICHAEL B. JOHNSON, P.E., California DOT STEPHEN D. MARAMAN, Nebraska DOR ROBIN NAITOVE, Florida DOT J. MICHAEL PATTERSON, Oklahoma DOT MICHAEL G. PAVLIDES, PBS&J, Beltsville, MD PETER STEPHANOS, P.E., Maryland State Highway Administration DUANE K. SULLIVAN, Texas DOT REGINA MCELROY, FHWA Liaison Representative CLAIRE FELBINGER, TRB Liaison Representative AUTHOR ACKNOWLEDGMENTS The research reported herein was performed under NCHRP Proj- at PB Consult, Inc., managed the analysis and reporting aspects of ect 19-04 by PB Consult, Inc., as the prime contractor and Price- the project. Lucinda Eagle and Nick Amrhein of PB Consult, Inc., waterhouseCoopers LLP; Cambridge Systematics, Inc.; and NuStats, also made major contributions. Other contributors to this work were Inc.; as subcontractors. Ed Chait of PricewaterhouseCoopers LLP and Mike Markow of Frank Smith, Principal Consultant at PB Consult, Inc., was the Cambridge Systematics, Inc. Survey administration was managed principal investigator while Wayne McDaniel, Principal Consultant by Stacy Bricka of NuStats, Inc.

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NCHRP Report 522: A Review of DOT Compliance with GASB 34 Requirements FOREWORD provides a comprehensive look at approaches taken by AASHTO member departments By Gwen Chisholm-Smith to comply with the requirements of Governmental Accounting Standards Board Staff Officer (GASB) Statement No. 34. GASB 34 is the accounting standard that requires general Transportation Research infrastructure assets to be reported together with related depreciation or preservation Board costs in the comprehensive financial statements of state and local governments. This report documents how the requirements set by GASB 34 were met and catalogs the var- ious approaches that were implemented in the first year. This report will be helpful to professionals who work with state DOTs and local governments in the areas of finance, auditing, asset management, and policy-making. In June 1999, the Governmental Accounting Standards Board (GASB) unani- mously approved Statement No. 34: Basic Financial Statements--and Management's Discussion and Analysis--for State and Local Governments. Among its many new pro- visions, GASB 34 requires that state and local governments begin to report on the cost of their infrastructure assets, including roads and bridges. Given that many of the infra- structure assets owned by the public sector in this country are built and maintained by transportation agencies, DOTs are among the public agencies most affected by these new requirements. Each jurisdiction is allowed to determine its own asset management methodologies, systems, and standards. However, this flexibility results in divergent approaches by the DOTs. This report (1) summarizes the approaches taken by DOTs to comply with GASB 34 and (2) provides information gathered from AASHTO mem- ber departments on policies and methodologies for reporting on infrastructure assets. PB Consult, Inc.; in conjunction with PricewaterhouseCoopers, LLP; Cambridge Systematics, Inc.; and NuStats, Inc.; conducted the research for NCHRP Project 19-04. To achieve the project's objective of summarizing the approaches taken by AASHTO member departments to comply with the requirements of GASB 34, the research team performed a literature review, conducted a comprehensive survey, performed inter- views, and conducted six case studies. The six case studies of DOTs (i.e., Michigan, South Carolina, Tennessee, Texas, Vermont, and Washington) covered the range of approaches used to meet the GASB 34 requirements. The report focuses on the approaches DOTs have taken to comply with the requirements of GASB 34 and why, how these approaches were implemented, prob- lems encountered, resulting changes in practice, and lessons learned. The appendixes, which include the consolidated survey and answers, have been published as NCHRP Web Document 63, available at: www4.trb.org/trb/crp.nsf.

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CONTENTS 1 SUMMARY 11 CHAPTER 1 Summary of Previous Surveys and Literature Review Tennessee DOT Survey--June 2001, 11 National Association of State Auditors, Comptrollers, and Treasurers Survey, 11 Georgia DOT Survey, 11 NCHRP Survey, 11 13 CHAPTER 2 Process for Developing the Survey Instrument Questionnaire Design, 13 Questionnaire Pretest, 13 Web-Survey Programming, 13 Survey Administration, 13 15 CHAPTER 3 Identification of Candidates for Case Study Analyses 16 CHAPTER 4 Case Study Overview Procedures, 16 Overview, 16 Michigan, 17 South Carolina, 18 Tennessee, 18 Texas, 19 Vermont, 19 Washington, 20 21 CHAPTER 5 Case Study Interview Questions and Responses Michigan, 22 South Carolina, 25 Tennessee, 29 Texas, 33 Vermont, 37 Washington, 41 46 CHAPTER 6 Information Gaps and Research Needs Methods for Condition Assessments and Preservation, 46 Research Topics, 47 Research Methodology, 48 49 BIBLIOGRAPHY