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18 The Department reports that, thus far, GASB 34 has not TENNESSEE had a measurable effect on resource allocation and bud- geting decisions, nor have Department staff received Tennessee DOT (TDOT) assumed from the outset that it any expressions of interest in the new information from would use the modified approach and did not seriously con- the legislature or the general public. sider the alternative. Existing management systems--in par- ticular, the Tennessee Road Information Management Sys- tem (TRIMS), the bridge management system (PONTIS), SOUTH CAROLINA and the Maintenance Management System (MMS)--gener- ate the necessary data, and the asset management approach In selecting the depreciation approach, South Carolina is consistent with the Department's philosophy. The follow- DOT's (SCDOT's) primary concern was to comply with ing items from the interviews were deemed to be particularly GASB 34 in the most efficient and effective manner. SCDOT noteworthy: concluded that its management systems were not adequate to support the modified approach, with the key weakness being Tennessee began implementing the modified approach data for secondary roads. The road valuation system for sec- earlier than most--in mid-1999, just before the formal ondary roads is being updated, which may lead to selection publication of GASB 34. It was essentially a TDOT of the modified approach in the future. Another concern, effort, but the Department met early with the Depart- however, was the potential effect of not meeting condition ment of Finance and Administration and the state audi- targets on funding levels. The following items from the inter- tor. An internal TDOT committee initially met quarterly, views were deemed to be particularly noteworthy: but more frequently toward the end. Condition targets for bridges were based on 75% of GASB 34 implementation began in 2000 and was over- the deck area being neither structurally deficient nor seen by a statewide committee with consultant support. functionally obsolete (the FHWA National Bridge Index However, 95% of the assets were SCDOT's and only goal). Condition targeting for roads was a new ven- SCDOT assets were classified as infrastructure. ture and was based on the Maintenance Rating Index As a depreciation approach state, SCDOT did not target (MRI) produced by the MMS. The MRI is determined condition levels or estimate the costs to achieve such for 1/10 mile road segments based on a sample size of targets. 7% annually. The link between targeted conditions and required expen- As a depreciation approach state, SCDOT grouped expen- ditures is weak. Neither MMS nor PONTIS, as currently ditures for preservation and capital projects together. It deployed, is mature enough to generate reliable cost esti- did not experience difficulty in differentiating these proj- mates. For FY02 and FY03, estimated costs are based on ects from maintenance expenditures. projections derived from historical funding patterns. For historical costs, SCDOT used AASHO: The First 50 Projects are categorized as either capital or preservation/ Years for 19141964 expenditures (with current replace- maintenance, and all costs within the project are in one ment value used to allocate costs among roads, bridges, category or the other. Allocation of costs within a proj- and right-of-way), internal financial statements for 1964 ect is not considered practical with over 1,500 new proj- to the early 1990s and current expenditure records from ects per year. A full reconstruction, even without addi- the early 1990s to 2002. tional lanes, is treated as capital based on the theory that To account for additions to and retirements of infra- current design standards will always generate significant structure assets, SCDOT modified its procedures so that, benefits. On the other hand, a resurfacing project that for GASB purposes, project closing occurs when expen- might have safety benefits is classified as preservation/ ditures are complete (rather than when open to traffic). maintenance. Additions and retirements are recorded once per year by TDOT historical costs were derived in three tiers: journal entry. AASHO: The First 50 Years for 19141964 with con- SCDOT acknowledged that the depreciation approach struction costs allocated among roads, bridges, and right- provides less meaningful information because it is incon- of-way based on current replacement cost; high-level sistent with the Department's preservation program and appropriation codes for 19642001; and project-level the nature of infrastructure assets. However, it sees a information beginning in 2001. danger in modified approach data being used to make In order to account for retirements from infrastructure inappropriate comparisons with other DOTs or budgets. assets, it was necessary to modify TRIMS. This was done Accordingly, SCDOT recommends that more detailed manually for FY02 and FY03. In the future, TRIMS will standards be developed for condition assessments and generate a report on lane miles removed. disclosures to minimize the possibility of unfair dis- TDOT believes that the information generated by the closures caused by inconsistencies. GASB 34 exercise is potentially useful, but, thus far, has