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35 with 55% of respondents indicating these processes as the context of a disinvestment situation. Other disinvestment con- texts included the long-range planning process (30%) or in response to budget cuts (20%). This finding is significant, as it emphasizes the role of disinvestment when agencies are fac- ing tradeoffs in programming (e.g., in the relatively short-term TIP and STIP processes) as opposed to looking at long-range implications (as might occur in the long-range planning process). It is also pertinent that in many cases (20% of disinvestment situations) the disinvestment involved some sort of jurisdictional turnback or agreement among agencies as to an alternative future for the disinvested asset. Although most disinvestment scenarios were not precipi- tated by budget cuts per se, the majority of disinvestment sce- narios (80% of disinvestment cases surveyed) were ultimately in response to a choice to favor other needs over the disinvested facility in the face of limited funds. Hence, in 80% of cases, the absence of funds to support the disinvested asset at its current level of performance was a consideration in the choice. DISINVESTMENT TRANSPARENCY AND PROCESS Practitioners have indicated that unlike new construction or other types of alternatives analysis disinvestment is often more of an internal than a public process. The most com- mon responses indicated that most of the scrutiny on the dis- investment process was internal to the agency, with only some degree of external scrutiny. However, most agencies also indicated that when disinvestment scenarios are subject to public scrutiny and debate they receive comparable levels of scrutiny to other planning decisions. In most cases, agencies, at the very least, inform the pub- lic of a disinvestment situation, with approximately 35% of the agencies involved in such situations actively engaging in structured public outreach to obtain input, and another 35% engaging in structured outreach to explain the decision, even if public input was not part of the decision-making pro- cess. Only 15% of agencies indicated that the decision was completely internal to the agency without any information or involvement of outside stakeholders. It is also notable that the majority of respondents (63% of those that engaged in disinvestment situations) engaged in some type of outreach to the business community either as part of the decision-making process or in implementing the decision. A survey of state agencies was conducted in March and April 2014. Surveys were completed online and participants also received follow-up phone calls and an opportunity to complete the survey by phone. Forty-one of the 50 state DOTs replied to the survey, including 38 states that completed the survey online, two partial responses (by e-mail and telephone) from states indicating some experience with disinvestment but lack- ing sufficient available information to answer the 20 questions, and one state responding that they lacked the information needed to complete the survey. WHO MAKES DECISIONS IN DISINVESTMENT SITUATIONS? Based on survey data received, states were split evenly in terms of those that had made an intentional disinvestment choice in the last five years: 43% had faced a disinvestment situation, 43% had not, and the other 16% were unsure or experienced only passive disinvestment. This finding suggests that while all states struggle with investment shortfalls and difficult choices, many do not explicitly structure these decisions as disinvestment scenarios or consider their implications as such. CONTEXT SURROUNDING AGENCY DISINVESTMENT SITUATIONS Those agencies that did face disinvestment scenarios tended to face choices regarding disinvestment in entire programs or classes of roads (70% of respondents), or for a specific facility (50%). Agencies did not appear to apply disinvestment strongly at the corridor or sub-area level (15%), suggesting decisions are often made at the statewide or district level. This is not surpris- ing given the potential political sensitivities that may surround disinvesting in a very specific location or geographic area. Consistent with the finding that agencies are inclined to take a high-level approach to disinvestment, the majority of staff indicating experience with disinvestment characterized their disinvestment situation as a âwholesale or incremental disinvestment policyâ (63% of respondents), as opposed to looking at a single disinvestment scenario (16%) or a periodic disinvestment scenario (21%). The State Transportation Improvement Program (STIP)/ Transportation Improvement Program (TIP) process was by far the most likely circumstance for disinvestment situations, chapter four STATE OF THE PRACTICE REVIEW
36 DISINVESTMENT ANALYSIS METHODS Most (75%) of the respondents who had faced disinvestment situations had engaged in some type of process to ascer- tain likely economic outcomes; however, the type of analy- sis varied from simply talking to businesses to engaging in formal impact modeling. The most common assessment (employed by 65% of respondents involved in developing disinvestment scenarios) entailed simply considering the historic performance of the asset (such as traffic count, safety performance, or pavement condition) or reviewing the operation and maintenance requirements of the dis- invested assets. Only 15% of respondents had conducted a formal costâ benefit analysis of disinvestment options and only 10% had conducted an economic impact analysis on a dis investment scenario. Despite not having widely utilized costâbenefit tools embedded in asset management systems, the major- ity of respondents indicated fair to high levels of confi- dence in these methods (average confidence of 2.7 on a scale of one to three). Most also indicated high levels of confidence in spatial and statistical data (average confi- dence of 2.4) and costâbenefit spreadsheets (average con- fidence of 2.3). When asked to assess the desirability of the analysis methods, respondents again expressed a desire for more rigorous analytical approaches. On a scale of from âhighly desirableâ (3), âsomewhat desirableâ (2), and ânot desir- ableâ (1), respondents indicated the strongest desire for âcostâbenefit analysis using an asset management tool that predicts asset conditions,â methods based on historical data about asset utilization, or methods based on historical data about asset condition, each with an average score of 2.6. The pattern was similar, with the next most desirable approach being âdata about the improvement history of an assetâ or âeconomic impact analysisâ (each averaging 2.4). Lowest ratings went to more qualitative methods, such as âidentify- ing analogous disinvestments in other areasâ (average 2.0) or âinterviewing or surveying businesses and economic develop- ment entitiesâ (average 2.1). The interest for better analytical techniques relating to disinvestment scenarios is further sub- stantiated by input respondents provided regarding things that would most help them articulate disinvestment implications to stakeholders. The most common response was for âbetter models to predict the economic outcomes of disinvestmentâ (73% or respondents), followed by âbetter models to predict the implications of disinvestment on transportation perfor- mance measuresâ (65%). Survey responses pertaining to analytical methods lead to three findings gathered from prior responses: (1) agencies are not broadly using analytical methods to assess the economic implications resulting from disinvestment situations; (2) they are aware of it; and (3) they have a desire for, and greater confidence in, those methods. REASONS FOR NOT CONDUCTING ECONOMIC ANALYSIS Given the earlier findings regarding the desire for better ana- lytical methods, it is not surprising that most respondents had low levels of confidence in their ability to anticipate the economic implications of disinvestment. On a scale of one to three (with three as very confident and one as not at all confident), the average respondent rated their confidence in their understanding of economic outcomes of disinvestment as 1.8. The most common response to this question was ânot at all confidentâ (40% of respondents). Fifty-eight percent of respondents cited limited time, bud- get, and staff availability as reasons for not undertaking more rigorous economic analysis of disinvestment scenarios. How- ever, another common reason (cited by 50% of respondents) was a belief that either the agency or political leadership was not scrutinizing the decision to a level warranting such analy- sis, or such analysis would not be likely to have changed the decision made. Not surprisingly, respondents indicated that their agency was more likely to assess the benefits of invest- ment than to assess the dis-benefits of disinvestment. In summary, the reasons agencies do not conduct economic analysis (for those that did not) reflect pragmatic considerations (limited budget to conduct analysis) combined with some skepticism that the analysis would not have affected decisions. PASSIVE DISINVESTMENT Some agencies had not faced intentional disinvestment sce- narios, but gave responses regarding passive disinvestment situations they had experienced. The most common way that agencies would know a passive disinvestment situation was occurring was âbenchmarking condition and performance, and consistently performing below target performance lev- elsâ (84% of respondents). However, responses were com- mon in other areas as well, including âconsistent funding levels below assessed investment needsâ (77%) and âpublicly visible performance failureâ (65%). Overwhelmingly, the reason passive disinvestment had occurred was the result of ârecurring funding shortfalls and deferred investment that led to conditions where the costs of âcatching upâ seemed insurmountableâ (71% of respon- dents). The second most common reason was âdemand for asset increased at a rate faster than anticipated by budget- ing, planning, and programming modelsâ (39%), meaning the funding shortfalls were the most compelling reason this had occurred. Most transportation agencies do not have the authority to increase revenues for transportation. If automatic increases do not occur from indexing taxes to fuel prices, increasing VMT, increasing vehicle value from excise taxes, or some other method then the transportation agencies must adjust to flat revenues and inflated costs.