audit or gener alNSAA

Annual ConferenceJune 12, 2004

Management Audit of theIllinois State Toll Highway

Authority

NSAA EXCELLENCE IN ACCOUNTABILITY AWARDS

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Illinois Toll Road System

274 miles of roads 1.2 million vehicles each day

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How did we get here?

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TOLLWAY: Originally constructed in 1958 March 2002 Reconstruction Plan:

$5.5 Billion; 88% toll increase

“The Authority has seen years of financial mismanagement, cost overruns, wasteful expenditures and poor planning….”

“It presented its 20-year, $5.5 billion plan to rebuild and extend tollways on a single sheet of paper….”

“To get public input … it arrogantly scheduled 12 different hearings all on the same night, at the same time.”

“Before one barricade or detour sign goes up or shovelful of concrete is poured, the Illinois State Toll Highway Authority has a far more urgent patch-up job: its credibility.”

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Chicago Tribune editorials:

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How did we get here?

THE PHONE CALL

President of the Senate

Historically, Tollway has not been anxious for oversight by anyone

Audit Resolution passed the Senate on May 21, 2002 and the House on June 2, 2002

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How did we get here?

One other minor detail…

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The Resolution requiredthe audit to be completed within

one year of its passage.

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Challenges:

Open-ended resolution:

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Determine whether the Toll Highway Authority is managing or using its resources in an economical and efficient manner

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Challenges:

Large complex agency:

1,900 employees

$379 million budget

Technical areas, such as bonds, construction, etc.

Under intense public scrutiny

200 miles away from Springfield Office

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What we did:

Divided the Tollway into18 functional areas, such as personnel, planning, contracting, real estate, etc.

Made one staff person responsible for each of these areas (staff had multiple areas)

Clearly defined responsibilities; staff development

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Organizational Chart of OAG:

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ASSISTANT TOAUDITOR GENERAL: CLARKE

CULLY – Graphic DesignerHAMILTON – Office Mgr.

LIVINGSTONE – SecretaryBRADLEY – Messenger Clerk

EXECUTIVE SECRETARY:

SMITH

DEPUTY AUDITOR GENERALSJOHN W. KUNZEMAN

CHARLES G. WOODWARD

FISCAL OFFICER: PAPE

LEONARD – Sr. Fiscal Asst.WALKER – Admin. Specialist

LEGAL COUNSEL: PATTON

DAHLQUIST – Admin. Mgr.WALKER – Admin. Specialist

AUDITOR GENERAL

WILLIAM G. HOLLAND

FINANCIAL/COMPLIANCE

DIRECTOR: BULLARDASST. DIRECTOR: STEPHENS

StilesAppelbaumCarhillUsherwoodRuddLabonteClarkKizziahDavisFoxWardenLongCampbellHartsonBallion

DzierwaOliveSchertzTaylorJohnsonKirkNwosuProhaskaKingSullivanEricksonFallerMcDowellSmith, A.

INFORMATION SYSTEMS

DIRECTOR: SAMPIAS

DevittHumphriesLovejoyGudgelWagnerMehochkoFrench

PERFORMANCE

DIRECTOR: SCHLOUCH

DadaWittrockMittelstaedtMaziarzPaoniHeltonWahlbrinkPetersButcherFlessner

BaptistBarkerGlahnAllenRobertsBrownWegerCorsLydigsen

Organizational Chart of OAG:

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ASSISTANT TOAUDITOR GENERAL: CLARKE

CULLY – Graphic DesignerHAMILTON – Office Mgr.

LIVINGSTONE – SecretaryBRADLEY – Messenger Clerk

EXECUTIVE SECRETARY:

SMITH

DEPUTY AUDITOR GENERALSJOHN W. KUNZEMAN

CHARLES G. WOODWARD

FISCAL OFFICER: PAPE

LEONARD – Sr. Fiscal Asst.WALKER – Admin. Specialist

LEGAL COUNSEL: PATTON

DAHLQUIST – Admin. Mgr.WALKER – Admin. Specialist

AUDITOR GENERAL

WILLIAM G. HOLLAND

FINANCIAL/COMPLIANCE

DIRECTOR: BULLARDASST. DIRECTOR: STEPHENS

StilesAppelbaumCarhillUsherwoodRuddLabonteClarkKizziahDavisFoxWardenLongCampbellHartsonBallion

DzierwaOliveSchertzTaylorJohnsonKirkNwosuProhaskaKingSullivanEricksonFallerMcDowellSmith, A.

INFORMATION SYSTEMS

DIRECTOR: SAMPIAS

PERFORMANCE

DIRECTOR: SCHLOUCH

DadaWittrockMittelstaedtMaziarzPaoniHeltonWahlbrinkPetersButcherFlessner

BaptistBarkerGlahnAllenRobertsBrownWegerCorsLydigsen

DevittHumphriesLovejoyGudgelWagnerMehochkoFrench

Identified need for additional assistance – both “grunt work” and technical

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What we did:

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Used public accounting firm doing our financial audit of the Authority to assist in personnel, contract, and expenditure testing ($26,250)

GRUNT WORK:

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What we did:

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Obtained assistance in areas of road reconstruction, benchmarking, capital planning, from consultant who had done work for other toll roads ($112,835)

TECHNICAL:

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What we did:

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What we did: Contacted the Economic and

Fiscal Commission and the Illinois Gaming Board

Entered into Intergovernmental Agreements

Provided assistance at no charge to us

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What we did:

Used e-mail and electronic file transfers as much as possible to reduce travel cost and time – also helped with documentation

Surveyed 964 Tollway employees

Surveyed 32 toll road organizations in United States and Canada

Results were very valuable; did extensive benchmarking from the survey results

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An Intervening Event

Elections held in November 2002

Democratic Governor elected for the first time in 28 years

Governor-elect had made the “inefficient” Tollway an issue in the campaign

New Executive Director was open to change and accepted most of the 23 recommendations made in the report

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Legislative Audit Legislative Audit CommissionCommission

September 19, 2003September 19, 2003

Management Audit

ILLINOIS STATETOLL HIGHWAY AUTHORITY

Capital Planning

Regarding the $5.5 billion reconstruction plan:

Some supporting documentation was not prepared until we requested the back-up

Cost estimates prepared by the Tollway’s contractual engineering firm were not reviewed by Tollway staff

3A

Capital Planning

The $5.5 billion cost estimate was thehigh end cost estimate and less costly alternatives existed

4A

Uncollected Tolls

In 2002, the Tollway did not collect $11.2 million in tolls, or 3% of estimated toll revenue

Tollway’s 3% uncollected rate was among the highest of tolls roads we surveyed

7A

0%

3%

6%

9%

12%

15%

18%

UNCOLLECTED TOLLSDecember 2002

16.2%

Unattended Automatic

Lanes

6.0%

I-PASS OnlyLanes

ManualLanes

.3%

8A

Counting of Tolls

We recommended improvements in the Tollway’s collection and counting of tolls:

Limiting access to the Money Room, vault, currency counting areas

Improving Money Room video surveillance

9A

Bonds

Recommended Tollway look at refinancing certain bonds

Subsequent to the audit’s release, the Tollway refinanced bonds, saving $600,000

10A

Benchmarking

Compared the Tollway’s performance with that of other toll roads

11A

Total Staff Per Lane Mile

0

0.5

1

1.5

2

2.5

12A

$0.00$0.02$0.04$0.06$0.08$0.10$0.12

$0.14$0.16$0.18

Average Toll Rate Per Mile

6A

Percent of Electronic Toll Collection

0%

10%

20%

30%

40%

50%

60%

70%

13A

audit or gener alNSAA

Annual ConferenceJune 12, 2004

Management Audit of theIllinois State Toll Highway

Authority

NSAA EXCELLENCE IN ACCOUNTABILITY AWARDS