New Rules of the Road – Reform

Transportation Blueprint:

Reform – Bring accountability, transparency and fairness to every level of decision-making, whether it be raising revenue or building roads.

Reform the Process

Fold both the Highway Trust Fund and the Highway Fund back into the General Fund. State transportation monies should no longer be segregated from the General Fund. Transportation funds were separated in order to provide dedicated funding for roads and other transportation needs. Instead the funds have been treated more as a slush fund used to balance the General Fund budget, pay for nonstatutory and non-transportation projects, or repay bond debt. Because spending on transportation does not require legislators to sacrifice spending in other areas, there is less scrutiny of increased spending on transportation. Returning all transportation funds to the General Fund will bring about increased accountability. However, stop-gap measures will have to guarantee a level of funding adequate for the system’s maintenance and development, particularly since revenues come from transportation-related taxes. In other words, transportation funding should be no lower than transportation revenues — and all budget documents should show, side-by-side, both anticipated revenues and budgeted funds.

Give NCDOT employees a percentage of every dollar they save taxpayers – relative to a reasonable baseline. Offer financial incentives to NCDOT employees to discover and introduce cost-saving measures and performance improvements, with the caveat that there be no reductions in safety or quality. Such a practice would also encourage accountability among state employees.

Transportation Corruption

"Campaign reports reveal how the Board acts like an ATM machine for the governor and other state politicians. Looking at the DOT secretary and the 19 Board members on January 15, 2008 (before Thomas Betts’ resignation), Democracy North Carolina found that these individuals and their immediate families donated more than $1 million in campaign contributions to state candidates and parties from 1999 through 2006. (Because of incomplete disclosure reports, it is impossible to tell how much money the members raised for candidates.) The $1 million-plus amounts to $50,000 in campaign contributions from each of the 20 families represented on the Board of Transportation. The top recipient of all this money is Gov. Michael Easley, whose campaign committee received $320,000 from these donors for his 2000 and 2004 elections."  – Democracy North Carolina

Give project heads ownership.  The rank and file at the NCDOT should have greater ownership (i.e. autonomy) over various aspects of projects. This will mean determining direct responsibility for success or failure, and attaching to these rewards and consequences. Success or failure should be determined, not only via review by superiors, but by predetermined metrics, benchmarks, targets and goals that track closely with new prioritization schemes and internal incentive structures. Currently, if such oversight is given, there are very few consequences for failures and missteps. Recommendations for reform in the NCDOT command structure can be found in the extensive 2007McKinsey report. (See box below.)

Create a more competitive and open bidding process. Every project, no matter how small, should be subject to open bidding. Online tendering systems and reverse auctions can be created to facilitate the bidding process.

Embrace design-build contracting. Design-build contracting is a project delivery strategy in which the design and construction phases of a project are combined into one contract, usually awarded on either a low bid or best-value basis. This strategy helps eliminate an extra bidding process by combining two steps into one. Such a process saves both time and money while improving quality. Design-build contracting also cuts down on opportunities for corruption and special arrangements between state bureaucrats and contractors. North Carolina has completed a few transportation projects using this strategy, but broader implementation would help to speed up many lagging projects—limiting the role of NCDOT to oversight and expertise.

Reform the Board

Reform the Board of Transportation. The Transportation Board has a checkered past, with recent scandals making it clear that board members should not exercise control over discretionary funds or be in a position to benefit from quid pro quo arrangements. To begin with, Transportation Board members should have the requisite education and experience to serve on the board. 

•  Board members should have relevant and varied expertise — thought weighted on vehicle-traffic analytics, demographics, and transportation planning.
•  Board should be smaller (i.e. 5-member board, rather than the current 19-member board which is the second largest in the country)
•  Both political parties should be represented
•  Require full disclosure of campaign contributions

Reduce or eliminate discretionary funds. As evinced by the recent scandal involving Transportation Board member Thomas Betts Jr., discretionary funds controlled by board members are subject to misuse. Reducing or eliminating these so-called slush funds (or at least subjecting the use of such funds to the same standards, cost parameters and prioritization schemes as other projects) will reduce or eliminate unethical practices at the highest levels of NCDOT. Any discretionary projects requested by board members must follow the prioritization scheme mentioned above or be approved as separate legislation.

Punish ethics violations with fines and firing. Any member of the Transportation Board or other appointee discovered to be reprioritizing projects based on political favors should be fined and/or fired. Appointments should be based on expertise, not political connections.

 

General Points from the 2007 McKinsey Report for the NCDOT

1. Setting clear direction. a. Vision and goals. Establish a clear, consistent vision and strategic goals. Success should be measured and linked to management’s performance reviews. b. Portfolio of projects, programs, and services.  NCDOT should not try to be “all things to all people,” but instead have a portfolio of projects, programs and services upon which it focuses with priority. 2. Rebuilding or refining key organizational elements. NCDOT should make critical improvements core processes, structure and systems and employee mindsets. a. Core processes. These include: • Strategic planning processes to be more formalized and focused. • Funding processes becoming more flexible and diverse. • Project design and delivery processes should involve prioritization, accountability, and coordination. • Operational processes could benefit from metrics-based management. b. Structure and systems. Organizational restructuring should involve: • Changing the structure to reduce “silos” and enable cross-department processes. • Reworking talent systems to emphasize recruitment, retention, and performance evaluation. • Upgrading internal and external communication systems. c. Employee mindsets. Human resources should be less siloed, more involved in planning and decision-making, and be evaluated/rewarded for successful involvement in processes.

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