New DOT Audit Released

The Legislative Audit Bureau (LAB) released a new audit of the Department of Transportation (DOT) on Jan. 26, revealing increased expenditures, inaccurate cost estimates and deteriorating state roads. The audit comes amid this session’s contentious transportation budget debate.

The audit examined 16 highway projects that were ongoing as of August 2016 and 19 completed projects. LAB’s findings revealed that highway expenditures increased over $1 billion in the past ten years, an increase of 190.2 percent.

LAB’s audit showed that DOT underestimated the cost of the 16 highway projects ongoing as of August by over $3 billion. Total costs added up to nearly $5.8 billion, more than double DOT’s original estimates. The audit showed that some DOT cost estimates did not take inflation into account and excluded design engineering, construction engineering and other project costs.  Because of inaccurate cost estimates, DOT budgeted more projects than it could actually afford. The audit estimated that DOT could have saved $32 million a year from FY 2009-10 through FY 2014-15 if costs during the construction phase of state highway projects had not “exceeded performance goals.”

The audit also revealed that Wisconsin’s highways are deteriorating, as the number of “good condition roads” declined from 53.5 percent to 41 percent from 2010-2015. The number of state highways in poor or worse condition increased from 7 percent in 2010 to 17.5 percent in 2015. According to the Federal Highway Administration’s index, only 32.2 percent of roads are in good condition, far lower than other Midwest states and below the national average. Iowa was the next closest state at 55.3 percent. The national average is 63.4 percent.

LAB also found that DOT is not consistently meeting performance measures to cut costs and improve operations. According to the audit, DOT could have saved over $50 million by meeting its goals in soliciting more bids for construction projects from 2006-2015. 2,247 projects from 2006-2015 received an average of 3.5 bids, and 16.2 percent of these projects received just one bid. LAB estimated that DOT could have saved $53.1 million had it met its quarterly goals for soliciting bids on construction contracts. The audit suggested that DOT pre-qualify more contractors and split up larger contracts to encourage more bidders.

The audit also showed that DOT did not take into account public input in selecting projects, as required by administrative rules, and did not document why it selected certain projects.

The audit revealed that debt for transportation revenue bonding increased 168.8 percent from $84.2 million in 1999 to $226.3 million in FY 2015-16. The last budget included $850 million in bonding, but GOP lawmakers have said they will not include as much in this biennial’s budget. DOT asked the legislature for $500 million in bonding in their 2017-19 budget request.

Overall, the audit recommended that DOT maintain complete information on all expenditures and document the reasons for increases in project expenditures, keep minutes and documents for Transportation Projects Commission meetings on its website, document why it selects certain projects over others and continue to control costs during the construction phase of highway projects to meet its performance measure goals.

The audit also recommended that the legislature should consider requiring DOT to provide reports on each major highway project that include original cost estimates, current expected costs, reasons for changes since the previous report and whether the project is expected to be completed on time.

Republican members of the Joint Audit Committee expressed disappointment in the missed cost savings but said the potential savings found could be a key factor in funding the state’s failing roads while minimizing the cost to taxpayers.