JLARC Study of Cost Allocation at Washington State Patrol Preliminary Report Keenan Konopaski, JLARC...

JLARC Study of Cost JLARC Study of Cost Allocation at Washington Allocation at Washington

State PatrolState Patrol

Preliminary ReportPreliminary Report

Keenan Konopaski, JLARC StaffKeenan Konopaski, JLARC Staff

Presentation to Joint Transportation CommitteePresentation to Joint Transportation Committee

September 26, 2005September 26, 2005

22September 26, 2005September 26, 2005 JLARC Review of State Patrol Cost AllocationJLARC Review of State Patrol Cost Allocation

Scope of StudyScope of Study

Focused on Focused on cost allocation practices to cost allocation practices to implement the 18implement the 18thth Amendment of State Amendment of State ConstitutionConstitution

May May changechange how the State Patrol how the State Patrol budget is budget is split between the Transportation and Operating split between the Transportation and Operating (Omnibus) budgets(Omnibus) budgets


Use of Transportation Funds is LimitedUse of Transportation Funds is Limited

The Washington State Constitution specifies The Washington State Constitution specifies certain transportation funds (primarily vehicle certain transportation funds (primarily vehicle registration fees and vehicle fuel taxes) are registration fees and vehicle fuel taxes) are limited to limited to highway purposeshighway purposes, which include:, which include:

“…“…policing by the state of public highways”policing by the state of public highways” (Article II, Section 40 of State Constitution, approved as Amendment 18 in 1944)(Article II, Section 40 of State Constitution, approved as Amendment 18 in 1944)


The Big QuestionThe Big Question

Cost allocation is “gray”, not “black and Cost allocation is “gray”, not “black and white”white”

So--how should the State Patrol allocate So--how should the State Patrol allocate costs between the Transportation and costs between the Transportation and Operating budgets?Operating budgets?


JLARC Study ConclusionsJLARC Study Conclusions Current practices generally reflect the 18th Current practices generally reflect the 18th

Amendment, but additional precision will Amendment, but additional precision will improve consistency with Constitutional intentimprove consistency with Constitutional intent

Improvements to cost allocation precision can be Improvements to cost allocation precision can be implemented in short order and fairly easilyimplemented in short order and fairly easily

The impact of identified improvements will shift The impact of identified improvements will shift costs around to be more accurate, but the net costs around to be more accurate, but the net impact on the Transportation and Operating impact on the Transportation and Operating funds is minimalfunds is minimal


How was the Analysis Done?How was the Analysis Done?


Allocation Analysis ResultsAllocation Analysis Results


Allocation Analysis ResultsAllocation Analysis Results For most part, existing methods were For most part, existing methods were

reasonably accurate in the first placereasonably accurate in the first place

• About 3.1% of the budget is being paid by About 3.1% of the budget is being paid by Transportation but should likely be paid by OperatingTransportation but should likely be paid by Operating

• About 3.3% of the budget is being paid by Operating About 3.3% of the budget is being paid by Operating but should likely be paid by Transportationbut should likely be paid by Transportation

The overall impact is essentially a wash (a net The overall impact is essentially a wash (a net shift of $0.4M from Operating to Transportation)shift of $0.4M from Operating to Transportation)


Implications for the FutureImplications for the Future

The allocation of some costs can be further The allocation of some costs can be further improved, but it will require the Patrol to begin improved, but it will require the Patrol to begin tracking some management data differentlytracking some management data differently

To ensure cost allocation results are current, cost To ensure cost allocation results are current, cost allocation factors need to be periodically allocation factors need to be periodically refreshedrefreshed


Much Ado About Nothing?Much Ado About Nothing? Not necessarily…if allocation changes are Not necessarily…if allocation changes are

adopted:adopted:• Improved confidence in compliance with 18Improved confidence in compliance with 18thth

AmendmentAmendment

• Better information for conducting budget analyses Better information for conducting budget analyses and making decisions on budget prioritiesand making decisions on budget priorities

• More accurate data to improve agency activity More accurate data to improve agency activity inventoryinventory

• But will require some additional effort by agency and But will require some additional effort by agency and legislative staff to implement JLARC’s recommended legislative staff to implement JLARC’s recommended changeschanges


RecommendationsRecommendations

Rec. 1Rec. 1: : The State Patrol, OFM, and the The State Patrol, OFM, and the Legislature should update the allocation Legislature should update the allocation methods used for budgeting and accounting, methods used for budgeting and accounting, using the methods presented in this studyusing the methods presented in this study

Rec. 2:Rec. 2: The State Patrol should refresh cost The State Patrol should refresh cost allocation statistics annuallyallocation statistics annually


Recommendations Recommendations (cont)(cont)

Rec. 3Rec. 3: : The Washington State Patrol should The Washington State Patrol should modify certain management data tracking modify certain management data tracking elements to further improve future cost elements to further improve future cost allocation precisionallocation precision



Rec. 4Rec. 4: : Staff from the Legislature, OFM, and Staff from the Legislature, OFM, and the State Patrol should collaborate on the State Patrol should collaborate on developing a common definition for developing a common definition for “transportation-related” services to ensure all “transportation-related” services to ensure all three groups treat on-going and future costs three groups treat on-going and future costs consistentlyconsistently



Rec. 5Rec. 5: : The State Patrol should develop formal The State Patrol should develop formal policies and procedures for implementing new policies and procedures for implementing new cost allocation practices:cost allocation practices:• Maintenance of the cost allocation modelMaintenance of the cost allocation model• Change control process for updates to Change control process for updates to

assumptionsassumptions• Communication process for informing legislative Communication process for informing legislative

staff about proposed changes and impacts to cost staff about proposed changes and impacts to cost allocationallocation

JLARC Study of Cost Allocation at Washington State Patrol Preliminary Report Keenan Konopaski, JLARC...

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