1. JLARC Study of Cost Allocation at Washington State Patrol Preliminary Report Keenan Konopaski, JLARC Staff Presentation to Joint Transportation Committee September 26, 2005

2. 1 JLARC Review of State Patrol Cost Allocation Scope of Study  Focused on cost allocation practices to implement the 18 th Amendment of State Constitution  May change how the State Patrol budget is split between the Transportation and Operating (Omnibus) budgets

3. 2September 26, 2005JLARC Review of State Patrol Cost Allocation Use of Transportation Funds is Limited  The Washington State Constitution specifies certain transportation funds (primarily vehicle registration fees and vehicle fuel taxes) are limited to highway purposes, which include: “…policing by the state of public highways” (Article II, Section 40 of State Constitution, approved as Amendment 18 in 1944)

4. 3September 26, 2005JLARC Review of State Patrol Cost Allocation The Big Question  Cost allocation is “gray”, not “black and white”  So--how should the State Patrol allocate costs between the Transportation and Operating budgets?

5. 4September 26, 2005JLARC Review of State Patrol Cost Allocation JLARC Study Conclusions  Current practices generally reflect the 18th Amendment, but additional precision will improve consistency with Constitutional intent  Improvements to cost allocation precision can be implemented in short order and fairly easily  The impact of identified improvements will shift costs around to be more accurate, but the net impact on the Transportation and Operating funds is minimal

6. 5September 26, 2005JLARC Review of State Patrol Cost Allocation How was the Analysis Done?

7. 6September 26, 2005JLARC Review of State Patrol Cost Allocation Allocation Analysis Results

8. 7September 26, 2005JLARC Review of State Patrol Cost Allocation Allocation Analysis Results

9. 8September 26, 2005JLARC Review of State Patrol Cost Allocation Allocation Analysis Results

10. 9September 26, 2005JLARC Review of State Patrol Cost Allocation Allocation Analysis Results  For most part, existing methods were reasonably accurate in the first place About 3.1% of the budget is being paid by Transportation but should likely be paid by OperatingAbout 3.1% of the budget is being paid by Transportation but should likely be paid by Operating About 3.3% of the budget is being paid by Operating but should likely be paid by TransportationAbout 3.3% of the budget is being paid by Operating but should likely be paid by Transportation  The overall impact is essentially a wash (a net shift of $0.4M from Operating to Transportation)

11. 10September 26, 2005JLARC Review of State Patrol Cost Allocation Implications for the Future  The allocation of some costs can be further improved, but it will require the Patrol to begin tracking some management data differently  To ensure cost allocation results are current, cost allocation factors need to be periodically refreshed

12. 11September 26, 2005JLARC Review of State Patrol Cost Allocation Much Ado About Nothing?  Not necessarily…if allocation changes are adopted: Improved confidence in compliance with 18 th AmendmentImproved confidence in compliance with 18 th Amendment Better information for conducting budget analyses and making decisions on budget prioritiesBetter information for conducting budget analyses and making decisions on budget priorities More accurate data to improve agency activity inventoryMore accurate data to improve agency activity inventory But will require some additional effort by agency and legislative staff to implement JLARC’s recommended changesBut will require some additional effort by agency and legislative staff to implement JLARC’s recommended changes

13. 12September 26, 2005JLARC Review of State Patrol Cost Allocation Recommendations  Rec. 1: The State Patrol, OFM, and the Legislature should update the allocation methods used for budgeting and accounting, using the methods presented in this study  Rec. 2: The State Patrol should refresh cost allocation statistics annually

14. 13September 26, 2005JLARC Review of State Patrol Cost Allocation Recommendations (cont)  Rec. 3: The Washington State Patrol should modify certain management data tracking elements to further improve future cost allocation precision

15. 14September 26, 2005JLARC Review of State Patrol Cost Allocation Recommendations (cont)  Rec. 4: Staff from the Legislature, OFM, and the State Patrol should collaborate on developing a common definition for “transportation-related” services to ensure all three groups treat on-going and future costs consistently

16. 15September 26, 2005JLARC Review of State Patrol Cost Allocation Recommendations (cont)  Rec. 5: The State Patrol should develop formal policies and procedures for implementing new cost allocation practices: Maintenance of the cost allocation modelMaintenance of the cost allocation model Change control process for updates to assumptionsChange control process for updates to assumptions Communication process for informing legislative staff about proposed changes and impacts to cost allocationCommunication process for informing legislative staff about proposed changes and impacts to cost allocation