|By PR Newswire||
|January 8, 2013 03:04 PM EST||
Audit reveals six findings, offers 20 recommendations for improvement
HARRISBURG, Pa., Jan. 8, 2013 /PRNewswire-USNewswire/ -- Auditor General Jack Wagner said that an audit released today of the Pennsylvania Turnpike Commission has found that the turnpike's involvement in interest-rate swaps has cost Pennsylvania taxpayers and turnpike motorists at least $108.9 million. Wagner said the turnpike's strategy was to use the swaps to save money, but it has instead proved to further saddle the debt-ridden commission by not using conventional fixed-rate bonds to finance its debt.
Under Act 44, a Lease and Funding Agreement was entered into by the turnpike and PennDOT, which requires the turnpike to pay PennDOT $450 million a year, or nearly $24 billion, over a period of 50 years to provide funding for roads, bridges and transit. According to news reports, the turnpike raised tolls only five times from its opening in 1940 through 2004. Since Act 44 was implemented in 2007, there have been five annual toll increases, including one that took effect Jan. 6. Wagner reiterated today that the commission's long-term debt has increased by more than 200 percent, from $2.6 billion to $8.3 billion, since the General Assembly approved Act 44 of 2007.
"Given its precarious financial position relative to Act 44 payments, the turnpike should not use these complicated and risky deals," Wagner said. "The Turnpike Commission should terminate its swap deals and ban all swap use in the future for the sake of Pennsylvania taxpayers and the motoring public as soon as it is financially feasible to do so."
Interest-rate swaps are legal agreements between two parties – a debt-financing entity and an investment bank – on which way interest rates will move. The party that guesses correctly gets paid, and the party that guesses incorrectly must pay. The payments are determined by the amount of public debt financed with variable-rate loans.
A 2009 investigation completed by Wagner's office of the Bethlehem Area School District found that on a statewide basis, 107 of 500 school districts and 86 local governments had $14.9 billion in public debt tied to swaps. The numbers have since increased to $17.5 billion in public debt, encompassing 108 of 500 school districts and 101 local governments. In the process, millions of public dollars have been lost in interest-rate swaps deals.
Wagner's audit, which covered the period Jan. 1, 2007 through Aug. 31, 2011, found that the turnpike's 23 active swaps had a negative book fair value of $29.3 million as of May 31, 2011. Furthermore, Wagner's audit revealed that the turnpike had paid $59 million in fees and interest for terminated swaps, and $49 million in fees and interest on active swaps, for a total of $108,972,133 paid out in swaps losses between Dec.16, 1998 and Aug. 31, 2011.
"Swaps may be perfectly acceptable for the private sector, where private citizens are free to decide how much risk they can tolerate when their own money is at stake, but swaps should have no role in government, where the taxpayers' money is at stake," Wagner said.
In addition to recommending that the Turnpike Commission terminate all remaining swaps as soon as it is fiscally responsible to do so and refinance, if necessary, with conventional fixed-rate bonds, Wagner also recommended that the Turnpike Commission promptly adopt a resolution unequivocally and permanently prohibiting the use of swaps in the future.
In all, Wagner's audit made a total of six findings related to the operation and maintenance of the Pennsylvania Turnpike, and offered 20 recommendations to fix the noted deficiencies. The five other report findings are summarized as follows:
- Turnpike Commission let employees ride the turnpike toll-free, even for personal travel
- Turnpike Commission provided more than $4.1 million of toll free travel to nearly 5,000 consultants, contractors, and other state government officials
- Turnpike Commission is overly generous and permissive when reimbursing commissioners for expenses, and lacks transparency and accountability with regard to those expenses.
- Turnpike Commission actively monitored the E-ZPass system to ensure correct fares are charged
- Turnpike Commission monitored, maintained, and inspected its tunnels, but it has not implemented fire detection systems in two of the five tunnels (Allegheny and Tuscarora) and critical project management practices that would ensure recommendations resulting from tunnel inspections are not overlooked.
Wagner's auditors found that the turnpike's liberal and inadequate policy of providing toll-free rides to turnpike employees and vendors, not only for business but for personal travel as well, amounted to 7,000 free rides and at least $7.7 million in lost toll revenue between January 2007 and August 2011.
Traffic volume on the turnpike has remained stagnant for the past five years. During fiscal year 2010-11, traffic volume on the Pennsylvania turnpike totaled over 189 million vehicles, including 165 million passenger vehicles (87 percent) and 24 million commercial vehicles (13 percent). The total net revenue generated from tolls in fiscal year 2010-11 was $763 million ($436 million or 57 percent from passenger vehicles, and $328 million or 43 percent from commercial vehicles). An increasing percent of revenue (47 percent in 2011) goes toward debt service mainly due to the burdens of Act 44 – passed in 2007.
The turnpike's workforce consisted of 2,104 employees as of May 31, 2011. It is administratively headed by a chief executive officer and a chief operating officer. The Turnpike Commission manages/oversees 21 maintenance facilities, 5 tunnels, 64 toll interchanges, 17 services plazas, and controls a total of 546 roadway miles.
A complete copy of Wagner's audit of the Pennsylvania Turnpike Commission is available at www.auditorgen.state.pa.us.
Auditor General Jack Wagner is responsible for ensuring that all state money is spent legally and properly. He is the commonwealth's elected independent fiscal watchdog, conducting financial audits, performance audits and special investigations. The Department of the Auditor General conducts thousands of audits each year. To learn more about the Department of the Auditor General, taxpayers are encouraged to visit the department's website at www.auditorgen.state.pa.us .
SOURCE Pennsylvania Department of the Auditor General
The unique combination of Amazon Web Services and Cloud Raxak, a Gartner Cool Vendor in IT Automation, provides a seamless and cost-effective way of securely moving on-premise IT workloads to Amazon Web Services. Any enterprise can now leverage the cloud, manage risk, and maintain continuous security compliance. Forrester's analysis shows that enterprises need automated security to lower security risk and decrease IT operational costs. Through the seamless integration into Amazon Web Services, ...
Jan. 19, 2017 12:00 PM EST Reads: 1,875
In the next five to ten years, millions, if not billions of things will become smarter. This smartness goes beyond connected things in our homes like the fridge, thermostat and fancy lighting, and into heavily regulated industries including aerospace, pharmaceutical/medical devices and energy. “Smartness” will embed itself within individual products that are part of our daily lives. We will engage with smart products - learning from them, informing them, and communicating with them. Smart produc...
Jan. 19, 2017 11:45 AM EST Reads: 1,687
Providing the needed data for application development and testing is a huge headache for most organizations. The problems are often the same across companies - speed, quality, cost, and control. Provisioning data can take days or weeks, every time a refresh is required. Using dummy data leads to quality problems. Creating physical copies of large data sets and sending them to distributed teams of developers eats up expensive storage and bandwidth resources. And, all of these copies proliferating...
Jan. 19, 2017 11:30 AM EST Reads: 3,874
"We provide DevOps solutions. We also partner with some key players in the DevOps space and we use the technology that we partner with to engineer custom solutions for different organizations," stated Himanshu Chhetri, CTO of Addteq, in this SYS-CON.tv interview at DevOps at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.
Jan. 19, 2017 11:30 AM EST Reads: 4,297
“DevOps is really about the business. The business is under pressure today, competitively in the marketplace to respond to the expectations of the customer. The business is driving IT and the problem is that IT isn't responding fast enough," explained Mark Levy, Senior Product Marketing Manager at Serena Software, in this SYS-CON.tv interview at DevOps Summit, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
Jan. 19, 2017 11:15 AM EST Reads: 11,393
Hardware virtualization and cloud computing allowed us to increase resource utilization and increase our flexibility to respond to business demand. Docker Containers are the next quantum leap - Are they?! Databases always represented an additional set of challenges unique to running workloads requiring a maximum of I/O, network, CPU resources combined with data locality.
Jan. 19, 2017 10:15 AM EST Reads: 562
The speed of software changes in growing and large scale rapid-paced DevOps environments presents a challenge for continuous testing. Many organizations struggle to get this right. Practices that work for small scale continuous testing may not be sufficient as the requirements grow. In his session at DevOps Summit, Marc Hornbeek, Sr. Solutions Architect of DevOps continuous test solutions at Spirent Communications, explained the best practices of continuous testing at high scale, which is rele...
Jan. 19, 2017 10:15 AM EST Reads: 4,314
"We got started as search consultants. On the services side of the business we have help organizations save time and save money when they hit issues that everyone more or less hits when their data grows," noted Otis Gospodnetić, Founder of Sematext, in this SYS-CON.tv interview at @DevOpsSummit, held June 9-11, 2015, at the Javits Center in New York City.
Jan. 19, 2017 10:15 AM EST Reads: 4,876
The emerging Internet of Everything creates tremendous new opportunities for customer engagement and business model innovation. However, enterprises must overcome a number of critical challenges to bring these new solutions to market. In his session at @ThingsExpo, Michael Martin, CTO/CIO at nfrastructure, outlined these key challenges and recommended approaches for overcoming them to achieve speed and agility in the design, development and implementation of Internet of Everything solutions with...
Jan. 19, 2017 10:00 AM EST Reads: 5,547
"What is the next step in the evolution of IoT systems? The answer is data, information, which is a radical shift from assets, from things to input for decision making," stated Michael Minkevich, VP of Technology Services at Luxoft, in this SYS-CON.tv interview at @ThingsExpo, held November 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA.
Jan. 19, 2017 10:00 AM EST Reads: 5,546
WebRTC sits at the intersection between VoIP and the Web. As such, it poses some interesting challenges for those developing services on top of it, but also for those who need to test and monitor these services. In his session at WebRTC Summit, Tsahi Levent-Levi, co-founder of testRTC, reviewed the various challenges posed by WebRTC when it comes to testing and monitoring and on ways to overcome them.
Jan. 19, 2017 09:30 AM EST Reads: 6,015
DevOps tends to focus on the relationship between Dev and Ops, putting an emphasis on the ops and application infrastructure. But that’s changing with microservices architectures. In her session at DevOps Summit, Lori MacVittie, Evangelist for F5 Networks, will focus on how microservices are changing the underlying architectures needed to scale, secure and deliver applications based on highly distributed (micro) services and why that means an expansion into “the network” for DevOps.
Jan. 19, 2017 08:30 AM EST Reads: 5,178
SYS-CON Events announced today that Catchpoint Systems, Inc., a provider of innovative web and infrastructure monitoring solutions, has been named “Silver Sponsor” of SYS-CON's DevOps Summit at 18th Cloud Expo New York, which will take place June 7-9, 2016, at the Javits Center in New York City, NY. Catchpoint is a leading Digital Performance Analytics company that provides unparalleled insight into customer-critical services to help consistently deliver an amazing customer experience. Designed ...
Jan. 19, 2017 07:45 AM EST Reads: 6,332
Internet of @ThingsExpo, taking place June 6-8, 2017 at the Javits Center in New York City, New York, is co-located with the 20th International Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. @ThingsExpo New York Call for Papers is now open.
Jan. 19, 2017 07:30 AM EST Reads: 3,633
Every successful software product evolves from an idea to an enterprise system. Notably, the same way is passed by the product owner's company. In his session at 20th Cloud Expo, Oleg Lola, CEO of MobiDev, will provide a generalized overview of the evolution of a software product, the product owner, the needs that arise at various stages of this process, and the value brought by a software development partner to the product owner as a response to these needs.
Jan. 19, 2017 07:00 AM EST Reads: 1,209