Welcome!

Microsoft Cloud Authors: Elizabeth White, Yeshim Deniz, Serafima Al, Janakiram MSV, John Katrick

News Feed Item

Auditor General Jack Wagner Says Pa. Turnpike's Dealings in Risky Swaps Has Cost Taxpayers and Motorists At Least $108 Million

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

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

@ThingsExpo Stories
A strange thing is happening along the way to the Internet of Things, namely far too many devices to work with and manage. It has become clear that we'll need much higher efficiency user experiences that can allow us to more easily and scalably work with the thousands of devices that will soon be in each of our lives. Enter the conversational interface revolution, combining bots we can literally talk with, gesture to, and even direct with our thoughts, with embedded artificial intelligence, whic...
Imagine if you will, a retail floor so densely packed with sensors that they can pick up the movements of insects scurrying across a store aisle. Or a component of a piece of factory equipment so well-instrumented that its digital twin provides resolution down to the micrometer.
In his keynote at 18th Cloud Expo, Andrew Keys, Co-Founder of ConsenSys Enterprise, provided an overview of the evolution of the Internet and the Database and the future of their combination – the Blockchain. Andrew Keys is Co-Founder of ConsenSys Enterprise. He comes to ConsenSys Enterprise with capital markets, technology and entrepreneurial experience. Previously, he worked for UBS investment bank in equities analysis. Later, he was responsible for the creation and distribution of life settle...
Product connectivity goes hand and hand these days with increased use of personal data. New IoT devices are becoming more personalized than ever before. In his session at 22nd Cloud Expo | DXWorld Expo, Nicolas Fierro, CEO of MIMIR Blockchain Solutions, will discuss how in order to protect your data and privacy, IoT applications need to embrace Blockchain technology for a new level of product security never before seen - or needed.
BnkToTheFuture.com is the largest online investment platform for investing in FinTech, Bitcoin and Blockchain companies. We believe the future of finance looks very different from the past and we aim to invest and provide trading opportunities for qualifying investors that want to build a portfolio in the sector in compliance with international financial regulations.
Leading companies, from the Global Fortune 500 to the smallest companies, are adopting hybrid cloud as the path to business advantage. Hybrid cloud depends on cloud services and on-premises infrastructure working in unison. Successful implementations require new levels of data mobility, enabled by an automated and seamless flow across on-premises and cloud resources. In his general session at 21st Cloud Expo, Greg Tevis, an IBM Storage Software Technical Strategist and Customer Solution Architec...
Nordstrom is transforming the way that they do business and the cloud is the key to enabling speed and hyper personalized customer experiences. In his session at 21st Cloud Expo, Ken Schow, VP of Engineering at Nordstrom, discussed some of the key learnings and common pitfalls of large enterprises moving to the cloud. This includes strategies around choosing a cloud provider(s), architecture, and lessons learned. In addition, he covered some of the best practices for structured team migration an...
No hype cycles or predictions of a gazillion things here. IoT is here. You get it. You know your business and have great ideas for a business transformation strategy. What comes next? Time to make it happen. In his session at @ThingsExpo, Jay Mason, an Associate Partner of Analytics, IoT & Cybersecurity at M&S Consulting, presented a step-by-step plan to develop your technology implementation strategy. He also discussed the evaluation of communication standards and IoT messaging protocols, data...
Coca-Cola’s Google powered digital signage system lays the groundwork for a more valuable connection between Coke and its customers. Digital signs pair software with high-resolution displays so that a message can be changed instantly based on what the operator wants to communicate or sell. In their Day 3 Keynote at 21st Cloud Expo, Greg Chambers, Global Group Director, Digital Innovation, Coca-Cola, and Vidya Nagarajan, a Senior Product Manager at Google, discussed how from store operations and ...
In his session at 21st Cloud Expo, Raju Shreewastava, founder of Big Data Trunk, provided a fun and simple way to introduce Machine Leaning to anyone and everyone. He solved a machine learning problem and demonstrated an easy way to be able to do machine learning without even coding. Raju Shreewastava is the founder of Big Data Trunk (www.BigDataTrunk.com), a Big Data Training and consulting firm with offices in the United States. He previously led the data warehouse/business intelligence and B...
"IBM is really all in on blockchain. We take a look at sort of the history of blockchain ledger technologies. It started out with bitcoin, Ethereum, and IBM evaluated these particular blockchain technologies and found they were anonymous and permissionless and that many companies were looking for permissioned blockchain," stated René Bostic, Technical VP of the IBM Cloud Unit in North America, in this SYS-CON.tv interview at 21st Cloud Expo, held Oct 31 – Nov 2, 2017, at the Santa Clara Conventi...
When shopping for a new data processing platform for IoT solutions, many development teams want to be able to test-drive options before making a choice. Yet when evaluating an IoT solution, it’s simply not feasible to do so at scale with physical devices. Building a sensor simulator is the next best choice; however, generating a realistic simulation at very high TPS with ease of configurability is a formidable challenge. When dealing with multiple application or transport protocols, you would be...
Smart cities have the potential to change our lives at so many levels for citizens: less pollution, reduced parking obstacles, better health, education and more energy savings. Real-time data streaming and the Internet of Things (IoT) possess the power to turn this vision into a reality. However, most organizations today are building their data infrastructure to focus solely on addressing immediate business needs vs. a platform capable of quickly adapting emerging technologies to address future ...
We are given a desktop platform with Java 8 or Java 9 installed and seek to find a way to deploy high-performance Java applications that use Java 3D and/or Jogl without having to run an installer. We are subject to the constraint that the applications be signed and deployed so that they can be run in a trusted environment (i.e., outside of the sandbox). Further, we seek to do this in a way that does not depend on bundling a JRE with our applications, as this makes downloads and installations rat...
Widespread fragmentation is stalling the growth of the IIoT and making it difficult for partners to work together. The number of software platforms, apps, hardware and connectivity standards is creating paralysis among businesses that are afraid of being locked into a solution. EdgeX Foundry is unifying the community around a common IoT edge framework and an ecosystem of interoperable components.
DX World EXPO, LLC, a Lighthouse Point, Florida-based startup trade show producer and the creator of "DXWorldEXPO® - Digital Transformation Conference & Expo" has announced its executive management team. The team is headed by Levent Selamoglu, who has been named CEO. "Now is the time for a truly global DX event, to bring together the leading minds from the technology world in a conversation about Digital Transformation," he said in making the announcement.
In this strange new world where more and more power is drawn from business technology, companies are effectively straddling two paths on the road to innovation and transformation into digital enterprises. The first path is the heritage trail – with “legacy” technology forming the background. Here, extant technologies are transformed by core IT teams to provide more API-driven approaches. Legacy systems can restrict companies that are transitioning into digital enterprises. To truly become a lead...
Digital Transformation (DX) is not a "one-size-fits all" strategy. Each organization needs to develop its own unique, long-term DX plan. It must do so by realizing that we now live in a data-driven age, and that technologies such as Cloud Computing, Big Data, the IoT, Cognitive Computing, and Blockchain are only tools. In her general session at 21st Cloud Expo, Rebecca Wanta explained how the strategy must focus on DX and include a commitment from top management to create great IT jobs, monitor ...
"Cloud Academy is an enterprise training platform for the cloud, specifically public clouds. We offer guided learning experiences on AWS, Azure, Google Cloud and all the surrounding methodologies and technologies that you need to know and your teams need to know in order to leverage the full benefits of the cloud," explained Alex Brower, VP of Marketing at Cloud Academy, in this SYS-CON.tv interview at 21st Cloud Expo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clar...
The IoT Will Grow: In what might be the most obvious prediction of the decade, the IoT will continue to expand next year, with more and more devices coming online every single day. What isn’t so obvious about this prediction: where that growth will occur. The retail, healthcare, and industrial/supply chain industries will likely see the greatest growth. Forrester Research has predicted the IoT will become “the backbone” of customer value as it continues to grow. It is no surprise that retail is ...