THE MISSISSIPPI LEGISLATURE

The Joint Committee on

Performance Evaluation and Expenditure Review

Report # 492

A Review of the Airport Multi-Modal Fund Committee’s Selection Process for Distribution of Transportation Improvement Funds

Executive Summary

Introduction

Upon the recommendations of the Airport Multi-Modal Fund Committee, the Mississippi Department of Transportation (MDOT) distributes money from the Multi-Modal Transportation Improvement Fund for the improvement of airports in Mississippi.

The purpose of this review was to determine whether the Airport Multi-Modal Fund Committee has a defensible and unbiased selection process for distributing funds and, if so, whether it adheres to such process.

In conducting this review, PEER sought to:

identify a model process for evaluating applications for funding;
analyze the Airport Multi-Modal Fund Committee’s application, evaluation, and approval process; and,
evaluate the committee’s process against the model process.

Background

Membership and Responsibilities of the Airport Multi-Modal Fund Committee

State law provides for a Multi-Modal Transportation Improvement Fund, into which the Mississippi Department of Transportation allocates money from motor fuel taxes, truck/bus privilege taxes and permits, and tag fees. For FY 2007, MDOT allocated $10 million to this fund. This money is to be spent “for the improvement of airports, ports, railroads and [public] transit systems in Mississippi” (MISS. CODE ANN. § 65-1-703 [1972]). Each of the major transportation modes has a committee authorized by law to review applications for potential projects to be funded and to make recommendations for funding to the Transportation Commission, which makes the final decision on distribution of funds.

Regarding the Airport Multi-Modal Fund Committee, MISS. CODE ANN. § 65-1-705 (2) (a) (1972) states that the membership of the committee shall consist of:

five directors of airports appointed by the President of the Mississippi Airports Association, or their designees, at least three of whom shall represent airports with commercial passenger service;
the Executive Director of the Mississippi Development Authority (MDA), or his designee; and,
the Executive Director of the Mississippi Department of Transportation (MDOT), or his designee.

CODE Section 65-1-705 (2) (b) (1972) requires that the committee meet to review and approve applications by no later than August 1 of each fiscal year.

Statutory Requirements for the Distribution and Use of Transportation Improvement Funds

Regarding requirements for the distribution and use of transportation improvement funds, MISS. CODE ANN. § 65-1-707 (3) (1972) stipulates:

…no application shall be approved or funds distributed pursuant to this article unless the expenditure of such funds shall be:

directly related to capital improvements or the rebuilding or rehabilitation of basic infrastructure and not for routine maintenance, administrative or operational expenses;
for a project or use directly related to the operation of the airport in its modal role; and
for a purpose outside the normal operating budget of the airport.

Also, CODE Section 65-1-707 (7) (1972) states:

In addition to such other expenditures as may be deemed appropriate by MDOT or hereunder, money distributed from the fund may be used to meet federal matching fund requirements and for pre-construction studies, planning and design; personal property acquisition; real property acquisition, reclamation and related relocation costs; professional services; and construction.

CODE Section 65-1-707 (3) (1972) directs the Airport Multi-Modal Fund Committee to develop appropriate criteria for the allocation of these funds.

Model for Evaluating Project Applications and Description of the Committee’s Current Selection Process

Elements of a Fair and Objective Process for Selecting Projects for Funding

The Airport Multi-Modal Fund Committee has the responsibility of selecting recipients of airport improvement funds through a fair and objective process. Such a process should help to ensure that all parties eligible to apply have an opportunity to compete for funding, the purpose of which is to improve airports in Mississippi. The process should be so transparent (i.e., easily followed or replicated) and defensible that there should be no question about why some projects are funded and some are not.

PEER developed a model process for selecting recipients to receive funding for airport improvement projects. The model was based on principles adapted from the American Bar Association’s Procurement Code for State and Local Governments and the Small Business Administration’s interpretation of federal procurement procedures. PEER determined that the steps in a fair and objective process should be to:

Establish goals for the program. The committee should first set goals for what it wishes to achieve through funding projects for airport improvement.
Determine criteria for the projects. Based on the goals set for the program, the committee should then establish a set of specific criteria that will serve as the guidelines for determining which projects should have priority for funding.
Develop a formal request for proposals. After members of the committee agree on the criteria by which they will evaluate proposals, they should translate these criteria into a formal request for proposals (RFP) and disseminate the RFP to eligible potential applicants.
Create and utilize a scoring system to compare proposals objectively. The members should also create a scoring system that assigns rating values for each criterion, making each one measurable or quantifiable.
Ensure that members apply criteria consistently and uniformly in evaluating applications. In order to ensure that committee members are assigning the same values to the criteria and scoring the applications consistently and uniformly, the committee should conduct practice evaluations to determine whether committee members’ independent evaluations of applications yield similar results.
Distribute funds based on systematic evaluation of applications. Using the predetermined criteria published in the RFP and the scoring system described above, the committee should systematically evaluate the applications for project funding. The committee should then distribute funds based on scores representing how well the proposed projects meet the criteria.
Document the committee’s actions. Throughout the process of selecting recipients for distribution of airport improvement funds, the committee should document its actions so that the process could be easily followed or replicated by a third party.

Description of the Airport Multi-Modal Fund Committee’s Current Selection Process for Distributing Funds

Currently, the first step in the Airport Multi-Modal Fund Committee’s process for distributing airport improvement funds is to send a letter regarding available funding to all eligible airports. The committee includes with the letter an application for interested airports to complete and return to the committee for funding consideration. The application requires the airports to complete justification statements as to why their projects meet the statutory guidelines set forth in subsection 3 of MISS. CODE ANN. Section 65-1-707 (1972).

The fund administrator sends copies of the airports’ applications to each committee member to review and rank. The committee members independently evaluate the proposals based on the applicants’ project justifications, using their own judgment as to how well they meet the statutory guidelines, and rank them. In an effort to prevent bias, those committee members that are airport directors do not rank their own airports’ projects.

The committee members send their rankings back to the committee administrator, who consolidates the individual rankings into a composite ranking. When the committee meets, it uses this composite ranking to expedite discussions regarding project approval. The members begin with discussion of the top projects (as shown from the composite ranking), vote on the ones they believe they should fund, and then send the results of the vote to the Transportation Commission for final funding approval.

Once the commission approves the projects, the fund administrator sends letters of approval or disapproval to the airports, with instructions to the airports whose projects were approved for funding.

Evaluation of the Committee’s Process for Distributing Airport Improvement Funds

Because the Airport Multi-Modal Fund Committee does not use a transparent and objective process in determining which airports’ projects will receive funds, the committee leaves itself vulnerable to allegations of bias in the selection process.

Comparison of the Committee’s Process to the Model Process

PEER compared the Airport Multi-Modal Fund Committee’s process for evaluating applications for funding to the model process and concluded the following:

Because the committee does not establish clear priorities and goals for distribution of each fiscal year’s airport improvement funds, the committee may not be directing funds to their highest and best use.
The committee has not established objective criteria to use in conducting systematic evaluations of applications. Because the committee has no specific evaluation criteria, it does not have standards with which to train its members to judge applications consistently and uniformly.
Since the Airport Multi-Modal Fund Committee does not use a formal Request for Proposals to solicit applications for project funding, the committee has no assurance that its selection process is fair and competitive.
In its selection process, the committee uses negotiated outcomes without adequate documentation for its final funding decisions, which further contributes to subjectivity in the selection of projects.

Lack of Information with Which to Provide Feedback to Applicants

Because of the nature of the committee’s selection process and the fact that the steps are not documented, the committee cannot provide constructive feedback to airport boards or staffs whose projects are not selected for funding and who request such feedback. Thus airports applying for airport improvement funds have no information to use in improving their applications or project proposals for future fiscal years.

Potential for Bias in Making Selections

As noted on page viii, state law sets the membership of the Airport Multi-Modal Fund Committee. Five of the seven members are to be directors of airports appointed by the President of the Mississippi Airports Association, at least three of whom are to represent airports with commercial passenger service.

In an effort to prevent bias in selected projects to receive airport improvement funds, members of the committee who also serve as airport directors exclude themselves from ranking the projects of their own airports. However, the method that the committee uses to compile composite rankings of applications for potential projects has actually resulted in committee members’ airports receiving a higher percentage of funds requested than those airports that do not have directors on the committee. For FY 2005 through FY 2007, 42.88% of dollars requested for projects of airports with a director on the committee were funded and 15.23% of dollars requested for projects of airports without a director on the committee were funded.

Statutory and Policy Issues Regarding the Committee’s Selection Process for Distribution of Airport Improvement Funds

Terms of Airport Multi-Modal Fund Committee Members

Because Airport Multi-Modal Fund Committee members serve unlimited terms, any biases in the committee’s present evaluation process could continue indefinitely.

MISS. CODE ANN. Section 65-1-705 (2) (a) (1972) does not indicate the lengths of terms for the Airport Multi-Modal Fund Committee members. In the absence of a specified term of appointment, appointing authorities may fail to reevaluate appointees and the service they are providing to the constituency represented.

Conflicting Provisions Regarding Use of Transportation Improvement Funds

Provisions in state law governing the distribution and use of transportation improvement funds appear to conflict.

MISS. CODE ANN. § 65-1-707 (3) (1972) stipulates that the expenditure of multi-modal funds must be “directly related to capital improvements or the rebuilding or rehabilitation of basic infrastructure and not for routine maintenance, administrative or operational expenses.” This section advances the policy of using multi-modal funds for capital improvement projects.

However, two provisions within MISS. CODE ANN. § 65-1-707 (7) (1972) appear to allow airports to expend transportation improvement funds on items not related to capital improvement projects and therefore would not be allowed under the provisions of MISS. CODE ANN. § 65-1-707 (3) (1972).

The effect of these apparent contradictions is that transportation improvement funds could become supplements to the operating budgets of airports rather than a source of funding for needed capital improvement projects with presumably greater economic benefits to the state.

Reporting Incomplete Information to the Joint Legislative Oversight Committee

MDOT’s annual reports to the Joint Legislative Multi-Modal Fund Committee do not provide complete information on the projects receiving airport improvement funds.

As state law requires, MDOT submits to the Joint Legislative Multi-Modal Fund Committee, the legislative committee with oversight responsibility for transportation improvement funds, an annual report on the administration of the fund. The reports MDOT submits include brief descriptions of all applications for funding received pertaining to the Multi-Modal Transportation Improvement Fund. They also indicate the status of all applications.

However, the reports include no specific criteria used to evaluate each application, no financial analysis of the return and benefits from funding projects, and no information on why projects received or did not receive funds. Thus the committee does not have ready access to the information it needs for overseeing the fund.

Recommendations

Prior to soliciting applications for airport improvement project funds each year, the Airport Multi-Modal Fund Committee should establish clear priorities and goals for that fiscal year. The committee should decide the purposes for the funds in a budget cycle and the types of projects that would best serve those purposes.
The Airport Multi-Modal Fund Committee should establish criteria by which it will objectively evaluate proposals and should incorporate these criteria into a formal Request for Proposals.
The Airport Multi-Modal Fund Committee members should create operational definitions for the evaluation criteria and should assign values and scores to the criteria, using the scores to choose funding recipients.
In order to increase inter-rater reliability in selection outcomes, the Airport Multi-Modal Fund Committee should conduct practice evaluations to ensure that all members are using the same criteria and same scores.
The Airport Multi-Modal Fund Committee members should continue to recuse themselves from evaluating their own projects; however, they should account for fewer evaluators in total scores (i.e., use average scores).
The Airport Multi-Modal Fund Committee should use evaluation scores as the definitive method for choosing funding recipients. Reasons for denying project funding should always be documented.
Upon request, the Airport Multi-Modal Fund Committee should provide feedback to airports whose project requests are unfunded, explaining why they were not approved.
The Legislature should amend MISS. CODE ANN. § 65-1-705 (1972) to assign terms of service to non-ex officio members of all committees that approve applications for distributions from the Multi-Modal Transportation Improvement Fund.
In carrying out its responsibilities in the second recommendation listed above, the Airport Multi-Modal Fund Committee should establish criteria that clearly limit the acquisition of personal property and other expenditures made pursuant to subsection (7) of MISS. CODE ANN. § 65-1-707 (1972) to items that are directly related to a specific capital project. Further, the Legislature should monitor compliance with this recommendation and consider removing subsection (7) from MISS. CODE ANN. § 65-1-707 (1972) in the event that the Airport Multi-Modal Fund Committee does not take steps to ensure that all expenditures made pursuant to this subsection are for items that are directly related to a specific capital project.

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