Ohio Turnpike making changes to reduce costs, improve service & ODOT looking at 4 major P3s

May 22, 2012
By Peter Samuel

May 21: With Governor John Kasich looking at possible concessioning of the Ohio Turnpike to investors as in Indiana to the west, the state Turnpike Commission is making serious moves to enhance its efficiency and cut costs.

Maintenance and engineering departments will be consolidated in the biggest reorganization.

The Turnpike says the consolidation will improve handling of workflow and result in improved road maintenance, and should result in fewer work zones and restricted lanes.

Also health benefits will require larger employee contributions in future, and vacation and sick pay benefits are being cut. Salaries of top management are being reduced too.

Savings of $2m/year are expected.

The Turnpike's governing board of commissioners approved the changes unanimously this week.

Executive Director Rick Hodges is quoted: "Our goal is to save money wherever possible so we can continue to provide the best road for our customers at an affordable price. Any savings on our expenses will be reinvested into the road, and the longer and better it is maintained, the more affordable it will remain."

Top management will have a pay scale ranging between $111,785 and $136,000. The chief executive was previously paid $150k, so Hodges takes a pay cut himself.

Hodges said: "I have led our staff in an effort to identify savings and envision ways we can do our jobs better. Responsibility for the recommendations rests solely with me, but I could not make these recommendations without their hard work, expertise, and willingness to assist in implementing difficult decisions."

"I believe we all shared the goal of maintaining our legacy of highway excellence, building relationships with the communities we serve, and reducing costs wherever possible and appropriate."

"Be open-minded"

Hodges says people need to be "open minded" about the future management of the Turnpike. KPMG Corporate Finance LLC has been hired by the state to examine a longterm lease concession like Indiana, bringing the Turnpike into the state DOT as in Massachusetts, contracting operations among other alternatives, which include doing nothing.

"We've been here for 60 years. The road is 60 years old. Our business model is essentially 60 years old and I think we owe it to the traveling public to go through this kind of review."

Democrat Party politicians have attacked even the KPMG study of alternatives, so attached are they to state ownership and operation.

Hodges says he personally has no favorite business model right now. But regardless of which way things go the Turnpike needs to align its pay and benefits more with comparable operations.

Average toll collection staff on the Turnpike are paid $62k/year and benefits are generous.

The Plain Dealer newspaper in Cleveland reported average pay at the Turnpike is 17% greater than state DOT pay. It also cited cases of Turnpike employees leaving with 6-figure separation payments based on the value of unused sick and vacation pay.

Hodges says changes are needed to end these large retirement payouts: "Vacation is for folks to recharge. Sick time is for people who (are sick.) They are not intended to be retirement plans.''

The changes proposed by Hodges and approved by the commission this week include:

- maximum accumulated sick leave to be limited to 1,000 hours versus 1,200 hours now

- vacation leave 80 hours or 2 weeks must be taken each year with accumulation allowed  for cash out on vacation entitlements beyond the 2 week and only allowed to accumulate to three times annual value

- health care premiums to cost staff more with a reduction in Turnpike paid doctor visits and deductibles

Commission statement:

http://tollroadsnews.com/sites/default/files/OTCpr.pdf

Commission resolution revising health benefits:

http://www.ohioturnpike.org/media/pdf/22-2012_RESOLUTION_HEALTH_CARE_MODS.pdf

Commission resolution ratifying revisions to vacation and sick benefits:

http://www.ohioturnpike.org/media/pdf/23-2012_RESOLUTION_VACATION_CONVERSION.pdf

Four more P3s

Also in Ohio yesterday the state DOT announced that its Division of Innovative Delivery is exploring public-private partnerships (P3s) for some of the state's largest road projects:

1. the second Innerbelt Bridge in Cleveland

2. Brent Spence Bridge in Cincinnati

3. Portsmouth Bypass in Scioto County

4. an interchange for U.S. Route 36 and SR 37 on I-71 in Delaware County

We'll report on these projects separately later in the week.

TOLLROADSnews 2012-05-21

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