GASB 34 -A Texas Approach Duane Sullivan, CPA Joe Graff, P.E Director of Accounting

1. GASB 34 -A Texas Approach Duane Sullivan, CPA Joe Graff, P.E Director of Accounting Director of Maintenance

3. TxDOT�s InfrastructureYear 2000 Interstate lane miles 14,375 Freeway lane miles 7,164 Non-freeway lane miles 151,709 Frontage road lane miles 12,936 Bridge class structures 32,000 + ROW acres 1,100,000 +

4. Comptroller�s GASB Task Force Texas Comptroller�s office formed a task force comprised of financial representatives from several state agencies and universities Task force was split into separate teams to address the different areas covered by GASB 34 and develop new procedures Capital asset team developed the Capital Asset Guide which has been adopted and published by the Comptroller�s office

6. Capital Asset Guide - Land Land is the surface or crust of the earth, which can be used to support structures, and may be used to grow crops, grass, shrubs, and trees. Land is characterized as having an unlimited life (indefinite). Land improvements consist of betterments, site preparation and site improvements (other than buildings) that ready land for its intended use. The costs associated with improvements to land are added to the cost of the land.

7. Capital Asset Guide - Buildings A building is a structure that is permanently attached to the land, has a roof, is partially or completely enclosed by walls, and is not intended to be transportable or moveable. Buildings that are an ancillary part of the state�s highway network, such as rest area facilities and toll buildings will be reported as infrastructure rather than as buildings.

8. Capital Asset Guide - Bldg Improvements Building improvements are capital events that materially extend the useful life of a building or increase the value of a building, or both. Improvements should be capitalized and recorded as an addition of value to the existing building if the expenditure for the improvement is > $100,000 or the expenditure increases the life or value of the building by 25 percent of the original life period or cost.

9. Capital Asset Guide - Facilities & Other Improvements Assets (other than general use buildings) built, installed or established to enhance the quality or facilitate the use of land for a particular purpose. (parking lots, fencing, etc) Depreciable improvements made to a facility or to land that should be capitalized as a betterment if the improvement is at the capitalization threshold or the expenditure increases the life or value of the asset by 25 percent of the original cost or life period.

10. Capital Asset Guide - Infrastructure Long-lived capital assets that normally are stationary in nature and can be preserved for a significantly greater number of years than most capital assets. Infrastructure assets are often linear and continuous in nature.

11. Capital Asset Guide - Infrastructure Improvements Capital events that materially extend the useful life or increase the value of the infrastructure, or both. Infrastructure improvements should be capitalized as a betterment and recorded as an addition of value to the infrastructure.

12. Capital Asset Guide - Personal Property Fixed or movable tangible assets to be used for operations, the benefits of which extend beyond one year from date of acquisition and placement into service. Improvements or additions to existing personal property that constitute a capital outlay or increase the value or life of the asset by 25 percent of the original cost or life should be capitalized as a betterment and recorded as an addition of value to the existing asset.

13. Capital Asset Guide - Library Books/Materials Generally a literary composition bound into a separate volume and identifiable as a separate copyrighted unit. Library reference materials are information sources other than books, i.e. journals, periodicals, microforms, etc., and similar items which provide information essential to the learning process or which enhance the quality of academic, professional or research libraries. Changes in value for professional, academic or research libraries may be reported on a aggregated net basis.

14. Capital Asset Guide - Works of Art/Historical Treasures Collections or individual items of significance that are owned by a state agency which are not held for financial gain, but rather for public exhibition, education or research in furtherance of public service. Collections or individual items that are protected and cared for or preserved and subject to an organizational policy that requires the proceeds from sales of collection items to be used to acquire other items for collections.

15. Capital Asset Guide - Software Developed Internally State Agencies State agencies will record the payment for the purchase of computer software whose unit value cost is $5,000 or greater and has an estimated useful life of more than one year. Capitalization of computer software includes software license fees if the total dollar amount of the fee divided by the number of units served (terminals) meets the criteria to capitalize the purchase.

16. Capital Asset Guide - Software Developed Internally Colleges and Universities (AICPA SOP-98-1) For software to be considered for internal use, the college/ university must meet the following tests: The software must be acquired, internally developed or modified solely to meet the college/university's internal needs, and During the software�s development or modification, the college/university must not have a substantive plan to market the software externally to other organizations.

17. Capital Asset Guide - Leasehold Improvements Construction of new buildings or improvements made to existing structures by the lessee, who has the right to use these leasehold improvements over the term of the lease. These improvements will revert to the lessor at the expiration of the lease. Leasehold improvements do not have a residual value.

18. Capital Asset Guide Web address http://www.Window.State.Tx.Us/comptrol/san/gasb/local/gasb34_localintro.Html

19. Capital Asset Guide - Thresholds Land/land improvements Capitalize All Buildings/bldg improvements $100,000 Facilities & other improvements $100,000 Infrastructure $500,000 Personal property (equipment) $5,000 Library books/materials (collections) Capitalize All Works of art/historical treasures Capitalize All Software developed for internal use - Colleges & Universities only $100,000 Leasehold improvements $100,000

20. Indirect Cost Plan Since TxDOT does not have a multi-year cost allocation plan, TxDOT will implement the $5,000 (currently $1000) personal property threshold September 1, 2001. The impact on the indirect cost rate is expected to be negligible. Other state agencies may delay the implementation until they have renegotiated their cost allocation plan with the appropriate federal agencies.

21. Donations Donations of engineering, right of way, materials, etc. will be initially recorded as revenues at fair market value Where a donated asset is used for a capitalizable event, the donated asset will be capitalized, otherwise it will be expensed

22. Bridge - Definition CFR Title 23 - Highways Sec. 650.301 Application of Standards (paraphrased) A bridge is defined as a structure including supports erected over a depression or an obstruction and having a track or passageway for carrying traffic or other moving loads, and having an opening measured along the center of the roadway of more than 20 feet between undercopings of abutments or spring lines of arches, or extreme ends of openings for multiple boxes; it may also include multiple pipes, where the clear distance between openings is less than half of the smaller contiguous opening.

23. Why Depreciate Bridges? Separately identifiable Require little maintenance Replaced in total Useful lives can be readily estimated

24. Bridges 9 identified types Concrete girder- pan Girder prest - I Concrete girder - tee Concrete slab Culvert Girder prest - box Steel girder Steel truss Timber stringer

25. Bridges - Concrete Girder Pan

26. Bridges - Concrete Girder Tee

27. Bridges - Culvert

28. Bridges - Steel Girder

29. Bridges - Timber Stringer

30. Bridges - Girder Prest I

31. Bridges - Concrete Slab

32. Bridges - Girder Prest Box

33. Bridges - Steel Truss

34. Bridges - Inventory Current information/inventory Bridge Inventory, Inspection and Appraisal Program (BRINSAP) Unique ID numbers Location and feature crossed Year constructed Year reconstructed Bridge type Deck length and width

35. Bridges - Inventory Future information/inventory ACCESS database to track changes to bridge inventory Excel spreadsheets uploaded to intranet website will allow districts to view their current inventory Intranet website will provide downloadable forms

36. Bridges - Inventory Future information/inventory (continued) Districts will be required to submit information on bridges removed from service, improved bridges, and newly constructed bridges District Engineers will be required to certify that their inventory is correct

37. Bridges - Financial System Financial Information Management System Additional accounts Capitalization Depreciation expense Accumulated depreciation

38. Bridges - Historical Cost Began with current replacement cost for each type of bridge Used a capitalization threshold of $500,000 Calculated historical cost using FHWA cost indices for structures Useful lives as determined by American Appraisal Associates

39. Bridges - Historical Cost

40. Estimating Useful Life

41. Comparison of Estimated Useful Lives for Bridges

42. Bridges - Reporting Capitalized when placed in service Separate asset group on balance sheet Depreciation based on composite method

43. Right of Way - Historical Cost 1917 - 1956 Estimated based on the average of ROW costs (10.59%) to Construction Costs for the years 1957 - 1999 1957 - 2000 Financial Reports and Financial Information System

44. Right of Way- Historical Cost

45. Right of Way - Historical Cost

46. Right of Way - Historical Cost

47. Requirements for Using the Modified Approach Maintain an inventory Perform condition assessments at least once every 3 years Maintain the system at a predetermined condition level Disclose needed versus actual maintenance expenditures to maintain condition level

48. Highways - Inventory Roadway inventory system Type of road Location Number of lane miles Features

49. Highways TxDOT will report the roadway system in two categories Interstate system Other non-interstate (state highways, farm to market, etc�)

50. Highways - Historical Cost Resources AASHO, the 1st 50 Years (1914-1964) TxDOT financial statements (1965-present)

51. Highways - Historical Cost

52. Highways - Historical Cost

53. Highways - Historical Cost

54. Highways - Historical Cost Method Calculated cumulative �construction� expenditures excluding estimated ROW and bridge costs. Multiplied the result by .65 (100% less 35% attributable to maintenance) .65 x $ 32,724,088,901 = $ 21,270,657,785

55. Capital versus Maintenance Paving shoulders Removing weight limits Increasing drainage capacity Adding new signals, pavement markers,etc. Adding a grade crossing

56. Maintenance vs Construction