TOPIC: Intelligent Transportation Systems OFFICE: Department of Finance and Administration QUESTION / ISSUE: STATE: TN DATE: 04/02/2012 We would like to get information from other states on how they are reporting, for financial statement purposes, Intelligent Transportation Systems. These systems may include management centers, cameras, dynamic message boards, traffic sensors, congestion monitoring stations, 511 information, Incident Management, fog detection and other safety items. If capitalized, please include asset category(ies). State Colorado Comments The Colorado Department of Transportation does capitalize its Intelligent Transportation System assets. The attached email contains a scan of the closing exhibit we use to identify useful lives for depreciation disclosures. CDOT ITS Capitalization Thresholds001.pdf The scan lists the assets identified as ITS and provides the related depreciation life. CDOT tells us that they record these assets in the financial statement note category “Depreciable Infrastructure.” Colorado uses $500,000 for infrastructure capitalization. I do not know how many or what amount of these assets have met that $500,000 threshold. Florida For the most part, FDOT “categorizes” most of the ITSs as either Furniture/Equipment or Buildings (whichever is appropriate). FDOT tries to attach a property ID number to as much as possible for insurance reasons. That would be an important point to make to Tennessee. These items are depreciated. Some (we believe a small percentage) of the ITSs are included in our infrastructure by our district offices if it is found on DOT right-of-way. FDOT infrastructure is not depreciated because we use the modified approach…..meaning that we must maintain infrastructure at a certain level of condition (refer to the note in the CAFR). Likewise, an important point for Tennessee. Idaho Idaho uses the modified approach for recording infrastructure. The Idaho Transportation Department capitalizes Intelligent Transportation Systems as part of the infrastructure assets. Iowa Iowa accounts for its infrastructure asset as a “network” with “subsystems.” The entire network is the asset. This includes the Interstate & Primary road systems which we categorize as “subsystems.” Any lighting, cabling, rest areas, weigh stations and scales are part of the subsystem/network. Any equipment items purchased such as the items listed in the question above are capitalized according to the policies and procedures established by Iowa DOT. If the item meets the dollar threshold it will be capitalized, if not it is expensed. If it is part of a project that will be added to the infrastructure, then the item becomes part of the project and is depreciated accordingly. All is dependent upon which cost centers and object codes are used to account for the costs. State Montana New Mexico Comments Montana Department of Transportation has components of an Intelligent Transportation System. We capitalize these systems based upon either (1) the capitalization threshold for software; or (2) the capitalization threshold for equipment; or (3) if the individual software and hardware do not meet the capitalization thresholds by themselves, but when assembled into a single unit for its intended use, it is capitalized at the total value. If the majority of component parts are software, we depreciate as software. If the majority of components are equipment, then we depreciate as equipment. 1. New Mexico’s Department of Transportation uses “PeopleSoft’s financial system” – asset module to track all of our capital and non-capital assets. The asset module (subledger) records the asset, retirement of the asset, adjustments, book value and the depreciation of each asset. When we close each period the information is posted to the full accrual ledger. 2. If the asset is purchased with state dollars the department must follow NMDOT capital asset procedures. An asset above $5,000 will be loaded as a capital asset or if the purchase is between $1,000 and $4,999 it is a non-capital asset. All qualifying assets are loaded into SHARE’s Capital Asset system within 30 days of the purchase. a. New Mexico does not require state agencies to record assets below $5,000 but it is highly recommended that state agencies do. NMDOT tracks all non-capital assets using the Asset Module within SHARE. b. NMDOT uses 7 categories to define out capital or non-capital assets (please see attached spreadsheet – Tab Categories). ITS assets 4-3-12.xlsx c. The next level of definition is by classification. We can search by category, then classification. We can use department numbers to pull everything within each department. (See attachment Tabs Capital or Non-capital.) 3. NMDOT “ITS” program leases the building they are in. NMDOT’s “ITS” program is funded both by state and federal dollars. If an asset is purchased with federal dollars the asset cannot be loaded into NMDOT’s asset system since we consider it as Construction in Progress (CIP). We currently have a manual process to deal with all of our CIP. Upon the completion of the project, the asset is then loaded into SHARE’s asset module. The asset number will have a distinction of “F” to indicate it was purchased with federal dollars. Assets not used in the operations of the department but used for public purposes are considered infrastructure assets and accounted for differently. Most ITS systems may qualify as infrastructure assets. New Mexico tracks infrastructure assets manually at this point and we utilize completed project expenditure reports to add to the value of our infrastructure annually. The original infrastructure value for New Mexico was an estimate done upon implementation of GASB 34 and we update annually based on the above methodology. State Nevada Comments Based on inquiry with our Nevada Department of Transportation, I have the following to offer. Most of our Intelligent Transportation Systems (ITS) are part of the roadway and classified as Infrastructure. In Nevada we use the "modified approach" for Infrastructure, under GASB 34. Therefore, Infrastructure is not depreciated. Our ITS Command Center is housed in the NDOT Las Vegas office building. Buildings are capitalized and depreciated over 40 years. As for information technology equipment, when computers are part of the installation of the ITS project, they are part of the project cost and coded as part of the Infrastructure. Then computers, incidental to the employees working on the ITS projects, are capitalized as equipment and depreciated over 4 years, normally. Finally, we expense the ongoing operating salaries and operating costs annually. Texas The Texas Department of Transportation (TxDOT) applies the modified approach to all assets within the state road and rail network. A network is composed of all assets that provide a particular type of service for a government. A subsystem is composed of all assets that make up a portion or segment of a network. A network or subsystem may account for dissimilar items. In TxDOT’s case, the state road and rail network consists of pavements, rail tracks, traffic control devices, electronic toll collection systems, lighting and signage. Rest area facilities around the state are considered an ancillary part of the state highway road network. Thus, we considerer intelligent transportation systems as part of our nondepreciable infrastructure capital assets. We have employed intelligent transportation systems in several of our Texas metro areas. There is also the point of capitalization thresholds and how such would apply to a project to install an ITS system. Currently we are applying a $500K threshold at the individual project level for all of our capitalizable projects within the state road/rail network, including those for the installation of ITS systems. We don't consider these ITS systems to be separable "equipment" assets any more than we consider the light poles and traffic lights to be separable assets from the network. Reference GASB June 30, 2011, Implementation Guide, Q 7.12.7, 7.12.8, 7.12.9, 7.16.1. Virginia Virginia capitalizes the types of assets described in the applicable buildings, equipment or software category. Wisconsin Wisconsin is currently not capitalizing costs of our ITS or traffic operations center. We are using the modified approach to report infrastructure assets. During initial implementation discussions, we decided to classify these costs as maintenance/preservation rather than capital. Wyoming WYDOT's Intelligent Transportation Systems (ITS) are reported as infrastructure assets with the exception of the dispatch consoles in the Traffic Management Center. They are included in the roadway infrastructure. WYDOT uses the modified approach under GASB 34 so we do not depreciate these assets. The dispatch consoles were capitalized and are being depreciated.