"What we don't know can hurt us" applies to government today, as much as it did in yesteryear.

West Virginia needs to revise the way it assesses the cost of our air fleet. Under the present system of charging some agencies a surcharge for vehicles they rent from the state, the public is unaware of the true cost of the air fleet. In order for government to be more transparent, the Department of Administration should do away with the present system and request special revenue shortfall be added to the annual budget to cover the costs of the Aviation Division.

West Virginia Legislative Auditor, Performance Evaluation & Research Division (PERD), presented a "Special Report: Fleet Management Administrative Fee" (September 2009 PE09-06-452)), to the Joint Committee on Government Operations and the Joint Committee on Government Organizations. The purpose of the report was to find out how the Department of Administration (DOA) was funding the annual revenue shortfalls in the Aviation Division budget.

For clarity, the Fleet Management Division, which manages the state's approximately 1,500 vehicles and the Aviation Division, which manages the States air fleet, are both under the Purchasing Division of the DOA.

The Legislative Auditor's report shows the Aviation Division has an annual revenue shortfall. The Aviation Division is unable to recover its operating costs through the revenue it generates from leasing the state's air fleet. This revenue shortfall is due, in part, to the state's inability to accurately predict the variable costs of operation, such as future fuel costs and unanticipated maintenance costs. In Fiscal Year 2009, the Aviation Division's revenue shortfall was almost $2 million.

The Legislative Auditor reported that since Fiscal Year 2007, the Aviation Division's revenue shortfall has been funded by a surcharge imposed by the Fleet Management Division. This surcharge, known as the Fleet Management Administration Fee, is currently $92 per month, per vehicle leased. While this surcharge may appear to be a sound financial and equitable way to make up the Aviation Division's revenue shortfall, it is not.

The Division of Highways, the West Virginia State Police, the Division of Natural Resources, the Division of Forestry, the Department of Agriculture, the Higher Education Policy Commission and the higher education governing boards and their institutions under West Virginia Code § 5A-3-48, as amended, are all exempt from being required to use the Fleet Management Division to obtain their vehicles. Therefore, these agencies are not required to pay the FMAF monthly fee, even though some of these agencies are significant users of the air fleet.

The Alcohol Beverage Control Administration, the Department of Labor, the Public Service Commission, the Division of Motor Vehicles, and the Miners Health Safety & Training and Administration accounted for $1,018,595 in payment or almost 22 percent of the total FMAF collected during fiscal years 2007-2009. Yet, none of these five agencies used the state's air fleet during this time period. The result of the FMAF on these agencies is an automatic decrease in funding the Legislature provides these agencies. This surcharge diverts funds from the purpose and mission of the agencies and it redirects these funds to the Aviation Division.

The Legislative PERD suggested that a fairer and more equitable way for this shortfall to be met is to have the Legislature provide for this revenue shortfall by making an allocation for this special revenue shortfall in each fiscal budget.

The Legislative Auditor then addressed two questions to the DOA:

1.) It is legal for the Fleet Management Division to charge other agencies a fee to fund the activities of the Aviation Division? and

2.) Is it legal for the Fleet Management Division to charge other agencies a surcharge on the leased vehicles when the surcharge on leased vehicles does not correlate to an agency's use of the state's air fleet?

Robert Ferguson, Cabinet Secretary for the Department of Administration, replied stating it was his belief that the DOA possessed legal rights under both expressed statutory authority and implied authority, through legislative rules, to access the agencies a surcharge. He further stated that he believed DOA could legally levy this surcharge even though there was a discrepancy in the correlation between an agency's use of the air fleet and the amount of the surcharge charged to an agency.

DOA may have the legal right to access and apply this FMAF to state agencies. However, having the legal right to impose a FMAF does not make the FMAF fair, equitable or the best way to address the revenue shortfall in the Aviation Division. The FMAF, as applied, adds an undue burden to agencies that are already operating under restricted budgets and hides the true cost of the Aviation Division from the public.

After reviewing the Legislative Auditor's report and the responses of the DOA, it is very clear that the proper way to resolve the revenue shortfall of the Aviation Division is to follow the suggestion of the The Legislative report. The report suggests that "a fairer and more equitable way for this shortfall to be met is to have the Legislature provide for this revenue shortfall by making an allocation for this special revenue shortfall in each fiscal budget."

As your delegate, I will request the Legislative Auditor's report and findings be reviewed by the Finance Committee and that an allocation for the Aviation Division's revenue shortfall be made annually in the budget. Such an allocation allows agencies the full use of revenue allocated to them and it also provides for transparent government.

Reminder: For those interested in applying for an internship or fellowship for the upcoming January 2010 Legislative session, applications must be in before Oct. 31, 2009.

Delegate Patti E. Schoen can be reached at 304-340-3141 (capitol phone) or 304-415-0411 (cell), or by e-mail at pschoen@mail,wvnet.edu. For more information, please check out www.pattischoen.us and www.legis.state.wv.us.

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