Following the Leader: How Washington DC Manages Infrastructure
By Shayne Kavanagh
Shayne Kavanagh is the Senior Manager of Research for the Government Finance Officers Association and has been a leader in developing the practice and technique of long-term financial planning and policies for local government. He started GFOA's long-term financial planning and policy consulting offering in 2002 and has been working with governments on financial planning and policies ever since. He has worked with many governments of different sizes and types on financial planning and policies across the United States and Canada.
Asset management and infrastructure renewal planning is a critical issue in most large cities. One of the cities that stands out in this critical area is the District of Columbia.
This column describes the District’s approach through the lens of the Government Finance Officers Association’s Financial Foundations for Thriving Communities, which consists of five pillars. Through this lens, the GFOA hopes to make it easier for local governments to invent approaches that best fit local conditions. Success at asset management is much more likely when each of the five pillars of the Financial Foundations Framework is put in place. You can learn more about the District’s approach to capital planning in the GFOA report “Capital Planning and the DC Government”.
Pillar 1 – Establish a Long-Term Vision
This pillar gives people a reason to work together. Successful capital planning and asset management require sustained cooperation between many people to make regular investments in asset upkeep.
In the District, the Mayor and the CFO saw the problem of deferred maintenance in its school buildings. It was clear that this problem could repeat itself with other asset classes and thus, DC needed a comprehensive program for asset maintenance. The District started its asset program with school buildings, school buses, and streets. As the data model grew and proved its usefulness, more asset classes were added. Today, thanks to a long-term vision for asset maintenance, 100% of the District’s assets are recorded in the District’s data model, which is called the Capital Asset Replacement Scheduling System (CARSS).
Pillar 2 – Trust and Open Communication
Conditions amenable to people working together are critical. Without trust and open communication, people will be less likely to support the common good and more likely to focus on self-interest. The GFOA’s Code of Ethics leads finance officers to five values that contribute to a trustworthy reputation. The District embraces these five values through its asset management program.
Honesty and Integrity. The District’s asset management system, CARSS, is the system of record. Because all departments supply asset data to CARSS, they trust that the data in CARSS is accurate. .
Valuable Results. In 2018, the District’s bond ratings were upgraded by all three of the major rating agencies. Among the reasons cited for the upgrade was the District’s commitment to long-term capital planning. This led to lower borrowing costs and the capacity to do more capital projects.
Diversity and Inclusion. The scoring system for evaluating capital projects is designed to make sure that all geographic areas within the city have quality basic services and can get the assets they need in their community.
Reliability and Consistency. The capital planning process remains the same each year, with some incremental improvements made. This consistency means people know what to expect.
Pillar 3 – Collaborative Decision-Making
The District has developed forums for working together. When people participate in making a decision, they are likely to support it. A supported decision has a better chance of being implemented.
How is this implemented? A team of representatives from across the District meets to score the capital projects that have been proposed for the capital plan and budget. Everyone is given a chance for input, and everyone is privy to how the final scores were arrived at. In terms of public participation, every year there is a series of meetings in every ward. The meetings are focused on understanding the priorities of the public, which the Mayor uses to shape the budget.
Pillar 4 – Create Clear Rules
Constructive behavior must be reinforced. A budget process is a complex system with many moving parts and many people involved. Rules are needed to maintain order and provide support for wise decision-making.
The District has rules that support good asset management. First, the funding that departments receive for assets is based on the quality of their asset plans, not how much money they got last year. Additionally, the District has established a local law that requires the CFO to file a report each year with the Mayor, the Council, and the public on the condition of the District’s assets as well as the amount of unfunded or deferred maintenance. Finally, the District has a rule that its four-year financial plan must be balanced.
Pillar 5 – Treat People Fairly
This pillar means promoting mutual trust and respect. The designers of a capital planning process must be mindful of two kinds of fairness. The first is “procedural justice” and concerns the objectivity of the process and how people are treated. The second is “distributive justice,” which concerns outcomes: people get what they deserve from the process.
For procedural justice, a transparent and consistent set of decision-making criteria should be applied equally. The District’s capital planning team applies the same criteria to all project proposals from all departments. The District also provides distributive justice. Inside the District government, because a cross-departmental team evaluates spending, there is a measure of equity across each department. Looking outside the District government, the CARSS data can be used to see where the money is going so the District can be sure each ward is getting equitable basic services and assets that are valuable for that ward. And at the Mayor’s neighborhood budget meetings, the Mayor shares the proposed budget by project. Citizens provide feedback on the projects proposed for their area versus what they feel might be needed.
Local governments can put in place a high-performing capital planning and asset management system without having to copy all of the technical details of the District’s system. Certainly, these details are worthy of emulation, but it may not be practical to transfer all of them to other situations. By thinking about the five pillars, local governments can outline the requirements of a capital planning process, take inspiration from the District where it works, and find different approaches where it does not.