CONTACT:
Jennifer
Freeman
(518) 474-4015
FOR RELEASE:
Immediately
July 31, 2009

DiNAPOLI: IMPROVEMENTS STILL NEEDED IN

THRUWAY AUTHORITY’S DEBT PROCESS

DiNapoli Available to Discuss Audit in
Buffalo Today at 10:30 AM

The New York State Thruway Authority has
made insufficient progress in how it manages debt issuances after a 2005
audit
identified questions about how firms were hired to sell debt and whether
best prices were obtained, according to a follow
up audit released today by State Comptroller
Thomas P. DiNapoli. As of December 31, 2008, the Thruway Authority had
$12.6 billion in outstanding debt — nearly $5 billion was reviewed by
auditors during the follow up audit.

“In 2005, our office told the Thruway Authority
to do a better job of managing how it issues debt,” DiNapoli said. “There
were too many unanswered questions and poorly documented procedures. Four
years later, a lot of those questions remain unanswered. This is just more
evidence that the Thruway Authority needs to take a hard look at how it
operates. Now more than ever, every level of government has to manage better
and watch taxpayer dollars closer.

“The Thruway has already raised its tolls,
but it hasn’t raised the confidence of New Yorkers. We still can’t be
sure if the Thruway could have kept tolls down by managing its operations
better.”

DiNapoli’s office has conducted a series
of eight audits examining the operations of the Thruway Authority. A January
2008 audit of proposed toll hikes recommended the Thruway Authority hold
off on toll hikes until it had conducted a thorough analysis of its expenses
and operations. Another audit found that the Thruway Authority’s capital
plan was behind schedule and could cost significantly more to complete,
but also raised questions on whether toll hikes were needed.

The initial audit report on the Thruway’s
debt practices, released in August 2005, examined the Thruway Authority’s
policies and procedures for obtaining underwriting and other debt services
to determine whether it received those services at the most reasonable
cost. Auditors found that the Thruway Authority did not document how firms
were selected to manage its debt sales. Auditors found that a relatively
small number of firms managed the majority of the Thruway Authority’s
debt sales and earned the largest share of fees. In addition, the board
did not review contracts pre-approved by the executive director for up
to $150,000 until a year later.

When auditors followed up on the prior audit,
they found the Thruway Authority had only fully implemented one of nine
recommendations from the prior audit and partially implemented three other
recommendations. The Thruway Authority still has not changed its policies
or procedures to outline its criteria for selecting underwriters and bond
counsel, nor is it fully documenting why particular firms were assigned
work.          

The board also continues to allow the executive
director to execute contracts up to $150,000; therefore contracts could
be in effect for a year before the board ratifies a contract. In addition,
the Thruway is not documenting or quantifying the reasons for its choice
of sales method nor has it developed policies requiring board approval
of the method of sale.

DiNapoli is available to discuss the audit
today, July 31, at 10:30 a.m. at 65 Court Street in Buffalo.

To view a copy of the initial audit report,
visit: http://osc.state.ny.us/audits/allaudits/093005/04s36.pdf

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