Monday, February 23, 2015

Local Exchange Plan: Interagency Service Swapping

The Local Exchange Plan is an adaptation of Agility Agreements, a program that was created in 1997 by the Pennsylvania Department of Transportation.  The state created the program as a means of reducing costs and improving standards among state and township road networks across the state.  Elements of this plan have been adopted in the Traffic Control Cooperative Plan.  In the traditional local maintenance contract method, state agencies pay local forces to maintain state roads.  This means that if the agency maintains state roads in lieu of the state agency that the state basically reimburses the local agency for work completed on the state road which the local agency uses to fund better operations than they normally could provide.  However, the traditional method has many pitfalls.  The agility plan corrects this by contracting with local agencies for specific state-level duties that are typically more labor intensive and less technical.  In return, the local agency is provided materials, equipment or a service by the state.  The net sum exchanged comes to zero so that no money is exchanged.  It is essentially a barter plan that keeps both state and local agencies intact allowing each agency to play off each other's strengths to compensate for their weaknesses.

Old US 22 in Bethel Township, PA is a town-maintained road designated T-721.  However, in this image the sign on the right has a PennDOT logo with many signs on the road similarly meeting state standards.  This means that this town is or was recently in an agility agreement where the town is providing limited maintenance on state-owned roads in turn for the state providing traffic signs and pavement markings such as what is seen here.  In all, this road is far better maintained than it would be without the agility agreements, which are the model for the Local Exchange Plan.


The traditional method of contracting local forces to maintain state roads is a troubled method for a number of reasons:
  • States or local agencies do not meet their ends of the bargain with either states not always adequately reimbursing local governments adequately for state level work or local agencies not completing required duties on behalf of the state
  • Many local governments are too small for this tactic to make any real difference in local road quality
  • Operations fees are too much of a financial burden on local agencies when paid to the state or another cooperative agency while states are likewise unwilling to portion off a large portion of their budget to include local road maintenance.
  • Accountability is often weak in such agreements meaning that state roadways maintained by the local authorities may actually be maintained significantly below state standards (especially in city/town maintenance agreements)
  • Local agencies are often not properly equipped or staffed for state-level road maintenance operations (especially in city/town maintenance agreements)
  • Formal agreements with local governments tend to be highly bureaucratic and political thus difficult to create
  • State standards are typically not required in such agreements meaning that added state-level funding does not necessarily mean state highway quality

The beauty of the local exchange plan is that many of the complications involved with traditional state contracts with local governments are greatly reduced.  The general view of such agreements is that local governments are much better at handling work that is less technical and more labor intensive that requires more routinely used equipment and materials.  On the other hand, states are better at handling more highly technical work that involves the use of skilled personnel, more expensive equipment and/or materials that local governments routinely lack.   Pennsylvania is a good example of this considering that their primary source of local government consists of townships who would have an extremely difficult time meeting state standards on their own.  The local exchange plan continues to correct this discrepancy between small municipal governments and the state.

Typically, when a local government enters an agility agreement the duties usually include the following:
  • Winter maintenance/snowplowing
  • Summer mowing and brush cutting
  • Grading and drainage
  • Pothole patching
  • Minor road repairs
  • Traffic signal maintenance (in larger jurisdictions)
A state government in contrast usually makes up the cost of work provided by the local government usually providing the following:
  • Engineering/traffic studies
  • Equipment purchases
  • Traffic sign installation
  • Traffic signal installation
  • Guardrail installation/repair
  • Pavement markings
  • Larger roadway repairs
When agility agreements became a normal source of service delivery, PennDOT was able to flex more muscle with local agencies than it did in the past.  The state now requires substantial compliance with state and MUTCD standards on traffic control devices along local roads and streets, and roadways maintained by local governments continue to substantially improve to near state levels.  It should be noted, however, that Pennsylvania maintains a very large state highway system consisting of 40,000 miles of state-maintained roads or 34% of the highway system.  This means that most townships have a sizable ratio of state-owned roads meaning that the dollar value of work on state roads completed by towns usually means a sufficient level of work returned to the local level on behalf of the state.  Because of this, such a plan has limitations and is not possible everywhere.  If PennDOT abandoned their system of secondary state roads, the agility program would likely also disappear.  In the meantime, this special method of service delivery has improved local roadway standards while subsequently reducing overhead costs for both parties.


The major issue with the local exchange plan is that this will only work in areas where state road mileage is high enough to provide adequate resources to local governments.  Across much of the US, many cities and towns do not have any roads on the state highway system.  Many counties also have far too few miles of state-owned roads to see any significant advantage in expanding operations to cover a few miles of state roadways.  Equipment costs would need to be adequately offset by ample funding to maintain and replace far more frequently used equipment, thus payments seem far more appealing.

Mile-per-mile, unless a local jurisdiction has a sufficient number of state-maintained road miles within their jurisdiction, the local agency would likely see far more benefit receiving payments for each mile maintained.  If the state pays, for instance, $12,000 per mile and the state has 20 miles of state roads within the local jurisdiction, the local jurisdiction will receive $240,000 a year: more than enough to cover employee budgets and equipment costs with a little left over for maintenance or engineering services.  In a local exchange agreement, the local agency would not be completely responsible for the entire maintenance of those 20 miles of roads, but the extra costs ensued by the local government will not include funding the costs for gas, equipment, repairs or labor for specific operations handled on behalf of the state.  A local agency may not be interested in that in exchange for street signs thus why participation is not 100% in Pennsylvania.

Nevertheless, counties would be the strongest contenders for local exchange plans. In states where at least 1/6 of the highway system is state controlled, agility would assure a healthy sum of funding guaranteed to all participating local governments each year.  This means if the county did $45,000 worth of work for the state, the county would receive $45,000 worth of state-level, state-supervised work including traffic studies and even equipment loans that could be used to fund or aid in guardrail repairs, replacement of road striping, new traffic signs, traffic studies or a combination of the any of the above.  This means that a county that is in a local exchange agreement could afford substantially more improvements on their roads without any downsizing or added costs on the state.

Regional Roads In the Local Exchange Plan

The local exchange plan could also work very well in larger regional road districts.  Even if the state has very few miles under state control, a regional district could still gain significant funding this way.  Consider this example:

The River Region has 425 miles of state roads that fall within their region.  The region has contracted to provide snow plowing, mowing and pothole patching on all 425 miles of state routes (assuming they are all surface routes) out of the total agency responsibility of 3,500 miles.  The total cost for the River Region was $643,000 in 2016.  Instead of paying the region $643,000, the DOT provides replacement or repaired equipment valued at $175,000, installs a traffic signal at $180,000 and the rest is used to cover new signs and striping on 40 roads.  The $288,000 worth of traffic control items was previously going to have to be put among the 12 counties and municipalities with traffic control in disrepair, but none of the local agencies were willing to budget much above the annual operations fee.  One county with a payment of $17,000 in operations fees was only willing to budget $3,000 when the regional agency had determined that at least $20,000 worth of work was needed.  At $24,000 per county, the region was then able to cover that county's needs.  In this plan, the state also saved money by not having to provide these services in-house or through contractors instead relying on the regional district.  In turn, they helped them manage the cost of providing this service on behalf of the state.


The local exchange plan does not necessarily lead to a new sense of purpose for local governments.  It only increases the amount of maintenance activities the state performs on local roads in turn for using local forces for specific state level duties.  While conditions will likely improve, it in no way is going to provide the same level of maintenance that the state offers.  It does not pay for a county engineer or PTOE, and it does not change local policy.  Since the state is not actually maintaining these roads, state engineers would not be supervising maintenance once the state has "paid back" local agencies with an equivalent amount of work.

A local exchange option was discussed previously in the Minimal Maintenance Plan as an option to offset added costs for targeted programs.  While it was not mandatory in that plan, it is essentially being expanded on here as a potential solution to local road deficiencies.  While far from a perfect plan, it is essentially the only plan being discussed here that will not require any redistribution or increase in funding.

This plan also needs to prioritize the engineering, installation and maintenance of safety devices over other maintenance needs as a means of making sure that the funding exchanged is being used to maintain these adequately on a local level in all participating agencies.  The local exchange plan is designed to improve on each agency's weaknesses, and if these weaknesses are not focused properly then the benefit would be marginal.  For instance, a local agency maintaining signs on a state road in turn for a state mowing local roads would have far less benefit than the same reversed with neither doing nearly as good of a job.  In this case, the local agency would lower the standards on the state-owned road while the state would only be mowing a couple local roads.

Pennsylvania's road system also is not completely uniform.  Their agility agreements do not adequately budget any work on a local level.  However, this tool has allowed the state to begin mandating that state and MUTCD standards are followed especially when agility funding is used.  Over the the 17 years it has been in place, the agility program has made a big difference, but there are still problem areas waiting for funding to correct.  This means that a local exchange rule would still need to be coupled with a state mandate that local governments begin to comply with proper standards: likely not popular in states where payments to local governments are already low and state control ratios do not adequately cover local road maintenance needs.  This means that in order for the system to be most effective, local exchange agreements should either be applied in large counties or in states with large state road networks.


The local exchange plan does not have to work independently of any of the other plans proposed.  In fact, it works quite well with all of them as long as local funding and control ratios are at adequate levels to offer any substantial benefit to local governments.  Let's look at how it works in relation to these other plans:

Regional Road Maintenance

The example above demonstrated that the local exchange plan works beautifully with the regional plan, when properly executed, considering that regional districts are essentially multi-county and city units who will themselves have enough responsibility and geography consolidated under their control that a partnership between the states and regions would provide far greater benefit than it would with a city or county.

Farm-To-Market Cooperative Plan

In this plan, more rural, lower population cooperative agencies would heavily benefit from providing labor-intensive routine maintenance on state roads within their region in turn for the state providing traffic control services on behalf of the region.  While the cooperative may be able to afford to hire a PTOE to handle that responsibility, the revenue streams may be inadequate to maintain roads to proper levels without some additional state-aid.  While it would be most beneficial for rural cooperatives to maintain both farm-to-market roads and state-owned roads, this method might work where the state does not wish to contract out responsibility with another agency for state-owned roads.


Adopted from Pennsylvania's agility program, the local exchange plan is not a guarantee of universally higher standards on local roads, but it provides a means for local agencies to exchange maintenance activities with the state as a means of saving money, better distributing resources, addressing weaknesses and providing higher levels of maintenance on local roads and streets without any increase in cost or reorganization required.  The main advantage, however, is that it does not require major structural changes to the road system and does not require any increase in funding to execute.  In all, it should be offered in far more states but is most effective in states with larger state control ratios or regional cooperative systems already in place.

The major purpose of a local exchange program should be to provide technical services, help finance costly equipment, correct deficiencies in traffic safety improvements while allowing states to eliminate a duplication of services on less complex, but more difficult to organize activities such as winter maintenance, summer mowing and pothole patching.  The goal should be to at least work toward unifying all road standards statewide without increasing costs or disrupting the balance of power between state and local agencies.

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