As CFO of the North Carolina Department of Transportation, Mark Foster puts cars on roads and coins in coffers.
By Stephanie Harris
Because Americans have—and always will be—on the move, our transportation infrastructure is in constant need of development, repair and maintenance. As the Chief Financial Officer (CFO) for the North Carolina Department of Transportation (NCDOT), the nation’s second-largest department of transportation, Mark Foster essentially oversees the financial and planning activities for a large Fortune 500 company—except that it is a public agency.
NCDOT has more than 13,000 employees and maintains an annual budget of about $5 billion. The agency is responsible for 80 percent of the state’s highways, as well as aviation, public transportation, rail, bicycle and pedestrian transportation, ferries and the North Carolina Turnpike Authority operations.
“We work closely with the governor’s office and state legislature on their budgeting process, which is a two-year process,” he said. “We also do long-range budgeting—our 10-year work plan—which is cash-flow based. We schedule close to 3,000 projects over 10 years based on this forecast.”
Prior to joining NCDOT in 2003, Foster’s experience had been entirely in the private sector, having directed finance, accounting, human resources (HR) and business services administration for Ryder System Inc. for 16 years. After Ryder, he began his own consulting firm, which he operated for seven years. What ultimately drew Foster to his current role with NCDOT, however, was the opportunity to introduce his private-sector finance knowledge and management skills to a public-sector entity where his impact would be palpable.
“Coming from a private-sector background and moving to the public sector, you see a large expansion in terms of your impact to the state and the state’s citizens,” he said. “Everything we do impacts transportation logistics of the state, as well as the economy.”
Different Sector, Same Issues
When Foster made the move from the private sector to the public sector, he quickly realized the business issues in each are essentially the same. “The only real difference between the private sector and public is that we have a few more tinkerers in the process in the public sector,” he said. “On the private side, I didn’t worry as much about what I would call the ‘governmental accounting side,’ which is a lot of interplay between state and federal resources and the rules that come with it.”
Many of the day-to-day challenges are the same too, Foster said. “It’s like every large organization—your biggest challenge is to stay focused on your strategic goals and mission and get the organization focused on those.”
One of the issues Foster and NCDOT has been focusing on is the integration of business disciplines to streamline the delivery of projects. Within the past two years, the North Carolina Turnpike Authority has been transitioning into the state DOT, and the agency has taken an oversight role for the state ports.
“This has allowed us to do more integrated transportation and logistics planning for the state so we don’t have each of the service silos doing their own thing without looking at the integrated whole and making the appropriate prioritization choices,” he said.
To facilitate this process and ensure that the various disciplines are communicating and coordinating, Foster holds a monthly meeting with all of the chief deputies and officers for each service silo, such as engineering, transit and highways, to discuss and resolve operational and strategic problems.
“Because we are a large capital business, we have to stay focused on the long term,” Foster said. “We have sophisticated 10-year cash models which identify where all resources are going to come from and how they’re going to be spent and prioritized over that period.”
In order to ensure the public that the funds are being spent wisely, performance transparency is a priority. “All of our performance metrics, change-management initiatives and the financial analyses are available on our website; everything down to which projects are in our 10-year plan are on our website,” Foster said. “We learned early on that for us to be successful with change management, we had to be much better communicators, both internally and externally.”
Public confidence and the project prioritization process are critical to Foster. “We make sure that before we ask for more revenue, the public is confident the revenue we do have is being used to the best of its abilities.”
How projects are picked and delivered, and the value those projects bring to the mobility, safety and infrastructure health of the state are carefully considered by Foster and his team.
Challenges & Changes Ahead
Looking ahead, Foster—and DOTs across the county—will face a number of fiscal challenges, particularly the depletion of traditional revenue sources, such as the gas tax, which funds much of the state and federal infrastructure needs.
“As vehicles become much more fuel efficient, we’re going to have to transition to another revenue stream to continue to take care of the infrastructure we have, as well as modernize it for the future economy.”
Public-private partnerships (P3s) have been explored as potential solutions, but according to Foster, it is not a long-term fix. So what would be a more stable solution? Tax reform for one, he said.
“You need to first determine what outcome you’re going to strive for, and then work backwards in terms of what it will take to finance that strategy,” he said. “When you look at transitional strategies for revenue, pick a base that closely mirrors the value people are getting for the service. In transportation, that tends to be user fees—whether a user fee is a gas tax or a toll. Then make sure that base will grow with the needs of the state.”
In addition to P3s, NCDOT recently opened its first all-electronic state toll road system on the North Carolina Turnpike. Although toll roads are not anything new, the technology is.
The NCDOT system is also interoperable with tolling transponders from other states, Foster said. “If someone is using EZ-Pass, they can ride on our toll roads and it’s seamless with our transponders. We are the first state to break that log jam and be interoperable.”
Although Foster is more heavily involved with governmental procedures and public-involvement issues than when he worked in the private sector, the business issues ultimately are the same.
“How you solve them and who you have to collaborate with to get them solved tends to be a little different,” he said. “But at the end of the day, it’s all about accomplishing what you set out to do.”
Stephanie Harris is a freelance writer based in Chicago, Illinois.
Mark's Key Partners:
Bank of America / Merrill Lynch (Banking) | KPMG (Audit) | McKinsey & Company (Consulting) | PFM Group (Financial Advisor)
Stephanie Harris
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