Recommendations of the Texas Comptroller

Expand the Automated

Registration and Titling System to Include all Registration and Titling Transactions

Summary

The Texas Department of Transportation (TxDOT) has begun the process to upgrade its 10-year-old automated Registration and Titling System (RTS). In addition to the upgrade, TxDOT has identified a number of enhancements to increase the effectiveness of the system. The upgrade and enhancements will be paid for from an additional $1 charged on registration renewals in certain counties. TxDOT should give priority to flexible technology solutions and should implement the changes on an aggressive schedule. In addition, after the changes are complete, state law should reduce the fee and return about $11 million annually to vehicle owners.

Background

In the past, vehicle registration and titling transactions relied exclusively on paper forms. In 1986, the Texas Department of Transportation (TxDOT) initiated an automated system–the Registration and Titling System (RTS)–to streamline these transactions. The system, originally envisioned to include all vehicle registration and titling transactions at both the state and county levels, was to be implemented in 1991.[1]

The current RTS does not cover all the transactions originally planned, but does include registration sticker sales, sticker inventory, plate inventory, title transfer functions and life cycle history of all motor vehicles registered in Texas. Implementation began in November 1994, but since county participation is optional, it was not completed until December 1998 when the last county came online.[2] RTS has greatly improved service by providing quicker response to customers, reducing errors in registering vehicles and improving the accountability of vehicle registration stickers.[3] Each year, RTS is used to register almost 17 million vehicles and title about 4.7 million vehicles, helping to collect about $675 million in state revenue and $360 million in county revenues.[4] Other state agencies and private entities use RTS data; the Texas Department of Public Safety, for example, makes more than two million RTS inquiries to check for stolen vehicles each month.[5]

RTS is now more than 10 years old and uses technology that is no longer supported by the vendor. As a result, TxDOT has initiated a project, called RACER, to update the system at an estimated cost of about $11.2 million.[6] TxDOT has issued a request for proposals (RFP) requiring the project be fully implemented no later than May 31, 2003.[7]

The RFP is broadly written to allow vendors to propose a wide variety of solutions. Some technologies are more flexible than others. For example, Internet-based technology is one of the more flexible technologies. E-commerce technology can be used within an organization (an intranet), between two organizations (an extranet or business-to-business model), and between an organization and its customers (the Internet). One benefit of this technology is that what appears to be a single, seamless system for completing a transaction may actually require accessing several different systems that use different technologies. This flexibility allows the organization maintaining the systems to upgrade or change their technologies over time without significant impact to the user.[8] Since TxDOT wants to avoid returning to the position of operating unsupported technology, it should give more weight during the evaluation of proposals to such flexible solutions.

The RFP also lists some possible enhancements that the vendor should consider in the design of the update. The enhancements include incorporating several functions such as local sticker printing, electronic lien and titling, special plates, International Registration Plan (registration of interstate commercial vehicles), inventory and material allocations, and fleet renewal processing. Most of these enhancements improve customer service, reduce the long-term cost of the transaction or help reduce fraud. Although the costs for all these enhancements have not been fully estimated, initial calculations indicate they would cost about $13 million.[9] TxDOT’s RFP indicates that these enhancements would be incorporated between 2003 and 2010.[10] Noting that within 10 years the current RTS became obsolete; completing enhancements over such an extended period could again result in TxDOT expensively trying to maintain an obsolete system.

None of TxDOT’s proposed changes to RTS significantly alter the underlying database. Implementing some of the enhancements, however, may be difficult without changing the database structure, standardizing the data in the database, or standardizing the way the data is entered. For example, the fields for owners’ and lien holders’ names are of a limited length and require that information be typed in by the county employee. Some names are entered last name first, while some begin with the first name. Longer names often result in abbreviations, but no standards for abbreviations have been established. Such inconsistencies may lead to problems implementing enhancements such as e-liens and fleet registrations, discussed in recommendations elsewhere in this report. To enable e-liens and ensure properly executed electronic transactions, for example, there can be no ambiguity as to which financial institution is the lien holder. Without standardization of name information, the lien may be entered in the wrong name or sent to the incorrect institution. To handle fleet registrations, TxDOT will need to identify which vehicles belong to which companies. With non-standard names, compiling this information would be much more difficult.[11]

Modifying the underlying database to allow these enhancements would provide benefits to state and local government as well as to Texas vehicle owners. For example, modifying the fleet registration process would reduce the number of renewals mailed to business with fleets, reduce the number of pieces of paper the business must handle, and reduce the number of transactions the county assessor-collectors’ offices must process. Incorporating transactions, such as International Registration Plan applications, currently performed by the 17 Vehicle Titles and Registration Regional Office employees would allow the counties to perform these transactions and provide a full-range of services to their constituents.

House Bill 3014, enacted during the 76^th Legislative session in 1999, added $1 to the registration fee for each vehicle in counties with more than 50,000 vehicles. The revenue from this fee, dedicated to enhancing RTS, generated $14.4 million in fiscal 2000 and is estimated to generate between $14 and $15 million each fiscal year through 2004. A total of about $30 million will be collected by the end of fiscal 2001 and a total of about $59 million will be collected by the end of fiscal 2003.[12]

Due to an oversight, none of the fee revenue was appropriated to TxDOT for fiscal 2000 or 2001. The total collected by the end of fiscal 2003 is expected to be enough to cover the cost of the RACER project and other major enhancements. TxDOT will need funding to make on-going enhancements to RTS, but $14.4 million per year after a major upgrade should not be needed.

Recommendations

1. TxDOT should give priority to flexible, Internet-based solutions in its efforts to upgrade Registration and Titling System (RTS).

1. TxDOT should implement the RTS upgrade and enhancements on a more aggressive schedule.

TxDOT should target the end of fiscal 2003 for completion of both the upgrade and enhancements. In addition, standardizing the underlying database should be included in the enhancements.

1. State law should be amended to reduce the fee for enhancing RTS from $1 to $0.25 per vehicle beginning in fiscal 2004.

TxDOT would need to maintain and upgrade RTS and should continue to use the dedicated revenue stream for this purpose. During the next biennium, TxDOT is expected to spend more than $23 million to upgrade and enhance the current, obsolete system. As technology changes, the system will need to be upgraded as well as changes to state laws and TxDOT and county operations will require system enhancements.

The current revenue stream grows as the number of vehicles in Texas increases and by fiscal 2004 is expected to generate more than $15 million each year. After the major upgrade and enhancements are completed in fiscal 2003, more than $15 million annually is expected to exceed the need. Therefore, reducing the fee from $1 to $0.25 would generate about $3.85 million annually for TxDOT to use and would return about $11 million annually to vehicle owners.

Fiscal Impact

By the end of fiscal 2003, about $59 million will have been collected from the fee revenue dedicated to enhancing the Registration and Titling System. Of this amount, TxDOT estimates that about $11.2 million will be spent on the upgrade and about $13 million will be spent on planned enhancements over time; however, this recommendation compresses the time frame. This recommendation includes an additional enhancement, modifying the database, which cannot be estimated (cbe) at this time. Other recommendations in this report include additional enhancements. The cost estimates are included in those recommendations and are not duplicated here.

Overall, the costs for the upgrade and all enhancements discussed in this report are estimated to be less than or equal to the $59 million that will be available to TxDOT and would be spent in fiscal 2002 and fiscal 2003.

Beginning in fiscal 2004, changing the fee from $1 to $0.25 would reduce the amount of revenue available to TxDOT by slightly more than $11 million each year. This change would leave TxDOT with about $3.85 million in revenue each year dedicated to upgrading and enhancing RTS. Slightly more than $11 million would not be collected from Texas vehicle owners.

[1] Texas Department of Transportation, Internal Audit Report Number 501-2 Registration and Titling System Project Schedule Estimation (Austin, Texas, April 13, 1993), p. 1; telephone interview with Bob Tanner, director, Technical Operations, Vehicle Titles and Registration Division, Texas Department of Transportation, Austin, Texas, August 11, 2000.

[2 ]Texas Department of Transportation, Vehicle Title and Registration Division Overview (Austin, Texas, March 28, 2000), p. 5; and letter from Cathy J. Williams, PHR, assistant executive director for Support Operations, Texas Department of Transportation, to Clint Winters, Research and Policy Development, Texas Comptroller of Public Accounts, October 18, 2000; telephone interview with Bob Tanner, director, Technical Operations, Vehicle Titles and Registration Division, Texas Department of Transportation, Austin, Texas, August 11, 2000.

[3 ]Interview with Jerry Dike, director, Vehicle Titles and Registration Division, and Vehicle Title and Registration Division staff, Texas Department of Transportation, Austin, Texas, January 26, 2000.

[4 ]Texas Department of Transportation, Request for Proposal: Registration and Title Point of Sale Redesign Project (Austin, Texas, September 2000), pp. 2-13; and Texas Department of Transportation, Biennial Operating Plan (Austin, Texas, August 2000), Appendix RACER, p. 1.

[5 ]Telephone interview with Bob Tanner, director, Technical Operations, Vehicle Titles and Registration Division, Texas Department of Transportation, Austin, Texas, August 11, 2000.

[6 ]Letter from Cathy J. Williams, PHR, assistant executive director for Support Operations, Texas Department of Transportation, to Clint Winters, Research and Policy Development, Texas Comptroller of Public Accounts, October 18, 2000; telephone interview with Scott Burford, manager, Information Systems Division, Texas Department of Transportation, Austin, Texas, September 28, 2000.

[7 ]Texas Department of Transportation, Request for Proposal: Registration and Title Point of Sale Redesign Project (Austin, Texas, September 2000), pp. 5-13.

[8 ]Telephone interview with James L. Jacobs, research director, Gartner Group, Leesburg, Virginia, November 2, 2000.

[9 ]Telephone interview with Scott Burford, manager, Information Systems Division, Texas Department of Transportation, Austin, Texas, September 28, 2000; and telephone interview with Bob Tanner, director, Technical Operations, Vehicle Titles and Registration Division, Texas Department of Transportation, Austin, Texas, August 11, 2000.

[10 ]Texas Department of Transportation, Request for Proposal: Registration and Title Point of Sale Redesign Project (Austin, Texas, September 2000), Appendix E.

[11 ]Telephone interview with Bob Tanner, director, Technical Operations, Vehicle Titles and Registration Division, Texas Department of Transportation, Austin, Texas July 20, 2000.

[12 ]Letter from Cathy J. Williams, PHR, assistant executive director for Support Operations, Texas Department of Transportation, to Clint Winters, Research and Policy Development, Texas Comptroller of Public Accounts, October 18, 2000.

e-Texas is an initiative of Carole Keeton Rylander, Texas Comptroller of Public Accounts
Post Office Box 13528, Capitol Station
Austin, Texas

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