PL 35, Analysis and Assessment of the Reimbursement Rates and Mechanisms for Kentucky's Publicly Funded Ferries

Kentucky currently has ten operating ferries. Seven of these are state-funded, one is federally-funded, and two are privately funded. The table below from the Division of Planning shows the river crossings of the ferries, the connections they provide, whether they are public, federally funded, or state funded, and the fee charged. The Kentucky Transportation Cabinet’s Division of Planning has responsibility for reimbursing the publicly-operated ferries using funds that are appropriated in the Six-Year Highway Plan. The mechanisms that are in place for reimbursing these ferries were established long ago, and the Division of Planning does not know if these mechanisms represent the best way to allocate resources. There is also a concern that the reimbursement rates are based more on historical practice than on economic analysis. The objective of this study is to assist KYTC’s Division of Planning in finding answers to the following questions: 1. How do other states with publicly-funded ferry operations manage the reimbursement of those ferry operators? Specifically, a. With whom do they contract, and how are their contracts set up? b. How are reimbursement rates determined? Hourly? Daily? Quarterly? How often are the reimbursement rates assessed/adjusted? How do other states handle reimbursements for ferry closures? Just Weather? Include Maintenance/Breakdowns? All Closures? c. What factors come into play in determining actual compensation amounts? d. Where does the money come from, and how is it allocated/appropriated? e. What are the auditing requirements and practices for ferry operations? f. Are there different mechanisms for handling capital expenses versus normal operating expenses? g. Are any other states providing additional funds due to Subchapter M impacts on ferry operations? 2. Division of Planning in terms of: a. Negotiating contracts with local/county governments or contractors/franchisees; b. Reimbursing ferryboat operators for capital costs or other non-routine costs (closed days); c. Determining reimbursement rates and providing reimbursement; and d. Requiring audits and/or financial documentation as a condition of payment.