All right. Good morning, everybody. We're going to go ahead and call this meeting to order and
We will do so at 903 a.m.
the
Metrolink Audit and Finance Committee meeting of July 14th, 2023
Certainly chair because we do have directors calling in
we will do a
Votes by roll call and each agency will receive one vote
We ask that those participating on zoom use the hand raise feature so that our chair knows that you would like to make a comment and
For those of you here in the boardroom
Please speak into your microphone and announce your last name so that the audience and those at home watching the stream
Can hear you clearly and that concludes housekeeping
into the safety briefing, and that is going to be led today by B.J. Takushia.
Hi, good morning everyone. So our safety briefing today starts off with our
evacuation. In the case, we do need to evacuate the building. We'll go out these
doors to my left. There is a staircase that we can that leads us down into the
plaza level outside the building, and we'll muster on the right side of the
building. In case of an earthquake, we practice a duck cover and hold. In case
of CPR first aid, I will ask our partners at LA Metro Security, I will go
out there and ask them to help and render assistance. In case we need to call 911,
I've asked Michelle to call 911 in that case. And in case of an active shooter, we also
practice run hide and fight and as a more of a safety message note I would
say it's gonna be hot this this weekend so make sure your guys are hydrating
and thank you very much and next item is the Pledge of Allegiance which will be
led today by Larry McCutlin thank you please join me as we salute the flag
that represents our great Republic all right very good thank you Larry and
welcome back. It has been a few months since we've seen you in person, so we're
absolutely delighted that you're here today. With that, we will go on to the
official roll call, Madam Secretary. Director Middleton. Vice Chair McCallin.
Here. Director Dutray. Here. Director Nguyen. Director Murphy. Here. Director Chavez. Here.
Director Krekorian director Najarian here director O'Connor here director Hughes
Leslie chair Bergson here we do have a quorum present excellent and with that
moving right on to item number five public comment period do we have any
members of the public wishing to speak on items not on the agenda I haven't
received any written public comment I'm not sure if there's any members in the
audience wishing to speak.
Just so you know, we'd like to get a speaker card filled out when you're done so that we
know who you are.
Go ahead.
You can go ahead and speak.
Thank you for the chance.
Just make sure after that.
Hi, I'm Donald Harlan.
I really love Metrolink and I really do mean the best for Metrolink and I'm trying to do
everything I can without pouring too much on it so that way it isn't weaponized against
to people, and I was really concerned about a lot of things.
There is a lot of risk in the job.
It doesn't go into what you guys are going over here,
and a lot of people trying to get
advantage because there's a lot of money.
There's a lot of jobs.
People are getting political leverage
by illegal, unlawful, and illegal means.
and I was really concerned about a lot of things.
I was mostly concerned about the real estate.
That it's important that they keep track
of the interactions or if there's a lease deal
or something in real estate that they keep track of it.
But there shouldn't be any developments
along the rail lines at all.
There shouldn't be building apartment buildings
for the workers and also I'm concerned that they're going
to try to create social services in metro link or metro.
I'm really fighting against that too.
There's, you know, it's a transportation company.
They shouldn't be doing daycare.
They shouldn't be doing homeless services
and they shouldn't be housing the homeless,
helping out building homeless shelters or, you know,
that's fine, you know, I know there's opportunities
for your family members and what not that, you know,
that's great but they shouldn't be doing it here.
You know, I notice a lot of problems
that some apartments being built on the off-ramps
along the freeways, along the rail lines,
along Metrolink, you know, for sure
that that's not just free property
that the person that owns those rails also owns a freeway.
and because the property on the off-ramp wasn't,
somebody didn't run and claim it, stand in there
and start building right away, that that's free property
or something like that, that's just not the case.
So you know those developments,
you can knock out as you please.
It may be that Metrolink needs a demolishing crew
just to go along and remove obstacles
that aren't supposed to be there.
And I would sanction that for you guys,
I would allow you guys to do that, I would endorse that.
I know that there's a lot of risks in the job
and I don't want you guys,
I'm not telling you guys to do something crazy
but things don't get to run like it's supposed to,
I appreciate it.
Thank you, sir, for your comments.
Are there any other public comments?
Seeing nobody else, we'll go ahead
and close the public comment period
and move along to our regular calendar, item 6A.
This will be approval of the minutes
from the June 9th, 2023
Audit and Finance Committee meeting.
Before I take a motion,
do we have any colleagues here
requesting any modifications?
Seeing none, do we have a motion to approve?
We have a motion by McAllen.
I couldn't hear the second.
I'll second, Chavez.
Okay, very good.
We do have a motion and a second.
And because we are having some members via Zoom,
we have to do roll call.
So, Madam Clerk, please proceed.
Vice Chair McCallin.
Yes.
Director Murphy.
Aye.
Director Chavez.
Aye.
Director Najarian.
Yes.
Chair Bergson.
Yes.
That motion carried unanimously.
Excellent.
Moving along to item 6B,
the internal audit proposed fiscal year 2024
annual audit plan presented by Elizabeth Lozwardi,
senior manager of audit.
Good morning, Chairman and members of the committee.
Next slide, please.
As required by the internal audit charter,
a risk-based audit plan is required to be developed
annually for review and approval to the board of directors.
The audit plan was developed utilizing a five-step process,
understanding the authority's strategic business plan
related to risks defining the audit universe,
assessing and scoring the risks, prioritizing the risks,
and finally developing the audit plan.
Next slide.
For fiscal 24, there are six new audits.
And next slide.
And there are four audits carried forward
from prior fiscal.
Two out of four audits are completed recently
and will be presented in the next two items.
From time to time, internal audit is requested
to provide assistance to the contracts department
to perform analysis of proposed contract labor costs,
incurred costs, contract close outs, and other matters.
Next slide.
This concludes my item.
Happy to answer if you have any questions.
Excellent report, thank you very much.
Any questions from my colleagues at this time?
I see Director Chavez.
Go ahead.
Not a question, Chair, and thank you.
just a comment, I just want to say thank you
to our audience finance team for their hard work.
I know it's not easy.
I know I've sat one on one with Ms. Luswarti
and going over it and she explains it very well.
So I just want to show my appreciation to her
and her team for all their hard work on that.
Thank you, Chair.
Thank you very much for that comment.
Appreciate that.
Do we have any public comments on this item?
I have not received any written public comment
or any requests to speak on this item?
Very good.
Bringing it back up to the dais,
I at the board briefing brought up something
after thinking about it a little bit or a lot.
It has to do with our primary goal at Metrolink,
and that has always been safety ever since I've been here.
Safety is the primary goal.
So when I was going over the staff report,
There's a table, table two key risk factors
that they analyze what items need to be audited
and how important they are.
Well, the first three items each have an equal weight
of 25%, so safety and security is 25%,
operational and strategic is 25%,
financial and compliance is 25%.
However, at least in my viewpoint,
if safety is the primary function,
shouldn't that be at 26% or more to at least show that we are truly emphasizing the safety
in everything we do, no matter what department it is or what aspect of Metrolink safety is
paramount.
So I was just thinking maybe we should revise this chart for the future to, of course, with
boards you know concurrence I think that should be modified for our future
reports just so that we all understand safety is the number one thing we're
looking at and it's not it's not equal to everything that's beneath it it is a
step above that being said I also was thinking about the fact that we live in
some very interesting times, pandemic, post-pandemic. A lot of issues happen on our trains, not
necessarily our trains, but trains in general. And what I was thinking about was an active
shooter situation. And I thought, well, if I was on a train, what would I do? I mean,
everybody's thinking call 911, but there's got to be some other options. And especially
if it's a board member or an employee of Metrolink, or I'd also say Amtrak because
there are the engineers and conductors.
I was thinking maybe we could add another item to this year's audit finding that has
to do with determining what is the process and do the employees even know there is a
process. Aside from the conductor that's actually well not aside from the
conductor the conductor has certain thing protocols I'm sure that they need
to follow in that scenario but I'm really thinking about the global impact
of others that are on that train. You know you certainly don't want to be on
your phone with an active shooter saying oh he's in my car and he's going to
shoot me because I'm talking to you right now but texting or some other
method so I was hoping if I had concurrence maybe we could move this to
the full board if as a modification to or a an amendment to approval of this
item to add that as as a an additional audit to be done this year of course I
would also then ask Elizabeth if there's time and man hours enough to make
something like that you know I know you only have so many hours so I'm not
trying to push something that can't physically be done within the hour so I
have to ask if that's even possible and maybe just to add also on page 18 of
the report there is a list of high-risk areas although not selected for this
inclusions to be included in this fiscal year audit plan safety and compliance
is included in one of the areas
that we are closely monitoring
because we are currently also in a meeting with management.
I just had a meeting with you, Darren, yesterday
in terms of discussing of the communications related
when an incident or a crisis occurs.
And that's also in my top list of high-risk areas.
currently management is working in terms of revising
the process and that's the reason it's not included
currently in the fiscal year 24 audit plan.
I don't know if you want to add anything to that, Darren.
No, I think, Elizabeth, you covered it.
I mean, we are at a stage where we're
taking a deeper look into our entire crisis
and emergency management activities
under the leadership of Frank Castellan.
So we're at that point, it's what may,
we need to give the team time to develop their program,
that's something in working with management,
of course with the support of audits as well
on best practices.
But no, Elizabeth, I think you covered the important items.
My colleagues, before I say anything else,
if they have any comments to make about my, Larry, go ahead.
Well I've gone over as chair with Elizabeth the audit plan prior to the meetings and I
agree with her. There's a lot to be done and we could we could be auditing a lot
more things if we had a lot more people. Obviously we're doing what we can with
the manpower that we have and I think the items that were selected were
appropriate for this time around and obviously we can do additional things as it comes up.
But adding something now I don't think is something that we ought to be doing.
Director Chavez has his hand up. Go ahead.
Thank you, Chair. I just wanted to kind of piggyback off of what you were saying about
safety and security. Obviously, we're you know, we need more people with Metrolink,
but I want to say how much I appreciate those comments in regards to thinking about the future
and those worst case scenario situations. For someone who was in public transit for
10-11 years, I understand that it's not an ideal situation when you're in motion.
what steps you need to take in order to keep yourself and everyone else safe.
I just went through with my current employer school district that an active shooter drill and
how to respond to those types of things sometimes are things that you don't always typically think
about. Your first thing is just to hide, but how do you do that on the train when it's in motion?
you know, how do you get a message to our conductor? You know, these are things that
we need to think about. And of course, you know, Darren is well aware of the importance of safety
as he rides the train, he speaks to our riders, he speaks to our employees, so he understands that.
And then we have a good chief of security person. We also have a good chief of operations who was
is just in the security position role before.
So I think we're positioned for getting to those steps,
but I just wanted to say
that I appreciate you bringing up those concerns
because that has been a concern of mine also.
So thank you, Chair, for making those comments.
Do we have any other comments?
Mr. Chair, if I could just real quickly add
because we're talking about active shooter,
just so you're aware.
It is something that we regularly drill on.
All of our staff are required to go through
active shooter training, we've just completed that.
What I'd like to do, I'm recognizing the,
obviously it's something we should all be concerned of,
and it has happened sadly in the transit space
where we've had to deal with active shooter.
Typically it's been related to places of employment
more so than in the action of taking a train,
but nonetheless we should do that.
What I'd like to suggest we do with your permission
is that we schedule some time
where when Frank Castellan is back,
and we can talk about the things that we're doing
as it relates to active shooter type of drill work,
what we're doing with local law enforcement,
given the sheer expanse of the region,
level of cooperation, so that we can at least share
with you, there is activity happening on that,
and currently underway with the agency.
Very good.
And I will leave it at that, but I will just
continue to see how things go just visually
from my own perspective and next fiscal year
if there's questions or concerns.
And also, as you did, Larry, I had a meeting
with Elizabeth Busuardi, and went over the list.
And at the time, the list is, you know,
and the list still stands.
It's still a good list of items,
including the ones that are being carried over.
But it was an afterthought,
which is why I hadn't raised the appropriate time,
I would say.
However, I appreciate, Darren,
that you are working diligently,
and we'll see how this progresses,
so that not just people can feel extra safe
if somebody's on board that can also help them aside from just the conductor
here's the exit here's how things that that the the passenger doesn't know but
an employee maybe needs to be trained to know and that's kind of what the audit
the point of an audit would be to say what are you doing what could we also
add to that mix down the road to train people even better so we'll see where we
And with that, I will ask for a motion to approve.
I will move the item for approval, but I wanted to make a comment that if we talk about this
in public, there may be some things that we don't talk about dealing with safety
and protection, you know, that we institute so that people,
That guy's don't know what they're facing, you know.
You're correct, and that's a very valid point.
This would be, I would say, information to employees who already are employees, and hopefully
they're, you know, they could do something that the average person wouldn't know, nor
would we ever give.
I was addressing the fact of having Castellan come before us and tell us what's going on
I just wanted to double check if the motion is the approving the auto plan as is okay.
the next. Thank you. Vice Chair McCallin. Yes. Director Murphy. Aye. Director Chavez. Aye.
Director Najarian. Yes. Chair Bergson. Yes. That motion carried unanimously. Okay, item 6C
performance audit IT software asset inventory process 2023-07-IA. This is a
receiving file presentation presented by Elizabeth Lozwardi, the senior manager
our chief technology officer as requested by Director McCallan at the board briefing,
Elisa will provide you with an update on the corrective actions after my presentation.
So we completed the IT software asset inventory process audit and the audit was included in
the board approved 23 audit plan.
The objective of the audit was to evaluate the effective steps of the employee and the
The objective of the audit was to evaluate the effectiveness
of the IT software asset inventory process.
There are four findings and six recommendations.
Management agreed with the findings
and developed corrective actions.
We will be reporting on the corrective action status
to the board on a quarterly basis.
And this concludes my item, Elisa.
As stated, this audit covers
IT related assets from January 2021 through December 2022.
I started as the Metrolinx CTO in September of 2022.
Since then, we've taken several mitigation steps.
We've strengthened the controls around IT software
and hardware acquisitions.
We have prevented the ability for users
to install software outside of IT.
And we are also working with our contracts groups
in cases of technologically related software acquisitions,
including hardware, software, and network.
The IT group does a complete review,
including an architectural review,
a cybersecurity assessment.
And then we also do what we call a rationalization.
And that's where we look for economies of scales.
And we determine if we have some similar software that
can maybe serve that purpose.
And we also ensure that the contract,
if we want to go forward with it,
has very strong cybersecurity-related language.
We also, at this point, reassess licensing
and see if there are ways for us maybe
to decommission software.
And we also have implemented several technological tools
that allow us to identify if, by chance,
If someone is able to get around our controls.
With that said, I'm willing to take any questions.
Thank you very much, appreciate that.
I see Larry's light is already on.
Just a comment.
I found this audit to be very concerning to me
and I kind of congratulate Elizabeth and her team
for doing an outstanding job in the audit.
It highlighted a lot of vulnerabilities we had
the software area. And I'm glad to hear that we've taken appropriate action to
clear that up even, I mean, when you came on board. I'm glad to hear that there
are processes in place where no one can install software on their computers
except IT. That's important because one of the things that bothered me with the
audit was that they found that some people had put personal software, finance software,
or gaming software on their computers. And that's a definite no-no, absolutely. Those
guys, instead of the slap on the hand, should have had, in my view, more discipline applied.
But that's not my bailiwick. So thank you very much for the audit, and thank you for
corrective actions that you've taken. Thank you Larry. Do we have any other
comments from my colleagues? How about any public comments? I have not received any
written public comments or any requests to speak for this item. This was a
receiving file item so if there are no other comments we will go ahead and
receive a file and move along to item 6d performance audit HR recruitment and
and selection process 2023-05-IA, again, a receive and file
and also again, presented by Lisbeth Lombardi.
So we completed the HR recruitment
and selection process audit.
The audit also was included
in the board approved fiscal 23 audit plan.
Intel audit engaged for OLP to perform the audit.
And I'm joined by Bert Nuring, the partner
the engagement is available to answer questions.
The objectives of the audit were to determine compliance
with HR policy and procedures,
with the applicable law and regulations,
and also assess the process effectiveness
as measured against best practices.
There are six findings and respective recommendations.
Management agreed with the findings
and developed corrective actions.
We will be reporting on the corrected fashion status of the board on a quarterly basis.
This concludes my item.
Thank you very much, Elizabeth.
Do we have any comments from my colleagues?
Seeing none, do we have any public comments?
I have not received any written public comments or any requests to speak on this item.
Okay, unless there's a further comment, we will go ahead and receive a file
and move along to item 6E, financial results
for the 11 months ended May 31st, 2023, ridership and revenue and operating results.
This time we are getting a presentation by Christine Wilson, the Senior Manager of Finance.
Good morning Chairman Bergson and members of the committee.
I'm presenting the financial results for the 11 months ended May 31st, 2023.
Next slide, please.
This slide shows ridership recovery process, progress.
The green boxes reflect actual performance by month
through May of 2023.
The black line is the FY23 budget against which we are measuring
because that is our budget for the year FY23.
The gray line shows the FY23 portion of the KPMG Sperry-RAN forecast
which we'll be using in FY24.
As you can see, our performance is slightly above the forecast,
confirming our beliefs that the new forecast used for FY24 will produce a revenue expectation
that will prevent shortfalls in FY24.
Next slide.
This slide shows fair box revenue by month for the physical year 2023 budget compared
to actual and a visual format.
Next slide, please.
This slide shows specific Fairbox revenue amounts
and recovery percentages by month.
As you can see, revenue through May of 2023 was budgeted
at a recovery of 60% or 42.6 million,
while the actual was 40% recovery or 28.4 million,
creating a revenue shortfall of 14.2 million.
Next slide, please.
This slide shows the year-to-date Fairbox revenue
compared to budget by line.
Next slide.
This slide shows ridership by month for fiscal year 23,
budget compared to actual in a visual format.
Next slide.
This next slide shows specific ridership amounts
and recovery percentages by month.
Ridership through May of 2023 was forecast
at a recovery of 60% or 6.5 million,
while the actual was 42% recovery or 4.6 million,
creating ridership below forecast by 1.9 million.
Next slide, please.
This slide shows ridership results through May by line.
Next slide.
As to the operating results.
The operating statement results through May of FY23.
Operating revenue is at 14.3 million below plan.
Total expenses are 35.4 million below plan.
With major contributors to the expense under it
being admin and services, train operations,
MOW and insurance.
I point out to you that this is based on accruals
and it also does not include a number of items
that must be trued up at the end of the year
during our outside audit.
So these numbers could change.
Next slide please.
Here are the actual detailed operating statements.
This is revenue.
Next slide.
Expenses.
Next slide.
And the totals showing the amounts that I described to you.
Next slide.
Now we get into Eero service.
Next slide.
You see here the Eero service revenue results
by month through May.
Next slide.
These are the actual revenue amounts and you see that, through May, we budgeted $773,000 whereas actual was $152,600 under budget.
Next slide. The ridership shows the same pattern. Next slide.
These are the amounts of ridership. Next slide.
This is the operating statement for aero revenue is below plan by 600,000 total
expenses are 5.3 million below plan support is 4.7 million below plan. Next
slide this concludes my report may I answer any questions. Thank you very much
for your report and to my colleagues have any questions on this. Just a net
comment. We can go back to the slide that introduced the arrow service. That doesn't
look like an arrow to me.
We'll make note of that in our graphic department. We'll get that correct.
It still looks like a really nice train though. Still a very pretty train.
Same species.
Just a quick question, Christine.
Because of our new, for our next fiscal year, which we're now in, we won't be seeing this
ugly chart, maybe only one more time with the 12-month pin one, but my question had
to do with Fairbox Recovery.
So I know our Fairbox Recovery was really, really bad, but that was based on the budget
for prior fiscal year.
That's right.
In the new fiscal year, has the Fairbox recovery been adjusted as well?
Is that going to kind of now follow suit with what our revenues are expected to be?
Yes, oh yes, yes.
So now we hopefully will see everything stable across the board?
Yes, yes.
And could you go back to the second slide?
I just want to show you, when KPMG gave us their forecast, back a few more.
Keep going back.
Go, go, go.
One more, one, there it is, that was it.
Okay, when KPMG did their forecast,
they gave it to us all the way from November of 23, right?
So you see here, their forecast is actually below
where we, what we achieved.
That makes us think that we'll have a forecast
that's right in line with what happens.
Let's hope so anyway.
I hope so, because I didn't like this chart anymore.
I'm tired, I'm tired.
So are we.
I know, I know.
Any other last comments from any of my colleagues
on this item?
Seeing none, it was a receive and file item.
Thank you very much, Christine Wilson, for the report.
We are now going to our favorite topic of the day,
our chief executive officer's report, Mr. Kettle.
Thank you, Mr. Chair.
Two good news items.
I think everybody's been well-informed at this point
about the San Clemente service and the fact that we're going to be able to start running
trains again starting Monday along with Pacific Surf Liner. That service will be restored
at full speed. We have a lot of people were engaged in this. When we do have the board
meeting, we will show some more pictures, show the time lapse of the project. The fact
is the project came in under budget and ahead of schedule. We did not expect that we would
be able to have trains until maybe the the following week. The fact that we've
been able to deliver in a timely fashion has been appreciated. I've received phone
calls of appreciation from Amtrak Pacific Surfliner recognizing the
critical nature of that corridor. So good news there. The second piece of good news
at the other end of the coastal corridor is over the course of next
weekend when working with the Ventura County Transportation Commission,
Metrolink will be providing additional train service all the way to the Ventura County
fairgrounds for the X Games finals that are being held there, where you'll be able to
use the additional round trip trains on weekends to be a spectator at the X Games.
So looking forward to capturing new interests from people that may not have thought about
taking the train in the past, and so we'll see how that goes.
I just want to share both of those pieces of good news.
Publicity going out to the masses
so they know that that is going to happen.
Next, committee member comments.
Any of my colleagues wish to say anything today?
I would love to, Chair.
I just want to publicly say thank you to the staff.
Myself and two other directors had an opportunity
to attend a two-day onboarding.
In addition to checking out our refurbished trains,
successfully navigating my train around a cow and a bus
on the simulator and receiving my unofficial license.
More importantly, I had the opportunity
to sit in a room full of the leaders of this organization
and I could tell you, wow,
just the incredible amount of competency,
passion, and leadership in that room,
that's what truly makes this organization amazing
and I'm just so blessed and thankful to be a part of it.
So for everyone who had a hand
in making that onboarding possible,
just thank you so much.
It was phenomenal and I'm, again, just so thankful.
And that's all I have.
Well, we appreciate hearing that.
I know when I was onboarded there was no program at all.
Zero, nothing.
So, I've never even seen the simulator,
let alone gotten an unofficial license, so.
Well, maybe we need to onboard all the old members, too.
I'm not objecting to it.
Not old members, but long-time members.
That's right, well.
I know a guy will react to it.
All right, and any other committee member comments?
Go ahead.
I just want to welcome back our President.
Well, I'm glad to be here.
I appreciate all of the, as I've gone through this battle,
I appreciate all the good messages
that I've received from my colleagues, phone calls, cards,
good thoughts.
It makes you realize that how many friends you have
and you appreciate them a lot more.
So I wanna thank all of you, thank you very much.
And thank you, Larry, it brought a smile to my face
when I walked in and saw you here and I told you
how excited I was to see you, so.
That because because of my bald head well, you know, I keep losing it you just you know
You look better than I would with no hair
Well, I'm just trying to emulate our
You handsome devil
Bald is beautiful
we were here at
chairs comments, which I just I
I've said enough today, so we're going to go ahead and adjourn the meeting at
943
Thank you so much for being here
Meeting is adjourned
Thank you. Have a good one