Morning, are we ready other than me? Very good. We will call the audit and finance committee of MetroLink for Friday, July 12th
2024 to order at 902 a.m.
To begin we'll have our safety briefing with Tim Morehead the interim chief safety security and compliance officer
Alright, good morning chair vice chair CEO members of the committee
Today's safety briefing is a reminder that in the event of a fire alarm activation
We're gonna want to collectively exit the boardroom go downstairs
And we're gonna stage outside front of Metro's customer service and wait for further instructions
For those of you that don't know the exits always look up to the roof
You'll see exit signs with arrows that will point you towards the direction that you need to go and those that may be at home
Or in the office just know your exits and and be prepared in case something happens at the house or office as well
In the event of an earthquake I'm going to ask that everyone take cover, wait for the
shake and the stop, and then we can make an assessment at that point if an evacuation
is going to be required.
In the event of a first aid situation, we do have a first aid responder in the room.
If he's unavailable, I will provide the first aid response, and then I will ask the board
Secretary to contact the security desk out front also where the AED device is
located and I call 911 if needed. And in the event of an active attacker let's
remember the three key words run, hide, fight. That concludes today's safety
briefing. Thank you very much and item three the Pledge of Allegiance please
join together placing your right hand over your heart. Ready begin. I pledge
allegiance to the flag of the United States of America and to the Republic
for which it stands one nation under God indivisible with liberty and justice for
all. Madam Clerk can we please have a roll call? Certainly. Director Middleton Vice
Chairman Callan. Here. Director Dutray. Here. Director Nguyen. Director Murphy. Here.
Here.
Director Tremblay?
Here.
Director Corcoran?
Director Najarian?
Here.
Director O'Connor?
Here.
Director Hughes-Leslie?
Here.
Chair Bergson?
Here.
We do have a quorum present.
Excellent.
Okay, moving along to public comment.
Do we have any public comment items
that are not on the agenda?
I have not received any written public comment
or any request to speak.
Excellent.
to item 6a on the regular calendar, an action item, approval of the minutes
from the June 14th Audit and Finance Committee meeting. Any colleagues have
any comments, questions, revisions? I don't see anybody online or here so do we
have any public comments on that? Seeing none, do we have a motion? We do have a
motion. McCallin, do we have a second? Second, Murphy. Murphy seconds. May we please
have roll call. Vice Chairman Callan. Yes. Director Murphy. Yes. Director Tremblay. Yes.
Director Najarian. Yes. Chair Burksen. Yes. That motion carried unanimously.
Excellent. Item 6B will be, this is to amend fiscal year 2024-2025 budget to
carry forward remaining funding approval in prior years for three San
Clemente landslide projects being presented by Christine Wilson,
assistant director of finance and this will be an action item good morning
chairman Bergson and members of the committee I'm Chris Wilson presenting
item number 6B a request to amend the FY 25 budget to carry forward remaining
funds adopted in the FY 24 budget for the three San Clemente landslide
driven projects the first of the three projects were in September was in
September 2021 at Cyber Shores or mile post 206.8. The second was in June 2023 at Casa
Románica or mile post 204.6 and the third at Mira Posa or mile post 204.2. All of these
landslide caused problems for our tracks and where a safety issue requiring prompt action.
All the immediate problems are believed to be resolved and services in all areas has
been restored but funds are still required to monitor the tracks and
continue to pay for any billings outstanding. All funds have been
provided by OCTA, the Orange County Transit Authority and the state of
California. Next slide please. This slide shows the amounts which were adopted
for each of the projects in prior years, funds which have been expended and the
remaining funds. Budgeted operating funds expire at the end of each year
Therefore, we are requesting that these remaining funds be added to the FY25 budget in an amendment.
As you can see, the amounts are 1.7 million, 2.9 million, or 4.0 million, respectively,
for the three projects totaling 8.6 million.
Staff recommends the committee recommend to the board that this amendment be adopted.
That concludes my report.
May I answer any questions?
Do we have any questions on this item?
I do.
He has a question.
Go ahead.
Are most of these funds grants from the state, or are they OCTA funds?
Most of it was OCTA funds, only a small portion was from the state.
And I don't want the money back.
Well, I'm sure they do, but they will call it, of course, get it as soon as all the expenses
are paid.
there a reason that this didn't hit the budget from the get-go I mean we knew
the funds hadn't been spent so I'm just curious why this items coming up after
the budget because we have to wait until it wasn't until now after June 30th that
we knew how much was left to get the exact amount thank you any other
questions seeing none are there any public comments on this item no public
comments. Do we have a motion to approve? Anybody? So moved. Murphy.
Murphy moves. And Trembly seconds. Thank you both. Roll call please.
Vice Chair McCallin. Yes.
Director Murphy. Yes.
Director Trembly. Yes.
Director Najarian. Yes.
Chair Bergson. Yes.
That motion carried unanimously. Excellent. Thank you.
Item 6C, the internal audit proposed fiscal year 2025 annual audit plan,
Presented by Elizabeth Lazuardi, the audit director.
This is an action item.
Good morning, Chairman, members of the committee.
Next slide, please.
So as required by the internal audit charter,
a risk-based annual audit plan is to be submitted
for review and approval to the board of directors.
The development of the audit plan includes five key steps
as detailed on the slide.
The audit plan will serve as the roadmap
for our department to conduct future internal audits
in the next fiscal.
Next slide.
The proposed fiscal 25 annual audit plan
is presented on this slide,
and there are four new audits.
Next slide please.
And these are the carried forward audits from fiscal 24.
We are now requesting the board
to approve the fiscal 25 annual audit plan.
Happy to answer if you have any questions.
All right, thank you very much.
One comment I was gonna make on that really quickly
was I appreciate since last year's,
we did up the percentage to 25% for safety and security,
which of course is the foundation of Metrolink,
and it needed to be shown in that regard.
So it was nice to see that improvement.
Do we have any other questions or colleague
from my colleagues here online?
Not seeing any raised hands.
Do we have any public comments on this?
We don't, okay, excellent.
In that case, we will ask for a motion.
McAllen, up moves.
We have a motion by McAllen.
Need a second?
Second, Najarian.
Najarian seconds, excellent.
Roll call vote, please.
Vice Chair McAllen.
Yes.
Director Murphy.
Yes.
Director Tremblay.
Yes.
Director Najarian.
Yes.
Chair Bergson.
Yes.
That motion carried unanimously.
Okay, on item 6D, before we,
This is a financial 9.2 collections escalation policy.
Our CEO wanted to make a comment first.
Yes, thank you, Mr. Chair.
As committee members know, we do briefings
during the week prior to committee meetings.
And during the briefing, Chair McAllan identified
some issues related to the policy
that actually incorporated some items
that are more procedure.
So our staff has gone back and are working on the policy
so that it's clearly policy.
We'll have a procedure behind that.
So what we'd like to do, Mr. Chair,
is to just take this to the full board
as an action item at the board
after we've had a chance between finance and legal
and the CEO's office to clean up those elements
so that we can clearly show what is policy
and then a procedure will be developed behind that.
Okay, do we have any objections to that?
I don't object.
Does that include the uncollectible account
that we were going to, also.
We'll take the whole action,
the whole item just directly to it
without action from this committee.
Okay, not seeing any objection,
we will pull that item and that will go directly to the board.
Item 6E, fiscal year 2024, financial results
for the 11 months ended May 30th, 2024.
This is the ridership, revenue and operating results.
A receive and file item presented by Christine Wilson,
The assistant director of finance.
Good morning again, chairman Bergson and members.
Again, this is presenting item 6E,
the report of ridership and financial information
through the 11th months ended May, 2024.
Next slide, please.
This chart shows Metrolink membership by month for FY24.
The columns are actual ridership.
The red line is the ridership forecast.
As you can see, we are over budget.
The blue parts of the column represent regular ridership
while the orange portion represents
the Student Adventure Pass ridership.
Next slide, please.
This chart displays Fairbox Revenue by month for FY24.
Once again, as you can see, we're over budget.
Next slide, please.
Here we see the Fairbox Revenue amounts by month
through May of FY24.
Physical year to date through May,
Fairbox revenue was budgeted at 32.2 or a 46% recovery
while the actual Fairbox revenue is 36.2,
a 51% recovery and 3.9 million over budget.
This revenue does include the student adventure pass
in an amount of $1 million for the month of May
and $6.7 million year to date.
Next slide please.
This chart shows the FY24 ridership by month.
Next slide.
You see here the ridership amounts
for each month in FY24.
Year to date through May,
ridership was forecast at 4.9 million,
or a 45% recovery,
while actual ridership was 5.6 million,
or a 51% recovery,
661,000 over the forecast.
These numbers include the student adventure pass
and represent 142 riders in the month of May,
142,000 riders in the month of May
and 959,000 riders a year to date.
Next slide, please.
The operating budget for the 11 months ended May, 2024.
Revenue is 58.6 million or 9.2 million over plan.
Expenses are 257.1 million or 22.3 million under budget.
Major categories which are under budget are shown here in the slide.
Before San Clemente expense we are under budget by $22.3 million.
And overall member agency support is currently in surplus by $31.7 million.
This data is based on accruals, not actuals.
This is the, next slide please.
This is the revenue section of the operating statement.
You see here that Fairbox revenue is under forecast.
It is probable that a considerable number
of the revenue shown here is now included
in this student adventure pass.
However, even if the shortfall is a result of that movement,
the data indicates that we have an additional benefit
of almost $4 million.
In other operating revenues,
we also see an increase of approximately 4 million.
This is a result of improved investing tactics
and better performance of rates.
Next slide, please.
Here is the train operation sections.
Category most under budget are train operations and fuel.
Next slide, please.
Maintenance of way is under by 2.2 million,
and all admin categories are under by 9.4 million.
Insurance is under by 1.8 million.
In total, expenses are under by 22.3 million or 8%.
Next slide please.
This slide is showing the result of special unbudgeted trains
which have earned $115,000.
Thus, the net loss through 11 months ended May is 198.4 million
or 31.7 million under budget.
Real confidence in the number will occur with year end closing.
Next slide.
Here is a graphic of the pass-due receivables as of May 31st.
Next slide.
This shows the detail of pass-due amounts of receivable.
Next slide.
Arrow, oh, sorry.
This is the cash position of SCRRA as of May.
And as you see, we are within our $50 million threshold.
Next slide, please.
Arrow service.
Next slide.
Fairbox revenue through May is 223,000,
of which 43,000 is student adventure pass.
Ridership through May is 107,000,
which is, of which 38,000 is student adventure pass.
Next slide.
Operating statement for Arrow.
Through 11 months, operating revenue is 472,000.
Expenses are $11.6 million, $2.4 million
under the continuing resolution used for FY24.
Support required is $11.2 million or $2.9 million
under the continuing resolution.
You will note that a new revenue category
has been added to Arrow for MOW revenue for BNSF from BNSF.
Because Arrow is charged for cost of track maintenance,
they will receive the funds paid by BNSF
for its use.
Next slide please.
This concludes my report.
May I answer any questions?
Thank you for the report.
Do we have any comments or questions by my colleagues?
Paul Krekorian, welcome and go ahead.
Thank you Mr. Chairman.
And I have to say with such efficiency,
I'm lucky I even made it.
Thank you very much for moving us forward.
Thanks for the report as always Chris.
it's very useful, I think, to have the comparison
between budgeted assumptions and what we end up spending.
Where I struggle still, and I'm sorry
that I struggle with this, but even after all this time,
when we're in this time of kind of reevaluating,
in a real sense, reevaluating some of our core mission,
in the post-COVID era, and our CEO has had a lot of real vision for how do we position
this agency to deal with the realities of a different economy, a different transit model
for the 21st century going forward.
Ridership numbers alone don't give me enough information to determine whether or not we're
are making the best investments to achieve those new goals.
And I'd like us to take a little,
as we continue to have these reports in the future,
I'd like us to consider taking a deeper dive
into other kinds of performance metrics other than ridership.
Passenger revenue miles, for example.
other things that we that maybe some of our our sister agencies use because
especially in a five county agency with each member agency making substantial
investments in this agency it's hard for us to figure out where is our money best
spent you know where do we get the best return on investment for each of those
dollars. It isn't as simple as saying X number of track miles or X number of
passengers. We have to look more deeply at that. So for next month, and I've got
some thoughts about some things that we might want to consider, but I'd like us
to have a broader range of performance metrics other than ridership and
dollars spent so that we can start, so that the board can be a little bit more
thoughtful in thinking through where our money is best spent. Where do we get the
most bang for our buck? Yeah, I do. Mr. Chair and Director Krekorian, we do have
that data. Because of what we have to submit to the National Transit
Database, it is data we do. We have absolutely by line, by system of course.
This is generally Ms. Wilson's presentation as a high-level summary for
the whole system but we have it that information where we're able to show
where lines have been better performers. Perfect example is the Antelope Valley
line with the service modifications we did this last year where we've
immediately seen better numbers on the per passenger mile that kind of thing so
that we have a sense of you know the decisions are making are there yielding
results or not so we we can that's something we'll drill down a little bit
more on. It's probably a deep enough topic that it's something at a workshop
or something along those lines so but let's see what we can come up with
and certainly at a workshop where we can get line by line so you can see that
information is going to be I think maybe helpful and informative for the larger
decision-making process. That would be very helpful and Antelope Valley line is
a good example because you know from from my perspective as a board member
member is a well invested more service produced more results that's great you
know that's a good thing but is it the right investment with the you know
optimal return compared to something else that we might have done I don't
know so having that kind of data I think would be would be very useful
excellent comments appreciate those anybody else have comments or questions
Larry? Yes, I agree with you completely. And Aaron, when do you think you'll be
able to have that information sooner than later? Yeah, sooner than later. Was that a
question or was that a statement? So let us, let me talk with the team, figure out
how we put together something that's digestible and gives you the information
and see how we were able to present that. Again, we're dark in August, so it may be
something we try to have set up for the September board meeting again the data
is available it's just going to be a matter of how we break it down and make
it so that it again that it's digestible because there is a huge amount of data
out there and so we want it to be something that's meaningful and not too
deep in the weeds and that's good September board meeting since we're not
having committee meetings in September that would be good work towards that and
And I'd just like to add a couple of my own thoughts
onto that.
One thing I've noticed, I also sit on the local buses
for Riverside Transit Agency.
And I know that, generally speaking,
at least in the Riverside area, the pre-pandemic levels
of bus riders, we've now surpassed that.
It's taken a while, but that's happened
over the last several months,
maybe in the last six months,
I've seen several agencies finally hit that target
of pre-pandemic numbers, yet in this industry,
we're still at half of that, at 50%.
So I wanna know, and I know that our sister agencies
throughout the Northern California, other states,
were also in that 40% range,
while we were still in the 40% range,
but I'd like to see how they're faring as well
as a comparison.
Because if, for example, they're about 80%,
and we're still at 50, what are they doing differently,
which feeds right into what Paul Kocorian is talking about,
we need to determine if the schedules that we're looking at
and the method that we're using to attract passengers
are the most appropriate and best return on the investment.
So I think we should be looking at sister agencies as well
to see where we are in comparison with them,
and then find out what kind of programs that they offer
that are more successful to them,
and then we can look and see if we can either incorporate
or modify some of what we do
to increase overall ridership, so.
And that's, again, that's readily available data
through the National Transit Database.
I can tell you anecdotally that we are back and forth
with Chicago Metra, our sister agency in Chicago.
We are neck and neck with them at about 55, 56%
of ridership recovery from pre-pandemic.
In California, we have seen we're doing the best
of the four commuter railroads,
but we can lay that out so you can see it.
The one, I'll call it outlier is the part of the country
that was accustomed to transit
way more than the rest of the United States,
and that's the New York, New Jersey area,
Pennsylvania, Boston, but they'd been doing it
a lot longer than we've been doing it.
So, but we have that data and we're happy to share it.
You're making Henning Eichler probably the happiest man
on the planet because he's the one that's gonna get
to do all the data mining on this one.
So, you've just made his day, gentlemen, ladies.
We're very happy to have done that.
And I appreciate all the comments from my colleagues.
So, do we have any public comments on this item?
We do not.
Any last minute comments from my colleagues?
This is a receiving file item, so without objection,
that is what we will do.
And then we will move to item seven,
our Chief Executive Officer's report, Darren Kettle.
Yes, thanks, Chair Burksen.
Just two quick items.
First, those of you that are on Zoom,
you're not gonna be able to see my introduction here,
but in our audience today,
we have our new Chief People Officer,
that is Alberto Lara.
So Alberto's here, he's joined us,
he's been with us a couple weeks.
and Arnold Hackett was kind enough to make sure
he knew how to find this boardroom today.
But Alberto joins us, he was most recently
with the County of Yolo here in California,
but he also worked for the Santa Clara Valley
Transit Authority and Pierce Transit in the Tacoma area.
So some great experience in local government
as well as transit, great to have him on board.
He's a native of Mexico City.
And so he is making his way from North to South.
He loves being in Los Angeles.
He's living here in town.
See, he's like three subway stops from the main office.
So Alberto, welcome.
Glad to have you on board.
Welcome.
And I will make sure that we introduce Alberto
at the board meeting for those of you
that are able to be here for the board meeting in July.
The only other item I have to report
is something I think most people are familiar with.
Late last week, midweek last week,
or before the 4th of July holiday,
Governor Newsom announced the release
of all the transit funding that had been bottled up
during the budget process.
It has been released now.
All of the member agencies are the recipients of that.
We don't receive it directly at Metrolink.
We work with our member agencies
to capture some of that revenue,
so it has made its way out,
and we're looking forward to those contributions
that our member agencies are making
to help us continue to operate our system.
As we do recover, continue to recover.
There's a recognition that our recovery is a bit slower,
but critically important is our system,
and so we're gonna work through that,
and that's what SP 125, the budget bill from last year,
made happen, and now we have the resources released.
So, Mr. Chair, that concludes my report.
Very good, and welcome, Alberta Laura.
And then, committee member comments.
Anybody on line?
Raise your hand, shout, scream, nothing?
All right, how about anybody here?
Larry?
And the check's in the mail, is that what I heard you say?
The check's in the mail, yes, sir.
To you guys, the member agencies.
Hopefully the check will go in the mail to us after that.
Very good, well, with that, Chair's comments,
the, I'm gonna make this comment.
I didn't bring it up in the audit plan
because it's not included in the audit plan,
but I wanna ensure, last year, a year ago,
I brought up the fact that if a board member
or a Metrolink employee is on a train
and something happens to that train, what do we do?
I have no clue.
And a year later, I still don't have a clue.
And that is not good enough.
But I brought it up a year ago
to see if we wanted to add that to the audit plan
see if we could uncover that. But it was kind of too late at that moment. But I know in
the background things have been discussed about this, but I'd like to just, Darren,
ask you to bring us something back at the next meeting. It tells us where we are and
what program or policies are going to be put into place and when and how. I think it's
It's time to, you know, if there's an incident and you work for Metrolink or a board member,
you should have, if there's a back number, a phone number, if you are supposed to push
a red button on the third window from the right, whatever it is, that, you know, the
general public is not necessarily going to be given that instruction, but it certainly
should be given to people that are working for this agency or represent the agency.
So that is my request and I would appreciate if we can get that done.
And with that, that was my only comment.
We will adjourn at 9.32.
Thank you.
Thank you, Mr. Chair.
Thank you all online as well.