Good morning and welcome. We will begin the Metrolink Audit and Finance Committee Meeting
Friday, October 11, 2024, calling the meeting to order at 9 a.m.
First item up is the safety briefing, so we'll call on Tim Morehead, Interim Chief Safety
Security and Compliance Officer.
Good morning. Good morning, Chair, members of the committee, and CEO. Today's briefing
as a reminder that in the event of a fire alarm activation, we're going to collectively
exit through the exits down to the escalator and meet at the bottom corner of the building
by LA Metro's customer service and wait for further instructions.
In the event of an earthquake, I'm going to ask that everybody take cover, get down under
something if you can.
If not, put your hands over your head, protect yourself, wait for the shaking to stop, and
then we can assess to see if a evacuation is going to be needed.
In the event of a first aid situation,
we do have a first responder in the room,
as well as an AED located out by the LA Metro security.
And if security's first responder is not in the building,
I will respond and I'll ask Ms. Pena
to contact the security and dial 911 if needed.
And in the event of an active attacker,
let's remember the three key words,
run, hide, and fight.
That concludes today's safety briefing.
Thank you.
Thank you very much, and the next item
is the Pledge of Allegiance.
And Paul Krakorian will lead us today.
Thank you very much.
And roll call, please, Madam Clerk.
Director Middleton.
Vice Chair McCallum.
Here.
Director Dutray.
Here, sorry.
Okay, thank you.
Director Nguyen.
Director Murphy.
Here.
Director Tremblay.
Here.
Director Krakorian.
Director Najarian.
Here.
Director O'Connor.
Here.
Director Hughes-Leslie.
Here.
Chair Bergson.
Here.
We do have a quorum present.
Very good.
Item five, public comments.
We have any members of the public wishing to speak?
Seeing none, we'll move to item six,
the regular calendar, item six A,
approval of the meeting minutes for July 12th, 2024,
the audit and finance committee meeting.
It's an action item.
Any of my colleagues have any comments,
clarifications, or do we have a motion?
We have a motion by McAllen,
we need a second. Murphy, back up.
We have a second by Murphy.
We have to do roll call.
Madam Clerk.
Vice Chair McAllen.
Yes.
Director Murphy.
Yes.
Director Trembley.
Yes.
Director Krakorian.
Chair Bergson.
Yes.
That motion carried unanimously.
Thank you.
Item 6B.
fiscal year 2024 audit, excuse me,
annual audit activities review
presented by Elizabeth Luzardi, Director of Audit.
Good morning Chairman and members of the committee.
This is the recipient file item.
Next slide please.
The auditing standards required that internal auditors
be independent to the entities
for which they perform audit services.
Internal audit function is organizationally independent,
reporting functionally to the board
and administratively to the CEO.
And staff is confirming our independence
fiscal 2024. In this item we are also presenting the status of the fiscal 24
audit plan that's in the attachment a and all other audit activities that took
place in fiscal 2024 including external audits and CEO request projects. On this
board report we're also presenting our productivity report this includes my
item happy to answer if you have any questions. Okay any comments or questions
for my colleagues anybody online wishing to make a comment we have any public
comments okay we will close the public comments and this is a receive and file
so that is the direction unless there's any objection we will receive in file 6b
moving along to item 6c fiscal year 2024 internal quality assurance review again
presented by Elizabeth well those warty director of audit this is a receiving
file item as well next slide please so internal audit completed the annual
internal quality assurance review for fiscal 2024 based on the procedures
performed there are no deficiencies identified the auditing standards
required that internal audit self performs the annual review in addition
to the required external peer review every three years the last peer review
was conducted in March 2023 and was reported to the board in April 2023 with
with no findings.
The next peer review is scheduled to be in 2026.
Next slide please.
This concludes my item.
Happy to answer if you have any questions.
Thank you very much.
Do we have any questions or comments
from any of my colleagues?
Seeing none.
There was no public comment cards
turned in on this item, correct?
Very good.
And with that, we will receive and file
unless there's any objection by any of my colleagues.
Seeing none, that will be the order.
Item 6D, Corrective Action Status Update.
Fourth quarter ended June 30th, 2024.
Again, presented by Elizabeth Lizuardi, Director of Audit.
This is my last recipient file item.
Next slide, please.
The board directed internal audit
to provide quarterly updates on the corrective action status
related to past internal and external audits.
For the fourth quarter ended June 30th, 2024.
There are 19 items implemented and verified.
implemented panic verification. There are no pass-through items and 19 items not
yet due. There's additional updates subsequent to June 30th. As of the end of
August all findings related to the OCTA RCTC FDA subrecipient review are closed.
That concludes my item, happy to answer if you have any questions. Thank you. Any
comments or questions from my colleagues? Seeing none, do we have any public
comments on this? We do have a request to speak from Donald Harlan on this item.
Okay sir you'll have three minutes you need to make sure you stay on topic this
is for item 6d. Okay great thank you I appreciate the audits I know that
there's a lot of audits and not really spending a lot of large percentage of
its income on audits and I know that maybe that's somewhat necessary but it
It seemed that external forces have pushed audits
onto Metrolink and other transportation agencies
that maybe were unnecessary.
It looks like people trying to figure out
how to spend the money or try to cover their crimes.
People trying to push audits that had illegally developed
along the tracks, trying to cover for themselves.
I appreciate it, I buy the data and information,
but there shouldn't be people in Metrolink
doing those kinds of things.
And I like audits and I like to keep track of things
but there's some redundancy where the people
that redid the audits have questionable motives,
trying to spend the money under the street
or trying to spend the money on the sidewalk
or cover for their illegal real estate developments
in another city.
I think a lot of lie detector tests and interviews
for the auditors also.
Please remember that any person that submits
forged documents or commits perjury
or endorses forgery or endorses illegal projects,
they don't get immunity or a grace period
to answer the interviewer.
It doesn't matter if your dad's the president of the United
States or your papa worked in the Secret Service.
And you get 120-day grace period to answer the interviewer's
questions and pass a lie detector.
But if you submitted forged documents and-
Sir, this is not on the topic.
Yeah, I'm sorry.
As far as the audits, as far as the auditors,
they have to answer the questions for the interviewers
also, because I don't want to create too many problems,
but I do appreciate the audits.
It's good to get all that information.
They should have the person looking at the books
with the keys to the books to decide which auditors
to disregard or to just buy their data
or to buy a contract or hire them for other things
or not. We don't want people in Metrolink that are here to hack the financial
system. I appreciate your time. Sorry, I spent the whole three minutes. Thank you
sir for your comment. That is a receiving file item unless you had a
comment. Yeah if I could, first of all I don't appreciate anyone saying that we
have illegal activities going on, especially in our auditor department. So
I really don't appreciate that. I know that Elizabeth and her staff are
doing a wonderful job and I really appreciate their efforts.
Elizabeth would you come up? I want to embarrass you. You were recently gone.
Where did you go? I'm sorry, recently? India. And why did you go to India? To pick up our daughter.
Pick up your daughter. All right, so how old is she? She's five. She's five, so you just became a mother, huh?
How about that?
Well, congratulations. It's a class course.
Thank you. Thank you. Keep up the good work. Thank you. I
wasn't even gonna do that, boy.
But I will ditto your comments. Elizabeth and her team have done a an outstanding job on the audits
these are internal audits to ensure that Metrolink is running as smoothly as possible
and to be as transparent as possible. This is separate from external audits.
But again, your team is doing wonderful, so thank you.
6E is the fiscal year 2025 financial results for the two months ended August 31, 2024.
This is a ridership revenue and operating results report
presented by Christine Wilson, Assistant Director of Finance.
Good morning Chairman Buksen and members of the committee. This report presents financial
information for the two months ended August 2024. Next slide please. You see here we are
very much on track with respect to our ridership forecast. The red line is our forecast while
the columns are actuals. The blue portion of the column is regular ridership. The red
portion is the student adventure pass ridership which you can see is
substantial. Next slide please. This chart shows actual ridership for July and
August with a view of the forecast for the balance of the fiscal year. Next
slide please. Here we have the actual numbers for ridership. Through August our
ridership forecast was 1.2 million or a 59 percent recovery while the actual is
1.2 million or a 59% recovery. Year to date, 309,000 student adventure paths contribute
to this number. It's approximately 25%. Next slide, please. Here we see the revenue. As
you can see, revenue is slightly below the ridership. Next slide, please. The revenue
as budgeted equals 7.3 million or a 56 percent recovery. The actual is 6.7 or a 51 percent
recovery under budget by 0.6 million. The underage is a result of our decision to cut
the revenue claimed for the student adventure pass by 50 percent in order to offer the program
for the entire year. The amount of student adventure pass in this number is 1.1 million
or 16%. Next slide please. Financial results for the two months ended August. A total operating
revenues are 10.8 million or 0.3 below plan. Expenses total 4.45.7 million or 7.7 million
below plan. Major contributors to this underage are as shown on the chart. In summary before
San Clemente, expenses are under 7.7 million, and overall member support is in surplus by
7.4 million.
Next slide, please.
Accounts receivable pass due total 74.6 million.
The majority of this amount is related to the working capital fund, and we are currently
working with member agencies on MOUs covering these amounts.
Next slide, please.
This is our cash position at August 30th,
and it was 58.1 million within the board established
$50 million threshold.
Next slide please.
Here's our O service.
Next slide.
This is the ridership chart for ARRO,
and as you can see, we are quite close to the budget.
Next slide please.
These are the actual amounts.
Ridership was forecasted at 23,000,
and the actual is 23,000.
Student adventure pass contribution to this number is 10,000.
Next slide, please.
This is the arrow revenue, and it's clearly over budget.
Next slide, please.
Here are the actual numbers.
Budget is 32,000, while actual is 60,000, over budget by 28,000 or 87 percent.
And as you can see, 24,000 of the 28,000 is student adventure pass.
The ridership revenue variance is the result of student adventure pass reimbursement being
so much greater than the average aero fare.
Next slide, please.
Aero financial results show that the operating revenue at $102,000 or $69,000 over plan,
is 2.5 million or 0.2 million below plan. So the support required is 0.2 million below
plan. Next slide please. Now we come to some information about the Student Adventure Pass
program. Next slide please. Here we're showing the result of the Student Adventure Pass program.
The chart compares ridership July through August of 23, compared to July through August
of 2024.
So you can see that the student riders system wide have increased by 133%, with individual
line increases between 98 and 277%.
Next slide, please.
That concludes my report.
May I answer any questions?
Thank you for the report.
Do any of my colleagues have questions?
I have a question about the chart
that we look at for ridership numbers.
And I appreciate the fact that we are basically
hitting them on the bull's eye.
But how far out does that forecast project,
and how often is it revised?
Okay, the chart, the one that's for ridership,
actually we're just getting another revision primarily
because we needed to incorporate the fact
that there were four trains that were removed
from the optimized service.
So we happen to be getting a revised one
within the next few weeks.
And it goes actually all the way out to I think 29, Arnold?
Chief Financial Officer.
We do an update annually on the forecast,
but it's forecast four years out,
but we try to make sure we utilize the available data
that's most accurate to us at that time.
Okay, good.
I just wanted to see, you know,
how we look at this down the road,
so that's very helpful.
Anybody else have any comments or questions?
Ara, please go ahead.
Hi, thank you for the report, Chris.
What I'd like to know either in today's meeting
or at some future meeting is a little more
about the demographics of the student pass riders.
Young college, high school,
traveling to the major, you know, is it,
are they going to a university or are they just riding it
because they have, because they go to a university?
if that makes sense.
I mean, they're clearly helping us out.
They're a huge chunk of our ridership
and potential riders once they move on in their life
to become hopefully commuters to their jobs.
But I think it'd be interesting to find out who they are,
where do they go and whatnot.
So I don't need it now,
but at some point, it'd be interesting to learn all that.
Yes, we will provide that.
Thank you.
You're welcome.
And my final comment just has to do with the Riverside line,
noticing the numbers are really low
for student adventure pass riders.
Perhaps we could get some kind of an idea or report
of what we're doing to advertise system-wide on that program
see if there's any way to do a better job in the Riverside area. Mr. Chair,
just briefly and we can certainly do that, I think there are probably two
predominant factors. The Riverside line is this line with the least amount of
trains on it, so that will obviously lead to fewer riders. The other is that it's
one of the line that has relatively limited college or universities that are
adjacent or nearby with maybe the closest being Cal Poly Pomona so that
may be another factor. We're of course trying to take the program beyond just
commuting to schools that they can use it for any purpose so that should allow
them to use the riverside line. So let us do some more homework on that and we'll
get back to you. Certainly appreciate that. Do we have any public comments on
this item? We do have a request to speak from Donald Harlan on this item. Okay
Sir, again, you'll have three minutes.
Please keep on topic.
Thank you, Metrolink, for all your work,
all those people involved.
And I appreciate all that you guys are doing.
I really appreciate Metrolink.
I use it a lot.
And it's a great service.
I know the price of Metrolink has gone from $30 million a year
to $40 million.
But I'm still like that.
I would still like to pay for Metrolink.
That's very good.
Metrolink's a great service, thank you very much.
I really didn't want them building along the rails
as a result of Metrolink.
Perverts building schools along their tracks and stuff,
but I appreciate you guys keeping tight numbers,
collecting all the money, checking the fares
and that there's some revenue.
I know that doesn't match the amount of money
that is going in there.
Often transportation infrastructure, I might receive a tenth of the value at best a year
in tax revenue and under the best conditions, it would still take ten years to match the
amount of money I originally invest in the transportation infrastructure and I appreciate
you guys keeping tight numbers and maybe never catch up to it or maybe even cost more than
and I put into it by the time I collect that amount.
Happens once in a while,
and if you lose the counts out there,
people are thinking that's a separate item
and issue for another time.
Metrolink owes them.
Perhaps there's something to do there.
Thank you for your time.
Thank you for your comments, sir.
Any other public comments on this item?
Seeing none, this is a receiving file.
If there's no objection, that will be the order.
And finally, we'll get to the fun stuff.
Chief Executive Officer report, Mr. Kettle.
Thank you, Mr. Chair.
Good morning, everybody.
So a few things, a couple of good news stories.
This week, from a ridership perspective,
we've had four consecutive days with riders
with boardings over 20,000.
That's a first for us since prior to the pandemic.
Usually Mondays are below 20.
We were actually almost 21,000 on Monday
and all the way through Thursday,
we had strong boarding numbers.
So we continue to see that positive growth.
I just recently saw some data out of the FTA
that shows that we have now passed not just Chicago Metra,
but New Jersey Transit in recovery of ridership
from pre-pandemic, so we're continuing
to see steady progress.
Of course, big news ahead, we're just less than two weeks
away from the launch of the optimized schedule.
As the board is probably keenly aware,
we've gotten a lot of feedback.
We're responding to feedback from
particularly current customers who see a change in schedule.
A schedule for a commuter is very personal, very personal.
So we've gotten some personal responses
with the news going out about our schedule.
I wanna make sure I thank Lisa Barr, Scott Johnson,
Denise Herrera on our team for literally taking
each of these responses and responding back personally.
So again, stay tuned, we're excited about October 21st.
We were already upgrading the fleet
to make sure we have all five car sets on these trains,
doing what we can to minimize what some of the concerns
were related to potential of overcrowding.
So good stuff happening on that without optimized schedule.
On the less good news side of things,
I wanna make sure we touch on the issues
of on-time performance.
It has been particularly horrible.
the last couple of months and if I could say something even beyond horrible in the last
month, it's beyond horrible on both the railroads that involve the two Class 1 freights, we're
linked to northern Santa Fe and Union Pacific.
My team, the team, the operations team, as well as myself have had personal meetings
with the leadership at both BNSF and UP to let them know of our frustrations that we
are hearing from our customers.
We have been assured, and I'm going to take this at this point with a grain of salt, of
course, that by the end of October, and actually by October 21st, many of the issues associated
with BNSF should have smoothed out, which is important to me, considering we're launching
the new schedule, and many of those trains are going to be on the Orange County line.
There is an increase in service on the Orange County line, which is where BNSF operates,
so we're going to be watching it extremely closely.
They understand our concerns.
What we've heard being the issues
are they're having workforce or crew challenges.
They've also seen an increase in volume out of the ports.
And then over the course of the last few weeks,
BNSF has been operating a railroad tie replacement effort
on that same corridor overnight,
which means they can't run freight railroad trains.
And so they have to run their freight trains
now in a shorter window,
where our passenger trains would normally be as well.
And there are slow orders associated
with those new ties for a while.
So we have proverbial death by a thousand cuts right now
as it relates to OTP.
Union Pacific, so the riverside line, Mr. Chairman,
we continue to struggle with some of the issues
with Union Pacific.
Those have been going on almost since the beginning of time.
I met with their network planning senior VP
And dispatcher yesterday raised these issues.
We're being told by UP, again,
they're working through some issues.
I have a little bit higher degree of confidence right now
that we're gonna see some improvement on the BNSF side.
We've gotta continue to work with UP.
We are having the conversations.
Don Felipe and the dispatch team are working,
having regular calls,
advising the two freight railroads
about the impacts on our system.
so please know members that it is an absolute top priority for us in trying
to get this resolved. The last challenge I'll mention is that we do operate under
agreements with both freight railroads that are in excess of 30 years old and
those agreements have very little teeth for the purposes of holding them
accountable. So we and I've had conversations with Mr. Del Rio about if
if we're going to have to take the gloves off because we're just not seeing performance,
how might we explore that?
We also will be working with the government relations teams from our member agencies,
if need be, as well as energizing our riders to help out and say this is just not acceptable.
So probably more than you wanted to hear but wanted to make sure you were aware that we
are taking this extremely seriously.
Mr. Chair, that concludes my remarks.
Excellent, thank you very much.
Off to committee member comments.
We'll start here in the dais, nobody.
About there in the Zoom world.
Not seeing anybody there.
Okay, Chair's comments.
Fortunately, I don't have any comments as well.
So certainly, go Dodgers, for sure.
And we will go ahead and adjourn the meeting at 9.29.
Thank you.
Thank you.