Good morning. We will go ahead and I will call the audit and finance committee meeting for Friday March 14th
2025 to order at 945 a.m.
May we please have a safety breathing thing this will be done by Cody Nelson assistant director of safety
System safety will be conducting the briefing. All right. Good morning
We are at one Gateway Plaza here at the LA Metro boardroom on the third floor
If we do need to evacuate the the room here will evacuate out to my left
We'll go down the escalators and meet out in front of the metro customer service area.
If we are evacuating or exiting the room, make sure that you're aware of the tripping
hazards that we have, chairs, backpacks, things of that nature.
In the event of an earthquake, we'll want to huddle under the tables until the shaking
stops.
We'll do an assessment to see if we need to evacuate.
In the event of a first-aid situation, there's an AED across from the security desk.
We do have first responders in the room from both San Bernardino County and LASD to help
us in that type of situation.
In the event of an active attacker, the procedure that will follow is run, hide, and fight.
For those joining us online, just make sure that you're familiar with your surroundings
or in your office, your place, make sure you're familiar with your place of safety and your
exit route.
And that concludes my briefing.
All right.
Thank you very much.
With that, we'll move to Pledge of Allegiance, and Linda Molina will be leading us.
Thank you very much.
And now, Madam Secretary, roll call.
Director Molina.
Vice-chair Tremblay
director Najarian
director O'Connor
director Olson here director Sandoval
director Chafee
director Nguyen
director McCallan
director Dutray here chair Bergson here. We do have a quorum present. Very good
Do we have any public comments today? I have not received any requests to speak or any written public comment
Okay, and we get to move to item 6a in the regular calendar approval of the minutes from February 14th
2025
Any of my colleagues have any requests to modify?
Or make any comments about it if not do we have a motion to approve?
We have a motion I chafee and a second. Okay. Oh same County. It must be a separate County. Yeah
You try a second for Sam
That sounds great thank you roll call, please
Vice Chair Tremblay? Yes. Director Najarian? Yes. Director Chafee? Yes. Director Dutray? Yes.
Chair Bergson? Yes. That motion carried unanimously. Excellent. Next will be item 6b, fiscal year
2025 mid-year operating budget review amendment presented by Christine Wilson,
Assistant Director of Finance, and very lovely hat and outfit for St. Patty's Day.
Thank you.
I was so happy to tie the river green, too.
Good morning, Chairman Burksen and members of the committee.
I am Christine Wilson, Assistant Director of Finance, presenting item number 6B, the
FY25 Mid-Year Operating Budget Review Amendment.
Next slide, please.
It is a practice of Metrolink to perform a review of the annual budget at mid-year to
identify any revisions that may be needed to the operating budget as a result of changed
circumstances.
Our review indicates that an amendment is required this year.
The amendment we are presenting is driven by the following.
Changes to ridership, changes to the service schedule, a change to the cost of mobilization,
and a member agency request.
Next slide please.
This slide shows the details of the amendment staff is recommending for adoption by the
member agencies.
The box at the top of the screen shows the budget as it currently exists, with revenue
of $68 million, expense of $332 million, and support of $264 million.
In the next boxes we see the amendments.
The revenue adjustments consist of a reduction of the revenue based on a re-forecast of the
revenue by Sverry Capital KPMG.
Because the LC top funding was not confirmed at the time we did the budget, the original
budget forecasted student ridership in the numbers as a 25% discount.
This re-forecast takes into account that students ride free.
In addition to the most current changes in ridership, this reduced revenue by $7.9 million.
The second change to the revenue is to include the Student Adventure Pass pilot budget.
Once again because we were unsure of funding, it was not included in the budget.
Including the Student Adventure Pass funding adds $6.3 million to revenue.
This produces a net revenue change of $1.6 million.
The next amendments relate to expense.
First, we have the removal of four LAUS to Laguna-Niguel trains originally included in
the optimized service budget.
Next, another adjustment to optimized service, the removal of 20 LAUS to Covina trains replaced
by the addition of 10 LA U.S. to Montclair trains.
You also see here at the request of SBCTA the addition of costs
for San Bernardino sheriffs added to San Bernardino County.
This is funded in its entirety by SBCTA.
Finally, the negotiation of the mini bundle, the Toms contract,
has reduced the original estimate budgeted for mobilization by $2.5 million.
All these amounts create in net a reduction to member agency required support by $896,000.
The boxes at the bottom of the slide show the amounts of the FY25 budget if this recommended
amendment is accepted.
Next slide, please.
All the following slides show the proposed amended budget by category and member agency,
including changes to the individual lines in the operating budget.
Next slide.
So you see here the individual items that have been changed.
Next slide, please.
And at the bottom, as I said, it creates a reduction to the amount we are asking for
member agencies by $896,000. That concludes my report. Can I answer any questions?
Thank you very much for the report. I'm turning to my colleagues here and online. A quiet
bunch again. Linda, Malina. Thank you for your great explanation of the number. Thank
you. Everybody knows what the numbers are, but you explain them so clearly. Thank you
for that. Thank you. All right with that that this is actually an action item so
we need to first ask for public comments. Hey Mr. Chairman John Detroit sorry I
actually have a couple questions start being slow. On the sheriff's contract with
San Bernardino Sheriff obviously SBCTA is covering that cost is that also in the
as a revenue in the budget? Yes that's added to the budget by this amendment.
okay all right then I'll move for approval then okay we do have a motion
but before we do that do we have any public comments I've not received any
written public comment or requests to speak on this item okay so we have a
motion on the floor to approve we have a second we have a second a different
County. So roll call vote please. Vice Chair Tremblay. Yes. Director Najarian. Yes.
Director Chafee. Director Dutray. Sorry yes. Chair Burksen. Yes. That motion carried
unanimously. All right very good. Item 6c performance audit deactivation of
badges for employees board members and IDTS contractors receive and file
presented by Elizabeth Lizwardi,
director of our audit department.
Good morning, Chairman and committee members.
Next slide, please.
The internal audit completed the deactivations of badges
for employees, board members, and integrated digital
and technology services, also known as IDTS contractors.
The audit is included in the fiscal 25
board approved annual audit plan.
The audit objective was to evaluate the effectiveness
of the agency's batch deactivations process
for secure access control
for employees, board members and IDTS contractors.
The audit period was January, 2023 through July, 2024.
There are three findings and three audit recommendations.
Management agreed with the findings
and developed corrective actions.
And so audit will track the status
of the corrective actions.
This concludes my item.
Happy to answer if you have any questions.
It was such a long stretch of time to deal with this.
That was a quick report.
But I'll open it up to questions.
I don't have any questions.
Any public comments?
I have not received any written public comments or requests
to speak on this item.
OK.
So then I will make a few comments.
I asked for this item to come to the audit committee
some time ago for the mere fact that my badge was supposedly
expired in the year 2020, and it was 2022 or 2023,
and it was still working just fine.
And I thought at the time, there was a lot of disgruntled ex
employees using things like old keys or old badges
to get into other facilities, not Metrolink,
but just in general on the news.
And I thought, well, we don't want
people that have expired badges to be able to come in
And you get access to our facilities to cause harm.
And so this started this process.
And I've learned that we have one more little tweak
that we're going to have to add to this.
I'm still getting comments from board members
that even as of today, the old badges are still working.
And what I've now learned over the last many months on this
is that our badges are programmed twice,
at least board members and anybody who has access
to this building here at Union Station.
The expired badges, I believe, will not work
at our Wilshire Building or any of our facilities
because those old badges have been turned off.
But what isn't turned off are the access
to this building here by LA Metro.
So somehow we've got to communicate to LA Metro
that when board members change out or expired badges, et cetera,
anybody who has access to this building,
LAMetra should be notified to deactivate those badges as well.
I think that's the one thing we just
have to add to this to make sure that gets accomplished.
And we should be good.
So I'll leave it at that.
And this is a receiving file.
And I appreciate the audit department's
long term deal to get this resolved and figured out
and it will lead to a much safer work environment
for all of our Metrolink family.
With that, we will move to item 6D,
financial results for the first seven months
of fiscal year 2025 through January 2025,
ridership, revenue, and operating results
presented by Christine Wilson,
the assistant director of finance.
Good morning again, Chairman Bergson and committee members.
This slide, next slide, please.
This slide shows the actual versus
forecasted ridership by month.
The red line is the budget.
The columns are actual with the blue portion
regular ridership in the orange portion,
the student adventure pass ridership.
As you can see, we are below the forecast ridership.
Much of this has to do with the devastating fires
in the month of January.
reductions went from 2.5% on the Ventura Line
to 9% on the Antelope Valley Line.
Next slide.
This graph shows the current ridership forecast
for the entire year.
Looking at the most recent month,
January is historically a recovery from December holidays.
This year was different.
The fires had a real effect.
Through January, ridership was forecast
at 4.2 million or 60%,
while actuals were 4.3 or 62%.
The student adventure pass pilot
provided 1.3 million riders a year to date.
Next slide.
We see here a graph of farebox revenue by month
and the current forecast for the rest of the year.
During the month of January,
revenue was budgeted at 24.4 million or a 54% recovery,
while the actual is 23.4 million or a 52% recovery.
1.1 million under budget.
Why are we so far under forecast?
The 25% monthly pass discount offered system-wide
as compents for the poor on-time performing
account accounts for 170,000 of the shortfall.
The reduction of the student adventure pass reimbursement
to 25% accounts for another 600,000.
Free rides for fire victims added to the reduction in revenue.
And there were fewer passengers as a result of the fire.
Next slide, please.
For total financial results in January, before San Clemente,
total expenses were under budget by 17.6 million.
And member agency support is in surplus by 21.4.
Total operating revenue is 37.6, less than 0.1 million under budget.
Total expenses at 169.8 million are 17.6 million under budget.
Categories under budget are as shown in the slides.
These expenses, I remind you, are based on accruals, not actuals.
Next slide.
Next slide, please.
This slide shows that we had past due receivables of almost $40 million.
In truth, by now, we actually have received 30 of it.
So this is way out of date just because we've received the money.
Next slide, please.
And as you see here, this is the operating cash that we're presenting, our cash resistant Metro.
As you know, there's a $50 million threshold that we are to maintain,
and you see here that the threshold that we're at right now is 86.1.
Next slide.
Moving to arrow.
Next slide.
This is the arrow ridership by month through January.
The ridership was forecasted at 81,000 while actual ridership is at 85,000,
over forecast by $4,000.
Year to date, the student adventure pass
contributes over half of the ridership.
Next slide, please.
And this is the arrow, Fairbox revenue by month
compared to budget.
Through January, Fairbox revenue was budgeted at $113,000
while the actual is $217,000, over budget by $102,000,
with the student adventure pass
contributing half of the revenue.
Next slide.
Financial results for Arrow through January show,
operating revenue at 365,000 or 264,000 over budget.
Expenses are 8.9 million or 1.1 million under budget.
And support is required at 8.6 million
or in surplus by 1.3 million.
Next slide please.
This is a student adventure pass brief update.
Next slide.
As you can see, this slide shows the amount of the Student Adventure Pass ridership
that we've obtained both through TVDs and the mobile app.
And as you can see, it has added 1.4 million riders to the system, including ERO.
Next slide, please.
This is an update on the FY26 budget development schedule.
We have thus far the 26th proposed budget has been presented to member agency CFOs three times
and to the member agency CEOs on February 21st.
We continue to be in daily discussions with the member agencies on the FY26 budget and we feel
that we are on track to bring a budget as required to this committee on next month.
That concludes my report.
May I answer any questions?
Did any of the agencies that you've been of the member
agencies have any issues with what the 26 budgets looking
like?
At the beginning, but not by now.
Almost everyone is.
There are certain things we still have to work out, but.
But no huge hurdles that are going to cause any.
We'll work them out.
All right.
Any questions or comments by anybody?
Okay, this one is receive and file.
Do we have any public comments on that?
I've not received any written public comments
or requests to speak on that item.
Okay, all right.
Our most favorite part of the day, CEO's report.
All right, well, I'm gonna make sure it's brief then,
so it stays your favorite.
Just very quickly, we mentioned this
in the Executive Committee meeting.
I think it's important to share here today
as well at AFCOM as it relates to some financial issues.
We are all looking towards 2028 in our ability
to be ready to move so many people for the Olympic games.
And most recently, we had an earmark
in a Senate appropriations bill that
was going to set aside $200 million
to the region for Olympics preparedness.
and 25 million was identified for Metrolink
with what is expected to happen today in the Senate,
that they will act on the House's version
of the continuing resolution,
that will effectively eliminate the earmarks
that were identified in that Senate appropriations package
in the T HUD and the T HUD Appropriations Bill.
It, besides losing the money,
the other element it did is that that action,
That earmark was creating a special account for LA-28,
for the Olympic Games, so that there was this place
that you could put money over the next appropriation cycles.
The action with the CR will then eliminate
that ability of having that account
also available for us for future efforts.
So we, the royal, we, the collective,
we are gonna have to identify another way
of securing funding from the federal government.
So it's a big deal, it's a huge disappointment.
We had other earmarks in both House and Senate packages
as probably some of your own home agencies had.
So on top of that, we've also lost other earmarks
as well through what's happening in Washington, D.C.
So I thought I'd share that with the group.
The only other item is, again, I wanna just call back
attention to the announcement I made earlier this week that on Friday of last week our chief
financial officer Arnold Hackett let me know that he was going to be moving on to new activities,
new things, so he's going to be leaving us here at Metrolink in early April.
So this is why Christine Wilson felt so confident in saying that we're going to have the budget all
worked out, is because Arnold has committed to making sure that it is done before he rides
off into the sunset. So that's why Christine said, sure, we got no problem. So in any event,
again, I said it earlier, my thanks to Arnold for his service here at Metrolink. And he's been at,
it's been six, seven years that he served in various capacities. He has helped us to get
through this challenging time of coming out of COVID and Metrolink reimagined a few other
elements so it took his steadfast leadership in that regard to help us navigate that and
working with our member agencies. So my thanks again to Arnold for his service. You will hear
me talk about this. We've got a couple more meetings where I get to embarrass him in public
so you'll hear more on that too. Thank you Mr. Chair that concludes my remarks. So I appreciate
your comments and follow-up question for you with the CR if it passes today that
that keeps the government open for a couple more months what about at that
point are these earmarks potentially able to be put back into a final
resolution how does that work right so the what we're hearing in fact the
timing right now is that the members are many members from from Southern
California are now put out the notice that we are accepting new earmark
requests. So we have a few already lined up that we'll be looking at. This 200
million one was, it was a movement of funding from one program that was
stepped back and put this 200 million into this special account. So we will I
think go back after it. So we'll be looking at now then FY26, the
appropriations package that was being done today, well will be done today, was
actually FY 25 the year we're in right now and it's been sort of the can't the
cans been kicked down the street a few different times and now it's usually
because they want to appropriate appropriators want to appropriate the
the fact that the CR is going to move forward just means we keep things business
as usual and then we will likely see some level of continuing resolution as
we get into again federal fiscal year is September 30th so we will see what
That happens as to whether we see continuing resolutions for FY26 as well.
Theoretically, Congress should act over the summer and we should have a full appropriations
package by the end of September.
That hasn't happened – doesn't happen all the time.
So we will likely see some continuation of even the FY26.
But we will all be making requests, and certainly Metrolink will be on the – through earmark
requests and future appropriations packages.
OK.
Thank you.
And then committee member comments.
Anybody have anything on their mind, Pam?
I just want to add about Arnold.
In addition to his technical abilities,
he's always been a very genial and kind person,
and I appreciate that.
Anybody else?
You ought to see him, though, when the member agencies
aren't cooperative.
Then he's not so congenial and that's good to see.
He knows when to pull it out.
Exactly.
When to be the tough guy.
But to still maintain good relationships with him.
And he does just, he has done that, no doubt.
All right, and Chair's comments.
Arnold, I hope this is a retirement,
not L.A. Metro stealing somebody else from us.
I'll also point out that in between,
before Darren, you filled the shoes,
if I remember correctly, as the CEO,
the interim CEO for a bit.
So you have had a variety of roles,
and your reports are always very well presented,
and we appreciate all that you've done here at Metrolink.
So hopefully you are going fishing and not fishing
for something down the street.
We'll have to find that out.
All right, with that, we're going
to go ahead and adjourn the meeting at 10, 12.
Thank you.