Good morning. It is 9 45. We will go ahead and begin the Metrolink Audit and Finance Committee meeting April 11th
2025 and
First may we please have a safety briefing by Hillary?
consul
Good morning committee chair
chair members
In the event of a fire evacuation will be notified by audible alarm if that should occur
We're exit out the doors down the stairs and we will meet to the your right
When we exit the building in front of the metro customer service area
In the event of an earthquake will drop take cover
After the rumbling stops we will assess the situation and see a further evacuation is necessary
Just be mindful there are tripping hazards in the room chairs and spags and that sort of thing
So if you're exiting just be mindful of those items
In the event of a first aid situation. We do have an ad device located in the hallway by the security desk and if
Ems is needed I'll ask the board secretary to down 9-1-1 and notify the the security desk
In the event of an active shooter. We will imply the
Run hide and fight tactic. Thank you any questions
Saying that thank you very much appreciate that
We will move to item three pledge of allegiance will be led today by Linda Molina
Very good madam clerk roll call, please
Vice chair Tremblay here director Najarian here director Sandoval
director O'Connor
director Olson
here
director Chafee
director Nguyen
here director McCallen
Director Dutray here chair Burke's in here
We do have a quorum present. Okay, very good. Thank you
Do we have any public comments?
We have not received any request to speak or any written public comment
All right, anybody in the audience wishing to speak on non-agendized items. Okay, we will move to item 6 our regular calendar
Item 6a an action item is the approval of the meeting minutes for March 14th 2025
Are there any of my colleagues here that have any comments or are asking for revisions?
Seeing none do we have a motion to approve chafee moves approval? Okay, chafee
We need a second
trembly second
only seconds
Okay, we have motion a second a roll call vote, please
Is chair trembly?
Yes, director najarian. Yes, director chafee
Director do tray yes chair Burksen
That motion carried unanimously. Thank you very much item 6b
this is the
proposed fiscal year 2025 2026 Metrolink budget for
Your forecast and annual contract authority renewal request to transmit that budget presented by Christine Wilson assistant director of finance
I am Kristian Wilson, Assistant Director of Finance, presenting item 6B.
And as the Chairman said, this is a request for approval to transmit the budget.
Next slide, please.
And staff is recommending the committee, recommend to the board that this budget and forecast
be transmitted to the member agencies for their adoption and approval.
In this report, I will be covering our financial challenges, assumptions used to create the 26th budget,
The proposed operating budget itself, the capital budget, and a brief summary.
Next slide, please. Since the precipitous drop in ridership and revenue caused by the pandemic,
our revenue has only slowly improved in the commute hours. On weekends, as our CEO said,
ridership is actually exceeding the pre-pandemic levels. Meanwhile, operating expenses increase
each year and 60% of our operating expenses are fixed. Member agencies are
projected to provide 78% of the FY26 funding for operating expenses, a slight
improvement of 2% from FY25. We are fully aware of the burden this places on the
member agencies. The proposed, next slide please, thank you, the proposed FY26
operating budget assumptions are as follows. Service level at the adjusted
optimized service schedule, revenue projections as provided by Sperry
Capital KPMG, no fair increase, major and for expenses, major contractor expenses
increases only as mandated by agreements, four additional FTE head counts, two for
CFR compliance, one legal and one outside 20 maintenance person funded by Metro, 3%
merit, 3% COLA, new CFR regulation support, 2028 Olympics readiness, no special trains.
And I remind you that the Arrow service is a separate budget.
Next slide, please.
This chart shows ridership either actuals or forecasts from July of 2010 until April
of 2029, as provided by Sperry Capital KPMG.
The proposed operating budget reflects operating revenue of $76.9 million, an increase from
the 25 budget of $8.9 million or 13.1 percent and the entire increase coming from Fairbox
revenue. Total expenses are $346.2 million, not including the outside 20 feet funded entirely
by Metro and the San Bernardino sheriffs funded entirely by SBCTA. The amount is an increase
from FY25 of $15.5 million or 4.7 percent.
Member agency operating support is $269.3 million and increase from FY25 of $6.6 million
or 2.5 percent.
Next slide please.
This graph shows our operating expenses FY19 through FY26 and as you see the FY26 number
is 346, 242.
Next slide, please.
This graph shows our revenue over the same period.
Revenue has shrunk by $22 million,
while expenses have increased by $105 million.
While that is only a 5.31% over seven years,
but with revenue reductions, we fully understand
the difficulty it causes.
Next slide, please.
Total operating support required equals 275.5 million.
And this pie chart shows the operating support required
from each member agency.
Metro, 141.4 million.
OCTA, 51.9 million.
RCTC, 32 million.
SBCTA, 32.9 million.
And VCTC, 17.3 million.
This chart shows the proposed revenue expense and support
by member agency compared to the FY25 budget.
The FY26 numbers shown here include the metro outside 20,
the SBCTA share of costs in 25 and 25 costs.
And do not include the mini bundle mobilization of 10.3
and student adventure contribution of 3.2 in the FY25 numbers.
As you can see on this basis,
The overall increase in expense is 10.6%.
Overall, all increase in support is 10%.
And by the way, outside 20 that is funded completely by Metro
is 2.9 million.
And the San Bernardino County shares are 3.3 million.
Next slide, please.
You see here the major expense drivers,
the largest being train operators, security,
The TVMs, MOW, operation salaries and benefits,
and indirect administrative expense.
Next slide.
This is capital program.
So, the state of the good repair request is 141.0 million,
a decrease of 18.6 million or 11.7% from FY25.
Next slide please.
New capital request is 15.6 million,
An increase of 9.7 million or 164.4%.
Next slide.
This slide shows the amounts of capital program requests from,
oh, I'm sorry, did we skip over one?
Can you go back one?
Yeah, this slide shows the amounts
of capital program requests from FY19 through FY26.
Next slide.
This pie chart displays the amounts requested
from each member agency for both.
the state of good repair, and new capital portions
of the capital budget.
Next slide.
Operating and Capital Budget Summary.
This slide shows, oh sorry, next slide.
This slide shows the total FY26 request by member agency
as compared to FY25.
As you can see, the total increase is 0.6%
with no member agency being requested more
than 4.1 more than last year.
In summary, our member agency CEO has encouraged us to partner with consultants to review our
service and equipment usage.
The results of the partnership is the optimized service schedule.
We are focused on growing ridership and revenue through reimagining Metrolink.
Our consultants advise that we will need two years to see the true results from the optimized
service schedule. This year, in particular, the budget was a joint project with our member
agencies. Our four-year forecast adhered to the sustainability principles discussed in
the member agency CFO and CEO meetings of remaining within a member agency support year-over-year
growth of not more than 5%. And now, a slight revision. A decision was made that two projects
should be removed from the state of good repair budget
at the request of OCTA.
And that decision was just made yesterday.
And the change is really for Orange County only.
Yes, thank you.
The revised documents will be, and as you see here,
it takes off $3.5 million from the amount needed from OCTA.
actually what happens here is that with these items off virtually every member
agency except one four out of five member agencies were asking for a total
request less than last year and it brings the to our request compared to
last year for the entire amount as two point two percent less than last year in
total. That concludes my report. Oh, I also want to say that the changes will be
included in the packet that we send out for the board and the amounts
that get sent to the member agencies in the transmittal. These amounts will be
changed in the documents. That concludes my report. Can I answer any questions?
Thank you. That was a an excellent report any questions
Right I did want to just ask
Because we had issue a couple years back with legal
settlements and things was with the legal department fully and involved in
This budget process to make sure we're not going to get into a situation of asking later what we should be asking for now
Yes, we we have been involved. Thank you
thank you and could you quickly go back to the chart that said the ridership
numbers it was toward the beginning that one yes I just wanted to marvel at it
for a moment because in my mind and in prior reports I thought we were at like
the 60 percent range of pre-pandemic but this is showing is this this is a
forecast for this has both actual and and forecasts the big dip that you see
there is the is the pandemic but but I'm saying now it's going back up to almost
where it started at yeah and and this what this is showing that this this
forecast through 2020 goes from July of 2010 to April of 2029 and you'll see
that we this is showing we won't be back to FY 19 until June so we are in the
like in the 60 percent range correct but we've been having as you mentioned in
the exec report some stellar days lately as well very steady growth in the last
the last couple of months and there will be a report when I come back and at the
board meeting where we'll show we have actually just recently surpassed a
recovery percentage past New Jersey transit so we've been saying oh you know
we're the best in the West well now we're catching up with the East so
that's that's saying something. That's great and and just on a last footnote I
know that through RCTC we are they're okay with the with the budget but if I
I see Director Najarian, you have your hand up, go ahead.
Yes, I do, I have a question.
What was that one slide where Riverside's contribution
went way down like negative 6%?
Was that in capital or total agency contribution?
I believe it was the total, if you got it up.
How did, I mean, how did that work?
Metro wants some of that too.
Was there reduced services or?
No, it's just that we were very careful with the budget.
We, when I said that we sharpened our pencil,
we sharpened it to a sword.
That's what we did and as you see,
if you were looking at this with the other correction
to the capital,
Can you show the slide that has both capital and expense in it?
There's another slide for the roll on that shows.
There was another one that I, that sort of, that's the one.
Right here.
And actually, I'm sorry that you aren't lower,
but in the, for everyone else, since we put in the cut
for OCTA, every single member agency is under last year.
Except that's right.
Well, and just if I could, there's two factors,
Director Najarian and Christine will correct me if I'm wrong.
Part of this does incorporate the fact that
we will be taking care of the outer 20
of the right-of-way for LA Metro,
whereas the other four counties cover that on their own.
So that is an element that if that was not included,
we would be closer to zero.
But the reason that Riverside sees a dip
as compared to others
is that through the optimized schedule
and how our all share formulas work,
we had several lines that ended up with
significantly increased service,
whereas Riverside's was not as much.
So when you put the puts and takes
of our all share formula,
because there's more service in some of the other counties,
they're absorbing some of the costs
that then Riverside does not have to.
So in time and working with RCTC,
there has been an indication that they would like
to grow some service, particularly on the 91 corridor,
serving both Los Angeles and Orange County.
So that number may adjust,
at which point their number won't be lower,
it'll be more in line with others.
So that will be a great day
when we start bringing back additional service
on that corridor.
Okay, one last question,
sort of in line with what Chair Bergson was talking about.
Can we drill down into the forecasted ridership increase?
Is that weekend ridership?
Is that student passes?
Is that regular commute?
What are we hoping for
in that we would realize that increase in revenue?
We're gonna have our data czar
come up and respond to that question.
Yes. This forecast reflects total ridership, so weekday, weekend, including students,
and it assumes the students at a 50% student fair discount.
Yeah, but what are we thinking? I mean, what are we really, I mean, I get that,
but are we hoping for a continued trend? I know we've got good weekend ridership.
Is it a return back to work? I mean, what are we, what's your gut? What were sort of the assumptions
that were hopes that we had when we make this forecast? Well the forecast assumes that both
commuter and non-commuter ridership will grow, but clearly the balance before the pandemic,
it was like 80-20 for commuters, so it's going to be more balanced in the future, maybe 60-40.
Yeah. Okay. Keep us, I mean, I'd like, I like the fact that we're expecting where KPMG is projecting
the forecast. I want to make sure that we're, that those forecasts are based in some, I don't
want to say reality, but some solid concepts that, that make the predictions valid. That's, I know
it's a prediction, but all right. Thank you very much. Director Najarian, if I could just give you
a quick anecdote. The other day I was on the train with one of our riders who catches the
train at my station in Camarillo, and he works for the VA. He's been a two-day-a-week commuter.
He shared with me earlier this week. He said, by the way, Darren, I'm going to be riding your
trains more often. They're asking us to be back in the office at least four days a week.
And he's going to now become a monthly pass holder,
whereas before he was using a different fare media.
So a fare product.
So I think there's a lot of unknowns,
but this is just one example of where
we will see some ridership growth.
And then just one real quick point.
We have seen this growth in the off peak.
During the peak, we've seen a drop in ridership by 1%
during our peak trains.
During our off peak, though, we have
seen a 60% increase in off-peak ridership.
So what we're trying to do with the optimized schedule
is capturing markets, providing people more options that
will lead to a net positive longer term.
OK, thank you very much, Henning and Chief.
My pleasure.
All right, any other comments or questions?
OK, this is an action item, right?
so we would, oh, let me first ask
if there's any public comments.
We have not received any written public comment
or any requests to speak.
All right, very good.
Then it is an action item, so we would need a motion.
I'll move approval.
All right, okay.
Ready, second.
We got the motion and the second.
Roll call vote, please.
Vice Chair Trumbly.
Yes.
Director Najarian.
Yes.
Director Chafee.
Director Dautry?
Yes.
Chair Bergson?
Yes.
That motion carried unanimously.
Thank you.
Next item is six C,
proposed fiscal year 2025 through 2026,
Arrow Service Budget,
request to transmit that budget,
presented by Christine Wilson, again.
Christine, would you mind,
you need to put your mic.
Thank you, yeah, I know.
These tall people.
It was Henning's fault.
Yeah.
This is a request to transmit the Arrow Service Budget
to the San Bernardino County Transportation Authority
for their consideration in adoption.
And this particular one does not include
a four-year forecast.
We feel further collaboration with SBCTA
is required to produce a forecast
which would include the new XEMU.
A lot of complications.
In this item, I will be presenting
Aeroservice FY26 service assumptions, revenue basis,
and the operating and capital budgets.
Next slide.
As to the assumption,
the service schedule will be
the current Aero Service Schedule.
Ridership revenue will be based
on Sperry Capital KPMG forecast,
no fare increase, new fare promotions,
student youth discount at 50%,
and fare restructure impacts.
The other thing that I want to point out here
is I know that SBCTA has been talking to us
about continuing the Student Adventure Pass program
on the arrow line.
So they may opt to do that.
And then that isn't reflected in this budget.
Expenses are contractor increases only
as mandated by agreements.
Elimination of two arrow-specific FDE headcounts,
which were transitioned to Statler.
And the new federal regulation support for CFR 245 and 246.
Next slide, please.
This slide shows the arrow ridership
from September of 24th through May of 29th.
This is a forecast that we got from Sperry Capital KPMG.
Next slide.
Next slide.
The arrow service operating budget for 26
shows operating revenue of 0.7 million,
an increase of 0.5 or 225.3% from FY25,
expense of 18.2 million,
an increase of 0.7 million or 3.9%,
member agency support of 17.5 million,
and increase of 0.2 million or 1.2% from FY25.
Next slide.
The chart shows Aero Service Operating Expenses
actual or budgeted from 23, FY23 through FY26.
Next slide.
This slide shows the FY26 capital program budget.
Sorry.
Shows the FY26 Aero Service Capital Program Budget.
State of Good Repair, 0.5 million,
an increase of 0.37 million or 270% from FI25,
new capital of 0.42 million,
and decrease from FI25 of 1.83 million or 81.2%.
Next slide.
This slide shows both SGR and new capital requests
for FY25 and FY26.
Next slide.
I wanted to mention that this shows the separate pieces
of the capital and state of good repair.
Next slide.
I wanted to also mention that this slide incorporates
transitioning equipment and facilities maintenance
from Metrolink and Alstom to Stadler.
Next slide.
This concludes my report.
May I answer any questions?
And we are requesting that the committee recommend
that this be sent to the board for approval.
Thank you very much.
Do we have any comments or questions about the area service?
Seeing anybody?
Traeffi moves approval.
OK, we have a motion to move the item.
Do we have a second?
We have a second, and then any public comments?
We have not received any written public comment
or any requests to speak.
Very good.
Roll call vote, please.
Vice Chair Trumbly?
Yes.
Director Najarian?
Yes.
Director Traeffi?
Director DeTrey?
Yes.
Chair Bergson.
Yes.
That motion carried unanimously.
Thank you very much.
Mr. Chair, if I could real briefly.
Developing our budget is not for the faint of heart.
And Mr. Hackett has moved on, but the brains
behind the operation is Ms. Wilson.
Thank you.
And I just want to make sure we very publicly, you know,
now we haven't gone to the board yet,
so she's going to get embarrassed again
assuming the board takes action in two weeks but I just want to make sure that
this committee and the members are aware of the level of effort that the finance
team and Christine has done as she leads the budget process on the sort of the
nuts-and-bolts day-to-day stuff to make sure that when Arnold was talking to the
CFOs of the five counties he had all the right information so again just want to
make sure we publicly thank Christine for the hard work to get us to this
point. Thank you so much. Chair may I add may I add to that as as a new committee
member and board member I have to agree you make it numbers are numbers and it's
not it's you're right it's not for the for the for the faint and whatever but
you make it very easy to follow and so it's if we don't have questions that's
a good thing because we understand it all it makes sense and and I just want to
say, good job. Thank you very much. So we absolutely appreciate it. I mean for
years you've been providing us reports that are very detailed but very easy to
listen to and I think the real question here is that that everybody just is
dying to know is how many hats you actually owned. I have an entire closet devoted to hats. I imagine so. I've never seen the same one
twice so thank you for the report and we we've done that we are yeah I was about
to do 60 you did that's okay no no no problem there I'm glad to be able to
recognize miss Wilson 60 is the financial results for the first eight
months of fiscal year 2025 this is February 2025 ridership revenue and
operating results. Our only guest speaker today is Christine Wilson,
Assistant Director of Finance. Next slide please. So here is our ridership by
month chart. The red line is the forecast, the columns are actuals with blue
regular ridership and orange being student adventure pass ridership. And as
you can see there was a real recovery from January. Next slide please. I want to remind
you that the amendment that we brought last month was not approved until the end of March.
For that reason, the amendment is not shown here in the forecast or we're making comparisons
still to the original budget. We will start next month putting in the amendment.
Next. Okay. I'm sorry. Yes, thank you. Here we see ridership by month as compared to the
forecast. The forecast through February is 4.8 million or a 60% recovery, while the
actual is 4.9 million or a 62% recovery. Over forecast by 147,000. The student
adventure pass program contributed 1.6 million to our ridership or 32%. Next
slide. This slide shows Fairbox revenue by month through February the year to
date Fairbox revenue was forecast at 28.1 million or a 55% recovery while
actual Fairbox revenue was 26.0 million or a 51% recovery under budget by 2.0
million. A large factor in this under budget condition is that beginning in January we
were claiming the student adventure pass LC Top at only 25%. This was to have enough
money in the LC Top pot to cover all the way through the end of the year. Fortunately,
we have identified additional LC Top funding and will begin claiming at the rate of 50%
the final quarter of the year, which will certainly help our comparison of revenue to budget. Next slide.
Operating statement results for MetroLink through February show total expenses under budget by 19.6 million,
resulting in a surplus in member agency subsidy of 18.1 million. Total expenses are 194.1 million and 19.6 million under budget.
with major drivers of the underage shown on this slide. A reminder that these
expenses are based on accruals and not actuals. I also want to mention that we
always get asked is the under expense going to hold up? Well in March we always
also bring a forecast to year-end so at that time we'll be telling you our
our opinion is of all that all that under budget amount being held up through the end of the year.
Next slide. So past two receivables at February 28th totals 9.5 million a market improvement
and the amount that amount even has been collected as of today. Next slide please.
Available cash as of February 28th was $60 million above the $50 million threshold
established by the board. Next slide. Now we're on to Arrow service. Next slide.
Here is the ridership for Arrow. Year to date through February, ridership was forecast at $93,000.
Actual is $99,000. Over budget by $6,000. The student adventure pass contributed
53,000 of these riders, more than half.
Next slide.
Here is the aero Fairbox revenue by month.
Through February, Fairbox revenue was budgeted at 131,000
while the actual is almost 239,000,
over budget by 109,000.
Student Adventure Pass contributed almost half
of the total revenue.
Next slide.
As the total financial results through February,
Operating revenue is 409,271,000 over budget.
Total expenses are 10.3 million or 1.4 million below plan.
Support required is 9.9 million or 1.6 million below plan.
Next slide.
This slide shows the amount and proportions
of student adventure pass riders July through February of 25.
A total of 1.6 million boardings.
Next slide.
That concludes my report.
May I answer any questions?
Thank you very much for the report.
Any of my colleagues have questions on this item?
Do we have any public comments?
We have not received any written public comment
or any request to speak.
Okay, this is a receive and file item,
so without objection, that is what we will do.
And with that, we will move to item seven,
the Chief Executive Officer's Report.
Karen?
Yes, thank you, Mr. Chair.
But just as I reported in the last meeting, although with a slight modification, our on-time
performance continues to be extremely strong over the last couple of months.
We've seen great progress between the schedule adjustment on the San Bernardino Line and
some improvement in working with our freight railroad partners, particularly BNSF.
And as Chair Chafee mentioned earlier today, it was very positive to have them tell their
story at our workshop a couple of weeks ago.
The other item that I wanted to discuss was some of our successes as it relates to ridership
growth.
And I got a little bit ahead of myself.
Mr. Scott Johnson from our communications team reminded me that where we broke the record
is for the month of March.
So in March of 2019 we had a ridership of, I believe it was, bear with me here if I have
it.
I don't have it as handy.
and 18,000 boardings.
We've seen an increase actually.
We broke the record for the month of March
for weekend ridership.
So that includes what we're at back in 2018, 2019,
where we are today.
So the record we broke, all-time record,
pandemic or otherwise,
was the month of March for weekend ridership.
So we're seeing that, again, the point in all this
is that we're seeing greater growth and ridership
on weekends.
can use the train for reasons beyond just the commute.
So, good news story there.
That's it, Mr. Chair.
Thank you very much.
And then next, our committee member comments.
Anybody wishing to speak?
No?
Okay.
Oh.
Director Malina.
I wish we had more money to fix everything in the comments.
Okay, thank you.
We will take that comment in.
And Mr. Chair, I actually found the record.
So in September 2018, that weekend, in September,
117,000 boardings in that weekend in September,
for the month of September.
In March of 2025, we went to 122.7.
So broke it by 5,000 riders that weekend.
So a fairly significant boost in that ridership.
So, the question is why, how did it happen?
We had the benefit of, on the San Bernardino line,
the Insomniac events that occur out at the Orange Show
in San Bernardino, the city of San Bernardino.
We had the Swallows event in San Juan Capistrano,
and the Dodgers opened at home.
So, this is what we're trying to preach
about what Metrolink can be in the future.
So, that explains.
and we expect to see where we may see record over record
over the course of this spring and summer.
So fingers crossed.
Thank you.
Excellent.
And any other comments by committee members?
So Chair's comments, I will just make two comments.
One, on the charts that we looked at
for the forecasts on those two items,
for Aero and regular service,
I didn't zone in to what my comment really pertains to.
But it just in seeing that chart,
it didn't look like it was accounted for.
We will have at least a month's worth
of what I would consider a very high spike in ridership
in 2028.
That chart went to 2029.
And my hope is that the ridership
that we sparked during the Olympics will carry forward.
And many more people will then enjoy riding.
And so I wonder if our forecasting models
are even considering incorporating potential outcomes
for additional ridership during the Olympics
and carrying that past the Olympics.
We should see a greater spike, at least that's
what I would hope that we would see for the future.
Agreed.
We'll make sure confirm with KPMG and spare capital on that.
I mean, I've said several, you know, a number of times
that the greatest legacy will leave not as all
the construction or new equipment or anything else.
The legacy we're going to leave with the Olympics
is the fact that people in Southern California
can ride the train and know that they can
and see that as a regular option.
And the Olympics will be what shows us all that.
So with that, and then I wanted to thank our Orange County
hosts for the workshop, very valuable information.
That's the first time we've had BNSF show up
and I thought that was very, very insightful.
And then I also appreciated our safety department
running the workshop, the safety clinic for us.
I think it's super valuable and I hope that they invite us
to do some more, when they do some online training,
or not online, but real live drills that we are aware
and hopefully board members will show up
if they're available.
And with that, we will adjourn this meeting at 10.26 a.m.
Thank you.