All right, I thank you for that.
With that, then I'm gonna call the meeting to order
and we'll begin as we used to do with our safety briefing
with Hillary Consol, our Chief Safety Security
and Alliance Officer.
And if you would let us know and we're all not
in the buildings, I'm not sure exactly what safety
we all have to observe in our respective homes
or wherever we are.
Hillary, good.
Good morning, chairman, directors.
I know this is a virtual meeting, so just as a reminder,
in the event you have to evacuate the place that you're at,
don't take any elevators, take the stairs down,
follow the evacuation procedures and the meeting point
and wait for further direction.
In the event of a medical emergency,
either dial 911, one of us can dial 911 for you.
And if somebody's in the room with you,
let them know if there's an AD in your facility,
make note where that is and have somebody retrieve that
as well if necessary.
In the event of an earthquake,
take cover under the desk table at your location,
wait for rumbling to stop
and see if further evacuation is necessary.
And then finally, in the event of an active shooter,
deploy the run high fight tactic.
Thank you.
Thank you for that.
Now we come to a pledge of allegiance.
I wonder if Director Najarian,
if you would be so kind as to lead us in the pledge.
Yes, I will.
Please rise if you're able,
place your right hand over your heart and repeat after me.
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.
For all.
Thank you, sir.
Madam Clerk, would you now call the roll?
Certainly.
Director Stegl?
Director Connolly?
Director Najarian?
Here.
Director Marquez?
Here.
Chair Chaffee?
Present.
We do have a quorum present.
Thank you, Madam Clerk.
Well, we do come to public comments.
I'm going to turn it back to our clerk
to explain the process and let us know
if there were any comments at this time.
If there are any members of the public wishing to speak,
they can raise their hand on Zoom
and then that'll alert me
that they wish to make a public comment.
And in the meantime,
I have not received any written public comments.
So I will check the attendee list right now
to see if there are any hand raised
and anyone wishes to speak.
I am not seeing any
but as we move throughout the agenda,
if anyone does wish to make a public comment,
we will provide that opportunity at the end of each item.
And again, attendees just have to raise their hand
to let us know that they'd like to speak.
We thank you for that.
We will check as each item is discussed and called
to see if there are public comments.
So with that, we now come to an action item,
which is approving the minutes, the last meeting.
Mints are very detailed, very extensive.
I was not present.
So I can't really tell you if it's accurate or not.
So I'll be abstaining myself,
but those of you who were present,
please review the minutes, they're very detailed.
Do we have any questions, comments, suggestions?
I'll move minutes if you're ready to-
Yes.
Motion to move has been made by Director Najarian.
Is there a second?
Mr. Chair, I think the remaining members
of the committee today were not present
for the last meeting, just as an observation.
Correct me if I'm wrong, Michelle?
Director Spiegel wasn't the last meeting.
Oh, that, okay, thank you.
There we go.
Very good.
I will second that, it was just, my dog was barking.
I had to get out of the way for her barking.
All right, we have a motion, it's moved and seconded
that there's no objection.
We will approve the motion,
the minutes and are approved we do have to do a roll call vote because we are
virtual reaction item I'll be doing a roll call vote roll call please Director
Smeagol yes Director Najarian yes director Marquez abstain
chair chafee I abstain so I'm gonna ask our general counsel if that motion
passes with two yeses and two abstentions. Yes it does pass and the
chair has the authority to place it on the record. All right I do so in
accordance with the Council's direction. Great. All right and then now our next
item is the proposed fiscal year 27 Arrow service budget and this you know
So we're very glad to have the San Bernardino County
Transit Agency bearing this cost.
So it doesn't really impact our budget,
but it's on our agenda too for consideration.
Madam Clerk, do we have any public comments on this item?
I am not seeing any hands raised currently,
and I have not received any British public comments
on this item.
Thank you.
Directors, comments, questions, suggestions?
Like you said, thank you San Bernardino
maintaining the budget. Our pleasure. I'd like to make a motion Mr. Shafee if I
could. All right do my am I getting a motion in the second to approve. I'll
second. All right there we go. Madam Clerk Rocha. Director Siegel. Yes.
Director Najarian. Yes. Director Marquez. Yes. Chair Chafee. Aye. That motion
Carries. I did want to let you know we were planning on doing a brief budget update at
the end of this presentation as part of the ARO presentation.
Let's go ahead and do that. The clerk is, so Tom Shamber, CFO, was going
to at the very end of the discussion because there have been questions related to the Metrolink
proper budget about where we are as far as an update. Tom wanted to provide at my request
just a brief update on where we are
with the larger Metrolink budget.
It will just take a matter of a minute or two.
Tom, if you wouldn't mind giving the committee
just a very quick update on our status.
I think that's important.
I didn't see it as separately agendized,
but we certainly do wanna know the status.
So, Tom, please go ahead.
Thank you very much.
Good morning, Chair Chafee, members of the board.
I'd like to give you a brief update
on the status of the FY27 Metrolink budget.
please to say we're making good progress.
We have an agreement with the member agencies
on a service plan that we can cost out and budget for.
We're currently developing ridership
and revenue projections for that level of service.
Alstom is working on a quote for that service plan as well.
We are continuing interaction with the member agencies
to look at all other costs on our operating statement
to make sure we're as lean as we can be.
The plan is for the fully developed budget
to be released to the member agencies on September 28th.
And then we would follow that with a special board meeting
on October 9th in lieu of BAFCOM,
where we would transmit the budget.
Then that would be followed by a public hearing
and adoption request at the regular
October 23rd board meeting.
The service changes that would be associated
with this budget would be expected
to start on or around November 16th.
That's my update, I'm happy to answer any questions.
Director's questions, comments.
I don't see any, but Madam Clerk,
Did we have any members of public
that want to comment on that?
I still don't see any hands raised in the entity list, so.
Okay, well then we'll move on to our next agenda item,
which is concerning proposed employee reclassifications,
classification and some salary adjustments.
And so that'll be presented by Corey Elmore,
our manager, our chemical resources.
Let's get into that.
let's see what that's all about.
Good morning, Chair Chafee and members of the committee.
I'm presenting on the proposed employee reclassifications
and adjustments to employee compensation.
Next slide, please.
In accordance with HR policy,
Wage and Salary Administration Number 2.1,
Salary Program Administration,
the addition of new job classifications
and corresponding salary grade assignments,
the addition of new salary grades
and salary grade adjustments are subject to approval
of the board of directors.
In addition, our board approved HR policies
and procedure state SCRA shall review classification
and pay plan on an annual basis.
This permits SCRA an opportunity to periodically assess
the competitiveness of its classification and pay plan,
including the salary structure
and make necessary adjustments to reflect changes
and internal equity and labor market conditions.
Next slide, please.
In March of 2025, HR initiated an annual review
of its classification and salary plan
permitted by our board of approved policies,
during which this review employees across the agency
were given the opportunity to request a review
of their classification and or compensation
in relation to their job duties and responsibilities.
Following the two weeks submittal period,
a total of 44 requests were received,
which comprises of approximately 15%
of our approved headcount.
Upon completion of the thorough review and analysis by HR,
including discussions with employee supervisors
and their respective senior management teams,
28 of those 44 employees were recommended
for a reclassification.
As part of the reclassification,
staff recommends a five to 10% salary adjustment
to each employee's salary with the large majority
of those 28 employees receiving a 5% salary increase.
Next slide, please.
In addition to the HR-led classification
and compensation review of select employees,
the IDTS and customer experience divisions
within Metra Clinic have been reorganized,
resulting in proposed reclassifications
of 11 total employees across both divisions.
staff. For those 11 are
recommended to receive a 5%
salary adjustment. And lastly,
the finance and strategy
divisions collectively between
the two have requested that
three of their employees be
reclassified to the appropriate
for a total of 42 employees. Of those 42 a proposed salary adjustment for 35 of those
employees that salary adjustment ranging from 5 to 10 percent. The total costs associated
with those salary adjustments for the 35 reclassified employees would be $267,601. The salary budget
increase would be included in the proposed fiscal year 27 operating budget and the
reclassifications and salary adjustments would become effective retroactively to July 1st,
2026. Next slide, please. Therefore, it is recommended that the committee recommend to the
board to approve the proposed employee reclassifications and approve the proposed
salary adjustments to employee compensation. Next slide, please. That concludes my presentation,
any questions? Mr. Chair, this is this is Darren if I could real quickly to
follow up on what Corey's just shared. I did have a very thorough review of this
entire analysis and the work. This has been something that's been ongoing for
more than a year. It has been postponed before going to the board because of
working through the variety of challenges we've had as it relates to
some of the nature of this normally would have gone with the normal budget process,
as we do when we do our employee compensation as part of the annual budget process.
The concern I had is after reviewing all of this is that that list of employees that have been
identified from my assessment and talking with their respective department directors or
managers are working are working outside of their current classification and that the
adjustments are warranted for the fact that the work is being performed that they have
been doing this is this is not a merit increase this is a recognition of people that have
been currently performing duties that are outside of their classification and are justified
for that reason. So, just wanted to be clear on that. Also, as we have gone through this
somewhat painstaking process of the budget, we have made sure that we factored into this
budget the adjustments of the $267,000 for the next fiscal year so that it is not something
that we have to look at being as an add-on to the budget that, as was described by Mr.
earlier a service scenario and tentative budget plan
that we have that we'll be presenting to the board
in October.
So just wanted to make sure we have that cover coverage.
Thank you, Mr. Chair.
I do see Director Spiegel has her hand raised.
Oh yes, Director Spiegel,
please go ahead unmute yourself too, please.
There you go.
My husband never says that to me.
Anyway, sorry.
I have a couple of questions.
and it just seems like an awful lot
with 35 employee reclassifications and salary adjustments.
That seems to be a lot, for one year.
Is there a reason there's so many at one time?
So Corey has done some work on this,
so I'm gonna let Corey,
because he was the person that did all this.
What I can say, Director Spiegel,
is every couple of years we go through a process,
started this about probably 18 months ago, Cori, correctly if I'm wrong, but it has been some time
that we started this work and we asked the entire population of the organization, where do we have
issues? And so this is a somewhat standard process for us and I think it's probably a sense of as
our work has changed, and we are asking more and more of our employees in this changed environment.
But Corey, if you have any other additional information about the nature of this,
please share that with the committee. Thank you, Darren. So, you know, I think another,
in addition to what Darren just mentioned, I think another thing that added to the increase
and the request that we received was this is usually done on an annual basis and in late 2022
the authority embarked on a global compensation and classification review where an external
consultant was hired. That process took longer than anticipated and was not implemented until
March of 2024 and during that time while that study was taking place the HR team at the time
didn't want to embark on their own internal annual review at the same time. So there wasn't
an annual HR review for you know several years while that global compensation classification
study was taking place. So I think that also added to the number of requests received.
Okay we can't do that again it just it really rocks have it. We need to be consistent
what learning from this that we don't have a huge catch-up it just doesn't look good
it doesn't feel good and then I know you said something about there's no merit increases for
this next year I get that but now you're going to have 35 employees getting some salary adjustments
and how are the other employees going to feel that they're not getting an adjustment or anything
income increase uh so director Spiegel that's a very fair question we have been talking about
this for again over a year publicly with our staff about how this classification process,
reclassification process has worked. I think there's a lot of recognition that we have had
people working out of class and have had done so for several years. So this has not been something
that has not been discussed. I brought it up regularly in my afternoon coffees every week
with the staff and really sort of had to let people know it's just taking more time than we'd like.
but your point is absolutely spot on. The nature of a catch-up is not the way we want to operate,
and we have found ourselves a bit in that boat for the reasons that Corey explained.
It is not a best practice for sure. Thank you. Mr. Shafee, I got a question and a comment.
Please go ahead. Thank you, sir. Appreciate that. First of all, this item was not discussed at the
map. SCRRA conducts consultant-led classification and compensation study every five years,
with the most recent study finalized in the late 2023. Because this review was initiated less than
five, or less than two years following the last study, what were the recommendations from the
study? And now have the roles and departments shifted since its completion? So that's my
question. Somebody could answer that, I appreciate that. So the last global classification
compensation study that was conducted by an external consultant was implemented in March 2024.
The scope independence and methodology and purpose of those external consultant-led
classification and compensation studies are completely different than the internal HR review.
They're not on the same cadence or frequency. Public agencies do both. The hiring of an external
consultant to conduct a classification and compensation study is a on a every three to
five year basis, you know, we tend to follow the five year. The focus of that is primarily
on the organization's overall classification and compensation systems. It looks at peer agencies,
their PTO accruals, paid holidays, their health benefits contributions. The internal annual HR
review does not look at that. It looks purely at employees individual situations and determining
whether or not their classification and or a remains appropriate for their classification.
We're not looking to change our salary grades, our salary ranges. So the scope and the purpose
is completely different than those external lead consultant studies. Yes, I appreciate that.
And I would only add is that the board does have a policy that every five years we go and we
bring in that out external consultant. So we do that on a every five year basis.
And then it's the interim that is these we do an annual review and ask of the
organization those positions. So this is again sort of caught up to views.
Director Spiegel's reference, we're doing almost almost three years of
catch-up because of the nature of that. The external study took longer
that it would normally take.
And so we have a catch up period in here
that is the reason why we have a larger volume than usual.
Thank you, sir.
Appreciate that.
Mr. Shave, you also have one more comment and a request.
Although SCRRA policy states
that they shall annually review the classification
and pay plan, the fiscal year 2026, 2027 budget
is under significant scrutiny
to identify potential reductions in cost savings.
a draft budget has not yet been provided to member agencies.
Given SCCRA current budgetary and fiscal constraints,
can we consider deferring this item to a future date?
And that's just another question that I have.
I can only say Director Marquez that that is,
I would not recommend that.
I think our employees that have gone
through this reclassification process
have done so in good faith. We have done it with our HR team in good faith.
The recommendations of the adjustments are warranted in my opinion.
We have recognized this through the budget process and that is one of the reasons why at Metrolink
we have found nearly 16 million dollars in savings over prior year.
as well as our own $9.3 million in allocation of state assistance dollars to help support some service levels.
I think suggesting that we postpone this for $267,000 for employees that have been performing their work in good faith for this agency is important.
And I would only recognize that we have, we do have a standard reclassification process.
And if we have employees working outside of class, it does establish some exposure
to the agency from a performing, working outside of class consideration.
So I think for those series of reasons, I would not recommend that this be postponed.
given the time it has taken for us to do what I believe is the right thing by way of the employees
that have been performing their work.
Yeah, thank you, sir.
I appreciate that.
Just one last comment.
A budget or a draft budget or as we move forward, what is that normally provided to the member agencies?
And are we anticipating this current future budget to be more or less than what last year's budget was?
as far as the agency-wide budget, Director Marquez?
Yes, sir.
So we will be getting an earlier start on the budget
this year than we have, because we are starting
from a different baseline.
This committee and the board will start hearing in earnest
how we are going to be tackling the FY27-28 budget
at the October meetings, where we
will be listing out the various assumptions
that we will be needing to factor in to budget development for the next year.
We would hope we will clearly be working off of a different schedule scenario, hopefully
the one that has been agreed to by the five member agencies at this point.
But we will still have factors that we have to look at, and we will be raising questions
such as the nature of any fair increases we might need to see.
If we are going to be, presumably the communications we've seen from the two member counties that
have put us on notice as far as budget reductions for the current fiscal year.
Let me just really quickly remind you the communication from LA Metro is a cut plus
keeping that cut flat for the next three years.
So just one of many factors that we're going to have to look into, as well as the escalators
we have in all of our annual contracts that are, that will be contractually required.
So how we get to that is going to be a very challenging lift for this committee and for
the full board as we develop the FY27-28 budget.
And Mr. Shave, one last comment.
Basically, I think we have great employees, so I want the employees to hear that from
me first of all second of all um when I worked for the fire department the last
10 years I was union president and to me the budget's very important to know
exactly what the budget is going to be for the following year and I just would
I would hate to put this in this organization in a not in a very good
position in the future so that just a concern that I have and my agency has so
but thank you for for allowing me to present these comments to you guys
appreciate that. Thank you. Thank you for your comments. It is appreciated and I would note this
is not the final action. I'll go to the full board so there is not an immediate implementation
and we'll see what the whole board sees with this. I'd have a couple questions myself.
Chair Chafee, director Najarian has his hand raised
and then director speak on his right hand.
I'm sorry, I didn't see that.
Director Najarian was next up.
Okay, go ahead, director Najarian.
Sorry.
Thank you, Mr. Chair.
So first off, I do wanna express personally
my deep appreciation for the employees
that are punching above their weight class, if you will.
doing these extra jobs, these extra tasks,
these extra activities for which, up to this point,
have not been compensated for.
And I think the principle, I fully support
giving the employees an appropriate and just salary
for the work that they're doing.
And they are such an important part of this organization.
We run a very lean train system, as we all know, and without these employees taking up
these tasks that they've either inherited or defaulted into, in addition to their general
duties, is truly laudatory, so I certainly support that.
So if we were to look closely and zoom in on what we're doing, I think that it's certainly
a reasonable and appropriate action.
But I think in my role as a representing Metro and perhaps my other colleagues representing
their own agencies, we need to zoom out a little bit.
We have been going through some very unusual budgetary times with delays in budget, with
reductions of contributions and everything that we've gone through
counting our pennies as we're cutting service to make our budget work. And it's
my understanding that LA Metro isn't entirely comfortable in the process in
which these increases are being presented. Not that they're not
owed, not that they're not reasonable or entitled to, but Metro itself feels a
little bit out of the dark. I understand that other member agencies may feel that
after understanding how the MAC committee meeting went yesterday. It is, I
think it's important that as we all work together to bring, you know, get our
budget for 27 up and the 28 budget process has already started that we
bring everybody on board and put all of the cards on the table and do this as a
complete budget process. I think that pushing this through, let me not say
pushing, but directing this through BAFCOM and then maybe going to
the board as an approval reflecting an approval by BAFCOM will sort of indicate that there is not
a large amount of importance placed to what the member agencies are feeling at this point.
I would suggest that we roll this over as Director Marquez said perhaps to our next meeting or the
budget adoption meeting in October. I do notice that the increases as indicated are going to be
retroactive anyway back to July so we're not going to be depriving any one of these funds.
Clearly there's room in our budget to grasp these funds but it's the process I think that we need
to pay attention with especially now in this very sensitive period where we're all pulling together
and mostly pulling together and trying to make this budget work and bring a strong unifying voice
for the member agencies as we help direct this agency forward. So I would, so in principle,
I have no problem with paying these employees the merit that they're owed, excuse me, not merit but
the additional work paid for the additional work that they're doing. But I think we need to bring
the other agencies along and not have a little bit of unsettling feelings and I can reflect that
Metro is feeling a little unsettled and we don't want to scuttle this we just want to have a
process that's open and comprehensive as we include other budget items into our entire agency budget.
Thank you very very wise comments. Mr. Chair, if I could just provide a quick response.
to Director Najarian.
And I totally understand these are extraordinary times.
But the nature of the work that we've done
with re-classifications of our employees is,
it is never the nature of the process.
In fact, we have gone even further in this process this year
by taking this through the MACC process.
It normally goes directly to the board.
Because of the nature of the backlog and that kind of thing,
and that kind of thing,
we thought in the interest of complete transparency,
we would take it to the MAC.
But this is an issue related specifically to this agency
in protecting this agency's interests
and its employees interests.
I do take exception that we have from any MAC members
that suggests that we are doing something
sort of outside of process.
This is what any public agency would do whether you're in local government,
any county transportation authority would do in working with
its governing board to recognize the reclassification of its employees.
This is a MetroLink issue and it's a board issue.
We believe that the approach we're taking here is
consistent with our standard practices that really
Now standard, not that it's taken us three years,
but standard as to how we would normally present these items.
So I appreciate, we may have MAC members
that feel like they're, that this is not a,
the process is not what they believe it should be,
but it is the process that has been our historic process
for the purposes of reclassifications.
Understood, thank you for that.
And I just wanna highlight that, especially in these times,
I think the goodwill, good faith, and total support
of the member agencies are really critical and utmost
for going forward.
I don't want to see something like this,
which is not a huge budget item,
cause, you know, ruffle feathers and causes difficulties
when we deal with much more complex items
as we move forward.
A quick followup, sir, that is a two-way street.
All right, Director Spiegel, I see you have your hand up.
If you'd unmute yourself again.
Just real quick, and I know there's been so much conversation
and I kind of got a little lost.
Is the, we're talking about outside and inside.
When we do these reclassifications,
are they normally handled internally or by third party?
Director Spiegel, I understand the need
for clarification there.
So, reclassifications come about in multiple ways,
but usually they're identified either internally,
on an ongoing maintenance, annual basis.
Reclassifications can be initiated by the employee themselves,
the direct supervisor, senior management,
when they're done internally.
As we discussed, every five years
is kind of the cadence of frequency
that Metrolink follows to go out in a competitive process
to identify and select a external consultant
to conduct a global classification salary analysis,
which again, usually entails identifying
a number of peer agencies, both in rail
and in just local government within California.
And those studies are reviewing the entire compensation
classification structure of the organization that hired them, which again includes PTO accruals
for employees, paid holidays, the health benefit contributions, if there are any sort of deferred
compensation employer matches. The internal HR-led study that was kicked off in March of last year
did not look at any of that. It clearly focused only on employees who in essence raised their hand
and said I would like GAR to review my classification and or compensation and see if it still aligns
with my classifications duties, responsibilities, level of independent judgments, discretion
exercised and so yeah hopefully that answers your question.
So how many employees that asked for it were turned down and said that they weren't out
the class? So let me refer back to my notes. So I don't know, it sounds like some may have had
the answer. I have the answers though. So a total of 44 requests were received during the two-week
window that we allowed employees to submit, which again comprises about 15 percent of our approved
head count and 28 of those 44 requests were recommended for reclassification.
Thank you. I don't see more hands if I may ask a question or two. When I share a director
Najarian's comments, I deal with the divided board. It's awkward. And I'd like to get to
the big picture, which is providing the unique transportation service that we do and someday
expanding it if we can. So when you have a divided board, that's very difficult. And this is not a
big item. I support the classifications. It is a different process. I don't know of any other
agency in which I started has this formality and where you hire an outside agency to periodically
review that rather this kind of ongoing and every other agency know. So you have a few at a time.
it may change not such a large number and I think that is kind of unfortunately calling
attention to a process that I wasn't familiar with it before and I don't know what our member
agencies are generally either, then I want to get together where we are as Dr. Majora says we need
to be together on this and move forward. I did have a couple of questions here. One, does this
involved any of our MOUs or union issues when we make these classification changes?
I don't know the answer to that. Chairman Chaffee, I can answer that. So
the scope of this internal led classification and compensation review did not include any of our
represented classifications. It was for our non-represented classifications.
Okay, thank you for that clarification. And you know, I think some of this is the times we're in,
it's very distracting trying to find a budget where you're cutting back. It's a lot of stress,
particularly on employees who are asking to do extra stuff. And that sometimes results in job
classification change. But I'm wondering though, if we change the classification, no one be sure
one is paid competitively within the industry but if we keep changing
classification I don't know how you judge that versus another agency you can
always find a competitive classification to see whether your compensation is
fair and adequate and then I wonder if this doesn't change a little bit because
the workplace is changing with all the AI stuff going on that doesn't sort of
change our job qualifications? I don't know the answer. I just went raising that as an issue.
So I'm supportive of this. It is noted it does go retroactive. And it does some further discussion
I'm sure will be happening before it does get approved. But I don't know why it's not a major
thing. And I want our employees to know they're appreciated working through stressful times.
So at this point, Madam Clerk, are there any public comments?
I do not see any hands raised for this item.
Well, I'm going to move recommendation of this item to our full board. Is there a second?
At what board cycle, Mr. Chair, if you could clarify?
Well, it's part of the whole budget adoption, I think. It really should not be separate.
I think that's part of the issue that it looks like some addition coming in.
But if it's included, then we need to talk about it as part of the budget.
So would that be an October board meeting?
Because that's whenever we come to the final budget.
I believe that's October 23rd board meeting that we're planning to adopt the budget at
and transmit at the special night.
Yeah, it would be included in that budget is what my understanding.
I would second that, Mr. Chair, to come in October with the budget.
Yeah, there's more time for some things to be worked out with our member agencies so there's
a more comfortable level. All right. Madam Court, would you call the roll, please?
Director Spiegel? Yes.
Director Nadarian? Yes.
Director Marquez? Yes.
Chair Chafee? Aye.
That motion carried.
Thank you all. It's a very good discussion we had. I appreciate the comments made by
at board members and very good.
All right, now we come on to our review
of the Working Capital Fund and Tom, you're back on.
Hi, I am back up and you're gonna hear a lot
from me this morning, so I'll skip the greeting each time
if you'll forgive me, but in the interest of time.
So this is a receive and file item
that satisfies the Working Capital Fund policy requirement
to review the sufficiency and effectiveness
of the fund annually.
Next slide, please.
The $50 million working capital fund
was established to fund day-to-day working capital
needs of grant-funded capital projects, which
can take considerable time to be reimbursed by grantors.
We began using this fund in November 2025
after appropriate policies and procedures had been developed.
Since then, over $80 million of payment and reimbursement
activity for 250 capital projects has flowed through the Working Capital Fund.
It is anticipated that the use of the Working Capital Fund will be more heavy each year as the
capital program grows. The eligibility to utilize the fund is for new capital projects as they are
approved. We did not know retroactively for existing capital projects, so we will see that
that I think the budget will
grow each year as a new slate
of projects is approved into
the budget. At this time, the
fund is operating as intended
and we do not recommend any
changes to the policy,
procedure or the funding amount
of the working capital fund. The
next review will take place in
September of next year. Next
slide. That concludes my
presentation. May I answer any
Well, no, corporate column public comments director stable has her hand raised. Oh, I'm sorry. Don't worry about it. So, so on this working capital.
My agency RCTC would, I guess, I guess you would like to say, consider a modification to the working capital fund to allow funds used for co op agreements on capital projects.
We're the lead on several projects, those co-ops.
If we don't get the modification, it just kind of puts us in a situation.
Currently when an upper agreement is needed, then between two agencies, RCTs is required
to pay the deposit to Metrolink.
And that level of deposit varies.
It depends on the WCF, its capacity, and then should we use it for what purpose?
You know, it just gets a little messy.
we just want to have this looked into a little further.
Yes, thank you for the comment, Director Spiegel.
I have been in conversation with RCTC about this.
Part of this was a new fund started just a year ago,
and we had to put parameters on it
knowing that we had a $50 million fund
and probably a lot more capital activity
than that could support.
And so we did put a parameter around eligible projects.
This was the start of an attempt
to separate our operating funding from our capital funding.
And we will evaluate this as we go on.
But as I said, even within the parameters we've defined,
while we haven't necessarily depleted this fund currently,
each year we add capital projects,
more of them will become eligible to use it.
So if we open it up to broadly, we may find that the fund isn't sufficient to support that.
So absolutely, we will consider evaluating it and I will consider, I mean,
I will continue conversations with RCTC.
We have talked about some alternatives that could alleviate some of the issues they're having
with those cooperative agreements.
Okay, thank you.
Are there any other comments?
I don't see any, Madam Clerk, public comments?
don't see any hands raised for this item. Okay this is an action item. Is there a
motion? I'll move the item. Okay a second. Moved and seconded. Thank you.
Madam Clerk we'll call. Director Spiegel? Yes. Director Nandarian? Yes. Director Marquez? Yes.
Chair Chafee? Aye. That motion carries. All right now the rest of the agenda are
a number of receiving file items and I think we'll go through them as informational and
important for us to understand. And so our first one is a working capital fund report.
The quarter just ended, which is the end of our year as well. Again, Tom, please go ahead.
Thank you. So we did just talk about what the working capital fund is. So I will skip
that part of my presentation.
For the fourth quarter,
over 200 eligible capital projects utilized the fund,
$24.6 million flowed through the working capital fund
in the fourth quarter.
As of June 30th, you can see the balance
is just under 29 million.
Next slide, please.
This is a similar presentation,
splitting the activity out by member agency rather than by month.
Our funds are held in an interest bearing account, and the accrued interest is paid
out annually to the member agency, so we only retain the principle.
But the allocation was agreed upon at the establishment of the fund to be allocated
based on track miles.
Next slide, please.
So this is the trend of the working capital fund balance over time.
You can see that as we developed policies and procedures, it hovered right around the
$50 million plus interest.
And then we started to draw down beginning in November and you can see we did utilize
the fund and it sort of stabilized somewhere in the $25 to almost $30 million range during
that time.
So we do consider it sufficient, as I mentioned in my last report, but we will continue to
watch that to determine whether we need to make any adjustments.
Next slide, please.
That concludes my presentation.
May I answer any questions?
Questions on that item?
So, receive and file item, Madam Clerk.
Any comments?
I cannot see any hands raised requesting to speak right now.
All right.
Well, Tom, you have the next item as well?
Okay, another receiving file item, the quarterly report on investments for the fourth quarter of fiscal 26. Next slide.
The balance of our various investment accounts at June 30 is 221 million, a decrease of 28.9 million since the prior order. Variations on these accounts is
to be expected, particularly our operating account, as you can imagine, the amount of activity that the ins and outs that go through that account.
Next slide, please. This presents that same information on a month by month basis. Next slide.
This is a chart of cash balances over the last year. We are comfortably above our minimum operating threshold at June 30.
that balance has begun to dip as we're still working through establishing MOUs for the various
member agencies for their Q1 and Q2 support for FY27 under the continuing resolution. So we have
collected some of that money since then, but we are still working to finalize agreements for the
rest of that money. So we do see it dipping, but we are still over the $50 million threshold.
Next slide please. Interest earnings have been constant from quarter to quarter at roughly 1.4
million dollars. Next slide please. And now there are a few required disclosures
for California Government Code. We are not aware of any instances of non-compliance with the code.
We cannot confirm the sufficiency of funds for the next month due to a number of factors,
including the unpredictability of grant receipts, the heavy dependency on member agency support,
and the fact that an FY27 budget has not been adopted. Finally, we are in compliance with the
authority's investment policy, which requires the minimum $50 billion cash threshold. Next slide,
please. That concludes my presentation. I answer any questions on this one.
Questions, directors?
Seeing none, Madam Clerk, any public?
I do not see any hands raised requesting to speak.
The receive and file item.
This one, Tom, you have our next item as well.
We're at the start of the show.
Go ahead.
Okay, thank you.
Another receive and file item.
This one is a quarterly report
on our accounts receivable activity
for the fourth quarter of fiscal 26.
Next slide.
Accounts receivable balances as of June 30 are $25.8 million,
which is a $7.3 million increase from the prior quarter.
Total past due receivables are 3.2 million,
roughly the same as the prior quarter.
Next slide, please.
This chart provides further detail
on past due receivable categories or customers.
Next slide, please.
Unbuilt capital expenses are those
which have been paid by Metrolink,
but not yet presented to the grantors for reimbursement
and those total $16.8 million as of June 30.
Next slide, please.
And this is a separate schedule related exclusively
to the San Clemente events we've had over the recent years.
Next slide, please.
And that concludes this presentation.
May I answer any questions?
Seeing none, thank you for presentation.
Again, Madam Clerk, any public comments?
No public comments on this item so far.
Thank you.
All right, now we have our annual audit activities review.
David Rogers, our senior auditor,
will make the presentation.
Thank you, Chairman, committee members.
My name is Dave Rogers, senior internal auditor,
and I'm reporting on item 6H.
This is the receiving file item.
Next slide, please.
The auditing standards require internal audit
to maintain independence when performing audit services.
Internal audit function is organizationally independent,
reporting functionally to the board
and administratively to the CEO.
Staff is confirming internal audits independence
for fiscal year 2026 in accordance with auditing standards.
The summary of our audit activities for fiscal year 26
and annual audit plan status
are also provided in the staff report.
Overall, our internal audit productive hours
essentially in line with the plan. Next slide please. That concludes this report. I'm happy to
answer any questions you might have. Directors. All right. Receive and file again,
Madame Clerk. Comments to the public? And do not see any hands raised for this item.
Thank you. All right. Now, again, David, you're on again with any corrective action that we need
to take? Yes. Back again, Dave Rogers senior journal auditor reporting on item 6i. Again,
this is a receiving file item. Next slide. The board directed a journal audit to provide
quarterly updates on the corrective action status related to pass and journal and external
audits. With the fourth quarter ended June 30, 2026, there are three items implemented
and verify it to items implemented pending verification,
zero pass-through items and 21 items not yet due.
Overall, there were no pass-through corrective actions
at quarter and an internal audit will continue to follow up
on remaining open items.
Next slide, please.
That concludes this report.
Happy to answer any questions.
Correct, please.
Can't receive and file, Madam Clerk.
Again, any public comments?
I do not see any hands raised for this item.
Okay, okay, David, let's discuss the fuel purchase policy.
Sure, back again, Dave Rogers, senior internal auditor
reporting on item 6J.
This is the receiving file item.
Next slide.
If your purchase audit was recently completed,
this audit is performed annually as required
by the fuel purchase policy
and was included in our annual audit.
The audit objective was to check compliance with the policy
and the audit period was January to December of 2025.
Internal audit engaged CRO LLP to perform the audit.
CRO was supported by Willis Graves and associates
who have expertise in oil and gas.
The audit resulted in no audit findings.
The audit was presented to the Ad Hoc Committee
on August 19th, 2026.
I'm joined by Bert Nering from CRO this morning.
He's available to answer any questions
you might have on this audit.
Next slide, please.
That concludes my report.
If you happen to have any questions.
Yeah, I would ask, we use biodiesel
and how does that fit into the fuel purchase policy?
We're comparing it with diesel, regular diesel
and are we saving money with this policy?
I will, this is Bert Nearing with Crow.
Thank you for the opportunity to be here.
With regards to your question,
we do consider biodiesel and the processes that are used
by the authority in the fuel purchases.
And so that's a part of our review
of the transactions each year.
The scope of our audit doesn't touch on
whether there have been cost savings
in using the biofuels.
But I will turn it over to either Alex or Tom
to see if there's any other feedback they can provide
with regards to the question.
Okay, thank you.
Alex, would you like to take that one?
Sure, this is Alex Barber.
I'm the assistant director of finance.
Regarding the purchasing of biodiesel,
we do receive a lower cost for our biodiesel.
There are incentives that the distributor receives
and those incentives are passed on to Metrolink
and those do result in savings
from buying biodiesel versus petroleum diesel.
Okay, well, then that's important that we have a savings
and we can and also the environmental benefit
of using biodiesel is equally important.
Any other questions to directors?
All right, Madam Clerk,
have no questions on this item from the public. I do not see any hands raised
for this item. Okay all right thank you for the update on that item that's a
receiving file. Let me come on to let's see, this is now a quarterly field
purchase program update it's not sure how different that is but Alexander
uh Barbara our assistant director in general accounting you have a report for us. Yes good
morning Chair Chafee and members of the committee this is a receive a file report for the fourth
quarter of FY26 fuel purchase program. The purpose of the fuel hedge is to minimize the budget risk
resulting from the purchase of fuel on a spot basis and to seek an overall low fuel cost in the long
term while managing budget risk. As of June 30th, 2026, the authority's hedging account had a value
of 4.1 million, a decrease of 362,000 from March 31st, 2026. Although there was a slight decrease
in the account value, the authority's hedge account continues to provide relief to the
increases that we are seeing at the fuel pump. As of today, September 11th, the authority's hedging
account had a value of 8.4 million, which is an additional increase of 4.3 million since
June 30 of 2026. Recent geopolitical events, including the conflicts in the Middle East
and Eastern Europe, as well as global shipping disruptions, have contributed to the increased
volatility in diesel fuel markets. To date, the Authority has not experienced any significant
adverse impact on the operating results resulting from these events. Potential future impacts
could include increased fuel costs and reduced effectiveness of our hedging mitigation under
Strategy 1 of Metrolink's fuel purchase policy.
Finance has met with our ad hoc committee to discuss updates regarding Strategy 1. The
discussions have centered around the increasing of purchasing of contracts under Strategy
by an additional six months to provide a total of 12 months of coverage, which would match
the authority's exposure for a fiscal year. We're still keeping in mind the downward pressure
of fuel prices and their impact on our fuel budget. Next slide, please. This concludes
my presentation, and I will be happy to answer any questions that you may have.
Alright, any questions here, Director Najarian?
So is the, since we're 100% renewable diesel, is the price volatility of the renewable diesel
similar to that of the petroleum based diesel?
Yes, it is.
the renewable price kind of tracks along with the petroleum diesel and it's used in the same manner
you will see the price variations and fluctuations be very similar. We do do on an annual basis
a review of all of the pricing related to the contracts that we're purchasing and the fuel
that we're purchasing to make sure that those hedges are still effective, and to date,
all of our hedges have been effective. If they are deemed ineffective, we would have to change
our accounting for those hedges, but again, we do an annual review, and during each annual review,
we have noted that our hedges are effective even with purchasing of renewable diesel.
Though the president has told us that in the near future, oil prices will be much lower
than they are now.
I think he's assuming some sort of resolution to the Middle East conflict.
If we share that belief, we should be going for shorter contracts, should we not?
there's going to be a large, you know, we don't want to get locked into something at today's rate
if we think the prices will be going down. Is that how we think about this?
So from a hedging perspective, we never want to speculate where we believe the prices will be
heading into. Truly, the purpose of the fuel hedge is to minimize the budget risk resulting
from the purchasing of fuel. Essentially, what we're doing is we're locking in a contract
so that we have some budget certainty over the course of a year. If we were to not lock in those
contracts, we would not be able to estimate what we believe we are going to pay for fuel in the
future. And so our strategy has been to look at it from a budget perspective and not speculate
where we believe fuel prices will be heading in the next six months to 12 months.
Okay. Understood. Thank you. Interesting. Good comment. Director, is there any other questions?
Madam Clerk, back to you again. I'm sorry. Yeah, Mr. Chair, just real briefly, because we are,
as part of this process, of course, Alex was talking about trying to minimize risk to the budget.
What we can tell you is that our consultant that is supporting us in our fuel purchasing program
has given us, and we have our budgeting for the next fiscal year, a 30 percent increase,
I believe is the number, Tom, correct me if I'm wrong, a 30 percent increase in fuel prices.
So we are factoring that into our budget development process.
So that's our fuel heads consultant who knows a whole heck of a lot more about this than we do.
But that is the number they've given us for budgeting purposes.
Thank you, Chair Chafee, maybe you're frozen.
We'll give him a minute to see if he covers back.
we have a vice chair.
Technically we do not,
oh, he just dropped off.
So we'll give him a chance to join back in,
but we actually do not have a vice chair for this meeting.
I would nominate director Spiegel,
to serve as chair pro tem.
Well, Mr. Del Rio is there a challenge to that
if we don't get Chafee back?
No, you certainly can be the acting chair
to resume the meeting.
Do we wanna wait for him to go?
I would give him a couple of minutes.
Okay.
I'm timing.
We're gonna get in touch with his chief of staff
to make sure that he can get Chair Chief back online.
And Director Spiegel, I don't know if you have the agenda
in front of you, if you end up having to take over
the gavel here for the rest of the meeting,
But we are on to the last item, item 6L,
that Tom Shambrel will be doing the presentation on.
They're not getting a response, so they couldn't hang on.
I think it's fair to continue the meeting.
Okay, I had closed down my agenda, sorry guys, so.
We're at 611, Madam Chair.
Yeah, we're on item 6L, it's the financial results,
be presented by Tom Shamber. Thank you. Hello, this is my last report and the last item of the
meeting today. This is a receiving file which reviews the financial results for the month
ended July 31st. Next slide please. Since the FY27 budget has not yet been adopted,
all comparisons in this presentation are going to be to last year's actuals, the same month in the
prior year rather than a comparison of budget versus actual. This chart shows
ridership performance for the month. The fiscal year has started strong with
ridership at six hundred and seventy five thousand ninety two thousand more
than last year and that's a sixteen percent increase. This represents a
combination of what I would call organic growth in ridership along with a bump in
ridership caused by high gas prices, which pushes people to take transit instead of fueling
their personal vehicles. Next slide, please. This slide shows revenue for the month. Revenue
is $3.9 million, a $372,000 increase or 10% higher than last year. Next slide, please.
You can see both the unsubsidized and subsidized riders, a ridership is up compared to fiscal 26.
Next slide please. This slide shows year-to-date ridership by line. All lines are showing strong
ridership when compared to last year. The Orange County line in particular grew 20 percent year
over year. Similarly, the IEOC in 91 lines grew 22%. Next slide please. On the fair revenue side,
revenues are correlating very strongly with ridership. Next slide please. Breaking down
revenues by line. Once again, the OC line shows the largest revenue growth in dollars,
while the IEOC line shows the greatest percentage increase.
Next slide.
Overall financial results for the month,
operating revenue is 5.6 million over FY26 actuals,
or $63,000, 1.1%.
Expenses are $28.3 million over FY26 actuals by $2 million,
or 7.6%. Support required is 22.8 million over the FY26 actuals of 1.9 million or 9.3%.
Your packet includes a complete MetroLink operating statement for your review. Next
slide, please. Moving on to AERO. Next slide. July fair revenues for AERO are $24,000 as
as compared to $21,000 last year, an increase of 14%.
Next slide, please.
Ridership is 14,000 riders compared to $9,000 last year,
an increase of 55%.
Ridership was boosted by a free college pass program
funded by SBCTA.
This promotion was not operating at this time
in July of 2025.
It started about a quarter into last fiscal year.
So that's why you're seeing this bump.
It's been a successful program.
Next slide, please.
Arrow operating revenue is 46,000
or over F-326 by $5,000 or 11.8.
I'm back on.
Okay, welcome back, Chair Chafee.
Yeah, I don't know what happened.
I got it blanked out on me.
So you made it just in time for the grand finale here.
Okay, well, my favorite thing to do during the meeting.
Okay.
So on this slide, we're looking at arrow operating revenue,
which is $46,000 over the FY26 actuals by $5,000
or 11.9%.
Expenses are 1.3 million over FY26 by 28,000 or 2.2%.
And support is 1.2 million over the FY26 actuals by 23,000 or 1.9 percent.
Next slide, please.
And that concludes my report.
I'm happy to answer any questions.
Correct.
I'm back.
I don't know if that's good or bad, but anyway, I'm back.
It got cut off for a while there.
And thank you, Michelle, for sending me another link.
And are there any questions?
I have a question.
Please go ahead.
There were some, with regard to the expense side
of the ledger, there were some significant expenses
that were noted.
Were those expected?
Were those, well, I can't say where they budgeted
because we don't have the budget directly to compare against
but were they unexpected?
And can you just address some of those
that we're a little bit higher than we expect it to be.
Sure, sure.
So there are several things going on.
We have increases in our train operator wages and benefits
associated with collective bargaining agreements.
There were increases in fuel.
We are hedged, but a hedge only mitigates those increases
to the extent that it can.
We had material increases and equipment failures,
mechanical, so mechanical was up.
And also we are seeing an increase
in our quality service pledge program
as we do have mechanical issues
and we have to offer our writers a $50 Uber vouchers
to help them reach their destination.
So that cost has been escalating as well.
All right, thank you.
Sure.
You have the questions, directors.
Madam Clerk, are there any public comments?
I do not see any attendees with their hands raised
to speak on this item.
All right, again, this is a receive and follow item.
And now we're coming on to Darren, your report, please.
Yes, thank you, Chair Chafee.
So just really two things.
One quick clarification.
I had been on vacation the last several weeks.
I was under the impression that the conversation
associated with the classical compensation discussion
that we had just a short time ago
had been agendized for the MAC.
It was not on the MAC.
It was only on this committee and members at the MAC
raised it in the context that it was gonna be heard
by this committee today.
So it came up not because it was agendized,
which would have been, again, our standard practice.
It just goes to the committee or the board.
So just a quick clarification,
because I had not seen the posted agenda, a MAC agenda.
So I think I had misspoke on that one.
It was not agendized for the MAC just for this committee.
So just wanna get the, set that record straight.
What I wanted to share mostly is, of course,
you've all heard so much news regarding San Clemente
and what we're doing with trying to protect
our railroad tracks south of San Clemente
and north of San Diego.
There has been a massive amount of work done by our teams
and a huge, huge shout out thank you to our contractor Herzog
who has been working night and day placing rock,
giant riprap rock and ballast to protect our tracks.
We're at over now 3,550 tons of rock
that has been placed in what is about a 600,
I think it's a 600 foot section of the tracks there,
just south of San Clemente.
And so want to make sure everybody's aware of that.
We were able last night to open the tracks temporarily
for the movement of freight.
So BNSF has been providing rock trains.
They're the delivery of the rock.
We're getting the material from Vulcan
here in Southern California.
BNSF has had to park freight trains
for the better part of the last week,
we were able to temporarily open for the movement of,
we had two northbound freight trains last night
from San Diego, moving from San Diego
into Southern California,
and we're supposed to have three southbound BNSF trains
that will run today.
They are going through at very restricted speed,
effectively being walked through the corridor.
And each time a train goes through,
the tracks are being reinspected.
So we have been able to do that for the purposes of freight
and at the very strong request of BNSF
to be allowed to do so, this weekend,
the corridor will be closed
because we had already a special work window
where we are making some infrastructure repairs
and improvements along the corridor,
both in South Orange County
as well as in North San Diego County.
So we had a work window already established
for this weekend on that corridor.
So we will not have any trains operating
over the course of the weekend.
So Mr. Chair, that is certainly the most current of events
and I'm happy to take any questions from committee members.
Not curious questions.
Mr. Chafee, this is Marquez.
I got a couple of questions.
Chair, I don't know if it's appropriate to talk about this,
but the Olympics, obviously 2028 is just around the corner
as far as monies that are needed by us for the Olympics.
How's that coming?
We will have a more thorough report for you,
Director Marquez, at our board meeting
at the end of the month because we are still tallying.
Bottom line is we have yet to see funding
coming from the federal government.
We had some hopes that there would be funding
through the House T-Hud Appropriations Bill,
But because Congress decided to do a continuing resolution
through the early part of December, I think December 11th,
the funding that was something on the order of,
I believe, $800 million that was in the House
T-HUT appropriations bill does not exist
and will not exist unless it's resurrected
at the end of that continuing resolution in December.
The state of California, also same message,
we're not, we have not yet seen anything.
So I regret to inform this committee
to address your question that we are still
in the same place where we were months ago.
I mean, we've not seen support on the federal side,
the state side, and LA 28 has yet to bring
any additional funding to the table.
I do know LA Metro's GR staff have been keeping
their board completely informed
because LA Metro has a huge lift
with their dedicated, their bus program
and that kind of thing.
And we're all hearing the same that at this point,
no funding flowing.
Thank you, sir.
The last question, as far as our units, the repairs,
are they getting better?
Are we still breaking down or is that getting better?
I would say we're pretty well status quo right now.
We did have a call this morning.
We are hoping to have 33 train consists
or 33 train sets available to us on Monday of next week.
Alstom is trying to play catch up on some of their backlog,
but we are getting better at the repairs needed
to be made on two critical components.
The fuel manifolds that have continued
to unfortunately fail as well as spider shafts,
but the vendors of both of those products
are making some progress on making sure we get that material
in a timely basis and installed into the equipment.
We're not where we need to be at.
Director Marquez to be quite blunt,
but we have seen a little bit of progress in the last,
even so much as 48 hours or so,
trying to get our fleet back to where it needs to be.
Thank you, sir.
Thank you.
Any more questions, directors?
Well, I thank all of you for your attendance today.
We're gonna close the meeting in memory
of the 21st anniversary of 9-11,
a terrible tragedy that shook all of us.
And keep that in mind.
And if anything, it reminds us we need to pull together
on everything to do the best we can.
And looking forward to working with all of you
and taking care of our member agencies
that they get comfortable with what we're doing.
And so we can do the best job we can as well.
And with that, the meeting is adjourned.
Thank you again for all your attendance.
Thank you all. Thank you, Mr. Chair.