[0:22] Good morning. We will go ahead and

[0:24] call the

[0:27] audit and finance committee meeting

[0:29] for friday, march 14, 2025 to order

[0:30] at 9:45 --

[0:33] 9:45 a.m.

[0:35] may we please have a safety briefing.

[0:36] this will be done by

[0:45] system safety.

[0:46] >>

[0:47] good morning. We are at one gateway

[0:48] plaza at the l.a. Metro board room

[0:49] on

[0:50] the third floor. If we do need to

[0:51] evacuate the room here, we will effectively

[0:53] out to my left. We will go down the

[0:54] escalators and meet out

[0:56] at the metro customer service area.

[0:57] for accident --exiting the

[1:00] room, make sure you are aware

[1:20] of the tripping hazards, chairs, backpacks,

[1:21] things of that nature. In the event

[1:22] of

[1:23] an earthquake, we will huddle under

[1:24] the tables until the shaking stopped

[1:25] to do an

[1:26] assessment to see if we need to evacuate.

[1:27] in the event of a first-day situation,

[1:29] there is an aed across from the security

[1:30] desk. We have first responders in

[1:32] the room from internet county --san

[1:33] benito county. In the event of an

[1:34] active

[1:35] attacker, run, hide and fight. 20th

[1:36] online, make sure you're familiar

[1:37] with your surroundings. Make

[1:38] sure you're familiar with your place of

[1:39] safety and exit route. That concludes

[1:41] my briefing.

[1:42] >> thank you very much.

[1:43] with that, we are going to

[1:44] move to the pledge of allegiance.

[1:45] >>

[1:49] [ inaudible ]

[1:52] >>

[2:05] thank you very much. And now,

[2:08] madame secretary, roll call.

[2:09] >> [

[2:11] roll call ]

[2:35] we do have a quorum present.

[2:36] >> very

[2:37] good. Do we have any public

[2:38] comments today?

[2:39] >> I have not received

[2:40] any request to

[2:41] speak or any written comment.

[2:43] >> okay.

[2:44] we get to move

[2:46] to item ,

[2:47] approval of the minutes from february

[2:49] 14, 2025.

[2:51] any of my colleagues have any request

[2:52] to modify

[2:55] or make any comments about it?

[2:58] if not, do we have a motion

[3:01] to approve ?

[3:02] >> I move for

[3:04] approval.

[3:05] >>

[3:07] approval by chaffee. Must be

[3:10] a separate county. Yeah.

[3:11] >> dutrey

[3:13] seconds .

[3:14] >> that

[3:15] sounds great. Thank you. Roll call please.

[3:19] >> [ roll call ]

[3:31] motion carried unanimously.

[3:32] >>

[3:34] excellent. Next will be

[3:36] fiscal year 2025 midyear operating

[3:37] budget review amendment

[3:40] presented by christine wilson,

[3:43] assistant director of finance.

[3:46] a very lovely hat and outfit for

[3:48] st. Pattie's day.

[3:49] >> thank you. Good morning,

[3:54] chairman and members of the committee. I'm

[3:55] assistant director of

[3:57] finance presenting item number 6b,

[3:58] the

[4:00] fy 25 midyear operating budget review amendment.

[4:07] it is a

[4:09] practice of metrolink to perform a review

[4:13] of the annual budget at midyear to

[4:15] identify any revisions that may be needed

[4:16] to the

[4:18] operating budget as a result of changed circumstances.

[4:22] our review indicates

[4:24] that an amendment is required this year.

[4:36] the amendment we are presenting is

[4:37] driven by the following. Changes to

[4:38] ridership, changes to the service

[4:40] schedule, a change to the cost of

[4:41] mobilization, and

[4:42] a member agency request. This slide

[4:43] shows the details of the amendment

[4:45] staff is recommending for adoption

[4:46] by the member agencies.

[4:52] the box at the top of the

[4:53] screen shows the budget as it currently

[4:55] exists. Revenue of

[4:58] 68 million, expensive 332 million,

[5:01] and support of 264

[5:04] million. In the next box

[5:07] we see the

[5:08] amendments. The revenue adjustments

[5:10] consist of a reduction of the revenue

[5:11] based on

[5:13] a re-forecast of the revenue

[5:22] by capital kpmg. Because the lc top

[5:23] funding

[5:24] was not confirmed at the time we did

[5:25] the budget, the original budget forecasted

[5:26] student

[5:28] ridership in the numbers

[5:31] as a

[5:32] 25% discount. This re-forecast to

[5:33] takes into account that students ride

[5:34] free.

[5:37] in addition to

[5:38] the most current changes in ridership,

[5:40] this reduced revenue by

[5:46] 7.9 million. The second change

[5:47] that the revenue is to include the

[5:49] student adventure pass pilot budget

[5:52] . Once again, because we were unsure

[5:54] of funding, it was not included in

[5:55] the budget. Including the student

[5:56] adventure

[5:58] pass funding , it adds

[6:02] 6.3,000,002 revenue that produces

[6:04] a net revenue change of

[6:07] 1.6 million. The next amendments relate

[6:09] to expense. First we have the removal

[6:10] of four

[6:14] 42 laguna trades originally included

[6:16] in the optimized

[6:19] service budget. Next, another in just

[6:20] a

[6:22] moment --adjustment is the removal

[6:25] of 20 laus

[6:27] to convene a trains replaced by the

[6:28] addition of 10

[6:31] laus to montclair trains.

[6:33] you also see here at the request of

[6:40] sp cta, the

[6:41] addition of cause for san bernardino

[6:43] sharers added to san bernardino

[6:49] county. This is funded in

[6:51] its entirety by sp cta. Finally, the

[6:52] negotiation of the mini bundle

[6:55] has

[6:57] reduced the original estimate budgeted

[6:59] for mobilization by 2.5 million

[7:06] . All these amounts create, in that,

[7:07] a reduction to member agency required

[7:11] support by $896,000.

[7:14] the boxes

[7:15] at the bottom of the slide show the

[7:17] amounts of the fy 25 budget if

[7:18] this recommended amendment is excepted.

[7:31] all the following slides show the

[7:32] proposed amended budget by category

[7:33] and member agency, including changes

[7:35] to the individual

[7:38] lines in the operating budget.

[7:44] you see here

[7:46] the individual items that have been changed.

[7:52] at the bottom, as I said, it creates

[7:53] a

[7:54] reduction to the amount we are asking

[7:56] for member agencies by

[8:00] $896,000. That concludes my report.

[8:02] can I answer any questions?

[8:03] >>

[8:04] thank you very much for the report.

[8:05] attorney to my colleagues here.

[8:08] and online. A quiet bunch

[8:11] again. Linda

[8:13] .

[8:14] >> thank you for your great explanation

[8:17] of the numbers.

[8:18] >> thank you. >>

[8:21] everybody knows what the numbers are,

[8:22] but you explained them so clearly.

[8:23] thank you

[8:24] for that.

[8:25] >> thank you. >> all right.

[8:26] with that,

[8:29] this is actually an action item.

[8:30] we need to first asked for public

[8:32] comments.

[8:33] >> mr. Chairman,

[8:36] john dutrey. I have a couple of questions.

[8:38] on the sharers contract

[8:41] , obviously, sbcta is

[8:46] covering that cost. Is that also in

[8:47] the budget?

[8:48] >> yes, that

[8:50] it started

[8:53] --added to

[8:54] the budget by this amendment.

[8:55] >> all

[8:56] right, them. I move for approval.

[8:57] >>

[8:59] okay. We do have a motion.

[9:04] before we do that, do we have any

[9:05] public comments?

[9:06] >> I have

[9:07] not received any written public comment

[9:08] or request to speak on this item.

[9:09] >> okay.

[9:10] emotion on the floor to approve. Do

[9:11] we have a second? We have a second.

[9:14] different county. [ laughter ]

[9:16] roll call, please.

[9:17] >> [ roll call

[9:18] ]

[9:34] motion carried unanimously.

[9:35] >> very good.

[9:38] item one to

[9:41] six see -- 6c.

[9:44] performance audit

[9:47] , deactivation of badges for employees,

[9:48] board

[9:50] members, and idts.

[10:00] presented by the director of the audit

[10:01] department.

[10:02] >> good morning, chairman

[10:03] and committee

[10:04] members. Internal audit completed

[10:05] the deactivation the badges for employees,

[10:06] board members and

[10:07] integrated digital and technology

[10:08] services, also

[10:09] known as idts, contractors. The audit

[10:11] is included in the fiscal 25 board

[10:12] approved

[10:13] audit plan. The objective was to evaluate

[10:15] the effectiveness of the agency's

[10:17] badge deactivation process

[10:20] for secure access control for employees,

[10:23] board members and idts contractors.

[10:24] the audit

[10:26] period was january 2023 through

[10:35] july 2024. There are three findings

[10:36] and

[10:37] three audit recommendations. Management

[10:38] agreed with the findings and developed actions.

[10:41] audit will

[10:42] track the status of the corrective

[10:43] actions. This concludes my item. Happy

[10:44] to answer any

[10:47] questions.

[10:48] >> for such a long stretch

[10:49] of

[10:50] time to deal with this, that was a

[10:51] quick report. I will open it

[10:53] up to questions. I don't have

[10:56] any questions.

[11:02] any public

[11:04] comments?

[11:05] >> I have not received any

[11:06] written public comments or requests

[11:07] to speak on

[11:08] this item.

[11:09] >> okay. So then, I will

[11:10] make a few comments. I asked

[11:11] for this item to come to the audit

[11:12] committee some time ago for the mere

[11:14] fact that

[11:20] my badge was supposedly expired

[11:22] in the year 2020, and it was 2022

[11:23] or 2023 and still working just fine.

[11:25] I thought, at the time, there was

[11:26] a lot of disgruntled ex-employees

[11:32] using things like old keys or badges

[11:33] to

[11:35] get into

[11:41] other

[11:42] facilities. Not metrolink, but just, in

[11:44] general, on the news. I thought, well,

[11:45] we don't want

[11:46] people with expired badges to be able

[11:47] to come in and, you know, get

[11:49] access to our facilities to cause harm.

[11:50] and so, this started

[11:53] this process.

[11:56] I have learned that we

[11:58] have one more little tweaks we are

[11:59] going to have to add to this.

[12:01] I am still getting comments from board members

[12:05] , easy that even

[12:07] as of today, that the old badges are

[12:08] still working. What I have now

[12:09] learned over the last many months

[12:11] on this is that

[12:17] our

[12:18] badges are programmed twice, at least

[12:20] board members, and anybody who has

[12:21] access to this

[12:22] building here at union station. The

[12:23] expired badges, I believe, will not work,

[12:29] will not work

[12:31] at the wilshire building or any of

[12:32] our facilities because they have been

[12:33] turned off.

[12:34] but what if it turned off are the

[12:38] access to this building here by ellie

[12:39] metro. Somehow we

[12:40] have got to communicate to ellie metro that

[12:47] --l.a. Metro, that when board members

[12:48] change out

[12:49] or expired badges, et cetera, anybody

[12:51] who has access to this building,

[12:54] they should be

[12:55] notified to deactivate those badges

[12:56] as well. I think that is the one thing

[12:57] we

[12:58] have to add to this to make sure that

[13:00] gets accomplished, and we should

[13:01] be good. I will leave it at that.

[13:08] this is a receive and file. Appreciate

[13:09] the audit

[13:10] department's long-term deal to get

[13:11] this resolved and figured out. It

[13:12] will

[13:15] lead to the much safer

[13:18] work environment for

[13:25] all of the metrolink family. With

[13:27] that, we moved to item 6d,

[13:28] financial results for the first seven

[13:30] months of

[13:36] fiscal year

[13:37] 2025 through january 2025 ridership,

[13:38] revenue and operating results. Presented

[13:39] by christine wilson, assistant director

[13:40] of finance.

[13:41] >> good morning, again.

[13:42] this slide

[13:45] shows the actual

[13:50] versus forecast ridership by month.

[13:51] the redline is the budget,

[13:54] the columns are actual

[13:55] with the blue portion regular ridership

[13:56] in the orange portion the student

[13:57] adventure

[13:58] pass ridership. As you can see, where

[14:00] below the forecast ridership.

[14:03] much of this has

[14:04] to do with the devastating fires in

[14:06] the month of january. Reductions

[14:11] went from 2.5% on the ventura line to

[14:12] 9%

[14:15] on the antelope valley line.

[14:18] this graph shows the

[14:19] current ridership forecast for the

[14:21] entire year. Looking at the most

[14:24] recent month,

[14:28] january is historically a recovery from

[14:29] december holidays. This year was different.

[14:30] the fires

[14:33] had a real effect

[14:40] . Through january, ridership was forecasted

[14:42] at 4.2 million or 60% while actuals

[14:43] work 4.3 or 62%. The student adventure

[14:45] pass pilot provided 1.3 million writers

[14:48] --riders year to date.

[14:51] we see here a graph of farebox revenue

[14:52] by month and the current forecast

[14:54] for the rest of the year.

[14:56] through the month of january, revenue

[14:57] was budgeted at

[15:03] 24.4 million or 54% recovery,

[15:05] while the actual is 23. 4 million

[15:06] or a 52% recovery.

[15:09] 1.1

[15:15] 1.1 million

[15:16] under budget. What are we so far under

[15:18] forecast? The 25% monthly pass discount

[15:21] offered systemwide for the poor on-time

[15:24] performance account

[15:27] --accounts for 170,000 of the shortfall.

[15:29] the reduction of the student adventure

[15:30] pass reimbursement

[15:33] to

[15:34] 25% accounts for another 600,000.

[15:36] free rides for

[15:39] fire victims added

[15:42] to the reduction in revenue. There

[15:43] were fewer

[15:44] passengers as a result of the fire.

[15:51] for total financial results in january,

[15:52] before san clemente, total expenses

[15:54] were under budget by 17.6 million

[16:03] , and member agency support is in

[16:04] surplus

[16:05] by 21 point 4. Total operating revenue

[16:06] is 37.6, less than

[16:08] 0.1 million under budget. Total expenses

[16:23] at 169.8 million are 17.6 million

[16:24] under budget. Categories under

[16:25] budget hour as shown on the slides.

[16:27] these expenses, I remind you, are

[16:28] based on

[16:30] accruals, not actuals. This slide

[16:31] shows

[16:33] that we had

[16:39] passed two receivables of

[16:40] almost 40 million. In truth, by now,

[16:42] we actually have received 30 of it.

[16:43] this

[16:45] is way out of date, --

[16:48] , just because we have received the

[16:49] money. This

[16:50] is the operating cash that we are presenting

[16:57] our cash position at metro. As you

[16:58] know, there

[16:59] is a $50 million threshold we are

[17:00] to maintain

[17:02] . You see here that the threshold

[17:06] , the amount we're at

[17:09] right now, is 86.1.

[17:15] moving to

[17:18] arrow. This is the ridership

[17:21] by month.

[17:27] through january, the

[17:28] ridership was forecasted at 81,000

[17:29] and actual ridership is at 85,000.

[17:30] over forecast by 4000.

[17:31] year to date, the student adventure

[17:33] pass attributes over half of the ridership.

[17:48] this is the arrow farebox revenue

[17:49] by month compared to budget. Through

[17:50] january, farebox revenue was budgeted

[17:51] at 113,000 and the

[17:52] actual is 217,000, over budget by

[17:54] 102,000. With the student adventure

[17:55] pass contributing half

[17:57] of the revenue. Financial

[18:00] results for

[18:06] arrow through january show operating

[18:07] revenue at 365,000, or 264,000 over

[18:09] budget.

[18:12] expenses are 8.9 million, or 1.1 billion

[18:21] --million over budget. Support is

[18:22] required at 8.6

[18:24] million, or in surplus by 1.3 million.

[18:25] this is the student

[18:27] adventure pass update. As you

[18:30] can see, this slide shows the

[18:33] amount of the student

[18:36] adventure pass ridership that we

[18:39] have obtained both through tvd

[18:42] and the mobile app.

[18:45] as you can see, it has added

[18:48] 1.4 million riders to the system,

[18:49] including

[18:51] arrow.

[18:58] this is an update on the fy 26

[18:59] budget development schedule. We have

[19:01] ,

[19:04] thus far,

[19:09] the budget presented to member agency

[19:10] cfos three

[19:11] times, and to the membership agency

[19:12] ceos on february 21. We continue to

[19:16] be in daily discussions with the member agencies

[19:19] on fy 26 budget

[19:21] , and we feel that we are on track

[19:22] to bring

[19:25] a budget as required to this

[19:28] committee next month.

[19:33] that concludes my report. May I answer

[19:34] any

[19:35] questions?

[19:36] >> did any of the agencies

[19:37] that you have been --of

[19:38] the member agencies have any issues

[19:40] with what the 26

[19:41] budget is looking like?

[19:42] >> at the

[19:43] beginning, but

[19:46] by now, almost everyone is --

[19:47] there are certain things we still

[19:49] have to work out.

[19:50] >> no

[19:52] huge hurdles

[19:55] that will cause any --

[19:56] >>

[19:57] we will work them out.

[19:58] >> any questions

[19:59] or comments by anybody? Okay. This

[20:00] one is receive and file. Do we have

[20:01] any

[20:04] public comments on that

[20:07] ?

[20:08] >> I have not received any

[20:09] written public comments or request

[20:10] to speak on that item.

[20:11] >> okay. Our

[20:12] most

[20:13] favorite part of the day

[20:16] , ceos report.

[20:17] >>

[20:18] I will make sure it is brief so it

[20:19] stays your favorite. Very quickly,

[20:20] we

[20:21] mentioned this in the executive committee meeting

[20:24] . I think it is important to share

[20:25] here

[20:28] today as well as it

[20:29] relates to some financial issues.

[20:31] we are all

[20:35] looking towards 2028 in our ability

[20:37] to be ready to move

[20:40] so many people for the olympic games.

[20:49] the most

[20:50] --most recently, we had an earmark

[20:51] in a senate appropriations bill that

[20:52] was going

[20:53] to set aside $200 million to the region

[20:55] 4 --region for

[20:57] olympics preparedness. And 25 million

[20:58] was identified

[20:59] for metrolink. With what is expected

[21:01] to happen today in the senate,

[21:06] that they will act on the house's

[21:07] version of the

[21:10] continuing resolution

[21:13] , that will effectively

[21:14] eliminate the earmarks that were identified

[21:15] in that senate appropriations package

[21:16] in the

[21:19] appropriations bill.

[21:21] besides losing the money, the other

[21:22] element it did

[21:24] is that that action, that earmark,

[21:25] was creating a

[21:28] special account for

[21:31] the olympic games so there

[21:33] was this place you could put money

[21:34] over the

[21:36] next appropriations cycles. The action where

[21:45] the cr will eliminate the ability

[21:46] of having that

[21:47] account also available for us for

[21:49] future efforts. Where now --the royal

[21:50] we,

[21:51] collectively, will have to identify

[21:52] another way of securing funding

[21:54] from the federal government. Is a

[21:58] big deal.

[21:59] is a huge disappointment. We had other

[22:01] earmarks in both house and senate

[22:02] packages,

[22:03] as probably some of your own home

[22:04] agencies had. On top of

[22:06] that, we've also lost other earmarks

[22:07] as well

[22:12] through what is happening in washington d.c.

[22:19] thought I would share that with the

[22:20] group is

[22:21] the only other item is that I want

[22:22] to call back your attention to the

[22:23] announcement I made earlier this week

[22:25] that on friday of last week our chief

[22:26] financial

[22:27] officer let me know that he was going

[22:28] to be moving on to

[22:31] new activities

[22:34] , new things. He

[22:36] is going to be leaving us here at

[22:37] metrolink in early april.

[22:40] this is why

[22:41] christine wilson felt so confident

[22:42] in saying we will have the budget

[22:43] all worked out.

[22:44] it is because arnold has committed

[22:46] to making sure it is done before he

[22:47] rides

[22:49] off into the sunset.

[22:57] that is why christine said, sure,

[22:58] we have got no problem. In any

[22:59] event, I said it earlier, my thanks

[23:01] to arnold for his service here at

[23:02] metrolink. He

[23:03] has been --it has been six or seven

[23:04] years he served in

[23:07] various capacities.

[23:10] he has helped us to get

[23:11] through this challenging time of coming

[23:13] out of covid and metrolink reimagined

[23:14] and a

[23:16] few other elements. It took his steadfast leadership

[23:17] in that regard to

[23:19] help us navigate that

[23:31] , and working with

[23:32] her member agencies. My thanks, again,

[23:34] to arnold for his service. You will

[23:35] hear me

[23:36] talk about this. We have a couple

[23:37] more meetings where I get to embarrass

[23:38] him

[23:39] in public. You will hear more on that

[23:40] too. They could, mr. Chair. That

[23:41] concludes my remarks.

[23:42] >> appreciate

[23:43] your comments. Follow-up question

[23:44] for you. With the cr, is

[23:45] it passes today, that keeps the government

[23:46] open for a couple more months. What

[23:47] about,

[23:49] at that point, are these earmarks

[23:50] potentially able to

[23:52] be put back into a final resolution

[23:58] ? How does that work?

[23:59] >> so what

[24:00] we're hearing, in fact, the timing

[24:01] right now is that the members are,

[24:04] many members

[24:13] from southern california, are now putting

[24:14] out the notice that

[24:15] we are accepting new earmark requests.

[24:16] we have a few already lined up that

[24:17] we

[24:18] will be looking at. This 200 million

[24:19] one was a movement of funding from

[24:20] one

[24:23] program that was

[24:24] stepped back and put this 200 million

[24:25] into the special account. I think

[24:27] we will go back after it. We will

[24:29] be looking at fy 26. The appropriations

[24:30] package that was being done today,

[24:31] that will be done today, was actually

[24:35] fy 25

[24:38] , the year we are in right

[24:39] now, and the can has been kicked down

[24:40] the street a few different times.

[24:41] now --

[24:42] they want to appropriate, appropriators

[24:44] want to appropriate --

[24:49] the fact that the cr will move forward

[24:50] means we keep things

[24:51] business as usual. Then we will likely

[24:52] see some level of continuing resolution

[24:53] as we

[24:56] get into federal fiscal year

[25:00] , september 30. We will see what happens

[25:02] as to whether

[25:04] we see continuing resolutions for

[25:05] fy 26

[25:08] as well.

[25:11] theoretically, congress should

[25:12] act over the summer, and we should

[25:13] have a full appropriations package

[25:14] by the

[25:15] end of september. That has not happened

[25:17] emma doesn't

[25:20] happen all the time. So

[25:21] we will likely see some continuation

[25:25] of the fy 26, but we will all be making

[25:26] requests, and

[25:27] certainly metrolink will be through

[25:34] earmark requests in future appropriations

[25:35] packages.

[25:36] >>

[25:38] okay. Thank you.

[25:39] committee member comments. Anybody

[25:41] have anything on their mind?

[25:49] pam? But I just want to add about

[25:50] arnold. In addition

[25:51] to his technical abilities, he has

[25:52] always been a very genial and kind

[25:53] person. I

[25:54] appreciate that.

[25:55] >> anybody else?

[26:08] you ought to see him when the

[26:09] member agencies aren't cooperative.

[26:10] that he is not so congenial.

[26:11] >> that

[26:12] is because he

[26:13] knows when to pull his punches and

[26:14] be the tough guy.

[26:15] >> you've got it.

[26:16] absolutely.

[26:17] >> but to still maintain

[26:18] good relationships.

[26:19] >> no doubt. Are

[26:20] right. Chair's comments.

[26:21] arnold, I hope this is a retirement,

[26:22] not l.a. Metro stealing somebody else

[26:23] from

[26:24] us . I will also point out that, before

[26:29] darren, you filled

[26:30] the shoes as the ceo, interim ceo

[26:32] for a bit. You have had a variety

[26:35] of roles

[26:37] . You know, your reports are always

[26:38] very

[26:41] well presented . We appreciate all

[26:43] that you have done here at metrolink.

[26:44] hopefully, you are going fishing

[26:47] and not fishing for something down

[26:48] the

[26:50] street. [ laughter ]

[26:55] we will have to find that out. All right.

[26:56] with that, we're going to go ahead and adjourn.

Audit and Finance Committee

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