[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.