Meeting_Body
FINANCE, BUDGET, AND AUDIT COMMITTEE
SEPTEMBER 18, 2019
Subject
SUBJECT: METROLINK ADDITIONAL FY 2020 FUNDING
Action
ACTION: APPROVE RECOMMENDATIONS
Heading
RECOMMENDATION
Title
CONSIDER:
A. REPROGRAMMING $2,088,793 of forecasted FY 2018-19 (FY19) surplus to fund the Southern California Regional Rail Authority’s (SCRRA operated as “Metrolink”) FY 2020 CEO Workplan; and
B. AMENDING and APPROVING Metro’s revised share of the FY 2019-20 (FY20) Metrolink Budget for a new total programming amount of $119,976,796.
Issue
ISSUE
Metrolink is requesting approval of $3.75 million of their forecasted FY 19 year end surplus be reprogrammed and carried forward into the Metrolink FY 20 Operating Budget. Metro’s share of the $3.75 million is $2,088,793 which would increase Metro’s FY 20 Metrolink funding share to a new total programming amount of $119,976,796. The Metro Board approved Metro’s funding share of the Metrolink FY 20 budget in the amount of $117,888,003 at the Board of Directors meeting on May 23, 2019. As a member of the Metrolink Joint Powers Authority, Metro is required to approve Metro’s funding share of the Metrolink budget on an annual basis. Staff’s recommended Board action will increase Metro’s funding share of the Metrolink FY 20 budget by $2,088,793 from $117,888,003 to $119,976,796.
Discussion
DISCUSSION
Metrolink staff analyzed their FY 19 budget actual revenue and expenditures in comparison to their adopted budget and identified an FY 19 forecasted budget surplus of $7.5 million as of May 31, 2019. The FY 19 forecasted budget surplus is a result of lower than budgeted operational expenditures amounting to a cost savings of $10.1 million. However, Metrolink is forecasting a revenue shortfall of $2.5 million which is being deducted from the $10.1 million for a net forecasted surplus of $7.5 million.
Metrolink is requesting to use 50% of the FY 19 forecasted surplus, totaling $3,734,202 to focus on improved fiscal sustainability, strengthened partnerships with member agencies and modernization of business practices by supporting the Metrolink CEO Initiatives of updating the strategic business plan, exploratory rebranding studies and promoting an operational excellence program (refer to Attachment A-Metrolink’s Update on Forecasted Comparative Operating Statement dated June 25, 2019).
Metrolink’s preliminary allocation of the forecasted surplus by Member Agency is presented below in Table 1.
TABLE 1: FORECASTED SURPLUS BY MEMBER AGENCY (as of 5/31/19)
|
Member Agency |
Metro |
OCTA |
RCTC |
SBCTA |
VCTC |
TOTAL |
|
Forecasted Surplus |
$4,177,585 |
$1,649,452 |
$722,940 |
$652,775 |
$265,653 |
$7,468,404 |
|
Metrolink’s 50% surplus request |
$2,088,793 |
$824,726 |
$361,470 |
$326,388 |
$132.826 |
$3,734,202 |
Generally, Metrolink identifies member agency surplus through their year-end budget closing process and completion of their annual audit and Comprehensive Annual Financial Report (CAFR) in December 2019. Upon completion of Metrolink’s annual audit and CAFR, Metrolink notifies the member agencies that there are surplus funds available to reprogram or refund to the member agencies. Metro routinely reprograms the surplus funds to future fiscal year operating costs to reduce Metro’s operating contribution.
Metro’s share of the FY 19 forecasted surplus is $4,177,585 of which $2,088,793 will be reprogrammed and budgeted to be used for the CEO Initiatives. Metrolink will provide monthly reporting of the CEO Initiatives to the Member Agency Advisory Committee.
Determination_Of_Safety_Impact
DETERMINATION OF SAFETY IMPACT
Approval of this item will have no impact on the safety of Metro’s patrons or employees.
Financial_Impact
FINANCIAL IMPACT
Reprogramming Metro’s share of the FY 19 forecasted surplus totaling $2,088,793 to fund the CEO Workplan would not require any additional funding from Metro since Metrolink already has the funds in their possession. If the actual surplus is less than $7.5 million after Metrolink completes their year-end close, there should be enough surplus funding available to absorb the difference.
Implementation_of_Strategic_Plan_Goals
IMPLEMENTATION OF STRATEGIC PLAN GOALS
Staff’s recommendation supports strategic plan goal #1.2 to improve L.A. County’s overall transit network and assets. Metro staff will work with the Southern California Regional Rail Authority to provide more frequent and reliable Metrolink services, improve customer satisfaction, and support better transit connections throughout the region.
Alternatives_Considered
ALTERNATIVES CONSIDERED
As a member of the SCRRA JPA, Metro is required to approve its share of the SCRRA budget. However, the Metro Board could elect to decline approving this additional funding. Metro staff does not recommend declining an approval of staff’s recommendation as it is important to support the Metrolink CEO’s Initiatives of customer focused operation, doubling ridership in 5 years and reducing member agency subsidy.
Next_Steps
NEXT STEPS
Staff will continue to work collaboratively with Metrolink and monitor implementation of SCRRA’s budget and programs. Metro staff will report back to the Metro Board with any issues requiring Board action.
Attachments
ATTACHMENTS
Attachment A - Metrolink’s Update on Forecasted Comparative Operating Statement dated June 25, 2019
Prepared_by
Prepared by: Yvette Reeves, Manager, Transportation Planning (213) 418-3176
Jeanet Owens, Sr. Executive Officer, Regional Rail (213) 418-3189
Reviewed_By
Reviewed by: Richard Clarke, Chief Program Management Officer (213) 922-7557
