MINUTES
STANDING COMMITTEE ON FINANCE AND AUDIT MEETING
January 28, 2014
At the call of the Chair, a Meeting of the Standing Committee on Finance
and Audit of the Massachusetts Department of Transportation was held at the
MassDOT Board Room, State Transportation Building, 10 Park Plaza, Suite
3830, Boston, Massachusetts on Tuesday, January 28, 2014.
There were present Messrs. Macdonald, Bonfiglio, Levenson and Davis.
Dr. Scott and Paige Scott Reed were not present..
Also present were Frank DePaola, Administrator of the Highway Division,
Thom Dugan, Budget Director and Jim Logan, Director of Audit, Owen Kane,
Senior Counsel to the Board and Eileen Mattis, Interim Recording Secretary.
The Chairman, Mr. Macdonald presided.
MassDOT Board of Directors
Ten Park Plaza, Suite 3830, Boston, MA 02116
www.mass.gov/massdot
Chairman Macdonald called the Open Meeting to order and presented the
order of business.
He began with opening up the meeting for public comment.
The first speaker was Louise Baxter of the T Riders Union. Ms. Baxter
expressed her support for youth stating that she hopes that there will be a 7 day
pass and a Pilot Program Youth Pass.
Students, youth, unemployed and
disabled individuals all need these more affordable passes, Ms. Baxter said. She
also expressed regret at the removal of the bus maintenance money as she fears
that will lead to a degradation of assets, which would adversely affect the riders.
The next speaker was Ms. Marilyn McNab.
Ms. McNab said she
appreciates the reduction of the RIDE fare to $3, but wants it for everyone. Ms.
McNab indicated that being ¾ of a mile from any station puts you in a $5 fare
zone. She indicated that Secretary Davey told her there aren’t a lot of people in
the $5 zone, however, she asks that their fares be decreased by $1 as well as
she feels their fares were set using the same “inaccurate” information that was
used originally to increase the RIDE fares. She mentioned that the MBTA is
bringing back a pilot program for the Night Owl service, which, she said, is
acknowledged to be a money loser, but one that helps a certain segment of the
population. Ms. McNab indicated that if the MBTA can bring in a money-losing
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late night service, the MBTA could certainly help RIDE users in the $5 zone.
Another point she made was that it is very important to have an official statement
for the RIDE users, not just accounting reports. Other government agencies are
using these reports, i.e., number of RIDE trips to the doctor, etc. She would like
RIDE users to get an official document outlining their RIDE trips, on official
letterhead.
Chairman Macdonald said that MBTA will look for ways to make all fares
more affordable and he will look into the difference between the internal reports
and what the rider receives.
The outside comment period then closed.
The first item on the agenda was the MassDOT Capital Investment Plan,
which was presented by Thomas Dugan, Budget Director for MassDOT. Victor
Rivas joined him (Deputy Director of Capital Budget with MBTA).
A short
PowerPoint presentation was given. Mr. Dugan indicated that this is the first time
both the MBTA and MassDOT Capital Investment Plans have been presented as
one integrated plan, including all modes of transportation. He said much of what
they are presenting would be dependent on the passage of the Massachusetts
Transportation Bond Bill.
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He said this is a five year rolling plan; both plans would be harmonized to
be on the same cycles next year. Mr. Dugan indicated that MassDOT’s budget
is a year behind the MBTA’s at the moment. He indicated also that this is a
transparent plan making clear how transportation will be funded, including
hundreds of projects. One of the appendices lists every project funded or to be
funded statewide by DOT, the MBTA or the Commonwealth on behalf of either of
them. It is focused on a state of good repair and improving the assets we have
today. A copy of Mr. Dugan’s presentation is available upon request.
The next speaker was Victor Rivas of the MBTA, who continued on with
presenting parts of Mr. Dugan’s presentation. He acknowledged working very
well in collaboration with MassDOT’s team to gather a massive amount of
information. He focused on the MBTA CIP. He indicated that over the five year
period of state and MBTA funding that the total funding sources amount to $6.1
Billion over the five year fiscal years 2015-2019. All the federal FTA funding
sources comes to about ½ of the $6.1 Billion. The state funding contributes
about 38% of the total and the MBTA Revenue Bonds comes to about 11% of the
funding. The majority of the bond contribution goes to support to the federal
program (80% federal; 20% MBTA funds). Other minor funding sources are
Homeland Security and Pay As You Go.
Director Bonfiglio asked about
Homeland Security’s funding. Jon Davis noted that Homeland Security money
has dropped from about $30M to about $10M. Mr. Davis further indicated that
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one Congressional mandate (not Homeland Security) is that the MBTA must
adhere to is Positive Train Control, which costs about $400M.
The Federal
Railroad Administration monitors this, but provides no funding. The MBTA is
looking into other funding sources for this program.
Mr. Rivas continued to describe the diversity of the MBTA system
including several types of buses, bus rapid transit, ferries, trains, light rail, etc.
He went on to describe the allocation of funds to various sectors of the system,
explaining that while the Blue Line appears to have less funding, that a lot of
funding has previously been allocated to Blue Line upgrades. He presented a
graph indicating where all the funding sources are allocated.
(Refer to Mr.
Dugan’s PowerPoint.)
Jon Davis answered Chairman Macdonald’s question, as presented by
Ms. Baxter during the open comment period, about funds being made available
for bus maintenance and replacement. Mr. Davis indicated that the MBTA has
tentatively committed between $300-400 million for bus replacements in the
budget. They are looking at how to fund this, but with the average age of the
buses and the need to look at equity across all modes, a significant amount of
money will be allocated to this area.
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Thom Dugan resumed the discussion and indicated that there will be a
series of six (6) public hearings statewide to discuss the Capital Plan. These will
be joint MBTA and MassDOT hearings, especially in the Boston, Worcester and
Lynn service areas. Public ideas will be solicited through comment cards and a
website. They will take the comments and they will be incorporated into the
Capital Plan to be brought back for a vote in February or March.
The next item on the Agenda was the briefing on the MBTA FY 2015
Preliminary Budget, which was presented by Jonathan Davis, Chief Financial
Officer for the MBTA. A copy of his presentation is available upon request. He
indicated the transportation finance legislation promoted by the Governor, the
Secretary and the Legislature, gives the MBTA a degree of stability that it has not
had in the past, although there will always be a need for additional resources.
Mr. Davis indicated the pro forma shows a $4.8 surplus of revenue over
expenses.
The revenue recovery ratio exceeded the 33% target set in the
transportation finance legislation. He also outlined an anticipated 5% overall fare
price increase scheduled for July 2014, including a RIDE Premium increase to
$5.25. Nothing is set in stone, but this all must be reviewed and presented to the
Board. He anticipated no change to the fare structure. RIDE fares will stay at $3
per the Board’s prior vote.
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Mr. Davis said that a preliminary budget will be presented to the Standing
Committee on Finance and Audit at its February 25th meeting. He further stated
that an approved preliminary budget is required by March 15th and a final budget
approved by April 15th. A copy of Mr. Davis’ full presentation is available upon
request.
Charles Planck continued with Mr. Davis initial presentation to the Board.
He said that the fare increase is set for July 2014, but no service changes are
required. He noted the anticipated 5% fare increase scheduled for July 2014.
The RIDE Premium fare will be $5.25 and the ADA fare will remain at $3.00..
Hearings will be set up around the MBTA service area prior to implementation.
Mr. Planck said a “tiered fares” or “means testing” program is being studied in
conjunction with other state agencies such as the Department of Public Health
and the Executive Office of Elder Affairs. Regarding a university pass program,
Mr. Planck said that research is being done at the various universities about what
their students would like. Since many students are paying full retail, they are
very interested in a university pass. There are issues such as encouraging offpeak travel for students. He also discussed “time of day” pricing. The MBTA is
planning to test this, although they do not have the means to do so yet. The
MBTA needs to encourage off peak travel and to avoid crowding at peak times.
He further noted that the MBTA is trying to reduce cash fares as the cash system
slows transit down considerably. Mobile ticketing has been very successful in
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this regard. They also want to simplify the fare structure in the future. They will
be investigating all of these for proposed inclusion in the FY16 budget. He also
discussed issues with MBTA parking lots and informal parking arrangements
around MBTA lots that are causing issues for local cities and towns.
The next item on the agenda was the MBTA authorization to issue up to
$200 million in Revenue Bonds to fund a portion of the Authority’s Capital
Investment Program. Jonathan Davis gave a brief presentation on this item. He
noted that even with the new bond issuance that the overall debt burden for the
Authority has been reduced, which is an important point for the MBTA.
He
indicated that $200 million is slightly more than needed, but due to the low
interest environment they felt it best to move forward to mitigate the interest rate
risk factor. A copy of Mr. Davis’ presentation is available upon request.
On motion duly made by Chairman Macdonald and seconded by Director
Bonfiglio, it was
VOTED:
that the Standing Committee on Finance and Audit recommends to
the full Board the issuance of $200 million in Revenue Bonds to
fund a portion of the Authority’s Capital Investment Program.
This was a unanimous vote in favor of the recommendation.
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The next item on the agenda was the Central Artery Repair and
Maintenance Trust Fund (CARM) audit, which was presented by Jim Logan. The
audit of CARM was the 4th annual audit for the Fund established in 2008. The
balance of the CARM Fund as of March 18, 2013 was approximately $387
million; the original amount was approximately $513 million, so the fund has been
decreased over the past 4 years. The current audit covered March 19, 2012
through March 18, 2013. Mr. Logan indicated that internal controls are operating
very
well,
with
only
one
minor
recommendation
for
improvement
in
documentation. There are federal requirements for investing this trust fund and
we follow them rigidly. Mr. Logan’s presentation is available upon request.
On motion duly made and seconded, it was unanimously
VOTED: to adjourn.
Documents relied on in meeting:
FY2014-FY2019 MBTA and MassDOT Capital Investment Plans
MBTA Preliminary Fiscal Year 2015 Budget Request Update
Staff Summary and Proposed Votes re Bond Authorization
MBTA Debt Issuance Policy
Municipal Market Update
Internal Audit of the Central Artery/Tunnel Project Repair and Maintenance
[CARM] Trust Fund
Internal Audit Unit Internal Audit Plan Fiscal Year 2014
MBTA Parking Lot Revenue Collection Audit
Internal Audit of MassDOT Statewide Tolling
Internal Audit of MBTA Rail & Transit Ticket Vendor Edenred
Management Corrective Action Implementation Timeline and Accountability
Report
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