June 8, 2006
(For Board: June 23, 2006)

 

REPORT OF THE FINANCE-AUDITING COMMITTEE

 

Honorable Board of Directors
Golden Gate Bridge, Highway
  and Transportation District

Honorable Members:

A meeting of the Finance-Auditing Committee was held in the Board Room, Administration Building, Toll Plaza, San Francisco, California, on Thursday, June 8, 2006, at 10:12 a.m., Chair Stroeh presiding.

Committee Members Present (5): Chair Stroeh; Directors Boro, Cochran, Eddie and Reilly

Committee Members Absent (3): Vice Chair Pahre; Director Murray; President Middlebrook (Ex Officio)

Other Directors Present (3): Directors Hernández, Kerns and Moylan

Staff Present: General Manager Celia G. Kupersmith; District Engineer Denis J. Mulligan; Auditor-Controller Joseph M. Wire; Secretary of the District Janet S. Tarantino; Attorney Madeline Chun; Deputy General Manager/Bridge Division Kary H. Witt; Deputy General Manager/Bus Division Susan C. Chiaroni; Deputy General Manager/Ferry Division James P. Swindler; Deputy General Manager/Administration and Development Teri W. Mantony; Director of Risk Management and Safety Bill Stafford; Director of Public Affairs Mary C. Currie; Deputy District Engineer Ewa Z. Bauer; Budget and Program Analysis Manager Jennifer Mennucci; Executive Assistant to the General Manager Amorette Ko; Assistant Clerk of the Board Patsy Whala

Visitors Present: Arthur A. Goepp, III, Managing Director and Gregory W. Wessel, Vice President, Marsh Risk & Insurance Services

     
1.
Authorize Amendment to the Pass-Through Agreement with the Metropolitan Transportation Commission for Federal Transit Administration Funds for the TransLink® Project
     
 

In a memorandum to Committee, Auditor-Controller Joseph Wire and General Manager Celia Kupersmith reported on staff’s recommendation to execute an amendment to the Pass-Through Agreement with the Metropolitan Transportation Commission (MTC) for Federal Transit Administration funds for the TransLink® Project (TransLink®).  The report stated that since 1992, District staff has worked with the MTC and several other San Francisco Bay Area transit operators in developing and implementing the TransLink® regional fare collection project.  MTC is the lead agency for TransLink®. 

The report also stated that the Board of Directors, by Resolution No. 96-258 at its November 8, 1996 meeting, authorized the District to act as the pass-through agency for federal funds programmed to support TransLink®, which entailed entering into a Pass-Through Agreement with the MTC.  As the lead federal grant recipient for TransLink®, the District is responsible for federal grant activities, such as submitting necessary application materials to the Federal Transit Administration (FTA), executing a contract for federal funds, drawing down federal funds to pass through to the MTC and providing quarterly project progress report information to the FTA.  These responsibilities are specified in the Pass-Through Agreement between the MTC and the District for TransLink®.  State Transit Assistance funds in the amount of $7,000 per year have been made available to the District to support TransLink® related grant activities to date.  This amount will be increased to $10,000 per year beginning in FY 06/07. 

The report further stated that staff recommends that the General Manager be authorized to execute an amendment to the Pass-Through Agreement with the MTC for TransLink®, to include additional federal funds to be secured through the District’s FY 05/06 Federal Urbanized Formula Program grant application, as well as to include additional applicable FTA requirements.  The report noted that funds to support this amendment have been included in the FY 06/07 Operating and Capital Budgets.  A copy of the report is available in the Office of the District Secretary and on the District’s web site.

Staff recommended and the Committee concurred by motion made and seconded by Directors EDDIE/COCHRAN to forward the following recommendation to the Board of Directors for its consideration:
     
 
RECOMMENDATION
     
 

The Finance-Auditing Committee recommends that the Board of Directors authorize the General Manager to execute an amendment to the Pass-through Agreement with the Metropolitan Transportation Commission for Federal Transit Administration funds for the TransLink® project.

Action by the Board - Resolution
NON-CONSENT CALENDAR

     
  AYES (5):      Chair Stroeh; Directors Boro, Cochran, Eddie and Reilly
NOES (0):      None
ABSENT (3): Vice Chair Pahre; Director Murray; President Middlebrook (Ex Officio)
     
  [Note:  The above recommendation was forwarded to the Board of Directors meeting of June 9, 2006, for action.]
     
2. Approve Renewal of the Liability Insurance Program
     
 
In a memorandum to Committee, Risk Management and Safety Director William L. Stafford, Auditor-Controller Joseph Wire and General Manager Celia Kupersmith reported on the annual renewal of the District’s Liability Insurance Program.  The report included recommended options for the following elements of the Liability Insurance Program:
  a. Excess General and Automobile Liability Insurance Program;
  b. Excess Workers’ Compensation and Employers’ Liability Insurance Program;
  c. General Liability Insurance Program for the remaining Northwestern Pacific Railroad Right-of-Way under District control;
  d. Public Officials’ Liability Insurance Program; and,
  e. Public Employees’ Faithful Performance Bond and Comprehensive Dishonesty, Destruction and Disappearance Bond.
     
 

The report contained detailed discussions of the renewal recommendations, alternative options, overall insurance market condition and specifics on the premium cost and coverage limits, as well as a description of the work provided by the District’s Insurance Advisor, Marsh Risk and Insurance Services (Marsh).  Attached to the report was the Liability Insurance Renewal proposal provided by Marsh.  The report noted that the overall casualty insurance market has softened in the last few years, resulting in a reduction of 18% in the amount of the premium for the 2006 renewal of the Liability Insurance Program.  A copy of the report is available in the Office of the District Secretary and on the District’s web site.

Staff recommended and the Committee concurred by motion made and seconded by Directors EDDIE/BORO to forward the following recommendation to the Board of Directors for its consideration:
     
 

RECOMMENDATION

     
 
The Finance-Auditing Committee recommends that the Board of Directors approve the Liability Insurance Program, as follows:
  a.
Renew the Excess General and Automobile Liability Insurance Program, with American International Specialty Lines Insurance Company, Lexington and Arch, for a one-year term, with a liability limit of $75 million each occurrence/annual aggregate in excess of a self-insured retention of $5 million each occurrence, for a total annual premium of $1,294,370, effective July 1, 2006;
  b.
Renew the Excess Workers’ Compensation and Employers’ Liability Insurance Program, with American International Group, for a one-year term, in excess of a self-insured retention of $1 million each accident with a liability limit of $10 million annual aggregate, for an annual premium of $269,368, effective July 1, 2006;
  c.
Renew the General Liability Insurance Program for the remaining portions of the Northwestern Pacific Railroad Right-of-Way under District jurisdiction (several easements south of the Larkspur Ferry Terminal (LFT), an overflow parking lot north of the LFT, a plot north of the Cal Park Hill Tunnel and a 200-foot section running through the San Rafael Transit Center), with Steadfast Insurance Company, for a one-year term, with a liability limit of $1 million each occurrence/annual aggregate and a deductible of $10,000 per occurrence, for an annual premium of $15,600, effective July 1, 2006;
  d.
Renew the Public Officials’ Liability Insurance Program, with National Union Fire Insurance Company, for a one-year term, with a liability of $5 million each occurrence/annual aggregate and a self-insured retention of $100,000 each claim, for an annual premium of $73,724, excluding terrorism insurance, effective July 1, 2006; and,
  e.
Renew the Public Employees’ Faithful Performance Bond and Comprehensive Dishonesty, Destruction and Disappearance Bond, with Fidelity and Deposit Company of Maryland, for a one-year term, with a liability limit of $1 million for employee dishonesty and computer fraud, subject to a $25,000 deductible and $5,000 deductible respectively, and a liability limit of $500,000 for loss of money and securities at the Golden Gate Bridge Toll Plaza, subject to a $5,000 deductible and $15,000 limit at all other locations with a deductible of $5,000, for an annual premium of $13,414, effective July 1, 2006;
 

with the understanding that requisite funds are available in the FY 06/07 Operating Budgets for the Bridge, Bus, Ferry and District divisions.

Action by the Board - Resolution
NON-CONSENT CALENDAR

   
  AYES (5):      Chair Stroeh; Directors Boro, Cochran, Eddie and Reilly
NOES (0):      None
ABSENT (3): Vice Chair Pahre; Director Murray; President Middlebrook (Ex Officio)
   
 
[Note:  The above recommendation was forwarded to the Board of Directors meeting of June 9, 2006, for action.]
     
3. Approve Renewal of the Health and Benefit Insurance Plans
     
 
In a memorandum to Committee, Deputy General Manager/Administration & Development Teri W. Mantony, Auditor-Controller Joseph Wire and General Manager Celia Kupersmith provided staff’s recommendation for renewal of the District’s Health and Benefit Insurance Plans for FY 06/07.  The Health and Benefit Insurance Plans renew on July 1, 2006, and include the following policies:
  a. Group Life, Accidental Death & Dismemberment and Dependent Life Plan;
  b. Medical Stop-Loss Coverage;
  c. Kaiser Foundation Health Plan;
  d. Blue Shield of California PPO Plan;
  e. Blue Shield of California HMO Plan;
  f. Caremark Prescription Drug Plan;
  g. U.S. Behavioral Health Services;
  h. Vision Service Plan of California; and,
  i. Delta Dental Plan of California.
     
 

The report stated that in response to budgetary deficits over the past several years, the District instituted cost containment measures and structural changes to the health and benefit plans that resulted in significantly reduced costs to the District, while continuing to maintain excellent employee benefits.  The report also stated that Towers Perrin, the District’s health and employee benefits broker, built on these cost containment strategies and successfully negotiated new contracts with the District health and benefit insurance providers.  The report described the negotiated changes in some of these contracts, including a new contract with Minnesota Life for provision of life insurance that reduced the premium by 17%.   The report stated that most of the other health and benefit plans experienced modest cost increases of an average of 12%, with the exception of a significant 23% cost increase for the Kaiser HMO plan.  The report included a chart that compared the percentage of increase in costs of the various plans from FY 05/06 to FY 06/07.  The report further stated that staff recommends approval of the above-described health and benefit insurance plans for FY 06/07, with an effective renewal date of July 1, 2006.  A copy of the report is available in the Office of the District Secretary and on the District’s web site.

Staff recommended and the Committee concurred by motion made and seconded by Directors REILLY/COCHRAN to forward the following recommendation to the Board of Directors for its consideration:
     
 

RECOMMENDATION

     
 
The Finance-Auditing Committee recommends that the Board of Directors approves the renewal of the Health and Benefit Plans, for a one-year term, effective July 1, 2006, through June 30, 2007, as follows:
 
a.
Group Life, Accidental Death & Dismemberment and Dependent Life Plan with Principal Mutual, in the amount of $124,000;
 
b.
Medical Stop-Loss Coverage with Blue Shield of California, with a deductible of $150,000, and a special deductible of $250,000 for one specified beneficiary, in the amount of $349,000;
 
c.
Kaiser Foundation Health Plan, in the amount of $3,282,000;
 
d.
Blue Shield of California PPO Plan, on a self-funded basis, in the estimated amount of $9,217,000;
 
e.
Blue Shield of California HMO Plan, in the estimated amount of $954,000;
 
f.
Caremark Prescription Drug Plan, on a self-funded basis, in the estimated amount of $3,711,000;
 

g.

U.S. Behavioral Health Services, in the amount of $59,000;
 
h.
Vision Service Plan of California, on a self-funded basis, in the amount of $301,000; and,
 
i.
Delta Dental Plan of California, on a self-funded basis, in the amount of $1,938,000;
 

with the understanding that requisite funds in the amount of $19,935,000 are available in the FY 06/07 Operating Budget.

Action by the Board – Resolution
NON-CONSENT CALENDAR

     
  AYES (5):      Chair Stroeh; Directors Boro, Cochran, Eddie and Reilly
NOES (0):      None
ABSENT (3): Vice Chair Pahre; Director Murray; President Middlebrook (Ex Officio)
     
  [Note:  The above recommendation was forwarded to the Board of Directors meeting of June 9, 2006, for action.]
     
4.
Adopt the FY 05/06 Operating and Capital Budgets and Approve Related Actions
     
 

In a memorandum to Committee, Auditor-Controller Joseph Wire and General Manager Celia Kupersmith provided staff’s recommendation for approval of the FY 06/07 Operating and Capital Budgets (FY 06/07 Budget). The report included a general overview of the proposed FY 06/07 Budget that had been presented in detail at the May 11, 2006 meeting of the Committee. A copy of the report is available from the Office of the District Secretary and on the District’s web site.

Mr. Wire stated that the Deputy General Managers for the Bus, Ferry and Administration/Development divisions would provide short overviews at this meeting of the workplans of their respective divisions, including accomplishments made in FY 05/06 and goals for FY 06/07, as outlined in the proposed FY 06/07 Budget. Mr. Wire also stated that he would then summarize the workplans, accomplishments and goals of the Auditor-Controller Department, also outlined in the proposed FY 06/07 Budget.

Susan Chiaroni provided an overview of the Bus Division accomplishments, workplans and goals, as listed on pages 59 to 72 of the proposed FY 06/07 Budget document. Among the many accomplishments of the Bus Division, Ms. Chiaroni highlighted the following:

  1.
She stated that over the past two years, the Bus Division has achieved significant savings by maintaining an adequate number of drivers, reducing driver overtime hours and instituting efficiencies with the help of the HASTUS scheduling and dispatch system.  She noted that an upgrade of HASTUS, currently in progress, will result in further efficiencies and cost savings in the Bus Division.
  2.
She stated that as Bus Operator positions become vacant, the Bus Division has been able to recall those Bus Operators who had been laid off as a result of the 2003 bus service reductions.  She noted that all laid-off Bus Operators on the recall list have been recalled and that 14 additional vacancies have been filled by newly recruited Bus Operators, who are currently in training.
  3.
She described the recent improvements made to the District’s customer relations, particularly for Spanish-speaking customers, with the goal of reducing the number of passenger complaints.  Such improvements have included bilingual signage on buses, a dedicated phone number for a bilingual Customer Service Representative and increased community outreach to the Canal area.
  4.
4. She stated that the Bus Division will be implementing two capital projects to replace the 15-year-old radio communications system and the 22-year-old fareboxes. She further stated that TransLink® equipment has recently been installed on all of the District’s buses and that training of Bus Operators on the new TransLink® system will continue through summer 2006.
  5.
She stated that the Bus Division has partnered with Alameda/Contra Costa Transit (AC Transit) in a zero emission bus demonstration project, and that the District’s participation in the project will include adding some zero emission demonstration buses in Golden Gate Transit revenue service  later in 2006.
     
 
James Swindler provided an overview of the Ferry Division accomplishments, workplans and goals. as listed on pages 77 to 89 of the draft FY 06/07 Budget document. Among the many accomplishments of the Ferry Division, Mr. Swindler highlighted the following:
  1.
He reported that the completion of the Operations/Safety/Training Manual and continued training and development of Ferry Division personnel has improved efficiencies while maintaining quality customer service.
  2.
He described new measures in place to improve ferry service farebox recovery, including restructuring of fares and undertaking a project to design replacement fare gates for the San Francisco and Larkspur ferry terminals.
  3.
He described plans to maintain and improve the ferry fleet, such as refurbishing one of the Spaulding vessels, acquiring a third high-speed ferry and future refurbishment of the oldest high-speed ferry, the M.V. Del Norte.
  4.
He stated that the Ferry Division is currently developing a project to design new passenger loading facilities in compliance with the Americans with Disabilities Act as part of an effort to maintain and improve the District’s shore-side ferry facilities.  He also stated that the Ferry Division will be directly involved in discussions and plans for the relocation of the San Francisco Ferry Terminal (at no cost to the District) while the Bay Area Rapid Transit Transbay Tube retrofit project is underway.
     
 
Teri Mantony provided an overview of the Administration/Development Division accomplishments, workplans and goals, as listed within pages 100 to 121 of the draft FY 06/07 Budget document. Ms. Mantony highlighted the following aspects of the Division’s workplan:
  1.
The Planning, Marketing and Communications and Customer Service departments are continuing to collaborate with MCTD staff regarding MCTD’s local bus service changes.  The Marketing and Communications Director has assumed a leadership role in developing the regional marketing program for the TransLink® Project.  Upgrades are scheduled for the District’s web site and enhancements to bilingual customer outreach will be done.
  2.
She described the new in-house training sessions for supervisors, which build on recent values training and provide a common set of vocabulary, principles and approaches for supervisors throughout the District.
  3.
She described on-going wellness, health and safety programs, which include monthly safety meetings for Bridge Division work groups.  She noted that under the leadership of Risk Management and Safety Director William Stafford and his staff, workers’ compensation claims have continued to drop over the past year, although the trends are flattening in some areas.
  4.
She stated that the DBE Administrator has been participating in a region-wide disparity study which is likely to be undertaken in response to a recent decision by the Ninth Circuit Court of Appeals regarding the use of contract-specific DBE goals.
  5.
She noted that the implementation of the Financial Management Information System (FMIS) modules is still underway, with planned integration of the new radio communications and farebox systems with HASTUS, IFAS and Spear data modules.
     
 
Joseph Wire provided an overview of the Auditor-Controller Department accomplishments, workplans and goals, as listed within pages 100 to 121 of the draft FY 06/07 Budget document. Among the many accomplishments of the Auditor-Controller Department, Mr. Wire highlighted the following:
  1.
He noted that the Auditor-Controller Department includes multiple functions such as financial, budget and program analysis, accounting, payroll, FasTrak™ coordination, auditing, capital/grants, purchasing, vault and the Gift Center/Café.
  2.
He stated that his department will be developing the financial projections to be used by the Board during its strategic planning session in fall 2006.
  3.
He provided a brief update on the progress of the FMIS implementation, which includes the upcoming launch of the Spear maintenance module, the position control module and the budget module.
  4.
He stated that Auditor-Controller staff will be involved with the financial aspects of the TransLink® regional fare payment system, which is anticipated to occur later in 2006.
  5.
5. He described the upcoming award of RFP No. 2006-B-19, Replacement of FasTrak™ Lane and Plaza/Host Equipment, a multi-million dollar project to replace the front-end lane and computer equipment for the FasTrak™ system.
  6.
He stated that later this summer, Auditor-Controller staff will prepare an analysis for an upcoming policy decision regarding funding of the District’s Retiree Health Benefit Liability.
  7.
He stated that budget and capital/grants staff will be developing a General Overhead Formula, subject to approval by Federal Transit Administration and Federal Highway Administration, which would lessen the burden on the operating budget by increasing the amount of overhead charged to grant-funded capital projects.
     
  Discussion ensued, including the following:
     
 
  • Director Boro made the following comments and inquires:
    • He suggested that staff pay close attention to the effect of steadily increasing gasoline prices on bus ridership, and also suggested that staff adjust bus service accordingly if transit demand increases.
    • He inquired regarding the plans to replace the bus fareboxes, noting that the farebox equipment specifications should include technology to collect bus passenger data, as well as fares.  He suggested that the fareboxes also be designed to be able to differentiate between fares for local service and fares for regional service.  In response, Ms. Chiaroni briefly described the technical specifications and some of the features of the new fareboxes.  Ms. Kupersmith added that the new fareboxes will be configured to accommodate the new TransLink® fare collection system and will integrate with the District’s applicable FMIS modules.
    • He suggested that the District develop an organizational long-term strategy to become more energy conscious, by investigating such alternative energy sources as solar energy or by converting to energy-saving light fixtures.  In response, Ms. Kupersmith affirmed that staff will further investigate and quantify such energy saving strategies.
    • He inquired as to whether the purchase of a third high-speed ferry will address capacity problems during the peak morning commute period.  In response, Mr. Swindler stated that it is envisioned that the third high-speed ferry will be designed for a maximum capacity of 499 passengers, the highest number allowed by U.S. Coast Guard regulations for a boat of that type.  He further stated that once the new high-speed ferry is put into service, it is anticipated that the M.V. Del Norte, the oldest and smallest high-speed ferry in the fleet, will be refurbished and used as a back-up vessel, rather than using a Spaulding vessel as a back-up vessel.
    • He inquired regarding the escalating cost of the TransLink® Project, recently reported in the press.  In response, Mr. Wire stated that MTC is paying for almost all the costs associated with the TransLink® Project, with federal grant funding funneled through the District as the pass-through agency.  He noted that the District’s operating costs associated with the TransLink® Project remain the same as projected.
     
 
  • Director Hernández suggested that if the current duties of Terminal Assistants are somehow diminished due to the installation of new automated ferry fare gates, that such personnel be provided opportunities for other work assignments.
     
 
Staff recommended and the Committee concurred by motion made and seconded by Directors COCHRAN/BORO to forward the following recommendation to the Board of Directors for its consideration:
     
 
RECOMMENDATION
     
 
The Finance-Auditing Committee recommends that the Board of Directors adopt the FY 06/07 Operating and Capital Budgets, and approve the following related actions:
  a.
District workplans, goals and objectives, as contained in the Budget document;
  b.
A 2% negotiated salary increase for employees represented by the Amalgamated Transit Union, Local No. 1575, effective March 1, 2006;
  c. Approve changes to the Reserve Structure; and,
  d.

Approve changes to the Table of Organization.

Action by the Board – Resolution
NON-CONSENT CALENDAR

     
  AYES (5):      Chair Stroeh; Directors Boro, Cochran, Eddie and Reilly
NOES (0):      None
ABSENT (3): Vice Chair Pahre; Director Murray; President Middlebrook (Ex Officio)
     
 
[Note:  The above recommendation was forwarded to the Board of Directors meeting of June 9, 2006, for action.]
     
5. Public Comment
     
  There was no public comment.
     
6. Adjournment
     
  All business having been concluded, the meeting was adjourned at 11:05 a.m.
     

Respectfully submitted,

/s/ J. Dietrich Stroeh, Chair
Finance-Auditing Committee