Ratify Actions by the Auditor-Controller

In memorandum to Committee, Auditor-Controller Joseph M. Wire and General Manager Celia G. Kupersmith outlined commitments and disbursements made on behalf of the District, noting that no investments were made during the period April 14, 2009, through May 11, 2009. The report also included a copy of the District’s Investment Report from PFM Asset Management LLC (PFM). A copy of the staff report, with attachments, is available in the Office of the District Secretary and on the District’s web site.

At the meeting, Nancy Jones reported that there had been no significant changes since her last reporting at the Finance-Auditing Committee meeting. Recently, the Federal Government extended insurance out to 2013. She reported that the yield curve is steep, which is a positive indicator. In April, the District bought two federal home notes, with yields of 2.96% and 3.00%. Ms. Jones noted that the best time to purchase these notes is when rates are stable, noting that rates have been low for approximately the past seven months. PFM will continue to look for stable anchors for the District’s portfolio. A copy of her written report is included in the staff report.

Staff recommended and the Committee concurred by motion made and seconded by Directors PAHRE/EDDIE 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 following actions by the Auditor-Controller:

with the understanding that no investments matured during the period of April 14, 2009, through May 11, 2009.

Action by the Board at its meeting of June 12, 2008 – Resolution
CONSENT CALENDAR

AYES (12): Chair Stroeh; Vice Chair Pahre; Directors Cochran, Eddie, Elsbernd, Grosboll, McGlashan, Moylan, Newhouse Segal, Reilly, Segal and Sobel; President Boro (Ex Officio)
NOES (0): None

Authorize a Budget Decrease in the FY 08/09 Bridge Division Capital Budget Regarding the Award of Contract No. 2009-B-4, Toll Plaza Pavement and Access Improvements, to Granite Rock, dba Pavex Construction Division

In a memorandum to Committee, Ewa Z. Bauer, Deputy District Engineer, Denis J. Mulligan, District Engineer and General Manager Celia G. Kupersmith reported on staff’s recommendation to authorize award of Contract No. 2009-B-4, Toll Plaza Pavement and Access Improvements. The report provided details regarding the award of Contract No. 2009-B-4 to Granite Rock, dba Pavex Construction Division, as well as other related actions. It is recommended that a budget decrease in the FY 08/09 Bridge Division Capital Budget in the amount of $892,000.00 be authorized. This project is 100% District funded. A copy of the staff 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 COCHRAN/PAHRE 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 a budget decrease in the FY 08/09 Bridge Division Capital Budget in the amount of $892,000.00, relative to the award of Contract No. 2009-B-4, Toll Plaza Pavement and Access Improvements.

Action by the Board

Refer to the Building and Operating Committee Meeting of May 21, 2009

AYES (12): Chair Stroeh; Vice Chair Pahre; Directors Cochran, Eddie, Elsbernd, Grosboll, McGlashan, Moylan, Newhouse Segal, Reilly, Segal and Sobel; President Boro (Ex Officio)
NOES (0): None

Authorize a Budget Increase in the FY 08/09 Ferry Transit Division Capital Budget Regarding the Execution of a Service Agreement with Karl Senner, Inc., Relative to Sole Source Contract No. 2010-FT-4, Gearbox Rebuilding and Re-Rationing for the M.V. Del Norte

In memorandum to Committee, Deputy General Manager/Ferry Transit Division James P. Swindler, Auditor-Controller Joseph M. Wire and General Manager Celia G. Kupersmith reported on staff’s recommendation to authorize execution of a Service Agreement relative to Sole Source Contract No. 2010-FT-4, Gearbox Rebuilding and Re-Ratioing for the M. V. Del Norte. The report provided details regarding the execution of a Service Agreement with Karl Senner, Inc., as well as other related actions. It is recommended that a budget increase in the FY 08/09 Ferry Transit Division Capital Budget in the amount of $907,000.00. This project is 100% federally funded.

Staff recommended and the Committee concurred by motion made and seconded by Directors COCHRAN/PAHRE 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 a budget increase in the FY 08/09 Ferry Transit Division Capital Budget in the amount of $907,000.00, relative to the award of Contract No. 2010-FT-4, Gearbox Rebuilding and Re-Ratioing for the M. V. Del Norte.

Action by the Board
Refer to the Building and Operating Committee Meeting of May 21, 2009

AYES (12): Chair Stroeh; Vice Chair Pahre; Directors Cochran, Eddie, Elsbernd, Grosboll, McGlashan, Moylan, Newhouse Segal, Reilly, Segal and Sobel; President Boro (Ex Officio)
NOES (0): None

Authorize Filing an Application with the Metropolitan Transportation Commission for FY 09/10 Transportation Development Act, State Transit Assistance and Regional Measure 2 Operating Funds to Support Bus, Ferry and Paratransit Services

In memorandum to Committee, Auditor-Controller Joseph M. Wire and General Manager Celia G. Kupersmith reported on staff’s recommendation to authorize filing an application with the Metropolitan Transportation Commission for FY 09/10 Transportation Development Act, State Transit Assistance and Regional Measure 2 Operating funds to support bus, ferry and paratransit services, as well as to fund Lifeline Transportation Program projects. The District’s total claim is $16,650,446.00.

This application will provide grant funds for the following: 1) $16,137,556 to support ongoing Golden Gate Transit operations; 2) $12,856,206 to support inter-county services; 3) $3,281,350 to be credited back to Marin County for local services; and, 4) $512,890 to support Lifeline Transportation Program (LTP), which are claimed by the District as pass-through funds to Marin Transit and the City of San Rafael (project sponsors) to support LTP projects. Grant revenues to support GGT operations are included in the proposed FY 09/10 Budget.

Staff recommended and the Committee concurred by motion made and seconded by Directors PAHRE/SOBEL to forward the following recommendations to the Board of Directors for its consideration:

RECOMMENDATION

The Finance-Auditing Committee recommends that the Board of Directors authorize filing an application with the Metropolitan Transportation Commission for FY 09/10 Transportation Development Act, State Transit Assistance and Regional Measure 2 operating funds to support bus, ferry and paratransit services, as well as to fund Lifeline Transportation Program projects.

Action by the Board at its meeting of May 22, 2009 - Resolution
NON-CONSENT CALENDAR

AYES (12): Chair Stroeh; Vice Chair Pahre; Directors Cochran, Eddie, Elsbernd, Grosboll, McGlashan, Moylan, Newhouse Segal, Reilly, Segal and Sobel; President Boro (Ex Officio)
NOES (0): None

Authorize Execution of a Revenue-Sharing Agreement with Marin Transit

[At the request of the General Manager, this item was taken out of order.]

In memorandum to Committee, Director of Planning Alan R. Zahradnik, Deputy General Manager/Administration & Development Z Wayne Johnson, Deputy General Manager/ Bus Transit Division Teri W. Mantony, Auditor-Controller Joseph M. Wire and General Manager Celia G. Kupersmith reported on staff’s recommendation to authorize execution of Revenue-Sharing Agreement with the Marin County Transit District (Marin Transit) to allow use of local Marin daily, weekly and monthly bus passes on the District’s Golden Gate Transit regional bus routes and to provide for full fare reciprocity between Marin Transit shuttles and Golden Gate Transit buses.

The report stated that in the fall of 2008, Marin Transit took action to create a series of daily, weekly and monthly local bus passes, compatible with the GFI electronic fareboxes on Golden Gate Transit buses and on other contracted local service vehicles. As a result of this action, Marin Transit staff and District staff developed an Agreement to extend use of these local bus passes on the District’s regional bus routes, including the following terms:

AYES (11): Chair Stroeh; Vice Chair Pahre; Directors Cochran, Eddie, Elsbernd, Grosboll, McGlashan, Moylan, Newhouse Segal, Reilly, Segal and Sobel; President Boro (Ex Officio)
NOES (1): First Vice President Reilly

Approve Salary and Bonus Freeze for Fiscal Year 2009-2010 for all Non-Represented Employees and Officers

[At the request of the General Manager, this item was taken out of order.]

In memorandum to Committee, General Manager Celia G. Kupersmith reported on staff’s recommendation to approve a policy that no across-the-board general salary increases or performance-based bonuses in FY 09/10 will be granted to non-represented employees and Officers.

The report stated that, with the loss of State Transit Assistance funds and the recession-caused decrease in toll revenues, the District is facing serious financial challenges in the upcoming fiscal year. This recommendation affects all non-represented employees and Officers, and will not affect employees represented: 1) by the unions involved in the Union Coalition, as the District is currently in negotiations with the Coalition regarding Memoranda of Understanding that expires on June 30, 2009 (no proposed wage increased); or 2) by the Memorandum of Understanding with the Amalgamated Transit Union, as employees in that bargaining unit are slated to receive a three percent salary increase in March 2010, with the understanding that any changes to the current MOU would require new negotiations with that Union, subject to direction from the Board and agreement by the Union. The report further stated that no bonuses were granted to Deputy General Managers or Officers in FY 08/09, and would no be granted to both those categories in FY 09/10, regardless of performance.

The report further stated that based on the 2.6% wage increase used in developing the Five- and Ten-Year Financial Projections, a salary and bonus freeze in FY 09/10 for all non-represented employees and officers would save approximately $420,000 in the first year, with $2.2 million saved at the end of five years, and $4.5 million after ten years.

Ms. Kupersmith stated that historically the District has granted the same salary percentage increase to the non-represented employees, as has been granted to the members of the Union Coalition. Ms. Kupersmith further stated that if the Board of Directors takes this type of action for non-represented employees, proactively its sends a clear message to the employee population about the financial state of the District. She reiterated that this recommendation carries with it a freeze on any the performance-generated bonus opportunities for Deputy General Managers and Officers. In conclusion, Ms. Kupersmith stated that the Amalgamated Transit Union’s three percent wage increase scheduled for March 2010 would only be opened for change if both sides agreed to do so.

Discussion ensued, including the following:

• Director Sobel asked that the Board not lose sight of the significance this will have on the individual employees and the great work they do.

• Director Grosboll inquired as to the number of employees that by this action. In response, Ms. Kupersmith stated that 100 out of approximately 820 employees would be affected.

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

RECOMMENDATION

The Finance-Auditing Committee recommends that the Board of Directors approve a policy that no across-the-board general salary increases or performance-based bonuses in FY 09/10 will be granted to non-represented employees and Officers, in light of the serious financial challenges in the upcoming fiscal year with the loss of State Transit Assistance funds and the recession-caused decrease in toll revenue.

Action by the Board at its meeting of May 22, 2008 – Resolution

AYES (11): Chair Stroeh; Vice Chair Pahre; Directors Cochran, Eddie, Elsbernd, Grosboll, McGlashan, Moylan, Reilly, Segal and Sobel; President Boro (Ex Officio)
NOES (0): None

Initial Presentation of the Draft FY 09/10 Operating and Capital Budgets

In a memorandum to Committee, Auditor-Controller Joseph M. Wire and General Manager Celia G. Kupersmith provided a summary of the development process and a general overview of the proposed draft FY 09/10 Operating and Capital Budget (FY 09/10 Budget), which contains District goals and objectives, projects and accomplishments, changes to the reserve structure and a Table of Organization. At the meeting, Mr. Wire introduced his finance staff, thanking them for their efforts in the development of the Budget.

The report provided an overview of the proposed FY 09/10 Budget, which includes:

• Operating Budget revenues of $161.3 million;
• Operating Budget expenditures of $170.1 million;
• Capital Budget revenues of $37.7 million;
• Capital Budget expenditures of $43 million; and,
• District reserves to be used to fund the FY 09/10 Operating Budget shortfall of $8.8 million and District share of the Capital Budget of $5.3 million.

The report also included background summary information regarding the proposed FY 09/10 budget, providing details on the Operating Budget, the Capital Budget and the use of reserves. A copy of the report, including a copy of the proposed FY 09/10 Budget, is available in the Office of the District Secretary.

At the meeting, Joseph Wire provided an overview of the proposed FY 09/10 Budget, noting that this meeting will provide an opportunity for discussion by the Committee. Mr. Wire then proceeded to guide the Committee members through the FY 09/10 Budget document, focusing on an overview of the District’s current financial situation, Operating Budget revenues and expenses and the Capital Budget. He addressed the recession, which has created a situation in which the District must work on a longer term plan. While the Budget has a deficit, amendments will be made throughout the year towards efforts to reduce expenditures and increase revenues.

Mr. Wire noted that the General Manager’s message is shown on Page 6 of the Budget document, outlining the accomplishments of the current fiscal year, and listing the major goals for the next fiscal year. He also noted that review of the proposed FY 09/10 budget begins on Page 13. Mr. Wire stated that the District’s $213.1 million budget was similar to that of the last four or five years. Expected capital expenditures total $43 million, while the District expects to bring in $161 million in operating revenue. $14.1 million will be used from reserves that were set aside for operating shortfalls and future capital projects to fund the remainder of the budget. Mr. Wire highlighted the fact that tolls are 46% of the District’s entire revenue stream, with transit making up 56% of operations and the Bridge comprising 44% of the same.

Mr. Wire described the District’s financial situation, as shown on Page 15 of the Budget document presented to the Committee. He stated that reserves are expected to remain flat for FY 09/10. The Budget also creates a Capital Plan reserve. Mr. Wire referenced the chart on Page 14 of the report, which shows the Budget’s net impact on District reserves. It is proposed that $20.9 million transfer to reserves in 09/10, resulting in a net positive impact of $6.8 million.

Regarding the Commercial Paper Program referenced on Page 18, in the current year (FY 08/09), Mr. Wire expects 1.75% in interest or in other payments. Rates are historically low, and the District does not expect to expand its debt in FY 09/10.

Concerning the District’s revenues, discussed on Pages 28-29, Mr. Wire noted that they are down from this fiscal year to next fiscal year by approximately $1.7 million. There will be a 5% fare increase beginning July 1, 2009, offset against the overall slight decrease due to the recession. Interest rates are low, and Bus and Ferry ridership remain relatively flat. Overall, there is approximately a $2 million reduction in revenues.

Concerning the Operating Expenses listed on Page 31, Mr. Wire noted that labor typically creates a small increase. There are no funds in the 09/10 Budget for any non-represented employee salary and/or bonus increases, though the Budget allows for a 3% increase for the bus operators, effective March 2010. Another significant increase for FY 09/10 is for the cost of fuel (budgeted at $2.50/gallon), though the Budget is smaller for professional services than it was last year.

The District’s Table of Organization, shown on Page 37, has not changed for FY 09/10.

Mr. Wire addressed the Capital Program Summary listed on Page 38. Specifically, he noted that the proposed Capital Program of $352.8 million reflects planned expenditures in the FY 09/10 Budget in the amount of $43 million. The FY 09/10 Budget is funded with $5.3 million District funds, and $37.7 million Federal, State and local grant funds. A substantial portion of this Budget goes toward the costs for work on the Anchorage House, refurbishment of the ferries and implementation of the bus technology project (work on the radio system).

The Bridge Division Capital Budget, listed on Page 49, discusses major projects within the Bridge Division, including the Seismic Retrofit project (budgeted at $25.2 million), final design of the Main Cable Restoration project, the design of a project to provide electrical service to the North Approach on the Bridge, construction of the Toll Plaza Pavement and Access Improvements project, final design of the South Approach and Pier Security improvements and preliminary studies and initial design of the Moveable Median Barrier project.

Mr. Wire concluded that the Budget would be revisited at the Finance-Auditing Committee at its meeting scheduled for June 25, 2009, at which time staff will answer any questions that cannot be answered at this Budget meeting, and request that the Committee recommend to the Board of Directors at its meeting of June 26, 2009, approval of the Budget.

Discussion ensued, including the following:

• Director Grosboll made the following comment and inquiries:

  • He clarified that the District’s reserves are at $98 million for 09/10 (Page 15 of the Budget document). Mr. Wire confirmed that figure.
  • He stated that after his review of the Budget document, it appeared that the District’s reserves would be going down. In response, Mr. Wire stated in the affirmative, noting that for each year of the Ten-Year Capital Plan, the District takes an average of what it needs to complete the Plan. Mr. Wire further stated that the Budget includes a $12 million capital contribution, which monies will flow from the Operating Budget into the reserves, and will be there for future years.

• Chair Stroeh asked whether the Capital Budget was approached pragmatically, and Mr. Wire responded in the affirmative. He stated that the District’s Capital Budget is project-specific driven, thus it is in the best interest of the District to ensure that projects are ready so that the District can receive the full cost of the project when it is completed.

• Director Elsbernd inquired as to what assumptions were made in the development of the Operating Budget, and if any measures were taken into consideration in light of the decisions being made in Sacramento. In response, Mr. Wire stated that the largest concern for operating costs is the reduction of funds from counties that may directly affect us. In looking at all of the District’s revenue sources, this is the only source the District does not have direct control over. If Sonoma or Marin lost funding, then the District would as well.

• President Boro commented that Mr. Wire has painted a picture that is both dismal and hopeful. The Board’s job will be to find a way to minimize the deficit moving forward. President Boro complimented Mr. Wire and his finance staff for their work on the Budget, and noted the Board is as informed as it can be. He highlighted Director Elsbernd’s point that the State is still in a decision-making mode, which could equate to more transit cuts ahead and that the District must be in a position to deal with these unknowns.

In conclusion, Chair Stroeh suggested that if the Committee members have any additional questions between now and the June 25, 2006 meeting of the Finance-Auditing Committee, that they do so in the not-to-distant future to afford staff time to provide the answers.

Action by the Board at its meeting of May 22, 2008 – None Required

Monthly Review of Golden Gate Bridge Traffic/Tolls and Bus and Ferry Transit Patronage/Fares (for Ten Months Ending April 2009)

In a memorandum to Committee, Auditor-Controller Joseph M. Wire and General Manager Celia G. Kupersmith provided a schedule comparing categories of Bridge traffic, as well as a monthly review of Bridge traffic and tolls and transit patronage and fares for ten months, ending April 2009. A copy of the report is available in the Office of the District Secretary and on the District’s web site.

Action by the Board at its meeting of May 22, 2008 – None Required

Statement of Revenue and Expenses

In a memorandum to Committee, Auditor-Controller Joseph M. Wire and General Manager Celia G. Kupersmith provided a financial statement entitled, Statement of Operating Revenues and Expenses. A copy of the report is available in the Office of the District Secretary and on the District’s web site.

Action by the Board at its meeting of May 22, 2008 – None Required

Statement of Capital Programs and Expenditures

In a memorandum to Committee, Auditor-Controller Joseph M. Wire and General Manager Celia G. Kupersmith provided a financial statement entitled, Statement of Capital Programs and Expenditures. A copy of the report is available in the Office of the District Secretary and on the District’s web site.

Action by the Board at its meeting of May 22, 2008 – None Required

Public Comment

There was no public comment.

Adjournment

All business having been concluded, the meeting was adjourned at 11:45 a.m.