June 24, 2010

 

REPORT OF THE FINANCE-AUDITING COMMITTEE/
COMMITTEE OF THE WHOLE

 

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, CA, on Thursday, June 24, 2010, at 10:11 a.m., Chair Stroeh presiding.

Committee Members Present (8): Chair Stroeh; Vice Chair Pahre; Directors Cochran, Eddie, Grosboll, Moylan and Sobel; President Boro (Ex Officio)
Committee Members Absent (1): Director Elsbernd
Other Directors Present (4): Directors Kerns, McGlashan, Newhouse Segal and Reilly

Committee of the Whole Members Present (12): Directors Cochran, Grosboll, Kerns, McGlashan, Moylan, Newhouse Segal, Pahre, Sobel and Stroeh; Second Vice President Eddie; First Vice President Reilly; President Boro (Ex Officio)

Committee of the Whole Members Absent (7): Directors Brown, Campos, Chu, Dufty, Elsbernd, Sanders and Snyder

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 David J. Miller; Deputy General Manager/Bridge Division Kary Witt; Deputy General Manager/Bus Transit Division Teri Mantony; Deputy General Manager/Ferry Transit Division James Swindler; Deputy General Manager/Administration and Development Z. Wayne Johnson; Director of Risk Management/Safety William L. Stafford; Executive Assistant to the General Manager Amorette Ko; Assistant Clerk of the Board Lona Franklin

Visitors Present: Nancy Jones, PFM Asset Management, LLC; Marina Secchitano, Inlandboatmen’s Union of the Pacific; Sandy Osgood, Wells Fargo Insurance

     
1.

Ratify Actions by the Auditor-Controller

In a memorandum to Committee, Auditor-Controller Joseph Wire and General Manager Celia Kupersmith outlined commitments, disbursements and investments made on behalf of the Golden Gate Bridge, Highway and Transportation District (District). The report also included a copy of the District’s Investment Report from PFM Asset Management, LLC. 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, PFM Asset Management, LLC, stated that a few longer-term securities were purchased on the District’s behalf in February 2010, when rates were higher than they are presently. She noted that the two-year Yield for Treasury Notes has declined from approximately 1.0% in May to less than .8% in June. She stated that, because of low interest rates, the purchases being made for the District at this time are short-term. She noted that leading economic indicators were positive for the first three months of 2010, and then became negative in April. She stated that the District’s portfolio is well protected. Nearly half the District’s assets are invested for a five-year term. Some funds are invested for one year, so will be available for reinvestment when the market rises. The District’s portfolio is rated AAA and has an overall return rate close to 3.29%. She stated that the District’s portfolio is positioned to be able to take advantage of higher returns when these become available.

[President Boro arrived at this time.]

Staff recommended and the Committee concurred by motion made and seconded by Directors EDDIE/McGLASHAN 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:

  a. The Board of Directors ratifies commitments and/or expenditures totaling $20,000.00 for the period May 1, 2010, through May 31, 2010.
  b. Ratify investments made by the Auditor-Controller during the period May 18, 2010, through June 14, 2010, as follows:
     
Security
Purchase Date
Maturity Date
Original Cost
Percent Yield
Credit Agri. North America
Commercial Paper
5/19/2010
08/16/2010
5,124,657.51
0.50
       
2. Authorize Budget Adjustment(s) and/or Transfer(s)
       
  a.

Budget Transfers Relative to the Fiscal Year 09/10 Operating Budget

In a memorandum to Committee, Auditor-Controller Joseph Wire and General Manager Celia Kupersmith reported on staff’s recommendation to authorize Operating Budget transfers of $2.5 million, or 1.5% of total FY 09/10 Operating Budget Expenses, as outlined in the staff report.

The staff report stated that, in accordance with District policy, budget transfers greater than $50,000.00 made across different divisions, or across different line items within the same division, are subject to Board approval. This item transfers funds in order to be in compliance with the Budget and District policies. There are no net additional expenses added to the FY 09/10 District Division Operating Budget.

The staff report described the five categories of increased expense in the Operating Budget and the expense categories with available funding, as well as indicating the reason that funds are available in those categories. In addition, the staff report discussed in detail the adjustments to the five categories of increased expense. The budget transfers, totaling $2.5 million, will not result in a net increase in the Operating Budget. A copy of the staff report is available from 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 KERNS/REILLY 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 Operating Budget transfers in the amount of $2.5 million, or 1.5% of the total FY 09/10 Operating Budget Expenses:

    a. Transfers $1,400,000.00 from the Bridge Division Debt Service to the following:
      1. District Legal Services (Professional Fees) in the amount of $200,000.00;
      2. District Maintenance and Security Services in the amount of $400,000.00; and,
      3. Bridge Division Bank Services (Professional Fees) in the amount of $800,000.00.
    b. Transfers $700,000.00 from the Bus Transit Division Fuel Expense to the following:
        Bus Transit Division Operators’ Salaries in the amount of $300,000.00;
        Bus Transit Division Operators’ Benefits in the amount of $200,000.00; and,
        Bus Transit Division Repair and Operating Supplies in the amount of $200,000.00.
    c.

Transfers $350,000.00 from the Ferry Transit Division Fuel Expense to the Ferry Transit Division Maintenance and Security Services.

Action by the Board at its meeting of June 25, 2010 - Resolution

       
 
AYES (12): Chair Stroeh; Vice Chair Pahre; Directors Cochran, Eddie; Grosboll, Kerns, McGlashan, Moylan, Newhouse Segal, Reilly and Sobel; President Boro (Ex Officio)
NOES (0): None
       
3.

Approve Adoption of the FY 10/11 Operating and Capital Budgets

In a memorandum to Committee, Auditor-Controller Joseph Wire and General Manager Celia Kupersmith reported on staff’s recommendation to approve the Proposed FY 10/11 Operating and Capital Budgets, including all other items as outlined in the staff report.

The FY 10/11 Budget is a policy document that identifies the strategic direction and priorities of the Board of Directors for the budget year. The Proposed Budget is the implementation tool for the Board’s policy directions and initiatives that were developed in its Long-Term Strategic Financial Plan (SFP), adopted by the Board at its Special Meeting of October 30, 2009. It carries out the stated mission of the District within the bounds of that SFP. The proposed FY 10/11 budget includes:

  a. Operating Budget revenues of $162.4 million;
 

b.

Operating Budget expenditures of $170.6 million;
  c. Capital Budget revenues of $64.3 million;
  d. Capital Budget expenditures of $76 million; and,
  e. District reserves of $8.2 million will be used to fund the FY 10/11 Operating Budget and reserves of $11.7 million will fund the FY 10/11 Capital Budget.
       
 

The staff report is summarized in detail in the Minutes of the May 28, 2010 meeting of the Finance-Auditing Committee. A copy of the staff report is available from the Office of the District Secretary and on the District’s web site. A copy of the FY 10/11 Proposed Budget document is available from the Office of the District Secretary.

At the meeting, Mr. Wire noted that the recommendations were discussed in detail at the May 28, 2010 Finance-Auditing Committee meeting. He directed the Board’s attention to a handout he provided. He stated that the handout shows a table and graph of restricted reserves beginning with FY 2011 and continuing through FY 2014, with FY 2014 showing the District’s contribution for the Doyle Drive Reconstruction Project (Doyle Drive). A copy of the handout is available from the Office of the District Secretary.

Mr. Wire stated that the amount of restricted reserves has grown over the last few years. There are some large projects on the horizon. The SFP takes all these obligations into consideration. He stated that in 2012 new funds in the amount of $87 million are expected to be allocated for Phase III of the Seismic Retrofit Project. It is expected to take five years to expend, but will be allocated in 2012. He stated that staff is endeavoring to locate grant funds to cover the District’s share of the Project. He noted that the District must plan for the long run, and for required actions should grants be unavailable.

Discussion ensued, including the following comments and inquiries:

  • Director Kerns made the following comments and inquiries:
    • He inquired as to the actual length of time over which the payout for Doyle Drive will be made. In response, Mr. Wire stated that the contract calls for payment in the last year of the project, which is projected to be 2014.
    • He commented that the length of time remaining before payment is due to Caltrans is fairly short. In response, Mr. Wire stated that, from a cash flow perspective, the District would, in essence, borrow from itself. In addition, the District’s Ten-Year Capital Plan shows that capital spending decreases over that period of time. Ms. Kupersmith added that, at present, the projection is for the final year of construction to be 2014. She stated that, while the project may take a longer period of time to complete, it is important to acknowledge the possibility that it could be completed more quickly. Were that to happen, the payment due date would be accelerated. Because the District does not have knowledge of the exact completion date, it must plan for the possibility of early completion.
  • Director Stroeh made the following inquiries:
    • He inquired as to staff’s degree of certainty that the District’s restricted reserves will be sufficient to fund the Doyle Drive payment. In response, Mr. Wire stated that the District’s reserves are set aside for other liabilities, but that the District’s Financial Plan calls for raising the funding for Doyle Drive over ten years. He stated that detailed analysis will be done in order to make the correct decisions regarding the funding required.
    • He inquired as to whether staff could provide the Board with a list of scenarios projecting the possible outcomes of various sets of circumstances over the upcoming years. Mr. Wire responded affirmatively, stating that staff would work with the Board to understand the various scenarios for funding the Doyle Drive payment.
  • Director Grosboll made the following inquiries:
    • He inquired as to whether Caltrans had based the 2014 payment date on the original contract. Mr. Wire responded affirmatively.
    • He inquired as to whether the District had allocated funds this year for the final payment in 2014. Mr. Wire responded affirmatively, and added that the Operating Budget is set up to make an annual contribution to the Capital Reserve. He stated that District plans call for $7.5 million to be set aside for ten years in order to cover the requirement for Doyle Drive.
  • Director Cochran inquired as to whether additional information in the form of a chart could be provided to the Board covering the use of District Reserves including the Doyle Drive Project. Mr. Wire answered affirmatively.
  • Director Newhouse Segal inquired as to the District’s prior experience using a loan to fund a required payment and whether any governmental authority to do so would be required. In response, Mr. Wire stated the District has previously used other means to make lump sum payments. Attorney Miller added that existing law provides the necessary tools for the District to use revenue anticipation notes, if necessary, and that the Board currently has the authority to approve use of this method.
  • Director Moylan inquired as to whether the District would receive a discount on the amount due should Doyle Drive be completed under budget. In response, Ms. Kupersmith stated that there is no language in the Memorandum of Understanding that addresses a discount to the District if the project is completed ahead of time or under budget. She stated that the District is protected from an increase if costs rise. She indicated that, should Doyle Drive be completed under budget or before 2014, the District would negotiate the payment amount.

Staff recommended and the Committee concurred by motion made and seconded by Directors EDDIE/REILLY 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 adoption of the FY 10/11 Operating and Capital Budgets, including the following items:

    a.
District Goals, Projects and Accomplishments;
    b.
Changes to the Reserve Structure;
    c.
Changes to the Table of Organization with the exception of elimination of vacant, represented positions, pending meet and confer sessions with the applicable Unions;
    d.
Limited delegation of Capital Budget Policy to the General Manager to move specific projects from a FY 11/12 project list into the FY 10/11 Capital Budget;
    e.
Implementation of four Financial Plan Initiatives; and,
    f.

A 1.75% salary increase for Coalition-represented and non-represented employees, effective January 1, 2011.

Action by the Board at its meeting of June 25, 2010 – Resolution

       
 

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

       
4.

Approve Renewal of the Liability Insurance Program

In a memorandum to Committee, Director of Risk Management/Safety William L. Stafford, Deputy General Manager Administration and Development Z. Wayne Johnson, Auditor-Controller Joseph Wire and General Manager Celia Kupersmith reported on staff’s recommendation to approve the Liability Insurance Program, effective July 1, 2010.

The staff report stated that the Liability Insurance Program covers the excess liability policy and specific policies limiting liability in connection with workers’ compensation claims, actions of public officials and employees, as well as pollution. All of the recommended renewals are for one year. The District purchased a Pollution Liability Insurance policy in 2009, which represented a three-year program at a premium of $102,291.00. All of these policies, except for the pollution policy, expire on June 30, 2010. The staff report discussed renewal recommendations, the overall insurance market condition, specifics on the premium cost, coverage limits and the work on the renewals for the Liability Insurance Program performed by the District’s insurance broker, Wells Fargo Insurance Services (WFIS). The staff report stated that the premium for the recommended renewal package for the District’s Liability Insurance Program is $1,517,502.00, a 2% decrease over the expiring package. The FY 10/11 Operating Budget includes funds to cover the costs associated with the renewal of the District’s Liability Insurance Program. A copy of the staff report is available from 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/KERNS 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 renewal of the Liability Insurance Program, effective July 1, 2010, as follows:

  a.
Renews the Excess General and Automobile Liability Insurance Program, including Public Officials and Employment Practices Liability with TRIEA, with Everest, Swiss Re, Arch and Lexington, for a one-year term, with a liability limit of $110 million each occurrence/annual aggregate in excess of a self-insured retention of $2 million each occurrence, including legal defense costs within the self-insured retention, for a total annual premium of $1,200,340.00;
  b.
Renews the Excess Workers’ Compensation and Employers’ Liability Insurance Program with Chartis, for a one-year term, in excess of a self-insured retention of $1 million each accident, with workers’ compensation statutory limits, for an estimated annual premium of $260,002.00;
  c.
Renews the Public Officials’ Liability Insurance Program with National Union Fire Insurance Company, for a one-year term, with a liability of $2 million each occurrence/annual aggregate and a self-insured retention of $100,000.00 each claim, including full Employment Practices Liability Coverage, for an annual premium of $43,032.00;
  d.
Renews the Fiduciary Liability Insurance Program, for the Other Public Employee Benefits (OPEB) Trust Board, with Chubb Insurance Company, for a one-year term, with a liability of $2 million each occurrence and no deductible, for an annual premium of $4,080.00; and,
  e.
Renews 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 $25,000.00 deductible and $5,000.00 deductible respectively, and a liability limit of $500,000.00 for loss of money and securities at the Golden Gate Bridge Toll Plaza, subject to a $5,000.00 deductible and $15,000.00 limit at all other locations with a deductible of $5,000.00, for an annual premium of $10,048.00;
 

with the understanding that requisite funds are available in the FY 10/11 Bridge, Bus Transit, Ferry Transit and District Divisions’ Operating Budgets.

Action by the Board at its meeting of June 25, 2010 – Resolution

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

       
5.

Approve Renewal of the Property Insurance Program

In a memorandum to Committee, Director of Risk Management/Safety William L. Stafford, Deputy General Manager Administration and Development Z. Wayne Johnson, Auditor-Controller Joseph Wire and General Manager Celia Kupersmith reported on staff’s recommendation to approve renewal of the Property Insurance Program, effective July 1, 2010.

The staff report provided details regarding the District Buildings and Facilities Program (Program) which renews for the first time on July 1, 2010, having previously renewed on April 8. In addition, the staff report stated that this Program now includes Boiler and Machinery coverage, which was previously purchased as a separate policy, with an annual premium of approximately $2,600.00. The staff report also summarized the District’s decision, effective April 8, 2006, to non-renew the insurance for the Bridge, and authorize the establishment of a restricted Golden Gate Bridge Self-Insurance Loss Reserve in lieu of purchasing the Bridge Physical Damage and Use and Occupancy policy. The staff report stated that the cost and coverage of the Bridge Property Damage and Use and Occupancy policy makes transfer of these risks not cost-effective at this time. The continued funding of a Restricted Bridge Self-Insurance Loss Reserve, to be used in case of catastrophic damage to the Bridge, is a viable way to develop the capital over time to replace this coverage. Currently, the Self-Insurance Loss Reserve represents approximately $5.5 million in District reserves. The FY 10/11 contribution would raise the Self-Insurance Loss Reserve to approximately $6.8 million. A copy of the staff report is available from the Office of the District Secretary and on the District’s web site.

At the meeting, William Stafford briefly summarized the staff report and noted that the Committee received a status report on the District’s Property Insurance at its June 10, 2010, meeting. He also noted that the premium for this insurance has decreased for FY 10/11 and explained that the property insurance market is dictated by the catastrophe market, most of which is earthquake insurance. Worldwide, there has been less impact than in previous years, leading to lower cost.

Discussion ensued, including the following inquiries:

  • Director Grosboll made the following inquiries:
    • He inquired as to whether the self-funded reserve for the Bridge has been increased. In response, Mr. Stafford stated that the recommendation for this reserve is being kept at the initial rate of $1.3 million annually, as approved by the Board at its meeting of April 8, 2006. He stated that the $5.5 million figure represents the current level of the Restricted Bridge Self-Insurance Loss Reserve.
    • He inquired as to whether the Restricted Bridge Self-Insurance Loss Reserve is part of the overall District reserves. In response, Mr. Wire stated that it is a separate account, and referred Board members to Appendix A of the Budget document. He added that the Board approved creating separate reserve accounts specifically for certain purposes and liabilities.
    • He inquired as to whether these funds are invested by PFM. Mr. Wire responded affirmatively.

Staff recommended and the Committee concurred by motion made and seconded by Directors KERNS/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 approve renewal of the Property Insurance Program, as follows:

  a.
Approves the District’s Building & Facilities Insurance Program with $125 million of All Risk coverage, which includes earthquake and flood coverage for $20 million subject to deductibles, with Lexington, Arch and Endurance Insurance Cos., for a renewal premium of $566,648.00, for a twelve-month term, effective July 1, 2010, through June 30, 2011; with the understanding that requisite funds are available in the FY 10/11 Bridge, Bus, Ferry and District Division Operating Budgets; and,
  b.

Continues allocation of monies to the Restricted Contingency Reserve for FY 10/11 in the amount of $1,300,000.00, as self-insurance for costs associated with Bridge Physical Damage and Loss of Revenue; with the understanding that requisite funds are available in the FY 10/11 approved budget, and that the Restricted Contingency Reserve will be funded in conjunction with the Building & Facilities Insurance Program renewal date of July 1, 2010.

Action by the Board at its meeting of June 25, 2010 – Resolution

       
 

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

       
6.

Approve Renewal of the Health and Benefit Insurance Plans

In a memorandum to Committee, Director of Human Resources Harvey Pye, Deputy General Manager, Administration & Development Z. Wayne Johnson and General Manager Celia Kupersmith reported on staff’s recommendation to approve renewal of the District’s Health and Benefits Insurance Plans, for a one-year term, effective July 1, 2010.

The staff report stated that the proposed costs for renewal of the District’s Health and Benefits Insurance Plans appear to be coming in at approximately 11% higher next year in total as compared to this year’s cost. While this number is higher than originally forecast last fall, it is lower than an earlier estimate provided to the Board in May 2009. It is important to note that some of the cost increase is due to the changes in federal law that no longer allow for a $1 million lifetime maximum exposure as has been the case historically with the District’s health plans. Additionally, the total package cost increase includes a small amount, approximately $10,000.00, for some additional program administration work by Blue Shield. Relative to prescription drugs, it appears that staff has been able to negotiate a Caremark contract that results in a cost savings of $1,382,000.00 over the next three years. This is an 8.4% reduction in expense over the three-year time period.

As a result of the Federal Mental Health Parity and Addiction Equity Act of 2008 that was signed into law on October 3, 2009, the District is required to provide “parity” between the financial requirements and treatment limitations applied to mental health/substance abuse benefits and medical benefits. This issue was addressed in a separate Rules, Policy and Industrial Relations Committee agenda item, and subsequently approved by the Board of Directors at their meeting of June 11, 2010. The cost associated with legal compliance with this new regulation is included in the total package of benefits being developed by staff.

The staff report discussed the ways health care reform will impact the District, providing details regarding extension of dependent coverage to age 26, the lifetime and annual dollar limits and pre-existing conditions exclusions. The staff report also summarized the temporary retiree reinsurance program, as well as the health flexible spending program. The staff report provided the following table showing a breakdown of costs for FY 09/10 compared to costs for FY 10/11 and the percent change to each cost classification.

       
HEALTH PLAN
ESTIMATED
COST
FY 09/10
PROJECTED COST
FY 10/11
% CHANGE
Vision Service Plan
$ 249,000
$ 251,000
1%
Delta Dental
$ 2,409,000
$ 2,545,000
6%
Basic Life/AD&D
$ 98,000
$ 98,000
0%
Stop-Loss
$ 415,000
$ 477,000
15%
Kaiser Permanente
$ 5,370,000
$ 6,337,000
18%
Blue Shield PPO
$ 8,810,000
$ 9,827,000
12%
Blue Shield HMO
$ 1,685,000
$ 1,937,000
15%
CVS Caremark
$ 4,406,000
$ 4,438,000
1%
OptumHealth Behavioral Solutions (EAP)
$ 34,000
$ 34,000
0%
TOTAL:
$ 23,476,000
$ 25,944,000
11%
   
 

A copy of the staff report is available from the Office of the District Secretary and on the District’s web site.

At the meeting, Mr. Johnson briefly summarized the staff report, stating that the overall increase in cost is approximately 11%, but, with the assistance of Mercer Health Benefits, LLC, the District has negotiated with CVS/Caremark and will save $1.3 million over the course of this Plan.

Discussion ensued, including the following inquiries:

  • Director Grosboll inquired as to the current level of medical stop-loss coverage. In response, Mr. Johnson stated that it is currently set at $1 million for the insured’s lifetime maximum, with stop loss coverage beginning at $175,000.00 per claim.
  • Director Pahre made the following comment and inquiry:
    • She inquired as to whether the Kaiser and Blue Shield increases were based upon actuarials or if these were across-the-board increases. In response, Mr. Johnson stated that the increases were driven by the District’s experience rating.
    • She commented that the insurance companies offer comprehensive analysis of where over-use has taken place. He stated that the District is reviewing where the highest utilization takes place. He added that the District must be cognizant of the fact that the covered population is made up largely of older individuals, including as it does both active employees and retirees.
  • Director Newhouse Segal inquired as to whether labor issues between CVS/Caremark and its employees have been resolved. Mr. Johnson responded affirmatively, and stated that there has been no consternation raised by any of the labor unions with which the District bargains. Ms. Kupersmith added that the District’s contracts specify Caremark, which is one and the same as CVS. She stated further that labor’s coverage specifies Caremark.

Staff recommended and the Committee concurred by motion made and seconded by Directors KERNS/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 approve renewal of the District’s Health and Benefits Insurance Plans, for a one-year term, with the exception of the CVS Caremark Prescription Drug Plan, which is for a three-year term, effective July 1, 2010, as follows:

  a.
Medical Stop-Loss Coverage, with Blue Shield of CA, at a cost of $477,000.00;
  b.
Kaiser Foundation Health Plan, at a cost of $6,337,000.00;
  c.
Blue Shield of California PPO Plan, on a self-funded basis, at an estimated cost of $9,827,000.00, and includes increased claims management by Blue Shield;
  d.
Blue Shield of California HMO Plan, at an estimated cost of $1,937,000.00;
  e.
CVS Caremark Prescription Drug Plan, at an estimated cost of $4,438,000.00 for FY 10/11, expected to save the District $1,382,000.00 over the three-year term of the Agreement;
  f.
OptumHealth Behavioral Solutions, at an estimated cost of $34,000.00;
  g.
Vision Service Plan of California (Self-funded), at an estimated cost of $251,000.00;
  h.
Delta Dental Plan of California (Self-funded), at an estimated cost of $2,545,000.00; and,
  i.
Group Life, Accidental Death & Dismemberment and Dependent Life Plan, with Minnesota Life, at an estimated cost of $98,000.00;
 

with the understanding that requisite funds are included in the FY 10/11 Bridge, Bus Transit, Ferry Transit and District Divisions’ Operating Budgets.

Action by the Board at its meeting of June 25, 2010 – Resolution

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

   
7.

Authorize Execution of a Memorandum of Understanding Regarding Operations and Maintenance of ClipperSM Smartcard Fare Collection System

In a memorandum to Committee, Auditor-Controller Joseph M. Wire and General Manager Celia Kupersmith reported on staff’s recommendation to authorize execution of a Memorandum of Understanding (MOU) with the Metropolitan Transportation Commission (MTC) regarding the operations and maintenance of the ClipperSM Smartcard Fare Collection System, effective upon execution by the MTC and all of the participating transit agencies that operate and maintain the ClipperSM system (transit operators), or such effective date as determined by the General Manager in concert with the other parties to the MOU.

The staff report stated that ClipperSM, formerly known as TransLink®, is an automated smartcard transit fare payment system for intra- and inter-operator transit trips in the San Francisco Bay Area. The MTC, under authority granted to it under SB 1474 (Statutes 1996, Chapter 256), included ClipperSM in its regional transit coordination program. The staff report stated that the new MOU, once executed, would replace the Interagency Participation Agreement (IPA) that has been in place since December 12, 2003. The IPA, which was entered into by the MTC and participating transit agencies including the District, created a Management Consortium for joint agency decision-making regarding implementation, operation and maintenance of the regional Smartcard Fare Collection System in the San Francisco Bay Area. The staff report stated that, due to the MTC’s decision last November to withdraw from the Management Consortium, it was agreed among the ClipperSM stakeholders that another vehicle would be needed to continue governing the obligations of the MTC and the participating transit agencies that operate and maintain the ClipperSM system.

The staff report provided a detailed list of key principles of the ClipperSM MOU, including high level responsibilities of the MTC and the participating transit agencies that operate and maintain the ClipperSM system; a cost and revenue allocation formula; the process for dispute resolution; the process for transit operator input on MTC-proposed changes to operating rules; the process for new operator participation; and, the term of the MOU. The staff report noted that there is no new fiscal impact resulting from execution of this MOU. A copy of the staff report is available from the Office of the District Secretary and on the District’s web site.

At the meeting, Mr. Wire briefly summarized the staff report.

Discussion ensued, including the following comments and inquiries:

  • Director Stroeh inquired as to how the name ClipperSM was chosen. In response, Ms. Kupersmith stated that a consultant was hired by the MTC to develop the new name, and that the change to ClipperSM will be effective July 1, 2010. She added that, consistent with the MTC’s requirements, ClipperSM will be the only way other than cash to pay bus and ferry fares.
  • President Boro inquired as to whether the MTC has sufficient knowledge, responsibility, operational ability and oversight for this to be a successful undertaking, and whether the District would be informed about decisions as they are made. In response, Ms. Kupersmith stated that they do have the necessary tools for success, and will be required to consult with the District and other transit operators about changes. She noted that the ability of the District’s Board to set the amount of ferry and bus transit fares has not been compromised and will remain its decision, stating that transit operators insisted upon retaining the ability to set fares. The MTC, however, requires that transit operators implement ClipperSM in order to receive funding.
  • Director Moylan inquired as to whether the District will be required to pay any money because of the change. In response, Ms. Kupersmith stated that the District will not, as a result of this change, be required to pay any amounts that have not previously been paid by it.
  • Director Newhouse Segal inquired as to the outcome should one or some of the transit operators decide not to participate. In response, Ms. Kupersmith stated that all transit operators have the freedom to withdraw from participation in the ClipperSM system regardless of participation in the MOU. She added that, were any transit operators to do so, the MTC would withdraw funding from that transit operator. The District would have the same freedom but would be unaffected by what other transit operators do.

Staff recommended and the Committee concurred by motion made and seconded by Directors GROSBOLL/MOYLAN 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 execution of a Memorandum of Understanding (MOU) with the Metropolitan Transportation Commission (MTC) regarding the operations and maintenance of the ClipperSM Smartcard Fare Collection System, effective upon execution by the MTC and all the participating transit agencies that operate and maintain the ClipperSM system, or such effective date as determined by the General Manager in concert with the other parties to the MOU.

Action by the Board at its meeting of June 25, 2010 – Resolution

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

[Chair Stroeh departed at this time, and Vice Chair Pahre assumed the Chair.]

   
8.

Monthly Review of Golden Gate Bridge Traffic/Tolls and Bus and Ferry Transit Patronage/Fares (for Eleven Months Ending May 2010)

In a memorandum to Committee, Auditor-Controller Joseph Wire and General Manager Celia Kupersmith provided a schedule comparing categories of Bridge traffic, as well as a monthly review of Bridge traffic, tolls, transit patronage and fares, for eleven months ending May 31, 2010. 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 – None Required

   
9.

Monthly Review of Financial Statements for Eleven Months Ending May 2010

     
  a. Statement of Revenue and Expenses
     
 

In a memorandum to Committee, Auditor-Controller Joseph Wire and General Manager Celia 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 – None Required

     
  b. Statement of Capital Programs and Expenditures
   
 

In a memorandum to Committee, Director of Capital and Grant Programs Gayle Prior, Auditor-Controller Joseph Wire and General Manager Celia 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 – None Required

Discussion ensued, including the following inquiry:

  • Director Grosboll inquired as to whether the Movable Median Barrier Project had been abandoned, as it appears from the financial statements that no outlay has been made for that project. In response, Mr. Mulligan stated that the consultant’s billing is a few months behind schedule. He added that the project is ahead of schedule and that Environmental Review is expected to be completed this year.
   
10.

Public Comment

Marina Secchitano, Inlandboatmen’s Union of the Pacific, stated that the MTC Service Center, which is projected to be installed within the main station inside the Bay Area Rapid Transit (BART) system in San Francisco, will be inefficient and cumbersome for ferry passengers to use. She stated that there is a need for more information to be provided to travelers using ferries, and that a service center inside the Ferry Building could utilize customer service agents.

In response, Ms. Kupersmith stated that she was familiar with the stated idea and has had conversation with the MTC about the project. Their response was that the BART station is where the largest number of passengers are and, for that reason, they would move forward with their plan for a service center within the BART station.

Discussion ensued, including the following comment:

  • Director Newhouse Segal stated that she had noticed that, within the Ferry Building, signage is insufficient and leads to confusion among the passengers. She stated that enhanced signage would be helpful. In response, Ms. Kupersmith stated that the need for better signage has been recognized and that District representatives are discussing this subject with the MTC.
   
11.

Adjournment

All business having been concluded, the meeting was adjourned at 11:55 a.m.

   

 

Respectfully submitted,

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