October 27, 2011

 

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/Committee of the Whole (Committee) of the Golden Gate Bridge, Highway and Transportation District (District) was held in the Board Room, Administration Building, Toll Plaza, San Francisco, CA, on Thursday, October 27, 2011, at 10:35 a.m., Chair Stroeh presiding.

Committee Members Present (8): Chair Stroeh; Directors Boro, Cochran, Elsbernd, Moylan and Sobel; Vice Chair Pahre; President Reilly (Ex Officio)
Committee Members Absent (1): Director Grosboll
Other Directors Present (2): Directors Eddie and Renée

Committee of the Whole Members Present (10): Directors Boro, Cochran, Elsbernd, Moylan, Pahre, Renée, Sobel and Stroeh; First Vice President Eddie; President Reilly (Ex Officio)
Committee of the Whole Members Absent (9): Directors Arnold, Brown, Campos, Chu, Mar, Rabbitt, Snyder and Theriault; Second Vice President Grosboll

Staff Present: General Manager Denis Mulligan; District Engineer Ewa Bauer; Auditor-Controller Joseph Wire; District Secretary Janet Tarantino; Attorney David Miller; Deputy General Manager/Bridge Division Kary Witt; Acting Deputy General Manager/Ferry Transit Division Christian Stark; Deputy General Manager/Administration and Development Kellee Hopper; Director of Risk Management and Safety William Stafford; Electronic Revenue Collection Program Manager David Dick; Assistant Clerk of the Board Lona Franklin

Visitors Present: Nancy Jones, PFM Asset Management, LLC

 

1. Ratification of Previous Actions by the Auditor-Controller

In a memorandum to Committee, Auditor-Controller Joseph Wire and General Manager Denis Mulligan outlined commitments, disbursements and investments made on behalf of the District. 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, of PFM, reported that consumer sales have not fallen as expected. Fewer dock workers are employed, because imports are down, which will have a negative impact on Christmas sales, because imported goods often account for the ability of retailers to offer pre-Christmas sale prices.

She indicated that the above and other information is used by PFM in decision-making regarding purchase of corporate securities. Currently, PFM is purchasing Scandinavian and Canadian bank securities, as these are expected to be the least affected by recent global economic changes.

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

RECOMMENDATION

The Finance-Auditing Committee/Committee of the Whole recommends that the Board of Directors authorize the following actions by the Auditor-Controller:

     
  a.

The Board of Directors has no commitments and/or expenditures to ratify for the period September 1, 2011 through September 30, 2011;

  b. Ratify investments made by the Auditor-Controller during the period September 13, 2011, through October 17, 2011, as follows:
   
Security
Purchase Date
Maturity Date
Original Cost
Percent Yield
JP Morgan Chase & CO Notes
09/15/2011
01/15/2014
3,185,284.20
1.71
Svenska Handelsbanken Certificate of Deposit
09/27/2011
12/22/2011
1,925,068.88
0.31
HSBC USA, Inc. Commercial Paper
10/14/2011
01/12/2012
5,514,551.25
0.25
  c. Authorize the Auditor-Controller to re-invest, within the established policy of the Board, investments maturing between October 18, 2011, and November 7, 2011, as well as the investment of all other funds not required to cover expenditures that may become available; and,
  d. Accept the Investment Reports for September 2011, as prepared by PFM.
     
   
Action by the Board at its meeting of November 18, 2011 – Resolution
CONSENT CALENDAR

 

AYES (10): Directors Boro, Cochran, Elsbernd, Moylan, Pahre, Renée, Sobel and Stroeh; First Vice President Eddie; President Reilly (Ex Officio)
NOES (0): None

     
2. Authorize Budget Adjustment(s) and/or Transfer(s)
  There were no Budget Adjustment(s) and/or Transfer(s) to discuss.
     
3. Authorize Actions Related to Grant Programs
     
  a. Authorize the General Manager to Request Approval of a Cooperative Work Agreement for Extension of the Encumbrance Period for Federal Financing of the Golden Gate Bridge Seismic Retrofit Phase II, South Approach Structures Construction Project

In a memorandum to Committee, Auditor-Controller Joseph Wire, District Engineer Ewa Bauer and General Manager Denis Mulligan reported on staff’s recommendation to authorize the General Manager to request an approval of a Cooperative Work Agreement through the California State Department of Finance for extension of the encumbrance period for Federal financing of the Golden Gate Bridge Seismic Retrofit Phase II South Approach Structures construction Project (Phase II Project).

Under California State procedures, federal funds appropriated by the State budget are available for liquidation within a limited time period and, if a local agency is unable to seek reimbursement during that time, a one-year time extension may be requested through a Cooperative Work Agreement (CWA), defined by Government Code Section 16304.3 as a document providing the State Department of Finance with approval of the time extension.

The staff report stated that a total of $185,376,124.00 of federal funds was obligated for the construction phase of the Phase II Project, which was completed in 2008. Of this amount, $412,709.00 represents the incurred Indirect Cost Allocation Plan (ICAP) portion of the Phase II Project federal funds.

The staff report also stated that the District has not been able to invoice the amount of the ICAP for a federal funds reimbursement because the District has not yet received the California Department of Transportation’s (Caltrans) Audits and Investigations Office approval of the 2007 and 2008 ICAP billing rates (Caltrans approval). Should the Caltrans approval not be received by March 2012, the District will be unable to invoice the outstanding ICAP amount by April 2, 2012, and these Phase II Project federal funds may be de-obligated.

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 STROEH/EDDIE to forward the following recommendation to the Board of Directors for its consideration:

RECOMMENDATION

The Finance-Auditing Committee/Committee of the Whole recommends that the Board of Directors authorize the General Manager to request approval of a Cooperative Work Agreement through the California State Department of Finance for extension of the encumbrance period for Federal financing of the Golden Gate Bridge Seismic Retrofit Phase II South Approach Structures construction Project.

Action by the Board at its meeting of October 28, 2011
Resolution

AYES (10): Directors Boro, Cochran, Elsbernd, Moylan, Pahre, Renée, Sobel and Stroeh; First Vice President Eddie; President Reilly (Ex Officio)
NOES (0): None

   
4.

Update on the District’s Workers’ Compensation Program

In a memorandum to Committee, Director of Risk Management and Safety William Stafford and General Manager Denis Mulligan provided a PowerPoint presentation (PowerPoint) on the District’s Workers’ Compensation Program.

The PowerPoint provided graphs and charts to illustrate the comparisons among various data for FY 10/11 and prior years, entitled as follows:


• Claims by Date Entered as of 6/30/2011;
• Frequency Analysis by Job Code;
• Frequency Analysis by Body Part (Top Ten);
• Frequency Analysis by Nature of Injury (Top Ten);
• Frequency Analysis by Loss Cause (Top Ten);
• New to Open Comparison as of 6/30 of Each Year;
• All Claims Closed; Indemnity Claims Closed;
• Annual Payout Comparison as of 6/30 of Each Year;
• Outstanding Liabilities as of 6/30 of Each Year; and,
• Litigated Claims Summary.

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

At the meeting, Mr. Stafford briefly summarized the PowerPoint, stating that the District’s new third party administrator, York Risk Services Group, Inc. (York), began serving the District. In addition, significant changes in Workers’ Compensation law took effect.

He reported that 115 new claims were entered as of June 30, 2011, the lowest level in ten years. The top five work units were analyzed with regard to claim frequency which revealed that, while Bus Operators make up 33% of the District’s staff, only 27% of Workers’ Compensation costs are assigned to that group. Painters make up 5% of the District’s staff, but account for 12% of claims and 13% of costs. Ironworkers make up only 2.5% of District staff, but account for 9.5% of claims and 10.2% of costs.

Mr. Stafford reported that lower back claims have decreased, with a corresponding decrease in costs. He added that, by contrast, claims for injuries to multiple body parts, such as a shoulder injury with elbow and neck involvement, have increased. He indicated that, despite intensive training to avoid sprains and strains, many claims are stilled filed for these injuries.

He also reported that claim review with York is scheduled for early November 2011. At that time, it is expected that several claims can be closed. He indicated that only few claims were closed during the transition period between the end of the District’s contract with Athens Administrators, Inc., the District’s previous third party administrator, and the beginning of its new contract with York.

He reported that Workers’ Compensation claims costs rose approximately 32% over the past year. One cause is the high prices associated with prescription medications. In addition, medical costs overall have increased. He stated that discussions with York on this subject are planned.

Regarding litigated claims, Mr. Stafford reported that there are 13 open claims by active employees with reserves of $373,573.00 and 8 open claims by inactive employees with reserves of $292,838.00. There are currently 101files resolved with open future medical care. He reported there are approximately 78 of the 101 files that may have the potential to settle in the future via compromise and release.

Discussion ensued, including the following inquiries:

• Director Stroeh inquired as to whether safety training is provided for District employees. Mr. Stafford responded affirmatively.

• Director Sobel made the following inquiries:


 He inquired as to whether Bus Operator claims have increased or decreased over the past five years. In response, Mr. Stafford stated that Bus Operator claims have remained stable during that time period. He added that indemnity claims have remained stable for the past three years.
 He inquired as to whether ergonomic training is expected to reduce the number of shoulder, lower back, knee, hand and wrist claims. Mr. Stafford responded affirmatively. Mr. Mulligan added that replacement of the drivers’ seats on Golden Gate Transit (GGT) buses has helped to alleviate injuries. He indicated that District staff worked together with GGT staff to improve the seats.
 He inquired as to whether settlement could be expected on claims resolved with open future medical care. In response, Mr. Stafford stated that, for the 101 such cases, mentioned above, settlement is a possibility in approximately 78
 He inquired as to whether information has been provided to the District’s various employee groups regarding the overall impact of cumulative Workers’ Compensation costs upon the District. Mr. Stafford responded that such information will be available through a Joint Bridge Division Health and Safety Committee meeting scheduled for November 8, 2011.
 He inquired as to whether the District disseminates Workers’ Compensation information to its employees by way of a newsletter. Mr. Mulligan responded that providing this information in the employee newsletter is a good idea, and suggested that plans be discussed in the near future to do so.

• Director Boro made the following inquiries:

 He inquired as to the age of open claims. In response, Mr. Stafford indicated that, during the past year, 132 claims were closed and 115 new claims were entered. However, a few older claims remain on the books, including one from 1978 and a few from the 1980’s.
 He inquired as to whether the managers are required to provide an explanatory report when a lost-time accident happens among employees under their direction, and whether a formal program is available to assist managers in helping their employees to keep preventing injuries. In response, Mr. Stafford stated that the mechanics in the Bus Transit Division have such a program. Mr. Mulligan added that, in the trades, managers are involved in the process so that when an accident happens, the manager and the foreman meet to evaluate the incident. He concluded that such evaluation, if not already included, will be part of the employee appraisal procedure.

• Director Pahre made the following inquiries:

 She inquired as to whether the impact on the District of Workers’ Compensation claims is shared with employees through their Unions, in order to foster a cooperative partnership. In response, Mr. Stafford indicated that the District has scheduled a Joint Health & Safety Committee meeting for November 8, 2011, where such information will be discussed.
 She inquired as to whether Unions assist the District in setting up training sessions. Mr. Stafford responded affirmatively.

• Director Renée inquired as to whether methods of preventing injury can be provided to employees. In response, Mr. Mulligan stated that new employees receive such instruction and training. In addition, regular safety meetings are held where specific injury prevention training is given.

Action by the Board – None Required

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

     
5.

Authorize Execution of Change Order No. 9 to Contract No. 2006-B-19, Replacement of FasTrak® Lane and Plaza/Host Equipment, with The Revenue Markets, Inc., dba TRMI Systems Integration, for Replacement and Upgrade of the Toll Collection System Hardware and Software

In a memorandum to Committee, Auditor-Controller Joseph Wire and General Manager Denis Mulligan reported on staff’s recommendation to authorize the execution of Change Order No. 9 to Contract No. 2006-B-19, Replacement of Fastrak® Lane and Plaza/Host Equipment, with The Revenue Markets, Inc., dba TRMI Systems Integration (TRMI), in the amount of $537,367.00, to replace and upgrade toll collection system hardware and software.

The staff report stated that the Board, by Resolution No. 2006-057 at its meeting of July 14, 2006, authorized award of Contract No. 2006-B-19, Replacement of FasTrak® Lane and Plaza/Host Equipment, to TRMI, for a new system, with off-the-shelf, readily available parts, to reduce the long-term costs associated with maintenance, and for revisions to the plaza/host system to streamline reports and reduce the staff time devoted to transaction reconciliation. TRMI completed the toll system replacement in June 2008, commencing a three-year software maintenance term and the General Manager exercised the first of two, two-year software maintenance options on June 17, 2011.

The staff report also stated that spare parts are no longer available for several lane controller hardware components which have reached the end of their operating life and require replacement. Hardware upgrades and increased software functionality will be necessary to handle All Electronic Tolling (AET) toll collection, which will require the capture of more images, a greater storage capacity and improved functionality to process and reconcile new payment types and support enhanced system monitoring.

The staff report concluded that, given that the equipment upgrades and replacement necessary for AET are inextricably connected to the FasTrak® system maintenance work to be performed by TRMI, and that FasTrak® as a whole must operate seamlessly as a single integrated system, it would be impractical, or in some cases impossible, for another firm to perform the necessary work. The cost of Change Order No. 9 has been negotiated with TRMI in the amount of $537,367.00, and the District’s AET implementation technical consultant has advised the District that the proposed cost is fair and reasonable based upon rates charged for similar work and knowledge of industry standards.

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. Dick briefly summarized the staff report, stating that the current change order is within the scope and budget approved by the Board in January 2011, for implementation of AET and upgrade of toll collection hardware and software. Greater storage capacity is required for license plates photographs, processing, new payment types, accounting and reconciliation and to enhance system monitoring.

He stated that District staff and the District’s AET consultant, Traffic Technologies, Inc., reviewed the proposal submitted by TRMI and prices were found to be reasonable. In addition, TRMI provided the system that was put into place several years ago.

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

RECOMMENDATION

The Finance-Auditing Committee/Committee of the Whole recommends that the Board of Directors authorize the execution of Change Order No. 9 to Contract No. 2006-B-19, Replacement of Fastrak® Lane and Plaza/Host Equipment, with The Revenue Markets, Inc., dba TRMI Systems Integration, in the amount of $537,367.00, to replace and upgrade toll collection system hardware and software; with the understanding that requisite funds are available in the FY 11/12 Bridge Division Capital Budget.

Action by the Board at its meeting of October 28, 2011
Resolution

AYES (9): Directors Boro, Cochran, Elsbernd, Moylan, Pahre, Renée and Sobel; First Vice President Eddie; President Reilly (Ex Officio)
NOES (0): None

       
6. Authorize Execution of Amendment No. 2 to the Professional Services Agreement No. 2010-D-9, Strategic Development Plan for All Electronic Toll Collection, with Traffic Technologies, Inc., for Implementation Coordination and Delivery Services for All Electronic Tolling Conversion

In a memorandum to Committee, Auditor-Controller Joseph Wire and General Manager Denis Mulligan reported on staff’s recommendation to authorize the execution of Amendment No. 2 to the Professional Service Agreement (Agreement) with Traffic Technologies, Inc. (TTI), relative to Request for Proposals No. 2010-D-9, Strategic Development Plan for All Electronic Toll Collection, in the amount of $244,500.00, for implementation coordination and delivery services for all electronic toll collection on the Golden Gate Bridge (Bridge).

The staff report stated that the Board, by Resolution No. 2011-018 at its meeting of March 11, 2011, authorized Amendment No. 1 to the Agreement, to provide technical and project management services for AET conversion on the Bridge.

The scope and budget of the AET conversion project contains several implementation tasks that have not yet been assigned, which include coordinating the development of a marketing strategy, coordinating the delivery of a cash payment network, coordinating District testing of new toll payment and system functionality, designing stationary signs on the approaches to the toll plaza, and delivering District staff training for new procedures and responsibilities accompanying AET operations. The total cost of these unassigned AET implementation tasks, as submitted by TTI, is $244,500.00.

The staff report stated that TTI is uniquely qualified to provide the District with implementation coordination and delivery services, because of its detailed knowledge of the District’s operations and its toll collections systems, hardware and software. TTI has provided the District with excellent services and charged very competitive rates. Staff finds the proposed expenditure of time to be reasonable, with TTI’s hourly rates having remained unchanged since 2006, and finds the proposed amount charged for work added through this amendment to be fair and reasonable.

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. Dick briefly summarized the staff report, stating that the required work is within the project scope and budget approved in January 2011. The recommended Amendment No. 2 will assign the work to TTI, to coordinate and deliver AET implementation, including marketing, employing the cash payment network, and insuring that the system is working correctly. In addition, delivery of AET, design of stationary signs and training for District staff is included. He concluded by stating that several options were considered and the recommended action was found to be the least expensive.

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

RECOMMENDATION

The Finance-Auditing Committee/Committee of the Whole recommends that the Board of Directors authorize the execution of Amendment No. 2 to the Professional Service Agreement with Traffic Technologies, Inc., relative to Request for Proposals No. 2010-D-9, Strategic Development Plan for All Electronic Toll Collection, in the amount of $244,500.00, for implementation coordination and delivery services for all electronic toll collection on the Golden Gate Bridge; with the understanding that requisite funds are available in the FY 11/12 Bridge Division Capital Budget.

Action by the Board at its meeting of October 28, 2011
Resolution

AYES (9): Directors Boro, Cochran, Elsbernd, Moylan, Pahre, Renée and Sobel; First Vice President Eddie; President Reilly (Ex Officio)
NOES (0): None

       
7. Monthly Review of Golden Gate Bridge Traffic/Tolls and Bus and Ferry Transit Patronage/Fares (for Three Months Ending September 2011)

In a memorandum to Committee, Auditor-Controller Joseph Wire and General Manager Denis Mulligan provided a schedule comparing categories of Golden Gate Bridge (Bridge) traffic, as well as a monthly review of Bridge traffic, tolls, transit patronage and fares, for three months ending September 2011. Copies of the reports are available in the Office of the District Secretary and on the District’s web site.

Action by the Board – None Required

       
8. Monthly Review of Financial Statements for Three Months Ending September 2011
  a. Statement of Revenue and Expenses

In a memorandum to Committee, Auditor-Controller Joseph Wire and General Manager Denis Mulligan provided financial statements entitled, Statement of Operating Revenues and Expenses. Copies of the reports are 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 Denis Mulligan provided financial statements entitled, Statement of Capital Programs and Expenditures. Copies of the reports are available in the Office of the District Secretary and on the District’s web site.

Action by the Board – None Required

       
9. Annual Review of the Capital Grant Awards for Twelve Months Ending June 30, 2011

In a memorandum to Committee, Director of Capital and Grant Programs Gayle Prior, Auditor-Controller Joseph Wire and General Manager Denis Mulligan provided a report entitled, Annual Review of Golden Gate Bridge, Highway and Transportation District Capital Grant Awards for Twelve Months Ending June 30, 2011. 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

       
10. FY 11/12 (First Quarter) Quarterly Report on Authorized Budget Adjustments and Budget Transfers

In a memorandum to Committee, Auditor-Controller Joseph Wire and General Manager Denis Mulligan provided a report entitled, Review of Auditor-Controller’s FY 11/12 First Quarterly Report on Authorized Budget Adjustments and Budget Transfers Executed under the General Manager’s Authority and Board Authority. A copy of the report is available in the Office of the District Secretary and on the District’s web site.

       
11. FY 11/12 (First Quarter) Quarterly Report on Contracts and Change Orders/Contract Amendments Executed Under the General Manager’s Authority

In a memorandum to Committee, Auditor-Controller Joseph Wire and General Manager Denis Mulligan provided a report entitled, Review of Auditor-Controller’s FY 11/12 First Quarterly Report on Contracts and Change Orders/Contract Amendments Executed Under the General Manager’s Authority. 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

       
12.

Closed Session

Attorney David Miller, at the request of Acting Chair Pahre, stated that the Committee would convene in Closed Session, to discuss the following matters, listed on the Agenda as Item No. 12.a.:

Closed Session
“Conference with Legal Counsel – Pending Litigation
“Pursuant to Government Code Section 54956.9(a)

“a. Report of John Glenn Administrators & Adjusters, Inc.
Charlene Williams vs. Golden Gate Bridge, Highway and Transportation District

After Closed Session, Acting Chair Pahre called the meeting to order in open session with a quorum present. Attorney Miller reported that the Committee had met in Closed Session, as permitted by the Brown Act, to discuss the matters listed under Closed Session, outlined above. He reported that during the Closed Session, the Committee approved a recommendation to settle this matter.

       
13.

Public Comment

There was no public comment.

     
14.

Adjournment

All business having been concluded, the meeting was adjourned at 11:21 a.m.

     

 

Respectfully submitted,

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