Los Angeles County One Gateway Plaza z.i Metropolitan Transportation Authority Los Angeles, CA gooi~-zg5z rnetro.net

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1 @ Metro Los Angeles County One Gateway Plaza z.i Metropolitan Transportation Authority Los Angeles, CA gooi~-zg5z rnetro.net FINANCE AND BUDGET COMMITTEE January 19,201 1 SUBJECT: FYI1 FIRST QUARTER FINANCIAL PERFORMANCE ACTION: RECEIVE AND FILE RECOMMENDATION Receive and file the financial performance review of first quarter FY 11 fiscal year budget. The Financial Stability Policy requires that the Board receive quarterly updates on the status of the fiscal year budget. This report discusses the FY11 first quarter financial performance. DISCUSSION SUMMARY OF REVENUE AND EXPENSE The agency ended the first quarter of FYI 1 with 15%, or $135.1 million, less revenue than the $878.5 million first quarter budget. The impact of the revenue shortfall was mitigated by a lower expense. Expense ended the quarter 33% lower than budget, as described later in this report. Summary of Revenues op 16, TCRP, and etc.

2 PROPOSITION A, C AND MEASURE R REVENUES Metro's sales tax revenue for the first quarter was 1% below budget. We believe that the sales tax estimate included in the annual budget is still reasonable. We will continue to monitor revenue and expenses through the remainder of FYI 1, and recommend amendments to the Board as necessary. PASSENGER REVENUES Passenger fare revenue was slightly better than budget, reflecting boarding recovery from both the effects of the July 1, 2010 fare increase and the "Great Recession". Fare revenue per boarding was75 cents, 1% below budget, but offset by 1% more boardings than assumed in the budget. FEDERAL AND STATE GRANT REVENUES Federal and State grant revenues are primarily reimbursements, parallel planning and capital expenditure activity, which came in below budget. Details of these expenses can be found in the summary of expenses. OTHERREVENUE Other income is over budget by $12.6 million primarily due to higher than budgeted investment income. Summary of ExpenseslExpenditures First Quarter (Dollars in Millions) Metro Operating (1) Metro Capital Other Operating & Subisides (2) Debt Service Budget Variance $ $ $ (9.5) -3% (47.9) -32% (144.6) -39% (134.6) -66% $ $ 1,015.3 $ (336.6) -33% Total ExpensesIExpenditures 1. Bus and Rail Operating Expenses 2. Other Operatingincludes all SBU expenses not charged to enterprise fund SUMMARY OF EXPENSES OPERATING EXPENSE (Attachment A- Operatinq Expense Detail) Overall, expenses totaled $678.7 million, which is $336.6 million (33%) below budget. Page 2

3 Operating, capital subsidies, and others all ended the quarter below budget. Metro operating expenses were $9.5 million, 3%, below the $292.9 million budget as a result of executive efforts to control cost. Wages and benefits were $4.1 million, 2% below budget due to lower than anticipated average operator wage, timing of fringe benefit allocations and vacant positions. Professional, maintenance and contract services were $7.2 million below delayed implementation of the TAP at the municipal operators and delayed bus and rail facility maintenance activities. Workers' Compensation and PLPD self insurance were below budget for the first quarter, but are likely to be at budget by year end. Partially offsetting these favorable variances were higher than budget electric rates for propulsion power, a temporary shift in parts usage from capital projects to operating projects, and less G&A transferred from operating to capital and planning projects. CAPITAL EXPENSES (Attachment B- Capital Expense Analysis) Because of timing issues and project delays Metro capital was $47.9 million, 32% below the $ million budget. Congestion Reduction Projects (1-10 and ) were $3.8 million below budget due to project delays. Bus acquisitions were $1 1.8 million below budget as a result of changes in bus delivery schedules. Light rail vehicle acquisitions were $6.3 million below budget due to delayed vehicle delivery and acceptance. The Metro Orange Line Extension was $7.4 million below budget due to revised contractor schedules. The UFSITAP projects were $1.8 million below budget due to acquisitions being behind schedule, payment delays and unused contingency. Delayed engine availability resulted in the bus mid-life and engine replacement projects being $4.8 below the budget. Timing issues regarding close out of the Eastside segment of the Gold Line resulted in favorable variances of $4.7 million. Partially offsetting these variances Phase 1 of the Expo Light Rail project was $0.9 over the quarter budget. The remaining 100+ capital projects were $8.2 million below budget primarily due to timing issues. OTHER METRO EXPENSES Other Metro operating and subsidy expenses were $144.6 million, 39% below the $367.0 budget. Page 3

4 The car pool lanes project was $54.1 million below budget due to delayed receipt of contractor invoices. Formula subsidies were $66.2 million below budget due to delayed invoices. The Foothill Gold Line extension project was $2.0 over budget due to payments in advance, but we expect payments to remain within budget for the year. As a result of being ahead of schedule the Green Line extension project was $0.4 over budget. Other Measure R projects such as Crenshaw ($2.8 million), Regional Connector ($4.1 million), Eastside Gold Line extension ($0.3), Subway extension ($8.2 million), highway operations improvement projects ($3.2 million) and South ($1.5 million) were below budget due to delays. The Freeway Service Patrol project was $2.6 million below budget as a result of putting the communications contract on hold. The SAFE project was $3.2 million below budget due to a billing dispute with AT&T and MATIS151 1 delays. Other governmental projects were $14.3 million below. DEBT SERVICES The debt principal and interest expenses were $134.6 million below budget. Debt principal payments were $120.2 million below budget because the entire annual budget was in the first quarter, but the actual expense is spread throughout the year. Had the budget been distributed evenly for each quarter, the expense would only be 1 O h under budget. The budget will be corrected in the second quarter. MEASURE R (Attachment C- Measure R Ex~ense Summary) Measure R projects are included in the capital, other metro and subsidies discussions above. Measure R capital, planning and subsidy projects ended the first quarter $85.0 million, 59%, below the $143.4 million budgeted. Of the Measure R projects budget in the first quarter only the South Bay Extension of the Green Line was over budget, since this project is ahead of schedule. All of the transit and highway projects were below budget. Such transit projects as the Orange Line Extension, Regional Connector, subway extension, and Eastside Gold Line Extension were all below budget Local return was over budget by $0.2 million (less than 1 O/O) over budget reflecting the lower than anticipated first year Measure R revenue. Measure R operating subsidies were below budget due to timing issues. Page 4

5 Metrolink did not utilize any of the planned $4.4 million capital funding, but will apply these funds towards positive train control in future. FYI 1 Outlook Metro should end the year on or about budget for revenue and expenses. Sales tax revenue still reflects lingering effects of the "great recession"; however passenger fares are on budget through the first three months. First quarter expenses are below budget in Measure R, operating, capital, debt, and subsidy funds, but we expect that expenses will correspond more closely with budget towards the midyear or by the by 3rd quarter of FY2011. Attachments: A- Operating Expense Detail B- Capital Expense Analysis C- Measure R Expense Summary Prepared by: Office of Management & Budget Page 5

6 T Paul Tay Deputy Chief ~xecutivkhficer Arthur T. Leahy Chief Executive Officer Page 6

7 At LACMTA Schedule A - Operating Expense Detail For Quarter Ended September 30, $ in Millions) Wages Benefits Fuel & Propulsion Power Purchased Transportation Workers' Comp & PLPD Actual Budget Variance % Variance (2.5) -2% (1-6) -3% Explana Less than anticipated incre wages Timing of fringe benefit all Electric rate increase mor % CNG price % In lieu of captialized bus m (7.2) -20% TAP and facilities mainten I - 0% (1.o) -5% Service provided per plan Timing; on budget at year Less G&A transfer to capi

8 A Capital Expense Analysis ProjectlCategory Actual Budget $ Variance % Variance Bus Acquisition 20,617,343 32,409, ,792, % I Veh Congestion Relief Projects Bus Maintenance 3,950,739 5,488,365 7,760,475 10,304,095 3,809,736 4,815,730 Icon -49. I % dela Deli -46.7% eng UFSITAP (432,028) 1,400,000 1,832, % pay cont Eastside Light Rail Mid-City Expo Light Rail 1,746,760 48,446,979 6,396,866 47,525,951 4,650,106 (92 1,028) l~il -72.7% cont 1.9% On s Metro Orange Line Ext. 7,530,486 14,900,093 7,369, % fund prot LRV Fleet Enhancement Administration - Capital Program and Construction 372, ,722 6,646, ,822 6,273, , % Veh Adm -29.4% proj Other Projects 15,306,594 23,305,459 7,998, % Tmi l~rand Total 1 103,638, ,513, ,875, % 1

9 A LACMTA Measure R Expense Summary by Project For Ql - Fiscal Year Ending Sept 30, 2010 Proj Project Name Project Type BUSES FOR CRDP MTA Capital FYI0 CMS ENGINE REPLACEMENT MTA Capital MEASURE R 20% FAP SUBSIDIES Subsidy METROLINK TRANSIT CAPITAL Subsidy MEASURE R 15% LOCAL RETURN Subsidy GOLD LINE FOOTHILL LRT EXT External W. STA ANA BR CORRIDOR ADMlN Subsidy EASTSIDE QUAD GATE STDY MTA REGIONAL CONNECTION MTA EASTSIDE EXTENSION PHASE II MTA EASTSIDE LIGHT RAIL ACCESS MT A EXPO BLVD LRT PHASE II MTA GREEN LINE EXT TO LA AIRPORT MTA GRN LIN EXT RDONDO BCH-S. BAY MTA SEPULVEDA PASS TRANSIT COR MTA PHASE II ACE GRADE SEPARATION External COUNTYWIDE SOUNDWALL PROJECTS MTA HWY OPR IMP ARROYO VERDUGO Subsidy HWY OPR IMP VIRGENESIMALIBU TBD SR91 RAMP&INTERCH Subsidy N ENHANCE SR14lKERN CNTY TBD CORRIDOR "HOT SPOT" TBD NORTH GAP CLOSURE MT A Actual $ , , ,880 11, , , ,123 1,067,522 (0) ( ) 2, ,562 Budget $ ,553,000 4,350, ,OOO 10, ,462 5,166, , , , , ,765,502 3,966, ,330 4, ,567 2,003, , ,617 Variance $ 15,611 Close-ou 1, Not Plan 2, lnvoicing 4, lnvoicing Pass-thr jurisdictio ( ) , ,754 4,283, , , of the sa Project D BNSF an land not Staff wo the proje lnvoice d Timing v submittin for PE w Funds w contact a lnvoice d invoice s Project d schedule Not Plan NIA (457,276) Project p Project s for relea 250,000 quarter. Negative accrual. Staff pre 1, package 4,135,003 Project i Working projects. Working projects. Working -- 2,003,356 projects NIA NIA SOUTH EARLY ACTION PROJS MTA SR-I38 CAPACITY ENHANCE TBD CRENSHAW TRANSIT CORRIDOR MTA WESTSIDE SUBWAY EXTENSION MTA 82, ,416,686 3, , ,624,594 2,221, ,825, Schedul the list o Working projects lnvoicln slower th contracto Going to PEIFEIS funds by