Operations & Finance Committee Meeting Agenda

Transcription

1 Operations & Finance Committee Meeting Agenda Nashville MTA Committee Meetings Music City Central Meeting Room 400 Charlotte Ave., Nashville, TN Thursday, March 22, 2018 The Operations & Finance Committee will begin at 1:30 p.m. Operations & Finance Committee Walter Searcy, Chair Hannah Paramore Breen, Member 1. Call to Order 2. Discussion Items a. Monthly Financial Report Compared to Budget Ed Oliphant, CFO b. Monthly Operating Statistics Dan Freudberg, Director of Service Quality c. Metro Internal Audit of the Revenue Collection Process Ed Oliphant, CFO 3. Action Items a. Fifth Third Revolving Line of Credit Renewal Ed Oliphant, CFO 4. Other Business 5. Adjourn OF-D OF-D OF-D OF-A

2 NASHVILLE METROPOLITAN TRANSIT AUTHORITY OF NASHVILLE AND DAVIDSON COUNTY, TENNESSEE COMMITTEE DISCUSSION ITEM Item Number: OF-D Meeting Date: 03/22/18 Item Title: MONTHLY FINANCIAL REPORT COMPARED TO BUDGET Attached is a statement of operations for the month of January 2018 compared to the budget and a balance sheet as of January 31, CURRENT STATUS Chief Financial Officer Ed Oliphant will review the statements at the committee meeting. Approved: Chief Financial Officer March 16, 2018 Date 1

3 Metropolitan Transit Authority Statement of Operations Compared to Budget For the Period Ending January 31, 2018 UNAUDITED Actual Month Month End F / Prior Year Actual Budget Y-T-D F / Original Month Budget Variance U Y-T-D Y-T-D Y-T-D Variance U Budget Revenue form Operations: Passenger Fares $578,008 $572,700 $5,308 F $5,808,808 $4,359,260 $4,286,600 $72,660 F $7,217,000 Access Ride 63,014 73,500 (10,486) U 505, , ,550 (33,912) U 864,900 Contract Revenues 207, ,815 (5,461) U 1,451,408 1,467,619 1,489,715 (22,096) U 2,553,800 Advertising 85,092 92,000 (6,908) U 612, , ,000 27,430 F 1,100,000 Other Non-Trans Revenue 84, ,979 (26,264) U 691, , ,054 2,030 F 1,062,450 Total Operating Revenue 1,018,183 1,061,994 (43,811) U 9,070,202 7,597,031 7,550,919 46,112 F 12,798,150 Federal/State/Local Income: Local Assistance 4,300,000 4,300,000 0 F 33,750,000 36,550,000 36,550,000 0 F 48,635,900 State Assistance F 4,653,700 4,723,500 4,723,500 0 F 4,723,500 Federal Assistance - CMAQ 160, ,250 2,104 F 1,113,015 1,118,740 1,108,000 10,740 F 1,900,000 Federal Assistance - JARC/New Free 115, ,610 7,553 F 235, , ,270 5,893 F 1,291,320 Total Assistance Income 4,575,517 4,565,860 9,657 F 39,751,734 43,151,403 43,134,770 16,633 F 56,550,720 Capital Revenue: Capital Operating Reimbursement F F 9,563,300 Capital ADA Reimbursement F F 2,750,000 Total Capital Income F F 12,313,300 Total Revenue $5,593,700 $5,627,854 ($34,154) U $48,821,936 $50,748,434 $50,685,689 $62,745 F $81,662,170 Expenses from Operations: Labor and Fringes $4,946,779 $4,675,639 ($271,140) U $31,825,458 $33,500,953 $33,826,844 $325,891 F $57,850,140 Services 719, ,145 (57,988) U 4,295,587 4,768,292 4,634,636 (133,656) U 7,970,200 Fuel 381, ,564 46,794 F 2,066,693 2,545,953 2,939, ,500 F 5,142,785 Parts, Materials and Supplies 544, ,846 (29,636) U 3,045,082 3,522,908 3,691, ,871 F 6,357,220 Utilities 116, ,020 1,573 F 728, , , ,993 F 1,430,850 Casualty and Liability 202, ,817 (25,962) U 1,297,396 1,286,726 1,237,719 (49,007) U 2,121,800 Other 36,101 55,880 19,779 F 326, , , ,622 F 789,175 Total Operating Expenses 6,947,491 6,630,911 (316,580) U 43,585,434 46,712,141 47,694, ,214 F 81,662,170 Surplus / (Deficit) before GASB 33 ($1,353,791) ($1,003,057) ($350,734) U $5,236,502 $4,036,293 $2,991,334 $1,044,959 F $0 Capital Grant Revenue 3,011,765 3,011,765 F 1,942,488 11,204,668 11,204,668 F 0 Rental income - MCC Amortization 49,167 49,167 F 344, , ,169 F Gain/(Loss) on Sale of Property 0 0 F 0 (25,720) (25,720) U Comp Op Analysis & Traincaster 0 0 F 0 (68,654) (68,654) U Depreciation (1,254,096) (1,254,096) U (9,356,638) (8,689,795) (8,689,795) U 0 Surplus / (Deficit) $453,045 ($1,003,057) $1,456,102 F ($1,833,479) $6,800,961 $2,991,334 $3,809,627 F $0 2

4 Metropolitan Transit Authority Comparative Balance Sheets Month Ended Month Ended January 31, 2018 June 30, 2017 (unaudited) (unaudited) CURRENT ASSETS Cash and cash equivalents $4,612,846 $2,254,719 Receivables from federal, state and local government 2,746,576 5,028,295 Accounts receivable 1,512,830 1,744,529 Materials and supplies 3,122,528 3,096,646 Prepaid expense and other 1,334, ,835 Pension Deferred Outflow 6,412,991 6,412,991 Total Current Assets 19,742,256 19,292,015 PROPERTY AND EQUIPMENT Land 14,733,025 14,733,025 Building, shelter and benches 96,040,972 93,878,816 Revenue equipment and parts 127,403, ,291,561 Office furniture and equipment 4,179,999 4,098,720 Other 9,372,310 8,540, ,729, ,542,477 Less: Accumulated Depreciation (122,791,112) (115,814,900) Total Property and equipment, net 128,938, ,727,577 OTHER ASSETS Cash and investments for self-insurance and other 9,624,434 13,664,028 TOTAL ASSETS $158,305,156 $159,683,620 LIABILITIES AND NET ASSETS CURRENT LIABILITIES Accounts payable $1,609,300 $3,277,698 Accrued expenses 6,122,361 6,089,065 Deferred revenue 46,621 46,466 Note Payable 0 2,850,000 Total Current Liabilities 7,778,282 12,263,229 NON-CURRENT LIABILITIES Deferred Revenue 8,803,296 9,147,465 Refundable Grants 1,235,641 5,185,951 Net Pension Liability 16,972,784 16,972,784 Pension Deferred Inflow 1,262,057 1,262,057 Net other postemployment benefits obligations 42,936,147 42,936,147 NET ASSETS Invested in capital assets 120,135, ,730,112 Reserve for capital purchases 9,274,434 13,314,038 Unrestricted (56,893,616) (46,502,782) Current Year Surplus / (deficit) 6,800,961 (9,625,381) Total Net Assets 79,316,949 71,915,987 TOTAL LIABILITIES AND NET ASSETS $158,305,156 $159,683,620 Current Ratio Quick Ratio Working Capital 5,550, ,795 3

5 NASHVILLE METROPOLITAN TRANSIT AUTHORITY OF NASHVILLE AND DAVIDSON COUNTY, TENNESSEE COMMITTEE DISCUSSION ITEM Item Number: OF-D Meeting Date: 03/22/18 Item Title: MONTHLY OPERATING STATISTICS BACKGROUND Attached are monthly operating statistics through January CURRENT STATUS Director of Service Quality Dan Freudberg will review the statistics at the committee meeting. Approved: Chief Operating Officer March 16, 2018 Date 4

6 MTA Operations Dashboard Report January 2018 January 2017 Pct. Change Average Monthly Goals Ridership Total Passengers Bus 721, , % AccessRide (MTA) 24,177 24, % AccessRide (Overflow/Taxi) 9,196 12, % AccessRide Total 33,373 36, % Total 754, , % 850,000 Passengers per Revenue Hour Bus % 20 AccessRide % 2.15 Total Scheduled Revenue Hours 57,305 53, % Total Cost Per Scheduled Revenue Hour of Service $ $ % Safety Miles Between Total Accidents 24,867 38, % 40,000 Miles Between Preventable Accidents 360, , % 325,000 Preventable Accidents % Non-Preventable Accidents % Internal Accidents % External Accidents % Service Quality Bus Trip Completion Percentage 99.5% 99.7% -0.2% 99.9% AccessRide Trip Denials % 0.0% Miles Between Road Calls 2,632 5, % 7,000 On-Time Performance Bus 88.3% 87.0% 1.4% 90.0% AccessRide 79.0% 86.0% -6.9% 90.0% Customer Care Passengers Carried Per Complaint Bus 5,681 5, % 8,000 AccessRide 359 1, % 950 Total Calls Received 31,742 26, % Percent of Calls Answered 93.7% 97.1% -3.5% 95.0% 5

7 MTA Operations Dashboard Report FY 2018 January FY 2017 January Pct. Change Average Monthly Goals Ridership Total Passengers Bus 5,417,059 5,499, % AccessRide (MTA) 183, , % AccessRide (Overflow/Taxi) 79,189 90, % AccessRide Total 262, , % Total 5,679,314 5,763, % 5,950,000 Passengers per Revenue Hour Bus % 20 AccessRide % 2.15 Total Scheduled Revenue Hours 396, , % Total Cost Per Scheduled Revenue Hour of Service $ $ % Safety Miles Between Total Accidents 35,415 36, % 40,000 Miles Between Preventable Accidents 279, , % 325,000 Preventable Accidents % Non-Preventable Accidents % Internal Accidents % External Accidents % Service Quality Bus Trip Completion Percentage 99.6% 99.7% -0.1% 99.9% AccessRide Trip Denials % 0.0% Miles Between Road Calls 2,518 5, % 7,000 On-Time Performance Bus 85.7% 84.0% 1.7% 90.0% AccessRide 83.7% 85.6% -1.8% 90.0% Customer Care Passengers Carried Per Complaint Bus 7,370 7, % 8,000 AccessRide % 950 Total Calls Received 198, , % Percent of Calls Answered 92.6% 96.2% -3.6% 95.0% 6

8 MTA Operations Dashboard Glossary Metric Ridership Total Passengers Bus AccessRide (MTA) AccessRide (Overflow/Taxi) AccessRide Total Passengers per Revenue Hour Bus AccessRide Total Scheduled Revenue Hours Definitons Total fixed route passenger boardings on all MTA operated services Total paratransit passenger boardings on MTA vans Total paratransit passenger boardings on 3rd party service providers Total paratransit boardings (MTA vans and 3rd party service providers) Total fixed route passenger boardings divided by total scheduled fixed route revenue vehicle hours. Total paratransit boardings on MTA vans divided by total scheduled paratransit revenue vehicle hours. Total fixed route and paratransit scheduled revenue vehicle hours. Note: Revenue vehicle hours are total vehicle in-service hours excluding vehicle travel from the garage to the first timepoint (or pickup for paratransit) and from the last timepoint (or pickup) to the garage. Total Cost Per Scheduled Revenue Hour of Service Total fully allocated cost to deliver service divided by the total scheduled revenue hours. Safety Miles Between Total Accidents Miles Between Preventable Accidents Preventable Accidents Non-Preventable Accidents Internal Accidents External Accidents Total number of miles travelled by all MTA revenue vehicles (fixed route and paratransit) divided by the total number of accidents. Total number of miles travelled by all MTA revenue vehicles (fixed route and paratransit) divided by the total number of preventable accidents. A motor vehicle collision, in which the Operator did not do everything reasonable to avoid a collision, committed an error or failed to react to the errors of others. A motor vehicle collision in which the Operator committed no driving error and reacted reasonably to the errors of others. A motor vehicle collision that occurs on Nestor or Myatt yard. A motor vehicle collision that occurs outside of Nestor or Myatt yard. Service Quality Bus Trip Completion Percentage Percentage of one-way fixed route revenue trips completed versus scheduled. 7

9 MTA Operations Dashboard Glossary Metric Definitons AccessRide Trip Denials Miles Between Road Calls Total number of paratransit trips that cannot be scheduled within one hour before or after the customer's requested pick-up time. Any mechanical failure, excluding farebox and accidents. Bus and AccessRide metrics will be reported separately. Bus On-Time Performance Percentage of total scheduled fixed route timepoint departures occurring between 59 seconds early and 5 minutes 59 seconds late. Customer Care Passengers Carried Per Complaint Bus AccessRide Total fixed route passengers divided by total fixed route customer complaints. Total paratransit (MTA and 3rd Party service providers) passengers divided by total paratransit customer complaints. Total Calls Received Percent of Calls Answered Percentage of calls received that were answered. Unanswered calls are calls that are lost for any reason once in the customer call phone queue. 8

10 NASHVILLE METROPOLITAN TRANSIT AUTHORITY OF NASHVILLE AND DAVIDSON COUNTY, TENNESSEE COMMITTEE DISCUSSION ITEM Item Number: OF-D Meeting Date: 03/22/18 Item Title: METRO INTERNAL AUDIT OF THE REVENUE COLLECTION PROCESS BACKGROUND On occasion, Metro Internal Audit does revolving internal audits of Metro departments and agencies in specific areas. In September 2017, Metro Internal Audit contacted us that the Nashville Metropolitan Transit Authority (Nashville MTA) had been selected for an audit of all of our revenue collection processes excluding federal and state capital and operating grants. The audit was completed in February with the final report being issued March 1, The audit resulted in no findings and three observations. Observations are only recommendations that do not reach the level of a finding and do not necessarily have to be addressed. We felt that all the observations were reasonable and were addressed in our responses which are included in the performance audit report.. CURRENT STATUS Ed Oliphant will discuss the attached audit report at the committee meeting and answer any questions the Committee might have and review our action plan at the meeting. Approved: Chief Financial Officer March 16, 2018 Date 9

11 FINAL REPORT A Report to the Audit Committee Mayor Megan Barry Chief Executive Officer Nashville MTA Stephen G. Bland Chief Operating Officer Richard Riebeling Audit Committee Members David Briley John Cooper Charles Frasier Talia Lomax-O dneal Bob Mendes Brackney Reed Metropolitan Transit Authority Revenue Collection Process March 1, 2018 Metropolitan Nashville Office of Internal Audit 10

12 EXECUTIVE SUMMARY March 1, 2018 Audit of the Metropolitan Transit Authority Revenue Collection Process BACKGROUND The Metropolitan Transit Authority is a component unit of the Metropolitan Nashville Government that provides public transportation to Nashville citizens and visitors. Why We Did This Audit The audit was initiated due to the importance of ensuring all revenue collections are managed and are available for public mobility services. What We Recommend Ensure evidence exists that employees agree on amounts of cash collections when custody changes. Maintain a listing of assets with advertising and reconcile it to the spreadsheet submitted by the advertising sales contractor. Implement automatic passenger counters as a control against fare evasion. The Metropolitan Transit Authority generates revenue from bus fares, advertising sales, and rental income from parking and Dunkin Donuts at Music City Central, the downtown Nashville transit station. Operating and non-operating revenue was $15.3 million for fiscal year OBJECTIVES AND SCOPE The objectives of this audit are to determine if: Cash receipts are complete and accurate. Cash receipts are deposited within two business days. Responsibilities for invoicing, handling, recording, and reconciliation of cash receipts are segregated. Cash receipts are secured. The scope of this audit was limited to operating, and non-operating revenues generated by the Metropolitan Transit Authority for fiscal years 2017 and The audit did not include operating assistance from local, state, and federal grants. WHAT WE FOUND Cash receipts are accurate and deposited timely. Responsibilities are segregated, but controls could be strengthened around custodial transfers of cash receipts within the Music City Central ticket window. Implementation of additional management controls to gauge the completeness of advertising sales and passenger counts could enhance the revenue collection process. 11

13 GOVERNANCE The Metropolitan Transit Authority is overseen by a five-member Board of Directors. The Chief Executive Officer of the Metropolitan Transit Authority reports directly to the Board of Directors and is charged with the managerial duties of the entire transit system. The Chief Executive Officer position is the only Metropolitan Nashville Government held position at the Metropolitan Transit Authority; all other employees are employed by the Davidson Transit Organization. The Metropolitan Transit Authority has a Chief Financial Officer, Chief Development Officer, and Director of Customer Service who are responsible for making operational decisions, policies, and procedures for the portions of the revenue cycle under their area of responsibility. FINANCIAL BACKGROUND Operating and non-operating revenues generated by the Metropolitan Transit Authority represented approximately 18 percent of total revenues in fiscal year The remaining revenue categories related to government assistance and capital contributions. A breakdown of revenues and capital contributions for fiscal years 2015 through 2017 are presented in Exhibit 1 below. Exhibit 1 Revenues and Capital Contributions by Fiscal Year Revenue Type FY 2015 FY 2016 FY 2017 Full Adult Fares $7,653,314 $6,701,476 $6,475,636 Discount of Ticket Sales (2,415) (2,809) (4,529) Senior Citizen Fares 1,248,739 1,392,442 1,418,670 Student Fares 1,770,112 1,470,420 1,359,142 AccessRide Revenue 871, , ,157 Contract Services Bus 1,635,327 1,690,648 1,693,752 Contract Services Regional Transportation Authority 780, , ,400 Management Advertising Revenue 690,960 1,140,723 1,007,653 Total Operating Revenues $14,647,487 $14,052,060 $13,611,880 Miscellaneous Income: Interest $5,288 $1,905 $994 Miscellaneous Income: Non-Transportation 130, , ,143 Rental Revenue 977, , ,687 Amortized Rental Revenue 590, , ,004 Other Receipts 10,251 39,671 - Total Non-Operating Revenues $1,713,989 $1,895,251 $1,706,828 Total Government Assistance $43,470,266 $47,268,602 $49,283,039 Total Capital Contributions $28,252,441 $18,442,390 $19,058,834 Total Revenue and Capital Contributions $88,084,183 $81,658,303 $83,660,582 Source: Metropolitan Transit Authority s Sage Accounting Software Bus Fare Collection Process Passengers purchasing tickets on buses will insert their cash into the farebox upon entering the bus. Cash is deposited into a secure cashbox within the farebox. After each trip, the bus will return to the lot and go through a probing process to empty the receipts from the cashbox. A data probe is used to Audit of the Metropolitan Transit Authority Revenue Collection Process 1 12

14 transfer ridership and revenue data from the farebox to the GENFARE information system. Once the transfer is complete, the farebox will open, and the cashbox can be removed. The cashbox is then inserted into a vault, which removes cash and coins from the cashbox into a secure bin within the vault. Each day, an armored car service will remove the cash receipts from the vault, count the receipts, and make the deposit with the bank. On a daily and monthly basis, cash receipts counted by the armored car service are reconciled to the revenue data transferred from the farebox. In addition to fare purchased on buses, passengers can purchase fare media from the Music City Central ticket window and ticket vending machines. Checks for rental income, bulk sales, advertising sales, and other miscellaneous payments will be mailed directly to the Metropolitan Transit Authority administration building. OBJECTIVES AND CONCLUSIONS 1. Are cash receipts reported by the Metropolitan Transit Authority complete and accurate? Generally, yes. Controls are in place to ensure fare revenue and contract revenue are accurate. Daily and monthly deposits are reconciled to farebox revenue data to ensure all funds are deposited into the bank. Contract payments from the contractors located at Music City Central were complete and accurate. The advertising contractor is submitting payments and documentation per the established contract. However, the Metropolitan Transit Authority should implement controls to ensure the completeness of advertising revenue. (See Observation B.) In addition, controls should be established to protect against fare evasion. (See Observation C.) 2. Are cash receipts deposited within two business days? Yes. Fifty-six out of 59 (95 percent) of reviewed cash receipts were deposited within two business days of receipt. All reviewed cash receipts were deposited into the bank. 3. Are responsibilities for invoicing, handling, recording, and reconciliation of cash receipts segregated? Yes. Duties for invoicing, handling, recording, and reconciliation of cash receipts are segregated. However, both employees should agree on cash balances when cash receipts pass from one employee to another. (See Observation A.) 4. Are cash receipts secured? Yes. Cash receipts are secured from receipt until deposit into the bank. Audit of the Metropolitan Transit Authority Revenue Collection Process 2 13

15 AUDIT OBSERVATIONS Internal control helps entities achieve important objectives and sustain and improve performance. The Committee of Sponsoring Organizations of the Treadway Commission (COSO), Internal Control Integrated Framework, enables organizations to effectively and efficiently develop systems of internal control that adapt to changing business and operating environment, mitigate risks to acceptable levels, and support sound decision making and governance of the organization. The audit observations listed are offered to assist management in fulfilling their internal control responsibilities. Observation A Custody of Cash Transfers If miscounted or misappropriated cash receipts were to occur, it would be difficult to determine the specific responsible employee or employees because cash is transferred without employees acknowledging cash custody transfers. Customer Care Department representatives at the Music City Central ticket sales window reconcile their cash receipts to fare media sold at the end of each shift and place the daily receipts into a drop safe. The next day, the Customer Care Department lead representative opens the safe and accepts custody of cash receipts without written acknowledgment from the employee placing the prior day cash receipts in the drop safe. During the audit period, log sheets were not maintained acknowledging custody transfers to a third party representative responsible for transporting deposits to the bank. The Customer Care Department Ticket Sales Procedure states this representative should sign a log sheet before receiving the daily deposit on behalf of the Customer Care Department. Since July 2017, documentation showed the third party representative signed for deposit pick-ups. Criteria: COSO, Control Activities Principle 10 The organization selects and develops control activities that contribute to the mitigation of risks to the achievement of objectives to acceptable levels. State of Tennessee, Division of Municipal, Internal Control and Compliance Manual, June 2010, Title 5 Control Activities, Chapter 14 Revenues / Receivables General Procedures states: when cash is transferred from one employee to another, the cash should be counted by both employees at the same time. Recommendations for management of the Metropolitan Transit Authority to: 1. Ensure evidence exists that customer service representatives agree on the amounts of cash collections transferred between employees. 2. Perform a smart safe implementation cost-benefit analysis for the deposit of daily collections in the Customer Care Department. 3. Establish a retention schedule and maintain the Deposit Pick-Up Log Sheet for the specified period. Observation B Advertising Contract Monitoring Management monitoring for completeness of advertising revenue could be improved. Advertising revenue represents 7 percent of the Metropolitan Transit Authority operating revenue for fiscal year Audit of the Metropolitan Transit Authority Revenue Collection Process 3 14

16 Monthly a Microsoft Excel spreadsheet containing the advertising client, order identification, description (bus, bench, or shelter), the timeframe of advertising, the number of each transit product line sold, total advertising sale, and the amount due to the Metropolitan Transit Authority is provided by the contractor responsible for advertising sales. However, there is no procedure to reconcile the contents of this spreadsheet with the installation of advertising associated with Metropolitan Transit Authority s assets. Criteria: COSO, Control Activities Principle 10 The organization selects and develops control activities that contribute to the mitigation of risks to the achievement of objectives to acceptable levels. Recommendations for management of the Metropolitan Transit Authority to: Maintain an independent listing of Metropolitan Transit Authority assets with advertising. Periodically reconcile the internal listing to the monthly spreadsheet submitted by the advertising contractor. Observation C Fare Evasion Controls are not in place to protect against fare evasion, which is defined as passengers riding on Metropolitan Transit Authority buses without a valid ticket. Ridership and revenue data is captured by the farebox when a rider inserts cash or uses a ticket or pass. If a passenger somehow bypasses the farebox, it would not come to the attention of Metropolitan Transit Authority management. Management is currently working towards the use of automatic passenger counters on buses, but the implementation has yet to take place. Once in place, the ridership totals from the automatic passenger counters can be compared to the ridership totals from the fareboxes as a detective control against fare evasion. Criteria: COSO, Control Activities Principle 10 The organization selects and develops control activities that contribute to the mitigation of risks to the achievement of objectives to acceptable levels. Recommendation for management of the Metropolitan Transit Authority to: Continue working towards the implementation of automatic passenger counters. Periodically reconcile automatic passenger counts to farebox ridership totals. Audit of the Metropolitan Transit Authority Revenue Collection Process 4 15

17 GOVERNMENT AUDITING STANDARDS COMPLIANCE We conducted this performance audit in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our observations and conclusions based on our audit objectives. METHODOLOGY To accomplish our audit objectives, we performed the following steps: Interviewed key personnel within the Metropolitan Transit Authority. Reviewed and analyzed documentation for compliance with the Tennessee Code Annotated, Metropolitan Nashville Code of Laws, and other applicable laws, regulations, and policies. Evaluated internal controls currently in place. Performed high-level analytics on fare box cash receipts and ridership data. Reviewed sample selections to determine the effectiveness of internal controls. Considered risk of fraud, waste, and abuse. AUDIT TEAM Seth Hatfield, CPA, CIA, CFE, In-Charge Auditor Bill Walker, CPA, CIA, Quality Assurance Mark Swann, CPA, CISA, CIA, ACDA, CMFO, Metropolitan Auditor Audit of the Metropolitan Transit Authority Revenue Collection Process 5 16

18 APPENDIX A MANAGEMENT RESPONSE AND CORRECTIVE ACTION PLAN Audit of the Metropolitan Transit Authority Revenue Collection Process 6 17

19 APPENDIX A MANAGEMENT RESPONSE AND CORRECTIVE ACTION PLAN We believe that operational management is in a unique position to best understand their operations and may be able to identify more innovative and effective approaches, and we encourage them to do so when providing their response to our recommendations. Recommendation Concurrence and Corrective Action Plan Recommendation for management of the Metropolitan Transit Authority to: A.1 - Ensure evidence exists that customer service representatives agree on the amounts of cash collections transferred between employees. A.2 - Perform a smart safe implementation costbenefit analysis for the deposit of daily collections in the Customer Care Department. A.3 - Establish a retention schedule and maintain the Deposit Pick-Up Log Sheet for the specified period. B.1 - Maintain an independent listing of Metropolitan Transit Authority with advertising. Periodically reconcile the internal listing to the monthly report submitted by the advertising contractor. Accept. Owner Zeda Riggs We accept this recommendation and will perform a cost benefit analysis to determine the best solution for documenting cash transferring between employees, specifically supervisors and customer care representatives. Depending on the cost benefit, this be addressed by adding an additional supervisor to help cover all Customer Care shifts seven days a week or install a smart safe that is being addressed in Recommendation A.2 below. Accept. Owner Zeda Riggs We accept this recommendation and will perform a cost benefit analysis for implementing a smart safe process. This could possibly be accomplished through an existing contract with our armored car service. We will have the analysis done by June 30, Accept. Owner Al Marashi We accept this recommendation. The Deposit Pick-up Log will be maintained in Customer Care at Music City Central on a rolling two-year basis and will be reviewed quarterly by MTA s Revenue Audit Analyst for completeness and accuracy. Accept. Owner Jason Minser We accept this recommendation. We are updating our transit stop report that tracks when advertising is added or removed from our buses, vans, shelters, or buildings. Once complete, we will reconcile this report on a monthly basis to the monthly revenue report submitted by our advertising contractor. Proposed Completion Date 6/30/18 6/30/18 02/28/18 04/30/18 Audit of the Metropolitan Transit Authority Revenue Collection Process 7 18

20 APPENDIX A MANAGEMENT RESPONSE AND CORRECTIVE ACTION PLAN Recommendation C.1 - Continue working towards the implementation of Automatic Passenger Counters. Periodically reconcile automatic passenger counts to farebox ridership totals. Concurrence and Corrective Action Plan Reject. Owner Al Marashi While we accept, in principle, the concept of implementing processes to identify possible fare evasion, we do not believe automatic passenger counters (APC) are accurate enough to identify possible fare evasion. It would also be difficult to reconcile to fare box data. APCs are primarily used for ridership counts reported to the Federal Transit Administration through the National Transit Database. They are also useful in designing new routes or making changes to existing routes by analyzing where riders get on and off. While MTA does have some fare evasion controls in place, we continue to consider some other ideas. Current processes include that the operator inspects the fare of each passenger boarding the vehicle and then follows designated operating procedures if a passenger fails to pay the appropriate fare (including escalation to road supervision and Metro Police as required). In addition to a visual display (OCU) that indicates to the operator whether a valid fare has been paid, there is an audible sound to provide a secondary confirmation or warning to the operator that a valid fare was or was not paid. MTA is also currently testing, through its sister agency, the Regional Transportation Authority of Middle Tennessee (RTA), the use of a third party vendor to have secret riders observe all processes on random RTA bus routes to insure adherence to fare rules as well as several other areas of interest. MTA will be evaluating the effectiveness of this program and possibly implement the same project on MTA buses which would include observation of riders boarding the bus and any possible fare evasion. Proposed Completion Date 09/30/18 Audit of the Metropolitan Transit Authority Revenue Collection Process 8 19

21 NASHVILLE METROPOLITAN TRANSIT AUTHORITY OF NASHVILLE AND DAVIDSON COUNTY, TENNESSEE COMMITTEE ACTION ITEM Item Number: OF-A Meeting Date: 03/22/18 Item Title: FIFTH THIRD REVOLVING LINE OF CREDIT RENEWAL BACKGROUND The Nashville Metropolitan Transit Authority (Nashville MTA) will once again need temporary operating fund assistance due to delays in receiving our FY2018 Section 5307 formula capital grant funding as well as our Congestion Mitigation Air Quality (CMAQ) operating grant funding. The Nashville MTA converts a portion of the capital grant funding appropriation from capital to operating to pay preventive maintenance and paratransit operating costs. This is similar to what has happened in previous years. Last year, the Nashville MTA was authorized to borrow up to $11.2 million through Fifth Third Bank. The Fifth Third credit facility expires April 1, The portion of our FY2018 Federal 5307 grant appropriation budgeted to be used for Nashville MTA operations is approximately $12.3 million plus a portion of our CMAQ operating funding of $700,000. Based upon these amounts, the Nashville MTA s cash flow requirements anticipate needing to borrow up to $13 million starting around April 1, 2018 through June 2018 or beyond, depending on the timing of the federal funding. The increase from the $11.2 million the Nashville MTA borrowed last year is due to the Nashville MTA s increased budget compared to the prior year, resulting in additional funds being needed to cash flow the current operations. The borrowings would come in increments through June as the need dictates. The loan will be repaid incrementally as the federal capital and operating funds become available, and historically, the loan has been completely repaid by December of the same year. One new caveat that was added last year was that the Nashville MTA must first get Metro Council approval before entering into a loan arrangement due to the Nashville MTA being a component unit of Metro Government. This was the result of an opinion that came out of the State Comptroller s Office that went into effect for FY2017. The current resolution that Metro Council passed for the FY2018 budget authorizes the Nashville MTA to obtain short-term financing in an amount not to exceed $12.4 million. We have requested that Metro Finance increase the Nashville MTA s borrowing limit to $14 million, and they have agreed to include that in the new FY2019 budget ordinance resolution that will be considered by Metro Council before June 30, This will allow the Nashville MTA to have the ability to raise the amount borrowed under the line of credit with the approval of the Nashville MTA Board once the new Metro Council budget ordinance is passed. 20

22 STAFF RECOMMENDATION Based on this explanation, we request the Operations & Finance Committee recommend the Board renew and increase the existing credit facility through Fifth Third Bank to allow the Nashville MTA to borrow up to $12.4 million. The term of the facility will be for one year with an interest rate of LIBOR plus 1.75% and a non-use fee of 20 basis points to be paid quarterly. The intent is to borrow up to $12.4 million until the new Metro Council resolution has passed in June 2018 and then increase the line of credit up to an amount not to exceed $13 million if necessary. The loan is to be received as needed and to be repaid in full once federal funding is available. This will allow the Nashville MTA to continue operating and allow time for the grant monies to be received. Approved: Chief Financial Officer March 16, 2018 Date 21

23 New Initiatives & Community Engagement Committee Meeting Agenda Nashville MTA Committee Meetings Music City Central Meeting Room 400 Charlotte Ave., Nashville, TN Thursday, March 22, 2018 Committees begin meeting at 1:30 p.m. The NICE Committee will immediately follow the Operations & Finance Committee. NICE Committee Janet Miller, Chair Glenn Farner, Member 1. Call to Order 2. Action Items a. Murfreesboro Pike Transit Signal Priority Software Integration Julie Navarrete, CDO 3. Other Business 4. Adjourn NICE-A

24 NASHVILLE METROPOLITAN TRANSIT AUTHORITY OF NASHVILLE AND DAVIDSON COUNTY, TENNESSEE COMMITTEE ACTION ITEM Item Number: NICE-A Meeting Date: 03/22/18 Item Title: MURFREESBORO PIKE TRANSIT SIGNAL PRIORITY SOFTWARE INTEGRATION BACKGROUND The Nashville Metropolitan Transit Authority (Nashville MTA) was awarded a $10 million Transportation Investment Generating Economic Recovery (TIGER) V Discretionary Grant from the United States Department of Transportation (USDOT) administered through the Federal Transit Administration (FTA) for the implementation of the Transit Signal Priority (TSP) project on Murfreesboro Pike in Davidson County. The TIGER V grant program enables the USDOT to invest in critical national objectives for transportation infrastructure. The program has five long-term outcomes: safety, economic competitiveness, state of good repair, livability, and environmental sustainability. This project is being advanced in partnership with the Tennessee Department of Transportation (TDOT), Metro Public Works (PW), Metro Planning, and Metro ITS. The Nashville MTA has secured and awarded contracts for the engineering design and preconstruction service to Kimley-Horn and Associates, construction to Stansell Electric, and construction engineering and inspection services to WSP USA. A contract has also been awarded to Trapeze for upgrades and support for the TSP project. Gresham Smith & Partners (GS&P) was awarded a task order for program management under their architectural and engineering services contract with the Nashville MTA. Project completion date is December 31, CURRENT STATUS On January 24, 2018, the Nashville MTA released a Request for Proposals (RFP) for the implementation of an integrated TSP system that includes software design, development, customization, integration, implementation, technical services, maintenance, and warranty support for a fully functional interconnected TSP utilizing the existing central traffic network management system, vehicle location, and wireless communication technologies infrastructure. Due to the specialized technical nature of this RFP, the Nashville MTA convened a comprehensive technical evaluation team including three staff members from the Nashville MTA, three staff members from PW, and four members from the project consultant teams including members from WSP, Kimley-Horn, and GS&P. On February 20, 2018, the Nashville MTA received proposals as follows: 1. Econolite Systems, Inc. $694, base cost 2. Global Traffic Technologies, LLC $688, base cost 1

25 On February 26, 2018, the evaluation team reviewed the proposals. On March 5, 2018, both teams were invited to interviews with the evaluation team to present clarifying information and to answer technical questions on their proposals, qualifications, and experience. Through the evaluation process, the team assessed that while the base costs for Econolite were slightly higher than Global Traffic Technologies, additional costs for annual maintenance, vehicle software and maintenance, and additional intersection software and maintenance increased the costs of the Global Traffic Technologies proposal significantly above Econolite. The evaluation team also scored the Econolite System proposal higher based on relevant experience with deployment of similar centralized systems including Charlotte and Miami, better and proven ability to integrate with and bridge between existing systems, better reporting capabilities included in the cost that allow for performance metrics, and no additional requirements or costs for additional hardware or maintenance. STAFF RECOMMENDATION We request the New Initiatives and Community Engagement Committee recommend the Board provide the Chief Executive Officer the authority to enter into a contract with Econolite Systems, Inc. as follows: A base contract for the Murfreesboro TSP project in the amount of $694,656 to include a project contingency of up to 10% for a not-to-exceed value of $764,122 including a 10-year term for warranty and maintenance; and, A five-year task order based contract with an option for an additional five-year extension to support expansion of the TSP system throughout Davidson County and not to exceed $1.5 million for the first five-year term and another $1.5 million for the five-year optional term for a total cumulative not to exceed $3 million over 10 years. Funding Sources for the base contract include the TIGER V Grant, Congestion, Mitigation and Air Quality (CMAQ) funding, and local matching funds. Funding sources for expanded intersection needs would need to be identified as intersection projects are designed. Approved: Chief Development Officer 2 March 16, 2018 Date