UTA stands for Utah Transit Authority. UTA operates and manages all of Utah's mass transit programs and projects. UTA has been audited by Utah State Auditor General and the report has been given to our legislators for 2008. 2012 and 2014. These reports exceeds 200 pages broken down in multiple areas. All three of these reports are extremely critical of the operation and management of UTA. UTA has over bonded and 86% of their total cost are subsidized. They have 12 existing bonds with a current debt of over $2 billion. There are 5 chapters to the 2014 audit report that I will break down so that there is a thorough explanation of each chapter in this 211 page report.
Summary of chapter 1 “Introduction” of the audit.
UTA’s revenues in 2013 was $312 million which 65.4% came from sales tax. Passenger revenues was only 16.7% and federal non capital assistance accounts for 15.8%. Utah County pays an addition sales tax for transit taxes of 0.5260% because transit services are provided in our county. UTA offers a range of transit services which includes buses (BRT), TRAX, Frontrunner and Vanpool/Paratransit which are specialty transit services.
Chapter 2- Better Control and Oversight Summary of 2014 Audit
There are two UTA development projects that are stated as needing “much stronger controls and oversight”. The Draper FrontRunner project was prepaid $10 million to a developer to construct a garage with no designs or plans for immediate construction. Two-and-a-half years later UTA hired another contractor to build the same garage but the first developer who got prepaid no longer had the funds to refund UTA. That developer still owes UTA $1.7 million. This prepayment was against UTA policy and practice. There were “the general lack of documentation and changing explanations we experienced throughout the audit”. “The lack of sufficient control and oversight can put taxpayer funds at risk”.
The Jordan Valley TOD project had UTA employees question the procurement process used to select the developer for this project. The auditor expressed “some aspects of the procurement process are concerning” and “the development agreement UTA signed appeared to us to be overly favorable to the developer”.
The changing explanations and lack of documentations delayed or not given to the auditor was stated as follows: “It leaves us doubtful about whether we obtained full and complete information. In some, instances, we are uncertain what to believe.” The timing of these two project also raised concern due to the fact that happened at the same time and was awarded to the same developer. For more disturbing concerns on these projects please read the report pages 15-45.
Chapter 3-UTA Should Benchmark Total Compensation Summary of the 2014 Audit
The audit’s focus includes compensation paid to highly compensated employees of UTA. In the 2008 audit UTA was advised to revise compensation for use of for-profit data in benchmark reports. The 2014 audit reports that this recommendation was not implemented. Current audit found that UTA executive’s total compensation includes large bonuses and special benefits. UTA only benchmarks salaries but not total compensation. UTA has not reported all of the total compensation to the state’s transparency website. Executives of UTA gets a base salary with standard benefits, bonuses, an asset management plan, a maximum 457 plan and a car allowance. The two highest paid employees at UTA also gets a special life insurance benefits. The three highest paid executives’ annual compensations packages in 2013 were General Manager- $402,187, General Counsel- $384,472 and Chief Operating Officer- $309,503. These packages are additional to the standard benefits given which includes: Retirement pension, health insurance, employee-paid taxes, sell-back vacation options, imputed income, gift certificates, and dependent care bonuses. For details of the compensation and benefits read pages 48-68 of the audit report.
Chapter 4-Financial Constraints Affect Asset Upkeep, Bus Service and New Projects Summary of 2014 Audit
This is a follow up on issues raised in the 2012 audit of UTA. Stated in previous reports, “using local funds to accelerate the construction of new rail lines has put a long term strain on UTA’s finances”. Increases in debt services along with operation and maintenance cost have taken down the UTA reserves for ongoing needs. UTA’s current debt consumes nearly half of UTA’s sales tax revenues and by 2018 will consume 60% of sales tax revenue. The cost of maintaining constructed rails is concerning because the preliminary estimates not previously reported add up to $2.9 billion by 2033. In addition the adequacy of bus service and funding new projects are lacking. Light rail fares covers about 40% of its operating costs and commuter rail fares cover 13% of operating costs. In 2013 UTA had about $260 million in total reserves, which $140 million were unrestricted and could be used operations and maintenance shortfalls. It was estimated by the end of 2014 the unrestricted reserves would decrease to $91 million. If this trend continues it is estimated that these reserves will be depleted by 2021. “UTA has little margin of error if sales tax revenues do not meet expectations.” To find out more about UTA’s funding issues please read pages 71-90 of the audit report.
Chapter 5- Transit Is Highly Subsidized; Better Data Can Aid UTA Board’s Customer Focus Summary of the 2014 Audit
A request to follow up on the 2012 audit of the UTA on issues relating to ridership, farebox policy and the costs, revenues and subsidy of each mode of transit. Improvement needs to be done on passage data because “Electronic Fare Collection data is inadequate, effectively tracking only 37 percent of ridership responsible for less than 32 percent of UTA fare revenue.” A consultant hired by UTA reported that pass programs were so “heavily discounted” making them inequitable. In the 2014 audit it is reported that “we found that inconsistency in subsidy levels among passenger types and modes remains.” Audit recommendations on rates among fare types, the board has not yet established any such policy. Reported subsidy on total costs for busing is 85%, light rail is 83%, commuter rail is 95% and combined is 86%.The data system (EFC) cost $19 million and is reported that “the system is still insufficient to analyze ridership. Also, inconsistencies and limitations in the data uncovered during our audit work prevent effective analysis.” To learn more about how fares and data is being handled, read pages 92-109 in the audit report.
The rest of the 211 pages are resources and reports to support the audits conclusions.
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