2023-101 Santa Clara Valley Transportation Authority

Audit Recommendations Disclosure

When an audit is completed and a report is issued, auditees must provide the State Auditor with information regarding their progress in implementing recommendations from our reports at three intervals from the release of the report: 60 days, six months, and one year. Additionally, Senate Bill 1452 (Chapter 452, Statutes of 2006), requires auditees who have not implemented recommendations after one year, to report to us and to the Legislature why they have not implemented them or to state when they intend to implement them. Below, is a listing of each recommendation the State Auditor made in the report referenced and a link to the most recent response from the auditee addressing their progress in implementing the recommendation and the State Auditor’s assessment of auditee’s response based on our review of the supporting documentation.

Recommendation 2

To make VTA’s term lengths more consistent with those of its peer transit agency boards and to help increase the overall experience and stability of board membership, the Legislature should amend state law to increase the length of VTA directors’ terms to four years.

Recommendation 4

To help ensure that it develops reliable cost estimates for its capital projects, VTA should, by December 2024, develop procedures that document the methodology for developing its capital project cost estimates, including costs other than those directly related to the design and construction of the project.

Recommendation 5

To help ensure that it develops reliable cost estimates for its capital projects, VTA should, by December 2024, develop procedures that estimate the anticipated operation and maintenance costs for capital projects in development.

Recommendation 6

To help ensure that the board can monitor project costs and schedules, VTA should develop procedures by December 2024 to monitor project costs and schedules against preconstruction estimates and present this information as part of its semiannual report to both the Capital Program Committee and the board. This report should provide status updates on the agency’s existing capital projects and identify deviations from projects’ preconstruction estimates.

Recommendation 7

To ensure that VTA receives stakeholder input on the Strategic Capital Investment Plan (SCIP), the agency should ensure that it presents all subsequent updates to the SCIP to the appropriate advisory committees, solicits their input, and presents that input to the board.

Recommendation 8

To ensure that it more effectively safeguards against a breach of fiduciary duty, VTA should complete the following by December 2024:

• Establish a policy requiring relevant staff, including the secretary’s office, to report to the FPPC those directors who do not submit their Form 700s in a timely manner.
• Establish a process for verifying whether directors have completed their biennial ethics training and following up to remind those who have not done so to complete the training.

Recommendation 9

To help ensure financial viability, VTA should determine by June 2025 the extent to which it can rely on revenue sources that are less uncertain than sales tax revenue. In reaching this determination, VTA should consider taking action to increase its farebox recovery ratio by, for example, raising fares or cutting expenses. VTA should then pursue any additional revenue sources it identifies to the extent possible.

Recommendation 10

To improve VTA’s forecasts of future financial scenarios, VTA should begin forecasting multiple expense scenarios for its transit fund by December 2024 and use those scenarios to create a projection of expenses to present to the board. Further, it should incorporate into these projections any anticipated increases in operational costs because of capital projects.

Recommendation 11

To ensure that VTA is consistent in its budget monitoring and oversight, VTA should adopt documented procedures by December 2024 that include, at a minimum, the following:

• A process that VTA will use to examine variances between budgeted and actual amounts of revenues and expenses.
• The use of quarterly variance reports by both the board and VTA staff, and expectations for appropriate actions to be taken when significant deviations are identified.
• Assignments that show which staff will be responsible for performing and reviewing variance analyses, and ensure continuity of these reviews when there is turnover in key management positions.

Recommendation 12

To ensure that it is informed about VTA’s performance against key financial indicators, the board should require VTA staff to regularly report on specified financial metrics—including its farebox recovery ratio, trips per revenue hour, and operating cost per revenue hour—beginning in December 2024 or sooner.

Recommendation 13

To ensure that VTA has a current strategic plan that incorporates best practices, VTA should create a comprehensive strategic plan by December 2025 that includes goals, measurable objectives, strategies, and performance measures to track progress. It should also adopt procedures to ensure monitoring of progress on the strategic plan and regular reporting to the board.

Recommendation 14

To help ensure that the CEO is guiding VTA to achieve its goals, the board should formally adopt by June 2025 the new evaluation process for its CEO and amend VTA’s Administrative Code to document the process. The evaluation process should include performance expectations for its CEO based on the agency’s objectives, including the goals in VTA’s most current strategic plan. All subsequent updates to the evaluation process and its goals and metrics should be formally approved by the board.