Financial Status Update and FMO Progress Report

Transcription

1 Finance & Administration Committee Information Item IV-A March 12, 2015 Financial Status Update and FMO Progress Report Page 32 of 58

2 Washington Metropolitan Area Transit Authority Board Action/Information Summary Action Information MEAD Number: Resolution: Yes No TITLE: Financial Status Update and FMO Progress Report PRESENTATION SUMMARY: Update the Committee on (a) the status of WMATA's Corrective Action Plan (CAP) responses to the Federal Transit Administration's (FTA) Financial Management Oversight (FMO) report and (b) WMATA's overall financial status. PURPOSE: Staff will provide a progress report on the status of all FMO CAP items, fulfillment of the FMO report's recommendations, and identification of next steps. Staff will also provide a broader update on WMATA's financial status, including cashflow and credit availability, grant reimbursements and applications, and the FY2014 external audit. DESCRIPTION: Key Highlights: WMATA committed to 65 CAP items in response to FTA s FMO findings and advisory comments. To date, documentation has been submitted for 62 of the 65 CAPs. Two Material Weakness CAP submissions, originally due September 8, 2014, have been extended to June 30, 2015, and the final Advisory Comment CAP has a committed due date of June 30, Overall, WMATA's financial picture has substantially improved since the FMO report was issued last year. Financial institutions have demonstrated confidence in WMATA's financial capacity; WMATA has a favorable cash position and is performing according to budget; federal grant reimbursements have increased; and all federal grant applications through Federal Fiscal Year 2014 have either been awarded or are in process and expected to be awarded shortly. Background and History: The FMO report of June 10, 2014, identified nine separate findings, including three material weaknesses and six significant deficiencies. An additional five advisory comments were also identified. A total of 45 recommendations from FTA for addressing the findings and comments were included in the FMO report. Discussion: Page 33 of 58

3 The FMO Dashboard contains the status as of March 4, 2015 of the 65 CAP items by finding level, the status of FMO-related training in key areas, a chart illustrating the quality and acceptance level of recent drawdown packages, and a summary of the number of FTA recommendations fulfilled based upon CAP submissions. Overall, WMATA's financial picture has substantially improved since the FMO report was issued last year: The existing $75 million credit line with Wells Fargo was renewed on February 26. WMATA has credit lines of $302.5 million with three banks to support cash flow requirements. WMATA has substantial cash on hand and is continuing to make timely payments to vendors and contractors. WMATA s credit ratings are also steady at Aa3 with Moody s and AA- with S&P, reflecting market confidence in WMATA s long-term financial stability and capacity to repay debt. WMATA has drawn down $72 million in FTA grant reimbursements since January 1 and $142 million since the imposition of the manual draw requirement as part of the FMO report. WMATA is now up-to-date on all federal formula and PRIIA grant applications. One FTA formula grant application with a federal value of $273.6 million was awarded by FTA on February 13. WMATA has now received a total of three grant awards since the beginning of January with a total federal value of $584.9 million. The FFY2014 PRllA grant application, with a federal value of $148.5 million, is currently with the Department of Labor (DOL) for review and certification. Staff anticipates that this pending grant application will be awarded during March The award of these additional grants will facilitate increased federal grant reimbursements over the coming months. WMATA s external financial audit for FY14 has been delayed as staff works with the new auditors but is on track for completion in April. All creditors have been notified and none have raised an objection. Finally, WMATA is favorable to budget on operating expenses and expects to cover the FY2014 deficit ($23 million) without requiring additional jurisdictional support. In addition, at the request of Congress, the Government Accountability Office is commencing a review of WMATA s response to the Financial Management Oversight report and NTSB recommendations, which WMATA looks forward to presenting as soon as possible. FUNDING IMPACT: No funding impact; information item only Project Manager: Thomas J. Webster Project OMBS/CFO Department/Office: TIMELINE: Previous Actions July 2014 through February Monthly presentations to FA Committee on FMO status of FTA submissions and CAP items. Page 34 of 58

4 Anticipated actions after presentation March 2015 and forward - complete remaining three CAP items and long-term compliance monitoring. RECOMMENDATION: No recommendation; information item only. Page 35 of 58

5 Washington Metropolitan Area Transit Authority Financial Status Update and FMO Progress Report Finance & Administration Committee March 12, 2015

6 Purpose Update on WMATA financial status Monthly Board progress report on FMO Corrective Action Plans (CAPs), FTA feedback and follow-ups

7 Financial Update $75 million credit line with Wells Fargo renewed on February 26 WMATA has credit lines of $302.5 million with three banks to support cash flow requirements Sufficient cash on hand Credit ratings steady at Aa3 with Moody s and AA- with S&P

8 Financial Update (cont.) $72 million in FTA grant reimbursements since January 1; $142 million since start of manual draw requirement Current on all federal formula and PRIIA grant applications through FFY14 FY2014 external financial audit on track for April completion Operating expenses favorable to budget Projecting to cover FY2014 deficit ($23 million) without additional jurisdictional support

9 FMO Dashboard as of 02/28/2015

10 FMO Dashboard CAPs Status by Finding

11 FMO Dashboard Reimbursement Request Success Rates

12 FMO Dashboard Compliance Training Asset Management Grants Management Procurement No. Trained Staff Training Estimate

13 FMO Dashboard Completion of FMO Recommendations

14 FMO Summary Timeline Final FMO Report received from FTA 30-, 60- & 90-day CAP follow-ups received from FTA Extension dates submitted to FTA for two 90-Day CAP Items 30-, 60- & 90-day CAP follow-ups received from FTA Additional 90-day CAP follow-ups received from FTA June 10, 2014 Oct. 1 Oct. 22 Oct. 31 Dec Dec. 22 Feb. 25 June 30 Sept CAP items submitted to FTA Oct & 60- day CAP follow-ups submitted to FTA Nov day CAP follow-ups submitted to FTA Dec. 23 Jan day & 90-day CAP follow-ups submitted to FTA

15 Update FTA follow-up response received February 25: WMATA s FTA Funded Asset response and Grants Close-Out Policy revision deemed adequate Four follow-up items related to FMS Access Controls due March 20 WMATA s Office of Internal Compliance has FMO CAP reviews scheduled during FY2015 for: Budget Controls Cash & Grants Management Procurement & Job Order Contracts Federal Financial Reporting FTA Funded Assets

16 Next Steps Achieve progress milestones; submit FMO responses due March 20; conduct monthly FTA Region III reviews WMATA s Office of Internal Compliance will continue follow-up reviews of FMO CAPs as part of overall compliance efforts