Finance & Administration Committee Information Item IV-A ...€¦ · Finance & Administration...
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Finance & Administration Committee
Information Item IV-A
March 12, 2015
Financial Status Update and
FMO Progress Report
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Washington Metropolitan Area Transit Authority
Board Action/Information Summary
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, grantreimbursements and applications, and the FY2014 external audit.
DESCRIPTION:
Key Highlights:
WMATA committed to 65 CAP items in response to FTA’s FMO findings andadvisory comments. To date, documentation has been submitted for 62 of the 65CAPs.Two Material Weakness CAP submissions, originally due September 8, 2014, havebeen extended to June 30, 2015, and the final Advisory Comment CAP has acommitted due date of June 30, 2015.Overall, WMATA's financial picture has substantially improved since the FMO report was issued last year. Financial institutions have demonstrated confidence inWMATA's financial capacity; WMATA has a favorable cash position and isperforming 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 threematerial weaknesses and six significant deficiencies. An additional five advisorycomments were also identified. A total of 45 recommendations from FTA for addressingthe findings and comments were included in the FMO report.
Discussion:
Action Information MEAD Number:201369
Resolution:Yes No
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The FMO Dashboard contains the status as of March 4, 2015 of the 65 CAP items byfinding level, the status of FMO-related training in key areas, a chart illustrating thequality and acceptance level of recent drawdown packages, and a summary of thenumber of FTA recommendations fulfilled based upon CAP submissions.
Overall, WMATA's financial picture has substantially improved since the FMO report wasissued 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. Staffanticipates that this pending grant application will be awarded during March 2015. 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 jurisdictionalsupport.
In addition, at the request of Congress, the Government Accountability Office iscommencing a review of WMATA’s response to the Financial Management Oversightreport and NTSB recommendations, which WMATA looks forward to presenting as soonas possible.
FUNDING IMPACT:
TIMELINE:
No funding impact; information item onlyProject Manager: Thomas J. Webster
ProjectDepartment/Office: OMBS/CFO
Previous Actions July 2014 through February 2015 - Monthly presentations to FA Committee on FMO status of FTA submissions and CAP items.
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RECOMMENDATION:
No recommendation; information item only.
Anticipated actions afterpresentation
March 2015 and forward - complete remaining three CAP items and long-term compliance monitoring.
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Financial Status Update andFMO Progress Report
Finance & Administration CommitteeMarch 12, 2015
Washington Metropolitan Area Transit Authority
Purpose
• Update on WMATA financial status• Monthly Board progress report on FMO
Corrective Action Plans (CAPs), FTA feedback and follow-ups
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
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
FMO Dashboard – Compliance Training
475
300
200
448
267
171
0 100 200 300 400 500
Procurement
Grants Management
Asset Management
No. Trained Staff Training Estimate
FMO Summary Timeline
Final FMO Report
received from FTA
June 10, 2014
June 30 –Sept. 30
62 CAP items
submitted to FTA
30-, 60- & 90-day CAP follow-ups received from FTA
Oct. 1 –Oct. 22
Extension dates
submitted to FTA for
two 90-Day CAP Items
Oct. 31
Nov. 5
90-day CAP follow-ups submitted
to FTA
30-, 60- & 90-day CAP follow-ups received from FTA
Dec. 10 -Dec. 22
Dec. 23 –Jan. 30
30-day & 90-day
CAP follow-ups submitted
to FTA
Oct. 15
30- & 60-day CAP
follow-ups submitted
to FTA
Additional 90-day CAP follow-ups received from FTA
Feb. 25
• 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
Update