agenda - friday, may 15, 2020 · 2020-05-12 · finance, audit and administration committee agenda...

~ NOTICE OF MEETING ~

CAPITAL METROPOLITAN TRANSPORTATION AUTHORITY

BOARD OF DIRECTORS FINANCE, AUDIT AND ADMINISTRATION COMMITTEE MEETING

www.capmetrotx.iqm2.com

~ AGENDA ~

Friday, May 15, 2020 10:00 AM Video Conference Meeting

Board of Directors Printed 5/12/2020

I. Public Comment:

II. Action Items:

1. Approval of Minutes from the February 12. 2020 Finance, Audit and

Administration Committee Meeting.

2. Approval of a resolution authorizing the President & CEO, or his designee,

to approve an Interlocal Agreement with the City of Austin for the New

Mover Program in an amount not to exceed $22,464.

III. Presentations:

1. FY2019 Financial Audit

2. FY 2021 Proposed Budget Development Calendar

3. Internal Audit FY 2020 Audit Plan Status

4. Internal Audit IT Endpoint Management Report

5. Internal Audit OrbCAD Incident/Accident Review Process Report

IV. Items for Future Discussion:

V. Adjournment

ADA Compliance

Reasonable modifications and equal access to communications are provided upon

request. Please call (512) 369-6040 or email [email protected] if you need

Finance, Audit and Administration Committee Agenda May 15, 2020

Board of Directors Printed 5/12/2020

more information.

Committee Members: Terry Mitchell, Chair; Wade Cooper, Pio Renteria and Troy Hill.

The Board of Directors may go into closed session under the Texas Open Meetings Act.

In accordance with Texas Government Code, Section 551.071, consultation with

attorney for any legal issues, under Section 551.072 for real property issues; under

Section 551.074 for personnel matters, or under Section 551.076, for deliberation

regarding the deployment or implementation of security personnel or devices; arising

regarding any item listed on this agenda.

Capital Metropolitan Transportation Authority MEETING DATE: 05/15/2020

Board of Directors (ID # 4587)

Approval of Minutes from the February 12. 2020 Finance, Audit and Administration Committee Meeting

Page 1

Approval of Minutes from the February 12. 2020 Finance, Audit and Administration Committee Meeting..

2.1

Packet Pg. 3


BOARD OF DIRECTORS

FINANCE, AUDIT AND ADMINISTRATION COMMITTEE

2910 East Fifth Street Austin, TX 78702

~ MINUTES ~

Wednesday, February 12, 2020 10:00 AM Capital Metro Rosa Parks Boardroom

Board of Directors Page 1 Printed 3/2/2020

Call to Order: 10:02 a.m.

I. Public Comment:

There was no public comment this month.

II. Action Items:

1. Approval of Minutes from the October 9th, 2019 and November 6th, 2019 Finance, Audit and Administration Committee meetings.

Motion to approve by Board member Cooper. Renteria second. Approved 3-0.

2. Approval of a resolution authorizing the President & CEO, or his designee, to execute an agreement with Intersection Media LLC to manage Capital Metro's transit advertising program for a (one) three-year base period with two renewable option periods of two (2) years each with a guaranteed payment to Capital Metro for the base period of $3,312,000.

Vice President of Marketing and Communications Brian Carter presented this item.

Intersection Media is the preferred vendor for this contract. They have a proven track record and clients throughout the country. It is expected that this will lead to greater exposure to larger and more national advertisers. There is a minimum guaranteed revenue amount for each of the three years of the contract and in later option years.

Board member Mitchell asked about the percentage of advertising space that was represented in the minimum revenue figures. Brian says that he believes it is based on space for paid advertising being about 70%.

Board member Cooper asked about the agency's policy limited advertising from certain industries -- alcohol and others. Chief Counsel Kerri Butcher explained that we currently have an operating policy which prohibits certain types of ads including political position advertising.

Board member Mitchell asked what the range of revenue at other agencies is. Brian explained that agencies have generally done better financially when they have a third-party helping them manage their program. President Clarke also commented that revenues at other agencies can be significantly higher when they are allowed to advertise at-stop and at facilities, something that is currently prohibited by City of Austin ordinances on outdoor signage. CFO Reinet

2.1.a

Packet Pg. 4

Att

ach

men

t: 2

0021

2 F

AA

Co

mm

itte

e M

inu

tes

(45

87 :

Ap

pro

val o

f M

inu

tes

fro

m t

he

Feb

ruar

y 12

. 202

0 F

inan

ce, A

ud

it a

nd

Ad

min

istr

atio

n

Finance, Audit and Administration Committee Agenda February 12, 2020


Marneweck said that a survey of other agencies in Texas was conducted two years ago and at that time Dallas DART had revenues of just over $4 million.

Motion to recommend for approval by Board member Cooper. Renteria second. Approved 3-0.

III. Presentations:

1. Customer Satisfaction Survey Presentation

Vice President of Marketing and Communications Brian Carter presented this item.

Brian reviewed the survey methodology and response rates. Nearly 1,500 surveys were conducted in September 2019. The next survey of this type will be conducted in July of this year.

In general customer satisfaction with Capital Metro remains high, with over 80% of customers expressing satisfaction with Capital Metro, and an overall Net Promoter Score of 45%. Customers rated frequency as the most important element of service, exceeding on-time performance in importance.

Brian also reviewed satisfaction for the last several years across service types. He also explained the rationale behind the Net Promoter Score (NPS), which is a new metric in the survey. In the two surveys that NPS has been included, Capital Metro has scored much higher than the transit industry average. He also reviewed key takeaways and actions the agency plans to take based on identified problem areas.

Board member Cooper asked about declining satisfaction numbers on MetroRapid service. Chief Customer Officer and COO Dottie Watkins commented that it may be due to a combination of overcrowding and problems with bus bunching caused largely by congestion. Texas Transportation Institute (TTI) is currently helping us to analyze operational data and will make recommendations on operational improvements.

2. FY2020 Financial Report -- December 2019

CFO Reinet Marneweck presented the report, which covered results through Q1 of FY2020.

Reinet reviewed each of the major categories of revenue and overall we are slightly below budget due to timing of some grant revenues. She also reviewed actual sales tax receipts and reported that sales tax growth continues to be strong. She also reviewed operating expense categories and we are currently tracking just below budget for the year. She reviewed budget Transfers, the agency's reserve and restricted funds, and budget variances by department. Finally she gave a summary of current capital projects spending.

3. Internal Audit Semi-Annual Implementation Status Report

2.1.a

Packet Pg. 5

Att

ach

men

t: 2

0021

2 F

AA

Co

mm

itte

e M

inu

tes

(45

87 :

Ap

pro

val o

f M

inu

tes

fro

m t

he

Feb

ruar

y 12

. 202

0 F

inan

ce, A

ud

it a

nd

Ad

min

istr

atio

n

Finance, Audit and Administration Committee Agenda February 12, 2020


Internal Auditor Sarah Daigle provided the report.

Internal Audit follows up and reports on all open audit recommendations twice a year, in May and November. This report covered the November 2019 timeframe. In November there were five audit reports that among them had 24 open recommendations. Of the 24 recommendations, twelve were found to have been fully implemented; with 12 outstanding. Sarah then provided an update on the current status of the 12 outstanding recommendations.

4. Internal Audit FY2020 Audit Plan Status

Vice President of Internal Audit Terry Follmer gave a progress report on this year's audit plan.

One item of note is the state-mandated quadrennial Independent Performance Audit. Capital Metro had hoped to enlist the Texas Transportation Institute for assistance with this work, but we have been notified that they may not be able to participate due to a non-compete agreement so it looks like a full procurement process will be necessary. Terry also reviewed other current and upcoming audits and anticipated assistance which will again be provided by interns from the University of Texas Professional Accounting Program.

IV. Items for Future Discussion:

V. Adjournment

Adjourn: 11:13 a.m.

ADA Compliance

Reasonable modifications and equal access to communications are provided upon request. Please call (512) 369-6040 or email [email protected] if you need more information.

Committee Members: Terry Mitchell, Chair; Wade Cooper, Pio Renteria and Troy Hill.

The Board of Directors may go into closed session under the Texas Open Meetings Act. In accordance with Texas Government Code, Section 551.071, consultation with attorney for any legal issues, under Section 551.072 for real property issues; under Section 551.074 for personnel matters, or under Section 551.076, for deliberation regarding the deployment or implementation of security personnel or devices; arising regarding any item listed on this agenda.

2.1.a

Packet Pg. 6

Att

ach

men

t: 2

0021

2 F

AA

Co

mm

itte

e M

inu

tes

(45

87 :

Ap

pro

val o

f M

inu

tes

fro

m t

he

Feb

ruar

y 12

. 202

0 F

inan

ce, A

ud

it a

nd

Ad

min

istr

atio

n



ILA with the City of Austin for the New Movers Program

Page 1

Approval of a resolution authorizing the President & CEO, or his designee, to approve an Interlocal Agreement with the City of Austin for the New Mover Program in an amount not to exceed $22,464. .

2.2

Packet Pg. 7


Board of Directors (ID # AI-2020-1216) New Movers ILA

Page 1

SUBJECT: Approval of a resolution authorizing the President & CEO, or his designee, to approve an Interlocal Agreement with the City of Austin for the New Mover Program in an amount not to exceed $22,464. FISCAL IMPACT Funding for this action is available in the FY2020 Operating Budget.

STRATEGIC PLAN: Strategic Goal Alignment: 1. High Quality Customer Experience 3. Sustainability 4. Valued Community Partner Strategic Objectives: 1.2 Ridership 1.3 Net Promoter Score /Customer Satisfaction 3.5 APTA Sustainability Program Index 4.1 Brand Reputation 4.4 Organizational Partner Satisfaction EXPLANATION OF STRATEGIC ALIGNMENT: This program supports the agency’s goal of encouraging alternate modes of transportation and ridership. BUSINESS CASE:

Capital Metro has partnered with the City of Austin to coordinate Smart Trips Austin since 2015. The program has been successful in reducing single-occupancy vehicle trips and increasing active commuting trips within targeted neighborhood areas. The overall program goal is to reduce regional vehicle miles travelled and rush hour traffic peak, to reduce costs associated with adding and maintaining roadway capacity. Through ongoing program evaluation, staff have found program participants are more likely to increase active commuting behaviors (walk, bike, micro-mobility, carpool, vanpool, and/or transit) when moving to a new home or workplace. Capital Metro and City of Austin staff propose applying this knowledge by targeting the delivery of Smart Trips programming and outreach to those who have registered a new mailing address (“New Movers”) in the past year, to see if it increases the number of participants reporting an increase in active commuting habits. COMMITTEE RECOMMENDATION: This agenda item was presented and is recommended for approval by Finance, Audit and Administration Committee on May 15, 2020.

2.2.a

Packet Pg. 8

Att

ach

men

t: R

eso

luti

on

-AI-

2020

-121

6 (

4588

: IL

A w

ith

th

e C

ity

of

Au

stin

fo

r th

e N

ew M

ove

rs P

rog

ram

)

EXECUTIVE SUMMARY: The New Movers program aims to reach people who have recently gotten a new home address in the Austin area and encourage them to try active modes of transportation. The City of Austin and Capital Metro are continuing to work on the program activities, but it is likely that a "New Mover" will receive walking, biking and transit maps, information, customized discounts for transit and micromobility providers, and invitations to active commuting activities (i.e., Smart Trips) and/or motivating interviewing appointments to help participants to develop a customized commuting plan. While Smart Trips focuses on geographic location, the New Mover program will focus on stages of change opportunities. Those who have recently moved to a new home, new city or recently started a new job or school year are the *most* likely to consider a new commuting option. This program will focus on those most ready to consider a new commuting option by targeting those who have registered a new mailing address in the past 90 days. The City of Austin received a grant from CAMPO of $255,000 to support the project with local matching funds from the City of Austin and Capital Metro in an amount of $22,464 each. The City of Austin administers the program and this agreement provides Capital Metro’s portion of the local matching funds..

DBE/SBE PARTICIPATION: Does not apply. PROCUREMENT: Does not apply. RESPONSIBLE DEPARTMENT: Community Engagement

2.2.a

Packet Pg. 9

Att

ach

men

t: R

eso

luti

on

-AI-

2020

-121

6 (

4588

: IL

A w

ith

th

e C

ity

of

Au

stin

fo

r th

e N

ew M

ove

rs P

rog

ram

)

RESOLUTION

OF THE


BOARD OF DIRECTORS

STATE OF TEXAS

COUNTY OF TRAVIS RESOLUTION (ID # AI-2020-1216)

WHEREAS, the Capital Metropolitan Transportation Authority Board of Directors and Capital Metro management endeavor to build strong community partnerships that further Capital Metro’s mission and vision; WHEREAS, the Capital Metropolitan Transportation Authority Board of Directors and Capital Metro management recognize the need to build ridership and increase market share of alternate transit use; WHEREAS, Capital Metro’s mission is to connect people, jobs and communities by providing high quality and sustainable transportation choices for communities in the Greater Austin area; WHEREAS, the City established Smart Trips Austin as an active transportation encouragement program that aims to improve health and manage congestion by increasing walking, biking and use of Capital Metro’s public transit system, to access workplaces, schools, recreation, shopping and medical facilities (“Smart Trips Austin Program”); WHEREAS, the City has undertaken New Movers as a new project under the Smart Trip Austin Program to assist recently relocated residents of Austin find sustainable transportation solutions (the “Project”); WHEREAS, the Capital Area Metropolitan Planning Organization (CAMPO) provided a matching grant of $255,000 to support the Project, and the City and Capital Metro will each contribute $22,464 to support the Project; and WHEREAS, Capital Metro has budgeted $22,464 for delivery of the Project. NOW, THEREFORE, BE IT RESOLVED that the Capital Metro Board of Directors authorizes the President & CEO, or his designee, to approve an Interlocal Agreement with the City of Austin for the New Mover Program in an amount not to exceed $22,464.

2.2.a

Packet Pg. 10

Att

ach

men

t: R

eso

luti

on

-AI-

2020

-121

6 (

4588

: IL

A w

ith

th

e C

ity

of

Au

stin

fo

r th

e N

ew M

ove

rs P

rog

ram

)

________________________ Date: ____________________ Secretary of the Board Eric Stratton

2.2.a

Packet Pg. 11

Att

ach

men

t: R

eso

luti

on

-AI-

2020

-121

6 (

4588

: IL

A w

ith

th

e C

ity

of

Au

stin

fo

r th

e N

ew M

ove

rs P

rog

ram

)

Smart Trips ILA Update

May 2020

1

2.2.b

Packet Pg. 12

Att

ach

men

t: 2

0200

501_

SM

AR

T-T

RIP

S_I

LA

-Up

dat

e (

4588

: IL

A w

ith

th

e C

ity

of

Au

stin

fo

r th

e N

ew M

ove

rs

Program Goals

• Manage Congestion by encouraging residents to explore the city in new ways

2

2.2.b

Packet Pg. 13

Att

ach

men

t: 2

0200

501_

SM

AR

T-T

RIP

S_I

LA

-Up

dat

e (

4588

: IL

A w

ith

th

e C

ity

of

Au

stin

fo

r th

e N

ew M

ove

rs

Program Components

3

Pre & Post Program Surveys + Transportation Toolkits Local Ambassadors Customized Events

2.2.b

Packet Pg. 14

Att

ach

men

t: 2

0200

501_

SM

AR

T-T

RIP

S_I

LA

-Up

dat

e (

4588

: IL

A w

ith

th

e C

ity

of

Au

stin

fo

r th

e N

ew M

ove

rs

Outcomes

2.2.b

Packet Pg. 15

Att

ach

men

t: 2

0200

501_

SM

AR

T-T

RIP

S_I

LA

-Up

dat

e (

4588

: IL

A w

ith

th

e C

ity

of

Au

stin

fo

r th

e N

ew M

ove

rs

2015 | North Austin

5

3.4 5

2.2.b

Packet Pg. 16

Att

ach

men

t: 2

0200

501_

SM

AR

T-T

RIP

S_I

LA

-Up

dat

e (

4588

: IL

A w

ith

th

e C

ity

of

Au

stin

fo

r th

e N

ew M

ove

rs

2016 | Central Austin

6

3.7 8.5

2.2.b

Packet Pg. 17

Att

ach

men

t: 2

0200

501_

SM

AR

T-T

RIP

S_I

LA

-Up

dat

e (

4588

: IL

A w

ith

th

e C

ity

of

Au

stin

fo

r th

e N

ew M

ove

rs

2017 | Central South

7

3.7 9

2.2.b

Packet Pg. 18

Att

ach

men

t: 2

0200

501_

SM

AR

T-T

RIP

S_I

LA

-Up

dat

e (

4588

: IL

A w

ith

th

e C

ity

of

Au

stin

fo

r th

e N

ew M

ove

rs

2018 | Central East

8

1 15

2.2.b

Packet Pg. 19

Att

ach

men

t: 2

0200

501_

SM

AR

T-T

RIP

S_I

LA

-Up

dat

e (

4588

: IL

A w

ith

th

e C

ity

of

Au

stin

fo

r th

e N

ew M

ove

rs

2019 | Eastside

9

9 12

2.2.b

Packet Pg. 20

Att

ach

men

t: 2

0200

501_

SM

AR

T-T

RIP

S_I

LA

-Up

dat

e (

4588

: IL

A w

ith

th

e C

ity

of

Au

stin

fo

r th

e N

ew M

ove

rs

Smart Trips ILA Update – New Movers 2021

2.2.b

Packet Pg. 21

Att

ach

men

t: 2

0200

501_

SM

AR

T-T

RIP

S_I

LA

-Up

dat

e (

4588

: IL

A w

ith

th

e C

ity

of

Au

stin

fo

r th

e N

ew M

ove

rs

Smart Trips ILA Update – New Movers 2021

• Capital Metro and City of Austin eachcontribute up to $150,000 annually

• In 2019, CAMPO provided a matching grant to double impact

• $255,000 (or 85%) of annual program costs

• Capital Metro and the City of Austin must provide $45,000 (or 15%) in one-time matching funds.

• ILA Amendment recognizes Cap Metro match of $22,500, bringing 2020-21 total contribution to $97,500

11

2.2.b

Packet Pg. 22

Att

ach

men

t: 2

0200

501_

SM

AR

T-T

RIP

S_I

LA

-Up

dat

e (

4588

: IL

A w

ith

th

e C

ity

of

Au

stin

fo

r th

e N

ew M

ove

rs

THANK YOU!

2.2.b

Packet Pg. 23

Att

ach

men

t: 2

0200

501_

SM

AR

T-T

RIP

S_I

LA

-Up

dat

e (

4588

: IL

A w

ith

th

e C

ity

of

Au

stin

fo

r th

e N

ew M

ove

rs

of 10

Interlocal Cooperation Agreement

between

Capital Metropolitan Transportation Authority

and

The City of Austin

(Smart Trips Austin – Newcomer Project)

This Interlocal Cooperation Agreement (the “Agreement”) is made by and between the City

of Austin (“City”), a Texas home-rule city and municipal corporation, and Capital Metropolitan

Transportation Authority (“Capital Metro”), a transportation authority and political

subdivision of the State of Texas organized under Chapter 451 of the Texas Transportation Code

(individually referred to as a “Party” and collectively referred to as the “Parties”), upon the

premises for consideration stated herein.

This Agreement is authorized by the Interlocal Cooperation Act, Chapter 791 of the Texas

Government Code. Each Party’s monetary obligations are for the performance of the government

functions or services and are payable from the current revenues appropriated and available for the

performance of those functions or services.

RECITALS:

WHEREAS, Capital Metro’s mission is to connect people, jobs and communities by providing

high quality and sustainable transportation choices for communities in the Greater Austin area;

WHEREAS, the City established Smart Trips Austin as an active transportation encouragement

program that aims to improve health and manage congestion by increasing walking, biking and

use of Capital Metro’s public transit system, to access workplaces, schools, recreation, shopping

and medical facilities (“Smart Trips Austin Program”);

WHEREAS, the City has undertaken a new project under the Smart Trip Austin Program to assist

recently relocated residents of Austin find sustainable transportation solutions (the “Project”);

WHEREAS, Capital Metro recognizes the value of the Project because it will improve health and

manage congestion by increasing walking, biking and use of Capital Metro’s public transit system,

to access workplaces, schools, recreation, shopping and medical facilities;

WHEREAS, Capital Metro would like to contribute $22,464.00 to be used by the City towards

the completion of the Project (the “Contribution”);

WHEREAS, the Project is a governmental function or service that each Party is authorized to

perform individually;

WHEREAS, the Austin City Council authorized negotiation and execution of the Agreement by

Ordinance No. 20191017-020 which is attached hereto as Attachment A; and

2.2.c

Packet Pg. 24

Att

ach

men

t: C

apm

etro

ILA

fo

r S

mar

t T

rip

s N

ewco

mer

SC

C E

dit

s 12

.12.

2019

_AW

12.1

9_C

BB

12.

20.1

9-b

c 01

.02.

2020

Cle

an V

ersi

on

(45

88 :

ILA

of 10

WHEREAS, Capital Metro’s Board of Directors authorized the finalization and execution of the

Agreement by resolution which is attached hereto as Attachment B.

NOW THEREFORE, in consideration of the mutual promises, covenants, obligations, and

benefits contained herein and for other good and valuable consideration, the receipt and sufficiency

of which are hereby acknowledged, the Parties agree as follows:

AGREEMENT:

1. Purpose. The purpose of the Agreement is to provide the terms, rights, and duties of the Parties

as they relate to the Contribution.

2. Effective Date. The Effective Date of this Agreement shall be the date of the last Party to sign

this Agreement.

3. Term. The term of this Agreement shall begin on the Effective Date and terminate at the end

of first quarter of Capital Metro’s fiscal year 2021. Capital Metro’s obligations under Section

4 of this agreement shall survive the termination of this Agreement.

4. Financial Obligations.

4.1. Capital Metro will provide funding for the Project in a total amount not to exceed

$22,464.00.

4.2. Capital Metro will draw the Contribution from non-federal revenue and remit the

Contribution to the City in one lump sum payment no later than the end of the first quarter

of Capital Metro’s fiscal year 2021.

4.3. In accordance with section 791.011(d) of the Act, Capital Metro will make payments

related to the Contribution from current available revenue.

5. Project Management. A single point of contact from the City (the “City SPOC”) and Capital

Metro (the “Capital Metro SPOC”) will establish the broad strategies and parameters of the

Project, including the selection of engagement tools, marketing materials and neighborhood

engagement events, and to assist with oversight of the Project on an ongoing basis.

Capital Metro SPOC contact information is:

Lonny Stern

Community Engagement Coordinator


2910 E. 5th St.

Austin, Texas 78702

(512) 389-7509

[email protected]

2.2.c

Packet Pg. 25

Att

ach

men

t: C

apm

etro

ILA

fo

r S

mar

t T

rip

s N

ewco

mer

SC

C E

dit

s 12

.12.

2019

_AW

12.1

9_C

BB

12.

20.1

9-b

c 01

.02.

2020

Cle

an V

ersi

on

(45

88 :

ILA

mailto:[email protected]

of 10

The City SPOC contact information is:

Cari Buetow

City of Austin, Business Process Consultant

Austin Transportation Department

901 S. MoPac Expressway, Building 5, Suite 300

Austin, Texas, 78746

(512) 974-6368

[email protected]

6. Liability. To the extent allowed by Texas law, each Party agrees that it is responsible for its

own proportionate share of any liability for its negligent acts or omissions for claims, suits and

causes of action, including claims for property damage , personal injury and death, arising out

of or connected to this Agreement and as determined by a court of competent jurisdiction,

provided that the execution of this Agreement will be not be deemed a negligent act.

7. Default. A Party shall be in default under this Agreement if it fails to fully, timely, and

faithfully perform any of its material obligations which are expressly stated in this Agreement.

In the event of default, the non-defaulting party may pursue all available legal and equitable

remedies, subject to the dispute procedure set forth in this Agreement.

8. Entire Agreement. This Agreement represents the entire agreement between the Parties

concerning the subject matter of this Agreement and supersedes all prior or contemporaneous

oral or written statements, agreements, and negotiations.

9. Amendments. The Austin City Manager and Capital Metro’s President/CEO or their designee

will have the authority to negotiate and execute amendments to this Agreement without further

action by the Austin City Council and Capital Metro Board of Directors to the extent necessary

to implement and further the clear intent of the respective governing bodies, but not in such a

way as would constitute a substantive modification of this Agreement’s terms and conditions

or otherwise violate Chapter 791 of the Texas Government Code. Any amendments that would

constitute a substantive modification to this Agreement must be approved by each Party’s

governing body.

10. Dispute Resolution.

10.1. If a disagreement between the Parties arises regarding the Project or any other

requirement or provision of this Agreement, it shall be referred as soon as possible to the

City SPOC and the Capital Metro SPOC for resolution.

10.2. Should any dispute arise between the Parties to this Agreement that cannot be

resolved by the City SPOC and the Capital Metro SPOC, the Parties agree to negotiate

prior to prosecuting a suit for damages. However, this section does not prohibit the filing

of a lawsuit to toll the running of a statute of limitations or to seek injunctive relief. Either

2.2.c

Packet Pg. 26

Att

ach

men

t: C

apm

etro

ILA

fo

r S

mar

t T

rip

s N

ewco

mer

SC

C E

dit

s 12

.12.

2019

_AW

12.1

9_C

BB

12.

20.1

9-b

c 01

.02.

2020

Cle

an V

ersi

on

(45

88 :

ILA


of 10

Party may make a written request for a meeting between representatives of each Party

within ten (10) days after receipt of the request or such later period as agreed by the Parties.

Each Party shall include, at a minimum, one (1) senior level individual with decision-

making authority regarding the dispute. The purpose of such a meeting and any

subsequent meeting with respect to such a dispute shall be to attempt in good faith to

negotiate a resolution of the dispute. If, within twenty (20) days after such meeting, the

Parties have not succeeded in negotiating a resolution of the dispute, the Parties will, upon

written notice of one Party to the other Party, given within ten (10) days following the

expiration of such twenty (20) day period (a “Request for Mediation”), proceed directly

to non-binding mediation as described below.

10.3. If the efforts to resolve such dispute through negotiation fail within the period set

forth in the foregoing section, or the City and Capital Metro each waive the negotiation

process, the Parties may select, within twenty (20) days after the date of the Request for

Mediation or mutual waiver of negotiation, as applicable, a mediator trained in mediation

skills to assist with resolution of the dispute. The Parties agree to act in good faith in the

selection of the mediator and to give consideration to qualified individuals nominated to

act as mediator. Nothing in this Agreement prevents the Parties from relying on the skills

of a person who is trained in the subject matter of the dispute or a contract interpretation

expert. If the Parties fail to agree on a mediator within twenty (20) days of initiation of

the mediation process, the mediator shall be selected by the Travis County Dispute

Resolution Center. The mediation shall take place in Austin, Texas. The Parties agree to

participate in mediation in good faith for up to thirty (30) days from the date of the first

mediation session. The Parties shall share the costs of the mediator equally. In the absence

of a separate written agreement of the Parties to the contrary, the results of this mediation

shall not be binding on either of the Parties.

11. Notices. Notices to either Party shall be in writing, and may be either hand-delivered, e-mailed,

or sent by certified or registered mail, postage paid, return receipt requested to the addresses

below. If sent to the Parties at the addresses designated herein, notice shall be deemed effective

upon receipt in the case of hand delivery, at the date and time of an e-mail sent to the other

party, and three days after deposit in the U.S. mail in case of mailing.

Capital Metro:

Lonny Stern

Coordinator Special Projects, Community Engagement


2910 E. 5th St.

Austin, Texas 78702

[email protected]

(512) 389-7509

2.2.c

Packet Pg. 27

Att

ach

men

t: C

apm

etro

ILA

fo

r S

mar

t T

rip

s N

ewco

mer

SC

C E

dit

s 12

.12.

2019

_AW

12.1

9_C

BB

12.

20.1

9-b

c 01

.02.

2020

Cle

an V

ersi

on

(45

88 :

ILA


of 10

With copies to:

Jackie Nirenberg

Manager, Community Engagement


2910 E. 5th St.

Austin, Texas 78702

[email protected]

(512) 369-6201

Kerri L. Butcher

Executive Vice President, Chief of Staff, Chief Counsel and External Affairs


2910 E. 5th St.

Austin, Texas 78702

[email protected]

(512) 369-6287

The City:

Cari Buetow

Business Process Consultant

Austin Transportation Department

901 S. MoPac Expressway, Building 5, Suite 300

Austin, Texas, 78746

[email protected]

(512) 974-6368

With copies to:

Spencer Cronk

City Manager

City of Austin

301 W. 2nd Street, 3rd Floor

Austin, Texas 78701

(512) 974-2435

Sean Creegan

Assistant City Attorney

City of Austin

301 W. 2nd Street, 4th Floor

Austin, Texas 78701

[email protected]

(512) 974-2268

2.2.c

Packet Pg. 28

Att

ach

men

t: C

apm

etro

ILA

fo

r S

mar

t T

rip

s N

ewco

mer

SC

C E

dit

s 12

.12.

2019

_AW

12.1

9_C

BB

12.

20.1

9-b

c 01

.02.

2020

Cle

an V

ersi

on

(45

88 :

ILA





of 10

12. General Provisions.

12.1. Good Faith. The Parties agree to work together at all times in good faith, meet regularly,

and keep each other informed as to activities of the other Parties, and maintain at all times

formal representatives to serve as points of contact for communications.

12.2. Alteration. This Agreement may not be altered, amended, or modified except with

written agreement from all of the Parties.

12.3. Cost for Preparation. Each Party will be responsible for all costs and expenses

associated with the preparation and adoption of this Agreement and future actions related

thereto.

12.4. Counterparts. This Agreement may be executed in multiple counterparts which, taken

together, will collectively constitute a single agreement.

12.5. Texas Public Information Act. It will be the responsibility of each Party to comply

with provisions of Chapter 552, Texas Government Code, (“Texas Public Information

Act”) and the Attorney General Opinions issued under that statute. Neither Party is

authorized to receive requests or take any other action under the Texas Public Information

Act on behalf of the other Party. Responses to requests for confidential information shall

be handled in accordance with the provisions of the Texas Public Information Act. The

provisions of this section survive the termination or expiration of this Agreement.

12.6. Venue and Applicable Law. This Agreement will be performed and enforced in Travis

County, Texas, and will be construed in accordance with the laws of the State of Texas

and the United States of America. Venue with respect to all disputes resides with the

county or district courts of Travis County, Texas. All rules, regulations, and other

requirements imposed by local, state, or federal law apply to the performance of the Parties

under this Agreement.

12.7. Force Majeure. In the event that the performance by the City or Capital Metro of any of

its obligations or undertakings hereunder shall be interrupted or delayed by any occurrence

not occasioned by its own conduct, whether such occurrence be an act of God, or the

common enemy, or the result of war, riot, civil corruption, sovereign conduct, or the act

of conduct of any person or persons not a party or privy hereto, then it shall be excused

from such performance for such period of time as is reasonably necessary after such

occurrence -to remedy the effects hereto.

12.8. Severability. If any section, subsection, sentence, clause, or phrase of this Agreement is

for any reason held to be unconstitutional, void, or invalid, the validity of the remaining

portions of this Agreement shall not be affected thereby. It is the intent of the parties

signing this Agreement that no portion of it, or provision or regulation contained in it shall

become inoperative or fail by reason of unconstitutionality or invalidity of any other

section, subsection, sentence, clause, provision, or regulation of this Agreement.

2.2.c

Packet Pg. 29

Att

ach

men

t: C

apm

etro

ILA

fo

r S

mar

t T

rip

s N

ewco

mer

SC

C E

dit

s 12

.12.

2019

_AW

12.1

9_C

BB

12.

20.1

9-b

c 01

.02.

2020

Cle

an V

ersi

on

(45

88 :

ILA

of 10

12.9. Relationship of the Parties. Nothing in this Agreement shall be construed to create a

joint venture or partnership between the Parties or an employee/employer or agency

relationship. Neither Party shall have any express or implied right or authority to assume

or create any obligations on behalf of or in the name of the other Party or to bind the other

Party to any contract, agreement, or undertaking with any third party.

[The remainder of this page was intentionally left blank. Signatures on the following page]

2.2.c

Packet Pg. 30

Att

ach

men

t: C

apm

etro

ILA

fo

r S

mar

t T

rip

s N

ewco

mer

SC

C E

dit

s 12

.12.

2019

_AW

12.1

9_C

BB

12.

20.1

9-b

c 01

.02.

2020

Cle

an V

ersi

on

(45

88 :

ILA

of 10

EXECUTED and effective on the date of the last signature.

CITY OF AUSTIN:

By: _____________________________

Date: ___________________________

Name: Gina Fiandaca

Title: Assistant City Manager

Approved to form:

By: _____________________________

Name: __________________________

Title: Assistant City Attorney

CAPITAL METROPOLITAN TRANSPORTATION

AUTHORITY

By: _______________________________

Date: _____________________________

Name: ____________________________

Title: _____________________________

2.2.c

Packet Pg. 31

Att

ach

men

t: C

apm

etro

ILA

fo

r S

mar

t T

rip

s N

ewco

mer

SC

C E

dit

s 12

.12.

2019

_AW

12.1

9_C

BB

12.

20.1

9-b

c 01

.02.

2020

Cle

an V

ersi

on

(45

88 :

ILA

of 10

Attachment A

City Council Action

2.2.c

Packet Pg. 32

Att

ach

men

t: C

apm

etro

ILA

fo

r S

mar

t T

rip

s N

ewco

mer

SC

C E

dit

s 12

.12.

2019

_AW

12.1

9_C

BB

12.

20.1

9-b

c 01

.02.

2020

Cle

an V

ersi

on

(45

88 :

ILA

of 10

Attachment B

Capital Metro Board Action

2.2.c

Packet Pg. 33

Att

ach

men

t: C

apm

etro

ILA

fo

r S

mar

t T

rip

s N

ewco

mer

SC

C E

dit

s 12

.12.

2019

_AW

12.1

9_C

BB

12.

20.1

9-b

c 01

.02.

2020

Cle

an V

ersi

on

(45

88 :

ILA



FY2019 Financial Audit

Page 1

TITLE: FY2019 Financial Audit

3.1

Packet Pg. 34

© 2020 RSM US LLP. All Rights Reserved. © 2020 RSM US LLP. All Rights Reserved.


Presentation to the Finance, Audit and Administration Committee

Audit for the Year Ended September 30, 2019

3.1.a

Packet Pg. 35

Att

ach

men

t: F

Y20

19 A

ud

it -

CM

TA

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

© 2020 RSM US LLP. All Rights Reserved.

Agenda

• Scope of Services

• Audit Overview

- Financial Statement Audit Results

- Federal and State Compliance Audit Results

• Required Auditor Communications

• Certificate of Achievement for Excellence in Financial Reporting

2

3.1.a

Packet Pg. 36

Att

ach

men

t: F

Y20

19 A

ud

it -

CM

TA

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


Scope of Services

• We were engaged by Capital Metro to:• Perform the audit of the financial statements of Capital Metro

prepared by management in accordance with accounting principles generally accepted in the United States of America, as applied to governments

• Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting standards

• Perform the audit of Federal and State Awards and report on internal controls over financial reporting, tests of compliance for major programs and the Texas Public Funds Investment Act

• Perform the required National Transit Database “NTD” agreed-upon procedures, as required by FTA’s 2019 NTD Policy Manual

• Perform the audit of the Financial Statements of the Defined Benefit and Defined Contribution Plans

3

3.1.a

Packet Pg. 37

Att

ach

men

t: F

Y20

19 A

ud

it -

CM

TA

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


Audit Overview

• Financial Statement Audit Scope• Financial statements are prepared by management• Our procedures include

• Examining evidence supporting amounts and disclosures on a test basis

• Assessing the internal control structure for purposes of auditing the financial statements, but not for providing an opinion on internal control

• Assessing the accounting principles, significant estimates made by management and disclosures in the financial statements

• Financial Statement Audit Results• Opinion on the financial statements: Unmodified• Opinions on each of the financial statements of the Defined

Benefit Plan and Defined Contribution Plan: Unmodified• No significant deficiencies in internal control were reported

4

3.1.a

Packet Pg. 38

Att

ach

men

t: F

Y20

19 A

ud

it -

CM

TA

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


Audit Overview—continued

• Federal and State Compliance Audit Results • Report on State Compliance Audit: Required in 2019

• Texas Mobility Fund

• Report on Federal Compliance Audit: Required in 2019

• Federal Transit Cluster

• Report on compliance for each major program: Unmodified—No Findings Reported

• Report on internal control over compliance with laws, regulations, contracts and grant agreements, and other matters for each major program and the Public Funds Investment Act—No Findings Reported

5

3.1.a

Packet Pg. 39

Att

ach

men

t: F

Y20

19 A

ud

it -

CM

TA

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


Required Communications

• Management’s Responsibilities• Preparing and fairly presenting the financial statements in

accordance with accounting principles generally accepted in the United States of America

• Establishing and maintaining effective internal controls • Adopting and following industry standard accounting

policies• Identifying and confirming that Capital Metro complies

with laws and regulations related to its activities

• Committee’s Responsibilities• Oversight of financial reporting process• Setting an appropriate tone for creating a culture of high

ethical standards surrounding financial reporting and compliance

6

3.1.a

Packet Pg. 40

Att

ach

men

t: F

Y20

19 A

ud

it -

CM

TA

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


Required Communications—continued

• Significant Accounting Policies

• Capital Metro follows the required GASB accounting standards

• There were no changes in accounting policies previously used or significant changes in required disclosures

• There were no accounting policies in controversial or emerging areas where there is a lack of authoritative guidance or consensus

7

3.1.a

Packet Pg. 41

Att

ach

men

t: F

Y20

19 A

ud

it -

CM

TA

(45

89 :

FY

2019

Fin

anci

al A

ud

it)



• Significant Accounting Estimates and Disclosures• Significant estimates

• Fair value of investments

• Fuel hedge valuation

• Estimated useful lives of capital assets, which impacts depreciation expense

• Pension plan expense and related liabilities

• Other post-employment benefits expense and related liabilities

• Significant financial statement disclosures• Investments

• Fuel hedging

• Pension expense and net pension liability

• Other post-employment benefits expense and related liabilities

8

3.1.a

Packet Pg. 42

Att

ach

men

t: F

Y20

19 A

ud

it -

CM

TA

(45

89 :

FY

2019

Fin

anci

al A

ud

it)



• Significant difficulties encountered during theaudit—none

• Uncorrected and corrected misstatements• Uncorrected misstatements—none• Corrected misstatements—none

• Disagreements with management—none

• Management’s consultations with otheraccountants—none

• Other significant findings or issues—none

• Received standard representation letter from management

9

3.1.a

Packet Pg. 43

Att

ach

men

t: F

Y20

19 A

ud

it -

CM

TA

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


Certificate of Achievement for Excellence in Financial Reporting

• The Comprehensive Annual Financial Report (CAFR) is a comprehensive disclosure document that communicates information to an audience including citizens, rating agencies, investors, regulatory bodies, insurance companies, etc.

• Our responsibility is on our opinion on the financial statements.• However, we read the other information in the CAFR to make

sure it is not inconsistent with the financial statements.

• Capital Metro submitted the 2019 CAFR to the Government Finance Officers Association (GFOA) for an additional quality review. Capital Metro has received the Certificate of Achievement for Excellence in Financial Reporting in the past and expects to receive the award for the 2019 CAFR.

10

3.1.a

Packet Pg. 44

Att

ach

men

t: F

Y20

19 A

ud

it -

CM

TA

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

© 2020 RSM US LLP. All Rights Reserved. © 2020 RSM US LLP. All Rights Reserved.

11

3.1.a

Packet Pg. 45

Att

ach

men

t: F

Y20

19 A

ud

it -

CM

TA

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


This document contains general information, may be based on authorities that are subject to change, and is not a substitute for professional advice or services. This document does not constitute audit, tax, consulting, business, financial, investment, legal or other professional advice, and you should consult a qualified professional advisor before taking any action based on the information herein. RSM US LLP, its affiliates and related entities are not responsible for any loss resulting from or relating to reliance on this document by any person. Internal Revenue Service rules require us to inform you that this communication may be deemed a solicitation to provide tax services. This communication is being sent to individuals who have subscribed to receive it or who we believe would have an interest in the topics discussed.

RSM US LLP is a limited liability partnership and the U.S. member firm of RSM International, a global network of independent audit, tax and consulting firms. The member firms of RSM International collaborate to provide services to global clients, but are separate and distinct legal entities that cannot obligate each other. Each member firm is responsible only for its own acts and omissions, and not those of any other party. Visit rsmus.com/aboutus for more information regarding RSM US LLP and RSM International.

RSM, the RSM logo and the power of being understood are registered trademarks of RSM International Association.


3.1.a

Packet Pg. 46

Att

ach

men

t: F

Y20

19 A

ud

it -

CM

TA

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

Capital Metropolitan Transportation Authority Basic Financial Statements For the Years Ended September 30, 2019 and 2018

3.1.b

Packet Pg. 47

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

Contents Financial section

Independent auditor’s report 1-2 Management’s discussion and analysis—(unaudited) 3-10

Basic financial statements

Statements of net position 11-12 Statements of revenues, expenses and changes in net position 13 Statements of cash flows 14-15 Notes to the financial statements 16-50

Required supplementary information Capital Metropolitan Transportation Authority Retirement Plan for Bargaining Unit Employees of StarTran, Inc. schedules of changes in net position liability and related ratios 52 Capital Metropolitan Transportation Authority Retirement Plan for Bargaining Unit Employees of StarTran, Inc. schedule of plan contributions 53 Capital Metropolitan Transportation Authority Retirement Plan for Administrative Employees schedules of changes in net pension liability and related ratios 54 Capital Metropolitan Transportation Authority Retirement Plan for Administrative Employees schedules of plan contributions 55 Capital Metropolitan Transportation Authority Other Post-Employment Benefits – Schedules of changes in the total OPEB liability and related ratios 56

3.1.b

Packet Pg. 48

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

1

Independent Auditor’s Report To the Finance, Audit and Administration Committee of the Board of Directors Capital Metropolitan Transportation Authority Report on the Financial Statements We have audited the accompanying financial statements of Capital Metropolitan Transportation Authority (the Authority) as of and for the years ended September 30, 2019 and 2018, and the related notes to the financial statements, which collectively comprise the Authority’s basic financial statements, as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Authority’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Authority’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Authority as of September 30, 2019 and 2018, and the changes in its financial position and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

3.1.b

Packet Pg. 49

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

2

Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis, the Capital Metropolitan Transportation Authority Retirement Plan for Bargaining Unit Employees of StarTran, Inc. Schedules of Changes in Net Position Liability and Related Ratios, Capital Metropolitan Transportation Authority Retirement Plan for Bargaining Unit Employees of StarTran, Inc. Schedule of Plan Contributions, Capital Metropolitan Transportation Authority Retirement Plan for Administrative Employees Schedules of Changes in Net Pension Liability and Related Ratios, Capital Metropolitan Transportation Authority Retirement Plan for Administrative Employees Schedules of Plan Contributions and Capital Metropolitan Transportation Authority Other Post-Employment Benefits – Schedules of Changes in the Total OPEB Liability and Related Ratios be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated February 25, 2020, on our consideration of the Authority’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements and the Public Funds Investment Act and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the Authority’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Authority’s internal control over financial reporting and compliance.

Austin, Texas February 25, 2020

3.1.b

Packet Pg. 50

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

Capital Metropolitan Transportation Authority Management’s Discussion and Analysis—(Unaudited)—September 30, 2019 and 2018

3

This section of the financial statements of the Capital Metropolitan Transportation Authority (CMTA, Capital Metro or the Authority) offers a narrative overview and analysis of the financial activities for fiscal year ended September 30, 2019 and 2018. The information contained within the Management Discussion and Analysis (MD&A) should be considered only part of a greater whole. The reader of this statement should take time to read and evaluate all sections of this report, including the footnotes and other supplementary information that is provided in addition to this MD&A. Financial Highlights Net position was $621.8 million as of September 30, 2019, increased 9.6% from $567.2 as of September 30,

2018. Prior to implementation of GASB Statement No. 75, net position as of September 30, 2017 was $500.7 million. After implementation, the adjusted net position increased by 13.8% from the balance of $498.4 million (Table A-1).

FY2019 sales tax revenue was $261.5 million compared to $243.6 million in FY2018, and $228.5 million in FY2017. This represents an increase of 7.4% (FY2019 over FY2018) and 6.6% (FY2018 over FY2017). Transportation fares increased from $14.6 million in FY2018 to $15.2 million in FY19, an increase of 3.9%. Rail freight revenue decreased slightly from $5.5 million in FY 2018 to $5.1 million, a decrease of 7%. (Table A-2).

Operating expenses (including depreciation) were $292.2 million for FY2019 compared to $282.2 million for FY2018, an increase of 3.6% (Table A-3).

Expenses of approximately $8.1 million in FY2019 and $6.6 million in FY2018 were made for regional mobility projects (Table A-4).

Expenses of $3.9 million were made in FY2019 for preliminary costs for long term mobility planning project

also known as Project Connect (Table A-4).

Capital assets (net of depreciation) increased by $54.4 million to $460.5 million in FY2019 from $406.1 million as of September 30, 2018 (Table A-5).

Overview of the Financial Statements This discussion and analysis are intended to serve as an introduction to CMTA’s financial statements. The financial statements are comprised of 1) financial statements, 2) notes to the financial statements, and 3) required supplementary information. The Statement of Net Position reports CMTA’s assets, deferred outflows and liabilities and deferred inflows, with the difference between the two reported as net position. This is a measure of financial position, which can indicate financial condition improvement or deterioration from year to year. The Statement of Revenue, Expenses and Changes in Net Position present information showing how CMTA’s net position changed during the fiscal year. Operating revenue consists of transportation fares, contract revenue and rail freight fees. Other non-operating revenue includes a one percent sales and use tax which comprises 72.9% of all revenues in FY2019, and 68.1% of all revenues in FY2018 as well as investment income, other income and operating contributions. Operating expenses include providing bus service, commuter rail service, maintenance, security and administration for CMTA. Non-operating expenses include funding for regional mobility projects.

3.1.b

Packet Pg. 51

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


4

The Statement of Cash Flows reports cash and cash equivalents activities for the fiscal year resulting from operating activities, non-capital financing activities, capital and related financing activities and investing activities. The Notes to the Financial Statements provide additional information necessary to fully understand the data provided in the financial statements. Required Supplementary Information (unaudited) includes the progress in funding CMTA’s obligation to provide pension benefits to its former employees and to its administrative employees and is required supplementary information by accounting principles generally accepted in the United States of America. FINANCIAL ANALYSIS Net Position Total net position may serve, over time, as a useful indicator of an entity’s financial position. The total net position of CMTA increased $54.6 million, from $567.2 million in FY2018 to $621.8 million in FY2019, primarily due to an increase of 7.5% in sales and use tax receipts with an expanding economy in the Austin region, increases in investment income due to higher interest rates during FY2019, offset by increases in purchased transportation due to a full year of Cap Remap which was the most significant change to Capital Metro’s bus network and made the network more frequent, more reliable and better connected and preliminary costs for Project Connect. The agency continued to increase net position in order to fund capital improvements for service enhancements, to meet Federal regulatory requirements, and to maintain transit assets in a state of good repair. Net position in FY2018 increased $68.8 million, from the restated amount of $498.4 million as of October 1, 2018 to $567.2 million as of September 30, 2018. Total assets and deferred outflows increased to $751.9 million in FY2019 from $696.6 million in FY2018 and from $642.7 million in FY2017 due primarily to increased depreciable assets, net of depreciation, and land and improvements, offset by a decrease in projects in process. Current liabilities increased $2.4 million from $56.8 million in FY2018 to $59.2 million in FY2019 due to increase in accrued expenses related to timing of purchased transportation payments and paying down of accounts payable. Current liabilities decreased $6.8 million from $63.6 million in FY2017 to $56.8 million in FY2018 due to a decrease in accrued expenses related to timing of purchased transportation payments, and a repayment of short-term notes payable. Long-term liabilities increased from $66.7 million in FY2018 to $67.6 million in FY2019 primarily due to a decrease in the Texas Department of Transportation grant which were received in advance and an increase in pension liability. Long-term liabilities decreased from $76.6 million in FY2017 to $66.7 million in FY2018 primarily due to expenses incurred against the Texas Department of Transportation grant which were received in advance in 2015 and the full repayment of the notes payable. Comparative amounts for the prior year have been presented in order to provide an understanding of changes in Capital Metro’s financial position and operations.

3.1.b

Packet Pg. 52

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


5

Table A-1 Summary Information of CMTA’s Net Position

(in millions of dollars)

FY 2019 FY 2018* FY 2017

Current assets 189.9$ 152.8$ 171.6$ Capital assets, net 460.5 406.1 371.7 Other noncurrent assets 86.0 128.3 88.4 Total assets 736.4$ 687.2$ 631.7$

Deferred outflow of resources 14.3 9.4 11.0

Current liabilities 59.2 56.8 63.6 Long-term liabilities 67.6 66.8 76.6 Total liabilities 126.8$ 123.6$ 140.2$

Deferred inflows 2.1 5.8 1.8

Net positionNet investment in capital assets 455.7 403.3 356.2 Unrestricted 166.1 163.9 144.5

Total net position* 621.8$ 567.2$ 500.7$

*FY 2018 restated for GASB No. 75. Certain unrestricted assets are designated through Board directive for specific uses. As of September 30, 2019, the CMTA Board has designations of $39.7 million for a statutory operating reserve, $21.5 million for a budget stabilization reserve, and $1.3 million for self-insurance. The reserves as of September 30, 2018 were $39.7 million for statutory operating, $19.8 million for budget stabilization, and $1.3 million for self-insurance. Commitments CMTA has a capital spending plan for projects for upcoming and future years. CMTA’s contractual commitments related to its capital improvement plan are $88.6 million and $74.5 million as of September 30, 2019 and 2018, respectively. CMTA has also executed contracts with various goods and services providers totaling $914.2 million extending to September 2035. CMTA is contractually committed to the Build Central Texas Program and Mobility Programs with the City of Austin and the Suburban Communities Program. These programs are detailed in Note 8 in the Notes to the Financial Statements. Change in Net Position The change in net position for FY2019 was an increase of $54.5 million or 9.6% of total beginning net position. The change in net position for FY2018 was an increase of $68.7 million or 13.8% of the total beginning net position Total operating revenue remained stable, with increased operating expenses and non-operating revenue noted on the following page (Table A-2).

3.1.b

Packet Pg. 53

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


6

Table A-2 Summary Information of Changes in CMTA’s Net Position


FY 2019 FY 2018 FY 2017Operating revenue: Transportation fares 15.2$ 14.6$ 16.0$ Contract revenue and fares 9.1 9.0 8.2 Rail—freight 5.1 5.5 4.5 Total operating revenue 29.4 29.1 28.7

Operating expenses: Purchased transportation 158.8 152.4 143.5 Depreciation and amortization 46.5 44.0 39.2 Salary and wages 23.9 23.4 22.2 Services 18.4 19.1 18.6 Employee benefits 21.3 19.2 22.0 Materials and supplies—fuel and fluid 13.4 12.1 12.3 Leases and other 4.8 4.8 4.1 Utilities 3.0 2.8 2.8 Casualty and liability 0.6 1.3 0.5 Materials and supplies—other 1.5 3.1 3.3

Total operating expenses 292.2 282.2 268.5

Operating loss (262.8) (253.1) (239.8)

Non-operating revenue (expenses): Sales and use tax 261.5 243.6 228.5 Investment income 5.7 2.0 1.4 Other income, net 2.2 2.1 2.4 Other federal grants 40.8 53.4 30.8 Long-term mobility planning (3.9) - - Build Central Texas Program (0.6) (0.4) (2.9) Mobility programs (7.5) (6.2) (4.0) Total non-operating revenue (expenses) 298.2 294.5 256.2

Income before contributions 35.4 41.4 16.4

Capital contributions 19.2 27.4 29.9 Change in net position 54.6 68.8 46.3

Total net position, beginning of the year* 567.2 498.4 454.5

Total net position, end of the year 621.8$ 567.2$ 500.8$

*FY 2018 restated for GASB No. 75.

3.1.b

Packet Pg. 54

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


7

Operating Expenses FY2019 operating expenses increased 3.6% to $292.2 million from $282.2 million in FY2018, primarily due to increased costs for purchased transportation for increased transit services and preliminary costs for Project Connect. Operating expenses for FY2018 increased by 5.1% to $282.2 million from $268.5 million in FY2017, primarily due to increased costs for purchased transportation costs for increased transit services offset by a decrease in employee benefits due to lower pension expenses.

Table A-3 Information on CMTA’s Total Operating Expenses (including depreciation)


FY 2019 FY 2018 FY 2017

Purchased transportation 158.8$ 152.4$ 143.5$ Depreciation and amortization 46.5 44.0 39.2 Salary and wages 23.9 23.5 22.2 Services 18.4 19.1 18.6 Employee benefits 21.3 19.2 22.0 Materials and supplies—fuel and fluid 13.4 12.1 12.3 Leases and other 4.8 4.8 4.1 Utilities 3.0 2.8 2.8 Casualty and liability 0.6 1.3 0.5 Materials and supplies—other 1.5 3.1 3.3

Total operating expenses 292.2$ 282.2$ 268.5$

Non-Operating Revenue Non-operating revenue consists of a 1 percent sales tax levied in CMTA’s service area, investment income, operating contributions and other income generated primarily from advertising sales. Non-operating revenue is reduced by the costs of providing funding for infrastructure needs in the service area. Sales tax represents the largest component of CMTA’s revenue. For FY2019 and FY2018 sales tax revenue increased by $17.9 million and $15.1 million or 7.4% and 6.6%, respectively, due to a continued robust economy in the Austin area. Investment income of $5.7 million for FY2019 was earned on CMTA’s cash reserve of $221.4 million. In FY2018, investment income was $2.0 million, earned on CMTA’s cash reserve of $215.9 million. During the fiscal years, the cash reserve was invested in the Texas Local Government Investment Pool with a portion invested in U.S. Government issues and Commercial Paper. CMTA funds programs for street maintenance, street repair, and transit capital improvements through the Build Central Texas program (formerly Build Greater Austin). It also funds mobility projects to assist in future transportation and improve regional mobility.

3.1.b

Packet Pg. 55

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


8

Table A-4

Information on CMTA’s Non-Operating Revenue and Expenses (in millions of dollars)

FY 2019 FY 2018 FY 2017

Sales and use tax 261.5$ 243.6$ 228.5$ Other federal grants 40.8 53.4 30.8 Other income, net 2.2 2.1 2.4 Investment income 5.7 2.0 1.4 Long-term mobility planning (3.9) - - Build Central Texas Program (0.6) (0.4) (2.9) Mobility interlocal agreements (0.4) (5.7) (4.0) Capital contributions—other jurisdictions (7.1) (0.5) (0.0)

Total net non-operating revenue 298.2$ 294.5$ 256.2$

Federal and State Grants Other grant revenue was received from the Federal Transit Administration on a reimbursement basis and from the Texas Department of Transportation, primarily for improvements to the downtown station, for new buses, for improvements to the rail lines and Positive Train Control (PTC). The capital funds are used primarily to fund CMTA’s capital improvement totaled $19.1 million and $27.4 million in FY2019 and 2018, respectively. The other federal grants are used for reimbursement of third-party cost of contracting. In FY2019 and FY2018, CMTA recognized other federal grant funding of approximately $40.8 million and $53.4 million, respectively. Capital Assets CMTA’s net capital assets at September 30, 2019 and 2018 totaled $460.5 million and $406.1 million, respectively, and consist of buildings and improvements, railroad, buses and equipment, passenger parking stations, leasehold improvements, land and construction in progress. FY2019 net capital assets represent an increase of 13.4% from FY2018 due to increases in buses and equipment, increase in land and improvements and a decrease in construction in progress. CMTA’s net assets at September 30, 2017 totaled $371.7 million. Net capital assets in FY2018 increased 9.2% from FY2017, due to increases in buses and equipment, railroad improvement and increases in construction in progress. Gross gains in FY2019, 2018 and 2017 were offset by an increase in accumulated depreciation. For more detailed information on capital assets, see Note 11 to the financial statements.

3.1.b

Packet Pg. 56

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


9

Table A-5 CMTA’s Capital Assets Information


FY 2019 FY 2018 FY 2017

Building and improvements 105.7$ 86.1$ 84.7$ Railroad 167.8 149.0 139.6 Buses and equipment 364.2 326.5 290.9 Passenger parking and stations 97.1 89.4 87.2

734.8 651.0 602.4 Less accumulated depreciation (408.0) (379.3) (349.1) Net depreciable property/improvements 326.8 271.7 253.3

Land and improvements 69.9 59.7 59.2 Construction in progress 63.8 74.7 59.2

Capital assets, net 460.5$ 406.1$ 371.7$

Long-Term Debt During FY2019, Capital Metro held zero long term debt. In prior fiscal years, Capital Metro held a lease/purchase financing agreement for funding of rail vehicles in the amount of $36.0 million with quarterly payments beginning in October 2006 for 10 years. In December 2011, the agency refinanced this note with quarterly payments beginning in January 2012 for seven years. In February 2012, Capital Metro held a long-term financing agreement in the amount of $20 million for bus purchases with annual principal payments beginning in April 2013 and semi-annual interest payments beginning in October 2012 for 10 years. Capital Metro paid off all debt balances in September 2018. For more detailed information on long-term debt, see Note 7 to the financial statements.

Table A-6

CMTA’s Long-Term Debt Information (in millions of dollars)

FY 2019 FY 2018 FY 2017

Rail lease purchase -$ -$ 3.7$ Note payable—buses - - 10.6

Total -$ -$ 14.3$

3.1.b

Packet Pg. 57

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


10

Economic Factors and Outlook for FY 2020 Capital Metro’s adopted FY2020 budget totaled $361.2 million in revenue, approximately $287.1 million in operating expenses, $109.7 million for new capital expenditures, and approximately $6.9 million for Regional Mobility pass through grants. For FY2020, sales tax revenue is budgeted at 3.1% growth above FY2019 forecast. FY2020 budgeted operating expenses were projected to increase 7.9% from the FY2019 budget. Management anticipates that its existing resources will be adequate to satisfy its liquidity requirements for FY2020. Request for Information This financial report is designed to provide our patrons and other interested parties with a general overview of the finances to demonstrate CMTA’s accountability for the funds it receives. If you have questions about this report or need additional financial information, contact Capital Metropolitan Transportation Authority, Finance Department, at 2910 East 5th Street, Austin, Texas 78702, call (512) 389-7564, or e-mail [email protected].

3.1.b

Packet Pg. 58

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

11

Capital Metropolitan Transportation AuthorityStatement of Net Position

September 30, 2019 and 2018

Assets 2019 2018

Current assets:Cash and cash equivalents 114,774,903$ 77,980,772$ Investments 21,419,264 11,369,855 Due from federal and other governments 1,791,117 13,913,143 Fuel hedge asset 1,338,482 1,899,641 Materials and supplies inventory, net 2,612,103 2,919,758 Prepaid transit expense and other 722,073 747,975 Other receivables, net 2,811,770 2,409,969 Sales and use taxes receivable 44,403,762 41,540,749

Total current assets 189,873,474 152,781,862

Non-current assets:Investments—designated for system expansion 71,478,036 108,524,243 Restricted for system expansion and acquisition:

Restricted—cash and cash equivalents 6,287,658 8,580,102 Restricted—investments 7,469,266 9,415,433

Capital assets:Land and improvements 69,889,511 59,689,545 Depreciable capital assets, net of depreciation 326,856,445 271,732,670 Projects in process 63,769,382 74,723,419

Other assets 788,235 1,734,116 Total non-current assets 546,538,533 534,399,528

Total assets 736,412,007 687,181,390

Deferred outflow of resources—pension plan 13,506,745 9,416,391 Deferred outflow of resources—fuel hedge 780,499 -

Total assets and deferred outflow of resources 750,699,251$ 696,597,781$

The accompanying notes are an integral part of the financial statements.

3.1.b

Packet Pg. 59

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

12


September 30, 2019 and 2018(continued)

2019 2018Liabilities

Current liabilities:Accounts payable 26,252,395$ 36,669,107$ Accrued expenses 21,829,638 13,551,022 Benefits payable 502,673 479,478 Accrued salary and wages 649,363 513,219 Accrued sick and vacation 2,697,865 2,603,184 Retainage 4,868,642 2,875,363 Payable from restricted assets 2,413,259 148,792

Total current liabilities 59,213,835 56,840,165

Long-term liabilities:Accrued sick and vacation 1,247,940 1,412,885 Total OPEB liability 2,876,406 3,339,100 Other rent liability 952,274 641,335 Unearned grant revenue—commuter rail cars and station 8,797,035 17,140,344 Net pension liability 53,757,461 44,189,642

Total long-term liabilities 67,631,116 66,723,306

Total liabilities 126,844,951 123,563,471

Deferred inflow—OPEB 996,403 276,839 Deferred inflow—fuel hedge - 2,764,415 Deferred inflow—pension plan 1,092,345 2,800,572 Total liabilities and deferred inflow of resources 128,933,698 129,405,297

Net position:Net investment in capital assets 455,646,696 403,270,271 Unrestricted 166,118,857 163,922,213

Total net position 621,765,553$ 567,192,484$


3.1.b

Packet Pg. 60

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

13

Capital Metropolitan Transportation AuthorityStatements of Revenues, Expenses and Changes in Net Position

For the Years Ended September 30, 2019 and 2018

2019 2018Operating revenue

Transportation fares 15,185,532$ 14,620,434$ Contract revenue 9,083,445 8,968,191 Rail—freight 5,110,051 5,453,100

Total operating revenue 29,379,028 29,041,725

Operating expensesPurchased transportation 158,795,657 152,361,385 Depreciation and amortization 46,522,354 44,010,538 Salary and wages 23,920,927 23,456,017 Services 18,360,137 19,113,196 Employee benefits 21,316,400 19,242,297 Materials and supplies—fuel and fluid 13,419,745 12,139,068 Leases and other 4,783,567 4,790,421 Utilities 3,016,639 2,768,950 Casualty and liability 640,414 1,279,723 Materials and supplies—other 1,495,276 3,068,461

Total operating expenses 292,271,116 282,230,056

Operating loss (262,892,088) (253,188,331)

Non-Operating revenue (expenses)Sales and use tax revenue 261,540,589 243,571,292 Other federal grants 40,798,618 53,422,347 Other income, net 2,221,765 2,147,901 Investment income 5,659,749 1,990,000 Long-term mobility planning (3,895,780) - Build Central Texas Program (570,966) (409,978) Capital contributions—other jurisdictions (420,730) (542,830) Mobility interlocal agreements (7,066,622) (5,669,095)

Total non-operating revenue (expenses) 298,266,623 294,509,637

Increase in net position before capital contributions 35,374,535 41,321,306

Federal grants and other capital contributions 19,198,534 27,441,971 Change in net position 54,573,069 68,763,277

Net position at the beginning of year 567,192,484 498,429,207 Net position at the end of year 621,765,553$ 567,192,484$


3.1.b

Packet Pg. 61

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

14

Cash flows from operating activities 2019 2018 Receipts from customers 29,274,820$ 30,429,467$

Payments to employees (19,491,940) (18,770,276) Payments for employee taxes (7,270,354) (7,171,070)

Payments to purchased transportation service providers (159,819,053) (151,546,944) Payments to suppliers of goods and services (53,793,525) (59,165,570)

(211,100,054) (206,224,394)

Cash flows from non-capital financing activitiesSales and use tax 258,677,576 240,643,002 Cash/proceeds received from operating grants 47,042,828 46,257,973 Payments for long-term mobility planning (3,895,780) - Payments for Build Central Texas Program (570,966) (409,978) Payments for mobility projects (7,066,622) (5,669,095)

294,187,036 280,821,902

Cash flows from capital and related financing activitiesProceeds from capital grants 16,783,476 20,982,613 Purchase of capital assets (100,236,046) (77,076,970) Proceeds from sale of capital assets 264,562 240,337 Payment of note payable - (10,550,000) Payments on master lease financing agreement - (3,657,979)

(83,188,008) (70,061,999)

Cash flows from investing activitiesSale of investments 98,930,542 91,050,014 Purchase of investments (69,987,578) (96,094,465) Net investment income 5,659,749 1,990,000

34,602,713 (3,054,451)

Net change in cash and cash equivalents 34,501,687 1,481,058

Cash and cash equivalents at beginning of year 86,560,874 85,079,816

Cash and cash equivalents at the end of the year 121,062,561$ 86,560,874$

Cash and cash equivalents at the end of the yearRestricted 6,287,658$ 8,580,102$ Unrestricted 114,774,903 77,980,772

121,062,561$ 86,560,874$

Continued on next page


Capital Metropolitan Transportation AuthorityStatements of Cash Flows


Net cash provided by non-capital financing activities

Net cash used in operating activities

Net cash used in capital and related financing activities

Net cash provided by (used in) investing activities

3.1.b

Packet Pg. 62

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

15


For the Years Ended September 30, 2019 and 2018(continued)

Reconciliation of operating loss to net cash used in operating 2019 2018 activities:Operating loss (262,892,088)$ (253,188,331)$

operating activities:Depreciation and amortization 46,522,354 44,010,538

Changes in assets and liabilitiesOther receivables (401,801) 1,230,322 Inventory 307,655 (2,120,178) Fuel hedge asset 561,158 (673,647) Other assets 2,272,976 1,643,074 Accounts payable (355,976) (3,153,101) Accrued liability and expenses 2,038,634 (643,410) Other liabilities 365,839 44,743 Deferred outflows—pension (4,090,354) 1,237,708 Deferred inflows—pension (1,708,227) 4,453,649 Deferred inflows—OPEB 719,564 276,839 Net pension liability 9,567,819 (1,550,049) Total OPEB liability (462,694) - Deferred outflows/inflows fuel hedge (3,544,913) 2,207,449

Net cash used in operating activities (211,100,054)$ (206,224,394)$

Supplemental cash flow information:Capital asset acquisition included in accrued and retainage

payable 4,266,000$ 3,150,000$


Adjustments to reconcile operating loss to net cash used in

3.1.b

Packet Pg. 63

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

Capital Metropolitan Transportation Authority Notes to the Financial Statements—September 30, 2019 and 2018

16

1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Reporting Entity – Capital Metropolitan Transportation Authority (CMTA, Capital Metro or the Authority) is a corporate body and political subdivision of the State of Texas. Capital Metro was established by a referendum on January 19, 1985 to provide mass transportation service to the greater Austin metropolitan area. Capital Metro commenced operations on July 1, 1985. Capital Metro is governed by an eight-member Board of Directors (Board) which has governance responsibilities over all activities related to Capital Metro. During the year ended September 30, 2009, the Legislature of the State of Texas enacted Senate Bill 1263, effective September 1, 2009, relating to the composition of the Board of Directors of certain metropolitan transit authorities. As a result of the enacted legislation, all the members serving on the Board are appointed in accordance with Section 451.5021, Transportation Code. Capital Metro is not included in any other governmental “reporting entity” as defined in Section 2100, Codification of Governmental Accounting and Financial Reporting Standards. The appointed members of the Board have the authority to make decisions, possess the power to designate management, have the responsibility to significantly influence operations and maintain primary accountability for fiscal matters. Prior to August 19, 2012 and as required by accounting principles generally accepted in the United States of America, these financial statements presented Capital Metro (the primary government) and its active component unit, StarTran, Inc. (StarTran), a corporation organized under the Nonprofit Corporation Act of the State of Texas. Although it was legally separate from Capital Metro, StarTran was reported as if it were part of Capital Metro because it was incorporated for the purpose of providing employee services to operate mass transit service on behalf of Capital Metro. Pursuant to the contract effective January 1, 1992, between Capital Metro and StarTran, Capital Metro provided all resources needed for business operations and the necessary administrative support needed for StarTran’s operations. Senate Bill 1263 passed by the Texas Legislature in 2009 required the Sunset Advisory Commission to evaluate the efficiency and effectiveness of Capital Metro’s bus operations. In August 2012, Capital Metro implemented a new business model to streamline operations and improve its business practices. Capital Metro now contracts with private companies to operate passenger service, including fixed route and paratransit services. StarTran is inactive but remains a blended component unit. Basis of Accounting – The financial statements of Capital Metro have been prepared in conformity with accounting principles generally accepted in the United States of America as applied to governments. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting standards. Capital Metro accounts for its operations as a proprietary (enterprise) fund. Proprietary funds are accounted for on the flow of economic resources measurement focus. An enterprise fund follows the accrual basis of accounting. With this measurement focus, all assets, liabilities and deferred inflows and outflows of resources associated with the enterprise fund operations are included in the Statement of Net Position. Under the accrual basis of accounting, revenues are recorded in the period in which they are earned, expenses are recorded when a liability is incurred, regardless of the timing of related cash flows and depreciation of capital assets is recorded. Revenue from grants are recorded when all eligibility requirements imposed by the provider are met and qualifying expenses have been incurred for reimbursement type grants.

3.1.b

Packet Pg. 64

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


17

1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

Net Position – Net position on the Statement of Net Position include the following:

Net Investment in Capital Assets – the component of net position that reports capital assets less both the accumulated depreciation and the outstanding balance of debt that is directly attributable to the acquisition, construction or improvement of these capital assets. Unrestricted – the difference between the assets and liabilities that are not reported in net investment in capital assets, or restricted net assets.

Nature of Operating and Non-Operating Activities – Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses result from providing services in connection with an entity’s principal ongoing operations. Capital Metro’s primary activity is transit operations designed to provide high quality, customer focused, effective and efficient transportation services and systems for its’ communities. Transit operations include planning bus routes, customer service, special transit services, purchased transportation services, maintaining equipment, facilities and buses and providing security, administration and management of the transit system. Capital Metro also owns and maintains a rail freight line. Operations include managing the rail freight contract and maintenance of the track and track infrastructure. In November 2004, citizens of the Capital Metro service area voted in favor of allowing the agency to operate urban commuter rail service from Leander, Texas to downtown Austin, Texas. Commuter rail service became operational in March of 2010. Non-operating revenue and expenses include: 1) Non-operating revenue consists of the one percent sales tax levied in the Authority’s service area,

federal operating grants that are received on a reimbursement basis, investment income and other income generated primarily from advertising commissions and childcare operations.

2) Mobility projects and programs to help fund future transportation projects. These projects must improve regional mobility, improve mass transit, leverage federal or private funds, add to an existing program and expedite a critical mobility project. These projects are governed by an interlocal agreement between Capital Metro and the City of Austin.

3) Long-range system planning called Project Connect that addresses both the short- and long-term needs

of Central Texas. Project Connect’s Investments program has developed plans for a long-term high-capacity transit system capable of moving more people in the same amount of road space as cars. These new transit options will provide real ways to avoid traffic and help produce a more balanced transportation system that benefits our diverse population in Central Texas. Project Connect’s Enhancements program has identified short-term projects that will ensure our existing transit network operates efficiently. The enhancement projects will improve MetroRail, MetroRapid and MetroExpress services, and create Mobility Hubs at sites across the region.

4) Programs to fund street maintenance, emergency street repair, transit corridor improvements, pedestrian

and bicycle safety/access, sidewalks, transit centers, and transit capital improvements. It is Capital Metro’s policy to use restricted resources first when an expenditure is made for purposes for which both restricted and unrestricted resources are available.

3.1.b

Packet Pg. 65

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


18


Revenue Recognition:

Operating Revenue – Transportation fares, contract revenue, rail-freight and transportation fares – commuter rail are recorded as revenue when the ticket is sold, regardless of when it is used.

Sales and Use Tax Revenue – Sales and use tax revenue is recorded based on information provided by the Comptroller of Public Accounts which reports when the underlying transaction occurred. Sales and use tax revenues account for approximately 72.9% of revenues in FY2019 and 68.1% in FY2018.

Other Federal Grants – Other federal grant revenue is recognized when the allowable cost is incurred, and all eligibility requirements have been met.

Capital Replacement and Improvement Grants – Capital Metro funds its capital improvements with sales taxes and grants from the Federal Transit Administration (FTA). Grant revenue is recognized when all eligibility requirements have been met. The grantor retains a reversionary interest in the capital asset over the estimated useful life of that asset. Federal and other capital contributions – Revenue from federal and other capital contributions are cash and noncash which include capital grants and contributions that are restricted revenue whose resources may only be used to purchase, build or use capital assets for specified programs.

Restricted Assets – Certain assets of Capital Metro are classified as restricted in the Statement of Net Position because their use is limited by contract for system expansion and acquisition or construction of long-term assets. Cash and Investments – For purposes of the Statement of Cash Flows, Cash and Cash Equivalents include cash on hand, cash in banks, and investments with original maturities of less than 90 days. All non-negotiable certificates of deposits and fixed-rate time deposits are recorded at amortized cost. Investments and debt securities are recorded at fair value (See Note 2). Fair value is the price that would be received to sell an asset in an orderly transaction between market participants. Annually, the Board of Directors of Capital Metro reviews and adopts a written investment policy regarding the investment of its funds as defined in the Public Funds Investment Act (Chapter 2256, Texas Government Code). Capital Metro is authorized to invest in obligations and instruments as defined in the Act. All investments held by Capital Metro are made in accordance with Capital Metro’s Investment Policy. Accounts Receivable – The allowance for uncollectible accounts is established as losses are estimated to have occurred through a provision for bad debt charged to earnings. Losses are charged against the allowance using specific identification method when management believes it is probable the receivable will be recovered. As of September 30, 2019, and September 30, 2018, management determined accounts receivable to be fully collectible. Inventory – Materials and supplies inventory consists of fuel, and facilities and building maintenance supplies and is stated at cost (weighted-average method).

3.1.b

Packet Pg. 66

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


19


Capital Assets – Capital assets include all items purchased that have a useful life of more than one year, are of a tangible nature and have a cost of $5,000 or more. Capital assets are recorded at cost and are depreciated over their useful lives using the straight-line method as follows: Estimated Useful Lives Buildings and improvements 40 years Passenger parking stations 5-20 years Railroad/leasehold improvements 10 years Buses and equipment 2-12 years Other equipment and software 3-5 years Office furniture and fixtures 5 years There are no intangible assets. Depreciation is presented as an operating expense in the Statements of Revenue, Expenses and Changes in Net Position. Construction in progress will be depreciated when the related asset is placed in service. Expenditures for renewals and betterments that increase property lives are capitalized, and maintenance and repair costs are charged to operations as incurred. Compensated Leave – Substantially all employees of Capital Metro are eligible to receive compensation for vacations, holidays, illness and certain other qualifying leave. For certain kinds of leave, the number of days compensated is generally based on length of service. Vacation leave, which has been earned and vested but not paid, has been accrued in the accompanying financial statements in the amount $2.5 million and $2.4 million as of September 30, 2019 and 2018 respectively. Earned and vested Sick leave for Capital Metro administrative employees has been accrued at a maximum of 240 hours for those employees with four (4) years or more of service as of September 30, 2019 and 2018 in the amount of $1.47 million and $1.32 million, respectively. Pensions – The net pension liability, deferred outflows and inflows of resources related to pensions, pension expense, and information about the fiduciary net position of Capital Metro’s participation in the Capital Metropolitan Transportation Authority Retirement Plan for Administrative Employees and Capital Metropolitan Transportation Authority Retirement Plan for Bargaining Unit Employees of StarTran, Inc., both single employer Plans (the Plans), and additions to/deductions from the Plan’s fiduciary net position have been determined on the same basis as they are reported by the Plans. For this purpose, benefit payments (including refunds of employee contributions) are recognized in the net pension liability calculation when due and payable in accordance with the benefit terms. Investments are reported at fair value. Other Post-Employment Benefits – The Authority implemented GASB Statement No.75, Accounting Financial Reporting for Postemployment Benefits other than Pensions (OPEB). The total OPEB liability has been determined based on the flow of economic resources measurement focus and full accrual basis of accounting. This includes measuring the total OPEB liability, deferred inflows of resources related to OPEB, OPEB expense, and information about benefit payments are recognized in the total liability calculation when due and payable in accordance with the benefit terms.

3.1.b

Packet Pg. 67

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


20


Deferred Outflows and Inflows of Resources – The Authority has classified as deferred outflows of resources certain items that represent a consumption of resources or deferred inflow of resources which represent an acquisition of net assets by Capital Metro that is applicable to a future reporting period and, therefore, will not be recognized as a revenue or expense until then. Capital Metro has deferred outflows which consist of deferred charge for pension for contributions made subsequent to the measurement date of December 31, 2018, the differences between the expected and actual experience, change in assumptions and net differences between projected and actual earnings and deferred outflows for the accumulation of gains and losses on fuel hedge. Risk Management – Capital Metro is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; business interruption; errors and omissions; injuries to employees and natural disasters. Commercial insurance coverage is purchased for claims arising from such matters. During FY2019 and FY2018, Capital Metro was covered under a variety of insurance policies at a cost it considers to be economically justifiable. Capital Metro has commercial insurance for all other risks of loss, except workers’ compensation and employee health and dental benefits, including employee life and accidental insurance. Claims have not exceeded insurance coverage in each of the past three years. Capital Metro is self-insured up to $350,000 per occurrence for losses related to workers’ compensation. (See Note 13) Capital Metro has purchased excess coverage through a commercial insurer licensed in the State of Texas. Use of Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Upcoming GASB Pronouncements In January 2017, GASB issued Statement No. 84, Fiduciary Activities. The primary objective of this Statement is to improve guidance regarding the identification of fiduciary activities for accounting and financial reporting purposes and how those activities should be reported. This Statement establishes criteria for identifying fiduciary activities of all state and local governments. The focus of the criteria generally is on (1) whether a government is controlling the assets of the fiduciary activity and (2) the beneficiaries with whom a fiduciary relationship exists. This Statement is effective for the Authority beginning with its year ending September 30, 2020. In June 2017, GASB issued Statement No. 87, Leases. The primary objective of this Statement is to improve accounting and financial reporting for leases by governments. This Statement requires the recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. The Statement establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset.

3.1.b

Packet Pg. 68

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


21


Under this Statement, a lessee is required to recognize a lease liability and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources. This Statement is effective for the Authority beginning with its year ending September 30, 2021. Management has not yet determined the impact, if any, these pronouncements will have on the financial statements.

2 – CASH AND CASH EQUIVALENT DEPOSITS AND INVESTMENTS

Cash and Cash Equivalent Deposits – At September 30, 2019 and 2018, deposits with financial institutions were fully insured, or collateralized by securities held by a third-party agent in Capital Metro’s name.

2019 2018Carrying CarryingAmount Amount

TexasDAILY and Texas TERM (investment pool) 122,324,112$ 88,276,363$ LESS:Outstanding reconciling items (1,261,551) (1,715,489) Total cash and cash equivalents 121,062,561$ 86,560,874$

Restricted cash for system expansion and acquisition 6,287,658$ 8,580,102$ Unrestricted cash 114,774,903 77,980,772 Total cash and cash equivalents 121,062,561$ 86,560,874$

Investments – Chapter 2256 of the Texas Government Code, (the Public Funds Investment Act) authorizes Capital Metro to invest its funds under a written investment policy that ensures the safety of principal, provides liquidity and optimizes return on investments with the constraints of safety and liquidity. Capital Metro deposits and investments are invested pursuant to the Investment Policy, which is approved annually by the Board of Directors. The Investment Policy includes a list of authorized investments, a maximum allowable stated maturity of individual investments and the maximum average dollar weighted maturity allowed for pooled funds. It includes an Investment Strategy Statement that addresses matching anticipated cash flows with adequate investment liquidity, and a portfolio structure which will experience minimal volatility during economic cycles. Capital Metro is authorized to invest in the following securities: 1. Obligations of the United States or its agencies and instrumentalities. 2. Direct Obligations of the State of Texas. 3. Other obligations, the principal and interest on which are unconditionally guaranteed or insured by the

State of Texas or the United States or is agencies and instrumentalities. 4. Obligations of states, agencies, counties, cities and other political subdivisions of any state having been

rated as to investment quality by a nationally recognized investment rating firm rating of not less than A or its equivalent.

3.1.b

Packet Pg. 69

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


22

2 – CASH AND CASH EQUIVALENT DEPOSITS AND INVESTMENTS, continued

5. Bankers’ Acceptances with a stated maturity of 270 days or less from the date of issuance that will be, in accordance with its terms, liquidated in full at maturity; is eligible for collateral for borrowing from a Federal Reserve Bank; and is accepted by a bank organized and existing under the laws of the United States or any state, if the short-term obligations of the bank, or of a bank holding company of which the bank is the largest subsidiary, are rated not less than A-1 or P-1 or an equivalent rating by at least one nationally recognized credit rating agency.

6. Commercial paper with a stated maturity of 270 days or less from the date of issuance that either is rated not less than A-1, P-1 or the equivalent by at least two nationally recognized credit rating agencies or is rated at least A-1, P-1, or the equivalent by at least one nationally recognized credit rating agency and is fully secured by an irrevocable letter of credit issued by a bank organized and existing under the laws of the United States or any state thereof.

7. Fully collateralized repurchase agreements having a defined termination date and described in more detail in the Investment Policy.

8. Other obligations, the principal and interest of which are unconditionally guaranteed or insured by, or backed by the full faith and credit of this State or the United States or their respective agencies and instrumentalities, including obligations that are fully guaranteed or insured by the Federal Deposit Insurance Corporation or by the explicit full faith and credit of the United States.

9. SEC-regulated, no load money market mutual funds. 10. Local government investment pools. Capital Metro participated in one Local Government Investment Pool. TexasTERM/TexasDAILY – TexasDAILY is a Texas Local Government Investment Pool established by the TexasTERM Local Government Investment Pool (TexasTERM) advisory board pursuant to provisions of the TexasTERM Common Investment Contract that established the TexasTERM Local Government Investment Pool and the series known as TEXASDaily. TEXASDaily was organized in conformity with the Interlocal Cooperation Act, Chapter 2256, Texas Local Government Code. The Advisory Board of TexasTERM, composed of participant and non-participant members, has oversight responsibility and reviews the investment policy and management fee structure. It is rated AAAm by Standard & Poor’s. As a requirement to maintain the rating, weekly portfolio information must be submitted to Standard & Poor’s. TexasDAILY meets the requirements of GASB Statement No. 79 and as such measures and reports its investments at amortized cost. As such, the Authority carries its investment in TexasDAILY at NAV based on amortized cost as provided by GASB Statement No. 72. TexasDAILY’s bylaws permit the Advisory Board to suspend the right of withdrawal or to postpone the date of payment in the event that the Federal Reserve Bank in Dallas is closed other than for customary weekend and holiday closings or if, in the opinion of the Advisory Board, an emergency exists so the the disposal of TexasDAILY’s securities or determination of its net asset value is not reasonably practical. For the year ended September 30, 2019 and 2018 the Authority’s investment in TexasDAILY was $80,824,112 and $74,776,363, respectively. TexasTERM is a fixed-rate, fixed-term portfolio, rated AAAf by Standard & Poor’s. Texas Term are short term investments in nonparticipating interest earning investment contracts which are stated NAV based on amortized cost. Capital Metro’s investment in TexasTERM was $41,500,000 for 2019 and $13,500,000 for 2018.

3.1.b

Packet Pg. 70

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


23


US Bank – the Authority has assets held by US Bank. These include US Treasury Notes, Federal Agency Notes, and commerial paper. As of September 30, 2019, Capital Metro’s investment was $77,724,862 in US Treasury Notes, $12,117,532 in Federal Agency Notes, and $10,160,971 in commercial paper. As of September 30, 2018, the Authority’s investment was $65,934,835 in US Treasury Notes, $32,011,446 in Federal Agency Notes, and $31,126,339 in commercial paper. The Authority did not participate in any reverse repurchase agreements or security lending agreements during FY2019 or FY2018. Custodial Credit Risk – Deposits – Custodial credit risk is the risk that, in the event of a bank failure, the System’s deposits might not be recovered. Capital Metro requires all banks, savings banks and credit union deposits to be federally insured or collateralized with eligible securities. The Authority's deposits are all FDIC insured and are adequately collateralized. Custodial Credit Risk Investments – Custodial credit risk for investment is the risk that, in the event of failure by the counterparty to a transaction, the Authority will not be able to recover the value of its investments or collateral securities that are in possession by an outside party. All of Capital Metro’s investments are insured, registered or held in the Authority’s name by the Auhtority’s agent; therefore, the Authority is not exposed to custodial credit risk. Foreign Currency Risk – Foreign currency risk is the risk that changes in exchange rates will adversely affect the fair value of an investment or a deposit. The Authority’s investment pools or investment securities are denominated in local currency and do not hold foreign investments The foreign currency risk does not apply to the Authority. Interest Rate Risk – Interest rate risk is the risk that the change in interest rates will adversely affect the fair value of an investment. As a means of minimizing risk of loss due to interest rate fluctuations, investment maturities will not exceed the anticipated cash flow requirements of Capital Metro funds. This is accomplished by purchasing quality, short- to medium-term securities that will complement each other in a laddered or barbell maturity structure. Maturity guidelines state that the dollar weighted average days to final stated maturity shall be 548 days or less. Securities may not be purchased that have a final stated maturity date which exceeds five years. The Capital Metro investment advisor monitors the maturity level and makes changes as appropriate.

3.1.b

Packet Pg. 71

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


24


At September 30, 2019 and 2018, Capital Metro’s exposure to interest rate risk as measured by the segmented time distribution by investment type is summarized as follows:

Less Than 90 Days

From 90 Days to 180 Days

From 181 Days to 365

DaysGreater Than

365 Days TotalInvestmentsUS Bank:

Commercial Paper -$ 6,949,916$ 3,211,055$ -$ 10,160,971$ Federal Agency Notes - - - 12,117,532 12,117,532 United States Treasury Notes - 9,684,764 33,125,985 34,914,113 77,724,862

Total Investments -$ 16,634,680$ 36,337,040$ 47,031,645$ 100,003,365$

Less Than 90 Days



DaysGreater Than


Commercial Paper 17,350,671$ 13,775,668$ -$ -$ 31,126,339$ Federal Agency Notes 8,331,293 9,062,210 14,617,943 - 32,011,446 United States Treasury Notes 499,470 3,787,634 7,429,968 54,217,763 65,934,835

Total Investments 26,181,434$ 26,625,512$ 22,047,911$ 54,217,763$ 129,072,620$

Investment Maturities in 2019


3.1.b

Packet Pg. 72

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


25


Credit Risk – Credit risk is the risk that an issuer or other conterparty to an investment will not fulfill its obligations to the Authority. The Authority’s investment policy seeks to control credit risk by investing in compliance with the policy, qualifying the broker and financial institution with whom the Authority will transact, sufficient collateralization, portfolio diversification, and limiting maturity. For the years ended September 30, 2019 and 2018, the Authority’s exposure to credit risk by investment category as rated by Standard & Poor’s is as follows:

2019 2018Carrying Value Carrying Value

Cash and cash equivalentsTexasDAILY 80,824,112$ AAAm 74,776,363$ TexasTERM 41,500,000 AAAm 13,500,000 Outstanding reconciling item (1,261,551) (1,715,489)

121,062,561$ 86,560,874$

InvestmentsUS BankCommercial Paper 6,588,272$ A-1 23,231,232$ Commercial Paper 3,572,699 A-1+ 7,895,107 Federal Agency Notes 12,117,532 AA+ 32,011,446 United States Treasury Notes 77,724,862 AA+ 65,934,835 Total Investments 100,003,365$ 129,072,620$

Concentration of Credit Risk – Concentration of credit risk is the risk of loss attributable to the magnitude of the Authority’s investment in a single issuer. The Authority diversifies its investment portfolio so that reliance on any one issuer or broker will not place an undue financial burden on the Authority. The Authority limits its repurchase agreement exposure with a single firm to no more than 15% of the value of the Authority’s overall portfolio and its commercial paper and banker’s acceptance exposure with a single issuer to no more than 5% of the value of the Authority’s overall portfolio. Local government investment pools and U.S. Treasury Notes/Bonds/Bills are authorized at 100%. Federal Agency notes are authorized at 60%. The Authority has more than 5% of its investment in Federal National Mortgage Association and Federal Home Loan Mortgage Corporation. As of September 30, 2018, the Authority’s investment in Federal National Mortgage Association and Federal Home Loan Mortgage Corporation are 16% and 8.4%, respectively of the Authority’s total investment. As of September 30, 2019, the Authority’s investment in Federal National Mortgage Association is 7.23%. Fair Value – The Authority categorizes its fair value measurement disclosure in accordance with GASB Statement No. 72, Fair Value Measurement and Application, which establishes a hierarchy that prioritizes inputs to valuation methods. The three levels of inputs are:

Level 1 – Unadjusted quoted prices in active markets for identical assets and liabilities that Capital Metro has the ability to access.

3.1.b

Packet Pg. 73

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


26


Level 2 – Significant other observable inputs which may include quoted prices for identical or similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in non-active markets; or inputs other than quoted prices that are observable for the assets or liabilities, either directly or indirectly. Level 3 – Unobservable inputs which may include situations when there is minimal, if any, market activity for the asset or liability.

The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. Texas DAILY invests in money market investments of high quality and low risk with the objective of capital preservation. As of September 30, 2019, and 2018, Capital Metro has no unfunded commitments relating to this investment. Investments in Texas DAILY are fully redeemable on any business day; there are no lockup or gate restrictions on redemption. The following table summarize the inputs used as of September 30, 2019 and 2018 for Capital Metro’s assets measured at fair value:

2019Investments Fair Value Level 1 Level 2 Level 3Commercial Paper 10,160,971$ -$ 10,160,971$ -$ Federal Agency Notes 12,117,532 - 12,117,532 - United States Treasury Notes 77,724,862 - 77,724,862 - Total investments 100,003,365$ -$ 100,003,365$ -$


The Authority’s market prices are derived from closing bid prices as of the last business day of the month as supplied by ICE Data Services or Bloomberg. Where prices are not available from generally recognized sources the securities are priced using a yield-based matrix system to arrive at an estimated market value. Prices that fall between data points are interpolated.

3.1.b

Packet Pg. 74

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


27

3 – RECEIVABLES

Receivables at September 30, 2019 and 2018, consist of the following:

2019 2018Accounts receivable 2,838,768$ 2,625,416$ Due from Federal and other governments 1,791,117 13,913,143 Sales tax 44,403,762 41,540,749 Allowance for doubtful accounts (26,998) (215,448) Total receivables 49,006,649$ 57,863,861$

4 – ACCRUED EXPENSES

Accrued expenses at September 30, 2019 and 2018, consist of the following:

2019 2018Accrued accounts payable 19,463,757$ 11,386,852$ Workers’ compensation self-insurance 80,000 80,000 Accrued other 2,285,881 2,084,169 Total accrued expenses 21,829,638$ 13,551,021$

Accrued accounts payable at September 30, 2019, consists primarily of $4.3 million for capital projects, and $11.8 million for purchased transportation services, and $3.4 million for other services. At the end FY2018, accrued accounts payable consists primarily of $3.15 million for capital projects, and $7.19 million for purchased transportation services, and $1.1 million for other services.

5 – DESIGNATED AND RESERVE POLICY

Certain asset balances are designated through board directives for specific uses. During FY2010, Capital Metro adopted a reserves policy that includes the following components – cash flow reserve, capital projects reserve, operating reserve, self-insurance reserve. The reserves are to be used at the discretion of the board to fund temporary cash flow shortages, capital, operating and self-insurance costs not in the budget, and/or emergencies or shortfalls caused by economic downturns. In February 2015, the board adopted revisions to the reserves policy to incorporate language from Section 451.134 of the Transportation Code that requires Capital Metro to establish a reserve account by September 1, 2016, in an amount that is not less than two months of actual operating expenses. This new reserve is entitled the “statutory operating reserve” and replaces the cash flow reserve. As of September 30, 2019, $39.7 million was allocated to the statutory operating reserve, $21.5 million for a budget stabilization reserve, and $1.3 million to the self-insurance reserve. For fiscal year ending September 30, 2018, $39.7 million and $19.8 million respectively, was allocated to the statutory operating and budget stabilization reserves and $1.3 million to the self-insurance reserve.

3.1.b

Packet Pg. 75

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


28

6 – LEASES

Capital Metro has non-cancellable lease commitments for certain real property that expires in April 2024 and October 2055 which is subject to an escalation clause. The aggregate minimum annual lease payment under the term of the foregoing leases is as follows:

2019Operating

Fiscal Year Ended September 30: Leases2020 454,802 2021 461,036 2022 467,395 2023 473,881 2024 338,290 2025-2029 715,531 2030-2034 715,531 2035-2039 715,531 2040-2044 715,531 2045-2049 715,531 2050-2054 715,531 2055-2056 155,030

Total lease commitments 6,643,621$

Rent expense was approximately $1,325,879 for the year ended September 30, 2019, and $1,809,041 for the year ended September 30, 2018.

7 – LONG-TERM LIABILITIES

In November 2004, the citizens of the Capital Metro service area voted in favor of allowing Capital Metro to operate urban commuter rail service from Leander, Texas to downtown Austin, Texas. In February 2006, the Capital Metro Board of Directors approved a tax-exempt lease/purchase financing agreement for the funding of rail vehicles. The Master Lease/Purchase Financing Agreement dated March 1, 2006, between Banc of America Leasing and Capital, LLC and Capital Metro, was executed on March 9, 2006 to purchase six rail cars from Stadler Bussnang AG, a corporation organized under the laws of Switzerland.

The financed amount was $36,044,935 with an interest rate of 3.7747%, payments due quarterly on the 15th of October, January, April and July of each year beginning on October 15, 2006 for 10 years in the payment amount of $1,100,281. In December 2011, Capital Metro refinanced this lease in the amount of $19,190,263 with an interest rate of 2.48%, payments due quarterly on the 15th of January, April, July, and October of each year beginning on January 15, 2012 for 7 years in the payment amount of $745,260. During September 2018, the final payment was made for the lease/purchase financing agreement.

3.1.b

Packet Pg. 76

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


29

7 – LONG-TERM LIABILITIES, continued

In February 2012, the Board approved a long-term financing/notes payable agreement with BBVA Compass Bank in the amount of $20,000,000 for bus purchases. This is a 10-year note, an interest rate of 2.15%, callable after April 2017 (but not called as of September 30, 2017) with interest due each October 1 and April 1 beginning in October 2012 and principal payments annually on April 1 of each year beginning in April 2013. During September 2018, the final payment was made for the long-term financing agreement. All long-term debt balances have been paid. Changes in Long-Term Liabilities: The changes in long-term liabilities for the year ended September 30, 2019 and 2018 are as follows:

Balance as of Balance as of 9/30/18 Adjustments Additions Payments 9/30/19

Accrued vacation 770,807$ -$ 481,236$ (504,945)$ 747,098$ Accrued sick leave 642,078 - (141,236) - 500,842 Other rent liability 641,335 - 283,126 27,813 952,274 Unearned grant revenue 17,140,344 - - (8,343,309) 8,797,035 Total OPEB liability 3,339,100 - (390,331) (72,363) 2,876,406 Net pension liability 44,189,642 - 16,260,797 (6,692,978) 53,757,461

Total 66,723,306$ -$ 16,493,592$ (15,585,782)$ 67,631,116$


Accrued vacation 698,608$ -$ 551,801$ (479,603)$ 770,807$ Accrued sick leave 564,755 - 77,323 - 642,078 Bus purchase note payable 8,530,000 - - (8,530,000) - Commuter rail car and - - - - stations notes payable 740,667 - - (740,667) - Other rent liability 546,592 - 150,000 (55,257) 641,335 Unearned grant revenue 18,828,476 - - (1,688,132) 17,140,344 Total OPEB liability 978,321 2,339,465 98,027 (76,713) 3,339,100 Net pension liability 45,739,691 - 5,561,379 (7,111,428) 44,189,642

Total 76,627,110$ 2,339,465$ 6,438,531$ (18,681,800)$ 66,723,306$

8 – COMMITMENTS

The Authority has a capital spending plan for projects for upcoming and future years. The Authority’s FY2019 and FY2018 capital budget has appropriations of approximately $114.5 million and $151.5 million, respectively. The Authority’s remaining contractual commitments related to its capital improvement plan are $88.6 and $74.5 million as of September 30, 2019 and 2018, respectively. The Authority has executed contracts with various goods and services providers totaling approximately $914.2 million with termination dates through September 2035. All contracts contain a termination for convenience clause in which such contracts may be terminated, in whole or in part, for the convenience of the Authority.

3.1.b

Packet Pg. 77

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


30

8 – COMMITMENTS, continued

The Authority has entered into an interlocal agreement with the City of Austin, as amended in April 2010, to pay the City of Austin its pro rata share of 25% of the Authority’s one-cent sales tax from 2001 to 2004 in consideration for the City to carry out transportation mobility projects as approved by the Authority (ILA). The remaining balance outstanding as of September 30, 2019 and 2018 was $9.7 and $18.1 million, respectively. The amount is payable when the City of Austin incurs an expenditure toward an approved mobility project. As specified in the agreement, payment is due to the City if the current year sales tax revenue exceeds the base amount as defined. October 2018, an amendment to the ILA was executed which reduced the remaining balance $6 million and redirected the funds to pay costs associated with Project Connect. The Authority partnered with the City of Austin and several suburban communities to develop the Build Central Texas (BCT) program. BCT is comprised of two primary segments: The Build Central Texas Program with the City of Austin and the Suburban Communities Program with the surrounding communities. The remaining commitments for the programs are outlined below.

2019 2018Build Central Texas 388,686 $ 662,152 $ Suburban Communities 200,496 247,996 Total commitment 589,182 $ 910,148 $

Either the Authority or the City of Austin may terminate the BCT agreement at any time, per the provisions of Section 15 of the Build Greater Austin interlocal agreement. In no way will such termination affect Capital Metro’s obligation to make payments for work completed on projects previously approved for funding. Expenses are accrued when the respective city incurs an expenditure for an approved project. Participating suburban communities have separate Interlocal agreements that require funds are used for mobility related projects. Fuel Hedge Derivative: The Authority developed and implemented a plan for a Fuel Risk Management Program to mitigate fuel price risk for diesel and gasoline, protect and manage budget objectives, and reduce price volatility and introduce price predictability. This may be accomplished by purchasing financial instruments known as swap and/or options and exchange-traded diesel fuel futures contracts. This program began in December 2008. The Authority reports its derivative instruments in accordance with GASB Statement No. 53, Accounting and Financial Reporting for Derivative Instruments, which addresses recognition, measurement and disclosures related to derivative instruments. The Authority does not use derivative instruments for speculative purposes. The only derivative instruments entered into are for the purposes of risk mitigation; therefore, these instruments are considered potential hedging derivative instruments under GASB Statement No. 53. In accordance with the requirements of GASB Statement No. 53, all fuel hedges are reported on the Statements of Net Position at fair value. The fair value of option contracts for Ultra Low Diesel Fuel is determined using New York Mercantile Exchange (“NYMEX”) closing settlement prices as of the last day of the reporting period for Ultra Low Sulfur Diesel NY Harbor. The fair value is calculated by deriving the difference between the closing futures prices on the last day of the reporting period and the futures purchase price at the time the positions were established.

3.1.b

Packet Pg. 78

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


31


The outstanding hedging derivative instruments were evaluated for effectiveness at September 30, 2019. The hedge instruments utilize diesel fuel forwards contracts that are priced based on the underlying NY Harbor Ultra Low Sulfur Diesel contract price, while the physical gas is typically purchased at prices based on OPIS Pricing Gulf Coast Ultra Low Sulfur Diesel. Therefore, effectiveness testing was based on the extent of correlation between the index for the hedge and the settlement price at OPIS with volumes matching the underlying expected physical transaction. As of September 30, 2019, the Authority has a total of 176 Ultra Low Sulfur Diesel futures contracts at 42,000 gallons per contract and paid approximately $9,500 for the execution of the trades. As of September 30, 2019, the Authority was hedged 85.5% and 43.73% for FY2020 and FY2021, respectively, based on projected fuel consumption As of September 30, 2018, the Authority has a total of 115 Ultra Low Sulfur Diesel futures contracts at 42,000 gallons per contract and paid approximately $4,300 for the execution of the trades. As of September 30, 2018, the Authority was hedged 81.9%, 5.3% and 0.0% for FY2019, FY2020 and March 2021, respectively, based on projected fuel consumption. Consistent with hedge accounting treatment required for derivative instruments that are determined to be effective in offsetting changes in the cash flows of the hedged item, changes in fair value are reported as deferred outflows or deferred inflows of resources on the statements of net position until the contract expiration that occurs in conjunction with the hedged expected fuel purchase transaction. When fuel hedging contracts expire, at the time the purchase transactions occur, the deferred balance is recorded as an adjustment to fuel expense. Market values of the outstanding diesel fuel futures contracts are calculated by the counterparty based on NYMEX – NY Harbor. As of September 30, 2019, and 2018, the outstanding contracts fair value is approximately $838,000 and $1.4 million respectively, and related unrealized market loss of $ 780,000 in 2019 and unrealized market gain of $2.7 million in 2018. The amount has been reported on the Statement of Position as a deferred outflow/inflow of resources fuel hedge. Diesel fuel futures contracts, which settled during FY2019 and FY2018 decreased diesel fuel cost by $869,000 and $1.6 million, respectively. The amount has been included as part of current operating cost in the Statement of Revenues, Expenses, and Changes in Net Position. Custodial Credit Risk – The Authority had deposits of $1.3 million and $1.9 million with its Broker as required by its Fuel Risk Management Program as of September 30, 2019 and 2018, respectively. At September 30, 2019 and 2018, respectively, of which $838,000 and $1.4 million was exposed to custodial credit risk. Basis Risk – The Authority’s outstanding hedges include basis risk, since the fuel products the government physically purchases to provide service are based on a different index for the same products used for the futures contracts – OPIS Pricing Gulf Coast Ultra Low Sulfur Diesel, vs. NYHRBR Ultra Low Sulfur Diesel.

3.1.b

Packet Pg. 79

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


32


Termination Benefits: In accordance with GASB Statement No. 47, Accounting for Termination Benefits, the Authority has provided termination benefits to former StarTran employees and the related benefit has been recognized within the financial statements. As disclosed within Note 1, as part of the 2012 outsourcing to private companies to operate all passenger service, the Authority also remains responsible for the Pension liability attributable to former StarTran employees of approximately $34.3 million as of September 30, 2019 and $29.0 million as of September 30, 2018. The assumptions used for the related liability, which are included in the Statement of Net Position, are disclosed in Note 10.

9 – 401(k) PLANS

The Authority has retirement benefits under a 401(k) defined contribution plan for its full-time employees which covers substantially all administrative employees. In a defined contribution plan, benefits depend solely on amounts contributed to the plan plus investments’ earnings. Employees are eligible to participate after 30 days of service. In January 2005, the Authority ended the employer contribution to the plan but does allow for discretionary employer contributions. The plan allows loans to participants. Participants start to vest in the employer’s contribution at the completion of one year of service with 100% vesting occurring after five years. All current participants are 100% vested in employer’s contributions made prior to January 1, 2005. Participants that terminated employment prior to January 1, 2009 may be partially vested. The Authority’s designated Plan Administrator administers the plan. The Authority maintains the authority to amend the plan. Contributions from participating employees for the Authority totaled $1,619,651 and $50,109 in discretionary employer contributions for the year ended September 30, 2019. For the prior year, employee contributions totaled $1,547,773 and there was $52,922 in discretionary contributions from Capital Metro.

10 – DEFINED BENEFIT RETIREMENT PLANS

Capital Metropolitan Transportation Authority Retirement Plan for Administrative Employees Plan Description Effective January 1, 2005, the Authority established a pension plan, the Capital Metropolitan Transportation Authority Retirement Plan for Administrative Employees, (the Plan). The Plan is a noncontributory single employer defined benefit plan. Subject to eligibility requirements, all full-time administrative employees are eligible for participation in the Plan except for employees covered by a collective bargaining agreement and lease employees as defined by the Plan. An employee is eligible to become a participant following the first day of the month coincident with or following their date of hire. The Plan is not subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (ERISA). Management of the Plan is vested in the Authority Board and advised by the Pension Plan Committee whose members are appointed by the Board.

3.1.b

Packet Pg. 80

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


33

10 – DEFINED BENEFIT RETIREMENT PLANS, continued

All Plan assets are maintained under a trust agreement. Under the terms of the trust agreement, Benefit Trust (the Trustee) serves as trustee on behalf of the Plan and carries out an investment policy established by the Pension Plan Committee, consistent with the purposes of the Plan and the requirements of applicable laws and regulations. The following is a description of the Capital Metropolitan Transportation Authority Retirement Plan for Administrative Employees. The Pension Plan Committee for the Plan is the administrator of a single employer defined benefit pension plan sponsored by Capital Metro. The following table summarizes membership of the plan at December 31, 2019 and 2018.

2019 2018Retirees and beneficiaries currently receiving benefits 113 99Terminated plan members entitled to but not yet receiving benefits 249 238Active plan members 292 296

654 633

The most recently available financial statement of the Plan is for the year ended December 31, 2018. A copy of the Plan’s annual audit may be obtained from:

Capital Metropolitan Transportation Authority 2910 East Fifth Street Austin, Texas 78702

Pension Benefits Participants become 100% vested upon completion of five years of service. Vesting period include periods prior to the effective date of the Plan computed as if the Plan had been in effect. The Plan also allow for participants to recognize prior service (limited to five years) with a governmental entity or other entity related to the provision of public transportation services. Plan participants are eligible for their Plan benefits after terminating employment with vested rights. Participants are eligible for normal retirement on the first day of the month following age 65. The Plan permits early retirement from ages 55 to 64, provided an employee has completed five years of vesting service. The amount of pension payable is computed in the same manner as for normal retirement, except that it is reduced by a reduction factor, which is graduated to reflect the number of years by which early retirement precedes age 65. Retirement benefits are paid to unmarried participants in the form of a single life annuity and to married participants in the form of a joint and 50% survivor annuity but may elect other payment options with spousal consent. Lump-sum benefits are only available if the actuarial value of the benefits is less than $5,000. Participants are entitled to annual pension benefits at normal retirement (age 65) equal to: (i) 1.5% of average earnings, as defined, plus (ii) 0.5% of earnings in excess of covered compensation, as defined, multiplied by (iii) the number of years of credited service, as defined by the Plan. If an active employee dies before reaching age 65, the surviving spouse or a designated beneficiary shall receive for his or her lifetime a deferred monthly benefit equals to the amount that the participant would have received based on service to the participant’s date of death had the participant elected a 50% joint and survivor annuity option and died the next day.

3.1.b

Packet Pg. 81

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


34


A participant may elect not to be covered by the deferred joint and survivor annuity option or may no longer be married when pension payments are to begin. In such instances, a single life annuity will be received by the participant. Disability benefits may be elected at age 55 up to normal retirement age, at which time disabled participants will receive the normal retirement benefit computed as though they had been employed to age 55 or up to normal retirement age with their annual compensation, as defined, remaining the same as at the time they became disabled. Contribution Contribution requirements of the active plan are established and may be amended by Capital Metro’s Board. Currently, plan members are not required to contribute. Capital Metro is making discretionary contributions based on the advice of the Actuary and consistent with funding policy for the Plan. Net Pension Liability Capital Metro’s net pension liability was measured as of December 31, 2018 and 2017, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. Actuarial Assumptions The actuarial assumptions that determined the total pension liability as of December 31, 2018 and 2017 were based on the results of observed past actuarial experience, best estimate of future expectations as well as estimates inherent in related market data. The Plan had an experience study performed in 2017 related to the retirement age. For FY 2018 and FY2017, the actuarial valuation was determined using the following actuarial assumptions: FY 2018 Actuarial cost method Entry age normal Discount rate 5.54% 20-year Municipal Bond rate 3.56% Salary increases 3.5% Investment rate of return 6.75% Retirement age Age 60-61 is 5%, Age 62-64 is 10%, Age 65 is 50%; Age 66-69 is 15% and age 70 is 100% Mortality rates Service retirees, beneficiaries and nondeposition members: SOA RP- 2014 Total Dataset Morality adjusted backwards to 2006 projected with Scale MP-2014 and projected with scale MP-2018 FY 2017 Actuarial cost method Entry age normal Discount rate 5.48% 20-year Municipal Bond Rate 3.04% Salary increases 3.5% Investment rate of return 6.75% Retirement age Age 60-61 is 5%, Age 62-64 is 10%, Age 65 is 50%; Age 66-69 is 15% and age 70 is 100% Mortality rates Service retirees, beneficiaries and nondeposition members: SOA RP- 2014 Total Dataset Morality projected with Scale MP-2017

3.1.b

Packet Pg. 82

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


35


Long-Term Rate of Return on Assets The long-term expected rate of return on Plan investments was determined using best estimate ranges of expected future real rate of return for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected information. The long-term expected geometric real rates of return for 2018:

Long-TermTarget Expected Real

Asset Class Allocation Rate of ReturnDomestic equities: 51.0% U.S. broad equity 7.14% Large cap 7.02% Small/mid cap 3.73%Domestic fixed income 26.5% 3.02%International equities: 13.1% Global ex-U.S. equity 7.25% International equity 6.99% Emerging markets equity 7.23% Non US FixedAlternative: High yield 5.35% Volatility hedge 5.48%

Private equity 8.49%Inflation 2.26%

Real estate 3.5% 6.25%Cash equivalents 5.9% 2.52%

100.0%

Discount Rate The discount rate used to measure the total pension liability as of December 31, 2018 was 5.54%. The projection of cash flows used to determine the discount rate assumed that employer contributions will be made equal to the actuarially determined contribution rate. Based on those assumptions, the pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members until 2054. Therefore, the long-term expected rate of return of 6.75% was applied to all periods of projected benefits payment to determine the total pension liability until 2054. Subsequent to 2054, the 20-year municipal bond rate of 3.56% was utilized as of December 31, 2018.

3.1.b

Packet Pg. 83

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


36


Changes in Net Pension Liability (Asset) The following presents the changes in total fiduciary net position and liabilites and plan fiduciary net position at September 30, 2019 and 2018 (measurement date of December 31, 2018 and 2017 respectively): Total pension liability: 2018 2017

Service cost 2,793,032$ 2,964,773$ Interest on total pension liability 2,445,407 2,235,084 Difference between expected and actual experience 720,052 (288,769) Change in assumptions (920,415) 3,035,050 Benefit payments/refunds of contributions (932,072) (916,317)

Net change in total pension liability 4,106,004 7,029,821

Total pension liability at beginning of year 45,157,623 38,127,802

Total pension liability at end of year (a) 49,263,627 45,157,623

Fiduciary net position:Employer contributions 2,692,422 3,106,829 Investment income net of investment expense (1,941,101) 4,081,936 Benefit payments/refunds of contributions (932,072) (916,317) Administrative expenses (58,478) (74,118)

Net change in fiduciary net position (239,229) 6,198,330

Fiduciary net position at beginning of year 30,010,195 23,811,865

Fiduciary net position at end of year (b) 29,770,966 30,010,195

Net pension liability at end of year = (a) - (b) 19,492,661$ 15,147,428$

3.1.b

Packet Pg. 84

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


37


Sensitivity Analysis The following presents the net pension liability of Capital Metro, calculated using the discount rate of 5.54% and 5.48% as of December 31, 2018 and 2017, as well as what Capital Metro’s net pension liability would be if it were calculated using a discount rate that is 1-percentage point lower or 1-percentage point higher than the current rate:

Current1% Discount 1%

Decrease Rate IncreaseDecember 31, 2018 4.54% 5.54% 6.54%Net pension liability 27,175,973 $ 19,492,661 $ 13,176,540 $

December 31, 2017 4.48% 5.48% 6.48%Net pension liability 22,379,800 $ 15,147,428 $ 9,227,770 $

Pension Expense For the fiscal years ended September 30, 2019 and 2018 (measurement dates December 31, 2018 and 2017, respectively), Capital Metro recognized the following pension-related expense: Pension Expense (Income) December 31, 2018 December 31, 2017Service cost 2,793,032$ 2,964,773$ Interest on total pension liability 2,445,407 2,235,084 Administrative expenses (58,478) (74,118) Expected investment return net of investment expenses (2,075,195) (1,674,487) Recognition of deferred outflows (inflows):

Experience 490,291 340,903 Change in assumptions 951,715 1,142,672 Investment gains or losses 609,076 (194,183)

Pension expense 5,155,848$ 4,740,644$

Deferred Inflows and Outflows of Resources As of September 30, 2019, and 2018 (measurement date of December 31, 2018 and 2017), the deferred inflows and outflows of resources are as follows:

3.1.b

Packet Pg. 85

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


38


Deferred Outflows of Resources2018 2017

Differences between expected and actual experience 709,140$ 600,061$ Changes of assumptions 2,541,101 4,013,042 Net difference between projected and actual earnings 1,940,696 - Contributions made subsequent to measurement date 2,176,377 1,803,291

7,367,314$ 6,416,394$ Deferred Inflows of Resources

Differences between expected and actual experience (264,106)$ (384,787)$ Changes of assumptions (828,239) (428,051) Net difference between projected and actual earnings - (1,466,524)

(1,092,345)$ (2,279,362)$

Capital Metro reported $2,176,377 as deferred outflow of resources resulting from contributions made subsequent to the measurement date and which are eligible employer contributions made from January 1, 2019 through September 30, 2019. For the same period in 2018, Capital Metro reported $1,803,291 as deferred outflow of resources resulting from contributions made. Amounts currently reported as deferred outflows of resources and deferred inflows of resources related to pensions, excluding contributions made subsequent to the measurement date, will be recognized as pension expense. The amortization period for these deferrals is over a period of 5 years for investment (gains)/losses. The remaining balance to be recognized in future years will be impacted by additional future deferred inflows and outflows of resources. Year ended September 30: 2018

2020 1,413,209$ 2021 699,981 2022 758,669 2023 1,226,733

4,098,592$

Capital Metropolitan Transportation Authority Retirement Plan for Bargaining Unit Employees of StarTran, Inc. Plan Description The Capital Metropolitan Transportation Authority Retirement Plan for Bargaining Unit Employees of StarTran, Inc. (the Plan) was closed and for GASB 68 reporting, is a “special funding situation.” Special funding situations are defined as circumstances in which a non-employer entity is legally responsible for making contributions directly to a pension plan that is used to provide pensions to the employees of another entity or entities and either (1) the amount of contributions for which the non-employer entity legally is responsible is not dependent upon one or more events unrelated to pensions or (2) the non-employer is the

3.1.b

Packet Pg. 86

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


39


only entity with a legal obligation to make contributions directly to a pension plan. The Authority is the only legal entity obligated to contribute to the Plan. The benefits were frozen for all participants as of August 18, 2012 and there are no longer any employee contributions. All future valuations will have an employer cost only. All Plan assets are maintained under a trust agreement. Under the terms of the trust agreement, Graystone Consulting (the Trustee) serves as trustee on behalf of the Plan and carries out an investment policy established by the Retirement Plan Committee, consistent with the purposes of the Plan and the requirements of applicable laws and regulations. The following is a description of the Capital Metropolitan Transportation Authority Retirement Plan for Bargaining Unit Employees of StarTran Inc. The Retirement Plan Committee for the Plan is the administrator of a single employer defined benefit pension plan sponsored by Capital Metro. Eligible participants are covered by the Plan. The following table summarizes membership of the plan at December 31, 2018 and 2017:


994 1008

The most recently available financial statements of the Plan are for the year ended December 31, 2018 and 2017. A copy of the Plan’s annual audit may be obtained from:


Plan Benefits The Plan provides retirement, death and disability benefits. All participants participating as of August 18, 2012 are considered 100% vested. Participants may retire with unreduced accrued benefits at age 65, or when benefit accrual service equals or exceeds 22.5 years of Benefit Accrual Service. The monthly benefit at retirement is payable in a ten-year certain and life thereafter form of annuity. Participants are eligible for early retirement at the age of 55 with 5 years of service, such participants shall be entitled to a normal pension accrued reduced in accordance with plan provisions. Retirement benefit payments are determined by application of a benefit formula based on the participant’s years of pension credited service. Effective July 1, 2000, the monthly retirement benefit for each year of benefit accrual service is $60.00 per month per year of Benefit Accrual Service for years earned. Participants with disability benefits have no age requirement must have 15 years of employment and the benefit is equal to the actuarial greater of 1) two times the participant derived benefit, or 2) the accrued benefit. The pre-retirement death benefit is equal to the present value of accrued vested benefit. There are no automatic or guaranteed post-retirement cost-of-living adjustments, but ad hoc retiree benefits increases may be created via plan amendments. Amendments to the plan are made only with the authority of the Retirement Plan Committee.

3.1.b

Packet Pg. 87

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


40


The following plan changes, adopted as a result of the plan freeze on August 18, 2012 are reflected in the valuation dated on or after December 31, 2017. Participants are eligible for immediate distributions.

Service requirements for Unreduced Early Retirement Age (UERA) was changed from 25 years to

22.5 years and participants receive credit toward UERA while working for the new contractor.

Lump sums are capped unless a participant is eligible for UERA.

Effective May 11, 2015, the Plan was amended to allow 15 former IUE participants to earn credit toward unreduced retirement eligibility while working for the new contractor.

Contributions There are no participant contributions after August 18, 2012. However, make up contributions are permissible under the Plan. Interest on participant contributions is credited annually based on the 120% of the Federal Mid-term rate in effect each January 1. The Authority makes contributions, which are actuarially determined as of each valuation date and compliant with the terms of applicable labor contracts. The actuarially determined annual contributions consist of a normal cost contribution and an amortization of the unfunded actuarial accrued liability contribution. The 2018 plan years’ employer contribution funded the normal cost and amortized the existing unfunded actuarial accrued liability on a “closed” 30-year level percent of amortization with 21 years remaining and with a 3% annual increase of the unfunded actuarial accrued liability. Net Pension Liability The Plan’s net pension liability was measured as of December 31, 2018 and 2017, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. Actuarial Assumptions The actuarial assumptions that determined the total pension liability as of December 31, 2018 and 2017 is based on the results of an actuarial experience study conducted in 2017. The total pension liability in the December 31, 2018 and 2017 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement:

3.1.b

Packet Pg. 88

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


41


Measurement date: December 31, 2018 Actuarial cost method Early age entry normal cost method Salary increases NA Investment rate of return 7.0% net of pension plan investment expenses Discount rate 7.0% Retirement age and withdrawal rates Age 55-61 is 13% to 14%

Age 62 is 15% Age 63 is 17% Age 64-70 is 30% to 100% Mortality rates Healthy and Disabled Healthy: PUB-2010 Amounts-Weighted Mortality for General Employees with Generational Improvements from 2010 using Scale MP-2018

Measurement date: December 31, 2017 Actuarial cost method Early age entry normal cost method Salary increases NA Investment rate of return 7.25% net of pension plan investment expenses Discount rate 7.25% Retirement age and withdrawal rates Age 55-61 is 13% to 14% Age 62 is 15% Age 63 is 17% Age 64-70 is 30% to 100% Mortality rates Healthy: Aggregate 2006 base rates from RP-2014 mortality study projected generationally from 2006 using Scale MP-2017 Disabled: 2006 disabled base rates from RP-2014 mortality study projected generationally from 2006 using Scale MP-2017

Long-Term Rate of Return on Assets The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation.

3.1.b

Packet Pg. 89

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


42


Best estimates of arithmetic real rates of return for each major asset class included in the pension plan’s target asset allocation as of December 31, 2018 is summarized on the following table:

Long-TermAsset Expected

Asset Class Allocation Rate of ReturnU.S. Large Cap Equity 19.20% 7.00%U.S. Small Cap Equity 8.50% 7.50%REITs 6.00% 6.80%Non U.S. Develop Equity 27.70% 8.00%Fixed Income 30.00% 3.60%Emerging Markets Equity 8.60% 8.60%

100.00%

Discount rate – The discount rate used to measure the total pension liability as of December 31, 2018 and 2017 was 7.0% and 7.25% respectively. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that employer contribution will be made at rates equal to the actuarially determined contribution rates. For this purpose, only employer contributions that are intended to fund benefits of current plan members and their beneficiaries are included. Based on these assumptions, the Pension Fund’s fiduciary net position was projected to be available to make all projected benefit payments for current plan members. Therefore, the long-term expected rate of return on Pension Plan investments was applied to all periods of projected benefit payments to determine the total pension liability.

3.1.b

Packet Pg. 90

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


43


Changes in Net Pension Liability (Asset) The following presents the changes in total fiduciary net position and liabilities and plan fiduciary net position at September 30, 2019 and 2018 (measurement date of December 31, 2018 and 2017): Total pension liability: 2019 2018

Service cost -$ -$ Interest on total pension liability 4,346,270 4,287,202 Effect of assumption changes or inputs (213,616) (1,769,787) Change in benefit term 2,453,043 3,305,720 Benefit payments/refunds of contributions (4,668,156) (4,540,291)


Total pension liability at beginning of year 62,241,794 60,958,950 Total pension liability at end of year (a) 64,159,335 62,241,794

Fiduciary net position:Employer contributions 4,000,556 4,004,599 Member contributions 654 4,578 Investment income net of investment expense (2,411,068) 4,420,550 Benefit payments/refunds of contributions (4,668,156) (4,540,291) Administrative expenses (227,031) (225,052)

Net change in fiduciary net position (3,305,045) 3,664,384

Fiduciary net position at beginning of year 33,199,580 29,535,196 Fiduciary net position at end of year (b) 29,894,535 33,199,580 Net pension liability at end of year = (a)-(b) 34,264,800$ 29,042,214$

Sensitivity Analysis The following presents the net pension liability of Capital Metro Retirement Plan for Bargaining Unit of StarTran, Inc., calculated using the discount rate of 7.0% and 7.25% for December 31, 2018 and 2017, as well as what Capital Metro’s Bargaining Unit of StarTran, Inc. net pension liability would be if it were calculated using a discount rate that is 1-percentage point lower or 1-percentage point higher than the current rate.




3.1.b

Packet Pg. 91

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


44


Pension Expense For the fiscal year ended September 30, 2019 and 2018 (measurement date of December 31, 2018 and 2017), Capital Metro recognized the following pension-related expense: Pension Expense (Income)

December 31, 2018 December 31, 2017Interest on total pension liability 4,346,270$ 4,287,202$ Member contributions (654) (4,578) Administrative expenses 227,031 225,052 Expected investment return net of investment expenses (2,375,130) (2,187,296) Recognition of deferred inflows/outflows of resources:

Change in assumptions 2,453,043 3,305,720 Recognition of demographic differences—current year (213,616) (1,769,787) Recognition of investment gains or losses—current year 957,240 (446,651) Recognition of investment gains or losses—prior years 168,313 614,964

Pension expense 5,562,497$ 4,024,626$

Deferred Inflows and Outflows of Resources As of September 30, 2019, and 2018 (measurement date of December 31, 2018 and 2017), the deferred inflows and outflows of resources are as follows: Deferred Outflows of Resources

2018 2017Contributions made subsequent to measurement date 2,999,997$ 2,999,997$ Net difference between projected and actual earnings 3,139,434 -

6,139,431 2,999,997

Deferred Inflows of ResourcesNet difference between projected and actual earnings -$ (521,210)$

-$ (521,210)$

Capital Metro reported $2,999,997 as deferred outflow of resources resulting from contributions made subsequent to the measurement date and which are eligible employer contributions made from January 1, 2019 through September 30, 2019. For the same period last year, the amount reported as deferred outflow of resources resulting from contributions was unchanged. Amounts currently reported as deferred outflows of resources and deferred inflows of resources related to pensions, excluding contributions made subsequent to the measurement date, will be recognized in pension expense. Investment (gains)/losses are recognized in pension expense over a period of five years.

3.1.b

Packet Pg. 92

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


45


Aggregate pension related amounts for all plans are as follows:

The Authority’s The Authority’sRetirement Plan Retirement Plan

for Administrative for Bargaining UnitEmployees Employees of StarTran, Inc. Total

Net pension liability 19,492,661$ 34,264,800$ 53,757,461$ Deferred outflows of resources, pension-

related amounts 7,367,314 6,139,431 13,506,745 Deferred inflows of resources, pension-

related amounts 1,092,345 - 1,092,345 Pension expense 5,155,848 5,562,497 10,718,345

Year ended September 30:2020 1,413,209$ 1,063,283$ 2,476,492$ 2021 699,981 608,322 1,308,303 2022 758,669 510,589 1,269,258 2023 1,226,733 957,240 2,183,973

4,098,592 3,139,434 7,238,026 Deferred outflows—contributions subsequent

to the measurement date 2,176,377 2,999,997 5,176,374 6,274,969$ 6,139,431$ 12,414,400$

11 – CAPITAL ASSETS

Changes in capital assets for the year ended September 30, 2019 were:

September 30, 2018 Additions RetirementsCompleted

Projects September 30, 2019Capital assets not being depreciated

Land and improvement 59,689,545$ -$ (69,715)$ 10,269,681$ 69,889,511$ Projects in process 74,723,419 100,236,046 - (111,190,083) 63,769,382

Total capital assets not being depreciated 134,412,964 100,236,046 (69,715) (100,920,402) 133,658,893 Depreciable capital assets:

Building and improvements 86,079,657 - (24,980) 19,672,234 105,726,911 Railroad 149,028,997 - - 18,790,222 167,819,219 Buses and equipment 326,473,243 - (17,024,730) 54,726,827 364,175,340 Passenger parking and stations 89,425,600 - - 7,731,119 97,156,719

Total other capital assets 651,007,497 - (17,049,710) 100,920,402 734,878,189 Less accumulated depreciation:

Building and improvements 49,040,929 3,290,076 (24,980) - 52,306,025 Railroad 116,412,803 9,124,577 (96) - 125,537,284 Buses and equipment 157,471,110 27,776,110 (16,804,479) - 168,442,741 Passenger parking and stations 56,349,983 5,385,711 - - 61,735,694

Total accumulated depreciation 379,274,825 45,576,474 (16,829,555) - 408,021,744 Depreciable capital assets, net 271,732,672 (45,576,474) (220,155) 100,920,402 326,856,445 Total capital assets 406,145,636$ 54,659,572$ (289,870)$ -$ 460,515,338$

Depreciation and amortization expense were $46.5 million for the year ended September 30, 2019.

3.1.b

Packet Pg. 93

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


46



CompletedSeptember 30, 2017 Additions Retirements Projects September 30, 2018

Capital assets not being depreciatedLand and improvement 59,166,866$ -$ -$ 522,679$ 59,689,545$ Projects in process 59,247,399 77,518,499 - (62,042,479) 74,723,419

Total capital assets not being depreciated 118,414,265 77,518,499 - (61,519,800) 134,412,964 Depreciable capital assets:

Building and improvements 84,692,633 - (58,228) 1,445,252 86,079,657 Railroad 139,643,809 - (11,501) 9,396,689 149,028,997 Buses and equipment 290,922,992 - (12,864,208) 48,414,459 326,473,243 Passenger parking and stations 87,162,200 - - 2,263,400 89,425,600


Building and improvements 46,826,275 2,272,882 (58,228) - 49,040,929 Railroad 107,339,494 9,084,810 (11,501) - 116,412,803 Buses and equipment 145,116,087 25,128,518 (12,773,495) - 157,471,110 Passenger parking and stations 49,869,377 6,480,606 - - 56,349,983


Depreciation and amortization expense were $44.0 million for the year ended September 30, 2018. Capital Metro owns certain real properties and a mass transit easement, which are used for current rail operations and held for future mass transit purposes. Such property is listed at cost.

12 – CONTINGENCIES

Various claims have been asserted against Capital Metro from personal injuries involving Capital Metro property. Capital Metro plans to vigorously defend all allegations and no liability is reflected in the financial statements. Certain other claims have been asserted for which estimation of potential loss, if any, may be determined. Potential losses on these claims are included in the financial statements. Capital Metro receives federal grants that are subject to review and audit by the grantor agencies. Such audits could lead to requests for reimbursement to the grantor agency for expenditures disallowed under terms of the grant. Capital Metro’s management believes such disallowances, if any, will not have a material effect on the financial statements.

3.1.b

Packet Pg. 94

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


47

13 – SELF-INSURANCE

Workers’ compensation claims are reserved and paid in accordance with the provisions of the Texas Workers’ Compensation Act. Claims that are probable and can be reasonably estimated are reported as a part of accrued expenses. The self-insurance retention levels as of September 30, 2019 and 2018 for workers’ compensation are $350,000 per occurrence. At September 30, 2019 and 2018, there are no claims exceeding Capital Metro’s retention limits. The following represents the workers’ compensation claims activity and the end of year liability, which includes claims incurred and reported, as well as estimated claims incurred but not reported for the year ended September 30, 2019 and 2018: Workers’ Compensation Claims 2019 2018Beginning of year liability 80,000$ 146,000$ Current year claims and/or changes in estimates 63,240 (54,584) Claim payments (63,240) (11,416) End of year current year liability 80,000$ 80,000$

Capital Metro has been self-insured for health and dental since January 1, 2003. United Health Care, Inc. administers the plan for Capital Metro employees. Health and Dental Self-Insurance 2019 2018Beginning of year liability 203,445$ 219,095$ Current year claims and/or changes in estimates 3,942,373 3,348,437 Claim payments (3,861,818) (3,364,087) End of year current year liability 284,000$ 203,445$

Due to the types of risk associated with being self-insured, the ultimate amount to be paid out may be more or less than the amounts accrued within accrued expenses at September 30, 2019 and 2018.

14 – OTHER POST EMPLOYMENT BENEFITS (OPEB)

Plan description: Capital Metro’s defined benefit OPEB plan, a single-employer, health care plan provides OPEB for eligible employees of the Authority. The plan is administered by Capital Metro and Capital Metro has the authority to establish or amend the plan provisions or contribution requirements. No assets are accumulated in a trust that meets the criteria in paragraph 4 of Statement 75. Retirees must elect within six months of becoming Medicare eligible. The plan does not issue a stand-alone financial report. Benefits Capital Metro provides a Medicare supplement insurance stipend to all eligible retired administrative employees of Capital Metro to supplement retiree health care. Employee benefits are set at a fixed amount (varies from $1,450 up to $2,900) per year and employees are eligible based on the following: Age 62-64 with at least 10 years of service at retirement Age 62-64 that meet the Rule of 80 at retirement Age 65 with 10 or more years of service at retirement Spouses are not eligible for postemployment benefits. The Authority has eliminated benefits for all bargaining employees.

3.1.b

Packet Pg. 95

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


48

14 – OTHER POST EMPLOYMENT BENEFITS (OPEB), continued

Contributions: The contribution requirements of plan members and the Authority are approved and may be amended by the Board of Directors. The Authority funds all obligations arising under this plan on a pay-as-you-go basis. The following is the participant summary as of September 30, 2019 and 2018 (the most recent actuarial valuation date): Participants: 2019 2018

Actives—fully eligible 16 9Actives—not eligible 288 299Retires 23 25

Total 327 333

Total OPEB Liability The Authority’s total OPEB liability of $2,876,405 was measured as of September 30, 2019 and $3,339,100 was measured as of September 30, 2018 and was determined by an actuarial valuation as of that date. Actuarial methods and assumptions: The total OPEB liability in the September 30, 2019 actuarial valuation was determined using the following actuarial assumptions and other inputs, applied to all periods included in the measurement, unless otherwise specified: Inflation 3.0% per annum Salary increases 3.5% per annum Discount rate 2.66% per annum (EOY) Health care cost trend rates Benefit will remain constant in the future. Actuarial cost method Entry Age Normal based on level percentage of projected

salary. Mortality rates General PUB-2010 generational table using MP-18

applied on a gender-specific basis. Plan participation percentage The participation percentage is the assumed rate of future

eligible retirees who elect to continue health coverage at retirement. It is assumed that 100% of all employees and their dependents who are eligible for early retiree benefits will participate in the retiree medical plan. This assumes that a one-time irrevocable election to participate is made at retirement.

The discount rate was based on Bond Buyer 20-Bond GO index.

3.1.b

Packet Pg. 96

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


49


Capital metro did not perform an actuarial experience study for the actuarial assumptions used in the September 30, 2019 valuation.

Changes in the Total OPEB Liability

September 30, 2019 September 30, 2018Net OPEB Obligation, beginning 3,339,100$ 3,317,786$ Changes for the year:Service cost 256,296 245,871 Interest 150,911 149,467 Changes in assumptions or other inputs (797,538) (297,311) Contributions and payments made (72,364) (76,713) Net changes (462,695) 21,314 Net OPEB Obligation, ending 2,876,405$ 3,339,100$

The total OPEB liability as of September 30, 2019 assumes a discount rate of 2.66%. Due to change in the termination and retirement rates based on current actuarial valuation, a $797,538 decrease in liability was realized. The total OPEB liability as of September 30, 2018 assumes a discount rate of 4.24%. The change in discount rate resulted in a 297,311 decrease in liability. Sensitivity of the total OPEB liability to changes in the discount rate: The following presents the total OPEB liability of the Authority, as well as what the Authority’s approximate total OPEB liability would be if it were calculated using a discount rate that is 1-percentage-point lower or 1-percentage-point higher than the current discount rate:

1% Decrease Discount Rate 1% IncreaseSeptember 30, 2019 1.66% 2.66% 3.66%Total OPEB liability 3,316,724$ 2,876,000$ 2,515,209$


3.1.b

Packet Pg. 97

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


50


Sensitivity of the total OPEB liability to changes in the healthcare cost trend rates: The following presents the total OPEB liability of the Authority, as well as what the Authority’s total OPEB liability would be if it were calculated using healthcare cost trend rates that are 1-percentage-point lower or 1-percentage-point higher than the current healthcare cost trend rates:

Cost TrendSeptember 30, 2019 1% Decrease Current 1% IncreaseTotal OPEB liability 2,876,000$ 2,876,000$ 2,876,000$


OPEB expense and deferred outflows of resources and deferred inflows of resources: For the year ended September 30, 2019 and 2018, the Authority recognized OPEB expenses of $329,234 and $374,865 respectively. The Authority reported deferred inflows of resources related to OPEB from the following source:

Deferred Inflows of Resources 2019 2018Difference between expected and actual experience (148,215)$ -$ Changes of assumptions or other inputs (848,188) (276,839)

(996,403)$ (276,839)$

Amounts reported as the deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense over the average future service to retirement of plan participants as follows:

Years ending September 30: 20192020 (77,973)$ 2021 (77,973) 2022 (77,973) 2023 (77,973) 2024 (77,973) Thereafter (606,538)

(996,403)$

3.1.b

Packet Pg. 98

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

51

Required Supplementary Information

3.1.b

Packet Pg. 99

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

Capital Metropolitan Transportation Authority Required Supplementary Information

52

Total pension liability: 2019 2018 2017 2016 2015Service cost -$ -$ 303,363$ 486,248$ 391,902$ Interest on total pension liability 4,346,270 4,287,202 4,206,646 4,226,699 4,221,102 Effect of assumption changes or inputs (213,616) (1,769,787) 1,878,042 (730,963) - Change in benefit term 2,453,043 3,305,720 934,709 - 302,377 Benefits payment/refunds of contributions (4,668,156) (4,540,291) (4,221,793) (4,959,966) (4,721,559)

Net change in total pension liability 1,917,541 1,282,844 3,100,967 (977,982) 193,822

Total pension liability at beginning of year 62,241,794 60,958,950 57,857,983 58,835,965 58,642,143 Total pension liability at end of year (a) 64,159,335$ 62,241,794$ 60,958,950$ 57,857,983$ 58,835,965$

Employer contributions 4,000,556$ 4,004,599$ 4,005,413$ 4,010,205$ 3,915,395$ Member contributions 654 4,578 5,417 5,760 6,322 Investment income net of investment expense (2,411,068) 4,420,550 1,621,196 (98,010) 1,813,047 Benefit payments/refunds of contributions (4,668,156) (4,540,291) (4,221,793) (4,959,966) (4,721,559) Administrative expenses (227,031) (225,052) (216,313) (225,290) (259,705) Net change in fiduciary net position (3,305,045) 3,664,384 1,193,920 (1,267,301) 753,500

Fiduciary net position at beginning of year 33,199,580 29,535,196 28,341,276 29,608,577 28,855,077 Fiduciary net position at end of year (b) 29,894,535 33,199,580 29,535,196 28,341,276 29,608,577 Net pension liability/(asset) at end of year = (a) - (b) 34,264,800$ 29,042,214$ 31,423,754$ 29,516,707$ 29,227,388$

Fiduciary net position as a % of total pension liability 46.59% 53.34% 48.45% 48.98% 50.32%Pensionable covered payroll* 8,732,490$ 9,672,912$ 9,807,345$ 10,882,123$ 12,270,378$ Net pension liability as a % of covered payroll 392.38% 300.24% 320.41% 271.24% 238.19%

Capital Metropolitan Transportation Authority Retirement Plan for Bargaining Unit Employees of StarTran, Inc. Schedules of Changes in Net Pension Liability and Related Ratios

Years Ended September 30, 2019, 2018, 2017, 2016 and 2015

Notes to Schedule: Method changes: There have been no method changes in the accounting valuation since the prior year. Assumption Changes: The financial accounting valuation reflects the following assumption changes: The discount rate decreased from 7.25% to 7.0% to reflect consistency with the change in the expected return on asset

assumption. The expected return on assets decreased from 7.25% to 7.0% to reflect target asset allocation as reflected in the Investment

Policy Statement and capital markets long-term return expectations. The mortality assumption for healthy lives changed from aggregate 2006 base rates from RP-2014 mortality study

projected generationally from 2006 using MP-2017, to the PUB-2010 Amounts-Weighted Mortality Table from General Employees with Generational Improvements from 2010 using Scale MP-2018.

The mortality assumption for disabled lives changed from the disabled base rates from the RP-2014 mortality study projected generationally from 2006 using Scale-2017 to PUB-2010 Amounts-Weighted Disabled Retirement Mortality Table for General Employees with Generational Improvements from 2010 using Scale MP-2018.

* Capital Metropolitan Transportation Plan for Bargaining Unit Employees of StarTran, Inc. was frozen to all participants in

2012 and the work previously performed by the StarTran participants was outsourced to a vendor (purchased transportation). As the Plan sponsor, Capital Metro is required to make the annual required contributions. Additionally, certain employees are eligible for unreduced retirement benefits while working for Capital Metro's Purchased Transportation provider. Under GASB Statement No. 68, the Plan qualifies for special funding which requires the reporting of the liability and related pensionable activity by Capital Metro. Capital Metro's purchased transportation provider incurred the reported pensionable covered payroll for eligible participants who are eligible for unreduced early retirement benefits upon completion of 22.5 years of credited benefit service credits.

See accompanying independent auditor’s report.

3.1.b

Packet Pg. 100

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


53

Actuarially Actual Contribution Pensionable Actual ContributionYear Ending Determined Employer Deficiency Covered as a % of CoveredSeptember 30 Contribution Contribution (Excess) Payroll Payroll

2010 1,797,529$ 1,384,464$ 413,065$ 30,548,644$ 4.5%2011 2,034,486 1,279,245 755,241 30,523,684 4.2%2012 4,246,630 4,163,071 83,559 21,222,724 19.6%2013 2,685,614 4,264,824 (1,579,210) - *2014 2,750,231 4,006,229 (1,255,998) - *2015 2,680,205 4,010,272 (1,330,067) - *2016 2,476,752 4,005,412 (1,528,660) - *2017 2,399,389 4,004,599 (1,605,210) - *2018 2,481,007 3,999,996 (1,518,989) - *2019 2,633,692 4,000,556 (1,366,864) -

Capital Metropolitan Transportation Authority Retirement Plan for Bargaining Unit Employees of StarTran, Inc.Schedule of Plan Contributions

Schedule of Employer Contributions

Methods and Used Assumptions to Determine Contribution Rates: Valuation Date January 1, 2019 Investment Rate of Return 7.0% including inflation, net of pension plan investment expenses Actuarial Cost Method Unit Credit Cost Method Discount Rate 7.0% Projected Salary Increases N/A Administrative Expenses $200,000 per annum Decrement Timing Middle of year decrements Withdrawal Rates Varies by age with age 55 at 13% withdrawal rate and up to age 70 with a 100%

withdrawal rate. Surviving Spouse Benefit Assumed 80% have an eligible spouse and that males are 3yrs older than their spouse. Retirement age Varies by age with 13% retirement at age 55 and with 100% of retirement at age 70. Mortality Healthy PUB-2010 Amounts-Weighted Mortality table for General Employees with generational

Improvements from 2010 using Scale MP-2018 Disabled PUB-2010 Amounts-Weighted Disabled Retirement Mortality table for General

Employees with generational Improvements from 2010 using Scale MP-2018. * Capital Metropolitan Transportation Plan for Bargaining Unit Employees of StarTran, Inc. was frozen to all participants in



3.1.b

Packet Pg. 101

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


54

2019 2018 2017 2016 2015Total pension liability:

Service cost 2,793,032$ 2,964,773$ 2,087,251$ 2,225,673$ 1,453,304$ Interest on total pension liability 2,445,407 2,235,084 1,863,897 1,573,679 1,538,740 Changes of benefit terms - - 2,054,914 - - Difference between expected and actual experience 720,052 (288,769) (86,781) 1,984,816 (319,936) Change in assumptions (920,415) 3,035,050 209,630 (1,415,858) 5,067,915 Benefits payment/refunds of contributions (932,072) (916,317) (892,937) (833,716) (717,439)

Net change in total pension liability 4,106,004 7,029,821 5,235,974 3,534,594 7,022,584


Fiduciary net position:Employer contributions 2,692,422$ 3,106,829$ 1,974,973$ 1,882,377$ 1,600,160$ Investment income net of investment expense (1,941,101) 4,081,936 1,795,013 (11,187) 1,017,006 Benefit payments/refunds of contributions (932,072) (916,317) (892,937) (833,716) (717,439) Administrative expenses (58,478) (74,118) (58,222) (63,645) (38,209)

Net change in fiduciary net position (239,229) 6,198,330 2,818,827 973,829 1,861,518

Fiduciary net position at beginning of year 30,010,195 23,811,865 20,993,038 20,019,209 18,157,691 Fiduciary net position at end of year (b) 29,770,966 30,010,195 23,811,865 20,993,038 20,019,209

Net pension liability/(asset) at end of year = (a) - (b) 19,492,661$ 15,147,428$ 14,315,937$ 11,898,790$ 9,338,025$

Fiduciary net position as a % of total pension liability 60.43% 66.46% 62.45% 63.82% 68.19%Pensionable covered payroll 22,758,461$ 20,966,199$ 22,195,764$ 18,663,437$ 16,183,596$ Net pension liability as a % of covered payroll 85.65% 72.25% 64.50% 63.75% 57.70%

Capital Metropolitan Transportation Authority Retirement Plan for Administrative Employees

Years Ended September 30, 2019, 2018, 2017, 2016 and 2015Schedules of Changes in Net Pension Liability and Related Ratios

Note to Schedule: Changes in Assumptions and The discount rate for year-end disclosure was 5.54%. Methods Since the Last Actuarial Valuation The assumed 20-year municipal bond rate was 3.56%. For GASB determination, the accounting mortality table was SOA RP-2014 Total Dataset Mortality

adjusted backwards to 2006 using MP2014 and projected with scale MP2018 Actuarial Assumptions The year-end disclosure discount rate was raised to 5.54% in accordance with GASB Nos. 67 and

68. The assumed rate of return was revised due to updated expectations. See accompanying independent auditor’s report.

3.1.b

Packet Pg. 102

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


55


2010 2,029,276$ 2,545,542$ (516,266)$ 17,330,101$ 14.7%2011 1,453,308 1,448,542 4,766 16,565,032 8.7%2012 1,659,488 1,704,070 (44,582) 18,347,486 9.3%2013 1,393,056 1,393,490 (434) 15,021,918 9.3%2014 1,588,278 1,600,160 (11,882) 16,183,596 9.9%2015 1,894,044 1,863,116 30,928 17,038,110 10.9%2016 1,971,655 1,971,655 - 18,791,825 10.5%2017 2,166,745 2,166,745 - 19,911,349 10.9%2018 3,243,014 3,243,014 - 20,757,338 15.6%2019 3,065,508 3,065,508 - 22,758,461 13.5%

Capital Metropolitan Transportation Authority Retirement Plan for Administrative EmployeesSchedule of Plan Contributions


Note to Schedule: Valuation date: Actuarially determined contribution rates are calculated as of January 1

for the respective year of contributions. Methods and Assumptions Used to Determine Contribution Rates: Actuarial Cost Method Entry age normal Amortization Method Level percent of payroll Remaining Amortization Period 20 years Asset Valuation Method Deferred recognition with phase in over 5 years Salary Increases 3.5% Investment Rate of Return 6.75% Retirement Age Age 60 to 61 is 5%, 62-64 is 10%, 65 is 50%, 66.69 is 15% and age 70 is 100% Mortality Rates RP-2006 Static, non-generational Mortality Table as described in Regulation 1.430(h)(3) and notice 2017-60, projected Scale MP- 2017, male and female, with combined rates for annuitants and non-annuitants. See accompanying independent auditor’s report.

3.1.b

Packet Pg. 103

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


56

2019 2018Total OPEB liabilityService cost 256,296$ 245,871$ Interest 150,911 149,467 Changes of assumptions or other inputs (797,538) (297,311) Benefit payments (72,364) (76,713)

Net change in total OPEB liability (462,695) 21,314

Total OPEB liability—beginning 3,339,100 3,317,786 Total OPEB liability—ending 2,876,405$ 3,339,100$

Covered payroll 21,423,143$ 20,757,338$

Total OPEB liability as a percentage of covered employee payroll 13% 16%

Changes of assumptions: Changes of assumptions and other inputs reflect theeffects of changes in the discount rate each period. The following are the discountrates used in each period:

2019 2.66%2018 4.24%2017 3.63%

Schedules of Changes in the Total OPEB Liability and Related Ratios

Capital Metropolitan Transportation Authority Other Post-Employment Benefits

Other Post-Employment Benefits –

This schedule is presented to illustrate the requirement to show information for 10 years. However, until a full 10-year trend is compiled, governments should present information for those years for which information is available. See accompanying independent auditor’s report.

3.1.b

Packet Pg. 104

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

3.1.b

Packet Pg. 105

Att

ach

men

t: 2

019

CM

TA

FS

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

Comprehensive Annual Financial Report For the years ended September 30, 2019 and 2018

Capital Metropolitan Transportation Authority | Austin, Texas

3.1.c

Packet Pg. 106

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

i

COMPREHENSIVE ANNUAL FINANCIAL REPORT

For the Fiscal Years Ended September 30, 2019 and 2018

CAPITAL METROPOLITAN TRANSPORTATION AUTHORITY AUSTIN, TEXAS

Prepared by the Finance Department

3.1.c

Packet Pg. 107

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

ii

This page left intentionally blank

3.1.c

Packet Pg. 108

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

iii


TABLE OF CONTENTS INTRODUCTORY SECTION

Letter of Transmittal ........................................................................................................................................ vii Certificate of Achievement for Excellence in Financial Reporting ................................................................. xi Board of Trustees and Administration ............................................................................................................ xii Organizational Chart ...................................................................................................................................... xiii Service Area ................................................................................................................................................... xiv

FINANCIAL SECTION

Independent Auditor’s Report .......................................................................................................................... 1

Management’s Discussion and Analysis (Unaudited) ....................................................................................... 3

Basic Financial Statements

Financial Statements

Statements of Net Position ..................................................................................................................... 11

Statements of Revenue, Expenses, and Changes in Net Position .......................................................... 13

Statements of Cash Flows ...................................................................................................................... 14

Notes to Financial Statements ................................................................................................................ 16


Capital Metropolitan Transportation Authority Retirement Plan for Bargaining Unit Employees of StarTran, Inc. schedules of changes in net position liability and related ratios ....... 52Capital Metropolitan Transportation Authority Retirement Plan for Bargaining Unit Employees of StarTran, Inc. schedule of plan contributions ................................................................................... 53Capital Metropolitan Transportation Authority Retirement Plan for Administrative Employees schedules of changes in net pension liability and related ratios ..................................... 54Capital Metropolitan Transportation Authority Retirement Plan for Administrative Employees schedule of plan contributions ............................................................................................ 55Capital Metropolitan Transportation Authority Other Post-Employment Benefits – Schedules of changes in the total OPEB liability and related ratios ..................................................................... 56

STATISICAL SECTION

Condensed Statement of Net Position ............................................................................................................ 59 Changes in Net Position ................................................................................................................................. 60 Revenue by Source .......................................................................................................................................... 61 Sales Tax Revenue .......................................................................................................................................... 62 Estimated Sales Tax Receipts by City ............................................................................................................. 63 Long-Term Debt .............................................................................................................................................. 64 Debt - Net Revenue Coverage Ratio ............................................................................................................... 65 Demographic and Economic Statistics ............................................................................................................ 66 Principal Employers ........................................................................................................................................ 67 Expenses by Object Class ............................................................................................................................... 68 Operating Statistics ......................................................................................................................................... 69 Capital Assets .................................................................................................................................................. 72 Total Employees .............................................................................................................................................. 73 Farebox Recovery Percentages ....................................................................................................................... 74 Fare Structure .................................................................................................................................................. 74

3.1.c

Packet Pg. 109

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

iv


3.1.c

Packet Pg. 110

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

v

2019 Comprehensive Annual Financial Report

Introductory Section

3.1.c

Packet Pg. 111

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

vi


3.1.c

Packet Pg. 112

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

vii

Capital Metropolitan Transportation Authority2910 East Fifth Street | Austin, Texas 78702TEL 512.389.7400 | FAX 512.369.6596 | capmetro.org

Date February 27, 2020 Dear Central Texas Community, On behalf of the board of directors of Capital Metropolitan Transportation Authority, I am pleased to submit to you the Comprehensive Annual Financial Report (CAFR) for the year ending September 30, 2019. Management assumes full responsibility for the completeness and reliability of the information contained in this report, based upon a comprehensive framework of internal control that it has established for this purpose. The internal control is designed to provide reasonable, rather than absolute, assurance that the financial statements are free of any material misstatements. We believe the data, as presented, is accurate in all material respects and that it is presented in a manner designed to fairly set forth the financial position and results of operations of Capital Metro in accordance with U.S. generally accepted accounting principles (GAAP) for local government units and the auditor's opinion on the fair presentation of the financial statements is unmodified. All disclosures necessary to enable the reader to gain an understanding of Capital Metro’s financial affairs have been included. During Fiscal Year 2019, Capital Metro continued its upward trend by focusing on the customer experience and supplementing its new bus network with further investment in service, amenities and community engagement. By committing to improve Capital Metro’s financial position and increase its ridership base, the agency has been able to reinvest in the customer experience throughout our service area. Capital Metro Profile Capital Metro is delivering on its promise to connect people, jobs and communities with quality transportation options. In FY2019, Capital Metro provided more than 31 million rides on the agency’s buses, trains and vans, an increase of better than 5%. With a fleet of 425 buses, Capital Metro provides Local, MetroRapid and MetroExpress bus routes, shuttle service to the University of Texas at Austin, the on-demand Pickup service and parallel door-to-door service for eligible riders with disabilities. MetroRail’s Red Line is a 32-mile commuter rail service between Leander and downtown Austin; it launched in 2010. FY2019 saw significant disruptions to MetroRail service, with the construction of a new Downtown Station requiring the agency to open a temporary replacement station and the federally mandated implementation of positive train control leading to a temporary suspension of weekend service. MetroRail’s ridership was down somewhat in FY2019 but it still provided almost 730,000 trips. The agency operates a vanpool program called MetroRideShare that features more than 257 groups and 1,450 participants. Capital Metro also works in partnership with the Capital Area Rural Transportation System (CARTS) to offer transportation to select outlying areas surrounding Austin. Beyond its passenger rail service, Capital Metro moves freight along its own 162-mile railroad line between Llano and Giddings. In FY2019, the freight rail operation shipped cargo on more than 55,409 rail cars, removing 221,636 semi-trucks from our roadways. Capital Metro was created in 1985, after voters in Austin and the surrounding area approved its creation in accordance with Chapter 451 of the Texas Transportation Code. Capital Metro provides service to more than 1.3 million residents within a 544-mile service area that includes the cities of Austin, Manor, San

3.1.c

Packet Pg. 113

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

viii

Leanna, Jonestown, Lago Vista, Leander, Point Venture and unincorporated portions of Travis and Williamson counties. These communities contribute one percent sales tax to help fund the services provided by Capital Metro. Governance Capital Metro is governed by an eight-member board of directors. The board consists of three members appointed by the Capital Area Metropolitan Planning Organization (CAMPO), including an elected official; one member representing the small cities in Capital Metro's service area; a member each appointed by the commissioners of Travis and Williamson Counties; and two members appointed by the Austin City Council, one of whom must be a member of the council. The board is responsible for adopting policies relative to the operation, control and management of the agency. The board members appointed Randy Clarke as the president and chief executive officer, who has the responsibility of providing leadership and direction to ensure that Capital Metro meets its mission, goals and objectives. Capital Metro implemented a new business model in 2012 to streamline operations and improve its business practices. The agency now contracts with private companies to operate all passenger service, including fixed-route, rail and paratransit service. Capital Metro’s service providers during FY2019 were RATP Dev North America, MV Transportation, CARTS, Herzog Contracting Corporation and MTM Transit (formerly Ride Right). The agency underwent a procurement process to combine Capital Metro’s two primary service provision contracts into one, which the board awarded to MV Transportation. That transition took effect January 5, 2020. Our Workforce Capital Metro helps the local economy by employing and contracting a diverse workforce of approximately 2,100. Capital Metro strives to be an employer of choice in the Austin area and the transit industry by providing competitive benefits and pay, as well as nationally recognized programs that contribute to employees’ well-being. Capital Metro’s award-winning wellness program includes three 24-hour fitness centers, personal training, nutrition counseling and healthy cafeteria options, among other benefits. Since the inception of the wellness program, employee health care costs and absenteeism rates have trended downward, while morale has improved. Capital Metro offers other benefits that contribute to a motivated workforce. These include flexible work schedules; telecommuting; leadership training, professional development and career advancement programs; and a top notch, on-site child care facility. Budget Control By state law, Capital Metro’s board of directors must adopt an annual budget driven by an approved strategic plan that outlines the agency’s priorities. The budget must be adopted before the beginning of each fiscal year and before Capital Metro conducts any business in the new fiscal year. The budget is amended if operating expenditures will exceed the budgeted amount. To continue efforts toward fiscal responsibility, the board has approved a five-year capital improvement plan. Control of the budget is maintained at the department level with overview responsibility exercised by the budget director. It is the responsibility of each department manager to administer operations in such a manner as to ensure that the use of funds is consistent with the goals and objectives in the strategic plan, and that the department remains within its budget.

3.1.c

Packet Pg. 114

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

ix

Accountability and Transparency As a steward of public funds and public trust, Capital Metro strives for both financial accountability and transparency. Not only does Capital Metro post detailed financial information on its website, but FY2019 saw the launch of our performance dashboards. These make public in unprecedented detail the agency’s ridership, operational, safety and financial performance levels. Capital Metro’s five-year capital improvement plan and improved financial reporting and budget development processes help ensure the appropriate level of accountability and oversight. Local Economic Outlook Continuing the growth experienced over the past several years, Austin placed third in the Milken Institute’s Center for Jobs and Human Capital 2019 ranking of the 10 best performing cities in the United States. It was the second consecutive year the Austin region was in the top three. The Wall Street Journal, using data from Moody’s Analytics, ranked Austin first in the nation’s hottest job markets, also for the second straight year. The Austin area's adjusted unemployment rate at the end of FY2019 was 2.7 percent, and unemployment was at or below 3 percent for each month of the year, according to the Texas Workforce Commission. Texas added an estimated 37,800 nonfarm jobs in 2019. The region’s population grows by approximately 150 people each day, adding 100 new cars to the area’s roadways. To address the region’s traffic congestion issues of today and be prepared for the growth and demand for reliable transportation, Capital Metro has joined with regional partners like the city of Austin and the Capital Area Metropolitan Planning Organization (CAMPO) on Project Connect, a long-term vision for regional transit. The multiyear process will result in a regional public transportation system that will transform Central Texas for generations to come. The Project Connect vision will be built on the strong foundation of the CapMetro transit system, which experienced ridership increases in 11 of the 12 months in FY2019. That success was enabled by the Cap Remap changes implemented the year before, the most significant change to our bus network in the agency’s history. On top of those systemic changes, CapMetro also made significant improvements to our facilities and amenities, ensuring a better customer experience across the board. The agency has also worked with cities outside our current service area through interlocal agreements to provide much-needed transportation service to some of the fastest growing areas in the region, including Georgetown, Pflugerville, Round Rock, Hutto and Buda. In recent years, that initiative has brought transit service to Round Rock and Georgetown, and FY2019 saw service extended to parts of Travis County that are outside of the Capital Metro service area. Our commitment to innovation allowed CapMetro to create services that fit specific communities, like the Hornsby Bend area of Travis County. The on-demand Pickup service also launched in Fiscal Year 2019, bringing a new transit service to the city of Manor and individual neighborhoods within Austin that aren’t served well by regular, fixed-route transit service. The Austin region continues to be a magnet for special events: South By Southwest; the Austin City Limits Music Festival’s two weekends; the United States Grand Prix at the Circuit of the Americas, attended by international race fans; and other festivals, including Pecan Street Festival, in both the spring and the fall, and the Moontower Comedy Fest, continue to bring in tourists from around the country and world. In 2019, Major League Soccer also announced the formation of a new club that calls Austin home, and Capital Metro figured prominently in those discussions. These events provide a significant positive economic impact and

3.1.c

Packet Pg. 115

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

x

increased exposure for Austin on an international stage while providing Capital Metro with the opportunity to serve new riders. Management’s Discussion and Analysis Capital Metro’s management is responsible for the accuracy, reliability and presentation of the financial information contained within the CAFR. The report includes all necessary disclosures and other information that enable the reader to gain an understanding of Capital Metro’s financial activities. Generally accepted accounting principles require that management provide a narrative introduction, overview and analysis to the accompanying basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with the MD&A. Capital Metro’s MD&A can be found directly following the independent auditor’s report. Certificate of Achievement for Financial Reporting Capital Metro has again received the Certificate of Achievement for Excellence in Financial Reporting for the Fiscal Year 2018 Comprehensive Annual Financial Report (CAFR) from the Government Finance Officers Association (GFOA). This award is destined to encourage and assist state and local governments to go beyond the minimum requirements of generally accepted accounting principles to prepare comprehensive annual financial reports that evidence the spirit of transparency and full disclosure and then to recognize individual governments that succeed in achieving that goal. Acknowledgements The preparation of this report on a timely basis could not be accomplished without the dedicated service of Finance Department staff members. Capital Metro also thanks its board of directors for their continuing support, and to the customers and taxpayers for whom we work. Respectfully submitted, Randy Clarke Capital Metro President & Chief Executive Officer

Reinet Marneweck Capital Metro Chief Financial Officer

3.1.c

Packet Pg. 116

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

xi


Board of Trustees and Administration

3.1.c

Packet Pg. 117

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

xii

a BOARD OF TRUSTEES

APPOINTING BODY

Wade Cooper, Chairman

Capital Area Metropolitan Planning Organization

Delia Garza, Vice Chair

Juli Word, Secretary

City of Austin Williamson County Commissioner’s Court

Rita Jonse

Small Cities Elected Official Representative

Terry Mitchell Capital Area Metropolitan Planning Organization

Jeffrey Travillion

Travis County

Ann Kitchen

Sabino Renteria

City of Austin City of Austin

ADMINISTRATION

Randy Clarke

President/Chief Executive Officer

Elaine Timbes

Deputy Chief Executive Officer, Chief Operating Officer

Reinet Marneweck

Executive Vice President, Chief Financial Officer

Kerri Butcher

Chief Counsel

3.1.c

Packet Pg. 118

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

xiii

3.1.c

Packet Pg. 119

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

xiv

3.1.c

Packet Pg. 120

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

xv


Financial Section

3.1.c

Packet Pg. 121

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

xvi


3.1.c

Packet Pg. 122

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

1

Independent Auditor’s Report

To the Finance, Audit, and Administration Committee of the Board of Directors Capital Metropolitan Transportation Authority Report on the Financial Statements We have audited the accompanying financial statements of Capital Metropolitan Transportation Authority (the Authority) as of and for the years ended September 30, 2019 and 2018, and the related notes to the financial statements, which collectively comprise the Authority’s basic financial statements, as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Authority’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Authority’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Authority as of September 30, 2019 and 2018, and the changes in its financial position and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

3.1.c

Packet Pg. 123

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

2

Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis, the Capital Metropolitan Transportation Authority Retirement Plan for Bargaining Unit Employees of StarTran, Inc. Schedules of Changes in Net Position Liability and Related Ratios, Capital Metropolitan Transportation Authority Retirement Plan for Bargaining Unit Employees of StarTran, Inc. Schedule of Plan Contributions, Capital Metropolitan Transportation Authority Retirement Plan for Administrative Employees Schedules of Changes in Net Pension Liability and Related Ratios, Capital Metropolitan Transportation Authority Retirement Plan for Administrative Employees Schedules of Plan Contributions and Capital Metropolitan Transportation Authority Other Post-Employment Benefits – Schedules of Changes in the Total OPEB Liability and Related Ratios be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audits were conducted for the purpose of forming an opinion on the financial statements that collectively comprise the Authority’s basic financial statements. The accompanying Introductory and Statistical Sections, as listed in the table of contents, are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has not been subjected to the auditing procedures applied in the audits of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on it.

Austin, Texas February 25, 2020

3.1.c

Packet Pg. 124

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


3

This section of the financial statements of the Capital Metropolitan Transportation Authority (CMTA, Capital Metro or the Authority) offers a narrative overview and analysis of the financial activities for fiscal year ended September 30, 2019 and 2018. The information contained within the Management Discussion and Analysis (MD&A) should be considered only part of a greater whole. The reader of this statement should take time to read and evaluate all sections of this report, including the footnotes and other supplementary information that is provided in addition to this MD&A. Financial Highlights Net position was $621.8 million as of September 30, 2019, increased 9.6% from $567.2 as of September 30,

2018. Prior to implementation of GASB Statement No. 75, net position as of September 30, 2017 was $500.7 million. After implementation, the adjusted net position increased by 13.8% from the balance of $498.4 million (Table A-1).

FY2019 sales tax revenue was $261.5 million compared to $243.6 million in FY2018, and $228.5 million in FY2017. This represents an increase of 7.4% (FY2019 over FY2018) and 6.6% (FY2018 over FY2017). Transportation fares increased from $14.6 million in FY2018 to $15.2 million in FY19, an increase of 3.9%. Rail freight revenue decreased slightly from $5.5 million in FY 2018 to $5.1 million, a decrease of 7%. (Table A-2).

Operating expenses (including depreciation) were $292.2 million for FY2019 compared to $282.2 million for FY2018, an increase of 3.6% (Table A-3).

Expenses of approximately $8.1 million in FY2019 and $6.6 million in FY2018 were made for regional mobility projects (Table A-4).

Expenses of $3.9 million were made in FY2019 for preliminary costs for long term mobility planning project

also known as Project Connect (Table A-4).

Capital assets (net of depreciation) increased by $54.4 million to $460.5 million in FY2019 from $406.1 million as of September 30, 2018 (Table A-5).

Overview of the Financial Statements This discussion and analysis are intended to serve as an introduction to CMTA’s financial statements. The financial statements are comprised of 1) financial statements, 2) notes to the financial statements, and 3) required supplementary information. The Statement of Net Position reports CMTA’s assets, deferred outflows and liabilities and deferred inflows, with the difference between the two reported as net position. This is a measure of financial position, which can indicate financial condition improvement or deterioration from year to year. The Statement of Revenue, Expenses and Changes in Net Position present information showing how CMTA’s net position changed during the fiscal year. Operating revenue consists of transportation fares, contract revenue and rail freight fees. Other non-operating revenue includes a one percent sales and use tax which comprises 72.9% of all revenues in FY2019, and 68.1% of all revenues in FY2018 as well as investment income, other income and operating contributions. Operating expenses include providing bus service, commuter rail service, maintenance, security and administration for CMTA. Non-operating expenses include funding for regional mobility projects.

3.1.c

Packet Pg. 125

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


4

The Statement of Cash Flows reports cash and cash equivalents activities for the fiscal year resulting from operating activities, non-capital financing activities, capital and related financing activities and investing activities. The Notes to the Financial Statements provide additional information necessary to fully understand the data provided in the financial statements. Required Supplementary Information (unaudited) includes the progress in funding CMTA’s obligation to provide pension benefits to its former employees and to its administrative employees and is required supplementary information by accounting principles generally accepted in the United States of America. FINANCIAL ANALYSIS Net Position Total net position may serve, over time, as a useful indicator of an entity’s financial position. The total net position of CMTA increased $54.6 million, from $567.2 million in FY2018 to $621.8 million in FY2019, primarily due to an increase of 7.5% in sales and use tax receipts with an expanding economy in the Austin region, increases in investment income due to higher interest rates during FY2019, offset by increases in purchased transportation due to a full year of Cap Remap which was the most significant change to Capital Metro’s bus network and made the network more frequent, more reliable and better connected and preliminary costs for Project Connect. The agency continued to increase net position in order to fund capital improvements for service enhancements, to meet Federal regulatory requirements, and to maintain transit assets in a state of good repair. Net position in FY2018 increased $68.8 million, from the restated amount of $498.4 million as of October 1, 2018 to $567.2 million as of September 30, 2018. Total assets and deferred outflows increased to $751.9 million in FY2019 from $696.6 million in FY2018 and from $642.7 million in FY2017 due primarily to increased depreciable assets, net of depreciation, and land and improvements, offset by a decrease in projects in process. Current liabilities increased $2.4 million from $56.8 million in FY2018 to $59.2 million in FY2019 due to increase in accrued expenses related to timing of purchased transportation payments and paying down of accounts payable. Current liabilities decreased $6.8 million from $63.6 million in FY2017 to $56.8 million in FY2018 due to a decrease in accrued expenses related to timing of purchased transportation payments, and a repayment of short-term notes payable. Long-term liabilities increased from $66.7 million in FY2018 to $67.6 million in FY2019 primarily due to a decrease in the Texas Department of Transportation grant which were received in advance and an increase in pension liability. Long-term liabilities decreased from $76.6 million in FY2017 to $66.7 million in FY2018 primarily due to expenses incurred against the Texas Department of Transportation grant which were received in advance in 2015 and the full repayment of the notes payable. Comparative amounts for the prior year have been presented in order to provide an understanding of changes in Capital Metro’s financial position and operations.

3.1.c

Packet Pg. 126

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


5

Table A-1 Summary Information of CMTA’s Net Position


FY 2019 FY 2018* FY 2017

Current assets 189.9$ 152.8$ 171.6$ Capital assets, net 460.5 406.1 371.7 Other noncurrent assets 86.0 128.3 88.4 Total assets 736.4$ 687.2$ 631.7$

Deferred outflow of resources 14.3 9.4 11.0

Current liabilities 59.2 56.8 63.6 Long-term liabilities 67.6 66.8 76.6 Total liabilities 126.8$ 123.6$ 140.2$

Deferred inflows 2.1 5.8 1.8

Net positionNet investment in capital assets 455.7 403.3 356.2 Unrestricted 166.1 163.9 144.5

Total net position* 621.8$ 567.2$ 500.7$

*FY 2018 restated for GASB No. 75. Certain unrestricted assets are designated through Board directive for specific uses. As of September 30, 2019, the CMTA Board has designations of $39.7 million for a statutory operating reserve, $21.5 million for a budget stabilization reserve, and $1.3 million for self-insurance. The reserves as of September 30, 2018 were $39.7 million for statutory operating, $19.8 million for budget stabilization, and $1.3 million for self-insurance. Commitments CMTA has a capital spending plan for projects for upcoming and future years. CMTA’s contractual commitments related to its capital improvement plan are $88.6 million and $74.5 million as of September 30, 2019 and 2018, respectively. CMTA has also executed contracts with various goods and services providers totaling $914.2 million extending to September 2035. CMTA is contractually committed to the Build Central Texas Program and Mobility Programs with the City of Austin and the Suburban Communities Program. These programs are detailed in Note 8 in the Notes to the Financial Statements. Change in Net Position The change in net position for FY2019 was an increase of $54.5 million or 9.6% of total beginning net position. The change in net position for FY2018 was an increase of $68.7 million or 13.8% of the total beginning net position Total operating revenue remained stable, with increased operating expenses and non-operating revenue noted on the following page (Table A-2).

3.1.c

Packet Pg. 127

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


6

Table A-2 Summary Information of Changes in CMTA’s Net Position


FY 2019 FY 2018 FY 2017Operating revenue: Transportation fares 15.2$ 14.6$ 16.0$ Contract revenue and fares 9.1 9.0 8.2 Rail—freight 5.1 5.5 4.5 Total operating revenue 29.4 29.1 28.7

Operating expenses: Purchased transportation 158.8 152.4 143.5 Depreciation and amortization 46.5 44.0 39.2 Salary and wages 23.9 23.4 22.2 Services 18.4 19.1 18.6 Employee benefits 21.3 19.2 22.0 Materials and supplies—fuel and fluid 13.4 12.1 12.3 Leases and other 4.8 4.8 4.1 Utilities 3.0 2.8 2.8 Casualty and liability 0.6 1.3 0.5 Materials and supplies—other 1.5 3.1 3.3

Total operating expenses 292.2 282.2 268.5

Operating loss (262.8) (253.1) (239.8)

Non-operating revenue (expenses): Sales and use tax 261.5 243.6 228.5 Investment income 5.7 2.0 1.4 Other income, net 2.2 2.1 2.4 Other federal grants 40.8 53.4 30.8 Long-term mobility planning (3.9) - - Build Central Texas Program (0.6) (0.4) (2.9) Mobility programs (7.5) (6.2) (4.0) Total non-operating revenue (expenses) 298.2 294.5 256.2

Income before contributions 35.4 41.4 16.4

Capital contributions 19.2 27.4 29.9 Change in net position 54.6 68.8 46.3

Total net position, beginning of the year* 567.2 498.4 454.5

Total net position, end of the year 621.8$ 567.2$ 500.8$

*FY 2018 restated for GASB No. 75.

3.1.c

Packet Pg. 128

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


7

Operating Expenses FY2019 operating expenses increased 3.6% to $292.2 million from $282.2 million in FY2018, primarily due to increased costs for purchased transportation for increased transit services and preliminary costs for Project Connect. Operating expenses for FY2018 increased by 5.1% to $282.2 million from $268.5 million in FY2017, primarily due to increased costs for purchased transportation costs for increased transit services offset by a decrease in employee benefits due to lower pension expenses.

Table A-3 Information on CMTA’s Total Operating Expenses (including depreciation)


FY 2019 FY 2018 FY 2017

Purchased transportation 158.8$ 152.4$ 143.5$ Depreciation and amortization 46.5 44.0 39.2 Salary and wages 23.9 23.5 22.2 Services 18.4 19.1 18.6 Employee benefits 21.3 19.2 22.0 Materials and supplies—fuel and fluid 13.4 12.1 12.3 Leases and other 4.8 4.8 4.1 Utilities 3.0 2.8 2.8 Casualty and liability 0.6 1.3 0.5 Materials and supplies—other 1.5 3.1 3.3

Total operating expenses 292.2$ 282.2$ 268.5$

Non-Operating Revenue Non-operating revenue consists of a 1 percent sales tax levied in CMTA’s service area, investment income, operating contributions and other income generated primarily from advertising sales. Non-operating revenue is reduced by the costs of providing funding for infrastructure needs in the service area. Sales tax represents the largest component of CMTA’s revenue. For FY2019 and FY2018 sales tax revenue increased by $17.9 million and $15.1 million or 7.4% and 6.6%, respectively, due to a continued robust economy in the Austin area. Investment income of $5.7 million for FY2019 was earned on CMTA’s cash reserve of $221.4 million. In FY2018, investment income was $2.0 million, earned on CMTA’s cash reserve of $215.9 million. During the fiscal years, the cash reserve was invested in the Texas Local Government Investment Pool with a portion invested in U.S. Government issues and Commercial Paper. CMTA funds programs for street maintenance, street repair, and transit capital improvements through the Build Central Texas program (formerly Build Greater Austin). It also funds mobility projects to assist in future transportation and improve regional mobility.

3.1.c

Packet Pg. 129

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


8

Table A-4

Information on CMTA’s Non-Operating Revenue and Expenses (in millions of dollars)

FY 2019 FY 2018 FY 2017

Sales and use tax 261.5$ 243.6$ 228.5$ Other federal grants 40.8 53.4 30.8 Other income, net 2.2 2.1 2.4 Investment income 5.7 2.0 1.4 Long-term mobility planning (3.9) - - Build Central Texas Program (0.6) (0.4) (2.9) Mobility interlocal agreements (0.4) (5.7) (4.0) Capital contributions—other jurisdictions (7.1) (0.5) (0.0)

Total net non-operating revenue 298.2$ 294.5$ 256.2$

Federal and State Grants Other grant revenue was received from the Federal Transit Administration on a reimbursement basis and from the Texas Department of Transportation, primarily for improvements to the downtown station, for new buses, for improvements to the rail lines and Positive Train Control (PTC). The capital funds are used primarily to fund CMTA’s capital improvement totaled $19.1 million and $27.4 million in FY2019 and 2018, respectively. The other federal grants are used for reimbursement of third-party cost of contracting. In FY2019 and FY2018, CMTA recognized other federal grant funding of approximately $40.8 million and $53.4 million, respectively. Capital Assets CMTA’s net capital assets at September 30, 2019 and 2018 totaled $460.5 million and $406.1 million, respectively, and consist of buildings and improvements, railroad, buses and equipment, passenger parking stations, leasehold improvements, land and construction in progress. FY2019 net capital assets represent an increase of 13.4% from FY2018 due to increases in buses and equipment, increase in land and improvements and a decrease in construction in progress. CMTA’s net assets at September 30, 2017 totaled $371.7 million. Net capital assets in FY2018 increased 9.2% from FY2017, due to increases in buses and equipment, railroad improvement and increases in construction in progress. Gross gains in FY2019, 2018 and 2017 were offset by an increase in accumulated depreciation. For more detailed information on capital assets, see Note 11 to the financial statements.

3.1.c

Packet Pg. 130

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


9

Table A-5 CMTA’s Capital Assets Information


FY 2019 FY 2018 FY 2017

Building and improvements 105.7$ 86.1$ 84.7$ Railroad 167.8 149.0 139.6 Buses and equipment 364.2 326.5 290.9 Passenger parking and stations 97.1 89.4 87.2

734.8 651.0 602.4 Less accumulated depreciation (408.0) (379.3) (349.1) Net depreciable property/improvements 326.8 271.7 253.3

Land and improvements 69.9 59.7 59.2 Construction in progress 63.8 74.7 59.2

Capital assets, net 460.5$ 406.1$ 371.7$

Long-Term Debt During FY2019, Capital Metro held zero long term debt. In prior fiscal years, Capital Metro held a lease/purchase financing agreement for funding of rail vehicles in the amount of $36.0 million with quarterly payments beginning in October 2006 for 10 years. In December 2011, the agency refinanced this note with quarterly payments beginning in January 2012 for seven years. In February 2012, Capital Metro held a long-term financing agreement in the amount of $20 million for bus purchases with annual principal payments beginning in April 2013 and semi-annual interest payments beginning in October 2012 for 10 years. Capital Metro paid off all debt balances in September 2018. For more detailed information on long-term debt, see Note 7 to the financial statements.

Table A-6

CMTA’s Long-Term Debt Information (in millions of dollars)

FY 2019 FY 2018 FY 2017

Rail lease purchase -$ -$ 3.7$ Note payable—buses - - 10.6

Total -$ -$ 14.3$

3.1.c

Packet Pg. 131

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


10

Economic Factors and Outlook for FY 2020 Capital Metro’s adopted FY2020 budget totaled $361.2 million in revenue, approximately $287.1 million in operating expenses, $109.7 million for new capital expenditures, and approximately $6.9 million for Regional Mobility pass through grants. For FY2020, sales tax revenue is budgeted at 3.1% growth above FY2019 forecast. FY2020 budgeted operating expenses were projected to increase 7.9% from the FY2019 budget. Management anticipates that its existing resources will be adequate to satisfy its liquidity requirements for FY2020. Request for Information This financial report is designed to provide our patrons and other interested parties with a general overview of the finances to demonstrate CMTA’s accountability for the funds it receives. If you have questions about this report or need additional financial information, contact Capital Metropolitan Transportation Authority, Finance Department, at 2910 East 5th Street, Austin, Texas 78702, call (512) 389-7564, or e-mail [email protected].

3.1.c

Packet Pg. 132

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

11


September 30, 2019 and 2018

Assets 2019 2018

Current assets:Cash and cash equivalents 114,774,903$ 77,980,772$ Investments 21,419,264 11,369,855 Due from federal and other governments 1,791,117 13,913,143 Fuel hedge asset 1,338,482 1,899,641 Materials and supplies inventory, net 2,612,103 2,919,758 Prepaid transit expense and other 722,073 747,975 Other receivables, net 2,811,770 2,409,969 Sales and use taxes receivable 44,403,762 41,540,749

Total current assets 189,873,474 152,781,862

Non-current assets:Investments—designated for system expansion 71,478,036 108,524,243 Restricted for system expansion and acquisition:

Restricted—cash and cash equivalents 6,287,658 8,580,102 Restricted—investments 7,469,266 9,415,433

Capital assets:Land and improvements 69,889,511 59,689,545 Depreciable capital assets, net of depreciation 326,856,445 271,732,670 Projects in process 63,769,382 74,723,419

Other assets 788,235 1,734,116 Total non-current assets 546,538,533 534,399,528

Total assets 736,412,007 687,181,390

Deferred outflow of resources—pension plan 13,506,745 9,416,391 Deferred outflow of resources—fuel hedge 780,499 -

Total assets and deferred outflow of resources 750,699,251$ 696,597,781$


3.1.c

Packet Pg. 133

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

12


September 30, 2019 and 2018(continued)

2019 2018Liabilities

Current liabilities:Accounts payable 26,252,395$ 36,669,107$ Accrued expenses 21,829,638 13,551,022 Benefits payable 502,673 479,478 Accrued salary and wages 649,363 513,219 Accrued sick and vacation 2,697,865 2,603,184 Retainage 4,868,642 2,875,363 Payable from restricted assets 2,413,259 148,792

Total current liabilities 59,213,835 56,840,165

Long-term liabilities:Accrued sick and vacation 1,247,940 1,412,885 Total OPEB liability 2,876,406 3,339,100 Other rent liability 952,274 641,335 Unearned grant revenue—commuter rail cars and station 8,797,035 17,140,344 Net pension liability 53,757,461 44,189,642

Total long-term liabilities 67,631,116 66,723,306

Total liabilities 126,844,951 123,563,471

Deferred inflow—OPEB 996,403 276,839 Deferred inflow—fuel hedge - 2,764,415 Deferred inflow—pension plan 1,092,345 2,800,572 Total liabilities and deferred inflow of resources 128,933,698 129,405,297

Net position:Net investment in capital assets 455,646,696 403,270,271 Unrestricted 166,118,857 163,922,213

Total net position 621,765,553$ 567,192,484$


3.1.c

Packet Pg. 134

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

13

Capital Metropolitan Transportation AuthorityStatements of Revenues, Expenses and Changes in Net Position


2019 2018Operating revenue

Transportation fares 15,185,532$ 14,620,434$ Contract revenue 9,083,445 8,968,191 Rail—freight 5,110,051 5,453,100

Total operating revenue 29,379,028 29,041,725

Operating expensesPurchased transportation 158,795,657 152,361,385 Depreciation and amortization 46,522,354 44,010,538 Salary and wages 23,920,927 23,456,017 Services 18,360,137 19,113,196 Employee benefits 21,316,400 19,242,297 Materials and supplies—fuel and fluid 13,419,745 12,139,068 Leases and other 4,783,567 4,790,421 Utilities 3,016,639 2,768,950 Casualty and liability 640,414 1,279,723 Materials and supplies—other 1,495,276 3,068,461

Total operating expenses 292,271,116 282,230,056

Operating loss (262,892,088) (253,188,331)

Non-Operating revenue (expenses)Sales and use tax revenue 261,540,589 243,571,292 Other federal grants 40,798,618 53,422,347 Other income, net 2,221,765 2,147,901 Investment income 5,659,749 1,990,000 Long-term mobility planning (3,895,780) - Build Central Texas Program (570,966) (409,978) Capital contributions—other jurisdictions (420,730) (542,830) Mobility interlocal agreements (7,066,622) (5,669,095)

Total non-operating revenue (expenses) 298,266,623 294,509,637

Increase in net position before capital contributions 35,374,535 41,321,306

Federal grants and other capital contributions 19,198,534 27,441,971 Change in net position 54,573,069 68,763,277

Net position at the beginning of year 567,192,484 498,429,207 Net position at the end of year 621,765,553$ 567,192,484$


3.1.c

Packet Pg. 135

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

14

Cash flows from operating activities 2019 2018 Receipts from customers 29,274,820$ 30,429,467$

Payments to employees (19,491,940) (18,770,276) Payments for employee taxes (7,270,354) (7,171,070)

Payments to purchased transportation service providers (159,819,053) (151,546,944) Payments to suppliers of goods and services (53,793,525) (59,165,570)

(211,100,054) (206,224,394)

Cash flows from non-capital financing activitiesSales and use tax 258,677,576 240,643,002 Cash/proceeds received from operating grants 47,042,828 46,257,973 Payments for long-term mobility planning (3,895,780) - Payments for Build Central Texas Program (570,966) (409,978) Payments for mobility projects (7,066,622) (5,669,095)

294,187,036 280,821,902

Cash flows from capital and related financing activitiesProceeds from capital grants 16,783,476 20,982,613 Purchase of capital assets (100,236,046) (77,076,970) Proceeds from sale of capital assets 264,562 240,337 Payment of note payable - (10,550,000) Payments on master lease financing agreement - (3,657,979)

(83,188,008) (70,061,999)

Cash flows from investing activitiesSale of investments 98,930,542 91,050,014 Purchase of investments (69,987,578) (96,094,465) Net investment income 5,659,749 1,990,000

34,602,713 (3,054,451)

Net change in cash and cash equivalents 34,501,687 1,481,058

Cash and cash equivalents at beginning of year 86,560,874 85,079,816

Cash and cash equivalents at the end of the year 121,062,561$ 86,560,874$

Cash and cash equivalents at the end of the yearRestricted 6,287,658$ 8,580,102$ Unrestricted 114,774,903 77,980,772

121,062,561$ 86,560,874$

Continued on next page




Net cash provided by non-capital financing activities

Net cash used in operating activities

Net cash used in capital and related financing activities

Net cash provided by (used in) investing activities

3.1.c

Packet Pg. 136

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

15


For the Years Ended September 30, 2019 and 2018(continued)

Reconciliation of operating loss to net cash used in operating 2019 2018 activities:Operating loss (262,892,088)$ (253,188,331)$

operating activities:Depreciation and amortization 46,522,354 44,010,538

Changes in assets and liabilitiesOther receivables (401,801) 1,230,322 Inventory 307,655 (2,120,178) Fuel hedge asset 561,158 (673,647) Other assets 2,272,976 1,643,074 Accounts payable (355,976) (3,153,101) Accrued liability and expenses 2,038,634 (643,410) Other liabilities 365,839 44,743 Deferred outflows—pension (4,090,354) 1,237,708 Deferred inflows—pension (1,708,227) 4,453,649 Deferred inflows—OPEB 719,564 276,839 Net pension liability 9,567,819 (1,550,049) Total OPEB liability (462,694) - Deferred outflows/inflows fuel hedge (3,544,913) 2,207,449

Net cash used in operating activities (211,100,054)$ (206,224,394)$

Supplemental cash flow information:Capital asset acquisition included in accrued and retainage

payable 4,266,000$ 3,150,000$


Adjustments to reconcile operating loss to net cash used in

3.1.c

Packet Pg. 137

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


16

1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Reporting Entity – Capital Metropolitan Transportation Authority (CMTA, Capital Metro or the Authority) is a corporate body and political subdivision of the State of Texas. Capital Metro was established by a referendum on January 19, 1985 to provide mass transportation service to the greater Austin metropolitan area. Capital Metro commenced operations on July 1, 1985. Capital Metro is governed by an eight-member Board of Directors (Board) which has governance responsibilities over all activities related to Capital Metro. During the year ended September 30, 2009, the Legislature of the State of Texas enacted Senate Bill 1263, effective September 1, 2009, relating to the composition of the Board of Directors of certain metropolitan transit authorities. As a result of the enacted legislation, all the members serving on the Board are appointed in accordance with Section 451.5021, Transportation Code. Capital Metro is not included in any other governmental “reporting entity” as defined in Section 2100, Codification of Governmental Accounting and Financial Reporting Standards. The appointed members of the Board have the authority to make decisions, possess the power to designate management, have the responsibility to significantly influence operations and maintain primary accountability for fiscal matters. Prior to August 19, 2012 and as required by accounting principles generally accepted in the United States of America, these financial statements presented Capital Metro (the primary government) and its active component unit, StarTran, Inc. (StarTran), a corporation organized under the Nonprofit Corporation Act of the State of Texas. Although it was legally separate from Capital Metro, StarTran was reported as if it were part of Capital Metro because it was incorporated for the purpose of providing employee services to operate mass transit service on behalf of Capital Metro. Pursuant to the contract effective January 1, 1992, between Capital Metro and StarTran, Capital Metro provided all resources needed for business operations and the necessary administrative support needed for StarTran’s operations. Senate Bill 1263 passed by the Texas Legislature in 2009 required the Sunset Advisory Commission to evaluate the efficiency and effectiveness of Capital Metro’s bus operations. In August 2012, Capital Metro implemented a new business model to streamline operations and improve its business practices. Capital Metro now contracts with private companies to operate passenger service, including fixed route and paratransit services. StarTran is inactive but remains a blended component unit. Basis of Accounting – The financial statements of Capital Metro have been prepared in conformity with accounting principles generally accepted in the United States of America as applied to governments. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting standards. Capital Metro accounts for its operations as a proprietary (enterprise) fund. Proprietary funds are accounted for on the flow of economic resources measurement focus. An enterprise fund follows the accrual basis of accounting. With this measurement focus, all assets, liabilities and deferred inflows and outflows of resources associated with the enterprise fund operations are included in the Statement of Net Position. Under the accrual basis of accounting, revenues are recorded in the period in which they are earned, expenses are recorded when a liability is incurred, regardless of the timing of related cash flows and depreciation of capital assets is recorded. Revenue from grants are recorded when all eligibility requirements imposed by the provider are met and qualifying expenses have been incurred for reimbursement type grants.

3.1.c

Packet Pg. 138

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


17


Net Position – Net position on the Statement of Net Position include the following:

Net Investment in Capital Assets – the component of net position that reports capital assets less both the accumulated depreciation and the outstanding balance of debt that is directly attributable to the acquisition, construction or improvement of these capital assets. Unrestricted – the difference between the assets and liabilities that are not reported in net investment in capital assets, or restricted net assets.

Nature of Operating and Non-Operating Activities – Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses result from providing services in connection with an entity’s principal ongoing operations. Capital Metro’s primary activity is transit operations designed to provide high quality, customer focused, effective and efficient transportation services and systems for its’ communities. Transit operations include planning bus routes, customer service, special transit services, purchased transportation services, maintaining equipment, facilities and buses and providing security, administration and management of the transit system. Capital Metro also owns and maintains a rail freight line. Operations include managing the rail freight contract and maintenance of the track and track infrastructure. In November 2004, citizens of the Capital Metro service area voted in favor of allowing the agency to operate urban commuter rail service from Leander, Texas to downtown Austin, Texas. Commuter rail service became operational in March of 2010. Non-operating revenue and expenses include: 1) Non-operating revenue consists of the one percent sales tax levied in the Authority’s service area,

federal operating grants that are received on a reimbursement basis, investment income and other income generated primarily from advertising commissions and childcare operations.

2) Mobility projects and programs to help fund future transportation projects. These projects must improve regional mobility, improve mass transit, leverage federal or private funds, add to an existing program and expedite a critical mobility project. These projects are governed by an interlocal agreement between Capital Metro and the City of Austin.

3) Long-range system planning called Project Connect that addresses both the short- and long-term needs

of Central Texas. Project Connect’s Investments program has developed plans for a long-term high-capacity transit system capable of moving more people in the same amount of road space as cars. These new transit options will provide real ways to avoid traffic and help produce a more balanced transportation system that benefits our diverse population in Central Texas. Project Connect’s Enhancements program has identified short-term projects that will ensure our existing transit network operates efficiently. The enhancement projects will improve MetroRail, MetroRapid and MetroExpress services, and create Mobility Hubs at sites across the region.

4) Programs to fund street maintenance, emergency street repair, transit corridor improvements, pedestrian

and bicycle safety/access, sidewalks, transit centers, and transit capital improvements. It is Capital Metro’s policy to use restricted resources first when an expenditure is made for purposes for which both restricted and unrestricted resources are available.

3.1.c

Packet Pg. 139

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


18


Revenue Recognition:

Operating Revenue – Transportation fares, contract revenue, rail-freight and transportation fares – commuter rail are recorded as revenue when the ticket is sold, regardless of when it is used.

Sales and Use Tax Revenue – Sales and use tax revenue is recorded based on information provided by the Comptroller of Public Accounts which reports when the underlying transaction occurred. Sales and use tax revenues account for approximately 72.9% of revenues in FY2019 and 68.1% in FY2018.

Other Federal Grants – Other federal grant revenue is recognized when the allowable cost is incurred, and all eligibility requirements have been met.

Capital Replacement and Improvement Grants – Capital Metro funds its capital improvements with sales taxes and grants from the Federal Transit Administration (FTA). Grant revenue is recognized when all eligibility requirements have been met. The grantor retains a reversionary interest in the capital asset over the estimated useful life of that asset. Federal and other capital contributions – Revenue from federal and other capital contributions are cash and noncash which include capital grants and contributions that are restricted revenue whose resources may only be used to purchase, build or use capital assets for specified programs.

Restricted Assets – Certain assets of Capital Metro are classified as restricted in the Statement of Net Position because their use is limited by contract for system expansion and acquisition or construction of long-term assets. Cash and Investments – For purposes of the Statement of Cash Flows, Cash and Cash Equivalents include cash on hand, cash in banks, and investments with original maturities of less than 90 days. All non-negotiable certificates of deposits and fixed-rate time deposits are recorded at amortized cost. Investments and debt securities are recorded at fair value (See Note 2). Fair value is the price that would be received to sell an asset in an orderly transaction between market participants. Annually, the Board of Directors of Capital Metro reviews and adopts a written investment policy regarding the investment of its funds as defined in the Public Funds Investment Act (Chapter 2256, Texas Government Code). Capital Metro is authorized to invest in obligations and instruments as defined in the Act. All investments held by Capital Metro are made in accordance with Capital Metro’s Investment Policy. Accounts Receivable – The allowance for uncollectible accounts is established as losses are estimated to have occurred through a provision for bad debt charged to earnings. Losses are charged against the allowance using specific identification method when management believes it is probable the receivable will be recovered. As of September 30, 2019, and September 30, 2018, management determined accounts receivable to be fully collectible. Inventory – Materials and supplies inventory consists of fuel, and facilities and building maintenance supplies and is stated at cost (weighted-average method).

3.1.c

Packet Pg. 140

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


19


Capital Assets – Capital assets include all items purchased that have a useful life of more than one year, are of a tangible nature and have a cost of $5,000 or more. Capital assets are recorded at cost and are depreciated over their useful lives using the straight-line method as follows: Estimated Useful Lives Buildings and improvements 40 years Passenger parking stations 5-20 years Railroad/leasehold improvements 10 years Buses and equipment 2-12 years Other equipment and software 3-5 years Office furniture and fixtures 5 years There are no intangible assets. Depreciation is presented as an operating expense in the Statements of Revenue, Expenses and Changes in Net Position. Construction in progress will be depreciated when the related asset is placed in service. Expenditures for renewals and betterments that increase property lives are capitalized, and maintenance and repair costs are charged to operations as incurred. Compensated Leave – Substantially all employees of Capital Metro are eligible to receive compensation for vacations, holidays, illness and certain other qualifying leave. For certain kinds of leave, the number of days compensated is generally based on length of service. Vacation leave, which has been earned and vested but not paid, has been accrued in the accompanying financial statements in the amount $2.5 million and $2.4 million as of September 30, 2019 and 2018 respectively. Earned and vested Sick leave for Capital Metro administrative employees has been accrued at a maximum of 240 hours for those employees with four (4) years or more of service as of September 30, 2019 and 2018 in the amount of $1.47 million and $1.32 million, respectively. Pensions – The net pension liability, deferred outflows and inflows of resources related to pensions, pension expense, and information about the fiduciary net position of Capital Metro’s participation in the Capital Metropolitan Transportation Authority Retirement Plan for Administrative Employees and Capital Metropolitan Transportation Authority Retirement Plan for Bargaining Unit Employees of StarTran, Inc., both single employer Plans (the Plans), and additions to/deductions from the Plan’s fiduciary net position have been determined on the same basis as they are reported by the Plans. For this purpose, benefit payments (including refunds of employee contributions) are recognized in the net pension liability calculation when due and payable in accordance with the benefit terms. Investments are reported at fair value. Other Post-Employment Benefits – The Authority implemented GASB Statement No.75, Accounting Financial Reporting for Postemployment Benefits other than Pensions (OPEB). The total OPEB liability has been determined based on the flow of economic resources measurement focus and full accrual basis of accounting. This includes measuring the total OPEB liability, deferred inflows of resources related to OPEB, OPEB expense, and information about benefit payments are recognized in the total liability calculation when due and payable in accordance with the benefit terms.

3.1.c

Packet Pg. 141

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


20


Deferred Outflows and Inflows of Resources – The Authority has classified as deferred outflows of resources certain items that represent a consumption of resources or deferred inflow of resources which represent an acquisition of net assets by Capital Metro that is applicable to a future reporting period and, therefore, will not be recognized as a revenue or expense until then. Capital Metro has deferred outflows which consist of deferred charge for pension for contributions made subsequent to the measurement date of December 31, 2018, the differences between the expected and actual experience, change in assumptions and net differences between projected and actual earnings and deferred outflows for the accumulation of gains and losses on fuel hedge. Risk Management – Capital Metro is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; business interruption; errors and omissions; injuries to employees and natural disasters. Commercial insurance coverage is purchased for claims arising from such matters. During FY2019 and FY2018, Capital Metro was covered under a variety of insurance policies at a cost it considers to be economically justifiable. Capital Metro has commercial insurance for all other risks of loss, except workers’ compensation and employee health and dental benefits, including employee life and accidental insurance. Claims have not exceeded insurance coverage in each of the past three years. Capital Metro is self-insured up to $350,000 per occurrence for losses related to workers’ compensation. (See Note 13) Capital Metro has purchased excess coverage through a commercial insurer licensed in the State of Texas. Use of Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Upcoming GASB Pronouncements In January 2017, GASB issued Statement No. 84, Fiduciary Activities. The primary objective of this Statement is to improve guidance regarding the identification of fiduciary activities for accounting and financial reporting purposes and how those activities should be reported. This Statement establishes criteria for identifying fiduciary activities of all state and local governments. The focus of the criteria generally is on (1) whether a government is controlling the assets of the fiduciary activity and (2) the beneficiaries with whom a fiduciary relationship exists. This Statement is effective for the Authority beginning with its year ending September 30, 2020. In June 2017, GASB issued Statement No. 87, Leases. The primary objective of this Statement is to improve accounting and financial reporting for leases by governments. This Statement requires the recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. The Statement establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset.

3.1.c

Packet Pg. 142

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


21


Under this Statement, a lessee is required to recognize a lease liability and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources. This Statement is effective for the Authority beginning with its year ending September 30, 2021. Management has not yet determined the impact, if any, these pronouncements will have on the financial statements.

2 – CASH AND CASH EQUIVALENT DEPOSITS AND INVESTMENTS

Cash and Cash Equivalent Deposits – At September 30, 2019 and 2018, deposits with financial institutions were fully insured, or collateralized by securities held by a third-party agent in Capital Metro’s name.

2019 2018Carrying CarryingAmount Amount

TexasDAILY and Texas TERM (investment pool) 122,324,112$ 88,276,363$ LESS:Outstanding reconciling items (1,261,551) (1,715,489) Total cash and cash equivalents 121,062,561$ 86,560,874$

Restricted cash for system expansion and acquisition 6,287,658$ 8,580,102$ Unrestricted cash 114,774,903 77,980,772 Total cash and cash equivalents 121,062,561$ 86,560,874$

Investments – Chapter 2256 of the Texas Government Code, (the Public Funds Investment Act) authorizes Capital Metro to invest its funds under a written investment policy that ensures the safety of principal, provides liquidity and optimizes return on investments with the constraints of safety and liquidity. Capital Metro deposits and investments are invested pursuant to the Investment Policy, which is approved annually by the Board of Directors. The Investment Policy includes a list of authorized investments, a maximum allowable stated maturity of individual investments and the maximum average dollar weighted maturity allowed for pooled funds. It includes an Investment Strategy Statement that addresses matching anticipated cash flows with adequate investment liquidity, and a portfolio structure which will experience minimal volatility during economic cycles. Capital Metro is authorized to invest in the following securities: 1. Obligations of the United States or its agencies and instrumentalities. 2. Direct Obligations of the State of Texas. 3. Other obligations, the principal and interest on which are unconditionally guaranteed or insured by the

State of Texas or the United States or is agencies and instrumentalities. 4. Obligations of states, agencies, counties, cities and other political subdivisions of any state having been

rated as to investment quality by a nationally recognized investment rating firm rating of not less than A or its equivalent.

3.1.c

Packet Pg. 143

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


22


5. Bankers’ Acceptances with a stated maturity of 270 days or less from the date of issuance that will be, in accordance with its terms, liquidated in full at maturity; is eligible for collateral for borrowing from a Federal Reserve Bank; and is accepted by a bank organized and existing under the laws of the United States or any state, if the short-term obligations of the bank, or of a bank holding company of which the bank is the largest subsidiary, are rated not less than A-1 or P-1 or an equivalent rating by at least one nationally recognized credit rating agency.

6. Commercial paper with a stated maturity of 270 days or less from the date of issuance that either is rated not less than A-1, P-1 or the equivalent by at least two nationally recognized credit rating agencies or is rated at least A-1, P-1, or the equivalent by at least one nationally recognized credit rating agency and is fully secured by an irrevocable letter of credit issued by a bank organized and existing under the laws of the United States or any state thereof.

7. Fully collateralized repurchase agreements having a defined termination date and described in more detail in the Investment Policy.

8. Other obligations, the principal and interest of which are unconditionally guaranteed or insured by, or backed by the full faith and credit of this State or the United States or their respective agencies and instrumentalities, including obligations that are fully guaranteed or insured by the Federal Deposit Insurance Corporation or by the explicit full faith and credit of the United States.

9. SEC-regulated, no load money market mutual funds. 10. Local government investment pools. Capital Metro participated in one Local Government Investment Pool. TexasTERM/TexasDAILY – TexasDAILY is a Texas Local Government Investment Pool established by the TexasTERM Local Government Investment Pool (TexasTERM) advisory board pursuant to provisions of the TexasTERM Common Investment Contract that established the TexasTERM Local Government Investment Pool and the series known as TEXASDaily. TEXASDaily was organized in conformity with the Interlocal Cooperation Act, Chapter 2256, Texas Local Government Code. The Advisory Board of TexasTERM, composed of participant and non-participant members, has oversight responsibility and reviews the investment policy and management fee structure. It is rated AAAm by Standard & Poor’s. As a requirement to maintain the rating, weekly portfolio information must be submitted to Standard & Poor’s. TexasDAILY meets the requirements of GASB Statement No. 79 and as such measures and reports its investments at amortized cost. As such, the Authority carries its investment in TexasDAILY at NAV based on amortized cost as provided by GASB Statement No. 72. TexasDAILY’s bylaws permit the Advisory Board to suspend the right of withdrawal or to postpone the date of payment in the event that the Federal Reserve Bank in Dallas is closed other than for customary weekend and holiday closings or if, in the opinion of the Advisory Board, an emergency exists so the the disposal of TexasDAILY’s securities or determination of its net asset value is not reasonably practical. For the year ended September 30, 2019 and 2018 the Authority’s investment in TexasDAILY was $80,824,112 and $74,776,363, respectively. TexasTERM is a fixed-rate, fixed-term portfolio, rated AAAf by Standard & Poor’s. Texas Term are short term investments in nonparticipating interest earning investment contracts which are stated NAV based on amortized cost. Capital Metro’s investment in TexasTERM was $41,500,000 for 2019 and $13,500,000 for 2018.

3.1.c

Packet Pg. 144

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


23


US Bank – the Authority has assets held by US Bank. These include US Treasury Notes, Federal Agency Notes, and commerial paper. As of September 30, 2019, Capital Metro’s investment was $77,724,862 in US Treasury Notes, $12,117,532 in Federal Agency Notes, and $10,160,971 in commercial paper. As of September 30, 2018, the Authority’s investment was $65,934,835 in US Treasury Notes, $32,011,446 in Federal Agency Notes, and $31,126,339 in commercial paper. The Authority did not participate in any reverse repurchase agreements or security lending agreements during FY2019 or FY2018. Custodial Credit Risk – Deposits – Custodial credit risk is the risk that, in the event of a bank failure, the System’s deposits might not be recovered. Capital Metro requires all banks, savings banks and credit union deposits to be federally insured or collateralized with eligible securities. The Authority's deposits are all FDIC insured and are adequately collateralized. Custodial Credit Risk Investments – Custodial credit risk for investment is the risk that, in the event of failure by the counterparty to a transaction, the Authority will not be able to recover the value of its investments or collateral securities that are in possession by an outside party. All of Capital Metro’s investments are insured, registered or held in the Authority’s name by the Auhtority’s agent; therefore, the Authority is not exposed to custodial credit risk. Foreign Currency Risk – Foreign currency risk is the risk that changes in exchange rates will adversely affect the fair value of an investment or a deposit. The Authority’s investment pools or investment securities are denominated in local currency and do not hold foreign investments The foreign currency risk does not apply to the Authority. Interest Rate Risk – Interest rate risk is the risk that the change in interest rates will adversely affect the fair value of an investment. As a means of minimizing risk of loss due to interest rate fluctuations, investment maturities will not exceed the anticipated cash flow requirements of Capital Metro funds. This is accomplished by purchasing quality, short- to medium-term securities that will complement each other in a laddered or barbell maturity structure. Maturity guidelines state that the dollar weighted average days to final stated maturity shall be 548 days or less. Securities may not be purchased that have a final stated maturity date which exceeds five years. The Capital Metro investment advisor monitors the maturity level and makes changes as appropriate.

3.1.c

Packet Pg. 145

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


24


At September 30, 2019 and 2018, Capital Metro’s exposure to interest rate risk as measured by the segmented time distribution by investment type is summarized as follows:

Less Than 90 Days



DaysGreater Than


Commercial Paper -$ 6,949,916$ 3,211,055$ -$ 10,160,971$ Federal Agency Notes - - - 12,117,532 12,117,532 United States Treasury Notes - 9,684,764 33,125,985 34,914,113 77,724,862

Total Investments -$ 16,634,680$ 36,337,040$ 47,031,645$ 100,003,365$

Less Than 90 Days



DaysGreater Than


Commercial Paper 17,350,671$ 13,775,668$ -$ -$ 31,126,339$ Federal Agency Notes 8,331,293 9,062,210 14,617,943 - 32,011,446 United States Treasury Notes 499,470 3,787,634 7,429,968 54,217,763 65,934,835

Total Investments 26,181,434$ 26,625,512$ 22,047,911$ 54,217,763$ 129,072,620$



3.1.c

Packet Pg. 146

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


25


Credit Risk – Credit risk is the risk that an issuer or other conterparty to an investment will not fulfill its obligations to the Authority. The Authority’s investment policy seeks to control credit risk by investing in compliance with the policy, qualifying the broker and financial institution with whom the Authority will transact, sufficient collateralization, portfolio diversification, and limiting maturity. For the years ended September 30, 2019 and 2018, the Authority’s exposure to credit risk by investment category as rated by Standard & Poor’s is as follows:

2019 2018Carrying Value Carrying Value

Cash and cash equivalentsTexasDAILY 80,824,112$ AAAm 74,776,363$ TexasTERM 41,500,000 AAAm 13,500,000 Outstanding reconciling item (1,261,551) (1,715,489)

121,062,561$ 86,560,874$

InvestmentsUS BankCommercial Paper 6,588,272$ A-1 23,231,232$ Commercial Paper 3,572,699 A-1+ 7,895,107 Federal Agency Notes 12,117,532 AA+ 32,011,446 United States Treasury Notes 77,724,862 AA+ 65,934,835 Total Investments 100,003,365$ 129,072,620$

Concentration of Credit Risk – Concentration of credit risk is the risk of loss attributable to the magnitude of the Authority’s investment in a single issuer. The Authority diversifies its investment portfolio so that reliance on any one issuer or broker will not place an undue financial burden on the Authority. The Authority limits its repurchase agreement exposure with a single firm to no more than 15% of the value of the Authority’s overall portfolio and its commercial paper and banker’s acceptance exposure with a single issuer to no more than 5% of the value of the Authority’s overall portfolio. Local government investment pools and U.S. Treasury Notes/Bonds/Bills are authorized at 100%. Federal Agency notes are authorized at 60%. The Authority has more than 5% of its investment in Federal National Mortgage Association and Federal Home Loan Mortgage Corporation. As of September 30, 2018, the Authority’s investment in Federal National Mortgage Association and Federal Home Loan Mortgage Corporation are 16% and 8.4%, respectively of the Authority’s total investment. As of September 30, 2019, the Authority’s investment in Federal National Mortgage Association is 7.23%. Fair Value – The Authority categorizes its fair value measurement disclosure in accordance with GASB Statement No. 72, Fair Value Measurement and Application, which establishes a hierarchy that prioritizes inputs to valuation methods. The three levels of inputs are:

Level 1 – Unadjusted quoted prices in active markets for identical assets and liabilities that Capital Metro has the ability to access.

3.1.c

Packet Pg. 147

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


26


Level 2 – Significant other observable inputs which may include quoted prices for identical or similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in non-active markets; or inputs other than quoted prices that are observable for the assets or liabilities, either directly or indirectly. Level 3 – Unobservable inputs which may include situations when there is minimal, if any, market activity for the asset or liability.

The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. Texas DAILY invests in money market investments of high quality and low risk with the objective of capital preservation. As of September 30, 2019, and 2018, Capital Metro has no unfunded commitments relating to this investment. Investments in Texas DAILY are fully redeemable on any business day; there are no lockup or gate restrictions on redemption. The following table summarize the inputs used as of September 30, 2019 and 2018 for Capital Metro’s assets measured at fair value:



The Authority’s market prices are derived from closing bid prices as of the last business day of the month as supplied by ICE Data Services or Bloomberg. Where prices are not available from generally recognized sources the securities are priced using a yield-based matrix system to arrive at an estimated market value. Prices that fall between data points are interpolated.

3.1.c

Packet Pg. 148

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


27

3 – RECEIVABLES

Receivables at September 30, 2019 and 2018, consist of the following:

2019 2018Accounts receivable 2,838,768$ 2,625,416$ Due from Federal and other governments 1,791,117 13,913,143 Sales tax 44,403,762 41,540,749 Allowance for doubtful accounts (26,998) (215,448) Total receivables 49,006,649$ 57,863,861$

4 – ACCRUED EXPENSES

Accrued expenses at September 30, 2019 and 2018, consist of the following:

2019 2018Accrued accounts payable 19,463,757$ 11,386,852$ Workers’ compensation self-insurance 80,000 80,000 Accrued other 2,285,881 2,084,169 Total accrued expenses 21,829,638$ 13,551,021$

Accrued accounts payable at September 30, 2019, consists primarily of $4.3 million for capital projects, and $11.8 million for purchased transportation services, and $3.4 million for other services. At the end FY2018, accrued accounts payable consists primarily of $3.15 million for capital projects, and $7.19 million for purchased transportation services, and $1.1 million for other services.

5 – DESIGNATED AND RESERVE POLICY

Certain asset balances are designated through board directives for specific uses. During FY2010, Capital Metro adopted a reserves policy that includes the following components – cash flow reserve, capital projects reserve, operating reserve, self-insurance reserve. The reserves are to be used at the discretion of the board to fund temporary cash flow shortages, capital, operating and self-insurance costs not in the budget, and/or emergencies or shortfalls caused by economic downturns. In February 2015, the board adopted revisions to the reserves policy to incorporate language from Section 451.134 of the Transportation Code that requires Capital Metro to establish a reserve account by September 1, 2016, in an amount that is not less than two months of actual operating expenses. This new reserve is entitled the “statutory operating reserve” and replaces the cash flow reserve. As of September 30, 2019, $39.7 million was allocated to the statutory operating reserve, $21.5 million for a budget stabilization reserve, and $1.3 million to the self-insurance reserve. For fiscal year ending September 30, 2018, $39.7 million and $19.8 million respectively, was allocated to the statutory operating and budget stabilization reserves and $1.3 million to the self-insurance reserve.

3.1.c

Packet Pg. 149

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


28

6 – LEASES

Capital Metro has non-cancellable lease commitments for certain real property that expires in April 2024 and October 2055 which is subject to an escalation clause. The aggregate minimum annual lease payment under the term of the foregoing leases is as follows:

2019Operating

Fiscal Year Ended September 30: Leases2020 454,802 2021 461,036 2022 467,395 2023 473,881 2024 338,290 2025-2029 715,531 2030-2034 715,531 2035-2039 715,531 2040-2044 715,531 2045-2049 715,531 2050-2054 715,531 2055-2056 155,030

Total lease commitments 6,643,621$

Rent expense was approximately $1,325,879 for the year ended September 30, 2019, and $1,809,041 for the year ended September 30, 2018.

7 – LONG-TERM LIABILITIES

In November 2004, the citizens of the Capital Metro service area voted in favor of allowing Capital Metro to operate urban commuter rail service from Leander, Texas to downtown Austin, Texas. In February 2006, the Capital Metro Board of Directors approved a tax-exempt lease/purchase financing agreement for the funding of rail vehicles. The Master Lease/Purchase Financing Agreement dated March 1, 2006, between Banc of America Leasing and Capital, LLC and Capital Metro, was executed on March 9, 2006 to purchase six rail cars from Stadler Bussnang AG, a corporation organized under the laws of Switzerland.

The financed amount was $36,044,935 with an interest rate of 3.7747%, payments due quarterly on the 15th of October, January, April and July of each year beginning on October 15, 2006 for 10 years in the payment amount of $1,100,281. In December 2011, Capital Metro refinanced this lease in the amount of $19,190,263 with an interest rate of 2.48%, payments due quarterly on the 15th of January, April, July, and October of each year beginning on January 15, 2012 for 7 years in the payment amount of $745,260. During September 2018, the final payment was made for the lease/purchase financing agreement.

3.1.c

Packet Pg. 150

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


29

7 – LONG-TERM LIABILITIES, continued

In February 2012, the Board approved a long-term financing/notes payable agreement with BBVA Compass Bank in the amount of $20,000,000 for bus purchases. This is a 10-year note, an interest rate of 2.15%, callable after April 2017 (but not called as of September 30, 2017) with interest due each October 1 and April 1 beginning in October 2012 and principal payments annually on April 1 of each year beginning in April 2013. During September 2018, the final payment was made for the long-term financing agreement. All long-term debt balances have been paid. Changes in Long-Term Liabilities: The changes in long-term liabilities for the year ended September 30, 2019 and 2018 are as follows:


Accrued vacation 770,807$ -$ 481,236$ (504,945)$ 747,098$ Accrued sick leave 642,078 - (141,236) - 500,842 Other rent liability 641,335 - 283,126 27,813 952,274 Unearned grant revenue 17,140,344 - - (8,343,309) 8,797,035 Total OPEB liability 3,339,100 - (390,331) (72,363) 2,876,406 Net pension liability 44,189,642 - 16,260,797 (6,692,978) 53,757,461

Total 66,723,306$ -$ 16,493,592$ (15,585,782)$ 67,631,116$


Accrued vacation 698,608$ -$ 551,801$ (479,603)$ 770,807$ Accrued sick leave 564,755 - 77,323 - 642,078 Bus purchase note payable 8,530,000 - - (8,530,000) - Commuter rail car and - - - - stations notes payable 740,667 - - (740,667) - Other rent liability 546,592 - 150,000 (55,257) 641,335 Unearned grant revenue 18,828,476 - - (1,688,132) 17,140,344 Total OPEB liability 978,321 2,339,465 98,027 (76,713) 3,339,100 Net pension liability 45,739,691 - 5,561,379 (7,111,428) 44,189,642

Total 76,627,110$ 2,339,465$ 6,438,531$ (18,681,800)$ 66,723,306$

8 – COMMITMENTS

The Authority has a capital spending plan for projects for upcoming and future years. The Authority’s FY2019 and FY2018 capital budget has appropriations of approximately $114.5 million and $151.5 million, respectively. The Authority’s remaining contractual commitments related to its capital improvement plan are $88.6 and $74.5 million as of September 30, 2019 and 2018, respectively. The Authority has executed contracts with various goods and services providers totaling approximately $914.2 million with termination dates through September 2035. All contracts contain a termination for convenience clause in which such contracts may be terminated, in whole or in part, for the convenience of the Authority.

3.1.c

Packet Pg. 151

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


30


The Authority has entered into an interlocal agreement with the City of Austin, as amended in April 2010, to pay the City of Austin its pro rata share of 25% of the Authority’s one-cent sales tax from 2001 to 2004 in consideration for the City to carry out transportation mobility projects as approved by the Authority (ILA). The remaining balance outstanding as of September 30, 2019 and 2018 was $9.7 and $18.1 million, respectively. The amount is payable when the City of Austin incurs an expenditure toward an approved mobility project. As specified in the agreement, payment is due to the City if the current year sales tax revenue exceeds the base amount as defined. October 2018, an amendment to the ILA was executed which reduced the remaining balance $6 million and redirected the funds to pay costs associated with Project Connect. The Authority partnered with the City of Austin and several suburban communities to develop the Build Central Texas (BCT) program. BCT is comprised of two primary segments: The Build Central Texas Program with the City of Austin and the Suburban Communities Program with the surrounding communities. The remaining commitments for the programs are outlined below.

2019 2018Build Central Texas 388,686 $ 662,152 $ Suburban Communities 200,496 247,996 Total commitment 589,182 $ 910,148 $

Either the Authority or the City of Austin may terminate the BCT agreement at any time, per the provisions of Section 15 of the Build Greater Austin interlocal agreement. In no way will such termination affect Capital Metro’s obligation to make payments for work completed on projects previously approved for funding. Expenses are accrued when the respective city incurs an expenditure for an approved project. Participating suburban communities have separate Interlocal agreements that require funds are used for mobility related projects. Fuel Hedge Derivative: The Authority developed and implemented a plan for a Fuel Risk Management Program to mitigate fuel price risk for diesel and gasoline, protect and manage budget objectives, and reduce price volatility and introduce price predictability. This may be accomplished by purchasing financial instruments known as swap and/or options and exchange-traded diesel fuel futures contracts. This program began in December 2008. The Authority reports its derivative instruments in accordance with GASB Statement No. 53, Accounting and Financial Reporting for Derivative Instruments, which addresses recognition, measurement and disclosures related to derivative instruments. The Authority does not use derivative instruments for speculative purposes. The only derivative instruments entered into are for the purposes of risk mitigation; therefore, these instruments are considered potential hedging derivative instruments under GASB Statement No. 53. In accordance with the requirements of GASB Statement No. 53, all fuel hedges are reported on the Statements of Net Position at fair value. The fair value of option contracts for Ultra Low Diesel Fuel is determined using New York Mercantile Exchange (“NYMEX”) closing settlement prices as of the last day of the reporting period for Ultra Low Sulfur Diesel NY Harbor. The fair value is calculated by deriving the difference between the closing futures prices on the last day of the reporting period and the futures purchase price at the time the positions were established.

3.1.c

Packet Pg. 152

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


31


The outstanding hedging derivative instruments were evaluated for effectiveness at September 30, 2019. The hedge instruments utilize diesel fuel forwards contracts that are priced based on the underlying NY Harbor Ultra Low Sulfur Diesel contract price, while the physical gas is typically purchased at prices based on OPIS Pricing Gulf Coast Ultra Low Sulfur Diesel. Therefore, effectiveness testing was based on the extent of correlation between the index for the hedge and the settlement price at OPIS with volumes matching the underlying expected physical transaction. As of September 30, 2019, the Authority has a total of 176 Ultra Low Sulfur Diesel futures contracts at 42,000 gallons per contract and paid approximately $9,500 for the execution of the trades. As of September 30, 2019, the Authority was hedged 85.5% and 43.73% for FY2020 and FY2021, respectively, based on projected fuel consumption As of September 30, 2018, the Authority has a total of 115 Ultra Low Sulfur Diesel futures contracts at 42,000 gallons per contract and paid approximately $4,300 for the execution of the trades. As of September 30, 2018, the Authority was hedged 81.9%, 5.3% and 0.0% for FY2019, FY2020 and March 2021, respectively, based on projected fuel consumption. Consistent with hedge accounting treatment required for derivative instruments that are determined to be effective in offsetting changes in the cash flows of the hedged item, changes in fair value are reported as deferred outflows or deferred inflows of resources on the statements of net position until the contract expiration that occurs in conjunction with the hedged expected fuel purchase transaction. When fuel hedging contracts expire, at the time the purchase transactions occur, the deferred balance is recorded as an adjustment to fuel expense. Market values of the outstanding diesel fuel futures contracts are calculated by the counterparty based on NYMEX – NY Harbor. As of September 30, 2019, and 2018, the outstanding contracts fair value is approximately $838,000 and $1.4 million respectively, and related unrealized market loss of $ 780,000 in 2019 and unrealized market gain of $2.7 million in 2018. The amount has been reported on the Statement of Position as a deferred outflow/inflow of resources fuel hedge. Diesel fuel futures contracts, which settled during FY2019 and FY2018 decreased diesel fuel cost by $869,000 and $1.6 million, respectively. The amount has been included as part of current operating cost in the Statement of Revenues, Expenses, and Changes in Net Position. Custodial Credit Risk – The Authority had deposits of $1.3 million and $1.9 million with its Broker as required by its Fuel Risk Management Program as of September 30, 2019 and 2018, respectively. At September 30, 2019 and 2018, respectively, of which $838,000 and $1.4 million was exposed to custodial credit risk. Basis Risk – The Authority’s outstanding hedges include basis risk, since the fuel products the government physically purchases to provide service are based on a different index for the same products used for the futures contracts – OPIS Pricing Gulf Coast Ultra Low Sulfur Diesel, vs. NYHRBR Ultra Low Sulfur Diesel.

3.1.c

Packet Pg. 153

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


32


Termination Benefits: In accordance with GASB Statement No. 47, Accounting for Termination Benefits, the Authority has provided termination benefits to former StarTran employees and the related benefit has been recognized within the financial statements. As disclosed within Note 1, as part of the 2012 outsourcing to private companies to operate all passenger service, the Authority also remains responsible for the Pension liability attributable to former StarTran employees of approximately $34.3 million as of September 30, 2019 and $29.0 million as of September 30, 2018. The assumptions used for the related liability, which are included in the Statement of Net Position, are disclosed in Note 10.

9 – 401(k) PLANS

The Authority has retirement benefits under a 401(k) defined contribution plan for its full-time employees which covers substantially all administrative employees. In a defined contribution plan, benefits depend solely on amounts contributed to the plan plus investments’ earnings. Employees are eligible to participate after 30 days of service. In January 2005, the Authority ended the employer contribution to the plan but does allow for discretionary employer contributions. The plan allows loans to participants. Participants start to vest in the employer’s contribution at the completion of one year of service with 100% vesting occurring after five years. All current participants are 100% vested in employer’s contributions made prior to January 1, 2005. Participants that terminated employment prior to January 1, 2009 may be partially vested. The Authority’s designated Plan Administrator administers the plan. The Authority maintains the authority to amend the plan. Contributions from participating employees for the Authority totaled $1,619,651 and $50,109 in discretionary employer contributions for the year ended September 30, 2019. For the prior year, employee contributions totaled $1,547,773 and there was $52,922 in discretionary contributions from Capital Metro.

10 – DEFINED BENEFIT RETIREMENT PLANS

Capital Metropolitan Transportation Authority Retirement Plan for Administrative Employees Plan Description Effective January 1, 2005, the Authority established a pension plan, the Capital Metropolitan Transportation Authority Retirement Plan for Administrative Employees, (the Plan). The Plan is a noncontributory single employer defined benefit plan. Subject to eligibility requirements, all full-time administrative employees are eligible for participation in the Plan except for employees covered by a collective bargaining agreement and lease employees as defined by the Plan. An employee is eligible to become a participant following the first day of the month coincident with or following their date of hire. The Plan is not subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (ERISA). Management of the Plan is vested in the Authority Board and advised by the Pension Plan Committee whose members are appointed by the Board.

3.1.c

Packet Pg. 154

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


33


All Plan assets are maintained under a trust agreement. Under the terms of the trust agreement, Benefit Trust (the Trustee) serves as trustee on behalf of the Plan and carries out an investment policy established by the Pension Plan Committee, consistent with the purposes of the Plan and the requirements of applicable laws and regulations. The following is a description of the Capital Metropolitan Transportation Authority Retirement Plan for Administrative Employees. The Pension Plan Committee for the Plan is the administrator of a single employer defined benefit pension plan sponsored by Capital Metro. The following table summarizes membership of the plan at December 31, 2019 and 2018.


654 633

The most recently available financial statement of the Plan is for the year ended December 31, 2018. A copy of the Plan’s annual audit may be obtained from:


Pension Benefits Participants become 100% vested upon completion of five years of service. Vesting period include periods prior to the effective date of the Plan computed as if the Plan had been in effect. The Plan also allow for participants to recognize prior service (limited to five years) with a governmental entity or other entity related to the provision of public transportation services. Plan participants are eligible for their Plan benefits after terminating employment with vested rights. Participants are eligible for normal retirement on the first day of the month following age 65. The Plan permits early retirement from ages 55 to 64, provided an employee has completed five years of vesting service. The amount of pension payable is computed in the same manner as for normal retirement, except that it is reduced by a reduction factor, which is graduated to reflect the number of years by which early retirement precedes age 65. Retirement benefits are paid to unmarried participants in the form of a single life annuity and to married participants in the form of a joint and 50% survivor annuity but may elect other payment options with spousal consent. Lump-sum benefits are only available if the actuarial value of the benefits is less than $5,000. Participants are entitled to annual pension benefits at normal retirement (age 65) equal to: (i) 1.5% of average earnings, as defined, plus (ii) 0.5% of earnings in excess of covered compensation, as defined, multiplied by (iii) the number of years of credited service, as defined by the Plan. If an active employee dies before reaching age 65, the surviving spouse or a designated beneficiary shall receive for his or her lifetime a deferred monthly benefit equals to the amount that the participant would have received based on service to the participant’s date of death had the participant elected a 50% joint and survivor annuity option and died the next day.

3.1.c

Packet Pg. 155

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


34


A participant may elect not to be covered by the deferred joint and survivor annuity option or may no longer be married when pension payments are to begin. In such instances, a single life annuity will be received by the participant. Disability benefits may be elected at age 55 up to normal retirement age, at which time disabled participants will receive the normal retirement benefit computed as though they had been employed to age 55 or up to normal retirement age with their annual compensation, as defined, remaining the same as at the time they became disabled. Contribution Contribution requirements of the active plan are established and may be amended by Capital Metro’s Board. Currently, plan members are not required to contribute. Capital Metro is making discretionary contributions based on the advice of the Actuary and consistent with funding policy for the Plan. Net Pension Liability Capital Metro’s net pension liability was measured as of December 31, 2018 and 2017, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. Actuarial Assumptions The actuarial assumptions that determined the total pension liability as of December 31, 2018 and 2017 were based on the results of observed past actuarial experience, best estimate of future expectations as well as estimates inherent in related market data. The Plan had an experience study performed in 2017 related to the retirement age. For FY 2018 and FY2017, the actuarial valuation was determined using the following actuarial assumptions: FY 2018 Actuarial cost method Entry age normal Discount rate 5.54% 20-year Municipal Bond rate 3.56% Salary increases 3.5% Investment rate of return 6.75% Retirement age Age 60-61 is 5%, Age 62-64 is 10%, Age 65 is 50%; Age 66-69 is 15% and age 70 is 100% Mortality rates Service retirees, beneficiaries and nondeposition members: SOA RP- 2014 Total Dataset Morality adjusted backwards to 2006 projected with Scale MP-2014 and projected with scale MP-2018 FY 2017 Actuarial cost method Entry age normal Discount rate 5.48% 20-year Municipal Bond Rate 3.04% Salary increases 3.5% Investment rate of return 6.75% Retirement age Age 60-61 is 5%, Age 62-64 is 10%, Age 65 is 50%; Age 66-69 is 15% and age 70 is 100% Mortality rates Service retirees, beneficiaries and nondeposition members: SOA RP- 2014 Total Dataset Morality projected with Scale MP-2017

3.1.c

Packet Pg. 156

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


35


Long-Term Rate of Return on Assets The long-term expected rate of return on Plan investments was determined using best estimate ranges of expected future real rate of return for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected information. The long-term expected geometric real rates of return for 2018:

Long-TermTarget Expected Real

Asset Class Allocation Rate of ReturnDomestic equities: 51.0% U.S. broad equity 7.14% Large cap 7.02% Small/mid cap 3.73%Domestic fixed income 26.5% 3.02%International equities: 13.1% Global ex-U.S. equity 7.25% International equity 6.99% Emerging markets equity 7.23% Non US FixedAlternative: High yield 5.35% Volatility hedge 5.48%

Private equity 8.49%Inflation 2.26%

Real estate 3.5% 6.25%Cash equivalents 5.9% 2.52%

100.0%

Discount Rate The discount rate used to measure the total pension liability as of December 31, 2018 was 5.54%. The projection of cash flows used to determine the discount rate assumed that employer contributions will be made equal to the actuarially determined contribution rate. Based on those assumptions, the pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members until 2054. Therefore, the long-term expected rate of return of 6.75% was applied to all periods of projected benefits payment to determine the total pension liability until 2054. Subsequent to 2054, the 20-year municipal bond rate of 3.56% was utilized as of December 31, 2018.

3.1.c

Packet Pg. 157

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


36


Changes in Net Pension Liability (Asset) The following presents the changes in total fiduciary net position and liabilites and plan fiduciary net position at September 30, 2019 and 2018 (measurement date of December 31, 2018 and 2017 respectively): Total pension liability: 2018 2017

Service cost 2,793,032$ 2,964,773$ Interest on total pension liability 2,445,407 2,235,084 Difference between expected and actual experience 720,052 (288,769) Change in assumptions (920,415) 3,035,050 Benefit payments/refunds of contributions (932,072) (916,317)


Total pension liability at beginning of year 45,157,623 38,127,802

Total pension liability at end of year (a) 49,263,627 45,157,623

Fiduciary net position:Employer contributions 2,692,422 3,106,829 Investment income net of investment expense (1,941,101) 4,081,936 Benefit payments/refunds of contributions (932,072) (916,317) Administrative expenses (58,478) (74,118)

Net change in fiduciary net position (239,229) 6,198,330

Fiduciary net position at beginning of year 30,010,195 23,811,865

Fiduciary net position at end of year (b) 29,770,966 30,010,195

Net pension liability at end of year = (a) - (b) 19,492,661$ 15,147,428$

3.1.c

Packet Pg. 158

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


37


Sensitivity Analysis The following presents the net pension liability of Capital Metro, calculated using the discount rate of 5.54% and 5.48% as of December 31, 2018 and 2017, as well as what Capital Metro’s net pension liability would be if it were calculated using a discount rate that is 1-percentage point lower or 1-percentage point higher than the current rate:




Pension Expense For the fiscal years ended September 30, 2019 and 2018 (measurement dates December 31, 2018 and 2017, respectively), Capital Metro recognized the following pension-related expense: Pension Expense (Income) December 31, 2018 December 31, 2017Service cost 2,793,032$ 2,964,773$ Interest on total pension liability 2,445,407 2,235,084 Administrative expenses (58,478) (74,118) Expected investment return net of investment expenses (2,075,195) (1,674,487) Recognition of deferred outflows (inflows):

Experience 490,291 340,903 Change in assumptions 951,715 1,142,672 Investment gains or losses 609,076 (194,183)

Pension expense 5,155,848$ 4,740,644$

Deferred Inflows and Outflows of Resources As of September 30, 2019, and 2018 (measurement date of December 31, 2018 and 2017), the deferred inflows and outflows of resources are as follows:

3.1.c

Packet Pg. 159

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


38


Deferred Outflows of Resources2018 2017

Differences between expected and actual experience 709,140$ 600,061$ Changes of assumptions 2,541,101 4,013,042 Net difference between projected and actual earnings 1,940,696 - Contributions made subsequent to measurement date 2,176,377 1,803,291

7,367,314$ 6,416,394$ Deferred Inflows of Resources

Differences between expected and actual experience (264,106)$ (384,787)$ Changes of assumptions (828,239) (428,051) Net difference between projected and actual earnings - (1,466,524)

(1,092,345)$ (2,279,362)$

Capital Metro reported $2,176,377 as deferred outflow of resources resulting from contributions made subsequent to the measurement date and which are eligible employer contributions made from January 1, 2019 through September 30, 2019. For the same period in 2018, Capital Metro reported $1,803,291 as deferred outflow of resources resulting from contributions made. Amounts currently reported as deferred outflows of resources and deferred inflows of resources related to pensions, excluding contributions made subsequent to the measurement date, will be recognized as pension expense. The amortization period for these deferrals is over a period of 5 years for investment (gains)/losses. The remaining balance to be recognized in future years will be impacted by additional future deferred inflows and outflows of resources. Year ended September 30: 2018

2020 1,413,209$ 2021 699,981 2022 758,669 2023 1,226,733

4,098,592$

Capital Metropolitan Transportation Authority Retirement Plan for Bargaining Unit Employees of StarTran, Inc. Plan Description The Capital Metropolitan Transportation Authority Retirement Plan for Bargaining Unit Employees of StarTran, Inc. (the Plan) was closed and for GASB 68 reporting, is a “special funding situation.” Special funding situations are defined as circumstances in which a non-employer entity is legally responsible for making contributions directly to a pension plan that is used to provide pensions to the employees of another entity or entities and either (1) the amount of contributions for which the non-employer entity legally is responsible is not dependent upon one or more events unrelated to pensions or (2) the non-employer is the

3.1.c

Packet Pg. 160

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


39


only entity with a legal obligation to make contributions directly to a pension plan. The Authority is the only legal entity obligated to contribute to the Plan. The benefits were frozen for all participants as of August 18, 2012 and there are no longer any employee contributions. All future valuations will have an employer cost only. All Plan assets are maintained under a trust agreement. Under the terms of the trust agreement, Graystone Consulting (the Trustee) serves as trustee on behalf of the Plan and carries out an investment policy established by the Retirement Plan Committee, consistent with the purposes of the Plan and the requirements of applicable laws and regulations. The following is a description of the Capital Metropolitan Transportation Authority Retirement Plan for Bargaining Unit Employees of StarTran Inc. The Retirement Plan Committee for the Plan is the administrator of a single employer defined benefit pension plan sponsored by Capital Metro. Eligible participants are covered by the Plan. The following table summarizes membership of the plan at December 31, 2018 and 2017:


994 1008

The most recently available financial statements of the Plan are for the year ended December 31, 2018 and 2017. A copy of the Plan’s annual audit may be obtained from:


Plan Benefits The Plan provides retirement, death and disability benefits. All participants participating as of August 18, 2012 are considered 100% vested. Participants may retire with unreduced accrued benefits at age 65, or when benefit accrual service equals or exceeds 22.5 years of Benefit Accrual Service. The monthly benefit at retirement is payable in a ten-year certain and life thereafter form of annuity. Participants are eligible for early retirement at the age of 55 with 5 years of service, such participants shall be entitled to a normal pension accrued reduced in accordance with plan provisions. Retirement benefit payments are determined by application of a benefit formula based on the participant’s years of pension credited service. Effective July 1, 2000, the monthly retirement benefit for each year of benefit accrual service is $60.00 per month per year of Benefit Accrual Service for years earned. Participants with disability benefits have no age requirement must have 15 years of employment and the benefit is equal to the actuarial greater of 1) two times the participant derived benefit, or 2) the accrued benefit. The pre-retirement death benefit is equal to the present value of accrued vested benefit. There are no automatic or guaranteed post-retirement cost-of-living adjustments, but ad hoc retiree benefits increases may be created via plan amendments. Amendments to the plan are made only with the authority of the Retirement Plan Committee.

3.1.c

Packet Pg. 161

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


40


The following plan changes, adopted as a result of the plan freeze on August 18, 2012 are reflected in the valuation dated on or after December 31, 2017. Participants are eligible for immediate distributions.

Service requirements for Unreduced Early Retirement Age (UERA) was changed from 25 years to

22.5 years and participants receive credit toward UERA while working for the new contractor.

Lump sums are capped unless a participant is eligible for UERA.

Effective May 11, 2015, the Plan was amended to allow 15 former IUE participants to earn credit toward unreduced retirement eligibility while working for the new contractor.

Contributions There are no participant contributions after August 18, 2012. However, make up contributions are permissible under the Plan. Interest on participant contributions is credited annually based on the 120% of the Federal Mid-term rate in effect each January 1. The Authority makes contributions, which are actuarially determined as of each valuation date and compliant with the terms of applicable labor contracts. The actuarially determined annual contributions consist of a normal cost contribution and an amortization of the unfunded actuarial accrued liability contribution. The 2018 plan years’ employer contribution funded the normal cost and amortized the existing unfunded actuarial accrued liability on a “closed” 30-year level percent of amortization with 21 years remaining and with a 3% annual increase of the unfunded actuarial accrued liability. Net Pension Liability The Plan’s net pension liability was measured as of December 31, 2018 and 2017, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. Actuarial Assumptions The actuarial assumptions that determined the total pension liability as of December 31, 2018 and 2017 is based on the results of an actuarial experience study conducted in 2017. The total pension liability in the December 31, 2018 and 2017 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement:

3.1.c

Packet Pg. 162

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


41


Measurement date: December 31, 2018 Actuarial cost method Early age entry normal cost method Salary increases NA Investment rate of return 7.0% net of pension plan investment expenses Discount rate 7.0% Retirement age and withdrawal rates Age 55-61 is 13% to 14%

Age 62 is 15% Age 63 is 17% Age 64-70 is 30% to 100% Mortality rates Healthy and Disabled Healthy: PUB-2010 Amounts-Weighted Mortality for General Employees with Generational Improvements from 2010 using Scale MP-2018

Measurement date: December 31, 2017 Actuarial cost method Early age entry normal cost method Salary increases NA Investment rate of return 7.25% net of pension plan investment expenses Discount rate 7.25% Retirement age and withdrawal rates Age 55-61 is 13% to 14% Age 62 is 15% Age 63 is 17% Age 64-70 is 30% to 100% Mortality rates Healthy: Aggregate 2006 base rates from RP-2014 mortality study projected generationally from 2006 using Scale MP-2017 Disabled: 2006 disabled base rates from RP-2014 mortality study projected generationally from 2006 using Scale MP-2017

Long-Term Rate of Return on Assets The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation.

3.1.c

Packet Pg. 163

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


42


Best estimates of arithmetic real rates of return for each major asset class included in the pension plan’s target asset allocation as of December 31, 2018 is summarized on the following table:

Long-TermAsset Expected

Asset Class Allocation Rate of ReturnU.S. Large Cap Equity 19.20% 7.00%U.S. Small Cap Equity 8.50% 7.50%REITs 6.00% 6.80%Non U.S. Develop Equity 27.70% 8.00%Fixed Income 30.00% 3.60%Emerging Markets Equity 8.60% 8.60%

100.00%

Discount rate – The discount rate used to measure the total pension liability as of December 31, 2018 and 2017 was 7.0% and 7.25% respectively. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that employer contribution will be made at rates equal to the actuarially determined contribution rates. For this purpose, only employer contributions that are intended to fund benefits of current plan members and their beneficiaries are included. Based on these assumptions, the Pension Fund’s fiduciary net position was projected to be available to make all projected benefit payments for current plan members. Therefore, the long-term expected rate of return on Pension Plan investments was applied to all periods of projected benefit payments to determine the total pension liability.

3.1.c

Packet Pg. 164

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


43


Changes in Net Pension Liability (Asset) The following presents the changes in total fiduciary net position and liabilities and plan fiduciary net position at September 30, 2019 and 2018 (measurement date of December 31, 2018 and 2017): Total pension liability: 2019 2018

Service cost -$ -$ Interest on total pension liability 4,346,270 4,287,202 Effect of assumption changes or inputs (213,616) (1,769,787) Change in benefit term 2,453,043 3,305,720 Benefit payments/refunds of contributions (4,668,156) (4,540,291)


Total pension liability at beginning of year 62,241,794 60,958,950 Total pension liability at end of year (a) 64,159,335 62,241,794

Fiduciary net position:Employer contributions 4,000,556 4,004,599 Member contributions 654 4,578 Investment income net of investment expense (2,411,068) 4,420,550 Benefit payments/refunds of contributions (4,668,156) (4,540,291) Administrative expenses (227,031) (225,052)

Net change in fiduciary net position (3,305,045) 3,664,384

Fiduciary net position at beginning of year 33,199,580 29,535,196 Fiduciary net position at end of year (b) 29,894,535 33,199,580 Net pension liability at end of year = (a)-(b) 34,264,800$ 29,042,214$

Sensitivity Analysis The following presents the net pension liability of Capital Metro Retirement Plan for Bargaining Unit of StarTran, Inc., calculated using the discount rate of 7.0% and 7.25% for December 31, 2018 and 2017, as well as what Capital Metro’s Bargaining Unit of StarTran, Inc. net pension liability would be if it were calculated using a discount rate that is 1-percentage point lower or 1-percentage point higher than the current rate.




3.1.c

Packet Pg. 165

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


44


Pension Expense For the fiscal year ended September 30, 2019 and 2018 (measurement date of December 31, 2018 and 2017), Capital Metro recognized the following pension-related expense: Pension Expense (Income)

December 31, 2018 December 31, 2017Interest on total pension liability 4,346,270$ 4,287,202$ Member contributions (654) (4,578) Administrative expenses 227,031 225,052 Expected investment return net of investment expenses (2,375,130) (2,187,296) Recognition of deferred inflows/outflows of resources:

Change in assumptions 2,453,043 3,305,720 Recognition of demographic differences—current year (213,616) (1,769,787) Recognition of investment gains or losses—current year 957,240 (446,651) Recognition of investment gains or losses—prior years 168,313 614,964

Pension expense 5,562,497$ 4,024,626$

Deferred Inflows and Outflows of Resources As of September 30, 2019, and 2018 (measurement date of December 31, 2018 and 2017), the deferred inflows and outflows of resources are as follows: Deferred Outflows of Resources

2018 2017Contributions made subsequent to measurement date 2,999,997$ 2,999,997$ Net difference between projected and actual earnings 3,139,434 -

6,139,431 2,999,997

Deferred Inflows of ResourcesNet difference between projected and actual earnings -$ (521,210)$

-$ (521,210)$

Capital Metro reported $2,999,997 as deferred outflow of resources resulting from contributions made subsequent to the measurement date and which are eligible employer contributions made from January 1, 2019 through September 30, 2019. For the same period last year, the amount reported as deferred outflow of resources resulting from contributions was unchanged. Amounts currently reported as deferred outflows of resources and deferred inflows of resources related to pensions, excluding contributions made subsequent to the measurement date, will be recognized in pension expense. Investment (gains)/losses are recognized in pension expense over a period of five years.

3.1.c

Packet Pg. 166

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


45


Aggregate pension related amounts for all plans are as follows:

The Authority’s The Authority’sRetirement Plan Retirement Plan

for Administrative for Bargaining UnitEmployees Employees of StarTran, Inc. Total

Net pension liability 19,492,661$ 34,264,800$ 53,757,461$ Deferred outflows of resources, pension-

related amounts 7,367,314 6,139,431 13,506,745 Deferred inflows of resources, pension-

related amounts 1,092,345 - 1,092,345 Pension expense 5,155,848 5,562,497 10,718,345

Year ended September 30:2020 1,413,209$ 1,063,283$ 2,476,492$ 2021 699,981 608,322 1,308,303 2022 758,669 510,589 1,269,258 2023 1,226,733 957,240 2,183,973

4,098,592 3,139,434 7,238,026 Deferred outflows—contributions subsequent

to the measurement date 2,176,377 2,999,997 5,176,374 6,274,969$ 6,139,431$ 12,414,400$



September 30, 2018 Additions RetirementsCompleted

Projects September 30, 2019Capital assets not being depreciated

Land and improvement 59,689,545$ -$ (69,715)$ 10,269,681$ 69,889,511$ Projects in process 74,723,419 100,236,046 - (111,190,083) 63,769,382

Total capital assets not being depreciated 134,412,964 100,236,046 (69,715) (100,920,402) 133,658,893 Depreciable capital assets:

Building and improvements 86,079,657 - (24,980) 19,672,234 105,726,911 Railroad 149,028,997 - - 18,790,222 167,819,219 Buses and equipment 326,473,243 - (17,024,730) 54,726,827 364,175,340 Passenger parking and stations 89,425,600 - - 7,731,119 97,156,719


Building and improvements 49,040,929 3,290,076 (24,980) - 52,306,025 Railroad 116,412,803 9,124,577 (96) - 125,537,284 Buses and equipment 157,471,110 27,776,110 (16,804,479) - 168,442,741 Passenger parking and stations 56,349,983 5,385,711 - - 61,735,694


Depreciation and amortization expense were $46.5 million for the year ended September 30, 2019.

3.1.c

Packet Pg. 167

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


46



CompletedSeptember 30, 2017 Additions Retirements Projects September 30, 2018

Capital assets not being depreciatedLand and improvement 59,166,866$ -$ -$ 522,679$ 59,689,545$ Projects in process 59,247,399 77,518,499 - (62,042,479) 74,723,419

Total capital assets not being depreciated 118,414,265 77,518,499 - (61,519,800) 134,412,964 Depreciable capital assets:

Building and improvements 84,692,633 - (58,228) 1,445,252 86,079,657 Railroad 139,643,809 - (11,501) 9,396,689 149,028,997 Buses and equipment 290,922,992 - (12,864,208) 48,414,459 326,473,243 Passenger parking and stations 87,162,200 - - 2,263,400 89,425,600


Building and improvements 46,826,275 2,272,882 (58,228) - 49,040,929 Railroad 107,339,494 9,084,810 (11,501) - 116,412,803 Buses and equipment 145,116,087 25,128,518 (12,773,495) - 157,471,110 Passenger parking and stations 49,869,377 6,480,606 - - 56,349,983


Depreciation and amortization expense were $44.0 million for the year ended September 30, 2018. Capital Metro owns certain real properties and a mass transit easement, which are used for current rail operations and held for future mass transit purposes. Such property is listed at cost.

12 – CONTINGENCIES

Various claims have been asserted against Capital Metro from personal injuries involving Capital Metro property. Capital Metro plans to vigorously defend all allegations and no liability is reflected in the financial statements. Certain other claims have been asserted for which estimation of potential loss, if any, may be determined. Potential losses on these claims are included in the financial statements. Capital Metro receives federal grants that are subject to review and audit by the grantor agencies. Such audits could lead to requests for reimbursement to the grantor agency for expenditures disallowed under terms of the grant. Capital Metro’s management believes such disallowances, if any, will not have a material effect on the financial statements.

3.1.c

Packet Pg. 168

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


47

13 – SELF-INSURANCE

Workers’ compensation claims are reserved and paid in accordance with the provisions of the Texas Workers’ Compensation Act. Claims that are probable and can be reasonably estimated are reported as a part of accrued expenses. The self-insurance retention levels as of September 30, 2019 and 2018 for workers’ compensation are $350,000 per occurrence. At September 30, 2019 and 2018, there are no claims exceeding Capital Metro’s retention limits. The following represents the workers’ compensation claims activity and the end of year liability, which includes claims incurred and reported, as well as estimated claims incurred but not reported for the year ended September 30, 2019 and 2018: Workers’ Compensation Claims 2019 2018Beginning of year liability 80,000$ 146,000$ Current year claims and/or changes in estimates 63,240 (54,584) Claim payments (63,240) (11,416) End of year current year liability 80,000$ 80,000$

Capital Metro has been self-insured for health and dental since January 1, 2003. United Health Care, Inc. administers the plan for Capital Metro employees. Health and Dental Self-Insurance 2019 2018Beginning of year liability 203,445$ 219,095$ Current year claims and/or changes in estimates 3,942,373 3,348,437 Claim payments (3,861,818) (3,364,087) End of year current year liability 284,000$ 203,445$

Due to the types of risk associated with being self-insured, the ultimate amount to be paid out may be more or less than the amounts accrued within accrued expenses at September 30, 2019 and 2018.

14 – OTHER POST EMPLOYMENT BENEFITS (OPEB)

Plan description: Capital Metro’s defined benefit OPEB plan, a single-employer, health care plan provides OPEB for eligible employees of the Authority. The plan is administered by Capital Metro and Capital Metro has the authority to establish or amend the plan provisions or contribution requirements. No assets are accumulated in a trust that meets the criteria in paragraph 4 of Statement 75. Retirees must elect within six months of becoming Medicare eligible. The plan does not issue a stand-alone financial report. Benefits Capital Metro provides a Medicare supplement insurance stipend to all eligible retired administrative employees of Capital Metro to supplement retiree health care. Employee benefits are set at a fixed amount (varies from $1,450 up to $2,900) per year and employees are eligible based on the following: Age 62-64 with at least 10 years of service at retirement Age 62-64 that meet the Rule of 80 at retirement Age 65 with 10 or more years of service at retirement Spouses are not eligible for postemployment benefits. The Authority has eliminated benefits for all bargaining employees.

3.1.c

Packet Pg. 169

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


48


Contributions: The contribution requirements of plan members and the Authority are approved and may be amended by the Board of Directors. The Authority funds all obligations arising under this plan on a pay-as-you-go basis. The following is the participant summary as of September 30, 2019 and 2018 (the most recent actuarial valuation date): Participants: 2019 2018

Actives—fully eligible 16 9Actives—not eligible 288 299Retires 23 25

Total 327 333

Total OPEB Liability The Authority’s total OPEB liability of $2,876,405 was measured as of September 30, 2019 and $3,339,100 was measured as of September 30, 2018 and was determined by an actuarial valuation as of that date. Actuarial methods and assumptions: The total OPEB liability in the September 30, 2019 actuarial valuation was determined using the following actuarial assumptions and other inputs, applied to all periods included in the measurement, unless otherwise specified: Inflation 3.0% per annum Salary increases 3.5% per annum Discount rate 2.66% per annum (EOY) Health care cost trend rates Benefit will remain constant in the future. Actuarial cost method Entry Age Normal based on level percentage of projected

salary. Mortality rates General PUB-2010 generational table using MP-18

applied on a gender-specific basis. Plan participation percentage The participation percentage is the assumed rate of future

eligible retirees who elect to continue health coverage at retirement. It is assumed that 100% of all employees and their dependents who are eligible for early retiree benefits will participate in the retiree medical plan. This assumes that a one-time irrevocable election to participate is made at retirement.

The discount rate was based on Bond Buyer 20-Bond GO index.

3.1.c

Packet Pg. 170

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


49


Capital metro did not perform an actuarial experience study for the actuarial assumptions used in the September 30, 2019 valuation.

Changes in the Total OPEB Liability

September 30, 2019 September 30, 2018Net OPEB Obligation, beginning 3,339,100$ 3,317,786$ Changes for the year:Service cost 256,296 245,871 Interest 150,911 149,467 Changes in assumptions or other inputs (797,538) (297,311) Contributions and payments made (72,364) (76,713) Net changes (462,695) 21,314 Net OPEB Obligation, ending 2,876,405$ 3,339,100$

The total OPEB liability as of September 30, 2019 assumes a discount rate of 2.66%. Due to change in the termination and retirement rates based on current actuarial valuation, a $797,538 decrease in liability was realized. The total OPEB liability as of September 30, 2018 assumes a discount rate of 4.24%. The change in discount rate resulted in a 297,311 decrease in liability. Sensitivity of the total OPEB liability to changes in the discount rate: The following presents the total OPEB liability of the Authority, as well as what the Authority’s approximate total OPEB liability would be if it were calculated using a discount rate that is 1-percentage-point lower or 1-percentage-point higher than the current discount rate:



3.1.c

Packet Pg. 171

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


50


Sensitivity of the total OPEB liability to changes in the healthcare cost trend rates: The following presents the total OPEB liability of the Authority, as well as what the Authority’s total OPEB liability would be if it were calculated using healthcare cost trend rates that are 1-percentage-point lower or 1-percentage-point higher than the current healthcare cost trend rates:



OPEB expense and deferred outflows of resources and deferred inflows of resources: For the year ended September 30, 2019 and 2018, the Authority recognized OPEB expenses of $329,234 and $374,865 respectively. The Authority reported deferred inflows of resources related to OPEB from the following source:

Deferred Inflows of Resources 2019 2018Difference between expected and actual experience (148,215)$ -$ Changes of assumptions or other inputs (848,188) (276,839)

(996,403)$ (276,839)$

Amounts reported as the deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense over the average future service to retirement of plan participants as follows:

Years ending September 30: 20192020 (77,973)$ 2021 (77,973) 2022 (77,973) 2023 (77,973) 2024 (77,973) Thereafter (606,538)

(996,403)$

3.1.c

Packet Pg. 172

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

51



3.1.c

Packet Pg. 173

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


52

Total pension liability: 2019 2018 2017 2016 2015Service cost -$ -$ 303,363$ 486,248$ 391,902$ Interest on total pension liability 4,346,270 4,287,202 4,206,646 4,226,699 4,221,102 Effect of assumption changes or inputs (213,616) (1,769,787) 1,878,042 (730,963) - Change in benefit term 2,453,043 3,305,720 934,709 - 302,377 Benefits payment/refunds of contributions (4,668,156) (4,540,291) (4,221,793) (4,959,966) (4,721,559)

Net change in total pension liability 1,917,541 1,282,844 3,100,967 (977,982) 193,822


Employer contributions 4,000,556$ 4,004,599$ 4,005,413$ 4,010,205$ 3,915,395$ Member contributions 654 4,578 5,417 5,760 6,322 Investment income net of investment expense (2,411,068) 4,420,550 1,621,196 (98,010) 1,813,047 Benefit payments/refunds of contributions (4,668,156) (4,540,291) (4,221,793) (4,959,966) (4,721,559) Administrative expenses (227,031) (225,052) (216,313) (225,290) (259,705) Net change in fiduciary net position (3,305,045) 3,664,384 1,193,920 (1,267,301) 753,500

Fiduciary net position at beginning of year 33,199,580 29,535,196 28,341,276 29,608,577 28,855,077 Fiduciary net position at end of year (b) 29,894,535 33,199,580 29,535,196 28,341,276 29,608,577 Net pension liability/(asset) at end of year = (a) - (b) 34,264,800$ 29,042,214$ 31,423,754$ 29,516,707$ 29,227,388$

Fiduciary net position as a % of total pension liability 46.59% 53.34% 48.45% 48.98% 50.32%Pensionable covered payroll* 8,732,490$ 9,672,912$ 9,807,345$ 10,882,123$ 12,270,378$ Net pension liability as a % of covered payroll 392.38% 300.24% 320.41% 271.24% 238.19%

Capital Metropolitan Transportation Authority Retirement Plan for Bargaining Unit Employees of StarTran, Inc. Schedules of Changes in Net Pension Liability and Related Ratios

Years Ended September 30, 2019, 2018, 2017, 2016 and 2015

Notes to Schedule: Method changes: There have been no method changes in the accounting valuation since the prior year. Assumption Changes: The financial accounting valuation reflects the following assumption changes: The discount rate decreased from 7.25% to 7.0% to reflect consistency with the change in the expected return on asset

assumption. The expected return on assets decreased from 7.25% to 7.0% to reflect target asset allocation as reflected in the Investment

Policy Statement and capital markets long-term return expectations. The mortality assumption for healthy lives changed from aggregate 2006 base rates from RP-2014 mortality study

projected generationally from 2006 using MP-2017, to the PUB-2010 Amounts-Weighted Mortality Table from General Employees with Generational Improvements from 2010 using Scale MP-2018.

The mortality assumption for disabled lives changed from the disabled base rates from the RP-2014 mortality study projected generationally from 2006 using Scale-2017 to PUB-2010 Amounts-Weighted Disabled Retirement Mortality Table for General Employees with Generational Improvements from 2010 using Scale MP-2018.

* Capital Metropolitan Transportation Plan for Bargaining Unit Employees of StarTran, Inc. was frozen to all participants in



3.1.c

Packet Pg. 174

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


53


2010 1,797,529$ 1,384,464$ 413,065$ 30,548,644$ 4.5%2011 2,034,486 1,279,245 755,241 30,523,684 4.2%2012 4,246,630 4,163,071 83,559 21,222,724 19.6%2013 2,685,614 4,264,824 (1,579,210) - *2014 2,750,231 4,006,229 (1,255,998) - *2015 2,680,205 4,010,272 (1,330,067) - *2016 2,476,752 4,005,412 (1,528,660) - *2017 2,399,389 4,004,599 (1,605,210) - *2018 2,481,007 3,999,996 (1,518,989) - *2019 2,633,692 4,000,556 (1,366,864) -

Capital Metropolitan Transportation Authority Retirement Plan for Bargaining Unit Employees of StarTran, Inc.Schedule of Plan Contributions


Methods and Used Assumptions to Determine Contribution Rates: Valuation Date January 1, 2019 Investment Rate of Return 7.0% including inflation, net of pension plan investment expenses Actuarial Cost Method Unit Credit Cost Method Discount Rate 7.0% Projected Salary Increases N/A Administrative Expenses $200,000 per annum Decrement Timing Middle of year decrements Withdrawal Rates Varies by age with age 55 at 13% withdrawal rate and up to age 70 with a 100%

withdrawal rate. Surviving Spouse Benefit Assumed 80% have an eligible spouse and that males are 3yrs older than their spouse. Retirement age Varies by age with 13% retirement at age 55 and with 100% of retirement at age 70. Mortality Healthy PUB-2010 Amounts-Weighted Mortality table for General Employees with generational

Improvements from 2010 using Scale MP-2018 Disabled PUB-2010 Amounts-Weighted Disabled Retirement Mortality table for General

Employees with generational Improvements from 2010 using Scale MP-2018. * Capital Metropolitan Transportation Plan for Bargaining Unit Employees of StarTran, Inc. was frozen to all participants in



3.1.c

Packet Pg. 175

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


54

2019 2018 2017 2016 2015Total pension liability:

Service cost 2,793,032$ 2,964,773$ 2,087,251$ 2,225,673$ 1,453,304$ Interest on total pension liability 2,445,407 2,235,084 1,863,897 1,573,679 1,538,740 Changes of benefit terms - - 2,054,914 - - Difference between expected and actual experience 720,052 (288,769) (86,781) 1,984,816 (319,936) Change in assumptions (920,415) 3,035,050 209,630 (1,415,858) 5,067,915 Benefits payment/refunds of contributions (932,072) (916,317) (892,937) (833,716) (717,439)

Net change in total pension liability 4,106,004 7,029,821 5,235,974 3,534,594 7,022,584


Fiduciary net position:Employer contributions 2,692,422$ 3,106,829$ 1,974,973$ 1,882,377$ 1,600,160$ Investment income net of investment expense (1,941,101) 4,081,936 1,795,013 (11,187) 1,017,006 Benefit payments/refunds of contributions (932,072) (916,317) (892,937) (833,716) (717,439) Administrative expenses (58,478) (74,118) (58,222) (63,645) (38,209)

Net change in fiduciary net position (239,229) 6,198,330 2,818,827 973,829 1,861,518

Fiduciary net position at beginning of year 30,010,195 23,811,865 20,993,038 20,019,209 18,157,691 Fiduciary net position at end of year (b) 29,770,966 30,010,195 23,811,865 20,993,038 20,019,209

Net pension liability/(asset) at end of year = (a) - (b) 19,492,661$ 15,147,428$ 14,315,937$ 11,898,790$ 9,338,025$

Fiduciary net position as a % of total pension liability 60.43% 66.46% 62.45% 63.82% 68.19%Pensionable covered payroll 22,758,461$ 20,966,199$ 22,195,764$ 18,663,437$ 16,183,596$ Net pension liability as a % of covered payroll 85.65% 72.25% 64.50% 63.75% 57.70%

Capital Metropolitan Transportation Authority Retirement Plan for Administrative Employees

Years Ended September 30, 2019, 2018, 2017, 2016 and 2015Schedules of Changes in Net Pension Liability and Related Ratios

Note to Schedule: Changes in Assumptions and The discount rate for year-end disclosure was 5.54%. Methods Since the Last Actuarial Valuation The assumed 20-year municipal bond rate was 3.56%. For GASB determination, the accounting mortality table was SOA RP-2014 Total Dataset Mortality

adjusted backwards to 2006 using MP2014 and projected with scale MP2018 Actuarial Assumptions The year-end disclosure discount rate was raised to 5.54% in accordance with GASB Nos. 67 and

68. The assumed rate of return was revised due to updated expectations. See accompanying independent auditor’s report.

3.1.c

Packet Pg. 176

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


55


2010 2,029,276$ 2,545,542$ (516,266)$ 17,330,101$ 14.7%2011 1,453,308 1,448,542 4,766 16,565,032 8.7%2012 1,659,488 1,704,070 (44,582) 18,347,486 9.3%2013 1,393,056 1,393,490 (434) 15,021,918 9.3%2014 1,588,278 1,600,160 (11,882) 16,183,596 9.9%2015 1,894,044 1,863,116 30,928 17,038,110 10.9%2016 1,971,655 1,971,655 - 18,791,825 10.5%2017 2,166,745 2,166,745 - 19,911,349 10.9%2018 3,243,014 3,243,014 - 20,757,338 15.6%2019 3,065,508 3,065,508 - 22,758,461 13.5%

Capital Metropolitan Transportation Authority Retirement Plan for Administrative EmployeesSchedule of Plan Contributions


Note to Schedule: Valuation date: Actuarially determined contribution rates are calculated as of January 1

for the respective year of contributions. Methods and Assumptions Used to Determine Contribution Rates: Actuarial Cost Method Entry age normal Amortization Method Level percent of payroll Remaining Amortization Period 20 years Asset Valuation Method Deferred recognition with phase in over 5 years Salary Increases 3.5% Investment Rate of Return 6.75% Retirement Age Age 60 to 61 is 5%, 62-64 is 10%, 65 is 50%, 66.69 is 15% and age 70 is 100% Mortality Rates RP-2006 Static, non-generational Mortality Table as described in Regulation 1.430(h)(3) and notice 2017-60, projected Scale MP- 2017, male and female, with combined rates for annuitants and non-annuitants. See accompanying independent auditor’s report.

3.1.c

Packet Pg. 177

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)


56

2019 2018Total OPEB liabilityService cost 256,296$ 245,871$ Interest 150,911 149,467 Changes of assumptions or other inputs (797,538) (297,311) Benefit payments (72,364) (76,713)

Net change in total OPEB liability (462,695) 21,314

Total OPEB liability—beginning 3,339,100 3,317,786 Total OPEB liability—ending 2,876,405$ 3,339,100$

Covered payroll 21,423,143$ 20,757,338$

Total OPEB liability as a percentage of covered employee payroll 13% 16%

Changes of assumptions: Changes of assumptions and other inputs reflect theeffects of changes in the discount rate each period. The following are the discountrates used in each period:

2019 2.66%2018 4.24%2017 3.63%

Schedules of Changes in the Total OPEB Liability and Related Ratios

Capital Metropolitan Transportation Authority Other Post-Employment Benefits

Other Post-Employment Benefits –

This schedule is presented to illustrate the requirement to show information for 10 years. However, until a full 10-year trend is compiled, governments should present information for those years for which information is available. See accompanying independent auditor’s report.

3.1.c

Packet Pg. 178

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

57


Statistical Section

3.1.c

Packet Pg. 179

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

58

This section of Capital Metro’s comprehensive financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about Capital Metro’s overall financial condition. Financial Trends

These schedules contain trend information to help the reader understand how Capital Metro’s financial performance and well-being have changed over time. (Pages 59-60)

Revenue Capacity These schedules contain information to help the reader assess Capital Metro’s most significant local revenue source. (Pages 61-63)

Debt Capacity

This schedule presents information to help the reader assess the affordability of Capital Metro’s current level of outstanding debt and the ability to issue additional debt in the future. (Pages 64-65)

Demographic and Economic Information

These schedules offer demographic and economic indicators to help the reader understand the environment within which Capital Metro’s financial activities take place. (Pages 66-67)

Operating Information These schedules contain service and infrastructure data to help the reader understand how the information in Capital Metro’s financial report relates to the services Capital Metro provides and the activities it performs. (Pages 68-74)

Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year

3.1.c

Packet Pg. 180

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

59

2019 2018 2017 2016 2015 2014 2013 2012 2011 2010Net PositionTotal assets $736,412,006 $687,181,390 $631,671,906 $581,284,435 $549,866,540 $483,139,154 $456,513,478 $424,222,373 $377,672,823 $399,721,817Deferred Outflow 14,287,244 9,416,391 11,040,533 14,502,678 13,394,914 - - - - -

Total liabilities 118,047,916 106,423,127 121,349,555 98,573,715 100,896,496 74,546,316 79,719,171 92,197,909 59,345,298 77,198,059Unearned grant revenue 8,797,035 17,140,344 18,828,476 41,375,065 45,450,146 - - - - - Deferred Inflow 2,088,748 5,841,826 1,765,739 1,288,901 261,124 - - - - -

Net positionInvested in capital assets 455,646,696 403,270,271 356,182,839 292,329,115 282,032,104 287,038,610 286,448,356 287,763,068 288,856,610 306,643,349Restricted for construction - - - - - - - - - - Unrestricted 166,118,857 163,922,213 144,585,830 162,220,317 134,621,584 121,554,228 90,345,951 44,261,396 29,470,915 15,880,409

Total net position $621,765,553 $567,192,484 $500,768,669 $454,549,432 $416,653,688 $408,592,838 $376,794,307 $332,024,464 $318,327,525 $322,523,758

Unaudited - see accompanying auditor's report

CAPITAL METROPOLITAN TRANSPORTATION AUTHORITYCONDENSED STATEMENT OF NET POSITION

LAST TEN YEARS

3.1.c

Packet Pg. 181

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

60

2019 2018 2017 2016 2015 2014 2013 2012 2011 2010Operating Revenue

Transportation fares $11,903,616 $12,031,326 $13,455,755 $14,124,211 $13,594,470 $12,104,556 $11,142,027 $10,967,223 $9,928,579 $9,001,139Contract revenue and fares 9,083,445 8,968,191 8,151,879 7,286,377 6,834,345 7,263,506 7,425,924 7,150,215 6,820,131 5,865,965Rail - freight 5,110,051 5,453,100 4,522,523 4,756,093 5,063,456 5,119,927 5,030,110 4,998,943 7,550,692 13,074,292Commuter rail 3,281,916 2,589,108 2,541,925 2,656,212 3,301,561 3,778,188 3,358,278 2,265,523 954,666 293,038 Total operating revenue 29,379,028 29,041,725 28,672,082 28,822,893 28,793,832 28,266,177 26,956,339 25,381,904 25,254,068 28,234,434

Operating ExpensesLabor/fringe benefits (1) 45,237,327 42,698,314 44,196,009 35,894,236 33,972,657 30,627,326 27,550,575 84,599,834 82,985,900 80,142,469Services 18,360,137 19,113,196 18,619,086 19,249,051 21,697,474 25,298,173 20,701,207 19,651,851 18,015,338 28,323,402Materials 13,696,518 14,099,827 14,564,759 16,459,622 17,141,586 18,425,437 18,250,925 23,529,099 24,340,524 20,989,934Utilities 3,016,639 2,768,950 2,784,922 2,678,320 2,595,727 2,278,593 2,185,680 2,052,397 2,021,342 2,287,654Insurance 640,414 1,279,723 517,691 681,159 2,321,705 1,748,556 2,461,415 1,367,652 1,329,780 1,370,865Taxes 1,218,503 1,107,702 1,056,256 1,045,710 1,088,166 983,295 983,894 949,247 990,353 977,203Purchased transportation (1) 158,795,657 152,361,385 143,514,968 145,026,467 123,661,911 113,472,564 103,479,414 35,326,960 28,316,877 26,205,959Other expenses 4,783,567 4,537,502 3,759,197 4,385,484 2,703,674 3,198,500 2,337,366 2,003,727 1,975,810 3,963,822Interest expense - 252,919 369,935 480,141 589,510 697,383 800,365 750,835 975,403 1,117,370Depreciation 46,522,354 44,010,538 39,145,873 35,561,903 33,553,776 33,742,878 31,579,554 33,229,888 34,680,209 31,274,225

Total operating expenses 292,271,116 282,230,056 268,528,696 261,462,093 239,326,186 230,472,705 210,330,395 203,461,490 195,631,536 196,652,903Operating Loss (262,892,088) (253,188,331) (239,856,614) (232,639,200) (210,532,354) (202,206,528) (183,374,056) (178,079,586) (170,377,468) (168,418,469)

Non-Operating Revenue (Expenses)Sales and use tax 261,540,589 243,571,292 228,545,196 221,298,639 210,413,738 193,818,456 179,022,794 165,248,523 151,156,042 141,867,771Investment income 5,659,749 1,990,000 1,395,002 1,386,061 54,646 92,949 99,480 86,006 24,616 29,971Other income, net 2,221,765 2,147,901 2,407,217 2,964,311 3,183,851 2,343,535 2,282,734 805,412 1,201,994 1,722,216Other federal grants 40,798,618 53,422,347 30,797,301 29,172,453 29,944,881 28,569,256 33,747,010 15,643,959 11,664,109 20,119,207Capital Contribution - Other Jurisdictions (420,730) (542,830) (57,160) - - - - - - - Build Central Texas Program (570,966) (409,978) (2,927,158) (180,544) (563,293) (756,097) (1,808,588) (1,216,386) (1,090,985) (2,195,584)Mobility interlocal agreements (7,066,622) (5,669,095) (3,998,451) (1,709,281) (2,342,069) (4,975,704) (7,764,324) (4,598,153) (8,398,120) (9,488,911)Long-term mobility planning (3,895,780) Total non-operating revenue (expenses) 298,266,623 294,509,637 256,161,947 252,931,639 240,691,754 219,092,395 205,579,106 175,969,361 154,557,656 152,054,670

Income (loss) before contributions 35,374,535 41,321,306 16,305,333 20,292,439 30,159,400 16,885,867 22,205,050 (2,110,225) (15,819,812) (16,363,799)Capital contributions 19,198,534 27,441,971 29,913,904 17,603,305 8,830,998 14,912,664 22,564,793 15,807,164 11,623,579 6,503,967Change in net position $54,573,069 $68,763,277 $46,219,237 $37,895,744 $38,990,398 $31,798,531 $44,769,843 $13,696,939 ($4,196,233) ($9,859,832)

(1) Captial Metro changed its business model to one that contracted out all transit operations and collections of fares in August 2012

Unaudited - see accompanying auditor's report.

CAPITAL METROPOLITAN TRANSPORTATION AUTHORITYCHANGES IN NET POSITION

LAST TEN YEARS

3.1.c

Packet Pg. 182

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

61

2019 2018 2017 2016 2015 2014 2013 2012 2011 2010RevenueOperating RevenueTransportation fares $11,903,616 $12,031,326 $13,455,755 $14,124,211 $13,594,470 $12,104,556 $11,142,027 $10,967,223 $9,928,579 $9,001,139Contract revenue and fares 9,083,445 8,968,191 8,151,879 7,286,377 6,834,345 7,263,506 7,425,924 7,150,215 6,820,131 5,865,965Rail freight revenue 5,110,051 5,453,100 4,522,523 4,756,093 5,063,456 5,119,927 5,030,110 4,998,943 7,550,692 13,074,292Commuter rail revenue 3,281,916 2,589,108 2,541,925 2,656,212 3,301,561 3,778,188 3,358,278 2,265,523 954,666 293,038Total Operating Revenue 29,379,028 29,041,725 28,672,082 28,822,893 28,793,832 28,266,177 26,956,339 25,381,904 25,254,068 28,234,434

Non-Operating RevenueSales tax 261,540,589 243,571,292 228,545,196 221,298,639 210,413,738 193,818,456 179,022,794 165,248,523 151,156,042 141,867,771Investment income 5,659,749 1,990,000 1,395,002 1,386,061 54,646 92,949 99,480 86,006 24,616 29,971Grant income 59,997,152 80,864,318 60,711,205 46,775,758 38,775,869 43,481,920 56,311,803 31,451,123 23,287,688 26,623,174Other Income 2,221,765 2,147,901 2,407,217 2,964,311 3,183,851 2,343,535 2,282,734 805,412 1,201,994 1,722,216Total Non-Operating Revenue 329,419,255 328,573,511 293,058,620 272,424,769 252,428,104 239,736,860 237,716,811 197,591,064 175,670,340 170,243,132

Total revenue $358,798,283 $357,615,236 $321,730,702 $301,247,662 $281,221,936 $268,003,037 $264,673,150 $222,972,968 $200,924,408 $198,477,566

Unaudited - see accompanying auditors' report.

CAPITAL METROPOLITAN TRANSPORTATION AUTHORITYREVENUE BY SOURCE

LAST TEN YEARS

3.1.c

Packet Pg. 183

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

62

3.1.c

Packet Pg. 184

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

63

2019 2018 2017 2016 2015 2014 2013 2012 2011 2010

Austin $239,726,641 $223,315,718 $210,876,619 $203,818,259 $195,031,837 $180,714,534 $167,830,291 $156,339,645 $143,501,921 $137,296,661

Leander 6,037,488 5,133,277 4,616,602 4,132,318 3,443,493 2,957,311 2,586,120 2,181,535 2,029,704 1,948,783

Manor 1,344,004 1,155,286 1,069,277 998,823 818,330 716,592 526,223 431,028 381,878 333,657

Lago Vista 528,727 478,798 444,480 413,984 371,054 364,704 317,522 286,891 279,397 274,804

Jonestown 152,737 160,874 124,228 115,269 101,117 102,155 91,234 102,180 108,337 108,084

Volente 181,991 162,055 76,700 62,280 46,538 46,767 62,989 45,214 41,188 36,376

Point Venture 65,181 59,006 58,503 42,811 37,414 27,500 25,538 23,851 30,068 23,964

Unincorporated Areas 13,503,821 13,106,278 11,278,787 11,714,897 10,563,956 8,888,893 7,582,877 5,838,179 4,783,549 1,845,442

Total $261,540,589 $243,571,292 $228,545,196 $221,298,639 $210,413,739 $193,818,456 $179,022,794 $165,248,523 $151,156,042 $141,867,771

Source: The Comptroller of Public Accounts does not provide detailed tax receipts for MTAs by member city; therefore the numbers above are allocated based on city sales tax receipts.


CAPITAL METROPOLITAN TRANSPORTATION AUTHORITYESTIMATED SALES TAX RECEIPTS BY CITY

LAST TEN YEARS

3.1.c

Packet Pg. 185

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

64

2019 2018 2017 2016 2015 2014 2013 2012 2011 2010

Note payable - - - - - - - - - $2,484,164- - - - - - - - -

Rail lease purchase - - 3,657,979 6,504,050 9,280,618 11,989,380 14,631,995 17,210,076 19,968,234 23,531,167- -

Long-term financing - - 10,550,000 12,525,000 14,460,000 16,355,000 18,210,000 20,000,000 - -

Total debt - - 14,207,979 19,029,050 23,740,618 28,344,380 32,841,995 37,210,076 19,968,234 26,015,331

Per capita income (MSA) - - 53,908 51,566 51,014 49,001 46,241 45,943 42,948 40,009- -

Total debt/per capita income - - $264 $369 $465 $578 $710 $810 $465 $650

Note: Prior year statistics are subject to change as more precise numbers become available

(1) Per capita statistics not availableUnaudited - see accompanying auditors' report

CAPITAL METROPOLITAN TRANSPORTATION AUTHORITYLONG-TERM DEBTLAST TEN YEARS

3.1.c

Packet Pg. 186

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

65

Sales Tax Operating Operating Operating Expenses Net Available Principal CoverageRevenue Revenue Grants Net of Depreciation Revenue Debt Payment Ratio

2019 $261,540,589 $29,379,028 $40,798,618 ($245,748,762) $85,969,473 - -

2018 243,571,292 29,041,725 53,422,347 (238,219,519) 87,815,845 14,207,979 6.18

2017 228,545,196 28,672,082 30,797,301 (229,382,823) 58,631,756 4,821,070 12.16

2016 221,298,639 28,822,893 29,172,453 (225,900,189) 53,393,796 4,711,568 11.33

2015 210,413,739 28,793,832 29,944,881 (205,772,410) 63,380,042 4,603,762 13.77

2014 193,818,456 28,266,177 28,569,256 (196,729,827) 53,924,062 4,497,615 11.99

2013 179,022,794 26,956,339 33,797,010 (178,750,841) 61,025,302 4,368,081 13.97

2012 165,248,523 25,381,904 15,643,959 (170,231,602) 36,042,784 2,758,158 13.07

2011 151,156,042 25,254,068 11,664,109 (160,951,327) 27,122,892 6,047,097 4.49

2010 $141,867,771 $28,234,434 $20,119,207 ($165,378,678) $24,842,734 $3,431,556 7.24

Capital Metro first incurred debt in 2006 with first payment due in 2007.


CAPITAL METROPOLITAN TRANSPORTATION AUTHORITYDEBT - NET REVENUE COVERAGE RATIO

3.1.c

Packet Pg. 187

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

66

YearCity of Austin Population (1)

Population MSA (2)

Personal Income (MSA) (thousands of dollars) (2)

Per Capita Personal Income (MSA) (2)

Unemployment Rate (MSA) (3)

2009 770,296 1,682,338 65,636,196 38,215 6.92010 778,560 1,727,627 69,239,230 40,009 7.02011 805,662 1,781,409 76,507,673 42,948 6.62012 821,012 1,835,298 84,319,550 45,943 5.72013 841,649 1,884,439 87,138,010 46,241 5.12014 878,002 1,943,465 95,231,402 49,001 4.22015 899,119 2,000,860 102,072,207 51,014 3.42016 925,491 2,056,405 106,040,064 51,566 3.22017 946,080 2,077,789 112,009,610 53,908 2.92018 963,797 2,168,316 127,439,164 58,773 2.9

Note: Prior year statistics are subject to change as more precise numbers become available.(1) Source : City Demographer, City of Austin, Planning and Zoning Department based on full purpose area as of September 30.(2) Source: Bureau of Economic Analysis (3) Source: Bureau of Labor Statistics, United States Dept. of Labor as of September 30.


CAPITAL METROPOLITAN TRANSPORTATION AUTHORITYDEMOGRAPHIC AND ECONOMIC STATISTICS

LAST TEN YEARS

3.1.c

Packet Pg. 188

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

67

10 Largest Employers Industry Rank Employees Percent of Rank Employees Percent of

State Government Government 1 37,890 (2) 3.52% 1 37,754 4.87%The University of Texas at Austin Education 2 23,925 (4) 2.22% 2 25,313 3.27%City of Austin Government 3 14,038 (5) 1.30% 4 12,406 1.60%HEB Retail 4 13,756 (4) 1.28% 7 10,904 1.41%Dell Computer Corporation Computers 5 13,000 (4) 1.21% 3 16,000 2.07%Federal Government Government 6 13,000 (6) 1.21% 5 11,991 1.55%Austin Independent School District Education 7 11,379 (3) 1.06% 6 11,322 1.46%St. David's Healthcare Partnership Healthcare 8 10,309 (4) 0.96% 10 6,043 0.78%Seton Healthcare Network Healthcare 9 9,947 (4) 0.92% 8 9,793 1.26%Samsung Austin Semiconductor Semiconductor 10 8,935 (4) 0.83%IBM Corporation Computers 9 6,200 (7) 0.80%

156,179 14.50% 147,726 19.08%

Notes:(1) Texas Workforce Commission - Total refers to a Metropolitan Statistical Area (MSA) employed work force of 1,076,900 for 2018 and 770,800 for 2009.(2) Texas State Auditor's Office: Regular and Part Time State Employees for 2018 in Bastrop, Caldwell, Hays, Travis and Williamson Counties.(3) Texas Education Agency 2017-2018 Texas Academic Performance Report for AISD Page 23(4) Austin Chamber of Commerce - Top Employers for Austin MSA - Fall 2018.(5) FY2018-2019 Personnel Summary (FTE's) City of Austin Budget Volume I Page 646 Approved Budget (2017-18 Amended Budget Column).(6) Bureau of Labor Statistics Federal Government employees in Austin MSA in September 2018.(7) 2009 and 2000 principal Employers - Current Year and Nine Years Ago, IBM Corporation Rank 9 in 2009Unaudited - see accompanying auditor's report

2018 2009

CAPITAL METROPOLITAN TRANSPORTATION AUTHORITYPRINCIPAL EMPLOYERS

Fiscal Year Ended September 30

3.1.c

Packet Pg. 189

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

68

2019 2018 2017 2016 2015 2014 2013 2012 2011 2010Operating ExpensesLabor/fringe benefits $45,237,327 $42,698,314 $44,196,009 $35,894,237 $33,972,657 $30,627,326 $27,550,575 $84,599,834 $82,985,900 $80,142,469Services 18,360,137 19,113,196 18,619,086 19,249,051 21,697,474 25,298,173 20,701,207 19,651,851 18,015,338 28,323,402Materials 13,696,518 14,099,827 14,564,759 16,459,622 17,141,586 18,425,437 18,250,925 23,529,099 24,340,524 20,989,934Utilities 3,016,639 2,768,950 2,784,922 2,678,320 2,595,727 2,278,593 2,185,680 2,052,397 2,021,342 2,287,654Insurance 640,414 1,279,723 517,691 681,159 2,321,705 1,748,556 2,461,415 1,367,652 1,329,780 1,370,865Taxes 1,218,503 1,107,702 1,056,256 1,045,709 1,088,166 983,295 983,894 949,247 990,353 977,203Purchased transportation 158,795,657 152,361,386 143,514,969 145,026,467 123,661,911 113,472,564 103,479,414 35,326,960 28,316,877 26,205,959Other expenses 4,783,567 4,537,502 3,759,197 4,385,483 2,703,674 3,198,500 2,337,366 2,003,727 1,975,810 3,963,822Interest expense - 252,919 369,935 480,142 589,510 697,383 800,365 750,835 975,403 1,117,370Depreciation 46,522,354 44,010,538 39,145,873 35,561,903 33,553,776 33,742,878 31,579,554 33,229,888 34,680,209 31,274,225Total operating expenses 292,271,116 282,230,057 268,528,697 261,462,093 239,326,186 230,472,705 210,330,395 203,461,490 195,631,536 196,652,903

2019 2018 2017 2016 2015 2014 2013 2012 2011 2010Non-Operating ExpensesBuild Central Texas 570,966 409,978 2,927,158 180,544 563,293 756,097 1,808,588 1,216,386 1,090,985 2,195,584Mobility programs 7,066,622 5,669,095 3,998,451 1,709,281 2,342,069 4,975,704 7,764,324 4,598,153 8,398,120 9,488,911Long-term mobility planning 3,895,780 - - - - - - - - - Capital contributions - other jurisdictions 420,730 542,830 57,160 - - - - - - - Total non-operating expenses $11,954,098 $6,621,903 $6,982,769 $1,889,825 $2,905,362 $5,731,801 $9,572,912 $5,814,539 $9,489,105 $11,684,495


CAPITAL METROPOLITAN TRANSPORTATION AUTHORITYEXPENSES BY OBJECT CLASS

LAST TEN YEARS

3.1.c

Packet Pg. 190

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

69

2019 2018 2017 2016 2015 2014 2013 2012 2011 2010Operating expensesDemand reponse directly operated - - - - - - - $23,163,134 $24,581,584 $25,631,904Demand reponse-purchased transportation 38,949,933 40,844,729 42,199,986 40,362,921 37,772,056 32,953,872 31,490,408 6,809,517 997,269 62,501Demand reponse taxi cab - - - 846,445 849,406 357,792 515,059 857,353 2,427,171 3,513,469Express bus directly operated - - - - - - - 8,755,409 - - Express bus-purchased transportation 8,828,809 7,750,079 6,379,211 5,688,832 5,019,117 7,722,055 7,724,750 1,108,609 - - Motor bus directly operated - - - - - - - 70,627,459 80,191,085 76,179,798Motor bus-purchased transportation 164,620,099 153,795,357 145,368,852 144,263,239 134,770,798 127,143,429 112,150,468 38,799,019 34,272,011 31,958,303Commuter rail-purchased transportation 19,319,510 23,182,822 21,743,560 24,246,860 14,779,117 15,810,047 13,712,449 11,358,085 9,388,517 6,890,954Vanpool-directly operated - - - - - 365,156 2,137,476 2,220,742 1,240,439 1,214,428Vanpool-purchased transportation 2,401,218 1,143,337 1,452,639 1,273,091 2,387,524 1,126,906 - - - -

Total operating expenses** $234,119,569 $226,716,324 $217,144,248 $216,681,388 $195,578,018 $185,479,257 $167,730,610 $163,699,327 $153,098,076 $145,451,357

Actual vehicle revenue milesDemand reponse directly operated - - - - - - - 2,956,691 3,005,416 2,906,963 Demand reponse purch. trans. 5,615,709 5,514,405 5,395,478 5,028,095 4,942,463 4,666,043 4,487,043 1,536,889 364,638 35,589 Demand response taxi cab - - - 146,782 149,625 111,189 122,604 228,402 775,874 1,135,199 Express bus directly operated - - - - - - - 626,413 - - Express bus purch. Trans. 1,147,318 928,475 737,780 736,798 747,633 739,055 701,561 80,303 - - Motor bus directly operated - - - - - - - 7,509,440 8,579,614 8,295,428 Motor bus purch. trans. 15,950,516 15,396,804 14,473,436 14,343,211 14,001,707 12,982,104 12,801,955 5,035,222 5,508,516 5,064,569 Commuter rail purch. Trans. 291,066 310,272 301,020 298,379 287,997 279,757 279,359 237,125 176,196 63,227 Vanpool-directly operated - - - - - 338,077 1,132,983 1,135,160 1,150,070 1,254,450 Vanpool-purchased transportation 4,416,865 4,339,303 3,747,150 3,109,432 2,241,335 870,967 - - - -

Total actual vehicle revenue miles 27,421,474 26,489,259 24,654,864 23,662,697 22,370,760 19,987,192 19,525,505 19,345,645 19,560,324 18,755,425

** Total operating expense does not include depreciation, rail freight expense, or other nonallocated expenses for NTD.Source: NTD report for each year

Unaudited - see accompanying auditors' report

LAST TEN YEARS

CAPITAL METROPOLITAN TRANSPORTATION AUTHORITYOPERATING STATISTICS

3.1.c

Packet Pg. 191

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

70

2019 2018 2017 2016 2015 2014 2013 2012 2011 2010Actual vehicle revenue hoursDemand reponse directly operated - - - - - - - 204,046 241,291 230,871 Demand reponse purch. trans. 404,492 385,547 396,660 382,088 367,735 333,772 314,473 104,261 30,802 2,588 Demand response taxi cab - - - 6,725 7,043 5,598 5,187 8,780 36,343 49,848 Express bus directly operated - - - - - - - 32,761 - - Express bus purch. Trans. 61,632 47,486 40,364 40,182 40,132 39,564 36,780 4,192 - - Motor bus directly operated - - - - - - - 632,112 693,325 679,591 Motor bus purch. trans. 1,434,665 1,325,923 1,230,076 1,167,955 1,162,528 1,065,774 1,020,612 383,347 397,959 363,219 Commuter rail purch. trans. 12,393 13,157 12,725 12,536 11,976 11,613 11,559 10,174 7,594 2,533 Vanpool-directly operated - - - - - 12,754 42,089 41,243 42,080 47,464 Vanpool-purchased transportation 119,102 116,427 101,553 86,694 67,713 29,007 - - - -

Total actual vehicle revenue hours 2,032,284 1,888,540 1,781,378 1,696,180 1,657,127 1,498,082 1,430,700 1,420,916 1,449,394 1,376,114

Annual Unlinked TripsDemand reponse directly operated - - - - - - - 382,786 464,902 471,760 Demand reponse purch. trans. 706,989 694,632 650,696 656,476 647,054 613,590 592,042 195,529 55,658 4,730 Demand response taxi cab - - - 25,902 28,678 19,730 20,144 33,431 126,439 189,609 Express bus directly operated - - - - - - - 520,834 - - Express bus purch. Trans. 779,887 611,298 527,351 542,266 585,298 594,020 641,492 78,818 - - Motor bus directly operated - - - - - - - 19,010,826 21,012,071 22,655,438 Motor bus purch. trans. 28,313,157 26,879,277 27,297,092 27,261,362 32,261,330 31,976,519 34,124,841 14,437,866 12,474,899 12,158,915 Commuter rail purch. trans. 729,508 811,242 824,704 806,331 833,195 763,551 834,699 527,370 377,666 120,788 Vanpool-directly operated - - - - - 65,624 219,902 225,192 228,636 258,272 Vanpool-purchased transportation 548,873 511,337 459,555 432,558 344,695 168,300 - - - -

Total actual unlinked trips 31,078,414 29,507,786 29,759,398 29,724,895 34,700,250 34,201,334 36,433,120 35,412,652 34,740,271 35,859,512

Unaudited - see accompanying auditors' report

OPERATING STATISTICS LAST TEN YEARS, continued

3.1.c

Packet Pg. 192

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

71

2019 2018 2017 2016 2015 2014 2013 2012 2011 2010Annual Passenger MilesDemand reponse directly operated - - - - - - - 2,978,934 3,317,279 3,473,722 Demand reponse purch. trans. 6,008,746 5,615,058 5,581,909 5,222,308 5,006,753 4,944,288 4,772,554 1,591,830 400,623 42,830 Demand response taxi cab - - - 169,347 179,147 128,787 138,430 261,435 895,136 1,234,524 Express bus directly operated - - - - - - - 8,204,168 - - Express bus purch. Trans. 14,695,729 10,302,794 7,701,902 8,811,515 9,596,464 9,198,180 9,728,554 1,091,142 - - Motor bus directly operated - - - - - - - 84,687,015 99,697,872 99,719,138 Motor bus purch. trans. 115,921,268 116,078,132 115,795,824 112,049,203 144,788,219 135,348,047 134,593,131 45,975,542 34,902,303 41,987,852 Commuter rail purch. trans. 11,187,645 12,269,528 13,034,972 13,241,488 13,491,230 12,006,789 13,281,938 8,534,175 6,424,718 2,145,345 Vanpool-directly operated - - - - - 1,835,645 5,824,978 5,631,716 5,353,528 6,117,848 Vanpool-purchased transportation 20,766,873 19,572,510 16,720,887 14,763,768 10,508,902 4,485,538 - - - -

Total actual vehicle revenue hours 168,580,261 163,838,022 158,835,494 154,257,629 183,570,715 167,947,274 168,339,585 158,955,957 150,991,459 154,721,259

Source: NTD report for each year


**Total operating expenses does not include depreciation, rail freight expenses, or other nonallocated expenses for NTD.

OPERATING STATISTICS LAST TEN YEARS, continued

3.1.c

Packet Pg. 193

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

72

2019 2018 2017 2016 2015 2014 2013 2012 2011 2010Capital assets not being depreciated: Land and Improvement $69,889,511 $59,689,545 $59,166,866 $56,637,590 $53,434,238 $53,434,238 $53,434,238 $53,434,238 $53,464,669 $52,591,322 Construction in process - rail - - - - - - - - - - Construction in process 63,769,381 74,723,419 59,247,399 22,204,736 14,746,255 10,852,403 18,629,684 10,198,381 6,332,694 7,167,942Total capital assets not being depreciated 133,658,892 134,412,964 118,414,265 78,842,326 68,180,493 64,286,641 72,063,922 63,632,619 59,797,363 59,759,264

Other Captial Assets: Building and equipment 105,726,911 86,079,657 84,692,633 84,264,315 86,235,633 86,388,814 84,498,819 84,366,351 84,420,220 83,730,680 Railroad 167,819,219 149,028,997 139,643,809 135,922,532 123,424,501 122,520,746 118,507,063 116,277,808 115,028,241 114,030,619 Buses and equipment 364,175,340 326,473,242 290,922,992 270,202,037 261,467,893 259,299,553 251,960,816 240,658,237 236,207,013 236,530,267 Passenger parking & stations 97,156,719 89,425,600 87,162,200 86,785,928 86,390,678 83,801,047 69,997,889 67,712,096 70,677,031 68,511,701 Leashold improvements - - - - - - 82,198 82,198 82,198 82,198Total other capital assets 734,878,189 651,007,495 602,421,634 577,174,812 557,518,705 552,010,160 525,046,785 509,096,690 506,414,703 502,885,465

Less: accumulated depreciation Building and equipment 52,306,025 49,040,930 46,826,275 44,721,335 43,285,522 41,136,061 38,230,502 35,382,804 32,649,558 29,429,151 Railroad 125,537,284 116,412,803 107,339,494 98,233,020 89,641,759 80,768,170 71,385,481 61,402,547 50,840,742 39,476,507 Buses and equipment 168,442,741 157,471,109 145,116,087 158,391,786 160,628,154 158,932,408 153,296,860 150,083,251 153,189,434 144,240,957 Passenger parking & stations 61,735,694 56,349,983 49,869,377 43,312,833 36,604,533 30,077,172 24,825,317 20,805,367 20,625,292 16,757,238 Leashold improvements - - - - - - 82,196 82,196 82,196 82,196Total accumulated depreciation 408,021,744 379,274,825 349,151,233 344,658,974 330,159,968 310,913,811 287,820,356 267,756,165 257,387,222 229,986,049

Total capital assets, net $460,515,337 $406,145,634 $371,684,666 $311,358,164 $295,539,230 $305,382,990 $309,290,351 $304,973,144 $308,824,844 $332,658,680


CAPITAL METROPOLITAN TRANSPORTATION AUTHORITYCAPITAL ASSETSLAST TEN YEARS

3.1.c

Packet Pg. 194

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

73

2019 2018 2017 2016 2015 2014 2013 2012 2011 2010

Employee Count

Capital Metro - administration 495 504 463 428 443 447 407 384 357 336

Startran Inc. - administrative - - - - - - - - 78 80

Startran Inc. - bargaining unit - - - - - - - - 842 803

Total Active Employees 495 504 463 428 443 447 407 384 1,277 1,219

Source: Capital Metro Human Resource Department

Employee count includes 178 part-time Security officers in 2019

Note: In August 2012, Capital Metro contracted out all bus operator employees



TOTAL EMPLOYEES

LAST TEN YEARS

3.1.c

Packet Pg. 195

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)

74

CAPITAL METRO TRANSPORTATION AUTHORITY FAREBOX RECOVERY PERCENTAGE LAST EIGHT YEARS (UNAUDITED)

1 Capital Metro discontinued Premium fares at the January 2017 service change. MetroRapid and Flyer fares were moved to Local.

2 Para Transit Services (MetroAccess) are for individuals who, due to disability, are unable to use the fixed route system. Individuals must meet an enrollment criteria. MetroAccess is a cashless based service, it requires pre-purchased MetroAccess tickets or a valid MetroAccess monthly pass. The MetroAccess Single Ride tickets are not valid for any fixed route services or rail, however; the MetroAccess Monthly pass is valid for all bus and rail services.

3 To be eligible for a reduced fare, the individual must be a Senior 65+ years of age, Medicare qualified, Disability

qualified, Para transit qualified. In addition, the individual is required to obtain a Capital Metro issued ID in order to ride at the reduced cash fare and to purchase reduced fare passes. Students 6-18 years of age and Active or Reserve Duty Military personnel are also eligible to pay a reduced fare, but must present a valid school and military ID, respectively.

4 University of Texas students are required to swipe their UT ID to ride fixed route services and must present their ID upon the request of a MetroRail fare inspector when riding MetroRail services.

5 Children 6 years and under must be accompanied by an adult.

6 This is a monthly pass, not a 31-Day rolling pass

Note: Upon meeting certain requirements, 31 & 7-Day rolling passes, day passes, ticket booklets and monthly Para Transit passes are available at discount to qualified non-profit agencies. An enrollment process is required. Unaudited – see accompanying auditors’ report.

3.1.c

Packet Pg. 196

Att

ach

men

t: 2

019

CM

TA

CA

FR

_FIN

AL

(45

89 :

FY

2019

Fin

anci

al A

ud

it)



FY 2021 Proposed Budget Development Calendar

Page 1

TITLE: FY 2021 Proposed Budget Development Calendar

3.2

Packet Pg. 197

FY2021 Budget Development Calendar

Presented on May 15, 2020

1

3.2.a

Packet Pg. 198

Att

ach

men

t: F

Y20

21 P

rop

ose

d B

ud

get

Dev

elo

pm

ent

Cal

end

ar -

May

202

0 (

4590

: F

Y 2

021

Pro

po

sed


• Feb 6 Operating and Capital Budget kick-off meeting with departments

• Apr 15 Capital Budget requests received from departments

• Apr 19 Operating Budget requests received from departments

• May 15 Board Committees review proposed budget calendar

• Jun 3 Initial review with Access Advisory Committee

• Jun 10 Initial review with Customer Satisfaction Advisory Committee

• Jun 10 Board Committees initial review and discussion

• Jul 15 Budget proposal presented to Board Committees

• Jul 27 Budget proposal presented to Board of Directors

2

3.2.a

Packet Pg. 199

Att

ach

men

t: F

Y20

21 P

rop

ose

d B

ud

get

Dev

elo

pm

ent

Cal

end

ar -

May

202

0 (

4590

: F

Y 2

021

Pro

po

sed


3

• Aug 5 Presentation to Access Advisory Committee

• Aug 12 Presentation to Customer Satisfaction Advisory Committee

• Aug 24 Proposed budget document is published online

• Aug 24 Notice of public hearing on proposed budget and capital improvement plan

• Aug 24-28 Public outreach at transit centers and rail stations

• Sep 16 Update Board Committees

• Sep 16 Public hearing on proposed budget and capital improvement plan at noon

• Sep 28 Board of Directors considers budget proposal

3.2.a

Packet Pg. 200

Att

ach

men

t: F

Y20

21 P

rop

ose

d B

ud

get

Dev

elo

pm

ent

Cal

end

ar -

May

202

0 (

4590

: F

Y 2

021

Pro

po

sed


4

• Early Oct Approved budget is posted online

• Early Dec Approved budget document submitted for consideration by Government Finance Officers Association -“Distinguished Budget Presentation” recognition

3.2.a

Packet Pg. 201

Att

ach

men

t: F

Y20

21 P

rop

ose

d B

ud

get

Dev

elo

pm

ent

Cal

end

ar -

May

202

0 (

4590

: F

Y 2

021

Pro

po

sed

THANK YOU!

3.2.a

Packet Pg. 202

Att

ach

men

t: F

Y20

21 P

rop

ose

d B

ud

get

Dev

elo

pm

ent

Cal

end

ar -

May

202

0 (

4590

: F

Y 2

021

Pro

po

sed



Internal Audit FY 2020 Audit Plan Status

Page 1

TITLE: Internal Audit FY 2020 Audit Plan Status

3.3

Packet Pg. 203

FY20 INTERNAL AUDIT PLANDepartment Scorecard

ProjectsStatus & %

Complete

Additional

Details

FAA Target

Date

FAA COMMITTEE & INTERNAL AUDIT CHARTER COMPLIANCE

1Finance, Audit & Administration (FAA) Committee Meetings: 10/9; 11/6; 12/6; 1/15; 2/12; 3/11; 5/15; 6/10; 7/15; 8/12

Ongoing

2 Semi-annual Implementation Status Report - November 2019 Completed 2/12

3 Semi-annual Implementation Status Report - May 2020 In-Process 6/10

4 FY2020 Risk Assessment & development of FY21 Audit Plan

FY20 Audit Assurance & Advisory Projects

1Quadrennial Review (Requisition #306188) - Evaluation Team currently looking at proposals received 4/30

In-Process

RFP released 4/1; Final

Proposals due 6/3

7/15

2QAR (Quality Assurance Review) of Internal Audit practices - GAO/ALGA have postponed all QAR's by 9 months

Postponed due to COVID-19

3 Payroll Process - SOX Like Key Financial Control Testing Planning

4 Project Connect - System Controls & Processes (e-Builder) Planning

5 Project Connect - Marketing & Planning Expenditures

6 Fixed Route Bus Contract Change Over - Inspections & Final Settlements In-Process 7/15

7 PTC (Positive Train Control) - Expenditures & Drawings8 DBE Program9 Watco Freight Revenue - build model to estimate monthly freight revenue Completed 2/12

10 Endpoint Management (Patching with SCCM) Computers - Completed 5/15

11 Analysis of Incident Reporting in OrbCAD system Completed 5/15

12 Annual Cybersecurity Review13 Rail Systems Security (Railcomm, PTC, Signaling, etc.)14 NIST Cybersecurity Framework (Facilitated Self Assessment)

CONTINGENT AUDIT PROJECTS - FY201 FTA - Passenger Transportation Agency Safety Plan program

2 Fuel Controls & Hedging In-Process UT Interns 6/10

3 Cyber Ransomware Threats - Table Top Exercise4 Healthcare & Other Insurance Benefits - TPA Payments5 Facilities Maintenance & Change Over6 Bridge Inspection Reports

NEW PROJECTS ADDED TO FY20 AUDIT PLAN by Terry Follmer

1ITS2011: Governance Risk and Compliance Software - $70K (ServiceNow; Galvanize) TXDOT implementing Galvanize

Planning On Hold

LINK TO THE PROJECT

2 OrbCAD - Analysis of Service Delays In-Process UT Interns 7/15

3 Develop a Contagious Virus Response Plan based on APTA Standard In-Process Draft Plan 5/15

4 Develop COVID-19 Situation Reports for 3/11 to 4/9 In-Process

5 COVID-19 Sharepoint Directory - Organize Key Documents by Area/Dept In-Process

3.3.a

Packet Pg. 204

Att

ach

men

t: F

Y20

20 In

tern

al A

ud

it P

lan

Sta

tus

(45

91 :

Inte

rnal

Au

dit

FY

202

0 A

ud

it P

lan

Sta

tus)



Internal Audit IT Endpoint Management Report

Page 1

TITLE: Internal Audit IT Endpoint Management Report

3.4

Packet Pg. 205

IT Endpoint Management (20-02)

Internal Audit Report #20-02 | April 24, 2020

IT ENDPOINT MANAGEMENT (20-02)

Terry Follmer, VP of Internal Audit

Distribution List: Capital Metro Board of Directors Randy Clarke, President and CEO Kerri Butcher, EVP, Chief Counsel & Chief of Staff Donna Simmons, EVP, Administration & EEO Officer Reinet Marneweck, EVP, Chief Financial Officer Dottie Watkins, Chief Customer Officer & COO David Dech, VP, Rail Operations Ken Cartwright, VP, Capital Projects Jane Schroter, VP, Chief Information Officer Shanea Davis, VP, Real Estate, Property & Asset Management Chad Ballentine, VP, Demand Response and Innovative Mobility Brian Carter, VP, Marketing and Communications Gardner Tabon, VP, Safety, Risk Management, and Accessible Services Muhammad Abdullah, Senior Director, Chief Procurement & Compliance Officer Susan Renshaw, Controller Steven Salinas, Director of Network Security David Newton, IT Service Delivery Manager Lori Hyde, Program Manager IV, Network Cybersecurity

3.4.a

Packet Pg. 206

Att

ach

men

t: 2

0-02

IT

En

dp

oin

t M

anag

emen

t 4

-24-

2020

(45

93 :

Inte

rnal

Au

dit

IT E

nd

po

int

Man

agem

ent

Rep

ort

)

Table of Contents

Executive Summary …………………………………………………………………………………………………………..1

Results……………………………………………………………………………………………………………….………………3

1. Explore Enhanced System Software Solutions …………………………………………………………………..…………3

2. Update IT Policies & Procedures …………………………………………………………………………………………………..4

3. Leverage Data Analytics Across Endpoint Management Tools ……………………………………………………..5

4. Define Patching Timelines by Patch Severity Rating ……………………………………………………………………..6

3.4.a

Packet Pg. 207

Att

ach

men

t: 2

0-02

IT

En

dp

oin

t M

anag

emen

t 4

-24-

2020

(45

93 :

Inte

rnal

Au

dit

IT E

nd

po

int

Man

agem

ent

Rep

ort

)

1

EXECUTIVE SUMMARY As part of our Fiscal Year 2020 Internal Audit Plan approved by the Capital Metro Board, we performed an audit of the IT Endpoint Management process to determine the effectiveness of internal controls over patching and machine configuration. The audit results including the objective, scope, and conclusion are as follows.

Background The IT Department has established policies, procedures and configuration standards to help protect the confidentiality, integrity and availability of Capital Metro systems. This includes a defense in depth approach which starts with the security and configuration of all endpoints connected to the network and employee training. Endpoint is a generic term that covers all devices on the network which includes the following: servers, laptop and desktop PC’s, tablets, TVM’s, printers, etc. Capital Metro has more than 1,000 endpoints connected to its network and the timely patching and monitoring of these devices is critical to the security of the overall network. Various software tools have been deployed by Capital Metro to protect and monitor the performance of the endpoints on the network. This includes anti-virus software as well as network monitoring and patch management software to ensure all endpoints have current software updates and are protected from known malware vulnerabilities. In the software industry, program updates are usually released once a week by software companies in what is referred to as “Patch Tuesday”. Endpoint security management is a software approach which helps to identify and manage the users' computer and data access over a corporate network, in order to maintain and comply with the organization's policies and standards. The IT Department has developed an IT Practices & Procedures Manual which defines the controls (e.g. patch management, virus protection, change controls, etc.) that help ensure the confidentiality, integrity and availability of Capital Metro systems.

Audit Objective & Scope The primary objective of this audit was to determine whether the design and operating effectiveness of internal controls over patching and machine configuration is sufficient to address the risks. The scope included a review of all endpoints connected to the network, conducting interviews, reviewing Authority policies/procedures, applicable contracts, and data analytics on the following four systems: Microsoft SCCM; Antivirus Software; ServiceNow CMDB; and Microsoft Active Directory.

Opinion Internal controls related to patching and machine configuration are generally in place and properly functioning. During our review we identified internal controls that require improvement and made the following recommendations:

1. Explore Enhanced System Software Solutions

2. Update IT Policies & Procedures

3. Leverage Data Analytics Across Endpoint Management Tools

4. Define Patching Timelines by Patch Severity Rating

3.4.a

Packet Pg. 208

Att

ach

men

t: 2

0-02

IT

En

dp

oin

t M

anag

emen

t 4

-24-

2020

(45

93 :

Inte

rnal

Au

dit

IT E

nd

po

int

Man

agem

ent

Rep

ort

)

2

More details regarding issue/risk and recommendation can be found in the detailed audit report below.

This audit was conducted in accordance with the U.S. Government Accountability Office’s Generally Accepted Government Auditing Standards (GAGAS) and the Institute of Internal Auditor’s International Professional Practices Framework (IPPF). These 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 objective. We believe the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objective. The audit was conducted by the following staff members in the Capital Metro Internal Audit Department:

• UT Audit Interns

• Terry Follmer, VP of Internal Audit (Project Lead) Recommendations to strengthen controls and improve accountability were provided to management. Management agrees with the internal audit recommendations and has provided target completion dates which are included in the detailed audit report below. A follow-up audit is performed semi-annually (i.e. May and November) to ensure management action plans for all issued audit reports are completed timely. We appreciate the cooperation and assistance provided to us throughout this audit.

3.4.a

Packet Pg. 209

Att

ach

men

t: 2

0-02

IT

En

dp

oin

t M

anag

emen

t 4

-24-

2020

(45

93 :

Inte

rnal

Au

dit

IT E

nd

po

int

Man

agem

ent

Rep

ort

)


3

Issues & Risk Recommendation Management Action Plan

1. EXPLORE ENHANCED SYSTEM MANAGEMENT SOFTWARE SOLUTIONS

Capital Metro has been using the Microsoft System Center Configuration Manager (SCCM), which is a software management suite that allows users to manage a large number of Windows based computers. SCCM features remote control, patch management, operating system deployment, network protection and other various services. While this tool is effective at deploying Microsoft patches, we noted that the tools has limitations in the following areas: ability to identify the patch severity rating (i.e. Critical, High, Medium, Low) of the missing patches; manage Mac iOS and related patches; and does not have “relay management” capability. Capital Metro has more than 1,000 devices on the network and tools like IBM BigFix can handle all of these shortcomings and will result efficiencies within the IT Department thus freeing up their time to perform more value added functions in the place of the manual monitoring and patching.

The Director of Network Services should explore on a cost-benefit basis other system management software solutions (e.g. IBM BigFix, etc.) that will enable the identification and deployment of patches based upon severity rating as well as improved capabilities on non-Microsoft operating systems (e.g. UNIX, Mac iOS, etc.).

Management agrees and has developed the action plan below. Target Completion Date: 7/31/2020 IT has already budgeted for and is in the process of implementing a solution for the MacOS (JAMF) that is not manual. While there is a plethora of system management solutions available on the market, Microsoft SCCM is included with the Capital Metro Enterprise agreement and does not cost the agency any additional funds. Also, the staff has all been trained on MS SCCM. The technical solution in place will always depend on the amount of manpower necessary to maintain the system and that is the primary factor in managing these systems. Patch severity is evaluated by the team and tagged in the SCCM system for application to the workstations at this time and is reviewed on a regular basis for compliance.

3.4.a

Packet Pg. 210

Att

ach

men

t: 2

0-02

IT

En

dp

oin

t M

anag

emen

t 4

-24-

2020

(45

93 :

Inte

rnal

Au

dit

IT E

nd

po

int

Man

agem

ent

4


2. UPDATE IT POLICIES & PROCEDURES

The IT Department has an IT Practices and Procedures Manual that covers many IT administration and security areas (e.g. governance, virus protections, data management, encryption, etc.). We noted that the manual is in the process of being updated and during Dell Secureworks 2019 security review they identified five policies as missing and provided Capital Metro with rough policy drafts as follows: Cybersecurity Program Policy; Acceptable Use Standard; Business Continuity and Disaster Recovery Policy; SDLC and Project Management Policy; and Security Awareness and Training Policy. We believe updating the department policies and procedures and incorporating the feedback from Dell Secureworks will further strengthen IT Endpoint Management controls.

The Director of Network Services to complete the updates to IT policies and procedures.

Management agrees and has developed the action plan below. Target Completion Date: 8/31/2020 IT has the following policies in place that partially or entirely cover the recommendations: IT Security Response Procedure and a Cyber security roadmap. We will work to consolidate existing documentation and practices into a comprehensive cyber security program policy. There is an existing Technology Use policy IT-201 in place and is reviewed on an annual basis. There is an existing Continuity of Operations policy and procedure in place. There is existing SDLC documentation. Steven will work with the enterprise application team to consolidate a comprehensive document to address this request. There is an existing mandatory end user security awareness training program in place. IT can develop formal documentation to support that on-going effort.

3.4.a

Packet Pg. 211

Att

ach

men

t: 2

0-02

IT

En

dp

oin

t M

anag

emen

t 4

-24-

2020

(45

93 :

Inte

rnal

Au

dit

IT E

nd

po

int

Man

agem

ent

5


3. LEVERAGE DATA ANALYTICS ACROSS ENDPOINT

MANAGEMENT TOOLS The IT security industry has not developed a comprehensive endpoint management tool, therefore organizations must manage/monitor IT endpoint security using a variety of software tools that don’t always share data openly across the software tools. As a result, most organization have manually built their own comprehensive endpoint management database by aggregating the key endpoint data from the endpoint management security tools that have been deployed. Capital Metro primarily uses the following endpoint management tools: Microsoft SCCM; Antivirus Software; ServiceNow CMDB; and Microsoft Active Directory. During our audit, the UT Audit Interns created a comprehensive database consolidating endpoint data from these four systems, and using the Microsoft Power Query tool they were able to identify the highest risk machines on the network. This new tool allows for the aggregation of all known endpoint attributes (e.g. User/Machine name, IP/MAC address, Operating System; Antivirus Software version; patching history; last login date; etc.). This analysis help ensure all endpoint are up to date and exceptions can be quickly identified and remediated.

The Director of Network Services should carryforward the Microsoft Power Query data analytics tool, and run the analysis on at least a quarterly basis to identify the highest risk machines. The highest risk machines should be identified, located and remediated on at least a quarterly basis.

Management agrees and has developed the action plan below. Target Completion Date: 7/31/2020 IT will have our Cyber Security Program Manager assess the solution and provide recommendations to continue its use or leverage other tools in the pipeline to maximize this effort. The limitation is one of priority and resources to address.

3.4.a

Packet Pg. 212

Att

ach

men

t: 2

0-02

IT

En

dp

oin

t M

anag

emen

t 4

-24-

2020

(45

93 :

Inte

rnal

Au

dit

IT E

nd

po

int

Man

agem

ent


6


4. DEFINE PATCHING TIMELINES BY PATCH SEVERITY

RATING

The software industry typically releases patch updates weekly, and as part of the release they rate the severity of patches using the following severity rating system: Critical; High; Medium; and Low. Critical patches are defined by Microsoft as “a vulnerability whose exploitation could allow code execution without user interaction”. A best practice is to specifically define a tiered software patch implementation timeline based upon the patch’s severity rating. Most organization have chosen a 14 to 30-day timeline from patch release date to install “critical” patches. Capital Metro’s IT Practice & Procedures manual does not specifically define patch implementation deadlines and instead states “patches should be installed within 60 days or as directed by vendor” (IT Practices & Procedures Manual section 10.4).

The Director of Network Services will further define patch management standards based upon the manufacturer’s severity rating standards (e.g. Critical; High; Medium; and Low) and clearly state the maximum number of elapsed days from the patch release date for installation. The IT Department will measure compliance with the patch management standards at least quarterly, and machines out of tolerance will be identified and remediated.

Management agrees and has developed the action plan below. Target Completion Date: 5/31/2020 Patch Management is currently done on a monthly basis in accordance with the formal Microsoft schedule. Any ad hoc critical patches are addressed as soon as possible after appropriate testing to ensure they do not adversely affect our applications, many of which are dated or developed in house.

3.4.a

Packet Pg. 213

Att

ach

men

t: 2

0-02

IT

En

dp

oin

t M

anag

emen

t 4

-24-

2020

(45

93 :

Inte

rnal

Au

dit

IT E

nd

po

int

Man

agem

ent



Internal Audit OrbCAD Incident/Accident Review Process Report

Page 1

TITLE: Internal Audit OrbCAD Incident/Accident Review Process Report

3.5

Packet Pg. 214

OrbCAD Incident/Accident Process Review (20-03)

Internal Audit Report #20-03 | March 09, 2020

ORBCAD INCIDENT/ACCIDENT PROCESS REVIEW

(20-03)

Terry Follmer, VP of Internal Audit

Distribution List: Capital Metro Board of Directors Randy Clarke, President and CEO Kerri Butcher, EVP, Chief Counsel & Chief of Staff Donna Simmons, EVP, Administration & EEO Officer Reinet Marneweck, EVP, Chief Financial Officer Dottie Watkins, Chief Customer Officer & COO David Dech, VP, Rail Operations Ken Cartwright, VP, Capital Projects Jane Schroter, VP, Chief Information Officer Shanea Davis, VP, Real Estate, Property & Asset Management Chad Ballentine, VP, Demand Response and Innovative Mobility Brian Carter, VP, Marketing and Communications Gardner Tabon, VP, Safety, Risk Management, and Accessible Services Muhammad Abdullah, Senior Director, Chief Procurement & Compliance Officer Susan Renshaw, Controller

3.5.a

Packet Pg. 215

Att

ach

men

t: 2

0-03

Orb

CA

D In

cid

ent-

Acc

iden

t P

roce

ss R

evie

w (

4594

: In

tern

al A

ud

it O

rbC

AD

Inci

den

t/A

ccid

ent

Rev

iew

Pro

cess

Rep

ort

)


Table of Contents

Executive Summary …………………………………………………………………………………………………………..1

Results……………………………………………………………………………………………………………….……………….4

1. Disconnected Systems & No Comprehensive Database……………………………………………….…...…….4

2. Improve QA Oversight, Analysis, & Monitoring………………………………………………………………….……5

3. Automate Reporting Out of Systems……………………………………………………………………………………….6

Appendix…………………………………………………………………………………………………….……..….…………......7

A. Venn Diagram………………………………………………..…………………………………..……….…………….7 B. Accident/Incident Flowchart………………………………………………………………………………………8 C. Operator Accident/Incident Report……………………………………………………………………………9 D. Supervisor Accident/Incident Report………………………………………………………………………..10 E. Notice of Accident Determination ……………………………………………………………………………11

3.5.a

Packet Pg. 216

Att

ach

men

t: 2

0-03

Orb

CA

D In

cid

ent-

Acc

iden

t P

roce

ss R

evie

w (

4594

: In

tern

al A

ud

it O

rbC

AD

Inci

den

t/A

ccid

ent

Rev

iew

Pro

cess

Rep

ort

)


1

EXECUTIVE SUMMARY As part of our Fiscal Year 2020 Internal Audit Plan approved by the Capital Metro Board, we performed an audit of the incident/accident reporting process to evaluate the efficiency and effectiveness of internal controls to ensure the completeness and accuracy of the records, and compliance with contract and applicable policies/procedures. The audit results, including the objective, scope, and conclusion, are as follows.

Background As of January 5th, 2020, MV Transportation (MV) is the sole service provider responsible for all bus operations and related maintenance. Prior to this date, MV was responsible for the north garage located at 9315 McNeil Road, and RATP Dev was responsible for the south garage located at 2910 East 5th Street. Capital Metro is responsible for providing all bus and operation systems, and MV is responsible for the personnel that record all incidents and accidents into the OrbCAD system, which then prompts manually completing of template forms and related pictures that are then saved to Sharepoint. OrbCAD is a computer-aided dispatch application used for vehicle dispatching, automatic vehicle location and monitoring, real-time performance and incident management, two-way messaging, route schedule adherence, remote vehicle health monitoring, and analytics. Capital Metro has three systems in place to record incident and accident data, but there is no automated data flow between them. The sequential flow of data between the systems is three steps as follows:

• OrbCAD – starting point where all incident/accident data originates and is used to record the initial data capture by the MV Dispatcher, usually using the auto-fill function in OrbCAD.

• Sharepoint – Incidents are saved to Sharepoint in an Excel template named Operator Report, and if the incident in OrbCAD is classified as an accident. Sharepoint is used by the MV Supervisors to record the manual Excel template called Supervisor Report for each accident together with any pictures. For FY2019, there were approximately 5,000 Operator Reports were handwritten by Bus Operators and then manually entered by Supervisors into an Excel template; and for accidents, Supervisors manually keyed in the details for 2,673 Supervisor Reports into Excel templates that are saved to Sharepoint.

• RiskMaster – all accident files in Sharepoint are reviewed by Capital Metro, and required accident data is manually keyed by Capital Metro into the RiskMaster system which is used for NTD and Capital Metro management reporting. For FY2019, Capital Metro’s Senior Risk Specialist manually entered the details of 866 accidents into the RiskMaster system.

The narrative below, together with the sample documents in Appendix A to E further explains the roles and responsibilities of the parties (i.e., MV Transportation and Capital Metro) and how the data is manually entered into the Sharepoint and RiskMaster systems. The Venn Diagram in Appendix A and flowchart in Appendix B depict all of the systems and manual reports that are used to capture incident/accident data. When an incident/accident occurs with a bus, the Operator notifies the Dispatcher, who will create a new event in OrbCAD (i.e., Incident Entry Form) that includes 24 data fields of which 12 are autofill as the system knows the information (e.g., Incident Form#, Date/Time, Operator Name, etc.). At the completion of each shift, the Operators are required to handwrite the details into a blank Operator’s Accident/Incident Report form (Exhibit C). The Supervisor reviews all Operator reports and keys this information into the Excel template (Appendix C), which is saved

3.5.a

Packet Pg. 217

Att

ach

men

t: 2

0-03

Orb

CA

D In

cid

ent-

Acc

iden

t P

roce

ss R

evie

w (

4594

: In

tern

al A

ud

it O

rbC

AD

Inci

den

t/A

ccid

ent

Rev

iew

Pro

cess

Rep

ort

)


2

to Sharepoint. If the Dispatcher categorizes the event as an accident, they will notify the Supervisor to visit the site, and the Supervisor is required to collect accident information at the scene to complete the Supervisor’s Accident/Incident Report (Exhibit D), including taking pictures. The Supervisor handwrites this form at the scene and then later is entered by the Supervisor into the Excel template form on Sharepoint. Within two business days after the accident occurs, the Supervisor is required to submit all support and documentation to MV’s Safety Manager. The Safety Manager saves information to the SharePoint folder and manually completes the Notice of Accident Determination Form (Appendix E). Also, the Safety Manager is responsible for completing the Monthly Incident/Accident Log that captures all accidents that occur during that month, which is due by the 5th business day of the following month to Capital Metro. For buses that are damaged and require repair, the Cost Maintenance Report Form is required to be completed within 30 days of the accident along with a copy of the repair work order or invoice in the SharePoint folder. The Capital Metro Senior Risk Specialist periodically checks the Sharepoint folder for completed accident files that contain both a Supervisor’s Accident/Incident Report (Appendix D) and Preventability Ruling Report (Appendix E). For the completed accident files, she reviews the SharePoint folder and manually enters accident data into the RiskMaster system. RiskMaster is a cloud-based claim processing and risk management system used by the Capital Metro Risk Department to capture all accidents, National Transit Database (NTD) reporting to the Federal Transit Administrator (FTA) and for internal Capital Metro management reporting. MV provides a Monthly Incident/Accident Log to Capital Metro. Capital Metro’s Senior Risk Specialist manually reviews it to ensure all accidents that are required for NTD reporting have been captured in RiskMaster. Similarly, the Customer Experience Specialist from the Contract Oversight Department reviews Incident/Accident Log with Senior Risk Specialist to discuss results and determine if the preliminary preventability ruling is correct. The Customer Experience Specialist will discuss the accident files with MV and resolve any discrepancies.

Audit Objective & Scope The primary objective of this audit was to determine whether internal controls over the reporting of incident/accident reporting process are sufficient to ensure the completeness and accuracy of the records and compliance with contract and applicable policies/procedures. The scope included completing a flowchart of the process, Venn diagram, perform walkthroughs, testing of several reports including tracing of OrbCAD reports to RiskMaster and Monthly Incident/Accident Log, reviewing Capital Metro’s policies, review of contracts, invoices, Quality Assurance Operations/Report forms, interviews and desk procedures. Testing of reports includes reviewing OrbCAD November Data, service provider Monthly Incident/Accident Log, and RiskMaster November’s 2018 data.

Opinion The incident/accident reporting process is predominantly manual and the three systems are not interfaced with each other, therefore all data must be manually keyed into the Sharepoint and RiskMaster systems which are inefficient and creates the possibility for data entry errors. In our opinion, internal controls can be improved by evaluating and improving the data controls in the following areas:

1. Disconnected systems and no comprehensive database.

3.5.a

Packet Pg. 218

Att

ach

men

t: 2

0-03

Orb

CA

D In

cid

ent-

Acc

iden

t P

roce

ss R

evie

w (

4594

: In

tern

al A

ud

it O

rbC

AD

Inci

den

t/A

ccid

ent

Rev

iew

Pro

cess

Rep

ort

)


3

2. Improve QA oversight, analysis, and monitoring.

3. Automate reporting out of systems.

More details regarding the issues/risks and recommendations can be found below in the detailed audit report.

This audit was conducted in accordance with the U.S. Government Accountability Office’s Generally Accepted Government Auditing Standards (GAGAS) and the Institute of Internal Auditor’s International Professional Practices Framework (IPPF). These 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 objective. We believe the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objective. The audit was conducted by the following staff members in the Capital Metro Internal Audit Department:

• Jeannette Lepe, Senior Auditor (Project Lead)

• Terry Follmer, VP of Internal Audit Recommendations to strengthen internal controls and improve accountability were provided to management in the audit report. Management agrees with the internal audit recommendations and has provided target completion dates, which are included in the detailed audit report below. A follow-up audit is performed semi-annually (i.e., May and November) to ensure management action plans for all issued audit reports are completed timely. We appreciate the cooperation and assistance provided to us throughout this audit.

3.5.a

Packet Pg. 219

Att

ach

men

t: 2

0-03

Orb

CA

D In

cid

ent-

Acc

iden

t P

roce

ss R

evie

w (

4594

: In

tern

al A

ud

it O

rbC

AD

Inci

den

t/A

ccid

ent

Rev

iew

Pro

cess

Rep

ort

)


4


1. DISCONNECTED SYSTEMS & NO COMPREHENSIVE DATABASE

We noted that incident/accident information is captured in three separate systems (i.e., OrbCAD, Sharepoint, and RiskMaster) but these three systems are not interfaced and all data is manually rekeyed into Sharepoint Excel templates as well as into the RiskMaster system. The OrbCAD system is the originating system, and 12 data fields (e.g., Date, Operator #, Bus #, Route #, etc.) are initially captured into OrbCAD by Dispatch using the auto-fill function together with other data. This original data set is then manually rekeyed by the Supervisor into Excel templates (e.g., Operator Report, Supervisor Report, etc.) and saved to Sharepoint. Capital Metro then reviews these Excel templates and then manually rekeys accident-related data into the RiskMaster system. The data entry is redundant and subject to human error as well as there is no single comprehensive database of all information related to the incidents/accidents. We tested the full population of data for November 2018 by comparing accidents in OrbCAD to RiskMaster data and noted the following differences: OrbCAD had 108 accidents versus 122 in RiskMaster; 44 of the 108 OrbCAD accidents had different data (e.g. date, vehicle ID#, Operator Name, route #, etc.). We believe the root cause for the data differences is due to the lack of automated data flow from OrbCAD into Sharepoint and RiskMaster, which results in all data being manually rekeyed and subject to human error.

The Director of Contract Oversight, IT Director of Transit Technology Systems and the Director of Risk Management will consider the following improvements:

a) Establishing a single comprehensive database for all incident/accident data.

b) Require MV to enter all data into the chosen single comprehensive database.

c) Automate the flow of data from OrbCAD into the required Excel templates (e.g., Operator Report, Supervisor Report, etc.) that are saved to Sharepoint, thus requiring the Supervisor to only record new data and not have to rekey all data that is already captured in OrbCAD.

Management agrees with the recommendations. Target Completion Date: Due to other IT priority projects, the IT Department will start work on this project in September 2020 and will have a target completion date of September 30, 2021.

3.5.a

Packet Pg. 220

Att

ach

men

t: 2

0-03

Orb

CA

D In

cid

ent-

Acc

iden

t P

roce

ss R

evie

w (

4594

: In

tern

al A

ud

it O

rbC

AD


5


2. IMPROVE QA OVERSIGHT, ANALYSIS AND

MONITORING

We noted that there is no process in place to ensure that the data initially captured in OrbCAD matches the data manually entered into Sharepoint and RiskMaster systems. We tested the full population of accident data for November 2018 by comparing accidents in OrbCAD to RiskMaster data and noted the following differences: OrbCAD had 108 accidents versus 122 in RiskMaster; 44 of the 108 OrbCAD accidents had different data (e.g., date, vehicle ID#, Operator Name, route #, etc.). Additionally, critical data fields that should either have audit trail tracking of changes for accountability or locked down to prevent changes need to be identified. We believe the process can be made more efficient, accurate, and complete if the process flow is redesigned.

The Director of Contract Oversight, IT Director of Transit Technology Systems, and the Director of Risk Management should consider and evaluate the following process improvements:

a) Review workflow and data needs for each of the parties (e.g., MV Transportation, Bus Operations & QA, Risk Management & Safety, etc.) and redesign process, data flow and systems to meet identified requirements and provide efficiencies.

b) Ensure monitoring controls are established related to the accuracy and timeliness of data provided by MV. If possible, implement automated controls related to QA oversight, performance metrics and any PDC’s (Performance Deficiency Credits).

c) As part of the process redesign, identify critical fields (e.g., Incident #, Date, Operator ID, etc.) and ensure appropriate audit trail is captured as to who/when critical data is changed/updated in the system to ensure accountability. Determine which data fields should be: locked and cannot be updated in which fields are required to be completed in order to proceed, etc.

d) Develop controls to ensure that data recorded in OrbCAD matches the data captured in the RiskMaster system. If events are reclassified from incident to accident or vice versa, ensure that both systems are updated with final classification between Incident or Accident.

Management agrees with the recommendations. Target Completion Date: July 31, 2020

3.5.a

Packet Pg. 221

Att

ach

men

t: 2

0-03

Orb

CA

D In

cid

ent-

Acc

iden

t P

roce

ss R

evie

w (

4594

: In

tern

al A

ud

it O

rbC

AD


6


3. AUTOMATE REPORTING OUT OF SYSTEMS

We noted that MV manually keys all accident-related data into the various Excel templates and saves it to Sharepoint. MV manually creates reports through data entry into the following Excel templates: Operator Report; Supervisor Report; Maintenance Report; Preventability Ruling Report. Note, each of these templates has redundant data from OrbCAD as well as redundant info in each of the templates that must be manually rekeyed multiple times (e.g., date, Bus #, route #, etc.). Additionally, the contractor manually creates and sends to Capital Metro the Monthly Incident/Accident Log which summarizes all activity for the month. Furthermore, the Monthly Incident/Accident Log created by MV/RATP Dev does not contain the original OrbCAD Incident # thus making it difficult to cross-reference to the original record created in OrbCAD. After MV completes creating a separate template for every incident/accident and saves to Sharepoint, then Capital Metro’s Senior Risk Specialist reviews and rekeys all required accident data into the RiskMaster system using the individual Supervisor Reports received from MV. We noted that the original Incident # that is automatically assigned by the OrbCAD system is not always being entered into the RiskMaster system which makes cross-referencing the two systems difficult.

The Director of Contract Oversight, IT Director Transit Technology Systems and the Driector of Risk Management, should consider and evaluate the following improvements:

a) Request the IT Departments Report Writing Team to develop required pre-printed reports (e.g., monthly reports as well as daily Operator/Supervisor Reports, etc.) out of OrbCAD and/or RiskMaster based upon which system is designated the system of record with all comprehensive data.

b) Review for additional monitoring needs (i.e., Capital Metro and MV) and develop additional reports as necessary to improve MV oversight and improve efficiencies.

c) Ensure that the original Incident # automatically assigned by the OrbCAD system is properly captured in other reports and systems for appropriate tracking purposes.

Management agrees with the recommendations. Target Completion Date: Due to other IT priority projects, the IT Department will start work on this project in September 2020 and will have a target completion date of September 30, 2021.

3.5.a

Packet Pg. 222

Att

ach

men

t: 2

0-03

Orb

CA

D In

cid

ent-

Acc

iden

t P

roce

ss R

evie

w (

4594

: In

tern

al A

ud

it O

rbC

AD


7

Appendix A: Venn Diagram – Risk Master Accelerator

3.5.a

Packet Pg. 223

Att

ach

men

t: 2

0-03

Orb

CA

D In

cid

ent-

Acc

iden

t P

roce

ss R

evie

w (

4594

: In

tern

al A

ud

it O

rbC

AD


8

Appendix B: Incident Management Business Process

3.5.a

Packet Pg. 224

Att

ach

men

t: 2

0-03

Orb

CA

D In

cid

ent-

Acc

iden

t P

roce

ss R

evie

w (

4594

: In

tern

al A

ud

it O

rbC

AD


9

Appendix C: Operator’s Accident/Incident Report

3.5.a

Packet Pg. 225

Att

ach

men

t: 2

0-03

Orb

CA

D In

cid

ent-

Acc

iden

t P

roce

ss R

evie

w (

4594

: In

tern

al A

ud

it O

rbC

AD

Inci

den

t/A

ccid

ent

Rev

iew

Pro

cess

Rep

ort

)


10

Apendix D: Supervisor’s Accident/Incident Report

3.5.a

Packet Pg. 226

Att

ach

men

t: 2

0-03

Orb

CA

D In

cid

ent-

Acc

iden

t P

roce

ss R

evie

w (

4594

: In

tern

al A

ud

it O

rbC

AD

Inci

den

t/A

ccid

ent

Rev

iew

Pro

cess

Rep

ort

)


11

Appendix E: Notice of Accident Determination (Preventability Ruling)

3.5.a

Packet Pg. 227

Att

ach

men

t: 2

0-03

Orb

CA

D In

cid

ent-

Acc

iden

t P

roce

ss R

evie

w (

4594

: In

tern

al A

ud

it O

rbC

AD

Inci

den

t/A

ccid

ent

Rev

iew

Pro

cess

Rep

ort

)