The Orange County Transportation Authority board of directors decided Monday to postpone increasing its subsidy of Metrolink until the board discusses a forensic audit of the rail authority.
Metrolink has come under heavy scrutiny because of basic accounting failures.
In a unanimous vote that coincided with approval of OCTA’s $1.3-billion budget, the board voted to keep its subsidy for the sprawling rail network at the current year’s level of $19.9 million and put a projected increase of $800,000 for the 2013-2014 fiscal year into a separate account.
The idea behind the action is to issue a rebuke to Metrolink and to give OCTA leverage in persuading the Metrolink leadership to complete a forensic audit of the agency sooner and make the audit’s findings public.
Metrolink recently made headlines for being a financial wreck, with finances so sloppy that the agency’s restricted accounts, including federal money, have appeared to be underfunded by $66 million
An audit of the $196-million agency, which runs commuter trains through the Los Angeles area, the Inland Empire and to Oceanside, found that financial accounting has been ripe for potential fraud.
OCTA directors have said that for years they have had trouble getting clear answers on the rail agency’s finances.
Some OCTA directors were openly offended by Metrolink’s budget for the next fiscal including an additional $400,000 for employee merit raises and a system-wide 5 percent fare increase. The board voted against the raises, saying in effect that Metrolink staff doesn’t deserve heftier salaries after mismanaging the rail authority’s finances.
And some directors also opposed the fare hike.
“I can’t vote to increase fares without knowing where the money is coming and going,” said OCTA Director Jeffrey Lalloway, also an Irvine city councilman.
There was also debate over whether the Metrolink board of directors is ready to hold the rail agency accountable. Some OCTA directors indicated that Metrolink’s fiscal mess is a result of not just incompetent staff but also a negligent and aloof Metrolink board of directors.
“I’ve seen smirky, arrogant grins,” said OCTA Director Steve Jones and Garden Grove city councilman of the Metrolink board. In mimicking the indifferent attitude of Metrolink’s leadership, he said the board appeared willing to do the forensic audit “only if we really have to.”
Others cautioned that taking a confrontational stance with Metrolink’s board is unwise. The OCTA board wrestled with the dilemma of wanting to hold Metrolink accountable but also to avoid a reaction whereby Metrolink’s board would cut the county’s rail services if OCTA withholds funding.
“Our budget here is not a referendum on theirs, and it’s a mistake to see it that way,” said Shawn Nelson, an OCTA director and county supervisor. “You poke these people in the eye enough, … I’m just trying to understand how that works for us.”
“To flip them the bird and just say we’re gonna cut off the funds and we’re not gonna play ball, we’re going home — where are we going home to?” Nelson said.
Ultimately, the OCTA board action taken was intended to send Metrolink a strong message without provoking the Metrolink board’s wrath.
The Metrolink board is scheduled Friday to take a first step toward commissioning a forensic audit. But the board has decided to finish with the work of an external auditor and a financial consultant before starting the forensic audit, said Metrolink Public Affairs Director Jeff Lustgarten.
“There’s general consensus among our board that those two processes should be allowed to take their course prior to the full-blown retention of a forensic auditing firm,” Lustgarten said.
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