TTAC STAFF REPORT

SUBJECT: Transportation Development Act Triennial Performance Audits

MEETING DATE: December 1, 2016 AGENDA ITEM: 5

STAFF CONTACT: Andrew Orfila, Peter Imhof

RECOMMENDATION:

Review and recommend that the Board approve the draft Triennial Performance Audits for FYs 2012/13-2014/15 for Santa Barbara Metropolitan Transit District (SBMTD), Santa Maria Area Transit (SMAT), City of Lompoc Transit (COLT), Santa Ynez Valley Transit (SYVT), City of Guadalupe Transit, Santa Barbara County Transit (Cuyama and Los Alamos), Easy Lift, the Santa Maria Organization of Transportation Helpers (SMOOTH), and SBCAG.

SUMMARY:

California Public Utilities Code (PUC) Section 99246 requires regional transportation planning agencies (RTPAs) such as SBCAG to conduct performance audits every three years of its activities as well as the activities of the transit operators to which it allocates Transportation Development Act (TDA) funds. SBCAG allocates TDA funds to the Santa Barbara Metropolitan Transit District (MTD), Santa Maria Area Transit (SMAT), City of Lompoc Transit (COLT), Santa Ynez Valley Transit (SYVT), City of Guadalupe Transit, Santa Barbara County Transit (Cuyama and, until June 2013, Los Alamos Shuttle), Easy Lift, and the Santa Maria Organization of Transportation Helpers (SMOOTH). SBCAG contracted with Michael Baker International to conduct the TDA triennial performance audits for FYs 2012/13 through 2014/15. Michael Baker International reviewed compliance, implementation of prior audit recommendations, and agency functions, and made findings and recommendations for SBCAG and each of the transit operators. The findings and recommendations from the final draft audits of SBCAG and the transit operators are attached.

TTAC is asked to review and recommend that the Board approve the triennial performance audits. The draft audits will be brought for review and a recommendation to the Santa Barbara County Transit Advisory Committee (SBCTAC) at its December meeting. Staff will seek SBCAG Board approval of the final draft audits at the January meeting prior to submittal to Caltrans.

DISCUSSION:

Background

California Public Utilities Code (PUC) Section 99246 requires regional transportation planning agencies (RTPAs) such as SBCAG to conduct performance audits every three years of its activities as well as the activities of the transit operators to which it allocates Transportation Development Act (TDA) funds. SBCAG allocates TDA funds to the Santa Barbara Metropolitan

Transit District (MTD), Santa Maria Area Transit (SMAT), City of Lompoc Transit (COLT), Santa Ynez Valley Transit (SYVT), City of Guadalupe Transit, Santa Barbara County Transit (Cuyama and, until June 2013, Los Alamos), Easy Lift, and the Santa Maria Organization of Transportation Helpers (SMOOTH).

Contracting for performance audits not only fulfills SBCAG’s legal requirements, but also provides for an independent, objective, and comprehensive review of the audited agencies. A performance audit evaluates an organization's effectiveness, efficiency, and economy of operation. The TDA audits evaluate compliance with TDA requirements and status of implementing prior audit recommendations, and provide a review of agency functions. SBCAG’s performance audit describes how well SBCAG is meeting its administrative and planning obligations particularly as it relates to the TDA programs. Transit operator performance audits ensure accountability in the use of public transportation revenue, and include calculations of transit service performance indicators. The audits conclude with findings and recommendations for improvement.

In October 2015, SBCAG issued a request for proposals (RFP) to conduct the triennial performance audits for fiscal years (FYs) 2012/13-2014/15. SBCAG formed an evaluation and selection committee composed of SBCAG and local transit operator staff to review the proposals. After reviewing the two proposals submitted, the committee recommended Michael Baker International. In January 2016, the SBCAG Board approved a contract with Michael Baker International to conduct the TDA triennial performance audits for FYs 2012/13-2014/15. Shortly thereafter, Michael Baker International initiated work on the performance audits. The work included on-site interviews and visits with each audited organization in the late spring/early summer. Michael Baker International submitted draft audits throughout November 2016.

Draft TDA Triennial Performance Audits

The findings and recommendations from each of the draft TDA triennial performance audits, submitted by Derek Wong of Michael Baker International in November 2016, are included as Attachments 1a-1i. The complete draft audits are available for review with the TTAC agenda on the SBCAG website (Attachment 2). Draft audits incorporate both transit operator and SBCAG comments and suggested revisions, where necessary.

Recommendations for SBCAG

Michael Baker International’s recommendations for SBCAG are summarized below. SBCAG responses follow.

1. Update the SBCAG TDA Claims Manuals for new legislation.

SBCAG Response: Concur with recommendation.

2. Update the Coordinated Public Transit-Human Services Transportation Plan.

SBCAG Response: Concur with recommendation. Last month, SBCAG submitted an application for a transportation planning grant for funding to update its Coordinated Public Transit-Human Services Transportation Plan.

3. Update the Transit Resource Guide.

SBCAG Response: Concur with recommendation. The SBCAG Traffic Solutions Division is currently working on the update to the Transit Resource Guide.

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4. Review agency strategic planning process as warranted under new leadership.

SBCAG Response: Concur with recommendation, subject to new leadership direction.

Findings for Transit Operators

Michael Baker International’s findings regarding operator compliance with state requirements for continued receipt of TDA funds are shown in Table 1 below.

Table 1: Operator Compliance

Urbanized)

-

Performance Measure Definitions Measure Performance

Reports Controller State of Submittal Audits Compliance and Fiscal of Submittal Inspections CHP Claims TDA of Submittal Non and (Urbanized FBRR 15%/Year < Increase Budget Operating (Urbanized) FBRR Elderly/Disabled) or (Rural FBRR System Retirement Funded Fully Funds of Use Federal Full COLT     N/A    N/A   County   Part  N/A  Part N/A   N/A Easy Lift     N/A   N/A    Guadalupe     N/A   N/A    MTD     N/A    N/A   SMAT Part    N/A   Part N/A   SMOOTH     N/A   N/A    SYVT     N/A   N/A     = Full Compliance Part = Partial Compliance N/A = Not Applicable FBRR = Farebox Recovery Ratio

Recommendations for Transit Operators

Draft audit recommendations for the eight transit operators are summarized below.

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COLT

1. Ensure all financial and operations data are properly included in the State Controller’s Transit Operators Financial Transactions Report. 2. Include additional locally generated revenue in the farebox recovery. 3. Ensure monthly contractor reports include all operational performance measures. 4. Update system map and schedule description on COLT website.

County

1. Ensure the proper and accurate completion of State Controller Reports. (Carryover recommendation from prior audit) 2. Enclose annual California Highway Patrol (CHP) terminal inspection report for Cuyama Transit in County TDA claim. (Carryover recommendation from prior audit) 3. Consider merger of Cuyama Transit into SMAT.

Easy Lift

1. Develop cost allocation plan for Easy Lift program services. 2. Further develop active travel training. 3. Maintain consistent reporting of performance data.

Guadalupe

1. Review opportunities for increasing local revenue to boost farebox recovery. 2. Consider other transit administration options for Guadalupe Transit.

MTD

1. Hold discussion with SBCAG regarding new rules for farebox recovery. 2. Continue efforts to locate and enhance program training, including for maintenance. 3. Fill key administrative positions.

SMAT

1. Continue to improve upon the consistent reporting of performance data to the State Controller. (Carryover recommendation from prior audit) 2. Fill key transit administrative positions. 3. Add interactive trip planning capability on SMAT website. 4. Plan and budget for additional technology systems to improve service.

SMOOTH 1. Develop expanded performance standards for CTSA service efficiency and effectiveness. 2. Evaluate alternative cost allocation models.

SYVT 1. Update the Short-Range Transit Plan. 2. Review opportunities for increasing local revenue to boost farebox recovery. 3. Consider options for further cooperation and consolidation with COLT.

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If the local transit operators wish to respond to the findings and recommendations after the TTAC meeting, responses should be forwarded to SBCAG staff so this information is included when the TDA Performance Audits are considered for approval by the SBCAG Board.

Conclusion

The findings and recommendations from the final draft audits are attached (Attachment 1). Complete copies of the final draft audits are available on the SBCAG website (TTAC meeting agenda on SBCAG website). TTAC is asked to review and recommend that the Board approve the audit reports. Comments from today’s TTAC meeting will be assessed and addressed by the consultant, Derek Wong of Michael Baker International, together with any comments from SBCTAC at its December meeting. Next month, the Board will be asked to approve the final draft audits prior to submittal to Caltrans.

ATTACHMENTS:

1. Draft Audit Findings and Recommendations: a. SBCAG b. Santa Barbara Metropolitan Transit District (MTD) c. Santa Maria Area Transit (SMAT) d. City of Lompoc Transit (COLT) e. Santa Ynez Valley Transit (SYVT) f. City of Guadalupe Transit g. Santa Barbara County Transit (Cuyama and Los Alamos) h. Easy Lift i. Santa Maria Organization of Transportation Helpers (SMOOTH)

2. Draft Transportation Development Act Triennial Performance Audits, FYs 2012/13- 2014/15 (web-posting only, hard copies are available upon request)

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Attachment 1a

Section V

Findings

The following material summarizes the major findings obtained from the Triennial Audit covering fiscal years 2013 through 2015. A set of audit recommendations is then provided.

1. SBCAG conducts its management of the TDA program in a competent, professional manner while operating in a complex intergovernmental environment.

2. SBCAG has satisfactorily complied with state legislative mandates for Regional Transportation Planning Agencies. To its credit, SBCAG meets these mandates using limited staff resources.

3. Two of the three prior performance audit recommendations have been fully implemented. The two recommendations that were implemented pertain to keeping SBCAG staff and the board apprised of the Strategic Plan, and tracking completion of Short Range Transit Plans. One prior recommendation relating to updating the Transit Resource Guide is carried forward in this audit for full implementation.

4. In FY 2013-14, a 2 percent cost of living adjustment was given to all authorized staff, and a 1.5 percent adjustment was given in FY 2014-15. Prior to these adjustments, SBCAG staff had not received a salary or benefit increase for the past five years due to the recession. To help reduce costs, SBCAG implemented an office closure during the holiday period starting at the end of December 2013.

5. SBCAG works with the local transit systems to improve travel options within and outside of the county. An example is the Breeze Route 200 intercommunity service between Santa Maria, Los Alamos, Buellton, and Solvang that went into operation in January 2013. Also, in 2014, SBCAG and Ventura County Transportation Commission adopted a 10-year service plan and entered into a new MOU for management of the Coastal Express service connecting Ventura, Santa Barbara and Goleta. Further, in 2015, the Clean Air Express began providing bi-directional Saturday service from the Santa Ynez Valley and linking Santa Barbara, Solvang, Los Olivos and Buellton.

6. The 2040 Regional Transportation Plan & Sustainable Communities Strategy (RTP-SCS) was approved in August 2013, marking SBCAG’s first RTP that integrates the SCS mandates. The RTP-SCS plans for and programs the approximately $7.4 billion in revenues expected to be available to the region for the 30-year period from 2010 to 2040. The next update to the RTP-SCS, entitled Fast Forward 2040, has been underway and is scheduled for completion in Spring/Summer of 2017.

Triennial Performance Audit 47 SBCAG 7. Several Short Range Transit Plans were adopted including for City of Guadalupe (July 2014), SBMTD (March 2015), and City of Santa Maria (June 2015). These updates follow other transit operator SRTPs conducted in the prior audit period. Intercity transit issues and countywide transit studies are conducted through SBCAG including the North Santa Barbara County Transit Plan that commenced in August 2013 and adopted by the SBCAG board in September 2016.

8. SBCAG prepares the annual Transit Needs Assessment in close consultation with the SBCTAC, which serves as the statutorily required Social Service Transportation Advisory Council (SSTAC). The Transit Needs Assessment fulfills the requirement of the TDA unmet transit needs process and entails an assessment of transit-dependent and transit- disadvantaged in the county, an evaluation of existing transit providers, public outreach, and testing of public request for services against reasonableness to meet criteria. For the three-year audit period, SBCAG made findings that there were no unmet transit needs that were reasonable to meet.

9. The SBCAG regularly updates its two reference documents Local Transportation Fund Claim Manual and State Transit Assistance Fund Claim Manual. The purpose of each manual is to clarify the respective provisions of TDA and to serve as a convenient reference document for TDA claimants and SBCAG in administering the TDA claims process. It also serves as a technical reference document for stakeholders who are involved with transportation planning in Santa Barbara County and with the unmet transit needs process.

10. In recognition of integrating alternative means of transportation, SBCAG completed a Regional Active Transportation Plan that meets requirements of the California Transportation Commission’s Active Transportation Program Guidelines for bicycle and pedestrian modes. Also, Traffic Solutions’ new interactive website, SmartRide.org, launched in April 2015 and is a one-stop-shop for dynamic real time commuter rideshare and trip- planning tools. Real time rideshare uses smartphone technology to match riders and drivers to facilitate casual carpooling for non-traditional commutes and transportation trips.

Triennial Performance Audit 48 SBCAG Recommendations

1. Update the SBCAG TDA Claims Manuals for new legislation. (Auditor Suggestion)

The Local Transportation Fund (LTF) and State Transit Assistance (STA) claims manuals produced by SBCAG should be updated following new legislation that makes adjustments to some key TDA performance criteria. The passage of SB 508 in October 2015 has several objectives, including simplifying fare recovery requirements; authorizing funding of bicycle and pedestrian safety education programs; and modifying STA qualifying criteria for operations. The manuals should be updated to reflect these changes and identify the responsible party for implementing the updates, such as the fiscal auditor for the farebox recovery calculation. SBCAG should also communicate these changes to the transit systems and determine what implication, if any, the changes might have on their respective transit operations.

SB 508 rationalizes performance metrics, for example, by applying the same operating cost exemptions to both the farebox recovery ratio and the STA qualifying criteria. In addition, this bill clarifies a few terms that should help ensure expectations are applied uniformly to the transit operators. Highlights of the bill are summarized below.

Farebox Recovery · Deletes the requirement for transit operators to maintain higher farebox requirements based on the 1978–79 fiscal year.

· Revises definition of local funds to mean any nonfederal or nonstate grant funds or other revenues generated by, earned by, or distributed to an operator.

· Revises definition of operating cost to exclude principal and interest payments on capital projects funded with certificates of participation.

· Exempts startup costs for new transit services for up to two years.

· Exempts additional categories of expenditures from operating cost (cost increases above the Consumer Price Index for fuel, alternative fuel programs, power, insurance premiums and claims, and state and federal mandates).

Claims for Funds · Authorizes the funding of bicycle and pedestrian safety education programs up to 5 percent of the 2 percent bicycle and pedestrian allocation found under Article 3 (PUC Section 99234(a)).

Triennial Performance Audit 49 SBCAG STA Qualifying Criteria for Operations · Uses of a sliding scale to reduce the operator’s STA allocation for operations, rather than pass/fail.

· STA qualifying criteria requirement is exempt through fiscal year 2015–16.

· New sliding scale effective July 1, 2016.

The farebox recovery ratios calculated in the FY 2016-17 TDA fiscal audit should account for these changes given that operator eligibility for TDA funds is determined by the audited farebox ratios. Given the emphasis on the new farebox calculations in the fiscal audits, SBCAG should ensure that the transit managers for each transit system have reviewed the calculation methodology in their respective financial audits. The revised STA sliding scale test that SBCAG must apply for operating funds also would have certain budgeting and planning implications for the operator to continually use STA for operations.

2. Update the Coordinated Public Transit-Human Services Transportation Plan. (Auditor Suggestion)

The coordinated plan, entitled Transportation Connections, helps coordinate specialized transit services for elderly, disabled, and transportation-disadvantaged individuals and is used by SBCAG to set priorities for certain federal transportation grant programs, with potential local match from sources such as TDA. The plan sets project goals, strategies, and selection criteria in the review of grant applications by SBCAG and in addressing the coordination and the provision of social service transportation. SBCAG intends to update the plan following completion of the North County Transit Plan update, and to ensure it is internally consistent with the RTP-SCS. The current plan, which SBCAG adopted in 2007, emphasizes the importance of CTSAs, such as Easy Lift and SMOOTH in transportation service coordination in the larger areas. An update would provide guidance for coordination of specialized services under more recent operating conditions and service capacities of the transportation providers.

3. Update the Transit Resource Guide. (Auditor Suggestion)

This is a carryover from the prior recommendation. Traffic Solutions is continuing the update to the guide and plans to include a trip planner. As recommended in the prior performance audit, an electronic link to the Transit Resource Guide is on the same webpage as the transit operator links on the Traffic Solutions website. However, the links to the Transit Resource Guide in both English and Spanish are broken with no information. Since 2009 when the last transit guide was developed, several new and modified transit services have been implemented along with new system connections. The Transit Resource Guide should be updated following or concurrently with the update of several other documents, including the North County Transit Plan, Short Range Transit Plans, and the coordinated

Triennial Performance Audit 50 SBCAG public transit-human services transportation plan. The Transit Resource Guide should be made available electronically given the prevalence of technology use by the public. It is suggested that the updated Transit Resource Guide be inserted within the same webpage as the transit operator links on the Traffic Solutions website, as well on the SBCAG publications site.

4. Review agency strategic planning process as warranted under new leadership. (Auditor Suggestion)

The SBCAG strategic plan was approved in 2011 and presents a vision and high-level actions that executive management and the organization as a whole have been implementing the past several years through the OWP and budget. The upcoming three-year performance audit cycle is a window from which SBCAG could continue assessing the outcomes of the strategic plan in meeting broad agency goals and policies. With the understanding that there will be new executive leadership in the near future, a review of the existing strategic plan and its consistency with the region’s transportation goals in collaboration with the SBCAG committees and the public should occur as conditions warrant. Oftentimes new leadership is an impetus for revisiting the organization’s mission, vision, and direction. A review of the strategic plan by this leadership is a step toward furnishing the context to improve accountability for the use of resources, coordinating policies and building partnerships with all constituencies, ensuring the alignment of resources to address critical issues, and reinforcing the basis for clearly linking goals and objectives with ultimate outcomes.

Triennial Performance Audit 51 SBCAG Attachment 1b Section VI

Findings and Recommendations

The following material summarizes the major findings obtained from this triennial audit covering FYs 2013 through 2015. A set of recommendations is then provided.

Triennial Audit Findings

1. Of the compliance requirements pertaining to MTD, the agency fully complied with all nine requirements. Two additional compliance requirements did not apply to MTD (e.g., intermediate/rural farebox recovery ratios). MTD also implemented the four prior audit recommendations pertaining to documentation of compliance findings, technology investment, short range transit plan update, and operator training.

2. Based on the annual fiscal audits, MTD complied with the farebox recovery ratio and the fare plus local support ratio. Both ratios were relatively strong compared to the TDA thresholds. MTD receives significant local support through various revenue sources including local Measure A, property taxes, contract fares from UCSB and SBCC, subsidies from local governments to buy down fares, and advertising. Through Measure A, MTD is a direct recipient of the sales tax revenue.

3. MTD participates in the CHP Transit Operator Compliance Program in which the CHP has conducted inspections within the 13 months prior to each TDA claim. The CHP inspection reports were rated satisfactory and included minor findings made by the CHP in regard to a driver with an excess number of hours allowed to drive, and inspection and maintenance records not including the signature of the mechanic performing the inspection.

4. MTD’s performance indicators reflect a relatively stable system in terms of operating costs, vehicle service hours and miles and farebox revenue during the reporting period. Apart from a reduction of ridership of 5.6 percent in the triennial period, MTD’s performance indicators experienced relatively modest changes. MTD included a cost-of-living increase consistent with the terms of the new collective bargaining agreement and follow a previous time when MTD froze employee wage rates. Other system-wide TDA performance indicators such as operating cost per passenger and cost per hour increased only slightly for the three-year period. Passengers per hour declined from the reduced ridership.

5. Among the modifications to the routes included the elimination of Line 22 (Old Mission) in August 2014 due to low performance. This line, which served from downtown Santa Barbara to the Old Mission including stops at Orpet Park and Museum of Natural History, attained only 24,000 riders per year, the least of all the routes.

6. MTD engaged in negotiations with the Teamsters Union for a new contract to replace the one that expired in June 2012. The issue surrounding implementation of the Public Employees’ Pension Reform Act of 2013 (PEPRA) on public transit employees complicated and prolonged negotiations between the District and Teamsters Local 186 regarding a new collective Triennial Performance Audit 42 Santa Barbara Metropolitan Transit District

bargaining agreement. The District received a permanent exemption from PEPRA due to the fact that its retirement plan is a Taft-Hartley Trust Plan. New agreements were effective July 1, 2012 through June 30, 2016. The District had designed a contingency plan and held public meetings for potential massive service reductions of a minimum of 30 percent from losing federal financial assistance.

7. The tight configuration of the maintenance facility was assessed and physical modifications made to increase capacity, especially to make room to service and house the three large articulated buses that stretch an additional 20-feet further than the typical MTD bus. The new articulated buses are maintained under a new bus canopy installed at the bus yard.

8. MTD updated its Short Range Transit Plan in March 2015 after 10 years since the last update in 2005. The update includes an assessment of the strengths and weaknesses of the existing service, and a forecast of future service and financial needs. The SRTP includes an assessment of the performance of existing services, including ridership levels and productivity, and recommendations for service improvement.

9. MTD produces a series of detailed statistical reports that provide snapshots of route performance. Data is collected through different means including probes of the GFI fareboxes and analysis by staff. Performance measures such as ridership and related key indicators are compared to historic data. Monthly data feeds into quarterly and annual statistics.

10. In July 2014, MTD provided revised specifications for an AVL & ITS Management (AIM) System. The AIM system is being implemented to aid MTD in fulfilling its mission and meeting the needs of the MTD bus operators, supervisors, management, and public ridership. In an era of rapid technology advances and increasing interoperability requirements, AIM is designed to allow it to be easily maintained, upgraded, and expanded. MTD entered into an 18-month contract with Clever Devices to provide MTD with a turnkey AIM System that includes five primary ITS systems.

11. MTD’s Board of Directors, working with staff, completed a new five-year strategic plan (FY 2016-2021) that was adopted on December 15, 2015. Six values were developed through the strategic plan process to fulfill the mission statement and meet the needs of the public. Identified strategic actions are reexamined annually.

12. A significant management transition occurred as the District’s general manager of the past 10- years (and employee for 40-years) retired in July of 2014. The former Assistant General Manager/Controller was appointed General Manager. The change in management coincided with new investments in technologies to enhance MTD’s customer service activities and operating procedures.

Triennial Performance Audit 43 Santa Barbara Metropolitan Transit District Triennial Audit Recommendations

1. Hold discussion with SBCAG regarding new rules for farebox recovery. (Statutory Requirement)

MTD is subject to farebox recovery ratios based on a now-deleted provision of TDA law. Senate Bill 508, passed in October 2015, eliminates provisions for farebox ratios higher than 20 percent for urban transit operators, as well as a separate fare plus local support ratio. Since MTD had a farebox recovery ratio greater than 20 percent in FY 1978-79, previous law stated the District must maintain that higher farebox recovery ratio of 30.27 percent. Also, since MTD had a fare and local support ratio greater than 20 percent in FY 1978-79, the agency must also maintain that higher fare and local support ratio of 34.33 percent.

MTD should hold discussions with SBCAG regarding the resetting of the single farebox recovery standard required by TDA. The requirement of two farebox ratios is eliminated. The farebox reset would reduce the ratio from 30.27 percent to 20.0 percent, a standard that can be readily met by the District considering its local revenues. Further, the new law allows other local support revenue to supplement the farebox recovery, as needed, to meet the 20 percent. In keeping with its current operating performance structure, MTD could consider retaining the existing higher farebox ratio as an internal goal while ensuring compliance with the state farebox standard. Funding approvals by SBCAG through the TDA claim would be based on the District meeting the lower state standard resulting from the new legislation.

2. Continue efforts to locate and enhance program training, including for maintenance. (Auditor Suggestion)

MTD prioritizes training and staff development that improve key performance indicators; however, MTD indicated there are limited resources in the Santa Barbara area available for specific training such as for bus mechanics. The current vehicle fleet mix of diesel, hybrid, and electric vehicles requires specialized training and knowledge of each type. Some training for bus mechanics is provided on-site by staff from the bus manufacturers, and the District is working with the Teamsters to develop a local training program. Possible outside area training opportunities include the Southern California Regional Transit Training Consortium, and contact with other transit agencies that are heavily involved with clean fuels such as SunLine Transit Agency in Thousand Palms. Up-to-date training provides both incentive and benefit for current and prospective bus mechanics in an industry that is in shorter supply of qualified personnel.

3. Fill key administrative positions. (Auditor Suggestion)

MTD was reorganized to better deliver transit service in a more efficient manner. The MTD organization chart shows an existing vacancy for a marketing manager, a key position that administers the marketing program, which includes customer outreach, customer service, Triennial Performance Audit 44 Santa Barbara Metropolitan Transit District complaint handling, and targeted general public outreach. While many of these duties are currently being addressed by the customer and public outreach administrator, filling the marketing manager position would help provide a broad perspective to the marketing program and increase the use of technology, such as customer relationship management software, to help enhance ridership. Funds are budgeted in the near term to enhance the marketing aspects of the District.

A procurement specialist position was also vacant during the audit period based on the MTD organization chart. The position has since been filed. With large procurements in the works such as vehicles and Transit Center rehabilitation, along with existing technology investments, staffing of this position is important. Another position for consideration is a transit analyst versed in transit technology application and data mining. This position is not on the organization chart, and would provide the technical resource capability to collect and interpret large amounts of data that will be generated from the information technology systems.

Triennial Performance Audit 45 Santa Barbara Metropolitan Transit District Attachment 1c Section VI

Findings and Recommendations

The following material summarizes the major findings obtained from this triennial audit covering FYs 2013 through 2015. A set of recommendations is then provided.

Triennial Audit Findings

1. Of the compliance requirements pertaining to Santa Maria Area Transit, the system fully complied with seven of the nine requirements. Two additional compliance requirements did not apply to Santa Maria (i.e., rural/intermediate farebox recovery ratios). The City was in partial compliance with the timely submittal of its State Controller Reports and attainment of the minimum farebox recovery ratio. The City has worked to ensure the timely submission of the State Controller Report, which it did the last two audit years.

2. Based on data from the annual financial statements and the NTD, the farebox recovery ratios were in partial compliance over the three-year period. The system-wide ratio of 20 percent was met in two of the three audit years. On a modal basis, the fixed-route ratio of 20 percent was met in one of the three years, while for ADA Paratransit, the mode’s farebox ratio of 10 percent was met each year with inclusion of local support revenue. The temporary reduction of the farebox standard from 20 to 15 percent was met in FY 2014-15.

3. Santa Maria participates in the CHP Transit Operator Compliance Program in which the CHP has conducted inspections within the 13 months prior to each TDA claim. The CHP inspection reports submitted for review were found to be satisfactory. First Transit Inc. provides maintenance of the City-owned transit vehicles. Minor violations were found in the inspection reports including some maintenance inspections not conducted within the scheduled intervals, and two vehicles taken out of service for minor mechanical issues that were corrected.

4. The operating budget did not increase by more than the TDA threshold of 15 percent. The budget decreased significantly in FY 2013 from the transfer of the Clean Air Express service to Lompoc. The operating budget for the other two years was flat.

5. Of the six prior audit recommendations, Santa Maria implemented five and partially implemented one. The recommendation partially implemented pertains to continuous improvement for consistent reporting of performance data. The State Controller Report for transit contained errors due to duplication of data transferred from one year to another. Also, FTE data have not been updated in the Controller Report to reflect annual FTEs calculated by transit staff.

6. SMAT’s transit indicators show generally positive trends from an operating cost perspective, as lower operating costs resulted in greater cost efficiency and effectiveness as measured by operating cost per vehicle revenue hour and by vehicle revenue mile, and operating cost per passenger. Contractor costs declined for the triennial period, as did maintenance expense Triennial Performance Audit 42 Santa Maria Area Transit (SMAT) from new vehicle replacements. The reconfigured transit network using the Transit Center as the main hub requires fewer transfers compared to the previous network, which is better for the customer but artificially decreases ridership. Further modifications to the service in response to driver and customer feedback did not increase ridership.

7. Santa Maria’s local transit system has been adapting to service structured around the Santa Maria Transit Center, which serves as the primary transit hub for local SMAT buses with enhanced convergence with other public transit services. A second round of service refinements was implemented in August 2012. Although the service changes were expected to reverse the declining ridership trend, local fixed-route ridership continued to drop. Some of the decline was from the nature of the refined service that reduced bus transfers to improve customer experience.

8. The Breeze interregional commuter service added a second route in 2013, Route 200, which provides three weekday runs between Santa Maria, Los Alamos, Buellton, and Solvang. New MOUs signed in June 2014 between the funding partners for each Breeze service provide the terms of service, with Santa Maria serving as lead agency responsible for administration, operations, management, and reporting of Breeze 100 and 200.

9. The contract operator is First Transit, which began working for the City on July 1, 2009. The contract is for three years plus seven one-year options (10 years total) that could carry the contract through June 2019. The fourth amendment between the City and First Transit in March 2014 was to extend the contract an additional two fiscal years through June 2016, and for the City to provide payment on a cost per vehicle revenue hour. This payment method is different from the previous two-tier cost system and is in line with industry norms.

10. The City indicated that new management for First Transit has been more hands-on and better for the service. The City enforces contract provisions through service performance standards contained in the contract. The City’s philosophy to financial incentives is to first identify a problem, determine a plan of action to remedy, and assess a penalty if the contractor does not show improvement and/or implementation of a plan.

11. SMAT completed the SRTP Update Summary Report in June 2015, which focused on meeting two goals: 1) evaluate the efficiency and effectiveness of existing evening service (Routes 7N, 61, and 62); and 2) develop a plan to improve the farebox recovery ratio and recommendations for a fare structure. The fare increases approved by the Santa Maria City Council in August 2016 are planned for the next three years from FYs 2017 through 2019. The council also approved the changes to the evening services.

12. The transit services manager is responsible for managing the transit system, with key support positions such as the transit technician vacant for much of the audit period. The transit coordinator position was also vacant for a time but was refilled by the same former employee. The City is reviewing existing and future growth options for public transit in the north county area, which will require staff augmentation to implement and manage additional programs and services.

Triennial Performance Audit 43 Santa Maria Area Transit (SMAT) Triennial Audit Recommendations

1. Continue to improve upon the consistent reporting of performance data to the State Controller. (Compliance Requirement)

This recommendation is carried over from the prior audit and is prompted for full implementation due to discrepancies found in the operational data elements contained in the reports to external agencies such as the State Controller. For example, there is repeat performance data for ridership and revenue hours and miles in the State Controller Report for FYs 2014 and 2015, in particular for demand response. This duplicative data results in greater discrepancies between NTD and State Controller data in FY 2015. Also, for fixed-route FTEs in the State Controller Report, the number of FTEs remained constant each year for the three year period despite differing annual FTE figures calculated in a worksheet provided by the City. City transit management should continue coordinating with the Treasurer and Finance Departments in the preparation and review of the State Controller Report prior to submittal by the statutory timeline.

2. Fill key transit administrative positions. (Auditor Suggestion)

For much of the audit period, the Transit Services Division was lean with the transit services manager fulfilling most roles and duties in the administration and management of SMAT. A part-time transit technician position is budgeted but has been vacant for most of the period and would be responsible for many aspects of the service under supervision of the transit services manager. According to a job posting for this position, the transit technician performs SMAT and Breeze ridechecks and assists in the preparation and development of bus schedules, routes, run-cuts, survey data, community events, marketing, and graphic presentations, and performs other work as assigned under supervision of the transit services manager. While the transit coordinator position is filled, the hiring of a transit technician will provide additional technical and administrative support for existing service and future growth. As responsibilities are transferred, the transit services manager could focus on other important tasks including grants and capital project management, contractor performance, and financial reporting.

3. Include additional locally generated revenue in the farebox recovery. (Auditor Suggestion)

SMAT is taking measures to improve farebox recovery including a combination of service adjustments and fare increases. New state legislation (SB 508, October 2015) allows for other locally generated revenues in the farebox ratio. Examples of possible other local support revenues may include interest earnings, gains on the sale of capital assets, lease revenues generated by transit-owned property, alternative fueling services, and advertising revenues. SMAT generates advertising revenue which could be included in the farebox ratio. The annual TDA fiscal audit of the public transit fund should calculate the farebox ratio inclusive of Triennial Performance Audit 44 Santa Maria Area Transit (SMAT) applicable additional revenue. The City’s Transit Services Division should work with the City Finance Department to identify locally generated revenue from transit, and then work with SBCAG and the TDA fiscal auditor in the calculation of farebox recovery under the provisions of the new TDA law.

4. Plan and budget for additional technology systems to improve service. (Auditor Suggestion)

SMAT has been moving toward application of technology to improve service efficiency and customer enhancement. Examples include upgraded electronic fareboxes, advancement in dispatch and scheduling software, and automated call-back reminders for scheduled ADA paratransit trips. The City has also expressed interest in transitioning to smart card fare media. The Santa Maria Bus Stop Improvement Plan developed several years ago for the Transit Services Division recommended an automated vehicle locator (AVL) system that helps the transit system in many ways, from tracking bus performance to better customer management and ridership data collection. As one of the larger transit systems in the county, SMAT would benefit from technology integration in its transit service and develop the means to achieve greater efficiencies. The transit services manager has indicated a desire to fund transit technology. According to the TDA audited financial statements, the City has a sizable LTF balance which is flexible for operations and capital projects. Recently, Santa Barbara Metropolitan Transit District entered into an 18-month contract with a technology provider to provide a turnkey AVL & ITS Management System, including time of arrival information, route and schedule adherence, and onboard video surveillance.

Triennial Performance Audit 45 Santa Maria Area Transit (SMAT) Triennial Performance Audit of City of Lompoc Transit – FYs 2013-2015 Attachment 1d Section VI

Findings and Recommendations

The following material summarizes the major findings obtained from this triennial audit covering FYs 2013 through 2015. A set of recommendations is then provided.

Triennial Audit Findings

1. Of the compliance requirements pertaining to COLT, the operator fully complied with each of the nine applicable requirements. Two additional compliance requirements did not apply to COLT (i.e., intermediate and farebox recovery ratios).

2. COLT is held to a temporary farebox recovery standard of 15 percent on a system-wide basis as an urban operator. Based on audited data, the system-wide farebox recovery ratios for COLT met the standard for the triennial period. The farebox ratios included deductions for depreciation costs, and inclusion of Measure A contributions in the revenue, both of which are allowed by the TDA. The measure revenues include local share to the City and contributions from the County for its share of service provided by COLT. Together, these measure tax sources were greater than fare revenues in FYs 2014 and 2015, hence, the increase in the farebox ratio.

3. Consistent with the draft 2011 Short Range Transit Plan and Short Range Financial Plan, COLT implemented service changes in 2012 and 2013 that resulted in service cutbacks including elimination of a full route.

4. Lompoc implemented three of the five prior audit recommendations and partially implemented one prior recommendation, while another pertaining to a fare deviation policy was no longer applicable. Electronic fareboxes recently installed on the buses after the audit period track fares. The recommendation partially implemented concerns proper recording of transit financial and operations data in the State Controller Report.

5. COLT’s operating cost performance indicators generally show positive trends, as lower operating costs resulted in greater cost efficiency and effectiveness, as measured by operating cost per vehicle revenue hour and by vehicle revenue mile, and operating cost per passenger. Contractor costs declined for the triennial period compared to previous years.

6. Service effectiveness measures such as number of passengers per service hour showed slight increases despite both ridership and vehicle service hours declining for fixed route. Demand- response ridership per hour increased as ridership held steady while service hours decreased.

Michael Baker International - 33 Triennial Performance Audit of City of Lompoc Transit – FYs 2013-2015

7. Improved demand-response scheduling and trip planning have been made possible with the introduction of StrataGen software. The StrataGen dispatching software is configured to accept same-day reservations and allows for open return reservations for passengers with medical appointments.

8. Following the five-year operations contract, the City went out for bid for COLT and selected a new contract that started in July 2016. The City indicated the transition between contractors was relatively smooth.

9. In an effort to enhance the customer experience on COLT, the City moved forward with construction of a transit transfer center that will be located on Cypress Ave and I Street. The City is also embarking on another sizable project: the new operations and maintenance facility that will house the entire City fleet. COLT intends to charge rent to the other City departments for use of the facility.

10. While an across-the-board fare increase was not approved by the City Council in 2012, a fare increase was implemented for ADA demand-response in March 2016 based upon a citywide fee study. The Santa Barbara Shuttle fare also increased.

11. COLT has an in-kind agreement with Allan Hancock College that allows the college to sell passes in exchange for internal advertising on board the vehicles. A small advertisement about COLT service has been placed in the campus course catalog. The City markets interior advertising space on board its vehicles to generate ancillary revenue.

12. The aviation/transportation administrator maintains a grant list of activities and timelines to track open state and federal grants. Through a new federal grant, Lompoc is working with a Santa Barbara-based firm to serve as a test case on facial recognition technology for transit to count passengers automatically and establish ridership patterns.

Michael Baker International - 34 Triennial Performance Audit of City of Lompoc Transit – FYs 2013-2015

Triennial Audit Recommendations

1. Ensure all financial and operations data are properly included in the State Controller’s Transit Operators Financial Transactions Report. (Compliance Requirement)

The recommendation is carried forward from the prior audit. There are a number of discrepancies in the State Controller Report, including omitted operations data such as ridership and FTEs, incorrect data for demand-response service hours, and annual passenger fare shown in excess of $1 million for fixed-route service. Depending on the type of revenue currently included as fares, such as Measure A contributions, there are other line items in the income statement for these revenue. Financial and operations data contained in the State Controller Report should be reviewed by City transit management for accuracy and completeness prior to submittal to the state by the Lompoc Finance Department. Proper reporting will result in more accurate performance indicators of productivity and responsiveness to the state.

2. Include additional locally generated revenue in the farebox recovery. (Auditor Suggestion)

COLT is taking measures to improve farebox recovery, including a combination of service adjustments and inclusion of allowable revenue. New state legislation (SB 508, October 2015) allows for other locally generated revenues in the farebox ratio. Examples of possible other local support revenues may include interest earnings, gains on the sale of capital assets, lease revenues generated by transit-owned property, alternative fueling services, and advertising revenues. COLT has an opportunity to further improve its farebox ratio with local support revenue. Examples include businesses purchasing interior advertisements on board COLT buses, as described on the City transit website. The new operations and maintenance facility will house the City motor fleet in which COLT intends to charge rent to the other City departments. The annual TDA fiscal audit of the public transit fund should calculate the farebox ratio inclusive of applicable additional revenue. The City’s aviation/transportation administrator should work with the City Finance Department to identify locally generated revenue from transit, and then work with SBCAG and the TDA fiscal auditor in the calculation of farebox recovery under the provisions of the new TDA law.

3. Ensure monthly contractor reports include all operational performance measures. (Auditor Suggestion)

A review of performance reports submitted to the City by the contractors shows key operational data that has not been recorded. These indicators are listed in the report but have not shown actual data such as service interruptions (road calls), accidents/incidents, and complaints. These operational measures are important to track and report to gauge services provided by the contractor and identify any areas to be addressed.

Michael Baker International - 35 Triennial Performance Audit of City of Lompoc Transit – FYs 2013-2015

4. Update system map and schedule description on COLT website. (Auditor Suggestion)

COLT information on the City’s website contains helpful information about the service. However, some parts of the website for transit are outdated and should be corrected to avoid customer confusion. For example, a description of the fixed-route service on the COLT main page states five local bus routes serving Lompoc, Vandenberg Village, and Mission Hills, when there have only been four main routes for several years. Also, the route description section of the website continues to provide a link to an outdated map and schedule that includes the eliminated Route 5. The City should review and update information regularly on the website to ensure valid transit system information is shown.

Michael Baker International - 36 Attchment 1e Section VI

Findings and Recommendations

The following summarizes the major findings obtained from this Triennial Audit covering fiscal years 2013 through 2015. A set of recommendations is then provided.

Triennial Audit Findings

1. Of the compliance requirements pertaining to SYVT, the operator fully complied with each of the nine applicable requirements. Two additional compliance requirements did not apply to SYVT (e.g., intermediate farebox recovery ratio under PUC 99270.1 and urbanized farebox recovery ratio).

2. Pursuant to SBCAG requirements, SYVT is held to a 10 percent farebox standard either on a system-wide basis or on a modal basis as a rural operator. Based on audited data, the farebox recovery ratios for SYVT were 10.47 percent in FY 2013; 17.15 percent in FY 2014; and 13.17 percent in FY 2015. The average farebox ratio during the period was 13.6 percent. On a modal basis, both fixed-route and Dial-A-Ride farebox recovery ratios exceeded the 10 percent standard during the audit period. Local Measure A revenue is included in the farebox ratios.

3. Through its contract operator, SYVT participates in the CHP Transit Operator Compliance Program and received vehicle inspections within the 13 months prior to each TDA claim. Satisfactory ratings were made for all inspections conducted during the audit period.

4. The operating budget exhibited modest fluctuations throughout the audit period. The FY 2013 operating budget decreased 6.7 percent followed by two years of increases. For FY 2014, the operating budget increased 12.8 percent due to higher transit contract costs and contributions to the regional Breeze Route 200 service. The budget increased 3.9 percent in FY 2015.

5. SYVT satisfactorily implemented the three prior audit recommendations, which pertained to correctly calculating the number of FTEs, the timely submittal of the State Controller Report and inclusion of local Measure A funds in the farebox recovery calculation.

6. Operating cost per vehicle service hour, an indicator of cost efficiency, remained stable systemwide during the reporting period. Fixed route operating costs per hour registered a decline while Dial-A-Ride operations cost per hour increase significantly from implementation of new general public Dial-A-Ride service on Sundays, while contract costs with the contract operator also increased. Other cost measures including operating cost per passenger and cost per mile showed similar performance trends.

Triennial Performance Audit 33 Santa Ynez Valley Transit (SYVT) 7. Passengers per vehicle service hour, which measures the effectiveness of the service delivered, decreased 9.1 percent systemwide between FY 2012 and FY 2015. Fixed route passengers per vehicle service hour operations declined while increasing for demand response. The overall systemwide trend is generally influenced by the fixed route measures.

8. SYVT’s operations remained relatively stable during the audit period. SYVT continued to make progress in optimizing its existing services through infrastructure and technology improvements, new vehicle procurement and updated image branding.

9. SYVT was involved in the implementation of the 2012 Transit Infrastructure Plan, which provided an assessment of passenger amenities that would ensure safety, comfort and convenience to the ridership. The bus stop upgrades undertaken were composed of concrete padding, shelters, benches and solar-powered beacons throughout the system. The first round of improvements involved 21 stops, which were completed in FY 2013.

10. SYVT procured two new cutaway replacement vehicles for fixed route operations as part of the fleet replacement plan set forth in the 2012 Short Range Transit Plan. Additional fleet upgrades have included new radio equipment and fare vaults.

Triennial Performance Audit 34 Santa Ynez Valley Transit (SYVT) Recommendations

1. Update the Short-Range Transit Plan. (Auditor Suggestion)

The current SRTP for SYVT was adopted in September 2012 and is nearing the end of its planning horizon. SYVT is considering a realignment of Routes A and B together with the implementation of an express route along SR-246 during the morning and afternoon peak service hours. SYVT has also made improvements to its bus stop infrastructure and procured new vehicles. The City of Solvang has indicated its intention to pursue an SRTP update in 2017. With the recently adopted 2016 North County Transit Plan and the service modifications under consideration, a timely update of the SRTP would help identify the necessary operational efficiencies and capital needs that would allow the agency to better meet service demand and target new markets.

2. Review opportunities for increasing local revenue to boost farebox recovery. (Auditor Suggestion)

As a result of state legislation (SB 508) passed in October 2015, transit systems are able to boost their farebox recovery through inclusion of local revenues generated by the transit service. While SYVT meets the 10 percent farebox standard, other revenues could be included such as advertisement on buses and bus shelters, interest earnings, and gains on the sale of capital assets. Should the farebox ratio ever dip below the 10 percent standard, SYVT has options to meet that standard beyond current fare revenue and Measure A support by considering additional local revenues tied to transit.

3. Consider options for further cooperation and consolidation with COLT. (Auditor Suggestion)

The 2016 North County Transit Plan recommended voluntary consolidation of transit operations in several key service areas including the Santa Ynez Valley. More specifically, the agencies that make up SYVT would give consideration for a merger with the City of Lompoc’s COLT transit system. COLT, in conjunction with the three SYVT partners, operates the Wine Country Express (WCE) service between Lompoc and Solvang with a stop in Buellton. Since the WCE alignment overlaps with the SYVT route alignment in Buellton, there may be potential for the SYVT route to serve as an extension of WCE. It is suggested that the SYVT JPA and the City of Lompoc consider discussions about furthering collaboration and potential consolidation of transit services.

Triennial Performance Audit 35 Santa Ynez Valley Transit (SYVT) Attachment 1f Section VI

Findings and Recommendations

The following material summarizes the major findings obtained from this triennial audit covering FYs 2013 through 2015. A set of recommendations is then provided.

Triennial Audit Findings

1. Of the compliance requirements pertaining to the City of Guadalupe, the City complied with each of the nine requirements. Two additional compliance requirements did not apply to Guadalupe (e.g., intermediate and urban farebox recovery ratios).

2. Based on the available data from the annual fiscal and compliance audits, the City exceeded the minimum rural farebox recovery ratio standard of 10 percent in each of the three performance audit years. The farebox recovery ratio was 26.5 percent in FY 2013, 24.1 percent in FY 2014, and 23.7 percent in FY 2015. The average farebox recovery during the triennial period was 24.76 percent.

3. Guadalupe participates in the CHP Transit Operator Compliance Program through the contractor in which the CHP has conducted inspections at SMOOTH’s facility within the 13 months prior to each TDA claim. The CHP inspection reports submitted for review were found to be satisfactory.

4. The operating budget did not increase by more than 15 percent and exhibited modest changes during the audit period. The budget increased 4.1 percent in both FY 2013 and FY 2014. The FY 2015 operating budget decreased 1.6 percent.

5. The City of Guadalupe continues to utilize federal rural grant funding in addition to TDA revenues. The FTA 5311 applications are completed by SMOOTH as part of the contracted services. Funding was provided for operations in each audit year.

6. Guadalupe satisfactorily implemented the three prior audit recommendations, which pertained to submitting a separate State Controller Report for ADA demand response, correctly calculating the number of FTEs, and monitoring performance trends for ADA demand response.

7. Operating cost per vehicle service hour, an indicator of cost efficiency, increased 4.1 percent system-wide from $63.60 in FY 2012 to $66.18 in FY 2015. This trend is similar to the fixed-route operation, which experienced an increase of 11.7 percent during the period. In contrast, ADA demand-response operations exhibited a decrease of 31.5 percent from $95.10 in FY 2012 to $65.13 in FY 2015. Operating costs increased 3.1 percent system-wide over the same period, with operating hours experiencing a slight decline of 0.9 percent.

8. Operating cost per passenger, an indicator of cost effectiveness, increased 10.2 percent system- wide from $3.20 in FY 2012 to $3.53 in FY 2015 as operating costs grew while overall ridership Triennial Performance Audit 32 City of Guadalupe Transit declined during the triennial period. Fixed-route services exhibited an increase of 19.5 percent from $3.03 in FY 2012 to $3.62 in FY 2015. ADA demand-response services decreased 53.6 percent during the period from $55.70 in FY 2012 to $25.82 in FY 2015 as operating costs declined and ADA demand-response ridership increased. Ridership system-wide decreased 6.5 percent during the period from 112,852 passengers in FY 2012 to 105,572 passengers in FY 2015.

9. Passengers per vehicle service hour, which measures the effectiveness of the service delivered, decreased 5.6 percent between FY 2012 and FY 2015 system-wide from 19.9 passengers per hour to 18.7 passengers per hour. The trend in this indicator reflects a decline in system-wide ridership at a rate higher than the decrease in service hours in the reporting period (6.5 percent decline in ridership versus 0.9 decrease in service hours). Fixed-route operations reflected a slightly greater rate of decrease of 6.5 percent over the same period from 21.6 to 20.2 passengers per hour. ADA demand-response operations exhibited an increase of 47.8 percent from 1.7 to 2.5 passengers per hour.

10. Most of the transit system’s ridership is composed of a transit-dependent population with limited mobility options. Acknowledging this growing need, Guadalupe Transit implemented Sunday service and extended service hours in August 2015. Service frequencies on the Flyer were also adjusted from 60 minutes to 75 minutes as a means to improve service performance.

11. The 2015–2020 City of Guadalupe SRTP was adopted in July 2014. The SRTP contained three alternative service scenarios presented for the general public services, which proposed a new local fixed route and an express Flyer service between Guadalupe and Santa Maria.

12. The current operations contract with SMOOTH went into effect July 1, 2013, under similar terms and provisions as the previous agreement. The latest contract provides for the hourly rate to be inclusive of vehicle insurance costs and four option years instead of three.

Triennial Performance Audit 33 City of Guadalupe Transit Recommendations

1. Review opportunities for increasing local revenue to boost farebox recovery. (Auditor Suggestion)

As a result of state legislation (SB 508) passed in October 2015 that further solidifies current practice, transit systems are able to boost their farebox recovery through inclusion of local revenues generated by the transit service. Although the system-wide farebox recovery ratio for Guadalupe Transit far exceeds the 10 percent minimum standard, supplemental revenues would serve in providing a local match for state and federal grants as well as fund a dedicated transit manager position that is under consideration. Other revenue enhancements commonly used by transit operators are advertisement on buses and bus shelters, and fare revenue agreements in lieu of individual fare payment with entities that have regular riders. Should the farebox ratio ever dip below the 10 percent standard, the City has options to meet that standard beyond fare revenue by considering additional local revenues tied to transit.

2. Consider other transit administration options for Guadalupe Transit. (Auditor Suggestion)

The City’s transit service has been administered by the City Administrator and the Finance Director, and is among a number of City departments and services under their purview. The City has considered retaining a consultant to serve as transit manager. SMOOTH has operated Guadalupe Transit since inception and provides a number of value-added support services such as grant administration and marketing. SMOOTH is also the designated Consolidated Transportation Services Agency (CTSA) for northern Santa Barbara County. The adopted 2016 North County Transit Plan recommended a voluntary merger of transit operations in several key service areas, including between Guadalupe and Santa Maria. More specifically, the City would give consideration for Guadalupe Transit to be administered and/or operated by SMAT, which could result in greater cost efficiencies. It is suggested that the two cities and the CTSA continue discussions about the administration and operation of the transit system.

Triennial Performance Audit 34 City of Guadalupe Transit Attachment 1g Section VI

Findings and Recommendations

The following material summarizes the major findings obtained from this triennial audit covering FYs 2013 through 2015. A set of recommendations is then provided.

Triennial Audit Findings

1. Of the compliance requirements pertaining to the County of Santa Barbara, the County fully complied with six of the eight requirements. The County was found in partial compliance with regard to performance measure reporting, and consistent CHP inspection reporting. Three additional compliance requirements did not apply to the County (i.e., intermediate and urban farebox recovery ratios, and use of federal grant funds).

2. The system-wide farebox recovery ratio remained above the required 10 percent throughout the audit period. The farebox recovery was 11.47 percent in FY 2013, 13.03 percent in FY 2014, and 11.19 percent in FY 2015. The system-wide average during the period was 11.90 percent.

3. Both County-supported systems participated in the CHP Transit Operator Compliance Program in which the CHP has conducted inspections. Prior to the Los Alamos Shuttle being discontinued in June 2013, inspections were conducted through the CTSA and found to be satisfactory. The inspection for Cuyama Transit was rated satisfactory for the October 2013 inspection; however, subsequent inspection reports were not available.

4. Of the three prior audit recommendations, one recommendation which pertained to pursuing a formalized agreement with SMOOTH was no longer applicable. The two remaining recommendations—the accurate completion of the State Controller Report, and attaching the CHP terminal inspection to the annual TDA claim—have been carried forward for further action and implementation.

5. Performance measures relating to cost efficiency, such as operating cost per vehicle service hour and cost per mile, showed positive trends, as the rate of cost decline over the three years outpaced the decline in hours and miles of service. However, for cost-effectiveness measures such as operating cost per passenger, the trend showed sharp increases as ridership declined more than the drop in costs. While cost per hour and per mile decreased 48 and 21 percent, respectively, over the audit period, cost per passenger increased over two-fold. The drop in costs and service was primarily due to the elimination of the Los Alamos Shuttle and changes to Cuyama Transit stemming from the retirement of the long-time driver and staff from the Cuyama Valley Recreation District.

Triennial Performance Audit 25 Santa Barbara County Transit (Cuyama Transit & Los Alamos Shuttle) 6. Passengers per vehicle service hour, which measures the effectiveness of the service delivered, decreased 84.9 percent between FY 2012 and FY 2015 system-wide from 3.6 passengers per hour to 0.5 passengers per hour. The trend in this indicator reflects the major decline in ridership on Cuyama Transit while vehicle service hours declined 13.6 percent between FY 2012 and FY 2015.

7. Personnel changes at the Cuyama Valley Recreation District impacted operations of the Cuyama transit service. The retirement of the District’s volunteer driver during the first quarter of 2014, plus lack of success in recruiting another local qualified driver, resulted in a temporary 60-day service suspension. The County approached the City of Santa Maria for operating assistance, and, through its contract operator, SMAT provided a qualified driver for Cuyama Transit.

Recommendations

1. Ensure the proper and accurate completion of State Controller Reports. (Compliance Requirement)

This recommendation is carried forward from the prior audit for full implementation. The Transit Operators Financial Transactions Reports completed by the County during the audit period still omitted certain information in the supplemental data section, such as the number of FTEs and the number of revenue vehicles and peak vehicles. The County submitted corrected reports in FY 2013 and FY 2014 after communications with the State Controller’s Office. Internal review of the State Controller Report for accuracy and completeness should be a priority prior to its submittal. With County-operated services reduced to only Cuyama Transit, internal review and revisions should be coordinated between County transit management and accounting staff.

2. Enclose annual CHP terminal inspection report for Cuyama Transit in County TDA claim. (Compliance Requirement)

This recommendation is carried forward from the prior audit for full implementation. With the acquisition of a 14-passenger vehicle, Cuyama Transit is subject to annual CHP terminal inspections. Based on TDA claims packets provided by SBCAG for this audit, CHP inspection reports were not included in the attachments the last few years despite sign-off by the County in the standard assurance form in the claim. With changeover of service providers, there may have been confusion over the responsibility for the CHP inspection. Subsequent inspections are coordinated through the City of Santa Maria, which operates Cuyama Transit under contract. The county alternative transportation manager indicated that the CHP inspection report dated February 24, 2016, was included with the County’s FY 2017 TDA claim. It is suggested that the County ensure that a copy of the CHP terminal inspection is attached to the annual TDA claim.

Triennial Performance Audit 26 Santa Barbara County Transit (Cuyama Transit & Los Alamos Shuttle) 3. Consider merger of Cuyama Transit into SMAT. (Auditor Suggestion)

Changes in local staffing for Cuyama Transit followed by a temporary service interruption provided impetus for the County to work with the City of Santa Maria to operate the transit service between the Cuyama Valley and Santa Maria. There was an additional cost for this arrangement as the driver travels round trip in a County-owned passenger sedan from Santa Maria to Cuyama where service starts. The adopted 2016 North County Transit Plan recommended a voluntary merger of transit operations in the Santa Ynez and Cuyama Valleys, which would include Cuyama Transit being merged into SMAT. The County should further review and evaluate this option with Santa Maria, along with any continued role for the Cuyama Valley Recreation District.

Triennial Performance Audit 27 Santa Barbara County Transit (Cuyama Transit & Los Alamos Shuttle) Attachment 1h Section VI

Findings and Recommendations

The following material summarizes the major findings obtained from this triennial audit covering FYs 2013 through 2015. A set of recommendations is then provided.

Triennial Audit Findings

1. Of the compliance requirements pertaining to Easy Lift, the agency fully complied with all nine requirements. Two additional compliance requirements did not apply to Easy Lift (i.e., rural and urban farebox recovery ratios).

2. Easy Lift complied with its 10 percent required farebox recovery ratio during the audit period. Measure A contributions from local jurisdictions and SBCAG are included, as allowed by TDA. Without Measure A, Easy Lift was still able to attain its farebox requirement. The average farebox ratio without Measure A support was 10.48 percent. Revenue was enhanced from the new contract with CenCal effective in FY 2012-13 for nonemergency medical transportation.

3. Easy Lift was subject to CHP inspections during the audit period as the fleet includes two commercial vehicles with capacities greater than 10 passengers, including the driver. Inspections were conducted and rated satisfactory for the vehicle inspection and DMV Pull Notice Program.

4. Easy Lift implemented the four prior performance audit recommendations pertaining to reporting of FTA Section 5310 funds as capital revenue, developing a technology plan, completing a strategic plan process, and monitoring the rate of vehicle failures.

5. Easy Lift’s performance indicators reflect a fairly significant increase in operating costs as labor-related costs grew from expansion of service. Demand-response ridership increased 13.1 percent in the reporting period; however, the combination of decreased service hours and miles, increased deadhead travel, and higher operating costs resulted in a decrease in cost efficiency and cost effectiveness during the triennial period. In contrast, service efficiencies such as passengers per hour and mile increased as ridership grew for the three years.

6. Easy Lift expanded operations during the audit period to accommodate new service contracts and a growing ridership from the new federal Affordable Care Act. The growth fueled an increase in ridership requests, leading Easy Lift to implement upgrades such as an enhanced telephone system which limits the amount of time a passenger is on hold, and provide quarterly customer service training for the entire staff.

7. Easy Lift entered into a new for-profit charter contract with CenCal Health in June 2012 to provide nonemergency transportation for Medi-Cal-eligible patients six days a week to medical appointments (primarily dialysis treatment). As the CTSA, this service was in line with the type

Triennial Performance Audit 32 Easy Lift Transportation of service already provided by Easy Lift. Easy Lift viewed the CenCal partnership as an opportunity to offer financial stability to the organization’s nonprofit services and capital reserves through means other than its foundation support.

8. Easy Lift has been using Trapeze NOVUS-Demand Response Management dispatching software for the past four years. Implementation of the dispatching system increases scheduling opportunities and the ability to group rides more efficiently. Drivers are equipped with digital tablets in an effort to transition away from paper manifests, improve on-time performance, and improve the collection and reporting of data.

9. The Rider’s Guide is updated to provide a wealth of information to riders. Easy Lift’s on-time, no-show, and insufficient notice policies are clearly stated in the Rider’s Guide. Implementation of the enhanced telephone system, among other improvements, has reduced the rate of no-shows.

10. An amended agreement between MTD and Easy Lift for ADA service was signed for a three- year period (one year plus two one-year options) beginning in July 2013 and terminating in June 2016. The annual subsidy by MTD is adjusted according to changes in the annual CPI. Because of low CPI changes, the subsidy level was specified for FY 2015-16 in an addendum to the agreement. MTD and Easy Lift representatives have worked cooperatively to assess the growth in demand for ADA paratransit service.

11. The organization has for the past three years worked with marketing professionals to release an improved annual report both in print and electronically to chart its milestones for the community. The Community Report builds on the Easy Lift identity and brand in media publications through incorporating experiences of its riders, and expresses the momentum and energy driving Easy Lift’s impact on the community.

12. Through the strategic plan process, Easy Lift updated its mission, values, and vision. In 2014, the executive director worked with a life coach to create the White Glove Initiative. This initiative contains four fundamental tenets that together tangibly strengthen Easy Lift's everyday practices and present an organization attentive to its core mission to be the specialized transportation leader and advisor for Santa Barbara, connecting individuals and charitable groups to basic life needs and medical, mental health, educational and social programs.

Triennial Performance Audit 33 Easy Lift Transportation Triennial Audit Recommendations

1. Develop cost allocation plan for Easy Lift program services. (Auditor Suggestion)

As Easy Lift increases its diversity of CTSA-related services, operations costs increase in proportion as new staff and vehicles are added along with shifts in resources. Operations costs are generally divided between direct and indirect, with direct costs such as drivers and fuel more readily identifiable by program than indirect costs such as administrative and management staff. Segregating both direct and indirect costs by program provides for better analysis and management of program success and understanding of any deficiencies. More meaningful performance measures could also be developed relating to cost efficiency and effectiveness for each program.

Easy Lift should develop a methodology that allocates both direct and indirect costs to each program (i.e., core programs). The factors used to allocate costs are dependent on the nature of the cost, whether it is an operational cost (driven by vehicle hours), maintenance cost (driven by vehicles miles), or administrative cost (driven by either hours, miles, or another factor). The amount of public funds support including from TDA and Measure A could align better with each program and provide financial stability. As the financial statements currently identify all Easy Lift programs under a general category, there is no separation of revenue and costs among programs. A cost allocation plan would provide the basis for a more detailed financial statement and internal cost tracking.

2. Further develop active travel training. (Auditor Suggestion)

With demand for Easy Lift reaching unprecedented levels, it is a challenge for the organization to meet the demand, as shown by increased ridership but also from recent increases in trip denials. Easy Lift offers mobility training to its customers, and includes questions about such training in the ADA eligibility application. As service demand continues to exceed available vehicles, Easy Lift should strengthen its active travel training program and work with its customers, and with MTD, to identify those who require Easy Lift service, and those that may be candidates to use the MTD fixed-route public transit service.

More emphasis on mobility training and benefits of the fixed-route bus can be offered when communicating with passengers. Suggested measures include revising the ADA application to include more questions about an applicant’s ability to ride the bus, and moving the mobility training questions and adding information about MTD service and fares to the front of the ADA application for greater customer awareness. Easy Lift might also give consideration to whether and how the disability impairs an individual’s mobility. The issued ADA card may indicate a conditional, unconditional, or temporary eligibility. Conditional eligibility means a rider can use Dial-A-Ride only under specific conditions (e.g., when a fixed-route stop is too far away), while unconditional eligibility means a rider has unlimited access to Dial-A-Ride. Temporary eligibility Triennial Performance Audit 34 Easy Lift Transportation means a rider can use Dial-A-Ride for a limited period of time. Greater demand for Easy Lift ADA service creates strain on the system, and higher operating costs, while the fixed-route bus is capable of providing the ride more efficiently on a cost per passenger basis.

3. Maintain consistent reporting of performance data. (Auditor Suggestion)

This review of performance documentation for Easy Lift showed a few shortages of key data. As an example, the FY 2015 NTD small systems report originally submitted by Easy Lift did not include service data such as revenue hours, miles, and passenger information. Also, in an internal productivity report for FY 2015, on-time performance was not reported by month or annually for ADA service. As demand for service has increased the past few years, along with extended operations, Easy Lift staff resources have been stretched in administration and operations. Performance data tracking and consistent internal and external reporting is an administrative responsibility that should continue to be prioritized so that a representation of the transit service could be made and compared on a regular basis for efficiency and effectiveness.

Triennial Performance Audit 35 Easy Lift Transportation Attachment 1i Section VI

Findings and Recommendations

The following material summarizes the major findings obtained from this triennial audit covering FYs 2013 through 2015. A set of recommendations is then provided.

Triennial Audit Findings

1. Of the compliance requirements pertaining to SMOOTH, the agency fully complied with all nine applicable requirements. Two additional compliance requirements did not apply to SMOOTH (namely, intermediate and urban farebox recovery ratios).

2. SMOOTH complied with its 10 percent required farebox recovery ratio each audit year, having achieved fare recovery ratios that far exceed the minimum standard. Revenues that contribute to the farebox include fares, local Measure A support, passes and contract payments for SMOOTH CTSA transportation services.

3. SMOOTH participates in the CHP Transit Operator Compliance Program and received inspections within the 13 months prior to each TDA claim. Satisfactory ratings were made for all inspections conducted during the audit period.

4. The CTSA operating budget did not increase by more than 15 percent and exhibited modest changes during the audit period. The budget decreased 7.9 percent in FY 2013. For FY 2014 and FY 2015, operating budget increased 7.6 percent and 4.7 percent, respectively.

5. SMOOTH satisfactorily implemented three of the four prior audit recommendations. The recommendations implemented pertained to the development of a technology plan, review of the Tri-Counties Regional Center contract structure, and opportunities to expand SMOOTH’s CTSA role. The recommendation that pertained to expanded CTSA performance standards was not implemented and is carried forward in this performance audit.

6. Operating cost per vehicle service hour, an indicator of cost efficiency, increased slightly by 2.3 percent systemwide to $65.53 in FY 2015. This trend is attributed to very similar increases in CTSA operating costs and vehicle hours during the reporting period. Operating cost per passenger, an indicator of cost effectiveness, showed similar trends.

7. Passengers per vehicle service hour, which measures the effectiveness of the service delivered, had a very slight decrease of 2.8 percent systemwide from 4.2 passengers per hour to 4.1 passengers per hour for the three year period. The trend in this indicator reflects a nearly identical increase in ridership on CTSA services and vehicle service hours.

Triennial Performance Audit 29 Santa Maria Organization of Transportation Helpers (SMOOTH) 8. SMOOTH operated five CTSA services during the audit period. Ridership on the CTSA services had increased including for TCRC and SDAR, the two largest clients. Ridership growth for TCRC occurred in light of rate freezes imposed by the California Department of Development Services. The CTSA added three R & D programs for a total of seven composed of 10 daily routes.

9. One new exploratory CTSA service implemented during the audit period was the Children’s Accessible Transportation program (CAT). With grant support from the Orfalea Fund, CAT provided daily transportation for low-income and at-risk grade school children.

10. SMOOTH provides additional community value by offering relative small complementary transportation services for senior and community events in Santa Maria and Guadalupe. SMOOTH budgets for and keeps a running log of the event and cost for providing the service. For one fiscal year, SMOOTH provided transportation to over 30 different events. Actual cost to provide these services was less than budgeted.

11. SMOOTH has continued replacing its fleet of older vehicles. SMOOTH has been involved in a three-year $1.2 million vehicle replacement project, which concluded in 2014. The organization procured a total of 12 new vehicles. The 2013 models were procured through the FTA Section 5310 program.

Triennial Performance Audit 30 Santa Maria Organization of Transportation Helpers (SMOOTH) Recommendations

1. Develop expanded performance standards for CTSA service efficiency and effectiveness. (Auditor Suggestion)

This recommendation is carried over from the prior audit. SMOOTH is working to fully develop expanded performance standards for CTSA service efficiency and effectiveness which continue to be a goal for SMOOTH’s management. SMOOTH continues to track ridership, mileage, service hours and farebox for each of the CTSA services on an activity summary spreadsheet on a monthly and annual basis. It is suggested that as new technological assets continue to be incorporated that SMOOTH leverage that data in the development of enhanced quantitative and qualitative performance metrics.

Suggested alternative measures that provide additional gauges of system and program performance include Service Quality/Reliability Standards (On-time Performance; Trip Coverage/Trip Denials; Cancellations and No Shows; and Complaints); funding leverage (total CTSA passengers relative to TDA funding; ratio of other fare revenue to TDA); and value for money (return on investment) through measures of effectiveness of meeting community transportation needs.

2. Evaluate alternative cost allocation models. (Auditor Suggestion)

SMOOTH’s management has indicated its intention to develop a cost allocation model that follows industry standards in spreading direct and indirect operating costs using variables that better relate to the service. An updated method generates an indirect cost ratio by service for fixed cost such as management expenses, and a separate allocation of variable costs such as driver wages and maintenance using performance indicators such as vehicle service hours and miles. Each cost line item is subjected to an allocation, meaning the cost is spread among each service as a reflection of the general supply of that service measured in either hours or miles. The higher the hours and miles produced by a service, the greater the cost that is allocated to that service. The model would help determine costs for CTSA independently from revenue generation, which at the end are both used to produce a measure of program subsidy and magnitude of TDA funding needs.

Triennial Performance Audit 31 Santa Maria Organization of Transportation Helpers (SMOOTH)