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Inal Inal Eportepo Rt Pennsylvania House of Representatives Transportation Committee Pennsylvania Houseof Pennsylvania Representatives FINALINAL REPORTEPORT Transportation Committee Southeastern Pennsylvania Transportation Authority Transportation Southeastern Pennsylvania Submitted inaccordancewiththeprovisionsof P.H. Adams and Associates and Will Scott and Associates Associates andWillScott Adams and P.H. in association with St. Clair/CPA Solutions in associationwithSt.Clair/CPA Supported by Capstone Concepts, Durbin Associates, Supported byCapstoneConcepts,Durbin Accepted October4,2006 House ResolutionNo.538 A Studyof A A STUDY OF SOUTHEASTERN PENNSYLVANIA TRANSPORTATION AUTHORITY SUBMITTED IN ACCORDANCE WITH THE PROVISIONS OF HOUSE RESOLUTION NO. 538 FINAL REPORT TO THE PENNSYLVANIA HOUSE OF REPRESENTATIVES TRANSPORTATION COMMITTEE Prepared by: in association with St. Clair/CPA Solutions supported by Capstone Concepts, Durbin Associates, P.H. Adams and Associates and Will Scott and Associates Accepted October 4, 2006 An employee-owned company October 4, 2006 The Honorable Richard A. Geist Chairman, Transportation Committee Pennsylvania House of Representatives P. O. Box 202020 Harrisburg, PA 17120-2020 Dear Representative Geist: On behalf of PBS&J, I am pleased to submit a final report of our review of the Southeastern Pennsylvania Transportation Authority (SEPTA). This report is submitted in accordance with the provisions of House Resolution No. 538. That resolution directed the Transportation Committee to conduct an investigation of SEPTA. PBS&J, in association with St. Clair/CPA Solutions, focused its review on the scope as contained in HR 538: • Overall and inclusive investigation of the operations, administration, management, and financial operations of SEPTA. • Performance and financial audit of SEPTA. • Evaluation of the current structure and system of performance evaluation of SEPTA and recommendation of a comprehensive and coordinated system of program evaluation that includes monitoring, impact assessment, examination of cost effectiveness and cost-benefit analysis. Our engagement team’s recommendations are based upon our review and analysis of extensive data and previous studies of SEPTA, as well as numerous interviews with SEPTA management throughout the organization. We acknowledge the positive spirit of cooperation of SEPTA’s management throughout our review process. We also acknowledge the leadership of the House of Representatives for its sponsorship of this review and for its strategic focus on evaluating and helping to address the challenges facing SEPTA and its stakeholders. Sincerely, Frank T. Martin Vice President/Division Manager National Transit Practice Leader 482 South Keller Road • Orlando, Florida 32810 • Telephone: 407.647.7275 • www.pbsj.com TABLE OF CONTENTS Contents EXECUTIVE SUMMARY ........................................................................................................vii SUMMARY OF RECOMMENDATIONS .................................................................................ix ACRONYMS AND ABBREVIATIONS..................................................................................xiii 1.0 INTRODUCTION....................................................................................................................1-1 1.1 ABOUT SEPTA ............................................................................................... 1-1 2.0 REVIEW OF SEPTA’S RESPONSE TO HOUSE RESOLUTION NO. 538 REQUEST ......2-1 2.1 DEVELOPMENT OF PRODUCTIVITY STANDARDS BASED ON FAREBOX REVENUE ....................................................................................................... 2-1 2.2 IMPLEMENTATION OF A MORE EFFICIENT MANAGEMENT AND PERSONNEL STRUCTURE............................................................................ 2-4 2.3 PROVISION FOR AN ANNUAL AND BIENNIAL PERFORMANCE AUDIT.... 2-6 2.4 THE USE OF PRIVATE SECTOR CONTRACTS FOR GOODS AND SERVICES THROUGH COMPETITIVE BIDDING.............................................................. 2-7 2.5 THE MODERNIZATION OF SCHEDULING SO THAT IT BETTER TAKES INTO ACCOUNT LEVELS OF RIDERSHIP AND EFFICIENCIES IN OPERATION.. 2-9 3.0 FINANCIAL REVIEW.............................................................................................................3-1 3.1 SEPTA’S ENVIRONMENT, ORGANIZATIONAL STRUCTURE, AND OPERATING AND FINANCIAL SYSTEMS ..................................................... 3-1 3.1.1 Prior Financial Statements, Budgets, Audits, Management Reports, and Letters .................................................................................................. 3-1 3.1.2 Organizational and Management Structure .......................................... 3-1 3.1.3 Overview of SEPTA Operating Divisions and Systems of SEPTA ........ 3-2 3.2 FINANCIAL REVIEW OF SEPTA.................................................................... 3-3 3.2.1 General Financial Systems and Processes .......................................... 3-3 3.2.2 Internal Financial Reporting System..................................................... 3-4 3.2.3 Operating Standards and Performance Evaluation Measures .............. 3-5 3.2.4 Procurement System, Policies, and Procedures................................... 3-6 3.2.5 Prior Audit Reports and Interview of Outside Auditor............................ 3-7 3.3 ANALYTICAL REVIEW AND TREND ANALYSIS .......................................... 3-8 3.3.1 Financial Trends................................................................................... 3-8 3.3.2 Peer Group Trends and Benchmarking ................................................ 3-9 3.4 REVIEW OF SPECIFIC FINANCIAL ITEMS AND SYSTEMS ....................... 3-16 3.4.1 Funding Sources ................................................................................ 3-16 3.4.2 Passenger Revenue System .............................................................. 3-20 Final Report to the Pennsylvania House of Representatives Transportation Committee i Accepted October 4, 2006 TABLE OF CONTENTS 3.4.3 Major Cost Areas................................................................................ 3-21 3.4.4 Operating Divisions ............................................................................ 3-22 3.4.5 Long-Term Capital Plan and Major Construction Projects .................. 3-25 3.4.6 Proposed Reorganization of SEPTA’s Executive Staff ....................... 3-26 4.0 LEGISLATIVE REVIEW (STATE).........................................................................................4-1 4.1 INTRODUCTION TO THE REVIEW OF ENABLING STATE AND FEDERAL LEGISLATION................................................................................................. 4-1 4.2 FEDERAL........................................................................................................ 4-2 4.2.1 The Language of Regulation ................................................................ 4-2 4.2.2 Responsibilities as a Federal Transportation Grantee .......................... 4-3 4.2.3 Using Taxpayer Dollars Wisely............................................................. 4-5 4.2.4 Being a Good Employer ....................................................................... 4-6 4.2.5 Being a Good Corporate Citizen........................................................... 4-7 4.2.6 Conclusion ........................................................................................... 4-8 4.2.7 References........................................................................................... 4-8 5.0 OPERATIONS........................................................................................................................5-1 5.1 GOAL .............................................................................................................. 5-1 5.2 AN ASSESSMENT OF RAIL OPERATIONS................................................... 5-1 5.2.1 Major Observations .............................................................................. 5-1 5.2.2 Review Team Response ...................................................................... 5-3 5.3 STATUS - ASSESSMENT OF BUS OPERATIONS ........................................ 5-4 5.3.1 Major Observations .............................................................................. 5-5 5.3.2 Review Team Response ...................................................................... 5-5 5.4 STATUS - AUTOMOTIVE EQUIPMENT ENGINEERING AND MAINTENANCE...................................................................................... 5-6 5.4.1 Major Observations .............................................................................. 5-6 5.4.2 Review Team Response ...................................................................... 5-9 5.5 RAIL EQUIPMENT ENGINEERING AND MAINTENANCE........................... 5-10 5.5.1 Major Observations ............................................................................ 5-10 5.5.2 Review Team Response .................................................................... 5-11 5.6 CENTRAL CONTROL ................................................................................... 5-12 5.6.1 Major Observations ............................................................................ 5-13 5.6.2 Review Team Response .................................................................... 5-13 6.0 LABOR ISSUES ....................................................................................................................6-1 6.1 SPECIAL ISSUES ..........................................................................................
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