SORTA FINANCE COMMITTEE MEETING TUESDAY, AUGUST 10th, 2021 - 8:30 A.M. SORTA/METRO AT HUNTINGTON CENTER, 23rd FLOOR CONFERENCE ROOM, 525 VINE STREET CINCINNATI, OHIO 45202 General Items: Call to order Pledge of Allegiance 1. Approval of Finance Committee Minutes: July 13th, 2021 Briefing Items 2. Fuel Hedging Report:Q2 (Cindy Resor) 3. Financial Reports for July 31st, 2021 (Cindy Resor) Action Items 4. Investment of Funds Report as of July 31st, 2021 (Cindy Resor) Other Items: New Business Adjournment The next regular meeting of the Finance Committee has been scheduled for September 14th, 2021 at 8:30 a.m. The SORTA Board of Trustees may go into Executive “Closed” Session under the Ohio Open Meetings Act: Section 121.22(G)(1) To consider appointment, employment, dismissal, discipline, promotion, demotion, or compensation of a public employee…; Section 121.22(G)(2) To consider the purchase of property for public purposes….; Section 121.22(G)(3) Conferences with an attorney for the public body concerning disputes involving the public body that are the subject of pending or imminent court action; Section 121.22(G)(4) Preparing for, conducting, or reviewing negotiations or bargaining sessions with public employees…, Section 121.22(G)(5) Matters required to be kept confidential by federal law or regulations or stat statues; Section 121.22(G)(6) Details relative to the security arrangements and emergency response protocols for a public body or a public office; Section 121.22(G)(8) To consider confidential information related to the marketing plans, specific business strategy, production techniques, trade secrets… FINANCE COMMITTEE TUESDAY, JULY 13th, 2021 – 8:30 A.M. COMMITTEE MEMEBERS APPOINTED: Heidi Black (Chair), Rod Hinton (Vice Chair), Allen Freeman, Thaddeus Hoffmeister, Pete McLinden, Chelsea Clark, and Sonja Taylor COMMITTEE/BOARD MEMBERS PRESENT: Alyson Beridon, Heidi Black, Rod Hinton, Blake Ethridge, Kreg Keesee and Sonja Taylor COMMITTEE MEMBERS ABSENT: Chelsea Clark, Allen Freeman, and Thaddeus Hoffmeister STAFF MEMBERS PRESENT: Darryl Haley, Donna Adkins, Pat Giblin, Adriene Hairston, Jennifer Jackson, Brandy Jones, Natalie Krusling, Kathleen McKeon, Matt Niehaus, John Ravasio, Cindy Resor, Shannel Satterfield, Khaled Shammout, Alan Solomon and Mike Weil OTHERS PRESENT: Kim Schaefer (Vorys, Sater, Seymour & Pease, LLP) 1. Call to Order Ms. Black called the meeting to order. 2. Pledge of Allegiance The Pledge of Allegiance was recited. 3. Approval of Minutes of June 8th, 2021 Ms. Black moved and Mr. Hinton seconded that the minutes of the June 8th, 2021 meeting be approved as previously emailed. 4. Internal Audit: Q2 Summer Ms. Adkins presented a summary of internal and external audit findings that had been performed during the years 2018-2021 with management responses to findings on outstanding items for quarter one (1). The Committee accepted the report as presented. 5. Financial Reports for June 30th, 2021 Ms. Resor presented the June financial reports. Total revenues were $12.1 million, which is favorable to budget by $2,511,000. Total expenses were $9.2 million, which is favorable to budget by $442,000 or 4.6%. The estimated sales tax revenue was $ 7,309,000 for the month. Fare revenue was unfavorable to budget by $132,000. Ms. Resor then reviewed the contributing factors to these variances. The Committee accepted the report as presented. 6. Investment of Funds as June 30th, 2021 Ms. Resor presented the report noting the yields for SORTA of 0.11% compared to the prior month of 0.10% for the month of June. Ms. Resor presented the report noting the yields for the Infrastructure Transit Fund of 0.08% compared to the prior month of 0.08% for the month of June. The Committee approved the report as presented. 1 7. New Business The next regular meeting of the Finance Committee has been scheduled for Tuesday, August 10th, 2021 at 8:30 A.M. 8. Adjournment The meeting adjourned at 9:11 A.M. 2 Attachments: Report August 2021 BRIEFING ITEM – DIESEL FUEL HEDGING REPORT – AS OF JUNE 30TH, 2021 STRATEGIC PLAN GOAL / OBJECTIVE • Organizational Sustainability RECOMMENDATION This is a briefing item. No action is required at this time. BUSINESS PURPOSE • SORTA spends approximately 7% of its annual budget on diesel fuel. • In May 2006 by Resolution 2006-21, the SORTA Board approved an Energy Forward Pricing Strategy (EFPS) which authorized staff to hedge SORTA’s fuel supply for up to 18 months in an effort to reduce uncertainty regarding the cost and price risk associated with purchasing diesel fuel to operate the system. • In November 2008 by Resolution 2008-62, the SORTA Board amended the EFPS to authorize hedging up to 90% for 24 months and up to 50% for 25-36 months. • SORTA's Energy Forward Pricing Strategy ("EFPS") was developed to: • Increase probability to remain within approved energy cost budget • Reduce the volatility of energy costs • Achieve a lower overall long-term fuel cost • Achieve time diversification/dollar cost averaging • Apply a dynamic strategy that balances risk and opportunity • • Attached is SORTA’s Diesel Fuel Hedging Report as of June 30th, 2021. SUBMITTED BY: Cindy Resor Interim CFO/Sr. Vice-President, Finance Southwest Ohio Regional Transit Authority Diesel Fuel Hedging Report As of June 30, 2021 Year to Date Total Per Gallon Fuel Purchased $2,240,054 $1.95 Hedging Gains / (Losses) 214,820 $0.19 Net Fuel Cost 2,025,233 $1.76 Budget 2,320,814 $1.86 Variance Favorable / (Unfavorable) $295,581 12.7% Gallons Hedged Average Cost Unrealized Future Hedges: Total Percent per Gallon Gain/(Loss) 2021 1,050,000 70% $1.70 $449,967 2022 2,520,000 87% $1.49 $1,495,691 2023 1,008,000 32% $1.39 $615,258 $2,560,916 Hedging Policy Policy Hedged Prior Qtr Hedged 0 - 24 Months 90% 68% 76% 25 - 36 Months 50% 32% 25% Historical Performance Fuel Realized Purchased Gain / (Loss) Net Budget Variance 2011 9,055,222 $2,597,327 6,457,895 6,180,421 (277,474) 2012 9,372,628 $1,319,310 8,053,318 8,209,351 156,033 2013 9,132,996 $372,338 8,760,658 9,210,597 449,939 2014 8,830,791 ($117,562) 8,948,353 9,345,585 397,232 2015 5,074,405 ($3,021,063) 8,095,468 8,958,919 863,451 2016 4,065,532 ($2,721,152) 6,786,684 7,162,468 375,784 2017 4,915,044 ($1,114,172) 6,029,216 6,213,987 184,771 2018 6,325,084 $845,763 5,479,321 5,229,423 (249,898) 2019 5,534,869 150,141 5,384,728 5,355,630 (29,098) 2020 2,913,009 150,141 2,762,868 5,355,630 2,592,762 YTD 2021 2,240,054 $214,820 2,025,233 2,320,814 295,581 Aggregate: $67,459,633 ($1,324,110) $68,783,743 $73,542,825 $4,759,082 Diesel Fuel for Board Quarterly Format 2021 Jun 8/2/2021 Attachments: Executive Summary Financial Report July 2021 BRIEFING ITEM – MONTHLY FINANCIAL REPORTS – AS OF JULY 31st, 2021 STRATEGIC PLAN GOAL / OBJECTIVE • Operational Excellence RECOMMENDATION This is a briefing item. No action is required at this time. BUSINESS PURPOSE • As part of the monthly closing of the general ledger, the Accounting Department prepares various financial reports. • One of the key reports is the Statement of Revenues and Expenses, also known as an Income Statement. • This report gives summary information about how actual SORTA revenues and expenses in the newly closed month (as well as calendar year-to-date) compare with budgeted and prior year values. • A separate Executive Summary is also prepared to give narrative descriptions behind key favorable and unfavorable actual results compared with budget values. • Attached are Monthly Financial Reports for as of July 31st, 2021. SUBMITTED BY: Cindy Resor Interim CFO/Sr. Vice-President, Finance SOUTHWEST OHIO REGIONAL TRANSIT AUTHORITY Monthly Financial Report Executive Summary July 2021 SORTA’s financial report for the seven months ending July 31, 2021 is attached. • Total Revenue of $13.0 million was favorable to budget by $2,735,000 or 26.7%. • Total Expense of $9.4 million was favorable to budget by $882,000 or 8.6%; • Operating surplus before adjustments was $3,617,000 for the month and $15,650,000 year to date. • Estimated $7,786,000 from the Sales Tax Revenue was recorded for the month. Capital Revenue was recorded to offset the operating surplus in order to build the Capital Reserve. Below is a summary of the most significant factors driving the results for the month: • Fare Revenue: Unfavorable to budget by $(262,000) or (22.1%). Metro fare revenue was unfavorable to budget by $(253,000). The fare box recovery ratio of 11.7%, unfavorable to budget by (1.8%). • CRRSSA: .Unbudgeted Federal Stimulus funds of $2,672,000 were accrued for the month and $10,688,000. • Wages & Benefits: Favorable to budget by $471,000 or 6% primarily driven by favorable bargaining unit wages. • Fuel & Lubricants: Unfavorable $(10,000) or (2.5%) due to unfavorable to budget miles per gallon offset and higher than anticipated miles for the month. • Other: Favorable $417,000 or 33.5% primarily as a result of outsourced services of $223,000, external advertising costs of $50,000 and leases & rentals of $29,000. Southwest Ohio Regional Transit Authority 2021 Profit & Loss Statement 7 Mos Ending Jul 31, 2021 Month Year to Date ($ In Thousands) Actual Budget Fav(Unfav) Actual Budget Fav(Unfav) Forecast Fav(Unfav) Ridership Fixed Route 583,693 801,577 (217,884) (27.2%) 3,633,428 4,442,537 (809,109) (18.2%) 3,628,323 5,105 0.1% CPS 1,848 3,026 (1,178) (38.9%) 244,288 802,800 (558,512) (69.6%) 243,637 651 0.3% Access 11,703 13,498 (1,795) (13.3%) 67,253 81,190 (13,937) (17.2%) 67,574 (321) (0.5%) Total Ridership 597,244 818,101 (220,857) (27.0%) 3,944,969 5,326,527