Finance and Audit Committee Meeting   1/14/2021

Good.

Okay, I saw Jennifer signed in for a second.

Am I showing up all right?

All right.

Yes, I made you an organizer.

And Jeremy, I apologize.

I may jump back and forth from the slides to that budget document.

Yeah, that won't be a problem.

I have it so that I can quickly toggle between both so I can.

So right now, are you looking at the slideshow in presentation mode?

That's what is coming up.

Yep.

Now it's back to the budget document.

Hey, Bridget.

I can probably check that.

Hi, Jeremy.

Hey, how are you?

If I put my name on there, we would have all kinds of registrants.

Yes, looks like it.

Ms. Butler-Painter just joined us.

Hi there.

We were just beginning a roll call to see who had registered and Jeremy informed me we have a grand total of 11

Good morning.

So Jeremy, you're going to be administering this meeting, I suppose?

That's great.

We'll handle the comments.

And if you want to switch between the document or the slides, you just let me know.

That's wonderful.

It looks fine on the screen here.

I'm just monitoring the attendees.

People come in.

If they're board members, I'll shift them over to organizers so they can control themselves from mute.

Morning, Steve.

I've looked at the agenda and I'm counting on you to walk us through the agenda within the scheduled time.

Yeah, very astute observation on when you said on the scheduled time.

Hi all.

Yeah, I don't know.

Has Jim joined us yet, Jeremy?

So we have Ms. Butler, Ms. Dorsch, Mr. Sadeed, Ms. Butler-Painter, got you there, Steve, Bridget, myself,

though I don't see Mr. Spore yet.

And Lisa is also going to join.

Hey, Deborah, I've been wanting to ask you,

did you ever come here to DRPT on the 21st floor?

We no doubt have, and yes, I did.

Yeah, I know it's been a few years back, but I thought there was a time when you and several other

Yep.

Would have been John Friedman probably and me and a couple of others.

Yeah.

Yep.

All right.

Mr. Spore has joined.

Still have a few minutes.

Did Jeremy, Jennifer said she was going to try to join, but I think she had another meeting going on.

And then I think Mike was sort of in the same category.

Mr. Skor, can you hear me okay?

Yes.

Yeah, we can hear you.

The agenda and the materials have been posted on the web for public access prior to this meeting.

Am I correct?

Yes.

That's great.

Have we received any comments?

None that I'm aware of yet.

Great.

Should we get started?

Jeremy, it is time.

Welcome.

I appreciate your service on this committee.

It's an important committee of the authority, and this is our first meeting of the Finance and Audit Committee.

Welcome.

I've seen the agenda, which will be, probably you've seen that as we have a full agenda today.

and before we get started, let me just go over a few housekeeping items.

As you know, on November 19th, Governor Ralph Northam signed House Bill 5005, which is revised by annual budget, which includes new language for meeting electronically

in light of the continuing state of emergency declared by Governor Northam.

We are conducting this meeting in a remote setting, keeping safety top of mind and mitigating the impacts and the spread of COVID-19.

Just a reminder that this is a recorded public meeting and we'll have public comment.

Please remember to keep

yourselves on mute.

There will be a closed session following the public portion of the meeting.

And with that, I think we should go forward and begin the meeting officially.

Most of the items almost entirely will be covered by Steve.

Thank you, Chairman.

So we do have quite a few items.

And I do want this to be open discussion.

So as I'm going through items, please feel free to interrupt me and ask questions.

And I think the biggest item for this meeting was for us to get through the budget document that hopefully we sent it out this past weekend.

And hopefully you had a chance to at least take a peek at it.

because ultimately we want to be able to, the next board meeting on the 25th, I believe it is, that Monday, to be able to, from this committee, make a recommendation to carry forward the budget to be sent to the Commonwealth Transportation Board.

Anyway, we'll spend a little bit of time going through the budget and that's the first item on the agenda.

And Jeremy, if you could move ahead on the slides, that'd be great.

Once again, you all have seen this.

This is just the requirements in the code for the budget and it details that we have to send a budget to the Commonwealth Transportation Board by February 1st each year.

And that includes both the operating

and a capital budget.

And then further, it stipulates that the CTB, as I'll refer to them, that they shall or have the right, the authority to approve the capital budget by May 30th of each year.

So, I sort of take that as sort of a, if they don't approve it, it's negative assurance.

We're working towards getting this budget to them on February 1.

And then on the operating plan side, there's not necessarily an approval.

It's just we submit it to them.

But also we do, are required to take their feedback with respect to the form and content of the budget document.

And in December, the December, I think it was the 9th of December, there was a Commonwealth Transportation Board meeting, which I presented.

The outline that I worked with Mr. Saadid on for this budget document, I presented that to the CTB and took their feedback at that time.

And so that has been incorporated.

I anticipate we may get further feedback after the February 1 submission.

So Jeremy, moving on, I guess I just wanted to maybe pull up the budget document for a second and just talk a little bit about

the highlights of it.

Essentially, the way we're framing this budget is we're recommending a fiscal year 2022 budget, both for operating capital and then capital we've broken down between capital projects and capital grants.

And capital projects being VPRA control is controlling the project, controlling the construction

capital grants, we're a funding participant.

They have a vested interest in the outcome of the project, but we aren't going to have the same level of control over carrying out that project.

So that being said, the total for FY22, I guess one more thing, there is in this budget, we do take the capital side of the budget and we forecast out the following five years so that we have

in total a six year forecast.

And unique to this year is included, I'll call it a pro forma budget for FY21 because the board wasn't in existence.

There wasn't time to approve a budget once the General Assembly authorized the Rail Authority.

So it's kind of going to be a little bit of a unique year in that there wasn't an approved budget for fiscal year 21.

So I did include a budget for 21 also here.

But as we go forward, I think I'm trying to frame it that the board is approving a one year operating capital budget and we include a five years additional of forecast for capital grants and projects.

So that said, the FY22 budget is a total of $450 million.

The operating piece is $51 million.

and what I'll say on the operating piece is there is a sizable increase from FY21 to FY22, and a lot of that is related to the impacts of the pandemic on Amtrak and our ridership.

And the other item I'm going to add is we took the most conservative route with our estimates in that another stimulus bill did pass in December, as I'm sure you're aware,

A billion dollars was allocated to Amtrak.

And we do anticipate that a portion of that billion dollars will be allocated to state supported service.

And that some of these costs that we're showing in our budget will be covered by some of those stimulus funds.

It's just December 22nd, I believe that that bill passed and we don't have that feedback yet from Amtrak as to

what share of that billion dollars we could expect to help us.

But once again, we took the most conservative approach for the FY22 operating budget.

The capital projects budget is $321 million for FY22.

The largest share of that is right away purchase.

about right-of-way acquisition for $200 million, which is part of the TRV initiative.

Really, the majority of the capital projects is the TRV initiative, which is broken down into numerous elements.

I guess one other point just on the overall budget, we've taken the simplified budget and now we've expanded it.

All of these projects now have a narrative that

should help you as board members help citizens to understand the projects that we're putting funding on.

One more point on TRV, we're continually refining the financial plan.

You know, it's a $3.8 billion project when you go all the way out to FY 30 to its completion date.

And we're continually updating the various revenue sources and the expenditure plan.

So it's possible that between now and final, this is the one area that I would say it's possible we may adjust some of those dollar amounts, not necessarily the totals, but the actual expenditure plan, the timing of them.

And finally, on the capital grant side, it's estimated at $78 million a year, and I've said already that this is where we're working with other rail partners here in the state of Virginia on initiatives that the rail authority has a vested interest in the outcome as a sort of a partnership in the efforts that we're working on.

So with that, if we could go back, Jeremy, to the slides for a second, I thought an important

to highlight to y'all as a committee and board members the changes from the December 14th.

We submitted just the bare bones budget numbers in tables at that date and there have been some updates from that time to now.

First, as I mentioned, there's a lot more detail now, a summary section and then details of all the different projects.

But then

On the capital grants forecasted budget, it did increase from that December 14th submission to the more updated document that we're working with now.

It increased about $25 million.

And what happened there was actually we removed three projects.

If you pulled those schedules out from the December 14th meeting and compared them, you'll see we removed three capital grants.

two of which it was determined should stay with DRPT and their transit division who works with Virginia Railway Express.

So those two projects, we changed our mind and decided to leave them with DRPT to manage.

And then a third project that related to Virginia Railway Express is no longer needed because of the impacts of the TRB initiative.

So that one was removed also.

and the reason, so I said we removed projects so you'd think the budget would go down, but also there were three projects in working with Virginia Railway Express that there were increased allocations in future years that in our financial system here at DRPT, we don't put future allocations in the system because just like your budget, as I explained to you,

there's forecasted expenditures that can change each year.

So we put through the current year that we're in and then the future allocations aren't in the system.

So those future allocations primarily of smart scale funds to these three, as you see on the screen, Alexandria Station, Brook Leland, Potomac Shores Construction and the Quantico Station, we found that there were some future

smart scale allocations that needed to be included in the capital grants forecast.

And then finally, I think part of this process is for y'all as a committee to provide your feedback, and certainly we can incorporate your feedback into this budget document.

And with that, Jeremy, if you can go to the next slide.

This is just the timeline.

As I said, December 9th, we presented the form of the budget to the CTB to get their feedback.

February 1st, we need to, as a passenger rail authority, need to submit a budget to the Commonwealth Transportation Board.

By May 30th, we hope to have had feedback from them.

And then I left it late May, early June, depending on when CTB gives their blessing.

I would anticipate the Passenger Rail Authority Board to adopt a final budget for FY22.

Actually, two questions just to understand from the 45 page document.

I know that the out years of forecast numbers for capital are just that forecast, but I'd like to understand, you know, it looks like we're bonding against ticket revenues, so I'd like to understand that.

And also a question about in the capital grants section, for example, just pulled out of your Crystal City platform study, we're paying a million for

Planning and Design, and you mentioned construction phase is $50 million.

Would we expect VRE to come back for the construction phase and look for part of all of that $50 million from us as well?

Right.

So let me handle the passenger ticket revenue bonding first.

So as we, you know, as we undertook this large initiative, and then really the formation of the Passenger Rail Authority, part of

that process was the ability to yet have bonded debt.

And also part of that was, you know, with the state, there's a limit to the amount of debt, a debt ceiling, a capacity that's monitored by the Department of Treasury.

And so any state supported debt goes against that limit.

The thought has been, and we've actually done a little bit of work with some outside consultants and with Amtrak too, because we would need their assistance in this, but the thought had been to take all of the, well, let me explain to you.

Correct, but Amtrak has agreed, they haven't agreed in writing, but we've agreed in principle that they would allow those passenger ticket revenues to come to us at the gross amount and then we would bond against them and then obviously the bill we get each month from them would obviously go from, you know,

a million dollars to six million.

I'm just throwing numbers out there, but they have agreed in principle, obviously, there's a lot more detailed work to be done.

And we were going down that path, but then the pandemic hit, obviously.

And actually, we had planned in FY22 to issue that debt.

And with the pandemic and ridership,

You know, being where it is, all of a sudden, the appetite in the investment world, I think, you know, we steered to, we need to let ridership come back and push that to fiscal year 25.

No, I think so.

And so, the thought is bond against Amtrak because of the relatively more reliable revenue stream than

you know, even by 2025, any new routes that we would have, right?

Well, and the thinking is, it doesn't, it doesn't, it's not subjected to the debt capacity limits of the Commonwealth.

So, you know, we have this revenue source coming in from the Commonwealth that's

roughly 90 million and growing to 140, 150 million in the six year timeframe.

But if we bonded against that debt, that revenue source, it would actually count against the debt capacity of the Commonwealth.

And so that's, yeah, it's sort of, you know, because what, you know, and maybe what you say is, well, that's unusual, but

Sure.

The comparison I was making wasn't bonding against the revenues that count against the state cap, but I was comparing it to maybe it's bonding against new ridership, new routes, or VRE or something else, established service

ticket revenues from established service to me I think would be more bankable than ticket revenues from service we started up a year before and therefore cheaper debt.

And it actually is.

All the estimates we did were just the existing six routes.

But when we get to FY 25, it's possible one of the new routes will start and will obviously include all that have started.

And you mentioned VRE.

That's not in this

It's not necessarily in the detail of this, but VRE, we've also worked with their contribution from their commuter rail operating capital fund.

And the expectation there is that VRE will bond against that $15 million a year of revenue to bring funds in in the early years.

And that's actually one source where we didn't need to

think we had to push that debt issuance out due to the pandemic.

In fact, it's an FY, I think it's FY22.

We had hoped by this November, but it was probably going to spill over just due to timing.

So then on your other question, and gosh, I've forgotten.

On the capital grant side where we're making

grants, for example, the VRE to build a station that's at the planning stage.

And you mentioned, you know, it's a million dollar planning stage.

And then you mentioned the construction phase will be another $50 million for the project.

And you know, Ms. Dorsch, I'm probably not the best person to answer that.

I know, you know, I think your question is a good question.

so I don't know if Mike's on the phone or not, because there's, you know, and I guess I'm not trying to be vague, there's just been a lot of negotiation with VRE with respect to the share that they're putting into the big TRV project, and then they have all of these other, as you see, they have a lot of other projects going on, and they all need to work together, and I just don't know enough to say

And Steve.

Steve, I appreciate that.

Thank you, Ms. George, for those good questions.

Steve and I have talked about the

the three budgets, operating budget and the capital and the grant projects.

And the one thing is for certain that this process really needs additional vetting as we go into the future.

These are the best estimates that have been incorporated, especially on the project side of the budget.

They will be subject to series of approvals.

Your question

about the bonding capacity and how we generate the revenues to fulfill the obligation going forward in terms of payback are excellent questions and they will certainly be vetted as we go into the next phase of our work as the committee.

Yeah, I have a question which I hope is not a terribly complex question because I'm cognizant of the agenda, but I'm curious about the process.

We've talked about the funding mechanisms, both the capital projects as well as the capital grants.

Those are actual shovels in the ground projects that are going to progress through some period of time.

Will this committee receive

high level red light, green light, yellow light on each of the projects as we move forward because to the extent there are delays in projects then that obviously would impact the numbers going forward.

Steve, I can react to that and correct me if I'm wrong.

Certainly it falls within the purview of this committee to take ownership over the budget and not just on the operating but also capital budget and capital grant budgets.

And certainly I would urge Steve and our colleagues at the RPT to continue bringing any changes to the attention of this committee going forward.

and obviously as an item on the agenda is the reporting methodology for us that we will be discussing shortly.

One of the least things that we hope to see is a forecast on a timely basis of the changes to the proposed budget as we go into the next year or so.

So I don't know, Steve, if you have any

Yeah, I completely agree and I put an item near the end of the agenda, as you mentioned, Mr. Sadiq, for us to talk about quarterly financial reporting and I think

It's important work for us as we go forward to start establishing the type of reporting that we'd all like to see.

And as I said to Mr. Sadiq yesterday, to me, it's the reporting the board would like to see to help you make decisions.

And part of that decision process, Ms. Painter, in my mind is, you know, to a degree, we've put these projects in a budget document and handed them to you and said, you know, here you go.

I would like to at least say these projects existed.

There was a transfer of the old rail programs from DRPT to the Passenger Rail Authority.

If you read the summary, there was a very small amount of new allocations related to passenger display signs and some positive train control, about $8 million.

I know it's sort of like you just kind of had to accept this package of projects, but going forward, I think part of your question to me would be also, what's the process going forward for a new project to be added?

Or, as you said, if all of a sudden we have to move out, as I talked about, moving the capital expenditure plan of TRV, and now all of a sudden it's gone up $30 million because of time, value, money, and expenditures process taking longer,

What process does the board want to have in those changes?

All really good questions.

And Ms. Dorsch, I did take a second and you asked about Crystal City.

From looking at the VRE budget real quick, that project looks like it's fully funded to me, but there's the L'Enfant Station, that's another project in the VPRA budget that does have a large unfunded amount.

in the VRE budget, and whether they would come back to the Passenger Rail Authority or not, you know, is a great question.

That's very helpful, and let me understand, like, the out years where there's a number, you know, and it's, and the fact that there isn't other numbers in there just means there is an extended planning grant, but getting planning money, it sounds like doesn't necessarily mean they'd come back for

for capital money or construction money because it seems like it's project specific.

Great.

I think we've exhausted our 15 minutes by another 10 or 12 minutes, and we've got other items on the agenda.

If there are no other burning questions, comments to the budget, I think, Steve, I want to compliment you and your team for having done such a

really comprehensive write up about the elements in the budget operating in capital.

I really compliment you.

It took me a lot of time to read through and I'm sure that the committee members will have other questions.

I urge you to reach back to Steve after this meeting or at the board meeting, upcoming board meeting to get further clarification and provide more input.

At this stage, I think we stop and

Well, Mr. Sadiq, can I, one more item that I needed to point out on page two, Jeremy, I don't know if you can flip back to the budget.

I know you had that ability.

So on page two there, actually, sorry, page

There was one item that, you know, I've been doing more review, and I found in the table at the bottom here, it's a table to show y'all the revenues of the passenger rail authority, the direct revenues, not from the various Amtrak, VREs, other sources.

And I had noted in further review that

that top line of that table at the bottom is actually at 95% of the total of the revenues that will come to the passenger rail authority.

And that's when we've been doing the TRV initiative financial plan, we've been leaving 5% out to cover the operating costs, the administrative operating costs,

of the Rail Authority.

And that data was picked up from the TRV financial plan.

And really this write-up and this summary is written at a gross level.

So it doesn't impact anywhere else, any of the narrative.

It doesn't change any of the meaning of the narrative.

But that top line and then obviously the middle subtotal and the final, the two non-shaded lines

they will also change because they're summing.

And so I do want to point out that that one table will change.

And then on page 40 in the document, you don't need to go there, Jeremy.

It's just, it's missing the page number.

I think it's just covered up by the graphic.

And so we'll make sure that's fixed too.

So with that, I just wanted to point that out, but I agree.

Aye.

Anyone nay?

We would like to add this to the board.

Mr. Chairman, I appreciate the work that the staff has done as well.

And I realize putting this budget together is the first effort of the authority.

And I think we as members of this committee are new.

But I'll tell you from my perspective, it's a little light on detail.

There needs to be much more time to review the document.

There needs to be much more detail.

to allow us to have a better understanding of what's in this document.

Thank you for that comment.

And I think we will please do send any suggestions for additional detail that you would like to see in the future budgets to Steve.

That will be certainly welcome.

Thank you.

Steve, back to you.

So the next few items, really, I just wanted to take you all through some of the activities that are ongoing that a lot of them require procurements, but they're financial based.

And frankly, I do think they need y'all's input or should involve y'all's input.

So the first one is

We've been utilizing the state's ledger system.

They were generous enough to create a new fund for the passenger rail authority in the state's ledger system.

And they essentially are going to treat that as if it didn't actually occur.

But part of that agreement from the Department of Accounts was that we needed to migrate off of the cardinal system.

And we had hoped by December 31st to that

for that to happen, but obviously the board didn't get up and running until October.

So anyway, one of the key elements of that happening is establishing a banking relationship for the passenger rail authority.

And I think as I relate to y'all, the initial balance is about a $300 million balance of funds

from the old rail programs that will be moved over to the rail authority when that final division occurs.

So obviously it's a large sum of funds.

We're going to be working through a $3.8 billion TRB initiative, another $400 million of capital grants.

We're talking $4 to $5 billion in funding flowing through this entity over the next

six to ten years.

It's a significant amount of money.

So, needing to do, need to do an RFP to get a banking and investment relationship established.

And so, to date, we have been working with the Department of Treasury who handles that for the state.

And they have been working with us to draft the RFP.

We have a draft.

It's close that

I could send it to y'all for your review and that's what I would like to do.

And then working with Department of Accounts, the goal will be to try to get this relationship established by March 31st.

So I would like to get y'all's input to the RFP and then hopefully we can put it out on the street and that input involves, I think also y'all's involvement in

selection if any of the committee members want to participate in that selection process.

So, with that, you know, at the end of this meeting, there is going to be a closed session to want all of these to just basically to allow us as a committee and staff to talk about these procurements in more detail and selection criteria.

So,

and it will allow, it's called an intermittent closed session, so it will allow us over time between now and our next meeting to work on these within a closed session format.

So that's pretty much the update of where we stand there.

about that process.

Steve, I have two reactions, if I may.

One, you started off by talking about the ERP, right?

The system cardinal.

And that's a different topic, right?

Does that have to do with the accounting system that the authority would need?

And the second topic is the banking relationship, which obviously has to be posted activities on the

on a general ledger.

So I just wanted to make that clarification.

Yeah, that's correct.

And I guess essentially what

What the Department of Accounts really, the main thing that they've been allowing us to do is use, by using the cardinal system, is allowing us to utilize the state's treasury and banking function.

And that's, you know, we can, you know, I think today we're processing around 13 transactions a month.

We've had about $18 million of expenditures in the six months since July 1.

that's going to increase fairly significantly in the next few months.

But it's not, you know, we talked about this yesterday that from a ledger perspective, I think my team and I have looked at it and we think that volume of activity can be handled on QuickBooks like using a cloud service until an ERP system can be procured.

Part of the ERP, and I'll just jump into the next item.

I was going to jump into that.

You know, it really isn't just about finance.

It's about the whole company and making sure the needs of the operational teams and all the other groups, HR, procurement, that any enterprise resource planning system we purchase, we want to make sure there's interoperability and that we can get that system to solve as many

or automate as many things as possible for everyone.

It won't make everything perfect, I know that.

And it's really a longer term decision.

I think the executive management of the passenger rail authority really should be in place.

I don't think it's a decision that the executive team of the rail authority would be happy if they showed up and an ERP system was purchased in it.

It wasn't their favored system.

But that is another item that we have actually put out a request for information, which is not a procurement.

It's a procurement-related activity, but it's not actually initiating a procurement.

It's just asking the community out there that does, like the Oracles and Microsofts of the world, send us the information.

Here's what we're doing, or here's what the rail authority is doing.

tell us what you can do, what type of systems you have, and how those would help us accomplish the work we need to do.

So we've done that, we've received the information back, we haven't had time to do much with that information, but the plan going forward would be to draft an RFP to put out for bids, and I think for that, you know, before that, you know, the drafting we can begin, and once again, we're glad to

share with you as a committee the RFI information and love to get your involvement so we can draft an RFP.

Having overseen Norfolk Southern's ERP installation, it was described to me before we got into it as a heart lung transplant.

And that is probably not an understatement.

So I would just strongly, it is at best, very disruptive, regardless of how wonderful the end result is.

Yes, when we were preparing the

The RFI document that we put out, I contacted several of the authorities in the state and they all use something different, but they all are using an ERP system and actually it was very interesting to hear their differing opinions on.

One would say, I love the Microsoft product and then the next one would say, I had Microsoft and I love the Oracle product, but yes, it is a big endeavor and

I had thought that maybe by September 30th, the one advantage we do have, Ms. Painter and committee, is this isn't an entity that's been in existence for 20 years using other systems.

There is minimal activity.

There's activity and it's fairly large dollars, but it's not voluminous.

So it hopefully will not be as hard as

Thank you for the comment, Ms. Painter.

You're absolutely right.

The decision about putting in an ERP should really be guided by the Executive Director and her or his team

when they're on board because it's a major undertaking and I appreciate that comment.

That's absolutely, but you were suggesting that Quickbook would be a kind of an interim to get off the Cardinal system so that you're not harassed by the Department of Accounts to get off the books.

Yeah, that's what we looked at internally.

In addition to that, we have an internal financial system here at DRPT that

is the main purpose of that system.

It interfaces with the cardinal system, but the main purpose of having that system is to allow us to do project level budgeting, which the state system isn't at that level yet.

It's a new system that was implemented about three years ago and project budgeting is not implemented yet.

So we've always had this because

For us, we do a lot of grants and we do a lot of projects, you know, over 2000 of them.

And so for us, project level budgeting was critical.

And so my thought also is, you know, that is our internally produced system.

It's not purchased from anyone else.

So we own it.

And my thought is that we would, we've been using it for these

those $18 million expenditures and the 13 transactions I was talking about a month, we've been utilizing our system.

My thought is we would copy our system and we would also continue to utilize it for project level budgeting as we move forward in addition to QuickBooks.

So QuickBooks would almost be like a basic ledger and a way to process disbursements.

So it would be the official record, but then we'd also have what we call our internal, it's called ICAPs.

Are there any additional comments to the topics that were just covered by Steve or input or questions?

Okay, it sounds like your interim solution makes sense, and then as you continue to work on the RFP document, that's really a great head start for the new team coming on board at the authority.

That seems to be a good path to follow.

So Mr. Sadeed, before I move there, there was one more item to discuss on the procurements, you know, and I think I had a slide, Jeremy, on this, on the audit.

So the Passenger Rail Authority is required to have an annual audit by a certified public accounting firm, and the selection of that firm is going to be handled by the auditor of public accounts.

and I spoke to Stacy Hinshaw, who is the new auditor of public accounts, and she indicated that in this process, and it makes perfect sense to me from my experience, but in this process, they will handle the procurement, but their expectation is that

People from the Passenger Rail Authority will participate in the evaluation and selection because it's really an audit, and in all honesty, it's an audit for the board.

It's part of y'all's selection process is to pick an auditor.

So in this instance, in most corporations, the auditor is not selected by the management, the day-to-day management, it's the board.

I will be glad to participate in this and I'm certainly going to coordinate with the Order of Public Accounts.

They're going, they haven't yet, but Stacey indicated they would be sending me an email shortly because they need to start that procurement to have people in place to do planning work come May and June for a June 30th audit.

So once I get that information, I guess I do think

at least one if not two of the committee members will probably need to participate in the evaluation process for that RFP.

And one last thing before we move on, if I may, we also have, we have initiated a procurement to get payroll processing services for the Passenger Rail Authority.

We're utilizing DRPTs and the state's procurement policies to handle that.

And it's, I guess I will say to you, it's anticipated to be based on our work, it's less than $5,000 a year annually is the cost of that.

So it's a small procurement, but it's important because as we move forward and hire people, we do need to have a way to process payroll because once again, the Department of Accounts has indicated that an entity and an authority such as a rail authority is not going to be eligible to utilize their Paywall Service Bureau.

So with that, the next topic,

was the quarterly financial reporting discussion, and we touched on this earlier with your question, Ms. Painter, and I think I just put this on here really just to hear y'all's thoughts, and mainly it's to begin the process of all of us thinking about what type of reporting we'd like to see, and this will be

Mr. Sadiq and I were talking about this yesterday.

This will be an evolution.

We'll start out with a report and two years from now, it will probably look completely different.

But I do think it's important that we, this first meeting, to at least put this out there as an item that as a team, we all need to work towards developing a report.

And from my perspective, this is a report.

We do a quarterly report here at DRPT and it's for the board.

and that's what I try to include things that I think are important to the board as far as their decision making.

So that's what I think y'all should be thinking about in coming up with these ideas.

And I think this is going to be something we're just going to be working on as we have meetings.

So I didn't know if anybody wanted to discuss it.

If there are any immediate reactions or suggestions to Steve, please bring them forward.

But we have plenty of time really as a committee to give feedback to Steve and his team with respect to the financial reports that we received.

At a minimum, I think, Steve, we need to basically track the budget against actual and revise the forecast as necessary.

But other than that, there will be probably, I think that the work that you're doing right now at DRPT, the quarterly report would be of interest to this committee.

I would urge you maybe using that model and then revising it as you get reactions and feedback.

And I will send y'all that document.

It's on our website, but I will send you the latest version of it for y'all to look at.

And I will also, I started looking yesterday at some of those entities I talked to, those authorities that I mentioned I talked to a while ago.

I started looking, I didn't find, the first one I looked at, I didn't find anything on their website, but I will

So you're tracking perfectly on time.

Any comments, questions about those topics relevant to the financial reporting, banking, ERP, and also selection of the auditors?

Okay, hearing none, I think Steve, Bob, you mentioned that we might be going to the, are there any public comments at this point?

Sure.

So yeah, we'll stop here to open it for public comments.

If there's anybody that'd like to make a public comment, you just need to raise your hand or if you're on the phone, hit star three, and I would unmute the line and you'd have about three minutes to give your public comment.

So we can just wait just a minute, see.

Okay, so at this point, did we move to the closed session to give the committee members an opportunity to discuss matters in the closed session?

Yes.

Does the committee feel that we need to hold a closed session at this point?

If, may I ask for a, if we feel close session

necessary.

May I ask for a motion to go to the closed session?

Hearing none, I guess we forego to closed session.

Yeah, yes, Jeremy, that's, I'd like to, I mentioned this a little while ago, the thought of the closed session was, it is not just a closed session for 10 minutes right now, it is a closed session that will allow you as committee members, the staff, to work on these procurements that I discussed, you know, in particular, the evaluation criteria,

talk about the potential dollar values, things that typically are done without a public facing.

So that was the point of this was to sort of open up a closed session that would last until we have another committee meeting and it would allow us to

work on those items so y'all could talk about who might want to be on the audit firm selection panel and then what are the criteria you'd like to implement without having to open up a public meeting and have those discussions and go into a closed session for 15 minutes.

So the Office of the Attorney General had indicated to us that

that was the avenue that we could do so we could sort of have those discussions and avoid having to go through a public meeting and then immediately going through a closed session and coming back out.

So that was what I was hopeful for, that it would allow us to do this work in the coming weeks and up until we have our next meeting and then we could come out of that closed session.

And I don't know, Lisa, if you're on the call, maybe I didn't do a good job explaining it there.

Hey, Steve, this is Jennifer.

First of all, hello, everybody.

I apologize for joining late.

We are in the middle of some negotiations today, but have a short break right now.

And Lisa can give us some more guidance on this.

There's a very limited set of circumstances under FOIA.

that allows us to go into closed sessions.

However, we are permitted to go into closed session when being in a public session would adversely impact our financial position as it relates to negotiations.

We will have some more guidance for you in the future about the things we can and cannot discuss in a closed session.

With more general topics,

we do discuss those in open session because of FOIA law.

So, Lisa, I think is on the phone.

Okay.

Lisa, would you like to add to that or that's very clear, the framework for going into a closed session to us.

and we will probably learn more about it as we go into the future.

Great.

Any other comments, questions?

I think just to summarize the meeting today is that we appreciate your participation and questions and feedback.

We will bring forward the proposed budget to the full board end of this month in preparation for

presenting that to the Commonwealth Transportation Board for final approval.

And we get a year started July 1 of 2021 for the FY22 with an approved budget.

And also if you have any feedback on topics discussed, and I think Mr. Spar, you mentioned

wisely that we need more detail behind certain elements of the budget and that will be a great, great feedback to Steve in terms of what else we should add to the document going forward and any other comments or input you have.

We'll look forward, Steve, to see the RFP for the selection of the auditors and I think

point is well taken that the committee should participate in the final decision, although it's really ultimately APA's decision to select the auditors, but they will probably benefit from the feedback from this committee in terms of who the public accountants would be to audit the books of the authority.

With that, I'll stop here and ask for final comments, feedback, and questions.

Again, thank you for participating.

This is Lisa.

I have had so many problems with my audio and with, I don't know if I'm on video or not, but the AG has a virtual location and then a non-virtual location.

And if you enter in the virtual location, you don't have any audio.

And so I was trying to get out of that and then go back into

the non-virtual location so that I can't get my AG documents, but I can at least talk.

So, I'm not certain if you guys still have any questions with respect to closed session, but if you want to discuss procurements and things that would put you at a disadvantage when you're negotiating contracts on behalf of the Finance Committee, it is appropriate that you go into a closed session so that you can talk about that.

and things that that would include are the finances for it and in addition potential vendors so that you don't want to give anybody a heads up, that sort of thing.

And so the code sections 2.2-3711 and there's a whole list of reasons.

So if I'm being redundant, my apologies, but and apologies for not being present.

I just had to figure out

which app I needed to be in in the Commonwealth system.

Thank you.

We got the gist of your advice.

We really appreciate it and look forward to seeing you in the future meetings on the screen and I hope your troubles for connecting will go away by then.

Thank you.

Thank you committee members.

It's a pleasure and an honor to work with you and we appreciate Steve, your hard work and your team.

And with that, we officially adjourned the meeting.

Thank you.