Finance and Audit Committee Meeting   1/14/2026

Okay, thank you.

Good morning, everyone.

I call to order this January 14th, 2026 meeting of the VPRA's Finance Committee.

Good morning and thank you, Ms. Dorsch.

We have done our safety briefing here in the Richmond office and I know our folks in the Alexandria office have done theirs as well.

Everyone else is here virtually, I just remind you to be aware of your exit route, also be cognizant of your address.

So if you need to call 911, their first question is going to be, where are you located?

And quite frequently, people don't know where they are if they're not in their normal office.

So be aware of that.

Also on the screen, you see some other tips about safety, security, health, and well-being.

Just continue to reminder that your safety is your number one priority.

Back to you, Ms. Dorsch.

Thank you.

And now I'd like to recognize our board assistant, Mary Estelle, and ask if you could please take roll call attendance.

Yes.

Aye.

Mr. Gilandro?

Mr.

Flowers?

Ms. Spears?

Present.

Ms. Robinson?

Thank you very much.

Now I request a motion to approve minutes from our last meeting, which was back on April 29th, 2025.

And a second?

Second.

Thank you.

Okay, great.

So this is a voice vote, so all in favor say aye and all opposed say no.

Aye.

Aye.

Aye.

Okay.

In the opinion of the Chair, the ayes have it and the minutes are approved.

Thank you.

Okay.

And now, next on the agenda is we will receive a briefing on VPRA's fiscal year 2027.

Oh, wait.

Alright, thank you very much.

If I need the pages turned, do I just want to say advance please or something like that?

I don't know who's in control here.

Yes ma'am.

Okay, thank you very much.

Well, good morning and thank you for the opportunity to be here today.

For the record, I'm Eileen Stanek with Meter Public Funds.

Today's goal is just to provide a brief update on our firm, the current economic and interest rate environment,

review the Authority's portfolio and just discuss how the strategy continues to align with your policy, liquidity needs, and risk profile.

As always, our primary objectives remain capital preservation, liquidity, and competitive yield with full policy compliance.

Next slide, please.

Meter Public Funds has been advising public entities for more than 30 years with an exclusive focus on public sector investing.

Today we serve over 400 public entities nationwide and advise on approximately a hundred and well over 165 billion dollars in public funds.

We are proud to say that we are one of the largest providers of this service throughout the country.

Next slide.

Our role is to ensure the Authority's portfolio remains fully aligned with state law and your investment policy while adapting to a changing rate environment.

In 2024, we worked with the staff to update the investment policy to do just that.

We support ongoing cash flow analysis, portfolio strategy, and best price execution.

We do have bimonthly meetings with the finance staff to discuss cash flow and investment opportunities and market conditions.

This collaboration really serves to ensure that the investment portfolio is tailored to meet the authority's needs.

In addition, we provide continuous compliance monitoring and clear, transparent reporting so that staff has full visibility at all times.

Next slide.

So turning now to the broader economic and interest rate environment.

The Federal Reserve has lowered the Fed funds rate by one and three quarters percent during this cycle.

Inflation remains above the Fed's long term target.

Economic growth is projected to slow and the labor market is cooling but still healthy.

For public funds investors like the authority, this remains a higher for longer environment with attractive short and intermediate term yields from a historical basis.

Next page, please.

Looking ahead, what we are showing here is the market's expectation for the overnight rate.

That's the turquoise bars compared to what the Fed has provided in their latest guidance, which is the blue box out there in December.

And basically, as we can see here, both the market and the Fed are expecting lower rates over the course of the next year.

And we can point out that the markets, though, expectations are for rates to move lower faster than what the Fed has provided guidance on.

Next slide.

Our next piece here is showing US Treasury rates across the entire maturity spectrum, looking at where interest rates were at the end of 2024 versus where rates ended at the 2025.

So top line, of course, is 2024.

and the bottom line is 2025.

So we can see that clearly we have had some steepening in the yield curve, meaning that longer term rates relative to shorter term rates are higher.

But in this environment, we believe that the yield curve continues to offer strong income opportunities, despite the drop, and one could say rather significant drop of rates over the past year.

Next slide there, please.

and one more.

So moving on to the Authority's investment portfolio.

This is the data as of November 30th of last year.

And this is what we characterize as our snapshot of the portfolio.

So as we can see in the upper left-hand corner, the portfolio totaled at the end of November around $632 million.

Looking at the asset allocation, we can see that 56% of that portfolio was held in the local government investment pool, i.e.

the LGIP.

This LGIP is managed by the Virginia Treasury.

The balance of the funds, the 270, almost 272 million, which represents 44% of the portfolio,

was allocated to securities held directly, and it is that portion of the portfolio which we manage.

So this allocation whereby we have a high percentage of the portfolio in the LGIP versus the individual securities has been a result of the need for a higher level of liquidity due to cash flow uncertainty.

The securities portfolio, focusing on those characteristics, had a weighted average maturity of around one and a half years and a weighted average yield of 4.42%.

This compares favorably to the current yield on the local government investment pool, which stands at 3.81%.

So as we can see, that local government investment pool, that rate has dropped and it follows the path of what the Federal Reserve does with the short term rate.

However, looking at our maturity distribution in the bottom portion of this page,

We can see that the yield on the securities within each fiscal year fully exceed the yield on that LGIP.

And this is a result of the proactive steps that were taken in fiscal year 24 and 25 to lock in rates for longer.

and again being very cognizant of the need to maintain liquidity in view of the uncertainty on the cash flow front.

Overall, the portfolio remains high quality, it's diversified, fully policy compliant, and aligned with the Authority's liquidity and operating needs.

So if we could turn to the next page please.

This slide illustrates the actual and projected interest income based solely on the current holdings.

It does not assume any reinvestment.

So even under these conservative assumptions, we can see that projected interest income will remain strong and predictable.

over the coming fiscal years.

And again, as we are reinvesting funds, these numbers will continue to grow as well as if at some point there's a stronger

I would say comfort level with the cash flow of the authority and additional funds are directed out of the LJIP into the securities portion, then yes, these numbers will grow as well and can also serve to provide predictable income for the authority.

So just to wrap it up here, the portfolio does remain conservatively structured, again, policy compliant, and well positioned, we believe, for the current interest rate environment.

We will continue to monitor markets, cash flows, and economic conditions, make adjustments as appropriate, and

We very much enjoy our collaborative actions with the finance staff.

So with that, I know I'm a little ahead schedule here, but to me, that's a good thing.

Thank you very much, Ms. Stanek, and yes, if there are any questions on VPRA's investment portfolio or any other aspect of Ms. Stanek's presentation, we certainly welcome those now.

Okay, hearing none, thank you again, Ms. Stanek, very much appreciate that.

Thanks Patty.

Good morning everyone.

So just to kind of wrap up our FY 25 financial statement audit, if you guys recall from the board meeting we had in October, where Mr. Dwight Buracker came and presented our financial statement audit, we discussed that we also had this additional piece that we had started and were subject to.

So that's the single audit and we were not able to issue a report at that time because OMB had not issued the official guidance for 2025 at that point.

So they had completed all their testing, we just were not able to issue the opinion and the report.

So OMB did issue the guidance finally in mid-December and PB Marist was able to wrap up the testing and issue the report which was sent to you guys as part of the packet.

So that was directly issued from them.

So just to kind of go over a couple of things, next slide for me, please, Mary Estelle.

In case you don't know what a single audit is, a single audit is essentially federally required.

Anytime you have federal expenditures over $750,000 for FY 25, that threshold is being lifted to $1 million for FY 26.

We will absolutely exceed that for FY 26 and be subject to this again this year.

Hopefully OMB will issue guidance a little bit sooner and we can issue the reports together this year.

That would be the goal.

So everything is governed by uniform guidance to CFR 200.

So that is what the auditors are testing us against.

They're making sure that we are in compliance with that guidance.

So it essentially combines a financial statement audit with a review of the compliance of the federal programs and making sure we're in line.

We just want to make sure that we're providing reasonable assurance that the federal funds are being used the way that they're supposed to be being used, right?

And it just highlights any, like, control gaps or compliance issues or anything like that that we might need to make sure we're taken care of.

Any questions about that, about what exactly a single audit is?

Perfect.

Next slide, please, Maristelle.

So the Finance Committee plays a really key role in reviewing this report and making sure that they understand what's going on and that we are doing what we're supposed to do.

So you guys should be reviewing the scope and the key audit results, which is all included as part of the report that PB mayors issued.

You should understand if there are any findings or risks, and you should oversee any corrective action plan if we have to, and make sure that we are filing submission to the Federal Audit Clearinghouse appropriately.

So the Federal Audit Clearinghouse is just essentially a repository for anybody who is subject to a single audit.

And we have to file this report along with our financial statements in that repository for public view.

Next slide, please, Mary Sue.

So the good news is, is that we passed with flying colors.

Yay.

So this was our first audit report that was issued.

And because it was our first one, we were not considered what they call a low risk auditee, right?

Because it was our first one, they needed to make sure that we were doing what we were supposed to do.

So all five of the programs that we received federal dollars for, we had to be tested on.

So they tested $43.5 million worth of federal programs, and they issued an unmodified opinion, which is a good thing.

That means that we passed, and there was no findings.

So we did submit the certification to the Federal Audit Clearinghouse.

Laura and I got to play with that.

That was fun for all of us newbies not knowing what's going on.

So we got all of that done and everything's been completed and there were no findings, there was no risks, there was nothing that the auditors were concerned about and we expect that to continue for FY26.

Now, because they did test all five programs this time, we do not expect them to have to test all five programs or six programs, I guess, at this point this time.

So in FY26, they will probably pick two, three, maybe four programs to test.

The FSP grant is always going to be tested.

So that's $729 million that we get from the FRA.

We will always, that will always be our biggest spend and they will always take a look at that one and make sure we're in compliance.

But some of the other ones may or may not be tested just depending on what threshold the auditors choose at that point.

But that's about it.

Any questions you guys?

Oh, my apologies, Maricel.

Okay, so now we're pivoting to agenda item number seven, which we will see the briefing on VPRA's fiscal year 2027 capital budget.

After this presentation, there's action we're going to take.

Committee members will be asked to vote to recommend the budget for consideration by the full VPRA board and the meeting on the 22nd.

Thank you.

Good morning, Madam Chair and members of the committee.

My name is Laura Farmer.

I'm the new Chief Financial Officer at VPRA.

I've been here about a month.

So I think I can cover the material and I'm hopeful that my team here will help me if I need any help as we move forward through the content.

So thank you for having us this morning.

Thank you very much.

Next slide, please.

So as you may be familiar, we have certain requirements related to our submissions to both the Commonwealth Transportation Board and to the authority itself.

And so we're required by the Code of Virginia to submit a detailed annual operating plan and budget to the CTV about February 1st.

And then they have, and that has to have the proposed capital expenditures and plan for those projects.

and then the CTV has until May 30th to approve that capital expenditure each year.

And then separately, obviously that is a component of the overall VPRA budget where we consider not just capital projects and the capital and operating grants, but also the operations component of our budget.

And so that's the reason that we kick off this process so early leading up to fiscal year 2027.

Next slide, please.

So the fiscal year 27 financial plan, as it's been presented over the years since VPRA's inception, is from the beginning through 31, which is the major lift for the capital projects we have currently underway or in development.

So when we compare our October assumptions from the last time the board met and considered adjustments to the management reserve compared to where we are today, we do have some changes in sources and uses that also impact the management reserve.

And so we'll walk through those changes in the subsequent slides.

but the end result is an increase overall in our management reserve, which brings us a little bit healthier in terms of looking forward to unpredictable costs in the future.

Next slide, please.

So this slide primarily focuses on the change in sources.

The first two listed are implementing funds that we received from others, either earmarks or third-party projects.

The third line item of the VPRA fund, or our share of the rail fund, is driven by changes in state revenue sources.

So from my previous job, I can tell you that that is about increased fuel taxes, expectations over the coming years, as well as motor vehicle sales and use taxes, offset by decreased assumptions related to retail performance over the six-year planning horizon.

So the net change over the next five years for VPRA is $25 million in expectations.

The next two lines again are also reimbursements from others for utility improvements or changes in utility locations.

And then

the crux of the major change is related to Amtrak ticket revenue over the period.

And we'll talk a little bit about that and the service changes that began this week and how we've implemented that and these assumptions going forward.

You see there'll be a significant change in uses as well that exceeds the revenue impact based on our current assumptions.

And so the total decrease in sources over the period is $71 million with a change in use

of $147 million, which we'll go into in detail.

So the net impacts over the two sets of assumptions is an increase in the management reserve of $76 million.

Next slide, please.

So in terms of uses, this table just provides a broad summary of those total changes by budget component.

and we'll walk through the detailed changes in each area, the budget components and the subsequent slide that just gives you an overview of the total changes and the total changes in uses total $147 million.

Next slide.

So in terms of the I-95 corridor, there's been a budgetary adjustment just related to culvert work, and we were able to transfer money from the Franconia to Lorton third track projects to the Franconia Springfield Bypass Project to accommodate for the culvert work estimate change.

And then the remaining changes along the I-95 corridor are refined design estimates that were implemented as a result of

progressive work in the design.

For the restaurant rail corridor, we have a refined Cambria parking lot cost estimate and the implementation of digital technologies that will be delivered as part of that project.

In terms of other capital improvements, again, we have with just progress in time, refined estimates related to those projects.

and adjustments related to what was needed for the platform and station improvements at Staples Mill.

In terms of other capital and operating grants, this is really more about funds that are coming to us from others, as well as changes in the track access fee when we update that estimate working with the information from VRE.

and then changes related to an earmark or grants provided by others.

So the total capital budget change across all of these components is $25 million year over year.

Next slide, please.

So the most significant change on the usage side corresponds with the passenger revenue adjustment in terms of Amtrak operations.

So with updates to the new plan, as well as the service adjustments that started this week going through fiscal year 31, we don't assume that any new trains will start until the latter part of fiscal year 31.

And that would be a phased approach as projects are complete to bring trains online.

And the only additional service that's being implemented is the extension to the New River Valley.

In addition, we have access fee changes related to the service plan for VRE.

No changes related to our own asset maintenance at this time.

We also re-forecasted our administrative expenses related to those service window changes offset by the third-party projects line item that we've included in operations this year.

And then in other operations, we have

A slight increase related to the implementation of the bus service and the initialization expense related to New River Valley.

We've begun to prepare for the CSX lease cost for the Richmond layover facility as a project that is in design today.

And that's offset by an overall decrease in the Bedford Amtrak Railway.

So the total changes related to uses over this period is a decrease of $172 million.

Bancing to the next slide.

So with these recommendations, we'd like for the committee to advance the recommendation of the capital budget to the board for the January 22nd meeting next week so that it can follow on and be presented to the CTB to follow through for their review and approval by May to facilitate the board's adoption of its budget in May of this year.

On the right side, you see the trajectory of the management reserve as we come back to you quarterly for adjustments to that.

The increase is helpful in terms of the overall goal.

However, the calculated goal amount of 5% of all of our future operational capital costs $251 million.

And so this is an area we will carefully watch going forward in terms of managing cash as well as the future expectations of the authority and its projects and commitments.

Could I ask one question here?

I was going to recommend approval.

Go ahead.

Okay.

Sorry.

Could I understand how we knew we'd have a suspension of service for

Long Bridge work, right?

And so now we have these adjustments.

Did we decide we would just make the adjustments in the year in which they would happen?

You know, we didn't anticipate some of these in last year's budget.

Yes ma'am, my understanding is that understanding the unknowns about what we wanted to do in working with the providers and the changes that were needed for the schedule, that those determinations cannot be made until this point as we moved into those service changes and then understanding how that was going to work.

I was going to interrupt and answer that, but you nailed it.

So nothing else to add.

Well, nothing else to add, but I will add that yes, Monday was the first day of the service changes.

and thanks to the hard work of really the entire team in VPRA, Amtrak, CSX, it's been seamless.

We've had folks on the platform directing people where to go.

Knock on wood, we've gotten a lot of positive feedback and obviously we're halfway through day three, so there's a long path ahead of us, but so far so good.

Okay, it's helpful.

I appreciate just confirming that the, you know, the significant changes and uses and sources were anticipated to be made at this time and so no one is surprised or caught off guard.

We decided we would make these and when we are closer to understanding what the actual impacts would be from the service changes.

That's correct and looking ahead as we get closer

31.

Long Bridge is scheduled to be finished at the end of FY30, beginning of FY31.

FY31 starts in July of calendar year 30.

Long Bridge will be finished sometime around there.

So as we get closer to FY30, FY31, we'll have a better sense for when the trains will be coming back.

Obviously, we want to bring them back as soon as possible, not only the existing, the service that was existing last week, but also bringing the number from 8 up to 30.

to include extra building.

Thank you very much.

Any other questions so far on this presentation?

Okay, so we'll do this by voice vote.

All in favor say aye.

Aye.

All opposed say nay.

Yes.

Okay.

So, Mike McLaughlin, Chief Operating Officer.

I'm going to hand it over to Jeff here in a couple of minutes, but I do want to flag, I do want to bring your attention to a couple of things.

We want to give you updates that are going to come in the May budget and hence the next few pages.

And some things to look out for will be not just the Franklin Alert and Third Track, which we're going to get into here in a minute, but there are some sidings projects that have kicked off 30% design.

And when those 30% designs come in, shortly after that, we'll get a new cost estimate for those 30% designs.

So those are projects from

Prince William County, all the way down to Hanover County.

There's four projects there that we kicked off 30% design with CSX in the past few months.

So, much like last year when we kept you updated on changes with regard to cost for Long Bridge and Franconia Bypass, this year we'll be continuing updating you and keeping you up to date on Franconia-Lorton project, which actually is a couple of projects all in one, and also some sidings projects as well south of that Franconia area, again, from Prince William County down to

Stafford, and Spotsylvania and down to Hanover County.

So with that, next slide please.

A key project for Hanover, Jeff, that we're looking at and going to procurement on this year, similar to what we looked at last year for Algen, your four track, would be the Franklin and Lorton third track.

A six mile project that Jeff and his team are leading.

So this is a very important project.

as we'll be continuing the third track.

Right now, there's three tracks all the way down to the Franconia-Springfield station and third track stops.

So continuing that third track all the way from DC, we'll have four tracks when Long Bridge and Alexandria four track are done.

And then the third track all the way down to this area in the busy VRE territory is a very important project.

Sure.

Thanks, Mike.

And thank you, Madam Chair and committee members.

Yeah, I think Mike, you teed that up really well.

Third track is exactly what it sounds like.

It's third mainline track from Franconia to South Oregon.

You know, this project still has a little bit of ways to go in terms of schedule, but you see it here.

We don't, you know, we are tracking the schedule.

We're also tracking the current budget right now.

Design is at 100%.

We've

are well underway on right-of-way acquisitions.

We are planning to have the first offer packages going out at the beginning of February.

We're expecting to complete those acquisitions in the middle of the summer.

CSX is expecting to release their invitation for bid early this summer, and they expect to have their contractor on board by the fall.

Like I said, we're tracking on budget, but there are a few things that we're monitoring from a cost perspective.

First, just given the way we do budgets and have RSOP at VPRA, our current budget for the project is based on 30% design.

It's three years old.

There's been a lot going on in the construction industry in those three years.

There's tariffs on materials.

There's labor availability issues that we're dealing with.

But on the positive side, there has been a lot of interest in our projects from industry, which is

creating a very competitive bid environment.

We saw that with the bids that came in last fall for Alexander at 4th track, and we're looking forward for the same thing on 3rd track as well.

We also have significantly more right-of-way to acquire than we originally expected.

I know we've briefed the Board on this multiple times in the past, but I will reiterate that the railroad corridor boundary survey that we performed and confirmed with CSX last year shifted the railroad boundaries quite a bit, especially in Fairfax County and especially in this corridor.

So that doubled the number of parcels that we needed to acquire from our original estimate.

That doesn't necessarily mean that we're doubling the cost of acquisition, but it's certainly something that could put us over our current right-of-way budget and that we might have to allocate some contingency to take care of.

And then finally, the thing I'll also hit on is that the third track footprint is very busy.

In addition to this project, we also have Franconia Springfield Bypass, we have VREs, Franconia Springfield Station improvements,

They all fall within the six mile corridor and they're all being constructed at the same time.

We're working with CSX and VRA right now on the overall construction pacing plan and how we're going to coordinate all those projects, working together very well.

I'm not expecting to see any major cost or schedule swings because of that coordination, but it's still something that we're monitoring from a risk management perspective.

I can go to the next slide.

Sorry, just to interrupt on the backside, you're doing an excellent job managing our expectations here and I love it.

So again, our SOT is that we set our budget at 30% and then when we have a bid in from a contractor, we come back and we finalize and re-baseline that budget.

So once that contractor comes on, you know, we have a bid from CSX and they have preferred, it's going to be sometime in September, October timeframe, we would come back to the board with what that final budget looks like.

And that's, I believe what we did.

for 4th track last year, for King Commonwealth, we also did that for Long Bridge and bypass as well.

And of course we hope that it comes in within budget, but just we don't want to

surprise you.

Next slide.

I think Mike mentioned that it's technically two projects that we have coming up for procurement.

In all practical purposes, it's one.

Road and Bridges over Newington Road is part of the Franconia, Lorton, Third Track

These bridges have been designed, they're going to be constructed by CSX as part of Third Track.

However, we've, at VPRA, been tracking these bridges as a separate project purely for financial purposes.

We have separate and dedicated funding for it from VDOT and through an FRA, State of the Repair grant, so we've always kept it sort of separate financially.

But again, for practical purposes, it will be delivered as part of Third Track with DSX.

As you see in the graphics here, the project's going to replace the existing one-lane underpass bridge with a longer span bridge that's going to provide multi-lane underpass as well as bike and pedestrian facilities.

Those roadway and pedestrian facilities are going to be designed, constructed, and mostly funded by VDOT and Fairfax County.

So because Newington bridges are effectively part of Third Track, everything I said to you on the previous slide

applies here as well.

The project is also tracking on budget right now.

We're looking forward to bidding it out with CSX in the fall.

We'll mention one unique item for Newington is that we're currently working on a three-party agreement with VDOT and Fairfax County that would allow for a full closure of Newington Road during construction.

It would be much faster to construct and much, much safer to construct the bridges.

without having to do it under the current traffic configuration.

So we're hoping for a positive outcome with VDOT and accounting on that.

But that could potentially have some budget considerations or some cost considerations, depending on what the outcome of that agreement is.

Well done.

And you might see this as two different projects in the budget because we do have that funding source from VDOT

Okay, thank you.

Anything else from the VPRA staff on this?

Okay, there's nothing else on the agenda.

Anything else from board members?

No further business.

Thank you all.

See you next week.