The Washington Metropolitan Area Transit Authority marked two financial milestones last week, announcing significant progress in its “Back2Good” reform and recovery campaign while proposing a budget for the 2019 fiscal year that will not raise fares or cut service.
Metro received access to previously restricted Federal Transit Administration grant money and finished a clean audit of its internal financial operations, a significant mark in its ongoing internal financial reform, according to WMATA General Manager and CEO Paul Wiedefeld.
“Getting Metro’s financial house in order is a significant accomplishment and involved a lot of hard work and effort over the past three years led by our Chief Financial Officer Dennis Anosike,” Wiedefeld said in a statement Oct. 25. “The finance team has implemented new processes to ensure Metro maintains strong financial controls necessary moving forward.”
The Federal Transit Administration restored WMATA’s access to $400 million in federal grants without limitations due to Metro’s improved financial status, meaning the transit agency can now receive quicker electronic reimbursements from federal grant funds for its expenditures.
Metro was previously required by the federal government to request reimbursements via paper forms in an effort to control costs starting in 2014, but the forms took months to process.
Wiedefeld also announced Oct. 26 a combined operating and capital budget proposal of $3.1 billion for the 2019 fiscal year.
The proposal requires an increase of $165 million over last year’s level of jurisdictional funding support, according to an Oct. 26 news release.
While the plan will protect customers from fare hikes and service cuts, Wiedefeld’s proposal calls for Metro to maintain strict management cost controls and increase funding for safety measures and reliability capital improvements, including delivery of its 7000-series train car and increasing fare enforcement around stations.
“This proposal builds on our success in investing capital to deliver projects that improve safety and reliability, which is critical to winning back riders,” Wiedefeld said in the news release. “This budget also doubles down on management cost controls to ensure we have squeezed the value out of every dollar that we spend delivering service to the region.”
Additionally, RSM US LLP, an external accounting firm, is expected to issue a “clean” audit of Metro, certifying Metro has not incorrectly reported information from financial statements.
Anosike said he was happy with the results of the audit but that there was still work to be done.
“We value the recommendations of the audit and continue to work to further improve our accounting and financial systems,” Anosike said in the news release. “This includes key controls on overtime, which have already been implemented.”
Metro faced criticism this year from rider advocacy groups, D.C. officials and former board members after its board of directors voted in March to raise Metrorail fares, cut service hours and eliminate bus routes to cut costs.
Metrorail fares increased by 10 cents, making the one-way minimum fare $2.25 and the new maximum $6. Non-rush hour fares rose 25 cents to $2. Metro also cut hours of operation every day of the week starting with train stations open from 5 a.m. to 11:30 p.m. Monday through Thursday, open from 5 a.m. to 1 a.m. on Friday and Saturday and open from 8 a.m. to 11 p.m. on Sunday.
Moreover, the agency faces declining ridership, with a fall to 624,000 trips in October 2016 from 750,000 daily trips in 2009. The board approved Wiedefeld’s recommendations earlier this year to avoid a $1.1 billion budget deficit by 2020.
Metro has faced restrictions on receiving federal grants since 2014, when consultants found that Metro had poorly organized its financial information and improperly conducted its bidding process for private contracts, potentially costing the organization millions of dollars.
Afterward, Metro had to comply with a “restricted drawdown” on federal grants, a process that prevented it from spending federal grant money in the short term. Metro borrowed money from private lenders to cover those costs while waiting for federal government reimbursement.
In December 2016, the FTA lifted the “restricted drawdown” practice for Metro on grants awarded after June 2015, but grants awarded before still faced access restrictions. At the time, Del. Eleanor Holmes Norton (D-D.C.) told The Washington Post that she was happy to see the restrictions lifted.
“FTA’s diligent financial monitoring of [the Washington Metropolitan Area Transit Authority] was essential to get the agency into acceptable financial standing with sound budget and financial controls,” Norton said. “This exercise has been a costly lesson for WMATA.”
WMATA historically has lacked a stable or dedicated funding source, relying on the D.C. government and seven other local and state jurisdictions for funding. Each year, WMATA must ask each of these governments to finance its operations based on population density, average weekday ridership and the number of stations open in each jurisdiction.