New York’s Metropolitan Transportation Authority held more than $90 million in funds and bank accounts that it could have used to meet budgeted costs, state Comptroller Thomas DiNapoli said Wednesday.
According to DiNapoli, auditors found the MTA managed its cash on hand poorly, had excess bank accounts and no set targets for short-term investing of billions of dollars. “The MTA is leaving money on the table,” DiNapoli said. “The MTA must do better.”
The audit examined how the MTA managed its cash and investment portfolio from Jan. 1, 2008, through March 31, 2011. As of March 31, 2010, the MTA maintained $1.8 billion in 126 investment funds, according to DiNapoli. He said a sample of 10 of those funds totaling $881 million found $64 million in excess monies that lacked any designation of use, either to meet fund requirements or to be used for some type of budgeted cost. “These monies could have been factored into the MTA’s budgeting process,” DiNapoli said.
Auditors also found that the MTA lacked a written investment plan, which includes yield expectations for the billions of dollars it invests. Investments ranged from $4.7 billion in April 2008 to $2.4 billion in April 2009, the audit said. MTA officials indicated that their current market objective is simply to attain the best return without losing any principal, though this policy is not formalized.
The audit also questioned the necessity of its many accounts, “particularly since many of the accounts appeared to have minimal activity.” It cited MTA Transit requiring 53 accounts including 19 with fewer than 40 collective transactions over a one-month period and seven with no transactions at all.
“The MTA rigorously monitors its funds, balances and investments,” the authority said in a response. “We invest to achieve maximum returns while protecting the safety of our principal, and we maintain adequate balances at all times.
“The Office of the State Comptroller has questioned whether the MTA has excess funds in several accounts, particularly a Triborough Bridge and Tunnel Authority reserve fund. Monies in this account are essential to maintaining our credit rating, and are available in the event of emergencies such as Superstorm Sandy.
“The MTA is in the process of consolidating our treasury functions MTA-wide to achieve greater efficiencies and cost savings, a process that was under way before the Office of the State Comptroller prepared its findings. As a result, we expect numerous accounts will be closed or consolidated.”
The MTA has $31.2 billion of debt outstanding. Moody’s Investors Service rates the MTA’s transportation revenue bonds A2, while Fitch Ratings and Standard & Poor’s assign A ratings. Standard & Poor’s last fall praised the MTA for a “strong track record of maintaining fiscally prudent operations while investing in the system.”
It said recently it must borrow $5 billion short term to cover costs of damage to Hurricane Sandy while it awaits reimbursement from the federal government and insurance companies.
MTA officials are weighing how to rebuild the South Ferry station at the lower tip of Manhattan, which is below the water table. The work could take up to three years and cost $600 million.
“That’s too long to wait. So one option we’re taking a look at is, could we recommission the old South Ferry station?” MTA New York City transit president Thomas Prendergast told the City Council’s Committee on Transportation Tuesday. “The other option is, could we open up the new South Ferry station in stages such that it could be restored to service before all the work is done.”
The authority reopened South Ferry in 2009. The former station’s curvature required riders to exit trains only in the first five cars.
Officials also said hardening, or protecting the system could cost a further $4.1 billion, but also pose new challenges, such as where to redirect water.
“We need to be conscious in the decision making that we take, with respect to where does that water go, because if it goes to another portion of the system that is harder to pump out, we actually may be defeating our own purpose,” said Prendergast.
