Supervisors press MTA over $62 million in work orders as youth groups push free Muni for youth

The Board of Supervisors'' government audit and oversight committee on Dec. 8 heard a follow-up review from the City Services Auditor (CSA) into the Municipal Transportation Agency''s use of interdepartmental work orders and received extensive public comment urging a Free Muni for Youth program.

Tanya Lehi, Director of Audits for the CSA, summarized the April 30, 2010 report and the limited FY 2010-11 follow-up. The review found MOUs (memoranda of understanding) were in many cases unsigned or dated after their effective dates, that some billings lacked required invoices or labor/nonlabor detail, and that MTA sometimes paid charges with rate inconsistencies before resolving issues. The audit identified about $4,100,000 in recommended baseline adjustments for prior-year expenditures and suggested checklists and improved review procedures to strengthen internal controls.

Committee members focused on a separate but related question: whether the MTA should be funding particular services at all. Chair Supervisor David Campos and President David Chiu pressed the CSA on whether the follow-up assessed the policy "nexus" between the expenditures and MTA's transportation duties. Lehi said the audit was a compliance review (MOUs and internal controls) and that a broader value-for-money review could be scoped with the MTA and added to the controller''s work plan.

MTA budget staff told the committee the agency's fiscal 2012 budget totals about $780 million, with roughly $62 million categorized as work order spending. Sonali Bose, MTA deputy/finance lead, outlined five categories of work orders: facilities and power; city function allocations (shared services such as 3-1-1 and audit support); mandatory department services required by charter (for example, legal services); discretionary department services that could be done in-house; and a policy-nexus category. Bose said the largest increases since 2007 were rent at 1 South Van Ness and information technology infrastructure costs.

On performance standards, CSA and the city attorney''s office said the charter requires performance measures when an agency contracts with another City department, but the audit did not comprehensively test charter compliance. Bose told the board that "the majority of [MOUs] do not" include performance standards and that MTA experiences difficulty obtaining some requested information from performing departments.

Public comment centered on equity and budget priorities. Representatives of the youth commission, the community organizing group Power and students from Balboa High School told the committee that better accounting for work orders and overtime could free money for a Free Muni for Youth pilot. Rochelle Chan, a 17-year-old youth commissioner, said a youth program could cost about $8 million, "less than 1% of Muni's overall budget," and urged a pilot. Community organizers asked the board to prioritize audits and reallocated MTA spending so that fare increases and service cuts do not fall disproportionately on low-income riders and youth.

The committee asked the controller and MTA to follow up. Supervisors instructed the controller to scope a deeper review focused on the top 10 departments receiving work orders and to report a timeline for that analysis. The committee continued further action on the item to the call of the chair to permit that follow-up.

What happens next: the Controller's Office and MTA will meet with the committee to define a scope and timeline for a further review of whether specific work-order expenditures are appropriately charged to transportation funds; the committee has requested the top-10-department analysis and sample MOUs with performance standards for verification.