Triennial FY18 Review

July 16, 2018

I recently received the Federal Transit Administration’s final report of its fiscal 2018 Triennial Review of CATA. The review, which evaluated the Authority’s compliance with federal regulations over a period of three years – 2015, 2016 and 2017 – resulted in 18 findings, six of which were promptly addressed.

CATA’s Board of Directors is confident that our Chief Executive Officer will competently and comprehensively address all Triennial Review findings. We trust him, the Authority’s seasoned leadership team and CATA employees to expeditiously implement processes, procedures, training and solutions that ensure CATA’s future adherence to regulatory requirements.

We also acknowledge that our current Board, the CEO and CATA’s executive leadership are new, or serving in new or expanded roles. As we honor past leadership and practices, we are on a different trajectory today, driven primarily by the voice of our customers and public feedback.

We look forward to transparency in reporting our progress on these 12 remaining findings, and appreciate your continued confidence in CATA.

Sincerely,

Nathan Triplett Board Chair

July 16, 2018

For three consecutive days in April 2018, CATA hosted a small contingent of U.S. Department of Transportation and Region 5 Federal Transit Administration (FTA) examiners for a Triennial Review. The review, which occurs every three years, is mandated by Congress as a tool to evaluate grant recipients’ adherence to current FTA requirements and policies.

In transitioning from a decades-long executive staff, CATA’s current leadership – including its administrators and new Board of Directors – welcomed the review and fully cooperated with examiners.

In charting our course to excellence, we are committed to owning and addressing all noted deficiencies.

Of 20 areas of compliance, CATA was cited for deficiencies in eight, for a total of 18 findings. Six of those findings were satisfactorily addressed and closed by June 11, 2018.

In the spirit of transparency, we hereby disclose the FTA’s final report of its fiscal 2018 Triennial Review of CATA, including a color-coded dashboard of noted discrepancies and corrective actions to be taken.

Findings highlighted in green remain open; those in yellow have been submitted and are pending FTA review; and those in red have been satisfactorily closed by the FTA. You are invited to follow our progress at www.cata.org/triennialFY18 as we address each finding.

On behalf of our current executive staff, administrative employees, bus operators, mechanics and ATU Local No. 1039, I thank you for your unwavering trust and confidence in CATA; for allowing us to deliver the exemplary transportation and mobility services we know we are capable of. Our region deserves nothing less.

Respectfully,

Bradley T. Funkhouser, AICP Chief Executive Officer

U.S. Department of Transportation Federal Transit Administration

REGION V Illinois, Indiana, Michigan, Minnesota, Ohio, Wisconsin

200 West Adams Street Suite 320 Chicago, IL 60606-5253 312-353-2789 312-886-0351 (fax)

June 28, 2018 Mr. Nathan Triplett Chair, Board of Directors Capital Area Transit Authority (CATA) 4615 Tranter Street Lansing, MI 48910 Re: Federal Transit Administration (FTA) Fiscal Year 2018 Triennial Review – Final Report Dear Mr. Triplett: The enclosed final report documents the FTA’s Triennial Review of CATA in Lansing, Michigan. This review is required by Chapter 53 of Title 49, United States Code Section 5307.

Although not an audit, the Triennial Review is the FTA’s assessment of CATA’s compliance with Federal requirements, determined by examining a sample of award management and program implementation practices. As such, the Triennial Review is not intended as, nor does it constitute, a comprehensive and final review of compliance with award requirements.

The Triennial Review focused on CATA’s compliance in 20 areas. No deficiencies were found with the FTA requirements in 12 areas. Deficiencies were found in eight areas: Financial Management and Capacity, Technical Capacity (TC) – Award Management, Satisfactory Continuing Control, Maintenance, Title VI, American with Disabilities Act – General, Charter Bus, and Section 5307 Program Requirements. CATA had no repeat deficiencies from the 2015 Triennial Review.

As part of this year’s Triennial Review of CATA, FTA incorporated an Enhanced Review Module (ERM) in the Financial Management and Capacity area. The purpose of an ERM is to conduct a more comprehensive review of underlying or contributing issues identified during the pre-assessment stage of the Triennial Review. Deficiencies resulting from the ERM are presented in the Financial Management and Capacity section of the report that follows. An additional deficiency was also added to the TC – Award Management section as a result of the ERM. Subsequent to the site visit, CATA provided responses to satisfactorily address the following deficiencies: Deficiency F2-3: ECHO draws not properly approved F6-4: Outstanding annual audit deficiencies TC-AM2-1: Incorrect FFR reporting

Status closed closed closed

Mr. Nathan Triplett Page 2 of 2 Deficiency TC-AM2-2: MPR/FFR do not agree CB1-1: Charter service not operated under exemption or exception 5307:3-3: Public comment process not followed

Status closed closed closed

CATA also provided corrective actions to partially address the deficiency in the Maintenance area: (late facility/equipment preventive maintenance (M2-2)). This deficiency will be closed when CATA submits to the FTA regional office a monthly report signed by the chief executive officer, or other senior management designee, on the preventive maintenance results of the items examined during the review that demonstrates CATA has conducted 80 percent of its preventive maintenance on time for three consecutive months.

Thank you for your cooperation and assistance during this Triennial Review. If you need any technical assistance or have any questions, please do not hesitate to contact Ms. Lisa Joiner, FTA Transportation Program Specialist, at 312-353-2791 or by email at Lisa.Joiner@dot.gov.

Sincerely,

Kelley Brookins Regional Administrator (Acting) Enclosure cc:

Brad Funkhouser, Chief Executive Officer Lisa Joiner, FTA Transportation Program Specialist James Buckley, Milligan & Company, LLC

FINAL REPORT

FISCAL YEAR 2018 TRIENNIAL REVIEW of

Capital Area Transit Authority (CATA) Lansing, MI ID: 1218 Performed for: U.S. DEPARTMENT OF TRANSPORTATION FEDERAL TRANSIT ADMINISTRATION REGION 5

Prepared By: Milligan & Company, LLC

Scoping Meeting Date: March 14, 2018 Site Visit Date: April 23-25, 2018 Final Report Date: June 28, 2018

Table of Contents I.

Executive Summary ............................................................................................................... 1

II. Review Background and Process ......................................................................................... 3 1.

Background ........................................................................................................................ 3

2.

Process ............................................................................................................................... 3

3.

Metrics ................................................................................................................................ 4

III. Recipient Description ............................................................................................................ 5 1.

Organization ...................................................................................................................... 5

2.

Services .............................................................................................................................. 5

3.

Award and Project Activity ............................................................................................... 6

IV. Results of the Review ............................................................................................................ 8 1.

Legal ................................................................................................................................... 8

2.

Financial Management and Capacity ............................................................................... 8

3.

Technical Capacity – Award Management .................................................................... 13

4.

Technical Capacity – Program Management & Subrecipient Oversight ..................... 15

5.

Technical Capacity – Project Management.................................................................... 16

6.

Satisfactory Continuing Control ..................................................................................... 16

7.

Maintenance..................................................................................................................... 17

8.

Procurement .................................................................................................................... 18

9.

Disadvantaged Business Enterprise (DBE) ................................................................... 19

10. Title VI .............................................................................................................................. 19 11. Americans with Disabilities Act (ADA)- General .......................................................... 20 12. ADA – Complementary Paratransit................................................................................ 21 13. Equal Employment Opportunity .................................................................................... 22 14. School Bus ........................................................................................................................ 22 15. Charter Bus ...................................................................................................................... 22 16. Drug Free Workplace Act................................................................................................ 23 17. Drug and Alcohol Program ............................................................................................. 24 18. Section 5307 Program Requirements ........................................................................... 24 19. Section 5310 Program Requirements ........................................................................... 25 20. Section 5311 Program Requirements ........................................................................... 26

V. Summary of Findings ........................................................................................................... 27 VI. Attendees .............................................................................................................................. 31 VII. Appendices ........................................................................................................................... 32

I.

Executive Summary

This report documents the Federal Transit Administration’s (FTA) Triennial Review of the Capital Area Transit Authority (CATA) of Lansing, Michigan. FTA wants to ensure that awards are administered in accordance with the requirements of Federal public transportation law 49 U.S.C. Chapter 53. The review was performed by Milligan & Company, LLC. During the site visit, administrative and statutory requirements were discussed and documents were reviewed.

CATA’s transit facilities were toured to provide an overview of activities related to FTA-funded projects.

The Triennial Review focused on CATA’s compliance in 20 areas. As part of this year’s Triennial Review of CATA, FTA incorporated an Enhanced Review Module (ERM) in the Financial Management and Capacity area. The purpose of an ERM is to conduct a more comprehensive review of underlying or contributing issues identified during the pre-assessment stage of the Triennial Review. Deficiencies resulting from the ERM are presented in the Financial Management and Capacity section of the report that follows. An additional deficiency was also added to the Technical Capacity (TC) – Award Management section as a result of the ERM. Deficiencies were found in the areas listed below: Review Area

SCC7-3

Deficiencies Description Missing, insufficient, or out of date financial operating procedures Electronic Clearinghouse (ECHO) draws not properly approved (closed) Financial management systems deficiencies ECHO documentation deficient Ineligible indirect costs charged to awards Outstanding annual audit deficiencies (closed) Incorrect Federal Financial Report (FFR) reporting (closed) Milestone progress report (MPR)/FFR do not agree (closed) Annual status reports missing or lacking required information Inadequate equipment records

SCC7-4

No evidence of physical inventory or reconciliation

M2-2

Late facility/equipment preventive maintenance Inadequate oversight of subrecipient, contractor or lessee maintenance activities Title VI complaint process not implemented in accordance with Title VI Program

Code F1-1

2. Financial Management and Capacity

F2-3 F3-1 F4-1 F5-1 F6-4 TC-AM2-1

3. TC – Award Management

TC-AM2-2 TC-AM4-1

6. Satisfactory Continuing Control 7. Maintenance 10. Title VI

M5-1 TVI4-1

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Review Area 11. Americans with Disabilities Act (ADA) – General 15. Charter Bus 18. Section 5307 Program Requirements

Code ADA4-1 CB1-1 5307:2-3 5307:3-3

Deficiencies Description Demand-response vehicle accessibility standards deficiency Charter service not operated under exemption or exception (closed) Elements missing in POP public participation procedures Public comment process not followed (closed)

Subsequent to the site visit, CATA provided responses to satisfactorily address the following deficiencies: Deficiency F2-3: ECHO draws not properly approved F6-4: Outstanding annual audit deficiencies TC-AM2-1: Incorrect FFR reporting TC-AM2-2: MPR/FFR do not agree CB1-1: Charter service not operated under exemption or exception 5307:3-3: Public comment process not followed

Status closed closed closed closed closed closed

CATA also provided corrective actions to partially address the deficiency in the Maintenance area: (late facility/equipment preventive maintenance (M2-2)). This deficiency will be closed when CATA submits to the FTA regional office a monthly report signed by the chief executive officer, or other senior management designee, on the preventive maintenance results of the items examined during the review that demonstrates CATA has conducted 80 percent of its preventive maintenance on time for three consecutive months.

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II.

Review Background and Process

1.

Background

The United States Code, Chapter 53 of Title 49 (49 U.S.C. 5307(f) (2)) requires that “At least once every 3 years, the Secretary shall review and evaluate completely the performance of a recipient in carrying out the recipient’s program, specifically referring to compliance with statutory and administrative requirements...” This Triennial Review was performed in accordance with FTA procedures (published in FTA Order 9010.1B, April 5, 1993).

The Triennial Review includes a review of the recipient’s compliance in 20 areas. The basic requirements for each of these areas are summarized in Section IV. This report presents the findings from the Triennial Review of CATA. The review concentrated on procedures and practices employed during the past three years; however, coverage was extended to earlier periods as needed to assess the policies in place and the management of award funds. The specific documents reviewed and referenced in this report are available at FTA’s regional office or the recipient’s office.

2.

Process

The Triennial Review process includes a pre-review assessment, a review scoping meeting with the FTA regional office, and a site visit to the recipient’s location. The review scoping meeting was conducted with the Region 5 Office on March 14, 2018. Necessary files retained by the regional office were sent to the reviewer electronically. A recipient information request and review package was sent to CATA advising it of the site visit and indicating information that would be needed and issues that would be discussed. The site visit to CATA occurred on April 23-25, 2018.

The onsite portion of the review began with an entrance conference, at which the purpose of the Triennial Review and the review process were discussed. The remaining time was spent discussing administrative and statutory requirements and reviewing documents. The reviewer visited CATA’s transit maintenance facility to provide an overview of activities related to FTAfunded projects.

The reviewer examined a sample of maintenance records for FTA-funded vehicles and equipment. Upon completion of the review, FTA and the reviewer provided a summary of preliminary findings to CATA at an exit conference. Section VI of this report lists the individuals participating in the review.

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3.

Metrics

The metrics used to evaluate whether a recipient is meeting the requirements for each of the areas reviewed are: •

Not Deficient: An area is considered not deficient if, during the review, no findings were noted with the recipient’s implementation of the requirements.

•

Deficient: An area is considered deficient if any of the requirements within the area reviewed were not met.

•

Not Applicable: An area can be deemed not applicable if, after an initial assessment, the recipient does not conduct activities for which the requirements of the respective area would be applicable.

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III.

Recipient Description

1.

Organization

CATA was formed under Act 55 (Public Acts of Michigan 1963). CATA’s governmental membership includes the cities of Lansing and East Lansing and the townships of Delhi, Lansing, and Meridian. The CATA Board of Directors establishes policy which sets the direction for CATA operations. The Board consists of ten voting representatives from member jurisdictions that provide funding for CATA operations. These jurisdictions include the cities of Lansing and East Lansing, and Townships of Delhi, Lansing, and Meridian. The Board also includes two non-voting representatives from Ingham County and Michigan State University (MSU).

2.

Services

CATA provides transit service in the cities of Lansing and East Lansing; MSU; the townships of Lansing, Delhi, and Meridian; Ingham County; and portions of Clinton and Eaton Counties. The population of its service area is approximately 289,629.

CATA operates all fixed-route service in-house. CATA operates its ADA complementary paratransit service, Spec-Tran, directly and with contractors. CATA manages all application and reservation functions and provides direct service to all non-ambulatory customers.

Transportation for ambulatory customers is provided by both CATA employees and a contractor, Transdev. Transdev also operates CATA’s rural service, CRS. CRS provides demand response and route deviation services that connect the rural areas of Ingham County to the urban transit system.

Within the fixed-route service area, where population density does not warrant fixed-route service, CATA operates a general public demand response feeder service called Redi-Ride. RediRide is available in Mason, Delhi, and Meridian Townships.

CATA operates a network of 32 fixed routes, including routes that serve the MSU campus, and express routes. CATA service operates 24 hours per day, seven days per week when MSU is in session.

The basic adult fare for fixed-route bus service is $1.25. A reduced fare of 60¢ is available during all hours to elderly and disabled persons, Medicare cardholders, and students with proper identification. Children under 42 inches in height ride free. The fare for ADA complementary paratransit service is $2.50. CRS rural service fares are $2.25 up to 10 miles, and $3.25 for trips over 10 miles.

CATA operates a fleet of 99 vehicles in fixed-route service. The fixed-route fleet consists of standard 40-foot low floor and 60-foot articulated buses. The current peak requirement is for 77 vehicles. The spare ratio is 20 percent. CATA also has a fleet of 105 paratransit vehicles.

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Seventy-two of these are provided to Transdev for paratransit service. CATA uses the other 33 for its direct operation of paratransit service.

CATA operates from a single maintenance and administration facility at 4615 Tranter Street in Lansing. Its services are oriented around the CATA Transportation Center in downtown Lansing.

CATA also has a transportation center on the MSU campus, where all routes serving campus converge. Shuttle buses connect a park-and-ride lot south of MSU to the MSU transportation center. Finally, the Multi-Modal Gateway in East Lansing is a transportation facility, which incorporates Amtrak rail and city, regional, and national bus lines.

CATA's National Transit Database Report for fiscal year 2017 provided the following financial and operating statistics for its fixed-route and ADA complementary paratransit service: Fixed-Route Service 3,276,260 250,099 $30,213,694

Operating Statistic Unlinked Passengers Revenue Hours Operating Expenses

ADA Complementary Paratransit Service 2,965,342 189,402 $10,861,788

3. Award and Project Activity Below is a list of CATA’s open awards at the time of the review: Award Number

Award Amount

Year Executed

MI-37-X046-00

$193,176

2012

MI-04-0085-00

$6,282,285

2013

MI-16-X010-01

$504,513

2015

MI-34-0001-02

$2,034,220

2015

MI-37-X049-00

$387,614

2013

MI-90-X647-01

$5,881,050

2013

MI-90-X672-02

$17,719,257

2015

MI-95-X105-02

$1,468,242

2015

Description Fiscal Year (FY) 2010 Lapsing Job Access Reverse Commute, Operating Service FY 2012 Bus Livability, Construction, Multi Modal Facility FY 2014 Section 5310 Bus Purchase and Operating FY 2015 Section 5339 Large and Small Buses FY 2011 and FY 12 Job Access Reverse Commute (JARC) Operating Service FY 2012 Bus, Preventive Maintenance.

Intelligent Transportation Systems FY 2015 Bus, Preventive Maintenance.

Intelligent Transportation Systems FY 2015 Congestion Mitigation Air Quality-Outreach

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Award Number

Award Amount

Year Executed

MI-2016-002-00

$1,250,000

2016

MI-2016-034-00

$8,018,360

2016

Description Transit Oriented Development in the Bus Rapid Transit Corridor FY 2016 CATA Super Grant

Projects Completed In the past few years, CATA has completed the following noteworthy projects: •

Completion of Multimodal Gateway. Construction was concluded in November of 2015.

The East Lansing Multimodal Station brings together rail, local and intercity bus, and private transportation options at a single location.

•

Replacement of telephone system. The old system was initially installed with FTA American Recovery and Reinvestment Act funds.

Ongoing Projects •

Shaping the Avenue. CATA received FTA Section 5309 funds to work with local jurisdictions, developers and residents to develop a form based code for the Michigan/Grand River Avenue corridor. The form based code will include transit oriented development principles such as maintaining local character; emphasizing mixeduse development; addressing the relationship between buildings, vehicles, pedestrians, and bicyclists; and establishing common design elements along the corridor.

•

Bus purchases. CATA placed orders for new buses, including seven large buses, seven small buses for mobility transportation, and one bus used in demand response service.

Future Projects •

Comprehensive Operational Analysis. CATA will be conducting a comprehensive operational analysis of its system in the coming year.

•

Fare system. CATA will seek to replace its farebox system in the next three to five years.

•

Bus shelters. CATA is proposing to install more bus shelters through a pilot project involving a public private partnership in the next few years.

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IV.

Results of the Review

1.

Legal

Basic Requirement: The recipient must promptly notify the Federal Transit Administration (FTA) of legal matters and additionally notify the U.S. DOT Office of Inspector General (OIG) of any instances relating to false claims under the False Claims Act or fraud. Recipients must comply with restrictions on lobbying requirements.

Finding: During this Triennial Review of CATA, no deficiencies were found with the FTA requirements for Legal.

2.

Financial Management and Capacity

Basic Requirement: The recipient must have financial policies and procedures; an organizational structure that defines, assigns and delegates authority; and financial management systems in place to match, manage, and charge only allowable cost to the award. The recipient must conduct required single audits and provide financial oversight of subrecipients.

Finding: During this Triennial Review of CATA, deficiencies were found with the FTA requirements for Financial Management and Capacity.

Missing, insufficient, or out of date financial operating procedures (F1-1) CATA has developed financial policies and procedures for managing award-related transactions using the Microsoft Dynamics financial application. The financial policies and procedures were reviewed to determine whether there were adequate procedures in place for managing FTA award-related transactions. Based on review of the financial policies and procedures and discussions with CATA staff members, it was determined that there were weaknesses in the financial policies and procedures. Specifically, the financial policies and procedures did not address the following areas: •

Documented procedures for establishing and managing award funds within the Dynamics system.

•

Documented procedures for making budget/award amendments within the Dynamics system.

•

Documented procedures for reversing charges incorrectly posted against an award.

•

Documented procedures for preparing and submitting FFRs. As of April 20, 2018, CATA began documenting the steps necessary to prepare the FFRs; however, the procedures should be updated to address instances where awards have other than an 80 percent Federal matching ratio, the reporting of program income, reporting of indirect costs, and the process for obtaining accrual information for the expenditures and unliquidated obligations.

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2 CFR Part 200.302 Financial management “(b) The financial management system of each non-Federal entity must provide for the following: (4) Effective control over, and accountability for, all funds, property, and other assets. The non-Federal entity must adequately safeguard all assets and assure that they are used solely for authorized purposes.

(6) Written procedures to implement the requirements of §200.305 Payment.

(7) Written procedures for determining the allowability of costs in accordance with Subpart E—Cost Principles of this part and the terms and conditions of the Federal award.”

ECHO draws not properly approved (F2-3) – closed A judgmental sample of twelve (12) ECHO drawdowns was selected to verify if costs were allowable, approved, and supported. Based on a review of the supporting documentation, it was determined that the ECHO payment request was approved by someone other than the authorizing official designated in the ECHO system for nine of the drawdowns.

FTA Circular 5010.1E Award Management Requirements (f) Standards of Internal Control and Audit Resolutions.

(1) General. b) The recipient’s formal organization structure must clearly define, assign, and delegate appropriate authority for all duties. c) Responsibility for duties and functions must be segregated within the organization to ensure that adequate internal checks and balances exist. Recipients should pay particular attention to authorization, performance, recording, inventory control, and review functions to reduce the opportunity for unauthorized or fraudulent acts.

Post Site Visit Subsequent to the site visit, CATA submitted to the FTA regional office a process for documenting that an authorized official approves each ECHO request along with documentation that it has updated the authorizing official in ECHO. CATA also submitted documentation of training conducted of the appropriate staff on the new process. Based on the submission of the corrective action, this deficiency is closed.

Financial management systems deficiencies (F3-1) CATA tracks grant budgets, encumbrances, and expenditures through the Microsoft Dynamics system. The records within the Microsoft Dynamics system track award expenditures to the Activity Line Item (ALI) and also track the local matching portion of expenditures. As a part of the review, CATA award records were compared to the executed award agreements and the expenditures and obligations identified within the FTA’s Transit Award Management System (TrAMS) in order to evaluate the effectiveness of CATA's award management processes. Based on an evaluation of the records and discussions with CATA staff, it was determined that CATA's

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award records were not consistent with the award agreements and disbursement records within TrAMS. The following observations were made: •

CATA records for MI-34-0001 indicated that the budget for ALI 11.12.01 ($2,542,776) had been exceeded by the amount of $116,606.93 in expenditures. It was also noted that the total amount of expenditures recorded against the award had exceeded the total budget amount by $26,773.93. Additionally, the Awards Fund Status module in TRAMS identified a refund of $75,817 and a remaining award balance of $73,773, that was not reflected in CATA’s records.

•

CATA records for MI-04-085 were also not consistent with TrAMS. The Awards Fund Status module in TRAMS shows $6,074,334 in cumulative drawdowns while the records from CATA’s Microsoft Dynamic system shows a total of $6,070,451.67 in expenses coded to the award. This indicates that the award has been overdrawn by $3,882.33.

•

CATA does not track the budgets and expenditures for its JARC Operating Assistance awards (MI-37-X046, MI-90-X672, and MI-2016-034) within the Microsoft Dynamic system. As a result, expenditures and unliquidated obligations on the FFRs can be overstated.

•

For MI-2017-014, CATA’s Microsoft Dynamic system only tracks the budget, encumbrances, and expenses for ALIs 11.12.04, 11.12.06, 11.91.05, and 11.93.05. The remaining projects in the award have not been set up within the system.

2 CFR Part 200.302 (f) Financial Management “(b) The financial management system of each non-Federal entity must provide for the following: (1) Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the CFDA title and number, Federal award identification number and year, name of the Federal agency, and name of the pass-through entity, if any.

(2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §200.327 Financial reporting and 200.328 Monitoring and reporting program performance.

(3) Records that identify adequately the source and application of funds for federally-funded activities. These records must contain information pertaining to Federal awards, authorizations, obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation.

(4) Effective control over, and accountability for, all funds, property, and other assets. The nonFederal entity must adequately safeguard all assets and assure that they are used solely for authorized purposes.

(5) Comparison of expenditures with budget amounts for each Federal award.

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ECHO documentation deficient (F4-1) In the review of the ECHO drawdown sample and the supporting documentation, it was determined that for two of 12 drawdowns, the records did not contain adequate support for the expenditures ($29,049 MI-57-X023-01; $87,711 MI-37-X046-00). These draws were for JARC operating expenses and the only supporting documentation was a spreadsheet. Additionally, for one of the two draws, the spreadsheet indicated that the request amount should have been $28,970.16 (a difference of $79) instead of $29,049.

2 CFR Part 200.302 (b)(4) Financial Management “The financial management system of each non-Federal entity must provide for the following…

(4) Effective control over, and accountability for, all funds, property, and other assets. The nonFederal entity must adequately safeguard all assets and assure that they are used solely for authorized purposes.

Ineligible indirect costs charged to awards (F5-1) It was determined through discussions with CATA staff that indirect costs were charged to FTA award MI-90-X-105 without obtaining FTA approval to use the de minimus rate or having an approved indirect cost allocation plan. Additionally, CATA’s JARC operating expenses reimbursed from FTA awards include administrative and finance department staff salaries and expenses that are allocated to the JARC program based on miles driven. These costs are indirect costs and must be allocated through an indirect cost allocation plan and not allocated directly to a grant.

FTA Circular 5010.1E, Appendix G, Indirect Cost Rate Proposals, 3 “When FTA is the cognizant agency for indirect costs, the ICRP should be submitted to the FTA when: a. The recipient is working on its first federal assistance Award or has not previously had an Indirect Cost Rate Proposal reviewed and accepted (note that such recipients may be eligible for the de minimis rate described in section 1 above).

Outstanding annual audit deficiencies (F6-4) – closed CATA’s FY 2017 Single Audit identified the following deficiencies that have not been fully remediated. Additionally, CATA did not have a process in place for reporting the status of Single Audit deficiencies to the FTA: •

2017-001: Material weakness related to procedures and controls to ensure balance sheet amounts are adequately supported and expenditures and revenues reported in their proper period.

•

2017-002: Material weakness related to controls to review and reconcile pension statements.

•

2017-003: Material weakness related to segregation of duties over cash collections and bank reconciliations.

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•

2017-004: Material weakness related to a lack of segregation of duties within the payroll, human resources and purchasing systems.

•

2017-005: Significant deficiency and material noncompliance with laws and regulations related to questioned costs for expenditures never paid by the authority.

•

2017-006: Significant deficiency and material noncompliance with laws and regulations related to Schedule of Expenditures of Federal Awards (SEFA) adjustments.

•

2017-007: Significant deficiency and material noncompliance with laws and regulations related to weaknesses in the process for verifying that bidders are not suspended or debarred.

FTA Circular. 5010.1E, Ch. VI, Section 8d (3) “The recipient must resolve the deficiencies or opportunities for improvement identified in their audit. The resolution of audits begins with FTA’s report to the recipient and continues until the recipient corrects identified deficiencies, implements needed improvements, or demonstrates that the findings or recommendations are not valid or do not warrant management action…The status of outstanding audit findings and recommendations should be monitored and reported by the recipient in quarterly progress reports and, where appropriate, significant events reported.”

Post Site Visit Subsequent to the site visit, CATA submitted to the FTA regional office procedures and a schedule for resolving single audit findings. CATA also submitted a report on the status of addressing the audit findings in the progress reports. Based on the submission of the corrective action, this deficiency is closed.

Corrective Actions and Schedule: For the deficiency missing, insufficient, or out of date financial operating procedures (F1-1), by September 25, 2018, perform the following: •

Develop and submit to the FTA regional office financial operating procedures for managing FTA award funds in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. This must include procedures for determining allowability of cost and timely distribution of funds and reflect recommendations from audit findings or significant changes in the organization.

•

Submit documentation that CATA has trained appropriate staff on the new policies and procedures.

For the deficiency financial management systems deficiencies (F3-1), by September 25, 2018, perform the following: •

Develop and submit to the FTA regional office policies and procedures that allow for the preparation of required reports, tracking of award funds, and addressing required elements.

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•

Submit to the FTA regional office evidence that CATA has implemented financial management systems to accurately account for and report on federal funds.

For the deficiency ECHO documentation deficient (F4-1), by September 25, 2018, perform the following: •

Submit to the FTA regional office procedures for documenting ECHO draws for JARC funds.

•

Discuss with the FTA regional office if it will require CATA to submit ECHO requests for prior approval.

•

Document and work with the FTA regional office to reimburse FTA for ineligible expenses charged to awards, plus applicable interest.

•

Implement and submit to the FTA regional office documentation of training conducted of the appropriate staff on new policies and procedures.

For the deficiency ineligible indirect costs charged to awards (F5-1), by September 25, 2018, discuss appropriate corrective action with the FTA regional office and regional counsel.

3.

Technical Capacity – Award Management

Basic Requirement: The recipient must report progress of projects in awards to the Federal Transit Administration timely.

Finding: During this Triennial Review of CATA, deficiencies were found with the FTA requirements for Technical Capacity – Award Management.

Incorrect FFR reporting (TC-AM2-1) – closed Based on discussions with CATA staff and review of CATA’s FFR reporting procedures, weaknesses were identified in the process for preparing and reporting the FFRs. Specifically, it was noted that the Federal and Local Share of Expenditures were not currently reported on an accrual basis. CATA pulls the expenditures from its PBGM Check Detail Report which captures the expenses paid through the payables module; however, the report does not include the invoices that have been received for services rendered but have not yet been paid.

It was also noted that the Federal and Local share of expenditures was calculated by reporting 80 percent of the total award expenditure as federal and 20 percent as local; however, CATA has awards that have ALIs with different matching ratios including operating assistance (i.e. MI2016-034, MI-2017-014, MI-90-X672) and procedures should be implemented to ensure accurate reporting of the federal share of expenditures. Additionally, the Federal and Local Share of Unliquidated Obligations were not reported on an accrual basis, neither was there a process in place to capture and report Program Income for awards.

Post Site Visit

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Subsequent to the site visit, CATA submitted to the FTA regional office current reports that include the missing information in TrAMS and notified the FTA regional office when reports were submitted. CATA also submitted procedures for including all required information in future reports. Based on the submission of the corrective action, this deficiency is closed MPR/FFR do not agree (TC-AM2-2) – closed The January 30, 2018 MPR submitted for award MI-16-X010 indicates that CATA entered into a commitment with a third party and ordered a bus. However, in review of the FFR for award MI16-X010, CATA did not designate the related funds as encumbered by recording an unliquidated obligation.

FTA Circular 5010.1E, Chapter. III, Section 3. Reporting Requirements Federal Financial Report (FFR). FTA’s electronic FFR report is consistent with and includes information identified in OMB’s Standard Form FFR (SF FFR). A recipient must submit an FFR for each active Award. The FFR accompanies the MPR (described below) and is used to monitor the federal assistance awarded. The purpose of the FFR is to provide a current, complete, and accurate financial picture of the Award. This report is submitted electronically through TrAMS and must be prepared on the accrual basis of accounting; that is, income is recorded when earned instead of when received, and expenses are recorded when incurred instead of when paid. The FFR may not be prepared on the cash basis of accounting, even though a recipient may keep its books on the cash basis during its accounting year. If this is the case, at the submission of the FFR, the recipient must prepare the necessary accruals and submit the FFR on the accrual basis of accounting. (See Appendix B, “Federal Financial Report”).

The FFR must contain the following elements: (1) All financial facts (e.g., expenditures and obligations) relating to the Award (scope of work and supporting activities); the purpose of each financial report and applicable reporting period should be completely and clearly displayed in the reports…. …(7) The recipient must provide financial information related to the FFR categories: Federal Cash, Recipient Share, Unliquidated Obligations, and Program Income.

FTA Circular 5010.1E, Chapter. III, Section 3. Reporting Requirements d. Milestone Progress Reports (MPR). The MPRs must be submitted for each active Award. The MPR is the primary written communication between the recipient and FTA. This report must be submitted electronically. If only operating assistance is included in the Award, the reporting requirements are limited to the actual dates when all federal assistance has been expended.

The information provided in MPR reports should be as complete as possible, highlighting progress toward project objectives and any potential problem areas.

Post Site Visit Subsequent to the site visit, CATA submitted to the FTA regional office current reports that accurately reflect the status of projects in TrAMS and notified the FTA regional office when reports were submitted. CATA also submitted procedures for reconciling FFRs and MPRs. Based on the submission of the corrective action, this deficiency is closed.

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Annual status reports missing or lacking required information (TC-AM4-1) As a recipient of Section 5310 funds, CATA is required to submit a program of projects status report with its MPR, annually. In a review of MPRs submitted during the review period, CATA did not submit the annual status report for MI-16-X010, its Section 5310 award.

FTA Circular 9070.1G, Chapter. VI, Section 23. Reporting Requirements “a. Annual Program of Projects Status Reports. By October 31 each year, the state or designated recipient should submit to FTA a program status report for each active grant, covering the twelve-month period ending September 30. Designated recipients in large urbanized areas must submit quarterly status reports. The status reports should be submitted electronically and are intended to meet minimal program information needs at the regional and national levels. Reports should include an updated POP for each approved grant that contains active projects. The updated POP should reflect revised project descriptions, changes in projects from one category to another, and adjustments within budget categories, if applicable. The updated POP can be imported as text into the project summary section of the electronic status report.

If revisions to the POP result in changes to the line item budget for the grant, these changes should be submitted as budget revisions. Significant civil rights compliance issues occurring during the year (such as Title VI, Equal Employment Opportunity (EEO), or Disadvantaged Business Enterprise (DBE) complaints against the recipient or subrecipients), should be addressed in the annual status report. In addition, the recipient may report notable accomplishments or problems involving Section 5310 subrecipients.”

Corrective Actions and Schedule: For the deficiency annual status reports missing or lacking required information (TC-AM4-1), perform the following by September 25, 2018:

4.

•

Submit in TrAMS the annual program of projects status reports for the past year.

•

Submit to the FTA regional office procedures for submitting reports with the required information at the required interval.

Technical Capacity – Program Management & Subrecipient Oversight

Basic Requirement: The recipient must follow the public involvement process for transportation plans; develop and submit a State Management Plan to the Federal Transit Administration (FTA) for approval; report in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS) on subawards; and ensure subrecipients comply with the terms of the award.

Finding: During this Triennial Review of CATA, no deficiencies were found with the FTA requirements for Technical Capacity – Program Management & Subrecipient Oversight.

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5. Technical Capacity – Project Management Basic Requirement: The recipient must be able to implement FTA-funded projects in accordance with the award application, FTA Master Agreement, and all applicable laws and regulations, using sound management practices; and prepare force account plans.

Finding: During this Triennial Review of CATA, no deficiencies were found with the FTA requirements for Technical Capacity – Project Management.

6.

Satisfactory Continuing Control

Basic Requirement: The recipient must ensure that FTA-funded property will remain available to be used for its originally authorized purpose throughout its useful life until disposition.

Finding: During this Triennial Review of CATA, deficiencies were found with the FTA requirements for Satisfactory and Continuing Control.

Inadequate equipment records (SCC7-3) As a non-state recipient, CATA is required to maintain equipment records that address certain required data elements for each federally-funded asset. In a review of CATA’s records, one such element was not included, the Federal Award Information Number (FAIN).

No evidence of physical inventory or reconciliation (SCC7-4) In addition to maintaining equipment records, CATA is required to conduct a physical inventory of its federally-funded assets every two years, and reconcile such inventory to the equipment records. CATA was unable to provide documentation that the inventory was conducted and that it was reconciled to the equipment records for the biennial inventory conducted in 2016.

However, CATA provided documentation that it did perform and reconcile the physical inventory to equipment records in 2018.

2 CFR 200.313 Equipment “(d) Management requirements. Procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property.

(2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years.

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Corrective Actions and Schedule: For the deficiency inadequate equipment records (SCC7-3), by September 25, 2018, submit to the FTA regional office updated equipment records which include all the required information.

For the deficiency no evidence of physical inventory or reconciliation (SCC7-4), by September 25, 2018, submit to the FTA regional office evidence that CATA has developed procedures to perform the biennial physical inventory of FTA-funded equipment and reconcile them to records.

7.

Maintenance

Basic Requirement: Recipients must keep federally funded vehicles, equipment, and facilities in good operating condition. Recipients must keep Americans with Disabilities Act (ADA) accessibility features on all vehicles, equipment, and facilities in good operating order.

Finding: During this Triennial Review of CATA, deficiencies were found with the FTA requirements for Maintenance.

Late facility/equipment preventive maintenance (M2-2) CATA’s facility maintenance plan indicates that preventive maintenance for the elevator is to be performed quarterly. In a review of the maintenance records for the elevator, CATA only performed preventive maintenance for nine of the 12 quarters over the review period. This is not in accordance with the plan.

FTA C. 5010.1E, Ch. IV Management of the Award, Section 4. Equipment and Supplies (Including Rolling Stock) “n. Management of Federally Assisted Property (4) Maintenance and Warranty (a)…Recipients must maintain federally assisted property in good operating order and in compliance with any applicable federal regulations that may be issued and follow applicable guidance that may be issued, except to the extent that FTA determines otherwise in writing… (b) Recipients must keep satisfactory records pertaining to the use of federally assisted property, and submit to FTA upon request such information as may be required to assure compliance with federal requirements…”

Post Site Visit Subsequent to the site visit, CATA provided corrective action to partially address the deficiency late facility/equipment preventive maintenance (M2-2). This deficiency will be closed when CATA submits to the FTA regional office a monthly report signed by the chief executive officer or other senior management designee on the preventive maintenance results of the items examined during the review demonstrating that it has conducted 80 percent of its preventive maintenance on time for three consecutive months.

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Inadequate oversight of subrecipient, contractor or lessee maintenance activities (M5-1) As discussed in the “Recipient Description,” CATA contracts and leases the use of its FTAfunded equipment to its contractor for the provision of its paratransit service. As a stipulation in the service agreement, the contractor is responsible for performing maintenance on the FTAfunded equipment in accordance with the CATA maintenance plan. The maintenance plan indicates that preventive maintenance is to be performed at 6,000-mile intervals on the assets. In reviewing the related records, the contractor was not performing the required preventive maintenance in accordance with the plan, as maintenance was only performed timely for 70 percent of the time.

2 CFR 200.318(b) “Non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders.”

Corrective Actions and Schedule: For the deficiency late facility/equipment preventive maintenance (M2-2), perform the following

by September 25, 2018: •

Submit to the FTA regional office procedures for completing preventive maintenance inspections on time.

•

Submit to the FTA regional office a monthly report signed by the chief executive officer or other senior management designee on the preventive maintenance results of the item(s) examined during the review until the data demonstrates CATA has conducted 80 percent of its preventive maintenance on time for three consecutive months. For each asset that received a preventive maintenance inspection during the month, CATA must include with the submittal to the FTA regional office: o a report listing the items, the dates the inspections are due, and the dates of the actual inspections. List the percentage of the inspections performed on time o back-up documentation for each item (e.g., copy of work order, printout from the maintenance management system) documenting the date of the inspection

For the deficiency inadequate oversight of subrecipient, contractor or lessee maintenance activities (M5-1), by September 25, 2018, submit to the FTA regional office oversight procedures to ensure that timely preventive maintenance is performed on all FTA-funded assets operated by CATA’s contractor, along with evidence of its implementation.

8.

Procurement

Basic Requirement: States: When procuring property and services under a Federal award, a state must follow the same policies and procedures it uses for procurements from its non-Federal funds. The state will comply with 2 CFR §200.322 (Procurement of Recovered Materials) and ensure that every purchase order or other contract includes any clauses required by section 2 CFR §200.326 (Contract Provisions). All other non-Federal entities, including subrecipients of a

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state, will follow 2 CFR §§200.318 (General Procurement Standards) through 200.326 (Contract Provisions).

Non-state recipients: The non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, and conform to applicable Federal law and the standards identified in 2 CFR part 200.

Where FTA funds are used in procurements for services or supplies, or where FTA-funded facilities or assets are used in revenue contracts, FTA Circular 4220.1F applies. FTA funds, even operating assistance, can be segregated from local funds. FTA Circular 4220.1F does not apply to wholly locally-funded capital procurements.

Finding: During this Triennial Review of CATA, no deficiencies were found with the FTA requirements for Procurement.

9.

Disadvantaged Business Enterprise (DBE)

Basic Requirement: Recipients must comply with 49 CFR Part 26 to ensure nondiscrimination in the award and administration of United States Department of Transportation assisted contracts.

Recipients also must create a level playing field on which DBEs can compete fairly for United States Department of Transportation-assisted contracts.

Finding: During this Triennial Review of CATA, no deficiencies were found with the US DOT requirements for DBE.

10.

Title VI

Basic Requirement: The recipient must ensure that no person shall, on the grounds of race, color, or national origin, be excluded from participating in, or be denied the benefits of, or be subject to discrimination under any program or activity receiving Federal financial assistance without regard to whether specific projects or services are federally funded. The recipient must ensure that all transit services and related benefits are distributed in an equitable manner.

Finding: During this Triennial Review of CATA, a deficiency was found with the FTA requirements for Title VI. Title VI complaint process not implemented in accordance with Title VI Program (TVI4-1) A review of CATA’s Title VI complaint log indicated that some complaints had been open for more than six months without resolution. CATA’s complaint procedures do not include timelines for complaint resolution.

FTA C. 4702.1B Chapter III 6. Requirement to Develop Title VI Complaint Procedures and Complaint Form

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“In order to comply with the reporting requirements established in 49 CFR Section 21.9(b), all recipients shall develop procedures for investigating and tracking Title VI complaints filed against them and make their procedures for filing a complaint available to members of the public. Recipients must also develop a Title VI complaint form, and the form and procedure for filing a complaint shall be available on the recipient’s website. FTA requires direct and primary recipients to report information regarding their complaint procedures in their Title VI Programs in order for FTA to determine compliance with DOT’s Title VI regulations.”

Corrective Action and Schedule: For the deficiency Title VI complaint process not implemented in accordance with Title VI Program (TVI4-1), by September 25, 2018, prepare and submit to the FTA regional civil rights officer (RCRO) evidence that CATA has revised its complaint procedures to include timelines for resolution of the complaints, along with evidence that staff has been trained on the revised procedures.

11.

Americans with Disabilities Act (ADA)- General

Basic Requirement: Titles II and III of the ADA of 1990 provide that no entity shall discriminate against an individual with a disability in connection with the provision of transportation service.

The law sets forth specific requirements for vehicle and facility accessibility and the provision of service, including complementary paratransit service.

Finding: During this Triennial Review of CATA, a deficiency was found with the U.S. Department of Transportation (US DOT) requirements for ADA – General.

Demand-response vehicle accessibility standards deficiency (ADA4-1) CATA procured non-accessible vehicles to operate in its demand response service in 2017. As a result, CATA was required to file a certificate of equivalent service with FTA. During the review, CATA could not provide documentation that it had filed a certificate of equivalent service.

49 CFR 37.77 Purchase or lease of new non-rail vehicles by public entities operating a demand responsive system for the general public. “(a) Except as provided in this section, a public entity operating a demand responsive system for the general public making a solicitation after August 25, 1990, to purchase or lease a new bus or other new vehicle for use on the system, shall ensure that the vehicle is readily accessible to and usable by individuals with disabilities, including individuals who use wheelchairs. (b) If the system, when viewed in its entirety, provides a level of service to individuals with disabilities, including individuals who use wheelchairs, equivalent to the level of service it provides to individuals without disabilities, it may purchase new vehicles that are not readily accessible to and usable by individuals with disabilities. (c) For purposes of this section, a demand responsive system, when viewed in its entirety, shall be deemed to provide equivalent service if the service available to individuals with disabilities, including individuals who use wheelchairs, is provided in the most integrated setting appropriate

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to the needs of the individual and is equivalent to the service provided other individuals with respect to the following service characteristics: (1) Response time; (2) Fares; (3) Geographic area of service; (4) Hours and days of service; (5) Restrictions or priorities based on trip purpose; (6) Availability of information and reservations capability; and (7) Any constraints on capacity or service availability.” (d) …. Public entities operating demand responsive service receiving funds under any other section of the FT Act shall file the certificate with the appropriate FTA regional office…All certificates under this paragraph may be made and filed in connection with a particular procurement or in advance of a procurement; however, no certificate shall be valid for more than one year. A copy of the required certificate is found in appendix C to this part.”

Corrective Action and Schedule: For the deficiency demand-response vehicle accessibility standards deficiency (ADA4-1), by September 25, 2018, submit to the RCRO procedures for filing the certificate of equivalent service prior to purchase or lease of non-accessible vehicles for general public demand-response service.

12.

ADA – Complementary Paratransit

Basic Requirement: Titles II and III of the ADA of 1990 provide that no entity shall discriminate against an individual with a disability in connection with the provision of transportation service.

The law sets forth specific requirements for vehicle and facility accessibility and the provision of service, including complementary paratransit service.

Finding: During this Triennial Review of CATA, no deficiencies were found with US DOT requirements for ADA – Complementary Paratransit.

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13.

Equal Employment Opportunity

Basic Requirement: The recipient must ensure that no person in the United States shall on the grounds of race, color, religion, national origin, sex, age, or disability be excluded from participating in, or denied the benefits of, or be subject to discrimination in employment under any project, program, or activity receiving Federal financial assistance under the Federal transit laws. (Note: Equal Employment Opportunity Commission’s regulation only identifies/recognizes religion and not creed as one of the protected groups.)

Finding: During this Triennial Review of CATA, no deficiencies were found with the FTA requirements for Equal Employment Opportunity.

14.

School Bus

Basic Requirement: Recipients are prohibited from providing school bus service in competition with private school bus operators unless the service qualifies and is approved by the FTA Administrator under an allowable exemption. Federally funded equipment or facilities cannot be used to provide exclusive school bus service.

Finding: During this Triennial Review of CATA, no deficiencies were found with the FTA requirements for School Bus.

15.

Charter Bus

Basic Requirement: Recipients are prohibited from using federally funded equipment and facilities to provide charter service if a registered private charter operator expresses interest in providing the service. Recipients are allowed to operate community based charter services excepted under the regulations.

Finding: During this Triennial Review of CATA, a deficiency was found with the FTA requirements for Charter Bus. Charter service not operated under exemption or exception (CB1-1) At the request of an elected official and board member, CATA operated charter service to transport residents of a community to a movie night in the park. This service does not qualify as an exemption or exception to the charter regulations.

49 CFR Part 604.2 Applicability “(b)The requirements of this part shall not apply to a recipient transporting its employees, other transit system employees, transit management officials, transit contractors and bidders, government officials and their contractors and official guests, to or from transit facilities or projects within its geographic service area or proposed geographic service area for the purpose of conducting oversight functions such as inspection, evaluation, or review. (c) The requirements of this part shall not apply to private charter operators that receive, directly or indirectly, Federal financial assistance under section 3038 of the Transportation Equity Act for 2018 Triennial Review - Capital Area Transit Authority

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the 21st Century, as amended, or to the non-FTA funded activities of private charter operators that receive, directly or indirectly, FTA financial assistance under any of the following programs: 49 U.S.C. 5307, 49 U.S.C. 5309, 49 U.S.C. 5310, 49 U.S.C. 5311, 49 U.S.C. 5316, or 49 U.S.C. 5317. (d) The requirements of this part shall not apply to a recipient transporting its employees, other transit system employees, transit management officials, transit contractors and bidders, government officials and their contractors and official guests, for emergency preparedness planning and operations. (e) The requirements of this part shall not apply to a recipient that uses Federal financial assistance from FTA, for program purposes only, under 49 U.S.C. 5310, 49 U.S.C. 5311, 49 U.S.C. 5316, or 49 U.S.C. 5317. (f) The requirements of this part shall not apply to a recipient, for actions directly responding to an emergency declared by the President, governor, or mayor or in an emergency requiring immediate action prior to a formal declaration. If the emergency lasts more than 45 days, the recipient shall follow the procedures set out in subpart D of 49 CFR 601. (g) The requirements of this part shall not apply to a recipient in a non-urbanized area transporting its employees, other transit system employees, transit management officials, and transit contractors and bidders to or from transit training outside its geographic service area.�

Post Site Visit Subsequent to the site visit, CATA submitted to the FTA regional office documentation that it ceased operating charter service that does not meet an exemption or exception. CATA agreed to use the FTA charter service reporting website and thereby report any charter service that adheres to the parameters set forth by FTA. Based on the submission of the corrective action, this deficiency is closed.

Corrective Action and Schedule: For the deficiency charter service not operated under exemption or exception (CB1-1), by September 25, 2018, cease operating charter service that does not meet an exemption or exception. If CATA wishes to continue to provide charter service, it must submit to the FTA regional office procedures for ensuring that services are consistent with an exemption or exception allowed under the charter regulation and evidence that the procedures have been implemented.

16.

Drug Free Workplace Act

Basic Requirement: Recipients are required to maintain a drug-free workplace for all awardrelated employees; report any convictions occurring in the workplace timely; and have an ongoing drug-free awareness program.

Finding: During this Triennial Review of CATA, no deficiencies were found with the FTA requirements for Drug-Free Workplace Act.

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17.

Drug and Alcohol Program

Basic Requirement: Recipients receiving Section 5307, 5309, 5311, or 5339 funds that have safety-sensitive employees must have a drug and alcohol testing program in place for such employees.

Finding: During this Triennial Review of CATA, no deficiencies were found with the FTA requirements for Drug and Alcohol Program.

18.

Section 5307 Program Requirements

Basic Requirement: For fixed-route service supported with Section 5307 assistance, fares charged seniors, persons with disabilities or an individual presenting a Medicare card during off peak hours will not be more than one half the peak hour fares. Recipients are expected to have a written, locally developed process for soliciting and considering public comment before raising a fare or carrying out a major transportation service reduction. Recipients shall develop, publish, afford an opportunity for a public hearing on, and submit for approval, a program of projects (POP). Recipients must annually certify that they are spending at least one percent of such funds for transit security projects or that such expenditures for security systems are not necessary.

Recipients must ensure that least one percent of such funds are expended on associated transit enhancement projects.

Finding: During this Triennial Review of CATA, deficiencies were found with the FTA requirements for Section 5307 Program Requirements.

Elements missing in POP public participation procedures (5307:2-3) FTA Circular 9030.1E, Chapter V, Section 6 requires recipients, in preparing the POP, to implement a consultative process and consider comments and views received, including those of private transportation providers and human services organizations or transit operators representing the employment-related transportation needs of welfare recipients and low-income individuals. CATA was not able to describe or document the consultative process it conducted to ensure that the proposed POP provides for the coordination of Section 5307 service with transportation services assisted with other Federal sources.

FTA Circular 9030.1E, Chapter V, Section 6 Program of Projects and Public Involvement Requirements “c. Public Participation Requirements. To receive a grant under Section 5307, a recipient must meet certain requirements concerning public participation in development of a POP and must certify to compliance with these requirements. The requirements are listed in 49 U.S.C. 5307(b)(1) through (7) and are discussed in the paragraphs below. The recipient may satisfy these requirements in whole or in part through the development of the metropolitan TIP and the local coordinated public transit–human service transportation plan.

Either the designated recipient for a UZA or each individual direct recipient must: ‌(2) Develop a proposed POP for activities the designated recipient will finance, in consultation with interested parties, including private transportation providers and human

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services organizations or transit operators representing the employment-related transportation needs of welfare recipients and low-income individuals; (6) Consider comments and views received, including those of private transportation providers and human services organizations or transit operators representing the employment-related transportation needs of welfare recipients and low-income individuals, in preparing the final POP; and…

Public comment process not followed (5307:3-3) CATA had a major service reduction during the review period. According to its public comment process, CATA was to notify the public of the proposed service change for a period of 30 days and allow interested parties an opportunity for a hearing. CATA did not follow its public comment process to offer the opportunity for a public hearing to discuss the proposed service reduction. Instead, CATA held a board meeting where the proposed service change was discussed and subsequently approved for implementation.

FTA Circular 9030.1E, Chapter VI Program Management and Administrative Requirements “1.a.(12)…The recipient is responsible for defining a major service reduction. The policy should provide an opportunity for a public hearing or public meeting for any fare increase or major service reduction and should describe how the recipient will conduct such meetings and how the recipient will consider the results of such meetings in the process of changing fares and service.

A public meeting is not mandatory; however, an opportunity for a public meeting in order to solicit comment must be provided.”

Post Site Visit Subsequent to the site visit, CATA submitted to the FTA regional office procedures to ensure that it follows its public comment process for fare increases and major service reductions. Based on the submission of the corrective action, this deficiency is closed.

Corrective Action and Schedule: For the deficiency elements missing in POP public participation procedures (5307:2-3), by September 25, 2018, submit to the FTA regional office a procedure for developing the proposed POP in consultation with interested parties, including private transportation providers and human services organizations or transit operators representing the employment-related transportation needs of welfare recipients and low-income individuals, along with evidence of its implementation.

19.

Section 5310 Program Requirements

Basic Requirement: Recipients must expend funds on eligible projects that meet the specific needs of seniors and individuals with disabilities. Projects selected for funding under the Section 5310 program must be included in a locally developed, coordinated public transit-human services transportation plan. Recipients must approve all leases of Section 5310-funded vehicles and ensure that leases include required terms and conditions. Either the recipient or subrecipient must hold title to the leased vehicles.

Finding: During this Triennial Review of CATA, no deficiencies were found with the FTA requirements for Section 5310 Program Requirements.

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20.

Section 5311 Program Requirements

Basic Requirement: Recipients must expend funds on eligible projects to support rural public transportation services and intercity bus transportation.

This section only applies to recipients that receive Section 5311 funds, therefore, the related requirements are not applicable to the review of CATA.

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V.

Summary of Findings

Review Area 1.

Legal

2. Financial Management and Capacity

Finding

Deficiency Code(s)

Corrective Actions

Response Due Date(s)

Date Closed

F1-1: Missing, insufficient, or out of date financial operating procedures

Develop and submit to the FTA regional office financial operating procedures for managing FTA award funds in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. This must include procedures for determining allowability of cost and timely distribution of funds and reflect recommendations from audit findings or significant changes in the organization.

September 25, 2018

Submit documentation that CATA has trained appropriate staff on the new policies and procedures.

September 25, 2018

Submit to the FTA regional office a process for documenting that an authorized official approves each ECHO request.

September 25, 2018

June 13, 2018

Submit documentation that CATA has updated the authorizing official in ECHO or that the authorizing official delegated authority in writing to the person approving ECHO requests.

September 25, 2018

June 13, 2018

Implement and submit to the regional office documentation of training conducted of the appropriate staff on new policies and procedures

September 25, 2018

June 13, 2018

Develop and submit to the FTA regional office policies and procedures that allow for the preparation of required reports, tracking of award funds, and addressing required elements.

September 25, 2018

Submit to the FTA regional office evidence that CATA has implemented financial management systems to accurately account for and report on federal funds.

September 25, 2018

Submit to the FTA regional Office procedures for documenting ECHO draws for JARC funds.

September 25, 2018

Discuss with the FTA regional office if it will require CATA to submit ECHO requests for prior approval.

September 25, 2018

ND D

F2-3: ECHO draws not properly approved

F3-1: Financial management systems deficiencies

F4-1: ECHO documentation deficient

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Review Area

3. Technical Capacity (TC) – Award Management

Finding

D

Deficiency Code(s)

Corrective Actions

Response Due Date(s)

Document and work with the FTA regional office to reimburse FTA for ineligible expenses charged to awards, plus applicable interest.

September 25, 2018

Implement and submit to the FTA regional office documentation of training conducted of the appropriate staff on new policies and procedures.

September 25, 2018

F5-1: Ineligible indirect costs charged to awards

Discuss appropriate corrective action with the FTA regional office and regional counsel.

September 25, 2018

F6-4: Outstanding annual audit deficiencies

Submit to the FTA regional office procedures and a schedule for resolving single audit findings.

September 25, 2018

June 13, 2018

Report on the status of addressing audit findings in periodic progress reports.

September 25, 2018

June 13, 2018

Submit revised reports that include the missing information in TrAMS. Notify the FTA regional office when reports are submitted.

September 25, 2018

June 13, 2018

Submit to the FTA regional office procedures for including all required information in future reports.

September 25, 2018

June 13, 2018

Submit revised reports that accurately reflect the status of projects in TrAMS and notify the FTA regional office when reports are submitted.

September 25, 2018

June 13, 2018

Submit to the FTA regional office procedures for reconciling FFRs and MPRs.

September 25, 2018

June 13, 2018

TC-AM4-1: Annual status reports missing or lacking required information

Submit in TrAMS the annual program of projects status reports for the past year.

September 25, 2018

Submit to the FTA regional office procedures for submitting reports with the required information at the required interval.

September 25, 2018

SCC7-3: Inadequate equipment records

Submit to the FTA regional office updated equipment records which include all of the required information.

September 25, 2018

TC-AM2-1: Incorrect FFR reporting

TC-AM:2-2: MPR/FFR do not agree

4. TC – Program Management and Subrecipient Oversight

ND

5. TC – Project Management

ND

6. Satisfactory Continuing Control

D

2018 Triennial Review - Capital Area Transit Authority

Date Closed

28 | P a g e

Review Area

7.

Maintenance

Finding

D

Deficiency Code(s)

Corrective Actions

Response Due Date(s)

SCC7-4: No evidence of physical inventory or reconciliation

Submit to the FTA regional office evidence that CATA has developed procedures to perform the biennial physical inventory of FTA-funded equipment and reconcile them to records.

September 25, 2018

M2-2: Late facility/equipment preventive maintenance

Submit to the FTA regional office procedures for completing preventive maintenance inspections on time.

September 25, 2018

Submit to the FTA regional office a monthly report signed by the chief executive officer or other senior management designee on the preventive maintenance results of the item(s) examined during the review until the data demonstrates CATA has conducted 80 percent of its preventive maintenance on time for three consecutive months.

For each asset that received a preventive maintenance inspection during the month, CATA must include with the submittal to the FTA regional office: o a report listing the items, the dates the inspections are due, and the dates of the actual inspections. List the percentage of the inspections performed on time o back-up documentation for each item (e.g., copy of work order, printout from the maintenance management system) documenting the date of the inspection.

Submit to the FTA regional office oversight procedures to ensure that timely preventive maintenance is performed on all FTA-funded assets operated by CATA’s contractor, along with evidence of its implementation.

September 25, 2018

Prepare and submit to the FTA RCRO evidence that CATA has revised its complaint procedures to include timelines for resolution of the complaints along with evidence that staff has been trained on the revised procedures.

September 25, 2018

M5-1: Inadequate oversight of subrecipient, contractor or lessee maintenance activities

8.

Procurement

9. Disadvantaged Business Enterprise (DBE) 10. Title VI

Date Closed

September 25, 2018

ND ND

D

TVI4-1: Title VI complaint process not implemented in accordance with Title VI Program

2018 Triennial Review - Capital Area Transit Authority

29 | P a g e

Review Area 11. Americans with Disabilities Act (ADA) - General

Finding D

12. ADA – Complementary Paratransit

ND

13.

Equal Employment Opportunity

ND

14. School Bus

ND

15. Charter Bus

D

16. Drug-Free Workplace Act

ND

17. Drug and Alcohol Program

ND

18. Section 5307 Program Requirements

D

19. Section 5310 Program Requirements

ND

20. Section 5311 Program Requirements

NA

Deficiency Code(s)

Corrective Actions

Response Due Date(s)

ADA4-1: Demandresponse vehicle accessibility standards deficiency

Submit to the RCRO procedures for filing the certificate of equivalent service prior to purchase or lease of nonaccessible vehicles for general public demand-response service.

September 25, 2018

CB1-1: Charter service not operated under exemption or exception

Cease operating charter service that does not meet an exemption or exception. If CATA wishes to continue to provide charter service, the recipient must submit to the FTA regional office procedures for ensuring that services are consistent with an exemption or exception allowed under the charter regulation and evidence that the procedures have been implemented.

September 25, 2018

5307:2-3: Elements missing in POP public participation procedures

Submit to the FTA regional office a procedure for developing the proposed POP in consultation with interested parties, including private transportation providers and human services organizations or transit operators representing the employment-related transportation needs of welfare recipients and low-income individuals, along with evidence of its implementation.

September 25, 2018

5307:3-3: Public comment process not followed

Submit to the FTA regional office procedures to ensure that CATA follows its public comment process for fare increases and service reductions.

September 25, 2018

2018 Triennial Review - Capital Area Transit Authority

Date Closed

June 13, 2018

June 13, 2018

30 | P a g e

VI.

Attendees Name

Title

Phone Number

E-mail Address

CATA Brad Funkhouser

Chief Executive Officer

517-394-1100

Ericka Hartigan

Grants Manager

517-999-2505

bfunkhouser@cata.org ehartigan@cata.org

Matt Oudsema

Senior Analyst

517-999-2506

moudsema@cata.org

Pat Lemon Marilyn Wiley Anita Detwiler Andrew Brieschke

Director of Finance Finance Manager Accountant II Deputy Chief Executive Officer Director of Maintenance Paratransit Manager System Planner Scheduling Manager Director of Marketing Paratransit Manager Procurement Manager Facilities Manager Director of Information Technology Executive Secretary

517-999-2530 517-999-2525 517-999-2529 517-999-2517

plemon@cata.org mwiley@cata.org adetwiler@cata.org abrieschke@cata.org

517-999-2574 517-999-2567 517-999-2509 517-999-2508 517-999-2560 517-999-2566 517-999-2531 517-999-2541 517-999-2550

bfrarey@cata.org cfrazier@cata.org jarcuicci@cata.org kchristiansen@cata.org lrobison@cata.org mwillis@cata.org nwilson@cata.org nvanalstine@cata.org sgleason@cata.org

517-999-2500

solson@cata.org

Bill Frarey Craig Frazier Janet Arcuicci Kai Christiansen Laurie Robison Michelle Willis Nicole Wilson Norm VanAlstine Sean Gleason Susan Olson FTA Lisa Joiner

Transportation Program Specialist

312-353-2791

Lisa.Joiner@dot.gov

Kris Welch

Community Planner

312-353-3853

Krishina.welch@dot.gov

267-608-1063 703-855-5942

jbuckley@milligancpa.com

Milligan & Company, LLC Reviewer Jim Buckley Senior Manager Evans Bannor

ebannor@samlincpa.com

2018 Triennial Review - Capital Area Transit Authority

31 | P a g e

VII.

Appendices

No appendices included in this report.

2018 Triennial Review - Capital Area Transit Authority

32 | P a g e

FTA Fiscal 2018 Triennial Review – Deficiencies and Corrective Action Plan REVIEW AREAS 2. Financial Management and Capacity

3. TC – Award Management

6.

Satisfactory Continuing Control 7.

Maintenance

DEFICIENCIES Code

CORRECTIVE ACTION STATUS

RESPONSIBLE PARTY(IES)

F1-1

Missing, insufficient or out-of-date financial operating procedures

•

CATA staff met internally to formulate a corrective action plan response to document financial operating procedures for managing award-related transactions.

09-25-2018

F2-3

Electronic Clearinghouse (ECHO) draws not properly approved

•

Finding Closed. FTA approved corrective action memo documenting CATA’s process to ensure an authorized official approves each grant draw down request. Training logs were submitted to document staff training on new policies and procedures.

Closed 06-11-2018

F3-1

Financial management systems deficiencies

•

09-25-2018

F4-1

ECHO documentation deficient

CATA staff met internally to formulate a corrective action plan response to develop policies/procedures that allow for preparation of required reports, tracking of award funds and addressing required elements.

CATA will submit to FTA evidence of the implementation of these policies and procedures.

CATA staff scheduled a telephone call with FTA to discuss JARC (Job Access and Reverse Commute) grant drawdowns of funds and eligible expenses.

F5-1

Ineligible indirect costs charged to awards

•

CATA staff to schedule a telephone call with FTA to discuss ineligible indirect costs charged to grant awards.

09-25-2018

F6-4

Outstanding annual audit deficiencies

•

Finding Closed. FTA approved corrective action for documenting internal procedures on addressing single audit findings. CATA also submitted the FY 2017 internal report documenting single audit findings and status updates.

Closed 06-11-2018

TC-AM21

Incorrect Federal Financial Report (FFR) reporting

•

Finding Closed. FTA approved corrective action memo from CATA documenting procedures for completing Federal Financial Reports (FFR) and Milestone Progress Reports (MPR) and the submittal of CATA’s FY 2018 Quarter 2 FFR and MPR reports.

Closed 06-11-2018

TC-AM22

Milestone progress report (MPR)/FFR do not agree

•

Finding Closed. FTA approved corrective action memo from CATA documenting procedures for reconciling two quarterly federal reports (FFR and MPR) and the submittal of CATA’s FY 2018 Quarter 2 FFR and MPR reports.

Closed 06-11-2018

TC-AM41

Annual status

•

09-25-2018

SCC7-3

Inadequate equipment records

• •

CATA staff to submit to FTA annual program of projects status reports for the past year for funds expended on Section 5310 – Enhanced Mobility for Seniors and Individuals with Disabilities Formula funding.

CATA staff to submit to FTA procedures for submitting reports with the required information at the required interval.

CATA to document updated equipment records and submit to FTA for approval.

SCC7-4

No evidence of physical inventory or reconciliation Late facility/equipment preventive maintenance (Elevator PMs)

•

CATA to develop procedures to perform biennial physical inventory of FTA-funded equipment and reconcile them to records.

09-25-2018

• •

09-25-2018

Inadequate oversight of subrecipient, contractor or lessee maintenance activities Title VI complaint process not implemented in accordance with Title VI Program

•

06-11-18 Preventive Maintenance Report demonstrating May 2018 maintenance checks submitted to FTA. June 2018 and July 2018 maintenance check reports to be compiled and sent to FTA to close out finding to demonstrate three consecutive months of required reporting.

CATA staff working internally to document oversight of contracted paratransit service provider.

09-25-2018

Operations Department

CATA to provide evidence of revised complaint procedures including timelines for resolution of complaints and evidence of staff training on revised procedures.

09-25-2018

Marketing and Planning Departments

M2-2

M5-1 10. Title VI

Description

ESTIMATED FINDINGSCLOSE DATE

TVI4-1

• •

•

09-25-2018

09-25-2018

Finance and Grants Departments Finance and Grants Departments Finance and Grants Departments Finance and Grants Departments Finance and Grants Departments Finance and Grants Departments Finance and Grants Departments Finance and Grants Departments Grants Department Finance Department Finance Department Facilities Department

FTA Fiscal 2018 Triennial Review – Deficiencies and Corrective Action Plan REVIEW AREAS 11.

Americans with Disabilities Act (ADA) – General 15. Charter Bus 18. Section 5307 Program Requirements

DEFICIENCIES Code

ADA4-1

CB1-1 5307:2-3

5307:3-3

Description

Demand-response vehicle accessibility standards deficiency

ESTIMATED FINDINGSCLOSE DATE

CORRECTIVE ACTION STATUS • •

CATA to complete procedures for filing the certificate of equivalent service for past purchase of non-accessible vehicles for general public demand-response service.

CATA to complete the equivalent service analysis, including required public outreach.

Charter service not operated under exemption or exception Elements missing in POP public participation procedures

•

Finding Closed. FTA approved corrective action memo from CATA stating awareness of FTA regulations.

•

Public comment process not followed

•

CATA to submit to FTA procedures and documentation of implementation of public outreach for the proposed Program of Projects (POP). This may include consultation with the following interested parties: o Private transportation providers o Human services organizations o Transit operators representing the employment-related transportation needs of welfare recipients and low-income individuals Finding Closed. FTA approved corrective action memo from CATA documenting procedures for public comment on fare increases and route reductions, along with evidence of its implementation.

RESPONSIBLE PARTY(IES)

09-25-2018

Operations Department

Closed 06-11-2018

Operations Department Planning, Grants and Marketing Departments

09-25-2018

Closed 06-11-2018

Marketing and Planning Departments

==

LEGEND Deficiency Open Submitted; Pending FTA Review Deficiency Closed

L