AGENDA ITEM #9B Mia. Information Item Harvey M. Rose, LLC Report Santa Clara Valley Transportation Authority December 9, 2010 Harvey M. Rose, LLC. hip + Commissioned by Working Partne VIN's Bargaining Units | USA on behalf of + Limited Scope Engagement + Objectives ~ Evaluate Assumptions & Cale tions 10-Year Fina Projection ~ Use of Capital Funds for Operations Assess VIW's Reserve Policies = Compare Pensfon Liabilities to other agencles & evaluate two-tier 12/8/201¢Response to H. Rose Report Updated Revenue/Expenditure Forecasts Baseline (Most Likely) Optimistic Best ¢ ~ Pessiniste (Worst Case) Projection Recommendations Capital Funds Recommendations Reserves & Internal Service Funds Recommendations, Pensions Baseline Forecast Economic Indicators Updated (November) 2% Annual Ridership Growth Goes Negative in 2016 Requires $17.5 Million Savings Board will review during budget process Ma 12/8/2016Optimistic Forecast Economic Indicators Updated (November) Low inflation Ridership based on Travel Demand Model Remains Positive throughout Planning Period Board will review during budget process Pessimistic Forecast Econom ¢ Indicators Updated (November) High taflation 2% Annual Ridership Growth Goes Negative in 2612 es $63 Million Savings Ree Board will review during budget process 12/8/201¢Recommendations from Harvey Rose Analysis = 10-Year Projections Harvey Rose ‘+ Reduce financial planning hori ta S years or less + Prepare & present best-case, Ikely-case & worse case projection scenarios + Use of cyclical vs, constant percentage growth fetes VIA Recommendations + Retain 1Dyear hoowsn + Continue using mastlkely scenario for establishing targets 4+ resent sensitinty analyse far Board discussion + Use trend forecast grow ates in December 2010 updated projectians Recommendat ms from Harvey Rose Analysis Using Capital Funds for Operating Costs Haney Rose ‘+ Use FTA 5307 & 5309 funds for preventative maintenance + Use Measure A funds for operating costs ~ na limitations + Reduces need far capital funds due to influ of ARKA funds VTA Recommendations + Adopt the Ad Hee Conimittee’s recommendation for use of FTA funds + Maintain current Beard policy to leve-fund operations fram Messare A + Vis asset replacement needs are on-going despite influx of ARRA funds 12/8/201Recommendations from Harvey Rose Analysis a Reserves and Internal Service Funds Harvey Rose + Werke Compensation Reserve 2 bees Si. 5ealian sd + General ably Reserve + Compensated absence Reserve hse ewe hy eter acorn arin aba ana al curt VTA Recommendations pment willinelude Recommendations from Harvey Rose Analyst a Pensions Harvey Rose. Pre-pay annual pension contribution to avaid $750,000 interest charges + Two-tiered pension system produces limited annual cost savings VTA Recommendations + Bienmia Budget Development mil include Review patel prpsyrert utions 1» evatuats we tice ten x ona means to conto growth of employee expenses 12/8/20.‘CONCLUSION a + canside recommendations frm Hose Reportin development ofthe FY 2012-2013, ude Next Steps 42012-2015 Budget Assumptions wil be reve 3