WASHINGTON — An audit released on Thursday reveals the continued financial problems plaguing Metro and the financial challenges facing Metro in the coming years. The financial report from accounting firm McGladrey finds that while revenues…
WASHINGTON — An audit released on Thursday reveals the continued financial problems plaguing Metro and the financial challenges facing Metro in the coming years.
The financial report from accounting firm McGladrey finds that while revenues dropped at Metro between 2013 and 2014, expenses during the same time period went up. The result was the agency spent $104 million more than it received during the fiscal year that ended June 30, 2014.
“This is a very important step forward in getting WMATA’s financial house in order,” says Metro Board Chairman Mortimer Downey in a press release. “We have more work to do to restore our credibility but this independent audit is key to demonstrating our commitment to transparency in our financial reporting to the market, our funders and our stakeholders.”
But the numbers reveal some troublesome signs for the transit agency. The profit and loss statement shows Metro received $890.5 million in revenues in fiscal year 2014, down from $906.9 million in 2013.
Metro saw a decline in passenger revenue of about $6 million, which is the largest portion of revenues coming into the transit agency. However, that number should rebound when 2015 figures are released because McGladrey projects a four percent to five percent increase in ridership revenue due to the opening of the Silver Line in July 2014.
While revenues decline, expenses went up in key categories. Labor costs, along with health, retirement and pension benefits rose significantly between 2013 and 2014. Labor costs rose from $655 million to $699 million. Over the last three years, fringe benefit costs have increased from $475 million to $544 million.
The result is a financial picture, where the agency lost $104.1 million in 2014 and $446 million over the last three years. Metro’s total net position, a barometer of market value and assets, has dropped each of the last three years.
“The historic documentation problem is being addressed with new management, new processes, and new financial controls that will make Metro fully compliant with FTA requirements,” said WMATA CFO Dennis Anosike. “These improvements in financial management will make future audits more timely and less problematic.”
Metro is on a restricted drawdown list from the Federal Transit Administration because of problems identified in an audit of the agency’s finances and use of federal grants. The restrictions from the FTA have required Metro to borrow money short-term to make ends meet. It also resulted in Moody’s lowering the transit agency’s credit rating in late March.
It remains unclear when Metro will be removed from the FTA restricted list.