Grand jury says VTA is expensive and inefficient

This story was originally printed in the Daily Post on June 22. Don’t be the last to know — pick up the Daily Post every morning at more than 1,000 locations.

By the Daily Post staff

A scorching new report from the Santa Clara County Civil Grand Jury finds that VTA is one of the most expensive and inefficient transit agencies in the country, the third Grand Jury report to criticize the agency since 2003.

The report criticizes the agency’s governance practices, particularly around financial management.

For example, VTA collected 5% less in fares in 2018 than in 2009 — but increased its operating expenses by 51% during the same period.

San Jose dominates VTA’s board

The Grand Jury finds that VTA’s board of directors is monopolized by representatives from San Jose and Santa Clara County, who get five and two voting seats on the board, respectively.

All of the other cities in the county combined have five voting board members, who tend to be less experienced and have higher turnover than the San Jose and county representatives.

The cities of Palo Alto, Mountain View, Los Altos and Los Altos Hills are all represented by a single voting member, currently Mountain View Councilman John McAlister.

The report also urges VTA to hold off on extending the light rail service to Eastridge in San Jose for $450 million, given that the system is one of the country’s most expensive, heavily subsidized and least used light rail systems in the country.

“VTA is committed to transparency and the prudent allocation of the resources entrusted to us,” transit agency spokeswoman Holly Perez said in a statement. “We intend to carefully review the report provided by the Civil Grand Jury. The report will help to inform the work we are currently performing.”

Mishandling financial crises

Perez said the VTA’s board had established an ad hoc committee focused on financial stability that provided direction on steps to improve the organization’s financial direction.

“Many of these steps are already implemented,” Perez said. “An Ad Hoc Board Enhancement Committee is currently meeting to address improving the effectiveness of board members and making better use of the time spent in board and committee meetings.”

The report actually criticizes the establishment of the Ad Hoc Financial Stability Committee that Perez touted, stating that VTA board has “historically followed a pattern of waiting for a financial crisis to arise and then appointing an ad hoc committee.”

In January 2018, San Jose Mayor Sam Liccardo — then VTA’s board chair — didn’t engage the full board about the agency’s structural deficit problem by holding a workshop, for example, and instead created an Ad Hoc Financial Stability Committee chaired by an ex officio member of the board and two voting board members.

The committee then invited a group of 12 “stakeholders” — employees, union representatives and individuals from community organizations — “each with their own agenda, but none with the fiduciary duty to make tough policy decisions solely in the best interests of VTA and county taxpayers,” the report states.

This committee was formed 14 years after another county Grand Jury report on VTA noted that it was “the fiduciary responsibility of the board, not a committee, a business lobbying group, or business community leaders, to provide oversight and direction” on VTA’s operations and financial management.

The ad hoc committee met six times between March and December 2018, canceling three of the nine planned meetings. At one committee meeting in August, VTA Chief Financial Officer Raj Srinath said the agency could continue operating for 18 to 24 months before going “off a cliff.”

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