William J. Dalton*

R6

OCTA should exercise stronger oversight in awarding planning and engineering contracts involving Measure M1 and M2 funds. Currently, OCTA utilizes 1 percent of Measure M funds for oversight of approved projects. This should be increased to allow for greater oversight of transportation contract awards consistent with State and Federal funding guidelines to ensure that Measure M funds are properly spent. The recommendation will not be implemented because it is not warranted. OCTA is very proud to have successfully delivered major, high priority transportation projects to Orange County through the Measure M program since 1991. These projects were most often delivered in partnership with other entities such as the California Department of Transportation (Caltrans), Metrolink, and local jurisdictions throughout Orange County. Moreover, approval for the renewal of the Measure M program by nearly 70 percent of Orange County voters in November 2006 can be directly linked to OCTA's track record of successful project delivery. OCTA is confident that project delivery to date and taxpayer safeguards that are built into the Measure M program speak to the integrity of the administration of Measure M funds. As referenced previously, the Measure M program includes strong oversight safeguards that protect the public's investments in transportation. The following safeguards are examples of this oversight: An independent Taxpayers Oversight Committee (TOC), led by the Orange County Auditor-Controller, helps ensure Measure M funds are spent as voters have mandated through the expenditure plan. Members of the TOC are screened by the Orange County Grand Jurors Association and ď, The Honorable Kim Dunning August 10, 2010 then selected by lottery to serve. TOC members are independent. These members are not appointed by and do not serve at the pleasure of the OCTA Board. Among its duties, the TOC is charged with contracting with an external ٠ accounting firm to conduct annual audits of the Measure M program. This audit is then used as a basis for a compliance finding. In each of Measure M's 19-year history, the TOC has found OCTA in compliance of delivering on the promises and requirements of Measure M. Quarterly and annual reports representing the progress of implementation of ٠ the Measure M expenditure plan are required to be prepared for the OCTA Board and public review. It is important to note that the Grand Jury report incorrectly concludes that the 1 percent administrative cap on the use of Measure M funds is strictly for oversight purposes. The 1 percent limitation for salaries and benefits of OCTA administrative staff is part of the authorizing legislation under which Measure M was put on the ballot and is also included in the Measure M ordinance. The limit applies to all the administrative activities of OCTA staff in regard to the sales tax program, including and not limited to oversight and accountability functions. OCTA does not have the discretion to change this limit. Measure M stipulates specific eligibility requirements for use of funds and complying with applicable state law. However, Measure M does not require eligible jurisdictions to abide by specific guidelines or procedures with respect to procurement activities on projects funded with local sales tax dollars. The Measure M expenditure plan and ordinance never contemplated nor intended to put OCTA in the role of setting standards for and/or overseeing procurement policies and procedures of the cities and the County of Orange. This was a deliberate policy choice consistent with the legislative intent not to create a large bureaucratic structure to administer local sales tax programs and with the requirement that the Measure M expenditure Plan be approved by cities and the county prior to being placed on the ballot. As noted in our response to Finding F.6 above, there are existing legal and policy procedures in place to set standards and accountability for procurement and contracting activities of cities and the County of Orange. The Honorable Kim Dunning August 10, 2010 Thank you for the opportunity to respond to the Grand Jury's report. OCTA appreciates the role of the Orange County Grand Jury in providing public oversight of Orange County public agencies. Sincerely,