Controller’s Audit of RTD Confirms Loose Practices

Poor accounting and contracting practices at the embattled RTD--many of them first reported by the news media--were confirmed Wednesday in a report released by the state controller’s office.

Citing deficient auditing standards, loose controls on lobbyists’ contracts, improper accounting for inventory and a potentially wasteful headquarters office lease, Controller Gray Davis said the “RTD has to run a tighter ship” and address “a number of accounting irregularities.”

No Misuse of Funds

The two-month review of the Southern California Rapid Transit District found no misuse of state funds, said Davis, who acknowledged that his staff had not conducted a thorough analysis of the transit agency’s financial management. Davis said he initiated the special review after reading a February report in The Times disclosing lax controls on more than $1.2 million spent on RTD lobbyists in Washington, Sacramento and Los Angeles in recent years.

Davis is the latest in a growing list of Sacramento politicians to criticize the transit district, which has been the subject of nearly a year of revelations and accusations of mismanagement. Already, the Legislature is completing work on a bill to disband the RTD and form a new regional super-agency to build and operate transit systems.

In a prepared response, RTD General Manager John Dyer said the district has corrected some of the problems and is working on others.

One new element in Davis’ report was a list of problems in the RTD’s internal auditing office--the unit charged with investigating how the huge transit system spends its more than $800 million annual budget. After finding inadequate supervision and poorly documented reports, among other problems, the state auditors urged the RTD to strengthen its auditing operation.

The state auditors said the RTD is improperly accounting for its $22-million inventory of bus parts and other supplies, which has the effect of inflating its annual operating expenses. Although no estimates were provided, state auditors said the potential result is that the state is providing the RTD too much money.

“It provides erroneous and misleading information to the (RTD) board and the public,” Davis said.

Spending on lobbyists has been poorly documented, the report said. RTD officials have previously argued that lobbyists are a special category of contracts that deal in sensitive areas and should be exempt from normal requirements for detailed accounting of what they spend.

Public Funds

“(RTD officials) are dealing with public funds,” said Greg Brummels, a state auditor. “While a lobbyist may be hesitant to provide all this information, we believe it is information the RTD must have in order to judge whether they are getting their dollars worth.”

In addition, the state auditors, while making no specific recommendation on the question, said the RTD should thoroughly review the cost-effectiveness of maintaining its current $2.2-million annual lease for office space downtown. News reports have alleged that the district could have saved millions of dollars by purchasing its Main Street office building, rather than leasing it.