Troubled Ride-Sharing Program Near Collapse

Southern California’s pioneering program to boost ride-sharing among commuters has produced only minimal gains and is on the verge of collapse after repeated warnings of mismanagement, sloppy accounting and conflict of interest.

During the last two decades, the government has pumped about $100 million into the nonprofit Commuter Transportation Services Inc. without adequate oversight to measure results or ensure that funds were spent properly, records show.

Prompted partly by problems with the firm, the Wilson Administration is recommending an end to funding all 17 regional ride-share programs that provide the major catalyst for car-pooling in California.

“We aren’t getting the bang for the buck that we need,” said Transportation Department Director James van Loben Sels.

CTS, which is the oldest and largest program of its kind in the country, was founded during the oil crisis in the 1970s by transportation officials at Caltrans and private corporations. Receiving about $10 million a year in federal funds, the company promotes ride-sharing through various advertising campaigns as well as a phone bank and computer system that match car-poolers in five Southland counties.

Company President Jim Sims said any problems the firm has experienced were caused by the failure of Caltrans officials to clearly communicate changes in government rules. He credited the company with doing a good job and said that ride-sharing rates in the Southland have remained steady while they have dropped elsewhere in the nation.

The company’s statistics show that car-pooling in the Southland has leveled off. The percentage of people who regularly car-pooled in 1994 is about the same as in 1990. The percentage of solo commuters actually rose slightly during three of the last four years in five Southland counties.

The state’s recent re-evaluation of the ride-sharing effort has been driven by the problems in Los Angeles, where government auditors have repeatedly criticized the company’s spending practices and other officials have questioned the group’s close relationship with transportation officials who have served on the company’s board of directors.

Hundreds of pages of documents and interviews show that:

* Year after year, Caltrans officials in Los Angeles gave Commuter Transportation Services an exclusive, no-bid contract to provide ride-sharing services even after their superiors in Sacramento directed them to seek competitive bids and after rival companies complained that they could do the work for less.

* Local Caltrans officials persuaded the company to use ride-share funds to pay for special projects that were not authorized in the Caltrans budget and sometimes had little connection to car-pooling.

* The Caltrans official in the Los Angeles district office who had responsibility for overseeing the company contract was also a member of the company’s board of directors, in what his Sacramento superiors called a conflict of interest, records show. He remained on the board even after he was urged to resign and was later demoted with a pay cut.

* The district director of Caltrans in Los Angeles was also disciplined for his supervision of the firm’s contract and was advised that his pay would be docked. But he resigned from his $85,900-a-year post at Caltrans to take a $125,400 job at the Metropolitan Transportation Authority, which also contracts with Commuter Transportation Services.

* MTA officials warned in 1993 that the firm was duplicating work already performed in-house by government transportation employees--and charging, in some cases, as much as 18 times more for it, records show. In one two-month period, MTA staff questioned or rejected more than $260,000 in invoices for trips, supplies, meals and services.

Sims, the president of the firm since 1989, said criticism is overblown and that he can document “every nickel, every dime” that has been spent. He said the allegations that his company spent 18 times as much as the government to do the same work are ridiculous.

Furthermore, he complained that the firm was unfairly faulted by auditors for doing things that Caltrans officials had previously sanctioned. For example, he said that with Caltrans’ approval, CTS regularly backdated checks for fiscal accounting purposes, only to be later criticized by government auditors.

For many years, the firm enjoyed a special relationship with transportation officials who sometimes were members of the company’s board of directors.

“We were seen almost as a subsidiary of Caltrans,” Sims said.

The company’s difficulties began, he said, when officials at Caltrans headquarters in Sacramento decided two or three years ago that Commuter Transportation Services should be required to strictly adhere to regulations and policies like any other private contractor.

He said this change of attitude was never adequately communicated either to the company or district Caltrans officials.

Although CTS is financed mostly by federal funds, the responsibility for oversight rests with Caltrans and the MTA, which administer the federal money. The company’s work is focused in Los Angeles, but San Bernardino, Riverside, Ventura and Orange counties have also paid the firm smaller amounts to assist their ride-sharing efforts.

In Los Angeles, the firm has long been popular with major corporations, which are required to set up ride-share programs to satisfy clean air requirements.

With 100 employees in their Los Angeles office, the firm has teamed up with more than 6,000 Southland employers to provide workers with lists of potential car-pool partners.

*

Since 1989, the firm’s funding has jumped about 50%, allowing it to increase its outreach significantly and expand its commuter database to include more than 700,000 drivers.

CTS statistics show that about 900,000 people regularly car-pooled last year, or about about 14% of 6.6 million commuters in five Southland counties. This is the same percentage as in 1990. There were about 5.5 million “solo” drivers--or 80%, which is the same percentage as in 1990.

Also, the percentage of drivers who occasionally use an alternative to driving alone has dropped from 8% in 1992 to 5% in 1994.

Sims said the picture in the Southland is less discouraging than in other metropolitan areas, where car-pooling rates have declined more precipitously. He blamed the ride-sharing slowdown in the Southland partly on the recession, noting that many workers have lost their car-pool partners to layoffs.

After the company was founded, the idea of promoting ride-sharing spread to other parts of the state, and Caltrans financed 16 other programs--all smaller than the Los Angeles effort.

Audits have identified problems in some of these other programs but the most serious ones were uncovered at the firm in a 1993 MTA audit.

“The CTS audit in a nutshell said the auditors couldn’t figure out what the hell was going on, which is just a horrible finding as far as I’m concerned,” said John Wolf, director of Caltrans office of traffic operations.

Some of the expenditures that state and local transportation officials could identify only raised more questions.

Dozens of invoices for trips, lunches, consulting services, association memberships and other expenses submitted by the firm were rejected for payment by the MTA. Some appeared to have been double-billed to different agencies, according to MTA staff memos, while others were deemed out of policy or unverifiable, records show.

Expenses for unauthorized business trips by employees to New York, New Orleans, Chicago and Buffalo were all challenged by the MTA. Some expenses were rejected and others were later paid.

The firm spent up to $5,000 a year on staff lunches and parties for employee morale, in what Caltrans officials called a possible violation of state policy, records show.

Officials also questioned why CTS spent about $80,000 on press conferences during one year and budgeted another $300,000 for legislative research and analysis--even though Caltrans and MTA both have staff and consultants for that purpose. In several instances, MTA officials were confounded to discover the lobbyists that the firm had hired were working in opposition to the local transit agency on state and federal clean-air issues.

Sims said he was unaware of this counterproductive lobbying effort and said that the firm no longer hires publicists to stage news conferences.

If auditors had bothered to dig deeply enough into the files, Sims said, they would have been able to determine exactly how the money was spent. But he also acknowledged that the company’s accounting system had to be overhauled to meet government requirements and avoid a threat by the federal government in February, 1994, to cut off funding.

The threat of federal action and the seriousness of the MTA audit caused the MTA and Caltrans to question whether their staffs had been too lax in monitoring the firm.

The MTA’s inspector general has criticized the local transit agency for ignoring serious problems with the program. CTS officials said they have fixed some but not all of the problems and are now pushing for a wholesale restructuring of the program.

At Caltrans, the head of the agency ordered a separate report to find out why the district office did not more to correct problems at the firm.

His inquiry uncovered a relationship between local Caltrans officials and the firm that had become so entwined over the years that both sides routinely ignored government rules and policies, records show.

Caltrans had given the firm a loosely written, no-bid contract year after year despite directives from Sacramento to seek competitive bids, records show.

As early as 1991, rival companies had objected to being frozen out of the competition and a coalition threatened to sue.

Local Caltrans officials justified the sole-source contract by asserting that “CTS is deemed to be the only contractor available to provide a ride-sharing program for the Greater Los Angeles area.”

But to Sacramento officials, the most troubling aspect of the relationship between the firm and the local district was that Lew Bedolla, the Caltrans official responsible for overseeing the contract, was a voting but unpaid member of the firm’s board.

“This board membership is a major obstacle to having the needed control and accountability” over the firm’s contract, wrote Wolf, an official in the Caltrans Sacramento office who reviewed the matter in 1992 and concluded that the situation posed a conflict of interest.

Bedolla did not resign from the board until February, 1994, a month after state auditors raised the issue again.

He told auditors, records show, that he did not believe board membership posed a conflict.

Bedolla recently declined to be interviewed by The Times but said through a representative that he intended to challenge his demotion from deputy director to supervisor and his $19,608 annual pay cut.

The relationship between the firm and Caltrans held advantages for both sides, record show. Sims acknowledged that on several occasions during the last few years, Caltrans officials asked him to use the firm’s funds to pay for special transportation projects that had not been authorized in the Caltrans budget.

Bedolla directed Sims to install at a cost of $45,193 a cable hookup linking City Hall’s public access television channel to a Caltrans traffic map, records show. According to an audit report, Bedolla told Sims to “find something in the current CTS contract that this . . . could fall under.”

Auditors, who challenged the $45,000 cable expenditure, noted that it diverted money “from a legitimate activity to one that is not eligible for (federal) funding.”

On another occasion, Sims told The Times, he agreed to use the firm’s funds to buy computer equipment for a Caltrans official supervising his contract. He said he was told the official needed the computer to keep track of the firm’s work.

Van Loben Sels said he was disappointed by the behavior of Caltrans officials who oversaw the firm.

“I was chagrined to find . . . people doing things that were inappropriate,” he said. “We both corrected the process and dealt with the individuals.”

In a rare move, he disciplined not only Bedolla but also the highest-ranking Caltrans official in the Los Angeles area, Jerry Baxter, who supervised Bedolla and personally authorized the $45,000 cable hook-up for City Hall.

Baxter’s pay raise was cut 20%, by $864 a year.

Baxter left his $85,900-a-year post at Caltrans in Octoberfor a top post at the MTA with an annual salary of $125,400.

He said in an interview that his move to the MTA had nothing to do with his rebuke at Caltrans. He added that he never thought very highly of the program he supervised because, “I just don’t think it was very cost-effective.” He blamed Sacramento headquarters for not giving better direction.

MTA chief Franklin White declined to comment on either Baxter’s hiring or the MTA’s oversight of its contract with the firm.