The Metropolitan Transportation Authority may be losing millions of dollars each year because of dishonest employees, poor cash management and faulty equipment, an internal audit has found.
The MTA inspector general's review of how the agency handles the $200 million it collects in bus fares each year cited numerous instances of employee theft. In one case, the report said, the agency lost $1.2 million from the theft and sale of transfers by one bus driver. The MTA could not immediately provide additional information about that allegation. The audit, however, said that before the theft was revealed, managers had considered the driver "an exemplary employee."
In addition, three workers were convicted of embezzling public funds in January and were ordered to pay back $40,000, the audit noted. Two other employees were accused of emptying fare boxes and ordered to pay restitution totaling $41,000, it said. And three thefts were reported at the MTA's cash-counting facility, although the report noted that no recent thefts have come to light there.
The audit, which did not name employees or provide specific dates or other details, said the thefts may just be the tip of the iceberg.
"Although the overwhelming majority of MTA employees are honest and dedicated to the integrity of the system, the large sums of cash regularly exposed in the system make a significant degree of theft inevitable unless very stringent controls are maintained," the audit found.
Overall, the report concludes that controls are so weak that the MTA is exposed to huge financial losses.
"MTA experienced numerous cases of thievery in virtually all phases of its operation, as well as substantial evidence that other criminal activity has gone unapprehended," the report said.
"Revenue is now so loosely accounted for that management would not be alerted to even very large diversions of funds," the audit found.
The report, which was completed last month after a year of preparation, also cited estimates that $2.2 million annually is lost from passengers boarding buses without paying the full $1.35 fare.
The document listed other problems as well, including counterfeiting of bus passes and tokens and faulty equipment such as cash boxes that did not lock.
In addition, it criticized the MTA's system of weighing dollar bills and selling them to a contractor at 97 cents on the dollar rather than counting the money in-house.
Every morning at a secret Downtown location, a worker counts $4,000 in dollar bills and then weighs the money. Workers stuff other dollar bills into bags that are weighed to match the standard. The bags are then turned over to a vendor.
"The vendor, understandably re-weighs the bags and has frequently returned those believed to be short," said the report. "If bags can sometimes be weighed short, logically there also could be overages. There are no reports, however, of bags returned because they were over."
Transit officials in the past have said it costs more for union workers to count the 200,000 or so dollar bills collected every day and prepare them the way the banks want them--stacked face up in bundles of $100.
The inspector general said that with proper equipment, the MTA could save about $426,000 a year by counting the currency instead of weighing it.
"There is no real accounting for the revenue that comes in on the buses," said an auditor in the inspector general's office. "That's the scary part. Until that money is weighed and deposited into the MTA account, we don't know how much comes in per day."
"We agree with the assessment that the MTA needs additional controls," MTA Chief Administrative Officer Judith Pierce said Wednesday.
She said the agency has taken steps to tighten procedures, including beefing up security. She added that the MTA is evaluating the recommendation to count currency instead of weighing it.
"There were problems, but I think we have been very aggressive in addressing many of the concerns," Pierce added.
Other problems identified in the 69-page report:
* The MTA has failed to install equipment that would track whether riders pay by fares or use bus passes. "It is difficult to know what your losses are if you don't know your expected revenues," the report says.
* Losses from jammed fare boxes are believed to be significant. Jamming prevents the box from accepting any further currency, and passengers often ride free until the problem can be fixed, the report says.
* An inspector general's visit to the vaulting operation--where money is transferred from fare boxes to safes--was described as "chaotic" and a tour of the cash-counting facility found the driver of the vault truck asleep in his cab and two safes left unattended.
* As for passengers boarding buses without paying the fare, drivers are limited in how insistent they can be with riders, the report said. Some drivers have been assaulted in confrontations with non-paying passengers.
But the transit police reported that in a spot check earlier this year of 294 passengers observed boarding buses without paying, drivers did not quote the fare, as required, in 245 cases.
Transit officials recently sent out a memo reminding drivers that they are supposed to quote the fare to riders once, but not more because it could lead to violent confrontations, said MTA Police Chief Sharon Papa. Instead, drivers are urged to notify police of non-paying customers, and undercover officers are assigned to ride problem buses.
The inspector general issued a number of recommendations designed to increase accountability and strengthen controls over revenue. Some have already been implemented, including hiring a director of revenue to oversee the handling of bus fare income.
The inspector general praised MTA management for moving quickly to correct problems. "Management, to its credit, has taken a number of actions to address issues and concerns."