a picture that shows trends, that shows how the agency compares with its peers, which is always a challenging thing to do, but also important as a benchmarking exercise that can provide useful guidance both to management there and also to you here. finally, it is my expectation fully because of the large amount of involvement of several key members of the board that it will be the individual board members that will be providing periodic guidance to the consultants on how to carry out the audience -- the audits. commissioner mirkarimi: welcome back from your trip as well, and i would like you to address the point that this contemplation of was moving forward with an audit is the second phase of an mta audit. the first, which was done

several months ago, had a slightly different approach to it, and as a result of that audit, i had approached you to think that maybe it could be more advantageous to have a transit-oriented company, who is used to doing audits in this bit of an industry, would add well to the consideration of those pursuing this audit, but it comes at a price because it is more money. but i think you should try to make some distinctions if you can as to why there might be some advantages in pursuing this particular route with a from outside that has also done transit-related audits -- with a firm outside that has also done transit-related audits. >> i thank you for reminding me of that. i think the most common observation we make when we look

at audits that are done of public agencies, but especially transit agencies, is that they tend to be either fiscal audits, which just look at the numbers, or those are an annual occurrence. in the case of the mta, those have been through the city system, but then, there is a tendency to confuse compliance audits with management performance audits. compliance audits, which you typically see a round here, are those reviews for the agency's following the federal rules for state rules for procurement. as you can imagine, in this very complex day and age, it would be quasi-suicidal if the agency did not follow federal or state rules because you do not get reimbursed. typically, those audits do not

generate terribly useful information. either the agency is complying, or it is not. those are not always addressing the issue of effectiveness, which is really the order of the day in government today because of the issue of budget cuts, and we need to do more with what we have or more with less, so the bottom line is that in order to find the areas of real promise, where you can do improvement and processes or do things as simple as connecting the dots between the investment and improvement services -- why are we buying equipment? what are the ultimate goals? the real goal is to provide better service, so management- related issues are the ones that need to be address, so in order to do that, you want to have one's with experience in a fairly complex field of transit

orientation so they know what they are looking for and they have a sense of what the range of reasonable currencies would be in other agencies. there's also the issue of comparing san francisco to other places. it is not impossible to compare. if you have the right consultant looking at the information with more of a compass of where we should be looking and how we should be approaching the information, we have a better chance of generating good results that, as i said before in my opening remarks, it is useful to you as the policy- making body, and hopefully to the mta board and management as well. areas where there would be a direct impact on their own effectiveness, not an exercise in finding blame, but an exercise in finding opportunities to do things better. for that, i think it is better to have people who have seen these variables before and

understand how the variables operate and are able to zero in on this quickly. it is worth paying the extra money to get that kind of mileage so that in a few months, you can have a useful document to move forward. that would be the basis for suggesting that this extra amount of money was spent. certainly from the perspective of authority, we deal with all of these issues. compliance performance was too much, but management performance looks at the facilities -- we have been talking about utility's plans for a long time. these are multi-billion dollar investments. you may recall that about a decade ago, when the authority decided to match the cost of the replacement of the entire fleet, and that was a $750 million investment with a lot of federal money in the, matched by the

prop k funds, there was a 22% increase in productivity as a result. there is a potential for a big payoff. it is important to understand that we would be looking at three key areas that can generate that kind of pay off, at a time when people are worried about stretching service, and there's a question about the role of transit into the future. there is a potentially very good tool for looking at these options going forward. commissioner mar: any other questions? seeing now, let's open up for public comment. is there anyone from the public that would like to speak? seeing none, public comment is closed. without objection, we are approving this budget amendment. the process is it goes to the plans and programs committee, and the deliverable or october

29 initial report. >> that is right. the plans and programs usually takes measures with this one to approve the appropriations so that the money is flowing through the proper channels. the schedule potentially has the consultant producing and initial preliminary assessment very early on, which is standard for the board to react to, so you understand what they found and the show looked -- an initial look and what they plan to do in more depth. so the early warning sign gives you an opportunity to have input. say what you would rather focus on, and it is actually an audit intended for you, so that is the idea of the early look. commissioner mar: thank you. please call item four. >> item four, recommend amendment of the administrative code. this is an action item.

>> good morning. deputy director for finance and administration. i have an update to the administration code. the authorities administration code directs the authority with a method of appointment of employees and policy consisted of the authority's operations and management. the last of the administration code was in july 2007 -- the last review of the administration code. we made two changes to the administration code. the first, where you can see on page 12 of your packet, is related to the employee performance evaluation of the executive director conducted. we would like to recommend a change that the executive director's performance evaluation take place on

december 31 instead of july 1 of each year and where the recommendation should be for the prior 12 months instead of what the pack it indicates as the current year of the evaluation. this was a request made by share --chair mirkarimi in june. the other changes relate to consistency within the codes -- updating the date the actual committee and board meetings take place, and just a few updates to promote the consistency with in the documents. with that, i would like to seek a recommendation for the amendment of the administration code. commissioner mar: thank you. any questions? and we are joined by commissioner alioto-pier. is there anyone from the public that would like to speak? seeing none, public comment is closed. moved and seconded without

objection, colleagues. so it is approved. >> item 5, state and federal legislative update. this is an information/action item. >> good morning. just to put this into context, the legislature wrap up its regular session three weeks ago today. legislation that passed in the last week or so leading up to the last day was received by the governor. he is allowed until the end of september to deal with those bills. in his history, he has not let a bill become law without taking action. the other surprising information is that in the three weeks since it passed, he has only dealt with a few bills, and it was principally the lieutenant governor who handled a couple of the bills. as you can imagine, there is a stockpile of several hundred bills on his desk that have to be dispensed between now and the

end of the month at the same time they are going through off and on budget negotiations. it is kind of a difficult time in sacramento trying to get your voice heard on specific legislation. there is no new bills added, but some of the bills, by virtue of the legislative session having completed, have been dispensed with either one way or the other, either passage or failed passage. i wanted to update you on a couple of high-speed rail bills of note and some other bills of interest. in the transit of arena, there were essentially two bills worth note moving through. let me take a step back first. in the transportation policy arena, after the passage of the gas tax swap back in march, not a lot of heavy duty policy bills were advanced in the wake of that, so there's not a sustainable amount of significant new policy year. speaker perez has a bill, which

is on page 26, that would increase violations for weapons possession at transit facilities. this was a very closely watched bill. it did pass the legislature. it is on the governor's desk. the other bill of note, and maybe of interest in the future -- it does not relate directly affect san francisco, although it affects a transit carrier that travels to your city, ac transit -- sb 1830 as an administrative adjudication process in lieu of the process most transit agencies go through, and it streamlines the ability of the transit agency to get to closure on pending violations, minor violations. in addition to adding ac transit as a couple of other transit agencies, i believe muni is

already in the statutes with this authority, but we have ac transit now as well. in the high-speed rail area, there were at least 18 bills moving through the end of session, and only a couple actually made it through. probably the more interesting is 8619, on page one, and that would require prospective high- speed rail contractors to disclose whether they were ever involved in involuntary deportations in world war ii. it represents an area that has a lot of world war ii survivors that are concerned about some of the european companies building the high-speed rail system here. it is a very sensitive issue. there is a perjury process that would be involved if the disclosure was not done appropriately, so we will see if the governor approves it still. sb 455 is probably the most

highly watched high-speed rail bill. it does not do much. that is found on page 10. the bill simply subjects gubernatorial appointees of the high-speed rail authority to senate advice and consent. i'm thinking that this governor will not sign that bill, so we will see. it is hard to take away discretion from the governor unless you have discretion. it did pass legislature and is on the governor's desk. interesting bill that emerged toward the end of session is sb 1371, found on page 16. that allows prop 1a, the high- speed rail bond, the preliminary category where there is a former -- formal distribution to provide connectivity to high- speed rail systems when eventually develop. this would allow a community to advance on projects with the prospect of later being paid

back when the bonds are sold. this deals with the gap between if you have a late budget and do not have the ability to put a marker for bonds, it allows if the project is ready, for the local agency to move forward with that project and have the prospect of being paid. on behalf of another client, i'm anxiously trying to get this signed by tomorrow because the commission is trying to move forward on this. this is right now high on my list to get done. that is pretty much it for the high-speed rail. there were a couple of other ones. i will not mention the ones that failed because they were watered down as they got toward the end of session and just failed to move through. there are several other bills we watched carefully through the year for you. ab 744 found on page two, dealt with mtc's hotline program. they pretty much abandoned that bill midway through this year,

and that did it fail passage. they will be pursuing that funny, scaled-back -- they will be pursuing that funding. ab 987 passed through, and that deals with transit village and expands the radius of the area of improvement within the transit village from a quarter mile of the parcel to half a mile. a little more flexibility for transit village development. your other local members has been very active, mr. amiano, pushing the bill that would kill -- pushing the bill that would deal with right turns, pushing the mechanism there. that did pass handily. we do not expect problems

because i think he worked out his issues with the state and highway patrol. the other bill we watched, ever since it has been introduced, ultimately did failed passage -- fail passage, but having said that, we have all suspected that some flexibility will ultimately play itself out in the budget, although sb 10, as a vehicle, is no longer available. the constant may still find its way into the budget process. >> but more likely not, that money is not going to go to the county. is going to go through the state. if it does work its way up, that money is more likely to go through the state. >> i think that likely as well. probably under realignment, yes. senator jaime carried a bill that may have to import to this

agency, that started off a little more rigorous in what it tried to do. this is sb 474 on page 10. by the time it made its way through, the opposition have watered the bill down to a somewhat acceptable position. this bill requires p-3 project sponsors, after they have approved a contract, to adopt a resolution defining the goals for the project, so at the future date, you will have some metrics to put back and see whether the metrics or goals were met or not. it started as a much more rigorous bill, and was thought to be a way to thwart p-3 instead of a way for the legislature to look at how those projects function. last sb 1061 on page 13, which was the authorization for the bike

lane expenditures on the bay bridge, was retained in assembly appropriations committee and failed to make it to the governor this year. somebody will have to pick up the cudgel next year on that. i failed to mention on the lont bill that staff pointed out to me that and he has a $27 million in allocated amount -- that mta has a $27 million un-allocated amount, so underscoring that that is that kind of tool that allows projects to continue deliveries even in the wake of a failed budget process, and it could be brought to bear year -- here. that is my report. i've briefly touched on propositions 22 and 26 last time i was here if you have questions on how those are being viewed and what the ramifications are, i would be glad to answer them,

but i know your time is limited. commissioner mirkarimi: just for the record, the board of supervisors passed a resolution opposing proposition 26. so we are on record. we do not like it. >> i can see why. commissioner mar: other questions? is there anyone from the public that would like to speak? seeing none, public comment is closed. mr. watson, is there an action item or recommendation? >> there were no substantive changes. there was one i was sensitive to and recommended going from watch to neutral, which is angels on the head of it in, but that is the bill that dealt with the high-speed rail members. i did not want to give any indication we were interested in that at all. my recommendation is to stay away from sitting members, so i thought a neutral position was a good way to go, rather than just watching. commissioner mar: is there a

motion to approve the recommendation? moved and seconded. without objection. thank you. next item. >> item 6, investment report for the quarter ended june 30, 2010. this is an action item. >> good morning. deputy director for finance and administration. i have a quick update for the investment and cash report balance. as directed by the authority's investment policy, we bring before you the status of investment and the compliance of the cash balances for the authorities. for the june 30 -- as of june 30, we have approximately $97 million sitting in the cash accounts. approximately 94% is in the city and county treasury pool. we also have funds sitting in a money-market account with

deutsche bank in compliance with commercial paper inventor. currently, with a $97 million balance, we have sufficient liquidity and funds for the next six months. we have no problem forcing and the expenditures in the next year. if there are any questions, i would be more than happy to answer them. commissioner mar: seeing no questions, let's open this up for public comment. is there anyone from the public that would like to speak? seeing none, public comment is closed. thank you for the informational items. we have one last information item. >> item 7, introduction of new items. this is an information in. commissioner mar: seeing none, next item. >> item 8, public comment. commissioner mar: is there anyone from the public that would like to speak? seeing none, public comment is closed. >> item 9, a german. commissioner mar: thank you,

everyone, for being here today. the meeting is adjourned.