State audit finds RTD’s financial health stronger than many of its peers
DENVER (Aug. 5, 2024) –– A recently completed performance audit conducted by the Office of the State Auditor (OSA) found that the Regional Transportation District (RTD) met all nine of the State’s financial health ratios as of calendar year 2022. The comprehensive audit, which was conducted over multiple months between June 2023 and July 2024, also reviewed RTD’s cost efficiency metrics, capital asset projects, budget filing requirements, strategic plan updates, and the onboarding of new Board members. Additionally, the audit examined the agency’s progress on implementing recommendations from the 2021 RTD Accountability Committee.
A final report was presented to the Legislative Audit Committee earlier today, and RTD’s General Manager and CEO Debra A. Johnson, Chief Financial Officer Doug MacLeod, and Board Chair Erik J. Davidson answered follow-up questions and outlined next steps for the agency.
“RTD has been firmly committed to being good stewards of taxpayers’ money,” said Chair Davidson. “The RTD Board of Directors and staff take this fiduciary responsibility very seriously, and we are pleased to see that RTD met all financial health ratios with no warning indicators. The findings of this audit emphasize that RTD’s efforts are working, and the agency is operating more cost efficiently than many of its peers across the country.”
Between 2019 and 2023, RTD improved its available fund balances to approximately $1.1 billion, reduced debt and pension obligations, improved liquid assets, and had its credit ratings improved to the highest level of AAA from S&P Global. RTD also maintained its per-boarding expenses, a metric used to measure cost efficiency at transit agencies, during historic inflation and market uncertainty following the COVID-19 pandemic.
In the final report presented to legislators, RTD indicated that it agrees or partially agrees with 21 of the audit’s 24 recommendations. The agency’s individual responses to each recommendation, along with implementation dates, were included in the 100-page report provided to the Legislative Audit Committee.
In addition to RTD’s current approach to reporting fare recovery ratios in its monthly financial statements posted online, the agency has agreed to begin reporting cost efficiency ratios, as defined in statute. RTD will also provide cost efficiency ratios against past performance and include a comparison to peer agencies. In May, RTD launched an online performance dashboard to begin proactively sharing reports and metrics in a prominent and easy-to-understand manner.
Other recommendations already underway by RTD include annually presenting the agency’s Transit Asset Management (TAM) Plan to its Board of Directors and updating fiscal policy to align the TAM Plan to financial forecasts. Efforts are also currently underway to bolster the materials and information included in the agency’s annual budget. The augmented documents will be part of the 2025 proposed budget that is publicly made available in October.
The audit also closely examined RTD’s participation in Colorado’s Ozone Season Transit Grant Program in 2022 and 2023. Dubbed “Zero Fare for Better Air” by the agency, OSA found “no problems with RTD’s use of the state-appropriated grant funds aligning with statute or applicable grant agreements.” The report did identify two areas for RTD’s consideration to improve the appropriation of funds in the future and its reporting of grant program impacts. RTD disagreed with the report’s two recommendations, responding that all state requirements were met, and that the agency closely collaborated with the Colorado Energy Office to establish parameters.
“RTD recognizes that there is great interest in its operations and a desire to support the agency’s continued success,” said General Manager and CEO Debra A. Johnson. “Audits ensure the agency is following all laws, policies, and procedures, and RTD welcomed the increased scrutiny and examination. The agency is committed to transparency and will implement recommendations focused on ensuring stakeholders and the public have access to information. RTD looks forward to adopting recommendations that support its customers and the agency’s continued financial health.”
The performance audit is the second in three years for RTD. State statute requires the OSA to conduct a performance audit at least once every five years to determine whether RTD is effectively and efficiently fulfilling its statutory obligations. RTD’s last audit was conducted in 2021. The 2024 performance audit came at a cost to RTD of approximately $435,000.