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Office of California State Auditor: Audit of High Speed Rail Program (2010)

Office of California State Auditor: Audit of High Speed Rail Program (2010)

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Published by wmartin46
The Office of The California State Auditor conducted an audit of the High Speed Rail that concludes that the High-Speed Rail Authority has not adequately planned for the future development of the program. For example, in its 2009 business plan, the Authority outlined the sources from which it expected to receive the funds necessary to meet the estimated $42.6 billion cost of the program. The Authority stated it would need $17 billion to $19 billion from the federal government; however, the Authority has received a federal
commitment of only $2.25 billion. In addition, the business plan does not make clear which government would
be responsible for a revenue guarantee needed to attract private investors, or how much it might cost. The
program risks significant delays without more well-developed plans for obtaining funds.
The Office of The California State Auditor conducted an audit of the High Speed Rail that concludes that the High-Speed Rail Authority has not adequately planned for the future development of the program. For example, in its 2009 business plan, the Authority outlined the sources from which it expected to receive the funds necessary to meet the estimated $42.6 billion cost of the program. The Authority stated it would need $17 billion to $19 billion from the federal government; however, the Authority has received a federal
commitment of only $2.25 billion. In addition, the business plan does not make clear which government would
be responsible for a revenue guarantee needed to attract private investors, or how much it might cost. The
program risks significant delays without more well-developed plans for obtaining funds.

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Published by: wmartin46 on Jul 30, 2010
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10/25/2012

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High-Speed Rail Authority:
It Risks Delays or an Incomplete System Becauseof Inadequate Planning, Weak Oversight, and LaxContract ManagementApril  Report 9-6
Independent
TRANSPARENT
Accountability
NONPARTISAN
 
Te rst ve copies of each California State Auditor report are free. Additional copies are $3 each, payable bycheck or money order. You can obtain reports by contacting the Bureau of State Audits at the following address:
California State AuditorBureau of State Audits555 Capitol Mall, Suite 300Sacramento, California 95814916.445.0255 or Y 916.445.0033
ORTis report is also available on the World Wide Web http://www.bsa.ca.govTe California State Auditor is pleased to announce the availability of an on-line subscription service. Forinformation on how to subscribe, please contact the Information echnology Unit at 916.445.0255, ext. 456,or visit our Web site at www.bsa.ca.gov.Alternate format reports available upon request.Permission is granted to reproduce reports.For questions regarding the contents of this report,please contact Margarita Fernández, Chief of Public Aairs, at 916.445.0255.
 
CALIFORNIA STATE AUDITOR
Bureau of State Audits
Doug CordinerChief DeputyElaine M. HowleState Auditor
555 Capitol Mall, Suite 300 Sacramento, CA 58141.445.0255 1.327.001 faxwww.bsa.ca.gov
April 29, 2010 2009-106 e Governor of CaliforniaPresident pro Tempore of the SenateSpeaker of the Assembly State CapitolSacramento, California 95814Dear Governor and Legislative Leaders:As requested by the Joint Legislative Audit Committee, the California State Auditor presents its audit reportconcerning the High-Speed Rail Authority’s (Authority) readiness to manage funds authorized for building thehigh-speed rail network (program) in California, including the $9 billion in general obligation bonds the votersauthorized in November 2008.is report concludes that the High-Speed Rail Authority has not adequately planned for the future developmentof the program. For example, in its 2009 business plan, the Authority outlined the sources from which it expectedto receive the funds necessary to meet the estimated $42.6 billion cost of the program. e Authority stated itwould need $17 billion to $19 billion from the federal government; however, the Authority has received a federalcommitment of only $2.25 billion. In addition, the business plan does not make clear which government wouldbe responsible for a revenue guarantee needed to attract private investors, or how much it might cost. eprogram risks signicant delays without more well-developed plans for obtaining funds.e Authority also needs to improve some administrative practices. State law requires the Authority toestablish an independent peer review group (review group) to review the Authority’s plans, but only ve of theeight members have been appointed. us, the Authority cannot fully benet from the expertise the review group would provide. Additionally, the Authority does not currently categorize and track expenditures foradministration, which state law limits to 2.5 percent ($225 million) of the $9 billion in bond funds authorized.Unless it tracks these funds and develops long-range plans for spending them, it risks running out of them prematurely.Finally, a primary tool for monitoring the program has been inadequate and the Authority has not implementedeective controls over invoice processing and in some cases has paid for work that was not part of contracts orwork plans. ree recent monthly progress reports the contractor managing the program (Program Manager)submitted to the Authority contained inconsistent information and did not compare actions performed andproducts created to what contractors promised to complete in their work plans. Additionally, the Authority paidat least $4 million of invoices for which it had no evidence from the Program Manager that the contractors hadperformed the work invoiced. e Authority also paid more than $268,000 for work that was not included incontractors’ work plans, impairing its ability to measure performance against those plans, and it misused publicfunds when it paid $46,000 for furniture not covered in the contract with its Program Manager.Respectfully submitted,ELAINE M. HOWLE, CPAState Auditor

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