CA Audit Criticizes High Speed Rail Authority of Mismanagement

Tehachapi_image_small.jpgImage: CAHSRA
The California State Auditor released an unflattering report yesterday that accuses the California High Speed Rail Authority (CAHSRA) of mismanagement of the nation's largest high speed rail project, a move that put the CAHSRA and other supporters on the defensive yet again.

Bay Area news outlets have long given a large soap box to Peninsula residents and policy makers who don't want the rail alignment to go through their cities unless it is built into deep, expensive tunnels. The new report will likely arm opponents to high speed rail in California and beyond with new ammunition they hope will ultimately kill the project before it goes to construction.

Among the findings of the report, the State Auditor argued:

  • The CAHSRA's 2009 business plan estimates it needs $17 billion to $19 billion in federal funds. However, the Authority has no federal commitments beyond $2.25 billion from the American Recovery and Reinvestment Act of 2009 (Recovery Act), and other potential federal programs are small.
  • The CAHSRA's plan for spending includes almost $12 billion in federal and state funds through 2013, more than 2.5 times what is now available.
  • The CAHSRA does not have a system in place to track expenditures according to categories established by the Safe, Reliable High-Speed Passenger Train Bond Act for the 21st Century, its largest source of committed funding.
  • The CAHSRA has not completed some systems needed to administer Recovery Act funds, for example, a system to track jobs created and saved.
  • Some monthly progress reports, issued by the CAHSRA's contracted Program Manager to provide a summary of program status, contain inconsistent and inaccurate information.
  • CAHSRA staff paid at least $4 million of invoices from regional contractors received after December 2008, without having documented written notification that the Program Manager had reviewed and approved the invoices for payment.
  • The CAHSRA paid contractors more than $268,000 for services performed outside of the contractors' work plans and purchased $46,000 in furniture for one of its contractor's use, based on an oral agreement contradicted by a later written contract.

The CAHSRA's response to the report was tepid: It acknowledged that it could do better with some of its management, but contended that the State Auditor repeated a number of findings that the Legislative Analyst Office had already brought up and that the CAHSRA was already addressing.

We note that many of the findings in your draft audit are similar to those outlined earlier by the Legislative Analyst’s Office (LAO). As a result, in many instances the Authority has already taken action to address issues raised in your report. In particular, the Authority earlier this month approved an addendum to its 2009 Business Plan that clarified our efforts to address funding for system construction, risk management, and alternatives for securing the private capital investments necessary to bring this important project to fruition. We appreciate that in many cases the draft audit takes note that the Authority is already taking steps to improve its operations based on recommendations made earlier by the LAO, as well as on findings in your draft audit. 

The CAHSRA goes on to criticize the title of the report as being "inflammatory" and the findings of the report failing to be equally as "scathing," but doesn't defend any of the individual contentions made by the State Auditor. Perhaps their strategy is to batten down the hatches and hope for better weather?

The strongest defense of the high speed rail project comes from the ever incisive Robert Cruikshank at the CAHSR blog, who writes that the State Auditor is wrong in her assumptions about federal funding for California's project and the project's competitiveness compared to other high speed rail lines. Cruikshank notes that a House subcommittee has already voted to appropriate $50 billion to the national high speed rail network in the new Transportation Act and California could reasonably expect to receive a large portion of that money.

As one of only two true bullet train projects in the country -- and with the other one, Florida, facing growing questions about its route choices and short intro line -- we’re much further along than most other states, and can turn around federal money relatively quickly after we receive it. If $50 billion over 6 years is indeed approved, I do not foresee any problem whatsoever with California getting $17-$19 billion of that, and nor should anyone who has been watching the federal government’s HSR actions the last two years. California’s powerful Congressional delegation, including Speaker Nancy Pelosi, also count in our favor.

As Cruikshank notes in his post today, the State Auditor's report has predictably led to a round of stories in the press that give the impression California high speed rail is limping toward death.

Beyond complaining about the tone of the report's title, I find it dispiriting that the CAHSRA leaves the task of managing its public relations work to a blog, albeit a very well-informed blog.