00:00:00:00 - 00:00:52:00 Chairman Vaughn Good afternoon. It is 1 p.m., and I calll to order the May 20th, 2025 meeting of the Texas Transportation Commission Audit Subcommittee. So for the record public notice of this meeting, containing all items on the agenda, was filed within the Secretary of State at 11:46 a.m. on May 12th, 2025, which is at least seven days prior to the meeting. In accordance with Government Code 551.004. At this time, I would like to ask that before we begin today's meeting you plan all phones and other devices in silent or off mode. All speakers should say their name and title for speaking. Thank you. With that, I will now turn it over to Chief Officer Parsons Townsend. 00:52:01 - 00:01:03:00 Chief Townsend Thank you, Chairman Vaughn. At this time, I ask for everyone's full attention to the screen as we show the Greer Building Safety Video describing emergency exits and other emergency procedures. [Greer Safety Video Plays] 00:02:26:00 - 00:02:29:00 Chief Audit and Compliance Officer Townsend With that safety briefing complete, I'll turn the meeting back to you Chairman Vaugh. 00:02:29:01 - 00:02:35:00 Chairman Vaughn Okay, now we will open with comments from my fellow Commissioner Meade, do you have any comments today? 00:02:35:01 - 00:02:35:02 Commissioner Meade I do not have any comments. 00:02:35:03 - 00:02:56:00 Chairman Vaughn Alright, great. Um, so with no other comments, we will now consider the approval of the minutes for the March 26th, 2025 Quarterly Audit Subcommittee meeting. Draft minutes have been provided. Do I have a motion to approve the minutes as presented? 00:02:56:01 - 00:02:56:05 Commissioner Meade I'll make a motion to approve. 00:02:56:06 - 00:03:00:00 Chairman Vaughn I second. All in favor, say aye. 00:03:01:00 - 00:03:01:03 Chairman Vaughn and Commissioner Meade Aye. 00:03:01:04 - 00:03:05:00 Chairman Vaughn Motion carries. I will now turn the meeting back over to Chief Townsend. 00:03:05:01 - 00:03:13:00 Chief Townsend Thank you much. At this time we will move to agenda item three, the internal audit division update. Craig Otto, division director will go through items a and b. 00:03:13:01 - 00:06:46:00 Director Otto Good afternoon. We'll take a look at the mangaement action follow up status in regards to the open maps for priorities one and two. As you can see, priority one, we have not had any change in status in regards to, one MAP that remains passed due, testing for this we're looking to commence, again in July. We had been out in the field and this is in regards to utility, placement. And so we, we were looking at was to try to determine how many districts had started compliance with this. And when we tested early on, there were enough to go ahead and either reduce the risk or close it. So there's been I know, some actions taken by the other districts to, to compel with, or comply with, what is required. And again, in July, we should have a little bit better update, probably in the August meeting and provide you more status on that once we get to that, to that on a subcommittee meeting and priority two, you know, status on this one. Again, we had a couple that were new, but we also had four that close. So that number has come down two, from the last time that we met. The ones that are in bold, there's two of them. Those two were newly added, the fleet preventive maintenance, and that relates to the handling of our pre-trip inspection forms and, one of the things that we had done on when we had gone out there, we had sort of inspected the progress on that. We had determined that not again, nothing not it's not that nothing had been completed. It's just that we worked with Carl and we felt that we needed to, to revise that MAP, make it a little bit more astute and understandable as relates to creating SOPs for the districts. So Carl, went ahead and did that. And that's one thing that's nice, I think, to, I guess to illustrate is that we do have that flexibility to make modifications. You know, something may sound good six months ago, but if there's something better to do, we have that flexibility to make sure we can work with the business to make sure that helps those, divisions or districts get to that final closure. And then the PCARD evaluation, implementing monitoring reviews. Again, this is as a state's a monitoring and control factor. Procurement had asked us for some additional time on that, which we did grant them. But we still notify them and let them know that it is still a past due, and they are aware of that. But again, at the time it was due, it was something that they had asked for, and we granted that. So again, we'll be looking to be testing that here, in the coming months. One other thing I would like to talk about, quickly on the management action plans. Last time when we met, I mentioned that we would be sending out some correspondence to the Chiefs or some had admin officials just bringing them up to speed and awareness in regards to, those management plans under their specific control. And, it was I think we got really good correspondence from some of them in regards to I could see that they had reached out. That's exactly what we're looking to do, is kind of get that dialog going. Sometimes we can persuade other times, you know, chiefs and others within the administration line can also help persuade getting these things done faster. So we're encouraged by that, we'll continue to do that, Chair and Commissioner, you know, going forward and hopefully as we continue to drill down on these ones and twos, you'll also see corresponding three and four priorities also coming down rapidly as well. So good news there. Any questions as related to item 3.a. for the management action plan follow up status? 00:06:48:01 - 00:06:48:03 Chairman Vaughn and Commissioner Meade No questions. 00:06:48:04 - 00:11:03:00 Director Otto Okay. I will continue to item 3.b. and this is the internal audit report on the aviation flight services. Overall the it was a priority two audit rating. There were three findings and we'll discuss those here. The first one is in regards to the strategic alignment or the kind of strategic measurable long range plan. This was something that, was posted and, and we had had taken a look at it, brought it back down just to kind of renew some of the, I guess, points of view that we, we think should be more optimized in regards to a long range plan. And those included, specifically around routine maintenance scheduling. That is, sometimes a, a smooth process and sometimes you can have other agencies dropping, copters off or planes off kind of sometimes a, you know, at will and that sort of kind of throws things in flux. And one of the things that we had had discovered is just in terms of how do we handle those types of situations when they happen frequently. And, and DPS is one agency that has a lot of aircraft, and they oftentimes are bringing things, into us. And, you know, we feel that the flight services group, handled things well. It was just one of these things is probably something to be thinking about from a long term perspective, especially, with current legislation going on across the street or how the numbers may fluctuate in regards to aircraft. It's probably something that should be considered as part of a long range plan. In addition to that, you know, how do we optimize our maintenance personnel and also full utilization of of the plane? So those are a couple things that we had recommended. And Dan Harmon and his team, others will get together and take a look at how we can make that plan even stronger. Moving forward. The second finding was in regards to looking at two things. One is the maintenance hourly fee and also the flying cost per hour. And we had the team had discovered that, there's a potential increase of around maybe $125 of additional maintenance items that could have been added to that fee. And I do want to stress is, you know, part of that, audit process is to say, hey, we may not be complete in regards to what we can choose, but it is our discretion as an agency to determine how we want to charge it. So I want to make sure that that's known. And similarly, we also had a couple items, within the flying cost per hour or flight cost, I should say, where we made some recommendations in regards to, pilot salaries and various other technicians, salaries. That may be something they want to include. Also in the cost recovery savings opportunities, there was we looked at fuel cost. One of the things that we discovered in the Austin, we actually have a contract that when we fuel up in Austin, we have a static rate, a little bit over $3. But when the planes actually go and fuel up in other cities, that price can fluctuate. And so we saw a 52% increase year over year. Dollar wise it's only about $60,000 a year. So it's it's not massive but it's something again I think for the business to consider, how can we potentially, stabilize that fuel, that fuel rate as we fly in and out of different ports. So the third finding was around signature, a delegation of authority preflight authorizations. Again, we wanted to make sure what is the process for getting onto the plane and also what what approval authorization was required. And there is an affidavit process, you know, declaring why you're flying or needing to fly. And there was a there's also an notarization process that happens there, on site, once you present your ID. So, you know, not just anybody can jump on a plane, but there's also, executive director or designee authorization that is needed as well by any of Marc or his peers and other agencies. In that front, we saw 26 of 125 where we are not able to obtain anything that would show us that the executive director or designee, provided that, the delta on that the remainder, that you could see signatures, many of which you can understand and see who it was. We can look it up and determine, yes, that is the appropriate person within that agency. So can we just ask for that to be tightened up a little bit more just to make sure, again, you know, the validity in authorization is being acknowledged. Any questions as it relates to the Aviation Flight Services audit? 00:11:03:01 - 00:11:05:00 Commissioner Meade No questions. 00:11:05:01 - 00:11:26:00 Chairman Vaughn Okay. On finding number one, will y'all ultimately have a recommended plan for us once you update, you know, you referred to we're going to have we are going to have, you know, ideas about how to make this plan more strategic and measurable. 00:11:26:01 - 00:11:34:00 Director Otto So those recommendations were presented to them. Yeah, to to the aviation division, to the aviation who that will put that plan together. 00:11:26:01 - 00:12:15:00 Chairman Vaughn Good deal, and then also on the number two, the hourly maintenance rate. It might be helpful for us as well. I know you are looking at this stuff in great detail, but we don't know what. For example, what the current rate is. So when you say, you know, it's not out of the way for dollars per hour, that's on top of what we believe is just for future reference. Specifically, we're not looking at this stuff every day. So just for transparency for us to know. Well, you know, a little more insight as to what we're currently paying and and what you would recommend as an increase. 00:12:15:01 - 00:12:40:00 Director Otto Sure. And and just yeah. Yeah. And I think from the maintenance, Chairman Vaughn in regards to the maintenance rate, right now we're looking at $65 for both rotary and fixed wing. And that's been same since 2024. Previous to that it was around $97 or $79 respectively between rotary and fixed wing. So it's fluctuated a little bit. 00:12:40:01 - 00:12:44:00 Chairman Vaughn So you're saying $135 on top of $65, right. So it's right. 00:12:44:01 - 00:12:46:00 Director Otto That that was what was recommended. What we found was. 00:12:46:01 - 00:12:52:00 Chairman Vaughn All right. Thank you. 00:12:52:01 - 00:12:58:00 Chief Townsend All right. Moving on to agenda item four, compliance division update. Cheryl Durkop, division director will go through items a, b, and c. 00:12:58:01 - 00:16:02:00 Director Durkop Good afternoon Chairman Vaughn and Commissioner Meade. The compliance division is presenting some investigations for the third quarter, the results of an external auditor of the Hidalgo County Regional Mobility Authority and an action plan follow up of finding issued by external audit. The summary of investigations include fraud, waste and abuse, as well as EEO investigations. Overall, for the quarter, we received 174 allegations. We initiated 36 investigations in Q3 and substantiated 30 of the 43 investigations that we closed resulted in a substantial reduced 70%. During the third quarter, we did continue to see multiple cases of substantiated falsified documentation, including employee timesheets and medical provider documentation. Also significant, this quarter, we substantiated an investigation on duplicated AGG101 proficiency testing by construction Inspector. During annual proficiency testing, the employee copied data from a coworker's proficiency worksheet without their knowledge. The employee certification was suspended and they received a 12 month probation. Are there any questions about the investigations? Uh, here you're seeing the results of investigations that we closed during the quarter, organized by allegation category. Workplace harassment does continue to be the most common allegation investigated. You can see this quarter that the majority of the cases investigated were not supported. Also on a positive note, we did see a significant decrease in investigations related to misuse of state sources. Do you have questions about the quarterly? And next slide showing you the substantiated allegations by category of at 18 months. As a reminder, each bar here reflects six months or two quarters worth of data. As in the quarterly summary, you can see workplace harassment is still our top category. And that last quarter, we talked about the average number of investigations per 100 employees. And we're still holding steady at 0.05 investigation, I'm sorry, workplace harassment cases per 100 employees. In the past several months, there have been some increases to EEO allegations as well as, as you can see, falsification of documentation, we have seen a downward trend in third party investigations. Any questions about the 18? 00:16:02:01 - 00:16:12:00 Chairman Vaughn No. I sure would like to see that workplace harassment coming down. What? What is it in general? Is it verbal? 00:16:12:01 - 00:16:18:00 Director Durkop It is verbal having to do with, race, sexual harassment. 00:16:18:01 - 00:16:20:00 Chairman Vaughn And that's at the district level, typically? 00:16:20:01 - 00:16:26:00 Director Durkop The majority of these cases are at the district level, yes. 00:16:26:01 - 00:16:55:00 Executive Director Williams The green line on the right reflects two quarter's worth of data. There was 11 harassment complaints in quarter two of FY25 and 4 harassment complaints in quarter three of FY25. So. We'll see if that trend continues. 00:16:55:01 - 00:17:05:00 Commissioner Meade But out of 13,000 employees. 00:17:05:01 - 00:17:05:03 Executive Director Williams Yeah. 00:17:05:04 - 00:17:11:00 Chairman Vaughn Not a perfect world. No, no. It's never yeah. It's not perfect. 00:17:11:01 - 00:20:24:00 Director Durkop External audit recently completed an audit of the Hidalgo County Regional Mobility Authority. Our audit work evaluated financial controls for grant funding as well as payment compliance. The audit focused on federal funds that we received for construction of the 365 tollway project, specifically reimbursements from FY22 to FY24. HCRMA utilized a value engineering change proposal program in order to reduce costs on this project. A 2023 review conducted by FHWA did determine that HCRMA's use of this program was not compliant. Since Texas does not have a VECP process as part of our value engineering program. During the audit, a methodology for determining items VCEP items as you can participate in or non participating was approved by a previous that the district did not have an approved program. So they were using the spec book in order to determine whether a reimbursement could be made on certain items or not. As a result of the new method, all in the status of some items has been changed. So previously some items were deemed as participating that are now considered non participating and as a result $1.3 million in question cost were identified. Due to this reevaluation. The district is currently working with HCRMA to coordinate a review of all the billings that they submitted for the whole project. To adjust for any changes made to the VECP eligible items and to address any reimbursement differences. Any questions about the audit? Okay. So the action plan follow up slide is showing findings that have been issued for audits conducted by the external audit section. Currently, external audits tracking nine audits with a total of 83 recommendations, 44 are identified as fully implemented and 39 as incomplete. There are currently two audited entities that have been closed out all their findings since the last time we presented this information, and we have five that we're actively working with to close our meeting findings, actively as it right now. One of the issues that we continue to see, with procrement issues, specifically with the MPOs. And a lot of that we're finding is due to the relationship with the, fiscal agents. That is something based on a recommendation yesterday from Marc that we have started talking with TPP, to try to, add some teeth and to tighten up the process for following up on these findings. 00:20:24:01 - 00:20:27:00 Commissioner Meade Some of the fiscal agents are cities, I can assume? 00:20:27:01 - 00:20:30:00 Director Durkop Yes. So like City of Laredo or Odessa. Yeah. 00:20:30:01 - 00:21:54:00 Executive Director Williams So we under the federal rules have a role in approving, or authorizing the procurement process for MPOs within the state. And so that could be, a requirement that we have on these MPOs that they want to be able to continue to have the ability to procure contracts, resources under the federal funds that we authorize through us to them. Then we need to see progress on on some of these and, you know, some of that, some of them are a little bit of a disadvantage because like the Laredo MPO, well, you got the Laredo MPO. They're they've got to work with the City of Laredo and get the City of Laredo to respond to make changes and adjustments. And so, you know, I realize that it's not always in the hands of the MPO itself to do these things, but, I mean, I think it's something that we can at least, you know, put a little bit more motivation, behind this for these MPO. So we'll see how you can adjust payment of maybe... 00:21:54:01 - 00:22:01:00 Director Durkop Questions about this slide? 00:22:01:01 - 00:22:01:08 Chairman Vaughn None here. 00:22:01:09 - 00:22:06:00 Chief Townsend Okay so with all agenda items complete, I'll turn the meeting back to you, chairman Vaughn. 00:22:06:01 - 00:22:17:00 Chairman Vaughn Okay, thank you. We will not meet in the executive session today. All the items on today's agenda are complete. Correct? 00:22:17:01 - 00:22:17:02 Chief Townsend Yes. 00:22:17:03 - 00:22:29:00 Chairman Vaughn Okay. We plan to conduct the next Texas Transportation Commission Audit Committee meeting on August 20th, 2025. There being no other comments, may I have a motion to adjourn? 00:22:29:01 - 00:22:31:00 Commissioner Meade I motion to adjourn. 00:22:31:01 - 00:22:33:00 Chairman Vaughn Second, all in favor say aye. 00:22:33:01 - 00:22:33:02 Chairman Vaughn and Commission Meade Aye. Aye. 00:22:33:03 - 00:22:46:00 Chairman Vaughn Motion carries. APlease note for the record, the time is, what is the time? 1:22, and this meeting stands adjourned. Thank you.