MAX Program Finance Department David Leininger Executive Vice President Chief Financial Officer June 19, 2017

Finance Department Organization Joe Costello SVP Accounting Business Planning & Analysis Payment Systems & Statistical Reporting Risk Management Treasury

Current Key Projects Conversion of Payroll System to Kronos Issuance of long-term debt for two large rail corridors Comprehensive Payments System Upgrade to current mobile app – GoPass Installation of validators on rail platforms and buses New Fareboxes FY 2018 Annual Budget and Twenty-Year Financial Plan

DART Board Calendar For Budget and Financial Plan Consideration Date Subject Feb 28 FY 2017 Financial Outlook March 28 FY 2018 Preliminary Financial Outlook Apr 25 Approval of FY 2018 Financial Standards May 23 FY 2018 Capital Budget Overview Jun 27 FY 2018 Operating Budget Overview Jul 11 Draft 2018 Annual Budget & Twenty-Year Financial Plan Aug 8 Budget & Finance Committee and Board Approval to Distribute FY 2018 Annual Budget and Twenty-Year Financial Plan to Service Area Cities Aug 22 Budget & Finance Committee Recommends Approval of the FY 2018 Annual Budget and Twenty-Year Financial Plan to Committee-of-the-Whole and Board Aug 24 Briefing for Service Area City Managers and Finance Directors Sep 12 Committee-of-the-Whole Review of FY 2018 Annual Budget and Twenty-Year Financial Plan Sep 26 Board Approval of FY 2018 Annual Budget and Twenty-Year Financial Plan

Budget & Financial Plan Overview Budget & Financial Plan developed within the Board Policy framework of the approved Financial Standards Twenty-Year Financial Plan Constructed from detailed data on capital projects, reserves, cashflows, operating expenses, revenues, sales tax and inflation projections, and debt service assumptions Reviewed and updated annually with prior year actual results and revised assumptions – budget for upcoming year is first year of 20-year financial plan Demonstrates financial sustainability

Board-Approved Financial Standards Policy The Board shall review and approve a set of Financial Standards each year as part of the Budget and Financial Plan approval process. Requires a two-thirds vote (10 votes) General Standards Business Planning Parameters Debt Standards

Financial Standards – General Prudently manage financial affairs Establish appropriate cash reserves Compliance with legal/statutory/Board policy requirements

Financial Standards – Business Planning Parameters Framework for developing Budget and Twenty- Year Financial Plan Establish future business targets

Business Planning Parameter – B9 The Twenty-Year Financial Plan shall include funding for asset replacements and expansion projects. Capital projects in excess of $1 million shall be approved by the Board. Timely replacement of assets shall be the highest priority to ensure a safe system. Accordingly, the Twenty-Year Financial Plan shall include replacement reserves by major asset category to ensure adequate future funding. The reserve levels shall be based on an independent assessment of asset condition (to be completed at least once every five years)…

Financial Standards – Debt Limit the level of debt incurred Debt assumptions based on market parameters

Coverage Ratios Financial Standard D7 External Coverage: Annual sales taxes must exceed current year debt service by 2.0 Internal Coverage: It is a goal that revenues available to pay for operations minus operating expenses must cover current year debt service, meaning a ratio >= 1.0

Financial Capacity