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Home My WebLink About2021 Annual Comprehensive Financial Report.pdfU TA H T R A N S I T AU T H O R I T Y SM Annual Comprehensive Financial Report For Fiscal Year Ended December 31, 2021 a Component Unit of the State of Utah 1 24 Our Mission Provide integrated mobility solutions to service life’s connections, improve public health and enhance quality of life. 2 25 Annual Comprehensive Financial Report For Fiscal Year Ended December 31, 2021 Finance Department William Greene Chief Financial Officer Troy Bingham Comptroller UTAH TRANSIT AUTHORITY A Component Unit of the State of Utah 3 26 Introductory U TA H T R A N S I T AU T H O R I T Y SM For Fiscal Year Ended December 31, 2021 4 27 UTAH TRANSIT AUTHORITY ANNUAL COMPREHENSIVE FINANCIAL REPORT Year Ended December 31, 2021 INTRODUCTORY SECTION Letter of Transmittal .................................................................................................................................................... 7 Certificate of Achievement for Excellence in Financial Reporting.....................................................................11 Organizational Chart ................................................................................................................................................... 12 Board of Trustees and Administration .................................................................................................................... 13 System Map .................................................................................................................................................................. 16 FINANCIAL SECTION Independent Auditor’s Report .................................................................................................................................. 18 Management’s Discussion and Analysis ................................................................................................................ 21 Basic Financial Statements Statement of Net Position ......................................................................................................................... 30 Statement of Revenues, Expenses and Change in Net Position ...................................................... 32 Statement of Cash Flows ......................................................................................................................... .33 Statement of Fiduciary Net Position ....................................................................................................... 35 Statement of Changes in Fiduciary Net Position ................................................................................. 36 Notes to the Financial Statements .......................................................................................................... 37 REQUIRED SUPPLEMENTARY INFORMATION SECTION Schedule of Changes in Net Pension Liability and Related Ratios .................................................................... 81 Schedule of Required Employer Contributions .................................................................................................... 83 Schedule of Investment Returns ............................................................................................................................. 84 SUPPLEMENTARY SCHEDULES Schedule of Revenues, Expense and Change in Net Position Budget to Actual ........................................... 86 Combining Statement of Fiduciary Net Position ................................................................................................. 87 Combining Statement of Changes in Fiduciary Net Position ............................................................................ 88 STATISTICAL SECTION Financial Trends These schedules contain trend information to help the reader understand how the Authority’s financial performance and well-being have changed over time. Net Position ................................................................................................................................................. 90 Change in Net Position ............................................................................................................................. 90 Revenue History by Source ...................................................................................................................... 92 Expense History by Function .................................................................................................................... 92 5 28 UTAH TRANSIT AUTHORITY ANNUAL COMPREHENSIVE FINANCIAL REPORT Year Ended December 31, 2021 STATISTICAL SECTION (continued) Revenue Capacity These schedules contain information to help the reader assess the Authority’s most significant local revenue sources. Local Contributions from Other Governments ................................................................................... 94 Local Transit Sales Tax Rates by County ............................................................................................. 94 Principal Contributors of Sales Tax by County .................................................................................... 96 Fares ............................................................................................................................................................... 96 Debt Capacity These schedules present information to help the reader assess the affordability of the Authority’s current level of outstanding debt and the Authority’s ability to issue additional debt in the future. Debt Service Coverage .............................................................................................................................. 98 Demographic and Economic Information These schedules offer demographic and economic indictors to help the reader understand the environment within which the Authority’s financial activities take place. Demographic and Economic Statistics .................................................................................................. 98 Operating Information These schedules contain service and facilities statistics to help the reader understand how the Authority’s financial report relates to its services and operating activities. Full-Time Equivalent Employees ............................................................................................................ 101 Trend Statistics ......................................................................................................................................... 102 Operating Indicators and Capital Assets ............................................................................................ 103 Performance Measures – Bus Service .................................................................................................. 104 Performance Measures – Commuter Rail ........................................................................................... 105 Performance Measures – Demand Response .................................................................................... 106 Performance Measures – Light Rail ...................................................................................................... 107 COMPLIANCE SECTION Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on the Audit of Financial Statement Performed in Accordance with Government Auditing Standards .................................................................................................................................................................................... 109 Independent Auditor’s Report on Compliance for Each Major Federal Program; Report on Internal Control Over Compliance ................................................................................................................................................................................... 111 Schedule of Expenditures of Federal Awards ...................................................................................................................... 114 Notes to Schedule of Expenditures of Federal Awards ..................................................................................................... 116 Schedule of Findings and Questioned Cost ......................................................................................................................... 117 OTHER SUPPLEMENTARY INFORMATION SECTION Independent Auditor’s Report Compliance with the State Compliance Audit Guide and Report on Internal Control Over Compliance ....................................................................................................................................................................... 123 6 29 June 17, 2022 To the Board of Trustees Utah Transit Authority and Citizens within the UTA Service Area We are pleased to submit to you the Annual Comprehensive Financial Report (ACFR) of the Utah Transit Authority (the Authority) for the fiscal year ended December 31, 2021. This document has been prepared by the Authority’s Finance Department using the guidelines recommended by the Government Finance Officers Association of the United States and Canada and conforms to accounting principles generally accepted in the United States of America and promulgated by the Governmental Accounting Standards Board. Management’s Assertions Management assumes full responsibility for the completeness and reliability of the information contained in this report. Management bases their assurance upon a comprehensive framework of internal control that it has been established for this purpose. To provide a reasonable basis for making these representations, management of the Authority has established a comprehensive internal control framework that is designed both to protect the government’s assets from loss, theft, or misuse and to compile sufficient statements in conformity with GAAP. The concept of reasonable assurance recognizes that: (1) the cost of a control should not exceed the benefit likely to be derived; and (2) the valuation of the costs and benefits requires estimates and judgments by management. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. The Annual Comprehensive Financial Report This report contains financial statements and statistical data which provide full disclosure of all the material financial operations of the Authority. The financial statements have been prepared on the accrual basis of accounting in conformance with generally accepted accounting principles. This ACFR is indicative of the Authority’s commitment to provide accurate, concise and high-quality financial information to the residents of its service area and to all other interested parties. The Authority is also required to conduct an annual single audit in conformity with the provisions of the Single Audit Act of 1984 and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Information related to the single audit, including the schedule of expenditures of federal awards, findings and recommendations, and auditor’s reports on internal control structure and compliance with applicable laws and regulations are included with this report. 669 West 200 South Salt Lake City, Utah 84101 1-888-RIDE-UTA www.rideuta.com 7 30 The accounting firm of Crowe LLP was selected to perform an annual independent audit of the Authority’s financial statements. The goal of the independent audit is to provide reasonable assurance that the Authority’s financial statements for the fiscal year ended December 31, 2021, are free of material misstatements. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management and evaluating the overall financial presentation. The independent auditor concluded that there was a reasonable basis for rendering an unmodified opinion that the Authority’s financial statements are fairly presented in conformity with accounting principles generally accepted in the United States of America. The audit also was designed to meet the requirements of the Federal Single Audit Act of 1984 and related Uniform Guidance. The auditor’s report on the basic financial statements and schedules, including reports specifically related to the single audit, are included in this document. GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of a Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. Background The Utah Transit Authority was incorporated on March 3, 1970 under authority of the Utah Public Transit District Act of 1969 for the purpose of providing a public mass transportation system for Utah communities. The Authority is governed by a three-member full-time board of trustees. The Governor appoints nominees from the three appointing districts within the UTA service territory to serve as trustees. The names of the nominees are then forwarded to the Senate for confirmation. Once confirmed, an appointee is sworn in as a trustee. Utah Transit Authority also has a nine-member local advisory council. The local advisory council representation includes: three members appointed by the Salt Lake County council of governments; one member appointed by the Mayor of Salt Lake City; two members appointed by the Utah County council of governments; one member appointed by the Davis County council of governments; one member appointed by the Weber County council of governments; and one member appointed by the councils of governments of Tooele and Box Elder counties. Terms for local advisory council members are indefinite. The responsibility for the operation of the Authority is held by the board of trustees that hires, sets the salaries, and develops performance targets and evaluations for the Executive Director, Internal Auditor, and any chief level officer. The Executive Director is charged with certain responsibilities, some of which require coordination with, or providing advice to, the board of trustees. Legal counsel will be provided by the Utah Attorney General’s Office. An organizational chart which illustrates the reporting relationships follows this letter of transmittal. The executive staff meets weekly to coordinate management of the affairs of the organization. The executive staff and various other department officials meet as needed in a policy forum to review management policies and strategic direction and objectives for the organization. The Authority serves the largest segment of population in the State of Utah known as the Wasatch Front. Its service area includes Salt Lake, Davis, Utah, and Weber Counties, the cities of Tooele and Grantsville in Tooele County and that part of Tooele County comprising the unincorporated areas of Erda, Lakepoint, Stansbury Park and Lincoln, and the cities of Brigham City, Perry and Willard in Box Elder County. The population of the Authority’s service area is approximately 2,642,086 and represents 78.5 percent of the state’s total population. 8 31 Economy Utah bounced back in 2021 from the pandemic recession shock. The state added a record-breaking 72,500 jobs over the year, recovering the 20,900 jobs lost in 2020 and gaining an additional 51,600 new jobs. Nationally, the jobs base is still 3.3% smaller than pre-pandemic. In 2021, only Utah and Idaho had more jobs than in 2019. The state's recovery has been widespread, but pockets of challenge remain. The leisure, hospitality and mining industries have yet to reach their 2019 peaks. Though it has yet to fully add back all jobs lost in 2020, on account of both the severity of the loss and a tight labor market, the travel and tourism sector shone bright in 2021. Despite operating under pandemic conditions and international travel restrictions, Utah ski resorts experienced a record number of skier visits during the 2020-21 season. Net in-migration reached a 16-year high in 2021, with nearly 35,000 new residents moving in from out of state. Population growth, combined with job and wage growth and low interest rates, fueled the ongoing real estate and construction boom. The value of nonresidential construction reached a new peak of $2.7 billion, and builders permitted a record 35,500 new dwelling units, despite supply-chain challenges and price pressures. Strong demand continues to boost home prices, which increased a never experienced 23.5% over the year. The consensus forecast predicts another year of substantial economic expansion in Utah in 2022. The most pressing internal risks will be growth-driven challenges like a limited labor supply, increasing costs, and housing affordability. Declining fertility, air quality, and water challenges will also add pressure. COVID-19 and inflation pose additional downside risks. Utah's fundamental advantages—a youthful demographic profile, economic diversity, a stable fiscal and regulatory environment, crossroads of the west location, global connections, and social cohesion—will continue to influence the state's economic position in 2022 and beyond. As long as major risks to the national expansion are not realized, Utah’s economy will once again be among the best in the nation. Awards The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to The Authority for its Comprehensive Annual Financial Report (ACFR) for the fiscal year ended December 31, 2020. This was the twenty-eighth consecutive year that The Authority has received this prestigious award. This certificate of award is the highest form of recognition for excellence in state and local government financial reporting. In order to receive this award, the Authority must publish an easily readable and well organized comprehensive financial report whose content conforms to the program standards. Such a report must satisfy both generally accepted accounting principles and applicable legal requirements. The Certificate of Achievement for Excellence in Financial Reporting is valid for a one-year period only. We believe that our current Comprehensive Annual Financial Report continues to meet the Certificate of Achievement Program’s requirements and are submitting it to determine eligibility for continued recognition. 9 32 Acknowledgements The preparation of this report would not have been possible without the efficient and dedicated service of the entire finance team at the Authority. We wish to express our sincere appreciation for the hard work and long hours that contributed to the preparation of this report. Appreciation is also extended to the Executive Board and the various team members for their cooperation and dedicated service that made it possible to produce a report of the highest standards. William Greene Chief Financial Officer Utah Transit Authority 10 33 Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to Utah Transit Authority For its Annual Comprehensive Financial Report For the Fiscal Year Ended December 31, 2020 Executive Director/CEO 11 34 UTA Board of Trustees Carlton Christensen, Beth Holbrook, Jeff Acerson Executive Director Jay Fox Chief Financial Officer Bill Greene Acting Chief Operating Officer Cherryl Beveridge Chief Planning & Engagement Officer Nichol Bourdeaux Chief People Officer Kim Shanklin Internal Audit Department Mike Hurst Mgr of Civil Rights Compliance Kenya Fail Manager Total Rewards Ann Green‐Barton Director Talent Acq Greg Gerber Mgr Customer Experience G.J. LaBonty Financial Services Administrator Emily Diaz Sr Mgr Budget & Financial Analysis Brad Armstrong Comptroller Troy Bingham Sr Supply Chain Manager Todd Mills Fares Director Monica Morton Claims & Insurance Mgr Dave Pitcher Mgr Customer Service Cindy Medford Director of Innovative Mobility Solutions Jaron Robertson Special Services GM Ryan Taylor Commuter Rail General Manager Brue Cardon Regional GM Mt. Ogden BU Johnny Salazar Regional GM Timpanogos BU Mary DeLaMare‐Schaefer Acting Chief of Police – Public Safety Mgr Dalin Taylor Regional GM Salt Lake BU Lorin Simpson Planning Director Russell Fox Government Relations Director Shule Bishop Utah Attorney General Mike Bell Tim Merrill David Wilkins Community Engagement Manager Megan Waters Light Rail GM Andres Colemen Director of Board Governance Annette RoyleDirector Safety & Security Sheldon Shaw Director of Talent Development Linda Watts Chief Enterprise Strategy Officer Alisha Garrett IT Director Dan Harmuth Sr Mgr Ops Analysis &Solutions Jonathon Yip Chief Service Development Officer Mary DeLoretto Director of Real Estate & TOD Paul Drake Director of Capital Development Todd Provost Dir of Capital Construction David Hancock Mgr Capital Assets&Proj Ctrls Daniel Hofer Director of Fleet Engineering Brian Sawyer Director of Maint Support Kevin Anderson Chief Communication Officer VACANT Communications Director Andrea Packer UTAH TRANSIT AUTHORITY INTRODUCTORY SECTION Year Ended December 31, 2021 12 35 UTA Board of Trustees Beth Holbrook Jeff Acerson Carlton Christensen Board Chair Davis, Weber and Box Elder Counties Salt Lake County Tooele and Utah Counties 13 UTAH TRANSIT AUTHORITY INTRODUCTORY SECTION Year Ended December 31, 2021 36 UTAH TRANSIT AUTHORITY INTRODUCTORY SECTION Year Ended December 31, 2021 Administration Board of Trustees BOARD CHAIR ........................................................................................................................... Carlton Christensen BOARD TRUSTEE ................................................................................................................................. Beth Holbrook BOARD TRUSTEE ..................................................................................................................................... Jeff Acerson Officers of the Authority BOARD CHAIR ........................................................................................................................... Carlton Christensen EXECUTIVE DIRECTOR .................................................................................................................................... Jay Fox TREASURER ......................................................................................................................................... William Greene COMPTROLLER ..................................................................................................................................... Troy Bingham SECRETARY ............................................................................................................................................ Annette Royle Administration of the Authority EXECUTIVE DIRECTOR ................................................................................................................................... Jay Fox CHIEF OF INTERNAL AUDIT .................................................................................................................. Mike Hurst CHIEF PLANNING AND ENGAGEMENT OFFICER .............................................................. Nichol Bourdeaux CHIEF FINANCIAL OFFICER ........................................................................................................... William Greene INTERIM CHIEF OPERATING OFFICER ................................................................................... Cherryl Beveridge CHIEF PEOPLE OFFICER ........................................................................................................................ Kim Shanklin CHIEF SERVICE DEVELOPMENT OFFICER ............................................................................... Mary DeLoretto CHIEF ENTERPRISE STRATEGY OFFICER ...................................................................................... Alisha Garrett CHIEF COMMUNICATION OFFICER ........................................................................................................... Vacant 14 37 UTAH TRANSIT AUTHORITY INTRODUCTORY SECTION Year Ended December 31, 2021 Local Advisory Council Members Name Appointing Authority CHAIR Julie Fullmer ..................................................................................................... Utah County COG VICE CHAIRS Mark Johnson .................................................................................................. Utah County COG Troy Walker ............................................................................................. Salt Lake County COG MEMBERS Erin Mendenhall ....................................................................................................... Salt Lake City Leonard Call .................................................................................................... Weber Area COG Bob Stevenson .................................................................................................... Davis Area COG Karen Cronin ................................................................................ Box Elder COG/Tooele COG Dan Peay ................................................................................................... Salt Lake County COG Trent Staggs ............................................................................................. 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BOX ELDER Brigham City GREAT SALT LAKE UTAH LAKE SUMMIT WEBER DAVIS SALT LAKE MORGAN UTAH TOOELE UTA BUS & RAIL SYSTEM MAP 0 10 205 Miles FrontRunner TRAX Bus Route County Pleasant View Ogden Roy Layton Farmington Bountiful Salt Lake City West Valley Draper Eagle Mountain Provo Santaquin Grantsville Tooele O Lake Park City 16 39 Financial U TA H T R A N S I T AU T H O R I T Y SM For Fiscal Year Ended December 31, 2021 17 40 Crowe LLP Independent Member Crowe Global (Continued) INDEPENDENT AUDITOR'S REPORT Board of Trustees Utah Transit Authority Salt Lake City, Utah Report on the Audit of the Financial Statements Opinions We have audited the financial statements of the business-type activities and the fiduciary activities of the Utah Transit Authority (the Authority), a component unit of the State of Utah, as of and for the year ended December 31, 2021, and the related notes to the financial statements, which collectively comprise the Authority’s basic financial statements as listed in the table of contents. In our opinion, the accompanying financial statements referred to above present fairly, in all material respects, the respective financial position of the business-type activities and the fiduciary activities of the Authority, as of December 31, 2021, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinions We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards (Government Auditing Standards), issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Authority, and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Authority’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. 18 41 (Continued) Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with GAAS and Government Auditing Standards, we  Exercise professional judgment and maintain professional skepticism throughout the audit.  Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.  Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Authority’s internal control. Accordingly, no such opinion is expressed.  Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.  Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Authority’s ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit. Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, schedule of changes in net pension liability and related ratios, schedule of required employer contributions, and schedule of investment returns, as listed in the table of contents, be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. 19 42 Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Authority’s basic financial statements. The schedule of revenues, expenses and changes in net position budget and actual, combining statement of fiduciary net position, combining statement of changes in fiduciary net position, and the schedule of expenditures of federal awards as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of revenues, expenses and changes in net position budget and actual, combining statement of fiduciary net position, combining statement of changes in fiduciary net position, and the schedule of expenditures of federal awards are fairly stated, in all material respects, in relation to the basic financial statements as a whole. Other Information Management is responsible for the other information included in the annual report. The other information comprises the introductory and statistical sections but does not include the basic financial statements and our auditor's report thereon. Our opinions on the basic financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon. In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated June 17, 2022 on our consideration of the Authority’s internal control over ﬁnancial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over ﬁnancial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the Authority’s internal control over ﬁnancial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Authority’s internal control over ﬁnancial reporting and compliance. Crowe LLP Indianapolis, Indiana June 17, 2022 20 43 THE UTAH TRANSIT AUTHORITY MANAGEMENT’S DISCUSSION AND ANALYSIS Year Ended December 31, 2021 Utah Transit Authority’s 2021 fiscal performance continues to demonstrate the successful implementation of its financial policies. This report provides accountability to the Authority’s goals and objectives defined with its residents and adopted by the Board of Trustees. This section of the Annual Comprehensive Financial Report presents our discussion and analysis of the Authority’s financial performance during the fiscal year that ended on December 31, 2021. Please read it in conjunction with the transmittal letter at the front of this report and the Authority’s financial statements, which follow this section. Due to the material relationship between the Authority and its component units (Joint Insurance Trust and Pension), the Total Reporting Entity information more accurately reflects the comprehensive financial operations of Utah Transit Authority. OVERVIEW OF THE FINANCIAL STATEMENTS The financial section of this annual report consists of four parts – Management’s Discussion and Analysis (MD&A), the Basic Financial Statements, other Required Supplementary Information, and a supplementary section that presents budget and actual schedules for the authority funds; and fiduciary fund schedules for the Joint Insurance Trust and Pension. The basic financial statements present different views of the Authority: •The first three statements are government-wide financial statements that provide both long-term and short-term information about the Authority’s overall financial status. •The remaining statements are fiduciary fund statements provide information about the financial relationships in which the Authority acts solely as a trustee or agent for the benefit of others, to whom the resources belong, such as the Authority’s pension and collective bargaining medical, dental and life insurance funds. FINANCIAL HIGHLIGHTS •The total reporting entity, has positive unrestricted net position of $331,437,253 at December 31, 2021, which represents an increase of $103,355,329 or 45.3 percent from the prior year. •The total expenses of the Authority’s increased 2. 7 percent to $574,219,498 during fiscal year 2021, while the Authority’s total revenues increased by 13.2 percent to $683,436,340. •At December 31, 2021, the Authority had $2,412,681,616 of debt outstanding, including $57,670,000 related to Utah County’s Bonds for Provo-Orem Bus Rapid Transit Construction in 2019. Accordingly, liabilities and deferred inflows of the Authority at December 31, 2021 w er e exceeded by its assets and deferred outflows by $1,026,420,583. •Revenues exceeded the budget by $21,225,694; alternatively, operating expense savings of $22,356,022 under the budget helped to provide additional available resources to fund the Authority’s reserves available for future appropriation. •For 2021, ridership increased by 1.8 percent compared to the prior year, with demand response growing the most in 2021, at 61.1 percent. Fare revenues contributed 4.2 percent of the total revenues for the Authority during fiscal year 2021. 21 44 THE UTAH TRANSIT AUTHORITY MANAGEMENT’S DISCUSSION AND ANALYSIS Year Ended December 31, 2021 The financial statements also include note disclosures that explain some of the information in the financial statements and provide more detailed data. The statements are followed by a section of required supplementary information that further explains and supports the information in the financial statements. In addition to these required elements, the financial statements include a supplementary section with combining statements that provide details about the Authority’s fiduciary funds, each of which are combined and presented in single columns in the basic financial statements The chart below summarizes the major features of the Authority’s financial statements, including the scope and the types of financial information presented. The remainder of this overview section of management’s discussion and analysis explains the structure and contents of each of the statements. Government-Wide Statements Fund Statements Fiduciary Funds Scope Entire Authority (except fiduciary funds). The Authority operates in a manner similar to private businesses. Instances in chich the Authority is the trustee or agent for someone else's resources, such as the retirement plan or medical plans of employees Statement of net position Statement of fiduciary net position Statement of revenues, expenses, and change in net position Statement of changes in fiduciary net position Statement of cash flows Basis of Accounting and Measurement Focus Accrual basis of accounting and economic resources measurement focus Accrual basis of accounting and economic resources measurement focus Type of Asset / Liability Information All assets and liabilities, both financial and capital, and short- term and long-term All assets and liabilities, both financial and capital, and short-term and long- term; the Authority's fiduciary funds do not currently contain capital assets although they could Type of Outflow/Inflow Information All revenues and expenses during the year, regardless of when cash is received or paid All revenues and expenses during the years, regardless of when cash is received or paid Major Features of Utah Transit Authority's Financial Statements Required Financials Statements 22 45 THE UTAH TRANSIT AUTHORITY MANAGEMENT’S DISCUSSION AND ANALYSIS Year Ended December 31, 2021 Changes in Net Position Current and other assets increased from 2020 due to the Authority continued receipt of federal stimulus associated with CARES Act and Coronavirus Response and Relief Supplemental Appropriations Act (CRRSAA) funding. These funds reimbursed the Authority for operating expenses previously paid with local sales taxes. This allowed the Authority to accumulate cash to offset losses in passenger fare and investment income effected by the downturn in the market due to the COVID-19 pandemic. The Authority was able to drawdown the remaining $90,268,322 in CARES Act funding and an additional $33,584,103 CRRSA Act. This offset what would have been local funding in the 2021 budget. Current liabilities increased from 2020 due three factors. First, non-state accounts payables increased by $18.7 million for large construction projects payments pending at year end. Second, larger principal payment of $31.5 million being required in 2021 on long-term debt. Third, the State of Utah started transferring cash funds awarded in the 2021 Legislative Session of $101.4 million to the Authority prior to spending the funds, so unearned revenue for the State of Utah was $48.2 million at year end. Deferred inflows of resources increased from 2020 due to the 2021 bond refunding which created a gain on refunding that will be amortized against interest expense over the remaining life of the 2015 bonds. Restricted net position decreased from 2020 due to actions taken by the Authority to reduce the required debt service reserve from $13,090,406 at the beginning of 2021 to $3,243 by the end of 2021. These remaining amounts will be used to make the June 2022 interest payments on the 2010 and 2015 bonds. A change in unrestricted net position over time may serve as a useful indicator of a government entity’s financial position. As of December 31, 2021, the Authority’s unrestricted net position increased $109.2 million from December 31, 2020. This change can be attributed to change in current and other assets explained earlier in this section along with reductions in spending during the COVID-19 pandemic. CONDENSED STATEMENTS OF NET POSITION 2021 2020 Difference Percent difference Assets Current and other assets 668,1 33,227$ 529,958,949$ $ 138,174,278 26% Capital assets, net 2,887,958,1 68 2,883,366,259 4,591,909 0% Total assets 3,556,091 ,395 3,413,325,208 142,766,187 4% Deferred outflows of resources 1 35,869,962 1 40,645,01 9 (4,775,057)-3% Liabilities Current liabilities 192,105,104 1 00,846,31 1 91,258,793 90% Long-term liabilities 2,445,107,562 2,513,952,882 (68,845,320)-3% Total liabilities 2,637,21 2,666 2,61 4,799,1 93 22,41 3,473 1% Deferred inflows of resources 28,328,1 08 21 ,967,293 6,360,815 29% Net position Net investment in capital assets 667,968,269 648,605,41 1 19,362,858 3% Restricted 27,01 5,061 40,51 6,406 (13,501,345)-33% Unrestricted 331,437,253 228,081,924 103,355,329 45% Total net position 1,026,420,583$ 917,203,741$ 1 09,21 6,842$ 12% 23 46 THE UTAH TRANSIT AUTHORITY MANAGEMENT’S DISCUSSION AND ANALYSIS Year Ended December 31, 2021 Total revenues for the Authority’s increased $79.6 million, and total expenses increased $14.8 million which resulted in a $64.8 million increase in change in net position during the current year. Passenger revenue as a portion of total revenues declined to 4.2 percent from 5.4 percent in 2020. This resulted in $4.3 million less revenue, which is due to corporate fare contract revenues continue to decline even though overall ridership is slowly returning. Many of the Authority’s corporate supporters have opted for contracts based on ridership during the COVID-19 pandemic rather than just general support of system. CONDENSED STATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION 2021 2020 Difference Percent difference Operating revenues 30,386,1 87$ 34,880,272$ $ (4,494,085)-1 3% Operating expenses 472,933,325 459,473,1 89 13,460,136 3% Excess of operating expenses over operating revenues (442,547,1 38) (424,592,91 7) (17,954,221)-4% Non-operating revenues 584,81 6,562 544,637,971 40,178,591 7% Non-operating expenses 101,286,173 99,898,505 1,387,668 1% Income (loss) before contributions 40,983,251 20,1 46,549 20,836,702 -1 03% Capital contributions 68,233,591 24,288,898 43,944,693 181% Change in net positon 1 09,21 6,842$ 44,435,447$ 64,781,395$ -1 46% Total net position, January 1 917,203,741$ 872,768,294$ Total net position, December 31 1,026,420,583$ 917,203,741$ SUMMARY OF REVENUES FOR THE YEAR ENDED DECEMBER 31 2021 2020 Difference Percent difference Operating Passenger revenue 28,510,458$ 32,845,272$ $ (4,334,81 4)-1 3% Advertising 1,875,729 2,035,000 (159,271)-8% Total operating revenue 30,386,1 87 34,880,272 (4,494,085) -1 3% Non-operating Contributions from other gov'ts (sales tax)433,360,729 361 ,590,707 71,770,022 20% Federal noncapital assistance 1 30,631 ,095 160,258,318 (29,627,223)-1 8% Interest income 1,432,026 3,525,448 (2,093,422)-59% Sale of assets 1,411,431 927,566 483,865 52% Build America Bond subsidy 8,1 58,624 8,893,288 (734,664)-8% Other 9,822,657 9,442,644 380,01 3 4% Total non-operating revenue 584,81 6,562 544,637,971 40,178,591 7% Capital contributions 68,233,591 24,288,898 43,944,693 181% Total revenues 683,436,340$ 603,807,1 41$ 79,629,199$ 13% 24 47 THE UTAH TRANSIT AUTHORITY MANAGEMENT’S DISCUSSION AND ANALYSIS Year Ended December 31, 2021 Since the Authority does not have the ability to levy taxes, it relies on contributions dedicated by member governments in the form of sales tax increments. 63.4 percent of total revenues are derived from sales taxes. Sales tax revenues increased by $71.8 million driven mainly by a vibrant economy described in the letter of transmittal section. In 2021, the federal government continued to contribute to the Authority for operating, maintenance, and administration assistance for $90,268,322 in CARES Act funding and an additional $33,584,103 in CRRSA Act funding. These allocations were based on a formula that factored in 2019 operating expenses of the Authority to determine the award amount. The funds received this year only constituted the first nine month of 2021 operating, maintenance, and administration expenses, and the remaining four months will be received in 2022 due to delays in filing for next round of federal stimulus funding. This delay led to the decrease of 29.6 million in 2021 federal noncapital assistance revenues. Capital contributions increased by $43.9 million due to state and local partners contributing more on capital projects in 2021. This can be expected, as local participation in new construction projects can vary from year to year and whether or not the project is grant funded. Operating expenses for 2021 increased $14.8 million from 2020. The two most significant changes by mode are in demand response services and administration. The demand response service introduced a new type of service called microtransit that increased this mode by $2.4 million. Demand response services experienced an overall increase in general demand in Utah and Salt Lake County post-COVID-19 (see ridership comparison). Administration increases are related to capital maintenance expenses. Capital maintenance expenses are significant but infrequent non-capital expenses that are not directly attributed to each mode of transit. The following chart shows the amount allocated to each mode: SUMMARY OF EXPENSES FOR THE YEAR ENDED DECEMBER 31 2021 2020 Difference Percent difference Operating expenses Bus service 1 08,575,280$ 1 07,390,047$ $ 1,185,233 1% Rail service 94,943,238 96,041 ,283 (1 ,098,045)-1 % Demand response service 27,083,173 22,646,903 4,436,270 20% Other services 3,587,718 3,296,275 291 ,443 9% Operations support 50,621,841 46,463,776 4,158,065 9% Administration 54,073,187 44,545,686 9,527,501 21% Depreciation 1 34,048,888 1 39,089,21 9 (5,040,331 )-4% Total operating expenses 472,933,325 459,473,1 89 13,460,136 3% Non-operating expenses Interest expense 101,286,173 99,898,505 1,387,668 1% Total non-operating expenses 101,286,173 99,898,505 1,387,668 1% Total expenses 574,21 9,498$ 559,371 ,694$ 1 4,847,804$ 3% 25 48 THE UTAH TRANSIT AUTHORITY MANAGEMENT’S DISCUSSION AND ANALYSIS Year Ended December 31, 2021 Like most transit service agencies, personnel cost is the Authority’s largest expense. Personnel cost for the Authority in 2021 was 67.1 percent of total operating expense less depreciation expense. Overall, personnel cost increased $1.2 million in 2021 due to the Authority increasing salaries less fringe expense reductions. Operating expense less personnel cost increased $18.5 million due to raising inflation of cost for goods, mostly fuel, and services after the COVID-19 pandemic. CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets SUMMARY OF CAPITAL MAINTENCE EXPENSES FOR THE YEAR ENDED DECEMBER 31 2021 2020 Difference Percent difference Capital Maintenance Expenses in Projects Bus service 1 ,050,751$ 2,935,739$ $ (1,884,988)-64% Rail service 1 6,279,01 1 22,009,771 (5,730,760)-26% Demand response service 1 62,543 4,802 157,741 3285% Other service 3,030 - 3,030 Administration 13,558,929 5,025,154 8,533,775 1 70% Total capital maintenance expenses 31,054,264$ 29,975,466$ 1,078,798$ 4% SUMMARY OF OPERATING EXPENSES FOR THE YEAR ENDED DECEMBER 31 2021 2020 Difference Percent difference Operating expense less depreciation 338,884,437$ 320,383,970$ 1 8,500,467$ 5.8% Wages 1 58,066,997 1 53,887,948 4,1 79,049 2.7% Benefits 69,21 2,1 30 72,1 56,293 (2,944,1 63)-4.1 % Operations less wages/benefits 111,605,310 94,339,729 17,265,581 18.3% Personnel cost 227,279,127$ 226,044,241$ 1 ,234,886$ 0.5% % of operating expense 67.1 %70.6%-3.5% -4.9% CAPITAL ASSET ACTIVITY 2021 2020 Difference Percent difference Land 41 1 ,342,949$ 41 0,537,405$ $ 805,544 0% Construction in process 203,927,118 137,936,777 65,990,341 48% Infrastructure 2,508,863,889 2,500,620,1 04 8,243,785 0% Building and building improvements 203,91 1 ,043 213,225,412 (9,314,369)-4% Revenue vehicles 748,886,006 752,974,669 (4,088,663)-1 % Leased revenue vehicles 87,967,286 71 ,632,600 16,334,686 23% Equipment 66,81 6,21 9 66,536,885 279,334 0% Land improvements 1 78,487,488 148,507,252 29,980,236 20% Leased land improvements 94,273,476 84,485,965 9,787,511 12% Intangibles 57,097,309 54,745,003 2,352,306 4% Accumulated depreciation and amortization (1 ,673,61 4,61 5) (1,557,835,813) (115,778,802)7% Total capital assets, net 2,887,958,1 68$ 2,883,366,259$ 4,591,909$ 0% 26 49 THE UTAH TRANSIT AUTHORITY MANAGEMENT’S DISCUSSION AND ANALYSIS Year Ended December 31, 2021 At the end of fiscal year 2021, the Authority had invested $4.5 million in a broad range of capital assets, including land, buildings, improvements, equipment, infrastructure, and construction in progress. The Authority continued to better define categories of capital asset. This resulted in transfers of assets from building and building improvements category to infrastructure and land improvement categories (see Footnote 4 for more details). Major Capital Asset Additions This year’s major Authority capital asset additions included the following: • The increase in leased revenue vehicle assets reflects the purchase of the new 2021 revenue vehicle fleet. • The Authority’s construction in process activities for fiscal year 2021 included $41.6 million expended on the Authority’s new clean fuel maintenance facility construction, $32.0 million on the future Ogden/Weber State bus rapid transit project, $21.5 million for the new airport TRAX station, and $15.2 million on double tracking FrontRunner in northern Utah County for the new Vineyard Station. Long-Term Debt And Other Obligations At year-end the Authority’s had total debt obligations of $2.4 billion, of which, bonded debt outstanding represented $2.3 billion, all of which is backed by pledged sales tax increments in each county. Of the Authority’s debt, $81.5 million represents leases secured solely by specified revenue vehicle that is pledged as collateral on the lien. The Authority’s total debt obligations decreased $34.4 million during the 2021 fiscal year. The key components of the 2021 activities were the issuance of taxable refunding sales tax revenue bonds totaling $383.1 million of 2015 senior lien sales tax revenue bonds and $14.1 million of subordinate lien sales tax revenue bonds as well as new lease funding totaling $32.0 million, coupled with principal retirements of $62.7 million. More detailed information about the Authority’s long-term debt is presented in Footnote 9 to the financial statements. Bond Ratings The Authority maintains ratings of AA from Fitch Ratings, Aa2 from Moody’s Investors Services and AA from Standard and Poor’s. All three ratings were reconfirmed during fiscal year 2021 refunding. Limitations on Debt The Authority has historically issued Sales Tax Revenue Bonds in lieu of any General Obligation Bonds. Revenue bonds do not have issue limits based on assessed valuation of properties in the Authority’s district but are constrained by UTA’s ability to repay the principal and interest amounts annually with pledged sales tax revenues. An important metric of the Authority’s financial health is the amount of pledged sales taxes annually in relation to the debt service due in the given year, or debt service coverage ratio. DEBT ADMINISTRATION Source: Zions Bank Financial Advisors Effective date: November 2021 Standard & Poor's Fitch Moody's Senior Lien Bonds Current rating AA AA Aa2 Outlook S table Negative S table Subordinate Lien Fixed Rate Bonds Current rating A+AA Aa3 Outlook S table Negative S table 27 50 THE UTAH TRANSIT AUTHORITY MANAGEMENT’S DISCUSSION AND ANALYSIS Year Ended December 31, 2021 Debt Service Coverage Ratio (DSCR) Policy Minimum DSCR Requirements Minimum DSCR Forecasted Year of Minimum Senior Lien 2.0x 3.60x 2022 Subordinate Lien 1.5x 4.54x 2040 The Authority’s net coverage ratio would reach a minimum of 2.49 in 2022. Adherence to other minimum debt service coverage ratios are detailed in the table below: Year 2022 Projected Pledged Sales Taxes Senior Lien Debt Payments Senior Lien Projected Debt Service Coverage Ratio Subordinate Lien Debt Payments Subordinate Lien Projected Debt Service Coverage Ratio Total Debt Payments Total Projected Debt Service Coverage Ratio 2022 353,760,000 98,150,193 3.60 43,797,227 8.08 141,947,420 2.49 2023 375,324,000 104,039,742 3.61 46,453,711 8.08 150,493,453 2.49 2024 391,804,000 104,045,687 3.77 46,446,219 8.44 150,491,906 2.60 2025 406,779,000 105,978,989 3.84 46,447,174 8.76 152,426,163 2.67 2026 421,509,000 105,981,667 3.98 46,451,771 9.07 152,433,438 2.77 2027 436,199,000 101,946,084 4.28 56,198,041 7.76 158,144,125 2.76 2028 451,640,445 101,941,964 4.43 56,188,017 8.04 158,129,981 2.86 2029 467,628,516 104,906,327 4.46 62,439,403 7.49 167,345,730 2.79 2030 484,182,566 102,048,307 4.74 62,415,895 7.76 164,464,202 2.94 2031 501,322,629 102,055,492 4.91 62,439,893 8.03 164,495,385 3.05 2032 519,069,450 101,802,153 5.10 62,439,607 8.31 164,241,760 3.16 2033 537,444,508 124,060,994 4.33 40,077,991 13.41 164,138,985 3.27 2034 556,470,044 124,064,926 4.49 40,080,199 13.88 164,145,125 3.39 2035 576,169,083 124,062,891 4.64 40,078,514 14.38 164,141,405 3.51 2036 596,565,469 127,429,814 4.68 34,962,723 17.06 162,392,537 3.67 2037 617,683,887 125,833,888 4.91 36,563,777 16.89 162,397,665 3.80 2038 639,549,896 123,415,219 5.18 38,980,308 16.41 162,395,527 3.94 2039 662,189,962 99,960,375 6.62 62,436,883 10.61 162,397,258 4.08 2040 685,631,487 11,657,724 58.81 150,946,856 4.54 162,604,580 4.22 2041 709,902,842 79,316,687 8.95 66,369,476 10.70 145,686,163 4.87 2042 735,033,402 122,206,633 6.01 23,475,140 31.31 145,681,773 5.05 2043 761,053,585 4,445,000 171.22 - - 4,445,000 171.22 2044 787,994,882 4,439,300 177.50 - - 4,439,300 177.50 28 51 THE UTAH TRANSIT AUTHORITY MANAGEMENT’S DISCUSSION AND ANALYSIS Year Ended December 31, 2021 ECONOMIC AND OPERATING FACTORS AND NEXT YEAR’S BUDGETS Key Economic Factors • During 2020, an outbreak of a novel strain of coronavirus (COVID-19) emerged globally. As a result of the spread of COVID-19, economic uncertainties have arisen that could negatively impact the Authority’s anticipated future revenues and operations for an indeterminable period of time. Other financial impacts could occur but are unknown as of the date of publication of this financial report. • In response to the COVID-19 global pandemic, the federal government has made funding available via the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act and Coronavirus Response and Relief Supplemental Appropriations Act (CRRSAA) funding to aid localities in their response to the health crisis. Expenditures of this federal funding are subject to audit by the grantor under the Uniform Guidance, and the Authority is contingently liable to refund amounts received in excess of allowable expenditures. In the opinion of the Authority’s management, no material refunds will be required as a result of expenditures disallowed by the grantor. See the results of the Single Audit in the Authority’s Single Audit Report for further information. • The fiscal year 2022 operating budget is $36.6 million higher than 2021, which is a 11.2 percent increase from fiscal year 2021. Operating Statistics The following information provides an annual comparison of ridership by service for years 2021 and 2020. The Authority had a 1.8 percent increase in ridership in 2021 and continues to recovery after the COVID-19 pandemic. Pre-pandemic levels of commuter ridership into Salt Lake City and Salt Lake County has not returned as of the date of this report as many businesses have encouraged telecommuting or working from home for their employees CONTACTING THE AUTHORITY’S FINANCIAL MANAGEMENT The financial report is designed to provide our citizens, taxpayers, customers, investors and creditors with a general overview of the Authority’s finances and to demonstrate the Authority’s accountability for the money received. Questions about this report or inquiries for additional information may be addressed to the Comptroller, 669 West 200 South, Salt Lake City, Utah 84101 or tbingham@rideuta.com. RIDERSHIP COMPARISON Source: National Transit Database 2021 2020 Difference Percent difference Bus service 1 2,61 6,872 1 2,441 ,304 175,568 1 .4% Light rail service 8,403,862 8,247,364 156,498 1.9% Commuter rail service 2,062,333 2,024,524 37,809 1.9% Demand response service 301 ,505 187,112 114,393 61.1% Other service 587,721 658,990 (71,269)-1 0.8% Total ridership 23,972,293 23,559,294 412,999 1.8% 29 52 UTAH TRANSIT AUTHORITY FINANCIAL STATEMENTS As of December 31, 2021 STATEMENT OF NET POSITION ASSETS Current Assets: Cash and cash equivalents $190,968,233 Investments 151,672,499 Restricted cash and cash equivalents (bond funds) 16,938,274 Receivables Contributions from other governments (sales tax) 83,728,630 Federal grants 32,359,923 Other 8,121,608 State of Utah 3,447,244 Parts and supplies inventories 34,175,227 Prepaid expenses 2,245,414 Total Current Assets 523,657,052 Noncurrent Assets: Restricted cash equivalents and cash equivalents Bonds funds 3,243 Interlocal agreements 2,044,945 Escrow funds 102,795,975 Self-insurance deposits 9,089,772 Total restricted cash equivalents and cash equivalents 113,933,935 Non-depreciable capital assets Land 411,342,949 Construction in progress 203,927,118 Total non-depreciable capital assets 615,270,067 Depreciable Capital Assets: Land improvements 178,487,488 Leased Land Improvements 94,273,476 Building and building improvements 203,911,043 Infrastructure 2,508,863,889 Revenue vehicles 748,886,006 Leased revenue vehicles 87,967,286 Equipment 66,816,219 Intangibles 57,097,309 Total depreciable capital assets 3,946,302,716 Total capital assets 4,561,572,783 Less accumulated depreciation and amortization (1,673,614,615) Total capital assets, net depreciation 2,887,958,168 Amount recoverable - interlocal agreement 19,461,924 Other assets 11,080,316 Total Noncurrent Assets 3,032,434,343 TOTAL ASSETS $3,556,091,395 **Readers wanting additional information should refer to the notes to the financial statements** 30 53 UTAH TRANSIT AUTHORITY FINANCIAL STATEMENTS As of December 31, 2021 STATEMENT OF NET POSITION (continued) DEFERRED OUTFLOWS OF RESOURCES Advanced debt refunding - loss on refunding $111,434,804 Deferred outflows of resources related to pension 24,435,158 TOTAL DEFERRED OUTFLOWS OF RESOURCES 135,869,962 LIABILITIES Current Liabilities: Accounts payable: Other 38,295,605 State of Utah 5,826,591 Accrued liabilities, primarily payroll-related 6,551,808 Current portion of compensated absences 10,238,900 Current portion of accrued interest 4,381,335 Current portion of interlocal loan 1,545,000 Current portion of long-term debt 64,946,585 Accrued self-insurance liability 1,061,173 Unearned revenues: Other 11,025,626 State of Utah 48,232,481 Total Current Liabilities 192,105,104 Long-Term Liabilities: Long-term compensated absences 4,385,260 Long-term deposits 46,559 Long-term accrued interest 3,643,226 Interlocal loan 56,125,000 Long-term debt 2,290,265,031 Long-term net pension liability 90,642,486 Total Long-term Liabilities 2,445,107,562 TOTAL LIABILITIES 2,637,212,666 DEFERRED INFLOWS OF RESOURCES Advanced debt refunding - gain on refunding 5,538,748 Deferred inflows of resources related to pension 22,789,360 TOTAL DEFERRED INFLOWS OF RESOURCES 28,328,108 NET POSITION Net investment in capital assets 667,968,269 Restricted for: Debt service 16,941,517 Interlocal agreements 2,044,945 Self-insurance deposits 8,028,599 Unrestricted 331,437,253 TOTAL NET POSITION $1,026,420,583 **Readers wanting additional information should refer to the notes to the financial statements** 31 54 UTAH TRANSIT AUTHORITY FINANCIAL STATEMENTS Year Ended December 31, 2021 STATEMENT OF REVENUES, EXPENSES AND CHANGE IN NET POSITION OPERATING REVENUES Passenger fares $ 28,510,458 Advertising 1,875,729 Total operating revenues 30,386,187 OPERATING EXPENSES Bus service 108,575,280 Rail service 94,943,238 Demand response service 27,083,173 Other service 3,587,718 Operations support 50,621,841 Administration 54,073,187 Depreciation 134,048,888 Total operating expenses 472,933,325 EXCESS OPERATING EXPENSES OVER OPERATING REVENUES (442,547,138) NON-OPERATING REVENUES (EXPENSES) Contributions from other governments (sales tax) 433,360,729 Federal operating grants 130,631,095 Investment income 1,432,026 Net gain on sale of capital assets 1,411,431 Other 9,822,657 Interest expense (101,286,173) Build America Bond subsidies 8,158,624 Net non-operating revenues 483,530,389 INCOME (LOSS) BEFORE CAPITAL CONTRIBUTIONS 40,983,251 CAPITAL CONTRIBUTIONS Federal grants 48,642,468 Local 19,545,348 Capital contribution 45,775 TOTAL CAPITAL CONTRIBUTIONS 68,233,591 CHANGE IN NET POSITION 109,216,842 Total Net Position, January 1 917,203,741 Total Net Position, December 31 $ 1,026,420,583 **Readers wanting additional information should refer to the notes to the financial statements** 32 55 UTAH TRANSIT AUTHORITY FINANCIAL STATEMENTS Year Ended December 31, 2021 STATEMENT OF CASH FLOWS Cash flows from operating activities: Passenger receipts 26,360,852$ Advertising receipts 3,222,176 Other receipts 9,822,657 Payments to vendors (101,160,108) Payments to employees (160,667,641) Employee benefits paid (75,067,384) Net cash used in operating activities (297,489,448) Cash flows from noncapital financing activities: Sales tax receipts 420,342,483 Federal operating/maintenance grants 143,468,591 Net cash provided by noncapital financing activities 563,811,074 Cash flows from capital and related financing activities: Contributions for capital projects Federal 32,311,468 Local 66,578,541 Proceeds from revenue bond escrow deposits 3,412,754 Payments of bonds (39,165,000) Payments on interlocal loan (7,995,597) Build America Bond subsidies received 8,158,624 Bond Interest payments (107,604,181) Proceeds from leases 32,019,500 Payment on leases (7,814,261) Purchases of capital assets (128,759,974) Proceeds from the sale of property 1,411,431 Net cash used in capital and related financing activities (147,446,695) Cash flows from investing activities: Interest on investments 1,343,660 Purchases of investments 6,120,980 Proceeds from the sales of investments (137,643,381) Net cash used in investing activities (130,178,741) Net change in cash and cash equivalents (11,303,810) Cash and cash equivalents at beginning of year 333,144,252 Cash and cash equivalents at end of year 321,840,442$ **Readers wanting additional information should refer to the notes to the financial statements** 33 56 UTAH TRANSIT AUTHORITY FINANCIAL STATEMENTS Year Ended December 31, 2021 STATEMENT OF CASH FLOWS (continued) Reconciliation of Cash to the Statement of Net Position Cash and cash equivalents at year end from statement of cash flows 321,840,442$ Cash as reported on the Statement of Net Position Cash and cash equivalents 190,968,233 Restricted cash and cash equivalents Bonds funds 16,941,517 Interlocal agreements 2,044,945 Escrow funds 102,795,975 Self-insurance deposits 9,089,772 Total cash and cash equivalents 321,840,442$ Reconciliation of operating loss to net cash used in operating activities: Operating loss (442,547,138)$ Adjustments to reconcile operating loss to net cash used in operatiing activities: Depreciation 134,048,888 Other operating revenues 9,822,657 Changes in deferred outflow/inflow of resources and net pension liability: Deferred outflows of resources related to pension (2,468,061) Deferred inflows of resources related to pension 822,067 Net pension liability (6,141,111) Total changes in deferred outflow/inflow of resources and net pension liability (7,787,105) Changes in assets and liabilities: Accounts receivable - Other and State of Utah (1,036,668) Parts and supplies inventories 247,610 Prepaid expenses 202,889 Accounts payable - Other and State of Utah 12,210,260 Accrued liabilities (2,884,350) Unearned revenue 233,509 Total changes in assets and liabilities:8,973,250 Net cash used in operating activities (297,489,448)$ Information about noncash investing, capital, and financing activities: Change in fair value of investments 51,879$ Capital asset acquisitions in accounts payable 15,772,798 Payments from refunding escrows: 2015A Non-Taxable Bonds in Escrow 397,275,000 **Readers wanting additional information should refer to the notes to the financial statements** 34 57 UTAH TRANSIT AUTHORITY FINANCIAL SECTION As of December 31, 2021 STATEMENT OF FIDUCIARY NET POSITION Pension and Other Employment Benefit Trust Funds ASSETS Cash in Bank 6,593,528$ Cash in Utah State Treasury 1,057,161 Total Cash 7,650,689 Global Equities 205,852,022 Fixed Income 73,221,266 Liquid Diversifiers 7,225,418 Real Assets 13,584,440 Money Market 13,440,201 Total Investments 313,323,347 Prepaid Benefits 1,454,872 Deposits 104,795 Receivables - Dividends Receivable 114 Accounts Receivable - Benefits 2,352 Accounts Receivable - Contributions 758,057 Total Receivables 760,523 TOTAL ASSETS 323,294,226 LIABILITIES Benefits Payable 16,944 Accounts Payable 2,213,084 TOTAL LIABILITIES 2,230,028 NET POSITION Restricted for: Pension 314,608,736 Benefits Other Than Pension 6,455,462 TOTAL NET POSITION 321,064,198$ Investments **Readers wanting additional information should refer to the notes to the financial statements and supplementary schedules** 35 58 UTAH TRANSIT AUTHORITY FINANCIAL SECTION Year Ended December 31, 2021 STATEMENT OF CHANGES IN FIDUCIARY NET POSITION Pension and Other Employment Benefit Trust Funds ADDITIONS Employer Contributions 45,485,487$ Participant Voluntary Contributions 811,291 Total Contributions 46,296,778 Net Investment Income 27,973,070 Interest 18,008 Dividends 1,509,174 Total Investment Income 29,500,252 Less: Investment Expense 660,644 Net Investment Income 28,839,608 TOTAL ADDITIONS 75,136,386 DEDUCTIONS Monthly Benefits Paid 33,494,571 Lump Sum Distributions 5,668,150 Administrative Expense 581,298 TOTAL DEDUCTIONS 39,744,019 CHANGE IN NET POSITION 35,392,367 Total Net Position, January 1 285,671,831 Total Net Position, December 31 321,064,198$ Net Appreciation in Fair Value of Investments **Readers wanting additional information should refer to the notes to the financial statements and supplementary schedules** 36 59 UTAH TRANSIT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS Year Ended December 31, 2021 NOTE 1 – DESCRIPTION OF THE AUTHORITY OPERATIONS AND DEFINITION OF THE ENTITY A. Organization The Utah Transit Authority, the “Authority”, was incorporated on March 3, 1970 under authority of the Utah Public Transit District Act of 1969 for the purpose of providing a public mass transportation system for Utah communities. The Authority’s service area lies in the region commonly referred to as the Wasatch Front. The service area extends from the Wasatch Mountains on the east to the Great Salt Lake on the west, is approximately 100 miles long and 30 miles wide, and consists of an area of approximately 1,400 square miles that covers all or portions of six (6) principal counties (Box Elder, Davis, Salt Lake, Tooele, Utah and Weber). The service area also includes a small portion of Juab County. The Authority’s operations include commuter rail service from Ogden to Provo, light rail service in Salt Lake County, and bus service, paratransit service for the transit disabled, rideshare and vanpool programs system wide. The Authority is governed by a three-member full-time board of trustees. The Governor appoints nominees from the three appointing districts within the UTA service territory to serve as trustees. The names of the nominees are then forwarded to the Senate for confirmation. Once confirmed, an appointee is sworn in as a trustee. Utah Transit Authority also has a nine-member local advisory board. The local advisory board representation includes: three members appointed by the Salt Lake County council of governments; one member appointed by the Mayor of Salt Lake City; two members appointed by the Utah County council of governments; one member appointed by the Davis County council of governments; one member appointed by the Weber County council of governments; and one member appointed by the councils of governments of Tooele and Box Elder counties. Terms for local advisory board members are indefinite. B. Reporting Entity The accompanying financial statements include only the accounts and transactions of the Authority. Under the criteria specified in Statements No. 14 and No. 39, the Authority has two component units that are fiduciary funds in the financial statements. 1. The Joint Insurance Trust is for current employee benefit premium to be held in trust until premiums are paid for the union employees of the Authority. Financial statements are included in the supplementary schedules. Separate financial statements are not created. 2. The Utah Transit Authority Employee Retirement Plan is a post-employment pension plan for all employees of the Authority. Financial statements are included in the supplementary schedules. Separate financial statements are not created. The Authority is considered a component unit of State of Utah. 37 60 UTAH TRANSIT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS Year Ended December 31, 2021 These conclusions regarding the financial reporting entity are based on the concept of financial accountability. The Authority is accountable for a separate employee pension from the Utah State Retirement System and jointly administers a joint insurance trust with the collective bargaining group that represents active union employees. Additionally, the Authority has considered the provisions of GASB No. 39 which follows the concept of economic independence. The Authority does not raise or hold economic resources for the direct benefit of another governmental units. Also, other governments do not have the ability to access economic resources held by the Authority. This is evidenced by the fact that the Authority is a legally and fiscally separate and distinct organization under the provision of the Utah State Code. 38 61 UTAH TRANSIT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS Year Ended December 31, 2021 NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Basis of Accounting The Authority reports as a single enterprise fund and two additional fiduciary funds for its employee pension and joint insurance trust. These funds uses the accrual method of accounting and the economic resources measurement focus. Under this method, revenues are recognized when they are earned and expenses are recognized when they are incurred. B. Standards for Reporting Purposes The financial statements of the Authority have been prepared in conformity with accounting principles generally accepted in the United States of America as prescribed by GASB. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, deferred outflows of resources, liabilities, deferred inflows of resources, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts or revenues and expenses during the reporting period. Actual results could differ from those estimates. C. Federal Operating Grants Federal planning assistance, operating and preventive maintenance grants are received from the Federal Transit Administration (FTA) and are recognized as revenue and receivable during the period in which the related expenses are incurred and eligibility requirements are met. D. Federal Grants for Capital Expenditures The U.S. Department of Transportation, through contracts between the Authority and the FTA, provides federal funds of 50% to 93.7% of the cost of property, facilities and equipment acquired by the Authority through federal grants. Grant funds for capital expenditures are earned and recorded as capital contribution revenue when the capital expenditures are incurred, and eligibility requirements are met. E. Classification of Revenues and Expenses • Operating revenues: Operating revenues include activities that have the characteristics of exchange transactions such as passenger revenues and advertising revenues. • Operating expenses: Operating expenses include payments to suppliers, employees, and third parties on behalf of employees and all payments that do not result from transactions defined as capital and related financing, non-capital financing, or investing activities. • Non-operating revenues: Non-operating revenues include activities that have the characteristics of non-exchange transactions and other revenue sources that are defined as non-operating revenues by GASB Statement No. 9, Reporting Cash Flows of Proprietary and Nonexpendable Trust Funds and Governmental Entities That Use Proprietary Fund Accounting, and GASB Statement No. 34. Examples of non-operating revenues would be the contributions from other governments (sales tax), federal grants and investment income. • Non-operating expenses: Non-operating expenses include payments from transactions defined as capital and related financing, non-capital financing or investing activities. 39 62 UTAH TRANSIT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS Year Ended December 31, 2021 F. Contributions from Other Governments The counties and municipalities who receive transit services from the Authority have agreed to contribute a portion of sales tax to the Authority in exchange for service. These contributions are received by the Authority approximately 60 days after the collection of the sales tax, and as such are recorded as an accrual to revenue and receivable during that period. The following percentage of sales have been authorized as Local Option Sales Tax and dedicated to support transit: Salt Lake County 0.7875% Davis County 0.6500% Weber County 0.6500% Box Elder County 0.5500% Utah County 0.6300% Tooele County 0.6500% County Mass Transit Tax (0.25% or 0.30%)* Additional Mass Transit Tax (0.25%) Mass Transit Fixed Guideway Tax (0.30%) County Option Transportation Tax (0.25%) County Airport, Highway, Public Transit Tax (0.10% or 0.25%) 4th Quarter (0.25%) Supplemental State Sales & Use Tax (0.05%) Local Option Transit (Up to 0.20%) 1st "Quarter"2nd "Quarter" Option 2nd "Quarter" Option 3rd "Quarter" Option 3rd "Quarter" Option 4th "Quarter" 5th "Quarter" (if all 4 Quarters imposed) MT UCA 59-12-2213 MA UCA 59-12-2214 MF UCA 59-12-2216 CT UCA 59-12-2217 HH UCA 59-12-2218 AT UCA 59-12-2219 SM UCA 59-12-2203 CP UCA 59-12-2220 Weber 0.25% (eligible for 0.30%)0.25%Ineligible 0.25%Ineligible 0.25%0.05%Eligible Davis 0.25% (eligible for 0.30%)0.25%Ineligible 0.25%Ineligible 0.25%0.05%Eligible Salt Lake 0.30%0.25%Ineligible 0.25%Ineligible 0.25%Ineligible Eligible Utah 0.25%Ineligible 0.30%Ineligible 0.25%0.25%Ineligible Eligible Tooele ( six cities) 0.30%Eligible Ineligible 0.25%Ineligible 0.25%Ineligible Currently ineligible Box Elder (three cities) 0.30%0.25%Ineligible Eligible Ineligible Eligible Ineligible Currently ineligible Local Option Transportation Sales Tax in UTA's Service Area Eligible but they've chosen not to give this tax to UTA, but instead contribute it for roads Ineligible Eligible & receiving this tax Legend Eligible but hasn't been enacted yet, UTA has not received this tax 40 63 UTAH TRANSIT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS Year Ended December 31, 2021 G. Cash and Investments Cash and investments include cash on hand, demand deposits, and amounts invested in a repurchase agreement, a certificate of deposit and the Utah Public Treasurers’ Investments Fund, including restricted cash equivalents. The Authority considers short-term investments with an original maturity of three (3) months or less to be cash equivalents (Note 3). H. Restricted Cash and Cash Equivalents Restricted cash and cash equivalents are defined as funds restricted by legal requirement(s) outside of the Authority. The Authority is required to place monthly deposits in trust for next year’s principal and interest on the bonds and these funds are restricted per the bond covenants. $ 16,938,274 The Authority is required to maintain certain accounts in connection with the issuance of bonds which are restricted per the bond covenants. 3,243 The Authority has entered interlocal agreement with Box Elder County to restrict a certain increment of sales taxes collected in their county for FrontRunner expansion to Box Elder. 2,044,945 The Authority has issued bonds and leases in 2018, 2019, and 2020 for projects that are not complete to date and has entered into interlocal agreement to establish escrow accounts for specific projects. 102,795,975 The Authority is required to maintain certain accounts in connection with being self- insured in the State of Utah. 9,089,772 I. Designated Cash and Cash Equivalents Designated cash and cash equivalents are considered designated through action by the Authority’s Board of Trustees and have no outside legal restrictions. Designations include funds to stabilize operations and debt service in the case of changing economic environments. The following amounts were considered designated by the Board of Trustees as of December 31 of the respective years: General reserve $ 65,368,000 Service sustainability reserve 10,895,000 Capital replacement reserve 45,645,000 Debt reduction reserve 30,000,000 Total designated cash and cash equivalents $ 151,879,000 • Designated for general reserves – This component of cash including the risk reserve, funded at a level equal to at least twelve percent (12%) of the Authority’s budgeted operating expense, excluding non-operating expense, to be used as a working capital account throughout the year. The Board has chosen to fund this reserve at eighteen percent (18%). The Treasurer will manage the use of 41 64 UTAH TRANSIT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS Year Ended December 31, 2021 the funds in the general operating reserve. (Utah Transit Authority Board Policy No. 2.1 Financial Management) • Designated for service sustainability reserves - This component of cash consists of three percent (3%) of the Authority’s annual operating budget expenses for the purpose of preserving service levels when the Authority is facing a revenue shortfall or cost overrun due to extraordinary circumstances, such as an economic downturn or rapid rise in fuel prices or any combination of such events. The Board of Trustees must give its prior approval before funds in the bond reserve are used. (Utah Transit Authority Board Policy No. 2.1 Financial Management) • Designated for capital replacement reserves – This component of cash consists of one percent (1%) of the property, facilities, and equipment cost as reported in the annual comprehensive financial report to be used for capital repair or replacement costs due to extraordinary circumstances. The Board of Trustees must give its prior approval before funds in the capital replacement reserve are used. (Utah Transit Authority Board Policy No. 2.1 Financial Management) • Designated for debt reduction reserves – This component of cash consists of debt service savings from refunded bond issues. In April 2020, in accordance with the Board’s Policy No. 2.1 – Financial Management, the Board reaffirmed continuing the debt reduction reserve and the primary purpose to be primarily early retirement of outstanding debt. J. Investments Cash in excess of operating requirements is invested by the Treasurer. The Authority’s investments comply with the Utah Money Management Act. K. Receivables Receivables consist primarily of amounts due to the Authority from sales tax collections, federal grants, and local government partners, pass sales and investment income. Accounting reviews all receivables that age past 120 days and follows up on contract terms for payment. This minimizes credit risk exists related to these receivables and allows for no current provision for bad debts. L. Parts and Supplies Inventories Parts and supplies inventories are stated at the lower of cost (using the moving average cost method) or market. Inventories generally consist of fuel, lube oil, antifreeze and repair parts held for consumption. Inventories are expensed as used. 42 65 UTAH TRANSIT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS Year Ended December 31, 2021 M. Capital Assets Capital assets include land and land improvements, right of way, buildings and building improvements, infrastructure, vehicles, equipment, intangibles, as well as any leased capital assets in these categories. Capital assets, other than infrastructure and intangible software, are defined by UTA policy as asset with an initial, individual cost of $5,000 or more. Infrastructure capital assets are defined as assets with an initial, individual cost of $50,000 or more. Intangible software capital assets are defined as assets with an initial, individual software license cost of $10,000 or more, or $100,000 or more per software. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend the asset’s life, are not capitalized, but are charged to operating expense as incurred. Upon disposal of capital assets, the accounts are relieved of the related costs and accumulated depreciation, and the resulting gains or losses are reflected in the statement of revenues, expenses, and changes in net position. Depreciation of capital assets is recorded using the straight-line method over the estimated useful lives of the assets. Depreciable capital assets are assigned the following estimated useful lives: Years Land improvements 10 to 20 Leased land improvements 50 Building and building improvements 20 to 50 Infrastructure 5 to 75 Revenue service vehicles 4 to 35 Leased revenue service vehicles 4 to 14 Equipment 4 to 20 Intangible assets 4 to 20 N. Amount Recoverable – Interlocal Agreement In 2008, the Authority entered into an agreement with the Utah Department of Transportation (UDOT) which required the Authority to pay UDOT $15 million in 2008 and $15 million in 2009 for the rights to Salt Lake County’s 2% of the 0.25% part 17 sales tax through the years 2045. The Authority records such payments made to other entities for rights to future revenues as Amount Recoverable – Interlocal Agreement. This amount is amortized over the life of the agreement. O. Other Assets The Authority has entered into development agreements: Thackeray Garn at South Jordan FrontRunner Station 43 66 UTAH TRANSIT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS Year Ended December 31, 2021 $1.5 million of appraised land was transferred to the development for a percentage interest in future profits at the site. STACK Real Estate at Jordan Valley TRAX Station $8 million of proceeds from the first phase of the development was reinvested for a percentage interest in future profits at the site. HPUTA East Village 3 LLC at Sandy TRAX Station $1,580,316 of land value was added to the development agreement for a percentage interest in future profits at the site. P. Compensated Absences Vacation pay is accrued biweekly and charged to department’s compensated absence expense as earned by employees. Sick pay benefits are accrued biweekly by employees but are not considered compensable until an employee meets the requirements to vest in the pension. This typically occurs when an employee has 5 years of service and is at least 55 years of age. Compensated absences have a maximum for administration employees of 900 hours of sick, but there is no maximum number of hours for collectively bargained employees. Employees that do not retire at the end of their tenure at the Authority forfeit all sick leave, so compensated absences are reduced yearly to reflect those choices by employees. Q. Risk Management The Authority is exposed to various risks of loss related to torts; theft, damage, and destruction of assets; environmental matters; worker’s compensation self-insurance; damage to property; and injuries to passengers and other individuals resulting from accidents, errors, and omissions. Under the Governmental Immunity Act, the maximum statutory liability in any one accident is $3 million for incidents occurring after May 1, 2019. The Authority carries an excess umbrella policy of $10 million over a $7 million self-insurance reserve. The Authority has Railroad Liability Coverage of $100 million per annum with $5 million of risk retention. The Authority is self- insured for worker’s compensation up to the amount of $1 million per incident and has excess insurance for claims over this amount. The Authority has insurance for errors and omissions and damage to property in excess of $100,000 per annum. R. Pensions For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Utah Transit Authority Employee Retirement Plan and Trust (“the Plan”) and additions to/deductions from the Plan’s fiduciary net position have been determined on the same basis as they are reported by the Plan. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. 44 67 UTAH TRANSIT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS Year Ended December 31, 2021 S. Net Position The Authority’s net position is classified as follows: • Net investment in capital assets: This component of net position consists of the Authority’s total investment in capital assets, net of accumulated depreciation, reduced by the outstanding debt obligations related to those assets. To the extent debt has been incurred, but not yet expended for capital assets, such amounts are not included as a component of net investment in capital assets. • Restricted for debt service: This component of net position consists of the amount restricted by bond covenants for debt service. • Restricted for interlocal agreement: This component of net position consists of the amounts restricted by interlocal agreements with the municipalities of Willard, Perry and Brigham City in Box Elder County. • Self-insurance deposits: This component of net position consists of the fund amount set aside for the Authority’s self-insured programs. • Unrestricted: This component of net position consists of that portion of net position that does not meet the definition of restricted or net investment in capital assets. When both restricted and unrestricted resources are available for use, it is the Authority’s policy to use restricted resources first, then unrestricted resources as they are needed. T. Deferred Outflows of Resources Deferred outflows of resources are reported in a separate section, immediately following assets in the Statement of Net Position. Deferred outflows of resources represent a consumption of resources that benefit future periods and will be recognized in future periods as an expense when they are used. The Authority has the following deferred outflows of resources: • Deferred loss on refunding • Deferred outflows of resources related to pensions U. Deferred Inflows of Resources Deferred inflows of resources are reported in a separate section, immediately following liabilities in the Statement of Net Position. Deferred inflows of resources represent an acquisition of resources that will be used in future periods and will be recognized in future periods as a revenue. The Authority has the following deferred inflows of resources: • Deferred gain on refunding • Deferred inflows of resources related to pensions 45 68 UTAH TRANSIT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS Year Ended December 31, 2021 V. Implemented Accounting Pronouncements GASB Statement 89 Accounting for Interest Cost Incurred before the End of a Construction Period Takes effect for reporting periods beginning after December 15, 2020. No effect on the Authority’s financial statements as a result of adoption. GASB Implementation Guide No. 2019-1 Took effect for FY 2021. Revenue recognition for nonexchange (reimbursement grant) transactions cannot be recognized until grant agreement is fully executed. No effect on the Authority’s financial statements as a result of adoption. GASB Statement 93 Replacement of Interbank Offered Rates Will take effect for FY 2022. The Authority’s will early implement because there is no agreement of the Authority that contain any reference to LIBOR. No effect on the Authority’s financial statements as a result of adoption. GASB Statement 98 The Annual Comprehensive Financial Report Took effect for FY 2021. The Authority’s financial statements are now referred to as “The Annual Comprehensive Financial Report” or “ACFR.” GASB Statement 99 Omnibus 2022 The requirements in paragraph 26-32 are effective upon issue. No effect on the Authority’s financial statements as a result of adoption. W. Future Accounting Pronouncements GASB Statement 87 Leases Takes effect for reporting periods beginning after June 15, 2021. The Authority has not yet determined the impact of this statement on the financial statements. GASB Statement 91 Conduit Debt Obligations Takes effect for reporting periods beginning after December 15, 2021. No expected effect on the Authority’s financial statements. GASB Implementation Guide No. 2019-3 Takes effect for reporting periods beginning after June 15, 2021. No expected effect on the Authority’s financial statements. 46 69 UTAH TRANSIT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS Year Ended December 31, 2021 GASB Statement 92 Omnibus 2020 Takes effect for reporting periods beginning after June 15, 2021. No expected effect on the Authority’s financial statements. GASB Statement 94 Public-Private and Public-Public Partnerships and Availability Payment Arrangements Takes effect for reporting periods beginning after June 15, 2022. No expected effect on the Authority’s financial statements. GASB Statement 96 Subscription-Based Information Technology Arrangements Takes effect for reporting periods beginning after June 15, 2022 The Authority has not yet determined the impact of this statement on the financial statements. GASB Statement 97 Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 deferred Compensations Plans Takes effect for reporting periods beginning after June 15, 2021 No expected effect on the Authority’s financial statements GASB Statement 99 Omnibus 2022 The requirements in paragraph 11-25 are effective for fiscal years beginning after June 15, 2022. The requirements in paragraph 4-10 are effective for fiscal years beginning after June 15, 2023. No expected effect on the Authority’s financial statements for the remaining paragraphs. 47 70 UTAH TRANSIT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS Year Ended December 31, 2021 NOTE 3 – CASH AND CASH EQUIVALENTS Unrestricted Cash and Investments Consisting of the following as of December 31, 2021: Zions Bank $ 36,412,425 Cash on Hand 252,825 Chase Lease Drawdown 3,698,072 Public Treasurers Investment Fund (PTIF) 150,604,911 Total Cash and Cash Equivalents 190,968,233 Chandler Investments US Agencies 18,307,643 Money Market 119,335,739 Zions Capital Advisors US Agencies 1,521,467 PTIF 33,820 Corporate Bonds 12,473,831 Total Investments 151,672,499 Total Unrestricted Cash and Investments $342,640,732 Cash Deposits All cash not on hand at the Authority is maintained in qualified public depositories. Investments Investments for the Authority are governed by the Utah Money Management Act (Utah Code Annotated, Title 51, Chapter 7, “the Act”) and by rules of the Utah Money Management Council (the Council). Following are discussions of the Authority’s exposure to various risks related to its cash management activities. • Custodial Credit Risk - Custodial credit risk for deposits is the risk that in the event of a bank failure, the Authority’s deposits may not be recovered. The Authority’s policy for managing custodial credit risk is to adhere to the Act. The Act requires all deposits of the Authority to be in a qualified depository, defined as any financial institution whose deposits are insured by an agency of the federal government and which has been certified by the Commissioner of Financial Institutions as meeting the requirements of the Act and adhering to the rules of the Council. At December 31, 2021, the balance in the Authority’s bank demand deposit accounts and certificate of deposit accounts according to the bank statements totaled $40,110,497 of which $250,000 was covered by Federal depository insurance. 48 71 UTAH TRANSIT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS Year Ended December 31, 2021 • Credit Risk - Credit risk is the risk that the counterparty to an investment will not fulfill its obligations. The Authority’s policy for limiting the credit risk of investments is to comply with the Act. The Act requires investment transactions to be conducted only through qualified depositories, certified dealers, or directly with issuers of investment securities. Permitted investments include deposits of qualified depositories; repurchase agreements; commercial paper that is classified as “first-tier” by two nationally recognized statistical rating organizations, one of which must be Moody’s investor Service or Standard & Poor’s; bankers acceptances; obligations of the U.S. treasury and U.S. government sponsored enterprise; bonds and notes of political subdivision of the state of Utah; fixed rate corporate obligations and variable rated securities rated “A” or higher by two nationally recognized statistical rating services as defined in the Act. The Authority is authorized to invest in the Utah Public Treasurers’ Investment Fund (PTIF), an external pooled investment fund managed by the Utah State Treasurer and subject to the Act and Council requirements. The pooled investment fund is fixed-rate corporate obligations and variable rate securities rated “A” or higher, or the equivalent of “A” or higher, by two nationally recognized statistical rating organizations. The PTIF is not registered with the SEC as an investment company and deposits in the PTIF are not insured or otherwise guaranteed by the State of Utah. The PTIF operates and reports to the participants on an amortized cost basis. The income, gains and losses, net of administration fees of the PTIF are allocated based upon the participants’ average daily balances. Concentration of Credit Risk – To minimize credit risk, the Authority looks to diversify the investments with any one issuer. All corporate investments are less than 1% of the total investment and do not represent a concentration of credit risk to the portfolio as of December 31,2021. Investment Credit Quality (Rating) Amount Credit Exposure as a % of Total Investment Corporate Bonds Apple Inc AA+ $ 750,335 0.49% Honeywell International A 1,401,961 0.92% Credit Suisse First Boston A+ 500,035 0.33% BMW US Capital LLC A 500,703 0.33% United Parcel Service Inc A- 750,602 0.49% PNC Bank Na Pittsburgh PA A 601,034 0.40% Jackson National Life Global Funding A 752,137 0.50% Met Tower Global Funding AA- 501,681 0.33% Goldman Sachs Group Inc BBB+ 1,405,841 0.93% Citigroup BBB+ 697,091 0.46% Wells Fargo & Co BBB+ 399,235 0.26% Truist Bank A 1,005,317 0.66% Toyota Motor Credit Corp A+ 500,060 0.33% Daimler Finance North America A- 1,351,395 0.89% 49 72 UTAH TRANSIT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS Year Ended December 31, 2021 Canadian Imperial Bank BBB+ 1,356,404 0.89% Subtotal Corporate Bonds 12,473,831 US Agencies FHLB Maturity 11/07/2022 AAA 1,521,467 1.00% Federal Farm Credit Banks Maturity 06/08/2023 AAA 3,090,018 2.04% Federal Home Loan Banks Maturity 11/09/2023 AAA 3,087,352 2.04% US Treasury Note Maturity 09/30/2025 AAA 3,026,125 2.00% US Treasury Note Maturity 01/31/2026 AAA 3,023,188 1.99% US Treasury Note Maturity 05/31/2026 AAA 3,036,295 2.00% US Treasury Note Maturity 09/30/2026 AAA 3,044,665 2.01% Subtotal US Agencies 19,829,110 Total Corporate Bonds and US Agencies Investments $ 32,302,941 21.30% • Interest Rate Risk - Interest rate risk is the risk that changes in the interest rates will adversely affect the fair value of an investment. The Authority manages its exposure by strictly complying with its Investment Policy which complies with the Act. The Authority’s policy relating to specific investment-related risk is to adhere to the Act. The Act requires that the remaining term to maturity of investments may not exceed the period of availability of the fund to be invested. • The following are the Authority’s investment as of December 31, 2021: Investments Less than 1 year 1-3 years Total U.S. Agencies/Taxable US Govt Bonds AAA $ 1,521,467 $ 18,307,643 $ 19,829,110 Corporate Bonds A+,A,A-,AA+,AA-,BBB+ 6,356,126 6,117,705 12,473,831 Money Market/PTIF Not Rated 119,369,558 119,369,558 $ 127,247,151 $ 24,425,348 $ 151,672,499 • Fair Value of Investments – The framework for measuring fair value provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy under GASB Statement 72 are described as follows: Level 1: Inputs are quoted prices (unadjusted) for identical assets or liabilities in active markets that a government can access at the measurement date. Examples of markets in which inputs might be observable include exchange markets, dealer markets, brokered markets and principal-to-principal markets. Level 2: Inputs include: 50 73 UTAH TRANSIT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS Year Ended December 31, 2021 • Quoted prices for similar assets or liabilities in active markets; • Quoted prices for identical or similar assets or liabilities in markets that are not active; • Inputs other than quoted prices that are observable for the asset or liability such as: o Interest rates and yield curves observable at commonly quoted intervals o Implied volatilities o Credit spreads • Market-corroborated inputs. If the asset or liability has a specified (contractual) term, the Level 2 input is required to be observable for substantially the full term of the asset or liability. Level 3: A government should develop Level 3 inputs using the best information available under the circumstances, which might include the government’s own data. In developing unobservable inputs, a government may begin with its own data, but it should adjust those data if (a) reasonably available information indicates that other market participants would use different data or (b) there is something particular to the government that is not available to other market participants. The Authority invests with Zions Capital Advisors, Chandler Investments, and the Utah Public Treasurers Investment Fund. All three of these organizations meet the requirements of the Utah Money Management Act. The following are the Authority’s investment as of December 31, 2021 by organization and by fair value measurement: 12/31/2021 Level 1 Level 2 Level 3 Zions Capital Advisors Agency 1,521,467$ -$ 1,521,467$ -$ PTIF 33,820 33,820 - - Corporate 12,473,831 - 12,473,831 - Chandler Investments Money Market 119,335,739 119,335,739 - - Agency 18,307,643 - 18,307,643 - Total Investments by Fair Value Level 151,672,499$ 119,369,559$ 32,302,940$ -$ Fair Value Measurements 51 74 UTAH TRANSIT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS Year Ended December 31, 2021 NOTE 4 – CAPITAL ASSETS Depreciation expense by mode that mirrors the Statement of Revenues, Expenses, and Changes in Net Position. Depreciation Expense Bus service $ 18,986,203 Rail service 105,802,693 Demand response service 4,644,905 Other service 4,615,086 $134,048,888 Due to a change in Capital Asset Policy in 2018, UTA continues to make the asset transfers during each biennial inventory to ensure assets reflect the current definition. The net effect was a 20% increase in land improvements. Balance Balance 1/1/2021 Increases Transfers Decreases 12/31/2021 Capital assets not being depreciated Land 410,537,405$ 2,980,645$ (2,175,101)$ -$ 411,342,949$ Construction in Progress 137,936,777 138,735,679 - (72,745,338) 203,927,118 Total capital assets not being depreciated 548,474,182 141,716,324 (2,175,101) (72,745,338) 615,270,067 Capital assets being depreciated Land improvements 148,507,252 1,869,824 28,990,852 (880,440) 178,487,488 Leased Land Improvements 84,485,965 9,787,511 - - 94,273,476 Buildings and Building Improvements 213,225,412 27,236,930 (28,813,036) (7,738,263) 203,911,043 Infrastructure 2,500,620,104 12,316,260 - (4,072,475) 2,508,863,889 Revenue Vehicles 752,974,669 69,467 5,250,476 (9,408,606) 748,886,006 Leased Revenue Vehicles 71,632,600 22,480,315 (6,145,629) - 87,967,286 Equipment 66,536,885 3,387,930 717,337 (3,825,933) 66,816,219 Intangibles 54,745,003 1,815,023 2,175,101 (1,637,818) 57,097,309 Total capital assets being depreciated 3,892,727,890 78,963,260 2,175,101 (27,563,535) 3,946,302,716 Less: Accumulated depreciation Land Improvements (82,838,296) (4,709,998) (10,575,274) 194,470 (97,929,098) Leased Land Improvements (4,858,293) (2,289,328) - - (7,147,621) Buildings and Building Improvements (101,935,425) (3,895,015) 10,397,458 60,975 (95,372,007) Infrastructure (854,704,244) (83,642,424) - 3,873,395 (934,473,273) Revenue Vehicles (419,584,654) (19,668,075) (4,366,810) 9,212,405 (434,407,134) Leased Revenue Vehicles (19,944,113) (8,215,889) 5,240,141 - (22,919,861) Equipment (57,230,788) (3,413,962) (695,515) 3,820,344 (57,519,921) Intangibles (16,739,998) (8,214,197) - 1,108,495 (23,845,700) Total accumulated depreciation (1,557,835,811) (134,048,888) - 18,270,084 (1,673,614,615) Capital assets being depreciated, net 2,334,892,079 (55,085,628) 2,175,101 (9,293,451) 2,272,688,101 Total capital assets, net 2,883,366,261$ 86,630,696$ -$ (82,038,789)$ 2,887,958,168$ 52 75 UTAH TRANSIT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS Year Ended December 31, 2021 This amount is due to the continued clarification to classify capital assets accurately and in accordance to the updated Capital Asset Policy. UTA has clearly distinguished the difference between a Land Improvement and a Building Improvement or Equipment and updates capital assets created prior to 2018 as they are identified. This will ensure consistency in classification. An impairment analysis was performed at the end of 2021 to identify any assets no longer being used for their intended purpose, out of service due to damage, or transit route changes. UTA also analyzed assets previously impaired and identified whether they still needed to remain impaired. An accumulated depreciation increases of $10,216,851 was recorded for assets out of service or not in use for an extended time-period over 1 year. Assets removed from the impairment list for the year include equipment that has been repaired to meet their intended use, the effect of these changes, reduced accumulated depreciation for $181,400. The effect on accumulated depreciation is shown below: Impairment Accumulated Depreciation Vehicles Out of Service $ (8,339,828) Bus Shelters Not in Use (13,847) Building Not in Use (384,378) Commuter Rail Station Not in Use (1,478,798) Equipment Unimpaired 181,400 Net Effect on Accumulated Depreciation $ (10,035,451) 53 76 UTAH TRANSIT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS Year Ended December 31, 2021 NOTE 5 – FEDERAL FINANCIAL ASSISTANCE The Authority receives a portion of its funding from the through the U.S. Department of Transportation’s Federal Transit Administration (FTA) in the form of federal preventative maintenance, federal operating assistance, and federal capital assistance grants. The majority of these grants require the Authority to participate in the funding of the service and/or capital project. The FTA retains ownership in assets purchased with federal funds. Operating assistance Federal preventive maintenance grants $ 6,778,670 Federal operating assistance – CARES grant 90,268,322 Federal operating assistance – CRRSAA grant 33,584,103 130,631,095 Capital projects Federal capital projects 48,642,468 Total federal assistance $ 179,273,563 NOTE 6 – SELF-INSURANCE CLAIMS LIABILITY Changes in the accrued claims liability in 2021, 2020 and 2019 were as follows: Beginning liability Claims incurred and changes in estimates Claim payments Ending liability 2021 $ 1,017,333 $ 4,032,321 $ (3,988,481) $ 1,061,173 2020 $ 862,650 $ 2,481,986 $ (2,327,303) $ 1,017,333 2019 $ 1,155,787 $ 3,319,863 $ (3,613,000) $ 862,650 There were no significant reductions in coverage from prior years. As show in the table above there were no instances in the past 3 years where settlements exceeded insurance coverage. Please refer to Note 2, Section Q for liability limits. The Authority’s Self-Insurance and Worker’s Compensation plans are fully funded. Losses are charged to operations as incurred. The liability for unpaid losses for self-insurance is determined using case-basis evaluations. Claims liabilities include allocated loss adjustment expenses and are reported net of estimated claims. Due to limited historical experience of the Utah Transit Authority’s Self-Insurance and Worker’s Compensation, there exists a significant range of variability around the best estimate of the ultimate cost of setting all unpaid claims. Accordingly, the amount of the liability for unpaid losses and related liabilities and the related provisions included in financial statements may be more or less than the actual cost of settling all unpaid claims. Adjustments to claim liabilities are made annually, based on subsequent developments and experience, and are included in operations as made. 54 77 UTAH TRANSIT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS Year Ended December 31, 2021 NOTE 7 – EMPLOYEE BENEFIT PLANS A. General Information Defined Compensation Plan The 457 Deferred Compensation Plan is offered by the Authority to its employees. The plan was created in accordance with Internal Revenue Code Section 457. The plan is available to all employees on a voluntary basis and permits them to defer a portion of their salaries until future years. The Authority will match $2 for every $3 the employee contributes up to 2% of the employee’s annual salary. In 2021 the Authority contributed $1,960,105. The deferred compensation is not available to employees until termination, retirement, death or unforeseeable emergency. All assets and income of the plan are held in trust for the exclusive benefit of the participants and their beneficiaries. As part of its fiduciary role, the Authority has an obligation of due care in selecting the third party administrators. In the opinion of management, the Authority has acted in a prudent manner and is not liable for losses that may arise from the administration of the plan. The Authority also has the right to change the amount of the employer match. The deferred compensation assets are held by third party plan administrators and are generally invested in money market funds, stock or bond mutual funds or guarantee funds as selected by the employee. Defined Contribution Plan The 401a Defined Contribution Plan is offered by the Authority to provide reasonable retirement security for select employees. The plan was created in accordance with Internal Revenue Code Section 401(a). The plan is available to the Board of Directors, the Executive Director, and the Chief Officer positions as an alternative to the Authority’s current pension plan. The Authority will contribute 15.5% of the annual salary of each Trustee who has elected this option. In 2021 the Authority contributed $117,361. The deferred contribution plan is not available to employees until termination, retirement, death, or unforeseeable emergency. All assets and income of the plan are held in trust for the exclusive benefit of the participants and their beneficiaries. As part of its fiduciary role, the Authority has an obligation of due care in selecting the third party administrators. In the opinion of management, the Authority has acted in a prudent manner and is not liable for losses that may arise from the administration of the plan. The Authority also has the right to change the amount of the employer match. The deferred compensation assets are held by third party plan administrators and are generally invested in money market funds, stock or bond mutual funds or guarantee funds as selected by the employee. Retiree Medical Account A Retiree Medical Account (RMA) is offered by the Authority to its employees. The plan was created in accordance with Internal Revenue Code Section 401(h). The plan is available to all collective bargaining employees at the start of employment and permits the Authority to contribute 1.33 hours of personal time per pay period to a defer tax account until retirement years. The Authority also allows the remaining employees at the end of their employment to create an account to defer taxes on their final pay out of unused sick leave upon retirement into a retiree medical account. In 2021 the Authority contributed $287,918. The deferred medical funds are not available to employees until termination, retirement, or death and can only be used for medical expenses with tax penalty. 55 78 UTAH TRANSIT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS Year Ended December 31, 2021 All assets and income of the plan are held in trust for the exclusive benefit of the participants and their beneficiaries. As part of its fiduciary role, the Authority has an obligation of due care in selecting the third party administrators. In the opinion of management, the Authority has acted in a prudent manner and is not liable for losses that may arise from the administration of the plan. The Authority also has the right to change the amount contributed in the collective bargaining agreement (CBA). The funds are held by third party plan administrators and are generally invested in money market funds, stock or bond mutual funds or guarantee funds as selected by the employee. Defined Benefit Plan The Utah Transit Authority Employee Retirement Plan is a single employer non-contributory defined benefit pension plan which includes all employees of the Authority who are eligible and who have completed six months of service. The Plan is a qualified government plan and is not subject to all of the provisions of ERISA. As a defined benefit pension plan, the Authority contributes such amounts as are necessary, on an actuarially-sound basis, to provide assets sufficient to meet the benefits to be paid. Required employee contributions were discontinued effective June 1, 1992. Participants may make voluntary contributions as described below. Interest on existing account balances is credited at 5% per year. Although the Authority has not expressed any intention to do so, the Authority has the right under the Plan to discontinue its contributions at any time and to terminate the Plan. In the event the Plan terminates, the trustee will liquidate all assets of the Plan and will determine the value of the trust fund as of the next business day following the date of such termination. The trustee will allocate assets of the Plan among the participants and beneficiaries as required by law. As of February 2016, U.S. Bank began serving as the administrator and custodian of the Plan, with Cambridge Associates, LLC (CA) serving as a third-party investment manager. B. Reporting The Defined Benefit Plan is administered by the Pension Committee that consists of nine (9) members, seven (7) appointed by the Authority and two (2) appointed by the Amalgamated Transit Union Local 382 in accordance with a collective bargaining agreement. The members of the Pension Committee may (but need not) be participants in the Plan. In the absence of a Pension Committee, the Plan Administrator assumes the powers, duties and responsibilities of the Pension Committee with respect to the administration of the Plan. C. Membership The Plan’s membership consisted of the following: Active Participants January 1, 2021 Fully Vested 1,542 Partially Vested - Not Vested 864 Inactive Participants Not Receiving Benefits 479 Retirees and Beneficiaries Receiving Benefits 776 Total 3,661 56 79 UTAH TRANSIT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS Year Ended December 31, 2021 D. Benefit Terms Retirement Benefits Employees with five or more years of service are entitled to annual pension benefits beginning at normal retirement age 65, or any age with 37.5 years of service in the Plan. For administration participants who began participating in the Plan prior to January 1, 1994, the annual benefit is based on a retirement benefit formula equal to: • 2.3% of average compensation multiplied by the participant’s years of service (not exceeding 20 years), plus • 1.5% of the average compensation multiplied by the participant’s years of service in excess of 20 years (but such excess not to exceed 9 years of service), plus • 0.5% for one year plus 2.0% for years in excess of 30 years not to exceed 75% of average compensation. For all other active participants, the annual benefit is based on a retirement benefit formula equal to: • 2.0% of average compensation multiplied by the participant’s years of service (not to exceed 37.5 years or 75% of average compensation) Upon termination of employment, members may leave their retirement account intact for future benefits based on vesting qualification or withdraw the accumulated funds in their individual member account and forfeit service credits and rights to future benefits upon which the contributions were based. If employees terminate employment before rendering three years of service, they forfeit the right to receive their non-vested accrued plan benefits. Early Retirement Benefits The Plan allows for early retirement benefits if the participant has not reached the age of 65 but is at least age 55 with a vested benefit. Benefits under early retirement are equal to the value of the accrued pension, if the participant had retired at the age of 65, reduced 5% per year if the payments begin before age 65. Disability Benefits The Plan allows for disability benefits. A member who becomes permanently disabled after 5 years of service will immediately receive the greater of the actuarially-reduced monthly accrued benefit or $90 per month, reduced by any Authority sponsored disability plans. Payment of the disability benefit ends at age 65. Death Benefits If a participant’s death occurs before age 55, but after 5 years of service, the present value of the participant’s accrued vested benefit is payable to the participant’s beneficiary in the form of a single lump sum regardless of the amount. 57 80 UTAH TRANSIT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS Year Ended December 31, 2021 If a participant’s death occurs after age 55 and 5 years of service, the participant’s beneficiary can elect to receive a benefit equal to the greater of: 1) A survivor’s pension as if the participant had retired on the date before the death with a 100% joint and survivor annuity in effect, or 2) The present value of the survivor’s pension, or 3) If a spouse of 2 or more years or a minor child, the participant’s contribution with interest, plus 50% of the average compensation, payable in the form of a lump sum, or 4) A 10-year term certain. A participant may elect a joint and survivor annuity with 100%, 75% or 50% to be continued to the beneficiary upon the death of the participant. Lump Sum Distributions Payment in a lump sum, regardless of amount, may be made with the participant’s written consent. Effective September 1, 2012, a participant who has not previously received benefits may elect a partial lump sum payment with the remaining part to be paid in the same manner as the traditional annuity. During 2021, 29 participants elected to receive their benefit in the form of lump sum distribution. Lump sum distributions collectively totaled $5,668,150. Individuals are removed from the Plan’s membership if they choose to take all of their benefit as a lump sum distribution. E. Contributions Employer Contribution Requirements Contributions are received from the Authority in the amount determined by the Pension Committee and approved by the Board of Trustees based on funding levels recommended by the Plan’s actuary. The contribution rate for 2021 was 16.3% of employee salaries. Participant Voluntary Contributions A participant who is vested in the Plan may make voluntary contributions into the Plan, and transfer funds from the Employee 457 Deferred Compensation Plan, for the purpose of purchasing “permissive service credit” (as defined in Internal Revenue Code Section 415(N)(3)(A)), in the Plan. No more than 5 years of “permissive service credit” may be purchased. Any purchase of “permissive service credit” must be made in the final year of employment with the Authority. F. Method of Accounting The Plan prepares its financial statements on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America, under which benefits and expenses are recognized when due and payable and revenues are recorded in the accounting period in which they are earned and become measureable in accordance with the terms of the Plan. Accordingly, the valuation of investments is shown at fair value and both realized and unrealized gains (losses) are included in net appreciation and depreciation in fair value of investments. The plan reports in accordance with the requirements of GASB 67. 58 81 UTAH TRANSIT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS Year Ended December 31, 2021 G. Pension Assets, Liabilities, Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions Net pension liability At December 31, 2021, the Authority reported a net pension liability of $90,642,486. The net pension liability was measured as of December 31, 2021 and was determined by an actuarial valuation as of January 1, 2021 and rolled-forward using updated procedures. Date Total Pension Liability Plan Fiduciary Net Position Employers Net Pension Liability/(Asset) Plan Fiduciary Net Position as a Percentage of the Total Plan Liability Projected Covered Payroll Net Position Liability as a Percentage Of Covered Payroll 12/31/2021 $405,251,222 $314,608,736 $90,642,486 77.63% $153,983,509 58.87% Deferred outflows of resources and deferred inflows of resources At December 31, 2021, the Authority reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: 2021 Deferred Inflows Deferred Outflows of Resources of Resources Differences between expected and actual experience $ (84,281) $ 15,889,719 Change of Assumptions (359,608) 8,545,439 Net difference between projected and actual earnings (22,345,471) - Total $ (22,789,360) $ 24,435,158 Pension expense For the year ended December 31, 2021, the Authority recognized pension expense of $17,420,398. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows: Year ending December 31, Amount 2022 $ 1,479,230 2023 (4,605,765) 2024 (639,704) 2025 2,054,226 2026 2,522,491 Thereafter 835,320 Total $ 1,645,798 59 82 UTAH TRANSIT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS Year Ended December 31, 2021 Actuarial assumptions The total pension liability in the January 1, 2021 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement: Inflation 2.30% Salary Increases 5.40% per annum for the first five (5) years of employment; 3.40% per annum thereafter Investment rate of return 6.75%, net of investment expenses Mortality RP-2014 Blue Collar Mortality Table, with MP-2014 Project Scale (Pre- retirement; Employee Table; Post-retirement Annuitant Table) Bond Buyer General Obligation 20- Bond Municipal Bond Index 2.06% The actuarial assumptions used in the January 1, 2021 valuation were based on the results of an actuarial experience study for the five year period ending December 31, 2008. The measurement date is December 31, 2021. There have been no changes in the assumptions or terms of the plan since the previous measurement date. Discount rate The discount rate used to measure the total pension liability was 6.75%. The projection of cash flows used to determine the discount rate assumed contribution rates as recommended by the Authority’s Pension Committee and approved by the Board of Trustees. Based on these assumptions, the pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive participants. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. In accordance with GASB 67 regarding the disclosure of the sensitivity of the net pension liability to changes in the discount rate, the table below presents the net pension liability using the discount rate of 6.75%, as well as what the net pension liability would be if it were calculated using a discount rate 1.00% lower (5.75%) or 1.00% higher (7.75%) than the current rate. The following sensitivity analysis assumes rate volatility of plus and minus one percent of the discount rate of 6.75%. 1% Decrease 5.75% Current Discount Rate 6.75% 1% Increase 7.75% Total pension liability $ 461,360,555 $ 405,251,222 $ 356,017,452 Fiduciary net position 314,608,736 314,608,736 314,608,736 Net pension liability 146,751,819 90,642,486 41,408,716 60 83 UTAH TRANSIT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS Year Ended December 31, 2021 Schedule of changes in total pension liability, plan fiduciary net position, and net pension liability The following table shows the change to the total pension liability, the plan fiduciary net position, and the net pension liability during the year. Increase (Decrease Total Pension Plan Fiduciary Net Pension Liability Net Position Liability [a] [b] [a]-[b] Balances as of January 1, 2020 $ 376,688,506 $ 279,905,104 $ 96,783,402 Charges for the year Service cost 12,597,159 - 12,597,159 Interest on total pension liability 25,639,471 - 25,639,471 Differences between expected and actual experience 9,188,520 - 9,188,520 Changes of assumptions - - - Employer contributions - 25,207,307 (25,207,307) Member voluntary contributions 334,301 334,301 - Net investment income - 28,830,047 (28,830,047) () Benefit payments (19,196,735) (19,196,735) Administrative expenses - (471,288) 471,288 Balance as of December 31, 2021 $ 405,251,222 $ 314,608,736 $ 90,642,486 H. Investments All Plan investments are stated at fair value. Most types of marketable or actively traded investments are priced by nationally known vendors. In the event that an investment is not priced by the primary vendor, the Custodian (US Bank) engages a secondary vendor or other source. See Note 4- Investments, Fair Value Measurements. Purchases and sales are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Investment Policy The Pension Committee has adopted an Investment Policy Statement (IPS). The IPS is reviewed by the Pension Committee once a year, and was amended effective February 2016 to revise the asset classes. A normal weighting is now indicated for each asset class. The IPS was also amended to provide a list of prohibited investments. 61 84 UTAH TRANSIT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS Year Ended December 31, 2021 In setting the long-term asset policy for the Plan, the Committee has opted to provide a minimum and maximum allowable allocation to the major asset classes. The aggregate exposure to each of the asset classes is to remain within the following ranges: Rate of Return The long-term rate of return is selected by the Plan’s Pension Committee after a review of the expected inflation and long term real returns, reflecting expected volatility and correlation. The assumption currently selected is 6.75% per annum, net of investment expenses. I. Payment of Benefits Benefit payments to participants are recorded upon distribution. J. Administrative Expenses Expenses for the administration of the Plan are budgeted and approved by the Pension Committee. Administrative expenses are paid from investment earnings. Plan expenses are paid from Plan assets. For the year ended December 31, 2021 the Plan paid $471,288 of administrative expenses. K. Tax Status The Plan operates under an exemption from federal income taxes pursuant to Section 501(a) of the Internal Revenue Code as a defined benefit plan. L. Mutual Fund Asset Coverage The Securities and Exchange Commission requires mutual fund companies to obtain fidelity bond coverage for the assets under their control. The bond coverage varies in amounts depending on the mutual fund. M. Cash Deposits Custodial credit risk for cash deposits is the risk in the event of a bank failure, the Plan’s cash deposits may not be returned. The Federal Deposit Insurance Corporation (FDIC) insures up to $250,000 per depositor per institution. Cash deposits and account balances in excess of $250,000 are uninsured and uncollateralized. Policy Allocation Target Allocation Long Term Expected Return Global Equity 63% 51% - 75% Liquid Diversifiers 10% 0% - 15% Real Assets 4% 0% - 8% Alternatives 22% 12% - 32% Cash & Equivalents 1% 0% - 5% 62 85 UTAH TRANSIT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS Year Ended December 31, 2021 The Plan considers short-term investments with an original maturity of 3 months or less to be cash equivalents. Cash held in banking institution(s) $ 507,681 N. Risks and Uncertainties The Plan utilizes various investments which, in general are exposed to various risks such as interest rate risk, credit risk and overall market volatility. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term and such changes could materially affect the amounts reported in the financial statements. O. Credit Risk Credit risk for investments is in the risk that the counterparty to an investment will not fulfill its obligations. The Plan’s rated investments are show below. Fixed Income: 2021 $ 73,221,266 AA/Aa Rated P. Investment Interest Rate Risk Investment interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of an investment. The table below shows the maturities of the Plan’s investments. Fixed Inc funds: 2021 $ 73,221,266 Average effective duration: 5.3 years Average effective maturity: 7.5 years Q. Concentration of Credit Risk Concentration of credit risk is the risk of loss attributed to the magnitude of a government’s investment in a single issuer. The following amounts represent 5% or more of the Plan’s fiduciary net position and investments as of December 31, 2021 invested with any one organization. Equity funds: Two Sigma Active US All Cap & $ 32,018,412 Investments Fixed income: IR+M Core Bond Fund II $ 26,468,445 iShares 7-10 Year Treasury Bond EFT $ 25,915,020 63 86 UTAH TRANSIT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS Year Ended December 31, 2021 The following are the Plan’s investments as of December 31, 2021 measured at fair value: Investment Assets at Fair Value as of December 31, 2021 Level 1 Money Market Funds $ 12,238,285 Global Equity 80,052,173 Liquid Diversifiers - Real Assets 10,461,393 Fixed Income 33,776,934 Total investments at Fair Value $ 136,528,785 R. Net Asset Value per Share The following tables provide additional disclosures concerning the investments measured at fair value based on NAV as of December 31, 2021. 2021 Redemption Unfunded Redemption Notice Fair Value Commitment Frequency Period Global Equities $ 125,799,849 $ - Daily Daily Liquid Diversifier 7,225,418 - Daily Daily Real Assets 3,123,047 - Daily Daily Fixed Income 39,444,332 - Daily Daily Total $ 175,592,646 $ - Global Equity – intended to provide capital appreciation, current income, and growth of income mostly through the ownership of public equities representing an ownership interest in a company. The objective for investment managers in this category is to exceed the results represented by the annualized return of the MSCI All Country World Index, net over annualized rolling three to five-year time periods. Liquid Diversifiers – intend to provide the Fund with less directional equity exposure and less correlated returns to traditional asset class (i.e. equities and fixed income). These strategies may utilize multiple asset classes spanning across the capital structure of equity and det securities and they may also employ leverage, commodities, and derivatives. These investments will be made in managers with more liquid investment profiles through mutual funds or commingled vehicles. 64 87 UTAH TRANSIT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS Year Ended December 31, 2021 Real Assets – intended to provide real return through investments which has inflation sensitive characteristics. Investments could include REITs, natural resource equities, MLPs, inflation linked bonds and commodities. Fixed Income – intended to provide diversification and protection against downward moves in the equity market and serves as a deflation hedge and a predictable source of income. Weighted average duration of the allocation will be within 1 year of the Barclays Capital Aggregate Bond Index, as measured on a quarterly basis. S. Actuarial Methods and Assumptions Actuarial valuation of the Plan involves estimates of the reported amounts and assumptions about the probability of occurrence of events into the future. Examples include assumptions about future mortality and future salary increases. Amounts determined regarding the net pension liability are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The last experience study was performed for the five consecutive calendar years ending December 31, 2008. • Actuarial Cost Method – Entry Age Normal • Inflation – 2.30% • Employer Annual Payroll Growth Including Inflation – 3.40% • Salary Increases – 5.4% for the first five years of employment; 3.4% per annum thereafter • Mortality – RP 2014 Blue Collar Mortality Table, with MP-2014 projection scale • Investment Rate of Return – 6.75%, net of investment expenses • Retirement Age – Table of rates by age and eligibility • Cost of Living Adjustments – None • Percent of Future Retirements Electing Lump Sum – 20% T. Target Allocations The long-term rate of return is selected by the Plan’s Pension Committee after a review of expected inflation and long-term real returns, reflecting expected volatility and correlation. Best estimates of the compound nominal rates of return for each major asset class included in the Plan’s target asset allocations as of December 31, 2021, is summarized in the table below. Asset Class Target Asset Allocation Long Term Expected Return Global Equities 63% 6.8% Fixed Income 22% 2.7% Liquid Diversifiers 10% 3.4% Real Assets 4% 5.1% Cash & Equivalents 1% 1.6% Total 100% 5.4% The 6.75% assumed investment rate of return is comprised of an inflation rate of 2.40% and a real return of 4.35% net of investment expense. 65 88 UTAH TRANSIT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS Year Ended December 31, 2021 U. Discount Rate and Rate Sensitivity Analysis The discount rate used to measure the total pension liability was 6.75%. The projection of cash flows used to determine the discount rate assumed that contributions will be made based on the actuarially determined rates. Based on those assumptions, the Plan’s fiduciary net position was projected to be available to make all the projected future benefit payments of current Plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. V. Employer Contribution Requirements The Authority’s contribution rate consists of (1) an amount for normal cost, the estimated amount necessary to finance benefits earned by participants during the current year, and (2) an amount for amortization of the unfunded or excess funded actuarial accrued liability over the service life of the vested participants in preparation for the Authority’s adoption of GASB 68, Accounting and Financial Reporting for Pensions—an amendment of GASB Statement No. 27. The rates are determined using the entry age actuarial cost method. 66 89 UTAH TRANSIT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS Year Ended December 31, 2021 SCHEDULE OF FIDUCIARY NET POSITION UTA Employee Retirement and Trust ASSETS Cash in Bank $ 507,681 Investments Global Equities 205,852,022 Fixed Income 73,221,266 Liquid Diversifiers 7,225,418 Real Assets 13,584,440 Money Market 12,238,285 Total Investments 312,121,431 Prepaid Benefits 1,454,872 Receivables Dividends Receivable 114 Accounts Receivable - Benefits 2,352 Accounts Receivable - Contributions 539,230 Total Receivables 541,696 TOTAL ASSETS 314,625,680 LIABILITIES Benefits Payable 16,944 TOTAL LIABILITIES 16,944 NET POSITION Restricted for Pension $ 314,608,736 67 90 UTAH TRANSIT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS Year Ended December 31, 2021 SCHEDULE OF CHANGES IN FIDUCIARY NET POSITION UTA Employee Retirement and Trust ADDITIONS Employer Contributions $ 25,207,307 Participant Voluntary Contributions 334,301 Total Contributions 25,541,608 Net Investment Income Net Appreciation in Fair Value of Investments 27,977,813 Interest 3,704 Dividends 1,509,174 Total Investment Income 29,490,691 Less: Investment Expense 660,644 Net Investment Income 28,830,047 TOTAL ADDITIONS 54,371,655 DEDUCTIONS Monthly Benefits Paid 13,528,585 Lump Sum Distributions 5,668,150 Administrative Expense 471,288 TOTAL DEDUCTIONS 19,668,023 CHANGE IN NET POSITION 34,703,632 Total Net Position (Restricted), January 1 279,905,104 Total Net Position (Restricted), December 31 $ 314,608,736 68 91 UTAH TRANSIT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS Year Ended December 31, 2021 NOTE 8 – JOINT INSURANCE TRUST A) General Information The Union and the Authority have agreed on February 1, 1989 that specific amounts of money paid for insurance benefit purposes for the union members be controlled by a trust. The trust should also control any additional amounts paid by the union member shall be deposited in same agreed upon trust account. B) Reporting Entity The trust is administered by the Joint Insurance Committee that consists of seven (7) members, one (1) neutral member agreed upon by the Union and the Authority, three (3) appointed by the Amalgamated Transit Union Local 382 in accordance with a collective bargaining agreement and three members of staff appointed by the Authority. The members of the Joint Insurance Committee may (but need not) be participants in the trust. C) Membership The Plan’s membership consisted of: December 31, 2021 Active participants 1,352 Inactive participants not receiving benefits 182 Total 1,534 D) Benefit Terms Insurance Benefits The Amalgamated Transit Union (ATU) and the Authority have established, through various collectively bargaining agreements, provisions for payment of medical, dental, vision, life, accident, and short-term disability insurances. E) Contributions Employer Contribution Requirements Contributions from the Authority are determined by based on the current collective bargaining agreement. Participant Matching Contributions A participant is an employee of the Authority who is eligible for insurance benefits under the collective bargaining agreement or is eligible for Consolidated Omnibus Budget Reconciliation Act (COBRA). Certain insurance plans in the trust require participants to pay a portion of the premiums or all of the premium to participate. 69 92 UTAH TRANSIT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS Year Ended December 31, 2021 F) Method of Accounting The Plan prepares its financial statements on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America, under which benefits and expenses are recognized when due and payable and revenues are recorded in the accounting period in which they are earned. Accordingly, the valuation of investments is shown at fair value and both realized and unrealized gains (losses) are included in net appreciation and depreciation in fair value of investments. SCHEDULE OF FIDUCIARY NET POSITION Joint Insurance Trust ASSETS Cash in Bank 6,085,847$ Cash in Utah State Treasury 1,057,161 Total Cash 7,143,008 Investments 1,201,916 Deposits 104,795 Receivables 218,827 TOTAL ASSETS 8,668,546 LIABILITIES Accounts Payable 2,213,084 TOTAL LIABILITIES 2,213,084 NET POSITION Restricted for Benefits Other than Pension 6,455,462 70 93 UTAH TRANSIT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS Year Ended December 31, 2021 SCHEDULE OF CHANGES IN FIDUCIARY NET POSITION Joint Insurance Trust ADDITIONS Employer Contributions $ 20,278,180 Participant Voluntary Contributions 476,990 Total Contributions 20,755,170 Net Investment Income Net Appreciation in Fair Value of Investments (4,743) Interest 14,304 Total Investment Income 9,561 TOTAL ADDITIONS 20,764,731 DEDUCTIONS Monthly Benefits Paid 19,965,986 Administrative Expense 110,010 TOTAL DEDUCTIONS 20,075,996 CHANGE IN NET POSITION 688,735 Total Net Position (Restricted), January 1 5,766,727 Total Net Position (Restricted), December 31 $ 6,455,462 71 94 UTAH TRANSIT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS Year Ended December 31, 2021 NOTE 9 – LIABILITIES The Authority issues revenue, capital interest, and capital appreciation bonds along with financing leases in order to provide funding for long-term capital improvements and acquisitions of capital assets. In some instances the full faith and credit of the Authority are pledged to secure the debt, while some are limited to pledge revenues stated in the bond. Leasehold interests in the vehicle being financed act as security for financing lease agreements. Related to bonds, the Authority’s interest payments are typically semiannual on June 15th and December 15th. Interest expense is accrued for the 16 remaining days of December as part of accrued interest. In 2019, Utah County and the Authority agreed a new 4th quarter cent sales tax in Utah County for transit would be exclusively used to repay any obligation be accrued by the Authority related to the Utah Valley Express bus route. In addition, the Authority has long term obligations related to compensate absences which represent obligations to employees for unused vacation leave balances or guaranteed health saving account contributions at retirement for unused sick leave balances. General revenues are used to liquidate compensated absence balances and other long-term obligations. In the event of default, the Trustee for the bonds may pursue any available remedy by suit at law on in equity to enforce the payment of the principal of, premium, in any, and interest on the Bonds the Outstanding or to enforce any obligations of the Authority. However, the Authority’s obligations with respect to the Bonds are limited to Pledged Revenues. (Amended and Restated General Indenture of Trust, dated September 1, 2002) For those debts for which collateral or a leasehold interest has been pledged, the most likely remedy in the event of default would be though other possible remedies include acceleration of all unpaid payments on the debt, possession of pledged property by the debtor, and any necessary legal actions against the Authority to cure the default. (The Authority’s Current Standard Lease Purchase Agreement Language) On November 10, 2021, the Authority issued $431,625,000 in Senior Sales Tax Revenue Bonds and $16,220,000 in Subordinate Sales Tax Revenue Bonds to provide resources to purchase qualifying open market securities which were placed in an irrevocable trust for the purpose of generating resources for the advanced refunding of certain 2015A Senior and Subordinate Revenue Bonds. As a result, the refunded bonds are considered defeased and a portion of liability for those bonds have been removed. The transaction partial refunding resulted in a reduction of total debt service requirements by $20,338,129 which resulted in an economic gain of $20,154,295. Interest on the prior bonds ranged from 4-5 percent depending on repayment year. Interest rates on the refunded amounts ranges from 0.347 percent to 2.989 percent in the new bonds. In prior years, the Authority has refunded certain bonds by placing the proceeds of new bonds in an irrevocable trust to provide for all future debt service payments on the refunded bonds. The amount placed in trust due to the 2021 refunding was $383,130,000 and $14,145,000 for the senior and subordinate 2015 revenue bond liens, respectively. Accordingly, the trust account assets and the liability for the refunded bonds are not included in the Authority’s financial statements. 72 95 UTAH TRANSIT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS Year Ended December 31, 2021 Amount Amount Due Accrued Amount of Outstanding Within One Year Interest Collateral Direct borrowings: Inter-local Loan: $57,670,000 $1,545,000 $381,103 $- Subtotal: Direct borrowings - Inter-local loans: $ 57,670,000 $1,545,000 $ 381,103 $- Financing Leases: $2,623,318$447,639 $- $ 2,447,216 1,454,440 205,500 - 1,384,545 16,815,605 1,963,077 - 16,603,356 274,656 274,656 - 614,001 9,740,074 955,557 - 9,440,403 152,962 78,689 - 157,342 343,341 343,341 - 442,787 4,285,989 401,986 - 3,877,555 1,488,378 549,284 - 1,646,349 787,758 469,645 - 814,965 8,921,712 618,685 - 8,221,679 On December 22, 2016, Utah County issued a $65 million Subordinated Transportation Sales Tax Revenue Bond to be used for the construction of the Utah Valley Express bus route. The Authority and Utah County have entered into an inter- local agreement that requires the Authority to reimburse Utah County for all bond costs (principal, interest, and cost of issuance) prior to December 31, 2028. In 2021, the Authority will remit $2,649,245.50 to Utah County for repayment of prior design cost incurred by Utah County, $3,460,616 of principal on variable rate loan for first year operations of route, and $199,480.44 of interest on the variable rate loan per the terms of Utah County 4th Quarter Cent Sales Tax Interlocal Agreement. As of November 2021, UTA only owes the remaining bond principal and interest on the 2016 Utah County Subordinated Transportation Sales Tax Revenue Bond. $5,283,500 12-Year Financing Lease, Series 2015, issued July 17, 2015, maturing monthly from August 17, 2015 through July 17, 2027, with interest payable monthly at rate of 2.0908%. A leasehold interest in 10 CNG buses and equipment is pledged as security for the debt. $2,480,000 12-Year Financing Lease, Series 2016, issued September 27, 2016, maturing monthly from October 27, 2016 through September 27, 2028, with interest payable monthly at rate of 1.6322%. A leasehold interest in 5 ski buses and equipment is pledged as security for the debt. $24,390,000 12-Year Financing Lease, Series 2017, issued November 30, 2017, maturing monthly from December 31, 2017 through November 30, 2029, with interest payable monthly at rate of 2.2440%. A leasehold interest in 47 buses and equipment is pledged as security for the debt. $1,444,000 5-Year Financing Lease, Series 2017, issued November 30, 2017, maturing monthly from December 31, 2017 through November 30, 2022, with interest payable monthly at rate of 1.8200%. A leasehold interest in 33 FLEX/Paratransit vehicles and equipment is pledged as security for the debt. $9,530,000 14-Year Financing Lease, Series 2020, issued December 5, 2020, maturing monthly from January 3rd, 2021 through December 3, 2034, with interest payable monthly at rate of 1.5050%. A leasehold interest in 20 buses and equipment is pledged as security for the debt. $1,960,000 4-Year Financing Lease, Series 2019, issued August 8, 2019, maturing monthly from September 8, 2019 through August 8, 2023, with interest payable monthly at rate of 1.9100%. A leasehold interest in 52 RideShare vans is pledged as security for the debt. $2,730,000 5-Year Financing Lease, Series 2019, issued August 8, 2019, maturing monthly from September 8, 2019 through August 8, 2024, with interest payable monthly at rate of 1.9100%. A leasehold interest in 30 FLEX/Paratransit vehicles and equipment is pledged as security for the debt. $5,190,000 12-Year Financing Lease, Series 2019, issued August 8, 2019, maturing monthly from September 8, 2019 through August 8, 2031, with interest payable monthly at rate of 2.2200%. A leasehold interest in 10 buses and equipment is pledged as security for the debt. $12,496,000 12-Year Financing Lease, Series 2018, issued November 28, 2018, maturing monthly from December 28, 2018 through November 30, 2030, with interest payable monthly at rate of 3.2950%. A leasehold interest in 24 buses, 2 trolleys, and their associated equipment is pledged as security for the debt. $381,000 5-Year Financing Lease, Series 2018, issued November 28, 2018, maturing monthly from December 28, 2018 through November 30, 2023, with interest payable monthly at rate of 3.0570%. A leasehold interest in 36 FLEX/Paratransit vehicles and equipment is pledged as security for the debt. $1,500,000 4-Year Financing Lease, Series 2018, issued November 28, 2018, maturing monthly from December 28, 2018 through November 30, 2022, with interest payable monthly at rate of 3.0220%. A leasehold interest in 60 RideShare vans is pledged as security for the debt. 73 96 UTAH TRANSIT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS Year Ended December 31, 2021 Amount Amount Due Accrued Amount of Outstanding Within One Year Interest Collateral 2,560,784 503,627 - 2,184,211 28,160,000 1,778,150 - 17,049,747 3,859,500 621,749 - - Subtotal: Direct borrowings - Financing Leases: $81,468,517 $ 9,211,585 $- $ 64,884,156 Total Direct borrowings: $139,138,517 $ 10,756,585 $ 381,103 $ 64,884,156 Other Related Debt: Revenue Bonds $1,915,000 $1,915,000 $4,189 $- 90,825,000 6,265,000 198,680 - 48,410,000 23,570,000 105,897 - 78,855,000 - 159,163 - 44,035,000 8,875,000 91,740 - 126,780,000 -191,763 - 82,265,000 -147,392 - 109,800,000 3,395,000 205,381 - 61,830,000 -104,579 - 188,810,000 -270,864 - 59,070,000 -87,851 - 207,280,000 4,130,000 194,585 - $188,810,000 Senior Revenue bonds, Series 2019B, issued November 26, 2019, maturing annually from June 15, 2020 through December 15, 2042, with interest payable semiannually at a rate of 3.443%. $59,070,000 Subordinate Revenue bonds, Series 2019B, issued November 26, 2019, maturing annually from June 15, 2020 through December 15, 2042, with interest payable semiannually at rates from 3.393- 3.643%. $216,650,000 Taxable Senior Lien Sales Tax Revenue bonds, Series 2020, issued March 19, 2020, maturing annually from June 15, 2020 through December 15, 2038, with interest payable semiannually at rates from .937-2.774%. $20,630,000 Senior Revenue bonds, Series 2005A, issued August 10, 2005, maturing annually from June 15, 2005 through June 15, 2022, with interest payable semiannually at rates from 3.25-5.25%. $134,650,000 Senior Revenue bonds, Series 2006C, issued October 24, 2006, maturing annually from June 15, 2007 through June 15, 2032, with interest payable semiannually at rates from 5.00% - 5.25% $28,160,000 14-Year Financing Lease, Series 2021, issued December 28, 2021, maturing monthly from January 28th, 2022 through December 28, 2035, with interest payable monthly at rate of 1.855%. A leasehold interest in 50 buses and equipment is pledged as security for the debt. $3,859,500 6-Year Financing Lease, Series 2021, issued December 28, 2021, maturing monthly from January 28, 2022 through December 28, 2027, with interest payable monthly at rate of 1.35%. A leasehold interest in 27 Flex/Paratransit vehicles and 35 RideShare vans and equipment is pledged as security for the debt. $3,060,000 6-Year Financing Lease, Series 2020, issued December 5, 2020, maturing monthly from January 3, 2021 through December 3, 2026, with interest payable monthly at rate of .88%. A leasehold interest in 25 Flex/Paratransit vehicles and 35 RideShare vans and equipment is pledged as security for the debt. $115,540,000 Subordiate Revenue bonds, Series 2018, issued March 15, 2018, maturing annually from June 15, 2018 through December 15, 2041 with interest payable semiannually at rates from 3.125-5.00%. $61,830,000 Senior Revenue bonds, Series 2019A, issued November 26, 2019, maturing annually from June 15, 2020 through December 15, 2044, with interest payable semiannually at rates from 3.00-5.00%. $700,000,000 Senior Revenue bonds, Series 2008A, issued April 10, 2008, maturing annually from December 15, 2008 through June 15, 2038, with interest payable semiannually at rates from 4.75-5.25% $668,655,000 Senior Revenue bonds, Series 2015A, issued February 25, 2015, maturing annually from June 15, 2015 through June 15, 2025, with interest payable semiannually at rates from 4.384-4.895%. $192,005,000 Subordinate Revenue bonds, Series 2015A, issued February 25, 2015, maturing annually from June 15, 2015 through June 15, 2026, with interest payable semiannually at rates of 5.00%. $126,780,000 Subordinate Revenue bonds, Series 2016, issued August 24,2016, maturing annually from December 15, 2016 through December 15, 2031, with interest payable semiannually at rates from 3.00 - 4.00%. $83,765,000 Senior Revenue bonds, Series 2018, issued March 15, 2018, maturing annually from June 15, 2018 through December 15, 2036, with interest payable semiannually at rates from 3.722 - 5.00%. 74 97 UTAH TRANSIT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS Year Ended December 31, 2021 Amount Amount Due Accrued Amount of Outstanding Within One Year Interest Collateral 74,750,000 - 90,177 - 431,625,000 7,385,000 745,210 - 16,220,000 200,000 39,092 - Subtotal: Other Related Debt - Revenue Bonds: $ 1,622,470,000 $ 55,735,000 $ 2,636,563 $ - Current Interest Bonds $115,895,000 $- $ 241,448 $- Subtotal: Other Related Debt - Current Interest Bonds: $ 115,895,000 $- $ 241,448 $- Build America Bonds 261,450,000 - 646,762 200,000,000 - 475,417 - Subtotal: Other Related Debt - Build America Bonds: $ 461,450,000 $ - $ 1,122,179 $ - Captial Appreciation Bonds 18,911,498 - 3,643,226 - Subtotal: Other Related Debt - Capital Appreciation Bond: $ 18,911,498 $ - $ 3,643,226 $ - Total Other Related Debt: $ 2,218,726,498 $ 55,735,000 $ 7,643,416 $ - $128,795,000 Subordinate Current Interest Debt, Series 2007A, issued June 19, 2007, maturing annually from December 15, 2007 through June 15, 2035, with interest payable semiannually at a rate of 5.00%. $261,450,000 Senior Debt, Series 2009B, issued May 21, 2009, maturing annually from December 15, 2009 through June 15, 2029, with interest payable semiannually at a rate of 5.937%. The authority elected to treat the 2009B bonds as "Build America Bonds" for the purpose of the American Recovery and Investment Act of 2009 (the Recovery Act) and to receive a cash subsidy from the United States Treasury in connction therewith. Pursuant to the Recovery Act, the Authority anticipates cash subsidy payments from the United States Treasury equal to 35% less sequestration ($5,123,131) of the interest payable on the 2009B bonds. $74,750,000 Subordinate Revenue bonds, Series 2020B, issued November 12,2020, maturing annually from June 15, 2021 through December 15, 2039, with interest payable semiannually at rates from 2.375-2.97%. $18,911,498 Capital Appreciation Subordiate Debt, Series 2016, issued August 24, 2016, maturing December 15, 2032 at a rate of 3.32% $431,625,000 Senior Revenue bonds, Series 2021A, issued November 10, 2021, maturing annually from June 15, 2022 through December 15, 2036, with interest payable semiannually at a rate from .0347 to 2.589%. $16,220,000 Subordinate Revenue bonds, Series 2021A, issued November 10, 2021, maturing annually from June 15, 2022 through December 15, 2037, with interest payable semiannually at a rate from 0.547 to 2.989%. $200,000,000 Subordinate Debt, Series 2010A, issued October 20, 2010, maturing annually from June 15, 2011 through June 15, 2040, with interest payable semiannually at a rate of 5.705%. The authority elected to treat the 2010A bonds as "Build America Bonds" for the purpose of the American Recovery and Investment Act of 2009 (the Recovery Act) and to receive a cash subsidy from the United States Treasury in connction therewith. Pursuant to the Recovery Act, the Authority anticipates cash subsidy payments from the United States Treasury equal to 35% less sequestration ($3,765,871) of the interest payable on the 2010A bonds. 75 98 UTAH TRANSIT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS Year Ended December 31, 2021 DIRECT BORROWINGS Beginning in 2015, UTA has secured capital leases annually for the purchase of buses, paratransit vehicles and vanpool commuter vans. The Capital Lease Agreements from 2015 through 2019 were secured from Banc of America Public Capital Corporation and the Capital Lease Agreement from 2020 through 2021 were secured through JP Morgan Chase Bank. On December 22, 2016, Utah County issued a $65 million Subordinated Transportation Sales Tax Revenue Bond to be used for the construction of the Utah Valley Express bus route. The Authority and Utah County have entered into an inter-local agreement that requires the Authority to reimburse Utah County for all bond costs (principal, interest, and cost of issuance) prior to December 31, 2028. Annual repayment requirements on the Direct Borrowings are: Inter-local Loan Year ending December 31, Principal Interest Total 2022 $ 1,545,000 $ 1,829,292 $ 3,374,292 2023 1,595,000 1,780,285 3,375,285 2024 1,645,000 1,729,692 3,374,692 2025 1,700,000 1,677,512 3,377,512 2026 1,750,000 1,623,588 3,373,588 2027-2029 49,435,000 4,530,568 53,965,568 Leases Year ending December 31, Principal Interest Total 2022 $ 9,211,585 $ 1,597,119 $ 10,808,704 2023 8,603,278 1,412,655 10,015,933 2024 8,188,797 1,240,354 9,429,151 2025 7,971,697 1,075,508 9,047,205 2026 8,135,242 911,962 9,047,204 2027-2031 28,316,951 2,307,377 30,624,328 2032-2035 11,040,967 396,442 11,437,409 OTHER RELATED DEBT The Sales Tax Revenue Bonds are payable from and secured by UTA’s sales and use tax revenue. UTA is require to maintain certain minimum deposits, as defined in the Indenture of Trust, to meet debt service requirements. Sales Tax Revenue Bonds debt service requirements to maturity are as follows: Year ending December 31, Principal Interest Total 2022 $ 55,735,000 $ 86,212,420 $ 141,947,420 2023 67,770,000 82,723,454 150,493,454 2024 70,675,000 79,816,906 150,491,906 2025 75,675,000 76,751,163 152,426,163 2026 78,095,000 74,338,438 152,433,438 2027-2031 475,300,000 334,330,442 809,630,442 2032-2036 562,366,498 256,693,314 819,059,812 2037-2041 684,050,000 111,431,192 795,481,192 2042-2044 149,060,000 5,506,073 154,566,073 76 99 UTAH TRANSIT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS Year Ended December 31, 2021 Changes in Debt Long-Term Liabilities Long-term debt liability activity for the year ended December 31, 2021 was as follows: Balance 1/1/2021 Additions Reductions Balance 12/31/2021 Due Within One Year Direct Borrowings Financing Lease Agreements $57,263,278 $32,019,500 $(7,814,261) $81,486,517 $9,211,585 Inter-local Loan 65,665,597 - (7,995,597) 57,670,000 1,545,000 Total Direct Borrowings 122,928,875 32,019,500 (15,809,858) 139,138,517 10,756,585 Balance 1/1/2021 Additions Reductions Balance 12/31/2021 Due Within One Year Other Related Debt Sales Tax Revenue Bonds 1,611,065,000 447,845,000 (436,440,000) 1,622,470,000 55,735,000 Current Interest Bonds 115,895,000 - - 115,895,000 - Build America Bonds 461,450,000 - - 461,450,000 - Capital Appreciation Bonds 18,911,498 - - 18,911,498 - Issuance premiums/(discounts) 117,041,243 (54,286,799) (7,737,843) 55,016,601 - Total Other Related Debt 2,324,362,741 393,558,201 (444,177,843) 2,273,743,099 55,735,000 Total long-term debt liabilities $2,447,291,616 $425,577,701 $(459,987,701) $2,412,881,616 $66,491,585 Compensated Absences Balance 1/1/2021 Additions Reductions Balance 12/31/2021 Due Within One Year Total Vacation Liability $9,080,232 $11,362,139 $(11,212,470) $9,229,901 $9,012,182 Total Sick Liability 5,257,875 722,061 (585,677) 5,394,259 1,226,718 Total Compensated Absences $14,338,107 $12,084,200 $(11,798,147) $14,624,160 $10,238,900 77 100 UTAH TRANSIT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS Year Ended December 31, 2021 NOTE 10 – COMMITMENTS AND CONTINGENCIES The Authority is a defendant in various matters of litigation and has other claims pending as a result of activities in the ordinary courses of business. Management and legal counsel believe that by reason of meritorious defense, by insurance coverage or statutory limitations, these contingencies will not result in a significant liability to the Authority in excess of the amounts provided as accrued self-insurance liability in the accompanying financial statements. As of December 31, 2021, the Authority also has purchasing commitments of $299.8 million for capital projects that will be funded through a combination of debt, grants, and other revenue. The largest of these commitments are as follows: • $55.1 million Ogden-Weber State University Bus Rapid Transit • $35.1 million Depot District • $27.2 million Volkswagen Settlement Bus Replacements • $26.8 million Traction Power Rehabilitation and Replacement • $26.2 million Bus Replacements • $25.1 million Grade Crossing Rehabilitation and Replacement • $17.6 million Light Rail Overhaul • $17.0 million Train Control Rehabilitation and Replacement • $14.9 million TIGER Grant Projects • $12.5 million Point of the Mountain Project • $ 6.1 million Park City Low/No Emission Vehicle Grant • $ 4.4 million Commuter Rail Engine Overhaul • $ 3.5 million FrontRunner Business Plan • $ 2.5 million Sandy Parking Structure • $ 1.8 million Mid-Valley Connector • $ 1.7 million Stray Current Mitigation • $ 1.6 million Meadowbrook Maintenance Garage Expansion • $ 1.5 million Bus Engine/ Transmission Rehab and Replacement • $ 1.3 million Rail Communications On-Board Technology • $ 1.2 million Light Rail Vehicle Accident Repair • $ 1.2 million Vanpool Replacement • $ 0.9 million 650 South Main TRAX Station • $ 0.9 million Facility Rehab and Replacement • $ 0.8 million Positive Train Control • $ 0.8 million Rail Rehab and Replacement • $12.1 million Other Capital Projects 78 101 UTAH TRANSIT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS Year Ended December 31, 2021 NOTE 11 –SUBSEQUENT EVENTS As of June 17, 2022 there are no subsequent events to report for the Authority. 79 102 Required Supplementary Information U TA H T R A N S I T AU T H O R I T Y SM For Fiscal Year Ended December 31, 2021 80 103 UTAH TRANSIT AUTHORITY REQUIRED SUPPLEMENTARY INFORMATION Year Ended December 31, 2021 SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS – 10 YEARS 2021 2020 2019 2018 Total Pension Liability Service cost $ 12,597,159 $ 10,653,870 $ 10,244,115 $ 9,550,863 Interest on total pension liability 25,639,471 24,263,256 22,947,802 21,512,781 Voluntary member contributions 334,301 83,988 298,803 223,572 Differences between expected and actual experience 9,188,520 4,292,503 3,347,505 4,893,150 Assumption changes or inputs 0 11,421,251 0 0 Benefits paid (19,196,735) (19,648,551) (17,302,699) (15,474,819) Net change in total pension liability 28,562,716 31,066,317 19,535,526 20,705,547 Total pension liability - beginning 376,688,506 345,622,189 326,086,663 305,381,116 Total pension liability - ending (a) 405,251,222 376,688,506 345,622,189 326,086,663 Plan Fiduciary Net Position Contributions - employer $ 25,207,307 $ 24,273,996 $ 24,008,192 $ 22,355,434 Contributions - members 334,301 83,988 298,803 223,572 Net investment income 28,830,047 33,846,259 40,648,932 (16,629,921) Benefits paid (19,196,735) (19,648,551) (17,302,699) (15,474,819) Administrative expense (471,288) (407,938) (434,427) (440,279) Net change in plan fiduciary net position 34,703,632 38,147,754 47,218,801 (9,966,013) Plan fiduciary net position - beginning 279,905,104 241,757,350 194,538,549 204,504,562 Plan fiduciary net position - ending (b) 314,608,736 279,905,104 241,757,350 194,538,549 Net pension liability / (asset) - ending (a- b) $ 90,642,486 $ 96,783,402 $103,864,839 $131,548,114 Plan fiduciary net position as a 77.63% 74.31% 69,95% 59.66% percentage of the total pension liability Covered payroll $153,983,509 $152,297,365 $141,812,999 $132,521,079 Net pension liability as a percentage 58,87% 63.55% 73.24% 99.27% of covered payroll Schedule is intended to show information for 10 years. Additional years will be displayed when available. 81 104 UTAH TRANSIT AUTHORITY REQUIRED SUPPLEMENTARY INFORMATION Year Ended December 31, 2021 2017 2016 2015 2014 Total Pension Liability Service cost $ 8,368,262 $ 7,711,706 $ 7,545,807 $ 7,284,379 Interest on total pension liability 20,368,031 19,604,345 18,717,411 17,623,248 Voluntary member contributions 697,576 437,923 916,567 275,663 Differences between expected and actual experience 4,915,564 (927,077) (1,973,177) 0 Assumption changes or inputs 5,079,447 (3,955,702) 7,725,363 0 Benefits paid (13,008,142) (12,980,615) (11,554,824) (10,181,732) Net change in total pension liability 26,420,738 9,890,580 21,377,147 15,001,558 Total pension liability - beginning 278,960,378 269,069,798 247,692,651 232,691,093 Total pension liability - ending (a) 305,381,116 278,960,378 269,069,798 247,692,651 Plan Fiduciary Net Position Contributions - employer $ 20,506,163 $ 19,603,952 $ 16,745,254 $ 15,366,694 Contributions - members 697,576 437,923 916,567 275,663 Net investment income 30,598,620 7,591,211 (1,085,458) 5,946,916 Benefits paid (13,008,142) (12,980,615) (11,554,824) (10,181,732) Administrative expense (324,912) (249,141) (244,011) (219,504) Net change in plan fiduciary net position 38,469,305 14,403,330 4,777,528 11,188,037 Plan fiduciary net position - beginning 166,035,257 151,631,927 146,854,399 135,666,362 Plan fiduciary net position - ending (b) 204,504,562 166,035,257 151,631,927 146,854,399 Net pension liability / (asset) - ending (a-b) $100,876,554 $112,925,121 $117,437,871 $100,838,252 Plan fiduciary net position as a 66.97% 59.50% 56.40% 59.29% percentage of the total pension liability Covered payroll $126,690,540 $115,430,618 $110,727,134 $106,004,057 Net pension liability as a percentage 79.62% 97.83% 106.06% 95.13% of covered payroll Schedule is intended to show information for 10 years. Additional years will be displayed when available. 82 105 UTAH TRANSIT AUTHORITY REQUIRED SUPPLEMENTARY INFORMATION Year Ended December 31, 2021 SCHEDULE OF REQUIRED EMPLOYER CONTRIBUTIONS – 10 YEARS Year Actuarial Determined Contribution Actual Employer Contribution Contribution Deficiency (Excess) Covered Payroll Contribution as Percentage of Covered Payroll 2021 $ 24,743,369 $ 25,207,307 $ (463,938) $153,983,509 16.37% 2020 25,167,517 24,273,996 893,521 152,297,365 15.94% 2019 22,240,718 24,008,192 (1,767,474) 141,812,999 16.93% 2018 21,600,936 22,355,434 (754,498) 132,521,079 16.87% 2017 20,270,486 20,506,163 (235,677) 126,690,540 16.19% 2016 17,147,568 19,603,952 (2,456,384) 115,430,618 16.98% 2015 16,609,070 16,745,254 (136,184) 110,727,134 15.12% 2014 14,757,446 15,366,694 (609,248) 106,004,057 14.50% 2013 14,352,279 13,338,052 1,014,227 102,099,985 13.06% 2012 12,206,257 11,645,982 560,275 96,750,285 12.04% NOTE 1 – METHODS AND ASSUMPTIONS USED TO DETERMINE CONTRIBUTION RATES AS OF DECEMBER 31, 2021 Actuarial cost method Entry age normal Amortization method Level percentage of payroll, open Remaining amortization period 18 years Asset valuation method 5-year smoothed market less unrealized Cost of Living Adjustments None Inflation 2.3% Salary increases 5.40% per annum for the first five years of employment; 3.40% per annum thereafter Investment rate of return 6.75%, net of investment expenses Retirement age Table of Rates by Age and Eligibility Mortality RP-2014 Blue Collar Mortality Table, with MP-2014 projection scale 83 106 UTAH TRANSIT AUTHORITY REQUIRED SUPPLEMENTARY INFORMATION Year Ended December 31, 2021 SCHEDULE OF INVESTMENT RETURNS The money-weighted rate of return considers the changing amounts actually invested during a period and weights the amount of pension plan investments by the proportion of time they are available to return during that period. External cash flows are determined on a monthly basis and are assumed to occur at the middle of each month. External cash inflows are netted with external cash outflows, resulting in a net external cash flow each month. The money-weighted rate of return is calculated net of investment expenses. Fiscal Year Ending December 31 Net Money-Weighted Rate of Return 2021 10.19% 2020 13.88% 2019 20.56% 2018 -8.00% 2017 2016 18.01% 4.90% 2015 -0.72% 2014 4.31% Schedule is intended to show information for 10 years. Additional years will be displayed when available. 84 107 Supplementary Schedules U TA H T R A N S I T AU T H O R I T Y SM For Fiscal Year Ended December 31, 2021 85 108 UTAH TRANSIT AUTHORITY SUPPLEMENTARY SCHEDULES Year Ended December 31, 2021 SCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION BUDGET TO ACTUAL Budget Budget Amendments Amended Budget Actual Favorable (Unfavorable) Revenues Contributions from other gov'ts, sales tax 364,088,000$ -$ 364,088,000$ 433,360,729$ 69,272,729$ Federal operating grants 171,507,000 - $1 71 ,507,000 1 30,631 ,095 (40,875,905) Passenger revenues 31,979,000 - $31 ,979,000 28,51 0,458 (3,468,542) Advertising 1,363,000 - $1 ,363,000 1 ,875,729 51 2,729 Investment income 4,807,000 - $4,807,000 1 ,432,026 (3,374,974) Other income 1 0,663,000 - $1 0,663,000 9,822,657 (840,343) Total revenues 584,407,000 - 584,407,000 605,632,694 21,225,694 Operating Expenses Bus services 107,925,000 1,100,209 1 09,025,209 108,575,280 449,929 Rail services 84,326,000 17,360,096 101,686,096 94,943,238 6,742,858 Demand response services 24,025,000 3,261,543 27,286,543 27,083,173 203,370 Other services 3,645,000 3,030 3,648,030 3,587,71 8 60,31 2 Operations support 53,541 ,000 (349,000) 53,192,000 50,621,841 2,570,159 Administration (less non-operating)46,691,000 10,692,423 57,383,423 45,054,028 12,329,395 Total operating expenses 320,153,000 32,068,301 352,221,301 329,865,278 22,356,023 Non-Operating Expenses (Revenues) Interest expense 98,474,000 - 98,474,000 101,286,173 (2,81 2,1 73) Build America Bond subsidies (8,870,000) - (8,870,000) (8,1 58,624) (71 1 ,376) Principal 53,762,000 - 53,762,000 48,461,745 5,300,255 Non-operating 9,102,000 1 09,000 9,21 1 ,000 9,01 9,1 59 1 91 ,841 Total non-operating expenses 152,468,000 1 09,000 1 52,577,000 1 50,608,453 1 ,968,547 Total Operating and Non-Operating Expenses 472,621 ,000$ 32,177,301$ 504,798,301$ 480,473,731$ 24,324,570$ Capital Expenses (Revenues) Federal and local grants (75,793,000)$ -$ (75,793,000)$ (48,642,468)$ (27,150,532)$ State and local contributions (33,748,000)- (33,748,000) (1 9,545,348) (1 4,202,652) Capital lease (28,306,000)- (28,306,000)- (28,306,000) Bonds (51,259,000) - (51 ,259,000)- (51 ,259,000) Project Expenses 255,619,000 (32,177,300) 223,441,700 170,912,980 52,528,720 Total capital expenses (revenues)66,513,000$ (32,177,300)$ 34,335,700$ 102,725,164$ (68,389,464)$ Project Expenses-less transfers to Capital Assets in 2021 (139,015,587) Operations Capital Outlay Expenses 279,907 Capital Project Expenses Not Capitalized 32,177,300$ Reconcilaition: Total Revenues (Operating and Capital)673,820,51 0$ (512,651,031) - Less Depreciation Expense (1 34,048,888) + Plus Sale of Assets 1,411,431 + Plus Capital Project Expenses Not Capitalized (Added into modes) Bus 1 ,1 00,209 Rail 17,212,096 Demand Response 162,543 Other Service 3,030 Administration 1 3,699,423 + Plus Principal Payments on Long-term Debt 48,461,745 + Plus Capital Contributions to Assets 45,775 1 09,21 6,842$ - Less Total Expenses (Operating, Non-Operating, and Capital (after Capitalization) Change in Net Position (Statement of Revenues, Expenses, and Changes in Net Position) 86 109 UTAH TRANSIT AUTHORITY SUPPLEMENTARY SCHEDULES Year Ended December 31, 2021 Combining Statement of Fiduciary Net Position UTA Employee Retirement and Trust Joint Insurance Trust Total ASSETS Cash in Bank $ 507,681 $ 6,085,847 $ 6,593,528 Cash in Utah State Treasury - 1,057,161 1,057,161 Total Cash 507,681 7,143,008 7,650,689 Investments Global Equities 205,852,022 - 205,852,022 Fixed Income 73,221,266 - 73,221,266 Liquid Diversifiers 7,225,418 - 7,225,418 Real Assets 13,584,440 - 13,584,440 Money Market 12,238,285 1,201,916 13,440,201 Investments 312,121,431 1,201,916 313,323,347 Prepaid Benefits 1,454,872 - 1,454,872 Deposits - 104,795 104,795 Receivables Dividends Receivable 114 - 114 Accounts Receivable - Benefits 2,352 - 2,352 Accounts Receivable - Contributions 539,230 218,827 758,057 Total Receivables 541,696 218,827 760,523 TOTAL ASSETS 314,625,680 8,668,546 323,294,226 LIABILITIES Benefits Payable 16,944 - 16,944 Accounts Payable - 2,213,084 2,213,084 TOTAL LIABILITIES 16,944 2,213,084 2,230,028 NET POSITION Restricted for: Pension 314,608,736 314,608,736 Benefits Other than Pension 6,455,462 6,455,462 Total Net Position $ 314,608,736 $ 6,455,462 $321,064,198 87 110 UTAH TRANSIT AUTHORITY SUPPLEMENTARY SCHEDULES Year Ended December 31, 2021 Combining Statement of Changes in Fiduciary Net Position UTA Employee Retirement and Trust Joint Insurance Trust Total ADDITIONS Employer Contributions $ 25,207,307 $ 20,278,180 $ 45,485,487 Participant Voluntary Contributions 334,301 476,990 811,291 Total Contributions 25,541,608 20,755,170 46,296,778 Net Investment Income Net Appreciation in Fair Value of Investments 27,977,813 (4,743) 27,973,070 Interest 3,704 14,304 18,008 Dividends 1,509,174 - 1,509,174 Total Investment Income 29,490,691 9,561 29,500,252 Less: Investment Expense 660,644 - 660,644 Net Investment Income 28,830,047 9,561 28,839,608 TOTAL ADDITIONS 54,371,655 20,764,731 75,136,386 DEDUCTIONS Monthly Benefits Paid 13,528,585 19,965,986 33,494,571 Lump Sum Distributions 5,668,150 - 5,668,150 Administrative Expense 471,288 110,010 581,298 TOTAL DEDUCTIONS 19,668,023 20,075,996 39,744,019 CHANGE IN NET POSITION 34,703,632 688,735 35,392,367 Total Net Position (Restricted), January 1 279,905,104 5,766,727 285,671,831 Total Net Position (Restricted), December 31 $ 314,608,736 $ 6,455,462 $ 321,064,198 88 111 Statistical U TA H T R A N S I T AU T H O R I T Y SM For Fiscal Year Ended December 31, 2021 89 112 UTAH TRANSIT AUTHORITY STATISTICAL SECTION Year Ended December 31, 2021 *NET POSITION AS OF December 31 - 10 Years 2021 2020 2019 2018 2017 Net Position as of December 31 Capital investment in capital assets $667,968,269 $648,605,411 $692,675,681 $827,646,243 $894,275,843 Restricted 27,015,061 40,516,406 66,948,773 66,559,450 60,399,717 Unrestricted 331,437,253 228,081,924 113,143,840 85,088,927 39,001,859 Total net position 1,026,420,583 917,203,741 872,768,294 979,294,620 993,677,419 Restatement - - - - - Total restated net position $1,026,420,583 $917,203,741 $872,768,294 $979,294,620 $993,677,419 *CHANGE IN NET POSITION - 10 YEARS 2021 2020 2019 2018 2017 Operating revenues $30,386,187 $34,880,272 $55,111,554 $54,464,392 $54,525,870 Operating expenses 472,933,325 459,473,189 457,897,920 401,161,541 427,777,940 Operating loss (442,547,138) (424,592,917) (402,786,366) (346,697,149) (373,252,070) Non-operating revenues 483,530,389 444,739,466 261,451,197 268,435,411 246,722,487 Income (loss) before capital contributions 40,983,251 20,146,549 (141,335,169) (78,261,738) (126,529,583) Capital contributions 68,233,591 24,288,898 34,808,843 63,878,939 57,063,288 Change in net position $109,216,842 $44,435,447 (106,526,326)$ (14,382,799)$ (69,466,295)$ *Source: Utah Transit Authority 2021 Annual Comprehensive Financial Report 90 113 UTAH TRANSIT AUTHORITY STATISTICAL SECTION Year Ended December 31, 2021 *NET POSITION AS OF December 31 - 10 Years (Continued) 2016 2015 2014 2013 2012 Net Position as of December 31 Capital investment in capital assets $924,260,135 $1,040,640,236 $1,230,633,230 $1,327,585,097 $1,364,803,454 Restricted 67,381,132 77,983,022 62,779,798 7,172,060 3,872,141 Unrestricted 71,502,447 76,548,154 137,991,170 242,347,746 304,834,237 Total net position 1,063,143,714 1,195,171,412 1,431,404,198 1,577,104,903 1,673,509,832 Restatement - (9,497,521) (115,047,267) 4,931,557 - Total restated net position $1,063,143,714 $1,185,673,891 $1,316,356,931 $1,582,036,460 $1,673,509,832 *CHANGE IN NET POSITION - 10 YEARS (Continued) 2016 2015 2014 2013 2012 Operating revenues $52,891,021 $54,346,242 $53,761,223 $52,044,200 $46,422,916 Operating expenses 422,543,342 394,062,733 398,626,029 378,224,993 319,322,223 Operating loss (369,652,321) (339,716,491) (344,864,806) (326,180,793) (272,899,307) Non-operating revenues 226,957,532 209,462,264 182,843,232 173,520,664 200,370,290 Income (loss) before capital contributions (142,694,789) (130,254,227) (162,021,574) (152,660,129) (72,529,017) Capital contributions 20,164,612 9,068,708 11,389,311 56,255,200 98,811,340 Change in net position (122,530,177)$ (121,185,519)$ (150,632,263)$ (96,404,929)$ $26,282,323 *Source: Utah Transit Authority 2021 Annual Comprehensive Financial Report 91 114 UTAH TRANSIT AUTHORITY STATISTICAL SECTION Year Ended December 31, 2021 REVENUE HISTORY BY SOURCE 2021 2020 2019 2018 2017 Operating -$ 34,880,272$ 55,111,554$ 54,464,392$ 54,525,870$ Sales taxes 130,631,095 361,590,707 317,797,604 282,933,591 265,770,775 Investment 1,411,431 3,525,448 6,821,490 6,525,872 2,873,787 Sale of Assets 9,822,657 927,566 - - - Build America Bond Subsidies 8,158,624 8,893,288 - - - Other (101,286,173) 9,442,644 (45,372,222) 8,155,668 3,954,893 48,737,634 419,259,925 334,358,426 352,079,523 327,125,325 Federal grants Federal preventive maintenance grants - - - 61,820,668 62,313,994 Federal operating grants 1,432,026 160,258,318 69,746,231 - - Federal capital grants 19,545,348 20,898,309 16,395,068 31,585,906 53,960,024 20,977,374 181,156,627 86,141,299 93,406,574 116,274,018 Other capital contributions 68,279,366 3,390,589 18,413,775 32,293,935 3,103,264 $137,994,374 $603,807,141 $438,913,500 $477,780,032 $446,502,607 EXPENSE HISTORY BY FUNCTION 2021 2020 2019 2018 2017 Bus service 94,943,238$ 107,390,047$ 104,570,413$ 96,719,747$ 88,928,063$ Rail service 27,083,173 96,041,283 77,972,467 75,157,087 72,895,607 Paratransit service 3,587,718 22,646,903 23,121,527 21,857,632 19,572,367 Other service 50,621,841 3,296,275 3,247,699 3,056,191 2,982,176 Operations support 54,073,187 46,463,776 47,056,444 45,557,749 41,932,571 Administration 1 - 44,545,686 36,738,745 39,593,947 30,612,930 Capital Maintenance Projects - - 19,078,502 38,654,111 20,602,425 Depreciation 472,933,325 139,089,219 146,112,123 80,565,077 149,440,887 Interest 2 (8,158,624) 99,898,505 87,541,906 91,000,388 88,190,962 Recoverable sales tax, interlocal 3 810,914 810,914 810,914 810,914 810,914 695,894,772$ 560,182,608$ 546,250,740$ 492,972,843$ 515,968,902$ 1 Includes major investment studies 2 Reported as non-capitalized interest 3 See Notes to the Financial Statement, Note 2.K 92 115 UTAH TRANSIT AUTHORITY STATISTICAL SECTION Year Ended December 31, 2021 REVENUE HISTORY BY SOURCE (Continued) 2016 2015 2014 2013 2012 Operating 52,891,021$ 54,346,242$ 53,761,223$ 52,044,200$ 46,422,916$ Sales taxes 245,008,417 227,703,023 214,683,276 203,806,329 196,693,543 Investment 1,732,939 2,831,406 5,803,226 1,455,039 1,892,549 Sale of Assets - - - - - Build America Bond Subsidies - - - - - Other 3,108,191 8,314,065 3,724,610 4,347,724 2,351,713 302,740,568 293,194,736 277,972,335 261,653,292 247,360,721 Federal grants Federal preventive maintenance grants 59,772,235 49,452,677 47,760,737 47,986,240 46,719,891 Federal operating grants 3,562,534 2,547,335 2,994,139 3,868,252 1,985,766 Federal capital grants 17,054,298 7,819,096 8,025,628 48,669,408 85,168,542 80,389,067 59,819,108 58,780,504 100,523,900 133,874,199 Other capital contributions 3,110,314 1,249,612 3,363,683 7,585,792 13,642,798 $386,239,949 $354,263,456 $340,116,522 $369,762,984 $394,877,718 EXPENSE HISTORY BY FUNCTION (Continued) 2016 2015 2014 2013 2012 Bus service 85,841,973$ 77,092,676$ 79,060,631$ 78,894,435$ 78,894,799$ Rail service 84,165,069 67,254,632 70,365,953 61,086,101 46,049,338 Paratransit service 19,341,116 18,511,580 18,748,699 18,202,211 17,516,117 Other service 2,949,643 2,918,871 3,183,892 701,656 596,583 Operations support 37,831,682 32,051,926 28,380,563 28,439,826 25,247,271 Administration 1 38,840,643 35,189,725 35,409,918 28,533,912 26,664,222 Capital Maintenance Projects Depreciation 153,573,216 161,043,323 163,476,373 162,366,852 124,353,893 Interest 2 85,415,870 80,575,328 91,311,842 87,132,004 48,462,258 Recoverable sales tax, interlocal 3 810,914 810,914 810,914 810,914 810,914 508,770,126$ 475,448,975$ 490,748,785$ 466,167,911$ 368,595,395$ 1 Includes major investment studies 2 Reported as non-capitalized interest 3 See Notes to the Financial Statement, Note 2.K 93 116 UTAH TRANSIT AUTHORITY STATISTICAL SECTION Year Ended December 31, 2021 LOCAL CONTRIBUTIONS IN THE FORM OF SALES TAX BY COUNTY - 10 YEARS 2021 2020 2019 2018 2017 Box Elder 1 2,690,712$ 2,404,175$ 2,019,035$ 1,898,308$ 1,957,740$ Davis 44,689,405 37,364,965 33,674,864 31,883,835 30,633,547 Salt Lake 260,485,953 217,849,215 196,744,294 174,704,191 163,407,564 Tooele 2 4,040,910 3,347,286 2,250,563 2,815,189 2,302,492 Utah 84,632,418 69,278,480 55,708,400 45,665,232 43,023,303 Weber 36,821,329 31,346,586 27,400,447 25,966,836 24,446,129 433,360,729$ 361,590,707$ 317,797,604$ 282,933,591$ 265,770,775$ 1 Includes Brigham City, Perry and Willard cities only 2 Includes the cities of Tooele and Grantsville; and the unincorporated areas of Erda, Lakepoint, Stansbury Park and Linc LOCAL TRANSIT SALES TAX RATES BY COUNTY - 10 YEARS 2021 2020 2019 2018 2017 Box Elder 0.5500% 0.5500% 0.5500% 0.5500% 0.5500% Davis 0.6500% 0.6500% 0.6500% 0.6500% 0.6500% Salt Lake 0.8500% 0.8500% 0.8500% 0.6875% 0.6875% Tooele 0.4000% 0.4000% 0.4000% 0.4000% 0.4000% Utah 0.6260% 0.6300% 0.6300% 0.5260% 0.5260% Weber 0.6500% 0.6500% 0.6500% 0.6500% 0.6500% 94 117 UTAH TRANSIT AUTHORITY STATISTICAL SECTION Year Ended December 31, 2021 LOCAL CONTRIBUTIONS IN THE FORM OF SALES TAX BY COUNTY - 10 YEARS (Continued) 2016 2015 2014 2013 2012 Box Elder 1 1,790,352$ 1,552,291$ 1,418,268$ 1,300,577$ 1,279,794$ Davis 27,606,440 23,178,724 21,459,683 20,023,042 18,692,038 Salt Lake 153,201,907 146,866,479 139,199,088 132,741,112 129,169,357 Tooele 2 1,798,971 1,521,097 1,384,631 1,349,366 1,364,179 Utah 38,601,427 36,221,930 33,752,513 31,905,764 30,576,235 Weber 22,009,320 18,362,502 17,469,093 16,486,468 15,611,940 245,008,417$ 227,703,023$ 214,683,276$ 203,806,329$ 196,693,543$ 1 Includes Brigham City, Perry and Willard cities only 2 Includes the cities of Tooele and Grantsville; and the unincorporated areas of Erda, Lakepoint, Stansbury Park and Linc LOCAL TRANSIT SALES TAX RATES BY COUNTY - 10 YEARS (Continued) 2016 2015 2014 2013 2012 Box Elder 0.5500% 0.5500% 0.5500% 0.5500% 0.5500% Davis 0.6500% 0.5500% 0.5500% 0.5500% 0.5500% Salt Lake 0.6875% 0.6875% 0.6875% 0.6875% 0.6875% Tooele 0.4000% 0.3000% 0.3000% 0.3000% 0.3000% Utah 0.5260% 0.5260% 0.5260% 0.5260% 0.5260% Weber 0.6500% 0.5500% 0.5500% 0.5500% 0.5500% 95 118 UTAH TRANSIT AUTHORITY STATISTICAL SECTION Year Ended December 31, 2021 PRINCIPAL CONTRIBUTORS OF SALES TAX BY COUNTY - 2021 AND 2011 Rank Percentage of contributions Amount Salt Lake County 1 60.11% 260,485,953$ Utah County 2 19.53% 84,632,418 Davis County 3 10.31% 44,689,405 Weber County 4 8.50% 36,821,329 Box Elder County 5 0.62% 2,690,712 Tooele County 6 0.93% 4,040,910 433,360,729$ FARES - 10 YEARS 2021 2020 2019 2018 2017 Cash Fares Base Fare 2.50$ 2.50$ 2.50$ 2.50$ 2.50$ Senior Citizen/Disabled 1.25 1.25 1.25 1.25 1.25 Ski Bus 5.00 4.50 4.50 4.50 4.50 Paratransit (Flextrans)4.00 4.00 4.00 4.00 4.00 Commuter Rail Base Rate 2.50 2.50 2.50 2.50 2.50 Commuter Rail Additional Station 0.60 0.60 0.60 0.60 0.60 Commuter Rail Maximum Rate 9.70 10.30 10.30 10.30 10.30 Express 5.00 5.50 5.50 5.50 5.50 Streetcar 2.50 1.00 1.00 1.00 1.00 Monthly Passes Adult 85.00$ 83.75$ 83.75$ 83.75$ 83.75$ Minor 42.50 62.75 62.75 62.75 62.75 College Student 42.50 62.75 62.75 62.75 62.75 Senior Citizen/Disabled 42.50 41.75 41.75 41.75 41.75 Express 170.00 198.00 198.00 198.00 198.00 Other Fares Day Pass 5.00$ 6.25$ 6.25$ 6.25$ 6.25$ Group Pass 15.00 15.00 15.00 15.00 15.00 Summer Youth 49.00 49.00 49.00 99.00 99.00 Token - 10-Pack 22.50 22.50 22.50 22.50 22.50 Paratransit - 10-Ride Ticket 40.00 40.00 40.00 40.00 40.00 *Source: UTA Fares Department 2021 96 119 UTAH TRANSIT AUTHORITY STATISTICAL SECTION Year Ended December 31, 2021 PRINCIPAL CONTRIBUTORS OF SALES TAX BY COUNTY - 2021 AND 2011 (Continued) Rank Percentage of contributions Amount 1 Salt Lake County 65.59% 120,094,110$ 2 Utah County 15.15% 27,743,162 3 Davis County 9.77% 17,880,017 4 Weber County 8.16% 14,939,966 5 Box Elder County 0.67% 1,226,730 6 Tooele County 0.66%1,207,539 183,091,524$ FARES - 10 YEARS (Continued) 2016 2015 2014 2013 2012 Cash Fares Base Fare 2.50$ 2.50$ 2.50$ 2.50$ 2.35$ Senior Citizen/Disabled 1.25 1.25 1.25 1.25 1.15 Ski Bus 4.50 4.50 4.50 4.50 4.25 Paratransit (Flextrans)4.00 4.00 4.00 4.00 3.50 Commuter Rail Base Rate 2.50 2.50 2.50 2.50 2.35 Commuter Rail Additional Station 0.60 0.60 0.60 0.60 0.55 Commuter Rail Maximum Rate 10.30 10.30 10.30 10.30 5.10 Express 5.50 5.50 5.50 5.50 5.25 Streetcar 1.00 1.00 1.00 1.00 n/a Monthly Passes Adult 83.75$ 83.75$ 83.75$ 83.75$ 78.50$ Minor 62.75 62.75 62.75 62.75 58.75 College Student 62.75 62.75 62.75 62.75 58.75 Senior Citizen/Disabled 41.75 41.75 41.75 41.75 39.25 Express 198.00 198.00 198.00 198.00 189.00 Other Fares Day Pass 6.25$ 6.25$ 6.25$ 6.25$ 5.75$ Group Pass 15.00 15.00 15.00 15.00 14.00 Summer Youth 99.00 99.00 99.00 n/a n/a Token - 10-Pack 22.50 22.50 22.50 22.50 21.00 Paratransit - 10-Ride Ticket 40.00 40.00 40.00 40.00 35.00 *Source: UTA Fares Department 2011 97 120 UTAH TRANSIT AUTHORITY STATISTICAL SECTION Year Ended December 31, 2021 TOTAL OUTSTANDING DEBT BURDEN PER CAPITA Sales Taxes Collected Personal Income of Percentage of Per (less Proposition 1 UTA Service Area Personal Income Capita Fiscal Year Bonds Inter-Local Leases and 4th quarter cent) 2012 2,142,639,468$ - -$ 196,693,543$ 83,156,237,000$ 2.58% 945.64$ 2013 2,132,224,961 - - 203,806,329 85,699,968,000 2.49% 926.12 2014 2,124,111,208 - - 214,683,276 91,063,808,000 2.33% 910.75 2015 2,291,439,672 - 11,272,688 227,703,023 98,213,376,000 2.34% 972.89 2016 2,259,166,529 - 19,605,173 238,584,981 104,042,124,000 2.19% 943.16 2017 2,300,193,307 65,000,000 46,394,866 256,742,750 110,124,169,000 2.19% 979.06 2018 2,377,228,054 65,960,616 56,038,716 273,007,256 118,270,822,000 2.11% 998.93 2019 2,329,663,958 67,050,616 52,187,203 288,548,490 125,338,146,000 1.95% 963.88 2020 2,324,362,741 65,665,597 57,263,279 311,520,915 135,585,673,000 1.80% 938.78 2021 2,273,743,099 57,670,000 81,486,033 262,251,079 - - 913.26 Source: Note 9 2021 income numbers not available as of May 2021 DEMOGRAPHIC AND ECONOMIC STATISTICS Estimated Personal Income Per Capita Unemployment Fiscal Year Population in UTA Service Area Personal Income Rate 2012 2,265,811 83,156,237,000$ 36,700$ 5.4% 2013 2,302,315 85,699,968,000 37,223 4.6% 2014 2,332,262 91,063,808,000 39,045 3.8% 2015 2,366,874 98,213,376,000 41,495 3.6% 2016 2,416,115 104,042,124,000 43,062 3.4% 2017 2,463,158 110,124,169,000 44,709 3.3% 2018 2,501,905 118,270,822,000 47,272 3.0% 2019 2,540,671 125,338,146,000 49,333 2.6% 2020 2,606,888 135,585,673,000 52,011 3.3% 2021 2,642,086 - - 2.3% Source: US Dept of Commerce, Bureau of Economic Analysis, Regional Data (www.bea.gov) Unemployment rate- Utah Department of Workforce Services https://jobs.utah.gov/wi/update/une/ https://worldpopulationreview.com/us-counties/states/ut US Bureau of Labor Statistics https://data.bls.gov/timeseries/LASST490000000000003 YEARLY DEBT SERVICE COVERAGE Sales Taxes Collected (less Proposition 1 Coveraqge Ratio Fiscal Year Principal Interest and 4th quarter cent) of Sales Taxes 2012 7,615,000$ 71,837,998$ 196,693,543$ 2.48 2013 7,450,000 84,319,531 203,806,329 2.22 2014 7,810,000 91,382,184 214,683,276 2.16 2015 11,445,000 84,785,200 227,703,023 2.37 2016 13,570,000 94,893,898 238,584,981 2.20 2017 8,750,000 77,765,121 256,742,750 2.97 2018 10,845,000 91,000,388 273,007,256 2.68 2019 17,500,000 87,541,906 288,548,490 2.75 2020 25,920,000 91,005,217 311,520,915 2.66 2021 46,860,000 100,245,573 262,251,079 1.78 Source: Statement of Expenses and Change in Net Position, and Note 9, Sales Tax Revenue Bonds Bonds Payments Total Debt 98 121 UTAH TRANSIT AUTHORITY STATISTICAL SECTION Year Ended December 31, 2021 PRINCIPAL EMPLOYER - 2020 AND 2010 Employer Industry Employees Rank % Total Employment Intermountain Healthcare Health Care 20,000 + 1 1.2% University of Utah Higher Education 20,000 + 2 1.2% State of Utah State Government 20,000 + 3 1.2% Brigham Young University Higher Education 15,000-19,999 4 0.9% Wal-Mart Associates Warehouse Clubs/Supercenters 20,000 + 5 1.2% Hill Air Force Base Federal Government 10,000-14,999 6 0.6% US Postal Service Federal Government 10,000-14,999 7 0.6% Davis County School District Public Education 7,000-9,999 8 0.4% Utah State University Higher Education 7,000-9,999 9 0.4% Smith's Food and Drug Centers Grocery Stores 7,000-9,999 10 0.4% Granite School District Public Education 7,000-9,999 11 0.4% Alpine School District Public Education 7,000-9,999 12 0.3% Jordan School District Public Education 7,000-9,999 13 0.3% Salt Lake County Local Government 5,000-6,999 14 0.3% Utah Valley University Higher Education 5,000-6,999 15 0.3% Total Employment 1,632,215 Source: Department of Workforce Services https://jobs.utah.gov/wi/data/library/firm/majoremployers.html http://www.dws.state.ut.us/wi/pubs/em/pastreports/11annual/11annual.pdf 2021 data not available https://jobs.utah.gov/wi/data/library/firm/majoremployers.html https://jobs.utah.gov/wi/pubs/em/pastreports/11annual/lrgstemp.pdf 2020 https://beta.bls.gov/dataViewer/view/timeseries/LAUST490000000000005;jse ssionid=157EB1C83D61925001914BA2E5AD33CF http://www.operationriogrande.utah.gov/wi/pubs/em/pastreports/09annual/lrgs temp2009.pdf 99 122 UTAH TRANSIT AUTHORITY STATISTICAL SECTION Year Ended December 31, 2021 PRINCIPAL EMPLOYER - 2020 AND 2010 Employer Employees Rank % Total Employment Intermountain Health Care Hospitals 20,000+ 1 1.6% State of Utah State Government 20,000+ 2 1.6% University of Utah Higher Education 20,000+ 3 1.6% Brigham Young University Higher Education 15,000-19,999 4 1.2% Wal Mart Stores Discount Store 15,000-19,999 5 1.2% Hill Air Force Base Defense 10,000-14,999 6 0.8% Granite School District Public Education 7,000-9,999 7 0.6% Utah State University Higher Education 7,000-9,999 8 0.6% Davis County School District Public Education 7,000-9,999 9 0.6% Kroger Group/ Smiths Marketplace Food/Discount Store 5,000-6,999 10 0.4% Alpine School District Public Education 5,000-6,999 11 0.4% Internal Revenue Service Public Taxation 5,000-6,999 12 0.4% Salt Lake County Local Government 5,000-6,999 13 0.4% US Postal Service Postal Service 5,000-6,999 14 0.4% Jordan School District Public Education 5,000-6,999 15 0.4% Total Employment 1,256,238 2010 100 123 UTAH TRANSIT AUTHORITY STATISTICAL SECTION Year Ended December 31, 2021 FULL-TIME EQUIVALENT AUTHORITY EMPLOYEES - 10 YEARS 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 Bus operations 1,069 1,104 1,138 1,089 1,030 1,028 951 945 911 963 Rail operations 595 625 631 611 580 563 527 542 526 506 Paratransit operations 190 200 204 196 191 192 188 183 176 168 Other services 10 10 10 8 9 9 12 10 10 12 Support services 453 417 433 413 365 366 349 323 335 293 Administration 190 187 184 180 243 212 210 207 195 217 Total 2,506 2,543 2,599 2,496 2,417 2,368 2,237 2,210 2,153 2,159 Source: UTA Budget Office Headcount Report 01/01/2022 101 124 UTAH TRANSIT AUTHORITY STATISTICAL SECTION Year Ended December 31, 2021 TREND STATISTICS - 10 YEARS 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 Passengers Bus service 12,616,872 12,441,304 20,799,642 19,624,935 19,749,855 20,033,242 20,560,068 20,165,174 19,695,711 21,222,669 Rail service 10,466,195 10,271,888 22,321,887 22,981,884 23,677,677 23,765,873 24,349,674 24,337,451 22,814,274 19,421,608 Paratransit service 301,505 187,112 388,265 394,816 386,977 389,019 388,169 372,499 383,453 715,034 Vanpool service 587,721 658,990 1,068,364 1,174,696 1,264,410 1,333,780 1,423,675 1,404,285 1,387,816 1,446,766 Total passengers 23,972,293 23,559,294 44,578,158 44,176,331 45,078,919 45,521,914 46,721,586 46,279,409 44,281,254 42,806,077 Revenue Miles Bus service 15,534,571 15,607,429 18,158,463 17,911,404 17,454,404 15,462,834 15,367,510 15,660,520 15,706,028 15,091,645 Rail service 10,904,101 10,153,689 11,977,751 12,084,767 12,082,292 12,070,277 11,988,005 11,784,146 11,681,251 7,905,460 Paratransit service 1,252,967 1,709,396 2,881,355 2,798,928 2,727,127 2,505,343 2,293,887 2,513,535 2,932,842 3,252,193 Vanpool service 5,633,164 5,705,170 6,451,812 6,354,828 6,449,439 6,518,150 6,734,487 6,859,802 7,053,191 7,553,978 Total Revenue Miles 33,324,803 33,175,684 39,469,381 39,149,927 38,713,262 36,556,604 36,383,889 36,818,003 37,373,312 33,803,276 Total Miles Bus service 17,262,587 17,692,313 20,854,420 20,247,617 19,899,364 17,511,624 17,662,486 17,864,847 17,191,018 16,553,983 Rail service 11,010,634 10,256,421 12,098,162 12,285,634 12,202,976 12,189,876 12,368,934 11,814,332 11,773,929 7,987,022 Paratransit service 1,571,443 2,223,889 3,566,711 3,376,772 3,263,607 3,254,559 3,192,367 2,844,468 3,493,247 4,088,027 Vanpool service 5,633,164 5,705,170 6,451,812 6,354,828 6,449,439 6,518,150 6,734,487 6,859,802 7,053,191 7,553,978 Total miles 35,477,828 35,877,793 42,971,105 42,264,851 41,815,386 39,474,209 39,958,274 39,383,449 39,511,385 36,183,010 Passengers per Mile Bus service 0.81 0.80 1.15 1.10 1.13 1.30 1.34 1.29 1.25 1.41 Rail service 0.96 1.01 1.86 1.90 1.96 1.97 2.03 2.07 1.95 2.46 Paratransit service 0.24 0.11 0.13 0.14 0.14 0.16 0.17 0.15 0.13 0.22 Vanpool service 0.10 0.12 0.17 0.18 0.20 0.20 0.21 0.20 0.20 0.19 Total passengers per mile 0.72 0.71 1.13 1.13 1.16 1.25 1.28 1.26 1.18 1.27 Revenue Hours Bus service 1,228,731 1,169,292 1,326,660 1,284,186 1,258,448 1,087,055 1,070,139 1,108,894 933,662 834,985 Rail service 511,973 480,016 532,353 527,187 513,389 511,082 506,233 487,435 641,914 536,066 Paratransit service 79,710 116,174 181,749 180,342 162,198 162,734 160,383 164,527 191,016 227,013 Total revenue hours 1,820,414 1,765,482 2,040,762 1,991,715 1,934,035 1,760,871 1,736,755 1,760,856 1,766,592 1,598,064 Passengers per Revenue Hour Bus service 10.27 10.64 15.68 15.28 15.69 18.43 19.21 18.18 21.10 25.42 Rail service 20.44 21.40 41.93 43.59 46.12 46.50 48.10 49.93 35.54 36.23 Paratransit service 3.78 1.61 2.14 2.19 2.39 2.39 2.42 2.26 2.01 3.15 Total passengers per mile 12.85 12.97 21.32 21.59 22.65 25.09 26.08 25.48 24.28 25.88 Total System Fare revenue $28,510,458 $32,845,272 $52,649,054 $52,051,892 $52,159,203 $50,624,354 $52,112,909 $51,461,223 $49,977,533 $44,489,583 Operating expense $346,672,552 $320,383,970 $311,785,797 $320,596,464 $257,734,612 $268,970,126 $242,516,933 $235,149,656 $215,858,141 $194,968,330 Cost per revenue mile 10.40 9.66 7.90 8.19 6.66 7.36 6.67 6.39 5.78 5.77 Cost per passenger 14.46 13.60 6.99 7.26 5.72 5.91 5.19 5.08 4.87 4.55 Fare revenue per passenger 1.19 1.39 1.18 1.18 1.16 1.11 1.12 1.11 1.13 1.04 Source: NTD Note: Does not include commuter bus or contract transportation. 102 125 UTAH TRANSIT AUTHORITY STATISTICAL SECTION Year Ended December 31, 2021 OPERATING INDICATORS AND CAPITAL ASSETS - 10 YEARS 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 Number of bus routes * 95 104 117 114 119 125 126 121 119 125 Number of rail routes Light rail 4 4 4 4 4 4 4 4 4 3 Commuter rail 1 1 1 1 1 1 1 1 1 1 Bus service miles (weekday)62,948 63,025 62,742 57,378 56,162 53,612 49,625 51,629 55,733 64,186 Rail service miles (weekday) Light rail 8,342 6,797 8,832 8,853 8,814 8,815 8,828 8,547 8,216 6,978 Commuter rail 3,727 3,628 4,660 4,664 4,623 4,627 4,651 4,638 4,488 2,390 Average passengers (weekday)79,916 78,972 152,940 151,901 156,288 155,873 161,862 161,339 162,644 152,934 Buses 648 539 570 561 582 567 555 535 493 570 Paratransit vehicles (buses/vans)188 207 198 182 148 129 84 113 110 Rail vehicles Light rail 117 117 117 146 146 146 146 146 146 122 Commuter rail 81 81 70 81 81 81 81 81 81 57 Vanpool vehicles 461 471 512 453 453 503 495 479 470 494 Park and ride lots1 46 41 Rail park and ride 42 42 42 42 42 Non-Rail park and ride 12 12 12 12 12 Bus stops 5,199 6,120 6,247 6,100 6,100 6,196 6,250 6,250 6,273 6,333 Rail stations Light rail 57 57 57 57 57 57 57 51 51 41 Commuter rail 17 17 17 16 16 16 16 16 16 16 Source: NTD NTD UTA capital asset record UTA capital asset record UTA Change-Day Roster UTA Change-Day Roster https://data-rideuta.opendata.arcgis.com/https://data-rideuta.opendata.arcgis.com/ * including flex 1 As of 2017 started distinguishing between Rail and non rail park and ride lots 103 126 UTAH TRANSIT AUTHORITY STATISTICAL SECTION Year Ended December 31, 2021 City, State Agency City, State Agency Saint Louis, MO BSDA Newark, NJ NJ Transit Dallas, TX DART Albuquerque, NM RMRTD Cleveland, OH GCRTA Denver, CO RTD Orlando, FL LYNX Sacramento, CA Sacramento RT Houston, TX Metro Spokane, WA STA Minneapolis, MN Metro Transit Fort Worth, TX The T Baltimore, MD MTA Portland, OR Tri-Met San Diego, CA MTS Salt Lake City, UT UTA Buffalo, NY NFT Metro San Jose, CA VTA The following charts contain information from the Federal Transit Administration's National Database (NTD) for the most recent year available (2020), and compares the Authority's performance with other like transit agencies. PERFORMANCE MEASURES - BUS SERVICE $0 $5 $10 $15 $20 Operating Expense per Vehicle Revenue Mile Operating Expense per Vehicle Revenue Mile Avg $0 $50 $100 $150 $200 $250 Operating Expense per Revenue Hour Operating Expense per Revenue Hour Avg $0 $1 $1 $2 $2 $3 $3 Operating Expense per Passenger Mile Operating Expense per Passenger Mile Avg $0 $5 $10 $15 $20 $25 $30 $35 Operating Expense per Passenger Trip Operating Expense per Passenger Trip Avg 0.0 0.5 1.0 1.5 2.0 2.5 3.0 Unlinked Trips per Vehicle Revenue Mile Unlinked Trips per Vehicle Revenue Mile Avg 0 5 10 15 20 25 30 35 Unlinked Trips per Vehicle Revenue Mile Unlinked Trips per Vehicle Revenue Hour Sum of P Average 104 127 UTAH TRANSIT AUTHORITY STATISTICAL SECTION Year Ended December 31, 2021 City, State Agency City, State Agency San Carlos, CA CalTrain Newark, NJ NJ Transit Dallas, TX DART Albuquerque, NM RMRTD Minneapolis, MN Metro Transit Seattle, WA Sound Transit Baltimore, MD MTA Pompano Beach, FL TRI-Rail Oceanside, CA NCTD Salt Lake City, UT UTA Chesterton, IN NICTD PERFORMANCE MEASURES - COMMUTER RAIL SERVICE The following charts contain information from the Federal Transit Administration's National Database (NTD) for the most recent year available (2020), and compares the Authority's performance with other like transit agencies. $0 $10 $20 $30 $40 $50 $60 Operating Expense per Vehicle Revenue Mile Operating Expense per Vehicle Revenue Mile Avg $0 $200 $400 $600 $800 $1,000 $1,200 Operating Expenses per Revenue Hour Operating Expenses per Revenue Hour Avg $0 $1 $2 $3 $4 Operating Expense per Passenger Mile Operating Expense per Passenger Mile Avg $0 $20 $40 $60 $80 $100 Operating Expense per Unlinked Passenger Trip Operating Expense per Unlinked Passenger Trip Avg 0 1 2 Unlinked Trips per Vehicle Revenue Mile Unlinked Trips per Vehicle Revenue Mile Avg. 0 10 20 30 40 50 60 Unlinked Trips per Vehicle Revenue Hour Unlinked Trips per Vehicle Revenue Hour Avg. 105 128 UTAH TRANSIT AUTHORITY STATISTICAL SECTION Year Ended December 31, 2021 City, State Agency City, State Agency Saint Louis, MO BSDA Salt Lake City, UT UTA Charlotte, NC CATS San Antonio, TX VIA Cleveland, OH GCRTA Providence, RI RIPTA Baltimore, MD MTA Columbus, OH COTA Sacramento, CA Sacramento RT PERFORMANCE MEASURES - DEMAND RESPONSE The following charts contain information from the Federal Transit Administration's National Database (NTD) for the most recent year available (2020), and compares the Authority's performance with other like transit agencies. $0 $5 $10 $15 $20 Operating Expense per Revenue Vehicle Mile Operating Expense per Revenue Vehicle Mile Avg. $0 $50 $100 $150 $200 $250 Operating Expense per Revenue Hour Operating Expense per Revenue Hour Avg. $0 $10 $20 $30 $40 Operating Expense per Passenger Mile Operating Expense per Passenger Mile Avg. $0 $25 $50 $75 $100 $125 $150 $175 Operating Expense per Unlinked Passenger Trip Operating Expense per Unlinked Passenger Trip Avg. 0.020.040.060.080.100.120.140.160.180.200.220.240.26 Unlinked Trips per Vehicle Revenue Mile Unlinked Trips per Vehicle Revenue Mile Avg. 0.00 0.50 1.00 1.50 2.00 2.50 3.00 Unlinked Trips per Vehicle Revenue Hour Unlinked Trips per Vehicle Revenue Hour Avg. 106 129 UTAH TRANSIT AUTHORITY STATISTICAL SECTION Year Ended December 31, 2021 City, State Agency City, State Agency Charlotte, NC CATS Denver, CO RTD Houston, TX Metro Sacramento, CA Sacramento RT Minneapolis, MN Metro Transit Portland, OR Tri-Met Baltimore, MD MTA Salt Lake City, UT UTA San Diego, CA MTS San Jose, CA VTA PERFORMANCE MEASURES - LIGHT RAIL The following charts contain information from the Federal Transit Administration's National Database (NTD) for the most recent year available (2020), and compares the Authority's performance with other like transit agencies. $0 $5 $10 $15 $20 $25 $30 $35 $40 $45 Operating Expense per Vehicle Revenue Mile Operating Expense per Vehicle Revenue Mile Avg $0 $100 $200 $300 $400 $500 $600 $700 Operating Expense per Revenue Hour Operating Expense per Revenue Hour Avg $0 $1 $2 $3 $4 Operating Expense per Passenger Mile Operating Expense per Passenger Mile Avg $0 $5 $10 $15 $20 $25 Operating Expense per Unlinked Passenger Trip Operating Expense per Unlinked Passenger Trip Avg 0 1 2 3 4 5 Unlinked Trips per Vehicle Revenue Mile Unlinked Trips per Vehicle Revenue Mile Avg 0 10 20 30 40 50 60 70 Unlinked Trips per Vehicle Revenue Hour Unlinked Trips per Vehicle Revenue Hour Avg 107 130 Compliance U TA H T R A N S I T AU T H O R I T Y SM For Fiscal Year Ended December 31, 2021 108 131 Crowe LLP Independent Member Crowe Global (Continued) INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Board of Trustees Utah Transit Authority Salt Lake City, Utah We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the business-type activities and the fiduciary activities of Utah Transit Authority (the Authority), a component unit of the State of Utah, as of and for the year ended December 31, 2021, and the related notes to the financial statements, which collectively comprise the Authority’s basic financial statements, and have issued our report thereon dated June 17, 2022. Report on Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the Authority’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Authority’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Authority’s internal control. Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. However, as described in the accompanying schedule of findings and questioned costs, we identified certain deficiencies in internal control that we consider to be material weaknesses and significant deficiencies. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. We consider the deficiency described in the accompanying schedule of findings and questioned costs as 2021-001 to be a material weakness. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. We consider the deficiencies described in the accompanying schedule of findings and questioned costs as 2021-002 and 2021-003 to be significant deficiencies. 109 132 Report on Compliance and Other Matters As part of obtaining reasonable assurance about whether the Authority’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. The Authority’s Response to Findings Government Auditing Standards requires the auditor to perform limited procedures on the Authority’s response to the findings identified in our audit and described in the accompanying schedule of findings and questioned costs. The Authority’s response was not subjected to the other auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on the response. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Crowe LLP Indianapolis, Indiana June 17, 2022 110 133 Crowe LLP Independent Member Crowe Global (Continued) INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM; REPORT ON INTERNAL CONTROL OVER COMPLIANCE Board of Trustees Utah Transit Authority Salt Lake City, Utah Report on Compliance for Each Major Federal Program Opinion on Each Major Federal Program We have audited Utah Transit Authority’s (the Authority), a component unit of the State of Utah, compliance with the types of compliance requirements identified as subject to audit in the OMB Compliance Supplement that could have a direct and material effect on each of the Authority’s major federal programs for the year ended December 31, 2021. The Authority’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs. In our opinion, the Authority complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended December 31, 2021. Basis for Opinion on Each Major Federal Program We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America (GAAS); the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States (Government Auditing Standards); and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Our responsibilities under those standards and the Uniform Guidance are further described in the Auditor’s Responsibilities for the Audit of Compliance section of our report. We are required to be independent of the Authority and to meet our other ethical responsibilities, in accordance with relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on compliance for each major federal program. Our audit does not provide a legal determination of the Authority’s compliance with the compliance requirements referred to above. Responsibilities of Management for Compliance Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules and provisions of contracts or grant agreements applicable to the Authority’s federal programs. 111 134 (Continued) Auditor’s Responsibilities for the Audit of Compliance Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on the Authority’s compliance based on our audit. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS, Government Auditing Standards, and the Uniform Guidance will always detect material noncompliance when it exists. The risk of not detecting material noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Noncompliance with the compliance requirements referred to above is considered material, if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about the Authority’s compliance with the requirements of each major federal program as a whole. In performing an audit in accordance with GAAS, Government Auditing Standards, and the Uniform Guidance, we  exercise professional judgment and maintain professional skepticism throughout the audit.  identify and assess the risks of material noncompliance, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the Authority’s compliance with the compliance requirements referred to above and performing such other procedures as we considered necessary in the circumstances.  obtain an understanding of the Authority’s internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in the circumstances and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of the Authority’s internal control over compliance. Accordingly, no such opinion is expressed. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance that we identified during the audit. Report on Internal Control Over Compliance Our consideration of internal control over compliance was for the limited purpose described in the Auditor’s Responsibilities for the Audit of Compliance section above and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies in internal control over compliance and therefore, material weaknesses or significant deficiencies may exist that were not identified. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, as discussed below, we did identify a certain deficiency in internal control over compliance that we consider to be a significant deficiency. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. We consider the deficiency in internal control over compliance described in the accompanying schedule of findings and questioned costs as item 2021-004, to be a significant deficiency. 112 135 Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, no such opinion is expressed. Government Auditing Standards requires the auditor to perform limited procedures on the Authority’s response to the internal control over compliance findings identified in our audit described in the accompanying schedule of findings and questioned costs. The Authority’s response was not subjected to the other auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response. The Authority is responsible for preparing a corrective action plan to address each audit finding included in our auditor's report. The Authority's corrective action plan was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on it. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance We have audited the financial statements of the business-type activities and the fiduciary activities of the Authority as of and for the year ended December 31, 2021, and the related notes to the financial statements, which collectively comprise the Authority’s basic financial statements. We issued our report thereon dated June 17, 2022, which contained unmodified opinions on those financial statements. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the basic financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by the Uniform Guidance and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditures of federal awards is fairly stated in all material respects in relation to the basic financial statements as a whole. Crowe LLP Indianapolis, Indiana June 17, 2022 113 136 UTAH TRANSIT AUTHORITY Schedule of Expenditures of Federal Awards For the year ended December 31, 2021 Federal Grantor/Pass-Through Grantor/Program or Cluster Title Federal ALN Number Grant Number Pass-Through Entity Identifying Number Passed Through to Subrecipients Total Federal Expenditures U.S. DEPARTMENT OF TRANSPORTATION Federal Transit Cluster - Federal Transit Administration Programs Federal Transit - Capital Investment Grants 20.500 UT-2021-021 -$ 22,836,345$ Federal Transit - Capital investment Grants 20.500 UT-2021-014-02 - 3,950,001 - 26,786,346 Federal Transit - Formula Grant 20.507 UT-2018-005-00 - 931,654 Federal Transit - Formula Grant 20.507 UT-2020-004-01 - 6,778,670 COVID-19 Grant (CARES) - Formula Grant 20.507 UT-2020-007-00 - 90,268,322 COVID-19 Grant (CRRSAA) - Formula Grant 20.507 UT-2021-019-00 - 33,584,103 FHWA Transfer to 5307 Ubanized Area Formula Grant 20.507 UT-2020-010 - 858,201 - 132,420,950 Bus and Bus Facilities Formula Program 20.526 UT-2018-010-00 - 8,948,790 Bus and Bus Facilities Discretionary Program 20.526 UT-2018-011-00 - 6,120,301 - 15,069,091 Federal Transit Cluster - Federal Transit Administration Programs total - 174,276,387 Transit Services Programs Cluster - Federal Transit Administration Programs Federal Transit - Enahanced Mobility for Seniors and 20.513 UT-16-X006 - 4,749 Federal Transit - Enahanced Mobility for Seniors and Individuals with Disabilities 20.513 UT-2016-013 13,078 40,059 Federal Transit - Enahanced Mobility for Seniors and Individuals with Disabilities 20.513 UT-2017-015 9,692 87,812 Federal Transit - Enahanced Mobility for Seniors and Individuals with Disabilities 20.513 UT-2017-016 48,793 147,163 Federal Transit - Enahanced Mobility for Seniors and Individuals with Disabilities 20.513 UT-2017-017 148,204 295,319 Federal Transit - Enahanced Mobility for Seniors and Individuals with Disabilities 20.513 UT-2019-001 85,674 147,255 Federal Transit - Enahanced Mobility for Seniors and Individuals with Disabilities 20.513 UT-2019-002 86,704 148,050 Federal Transit - Enahanced Mobility for Seniors and Individuals with Disabilities 20.513 UT-2019-003 - 78,286 Federal Transit - Enahanced Mobility for Seniors and Individuals with Disabilities 20.513 UT-2021-005 - 194,165 Federal Transit - Enahanced Mobility for Seniors and Individuals with Disabilities 20.513 UT-2021-007 - 23,391 Federal Transit - Enahanced Mobility Pilot Program 20.513 UT-2020-003 - 233,170 Federal Transit - Suicide Prevention Research and Demonstration Project 20.513 UT-2021-004 - 152,363 Federal Transit - Enahanced Mobility for Seniors and Individuals with Disabilities 20.513 UT-2021-006 - 27,026 Transit Services Programs Cluster - Federal Transit Administration Programs 392,145 1,578,808 Federal Transit Administration Programs total 392,145 175,855,195 114 137 UTAH TRANSIT AUTHORITY Schedule of Expenditures of Federal Awards For the year ended December 31, 2021 Federal Grantor/Pass-Through Grantor/Program or Cluster Title Federal ALN Number Grant Number Pass-Through Entity Identifying Number Passed Through to Subrecipients Total Federal Expenditures National Infrastructure Investment - Federal Transit Administration Programs Federal Transit Administration - National Infrastructure 20.933 UT-2018-002 Investment (TIGER)-$ 3,624,166$ National Infrastructure Investment - Federal Transit Administration Programs total - 3,624,166 TOTAL U.S. DEPARTMENT OF TRANSPORTATION 392,145 179,479,361 DEPARTMENT OF HOMELAND SECURITY FEMA Rail and Transit Security Grant Program 97.075 17-RA-00042 - 10,100 FEMA Rail and Transit Security Grant Program 97.075 19-RA-00040 - 22,856 TOTAL DEPARTMENT OF HOMELAND SECURITY - 32,956 TOTAL FEDERAL AWARDS EXPENDED 392,145$ 179,512,318$ RECONCILIATION OF FEDERAL EXPENDITURES TO FEDERAL REVENUES ON THE STATEMENT OF REVENUES, EXPENSES, AND CHANGE IN NET POSITION Federal Preventative Maintenance grants 130,631,095$ Capital Contributions: Federal grants 48,642,468 Total per Statement of Revenues, Expenses and Change in Net Position (2021)179,273,563 Total per Schedule of Expenditures of Federal Awards for the year ending December 31, 2021 179,512,318 Difference 238,755 Previous Over/(Under)stated Revenues reflected in 2020 Statement of Revenues, Expenses and Change in Net Position Transit Services Program Cluster ALN Grant # Amount Enhanced Mobility for Seniors and Individuals with Disabilities 20.513 UT-2016-013 40,059 Enhanced Mobility for Seniors and Individuals with Disabilities 20.513 UT-2017-015 2 Enhanced Mobility for Seniors and Individuals with Disabilities 20.513 UT-2017-017 74,195 Enhanced Mobility for Seniors and Individuals with Disabilities 20.513 UT-2020-003 124,461 238,717 National Infrastructure Investment – Office of the Secretary Programs ALN Grant # Amount Office of Secretary – National Infrastructure Investment (TIGER) 20.933 UT-2018-002 38 38 Total Adjustment 238,755$ 115 138 UTAH TRANSIT AUTHORITY NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Year Ended December 31, 2021 A. Basis of Accounting The information in this schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the Authority, it is not intended to and does not present the financial position, changes in net position or cash flows of the Authority. Expenditures are recognized on the accrual basis of accounting, following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. B. Pass-Through Awards The Authority receives certain expenditures of federal awards, which is passed through to sub-recipients. The total amount of such pass-through awards is included in the schedule of expenditures of federal awards. C. Non-Cash Federal Assistance No non-cash federal assistance was received during the year ended December 31, 2021. D. Indirect Cost Rate The Authority did not use the 10 percent de minimis indirect cost rate. 116 139 UTAH TRANSIT AUTHORITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS Year ended December 31, 2021 (Continued) SECTION I – SUMMARY OF AUDITOR’S RESULTS Financial Statements Type of report the auditor issued on whether the financial statements audited were prepared in accordance with GAAP: Unmodified Internal control over financial reporting: Material weakness(es) identified? X Yes No Significant deficiency(ies) identified? X Yes None reported Noncompliance material to financial statements noted? Yes X No Federal Awards Internal control over major federal programs: Material weakness(es) identified? Yes X No Significant deficiencies identified not considered to be material weaknesses? X Yes None reported Type of auditor’s report issued on compliance for major federal programs: Unmodified Any audit findings disclosed that are required to be reported in accordance with 2 CFR 200.516(a)? Yes X No Identification of major federal programs: Assistance Listing Number(s) Program/Cluster Title 20,500, 20.507, 20.526 Federal Transit Cluster 20.933 National Infrastructure Investments Dollar threshold used to distinguish between type A and type B programs: $3,000,000 Auditee qualified as low-risk auditee? Yes X No 117 140 UTAH TRANSIT AUTHORITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS Year ended December 31, 2021 (Continued) SECTION II – FINDINGS RELATING TO THE FINANCIAL STATEMENTS, WHICH ARE REQUIRED TO BE REPORTED IN ACCORDANCE WITH GAGAS Finding 2021-001 – Information Technology Controls over Change Management (Material Weakness) Criteria: Internal controls over information systems are a key component of an organization’s control environment. Entities should have internal controls including policies and procedures requiring appropriate segregation of duties for key process cycles. Where adequate segregation of duties cannot be employed via system access restrictions, detective and monitoring review controls should be established that adequately mitigate such risks. Condition/Context: Segregation of duties does not exist between individuals with access to the general ledger source code and individuals responsible for implementing changes to the source code into the production environment. Effect: Unauthorized or uncontrolled changes to general ledger software could be made to the application source code, which could impact system availability, data integrity, and information confidentiality. Cause: Individuals with application development access have the ability to modify source code and deploy the changes into production. The Authority has a policy that source code changes are required to be reviewed by a second individual, however there are no system limitations or other restrictions to prevent unapproved changes from being placed into production. Furthermore, effective compensating controls are not in place to monitor and review source code changes that may have circumvented the policy requirement. Identification as a Repeat Finding: This finding was reported in the immediately prior audit as Finding 2020- 001. Recommendation: We recommend that the Authority modify its policies and procedures to ensure that source code changes are initiated with appropriate authorization and management oversight and approval is obtained prior to implementing the changes into the production environment. If access to development and production cannot be restricted, a compensating monitoring control should be implemented wherein an independent individual reviews source code changes for propriety. Management’s Response: Technology Management installed and configured privileged access management (PAM) solution for its ERP system in late December 2021. The PAM solution would provide the necessary detective and monitoring review controls to satisfy the audit finding. Staff who need access to the production environment for support and application upgrades are required to make an access request, first through the Technology Change Control Board (TCCB) and then through the PAM solution. The PAM system will issue temporary credentials and maintain logs that track all developer activities during the session. Staff is currently working on how documentation and approval will work in the new software. After reviewing the process with Crowe LLP staff in April 2022, UTA will implement the necessary changes and responsibilities in Technology Management by August 2022. Log activity and session recordings from the PAM system for ERP are reviewed and will be independent of development staff and supervision anytime developers must access the production environment. Detailed documentation of the specific work performed is part of the existing change control process. 118 141 UTAH TRANSIT AUTHORITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS Year ended December 31, 2021 (Continued) Finding 2021-002 – Financial Reporting Controls over Pension Trust (Significant Deficiency) Criteria: Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, including the design, implementation, and maintenance of internal controls. Condition/Context: The following conditions were identified in our testing of the pension trust: 1. General journal entries to the trust financial statements are not formally reviewed and approved. 2. Reconciliations of trust balances and activity are not formally reviewed and approved. Effect: The lack of a formal policy for review of journal entries and reconciliations could result in misstatement of the trust financial statements due to error or fraud as unauthorized or inaccurate transactions could go undetected. Cause: The Authority does not have a policy requiring the review and approval of pension trust journal entries or reconciliation of pension trust activity reported in the financial statements to the underlying records and source data. Identification as a Repeat Finding: This finding was reported in the immediately prior audit as Finding 2020- 003. Recommendation: We recommend the Authority’s management increase oversight of all third-parties involved in the administration of the pension trust by designing and implementing controls over the reconciliation of pension trust activity reported in the financial statements. Specifically, management should ensure that transactions and balances, including investment activity, contributions, benefit payments, and other general journal entries reported in the trust financial statements reconcile to the underlying detail maintained by the Authority, the custodian, and any other Third Party Administrators. Management’s Response: Management agrees with the finding. The Chief Financial Officer and Chief People Officer will continue to lead development of an agency strategy to provide coordinated oversight of pension administration including all existing contractors. This will include addressing the following areas of concern:  Monitoring journal entries performed by the pension accounting firm in the pension accounting system and trial balance  Reviewing financial statements integrated into the yearly financials of the Authority for completeness and accurate actuarial information  Serving at a repository for investment statements and audited financial statements  Reviewing pension benefit calculations  Insuring retention of documentation on employee retirement choices  Follow-up on monthly payments of taxes and annual tax reporting to the various states and the federal government  Implementing regulatory and compliance changes with the various pension contracts to ensure ongoing compliance Given the breath and scope of this review, the recommendations by the Chief Officers will be presented at the fall 2022 pension committee meeting and finalized at the last pension committee meeting of 2022. 119 142 UTAH TRANSIT AUTHORITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS Year ended December 31, 2021 (Continued) Finding 2021-003 – Accounting for Capital Assets (Significant Deficiency) Criteria: Accounting processes and systems should be in place to accurately track capital asset balances and activities, including the cost basis, accumulated depreciation, current period depreciation, and net book value for each asset. Condition/Context: In 2020, management reassessed the useful lives of certain capital assets outside of the general ledger system and began using a manual spreadsheet to track accumulated depreciation and current period depreciation expense. During our testing of management’s spreadsheet in the current year audit, we identified several formula errors resulting in an overstatement of 2021 depreciation expense of approximately $3.2 million. In addition, in 2021 management changed the initial start date of the new useful lives, and as a result, the 2020 depreciation expense was overstated by approximately $5.1 million, which caused 2021 depreciation expense to be understated by the same amount. Effect: Use of a manual schedule reduces the effectiveness of the controls the system has in place, increasing risk of misstatement to the financial statements. Cause: The capital assets module of the accounting system does not track these specific capital assets using their appropriate reassessed useful lives, requiring management to use a manual spreadsheet to recalculate the appropriate depreciation expense in the financial statements. Identification as a Repeat Finding: This finding was reported in the immediately prior audit as Finding 2020- 004. Recommendation: We recommend that the Authority work with their software company (Oracle/JD Edwards) to adjust the useful lives of capital assets within the system to reflect the appropriate depreciation and remaining useful lives so the system calculations can be relied on for future financial reporting, rather than a manual spreadsheet. The Authority has also received several findings in a recent Federal Transit Administration Financial Management Oversight report citing additional deficiencies in internal control policies and procedures regarding capital assets that should be considered in additional to this finding. Management’s Response: Management understands the recommendation, but as a Federal Grantee, the Authority is trying to keep its FTA mandated Transit Asset Management Plan and financial system referencing a common depreciation schedule. Prior Authority management were aggressive (understated the useful life) in their depreciation methods for revenue vehicles and were not consistent with asset depreciation as document in the FTA approved Transit Asset Management Plan. Keeping Oracle/JD Edwards at the retrospective calculation for revenue vehicle depreciation for federal reporting purposes is in the best interest of the Authority for Federal Transit Administration compliance. The Authority is aware of the miscalculation in the referenced 2021 excel spreadsheet for revenue vehicles based on the prospective accounting guidance from this finding but feel this issue has been already resolved for 2022 after the auditor’s review in June 2022. An accounting entry will be done as part of the 2022 financial statement to reconcile Oracle/JD Edwards to the correct prospective change in accounting estimate tracked by spreadsheet until the two amounts match in subsequent years. As to the findings in the Federal Transit Administration Financial Management Oversight Report, The Authority’s staff has developed individual plans for each of the four capital asset related findings with the Federal Transit Administration and the corrective actions are currently on-going. These finding will be resolved by December 31, 2022. 120 143 UTAH TRANSIT AUTHORITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS Year ended December 31, 2021 SECTION III – FINDINGS AND QUESTIONED COSTS FOR FEDERAL AWARDS INCLUDING AUDIT FINDINGS AS DEFINED IN Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards Finding 2021-004 – Federal Transit Cluster Cash Management (Significant Deficiency) Criteria: Per 2 CFR section 200.305(b), non-federal entities must minimize the time elapsing between the transfer of funds from the US Treasury or pass-through entity and disbursement by the non-federal entity for direct program or project costs and the proportionate share of allowable indirect costs. Questioned Cost: None identified. Condition/Context: We selected a sample of 60 disbursements to test whether the Authority had disbursed the funds prior to the date of the reimbursement request from the Department of Transportation. For 4 of the disbursement sample selections, management was unable to identify which specific reimbursement request the expenditure was included in and thus we were unable to identify whether the funds were properly disbursed prior to the reimbursement request. Effect: The Authority is not in compliance with the cash management requirements of Uniform Guidance and may not have disbursed the funds prior to the date of the reimbursement request from the Department of Transportation. Cause: Due to turnover in the Authority’s grants management they were unable to identify and provide supporting documentation of the individual expenditures that comprised certain reimbursement requests. Identification as a Repeat Finding: N/A Recommendation: We recommend that the Authority maintain detailed supporting documentation for each reimbursement request that includes a listing of individual allowable expenditures that reimbursement is being requested for. Management’s Response: Management agrees with the finding and has already taken steps in drawdown documentation in 2022 to add more detail to the request for future references. 121 144 Other Supplementary Schedules U TA H T R A N S I T AU T H O R I T Y SM For Fiscal Year Ended December 31, 2021 122 145 Crowe LLP Independent Member Crowe Global (Continued) INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE AND REPORT ON INTERNAL CONTROL OVER COMPLIANCE AS REQUIRED BY THE STATE COMPLIANCE AUDIT GUIDE Board of Trustees Utah Transit Authority Salt Lake City, Utah Report On Compliance Opinion on State Compliance We have audited the Utah Transit Authority’s (the Authority), a component unit of the State of Utah, compliance with the applicable state compliance requirements described in the State Compliance Audit Guide, issued by the Office of the State Auditor, for the year ended December 31, 2021. State compliance requirements were tested for the year ended December 31, 2021 in the following areas:  Budgetary Compliance  Restricted Taxes and Related Revenues  Fraud Risk Assessment  Government Fees In our opinion, the Authority complied, in all material respects, with the compliance requirements referred to above for the year ended December 31, 2021. Basis for Opinion on State Compliance We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America (GAAS); and the audit requirements of the State Compliance Audit Guide, issued by the Office of the State Auditor. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of Compliance section of our report. We are required to be independent of the Authority and to meet our other ethical responsibilities, in accordance with relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on compliance. Our audit does not provide a legal determination of the Authority’s compliance with the compliance requirements referred to above. Responsibilities of Management for Compliance Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules and provisions of contracts or grant agreements applicable to the Authority’s state programs. 123 146 (Continued) Auditor’s Responsibilities for the Audit of Compliance Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on the Authority’s compliance based on our audit. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and the State Compliance Audit Guide will always detect material noncompliance when it exists. The risk of not detecting material noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Noncompliance with the compliance requirements referred to above is considered material, if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about the Authority’s compliance with the requirements as a whole. In performing an audit in accordance with GAAS and the State Compliance Audit Guide, we  exercise professional judgment and maintain professional skepticism throughout the audit.  identify and assess the risks of material noncompliance, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the Authority’s compliance with the compliance requirements referred to above and performing such other procedures as we considered necessary in the circumstances.  obtain an understanding of the Authority’s internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in the circumstances and to test and report on internal control over compliance in accordance with the State Compliance Audit Guide, but not for the purpose of expressing an opinion on the effectiveness of the Authority’s internal control over compliance. Accordingly, no such opinion is expressed. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance that we identified during the audit. Report on Internal Control over Compliance A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the Auditor’s Responsibilities for the Audit of Compliance section above and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies in internal control over compliance. Given these limitations, during our audit we did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. However, material weaknesses or significant deficiencies in internal control over compliance may exist that were not identified. Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, no such opinion is expressed. 124 147 The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the State Compliance Audit Guide. Accordingly, this report is not suitable for any other purpose. Crowe LLP Indianapolis, Indiana June 17, 2022 125 148 UTAH TRANSIT AUTHORITY Independent Accountant’s Report On Applying Agreed-Upon Procedures Year Ended December 31, 2021 149 Crowe LLP Independent Member Crowe Global 1. INDEPENDENT ACCOUNTANTS’ REPORT ON APPLYING AGREED-UPON PROCEDURES Management Utah Transit Authority Salt Lake City, Utah We have performed the attached procedures on the Federal Funding Allocation Statistics Form FFA-10 (FFA-10), related to the Utah Transit Authority’s (the Authority) compliance with the Federal Transit Administration’s (FTA) Declarations section of the 2021 Policy Manual and the Uniform System of Accounts (USOA) and Records and Reporting System; Final Rule, as specified in 49 CFR Part 630, Federal Register, January 15, 1993, as of December 31, 2021. The Authority is responsible for its compliance with those requirements. The Authority has agreed to and acknowledged that the procedures performed are appropriate to meet the intended purpose of assisting users in understanding compliance with the above specified requirements. Additionally, FTA has agreed to and acknowledged that the procedures are appropriate to meet their purposes. We make no representation regarding the appropriateness of the procedures either for the purpose for which this report has been requested or for any other purpose. This report may not be suitable for any other purpose. The procedures performed may not address all the items of interest to a user of this report and may not meet the needs of all users of this report and, as such, users are responsible for determining whether the procedures performed are appropriate for their purposes. An agreed-upon procedures engagement involves performing specific procedures and reporting on findings based on the procedures performed. The procedures and the associated findings are in Attachment A. We were engaged by the Authority to perform this agreed-upon procedures engagement and conducted our engagement in accordance with attestation standards established by the American Institute of Certified Public Accountants. We were not engaged to and did not conduct an examination or review engagement, the objective of which would be the expression of an opinion or conclusion, respectively, compliance with the specified requirements. Accordingly, we do not express such an opinion or conclusion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. We are required to be independent of the Authority and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements related to our agreed-upon procedures engagement. This report is intended solely for the information and use of the Authority and FTA and is not intended to be, and should not be, used by anyone other than these specified parties. Crowe LLP Indianapolis, Indiana June 10, 2022 150 (Continued) 2. Attachment A The procedures below were applied separately to each of the information systems used to develop the reported actual vehicle revenue miles (VRM), fixed guideway (FG), directional route miles (DRM), passenger miles traveled (PMT), and operating expenses (OE) of the Authority for the year ending December 31, 2021 for each of the following modes:  Motor Bus – Directly Operated (MBDO)  Commuter Bus – Directly Operated (CBDO)  Commuter Rail – Directly Operated (CRDO)  Light Rail – Directly Operated (LRDO)  Demand Response – Directly Operated (DRDO)  Demand Response – Purchased Transportation (DRPT)  Motor Bus – Purchased Transportation (MBPT)  Vanpool – Directly Operated (VPDO) a. Obtain and read a copy of written system procedures for reporting and maintaining data in accordance with NTD requirements and definitions set forth in 49 CFR Part 630, Federal Register, dated January 15, 1993, and as presented in the 2021 Policy Manual. If there are no procedures available, discuss the procedures with the personnel assigned responsibility for supervising the NTD data preparation and maintenance. Procedure performed without exception. b. Discuss the procedures (written or informal) with the personnel assigned responsibility of supervising the preparation and maintenance of NTD data over:  The extent to which the transit agency followed the procedures on a continuous basis; and  Whether these transit personnel believe such procedures result in accumulation and reporting of data consistent with NTD definitions and requirements set forth in 49 CFR Part 630, Federal Register, dated January 15, 1993, and as presented in the 2021 Policy Manual. Procedure performed without exception. c. Ask these same personnel about the retention policy that the transit agency follows as to source documents supporting NTD data reported on the Federal Funding Allocation Statistics form. Per inquiry with the Authority NTD Staff (“Staff”), NTD source documentation is retained for a minimum of 3 years per the FTA requirements and is stored on local drives for longer. Procedure performed without exception. d. Based on a description of the transit agency’s procedures from items (A) and (B) above, identify all the source documents that the transit agency must retain for a minimum of three years. For each type of source document, haphazardly select three months out of the year and observe whether the document exists for each of these periods. We selected a haphazard sample of 24 total source documents across all modes from March, May, and September of 2018, 2019, and 2020. We observed that the source documents were maintained for each year as required. Procedure performed without exception. e. Discuss the system of internal controls by inquiring whether separate individuals (independent of the individuals preparing source documents and posting data summaries) obtain the source documents and data summaries for completeness, accuracy, and reasonableness and how often these individuals perform such reviews in order to perform procedure f. 151 (Continued) 3. Per inquiry with Staff, the Operations, Analysis & Solutions department created and adopted a system of controls in 2021 which includes formal documented preparation, review, and approval of source documents on a monthly, quarterly, and annual depending on the type of data each form requires. Procedure performed without exception. f. Select a random sample of 3 source documents for each mode and observe whether supervisors’ signatures are present. If supervisors’ signatures are not required, inquire how personnel document supervisors’ reviews. We selected a haphazard sample of 24 total source documents across all modes. We observed supervisors’ signatures on all modes and months except March 2021 for DRDO, DRPT, and MBPT and all months for VPDO. Per inquiry with Staff, annual data for all modes is approved on a monthly disaggregated level. g. Obtain the worksheets used to prepare the final data that the transit agency transcribes onto the Federal Funding Allocation Statistics form. Compare the periodic data included on the worksheets to the periodic summaries prepared by the transit agency. Recalculate the arithmetical accuracy of the summaries. Procedure performed without exception. h. Observe the procedure for accumulating and recording passenger miles traveled (PMT) data and inquire whether the procedure is one of the methods specifically approved in the 2021 Policy Manual. Per inquiry with Staff, the sampling method is in accordance with NTD requirements. i. Inquire with transit agency staff the transit agency’s eligibility to conduct statistical sampling for PMT data every third year. Observe whether the transit agency meets NTD criteria that allow transit agencies to conduct statistical samples for accumulating PMT data every third year rather than annually by specifically observing the following:  According to the 2010 Census, the public transit agency serves an UZA with a population less than 500,000.  The public transit agency directly operates fewer than 100 revenue vehicles in all modes in annual maximum revenue service (VOMS) (in any size UZA).  Service purchased from a seller is included in the transit agency’s NTD report.  For transit agencies that meet one of the above criteria, observe the NTD documentation for the most recent mandatory sampling year (2017) and observe that statistical sampling was conducted and meets the 95 percent confidence and ± 10 percent precision requirements.  Inquire how the transit agency estimated annual PMT for the current report year. Per inquiry with Staff, the Authority is not eligible to conduct statistical sampling for PMT data every third year. j Obtain a description of the sampling procedure for estimation of PMT data used by the transit agency. Obtain a copy of the transit agency’s working papers or methodology used to select the actual sample of runs for recording PMT data. If the transit agency used average trip length, observe that the universe of runs was the sampling frame. Observe that the methodology used to select specific runs from the universe resulted in a random selection of runs. If the transit agency missed a selected sample run, observe that a replacement sample run was random. Observe that the transit agency followed the stated sampling procedure. We obtained the sampling procedure and methodology for PMT data noting Automatic Passenger Counters (APC) are utilized for a 100% count of PMT for the Commuter Rail, Light Rail, Commuter Bus and MBPT modes. The MBDO mode uses a modified PMT measurement method that utilizes APC data to estimate PMT. 100% of PMT are counted for the Demand Response and Vanpool modes. Procedure performed without exception. 152 (Continued) 4. k. Select a random sample of three source documents for each mode for accumulating PMT data and determine that the data are complete by comparing the data in the accumulation periods to the total (all required data are recorded) and that the computations are accurate by recalculating. Select a random sample of three accumulation periods for each mode and re-compute the accumulations for each of the selected periods. Recalculate the arithmetical accuracy of the summary. We selected a haphazard sample of 24 total source documents from March 2021, May 2021, and September 2021 for each mode and recalculated PMT. Procedure performed without exception, except for modes and accumulation periods listed below. For MBDO, PMT data in the summary was higher/(lower) than our recalculation for the 3 selected months by 145,520, 55,954, and (3), respectively, totaling 201,471. For CBDO, PMT data in the summary was 13,853 higher than our recalculation for March 2021. For LRDO, PMT data in the summary was higher/(lower) than our recalculation for the 3 selected months by 247, 228, and 612, respectively, totaling 1,087. l. Inquire with management regarding the procedures for systematic exclusion of charter, school bus, and other ineligible vehicle miles from the calculation of actual vehicle revenue miles with transit agency staff and determine that they follow the stated procedures by selecting a random sample of three source documents for each mode used to record charter and school bus mileage and recalculate the arithmetical accuracy of the computations. Per inquiry with Staff, the Authority does not operate charter, school bus, or other ineligible vehicles. As such, the procedure was not performed. m. For actual vehicle revenue mile (VRM) data, observe the collection and recording methodology and determine that deadhead miles are systematically excluded from the computation. This is accomplished as follows:  If actual VRMs are calculated from schedules, observe the procedures used to subtract missed trips. Select a random sample of three days that service is operated, and re-compute the daily total of missed trips and missed VRMs. Recalculate the arithmetical accuracy of the summary.  If actual VRMs are calculated from hubodometers, observe the procedures used to calculate and subtract deadhead mileage. Select a random sample of three hubodometer readings and observe that the stated procedures for hubodometer deadhead mileage adjustments are applied as prescribed. Recalculate the arithmetical accuracy of the summary of intermediate accumulations.  If actual VRMs are calculated from vehicle logs, select a random samples of three vehicle logs for each mode and observe that the deadhead mileage has been correctly computed in accordance with FTA definitions. Per inquiry with Staff, with the exception of DRDO, DRPT, and VPDO, actual vehicle revenue miles are computed by subtracting deadhead mileage and missed trips from the scheduled trips. For DRDO and DRPT, actual vehicle revenue miles are calculated by subtracting the deadhead mileage from the miles on hubodometer readings. For VPDO, actual VRMs are calculated from vehicle logs and there are no deadhead miles since it is a non-dedicated service. Procedure performed without exception. n. For rail modes, observe the recording and accumulation sheets for actual VRMs and observe that locomotive miles are not included in the computation. Procedure performed without exception. 153 (Continued) 5. o. If fixed guideway or High Intensity Bus directional route miles (FG or HIB DRM) are reported, inquire of the person responsible for maintaining and reporting the NTD data whether the operations meet FTA definition of fixed guideway (FG) or High Intensity Bus (HIB) in that the service is:  Rail, Trolleybus (TB), Ferryboat (FB), or Aerial Tramway (TR); or  Bus (MB, CB, or RB) service operating over exclusive or controlled access rights-of-way (ROW); and i. Access is restricted; ii. Legitimate need for restricted access is demonstrated by peak period level of service D or worse on a parallel adjacent highway; and iii. Restricted access is enforced for freeways; priority lanes used by other high occupancy vehicles (HOV) (i.e., Vanpools (VP), carpools) must demonstrate safe operation. Per inquiry with Staff, the modes reporting FG and HIB DRM meet the FTA definitions as listed above. Procedure performed without exception. p. Observe the measurement of FG and HIB DRM with the person reporting NTD data and inquire if he or she computed mileage in accordance with FTA definitions of FG/HIB and DRM. Inquire of any service changes during the year that resulted in an increase or decrease in DRMs. If a service change resulted in a change in overall DRMs, re-compute the average monthly DRMs, and compare the total to the FG/HIB DRM reported on the Federal Funding Allocation Statistics form. Per inquiry with Staff, the computation of FG and HIB DRM is in accordance with FTA definitions. Additionally, no service changes resulted in an increase or decrease in DRMs. q. Inquire if any temporary interruptions in transit service occurred during the report year. If these interruptions were due to maintenance or rehabilitation improvements to a FG segment(s), the following apply to management:  Report DRMs for the segment(s) for the entire report year if the interruption is less than 12 months in duration. Report the months of operation on the FG/HIB segments form as 12. The transit agency should document the interruption.  If the improvements cause a service interruption on the FG/HIB DRMs lasting more than 12 months, the transit agency should contact its NTD validation analyst to discuss. FTA will make a determination on how to report the DRMs. Procedure performed without exception. r. Recalculate FG/HIB DRM from maps or by retracing route. Procedure performed without exception. s. Inquire whether other public transit agencies operate service over the same FG/HIB as the transit agency. If yes, observe that the transit agency coordinated with the other transit agency (or agencies) such that the DRMs for the segment of FG/HIB are reported only once to the NTD on the Federal Funding Allocation form. (Note: Each transit agency should report the actual VRM, PMT, and OE for the service operated over the same FG/HIB.) Per inquiry with Staff, the Authority operates modes of service over the same FG/HIB as other transit agencies. UTA is the approved operator for all their FG and UTA is reporting their actual VRM, PMT, and OE for their services. Procedure performed without exception. 154 (Continued) 6. t. Obtain the FG/HIB segments form. Inquire regarding the Agency Revenue Service Start Date for any segments added in the 2021 report year with the persons reporting NTD data. This is the commencement date of revenue service for each FG/HIB segment. Observe that the date reported is the date that the agency began revenue service. This may be later than the Original Date of Revenue Service if the transit agency is not the original operator. (Note: If a segment was added for the 2021 report year, the Agency Revenue Service Date must occur within the transit agency’s 2021 fiscal year. Segments are grouped by like characteristics. Note that for apportionment purposes, under the State of Good Repair (§5337) and Bus and Bus Facilities (§5339) programs, the 7-year age requirement for fixed guideway/High Intensity Busway segments is based on the report year when the segment is first reported by any NTD transit agency. This pertains to segments reported for the first time in the current report year. (Even if a transit agency can document an Agency Revenue Service Start Date prior to the current NTD report year, FTA will only consider segments continuously reported to the NTD.) We obtained the FG/HIB segments form. There were no new segments added during the reporting year 2021. u. Compare operating expenses in the FFA-10 with audited financial data after reconciling items are removed. Procedure performed without exception. v. If the transit agency purchases transportation services, inquire with the personnel reporting the NTD data regarding the amount of PT generated fare revenues. Observe the PT fare revenues equal the amount reported on the Contractual Relationship form. Procedure performed without exception. w. If the transit agency’s report contains data for purchased transportation services and the procedures in this report were not applied to the purchased transportation services, obtain a copy of the IAS-FFA regarding data for the purchased transportation service. Note as a negative finding if the purchased transportation services were not included in this report, and the transit agency also does not have a separate Independent Accountant’s Statement for the purchased transportation data. Procedures in this report were applied to the Authority’s PT modes, therefore this procedure is not applicable. x. If the transit agency purchases transportation services, obtain a copy of the PT contract and observe that the contract specifies the public transportation services to be provided; the monetary consideration obligated by the transit agency or governmental unit contracting for the service; the period covered by the contract (and that this period overlaps the entire, or a portion of, the period covered by the transit agency’s NTD report); and is signed by representatives of both parties to the contract. Inquire of the person responsible for retention of the executed contract whether copies of the contracts are retained for three years. Procedure performed without exception. y. If the transit agency provides service in more than one UZA, or between an UZA and a non-UZA, inquire of the procedures for allocation of statistics between UZAs and non-UZAs. Obtain and observe the FG segment worksheets, route maps, and urbanized area boundaries used for allocating the statistics, and observe that the stated procedure is followed and that the computations are correct through recalculation. The Authority provides services in three UZAs and one non-UZA. Per inquiry with Staff, the Authority uses ArcGIS mapping to allocate statistics based on route mileage. Procedure performed without exception. 155 7. z. Compare the data reported on the Federal Funding Allocation Statistics Form to data from the prior report year and calculate the percentage change from the prior year to the current year. For actual VRM, PMT or OE data that have increased or decreased by more than 10 percent, or FG DRM data that have increased or decreased. Inquire of transit agency management regarding the specifics of operations that led to the increases or decreases in the data relative to the prior reporting period. Procedure performed without exception. 156