Almanac

News - November 3, 2010

Roller-coaster week for California high-speed rail

by Gennady Sheyner

The California High-Speed Rail Authority received some good news at the beginning of last week, when the Federal Railroad Administration awarded the agency another $715 million in funding, bringing the agency total secured funding up to $4.3 billion.

The money would be used primarily for building high-speed rail in the Central Valley, even though the rail authority has yet to formally decide which segment of the San Francisco-to-Los Angeles line would be the first to be constructed.

Curt Pringle, chair of the authority's board of directors, said the funding "has once again invigorated the project and will be a huge boost to the state's economy."

By the end of the week, however, followers of the rail project had a new reason to be concerned about the money. A new audit from state Inspector General Laura Chick concluded that the authority is "not fully prepared to distribute and monitor (American Recovery and Reinvestment Act) funds."

The audit found that the authority has some notable deficiencies when it comes to money management. The audit reviewed 11 invoices totaling $8.94 million and found that $3.4 million in expenditures were "without adequate supporting documents."

Auditors also found that over a four-month period, the authority paid $72,000 to public-outreach consultants "without any back-up documentation." During this same period, the authority dished out more than $1 million to Ogilvy Public Relations, its primary communications consultant.

Ms. Chick indicated in a letter to Gov. Arnold Schwarzenegger that the authority is getting better at tracking its expenditures and that its new contract manager has renegotiated several contracts, potentially saving the taxpayers $2.6 million. "Just think how much money could be saved if all state contracts were negotiated in this way from the get go!" she wrote.

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