Special Board Meeting February 25, 2011

1. Special Board Meeting • February 25, 2011

2. No Widespread Corruption • “I am pleased to report to the Metra Board and to the citizens of Illinois that we found no evidence of widespread or institutionalized fraud, waste or abuse in the Metra organization.” • Hillard Heintze, 2011 2

3. Board of Directors Timeline 3

4. Board Takes Swift Action • Financial Practices & Reporting Review Committee • Executive Committee • May 2010 • Engaged Hillard Heintze • Interim Office of Inspector General (OIG) • Blackman Kallick • Risk Assessment • Internal Controls Evaluation 4

5. Board Takes Swift Action • Ordinance NO. MET 10-4 • Metra OIG • Ordinance NO. MET 10-07 • Established Executive Committee • Ordinance NO. MET 10-14 • Non-Contract Employee Handbook Employment Conditions • Ordinance NO. MET 10-15 • Special Contributions to 401(k) Plan 5

6. Board Takes Swift Action • Ordinance NO. MET 10-16 • Nepotism • Ordinance NO. MET 10-17 • Whistle-blower 6

7. Action Plan 7

8. Ethics “I understand that it is my job to expand upon this and to inspire and empower Metra’s employees to come into alignment with this critically important mission. I will push these reforms and others down through the organization. Most importantly, senior management must lead by example.” February 4, 2011 8

9. Ethics • Lead by Example • Reinforce duties of Ethics Compliance Officer compliant with new state statute • Develop ethics training programs • Teach ethics and integrity • Structure office and interactions 9

10. Ethics • Zero tolerance for fraud and abuse • When updated, post Organizational Chart throughout the agency, the website and include in annual Metra Program & Budget document • Metra employees will be reminded of Ethics Ordinance 10

11. It’s a New Day • Passenger Safety & Satisfaction • Fiscal Responsibility • Reform 11

12. Blackman Kallick/Hillard Heintze • Consolidated Findings • Organizational • Process, Hiring & Promotions • Information Technology • Compensation & Benefit • Discipline • Leadership • Metra Police • Strategic Planning • Ethics 12

13. Organizational Issues • Human Relations & Administration • Understanding of management team • Management self-assessment of senior staff within 30 days 13

14. Organizational Issues • Non-Contract Compensation Considerations • Return to Board Compensation Committee in April with 2011 pay-increase recommendations • Fiscal 2012 Initiate Pay for Performance • Subject to availability of funds • Notify non-contract employees of process • Mid-year 2011 reviews • Year-end and start-of-year reviews • HR to develop Pay for Performance alternatives and present to Board Compensation Committee 14

15. Organizational Issues • Compensation Considerations • Human Resources Support - RFP • Comprehensive non-contract classification and compensation study • Job specifications and salary ranges as compared to peer agencies and other transit properties • Compression and hierarchy • Present findings to Board Compensation Committee 15

16. Organizational Issues • Employee Non-Contract Handbook Committee • Review peer agencies and other transit properties’ policies • Update and add to Metra policies, including: • Acting appointments • Take-home cars • Leniency reinstatements • Compensation • Report back to Board Compensation Committee 16

17. Organizational Issues • Revamp Five-Phase Succession Plan • Analyze Workforce (Contract & Non-Contract) • Successor Candidate Identification • Compensation • Recruitment/Retention • Develop internal talent • Add new approaches • Mentoring and functional rotations • Monitor, Evaluate & Revise 17

18. Organizational Issues • Internal Audit • With the assistance of Blackman Kallick, develop annual enterprise risk assessment, internal audit and controls strategy • Assist ED/CEO in other various audits and risk assessments 18

19. Process, Hiring & Promotions • Competitive process in place for all positions • Any direct appointments require concurrence of ED/CEO and Board of Directors • Hiring and promotion policies will be strictly followed 19

20. Process, Hiring & Promotions • All applicants will be referred to HR • Effective immediately: • The practice of “exploratory interviews” is terminated. 20

21. Process, Hiring & Promotions • Agency Wide • All non-contract salary and equity increases will only occur if they are part of a Board-approved pay increase, a promotional opportunity or the result of a Board-approved salary equity review. • ED/CEO in conjunction with the CFO will create a well defined budget process for the 2012 budget year and an expanded monthly variance process with root cause analysis. 21

22. Process, Hiring & Promotions • All timekeeping manual entries will be reviewed by managers • Finance and Operations will engage an analysis of the high-overtime groups to determine the appropriate cost-benefit of hiring additional employees versus paying overtime. • Managers and supervisors tasked with reviewing all overtime reports 22

23. Information Technology Issues • “During our evaluation of the current processes, we identified inefficiencies that were directly related to outdated or absent information technology systems and applications.” • Blackman Kallick, 2011 23

24. Information Technology Issues • Numerous systems 25 to 30+ years old • Many key systems still operate on mainframe • Over-reliant on paper-routing processes 24

25. Information Technology Issues • Some do not have disaster recovery • High Priority • Update Needed in Financial Suites • Payroll • Accounts Receivable • Purchase Order • Accounts Payable • General Ledger • Disaster recovery 25

26. Information Technology Issues “…Also, this project will provide funding for Metra to scope and prepare an RFP for replacement of its current financial systems with an adaptable modular system that can later be integrated into an Enterprise Resource Planning (ERP) system that will comply with current financial system ‘Best Practices’.” • 2011 Metra Program & Budget Book 26

27. Information Technology Issues • Kronos • Biometrics installed in remaining engineering large facilities by March 31 • Evaluate timekeeping approach for 547 W. Jackson Blvd., police and smaller engineering facilities 27

28. Compensation & Benefits Issues • Work with HR and Blackman Kallick to provide comprehensive series of recommendations relative to health, pension and cost-avoidance 28

29. Compensation & Benefits Issues • In the FY 2012 budget, enhance health and wellness programs • Recommendations to be presented to Board Compensation Committee 29

30. Compensation & Benefits Issues • Extend Blackman Kallick for Phase III assistance to accomplish the following: • Develop comprehensive annual enterprise risk assessment, internal audit and controls strategy • Develop comprehensive series of recommendations relative to health, pension and cost-avoidance • Complete risk assessment for remainder of organization 30

31. Discipline • “Our investigation confirmed that, in multiple instances, the absence of common policies and protocols for employee conduct and disciplinary actions led to confusion among employees about what consequences would result from specific behaviors.” • Hillard Heintze, 2011 31

32. Discipline • Develop program to train all managers and supervisors on proper progressive discipline • Ensure consistency in practice 32

33. Discipline • Action Taken February 17 • Effective immediately, all proposed leniency reinstatements must be reviewed and approved by the CEO. • This change will remain in effect until further notice. 33

34. Media Relations/ Website Chief of Staff, Admin. Corp. Admin/ Website Comm. Exec. Sec’y Audit Legislative HR Labor Relations Capital/Planning Finance Dept. ED/Ops General Admin. General Counsel Customer Affairs Current Management Flow Chart Board of Directors Executive Director/CEO 34

35. Media Relations/ Website Chief of Staff, Admin. Corp. Admin/ Website Comm. Exec. Sec’y Audit Legislative HR Finance Capital/Planning Labor Relations Dept. ED/Ops General Admin. General Counsel Customer Affairs Current Management Flow Chart Board of Directors Executive Director/CEO Vacant Vacant Vacant Vacant Vacant Vacant Vacant 35

36. Leadership • Chief of Staff • Interviewing end of February • In place by mid-to-end-of March • Chief Financial Officer • Board concurrence to hire search firm • In place by late June or early July 36

37. Leadership • Capital & Strategic Planning • To be posted by end of March • In place by mid-April • General Counsel • Posted until filled • In place by end of April or early May 37

38. Leadership • Legislative Affairs • Posted • In place by end of March or mid-April • Labor Relations • To be posted by end of March • In place by end of May 38

39. Metra Police • Metra Police Department • Beginning March 1 • ED/CEO to review overtime reports for police department on monthly basis • Review existing policies on backfilling short- and long-term vacancies with overtime 39

40. Metra Police • Return to Board with recommendation for a comprehensive review of Metra Police Department organizational structure, responsibilities and external security contracts 40

41. Strategic Planning • Metra Non-Police Vehicle Fleet • Evaluate vehicle fleet and usage • Review all existing take-home vehicles and uses • Review why vehicles are unmarked • Create policy for vehicles • Define uses for justification • Establish guidelines 41

42. Strategic Planning • Strategic/Capital Plan Review & Update • Strategic Plan Committee will update existing long-range planning documents • Assess needs across the six-county region • Review current project scoring systems • Assign updated values to projects • Identify high-priority projects (safety, state of good repair, obsolescence, etc.) • Identify funding strategies • Present to Board 42

43. Strategic Planning • Update Mission Statement, Goals, Objectives & Core Values • Team-Building Process • Board of Directors with executive leadership • Facilitated event • Statement in place by end of third quarter • Educate workforce on mission statement, goals, objectives and core values 43

44. Effective Immediately • All proposed leniency reinstatements must be reviewed and approved by the CEO • This change will remain in effect until further notice • The practice of “exploratory interviews” is terminated • All timekeeping manual entries will be regularly reviewed by managers • Managers and supervisors tasked with reviewing all overtime reports 44

45. Effective Immediately • Review peer agencies and other transit properties’ policies and update Metra policies • Initiate management self-assessment of senior staff • Begin development of an RFP for support services for a comprehensive non-contract classification and compensation study • Reach out to employees for suggestions on cost savings and efficiencies. • Any direct appointments require concurrence of ED/CEO and Board of Directors 45