Financial Audit and Oversight Select Committee Meeting - October 15, 2026: JTA Financial Analysis

The Financial Audit and Oversight (FAO) Select Committee convened on October 15, 2026 at 9:30 a.m. in Council Chambers to examine the Jackson Transportation Authority (JTA) financial position. The meeting focused on the Council Auditor's presentation detailing how JTA reached its current financial crisis, including revenue shortfalls, expenditure overruns, and budget control failures. The session ran approximately 1.5 hours, concluding at 11:00 a.m. with adjournment before public comments. The next meeting is scheduled for October 23, 2026 at 9:30 a.m.

Follow-Up Items from Prior Meeting

• Council Member Salem asked about JTA's outside audit; Philip Peterson (Council Auditor) confirmed JTA has an annual audit by Cherry Beckert and is a component unit of the city.
• Salem requested information on how COVID-19 funds were received, spent, and whether they delayed recognition of financial troubles. Council will investigate this and other federal grants.
• Council Member Miller requested documents on fiduciary responsibility acknowledgments for executives and board members; JTA CFO Randall Barnes committed to provide these.
• Miller also asked for details on CFO turnover over the last three to five years, including names, tenure, and reasons for departure. Barnes agreed to provide the information, noting that his finance and technology division has seen 50% reduction in staff over the last year.

Council Auditor's Presentation: How JTA Got Here

• The presentation covered revenues (primarily half-cent transportation tax) and expenditures from fiscal year 2022 through projected 2026.
• Half-cent sales tax represents 60-70% of JTA's budget; while collections grew until late 2025, increases were offset by rising debt service payments for BJP projects (debt rose from $19.7M in FY24 to $36.9M in FY25).
• In FY25, the Council reduced JTA's requested sales tax projection by $11.4M after the Auditor's office flagged overestimates. JTA filled the gap with $7M in one-time reserve use and $5M in interest transfers that did not materialize.
• Quarterly summaries showed small overages in FY22-24 but a dramatic $18.9M deficit in FY25 (year ending September 30, 2025), driven by $12M bus overspend (linked to NAVI) and $4.1M CTC (connection) overspend. Projections from JTA throughout FY25 were overly optimistic (surplus of $34k then $2.3M then $3.9M) compared to actuals.
• For FY26 (ending September 30, 2026), JTA projected a $31.8M deficit: $17M revenue shortfall (sales tax, interest, gas tax, fares) and $14.8M expenditure overrun (CTC contract under-budgeted for full year, fringe benefit errors).
• The presentation concluded that problems are isolated to FY25-26, with $26.7M in reserves used in FY25 and approximately $32M projected in FY26.
• Recommendations: implement budgetary controls (prevent spending without capacity), monthly forecasting, present forecasts to the board publicly, and continue conservative budgeting for half-cent sales tax.

Discussion Items

• Pushback on Budget Projections: The Auditor's office described unusual resistance from JTA leadership (CEO, CFO, budget staff) during FY25-26 budget negotiations, where JTA insisted on higher revenue figures despite evidence. Council members questioned whether this pressure indicated management knowingly used unrealistic numbers.
• Board Lack of Financial Projections: Randall Barnes confirmed JTA's board received monthly actuals and year-to-date reports but not financial projections. Council members expressed disbelief and anger that board members were not given forward-looking data, preventing them from identifying the crisis earlier. Several members (Salem, Diamond, Carlucci, Lane) stressed the need to review board packets and minutes to determine what was provided.
• Need to Hear from Former CEO and Board Chair: Council members Diamond and Salem argued that former CEO Nat Ford and the board chair should testify before the committee to explain decisions and awareness. Chair Miller agreed to request their attendance, with possible use of committee authority if needed.
• Charter Authority: Discussed whether Council can mandate reporting from JTA (a state-created agency); Office of General Counsel indicated limited ability but suggested legislative action via local bill or resolution.
• Auditor Access: The Auditor's office is working to gain read-only access to JTA's financial systems (expected within a week). Currently they rely on JTA-provided data except for certain city-controlled revenue streams.
• Timeliness of Budget Amendments: Council members criticized JTA for late budget amendments (sometimes 12 months after year-end), though recently improved to 3 months. The FY25 actual deficit required immediate attention.
• Cash Crisis: Noted that on May 28, 2026, JTA had only $938,000 in operating cash, leading to a line of credit and eventual use of LOGT funds approved last week. Council Member Lane emphasized that balance sheet moves (prepayments, transfers) masked cash problems.

Key Outcomes

• Directives to Staff:
  • Council Auditor's office to research COVID-19 and other federal funds received by JTA, how spent, and impact on financial condition.
  • Council Auditor's office to obtain and review JTA board packets (ongoing) to determine what projections and cash positions were presented to the board.
  • Council Auditor's office to compare board reporting practices of other independent authorities (JEA, JAA, JPA).
• Follow-Up Actions:
  • JTA CFO to provide documents on fiduciary responsibility acknowledgments and CFO turnover details.
  • Chair Miller will formally request former CEO Nat Ford and board chairs to appear at future meetings; if uncooperative, committee will consider using rules to compel testimony.
  • Next meeting scheduled for October 23, 2026 at 9:30 a.m. will include JTA's FY27 projections and further financial discussion.
• No formal votes taken; the committee is fact-finding and will issue recommendations later.