CITY HALL — A significant number of employees are no longer participating in a rideshare program that provides free transit passes to those who choose not to drive to work, according to figures released by City Hall.

The reason: an ongoing criminal investigation that has already identified three Big Blue Bus employees as having allegedly abused the program. Lower gas prices and more oversight of the rideshare program could also be factors, city officials said Tuesday.

The drop will result in an estimated savings of roughly $194,000 in 2009-10, according to figures provided by the Finance Department.

“When you are providing stricter controls and greater oversight, it does become a burden for some people and I recognize that,” City Manager Lamont Ewell said. “But from our perspective I had to make sure we are protecting the public interest. … We have seen ebbs and flows before, but this is a remarkable drop off.

“I think, quite candidly, after finding some people who were abusing the program, it causes people to pause and make sure they are doing it the right way so they are not getting in trouble,” Ewell added.

During the current fiscal year as many as 370 employees would sign up each month for the Transit Club and receive EZ transit passes valued at $70 each. In March, when the Santa Monica Police Department was conducting its investigation into allegations of theft, that number dropped to 73 employees, said Chuck McBride, City Hall’s assistant finance director.

City Hall was looking to spend $317, 815 on the Transit Club this fiscal year, but with employees dropping out, that figure is expected to decrease by $50,000. McBride estimates City Hall will spend $73,000 in 2009-10.

“We have new forms now that require people to provide more information, making it easier for us to track,” McBride said. “It was more of an honor system. From now on we will do periodic audits.”

To remain in compliance with the Transit Club, employees now have to ride the bus at least 15 times per month, McBride said. Employees will have to keep a log of what bus route they took on what day, something they were required to do before the audit, but was never enforced.

Three BBB employees were arrested last week for allegedly abusing the Transit Club. Following a random internal audit of the program, the Finance Department discovered irregularities in applications for the free transit passes, as well as a lack of effective internal controls.

The audit was the result of a system-wide review of how City Hall collects revenues.

When irregularities were found in the Transit Club, Ewell ordered a criminal investigation. Crystal Buckner, a motor coach operator supervisor; Michael Brown, a motor coach operator; and Kalin Green, a transit operations assistant, were charged. Buckner and Green were both booked for grand theft, Brown for petty theft. They are expected to be arraigned May 15.

Ewell said he ordered the review because of his experiences in San Diego, where he served as city manager. Ewell was hired in San Diego at a time when the city faced record deficits and criminal investigations surrounding its pension fund.

“I just came out of San Diego and spent two years dealing with investigations and reviews and there were plenty of lessons learned, that sometimes we take for granted controls in place and assume they are working … ,” Ewell said, explaining the review.

“We focused on the financial side first because in the city we have over 50 different cash collection points and some are pretty large dollar amounts,” Ewell added. “I wanted to make sure we had the best controls and oversight in place. It’s about protecting the public’s money.”

The review found that some people had paid parking tickets twice. City Hall spent a year contacting those that overpaid and refunded their money.

Since the Transit Club and other rideshare programs are benefits for employees, the Human Resources Department will oversee it along with finance. When new employees are hired, they will received information on rideshare programs and it will become “a centerpiece” of the benefits discussion, Ewell said.

“The key here is not to just say we provide a rideshare program, but to talk about the benefit and the reduction of carbon footprints,” Ewell said. “Not only is it benefiting them by finding alternative travel, it’s also benefiting the environment.”

To ensure accountability and prevent against waste, Ewell has also hired an internal auditor, Martin Kolkin, who served as the auditor for the city of Sacramento.

“We want to make sure the proper controls and oversight are in place now, clean it up and move forward,” Ewell said.

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