transit sustainability project commission workshop april 28, 2011
TRANSCRIPT
Transit Sustainability Project
Commission WorkshopApril 28, 2011
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Today’s Agenda – Transit Sustainability Project
a. Introduction
b. Financial Data Summary
c. Draft Financial Principles
d. Look Ahead to Service Delivery and Institutional Issues
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Introduction
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Steve HemingerExecutive Director
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Financial: Short and Long Term Problem
$17.2 b
$8 b
$0
$10
$20
Total 25-Year
Operating Deficit
Total 25-Year
Capital Deficit
Projected Deficits Transportation 2035
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Why now?
Severe budget shortfalls in the immediate term.
Service cuts are degrading the transit system.
Long term viability of the existing system is at risk, let alone the ability of the region to provide service expansion.
Need to provide a system that more people will use – customer-focused, not agency-centric.
A robust transit system is fundamental to the mode shift needed for the Sustainable Communities Strategy per SB 375.
The region has a significant opportunity to alter course as budget situation improves.
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Project Approach
Financial Service Institutional
Technical Analysis
18-month project schedule
Commission established Select Committee to inform the project
Technical Analysis supported by advisory committees
Project Steering Committee – transit general managers, labor, advocacy community, business community
Staff Technical Advisory Committees – financial and service planning staff from transit agencies and CMA representatives
Public outreach as technical analysis advances
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FinancialData Summary
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Alix Bockelman, DirectorProgramming and Allocations
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Bay Area Large Operators: Percent Change in Cost and Performance Indicators (1997 – 2008)
Source: National Transit Database, “Big 7” only. Excludes ferry, cable car and paratransit.
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Major Modes: Aggregate Percent Change in Cost & Performance Indicators (1997-2008, adjusted for inflation)
27%34%
40%
79%
38%
4%
63%
74%
-8%
43%
55%
40%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
All Bus Heavy Rail Commuter Rail Light Rail
Operating Costs Revenue Vehicle Hours Unlinked Passenger Trips
Source: National Transit Database, “Big 7” only. Excludes ferry, cable car and paratransit.
SFMTA, AC Transit,VTA, SamTrans,
GGBHTDSFMTA, VTABART Caltrain
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2008 Operating Costs – “Big 7” Operators Nearly $2 billion
Source: National Transit Database, “Big 7” only. Includes ferry, cable car and paratransit.
Wages and fringe benefits account for over 75% of O&M costs.
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Operator Base Wage Consistent with Peer Agencies
Source: "ACCRA Cost of Living Index, 2009 Annual Average Data," prepared by the Council for Community and Economic Research, as cited by Dash &
Associates. Dash & Associates, Agency data* As of July 1, 2010** As of June 2009
Hou
rly W
age
Top Hourly Wage Rates Adjusted to Bay Area Cost of Living
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Operator Wages – Summary Findings
Region’s base operator wage rates are higher than many peers, but when adjusted for the cost of living, appear reasonable
Increases in the base wage rates were higher than inflation, but lower than the overall regional wage index
Total wage costs grew faster than inflation:
Also affected by work rules, which are distinct from base wage rate
Staffing levels, which affect total wage costs
Recommendation: no further analysis of operator base wage rate, and more analysis of work rules and staffing levels
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Review of Fringe Benefit Cost Trends
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The “Big 7’s” total fringe costs have increased from $355 million in 1997 to $601 million from 1997 to 2008. Increase of 69% after adjusting for inflation.
“Big 7” operators;Source: National Transit Database
$0
$100
$200
$300
$400
$500
$600
$700
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Mill
ions
, 200
8$
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Peer Analysis of Funded Pension Liability (as of June 2008)
Sources: Agency CAFRs[1, 2] Data as of June 30, 2008, from Pew Center on the States report entitled “Trillion Dollar Gap,” dated February 2010. [3] Based on S&P 500 Indices
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0%
20%
40%
60%
80%
100%
120%
SFMTA
Samtra
ns
City o
f San
Jos
e
BART
Gold
en G
ate
Mar
in Coun
ty
Santa
Cla
ra C
ount
y
State
of C
alifo
rnia
[1]
Alam
eda
Count
y
Avera
ge o
f U.S
. Sta
te G
over
nmen
ts [2
]
Privat
e Indus
try [3
]VTA
City o
f Oakla
nd
San M
ateo
County
AC Tra
nsit%
Fu
nd
ed
Pe
nsi
on
Lia
bili
ty The region’s pension plans are mostly funded; however, unfunded costs in the region total $482 million.
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Fringe Benefits – Summary Findings
Fringe benefits are a major cost driver both over the short and long term
Both health care costs and pension obligations are areas of concern, requiring increasing percentages of agencies’ operating budgets over time
Pension funding appears to be in relatively good shape; however, unfunded liability of nearly $500 million remains (as of June 2008)
Lower projected investment returns would increase unfunded pension liabilities
Issue is not unique to transit agencies
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Work Rules Analysis
Current rules are the result of a long history of collective bargaining agreements and agency specific practices
Rules impact how transit service is delivered and the cost of delivering service
Scenarios tested provide possible areas of consideration and do not represent agency policy directive
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Work Rule Category Proposed Test
Interlining/Layovers Target 15% layovers
Guarantee/Overtime Weekly guarantee/overtime (40 hours)
Report Times 10 minute sign on and 5 minute sign off
Meal Times 30 min. unpaid meal breaks as allowed in Wage Order 9
Split Shifts Spread premium from 11th hour; Max 2 hour split break; No pyramiding
Part Time Maximum 7.5 hours per day and up to 20% of full time roster assignments
Extraboard/Absenteeism 1-5% reduction in Extraboard staff
Holidays One less holiday on full service day
Service Contracting Contract operation of one division or service group
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Annual Work Rule Cost Saving Estimates
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Interlining/Layovers , $8M (19%)
Meal Breaks$3M (7%)
40 Hour Guarantee/Overtime ,
$10M (23%)
Report Times , $0.5M (2%)
Split Shifts$6M (14%)
Part-time $7M (16%)
Extraboard/ Absenteeism $1.5M (5%)
Holidays$1M (2%)
BART Various Cost Savings
$5M (12%)
Total Estimated Annual Savings: $38M – $46M
Figures in chart based on mid-range estimates
Savings result from:• Reduced overtime• Reduced time paid when not working• No reductions in service or base wage rate
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Work Rule Cost Analysis – Summary Findings
Areas of potential savings vary significantly among agencies
Key work rule changes can potentially save significant operating costs by removing unproductive time
Some improvements are possible under existing contracts
Actual implementation of specific work rule changes is under the purview of transit agencies and labor representatives during the collective bargaining process
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Business Model – Contracting
Many examples of service contracting throughout California and the nation
Some are legacy (e.g. SamTrans)
Others are more recent transitions intended to lower overall operating costs
Mix of 100% or partial service contracting
Savings result from both:
More efficient work rules and practices
Lower hourly rates and benefits
Service quality considerations raised as a potential issue
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- Directly Operated - Contracted
Contracted portions of Golden Gate,and VTA services not included.
Source: National Transit Database
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$185 $166 $156 $154
$107 $100 $92$99$111
$171
$0$20$40$60$80
$100$120$140$160$180$200
GoldenGate
Sam Transdirectly
operated75% ofservice
SFMTA AC Transit VTA SamTranscontracted
25% ofservice
Santa Rosa CCCTA FAST LAVTA
All agencies use union drivers.
Fixed Route Bus Cost and Service Delivery Comparison
Cost per vehicle service hour FY09Fixed route bus only
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$171
$143
$128$122
$118
$98 $96
$111
$68
$81$88
$58 $57 $60
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
SamTrans DenverRTD
LAMetro
MetroHouston
OCTA RiversideRTA
San DiegoMTS
Directly Operated Cost per Hour Contracted Cost per Hour26% 48%33%6%120%7%47%
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Service Contracting Examples
Source: 2009 NTD
Percent Contracted:
1OCTA moving to 30% outsourcing
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Annual Savings from Partial Service Contracting
Total Estimated Annual Savings: ~$30M – $40M
System Scenario TestedPercent
Contracted
AC Transit TransBay express and school services 14%
BARTwould require complete contracting (all-or-nothing); was excluded from analysis
0%
Golden Gate two smaller divisions 30%
SamTransalready contracts 28%; Tested increase of one percent to currently allowed limit
29%
SFMTA smallest bus division 13%
VTA smallest bus division 24%
TOTAL 19%
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Section 13(c) Considerations
Section 13(c) requirements may impact potential cost savings
Each transit agency has its own 13(c) agreements with different requirements and conditions
Section 13(c) provides certain protections to existing transit employees who are affected by federally-funded projects
A high-level review of 13(c) is being undertaken as part of the TSP to assess the potential impact of Section 13(c) requirements on any proposed recommendations
A review of each transit agency’s Section 13(c) provisions could be undertaken based on the results of the initial analysis and proposed recommendations coming out of the TSP
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Source: National Transit Database 2008
Note: Data includes all modes except Vanpools, Paratransit, SFMTA Cable Car, and Ferry.Bay Area Large Operators: BART, SFMTA, SCVTA, GGBHTD, AC Transit, and SamTrans
Administrative Cost Comparison ($ adjusted to SF-Oakland 2008 CPI)
Operator Admin Cost ($ in thousands)
RVH (in
thousands)
Unlinked Passenger Trips
(in thousands)
Admin Cost per RVH
Admin Cost per Trip
Admin Cost as a % of Total Operating
Cost
Bay Area Large Operators
$326,676 9,322 459,510 $35.0 0.71 19.9%
CTA, Chicago $117,676 7,730 526,336 $15.2 0.22 9.4%
LACMTA, Los Angeles
$185,442 7,823 474,228 $23.7 0.39 16.0%
King County, Seattle
$78,529 3,096 118,692 $25.4 0.66 16.5%
MBTA, Boston $90,118 3,171 368,954 $28.4 0.24 9.7%
MTA, New York $614,524 15,362 3,330,949 $40.0 0.18 11.7%
SEPTA, Philadelphia $138,843 4,652 339,168 $29.8 0.41 15.1%
WMATA, DC $321,539 4,134 423,524 $77.8 0.76 15.8%
MARTA, Atlanta $76,686 2,356 150,503 $32.5 0.51 19.9%
Group Avg $34.1 0.42 14.3%
Staffing Levels: Administrative Cost Relative to Peers
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Staffing Levels – Summary Findings
Findings
Bay Area operators dedicate a higher percentage of operating budgets to administrative costs than peers
Bay Area administrative cost per service unit is mixed compared to peers
Based on 2008 NTD data; many agencies have since experienced layoffs and hiring freezes, so a more careful look is needed
Recommended next steps for staffing levels
Analyze further as part of institutional analysis:
Collect more detailed and current data from all agencies
Refine peer analysis framework
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Cost Containment Strategies Summary
Potential annual regional savings if cost containment strategies applied regionally: approximately $235 million
Represents approximately 10 to 12% of annual operating costs
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Cost Category Potential Regional Savings
Fringe Benefits $65 million
Work Rules and Business Model $80 million
Administrative Staff Costs $90 million*
Total $235 million
*More detailed analysis currently underway; estimated savings will be updatedas information is available.
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Revenue Trends
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"Big 7" Revenue Composition ($ in billions)
Source: MTC Statistical Summaries
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Fare Revenue
Sales Tax
Property Tax
STA
FederalOther
SF General Fund and Parking
$-
$0.5
$1.0
$1.5
$2.0
$2.5
1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Revenue picture is different forsmaller operators
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Bay Area "Big 7": Farebox and Sales Tax Revenues(Figures in $ millions)
$-
$100
$200
$300
$400
$500
$600
1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Mill
ion
s
Sales Tax ($1997) Farebox ($1997)
Source: MTC Statistical Summaries
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Observations:
Sales Tax Revenue unpredictable and lower in real terms than in 1997; decreasing trend likely.
Farebox revenue higher in real terms and more in agency control
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Draft Financial Principles
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Possible Approach
MTC could set performance targets for:
Improved efficiency
Controlled cost growth
Stable operating revenues
Each transit agency/board would decide what specific changes (e.g. work rules, pension programs, administrative costs, etc) to make in order to meet those targets
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Financial Principles and Targets Framework
Principles
Example Strategies
Targets
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Draft Financial Principles
Draft Principles
#1Improve
Operating Efficiency
#3Stabilize
Operating Revenues
#2Control
Cost Growth
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Targets
Reduce cost per hour of service by 10% (after adjustingfor service fluctuations)
Potential target of ~10% reduction in operating costs appears reasonable
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Draft Financial Principles
Draft Principles
#1Improve
Operating Efficiency
#3Stabilize
Operating Revenues
#2Control
Cost Growth
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Targets
Keep any real increases in operating cost per hour/mile
equal to or less than increases in amount of service provided
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Draft Financial Principles
Draft Principles
#1Improve
Operating Efficiency
#3Stabilize
Operating Revenues
#2Control
Cost Growth
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Targets
a) Secure increased and more reliable funding equal to X% of regional operating costsb) Create regional operating reserve of X% annual operating costs as hedge against revenue fluctuations
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Performance Framework
Incentive-based funding allocations
Reward operators that meet certain performance thresholds with regional discretionary funds:
TDA (~$270 million annually)
STA Population-based (~$30 million annually)
FTA funds (~$350 million annually)
Condition new funds on meeting certain performance standards
Regional gas tax (estimated to generate roughly $300 million annually)
County sales taxes
Other new dedicated fund sources
Figures based on FY2012 Fund Estimate and recent FTA appropriations.
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Discussion of Draft Principles
How do we make principles and targets meaningful?
Condition funding on meeting targets:
Option A: Any new regional funding source
Option B: Any increase in funding from today’s levels
Option C: Some portion of current funds
MTC role in achieving regional targets
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Look Ahead to Service Delivery
and Institutional Issues
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Carolyn ClevengerTSP Project Manager
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Service Analysis
System-wide:
Evaluate existing performance
Regional Services:
Assessment of transit competitiveness
TransBay, Express, and Feeder Services
Analysis of ADA-paratransit
Sub-regional Service Analysis:
East Bay and Peninsula
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Service Outcomes
System-wide:
Consistent performance metrics to evaluate service performance
Regional Services: Strategic plans for TransBay, Express
and Feeder services
Evaluate where transit is most competitive relative to market demand, land use, etc.
ADA-paratransit delivery options
Sub-regional Service Analysis: Service plans for Inner East Bay and
Peninsula
Strategies to improve service delivery and increase rider convenience of multi-operator services
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Performance Metric Framework
Evaluate the existing system performance using consistent metrics
Transit services will be differentiated by type of service (e.g. regional all-day services, urban trunk, local network, community bus, etc.)
Performance metrics related to service effectiveness (productivity) and service efficiency (cost effectiveness) will be used to evaluate current system performance by service type
Metrics can be used to evaluate system performance over time, and inform future MTC investment decisions and performance-based allocation policies
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Identify Partnerships with Local
Jurisdictions
Applications of Transit Competitiveness Index (TCI)
Support Public Outreach & Funding
Proposals
Transit Agency Resource Allocation
Expand competitive markets
Reduce service in uncompetitive markets
Land use density
Parking Price & Supply
Transit priority on local streets
Pedestrian environment
Voters
Transit supporters/advocates
Neighborhoods
4343
TCI Example: VTA Comprehensive Operations Analysis
< 25
25 - 50
50 - 100
100 - 200
> 200
DestinationOrigin Both
444444
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Core Network
Comprehensive Operations Analysis
BRT Corridors
TCI Example: VTA Comprehensive Operations AnalysisCore Network Routes
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Sub-Regional Service Analysis – Inner East Bay
Focus on BART and AC Transit
Collaborative effort with transit agency staff actively engaged to analyze transit service in the Inner East Bay
Outcomes:
Comprehensive service and market review of AC Transit and associated BART service
Service planning concepts that:
examine coordination opportunities between AC and BART services
identify gaps and/or duplication in terms of service coverage (by location and/or time of day)
identify resource requirements for service improvements
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VTA and SFMTA recently completed comprehensive evaluations of their respective service areas; SamTrans is currently undertaking a similar effort
TSP effort will focus on:
Trips between service areas
Connections with Caltrain
Implementation of recommendations from previous efforts
Will work with transit agency staff to identify priority areas for analysis
Sub-Regional Service Analysis – Peninsula Caltrain Corridor
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Service Analysis Discussion
Performance metrics:
Performance-based allocation policies?
What options would you like us to consider?
Regional Analysis:
Should MTC play a more active role in defining and funding regional services (TransBay, Express and Feeder services)?
In addition to the TCI tool, what additional tools/information would be useful to evaluate services?
Sub-regional Analysis:
Are there specific issues in the Inner East Bay or Peninsula you would like us to consider?
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Institutional Analysis
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Regional Transit Network
Examples:
Transbay
AC, BART, ferries
Peninsula
BART, Caltrain,
SamTrans, VTA
East Bay Suburban
Marin/Sonoma
Multiple Services/Shared Service Areas
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Bay Area has 28 transit agencies and 228 transit decision makers
11 Service providers governed by local City Councils or County Board of Supervisors
15 Districts/Authorities/Agencies with Appointed Members
2 Districts with elected board of directors
Service and fare policy decisions are understandably agency-centric
Challenge at regional level is to knit together a network that works for passengers
Complex Decision-making Structure
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Examples of Recent Institutional Challenges
Caltrain financial plan
Financial reliance on three distinct boards Competing needs and priorities
SMART implementation
Multiple jurisdictions System overlays existing inter-county and local bus services Competing needs and priorities
Clipper implementation
Multiple and complex fare structures Inconsistent policies and practices for customers
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Institutional Analysis Approach
Analyze opportunities and challenges of different institutional models
Functional consolidation or coordination
East Bay Paratransit Consortium LAMTA model
Agency consolidation
Geographic: ACTC and SolTrans examples Modal consolidation: Regional Rail Plan concepts Multi-modal: WMATA model Multi-functional: VTA – combined CMA, sales tax, and transit
agency
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Institutional Discussion
What information would be helpful for you in evaluating institutional structures?
Are there specific models or questions you would like us to focus on?
How should we effectively engage local transit agency boards and local stakeholders?