Maintaining Transit Effectiveness Under Major Financial Constraints (2014)

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78 CHAPTER FIVE CONCLUSIONS AND AREAS OF FUTURE STUDY CONCLUSIONS This synthesis examines the many ways transit agencies have reduced their costs and generated new revenues to help provide as many dollars as possible to maintain or increase service and thereby maintain their effectiveness. Forty transit agencies completed the survey, representing an 87% response rate. Transit agencies throughout the country have responded to the challenges they have faced as a result of reduced revenues from traditional sources caused by the great recession. Virtu- ally every function in transit agencies (planning, operations, maintenance, marketing, paratransit, fi nance, and adminis- tration) has identifi ed and implemented new ways of fulfi ll- ing its responsibilities that have either saved money through new effi ciencies or generated new, nontraditional revenues. Although these savings and new revenues are not usually enough to replace the revenues that are lost in a bad econ- omy, they are nonetheless signifi cant. Every dollar saved or newly earned translates into fewer reduced service hours, the retention of existing service, or, in some cases, new service in the community. Through these actions, transit agencies help themselves maintain their effectiveness as providers of mobil- ity. They also demonstrate to the communities they serve that transit managers are doing all they can with the assets (equip- ment, facilities, employees) they manage to help avoid service reductions, fare increases, or new taxes. The following are the primary methods of reducing or containing expenses: 1. Implementation of data-driven management systems through which staff can more thoroughly analyze trends and causes of expenses or performance defi - ciencies, allowing the agency to develop appropri- ate solutions that are driven by facts rather than best guesses or anecdotal information, resulting in con- siderable savings and improved service to the public. 2. Engaging in performance benchmarking with peer agencies to identify shortcomings and opportunities for improvement. 3. Reorganizing to create fl atter agencies with attendant reduction of management positions and consolida- tion of functions under fewer managers (though this comes with risk of burnout), and the consolidation of facilities where appropriate. 4. The strategic use of capital funds to reduce operating expenses, such as installing or building new energy- effi cient systems, purchasing more fuel-effi cient vehicles, or building new LEED-certifi ed facilities. 5. Reducing energy and fuel use through programs such as regenerative power, electrifying bus cooling sys- tems, reduced idling, energy audits, and rate struc- ture analysis, and participating in base interruptible electric utility programs to reduce electrical rates and utility bills. 6. Right-sizing vehicle fl eets for the level of demand that exists and using more fuel-effi cient vehicles for every type of bus or van service and other agency support vehicles. 7. Improved management of health care costs through self-insurance, high-deductible programs rather than premium-based co-pay programs, and opt-out pro- grams for employees with access to other health plans. 8. Better management of workers’ compensation claims and family medical leave through specialized expertise, usually provided by third party adminis- trators, as well as implementation of safety and well- ness programs. 9. Improving employee availability through more emphasis on monitoring and controlling absenteeism, including implementation of light duty programs for those on workers’ compensation leave. 10. Contracting for a variety of functions (e.g., fi xed- route bus, rail, and paratransit services) if healthy competition exists, political support is present, and contract management skills are suffi cient. 11. Modifi cation of outdated work rules, changing the payment for overtime to apply after 40 hours a week rather than after 8 hours a day, and more use of part time operators to help transit agencies reduce costs.

79 12. Limiting and sometimes reducing paratransit expenses through more disciplined determinations of eligibility and the establishment of eligibility centers, travel training, scheduling software, mobile data ter- minals, no-show policies, the use of taxis for meeting peak demand, interactive voice response technology, videos to show travel options, and partnerships with nonprofi t organizations. 13. Using optimization software that produces more effi cient fi xed-route scheduling and run cutting, and reduces deadhead mileage. 14. Using advances in offi ce technology to create effi - cient data warehousing, server virtualization, and thin clients, all of which save agencies time, effort, energy, and money, and provide data for better deci- sion making. 15. Using digital video cameras to capture activity in and around a bus to counter false injury claims and enhance security, and using pedestrian alert audio technology to help avoid collisions with pedestrians at intersections. 16. Using training simulators and computer-based learn- ing tools to save time and fuel costs. 17. Using social media and websites to help reduce tradi- tional marketing activities and expenses, and provide more real-time information to passengers through e-mails and texts, while taking advantage of auto- mated trip planners and interactive voice response systems to free customer service agents to engage in providing information through social media outlets. 18. Using maintenance performance software, staying current on warranty recovery, establishing just-in- time inventory systems, contracting out some repairs while bringing others in-house, modifying work shift hours and personnel based on when buses are most needed, and changing work rules where appropriate and feasible. The following are the primary means of earning new revenues: 1. The sale of transit-controlled venues for advertise- ments (both visual and audio) in new ways, such as digital messages, train wraps, light-emitting diode (LED) signs on buses, advertisements on agency websites and Wi-Fi splash pages, naming rights to stations and routes, billboards on transit agency prop- erty, “station domination” (providing exclusive rights to individual businesses to turn a station into a sig- nifi cant advertisement), and selling space on virtu- ally any surface or in any area the transit authority controls. 2. Leasing space within transit corridors to communi- cations fi rms for fi ber-optic lines, and leasing offi ce space that is empty because of staff reductions. 3. Partnerships with private entities such as business parks, hotels, hospitals, casinos, shopping malls, pro- fessional sports venues, apartment complexes, muse- ums, and downtown business districts that help pay for services that benefi t the businesses as well as the general public. 4. Partnerships with other public organizations such as universities, local municipalities, military bases, local school districts, convention centers, commuter assistance programs, and social service agencies that help pay for new service that is also available to the general public. 5. Increases in farebox revenue from additional rider- ship because of better analysis of utilization patterns and service standards that support strategic realloca- tion of service from low-demand areas to routes that require additional capacity or improved reliability, and from comprehensive operations analyses that often identify new service patterns and methods of serving communities that will attract more ridership. AREAS OF FUTURE STUDY The development of partnerships with a variety of public and private organizations has brought in additional rev- enue for transit agencies and has resulted in additional service and ridership. Many transit agencies around the country have reached agreements with universities in their communities to serve as the primary provider of public transportation to students, faculty, and administrative staff for transportation both on and off campus. Conferences dealing with this kind of partnership are now held, reports have been written, and a considerable amount of infor- mation is exchanged among transit agencies that engage in this activity. However, a similar body of knowledge is not available regarding agreements between local public schools and public transportation agencies in the United States. Some of the agencies responding to the survey for this synthesis reported that they had reached agreements with their local school systems (such as middle schools and high schools) to be the primary provider of transpor- tation service to local school students. However, there is little information available on the structure of such rela- tionships and continuing uncertainties as to the legality of providing such service. It is an area worthy of continued investigation and clarifi cation. Developing such services

80 can help local school districts with their own tight budgets by relieving them of the responsibility of providing some or all of their yellow bus service. This would also produce increased revenue and ridership for public transportation agencies. A report prepared for the Canadian Urban Trans- portation Association in 2000 found that of the 23 tran- sit agencies that had reported increases in ridership from 1990 to 2000, 19 had worked closely with their local school boards to accommodate students for school transportation purposes (76). Many details need to be addressed when such arrangements are made. Some partnerships might be formal, while others can be informal. A synthesis on this topic in the United States would be very timely, as both school districts and public transportation agencies will almost certainly deal with tight budgets in the future, and both might be in a position to benefi t from partnerships in transporting students. In addition to the downturn most transit agencies expe- rienced because of the national economy, some agencies realized that they had a more systemic challenge in terms of long-term fi nancial sustainability. The Metropolitan Transportation Commission of the San Francisco Bay Area launched the Transit Sustainability Project to examine trends and identify issues as a fi rst step toward fi nancial sustainabil- ity. The initial fi ndings of this project indicated that operat- ing costs among the Big Seven transit agencies in the Bay Area increased 83% from 1997 to 2008, while service hours increased only 15% and ridership increased only 7% (77). While the situation in the San Francisco Bay Area might be among the more severe, it is not inconsistent with the overall trends in the transit industry in the United States. Virginia Tech researcher Ralph Buehler summarized the situation in an article comparing the output of transit invest- ments in the United States to those in Germany; these two industrialized western countries have approximately the same per capita income and many other similarities, includ- ing a thriving automobile industry. While fuel prices and taxes on cars are signifi cantly higher in Germany, many reforms have been implemented in that country to dramati- cally increase the effi ciency of transit services, resulting in a much higher market share for transit. Since the passage of the Intermodal Surface Transportation Effi ciency Act (ISTEA), subsidies for public transport in the USA have increased considerably: from $14 billion in 1991 to $32 billion in 2007 (APTA 2009). Even adjusted for inflation, this constitutes a 50% rise in annual funding for public transport. At first glance, it appears that increased funding was successful. Over the same period, vehicle kilometers of public transport supply rose by almost 20% and passenger trips increased by 16% (APTA 2009). However, controlling for population growth, public transport passenger kilometers and trips per capita have hardly increased at all. Moreover, the share of operating expenses covered by farebox revenue fell from 37% in 1992 to less than 33% in 2007 (APTA 2009). Public transport in Germany captures five times as high a market share as in the USA. (78) More research could be done to address the systemic issue of rising costs in the transit industry to help ensure its viability and its competitiveness among public services seeking public funding. Another area for future study is how transit agencies are dealing with the cost of pension plans. A number of transit agencies will fi nd it challenging to maintain the same level of pension benefi ts that have been provided in the past with- out cutting service or raising fares. Finally, it would appear that researchers might consider revisiting the Simpson-Curtin elasticity model, which addresses how ridership responds to increases and decreases in fares. The general rule of thumb proffered by the model is that ridership will decrease approximately 3% for every 10% increase in base fare. However, many transit agencies increased their fares during the great recession to address the budget gaps caused by reduced property and sales tax revenues without losing ridership. Many survey respon- dents indicated that their passengers clearly preferred fare increases to reduced service in order to balance budgets. Some agencies even gained ridership with increased fares, in spite of maintaining the same level of service or reduc- ing it. A number of factors, such as higher unemployment and underemployment, higher gas prices, and a new attitude toward transit among younger adults have no doubt affected travel behavior, requiring a recalculation of fare elasticities for public transit agencies.

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