FY2014 Business Planning and Budget Discussion€¦ · PRESENTATION SUMMARY This presentation will...
Transcript of FY2014 Business Planning and Budget Discussion€¦ · PRESENTATION SUMMARY This presentation will...
Finance & Administration Committee
Information Item IV-A
November 1, 2012
FY2014 Business Planning and
Budget Discussion
Washington Metropolitan Area Transit Authority Board Action/Information Summary
Action InformationMEAD Number:
103051
Resolution:
Yes No
TITLE Multi-Year Business Planning and Operating Budget Discussion
PRESENTATION SUMMARY
This presentation will demonstrate how the General Manager’s recommended FY14 budget is constructed within the framework of a Multi-Year Business Plan. The business plan contains defined actions that support specific performance outcomes that are designed to achieve Board-adopted strategic plan goals.
In order to make the process more transparent so that customers and stakeholders can better understand how the operating budget funds certain levels of rail, bus and paratransit services, this presentation details current levels of service and where service growth is projected next fiscal year. It also identifies emerging regulatory mandates and safety corrective actions, as well as reliability, customer service and communications enhancements that are responsive to management and Board objectives. This outlook will include discussion of how these changes, and expected efficiencies that are also included in the business plan, are reflected in the budget outlook for FY14 and beyond.
PURPOSE
Metro is developing a Multi-Year Business Plan that achieves the Board’s strategic goals related to safety, customer satisfaction, connecting communities, and financial stability.
The business plan identifies actions and strategies linked to specific outcomes that are measured and publicly reported as key performance indicators.
In developing its budget for the next fiscal year, Metro must consider how to curb and offset increasing costs of pension and health benefits; increases in materials and utilities; and fund safety improvements including fatigue management and corrective actions identified by NTSB, TOC, and FTA; as well as additional expenses for operating new trains for Silver Line service.
Further, Metro’s Executive Management team is currently analyzing and prioritizing new initiatives for further consideration.
DESCRIPTION
The cost of providing service has been increasing in recent years. Years of underinvestment in the system have required significant maintenance and capital
investment in equipment and infrastructure in particular as we strive to bring the system to a steady state of good repair. Additionally, benefit costs have increased dramatically over the last four years and pension costs, still recovering from the impact of the great recession on the stock market, have increased 91 percent between FY10 and projected FY14.
Metro is making progress on all fronts. Leadership is focused on lowering the cost of providing rail and bus services without impacting safety, performance or customer satisfaction. Major cost drivers including overtime and the acquisition, management and distribution of materials and parts have been targeted for improvement. We will be reporting to you in the coming months on our success and actions to reduce costs and increase efficiency in these areas. The investments approved by the Board in May are also enhancing safety, improving performance, providing more and better service, and moving Metro to a steady state of repair.
The human capital management program is resulting in the hiring of new employees at a rate that will allow us to deliver new services like the Silver Line and Better Bus as promised. Expedited recruiting and hiring is also paying dividends as Metro is accelerating the investment rate and efforts necessary to fulfill our capital rebuilding program and greatly improve equipment and infrastructure maintenance.
BACKGROUND
Metro’s FY13 operating budget is $1.576 billion. Before any changes are made to the system on July 1, 2013 (the start of the next fiscal year), Metro must cover an additional $108 million in operating expense associated with the base operating costs approved by the Board in May. These expenses are the projected costs of additional fuel and propulsion, utilities, pension, health and other benefits, bus service enhancements, and a full year of service on the Silver Line. Against current revenue projections (fare box, jurisdiction and commercial) of $906 million, that created a preliminary unfunded need of $75 million.
The General Manager has committed Metro to a continuous improvement process in the search for additional efficiencies and cost reductions. As reported to the Board in September, efficiencies, cost reductions, the use of FY12 budget surpluses and other offsets, Metro now estimates the adjusted unfunded need at approximately $25 million. As part of the budget development process Metro is seeking to lower the unfunded need further.
In addition, Metro’s Multi-Year Business Plan for FY14-16 strives to achieve the Board’s strategic goals:
Build and maintain a premier safety culture and system Meet or exceed customer expectations by consistently delivering quality
service Improve regional mobility and connect communities Ensure financial stability and invest in our people and assets
In order to reach those goals, the Business Plan outlines actions for incremental improvements in Metro service including:
The preparation and opening of the Silver Line for revenue service Implementation and enhancement of the Better Bus program Addressing fatigue management Taking actions to further close out NTSB recommendations Upgrading financial, human capital, and other critical business systems Automation of parking revenue collection Efficient overtime management
The Business Plan and actions represent a plan to deliver the approved baseline services within the current budget levels. The actions outline efficiencies and performance enhancements that will be accomplished within current funding levels. The next step in the business planning/budget development process will be to identify opportunities for further improvements, efficiencies and the identification of unfunded needs including safety requirements, and other needs. The Executive Management Team has identified a list of initiatives for in-depth analysis.
The Executive Management Team received requests for new initiatives from all areas of the organization. The list has been prioritized and will undergo further refinement before consideration by the General Manager for inclusion in his FY14 budget request. The initiatives can be grouped by strategic goal:
Strategic Goal Objective Action Safety Culture
Increase employee safety Regulatory compliance
Fatigue
management
Employee and workplace safety
Customer Service
Improve service reliability Improve customer comfort
Better Bus
Customer
Improvements
Reliability and Customer Support
Financial stewardship/efficiency
Time collection
Inventory
management
Management will be working to further analyze and prioritize these requests before returning to the Board with a final General Manager recommended budget for FY14 in January. We will keep you informed of our progress.
FUNDING IMPACT
TIMELINE
Board action None required at this time Anticipated actions after presentation
Staff to return to Board F&A committee in December with an update on the progress of budget development.
ELECTRONIC ATTACHMENTS
See attached power point presentation.
Fiscal Year 2014 Operating Budget Development Finance and Administration Committee November 1, 2012
Washington Metropolitan Area Transit Authority
Implementing Momentum
Measure and Report Results Evaluate Performance Outcomes
Allocate Resources Budget and Staff
Business Plans Actions – Targets and Measures Identified
Metro’s Strategic Plan Vision – Mission – Goals Set Direction
Momentum Sets Direction for the GM/CEO Business Plan
Vision: Metro moves the region forward by connecting communities and improving mobility for our customers. Mission: Metro provides safe, equitable, reliable and cost-effective public transit. Strategic Goals: •Build and maintain a premier safety culture and system •Meet or exceed customer expectations by consistently delivering quality service •Improve regional mobility and connect communities •Ensure financial stability and invest in our people and assets
Building the GM/CEO Business Plan Key Actions in Baseline Budget
Closing NTSB recommendations, CAPs
Infrastructure reconstruction, steady state of maintenance
Maintenance capabilities
Fatigue management program
Bus & facility security
Safety mgmt systems
Safety Culture and System
Building the GM/CEO Business Plan Key Actions in Baseline Budget
Quality Service
Better Bus
Silver Line preparation & opening
MetroAccess demand management, new contract
Customer service improvements
Fare collection improvements
Prepping for automatic train operation (NTSB-dependent)
Building the GM/CEO Business Plan Key Actions in Baseline Budget
Financial Stability, People & Assets
Parking revenue collection automation
SmarTrip market penetration
Overtime management
Upgraded financial enterprise, human capital mgmt systems
Materials/inventory management
Asset management
Management efficiency review
Succession planning
Metro’s Revenue Source Cost per rider (FY2013)
Rail ($4.11 per rider)
$2.90
Bus ($4.35 per rider)
$3.16
Passenger Revenue Commercial Revenue Jurisdiction Investment
Access ($52.02 per rider)
$48.52 $3.50
Metro’s Lines of Business Rail
2013 2014 Fixed Assets (Infrastructure) Trains per day (average) 1,374 Trains per day with Silver Line 1,644 Total rail car fleet 1,104 1,104 Track miles 106 117.5 Stations 86 91 Rail yards 10 10
Metro’s Lines of Business Bus
2013 2014 Fixed Assets (Infrastructure) Weekday revenue bus trips 15,473 15,681 Buses in Service 1,244 1,261 Total Bus fleet 1,511 1,536 Bus routes 325 325 Bus garages 10 10 Bus stops 11,500 11,500
Metro’s Lines of Business Access Services
2013 2014 Fixed Assets (Infrastructure) Paratransit fleet 600 600 Operating facilities 7 Operating contracts 1
Multi Year Initiatives Under Consideration:
Goal Initiative
Safety Culture – Fatigue management And System – Employee and workplace safety Quality Service – Better Bus – priority corridors – Customer improvements Financial Stability – Improve time collection People and Assets – Materials/inventory management
Next Steps
GM/CEO FY2014 BUDGET REQUEST AND MULTI-YEAR PLAN – DECEMBER MEETING
Account for Risk
Refine Pro-Forma
Budget
Consider New
Initiatives