Community Advisory Committee FY18 Draft Budget Community Advisory Committee June 13, 2017

Major Issues Short Term Mid Term Long Term Minimum Wage COR Recommendations New Eligibility Facility/New Contractor West/Central Region – New Contract 11/1/17 Mid Term Co-Location VoIP Centralized Reservations Long Term Centralized Dispatch If you will remember, we negotiated rates for our contractors through FY18 to address the impact of minimum wage. However, we wanted to wait until after the receipt of proposals for the West/Central region to get a better gauge of pricing. If you will remember, we will have another increase to the minimum wage in July 2018 of $1.25 And another increase in July 2019 of $1.00 And a final increase of $0.75 in July of 2020. West/Central and Santa Clarita will not have to be negotiated as these two contracts will have been bid by the start of FY19. However, for the remainder, we will have to come back to board to address the financial impact. In order for Access to modernize, we will need to have a true co-location for IT. Co-location will set the foundation for migrating to VOIP – this will generate savings of approximately 1.5 to $2 million annually. Colocation also sets the stage for centralized reservations in the shorter term rather than years away. Then, if it makes sense we will move to centralized dispatch.

Other Issues Grants STP Funding Parents With Disabilities Marking and Tethering Grant Access to Work STP Funding Current allocation is only through FY19 PWD Grant will expire in November /December timeframe. Currently in discussions with MV to determine if we will continue to operate this service MAT grant – Funding will run out sometime this fiscal year. ATW – Operating funds are enough to cover another year to year and a half. We will again apply for this grant for both operating and capital. STP Funding Our STP allocation only runs through FY 2019. Metro will have to go their Board to seek Access’ STP allocations for future years beginning FY 2020 through FY 2024

HDR – Historical Data Year Actual Trips HDR Projected % Difference FY13 2,677,808 2,617,060 -2.3% FY14 2,933,690 2,786,564 -4.7% FY15 3,157,388 3,182,653 0.8% FY16 3,351,612 3,437,249 2.6% *FY17 1,718,372 1,751,425 1.9% HDR is the independent firm that provides us with passenger projections. We in turn use these projections to estimate the number of trips that the projected number of passengers will generate. Up until two years ago, we would receive their estimates very late in the fiscal year but the estimates were based on actual data through January or february of the current fiscal year. Metro has since requested that Access submit budget figures by March 1. In order to do that we have had to request the estimates be delivered to us much earlier. This has also meant that the data provided to HDR only contains actual numbers through November or December of the current year. HDR uses historical numbers from years past to estimate the remaining months and project growth for the following year. As you can see, in FY13 and FY14, HDR estimates were below actuals. Access addressed the funding shortfall by reprogramming capital funds for operating. Of course, this meant that our fleet was not being replaced as it should have been as capital purchases were diminished in order to accommodate the funding shortfall. We can no longer reprogram capital funds as the new MOU requires us to submit an accepted purchase order before we are allowed to draw down the funds. So what happened in the last two and half years? A LOT! The economy turn around and people actually believed, the unexpected glut in oil has led to depressed fuel prices at the pump for the last two years. Yet another event was the change in the law that allowed undocumented persons to apply for drivers licenses. All of these things have had an impact and reduced demand for our services. What is happening this year? Well, everything that I just mentioned and one more thing: Not El Nino but perhaps is La nina. The number of rainy days this year has suppressed the number of trips since november!

HDR Projections Year Trips % Growth 2016 4,334,872 - 2017 4,506,664 3.96% 2018 4,799,412 6.50% 2019 5,137,155 7.04% 2020 5,508,335 7.23% 2021 5,912,627 7.34% 2022 6,348,773 7.38% 2023 6,816,556 7.37% 2024 7,323,125 7.43% 2025 7,872,064 7.50% 2026 8,471,770 7.62% HDR’s projection for this year is for passenger growth to rise by 3.96% However, in upcoming years, the expectation is that passenger growth will increase significantly averaging well over 7% per year.

Direct Costs - Detail Paratransit Operations - Direct Cost Partial Detail   2017 - 2018 Budget % of Total Funding % of Operating Costs Purchased Transportation Services 124,654,887 70.4% 74.7% Fuel 320,864 0.2% Access to Work 1,583,396 0.9% Rancho Los Amigos Shuttle 110,400 0.1% MTA Shuttle Service - 0.0% Other 17,540,672 9.9% 10.5% Total Direct Cost 144,210,220 81.5% 86.4% Now I will move on to our draft budget: Operations is our biggest part of the budget. As you can see here, Purchased transportation alone is over 128 million. In the Other category includes items such as insurance at 7.1mm, contracted call center at 2.1MM, phones at1.5mm, salaries and other items as detailed in the detailed budget provided to you.

Budget by Category 2017-2018 Budget % of Total Funding   2017-2018 Budget % of Total Funding % of Operating Costs Paratransit Operations 146,735,271 82.9% 87.9% Eligibility Determination 12,589,365 7.1% 7.5% CTSA Function 551,356 0.3% Administrative Expense 7,026,170 4.0% 4.2% Operating Expense 166,902,161 94.3% 100.0% Capital Expenditures 10,000,000 5.6% Total Expenses & Captial Expenditures 176,902,161

Funding Sources Total Funding $ 177,033,087 Operating Funds Funding Proposition C - Discretionary Funds $ 89,803,475 Section 5316 JARC (Access to Work Grant #2) $ 984,000 Section 5310 - FTA STP Funding - (88.53% of Contracted Paratransit Operations) $ 64,566,000 Section 5316 JARC (Access to Work Program) $ 791,698 Section 5317 New Freedom Grant (Tether Strap and Marking Program) + OOS $ 266,810 Interest Income / Miscellaneous $ 70,000 Disposal of Retired Vehicles $ 250,000 Passenger Fares $ 10,170,179 Measure M? - Operating Revenues Subtotal 6/30/2018 $ 166,902,162 Major issues with funding: We do not yet know how much funding will be allocated from Measure M – Thus it is blank. My presumption is that as we negotiate the funding MOU, we will supplant Prop C funding for Measure M funds.. For capital funds, we are proposing to utilize 5310 funds to purchase vehicles for the upcoming fiscal year. At this point, I have not programmed any additional capital expenses for FY18 Capital Funds Funding Section 5310 - MAP21/Toll Lane Grant $ 10,130,925 Capital Expenditures Subtotal Total Funding $ 177,033,087

Demand Growth Cost of Trip Growth $6,614,824 FY17 Trips 3,558,043 3,745,538 Increase in Trips 187,495 % Increase 5.3% Variable Cost Per Trip $35.28 Cost of Trip Growth $6,614,824 The increase in trips is projected to be about 5.3% for next year. This translates into 187,500 more trips. Utilizing the variable cost per trip of $35.28 the increase in funding required to accommodate growth is about $6.6 million

Other Items FY17 Service Demand FY18 Insurance premiums Fuel COR As I mentioned earlier, service demand is running about 2% lower than the original projection. This 2% amounts to roughly $3 million – We will need demand to stay at or below that in order for us to remain within our allocated funds for FY17. For FY18, Again we have only programmed 5310 funds for capital expenditures Fuel continues to be budgeted at $3.50 – There is some risk there as fuel has now begun to increase slightly. Personally I noticed that unleaded has now gone over the $3 dollar mark – something that has not happened in a couple of years. The way the fuel peg is structured, we are covered budget wise as long as the fuel stays between $2.80 and $4.20. Below $2.80 and we will have additional savings, if over $4.20 the budgeted savings will not materialize and we will have to a shortfall in this category. I have not budgeted any funds to cover implementation of possible recommendations that come out of the comprehensive operational review. With all that said, I will take any questions you may have.