Item 12 FY2019/20 Budget Overview

FY19 Projection Department FY19 Budget FY19 Projection % Paratransit Operations 157.0 155.1 -1.2% Eligibility Determination 7.8 9.0 13.3% CTSA Function 0.7 0.2 -250.0% Administrative Expense 6.9 7.2 4.2% Total Operating and Capital Expenses 172.4 171.5 -0.5% *figures in millions

Legal Requirements Anderson v. Rochester-Genesee Regional Transp. Authority  337 F.3d 201, 210 -212 (C.A.2 (N.Y.),2003) § 37.131(b) requires paratransit service providers to plan to meet 100% of the demand for next-day ride requests.  Requirements to fully fund expected demand FTA assurances Applicable federal regulations as interpreted by the courts require that all public fixed route operators must provide or certify there is provided ADA paratransit service complementary to its fixed route and which is designed, funded and implemented to fully meet all projected demand for next-day complementary ADA service. [49 C.F.R. 37.131(b)] The paratransit system must also be operated so as to be free of capacity constraints . [49 C.F.R.37.131(f)] Anderson v. Rochester-Genesee Regional Transp. Authority  337 F.3d 201, 210 -212 (C.A.2 (N.Y.),2003) For many years Access has used HDR to project ridership. WHEREAS, since the Americans with Disabilities Act (ADA) requires transit agencies to service all reasonably anticipated demand, Access Services has contracted with HDR Decision Economics to provide ridership projections that are used to recommend funding amounts to meet the annual ADA obligations for Los Angeles County The assurances in Group 01.F are consistent with the U.S. OMB assurances required in the U.S. OMB SF-424B and SF-424D, updated as necessary to reflect changes in Federal laws and regulations. 1. Administrative Activities. On behalf of your Applicant, you assure that: a. For every Project described in any application it submits, it has adequate resources to properly plan, manage, and complete its Project, including the: (1) Legal authority to apply for Federal funding, (2) Institutional capability, (3) Managerial capability, and (4) Financial capability (including funds sufficient to pay the non-Federal share of Project cost),

Budget Process HDR Projections Mid-year actuals Report March/April Metro Requirements Per MOU submit preliminary budget info by March 1 Metro review of draft budget information Submit revised budget information to Metro Submit funding request letter Metro Board approves budget Metro Board approves subsidies Access Board approves budget Execute new MOU

FY 20 Projected Service Demand For FY18 the trips should be 3,586,893

Budget Summary FY20 Budget % of Total Funding % of Operating Costs Paratransit Operations 165,220,877 85.4% 89.8% Eligibility Determination 11,047,963 5.7% 6.0% CTSA Function 457,314 0.2% 0.3% Administrative Expense 7,178,368 3.8% 3.9% Operating Expense 183,904,523 95.1% 100% Capital Expense 9,255,055 4.9% Total Operating and Capital Expenses 193,159,578  

HDR/Contractual Increases 2019 Budget 2020 Budget Change Purchased Transportation $142,544,894 $151,288,977 $8,744,083 Eligibility and Appeals $4,253,579 $6,016,864 $1,763,285 Total Increase $10,507,368 The total increase to the FY20 budget is about 11.50 million of that these two categories that are dictated by HDr projections and the contract rates stipulated in our contracts account for over $10.5 million of the total FY20 increase or about 91% of the total.

Administrative Costs

Cost Comparison The June 2017 COR conducted a survey of cost per trip from comparable agencies across the United States. And as you can see, even using two year old data, Access still compares favorable with our FY20 cost per trip at of $43.17 . If you will notice, the average cost per trip back in June 2017 was $43.51 In spite of using two year old data for all other transit properties, our projected cost per trip for FY20 of $43.17 is still below the 2017 average cost per trip for comparable agencies

Cost Per Trip LA County Minimum Wage

FY19 Projection/FY20 Budget Comparison Department FY19 Budget FY19 Projection FY20 Budget % Change vs Projection Paratransit Operations 157 155.1 165.3 6.6% Eligibility Determination 7.8 9 11 22.2% CTSA Function 0.7 0.2 0.4 100.0% Administrative Expense 6.9 7.2 0.0% Operating Expense 172.4 171.5 183.9 7.2% Capital Expenditures 12 9.3 -22.5% Total Operating and Capital Expenses 184.4 183.5 193.2 5.3% Duplicate slide without FY18 and eliminate Capital expenditures *figures in millions

Funding FY20 Budget % of Total Funding Local Funds $101.2 52.4% FTA Section 5310 $67.7 35.1% Passenger Fares $10.1 5.2% Capital or Other Grants $13.6 7.0% Misc. Income $0.6 0.3% $193.2 100.0%

Measure M Projects Project FY20 Budget Enhanced Performance Objectives (KPIs) 8,947,000 Where's My Ride 250,000 Web Booking Additional Transfer Trips 275,000 High Trip Generators - Starters 175,000 Software Modifications - Service Enhancements 500,000 Travel Training 853,000 Parents with Disabilities Pilot Antelope Valley Pilot Project 100,000 ETA Phone System 150,000 Total Measure M Projects 12,000,000 6.6%

FY20 Budget Risks Improved service could increase demand Eligibility HDR projections are based on historical trip demand. However, one of the factors with a strong correlation is “good service” such as good OTP. Recently, with the adoption of 5M by our largest region, we have seen increased demand and a dramatic drop in complaints. We believe that this strong rise in performance will in fact translate into higher trip demand We are currently using a trip factor of 1.2905. This number is the average of the preceding twelve months. However, the trend over the last 24 months is one of a slow but steady decline, such that the trip factor could be as low as 1.279 – Translation about $1.3 million more in trip costs. Associated with the HDR forecast is that while the increase in the forecast for the number of annual passengers has remained relatively flat, the number of those passengers becoming paid trips has also increased steadily over the last two years. As you know, there is significant pressure by advocate groups to deliver some type of same day service. This type of service can prove costly on a per trip basis and even costlier should demand for this type of service increase dramatically as we have seen happen at other agencies. Last but not least, Access is not immune to the issue of minimum pay increases and lack of competitive wages. We have several job categories that are within a dollar or two of the current minimum wage – although they were not like that when the staff was hired. Budgeted 3% increases to wages cannot keep with the double digit increases to the minimum wage. Further impacting us is that while the overall marketplace has responded to these wage pressures, we have not been able to respond. This has at least two effects on this agency: People that come work for us stay here only a short time, and two, applicants will decide not to pursue employment with us knowing that the pay scales are so outdated – worse yet, they do not bother applying.

Next Steps Make final adjustments to budget Present Final Budget for approval on June 17th

Recommendation Receive and file. The Strategic Plan aims to lay out the agency’s goals for the next five years Beginning in FY 2019 through 2023 By being transparent with the Board and other stakeholders, we hope the process to be collaborative process.