Sunset Commission Progress Report

The Capital Metro board of directors approved a reserve policy on September 24, 2010. The policy defines several types of reserves: an operating reserve of at least two months of operating expenses (a cash flow reserve), a capital reserve, a self-insurance reserve and a budget stabilization reserve. Procedures are being developed on funding and maintaining the various reserves.

Capital Metro is making significant progress toward meeting the Sunset recommendation of establishing at least two months of operating reserves (approximately $28 million) no later than October 2013. It is anticipated that the ending balance for fiscal 2011 will be approximately $21 million under current projections. Longer term financial projections are being prepared.

Capital Metro has adopted a strategic plan that includes a new vision, mission and four key goals to guide the agency through FY2012 and beyond. The goals and objectives are tied directly to Capital Metro's operating and capital budgets. The strategic plan will be revisited in FY 2013 and each year thereafter, and refined as needed to reflect the changes in board, organizational and regional priorities.

This recommendation has two components. The primary component is to adopt a balanced budget that includes both operating and capital expenses. On September 24, 2010, the Capital Metro board of directors adopted a balanced operating and capital budget for FY2011. The operating budget includes line-item account details for each department, and the capital budget includes project descriptions, spending categories, funding sources, expected benefits, estimated operating cost impacts and the corresponding strategic objectives for each of the capital projects.

The second component of the Sunset recommendation requires quarterly status reports on actual operations and capital expenditures in comparison to amounts budgeted. Operating variances are currently reported to the Capital Metro board of directors on a monthly basis. Capital Metro has developed a matrix to monitor projects identified in the Capital Improvement Plan (CIP). Elements of the matrix include project budget, project manager, major milestones and timelines. Since January 2011, Capital Metro staff have reported quarterly to the board regarding capital project status and progress.

The Capital Metro board of directors adopted the FY2011 and 2012 operating and capital budgets on September 24, 2010, which incorporates planned capital spending for the first year of the Capital Improvement Plan (FY2011). The CIP is Appendix A of the FY2011 and 2012 adopted budgets and includes estimated costs for the remaining three years (FY2013-FY2015). It also reflects the funding source for each capital project. An extensive public outreach review and comment process was included in the budget development process prior to board adoption.

The Capital Planning Policy was adopted by the Board of Directors in January 2011. The policy will incorporate the detailed planning process as defined here and within the Sunset Commission Report, and will be consistent with organizational and regional long-range goals.

The Capital Metro board adopted a policy for evaluating and compensating its president/CEO (general manager) in May 2010 and that policy was followed in the President/CEO hiring process completed in July 2010.

The Sunset Commission identified a number of potential measures to improve Capital Metro's financial stability and build reserves. They recommended the board incorporate the following changes in the FY2011 budget as appropriate.

• Adopt a five-percent across-the-board reduction in costs
  Status: Complete - Not Selected for Implementation
  

  In preparing the FY2011 budget, each department provided a list of expense reductions that equaled five-percent of non-service related costs. The finance department incorporated a number of these reductions into the proposed budget; however, without significant changes to the labor and management agreements with StarTran, an overall five-percent reduction likely would have required reductions to transit service. In response to public input, the agency did not elect to reduce service. Additional cost reduction opportunities will be considered as the labor structure is reviewed. (See Issue 2.1 for further details.)

• Require administrative employees to contribute 4 percent of wages to their pension plan
  Status: Complete - Not Selected for Implementation
  

  The Board of Directors reviewed this recommendation and chose to delay any implementation until after the effects of the labor structure change are known.

• Revise paratransit policies that exceed Americans with Disabilities Act requirements
  Status: Complete
  

  MetroAccess paratransit policies have been revised. The board adopted the revised policies on September 24, 2010, and the FY2011 budget reflects the projected financial impacts.

  A summary of the revised policies:

  • Eligibility - To be eligible for service, all new and recertified customers must complete an individualized application, participate in an in-person interview and if appropriate, undergo a functional assessment. The certification period will be extended from two years to four years.
  • Taxi Voucher Program - The voucher on demand program will be a non-ADA, cost-shared, premium service. The program will be capped with both monthly and annual limits, and is cost neutral.
  • Service Area - The MetroAccess ADA service area was officially approved by the Capital Metro board of directors and is defined as the area within 3/4 mile of regular, in-service fixed-route bus service, mirroring its service area and hours. The 3/4 mile area is not defined by commuter rail service, express, flex or feeder route service.
  • Service Level - Capital Metro will provide three levels of service: curb to curb, door to door, and door through door. A customer's default level of service will be determined during the eligibility process, but customers may always request a different level of service at the time they book their trips or at the time the vehicle arrives at their destinations.
  • Open Returns - The change to this policy is the requirement that customers must provide an estimated pick-up time.
  • Call Center and Advance Reservations - The call center will take calls from 7 a.m. to 6 p.m., Monday through Friday, and 8 a.m. to 5 p.m. on weekends. Customers can schedule rides up to three days in advance.

• Charge a bus fare of 50 cents for groups currently riding free and charge $2.00 for paratransit rides
  Status: Complete
  

  On September 24, 2010, the Capital Metro board of directors approved the FY2011 budget that includes projected revenues from a new 50-cent fare increase for groups currently riding free (adults over 65 and persons with disabilities) and an increase in fare for paratransit rides to $1.50.

  On November 10, 2010, the board adopted the fare increase, which will go into effect January 16, 2011.

• Renegotiate the UT-Austin contract to cover 65 percent of Capital Metro's fully allocated costs
  Status: Complete - Alternative Action Taken
  

  The Capital Metro board took alternative actions to increase cost recovery on the UT Shuttle contract. The board approved a new contract with the University of Texas at the July 2010 board of directors meeting. The University will reimburse Capital Metro for 50 percent of the UT Shuttle service direct operating costs. In addition, the University will pay Capital Metro a fee for each trip taken by a student on regular fixed-route and rail services. Staff projects these contractual changes to increase revenues by approximately $600,000 during the 2010-2011 school year.

• Freeze capital spending on expansions of commuter rail that use tax revenues as a source of funding
  Status: Complete
  

  The approved FY2011 operating and capital budget does not include expenditures for the expansion of commuter rail services. The budget, however, does include funding for "state of good repair" infrastructure projects, such as bridge replacements identified in the agency's Railroad Bridge Safety Management Program (see Issue 3.3) and bridge repairs.

• Review all capital spending projects and put on hold any not immediately needed to ensure public safety or that would not jeopardize federal funding
  Status: Complete - Not Selected for Implementation
  

  Capital Metro staff evaluated all existing and proposed capital projects to ensure alignment with the agency's strategic plan. Projects that involve safety or regulatory compliance were given priority when allocating funding. Based on public input and agency objectives, the FY2011 budget includes projects needed from a safety or federal funding standpoint as well as those needed for continued operation of service. For example, projects that improve bus stop accessibility, maintain the agency's existing infrastructure and assets in a state of good repair, and respond to ongoing customer demand are included in the FY2011 budget.

Capital Metro has increased its financial transparency online, and financial information is directly accessible from the Capital Metro homepage. This information includes:

• Budgeted and actual expenditures by department. Capital Metro posts monthly financial reports that provide this information at a department level. Additionally, Appendix B of the FY2011 budget includes individual department budgets and FY2009 actual departmental expenditures. (FY2010 actual expenditures are not yet available.)
• Five-year archive of past budgets
• Executive management salaries
• Long-range financial plan overview

In addition to the above items, Capital Metro has exceeded the recommendations in the Sunset Commission Report by augmenting its financial information online with:

• Capital Metro's check register which reports all checks written by the agency
• Capital Metro's purchase card (credit card) transaction log
• Capital Metro's contract information
• Internal and external audits
• Sunset Review progress reports
• Monthly operations performance reports
• A more extensive history of board agenda packets and board meeting minutes.

As a result of this added transparency, Capital Metro was the first transit agency in the state to receive the Leadership Circle Award from the Texas Comptroller's Office.