Impacts of the Recession on Public Transportation Agencies

2011 Update Survey Results

Published: August 2011 Data Collected: March 2011

APTA 1666 K St. NW Washington, DC 20006 www.apta.com

ImpactsoftheRecessiononTransitAgencies August2011 ExecutiveSummaryandKeyFindings

PublictransportationagenciesacrosstheUnitedStatescontinuetofacebudgetarychallengesasaresultofthe currentrecession.Manytransitagenciessawdecreasesinstateandlocalfundinginthepastyear.Inorderto survive,agencieshavebeenforcedtocutservice,raisefares,layoffemployees,andimplementhiringfreezes, amongotheractions.Theactionscomeevenasagenciesareexpectedtoserveanincreasednumberofriders. Thisreport,basedonaMarch2011survey,providesanationalperspectiveontheextenttowhichtherecession isaffectingpublictransportationagenciesandthemillionsofAmericanswhousetheirservices. Thesurveywasafollowuptoasimilarsurveyin2010thataskedaboutactionstakeninresponsetothe economicdownturn.ThisnewsurveyaskedaboutactionstakensinceJanuary1,2010andactionsagencies anticipatedtakinginthenearfuture.117transitagenciesrespondedtothesurvey.Theresultsshowthata largenumberoftransitagenciesarefacingservicecuts,fareincreases,andreductionsinstaffandbenefitsdue todecliningfunding.Largerpublictransportationagenciesfeltthemostsevereimpacts. Thesurveyfound: 71percentofpublictransportationagenciessawflatordecreasedlocalfunding,and83percentsawflat ordecreasedstatefunding. Capitalbudgetsarealsoatrisk,with85percentofagenciesreportingflatordecreasedcapitalfunding. Nearlyeightintentransitagencies(79%)havecutserviceorraisedfaresorareconsideringeitherof thoseactions.Halfofthetransitagencies(51%)havealreadycutserviceorraisedfares. Largertransitagenciesweremorelikelytohavecutserviceorraisedfaresthanotheragencies.Sevenin tenlargeagencies(71%)cutserviceinthepastyearcomparedto41percentofotheragencies.Halfof largeagencies(50%)raisedfaresinthelastyear;only30percentofotheragenciesdidso. Largeragencieswerealsomorelikelytotakestepstoreducetheirworkforces,withthreequarters (75%)oflargeagenciesreducingtheirnumberofpositionsandnearlyhalf(46%)layingoffemployees.

Transitagenciescontinuetofindsolutionstotheirbudgetpressureswhilestillprovidingcriticaltransportation servicetoconnectpeopletojobsandsupporteconomicgrowth.Additionally,agenciesareforeseeingfuture pressuresastheU.S.HouseTransportationandInfrastructureCommitteeisproposingtocutanadditional37 percentinfederalfundingtopublictransportationandallsurfacetransportationprograms.Stateandlocal governmentswillnotbeabletomakeupforthislackoffunding.Nowisnotthetimetoreducecriticalfederal fundingthatisneededtopreserveserviceandaddresscapitalneeds.

Introduction
InMarch2011APTAconductedasurveyofitspublictransportationagencymemberstofurthergaugethe effectstherecessionishavingonagenciesandtheircustomers.Thesurveyisafollowuptoasimilarsurvey doneinMarch2010(hereinafterreferredtoastheprevioussurvey)ontheimpactsoftherecessionas measuredthroughspecificactionssuchasservicecutsandfareincreases.Thissurveyrecordsactionstaken sinceJanuary1,2010.Atotalof117publictransitagencymembersrespondedtothesurvey,whichhasa maximummarginoferrorof7.5%.Theresultsshowthattransitagenciescontinuetofacefundingchallenges requiringservicecutsandfareincreases.Twooutofeveryfiveagencies(40%)thathavealreadytakenthose actionsremaininbudgetshortfallforthecomingyear.Inaddition,85%oftransitagencieshaveseenflator decreasedcapitalfunding,resultinginthreeintenagencies(31%)delayingvehicleacquisitionsandtwointen (20%)delayingcapitalmaintenance.

AgencyRevenuePicture
Operatingfundingfortransitagenciescomesfromthreemainsources:local/regionalrevenue,staterevenue, andtransitfares.Transitagenciesservingurbanizedareaswithpopulationsoflessthan200,000orruralareas canuseaportionoftheirfederalformulafundingforoperatingassistance.Thisyearsresultsshowthatalarge majorityofagenciesarestillfacingflatordecliningstateandlocaloperatingfunding.Atotalof71percentof respondingagenciessawflatordecreasedlocaland/orregionalfunding,and83percentsawflatordecreased statefunding.Thesedecreasesareontopofanalreadystagnantfundingsituationinthepreviousyear.Inthe previousAPTAsurvey,90%ofagenciessawdecreasesinfundingfromlocaland/orregionalsourcesand89% reporteddecreasesinfundingfromstatesources.Feweragenciesinthe2011surveysawdecreasesinfare revenue(28%comparedto47%)andmoreagenciessawincreases(46%comparedto30%),mostlydueto agenciesraisingfares.

ChangesinLocaland/orRegional FundinginCurrentYear

ChangesinStateFundingin CurrentYear

Remain theSame 37%

Decrease 33%

Remain theSame 42%

Decrease 40%

Increase 30%

Increase 18%

ChangesinFareRevenuein CurrentYear
Remain theSame 26%

Decrease 28%

Increase 46%

BudgetShortfalls
Evenwiththeimprovedrevenuepicture,manyagenciesarestillfacingchallengingbudgetsituations.Overone third(35%)ofagenciesareprojectingabudgetshortfallinthecomingbudgetyear.Ofthose,morethanonein ten(16%)hadshortfallsofovertenpercent,andhalfofthoseexpectedshortfallsofover20%.Thetotal shortfallpredictedbyrespondingagencieswasover$600million.

MagnitudeofProjectedAgency BudgetShortfalls
90% 80% 70% 60% 50% 40% 30% 20% 10% 0% PercentofAgencies

PercentofAgencies ProjectingShortfalls

83% 8%
0%10% 10%20% AmountofShortfall

Yes 35% 8%
>20%

No 65%

Anewquestiononthe2011surveyaskedagenciestoidentifyhowimportantvariouscriteriaweretothestress intheiroperatingbudget,onascalefrom1(Notacause)to5(CriticalImportance).Thetopthreecausesof stressinoperatingbudgetsamongagencieswereincreasingfuelprices,thestatusoflocal/regionalfunding,and thestatusofstatefunding.Theleastimportantcriteriawasthecurrentstatusoffarerevenues,whichreflects thefactthatmanyagencieshaveseenrisingfarerevenuesasoflate.

SourcesofStressinCurrentOperatingBudget
PercentIndicatingImportantorVeryImportantCauseofStress Local/RegionalOperatingFundingStatus IncreaseinFuelPrices StateOperatingFundingStatus IncreaseinOverallOperatingExpenses IncreaseinLaborCosts FareRevenueStatus 0% 10% 74% 74% 72% 66% 57% 50% 20% 30% 40% 50% 60% 70% 80%

ActionsTakenbyTransitAgenciestoAddressBudgetShortfalls
Agenciesonceagainhavetakenanumberofactionstoaddresspotentialbudgetshortfalls.Theseactionsare havingevenmoredetrimentaleffectsonagencies,theiremployees,andtransitusersasthecompounding effectsofyearoveryearcuts,fareincreases,layoffs,andbenefitreductionsarefelt.Overseveninten(71%) agencieshavecutserviceinthepastyearorareconsideringdoingsointhefuture.Nearlysixinten(58%) agencieshaveincreasedfaresinthepastyearorareconsideringfuturefareincreases.Overthreequarters (79%)ofagenciesareconsideringfareincreasesorservicecutsin2011orhavealreadyimplementedthem.In comparisontotheprevioussurvey,asimilarpercentageofagenciesareimplementingorconsideringservice cuts(71%comparedto74%)butasmallerpercentageareconsideringorimplementingfareincreases(58% comparedto73%).Inaddition,ofthoseagenciesintheprevioussurveythatwereconsideringfuturefarecuts orserviceincreases,overtwothirds(69%)indicatedinthenewsurveythattheytookatleastoneofthose actions.

ServiceCuts: ReductioninPeakPeriod Service EliminationorReductionin OffPeakService ReductioninGeographic CoverageofService FareIncrease FareIncreaseANDServiceCuts FareIncreaseORServiceCuts Transferoffundsfromcapital usetooperations UseofReserves

ImplementedSince January1,2010,or Approvedfor Implementation 47% 24% 32% 13% 34% 20% 51% 35% 42% 5

Considering Future Action 28% 24% 33% 24% 28% 25% 56% 17% 21%

Implemented ANDConsidering additionalFuture Action 9% 3% 7% 3% 4% 3% 28% 6% 9%

ImplementedOR Consideringfor FutureAction 71% 45% 58% 33% 58% 41% 79% 46% 53%

Transitagenciesarealsotakingactionswithrespecttohumanresourcestoaddresstheirbudgetissues.Nearly half(48%)ofagenciessurveyedthisyearhaveimplementedhiringfreezesinthepastyearorareconsidering doingsointhefuture.Oversixinten(62%)agencieshavefrozenthesalariesoftheirnonunionemployeesor areconsideringdoingso.Twointen(21%)haveconductedlayoffsinthepastyearandanadditional15percent areconsideringfuturelayoffs. Implemented ImplementedSince January1,2010,or Considering ANDConsidering ImplementedOR additionalFuture Consideringfor Approvedfor Future Action Implementation Action FutureAction HiringFreeze 37% 13% 2% 48% Furloughs:NonUnion 13% 13% 3% 22% Furloughs:Union 9% 8% 2% 15% SalaryFreezeorreduction: NonUnion 55% 14% 6% 62% SalaryFreezeorreduction: Union 26% 16% 3% 40% ReductioninBenefits: NonUnion 26% 21% 3% 44% ReductioninBenefits:Union 14% 23% 3% 33% ReductioninPositions 42% 14% 5% 50% Layoffs 21% 15% 3% 34%

DifferencesinImpactbySizeofAgencyOperations
Inexaminingtherecessionimpactsbetweenthoselargertransitagencies(providing25millionormoreannual trips)andsmallertransitagencies(thoseprovidingfewertrips),severaltrendsbegintoemerge.Ahigher percentageoflargeragenciessawdecreasesinLocal/RegionalandStaterevenue.Onthefarerevenuesside, moreofthelargeragenciessawfarerevenueincreases,likelyduetothefactthatahigherpercentageofthose agenciesraisedfares.

ChangesinLocaland/orRegional FundingInCurrentYearbyAgencySize
50% 40% 30% 20% 10% 0% Decrease Increase Remainthe Same OtherAgencies (<25millionannualtrips) 60% 50% 40% 30% 20% 10% 0%

ChangesStateFundingInCurrentYear byAgencySize

Decrease

Increase

LargerAgencies (>=25millionannualtrips)

LargerAgencies (>=25millionannualtrips)

Remainthe Same OtherAgencies (<25millionannualtrips)

ChangesFareRevenueInCurrentYear byAgencySize
80% 60% 40% 20% 0% Decrease Increase Remainthe Same OtherAgencies (<25millionannualtrips)

LargerAgencies (>=25millionannualtrips)

Moreofthelargeragencieshavealsobeenforcedtotakeactionintermsofservicesprovidedtocustomersin ordertoaddresstheirbudgetissues.Morethantwothirds(71%)oflargeragencieshaveimplementedorhave approvedcutstotheirtransitservicesinceJanuary1,2010.Thesecutshaveacompoundingeffectontransit passengersinthe2010APTAsurvey66percentofagenciesreportedapprovingservicecuts.Acrosstheboard alargerpercentofthelargeragenciescutservice,raisedfares,ortookotheractionsinordertocontroltheir budgets.

ActionsAlreadyImplementedorApprovedforImplementation
ServiceCuts: ReductioninPeakPeriodService ReductioninGeographicCoverageofService FareIncrease Transferoffundsfromcapitalusetooperations UseofReserves 0% LargerAgencies (>=25millionannualtrips) 25% 10% 50% 30% 54% 30% 58% 38% 10% 20% 30% 40% 50% 60% 70% 80% OtherAgencies (<25millionannualtrips) 71% 41% 50% 41%

Largeragencieshavealsobeenimplementingmoreinternalpoliciesthanotheragencies.Sixinten(63%)larger agenciesimplementedorimprovedhiringfreezes,morethanthenumberfromthe2010survey(54%).Three fourths(75%)oflargeragenciesimplementedareductioninpositions.Thesereductionscomepartiallythrough naturalworkforcechangeslikeretirement,butalsothroughlayoffs,and46percentoflargeragenciesreported implementingorapprovinglayoffs.

ActionsAlreadyImplementedorApprovedforImplementation
HiringFreeze SalaryFreezeorreduction:NonUnion SalaryFreezeorreduction:Union ReductioninPositions Layoffs 15% 20% 30% 40% 50% OtherAgencies (<25millionannualtrips) 60% 70% 80% 38% 24% 75% 33% 46% 63% 30% 71% 51%

0% 10% LargerAgencies (>=25millionannualtrips)

CapitalBudgetsAlsoStrained
Anewsetofquestionsinthe2011surveyaskedaboutcapitalbudgetsandtheimpactofcapitalfunding constraints.Atotalof85percentofrespondentsreportedflatordecliningcapitalfunding.Whenaskedabout theimpactontheircapitalbudget,threeintenagencies(31%)saidthattheydelayedvehicleacquisitionsdueto capitalbudgetissues,andtwointen(20%)reportedthattheyhaddelayedcapitalmaintenance.Twointen agencies(21%)alsoreportedthattheyhaddelayedcapitalconstruction.

ChangesinCapitalFundingin CurrentYear

35% 30% 25%

31%

21%

Decrease 27% Staythe Same 58%

20% 15% 10%

20%

Increase 15%

5% 0% Delayedvehicle Delayed acquisition construction Delayedcapital maintenance

Conclusion
Publictransportationagenciescontinuetofacefundingchallenges.Manyagenciesinthepastyearsaw reductionsineitherstateorlocalfunding.Servicecutsandfareincreaseshaveoccurredatmanyagencies,in somecasesontopofcutsandincreasesenactedduringthepreviousbudgetcycle.Manyagencieshavealsohad todeferordelayplannedcapitalprojects,includingreturningexistingfacilitiestoastateofgoodrepairor replacingagingvehiclesandfacilities.Transitagenciesfacefuturechallenges,asrisinggaspricesareexpectedto drivepublictransitridership.Agenciesarecurrentlyexperiencinginstabilityintheirfundingsourcesduringa timewhentheyareexpectedtoserveanincreasingridership.Agenciescontinuetofreezepositionsandlayoff workers,makingtheprovisionoftransitserviceevenmoredifficult.Nowisnotthetimetoreducecritical federalfundingthatisneededtopreserveserviceandaddresscapitalneeds.