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TO: |
Board of Trustees |
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THROUGH: |
Jay Fox, Executive Director |
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FROM: |
Viola Miller, Chief Financial Officer |
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PRESENTER(S): |
Viola Miller, Chief Financial Officer |
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Brad Armstrong, Director, Budget and Financial Strategy |
TITLE:
title
Proposed 2024 Final Budget
end
AGENDA ITEM TYPE:
Discussion
RECOMMENDATION:
Informational report for discussion
BACKGROUND:
Each year, the Authority is required to prepare an operating and capital budget for the succeeding year. After consultation with the Board of Trustees, and in accordance with Utah Code 17B-1-702 and 17B-2a-801, the Executive Director has prepared the Final 2024 Budget for Board review.
DISCUSSION:
The operating budget was developed in a time of continued economic uncertainty. As the community and nation consider the impacts of inflation and higher interest rate, a continued tight labor market, and the potential of slowdown in the Utah economy requires UTA to adopt a flexible approach.
Over the first half of 2023, the Board of Trustees and UTA staff reviewed 2023 program delivery, current operating environment including economic conditions, revenue projections, and the organization’s strategic priorities to support near and long-term public transportation needs in the region.
Using 2023 existing operating budgets as a starting point, the organization updated inflationary assumptions for labor, fuel, and other expenses, eliminated one-time 2023 costs, and annualized the cost of mid-year budget adjustments (August 2023 service changes, technical budget adjustments, etc.). The resulting 2024 base budget or budget target was developed at the department and object of expenditure level.
Using foundational operating priorities and informed by discussions with the Board of Trustees, the organization began the process to consider new 2024 budget requests. Business cases were developed for new requests and requests were prioritized, rated, ranked, and ultimately selected for inclusion in the 2024 budget request after considering budget value and other priority considerations.
Simultaneously, the capital program development process revisited the existing 5-year capital plan, held a call for new projects, and prioritized the resulting list to select projects for consideration, culminating in a draft 5-year capital program.
In September the Board of Trustees held four budget work sessions to discuss the 2024 operating budget. In October, the Board of Trustees reviewed 2023 capital program delivery, discussed 2024-2028 assumptions, and staff previewed existing projects and new projects being considered for inclusion in the 5-year Capital Plan.
Transit agencies across the country are experiencing continued difficulty recruiting and retaining workers, especially operators, leading to service performance issues and, in many cases, service reductions related to staffing shortages. The 2024 budget includes a continued service strategy to address this issue. The 2024 service strategy includes service additions for microtransit and commuter rail. The microtransit program adds additional service in South Salt Lake County.
The service request also includes contingencies aimed at addressing recruitment and retention. These contingencies also provide the Board with tools to react to near-term economic slowdowns. These include:
• Enhanced effectiveness and compliance of organization by increasing financial support services.
• Additional focus on better communication with customers and stakeholders with the addition of social media and communications resources.
• Enhancing safety for ‘at risk’ UTA employees by providing Hepatitis B vaccination program.
• Provide additional Transit app capabilities and data integration to help customers.
Other 2024 requests include additional resources for facilities maintenance, additional Planning staff to help plan for future service enhancements, additional recruitment resources to help with labor constraint issues, and a continued emphasis on workforce strategy.
At the December 6, 2023 Board of Trustees meeting, UTA will present to the Board the proposed 2024 Final Budget. At the December 20, 2023 Board meeting, staff will present a resolution to adopt the 2024 Final Budget.
Changes from the Tentative to Final 2024 Budget are as follows:
Expenditures
Carry Forward From 2023 Budget $325,000
On Board Survey costs expected to be incurred in 2023 have been delayed until 2024 due to slower implementation of the survey process than originally expected. This will result in a reduction in expected expense in 2023 of the same amount.
Technical Budget Adjustments $644,000
A series of adjustments to the Tentative budget including the addition of two budgeted administrative headcount in the Finance area ($310,000), a study of Enterprise Resource Planning software needs of the organization ($250,000), additional funding for personnel recruiting efforts ($100,000) and various reductions in expenditures for meeting expenses ($16,000).
Capital Budget
No additional adjustments were made to the 2024 Capital Budget from the Tentative Budget submission.
Public Comment
The public comment period for the 2024 Budget ran from November 1, 2023 to November 30, 2023. Comments on the budget from the public and public entities within the UTA service area are currently being collected. A summary of comments received will be compiled and presented at the Board meeting on December 6, 2023.
ALTERNATIVES:
The Board may request additional revisions to the proposed 2024 Final Budget prior to adopting the budget at a future meeting.
FISCAL IMPACT:
Proposed changes would increase Operating Costs by $969,000 in 2024 as compared to the Adopted Tentative Budget.
No changes are being proposed for Capital Costs in 2024 as compared to the Adopted Tentative Budget.
The additional Operating expense will be covered by funds from UTA’s unrestricted cash reserves.
ATTACHMENTS:
Final Operating Budget - Exhibit A
Final Capital Budget - Exhibit A-1
Final Operating Budget - Exhibit A-2 (Operating by Office)
Changes from Tentative Operating Budget - Exhibit B
Changes from Tentative Capital Budget - Exhibit B-1