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TO: |
Board of Trustees |
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THROUGH: |
Jay Fox, Executive Director |
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FROM: |
William Greene, Chief Financial Officer |
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PRESENTER(S): |
Jay Fox, Executive Director |
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Brad Armstrong, Director of Budget and Financial Strategy |
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Dan Hofer, Director Capital Assets and Project Controls |
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Troy Bingham, Comptroller |
TITLE:
title
Tentative 2023 Budget
end
AGENDA ITEM TYPE:
Discussion
RECOMMENDATION:
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 the provisions of the Local Districts Act (§17B-1-702) and Public Transit District Act (§17B-2a-8), the Executive Director has prepared the 2023 Tentative Budget.
DISCUSSION:
The operating budget was developed in a time of economic uncertainty. As the nation and region continue to recover from the pandemic, forecasting the impacts of inflation and the federal response, a competitive regional job market, and the potential of slowdown in the Utah economy requires a flexible approach.
Over the first half of 2022, the Board of Trustees and UTA staff reviewed 2022 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 2022 existing operating budgets as a starting point, the organization updated inflationary assumptions for labor, fuel, and other expenses, eliminated one-time 2022 costs, and annualized the cost of mid-year budget adjustments (August 2022 service changes, technical budget adjustments, etc.). The resulting 2023 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 2023 Budget Requests. Business cases were developed for new requests and requests were prioritized, rated, ranked, and ultimately selected for inclusion in the 2023 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 and Local Advisory Council reviewed 2022 capital program delivery, discussed 2023-2027 assumptions, and staff previewed existing projects and new projects being considered for inclusion in the 5-year Capital Plan. The Board of Trustees also held four budget work sessions to discuss the 2023 operating budget in September.
Transit agencies across the country are experiencing difficulty recruiting and retaining workers, especially operators and maintenance workers, leading to service performance issues and, in many cases, service reductions related to staffing shortages. The 2023 budget includes a service strategy to address this issue. The 2023 service strategy includes service additions for bus and light rail, adding an estimated 24,000 annual operating hours to existing service. The microtransit program adds service in South Salt Lake County (about 9,000 annual hours). Combined, UTA is requesting about $4 million in service additions in 2023.
As part of the 2023 service strategy, UTA is adding Extra Board staffing at all three bus business units to address recruitment and retention of operators. These Extra Board or entry level operators fill a vital role at UTA filling part-time and split shifts and providing on-call support for other shifts. These Extra Board operators will allow UTA to deliver scheduled service and meet emerging service needs.
The service request also includes contingencies aimed at addressing recruitment and retention and UTA’s ability to deliver on 2023 and future service commitments. These contingencies also provide the Board with tools to react to near-term economic slowdowns. These include:
• Nearly 32,000 hours of local service to compliment and support introduction of the new Ogden bus rapid transit service. Given the uncertainty of UTA’s ability to recruit and retain operators, this service addition has been placed in contingency and will only be added if hiring conditions improve and ultimately, this addition will require Board approval. The Board will make a decision on this service in time for August 2023 implementation.
• Planning, Operations, Finance, and the People Office have reviewed service priorities for the 2024 budget and recommends a strategy to begin ramping up the recruitment process for new operators in 2023. This will support 2023 service delivery and build capacity for future service additions.
• Operations has identified a need for additional operations supervisors as a priority need for the agency. The current supervisor/operator ratio and resulting workload is unsustainable.
• Staff will return to the Board with specifics on the ramp up strategy and increased supervisor support in 2023. The Board will consider approval of additional staffing from the Operating Contingency at that time.
Other 2023 requests that will be detailed by staff at the October 12 meeting include data development and security, improved fleet and grant management initiatives, audit and government relations support funding, Operations and People Office support, and a continued emphasis on workforce strategy.
The request also includes a new Workforce Innovation program. This program will seek innovative ideas from our employees to generate savings, improve service delivery, and/or improve culture at UTA. This program is envisioned to be self-sustaining within three years, with the goal to have a positive return on investment while increasing efficiency and employee culture/engagement.
Finally, UTA is requesting funding to stand up a Transit Connection Program aimed at improving customer experience and addressing unhoused rider resources on the UTA system.
At the October 26, 2022 Board of Trustees meeting, UTA will present to the Board a resolution to adopt the 2023 Tentative Budget. Pending approval by the Board, staff will consult with the Local Advisory Council on November 2, 2022 and receive their input on the 2023 Tentative Budget.
Summary information about the 2023 Tentative Budget is provided in the tables below.
UTA 5-YEAR CAPITAL BUDGET BY YEAR
More detail will be provided in the 2023 Tentative Budget documentation that will be included in the resolution on October 26, 2022.
ALTERNATIVES:
Discussion Item
FISCAL IMPACT:
The proposed 2023 Tentative Budget and supporting 5-year Financial Plan are financially constrained with all required reserves fully funded.
ATTACHMENTS:
None