CTA | Chicago Transit Authority - 1999 Operating Budget Summary

1999 Operating Budget Summary

The focus of CTA’s 1999 budget is to deliver on-time, clean, safe and friendly service. The 1999 budget provides funding for many new initiatives to meet the objective of rebuilding CTA into a customer-driven organization. The following highlights some of the new initiatives:

On-Time

Capital funding for the Bus Service Management System to improve on-time performance and eliminate bunching of buses
Bus schedules posted on selected routes as part of a pilot program, which will be expanded to all bus routes if successful
Improved system signage and bus numbering to make our system more customer-friendly
Capital funding for rail car rehabilitation to increase service reliability

Clean

Implementation of a no-tolerance graffiti and window etching pilot program at two bus garages
Capital funding for bus exterior washers
Increased janitorial staff for station and rail car cleaning
Expansion of the subway and rail right-of-way cleaning initiatives started in 1998

Safe

A pilot project for installation of cameras on 25% of our buses
Increased funding for guard and security services
Installation of two-way intercoms on all rail cars

Friendly

Fare simplification that offers customers more choices and greater convenience, and makes the system more affordable
Customer service training for all employees to teach them the art of being more responsive to customer concerns
Allocation of over 25% of our capital funding to make CTA rail stations more accessible to disabled and elderly customers
Clear and consistent prerecorded announcements on all rail cars
Expansion of the customer service hot line
Continuation of ridership initiatives such as the University Pass and the Visitor Pass
Expanded access to information through an improved internet web site (www.transitchicago.com)

A discussion of each of the major expense and revenue categories follows.

Labor
Labor expense for 1999 is budgeted at $574.6 million, an increase of $15.3 million (2.7%) over the 1998 budget. Labor cost for 1999 represents 72.2% of the CTA's Total Operating Expenses. The year over year increase in labor expense is primarily the result of two contractual pay increases in 1999 and the full annualization of the wage rate increase in July 1998.

The labor contract with the Unions was approved in January 1997. Under the terms of the new labor contract, two hourly rate increases are provided for in 1999. The first top operator hourly rate increase is equal to $0.21 per hour and is effective January 1; the second increase is $0.61 per hour and is effective September 1. As a result, the top operator hourly rate of pay will increase to $20.01 per hour in September. These two hourly rate changes, coupled with the midyear increase in 1998, will increase wage expense in 1999 by approximately $16.0 million. The labor contract expires at the end of 1999.

An increase in janitorial staff to improve the cleanliness of our rail cars and the appearance of rail stations, and the launching of a major customer service training program for our employees add to the 1999 labor costs. These additional costs are offset somewhat by the full annualization of the cost containment programs implemented in 1997 and 1998 that reduced staff.

Material
The budget for material expense approximates the 1998 budget --$59.8 million for 1999 compared to $60.4 million in the 1998 budget. No significant change in material expense has been assumed in the 1999 budget as CTA implements a program to reduce inventory levels in the stockrooms and warehouse. Material prices for new purchases are projected to decrease or remain constant.

Fuel - Revenue Equipment
Diesel Fuel for 1999 is budgeted at $14.2 million, a decrease of $1.1 million from the 1998 budget. This decrease is primarily a result of lower projected fuel prices, partially offset by slightly higher consumption. The 1999 amount assumes consumption of 21.2 million gallons at an average price of $0.67 per gallon, compared to 20.7 million gallons in the 1998 budget at an average price of $0.73 per gallon.

Electric Power - Revenue Equipment
The cost of electric power for revenue equipment is projected to decrease by $3.0 million from the 1998 budget due to lower electric rates. The lower electric rate is a result of CTA’s participation in the Municipal Power Alliance. The Municipal Power Alliance was able to negotiate lower power rates for member organizations as part of utility deregulation legislation.

Provision for Injuries & Damages
The Provision for Injuries and Damages is budgeted at $31.0 million for 1999 based on actuarial analysis that was performed in 1997. This provision represents the estimate of costs CTA will fund in 1999 for claims and litigated settlements.

Purchase of Paratransit
The 1999 budget of $27.1 million provides funding for 1.1 million trips at an average cost of $23.87 per trip. CTA contracts with four vendors to provide paratransit service. Over the past eight years, paratransit costs have increased significantly – from $13.8 million to $26.3 million. This increase, in part, reflects the current RTA certification process. By comparison, CTA provides more paratransit rides than New York, which is the largest public transportation system in the country. Although the Americans with Disabilities Act requires CTA to provide trips sufficient to meet demand, no funding is provided for this service. CTA is committed to meeting this obligation by making the system accessible to its customers. In 1999, $62.0 million of capital improvement funds will be spent to make the mainline system more accessible to our disabled customers. More than 26% of CTA’s total capital funding and 3.4% of its operating funding has been allocated to deliver service to the disabled community and make the system more accessible.

Security
The 1999 budget shows an increase of $8.3 million for security expenditures. Security expenditures include services provided by K-9 guard and dog teams, Chicago Police Department, security guards and alarm protection systems. The increase in 1999 reflects the implementation of a no-tolerance graffiti and window etching pilot program. This program includes installation of security video cameras on 25% of the bus fleet and increased security guard coverage. Since the mid-80’s, CTA’s security program has been increasingly privatized.

Other Services
Other Services includes expenses for utilities, maintenance and repair, advertising and promotion, contractual services, leases and rentals, and travel and training. The 1999 budget for Other Services totals $41.9 million, a decrease of $6.8 million from the 1998 budget.

This decrease is due to the one-time funding of the ridership initiative and the alternative service program in 1998.

Revenue
CTA revenue is comprised of two components: Public Funding and System Generated Revenues. In 1999, CTA will receive $384.8 million of public funding through the Regional Transportation Authority (RTA), CTA’s oversight board. System Generated Revenues of $411.0 million are projected for 1999. Public Funding combined with System Generated Revenues total $795.9 million. These funds will finance 1999 Operating Expenses.

System Generated RevenueSystem-Generated Revenue
The 1999 budget for System-Generated Revenue is $411.0 million. This is an increase of $6.3 million (1.6%) over the 1998 budget. Fare revenue is projected to decrease slightly due to the fare simplification initiative, which is aimed at making the CTA more affordable and convenient for patrons. The University Pass program also will work to reduce the average fare CTA collects from customers. However, these two initiatives should have a tremendous impact on making CTA more affordable and rebuilding ridership on the system in future years. Ridership is estimated to increase by nearly 5 million over the 1998 projection.

Advertising, charter and concessions revenue is projected to increase $4.0 million over the 1998 budget due to higher revenue from advertisements on vehicles and rail platforms. The proceeds from wrapping trains and buses, and a contract to allow soft drink vending machine sales in all rail stations and bus terminals also work to bolster 1999 revenues. In addition, an initiative to increase the number and quality of concession contracts at rail stations began in 1998.

Reduced fare reimbursement equals the 1998 budget level. This is the amount of reimbursement the CTA receives from the State of Illinois for discounted fares the CTA offers to the elderly, disabled and students. In 1999, CTA is expected to provide over $20.0 million in discounted fares for which the State will not reimburse CTA.

Cash contributions from local governments are on par with the 1998 budget. CTA receives $3.0 million from the City of Chicago and $2.0 million from Cook County annually. In addition, the City provides significant capital and operating support to CTA.

Investment income increases by $2.2 million over the 1998 budget as a result of a higher investable cash balance due in part to CTA receiving cash directly from fare card sales at Automated Vending Machines.

All other revenue is estimated to increase by $0.8 million due to the inclusion of one-time revenues from the sale of surplus material.

Based on the expense and revenue projections, CTA estimates it will recover 52.36% of its operating expenses from system generated revenues. The current projection for public assistance required for operations and the recovery ratio, meets or exceeds the funding mark established by the RTA. In the long run, the recovery ratio standards established by the RTA will determine our ability to provide service in all of our communities.