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RELATED TO AGENDA ITEM 6. FY 2015 Budget Assumptions. Performance, Administration and Finance Committee April 3, 2014. Purpose. Receive the FY 2015 budget assumptions Provide guidance on the assumptions Approve the use of assumptions for preparing F Y 2015 budget. Board policies

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fy 2015 budget assumptions

RELATED TO AGENDA ITEM 6

FY 2015 Budget Assumptions

Performance, Administration and Finance Committee

April 3, 2014

purpose
Purpose
  • Receive the FY 2015 budget assumptions
  • Provide guidance on the assumptions
  • Approve the use of assumptions for preparing FY 2015 budget
key assumptions
Board policies

Goals and priorities

Highlights

Boardings

Revenues

Expenses and Staffing

Capital Improvement Program (CIP)

Key dates

Deliverables

Key Assumptions
board policies
Board Policies
  • Policy No. 17 – Financial principles:
    • Fund ongoing operations
    • Annual balanced budget
    • Conservatively estimate revenues while using one-time revenues for one-time expenses or capital investments
    • Expenses to support effective transportation
    • CIP based on need
    • Effective cost of service through inter-governmental relationships
    • Board may authorize use of debt for temporary cash flow and emergency shortfalls, and urgent unfunded capital improvements
    • Accounting in accordance with GAAP
board policies1
Board Policies
  • Policy No. 9 – Investment policy objectives are:
    • Compliance with laws
    • Protection of principal
    • Liquidity
    • Generation of investment income
  • Policy No. 10 – Requires Board Reserve Fund with targeted balance of $15 million or minimum target of 15% of annual budgeted operating expenses
  • Policy No. 17– Cost neutral budget transfers allowable except for transfers from fuel budget and capital outlays
priorities
Priorities
  • Safety and security
  • Financial health and sustainability
  • Increase customer ridership and revenue by a minimum of 2%
  • Successful organizational transformation
  • Improve customer riding experience
  • Business development opportunities
  • Capital program project management and delivery
priorities 1
Priorities – 1

Safety and Security

  • Conduct threat and vulnerability assessment and update system-wide safety and security plans
  • Reduce incidents, preventable accidents, and workplace injuries
  • Advance PTC project
priorities 2
Priorities – 2

Financial Health and Sustainability

  • Balanced budget with no fare increases or service reductions
  • Maintain restricted reserves consistent with Board Policy
  • Develop contingencies for spikes in commodity prices
priorities 3
Priorities – 3

Increase customer ridership and revenue by a minimum of 2%

  • Continue Amtrak Rail to Rail (R2R) program
  • Assess the effect of the Mobility Plan on BREEZE operations
  • Improve revenue collection
priorities 4
Priorities – 4

Successful organizational transformation

  • Complete update to facility management plans
  • Continue implementation of forms process within document management system
  • Streamline JDE system business processes
    • Implement State of Good Repair Program consistent with MAP-21
priorities 5
Priorities – 5

Improve customer riding experience

  • Continued implementation of improved real time travel information
  • Advance Camp Pendleton Rail Station project
priorities 6
Priorities – 6

Business development opportunities

  • Advance Solana Beach transit oriented development project
  • Advance joint developments for:
    • Carlsbad Village Station
    • Escondido Transit Center
    • Oceanside Transit Center
priorities 7
Priorities – 7

Capital program project management and delivery

  • Update of project management manual
  • Continued implementation of Project Management Consultants (PMC) to obtain project readiness and completion of major development and facilities capital projects
highlights
No planned fare increases or service reduction

Projecting ridership at 12.8 million boardings

NCTD to surpass 400 million boardings

Projecting fare revenue at $19.6 million

Investment in the Capital Improvement Plan of $20 million

Highlights
ridership forecast
Ridership Forecast

Total ridership increase 2% overall (12,819,638)

fare revenue assumptions
Fare revenue of $19.6 million is forecasted by mode based on:

Planned ridership

Estimated fare revenue per rider for each mode

Estimates based on prior years and year to date actuals

No planned fare increases

Fare Revenue Assumptions
auxiliary revenue
Auxiliary Revenue
  • Auxiliary revenue totals $9,549,450:
    • Shared use
    • Advertising
    • Dispatch
  • Shared use agreements are with BNSF and Amtrak
    • BNSF is in process of being renewed (current agreement has increases each April 1 tied to the American Association of Railroads index)
  • Advertising revenue is projected to remain at FY 2014 levels
  • Dispatch agreements are with BNSF, Amtrak, and Metrolink
non transportation revenue
Non-Transportation Revenue
  • Non-transportation revenue totals $1,689,000:
    • Leases and permits
    • Investment Income
    • Administration fees
    • Miscellaneous
    • Gains or losses on disposals of assets
  • No planned changes in non-transportation revenue
grant revenue sources fy 2015
Grant Revenue Sources FY 2015

In Thousands

Current budget assumption is $63 million for operating grant revenue

local cash grants
Local Cash Grants
  • Local cash grants totaling $44,047,971 are:
    • TDA (Transportation Development Act 4.0 and 4.5)
    • TransNet
  • Grant estimates are based on SANDAG’s approved FY 2015 Transportation Development Act Apportionment and Claims Schedules using the mid-range estimates
  • Planned decrease of $3.6 million from FY 2014 budget
    • Total allocation is larger, but more dollars are being allocated to CIP
    • FY 2014 local grant revenues includes use of prior year funds.
state cash grants
State Cash Grants
  • Primarily the State Transportation Act (STA)
    • $0.0025 tax on diesel fuel
    • Estimates are from the California State Controller’s letter dated January 25, 2013
  • FY 2015 will be $266,000 less than FY 2014 budget
    • FY 2014 was $5.8 million
    • FY 2015 is planned at $5.5 million
federal cash grants
Federal Cash Grants
  • Federal cash grants for FY 2014 total $13,839,343:
    • 5307 – Urbanized Area
    • 5337 (formerly 5309) – State of Good Repair
    • 5311 – Rural Area Program
    • JARC and New Freedom (5316/5317)
  • Budget for FY 2015 is about $1 million more than FY 2014 as formula allocations are higher than FY 2014
revenue carry forward
Revenue Carry Forward
  • Proposed FY 2015 Operating budget includes $3.4 million carry forward from FY 2014
1 purchased transportation
(1) Purchased Transportation
  • Increases are due to contract escalations and changes in service levels and increased service levels.
2 professional services
(2)Professional Services

Professional services of $18,020,978:

  • Engineering ($5,977,932)
  • Operations ($3,522,448)
  • Financial & Administrative ($2,126,723)
  • Facilities ($1,993,165)
  • Information systems ($1,801,500)
  • Security ($1,775,000)
  • Legal & Compliance ($453,000)
  • Communications ($371,210)
3 salaries wages and benefits
(3) Salaries, Wages, and Benefits
  • Labor costs of $14,791,818 are primarily:
    • Regular, holiday, and overtime pay
    • Payroll taxes
    • PERS retirement
    • 401(a) retirement contribution
    • Medical insurance
    • Workers’ compensation insurance
    • Retirees’ health insurance
benefits1
Benefits

NCTD Monthly Contribution for Medical Insurance (unchanged):

4 materials and supplies
(4) Materials and Supplies

Materials and supplies of $8,700,264 are primarily fuel costs (natural gas, diesel, and unleaded fuel)

Budget unit prices are based on the U.S. Energy Information Administration’s estimates. NCTD takes a conservative view as the forecasts are subject to volatility and could differ significantly.

miscellaneous expense
Miscellaneous Expense
  • Miscellaneous expense primarily consists of:
    • Advertising and promotion
    • Dues and subscriptions
    • Travel, meetings, and other
contingency
Contingency
  • FY 2014 budget included a contingency of $1 million
  • FY 2015 proposed budget includes a contingency of $865,000
fy 2015 major projects
FY 2015 Major Projects
  • Acquisition of 13 CNG buses ($6.9M)
  • Bridge improvements and replacements ($2.7M)
  • COASTER locomotive overhaul ($1.3M)
deliverables
Deliverables
  • Operating Budget and CIP
  • Classification and Compensation Schedule
  • Cost Recovery Fee Schedule
  • Service Implementation Plan (if applicable)
  • Disadvantaged Business Enterprise Goal