Presentation on theme: "FY 2015 Budget Assumptions Performance, Administration and Finance Committee April 3, 2014 RELATED TO AGENDA ITEM 6."— Presentation transcript:
FY 2015 Budget Assumptions Performance, Administration and Finance Committee April 3, 2014 RELATED TO AGENDA ITEM 6
2 Purpose 1.Receive the FY 2015 budget assumptions 2.Provide guidance on the assumptions 3.Approve the use of assumptions for preparing FY 2015 budget
3 Key Assumptions Board policies Goals and priorities Highlights Boardings Revenues Expenses and Staffing Capital Improvement Program (CIP) Key dates Deliverables
4 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
5 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
6 Priorities 1.Safety and security 2.Financial health and sustainability 3.Increase customer ridership and revenue by a minimum of 2% 4.Successful organizational transformation 5.Improve customer riding experience 6.Business development opportunities 7.Capital program project management and delivery
7 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
8 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
9 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
10 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
11 Priorities – 5 Improve customer riding experience Continued implementation of improved real time travel information Advance Camp Pendleton Rail Station project
12 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
13 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
14 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
15 Ridership Forecast Total ridership increase 2% overall (12,819,638) ModePlanned Increase Why? BREEZE2%3% increase in service COASTER2%Continued Rail2Rail program SPRINTER2%Economic improvement LIFT-6%Service Model transition from brokerage to dedicated fleet FLEX3%Maturing service
16 Operating Revenue
17 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
18 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
19 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
20 Grant Revenue
21 Grant Revenue Sources FY 2015 In Thousands Current budget assumption is $63 million for operating grant revenue
22 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.
23 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
24 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
25 Revenue Carry Forward Proposed FY 2015 Operating budget includes $3.4 million carry forward from FY 2014
26 Proposed Expenses
27 Proposed Expenses by Source FY 2015
28 (1) Purchased Transportation Increases are due to contract escalations and changes in service levels and increased service levels.
29 Service Levels
30 (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)
31 Carry Forward Projects
32 One-Time Costs
33 (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
35 Capital Positions (FTE) Year Capital Headcount Total Headcount % Capital to Total FY 201416.8126.513% FY 2014 Revised 16.6151.011% FY 201510.7151.07% Change-5.90-4%
36 Benefits BenefitAssumption PERS retirement (NCTD Plan funded at 91.9%) Rate increases from 11.988% to 18.672% based on the CALPERS Actuarial Valuation June 30, 2012. Employee portion blended for 6 months at 4.67% and 6 months at 7.00%. 401(a) retirement contribution (unchanged) NCTD matching contribution of 50% of employee deferrals up to 8% of salary or 4% of salary maximum match.
37 Benefits NCTD Monthly Contribution for Medical Insurance (unchanged):
38 Benefits BenefitAssumption Workers compensation insurance Workers compensation insurance is comparable to FY 2014. Expense is related to variance from accrual of prior years’ claims as of June 30, 2012, based on an actuarial study completed by Bickmore, a Risk Management Services firm, on November 16, 2012. Retirees’ health insurance No planned increases from FY 2013 budget based on OPEB report draft dated July 1, 2012.
39 (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.
40 Utilities, casualty and liability costs, taxes, leases and rentals, and interest expense CostAssumption Utilities10% increase over FY 2014 Budget Casualty and liability costs 6% decrease over FY 2014 Budget TaxesSales tax on fuel costs (comparable) Leases and rentals7% increase over FY 2014 Budget Interest expenseDecrease of about $64,000 from FY 2014 Budget due to retirement of $1.2 million in Certificates of Participation 2004 Series A in FY 2014.
41 Miscellaneous Expense Miscellaneous expense primarily consists of: Advertising and promotion Dues and subscriptions Travel, meetings, and other
42 Contingency FY 2014 budget included a contingency of $1 million FY 2015 proposed budget includes a contingency of $865,000
43 FY 2015-2019 CIP
44 FY 2015 Major Projects Acquisition of 13 CNG buses ($6.9M) Bridge improvements and replacements ($2.7M) COASTER locomotive overhaul ($1.3M)
45 Key Dates for Budget DateAction April 3, 2014Present assumptions to the Performance, Administration and Finance Committee April 14, 2014Notice to the public that NCTD will hold a public hearing on May 15, 2014 April 17, 2014Budget Assumptions and Draft Operating Budget presented to the Board April 29, 2014Release budget documents to the public May 1, 2014Final review of Operating Budget with the PAF Committee May 15, 2014Receive public comment, close hearing, and adopt the budget June 20, 2014Informational budget presentation to SANDAG Transportation Committee
46 Deliverables Operating Budget and CIP Classification and Compensation Schedule Cost Recovery Fee Schedule Service Implementation Plan (if applicable) Disadvantaged Business Enterprise Goal