FY2021 Operating Budget Amendment - WMATA...developed prior to Covid-19 pandemic. In response to the...

Finance and Capital Committee

Action Item III-A

January 14, 2021

FY2021 Operating Budget Amendment

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Washington Metropolitan Area Transit Authority

Board Action/Information Summary

TITLE:

FY2021 Operating Budget Amendment

PRESENTATION SUMMARY:

As a result of the availability of Covid Relief Act federal funding, Metro will be able to increase and therefore, amend its budget enabling the continuation of essential transit service and employment of thousands of transit workers. Staff will review budget updates that will eliminate the need for previously approved service cuts and layoffs, and request board approval of abudget amendment.

PURPOSE:

To seek Board approval to amend the FY2021 Operating Budget

DESCRIPTION:

Identification of Parties with an interest in Metro’s budget:

The following list includes Metro's top non-personnel multi-year contractors through FY2021 and to date ($500 million) as well as the Metropolitan Washington Airports Authority (MWAA). Some vendors have contracts spanning through FY2022 as well.

Kiewit Infrastructure Company Kawasaki Rail Car Inc. PNC Bank National Association SunTrust Bank C3M Power Systems, LLC Transdev Services, Inc. Gannett Fleming-Parsons Joint Venture II Mott MacDonald I&E, LLC New Flyer of America, Inc. l Bank of America NA Wells Fargo Commercial Services Clerk, U.S. Court Motorola Solutions Inc. M.C. Dean, Inc. Mythics, Inc. Potomac Yard Constructors First Transit, Inc. Diamond Transportation Service, Inc. Dell Marketing LP HNTB Corporation

Action Information MEAD Number:202239 Resolution:

Yes No

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Metropolitan Washington Airports Authority (MWAA)

A full list of Procurement Awards is available at: www.wmata.com/business/procurement/solicitations/index.cfm#main-content

Metro has labor agreements with the following collective bargaining units:

Fraternal Order of Police/Metro Transit Police Labor Committee, Inc. (FOP) The Office and Professional Employees International Union Local No.2, AFL- CIO (Local

2) Local 639, International Brotherhood of Teamsters Law Enforcement Division (Local 639) Local Union 689 of the Amalgamated Transit Union, AFL-CIO (Local 689) Local 922, International Brotherhood of Teamsters (Local 922)

Key Highlights:

The preliminary estimate is that Metro will receive approximately $610 million fromthe Coronavirus Response and Relief Supplemental Appropriations Act of 2021, ofwhich $95.6 million is proposed to be allocated to the FY2021 operating budget.

Revisions to the previously approved budget and in response to customerrequests and current demand, Metro will restore and increase Metrobus service toensure service for essential trips and provide extra capacity to maintain socialdistancing.

Current approved rail service levels are recommended to continue as they provideadequate capacity for demand that is forecast for the remainder of the fiscal year.

Service-related FTE positions previously scheduled to be eliminated in Februarywill not be eliminated to ensure Metro has flexibility to respond to changingdemand and ridership recovery.

The previously planned $30 million capital project deferral is no longerrecommended in order to preserve borrowing capacity and protect the capitalprogram.

Background and History:

On April 2, 2020, the Board approved Metro’s $2.08 billion FY2021 Operating Budget, which included total subsidy requirement of $1.25 billion. The original budget was developed prior to Covid-19 pandemic. In response to the pandemic, the Board revised the FY2021 operating budget on May 28, 2020 to $2.052 billion and total subsidy requirements to $1.11 billion. The amended budget utilized $546M of Cares Act funding, deferred implementation of previously approved service and fare adjustments for six months, took additional management actions to reduce expenses, and provided a one-time credit that reduced jurisdictional subsidy contributions by $135 million. These actions were taken to ensure the Authority balanced its budget amidst a greatly reduced ridership outlook and constrained funding environment.

With unforeseen prolonged recovery and CARES Act funding expected to run out before the end of the fiscal year, the Board amended the budget a second time on November 19, 2020. This second amendment balanced the FY2021 budget through $176.5 million in savings comprised of $30.5 million in management reductions and $146 million in Board actions that included capital project deferment, service cuts, and

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layoffs.

Discussion:

Additional Federal Funds and FY2021 Operating Budget AmendmentOn December 27, 2020, the Coronavirus Response and Relief Supplemental Appropriations Act of 2021 was signed into law, which is estimated to provide approximately $610 million in additional federal funding. The final regional appropriation amount will be determined by the Federal Transit Administration, after which, it will be shared by regional transit providers. Metro’s final funding will be known following these two steps.

Given the gradual recovery in ridership and revenue well into the next fiscal year, staff recommend utilizing Metro’s share of additional federal relief funds to balance the FY2021 budget. In FY2021, management proposes utilizing $95.6 million of the additional federal funding and allocating the balance to FY2022.

Recommended Service Levels and AdjustmentsAs a result of the additional funding from the federal government, staff recommends restoration of service levels on Metrobus while maintaining the current approved service levels on Metrorail.

MetrobusCurrent Metrobus service levels of approximately 78 percent of pre-pandemic service would be maintained to serve essential trips with improvements phased in during the spring until reaching 82 percent of pre-pandemic service in May. The added service would help maintain social distancing of approximately no more than 20 passengers at the same time on a standard bus and support higher ridership as well as improve reliability.

Specific improvements to be phased in include: 7 lines with full or partial restoration of weekday peak-period coverage 4 lines with full or partial restoration of weekday all-day service 10 lines with restoration of Saturday service 9 lines with restoration of Sunday service 34 lines with service extended to 2 AM

In addition to the improvements to regular scheduled Metrobus service, Metrobus will directly provide service for the Summer 2021 Platform Improvement Project railreplacement shuttles.

MetrorailNo additional change to Metrorail service is recommended at this time. Instead, Metrorail would maintain the FY2021 service levels approved by the Board on November 19, 2020 including retention of:

5:00 am to 11:00 pm daily operating hours Standardize weekday and off-peak rail service frequencies on each line Open Silver Line Phase 2: July 1, 2021

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While the proposed budget amendment would restore more than 1,200 FTE positions to Metro’s FY2021 budget that were scheduled to be eliminated in February, the Authority will continue workforce reductions through attrition, voluntary departures, and efficiency-driven non-voluntary reductions.

FUNDING IMPACT:

The $1.942 billion FY2021 operating budget will be balanced through additional federal funding; resulting in no additional financial impact to funding jurisdictions.

TIMELINE:

RECOMMENDATION:

Approval of the amendment to the FY2021 Operating Budget.

Previous Actions

April 2020 – Board adopts FY2021 Operating Budget and FY2021-2026 Capital Improvement Program

May 2020 – Board adopts revised FY2021 Operating Budget and defers FY2021 fare and service changes

September 2020 - Board authorizes public hearing on additional FY2021 service reductions to balance the budget due to additional Covid-19 financial impacts

October 2020 - Virtual Compact Public Hearing

November 2020 - Board approved amendment to FY2021 Budget

December 2020 - GM/CEO presented and Board authorized public hearings on, the Proposed FY2022 Operating Budget and FY2022-2027 Capital Improvement Program

Anticipated actions after presentation Spring 2021 - Implement budget and service changes

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WASHINGTON METROPOLITAN AREA TRANSIT AUTHORITY1

FY2021 Budget Amendment& FY2022 Docket Authorization

Finance and Capital CommitteeJanuary 14, 2021


Purpose Update Board on Coronavirus Response and Relief Supplemental

Appropriations Act (Relief Act) impact on essential services and transit jobs

Review staff recommendation to amend FY2021 Operating Budget

Review staff recommendation to revise public docket for FY2022 Operating Budget

Begin discussion of policy issues during months-long FY2022 fiscal year budget development process

Background

WASHINGTON METROPOLITAN AREA TRANSIT AUTHORITY


OverviewWith the pandemic causing catastrophic ridership and revenue loss, Metro

has been operating essential bus and rail service, while maintaining workforce, with support of federal relief funding

Recent Relief Act funding enables Metro to avert service cuts in FY2021, and to gradually ramp up service to meet demand as the region begins to recover, while maintaining service-related jobs

Metro’s share of the new federal “down payment” from the Relief Act will not cover all of FY2022, and will again require major service cuts and layoffs if no additional relief is provided

Background



Review of recent actions impacting FY2021 & FY2022 Budgets Faced with a FY2021 budget deficit of $176.5 million, the Board revised the budget on

November 19th with management actions, shifts of operating costs to the capital program for preventive maintenance, and service cuts and related layoffs effective January 2021 (Second half FY2021)

December 27, 2020, Relief Act became law, enabling the continued funding of essential transit services and jobs in FY2021 and provided a “down payment” for FY2022

With the revised FY2021 amendment, eliminating most of the proposed employee reductions, and augmenting service levels, resulting in a FY2022 budget gap of $724 million, prior to the utilization of the new Relief Act funding.

Background



Additional Federal Covid Relief

Estimated Relief Act Distribution Summary

$ in MillionsAmount

Nationwide Apportionment $13,271

Regional share $830

WMATA allotment (86.5% of regional) $718

Local Bus Operators ($108)

Available WMATA Funding $610



Staff Recommendation

FY21 Operating Budget Amendment Recommendation



Apply New Relief Act funds to FY2021 Maintain essential bus, rail and paratransit service, and halting

layoffs of operating employees

Provide phased bus service improvements in March and May, 2021

Eliminate shifts of operating costs to capital program for preventive maintenance in order to preserve borrowing capacity and protect the capital program

Continue management actions to reduce costs




Management actions continue to reduce operating costs

Continue to reduce workforce through attrition, incentive programs, vacancy eliminations

Discontinue non-essential administrative functions

Paratransit contractor cost savings from reduced utilization





Management Actions

$ in Millions

FY2021 November

Approved Budget

FY2021 January

AmendmentChange

Contractor Cost Reduction ($7.5) ($7.5) -

Paratransit Contract ($12.3) ($12.3) -

Eliminate Meal Reliefs for Station Managers ($1.9) - $1.9

Eliminate Station Assists ($0.6) - $0.6

NRP Pay for Performance Deferment ($7.2) - $7.2

Discretionary Reductions ($1.0) ($1.0) -

Total ($30.5) ($20.8) $9.7


Note: Amounts are rounded for presentation purposes and may not sum


Recommended Board Actions FY2021 Operating Budget Amendment Recommendation

Action #1 - Restore Service and prevent significant layoffs1

Rail

maintain 11:00pm daily closing time

standardize headways across lines (12min weekdays/15min weekend on BOGYS, 6min and 12min on Red)

Bus

Add buses to help maintain social distancing and support higher ridership lines

Provide run-time and data quality improvements for reliability in March

Extend span on 34 lines to 2 AM 7 days-a-week in May

Reduce contractor use by using Metrobus operators for summer Platform project shuttles

Action #2 – Capital Projects deferral

Eliminate the $30M Capital Projects deferral previously approved in November in order to preserve borrowing capacity and protect the capital program

1 See Appendix for details



Use Relief Act Funds to Close Funding Gap of $177M


$ in millions

FY2021January Amendment

Management Actions ($20.8)

Board Actions ($59.8)

Preventive Maintenance Transfer -

Service Cuts/Adjustments ($59.8)1

Savings Achieved ($80.6)

Relief Act ($95.6)

Total ($176.5)1 Includes Deferment of Silver Line Phase 2 revenue to July 1, 2021 of $53.8M & reinstatement of Metrobus fare collection of $6MNote: Amounts are rounded for presentation purposes and may not sum



1. Full-time equivalents (FTE) vacant or filled ; subject to separation and retirement incentives 2. FTE reduction presented are vacant positions

Proposed Changes to Bus and RailFY2021

November BudgetFY2021 January

Amendment

$ in MillionsFTEs1 FTEs2 Service Level vs. November

Rail Standardize weekday rail service frequencies (493) - No change

Silver Line Phase 2 Opening July 1 (228) (228) No change

Bus Retention of August Service Plan (876) - Increase

Restore Bus Fares in Q32 - - No change

Bus Service Improvements 136 - Increase

Total (1,461) (228)



FY2021 Budget Subsidy ReviewFY2021 Budget FY2021 FY2021

$ in millionsPre-Covid-19 (April) November Budget January Amendment

Revenue $823.7 $182.7 $180.7 Expense $2,070.0 $1,840.6 $1,934.21

Gross Subsidy $1,246.3 $1,657.9 $1,753.5

Cares Act - $546.3 $546.3 Relief Act - - $95.6

Net Subsidy $1,246.3 $1,111.6 $1,111.6



1. Excludes operating reimbursables. With operating reimbursables, total expense is $1.942 billionNote: Amounts are rounded for presentation purposes and may not sum


Recommended Action

Approve amended FY2021 Operating Budget



SUBJECT: AMENDMENT OF FISCAL YEAR 2021 OPERATING BUDGET AND METROBUS SERVICE CHANGES

RESOLUTION OF THE

BOARD OF DIRECTORS OF THE

WASHINGTON METROPOLITAN AREA TRANSIT AUTHORITY WHEREAS, Pursuant to WMATA Compact §§ 23 and 24, on April 2, 2020, the Board of Directors adopted the fiscal year (FY) 2021 Capital Budget and Operating Budget (Resolution 2020-09); and WHEREAS, On November 19, 2020, the Board amended the FY 2021 Operating Budget and Capital Budget (Resolution 2020-39); and WHEREAS, The Board wishes to further amend the FY 2021 Operating Budget to reflect the additional funding to Metro from the Coronavirus Response and Relief Supplemental Appropriations Act of 2021 which became law on December 27, 2020; NOW, THEREFORE, be it RESOLVED, That the FY 2021 Operating Budget is further amended to increase the budget from $1.848 billion to $1.942 billion with such increase to be apportioned among the expense categories as determined by the General Manager and Chief Executive Officer, but with no change to the jurisdictional contribution amounts; and be it further RESOLVED, That the fifth RESOLVED clause of Resolution 2020-39 is rescinded; and be it further RESOLVED, That Attachment C to Resolution 2020-39 relating to service changes is amended to include the changes shown on the attached Additions to Attachment C to Resolution 2020-39; and be it further RESOLVED, That the Metrobus service changes contained in the original Attachment C to Resolution 2020-39 shall be effective on or about March 14, 2021, the Metrorail changes in the original Attachment C to Resolution 2020-39 shall be effective on or about February 14, 2021, and the changes in the attached Additions to Attachment C to Resolution 2020-39 shall be effective as soon as administratively and operationally possible; and be it finally

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RESOLVED, That this Resolution shall be effective 30 days after adoption in accordance with § 8(b) of the WMATA Compact. Reviewed as to form and legal sufficiency,

_/s/ Mark R. Pohl for _____________________

Patricia Y. Lee Executive Vice President and General Counsel WMATA File Structure No.: 4.2.2. Fiscal Year Budgets

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Additions to Attachment C to Resolution 2020-39

Spring 2021 Proposed Service Improvements

Establish 2AM network 7 days-a-week as a pilot on the following lines DC MD VA 32, 36 A12 1A 33 C4 7A 52 D12 10A 70 F4 16E 80 J2 23B 92 K6 28A A6, A8 P12 38B G8 T18 H4 Y2 L2 Z8 P6 (Anacostia-Archives only)

S2 U5 V2, V4 W2 (Anacostia-Alabama & Irving only)

W4 X2

Add/Modify Weekday service as follows: Line State Time

Period Description

8Z / 21A VA Peak Add a pilot hybrid service on 21A alignment between Stevenson & Walker and Duke & Reynolds, then 8Z alignment between Duke & N. Pickett and Pentagon Station

11Y VA Peak Add as a pilot, a modified service between Mt. Vernon and N. Washington & Pendleton Streets, then terminate at Braddock Road Station (Temporarily charge regular fare until direct service to downtown is restored)

17H (17K)

VA Peak Extend route 17H on the route 17K alignment from Commonwealth & Gainsborough to the Twinbrook Rd. terminal

18J VA Peak Add service on regular alignment

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22F / 28F

VA Peak Extend route 22F as a pilot to Skyline City from Beauregard & Filmore on 28G alignment, Add 28F service on regular alignment

23A, 23B, 23T

VA All-day Restore service to pre-pandemic schedule

26A VA All-day Add service on regular alignment 60 DC All-day Add service on regular alignment C26 (C28)

MD Peak Extend route C26 from Pointer Ridge to Bowie Park-and-Ride via Bowie Gateway Center as a pilot

M4 (E6) DC All-day Extend route M4 from Pinehurst Circle to Knollwood as a pilot

Add Saturday / Sunday service as follows: Line State Service

Days Description

C12, C14

MD Sat Restore service

C29 MD Sat Restore service between Pointer Ridge and Bowie D2 DC Sat/Sun Restore service E2 DC Sat/Sun Restore service G2 DC Sat/Sun Restore service H12 MD Sun Restore full span of service M6 DC Sat/Sun Restore service NH2 MD-

VA Sat/Sun Restore service on previously approved modified

alignment between National Harbor and King St. Station only

R12 MD Sat Restore service T14 MD Sun Restore service V12 MD Sun Restore service X8 DC Sat/Sun Restore service Z6 MD Sat Restore service

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