Los Angeles County Service Authority for Freeway Emergencies Matort%$ Atd 3

SAFE BOARD MAY 26,201 1

SUBJECT: FISCAL YEAR 2011 - 2012 SAFE BUDGET

ACTION: ADOPT THE FISCAL YEAR 2011 - 2012 BUDGET

Adopt the Fiscal Year 201 1 - 2012 (FY12) budget in the amount of $15,970,445 for the operation and administration of the Los Angeles County Service Authority for Freeway Emergencies (SAFE). This budget amount includes the annual funding allocations to 1) the MOU with Public Transportation Services Corporation (PTSC) for direct labor support in the amount of $1,592,705; 2) the Agreement with Metro for Freeway Service Patrol (FSP) operations in the amount of $1,500,000; and 3) if approved, a new Agreement with Metro to provide funding in support of the ExpressLanes project in the amount of $2,000,000.

SAFE was created in 1988, pursuant to California Streets and Highway Code Section 2550 et.seq. and is responsible for providing motorist aid services in Los Angeles County. In order to fulfill its mission SAFE needs an annual budget and requires administrative support services, which is provided via an MOU, from the PTSC. A summary of the proposed FYI2 budget is provided as Attachment A.

DISCUSSION

During FYI 1, SAFE continued to fund, develop, implement and operate a variety of motorist aid services, programs and activities. These programs, services and activities included:

e The operation of the Call Box Programs - Mobile/#399 and the Kenneth Hahn Call Box System. The development and implementation of Southern California 51 1 - a regional traveler information system.

* The funding of the Metro Freeway Service Patrol program. * Continued coordination and support of Metro Big Rig, FSP, Congestion Pricing,

Nextrip and the Regional Integration of Intelligent Transportation Systems (RIITS).

For FY12, SAFE is recommending the funding, implementation andlor operation of the following projects and activities:

Continue the operation of the Call Box Programs -the Kenneth Hahn Call Box System and the Mobile/#399 program; Evaluate and restructure the Kenneth Hahn Call Box System; Manage, operate and maintain Southern California 51 1 ; Develop and implement new services under Southern California 51 1 ; Continue funding for the Metro Freeway Service Patrol program; Provide funding to and work with Metro to support the ExpressLanes demonstration project; Work with Metro and Caltrans to evaluate and support the continued development and operation of the Regional Integration of ITS (RIITS) project; Work with our regional partners to identify and implement improvements to existing motorist services programs and develop new services that will improve mobility within the region - including Intelligent Transportation Systems (ITS) projects;

The anticipated ongoing operation, funding and implementation of these initiatives will assist Los Angeles County motorists by continuing to provide efficient and effective motorist services at a time when congestion and mobility remain an issue of utmost concern to all Los Angeles County residents.

The FYI2 budget of $15.9 million represents an increase of approximately $825,397 or 5% compared to the adopted FYI 1 budget. The budget increase is primarily attributable to the new $2 million ExpressLanes grant which SAFE is proposing to provide to Metro during this fiscal year. Overall, each major budget category is proposed to experience an increase in FY 12. Specifically, the FY 12 budget increases for each major budget category are as follows:

Categorv Increase/(Decrease) Administration $ 90,649 Direct Labor $339,208 Programs & Services $395,540

The increase in Administration is directly attributable to request for resources to support motorist services programs and projects. The increase will enable SAFE to obtain technical services to support SAFE during the fiscal year, primarily procurement support. The funding increase will provide SAFE with greater flexibility to respond to circumstance that develop during the fiscal year and will only be used when there is a real need andlor benefit.

The increase in Direct Labor is a due to an increase in the overhead and fringe benefit charges allocated to SAFE by PTSC. The staffing allocation of 10 Full-Time Equivalents (FTE) for FYI2 is proposed to remain consistent with the approved FYI 1 budget allocation.

The increase for Programs & Services is primarily attributable to the new funding allocation for the ExpressLanes. If approved by the Board, SAFE will provide up to $2 million in FYI2 and an additional $2 million in FYI 3 to Metro for the ExpressLanes project. These funds will mainly be used to purchase in-vehicle transponders for the project, which in turn will be provided to the motorists who will use the ExpressLanes. The only other item proposed to increase in FYI2 is the Motorist Services Improvements sub-category - proposed for a $150,000 increase. This increase is associated with the development of a regional ITS Strategic Plan to help SAFE, Metro and other regional partners better coordinate ITS related deployments and provide a roadmap for future ITS projects. All other sub-categories are proposed to have a decrease in their funding allocations for FY 12.

A more detailed summary of each projectlservice as well as a breakdown of the FTE allocation is provided as part of the Five-Year Financial Forecast (Attachment B).

FINANCIAL IMPACT

The funding of $15.9 million has been included in the FYI2 proposed budget in project 300209. The Five-Year Financial Forecast demonstrates the financial capacity of SAFE to use its existing fund balance and projected revenue to fully fund the proposed FYI2 budget. While there is a concern that the current state of the economy will negatively impact SAFE's dedicated vehicle registration surcharge revenues, the forecast that is being presented is a conservative one based upon long-term historical averages.

Impacts on Bus and Rail Operating and Capital Budget

The source of funds is the annual $1 .OO surcharge assessed on each vehicle registered within Los Angeles County. These funds are not eligible for Metro bus and rail operating and capital expenditures or to resolve the Metro structural deficit.

ALTERNATIVES CONSIDERED

The Board has two alternatives. It can (a) decide to not adopt the proposed budget or (b) make a modification, either a decrease or an increase, to the proposed budget. Neither of these options is recommended.

To ensure the continued operation of SAFE and its programs an annual budget is required. Without the budget, SAFE will be unable to administer its programs and fulfill its statutory motorist aid mission. Modification of the proposed budget is also not recommended. The proposed budget was developed to ensure that SAFE is sufficiently funded for FYI2 and has a certain amount of flexibility to adapt to situation and opportunities as they arise. The proposed budget ensures SAFE's ability to properly fulfill its mission and comply with all existing legal and statutory requirements.

NEXT STEPS

Upon approval of the proposed FYI2 budget, staff will begin implementing the projects and work for FY12. Staff will monitor the budget and projects to ensure SAFE meets all its requirements in a fiscally responsible manner.

ATTACHMENTS

A. Proposed Fiscal Year 201 1 - 2012 Budget Summary B. Five Year Financial Forecast

Prepared by: Don Howey, Planning Manager Kenneth Coleman, Program Manager

- - ~xecutive Director, Highway Program

Executive Officer

ATTACHMENT A

Proposed Fiscal Year 201 1 - 2012 Budget Summary Total Expenditure Categories

Call Box Operations Traveler lnformation System Metro Freeway Service Patrol Metro Services lmprovements

Proposed Fiscal Year 201 1 - 201 2 Budget Summary Comparison FYI 1 Budget vs. FYI2 Budget

Traveler lnformation System Metro Freeway Service Patrol Motorist Services lmprovements

ATTACHMENT B

LOS ANGELES COUNW SERVICE AUTHORITY FOR FREEVVAY EMERGENCIES FINANCIAL FORECAST ($000)

FISCAL YEAR 201 1 - 2012

Projected Registration Surcharge Projected SAFE Fund Balance Projected Interest

Administration

Direct Labor

Programs & Services

#399 - Motorist Aid (Mobile Call Box)

Call Box Program

Traveler Information

Metro Freeway Service Patrol

Motorist Services Improvements

Los Angeles County Service Authority for Freeway Emergencies

Five-Year Financial Forecast Fiscal Year 201 1 - 201 2

Notes and Assumptions

The FYI2 Five-Year Financial Forecast has been developed to provide a snapshot of SAFE'S current financial situation and project the impact of the proposed FYI 2 budget to the overall financial condition of SAFE. The forecast is based upon the assumptions and notes listed herein.

The use of SAFE funds is strictly limited per California Streets and Highways Code Section 2550 et.seq., which requires SAFE to first use its dedicated funds to support the call box system and then enables the use of funds to support other motorist aid services.

The forecast demonstrates that SAFE currently has sufficient financial capacity to fully fund the call box system as well as other motorist aid services as proposed in the FYI2 budget. SAFE has the current financial capability to absorb the impact of the FYI2 budget for the next five years. However, the forecast also shows a steady decrease in available SAFE funds for each successive fiscal year. Staff will closely monitor the financial status of SAFE and identify and implement solutions to alleviate any potential negative financial situation in a timely manner.

This forecast includes the projected costs of operating and enhancing Southern California 51 1 as well as continuing the operations of the call box system and the #399 - Mobile Call Box program, funding for Metro Freeway Service Patrol operations and funding improvements to motorist services programs. In addition, the forecast also includes a new two-year funding allocation in support of the ExpressLanes demonstration project. All financial figures will be refined as better information is obtained and more accurate projections can be made.

SAFE FUNDS

This section provides a summary of the projected funds available to SAFE.

e Projected Registration Surcharge

This refers to the projected annual revenue generated by the $1 .OO vehicle registration surcharge. The forecast is based upon historical figures. While the actual revenue obtained from the vehicle registration surcharge has increased over the last couple of years, there is a concern that the current state of the economy will negatively impact new vehicle purchases which may in turn impact the overall number of registered vehicles. Therefore, a

conservative forecast is being presented based upon long-term historical averages. Overall, the registration surcharge is projected to remain relatively constant for the next five years.

0 Projected SAFE Fund Balance

The SAFE fund balance shows the available funds from the end of the previous fiscal year.

Projected Interest

This references the projected interest income for SAFE, based upon a conservative 2.5% rate of return on the investment base. The investment base is defined as the total funds available less 50% of the projected fiscal year expenditures. The total funds available is defined as the "Projected Registration Surcharge" + "Projected SAFE Fund Balance".

Other

This category represents any funds to be obtained from claims against individuals who have damaged call boxes and from the sale of any surplus or salvaged inventory. This category also includes reimbursement funding from OCTA in support of the operation of Southern California 51 1.

Administration

These are funds programmed for general administrative support services and equipment costs. Items such as professional and technical support, printing, travel, training, office supplies, computer equipment, insurance, legal, and other general services required for the administration of SAFE are included in this category. The forecasted cost for administration is projected to fluctuate during the five-year period. There is a slight decrease for FYI3 and FY14, compared to the proposed FYI2 allocation, due to a decrease in the procurement support allocation - this presumes that PTSC will be able to fully support SAFE'S procurement needs. The increases for FYI 5 to FYI 7 are mainly attributable to an increase in insurance costs and equipment replacement costs.

The FYI2 budget for administrative services is proposed to increase by $90,649 compared to the adopted FYI I budget. This increase is due to the addition of funding for professional and technical services.

e Direct Labor

These funds are programmed to cover the projected costs associated with overhead, salary and fringe benefits SAFE incurs due to its FTEIpermanent staffing needs. During FY12, SAFE will continue to fund the program management for both SAFE and Motorist Services Unit. The FYI2 budget for this category is $339,208 more than FYI 1 due to the changes to the overhead and fringe benefit allocations assessed to SAFE by PTSC.

The FYI 2 FTE allocation is comprised of the following positions:

- Motorist Services Program Manager - Motorist Aid Technical Administrator - Motorist Aid Program Administrator - Transportation Planning Manager Ill - Transportation Planning Manager IV - Senior Contract Administrator - Senior Administrative Analyst -Administrative Aide

The FYI 2 allocation is consistent with the approved FY 1 1 allocations. All of the staff provided under this category will be obtained from the Public Transportation Services Corporation (PTSC) via the existing MOU. Costs for outlying years are projected to slightly increase over the forecast period. The forecast predicts no increase for FY13; a 1% increase for FY14; and 2% annual increases for FYI5 to FY17.

e Programs & Services

Funds programmed in direct support of the programs, projects and services operated by or to be funded by SAFE. The programs and services SAFE proposes to support during FYI 2 include #399 - Mobile Call Box program; Metro Freeway Service Patrol operations; the Kenneth Hahn Call Box System, Southern California 51 1, Motorist Services lmprovements and the ExpressLanes demonstration project.

The FYI2 budget for this category has increased by $395,540 compared to the adopted FYI I budget. This increase is attributable to two (2) sub- categories - Motorist Services lmprovements and ExpressLanes. Funding for Programs & Services is projected to decrease over the next two fiscal year (FYI3 and FY14) then remain relatively stable over the next three fiscal years. The forecast takes into account the impact of the guaranteed revenue offsets provided under the contract for Southern California 51 1, which reduces the overall projected expenditures in FYI3 to FY17. As the program continues to mature, the amount of the offset grows, thereby decreasing the

overall cost to operate and maintain Southern California 51 1. As funds become available andlor as new motorist aid projects are identified, SAFE will evaluate the ability to fund andlor operate new projects and incorporate the projects into the forecast as the Board authorizes them. The following is a breakdown of each program and service to be funded andlor operated by SAFE during FY12:

#399 - Mobile Call Box

Funds programmed to support the operation of the #399 - Mobile Call Box program. The FYI2 budget for this program is proposed to decrease by $50,160 compared to the adopted FYI I budget. This reduction is due to a lower per call handling cost.

This program provides motorists with an easy-to-use alternative to the freeway call box by providing a number that they can call from their wireless mobile phone to request non-emergency roadside assistance. The allocated funds cover the cost to answer the calls. Call volumes are projected at 3,000 callslmonth for FY 12 and FYI 3. As the program is expected to be merged with Southern California 51 1 by the end of FYI 3 there are no forecasted costs associate with this program after FYI 3. After FYI 3, all costs associated with this program will be incorporated into Southern California 511.

Call Box Program

Funds programmed to cover the costs to operate, maintain and improve the Kenneth Hahn Call Box System. The FYI2 funding for the Call Box Program is proposed to decrease by $64,300 compared to the adopted FYI I budget. This decrease is attributable to lower call volumes and lower maintenance cost.

Operational cost to fund the call box system include all day-to-day requirements to operate and maintain the call box system and is based on contractual and supplier costs to supply the services and parts to operate and maintain the system. Items include call answering services, cellular service and maintenance operations. Funding for call box operations is projected to remain stable during the course of this forecast; however, this may change as staff will be conducting an evaluation of the system in FY12. As a result of the evaluation, it is anticipated that there will be restructuring of the call box system. The impact of the anticipated restructuring has not been factored into this forecast due to the level of uncertainty and will be entered into the forecast at a later time.

Traveler Information System - Southern California 51 1

Funds programmed to support the continued development and operation of Southern California 51 1. Southern California 51 1 is a regional traveler information system operated in partnership with Metro, the Orange County Transportation Commission, the Ventura County Transportation Commission, CHP and Caltrans. The system provides individuals with the ability to obtain traffic, transit, commuter services and other general traveler information via their phone or the Internet. The system was deployed in June 2010 as a "beta" system and is now operating as a fully functional system. With the deployment, the Los Angeles County region joins over 35 other 51 1 systems in operation throughout the nation. Since the June 2010 launch, Southern California 51 1 has handled over 1.7 million phone calls and 280,000 web visits. The system is still in the early stages of its development and improvements are both underway and/or planned to:

o improve the quality of the 51 1 phone system; o improve the performance of the website; o expand the capability of the real-time transit information (Nextrip); o improve the quality and amount of data and information available; o develop a general emergency platform for 51 1 to support in emergency

situations; o improve the alert and announcement information; o and a variety of other items

The FYI2 allocation for this system is proposed to decrease by $1,140,000 compared to the FYI 1 allocation; however, this decrease will not negatively impact the ability of the program to operate or improve. The FYI2 request includes funds for the continued development, deployment and operation of the system. The decrease is due to the transition of the system from the initial higher cost development stage to the lower cost operation and system improvement stage. Allocations for FYI 3 and beyond remain relatively stable and include system enhancements, support, operational and marketing costs. Costs are also somewhat offset by the impact of the guaranteed revenue offsets that are contained in the contract to operate and maintain Southern California 51 1. Staff will closely monitor 51 1 operations to ensure that the highest quality service is provided to the public and to ensure that the system adapts to meet the needs of the region.

Metro Freeway Senlice Patrol O~erations

Funds programmed to assist Metro with the operation of the Metro Freeway Service Patrol (FSP). Funding of the Metro FSP program from SAFE funds is authorized as FSP is a motorist aid service. Based on past usage, SAFE has allocated up to $1.5 million annually for the five year period of this forecast in support of Metro FSP operations.

Motorist Services Improvements

Funds programmed to enable SAFE to support improvements to existing motorist services programs andlor develop new services. For FY 12, these funds may be used to support the implementation of the restructuring of the Metro Freeway Service Patrol; develop and deploy new non-planned improvements to Southern California 51 1 ; support the development of new ITS related projects which will reduce congestion and improve mobility; and a variety of other motorist services programs. As an example, in FYI 1 SAFE worked with Metro to support the development and deployment of Metro's Nextrip service. SAFE made improvement to 51 1 to enable transit users to call and obtain information about when the next bus will be at their bus stop. In addition, SAFE provided Metro will funding in support of the production of new bus stop signs in support of the Nextrip service. Another example is the partnership with the City of Los Angeles to have Southern California 51 1 support their intelligent parking system to be deployed in the downtown area as part of the Congestion Pricing program. The City is requesting to use 51 1 to dispense information about parking availability and rates. This will require additional resources on SAFE'S part to obtain the data and develop an appropriate format to display and distribute the information. SAFE is also working with Metro to determine the best way to incorporate information about the ExpressLanes demonstration project into 51 1. When an opportunity, such as the aforementioned items arise SAFE will use these funds to implement the necessary and approved improvements. The funding for service improvements is projected to decrease in FYI3 and again in FY15. Funding for this sub-category will be evaluated on an annual basis and the allocation will be dependent upon available funds and identified needs.

ExpressLanes Demonstration Proiect

Funds programmed to assist Metro with the deployment and operation of the ExpressLanes demonstration project. This is a two-year allocation ($2 million per year) whereby SAFE funds will be used to purchase in-vehicle transponders and provide administrative support to the project. This funding is contingent upon Board approval of a funding agreement with Metro.