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Report No: Meeting Date:

Alameda-Contra Costa Transit District

STAFF REPORT TO: Finance and Audit Committee

AC Transit Board of Directors

FROM: David J. Armijo, General Manager

SUBJECT: Proposed FY 2015-16 Budgeting Framework

BRIEFING ITEM

RECOMMENDED ACTION(S):

15-033 January 28, 2015

Consider receiving an overview on Staff's proposed FY 2015-16 budgeting framework

EXECUTIVE SUMMARY:

The Board adopted a budget development calendar on November 12, 2014. Staff is now

proposing the next steps in the development process. The FY 2015-16 Operating and Capital

Budgets will be guided by prioritized goals and objectives, key performance indicators, and

major program targets. These strategies are derived from the development of the Short Range

Transit Plan (SRTP), which is the District's long-term vision for service, equipment, and facility

priorities.

Over the next weeks and months, staff will work with all department managers and employees

to generate systemic commitment and engagement in the definition of departmental goals, key

performance indicators, and specific targets to be achieved during the budget period. These

elements will be presented to the Board as the budget cycle progresses.

BUDGETARY/FISCAL IMPACT

There is no budgetary/fiscal impact associated with this report.

BACKGROUND/RATIONALE:

This staff report provides the Board with an update on the process for development of the FY

2015-16 Operating and Capital Budgets. The Board adopted a budget development calendar on

November 12, 2014. As presented in the calendar, the Board is receiving for consideration of

adoption a Mid-Year budget for both Operating and Capital activity for the current FY 2014-15

on January 28, 2015. The mid-year budget discussion represents a baseline for the current state

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Report No. 15-033 Page 2 of 2

of operating performance versus operating costs, and the evolution of revenue trends. Staff is

now proposing the next steps in the development process.

ADVANTAGES/DISADVANTAGES:

This report does not recommend a course of action with notable advantages or disadvantages.

ALTERNATIVES ANALYSIS:

This report is being provided to inform the Board of the activities associated with the

development of the FY 2015-16 Operating and Capital Budgets.

PRIOR RELEVANT BOARD ACTIONS/POLICIES:

SR 14-283 Budget Development Process and Calendar, November 2014

ATTACHMENTS: 1: Overview of Proposed Budgeting Framework

Department Head Approval:

Reviewed by: Prepared by:

James D. Pachan, Interim Chief Financial Officer

Denise C. Standridge, Interim General Counsel Hernan Vargas, Budget Manager

FY 2015-16 Budget Development Process – An Overview of the Proposed

Budgeting Framework Presented by Jim Pachan, Interim Chief Financial Officer, and Hernan Vargas, Budget Manager

AC Transit Finance Department January 28, 2015

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Agenda

Introduction

Overview of the Proposed Budgeting Framework

Refresher: the Framework for the SRTP Process

The Proposed FY 2015-16 Budgeting Framework: Steps

One Example

Conclusions and Q & A

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Introduction

• Budget Board Policy 312 mandates District Staff to produce a budget based on long-term and short-term Goals, Objectives, KPIs and targets linking the SRTP’s strategies with the current year operating and capital budgets

• The budget developed plan accomplishes this mandate

in compliance with GFOA recommendations

• The following is an overview of the proposed budgeting, planning and budgetary control processes for FY2016

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Overview: the proposed performance-based budget development process framework

SRTP Review

Set

Strategic Priorities

For new FY

Finalize Recommend

Budget

Review Goals,

Objectives KPIs

Targets For new

FY

Set specific Department

Objectives KPIs

Targets

Develop Proposed

Budget

-Verify Key Long term assumptions and status of long-term critical programs

-Define focus area at the District-level

-Roll down to department level with a focus on interdepartmental collaboration and common purpose

-Specify focus Goal(s) according to strategic priority

-Work on planning activities and resources (details in next slide)

-Define a final Recommended Budget repeating previous steps

Note: Process assumes implementation of individual performance evaluation 139

Refresher: The Framework for the SRTP Process

Board Policies

Performance Management – SMART Goals

FY 2014-15 Operating Budget

FY 2014-15 Capital Plan

MTC

AC Transit FY 2015-16 Operating

and Capital Budget

FTA

COA, BRT, CBTP, RTCI, TSP

FY 2015-16 / FY 2025-26 AC Transit

SRTP

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The FY 2015-16 Proposed Budgeting Framework: Steps

1.- Define the strategic priorities for the FY

2015-16 year

2.- Pick the Goals that will guide us based on the strategic priorities

for the FY 2015-16 year

3.- Pick the Objectives for each of those Goals

selected for the FY 2015-16 year, and

define one KPI and one Target for the year for

each

4.- Create programs, projects or initiatives

that cross departmental

boundaries to achieve set targets for the FY 2015-16, and

assign a budget for those

Performance Budgeting

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One example

A totally made up example First Step – Define Strategic Priorities

Increase ridership by a level enough to increase Farebox Recovery Ratio by 1 percentage point, at least, by the end of

FY 2015-16, OR Increase total service available by new Enhanced Service strategy, improving OTP by 3 percentage points and reducing total service costs per hour by 1 percent by the end of FY 2015-16

Second Step – Pick Goals

Goal 1: Provide quality and reliable service, OR Goal 2: Implement and maintain a strong safety culture, OR Goal 3: Utilize financial resources effectively and efficiently

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Conclusions

The suggested Process, based on Best Practices, can assist the District to:

Design cross-departmental programs or initiatives that

contribute to achieving results with limited resources Fosters collaboration and systemic unified planning and

implementation – so everyone can win Picking priorities for action is based on hard data Helps discover positive feedback loops or interactions

between many Objectives and Goals

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Q & A

Thanks for your attention!

Open for all Questions

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