fy18 preliminary itemized budget - massachusetts …€¢ march 14 – april 9: ongoing discussions...
TRANSCRIPT
Draft for Discussion & Policy Purposes Only
FY18 Preliminary Itemized Budget
March 13, 2017
Summary for Vote to Release to MBTA Advisory
Board and for Public Discussion
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Draft for Discussion & Policy Purposes Only
Table of contents
• Review of Relevant Statutes
• Recap: FY16-17 Management/FMCB Actions
• FY18 Balanced Budget Proposal
• Trade-Offs
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Statutory Preliminary FY18 Itemized Budget voting
requirement for release to MBTA Advisory Board
FY18 Preliminary Itemized Budget – Introduction
REQUIRED VOTE FOR TODAY
That the Fiscal and Management Control Board approves the Authority’s Preliminary FY18 Itemized Budget of current operating expenses and debt service costs for a one year period—July 1, 2017 through June 30, 2018—in the amount of $1,950MM in the form submitted at this meeting; and
That the General Manager and Chief Administrator are hereby authorized and directed to submit the Preliminary FY18 Itemized Budget, in the name and on behalf of the Authority, to the MBTA Advisory Board; and
That following the Advisory Board review, a Final FY18 Itemized Budget will be submitted to the Fiscal Management and Control Board no later than April 15, 2017 in accordance with Section 20 of Chapter 161A of the Massachusetts General Laws.
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• March 13: Presentation of Preliminary FY18 Itemized Budget to FMCB
› FMCB to vote on Preliminary Itemized Budget for release to MBTA Advisory Board and to MBTA website for public discussion
• March 14 – April 9: Ongoing discussions with FMCB, Management, Stakeholders and MBTA Advisory Board
• March 16: Secretary of Transportation/MBTA budget hearing with Legislature
• April 10: Presentation of Final FY18 Itemized Budget to FMCB
› FMCB vote to approve Final FY18 Itemized Budget
• April 15: Deadline to submit Final FY18 Itemized Budget for release to MBTA Advisory Board
FY18 Budget Process: Key Dates
FY18 Preliminary Itemized Budget – Introduction
5
FMCB statutory mandate #1:
Separate capital and operating budgets
Under Section 5 of Chapter 46 of the Acts of 2015, the FMCB is directed to:
“Establish separate operating and capital budgets each with clearly designated revenue sources and uses and establish policies and procedures to ensure that no funds are commingled between operating and capital budgets”
FY18 Preliminary Itemized Budget – Introduction
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Additional State Assistance
Additional State Assistance
Operating Dollars Capital Dollars
• MBTA goal in FY18 is to eliminate use of Additional State Assistance to fund operating deficit
• FY17 & beyond CIP commitments
• “Pay-as-you-go” capital programs
o Capital Maintenance Lockbox
o Legacy Capital Maintenance Fund
Additional Assistance from Commonwealth is restricted in use:
“Funding shall be used solely for repayment of debt encumbered prior to 2001 and debt associated with mitigation commitments related to the Central Artery Tunnel Project, the movement of costs from the capital to operating budget, pay-as-you-go capital programs, or debt service for new borrowing related to improving the system's state of good repair…”
FY18 Preliminary Itemized Budget – Introduction
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FMCB statutory mandate #2:
Deliver a balanced operating budget
Under Section 5 of Chapter 46 of the Acts of 2015, the FMCB is directed to:
“Establish 1- and 5-year operating budgets under section 20 of chapter 161A, beginning in fiscal year 2017, which are balanced primarily through a combination of internal cost controls and increases in own-source revenues”
FY18 Preliminary Itemized Budget – Introduction
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Table of contents
• Review of Relevant Statutes
• Recap: FY16-17 Management/FMCB Actions
• FY18 Balanced Budget Proposal
• Trade-Offs
9
Without action, structural deficit was on track to reach $427M by FY20
STATUS QUO FY17 PRO FORMA – 8.1.2015
Projected Structural Deficit
Note: Structural deficit includes debt service and transferred capital employees annual expense; does not include Additional State Assistance
FY18 Preliminary Itemized Budget – Introduction
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Putting MBTA on path to fiscal sustainability
Management actions – FMCB first 18 months
Moved MBTA onto statewide contracts and payroll system
Streamlined corporate HQ/administrative positions 30% reduction
Strengthened and enforced overtime and attendance policies
Modernized cash-handling & warehouse through contracting
Restructured Carmen’s Union contract work-rules and wage rates
Launched Uber/Lyft and taxi paratransit pilots
Locked electricity rates; invested in generating capacity
Restructured and refinanced debt portfolio
Rebid parking/advertising and raised system-wide fares
$100M in winter resiliency projects / $140M in the capital lock box
FY18 Preliminary Itemized Budget – Introduction
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Note: For comparative purposes, FY17 Recast core operating expenses do not include new Amtrak/PRIAA expenses or capital employees transferred in FY17 Note: FY18 Energy costs forecast to be consistent with FY17 Recast
Preceding 15+ Year Average: 5%
Positive results:
Operating expenses on track for lowest growth in more than 15 years
FY18 Preliminary Itemized Budget – Introduction
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Note: MBTA Management in process of recasting the pro forma. Operating Deficit does not include Additional State Assistance of $155M in FY16, $187M in FY17 Recast, and $187M in FY18 (Note $60M will be directly deposited in “Capital Maintenance Lockbox”)
Positive results: Operating deficit continues to decrease;
FY18 operating could be balanced through trade-offs
FY18 Preliminary Itemized Budget – Introduction
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Draft for Discussion & Policy Purposes Only
Table of contents
• Review of Relevant Statutes
• Recap: FY16-17 Management/FMCB Actions
• FY18 Balanced Budget Proposal
• Trade-offs
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• Without action, structural deficit was on track to reach $427M by FY20
• This presentation will highlight and summarize the impact of the FMCB and Management’s actions to:
› Eliminate the structural deficit in FY18
» Enable the full $187M in FY18 Additional State Assistance to be invested in capital (as per the FY18-21 CIP)
› Continue to control cost growth in FY18
» FY16-17 lowest operating expense growth in more than 15 years
› Continue to drive productivity and efficiency in FY18
» Overtime hours down 25% from FY15; 30% reduction in Corporate Headquarters/Administrative positions
› Focus on delivering trips to our customers in the most efficient manner
• Balancing the FY18 budget (as required by statutory mandate) will put MBTA on path to long-term fiscal stability
Overview:
FY18 budget process
FY18 Preliminary Itemized Budget – Overview
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Revenue
• Sales tax revenues will be conservatively budgeted at the Base Revenue Amount (BRA) - $1,007M
• Own-source revenue increase of $15M, driven by growth in both parking and advertising revenues
• Additional State Assistance of $187M fully committed to CIP and “Pay-GO” capital; excluded from operating budget
Expenses
• Wage expense assumptions
› Flat Headcount (i.e., one-in/one-out) across the MBTA
› 30% reduction in Corporate HQ/Administrative positions (complete as of 5/1/17)
› Boston Carmen’s Union (L589) 12/19 agreement in effect for first full Fiscal Year
› Overtime costs projected to be level with FY17 run-rate (i.e., below FY13-14 levels)
• RIDE call center fully operational (pilot programs forecast to decrease overall cost)
• Warehouse/Cash Collection/Call Center/Police Dispatch fully implemented
• Materials/Services/Supplies expense built from the bottom up based on executed contracts and purchase orders
• Total debt service is $451M; including $240M of principal pay down per amortization schedule (up $30M from FY17)
Executive Summary:
FY18 Baseline Status Quo Budget before policy decisions
FY18 Preliminary Itemized Budget – Overview
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Budgeted sales tax revenue will be derived from the Base
Revenue Amount in FY18
FY18 Preliminary Itemized Budget – Revenue
FY18
FY18 Projected Sales Tax Revenue (Base Revenue-Derived)
$1,007M
FY18 Base Revenue Amount (Minimum Dedicated Revenue)
$1,007M
Projected Sales and Use Tax Collections, Excluding Meals Tax
$5,256M
Percentage due to MBTA x 16%
$841M
Additional dedicated revenue + $160M
$1,001M
Calculation of FY18 Dedicated Revenue
Future Dedicated Revenue based on sales tax is subject to economic conditions
Ded
icate
d S
ale
s
Tax R
even
ue
Calc
ula
tio
n
B
A
MBTA receives the larger of A
or B
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FY18 Proposed Balanced Budget
($M)
FY17 BUDGET RECAST
FY18 BUDGET PRELIM.
$ VARIANCE
% VARIANCE
REV
EN
UES
Operating Revenues $717.4 $744.5 $27.0 3.8%
Non-Operating Revenues $1,203.1 $1,205.6 $2.5 0.2%
Total Revenues $1,920.5 $1,950.0 $29.5 1.5%
EX
PEN
SES
Wages, Benefits and Payroll Taxes
$767.0 $744.1 ($22.9) -3.0%
Non-Wage $774.9 $754.8 ($20.1) -2.6%
Operating Expenses $1,541.9 $1,498.9 ($43.0) -2.8%
Debt Service $428.7 $451.2 $22.5 5.2%
Total Expenses $1,970.6 $1,950.0 ($20.5) -1.0%
Structural Deficit ($50.1) ($0.0) $50.1 -100.0%
FY18 Preliminary Itemized Budget – PATH TO A BALANCED BUDGET
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“P
Note: Operating Deficit does not include Additional State Assistance
Achieving a balanced budget in FY18 would put MBTA on path
to fiscal stability FY19-21 and enable capital investment
FY18 Preliminary Itemized Budget – PATH TO A BALANCED BUDGET
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Key capital investments enabled by achieving balanced budget
FY18 Preliminary Itemized Budget – PATH TO A BALANCED BUDGET
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Board approved $600M in current CIP (FY18-21) funded by Additional State
Assistance; Remaining $148M could be programmed to “Pay-GO” Projects
ADDITIONAL INITIATIVES
• Beacon Junction • Red Line #3 Car
Replacement • Commuter Rail Locomotive
and Coach Rehabilitation • Power Investments
FY18 Preliminary Itemized Budget – PATH TO A BALANCED BUDGET
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Draft 5-year Pro-Forma:
MBTA projected to have no structural deficit FY18-FY21
($M)
FY17 BUDGET RECAST
FY18 BUDGET PRELIM. FY19P FY20P FY21P
FY18-21 GROWTH
REV
EN
UES
Operating Revenues $717.4 $744.5 $771.1 $795.0
$812.8 Non-Operating Revenues
$1,203.1 $1,205.6 $1,217.6 $1,229.8 $1,242.1
Total Revenues $1,920.5 $1,950.0 $1,988.7 $2,024.8 $2,054.9 1.8%
EX
PEN
SES
Wages, Benefits and Payroll Taxes
$767.0 $744.1 $754.3 $766.8 $780.8
Non-Wage $774.9 $754.8 $767.7 $802.4 $805.4
Operating Expenses
$1,541.9 $1,499 $1,522 $1,569 $1,586 1.9%
Debt Service $428.7 $451.2 $466.7 $455.6 $468.8 1.3%
Total Expenses $1,970.6 $1,950.0 $1,988.7 $2,024.8 $2,054.9 1.8%
Structural Deficit ($50.1) ($0.0) ($0.0) ($0.0) ($0.0)
FY18 Preliminary Itemized Budget – PATH TO A BALANCED BUDGET
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Table of contents
• Review of Relevant Statutes
• Recap: FY16-17 Management/FMCB Actions
• FY18 Balanced Budget Proposal
• Trade-Offs
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Path to a FY18 Balanced Budget:
Baseline Status Quo
FY18 Preliminary Itemized Budget – PATH TO A BALANCED BUDGET
BASELINE STATUS QUO FY18 BUDGET
Baseline Revenues
• No fare increases in FY18
• Statutory increases in Base Revenue Amount (BRA) and Local Assessments
• Own-source revenue growth driven by new advertising and parking contracts
• Reduction in one-time revenues
Baseline Expenses
• Headcount held flat (one-in/one-out)
o Strategic Operations hires not included in in baseline
• L589 12/19 Agreement in effect for full fiscal year
• Execution of ongoing contracting initiatives
o e.g. Warehouse, Cash Collection, Call Center, Police Dispatch, etc.
• Fully operational call center for the RIDE
• Materials, services, and supplies expense built from bottom up
Baseline Debt Service
• Restructuring of swap and debt portfolio reduce FY18 interest costs by $26M
• Total debt service is $451M; including $240M of principal pay down per amortization schedule (up $30M from FY17)
• Near-term debt refinancing have opportunities have been realized
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Path to a FY18 Balanced Budget:
The following actions could balance the budget
FY18 Preliminary Itemized Budget – PATH TO A BALANCED BUDGET
OPTIONS FOR CLOSING THE $42M GAP BETWEEN BASELINE STATUS QUO REVENUES & EXPENSE FROM FY17 RECAST
High-Subsidy Services
• Weekend Commuter Rail (Suspend, Invest, Relaunch)
• The RIDE premium trips (1 year suspension of trips beyond 3/4 mile of the fixed route, not legally required)
Flexible Contracting
• Focus 40 Garages
• Cabot Garage
• Everett Bus Shop
• Hybrid in-station customer service model (consistent with L589 12/19 agreement)
Revenue
• Maximize revenues from real-time information screens (policy change)
• Keolis/MBTA revenue growth strategy
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FY18 operating budget could be balanced through trade-offs
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Note: Operating budget costs only, does not include non-cash fringe
FY18 Preliminary Itemized Budget – PATH TO A BALANCED BUDGET
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Trade-offs for balancing FY18 Budget
(in millions)
FY18 Deficit (Baseline Status Quo before Trade-Offs) ($41.7)
Internal Cost Control
Hybrid In-station Customer Service Model $6.3
Focus 40 Garages $11.1
Everett Bus Shop $5.3
Cabot Garage $4.9
Subtotal Internal Cost Control $27.6
Service Suspensions
Weekend commuter rail (1yr suspension) $10.0
RIDE Premimum Trips (1yr suspension of legally non-req. services) $7.4
Subtotal Service Suspensions $17.4
Revenue Initiatives
Maximize Real-Time Information Screens $3.0
MBTA/KCS Revenue Growth $1.0
Subtotal Revenue Initiatives $4.0
Operations Key Strategic Hires ($7.3)
(Power/Signals/Chief Engineer/Service Planning)
FY18 Balanced Budget ($0.0)
FY18 Preliminary Itemized Budget – PATH TO A BALANCED BUDGET
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REVENUES $4M
HIGH SUBSIDY
$17M
FLEXIBLE CONTRACTING
$28M
FY18 operating budget could be balanced through trade-offs
TOTAL VALUE: $49M DEFICIT REDUCTION
FY18 Preliminary Itemized Budget – PATH TO A BALANCED BUDGET
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LOOKBACK 11/15/2015:
RIDE premium non legally required trips
FY18 Preliminary Itemized Budget – PATH TO A BALANCED BUDGET
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LOOKBACK NOV15:
High cost bus maintenance operations
FY18 Preliminary Itemized Budget – PATH TO A BALANCED BUDGET
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LOOKBACK 10/5/2015:
Maximize advertising revenue with new advertising partner
FY18 Preliminary Itemized Budget – PATH TO A BALANCED BUDGET
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FY18 BASELINE STATUS QUO FY18 BALANCED BUDGET
• Assumes no cuts to service levels from FY17
• Service expansion of Silver Line to Chelsea
o Additional drivers funded from operating budget to expand service
• Balanced Budget includes 1-year suspension of limited non-core services
• 1-year suspension of high-subsidy weekend commuter rail
o Allows for work/investment in key maintenance and safety programs (i.e., PTC)
• 1-year suspension of Premium RIDE trips
(trips beyond 3/4 mile of the fixed route, not legally required)
Baseline Budget maintains or expands service
OPTION: Suspend Non-Core Services
FY18 Preliminary Itemized Budget – PATH TO A BALANCED BUDGET
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Re-inventing weekend commuter rail service: Weekend commuter rail
service has low ridership and high costs, resulting in high subsidies
WEEKEND TRIPS HAVE SIGNIFI-CANTLY HIGHER SUBSIDIES…
…AND WEEKEND SUBSIDY PER TRIP EXCEEDS $100 ON SOME LINES
Note: Data does not include annualized capital investment required to maintain system in a state of good repair. Source: Ernst & Young Infrastructure Advisors analysis of MBTA data.
FY18 Preliminary Itemized Budget – PATH TO A BALANCED BUDGET
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• Extensive weekend shutdowns (line specific) are planned starting in the summer of 2017 to accommodate PTC and other capital programs
• System-wide weekend commuter rail shutdown would enable accelerated work on state of good repair maintenance and other capital projects
• As work is completed, could strategically re-launch weekend commuter rail service with a focus on developing a financially sustainable product
› Target subsidy over first 6 months: $15/trip
› Target subsidy over 12 month: $10/trip
• Keolis to present a strategy for weekend pilots
› Family passes and other fare products focused on weekend usage patterns
› New demand-based schedules/frequency
› Partnership with Boston entertainment venues/sports events
Re-inventing weekend commuter rail service:
Creating a demand-driven, fiscally sustainable product
FY18 Preliminary Itemized Budget – PATH TO A BALANCED BUDGET
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• REMINDER: Keolis contractually required to perform a certain quantity of fixed-price, long-term maintenance annually (not included in ‘Extra Work’)
• System-wide weekend shutdowns provide unique opportunity to accelerate Keolis maintenance/SGR scheduled programs
• Maintenance currently schedule to be performed in FY19, FY20, FY21, and FY22 can be completed in FY18
• Immediate benefit to improve state of good repair
• Ernst & Young performed a review and highlighted a number of projects that could be accelerated by system-wide shutdowns
› See next two slides
Invest in the Commuter Rail system:
Accelerate Commuter Rail ongoing maintenance
FY18 Preliminary Itemized Budget – PATH TO A BALANCED BUDGET
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Invest in the Commuter Rail system:
Accelerate Commuter Rail ongoing maintenance (1/2)
FY18 Preliminary Itemized Budget – PATH TO A BALANCED BUDGET
Source: Ernst & Young Infrastructure Advisors analysis of MBTA data.
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Invest in the Commuter Rail system:
Accelerate Commuter Rail ongoing maintenance (2/2)
FY18 Preliminary Itemized Budget – PATH TO A BALANCED BUDGET
Source: Ernst & Young Infrastructure Advisors analysis of MBTA data.
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FY18 BASELINE STATUS QUO FY18 BALANCED BUDGET
• Assumes minimal changes to current Customer Service Agent (CSA) delivery model
• Includes internal management restructuring of CSA program
• Transfer all temporary CSA personnel to operator/motorperson pool over 12 months
o In-station customer service will be provided by both permanent MBTA CSAs and third party employees
o Consistent with L589 12/19 agreement
• Includes provisions for increased coverage of stations
• Contracted service increases replaced internal man hours by 50%
Baseline Budget retains in-house CSA program
OPTION: Change Customer Service Delivery Model
FY18 Preliminary Itemized Budget – PATH TO A BALANCED BUDGET
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FY18 BASELINE STATUS QUO FY18 BALANCED BUDGET
• Baseline Budget includes no changes to existing Bus Maintenance delivery model
• Balanced Budget includes contracting management and maintenance performed at Focus40 garages (Arborway, Quincy, Lynn, Fellsway)
o Preliminary innovation proposals suggest significant savings from contracting to third party operators
o More efficient management structures o Materials and services reduction o Increased maintenance productivity
• Balanced Budget also includes increased flexible contracting and staff reduction at Everett Bus Shop
o Includes reduction in heavy maintenance spending at Everett Bus Shop (private operator would be responsible for heavy repairs)
• Balanced Budget also includes efficiency gained at Cabot Garage
o New management practices and organization structure
o Savings from brand new bus fleet
Baseline Budget does not include contracting of Bus Maintenance
OPTION: Change to Bus Maintenance Delivery Model
FY18 Preliminary Itemized Budget – PATH TO A BALANCED BUDGET
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FY18 BASELINE STATUS QUO FY18 BALANCED BUDGET
• Existing revenue initiatives included in Baseline Budget
o Digital Advertising Revenue: Installation of 700 additional panels
o Parking Revenue Expansion Strategy: Implementation of demand-based pricing to increase overall parking revenue
• Excluded revenue initiatives for FY18
o Fare increases are not legally permitted until FY19
o Material one-time real estate revenues in FY17, not included in FY18
• Limited opportunities for additional revenue growth not included in Baseline Budget
• Maximize real-time information screens with policy changes: $3M per OUTFRONT Media
o Two identified channels: Core System – $2M Commuter Rail – $1M
• MBTA/KCS revenue growth from
improved ridership and better overall fare collection
o Enhanced Fare Enforcement (including installation of fare gates)
o Align MBTA service and Keolis with best global rail practices*
Aggressive revenue initiatives are under way
OPTION: Maximize Additional Revenue Initiatives
*Per Ernst & Young infrastructure advisors review of Commuter Rail Service
FY18 Preliminary Itemized Budget – PATH TO A BALANCED BUDGET
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PROPOSED CAPABILITIES
• Strategic Executive Management
• Signals & Communications
• Power Systems Maintenance
• Asset Management & Planning
• Track Improvements
Successful execution of trade-offs could allow MBTA to
make strategic investment in operations talent and capabilities
COO TO PRESENT HIRING PLAN IN COMING WEEKS
FY18 Preliminary Itemized Budget – PATH TO A BALANCED BUDGET
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REQUIRED VOTE TO RELEASE PRELIMINARY FY18
ITEMIZED BUDGET
That the General Manager and Chief Administrator are hereby authorized and directed to submit the Preliminary FY18 Itemized Budget to the MBTA Advisory Board, including proposed revenue, proposed expenses, and potential options for further aligning revenue and expenses and balancing the budget; and
That following the Advisory Board review, a Final FY18 Itemized Budget will be submitted to the Fiscal Management and Control Board no later than April 15, 2017 in accordance with Section 20 of Chapter 161A of the Massachusetts General Laws.
FY18 Preliminary Itemized Budget – PATH TO A BALANCED BUDGET
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FY18 revenue from all sources up 1.5%
FY18 Preliminary Itemized Budget – REVENUE DETAIL
($M)
FY17 BUDGET RECAST
FY18 BUDGET PRELIM.
$ VARIANCE EXPLANATION
% VARIANCE
OP
ER
ATIN
G
Fares, all modes $658.5 $670.9 $12.4 1.9% • Increased ridership
Own-Source $59.0 $73.6 $14.6 24.8% • Advertising up $7.4M
• Parking up $4.1M
Operating $717.4 $744.5 $27.0 3.8%
NO
N-O
PER
ATIN
G
Dedicated Sales Tax $992.2 $1,006.8 $14.6 1.5% • Inflation adjustment per statute
Dedicated Local Assessment
$164.0 $166.5 $2.5 1.5% • Inflation adjustment per statute
Other $46.9 $32.3 ($14.6) -31.0% • Exclude FY17 one-time revenues
Non-Operating $1,203.1 $1,205.6 $2.5 0.2%
Total Revenues $1,920.5 $1,950.0 $29.5 1.5%
Fare recovery ratio 43% 45%
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Wages and Benefits
($M)
FY17 BUDGET RECAST
FY18 BUDGET PRELIM.
$ VARIANCE
% VARIANCE EXPLANATION
WA
GE
S
Regular Wages $468.0 $451.3 ($16.7) -3.6% • Reduction in headcount offset
by non-L589 CBA increases
Overtime $42.2 $42.2 ($0.0) 0.0% • Continued management focus
Wages $510.1 $493.5 ($16.7) -3.3%
BEN
EFITS
AN
D T
AX
ES
Pension^* $89.4 $85.9 ($3.6) -4.0% • Reduction in headcount
Health $104.3 $102.8 ($1.6) -1.5% • Average GIC growth of 3.8%,
offset by lower headcount
Retiree Health $43.8 $44.8 $1.0 2.2% • Average GIC growth of 3.8%
Health & Welfare Fund $9.9 $10.3 $0.3 3.5% • 12/19 L589 Agreement
Other Fringes $13.0 $12.4 ($0.6) -4.3% • Driven by headcount reduction
Payroll Taxes $40.2 $39.3 ($0.9) -2.2% • Driven by regular wages
Benefits and taxes $256.8 $250.6 ($6.2) -2.4%
Total Wages, Benefits and Taxes
$767.0 $744.1 ($22.9) -3.0%
^FY18 pension expense is an estimate and will not be finalized until MBTRF and its actuaries complete their 12/2016 investment valuation. *Pension includes Main Fund, Police, Deferred Compensation Supplement, 401(a) MBTA Match
FY18 Preliminary Itemized Budget – WAGES AND BENEFITS DETAIL
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Non-Wage Operating Expenses (pp. 1/2)
($M)
FY17 BUDGET RECAST
FY18 BUDGET PRELIM.
$ VARIANCE
% VARIANCE EXPLANATION
MA
TER
IA
LS
AN
D S
ER
VIC
ES
Materials $60.0 $35.1 ($24.9) -41.5% • PO Process
Services $103.8 $129.5 $25.7 24.8% • Flexible contracts
Utilities $38.0 $38.0 $0.0 0.0% • Level-funded due to long term contracts
Fuel $17.6 $17.8 $0.2 1.3% • Level-funded due to long term contracts
Contract Cleaning $23.8 $23.8 ($0.0) 0.0% • Contractual
Uniform $2.2 $2.2 $0.0 0.0% • Stable headcount and prices
Materials and Services $245.4 $246.4 $1.0 0.4%
IN
SU
RA
NC
E
Insurance $13.8 $14.2 $0.3 2.4%
FY18 Preliminary Itemized Budget – NON-WAGE COSTS DETAIL
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Non-Wage Operating Expenses (pp. 2/2)
($M)
FY17 BUDGET RECAST
FY18 BUDGET PRELIM.
$ VARIANCE
% VARIANCE EXPLANATION
CO
MM
UT
ER
RA
IL Fixed Price $314.7 $308.6 ($6.1) -1.9%
• Suspension of Weekend service
Extra Work and Services
$54.2 $37.8 ($16.3) -30.1% • Capital work allocated to capital budget
Fuel $24.1 $28.2 $4.1 17.1%
PRIAA $0.0 $9.3 $9.3 n/a • New contractual expense
Commuter Rail $393.0 $384.0 ($9.0) -2.3%
LO
CA
L
SER
VIC
E
THE RIDE $99.8 $86.8 ($13.0) -13.0% • Call/dispatch center and pilots
Ferry $13.3 $14.0 $0.7 5.2% • Contractual
LSS Other $2.5 $2.6 $0.1 5.7% • Contractual
Local Service $115.6 $103.5 ($12.2) -10.5%
OTHER Financial Service Charges
$7.0 $6.7 ($0.3) -4.4%
Non-Wage Expenses:
$774.9 $754.8 ($20.1) -2.6%
FY18 Preliminary Itemized Budget – NON-WAGE COSTS DETAIL
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Debt service forecast to grow by $13M
($M)
FY17 BUDGET RECAST
FY18 BUDGET PRELIM.
$ VARIANCE
% VARIANCE EXPLANATION
DEB
T S
ER
VIC
E Interest $215.4 $208.3 ($7.1) -3.3%
• MBTA locked in lower interest rates with FY17 issuance
Principal $208.6 $240.0 $31.4 15.0% • Per amortization schedule
Lease $4.6 $2.9 ($1.7) -37.6% • Expired leases
Debt Service $428.7 $451.2 $22.5 5.2%
FY18 Preliminary Itemized Budget – DEBT SERVICE DETAIL
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MBTA has paid off over $400 million in principal since FY15
FY18 Preliminary Itemized Budget – DEBT SERVICE DETAIL
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Historic revenues and expenses:
MBTA on track to continue lowering its structural deficit
($M) FY15
ACTUAL FY16
ACTUAL
FY17 BUDGET RECAST
FY18 BUDGET PRELIM.
REV
EN
UES
Operating Revenues $646.0 $678.5 $717.4 $744.5
Non-Operating Revenues $1,157.3 $1,183.7 $1,203.1 $1,205.6
Total Revenues $1,803.3 $1,862.1 $1,920.5 $1,950.0
EX
PEN
SES
Wages, Benefits and Payroll Taxes
$727.6 $735.7 $767.0 $744.1
Non-Wage $781.2 $768.6 $774.9 $754.8
Operating Expenses $1,508.8 $1,504.3 $1,541.9 $1,498.9
Debt Service $413.4 $443.7 $428.7 $451.2
Total Expenses $1,922.3 $1,948.0 $1,970.6 $1,950.0
Structural Deficit ($119.0) ($85.9) ($50.1) ($0.0)
FY18 Preliminary Itemized Budget – COMPARISON WITH HISTORIC