Finance & Administration Committee Information Item III-B
October 13, 2011
TITLE:
Update on the Multi-year Budget Plan Development PURPOSE:
To continue the discussion on the annual budget and strategic plan priorities for the multi-year business plan and FY2013 Operating Budget.
DESCRIPTION:
The multi-year business plans for the operating and capital budgets incorporate and reflect the organization's strategic and business priorities: Safety, State of Good Repair,
Performance/Efficiency and Customer Service. A multi-year budget plan improves coordination between capital projects and operations, increases synergy across departments and allows for evaluation of expense offsets through either increases to revenue or decreases to cost.
The basis of the multi-year budgeting effort is an assessment of our core business including defining the essential performance outputs from bus, rail and Access; and the identification of new business initiatives. Each initiative is evaluated based on how it aligns with Metro's strategic goals and the impact on the key performance indicators. The discussion on the multi-year business initiatives provides a preliminary view of the FY2013 budget plan.
FUNDING IMPACT:
No funding impact at this time
RECOMMENDATION:
Board discussion
Washington Metropolitan Area Transit Authority
Board Action/Information Summary
Action Information MEAD Number: Resolution:
Yes NoWashington Metropolitan Area Transit Authority
Multi-Year Budget Plan Development
Finance and Administration Committee
October 13 , 2011
Purpose
• Review the Multi-year budget prepared within the current
strategic framework
• Objective of the Multi-year budget:
– Identify efficiencies in Metro’s operations
– Evaluate strategic and business plan priorities for more effective
Multi-year planning and budgeting
Multi year planning and budgeting
• Multi-year budget supports Metro’s priorities:
Safety
– Safety
– State of Good Repair
– Performance/Efficiency
Performance/Efficiency
– Customer Service
FY2013-FY2015 Multi-Year Planning
Multi-year budget has two components:
Multi-year budget has two components:
•
Baseline - Growth factors and other assumptions applied
t FY2012 b d t t
id FY2013
f
b d t
to FY2012 budget to provide FY2013 pro forma budget
•
Business initiatives – Based on assessment of core
Business initiatives Based on assessment of core
business, Metro’s executive team developed initiatives for
FY2013 through FY2015
•
Approved FY2013 initiatives will be added to the FY2013
baseline budget
Drivers of FY2013 Expense Growth
• 32% increase in pension costs Authority-wide
32% increase in pension costs Authority wide
– 2008 losses continue to work their way through the accounting process
based on the smoothing requirements of the plans
– Pension expenses should peak and begin flattening in 2014
Pension expenses should peak and begin flattening in 2014
• 8% growth in health care expenses
– National inflation trend for health care costs is 7%
– Growth in Metro’s health care “payrolls” from increasing number of
retirees
5%
th i
lt & li bilit i
t
• 5% growth in casualty & liability insurance costs
FY2013 Pro Forma Expense Budget
FY2013 Pro Forma
FY2012
FY2013
Growth
Assumptions
FY2012
FY2013
$ In Millions
Budget
Projection
$
%
Expenses
Labor
Salaries & Wages
$ 653 0
$ 662 8
5
$ 9 8
1 5%
Assumptions
Salaries & Wages
$ 653.0
$ 662.8
5
$ 9.8
1.5%
Overtime
57.1
57.9
0.8
1.4%
Fringe
Health
141.9
153.7
11.8
8.3%
Pension*
94 9
125 4
30 5
32 2%
Pension*
94.9
125.4
30.5
32.2%
Other Benefits
76.4
79.3
2.9
3.7%
Services
93.7
95.9
2.2
2.4%
Paratransit
105.8
107.9
2.1
2.0%
Materials & Supplies
58 9
60 2
1 3
2 1%
Materials & Supplies
58.9
60.2
1.3
2.1%
Fuel, Propulsion, Utilities
148.3
151.6
3.3
2.2%
Casualty & Liability
28.7
30.3
1.5
5.3%
Other
5.8
6.0
0.1
2.0%
Savings Initiatives
0.0
* Authority-wide pension contribution for FY2012 is $112 M and FY2013 is $148 M,
85% is funded by the Operating Budget
Multi-Year Planning Process
• Each initiative was evaluated based on alignment with
g
Metro’s strategic framework goals and impact on Key
Performance Indicators
• Over 188 business initiatives evaluated
• Initiative requirements:
q
– Specific deliverables and linkage to Metro’s goals
– Must be incremental to department base budget
• Initiatives were reviewed for:
– Cross-departmental synergy
Key Performance Indicators
y
Criteria for Evaluating Initiatives
g
Safety and
Customer Injury Rate
Security
y
Employee Injury Rate
Crime Rate
Deliver Quality
On-Time Performance
S
i
M
Di
B
F il
(
D l )
Service
Mean Distance Between Failure (or Delay)
Escalator/Elevator Availability
Customer Comment Rate
Customer Comment Rate
Use Resources
Initiative Categories
g
• Self Funded
• Customer Service
• Performance/Efficiency
• Safety and Security
Safety and Security
• State of Good Repair
• Dulles
Self Funded Initiatives
Program
g
FY2013
FY2014
KPI
Business operation and system application efficiencies
$0.2-3 M
$0.2-6 M Use Resources Wisely ↑
Scheduling Efficiencies
$2.5 M
$1.4 M Use Resources Wisely ↑
Labor Cost Efficiencies
$0 2 0 5 M
$0 2 1 M Use Resources Wisely ↑
Labor Cost Efficiencies
$0.2-0.5 M
$0.2-1 M Use Resources Wisely ↑
Parking Mobile Payment System
$0.1 M
$0.1 M
Quality Service and
Use Resources Wisely ↑
Customer Service Initiatives
Program
FY2013
FY2014
KPI
Program
FY2013
FY2014
KPI
Customer & Employee Outreach
$0.2-3 M $0.03-3 M
Quality Service
Safety & Security
↑
Communication for Bus service
$0.5-1 M
$0.5-1 M Quality Service
↑
Customer Friendly Fare payment system
$1 M
$1 M Quality Service
↑
Th C
t
S
i
I iti ti
$0 5 M
$0
Q
lit S
i
↑
The Customer Service Initiative
$0.5 M
$0 Quality Service
↑
Performance/Efficiency Initiatives
Program FY2013 FY2014 KPI
Quality inspections and maintenance reliability enhancements $0.4-20 M $0.5-22 M Quality Service ↑
B S i & S t I t d P i it C id $0 1 6 M $0 1 9 M
Quality Service and
Safety & Security ↑ Bus Service & System Improvements and Priority Corridor $0.1-6 M $0.1-9 M Safety & Security ↑
Systems to support asset management and operations center $0.2-2 M $0.2-3 M Quality Service ↑
Non Revenue Vehicle Maintenance $0.1-2 M $0.1 M Quality Service ↑
Rail Fleet enhanced maintenance $1 5 M $1 5 M Quality Service ↑
Rail Fleet enhanced maintenance $1.5 M $1.5 M Quality Service ↑
Rail Operations Training $0.4-1 M $0.4-1 M Quality Service ↑