The budget for the upcoming Ann Arbor Transportation Authority fiscal year – which starts Oct. 1, 2012 – will show a roughly $300,000 deficit. The vote by the AATA board adopting the $32,700,181 budget, as well as an annual work plan, was taken at its Sept. 27, 2012 meeting.
The draft AATA budget provided on Sept. 12 to the city council as a communication item for the council’s Sept. 17 meeting showed a surplus of $22,692 over the budgeted expenses of $33,344,048. The need for the AATA to use $300,000 of unrestricted net assets – to cover the difference between expenditures and revenues – was prompted by notification on Sept. 14 by the Michigan Dept. of Transportation (MDOT) that a new interpretation of the state’s operating assistance formula would reduce AATA’s assistance by $803,500.
The possibility of the reduction in funding was known previously. At the board’s Aug. 16, 2012 meeting, Charles Griffith had reported from the performance monitoring and external relations committee on the topic. From The Chronicle’s report: “An issue of concern, Griffith said, is the possibility of state operating assistance decreasing for fiscal year 2013, due to a change in the formula the state has been using to distribute money to transit agencies around the state. It could result in a loss of $800,000 in next year’s budget. Griffith said that ‘we have folks working on that,’ and the AATA is working with some of the other transit agencies in the state, and will be attempting to address that going forward.”
About half the reductions in expenses in the final budget, compared to the draft, were made in wage reductions – a total of $294,473. Percentage-wise, the budget for management wages was reduced by 2.79% compared to a 1.24% decrease in non-management wages. That reflects a wage freeze for non-union employees. According to CEO Michael Ford, no reduction in service was required in order to balance this year’s budget. [Google Spreadsheet compiled by The Chronicle showing contrast by category between draft and final budget.]
Last year, the AATA adopted a budget with a deficit of close to $1 million. At the time, AATA board members characterized the strategy as making investments in service expansion in advance of the transition of the AATA to a new authority incorporated under Act 196 of 1986. The AATA has called a special meeting of the board for Oct. 2, 2012 to make a formal request of Washtenaw County to file the articles of incorporation for the new authority under Act 196.
At the board’s Sept. 27 meeting, board treasurer David Nacht was keen to stress that various initiatives in which the AATA has invested in the past year and in this next year’s budget could not be sustained without the kind of additional funding that could come from a countywide authority.
Based on the draft budget projections for the draft FY 2013 budget – which used the first nine months of actual expenses and revenues with seasonal adjustments – the AATA expected to finish FY 2012 with a much smaller deficit of $296,378. That’s about one-third of what was budgeted at the start of last year. But figures through the first 11 months of the year, included in the Sept. 27 board meeting information packet, show that the AATA has incurred a deficit of $1,077,250.
The AATA’s fund balance policy requires it to maintain reserves equal to at least three months’ worth of operating expenses. At the meeting, Nacht indicated that three months of operating expenses would be in reserve at the end of the 2013 fiscal year. The AATA’s controller put the actual amount of reserves at $8 million in the bank.
Also at its Sept. 17 meeting, board approved its work plan for the upcoming year. Key goals include the implementation of the transit master plan (including new governance under Act 196 and securing voter-approved funding), negotiating a new labor contract, building a replacement for the Blake Transit Center in downtown Ann Arbor, and developing a new model for paratransit services.
The work plan also calls for continued cooperation with the Ann Arbor Public Schools to expand student transportation options.
This brief was filed from the downtown location of the Ann Arbor District Library, where the AATA board holds its meetings. A more detailed report will follow: [link]