Staff Report #6
September 26, 2018
To All Commissioners
Re: Financial Update – Conventional Transit Services – Operating Budget – August 31, 2018
Recommendation
That the report be NOTED and FILED.
Background
Set out in the table below is the Statement of Operations for Conventional Transit Services for the eight month period ending August 31, 2018. The statement sets out actual to budget performance for the period.
London Transit Commission
Statement of Operations – Conventional Transit Services
Eight Months Ending August 31, 2018
(000’s omitted)
| Description | Actual | Budget | Amount Better (Worse) | Percent Better (Worse) | |
| Revenue | |||||
| Transportation | $ 20,364.6 | $ 20,249.0 | $ 115.6 | 0.6 % | |
| Operating | 984.4 | 921.7 | 62.7 | 6.8 % | |
| Transfers from reserves | 737.7 | 520.0 | 217.7 | 41.9 % | |
| Province – provincial gas tax | 5,206.4 | 5,206.4 | – | 0.0 % | |
| City of London | 19,526.8 | 19,526.8 | – | 0.0 % | |
| Total revenue | 46,819.8 | 46,423.9 | 395.9 | 0.9 % | |
| Expenditure | |||||
| Personnel cost | 31,639.3 | 31,539.1 | (100.2) | (0.3)% | |
| Direct bus maintenance | 3,906.8 | 3,913.9 | 7.1 | 0.2 % | |
| Fuel | 4,950.4 | 4,583.9 | (366.5) | (8.0)% | |
| Facility costs | 2,247.2 | 2,263.3 | 16.1 | 0.7 % | |
| Insurance | 1,867.1 | 1,795.0 | (72.1) | (4.0)% | |
| Contribution to reserves | 759.8 | 643.0 | (116.8) | (18.2)% | |
| All other material expense | 1,708.1 | 1,685.7 | (22.4) | (1.3)% | |
| Total expenditure | 47,078.7 | 46,423.9 | (654.8) | (1.4)% | |
| Net favourable/(unfavourable) | $ (258.9) | $ – | $ (258.9) | (0.6)% | |
As indicated, the conventional transit service to-date has a net unfavourable actual to budget performance of $258,900 representing approximately 0.6% of the total budget to-date of $46.4 million.
The major performance issues relate to:
Revenue
- favourable transportation revenue of $115,600 due to higher than budgeted ridership ($368,800) offset by lower than budgeted average fare ($253,300) (mix of riders different vs. budget);
- favourable operating revenue of $62,700 due to higher than budgeted interest income; and
- an increase in the transfers from reserves of $217,700 utilized to offset the unfavourable insurance expenditures noted below ($132,400) as well as personnel costs related to the return-to-work program ($85,300).
Expenditures
- unfavourable personnel costs of $100,200 due mainly to higher than budgeted return-to-work program costs as well as the impact of Bill 148’s paid emergency days;
- unfavourable fuel costs of $366,500 attributed to unfavourable fuel rates ($421,600) offset by favourable fuel consumption ($55,100);
- unfavourable insurance claim costs of $72,100; and
- an increase over budget in contributions to reserves of $116,800 due to increases in interest income (operating revenue).
Ridership
The table below sets out actual to budget ridership performance for the eight months ending August 31, 2018 as well as comparison to the same period in the previous year.
| Description | Actual | Budget | Variance | % Variance | 2017 Actual | % Variance |
| Total Passengers (000’s) | 14,643.7 | 13,381.8 | 261.9 | 1.8 % | 14,099.0 | 3.9 % |
| Average Fare | $ 1.391 | $ 1.408 | $ (0.017) | (1.2)% | $ 1.393 | (0.2)% |
| Revenue Service Hours | 413.5 | 415.8 | 2.2 | 0.5% | 401.1 | 3.1 % |
| Rides/Rev Service Hour | 35.4 | 34.6 | 0.8 | 2.4 % | 35.1 | 0.7 % |
Youth Pass
September marked the first month the new Youth Pass was available for sale. The monthly pass is sold for $52, for use by riders between the ages of 13 and 17. The subsidized portion of the pass ($29) is split between LTC and the City of London based on a sliding scale dependent on the number of passes sold each month.
At time of report writing, pass sales for September were closed, so early assessments could be completed on this measure. What can’t be measured at this time is any impact on student ticket sales/use as the result of the new Youth Pass. The following assessment is provided as an early indication of the impact on pass sales only, noting a more detailed assessment involving all fare categories will be provided in the future.
The table below sets out the pass sales for the months of May and September 2018. May was chosen as a comparator given it is the closest previous month to September that is not impacted by the traditional declines in ridership in the period of June through August associated with summer vacation.
| Monthly Pass Sales | May-18 | Sep-18 | Variance |
| Citipass | 4,874 | 4,414 | (460) |
| Weekday Pass | 1,227 | 1,074 | (153) |
| Youth Pass | 0 | 629 | 629 |
| Total Pass Sales | 6,101 | 6,117 | 16 |
As the table indicates, the Youth Pass sales are almost a direct offset to the combined decreases in Citipass and Weekday Pass sales. This indicates that, for the month of September, there was not a discernible increase in pass riders relating to the new Youth Pass, rather a transfer of existing pass riders from the higher priced Citipass and Weekday pass categories.
As indicated earlier, the Youth Pass pilot program calls for the $29 price subsidy to be shared between London Transit and the City of London. The table below sets out the LTC revenue for the corresponding pass sales in each of the comparative months.
| Monthly Pass Revenue | May-18 | Sep-18 | Variance |
| Citipass | $ 394,800 | $ 357,500 | $ (37,300) |
| Weekday Pass | 84,700 | 74,100 | (10,600) |
| Youth Pass | 44,600 | 44,600 | |
| Total Pass Sales | $ 479,500 | $ 476,200 | $ (3,300) |
As the table sets out, should the uptake of the Youth Pass continue to be a transfer from the Citipass and Weekday pass categories, it will result in overall lower revenue received for the same number of pass riders.
Administration will continue to monitor the operating budget performance, including ridership, on a monthly basis.
Recommended by:
Mike Gregor, Director of Finance
Concurred in by:
Kelly S. Paleczny, General Manager