Staff Report #4
April 13, 2023
To All Commissioners
Re: Tuition-based Pass Contract
Recommendations
That the Commission:
- DIRECT administration to establish a one-year extension for the 2023/24 academic year to the Tuition-Based Pass Contracts with University Student’s Council at Western University, Society of Graduate Students at Western University, and Fanshawe Student Union at Fanshawe College providing for a 0% increase in the annual cost and utilizing the remaining terms and conditions that are currently in place; and
- DIRECT administration to undertake a comprehensive review of the Tuition-Based Pass Program including but not limited to consideration of price, ridership and demand, overall usage rates, price escalation rates, administration of the program, contract terms and conditions, and the impact of the program on other fare categories and report back to the Commission with a recommended path forward.
Background
The tuition pass program was established in 1998 as a result of a request from the Western Student Union to create a program that would provide unlimited access to transit for students at a reduced rate with one of the intended benefits being increased ridership for London Transit. This program was established during a period of ridership recovery for London Transit (and transit systems across the Province). The ridership decline began in the early 1990’s as the result of Provincial funding cuts that resulted in the need for transit systems to reduce service levels and increase fares in order to balance budgets, which in turn resulted in a downward spiral of ridership losses over a number of years. In London, ridership dropped from a high of 15 million in 1992 to 12.2 million in 1996 as the result of the ongoing service reductions and fare increases. In the first full year of the tuition pass program being in place (1999), ridership levels returned to the 15 million mark.
The basis of the original tuition pass program was that it would be universal in nature, meaning all students would have to pay the agreed-upon fee, and that the overall program would be revenue neutral to London Transit, meaning that the fee charged to the entire student group would offset the lost revenue from those students currently utilizing transit and purchasing a monthly pass, and there would be limited administrative work for London Transit associated with the management of the program. At the time the program was implemented, there was limited concern with respect to accommodating the anticipated additional riders as overall ridership remained at levels low enough that capacity was available on all routes currently being operated. The initial program was limited to Western undergraduate students, and provided unlimited access to public transit for an eight month period matching the academic year (September through April). In 2002, the Society of Graduate Students at Western and the Fanshawe College Student Union entered into tuition pass agreements covering a 12 month period (September through August). In 2007, the Western undergraduate students voted to move their tuition pass program to a 12 month period as well.
The Commission currently holds three tuition-based pass program contracts with Fanshawe College, Western University undergrads and Western University Society of Graduate Students. The contracts were set to expire in August of 2021; however, given uncertainty relating to the declaration of the pandemic, a number of annual COVID-related addendums were established with each of the parties. The addendum particulars provided the flexibility to the parties to ensure that students who would be interacting with the campus in any manner would be required to purchase the tuition-based pass while excluding those students who would not be returning to London to undertake their studies given the move to fully online classes for their particular program. While these addendums resulted in a decrease in participants at both Western and Fanshawe, the approach protected the universality concept of the program in that opting in or out was not allowed.
The contract provisions call for an annual price escalation that includes a base 1% increase intended to assist with funding annual service growth initiatives that benefit the tuition-based pass holders, and an additional increase based on the year-over-year change in Ontario Price Index, noting a cap of a 5% increase in any one year is included in the formula. The contractual increases that have been applied over the past three addendum periods are:
- 2020/21 academic year – 1% (1% + 1.1% OPI);
- 2021/22 academic year – 1.8% (1% + 0.8% OPI); and
- 2022/23 academic year – 0% (noting contract provisions called for an increase of 5% (1% + 5.2% OPI, note 5% max)
The 2% increase for the 2022/23 academic year was negotiated based on the fact that approximately 74% of the service changes that were planned to be implemented in the 2022/23 academic year would directly benefit holders of the tuition pass given the routes that would be affected. The price of the annual tuition based pass for the 2022/23 academic year is $265.85 per full time student, noting the pass provides access to LTC service for a 12 month period ending August 31, 2023. By way of comparison, a transit rider purchasing a monthly Citipass for twelve months, which would provide the same level of access as the Tuition Pass would pay $1,140.
In addition to approving the one year contract for the 2022/23 academic year, the Commission also directed administration to finalize new multi-year contracts with each of the parties for the academic year beginning 2023/24. This direction was based in part on the assumption that any remaining impacts associated with the pandemic would be limited by the fall of 2023. This approach would also provide administration with the contract details required for the preparation of the next multi-year budget covering the period 2024 through 2027.
Administration has been in discussion with the representatives from Western University and Fanshawe College in regard to a new multi-year contract for the past number of months. During discussions, the Western University and Fanshawe College representatives expressed concerns relating to whether the students participating in the tuition pass program were perceiving value from the pass noting instances of full buses passing students who were then required to wait for the next bus and student polls indicating they do not feel that LTC meets their needs for a safe, reliable and consistent ride. Further, based on ridership data provided, questions were raised with respect to the actual value students are receiving from their tuition pass (see Communication #3 dated April 13, 2023).
Given these concerns, coupled with the slower than anticipated implementation of the service improvements that were considered as part of the increase included in the 2022/23 renewal, administration is recommending a one-year extension of the contracts with a 0% increase in pass price and all other terms and conditions of the contract remaining in place.
The second part of the recommendation calls for administration to undertake a comprehensive review of the Tuition Pass Program in an effort to determine a path forward for the program that will continue to:
- Employ the universality concept, requiring all full time students to participate in the program and pay the required fee regardless of their level of transit use;
- Include a fee that takes into consideration overall usage rates, impact of the fee on other fare categories and the costs associated with the administrative expectations of London Transit; and
- Include a price escalation clause that ensures the ongoing viability of the program
Subsequent to the Commission’s concurrence with this approach, administration will finalize the contract extension as set out in the first recommendation and begin the review as set out in the second part of the recommendation, noting a report will be provided back to the Commission prior to any further contract extensions being negotiated.
Recommended by:
Mike Gregor, Director of Finance
Concurred in by:
Kelly S. Paleczny, General Manager