Staff Report #8
August 26, 2020
To All Commissioners
Re: Financial Update – Conventional Transit Services – Operating Budget – July 31, 2020
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 seven-month period ending July 31, 2020 including actual to budget performance for the period. The table has been modified to include a breakout of the resulting variances based on either general operating differences (i.e. ongoing operations) and those attributed to the COVID-19 outbreak.
London Transit Commission
Statement of Operations – Conventional Transit Services
Seven Months Ending July 31, 2020
(000’s omitted)
| Description | Actual | Budget | Amount Better (Worse) | Explanation | Percent Better (Worse) | ||
| General Operating | COVID Impact | ||||||
| Revenue | |||||||
| Transportation | $12,421.1 | $21,059.7 | $ (8,638.6) | $ 280.3 | $(8,918.9) | (41.0)% | |
| Operating | 756.4 | 767.1 | (10.7) | (10.7) | – | (1.4)% | |
| Transfers from reserves | 425.1 | 362.6 | 62.5 | 62.5 | – | 17.2 % | |
| Province – provincial gas tax | 4,069.2 | 4,375.2 | (306.0) | (306.0) | – | (7.0)% | |
| City of London | 17,846.6 | 17,846.6 | – | – | – | 0.0 % | |
| Total revenue | 35,518.5 | 44,411.2 | (8,892.7) | 26.2 | (8,918.9) | (20.0)% | |
| Expenditure | |||||||
| Personnel cost | 28,217.6 | 29,965.5 | 1,747.9 | 348.6 | 1,399.3 | 5.8 % | |
| Direct bus maintenance | 3,846.3 | 3,928.1 | 81.8 | 81.8 | – | 2.1 % | |
| Fuel | 2,923.1 | 4,170.7 | 1,247.6 | 968.3 | 279.3 | 29.9 % | |
| Facility costs | 1,767.1 | 2,026.1 | 259.0 | 244.0 | 15.0 | 12.8 % | |
| Insurance | 2,632.1 | 2,267.3 | (364.8) | (364.8) | – | (16.1)% | |
| Contribution to reserves | 196.0 | 225.3 | 29.3 | 29.3 | – | 13.0 % | |
| All other material expense | 1,723.0 | 1,828.2 | 105.2 | 40.6 | 64.6 | 5.8 % | |
| Total expenditure | 41,305.2 | 44,411.2 | 3,106.0 | 1,347.8 | 1,758.2 | 7.0 % | |
| Net favourable/(unfavourable) | $(5,786.7) | $ – | $ (5,786.7) | $ 1,374.0 | $(7,160.7) | (13.0)% | |
As indicated, the Conventional transit service to date has a net unfavourable actual to budget performance of $5,786,700 representing approximately 13.0% of the total budget to-date of $44.4 million. Of this unfavourable variance, $7,160,700 is attributable to the impacts of COVID-19 and is offset partially by a favourable general operating variance of $1,374,000.
An explanation of the two variances is set out below:
COVID-19
The impacts attributed to COVID-19 in the table above are based on the assumptions of administration that have been applied from the onset of the pandemic. Some of these impacts apply to March of 2020, which is not part of the period covered by the new funding programs. Additionally, given uncertainties around eligible expenditures relating to the funding programs, it has not yet been confirmed that all of the impacts currently being included in this column will be considered eligible for the funding programs discussed in Staff Report #1, dated August 26, 2020. With respect to the variances that have been attributed to COVID-19 at this time, the following explanations are provided:
- unfavourable transportation revenue of $8,918,900 due to the loss of revenue associated with the rear door boarding and elimination of fare collection that began March 20, 2020;
- net favourable personnel costs of $1,399,300 due to reduced service hours relating to COVID-19 related absences and increased costs relating to enhanced nightly bus cleaning;
- favourable fuel costs of $279,300 due to reduced kilometers; and
- net favourable facility and other material costs due to reduced expenditures for hydro (rate) and fare processing fees offset by additional costs for disinfectants, hand sanitizers, masks and other supplies.
General Operating
- favourable transportation revenue of $280,300 due to higher than budgeted ridership prior to the onset of COVID-19;
- unfavourable provincial gas tax funding compared to budget as the allocation has been reduced to keep the PGT allocation to operations consistent with the budgeted 9.8% investment share;
- favourable personnel costs of $348,600 due to the timing of vacancies and other non-COVID-19 related absences;
- favourable fuel costs of $968,300 due mainly to a favourable price variance;
- favourable facility costs of $244,000 mainly due to lower consumption of natural gas during the unseasonably warmer heating season; and
- unfavourable insurance costs of $364,800 due to increase in premiums imposed on the 2020-2021 insurance program renewal.
Ridership
The table below sets out actual to budget ridership performance as well as comparison to the same period in the previous year, noting that ridership numbers subsequent to March 22, 2020 are based on boardings as collected by the onboard passenger counters.
Ridership Performance – Actual vs. Budget
| Description | Actual | Budget | Variance | % Variance | 2019 Actual | % Variance |
| Total Passengers (000’s) | 9,485.7 | 13,554.6 | (4,068.9) | (30.0)% | 13,584.4 | (30.2)% |
| Average Fare | $ 1.024 | $ 1.557 | $ (0.533) | (34.3)% | $ 1.386 | (26.1)% |
| Revenue Service Hours | 344.5 | 388.6 | 44.1 | 11.3 % | 371.4 | 7.2 % |
| Rides/Rev Service Hour | 27.5 | 34.9 | (7.3) | (21.1)% | 36.6 | (24.7)% |
Administration will continue to monitor the operating budget performance, with the focus on COVID-19 as well as general operating impacts on a monthly basis.
Recommended by:
Mike Gregor, Director of Finance
Concurred in by:
Kelly S. Paleczny, General Manager