AAATA Fiscal Year Begins With Service Hour Costs Trending Up & Ridership Trending Down

WEMU AS WELL AS The Ann Arbor News recently reported on data contained in a Peer Comparison Report released by Ann Arbor Area Transportation Authority officials which focuses on a comparison of per passenger costs with “peer public transit organizations.” The AAATA report revealed that the organization’s cost per passenger trip cost 17 percent less than the “median cost of similar organizations.”

WEMU reported: “The lower cost is thanks to The Ride having about 50% more passenger trips per service hour, and despite a higher cost per service hour than the median of their peers.”

AAATA Board Chair Charles Griffith was quoted as saying, “The board is now asking staff to dig deeper into the report and find areas The Ride can do better.”

AAATA officials released the 2013 Peer Comparison Report on November 22, 2013 just 10 days prior to the organization’s December 2, 2013 performance report delivered to the Ann Arbor City Council.

As opposed to the Peer Comparison Report, the monthly performance report includes year-over-year data that paints a different picture of AAATA’s costs per passenger on fixed routes, ridership on so-called “urban demand subcontracted routes,” as well a steep decline in AAATA passenger revenue.

It is worth noting that the October 2013 AAATA report to City Council shows that AAATA began its present fiscal year with operating expenses per passenger, per service hour and service mile all on an upward trend in comparison to the same month last year. Meanwhile, the number of weekday passengers stated is trending down on both the routes inside Ann Arbor as well as on subcontracted routes.

Do the trends concern AAATA CEO Michael Ford?

An AAATA spokesman pointed out that “October is the first month of our fiscal year and therefore is not representative of our operating trends. Using the single month of October to make comparisons and determine trends, is not likely to reflect the actual revenue and expenses from year to year.”

Don Kline, a marketing coordinator for the AAATA also said, “Our most recent Peer Comparison which compared per passenger costs of AAATA to other agencies was an apples-to-apples comparison from Fiscal Year 2011, which is the latest year for which national data is available.”

Ted Annis, former Treasurer of the AATA Board of Directors disagrees that the Peer Report and passenger costs provide the public with the best way to gauge whether AAATA is providing services efficiently. Annis explains why a rise in the cost per service hour could be of concern.

“Cost per service hour is the measurement of the economic operating efficiency of a bus system. This unit metric is used by the government to compare bus systems’ operating performance in financial terms and is independent of passengers, stops, miles covered.”

For fixed-route service, in October 2012, the cost per service hour was $97.56. The amount per service hour budgeted for 2013 was $119.17 and the actual amount spent was $103.41 per service hour. While that is under the budgeted amount, both the budgeted and actual amounts spent are higher than what each service hour cost in October 2012.

Ted Annis goes on to explain that, “Cost per passenger is a measurement of the efficiency of community’s use of the  bus system. It has no bearing on operating efficiency.”

Annis, whose tenure on the AATA Board of Directors was marked by a push to make the transportation authority provide bus service more efficiently, talked about his efforts to use the cost per service hour metric: “When the AATA was compared to the U of M bus system using the cost per service hour metric, the AATA looked highly inefficient and the U of M bus system looked remarkably efficient.”

Annis explains that when he served on the Board in 2009, AATA provided about 182,000 bus service hours/year. The University of Michigan bus system operated at approximately $55 per bus service hour and the AATA operated around $107 per bus service hour.

In its last fiscal year, AAATA operated at $111 per bus service hour on fixed routes. Between 2009 and 2013, per service hour costs rose 10 percent, which outpaced the cost of inflation.

The AAATA report to City Council shows that not only are key metrics such as cost per service hour on the rise for fixed routes, operating expenses for the months of October 2012 and October 2013 rose, as well, from $1.736 million in October 2012 to $1.866 million in 2013, an 8 percent increase.

While Ted Annis argues that cost per passenger metrics are not a good measure of whether AAATA is using its local, state and federal tax dollars to provide services efficiently, the October report to Council shows AAATA starting off its fiscal year with drops in the total number of passengers, total weekday passengers, as well as a 44 percent drop in passenger revenue.

While the numbers compare only one month in 2012 and one month in 2013, it’s a snapshot that captures AAATA in a somewhat compromising pose. While service hours and service miles are up, performance indicators are down as AAATA officials prepare to go to voters for a new millage on the promise of “improved” bus service.

If there is a bright spot in the October report to City Council, it is the performance of the AAATA’s ExpressRide and AirRide services. Both, according to the October report, started the year with increases in the number of weekday passengers, as well as percent of cost paid by passenger.

Looking at the operating expense per service hour metric, ExpressRide service costs dropped from $159.85 per service hour in October 2012 to $108.29 in October 2013. However, AirRide’s operating expense per service hour jumped from $140.79 in October 2012 to $149.02 in October 2013.

AAATA’s October operating statement revealed that total revenues are 0.2 under budget and that expenses are 5.2 percent under budget. In its first month of its 2013-14 fiscal year, The Ride took in $819,000 in local property tax revenue and $763,000 in state operating assistance. Federal dollars allocated for operating assistance totalled $355,235 for the month of October 2013.

The largest monthly expense in October 2013 was $605,642 paid to bus operators, followed by $508,550 paid to managers and other staff.