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Review of FY 2020 Financial Projections & Preliminary FY 2021 Financial Outlook

Budget & Finance CommitteeApril 28, 2020

Joseph G. CostelloChief Financial Officer

Sherry FosterInterim AVP, Business Planning & Analysis

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FY 2021 Budget and Financial Planning Process Calendar

Finance Department

Date Subject

Apr 14 • Briefing on Agency Preparedness – COVID-19

Apr 28 • Approval of Financial Standards for FY 2021 Budget and Twenty-Year Financial Plan Process

• Briefing on FY 2021 Outlook and FY 2020 Projections

May 26 • FY 2021 Budget and Financial Planning Process – Capital Budget Overview

Jun 23 • FY 2021 Budget and Financial Planning Process - Operating Budget Overview

• FY 2021 Budget and Financial Planning Process – Departmental Presentations

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FY 2021 Budget and Financial Planning Process Calendar (Cont.)

Finance Department

Date Subject

Jul 7 • Departmental Budget Reviews• Briefing on FY 2021 Budget and Financial Planning Process - Draft FY

2021 Annual Budget & Twenty-Year Financial Plan

Aug 11 • Approval to Distribute Proposed FY 2021 Annual Budget and Twenty-Year Financial Plan to Service Area Cities for Review

August • Briefing for Service Area City Managers and Finance Directors

Aug 25 • DART Presentation of Proposed FY 2021 Annual Budget and Twenty-Year Financial Plan to the service area cities

Sep 22 • Board Approval of FY 2021 Annual Budget and Twenty-Year Financial Plan

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• Financial Plan Priorities• Order of Magnitude• Summary• Potential Resulting Key

Performance Indicators

Presentation Outline

Finance Department

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Financial Plan Priorities

Finance Department

• The Financial Plan demonstrates the financial sustainability of the agency with the following priorities. SGR: Preserve the capital assets of the agency (state-of-

good-repair). Workforce: Retain agency institutional knowledge and

expertise. Service: Provide the highest levels of effective mobility

service.

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Financial Plan Priorities (continued)

Finance Department

• The potential budget and financial plan actions, below, preserve the financial sustainability of the agency within these priorities as follows:Action (priority)o Secure maximum federal and other funding. (All)o Draw on agency reserves. (All)o Defer projects other than state-of-good-repair projects.

(SGR)

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Financial Plan Priorities (continued)

Finance Department

• Retain employees required to provide service. (Service)• Achieve operating budget savings through non-personnel

cost reductions, program deferrals, and personnel related cost constraints. (Workforce)

• Review SGR projects for effectiveness. (All)• Modify service levels as appropriate for existing demand.

(All) • Examine personnel and procedures for efficiencies and take

actions necessary to enact. (All)

7Finance Department

l Order of Magnitude ~----J I Change from FY 2020 Financial Plan ! ' .................................................................................................................................................................................... .;

I Positive (Negative) Impact in Millions I

!··························································:·················································: ...................................................................... .1 i FY 2020 i FY 2021 i 20 - Year Plan

! Revenues: I I ----+-! -!--------------------------------------------------------------------------------------------------i _____________________________________ ---,i_ ---

!::::::::::!:~::~::~:::::========== (~~~::;: I (~~~~:~: I ($1;:~:::: I

: ................................................................................................................................................... , ........................................................ .l ................................................ i ....................................................................... : I Operating Cost: COVID-19 Increase I ($6.1) I $0.0 I ($6.1) I

l__ ___ ___ ___ __ __ _ _________________________ L_ ___ ___ ___ ___ __i __ _ ________ J _____________________ :

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Operating Expense Operating Cost- COVID 19 Increase FY 2020

Increase temps for cleaning (3.2)

Increased emergency costs - Cleaning (0.4) MATA funding (0.4) Heroes/Hazard Pay (1.7) Work from Home (0.5) Additional Operating Expense (6.1)

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Sales Tax Loss

$1,600

$1,400

$1,200

$1,000

$800

$600

$400

$200

$0

Sales Tax Receipts (in Millions)

~~~~~##~~#~~~~~~~~~~ - Aproved Budget - Proposed Budget

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I April - September 50% Loss Approved Proposed Incremental

Year Budget Budget Loss FY20 628.1 470.5 (157.7) FY21 653.3 470.5 (340.5) FY22 686.0 522.3 (504.1) FY23 727.2 590.3 (641.0) FY24 763.6 679.0 (725.6) FY25 794.2 746.9 (772.8) FY26 818.0 806.8 (784.1) FY27 818.5 807.3 (795.3)

11Finance Department

Order of Magnitude Change from FY 2020 Financial Plan

------------------------------------------------- ---------------------------------------------------------------------- ----------------

Positive (Negative) Impact in Millions ....................... .................................... , ..................................................................................

FY 2020 FY 2021 20 - Vear Plan

Operating Cost: $14.8 $39.4 $628.9

• Non-Service & Non- 7.3 19.3 Personnel Reductions

• Attrition, Bonus, & Merit 7.5 20.2 Raise Reductions

:

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CARES Act Funding

• On March 27, President Trump signed the CARES Act into law.

• FTA allocated $25B to grantees receiving formula funds.

• The Dallas Area Urbanized Area (UZA) was allocated $318,629,129. • DART’s allocation was $229,627,520.

• DART is working with FTA to file our grant application for operating expense reimbursement beginning on January 20, 2020.

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] Operating Costs i

Impact in Millions :

I :

i !

I I

FY 2020 FY 2021 , .. I

Personnel i 2.8 5.4

• Hourly Open 5.1 I 11.9 -<·

• Salaried Open ! (2.8) I (7.6) • •••o .. o•••o•O o o•oo 0 .... - - .. .... .. 0 ....

j

Less Budgeted Turnover 5.0 9.7 i : i ,-

Personnel ,_

• Eliminate positions - Open Positions 5.0 : 9.7

• Merit elimination J. 8.0 I

• Bonus elimination : 2.5 2.5 i

• Personnel Reductions 7.5 20.2 . •.

- - -j-Non-personnel I

Consulting I 2.0 1.5 i

Outside Training I 1.2 1.0 Travel i 0.7 0.6 !

Inflation 10.3 Other 3.4 5.9

:

Non-personnel Reductions 7.3 19.3 Total Reductions 14.8 39.4

14Finance Department

[ __________________________________________________________ 0 rd_e r ___ o~ ___ Mag n_ it u_d_e _______________________________________________________ __J

1 ---i:s~;~=-~~:;a:~:i°1::~:a~c:1ri~~;s-·-1 FY 2020 i FY 2021 i 20 - Year Plan !

------------------------------------------------------------------------------------------------------------------------+----------------------------------------------j _______________________________________ J __________________________________________________________ i I Capital Projects (cash flow): i $96.8 i $270.6 I ($137.6) I i--------------------------------------------------------------------------------------------------------------------------i-------------------------------------------------i----------------------------------------+----------------------------------------------------------1

! • D2 ! $79.2 ! $250.3 ! ($150.6) !

I • Streetcar Extension 1 so.6 1 $8.5 r ($18.3) I l=-~--=·=·=-~-Other _ Ca-pita ___ Projects --~--~--~--t-~--=-~--=--$17 .0 --1=··--·=··~ $11. 9---1---~-=--~-=--~-=--~ $31.3 __ j

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Capital Projects

Finance Department

Life to date D2 Expenditure FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27 FY28 FY29 Total

Current

Budget $15 $107 $312 $355 $355 $226 $42 $1,413

Grant Fund ing $100 $100 $100 $300

Debt $100 $120 $240 $400 $240 $1,100

Three Year Deferral

Budget $15 $6 $5 $5 $113 $341 $388 $393 $251 $47 $1,563

Grant Fund ing $150 $200 $150 $150 $650

Debt $140 $120 $150 $100 $240 $130 $880

Life to date Streetcar Expenditure FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27 FY28 FY29 Total

Current

Budget $0 $1 $8 $32 $37 $18 $96

Grant Fund ing $24 $24 $48

Debt $48 $48

Five Year Deferral

Budget $0 $1 $10 $38 $44 $22 $114

Grant Fund ing $29 $29 $57

Debt $57 $57

16Finance Department

Order of Magnitude Change from FY 2020 Financial Plan

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Positive (Negative) Impact 1n Millions !

FY 2020 j FY 2021 I 20 - Year Plan ]

Finance Borrowing ($100.0) ($120.0) ($211.0)

Debt Service $0.8 $8.7 $414.7

Reserves $0.0 $0.0 $66.7

Federal Relief (net of $0.4m to MATA) $174.9 $6.5 $229.2

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Summary

Finance Department

In millions FY 2020 FY 2021 20-year Impact

Sales tax ($157.7) ($182.8) ($1,309.9)

Passenger revenues ($24.5) ($22.0) ($46.5)

Increased operating costs ($6.1) $0.0 ($6.1)

Total financial impact ($188.3) ($204.8) ($1,362.5)

Operating cost savings $14.8 $39.4 $628.9

Capital project deletions $17.0 $11.9 $31.3

Streetcar central link deferral $0.6 $8.5 ($18.3)

D2 deferral $79.2 $250.3 ($150.6)

Long-Term Debt Issued ($100.0) ($120.0) ($211.0)

D2 Grant $0.0 $0.0 $350.0

Reserve Adjustment $0.0 $0.0 $66.7

Debt service changes $0.8 $8.7 $414.7

Fed relief (net of $0.4 to MATA) $174.9 $6.5 $229.2

Other Misc. $0.2 $0.0 $5.5

Total offset $187.5 $205.2 $1,346.3 D

Net change ($0.8) $0.3 ($16.2)

18Finance Department

Potential Resulting Key Performance Indicators

FY 2020 FY 2021 20 - Year Plan

Ratio:

• Internal 1.41 1.60 1.24

• External 2.67 2.76 2.49

Cash Ending Balance:

• Unrestricted (in millions) 528.3 500.3 183.7

Total (in millions) 750.3 684.0 442.8