Finance and Capital Committee

Information Item III-A

February 28, 2019

FY2020 Operating Budget Work Session

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Washington Metropolitan Area Transit Authority

Board Action/Information Summary

Action Information MEAD Number: 202066

Resolution: Yes No

TITLE:

FY2020 Budget Work Session

PRESENTATION SUMMARY:

To address additional questions relating to the FY2020 Proposed Operating Budgetand Capital Improvement Program

PURPOSE:

The General Manager/Chief Executive Officer (GM/CEO) presented the FY2020Recommended Budget and FY2020-2025 Capital Improvement Program (CIP) to theFinance and Capital Committee of the Board of Directors on November 1, 2018. Following that presentation, Principal Board Members submitted questions on theFY2020 Recommended Budget to be reviewed during a work session held onNovember 15, 2018. Board members submitted additional questions after furtherreviewing the budget; this work session will address that second round of questions.

DESCRIPTION:

Key Highlights:

Staff received a total of 19 questions for this work session, grouped into twocategories:

Operating BudgetCapital Budget

Background and History:

The GM/CEO's budget sets a series of goals for FY2020, with initiatives toincrease ridership and improve the customer experience, as well asmanagement actions to maximize operating efficiency, enhance employeeengagement and development and comply with Dedicated Fundingrestrictions.

Discussion:

The GM/CEO's recommended operating budget totals $2.0 billion of operatingspending in FY2020. In the interest of demonstrating compliance with the

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recent Dedicated Funding legislation, the FY2020 Operating Budget is brokendown as follows: the base budget which reflects the new 3 percent mandatedsubsidy growth cap, items legislatively excluded from the subsidy cap, andnew customer/ridership initiatives which require additional support beyond thecap. The total operating subsidy, including capped subsidy, exclusions, andnew initiatives is $1.184 billion.

Responses to the Board member questions regarding the FY2020recommended operating budget are included as an attachment. Thepresentation to the Finance and Budget Committee summarizes thesequestions into related topic areas. Key policy considerations to be discussed at the work session include: Fare Changes

1. $2 weekend flat fare proposal, which will have a negative revenue impactof approximately $3 million.

2. 7-Day Regional Bus Pass discount, which will cost approximately $2million.

3. Visitor and SelectPass changes

Expenses

1. Four new initiatives to drive ridership growth will cost an estimated $20million

2. Silver Line Phase 2 ramp-up activities are expected to costapproximately $37 million in FY2020

Rail Overnight Maintenance Window and Work Hours - Potential impact of upto $45 million Eligibility of legislative exclusions Subsidy Allocation Formula changes

1. Board-approved formula used in previous years, or2. 3 percent subsidy allocation, requested by the Board, in lieu of

previously used formula

FUNDING IMPACT:

Information item only - no funding impact. Project Manager: Dennis Anosike

ProjectDepartment/Office: CFO/OMBS

TIMELINE:

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Previous Actions

November 1, 2018 - GM/CEO presented FY2020Proposed Budget and FY2020-2025 Capital ImprovementProgram November 15, 2018 - First work session regarding theoperating budget January 10, 2019 - Second work session focused on thecapital program January-February 2019 - Budget deliberations, CompactPublic Hearings and related public participation activitieson the FY2020 Operating Budget and FY2020-2025Capital Improvement Program

Anticipated actionsafter presentation March 2019 - Board adoption of FY2020 Budget

RECOMMENDATION:

No action recommended - information item only.

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1 WASHINGTON METROPOLITAN AREA TRANSIT AUTHORITY

FY2020 Budget Work Session

Finance and Capital Committee

February 28, 2019

Page 8 of 39

Purpose

▪ 3rd Board work session on FY2020 Operating Budget and

FY2020-2025 Capital Improvement Program

2

Proposed FY2020 Budget

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Capital Improvement Program

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FY2020 Capital Program Changes from Proposed Budget

FY2020-2025 Capital Improvement Program

▪ Major Drivers

▪ Changes in project schedules

▪ Project plans and scopes developed

▪ Examples▪ 7000 Series Railcar Delivery schedule shifted into FY2020

▪ Platform Reconstruction Program fully scoped

▪ Traction Power and Automatic Train Control work accelerated

▪ Potomac Yard construction activities to begin in FY2020

▪ Acceleration of Office Consolidation Program

▪ Dedicated Funding

▪ Will enable Metro to use debt to manage program cash flow needs

▪ Keeps jurisdictional contributions consistent with FY2020-2025 expectations

4Page 11 of 39

FY2020 Forecast and Six-Year Total($ in millions)

Planned Investment

FY2020

Proposed

FY2020

Forecast

FY2020-

2025

Railcars $255 $269 $1,783

Rail Systems $187 $204 $1,225

Track and Structures $171 $166 $1,491

Stations and Passenger

Facilities$360 $491 $2,066

Bus and Paratransit $205 $194 $1,374

Business Support $174 $226 $1,302

Total $1,352 $1,550 $9,241

FY2020-2025 Capital Improvement Program

Note: Totals exclude $23M for service disruptions associated with major capital projects.

5Page 12 of 39

FY2020-2025 Capital Improvement Program

Six-year planned capital investment remains at $9.2B

1,2791,352

1,499 1,5091,606 1,630 1,646

1,434

1,550

1,685 1,666

1,461 1,501

1,355

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

FY19 FY20 FY21 FY22 FY23 FY24 FY25

Proposed Updated

Note: FY20-25 CIP total in unchanged, however first three program years increase by $541m, while second three years of program decrease by $541m due primarily to Platform Rehabilitation

and Office Consolidation initiatives. The 7-Year Program (including FY19 increases by $154m; which will be funded with Dedicated Revenues.

6

($ in millions)

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FY2020-2025 Capital Improvement Program

7

- - - -

134

192

94

171

201

5

63

- $-

$100

$200

FY2020 FY2021 FY2022 FY2023 FY2024 FY2025

Debt Utilization - Proposed Debt Utilization - Updated

Six-Year program anticipates PAYGO and approximately $500 million of new

debt($ in millions)

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Operating Budget

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Impact of Local 922 CBA on FY2019 Operating Subsidy

FY2020 Proposed Operating Budget

Subsidy

FY2019 Approved $1,008.931

Grosvenor Turnback & Bus Amendment $4.929

FY2019 Amended (June 2018) $1,013.861

Paratransit Amendment $36.500

Required Subsidy - Local 689 $25.060

Required Subsidy - Local 002 $4.015

Required Subsidy - City of Falls Church Bus $0.211

FY2019 Revised (November 2018) $1,079.647

$1.146

$1,080.793

Required Subsidy - Local 922

FY2019 including Local 922

Revised FY2020 (3% Mandated Cap) $32.424

Projected Revised Base in FY20 $1,113.216

9

($ in millions)

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Allocation of Required FY2019 Subsidy for Local 922

Jurisdiction Total

District of Columbia $0.480

Montgomery County $0.170

Prince George's County $0.195

Maryland Subtotal $0.364

City of Alexandria $0.055

Arlington County $0.088

City of Fairfax $0.002

Fairfax County $0.152

City of Falls Church $0.004

Virginia Subtotal $0.302

TOTAL $1.146

FY2020 Proposed Operating Budget

10

($ in millions)

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FY2020 Proposed Operating Budget

Legislatively Excluded Operating Subsidy Growth Above the 3% Mandated Cap is $51 million

11

$ in millions

Litigation, Falls Church

Bus, Safety & Health

Requirements

MetroAccessSilver Line

Phase 2 Total

District of Columbia $3.2 $1.1 $12.1 $16.5

Montgomery County $1.5 $1.0 $6.4 $9.0

Prince George's County $1.5 $2.1 $5.8 $9.3

Maryland Subtotal $3.1 $3.1 $12.2 $18.3

City of Alexandria $0.4 $0.0 $1.7 $2.2

Arlington County $0.8 $0.0 $3.4 $4.3

City of Fairfax $0.0 $0.0 $0.1 $0.1

Fairfax County $1.3 $0.6 $6.0 $7.9

City of Falls Church $0.2 $0.0 $0.1 $0.1

Loudoun County $0.0 $0.0 $1.1 $1.1

Virginia Subtotal $2.8 $0.7 $12.4 $15.7

Total $9.1 $4.9 $36.7 $50.7 Page 18 of 39

FY2020 Proposed Operating Budget

Revenue and Ridership impact of Fare Changes

▪ 7-Day Regional Bus Pass and $2 Weekend Flat Fare will increase ridership and decrease revenue

▪ Visitor Passes and adding unlimited bus to SelectPass will increase

ridership and revenue

12

(3) (1) 1 3

SelectPass Changes

Visitor Pass Changes

$2 Weekend Rail Fare

7-Day Bus Pass Discount

Revenue ($ in M) Ridership (in M)

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FY2020 Proposed Operating Budget

Proposed New Initiatives to Drive Ridership Growth

13

$ and Trips in Millions $

New Initiatives

Operating

Cost

Trips

Benefitting

New

Trips Revenue Subsidy

Cost Per

New Trip

Subsidy Per

New Trip

Expand Rush Hour

Service Periods$8.2 11.7 1.2 $2.8 $5.4 $6.83 $4.50

Extend Yellow Line

Service to Greenbelt$8.2 12.4 1.7 $5.0 $3.2 $4.82 $1.88

Run all Red Line Trains

to Glenmont$3.1 3.4 0.6 $2.0 $1.1 $5.17 $1.83

Expand all Trains to

Maximum 8-Cars$10.5 1.5 0.1 $0.2 $10.3 $105.00 $103.00

Total $30.0 29.0 3.6 $10.0 $20.0

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FY2020 Proposed Operating Budget

Cumulative management actions reduce FY2020 expenses by

$182 million

FY2018 FY2019 FY2020

10% of Operating

budget or 20% of

subsidy

14

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Public Comments

▪ Compact Public Hearings held

➢ January 30, 2019 - VA

➢ January 31, 2019 - MD

➢ February 5, 2019 - DC

▪ 30 individuals testified and more than

5,800 comments were submitted

through paper and online surveys

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Next Steps

▪ March 2019: Review and accept Public Communication & Outreach

Report

▪ March 2019: Board approval of FY2020 Operating Budget and

FY2020-2025 Capital Improvement Program

▪ April 2019: Submit federal grant applications

▪ July 2019: FY2020 Fiscal Year Begins

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FY2020 Operating Budget Questions February 28, 2019 Work Session

OPERATING BUDGET: 1. There is general agreement among the jurisdictions that funding the General

Manager’s rail service “New Initiatives” would push VA and MD’s operating subsidy requirements over the 3% cap and trigger legislatively-mandated funding penalties. Previously WMATA staff provided ridership and cost estimates for each proposal. Would you now make a business case for each individual option, taking into account cost per new rider, and provide the Board with a prioritization ranking. (MD)

Answer:

The proposed FY2020 Budget recommends four new customer initiatives to improve service levels. The new initiatives are:

• Expand rush hour service periods. Trains would run at more-frequent rush hour service levels for an additional 30 minutes each morning (from 9:30 until 10 a.m.) and an additional 90 minutes each evening (from 7:00 until 8:30 p.m.). The move would reduce the time customers wait for trains and make Metro a more attractive option for customers later in the morning, as well as those using Metro for evening activities. Subsidy per rider is $4.50 with off-peak fares in effect during these periods.

• Extend Yellow Line service to Greenbelt. Currently, Yellow Line trains “turn back” at Mt. Vernon Square during rush hours and at Fort Totten at all other times. The new initiative would extend every Yellow Line train to Greenbelt, which would double service during rush hours and address current crowding conditions at the nine stations north of Mt Vernon Square (Shaw-Howard through Greenbelt). During off-peak times, the four stations north of Fort Totten would see an increase in service. Many current Green Line customers traveling to Yellow Line stations in Virginia (such as Reagan National Airport) would be able to make the trip without changing trains. Subsidy per rider is $1.80.

• Run all Red Line trains to Glenmont. Currently, some Red Line trains “turn back” at Silver Spring, while others operate to the end of the line at Glenmont. The recommendation would simplify Metro’s service pattern for customers while increasing service at another three Red Line stations (Glenmont, Wheaton, and Forest Glen), by running Red Line trains to Glenmont during peak periods and on weekends. This initiative would complement a related service enhancement on the Shady Grove end of the line, in which all Red Line trains begin/end at Shady Grove. Weekday off-peak service would remain unchanged. Subsidy per rider is $2.00.

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• Expand all trains to the maximum length of 8 cars. This initiative would address the capacity and crowding by increasing all trains to their maximum length of eight. The move would also allow Metro to simplify its yard and maintenance operations by standardizing trainsets (for example, reducing the need to continually add and remove cars to trains). The proposal would be phased-in by line, starting with the Red Line (July 2019), followed by the Blue Line (October 2019) and Orange and Silver Lines (June 2020).

The table below summarizes expenses, revenues, ridership, and cost per new rider associated with each of the four new initiatives in the proposed FY2020 budget.

in millions Expand Rush Hour

Service Periods

Extend Yellow Line

Service to Greenbelt

Run Red Line Trains to

Glenmont

Expand All Trains to The

Maximum Length Of 8 Cars Total

Service Level Impact 9:30am - 10:00am 7:00pm - 8:30pm

All Weekday Peak &

Weekend All

Revenue $2.8 $5.0 $2.0 $0.2 $10.0

Operating Costs $8.2 $8.2 $3.1 $10.5 $30.0

Net Subsidy Impact $5.4 $3.2 $1.1 $10.3 $20.0

Current Trips Benefitting 11.7 12.4 3.4 1.5 29.0

New Trips 1.2 1.7 0.6 0.1 3.6

Expand Rush Hour

Service Periods

Extend Yellow Line Service To Greenbelt

Run Red Line Trains To Glenmont

Expand All Trains to

Maximum Length Of 8

Cars Total

Cost per New Passenger Trip

$6.83 $4.82 $5.17 $105.00 $8.33

Net Subsidy per New Passenger Trip

$4.50 $1.88 $1.83 $103.00 $5.56

% of Costs Recovered from New Passenger Revenue

34% 61% 65% 12% 33%

The figures above do not include $4 million in revenue that could be generated by peak fares during expanded rush hour service periods.

2. After some discussion with the Board, WMATA staff have used a new formula/ subsidy allocation to place each jurisdiction’s contribution at the 3% cap in FY20 (see WMATA budget page 15). How was this done and how will the revised allocation formula be auditable going forward? Can you also explain policy-wise what impact this will have on the connection between the share of WMATA service in a jurisdiction and that jurisdiction’s share of the operating subsidy in the long term? (DC)

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Answer: The methodology used for allocating the FY2020 subsidy is summarized below. This methodology is based on the jurisdictions’ share of WMATA’s subsidy in FY2019 and reflects WMATA’s service plans from FY2019.

• Base Operating (Capped) Subsidy: ✓ Base operating subsidy growth is capped at the mandated 3% from FY2019

subsidy. ✓ Total contributions for the District of Columbia, the State of Maryland, and

the Commonwealth of Virginia are capped at 3% from their FY2019 contributions.

✓ Intra-state contributions within the jurisdictions of Maryland and Virginia

were calculated based on an allocation proportional to their FY2019

contributions.

• Legislative Exclusions (per MD HB 372/SB 277 and VA HB 1539/SB 856): ✓ Training cost for Silver Line Phase II was allocated to all jurisdictions

(including Loudoun County) based on the Board-approved Metrorail formula.

✓ Paratransit cost increase allocated to all jurisdictions (excluding Loudoun County) based on the Board-approved MetroAccess formula.

✓ Remaining costs included in this category were allocated to the jurisdictions (excluding Loudoun County) per the Board-approved formulas.

• New Initiatives: ✓ Allocated to all jurisdictions (excluding Loudoun County) based on Board-

approved Metrorail formula.

If the Board decides to proceed with this method, the new methodology would be included in the Resolution approving the FY2020 Budget.

3. Does the budget include any assumptions about Late Night Service Partnerships for FY20? Please provide information on any partnerships and estimated expense or revenue commitments assumed for FY20, especially as compared to FY19. (MD)

Answer:

The Proposed FY2020 Budget includes $1 million to support a pilot program for Late Night On-Demand Transportation Service.

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4. What is the estimate of lost fare revenues in FY20 because of the decriminalization of fare evasion in D.C.? Does WMATA also estimate a reduction in litigation /enforcement costs due to this decision by the D.C. City Council? (MD)

Answer:

The Proposed budget does not assume additional lost fare revenues due to

decriminalization of fare evasion in DC as the legislation was passed after introduction

of the Proposed budget. Staff expect that this action will increase the estimated $25

million in annual Metrobus losses related to fare evasion and millions more for

Metrorail. Any increase in fare evasion as a result of a change in District law in the

would require additional subsidy contributions or fare increases to ensure budget

balance. For additional information, the November 29, 2018 letter provided to the

Council of the District of Columbia is attached.

As to expenditures, the budget does not anticipate a reduction in

litigation/enforcement cost due to this decision.

5. The Silver Line Phase II schedule is experiencing significant construction issues.

Does staff believe that these issues will delay the anticipated opening date and, as a

result, schedule of ramp-up cost assumptions? Do the reported $37 million in ramp-

up costs need to be included, in whole or in part, in the FY20 budget? Will the delays

affect the start of contributions from Loudoun County? (MD)

Answer: The $37M ramp up cost included in the Proposed FY2020 Budget assumes Silver Line Phase II will open for revenue service after July 1, 2020. If this date changes, the ramp up cost allocable to FY2020 will change as well, potentially eliminating the need additional subsidy in FY2020.

6. Please provide a detailed description for each of the programs that total $51 million,

included in the FY20 operating budget above the 3% cap as legislative exclusions

(SL2 ramp-up, litigation costs, OSHA-mandated testing, additional paratransit costs).

Please provide a breakdown of the cost of each exclusion to each jurisdiction, and a

description of how each of these costs were calculated. (MD)

Answer: Mandated and legislatively excluded subsidy requirements were established by the Commonwealth of Virginia and the State of Maryland as part of their Dedicated Funding legislation. As requested, the table below details the specific cost exclusions, the exclusion category, the justification or basis for the exclusion and the cost elements:

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Cost Category

Exclusion Category

Justification Cost Detail

Silver Line Phase 2

Capital Project In HB1539ER2, Sec 33.2-214.3 - Statewide prioritization for the Commonwealth Mass Transit Fund, subsection J, ..."Any capital project approved by WMATA Board before or after effective date of this provision" shall be excluded from the 3% cap. WMATA's Board approved the Silver Line Phase 2 project on January 28, 2010.

The FY2020 Proposed Operating Budget includes start-up training costs for police officers, rail operations and maintenance employees in preparation for operating service and rail yard maintenance mobilization.

Litigation Legal Disputes Expenses that arise from or are related to legal disputes between WMATA and any other person or entity.

Incremental increase in costs from FY2019 to FY2020 for internal and external counsel services for litigation, as well as the associated costs: court reporters, court filing fees, experts’ fees, independent medical evaluation, medical records, and private investigators required to support litigation and defend claims made against the Authority.

Occupational Safety & Health

Federal Mandate

FTA and DOT statutes and regulations require medical exams, random drug and alcohol testing, and other exams. FTA recently increased required the percent of WMATA employees subject to random drug testing which will double current costs

To comply with these requirements, Metro must add both personnel and contracted services to provide and manage medical exams, random drug and alcohol screening, and other exams to ensure fitness for duty and safe operation of the system.

ADA Paratransit

Federal Mandate

Sec 12143 of the Americans with Disabilities Act (ADA) mandates that public entities operating fixed route systems must have paratransit services as a complement to fixed route service.

Reflects annual contractual cost escalation clauses for Service Delivery Providers, Operations Control Assurance and the Quality Assurance Provider

City of Falls Church Bus Service

Jurisdiction-Requested Services

Commonwealth Transportation Board Policy (Resolution passed 9/18/18) states that the 3 percent calculation shall not include: “Operating subsidies for specific WMATA transit services that are funded by one or more WMATA member jurisdictions and/or from other non-WMATA funding sources.”

Metrobus 3T service was requested by the City of Falls Church with all costs paid by the requesting jurisdiction. The Board approved this change in November 2018 and service began in late December 2018. The first half of the $422,000 annual subsidy ($211,000) is included in the FY2019 Base and therefore included in the FY2020 base. The second half of the subsidy ($211,000), for a full year of service in FY2020, is subject to the legislative exclusions. All subsidy (100 percent) is allocated to the City of Falls Church as Non-Regional Bus Subsidy.

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A breakdown of the cost of each exclusion by jurisdiction is below:

($ in Millions)

Litigation, Falls Church, Safety

& Health Requirements MetroAccess

Silver Line

Phase II Total

District of Columbia $3.3 $1.1 $12.1 $16.5

Montgomery County $1.6 $1.0 $6.4 $9.0

Prince George's County $1.5 $2.1 $5.8 $9.4

Maryland Subtotal $3.0 $3.1 $12.2 $18.3

City of Alexandria $0.4 $0.0 $1.7 $2.2

Arlington County $0.8 $0.0 $3.4 $4.3

City of Fairfax $0.0 $0.0 $0.1 $0.1

Fairfax County $1.4 $0.6 $6.0 $7.9

City of Falls Church $0.2 $0.0 $0.1 $0.3

Loudoun County $0.0 $0.0 $1.1 $1.1

Virginia Subtotal $2.8 $0.7 $12.4 $15.9

Total $9.2 $4.8 $36.7 $50.7

7. WMATA staff have indicated that the proposed fare and pass changes are revenue

neutral overall. What are the revenue and ridership forecasts for each individual pass and fare change? What evaluation criteria did you use? Which changes are the most efficient per rider gained (please provide a prioritization of which are the most cost effective)? (VA)

a. What are the revenue and ridership forecasts for each individual pass and fare

change?

Answer:

As discussed in November 2018, the weekend flat fare could result in $3 million revenue loss with 1.4 million increase in ridership and the reduction in the 7-Day Regional Bus Pass from $17.50 to $15.00 is estimated to reduce revenue by $1.8 million in FY2020, with an expected increase in ridership of about 0.7 million trips. These revenue impacts are mostly offset by expected increases in revenues from Visitor Pass and SelectPass offerings, as shown in the table below.

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When combined, the proposals are projected to add nearly three million trips with a revenue impact of less than $1 million.

b. What evaluation criteria did you use?

Answer:

For the FY20 budget, proposals were evaluated against three primary criteria: Level of Effort (based on the execution capacity of existing or anticipated technology); cost recovery and ridership recovery.

c. Which changes are the most efficient per rider gained (please provide a prioritization of which are the most cost effective)?

Answer:

Full deployment of enhancements to SelectPass is the highest-priority investment. It impacts the highest percentages of annual trips on the system, unifies rail and bus under one umbrella, and the highest potential for increased usage and net revenue to WMATA. The Visitor passes also offer an opportunity to grow both revenue and ridership, though at more modest levels than with SelectPass. Visitor passes for bus and rail a can be used repeatedly in the same day without consulting fare tables, would be offered at more competitive prices and would introduce a new 3-day pass option.

8. Last year, the WMATA board approved policy changes granting flexibility to the use

of joint development revenues. Does this change allow the ability to use additional joint development or land sale revenues as operating revenue? What are WMATA’s assumptions for this in the FY20 budget? (VA)

FY2020 Revenue Initiatives Revenue Ridership

Metrorail Weekend Flat Fare $2.00 ($3,000,000) 1,400,000

Reduce 7-Day Bus Pass ($17.50 to $15.00) ($1,800,000) 700,000

Visitor Pass Upgrades $400,000 273,000

Add a 3-Day Weekday Pass ($28) $526,000 175,000

Add Unlimited Bus to all Visitor & SelectPasses $3,035,000 375,000

Total ($839,000) 2,923,000

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Answer: Proceeds from joint development and land sales that were originally purchased with local funds may be applied as operating revenue per the Board policy. Total joint development revenue in FY2020 is estimated at $11.1 million; a $1.3 million increase over the previous year. Proceeds from specific land sales originally purchased in part with federal funds are required to be reinvested in the capital program as directed by FTA Circular 5010.1E.

9. Page 11 of the budget shows an increase in parking revenue of $4 million from the 2018 parking pilots. Since a modified package of parking programs was approved in December 2018 (after the proposed budget submission), what are the revised revenue implications, if any, for the operating budget? (VA) Answer:

The revised increment in parking revenue based on the programs approved in December remains at $4 million. The reduction in the Saturday parking fee revenue was offset by increases from Regional Events and other changes.

10. WMATA Board approved several fare changes in the fall/winter of 2018 during budget

development that could result in additional revenue: peak fares for regional events and changes to the use regulations. What, if any, revenue is assumed in the proposed FY20 operating budget from these actions? (VA)

Answer: Peak fares for regional events is designed to allow Metro to recover a portion of additional expenses associated with supporting regional events such as transit police and customer service staff. While this change may increase revenues, it will be offset by additional expenses. Regional events are largely unpredictable, accordingly no assumptions about the number or financial impact of regional events are reflected in the proposed budget. The Use Regulation changes, for the most part, conformed and consolidated several Board and management policies into a single consolidated document. The budget assumes no financial impacts from these changes.

11. Previously WMATA staff have provided the worksheets detailing how the subsidy

allocations were determined for each jurisdiction. Please provide a detailed description of the method used to create the three budget scenarios (Traditional, Training, No Bus) proposed by the GM in November. While the Board has discussed modifications to the operating budget subsidy calculation for the FY20 budget, no

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formal vote has occurred? When does staff recommend the Board formally consider any change? (MD) Answer: The three subsidy scenarios included in November’s presentation utilized the Board-approved subsidy allocation methodology. The Board of Directors subsequently requested a consensus formula consistent with the Dedicated Funding legislation as explained in question 2. That said, the three scenarios are explained below:

• Traditional Scenario, using traditional allocation formulas, the subsidy was allocated to all jurisdictions, with Loudoun County participating in Bus and Rail subsidies only.

• Training Scenario, using traditional allocation formulas, the total subsidy less the ramp-up cost of Silver Line Phase II was allocated to the jurisdictions not including Loudoun County. The ramp up cost for Silver Line Phase II was allocated to Loudoun County and Fairfax County only.

• No Bus Scenario, using traditional allocation formulas, the subsidy was allocated to all jurisdictions. Loudoun County participates only in the Rail subsidy.

12. When will WMATA provide a jurisdictional subsidy contribution breakout by mode (rail, bus and MetroAccess) as has been provided during the budget review process in prior years? An example is provided as an attachment. (MD)

Answer:

As noted in responses to Question 2 and 11 above, the consensus FY2020 subsidy allocation apply 3.0% to each State’s FY2019 subsidy contribution. This method departs from the previous modal method. Therefore, no modal breakdown is available.

13. In November, WMATA provided a budgeted rail revenue miles number of 94,164,783. Why is this figure unadjusted for the 3-month closure of the Yellow and Blue lines south of National Airport? How many miles in this figure represent the rush hour extension of every other Red line train to Shady Grove? Based on actual revenue miles operated for the last 4 fiscal years, why should the Board not assume the budgeted revenue miles number is too high? (DC)

Answer: The Proposed budget was developed prior to additional details on the scope and schedule of the upcoming year’s track program and corresponding service changes from the planned Blue Line shutdown. The Proposed budget includes 1,493,000

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annual railcar miles associated with the service change to run all Red Line trains to Shady Grove.

14. Please provide a breakdown of the subsidies, as shown in the attachment, that excludes the $20 million for new rail initiatives and $50.5 million for legislatively excluded items (would total $1,111 million)? The $20 million in new initiatives and $50.5 million in legislative exclusions should be included as separate columns. (MD)

Answer:

($ in Thousands)

FY20

Capped Exclusions

New

Initiatives

Proposed

FY20

Revenue

Passenger 690,035 - 10,000 700,035

Other Passenger - - - -

Parking 47,238 - - 47,238

Advertising 26,000 - - 26,000

Joint Development 9,750 - - 9,750

Fiber Optics 16,939 - - 16,939

Other 7,770 - - 7,770

Reimbursables -

Total Revenue 797,732 - 10,000 807,732

Expenses

Personnel 1,366,345 7,896 18,603 1,392,843

Services 319,565 39,853 - 359,418

Materials & Supplies 104,071 1,317 2,300 107,688

Fuel 29,834 106 - 29,940

Utilities 93,969 1,511 9,097 104,577

Casualty & Liability 31,339 - - 31,339

Leases / Rentals 8,363 - - 8,363

Misc. 4,572 30 - 4,602

Capital Allocations (47,111) - - (47,111)

Total Expenses 1,910,947 50,711 30,000 1,991,659

Net Subsidy 1,113,215 50,711 20,000 1,183,927

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CAPITAL BUDGET:

15. The proposed WMATA FY20 capital budget originally projected an overpayment of

$116M from the jurisdictions (p. 63). It now appears that all or a large portion of these funds can be used to fund additional capital spending occurring in FY19. If this is true, can the FY20 budget be adjusted so that it is clear that the jurisdictions will no longer be overpaying? (VA)

Answer:

Given the FY2019 capital spending forecast and impacts on current projects, staff is evaluating funding needs for FY2020 capital budget and the utilization of available funding sources that do not include additional funding request of the region. This information will be presented to the Board upon completion.

16. There is no bonding of the WMATA dedicated funding shown in the six-year

CIP. WMATA requested a dedicated funding source so it could use debt to accelerate capital spending and smooth out the funding plan in years when budgeted state and local contributions were insufficient to meet planned expenditures. What is your capital funding strategy for the out years of the CIP and do you anticipate a need to borrow additional funds? (VA)

Answer: The Proposed six-year Capital Improvement Program includes a total of $325.7 million in anticipated borrowing using Dedicated Funding as a pledge, as shown on page 63 of the FY2020 Proposed Budget. Please note that WMATA’s debt strategy will evolve as capital projects advance and the investment program expands.

17. Previously Unanswered: Will capital investments proposed in FY 2020 budget directly

result in close out of FTA or NTSB Safety CAPs? (MD)

Answer: Listed below are some examples of investments in the Capital Program that both improve system safety and address safety recommendations from FTA and NTSB. A comprehensive and detailed status of all FTA and NTSB Corrective Action Plans (CAPs) is available at the website linked below https://www.wmata.com/initiatives/transparency/Corrective-Action-Plans.cfm

• Replacement of pneumatic control boxes for ventilation fans with Programmable Logic Control systems (addresses FTA SMI R-6-37-a)

• Enterprise Learning Management system evaluation to ensure accurate training, re-certification and professional certification records are created, maintained and

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readily accessible to appropriate managers and employees (addresses FTA SMI R-7-39-a)

• Maintenance Management System to improve the capabilities of employees to enter, analyze and assess information into the agency’s Maintenance Management Information System (addresses FTA SMI R-7-40-a/b/c)

• Development of proactive safety analysis of information provided by Operating and Maintenance departments procedures to provide more support for proficiency testing, conduct more in- depth safety studies, reviews and accident/incident investigations (addresses FTA SMI R742b)

18. The WMATA capital budget assumes jurisdictions would make up the loss of $150 million annually if the federal government does not reauthorize its $150 million in direct capital investment in WMATA. How would WMATA modify its capital budget to reflect the fact that the jurisdictions have not indicated a willingness to provide this additional capital funding? (MD) Answer: WMATA’s 6-year $9.3 billion Capital Improvement Program consists of critical safety, state of good repair and system reliability improvements. Major changes to program investment levels would impact WMATA’s ability to achieve its system safety and reliability goals.

19. The six-year CIP local funding levels shown on page 63 of the WMATA budget are about 33% higher than some jurisdictions expected. When developing the dedicated funding bill, these jurisdictions assumed that the jurisdictional capital request would fall back to the capital subsidy levels before the steep increases started (look back six years). What would be the impact of lowering the jurisdictional capital contribution to a level more in line with former budgets and using the dedicated capital funding to support debt issuance to maintain the $1.5 billion capital spending level? (VA)

Answer: The FY2020 Capital Improvement subsidy contributions are consistent with the plan to Keep Metro Safe, Reliable and Affordable (KMSRA). The growth in jurisdictional capital contributions for formula match and system performance (excluding PRIIA, Dedicated Funding and Other contributions) is limited to three percent from FY2019 to FY2020 and throughout the six-year program period.

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Attachment referenced in question #12.

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Attachment referenced in question #14.

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