Agenda Item No. 4

To:   Finance-Auditing Committee/Committee of the Whole
Meeting of October 10, 2002
 
From:   Celia G. Kupersmith, General Manager
 
Subject:   APPROVE REVISIONS TO THE STRATEGIC PLAN FOR ACHIEVING LONG-TERM FINANCIAL STABILITY

Recommendation

The Finance-Auditing Committee recommends that the Board of Directors approve a revised and updated version of the Strategic Plan for Achieving Long Term Financial Stability.

This matter will be presented to the Board of Directors at its October 11, 2002, meeting for appropriate action.

Background

At the June 28, 2002 Board meeting, the Board of Directors adopted a first version of the Strategic Plan for Achieving Long-Term Financial Stability (Strategic Plan). After working with the plan for several months and based on further decisions and directions from the Board and its Committees, staff has prepared a revised version that reflects the updated condition of the Strategic Plan.

The significant revisions to the Strategic Plan include the following:

  1. The timing and approach to transit service reductions has been amended in response to public and Board member concerns that the incremental approach does not adequately allow for design of a new approach to transit services and makes it harder for transit users to know what is happening to their service over time. The Strategic Plan now calls for an initial round of service reduction consistent with what is currently being discussed through the public process and a second, larger round of reductions that will be developed with public involvement in the process over the next several months. Implementation of potential reductions is now scheduled for March 2003 and either September 2003 or March 2004.
  2. A voluntary donation program for Bridge sidewalk and facility visitors will be developed and implemented in Spring 2003 with a comprehensive review of the program's effectiveness after one year.
  3. Miscellaneous strategies under investigation by staff for raising revenue or reducing costs are referenced in the document. An example would be the focus on reviewing Human Resources policies to determine if small improvements could be made that reduce current or future costs with minimal impact to employees.
  4. Broad timelines for activities in the Strategic Plan have been incorporated to assist in monitoring progress.

Fiscal Impact

There is no direct fiscal impact associated with approval of the revised version of the Strategic Plan for Achieving Long-Term Financial Stability.

Attachment ­ Revised Strategic Plan for Achieving Long-Term Financial Stability
(October 2002)

STRATEGIC PLAN FOR ACHIEVING LONG-TERM FINANCIAL STABILITY
REVISED: OCTOBER 2002

The Golden Gate Bridge, Highway, and Transportation District faces a serious financial crisis in the next few years. To increase our major revenue sources, the Board has approved a toll increase and transit fare increase, both to be implemented in Fiscal Year 2003. Future bus and ferry fare increases have also been approved for study by staff. It has become clear, however, that toll and fare increases alone will not raise enough revenue to meet our financial needs over the next five years. Additionally, we do not have enough money in our reserves to carry us through this time period. We find ourselves needing to slow down spending in order to balance our budgets.

Facing this magnitude of problem, the Board directed staff to begin work on several pathways to achieve long-term financial viability. This Strategic Plan for Achieving Long-Term Financial Stability (Strategic Plan), revised in October 2002, reflects further direction provided to staff regarding the elements of the Strategic Plan and incorporates general timelines for the implementation of the Strategic Plan.

NEW AND ENHANCED REVENUE STRATEGIES

Staff is looking at new revenue sources such as Bridge sidewalk access fees, further bus and ferry fare increases, additional grant funds, and ideas that focus on making money through non-traditional means:

  • A voluntary donation program for users of the Golden Gate Bridge Sidewalks will be implemented in Spring 2003, following the rainy season. At the end of one year, the program will be evaluated to determine its success. This evaluation may result in a desire to consider a required fee collection program.
  • A continuation of the program of annual bus and ferry fare increases will be brought to the Board in the next few months for initial implementation on July 1, 2003 and then on July 1 of each of the following four years.
  • Staff is also investigating the feasibility of a supplemental ferry fare increase in March/April 2003 to make a substantial adjustment to the ferry fares to bring them into parity with those of our private sector partners. This strategy is now being examined by the Bus and Ferry Services Advisory Committee.
  • Work is underway on development of a strategy for collecting parking fees at Larkspur Ferry Terminal. This will proceed in coordination with the ferry fare increase analysis due to the direct inter-relationship between parking fees and ferry service fares.
  • Staff is implementing an expansion to the parking meter program at the Bridge. The program is being designed so that visitor revenue is increased while
  • continuing to allow staff to park at their worksite. Staff will also explore the possibility of charging a parking/access fee for tour buses at the Bridge.
  • Staff is examining ways to maximize revenues from visitor-related services through reduced operating costs for the Bridge Gift Center and Bridge Café and through increased revenue generation. The Fiscal Year 2003 budget includes funds for marketing of the gift shop to local residents in addition to visitors. Staff will also explore the possibility of establishing a jointly operated gift center at Vista Point with the State of California, Department of Transportation.
  • Staff is investigating opportunities to expand concession opportunities at the Bridge. Initial ideas have included bike rentals and audio tours. In both cases, the revenue-generating potential was much smaller than expected and the staff support necessary to implement and monitor the programs was significant. We are continuing to examine other concepts, including Bridge access tours, which may have more significant revenue generation potential.
  • Staff will work with the local jurisdictions to seek their help in subsidizing specific bus routes that the District may seek to discontinue but that the local community may be desirous of maintaining.
  • Staff will explore the possibility of creating a non-profit support organization to solicit, accept and grant monies for specific District projects and activities. Legal counsel is currently working on this strategy.
  • Staff will explore the benefit of instituting a Golden Gate Bridge credit card and/or license plate program.
  • Staff believes that providing extra staff resources within the Grants Department would enable the District to more aggressively pursue both traditional and non-traditional grant funds. We are reviewing the potential impacts of transferring an existing employee into the grants area. It is likely that additional training for this individual would be necessary and there may be an offsetting decrease in staff level elsewhere in the organization. We anticipate having a proposal for Board consideration in early Spring 2003.
  • Staff will pursue federal Homeland Security funds that may become available for use in District projects. Conversations with the Federal Bureau of Investigations and other national and state partner agencies are under way.
  • Staff will participate in any region-wide discussion and study of congestion pricing and will seek funds from the Federal Highway Administration and Bay Area Air Quality Management District to cover any costs associated with such study and any implementation that may occur.
  • Staff will pursue opportunities for one-time and on-going revenue streams from the Metropolitan Transportation Commission (MTC) and Caltrans. It is our intent to approach both organizations for assistance in funding on-going activities such as annual bridge maintenance, tow truck services, and transit operations. It is not possible to estimate the impact of this initiative but staff believes that funds can be made available in partnership with the District.
  • Staff will work to ensure that the District's funding needs are included in any state-wide or county-level funding initiatives that may go to the voters for consideration.
  • Staff will review arrangements and agreements with local agency partners, such as Marin and Sonoma Counties, to determine if the District's interests and needs are adequately and fairly addressed in light of our financial crisis. Negotiations with both Counties have begun and are expected to be wrapped up in the first half of 2003.
  • Staff will investigate the feasibility of implementing, only in conjunction with Caltrans, electronic toll collection transponder charges.
  • Additionally, staff will develop a program for public review and discussion of toll rates and the needs for changes to the toll rates on a regular basis, approximately every one to three years. In this way, the Board of Directors will be able to make a timely determination regarding the need for further toll or transit fare increases. This will be carried out as an integral part of the budget development and financial planning activities of the District.

EXPENSE REDUCTION STRATEGIES

The Board has also discussed several methods for attaining cost reductions and cost containment in addition to revenue enhancement. These discussions have included a wide range of ideas for further consideration and action.

  • Staff is examining opportunities to reduce costs through increased efficiency and cost-sharing. Recent examples of this include partnering with MTC to reprint FasTrak brochures and materials to include TravInfo® information also. This saved the District $130,000 in this budget year. Administrative costs for the workers compensation program have also been reduced by $90,000 per year due to better management of cases and a reduced number of outstanding cases. Opportunities for staff restructuring and position elimination as vacancies appear will be also be an on-going activity.
  • Staff intends to approach the Union Coalition in conjunction with the negotiations that will be underway during the second quarter of 2003 regarding a program of
  • cost containment strategies. This will be followed by discussions with the Amalgamated Transit Union when their MOU is subject to renegotiation.
  • Staff will prepare information for Board consideration regarding implementation of a two-year salary freeze for District employees, particularly for non-represented staff. Staff will also consider efforts to reduce health benefit costs through implementation of a cap on benefit levels. This analysis is underway and will be brought forward over the next several months.
  • Staff is reviewing all current Human Resources policies to identify any opportunities for cost savings that can be secured early in the process so as to reduce the need for more drastic actions later.
  • Staff is also working on developing proposals for some type of employee "early-out" program. Inducements will be examined with the goal being a financially sound approach to downsizing that minimizes the need for layoffs. It is important to understand that an "early-out" program applied across the Board may leave the District without employees in key positions. Our goal is not to end up needing to hire people as a result of any "early-out" program. Therefore, staff is taking a deliberative approach to development of such a program so that it works to the benefit of the organization and the employees who choose to take advantage of this potential window of opportunity. It is anticipated that such proposals will be forthcoming in 2003.
  • A comprehensive staff suggestion program is being implemented that expands upon the success of such programs in some of our departments. Suggestion boxes are now in place throughout the District and an e-mail mailbox is available from work or home e-mail systems as well. District employees have received a letter from the General Manager outlining our financial problem and encouraging them as the front-line job experts to submit any idea they may have for reducing costs. These ideas will be reviewed first by the Employee Suggestion Program Committee to determine their potential for cost savings and to ensure that all ideas are looked at with fresh perspective.
  • Staff will explore the financial advantages and disadvantages of being self-insured.
  • A significant component of the District's effort to achieve a sustainable financial future will include development for Board consideration of a proposal to place a maximum limit on the amount of toll revenues that are used annually to subsidize transit services. This is expected to come before the Board for consideration in early 2003.
  • Starting in late 2002, as directed by the Board and in response to our fiscal emergency, staff is developing a program for significant, system-wide service reductions that result in sustained savings over the long-term. Both bus and ferry
  • service reductions are under consideration. Extensive public outreach throughout the process as well as a formal public hearing will be undertaken. System downsizing will be approached in two parts. The first part, impacting approximately 5% of our service hours and 3% of the passenger trips, is underway and decisions will be forthcoming in late November 2002. The first round of service reductions, if approved, would be implemented in March 2003.
  • The process for developing a more significant downsizing and restructuring of the service will be undertaken beginning in late 2002 and will continue into the first half of 2003. The earliest date for implementation of any changes forthcoming from this effort would be September 2003. An alternative date for implementation would be March 2004.
  • Other programs and services provided by the District will be undergoing review. Non-core programs and services will be subject to consideration for reduction or elimination. Staff will begin reviewing programs and services throughout the District that focuses on clearly identifying those services that must occur in order to carry out our primary mission (i.e., operate and maintain the Bridge so as to allow safe crossing of the Golden Gate Strait and provide bus and ferry services according the service priorities adopted by the Board). Programs and services that are extra will be identified and then examined to determine their value to the District in light of our financial emergency. This analysis will be conducted over the next several months.