Item #E2 – Consolidation Study Update – Attachment
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ATTACHMENT A SAN BERNARDINO COUNTY TRANSPORTATION AUTHORITY CONSOLIDATION STUDY AND INNOVATIVE TRANSIT REVIEW TASK 2 — FINAL CONSOLIDATION REPORT AUGUST 27, 2020 FINAL jasonwittenphoto.com CONSOLIDATION STUDY AND INNOVATIVE TRANSIT REVIEW TASK 2 FINAL CONSOLIDATION REPORT SAN BERNARDINO COUNTY TRANSPORTATION AUTHORITY SUBMITTAL (VERSION 5B) FINAL PROJECT NO.: 12771C70, TASK NO. 2.1 2020 DATE: AUGUST 2020 WSP SUITE 350 862 E. HOSPITALITY LANE SAN BERNARDINO, CA 92408 TEL.: +1 909 888-1106 FAX: +1 909 889-1884 WSP.COM PRODUCTION TEAM WSP Project Manager Cliff Henke Project Lead Eryca Dinsdale Project Support Simon Mosbah Ruby Lee Senior Advisors Tom Lichterman Quality Control John Heaton Table of Contents EXECUTIVE SUMMARY .................................... 1-1 INTRODUCTION .................................................. 2-1 2.1. Study Overview ................................................................ 2-1 TABLE OF 2.2. Report Organization and Methodology ............... 2-2 CONTENTS CONSOLIDATION REPORT OVERALL FINDINGS ............................................................... 3-1 3.1. Summary of Findings ..................................................... 3-1 3.2. Comparison of key agency elements .................... 3-2 3.3. Comparison of key consolidation factors between case study agencies and this potential consolidation .................................................................... 3-4 3.4. Areas of Organizational Impacts ............................. 3-7 3.5. Areas of Legal/Contractual Impacts ..................... 3-12 3.6. Areas of Financial Impacts ........................................ 3-15 CONSIDERATIONS IN A POTENTIAL COMPLETE CONSOLIDATION ...................... 4-1 4.1. Risks and Mitigation Strategies for a Potential Consolidation .................................................................... 4-1 4.2. Barriers and Facilitators for a Potential Consolidation ................................................................... 4-3 4.3. Organizational Structure of a Potential Consolidation ................................................................... 4-5 4.4. Consolidation Considerations Responding to the Global COVID-19 Pandemic ........................................ 4-6 4.5. Streamlining Opportunities Without Consolidation ................................................................... 4-11 4.6. A Review of the 2015 Study Efficiency ................. 4-12 IMPLEMENTATION PLAN AND GUIDANCE ..................................................................................... 5-1 5.1. Approaches for Reaching a Decision on Consolidation .................................................................... 5-1 5.1.1. Decision Making Approaches ......................................................................... 5-3 Consolidation Study and Innovative Transit Review Task 2 Final Consolidation Report August 27, 2020| i Table of Contents 5.1.2. Other Items to Consider ..................................................................................... 5-4 5.2. High-Level Implementation Plan in the Event of a Consolidation Decision ................................................ 5-4 5.2.1. Stage 1: Preparatory/Pre-Consolidation ...................................................5-5 5.2.2. Stage 2: Implement Consolidation ............................................................. 5-7 TABLE OF 5.2.3. Stage 3: Pursue Further Goals and Efficiencies ................................. 5-9 CONTENTS STAFF RECOMMENDATION .......................... 6-1 Consolidation Study and Innovative Transit Review Task 2 Final Consolidation Report August 27, 2020| ii Table of Contents TABLES Table 1: Comparison of key agency factors................................................... 3-3 Table 2: Summary of Key Factors in Case Study Consolidations ............................................................................ 3-6 Table 3: Summary of Functional Areas with Potential TABLE OF Organizational Impacts ....................................................... 3-8 Table 4: Summary of Functional Areas with Potential Legal CONTENTS Impacts ........................................................................................... 3-12 Table 5: Implementation status of items identified in the 2015 Efficiency Study ............................................................ 4-12 Table 6: Considerations for consolidation ..................................................... 5-2 FIGURES Figure 1: Consolidation Study Tasks Completed ........................................ 1-1 Figure 2: 2020 SBCTA Consolidation Study Methodology ............... 2-3 Figure 3: Summary findings in a potential consolidated agency ................................................................................................ 3-2 Figure 4: Case study agencies ................................................................................3-5 Figure 5: Combined total Annualized Costs/Savings for Retirement and Benefits .................................................... 3-16 Figure 6: Job Classification and Staff Duplication Impacts ........... 3-18 Figure 7: Potential Department Structure for a Consolidated Agency ..............................................................4-5 Figure 8: Average Weekday Fixed Route Ridership: March 15 - June 15 2020 ....................................................................... 4-8 Figure 9: Omnitrans’ Service Triggers .............................................................. 4-9 Figure 10: Questions to guide an approach for reaching a decision .............................................................................................. 5-1 Figure 11: Stage 1 - Preparatory/Pre-Consolidation Timeline .......... 5-6 Figure 12: Stage 2 - Implementation Plan .................................................... 5-8 Figure 13: Stage 3 – Pursue Further Goals and Efficiencies .............. 5-9 Consolidation Study and Innovative Transit Review Task 2 Final Consolidation Report August 27, 2020| A-iii 1 Executive Summary Executive Summary The SBCTA Consolidation Study commenced in January 2020 to build on the Countywide Transit Efficiency Study from 2015. The 2015 Study evaluated the six operators in San Bernardino County and identified the potential efficiencies that could be achieved through coordination and joint efforts among the operators and SBCTA. Subsequent to the 2015 Study, Omnitrans experienced significant cost increases of 35 percent, partially due to the changes in the scope of the agency, while ridership dropped 25 percent during the same period, leading to the impetus for the current study. Since the original 2015 Study, the scope of the work evolved to only include Omnitrans and SBCTA. The scope of the 2020 Study concentrates on identifying the cost saving opportunities that could be achieved through a complete consolidation with Omnitrans and quantifying the opportunities and challenges of merging the two agencies. This Study also discusses steps and estimated cost to implement such a consolidation. Since January 2020, the consultant team issued four reports as shown in Figure 1. Figure 1: Consolidation Study Tasks Completed • Updated the agency’s functional assessment from the 2015 Study and Task 1.2 provided initial list of pros and cons of the consolidation. Task 1.3 • Evaluated the current performance of Omnitrans. • Qualitatively analyzed the organizational, financial and legal impacts of Task 1.4B a potential consolidation. • Estimated the financial impacts on each functional area due to the Task 1.4C consolidation. The reports were commissioned prior to the global COVID-19 pandemic and as such compare and refer to the pre-pandemic information. The reports concluded that there are fundamental differences in the missions of the agencies. A performance review of Omnitrans’ key metrics and performance was conducted (Appendix A.4) and SBCTA and Omnitrans, after an analysis of 49 functional areas, had limited functional overlaps between the agencies. Most areas presented limited savings while others raised significant risks. Omnitrans has already demonstrated the ability to make the difficult decisions necessary to address structural funding issues, with the 11 percent service reduction approved in May 2020 as part of ConnectForward. Since then, Omnitrans significantly reduced the service levels twice more due to the pandemic. After careful discussion and review, SBCTA and Omnitrans staff recommend not to consolidate. Consolidation Study and Innovative Transit Review Task 2 Final Consolidation Report August 27, 2020| 1-1 2 Introduction Introduction 2.1. Study Overview San Bernardino County is the largest county in geographic area in the contiguous United States, with developed regions that vary from relatively dense urban concentrations to rural communities, combined with untouched desert and mountain landscapes. Like the county they are located in, the six transit operator/agencies1 in San Bernardino County vary widely in size and nature of the transit services provided. However, all are in the business of moving people by public transit efficiently and economically. In 2015, the San Bernardino County Transportation Authority (SBCTA) conducted a study, the “2015 Study”, of all the bus transit operators in the County with the goal of identifying opportunities for improved economies of scale through increased coordination, cooperation, and joint efforts. The study identified a series of potential strategies that could be pursued to improve efficiency and