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Southwest Pennsylvania Transit Southwest Pennsylvania Transit Port Authority Consolidation Study March 2015 To Interested Stakeholders: Pursuant to the requirements of Senate Bill 700 (SB 700) of 2013, enclosed are reports assessing the impacts of consolidating transit agencies in southwestern Pennsylvania and of the privatization of Port Authority of Allegheny County (PAAC) service. PennDOT identified and analyzed four consolidation scenarios ranging from one to three transit authorities taking the place of the 14 existing transit systems in the ten-county region. Based on those scenarios, estimated annual operating cost savings range from $3.4 million for three separate authorities to $7.2 million for one regional authority. With regard to privatization of PAAC service delivery, the report concludes that privatization is a tool which could potentially result in cost savings for PAAC. However, privatization is not a magic bullet. Rather it is one of many tools management could use to control growth in operating costs. Regardless of which tools are selected to help control costs, success will require strong leadership, local support, and significant time to overcome the historically high cost structure. Because public transportation in Pennsylvania is locally controlled and managed, PennDOT recommends that actions beyond these reports be determined locally. Local transit management and governing boards must review the study findings and move forward to find ways to reduce cost increases and keep long term legacy costs in check. The Commonwealth, as a major contributor to public transportation operating and capital costs, must work in partnership with local transit systems to maximize service to residents while recognizing that there must be local support and local leadership for any initiative to be successful. Therefore, we recommend that: Stakeholders review the study results and options Stakeholders consider a second phase of study for consolidation, that would: o Facilitate discussions between agencies o Draft a framework for consolidation PennDOT will continue to support the region as the stakeholders consider the results of these studies. Sincerely, Toby Fauver, A.I.C.P. Deputy Secretary Multimodal Transportation TABLE OF CONTENTS Table of Exhibits ...................................................................................................................... ii Introduction ............................................................................................................................... 1 Approach .................................................................................................................................... 3 Current Environment ................................................................................................................ 4 Southwest Transit Agency Consolidation ................................................................................. 7 Benefits of Consolidation ......................................................................................................................... 7 Challenges of Consolidation .................................................................................................................... 9 Consolidation as a Means to Reduce Costs or Increase Revenues ........................................ 12 Service Region Alternatives ..................................................................................................... 14 Consolidation Planning and Transition Requirements .......................................................... 16 Appendix A: Approach Detail ................................................................................................ 17 Appendix B: Transit Agency Profiles ..................................................................................... 19 Appendix C: Current Environment Detail ............................................................................. 33 Demographic and Economic Statistics ................................................................................................ 33 Governance and Service Structure ........................................................................................................ 35 Staffing ...................................................................................................................................................... 39 Financial Profiles...................................................................................................................................... 42 Wages ..................................................................................................................................................... 42 Administrative Costs .............................................................................................................................. 43 Employee Benefits ................................................................................................................................... 43 Assets and Liabilities ............................................................................................................................. 45 State and Local Subsidies ........................................................................................................................ 48 State Subsidies ........................................................................................................................................ 49 Local Subsidies and Related Support....................................................................................................... 50 Appendix D: Financial Impact of a Consolidated Authority ................................................. 51 Governance Structure ............................................................................................................................. 51 Legal Structure ......................................................................................................................................... 52 Assets and Liabilities ............................................................................................................................... 52 Organizational Structure ......................................................................................................................... 53 Administrative Functions ........................................................................................................................ 53 Operations, Maintenance and Engineering ............................................................................................... 53 Staffing ...................................................................................................................................................... 54 Financial Impact of Consolidation ........................................................................................................ 56 Salary Expenses ..................................................................................................................................... 56 Employee Benefit Expenses ..................................................................................................................... 57 Purchased Transportation Expenses ........................................................................................................ 58 Professional Services ................................................................................................................................ 58 Information Technology Expenses ............................................................................................................ 58 Other Operating Expenses ...................................................................................................................... 58 Operating Revenue .................................................................................................................................. 58 Summary Financial Impact ..................................................................................................................... 59 Appendix E: Functional Organization Charts for a Single 10-County Regional Authority .. 60 Port Authority Consolidation Study i TABLE OF EXHIBITS Exhibit 1: Current Environment Summary Part I ........................................................................................ 5 Exhibit 2: Current Environment Summary Part II ....................................................................................... 6 Exhibit 3: Summary Financial Impact of Consolidation ............................................................................ 13 Exhibit 4: Summary and Financial Results of Alternative Consolidation Scenarios.............................. 14 Exhibit 5: Financial Impact Comparison of Consolidation Alternatives ................................................ 15 Exhibit 6: Demographic and Economic Conditions .................................................................................. 34 Exhibit 7: Population Characteristics ............................................................................................................ 35 Exhibit 8: Organization and Governance Structures ................................................................................. 35 Exhibit 9: Transit Service ................................................................................................................................ 36 Exhibit 10: Number of Positions .................................................................................................................
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