Annual Budget Process 

The Budget & Financial Plan Process 

The RTA Act requires the RTA Board to adopt a consolidated annual budget and two-year financial plan. The budgetary process contains three phases: budget development, budget adoption, and budget execution and administration. 

June: Budget call from RTA 
August: CTA submits macro budget to RTA 
September: RTA releases budget marks; Budget release to public 
October: Public Hearing 
November: Cook County Board meeting; Chicago Transit Board approval; Submit budget to RTA 
December: RTA Board approval 

Budget Development 

June 25: Budget development begins each year in June with the Budget Call from the RTA. The Budget Call outlines the required budget information needed for 
the RTA, as well as provides economic assumptions for the region. 

The RTA's sales tax forecast is based on the most recent sales tax revenue estimate provided by the State Bureau of the Budget (BOB). The BOB is required to submit to the RTA by July 1 of each year an estimate of sales tax revenues to be received by the CTA for the next fiscal year. The RTA uses this estimate and the sales tax growth rates to prepare the annual budget funding marks, and to estimate sales tax for the two years of the financial plan. 

Budget Adoption 
August 13: Initial budget submitted to RTA. By the middle of August, the CTA is required to submit a macro-level budget and a two-year financial plan to the RTA. 

September 15: RTA to announce marks. The RTA Board is required by the RTA Act to set operating funding marks for the three Service Boards by September 15. The 
marks include estimates of available operating funding for the budget and financial plan, and a required recovery ratio (the ratio or percentage of operating expenses that must be recovered from system-generated revenues) for the budget. Upon issuance of the budget marks, the CTA revises its expenses and revenues to conform to the marks. 

September 29:  CTA Budget released to the public. The statute requires that documents be available for public inspection 21 days prior to the public hearing. 

October 26: Public Hearing to receive comments from the public. 

November 3:  Budget presentation to the County. The CTA presents the budget to the Cook County Board after the Public Hearing but prior to the CTA adoption of 
the budget, as required by the RTA Act. 

November 10: Chicago Transit Board approval. The Chicago Transit Board incorporates any changes and adopts the budget and two-year financial plan. 

November 15:  Budget submission to RTA. The RTA Act requires that the CTA, by November 15, submit its detailed budget and financial plan to the RTA. The 
budget must conform to the marks set by the RTA on September 15. 

December 16: RTA Board approval. The RTA Board adopts the proposed budget and financial plan upon the approval of nine of the RTA's 13 directors. 

RTA Statutory Requirements for Budget Approval 

The RTA Board adopts the proposed budget and plan upon the approval of nine of the RTA's 13 directors. If the budget meets the RTAs six criteria, which are identified in the RTA Act outlined below, then the RTA is required to adopt the budget by December 31. If the RTA Board does not approve the budget, the RTA Board cannot release any funds for the periods covered by the budget and financial plan, except the proceeds of sales taxes due by the statutory formula to the CTA until 
the budget conforms to the criteria specified in the Act. 

The six criteria for budget and plan approval per RTA Act are: 
1. Balanced Budget: The budget and plan show a balance between (A) anticipated revenues from all sources including operating subsidies and (B) the costs of providing the services specified and of funding any operating deficits or encumbrances incurred in prior periods, including provision for payment when due of principal and interest of outstanding indebtedness. 
2. Cash Flow: The budget and plan show cash balances including the proceeds of any anticipated cash flow borrowing sufficient to pay with reasonable promptness all costs and expenses incurred. 
3. Recovery Ratio: The budget and plan provide for a level of fares or charges and operating or administrative costs for the public transportation provided by or subject to the system generated revenue recovery ratio. 
4. Assumptions: The budget and plan are based upon and employ assumptions and projections, which are reasonable and prudent. 
5. Financial Practices: The budget and plan have been prepared in accordance with sound financial practices as determined by the RTA Board. 
6. Other Requirements: The budget and plan meet such other financial, budgetary, or fiscal requirements that the RTA Board may by rule or regulation establish. 
7. Strategic Plan: The budget and plan are consistent with the goals and objectives adopted by the RTA Board in the Strategic Plan 

Budget Execution & Administration 

After the proposed budget and financial plan are adopted, the budget execution and administration phase begins. Detailed budgets of operating revenues and expenses calendarized for the 12 months of the budget year are forwarded to the RTA. The CTAs actual monthly financial performance is measured against the monthly budget and reported to the RTA Board. Detailed capital grant applications are prepared and submitted to funding agencies. Quarterly capital program progress reports are provided to the RTA board to monitor expenditures and obligations for capital program items. 

Amendment Process 
As the CTA monitors actual performance, changes may be required to the budget. The RTA might revise its sales tax forecast, which could result in less public funding for the CTA. This in turn would require reduced spending to meet the revised funding mark and recovery ratio. 

When the RTA amends a revenue estimate because of changes in economic conditions, governmental funding, a new program, or other reasons, the CTA has 30 days to revise its budget to reflect these changes. The RTAs Finance Committee must approve all amendments before they are recommended to the RTA Board for approval. The budget may also be amended if the CTA is significantly out of compliance with the budget for a particular quarter based upon its financial condition and results of operations. The RTA Board, by a vote of 12 members, may require the CTA to submit a revised financial plan and budget, which show that the marks will be met in a time period of less than four quarters. If the RTA Board determines that the revised budget is not in compliance with the marks, the RTA will not release discretionary funds. RTA discretionary funds include monies from the Public Transportation Fund (PTF), discretionary sales tax and other state funding. 

If the Authority submits a revised financial plan and budget which show the marks will be met within a four-quarter period, then the RTA Board shall continue to release funds. 

As capital projects proceed, changes may be required to project budgets. Capital funding marks may be revised based on actual federal or state appropriations actions. When revisions are necessary, the CTA will amend the five-year capital program and submit the changes to the RTA for RTA Board action. 