CTA | Chicago Transit Authority - 1998 Operating Budget Performance

1998 Operating Budget Performance

The following summarizes operating results for the 1998 projection compared to budget.

Operating Expenses
1998 projected Operating Expenses are $799.6 million. This represents an increase of $17.6 million, or 2.3%, over budget. All expense categories are forecast at, or above, budget except for fuel, traction power and other services. A discussion of each of the major expense categories follows.

Labor
Labor for the 1998 projection is $565.2 million, which exceeds the budget by $5.9 million, or 1.0%. This increase was due to contributions made to the pension fund to cover liability from the 1992 incentive retirement program. These pension contributions were previously unfunded due to CTA's financial constraints. Lower average wage rates and a reduced work force resulting from the current incentive retirement program, combined with better staffing management has helped offset the higher pension contributions.

Material
Material expense for 1998 is projected to be over budget by $6.7 million, or 11.2%. This overage is a result of the increase in the reserve for obsolescence of $4.0 million, and the funding of bus maintenance expenditures with operating monies instead of capital. The increase in the obsolescence reserve is due to the write-off of inventory identified in the study performed by Mercer Consulting in 1996.

Fuel--Revenue Equipment
Diesel fuel for 1998 is projected to be $13.1 million. This is under budget by $2.2 million due to a lower purchase price. The 1998 budget assumed consumption of 20.7 million gallons at an average price per gallon of $0.73. Actual consumption is projected to be 20.7 million gallons at an average price of $0.61.

Electric Power--Revenue Equipment
Electric power for revenue equipment in 1998 is forecast at $21.7 million. This is below budget by $3.0 million due to lower electric rates. The lower rates are due to the successful rate negotiation by the Municipal Power Alliance. Lower consumption due to a mild winter also contributed to the positive variance.

Provision for Injuries and Damages
The Provision for Injuries and Damages is projected at $42.0 million for 1998. This is $12.0 million over budget due to increased funding for potential injuries and litigated settlements based on the most recent actuarial projections. In past years, CTA only funded the amount of payments expected to be paid out during the current year. Due to the recognition of some one-time revenues, CTA took the opportunity to cover some past unfunded obligations.

Purchase of Security Services
The Security Services expense is projected at $17.4 million. This amount is slightly higher than the 1998 budget as a result of our continued commitment to improve safety measures for our customers and employees.

Purchase of Paratransit Services
Paratransit expense is projected slightly over budget, $0.1 million, due to a 4.2% increase in the average trip cost during 1998, partially offset by a reduction in the total number of trips provided. In 1998, CTA will fund 1.1 million trips at an average cost of $23.15. This differs slightly from the 1998 budgeted average trip cost of $22.60.

Other Expenses
Other Services includes expenses for utilities, maintenance and repair, advertising and promotion, contractual services, leases and rentals, and travel and training. The 1998 result is expected to be $2.1 million under budget. Lower expense projections are based on the current expense trends. Mild winter weather conditions resulted in reduced utility costs, and the successful implementation of the Automated Fare Collection (AFC) project resulted in lower sales commissions for vendors of CTA fare media. Also, a capital funded buy-out of a service vehicle lease contract reduced expenses. Advertising and promotion cost exceed budget because the 1998 budget included Ridership Campaign expenses in the contractual services line-item.

System-Generated Revenue
The 1998 projected System-Generated Revenue is $422.4 million. This exceeds budget by $17.6 million. All categories of system-generated revenue are projected at, or above, budget.

Fare Box and Passes
Fare revenue is expected to be $365.8 million. This is above budget by $3.1 million. The 1998 budget assumed an increase in revenues due to less shrinkage with the implementation of AFC and higher ridership due to the ridership campaigns. Ridership is projected at 5.4 million trips fewer than budget, but ahead of the previous year's level, as ridership initiatives begin to take hold. The average fare increased from $0.85 to $0.87. Compared to 1997, fare revenue is expected to be $5.5 million higher.

Reduced Fare Reimbursement
Reduced Fare Reimbursement is on par with budget but continues to be well below need. The State appropriated $20.0 million for reduced fare reimbursements to the RTA in its current fiscal year budget. Similar to prior years, the State's appropriation is substantially less than the amount the three Service Boards project for reimbursement. In 1997, CTA received $17.0 million from the state. This was $18.6 million less than CTA requested. In 1998, we expect the state reduced fare reimbursement funding shortfall to be approximately $18.7 million.

Advertising, Charter & Concessions
These revenues are estimated to exceed budget by $3.7 million due to higher revenues from platform and vehicle advertisements. In 1998, the wrapping of trains and buses enhanced advertising revenue.

Investment Income
Investment income is forecast $1.9 million higher than budget due to a higher investable cash balance. This reflects an increase in cash receipts from sales of fare cards through vending machines, and cash received from innovative lease transactions.

All Other Revenue Categories
All other revenue categories for 1998 are expected to be $13.1 million, which is favorable to budget by $8.9 million. This is primarily due to the one-time receipt of the insurance settlement for the Wilson fire loss.

Public Funding and Recovery Ratio
Public Funding Required for Operations in 1998 is projected at $377.3 million. As required by statute, this is equal to the funding mark provided by RTA. Included in the funding mark are state sales tax receipts, public transportation funds, and FTA operating assistance. All public funding amounts flow through RTA. The projected recovery ratio for 1998 is expected to be 53.48% - 1.55 basis points above budget due to a higher proportion of system-generated revenues in relation to expenses than assumed in the budget.