Metro nets $28 million surplus through aggressive cost controls
Authority concerned about rising cost of pensions and impacts of sequestration
Metro ended fiscal year 2012 (July 1, 2011 through June 30, 2012) with a $28 million operating surplus due to aggressive cost management measures taken throughout the year. Fiscal controls included a successful health care audit and fuel hedging, which locked in a favorable rate for fuel that saved the Authority money.
“I am pleased to report that we ended the year with a surplus and we continue to identify cost savings opportunities to ensure we are operating efficiently,” said Metro General Manager and CEO Richard Sarles. “We anticipate applying the surplus to offset budget challenges we foresee in the coming fiscal year.”
In a financial outlook report to its Board this Thursday, Metro says it is working to reduce the early forecast for additional funding for FY2014 from $76 million to $25-$30 million.
As part of the Authority’s multi-year business planning efforts, management is focused on continuing critical safety initiatives to include satisfying all recommendations by oversight agencies, as well as addressing fatigue management. Next year’s budget will continue the expanded rail and bus services started in FY2012 such as Rush+ and Better Bus. Increased service will be provided through the launch of Silver Line service from the west and through the core of the system. Additionally, Metro is improving customer service through 50 distinct projects, including better in-system and real time communications, as well as frontline staff training.
While Metro’s report says further management actions to curb costs are planned to save $14 million, the Authority’s Chief Financial Officer is expected to cite a number of cost drivers and risks, including human capital costs – noting that Metro’s pension expense is the largest growth area by dollar ($29 million). Other risks include potential ridership and operating revenue risk and loss of capital funding related to Federal Sequestration.
News release issued at 12:34 pm, September 10, 2012.