Staff Report #11 – Financial Update – Conventional Transit Services – Operating Budget – July 31, 2023

Staff Report #11

August 30, 2023

To All Commissioners

Re: Financial Update – Conventional Transit Services – Operating Budget – July 31, 2023

Recommendation

That the report be NOTED and FILED.

Background

Set out in the table below is the Statement of Operations for Conventional Transit Services for the seven-month period ending July 31, 2023. The statement sets out actual to budget performance for the period.

London Transit Commission Statement of Operations – Conventional Transit Services Seven Months Ending July 31, 2023 (000’s omitted)

Description  Actual  Budget Amount Better (Worse) Percent Better (Worse)
Revenue
Transportation $ 19,043.8 $ 19,094.2 $ (50.4) (0.3)%
Operating 2,003.6 1,475.8 527.8 35.8%
Transfers from reserves 4,543.9 4,694.7 (150.8) (3.2)%
Province-provincial gas tax 5,175.1 5,175.1 – 0.0 %
City of London 22,138.6 22,138.6  – 0.0 %
Total revenue 52,905.0 52,578.4 326.6 0.6 %
Expenditure
Personnel cost 33,215.5 33,429.3 213.8 0.6 %
Direct bus maintenance 4,951.7 4,410.6 (541.1) (12.3)%
Fuel 5,363.6 5,958.1 594.3 10.0 %
Facility costs 2,416.1 2,528.0 111.9 4.4 %
Insurance 3,575.1 3,639.2 64.1 1.8 %
Contribution to reserves 997.8 582.6 (415.2) (71.3)%
All other material expense 2,061.8 2,030.6 (31.2)  (1.5)%
Total expenditure 52,581.7 52,578.4 (3.3)  (0.0)%
Net favourable/(unfavourable) $ 323.3 $ – 323.3 0.6 %

As indicated in the above table, the conventional service has a net favourable operating budget performance to-date of 0.6% or $323,300. An explanation of the variances is set out below.

Revenue

  • net unfavourable transportation revenue of $50,400 due to slightly lower than budgeted average fare (impacted by differing ridership mix), offset by slightly higher than budget ridership, noting the 2023 budget was updated to reflect the post-COVID trends that had been emerging since last September;
  • favourable operating revenues of $527,800 due to the continued climb in interest rates, resulting in higher than budgeted interest income, noting this increase is offset below as unfavourable contributions to reserves; and
  • unfavourable transfers from reserves as the required contribution to cover insurance claims is less than budgeted, noting this decrease is offset below as a favourable insurance cost.

Expenditures

  • favourable personnel costs of $213,800 due primarily to the timing of filling vacant positions;
  • unfavourable direct bus maintenance expenditures due mainly to the increasing cost pressures on parts as well as outsourced repairs required to maintain MTO inspections during labour shortfalls;
  • favourable fuel costs of $594,300 due mainly to lower than budgeted diesel fuel prices:
  • net favourable facility costs of $111,900 due to lower than budgeted utilities;
  • net favourable insurance costs of $64,100 due to lower than budgeted claims costs offset by slightly higher than planned insurance premiums; and
  • unfavourable contributions to reserves of $415,200 due to the increase in interest income earned on reserves, noted above in operating revenue.

Ridership

The table below sets out actual to budget ridership performance as well as a comparison to the same period in the previous year.

Ridership Performance – Actual vs. Budget Seven Months Ending July 31, 2023 (000’s omitted)

Description Actual Budget Variance % Variance 2022 Actual % Variance
Total Passengers (000’s) 10,085.9 9,909.6 176.3 1.8 % 6,494.0 55.3 %
Average Fare $ 1.888  $ 1.927  $ (0.039)  (2.0)% $ 2.338  (19.2)%
Revenue Service Hours 389.7 391.2 (1.5) (0.4)% 355.2 9.7 %
Rides/Rev Service Hour 25.9 25.3 0.6 2.2 % 18.3 41.6 %

Administration will continue to monitor the operating budget performance, including ridership, on a monthly basis.

Recommended by:

Mike Gregor, Director of Finance

Concurred in by:

Kelly S. Paleczny, General Manager