U-PASS Advisory Board Regular Meeting January 15th, 2016 I.

Present:  Adam Khan – Advisory Board Chair (ASUW)  Shreya Ahluwalia – ASUW Representative  Anna Wittow – GPSS Representative  Joshua Kavanagh – Transportation Services  Vicky Clarke – GPSS Representative  Tyler Wu – ASUW Representative  Timmy Bendis – ASUW Representative  Reed Keeney – Transportation Services  Celeste Gilman – Transportation Services  Zachary Howard – Transportation Services  Cooper Smith – U-PASS Liaison

II.

5 Minute Public Comment Period Acknowledged

III.

Agenda Introduced Adam: I would like to add to the end of the agenda a quick review of the meeting between Tyler, myself, the University Finance & Budgeting Director, and the fee chairs from earlier today. Agenda amended, approved 12:35pm

IV.

Nov. 10, Dec. 8, and Jan. 8 Minutes Presented Minutes Approved at 12:36pm

*Rene Singleton (Student Life) arrives* V.

U-PASS Budget Presentation

Reed: What you have in front of you is a draft budget. The top half is about operations, or what’s happening on a day-to-day basis. The bottom half is reserves. The columns include actual, projected, and next year’s budget (2016-17). Starting with the top section is revenues divided into 4 principal categories. Celeste: It might be helpful to explain what TDM is since we have some new members with us today. Josh: Sure. One thing I want to mention first real quick is you see among the listed transit services, under operating expenses, that Metro related expenses are projected to go down next year. This is a result of a contract timing issue where we made a number of changes to our contract that didn’t kick in until this last October. That shifted the expenses around in time so more of them got experienced this fiscal year, and they will be experienced in more real time instead going forward. So we will return to a more normal level of costs next year.

The Transportation Demand Management fee, or TDM fee, is a surcharge that is placed on parking fees. So when you go to a gatehouse you would pay the base parking fee, plus the TDM dee, plus a mix of state and local taxes. The TDM fee is used to fund a number of things we do on campus to help people commute in ways other than driving alone, like funding shuttles, or next year when it will begin funding some bike and pedestrian programming. The lion’s share, however, is distributed between the Faculty/Staff and Student U-PASS programs’ costs. This is something that’s been documented over the years, and you can see the agreement in the MOU in your binder. Last year we were expecting some bad news as it related to the commercial parking tax, the upshot of that being that the City has since ruled that the TDM fee is also a parking fee, and that they are going to tax it like parking. They are doing that retroactively to 2011 when it was implemented. Because we anticipated that at the end of last year, we have since paid those taxes. So we took this money out of the U-PASS and moved it to a tax reserve. Reed: And we have paid the City as of the first week of January. I was also going to note when you look at the total expenses, the bulk of that is mainly due to Metro and other transit authorities. Part of it also is not just about timing, but also usage, and individual fees associated with transit authorities. Josh: A noteworthy one is Sound Transit for next year. Metro related operating expenses is going down due to contract timing, but also from the anticipated use of light rail resulting in fares being split. In other words, some people taking a full or partial trip on light rail instead of using Metro, so money is shifted to Sound Transit away from Metro. Reed: Then we go down to the net operating income line. Last year we had a million dollar loss, then this year a little less of a loss, then next year not so bad, about 100 thousand in the black. Then you will see a special category, a reserve for sales tax liability. We are currently waiting on a ruling on if the TDM fee will be subject to state tax. Then we have the one month operating reserve, which is the minimum we wish to have, kind of like a rainy day fund so we have a cushion if something is off with our revenue or expense projections. Josh: Last year’s Advisory Board (AB) came together with Transportation Services (TS) to create an agreement on this reserve. It’s not a hard and fast reserve, it is just a target. But our goal is to not spend the reserve down to zero, and maintain what everyone agrees would be a responsible amount to have on hand. So the gist on the negative fund balance in 2016-17 at 300 thousand dollars suggests the program is a little upside down on how it should be, but not so much that we need to recommend a fee increase. Rather there should be an adjustment to the U-PASS fee next time around on a normal cycle. This is so that we don’t have to come back to students in the middle of a cycle to say “Whoops! Our budget wasn’t right.” Timmy: So we are still losing money? Josh: Yes, but only after taxes. Tyler: Another question, the TDM fee decreasing from 60% to 59% from 15-16 to 16-17, why is that?

Reed: We get the TDM fee from the Parking Group. In order to keep the U-PASS program afloat, while also avoiding passing on the full operating cost to its users, the TDM fee subsidizes the U-PASS program. However, the expenses in parking continues to go up. As a result the portion of the TDM fee going to UPASS goes down a single percentage point. The parking unit cannot continue to give at the rate it historically did. Tyler: So the parking revenue will continue to decrease? Josh: Not necessarily the revenue, because parking fees may go up, but the percentage shared with UPASS may continue to go down. Reed: Also, if a large number of people switched from parking on campus to using light rail that would also have an impact on the TDM fee. But that is not something we expect to be an issue. Adam: Does this budget account for potential impacts from the minimum wage increase? Josh: There is a little bit of that in there, but none of the regular employees in TS earn minimum wage, and even our student event workers make at least a dollar over minimum wage. There is a slight impact in our Commute Concierge program with folks that are closer to minimum wage. Otherwise, the U-PASS program is primarily composed of professional staff with classified salaries, and there are merit increases. Then we have a slight bubble bleeding over into the 2016-17 budget where we’ve done some surge staffing to handle all the changes in transit we will be facing. Right now it’s Link Light Rail, and then phase 2 of the Seattle changes that will kick in. So we want to make sure we are staffed to help folks navigate all of that. Reed: Looking at the current year and prior year salaries and wages, if you have people whose position is available, which is to say we are looking to replace someone who left, it’s sometimes the case that we have to hire temporary staff, and so that brings the wages and salary lines down. In that case we move that money over to the ‘Other Operating Expenses’ category. So it’s a classification change, which can make the prior year numbers look bigger if you are currently understaffed. Timmy: Do we anticipate Sound Transit expenses to continue to go up as UW housing prices go up? These numbers look conservative to me. Josh: Yes and no, and this is where we kind of get into crystal ball gazing. I think light rail is great way to commute, and a certain population may be less inclined to live in the U-District if they can live somewhere more affordable, like Columbia City, which can access the new light rail infrastructure. At the same time these places, like Columbia City for example, are going to see rents go up significantly and all of those places that are adjacent to light rail are going to see things creeping up. So the cost-benefit difference will eventually balance out. Sound Transit expenses will continue to go up, but not at the rate you see from this year to next year, right when the system comes online. The next big step I think you will see in Sound Transit expenses going up will be with the opening of the North Gate station in 2021. Adam: So in the grand scheme of things, UW Housing and Food Services (HFS) will not have such a big impact in shifting people to light rail? Josh: Correct.

Vicky: Is the per-ride, per-unit rate for Metro and Sound Transit the same when you buy it? Josh: No it is all negotiated, and depends on a wide variety of factors. For instance University population, distance of the trip, and others. Celeste: Anytime you tap your U-PASS before you get on the light rail, and then tap when you get off, that trip is associated with the normal fare of that trip. If it involves a transfer, that is also recorded. So the total cost of the trip, all of those transactions get added up every month based on what everyone took, plus a discount rate negotiated with the agencies. That then produces the bill that we pay. So we have average fares for the different agencies that we can use, and then we can do this modeling and forecasting. But this method of paying exactly what it costs, it can change month-to-month. Vicky: I see. So what I’m really trying to get at is if a Sound Transit increase in use and Metro decrease is equivalent? Zack: It depends on the time of usage, as Metro has peak fares, and that goes into the equation. So there are some cases where you could have an equivalent fare, but in our projections we take into account all trips that have been taken, and what those full fares were. For Sound Transit we have estimated a significant jump based on that average fare price that has been charged to us in the past. I think the other thing is just quantity; about 6 million dollars’ worth of trips taken on Metro, and much less on Sounder. So even a slight increase in Sounder usage will not match Metro overall. Josh: But your intuition about if someone gets off Metro to start using Link, and how does that affect us, is correct. That does cost us more. Not much, but a little bit. Tyler: So to frame what we’ve discussed, is this a conversation about how U-PASS may be entering a pattern of unsustainability, or just that these last two years have been an outlier? Josh: It’s that these last two years have been anomalies, and at a big picture perspective, this is good news. It means that when we sat down a year ago and talked with students about what the fee should be that we made good decisions, because our balance was high enough to absorb the unexpected tax blow, and what we are in the red for outside of taxes is very little. It shows that the program is fundamentally in balance, and that means we did a good job in figuring out what the rates should be. Furthermore, it means next year at this time we will be talking about a rate increase. Something to compensate for the tax in future years and also to keep up with program costs. It would be irresponsible to have the reserve continue to decline as we are already at a level of slight discomfort, and we do not want it to progress to a point of risk. Celeste: Having that buffer really helps in keeping things at a more even playing field, so as we continue to eat into that reserve, our conversation next year will be about how much we need to increase the fee to bring that up again. Josh: The AB next year will be more conservative than the AB last year, because they will have a smaller buffer. And hopefully they will take measures to increase that buffer, so the AB after them can be less conservative.

Reed: Also I would add that being 300 thousand in the hole is only two tenths of a percent of the program, and the concept of all of this is break even, so that’s really good. When you are working with 17 million dollars you basically can’t break exactly even, but what you are all doing is really a great job. So every here should be complimented. Adam: At our last meeting we talked about gap quarter, and based on the fact that revenues are not what they were and expenses are changing, would it even be feasible to do a gap quarter program without depleting our reserves? Josh: That’s a great question. And the question I would ask is how fast students want to implement the gap quarter, and how willing the next AB is to build it into the fee structure. The fee will need to go up a little to cover the tax gap. We will have to bring the fee up a little more to get back into balance considering the rising fares and adjustments to utilization. If we have to do more with gap quarter, things start to add up. So the question is how far are students willing to go to bring gap quarter up to speed? Rene: I hope everyone is willing to take their time when it comes to the gap quarter discussion. Is it for everyone? Freshmen? There are so many questions and things that go with it, and as you know, if you guys continue to take your time and be thorough it can be as fair as possible for everyone so you don’t have to build a bunch of exceptions in the future. There are so many things to think about, and it will be fun to listen to. Josh: We have talked to students who have gone record with their support for a gap quarter service, without specifics on how it would happen. So we (Transportation Services) are also looking at other mechanisms to accomplish this other than joining the socialization pool of U-PASS. Reed: Are there any more questions? Celeste: We’ve been talking a lot about forecasts. I know it says “Draft,” up there, and though there are single digit dollars here, it’s important to remember that this is a best guess with available information at this time. As we continue to get more information we will continue updating this projection. In other words, keep in mind that this is just a snapshot of where things are right now. Josh: Right, and we will hear again from Reed in a quarter and if there are any substantive changes we will inform you. Adam: Great, well thank you Mr. Keeney for your time. Reed: My pleasure, and feel free to reach out to me or my colleagues if you have any other questions. VI.

Review of meeting on mandatory fees, U-PASS

Adam: Let’s talk about the meeting this morning. It was a gathering of Tyler (ASUW president), the fee chairs, the University Finance and Budgeting Director, and myself. From this discussion we learned of a couple items that the other members wanted the AB to look into: a. Moving the U-PASS Fee on the tuition statement down below with SAF and other mandatory fees. b. To look at the possibilities of faculty opt-in.

Tyler: We initially talked about required fees in general, universality, and no exemptions. There was strong support to maintain SAF and no exemptions, which naturally moved to talk about the U-PASS specifically. Adam: The idea that was put forth was for a public statement signed by chairs of each board, demonstrating an expression of support to maintain universality. We will have that item from the meeting sent out for your review later today. Josh: I’m interested in the faculty component, but not sure if you talked about universality as it applies to faculty. Tyler: We barely scratched the surface on that issue. Josh: Understood. That’s really exciting, and something that we (Transportation Services) are actively talking about and working on. Adam: Motion to adjourn? *Adjournment 1:22pm*