For most public transportation agencies, 2020 was a year like no other. The COVID-19 pandemic created a significant drop in ridership at a time when many agencies were already struggling financially — and that drop has been slow to recover. The $25 billion allocated for public transportation in the CARES Act proved to be an essential lifeline to continue services at a time when ridership was down, fares were suspended for some, and costly new safety protocols were being implemented. And just as that funding was running out, the federal government allocated an additional $14 billion to avoid service cuts and layoffs that agencies warned were looming. But that still may not be enough: without another round of funding agencies may again be forced to consider discontinuing service lines, delaying necessary capital projects, laying off valuable staff, or shutting down entirely.
So, what can your agency do now to fill gaps in funding and prepare for a post-COVID-19 recovery? Here are our top three strategies.
Review your finances
Many agencies have taken the “quick-hit” steps to save money by reducing staff and service levels. But by digging deeper, the financial picture can be improved through better resource management and thinking outside of the box to uncover extra dollars. Here are a few ideas:
- Budgeting: Start by reviewing and updating your budgets more frequently. Prepare multiple versions that include best-case, worst-case, and other potential scenarios.
- Reduce costs: Consider the full range of options to reduce costs. This could include asking employee groups for concessions, reducing discretionary spending, or implementing a temporary hiring freeze.
- Cash flow management: Look for opportunities to proactively manage and improve your cash flow. For example, increasing the frequency of requests for reimbursement from the Federal Transit Administration can lead to smoother revenue streams and extra dollars when considering the time value of money. Create a model to determine your cost of money and how much additional cash your agency could generate by increasing the cadence of reimbursement from say quarterly to weekly. From an investment perspective, this “found money” could be used to improve the systems used to generate real-time funding requests.
- Alternative sources of revenue: Think of creative ways to increase revenue by using assets in new ways — for example, attracting customers to concessions or using parking facilities for events. The Mass Transportation Authority in Flint, Mich., offers a "Rides to Wellness Program" providing door-to-door mobility service for riders going to health and wellness-related appointments. Or perhaps your agency has assets sitting idle that could be auctioned off. On a larger scale, consider covering unused open space with solar array panels. Solar power projects at Washington Metropolitan Area Transit Authority and the Delaware River Port Authority will utilize parking lots and transportation agency-owned land to generate electricity, and a project at John F. Kennedy International Airport will offset energy requirements and reduce the amount of power that the airport buys from the grid. The goal is to look for solutions beyond cutting costs and waiting for more government funding.
- Preserve ridership: One of the biggest unknowns related to future funding and revenue is when will ridership return and at what level. The third quarter ridership report from the American Public Transportation Association showed ridership across the country was down 62% compared to the previous year. Will ridership return to those levels, or will competition such as remote work and alternative sources of mobility put a permanent dent in ridership? To lure riders back, agencies need to do whatever’s necessary to make riders feel more comfortable and safer. This could mean installing ticketless systems to avoid touching cash and fare boxes that could be contaminated. Also, consider potential transitions to a new class of ridership. Are there opportunities to target the business population or leisure travelers for future growth?
Find efficiencies: Automate, integrate, and optimize
Next, look at how your agency can become more efficient — how it can do more with less.
If your “new normal” will require operating efficiently with a reduced staff, systems such as robotic process automation (RPA) can help fill the labor gap. RPA software allows you to create virtual robots to perform repetitive tasks such as payroll processing, accounts payable functions, and monthly reconciliations just to name a few. For example, a robot can be trained to read invoices and input all pertinent information into the accounts payable module before staff even looks at the invoice for the first time. It’s estimated that about 72% of organizations have started their RPA journey and that by the end of 2021, 4 million virtual robots will be doing office and administrative work, including other tasks. If you’re new to RPA, now’s a good time to consider a proof of concept. Start with one process — test it out to see the benefits — and then move on to another task and so on.
Optimizing your enterprise resource planning (ERP) system — the heart of all public transportation systems — can help you improve your budgeting and project accounting. An up-to-date ERP can help you better manage processes by capturing information in real-time and track everything immediately against projects instead of spreading data across multiple systems or allocating after the fact. Having the right data can improve grant requests; your ERP tracking will show exactly what was spent the last time, and because you’re timely and on an optimized path, you may be able to ask for more money than you received on previous projects. As mentioned previously, capturing data in real-time enables your agency to bill out and receive funding more quickly.
Likewise, ensure your enterprise asset management (EAM) system is up to date and optimized to your operations. A well-operated EAM system will enable your agency to plan maintenance activities efficiently and ensure assets remain in a state of good repair — reducing risk and ensuring your agency qualifies for the funding it needs.
Reduce cyber risk
The rapid growth of technology in the public transportation industry has brought with it a significant increase in cyber-related security risk. Agencies are expanding online services to customers and their staff are increasingly using personal devices to access email and agency systems to perform work duties. Rapidly advancing mobile computing capabilities are encouraging some facilities to rely on public cellular or wireless networks to extend the reach of their systems. Some agencies are increasingly relying on cloud-based computer infrastructure, software, and data hosting. All of these systems with multiple access points are potential vectors for cyberattacks.
With expanding interconnected systems, public transportation cyberattacks can become an attack on lives, including derailing or crashing of trains or taking over controls in airplanes. The risk is real, and it goes well beyond threats to personal data, credit card information, or money. While the risks can’t be totally eliminated, they can be significantly reduced through implementing industry standards, best practices, a response plan, and awareness programs for staff.
A recent survey in Mass Transit found 73% of respondents felt they had access to sufficient information to implement a cybersecurity preparedness program, but only 60% had a cybersecurity response plan in place. Of that number, 43% felt their plan wasn’t sufficient. How prepared is your agency?
A good cyber awareness culture should start with these best practices:
- Ensure the right governance is in place.
- Hire effective cybersecurity staff to ensure alignment of practice with your cybersecurity strategy.
- Educate people in your organization about cyber risks, especially phishing, which is currently the most common type of cyberattack.
- Communicate on cybersecurity matters regularly with all levels of personnel.
- Require all contractors and vendors to maintain state-of-the-art cyber protections.
- Conduct periodic cybersecurity assessments to identify potential vulnerabilities and ensure controls are working effectively.
These are challenging times for public transportation. But they’re also an opportunity to make your agency better by maximizing resources, becoming more efficient, and building the technology infrastructure now that will drive services in the post-COVID-19 world.
As you continue to navigate these challenges, we’re here to help. Contact us to get in touch with one of our experts.
