On 2/6/2020 we received notifications from WSU Transportation Services proposing that parking rates should increase. The justification for this increase was centered around a need to generate an additional $4.8 M over 8 years to cover “capital maintenance and repair projects”.
I have several concerns:
First, according to transportation’s publicly available budget, they already account for costs associated with maintenance ($536,109 / yr) as well as depreciation ($619,992 / yr accounted for in real dollars). Why then, is there a need to spend more on maintenance and repair projects?
Second, in the budget there is a ($989,450 / yr) line item for “Debt Service”. It is unclear to me what “Debt Service” entails. Is this transportation paying down its own debts? The university debt? Something else? If transportation is able to take on debt, then should they finance their 8 year maintenance and repair project over the projected lifetime of the resulting parking spaces so as to equitably defer the cost among all parking users both present and in the future?
Third, what is the ($491,452 / yr) “Administrative Service Charge”? Is this salary for administrative positions that is separate from the other wages ($1,566,240 / yr)?
Overall, since the proposed rate increase seeks to generate an additional $600k / yr – I would like to know what is the projected increase in yearly revenue that will result from the rate increase? Has transportation services considered cutting expenses in the areas of debt service, administrative service, or positions (wages) to save this amount rather than increase parking rates?
Comments
combined responses from John Shaheen
Permits: Revenue from annual and daily permit sales.
Fines: Fine revenue from parking violations.
Short-term: Short-term hourly parking revenue from parking meters and garages. The revenue from short-term parking was $1,371,901, not $562,351. These numbers were recorded incorrectly in the above table.
Special Events: Revenue from major events such as Alive!, FFA and other conferences, football, basketball, etc. The revenue from Special Events was $562,351, not $1,371,901. These numbers were recorded incorrectly in the above table.
Other: Other revenue is mostly from pooled interest on the fund balance.
Snow Removal: Annual expense for snow removal and gravel cleanup.
Alternative Transportation: This is TS share of the total WSU contribution (mostly supported financially from student fees) to Pullman Transit. The availability of transit significantly mitigates parking demand.
Goods and Services: Includes the usual such as supplies, materials, equipment, contracts, training, travel, external audit, vehicle rental including fuel and maintenance.
General Maintenance: General routine parking lot maintenance including gravel lot maintenance, painting, striping, signing, minor repairs, etc.
Wages, Salaries, Benefits: Includes 18 full-time employees and many part-time student employees. Typical for an auxiliary, the benefit load for full-time employees is paid by Transportation Services, not from the central benefits pool. Student employees provide event support, customer service, enforcement, and maintenance.
Debt Service: Bond repayment for Smith Center (SCUE) Garage construction, and inter-fund loan repayment.
Depreciation: Basically as you describe.
Administrative Service Charge: 10% of all revenue. All university auxiliaries contribute to the cost of central administrative functions that support them such as payroll, accounting, HRS, etc.
Transfers: Payment to WSU Police Dept. for police support. This is a longstanding line item.
Capital Projects: This is an artificially low capital expenditure. Like all areas and units, TS is holding back on spending to support institutional financial goals toward restored fiscal health. Future capital expenditures will likely be in the range of $1M-$2M per year once things normalize.
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On 2/6/2020 we received notifications from WSU Transportation Services proposing that parking rates should increase. The justification for this increase was centered around a need to generate an additional $4.8 M over 8 years to cover “capital maintenance and repair projects”. I have several concerns:
The description above is not complete. Here is the content from proposal website.
Capital maintenance and repair projects include:
First, according to transportation’s publicly available budget, they already account for costs associated with maintenance ($536,109 / yr) as well as depreciation ($619,992 / yr accounted for in real dollars). Why then, is there a need to spend more on maintenance and repair projects?
The bullets above from the website describe capital expenses for major repair and maintenance, i.e. asset preservation. The $536,109 in maintenance refers to routine general maintenance such as gravel lot maintenance, painting, striping, signing, minor repairs, equipment repairs, etc. Depreciation does make up part of the capital to be used to accomplish the work.
Second, in the budget there is a ($989,450 / yr) line item for “Debt Service”. It is unclear to me what “Debt Service” entails. Is this transportation paying down its own debts? The university debt? Something else? If transportation is able to take on debt, then should they finance their 8 year maintenance and repair project over the projected lifetime of the resulting parking spaces so as to equitably defer the cost among all parking users both present and in the future?
The debt service includes bond repayment for Smith Center (SCUE) Garage construction, and inter-fund loan repayment for parking lot construction from previous years. The SCUE bonds are general obligation bonds and TS is responsible for paying that debt. The university has limited debt capacity, and preserves those opportunities for priority projects. Using debt merely to finance repairs and maintenance of existing facilities bears a significant opportunity cost to the university.
Third, what is the ($491,452 / yr) “Administrative Service Charge”? Is this salary for administrative positions that is separate from the other wages ($1,566,240 / yr)?
10% of all revenue. All university auxiliaries contribute to the cost of central administrative functions that support them such as payroll, accounting, HRS, etc.
Overall, since the proposed rate increase seeks to generate an additional $600k / yr – I would like to know what is the projected increase in yearly revenue that will result from the rate increase?
The rate increase is estimated to increase revenue by approximately $600k.
Has transportation services considered cutting expenses in the areas of debt service, administrative service, or positions (wages) to save this amount rather than increase parking rates?
We do have these kinds of discussions in task force meetings. We keep the task force apprised of any and all opportunities to save in operating and maintenance costs. The application of License Plate Recognition (LPR) technology for permitting and garage operations will save us approximately $50,000 per year in operating costs. Every two years we engage in a zero-based budgeting process to identify opportunities for additional savings or restructuring. We will start that process in April for FY 2021. We also practice Lean management and our employees have generated and implemented hundreds of ideas to improve our operation and reduce waste.