TO: AC Transit Board of Directors
FROM: Michael A. Hursh, General Manager/Chief Executive Officer
SUBJECT: Financial Update for Realign
BRIEFING ITEM
AGENDA PLANNING REQUEST: ?
RECOMMENDED ACTION(S):
Title
Consider receiving a District financial update related to the Realign effort.
Staff Contact:
Chris Andrichak, Chief Financial Officer
Body
STRATEGIC IMPORTANCE:
Goal - Financial Stability and Resiliency
Initiative - Financial Efficiency and Revenue Maximization
Providing the Board and public updated financial information will help set expectations and provide guidance on what can be achieved with the Realign program.
BUDGETARY/FISCAL IMPACT:
There are no fiscal impacts from this report, although it does discuss the District's overall fiscal situation.
BACKGROUND/RATIONALE:
Staff last updated the Board on the District's financial outlook and projections in April 2023. Those projections showed varying deficits over a five-year period (FY 24-25 through FY 28-29) using three sets of assumptions (best, expected, and worst cases). The expected case showed a total deficit of $143 million over the five-year period. All of the projections used the current service level as a constant over the projection.
The different projections primarily vary the amount of revenues the District would receive based on performance of the local and state economy. The sales, property and parcel taxes that make up the bulk of the District's revenues change depending on how the economy performs, which ultimately determines the deficits that arise. There are things the District is doing now and could do in the future to reduce expenses, but the primary driver of expenses is labor and that is mainly based on service level. Outside of service level, the cost reductions can apply to any scenario and so don't help to differentiate the scenarios.
The past few months have not greatly changed the economic outlook staff used to construct the revenue scenarios. What has change...
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