TO: AC Transit Board of Directors
FROM: Michael A. Hursh, General Manager
SUBJECT: Bi-Monthly Budget Update and Forecast
BRIEFING ITEM
RECOMMENDED ACTION(S):
Title
Consider receiving the bi-monthly budget update for the period of July through December of FY 2020-21 and updated financial forecast.
Body
STRATEGIC IMPORTANCE:
Goal - Financial Stability and Resiliency
Initiative - Financial Efficiency and Revenue Maximization
Regular financial reporting benefits staff and Board Members in assessing the condition of the District.
BUDGETARY/FISCAL IMPACT:
There are no budgetary of fiscal impacts associated with this report.
BACKGROUND/RATIONALE:
?Overview
This staff report is an update on the District's financial position for the first six months of the year based on actuals for revenues and expenses while operating during a pandemic. The accompanying presentation provides staff's outlook for the remainder of FY 2020-21 going into the next two fiscal years.
The first half of the year has produced better than expected subsidies revenue and lower than expected operating expenses, making it likely that FY 2020-21 will end with a surplus. However, given the uncertainty of sufficient federal stimulus and the anticipated increase in labor costs (even with a partial hiring freeze), staff is bracing for negative conditions in FY 2021-22 and FY 2022-23. Staff is reviewing options to keep the District operating within budget despite even optimistic projections starting at a $10 million deficit.
Revenues and Subsidies are $13.8 million (5.2%) above budget and Expenses are $19.5 million (8.3%) below budget for the July through December period of FY 2020-21, resulting in a current operating surplus of $61.8 million. This significant revenue surplus is primarily due to the front-loading in the fiscal year of the draw-down of the $84.1 million in Coronavirus Aid, Relief, and Economic Security (CARES) Act federal funds. The $84.1 million is 18% of our total rev...
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