Optimizing Revenues without Layoffs

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Optimizing Revenues without Layoffs
By Ehren Bingaman, Principal Consultant

Early in the COVID-19 pandemic, transit agencies were quick to recognize the threat to the financial aspects of the business of public transportation. The CARES Act provided essential relief to agencies around the country, but so far it is one-time funding. The New York Times and Wall Street Journal have both recently published articles about the dire condition of funding and the decisions transit agencies are making, impacting service and employment at agencies around the country.

To optimize revenues, agencies are making painful service cuts and layoffs because their impact on revenues is tangible. However, a more creative approach could identify other opportunities to ease financial strain without having to sacrifice jobs or service. Many tactics are available to help financial managers at transportation agencies manage cash, expenses, and reserves. For example:

A common denominator of agencies experiencing less stress around the optimization of revenues are those with clear priorities organized around outcomes. Agencies that clearly articulate their priorities develop budgets that focus resources on what matters most to them. This framework enables clear headed decision making for Boards and leaders seeking to optimize their limited resources. The Central Indiana Regional Transportation Authority, for example, recently defined success outcomes, which is helping the agency prioritize resource allocation with an emphasis on taxpayer value and expand options for regional mobility to suburban job centers.

Another factor influencing how organizations manage financial uncertainty is the culture of the team. Organizations that empower open dialogue to collaboratively solve problems in a spirit of achieving priorities enable creative environments for ideas to flourish. In 2008, during the last major era of revenue uncertainty for transit, the Rochester-Genesee Regional Transportation Authority achieved revenue growth, fare reductions, and improved customer experience through rigorous prioritization. As chronicled in Driving Excellence, by TransPro CEO Mark Aesch, agencies approaching optimization through the lens of success definition and prioritization can achieve great outcomes without necessarily resorting to service cuts, layoffs, and fare increases.

If you don’t have priorities, it’s harder to make purposeful decisions to optimize revenues. By proactively setting clear goals and outcomes, rather than simply stopping leaks, transit agencies have the opportunity to set themselves up for long-term financial sustainability.