Senate Bill No. 508

Introduced by Senator Beall

February 26, 2015

An act to amend Sections 99247, 99268.2, 99268.3, 99268.4, 99268.17, and 99314.6 of the Public Utilities Code, relating to transit.

LEGISLATIVE COUNSEL’S DIGEST

SB 508, as introduced, Beall. Transit operations: financial requirements.

(1) Existing law provides various sources of funding to public transit operators. Under the Mills-Alquist-Deddeh Act, also known as the Transportation Development Act, revenues from a 1⁄4% sales tax in each county are available, among other things, for allocation by the transportation planning agency to transit operators, subject to certain financial requirements for an operator to meet in order to be eligible to receive funds. Existing law sets forth alternative ways an operator may qualify for funding, including a standard under which the allocated funds do not exceed 50%of the operator’s total operating costs, as specified, or the maintenance by the operator of a specified farebox ratio of fare revenues to operating costs. Existing law generally establishes the required farebox ratio as 20% in urbanized areas and 10% in nonurbanized areas, except that an operator that exceeded those percentages in the 1978-79 fiscal year is required to maintain the higher farebox ratios in order to remain eligible for funding. Existing law provides various exceptions to the definition of “operating cost” for these purposes.

This bill would delete the requirement for transit operators to maintain higher farebox requirements based on the 1978-79 fiscal year. The bill would exempt additional categories of expenditures from the definition of “operating cost” used to determine compliance with required farebox ratios, including, among others, certain health coverage, pension, fuel, insurance, and claims settlement costs. The bill would also exempt startup costs for new transit services for up to 2 years. The bill would revise the definition of “operating cost” for performance audit and certain other purposes to exclude principal and interest payments on capital projects funded with certificates of participation or other lease financing mechanisms.

(2) Existing law also creates the State Transit Assistance program, under which certain revenues in the Public Transportation Account are allocated by formula for public transportation purposes. Under that program, funds may not be allocated to a transit operator for operating purposes unless the operator meets certain efficiency standards. Compliance with the efficiency standards is based on whether the operator’s total operating cost per revenue vehicle hour is increasing by no more than the Consumer Price Index, as specified. Existing law imposes no restrictions on allocations of funds for capital purposes. Existing law provides for funds withheld from an operator to be retained by the allocating transportation planning agency for allocation in a later year if the operator can subsequently meet the efficiency standards, and in certain cases, provides for the funds to be reallocated to other transit purposes, or to revert to the Controller.

This bill, rather than making an operator ineligible to receive State Transit Assistance program funds for operating purposes for an entire year for failing to meet the efficiency standards, would instead reduce the operator’s operating allocation by a specified percentage, based on the percentage amount that the operator failed to meet the efficiency standards, as specified. The bill would exclude certain health coverage and pension costs from the definition of operating costs used to calculate compliance with the efficiency standards. The bill would delete provisions related to funds withheld, reallocated, or reverted by the transportation planning agency.

Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 99247 of the Public Utilities Code is
amended to read:

99247.  

For purposes of Section 99246, and as used elsewhere
in this article:

(a) “Operating cost” means all costs in the operating expense
object classes exclusive of the costs in the depreciation and
amortization expense object class of the uniform system of
accounts and records adopted by the Controller pursuant to Section
begin delete 99243, and exclusive of all. end delete begin insert 99243. “Operating cost” excludes all end insert
subsidies for commuter rail services operated begin insert on railroad lines end insert
under the jurisdiction of the begin delete Interstate Commerce Commission and
of end delete begin insert Federal Railroad Administration, end insert all direct costs for providing
charter services, begin delete and exclusive of end delete all vehicle lease costs begin insert , and
principal and interest payments on capital projects funded with
certificates of participation or other lease financing mechanisms end insert .

(b) “Operating cost per passenger” means the operating cost
divided by the total passengers.

(c) “Operating cost per vehicle service hour” means the
operating cost divided by the vehicle service hours.

(d) “Passengers per vehicle service hour” means the total
passengers divided by the vehicle service hours.

(e) “Passengers per vehicle service mile” means the total
passengers divided by the vehicle service miles.

(f) “Total passengers” means the number of boarding passengers,
whether revenue producing or not, carried by the public
transportation system.

(g) “Transit vehicle” means a vehicle, including, but not limited
to, one operated on rails or tracks, which is used for public
transportation services funded, in whole or in part, under this
chapter.

(h) “Vehicle service hours” means the total number of hours
that each transit vehicle is in revenue service, including layover
time.

(i) “Vehicle service miles” means the total number of miles that
each transit vehicle is in revenue service.

(j) “Vehicle service hours per employee” means the vehicle
service hours divided by the number of employees employed in
connection with the public transportation system, based on the
assumption that 2,000 person-hours of work in one year constitute
one employee. The count of employees shall also include those
individuals employed by the operator which provide services to
the agency of the operator responsible for the operation of the
public transportation system even though not employed in that
agency.

SEC. 2.  

Section 99268.2 of the Public Utilities Code is
amended to read:

99268.2.  

begin delete (a) end delete begin delete   end delete In the case of an operator required to be in
compliance with Section 99268 under Section 99268.1, the operator
may be allocated additional funds that could not be allocated to it
because of begin delete such end delete begin insert those end insert requirements, if it maintains, for the fiscal
year, a ratio of fare revenues to operating cost, as defined by
subdivision (a) of Section 99247, at least equal begin delete (1) end delete begin delete   end delete to one-fifth if
serving an urbanized area or to one-tenth if serving a nonurbanized
begin delete area or (2) end delete begin delete   end delete begin delete to the ratio it had during the 1978-79 fiscal year,
whichever is greater. end delete begin insert area. end insert

begin delete

(b) In addition, such an operator having a ratio of the sum of
fare revenues and local support to operating cost greater than
one-fifth if serving an urbanized area, or one-tenth if serving a
nonurbanized area, during the 1978-79 fiscal year shall, at least,
maintain that ratio in order to be eligible for additional funds
pursuant to this section.

end delete

SEC. 3.  

Section 99268.3 of the Public Utilities Code is
amended to read:

99268.3.  

(a) In the case of an operator begin delete which end delete begin insert that end insert is serving
an urbanized area, and begin delete which end delete begin insert that end insert was eligible for funds under this
article during the 1978-79 fiscal year even though not required to
be in compliance with Section 99268 or begin delete which end delete begin insert that end insert commenced
operation after that fiscal year, the operator shall be eligible for
begin delete such end delete begin insert those end insert funds in any fiscal year, commencing with claims for
the 1980-81 fiscal year, if it maintains, for the fiscal year, a ratio
of fare revenues to operating cost, as defined by subdivision (a)
of Section 99247, at least equal to begin delete one-fifth or to the ratio it had
during the 1978-79 fiscal year, whichever is greater. end delete begin insert one-fifth. end insert

begin delete

(b) In addition, such an operator having a ratio of the sum of
fare revenues and local support to operating cost greater than
one-fifth during the 1978-79 fiscal year shall, at least, maintain
that ratio in order to be eligible for funds under this article.

end delete begin delete

(c)

end delete

begin insert (b) end insert  In the case of an operator begin insert that is end insert serving an urbanized area,
and begin delete which end delete begin insert that end insert was in operation during the 1978-79 fiscal year
even though not then eligible for funds under this article, but begin delete which end delete
begin insert that end insert has since become eligible for begin delete such end delete begin insert those end insert funds, the operator
shall be eligible for begin delete such end delete begin insert the end insert funds in any fiscal year, commencing
with the 1980-81 fiscal year, if it complies with either of the
following:

(1) The requirements of Section 99268.

(2) The requirements of begin delete subdivisions end delete begin insert subdivision end insert (a) begin delete and (b) end delete .

SEC. 4.  

Section 99268.4 of the Public Utilities Code is
amended to read:

99268.4.  

begin delete (a) end delete begin delete   end delete In the case of an operator begin delete which end delete begin insert that end insert is serving
a nonurbanized area, and begin delete which end delete begin insert that end insert was eligible for funds under
this article during the 1978-79 fiscal year even though not required
to be in compliance with Section 99268 or begin delete which end delete begin insert that end insert commenced
operation after that fiscal year, the operator shall be eligible for
begin delete such end delete begin insert those end insert funds in any fiscal year, commencing with claims for
the 1980-81 fiscal year, if it maintains, for the fiscal year, a ratio
of fare revenues to operating cost, as defined by subdivision (a)
of Section 99247, at least equal to begin delete one-tenth or to the ratio it had
during the 1978-79 fiscal year, whichever is greater. end delete begin insert one-tenth. end insert

begin delete

(b) In addition, such an operator having a ratio of the sum of
fare revenues and local support to operating cost greater than
one-tenth during the 1978-79 fiscal year shall, at least, maintain
that ratio in order to be eligible for funds under this article.

end delete

SEC. 5.  

Section 99268.17 of the Public Utilities Code is
amended to read:

99268.17.  

(a) Notwithstanding subdivision (a) of Section
99247, the begin insert following costs shall be excluded from the definition
of end insert begin insert “operating cost end insert begin insert ” for the purposes of calculating any required
ratios of fare revenues to operating cost specified in this article: end insert

begin insert (1) end insert begin insert   end insert begin insert The end insert additional operating costs required to provide
comparable complementary paratransit service as required by
Section 37.121 of Title 49 of the Code of Federal Regulations,
pursuant to the Americans with Disabilities Act of 1990 (42 U.S.C.
Sec. 12101 et seq.), as identified in the operator’s paratransit plan
pursuant to Section 37.139 of Title 49 of the Code of Federal
Regulations that exceed the operator’s costs required to provide
comparable complementary paratransit service in the prior year
as adjusted by the Consumer Price begin delete Index, shall be excluded from
the definition of operating cost for the purposes of calculating any
required ratios of fare revenues to operating cost specified in this
article. end delete begin insert Index. end insert

begin insert

(2) The additional costs of health insurance premiums, or
contributions to self-insurance programs, that exceed the
operator’s cost of health insurance premiums or self-insurance
contributions in the prior year as adjusted by the Consumer Price
Index.

end insert begin insert

(3) The additional costs of pension contributions, or related
defined benefit programs, that exceed the operator’s cost of pension
contributions or defined benefit programs in the prior year as
adjusted by the Consumer Price Index.

end insert begin insert

(4) Fuel.

end insert begin insert

(5) Alternative fuel programs.

end insert begin insert

(6) Power, including electricity.

end insert begin insert

(7) Insurance premiums and payments in settlement of claims
arising out of the operator’s liability.

end insert begin insert

(8) State or federal mandates.

end insert begin insert

(9) Startup costs for new services for a period of not more than
two years.

end insert

(b) The exclusion of costs from the definition of operating costs
in subdivision (a) applies solely for the purpose of this begin delete section end delete
begin insert article end insert and does not authorize an operator to report an operating
cost other than as defined in subdivision (a) of Section 99247 or
a ratio of fare revenue to operating cost other than as that ratio is
described elsewhere in this article, to any of the following entities:

(1) The Controller pursuant to Section 99243.

(2) The entity conducting the fiscal audit pursuant to Section
99245.

(3) The entity conducting the performance audit pursuant to
Section 99246.

begin delete

(c) This section shall become operative on January 1, 2007.

end delete

SEC. 6.  

Section 99314.6 of the Public Utilities Code is
amended to read:

99314.6.  

(a) Except as provided in Section 99314.7, the
following eligibility standards apply:

(1) Except as provided in paragraph begin delete (2) end delete begin insert (3) end insert , funds shall begin delete not end delete be
allocated for operating begin insert or capital end insert purposes pursuant to Sections
99313 and 99314 to an operator begin delete unless end delete begin insert if end insert the operator meets either
of the following efficiency standards:

(A) The begin insert operator shall receive its entire allocation, and any or
all of this allocation may be used for operating purposes, if the end insert
operator’s total operating cost per revenue vehicle hour in the latest
year for which audited data are available does not exceed the sum
of the preceding year’s total operating cost per revenue vehicle
hour and an amount equal to the product of the percentage change
in the Consumer Price Index for the same period multiplied by the
preceding year’s total operating cost per revenue vehicle hour.

(B) The begin insert operator shall receive its entire allocation, and any or
all of this allocation may be used for operating purposes, if the end insert
operator’s average total operating cost per revenue vehicle hour
in the latest three years for which audited data are available does
not exceed the sum of the average of the total operating cost per
revenue vehicle hour in the three years preceding the latest year
for which audited data are available and an amount equal to the
product of the average percentage change in the Consumer Price
Index for the same period multiplied by the average total operating
cost per revenue vehicle hour in the same three years.

begin insert

(2) If an operator does not meet either efficiency standard under
paragraph (1), the operator shall receive its entire allocation and
the funds shall be allocated pursuant to this paragraph. The portion
of the allocation that the operator may use for operations shall be
the total allocation to the operator reduced by the lowest
percentage by which the operator’s total operating cost per
revenue vehicle hour for the applicable year or three-year period
calculated pursuant to subparagraph (A) or (B) of paragraph (1)
exceeded the target amount necessary to meet the applicable
efficiency standard. The remaining portion of the operator’s
allocation may be used only for capital purposes.

end insert begin delete

(2)

end delete

begin insert (3) end insert  The transportation planning agency, county transportation
commission, or the San Diego Metropolitan Transit Development
Board, as the case may be, shall adjust the calculation of operating
costs and revenue vehicle hours pursuant to paragraph (1) to
account for either or both of the following factors:

(A) Exclusion of begin delete costs end delete begin insert cost end insert increases beyond the change in the
Consumer Price Index for fuel; alternative fuel programs; power,
including electricity; insurance premiums and payments in
settlement of claims arising out of the operator’s liability; begin insert health
insurance premiums or contributions to self-insurance programs;
pension contributions or related defined benefit programs; end insert or state
or federal mandates, including the additional operating costs
required to provide comparable complementary paratransit service
as required by Section 37.121 of Title 49 of the Code of Federal
Regulations, pursuant to the Americans with Disabilities Act of
1990 (42 U.S.C. Sec. 12101 et seq.), as identified in the operator’s
paratransit plan pursuant to Section 37.139 of Title 49 of the Code
of Federal Regulations.

(B) Exclusion of startup costs for new services for a period of
not more than two years.

begin delete

(3) Funds withheld from allocation to an operator pursuant to
paragraph (1) shall be retained by the transportation planning
agency, county transportation commission, or the San Diego
Metropolitan Transit Development Board, as the case may be, for
reallocation to that operator for two years following the year of
ineligibility. In a year in which an operator’s funds are allocated
pursuant to paragraph (1), funds withheld from allocation during
a preceding year shall also be allocated. Funds not allocated before
the commencement of the third year following the year of
ineligibility shall be reallocated to cost effective high priority
regional transit activities, as determined by the transportation
planning agency, county transportation commission, or the San
Diego Metropolitan Transit Development Board, as the case may
be. If that agency or commission, or the board, determines that no
cost effective high priority regional transit activity exists, the
unallocated funds shall revert to the Controller for reallocation.

end delete

(b) As used in this section, the following terms have the
following meanings:

(1) “Operating cost” means the total operating cost as reported
by the operator under the Uniform System of Accounts and
Records, pursuant to Section 99243 and subdivision (a) of Section
99247.

(2) “Revenue vehicle hours” has the same meaning as “vehicle
service hours,” as defined in subdivision (h) of Section 99247.

(3) “Consumer Price Index,” as applied to an operator, is the
regional Consumer Price Index for that operator’s region, as
published by the United States Bureau of Labor Statistics. If a
regional index is not published, the index for the State of California
applies.

(4) “New service” has the same meaning as “extension of public
transportation services” as defined in Section 99268.8.

(c) The restrictions in this section do not apply to allocations
made for capital purposes.

(d) The exclusion of begin delete costs end delete begin insert cost end insert increases described in paragraph
begin delete (2) end delete begin insert (3) end insert of subdivision (a) applies solely for the purpose of
calculating an operator’s eligibility to claim funds pursuant to this
section and does not authorize an operator to report an operating
cost per revenue vehicle hour other than as described in this section
and in Section 99247, to any of the following entities:

(1) The Controller pursuant to Section 99243.

(2) The entity conducting the fiscal audit pursuant to Section
99245.

(3) The entity conducting the performance audit pursuant to
Section 99246.

begin delete

(e) The restrictions in this section shall not apply to the
allocation of funds made pursuant to Sections 99313 and 99314
after January 1, 2010, and through the 2014-15 fiscal year.

end delete