COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING COUNCIL COMMITTEE ON TRANSPORTATION AND PUBLIC UTILITIES - - - Room 400, City Hall Philadelphia, Pennsylvania Tuesday, 04/03/01 10:14 a.m. - - - RES. 000142 - Authorizing the Committee on Transportation and Public Utilities to hold hearings into student transportation costs. RES. 000597 - Authorizing the Committee on Transportation and Public Utilities to conduct comprehensive comparative research into the state of the City's transportation and public utilities systems and hold hearings into the same. PRESENT: COUNCILMAN W. WILSON GOODE, JR., Chair COUNCILWOMAN JANNIE BLACKWELL COUNCILWOMAN BLONDELL REYNOLDS BROWN COUNCILMAN DAVID COHEN COUNCILMAN FRANK DICICCO COUNCILMAN RICHARD T. MARIANO COUNCILMAN ANGEL L. ORTIZ COUNCILWOMAN MARIAN B. TASCO - - - VINCENT VARALLO ASSOCIATES, INC. Registered Professional Reporters Eleven Penn Center, Suite 600 Philadelphia, PA 19103 (215) 561-2220 2 4/3/01 PUBLIC TRANSPORTATION, UTILITIES I N D E X Res. 000597 Jack Leary, General Manager, SEPTA. . . . . . Res. 000142 Jack Leary, General Manager, SEPTA. . . . . . 29 Christian DiCicco, SEPTA Board Member . . . . 50 Phil Goldsmith, Interim CEO, School District 76 Sandra Dungee Glenn, School Board Member. . . 76 Rhonda Chatzkel, CFO, School District . . . . 94 John Lombardi, Administrator. . . . . . . . . 102 Transportation Services, School District Shelly Yanoff, Director, PCCY . . . . . . . . 115 Crystal Reddenberg, Building Representative 121 West Philadelphia High School Susan Oh, Student Staff Member. . . . . . . . 123 Philadelphia Student Union Richard Weishaupt, Esq., Attorney for . . . . 127 Community Legal Services 3 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 597 P R O C E E D I N G S
Good morning. This is a Committee on Transportation and Public Utilities hearing to consider Resolutions 597 and 142. This hearing is called to order, a quorum is present. For the record, in attendance are Committee members Marian Tasco, Angel Ortiz, and Frank DiCicco. Also present are Councilwoman Blondell Reynolds Brown and Jannie Blackwell and myself. The clerk will please read the title of Resolution 597.
Resolution 000597, a resolution authorizing the Committee on Transportation and Public Utilities to conduct comprehensive comparative research into the state of the City's transportation and public utilities systems and hold hearings into the same.
Mr. Leary, please approach the witness table. (Witnesses come forward.)
Good morning. Please state your name for the record and proceed 4 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 597 with your testimony.
Good morning, Mr. Chairman and members of the Committee on Transportation and Public Utilities and members of the City Council. My name is Jack Leary, and I'm the General Manager of the Southeastern Pennsylvania Transportation Authority. And joining me this morning at this table are Board members Christian DiCicco, Miss Jettie Newkirk, and Assistant General Manager Frances Jones. S. public transportation systems. And, Mr. Chairman, Council staff should be commended for their work and with the direction and the preliminary findings of the study. This is very comprehensive and well done on a very complex undertaking. SEPTA is the fifth largest transit authority in the nation, serving some 220 square miles, including the City of Philadelphia. We operate a complex, multi-modal system, offering a greater variety of vehicle types than any other 5 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 597 system in the United States. We have already provided for your review and use more detailed information covering the period fiscal years 1996 to 2000. With the exception of the base fares, all of the information submitted was derived from the National Transit Database Report that SEPTA prepares annually for the Federal Transit Administration. Given the complexity of the material and the comprehensive list of items requested, I should like to provide just a brief summary highlighting some key points and some key issues. First, on the issue of SEPTA delivering more service. Between 1996 and the year 2000, service delivery was improved, as evidenced by an increase in annual passenger miles, from 1,302,000,000 miles in fiscal year 1996 to 1,391,000,000 miles in fiscal year 2000. 7 million miles in fiscal year 2000. The number of active vehicles available 6 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 597 for service also increased from 2,550 in fiscal year 1996 to 2,790 in fiscal year 2000, resulting, again, in an increase -- in a percent increase 5 in vehicles available for maximum service. 6 During this period, SEPTA made fleet 7 improvements, purchasing new buses and subway 8 cars. years in fiscal year 2000. years in 1996, this means SEPTA is providing newer vehicles for improved customer service. 8 years in fiscal year 2000, and this is with the addition of the new Market Frankford cars. Now, our fare revenue has also increased. During this five-year time period, SEPTA's fare structure remained the same. 7 million in fiscal year 1996 to $293 million in fiscal year 2000 reflects an increase in actual ridership. For each of these years, ridership 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 597 increased by approximately 2 percent, with an overall 9 percent increase over the four-year period. Now, operating funds remained relatively constant during this period. Between fiscal year 1996 and fiscal year 2000, passenger revenues increased by 9 percent, and the total of federal, state, and local operating subsidies increased by 6 percent. However, within this time, SEPTA was able to effectively leverage these resources to increase service levels to meet the needs of growing customer markets. Since fiscal year 1996, we have also reduced the size of our organization by 1300 employees. These reductions, however, came primarily as a result of attrition and early requirement, and no segment of SEPTA employees lost jobs during this time. With effective resource management, we have been able to institute cost control measures while improving overall productivity. 8 million in fiscal 8 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 1 million in fiscal year 2000. Many significant multi-million dollar projects began construction, including several in Philadelphia, such as the new Frankford Center Transportation Complex, the Market Street elevated reconstruction project in West Philadelphia, as well as infrastructure and safety renewal programs.
Recently, SEPTA staff had the opportunity to review draft text of the comparative analysis study being undertaken at the request of this committee. This preliminary document contains 1998 statistical information about SEPTA, so I'm pleased to be able to provide our most current data to ensure consistent comparison of transit properties provide across the country. There are, however, some unique nuances to SEPTA's operation during the five-year period that we would just like to highlight for the study to take into consideration. For example, our vehicle overhaul program is completed, using in-house resources and utilizes capital dollars transferred into our operating budget. In 1997, SEPTA's paratransit 9 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 597 service was an in-house operation, where most transit properties used external resources. And in 1998, we had a 40-day work stoppage. We would like our staff to have an opportunity in another forum to share this information with the committee and with those individuals completing the study. Thank you, Councilman Goode, for the opportunity to speak today, and I'd be happy to try to answer any questions you may have, and I have key members of our staff with us that may also help in that endeavor. Thank you again.
Thank you for your testimony, Mr. Leary. Could you pull the mike closer to you.
I have a few questions. First of all, thank you for the update in terms of the data you've submitted, with more current data since 1998, but I have some questions regarding performance measures in the transportation industry and how SEPTA stacks up. In the draft report submitted to this 10 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 597 committee in anticipation of this hearing, we compared SEPTA among transit agencies in the 4 largest cities in the United States. As part of 5 this analysis, we compared each agency's service 6 efficiency, cost effectiveness, and service 7 effectiveness. We found that in various 8 categories, SEPTA tended to have a lower-than- 9 average efficiency and cost effectiveness but a 10 higher-than-average service effectiveness. "Service efficiency" is defined as operating expenses per vehicle, revenue, mile, or hour; and "cost effectiveness" being defined as operating expenses per passenger mile or per passenger trip; and "service effectiveness" as being defined unlinked passenger trips per vehicle, revenue, mile, or hour. Could you explain why this is and what SEPTA is doing to improve these performance measures. In other words, SEPTA seems to be delivering service very well but at a very high cost. Why is that?
Well, Mr. Chairman, it's very hard to answer a question like that without actually looking and going into the data and 11 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 597 comparing the specific data for the specific mode. If it would be appropriate for the committee, I'd like to get back with a specific response to that question rather than just off the top of my head try to answer it. Generally speaking, when SEPTA is compared, both the cost of the delivery of service and the effectiveness of the delivery of service, SEPTA rates very high among transit properties in its peer group, with the exception of New York, of course, because New York is the unusual situation, given the volume of people they carry. But given the direct comparison of data, I think you'll --
Well, without comparing it to specific cities, although that is what this hearing is about, there is a standard set within your industry, and there are measures set and you submit data to the industry so that it can be compared among other agencies. You've submitted updated data to us, but what does that data represent comparatively? I mean, do you think those numbers are good or are they actually 12 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 597 good?
Well, when I went through the study or heard the study, Mr. Chairman, I was pleased at the comparisons that SEPTA -- how SEPTA compared with the others. Again, the multi-modal nature of SEPTA creates a situation where the costs and effectiveness of SEPTA are blend together. So in making these comparisons, you have to take the SEPTA rapid transit system and compare it to the Boston, Los Angeles, Chicago rapid transit system. And likewise with the bus system, likewise with the light-rail system, likewise with the commuter rail system. When it all gets blended together, it's difficult to make the comparison with a property that doesn't have that multi-modal nature.
But specifically with regard to bus and heavy rail, we found that service efficiency and cost effectiveness was lower than in other cities. We found that service effectiveness was higher while their service efficiency and cost effectiveness was lower.
Mr. Chairman, I'd have to 13 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 597 get back to you. I just -- off the top of my head draw -- I can't didn't draw that same comparison. So I'd have to get back to you.
Okay, I'll move on. The City of Philadelphia currently contributes over $60 million in subsidy to SEPTA on an annual basis. Could you briefly describe what this subsidy is used for and how that amount is determined.
Mr. Chairman, that is determined to be the proportionate share of the total subsidy for the City of Philadelphia, the level of service provided in the City of Philadelphia. That money is used to match the State, the Commonwealth of Pennsylvania, and to draw down the maximum amount of revenue available to us from the Commonwealth of Pennsylvania. The total of the Commonwealth's subsidies, the City subsidy, and the revenue collected is converted into -- 100 percent of the dollars are converted into the delivery of service. At the beginning of the year, we're required to submit, as you know, a balanced budget 14 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 597 based on subsidies and revenues anticipated to be generated from the service. In three of last four years, we have in fact turned back a slight surplus in each year, three of the last four years. So, essentially, the short answer is, the City's appropriation is used to match the maximum amount -- leverage the maximum amount of revenues from the Commonwealth of Pennsylvania for service to be delivered in the City of Philadelphia.
Through a formula, the amount's worked out through a formula, and our finance staff and budget staff work with the City staff to determine what's available and what is needed to support the level of service. And then that number is generated and provided to us.
Okay. For the record, what percentage of SEPTA's operating expenses are recovered through fare revenue? In our 1998 figures, it showed it was roughly 37, 38 percent. In terms of more recent data, what is 15 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 597 that percentage?
Actually, we achieve 50 percent each year. And in fact, we are required under our enabling legislation and by law to achieve a 50 percent cost recovery ratio.
And would you please tell us how SEPTA compare to peer agencies in expense recovery. Are there different standards for different cities?
Again -- yeah, again, there are different standards in different cities. And generally, I would say to you that SEPTA is on the high end of the cost recovery ratio, at 50 percent. You have other cities that make a very cognizant public policy decision to keep fares artificially low. I'm thinking of Boston, for example, with a cost recovery ratio of, I believe, in the 30 to 34 percent range. And then you have properties like San Diego that have a different budgetary structure and report a cost recovery 16 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 597 ratio of 80 percent. But in San Diego, for example, many of the costs of providing that transit service are covered by city government. So, as I mentioned at the very beginning of this, your staff did an excellent job of trying to delineate a apples-for-apples, an exact comparison of data, because in fact, it's very different in each city. SEPTA incorporates the cost, for example, in its budget of its police department; other cities provide that cost to the transit property. I mean, that's just one example of how it's very difficult to make the direct comparisons.
Okay. It's my understanding that SEPTA currently has the second highest fare in the United States, while it's the fifth largest system. Why is that?
You know, when I first arrived four years ago in Philadelphia, the first thing that was brought to my attention is SEPTA had the highest fare in the United States. Very few people, Mr. Chairman and members of Council, pay that fare, because SEPTA also has the highest discount structure in the United States. 17 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 597 The base fare today is $1.60 but a token is discounted by 28 percent to $1.15 per ride. Now, the passes, the weekly passes, the monthly passes, the tokens, everything is very, very heavily discounted. So to answer your question specifically, SEPTA does not have the highest fare in the United States. There are transit properties in the country today that have a $2 base fare structure. It's just the -- a sort of a rumor or that was established years ago and just sort of stuck that SEPTA is the highest fare in the country; it is not. At $1.60, it's somewhere between the middle of the transit group and maybe even a little on the lower side of the transit group.
I believe New York is now $1.75; Pittsburgh is at least 1.60, if not $1.75. Many of the California properties are all in the $1.75 to $2 range. Mr. Chairman, if you'll hold on, I think we have that data with us. It's in the 18 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 597 report. Yeah, Atlanta -- the full cash fare -- oh, here we go. Yeah, Atlanta is $1.75, Los Angeles is $1.55. And just let me make the point. Even in Los Angeles, their cash fare is $1.55, but 50 percent of the users of the system pay the cash fare. In Philadelphia, the cash fare is $1.60, but only percent of the users pay the $1.60. 10 So everybody in Philadelphia knows, and let me 11 say, we encourage it, you know, don't pay the cash 12 fare, take advantage of the discounts, buy the 13 passes, buy the weekly passes. They're more 14 efficient for us to handle and they're more 15 customer-friendly for our customers to use. In San Diego, it's $2.00; Pittsburgh is $1.60; the Port Authority in New York is $1.06; Los Angeles is $1.55; Atlanta is $1.75.
But at $1.15, let me say, we are very much at the low end of transit fares around the country.
I have other questions. Do other members of the Committee have questions at this time? Councilman Ortiz. 19 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 597
Good morning, Pam. The sun is out today. Mr. Leary, do these other cities have discounts? I mean, I imagine that all of these other cities also give discounts on their fares to people, elderly and so on. Don't they?
Yes. Most cities have some sort of a discount. I would say to you, Councilman, generally speaking, I don't know of any city that has as many discounts as the SEPTA system. Now, that may have something to do with the fact that we are so multi-modal. I mean, we have every mode. Only Boston is close to SEPTA in terms of the many modes. New York, for example, has buses and heavy rail, and that's it.
But New York has -- New York also offers the students free transportation, does it not?
Um, I honesty -- I don't know. I'd have to look it up in my notes.
It does. 20 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 597
I don't believe it's free. Maybe the student doesn't pay, but someone pays the --
The students rides free. Somebody always pays, Mr. Leary.
Someone always. You have -- you make a statement in your testimony here on at the end bottom part that you said you are doing what is possible within the parameters of enabling legislation which prohibits us from providing free service to any customer market. What does that mean?
On the next resolution, and I am planning to make a more detailed statement, a formal statement to that and explain each one of those.
But it's about students and -- 21 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 597
You mean, I got to wait to ask questions about the tokens until then? Thank you. You know, I'll wait for the token questions. I'm sorry, okay?
For the record, Councilman Rick Mariano has joined us. Are there any other questions from members of the committee?
Would you pull the mike a little bit closer. 22 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 597
Okay. Determining the fares is based upon two general principles and has been seen over the years in the transit industry as the best balance to achieve the maximum amount of ridership and generate the maximum amount of revenue. If you raise your fare too high, you lose ridership; and, therefore, your cost recovery is in danger. We watch it very carefully. As you know, we have been, and I report it to you every year as part of the budget process, a very aggressive campaign to improve ridership and to improve revenue. We've been very aggressive about advertising and redesigning the bus routes to try to focus on major designations. And we have been very successful. This year, we will carry 13 million more people than the previous year. We have been very successful because we have been able to keep the transit fares as low as possible. We have not had a fare increase, for example, in six and a half years. It's all contributed to bringing people back on the system. We very carefully try to balance the revenue to be generated to the number of riders 23 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 597 that we can attract, and it's that equation that helps you determine what the most optimum fare is, the optimum are for attracting the largest number of riders.
And at what interval do you do fare increases? When you do a fare increase, is it for five years, for ten years, uh. . .
Mr. Chairman, I'm not sure that I would want to commit to that because you never know where your expense structure is going. As you know from our budget hearings, we have had this last year some very unusual expenses. In our business, one of the big expenses is diesel fuel. We buy 15 million gallons of diesel fuel every year, and diesel fuel went from 51 cents a gallon to $1.01. I mean, that's an enormous increase. So when you're faced with expenses growing at that rate, it's at that point in time that you have to reconsider the cost -- the revenue generation ability from the fare. As I said, it's been six and a half years since there's been a fare increase. As you know, we are seriously studying the potential of a 24 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 597 fare increase for next year, a process that will begin in the not-too-distant future. But it's -- I would say to you that SEPTA has been very fortunate in the sense that we have not had to raise the fares for a large number of years, many years.
At what rate do you see operating expenses increasing over the next five years incrementally?
Mr. Chairman, if you'd hold on for just one moment, I want to check with our finance people. (Mr. Leary confers off record with colleagues.)
Mr. Chairman, we're projecting about a 3.5 percent per year increase each year over the next five years.
If I just might add, for the last five years, we have been able to contain those expenses to approximately 1.5 percent. So we have been very successful. As you know from the budget hearings, we have been very successful 25 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 597 at containing costs, restructuring our organization and reinventing the way we do business to try to improve the effectiveness of the dollars we invest in transit. It's been very successful for the last five years. It's just that this past year, the combination of medical expenses, prescription drugs, diesel fuel, natural gas, some of our -- some of the cost components of delivering the service that are outside the control of SEPTA have just, as you know, from discussions, it's been no 13 secret that medical costs have increased 125 percent the last couple of years. I mean, that kind of cost increase is just not something you can deal with. And we don't expect that to occur in the out-years anyway.
So you expect operating expenses to increase incrementally at 3 percent a year for the next five years, and it's my understanding and it is rumored that you are considering a fare increase. Would a flat fare increase actually equal some of those incremental increases over the next five years?
Yes. We would try to 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 597 project the revenue increases from a fare increase and project a continuation of rebuilding ridership over that period of time. Again, our strategic plan for the next five years, we would try to balance and project revenues that would equal the cost of delivering the service, and that's really the objective, given that by law we're required to submit a balanced budget.
I think I was more specifically not trying to tie you down to a number yet.
But if operating expenses are going to increase 3 percent a year and you can't necessarily foresee more than five years, I'm really asking the question, is a flat fare increase going to be based upon the sum of those incremental increases?
Yes. It would very much be tailored to what the expected increases would be. Now, keep in mind, the fares only represent 50 percent of the cost of delivering the service. So we would very much try to balance the fares with the expected increase in costs and structure 27 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 597 the organization's future to be a fiscally responsible future, at least in the short term, projecting revenues that would balance expenses. I think that is the -- sort of the fiscally responsible way of approaching this issue.
Okay. I believe Councilwoman Blackwell has a question, but I will wait for her and ask another question. For the record, could you please tell this committee which portion of SEPTA's fiscal infrastructure are owned by the agency and which are owned by the City?
Mr. Chairman, that would on the surface appear like a very simple question, but it's very, very complex. There is a complex system of leases and lease-backs involving both rolling-stock subway station structure. And to be perfectly honest, off the top of my head, I can't tell you other than those general categories where specific ownership is. It's gotten more complicated even in recent years, as those assets have been -- what's the right word. Their useful life has expired, they have been replaced. They have been replaced, 28 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 597 in many cases, with federal funding that introduced the federal ownership or federal -- well, I guess ownership's the right word of 80 percent in some cases. So it's a very complex response to that. It will take the best Philadelphia lawyers to figure that out.
Do you know offhand how many lease, leaseback agreements there are regarding physical infrastructure?
I would encourage both the 29 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 SEPTA staff and City staff to put aside several years in terms of research, formulating solutions and alternatives to find a way to do this. I mean, it wouldn't be too soon to start this year.
Okay, thank you. Are there any other questions from members of the committee? (No further questions.)
Thank you for your testimony and for answering the questions. I look forward to the follow-up information in finalizing this report. I think most of the people that have come here today have come to considering Resolution 142, so let's move forward. The clerk will read the title of Resolution 142.
Resolution 000142, a resolution authorizing the Committee on Transportation and Public Utilities to hold hearings into student transportation costs.
Mr. Leary, would you please proceed with your testimony on 142.
I thank you, Mr. Chairman. And good morning, Councilman Goode and members of 30 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 the committee. And members of the City Council, again, my name is Jack Leary. For the record, I'm the general manager of the Southeastern Pennsylvania Transportation Authority. And joining me at the table are Board members Miss Jettie Newkirk and Board member Christian DiCicco. And I've invited also the Treasurer of SEPTA to join me, Faye Moore, with Frances Jones and counsel (inaudible). And, again, we have other members of the staff in the audience as we get into the question-and-answer period. Supporting the welfare and future of our children is an issue of concern, and SEPTA applauds the Council's comprehensive fact-finding approach to assist the School District of Philadelphia, establish a realistic and viable student transportation policy, one which could well become a model for all school institutions, for other school institutions within our service region. SEPTA offers an important support service to students who must travel to area schools by providing access to transportation. The Authority School Initiative is comprised of 31 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 two main elements: sale of fare instruments and delivery of revenue service. In all, we spend almost $40 million annually to provide approximately 100,000 daily trips -- and these are unlinked trips -- for over 30,000 children in the City. I'd like to take a minute now to describe SEPTA's activities on a typical school day. Students use our service -- buses, trolleys and subways elevator lines -- to travel to and from school. On average, 20,000 student trips are provided on the Market-Frankford and Broad Street subway lines, and almost 80,000 daily student trips are taken on some 41 City transit bus and light-rail lines operating on routes that pass area schools. In addition, on school days, targeted service provides 87 buses that operate with schedules specifically coordinated with the school day. While these services run -- excuse me. m. m. timetables are designed to provide transportation to and from Philadelphia schools. These schools include: 32 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 The Bartram High School at 67th and Elmwood; Leeds Middle School at Mt. Pleasant and Wilson; Olney High School at Front and Duncannon; Roxborough High School at Ridge and Fountain; Saul High School for Agricultural Services at 7800 Ridge; George Washington High School on Bustleton Avenue; Rush Middle School at Knights and Fairdale; Gratz High School at 18th and Hunting Park; and Jones Middle School at Anne and Mifflin Streets, just among others. Combined these routes generate over 800,000 service miles to and from school destinations annually. The majority of students taking public transit use special school tokens and transfers. The School District of Philadelphia purchases these fare instruments from SEPTA as part of a bulk sales program for resale to students. The Philadelphia Archdiocese, Philadelphia charter schools, and selected school districts in Delaware and Montgomery Counties also participate in this sale program. million in tokens and 33 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. million in transfers. 15 and 40 cents for transfers. Through their student sales program, the School District of Philadelphia further discounts the already-discounted price of a token to 90 cents. The District also provides school tokens free of charge to approximately one-third of its students, based upon the criteria in their individualized educational plans. Now, what is the cost, the breakdown for the $40 million figure I spoke about a few minutes ago. The Authority spends $26 million to operate the regular service and $14 million to operate the targeted services.
We generate $13 million in revenue from the tokens and transfers used on the regular service, and $3 million from the targeted services, for a total of $16 million. 30. 15. The token represents about 50 percent of the cost of delivering that service or the subsidy. 34 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 Now, who helps pay for these costs? SEPTA covers the $24 million not subsidized by tokens and transfer revenues out of its annual operating budget. 5 million. The District then receives $5 million in reimbursement from the Pennsylvania Department of Education, as allowed by the State's public transportation reimbursement program. As you can see from these basic cost and subsidy calculations, providing public transportation services for a student population as large as the City of Philadelphia's is an expensive undertaking. And as we are all aware, the question is not simply the ability of any one party to underwrite these costs but to establish a comprehensive policy to address the transportation needs of students. As I recently testified during the Council's operating budget hearings, although we have exercised fiscal diligence and discipline to maximize the effectiveness of our resources and 35 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 expand service levels while holding expenses in check, we have been faced with skyrocketing costs in a couple of key areas, and as part of the previous discussion, I mentioned them: diesel fuel prices, natural gas prices, prescription drug costs, just to make a few. Compounding all of this is the disappointing news that the Governor's budget submission does not provide SEPTA with an increase needed to meet even our normal 3 percent inflationary costs. Under State law, we cannot present an unbalanced budget. And with the prospect of $43 million in increased costs, we must work to find responsible solutions to these issues by looking at all possible avenues to increase revenue sources, increase our subsidy funding, and decrease expenses. Now, some of these choices may be difficult, including the prospect, as we spoke about a few moments ago, the prospect of a fare increase, the first in over six years. None of these decisions will made without careful study and full opportunity for public comment. However, definitive action must 36 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 be taken if we are to sustain current City service levels, including those provided to school children. While the focus of this morning's hearing is the School District of Philadelphia, the largest within the SEPTA service region, there are other systems: the charter and parochial school systems in the City and districts in the four surrounding counties within our operational network. We are obligated under law to ensure that all SEPTA initiatives provide equal protection to those live and work within our diverse service region; therefore, as mandated by our enabling legislation, any programs, policies or tariffs put into place to address the transportation needs of Philadelphia school children would also apply to all of these other districts and systems as well. It is our understanding that under State law, the School District of Philadelphia has assumed the burden of responsibility for providing children with transportation to and from school. To offset the financial burden associated with 37 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 this activity, public transportation fares qualify as a 100 percent allowable expense for the School District, and there is no funding cap imposed for reimbursement of transportation costs. Today the State reimburses 67 percent of the cost incurred by the School District of Philadelphia for each dollar spent on public transit. As such, we would hope that one of the solutions would be to seek additional funds for the School District's budget.
Given the operating dollars currently expended by SEPTA to support student transportation, given our financial constraints and our obligation to balance the budget, while struggling to address many cost increases, we are doing what is possible within the parameters of our enabling legislation, which prohibits us from providing free service to any customer market. These concerns notwithstanding, students are an important segment of SEPTA's overall customer base, and we are committed to working with the School District of Philadelphia, the Philadelphia City Council, legislative officials, and all other advocates interested in 38 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 working together to find solutions to the challenge of establishing a transportation policy. We stand ready to lend our professional resources to this committee to assist in reviewing and analyzing the information developed from this hearing. Mr. Chairman, thank you again for the opportunity to speak, and I'd be happy to try to answer any questions you may have or provide any information you need to help with this very difficult issue. Thank you again.
Thank you, Mr. Leary. I have a couple questions before I return to Councilman Ortiz. The first is for the record. How many tokens or transfers does the School District from SEPTA on an annual basis? Not the cost, but actually how many tokens and how many transfers. (Mr. Leary confers off record with colleagues.)
Mr. Chairman, we're doing some quick math here, and we may be off a little bit so we'll get to you the exact number, but 39 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 we're talking about 1 million 3, and constantly repeating, constantly cycling through the system several times a year.
Is the School District largest single purchaser of tokens and transfers?
Well, what is SEPTA's largest client beyond the School District?
I believe the general customer base of the system; the daily commuter would be the largest client group.
No, as an institution, the school department has to be -- has to be the largest, yeah.
Okay. Councilman 40 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 Ortiz?
Yes. Explain to me that last sentence in : "Given the operating dollars currently expended by SEPTA to support student transportation. . ." It's down at the bottom of on your testimony.
Yes, sir. Specifically given the operating dollars currently expended by SEPTA?
We're looking at a total cost of $40 million for providing the service. Is that the number you're referring to? There's $26 million of costs provided throughout the regular service system and $14 million for that targeted system. And some of us have referred to in the past the targeted system being the 400 buses, those buses that go out to the particular schools every day.
Have those buses just specifically -- I mean -- and once the school 41 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 day is over, those buses don't run any longer?
That's -- that's correct. Councilman, we are prohibited by both State and federal law from providing school bus services, so we are very careful to describe them as "targeted services," but the truth of the matter is, they begin their run at the high school and they finish their run at a major terminal for the students to get off.
But they are open -- these routes are open for the general population to use, the general public to use.
Right, they're open. They're not -- you just plan your route so that students are able to make use of public transportation and reach their schools.
But these targeted routes are a part of your public transportation strategy in terms of the --.
-- overall population. 42 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142
Okay? So you cannot -- that is not a subsidy. I mean, that is part of being able to market public transportation to people and make it accessible.
I would say to you, sir, generally that is correct, but there are 87 bus routes that if we went out today, I think you would find that the 100 percent of the customer base on that route is a high school student.
Given the fact that the school system, and you stated, is the largest customer, institutional customer that you have, you don't provide any -- any discount to them other than what you provide to the average customer that travels on public transportation. You sell 'em the tokens at $1.15.
So that is not a thing that you have instituted in terms of the students.
That is correct. I believe 43 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 that that token -- the general population is required to buy two at a time. The school department -- we sell them to the school department for individual sale. But given that it's the highest discounted media that we have, you are correct.
And we have the -- probably the largest segment of poor families in the Commonwealth of Pennsylvania (inaudible). How do students in Pittsburgh are able to ride the public transportation system over there at no cost to them and how do they do it? And why can't we here?
I'll answer the second question first: We can't. And the first question is, the Board of Education purchases monthly passes for the students in Pittsburgh at a cost of $40 per pass per month.
-- purchases monthly passes 44 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 for the students in Pittsburgh at a cost of $40 per pass per month.
Yeah. Now, the token purchased by the school department is given, blending transfers in runs about to $24 a month, so it's a much better 11 deal buying tokens the way the school department 12 is buying them today than buying the monthly 13 passes. And we've had this conversation several 14 times, and we'd be more than willing to sell 15 monthly passes. It's not the best deal for the 16 school department. 17
So it's the school 18 system -- the public transportation does not give 19 -- does the public transportation give a subsidy 20 to the Pittsburgh school system for their tokens? 21
Our data indicates that they provide the pass for the student. 45 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142
And let me just say, this is data that was provided to us by the Daily News Editorial Board on March 13, 2000. It must be correct. (Laughter.)
I see the Daily News reporters smiling. They're usually correct. They did a great editorial today, so I've got to commend them on it. So what you're saying to me is that we here -- that your system is very much just like Pittsburgh.
And you don't provide, just as Pittsburgh doesn't provide, any 46 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 subsidy, extra subsidy that it doesn't give to the average customers.
Sir, I think the answer to the question is that the Pittsburgh Department of Education pays the cost of the transportation and the Transit Authority is made whole -- is not subsidizing the transportation.
It's -- basically the Department of Education in Pittsburgh pays the cost of the transportation.
Well, I just have some information here that says that Pittsburgh School District receives a total State reimbursement of around approximately 40 percent, but included in that amount is public transportation reimbursement at 100 percent of allowable cost. Does that go -- does that --
Yeah, not to the Transit 47 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 Authority, to the School District.
So both transit authorities don't do anything specifically special in terms of the school kids in their cities.
Thank you, Mr. Chairman. Mr. Leary, we're probably going to have a rate increase. I guess that's top secret, but it sure looks like it's going to happen. Since we're going to hit the riding public for a rate increase, why don't we just hit 'em for enough to cover the cost -- not so we go totally free like we would like to see but so, you know, we can get down. I was reading in one of the great papers -- I don't know which one, they both fuzz together for me -- that students would be excepted or someone would be excepted, that the cost is down to like $5 a week, and that might be acceptable, even though we're trying to get to free. 48 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 Have you done any homework or tried to figure out that to try to make this less painful?
Yes, sir, we have actually. And what we've discovered, and it's very clear to us, is that we're prohibited from creating an advantage for any one consumer group.
Even if you don't make it free, as long as you'd be dis --
Okay. Well, I know and I understand you can't make it free for that reason. But if you cut the cost down where it's more bearable instead of what -- what are they paying, $9, $7 a week? (Audience member responds off-mic.)
Is it 7, Shelly? 9. So 5, say we make it 5, can we do something like that? Could we figure -- 'cause then we wouldn't have to do the whole thing for everybody else that doesn't live in Philadelphia, just -- 49 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142
Yeah, one of the -- (Mr. Leary confers off record with colleagues.)
Because the common-sense approach to this so we don't have to keep coming back here and doing this, doing this, and doing this --
Yeah. You know, Councilman, everyone says to us, you know, What's the big deal, why don't you tell us what you're doing in terms of the fare increase? And the reason we can't because is it's so complicated. We're being very, very careful in studying this and designing this so that there is a very careful balance across the board for everybody.
And there's no advantage or disadvantage in real terms to any particular group. And it gets very complicated when do you that.
My point though -- I think you're missing my point. We give them a discount for tokens now, correct? (No immediate response.) 50 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142
You got the nice haircut. I mean, say something. I'm trying to make you important. Your father can't talk to you, I can.
The discount isn't exclusive to the school children; it's available to the general public as well.
Well, it's been a little while since I went to school, but aren't the tokens cheaper if you get the school tokens and we stop doing that?
It's been a long time since I went to school. We don't do that anymore, right?
Student tokens are $1.15 51 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 and general-public tokens $1.15.
Okay, but we're still giving some discount, if not to --
Oh, okay. So they buy 'em for the cost? Are they buying 'em for -- (Unintelligible, parties talking over each other.)
I mean, people are going to -- they're going to bitch about a raise anyhow, so let's make it so we can try to get this somewhere where there's threshold of pain is eased. You know, it's hard for us to come here. I mean, that's what this is all about. We can talk for all night and all day, but it's hard for us to come here and read a story in one of these papers that some kid missed his final exams 'cause he couldn't go to school. 52 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 That's the stuff that makes our life unbearable, because, you know, we're riding around in these fancy cars that they pay the gas and our tires and everything, and we can't give some kid -- I mean, it would be -- I know you got problems for all the things you stated, and I'm sure nobody at that table doesn't want the kids to ride for free, and maybe free is not where we can get to. But if we're going to hit everybody for a rate increase, let's do it at one time and ease that threshold of pain down a little for these school kids so we don't have to read these stories. You know, this is a great job we have here, but then we have to read them stories, then I have to, you know, be all angst over all of that kind of stuff, you know? It makes my life more intolerable. Could we do something like that? (No immediate response.)
I love when they don't answer, just everybody's chatting. And I like you.
No, Councilman, you've been terrific to us. 53 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 You know, we just did some quick mathematics, and we said -- and we'll confirm it. But if you were to say that the regular commuter, that their ticket price would increase enough to cover the student for free --
It would have to be 11 percent higher than that just to cover the offset.
I see. Now, let me ask you this question and somebody might ask you this. The thing to getting it to free is some kind of a -- is it a State or a federal law? 54 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142
Both? Can we have Harrisburg and Washington work on that? I mean, we're all trying to do good things here, but if they're going to keep us and you from doing what we need to do, maybe it's time our Congress people and our State Representatives started working on this instead of coming to us with this all the time, when we can only do and you can only do what you can do.
Councilman, I think there may be some opportunity to discuss that in Harrisburg. I've had some experience at the federal level with it, and they are very, very strict about using public dollars to compete with the private sector, and they see public transit properties getting into school bus business as direct competition with the private sector, and --
When you were here before, we asked you some questions about other institutions that you sell tokens to and what 55 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 arrangements you have with them, and the University of Pennsylvania has a relationship in terms of tokens for their students and --
No, sir. They -- we have a relationship with them and many other large institutions around town to buy monthly passes, and that monthly pass is discounted by 5 percent. Now, just keep in mind, the token is discounted by 28 percent. We sell to the University of Pennsylvania a $64 monthly pass. And because they pay in advance and buy 'em in bulk, we discount it by 5 percent. They buy an entire semester's worth at once, so they pay up-front. You know, each time we talk about it, and we'd be more than willing to sell monthly passes, but the bottom line is, the monthly pass is more expensive than the token arrangement, and it's substantially more expensive.
All right, Councilman. I have other information but we'll come 56 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 back to that.
Could we get to the point where now that we're on that, could there be like a whole-term pass? Like Frank DiCicco goes to public school or whatever? We could do all the schools if you want, but we're looking at public schools, and as long as Frank' enrolled at South Philadelphia High School, as long as -- he could have a yearly pass or, you know, from September to June? Isn't there -- do we ever look at anything like that?
Don't clap 'cause then I might want to run for mayor or something.
The idea of a pass is a very efficient idea, it works real well, but it has very limited application. We sell monthly passes; people pay $64 for a monthly pass. And we well weekly passes.
Mr. Leary, let me interrupt you one minute. For instance, you go to Frankford High School, you have an I.D. card 57 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 that's scanned on the back. You take that and the guy scans it. Eventually that -- that technology's here.
All right. Well, can't we scan this Frankford High School I.D. so we can -- I mean -- or we could debit something. There's something out there, you know, and I know you're a nice guy and I know youse are all forthright, but it just seems we do this all the time and -- believe me, I'm not beating on youse, but we need to get to a point where we got to solve it.
We see this down the road. I mean, if not now, where we can come back here and say we've achieved something and 58 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 we're going to do this. And I can't read them stories about that kid that can't take his finals 'cause he didn't have tokens. That's the kind of stuff that makes you not want to be in City Council because you feel like they're the things you want to do, and I'm sure they're the things you want to do and SEPTA wants to do.
Substituting a weekly pass for the token is a very realistic, very legitimate idea. SEPTA tried it several years ago, before my time, tried it for about six weeks.
That's why I'm saying, you lose your I.D., then you don't get in school and then you're in trouble.
Yeah. That -- it became such a problem so quickly. I understand in about six weeks, they had to cancel the program. Kids looking for replacement passes. Now, a token is recyclable, okay? You leave your pass in you jeans and it runs through the washing machine, you know, and there were just 59 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 hundreds and hundreds of issues like that every day, looking for replacement passes, and unfortunately, they had to discontinue the program.
The I.D. Card scan is something that, you know, they can lose, but eventually, they've got to become adults. At least teenagers realize they got to have that to get free. If you gave me a card and said, You can ride the bus for free and you can get in school, I would make sure I didn't lose it, even when I was years old. 14
Well, there's a difference 15 between free and there's a difference --
Replacing a -- (Unintelligible, parties talking over each other.)
Yeah. (Unintelligible, parties talking over 60 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 each other.)
In a crazy way, every time we look at this and you get into the details, and I don't like even saying tis because this is the 21st century and technology should be able to replace --
But the token is such a versatile media, you know, you can't destroy it, you can't -- you know, we're just recycling it.
And I happen to know Councilman DiCicco has a whole bag of old PTC tokens that he slips in every once in a while when he's running, and now that his son's on the board, he can't do it.
But back to my point, I mean, is this something we're looking at? I mean, if I could think of it, someone else --
Oh, no, no. We've been looking at it actively to try to find a way to 61 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 make it work.
That, you know, we've gone back to the point in the mid-'80s when they tried it, to get all the data, and it just scares everybody that look at it.
You know, we sell it -- and, frankly, you'd sell it for the same price as the token.
To give you an easy example, if you price it to be the same as the tokens, you know, $20 a week, what do you do on the school weeks that only have three days?
That's why you could scan that I.D. card and you could -- you can do it when drive over the bridge.
No, you use the I.D. card to buy the weekly card. 62 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142
No, I'm saying you have a debit card, your I.D. card becomes a debit card, and you use that card like you use when you go over the bridge and they send you a bill. It's automatically taken off of something.
I'm not saying you take it off some kid's checking account, 'cause he don't have it, but there's got to be some kind of technology along that lines that we could use.
That's a different technology than we have today. We have the scanner, the magnetic card reader, the introduction of a smart card, and it will come.
I mean, it's only a matter of time. But it's a big capital investment for SEPTA. And I'm going to say, Councilman, we have looked at it, and it's in the range of $60 million to change all of the fare collection equipment from magnetic read to computer-chip smart card. And, Madam Treasurer, am I close? 63 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 SEPTA TREASURER: 132 million.
When new buses come on line, do you put the old system, or do you start making out a system that can be upgradeable.
No. When new buses come on, we take the existing fare boxes that have a 20-year lifetime.
We've really, really -- are exactly where you are internally, trying to figure out how to phase in a technology that will make all of these systems so much easier. I mean, we have so many different fare zones and fare media now that, you know, part of our objective is to simplify it, reduce it, to make it so we can actually get -- so it's understandable.
I want to tell 64 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 you, there's somebody listening to this, that will be reading about this tomorrow that's going to call your office and tell you he has the -- he or she has that technology and their company -- can you give me your home phone number, then they can call you tomorrow, tonight. (Laughter.)
I have a quick follow-up, then Councilman DiCicco, then Councilman Cohen. But I also want Mr. Goldsmith to joining Mr. Leary at the table when he returns; he is here. Mr. Leary, regarding Councilman Mariano's question, we know that if we decrease student transportation costs, we are passing on that cost. If it's free for students, we're passing on that cost -- or reduced for students, we're passing on that cost to either adult fare payers or adult taxpayers. In view of your statement that you have a 50 percent expense recovery ratio that's 65 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 mandated by the State, I would suggest that 50 percent of your money come from fares, the other 50 percent come from government subsidy. If you are seriously looking at reducing or eliminating student transportation costs, are you looking at splitting that cost between taxpayers and fare payers, or have you considered that at all?
No. In our examination of that issue, we were advised by counsel very clearly that we do not have the ability to disadvantage any one customer market group. Let me just -- let me just look to counsel now. (Mr. Leary confers off record with colleagues.)
That's correct, that's the equal rights -- equal protection clause of our enabling act and the Constitution.
I'm referring to a client like the University of Pennsylvania, as Councilman Ortiz referred to before, not young people, not students in general, but a client which is the School District, which is going to 66 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 purchase from you. If we're going to look at discounting or eliminating that cost, it's eventually going to go get passed on to students. If you are seriously considering this, were you looking at splitting that cost between the fare payer and the taxpayer, since you are considering a fare increase, or were you going to pass it on to the taxpayer totally?
Councilman, we would be look to go split the cost at the same ratio that exists today, as costs go up, to keep the balance of a cost recovery ratio at 50 percent. Now, just on your first issue about the Penn pass, because that is discounted at a 5 percent rate, but that is available to everybody, the entire population. Now -- and if the school department would want to engage in that program, we would welcome it. I just have to tell you that it is not in their best financial interest; it's a more expensive program than the one that they have. They have selected the most cost-efficient program that exists.
If you understand 67 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 the question that I was asking you, you referred to a $40 million cost. You said that's split between $16 million for the School District and $24 by SEPTA. Actually, SEPTA doesn't have any money of its own; that money comes from the fare payers and the taxpayers. As we bring the School District and SEPTA to the table to determine what we're going to do in terms of reducing or eliminating costs, is everything on the table? Some of the revenues you're considering are coming from fares. Are you going to -- additional revenue in terms of fare increase, are you going to put it on the table before you decide to make it available for discounting student tokens or student transportation? (Mr. Leary confers off the record with colleagues.)
Councilman, I'm not sure how to answer it. The -- all of the proposals on the table being studied raise all of the media, including the token. So there's no -- we're trying to be very careful to balance it across the 68 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 board in real terms and that if there is a fare increase, they would include all of the media, including the token.
So is it your intention to raise the cost of tokens to the School District through your fare increase.
That is correct. It would have to be a very balanced, across-the-board proposal.
Will Mr. Goldsmith join Mr. Leary at the table. Councilman DiCicco?
I just want to follow up on that line of questioning. Is there any way -- because I understand about this equity and that you can't provide for certain reasons under State and federal regulations free. Now that you're going through the process of looking at a fare increase, without asking for that number here today, is there a way in which that fare increase could be such that it would absorb any potential for an increase to the students? In simpler terms, meaning, is there a way in which you can at the 69 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 very least freeze the student cost to the level they are today -- we're still going to try and figure out if we can ever get that down -- and passing that on for lack of a better way to the consumer by way of a fare increase.
Councilman, I understand the question, and I believe the answer is no. I'd have to consult with counsel on this carefully. My understanding is that to be successful in moving forward with the fare increase, this issue of equity and social justice and balancing is an overriding and very powerful issue. And failure to deal with any one of those principles can in fact -- you end up in court and tied up for a very long period of time. So we're being very careful about that. You know, the idea of keeping the token for the student at the existing price and asking everybody else to increase their proportionate share to pay for it is a principle that's dangerous in our environment of moving forward with something as large and complex as a fare increase throughout the region.
Well, I'm not an 70 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 attorney, but aren't we already doing that in a sense when we provide certain discounts for students? Or is that consistent with discounts in general for people who use public transportation?
It has stood the test of time at this point. Excuse me one moment.
Sure. (Mr. Leary confers with colleagues off record).
I am also reminded, Councilman, that we don't discount for students. We sell it at the regular price, and the school department does.
The other question actually was asked by my colleague who generally looks at my notes while I'm preparing them, but that's okay, we're one big happy family here. (Laughter.)
So, as you know, a couple years ago, when I chaired this committee 71 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 and subsequently was vice chair, I've been looking for other sources of revenue which I would consider to be revenue-neutral, meaning no cost to people who use public transportation and/or to the taxpayers by providing some sort of foundation or money from private industry. Unfortunately, in light of a bill that I introduced a couple of weeks ago and the opposition to that bill, 629, which may have created an opportunity to create a revenue stream by way of certain types of -- permitting certain types of outdoor advertising, along with community support, it appears that that bill is probably dead in the water, and that notion that I was going to be able to create that revenue stream that would provide, if not all of, at least a significant portion of the revenues to pay for the student transportation needs is probably dead in the water. So I know Shelly's in the audience today, and I'm really sorry about that, but it's very unlikely that that legislation will go anywhere as a result of the negative comments and statements that were made to Bill 629. 72 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 I know it's really not for you, Mr. Leary, but I wanted to put that on the record today. Those two years of work seem just about dead at this particular time. Thank you, thank you for being here. Thank you, Mr. Chairman.
Mr. Leary, it's mighty strange to hear you speak in terms of social justice and equity requiring that poor kids have problems getting to school, because you are saying -- you are defending charging kids to go to public school and you're saying that's called for by social justice and equity. And the exact reverse is the fact, not what you said. There are no exquisite balances to maintain in order to keep kids from going to school. The exquisite balance is to find a way to get the kids to school if there's any meaning to the very often-repeated statements that this is "The Year of the Child" or that education is important to Philadelphia or the nation or to whomever. 73 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 If it were possible for us to get a man to the moon or a woman to the moon, you mean it's not possible to get government to act in a way and the private-business sector to act in a way which really assures free education for kids? I don't believe that for a moment, Mr. Leary. And I don't appreciate all of the so-called niceties. I happened to be in City Council when SEPTA law was passed, when it was enacted by the State legislature back in 1968, and I assure you, there were no fine balances that were being sought. What there was plain horse-trading, and the suburbs won over the City. Even though the City provides approximately 80 or 85 percent of the revenue, the benefits went to the suburbs. And it's about time to recognize the facts of life. It's time for you, it's time for the School District, it's time for us in government to get together and make public education free education. And every kid, whether he goes to public school or private school, beginning with kindergarten through high school, ought to be able to get to school without the family figuring out, do we eat this day or do we 74 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 send one of our kids to school this day? (Applause.)
And I think it's an absolute disgrace for representatives of the public -- and SEPTA is a public body -- to stand there and to say social just and equity require that kids have to pay to go to school, because that's just the reverse of the fact. I think it's not for us to decide the technical way in which you do it, but I think it's absolutely part of your duties to find a way, together with the School District and the City of Philadelphia and probably, as Councilman Mariano stated, the State legislators, and if necessary, Congress. But this is a problem that's got to be settled now. We can't wait another year, another two years or five years. This is a problem that can be set, and I think you ought to come clean instead of giving us all of these Massachusetts cliches, because that's all we're hearing from you. You tell us there's nothing more you can do, but you're ready to cooperate with us fully in doing nothing more. That's what your statement 75 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 tells us. And I think you ought to withdraw it and I think you ought to go back to the drawing boards and come up with ways with the School District. And if you feel you need more money from the State, I think it's your role to make the demand to your bosses, to the State government, because the State and the suburbs have most of the seats. Don't they have out of the now? 11 That's my understanding. 12 And I would like to see a genuine 13 approach rather than all of this fancy dancing 14 around the issue, trying to indicate that justice 15 is on your side; it is not. You are the people being unjust, you're being unjust to the kids of Philadelphia. Thank you, Mr. Chairman.
Mr. Chairman, just for the record, I want it to be noted that Councilman was making fun of your Massachusetts heritage, not me this time. 'Cause last time I was in the New England newspapers, and I can't go 76 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 to the Red Sox games anymore.
If Mr. Leary and SEPTA can remain available for questioning, I'd like to have Mr. Goldsmith testify at this time. Goal.
Sandra Dungee Glenn, a member of our board, is here with me, and she'd like to make some comments, and I'd like to have our chief financial officer, Rhonda Chatzkel, join us up here. (Witness comes forward.)
Miss Glenn, please state your name for the record and state your testimony.
Good morning. My name is Sandra Dungee Glenn. Good morning, Chairman Goode and members of the committee and members Council. I'm a member of the Board of Education of the School District of Philadelphia, and it is a pleasure to be here to testify on behalf of the 77 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 Board about our policies and give our perspective on student transportation. Transportation to and from school is as vital a concern to today's Board as it was more than years ago, when the Board adopted its 7 original policies. Then, as now, the Board 8 recognized the simple fact that a student cannot 9 learn if a student cannot get to school, and that 10 helping students get to and from school is one way 11 to promote better attendance, especially in the 12 middle and high school years. 13 Then, as now, Councilmembers 14 acknowledged the importance of students 15 transportation. This kind of collaboration will 16 be critical as we on the Board reexamine all of 17 our policies on transportation in light of the 18 serious financial crisis the District now faces. 19 The board welcomes Council's assistance in 20 crafting strategies to reduce the cost of student 21 transportation. 22 You have each received data summarizing 23 the District's expenditures on transportation and 24 Mr. Goldsmith, the District's Interim Chief 25 Executive Officer, will give you more details in 78 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 his testimony. With that in mind, I want to outline the Board policies now governing all student transportation in order to give you a context in which your help is being sought. First, let me stress that there is no 7 income requirement for any student to receive free transportation. All students receiving special education services, participating in desegregation programs, and assigned to schools for reasons of overcrowding receive free transportation. That transportation can include tokens, transfers, buses or cabs. Homeless students also receive free tokens. Second, students whose route to school is determined to be hazardous by the State of Pennsylvania's Department of Transportation receive free transportation. Third, students who live more than one mile and a half from their assigned schools receive free transportation. Fourth, students whose situations dictate on extraordinary need for free District-provided transportation also receive it upon the recommendation of the District's Chief 79 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 Executive Officer or the Chief Academic Officer or the Board. That is known as the "exception-to- policy" policy. Finally, the District of Philadelphia is required by State law to provide the same free transportation services to parochial and private school students that we provide for public school students. Each day, the District is responsible for the transport of over 60,000 public, private, and parochial school students. The District runs about 1200 yellow bus and cab routes each day and spends $67 million a year on transporting students. This district puts forth much effort and many dollars to minimize student transportation costs across the District, even though the majority of our 214,000 students walk to school. An important component of our transportation system is free and subsidized SEPTA tokens and transfers. Two years ago, at Council's urging, discussions first began on the development of a swipe-card system, with an eye to eliminating the District's costs with buying and distributing 80 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 tokens. More recently -- in fact, just last week -- similar discussions also have taken place. We want to partner with SEPTA in pursuing ways to reduce the impact of this barrier to learning, and we appreciate their willingness to do the same. The Board is directing District staff to assess the impact of transportation costs to public school students and its impact on truancy.
The District and SEPTA should work together with our joint funders, the City and the Commonwealth, to devise strategies on this issue. I also want to thank the Philadelphia Student Union and the Philadelphia Citizens for Children and Youth for their advocacy on behalf of more than 23,000 public school students who ride SEPTA to school. We find intriguing and creative the PCCY proposal that SEPTA or the City look for ways to reduce the cost of either transfers or tokens to the District, which then could provide a larger subsidy to the students. The Board would support such a proposal as long as it would be cost-neutral to the District. Our greatest concern at this time is that students be held harmless in the event of any proposed fare 81 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 increase. Hopefully, this explanation has clarified why what may seem like an easily accomplished task actually will require more innovative solutions devised among SEPTA, Council, and the District. 1 million to the District's overall transportation costs. This board has dedicated itself to working collaboratively with all of our State (indiscernible) in search of solutions to this and a wide range of problems that confront our district. We look forward to having similar creative thinking on this issue from Council. Thank you, and I will be glad to take your questions at the conclusion at our testimony. And it is now my pleasure to introduce Philip R. Goldsmith, the Chief Executive Officer for the District of Philadelphia. 82 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142
Good morning, Chairman Goode and members of Council. My name is Phil Goldsmith, and I'm the Interim Chief Executive Officer of the Philadelphia School District. I'm here to discuss the issues of student transportation. I welcome Council's interest in this subject and appreciate the interest and concern of Philadelphia Citizens for Children and Youth, the Philadelphia student unions, and others who have raised this issue. Currently, over 23,000 public school systems ride SEPTA back and forth to school. Of the students using SEPTA, 10,000 students receive free tokens and transfers. They are eligible for free tokens for a variety of different reasons governed by either State or School District policy or both and include desegregation, special education, overcrowding, hazardous routes, and exception to policy. About 13,000 students purchase tokens at the rate of $9 per week. This discounted rate is subsidized by the School District as a matter of Board policy. 50. In other words, the School 83 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 15 per token and receives 90 cents from the student, a 25-cent subsidy per trip. All students receive free transfers if requested. Each of you should have received the table summarizing expenditures on transportation. 7 million. million. million. 1 million. 5 million. Students' use of tokens is not of recent vintage. It's been going on since the 1950s. It wasn't until almost three decades later, in 1984 and 1985, when the subsidy of tokens began. 15. 84 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 Between 1985 and 1989, the City and School District shared the cost of subsidizing student tokens. Due to the City's financial crisis in the late 1980s, the City stopped sharing the cost. Since then, the School District has borne the entire local burden. 15, which is where the 10 subsidy and the fare now remains. 11 Although we have no definitive 12 empirical evidence at this time to show a 13 correlation between transportation and attendance, 14 common sense and anecdotal evidence suggests that 15 the inaccessibility of transportation can be an 16 impediment to school attendance. As one parent 17 applying for emergency transportation funds for 18 transportation wrote: 19 "The cost of living is too high for 20 the salary I make. The bills make it extremely 21 hard to keep trying to squeeze our money for 22 Maleeka's car fare. Every week, she has to worry 23 about where car fare's coming from. " 85 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 Principals, teachers, and administrators are all too familiar with stories like this. And that's not surprising. Our School District has the second highest poverty rate in the State; it's more than twice the average of the Commonwealth's other 500 school districts. In fact, our most affluent school has a poverty rate that is higher than the State average. The School District's mission is to provide all students with the educational skills and tools needed to be productive and engaged citizens. If students do not attend school on a daily basis or are tardy, it is all the more difficult to achieve our mission. We're committed to working with Council, SEPTA, and the State to develop strategies to reduce transportation costs and reduce any impediments that hinder assistance and foster learning. But having said that, it's essential to emphasize that just as the City had its financial crisis in the late 1980s and stopped its subsidy, the School District now has its own serious financial crisis. As we pointed out in this very chamber only a few weeks ago, the District is 86 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 facing a $191 million deficit for the next fiscal year. And unlike SEPTA, we do not have a fare box to make up any of the difference. As the District's Interim Chief Executive Officer under our new governance model, my mandate is to implement, enhance, and professionalize our management practices and approach.
Until we first resolve our current financial situation, it would not be managerially responsible on my part for me to recommend to the Board any additional subsidy that would increase our costs and increase our deficit. I would recommend to the Board, however, that if SEPTA's proposed fare increase includes students, the District should oppose such an increase. Our students cannot afford to pay more, nor can the District. I trust that it will not come to that. SEPTA and the School District have a good working relationship. We have cooperative initiatives through programs such as the Police Collaboration Project to return truant students to school. General Manager Jack Leary and I have already met, we have arranged for our staffs to meet to explore 87 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 ways to utilize technology, to minimize the administrative task of purchasing and distributing tokens. Several meetings between our staffs have already occurred. It should also be noted that the Commonwealth of Pennsylvania is a major funder of both SEPTA and the School District. As we both talk with Harrisburg about our needs, student transportation should be on both our agendas. It has been on ours. In conclusion, we share a concern as to the raise cost of transportation for our students. It is why the District has subsidized part of their cost uninterrupted for the past 15 years. We know more needs to be done, and nothing would please us more than to be in the financial position to do more. I'd be pleased to answer any questions, and our CFO, Rhonda Chatzkel is here with me, and our Head of Transportation, John Lombardi, is also here. Thank you.
Thank you, Mr. Goldsmith, for your testimony. I don't know 88 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 if you were here and heard Mr. Leary already state that although they have not ruled out their fare increase yet, that because of equity issues, according to them, that they intend to increase the cost of tokens to the School District. You also said that the School District, because of its financial situation, cannot afford to subsidize even under the current conditions, let alone an increase in token prices. But the purpose of this resolution and the purpose of this hearing today is not to ask SEPTA or the School District to foot the cost, knowing that both are funded by tax dollars, and we will discuss actually where the money will come from at some later point. The purpose of this hearing is to actually get down to the actual cost and what we might be able do and what it would actually cost to reduce or eliminate the price of tokens. I'd like to -- or student transportation in general. I'd like to run through a number of different questions with you based upon your testimony and discussions that we've already had. What is the School District's current 89 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 transportation policy; can you briefly describe it. And how is it determined and when was it established?
Okay, I'm going to sort of reiterate what Sandra Dungee Glenn had said, but the policy, as it currently states is to provide -- first of all to be a resident of the City of Philadelphia. Secondly, there's transportation, free transportation, for special education needs where -- in their IEP so designated. Next, there is transportation for a student who lives more than a mile from his or her home and is participating in a voluntary desegregation program of the School District of Philadelphia. There is also a free transportation in Grades 1 through 6, if you live a mile and a half from your school. Also, if a school route is designated as hazardous by the Pennsylvania Department of Transportation, free transportation is provided. And then, also, if your school is overcrowded and you need to be transported 90 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 elsewhere, we provide free transportation. And then there's the exception-to- policy designation, which would include either individual requests or requests that come from our staff concerning special situations, such as homeless people and other matters like that. As I understand it, I think John Lombardi has said he's been with the District since 1974 and said that these policies have basically been in place since 1972, or at least since he's been here. So they've been long-standing and they get approved and reapproved from time to time, but they are long-standing policies of the School District.
Are there any legal restrictions from establishing an income-based a student transportation cost policy?
But there are none 91 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 that you know of.
There is none that I know of. Obviously, our free food program is income-based, and that's obviously a federal program and a different program, so it may be well that we may be able to do that, but I don't know the definitive legal answer to that.
Okay, based upon the current student transportation policy, what's the current overall cost of student transportation for the District?
The current cost is $14.8 million -- I'm sorry, the current cost for our total transportation program is $67 million. The net cost for the District is $44 million.
On March 15th of this year, a few weeks ago, City Council unanimously passed a resolution calling on the School Board to establish a students transportation cost policy based on financial need, the current financial needs of the student population. Could you please update this committee on where you are in this process, when it will be 92 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 resolved, and will the Board examine -- how it will examine truancy-related transportation costs? If either you or Ms. Glenn could answer question.
Mr. Chairman, if I can. Just to restate it, the Board has asked staff to begin to look at data that might make any correlation or kind of identify the correlation between transportation costs, public transportation costs, and student attendance. And so we don't have anything definitive on that as of yet, but we are trying to get that answer. The second part of your question in terms of the Board's review of our policy, we have just begun, or are just beginning, to actually -- the policies really have not been reviewed in any depth for the past, I believe, years, since 19 they went into effect. And I think it is the 20 Board's intent during the course of this coming year to review them and look at how we may need to update our policies particularly as it relates to issues like the impact of income since over 80 percent of students are eligible for free or reduced-price lunch, and what does that mean in 93 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 terms of the need for transportation or the role of subsidized or free transportation. But, again, that review is -- has not begun in full. We need to really do that during the course of this year, so that is nothing that we have not revised as of yet.
So within the course of this year, is there any time frame set to something you definitely will have done by June, before June, or is there any time frame set in terms of a deadline?
No, we have not. Just to give you a straightforward answer on that, no, we have not set a time frame.
Okay. I would ask that you do so because, particularly for the purposes of this conversation, I think that traditionally, members of the public and sometimes members of Council have pointed the finger at SEPTA, without acknowledging that there is no 22 income-based policy with the School District, and we require that policy before we can take any action and even look at finding funds. I want to ask a lot of other questions 94 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 related to actual student transportation costs to get down to what that number might be, even before you establish a policy. What would be the cost to the District of fully covering all student transportations costs?
If we were just to do, in an ideal world, all students have to have free transportation to school, meaning not just public but non-public.
My name is Rhonda Chatzkel, and I'm the Chief Financial Officer for the School District. Without doing a full analysis of which students might avail themselves of transportation who currently don't, we came up with an aggressive cost scenario. We assumed that about 70 percent of all elementary school students who do not now 95 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 receive transportation -- and I should say that any elementary school student in the categories that Mr. Goldsmith and Miss Dungee Glenn mentioned do receive transportation. But by and large, elementary school students live very close to their home school. But if 70 percent of those were to receive transportation, and because they're young, it would be yellow bus transportation, the cost to us could be $100 million for that pool, that population alone. The assumption is, and it's a grounded assumption, that anything that we provide to public school students, we need to provide to non-public school students as well, which is what brings the cost up. We also could not assume that there would be reimbursement for that expense, because to a child lives less than a mile and a half between home and school, that's not a reimbursable expense. If we were to provide for secondary school students, who are not now receiving free transportation, if any child buying a subsidized token were to receive a free token -- and, again, not knowing whether public transportation or 96 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 yellow school bus is the appropriate vehicle, we assume the most expensive mode of transportation for the rest of those secondary school students, which is a yellow bus, which runs about $1,000 per student per year, and for which the reimbursement is fairly low, at about 30 percent -- sometimes 8 to 30 percent, depending on the year and the type 9 of transportation, type of bus. 10 The additional cost for that expensive 11 mode of transportation might be another 12 $60 million -- again, assuming that we have to 13 deliver the same transportation to non-public 14 school students. 15 So on the high side, without doing 16 further analysis, we would come up with a cost of 17 about $160 million, maybe even more. 18
And that's in 19 addition to the current 67 million. 20
That's in addition, 21 that's correct. 22 Again, very aggressive costing because 23 we don't know what type of transportation would be 24 appropriate. 25
So when people 97 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 discuss broadly the issue of free transportation for students, we're talking a $200 million figure, not a 2 to $3 million figure.
Okay. What would be the cost to the District of lowering the student cost to 50 cents per token?
The first answer -- and there need to be two parts to this answer. If we assume that the 18,400 students -- and that's not just public school students but non-public school students -- that currently receive subsidized tokens are the only recipients of that increased subsidy, the cost to us would be $2.7 million approximately before reimbursement; and assuming that reimbursement rates stay the same, the net cost would be just under $900,000. We need to preface this with a reference to the public school code, which gives the State an ability to review and to approve whatever reimbursement they're paying for, you know, for public transportation. And so if they opted not to approve the increase, we couldn't assume a 67 percent 98 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 reimbursement rate, and that would make a big difference.
I'm sorry. The $2.7 million figure covers public and non-public?
Yes. The other piece to this -- and, again, from an educational standpoint, this is plus, and from the financial standpoint, it has an impact -- is that if more students availed themselves of this subsidy because it became more affordable to them, for every 10 percent increase in subsidized ridership, there would be a net cost to the District of about $200,000; again, assuming that the reimbursement rates from the State stay about the same.
Okay. And so you assume this would increase student ridership?
And how would that further increase the cost? By how much do you 99 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 estimate?
For every 1,840 students 6 that decided to take advantage of the subsidy, it 7 would be a net cost of 200,000. If we were to 8 assume that -- and, again, not really knowing what 9 the response rate would be, if we were to assume 10 that the participation rate in the subsidized program were to double, just to double, that there would be 18,400 new children that would opt to take advantage of this, the cost to us before reimbursement would be an additional $8.7 million. The cost to us were we to receive the same level of reimbursement -- which, again, is a question -- is $2.9 million. If it were to triple, which may or may not be unrealistic, it depends on where all these students live and what their situations were, but if it were to triple so that were 55,000 students, about, that were to take advantage of the subsidized program, that would represent about 50 percent of the whole pool of secondary students, so it may not be unreasonable as a 100 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 high. And the cost to us in that scenario would be about $15 million in additional cost before reimbursement. And if we were to get the same level of reimbursement, it would be just under $5 million.
Okay. Under the current ridership, it would be 2.7 without reimbursement and 90,000 after reimbursement.
Let me just say, if I may, Chairman Goode, it's always difficult to determine the law of supply and demand; obviously, if you lower the price, normally the demand goes up. We did have a pilot project several years ago, I believe, at William Penn High School, where it was not an issue of cost, it was an issue of distribution, and took it out of the schools and used some distribution points of SEPTA and also some stores around the area, and I believe our costs tripled because the usage went up. And that had nothing to do with the price, as I understand; it was just a question of greater accessibility. And, again, you could argue 101 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 educationally that's sound, but from a financial point of view, there's no question that it has impact.
Can you tell me how many tokens purchased by the School District remain unsold or not distributed at the end of the school year?
The unsold amount last year -- I think the at the close of last year was $243,000. I'm not sure how many tokens if you divided $1.15 into that would --
That's for public school students. I think for parochial school, it was about $8300.
Okay, what about in terms of not distributed, in terms of free tokens?
Same number. 102 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142
Okay. How does the School District count for transfer uses by students, and what is the transfer price based upon?
John, do you want to answer that? (Witness comes forward.)
Good morning. I'm John Lombardi, Administrator of Transportation Services. Currently, the process that we're billed under, SEPTA informed us that whenever a student places a token in a fare box and asks for a transfer, the driver pushes a button and makes note of it, and that information is relayed back to the central office. And the estimate is that approximately 59 percent of the students who ride SEPTA and use student tokens ask for a transfer, and they charge us 40 cents per transfer.
Thank you. Last question for members of the committee, is the current student transportation cost policy adequately addressed to its extracurricular activities? I've heard many 103 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 complaints over several years, even dating back to when I was at school, that past a certain time, SEPTA does not accept school tokens.
I checked into that the other day with our athletic department and others. There was no indication that, in fact, was the indicate. That's not to say that from time to time it doesn't happen, but as far as I know, there's no systemic issue along those lines. Obviously, if there was, it would be something we'd be interested in addressing.
Sure. Thank you. You know, it really befuddles me in terms of how complicated it seems to us to provide a very basic service. I remember when I went to public school in the lower east side of New York. All I showed was my student government card to the subway attendant or the bus driver, and I would get in and get on the bus and be able to go to school. And it seems that we have gotten 104 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 wealthier as a nation, we have gotten richer as a nation, but in terms of the services that we use to provide students, especially students who live in urban areas such as Philadelphia, Detroit, we really have taken away rights and things that those students used to have. And I know that the school system cannot afford to keep on subsidizing, and obviously, Mr. Leary told us that they have gone as far as they can go by offering the school system the same discount that they offer everybody. They're not offering anything new, they're not offering anything special to the students. They are saying to the school system, You come in as the biggest institutional customer we have, probably providing a great percentage of the daily ridership that SEPTA enjoys, at the same level that every other individual comes in, and you get the same type of discount. It is not rocket science. We have kids who are not going to school. We have a gas rate hike that may put families really in dire economic straits. We have a water rate hike coming down the pike. We have a bus fare hike coming down, as 105 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 Mr. Leary stated. We need to be able -- and we keep talking about that in order to become a first-class city, we need a first-class system of education -- and, of course, two new stadiums. You know? But we get the money for the two new stadiums, but in order to become a first-class city, we cannot come up with $3 million to be able to reduce the amount that students pay for their tokens to 50 cents. But we're able to come up with a billion dollars and we issue bonds and we issue all sorts of things and we put our kids in debt into the next 50, 40 years. And isn't it a fact, Mr. Goldsmith, that today, there are kids that are not attending school because their family, their mother, their grandmother cannot afford a token? Is that a fact?
Well, I think that there are instances of that, yes, and we hear stories about that.
And even if it were one, you know, that would be criminal. And since SEPTA can't do anything about it, and I know that 106 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 we are trying to find money for the school system as it is in order to be able to keep on providing basic books and be able to give our kids an opportunity to have a music teacher every once in a while and not once every two weeks at least. It really falls to this Council to be able to find at least $3 million. We are not going to solve the problem, we understand that. But then it behooves us to begin because SEPTA's not going to do it. The suburban board that controls it will not allow it. Their kids go to public schools and their public schools are functioning very well. Their public schools in the suburbs don't suffer the deficit that we're suffering here. So it behooves us, then, to find the $3 million. It's whether we have the will to be able to, as a Council, as a city government, to be able to say, We are going to try to do something. And we've been talking about this now for ten years or more. So, it isn't -- it isn't the new board and the new chief executive. It's about time that we did something about it. It's about time we did something about 107 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 it. It's about time that we are able to say that all of those developers and all of those other individuals that keep on getting from us in one way or the other, we have to be able to get from them to give to the kids, or somehow or other, all of these economic stimulus that we have -- I think the biggest economic stimulus that we can have is graduating classes from Edison and Olney and Kensington and so on that are able to do and provide the people power to function and create an economy in this city. And we cannot keep on accepting the fact that kids are not attending school because they are poor. We cannot keep on accepting the situation that a mother or a grandmother has to make a decision about what to do every day and where to put her limited amount of money that they have. It falls on this Council, Mr. Chairman. It comes down to whether we want to do something at this point because, SEPTA, Harrisburg, Mr. Goldsmith keeps going to Harrisburg, asking them to be able give us money for schools and books and to bring us up to a level of per-student 108 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 spending that is not luxurious but even is just adequate, and we can't even get that. So it can't fall on the School District to keep on subsidizing. And if we have a surplus we have to be able to find $30 million in order to be able to at least begin the process. I think that's the least this Council and this government can do. Thank you, Mr. Chairman.
Thank you, Mr. Chairman. Is there any long-term plans? You might have spoke about this, but is there a long-term plan? Are we considering using like a five-year plan to eliminate the cost of transportation, allowing this reduction to take place, like, slowly?
I know our costs are up. But, you know, like Councilman Ortiz says, they've been talking for ten years. I mean, we'd be willing to wait a little if we see, again, the same thing I told Mr. Leary, the light at the 109 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 end of the tunnel. I mean, is this any plans on the School District's part to eliminate -- I mean, they say they're prohibited --
-- from offering something. You can do what you can do; you just have to pick up the cost basically.
Right. I think, as you know, we have come up with a three-year plan which we have distributed to Council, and Miss Chatzkel may talk about where we saw things going in transportation. I will say as we engage Harrisburg in conversations, as we have, one of the issues we do talk about is transportation. And, you know, there's some responsiveness to the needs that we have on this issue and we are in a different situation than a lot of other school districts in not being able to provide free transportation. I think that's been noted in Harrisburg. And hopefully, as we continue to work with Harrisburg and others, we will get some relief from that situation. 110 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 But it's nothing that I can write a check on right now as we go through that process, but it has been noted and it's been noted in interesting places.
And would that be like the District's several transportation costs? I mean, have you guys sat down -- just for instance, there might be different fuel to use.
I'm just trying these things out. There are things like --
We're continually looking at that, yes, and we have to continue to look at that.
All right, thank you very much. No further questions.
Could Mr. Leary come back to the witness table. (Mr. Leary and staff members return to witness table.)
I feel like we're going to have a ceremony of some sort. 111 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 (Laughter.)
I do have a follow-up question to Councilman Mariano's inquiries regarding SEPTA simply not being able to provide these kind of free tokens, and I want to make sure I heard you correctly before I proceed with follow-up questions. Did I hear you say by federal law or federal statute, you're not able to provide the discount or free or discount token to students?
Yes, that is correct. It's -- now, I'm not sure, let me ask for guidance from counsel. (Mr. Leary confers off record with colleagues.)
Not federal statute, but I believe it's a Constitutional issue regarding equal protection clauses that require -- in the Pennsylvania Constitution that prohibits us from disadvantaging any one group, or conversely, or advantaging [sic] one group.
Could you provide 112 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 that piece of the document that speaks to that specifically to the Chair. Who would that be administered by, the Federal Highway Transit Administration? And if not today --
Okay. So if you could provide that to the Chair, that would be helpful.
Who approves discount rates for senior citizens? Is that a Board policy or a State policy, and why is that not included under the same umbrella as has been --
There is a special program, and it's the lottery program, at the State level that provides the funds to support the -- and pay 113 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 for the extra subsidy for seniors to ride free essentially.
How old is that program? Might you recall when that was instituted?
One second, let me check with staff. (Mr. Leary confers off record with colleagues.)
Okay. Let me. . . okay, all right. So we'll just look forward to receiving the language that says specifically that students cannot be included as a constituency or the School District as an institution --
Are there any other questions from members of the committee?
SEPTA and the School District should stay around for a while. And could Yanoff and Mr. Braxton come to the table, please. (Witnesses come forward.)
You know, the 14th Amendment of the Federal Constitution, the equal protection clause, is the factor here that is the operating -- the operating -- the legal operative 115 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 clause that prevents SEPTA from doing anything along those lines.
Miss Yanoff, could you state your name for the record and proceed with your testimony.
Yeah. I'm Shelly Yanoff, and I'm the Director of Philadelphia Citizens for Children and Youth, the region's child advocacy organization outside of government. Thank you for holding the hearing and for the opportunity to testify. I want to say that this is about the third or fourth hearing, and kids are still waiting while adults are debating. The posters that are around are posters that are three years old; you've really saved my organization a lot of money by not moving on this issue 'cause I don't have to use any new paper or markers.
That's right, you haven't, and I'm very excited that we're going to change things. I think there is a lot of agreement in 116 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 the room, although not about the interpretation of the equal protection clause. We do agree that the students in the City schools are predominantly low-income. 80 a day to attend middle and high school in the City. We do agree that while it's difficult to ascertain with absolute certainty the number of students who miss school regularly because they can't afford the fare, the number's large. Knock on many high school teacher's, counselor's or principal's door, and they'll tell you. We recently were told that between 17 and 25 percent of the kids in the academies miss 18 schools several times a month because of the cost 19 of tokens. We've spoken with counselors and 20 teachers in vo-tech schools who tell us about kids who drop out because they can't afford to travel to the school that they want to go to. We all agree in this room that the high cost of school transportation in this city is yet another barrier for kids and their families to have to get over to 117 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 get a decent education. At the last hearing on the subject, you heard from students and parents, and you'll hear from more today, who expose their problem and ask for help. It isn't easy to stand up and say "I didn't go to school today because I couldn't afford it" or "I didn't send my child today because of that," but you heard from parents and teachers and from community organizations who were trying to help. That was more than two years ago, and the kids are still waiting. During this period, PCCY went back to check on what other city districts were doing. We found that in New York, Chicago, or Detroit, students ride free if they live further than one and a half miles from school, and that in Boston and Pittsburgh, they ride free if they live two miles from school. The Boston students who live closer but still want to ride to school pay a substantially discounted rate of $13 a month. And in Los Angeles, the regular students pay a discounted rate of $20 per month, while the special ed. students pay $12 a month. As you heard last time and the time before, San Francisco 118 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 students have a youth pass, they pay $8 a month, and there's a movement now to reduce that further. All of in us this room agree that our kids deserve as good a chance as the students in those cities, but somehow we don't get there. When we started discussing this issue five years ago, the District had not issued identification cards to its high school students. That has changed. It's time for this situation to change as well. The schools could issue kids a card which is similar to what Councilman Mariano was suggesting earlier that allowed them to ride at a discounted rate, and SEPTA would accede to that, as it does for other categories of riders using swipe cards. There are many ways to find a solution; we simply have to agree to want to. There currently is agreement, I believe, and understanding on the numbers and process. 15, then discounts the tickets by cents and sells them to 13,000 24 public school students for 90 cents each. The 25 District also purchases its transfers for close to 119 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 60 percent of the students at 40 cents per transfer, and doesn't charge the students for the transfers; thus for the majority of students who ride, the District puts in plus 40, or 65 cents 6 per ride. For these costs, the State reimburses 7 the costs at 67 percent for public school students 8 and close to 75 for non-public. Thus for every 9 dollar of money we put in locally, for public 10 school kids, we get two-thirds back, and that 11 money stays in Philadelphia. 12 I believe there's agreement in this 13 body to do something about the high cost of 14 tokens.
In the past, we've urged that SEPTA 15 simply stop charging the District for transfers, 16 and the District put the savings into a pool to 17 lower the cost for tokens. We believe that made 18 sense. SEPTA would still be receiving full cost 19 for the tokens and would be providing its largest 20 customers a discount, and the kids would get a 21 break. We believe that the District using this 22 model it would be able to reduce the cost to the 23 kids to about 55 cents. That's significant, it 24 sends a message. It's not as good as in most 25 cities, but it's really a big step. 120 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 We're not wed to any one strategy, however. We come today urging that the City participate in some way in lowering the cost of transportation for kid these. There's history and there's need. Twenty years ago, the City used to participate in subsidizing the cost of student transportation. In recognizing the need, the City has been working on many initiatives with the School District now in reducing truancy. Now is the time to do more. We urge you not to discourage more kids, not to send the message that while you'd like to, you can't help them get to school. You can and you can do it now. The City could and should lower the cost of traveling to school for thousands of children. 3 million, the kids would have their cost lowered to about 55 cents. The State would reimburse the District by two-thirds, resulting in a net cost of under a million dollars for the City. You would be sending a powerful message. We urge you to do it now. Thank you. 121 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142
The next person testifying, state your name and proceed with your testimony. MISS REDDENBERG: Good morning. My name is Crystal Reddenberg. I'm on staff at the Philadelphia Student Union as Building Representative of West Philadelphia High School. I'm here to testify why a reduction on the price of tokens is important. If tokens prices are reduced, it will be more accessible for students so attend school. Tokens cost $9 per pack; that's $36 per month per student. And Philadelphia has a large percentage of low-income families, and in a household where there are four or more students attending school, that's $144 per month per household, which seems to me to be a ridiculous price to pay for a free education. Students in New York, Pittsburgh, and Erie and many other cities attend school for free. In Boston and San Francisco, they go to school for a third to a fourth of what we pay to go to school 122 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 for a so-called free education. Based on our informal surveys in my school, about 60 percent of the students have missed school at one point or another due to the fact that token prices are so high that they have no way to get to school. I am very aware that when the City wants something done, it gets done. And helping students get an education should be your number-one priority. It seems to me that SEPTA somehow could accommodate Penn employees last year with free transportation, but it's crucial to accommodate students with free transportation. If you want to keep youth off the streets, you have to help us get to school. It is a reality that a lot of families can't afford to pay money for multiple children to get to school. Young people end up on the streets, not by choice, and as a result, they end up in truancy court, get a criminal record, and possibly have to pay a fine. We need help getting to school every day, and since we look up to you as our leaders and since it is your responsibility, we ask you to 123 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 be a part of the solution and not the problem. If you don't think this is a crucial issue that stops students from getting to school, you can talk to many high school principals that come out of their pocket to help students get to students. Students are begging to get to school, and I don't think that is fair that we have to beg to get to school. We want to go to school, we want to learn, but we need your help. My colleague, Susan Oh, will present our plan on how to do this.
Thank you, Crystal. Susan, will your state your name for the record and proceed with your testimony.
My name is Susan Oh. Good morning, Councilmen and women. I'm also a student staff member with the Philadelphia Student Union. I'm here on behalf of the 18,000 private, public, and parochial school students who take SEPTA to and from school every day. I'm here because, as Crystal HAS just said, there is a problem that plagues thousands of students. We have sat here many times before, but I'll repeat it again for emphasis. Although we 124 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 are supposedly receiving a free education, how free is this education if we are paying nearly $40 a month to even access it. Many Philadelphia students, particularly the public school students, live below the poverty line, and this $40 a month creates a major financial stress on every household. However, we have come up with a plan that would ease the financial burden of the excessive cost of transportation. The desired result of our plan is an overall reduction in cost from $9 per 10-pack of tokens to $5. We picked $5 because we believe that this would provide relief to many families without greatly increasing ridership and, thereby, ballooning the cost. Another measure that would help prevent an enormous unreasonable increase in ridership is to limit the reduced-price tokens to students who live at least one and a half miles from their respective schools. Presently, SEPTA is being paid full price for their tokens, which is $1.15 per token. The District pays cents per token as well as 25 the cost for transfers for about 60 percent of the 125 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 students. However, the overwhelming majority, 90 cents, is paid for by students. This adds up to $5.8 million every year. Bringing down the cost for students to $5 per pack creates a 40-cents difference that someone needs to pick up. The 40 cents per token is the difference necessary to drop the price, obviously, from $9 to $5. The total cost of doing this for the public and private school students before reimbursement from the State is $2.6 million. This is, simply put, 40 cents times 2 tokens per day times 180 school days times 18,000 students who buy tokens. The State currently reimburses the School District for public school students at a rate of about 67 percent, and for private school students at a rate of about 75. After reimbursement, the cost to the District only comes out to about $800,000. We strongly believe that there are people at the state legislator who can guarantee that the aid rations will remain at the same level. It is the least that they can do, and it does not even require new legislation. Even if there's an increase in 126 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 ridership -- let's say about percent due to the cheaper tokens -- the net cost would still only increase by about $40,000 to 840,000. In the long run, we want to figure out how to reduce the cost further, if not eliminate the cost for tokens. We also want to have swipe cards make system simpler. In the meantime, this is something that we can do right now that will greatly help many families in the City. There are many factors to take into consideration when looking into this issue. However, what it boils down to is whether or not the City will take responsibility for educating the millions of students in the area. If tens of millions of dollars can be found for metal detectors and hundreds of millions, if not billions, can be found for stadiums, it should be extremely easy to find the $800,000 that we are asking for to fund a cut in transportation costs. It is the least that we can do. It is a matter of prioritizing the needs of the City and taking the responsibility of educating all of the students, the future of this world. We always tell students how important 127 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 it is to get an education. Now it is time to put some action behind those words. (Applause.)
Thank you, Susan. Someone else to interfere testify please state in him for the record.
My name is Richard Weishaupt, and I'm an attorney with Community Legal Services, and I felt it incumbent upon somebody who has a law degree to put the lie to what Mr. Leary said. I have heard a number of things. And if SEPTA were sitting here and saying, Look, we can't afford, you know, we're a system that's strapped for cash and we just can't afford it, that would be an answer. It may not be an answer that everybody would accept, but it would be a legitimate answer. But to say that giving people rides violates equal protection -- I guess this is a different equal protection clause than the one that got Councilman Ortiz and me to school for free in New York City. The last time I looked, the United States Constitution applied to 128 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 everybody in every locale, and not just to school children in Philadelphia. To say that it would violate equal protection to give children free rides to school is about the biggest lie I have ever heard in these chambers. And I just think that for someone to say that, quite frankly, just means we don't care about children and we don't care if they go to school. And is Mr. Leary still here? You're free to come up and rebut me, but I have heard many ridiculous things, but this one takes the cake. I mean, is it a violation of equal protection to give senior citizens free rides? Is it a violation of equal protection to give the disabled free rides? Is it a violation of equal protection to give children 42 inches tall or less free rides? No, of course it isn't. And it is not a violation of equal protection to give children a free ride so they can go to school so they can get an education. Thank you.
You're welcome. 129 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 (Applause.)
Councilman Ortiz, do you have any questions for the panel?
Okay, thank you very much. Is there anyone else to testify?
I just want to just add that it is true that there has been interest on this Council's part for a long time, and it is true that, Mr. Chairman, you were not here for some of that time but --
And we would hope that within a very, very, very short period, we stop acknowledging the problem and really start being serious about a solution. It is -- there are kids who have aged 130 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 out, who have dropped out, who have aged out, and they've missed a chance because their family was embarrassed to beg all the time and because they didn't -- they couldn't make it and pay their energy bill and pay their rent and pay their food. It doesn't make sense as a society to do it. We do love our children as much as the kids are loved in Boston and New York; let's show it. (Applause.)
You know, it's just incredible and, like I said, mind-boggling that we keep talking about the children. And it's good rhetoric, it sounds good. But then when it comes time to really do something about it -- we have not had a meeting about children in this Council that lasted until midnight, o'clock in the morning, but we had a meeting in this Council about stadiums that went on till o'clock in the morning a few months back. But about children, we don't have that type of debate. And, you know, we got to be able to do something about that. And Richard is correct. And, Shelly, 131 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 you've been through this and I've been through this, and we've talked this issue to death. I mean, we have. And if Wilson goes back to the transportation hearings we had in prior years, he will see that everything that has been said today, what Mr. Leary has said today was said by Mr. Gambiccini (ph.). What you said today was said by you. What the students was said by other students prior to this.
And that is the difference between this hearing and the others.
Well, the thing is 132 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 that --
And that, in the end, is where the resolution is going to lie.
The difference between this hearing and any other is when we come up with some money.
And if it doesn't come from this hearing, then this hearing is the same as other hearings because all we have done is produced paper and information. And if we cannot --
Councilman, are you directing a question toward the witness table?
No, I'm making a statement to the witness because what she said is very true, and if we cannot, if we cannot, out of a $2.6 billion budget -- let's say SEPTA maintains they cannot do anything. Mr. Leary said they 133 4/2/01 PUBLIC TRANSPORTATION, UTILITIES - RES. 142 can't do nothing. The equal protection clause protects them and prevents them. The School District has a deficit, they can't do anything. Well then, if we do something, it has to come -- the first step has to be taken by the City Council. And 2.7 -- 2.7 million or $3 million out of a $2.6 billion budget should not be difficult to find if we find all of the other subsidies for the developers and so on. And that's all I'm saying, and that's what should come out of this hearing, at least the will to do it.
This hearing is recessed till the call of the Chair. Thank you all for coming. (Adjourned 12:30 p.m.) 134 C E R T I F I C A T E I HEREBY CERTIFY that the foregoing proceedings of the Council of the City of Philadelphia of Tuesday, April 3, 2001, were reported fully and accurately by me, and that this is a correct transcript of same. RE: COUNCIL COMMITTEE ON TRANSPORTATION AND PUBLIC UTILITIES RES. NO. 000142, 000597 __________________________________, JOSEPHINE CARDILLO, Registered Professional Reporter