Shuttle subsidy under scrutiny
Ut pays capital metro about half of the cost of running the system
Capital Metro spent $108.1 million during the past decade running its shuttle bus system for University of Texas students, staffers and faculty members. During that span, the university paid the transit agency $52.8 million for the service, or about 49 percent of the cost.
And that doesn’t take into account the initial cost to Capital Metro of buying the shuttle service’s 87 buses — up to $400,000 each, although federal grants often pay 80 percent — that carry those students and workers around.
As the transit agency’s board this month considers renewing that contract, board member Norm Chafetz says that after 21 years of subsidizing UT buses, it might be time to consider putting more of the financial onus on the university. For now, Chafetz has managed to persuade Capital Metro and UT officials to shorten the proposed contract to two
‘I’m not convinced we can’t do better. There’s no reason you have to subsidize all your services. If we can get full cost recovery, then we should.’
norm chafetz, member of Capital Metro’s board, which is considering renewing its contract with UT
years from three years so that new agency chief Linda Watson can revisit the issue sooner. The board probably will approve the shorter version July 26.
“I’m not convinced we can’t do better,” Chafetz said. “There’s no reason you have to subsidize all your services. If we can get full cost recovery, then we should.”
But UT officials say the math is not that simple. They point out that UT students and staffers pay Capital Metro’s 1 percent sales tax when they make purchases, just like everyone else in Austin. And they note that by paying approximately half of what it costs Capital Metro to provide buses, drivers and mechanics for the 14
Continued from A shuttle routes to student housing hot spots around town, the university is carrying about five times the fiscal freight of those who ride regular Capital Metro buses and trains.
Passengers cover about 10 percent of the cost of regular bus services — even less for MetroRail — with taxpayers covering the rest.
“UT students are subsidized much less than Austin residents,” said Pat Clubb, UT’s vice president for university operations. “The students are taxpayers too; they pay sales tax on everything they buy. … Why shouldn’t they be subsidized if every other citizen is subsidized?”
Capital Metro planners, after a route-byroute analysis of the shuttle system and regular bus runs across the city, say that if the shuttle contract with UT were to disappear tomorrow, the agency would need to offer about 80 percent of the bus service now covered under the UT contract to satisfy student demand for transit. And perhaps take in less money than it gets now from UT.
“In a nutshell, that’s why we think the partnership with UT is a win-win,” said Todd Hemingson, Capital Metro’s vice president for strategic planning and development.
The relationship between the university and Capital Metro dates to 1989, when the agency took over service that private bus companies had provided for 20 years. Capital Metro offered snazzier buses with air conditioning, but it immediately lengthened the time between some bus runs.
These days, Hemingson said, the shuttle runs during the school week are five to 15 minutes apart. Aside from routes in and around the campus, the system includes runs to East Riverside Drive, Lake Austin Boulevard and Far West Boulevard in Northwest Hills, among others.
This is no doubt an improvement over the first dozen years of shuttle services. Bobby Stone, UT’s director of parking and transportation services, says that the shuttles were launched in 1957 by the Phi Kappa Psi fraternity, which offered a few buses and charged students $6 a month to haul them to campus. The private bus companies took over in 1969.
For much of Capital Metro’s shuttle tenure, heavily subsidizing the UT service was no problem for the agency because it was taking in far more tax money than it took to run the agency. The UT service, in fact, helped Capital Metro by increasing its overall ridership numbers and qualifying it for more federal transit funding.
But Capital Metro’s finances have changed for the worse in the past three years, with inadequate reserves and lagging tax revenue that have forced the agency to trim services and cut staff through attrition. That includes the UT shuttle service.
During the five fiscal years that ended last September, hours of shuttle service declined by 16.3 percent and passengers declined by 28 percent. Capital Metro attributes some of that ridership loss to UT students and staffers moving in greater numbers to regular Capital Metro bus routes, where they ride for free. During the same period, nonshuttle ridership by UT students and staffers increased to 2.3 million from 1.6 million. Still, combined shuttle and nonshuttle UT ridership has declined.
The university’s annual payment to Capital Metro would remain about $6 million in the first year of the new contract, Hemingson said. The payment comes from part of university tuition; in the past it came from a transportation fee that students paid in addition to tuition.
UT in the first year would pay Capital Metro 40 cents for each student who rides a nonshuttle bus, then 50 percent of the agency’s base fare after that (the base bus fare is $1 currently). UT’s 16,500 faculty and staff members, covered under a separate contract that has not expired and pays Capital Metro just $100,000 this year, will continue to ride for free on all Capital Metro buses and MetroRail.
In addition, the new contract stipulates that the shuttle buses, rather than being painted orange and white, would be regular Capital Metro buses with minimal signage identifying them as UT shuttles. That would give Capital Metro more flexibility in moving buses around to different uses.
After 21 years of subsidizing the University of Texas shuttle bus system, Capital Metro is considering putting more of the financial responsibility on the university. A new contract is expected to be approved July 26.
UT officials point out that students and staffers pay Capital Metro’s 1 percent sales tax when they make purchases in Austin. ‘Why shouldn’t they be subsidized if every other citizen is subsidized?’ one official asked.