SAGINAW, MI -- Saginaw's independent public transit authority is, for the first time in its 21-year history, considering a long-term consolidation of its 11 local bus routes.
Saginaw Transit Authority Regional Services General Manager Sylvester Payne presented a 2015-16 fiscal year budget proposal to the STARS Board of Directors on Tuesday, Sept. 8.
Related: $1.4 million deficit could mean 21 layoffs for Saginaw's bus system
Payne's budget has a $457,753 shortfall, despite $1.2 million in cuts that would result in the elimination of 16 positions and a consolidation plan that will reduce STARS from 11 to seven main bus routes.
Cleveland Coleman, a Saginaw resident who uses one of the routes daily among those that would be consolidated, spoke during Tuesday's meeting.
"STARS may well be at a historic crossroads," Coleman said. "In the future, people may either refer to this period as the golden age of public transportation in Saginaw or, conversely, it may be remembered as the death knell."
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Above all, the regular bus rider said he hopes STARS is transparent in the process, regardless of its decision.
Payne agreed with Coleman's assessment of the situation.
A 'crossroads'
"We are at a crossroads," Payne said. "But I believe it is something we will be able to conquer."
Controller Jan Histed explained to board members that the authority is facing a budget shortfall of $457,743, even after trimming nearly $1.2 million from the expense side of the service's $7.5 million budget.
Histed explained that the majority of that $1.2 million reduction will be achieved by eliminating 16 positions -- 15 full-time employees and one part-time employee. The cuts also take into account the proposal to scale back and consolidate bus routes.
The proposal, Histed said, is designed to move STARS toward a balanced budget while still "getting the best bang for our buck" and "keeping the most buses on the road."
Read: The information presented to the STARS board
The positions cut in the proposed budget include three administrative positions, 11 bus drivers, one mechanic and one part-time janitor.
With the exception of the three administrative positions, which are currently vacant, Histed said the reductions would mean layoffs for several current STARS employees.
Several board members expressed discomfort with the idea of layoffs, but also said they understood the need to make major and immediate reductions in spending.
"I just think it's sad any time you have to cut service or cut staff," Board Member Nita Williams said. "But we've got to do what we've got to do."
Board Chairman Daniel LaPan expressed a similar sentiment.
"It's hard when you start affecting people's lives," LaPan said.
The biggest change most STARS riders will notice if the proposed budget is adopted will be the consolidation of bus routes.
From 11 routes to seven
Three routes -- Routes 1, 5 and the Delta Express (Route 75) -- will not be consolidated, though some reductions to service are planned. The only major change to those routes will be the number stops the Route 1 bus makes at the Walmart located at 5825 Brockway each day.
The remaining eight routes will be consolidated into four new routes, resulting in reduction from 11 to seven main bus routes.
The eight routes that would be consolidated, will be combined in the following pairs:
- Route 2 + Route 4 = Route 24 (
- Route 3 + Route 11 = Route 311 (
- Route 6 + Route 9 = Route 69 (
- Route 7 + Route 8 = Route 78 (
Sherina Turner, STARS' manager of transportation, explained the consolidation to board members using digital maps of each. Essentially, Turner said, half of the route will be eliminated for each of the eight routes being consolidated.
For example, she said the combination of Routes 2 and 4 mean that the bus will no longer make the normal Route 2 return trip. Instead, a bus will follow Route 2's outbound course and return using the second half of Route 4's normal loop.
"We're going to go out on 2 and come back in on 4," Turner said.
For some riders, it will mean the bus will pass their usual bus stop less frequently.
Board member Karen Courneya explained that the same neighborhoods would be serviced, though it would add the inconvenience of having to walk a block or two farther to get to a bus stop.
"They still have the ability to get to the transportation," Courneya said.
Payne admitted the changes will impact riders, though he said the proposal is designed to have the smallest impact possible.
"Is there going to be some inconvenience to some of our passengers?" he said. "Yes there is, and I can apologize for that happening."
The general manager explained that population shifts in Saginaw have left some areas relatively empty of homes and businesses, though they still receive bus service every 40 minutes.
The end result of the consolidation plan, Payne said, will be a "smaller, more efficient system."
New route maps
Route 24 - Combination of former Routes 2 and 4
Route 311 - Combination of former Routes 3 and 11
Route 69 - Combination of former Routes 6 and 9 (Runs only four times each day and goes to Target, Walmart and Saginaw Valley State University)
Route 69-2 - The more frequent version of the combination of Routes 6 and 9 (Runs 16 times each day)
Route 78 - A combination of Routes 7 and 8
Final run eliminated
The plan also calls for bus service to be shut down an hour earlier than it is under the current schedule, meaning bus service will end in Saginaw at 7:15 p.m. instead of 8 p.m.
Payne explained that STARS ridership statistics show that the final loops buses make each evening see relatively small numbers of riders.
"What I'm trying to do in doing all of this is to make sure the public doesn't feel that much of the pain, if we can help it," he said.
Payne said changes are also being proposed on the on-demand LIFT service offered by STARS, with a reduction in the service area and a reduction in the fee from $3 to $2.50 for senior citizens and disabled city residents. Those changes are also based on recommendations from the recent federal review, he said.
Payne said the route changes and layoffs, if approved by the Board of Directors, would not take effect until Nov. 1.
The general manager laid out the following timetable between now and the proposed implementation date:
Sept. 28: Public hearing on the proposed budget, up for final approval at the noon Board of Directors meeting
Oct. 26: Public hearing on route changes during the 11:30 a.m. Finance Committee meeting
Oct. 26: Route changes are up for final approval at the noon Board of Directors meeting
Nov. 1: Staff layoffs and route consolidations go into effect
The proposal to cut back STARS services comes on the heels of an overwhelming show of support for the system's 3-mill property tax levy, estimated to raise nearly $1.5 million next year.
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The money brought in by the levy covers about 21 percent of the $6.4 million budgeted for the upcoming fiscal year. State funding covers another 27 percent, federal funds cover about 30 percent and operating revenue from fares and other sources another 13 percent.
That leaves about 7 percent of the budgeted expenses unfunded.
A legacy of operating losses
The authority has been bleeding money for the last few years, operating more than $1 million in the red for each of the last three budget years. An operating loss of about $1.45 million is budgeted in the current fiscal year.
Financial documents provided by STARS show the authority only holds about $1 million in net unrestricted assets, compared to the more than $2 million in cash reserves it held two years ago.
Histed said the money STARS does have in the bank cannot be drawn down much further, because it's needed to cover expenses until reimbursements are received from the federal government.
"It isn't going to hold us very long," she said.
The authority has largely decreased its expenses over the years, from the nearly $10 million it spent on operations and capital improvements in 2003 to about $6.5 million in 2008, though total expenses did increase to $7.4 million in 2013. The proposed budget brings that total back down to about $6.4 million.
But over the same period, the revenue sources that fund STARS have not kept up.
While the costs associated with employees, fuel, maintenance and other items increased, Histed said, the federal funding level remained flat.
"The revenue is sort of fixed here," she said.
In fact, Histed said, state funding has decreased, as has the money collected through a 3-mill property tax levied on city property owners since 1995. She explained that Saginaw's declining population and property values meant less money in the STARS budget.
"At the same time, they didn't reduce any of their spending while the costs kept getting higher and higher," Histed said.
State funding for STARS operations has fallen from $3.5 million in 2003 to less than $2 million in the upcoming fiscal year. The total the authority receives from the 3-mill property tax has also decreased, from about $2 million in 2008 to less than $1.5 million anticipated in the upcoming fiscal year.
Fare revenues have largely stayed flat, oscillating between $650,000 and $800,000, as have federal funding, which has remained near $2 million each year.
With its back to the wall financially, Histed said STARS is now forced to consider difficult decisions that would result in layoffs and route reductions. Had spending been reined in earlier, she said, the cuts likely could have been made incrementally.
"They really should have started reducing routes earlier on," Histed said. "Rather than let things get this bad and do it now."
Nearly half-million-dollar gap remains
Histed said STARS administrators plan to continue to work throughout the upcoming fiscal year to find various ways to close the remaining budget gap of $457,743.
Depending on what happens, she said that could mean the elimination of up to 13 more employees and further cuts to bus routes and services.
The authority's unrestricted net assets currently total about $1 million.
Saginaw Transit Authority Regional Services buses pull away from the Rosa Parks Transfer Plaza on Johnson in downtown Saginaw.
One thing STARS will not do, Payne said, is increase its bus fares at this time. Given the economic condition of the community and the relatively small portion of the budget funded through the fares, he said raising the $1.25 rate would not make any sense.
"I don't think there is any need to penalize those who are already struggling to get from point A to point B," Payne said.
An earlier draft of the budget had proposed deeper cuts in administrative staff at STARS. Those positions were reinstated in the current version of the budget, Payne said, after a review by the federal government expressed concerns that the cuts could mean the authority would no longer be able to operate properly.
The general manager said he agreed with the review's findings, that STARS would "cut off its nose to spite its face" if any more administrative positions were cut.
One of the biggest problems in the current fiscal year, Payne said, was that spending was closely monitored and opportunities to correct the authority's financial inequities were missed.
"We probably could have caught some of these things quicker than we did," he said. "We are now at the point that we have to make some extreme cuts in order to get back on track."
In explaining that failure, he pointed to the departure of the former controller and his own absences for medical reasons in recent years. Payne praised the work done by Histed, who took over as controller late last year.
"She came here in December and she's been putting out fires ever since she's been here," he said.
First permanent route reductions in 21 years
Payne said the proposed reductions to STARS routes are the first major, permanent reductions to bus service in the authority's 21-year history.
Payne has served as the director of Saginaw's transit system for about 26 of the last 29 years, leaving the job in 2000 to pursue a career in the private sector and returning in 2004 to replace then-suspended general manager Wilfred L. Beal.
Saginaw's city government ran the transit system until 1994, when leaders decided to form a nonprofit authority, which began levying a 3-mill tax on city properties in 1995 to supplement state and federal funding.
Payne served as the city's transit administrator from 1986-94 and, after the creation of the authority, took over as its director.
It is certainly not the first time in the history of STARS limited funding and rising costs have prompted STARS to increase user fees or cut back bus service.
The number of routes and frequency of bus service was temporarily cut back in the spring of 2004 after city voters, for the first time in the authority's history, denied a millage request. Service was later restored after voters, by an 81-vote margin, restored the tax in February 2005.
In 2008, the Board of Directors voted to increase its single-ride fees from $1 to $1.25.
In 2012, Saturday bus service was eliminated entirely.
In the campaign leading up to the August 2015 renewal of the system's local millage, Payne said he hoped route consolidation efforts would eventually lead to the reinstatement of Saturday service.
There was no talk of bringing back Saturday routes during Tuesday's meeting.
But Payne did say he is hopeful that, once the authority is financially stable, it can provide quality transportation services to the community for many years to come.
Coleman said he hopes, whatever decisions are made, that those making in them take into account the input their receive from drivers and passengers, and that information about the changes is clearly and transparently disseminated.
"I sincerely hope the STARS organization does not become afflicted with what I like to call 'ivory tower syndrome,' in which the upper-echelon figures insulate themselves from the tangible realities of operating a public transportation system and make decisions without considering the needs and requirements of the drivers and passengers," he said.
Mark Tower covers local government for MLive/The Saginaw News. Contact him at 989-284-4807, by email at mtower@mlive.com or follow him on Twitter, Facebook or Google+.