GLTC mulls revising billing for LU

The Greater Lynchburg Transit Company’s board agreed to consider revising its billing formula for Liberty University following complaints from the school.

LU, which hires GLTC to provide on-campus bus service, recently raised concerns it was getting shortchanged on its share of federal and state subsidies provided to GLTC. The school also said GLTC’s overall charges were rising too rapidly and would need to be curbed if the partnership was going to continue.

During a three-hour work session Friday, GLTC board members and LU officials debated at length what the fairest distribution of federal and state support would be. The aid can vary wildly from year-to-year and the formulas can be nebulous, making it difficult to determine what, if any, dollars are directly attributable to LU service.

Further complicating matters is the fact that aid levels are typically based on two-year-old budget figures. Earlier this fiscal year, GLTC used data from the wrong year to calculate LU’s bill, resulting in a $120,400 overcharge, which was later corrected after LU questioned it.

Friday, both sides ultimately agreed they would prefer a simpler approach that was easier to understand and justify. They asked staff to work up projections focused solely on how much local funding is needed after fare revenues, federal aid and state aid are applied.

The remaining sum would be divided up among LU, the city and other funding partners based on the amount of GLTC service hours for which they are responsible.

This is similar to the way the system originally was envisioned when the partnership with LU started in 2007. But in 2009, a more complex allocation formula was adopted to avoid siphoning federal/state dollars away from the city-subsidized routes to LU.

In a report submitted for Friday’s meeting, GLTC staff noted they were under “tremendous pressure” to control the city’s costs.

The revised formula is more difficult to understand and GLTC staff has not always applied it consistently, contributing to some of LU’s recent confusion.

During Friday’s meeting, City Manager Kimball Payne, who is on GLTC’s board, said the concern should not be about one side winning or losing funding, but rather on ensuring all parties were paying their fair share.

Payne stopped short of endorsing the simpler formula proposed, though, saying he needs to see the report on how it would change everyone’s costs.

“If the numbers come back and it’s going to cost the city $1 million more, I’m going to have to rethink it,” he said.

The board asked GLTC staff to submit a report on how a revised formula would affect costs for its February meeting. LU officials said they’d like to have some resolution by the end of February to begin making plans for next year.

The bus service is becoming increasingly critical to the school as it works to create a more pedestrian-friendly campus and discourage car traffic, they said.

“We would have to revisit how we are growing the campus” if a GLTC partnership is no longer viable, said Richard Martin, LU’s vice president of financial research. “That’s how big of a change it would be.”

Martin said LU has considered switching to a private vendor and GLTC has been the more cost effective option, but it will not remain so if costs continue to rise at the same rate they have since 2007. The university would like to have a better understanding of what GLTC’s cost drivers are, he said.

During the first five months of this fiscal year, between July and November, LU’s campus service accounted for 65 percent of GLTC’s ridership, according to recent operating reports. It’s expected to account for 30 percent of the system’s total annual service hours.

Under a revised budget adopted by GLTC’s board last Wednesday, LU is project to spend $1.09 million on its service this fiscal year. The city gives GLTC $1.14 million.