Metro’s board batted around ideas in recent days to solve a nearly $700 million puzzle. While several of its pieces are missing amid sunken ridership levels, the dwindling of Metro’s largest pre-pandemic customer base is perhaps the biggest obstacle to a financial rebound.
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About 40 percent of Metro commuters on rail and buses were federal workers before the pandemic upended workplaces and transit agency budgets. A recent customer survey of current Metrorail commuters showed only 14 percent were federal workers as ridership hovers at one-third of its earlier levels.
Washington’s rail system was built to serve downtown office buildings teeming with federal workers who enter the city’s core in the mornings and leave in the evenings. As ridership hovers near historic lows, Metro’s leaders are hopeful federal workers soon will return en masse, but they acknowledge they need other options if that group stays away.
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Records from Metro and federal agencies lay bare how crucial federal commuting dollars are to the transit agency. They also form a bleak benchmark for how many new riders Metro’s leadership may have to recruit in about two years. At that time, the federal coronavirus aid on which the transit agency is subsisting will run out.
“You’re all aware of the fact that we do have a limitation on our federal funding that will hit in a few years,” Metro board Finance Committee Chairman Matt Letourneau told board members Thursday. “We have to have that context as we look at some of these options.”
Metro considers another round of lower fares to lure riders back
In fiscal 2019, fares, parking fees and other revenue made up 42 percent of Metro’s operating budget. This fiscal year, those sources are projected to account for 11 percent, Metro spokesman Ian Jannetta said.
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That missing revenue was replaced by money from three coronavirus aid packages that Congress passed last year, providing about $763 million of Metro’s $2.1 billion operating budget. This fiscal year, Metro expects to take in nearly $160 million from passenger fares — less than one-quarter of pre-pandemic estimates — and $68 million in parking fees and other payments, according to transit agency records.
The amount of money Metro collected from the federal government — which provides generous monthly transit benefits to federal workers — had been rising before the pandemic. The transit agency received $80 million of federal commuter funding in fiscal 2018, a period that included a 35-day government shutdown. In fiscal 2019, federal contributions hit $108 million, Metro said.
Metro board approves fare reductions, service increases in bid to lure back riders
In fiscal 2020, which included the pandemic-hit months of March through July, the federal contribution dropped to $70 million. In the most recent data available, Metro brought in $11 million from federal workers in July and August 2020.
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Federal records show that commuting dollars paid in by workers who use TRANServe — a commuting benefit program used by most government agencies — fell from about $40 million in fiscal 2018 and 2019 to $15.7 million in fiscal 2020 and, through July of this fiscal year, to $1.5 million, according to the Transportation Department. (The federal government’s fiscal year runs from Oct. 1 through Sept. 30; Metro’s runs from July 1 to June 30.)
Workers didn’t stop participating in the commuter benefit program as much as they stopped riding Metro, according to Transportation Department figures. In fiscal 2020 — six months of which were affected by the pandemic — enrollment fell 1 percent compared with two years earlier, but the amount of money TRANServe paid Metro for rides plunged by 61 percent, federal records show.
In fiscal 2021, enrollment has fallen 20 percent, and money the program paid Metro tumbled by 96 percent as federal workers have abandoned transit.
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TRANServe allows employees to use the subsidy only when commuting between home and work. Federal officials attributed the drop in employee participation in the commuter benefit programs to an increase in teleworking.
The drop in commuter contributions from the Defense Department — which is not part of the TRANServe program — was cut in half, but not nearly as much as was seen in other parts of the federal government, signaling that those workers were more likely to be in their offices than were other agencies’ workers. In 2018 and 2019, nearly 24,000 workers who were enrolled in the Defense Department’s transit benefit program provided Metro with more than $32 million each year. In 2020, Defense Department contributions to Metro dropped to $16.6 million.
Metro board members open to fare reduction, service changes to lure back riders
The number of Defense Department employees enrolled in transit benefits for the first six months of this year has fallen to 18,051, with Metro receiving $6.9 million, according to Pentagon records.
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The Department of Health and Human Services, which uses a separate commuter benefits program, did not provide usage records.
Metro invoices federal agencies according to their employees’ use of SmarTrip credits, according to the Department of Transportation. Participants in the commuting programs receive up to $270 a month in transit benefits. Unused credits cannot accumulate beyond employees’ monthly commuting costs, federal officials said.
Metro board considers lowering fares to lure riders when workers return to offices
As it is with other commuters, officials say it is unclear whether the federal workforce will return to trains and buses when all federal offices reopen. Like private companies, federal agencies continue to monitor coronavirus infection rates and other health information.
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“DoD has authorized the use of maximum telework opportunities since early in the pandemic,” said Sue Gough, a Defense Department spokeswoman.
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The White House Office of Management and Budget, which administers policies across executive branch agencies, said in a statement that the federal government will evaluate longer-term telework policies.
Metro board members, while expecting that increased telework levels will remain in the private and public sectors, are looking for shifts to indicate a sustained rise in in-person work. Board members have made changes to fares and service levels that cater more to retail and service-industry workers while de-emphasizing the typical weekday office schedule.
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The changes also are aimed at attracting teleworkers traveling for errands and leisure, as well as workers splitting their workweek between the office and home. Other transit agencies also are using the strategy.
This month, the Metropolitan Transportation Authority in New York launched the “Welcome Back New York” campaign, extending off-peak fare discounts on the Long Island and Metro-North railroads. The MTA is offering businesses MetroCards in bulk “to help the city’s efforts at encouraging customers to return to the system,” according to an agency statement.
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“These incentives are specifically targeted at attracting customers with new telework schedules,” the MTA said.
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In late May, the Chicago Transit Authority lowered fares on three unlimited-ride passes as part of its “When You’re Ready, We’re Ready” campaign.
Across the nation, transit officials had hoped Labor Day would mark the date when many downtown and federal offices would start reopening, sending a surge of commuters back to trains and buses. The prevalence of the coronavirus’s delta variant this summer frustrated those hopes, leaving transit officials with little data to predict federal commuting contributions.
After showing its worth during pandemic, momentum builds for free or reduced-fare transit
“Unfortunately, the disruption that the pandemic has caused has broken every forecasting tool and model that we’ve used or that the industry has used,” Metro’s vice president for strategy, planning and program management told Metro board members on Thursday.
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“To the extent that things become a little bit more predictable, that would be great,” Tom Webster told the board. “I’m not anticipating that in the near term, just because of how disruptive the last 18 months have been.”
Regardless of where future fares come from, whether it’s federal workers returning to the system or new customers traveling Metro for leisure, transit leaders say they have to find riders before aid money runs out.
“One concept that probably won’t change is the fact that rail pays the bills,” Metro board Chairman Paul C. Smedberg said. “So we’ve got to do everything we can to encourage that ridership.”