Getting to UJuly 10, 2010 by: Alex Bell
The transit map for Madison, Wisconsin shows a thick gray band running along University Avenue south of the University of Wisconsin, Madison (UW). Far from a blank on the map, it actually represents a space so dense with bus routes – 13 weekday routes – that any attempt to represent each of them would have rendered an illegible, varicolored spaghetti. Metro, the City of Madison’s transit arm, provides a lot of service, and the citizenry use it – compared to 15 other metropolitan statistical areas of nearly the same size (see Table 1) Madison’s passenger trips-per-capita (20) is more than twice that of the next highest, Des Moines, Iowa (9). This impressive statistic can be explained in part by extensive service to the UW campus. With the 13 routes that skirt its southern edge and two additional campus-only routes funded by UW, the school’s 42,000 students accounted for roughly 8% of the MSA population and 10% of the city’s ridership in 2007.
The University of Wisconsin Madison, like many state universities, is similar to a central business district in that it has relatively tall structures built at high densities. The campus is near the heart of downtown Madison, a geographic anomaly where the state capitol and associated buildings rest on the Madison Isthmus, a sliver of earth between Lakes Mendota and Monona. The urban fabric extends west from downtown to wrap the university from the south. On the northern edge of the campus the 126 billion gallons of water that comprise Lake Mendota complete the encirclement of UW. In this dense urban setting, parking spaces are few and housing student vehicles is a low priority: surface lots are mere placeholders for new classroom and research facilities. Sharon Persich, Metro’s planning and scheduling manager, notes that students tend to find themselves “at the bottom of the totem pole” when additional campus parking is created. Incoming students are advised not to bring their cars, and parking permits are only issued to approved candidates, usually students who live outside of Metro’s service area or have a demonstrable need to drive to campus either for employment or because of “unusual or special needs.”
As an industry, transit faces the daunting challenges of retaining and growing ridership in an increasingly decentralized society built by and for the private automobile (although there is evidence that this may be changing). Funding is often scarce, and the twin specters of politics and “cost-effectiveness” can foil the best-laid plans. All transit properties have an interest in demonstrating the utility of the service they provide, especially those who lack a dedicated funding source, as they compete for public monies, often with the road builders in Public Works. Generally speaking, the most effective means of doing so is to point to the hard numbers – ridership and revenue. For properties serving institutions of higher learning, students are often seen as a critical market to bolster these performance measures. Unlimited Ride Pass (URP) programs negotiated between transit properties and a variety of institutions are an established and popular way to enhance revenues and attract new patrons. When implemented in a university setting, the term “U-pass” is commonly applied to such programs.
While not the first agency to offer students a U-pass, Metro offers an example of the great potential they possess and also provides helpful insights into managing the challenges that accompany a successful U-pass program. Metro has URP contracts with numerous institutions, including several hospitals, the city government, and other colleges and universities; but their partnership with UWM and its student government, Associated Students of Madison (ASM), is easily the largest and most challenging.
Ms Persich has managed the ASM U-pass program since its inception in 1996. She says that Metro was already carrying a high volume of student riders at that time, about 1 million trips per year, but traffic congestion around UW and downtown Madison coupled with the aforementioned parking difficulties facing students limited the campus’s accessibility. Both Metro and ASM wanted to find a reasonable solution.
With little hope of augmenting the on-campus parking supply, ASM decided to team with Metro to increase student’s commuting options. The result was the ASM U-pass, which allows UW students to ride all of Metro’s routes effectively free of charge (all students pay a non-refundable transportation fee to the university as part of their tuition). Persich likens the program to insurance – not everyone uses it, but the monies collected from everyone subsidize the costs incurred by Metro for those who do use it.
Students pick up a U-pass card on campus. A valid UW ID card is required, and new passes are printed every semester to ensure that only currently registered students can take advantage of the program. This system is preferred over flashing the student ID when boarding because it eliminates the problem of former students using outdated ID’s and taking free trips for which ASM must pay the tab. (ASM and Metro are working on a cost-effective way of coding the student ID cards so they can be read and validated when boarding the buses.) The pass is intended to help students access the campus from anywhere in Madison and has the added benefit of increasing their options when choosing a place of residence.
Since the introduction of the U-pass, Metro’s student ridership has grown substantially, accounting for about 2.4 million trips annually, an increase of 140% over ten years. The success of the program, however, yields complications.
Unlimited Ride Pass contracts in Madison take one of two different forms: fixed price and variable price. Fixed price contracts involve projecting ridership for the prospective URP program based on previous years and multiplying this figure by a negotiated average fare. The resulting price is fixed for the contract period. If actual ridership exceeds the projected number, the average fare is eroded, potentially resulting in a revenue loss for Metro. Conversely, if ridership falls short of the projected figure, the sponsoring institution would pay for more service than its members actually use. The problem here is that Metro has an incentive to keep ridership relatively low, a strange and seemingly counterproductive position for a transit agency.
While variable price contracts are also tied to an average fare, they incorporate minimums and/or maximums to ensure that both parties are protected from variances in projected and observed ridership. Under this scheme, ASM would pay the negotiated average fare up to a minimum number of observed U-pass riders. If ridership exceeds the minimum, a higher average fare would be applied. However, a maximum would be established to protect ASM from incurring exorbitant costs if ridership far surpassed expectations, as could happen when gas prices soar. In short, ASM would pay by the trip, but the price per trip could change depending on the number of U-pass trips recorded.
The agreement between Metro and ASM was a fixed price contract during the U-pass program’s early years but has more recently shifted to a variable price structure because of the protections afforded to both parties. The switch was prompted by a consistent trend of growing student ridership: it always outpaced projections, and as such, Metro was collecting heavily diluted average fares under the fixed price agreement. However, the decision to move to a variable price contract was not made lightly, as ASM understood that while high ridership numbers meant they were getting a bargain under the fixed price scheme, the variable price plan would require them to pay more per trip. The UWM administration provided funding assistance to ease the transition to the new pricing system.
Although not utilized by Metro, a third alternative exists when drafting URP contracts that allow the sponsoring institution to pay an hourly rate per service hour. In this system ridership is not taken into account. With no per trip costs, the most difficult part is in negotiating the hourly rate; once agreement is reached the main concern for the transit property is that vehicles do not become overcrowded; the institution has only to be concerned that its members use the service and can make future decisions based on use. The institution then has an incentive to market the service to its members and the property can use higher ridership as a bargaining chip for the next round of negotiations. This system is typically used in systems that have routes specifically designated as campus services. In Madison’s case, Persich estimates that about 80% of Metro’s routes serve UW, so billing by the hour would not be feasible. Campuses that are served by only a handful of routes may find this alternative structure more appealing than one based on an average fare.
Even though the variable price contract is now established, several significant points of contention still strain negotiations from time to time. Until recently, Metro negotiated the average fare charged for each of its URP contracts, often times at a rate lower than the actual average fare for the system. In 2006, Metro’s policy board adopted a fare tariff that applies to all URP contracts and removes the average fare negotiations from the process. This ensures that all URP sponsors are paying appropriate and equitable average fares. The fare tariff also includes annual fare increases to help Metro keep pace with rising costs. However, ridership minimums and maximums remain negotiable and are now the critical points of debate. Although student ridership might be expected to remain more or less stable over the years, Persich states that U-pass patronage has yet to plateau, making these minimums and maximums ever more important to both Metro and ASM.
Observed and projected ridership figures have also been attacked, especially in previous years when counts were done manually. Once, Metro used cash registering fare boxes that required drivers to press a key to record all riders using passes. Today, new fully-automated fare boxes have improved the accuracy of the counts and fortified projections based on ridership trends. In fact, these more trustworthy data suggest that Metro has historically undercounted student ridership and further justified the switch to a variable price contract.
Given the geographical constraints of the UW campus, transit is likely to remain a crucial mode of access for the students that ASM represent. As such, both Metro and ASM will need to continue to find ways to streamline URP negotiations and foster a mutually beneficial partnership. While not all transit properties serving major universities will enjoy the benefit of a campus with such extreme parking limitations, the evidence from Madison suggests transit can be an effective alternative to driving to and on campus. University administrations (or student governments) may see transit as a cost effective alternative to new parking decks.
Agencies looking to establish URP programs with universities or other institutions should be prepared to establish an average fare that is both attractive to the prospective client but also sufficient to cover the additional costs of increased ridership. A schedule for fare increases can simplify negotiations. If ridership trends are erratic, a variable price scheme with appropriate minimums and maximums can help protect both the transit agency and the institutional client from drastic overpayments or revenue losses. If the veracity of ridership figures becomes a point of contention, an hourly pricing scheme may be appropriate, especially for campuses served by a small number of routes.
Where hourly pricing is not feasible, an effective and reliable means of tracking ridership is critical to maintaining a positive working relationship. If this entails a massive investment in new technologies, properties should weigh the prospective benefits against the costs of acquisition, installation, and maintenance. On the same note, it may not be wise to enter into a contract with an institution without being able to accurately track and report ridership statistics. Mistrust in this area could create a long-term rift and effectively alienate a vast pool of new riders. Reliable methods and technologies warrant investigation to ensure that any major partnership has the potential to become a lasting, mutually advantageous relationship.
This article first appeared in the Fall 2008 Universities issue of Trip Planner Magazine.