IndyGo: A Sound Investment

There are a lot of exciting things on the horizon when talking to staff at the Indianapolis Public Transportation Corp. (IndyGo). And after years of a lack of investment and more focus on the car, the system had eroded after time, says President & CEO Michael Terry.

Terry started his career in Indianapolis at the American Automobile Association, then worked with the state of Indiana as the deputy commissioner for licensing. He also did human capital management consulting for several years in the private sector for emergency technology companies, not-for-profits and faith-based organizations.

“This [IndyGo] was actually one of my clients.” He continues, “The president at the time here was also the commissioner of the motor vehicles and we were friends working together when he asked me to join him.”

Terry came onboard in 2003 as the director of business development. When the president retired, the board asked him if he would be the interim as they did a national search. After about a year and a half, the board asked him to step into the role permanently.

“This is the closest thing I’ve done to mission work,” he says of his work at IndyGo. And he says it’s always fun to feel you’re making a difference. “I think the team, that we have embraced that they really feel like they’re making a difference in the community.

“We see the growth and investment … that comes back to just running a good business.”

Trimming Healthcare Costs

One of the areas that had become unsustainable for IndyGo was its healthcare costs. Looking at the reasons for the high costs, one was an unhealthy workforce. Ongoing rising costs, a robust healthcare plan that was attractive for family members, Terry says they couldn’t keep absorbing the costs.

“When going out to bid for an insurance company, only one would respond. So we had to address that,” Terry says. “And so we started with a wellness program.”

The wellness program was voluntary at the time and initially there wasn’t a huge representation for it. When they got into a contract arbitration, they made some changes to the healthcare deductible. The wellness program included a financial incentive so for those actively participating in it, the company would pay 85 percent, as opposed to 70 percent.

Participation was laid out in a structured format, with steps to follow. Once people got started, there is a mini physical, blood draws and individual coaching sessions based on the individual’s particular needs. “People are not only saving money but they’re getting healthier,” Terry says.

“When you look at the national healthcare plans that are going to be coming into play, most of those address the provider and the insurance companies but they really don’t address personal responsibility for your own health.” He continues, “Personal responsibility is something that is a challenge, especially in this kind of environment.

“But we’re trying to put the incentives in place and it’s almost a catalyst,” Terry explains. “We’re seeing more individuals who are looking at their diet, looking at exercise.”

There is a Weight Watchers program, classes, such as Zumba, and other things that the HR department puts together.

At first there was some apprehension that they were “collecting data to weed out the weak and get rid of them.” Trust was a major issue, Terry states. “It takes individuals who are willing to step into the program.” And they did, he says, because there was something in it for them.

IndyGo has a clinic right within its offices. Originally more of a “worker’s injury” kind of clinic, today it is a primary health clinic with a doctor, nurse practitioner and medical technician. When it was an occupational health clinic there was a lack of trust in that if you were hurt, you might be told you couldn’t work so many wouldn’t go to the clinic. Today’s clinic, of course, follows HIPAA laws and Terry says, “We don’t know anything and we don’t want to know anything.” He adds, “We want to know participation in regard to the wellness program but we combine the wellness and the clinic so now they are working in tandem of each other.”

Terry says they found that about 50 percent of their employees didn’t have doctors. Where were they going? Urgent cares. And that was causing increased loss ratios. Now, for a number of people, this is their doctor and some even bring their family.

What’s resulted from this is that their losses started going down. Terry says it’s not because people weren’t going to the doctor, but they were finding that people were starting to take care of themselves by addressing the issues of obesity, hypertension, diabetes, smoking and nutrition.

“At most transit properties, you have people who have erratic schedules. And, they’re not eating well and usually grabbing some fast food and bringing it to the rest of the family,” says Terry.

They also did a “smart bomb approach,” identifying and working with individuals who were high-risk users, the highest contributors to the loss ratio. Working with them with the doctor and practitioners they helped focus those individuals from some of the complications that were occurring, such as getting uncoordinated treatments from multiple doctors or splitting pills or skipping doses. Terry says, “That was a very interesting approach, but it was a tactical effort to get into some of the high flyers.”

With the changes in place, a couple years ago when going out to bid they started seeing a reduction in renewals and they started seeing competition. And when going out to bid this year, they had nearly a 14 percent reduction in healthcare. “We switched carriers, we have more competition, it played out exactly the way we hoped in addressing the issue of first getting a healthier workforce and driving down the cost for our company,” Terry says. “This year we project being close to $700,000 in savings.”

Efficiencies in Labor

Over the past couple years a lot has been done to reduce the overtime and absenteeism. Previously absenteeism was about 17 percent to now 6 percent. Overtime in transportation was 20 percent, now at about 8 percent and vehicle maintenance overtime was at 20 percent, and now down to around 10 percent.

Over the week there was so much overtime availability, some would call in sick one day to pick up over time later in the week.

“We looked at the staffing model of some of the bigger properties on how they staff,” Trevor Ocock, vice president & chief operating officer, explains. They determined the appropriate number of FTE they needed and pushed hard and fast to hire quickly and then not have as much overtime availability. And it really required employees to come to work, he says. “It was a tough road.”

It was a little different when it came to maintenance because the staffing levels weren’t the issue. There are multiple shops within the vehicle maintenance department and one was the rebuild shop where they would rebuild their own components. “We did an analysis about five years ago that showed everything we were rebuilding. We wanted to see the equivalent of buying new components under warranty.

“We saw that holistically for the whole shop, it was better to discontinue rebuilding used parts and it was better to buy new parts with warranties.”

Ocock says they reached out to an area college to help train those from that shop some of the other skills, such as heating, ventilation, air conditioning, electrician and body work and those employees were transferred to the other shops.

Providing Paratransit

With recertification, better scheduling and a voucher system, IndyGo was able to provide more efficient access for paratransit. Terry says they do functional and cognitive assessments to recertify individuals so people who are truly in need of the service are qualified for that.

“We found that maybe a third or more of the individuals were certified because they couldn’t access fixed-route because of sidewalks not being there or being in disrepair or lack of safe crossings,” he says. By working closely with the city department they put a major focus on areas needing street and sidewalk improvements.

Qualified individuals can utilize the paratransit services, can ride the fixed-route system free of charge or can use a taxicab voucher. “We have put a call out for any taxi services that would like to accept our vouchers,” explains Terry. The individual buys the voucher for $3.50 and the agency puts in $10. The individual purchases the voucher and then makes their own arrangements. The cost covers any ride within the area’s range. If they need to go much further, then there’s an additional cost.

“That has blossomed,” says Terry. “We are trying to find more grant money to be able to use that.

With the paratransit service, instead of the $7 round-trip cost to the agency for fixed-route, it’s $60. With the taxicab voucher, the agency is spending $20 on a roundtrip, as opposed to the $60.

“In addition you’re giving that individual greater flexibility,” Terry explains. “They’ve increased their independence.”

An Aging Fleet

When I ask Terry where IndyGo’s funding comes from he responds with a smile, “Bake sales.” While they get the usual mix of federal, state, local and farebox, he says the issue for them has been the utilization of their federal dollars for operating expenses. “We’re allowed to use that but we need to get away from that for the sake of having a good replacement program.

“We’re trying to keep service on the street, we’re trying to stabilize and we have been and we’ve been trying to wean off the federal money.” He continues, “When you look at other transit systems you’ll see probably less federal money in their operating but here, it’s 23 percent of our budget.”

With some good financial savings that have occurred, especially with healthcare, they hope to wean away from it this year. And they’ve also leveraged grants. Early on they were using CMAQ grants to develop express bus service outside the traditional area. “That was kind of leap-frogging the long-range plans,” Terry says. “But it helped spur some of this suburban-urban connectivity.”

In the past vehicles were purchased with earmarks or special grants and vehicles were purchased in large quantities at one time when a big amount of cash came in. “We have an aging fleet,” explains Terry. “You have a bus that’s supposed to be 12 years, 500,000 miles; that’s the useful life. So the average age of your fleet should be six years; you should be replacing 1/12 of your fleet every year.

“Doen’t happen here.”

He continues, “Our strategy now is three-fold. We’re looking at back-building the gaps by buying used buses.”

In Columbus, Ohio, they had some 12-year-old buses they were going to get rid of and they were better than IndyGo’s ’97 and ’98 buses, so IndyGo bought them to back-fill its fleet. And also used artics to accommodate growth on some of the higher-capacity routes.

They are also doing mid-life rebuilds at Indygo, taking some of the State of Good Repair Grants and rebuilding just over 20 of their 2003 buses.

The third part of the strategy is that they’re also buying new. Terry says they just received an FTA grant for about $10 million to purchase replacement buses.

An increase in budget

The budget process normally consists of putting together a budget, going to city council to say how much is needed for the same level of service without having to raise fares, come together in agreement and as Terry describes it, “It’s just a patchwork.”

This year, with the way they’ve been driving down healthcare costs, have been changing their vehicle purchasing process, have been saving on fuel procurements, and have been controlling costs with absenteeism and overtime, they approached things a little differently.

“We told our board, we can live with our current revenue sources; we’re not going to ask anybody for any additional funding. We have been good stewards,” Terry explains. “But if you want to be bold and courageous, then we’re asking the board to adopt a budget that increases our funding by $6 million.

“It was unanimous council approval of our additional funding because they recognize that we’re doing the right things, we’re operating efficiently and we are worth investing in.”

The new funding is all going toward building and putting service on the street. Terry says, “We have plans. We always have plans, but now we’re able to start putting out our bus plan.”

Vice President of Business Development Samantha Cross says, “Normally we have plans to reduce service; we’re always ready.” She continues, “So it was like Hanukkah or Christmas, just a wonderful gift.” Not knowing the budget outcomes, they had started their plans last summer, while the budget was still in development and had put together a good scenario and best-case scenario.

The initial investment was made to enable more frequent service. Cross explains, “In our system we have 36 routes but two or three of our routes are a little bit more than 35 percent of our ridership so those are the backbone of our routes; we put more frequency into those routes.” She adds, “That also enables Bryan [Luellen] to become more creative with how we market the services. Now, we can actually say we have frequent services.”

Manager of Marketing Bryan Luellen states, “That hasn’t happened on these routes in 50 years. Service has just been in a spiral of degrading and this is the first time that we can really say ‘frequent service,’ so that’s exciting.”

After increasing frequency on core routes, they looked at some later service on some routes, frequency improvements on others, a new route across town on the north side, and also used it as an opportunity to realign some routes.

Not Your Usual Stop

Working with People for Urban Progress (PUP), IndyGo has a fun and creative program for bus stops.

PUP wants smart urban design and is an advocate of transit. It is involved in the community and Cross says most people know about them because they get materials that are going to be thrown away and then repurpose them. An example was the mesh cloth from a dome roof when the RCA Dome stadium came down. They have used the cloth to make things such as purses, wallets and bags.

When Bush Stadium was being redeveloped into apartments, they had this excess seating. PUP had a deal with the city and developer to get that old seating and it was thought that would be a fun and creative idea for seating at stops.

“In 2011 they said, ‘We have a seat,’” Cross explains, “So we found a good location.

“Our approach was we’ll start with existing locations and we can swap them out.” She continues, “And to help cover the costs, we’ll develop a program because we can’t pay for every one that goes down because they cost a little bit more than our standard bench, but we’ll share the expense with people.”

Cross says they went ahead and invested in a few to plant the seed and now IndyGo’s director of planning is overseeing the program. “It’s not a quick program because they still have to refurbish them but we have five or six seats out and the list is getting close to 10 that we’re getting ready to deploy.

“We’re trying to make it simple,” she says. “We just buy it directly from PUP and people can donate to our program.

“If they’re replacing an existing bench, we cover the cost. If it’s a new location we would invest in, we’re splitting the cost with them.” She explains, “We didn’t want to spend more than we normally would spend on them with this program.”

A Focus on Customer Service

Like many agencies, originally IndyGo recruited people with a CDL for its operators but today it has changed that approach. “What we found is our most likely candidate to come in was either a truck driver or a school bus driver and those roles didn’t always translate well into operating in transit,” explains Vice President of Human Resources Michael Birch. “We’re trying to follow a model that has a stronger emphasis on customer service. Our future goal is to really go after the hospitality industry.”

If a candidate passes through the pre-employment process, IndyGo pays to send them to a CDL school. It is partnering with a tech school to do the training and then the candidate comes back to indyGo with the CDL and are hired and start the training academy where they go through the typical training that everybody gets.

There are some older buses outside the 12-year mark that Birch says they are transferring to the school and IndyGo gets credit back on the value of the buses. “Some of our costs will be offset by the deletion of the buses,” Birch says.

With the increase in service as they push to staff the $6-million service enhancements, Cross says there’s quite a demand for that CDL, so expecting it right off the top was hurting them when recruiting people. Taking that barrier away, they’ve increased the number of applicants tremendously. Birch says they had an average of 40 new applicants a month and now it’s more than 800. “It’s almost to the point where we don’t know where to start.” He adds, “It’s a nice problem for us to have; it absolutely is.”

The change went into effect in December and March 11 was the first class that didn’t come with their CDLs. If they stay with IndyGo for a year after they graduate, they don’t have to pay back the cost, but for some reason if they leave before that year is over, there’s a contract in place where IndyGo recoups its costs.

Service Into the Future

With government having enough of a stigma of not being good stewards of taxpayer dollars, Terry says they’ve been working particularly hard to ensure they operate efficiently and effectively. “We might be a smaller system in comparison to other systems in our region … but we operate effectively and creatively.

“We’re under-resourced for a city our size, but we’re effectively using the resources we do have. We’re being creative with what we’re doing and we’re delivering a quality service.”