Leading a transit organization is a very challenging, but rewarding, occupation. Those who have had the privilege to be a transit system executive belong to a small but dedicated group of professionals. While the principal goal of the transit CEO is to provide transportation in a safe, efficient and customer-oriented manner, one of the inescapable responsibilities of the job is to ensure the proper fiscal management of the system. Taxpayers and policy-makers rightfully expect that the transit management professionals will provide for the proper stewardship of the public resources invested in the transit system.

This article takes a look at some practices and pitfalls transit executives need to be aware of as they work to lead their staffs in providing the best service available to their riders.

PRACTICES

In our management of more than 120 transit operations throughout the United States we have found there are some specific fiscal management practices a transit executive should strive to have in place to be effective. While this article does not allow us to go into great detail regarding these practices, we can briefly discuss them.

First, a transit executive needs a formal management plan developed to meet the organization's mission. This plan should have measurable goals and objectives with appropriate staffing and operating plans. This plan will serve as the basis for developing both an operating and capital budget.

From the formal management plan, a budget development methodology needs to be created that involves as many of the operating and supervisory staff as possible. This budget development protocol must tie the system's goals and objectives to a financial resource. The budget preparation should provide for reviews by senior staff and policy-makers and ultimately result in the formal adoption of a budget or financial plan that is "married" to the management plan and the fiscal year goals and objectives.

Experienced financial managers are essential for any transit agency. Just as you require trained professionals to lead your operations and maintenance functions, there must be experienced professionals who assume responsibility for the critical financial functions. These managers can help with the establishment of an accurate financial management information system, which is critical. Having access to accurate and timely financial data and reports is essential if an executive and the policy-makers are to make well-informed decisions. These MIS systems also support the payroll, accounts payable and monthly financial reporting that are necessary.

The forecasting of revenues and expenses during your fiscal year is a must. It is not enough to develop a budget and then set it aside as the reality of the operation evolves during the fiscal year. Budgets must be living documents that are reviewed each month. As situations change, so too must the forecasting of expenses. The executive and policy makers need to be kept informed so that midcourse corrections can be made to ensure proper fiscal accountability. Forecasting of revenue and expenses directly flows to cash flow management. One of the most difficult duties of the successful transit professional is the proper management and projection of cash flow. As all professionals realize, financial procedures tend to work together, proper budgeting leads to proper management, proper management leads to proper operations, proper operations lead to proper cash flows and so on. The management of cash flows is imperative in two basic areas: