Friday, January 14, :00 a.m. COMMITTEE MEMBERS PRESENT:

TEXAS DEPARTMENT OF TRANSPORTATION PUBLIC TRANSPORTATION ADVISORY COMMITTEE MEETING Room A., Building 00 00 E. Riverside Drive Austin, Texas Friday, January, 00 0:00 a.m. COMMITTEE MEMBERS PRESENT: FRED GILLIAM, Presiding PAULETTE SHELTON VASTENE OLIER VINSON FARIS DONNA HALSTEAD BOB GEYER VIA TELEPHONE: VINSON FARIS TOM KING STAFF: SUSAN BRYANT, Director, Public Transportation Division GINNIE MAYLE RICHARD MONROE, General Counsel BOBBY KILLEBREW, Deputy Director, Public Transportation Division

AGENDA OF PUBLIC TRANSPORTATION ADVISORY COMMITTEE ITEM PAGE I. Call to Order II. Approval of Minutes (action) III. Report from the technical subcommittee concerning rural and urban transportation funding formulas. (state formula program),. (discretionary program), and. (section grant program) IV.Discussion and recommendation regarding rural and urban public transportation funding formulas TAC Chapter, Public Transportation, Subchapter A, General, Subchapter B, State Programs, and Subchapter C, Federal Programs (action) V.Report from the technical subcommittee concerning health and human services transportation coordination and coordination conference VI.Discussion and recommendation regarding health and human services transportation coordination and coordination conference (action) VII. Discussion and recommendation regarding draft strategic portion of the business plan as submitted to TxDOT by the contractor, KFH Group, Inc. (action) VIII.Public comment XIX.Confirm date(s) of next meeting(s) (action) 0 X.Adjourn (action) 0

0 0 P R O C E E D I N G S CHAIRMAN GILLIAM: Good morning and Happy New Year to all of you. When I walked in the auditorium, I wasn't sure I was walking in the correct meeting, because this is the largest group we've had since I've been a part of this. Welcome to all of you. The first thing we need to do is call the meeting to order. If I can get a roll call here, Bob, if you'll start, then just go right around. MR. GEYER: Bob Geyer. MS. OLIER: Vastene Olier. MS. HALSTEAD: Donna Halstead. MS. SHELTON: Paulette Shelton. CHAIRMAN GILLIAM: Fred Gilliam. All right. Who's on the phone? MR. FARIS: Vinson Faris. MR. KING: Tom King. CHAIRMAN GILLIAM: Okay. Mayor Trevino is not available. Is Mark? (No response.) CHAIRMAN GILLIAM: Do we know about either one of those? VOICE: Neither of them is attending. CHAIRMAN GILLIAM: Okay. So we do have a

0 0 quorum. Seven of our nine are present. So we have a quorum for this meeting. Our first item for business is approval of the minutes. Do we have a motion? MS. HALSTEAD: So moved. MS. OLIER: Second. CHAIRMAN GILLIAM: Okay. We have a motion and it's seconded. Any discussion or items that need some review? (No response.) CHAIRMAN GILLIAM: If not, I call for a vote then. All in favor? (A chorus of ayes.) CHAIRMAN GILLIAM: Okay. Any opposed? (No response.) CHAIRMAN GILLIAM: The minutes are approved. Item number is a report from the technical subcommittee, regarding rural and urban transportation funding formulas. Let's see. That's you. MS. OLIER: Uh-huh. CHAIRMAN GILLIAM: Are you prepared today to give us a report? MS. OLIER: Yes. CHAIRMAN GILLIAM: Okay. Give us a report then.

0 0 MS. OLIER: Okay. Thank you. The subcommittee on the formula had a telephone conference meeting last week. That meeting -- can you all here me back there? VOICE: No. MS. OLIER: Okay. I'm trying to -- we're going to have to talk into the mikes for those people who are on the telephones and then I'm going to be talking to you all, too. So speak up and let me know if you can't hear. We had a subcommittee meeting last week by way of telephone conference. In attendance for that was Tom, who is on the telephone today, and then Bobby and myself. Donna Halstead also serves on our committee and so does Oscar Trevino, who is not with us today by way of telephone. So we had just two committee members. We did not make any recommendations. We discussed a number of things and you will have the opportunity today to hear what we asked for. The first is going to be from Bobby. He is going to explain to us the current formula, which is the '0 one that we're spending now. He's going to explain to us the formula that was adopted and how, as a background, his notes on that. So I think it's an excellent opportunity for all of you all, as well as myself, to get an education so that we can understand our funding. And then, Bobby is also going to ask to share

0 0 with us a timeline because if we are to make changes to the formula, we are working within a very narrow window. So we've got a lot of work to do. As part of our report today, let me turn it over to Bobby so that he can share that information with you. CHAIRMAN GILLIAM: Just -- I want to make sure that the two board members that are not here can hear. Are you able to hear Tom and Vinson? MR. KING: Yes. MR. FARIS: Yes, I'm here. CHAIRMAN GILLIAM: Okay. Great. All right. Go ahead, Bobby. MR. KILLEBREW: Okay. Can the people on the phone hear me okay? This is Bobby by the way. Good morning. MR. KING: Yes, I can hear. MR. FARIS: I can hear. MR. KILLEBREW: Okay. The telephone thing is a little bit further away from me. If you in the audience can't hear, feel free to move closer. Just don't stand on top of me. One of the items I was asked to do by the subcommittee was to explain the funding formula step by step. I do have a few extra copies this morning. Ginnie has those that I'll make available to the audience. PTAC

0 0 members, you were sent these copies electronically. For the PTAC members here in Austin this morning, I actually put some extra copies in front of you in case you didn't bring your copy with you. I'm going to walk through a single system. It happens to be an urban system. Hopefully after I explain how this single system went through the formula, as requested, step by step, you can take the same methodology and apply it to all the other systems. If that's okay with the committee, I'd prefer that we just look at a single system and walk it from step one to step end. In the spreadsheet that was sent out -- and for the members of the audience that are looking at the spreadsheet -- that spreadsheet had various tabs at the bottom. It was an Excel spreadsheet. The far left tab was a "Read Me" tab. I do want to re-emphasize, in the E-mail that went out to the PTAC members, this spreadsheet is the working papers of staff. They may have used terminology of column headings that were meaningful to them. Now that everybody is looking at it, you may look at a column heading and think that it means something else. So when I go through and explain what's in that column, don't necessarily take that column heading and say, That's what's in the column, because what I'm saying

0 0 is in the column is in the column. The column heading may be somewhat misleading. Again, it meant something to the author. It may not mean something necessarily to those of us who are just looking at it for the first time. On the "Read Me" tab of the spreadsheet, it was just to give out some basic information to talk about the spreadsheet. In effect, if we ever had a staff member leave that perhaps the next person that had to pick up this project would be able to have somewhat of a background of how this spreadsheet worked, or if there was something special about this particular round, then they would list it on the front page. This particular front page does talk about fiscal year '0 money only. This whole spreadsheet is fiscal year '0, state '0, money. There is a reference on the spreadsheet that talks about 00 allocations. The reason that is important is during the development of the formula which was to be effective for '0, under the old formula, the Commission had a setaside amount of money. It was unknown at that time whether or not the Commission would take action regarding that setaside of funds. If they had taken action before the new formula took effect, then that money would not be rolled forward obviously. If they had not taken any action, then that would be money that's

0 0 unobligated and should be counted in the '0 allocations. So there's a little note on there that explains it. It references $ million. That million dollars was the 0 percent setaside for Commission selected projects. The Commission did not allocate that out to any projects. Therefore, it was unobligated at the time '0 kicked in and that was included with the regular '0 funds. The next tab on the spreadsheet -- this is being shown on the wall so I will use a pointer from time to time to kind of give you a general location -- but the next tab on the spreadsheet is labelled "0 Base Data." I know in your handout you can't tell what that is, but these spreadsheets are in order. So if you flip to the next page, you'll be looking at the 0 base data page. This page starts with the city of Abilene as the first system in the left-hand column. I'll just walk across the page, again using only one system, so that we kind of follow the thought through. This particular page is where the data is recorded that will fit into the formulas on the following pages. This includes a population column because in the urban formula the demographics of population is used. You'll see, for the city of Abilene, it's 0,0. The next group of data is kind of categorized in several columns and is 00 operational data. The

0 0 0 columns here are local funds, operational expenses, ridership figures, mileage, and then we have a column that says local funds per capita. For those in the room, I'm going to click on that cell, just to let you know, in that cell is a formula. Members, when you got this spreadsheet electronically, you can also go in there and see the formulas that are in the cell. So local funds per capita is a calculated figure. It's based off of the raw data that's in local funds and the raw data in population. MS. HALSTEAD: Bobby, do you want questions at the end or as we go through? MR. KILLEBREW: If we have questions and I've lost you some place, then I would say, Please raise them at that time, because I'm going to build as we go through this. MS. HALSTEAD: Okay. MR. KILLEBREW: If you have general questions, maybe we can hold those until the end. Would that work for you all? MS. HALSTEAD: I think this may be in the first category? MR. KILLEBREW: Okay. The first category, I'm lost, yes, Donna. MS. HALSTEAD: I'm not lost. I just don't know what the formula was that you used to get that number.

0 0 MR. KILLEBREW: Donna's question was about the formula to get local funds per capita. Basically, it takes the local funds number and divides it by the population number. MS. HALSTEAD: Well, but my question is -- how do you determine what constitutes local funds? What do you include in the local funds category? Is it funds generated at the local level, funds passed through to go to the local level and actually come from somewhere else? What is it? MS. SHELTON: My understanding was it was the list that we had put up on the board that included local from local government as well as contract income and -- MR. KILLEBREW: This is Bobby again. It does conform to the definition that was approved and passed the administrative code. Paulette has explained that correctly. It was a definition that came out of a joint working group. In fact, it included all of the operators. We had a semi-annual meeting that discussed about performance measures. We came up with the definition, presented it to the group as well as to PTAC, and said, This is how we're considering local funds. So it is very much that. MS. HALSTEAD: So it is funds that are generated at the local level and what else?

0 0 MS. SHELTON: Okay, funds received from local governments, not for profit agencies such as United Way, and -- MS. HALSTEAD: That still want the money? MS. SHELTON: Yes -- and contract income that may be generated from service contracts that are operated in the area. MS. HALSTEAD: Operated. And the source of those funds would be what, local money, state money, or what? MS. SHELTON: Yes, it would be local agreements for service, perhaps advertising revenue and other things. MS. HALSTEAD: Okay. Is there any money included in this column which is actually passed through from other governmental entities, like Title III maybe, and services. MS. SHELTON: Are you talking about local tax dollars from the city and the county? MS. HALSTEAD: I'm talking about some special funds of some sort which come to the local government from a specific line item in federal legislation. If city A has, you know, $00,000 to support local transit that comes through federal legislation, does it show up in this line? MR. KILLEBREW: This is Bobby again. Maybe I

0 0 can simplify it. I'm sorry I don't have the definition that's in the administrative code in front of me. Basically, it excludes the state funds for public transportation and the federal funds for public transportation. MS. HALSTEAD: Okay. That's what I wanted on the record. MR. KILLEBREW: Okay. MS. HALSTEAD: Thank you. MR. KILLEBREW: After the local funds per capita, we have miles per expense, trips per capita. Again, these are formula driven items. So when you look at the number on your spreadsheet, there's a formula in that cell that calculates it based off of other base data. If you move to the right of the columns I was just discussing, you'll see now we have 00 operational data. The information in these columns is mirror to the information that's in 00. It's just a different year. The logic behind this is on the performance measure we're comparing a system against itself, year to year. So we have to have two years of data in this base data page. This is the data that's reported to TxDOT, verified by the transportation system. That's where this information comes from, except for the population which came from the census.

0 0 This last column on this page, the author of the spreadsheet needed some place to put what the allocation was for that particular system in fiscal year 00. The very last column is a hard number just showing what the allocation was for 00. The reason this page is important is because all the formulas on the following pages are going to tie back here in some form or fashion. You'll see references -- for the people in the room, when I bring up the cell, you'll see references to the 0 base data sheet. This is the sheet we're talking about when we talk about those other formulas. I'm going to flip to the next page unless I see anybody with a blank stare. I think we're okay to go. Good. VOICE: What about on the telephone? MR. KILLEBREW: Our telephone folks, are we okay still? MR. KING: Yes, I'm having trouble hearing. Somebody's banging the mike around pretty good. MR. KILLEBREW: Okay. I'm going to move the telephone mike a little bit closer to me, Tom. MR. KING: All right. Somebody keeps hitting it or banging something on it. MR. KILLEBREW: Oh.

0 0 MR. KING: I get a lot of rumbling. MR. KILLEBREW: That may have been my stomach. I don't know. The next spreadsheet has a tab at the bottom, which is "Needs Measure." Bear with me just a minute, please. MR. KING: Which spreadsheet are you on, Bobby? MR. KILLEBREW: Just a second, Tom. MR. KING: I'm lost. (Pause.) MR. KILLEBREW: Okay. I need to explain to the folks here in the room. This just stumped me for a minute. For those of you here in the room, the previous tab we were on, which was the 0 base data page, when I printed that out, it was going to be too small for you all to be able to read it. So it actually printed out on two pages. And so, for you here in the room, you're probably ahead of me. I'm the one who's lost. It actually is two pages. So when you get to the page that is needs measure, it will look like what's being shown on the screen. For the folks on the phone, the needs measure page actually has a title at the top of the page. It says, "Needs measure for draft urban scenario, July c." VOICE: Correct.

0 0 MR. KILLEBREW: So did you find that page, Tom? MR. KING: No, I'm still looking. Are these spreadsheets the ones that you E-mailed us? MR. KILLEBREW: Yes, sir. MR. KING: A scenario of urban state and scenario of rural state? MR. KILLEBREW: Yes, sir. We're looking at the urban. MR. KING: We're looking at the urban, right. MR. KILLEBREW: One of the tabs at the bottom of the page -- are you looking at it electronically or hard copy? MR. KING: Yes, I'm looking at it on the computer, which is why I'm confused. MR. KILLEBREW: Okay. On the computer, there's a tab at the bottom of the page that says, "Needs Measure." MR. KING: Needs measure? I'm seeing draft scenario, 00 working, 00 sorted. MR. KILLEBREW: You need to go back to the left on your tabs. If you go back to the left more -- VOICE: You don't have all your tabs exposed. MR. KING: Well, I did -- oh, okay. MR. KILLEBREW: Okay? MR. KING: I found the error. Okay. Needs

measure -- 0 0 MR. KILLEBREW: Okay. MR. KING: -- that's where we are? MR. KILLEBREW: Yes, sir. MR. KING: All right. I got it. MR. KILLEBREW: Here in the room, we're okay? (No response.) MR. KILLEBREW: On the needs measure page, again looking at the city of Abilene, you'll see in the column for the city of Abilene.0. I'm going to click in that cell so that you can see the formula, for the folks in the room, and Tom, I know you're on your computer back where you're located. That formula refers to the tab base data sheet cell D divided by base data sheet cell D. MS. HALSTEAD: I'm sorry. MR. KILLEBREW: I just lost someone. So this is a calculated figure. This is a calculated build. VOICE: Sure. MS. HALSTEAD: Give me the plain English. What did we divide by what? MR. KILLEBREW: I'm going to go back and show it to you exactly. MS. HALSTEAD: Thank you. MR. KILLEBREW: Again, I said it was on the

0 0 base data sheet. MS. HALSTEAD: Right. MR. KILLEBREW: So I'm going to go to the base data tab. We're looking at cells D divided by D. Here's column D. I'm going down to D, which is the population for the city of Abilene, divided by D, which is the total of all populations for these urban systems. MS. HALSTEAD: Okay. The problem is that the sheets that I have don't have a reference to the various cells so you lose me completely when you're using that as your explanations. There's nothing on here that has anything to do with the cell C, D, or whatever. MR. KILLEBREW: Donna's comment was -- in fact, the comments that the subcommittee made on the phone, which is why the electronic version of the sheets were requested. I understand, some of you may be like me, and you're not the statistician, you're not the Excel wizard, so it is difficult to find that. So let me know if I lose you in this explanation. If you're comfortable with a one on one, I still get off early. We can sit down and we can write some cheat notes to show you where this came from. MS. HALSTEAD: Once again, this is the population of the individual city divided by the total population of the entire universe of cities? MR. KILLEBREW: Of those cities, yes.

0 0 MS. HALSTEAD: Okay. Thank you. MR. KILLEBREW: Yes, ma'am. This is the part of the formula where 0 percent of the funding is allocated. If you'll recall under the urban formula, 0 percent of the funding is allocated based on population. So we have to have some type of a calculation there to figure out what is Abilene's pro rata share of that 0 percent. This is setting us up to do that. I think I see nods so I'm going to go onto the next sheet, which his performance measures. The sheet does have some complex formulas on it so please bear with me. I'll be happy to go back if I lose somebody. Again looking just at the city of Abilene -- and I don't know if the city of Abilene is present today, I apologize for picking on you, but you're at the top of the list and it's an easy one to find -- after the first two columns, you come to a column that's current year local funds per capita. That column again is a formula, which references back to the base data sheet. On the base data sheet, we had already calculated local funds per capita. VOICE: Right. MR. KILLEBREW: All we're simply doing is bringing that number forward to this spreadsheet. So it's the same calculation, local funds per capita, local funds

0 0 0 divided by that population figure. We're bringing that number forward. The next column -- a column which I attempted at one time to explain and was unsuccessful, I'm going to do my best again today -- is labelled normalized. I'm not a statistician. I'm not the one who cranks these numbers, but I'm going to do my best to explain this to you. I've thought about this over the past week, on how to come up with different ways of doing this, so that it might help you understand. I was not successful in my own mind. In this particular case, what normalization is doing is really just taking a percentage. It is taking Abilene's percentage right here, that number, compared to all the other systems. That's all this is doing. You can see the formula up there. It takes D divided by D. It takes Abilene divided by the total. So Abilene is.0 percent of that total. Now, I think this is where things get fuzzy. It's -- why do you normalize? Why would you do that? You already have the local funds per capita. It doesn't make any sense that you're going to put in a new percentage now. The reason it's normalized is because you're going to have to take that one performance factor and compare it against some other performance factors. They're not like. They're two different things. It's like an apple and an

0 0 orange. So you're going to have to put everything in equal units of measurement, so that you can add things together, subtract them apart, divide them, whatever it is you're trying to do. I came up with a pitiful example. Since I was talking with a neighbor of mine a couple nights ago, we were talking about property and measuring things. If I say something is half a foot, you think. feet. I want to take half a foot and add seven inches to it. I can't take the number, seven inches, and add it to. feet, because. is not the right answer. We all know that. We have to say inches. Half a foot is six inches. Six inches plus seven inches is inches. That makes sense. That's what we're doing here. We're putting everything in an equal unit of measurement so that we can compare, so that we can add, so that we can subtract, and we can divide. I've got some nods. Did that work? VOICE: Yes, it did. Very good. CHAIRMAN GILLIAM: Well said, sir. MR. KILLEBREW: All right. I did better this time. MS. HALSTEAD: It's fine up until you to the point that you give different weights to different things and then it gets a little squirrelly.

0 0 MR. KILLEBREW: Yes, ma'am. We're going to discuss that aspect too. So going across the page, each of these columns have some formula in them and then the column is normalized, putting everything in equal measurements. The next column over is change in system miles per expenses. That was another performance measure. There's this big old formula sitting there at the top, for those that can see the electronic version. Tom, I know you have it on your computer. It's, again, looking back at that base data sheet. It's taking the base data sheet, and it's taking one year on that base data sheet, subtracting the next year from it, and then dividing by that next year, to get the change, the percent change in system miles per expenses. That's all it's doing. There are reference points back to that data spreadsheet. Again, I'm just looking at Abilene so it would be the Abilene line back on that base data spreadsheet. That column, going over one to the right, is normalized. The next performance measure, change in system trips per capita, it's the same thing. For those here in the room, and Tom at your computer, you see this big old formula at the top of the spreadsheet that's referenced back to the base data spreadsheet. It's taking one year

0 0 compared to another year, and then dividing to get that percent change. MR. KING: Okay. MR. KILLEBREW: The column next to it, it just normalizes those figures. MR. KING: Right. MR. KILLEBREW: Now you'll see, there are some blanks on here for some of the systems. Those systems were new systems and so there was no way to compare year to year data. We didn't have data for them because they were brand new urbanized systems in Texas. That's like Jackson-Angleton area, McKinney, Midland-Odessa, and the Woodlands. The data for this calculation was 00, 00. The next performance measure, change in system revenue miles, again refers back to the base data sheet. It's the same calculation, one year compared to another, the division to get a percentage, and, one more time, to the right, it's normalized. Now, we're up to a column that's called composite of all formula measures. For those here in the room, and Tom on your computer, you see the formula here adds columns E, G, I, and K. Let me tell you what those columns are. Column E is the normalized column for local funds per capita. G is the normalized column for the next performance measure. I is the column for the next

0 0 performance measure. K is the column for the last performance measure. So it's taking those normalized columns, and adding them together, and then dividing by to get an average. Now, putting things in equal units of measurements makes sense. And then, we talk about, Donna made the mention about applying equal weight. These are all equally weighted. MS. HALSTEAD: This assumes equal weight -- MR. KILLEBREW: Yes, ma'am. MS. HALSTEAD: -- of all items? MR. KILLEBREW: Yes, ma'am. This is where we have to do a little "if" statement because in the formula, in order to be eligible for the 0 percent performance award, you would have to have a positive performance. Your performance would have to increase. It would have to be better. It would have to go up. So there's an "if-sum" column located on the spreadsheet. What it's saying basically is if that column, the composite of all four measures, is greater than zero, then pick up that number. So if your performance went better, then pick up that number. If it didn't, then put a zero in this column. That's what that "if-sum" column is doing. It says, if the performance went up, if you got a positive number, then keep that

0 0 positive number and put it in this column. If it didn't go up, then stick a zero in that column because you have to have better performance to be eligible for the 0 percent. MS. HALSTEAD: Bobby? MR. KILLEBREW: Yes, ma'am? Yes, Donna? MS. HALSTEAD: Am I correct that this page does not factor in the previous page where normalized need? So the population issue that we've quantified in the previous page is not reflected in this page? MR. KILLEBREW: Yes. If I may, Donna's asking -- there was a previous page called needs measure, which is the population, which is the 0 percent. She's says, is she correct in saying that it's not on this page that we're looking at now, which is performance measures? You are correct. We are setting all this up to get to allocation of money, soon, and we will be using both the needs measure page and the performance measure page and bringing them together. MS. HALSTEAD: I just wanted to make sure we were talking two different calculations. MR. KILLEBREW: Yes, ma'am. You are absolutely correct. After we do a little if-sum statement here, and say, if your performance went up, then let's keep the

0 0 number, if it didn't, then let's put a zero there, for every system that had an increase in performance, again we have to normalize it to an equal measurement. You can see adding this column up doesn't give you that number. We have to normalize it to a unit of one so that you can, when we get to there, apply funds in a pro rata share to the systems that had increases in performance. So instead of having all the systems, you're now looking at the systems that had an increase in their performance because they're the only systems that are eligible for a performance award. Basically, we're taking their pro rata share of the total so that at some point on the next spreadsheet we can apply some funds to that pro rata share. So you'll see, since we're using the city of Abilene, they did not have a positive increase in performance. Therefore, they don't get a number in this far right-hand column. If I go down a couple lines to the city of Arlington -- I'm sorry, I'm a little blind seeing that far away, is that the city of Arlington -- VOICE: Yes. MR. KILLEBREW: -- the city of Arlington, who had a positive performance, they have a percentage over in that right column. MR. KING: Bobby, it looks like half showed a

0 0 positive performance. Is that my quick count on those? MR. KILLEBREW: I'm sorry. I didn't hear the comment. MR. KING: It looks like half of them showed positive there. I can't quite get a quick count. It's like seven or eight. MS. OLIER: He says, it looks like half of them had a positive performance. MR. KILLEBREW: I believe you're correct. I didn't count them, but I believe it was somewhere in that range. About half the systems had a positive performance. CHAIRMAN GILLIAM: It is on the list? I counted. Is it on the list based on your previous comments? MR. KILLEBREW: I believe it's something like,, yes. CHAIRMAN GILLIAM: Any other questions? VOICE:. CHAIRMAN GILLIAM:. MS. HALSTEAD: Am I the only one asking questions? MR. KILLEBREW: I believe Donna has a question. Go ahead, Donna. MS. HALSTEAD: Okay. It's been a long time since I was in graduate school taking statistics courses.

0 0 I'm going to ask the question anyway. Statistically, are you not going to generate a more accurate analysis if you take the column labelled composite of all performance measures, and lay out those numbers, and determine the mean, and then take variance from the mean to determine whether or not they qualify as having positive performance or not having improved performance? MR. KILLEBREW: If I may rephrase it, Donna's comment was on the approach that was taken by the statistician on calculating normalization. Would we have a better formula in place if we calculated variance off of the mean instead of what was done here? I would say that may be something that PTAC would like to consider and direct us to draft up. MS. HALSTEAD: The only reason I ask the question is because -- MR. KILLEBREW: Yes? MS. HALSTEAD: -- if you assigned zero to everybody who has a negative number, no matter how big or small that negative number is, then you really haven't factored in whether or not they have performed better as compared with the mean or with the agency as a whole. I just think it gives you -- if you're going to go through this much statistical voodoo anyway, you might as well take it one step further and look at that rather than

0 0 arbitrarily assigning zero to all negative numbers on it. MR. KILLEBREW: Um -- MS. HALSTEAD: I didn't mean to give you a headache. I'm just being -- MR. KILLEBREW: No. I think Sue had a comment. MS. BRYANT: This is Sue Bryant. I'm sorry if you can't hear me back there. Donna, that would be a change in the formula because of the -- and Bobby correct me if I'm stating this incorrectly -- the formula calls for comparing a system to itself. So if you then establish a mean, and establish then a comparison of a provider to that mean, then you would be comparing a provider to all the other providers not comparing it to itself. That was part of the discussion. The way the formula did come out is that it was to compare provider's performance to itself. So that gets back to what Bobby said. That might be an instruction or a recommendation that you would like to make. MS. HALSTEAD: You have compared them to themselves in all these numbers. We're not talking about the actual comparisons. We're talking about deriving a composite number -- MS. BRYANT: Correct. MS. HALSTEAD: -- from which to work. All I'm saying is if you're going to extrapolate from that

0 0 0 composite number, if you arbitrarily assign zero to everybody who is below a certain point, you're skewing the data because they aren't all zero. MS. BRYANT: Some of them are minus. MS. HALSTEAD: Some of them are a lot more minus than others. MS. BRYANT: Yes. MS. HALSTEAD: To put them on the same footing doesn't compare them with themselves. It assigns an arbitrary figure, an arbitrary value, based on the fact that they got a negative number. MS. BRYANT: Right. As the formula was described, if they don't improve in performance, they were not eligible for any of the performance funding. There wasn't anything -- and I'm going by memory, I don't have it in front of me -- that if they have negative performance, there wasn't anything actually built into the formula to accommodate that. So that would be a -- MS. HALSTEAD: I thought we had 0 percent of the formula based on performance. MS. BRYANT: Correct. MS. HALSTEAD: If you're going to assign that 0 percent of the money available, you're not saying that only those who had improved performances are eligible for the 0 percent. What it says is you're going to look at

0 0 the field, and you're going to decide based upon their performance who gets what percentage of what. By assigning an arbitrary number of zero, you've basically said that unless you are in that positive portion, which may end up being, the way this is done, it could end up being five of the agencies, and those are the only five who would be eligible for money. MS. BRYANT: Uh-huh. MS. HALSTEAD: It was my understanding what we wanted to do was allocated that 0 percent of the funds based on the quality of the work that the agencies were doing, not as a bonus for just those agencies who were doing better than whatever threshold you identify in this point. MR. GEYER: You can't do that if you use 0 percent of the funding based on the needs, population. You can't do that. You can't subtract from that 0 percent. That would have to mean you would have to subtract. Then you'd have to change the 0 percent portion of the funding if you're going to start subtracting. MS. HALSTEAD: No. MR. GEYER: Yes, you would. MS. HALSTEAD: No, you're not dealing with the 0 percent needs pot. You're only dealing with that 0

0 0 percent pot. MR. GEYER: If you start subtracting from the 0 percent, then you've got to cut into the 0 percent, if you subtract something from the other. MS. HALSTEAD: No. MR. GEYER: Yes, you do. The 0 percent is there. MS. HALSTEAD: It's two separate pots of money. MR. GEYER: I know. MS. HALSTEAD: All I'm saying is -- MR. GEYER: You are -- MS. HALSTEAD: -- that if you've got a pot over here with 0 percent of your total funds in it, and you're going to allocate that 0 percent of the money, totally separate from however you've allocated the 0 percent, based upon how this is done that 0 percent of the money could only go to agencies who had a positive value in this column. I didn't think that that was what we had necessarily intended when we developed the formula in the first place. I didn't think we had set aside that 0 percent as a bonus pot based solely upon whether or not these calculations developed a specific number. CHAIRMAN GILLIAM: Do you have a comment? MR. GEYER: I thought that's the way it was set up. It's a difference of opinion. You were one of the

0 0 main ones who pushed for performance -- MS. HALSTEAD: You're right, I did. MR. GEYER: -- you know, as being a very important figure. MS. HALSTEAD: Well, and I also prefaced that comment by saying that performance is a very squishy deal with transit agencies, because the more effective they are, you know, often the more money they lose. You know, it's just a fact of life that sometimes that data is not necessarily going to reflect greater productivity because you're carrying a whole bunch more people. It's not like business where if you do better, you end up with a better bottom line. Transit isn't like that most of the time. I raised the question solely because I didn't remember that the 0 percent pot was to be set aside as a bonus. The way this is calculated, that's kind of how it's coming out. CHAIRMAN GILLIAM: Bobby, quick question in relationship to the miles. In normalizing it, does it take into consideration the different days of the year? One year you may run more service Monday through Friday and less service on weekends or whatever, so it will have a minor variance, but it will not always be the same. So when I look at miles here, I see miles may be slightly less than the previous year. So will it be normalized for

0 0 that, to take that into consideration? If not, that performance indicator could show a negative when in fact they've not reduced the miles. MR. KILLEBREW: This is Bobby. The raw data is simply what the systems report on an annual basis. And so, there is no other modification to the raw data. It's strictly the revenue miles reported one year compared to the revenue miles reported in the second year. CHAIRMAN GILLIAM: I have one follow-up question. Now in all these four categories, do you have to show positive in all -- I didn't try to go back and look -- or one negative in one, and as you calculate it out, and in the end, on the total, it shows a positive, then it's a positive total, or does one negative nullify the other three? I didn't look at that. MR. KILLEBREW: This is Bobby again. One negative in one column does not throw you out of the pot. It is the average of all four columns weighted equally. That is the final calculation. That's the determining factor if you're in the 0 percent pot or if you're not eligible for it. CHAIRMAN GILLIAM: I'll go back to the first question I just asked as it related to the miles. MR. KILLEBREW: Yes, sir? CHAIRMAN GILLIAM: I don't know, because I

0 0 don't understand how many miles normally the systems would be performing on an annual basis. I know in my own system, which is not in this calculation, that my miles from an annual basis, and if I don't add any service to anything, that it has a significant impact as it relates to what miles I will operate one year as compared to another one, based on the fact that I may operate more weekday service, and I guess I'm trying to understand this. There's a possibility that someone may get a negative number here, which will affect their performance based on that. I'm not sure if that is being fair because, I mean, you work very hard to make sure your performance indicator is up, and that number, there's not a thing you can do about, because that's just the way the calendar works. So it's something I think should be taken into consideration. MS. SHELTON: That was one reason for revisiting the formula allocation. There are those problems that are inherent in the formula as well as some of the other ones. For example, with the operating expenses, you'd have somewhat of a natural increase that is not controllable by the operator. So how do we come back and recognize those variances in the formula? MS. OLIER: Fred, I think one of the things

0 0 that we'll need to do in the formula committee meeting is address performance measures and the issue of service miles. It's one of the things that's been suggested that we take and visit, and maybe decide whether we want it to be a part of the performance measures, and how we can use it. So rather than keeping Bobby on that one, let's pinpoint that one and pick that one back up when we get back into the committee portion of it. CHAIRMAN GILLIAM: Okay. Bobby, continue. MR. KILLEBREW: Okay. Moving on, we're faced with -- MR. KING: Bobby, can I interject one little question here before we continue, on what Donna asked? CHAIRMAN GILLIAM: Okay, Tom. MR. KING: Can you work us up a couple of versions of this where that performance is normalized the way Donna suggested so we could see what the impact on the numbers would be, just as an exercise? MR. KILLEBREW: This is Bobby and I'd like to defer that to the chairman of the subcommittee to see if that's the wishes of the subcommittee. I think you all have some particular items in mind anyway. MS. OLIER: Okay. MR. KING: I'm on the subcommittee. I vote yes.

0 0 MS. OLIER: Okay. MR. KING: I'd like to see what she's talking about after you run the numbers and see how that impacts it. MS. OLIER: Tom, let's just make sure that we bring that up when we start the committee meeting. MR. KING: Oh, all right. MS. OLIER: Just take a note on that. CHAIRMAN GILLIAM: All right. Go ahead, Bobby. MR. KILLEBREW: Okay. This is Bobby again. I think we're finished with this page. I've made it over to the right-hand column. So I'm going to go to the next page. Tom, this will be the next tab for you. It's labelled "Draft Scenario" on the electronic spreadsheet. For the folks here in person, there is a title at the top of your page that says, "Draft scenario July c." Again, I'm going to look at the city of Abilene because it happens to be at the top of the list. I'm not picking on Abilene today. The third column over says 0 percent needs. For the folks here in the room, and Tom on your computer, you can see there is a formula in that cell. It's kind of a complex formula. It has the word "round" in it and that scares people first off the bat, but all that's doing is rounding to probably a whole

0 0 integer so that we don't have any decimals out there lingering or it doesn't go out into eternity land with the decimals. What it's rounding is a formula that says, take the needs measure page cell D times the draft scenario page cell C. Now, I'm going to tie in one of the questions that Donna had earlier. She said, we have this needs measure page, are we going to use that number again? Back on the needs measure page, for Abilene, there was a normalized figure for population. That was that, what is Abilene's pro rata share versus all the other systems. It's taking that pro rata share and it's multiplying it by a number that's on this page. The number on this page that it's multiplying it by is down towards the bottom. It's on a line that says, 0 percent funding for needs. So all this is simply doing is it's taking 0 percent of the overall funding for the urban systems, which is located at the bottom of the page, and it's giving Abilene the pro rata share based on a number calculated on the previous spreadsheet. So this is calculating out the 0 percent of the formula. MR. KING: So you're saying that's the needs measure, which is that.0 on the needs measure sheet, and you're multiplying it by what? MR. KILLEBREW: At the bottom of the page,

Tom -- 0 0 MR. KING: Oh, okay. MR. KILLEBREW: -- towards the bottom -- MR. KING: You multiply that number by the total available funding or the 0 percent piece? MR. KILLEBREW: The 0 percent piece. MR. KING: Okay. I've got it. MR. KILLEBREW: It's just the 0 percent that's in this part of the formula. MR. KING: Okay. MR. KILLEBREW: All the systems in that column are treated the same way. They're all multiplied by that 0 percent, using the number we calculated on a previous page. It's their pro rata share of the 0 percent based off basically their population. That's what the formula said. It's a complicated way to get there, but in layman's terms it's your pro rata share of the population times 0 percent. The next column is 0 percent performance. It's another one of those semi-complex formulas. It's got that round word in there again. We're rounding to a whole integer. It's taking a figure from the performance measure page and it's multiplying it by 0 percent of the funding pot. Using the city of Abilene, it references back

0 0 0 to the performance measures page, to a cell called N. That was that last column on that page, the far right-hand column. It's multiplying it by the 0 percent. At the bottom of this page, the bottom of the draft scenario page, you can see where the 0 percent figure is down there. That's how much money is in the 0 percent pot. You'll notice that Abilene didn't get anything. That's because in the far right-hand column on the performance measures pages, Abilene's performance went down so they weren't given a number. Only those systems that had an increase in performance were eligible for the 0 percent pot. So that's what got put there. The next column over is total allocation. This is one of those columns that I probably would have used different terminology because this really isn't the total allocation. This happens to be a column that adds up the previous two columns. All that this total allocation column does is it takes the number that's in the 0 percent column, and adds it to the number in the 0 percent column, and you get a total. The reason I say it's not total allocation is because this is only a piece of the formula. This is not the entire formula. This is only one step of many steps in calculating what the final allocation is going to be. So this, to me, is just a total column. It's not a total

0 0 allocation column, but I didn't do the spreadsheet and I will go with what the author put on here. The column to the right of it says 00 allocation. This simply just brings forward a number off of the base data sheet. If you'll recall on the base data sheet, the far right-hand column has 00 allocations, what that system got from a previous state fiscal year. It just brings that number forward to this sheet because it's easier to do that so you can see it here. The reason we bring it forward is because the next step in this process, based on the formula, is to look at system's growth and decreases thus far. If you'll recall, there's a transition phase in the formula for the first five years that caps systems at 0 percent and prevents systems from being decreased more than 0 percent. So we're setting up for that condition to happen. The next column is labelled differences. The next couple of columns are differences from 00 and there's both a number and a percentage. I'm looking at the city of Abilene. On the city of Abilene, thus far in calculating the formula, they would actually go down $00,000 -- VOICE: Ouch. MR. KILLEBREW: -- which would be a percent

0 0 decrease. That's something that the committee was strong about. We cannot decrease a system by percent. You'd put them out of business. So this is all this has done so far, is calculate what these items are. We've not done anything about the caps and the basis. We've not calculated that yet. We've just put this information. So we know who will be going up and going down. Tom, your spreadsheet should be color-coded. For the members here in the room, it's black and white. I apologize. I didn't have time to run color copies, but you should see different shades of gray. What those different shades are is those are the systems that are going to fall outside of the 0 percent base and 0 percent cap. That's just an easy reference that this author wanted to do for his own benefit to see what systems are we talking about here. What systems, thus far, are getting more than 0 percent? Which systems, thus far, would be reduced more than 0 percent? So that's just an easy reference point. CHAIRMAN GILLIAM: Bobby, just to make sure I'm understanding this chart. That totals up to a little over $0 million, if you look at allocation. Then when I'm looking at the number that says total available program funding,,,000. Are you saying that the -- is that being interpreted as less funds being available in '0

0 0 than it is in '0? MR. KILLEBREW: Actually, because the Commission did not aware the Commission-selected projects pot of money in '0, '0 actually ended up having more funds available to it. I think what Fred's referencing is some of the calculations down here at the bottom, where the author has added some things. A line that says, Commission-selected projects was 00,000 on there. There's another line that says Denton and Lewisville. The grand total is 0 million. CHAIRMAN GILLIAM: Right. MR. KILLEBREW: This was for the author to go back and do some things for their purposes. Denton and Lewisville were not eligible for state funding in fiscal year '0. They became ineligible. So they're not included in the calculation. This was to footnote back to some items so that he knew that he was still in balance with the appropriated levels. So Denton-Lewisville basically gets taken out of the pot. They're not considered in the '0 pot calculation. This $00,000, Commission-selected projects that wasn't awarded in 00, actually got rolled into the 00 number. It's a little misleading, again maybe not the way I would have presented this. This is staff working papers. This was something that they needed to do

0 0 so that they made sure that they were still in balance with the appropriated levels and they had not missed a system in doing their calculations. CHAIRMAN GILLIAM: Well, let me ask the question again. Is,,000, the number that should be comparable to the,,000? MR. KILLEBREW: Yes. CHAIRMAN GILLIAM: This is misleading to me. I understand what you said, but it's not adding up for me. MR. KILLEBREW: If you're comparing the same systems in 00 to the same systems in 00, the level of funding would be 00,,,000 compared to the,,000. CHAIRMAN GILLIAM: This was just an added bonus on this year, the half million and the for one year? MR. KILLEBREW: These numbers are not actually added back in. This was a way for the author to make sure that he accounted for all the systems in 00. In 00, this was the number that we actually had available for the Commission to hand out. The Commission did not hand out the $00,000. They did award Denton-Lewisville, but Denton-Lewisville is not in the mix in 00. So this was a way for the author to footnote that I have accounted for all the allocations in 00, or all the money in 00. The 00,000 that actually was not

0 0 awarded by the Commission is included in this number down here. Again, this is not the way I would have presented it because now it looks like you've got it in there twice. The 00,000 for Commission-selected projects for 00 was unobligated funds that was never obligated to any project. Did I lose anybody? Did that answer the question, Fred? CHAIRMAN GILLIAM: That's it. I understand what you're saying. MR. KILLEBREW: Okay. CHAIRMAN GILLIAM: Keep going. MS. HALSTEAD: Bobby? MR. KILLEBREW: Yes, Donna. MS. HALSTEAD: Do we want a lawyer question asked now or are we going to have an attorney present in the subcommittee meeting? I have one that I think is pretty -- MR. KILLEBREW: Donna's question was -- do we have a legal question on the table now? MS. HALSTEAD: -- critical to -- MR. KILLEBREW: Should we ask it? I would say, now would be a good time to ask it because I don't know that we'll have legal counsel in the subcommittee. MR. MONROE: Fire away. MS. HALSTEAD: Okay. During all of these