ITHACA, N.Y. — In early 2021, in the midst of the pandemic, Cornell University was able to leverage a discount of nearly $315,000 on payments it owed Tompkins Consolidated Area Transit (TCAT).
Cornell, which is one of the three financial underwriters of TCAT along with the City of Ithaca and Tompkins County, began to seek discounts from the transportation operator last year on contractually obligated payments for the Cornell University Bus Program.
The Cornell University Bus Program is a separate agreement between TCAT and Cornell, giving the university’s students, staff, and faculty, free or discounted bus rides, paid for by the university in a monthly lump sum to TCAT. Between 70 and 75% of TCAT’s riders are Cornellians, covered by this agreement.
But when TCAT — which was facing financial straits at the time in the pandemic — insisted that it had already budgeted to spend the funds it had expected Cornell to pay them, the university began to withhold its monthly payments starting in Nov. 2020 until Jan. 2021 as it pushed for a discount.
The university’s tactics to get the discount were divisive, but its unclear if it needs to be readdressed at this point, or if its better left as water under the bridge. TCAT’s Board of Directors and Cornell have recently begun negotiations for another three year contract for Cornell University Bus Pass Program.
TCAT’s issue with granting the discount in 2021 was two-fold: its ridership had plummeted as a result of the pandemic, and many of its costs had remained including staff salaries, maintaining its vehicles and facilities. In total, about 30% of TCAT’s operational budget is built from ridership fares.
Cornell’s point of view was that due to the COVID-caused student exodus from their campus, the services they had contracted TCAT were no longer proportionate to their needs.
In April 2021, the arrears Cornell owed TCAT for three months of withheld payments totalled around $809,000. The discount of about $315,000 granted by TCAT’s board was a compromise in order to make the problem go away. Cornell had originally requested a $728,000 discount in Dec. 2020.
The Ithaca Voice request for an interview with Cornell’s Senior Director of Finance and Administration Kelly Cooper was denied. Cooper was an important figure on seeking a discount from TCAT for the Cornell University Bus Pass Program.
Joel Malina, Cornell University’s Vice President for University Relations, offered a response to The Ithaca Voice in March.
Malina cited the steep drop off in ridership which TCAT experienced as a result of the pandemic, writing, “During the 2-year COVID-19 pandemic, TCAT reduced service significantly and Cornell ridership fell proportionately from 3.2 million rides in 2019 to 1.5 million rides in 2021. Information for 2020 rides was not collected by TCAT since service was significantly altered.”
He framed the discount that Cornell received in April 2021 as a “one-time adjustment to the annual fare payment” which both “Cornell and TCAT leaders explored.”
“Together, Cornell and the TCAT board agreed to reduce Cornell’s payment 10% for 2021 to $2.9 million. This year, Cornell’s ridership payments to TCAT will total $3.3 million,” wrote Malina.
Cornell notably had record-breaking donations for its 2020 to 2021 fiscal year, with over $839M in gifts and commitments. Additionally, the university received $12.8M in federal aid in 2020.
“An act of bad faith”
While the discount to Cornell was granted almost a year ago in April 2021 and, in that right, is old news, the issue has remained a sore point for some, and a particular sticking point for Tompkins County Legislature Dan Klein, who was Chair of the TCAT Board of Directors in 2021.
He felt Cornell’s negotiation strategy was “an act of bad faith.”
“This is a role I will not miss,” Klein wrote in the January issue of the Danby Town News
of his position as the TCAT’s Board of Directors 2021 chair.
“I have lived in Tompkins County for 35 years. Of course I have heard stories about Cornell being a bully. But I had never experienced it firsthand until I became Chair of the TCAT board,” wrote Klein.
TCAT’s nine member board is composed of appointees from its three financial underwriters; three members appointed by each Cornell, the county, and the City of Ithaca. Among other conditions to the agreement, each contributes equal financial support for TCAT, which ends up being about 18% of TCAT’s $16M operational budget. This relationship is outlined in a Transportation Services Agreement between the three entities. This 20-year contract is also up for renegotiation in October.
The tactics that Cornell took during the pandemic to get a discount on their bus program remain in stark relief for Klein as Cornell and TCAT work to negotiate the three year contract.
Klein said, “So as a TCAT board member, I have a little trouble trusting that Cornell’s word is good. What’s the point of signing an agreement if you feel like it can be broken at any point?”
Other members were clearly not as moved by the tactic, as TCAT’s board voted 8 to 1 in April 2021 to approve the $315,000 discount, with Klein being the only one to vote against it. The April 2021 meeting minutes for TCAT’s Board of Directors reflects a desire to “move on” among board members recorded comments.
TCAT was able to use federal funds received through the CARES act to balance its budget throughout negotiations with Cornell.
Upon a request for comment, TCAT General Manager Scot Vanderpool wrote to The Ithaca Voice that, “As General Manager it would be inappropriate for me to comment on any differences of opinion” regarding Cornell’s withholding of payments. Though he did stress the way that Cornell contributes to TCAT through the “world-class talent” it attracts to the area, as well as through the expertise and guidance the university contributes to the bus service.
Burying the hatchet
There are other TCAT board members, who, despite not thinking Cornell’s negotiation tactics were necessarily fair, would like to see the hatchet buried.
Tompkins County Legislator Vice-Chair Deborah Dawson, who was a TCAT Board member in 2021, is recorded to have said in the April 2021 meeting minutes, when Cornell was granted the discount, “I don’t think it’s fair. I don’t think it really relates to the level of service we provide, or anything else under the terms of the MOU, but I do think it’s time to get this put away.”
Dawson responded to a request for comment for this story, writing that, “My personal opinion of the negotiations is hardly relevant at this point.”
She contextualized the negotiations that led to Cornell receiving the discount as being a time where both TCAT and Cornell were “struggling to predict what their needs would be when the pandemic dust finally settled.”
“Tompkins County looks forward to working with all interested parties to produce a fair and mutually acceptable set of agreements that will enable TCAT to continue to serve our community,” wrote Dawson.
Dawson’s sentiments are largely reflected in current TCAT Board of Directors Chair and Acting Mayor of Ithaca Laura Lewis. She said that she was “disappointed that Cornell chose to withhold agreed upon payments,” adding “I would have preferred having conversations on the front end, rather than reactive conversations, which are always more difficult. That would have been my preference.”
But Lewis added, “It was difficult to see to the far side of those most difficult days of the pandemic.”
Lewis overall said she would like to see things move forward in what she considers an essential partnership between the university, the city, and the county.
All other TCAT board members who were appointed by the City of Ithaca and Tompkins County either said they felt they couldn’t speak to the issue, or didn’t respond to the Voice’s request for comment.
Two of the three 2021 TCAT board members that were appointed by Cornell referred The Ithaca Voice to Malina’s March response to “summarize Cornell’s position” on the issue of how the university pursued the discount it received, which to Klein is a problem. On Cornell Board appointee, Gary Stewart, did not respond.
“We are coached very heavily once we get on the TCAT board that while you’re here, while you’re in this room, you are advocating for TCAT. You are a TCAT board member. Period. You are not a representative from your organization,” said Klein in an interview with The Ithaca Voice.
Klein made the point that Cornell’s appointees to the TCAT board have the unique pressure on them to not displease their employer.
“They’re all employees there, and if they stood up and said, ‘You know what Cornell should pay […] TCAT — whatever the number would be — they could be fired,” said Klein.
It’s a potential conflict of interest that Klein thinks should be addressed, though at the time of this interview, said he is not sure how it could be solved.
Looking down the road
In the instance that TCAT runs at a deficit, all three of the underwriters have agreed to fill the gap in equal parts in accordance with the Transportation services agreement. Klein emphasized that if this hypothetical situation came to be, it would be the taxpayers of the City of Ithaca and Tompkins County that end up bearing the costs which were ultimately unpaid by Cornell.
Klein added, “It may never come to pass, but there’s sort of a hole in our future budget that if it ever materializes and TCAT can’t meet that hole, part of that hole came about because of Cornell’s holding back its payment.”
With all these grievances laid out, Klein did stress that he sees Cornell as an essential partner in TCAT. The higher density routes of Cornell and the City of Ithaca “subsidize the less dense, far flung routes,”said Klein. “So that’s why the partnership works.”
Klein emphasized that he took issue with Cornell seeking a discount, but more so with how it went about getting the discount. Klein described communication as challenging with Cornell, as well as uncooperative, unproductive. He added that it was difficult to understand why the university had taken the approach it did to get the discount, calling it “shortsighted.”
Klein noted that since Tompkins County is involved in TCAT, the bus service is eligible for state grants and funding, which accounts for 38% of its operating budget.
“I feel like they don’t really understand or won’t acknowledge how much a service would cost them if they needed to do it on their own,” said Klein. “I don’t think they acknowledge or possibly don’t realize how much they need the city or the county involved in the system.”