ITHACA N.Y.—Cornell University has declined to increase its underwriter payments in support of Tompkins Consolidated Area Transit (TCAT).
In August, TCAT’s Board of Directors greenlighted a request for an 8% increase in contributions from its three underwriters, the City of Ithaca, Tompkins County, and Cornell. The increase would constitute an additional $75,780 in payments, bringing the total annual contribution from each underwriter to $1,022,911. In total, the funds would make up about 16% of TCAT’s $19.2 million of its projected expenditures in 2023.
In a Nov. 21 email obtained by The Ithaca Voice, Joel Malina, Cornell’s Vice President for University Relations, wrote to TCAT Management, the Tompkins County Legislature, and the City of Ithaca, informing them of Cornell’s decision to decline the increase.
Malina wrote that TCAT had not provided “any specific justification for such a large increase,” and that Cornell had confirmed that TCAT holds “approximately $16 [million] in reserve and fund balance with an additional $15 [million] in grants/funding forthcoming for capital and one-time needs.” TCAT’s reserves and fund balances, Malina wrote, should be used to get “through these uncertain times” like Cornell is planning to do.
It may very well be the most challenging period in all of TCAT’s history, since incorporating in 2005. The decision from Cornell comes amid a challenging economic climate, and a litany of issues that TCAT is contending with — from driver and mechanic shortages, to increasing costs and the difficult decision for the transit agency to make service cuts. A backlog of bus repairs have resulted in TCAT missing numerous bus runs, and TCAT is in the midst of negotiating a labor contract with United Auto Workers Local 2300 which expired about six months ago.
TCAT’s Board of Directors reviewed a budget projection for the transit company in August that showed that TCAT may burn through its reserves and emergency funds by 2024 and face a $3.7 million deficit in its operational budget. TCAT projected its expenditures to increase by 14% from 2022 to 2023, going from about $16.6 million to just over $19.2 million.
Many of these challenges are cited in the Oct. 6 email TCAT General Manager Scot Vanderpoool’s sent to Cornell in which he originally relayed the request for an 8% increase in payments.
Vanderpool wrote that, “we did not request local underwriter increases in 2022, but our projections for 2023 account for inflationary pressures that impact our ability to keep up with rising costs. To sustain our services, TCAT must remain competitive in the current labor market, especially for recruiting and retaining professional drivers and mechanics.” According to the U.S. Bureau of Labor Statistics, the consumer price index of all items has increased by 7.1% over the last 12 months.
The Ithaca Voice reached out to Vanderpool, requesting a statement on Cornell declining the increase, but due to the ongoing negotiations around the underwriter payments, Vanderpool said he could not speak to the matter. However, Vanderpool did say that TCAT’s fund balance is actually closer to $9 million, not $16 million as Malina had indicated.
The grant funds that Malina referred to came to TCAT through a $8.74 million grant from the U.S Department of Transportation’s Federal Transit Administration’s Low or No Emission program, and a $7 million grant from the New York State Energy and Research Development Authority. The federal grant is specifically for the purchasing of 10 electric buses. Details around how the $7 million state grant will be spent are not yet public.
The Tompkins County Legislature and the City of Ithaca’s Common Council have already approved and budgeted for the 8% increase in payments that TCAT requested. Cornell’s decision to decline the increase would constrict the payments that the city and the county are able to make. According to the Transportation Agreement — the contract that binds together the three underwriters in support of TCAT — the payments from each underwriter must be “equal annual contributions to TCAT.”
In response to a request for comment from The Ithaca Voice, Tompkins County Legislature Chair Shawn Black wrote that the 8% increase requested by TCAT was, “a reasonable and prudent ask relative to the increased challenges in operating our local bus service. TCAT is an integral service provider in our community, especially for the Cornell community, who are the most frequent users of the bus system. We’re disappointed that Cornell isn’t initially supportive of this 8% increase.”
About three quarters of all TCAT riders are associated with Cornell.
Black continued to say in her statement that, “TCAT management has communicated that they are interested in sharing more details with underwriters on the 8% ask, increased needs related to maintaining service, and the structure of their fund balance. We look forward to this conversation and hope it will clear up any concerns or questions that Cornell has in anticipation of their eventual decision.”
Ithaca Mayor Laura Lewis said she was “unable to comment on this issue at present.”
The Ithaca Voice also reached out to TCAT’s Board of Directors for comment. The nine member board is composed of three representatives recommended to TCAT by its underwriters, the City of Ithaca’s Common Council, the Tompkins County Legislature, and Cornell University.
Of the nine current members, two responded: Ithaca Alderperson Ducson Nguyen and Tompkins County Legislator Dan Klein.
Nguyen wrote, “I’m confident that Cornell will ultimately recognize the value that TCAT brings to our community, the enormous budgetary challenges the agency faces in the next few years, and the importance of investing in TCAT’s workforce. Unlike other transit agencies, TCAT is not a public authority and thus unable to issue its own debt. In my view it would be unwise to prematurely draw down on TCAT’s reserves with difficult years on the horizon.”
Klein had the most critical perspective on the issue. In his statement, he wrote that, “Cornell’s reasoning is not fair. They say that Cornell will be using its fund balance, therefore TCAT should too. That is comparing watermelons to raisins. Cornell took in approximately $1 billion in donations last year alone.”
He called Cornell’s choice to decline the 8% increase while the city and county had approved it “insulting.”
“Cornell receives the biggest benefit by far from TCAT, and yet they have shown disregard for the financial well-being of TCAT over and over again,” wrote Klein. “I do not say things like this lightly, but Cornell University should be ashamed of itself.”
“TCAT, like Cornell, received significant funding from the federal government during the pandemic,” he continued. “That funding is what is keeping TCAT afloat at this time. That one-time money will run out in the near future. To use it to fund operations, as Cornell is suggesting TCAT should do, is irresponsible. You don’t need a Cornell degree to understand that spending one-time money on ongoing operational costs is unsustainable.”
In a request for further comment from Cornell, The Ithaca Voice asked what percent increase the university felt was reasonable for the underwriters to pay. Cornell’s media relations team responded, writing that the university does not, “have a comment beyond what was communicated to the Ithaca mayor, the Tompkins County leg. Chair and the TCAT General Manager” on Nov. 21.