Proposal 16-20

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The University Senate of Michigan Technological University

Proposal 16-20

(Voting Units: Full Senate)

“Proposal for Transparency in Employee Parking Permit Fees and Transportation Operations Planning”

1. Introduction

In 2013 Michigan Tech began charging employees for permits to park on campus, following recommendations made in both an internally produced 2010 Parking Task Force Final Report and the externally produced 2011 Campus Transportation and Parking Plan: Final Report. At that time, the justification for the new permit fee was related to a $450,000 difference between parking operations ($780,000) and revenues from student parking fees, fines, and metered/hourly fees ($330,000). It was suggested that new fees for faculty and staff parking permits could make up the deficit and possibly fund parking improvements and new facilities in the future.

However, despite the initial justification for implementing paid parking for employees, the revenue from Transportation Operations (i.e. revenue from permits, citations, and parking fees) has been increasingly used to subsidize the University General Fund through administrative fees, as well as the University shuttle service; and no strategic plan has been articulated to date for the use of the continued accumulation of surplus funds.    

The issue of parking permit fees is representative of the broader erosion of employee benefits at Michigan Tech, a ten plus year trend as documented by the Senate Fringe Benefit Committee in the report History of Total Compensation at Michigan Tech, 2008-2017.  In this case, a former benefit, i.e. parking, is now a cost to employees; a cost that has continued to increase despite consistent budget surpluses, and a cost that functions as a regressive tax on lower-income earning employees.

1. Background/Rationale

In a 2019 presentation to the University Senate on the activities of Transportation Services[1], Police Commissioner Daniel Bennett provided documentation showing that revenue from parking permits, citations, and other sources related to Transportation Operations for FY2018 ($938,916.68), when comparted to Transportation Operations expenses ($627,799.54) netted a sizable surplus of $311,117.14; and a surplus despite the annual subtraction of a “General Fund Administrative Fee” that in FY2018 totaled $116,459.83.

In fact, data provided to the University Senate by Transportation Services (Parking Updates Presentation, 10/25/17; Transportation Services Presentation, 3/27/19) shows that Transportation Operations has accumulated a substantial budget surplus every year, with the exception of FY2014, since the inception of faculty/staff permit parking in 2013 (Table 1). 

Table 1.  Transportation Operations net revenue FY2013 – FY2018

Beyond running a consistent budget surplus, several other remarkable points have become evident from the information and financial accounting provided by Transportation Services.  First, there does not seem to be a clearly articulated strategic plan related to the use and/or justification for the continued amassing of surplus revenue.  Second, large percentages of the yearly revenue generated by parking permits (student and employee), citations, and hourly parking are being transferred out of Transportation Operations under the line item General Fund Administration Fee.  Third, some portion of the revenue generated by Transportation Operations, including from employee parking permits, is being used to subsidize Shuttle Services. 

As stated in the introduction, a parking permit fee for employees was initially recommended as a means for meeting the shortfall in expenditures related to parking maintenance and administration, as well as a means for generating revenue for future improvements.  As the financial data provided by Transportation Services indicates, current and past fee structures have clearly met the need to cover the yearly expenses of Transportation Operations.  It is concerning however, that in the eight-plus years for which these fees have been collected, there has been no clear plan for how surplus funds might be used to improve on campus parking.  It may be generally true that faculty and staff are willing to support the accrual of funds for future improvements, but the lack of a strategic rationale and plan justifying the collection of said funds is not acceptable practice.

The second point is more troubling.  Since FY2014 more than $333,756.35 has been transferred from Transportation Operations to the General Fund as an “administration fee.”  The justification for this fee and the ultimate use of these funds is not clear.  As it stands, this fee is syphoning off revenue, supposedly for the maintenance and improvement of employee used parking facilities, for some unknown use.  Moreover, when the proceeds from the same fee levied on Husky Motors are also considered, this administration fee has transferred nearly $1,000,000 from Transportation Services to the General Fund since FY2014 (Transportation Services Presentation, 3/27/19).  This fee appears to be a tax levied against revenue generated from the removal of what was previously an employee benefit.  It may be that those funds are benefiting employees in other ways through General Fund expenditures.  However, the initial justification for removing the previous parking benefit was for maintaining and improving employee utilized parking facilities.

The third point concerns the use of Transportation Operations revenue, as well as revenue from Husky Motors, to subsidize the Shuttle Service.  There is no doubt that the campus shuttle provides a valuable and needed service to our community.  The relevant question here is whether revenue generated from employee parking permit fees should be used to subsidize what is currently offered as a free service.  Remembering again, that the initial justification for adding permit fees, and by extension the removal of a previously held employee benefit, was to maintain and improve employee used parking facilities.  The impact of subsidizing the Shuttle Service and the General Fund Administration Fee on the overall net income of Transportation Services is show in Table 2 below.    

Table 2. Financial data for Transportation Services FY2014-2018, showing the impact of shuttle Services and the General Fund Administration Fee on net income

¹Total Revenue for Transportation Services derived from Transportation Operations and Husky Motors.

²Total expenses including Transportation Operations, Husky Motors, and the Shuttle Service.

³Total General Fund Administrative Fee for both Transportation Operations and Husky Motors.

The impact of revenue transfers to the General Fund and Shuttle Services are even more impactful when compared to the relative funds generated by employee parking permit fees and the revenue currently generated by student parking permits, citations, and parking fees. For example, when revenue from employee permit fees are excluded, Transportation Operations still runs a budget surplus every year from 2016; and this surplus is amplified, and stretches back to 2015, when including the amount of yearly funds transferred out as the General Fund Administrative Fee (Table3).

Table 3. Transportation Services financial data FY2014-2018, including adjusted income for Shuttle Services and General Fund Administrative Fee transfers

III. Proposal

The University Senate asks for greater transparency regarding the rationale for the ongoing administration of employee parking permit fee structures and revenue.  The Senate asks that the University Administration and Transportation Services attend a Senate meeting prior to the completion of the 2019-20 Senate term to present information related to the following concerns:

• Justify the surplus funds being generated by the current fees attached to employee parking and present data related to the feasibility of lowering parking permit fees for employees;

• Explain and justify the General Fund Administration Fee that has transferred more than $333,756.35 from Transportation Operations since FY2014 and nearly $1,000,000 overall from Transportation Services over that same period;

• Justify employee permit fees being used to subsidize Shuttle Services;

• Account for the $687,886 net revenue generated to date by Transportation Services and provide a strategic plan for the use of these funds, including any plans for new parking facilities.

[1] Transportation Services includes Transportation Operations, Husky Motors, and Shuttle Services.