The Strathmore Handi-bus Association is considering adopting a new organizational model to address financial challenges it faces.
The Strathmore Handi-bus provides accessible transportation to senior citizens and temporarily and permanent disabled people of all ages. During Strathmore town council’s regular meeting on Dec. 2, Wayne Herdman, association treasurer, presented a history of the organization and an account of financial challenges it now faces.
In 1986, the Strathmore Handi-bus Association was registered as a non-profit under the Alberta Societies Act. In 2003, the town, Wheatland County and the society raised funds to build a garage for its vehicles. At that point, a board was established, composed of local volunteers. The group ran into financial difficulties, so the Handi-bus Association entered a memorandum of understanding (MOU) with the Town of Strathmore.
The MOU states the town would provide $175,000 per year to fund salaries for the Handi-bus and that it would take over the operation and direction of the service, explained Herdman. The association then prospered for some time, in part due to receiving “quite a few generous” donations, he said.
But the Handi-bus Association started to run into troubles around 2018, when wages increased over 25 per cent, he said. Then, in 2019, wages increased again, by an additional seven per cent.
“Costs were going up and we didn’t see the volume of donations that we had previously,” he said. “It then became a financial problem.”
Wages are now the organization’s largest expense. In 2013, wages were about $210,000, he said. In 2018, wages were about $319,000.
This increase in revenue expenditures hit the organization right in the pocketbook. In 2019, the organization had an approximately $76,000 deficit. The 2020 deficit was estimated to be $92,800, but with decreased service levels due to COVID-19, the organization is now forecasting a loss of $53,000 this year.
Throughout that period, demand for the service also increased. Between 2011 and 2019, the number of trips increased by 47 per cent, from 2,487 to 5,626 trips per year. If the number of trips continues to rise, the organization must ensure it is financially feasible, said Herdman.
To address this problem, the association is proposing to change its service delivery by taking direct control of operations, in order to streamline costs and wages. With that plan in mind, a new budget was formulated for the organization, predicting a $14,500 deficit in 2021 and a $30,800 deficit in 2022. These forecasts incorporate the Town of Strathmore continuing providing $175,000 per year to the program, as well as $35,000 from Wheatland County.
“If there’s any changes in that, it becomes very difficult for us,” said Herdman. “The Handi-bus operations depend on donations, whether it’s support from the town or Wheatland County or other people, we’re very highly dependent on that. If we lose any of the donations we’re getting, it puts us in a critical stage, and I’m not sure where we go from there.”
The town has already budgeted $175,000 for the organization in 2021.
Despite these challenges, the association does have reserve funds, including about $400,000 in accumulated surplus as well as $100,000 in restricted funds to purchase a new garage. As such, the organization could possibly run off two years of reserves, said Herdman.
Providing a service that is limited to seniors and people facing accessibility challenges results in high operation costs, explained Town of Strathmore Councillor Jason Montgomery, who is the town representative on the Handi-bus board.
Part of the problem is that the service pricing covers direct cost for operating vans but does not cover overhead. But the organization is hesitant to increase rates, as was done last year, said Herdman. The association could try to find efficiencies to deliver services more effectively and help its financial situation, which would be more feasible with greater independence, he said.
By operating independently, there is also greater potential for the organization to receive grant funding from Alberta Gaming, Liquor and Cannabis (AGLC). Currently, however, the AGLC has rules that prevent the association from being a fundraising arm for a town program, which it currently sees as the case, explained Montgomery.
Residents can support the Handi-bus service by volunteering for the board and by donating to the association, to make it more sustainable, said Montgomery.
A report will be returning to town council in January in relation to a proposed new agreement, based on the organization changing its method of service effective Feb. 1. If an agreement is reached, the existing MOU will be terminated.
Sean Feagan, Local Journalism Initiative Reporter, Strathmore Times