As the Legislature Considers Three Different Proposals, What Do Transit Agencies Think?
By Jacob Herson
Managing Editor
Transit California
Fare free transit in one form or another is a concept that has been gaining momentum for years. As an enticement to those who do not normally ride transit, it encourages mode shift—especially among the young people who fare free programs usually target, who are then poised to become lifelong transit riders. For those who use transit by economic necessity, fare free programs serve equity goals. Across the board, increasing transit ridership and decreasing car usage is critical to achieving climate goals. But for agencies reliant on farebox revenue, fare free transit requires sustainable funding sources to move beyond the short-term pilot stage.
Legislators, Assemblymember Chris Holden in particular, have been trying to generate support at the state level. In 2017, the Legislature passed Assemblymember Holden’s AB 17, a pilot program for low-income student transit passes, but Governor Jerry Brown vetoed it, citing concerns over funding sources. Legislators are now considering three different pathways that would advance some form of fare free transit: a proposal from Governor Gavin Newsom; Assemblymember Holden’s AB 1919; and Senator Josh Newman’s SB 942, which is co-sponsored by the California Transit Association.
In March, in response to rising gas prices, Governor Newsom proposed an $11 billion relief package. It includes $750 million to transit and rail agencies to provide free transit to all Californians for three months. With the release of the May Revise, Governor Newsom has maintained this proposal.
In April, Assemblymember Holden’s AB 1919 passed the Assembly Transportation Committee with unanimous bi-partisan support. The bill would require all transit agencies receiving state funds under the Transportation Development Act (TDA), the State Transit Assistance (STA) Program, and the Low Carbon Transit Operations Program (LCTOP) to provide fare free transit to youth 25 years or younger for five years. It would also allocate $115 million for the creation of passes so that struggling transit agencies can ensure their farebox revenue losses will not be compounded.
The California Transit Association opposed AB 1919 as it was initially written. The Association cited lack of clarity on funding sources to offset the lost farebox revenue; the bill’s stipulation that agencies refusing or failing to deliver on its fare free mandate would forfeit their funding from the TDA, STA, and LCTOP, which is vital to their capital and operations costs; and finally the concern that with agencies required to provide fare free funding, institutional partners that currently provide financial support for fare free or reduced fare transit would no longer see the need to do so.
The Association has been working with Assemblymember Holden and Move LA, a nonprofit co-sponsoring the bill, on amendments to address these concerns. The process is ongoing at the time of this writing, and Eli Lipmen, Director of Programming and Development for Move LA, calls it “incredibly collaborative.” Lipmen believes a revised bill will allow agencies to opt into the program if it would benefit them, rather than mandating participation. The first round of amendments representing this collaboration went into print on April 19. With the budget surplus and Holden serving as Chair of the Assembly Appropriations Committee, Lipmen continues to see AB 1919 as the greatest opportunity to achieve rapid mode shift. He also believes that focusing on youth, seniors, and people with disabilities is the right approach from an equity perspective. 
The Association is meanwhile co-sponsoring Senator Newman’s SB 942, which is designed to reduce hurdles to accessing an existing funding source. The Low Carbon Transit Operations Program (LCTOP) receives five percent of funds deposited into the Greenhouse Gas Reduction Fund, which receives all funds (except for fines and penalties) collected by the California Air Resources Board. Existing law requires each transit agency that receives LCTOP funds to demonstrate that each expenditure reduces GHG emissions and does not supplant another source of funds, to use those funds to provide transit operating or capital assistance, to use at least 50 percent of the funds to benefit disadvantaged communities, and to submit specified information to the department before seeking a disbursement of those program funds.
Under current law, an agency must repeatedly demonstrate that it meets those requirements to continue using LCTOP funds to maintain a program. SB 942 would remove that hurdle, allowing agencies that use LCTOP funds for a fare free or reduced fare transit program to continue doing so once they demonstrate compliance in their initial program application.
Agency Perspectives
The Orange County Transportation Authority (OCTA) is also a co-sponsor of SB 942. OCTA relies on LCTOP funding for its Youth Ride Free program. Launched in fall 2021, the program became permanent in February of this year, offering free rides to all youths ages six to 18. Since the launch of the program, 1.3 million boardings have been recorded. OCTA also offers free bus rides to full-time and part-time students through its Community College Pass program at a growing number of schools.
“SB 942 will give certainty to OCTA by allowing us to use LCTOP funding on a long-term basis to fund our Youth Ride Free program,” said Megan Abba, a spokesperson for the agency. “Without this funding, there is no guarantee we could continue using LCTOP funding moving forward. The bill also significantly streamlines the administration of LCTOP while still providing for relevant data about benefits to the environment and disadvantaged communities. The bill would also provide the opportunity to explore investments in new pass programs, in addition to existing eligibilities related to zero-emission technologies and operations of new transit services.
“OCTA supports the underlying premise of both AB 1919 and the Governor's free transit proposal, which attempt to find funding from the state to support free transit programs. However, for agencies like OCTA that have already made a free transit program permanent, these proposals may not provide the desired benefits. OCTA has already determined that there are long-term benefits to the Youth Ride Free program, but funding is needed to continue it. While both AB 1919 and the Governor's proposal attempt to find funding for the short term, neither proposal addresses the need for long-term support.
“What OCTA has also found is that each transit agency needs flexibility to craft a program that works for its ridership. OCTA found that providing free rides to youth 18 and under would be most beneficial for our riders. However, some agencies may see more benefits by offering free rides or significantly reduced fares for a different age group. We also need to be careful about jeopardizing existing funding agreements agencies may have with local colleges, cities, or other entities.
“In addition, whenever an agency implements a new program like this, there is a long lead-time. Therefore, any requirement related to free transit fares can’t be implemented immediately, even when funding is available. Time is needed for coordination with stakeholders, to develop a public awareness campaign and secure fare media.
“There are still challenges ahead even if SB 942 passes. If ridership continues to increase due to the free fares and other factors like high gas prices, OCTA will need to identify an increase in sustainable transit operations funding to support the increased demand. While funding by the federal government for operations because of the pandemic was critical to allowing OCTA to sustain operations over the last couple years, eventually that will not be available. Discussions are needed about how we support operations long-term, especially as we all work to expand the transit network and attract new riders.
“In addition, there are some challenges related to tracking ridership data. Ridership data is critical to determining federal formula funds and information about benefits to the environment and disadvantaged communities, so riders must continue using a pass to board OC Bus. How we distribute those passes, protect rider privacy, and coordinate with pass programs developed by neighboring agencies are all things that require further discussion.”
Santa Rosa CityBus also leans toward SB 942 among the current alternatives. Rachel Ede, the agency’s Deputy Director, said, “We appreciate any proposal that brings new revenues to support discounted or fare free programs instead of mandating a diversion of funds that could be used to improve or maintain transit service levels. In the case of SB 942, the added flexibility in the use of LCTOP funds can help sustain successful fare free programs that might otherwise have to end after the pilot period. While short-term fare free promotions can be helpful from a marketing standpoint, building and sustaining long-term fare programs to improve access to transit—without detracting from service quality—is the way to go if we want to move the needle on transportation equity, ridership, and mode share.”
CityBus launched an 18-month pilot program in July 2021 providing free fares for K-12 youth, using Transportation Fund for Clean Air funds. By the end of the first full month of the school year, youth ridership had increased to near pre-pandemic levels. As of today, youth ridership is exceeding 125 percent of pre-pandemic levels and continuing to trend upward. The agency hopes to extend the program beyond the pilot term (ending December 2021) and possibly make it permanent.
CityBus is also part of a partnership with the Santa Rosa Junior College (SRJC) to provide fare free access for students on CityBus, Sonoma County Transit, and Petaluma Transit. This program has been in place since 2018 and has also exceeded ridership projections. The transit operators are reimbursed for lost fare revenue by a SRJC student transportation fee. The agency has recently expanded its Unlimited Pass program to pursue partnerships with employers, residential developers, and others to provide fare free access to the transit system.
“We believe that it’s time to shift away from farebox recovery as a performance metric for Transportation Development Act funds,” said Ede. “While there is a temporary suspension of the farebox recovery requirement at present, I think that reinstatement of that requirement will have a chilling effect on discounted and fare free transit programs that can support transit ridership recovery and local equity and climate action goals.
“I also want to note that fare free transit is not a substitute for investing in and maintaining transit service quality. Transit agencies need to have the resources to provide great service that can meet the mobility needs of their riders. Implementing fare free transit at the expense of service quality (such as increased frequency or service expansion) shouldn’t be the outcome. There also needs to be a recognition that ridership gains from fare free programs can lead to higher operating costs as additional resources are needed to accommodate higher rider loads.”
Sacramento Regional Transit District (SacRT) has also partnered with local institutions to fund its RydeFreeRT program. General Manager/CEO Henry Li explains: “Every community is different, so there is not always a one-size solution that fits perfectly for all transit agencies. However, fare free and reduced fare transit truly promotes so many positive goals around greenhouse gas reduction, mobility, and social equity, especially for those living in underserved and disadvantaged communities where reliable and affordable transportation may be a barrier to success. Ultimately, a successful pathway will need sufficient funding and flexibility for fare free programs like RydeFreeRT to flourish long-term.”
SacRT launched the RydeFreeRT program in October 2019, providing fare free transit for youth in grades K-12, including students, foster, and homeless youth, across the whole system at any time during regular service hours. The agency calls this the first unrestricted youth/student fare free program in the nation. Within the first three months of the launch, student ridership increased 127 percent. Though it decreased due to the pandemic, ridership has returned to approximately pre-pandemic levels. SacRT’s funding partners, including the City of Sacramento and Sacramento County, are moving forward with supporting a fourth year for the program, which is now available to approximately 260,000 youth/students.
A study released by the University of Texas in 2021 found that the RydeFreeRT program achieved multiple key goals to increase transit ridership and school attendance. The study also demonstrated a statistically significant decrease in automobile usage, especially for those who used to get a car ride to and from school. In addition, youth/students reported that they are using RydeFreeRT to access important non-school activities and destinations. Even during the peak of the pandemic in 2020, when many schools were closed, the RydeFreeRT program experienced over 1 million students/youth trips. 
“The biggest challenge to offering fare free programs is offsetting revenue loss,” said Li. “With the RydeFreeRT fare free program, SacRT was able to secure a majority of the funding by partnering with local jurisdictions to make the program possible. Securing dedicated long-term funding will be key to ensuring fare free programs like RydeFreeRT can continue into the future.”
Monterey-Salinas Transit (MST) also relies on local partners to subsidize 100 percent of the operating costs of any fare free service it runs for their benefit. “Mandating free transit fares reduces any incentive for partners to acknowledge and financially offset their impact on local traffic and greenhouse gas emissions,” explains MST General Manager/CEO Carl Sedoryk. “Pre-COVID, MST partnerships accounted for 10 percent of our operating revenue and 25 percent of our ridership. With no incentive to provide partnerships, MST would be forced to reduce services and provide fewer mobility options to members of our community who depend on transit.
“Inducing demand by mandating free transit across the board for transit operators at a time when the industry is facing an acute labor shortage is problematic in that some operators may not have the resources to respond, which could result in overcrowding. Of particular concern is the impact on ADA services. A transit operator may be found in violation of the Americans with Disabilities Act (ADA) if they do not have the resources to fulfill a request for ADA services.
“Covering the costs of fares only addresses 15 percent of the costs of providing the service. If the free service results in ridership that requires additional buses or drivers, the transit operator may be forced to reallocate resources from other programs and communities, potentially resulting in reduced coverage or span of service to lower-density or more rural communities.
“Allowing LCTOP funds to sustain free transit programs indefinitely without additional funding could possibly strain the ability of this program to assist with the longer-term need to financially support the unfunded mandate to transition to a 100 percent zero-emission bus fleet per the Innovative Clean Transit Rule.
“Superior options to either of these measures would be to provide additional operating support to local transit operators and to let local policy makers decide how to best use those funds to serve the diverse needs of their communities.” Sedoryk also advocates for “the permanent elimination of the anachronistic and counterproductive performance measurements contained within the Transportation Development Act, including farebox recovery and caps on annual cost increases that stifle transit operator flexibility, with potential fiscal punishment for lowering fares or increasing frontline worker wages.”
Sharon Cooney, San Diego Metropolitan Transit System (MTS) Chief Executive Officer and Vice Chair of the California Transit Association, reflected: “MTS’s experience with free-fare pilots has been positive. We started with our first free fare day a few years ago on California Clean Air Day, and then last year we offered free fares for a month to help customers transition to our new fare collection system. Now MTS is partnering with the County of San Diego and SANDAG on a formal year-long pilot program allowing youth 18 and under to ride free. In all three cases, MTS experienced a bump in ridership over baseline: 30, 14, and 16.5 percent, respectively.
“Keep in mind, each time free fares are given, it’s a loss of fare revenue—the backbone to keeping service at sustainable levels. While free fare pilots are good to build long-term support for transit and increase ridership, it’s best to take a measured and strategic approach. This could include building a free fare pilot into an annual budget, starting small with single days of free fares, or even a specific time frame for a special event.
“The reality is free fares aren’t free. Transit agencies will need a sustainable source of funding to move free fare programs past the pilot phase and into longer term implementation. Data collection is also a challenge. Success metrics should be created for any free fare pilot. Transit KPIs can be a good starting point, such as ridership, passengers per revenue hour, complaints, and on-time performance. Capturing the data from those participating in the pilot, as opposed to already riding regularly, is challenging, but it’s important to know what created the behavior change. Because our Youth Opportunity Pass pilot still requires participants to use fare media and is using a targeted demographic, we will have an opportunity to really look at different success metrics such as emission reductions, long-term ridership gains for youth riders, and more.”
While the benefits of fare free programs have been demonstrated and the urgency to achieve mode shift is real, it has to be done in a way that does no harm—whether by jeopardizing critical state funding, jeopardizing existing funding partnerships, or putting service quality at risk to meet additional demand. With proposals arising from the Governor’s office, the Assembly, and the Senate, there is clearly widespread support for finding the right solution.