Chicago Transit Authority Reduces Assumptions for State Reduced Fare Subsidy

November 15, 2019

The Chicago Transit Authority (CTA) has historically received a reduced fare reimbursement, or subsidy, from the State of Illinois for providing free and discounted rides to eligible riders including seniors, people with disabilities, military and students. The CTA provides nearly 100 million free and reduced-fare trips annually, which amounts to more than $100 million in foregone revenue.[1] 

The reduced fare subsidy is a partial reimbursement from the State of Illinois for the discounted and free rides granted to the Regional Transportation Authority (RTA), which then disburses the funding to the Authority’s three transit boards—CTA, Metra and Pace—based on the number of free and reduced trips provided. The CTA receives approximately 85% of the subsidy.

The CTA offers free rides to low income seniors and people with disabilities who qualify for the Illinois Department on Aging’s Benefit Access Program and to active military personnel and veterans with service-connected disabilities. The free transit program was established in 2008 as then-Governor Rod Blagojevich’s Seniors Ride Free program, which provided free transit rides to all senior citizens 65 and over regardless of their income or ability to pay. This changed under then-Governor Pat Quinn in 2011 through Public Act 96-1527, which eliminated the free ride benefit for higher income seniors. Instead, adults age 65 or older with income below a certain threshold could qualify for free rides and all other adults age 65 or older could qualify for reduced rides, in line with a Federal Transit Administration requirement that transit systems accepting federal funding must not charge seniors and individuals with disabilities more than 50% of normal rates during non-peak times.

The CTA offers reduced fare rides to seniors, Medicare recipients and people with disabilities through the RTA Reduced Fare Permit program. Students also receive a reduced fare on school days, and children under age 7 ride free with a fare-paying customer.

In the past, the reduced fare subsidy to the CTA from the State was $28.3 million annually. However, the State cut the subsidy approximately in half in FY2015 to $14.6 million due to a State budget shortfall and subsequent budget cuts. The subsidy remained at that level every year through FY2019. Despite the State reduction, the CTA continued to budget for the full $28.3 million reimbursement based on guidance from the RTA and in order to demonstrate a continued need for the subsidy. The Civic Federation cautioned against the CTA relying on the full reduced fare subsidy each year since it was highly unlikely to be restored given the State’s ongoing financial challenges.

The State never restored the reimbursement to the full amount and the CTA was forced each year to find ways to close the resulting budget gap. Matters became worse during the State budget impasse because the State made additional cuts made to the Public Transportation Fund and implemented a surcharge on sales tax revenue distributed to the CTA. The combination of budget stressors forced the CTA to rely on short-term borrowing to close a $17.5 million year-end budget shortfall at the end of FY2017.

The State of Illinois FY2020 enacted budget allocates $17.6 million for the RTA’s service boards—the same level as the previous several years. Based on this amount, the CTA will receive $14.6 million in FY2020. For the first time since the cuts began in FY2015, the CTA’s FY2020 budget proposal plans for the reduced subsidy of $14.6 million rather than the full subsidy of $28.3 million.

The Civic Federation commends the CTA for reducing the reimbursement assumption based on the State of Illinois budget. Budgeting for reality is a better practice than budgeting for the full subsidy and making adjustments throughout the year to close the resulting deficit.

Despite reduced State funding to the RTA’s transit service boards, these agencies are still required to comply with federal and state mandates to provide free and reduced rides. While the CTA has reduced its projection for the reduced fare reimbursement for FY2020, the CTA says it will continue to work with the RTA and the other service boards to advocate for the State of Illinois to restore full funding.[2] The Civic Federation continues to support restoration by the State of the full subsidy since State statute implemented the free rides program.

For more information about the CTA’s FY2020 budget, see the CTA website.