Knox County transit director explains complex funding challenges

MOUNT VERNON — Government funding is seldom straightforward. Transit Director Bethany Celmar illustrated how confusing it can be.

“I think the biggest misconception is that we just are given a big pot of money and we run off of it, right? And that’s not how this works at all,” she told the Knox County commissioners on Tuesday.

The Ohio Department of Transportation manages state and federal public transit funds. To receive funds, Knox County Transit must incur the cost first and then submit it to ODOT for reimbursement.

The agency is vulnerable because federal dollars fund nearly $1.4 million of KCT’s budget.

Responding to Commissioner Drenda Keesee’s question about possible cuts related to DOGE (the Trump Administration’s Department of Government Efficiency), Celmar said, “That is the burning question.”

“I think I have to expect that. I have no idea what that would look like or how much,” she said.

“All of this funding goes through June, so we’re good until then. July is when the the new award comes out.”

Increasing fares is not optimal as a funding source because 1) public transit is supposed to be affordable, and 2) when KCT brings in more fare revenue, it gets less federal reimbursement.

Additionally, if someone volunteers to cover another individual’s fare, it counts against the transit agency.

The alternative is increasing contract revenue and local contributions. Instituting a free fixed-route system in the city would increase federal reimbursement but likely reduce contract revenue.

“We’ve worked really hard on reducing every cost that we possibly can,” Celmar said. “We really run a very slim operation, but at this point, it’s wages and benefits. That’s driver hours and availability.”

Federal operating expenses

Federal revenue is split into two streams. One covers capital or preventive maintenance expenses and the other covers operating expenses.

Operating expense reimbursement is not a one-to-one ratio. Instead, ODOT reimburses 50% of expenses after subtracting the fare revenue.

For the second quarter of the Fiscal Year 2024-25, KCT’s operating expenses totaled $613,974. Here’s what the reimbursement calculation looks like:

“This is a key principle,” Celmar said. “I can never get more than 50% of my budget between federal reimbursement and fares. The higher my fares are, the less federal funds you get.”

State and local funds must cover the remaining $316,921 needed for Q2 expenses ($613,974-$297,053).

State funds

Many CARES Act (Coronavirus Aid, Relief, and Economic Security Act) dollars went to transit. During COVID, the state allotted $900,000 annually instead of the current $548,000.

The state distributes the $548,000 in quarterly payments of $137,500.

However, $50,000 each quarter is for the Night Bus. That funding will end in June.

The decreased state funding comes at a bad time because the transit agency just added a second night bus to accommodate the demand for employment transportation.

Celmar said that to sustain the Night Bus program, she will ask retail, food service and manufacturing employers to contribute.

“I don’t think anybody wants to see that go away. That’s incredibly valuable with getting people to work every night,” she said.

Local funds

The county contributes $200,000 annually. The city increased its contribution from $25,000 to $50,000.

Safety-service Director Tanner Salyers said that after discussions with Celmar and County Administrator Jason Booth, the city determined that KCT provides tremendous service, particularly to Mount Vernon and its employers.

“This administration recognizes the importance of public transit in rural areas, how financial constraints can impact rideshare, and what that means for those who use this service,” Salyers told Knox Pages on Wednesday.

“During budget discussions, we looked at what we could do and what our priorities were and determined that collaboration with the county on public transportation that supports our small businesses, manufacturers, educational institutions and public health was something we wanted to invest in.

“We hope our increased investment serves as a signal to others to both continue and increase their support as the need increases and costs continue to rise,” he said.

Contract revenue

KCT charges organizations that contract with the transit company the fully allocated rate, which covers the full cost of providing a ride.

Celmar said the FTA (Federal Transit Administration) wants to see local support for public transit.

“I think that’s where this comes from, and I think it’s fair to say your transit is only as strong as your community who supports you,” she told the commissioners.

Celmar said the vibe she gets from organizations is that “it’s public transit, it should just be there for us.”

That “vibe” is where the fixed-route system comes into play. The county would provide public transit at no cost, so fare revenue would not count against its reimbursement.

However, fixed routes will reduce contract revenue.

“If I’m doing something in town for an organization and someone can suddenly get on and switch for free, why would they pay?” Celmar asked. “I still think [fixed routes] will provide transportation better than anything else for the city, but is it sustainable funding if we’re losing contract revenue?”

Celmar said several employers contribute to their employees’ fares. However, that detracts from federal reimbursement.

A possible alternative is for employers to contract with KCT, which helps with the local match the FTA wants to see, and then provide vouchers to their employees.

“Businesses are trying to save money too, so they’re not going to be real excited to add a transportation line to their budget unless it’s necessary,” Celmar said.

Federal capital expenses

Knox County Transit receives a second stream of federal funding.

Under the capital maintenance program, KCT gets 80% reimbursement for vehicle materials, supplies and mechanics and detailer salaries. For FY 2024-25, the agency can apply for up to $212,764 in reimbursement.

However, the transit company has not had an approved contract since July 2024. That means KCT has been unable to apply for July through December 2024 reimbursement.

That equates to around $90,000 that KCT has not received.

ODOT has not said why.

“This is not even the new [Trump] administration. This is the last [Biden] administration,” Celmar said.

“But I’m still paying people, we’re still fixing vehicles. I have held off on a few major repairs. I don’t think it’s a question of if we’ll get it, but it’s definitely a question of when.”