Ted Bergh, MBA '80: A new model for increasing ridership and revenue for public transportation
Ted Bergh, MBA '80, CFO of Metro, Southwest Ohio's fixed route bus service, is also executive director of Everybody Rides Metro, an independent charitable foundation committed to providing reliable transportation to the economically disadvantaged of Cincinnati. Everybody Rides Metro (ERM), Bergh's brainchild and the first foundation of its kind in the country, assures access to employment, education, health care, and other vital services for low-income individuals as they work towards self-sufficiency. In October 2008, Metro received the American Public Transit Association's (APTA) Innovation Award for creating Everybody Rides Metro.
"This foundation started in 2006 and grew from providing 2,000 rides per month in 2007 to 22,000 currently," said Bergh. "This is 1 percent of all Metro rides, and our goal is 3 percent or 70,000 rides per month by 2009." ERM partners with local non-profit agencies who were already helping low-income individuals live more sustainable lives. This collaborative partnership has been successful at raising $1.25 million from governments, charitable foundations and individual contributions. Over 50 agencies have distributed more than 100,000 tokens to people in need since the program was launched.
APTA's awards announcement in "Transit News" noted: "In 2006, the Southwest Ohio Regional Transit Authority -- which operates Metro fixed-route service in Cincinnati -- faced an aging fleet in desperate need of replacement, skyrocketing fuel and healthcare costs, and a fare that was far lower than most in the nation, Metro's Chief Financial Officer Ted Bergh had an idea to create a foundation to provide subsidized fare media for those individuals who need it the most. This concept would ensure that Metro could raise fares without unfairly affecting low-income riders while bringing in fresh capital to be used for the purchase of bus passes and tokens. From this simple idea the Everybody Rides Metro foundation (ERM) was born in fall 2006 as a 501(c)(3). ERM began distributing tokens through partner agencies in 2007. ERM's mission is to provide reliable transportation to the economically disadvantaged of Cincinnati, assuring access to employment, education, health care and other vital services as they work towards self-sufficiency."
Below, Bergh answers questions about how Bergh came up with the idea for ERM, how the win/win idea helps Metro's bottom line, the most compelling and most frustrating aspects of his job, and how public transportation is changing.
What first sparked the idea for Everybody Rides Metro?
Bergh: I worked as CFO of a newspaper prior to Metro, and the newspaper had a 501(c)3 that contributed to the community by helping needy children. After a few months at Metro, I suggested starting a similar foundation, but have the beneficiary be low income bus riders. After some internal discussion, we realized that with rising energy costs, Metro would need to raise fares, [which] would disproportionately hurt low income riders. Metro could not discount rides to some riders but not others. ERM was started to find alternative sources of funding to provide rides for low income residents. If there was an alternative funding source for low income riders, then fares could be raised for riders who could afford a higher fare. In researching the startup, it was learned that virtually all social service agencies serving low income residents spent some of their budget on public transportation.
Does Everybody Rides Metro also work to help the bottom line at Metro?
Bergh: About one third of Metro riders are below the federal poverty line. With rising fares, these riders would have ridden less. Local charities and social service agencies were buying about $500,000 of rides per year. With rising fares, the amount of rides purchased would be less, since most charities have fixed budgets. By finding alternative funding sources, ERM prevented a loss in riders and improved Metro revenue. ERM is currently providing about 2 percent of Metro revenue that should grow to 3 percent in 2009. This is definitely a new source of funds for Metro. We learned that if we were to increase riders from Metro's largest segment (low-income riders), we had to locate the funds to pay for the rides.
What's the most compelling aspect of your job?
Bergh: Being able to say that ERM helps people find and maintain jobs and helps people access appropriate health care. The most compelling aspect is becoming a social entrepreneur to produce a return to the community, instead of a return to private investors. Learning how to produce in the not-for-profit sector, where funding is readily available for projects with a social return, is a business model that is new and being developed. Working with individuals who are devoted to helping others in the not-for-profit sector is much more rewarding.
What's the most frustrating aspect of your job?
Bergh: I am still the CFO of Metro, so it is difficult to give adequate attention to being executive director of Everybody Rides Metro. We are seeking some capacity-building grants to finish proving the business model and packaging it to take to other markets. If we had the funding, we would be able to take the model to other markets faster.
What key issues are affecting your industry today? How is it changing?
Bergh: Public transportation is key to solving many critical issues facing the nation today, from reducing energy demand and carbon emissions to improving access to health care access for uninsured, low-income residents. Investments in public transit, including developing new models to link public transit to other social issues, should provide high social returns. Developing the models to prove the returns is the challenge.
- The Everybody Rides Metro Foundation was featured in the most recent issue of Cubic Corporation's quarterly magazine, Collection Point.
- Business Courier of Cincinnati, 3/21/2008: "Pilot program gets everyone on the bus"
- American Public Transportation Association news release, 10/7/2008: "American Public Transportation Association Honors Top Public Transportation Leaders and Public Transit Systems"