A – Overall Passenger Revenue Loss
We estimate that TTC lost at least $64M in passenger revenue in 2018 due to:
- $61M from fare evasion
- $3M from malfunctioning Metrolinx equipment (TTC’s analysis)
Additional revenue losses from malfunctioning TTC subway fare gates and unattended “crash gates” could not be determined during this phase of the audit, so the estimated $64M annual loss is likely understated.
B – Fare Evasion Rates
System-wide 5.4%: streetcar 15.2%, bus 5.1%, subway 3.7%
The high fare evasion rate on streetcars could be due to its Proof-of-Payment policy where there is no interaction between passengers and streetcar drivers, as well as the multiple-door design of the new streetcars. The design and functionality of subway fare gates make illegal entry easier, particularly at automatic subway entrances without presence of TTC staff.
C – Fraudulent Use of Child PRESTO Cards
TTC’s Child PRESTO card, which provides unlimited free rides, is vulnerable to fraudulent use by people older than 12. During our audit, TTC Fare Inspectors within a short time identified 56 subway riders and 22 bus riders fraudulently using Child PRESTO cards. And we did not come across ANY children aged 12 and under using the Child PRESTO cards. The key problems are: a lack of visual distinction from the regular PRESTO card, no display available to help drivers determine if the passenger is using a Child card, lack of controls over the issuance of the cards, and uncertainty in the deactivation of cards found to be used fraudulently.
D – Fare Inspection Program
There are many opportunities to improve the efficiency and effectiveness of TTC’s fare inspection program, including:
- Conducting a cost-benefit analysis to determine an optimal mix of Transit Fare Inspectors vs. Transit Enforcement Officers
- Reviewing the authority and tools of Fare Inspectors to ensure they can carry out their duties in a safe and effective manner
- Improving scheduling to ensure adequate coverage of routes and time periods
- Increasing actual fare inspection time
Winner – 2019 Exemplary Knighton Award
The Toronto Auditor General’s Office has been awarded the 2019 Exemplary Knighton Award for its audit ‘Review of Toronto Transit Commission’s Revenue Operations: Phase One – Fare Evasion and Fare Inspection’.
This is the highest award for auditing in North America, and is awarded by the Association of Local Government Auditors (ALGA). This is the first time a Canadian audit office has won the Knighton Award at this level.
The audit was a team effort (team pictured below). However, it takes a village to complete an audit like this, and many more staff in the City of Toronto Auditor General’s office contributed to its success.
The audit team pictured from left to right, top to bottom:
Impactful and relevant, thorough data collection
The Awards Panel said the report was impactful and relevant, and that the data collection was thorough. The audit found that a reduction in the fare evasion rate in Toronto of one percentage point would result in $11 million in additional passenger revenue. In order to capture the fare evasion rate, the audit team conducted 136 hours of ride-alongs with fare inspectors, and performed calculations to confirm the statistical validity of their sample size so they could extrapolate the results to the full population.
The judges also found that the audit report was clear and concise:
“The report began with an Audit at a Glance section which provides highlights of the findings, the impact of reducing or mitigating fare evasion on the need to raise fares and the benefit to the City of Toronto of the proposed recommendations. The Executive Summary provides a succinct narrative of a lot of information for readers with limited time. In the report body, uses of white space, well placed visuals, color coded recommendation boxes to highlight the recommendations— made a longer report an easy read. Effective placement of visuals and the video prepared for the residents were deemed to be immensely effective in communicating the magnitude of the problem.”
This was the first time the Toronto Auditor General’s Office has made use of video to communicate the results of an audit. The video can be viewed here, and the full audit report can be found here.
“Excellent roadmap”
As auditors, we always hope our work will be used to make a difference. In this case, we were very proud when the Chair of the TTC Board said they will use the audit as a roadmap to make changes to reduce the risk of fare evasion. Also, management at the TTC accepted all 27 of the report’s recommendations.
“We can’t really go wrong with these recommendations because they are so clearly laid out. I think this is an excellent road map. A way for us to move forward into the future of our system. And again I thank everybody who’s played a role in this. We’ve got some really good recommendations before us that we can adopt and make the system healthier and wealthier for our city.”
– Jaye Robinson, TTC Board Chair
Each year, local government audit organizations from around the U.S. and Canada submit their best performance audit reports for judging. The purpose of the competition is to improve government services by encouraging and increasing levels of excellence among local government auditors. Judges from peer organizations determined that this audit was among the best of 2019.