A Public Transit Transformation: Santa Cruz METRO

There’s no question that public transit is often a lifeline, particularly for lower-income riders, people with disabilities, and the elderly—making mobility more equitable. It’s also an essential circulatory system that feeds the economic, social, and cultural health of a community. 

For transit agencies, getting people from point A to point B with a reliable, frequent, and affordable service is no easy task. A litany of complex challenges are weighing them down: ridership numbers that are often still below pre-pandemic levels, the ebb and flow of funding, tough decisions about maximizing coverage versus ridership, changing regulations, and even rolling blackouts.

To best serve their constituents, transit agency leaders need to build agility into their organizations by laying a foundation of smooth operations and systems. At Santa Cruz METRO, they were held back by outdated legacy systems and manual processes.

“We use a finance system that was created in the 1990s that is no longer supported,” said Chief Financial Officer Chuck Farmer, who is responsible for all the accounting, finance, and treasury functions as well as payroll, procurement, and inventory management at Santa Cruz METRO. “When we print reports, they look like they’re from a dot-matrix printer. We can’t do any type of electronic funds transfer or direct deposits.”

Those disconnected clunky systems and manual processes made getting key financial information difficult and slow. To ensure the financial health of their agency as well as attract and retain employees, Santa Cruz METRO looked to modernize its technology—recently signing on with Workday and starting the implementation process.

We talked with Farmer to learn more about the agency’s digital transformation plans. Our interview has been lightly edited and condensed for clarity.

Could you tell us a little bit about Santa Cruz METRO?

We’re the leading transportation company in Santa Cruz County, California. We offer fixed-route bus and paratransit service throughout the county, as well as extensions to places like San Jose for commuters and supporting colleges with transit options. In 2021, we had a ridership of 1,762,800. Our ridership levels are still recovering from the pandemic, and our current target is to increase ridership to 75% of pre-pandemic levels by 2023. We also plan on expanding our zero-emissions buses (ZEBs), and redeveloping transit centers to include affordable housing, as Santa Cruz County has the second most expensive rental market in the U.S.

What are the challenges that made you decide on Workday?

With 400+ checks printed a week, it created a lot of manual work. We fold the checks, stick them in envelopes, and print addresses. And with mail, not everything makes it to the right address or people sit on checks, creating a large list of outstanding checks that need to be tracked down. However, it still works, but it’s not good for what we need today. And that’s just one of the systems we use. You can see that’s a problem.

These systems work on servers contained in-house—not in the cloud. That’s another problem. If a server goes down, we’re down. And in one case, the server crashed and was not repairable. Our IT department had to bring on a new server and restore the software and data from two days prior. 

None of our existing programs are connected or communicating. If you have an HR [human resources] system, a payroll system, and a finance system, an employee could have three different addresses and potentially three different pay rates with three different withholdings because the systems don’t talk. Reconciliation between systems is very manual and time-consuming.

What challenges are unique to transit agencies versus other public sector agencies?

Everybody is in a world of hurt. The smaller the agency, the worse it is. The larger agencies have the funding for in-house, back-office support. The smaller agencies for years were starved, and then the funding from CARES [Coronavirus Aid, Relief, and Economic Security Act], CRF [Coronavirus Relief Fund], and ARPA [American Rescue Plan Act] all came through, and it helped put some funding in to replenished some of the bucket. People are now saying, “Finally, after 20 years or so, we’re going to update our back-office systems.”

People are looking for new systems, even if it is just the finance system or the HR system. I talk with a lot of the transit agencies, and most are working with a hodgepodge of legacy systems, most of which you probably have never even heard of and many of which are 15 to 20 years old. And more than likely, the company that created the legacy system was bought by some other company, which then was bought by another company, and then another company. It’s a real mess in transit, especially with a smaller agency that didn’t have funding. 

Payroll is very manual, and we leverage the county to help in the process. The challenge we have is the dynamics around pension and our union contracts. Everybody has pensions, and here at Metro our pension is with CalPERS [California Public Employees’ Retirement System]. CalPERS pension is broken into two categories: Classic, which are employees prior to 2012, and PEPRA are employees that came on after 2012. Each of these two plans are different and work separately. The other dynamic is union contracts. People in different groups within unions could have different rules that apply to them versus another group or union. This creates a lot of pay dynamics that you don’t really see in the private industry if there are no unions. All of this is big, complicated, and really confusing.

Why did you choose Workday?

We needed a vendor who could really dedicate their time with us. Some vendors, as soon as they walk out the door, stop providing support and they stop listening to you. It’s almost impossible to get them back in the door to fix an issue that was never really fixed in the first place.

With Workday, I felt like we got the best of everything. It was cloud based and it was integrated. There are multiple applications that all talk or interrelate within the same “bubble,” or environment. Other vendors we looked at didn’t have that. And it really came down to Workday having that bubble mentality, the continuous support, and partnering with companies like Avaap to do the installation. 

Plus, being a big name was another critical factor. Workday is a company that’s going to be around because of its size and scope across so many different industries.

What are your top transformation goals? 

Our top goal is getting a seamless connection to all support systems, so they talk and there is one version of the truth. We need all our data in a system that talks with other systems. Second, the system has to be cloud based because I want to remove the servers in the basement and out of the agency. When the generator kicks on, many times it will create a power surge and reset the servers, taking down everyone for 30 minutes. And if the servers do go down, somebody then has to come in from home to reboot the servers and make sure they are all back up and running. So that was a critical factor as well. 

What Workday functionality are you most looking forward to using? 

Automation. We do so much work in spreadsheets alone with manually creating and inputting information into systems. In fact, there’s some things we just can’t do because it’s either too time-consuming or the current software does not support it. Having everything automated is really the functionality that we’re looking for—push a button and it’s done. Get a check automatically or electronic funds transfer into your bank account for travel reimbursement, for example. Currently our functionality does not allow EFT or wires, so everything we do is by check.

How do you collaborate with other transit leaders to drive broader success and goals?

It’s different in a transit agency, even compared to other government agencies. In a private industry, a CFO is not going to liaison with their competitor. They keep their distance because there’s a competitive nature between companies. Here, there's no competition. Everything’s on the table, everybody’s happy, and they all know each other. We share tips, tricks, even work together to help train people for jobs. In fact, there are a few transit agencies looking over my shoulder to see how this ERP solution works and probably will follow us shortly after go-live.

I spend a lot of time talking with other CFOs of different transit agencies. “How does this work? How does that work?” Everything’s public knowledge, and there’s open communication between the CFOs of transit agencies and insider information since it is all subject to FOIA [Freedom of Information Act], which is unique. 

How do you make sure you’re capturing and sharing data so that everyone has access to insights? 

The big thing here is that I need to gather data to report to the federal government, National Transportation Safety Board [Federal Transit Administration], state agencies, the county, and so forth. I need auditable data that I can pull quickly for each of these groups. Sharing is big in the public arena, and with everything being part of FOIA requests, we need to make sure the public knows what we are spending their tax dollars on and what they get in return. Also, reliable and accessible data helps me figure out which way the agency is headed, to guide discussions with our board and CEO. 

How do you manage all this change across these different stakeholders? 

This is the only place I’ve ever been where everybody’s on board. I have not had to fight the battle of “No, we’ve always done it this way.” It’s been wonderful. 

They’re a little concerned about the amount of work they’re going to have to do to make the change happen. But they’re all on board with change if it makes their job better. They’re ready for something new. 

It’s like buying a new car. Even though they don’t want to get rid of that old Nova, they want a new car. We’re giving them a new car, and it’s going to drive differently, have more bells and whistles, better gas mileage, and they’re going to be happy driving down the road. Now they’re going to say, “Oh, I should have done this years ago.” 

You basically have to prepare for everything, whether it’s the rolling blackouts or uncertainty with funding ebbs and flows. How do you make sure you’re more agile?

We need to be on top of our planning and be abreast of macro- and microeconomic changes as well as political changes. Running various scenarios such as: “If this happens, then what’s the impact? If we move that up, then what happens?” We have purchased Workday Adaptive Planning and will use it to run scenario plans off a host of variable changes in the agency. If we cut back on funds, it will tell us how many employees are impacted, what routes we need to reduce, and whom that affects in the county. If we get an influx of dollars, how do we track and use it? We need to make the right decisions at the right time as it could impact the future of the agency. My motto is: “Make a plan, spend it wisely, reevaluate, adjust, and move forward.” Because we are watched by many people to do the right thing and flex if needed.   

Such interesting complexities. Thanks for giving us insight into that.

Yeah, for a little transit agency, it’s a pretty crazy amount of work.

To learn more about how Workday helps governments drive digital transformation, visit our website.