Revenue lost to TTC fare evasion three times greater than agency previously said, auditor general reports

TheStar.com
February 22, 2019
Ben Spurr

Fare evasion on the TTC is a much more common and costly problem than the transit agency has previously told the public, according to a new report from the city’s auditor general.

The report by Auditor General Beverly Romeo-Beehler released Thursday says the portion of riders skipping out on fares is more than twice the figure that the TTC has previously said, and last year unpaid trips resulted in more than $60 million in foregone revenue.

The number of fare evaders is more than twice what the TTC has previous said, says a new report from the city’s auditor general, noting the problem in 2018 resulted in more than $60 million in foregone revenue.

The TTC has consistently stated its evasion rate was around 2 per cent and cost the public agency about $20 million annually. It has repeated those figures despite unpublished internal reports that suggested the numbers were significantly higher.

Romeo-Beehler’s report concluded the actual evasion rate is roughly 5.4 per cent. The city’s financial watchdog determined evasion cost the TTC $61 million last year, a number that rose to $64 million when lost revenue from malfunctioning Presto fare card equipment owned by the province was factored in.

Even the $64-million number “is probably understated,” according to the report, because the auditor was not able to accurately quantify all losses as a result of faulty subway fare gates and the TTC’s fare collecting practices at busy subway stations.

TTC Chair Jaye Robinson called the numbers “very unsettling” and said they confirmed her suspicions that evasion is more widespread than the official agency numbers have indicated.

Robinson, who is also councillor for Ward 15 (Don Valley West), said it was “long overdue” that evasion rates were “accurately quantified,” and stressed the TTC was committed to acting on the auditor general’s recommendations.

“We need to fix what’s clearly broken, and the abuses that are taking place,” she said. “I think this is a major issue and we have to address it swiftly.”

Robinson conceded the money the agency is losing to evasion provides “a clear counterpoint” to the TTC board’s decision to ask riders to pay more through a 10-cent fare increase this year, but said reversing the hike two weeks before it goes to council for approval is “not on the agenda.”

A 1-per-cent reduction in fare evasion would result in an additional $11 million in revenue for the TTC.

TTC spokesperson Susan Sperling said the agency welcomed the auditor general’s report and has accepted all 27 of her recommendations.

She said even prior to the report the agency had taken steps to reduce evasion, including installing CCTV cameras at subway gates, using Presto data to inform fare inspection work, and developing an “extensive” public education campaign.

As part of its proposed 2019 budget, the TTC board has already approved hiring 45 more fare inspectors, which would bring the total number to 113.

The auditor general’s office conducted its review by spending 136 hours observing fare inspectors on 315 streetcars, 76 buses, and 15 subway stations over a six-week period between November and December. The auditor also reviewed 38 hours of security camera footage of automatic subway entrances.

The report concluded fare evasion rates differed depending on the mode of transit -- streetcars had the highest portion of free riders, at 15.2 per cent. For buses the rate was 5.1 per cent, and for subways 3.7 per cent.

The auditor general speculated rates could be higher on streetcars because of the proof-of-payment system that allows riders to board at rear doors, and the design of the new streetcars that keeps drivers separated from the public.

She also said that the “design and functionality” of the new subway station fare gates, which the TTC has budgeted more than $60 million to install, “make illegal entry easier.”

The report reserved much of its gravest concern for the TTC’s use of child Presto cards. Under a policy introduced by Mayor John Tory in 2015, kids 12 and under are allowed to ride the TTC for free. Although they’re not charged, they’re supposed to use specially programmed Presto fare cards to gain entry to the network.

But the child cards look exactly the same as regular ones. And over the course of the audit, investigators didn’t encounter any children using fare cards designated for them, but did find 78 older subway and bus riders who were fraudulently using the child card.

“There are numerous serious control weaknesses with the issuance and monitoring of these (child) cards, including a lack of visual distinction from the regular Presto card,” Romeo-Beehler’s report found.

Among her recommendations are for the TTC to “re-assess whether there is a critical need” to issue the child cards in the first place, and to consider temporarily suspending their use until the problems can be sorted out.

Other recommendations include having the agency set “acceptable targets” for fare evasion and develop strategies to achieve them; “accurately measure and publicly report” on the rate each year; expand its inspection program to cover more of the system and increase the use of plainclothes inspectors; and review the functionality of subway fare gates.

The report will be debated at the TTC board meeting Wednesday.

In a statement, Mayor Tory said he had already discussed the report with TTC officials and they “will be taking immediate action to increase fare compliance.”

“I hope they send a clear message to fare evaders very quickly that they will be caught and they will face costly penalties,” he said.

The evasion rate of 2.2 per cent that the TTC has cited for years was taken from an internal audit conducted in 2011, before major changes to fare policy such as all-door boarding on streetcars and widespread use of the Presto card.

A separate study commissioned by the agency and completed in 2016 determined the evasion rate across the system was 4.4 per cent and cost the TTC $49 million annually.

Although the TTC paid almost $100,000 for that study and its results sparked transit agency officials to draft an internal action plan to address the problem, the results were never made public.

In 2017, the Star obtained documents that cited the higher evasion rate from the more recent study and published the numbers. The TTC says it decided not to release the 2016 study’s higher fare evasion figures because the agency believes its methodology was flawed.