TWU 234 Wage Increases Pattern wage increases 1

TWU 234 Wage Increases § Pattern wage increases — $1, 250 lump sum payment — 1. 5% increase in July 2010 — 1. 0% increase in December 2010 — 2. 5% increase in December 2011 — 3. 5% increase in December 2012 — 3. 0% increase in December 2013 § Total increase over life of contract: 11. 5%, plus lump sum payment § 1. 5% additional employee Pension Contribution § Net wage increase: 10%, lump sum payment 1

TWU 234 Important Contract Provisions § Five year wage progression to reach top rate § No Layoff Clause after one year of service § Split Shift Operators Ø Total number of straight runs not less than 60% of split shift runs Ø Utilized for 49% or 917 of 1, 855 daily Operator and Cashier runs § Overtime paid for “Work Hours” in excess of 8 hours for each work day Outsourcing § Ø The Authority and Union discuss and investigate the necessity for outsourcing unless: o Unforeseen emergency o Not fully qualified employees in the department o Equipment repair requiring work or specialized training, skills and facilities o Cylinder Head and Turbocharger Rebuilds 2

TWU 234 Contract Wages Operators Current 2012 -13 Starting wage $14. 91 $15. 28 Top wage $24. 85 $25. 47 Average wage $23. 44 $24. 03 2. 5% Number- Full Time Number-Part Time Operators 2, 590 - Mechanics 2, 190 - 340 - 5, 120 - Contract wage increase Job Classification Cashiers Total 3

9. Healthcare

Healthcare q Comprehensive healthcare plan provided to employees Ø Existing 3 year contract with Independence Blue Cross Ø Personal Choice & HMO offered Ø HMO only for new hires after November 7, 2005 q Healthcare provided for 3 years post retirement 5

Healthcare Basic Coverage Union Non-Union Current $1, 121 per month FY 2012 -13 $1, 233 per month 1 % of 40 hours weekly pay 5% of monthly plan premium No change in formula: increases with pay No change in formula: increases with premium $5 per visit $10/$20 per visit No Change Current Employee Contributions Co-Payment FY 2012 -13 Current: HMO Current: PPO FY 2012 -13 6

10. Pension Overview

Pension Summary q Master trust comprised of five separate plans covering City Transit, Red Arrow, Frontier, Transit Police & SAM q Regional Rail Employees covered under Railroad Retirement q Assets totaled $833 million at June 30, 2011 q Preliminary composite actuarial funding ratio at July 1, 2011 is 61. 3 percent q Consistent funding policy – Authority pays 100 % of Annual Required Contribution (ARC) each year Ø $87 Million FY 2012 8

Pension: Eligibility & Contributions Union Employee Contributions Non-Union Current • • 2% of 40 hours weekly pay 2. 5% of 40 hours weekly pay effective 12/11/2011 • 1% of salary FY 2012 -13 • 3. 5% of 40 hours weekly pay effective 12/9/2012 • 1% of salary Current • • Age 62 with 5 years of service • 30 years of service, no age • requirement Minimum Age to Qualify for Retirement FY 2012 -13 Minimum Number of Years to Qualify for Retirement Current Minimum Number of Years to be Vested Current FY 2012 -13 No change • • 30 years: full pension 25 years: reduced pension Age 62 with 5 years of service Age 55 with 30 years of service No change • • 30 years: full pension 25 years: reduced pension No change 5 Years No change 9

Strategy To Improve Pension Funding Levels q Minimize unfunded enhancements to existing Plan benefits q Revised strategic asset allocation in 2011 to reduce volatility and achieve desired growth rate q Change Fund Managers 10

11. Diesel Fuel

Diesel Fuel q Fiscal Year 2012 Ø SEPTA employs financial hedging strategy for purchases o Ensures separation of credit risk and physical delivery risk o Provides budget certainty and allows “Price Locks” beyond 1 year - as appropriate q Annual usage approximately 16 million gallons q Cost per Gallon = $2. 20: July - December 2011 $2. 89: January – June 2012 12

12. SEPTA Passenger Revenue

Ridership in Millions 14

Fare Policy q Fare increases every 3 years q Increases to replicate inflation q Encourage use of pre-paid fare instruments Ø Monthly Passes Ø Weekly Passes Ø Tokens q Discourage use of cash 15

Transit Fare Mix 16

Regional Rail Fare Mix 17

Fixed Route Fares Fare Type Date of Last Increase Current Amount Date of Planned Increase Base Fare July 1, 2001 $2. 00 July 2013 Transfers July 1, 2010 $1. 00 July 2013 Zone Fares July 1, 2010 $. 50/ zone July 2013 Other multi-ride tickets/passes July 1, 2010 Average Fare: • Current • Future Transit Weekly $ 22. 00 Monthly $ 83. 00 Regional Rail Weekly $24. 25 - $ 53. 00 Monthly $91. 00 - $191. 00 Transit Regional Rail July 2013 $ 1. 01 $ 3. 75 § 84% of Transit users have a form of discounted pass or token § 86% of Regional Rail customers use a pass or advance purchase ticket for their trips 18

Shared Ride Fares Eligibility: Seniors must be at least 65 years old Date of Last Increase Current Patron Fare Current Full Fare Date of Planned Increase Individual Fare July 9, 2007 $ 4. 00 $26. 70 unknown Group Fare July 9, 2007 $ 3. 70 $24. 70 unknown Fare Type Sponsors Ø Philadelphia Corporation of the Aging (PCA) § Adult Day Care and Senior Centers Ø State Certified Third Party Agencies Fare Policy Ø Patron is responsible for 15% of the full fare and Penn. Dot’s Lottery Fund pays 85% Ø Fares must be paid with cash or be sponsored 19

13. Major Factors Producing Cost Increases

SEPTA Five Year Projection 21

Budgetary Challenges q Unbudgeted expenses greater than $5 million due to infrastructure and vehicle repairs resulting from Hurricane Irene and Tropical Storm Lee q Increased maintenance costs due to deferral of capital projects q Service cuts and major fare increases are likely in FY 2014 22