By Lori Diggins, LDA Consulting
(Reprinted from the TMA Clearinghouse Quarterly - Spring 1995)
TMAs, particularly those working to become self-financed, find that fee-based services provide a good source of income. Some TMAs report that income from these services supports as much as 10-20 percent of the operational budget.
Until recently, most TMAs provided only those services that were financed through membership dues. Services for which they charged a fee were not typically offered. According to a 1993 survey of 45 TMAs conducted by the ACT TMA Council, only 3 percent of TMAs nationwide charged a fee for services. However, the number of TMAs with fee-based services appears to be rapidly increasing. In interviews conducted with TMA executive directors in California and other states, over 40 percent of the 47 TMAs surveyed reported having some form of a fee-based program. Details gained from these interviews serve as the basis of this article.
The impetus behind offering fee-based services is largely financial. In recent years, budgetary constraints have led some TMAs to search for additional funding sources. In New Jersey and Pennsylvania, a goal of the TMA assistance programs is to make TMAs independent of state funding after three years. Not surprisingly, findings show a concentration of TMAs with fee-based services in those states. This reflects the thinking of TMA directors who believe fee-based services are essential if they are to become independent of state funding.
Charging a fee for services has brought in needed additional revenue, with many TMA directors reporting that 10 to 20 percent of their operational budget is now derived from these services. This new practice has also enabled TMAs to provide a wider range of services than might otherwise be possible.
Some services are unique to a state or region. For instance, TMAs in New Jersey charge a fee for Plan Certification, a State of New Jersey requirement that has j proven to be the most popular service offered by that state's TMAs. In Los Angeles, the Century City West Side TMA charges a fee for emergency episode monitoring, i.e. smog alerts; on-site computerized ride matching, and on-site commuter center maintenance. The Long Beach Airport Area TMA charges $100 per hour for assisting employers who receive notices for Regulation XV violation. The South Placer TMA in northern California charges $20 per person to members and non-members for use of TMA telecenters. A guaranteed ride home program is provided to members at no additional charge and offered to non-members for a fee, based on the distance traveled between work and home. Until recently, TDM consulting firms customarily provided these types of services to employers. By offering similar services at relatively low rates, TMAs may become an increasingly competitive force in the TDM consulting field and at the same time are redefining the traditional role of TMAs.
Fee-based services are offered to a variety of organizations, including both public and private employers. While these services are always available to TMA members, TMAs have succeeded in expanding their market by offering their fee-based services to non-members. Members usually receive these services at a discount. For instance, the hourly rate for plan preparation charged to TMA members by the Greater Mercer TMA in New Jersey is 25 percent less than for non-members. The Meadow Link TMA in New Jersey gives members a 20 percent discount per hour for all fee-based services. Some TMAs are also exploring the concept of associate membership in which employers who prefer not to pay for full TMA membership are offered a menu of TMA services from which they select and pay for only those that meet their needs.
TMAs consider cost factors such as labor and overhead when calculating the fee for these services. Since these cost factors vary by region, the fees charged for similar services will differ accordingly. In addition, fees may vary according to additional cost factors such as company size or the number of worksites. For example, discounts are sometimes provided to multisite organizations for plan preparation. In contrast, the fee charged for conducting surveys or providing ridematching services will be greater for large employers since it is frequently based on a unit cost per employee.
Most of the TMAs contacted only began offering fee-based services within the last year. One has offered these services for five years. Even during this brief time, fee-based services appear to be becoming a significant revenue source for most of these TMAs. Executive directors of these TMAs report generating $60?100,000 in fee-based revenue during the past year. As more TMAs initiate this practice and acquire fee-based experience, the variety and importance of such services will probably continue to grow.
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