The University of Tennessee has signed an 18 year, $5 million contract with First Transit to provide bus services. "First Transit [claims it] is the largest provider of university transportation services, operating in 26 colleges and universities throughout North America."

A KAT "spokesperson said the UT contract is less than 10% of its budget and any losses will be offset by a reduction in costs."

It's hard to tell from KAT revenue reports, but yes the UT contract is probably less than 10% of the budget. However, it appears the UT contract is about 40% of KAT's revenue from operations. The majority of KAT revenue comes from non-operating revenue, e.g. federal, state, and local government funding. To review KAT monthly reports, select the General Information link on the KAT website, then select the KTA Board link on the right, then select the monthly minutes. I used the April 2012 report for the period ending March 31, 2012.

It also appears the UT ridership is 30% of KAT ridership.

Based on the numbers given, it looks like it is possible that UT could save up to $1 million a year with this new contract. I am surprised by this possible savings. Maybe there is more to the story.

UPDATE: WATE reported the First Transit contract numbers incorrectly. It is actually an $18 million, 5 year contract. Thus, UT will not be saving money, they will be spending more money, possibly a million dollars more per year. Thanks to a reader for the correct information.