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CONFIDENTIAL AND PROPRIETARY
Finance Committee -
benchmarking highlights
July, 2016
2
Although safety performance has declined in 2015, Metrorail has better
performance than peers on multiple measures for the last 3 years overall
SOURCE: NTD
69
67
39
35
32
31
Ø 45
CTA
SEPTA
MBTA
BART
WMATA
MTA
543
322
156
141
107
70
SEPTA
CTA
BART
WMATA
MBTA
MTA
Ø 223
75
79
121
244
Injuries
Ø 267
Fatalities
SEPTA 54326 517
48521 464
WMATA 2528
BART 14423
MBTA 9213
MTA 8611
CTA
5 / 6WMATA
2015 rank3 / 6 6 / 65 / 6
Collisions, derailments, and fires
Events per 1B unlinked passenger trips
Security incidents
Events per 1B unlinked passenger trips
Injuries and fatalities, excl. suicides
Number per 1B unlinked passenger trips
Safety and security incidents
January 2013-August 2015
SAFETY: RAIL
3
Metrobus has more safety and security incidents and more injuries than
peer bus agencies
SOURCE: NTD
NJ Transit
King County
2.2MTA
10.8
3.5
Denver
SEPTA
WMATA
Ø 8.2
CTA
LACMTA
7.9
10.9
14.4
MBTA
12.1
7.5
4.2
2.7
Ø 1.4
WMATA 2.8
CTA
2.3
MBTA 1.5
SEPTA
LACMTA 1.3
Denver
MTA
0.9
0.4
NJ Transit
0.1
0.3
King County
23.923.9
19.0
SEPTA
Ø 16
Injuries
26.7
Fatalities
0.1 26.5
NJ Transit 24.00.2 23.8
WMATA 0.1
Denver
LACMTA
King County
0.1
13.2
7.4
18.5CTA
6.5
13.00.2
MTA
0.1 18.6
MBTA
5.0
0.6
0.1
18.4
6.4
7.5
5.20.2
SAFETY: BUS
Collisions and fires
Events per 10B unlinked passenger trips
Security incidents
Events per 10B unlinked passenger trips
Injuries and fatalities, excl. suicides
Number per 10B unlinked passenger trips
Safety and security incidents
January 2013-August 2015
4
Railcar availability historically lagged peers, and has fallen significantly
further behind since April, partially but not only due to parts shortage
SOURCE: NTD; Vital Signs; WMATA Maintenance and Material Management System
78
78
79
81
81
82
Ø 80
SEPTA
MBTA
WMATA
BART
CTA
MTA1
InsightsFleet availability
Target: 9542
October 918
September 926
August 895
892
June 884
May 934
April
January
941
956
March
February
958
923
July
55
36
9
Under repair
Awaiting parts
Planned
inspection /
engineering
1 Due to a data discrepancy in the NTD data, 2014 active vehicles used for MTA (excl. Staten Island Rail)
2 In October only 922 cars were required for service because Orange/Blue headways were extended in response to the car problems, but the plan is to
return to 6 minute headways in January
▪ WMATA made service before
Silver Line, but had a slightly
higher spare ratio than peers
▪ The number of cars available
has since fallen, even as
service requirements
increased
– Minimum car requirement
was met only 10 out of 64
weekdays in Q3
▪ A significant problem is that 76
cars are out of service awaiting
critical parts, in part due to
challenges procuring the items
– Should be <10% (no stock
and in-transit items)
– Immediate situation being
addressed, 22 cars expected
back in service by January
31
– Root cause of parts shortage
merits attention
▪ But another 118 cars are out-
of-service due to repairs.
Reducing unplanned repairs
could improve availability
Availability was slightly behind
peers
Vehicles operating in max. service /
vehicles available in max. service,
2014, percent
WMATA availability has
declined significantly this
year
Cars released for service,
2015
WMATA railcars out-of-
service by cause
Share of out-of-service
cars on 12/7/15, percent
SERVICE RELIABILITY: 2A. RAILCAR AVAILABILITY
5
WMATA spends more than peers on rail maintenance, but less on rail ops
SOURCE: NTD
Ø 5.03
WMATA 7.14
MTA 6.43
MBTA 5.82
SEPTA 4.28
CTA 3.35
BART 3.16
Rail vehicle and non-vehicle
maintenance spend per
revenue mile
2014
InsightsRail maintenance cost efficiency
▪ WMATA is ~30%
higher than peer
average on rail
maintenance cost
▪ Fleet age does
not fully explain
the gap
– MBTA spends
less with an
older fleet
▪ Reducing the gap
on maintenance
spend between
current state and
peer average by
half would save
~$80M annually
▪ Rail operations
cost slightly
below peers
Average fleet age
Years, as of 2014
Ø 21
24
21
26
22
16
17
Rail vehicle operations
spend per revenue mile
2014
Ø 5
6.51MTA
MBTA 5.75
SEPTA 5.36
WMATA 4.36
BART 3.69
CTA 3.22
Rail operations efficiency
SERVICE RELIABILITY: 2C. RAIL MAINTENANCE COST
6
Bus failures
Total vehicle system failures per
100,000 miles traveled, 20141
Bus maintenance costs
Average $ spent per / revenue
mile, 20141,3
Bus fleet age
Years as of 20141
WMATA’s bus failure rate and maintenance spend are in line with or
slightly ahead of peers, which may be partly due to a relatively young fleet
SOURCE: NTD
1 Excludes Commuter Bus
2 Combines NYCT Bus and MTA Bus
3 Calculated as sum of all vehicle and non-vehicle bus maintenance cost divided by bus vehicle revenue
7
5
WMATA
11
12
MBTA
NJ Transit
17
Ø 18
King County 33
CTA 30
LACMTA 26
SEPTA 19
MTA2
Denver
Ø 3.85
MTA2 7.54
MBTA 4.83
SEPTA 4.08
LACMTA 3.47
WMATA 3.41
CTA 3.15
King County 3.10
NJ Transit 2.67
Denver 2.43
10
10
9
9
8
8
8
8
7
LACMTA
Ø 9
MBTA
SEPTA
Denver
King County
MTA2
CTA
WMATA
NJ Transit
SERVICE RELIABILITY: 5A. BUS MAINTENANCE
7
WMATA spends 24% less capital on rail per revenue mile compared to its
major US transit peers; on bus, WMATA is the highest
8.70
7.437.39
6.47
5.38
5.11
Average of peers 7.07
-24%
SEPTA
MBTA
MTA (NY)
MARTA
CTA
WMATA
Average rail capital deployment 2003-2013
$ capital spend per revenue mile
SOURCE: NTD database on capital spend and vehicle revenue miles, 2003-2013
Average bus capital deployment 2003-2013
$ capital spend per revenue mile
3.40
2.902.49
2.14
1.84
1.74
Average of peers 2.22
+55%
WMATA
MBTA
MTA
CTA
SEPTA
MARTA
Benchmarking
SERVICE RELIABILITY: 6AII. CAPITAL PEER SYSTEM COMPARISON
▪ WMATA may be undercapitalizing its
rail system - normalizing for system
size, as measured by revenue mile,
WMATA’s rail spend is significantly
below peers for the period 2003-13
(24% below peer average)
▪ The situation would have been better
but still below average if WMATA
would have spent its entire budget
(spend would be $5.94, still below peer
average of $7.07)
▪ On the other hand, bus spending
exceeds peers (WMATA spends the
most of any major national peers). This
is driven by the recent investments in
fleet
– Bus replacement was the largest
item of WMATA capital spend in FY
2012 ($110M) and the second
largest in FY 2013 ($70M)
Observations
8
WMATA’s operating deficit is growing and farebox recovery declining as
expense growth outpaces revenue growth
2,000
0
1,000
2,500
500
1,500
Expense
Revenue
16 1913 182011 202012 15 1714
4.0
2.8
ProjectedActual
SOURCE: WMATA 2011-YTD 2016 budget data; NTD 2014
1 Excluding silver line expansion, which will grow the deficit 2 Farebox recovery ratio = total fare revenue / total operating expense
40
50
0
55
45
60
14
45
13
43
15 1716
42
2011
47 47
12
CTA
48
MBTA
WMATA
44
2020
MTA
19
41
18
45
40
ProjectedActual
FISCAL SUSTAINABILITY: 1. OPERATING DEFICIT
-1.4
CY
Other agency projections are flat growth from CY14
Farebox recovery ratio2, % by CY
Operational deficit and farebox recovery1
CAGR, %
If revenue and expense continue on
current trends:
▪ WMATA’s operating deficit will
continue to grow to $1.1B in FY20
▪ By CY20, WMATA’s farebox recovery
would be the lowest among
comparable peers’ if peer ratios
remain the same
Insights
WMATA 45
CTA 44
MBTA 40
MTA NYCT 49
Benchmarking
System
CY14 Recovery ratio,
%
Expense & revenue, $M by FY CAGR, %
FY11-15
CY11-14 %
9
12
810
99
711
2011
807
99
707Non-farebox revenue
Farebox revenue
2015
899
117
782
14
861
119
742
13
854
101
753
269267274
288287
13
2.21
12
1.98
2011
1.99
2015
2.33
14
2.22
The decline in rail annual passenger trips has limited revenue growth but
has been mitigated by fare increases
133134
132132
125
2015
1.10
14
1.05
13
1.05
12
1.02
2011
1.05
-1.6
4.0
1.5
1.1
2.5
Revenue1, $M
4.2
Rail
627
593606
569571
146141139
1341312.3 2.6
FISCAL SUSTAINABILITY 2. FARE REVENUE
SOURCE: WMATA FY2011-YTD 2016 budget data; NTD 2014, OMBS actuals FY2012-2015; NTD FY 2012 – 15
MTA
MBTA
CTA
WMATA
Rail
fare/pass.
mile
0.28
0.33
0.20
0.39
0.54
0.29
0.43
0.34
System
Bus fare/pass.
mile
1 Farebox revenue includes “passenger” revenue; non-farebox revenue includes “passenger-other” revenue and “non-farebox revenue” from payroll data
2 Realized fare = fare revenue / annual ridership
Benchmarking
WMATA rail service includes commuter rail-
type service and fares
▪ Due to the decline in annual rail trips
since FY12, WMATA lost ~$44M in rail
fare revenues in FY15
▪ Growth in annual bus trips and bus
realized fare has led to a ~3% p.a.
growth in bus fare revenue
CAGR,
FY11-15 % Bus
CAGR,
FY11-15 %
Fare
Revenue,
$M
UPT,
Trips, K
Realized
fare2,
$/Trip
FY
CAGR,
FY11-15 %Revenue decomposition Insights
10
Despite recent attention, WMATA has seen declining rail ridership for six
years; 2015 ridership has been no higher than 2005
SOURCE: NTD, Maryland Open Data (data.Maryland.gov), US Energy Information Administration
90
95
100
105
110
115
120
125
130
135
140
Los Angeles County Metropolitan Transportation Authority
San Francisco Bay Area Rapid Transit District
Chicago Transit Authority
Metropolitan Atlanta Rapid Transit Authority
Washington Metropolitan Area Transit Authority
Southeastern Pennsylvania Transportation Authority
MTA New York City Transit
Massachusetts Bay Transportation Authority
20152
120
117
100
1413121110090807
100
Maryland Area Regional Commuter (MARC) Train*
Virginia Railway Express (VRE)*
062005
*commuter rail in Washington metropolitan area
1 US regular gasoline prices, US Energy Information Administration
2 Year to date (compared to 2005 Year to date)
3 Sum of MARC,VRE, and WMATA Metrorail trips, CY2009-2014
Peak in gas prices nationwide3
FISCAL SUSTAINABILITY 3. RAIL RIDERSHIP
June ‘08 July ‘14
Total unlinked passenger trips on Heavy Rail, Index=100 in 2005
Observations
▪ When normalized for population, 2015 WMATA ridership is only 86% of the 2005 level (see detail on next page)
▪ Most other agencies have remained above 2005 levels
▪ Regional commuter rail systems (VRE and MARC) are significantly above 2005 levels and have increased from 3.9% to
4.8% of regional rail activity3
Denotes WMATA (Metrorail) fare increase
11
Analysis Observations
Since 2011, demand has declined most acutely at the system’s outer
edges and during off-peak times
SOURCE: WMATA Office of Planning; Metrorail boarding data FY11-FY15
1 Average weekly entries across entire system FY11-FY15 (all months) estimated with Sat,Sun, and weekday boardings (multiplied by 5)
▪ Ridership losses are
spread across all lines
and geographic areas,
pointing to a secular
shift in transit demand
▪ Stations on the outer
edges appear hardest
hit (eg, New Carrollton,
Landover)
▪ Off-peak (weekday
midday/evening and
weekends),comprising
40% of weekly
boardings, has
contributed 48% of the
decline from FY11-
FY15
FISCAL SUSTAINABILITY: 1A: REVENUES AND RIDERSHIP
12
The reliability decline has been accompanied by declining customer
satisfaction and ridership on rail
760,000
740,000
720,000
700,000
0
-1% p.a.
CY15
713,000
CY14
721,000
CY13
726,000
CY12
745,00071%
79%83%
71
56%
68%
788584
CY15CY14CY13
600
500
100
400
300
200
0
CY15
517
CY14
519
CY13
520
CY12
494
Metrorail passenger revenue
$M, by CY
Metrorail ridership
Average weekday boardings, May
Metrorail customer satisfaction
% of respondents selecting 4 or 5 on a 1-5 scale
SOURCE: WMATA customer survey; OMBS data on actuals; Metrorail & Metrobus Ridership History Data
FISCAL SUSTAINABILITY 4. CUSTOMER SATISFACTION
Likely to
recommend
Reliability
Safety on
train
13
Bus presents a more positive story of stability in customer satisfaction,
increases in Metrobus ridership and revenue since 2013
0
50
100
150
115
CY12
121
CY13
123
CY14
122
CY15
Metrobus passenger revenue
$M, by CY
Metrobus ridership
Average weekday boardings, May
Metrobus customer satisfaction
% of respondents selecting 4 or 5 on a 1-5 scale
0
440,000
450,000
460,000
470,000
446,000
CY12
461,000
CY13
462,000
CY14
+2% p.a.76% 75% 72%
7065% 65%
848586
CY13 CY15CY14
Metrobus
data for
CY15 not
available
SOURCE: WMATA customer survey; OMBS data on actuals; Metrorail & Metrobus Ridership History Data
FISCAL SUSTAINABILITY 4. CUSTOMER SATISFACTION
Likely to
recommend
Reliability
Safety on
bus
Metrobus
fare of
$1.75 is
below
national
average
of $2.21
14
Overhead is ~13% of operating expense across WMATA
ObservationsOverhead spend at WMATA
WMATA overhead expense, %
Breakdown of overhead expense by department, %
Overhead is
defined as
spend on:
CFO
IT
HR
CAGR,
FY11-15 %
9.0
3.4
89 91 89 88 87
13
1.63
11
1.42100% =
2015
Overhead
1.66
Other
Op Exp
14
12
13
1.53
12
1.43
9
2011
11
17 18 21 19 17
25 29 28 29 30
39 33 31 33 32
1110121211
2011
44
12
127 168
13
3 53 4
153100% =
HR
2015
Others
DGMO
IT
CFO
INDP
216
3
14
6
202
3 6
Benchmarking
System CY14 overhead expense, %
MTA 15
MBTA 14
WMATA1 12
FISCAL SUSTAINABILITY: 7. OPERATING EXPENSE
MBTA 12
For each support activity (such as IT,
procurement, and finance), there are identified
ways to cut costs by working more
economically and looking for entirely new ways
to deliver support.
CAGR,
FY11-15 %
3.8
14.1
8.5
10.0
19.1
8.7
9.0
CFO
IT
INDP
HR
DGMO
Others
Overall
SOURCE: JAC allocation FY2011-2015
▪ Overhead expense is growing at a faster
rate than other operating expense
▪ The largest amount of overhead expense is
allocated to the CFO department in FY2015
▪ DGMO’s overhead expense is growing the
fastest at ~19% p.a. since 2011
▪ WMATA’s overhead expense is on par with
its peers’
1 WMATA's NTD overhead expense is used for fair comparison
FY
FY
15
The growth in opex is driven by increases in labor expense and fringe
benefits, with the latter’s growth exceeding peers’InsightsOperating expense
29 29 29 27 27
49 50 49 49 49
22 21 22 24 25
2011
1,418 1,5261,435 1,660
Labor
expense
13 14
1,635
Fringe
benefits
2015
Non-
personnel
expense
12
100% =
SOURCE: WMATA 2011-YTD 2016 budget data; MTA 2014 annual report; MBTA SORE History FY2016; CTA budget book 2012 - 2016
▪ The level of expense growth that outpaces revenue growth
(and shrinks the recovery ratio) is coming from personnel
expense
▪ Within personnel expense, fringe benefits are growing much
faster than labor (~7% p.a. vs. ~4% p.a.), due to increasing
headcount relative to hours worked
▪ If fringe benefits grew at the same rate as they did at MTA
NYCT since 2011, WMATA could have saved ~$25M from
fringe benefits in 2015 (a 6% savings relative to FY15 actuals)
446
807
407
Labor
expense
14
1,635
441
805
388
Non-
personnel
expense
Fringe
benefits
2015
1,660
694
314
410
336
12 13
447
1,5261,435
719
413
303
743
2011
1,418
6.7
3.9
2.1
4.0
Overall
expense
1 WMATA and CTA statistics are based on FY15; MBTA statistics are missing due to data issue 2 For CTA only combined labor and fringe benefits
CAGR are available
FINANCIAL SUSTAINABILITY: 7. OPERATING EXPENSE
Benchmarking
CAGR, FY11-15 %
Personnel
expense
share, %
74
73
70
WMATA
MTA
CTA2
System1
Annual operating expense, $M
CAGR, FY11-15 %
Expense breakdown, %
FY
FY
Labor
exp, %
Fringe
benefit, %
Non-
personnel
exp, %
4
4
3
7
7
3
2
6
1
16
FTE has grown by ~5% p.a. since 2011 and is concentrated in the BUS and
TIES departments
ObservationsFTE
FTE breakdown by department, %
13 13 13 14 15
32 33 34 36 35
39 40 38 37 38
910
8,725
8
12 2015
Others
MTPD
RTRA
10,269100% =
TIES
7
14
10,093
6
BUS
68
13
9,301
6
2011
8,596
66
FTE
10,26910,0939,3018,7258,596
FTE
14 201513122011
Headcount
4.6
3.6
6.7
7.1
3.7
Benchmarking
CAGR, FY11-15 %
CAGR, FY11-15 %
FISCAL SUSTAINABILITY: 7C. FTE
System
Employee headcount
CAGR, FY11-14 %
WMATA24
-2.9
MBTA 2
MTA 1
MTA 1
1 Operating headcount includes: general administration, vehicle maintenance, non-vehicle maintenance, and vehicle operations
2 WMATA's headcounts from budget reports are used to compare against peers’
FY
FY
SOURCE: WMATA payroll data FY2011-2015; Transit systems’ budget reports FY11-15
▪ FTE has grown at ~5% p.a. since 2011
▪ BUS and TIES department constitute 73% of
FTE in 2015
▪ TIES and RTRA departments are growing the
fastest at ~7% p.a. since 2011
17
Realized rail fares are higher than peers’ due to variable pricing while
realized bus fares are in line due to limited pass options
3.15
2.75
2.65
2.25
6.90
2.40
2.10
2.15
2.48
2.25
2.20
5.90
Rail fares
Bus fares
1.75
2.75
2.10
2.25
2.21
1.75
2.48
1.60
2.00
1.96
Smartcard fare, $
Smartcard fare, $
Cash fare, $
Cash fare, $
1.11
2.33
1.16
1.15
1.22
1.13
1.07
0.99
1.10
0.78
Fare per trip, $
Fare per trip, $
1
Average
Average
SOURCE: NTD 2014
1 Peak fare used
FISCAL SUSTAINABILITY 8. SERVICE BENCHMARK
18
Benchmarking WMATA’s current operations in bus and rail against peers
Category
Fiscal
sustainabi-
lity
Service
reliability
Safety
Overall performance2
WMATA Peers WMATA Peers WMATA
Rail Bus
WMATA lacks a target-based capital strategic plan and and
independent capital decision-making authority
Capital planning process
Benchmark1
Project priortization is not centralized and does not use clearly
defined evaluation criteria
Capital portfolio optimization
4% 3.5% 4.3% 3.8% 0.8%Labor expense growth, FY2011-15 0.7%
5.4% 5.7% 1.3% 2.4%
Peers
45% 44% 62% 59% 25%Farebox recovery ratio, 2014 26%
$4.46 $4.58 $5.11 $7.07 $3.40Capital spend per revenue mile, 2003-2013 2.22
1.4% 5.7% 2.4% 2.9%Headcount growth, FY2011-15 (1.2%)4.6%
11.6% 13.8% 6.2% 6.4% 3.3%Overhead exp as % of total op exp, 2014 4.6%
SOURCE: NTD database 2011-15; Annual budget reports of WMATA and peers, 2011-15; Vital Signs
1 Data are for calendar year period, unless otherwise noted 2 Some overall statistics are on calendar year schedule
3 Fleet availability has declinedby 6% Oct 2014-Oct 2015
7% 4.6%Fringe benefit expense growth, FY2011-15
$2.33 $1.15 $1.10Realized fare per trip $1.08N/A
(1.6%) 1.2% 1.5%Ridership percentage change, CAGR 11-15 (1.0)%N/A
(4%) (4%)Staffing level trend, passenger trips/FTE
CAGR, FY2011–15N/A N/A N/A
24 21 8Average fleet age, years 9N/A
$7.14 5.03 $3.41Maintenance cost per revenue mile 3.85N/A
79% 80% 87%Fleet availability3 82%N/A
2/6 7/9Collisions derailments and fires by service
size rank, Jan 2013-Aug 2015N/A N/A N/A
3/6 9/9Security incidents per by service size rank N/A N/A N/A
4/6 7/9Total injuries + fatalities by svc. size rank N/A N/A N/A
19
In order to address these core challenges, experience suggests the
transformation has to be a portfolio of initiatives
▪ Regain the trust of
WMATA customers by
improving safety and
reliability which creates
the space for bigger,
bolder initiatives
▪ Regain the trust of
the jurisdictions by
demonstrating short
and long term
improvements in the
financial position which
demonstrates capability
to invest
▪ Launch reforms of
critical business
processes (e.g.
financial management
systems and
procurement)
Objectives of the
transformation… …imply a balanced portfolio
▪ Relatively quick impact, but typically $20-30M per initiative
▪ Requires focus and execution
▪ Savings can be re-invested in other priorities
Process
enhancements
Structural change
through fares, network,
and major costs
Discrete
opportunities
Balanced
Portfolio
▪ Longer term bends cost
curve
▪ Implementation risk high
▪ Focused on improving
systems, processes, etc.
▪ Politically very difficult
▪ Impact can be quick, but
sustaining it can be difficult
▪ Near term implementation
risks lower
21
Expert interviews, experience from other systems and internal
discussions generated a wide range of ideas
SOURCE: Team analysis
Ease of
capture
Easy
Difficult
Low( $0) High ($30M+)
Operational impact
Mid ($15M)
1
2
3
4
5
6 7
8
9
10
11
12
13
14
15
16
17
1819
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
2 Adjust pensions and OPEB commitments
3 Reduce or outsource other fringe benefit
administration
4 Better manage overtime expense through
clear policies and enforcement
5 Reduce fare evasion on bus
6 Improve data quality and integration
7 Implement a quality management system
(QMS)
8 Move HQ building
9 Automate HR business processes and
Reduce TCO
10 Outsource medical services
11 Set up asset management information system
12 Create account based ticketing system
13 Monetize high value bus maintenance real
estate
14 Monetize parking real estate
Transform paratransit delivery16
15 Increase parking payment yield
17 Increase service on crowded bus routes
Manage grade structure through attrition of
workforce 21
20 Increase concessioning at rail stations
Implement advanced acquisition practices
in select categories19
18 Transform capital planning process
(strategy to execution)
1 Retool worker's compensation process Increase advertising revenue 22
Transform customer experience23
24 Create Smartrip partnership with credit
card companies
25 Introduce promotions/discounts for
customers
26 Adjust service rail to match supply to
demand
27 Adjust service on underutilized bus routes
28 Reform financial management and process
29 Reduce bus maintenance spend through
refurbishing facilities
30 Reduce overruns on select capital projects
31 Optimize facilities footprint
32 Adjust bus fare policies while targeting
support to lower income households
33 Undertake comprehensive review of spans
and layers in the organization
34 Create a WMATA app (potentially through
competition)
35 Transform / lean railcar maintenance
process
36 Outsource selected auxiliary services(e.g.,
bus maintenance, facilities cleaning, non
revenue fleet maintenance)
Financial impact
ORLow High
37
Deep dive areas
22
The MTA’s turnaround shows how an initiative portfolio can drive change
SOURCE: Expert interviews; MTA Making Every Dollar Count; MTA budget and board presentations
Outcome
▪ State increased support by
$1.7B p.a. with a new dedicated
tax and fees
▪ MTA has not stopped pursuing
capital and operating savings
– Capital program reduced
another $2B in 2011 and
proposed a lean program for
the next 5 years (recently
approved and funded)
– Recurring operating savings
at $1.3B annually in 2015,
with targets rising to $1.8B in
2019 from new, specific
initiatives
▪ Faced with a dramatic drop
in revenues during the 2008
financial crisis, the MTA had
to reduce costs
– Dedicated MTA taxes
generated nearly $1B
less in revenues
compared to plan and fare
revenues fell by $200M
– Costs increased >$200M
from an unfavorable labor
arbitration award and
increased costs
– By statute, the MTA is
required to operate on a
“self-sustaining basis,”
including a balanced
budget each year
▪ MTA needed to improve
costs and build credibility
with legislature, proving itself
a good steward of public
funds; to build the case for
new tax revenues in a bad
economy
Situation
▪ Reduced the size of the capital
program by $2B and achieved
$525M in annually recurring
operating cost savings in the first
year
▪ Operating savings initiatives were
designed around several principles
– Mix of quick wins, incremental, and
transformative changes
– Visible to consumers
– Share the burden across
stakeholders
– Balance with strategic investments
for customers
▪ Used a broad set of levers
– Fare increases, service reductions,
layoffs, and wage freeze
– Rebid employee healthcare
– More efficient Paratransit provision
– Reduced overtime
– Consolidated back-office functions
– Strategic sourcing
– Rationalized office space
▪ Communicated its success to the
public, legislature, and labor
Response
