MTA audits conducted by the State of New York Comptroller’s office in 2010 indicate that lack of management oversight, ill-conceived policies, sloppy record-keeping and rigid union demands at the MTA Bus Company and New York City Transit are at the core of the MTA’s budget woes. Employee layoffs and service cuts should be a last resort in restoring profitability to the MTA.
There are some glaring issues contributing to wasteful spending at the MTA Bus Company and New York City Transit. The first involves the use of expensive jet/kerosene fuel in city buses rather than less expensive and environmentally friendly diesel fuel, even though a newer, less expensive fuel became available in 2006. The audit revealed that the MTA Bus and Transit spent about $39 million more for fuel than was necessary from October 2006 to September 2009.
In addition to overpaying for fuel, the audit also found that there was inadequate accountability regarding the MTA Bus Company’s fuel supply, meaning that fuel on hand and delivered versus the amounts dispensed to vehicles did not reconcile. The MTA Bus Company has been unable to account for how the fuel is used and whether all of it is being used only for business purposes. This lax oversight increases exposure to loss and theft.
An even greater contributor to the MTA’s budget woes is excessive overtime under questionable policies and practices. The Comptroller’s office estimates that by addressing all the overtime issues at the MTA, more than $56 million annually could be saved.
Overtime costs at the MTA increased by 26% to $590 million annually from 2005 – 2009. There are fundamental problems with overtime policies, including the finding that some senior employees load up on overtime during their last three years of employment to increase their pension payouts since it is this time frame that is used to calculate their pensions. In calendar year 2009, about 10,900 employees received at least 30% of their salary in overtime, with 147 employees racking up at least 100% of their base pay in overtime. The New York State Comptroller’s office plans to do further audits regarding overtime at the MTA in the coming months.
Another problem with overtime policy is that regular full time employees are utilized on weekends to do routine track work, resulting in high overtime pay. A solution would be to restructure work shifts so that routine weekend track work is done by people assigned to work weekends as part of their regular schedule rather than paying overtime rates to employees that already have a full weekday schedule. It is estimated that if only a portion of the day shift employees were assigned to evening and weekend shifts and paid a shift differential, the MTA could save close to $39 million a year in overtime costs.
The good news is that in July 2007 and January 2008, overtime caps for newly hired employees were put into place at Metro-North and the Long Island Rail Road which limit qualifying overtime to 20% of base pay. The same needs to be done across the board to head off catastrophic future pension liabilities, but legislation and possibly union agreement must be reached to implement these caps, which complicate the process.
The way in which annual budgets are determined at the MTA is another flawed policy costing millions. Budgets are typically carried forward from the pervious year, so there is no adjustment or attempt to reign in expenses. It’s just the status quo from year to year.
These issues are just the tip of the iceberg in a system that is rife with waste, inefficiency or worse. Lack of stringent oversight by the Central Office and structural deficiencies have been at the core of crippling shortfalls at the MTA whose impact is felt by millions of New Yorkers through service cuts and fare increases. Chairman and Chief Executive Officer, Jay Walder, has been committed to improving operations at the MTA, but progress hasn’t been quick enough to head off additional fare increases for cash-strapped New Yorkers.