Civic Federation Report Recommends Additional Funding for CTA

May 2, 2005

Chicago Transit Authority officials expressed appreciation to the Civic Federation for its support of additional transit funding.

In its May 2 analysis of the State of Illinois? budget proposal, the Civic Federation said it supports additional funding for the CTA, Metra and Pace, and it acknowledges the critical importance of mass transit to the region's economy.

?The CTA and the Chicago Transit Board greatly appreciate the support for stable transit funding expressed by the Civic Federation," said Chicago Transit Board Chairman Carole Brown. ?We are in agreement on a number of recommendations outlined in their report, particularly the need to provide sufficient funding now for all three regional service boards. The service cuts we may be forced to make in July will be devastating and have a ripple effect on business, traffic congestion, air quality and the health of the overall regional economy."

Recommendations by the Civic Federation include reviewing the current funding formula, adding a sunset clause to ensure future review of the RTA Act at appropriate intervals, addressing paratransit costs, the underfunded pension issue and implementing a fare increase.

?Our efforts to enact funding change have included reference to the fact that the federal government reviews and modifies the federal funding program for transit every five to six years while no modifications have been made to the RTA Act in over 20 years, despite changes in funding sources and new obligations, growing congestion, regional ridership losses and worsening air pollution," said CTA President Frank Kruesi. ?Incorporating conditions for regular review of the RTA Act is something that would help to avert a future recurrence of the funding dilemma that we face today."

In addition, the report recommends excluding paratransit costs from CTA's recovery ratio, something the CTA favors. CTA is required by the federal government to provide paratransit service but receives no dedicated funding in support of the service. Costs for paratransit have nearly doubled in the past five years and currently represent five percent of CTA's total operating costs.

The report outlines other measures, many of which the CTA has already enacted, that would help reduce the CTA's projected $55 million deficit and avert planned service reductions later this year.

"We have long recognized that CTA has an ongoing responsibility to find ways to use its existing funding in the most efficient and effective manner. And we have a strong record of managing better, first," added Kruesi. ?In fact, since 1997 the CTA has reduced operating costs by more than $760 million through cost saving initiatives and management improvements throughout the organization. We have streamlined departments, privatized functions, clamped down on overtime, tightened controls over workers compensation expenses and eliminated over 1,000 positions."

Functions CTA has already outsourced include rehabilitation work on buses and trains, the administration of its short- term disability program, the management of some buildings, and the handling of non-diesel fuel. Major construction projects have also provided CTA with opportunities; last year 66 percent of its construction work was handled by outside firms. Most recently, CTA retained a professional consulting team to assist with the analysis of its operations and identify additional cost efficiency measures.

Also recommended in the report was that the CTA raise fares by 25 cents. The Board agrees with this recommendation. At its April meeting the Board approved a 25 cent fare increase to mitigate service cuts and structured it in a way that will encourage efficiencies across the system. CTA customers who use passes, Chicago Cards, Chicago Card Plus and bus customers who use magnetic strip transit cards, will not be impacted by the fare increase, thereby providing incentives to use electronic fare media which reduces CTA's costs and speeds up boarding, while allowing customers to choose fare options that will not increase their overall costs.

?The Board asked that in developing service reduction scenarios, CTA staff adhere to three guiding principles: maintain as much availability as possible for transit dependent customers; maintain regional connections where possible; and spread the burden of cost reductions in an equitable manner," explained Brown. ?The Board approved a plan that adheres to all three principles and most resembles CTA's current service. The plan provides some service 24 hours a day to maintain basic mobility, because certain types of workers, such as nurses, custodians, and other shift workers often have no other transportation alternative."

The report also urged reforms to address the state's unfunded pension obligations. Due to insufficient funding the CTA, like the state, deferred contributions to the pension fund over the years. As a result CTA's pension fund is only 46 percent funded. Without additional pension contributions and reforms of as much as $200 million annually, the fund is projected to run out of money in 2014.

Last fall, the Chicago Transit Board passed the Gridlock budget which included a 20 percent reduction in service levels scheduled to take effect January 2, 2005. But at the request of members of the General Assembly, the Board deferred service cuts until July 2005 to allow more time for the General Assembly to review the issue of transit funding. The CTA remains hopeful that the General Assembly will take action during the spring session to increase regional transit funding. If the General Assembly does not act, however, the CTA will be forced to implement the newly approved plan to balance its budget.

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