CTA Continues Cost-Reduction Efforts to Help Offset Budget Shortfall

CTA Continues Cost-Reduction Efforts to Help Offset Budget Shortfall

In a continuing effort to streamline operations, CTA is aggressively pursuing cost reductions throughout its operations. Since 1997, CTA has reduced its operating costs by over $760 million, including the reduction of more than 1,100 positions while increasing service on 68 percent of its bus routes and all of its rail routes. Without these internal cost control measures, the CTA's budget for 2005 would have been $175 million?or more than three times higher than the $55 million deficit CTA is currently facing.

As it began to develop its budget last year, the CTA's estimated budget shortfall was $77 million. Through job eliminations, the replacement of some customer assistant positions with security guards, operating efficiencies, property sales and increases in certain fares and fees, the CTA was able to reduce the shortfall to $55 million. The CTA intended to make up the balance through service reductions planned for January 2. In December, the Chicago Transit Board decided to postpone reductions until July in order to give the Illinois General Assembly more time to consider transit funding issues.

In March, the Board was presented with five new scenarios outlining service cut or fare increase proposals that would enable the CTA balance its budget if the Illinois General Assembly does not provide additional funding. Tomorrow, at its monthly meeting, the Chicago Transit Board will vote on which plan to implement. The Board must choose a plan now in order to have time to implement it by July.

In addition, the CTA is actively pursuing other cost containment initiatives.

?CTA has squeezed over $120 million out of our annual operating budget, or 25 percent of our annual public subsidy. But we are committed to getting even better," said Chicago Transit Board Chairman Carole Brown. ?Our customers and the taxpayers deserve continuous improvement from CTA as we balance the demand for service against available funding."

?We have streamlined departments, privatized functions, clamped down on overtime and tightened controls over workers compensation expenses. 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," said CTA President Frank Kruesi. ?We would not be requesting greater funding if it was not critical and if we hadn?t already made sure that our own financial house was in order."

CTA has taken a number of steps this year to continue to curb costs. In 2005, CTA is eliminating 250 non-operating positions, in addition to the 446 non-operating positions cut in 2004.

The CTA is working with efficiency experts to help identify further cost reduction measures. The goals are to reduce administrative and operating costs, improve customer service through best business practices and leverage process innovations in both administrative and operating functions.

Staff continues to analyze and evaluate how CTA conducts its business in order to maximize opportunities and efficiencies. Opportunities for increasing the use and revenues from existing park and ride facilities are being examined.

The CTA is also pursuing group health initiatives, such as an HMO project with sister agencies to procure favorable rates by bargaining as a coalition. CTA is currently realizing the benefits of a prescription drug plan that was finalized with Caremark in July 2004.

CTA has outsourced rehabilitation work on buses and trains, the administration of its short term disability program, the management of some of its facilities and the handling of non-diesel fuel. Major construction projects have also provided opportunities to hire outside professionals. In fact, last year 66 percent of CTA's construction work was handled by outside firms.

Through tough negotiations and arbitration with its unions, the CTA has won modifications to antiquated work rules in order to gain efficiencies. A number of obstacles, including internal dissent within its largest union, continually blocked the path to resolution. The union's international office intervened and appointed a trustee. That paved the way to arbitration and the CTA eventually secured work rule flexibility that enables it to operate more efficiently.

For example, under a current agreement, the CTA can roster work assignments to schedule certain employees by week rather than by day. This means that instead of paying overtime after an eight hour day, it is only paid after a 40-hour week thereby reducing overtime and administrative costs. It is currently in use at two garages and saving CTA about $2 million a year. CTA is seeking to expand its use to more garages under the next agreement.

The CTA has also won the right to increase the number of part-time employees. These employees are paid less than full-time employees so CTA's overall wage and benefit costs are reduced.

With its craft unions, the CTA achieved changes in overtime pay where it is now paid at time-and-one-half instead of double time. In addition, CTA also succeeded in being allowed to count some Saturday work at straight time and now also has the right to outsource some snow removal and landscaping work.

Efficiencies have impacted non-union employees as well. Salaries for non-union employees have been frozen at 2003 levels. They did not receive raises or cost of living increases in 2004 and none are scheduled for 2005.