Slow Economic Recovery Mandates Fiscal Discipline
As the Chicago Transit Authority prepares its 2011 Budget, CTA President Richard L. Rodriguez has identified $53.6 million in management efficiencies designed to help the agency weather the continued economic challenges without adversely impacting the current level and quality of service provided to customers.
“The economy remains sluggish and isn’t rebounding as quickly or robustly as had been predicted,” said Rodriguez. “Although we are still finalizing our budget recommendations, we expect that revenues will not increase enough to cover the increase in costs, particularly those related to union labor agreements. Effective and disciplined management will be as essential in 2011 as it was in 2010. However, we are committed to providing the best possible service for our customers and are looking at the best ways to do that within the constraints of our budget.”
Rodriguez directed CTA’s departments to streamline costs while maintaining CTA’s core mission of providing on-time, clean, safe, courteous and efficient service.
Approximately $36 million of cost savings will be a result of personnel efficiencies. CTA will save approximately $7.2 million in salaries and benefits by eliminating more than 70 positions—including more than a dozen at manager level. A savings of $13.7 million in salaries and benefits will be achieved by delaying hiring for open positions that are deemed necessary, but are not safety related or directly impact service. Continuing to manage and control overtime is expected to save an additional $5.5 million in next year’s budget. In 2011, non-union employees will again forgo wage increases and will be required to take up to 18 unpaid days for an additional savings of $9.7 million.
In addition, CTA will save approximately $17.5 million as departments continue to aggressively streamline operations and reduce expenditures such as fuel, power, materials and contracts in 2011.
CTA also continues to realize savings through the reduction of fuel consumption by its bus fleet. By retiring older buses from its fleet and replacing them with more fuel efficient buses, most recently hybrids, CTA saves approximately $7 million per year in maintenance, parts, and labor costs, including more than $900,000 annually in fuel costs.
In addition to declining consumption, the price of fuel for the CTA has also decreased. The CTA uses a long-term, layered fuel hedging strategy. Fuel prices in 2010 are projected to end the year at a net average price of $3.16 per gallon, which is 30.5 percent less ($1.39) than the actual average price ($4.55) in 2009.
Through July, the CTA has spent $30 million for fuel versus a budgeted amount of $36.5 for the first seven months—resulting in a savings of $6.5 million to date. Through the same time period last year, the CTA’s fuel expenditure was $57.7 million. The CTA will continue to hedge fuel in 2011 and anticipates the approach will continue to gather savings for the agency.
The CTA has also reduced its power costs primarily due to a new contract that allows the purchase of wholesale power. The CTA has already purchased some of its 2011 power in advance, through hedges, and expects to spend $8.1 million less on power in 2011 than was budgeted for 2010.
“The financial challenges we’re experiencing are not exclusive to the CTA,” added Rodriguez. “Just like other businesses around the nation, we continue to strive for ways to be fiscally responsible and maintain operations until the economy recovers.”
“In these tough economic times, access to affordable public transportation is even more important and at the CTA we will do everything we can to ensure the buses and trains continue to operate for those who depend on them.”
# # #