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It’s been a year since Governor Baker acted, with the support of the Legislature, to create the Fiscal and Management Control Board for the MBTA following the system meltdown during the snowstorms of February 2015. During remarks to members of the media, Governor Baker summed up the last year: “We’ve learned a lot. And done a lot. But much more remains to be done.”

[Watch Governor Baker’s remarks]

Calling the members of the FMCB the “five hardest working volunteers in state government,” Governor Baker applauded the governing group for not being a rubber stamp. They have met 52 times, conducting their oversight in the glare of the media’s lights and the public’s eyes, and opening every meeting with public comment sessions, some of which ran over an hour. 

In the shadow of nine feet of snow, a special panel assembled by Governor Baker found that the “catastrophic winter breakdowns were symptomatic of structural problems that require fundamental change in virtually all aspects of the MBTA.” And their nine key findings have proven to be prophetic:

FMCB-Slide01

In his remarks, Governor Baker pointed out that the special panel did not say that the MBTA was underfunded. “It wasn’t. It isn’t. It won’t be. What it was was poorly led and horribly managed.”

Every day, the MBTA manages to safely move over a million riders from where they are to where they need to go, and this is good news. But there is also spectacular room for improvement. Turnarounds take years, with the first step putting out immediate fires, grabbing low hanging fruit, and stalling the downward slide into the abyss. Step Two is about cranking the crank and climbing back up the hill, with Step Three using the work of steps One and Two to create real momentum. Governor Baker: “We are at the start of Step Two.”

What are some of the fires that have been put out?

  • FMCB-Slide04Operating Expenses – The MBTA’s operating expenses had gone up 5% per year for the past 15 years, with virtually no increase in ridership.
    • The MBTA  in its operating budget this past year, limiting the draw on state government resources and beginning to make it possible for the MBTA to invest operating savings in pay as you go capital projects. 
  • FMCB-Slide06Capital Budget – For years, the MBTA never spent its allocated capital budget.
    • For the next five years, the MBTA will double the money it spends on signals, switches, tracks, power systems, cabling, trains and buses.
  • Administrative Processes – The MBTA has a well known history of not managing overtime and unanticipated absences.
    • For the first 6 months of 2016, operator absenteeism is down nearly 25% and total overtime expense is down by more than 30%. Weekday dropped bus trips are down by more than a third.
  • Major Procurement – The MBTA’s recent history on major procurements–locomotives, Commuter Rail contract, Green Line extension, phone and wireless service–has been underwhelming.
    • The Green Line Extension project was suspended and completely redesigned to reduce costs. Hundreds of unused–but paid for–wireless devices were shut off, saving $500,000. The commuter rail contract has been renegotiated, incorporating key missing elements, and focusing on customer experience. Advertising procurements have been revamped, and annual revenue has jumped by over 30% year to date. 
  • FMCB-Slide12Cash Collection and Reconciliation – Unlike other transit systems across the country, the MBTA has never been able to reconcile cash to calculated collections, and its money management process contains serious risks.
    • All of the issues raised by an independent security audit are being addressed for the near term, and the MBTA plans to contract this service out to a firm that focuses on moving and managing cash.
  • Parts Warehouse – The warehouse is a regular underperformer, delivering parts 4 or more business days after the order, while other suppliers deliver parts in less than a day, and matching actual inventory to purchased inventory 56% of the time vs. 95% at other systems. 
    • Warehouse operations will be put out to bid soon duplicating the service model used by almost every other public transportation systems in the country. 
  • Pension System – With a $1 billion shortfall in a $1.5 billion system, the MBTA’s pension system is in freefall, losing $89 million a year in assets. 
    • The pension system cannot survive as a standalone entity, and the administration will be recommending to the Legislature in January that it be managed by the state’s PRIM system.

For the first time in a long time, there is new leadership in place and the MBTA is being managed. There is a new General Manager, Chief Administrator, Chief Operating Officer, Chief Financial Officer and Chief Procurement Officer, as well as the MBTA’s first ever Chief Technology Officer. In both the money room and the warehouse, executive managers–not union members, but managers accountable to the GM–have been put in place. 

The MBTA is also putting safety first after years of failing to meet a federal mandate to install Positive Train Control on the commuter rail system. After a horrific crash in Philadelphia made it obvious that PTC must be implemented, the MBTA put together a finance plan and successfully applied for two different federal loan programs to ensure that they will be in compliance. Furthermore, the MBTA’s five year capital plan includes funding for a needed Green Line collision avoidance system. 

In the coming year, the MBTA and its FMCB will continue to have an aggressive focus on operating expenses and operating performance, as well as deploying available capital funds and investing in infrastructure. Both the money room and the warehouse operatives will be put out to bid to determine if the MBTA can both save money and improve performance. Talented people will be sought out to manage some of the MBTA’s critical functions, and improve service in ways that customers can see. 

“Don’t be afraid to change how services are delivered and vehicles are maintained,” Governor Baker said. “Actively seek out private partners–even let them make unsolicited proposals–to help the MBTA find new and smarter ways to deliver for its customers.”

Governor Baker tipped his hat to the “many, many talented, hardworking and dedicated people working at the MBTA” who have been badly let down by the culture from top to bottom that has allowed the MBTA to deteriorate. Beyond time and money, the MBTA’s turnaround will also take a change in attitude at every level. On almost every benchmark, the MBTA underperforms against its peers–peers that have the same unions and in many cases, very similar tasks and equipment.

“I don’t care if a service is provided publicly or privately,” said Governor Baker. “What I care about is performance, productivity and ensuring the money the taxpayers pay into the system is protected. The old way of doing things at the MBTA is no longer viable or sensible.”

The MBTA must deliver a reliable, dependable, affordable service to the region’s riders, and put their house in order operationally and financially, and that is the path that the FMCB and the MBTA’s new leadership is putting it on. Everybody wins if the MBTA takes the task of becoming a 21st century public transportation system to heart, and works hard to learn from each other, and from its peers.

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