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Rail News: Passenger Rail
10/1/2012
Rail News: Passenger Rail
MARTA's current economics are unsustainable, audit firm says
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Last week, the Metropolitan Atlanta Rapid Transit Authority (MARTA) released a draft report from auditing firm KPMG that examined measures to cut costs, improve efficiency and generate more revenue to help boost the agency's long-term fiscal sustainability and growth.
MARTA officials voluntarily took on the review as part of a comprehensive review of its internal management and operations that began in fall 2011. Officials tasked KPMG with assessing the opportunities and challenges facing the agency, and then issuing recommendations.
KPMG found that MARTA's current economic model is "unsustainable," therefore requiring the agency to cut expenses by $25 million annually, MARTA officials said in a prepared statement.
Other key findings included:
• MARTA is projected to exhaust its reserves by fiscal-year 2018 and fall below its mandated reserve levels by FY2016;
• The agency has $7.1 billion in unfunded capital needs through FY2021;
• High employee-absenteeism rates cost MARTA about $11 million in additional benefits; and
• Annual retirement costs are $22 million more than the national average in the public and private sectors.
The draft report also identified steps the agency already has taken to reduce costs and improve efficiency, such as freezing employee wages for five years, implementing unpaid furloughs for nonunion staff, laying off 400 employees and raising the cost of employees' medical premiums.
In addition, the report cited 12 operational areas that could be outsourced by hiring third-party firms, including payroll, computer support, customer service, recruiting, cleaning services, and mobility for paratransit customers.
"MARTA must make significant and fundamental changes to operations to avoid across the board cuts that will adversely affect operational and customer service," the report states.
MARTA officials voluntarily took on the review as part of a comprehensive review of its internal management and operations that began in fall 2011. Officials tasked KPMG with assessing the opportunities and challenges facing the agency, and then issuing recommendations.
KPMG found that MARTA's current economic model is "unsustainable," therefore requiring the agency to cut expenses by $25 million annually, MARTA officials said in a prepared statement.
Other key findings included:
• MARTA is projected to exhaust its reserves by fiscal-year 2018 and fall below its mandated reserve levels by FY2016;
• The agency has $7.1 billion in unfunded capital needs through FY2021;
• High employee-absenteeism rates cost MARTA about $11 million in additional benefits; and
• Annual retirement costs are $22 million more than the national average in the public and private sectors.
The draft report also identified steps the agency already has taken to reduce costs and improve efficiency, such as freezing employee wages for five years, implementing unpaid furloughs for nonunion staff, laying off 400 employees and raising the cost of employees' medical premiums.
In addition, the report cited 12 operational areas that could be outsourced by hiring third-party firms, including payroll, computer support, customer service, recruiting, cleaning services, and mobility for paratransit customers.
"MARTA must make significant and fundamental changes to operations to avoid across the board cuts that will adversely affect operational and customer service," the report states.
