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Last week, the Santa Clara Valley Transportation Authority’s (VTA) board approved a contract amendment that modifies terms and conditions of employment for Amalgamated Transit Union-represented workers and is expected to generate $5.5 million in cost savings.

Union members previously agreed to various cost-cutting concessions — such as deferring wage increases for two years — to help VTA address a fiscal-year 2010/11 budget deficit.

Earlier this year, VTA and the American Federation of State, County and Municipal Employees, Service Employees International Union, and Transportation Authority Engineers and Architects agreed to wage freezes and unpaid furloughs up to 12 days annually for the next two years to save the agency about $17.3 million.

VTA already has cut department operating budgets by 15 percent or more and frozen open positions. The agency also has tried to generate additional revenue by selling advertisements on VTA vehicles and used federal stimulus funds to offset operating costs.

However, fare and sales tax revenues continue to decline, and cost savings derived so far “will not be sufficient to avoid service reductions in January and a fare increase in October,” VTA officials said in a prepared statement.

The agency is conducting a series of public meetings to discuss service-reduction options in the coming year.