Finance Committee - benchmarking highlights

July, 2016

CONFIDENTIAL AND PROPRIETARY SAFETY: RAIL Although safety performance has declined in 2015, Metrorail has better performance than peers on multiple measures for the last 3 years overall Safety and security incidents January 2013-August 2015

Collisions, derailments, and fires Security incidents Injuries and fatalities, excl. suicides Events per 1B unlinked passenger trips Events per 1B unlinked passenger trips Number per 1B unlinked passenger trips

MTA 31 MTA 70 MTA 11 75 86

WMATA 32 MBTA 107 MBTA 13 79 92

BART 35 WMATA 141 BART 23 121 144

MBTA 39 BART 156 WMATA 8 244 252

SEPTA 67 CTA 322 CTA 21 464 485

CTA 69 SEPTA 543 SEPTA 26 517 543

Fatalities Injuries Ø 45 Ø 223 Ø 267 WMATA 5 / 6 3 / 6 5 / 6 6 / 6 2015 rank

SOURCE: NTD 2 SAFETY: BUS Metrobus has more safety and security incidents and more injuries than peer bus agencies Safety and security incidents January 2013-August 2015 Collisions and fires Security incidents Injuries and fatalities, excl. suicides Events per 10B unlinked passenger trips Events per 10B unlinked passenger trips Number per 10B unlinked passenger trips

MTA 2.2 King County 0.1 King County 0.2 5.0 5.2

LACMTA 3.5 NJ Transit 0.3 MTA 0.1 6.4 6.5

King County 4.2 MTA 0.4 LACMTA 0.1 7.4 7.5

MBTA 7.5 Denver 0.9 MBTA 0.2 13.0 13.2

CTA 7.9 LACMTA 1.3 CTA 0.1 18.5 18.6

NJ Transit 10.8 MBTA 1.5 Denver 0.6 18.4 19.0

WMATA 10.9 SEPTA 2.3 WMATA 0.1 23.9 23.9

SEPTA 12.1 CTA 2.7 NJ Transit 0.2 23.8 24.0

Denver 14.4 WMATA 2.8 SEPTA 0.1 26.5 26.7

Fatalities Injuries Ø 8.2 Ø 1.4 Ø 16

SOURCE: NTD 3 SERVICE RELIABILITY: 2A. RAILCAR AVAILABILITY Railcar availability historically lagged peers, and has fallen significantly further behind since April, partially but not only due to parts shortage

Fleet availability Insights ▪ WMATA made service before Availability was slightly behind WMATA availability has Silver Line, but had a slightly peers declined significantly this WMATA railcars out-of- higher spare ratio than peers Vehicles operating in max. service / year service by cause ▪ The number of cars available vehicles available in max. service, Cars released for service, Share of out-of-service has since fallen, even as 2014, percent 2015 cars on 12/7/15, percent service requirements increased January 956 Planned 9 MTA1 82 inspection / – Minimum car requirement February 923 engineering was met only 10 out of 64 weekdays in Q3 81 CTA March 941 Awaiting parts 36 ▪ A significant problem is that 76 cars are out of service awaiting April 958 critical parts, in part due to BART 81 challenges procuring the items May 934 – Should be <10% (no stock June 884 and in-transit items) WMATA 79 – Immediate situation being July 892 addressed, 22 cars expected Under repair 55 back in service by January MBTA 78 August 895 31 September 926 – Root cause of parts shortage merits attention SEPTA 78 October 918 ▪ But another 118 cars are out- of-service due to repairs. Reducing unplanned repairs Ø 80 Target: 9542 could improve availability

1 Due to a data discrepancy in the NTD data, 2014 active vehicles used for MTA (excl. Staten Island Rail) 2 In October only 922 cars were required for service because Orange/Blue headways were extended in response to the car problems, but the plan is to return to 6 minute headways in January

SOURCE: NTD; Vital Signs; WMATA Maintenance and Material Management System 4 SERVICE RELIABILITY: 2C. RAIL MAINTENANCE COST WMATA spends more than peers on rail maintenance, but less on rail ops

Rail maintenance cost efficiency Rail operations efficiency Insights

Rail vehicle and non-vehicle ▪ WMATA is ~30% maintenance spend per Rail vehicle operations higher than peer revenue mile Average fleet age spend per revenue mile average on rail 2014 Years, as of 2014 2014 maintenance cost ▪ Fleet age does BART 3.16 17 CTA 3.22 not fully explain the gap CTA 3.35 16 BART 3.69 – MBTA spends less with an older fleet SEPTA 4.28 22 WMATA 4.36 ▪ Reducing the gap on maintenance MBTA 5.82 26 SEPTA 5.36 spend between current state and peer average by MTA 6.43 21 MBTA 5.75 half would save ~$80M annually WMATA 7.14 24 MTA 6.51 ▪ Rail operations cost slightly below peers Ø 5.03 Ø 21 Ø 5

SOURCE: NTD 5 SERVICE RELIABILITY: 5A. BUS MAINTENANCE WMATA’s bus failure rate and maintenance spend are in line with or slightly ahead of peers, which may be partly due to a relatively young fleet

Bus failures Bus maintenance costs Total vehicle system failures per Average $ spent per / revenue Bus fleet age 100,000 miles traveled, 20141 mile, 20141,3 Years as of 20141

Denver 5 Denver 2.43 NJ Transit 7

MBTA 7 NJ Transit 2.67 WMATA 8

NJ Transit 11 King County 3.10 CTA 8 WMATA 12 CTA 3.15 King County 8 MTA2 17 WMATA 3.41 MTA2 8

SEPTA 19 LACMTA 3.47 Denver 9 LACMTA 26 SEPTA 4.08 LACMTA 9

CTA 30 MBTA 4.83 SEPTA 10

King County 33 MTA2 7.54 MBTA 10

Ø 18 Ø 3.85 Ø 9

1 Excludes Commuter Bus 2 Combines NYCT Bus and MTA Bus 3 Calculated as sum of all vehicle and non-vehicle bus maintenance cost divided by bus vehicle revenue

SOURCE: NTD 6 SERVICE RELIABILITY: 6AII. CAPITAL PEER SYSTEM COMPARISON WMATA spends 24% less capital on rail per revenue mile compared to its major US transit peers; on bus, WMATA is the highest Benchmarking Observations Average rail capital deployment 2003-2013 ▪ WMATA may be undercapitalizing its $ capital spend per revenue mile rail system - normalizing for system Average of peers 7.07 size, as measured by revenue mile, WMATA’s rail spend is significantly below peers for the period 2003-13 WMATA 5.11 (24% below peer average) CTA 5.38 MARTA 6.47 ▪ The situation would have been better MTA (NY) 7.39 but still below average if WMATA MBTA 7.43 would have spent its entire budget SEPTA 8.70 (spend would be $5.94, still below peer average of $7.07) -24% ▪ On the other hand, bus spending exceeds peers (WMATA spends the Average bus capital deployment 2003-2013 most of any major national peers). This $ capital spend per revenue mile is driven by the recent investments in Average of peers 2.22 fleet – Bus replacement was the largest MARTA 1.74 item of WMATA capital spend in FY SEPTA 1.84 2012 ($110M) and the second CTA 2.14 largest in FY 2013 ($70M) MTA 2.49 MBTA 2.90 WMATA 3.40 +55%

SOURCE: NTD database on capital spend and vehicle revenue miles, 2003-2013 7 FISCAL SUSTAINABILITY: 1. OPERATING DEFICIT WMATA’s operating deficit is growing and farebox recovery declining as expense growth outpaces revenue growth

Operational deficit and farebox recovery1 Insights

Expense & revenue, $M by FY CAGR, % If revenue and expense continue on current trends: 2,500 FY11-15 2,000 Expense 4.0 ▪ WMATA’s operating deficit will continue to grow to $1.1B in FY20 1,500 ▪ By CY20, WMATA’s farebox recovery 1,000 Revenue 2.8 would be the lowest among 500 comparable peers’ if peer ratios Actual Projected remain the same 0 2011 12 13 14 15 16 17 18 19 2020

Farebox recovery ratio2, % by CY CAGR, % Other agency projections are flat growth from CY14 CY11-14 % 60 Benchmarking CY14 Recovery ratio, 55 System % 50 47 47 48 MTA 45 45 MTA NYCT 49 45 44 43 CTA 42 41 40 WMATA -1.4 WMATA 45 40 MBTA Actual Projected CTA 44 0 CY 2011 12 13 14 15 16 17 18 19 2020 MBTA 40

1 Excluding silver line expansion, which will grow the deficit 2 Farebox recovery ratio = total fare revenue / total operating expense

SOURCE: WMATA 2011-YTD 2016 budget data; NTD 2014 8 FISCAL SUSTAINABILITY 2. FARE REVENUE The decline in rail annual passenger trips has limited revenue growth but has been mitigated by fare increases CAGR, Revenue decomposition FY11-15 % Insights Revenue1, $M ▪ Due to the decline in annual rail trips since FY12, WMATA lost ~$44M in rail 899 807 810 854 861 fare revenues in FY15 Farebox revenue 2.5 707 711 753 742 782 ▪ Growth in annual bus trips and bus Non-farebox revenue realized fare has led to a ~3% p.a. 4.2 99 99 101 119 117 growth in bus fare revenue 2011 12 13 14 2015 CAGR, CAGR, Rail FY11-15 % Bus FY11-15 % 627 146 Fare 141 606 593 139 Benchmarking Revenue, 571 569 131 134 $M 2.3 2.6 WMATA rail service includes commuter rail- type service and fares 134 Rail 287 288 132 132 133 UPT, fare/pass. Bus fare/pass. 274 269 Trips, K 267 -1.6 125 1.5 System mile mile WMATA 0.39 0.34 Realized 2.33 1.10 2.21 2.22 1.05 CTA 0.20 0.43 fare2, 1.05 1.05 1.99 1.98 1.02 $/Trip 4.0 1.1 MTA 0.28 0.54

FY 201112 13 142015 201112 13 142015 MBTA 0.33 0.29 1 Farebox revenue includes “passenger” revenue; non-farebox revenue includes “passenger-other” revenue and “non-farebox revenue” from payroll data 2 Realized fare = fare revenue / annual ridership

SOURCE: WMATA FY2011-YTD 2016 budget data; NTD 2014, OMBS actuals FY2012-2015; NTD FY 2012 – 15 9 FISCAL SUSTAINABILITY 3. RAIL RIDERSHIP Despite recent attention, WMATA has seen declining rail ridership for six years; 2015 ridership has been no higher than 2005 Total unlinked passenger trips on Heavy Rail, Index=100 in 2005

Peak in gas prices nationwide3 140 June ‘08 July ‘14 135 San Francisco Bay Area Rapid Transit District

130 Chicago Transit Authority

125 Los Angeles County Metropolitan Transportation Authority 120 MTA New York City Transit 120 117 Maryland Area Regional Commuter (MARC) Train* 115 Virginia Railway Express (VRE)* Southeastern Pennsylvania Transportation Authority 110 Massachusetts Bay Transportation Authority 105 100 Metropolitan Atlanta Rapid Transit Authority 100 100 Washington Metropolitan Area Transit Authority 95 *commuter rail in Washington metropolitan area 90 2005 06 07 08 09 10 11 12 13 14 20152 Denotes WMATA (Metrorail) fare increase

Observations ▪ When normalized for population, 2015 WMATA ridership is only 86% of the 2005 level (see detail on next page) ▪ Most other agencies have remained above 2005 levels ▪ Regional commuter rail systems (VRE and MARC) are significantly above 2005 levels and have increased from 3.9% to 4.8% of regional rail activity3 1 US regular gasoline prices, US Energy Information Administration 2 Year to date (compared to 2005 Year to date) 3 Sum of MARC,VRE, and WMATA Metrorail trips, CY2009-2014

SOURCE: NTD, Maryland Open Data (data.Maryland.gov), US Energy Information Administration 10 FISCAL SUSTAINABILITY: 1A: REVENUES AND RIDERSHIP Since 2011, demand has declined most acutely at the system’s outer edges and during off-peak times Analysis Observations ▪ Ridership losses are spread across all lines and geographic areas, pointing to a secular shift in transit demand ▪ Stations on the outer edges appear hardest hit (eg, New Carrollton, Landover) ▪ Off-peak (weekday midday/evening and weekends),comprising 40% of weekly boardings, has contributed 48% of the decline from FY11- FY15

1 Average weekly entries across entire system FY11-FY15 (all months) estimated with Sat,Sun, and weekday boardings (multiplied by 5)

SOURCE: WMATA Office of Planning; Metrorail boarding data FY11-FY15 11 FISCAL SUSTAINABILITY 4. CUSTOMER SATISFACTION The reliability decline has been accompanied by declining customer satisfaction and ridership on rail

Metrorail customer satisfaction Metrorail ridership % of respondents selecting 4 or 5 on a 1-5 scale Average weekday boardings, May

83% 79% 71% 760,000 745,000 -1% p.a. Likely to 740,000 726,000 recommend 721,000 720,000 713,000 700,000

71 68% 0 56% CY12 CY13 CY14 CY15 Reliability Metrorail passenger revenue $M, by CY

600 520 519 517 84 85 494 78 500 400 Safety on 300 train 200 100 0 CY12 CY13 CY14 CY15 CY13 CY14 CY15

SOURCE: WMATA customer survey; OMBS data on actuals; Metrorail & Metrobus Ridership History Data 12 FISCAL SUSTAINABILITY 4. CUSTOMER SATISFACTION Bus presents a more positive story of stability in customer satisfaction, increases in Metrobus ridership and revenue since 2013

Metrobus customer satisfaction Metrobus ridership % of respondents selecting 4 or 5 on a 1-5 scale Average weekday boardings, May

76% 75% 72% +2% p.a. 470,000 Likely to 461,000 462,000 460,000 recommend Metrobus 450,000 446,000 data for 440,000 CY15 not available 70 65% 65% 0 CY12 CY13 CY14 Reliability Metrobus passenger revenue $M, by CY 150 115 121 123 122 Metrobus 86 85 84 fare of 100 $1.75 is Safety on below bus 50 national average 0 of $2.21 CY12 CY13 CY14 CY15 CY13 CY14 CY15

SOURCE: WMATA customer survey; OMBS data on actuals; Metrorail & Metrobus Ridership History Data 13 FISCAL SUSTAINABILITY: 7. OPERATING EXPENSE Overhead is ~13% of operating expense across WMATA

Overhead spend at WMATA Observations CAGR, WMATA overhead expense, % FY11-15 % ▪ Overhead expense is growing at a faster rate than other operating expense 100% = 1.42 1.43 1.53 1.63 1.66 Overhead is 9.0 Overhead 11 9 11 12 13 defined as ▪ The largest amount of overhead expense is spend on: allocated to the CFO department in FY2015 3.4 . CFO ▪ DGMO’s overhead expense is growing the Other . IT 89 91 89 88 87 fastest at ~19% p.a. since 2011 Op Exp . HR ▪ WMATA’s overhead expense is on par with its peers’ FY 2011 12 13 14 2015 CAGR, Breakdown of overhead expense by department, % FY11-15 % Benchmarking

100% = 153 127 168 202 216 9.0 Overall System CY14 overhead expense, % CFO 31 39 33 33 32 CFO 3.8 MTA 15 IT MBTA 14 INDP 28 IT 25 29 29 30 14.1 HR WMATA1 12 INDP 8.5 DGMO 17 18 21 19 17 MBTA 12 HR 11 12 12 10 11 10.0 Others For each support activity (such as IT, 3 4 4 4 3 5 3 6 3 6 DGMO 19.1 procurement, and finance), there are identified Others 8.7 FY 2011 12 13 14 2015 ways to cut costs by working more economically and looking for entirely new ways 1 WMATA's NTD overhead expense is used for fair comparison to deliver support.

SOURCE: JAC allocation FY2011-2015 14 FINANCIAL SUSTAINABILITY: 7. OPERATING EXPENSE The growth in opex is driven by increases in labor expense and fringe benefits, with the latter’s growth exceeding peers’ Operating expense CAGR, FY11-15 % Insights Annual operating expense, $M ▪ The level of expense growth that outpaces revenue growth Overall (and shrinks the recovery ratio) is coming from personnel 1,635 1,660 expense expense 1,526 1,418 1,435 ▪ Within personnel expense, fringe benefits are growing much Fringe 388 407 336 faster than labor (~7% p.a. vs. ~4% p.a.), due to increasing benefits 314 303 4.0 headcount relative to hours worked Labor 805 807 ▪ If fringe benefits grew at the same rate as they did at MTA expense 694 719 743 NYCT since 2011, WMATA could have saved ~$25M from Non- fringe benefits in 2015 (a 6% savings relative to FY15 actuals) personnel expense 410 413 447 441 446

FY 2011 12 13 14 2015 Benchmarking Expense breakdown, % CAGR, FY11-15 % 100% = 1,418 1,435 1,526 1,635 1,660 Personnel Non- Fringe 22 21 22 24 25 6.7 expense Labor Fringe personnel benefits System1 share, % exp, % benefit, % exp, % Labor WMATA 74 4 7 2 expense 49 50 49 49 49 3.9 Non- MTA 73 4 7 6 personnel CTA2 expense 29 29 29 27 27 2.1 70 3 3 1

FY 2011 12 13 14 2015 1 WMATA and CTA statistics are based on FY15; MBTA statistics are missing due to data issue 2 For CTA only combined labor and fringe benefits CAGR are available

SOURCE: WMATA 2011-YTD 2016 budget data; MTA 2014 annual report; MBTA SORE History FY2016; CTA budget book 2012 - 2016 15 FISCAL SUSTAINABILITY: 7C. FTE FTE has grown by ~5% p.a. since 2011 and is concentrated in the BUS and TIES departments

FTE Observations

FTE CAGR, FY11-15 % ▪ FTE has grown at ~5% p.a. since 2011 10,093 10,269 8,596 8,725 9,301 ▪ BUS and TIES department constitute 73% of Headcount FTE in 2015 FTE 4.6 ▪ TIES and RTRA departments are growing the fastest at ~7% p.a. since 2011

FY 2011 12 13 14 2015

FTE breakdown by department, % CAGR, FY11-15 % 100% = 8,596 8,725 9,301 10,093 10,269 Benchmarking Employee headcount System CAGR, FY11-14 % BUS 39 40 38 37 38 3.6 WMATA2 4

TIES MBTA 2 32 33 34 36 35 6.7 RTRA MTA 1 MTPD 13 13 13 14 15 7.1 Others 6 6 6 6 6 MTA 1 10 8 9 8 7 3.7 -2.9 FY 2011 12 13 14 2015

1 Operating headcount includes: general administration, vehicle maintenance, non-vehicle maintenance, and vehicle operations 2 WMATA's headcounts from budget reports are used to compare against peers’

SOURCE: WMATA payroll data FY2011-2015; Transit systems’ budget reports FY11-15 16 FISCAL SUSTAINABILITY 8. SERVICE BENCHMARK Realized rail fares are higher than peers’ due to variable pricing while realized bus fares are in line due to limited pass options Rail fares Cash fare, $ Smartcard fare, $ Fare per trip, $

2.25 2.25 1.22

2.65 2.10 1.11

2.75 2.48 1.15

1 3.15 6.90 2.15 5.90 2.33

Average 2.40 2.20 1.16 Bus fares

Cash fare, $ Smartcard fare, $ Fare per trip, $

2.25 2.00 1.07

2.10 1.60 0.78

2.75 2.48 1.13

1.75 1.75 1.10

Average 2.21 1.96 0.99 1 Peak fare used

SOURCE: NTD 2014 17 Benchmarking WMATA’s current operations in bus and rail against peers Overall performance2 Rail Bus Category Benchmark1 WMATA Peers WMATA Peers WMATA Peers Farebox recovery ratio, 2014 45% 44% 62% 59% 25% 26% Realized fare per trip N/A $2.33 $1.15 $1.10 $1.08

Ridership percentage change, CAGR 11-15 N/A (1.6%) 1.2% 1.5% (1.0)% Staffing level trend, passenger trips/FTE Fiscal N/A (4%) N/A (4%) N/A sustainabi- CAGR, FY2011–15 lity Labor expense growth, FY2011-15 4% 3.5% 4.3% 3.8% 0.8% 0.7% Fringe benefit expense growth, FY2011-15 7% 4.6% 5.4% 5.7% 1.3% 2.4% Headcount growth, FY2011-15 4.6% 1.4% 5.7% 2.4% 2.9% (1.2%) Overhead exp as % of total op exp, 2014 11.6% 13.8% 6.2% 6.4% 3.3% 4.6% Fleet availability3 N/A 79% 80% 87% 82% Maintenance cost per revenue mile N/A $7.14 5.03 $3.41 3.85 Average fleet age, years N/A 24 21 8 9 Service Capital spend per revenue mile, 2003-2013 $4.46 $4.58 $5.11 $7.07 $3.40 2.22 reliability Capital planning process WMATA lacks a target-based capital strategic plan and and independent capital decision-making authority Capital portfolio optimization Project priortization is not centralized and does not use clearly defined evaluation criteria Collisions derailments and fires by service 2/6 7/9 size rank, Jan 2013-Aug 2015 N/A N/A N/A Safety Security incidents per by service size rank N/A 3/6 N/A 9/9 N/A Total injuries + fatalities by svc. size rank N/A 4/6 N/A 7/9 N/A 1 Data are for calendar year period, unless otherwise noted 2 Some overall statistics are on calendar year schedule 3 Fleet availability has declinedby 6% Oct 2014-Oct 2015

SOURCE: NTD database 2011-15; Annual budget reports of WMATA and peers, 2011-15; Vital Signs 18 In order to address these core challenges, experience suggests the transformation has to be a portfolio of initiatives

Objectives of the transformation… …imply a balanced portfolio ▪ Regain the trust of ▪ Relatively quick impact, but typically $20-30M per initiative WMATA customers by ▪ Requires focus and execution improving safety and ▪ Savings can be re-invested in other priorities reliability which creates the space for bigger, Discrete bolder initiatives opportunities ▪ Regain the trust of the jurisdictions by demonstrating short Balanced and long term Portfolio improvements in the Structural change financial position which Process through fares, network, demonstrates capability enhancements to invest and major costs

▪ Launch reforms of ▪ Longer term bends cost ▪ Politically very difficult critical business curve ▪ Impact can be quick, but processes (e.g. ▪ Implementation risk high sustaining it can be difficult financial management ▪ Focused on improving ▪ Near term implementation systems and systems, processes, etc. risks lower procurement)

19 Expert interviews, experience from other systems and internal Deep dive areas discussions generated a wide range of ideas

Easy 1 Retool worker's compensation process 22 Increase advertising revenue 34 2 Adjust pensions and OPEB commitments 23 Transform customer experience 22 25 3 Reduce or outsource other fringe benefit 24 Create Smartrip partnership with credit 23 33 card companies 21 administration 4 Better manage overtime expense through 25 Introduce promotions/discounts for 37 20 31 17 clear policies and enforcement customers 30 5 Adjust service rail to match supply to Reduce fare evasion on bus 26 5 demand 15 29 11 36 19 6 Improve data quality and integration 27 Adjust service on underutilized bus routes Ease of 6 10 7 16 13 18 capture 7 Implement a quality management system 28 Reform financial management and process (QMS) 8 14 28 29 Reduce bus maintenance spend through 3 12 8 Move HQ building refurbishing facilities 27 9 9 Automate HR business processes and 30 Reduce overruns on select capital projects Reduce TCO 24 32 26 2 31 Optimize facilities footprint 10 Outsource medical services 32 Adjust bus fare policies while targeting 4 1 35 11 Set up asset management information system support to lower income households Undertake comprehensive review of spans 12 Create account based ticketing system 33 and layers in the organization Difficult Monetize high value bus maintenance real 13 34 Create a WMATA app (potentially through Low( $0) Mid ($15M) High ($30M+) estate competition) Financial impact 14 Monetize parking real estate 35 Transform / lean railcar maintenance Low OR process High 15 Increase parking payment yield 36 Outsource selected auxiliary services(e.g., Operational impact 16 Transform paratransit delivery bus maintenance, facilities cleaning, non revenue fleet maintenance) 17 Increase service on crowded bus routes

18 Transform capital planning process (strategy to execution) 19 Implement advanced acquisition practices in select categories 20 Increase concessioning at rail stations

21 Manage grade structure through attrition of workforce

SOURCE: Team analysis 21 The MTA’s turnaround shows how an initiative portfolio can drive change

Situation Response Outcome ▪ Faced with a dramatic drop ▪ Reduced the size of the capital ▪ State increased support by in revenues during the 2008 program by $2B and achieved $1.7B p.a. with a new dedicated financial crisis, the MTA had $525M in annually recurring tax and fees to reduce costs operating cost savings in the first ▪ MTA has not stopped pursuing – Dedicated MTA taxes year capital and operating savings generated nearly $1B ▪ Operating savings initiatives were – Capital program reduced less in revenues designed around several principles another $2B in 2011 and compared to plan and fare – Mix of quick wins, incremental, and proposed a lean program for revenues fell by $200M transformative changes the next 5 years (recently – Costs increased >$200M – Visible to consumers approved and funded) from an unfavorable labor – Share the burden across arbitration award and – Recurring operating savings stakeholders increased costs at $1.3B annually in 2015, – Balance with strategic investments with targets rising to $1.8B in By statute, the MTA is – for customers 2019 from new, specific required to operate on a initiatives “self-sustaining basis,” ▪ Used a broad set of levers including a balanced – Fare increases, service reductions, budget each year layoffs, and wage freeze ▪ MTA needed to improve – Rebid employee healthcare costs and build credibility – More efficient Paratransit provision with legislature, proving itself – Reduced overtime a good steward of public – Consolidated back-office functions funds; to build the case for – Strategic sourcing new tax revenues in a bad – Rationalized office space economy ▪ Communicated its success to the public, legislature, and labor

SOURCE: Expert interviews; MTA Making Every Dollar Count; MTA budget and board presentations 22