Tag Archives: National Transit Database

PRT-ATU contract is a missed opportunity

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Summary: Pittsburgh Regional Transit (PRT) and the Amalgamated Transit Union have agreed to a generous four-year labor contract, twice the length of the previous contract and likely to cover the time period when remaining federal COVID aid is expended. Apparently, the contract does not provide for employment cuts despite passenger counts remaining far below pre-pandemic levels.

Based on a PRT news release, the contract includes pay raises totaling 12.75 percent and bonuses for employees based on the hours they worked from March 2020 through June 2021, up to a maximum $4,000.  The starting wage for a new operator will be around $25 an hour and the top rate over $38 an hour, “keeping PRT employees among the highest paid transit workers in the nation.”

According to PRT, as of Dec. 8 there were 1,044 active bus and light-rail operators (excluding student operators) making an average wage of $30.78 per hour.      

PRT’s CEO has said the ridership level of March 2020 is not coming back.  As of October 2022, average bus and light-rail ridership are 34 percent and 52 percent, respectively, below where they stood in pre-pandemic October 2019.

Institute research has shown how operator pay drives the high operating costs at PRT. 

Policy Brief Vol. 19, No. 43 measured operator compensation on a per revenue mile basis.  Utilizing 2017 data from the National Transit Database (NTD), with $60.1 million in bus operator wages and salaries, $70.6 million in fringe benefits and 21 million bus vehicle revenue miles driven, PRT bus operator wages and salaries per revenue mile were $2.86 and fringe benefits per revenue mile were $3.35. 

Those were at the top among a 10-city sample that included transit agencies in Cleveland, San Antonio, St. Louis, Charlotte and Milwaukee.  Wages and salaries per revenue mile in the sample averaged $2.42 and fringe benefits per revenue mile averaged $1.96. 

Examining NTD’s data for the years 2018 through 2021, PRT bus operator wages and salaries grew, fringe benefits grew until 2021 and vehicle revenue miles decreased.  As a result, wages and salaries and fringe benefits per revenue mile rose each year. 

In 2021, bus operator wages and salaries per revenue mile were $3.57 and fringe benefits per revenue mile were $3.82.  In percentage terms on a per revenue mile basis, wages and salaries were 25 percent higher and fringe benefits 14 percent higher than in 2017. NTD data on operating expense per passenger mile shows PRT’s expense rose 207 percent from 2017 to 2021.  Policy Brief Vol. 22, No. 39 estimated costs per passenger based on August ridership.

PRT and seven of the nine agencies included in the 2019 Brief reported bus operator wages and salaries and fringe benefits for 2021.  Again, by no surprise, PRT topped the list.  On wages and salaries per revenue mile, the sample average was $2.90, putting PRT $0.67 (23 percent) above the average.  Cleveland, Columbus and Kansas City were the only other agencies with wages and salaries per revenue mile above $3.00. 

PRT Bus Operator Compensation per Vehicle Revenue Mile, 2017 to 2021

On fringe benefits per revenue mile, the sample average was $2.27 and PRT was $1.55 above the average.  Four agencies—Cleveland, Columbus, Kansas City and St. Louis—topped $2 per revenue mile in fringe benefits. Agencies exceeded PRT’s growth rate in wages and salaries and fringe benefits from 2017 to 2021 but none ended up with per vehicle mile values greater than PRT. 

As noted in Policy Brief Vol. 22, No. 19, NTD’s “Transit Profiles: 2019 Top 50 Reporters” (ranked by the number of unlinked trips on all transit modes offered by an agency), PRT was fifth highest of the 19 agencies that operated light-rail when measuring operating expense per vehicle revenue hour. 

According to the same NTD report, 43 agencies operated buses.  PRT ranked sixth highest at $199.09 operating expense per vehicle revenue hour.  Three agencies in the New York City metropolitan area and two in the San Francisco and Oakland metropolitan area were the only agencies to report a higher expense level than PRT. The five higher cost agencies all operate in areas with a much higher cost of living than Pittsburgh.   

PRT’s annual service reports note the extremely high costs, how they compare to peer agencies and cite legacy costs and the strength of the labor union among the reasons. This is certain to be repeated as new reports are published. 

The Pennsylvania Department of Transportation will be carrying out a subsequent performance review as required by Act 44 of 2007. That review examines operating expenses on per-hour and per-passenger basis and compares them to peer agencies.

The new labor contract contains language, in a renewal of language dating to 1997, that limits the use of small transit vehicles (24 or fewer seats) on fixed route service to 3 percent of the large buses in use.  For an authority that should be significantly reducing service in response to the huge drop in passengers (some bus routes remain 50 percent below pre-pandemic levels), the limitation on the use of smaller vehicles is a provision that should never have been agreed to.

State law creating the authority allows strikes when there is a bargaining impasse and fact-finding recommendations and mutual binding interest arbitration are not agreed to.  Pennsylvania is virtually unique in allowing public transit workers to strike. It creates enormous bargaining power that, over time, has allowed the union to receive wages and benefits that are far above peer agencies around the country.

Policymakers at the state and county level should use the time between now and the contract’s expiration to make the changes needed to lower the high costs of the agency for the benefit of state and county taxpayers that subsidize the system.  The opportunities for change are there and the evidence is overwhelming.

Port Authority’s light-rail costs near the top nationally

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Overview: A recent Policy Brief (Vol. 22, No. 14) analyzed the Port Authority’s light-rail system with emphasis on the North Shore Connector.  This Brief compares the authority’s operating expense per vehicle revenue hour with other systems in the United States in the year before COVID.

The National Transit Database (NTD) defines light-rail as “a transit mode that typically is an electric railway with a light volume traffic capacity [with] passenger rail cars operating…on fixed rails in shared or exclusive right-of-way.” 

Based on the NTD’s “Transit Profiles: 2019 Top 50 Reporters” (ranked by the number of unlinked trips on all transit modes offered by an agency) there are 19 mass-transit agencies in the U.S. that operated light-rail. 

Included in the group was the Port Authority of Allegheny County (PAAC).  There were 7.2 million unlinked light-rail trips taken, which ranked the agency fourth from the bottom.  For the group, the range was just under 60 million in Los Angeles to 1.5 million in Cleveland.  Eleven percent of all mass transit trips provided by PAAC were on light-rail; only Newark, Baltimore and Cleveland were lower. 

Operating expense per vehicle hour

In Policy Brief Vol. 18, No.13 it was noted “operating expense per revenue hour should be considered the best cost measure since that is the fundamental cost of providing the service.”  On bus service, PAAC was much higher than the average for a peer group of five agencies.

In order to replicate the comparison for light-rail, operating expense per vehicle revenue hour is shown in the table below for the 19 agencies.  It ranged from $695.47 in Newark to $168.59 in Denver.  The average for the 18 systems other than PAAC was $339.48. 

Light-Rail Operating Expense per Vehicle Revenue Hour, 2019

PAAC’s $422.80 ranked fifth highest of the group.  It was 9 percent higher than the next closest agency and 25 percent higher than the group average. It was 54 percent higher than the average $273.77 for the 14 agencies with a lower operating expense per vehicle revenue hour. 

Systems in Salt Lake City, Minneapolis, San Diego and Denver had an operating expense per hour that was less than half of PAAC’s. 

If PAAC was able to operate at the group average on a per vehicle hour basis it would result in savings of $14 million per year of its $71.1 million in light-rail operating expenses. Even more dramatic savings of $25 million of the $71.1 could be achieved if PAAC operated at the average cost of the 14 less expensive systems.

Looking closely at the components of total operating expenses for all modes of transit provided by an agency—labor, materials and supplies, purchased transportation and other operating expenses—there were five agencies where labor represented over 70 percent.  PAAC was one of the five at 74.1 percent.  It was exceeded only by agencies in Minneapolis (77.9 percent), San Francisco (76.8 percent) and Cleveland (74.8 percent).  If the overall labor expense percentage of 74.1 percent was applied to PAAC’s $71.1 million in light-rail operating expenses, the labor expense would be $52.7 million that year. For the 11 agencies with a lower operating cost per vehicle revenue hour than PAAC and also had a labor cost lower than 70 percent of total operating expenses, the average labor cost was a dramatically lower 55 percent of total.  

Much like PAAC’s 2016 performance review performed by the Pennsylvania Department of Transportation (PennDOT) as required by Act 44 of 2007, PAAC was lower on operating expense per vehicle revenue hour than the system in San Jose but higher than those in Baltimore, Cleveland, Minneapolis and St. Louis.

Moreover, it would be reasonable to assume that the cost of living difference among the cities would be correlated to light rail operating expenses. However, that is not the case. Using the Bureau of Economic Analysis’ Regional Price Parities (RPP) State and Metro Area Index which assigns a value of 100 to the U.S. it is possible to evaluate the assumption that light rail cost and cost of living in the cities are correlated.  The Pittsburgh Metropolitan Statistical Area (MSA) had an RPP of 95.4 and ranked 155th out of 384 MSAs surveyed. The four agencies that had a higher operating expense per vehicle revenue hour than PAAC had a higher RPP with an average of 111.9. 

However, there were 10 agencies—including those in Dallas, Baltimore, Minneapolis and Denver—with a higher RPP than Pittsburgh (average of 102.98) but lower operating expense per vehicle revenue hour.  There were five MSAs where the RPP was quite close to Pittsburgh’s and had lower operating expense per vehicle revenue hour measure.

Managing costs

The Act 44 performance review stated that “to some extent, costs should be managed through good governance, proactive management and effective cost containment.”  PAAC’s 2021 service report noted its high light-rail costs (per passenger served) and attributed it to “comparatively high operator and maintenance employee wages and benefits, high maintenance costs … and closely spaced stations which cause the rail to travel at lower speeds.” The report stated studies were underway to come up with solutions to lower costs. It is not known when the findings will be delivered or if any steps will be taken to lower costs.

That’s very important to keep in mind as the PAAC administration negotiates a new labor agreement with its largest transit union in the coming months. To date there have been no layoffs or furloughs related to service being provided despite falling ridership throughout the pandemic. Average weekday light-rail ridership in February was a stunning 79 percent lower than in February 2019. 

Conclusion

PAAC has forecast how long federal stimulus money will last and that depends on how ridership recovers. PAAC has also acknowledged that state funding is entering a period of uncertainty with payments from the Turnpike Commission to PennDOT dropping significantly. 

That has not dissuaded talk of extending the light-rail system from where it currently ends on the North Shore.  In the same year when PAAC received a full-funding grant agreement from the federal government for the North Shore Connector, systems in Denver, Dallas, Newark, Los Angeles and Seattle also received funding for projects.  The connector’s cost per mile was much higher than the other projects, and that was before the final price tag.

A finite amount of federal stimulus money, a major change in state subsidy and local tax levies on alcohol and vehicle rentals that have been affected by the pandemic are all factors affecting future PAAC revenue. This a prime opportunity for PAAC to enact long overdue reforms to reduce or at least slow the rise in operations costs.

Is PAT a Burden on Taxpayers?

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In a remarkably inept attempt to invalidate the State Senate Pro Tempore’s assertion that the Port Authority of Allegheny County (PAT) has been a long-time burden on taxpayers, an editorial writer says the Senator’s claim is a flawed premise and misses the significant role mass transit plays in a region like Pittsburgh.

 

 

Clearly, anyone who takes the time to think about the editorial writer’s comment can see the faulty logic of the attempted refutation.  The Senator’s comment neither explicitly nor implicitly claims that mass transit has played no role, important or otherwise, in the region. If he believed that he would more likely be pushing to eliminate state subsidies altogether as opposed to wanting to reform PAT to make it more cost effective and efficient.  Note that state operating assistance and grants provided a combined $205 million (55%) of PAT’s total revenue in FY13, while farebox revenues accounted for $84 million, or 23 percent, of total revenue. 

 

But the larger issue is whether the Senator was right about PAT being a burden on taxpayers. There are a number of ways to look at the burden issue.  For example, are PAT’s costs in line with benefits it produces for the county, region and state? Or, are PAT’s costs in line with other comparable transit agencies around the country? 

 

Well, let’s go back a ways to assess the Senator’s claim that PAT has been long-time burden on taxpayers. In November 2006, Governor Rendell’s Commission on Transportation Funding and Reform issued a report containing the following findings (among others) regarding PAT.

 

  • Needs to focus on financial performance indicators to better align service needs and effectiveness. The Commission wanted PAT to meet industry best practices.
  • Has the highest wage rates in the country adjusted for cost of living.  At the time of the report PAT wage rates averaged $20.50, 40 percent higher than the average of 60 transit agencies studied by the Commission. 
  • Is challenged by high labor, health care and pension costs for current and retired employees. From 1999 through 2005 these line items grew at an annual rate of close to 14 percent.
  • Focused effort on fixed guideway development and service expansion rather than basic asset replacement maintenance. The Commission said that PAT was going after new starts and expansions instead of focusing on existing needs.

 

So where is the agency now?  The National Transit Database’s profile of the largest 50 public transit agencies in the U.S. showed that in 2011 PAT provided 54 million annual unlinked bus trips over a service area of 775 square miles with a per passenger expense of $5.31.  If one looks at agencies in the top 50 that ran the same range of bus trips (44 million to 64 million) which covered areas such as Atlanta, Milwaukee, San Antonio, and Houston only Houston came within $1 of the expense by PAT ($4.95 per bus trip).  If one looks at agencies covering a similar service area (570 square miles to 868 square miles) which included Portland, Philadelphia, Minneapolis, San Diego, and Dallas, all with the exception of Dallas ($6.40 per bus passenger trip) had costs below PAT. 

 

For 2009 (the latest data available) the American Public Transportation Association examined transit wages and average bus operator wages.  In FTA region 3 (PA, WV, DE, DC, MD, and VA) the average agency wage was $17.12: the average PAT wage was $24.25, which was the highest of all transit agencies in region 3.  Adjusted for cost of living, the 2009 average PAT bus operator wage was higher than those of Atlanta, Chicago, Cleveland, and Milwaukee. Bear in mind that drivers at other regional transit agencies in southwestern Pennsylvania earn $8 less per hour and have nowhere near the benefit package PAT drivers have.

 

PAT’s net expenditures for pension, active healthcare, and retiree healthcare stands at $103.3 million in FY2013, 6 percent above the audited 2010 amount of $97 million.  Contract after contract has made changes to fringe benefits as new hires (depending on bargaining unit) come under defined contribution pensions or have age and service requirements to make them eligible for retiree health care.  With a long-term liability of $890 million on retiree health care those are changes that have to be made. As a percentage of PAT’s covered payroll, the unfunded liability stood at 559 percent as of 2012.  By way of comparison, the larger SEPTA system’s unfunded liability to payroll percentage was 299 percent in 2009. 

 

Bear in mind too that the concerns about excessive spending on guideways expressed in the Governor’s report predated the $520 million North Shore Connector project. This project required tens of millions of state and local tax dollars as well as the diversion of millions of Federal dollars that could have been used for other traffic improvement projects in the region.

 

Over and above the state’s generous annual allocations to PAT for operations and capital expenditures, enormous sums of highway money have been “flexed” by Governors and the SPC to fill budget holes at PAT. In 2005 alone, PAT received over $140 million to plug budget holes. Another $47 million was flexed in 2011-12 to avoid shortfalls.

 

Much of this comes down to the issue of contract bargaining that was tilted heavily in the unions favor by their right to strike. “Transit strike” are the two most frightening words transit managers and riders can hear. Because of the threat of strikes, PAT boards have not been able or willing to stand up to union demands, no matter how outrageous or threatening to the Authority’s long term financial viability.

 

The right to strike is granted by the state, which therefore bears some responsibility for the excessive cost structure at PAT and the resulting need for the state to heavily subsidize its operations. But that does not obviate the Senator’s point.  Because PAT’s cost are so high compared to similar sized agencies and because the state’s subsidy keeps expanding in the face of relatively stagnant paying riders, there can be little doubt that PAT is a burden on taxpayers.  That situation must be corrected. And substantial corrective reforms ought to and must receive broad support from taxpayers and businesses if the burden is ever going to be reduced.