MTA Audit - NOW WHAT?

 NYS Comptroller Tom Di Napoli’s office released the long awaited audit of the MTA. Below is the summary included in the audit and a link to the report.

The objective of the audit was to determine whether the Metropolitan Transportation Authority has effectively managed and controlled its employee overtime costs.

(Click full report http://www.osc.state.ny.us/audits/allaudits/093010/09s88.pdf)

Audit Results–Summary
We found that the MTA has not eff ectively managed and controlled its overtime costs. Rather,there has been a culture of acceptance among MTA managers regarding overtime, and no real efforts were made to make significant changes in longstanding practices that resulted in routine, and often unnecessary, overtime. As a result, overtime has become the rule rather than the exception for many of the MTA’s employees, and the MTA’s already high overtime costs have continued to escalate.

The MTA provides public transportation in and around the New York City metropolitan area. It employs about 71,000 workers at an annual cost of about $4.6 billion. In accordance with its enabling legislation, the MTA is expected to be financially self-sustaining, and generate enough fare and other revenues to cover its expenses. However, in recent years, the MTA has consistently operated at a financial deficccit.
Between 2005 and 2009, the MTA’s annual overtime costs increased from $468 million to $590 million, an increase of 26 percent. We examined records showing the amount of overtime pay received by the MTA’s employees. We found that many of the employees are being paid significant amounts of overtime, as their annual overtime pay is approaching, and in some cases exceeding, their annual salaries. For example, in 2009, there were 3,274 employees whose total overtime pay for the year equaled at least 50 percent of their annual salaries, including 147 whose total overtime pay exceeded their annual salaries. There were 10,909 employees (more than 15 percent of the workforce) whose total overtime pay for the year equaled at least 30 percent of their annual salaries. When we examined why the employees at four of the MTA’s seven constituent agencies were working such significant amounts of overtime, and whether the overtime was, in fact, necessary,we found indications that the overtime often was not necessary. For example, routine track maintenance work is often performed by workers on overtime, because the workers’ regular work shifts coincide with peak service periods when the tracks are not available for routine maintenance.

In addition, many of the employees who work overtime are replacing absent workers, especially workers who have called in sick. Much of this overtime could be eliminated if absenteeism were reduced and absent workers were only replaced when necessary. We also found that many of the employees working overtime have no valid justification for doing so, and some may not actually work all the overtime hours claimed. If corrective actions were taken to eliminate the unnecessary overtime identifi ed by our audit, we estimate the MTA could save more than $56 million a year in overtime costs.

The MTA Central Office, together with the management of the seven constituent agencies, is responsible for overseeing the agencies’ operations. However, we found that these officials have not eff ectively managed and controlled the agencies’ overtime costs. For example, the agencies’ overtime budgets are seriously flawed, because past overtime inefficiencies are routinely incorporated into the current year’s budgets, and the Central Office routinely accepts the budgets, without question. Also, the Central Office has not worked actively with agency management to reduce overtime costs, even though the MTA has consistently faced serious budget shortfalls. Prior to our audit, neither the Central Office nor agency management had proposed reduction goals for overtime costs, such as a 10 percent reduction. Such a reduction would result in savings of nearly $60 million annually for the MTA, which could help off set
planned fare increases, cuts in service, and/or cuts in capital improvements.

When we discussed our observations with Central Office officials, we were told that, prior to the current administration, the management of the constituent agencies was left to agency officials. Officials in the current administration state that they plan to take a much more active role in managing and controlling employee overtime, and further indicate that some actions have already been taken to reduce overtime costs. According to officials in the four constituent agencies we examined, employee absenteeism and union work rules are the primary drivers of overtime. However, we note that only limited eff orts have been made by management to reduce absenteeism and address unproductive work rules,and management needs to be more proactive in these areas. We recommend MTA offi cials consider adopting some of the best practices of other public transportation authorities that have been able to control their
overtime costs.

Our report contains a total of six recommendations for improving the MTA’s management
and control of employee overtime. MTA offi cials are in general agreement with our fi ndings
and recommendations and intend to pursue them as part of their internal eff orts to reduce
overtime.
This report, dated August 5, 2010,