Subway Operating Efficiency and the MTA Budget Crisis

As most of you are likely aware, the MTA is currently facing a large deficit. Thanks to the ridership and cost impacts of the COVID pandemic, the agency needs $12 billion to cover operating losses through the end of 2021. It is hoped that the federal government will cover the shortfall, lest New York face a massive round of service cuts.

Given the magnitude of this budget shortfall, it is likely unrealistic to expect the MTA to recover fully without federal aid. However, whether to mitigate the impacts of a no-funding situation or to cover a shortfall in provided funds (for example, if Congress grants, say, $10.5 rather than $12 billion), it is important for the MTA to have identified ways of extracting efficiencies from its operations that do not involve the broad-based service cuts, layoffs and wage freezes threatened.

The path to ‘better’ savings isn’t especially murky. Patrick O’Hara laid out ways to save on the operation of LIRR service in this post of a few weeks ago, and I have tweeted a good bit on NYCT’s operating cost issues in the past. That said, given current events, it’s worth discussing the issue in depth. To be clear: I do not mean for this post to be an all-encompassing list of potential ways to save; my aim here is to present a few frameworks/cost centers of interest when discussing a financial path forwards.

The 80/20: Facility Maintenance

As should immediately stand out on the chart above, NYCT’s operating cost issues are driven by maintenance, specifically facility maintenance (think: track, tunnels, signals, yards, stations). If you look at cost-efficiency numbers on a per track-mile basis, the picture becomes even more dismal: NYCT is spending about three times as much per unit of maintenance as domestic peers. (NOTE: to get a comparison to true best practices, NYCT should benchmark to the likes of Paris or London, but I have not been able to obtain granular cost data for those systems)

There are some caveats here, of which it is important to be aware:

  • Facility maintenance expenditures are somewhat correlated with use intensity (as measured by car-miles per track-mile), even after you exclude the outliers of NYCT and PATH (these analyses include light rail system data to increase sample size beyond 14). However, even when including PATH and NYCT in the regression, NYCT’s maintenance costs are about $800,000 more than predicted.
  • Most US agencies classify some maintenance-like items as capital expenditures; for example, NYCT put spending on switch replacements in the capital budget. While it is possible to access regularized capital spending data through the National Transit Database, the NTD data do not offer sufficient detail to distinguish, say, an ADA upgrade from a laundry list of deferred maintenance items being treated as a capital project. The upshot: operating budget expenditures may not reflect the full extent of maintenance spending, but including capital spending may end up overstating costs.

With that said, let’s break down the issue. Maintenance cost structures across all US systems are dominated by labor. NYCT is no different in this regard; its cost disease seems to be driven almost entirely by a serious maintainer productivity deficit. NYCT’s labor cost per facility maintainer-hour (including salary and fringe benefits) is actually about average for US systems at $65; its issue is that it uses about four times more maintainer hours per track mile than peers.

The obvious question here is “why.” I am, honestly, not entirely sure. I have long thought that some combination of the agency’s complex track access and roadway worker protection (“flagging”) protocols and work rules may be what is driving up costs and labor expenditures, but I cannot present evidence beyond anecdote and my own observations. Nevertheless, this area holds massive potential for further investigation: bringing NYCT’s facility maintenance costs down to the national average could save $1.3 billion dollars per year, or about twenty percent of the projected 2021 deficit.

Other Ways to Save: OPTO and Hidden Time

One of the more commonly proposed ideas for cost reduction at NYCT is movement to one-person train operation, or OPTO. OPTO is, unequivocally, an international best practice in rapid transit, even on systems (ex: Thameslink) with long, crowded trains and curvy platforms. While NYCT’s overall vehicle operations spending isn’t extreme compared with those of other US systems — most of which use OPTO — OPTO would indeed be a significant saving, and would more importantly reduce the incremental cost of subway service, thus making cuts less and expansions more attractive. However, outside the G and L lines, any OPTO expansion would require significant investments in CCTV infrastructure and crew training. This would be money well spent, but the need for investment introduces a relatively inflexible minimum time-to-savings. And, of course, this is all assuming that the TWU would even concede OPTO, which seems unlikely (and honestly, who can blame them?)

Making a unit of service cheaper is only one of the two broad levers transit managers have at their disposal right now. They can also cut service. Even with COVID ridership levels, service frequency/span/coverage cuts should, as a general rule, be avoided (for reasons ranging from equity to the difficulty of re-hiring and re-training operations staff, to the downwards pressure this would have on ridership’s recovery), but there are ways to trim service with small impacts relative to their returns. These savings are all about ‘hidden time,’ which in my mind comes in two varieties: excess scheduled runtime and non-revenue train movement.

Most costs associated with train operation scale with the time it takes to run the length of a line. The longer the round trip runtime, the more trains and crews you will need to run a service at a given frequency. The corollary here is that when you shorten scheduled running times, you can make a service (hours) cut without actually impacting frequencies or coverage: crews and trains are doing the same work in less time. One cannot wake up one morning and magically speed up trains, but NYCT’s incremental speed efforts have borne fruit and COVID ridership losses are making trains run faster; if the agency expects these gains to hold, it may be worth adjusting schedules to reflect them. There are also likely savings to be had in schedules for diversions, though those savings would be more likely to accrue to the capital budget, which pays their cost.

The issue of non-revenue time is more straightforwards. In the course of operating a transit system, you inevitably end up with vehicles running without passengers — for example, on trips to and from train yards. For its size and complexity, NYCT’s non-revenue proportion benchmarks well compared to other US heavy rail systems, but savings likely exist. We could ask, for example, whether every AM rush D train need originate from Stillwell Avenue; on the N, some enter service at 86 St which minimizes time from yard departure to entry into northbound service (this may require slightly rearranging yard patterns in the Coney Island complex).

Hidden time cuts likely will not add to much in the grand scheme of the transit budget. It is not even possible to say for certain whether, after accounting for the resources that would have to be invested in rewriting schedules, they would net much financial benefit in the short run. However, cuts like these have return beyond finances: a faster, more tightly scheduled system is better for riders and operations, and I moreover think we would be remiss not to look at low impact savings before reducing mobility in a crisis.

Difficult Decisions

What New York and its transit system face today is unprecedented and unpredictable there is no certain way out of this mess. I want to be clear in saying that the immediacy of this potential crisis may make the systemic work I suggest too time-intensive to be helpful. But we need to be cognizant of our actions’ long term ramifications for the agency and for New York. Indiscriminate cuts and wage freezes will likely erode the MTA’s knowledge bases, internal networks and organizational capacity, whereas targeting specific cost centers reduces institutional risk while enhancing process reform capabilities. And every transit service cut made threatens climate, equity and the mere survival of the transit-dependent urban landscape that is New York. So, if funding does not come through, it is imperative that we try pursuing more targeted approaches to the budget.

6 thoughts on “Subway Operating Efficiency and the MTA Budget Crisis

  1. First. Just kidding. What are your thoughts on how many personnel should be in management positions? I think it is crazy that there are so many people they added in C-level positions.

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    1. Yeah, you probably could streamline upper management. You want to be careful not to cut too far, though — overloaded execs are too common in the public sector.

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