Metro CEO Art Leahy has been on the job for almost a year and yesterday he announced to agency staff his most significant initiative: he wants to “streamline” the agency, which involves eliminating some open jobs and through voluntary and involuntary layoffs.
This is how it has been explained to me:
Metro faces an historic operating deficit in the fiscal year that begins on July 1. It’s currently projected at $181 million. The causes for this: the recession, local transit sales taxes are 20 percent down from their peak, state funds that would normally go to Metro are being diverted by the Legislature and farebox revenue has declined as bus ridership has dropped during the recession.
The agency is trying to avoid using its reserves to balance the budget (the budget is legally required to be balanced). The idea is to do this while treating major service cuts and fare increases only as a last resort.
Against this backdrop, Leahy has scrubbed the agency’s overhead and other expenses and has already cut $59 million from the current budget. More cuts in expenses are planned for the next fiscal year, including the elimination of 20 percent of non-contract employee positions — up to 260 jobs. Leahy also wants to reorganize the agency to focus on its core services: bus and rail operations, planning and construction of Measure R projects and the coordination and management of countywide regional programs.
In addition, Metro officials and Board members also are actively seeking state and federal assistance to keep the Metro system in a state of good repair.
The memo is below:
Memo from the CEO Regarding Streamlining the Agency & Restructuring our Service & Program Delivery
The Los Angeles County Metropolitan Transportation Authority is at a critical juncture. In the midst of a major economic downturn, never has more been expected of this agency with regard to the delivery of capital programs and day-to-day services.
In order for us to successfully meet our broad set of programmatic and service commitments in a fiscally responsible manner, we must act now to streamline the agency, restructure our service delivery, and markedly improve the management of our capital programs. Collectively, we are committed to three essential objectives:
* A sustainable operating model where we can afford to operate and maintain with consistently high qualitywhat we buy and build;
* A world class transit system with the range, quality and speed to attract and keep the most discerning customers; and
* Accelerated expansion of our transit system through the planning and building of outstanding projects delivered on time, within budget, and with safety as job one.
Our challenge is to deliver this package of imperatives within the context of “The Great Recession.” We are committed to planning and acting now in a manner which serves to preclude more negative impacts on our customers and employees downstream.
In the course of the next three months, we will lay out a comprehensive plan to achieve our objectives with minimum draw upon the agency’s reserves. We intend to enter FY11 with a new lean organization, a new service delivery model, and a focused agenda for capital programs delivery.
With the Board’s concurrence, MTA will be reorganized into six strategic business units:
* The Executive Office will be responsible for government relations, labor relations, safety, security, the Office of Management & Budget, the Office of Equal Employment & Opportunity, and Management Audit Services.
* Operations will be responsible for bus & rail transportation and bus & rail maintenance.
* Programs will be responsible for transit projects, highway projects, facilities projects, construction, engineering, planning, business development, and real estate.
* Customer Services will be responsible for service development, information services, external affairs, customer programs/services, and regional programs.
* Financial Services will be responsible for accounting, finance & treasury, revenue collection, and risk management.
* Administrative Services will be responsible for human services, procurement, materiel management, and economic opportunity.
Our intent in restructuring is to ensure we more efficiently and effectively address the needs of our customers and the specific programmatic commitments prescribed in Measure R and our charter.
In parallel, we will be eliminating up to 260 non-contract positions during the remainder of FY10. This reduction will constitute approximately 20% of our non-contract positions and will be accomplished by the elimination of unfilled lower priority positions plus the carrying out of a voluntary severance program and a reduction in force program.
In April, we will bring to the Board a Comprehensive Service Restructuring Plan based upon the guiding principles of service quality, systems integration, and network rationalization. With the Board’s concurrence, this plan will be publicly vetted and fully implemented in FY11.
Concurrently, within the Programs SBU, we will be integrating and refocusing our transit, highway, and facilities programs with the construction, engineering, planning, business development, and real estate units. A new Programs Management Office will be a key component of this structure. In combining these organizational elements, our goal will be to ensure accelerated project delivery, enhanced customer & safety focuses, improved application of lessons learned consistent application of best practices, strengthened fiscal/control management, and enhanced operational & peer review.
In the coming months, we will also be recommending to the Board the elimination of specific programs and activities from across the agency as a means of further reducing our expenditures.
Working together we will remake this agency to ensure that we successfully deliver on the myriad of expectations and commitments which exist for MTA. By planning and acting boldly today, we can bring our shared commitments to fruition in a manner which best serves our customers and our employees.