(The following story by Jon Hilkevitch appeared on the Chicago Tribune website on May 11.)
CHICAGO — On his 10th day on the job Thursday, CTA President Ron Huberman nibbled at non-essential internal expenses, announcing $12.5 million in administrative cuts from the transit agency’s $1.1 billion annual operating budget.
CTA customers will not feel the pinch from the elimination of 49 positions—of which 31 are already vacant—and other cutbacks at the agency’s glass-and-steel headquarters downtown, Huberman said, calling the cuts just the beginning. The CTA has more than 11,000 employees.
No frontline jobs, like bus drivers, train operators, janitors or maintenance workers, were slashed, Huberman said, adding, however, that service cuts are still on the table later this year if the legislature does not approve additional transit funding to plug a $110 million budget shortfall.
Transit oversight groups praised Huberman’s cost-cutting effort, but they said major savings can be achieved only by the CTA aggressively holding down costs related to salaries, health care and pension benefits provided to retirees, who currently make no contributions to their health insurance plan. The CTA pension is only about 35 percent funded.
“The General Assembly has passed legislation requiring the CTA pension be at a 90 percent funded ratio by 2058. Unless the CTA finds new revenues or substantially reduces labor costs, these funds must come from service cuts,” said Laurence Msall, president of the Civic Federation of Chicago.
The jobs that Huberman yanked from the CTA payroll Thursday range from more than a dozen manager posts to nine unionized jobs, including secretaries, clerks and typists, at a total annual savings of $3.8 million, officials said. Some affected employees who have good work records could be reassigned, Huberman said.
Most of the remaining savings would come from an estimated $7 million reduction in overtime pay. The $7 million represents about 20 percent of what is typically spent on overtime annually at the CTA, officials said.
Also being pared are advertising expenditures, miscellaneous administrative spending and employee travel, and purchasing practices will be reformed to better manage cash flow, Huberman said.
“What we are doing at the CTA is tightening the belt everywhere we can,” Huberman said at a news conference at CTA headquarters, 567 W. Lake St.
“The CTA has to show its riders, Chicago’s taxpayers and the legislature that we are doing a better job managing the resources we currently have,” he said.
The CTA faces a $110 million operating shortfall in 2007. The agency, along with Metra and Pace, is counting on a $226 million bailout from Springfield.
The Regional Transportation Authority, meanwhile, is calling on the General Assembly to provide $400 million in annual operating funds for transit and $10 billion in new capital funds over the next five years.
RTA Executive Director Stephen Schlickman said Huberman’s administrative cuts “definitely send the right message that we need to make tough decisions.”
While agreeing with a recent state audit that called for reforms and belt-tightening by the CTA, Metra and Pace in concert with increases in state transit funding, Schlickman said, “I don’t think there is a lot more to be cut out of the CTA’s administrative costs. Eventually you will be cutting into the bone.”
Schlickman on Thursday sent a letter to the three transit agencies asking them to produce plans for possible service cuts and fare increases to take effect July 1 if the state does not authorize additional funding.
Huberman said his top priority at the CTA is to focus on safety, consistency of service and cleanliness. But he indicated the CTA would continue to cut costs to demonstrate to state legislators the transit agency’s commitment to operating like a business while striving for high performance.
“We will be coming back in a lot of areas” for more cuts, Huberman said.
A consultant that the CTA hired in 2005 to identify cost savings came up with $159 million in suggested cuts and efficiencies. But $111 million of the projected savings would require changes in the CTA’s collective-bargaining agreements or legislation.