(The following article by Mike McIntire was posted on the New York Times website on December 18.)
NEW YORK — The Metropolitan Transportation Authority, long criticized as a secretive collection of fiefs largely unaccountable to taxpayers or the riding public, is embarking on what it says is a major overhaul of how it conducts its affairs.
The authority is expected today to announce a series of proposed management reforms, drawn up over the last six months by experts in corporate governing and public finance, that are intended to make its operations more efficient and open to public scrutiny, according to officials and consultants involved in the project.
In a departure from the current practices of most public agencies, the authority would adopt a set of guidelines for good corporate governing similar to those adhered to by the boards of the nation’s largest shareholder-owned companies. Those principles are intended to deter inefficient or corrupt behavior by holding a company’s board members responsible for its actions, making its finances more open and understandable, and clearly defining the duties of its upper-level managers.
The authority has already begun releasing its long-range financial plans, and making its budget documents clearer and more easily accessible, in response to criticism that its finances were cloaked in secrecy.
The changes are partly an attempt to stave off calls in Albany for independent oversight of budgeting for the agency and other public authorities. Proponents say the reforms would represent a significant cultural shift at the quasi-public agency, which has a $7 billion budget and serves eight million subway, bus and rail riders each weekday.
“I think this is a groundbreaking thing,” said Ira M. Millstein, a senior partner at the Weil, Gotshal & Manges law firm and a professor at the Yale School of Management who specializes in corporate governing issues and was hired last summer to examine the transportation authority’s operations. “It could be a prototype, going forward, for other public agencies.”
Among the structural changes Mr. Millstein recommended is one that the authority’s chairman, Peter S. Kalikow, has said he favors: delegating the chief executive functions, now vested in the board chairman, to the executive director.
“A big reason for this is to reaffirm that the oversight function of the board is prime,” Mr. Kalikow said. “It’s the most important thing we do.”
Other proposed changes include having the auditor general, who conducts internal audits, report directly to the chairman and the audit committee, and having the board’s powerful committees, which deal with the authority’s various components like Metro-North Railroad and New York City Transit, adopt written charters defining their responsibilities and making their actions clearer to the public.
Noting that many of the board’s members each represent a specific community or interest group, Mr. Millstein said it was important for the directors to learn to think and act in the best interests of the authority as a whole.
“Our impression is that they each think they are responsible for their own agency or issue, when in fact it is much broader than that,” Mr. Millstein said. “I don’t mean to frighten them, but the authority has issued $16 billion worth of debt. Under securities laws, they are all responsible for any false or misleading information that could be released in connection with that.”
Some board members, while supportive of Mr. Millstein’s recommendations, chafed at the notion that they have not fully appreciated their roles and duties. Edward B. Dunn, one of two vice chairmen, said he was “unaware of a time when I thought people were overly focused on the narrow issues that got them on the board.”
“But that is an important issue,” Mr. Dunn said, “and I am abundantly comfortable with re-emphasizing it.”
One of the authority’s harshest critics, Assemblyman Richard L. Brodsky of Westchester County, who has held hearings on corruption and mismanagement at New York’s public authorities, said he was briefed on Tuesday about Mr. Millstein’s recommendations, and found them lacking in substance.
“This is not reform,” Mr. Brodsky said. “This is a rearranging of the deck chairs in first class on the Titanic. It’s administrative restructuring, that’s all, and it would be unfortunate if they try to sell this as something more than it is.”
Mr. Brodsky has proposed that the authority create independent offices to oversee budgeting and internal corruption investigations. Those steps would require legislative approval.
The changes being put forward today require only the board’s action, and they are expected to be put in place in the coming months, said Katherine N. Lapp, the authority’s executive director.
The authority retained Mr. Millstein and his partner Richard Davis amid controversy surrounding the authority’s decision to raise fares and tolls as much as 33 percent. The state and city comptrollers accused the authority of hiding hundreds of millions of dollars to justify the increases, and demanded that it reform its fiscal practices.
Adding to the pressure have been Mr. Brodsky’s hearings; some have focused on corruption involving the construction of the authority’s new headquarters at 2 Broadway, which is $300 million over budget. On Tuesday, three authority employees were charged with accepting bribes from contractors in connection with the project.
The practical benefits of Mr. Millstein’s recommendations for the authority’s customers are hard to measure. Riders are unlikely to discern any immediate differences, and budget problems at the authority are still being forecast into the foreseeable future.
Andrew Albert, a nonvoting member of the authority’s board who represents the New York City Transit Riders Council, said the changes would be worthwhile if they increased public confidence in the authority. “Anything the M.T.A. can do to become more user-friendly is a good thing,” Mr. Albert said.