MTA Gas Choices Cost Taxpayers $39M
The MTA’s bus fuel contract is once again in the news & yet again it is in an unfortunate light. Back in September 2008, I wrote about how the agency was being price gouged on the contract by long time supplier Sprague Energy Corp. Fast forward to 2009 when I wrote about the agency announcing a new deal with Sprague that enabled savings which I did question. Now lets go to the present where New York State Comptroller Thomas P. DiNapoli released an audit on how the MTA’s bus fuel contract cost taxpayers $39M dollars. Here is the press release:
New York City Transit and the MTA Bus Company spent $39 million more than they should have on diesel fuel due to wasteful practices and improper oversight, according to a new audit issued today by New York State Comptroller Thomas P. DiNapoli. In addition, the MTA Bus Company’s records showed unexplained discrepancies in fuel delivery, quality and usage, leading auditors to conclude that the agency needs to significantly improve its fuel procurement process.
“New York City Transit and the MTA Bus Company are literally running out of gas because of their poor spending practices,” DiNapoli said. “They squandered more than $39 million of taxpayer dollars due to outdated, expensive contracts and delayed decision-making. Buses don’t need jet fuel, and taxpayers shouldn’t have to pay for it. There are some clear, decisive steps to cut excessive fuel spending. The MTA should work with OGS to lower its fuel bills and maintain accurate records for how the bus fleet buys and uses fuel.”
The MTA Bus Company was created in 2004 to absorb seven private companies operating under franchises from the New York City Department of Transportation. The fleet operated 1,323 buses at the time of the audit, which covered the period between October 2006 and September 2009. Diesel fuel powers 78 percent of the fleet while 22 percent use compressed natural gas (CNG).
The diesel bus fleet can use either the widely-available diesel fuel known as ULSD#2 or ultra low sulfur diesel #1 (jet/kerosene). In 2003, the MTA signed a five-year contract with Sprague Energy Corporation to supply jet/kerosene, despite regulatory changes that would make ULSD#2 a cheaper and equally environmentally friendly alternative by 2006. Even after the expensive jet/kerosene fuel contract ended, the MTA extended their deal with Sprague by a year when they could not find other bidders to supply jet/kerosene. The contract extension cost the MTA an extra $27.5 million.
In addition, auditors noted:
* The terms of the one-year contract extension required both NYC Transit and MTA Bus to absorb a 55 cent per gallon price increase on jet/kerosene costs, while also agreeing to purchase a minimum of 50 million gallons;
* The Office of General Services (OGS) had a statewide contract for diesel and gasoline fuel that would have cost the MTA nearly 29 cents less per gallon than its contract price;
* The amount of fuel pumped from tanks did not match the amount of fuel recorded as dispensed to vehicles at four of eight MTA Bus Company depots, leading auditors to conclude that the agency could not account for fuel usage.
Auditors recommended that the MTA:
* Explore alternative contracting strategies including the use of the OGS fuel contract.
* Finalize new policies regarding fuel accountability and train personnel on the new rules;
* Account for fueling discrepancies on a daily basis; and
* Require fuel to be tested for compliance with contract specifications.
MTA officials generally agreed with the audit and switched to ULSD#2.
Click here to read the complete audit in pdf form.
Audits like these highlight the mess that is the MTA & how it does business. These are the kind of points that TWU Local 100 President John Samuelsen should focus on. Focus on how it seems quite hypocritical to complain about worker salaries & such when money is being lit on fire with horrendous contracts that do no one favors outside of a select few insiders via kickbacks.
I would love to hear any legitimate defense from the MTA on how it could have ended up in such a position to begin with. Why does it seem they always pay more than the next company for the same exact products or services? Are they that inept in negotiating? This is beyond pathetic!
xoxo Transit Blogger
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Service Diversions 05-20-10
I have just updated the “Service Diversions” page with the latest information for the weekend & following week (beyond in some cases). For riders going near the Broadway-Nassau & Fulton Street stations, do not forget to read this entry to see what service is affected.
I suggest you print out a copy of the diversions to carry with you or use your mobile device to access the phone friendly version of Transit Blogger. Have a safe & wonderful weekend!
xoxo Transit Blogger
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MTA Statement On Targeting Overtime Costs
In the entry below, I referenced a report in yesterday’s New York Post which talked about the MTA’s desire to crack down on overtime abuse. Earlier this afternoon, the MTA sent me a press release highlighting their desire & points of emphasis on cutting back on overtime costs:
The MTA today announced plans to significantly reduce its overtime costs, with savings of more than $20 million in 2010 and $60 million annually starting in 2011. The announcement reflected the agency’s recent completion of an internal review of its $560 million annual overtime expense. The review concluded that while some overtime is necessary to run service, inflexible work rules, employee absenteeism and pension padding contribute to significant amounts of unnecessary overtime. The agency acknowledged that despite some advances, management has also played a role in allowing unnecessary overtime and committed to a series of tighter management controls that will lead to the cost reductions. The agency also said that the savings projected for 2011 could only be achieved in partnership with its labor unions.
“Some overtime is needed to put out a reliable service and respond to emergencies, but much of it is unnecessary and can’t be justified,” said MTA Chief Operating Officer Charles Monheim. “MTA leadership is now committed to eliminating unnecessary overtime, and we expect new controls to save millions. We will do our part, but a real partnership with labor is the only way to make a real dent in unnecessary overtime.”
The agency identified a number of examples of unnecessary overtime:
• Outdated work rules result in some employees being paid when they’re not working
o Locomotive engineers at the LIRR receive an extra day’s pay for switching between electric and diesel equipment without working one extra minute.
o A local Queens bus driver gets 12.5 hours pay for eight hours of service, including 6 hours of paid “swing time.”
o More flexible work hours in place in other parts of the MTA would cut costs by 1/3 if allowed in this case.
o Some employees are paid for overtime on vacation, holiday and sick days.
• High employee absenteeism is covered with overtime shifts.
o In addition to 37 holiday and vacation days, a quarter of represented NYC Transit employees take 15 or more sick days each year. These shifts must also be filled on overtime.
o The impact is doubled when high users of sick leave make up for unpaid sick time by using more overtime.
o A common example is a Train Operator who took two unpaid sick days but made a full week’s pay by working overtime on three other days. NYC Transit pays unnecessary overtime to cover his original shifts and the ones he takes to make up his missed pay.
• Some employees load up on overtime to increase pensions
o In some cases, pension is calculated using highest 5 years of total earnings, with no cap on overtime and seniority rules enabling huge hours nearing retirement.
o For example, an MTA Bridges and Tunnels employee who retired in 2007 used overtime to double his pension – which exceeded his annual base pay of $53,000. He is paid $73,000 a year in retirement, due in part to working 35 shifts of 16 hours or more in his final year.
• Management hasn’t consistently focused on limiting unnecessary overtime.
o The cost of doing repair work varies greatly by bus depot, with reliance on overtime tied enabling low productivity and leading to higher costs.
o For example, bus repairs at Castleton Depot cost $2 million more each year than the same repairs at Flatbush Depot because of unnecessarily high overtime usage at Castleton.
• Lower productivity means the same air conditioner maintenance job takes 8-12 hours at Flatbush but 16-24 hours at Castleton.
o Management has tolerated unproductive mega-shifts.
o LIRR employees work continuous tours of duty enabling, for example, a crew dispatcher to earn over $233,000 in 2009 when the base pay was $80,041. The employee worked 16 hours a day for 5 consecutive days 10 times during this period, totaling 180 days where more than 16 hours was worked during 2009.
MTA COO Charles Monheim noted that progress had been made in tighter management controls, but said that more needed to be done to reduce unnecessary overtime. He announced the implementation of a series of controls designed to limit overtime in areas controlled by management. Savings were projected at $22 million in 2010 and $60 million in 2011 and beyond with active labor participation.
The actions include:
• Closely monitoring shifts greater than 16 hours to reduce double-time payments, ensure productivity and limit pension padding.
• Aggressive enforcement of sick leave abuse.
• Bi-weekly reporting to agency presidents of overtime and explanations for variances at monthly committee meetings.
• Specialized task forces and more intensive reporting in high usage areas.
• Engage with labor to begin the discussion about changing work rules that lead to unnecessary overtime.
It should be interesting to see how many of these goals the MTA could accomplish when it decides to finally sit down & negotiate instead of bickering through the media.
- MTA Looks To Crack Down On OT Abuse
- MTA Statement On Manhattan Institute Report
- MTA Police Overtime Draining Budget
- Retired LIRR Worker Pads Salary With OT
- MTA Contiues To Throw Money Away
MTA Looks To Crack Down On OT Abuse
MTA CEO & Chairman Jay H. Walder is obsessed with fixing the MTA’s budget woes. One of his main fights is against what he finds is blatant overtime abuse. Yesterday’s edition of the New York Post had a report from Tom Namako about the agency’s attempt to do just that:
A far-reaching crackdown on union overtime is under way at the cash-strapped MTA, as top brass vowed to tighten wide-scale abuse of sick days, costly double and triple shifts, and pension inflation.
The new policies, which the agency said it can unilaterally impose in 2010 for $22 million in savings, is sure to set the table for hostile talks between management and the strong unions that represent much of the workforce in the near future.
Agency presidents laid out several examples of how union employees use contractual work rules to rack up obscene amounts of overtime — in some instances without even lifting a finger.
“They’re not working,” said LIRR president Helena Williams.
“People aren’t physically working 24 hours” but they’re getting paid for it in some cases under the provisions of thier contract, she said.
Each division will have a task force that will make sure employees aren’t abusing sick days, like using them while traveling for personal reasons in lieu of vacation days. When someone calls out sick, the replacement is generally paid time-and-a-half.
One stunning figure is that one-quarter of the entire New York City Transit workforce — about 35,000 people represented widely by TWU Local 100 — takes more than 15 sick days each year, even though only 12 of them are actually paid.
For example, one subway operator was able to make enough money for a five-day work week by only actually showing up for three days and working overtime — he called out for unpaid sick time the other two days of the week.
Click here for the complete report.
I have to say I do support the MTA in trying to crackdown on blatant overtime & sick time abuse. I just do not want it to turn into a witch hunt in trying to make it seem that legitimate overtime or sick time use should be grouped with any abusing of the system that occurs. Since I grew up around the MTA & still know plenty of people involved within it, I am afraid that the unfair lumping will occur.
Tensions are already high between the MTA & its unions, the last thing the Chairman needs to do is make it any worse. Sit down & negotiate in good faith. If you do, positive things can come from it all for boths ides.
xoxo Transit Blogger
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MTA Dumps Goldman Sachs
The MTA is by far one of the most unpopular agencies in our area. However another agency by far trumps it in the unpopular category & on a much bigger scale. The agency in question is Goldman Sachs who the MTA announced it will no longer employ as its financial advisor. Tom Namako of the New York Post has more in this brief exclusive report from Tuesday:
Beleaguered investment banking giant Goldman Sachs will be removed as financial advisor to the MTA, board sources said.
The transit agency’s finance committee will vote on Monday on whether or not they will hire a different analyst.
The MTA’s contract with Goldman, which was recently charged with fraud by the federal government over a subprime mortgage product, had recently run out.
The firm is currently working on a month-to-month basis with the agency, sources said.
It’s unclear if the investigation played any role in the MTA’s decision.
Board commissioners have criticized Goldman’s handling of MTA finances at public meetings.
Yet board sources also said that MTA management was happy with the company’s overall performance, and that transit brass simply found a better offer with a different company.
Goldman officials declined to comment.
The MTA is facing a $400 million financial shortfall for 2010.
I can’t say that I am surprised at this decision. I don’t believe this has anything to do with the negative spotlight being shined on Goldman Sachs but more of how they did not exactly do the best job with the MTA’s financial assets. This is the same agency that made almost $300,000 when advising the MTA on a questionable bond deal at a time when the market was extremely stressed. The other agency involved in the deal, was Citigroup Global Markets. The deal was so questionable, the Securities and Exchange Commission (SEC) filed a complaint.
I would love to know more details about the deal struck between the MTA & whomever their new financial advisor is. Hopefully details about that will be available soon & they perform better as Goldman Sachs was not getting the job done.
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