Monday, November 26, 2007

More Money For The CTA: Hold On Says IPI Study

From reading his column I have always imagined that Dennis Byrne, the Chicago Tribune columnist, channels the spirits of Lenora Helmsley and George Wallace. Yet, Byrne's column in today's Tribune lambasting the Chicago Transit Authority does us a real service by pointing us to a new analysis of CTA spending and operations by the Illinois Policy Institute.

We have recently compared the CTA's bus system's performance to the performance of Pace's bus system and found that Pace's system appeared to be more cost effective on every measure examined except public subsidy per passenger. The IPI analysis compares the CTA's performance today to its past performance. Here are some of the key findings:
  • Rail ridership is up 25%, from 152 million to 190 million since 1979.
  • Bus ridership has plummeted by 45%, from 552 million to 304 million since 1979 and overall ridership is down 23% since 1969/70. Bus operations are a key area ripe for improvement.
  • The average CTA employee today is less productive than the average CTA employee in 1969 or even 1979. This is illustrated in a number of ways. Spending (cost) per rider is up 41% from $1.55 to $2.19 since 1969/70 and up 31% (from $1.67) since 1979. Correspondingly, riders per employee are down, from 56,299 per employee to 45,292 since 1979. The bottom line is that today’s CTA spends more to deliver a rider and each employee delivers fewer per year on average. This is a root cause of the CTA financial crisis and most of it rests within the bus operations.
  • By achieving the 1979 spending benchmark alone ($1.67 per rider), the CTA would save $257 million and more than close the funding gap without having to ask the taxpayers for more.
  • By achieving the 1969/70 spending benchmark ($1.55 per rider), the CTA would save $316 million per year.
  • The CTA is earning more system (non-subsidized) revenue per rider today than it was in 1979, $1.13 versus $.88, an increase of 28% and certainly a step in the right direction.
  • Advertising and concession revenue are up 478%, from $4.3 million to $25 million.
  • The public subsidy per rider is up 35% since 1979, from $.79 to $1.07. The taxpayers are more than doing their part in subsidizing the CTA’s operation.
  • This 35% increase in the public subsidy on a per rider basis illustrates the fallacy of the CTA public relations and budget document claims that the CTA’s pubic subsidy has not kept pace with inflation. While that fact is true in total dollars, it is a misleading fact since the key data point is the subsidy per rider. In fact, one could make the case that the subsidy is excessive by $138 million ([$1.07 - $.79] x 494 million riders for 2007).
  • Bus operations are a key area for improvement. While ridership is down 45% since 1979, total miles driven per year is only down 14%, from 83.5 million to 71.9 million. Further, the total route miles covered (the aggregate miles of the route map) has more than doubled, from 1,042 route miles to 2,529 route miles in 2007. This is unsustainable and the underlying reasons for this must be addressed.
  • Today the CTA runs 154 bus routes versus 134 in 1979, an increase in routes and corresponding expense of 15% while ridership fell 45%.
  • The bus operations data indicate that in 1979 the CTA operated a tightly focused, more market sensitive route map with more traffic per bus per route operated and bus run made. Today, with the route miles up 143%, it appears the CTA is running too many route miles for too few riders, making the bus system inefficient.
The IPI then makes a series of recommendations that it claims can save the CTA more than the $158 million deficit it faces in 2008.

IPI's short and cogent analysis is well worth a read. It challenges the conventional wisdom that a series of unfortunate events has overwhelmed the CTA, Metra and Pace, necessitating greater public subsidies. Instead, the analysis suggests that the bailouts past and present have allowed the CTA to avoid taking the steps necessary to prudently manage its business.

29 comments:

Anonymous said...

The Transit Service/Ridership Constant:

When ridership goes down, bus service levels go up as the agencies seek to capture riders by putting more nets in more water..if you will. As every reader of this blog surely knows by now, Rail is not so flexible and not as crucial to overall ridership figures anyway except of course if you have certain land values you want to increase/augment..well then in your case, Rail Transit is the most important public policy issue in the universe.

Of course this tendency to sail further and further out for less fish, er.. riders, is only possible because of the public subsidy.

It does not occur with market driven commodities ie...supply and demand economies.

Excess capacity is a fallacy-- every new rider requires an incremental increase in subsidy because to capture new riders you have to expand the service (market) range.

You can all extrapolate the rest...if you care to.

Anonymous said...

"Excess capacity is a fallacy-- every new rider requires an incremental increase in subsidy because to capture new riders you have to expand the service (market) range."

It may be the case, but not necessarily. If a 40 seat bus could attract 40 passengers instead of 15, the other 25 would be essentially at no marginal cost. Of course, you had the CTA threatening to cut rush hour lines even though they were running at capacity, so something is strange there, too.

Too much of the bus transit industry mentality seems to be that since each passenger requires a $1 subsidy, you cut your losses by cutting the passengers. It might be possible to "grow the business" (as corporations ungrammatically state), by providing more dependable service, rather than extending service into territories that can't support it.

Anonymous said...

Buses do not "attract" riders. They are not movie theaters... Buses travel on routes and routes have a market share. Assuming the bus serves suitable destination(s), to "attract" those 25 incremental riders the bus has to travel much much farther and deeper..totally offsetting the "excess capacity" theory. As structured now (existing travel markets), every rider that brings in a new $1, is $1 short. In that sense, the Transit System is actually buying that rider for a buck. Hey, what do you want them to do? Everybody is always wonking all over their ridership numbers...that's the way the game is played.

Anonymous said...

9:19: It seems like you missed the "grow the business" point. A transit authority could stem the loss of passengers if it ran on time, with clean equipment, courteous drivers, to destinations riders wanted to reach, etc. Or, it could be like the CTA and spurn discretionary riders, run filthy equipment on irregular schedules, harbor panhandlers, maintain duplicative routes, etc. I guess you are saying that all of the restructuring studies CTA is doing are futile, unless CTA can extend its territory, resulting in the service overlap.

Anonymous said...

11:02:00 AM You Missed The Point:

Transit is not a "choice" commodity. Most everyone who can use it, does, because it is a really good deal...period. (See: Ridership to the Loop, many sources). For tangible numbers of "new riders" you have to go out further to find them... Like the old ice-cream truck regression analysis problem.... On a 90 degree day the truck has to go 2.5 miles to sell out... on a 75 degree day the Ice Cream truck has to travel 15 miles to sell out or "attract" ice cream lickers ...profit-literally-out-the-window
Temperature is the dependent variable for ice-cream trucks and and likewise, linked origins and destinations is for transit, not "nice and friendly environments with wi-fi"...see now?

Anonymous said...

Erata: 11:11 am

Replace "dependent" with "independent"

Anonymous said...

No, you miss the point. Your statement that "Transit is not a "choice" commodity. Most everyone who can use it, does, because it is a really good deal...period" is either inconsistent or a fantasy.

If you really believe what you say, then just advocate downsizing the system.

Anonymous said...

11:55:00 OK that's it..I'll yield to your theories if you can just answer this:

InRe: the subject, what type of a market do we have?

1) Unregulated Free-Enterprise?
2) Regulated Free-Enterprise?
3) Public Franchise?
4) Managed Competition?
5) Cartel?
6) Entrepreneurial Govt w/ Subsidy?

Anonymous said...

Or none of the above.

We have a public agency that was incompetently run, at least under Kruesi's management. Huberman is trying to turn it around, at least with regard to some of the deficiencies I noted, such as the dirt and bus bunching. You tell me what model Huberman is using.

The rest is just sophistry, trying to divert the point.

Anonymous said...

To certain degree, you're both right.

Huberman is improving on the reliability and cleaniness and, only time will tell, that will fill some of the seats, increasing ridership with the same level of service/cost. In fact, reliability has as double-factor in that more reliable service is not just nice, because the waits are shorter, but the loads are evened-out, providing more comfort--so better management can increase ridership. Better management is "casting the net further."

BUT, the other "anon" is correct, too. 2007 is not 1979; things are very different--the temperature for the ice-cream truck is lower these days. A transit bus system really does have to "do more" to get more riders these days. Less downtown travel; more car ownership; gas just reached 1979 prices. It's not just geographic--it is temporal, too. Slower, congested streets mean buses cover less territory in the same time. ADA requirements have shrunk the buses' capacities, too.

dbx said...

Let's see -- horrendous increases in traffic with no accompanying congestion mitigation means buses go slower and less reliably, which means more people drive, which means bus service gets even worse.

And the CTA's approach of running more routes with less density doesn't work either. People want easy. They want frequency. I would hope that they don't mind walking a couple of extra blocks to get it. Although admittedly the failure to control gangs in some parts of the city makes this one a bit tricky in places.

One number is surely wrong -- that CTA route mileage has more than doubled. Must include PACE?

So, what to do about it?

1. HOV lanes on Lake Shore Drive. ESSENTIAL. Heck, consider making the whole thing HOV during peak times. In any case, HOV lanes are the only way of getting something approaching true bus rapid transit around here.

2. Lights controlled by buses. Buses override traffic lights at minor intersections that aren't essential to keeping car traffic flowing but could make a big difference to bus schedules.

3. Consider some deviations from the grid system. Make use of Elston and Clybourn, now bustling commercial corridors that once had their own bus routes but lost them years ago, making the box retailers car only (OK, in Elston's case, car or bike only, at least they did a decent job there with cycle lanes). And make more use of the freeways, which could in turn use their own . . .

4. . . . . HOV lanes on the Ryan, Kennedy and Eisenhower, plus shoulder-riding for buses and carpools on the Stevenson.

5. Remember, CTA, your number one goals are speed and reliability. Fast service. Maybe fewer stops. More frequency. Also, a good internal look at how you're providing the service. ABSOLUTELY NO MORE BUS BUNCHING. GPS if necessary to prevent drivers from bunching buses to coordinate their coffee breaks with one another. No more union grievances trying to thwart efforts to stop bus bunching.

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