WMATA: Search under way for the Next General Manager of DC’s Metro System; Transit Authority Needs Dedicated Revenue Source

The Washington Metropolitan Area Transit Authority (WMATA) is searching for another General Manager. Finalists from an initial search were released because of a difference of opinion of what type of General Manager (GM) WMATA should have–a “financial turnaround specialist” or a traditional transit executive. A transit executive would be preferable because (1) transit is a public service, not a profit-generating business, and (2) the system is responsible to the welfare of all human beings using or operating the system each day.

I am skeptical of any financial turnaround specialist because the true test for one was in 2008 during the United States financial crisis. None showed up (excepting the Obama Administration), and, thus, I do not expect any candidates for WMATA.

State Amount of Funding
(components are rounded; in millions of dollars)
FY 2010 FY 2011 FY 2012 FY 2013 FY 2014
Maryland 215.6 228.1 246.4 263.6 279.7
District of Columbia 201.6 214.15 233.3 249.1 271.7
Virginia 129.4 129.7 142.2 156.5 181.0
Subtotal subsidy 546.7 572 622 669.2 732.4
Debt service 27.5 48.7 48.7 37 33.0
Audit adj fy 2011 and 2012 -30.5
Total (budgeted) 574.2 620.7 670.7 706.2 734.9
Actual* [630.7] [722.51] [687.02] [711.10]
(6/30/10) (6/30/11) (6/30/12) (6/30/13)

The difficulty with deciding to take the GM job with WMATA remains the same as specified in a previous post. Primarily, WMATA still does not have a dedicated source of revenue. It is interesting that Maryland supports a financial turnaround specialist for WMATA, yet Maryland provides funds for Baltimore’s subway and light rail system. WMATA’s unique financial and political circumstances make WMATA a challenge, one most incumbents only keep the job for about 3-4 years, excepting Richard White. Even with the challenges, there should be transit executives willing to accept the GM job, well aware of the high stakes (and potentially short-term nature) of the job.

Passenger Fares and Parking Fees
(rounded; in millions of dollars)
FY 2010 FY 2011 FY 2012 FY 2013
Budgeted 702.7 789.5 767.7 874.0
Actual* 727.8 (6/30/10) 804.5 (6/30/11) 816.7 (6/30/12) 856.8 (6/30/13)
*Actual amount comes from Metro’s statement of revenues, expenses, and changes in net assets. This statement does not identify parking fee revenue; I used the total revenue amount in the table.

The financial statements are not yet available for 2014, and the ridership numbers are estimated for 2013. However, I have updated information for WMATA as it was available at the time of this post.

Ridership
(in number of trips)
2010 2011 2012 2013
Rail Bus Rail Bus Rail Bus Rail Bus
217,219,146 123,670,000 217,052,000 124,173,000 212,188,640 131,780,990 209,000,000* 136,000,000*
* Estimated
Source: Metro Facts.

Interesting Background Facts (source: Metro Facts 2014)

Metrorail system age: 39

Organizational Structure of Metro (Metro Compact Article III)

[Four legislative bodies–Congress (federal government), D.C. City Council, Md. state legislature (Montgomery and Prince George’s), Va. state legislature (Arlington, Fairfax, and Alexandria) (subsidy funding)]

Board of Directors (8 members selected from each jurisdiction [federal government, District of Columbia, Maryland, and Virginia]) [Note:  There are 8 alternates.]

Officers (General Manager, Secretary, Treasurer, Comptroller and General Counsel and such other officers as the Board may provide.)

Metrobus

328 routes (breakdown by jurisdiction not available)

Metrorail stations (by state)

Total: 91

District of Columbia: 40 (38.3 miles of track)

Maryland: 26 (Prince George’s County (15) and Montgomery County (11)) (38.31 miles) [Note: The state of Maryland operates its own subway in Baltimore, Md.]

Virginia: 25 (Arlington County (11), Fairfax County (11), and the City of Alexandria (3)) (41.47 miles)

 

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WMATA: Charts on 2012 Financial Results and Fiscal Year 2013 Budget (Selected Items)

In this post, I am updating the tables in a previous post with 2012 and some 2013 numbers.

The first chart below shows the amount of subsidy funding that Metro receives from Maryland, the District of Columbia, and Virginia. The second chart shows Metro’s income from fares and parking fees. It seems that the states and the passengers essentially share equally in paying for the operating expenses of Metro.

The third chart shows the number of trips taken in Metro vehicles. Rail trips declined, while bus trips increased. It would be interesting to find out reasons for these numbers.

State Amount of Funding
(components are rounded; in millions of dollars)
FY 2010 FY 2011 FY 2012 FY 2013
Maryland 215.6 228.1 246.4 263.6
District of Columbia 201.6 214.15 233.3 249.1
Virginia 129.4 129.7 142.2 156.5
Subtotal subsidy 546.7 572 622 669.2
Debt service 27.5 48.7 48.7 37
Total (budgeted) 574.2 620.7 670.7 706.2
Actual* [630.7] [722.51] [687.02]

*Actual amount comes from Metro’s statement of cash flows.

Passenger Fares and Parking Fees
(rounded; in millions of dollars)
FY 2010 FY 2011 FY 2012 FY 2013
Budgeted 702.7 789.5 767.7 874.0
Actual* 727.8 (6/30/10) 804.5 (6/30/11) 816.7 (6/30/12)

*Actual amount comes from Metro’s statement of revenues, expenses, and changes in net assets. This statement does not identify parking fee revenue; I used the total revenue amount in the table.

Ridership
(in number of trips)
2010 2011 2012
Rail Bus Rail Bus Rail Bus
217,219,146 123,670,000 217,052,000 124,173,000 212,188,640 131,780,990

Data for 2010 comes from Metro’s 2010 Media Guide. Data for 2011 and 2012 comes from Metro’s Metro Facts.

WMATA: Salaries of General Manager and High-Level Managers Seem OK; Media Should Focus on Metro’s Uncertain Funding Structure

The local media seems fixated on equating Metro issues to fare increases. Fare increases are seen by the ridership most directly, but they are not Metro’s sole source of income. As discussed in a prior post, Metro’s finances are difficult because the agency does not have a single source of funding like other transit agencies in the United States. If the local media were to focus on this particular issue, rather than just stirring irritation for its sake alone, it would truly be doing a great service.

The first chart below shows the amount of subsidy funding that Metro receives from Maryland, the District of Columbia, and Virginia. The second chart shows Metro’s income from fares and parking fees. It seems that the states and the passengers essentially share equally in paying for the operating expenses of Metro.

The third chart shows the number of trips taken in Metro vehicles. It seems relatively steady.

The Washington Post reported on the level of salaries of Richard Sarles, General Manager and Chief Executive Officer of Metro, and other high-level managers at Metro. Salaries are usually the highest expense at any organization; as long as the the salary is reasonably tied to the work expected, the salary level mutually determined by the parties should be OK.

State

Amount of Funding

(components are rounded; in millions of dollars)

FY 2010

FY 2011

FY 2012

Maryland

215.6

228.1

246.4

District of Columbia

201.6

214.15

233.3

Virginia

129.4

129.7

142.2

Subtotal subsidy

546.7

572.0

622.0

Debt service

27.5

48.7

48.7

Total (budgeted)

574.2

620.7

670.7

Actual*

[630.7]

(6/30/10)

[722.51]

(6/30/11)

 

*Actual amount comes from Metro’s statement of cash flows.

Passenger Fares and Parking Fees

(rounded; in millions of dollars)

FY 2010

FY 2011

FY 2012

Budgeted

702.7

789.5

767.7

Actual*

727.8 (6/30/10)

804.5 (6/30/11)

*Actual amount comes from Metro’s statement of revenues, expenses, and changes in net assets. This statement does not identify parking fee revenue; I used the total revenue amount in the table.

Ridership

(in number of trips)

2010

2011

2012

Rail

Bus

Rail

Bus

217,219,146

123,670,000

217,052,000

124,173,000

Data for 2010 comes from Metro’s 2010 Media Guide. Data for 2011 comes from Metro’s Metro Facts.

September 11, 2001: Hard to Believe Ten Years Has Passed; Still Remember the Events of the Day

A decade ago, September 11, 2001, the day was at first a very beautiful late-summer day. I was downtown in an office. As I started to work (about 8:45), I noticed that I could not get on the Internet. The management of the business did not inform the employees of any external problems, and so I figured something was wrong with the company’s Internet connection. It was not until mid-morning that a colleague had said planes had hit the World Trade Center in New York City. I later found out that the Pentagon was struck by an airplane as well. There were rumors that another plane was in the air heading for another target, rumors of other places that were hit, and other confusing rumors.

It was an unusual feeling; the workday was over. I was able to get in touch with family (some of whom lived in the New York City metropolitan area), and I e-mailed friends who had just moved to the New York City area (they were fine).

Later in the morning, I was able to get on the Internet and was able to see the terrible extent of the damage done by the airplane hijackers that day—people jumping out of the top floors of the burning World Trade Center towers to certain death, damage to the Pentagon, a plane crash in Pennsylvania, workers at the Capitol running out of its buildings. Rumors lessened and facts increased. I was dismissed from work at about 1:00 p.m.

When I left the office, the roads were tranquil. (I had missed the earlier traffic jams as people sought to leave the city at the same time.) As I took the subway (basically empty), I was able to see the smoke from the Pentagon from the windows of the subway car.

Ten years on, many things have happened, yet I still remember the events of that day relatively clearly.

WMATA: Washington Council Of Government’s “Moving Metro Forward” Has Flaw–Lack of Evaluation of Metro’s Funding

While the Joint Washington Metropolitan Area Transportation Authority (WMATA or Metro) Governance Review Task Force produced a document (“Moving Metro Forward“) for discussion of the organization structure of Metro.  But the reason why the current structure is ineffective is that the people on the Metro Board do not control or govern revenue to maintain or operate the system. That responsibility is in the control of Congress, and the state legislatures Maryland and Virginia and the District of Columbia’s City Council. Because the Joint Council of Governments and the Board of Trade Task Force dismissed the critical effect of the funding situation, the document falls short on providing a way beyond the Metro’s challenges.

Other challenges facing Metro:

  • Metro’s Compact is designed for constructing the system as it stands, not for operating it. The Compact is long overdue for an overhaul (perhaps the Joint WMATA Governance Review Task Force could be helpful during that activity).
  • The WMATA is subject to jurisdictional budget processes (not necessarily coordinated).

The DC metropolitan area’s rail and bus system is a capital asset, requiring money to build and maintain, but also assists to produce money for the separate jurisdictions through the movement of people to the various points of destination. Despite this fact, the Metro system is left to beg for money for its capital goods and operations. This is an unacceptable situation given Metro’s contribution to the daily lives of many residents and visitors to the DC area and must be resolved.

WMATA: Virginia Governor Calls for Safety Oversight for Metro System; No Mention on Providing Funding

It is unfortunate that the Washington Metropolitan Area Transit Authority (Metro) system has become a political football by those who are responsible for the system. It seems that denouncing Metro is seen as politically expedient while at the same time those same politicians refuse to provide funds that will allow Metro system to maintain and operate its capital plant.

For example, see this article about Robert McDonnell, Virginia Governor, calling for increased safety oversight for Metro. As I have mentioned before, this is a laudable and necessary goal, but it requires money (it was unmentioned whether Gov. McDonnell discussed how to pay for the oversight).

Subsidy Funding (fiscal year 2010) (Source: WMATA)

Maryland $215.6 million
District of Columbia $201.6 million
Virginia $129.4 million
Total subsidy $546.7 million (+27.5 million debt service)= $574.2 million

Passenger fares and parking fees: $702.7 million

Metro System Information

Metrobus 340 routes (breakdown by jurisdiction not available)

Metrorail stations (by state)

Total: 86

District of Columbia 40 (38.3 miles of track)

Maryland 26 (Montgomery County (11) and Prince George’s County (15)) (38.31 miles) [Note: The state of Maryland operates its own subway in Baltimore, Md.]

Virginia 20 (Arlington County (11), Fairfax County (6), and the City of Alexandria (3)) (29.47 miles)

Source: WMATA.

The days of expecting the ridership to cover the funding shortfalls has come to an end; the jurisdictions must step forward with additional funding. Metro is an instrument that many taxpayers use to get to work or social activities all around the metropolitan area. So providing money to Metro is not really a money drain but rather an input to capital which allows for the same jurisdictions to receive an output (tax receipts).

Post Script:

Fair Share for Metro

WMATA: Search Underway for the Next General Manager of DC’s Metro System; Risks Presented by GM Job May Lead to High-Salary Candidate

[Update 25-January-2011: Richard Sarles selected to be WMATA General Manager/CEO.]

[Update 23-April-2015: New WMATA post on blog.]

The present General Manager of the Washington Metropolitan Area Transit Authority (Metro) system, John B. Catoe, Jr. (bio-General Manager John B Catoe), is leaving the post on April 2, 2010. Catoe is an experienced transit manager, yet he is leaving after little more than 3 years (the general tenure for Metro’s General Managers).

Who will be Catoe’s permanent successor? The Metro system will attract candidates because of its location in the nation’s capital; however, Metro presents significant challenges for candidates to consider.

The Metro system’s organizational structure is complex, its capital structure is aging and is in need of an overhaul for its next 33 years, it is an industrial organization in a white-collar, service-oriented region, its funding is generally uncertain, and all actions of the transit agency are evaluated by four jurisdictions, plus the ridership.

I think that the political wild card of having to deal with the unpredictable (often bombastic (witness Senator Barbara Mikulski’s (D-Md. [Baltimore (Baltimore, Md. has its own subway, so Md. pays for two systems (one with the MTA and the D.C. Metro)].) comments) and diffuse scrutiny of Congress may cause a successor to want more money to compensate for the high-stakes risk he or she will accept as the general manager.

In addition, Metro does not have a fixed source of revenue, outside ridership fares and fees and cannot rely on a state for support like all of the other subway systems in the country. This means a yearly passing of the tin cup for your operations, something a potential general manager must consider heavily before assuming the job.

Over the past 20 years (from 1990-2010), only one Metro general manager had a 10-year tenure-Richard White (August 1996-February 2006). The others had tenures of 3 years or less.

Potential candidates will likely consist of transit managers from other transit agencies in the United States.

Interesting Background Facts

Metrorail system age: 33

Organizational Structure of Metro (Metro Compact Article III)

[Four legislative bodies–Congress (federal government), D.C. City Council, Md. state legislature (Montgomery and Prince George’s), Va. state legislature (Arlington, Fairfax, and Alexandria) (subsidy funding)]

Board of Directors (8 members selected from each jurisdiction [federal government, District of Columbia, Maryland, and Virginia]) [Note:  There are 8 alternates.]

Officers (General Manager, Secretary, Treasurer, Comptroller and General Counsel and such other officers as the Board may provide.)

Subsidy Funding (fiscal year 2010)

Maryland $215.6 million

District of Columbia $201.6 million.

Virginia $129.4 million

Total subsidy $546.7 million (+27.5 million debt service)= $574.2 million

Passenger fares and parking fees: $702.7 million

Metrobus

340 routes (breakdown by jurisdiction not available)

Metrorail stations (by state)

Total: 86

District of Columbia 40 (38.3 miles of track)

Maryland 26 (Montgomery County (11) and Prince George’s County (15)) (38.31 miles) [Note: The state of Maryland operates its own subway in Baltimore, Md.]

Virginia 20 (Arlington County (11), Fairfax County (6), and the City of Alexandria (3)) (29.47 miles)

Metro FY 2010 budget