Category Archives: Budget Problem

Chicago Transit Authority Budget & Fares

Public transit has come a long way since its earliest days in Chicago. Original horse drawn service began in 1859. By 1947, the Chicago Transit Authority is granted the exclusive right to own and operate a unified, local transportation service and became the sole operator of Chicago transit. According to the Chicago Transit website, today, the CTA operates the nation’s second largest public transportation system. To some, it is an everyday means of travel, to work, school, friends, and/or all sorts of attractions. It opens up the city to everyday consumers, rain or shine, night or day, and aims for affordable access for everyone.

There are over 1.6 million people who depend on the Chicago Transit Authority (CTA) as a means of transportation on an average weekday. The 2011 budget estimated systemwide ridership to be 521.8 million, with a projected ridership that will end the year at 524.4 million, meaning there is a slight increase in ridership this year than estimated. The CTA has been able to provide a public option of transportation for the city of Chicago. Whether it is using this form of transportation around downtown, or to the 40 suburban communities that are also accessible, the CTA attempts to offer a quality and affordable transit service to serve the people. However, just as most businesses have been hit hard with the recession, the CTA is no exception. The CTA faces monumental financial complications.

According to a press release from the CTA, “Throughout the budget process, our goal has been to manage responsibly and make strategic budget decisions so that we can weather this recession and still provide the critical, affordable services that so many working men and women rely on,” said Chicago Transit Authority President Richard L. Rodriguez. Rodriguez supported the 2010 budget cuts made in order to not increase the current fare price for consumers. The Regional Transportation Authority (RTA) was created by state legislation and is the CTA’s fiscal oversight agency. Between the RTA and the State of Illinois, the RTA agreed to issue debt to provide an additional $83 million to the CTA in 2010 and 2011. This debt allowed to hold the same fare prices over those years, however, it is not predicted to reoccur in 2012. This could prove problematic and lead to fare increases in the near future for CTA riders.

The overall approval of the past budget meant service reductions, furlough days for workers, elimination of 1,100 jobs, bus service reduction by 18%, and rail service by 9%. There are currently 41 bus routes with later start times and/or earlier end times. Besides the routes cut altogether, these reduced routes (as featured on the chart) support increased planning of travel by tracking the arrival times of buses and trains. This timing was made possible with the advancements in technology. CTA Bus Tracker and CTA Train Tracker offer a way to plan your transportation online, so riders can plan accordingly to avoid to extended wait.

As previously mentioned, the Chicago Transit Authority has undergone several budget cuts in the past years. The CTA president also proposed a 1.24 billion 2012 budget recommendation plan to address the financial struggles they continue to face today. This year, escalated fuel prices and increased electric power, used for extreme weather conditions, went over budget in those allotted areas. The CTA has recovered from small setbacks due to adjustments in their budget. However, the 2012 operating budget faces bigger issues. It lacks $131.2 million that was available the previous year.  As featured in the CTA’s budget breakdown, the debt is projected to exist until 2033.

The outcome for the Chicago Transit Authority might seem problematic, but, in the past, they have made it through other financial hardships. They are currently in the process of trying to avoid further service cuts and fare increases through different measures, most articles suggest union work rule changes.

The Chicago Transit Authority offers full opportunity for consumer feedback on their website. Next year seems in need for further budget cuts. It will be interesting to see if fares end up increasing and/or the union will reach some sort of agreement with the CTA. Comparing the entrance fee to get into a cab in Chicago is about the same price as an entire trip on the CTA, I would still consider a quarter-more hypothetical price increase to be a bargain.
By Ashley Prete

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Filed under Budget, Budget Problem, CTA, Finances

CTA Route Cuts

Even CTA consumers that are uninterested, unhappy, or just plain unaware of the CTA’s recent management fiasco and budget crisis have found it difficult to ignore the inconveniences created by route cuts. Since of February 6 2010, the bus service has been reduced to 1/5 of its original size. In addition, train operations have also been reduced 9% since the CTA made its route cuts to reduce the budget deficit. Consequently, these decisions have left about 1100 CTA employees out of work and many more CTA consumers unhappy about their longer commutes. Many public transportation commuting Chicagoans are still expressing their discontent through blogs, YouTube Videos, and some opinions have even made it to the pages of many newspaper articles of papers like the Chicago Tribune. In consequence, I will share with you a few details about the infamous CTA route cuts that I have come across.

First, one of the biggest hits to the bus route system was the closing of the 103-year-old Archer Garage located at 2600 W Pershing Rd, which once operated 22 bus routes on its own. On the upside, all of its bus routes did not just cease to exist, but have been distributed among the other seven remaining garages within Chicago. Also, bus operators and maintenance personnel who had worked at the Archer Garage still hold jobs within the CTA in its other garages. The only Archer Garage bus route that was eliminated as a whole was the X49 Western Express. However, as a whole there were nine express bus routes cut from the system. As a sad reminder for many commuters, the Archer Garage now sits as a storing space for old out –of- service bus batteries and their drained fluids.

Furthermore, the closing of the Archer Garage has brought other conversations such as environmental concerns and local economy to the table. Folks residing within the garage’s neighboring area feared that the garage would have environmental effects on the community. This is a reasonable fear since the garage currently has six tanks filled with either diesel fuel or lube oil underground and has already had an oil spill incident that left oil residue stuck in the soil. However, the Illinois Environmental Protections Agency (IEPA) has been working with the garage to monitor leaks and contaminations.

According to a project manager working with IEPA, soil contaminated with oil should not affect the community’s drinking supply because they should be receiving their water from the public water supply that is not affected by the local soil. In addition, local businesses are not particularly happy either since the Archer Garage bus routes brought much revenue, but will now reduce local business costumers considerably.

Additionally, train lines have faced cuts as well. In fact, all the train lines except for the yellow line have been reduced. Consequently, waiting for train rides has increased significantly and have made the commute much more crowded than before. Many CTA riders are avidly complaining that their commutes have increased up to a half an hour or more. Other riders are completely annoyed by the crowdedness of their train rides, in which they not only have to stand, but must also get out of the train to let fellow passengers out. However, there are other CTA riders who do not feel that it has been as significant of a problem that some are making it out to be. The more optimistic passengers are simply relying on bus tracking systems to make their commutes a little more reliable.

CTA route cut problems do not end with long, crowded, and nonexistent routes, but have also brought about discussion on the inequality of such cuts. The YouTube video above entitled “Rev. Jesse Jackson calls for end to inequality in CTA bus routes” illustrates some of the issues that have risen out of the CTA bus route cuts. CTA riders are speaking up against CTA decisions to cut routes important to certain communities and are claiming that it is due to the favoring of certain neighborhoods over others. Evidence that the south side of Chicago is being left out in the cold comes from buses like the Dan Ryan terminal from the south side, which makes about two or three roundtrips and for the rest of the day turns into and stays as a 151-bus route for the north side.

Rev. Jesse Jackson along with the Rainbow coalition is backing union leaders in asking that the CTA redistribute bus routes equally. With all the arising bus route issues, CTA President Richard Rodriguez has much to consider.

By Yaxal Sobrevilla

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Filed under Budget, Budget Problem, CTA employees, Multimedia, Routes

Recession Effects on CTA

The recession that hit the U.S. nationwide had a large effect on the Chicago Transit Authority as well as their ridership.  Due to loss of revenue and ridership, the CTA was forced to drastically change their budget and make major budget cuts.  Most of this transit system’s revenue comes from sales taxes, which has been much lower than usual since the recession began.

The CTA is trying to do whatever they can do to protect their revenue sources, but unfortunately, this affects their operating costs.  Just as everyone else must do in an economic downturn, spending must be carefully watched and saving becomes highly important.   With high unemployment percentages, ridership also decreased during rush hours since not as many people are using the CTA to commute to work.  Currently, they are trying to figure out how to increase their ridership.  They would like to not rely on mainly people commuting to their job.  Any type of rider would be accepted.

In 2010, the CTA budget deficit hit $300 million.  The following year, in 2011, the budget deficit came down to $95.6 million.  This year, the budget deficit is estimated to be somewhere in between the past couple of years’ deficits at $277 million.  In essence, the deficit will stop being such a big issue once ridership increases along with all stakeholder issues.  Hopefully, one day the CTA will achieve this.

Since 90% of the CTA’s workforce is unionized, coming to an agreement between everyone becomes difficult.  Being highly unionized also costs the CTA a lot.  This causes them to be careful in talks with the union about the budget.  The union always wants more money, while the CTA is trying to cover costs wherever they can.  Again, they have to find a way to compromise with their union and make everybody happy.

In effect, customers of the CTA have become angry with how the CTA is handling their economical issues.  Layoffs, route cuts, and fare hikes affected ridership.  Chicago transit users have complained about route cuts and fare hikes the most. In order to cope with this, the CTA is trying to communicate better, in general, with their users.  They want  riders to be the most aware of what will be going on as soon as something goes into effect.  Their customers are on the forefront and necessary for the survival of this transit system.

By Priscilla Martinez

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Filed under Budget, Budget Problem, Finances

Introduction to Pension Plan Issues

Pension Problems:
CTA financial crisis arises due to the open promises made in their pension plan

Ameya Pawar argues that elected officials have not done their job in funding the CTA pension plan throughout time. These promised benefits were brought out by the government; therefore it would be unreasonable to blame the retirees and union members for the evolving Chicago Public Transit problems.

The first problem stems on what actions the city of Chicago should take in order to regain ground. Pawar explains how money is being distributed ineffectively, while half of the property tax payer’s money goes toward service debt and service pensions. Obviously, the money is scarce and Pawar argues that in order to free up some money, the service must be sustainable and efficient. By improving the system, it will allow money to go toward the pension. It is unethical to increase fares on a system that clearly doesn’t work anymore. The main priority should be getting labor and union workers on board through an improved system, while avoiding the taking away of benefits from individuals who have bought into the plan. This is a government problem, so therefore why are the residents of Chicago being penalized with increased fares and union workers with cut benefits?

An Overview:

According to the CTA Retiree Health Care Trust (RCHT), as of 2006, the CTA Retirement Plan was only 30% funded at this time. This suggests that retirees were only receiving 30% of coverage on expenses toward health care and pension payments. Through time, the CTA retiree health care plan was seen as extremely generous when compared to other public or private employers. Holding many uncommon characteristics of formerly known pensions, the CTA offered plans that were free for retirees that included a fixed premium rate for dependent coverage regardless of the number of dependents being covered in the first place. Increased health care costs caused the retirement plan to plummet, providing an even larger portion of funding for future health care costs. Changes were needed to make the design more practical.

The Illinois legislative approached the problem by passing two laws in 2006 and 2008. The first public act called for the CTA to separate the funding for retiree health care benefits from the funding for pension payments. The second public act passed in 2008 modified section 22-1018 of the Illinois Pension Code, as well as section 3-2.3 of the Illinois State Auditing Act. Some of the changes are as follows:

  1. The CTA Retiree Health Care Trust (RHCT) must be independent in providing health care benefits to retirees, their dependents and survivors. Also, the Trust must be run by a board including three union representatives picked by the CTA. The RHCT is expected to assume responsibility after January of 2009.
  2. To be eligible for a retiree health care coverage, the CTA employee must be 55 years of age and have at least ten years of service before that individual can decide to retire.
  3. Once the RHCT declares financial responsibility for retiree health care after July of 2009, then the program can not offer any plan that includes co-insurance levels higher than 90% coverage for in-network services and 70% for out-of-network services.
  4. The retiree health care benefit program must be reviewed annually to determine if there are sufficient funds to cover future responsibilities. If the current funds happen to be insufficient, then contribution increases (increased premiums) and benefits decrease (reduced coverage) to help balance the shortage within a ten year span.
  5. The total contributions received from participants, including all retirees, dependents and survivors, cannot exceed 45% of RHCT expenses in the prior plan year.
  6. Active employees will be required to contribute at least 3% of their salary to the RHCT after January of 2008.

The CTA retiree health care trust plan was established in May of 2008 and was first funded with about $529 million dollars from CTA’s pension obligation bonds. It also receives money from the following:

1. Retiree/ dependent/ survivor premium contributions: As of July 2009, the RHCT began collecting premium contributions from retirees for their coverage, while before the retirees’ only use to pay the premiums for their dependents.

2. Payroll deductions from active CTA employees: By January of 2008, all active CTA employees had a 3% cut to their gross salary.

3. Investment Returns. The trust fund balance will be invested and the income from those investments, including all of the net losses and expenses, will be returned to the fund.

The CTA RHCT was said to take full responsibility for the funding, payment and administration of health care benefits for the CTA retirees, dependents and survivors as of July 2009. While they say they are committed to offering their expertise for the best benefits for their employees, CTA still suffers problems in the present year of 2011.

By: Gia Donofrio

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Filed under Budget, Budget Problem, CTA employees, Finances, Multimedia