Category Archives: Finances

CTA Labor Union Layoffs

Due to the major CTA budget deficits in the past three years, the transit agency planned to layoff more than 1,100 employees in 2010. Chicago Breaking News Center says The labor union layoffs along with 18 percent reduction in bus service and 9 percent in train service were implemented in hopes of reducing the budget deficit for the following year. CTA management introduced more than $200 million in internal cuts as well as other cost savings and wanted unions to agree to salary and concessions however, unions representing CTA bus and rail workers refused since they agreed to concessions in the past.

The unions also felt that the “agency violated contract provisions pertaining to the seniority of full-time and part-time employees”. The unions argued that the CTA laid off too many full-time employees while retaining part-time employees. Arbitrator, Edwin Benn does want CTA to follow proper procedures in laying off workers based on seniority within their job classifications. 241 Local and 308 of the Amalgamated Transit leaders of the unions agreed to meet with the CTA management after Benn’s decision. CTA President Richard Rodriguez wanted to try and prevent the service cuts and wants to restore jobs. The union leaders were disappointed in the Arbitrator’s decision and requested to postpone the cuts for at least 30 days for seeking additional funding from the State or other options in general.

In September 2010, Rodriguez stated that the CTA was supposed to receive 83 million in bond proceeds and made an agreement to hold fares for both 2010 and 2011, but would have the freedom to raise fares if the state failed to pay public subsidies and capital funds. The CTA budget for 2011 was 5 percent higher than 2010’s budget, which was partly caused by a 3.5 percent increase in wages for union bus and rail employees. Labor costs make up 70 percent of the CTA’s budget.

Non-union CTA employees last received salary increases in 2006, however their wages were frozen this year and they had to take up to 18 unpaid furlough days and holidays to help manage the budget deficit. 100 non-unions jobs were cut this year, and an estimate of 70 jobs plan to be cut next year. Chicago Breaking News Center also says Rodriguez has tried to convince union workers to accept concessions to also help ease the annual budget and prevent future service cuts. Union leaders however stood strong on their decision since they had done it in the past and decided to allow more than 1,000 union members to be laid off.

In October of this year, According to Chicago Tribune the CTA laid of three media relations employees as part of an “agency-wide reorganization” to reduce the budget plan for 2012. It laid off the general manager of public affairs, manager of media relations as well as a spokeswoman leaving only four employees working on media relations under Sullivan. The $277 million budget deficit is projected to be cut down. $177 million would be from the senior-level position layoffs. The CTA is also hoping for 80 million worth of partly from agreements of concessions of union workers while also planning to use 80 million from its reserve fund.

By Amber Smith


Leave a comment

Filed under Budget, CTA employees, Finances

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


Filed under Budget, Budget Problem, CTA, Finances

CTA Surface Fare History

CTA Surface Fare History

Leave a comment

November 10, 2011 · 6:45 pm

Safety and Security

[Image credit:]

According to a recent Chicago Tribune article, there were 581 reported CTA robberies in 2010 and 294 robberies from the time period of January through May of this year, resulting in a 23 percent increase. This information was received from the Chicago Police Department and includes reported crimes located in CTA parking garages and lots, trains, buses, and platforms. Many people attribute these rising crime rates to the popularity and demand of smartphones. According to officials, the act of stealing smartphones from people waiting for trains and buses is typically referred to as “Apple-picking.”

When asked about the increase in robberies on CTA premises, CTA president Forrest Claypool responded, “This is the reason the Chicago Police Department is deploying more undercover officers, a visible wolfpack deterrent that can move between trains, and why the CTA is speeding up the installation of security cameras. We are trying to be agile and effective in responding to criminal activity and hooliganism, and making sure our riders can feel safe and secure on our system.”

One of the CTA concerns that has improved tremendously throughout the years has been safety and security, and although crime is still high, the city and CTA officials are actively working to provide safer transit. Securing the safety of passengers is a goal that the CTA has tried to accomplish through various means, such as installing security cameras in buses and train platforms, assigning more policemen to patrol platforms and transportation. Some other attempts at covering safety issues are posting a security tips brochure on their website and placing emergency instructions in each train car.

The Chicago Transit Authority’s YouTube Channel continues to update their channel with video postings on current efforts to build a safer travel environment, such as this video on safety tips and evacuation procedures. But how effective can a security tips brochure, emergency instructions and safety buttons be in ensuring a safe, hassle-free ride for CTA customers?

Our guess is not so much. But there is hope.

The following YouTube video explains how the Chicago mayor and CTA officials plan to improve safety conditions on CTA property through various means such as an increase in high-tech security cameras as well as more patrol by police officers:

Mayor Rahm Emmanuel and CTA President Forrest Claypool have looked into the CTA safety problems and implemented a new plan to install double the amount of current cameras on CTA premises by the end of 2011. The new cameras that have been installed since June of this year have aided in capturing 13 criminals thus far.

According to an article from ABC’s local news website, the city is spending a reported $15 million to install an additional 1,500 cameras, totaling 3,000 cameras across Chicago. One controversy that has sparked out of CTA’s technology budget has been the implications on CTA customers in regard to increasing fare hikes and cuts in bus and train services. Mayor Emmanuel responded to the controversy by replying, “We have some choices to make. And they’ll lay out their budget, but it’s clear that we’re investing and making sure that the dollars do not sit in the bureaucracy — they go right to the platform, right to the bus shelter.”

Although the security of passengers remains a significant concern regarding the CTA, improvements and future goals are actively being pursued within the realm of CTA safety. Until then, it is up to Claypool and other CTA officials to decide how to pursue these goals within the company’s budget.

We’d like to ask our readers: What do you think about the new spending plans on high-tech security cameras on CTA premises? Will this benefit consumers in the end, or will there be larger implications?

By Diana Park

Leave a comment

Filed under Budget, Finances, Improvements, Multimedia, Safety

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


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


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