It Ain't Easy Being Muni

When Mayor Ed Lee was asked by the San Francisco Chronicle if there was one job in city he'd never willingly take, he answered quickly: running the San Francisco Municipal Transportation Agency--the over-arching body that administers all transportation in the city, from taxicabs to parking to Muni.

"Of all the agencies, they have probably the toughest job in the've got thousands of people everyday depending on a perfectly working system," said the then-interim mayor in an interview during the gap between the resignation of controversial SFMTA boss Nat Ford and Lee's announcement of his replacement, Department of Public Works chief Ed Reiskin. "We can make a few mistakes at...[the Department of Public Works] and get away with it. You can come back and do a pothole, but you can't come back and save peoples' jobs because they were late for work."

That urgency is why Muni is such a touchy subject for so many people. Thousands of San Franciscans rely on its buses and light rails every day to get to work, go out partying and even fall in love. When it breaks down, scales back service or just generally shits the bed, there's a palpable sense of outrage--other cities may be content with second class transit systems, but this is San Francisco. We should be able to do better.

That's why articles like this recent San Francisco Examiner editorial lambasting the agency for looking to increase fares, in their own perverse way, always give us the warm fuzzies. Calling out the ever-unpopular agency for the three amigos of waste, fraud and abuse on issues ranging from an increase in the cost of work orders from other city departments to unacceptably high levels of driver overtime are important because large bureaucracies, especially ones run the by the government, can almost always be made more efficient--but they kind of miss the point.

The fundamental problems with Muni are largely divorced from what's actively happening with its current management which, (it's fun to play devil's advocate here) seem to actually be doing a good job of playing the hand they've been dealt.

Show me a problematic government agency, and I'll show you one that's hamstrung by a Byzantine set of service regulations and spending mandates coming from down from City Hall while simultaneously having to make do with significantly less money being given to the agency from Sacramento.

Before we get into that, let's talk about work orders.

Earlier this month, Supervisor David Campos called a hearing where he lambasted SFMTA management over the increasing cost of work orders.

When one city department enlists the services of another, they have to pay for it. That movement of money from one pocket of city government to another is called a work order. Campos deemed the increasing cost of SFMTA's work orders part of a "crisis of management" within the agency.

Campos is right that the overall cost of Muni's work orders have increased in recent years and that, up until last year, there were significant problems in SFMTA's process in handling them. In 2010, the City Controller's office released a report looking into how the agency handles its work orders saying just that. You can read it here. (Government documents like this usually aren't as scary as they initially seem--last year's Prop C pension reform ballot measure being a notable exception--and, most of the time, the important info is right at the beginning).

The report contained a number of revelations. The first was that SFMTA had no standard procedure for handling work orders, specifically that there wasn't always written documentation outlining exactly what services were going to be performed or exactly how those services were budgeted. Without written contracts, operatives on both sides of each work order had the opportunity to get away with sloppy accounting, missing documentation and a disturbing tendency to pay agencies based on predicted costs instead of actual ones.

In the year since the report was released, the agency has tightened up its procedure and started getting a contract for every single one of its work orders. What's more interesting is that similar problems like this aren't solely limited to Muni--they're endemic across the entire system.

Departments within the city government contract services with each other in a similar manner to how they contract with private companies. If a department needs power, they'll order it from the Public Utilities Commission; if they need an architect to design a new building, they'll contract the services of one from the Department of Public Works.

During the 2009-10 fiscal year, work orders accounted for eight percent of Muni's overall budget. The biggest slices of the pie went to the City Attorney for legal services (20 percent) and SFPD for police services (18 percent).

The problem is that the city doesn't have standard policies as to how these agreement should work. What was going on with Muni likely isn't any worse than what's happening at other departments but, because San Francisco's sprawling transit system touches virtually every inch of city government, its problems with work orders are larger by comparison.

More importantly, what the report showed is that the main reasons for the overall cost of the agency's work orders doubling over the past decade were largely out of its control.

The city purchased a previously leased a facility at One South Van Ness in 2007 that houses the SFMTA offices. While this eliminated the money the agency had to pay in rent, it created a $6.3 million yearly work order to the General Services Agency to pay for a portion of the building's debt financing and operating costs. It was a net positive for agency, but that payment now accounts for about ten percent the overall work order budget.

Around the same time, the city opened up its 311 call center and has started to charge SFMTA for every Muni-related call. SFMTA pays for 61 percent of the city's 311 system. That's ten percent right there. SFMTA's share of paying for an upgrade to the city's employment benefit system? There's another five. Also in the work orders: gasoline from the General Services Agency's Central Shops--gas prices have more than doubled since over the past decade.

There's been a $2 million increase in the cost of work orders coming from SFPD. The main reason for that increase is a change in the way officers deploy into the transit system. Previously, officers would be deployed directly into a station and SFMTA would get a bill for the officers' time. Now, officers go into the stations as part of their daily patrols. This allows for better integration of the transit system into the security grid for the surrounding neighborhood but it also increases the police presence in those stations. The more time SFPD offices spend inside Muni stations, the more SFMTA has to pay SFPD.

See, a lot of these major expenses either were overall cost-savers for the agency, were forced on SFMTA from the outside or are things about which it would be easy to build a credible case justifying.

Also, as per the city charter, SFMTA is required to use the City Attorney's office for all legal matters. If someone gets hit by a bus or a group of neighborhood residents sues to get a proposed light rail stop changed, it all has to go though the City Attorney. Even if the agency wanted to put the contract for taking a case out for bid to a private firm, they wouldn't be able to, and that lack of competition puts an upward pressure on the agency's legal bills.

Additionally, as the report notes, the average annual growth rate of the work orders is 4.1 percent. The growth rate of SFMTA's total budget? 11.4 percent. Work orders clearly aren't a major problem and, even if they were, critics are about a year too late in hammering the agency to do something about it.

So if work orders aren't at the heart of what's causing Muni to feel the need raise revenue, then what is?

Personnel is the single biggest drain on the agency's resources, and recent events in Sacramento have conspired to make Muni's labor costs even more expensive.

Over the past three years, the amount of money SFMTA has gotten from the state has decreased by about $90 million. As a result, last year the agency enacted a ten percent service cut, however 60 percent of that service was later restored. Where Muni ended up cutting the most fat was in personnel--managers, mechanics and, most importantly, drivers. With fewer drivers on staff, it was forced to rely more heavily on drivers who had already maxed out their normal hours and have had to dip into their significantly more expensive overtime hours.

This is where criticisms of the agency allowing for too much overtime, as was charged in the aforementioned Examiner editorial, come in. High levels of overtime are an issue across a lot of city departments; however, Muni is a special case--the agency has, in some years, been known to single-handedly rack up the majority of overtime hours across all city departments.

But what recent criticisms often seem to miss is that, for years, Muni's hands were tied with regard to the simplest and most effective solution to the overtime issue: hiring part-time workers. As per the operators union's contract with SFMTA, the agency was only allowed to hire drivers full-time. If they wanted to get someone to only work a few days a week, to solely cover excess demand during Giants games or evening rush hour for example, it would violate the terms of the contract.

The agency's push to be able to hire part-time workers was one of the main sticking points in their fight with the union over a new contract that dragged on through much of this year. That battle was bitter, sanctimonious and marked the end of decades of relatively peaceful labor relations in the city. Accusing Muni of not doing enough to combat overtime ignores that the agency went all out in these contract negotiations, even going as far as hiring an outside firm to handle media relations and outreach to the Board of Supervisors.

While projections for the actual dollar figure on the saving from the part-time workers have varied wildly (from $41 million all the way down to $7 million), actual numbers for decreases in overtime costs since the new contract was implemented this summer have yet to be released. But it stands to reason that the savings won't be insignificant.

One way to save Muni a whole heap of cash would be to scrap the deeply controversial $1.6 billion Central Subway, which extends the T-Third line through SoMa, under Union Square and into Chinatown. The construction itself is expensive, and actually running trains through the new tunnel could cost anywhere between $1.7 million and $15.2 million annually (depending on whose ridership estimates you believe).

When former mayor Gavin Newsom was asked about abandoning the project during a Commonwealth Club event earlier this year, he just laughed. There's absolutely no way, in the midst of an anemic economic recovery, that the city would cancel a project of this magnitude when 80 percent of the construction costs are being covered at the federal and state level.

For politicos looking to grow jobs, especially in a construction sector that's been hit hard nationally and a tight regulatory environment in San Francisco that isn't particularly hospitable to new construction, taking the money now and praying to the transit gods that the ridership numbers ultimately fall on the optimistic end of the projections is a no-brainer.

The odds of anyone with real power pulling the rug out from the Central Subway project are about as low as them doing the same for the city's iconic cable cars, which run a massive yearly deficit. In 2008 alone, SFMTA had to subsidize the cable cars to the tune of $27 million over what they earned in ticket sales, significantly more than even the most dour analysis have predicted for the Central Subway's annual operating costs.

Another way to get Muni more funding is to clamp down on the fare evaders that costing the agency around $20 million per year (approximately the same amount of the agency's annual budget deficit), but doing that either requires all-door boarding, which Muni is starting to implement on a number of its lines next year, or significantly upping the police presence on its vehicles, which in turn means more costly work orders from the police department.

In essence, the problems with Muni run far deeper than things happening with the current management. Could they be doing a better job? Of course; anyone running a system as messy and complex as Muni could find ways to tighten things up, as happened in the wake of the City Controller's work order report. But demanding the same level of service from an agency whose hands are often tied by mile after mile of ted tape from City Hall and/or Sacramento or is ludicrous.

We get the transit system we pay for. And if we're not willing to pay for it, we're not going to be happy with the results.