Privatization: a Route to Better Bus Service?

By JEFF LEEDS

April 12, 1998 12 AM PT

TIMES STAFF WRITER

When it’s time for the Metropolitan Transportation Authority to decide whether to amputate a piece of itself to better serve San Fernando Valley bus riders, the agency is likely to feel a profound sense of deja vu.

That’s because Los Angeles’ transit system underwent this sort of radical surgery once before, when the MTA’s predecessors created Foothill Transit to privatize their bus lines in the San Gabriel Valley.

Ten years later, Foothill boasts that it provides cheaper, higher-quality bus service than the MTA ever could. Its base fare is 90 cents, while the MTA’s is $1.35. By its own analysis, Foothill has doubled the amount of service on its lines while running at roughly half the MTA’s cost.

For critics of Los Angeles’ behemoth transit agency, which is tens of millions of dollars in the red and whose internal controls were recently called “embarrassing” by its own CEO, Foothill’s so-called “transit zone” stands as a model of efficiency.

Consultants for the MTA are studying the impact of establishing similar entities regionwide, with the aim of providing better bus service in the Valley, on the Eastside and in South-Central Los Angeles. But one result already is clear to critics of the MTA: Compared to Foothill, the MTA doesn’t just look wasteful--it looks obsolete.

“The MTA is not serving the Valley or, frankly, any other area of the county,” said Supervisor Zev Yaroslavsky. “The transit zone is a way of tailoring a transit system to meet the idiosyncratic needs of an area. . . . If necessity is the mother of invention, then maybe the transit zone is the invention for the Valley.”

To some supporters, that means the future is a regional bus system composed of small semi-private entities covering every corner of the MTA’s service area, in which the MTA acts only as a contract manager.

Even such basic questions as which lines the new agency would run and which cities would participate have yet to be worked out. But the concept faces a crucial test Monday when a bill to establish such an agency is presented to the state Assembly’s Transportation Committee.

Proponents are attempting to develop a blueprint for a Valley agency that could operate the bus lines at least 25% more cheaply than the MTA--a benchmark established in MTA guidelines for breaking into such “zones.”

The quickest way to save that much, supporters say, is obvious: Privatize bus service and employ drivers and mechanics at lower wages.

A consultant’s preliminary report to the city Department of Transportation indicates that a Valley agency could slash base fares 35 cents, run buses more frequently and still operate 25% more cheaply than the mammoth agency if it could privatize bus service.

Any attempt to start a new agency without sticking to the MTA’s labor contract, however, is sure to provoke a political and legal battle with the agency’s transit unions.

“We will insist the MTA respect its obligations under our labor contract,” said Goldy Norton, spokesman for the United Transportation Union. “We will take all necessary legal means to make sure it is enforced.”

Riordan & McKinzie, the politically connected law firm that successfully defended Foothill against litigation from the union, is now preparing an analysis of the legal issues involved for the MTA.

The threat of a protracted legal war, however, didn’t stop the MTA’s predecessors from establishing Foothill in 1987. Leery of an impending fare increase and cuts in service by the Southern California Rapid Transit District, which ran the buses at the time, county Supervisor Pete Schabarum began developing a separate agency for his San Gabriel Valley district.

Initially, the unions and the RTD fought the idea. But after its backers won the support of county officials, RTD’s managers were forced to relent and support privatization. Lawyers for the transit unions filed two lawsuits and went to an arbitrator to halt the process, but lost.

The architect of the new entity was transportation consultant William P. Forsythe, who was enlisted by Schabarum after planning transit for the 1984 Olympics.

Over the years, the MTA has given his brainchild more and more responsibility--Foothill now runs 26 lines, up from its original 14--and it has returned striking results.

Overall, it costs the agency $56 per hour to run buses, compared to an estimated $92.56 for the MTA. Boardings on the lines taken over by Foothill have increased 61%, to 15.2 million last year. The MTA’s boardings systemwide have dropped about 23% in the same period, to 342.7 million.

The Foothill agency itself has no employees. Rather, it is governed by a “joint powers authority,” made up of representatives from 20 cities in the San Gabriel Valley, which meets once a year to approve a budget. That authority pays a private management firm--Forsythe’s--$3.2 million a year to run bus service.

About 50 Forsythe and Associates Inc. employees handle everything from contract management to answering customers’ questions. The agency buys or leases its 259 buses from two other private companies, Laidlaw and Ryder/ATE, which drive and maintain them.

Underlying much of Foothill’s savings, however, is a pay structure markedly different from the MTA’s. The publicly employed drivers, represented by the United Transportation Union, make an average of $18 per hour.

Foothill’s two contractors pay about half as much: Ryder/ATE’s drivers, represented by the International Brotherhood of Teamsters Local 848, make an average of $9.30 per hour. Laidlaw’s drivers voted recently to have an open shop and make an average of $9.06. Norton, the United Transportation Union spokesman, suggests that Foothill’s drivers make less than a living wage, and that taxpayers end up paying for the difference with the cost of county hospitals and food stamps.

But the concept of a privatized Valley bus agency is alluring to some MTA board members looking for a way to rescue the agency from financial ruin.

“I’m not trying to be a union-buster, but we’ve got to be able to do it with the least amount of money, and not be wasteful,” said Glendale Mayor Larry Zarian.

Even if supporters of a new agency are forced to keep the MTA’s labor contract, they say they could achieve the 25% cost-cutting goal by establishing different work rules or slashing overhead.

To advocates such as county Supervisor Mike Antonovich, however, the MTA’s dismal financial outlook means it may not be necessary to save that much to win the backing of the MTA board.

“Fifteen percent is better than continuing an operation in the red,” he said.

MTA officials say Foothill’s apparent success may be “exaggerated” because a disproportionate number of its routes are long express lines that yield more revenue than the local lines more common in the MTA. And they argue that Foothill’s buses run more cheaply because they operate in less crime-ridden areas than the MTA’s.

Antonovich also said he would like to establish similar agencies for the Eastside and South-Central, and he believes private contractors would line up to run bus lines there despite the higher costs associated with operating on poorly kept roads and in congested areas.

Forsythe, the transit consultant, agreed. But he said the prices charged by private companies to improve service in those areas could be higher than what it costs the MTA.

Although supporting a privatized system for the Valley, Yaroslavsky warned that the MTA should be careful not to allow contractors to “cherry-pick” lines likely to be profitable, while leaving the MTA to run lesser routes.

Others also remain skeptical of widespread Foothill-like entities. A proliferation of privatized transit would be a “disaster,” said Eric Mann, head of the watchdog Bus Riders Union, which is monitoring the MTA’s compliance with a court consent decree requiring improvements in service.

Any private operator would still be responsible for meeting the requirements in the consent decree, Mann said, but replacing the MTA with a group of contractors would make it more difficult to hold anyone accountable for inadequate service.

“How the hell are we going to monitor five, six, 11, 12 transit zones?” he asked.

Foothill’s managers expressed confidence that a private agency could run more cheaply than the MTA in the Valley.

“We’re surprised no one’s tried to do it before now,” said Julie Austin, Foothill’s executive director. “Why is it better to have this huge monolithic thing, when there’s a better way?”

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Foothill Transit: Trying harder

Foothill Transit provides more service on the bus lines formerly run by the MTA’s predecessor and charges lower fares. The MTA and the city Transportation Department are studying whether the Foothill zone approach could be adapted to the San Fernando Valley.

Today, Foothill’s fares and pay scale are much lower...

Base Fare

MTA: $1.35

Foothill: $.90

Drivers’ avg. salary

MTA: $18/hr

Foothill: $9.30/hr or $9.06 depending on which contractor

...While service and the number of riders have increased.

Actual Change: Vehicle Service Hours

RTD 1986: 285,859

Foothill 1997: 539,044

% Change: 88.6%