Many Recommendations, Few Surprises in SFMTA Management Audit

SFMTA Executive Director Nat Ford, SFMTA Board Chairman Tom Nolan, and SFMTA Board member Jerry Lee discuss the results of an SFMTA management audit. Photos: Michael Rhodes

The results of a Muni management audit are out, and its 22 recommendations have set off a discussion about the San Francisco Municipal Transportation Agency's governance and labor expenses just a day before the Board of Supervisors considers the SFMTA's two-year budget.

San Francisco Budget and Legislative Analyst Harvey Rose has published the results of the limited-scope audit [PDF] with recommendations that could save the agency a total of $3,090,645 annually.

The report addresses four key areas of the SFMTA's management and operations, including its governance structure, its financial and operational oversight, and driver schedules and overtime.

The 22 recommendations are in response to four major findings:

• Muni's operator scheduling practices are inefficient, costing more than needed
• The agency hasn't developed an effective program to reduce unscheduled absenteeism and overtime.
• The SFMTA Board should "strengthen its processes to better oversee a complex transit agency."
• The SFMTA Board should increase its oversight over implementation of the Transit Effectiveness Project, financial reporting, and operational risks.

For instance, the report notes, Muni does poorly when it comes to avoiding downtime in operators' schedules, when they're not actually operating a vehicle. The ratio of paid hours to driving hours for Muni operators compares poorly to other transit agencies, largely because Muni doesn't use part-time operators.

The report's authors wrote: "According to King County (Washington) Metro Transit staff, their agency's ratio of paid hours to driving hours of only 1.11 compared to Muni's ratio of 1.23 is achieved through the extensive use of part time operators. In fact, all of the other comparable transit agencies surveyed for this performance audit employed part-time operators. Yet Muni does not employ any part-time operators."

It's not that the the idea hasn't occurred to SFMTA staff. In fact, the current memorandum of understanding (MOU) between the SFMTA and the operators union limits the agency's ability to use part-time operators. The audit recommends revising the next MOU to give Muni more scheduling flexibility, though it also notes that management doesn't have much leverage to do so, since operator salaries -- management's bargaining chip -- are set in the City Charter.

All told, the report finds the SFMTA could save $1,215,645 in transit operator pay by reducing so-called standby time, when drivers have downtime between runs, and could save about $1,375,000 in unscheduled overtime costs by implementing the recommendations.

It also suggests the SFMTA stop paying for seven operators to work full-time as union chairs, instead funding just one. That would save Muni $500,000.

On the governance side, the audit faults the SFMTA for lacking clear direction for the mission of its board, and recommends that it "Adopt a written statement of governance principles modeled after best practices for governing boards." It also advises defining the role of the Policy and Governance committee, and examining whether there should be more committees in general.

The board should also direct SFMTA staff to come up with a clearer plan to implement the 2008-2012 Strategic Plan, the report argues, as well as establishing "a process to annually assess its [own] performance as a governing board." The audit stops short of recommending broader changes to the board, however, such as giving the Board of Supervisors power to nominate some of its members. Currently, the Mayor appoints all seven directors.

In terms of oversight, the report concludes that the SFMTA staff should also provide regular reports on the implementation of the TEP, as well as establishing an audit committee.

MTA Reacts to the Audit

At a press conference today, SFMTA Board Chairman Tom Nolan said he welcomed the review, but disagreed with several of its conclusions. "I did not recognize the Board of Directors that the audit describes," he said. Unlike the autonomous New York Metropolitan Transportation Authority, said Nolan, the SFMTA is a department within the city, and doesn't stand entirely alone. In total, Ford and Nolan agreed with 17 of the audit's 22 recommendations.

The TEP criticism "baffles me most of all," said Nolan, who disagreed with the report's assessment that the SFMTA Board wasn't sufficiently engaged in the TEP process. He noted that the December 2009 service changes were heavily informed by the TEP and reflected the board's input.

Perhaps most strikingly, in light of Director Bruce Oka's recent comments, Nolan argued that the current SFMTA Board is independent, and makes decisions without pressure from the Mayor or Board of Supervisors. "I've learned in recent months that independence is truly in the eye of the beholder," said Nolan. "I submit to you that this board has acted independently based on our own judgment."

Given the financial climate, Nolan argued, the SFMTA Board should be proud of its achievements under its current structure.

Supervisors React

Supervisors David Campos, David Chiu, and Ross Mirkarimi discuss the management audit at a press conference today.

Earlier today, four members of the Board of Supervisors provided a very different assessment. While recognizing that labor issues were a major component of the audit's findings and of the SFMTA's challenges, Supervisor Ross Mirkarimi said the report highlights the need for a more independent board. "The MTA board for all intents and purposes is really a rubber stamp," said Mirkarimi. That comment got back to Nolan, who called it "erroneous and insulting."

Supervisor David Campos said the Police Commission and the Planning Commission provide models of split-appointment boards that are more independent than the SFMTA Board.

No one seemed particularly shocked by the report's finding -- both Nolan and Board of Supervisors President David Chiu called the results unsurprising -- but a fuller report will arrive this summer that should provide a more comprehensive look.

The supervisors will hold a hearing on the audit and on the SFMTA's two-year operating budget at their 1:30 p.m. Budget and Finance committee meeting tomorrow. Several of the supervisors have said they'll reject the proposed budget, which continues service cuts through the next two years. A wide range of advocates are expected to attend the meeting, including
the members of the MORE Public Transit coalition and the San Francisco
Transit Riders Union.

Seven votes are needed for the supervisors to reject it, and several supervisors, including Sean Elsbernd, remain on the fence. Elsbernd said he expects the budget discussion will begin in earnest tomorrow, but a vote won't take place until next week or the week following, since the audit provides so much information for the supervisors to digest in just 24 hours.

Board of Supervisors Budget and Finance Committee hearing on the SFMTA Fiscal Year 2011-12 budget and SFMTA management audit, 1:30 p.m., San Francisco City Hall Room 250.