MBTA’s bus driving & maintenance can be considered for privatization

Members of the union representing the majority of the MBTA’s employees rallied on Monday in protest of a new decision that could expand the agency’s privatization. The decision puts bus driving and maintenance on the table for outsourcing.

While officials already were looking at contracting out departments such as cash-counting and warehouses, a recent report from the MBTA Fiscal and Management Control Board significantly widens the scope by putting primary functions up for consideration.

With the agency facing a more than $100 million deficit and challenges to service delivery, MBTA officials say they intend to examine all tools available to reduce it while bringing greater efficiency and effectiveness.

Members of the Boston Carmen’s Union spoke out against the idea on Monday. Not all officials are on board with this level of privatization either, including MBTA Fiscal and Management Control Board member Brian Lang and Mayor Martin Walsh. Both have union ties: Lang currently is president of a labor union and Walsh was a union president prior to being elected mayor.

Walsh said outsourcing is unlikely to net real savings.

“When you talk about privatization, in an initial contract, it always seems like it’s going to save money. Long term, it doesn’t save money, the costs go up,” Walsh said during the Greater Boston Labor Council’s Annual Labor Day Breakfast.

Maintenance and operations

According to the Control Board’s report, operations and maintenance constitute 85 percent of the MBTA’s costs. Bus drivers earn $35.86 per hour. The T employs 1,300 of them full-time and 400 in part-time positions. There are 450 full-time T mechanics.

The MBTA did not answer questions on how much it expects to save by privatizing operations and maintenance and on what minimum wage and benefits it would require from any firm bidding on the contracts.

According to the Control Board report, the contractors currently engaged to operate certain bus routes have delivered those services for 30 percent lower costs.

When privatization hurts or helps

Some express concern that while privatization can be a cost-saver, it is unclear if it will be in this particular case. The concerns — and the momentum around outsourcing — seem partly fueled by the MBTA’s temporary exemption from the Pacheco Law.

The Pacheco Law blocked officials from privatizing a public service without first making the case that the move would generate equal or higher quality at lower taxpayer expense than could be achieved in-house. Savings could not be derived by simply reducing employee wages and benefits. Opponents framed the law as anti-privatization.

Senator Marc Pacheco, the law’s sponsor, said that exempting the T was a risky step.

“It is very easy for the T or any other agency to claim it will save money on behalf of the taxpayer,” he told the Banner, but, without requirements for clear cost-benefit analysis or full assessment of all expenses involved, it is difficult to know with certainty.

One nuance when assessing public service efficiencies: Savings for one department do not necessarily translate to taxpayers savings if they produce new expenses for another public department. For instance, laying off bus drivers could generate new demand for unemployment benefits, and if private contractors reduced the jobs’ wages and benefits, that could remove one pathway to residents’ quality of life advancement, Pacheco said.

Noah Berger, president of Massachusetts Budget and Policy Center, said in some cases privatization can bring advantages — such as when state colleges turn over their bookstores to a private bookseller, savings may be achieved through an economy of scale. But if cost-savings are based on wage-reduction — something that the Pacheco Law blocked— the overall economy could be harmed.

“The great danger of privatization is that the private provider will cut wages,” Berger told the Banner. “If it turns good-paying jobs into low-paying jobs, that hurts those working people and reduces their ability to buy goods and services and has a negative impact on the economy,”

The Control Board acknowledges in its report that the T has had mixed success with outsourcing. Report authors upheld elevator and escalator maintenance as an example of privatization done right, stating that safety and timeliness improved without a rise in costs, while noting that contracting out parking operations had been less successful. Earlier this year, an investigation was launched over allegations of missing money, in which the MBTA officials said collected revenue seemed less than it should be, given the level of parking lot use.

Pacheco also pointed to the T’s contracts with Keolis, the firm that operates the commuter rail. This summer, the MBTA agreed to pay Keolis approximately $66 million more than the agreed to terms over the next six years.

“To succeed, strategic contracting, including outsourcing some functions now performed by the T, must be properly developed, implemented and managed,” Control Board members wrote. “As the MTBA looks to improve both cost and performance in operations and maintenance, it will continue to work with its employees and their unions to help identify and implement measures to improve productivity and performance.”