Private fixes for MARTA?
Moderated by Tom Sabulis
MARTA privatization is the focus of House Bill 264, currently in the General Assembly. State Rep. Mike Jacobs writes about cost savings the private sector could bring to the strapped transit agency. But the transit union argues the bill will mean lost wages and jobs.
Commenting is open below Curtis Howard’s column.
Private-sector fixes needed for MARTA
By Mike Jacobs
It’s no secret that MARTA, metro Atlanta’s flagship transit agency, is in dire financial shape. If necessary changes are not made, MARTA will continue to run an annual deficit of about $30 million, and costs are projected to outstrip revenues every year through at least 2021.
MARTA provides some services that are worthy and essential but carry an astronomical price tag. For example, MARTA’s paratransit bus service picks up and delivers the disabled and elderly. But at a cost of $50.43 per trip per rider — compared to the $4 fare actually charged each passenger — the price is unbearable. Estimates say the average new-car payment last year was $452. For frequent users of paratransit, it’s almost cheaper for MARTA to buy a new vehicle for each passenger and have someone drive them than to retain this service.
That is why the General Assembly is moving forward this session with House Bill 264, to require the MARTA board to competitively bid paratransit to the private sector so it can operate at lower cost. When private companies compete for contracts, costs drop for taxpayers, and the service usually is much better. Private companies may also retain current employees if they are doing a good job.
KPMG released an audit last fall that said MARTA could achieve as much as $15 million to $43 million in savings if a private company provided paratransit bus service. Both Cobb and Gwinnett counties utilize private companies to operate their entire bus systems.
HB 264 also follows the lead of the private sector in other ways. According to the KPMG audit, only 41.7 percent of private-sector companies had “defined benefit” or fixed pension plans. MARTA is spending $22 million more than the national average on retirement annually — even above other public-sector pension plans — and it should follow the trend and embrace the 401(k) “defined contribution” model
HB 264 would prohibit all new employees hired after Jan. 1 from joining the pension system. This would require MARTA to embrace a defined contribution system so new employees contributed to their own pension accounts.
The legislation also requires privatization of back-office functions within five years — accounting, human resources, recruiting, data collection, telephone operations, information technology, computer support, workers comp processing, customer care hotlines and bus and train cleaning.
All of these critical financial reforms have prompted MARTA’s employee union to lash out. Nevertheless, it is time to end the sweet deals that in part have caused the transit agency’s red ink and two fare hikes in three years.
What MARTA pays for in bonded debt is likewise startling. Debt repayment equals about 42 to 43 percent of MARTA’s prior-year sales tax collections. MARTA’s debt is anticipated to increase every year for the next 10 years. HB 264 requires MARTA to reduce its debt to 40 percent of sales tax collections within three years and 35 percent within six years.
Metro Atlanta deserves a flagship transit agency that is poised to grow and thrive. This cannot happen if MARTA’s business practices — many of which date to the 1970s — continue to hold the agency hostage to red ink.
Mike Jacobs, R-Brokkhaven, is chairman of the MARTA leigslative oversight committee.
Outsourcing slashes services and jobs
By Curtis Howard
Pundits who say government is sluggish and complain about political gridlock missed a Guinness Book of World Records entry last week at the State House.
In what seemed like record time, a so-called MARTA privatization bill was passed out of the Transportation committee, first by allowing state Rep. Mike Jacobs, who chairs the MARTA legislative oversight committee MARTOC, to filibuster for nearly an hour, after which public comments were shut down.
The next day, citizens were prevented by full committee Chairman Jay Roberts from exercising their right to speak to their elected officials on a bill that could cost the city three-quarters of a billion dollars over 10 years by violating federal laws protecting workers.
Attendees had already listened to a disingenuous defense of his bill by Jacobs, which will turn over nearly a dozen job titles to private companies, one of which is the French company Veolia Transportation.
This bill should be forever known as “The Veolia Gravy Train.”
The business of Jacobs and other politicians across the country is to reduce the wages, benefits and pensions of American workers.
Profits made by outsourcing and service cuts will be taken out of our economy and shipped to France. Seven hundred MARTA workers — whose ancestors helped build Atlanta — may lose their jobs.
Jacobs said his bill will “bring MARTA into the 21st century.” Actually, it could return us to the early 20th century (and the mid-19th century on wages), when private transit companies bribed city officials for franchises. The companies were corrupt and the service so bad that municipalities had to take over the companies.
Recently, the MARTA workers’ union asked for public documents, including the actual detailed numbers from the KPMG report on how MARTA will save money by “outsourcing.” At first, MARTA CEO Keith Parker said we could have them, but later said the numbers will not be released because KPMG considers them “proprietary.” That’s an absurd claim; we all paid for the report.
Parker and Jacobs also made stunning admissions to us last week: They never saw the KPMG numbers, so they don’t really know if the bill will save or lose MARTA money.
Who makes public policy this way?
Before the bill was introduced, Veolia officials were on MARTA property inspecting operations. The company has a history of hiring political insiders to do its bidding. In Georgia, former state Sen. Chuck Clay is the lobbyist for Veolia. In Phoenix, it was a friend of the mayor. In New York, it was former U.S. Sen. Alphonse D’Amato.
Jacobs said outsourcing “works well” in Nassau County, N.Y., where Veolia is making money by slashing service by 60 percent and proposing fare hikes. In West Palm Beach, Fla., paratransit service was outsourced, and it has been such an abysmal failure that some lawmakers are clamoring for the government to take it back.
“Privatization” of MARTA is highway robbery and should be stopped in its tracks.
Curtis Howard is president of the MARTA chapter of the Amalgamated Transit Union.
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15 comments Add your comment
Mary Elizabeth
February 19th, 2013
12:22 pm
Correction to state Sen. Mike Jacobs’ words. I had left out the word “should.” Sen. Jacobs had actually written:
“MARTA is spending $22 million more than the national average on retirement annually – even above other public sector pension plans – and it should follow the trend and embrace the 401(k) ‘defined contribution’ model.”
Mary Elizabeth
February 19th, 2013
12:13 pm
Addendum to my 10:59 am post:
In his article, above, state Representative Mike Jacobs writes, “According to the KPMG audit, only 41.7 percent of private-sector companies had ‘defined benefit’ or fixed pension plans. MARTA is spending $22 million more than the national average on retirement annually – even above other public sector pension plans – and it follow the trend and embrace the 401(k) ‘defined contribution’ model.
HB 264 would prohibit all new employees hired after Jan. 1 from joining the pension system. This would require MARTA to embrace a defined contribution system so new employees contributed to their own pension accounts.”
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My. My – How Sen. Jacobs’ words, above, mirror the national Republican ideological agenda for changing long-standing public programs such as Social Security and Medicare into privatization programs. Moreover, it is interesting to observe how the KPMG audit sustains Sen. Jacobs’ obvious privatization agenda.
Sen. Jacobs writes, “MARTA is spending $22 million more than the national average on retirement annually.” Twenty-two million dollars seems to be a large sum of money when one thinks of one’s personal budget, but what is the actual dollar amount of the “national average on retirement annually”? Could the $22 million more spent by MARTA on retirement annually be only .00002% higher than the national average’s dollar amount, or is it 20% higher? I STILL do not know the answer to that question, the answer to which is vital to know how much of a “spendthrift” MARTA might be, or is implied “spendthrift” an undeserved label being pinned onto MARTA (which receives no state funds as do other national transit systems) in order for the power players in Georgia to achieve a conservative ideological agenda?
Nationally, citizens rejected the privatization of Social Security when President George W. Bush attempted to thrust that ideological conservative agenda upon citizens in our nation, but here in Georgia, with its Republican-dominated General Assembly, Republican state Representatives and Senators are trying to push through a highly ideological privatization agenda which will effect adversely the future security of all of those state workers in Georgia who work as public servants for the common good of all of Georgia’s citizens. MARTA employees work for the common good of the greater Atlanta area citizens who need public transportation.
The only way to stop this craze, imo, for a privatization of public services in Georgia is to oust the Republicans and vote in Democrats in Georgia’s General Assembly. Democrats may, also, of course, look after their own interests, as do Republicans, but at least Democrats will not be not supporting blindly a group-think agenda that privatization is the panacea to the nation’s and this state’s financial problems. Republicans in Georgia’s General Assembly, in my opinion, are living out a national Republican extreme ideological agenda that has been decades in the making. This agenda needs many watchdogs in the media exposing it for what it is, because this ideological movement simply lacks common sense, prudence, and balance, imo.
MANGLER
February 19th, 2013
11:23 am
Are there no local companies that can manage work outsourced from MARTA, or are there just no local businesses that are connected to Mr. Jacobs or KPMG, only French firms? I happen to know many people who live here in the metro who would make wonderful secretaries, IT staff, marketers, janitors, and guards. Heck, many of them even utilize MARTA daily (that’s kind of important to run something well). However, I’m willing to be none of them know Mr. Jacobs personally, so that won’t even be considered.
Mary Elizabeth
February 19th, 2013
10:59 am
From the article, above, by Curtis Howard:
“Recently, the MARTA workers’ union asked for public documents, including the actual detailed numbers from the KPMG report on how MARTA will save money by ‘outsourcing.’” At first, MARTA CEO Keith Parker said we could have them, but later said the numbers will not be released because KPMG considers them ‘proprietary.’ That’s an absurd claim; we all paid for the report.”
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The KPMG auditing report said (paraphrasing) that the cost to run MARTA was higher than that of other transit authorities throughout the nation and that was part of the reason that KPMG recommended outsourcing some services to private industries. At the time of the audit release, I remember asking, on a local blog, what the actual numerical difference was between MARTA’s cost of operation and that of other transit authorities – was MARTA’s cost 20% higher or .02% higher? There is a substantial difference in having a 20% higher cost variance with other transit authorities, as compared with having a .02% higher cost variance, which is minimal. I never received a response to my inquiry, but I continue to maintain that the actual numbers from KPMG should be released to the public, so that citizens like myself can analyze for ourselves the findings of the KPMG audit report. Again, it should be stated that MARTA, unlike other large transit authorities, receives no funding from the state of Georgia.
As a retired educator, I believe in thinking for myself and of not accepting, blindly, without question. Transparency, with full disclosure to the public, is essential from KPMG so that I, and other citizens, are able to analyze its findings for ourselves, in detail. What, if anything, is being hidden, I wonder? Because no actual numbers from the KPMG audit are being made public, I cannot help but speculate if an ideological factor, stemming from the ideological agendas of powerful players, is what is, also, at work, here, instead of a simple cost savings agenda, relative to the public service that MARTA offers to the general public. Please disclose the numbers and the details of the KPMG audit to the public.
Matt321
February 19th, 2013
10:29 am
The Republican from Brookhaven’s arguments are difficult to follow, and border on the nonsensical. I have no idea why he was talking about a new car for paratransit – why doesn’t he say how much it would cost for a private company to do the equivalent work?
Also, this entire section is laughable: “HB 264 also follows the lead of the private sector in other ways. According to the KPMG audit, only 41.7 percent of private-sector companies had “defined benefit” or fixed pension plans. MARTA is spending $22 million more than the national average on retirement annually — even above other public-sector pension plans — and it should follow the trend and embrace the 401(k) “defined contribution” model”
The 401k model has proven to be a disaster. The average retirement savings of someone with a 401k are so miniscule that retirement is an impossible dream. The private sector was suckered and swindled into adopting this scheme to enrich Wall Street and impoverish regular retirees. Why should the public sector follow? Or as my mom always said, if all your friends jumped off a bridge, would you jump off too?
The Republican from Brookhaven says that pensions – that is, guaranteeing that your longtime employees have some security in their old age, something that was non-controversial in Bismark’s Prussia but is apparently too radical and progressive for Georgia – have caused MARTA’s red-ink. Why the silence on the number one contributing factor – that MARTA is the largest transit operation in the country to operate without state funding? Or the number two factor – the bizarre state restrictions on capital spending and operating spending? I suppose that may be because those lay at the feet of the legislature, and the Republican from Brookhaven. Here’s another wise old saying – before trying to remove the speck from another’s eye, first remove the plank from your own. Roughly translated, fix the state funding of MARTA, then you can try to save a dime by squeezing the pocket books of elderly, long-time MARTA employees.
Deep Cover
February 19th, 2013
10:14 am
Privatization is just another code word for transferring Atlanta City and Dekalb County taxes to North Fulton forms. This is just another form of corporate welfare. North Fulton “management firms” will end up getting the contracts. They will then “rehire” the current MARTA workforce (while forcing them to take 40% less pay and BENEFITS). Those North Fulton firms will then charge another 20% administration fee to MARTA. As a result, privatization will be more expensive and just transfer MORE WEALTH to North Fulton while delivering subpar service.
Bernie
February 18th, 2013
10:22 pm
Today’s local television news reported a company or a related company of former Mayor Shirley Franklin is in charge of the Trolly construction work currently ongoing on Auburn ave in Atlanta.
This is the kind of political shenanigans that tarnishes the image,confidence and support of anything proposed by Atlanta City Government leaders. Ms. Franklin has been out of office less than (4) four years and she is already financially benefitting from a City contract. I expect the same action from Mayor Reed, and or current City Council members as soon work began on the proposed New Stadium the moment construction starts.
This is the very reason why privatization of MARTA services is not a good idea. Only the politically connected will benefit, thereby making the cost higher than it really should be and makes one question, if everything is above board with Taxpayors funds.
SAWB
February 18th, 2013
6:50 pm
While I do believe there are services like human resources, payroll, janitorial, engineering, security, IT and others that can and should be outsourced. However, I would be concerned about jeopardizing transportation for the disabled. I’m not saying a private organization couldn’t handle the service, but it would need to be closely monitored to assure services are maintained if not improved.
Mary Elizabeth
February 18th, 2013
6:25 pm
@ Bernie “It is time for the State Of Georgia lawmakers to step up to its responsibility as other states have done around the country and make the major investments required in a public transportaion system like MARTA to be expanded state wide.”
I agree with you. MARTA is one of the few large public transportation systems that receives no state funding. I could see this increased movement toward the privatization of MARTA coming after last year’s audit of MARTA, which recommended private outsourcing of some of MARTA’s functions and no journalist chose to support MARTA, at that time, by pointing out that MARTA was not receiving state funds which would have, in itself, improved MARTA’s financial situation.
The Republican politicians in this state continue to perceive that privatization is “the” answer for public services in Georgia. It is no coincidence that privatization is, also, a national Republican ideological goal and agenda for states throughout the nation. I think the citizens of Georgia should vote for Democrats in every state election that they have the opportunity to do so. Citizens should return this state to Democratic control, once again. Republican legislators in Georgia do not seem to be sensitive to the needs of the poorer populace in Georgia, nor to the needs of the working middle class in Georgia. Time to relieve these Republican legislators of their responsibilities and right to vote in Georgia’s Senate and House of Representatives, imo.
Bernie
February 18th, 2013
5:54 pm
This idea of privatization is not the best way forward for MARTA,Atlanta and the RIDERS who must be the beneficiary of said services. Privatization will only enrich those who are fortunate enough to obtain contracted services. The lowest bidders will be selected only to find that the bid stated will fall short of the desired goals. The second contract will be bidded a higher rate to recoup the losses and expended captial from the inital contract. either way the CITY and RIDERS lose!
it is time for the State Of Georgia lawmakers to step up to its responsibility as other states have done around the country and make the major investments required in a public transportaion system like MARTA to be expanded state wide. For every dollar invested would produce in return a minimum of $5.00 or more to the State economy and and economies of the surrounding communities. Georiga would see a rapid increase of Business investment, Jobs and Tourism like it has never seen or will ever see again. Now is the time!
Sadly, Georgia politics is too fraught with political corruption,nepotism, back room dealing, political payoffs, side deals, racisim and prejudice to make any of this idea to come to fruition.
It is Nice to dream anyway of a better Georgia, if only we had the maturity and gumption to do the right thing for Her and her citizens. Unfortunately, settling with the usual crooks will be in the offering as one may expect.