Whether enforcing new safety initiatives or renegotiating contracts, transit agencies around the nation face workplace issues, big and small, on an everyday basis. With many sides needing to be appeased in the workplace — from management to employees to the board to the customers — there are many hurdles that must be negotiated to maintain a smooth-running, efficient organization.
When your agency is facing a major incident of game-changing proportions, what do you do? Two CEOs faced with different workplace issues say that whatever the issue, keeping an open line of communication with all stakeholders is key.
Labor contract issues
With the recession lowering tax revenues and unemployment biting into ridership, the situation at the Greater Cleveland Regional Transit Authority (RTA) is similar to the one many transit agencies across the nation face: trying to balance the budget without making deep service cuts, which subsequently leads to employee downsizing.
"Anyone who relies on sales tax, property tax or payroll tax has seen a very significant decline in that revenue," says Joseph Calabrese, CEO at RTA. "Here in Cleveland, last year our sales tax revenue — which is between 60 percent and 70 percent of our revenue — was down about $19 million, and based on our projections, it may take us anywhere between six and 11 years to get back to 2008 sales tax revenue levels."
The financial strain caused by the decrease in sales tax revenues forced RTA to look into making major concessions to try to avoid service cuts and employee layoffs.
In June 2009, for example, RTA management took a minimum 3 percent wage reduction to help reduce costs — even after earlier agreeing to a pay freeze — and eliminated more than 8 percent of non-union positions. Management also took unpaid furlough days and deferred paychecks in 2009 and is doing so again in 2010.
Despite these cuts, RTA's budget shortfall persisted, causing a sticking point in renegotiating its labor contract with the Amalgamated Transit Union, which represents more than 1,800 of its approximately 2,300 employees. The two sides have been in negotiations since before the contract expired at the end of July 2009 and, as of press time, failed to reach an agreement.
As a result of the impasse, the RTA was forced to do what they were trying so desperately not to — cut service and employees.
On April 4, the transit agency reduced service by 12 percent and, in total, has now reduced its workforce by 185 people.
"Some of the decisions that union members have to make, and have had to make [since] the beginning of time, is the more money each of them gets, no matter how much they may feel they deserve, certainly means we can employ fewer people," says Calabrese. "There's no magic. It's not rocket science. It's total revenue divided by cost per employee, which yields how many employees we can afford to have on the payroll and how much service we can provide to the public."
To help deal with the situation that has been caused by budget issues, Calabrese explains that RTA has openly communicated with its employees and customers that it simply cannot provide the same services and employment benefits that it did when revenues were higher. RTA also has a "Budget Challenges" section on its Website - both on Internet and Intranet - where it discusses, in detail, what's happened to revenues, what's happened to expenses, what services have had to be adjusted and the things it has already done to reduce costs.
"It's very unfortunate that we have to lay people off, but I think that the employees understand that we are doing this because we really have no choice," Calabrese says. "The only option is to not have a balanced budget, which is required by law, so I think including them in the process as part of the solution is very important."
By maintaining an open dialogue, Calabrese hopes to keep morale amongst the employees up, even as the side effects of not striking a new labor agreement persist. He says that in regards to this issue, time is of the essence, since the failure to find a solution resulted in April's service and employment cuts.
"Now, we're focused on 2011 and again have to go through that same exercise: what will our costs be? And, how much service can we provide?" Calabrese says. He adds that the unfortunate reality of the situation is that the services cut in April are unlikely to return, so the RTA's main focus right now is to prevent further cuts and enable its employees to maintain quality, well-paying jobs.
"Although the current contract is past its expiration date, the terms of the contract remain in full force. It's not that there's no contract, it's just that the terms of the previously negotiated contract continue into the future, which is important for both sides," Calabrese says. "We are continuing to negotiate and will continue to negotiate with the union, in hopes that we can avoid future layoffs and future service cuts, but that is something that is going to take two parties to agree on."