San Carlos, California’s Caltrain approved its operating budget for Fiscal Year (FY) 2027 at the rail agency’s monthly board meeting, as well as all recommendations for early action strategies recommended by the SB 63 Financial Efficiency Review Independent Oversight Committee’s final Phase 1 report.

The move ensures Caltrain service will continue operating as usual in the near term, but long-term financial challenges remain for the rail agency absent a new revenue source.

Caltrain’s FY27 Budget

The FY27 operating budget is nearly $270 million, with funds coming from multiple sources, including fares, GoPass, Measure RR, parking and rental income, State Transit Assistance, and a one-time loan from the state through the Metropolitan Transportation Commission (MTC), which is intended to help address transit agency operations shortfalls in the Bay Area.

With a balanced budget, Caltrain can continue its popular electric service, running trains every 15 minutes at most stations during peak hours and half-hourly service at all other times, including weekends, said officials.

The agency said Caltrain managed to adopt a balanced budget by limiting cost increases across its operations, reducing professional services, benefiting from stronger-than-anticipated fare revenue, and receiving a one-time state loan.

Officials added that the agency continues to break ridership records, shattering previous records in March of this year, and again in April, and was named the fastest-growing transit agency in the US in 2025.

The Oversight Committee’s Efficiency Report recognized Caltrain’s $76 million in savings due to recent cost-saving measures.

Since 2020, Caltrain has achieved over $76 million in cost savings, approximately 7% of the agency’s operating budget over the last five years. Caltrain’s cost savings were measured by MTC as required by Senate Bill (SB) 63, the Connect Bay Area Act. The MTC report, issued earlier this month, showed that Caltrain’s cost savings were achieved primarily through workforce controls, service optimization, and operating efficiencies.

Ongoing cost-reduction measures include a targeted hiring freeze saving $17 million; 30-minute service reducing the need for special trains; improved operator crew efficiency and reduced overtime saving $37 million; and the integration of maintenance of new infrastructure into existing operating contracts, saving approximately $2.1 million.

Other measures include reducing professional services, temporarily deferring service increases, and efforts to reduce fuel and electricity costs.

Finding Efficiencies

Since Caltrain began its electrified service, cost-saving measures have slowed the growth of operating costs, offsetting some of the inflationary pressures that many transit agencies continue to face. Caltrain has also been actively pursuing additional avenues to monetize assets through a non-fare revenue strategy, the agency said.

The Efficiency report highlighted Caltrain's efforts and opportunities to grow parking revenue, leasing fiber and communications assets, pursuing an energy storage project to optimize power use further, and finding new customers for Clipper BayPass and GoPass, studying ways to activate and enhance retail at stations, in addition to monetizing Caltrain’s real estate holdings.

The Caltrain board voted to approve and move forward with each of the independent financial review committee's “early action strategy” recommendations.

“Ensuring we are responsible stewards of taxpayer money is vitally important to any public agency, regardless of the economic climate,” said Michelle Bouchard, executive director of Caltrain. “We are hard at work finding ways to be more efficient than ever before, while still providing a safe, world-class service for the people who rely on us.”

Despite the important steps Caltrain is taking to control costs, generate revenue, and grow ridership, Caltrain still faces an average $75 million deficit that would start in FY28.

Absent a new, reliable funding source — through a regional measure or other external support — Caltrain will be forced to make significant service and staffing cuts, with potentially long-lasting consequences for the tens of thousands of people and businesses that depend on — and have begun to benefit from — the newly electrified system, said the agency.