Metro has a budget deficit that’s widening, and while the agency is employing more and more people, ridership is down. The consultants who started reviewing WMATA earlier this year recently presented their findings to Metro’s finance committee, and suggested a couple of possible ways to start closing the gaps.

WMATA’s operating deficit has grown, with costs outpacing revenue. Image from McKinsey/WMATA.

Metro’s General Manager Paul Wiedefeld brought on McKinsey & Co early on in his tenure to review the agency’s operations, and to suggest ways it could work better and save money. Thursday’s presentation was a follow-up to an earlier McKinsey report, and allowed Metro’s board of directors to discuss the company’s findings and start mulling over what to do next.

In short, McKinsey restated that Metrorail security is ok relative to other US agencies but Metrobus security lags behind, that the agency spends more than most on rail car maintenance yet still has issues getting cars into service, and the agency is doing less with more employees.

The combination of all of these issues means ridership has gone down and is no higher now than it was in 2005, but costs have continued to increase. Given the hand it’s been dealt, WMATA still has some time left to take the steps necessary to turn things around, but the window of opportunity won’t be open forever.

Metro’s financial problems aren’t new by any stretch of the imagination. Metro’s CFO presented a similar warning last year that expenses were continuing to increase while revenue stagnates. Also, federal funding for WMATA has been restricted since 2014, when the FTA performed a financial audit and found gaps in the agency’s monetary controls.

The federal funding restrictions have meant it takes longer for Metro to receive funding even if it expects to ultimately get it, and that the agency has had to crack down in its finance office to make sure money is being used properly.

The FTA’s report and late financial audits have made it harder for Metro to justify that it needs continuing and increased funding.

Employee headcount and expenses. Image from McKinsey/WMATA.

Two main factors were seen as contributing to the agency’s financial woes: a rising number of full-time employees and decreasing ridership. The agency’s full-time employee headcount has increased from 8,596 in fiscal year 2011 to 10,269 in FY 2015, which ended June 30th of 2015.

The report notes that 73% of these employees are in two main groups within WMATA: Metrobus, and Transit Infrastructure and Engineering Services (TIES), which is in charge of most if not all Metrorail maintenance, construction, and upkeep.

TIES and Rail Transportation (RTRA) have been growing at a rate of 7% since 2011, according to the report. Some of the increase is due to almost 500 positions filled for the opening of Phase I of the Silver Line, however that still means around 800 other employees were added as well. Wiedefeld has un-done some of this growth by recently announcing that he’ll eliminate 500 positions,  but some of those are vacant anyway.

Normalized for population, Metrorail carried 86% the number of riders in 2015 as it did in 2015. Image from McKinsey/WMATA.

Ridership is down

Yearly employment growth might be healthy if ridership on the system was keeping up, but that is not the case here. McKinsey’s report notes that adjusted for population growth in the region, the system in 2015 carried only 86% than what it carried in 2005.

While all other systems that McKinsey looked at showed ridership growth between 2005 and 2015, Metro’s growth increased up to around the financial crisis in 2008-2009 and has been decreasing ever since. Off-peak rides account for 48% of the ridership decline since 2011, continues the report.

While there may be no one thing that caused people to stop riding, there are certainly several circumstances that greatly contributed to it, including: drops in reliability; seemingly-constant weekend, weeknight, and mid-day trackwork reducing train frequency and increasing waits; fare increases; and high-profile safety/security events relating to the system.

McKinsey recommended a number of ideas for cutting costs, including moving the Metro headquarters, and selling off or contracting out the agency’s parking garages.

Those ideas are great, but the real keys are increasing system reliability, decreasing rail car breakdowns and delays, and spurring growth around Metro stations to encourage continuing ridership. Paul Wiedefeld seems to understand what needs to be done to turn the tide, and has implemented the SafeTrack program and now also has a focus on fixing railcar maintenance.

Improvement won’t be instant— few positive changes are— but hopefully it will show its head in the weeks, months, and years to come.

Stephen Repetski is a Virginia native and has lived in the Fairfax area for over 20 years. He has a BS in Applied Networking and Systems Administration from Rochester Institute of Technology and works in Information Technology. Learning about, discussing, and analyzing transit (especially planes and trains) is a hobby he enjoys.