After five months of better-than-projected budgetary performance, the MBTA is considering offering a retirement incentive to shave $30 million to $36 million from the projected deficit in fiscal 2017.
Last year, lawmakers gave the MBTA an additional $187 million to plug a projected $170 million budget hole. In the first five months of fiscal 2016, the T has outperformed its budget by about $53 million, mostly through a reduction in operating expenses.
MBTA Chief Administrator Brian Shortsleeve told reporters the money saved would be invested in capital needs for the aging system.
“We will invest every dollar we save, and every dollar that we beat the structural deficit, into capital,” said Shortsleeve, who declined to forecast how the roughly $50 million in savings through the first five months would impact the books by the end of the fiscal year. He said, “We are very aware that another big winter would negatively impact us.”
Established last summer after problems at the MBTA spurred a new approach for the agency, a Fiscal and Management Control Board has received troubling reports on overtime usage and the ballooning cost of the Green Line Extension.
Monday’s presentation to the board offered potentially brighter news for the MBTA.
“The ongoing challenge for all of us is that this more regulated level of cost-growth is sustainable,” said control board member Steven Poftak, who hoped the more modest cost-growth would be the “new normal.”
The retirement program would not offer early retirement, but would rather provide an incentive as about 1,000 of the roughly 6,500 MBTA employees are eligible to start collecting pensions – meeting the requisite 23 years of service and 55 years of age, according to Shortsleeve.
About 400 of those 1,000 eligible people are MBTA operators and the program would be geared to encourage retirements of people in non-operational administrative roles, said Shortsleeve, who said the MBTA is also hiring employees to operate vehicles.
“We’re actively hiring bus drivers. Last week we had a whole new group come in,” Shortsleeve said. “It’s incumbent on us to be actively developing new talent.”
Shortsleeve declined to outline what the incentive would be for eligible retirees. He said the T would shoot for about 400 retirements with 100 new hires to fill the emptied positions, or that equivalent in salary. He said the last retirement incentive program at the T was in 1991.
In fiscal 2017, the T will face “significant headwinds” with additional costs that are not part of the fiscal 2016 budget, Shortsleeve said. Tallying the total new costs in fiscal 2017 at about $70 million, Shortsleeve said it will cost $52 million to bring capital employees to the operating budget, about $12.5 million for a 2.5 percent wage hike for unions, and $10 million more in debt service.
