and they're going later into the afternoon. i can think of a spanish speaking church on industrial with a similar situation. i want to be open and honest when talking about our concerns, but that is how i am approaching this discussion about public leaders. -- public meters. >> thank you. i have only gotten halfway through slide 5 on my presentation, so you didn't miss much. thank you for the kind remarks. i want to take credit. there is a great team that mta and there are a lot of good things movie before word -- moving full word. with regard to sundays, i hear you on that. one thing i would say is for any

activity on sunday that happens before noon, there is no change. for activities afternoon, i would argue by managing parking for those churches in metered areas, and many are not, but for those who are, parking availability will increase as a result of managing parking. it arguably may be easier for people to find parking close to their churches. they will have to pay for it. we are, not creating no parking zone, just metered parking. people crossing the bridge have to pay the bridge tolls and people would have to pay for parking just like any other day of their week. i look for to working with you throughout the process.

supervisor chu: i want to request from the audience, but i would ask that you be respectful of the speakers when they tried to explain the rationale for some of these items we are considering. i know we are probably going to move on to the other components of your budget, but i have never been a fan of meter changes. i don'ti hope we can work with . you will be coming back to us in june with some amendments given labor negotiations among other things. i do want to speak further about that. i question the logic of implemented meters without yet having the upgrades. it seems more reasonable to have the upgraded meters, which you are in the process of doing, before implementation. i would like to talk about that component. another thing quickly. you went through this quickly. with regards to the back door

boarding proposal, this is something, i am wondering, in terms of your budget, how does that policy impact your budget? did you assume a lower rate of revenue or assume higher enforcement? can you speak to that quickly, unless there is a slide later on? >> i am happy to speak to it now. the direct cost -- well, let me put it this way, we are proposing to add more fare inspectors as part of the budget. that is about $900,000 cost to the that is something that probably would have proposed even without that. but we do need better fare inspection to the commander a sign from the police department who oversees that unit, among many others, has done an outstanding job of restructuring that units, which is the

approach we will bring over to the parking enforcement as well. we have much more productivity, much more visibility of that unit, but we felt that we needed more resources there. but we do also anticipate higher fare revenues as a result and high your citation revenues. we have budgeted sum increases on both of those line items. in the case of parking, we're seeking higher fare revenues. we do not want to be citing people for not paying. we want people to pay the way they're supposed to. based on the existing changes and the existing increase visibility and adding on 10 more fare inspectors, we think we will have a better fare compliance moving forward. some of the transit fare increase in the adopted budget reflects that. supervisor chu: you are anticipating potentially higher citations, but in terms of revenues on fares, there is an

increase in ridership and also a cti increase as well, so that helps to drive your revenue numbers up. but in terms of the back door reported proposal, your expectation is you not see a drop in revenues because you have additional fare inspectors to increase compliance and get more positives? >> yes, ridership and compliance all contribute to the assumptions within the revenues for increased fares. we did not want to this and that was going to adversely affect revenues as we go to all door boarding. there are other benefits from speeding up the system that might not be directly financial, but improves the reliability of this service. there could be snowballing benefits of that in terms of increased ridership that, frankly, are difficult to calculate at this point. when we presented all door boarding at the land use committee, the legislative

change that the board approved, we included the various ways that we are going to measure this. because of the we have not already legally, on the train system and illegally on the bus system, we really do not fully know what all the impacts will be. so we are going to be watching that very closely, compliance and fare revenues, but we did assume a slight positive in terms of fare compliance as a result of the change and the redeployment and additional numbers of fare inspectors. supervisor chu: thank you. >> to round out the revenue part, i mentioned the general fund increases that come through by formula. with the indexing and parking management, those were kind of to the plus side. on the minus side, something that was kind of the other exciting part of our budget deliberations, that that surrounded the youth fare pilot.

with the board ultimately approved was a 22-month pilot that is targeted at low income youth, and if it is contingent on securing funds from both local funds from county transportation authority, which believe you approved two days ago, as well as from the regional transportation planning organization. so we have constructed this. $9.4 million is including additional costs. so this is kind of the net impact assuming we have no major operating impacts as a result of this. we have designed it to fit within our budget in terms of baseline amounts already in the budget. in the budget this year and last year. supportive of a youth fare

program. about $1.4 million per year. we instructed the financing plan for this pilot, to use those funds and the other funds that would not be coming to muni, so that we can do this with no really increased adverse impact to our operating budget. deliberations with regard to the county sheriff funds well happened next month. i think on june 13. then we will be at the full commission at the end of june. i want to commend supervisor campos for his leadership on this and the various community groups working on this. it was very much a grass-roots effort. many hours of public testimony at mta board meetings. i think we arrived at something that is sensible and workable, and it raised to us the issue that our general policy of offering discounts based on age or disability versus based on

ability to pay, it may not make the most sense. right now, for example, in low income adult pays $31 for a fast past a high income youth pays $21. so that is a system that does not really make sense. what we will be doing during this pilot, if it does get the funding from the region, is taking a step back and reviewing our overall structure and seeing if we can make it better aligned to need as opposed to the current definitions that we have. supervisor chu: thank you. supervisor wiener, do you have a question on this? supervisor wiener: i actually do. related to the last item, free muni for youth. i will not repeat. i have talked about this a lot and have been public in my views about it. but one thing i wanted to clarify and i had been hearing

from you that there were no muni operating funds going into this, but then i saw, when it came to the transportation authority this past tuesday, in the packet, itemizing how it was being funded, and there was a pretty significant line-item from operating funds. can you clarify that? because i think the proponents have talked about how this is not going to impact muni operational capacity, which has always been a concern of mine. >> yeah, i would be happy to. and i apologize if anything that i or anyone from the mta said has led to a misunderstanding of that. it has been clear, i think, every document and letter and report we have put out on this, but our principal in moving forward, and this is something that the mta board or ultimately supported, was no additional adverse or fiscal impact to the operating budget. as i mentioned, there already is

about a $1.4 million amount in the baseline mta budget, so we assumed that that was available for this purpose. it was put into place i think for this current two-year budget, and there was an attempt last fiscal year to work with the school district to do sums of the reduced fare that had some system starts for the current -- starts. for the current fiscal year, we agreed with the folks advocating for free muni with the school district that we would put the program on hold and not expend from this year's budget until we resolve how we were going to move forward on free muni for youth. those funds for this year will not be spent. it will drop to our fund balance. the funds for the next fiscal years will remain at that $1.4 million operating level. there are three years of that basically that a part of the

funding plan for the 22-month pilot. this are mta operating dollars that were previously already designated for this purpose. what i guess i meant to be conveying, and i apologize if i did not do it clearing, was that we were supporting and recommending a pilot that did not go deeper into the budget but just maintained that the commitment that the mta board had already established, the $1.4 million a year level. supervisor wiener: when that $1.4 million commitment was made, was that intended as an ongoing annual $1.4 million item? >> that predates me, but i believe it was. it is part of our base in project. when we developed our initial baseline budget back in the fall for this coming fiscal segel, that $1.4 million was in there, and the mta board seems supportive on continuing use of

those funds to support youth fares. it did not support going beyond those funds. that is how we ended up with this pilot. supervisor wiener: thank you. supervisor chu: thank you for that question. when that $1.4 million was originally put in there, i cannot say as to what other people assumed that was, whether it was meant to be ongoing or not, but frankly, the idea back then was that it would be a pilot. ipod leave -- a pilot to do free muni for a period of time. i think other people would probably say they thought it would be ongoing. but in my mind, it was clear that it was supposed to be a pilot to see how it would work. now to say that it was meant to be part of your annual budget, i do not know that is actually the understanding i would have had having been there in that budget as well. i just wanted to comment on

that. i also, for whatever reason, had the assumption that there was no funding from muni to go to this program, so it is something that, as we looked as the other budgets, we started to realize there is a significant component in mta's budget towards this. i wanted to also know that. >> ok, fair enough, and i certainly take responsibility it that was unclear. it was clear to us all along. also, i think the preliminary discussions with the ta staff and mtc staff, there was always an expectation that those entities would be putting a share in, and a reluctance from putting more than 50% share, meaning there was always an expectation from all sides that we would have to put in a share as well. again, i apologize if i communicated in a way that seemed like those dollars were

in there. supervisor chu: thank you. >> on the expenditure side, again, not a significant change in allocation, but between categories there are some line items that have moved around. but the first thing i did before trying to make the investments that are in this budget or looking at revenue solutions, the first thing i did was look at areas to cut. i have already implemented management cuts that will yield more than $2 million of ongoing savings. i will address, overtime, -- i will address overtime separately later. i know it has been an issue to the board. and proposing a significant reduction in actual expenditures. fort overtime, we're partnering with the department of human resources to manage this. we will be bringing it to you sometime soon at -- with a joint

third-party administrator. our program is separate from the rest of the city. sort of like combining forces. i think there's a lot of opportunity. at dpw, we were able to bring these costs down every year. most of the rest of the city, the costs are going down every year. at the mta, the costs are going up every year for workers' comp. we were able to identify some equipment eligible for capital funding. we were able to move that out of the operating budget. and we assume, because our budget had to be transmitted to you by may 1 before the labor negotiations were done, what we assumed in our budget that the board adopted was basically our opening position at the negotiating table, which between labor and benefits was roughly at 3% concession in the first year and the 3.3% concession on the second year. about half of our employees that

have open contracts at the moment. the transit workers union, the two larger locals are already eyeing contract, pending -- are already in contract, pending the first year of a three-year contract. about half of the agency was in open contracts. we estimated concessions on the order of about $14.5 million. but as i will mention later, it did not come to fruition based on how negotiations have turned out. what i am most excited about with this project is despite the fiscal climate and despite the challenges we have, we were able to incorporate a significant investment in the system as part of this budget. and already spoke to this to some extent, so i will not go through it again except to say that we're proposing to fund spending on the order of over 100 maintenance positions to get back to that kind of bread and butter needs, primarily in muni,

but also some on the traffic operations side to catch up on and provide a higher level of maintenance that will in turn provide a higher level of reliability. supervisor wiener mention funds for tep. we are in environmental review which concludes next summer. with these funds, we want to get a few planners and designers onboard now so that we can do some of that work concurrent with the environmental review and the public process. once we're through environmental review, to the extent we have dollars available, we can implement immediately. we talked about the fare inspection. this is the cost of the 10 additional fare inspectors. we're adding some two hour crossing guard contingent and adding some to safety staffing. safety is the number-one priority of the agency.

i showed this slide when i presented last time, but really looking at the reductions to streamline and make things more efficient. but also, investing too right size or taking a step towards right sizing what we need to be investing in maintenance to better improve transit reliability, which is to try to get more people on transit which is what the trend the first policy says we should be doing. as well as a proving safety and reliability. that is the theme of the expenditures in this budget. a couple of measures. time is back again to the strategic plan that was adopted, and this is a small sampling of a large number. but to reduce kind of all aspects of safety by 10%, and that is for each two-year fiscal cycle.

on the muni side, muni has always looked at on-time performance. that is measuring our performance relative to a schedule. but the fact that nobody knows what that schedule is makes that maybe not the best measure. what people, from my experience, what frustrates people is when there is a long gap between buses, and then when the buses come, there's two or three there and they're very crowded. improving the spacing so that it is more reliable. so they can and without knowing the schedule, which nobody does, and anytime you go to a bus stop or a train stop, you have a reasonable expectation of what you're waiting time will be. it will not be that variable. that is what we're trying to achieve. we will continue to measure on- time performance. we will continue to report it as we traditionally have. and based on a more accurate method that we have now, what we are really targeting is

eliminating gaps in the system. our goal in the first fiscal cycle is to do that for 25% of the ridership, and we will start on the busiest lines and work our way through the system. we have some larger six-year goals. i mentioned the transit first policy. that was put in place by the board of cyber visors in 1973 -- board of supervisors in 1973. my understanding is that we have not really achieved any significant shift, and we are endeavoring in this plan to do so. to move from 38% of trips taken by non-private automobiles up to 50%. that would be a pretty significant move forward. that will require better muni service, better taxi service, better bike lanes, more pedestrian-friendly streets. that is probably the most significant role in this plan. we are so -- we also are

endeavoring to close the structural budget deficit gaps on the operating and capital side. this proposed two-year budget makes a good first step towards that by closing a big chunk of the main and the gap, but we will still need more sustainable sources of funding, particularly on the capital side if we're going to achieve that ambitious goal. i wanted to cover a few issues that have arisen before or that could be a rising. i will cover overtime in the next slide. i know it has been a source of interest and concern for many of you and for the public and for me. but work orders, what is in the proposed budget is more or less consistent with what is in the current budget. it is about $64 million a year, $65 million a year. less than a 10th of our budget, but not a significant amount. we have that entire hearings on

work orders. i do have some data on it if anybody wants to dive into that. i was directed by or requested by the budget balancing group by put together, directed by my board, to include in my transmittal letter to the board of supervisors and the mayor some reference to the issue of the portion of the police department work order that funds the traffic company, which is the one work order that is not a direct service that we are purchasing or an allocation of a city-wide service, which is largely of the rest are categorized. so i did include that. that is $9 million or $10 million. i included my transmittal letter. it the general fund has to pay for that service, which is really the only other choice. and i recognize the general fund has a $100 million plus gap itself to solve the but if the general fund had to pay for it, here are the things that i would

put that money towards. primarily maintenance, equipment, and some other safety and bike and pedestrian elements. the short story is that the work order approach in this budget is more or less consistent with how it has been in the past. i made reference to the labor savings. we had to adopt our budget before the negotiations were concluded. as you have no doubt heard by now, the general package that most of the unions agreed to was the zero wage increase in the first year and the equivalent of the 1.75 wage increase in the second year. that is obviously quite different than the 3% decrease in anticipated in the first year and the 3.3% decrease in the second year. there were some concessions on

the benefit side that we will mitigate against. but suffice to say, the $14 million that we had budgeted as a labor savings will not be realized. so i will need to basically rebalance the budget, so we will be bringing back to the mta board on june 19 a plan to rebalance based on this assumption not realized, at which we would then, upon approval by the mta board, submit to the board of supervisors as a technical adjustment. i do not anticipate at this time any major policy changes, any major service reductions, but we are still awaiting all the information from our own staff, the controller's office so we can quantify the impact of the negotiated agreement. then we will know basically what

the size of the hole is that we have to fill. that will be coming back to the board of supervisors in june. then i just wanted to highlight some other risks that are out there that may be difficult to predict. fuel cost is a big one. we're obviously a big consumer of fuel. it has been rising quite rapidly. to the extent that they rise faster than we have anticipated, that will create budget pressure. we already talked about the youth pilot fare. it was passed contingent on a regional funding at a certain level, about $5 million. seems unlikely at this point that we will get funding at that level, so we will have to adjust accordingly based on whatever we can secure from the region. special events, there's a lot of appetite in the city for special events, and there seem to be more and more demand for them. many of these do not include cost recovery for the operating

impact for us on the muni or the parking and traffic site. to the extent there is more of those, that creates budget pressure. most generally, a third of our budget comes from the general fund. so whether it does well or not impact our budget fairly significantly. the state of the economy can impact ridership, as does our own performance. because a quarter of our revenues come from transit fares, that also has a big impact on the budget. just kind of flagging a few issues out there that we may need to confront in one way or another in the two-year cycle. with respect to overtime specifically, we have had a couple hearings here, but that budget and finance and at gao. we have been running somewhere in the low to mid 50's in terms

of millions of dollars on overtime expenditures. $20 million is planned overtime, built into our schedules. that is necessary for 24/7 operations. that obviously leaves a lot of unplanned overtime. since the beginning of the year, we have worked on a projection that was looking at something like $55 million, down to $52 million, which is no cause for celebration but it is moving in the right direction. for the next fiscal year, we're budgeting $42 million. year after that, $37 million. a very high level on how we intend to do that. part of it is filling vacant funded positions are new positions that we're adding as part of this budget. we have many positions or shifts that we have to fill. when we do not have regular tie resources, our only recourse is

to use overtime. that is driving a big part of these numbers. in terms of cost recovery, we are seeking to, wherever we can, improve cost recovery, from construction projects, special events, from any way we can. we're limited to the extent we can do that. i think there's opportunity for improvement there that we will be seeking so if we are spending over time dollars, it is not our budget that is paying for it. unquestionably, it -- >> i have a question. on page 10, you have the fiscal year 2011-2012 projection. was that from the beginning of the fiscal year? >> this is the current projection, a around $52 million. earlier in the year, it was closer to $56 million. a little bit of improvement already but not nearly enough