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. better management is part of seeking that improvement. there has been a lot of overtime by right kind of mentality in the agency and a lot of opportunity for active management of overtime to make sure that it is being used only when needed. we're also going to be restructuring some areas, either changing shifts or changing how people are deployed. that will reduce some of the built-in overtime. you may hear from some unhappy employees who for many years have been turning this over time you're not going to be earning it anymore, we believe that through better management and deployment and scheduling of resources, weakened considerably reduce overtime costs, and that

is something we need to do. finally, the capital improvements themselves, the big work, for example, that we're doing this weekend as part of the improvements along one of our lines, replacing the tracks, switches, and signals. and when they fail, they require us to bring in maine and its resources on overtime. to the extent we get our infrastructure in better shape, we will have fewer of those unplanned shutdowns that drain some of -- that demand some of our overtime resources. same with procurements. you'll see in the capital budget that we are proposing some bus procurements because of the age of our fleet, we have breakdowns that generate sometimes overtime expense as we are trying to compensate for those failures. the more we can invest in the capital side, we can often generate some on the operating

side, especially in terms of unplanned responses which are often done on overtime. you had asked for reporting on fte. changes. we are, because of the investments that we are making, going up quite a bit. in some cases, it is budgeting -- it is just restoring positions that were in the agency but not budgeted. these are all front line positions. we have reduced the number of managers. we are not adding any administrative staff. much of this is going straight to the front lines. you asked for us to touch on job

creation. there are a few different ways we are contributing to job creation. the first is the capital program. we are spending a lot of capital dollars on the order of about half a billion dollars a year, we have a very strong capital budget. a big chunk of that is the central subway. we have done some of the utility relocation now. we are advertising all the construction contracts this year. while this is a federally funded program, it inhibits from using local hiring practices, we are bringing the spirit of the local hiring practice to the central subway and all of our other

programs. we are working closely with workforce development and there getting some good success. in the central subway, we've partnered with the laborers union to find tunneling apprenticeship program so that we can train laborers that have not had the experience to work on tunneling projects to get that experience so they can get to work on the tunnel contract. in the central subway, we have been meeting all of our coals on the design contracts -- all of our goals on the design contracts and we have strong participation. we're not able to give those preferences. the balance of the system, we are using the opportunity of the capital spending to put people to work.

a lot of opportunity on the capital side. in terms of the summer, we will have 40-45 young people participating for youth summer employment. making as much space as we could afford to to bring young people in. most of these we have been using for many years and said that a lot of good success. we are parting with the mayor's office and the city to make those opportunities available. we are in the -- we are investing in the system and will be hiring city employees, a fairly significant amount of city employees. doing some direct job creation. the most indirect, but i don't want to not notes id, the transportation system is the big part of what makes the economy

make san francisco move. we have 700,000 boardings on a an average weekday, which is more than the next three transit agencies in the region combined. it is more than 40% of the boardings on transit in the region. we are moving a lot of people and a lot of that is getting people from home to work in san francisco. i just want to note the royal dutch be played in the economy in supporting job creation, -- the role we play in the economy in supporting job creation. in terms of language access, which you have also asked us to speak to, and we are addressing across the hall in the hearing at the same time as this one, we are a very out were facing agency. we have a lot of interaction with the public in a lot of different ways. we also, we are subject to title

6 of the civil rights act. in some ways, the local language ordinance helps us be complied with that. in some ways, we need to go further because of the title six requirements. we do that in a lot of different ways through various materials, translations, using 3-1-1, training of staff, using by local staff, performing outreach. a couple of examples just from last night, we have been doing a number of workshops around the city. we have also been reaching out to groups, particularly those that represented or have membership that have a lot of people who do not speak english. last night, we did a meeting with power. the meeting was largely done in spanish. it was a way of the are trying to make sure the programs that

will have real impact to people on the ground, that we can get feedback. also last night, we had a public meeting -- we are changing the structure of were the 49 it turns around by city college to make way for some development and improve service. we had a meeting out there last night and and our translator that was -- was not able to show up, so we ever able to pull a train operator from the train yard nearby who speaks cantonese, who was able to enable the people and the meeting to access all the information. there is a lot of different avenues that we are pursuing to make sure people have access, good access, to information.

some examples of some materials that we have available at different locations that help people get access to a translation services if a person sitting at the desk or the counter or on the bus is not able to communicate to them in their language. >> we have worked with your department and the past. primarily the idea that the buses do not go all the way to the end of the schedule, but turns around some more in advance. one of the things you want to try to memorize -- minimize that as much as possible. announcements to passengers to let them know ahead of time that those trains in tend to short term. i am wondering if you have thought about -- intercom announcements are sometimes garbled. do you have plans to improve that system?

have you thought about doing pre-recorded messages for some of these things that are common occurrences that might be -- that might translate into multiple languages? to the extent that you have certain things that always happen, such as a delight in a tunnel, that you would want to communicate -- such as a delight and a tunnel, that you would want to communicate to passengers. a lot of the folks who are on those lines are limited english speakers. >> the answer to all that is yes. with regard to turn back, we have been working to reduce the unplanned turnbacks. we're making good success in doing that. there will always be instances where it makes sense to turn back or because of an emergency, or we schedule it. we have been working very hard at communications with people

when they first get on the train. with regard to communications, we are currently upgrading our radio system as well as our public address and public display system. in doing so, it will give us much clearer autozone. right now, the on board audio is pretty clear, but only make announcements from our central control center, that is when it gets pretty garbled. automatic announcements, you will notice on the train system, the automatic announcements only happen underground. we will have that same automated and announcement happening above ground as well. we will also have pre-recorded messages for the various kinds of events, such