July 1996

Board of Supervisors
Budget Analyst
1390 Market Street, Suite 1025
San Francisco, CA 94102
Telephone (415) 554-7642. . . . . Fax (415) 252-0461

July 11, 1996

Rudolf Nothenberg, President
      and Members of the Public Transportation Commission
City and County of San Francisco
949 Presidio Avenue, Room 238
San Francisco, CA 94115

Dear President Nothenberg and Members of the Public Transportation Commission:

Transmitted herewith is our Management Audit of the San Francisco Municipal Railway (MUNI) conducted in accordance with the mandates included in Proposition J, as approved by the voters in November of 1995. The report includes 20 findings which contain 97 recommendations. These findings and recommendations identify opportunities for increasing MUNI revenues and reducing expenditures by $7.8 million annually, and $1.6 million on a one-time basis, net of identifiable costs. Because all of the savings related to the findings contained in this report cannot be fairly estimated, the $7.8 million in annual savings is a conservative estimate. Equally as important, our recommendations would significantly improve the efficiency, effectiveness, and economy of MUNI operations if properly implemented by the Department.

In accordance with Proposition J, funding for this management audit in the amount of $125,000 was approved by the Mayor and the Board of Supervisors. Field work began on January 29, 1996, and the draft report was completed and delivered to MUNI management on June 12, 1996. The Department reviewed the report for factual accuracy during the remainder of the month of June.

The Acting Deputy Director of MUNI Operations left City and County employment in late June, and a replacement Deputy Director was appointed by the Director of Public Transportation. Shortly thereafter, on July 1, the Director of Public Transportation resigned from the City and County, and a new Director was appointed by the Mayor. Despite these significant changes in MUNI management, an exit conference, was conducted between the Budget Analyst staff and the Department on July 2 in order to discuss the findings and recommendations contained in our draft report and to address any factual concerns which MUNI had regarding our report.

Because the date for delivering the final management audit report to the Public Transportation Commission (PTC) was mandated by Proposition J, the new Director of Public Transportation stated that he could not thoroughly review the draft report content prior to its release. Therefore, the Director decided that he will respond directly to the Public Transportation Commission (PTC) once he familiarizes himself with the findings and recommendations contained in the report. Accordingly, we are unable to comment on areas of the Department"s formal agreement and disagreement with the report at this time.

The Public Transportation Commission is now required to conduct "three consecutive months of public hearings to review the findings and recommendations" contained in this report, and to "approve and propose to the Mayor its recommended Action Plan for implementation of audit recommendations and related steps to improve service, safety, and cost-effectiveness." Proposition J further requires that "The Mayor shall approve the Commission"s Action Plan, and the Public Transportation Commission, the Municipal Railway Director, the Mayor, and the Board of Supervisors shall use their best efforts to implement the Action Plan."

The FY 1996-97 Budget, as recommended to the Board of Supervisors by the Budget Committee, includes $1,420,488 in reserves, pending consideration of the recommendations contained in this management audit report. During the deliberations on this report by the Public Transportation Commission (PTC) that will follow the public hearings, Budget Analyst staff will maintain a record of PTC decisions regarding its Management Audit Action Plan, and compare the PTC actions with the recommendations contained in this report. We will then develop specific recommendations for the release of reserved funds in the FY 1996-97 budget, and transmit these recommendations for the release of reserved funds to the Board of Supervisors.

Project Scope

The text of Proposition J required that the Budget Analyst conduct a "comprehensive management audit" of the Municipal Railway. However, the amount of funding designated for the management audit in Proposition J was sufficient to fund only a limited scope study for an agency the size and complexity of MUNI. Accordingly, the Budget Analyst developed a limited scope management audit work plan which was consistent with the Proposition J text. The audit scope was reported to the Board of Supervisors in connection with the supplemental appropriation ordinance approval process. In addition, Budget Analyst staff assigned to our current management audit of the Police Department contributed the section of this report addressing MUNI security.

Proposition J requires that:

Our findings and recommendations have been organized according to these specific audit areas so that consistency with the voter initiative is readily apparent.

Department Organization and Cost

The Municipal Railway is a department of the City and County of San Francisco. MUNI is managed by a Director of Public Transportation, who reports to the Mayor through a five member appointed Public Transportation Commission. As part of the City and County, the Municipal Railway"s annual operating budget is proposed by the Mayor and authorized by the Board of Supervisors.

In addition to the Director of Public Transportation, the Municipal Railway has one Chief of Staff and four Deputy Directors who manage an authorized staff of approximately 3,570 employees. Included in this total are 1,833 authorized Transit Operator (Driver) positions, which represent approximately 51 percent of the total workforce.

In FY 1995-96, the Department was initially authorized an operating budget of approximately $280 million. Over $206 million, or 73.6 percent of this amount was for salaries and benefits (including temporary salaries and overtime). The balance of approximately $74 million was for contract services provided by private vendors and by other City and County departments, materials and supplies, judgments and claims, and capital outlay. In FY 1996-97, the Department"s operating budget has been increased to approximately $285 million.

Comparison with Other Transit Properties

As part of this study, we compared the Municipal Railway with other large transit properties within the United States. Based on this comparison, MUNI is clearly one of the most complex and heavily used transit systems in the Country. The following observations, made by analyzing data compiled by the federal government, illustrate this point.

• The Municipal Railway operates four separate modes of transportation (light rail, trolley bus, motor bus and cable car). This is a greater variety than any other transit agency in the Country when regional diesel rail, heavy rail and commuter rail systems are excluded from the comparison.

• The Municipal Railway is the only major transit agency which operates cable cars as part of its general system of transportation services.

• The Municipal Railway is one of only four major transit agencies which operate trolley buses. The others are the Southeastern Pennsylvania Transit Authority (SEPTA), the Massachusetts Bay Transit Authority (MBTA), and the Seattle-Metro Transit Authority. San Francisco operates more trolley buses than the total of the other three transit agencies combined.

• The Municipal Railway operates over 100 light rail vehicles during peak travel periods. This is second only to MBTA, which operates 177 light rail vehicles during peak travel periods.

• The Municipal Railway provides the greatest average number of motor bus passenger trips per hour of service of any major transit agency in the Country.

• Second only to SEPTA, the Municipal Railway provides the greatest average number of trolley bus passenger trips per hour of service of any major transit agency in the Country.

• The Municipal Railway provides the third greatest average number of light rail passenger trips per hour of service of any major transit agency in the Country. Only MBTA and SEPTA provide a greater number of light rail trips per hour.

In addition, MUNI faces other challenges that are uncommon for transit agencies within the United States. Services are provided in a compact geographic area, on narrow streets which are heavily congested with automobile traffic during peak hours of service. Motor and trolley buses must navigate steep hills, and maneuver through tight intersections in many locations within the City. Although not faced with winter snow and cold, as are some properties in the middle and eastern sections of the Country, in many respects the physical characteristics of San Francisco make transit services equally difficult to provide.

Broad Conclusions Regarding MUNI Operations

Based on our review of reports produced by MUNI and external review agencies, as well as additional analysis conducted by Budget Analyst staff, we have drawn the following broad conclusions regarding the operations of MUNI:

1. The Municipal Railway"s budget has increased at a rate below inflation during the past five years. As a result, MUNI"s absolute budget has decreased during this period when adjusted for inflation.

2. MUNI has assumed responsibility for certain administrative and support functions which previously had been provided by the Public Utilities Commission (PUC) prior to 1994. The additional operating burden placed on MUNI from the assumption of these underfunded functional transfers has severely impacted the department"s ability to provide reliable service to the San Francisco community.

3. The service impacts from budget reductions and the loss of PUC support has been exacerbated by an aging vehicle fleet that requires increased maintenance and repair effort to operate.

4. Many of the Municipal Railway"s facilities are aging and are not designed to accommodate the new equipment that is being purchased by the Department. The difficulties presented by facility condition will impact MUNI"s future ability to provide reliable services.

5. The City and County has not implemented formal service reductions that will allow MUNI to efficiently operate within funding levels authorized by the Mayor and the Board of Supervisors.

These general conclusions are discussed in more detail within the body of this report. Our detailed recommendations, included at the end of each finding, provide many specific steps that MUNI should take to improve service and increase efficiency. However, we believe that unless the City and County either seriously considers targeted service reductions, or identifies additional sources of revenue to supplement current levels of General Fund support, MUNI service quality will continue to deteriorate.

Recent Efforts to Improve the Cost Effectiveness of MUNI Services

This report presents a critical evaluation of MUNI operations, appropriately identifying problem areas within the organization in order to provide recommendations for corrective action. Because of the critical nature of this study and of management audits in general, we believe it is appropriate to recognize the Public Transportation Department"s efforts to stabilize and improve MUNI operations.

Accordingly, this section provides summary descriptions of some of MUNI"s most noted accomplishments. For example, MUNI has:

• Reorganized in 1995-96 by creating the Office of the Director, which consolidates the various functions that support the Director and the Public Transportation Commission. This is a positive step toward enhancing the support given to City and County decision-makers, and improving communications with the public and employees.

• Developed and implemented a comprehensive data collection plan devised to produce line level ridership data for internal planning purposes, scheduling, and federal Section 15 ridership reporting.

• Developed and sought approval for a Comprehensive Integrated Safety and Loss Prevention Program which is intended to reduce the incidence of worker injury and accompanying Workers Compensation Cost. Such a program is critical for protecting workers and the public, and for reducing the costs of Workers Compensation.

• Transferred capital grants staff from the Finance Division to the Capital Projects Division to improve coordination between capital financial staff and project managers.

• Successfully implemented a substance abuse testing program required by the federal Omnibus Transportation Employee Testing Act of 1991. Although we did not have sufficient time to conduct a detailed review of the program as part of this management audit, the reported design of the program and the Department"s success with achieving compliance with federal law appears commendable.

• Successfully implemented a Graffiti Prevention program which has substantially improved the appearance of MUNI vehicles. Although vandalism continues (e.g., broken windows), the success of this campaign has been significant.

Under the guidance of the Public Transportation Commission, MUNI is making an effort to more effectively identify operating problems and implement changes to its system that will improve services and reduce costs. Each of these examples demonstrate instances where Department initiatives have resulted in positive change. The challenge for the Department is to continue with such efforts in an operating environment characterized by diminishing resources. Our findings and recommendations, which focus on practical steps that should assist MUNI in providing services more successfully, are summarized below.

1.1 Organization and Management

The Municipal Railway"s direct service activities are presently organized by the principal functions of Operations and Maintenance, with management and support activities performed by the Director"s Office, Capital Programs, and Finance, Administration and Personnel. This organizational structure creates a system of management by specialty, but reduces accountability by service or product line (e.g., diesel, trolley, light rail, and cable car services).

Other large transit properties with multiple vehicle modes are organized according to general service. This organizational structure fosters management accountability while retaining suitable levels of technical specialty within the organization.

The Department and the Public Transportation Commission should consider alternative organizational structures for the Municipal Railway in order to increase management accountability, responsibility, and timeliness of decision making over major service modes.

The Public Transportation Commission should:

Although there would be no new cost to implement this recommendation, the benefits from reorganizing the Municipal Railway could be significant in terms of customer service, efficiency, and cost savings. The amount of such savings cannot be quantified until specific organizational alternatives are developed by the Public Transportation Commission, and the results of meet and confer sessions with employee bargaining units are known.

1.2 Transit Operator Scheduling

The Municipal Railway has not developed a program to effectively manage transit operator staff. Position control is fragmented and weak, sick leave and workers compensation use is high, and the assignment of operators to non-driving duties is excessive. As a result, MUNI operators are required to work extended shifts, resulting in the scheduling of excessive non-productive hours and a high use of overtime.

For example, in FY 1995-96, scheduled overtime totaled approximately $10.0 million annually, or 11.92 percent of current platform operator salary expenditures. This scheduled overtime includes all platform operator pay which is built into individual runs, paid at a premium time and one-half rate. An additional $7.4 million, or 8.4 percent of expenditures, is currently paid for unscheduled overtime for platform operators. This unscheduled overtime is required to cover scheduled runs when regularly scheduled operators are in training or on leave. In total, over 20 percent of Platform Operator salary expenditures are for overtime.

MUNI also employs many more operators than are authorized by the Board of Supervisors, agreed to in the Memorandum of Understanding with Transit Workers Union Local 250A, or agreed to by the Mayor and the Controller to replace employees on long-term industrial injury leave. During the period of our study, the Department employed 138 Platform Operators more than are authorized in the Annual Salary Ordinance.

Despite this "over-employment" of personnel, the Department is still unable to meet its vehicle scheduling needs with regularly scheduled personnel, resulting in the use of excessive overtime (averaging over 20 percent of all paid time in FY 1995-96) and lost service. In the first half of FY 1995-96, over 15,000 hours of service were missed due to "No Operator." This equates to a rate of 6.9 percent of all service, or more than 30,000 hours of missed service per year. This occurs, primarily, due to the number of operators on extended leave, in light duty status, or assigned to non-driving special duties. The actual number of operators available for sign-up is currently less than the 1,780 required for optimal scheduling, even though the Department employs over 2,240 full-time and part-time platform operators.

By implementing an effective position control system and increasing the number of full-time and part-time operators who are physically able and available to drive, the Municipal Railway could reduce platform hour requirements, increase service reliability, and save approximately $1.1 million per year.

Therefore, the Director of Public Transportation should:

1.2.1 Develop a proposal to purchase or develop a centralized personnel information system for maintaining all employee information. This system should include a position control element.

1.2.2 Request a supplemental appropriation to provide funding for the implementation of the proposed centralized personnel information system.

1.2.3 Develop historical averages of the number of operators who are unavailable for driving due to extended leave and other factors.

1.2.4 Implement detailed recommendations in Section 2.1 of this report to reduce the number of operators assigned to non-driving special duties.

1.2.5 Provide the Public Transportation Commission with a quarterly list of operators assigned to non-driving duties, their assignment, and the reason the assignment is of a higher priority than driving.

1.2.6 Seek approval and funding for the Integrated Safety and Loss Prevention Program developed by the Department in March 1996.

1.2.7 Report to the Public Transportation Commission quarterly regarding the number of employees unavailable for driving duties due to sick and industrial leave status.

1.2.8 After implementing recommendations 1.2.1 through 1.2.7, above, request an amendment to the City"s Annual Salary Ordinance to increase the number of full time operator positions to correspond with actual practice.

1.2.9 Increase the number of part-time platform operators to the 220 maximum allowed by the present MOU as soon as sufficient operators complete the necessary training.

Implementation of the Integrated Safety and Loss Prevention Program, as proposed by the Department, would result in annual costs of approximately $1.3 million per year. However, these costs will be offset by reductions in the cost of Workers Compensation claims and increased scheduling efficiencies described in this finding.

The cost of a computerized position control system is unknown at this time. However, such a system would be cost effective if it is microcomputer or minicomputer based, reduces the need for duplicative data entry and record management, and improves management"s ability to control operator costs.

By consolidating platform operator personnel records into a centralized position control system, MUNI would have more accurate information on the status of each individual operator and the total number of operators available for sign-up. Implementing an effective position control system would also provide MUNI management with improved information for use in developing and monitoring the budget to insure that salary accounts are not over-expended.

By implementing all of the recommendations contained in this Section, the Municipal Railway can reduce its platform hour requirement, resulting in reduced costs estimated to be $1.1 million annually.

1.3 LRV Second Operators

The Municipal Railway currently schedules platform operators for duty in all Light Rail Vehicle (LRV) cars that are placed into passenger service. Scheduling operators in the second, third and fourth cars of multiple LRV trains is an inefficient use of staff resources.

Implementing a Proof-of-Payment Program (with the addition of 37 positions at an annual cost of between $1,324,178 and $1,591,181) would result in increased efficiencies, more expeditious passenger boarding, and net annual savings of as much as $2.1 million.

The Director of Public Transportation, and other appropriate City and County managers, should:

1.3.1 Meet and confer with the Transport Workers Union, Local 250A, regarding the implementation of a full Proof -of-Payment Program.

1.3.2 Request a supplemental appropriation for 37 positions, costing between $1,324,178 and $1,591,181, which would provide funding for the implementation of a Proof-of-Payment Program.

1.3.3 Request amendments to the City"s Annual Salary Ordinance which would provide authorization to staff the Proof-of-Payment Program.

1.3.4 Reassign operators from duty on the second, third, and fourth cars of multiple LRV trains to active driving assignments, to improve MUNI"s ability to meet scheduled service requirements.

Implementation of a Proof-of-Payment Program would result in more expeditious boarding of passengers, and a net savings estimated to be as much as $2.1 million annually.

1.4 Transit Service Supervision

The number of budgeted fixed post and mobile transit supervisor positions has steadily decreased from a high of 95 in FY 1981-82 to 64 in FY 1995-96. Yet the need for street supervision to sustain schedule adherence is apparent.

During random corner checks performed by our study team, we found that only 62 percent of MUNI vehicles adhere to their published schedules, as compared with a service goal of 85 percent established by the Department. We also observed that the time between service could be doubled at specific stops if coaches ran late or early.

For example, the "headways" on Line Number 2 Clement are 15 minutes on the day when we conducted our observations. On one observation, Run No. 686, which had a scheduled outbound time of 2:45 PM, had an actual outbound time of 2:40 PM. The next run on Line 2 Clement, Run No. 703, was running fifteen minutes late, probably due at least in part to the effects of having to pick up the passengers that missed Run No. 686. Thus, a transit passenger arriving at the Fillmore/Sutter outbound stop to catch Run No. 686 at 2:45, just prior to that time, would have had to wait until 3:15 (over one half hour) to board Run No. 703.

On that same day, we observed that Run No. 707 was running late by eighteen minutes, arriving at the Fillmore/Sutter intersection at 2:56 PM. Run No. 623, which is Run No. 707"s "follower," was running late by only four minutes and thus arrived at the Fillmore/Sutter intersection at 2:57 PM, one minute behind its "leader." Since the next inbound run, Run No. 700 was not dispatched due to the unavailability of an operator, there was a period of 30 minutes between Run No. 623 and Run No. 662, the next inbound coach on Line No. 2.

Another indication of poor line management is when transit vehicles on the same line run in very close proximity to one other, not maintaining scheduled headways. For example, we observed three coaches on the 21 Hayes Line running in tandem on Wednesday, April 24, 1996, at 2:26 P.M., at the intersection of Hayes and Gough Streets. Two of the coaches were in the bus stop zone simultaneously and the third was across the intersection waiting for a green light, the first vehicle in its lane. We checked with Central Control and determined that there had been no activity reported that qualified for an entry in the daily log.

We also found that approximately eight percent of motor coaches pull-in to the yards prior to their last scheduled passenger service stop (node). Based on two random observations, we found that approximately 31.6 percent of the pull-in-times observed at the Flynn and Kirkland diesel bus yards were four or more minutes ahead of schedule. In fact, approximately eight percent of the coaches arrived well before the last scheduled passenger stop for the run.

Five coaches out of 56 coaches observed at the Flynn Motor Coach Division arrived from nine minutes to 29 minutes prior to the last scheduled passenger stop on their assigned runs (8.9 percent of all observed pull-ins). Similarly, six out of 75 coaches observed at the Kirkland Motor Coach Division arrived prior to the last scheduled service stop on their assigned runs (8.0 percent of all observed pull-ins). The practice of "cutting runs short" to leave work early is one which is reportedly common, based on interviews conducted during this study.

We interviewed many Transit Service Inspectors. In general, the morale of those with whom we talked is very low, particularly among those who have been employees of MUNI for many years. The inspectors we interviewed discussed their feelings that many employees now take advantage of "quirks" in MUNI"s rules to manipulate the system to their advantage. They believe some operators abuse Workers Compensation rules by making inappropriate or fraudulent claims; and avoid work, as evidenced by records of high numbers of miss-outs, claims that equipment is faulty as an excuse to return to the yard before the scheduled end of their runs, and operate coaches as "out-of-service" when required to be in-service. Some of the Transit Service Inspectors we interviewed stated that because of these perceived abuses, they are no longer enthused about their roles in the organization.

By increasing the number of transit supervisors, adjusting transit schedules to conform with operator and equipment resources, and by regularly employing random line supervision techniques, MUNI can enhance transit services and schedule adherence.

Recommendations

The Mayor and the Board of Supervisors should:

1.4.1 Approve the Public Transportation Commission"s request for an additional 12 Transit Service Supervisor positions for FY 1996-97 (these 12 positions are included in the Department"s FY 1996-97 Budget).

The Public Transportation Commission should:

1.4.2 Direct the Director of Public Transportation to develop an efficient methodology for evaluating and reporting on the reliability of current transit services.

1.4.3 Direct the Director of Public Transportation to develop and report on a deployment plan for the Transit Service Supervision Unit. This plan should maximize inspector effectiveness by rotating some inspectors to random locations based on periodic assessments of schedule adherence. Until the results of this deployment strategy are known, other supervisor positions (including the Transit Manager I positions included in the FY 1996-97 Recommended Budget), should not be authorized.

The cost of adding 12 Transit Service Supervisor positions to provide increased field supervision would be $839,768 annually, at the top step including fringe benefits (included in the FY 1996-97 Approved Budget). However, the addition and effective deployment of these personnel would improve the quality and timeliness of current services.

1.5 MUNI Metro Tunnel Station Agents

Six of the nine MUNI metro tunnel stations have two fare gate entry booths. The MUNI Metro Station Operations Unit attempts to staff the secondary booths, depending on the station and booth location, for up to 15 hours per day during weekdays and 10.5 hours per day on weekends.

Secondary booth coverage is most critical at the Powell, Civic Center, and Montgomery stations, due to high levels of use and the remoteness of the secondary booths from the primary booths. However, even those three secondary booths are often not staffed, resulting in public inconveniences, revenue loss, and equipment vandalism.

For example, according to MUNI"s records the cost of labor and materials to repair fare gates in calendar year 1995 was $26,600. That figure does not include approximately 23 coin canisters which were stolen and which cost $829 each, or an additional $19,067. These costs also do not include revenue stolen from the coin canisters, which cannot be estimated. Additionally, the Department"s Revenue Manager cannot provide an estimate of revenue losses which occur due to the misuse of discount passes, fare gate intrusions, other canister thefts, and illegal entries. However, we believe that the total figure would be far in excess of the $45,667 in identified costs per year.

By staffing the Metro Station Operations Unit at its authorized strength, by better controlling absences, and by investigating the costs and benefits associated with installing electronic surveillance equipment at all booth locations, adequate service and security would be better accomplished.

The Director of Public Transportation should:

1.5.1 Direct MUNI Metro Station Operations management to develop a plan for reducing absenteeism, and to closely monitor and manage staff absences in order to achieve at least 80 percent of paid time on the job.

1.5.2 Staff the MUNI Metro Station Operations Unit at its authorized strength of 57 full-time positions, using existing resources authorized for the Department.

1.5.3 After regular full staffing has been achieved, investigate and report back to the Public Transportation Commission on the costs and benefits of installing electronic monitoring equipment at all of the station booths, taking into consideration the full benefits from more consistent staffing of the primary and secondary booths.

1.5.4 Request that the Department of Human Resources survey and classify the top management position in the MUNI Metro Station Operations Unit to determine whether it would be more appropriately staffed at the Transit Manager I level.

1.5.5 Conduct a study of the Metro Stations and report to the Public Transportation Commission on steps that can be taken at minor cost to improve operational and working conditions, and on those working and operational condition improvements that may require significant funding through a capital project.

There would be no additional costs to implement these recommendations.

By staffing the Metro Station Operations Unit at its authorized strength, by better controlling absences, and by investigating the costs and benefits associated with installing electronic surveillance equipment at all booth locations, adequate service and security would be better accomplished.

1.6 Maintenance Management Controls

Many Management controls and processes in MUNI"s maintenance division are weak and need improvement.

For example, we observed persons asleep during the graveyard shift at the cable car barn, which at the same time was left unsecured and unattended by employees. Specifically, during an unannounced visit to the Cable Car Barn at 3:30 AM, we observed that the Mason and Washington Street garage doors were left open and unguarded. We entered the facility and walked through each area unapproached by MUNI employees. There were no employees in attendance at the control room on the first floor; and, there were no employees present on the second floor where 39 Cable Cars are stored. Although approximately one-half hour was spent inspecting individual Cable Cars, no MUNI maintenance personnel made their presence known.

While inspecting the Cable Cars, we observed that several private vehicles were parked in unauthorized parking areas and one of these vehicles contained an individual who was sleeping. [1] After completing a separate visit to the Operations Division on the second floor mezzanine and completing appropriate verification of our visit, we exited through the open barn door at Washington Street, unnoticed.

We believe that this represents a serious breach of security at a City facility and particularly at one that houses a local and national treasure such as the San Francisco Cable Cars. Five maintenance employees are assigned to work on the graveyard shift at the Cable Car Barn, so there should be sufficient staff to monitor the security of such valuable assets. If maintenance employees are called away for an emergency, the barn door should be locked and the facilities made secure.

In addition, quality control and monitoring of road calls associated with disabled revenue vehicles is weak. One road call which we observed was initially described as a "damaged tire" on a diesel bus disabled at 41st Street and Sloat Boulevard in the Sunset District. The auto service worker who provided the replacement bus could not find any impairment to the tire in the field. Despite the reported damaged tire, the mechanic returned the disabled bus to the Woods maintenance yard at speeds of up to 60 miles per hour on Interstate 280.

Further, employee evaluations are consistently not performed so supervisors lose control of effective and consistent management oversight of their assigned employees. Site supervision can also be weak. For instance, at all facilities, assigned employees are often difficult to locate. After several rounds through the Flynn Articulated Motor Coach Yard during the hours between 7:00 PM and 10:00 PM, we did not observe any mechanics working on coaches parked in the maintenance bays. At the Woods facility, maintenance employees had only a minimum amount of work underway at the time of our arrival at 3:30 AM, over one half hour into their shift. When our presence became known, these workers dispersed to areas of the yard where they could not be observed. We could not determine whether these individuals were working when we left the facility because none were observed working on coaches in the maintenance bays.

Lastly, the Maintenance Division has yet to develop a set of operating standards in order to create a measure of effective labor utilization. For example, two maintenance controllers were on duty at the Woods Yard during our visit, and we observed the work they perform. That work included coordinating road calls, entering vehicle repair data into the computerized Vehicle Maintenance System (VMS) and working with the swing and graveyard superintendents to assign repair and service activities to workers. We later analyzed the work product of the controllers assigned to this shift, including the monthly data reports on the hourly distribution of road call activities. Based on our observations and this review of workload, we believe that the controller function at the Woods Yard can be accomplished by one rather than two controllers between the hours of 11:00 PM and 6:00 AM.

Therefore, the Director of the Public Transportation should:

1.6.1 Implement management standards throughout the organization that (1) guarantee adherence to basic employee expectations for job conduct and performance, and, (2) establish a procedure that makes managers accountable for the implementation of these standards and quality assurance measures. The protection of city assets is a major standard that should be immediately addressed;

1.6.2 Reduce the number of graveyard maintenance controllers from two to one at the Woods Facility to reflect the actual level of work required during this shift;

1.6.3 Instruct Field Operations Central Control to advise maintenance dispatchers on the direction as well as the location of disabled vehicles in order to minimize the time needed for the scheduled run to be out of service;

1.6.4 Implement a one coach-one driver policy that would improve respect for equipment and worker accountability, and would foster relationships between operators and mechanics regarding the maintenance and care of individual vehicles;

1.6.5 Require annual performance appraisals by requiring accountability of each division for the timely performance of all employee evaluations. The MUNI Personnel Unit should also be accountable to provide a more concerted effort to assure that all evaluations are completed on time.

The Deputy Director of Maintenance should:

1.6.6 Direct supervisors and controllers to implement quality control procedures and practices that will reduce questionable road call incidents by an estimated ten percent;

1.6.7 Implement the installation of electronic hub odometers to the front wheel of the 500 diesel buses in the current fleet in order to clock the accurate time that revenue vehicles complete their schedule runs;

1.6.8 Develop and adopt time goals or operating standards for as many maintenance activities as practical. The development of guidelines should be undertaken jointly by management and labor personnel in accordance with existing labor Memoranda of Understanding. The time estimates should be used as guidelines, not as strict standards. Their purpose should be to track mechanic productivity and to identify exceptions or deviations from expected output. Major deviations should be investigated and acted upon accordingly, when not justified.

Implementation of improved management controls would enhance maintenance supervision and productivity. Because the City Cable Car fleet is a major City asset as well as a national treasure, their protection and safety should be one of MUNI"s highest priorities.

Quality assurance provisions for road calls that dispatch assistance to disabled vehicles during scheduled runs should be implemented to reduce the number of unnecessary requests for road assistance. We estimate that road calls could be reduced by 10 percent which would allow Auto Service Workers to be reassigned to other maintenance duties. The deletion of one maintenance controller from the graveyard shift would save an estimated $73,500 annually. In addition, MUNI should expand the scope of installing electronic hub odometers to its 500 diesel bus fleet at an estimated one-time cost of $108,000 which could be paid from the savings in labor costs of a maintenance controller over a two year period. These devises would keep track of the time vehicles return after completing a designated run, which further make operators accountable for their time.

Annual staff evaluations permit managers and employees to assess areas for improvement and to identify areas in which additional training is needed. The development of work standards would allow MUNI to objectively evaluate the productivity of its maintenance workers. In turn, the maintenance workers would know what is considered an acceptable and fair level of performance.

1.7 Maintenance Engineering

Engineering staff assigned to the maintenance division has been reduced from earlier levels due to budget reductions. This reduction in engineering staff has resulted in a number of technical shortcomings, including: (1) no in-house analysis of alternate products and services including the re-engineering of parts, (2) minimal expertise to develop alternative repair solutions that would correct repeated breakdowns to the revenue fleet, (3) the lack of maintenance standards that would provide managers with staff performance indicators and, (4) weak in-house engineering support for facility design and renovation.

For example, several costly design flaws occurred during the renovation projects for the Potrero Division Trolley Coach Division and the Flynn Center Diesel Division. In one instance, a three post lift was designed and constructed along interior track No. 20 to raise the new 60 foot electrical articulated coaches. The construction of this lift was too close to a bearing wall and to an electrical circuit conjunction box for the lift to be operational. Although the work is completed, the lift has never been used.

To overcome these types of shortcomings, the Public Transportation Department should dedicate three engineers to the Maintenance Division, one to each of the primary vehicle modes: LRV, Diesel, and Trolley divisions. These engineers would provide technical assistance and support for major vehicle overhauls, the review of specifications and evaluation of bids from outside vendors, analysis of alternate products and services, the development of solutions to design deficiencies, the preparation of work standards and practices, and coordination with existing Capital Projects engineers on the design and renovation of facilities.

Cost savings from implementing these recommendations would be at least $450,000 per year. After factoring-in the cost for additional staff of $226,700 per year, the net annual savings would be $223,300.

The Director of Public Transportation should:

1.7.1 Modify the Department"s budget request and assign three engineering positions, (one new senior mechanical engineer and two new electrical engineers) to the primary vehicle modes: LRV, Diesel and Electric Trolley Coach Divisions. These engineers would also consult with existing engineers assigned to the Capital Projects Division on facility design and renovation.

1.7.2 Assign the engineers to supervise the work of the Technical Services Units, in consultation with unit supervisors, senior controllers, materials managers and maintenance trainers, to solve immediate problems, develop alternative repair and maintenance solutions, and provide quality assurance to maintenance procedures and standards.

The additional three engineers would cost $226,700 annually. This cost would be offset by an estimated $450,000 through savings in design enhancements, improved parts from in-house fabrication, the preparation of more detailed specifications to vendors, and the preparation of work standards to improve work practices. This would result in a net annual savings of $223,300 during the first year of implementation.

2.1 Special Duty Operators

The Municipal Railway has assigned Transit Operators to non-driving duties for many years to provide various clerical, administrative, and support services in the Department. The employees who are placed on these non-driving assignments are termed "Special Duty Operators", or SDOs.

Presently, 53 operators are assigned on a full-time, regular basis to non-driving SDO duties. Further, based on a review of sample pay periods conducted as part of this study, the equivalent of an additional 35.2 FTE operators are assigned to SDO duties on a part-time or intermittent basis.

As a result, as many as 88.2 FTE operators are diverted from normal driving duties even though MUNI is regularly unable to dispatch scheduled service due to a lack of available operators. This practice is costly. For example, some permanent Special Duty Operators sign on to regular transit runs and are paid on the basis of that transit run, which can range for anywhere between straight pay for eight hours to straight pay for eight hours plus overtime for up to 2 hours, even though they do not drive a bus, but are performing clerical and administrative work.

The Deputy General Superintendent of Division Operations states that, with the exception of one operator who gets paid for time actually worked, Special Duty Operators working in the Headquarters generally work eight hours per day, but are paid for one additional hour of overtime in order to "compensate them for the reduction in pay they would otherwise suffer when compared to the run pay they would receive as a transit operator, which often includes overtime." In other words, some MUNI employees are being paid for time not worked, which is an improper practice and which should be terminated immediately. The cost of this practice is approximately $278.70 per day, or $66,888 in unearned overtime compensation per year for the ten special duty operators who are on this pay arrangement at Headquarters. Our examination of the Department"s pay and operational records reveals that some operators who are being paid on the basis of transit runs do not operate transit vehicles at all. Others operate transit vehicles only periodically, while some operate transit vehicles on a daily part-time basis. This practice is also in violation of the current MOU with TWU Local 250A, and is inconsistent with the budget policy established by the Mayor and the Board of Supervisors.

As an example of how this practice impacts service, on the morning of April 5, 1996, the Potrero Division reported a total of 10 transit line runs which were not dispatched because an operator was not available. However, the Potrero Division uses 13 transit operators as non-driving SDOs on a full time basis. Had these operators been available to operate a transit vehicle, the number of missed runs due to the unavailability of operators could have been reduced, if not entirely eliminated.

Department-wide, the salaries and benefits for platform operators assigned to special duty equates to approximately $4.9 million per year, much of which represents a loss of service or is backfilled with scheduled overtime. By eliminating this practice, except for operators who fulfill specific union roles or are on temporary light duty status, transit service reliability could be improved and operating costs could be reduced.

The Director of Public Transportation should:

2.1.1 Issue a directive to all MUNI managers to immediately discontinue the use of Special Duty Operators, except for light duty and the ten positions permitted by the MOU with TWU Local 250A.

2.1.2 Discontinue the practice of paying overtime to Special Duty Operators in MUNI Headquarters, for time not actually worked.

2.1.3 Discontinue the practice of permitting full-time, regular Special Duty Operators to sign-up for transit runs, or be compensated on the basis of transit run pay.

2.1.4 Discontinue the practice of permitting paid, excused absences.

There will be no cost to implement these recommendations.

A precise estimate of potential savings cannot be calculated due to limitations in the scope of this management audit. However, we believe that by eliminating the practice of making excessive SDO assignments, transit service reliability could be improved, and operating costs related to the $4.9 million in SDO salaries could be reduced by several hundred thousand dollars per year.

2.2 Special Duty Maintenance Workers

The Maintenance Division has had as many as 22 employees reassigned to special duties. These administrative transfers, along with 74 budgeted positions kept vacant to achieve a seven percent salary savings, have decreased MUNI"s capability to meet its repair and maintenance needs.

As of April 1996, 11 of the 22 employees have been transferred back to their originally assigned duties. An additional three employees should be restored to their previous duties, to bring the total number to 14 employees, costing $844,300 per year.

MUNI has requested $459,335 in its 1996-97 budget request to fill 11 vacant positions, which would reduce the Department"s current salary savings from 7.0 to 6.3 percent. Before reducing its salary savings and hiring additional employees, MUNI should evaluate the impact from (1) restoring the 14 employees to their previous duties, (2) hiring 21 employees in newly approved positions, and (3) filling up to 26 vacant positions not affected by current salary savings requirements which in total are estimated to cost $3.2 million annually in labor costs.

The Director of the Public Transportation Department should:

2.2.1 Restore three positions (1426-Senior Clerk Typist, 1844-Senior Management Assistant and 7379 Electrical Transit Mechanics) to the Maintenance Division as identified in Table 2.2.3 of this report.

The Board of Supervisors should:

2.2.2 Continue to reserve $459,335 in salary savings reductions until MUNI management provides a report on the impact of restoring 14 employees to line duties, hiring up to 26 vacant positions not subject to the seven percent salary savings, and hiring 21 new positions in the Maintenance Division; and a report on how the additional positions will fulfill vitally needed maintenance work.

The Department of Human Resources should:

2.2.3 Review the status of eight positions [(6) 7379 Electrical Transit mechanics, (1) 7380 Electrical Transit Mechanic, and (1) 7409 Electrical Transit Service Worker] to determine the appropriate classifications associated with performing work out of the current classification.

Evaluation of the 14 restored positions to the Maintenance Division may be sufficient to fulfill additional needed maintenance work for MUNI"s purposes and thus avoid adding positions estimated to cost $459,335 per year.

2.3 Fuel Waste, Engine Wear, and Air Pollution

Although diesel bus manufacturers and MUNI policy recommend starting diesel buses only 15 minutes before early morning pull-out, maintenance service workers routinely start diesel buses at 2:30 AM at the Kirkland and Woods yards.

Thus, 262 diesel bus motors idle for at least two and one-half hours and as much as four and one-half hours until they are placed into service between 5:00 AM and 7:00 AM. This practice wastes fuel, pollutes the air, and adds unnecessary wear to the diesel engines.

By correcting this practice, MUNI would save an estimated $670,000 annually in lost fuel and diesel engine repair costs. In addition, MUNI would reduce air pollution generated by the diesel buses, which for one weekday is the equivalent of idling nearly 56,000 passenger vehicles for one hour.

The Director of Public Transportation should:

2.3.1 Direct Maintenance Division staff to comply with MUNI"s own policy, as well as with the recommendations of diesel engine manufacturers, regarding the start-up of diesel buses, which require that the engines be started only 15 minutes before early morning pull-out.

The Mayor and the Board of Supervisors should:

2.3.2 Add two additional auto service workers to assist with the starting of the diesel buses, one each at Woods and at Kirkland Bus Yards.

Unnecessary fuel usage and engine wear and tear will be substantially reduced for an estimated savings of $670,000 annually. Air pollution emission of nitrogen oxide equal to the idling of nearly 56,000 passenger vehicles will be eliminated, thus improving the general air quality for the San Francisco Bay Area.

2.4 Purchasing Parts and Equipment

MUNI currently has 24,350 vehicle parts valued at approximately $23.5 million which are stored at nine different maintenance locations in the City. In 1995, automated inventories at the nine storeroom sites had an unrecorded variance of $1.43 million, which was 6.6 percent of the total inventory value of $21.6 million (during the last six months, inventory values have increased $1.9 million from $21.6 to $23.5 million). This $1.43 million inventory variance includes a positive adjustment of $605,406 and a negative adjustment of $828,229. Thus, $828,229 in inventoried parts are either missing or not properly accounted for, and $605,406 in parts are actually in stock but not recorded in the automated inventory records.

MUNI needs to implement stricter security measures that will protect their assets and/or mistakes in recording inventoried parts. Although MUNI has requested seven additional parts storekeepers, three would be sufficient to facilitate expanded maintenance swing and weekend shifts.

Further, Materials Management staff should review current practices to identify more competitive prices or opportunities to fabricate parts in-house. For example, a review of the existing wheelchair lift overhaul operations found that repairs could be done at less cost either by purchasing less expensive parts or by fabricating parts in-house. Potential savings with the overhaul and repair of 280 wheelchair lifts could be substantial but are unknown until Materials Management completes a full review of the alternative purchasing options.

In addition, 20 new diesel engines were purchased over two years ago, but never installed. Because the total cost may exceed $2.3 million, the Public Transportation Department should consider selling the engines and implementing an alternate program of engine repair that would save an estimated $1.1 million.

The Public Transportation Department should:

2.4.1 Expand data collection on parts to include information on all purchases and parts that are fabricated by MUNI personnel;

2.4.2 Research other computer based materials inventory systems that will require less labor intensive data entry requirements than the current Materials Management System and provide easier access and integration of all parts information with data maintained for the repair and maintenance of transit vehicles;

2.4.3 Introduce bar coding of parts into an improved materials inventory system in order to facilitate the tracking of information on the repair of individual transit vehicles;

2.4.4 Implement tighter security measures for parts storeroom access in order to control unauthorized entries by non-storeroom personnel;

2.4.5 Increase the number of hours that parts storerooms are open for the issuing of parts to maintenance personnel. We have recommended an additional three parts storekeeping positions so that storerooms are open between 6 AM and 7 PM on weekdays, and between 8 AM and 5 PM on weekends. These expanded hours should facilitate the additional needs associated with the expanded maintenance hours.

2.4.6 Modify procedures so that entries to the storeroom during times when parts storekeepers are not on duty should be limited to and be the responsibility of the night and weekend supervisors.

2.4.7 Provide for continuous review of existing vendor contracts to assure that MUNI is obtaining the best prices and to determine if other opportunities, such as in-house fabrication of parts, might be a more economical alternative.

The Mayor should:

2.4.8 Direct the Purchaser to relocate five MUNI dedicated purchasing staff to MUNI"s Materials Management centralized operation at Pier 80. This would comply with the recently passed Proposition M, which mandated the separation of MUNI functions from the Public Utilities Commission.

Increased parts storeroom security and adherence to storeroom procedures will decrease the risk of the loss of assets and mistakes in the proper recording of parts issued and received.

The adding of parts storekeepers will provide sufficient staff to fill swing shift and weekend shift parts issuing functions at the yards. Our recommendation of three additional parts storekeepers would reduce MUNI cost to hire seven additional parts storekeepers by $178,370.

The review of current vendor contracts would provide for opportunities that would result in savings. Two examples noted in this section identified potential savings with the overhaul and repair of wheelchair lifts, and $1.1 million with an alternate proposal to repower 20 diesel buses.

2.5 Farebox Revenue Collection & Control

Fifty-two percent of the incidents written up in the Revenue Division"s "Unusual Occurrence" reports relate to situations where staff did not follow procedures or procedures were obsolete. By making procedural, operational, and physical work environment improvements, MUNI could increase productivity and accountability of staff in this division.

For example, MUNI is foregoing approximately $36,860 annually in unearned interest as a result of being, on average, three days behind in processing and depositing fare revenue. This is in violation of City Charter Section 6.311 that mandates all moneys and checks received by any officer or employee of the City and County shall be paid or delivered into the treasury not later than the next business day after its receipt. Furthermore, the late deposit of revenue, which is in the form of currency, jeopardizes the safety of City employees and the security of the revenue.

General procedures manuals for the Municipal Railway"s Revenue Division, including the Collection, Reconciliation, and Processing Units, have not been updated in the last 10 years. Accordingly, current procedures are incomplete and some are obsolete. In some cases, when procedures do exist and are either formally or informally communicated to staff, enforcement by management and supervisors should be strengthened.

MUNI also has not established adequate procedures for staff to safely retrieve and transport revenue from Cable Car pass collection sites to headquarters. Specifically, during the PM pickup of revenue at the Powell/Market location, Division staff and a contract security guard are required to carry revenue from the ticket booth to the transport vehicle, which is often parked one to two blocks away from the booth. MUNI does not have a permanent parking spot designated in that location, often forcing staff to park blocks away. (MUNI has even been cited and towed by the City for parking the revenue van on Market Street when retrieving revenue). This situation puts personnel and revenue at risk.

With a full staff of nine fare collection receivers, MUNI"s Processing Unit should be able to process its assigned revenue. However, this unit has a high absenteeism rate. During January of 1996, this unit only had full staff 42 percent of the time. During a three month period from January 1996 through March 1996, approximately half of the staff in this unit worked less than 90 percent of their scheduled work hours.

The 15-year-old equipment for collecting revenue from subway faregates is also technically inefficient, outdated, and costly to repair. Electronic fareboxes manufactured by Cubic Precision, a system that cost MUNI approximately $5.2 million to purchase and install in 1991, do not receive the required preventive maintenance, causing MUNI to forego revenue as well as incur excessive depreciation costs. Because of this faulty equipment, revenue and staff are placed at risk during the collection process. For example:

• At the Embarcadero Station, staff were observed lining the bottom of the flasher unit (mobile repository that holds revenue containers) with a cloth bag in order for the extractable vault to fit properly into the flasher unit.

• At the Montgomery Station, a piece of cardboard was wedged between a faregate and the metal bar-lock, ensuring that the fare gate door remains completely closed and that the revenue canister is flush against the fare gate so that the internal microprocessor will read the revenue.

• At the Civic Center Station, staff were observed using a crowbar to pry a vault out of a flasher unit. Old vaults are welded together to collect and temporarily store revenue.

• There are not enough usable vaults to collect all the revenue from each fare gate. Staff were observed using a cloth revenue bag to collect the revenue out of fare gates that have the least amount of revenue (Forest Hill Station). Staff handle revenue directly in this situation. Thus, there is minimal control over the receipt and security of cash in the stations when this occurs.

A survey of the subway revenue collection equipment revealed that there are sufficient numbers of vaults to temporarily transport collected revenue. However, this equipment undergoes constant maintenance and frequent modification by the Electronics Shop in order for MUNI to utilize and properly secure revenue.

The Director of Public Transportation should direct the Director of Enterprise Accounting to:

2.5.1 Update and distribute procedure manuals to indicate current operating procedures by October 1996, which would result in increased efficiency, effectiveness, and security over farebox revenues;

2.5.2 Develop alternative collection and processing schedules so that revenue can be deposited within one day, as required by the City"s Administrative Code;

2.5.3 Develop and implement a performance standard by which to evaluate the productivity of fare collection receivers by October 1996;

2.5.4 Develop program incentives which will increase productivity and morale, and which comply with Civil Service rules, for staff to meet performance standards;

2.5.5 Complete structural improvements to the Revenue Processing Unit area by December 1996, which will ensure the safety of staff;

2.5.6 Coordinate with the Maintenance Division to establish an appropriate preventative maintenance schedule for electronic fareboxes;

2.5.7 Work with the Department of Parking & Traffic to establish a designated parking area for MUNI"s revenue collection unit near the Market/Powell cable car turnaround by October 1996;

2.5.8 Develop a staffing plan which will ensure the timely and secure processing of farebox revenue;

2.5.9 Investigate contracting out for revenue processing services with a private vendor and BART, and report back to the Public Transportation Commission on feasibility and comparison to in-house staffing costs by January 1997;

2.5.10 If the program is to be retained in-house, evaluate the space needs of the processing unit, and investigate the feasibility of developing individual work stations; and,

2.5.11 Coordinate the current examination of the TransLink Project and the issues of concern to MUNI in relation to this project, with the potential procurement of subway fare collection equipment.

The costs for implementing potential staffing, contracting, and structural improvement alternatives cannot be estimated at this time. Other recommendations could be implemented by the Department at no cost.

Implementation of these recommendations would result in increased efficiency and productivity within MUNI"s Revenue Collection Unit. In addition, the security of the staff and revenue would no longer be in jeopardy when procedures are established or updated. MUNI will earn an estimated $36,860 from annual interest income when it begins to comply with the City"s Charter provisions and deposits the revenue by the day after it is collected.

3.1: Facility Planning

MUNI vehicle maintenance and storage facilities are at or above capacity. Construction of new facilities or expansion of existing facilities has been deferred by MUNI until after 2005 because anticipated federal, State and local funds have been allocated to replacing the entire fleet of light rail, trolley and diesel vehicles, as well as to major capital expansions, such as the F-Line. However, MUNI and its funding agencies must recognize that MUNI"s ability to protect its investments in new vehicles will be jeopardized by reliance on inadequate maintenance and storage facilities. Implementation of certain facilities relocations would also enable MUNI to pursue potential revenue-generating development of MUNI property, as discussed in Section 3.2 of this report.

Major decisions on objectives, priorities and sites must be made before MUNI can effectively pursue funding for facilities projects. Among the key questions that must be resolved are the following:

• Will relocation of the Kirkland Division diesel bus facility to the Islais Creek site meet MUNI"s needs for an improved maintenance and operations facility?

• Should MUNI pursue development of a central maintenance facility, or commit to decentralized basic maintenance, and develop a component repair facility?

• What other MUNI facilities should and could be located at Islais Creek? What is the optimum mix of uses for this site?

• Should the Presidio Division trolley facility be expanded at 949 Presidio, or relocated to facilitate revenue-generating development at this site. Are there potential sites for such a relocation?

• Where should the planned Metro East light rail vehicle facility be located? Depending upon the site selected, how soon will MUNI have to act to obtain the site?

• What specific functions and personnel should be located at a new administrative headquarters? What are their space needs?

• Where should a new administrative headquarters be located -- in the Civic Center near other government functions, or in the southeastern area of the City, near other MUNI facilities?

These are basic decisions, many of them interrelated, which must be made by senior management before MUNI can make any progress on major facilities improvements. The current lack of funding should not be used as an excuse to forestall making difficult decisions.

The Deputy Directors for Maintenance and Capital Projects should develop a two-year program, with suitable milestones, for creating a Facilities Master Plan. This program should include a decision-making structure that promotes input from all affected sections of the organization and establishes the accountability of senior management, as a group, for key components of the Plan. If necessary, MUNI should approach funding agencies, such as the San Francisco Transportation Authority, for additional funds to support dedicated staff to coordinate the process. MUNI should move aggressively towards applying for funds to complete key facilities projects as soon as possible, to ensure that riders receive the maximum benefits from the new vehicles being purchased.

In summary, MUNI cannot afford to defer major facilities improvements indefinitely, without jeopardizing its multi-million dollar investments in new LRV, trolley and diesel fleets, and effecting service on the street. Development of a comprehensive Facility Master Plan over the next two years is a crucial first step towards obtaining the necessary funding for such projects at the earliest possible date.

The Director of Public Transportation should:

3.1.1 Develop a two-year program, with suitable milestones, for creating a Facilities Master Plan. This program should include: (1) an analysis of the relationship between facilities constraints and service delivery, to further prioritize facilities projects and improve funding agency understanding of their importance to protecting the investment in new vehicles; (2) a conceptual analysis of the desired structure for delivery of maintenance services, by mode; (3) an assessment of identified site alternatives for meeting the highest priority long range maintenance and operations goals related to facilities; and (4) alternative financing plans and delivery schedules. Milestones should be defined to highlight decision points for the Deputy Directors and the Director.

3.1.2 Dedicate adequate staff to coordinate the Facilities Master Plan project, if necessary, soliciting additional funds from the San Francisco Transportation Authority.

3.1.3 Move aggressively towards applying for federal, State, and local transportation funds, as such funds become available (i.e., starting immediately in 2005, or earlier if anticipated funding opportunities are found) for the completion of top priority facilities projects identified in the Master Plan, to ensure that (1) the new fleets will be properly stored, maintained and operated; and (2) opportunities for optimal site selection will not be missed due to extensive delay.

Implementation of the above recommendations will put MUNI in a strong position to access grant funding for major facilities projects at the earliest possible date. Key facilities improvements are needed to protect the property"s investment in new light rail, trolley and diesel bus fleets.

3.2: Disposition of Surplus Assets

MUNI currently has no property which has been declared as surplus property, or property which is excess to the needs of MUNI. However, certain MUNI facilities do not serve MUNI well in their current locations. If the functions can be relocated to more appropriate sites, then the existing sites would become available for sale or development by MUNI. However, there are no funds programmed for such relocations in MUNI"s 1995-2005 Short Range Transit Plan.

The primary sites that present possible future revenue opportunities are: (1) the site of the Kirkland Division motor coach facility, in the Fisherman"s Wharf area; (2) the 949 Presidio Avenue site, currently used as a trolley division and as MUNI"s administrative headquarters; and (3) a parcel at the corner of Mission Street and Steuart Street, currently used as a layover lot for trolley and diesel bus lines. A preliminary assessment of the development potential of these sites has recently been conducted by a consultant. In addition, there may be opportunities for lease of ground or air rights surrounding MUNI substations.

It is crucial that MUNI complete the Facilities Master Plan that is discussed in Section 3.1, to determine how each site fits into its long term operational framework. The need to provide fully functional maintenance, operations and administrative facilities for MUNI activities should take priority over real estate disposition strategies, although facilities plans and revenue-raising efforts may be compatible in some instances. Once MUNI"s facility plans have been clearly defined, it will be necessary to obtain more detailed cost and market analyses of identified development options.

The Director of Public Transportation should:

3.2.1 Require that consideration of proposals for revenue-generating sale or development of MUNI property be incorporated into development of MUNI"s Master Facility Plan. Give planners clear guidance that provision of fully functional maintenance, operations and administrative facilities for MUNI should be the first goal of the Master Facility Plan, so that any surplus property disposition plans must be fully compatible with MUNI"s operational priorities.

3.2.2 Consult with City officials to clarify to what extent revenue that might be generated from sale or development of MUNI property would be dedicated to MUNI. MUNI should only expend resources from scarce operating and capital funds for property development if such expenditure will help MUNI to meet ongoing budgetary needs.

3.2.3 Following preparation of a Master Facilities Plan, pursue planning for anticipated surplus property by (1) obtaining more detailed market analyses, (2) quantifying any toxics cleanup costs, and (3) comparing the present value of the projected income stream from development with projected revenue from sale of the property.

3.2.4 Ensure that sufficient staff resources are dedicated now to (1) determine whether relocation of the Mission Street and Steuart Street layover facility makes sense for MUNI operations, and (2) participate effectively in negotiations with the various public and private entities in the Embarcadero/Transbay Terminal area regarding the status of the layover function and any development of MUNI property.

3.2.5 Obtain an opinion from the Department of Public Health regarding whether any possible health risks exist that would preclude commercial lease of ground or air rights at MUNI substations. If such leases do not pose a health risk, obtain the assistance of the Department of Real Estate in identifying and marketing substations with the strongest lease potential.

Future sale or development of MUNI property that becomes surplus as a result of facility relocation could yield significant revenues to MUNI. Net revenue projections will have to be developed by MUNI using detailed market analyses and quantifying facility relocation costs and any site clean-up costs.

4.1 Capital Projects Management

Over the next ten years, MUNI will spend approximately $732.5 million on vehicle acquisitions. This will involve the purchase of LRVs, and trolley and diesel coaches.

Perhaps even more important than the amount of these planned expenditures is the long term effect fleet acquisitions will have on the quality of MUNI service to the public. It is crucial, therefore, that MUNI manage these projects in a manner that results in the timely delivery of high quality vehicles that meet operational and maintenance needs from both a functional and financial standpoint.

However, MUNI decision makers do not have a practical evaluation format to use when evaluating acquisition options, to ensure that full costs and benefits are considered. Furthermore, the roles and responsibilities of the project design phase are not clearly defined, contributing to the need for project changes at later, more costly phases of the project. Further, MUNI capital project cost and schedule control systems provide inadequate information to project managers, supervisors and funding sources.

Accordingly, the organization of the functional analysis and design phases of capital projects needs to be clarified and structured. With the help of capital grants staff, project managers should maintain and update records of expenditures by funding source, and should be required to include true baseline information in project cost reports and annual plans so that evaluation of projects is possible. Annual program plans should be prepared for each capital project which establish project milestones and line item budgets for the coming year; and compare planned, revised and actual milestones for the year just completed.

The Director of Public Transportation should direct MUNI"s senior managers to:

4.1.1 Develop and rank detailed objectives for each fleet acquisition at the outset of work on the project, to provide a consistent format in weighing the costs and benefits of alternative design elements.

4.1.2 Develop an evaluation format for reviewing options related to procurements and other capital projects, that directly takes into account (1) increases or decreases to ongoing operational costs; (2) any facility or infrastructure changes that would be necessitated from selecting a particular option; and, (3) the detailed overall project objective developed pursuant to Recommendation 4.1.1.

4.1.3 Establish a formal process for decision-making on fleet acquisitions, providing clear guidelines regarding (1) what types of decisions should be referred to the Deputy Directors as a group; (2) the responsibilities of team members in obtaining input and consensus from line managers and senior management in Operations and Maintenance; and (3) the respective responsibilities of the consultant and the MUNI project manager in presenting decision packages to the project team and to the Deputy Directors, in a consistent format. Recommendations from project teams and decisions by the Deputy Directors should be documented.

4.1.4 Consider adopting a policy of assigning staff from the Project Management section of the Capital Projects Division to manage fleet acquisition projects, thereby allowing fleet engineers to focus on comprehensive analysis of specifications and designs.

4.1.5 Include the original, unrevised baseline budget (using the construction budget as of the bid award as the baseline for the construction portion of the budget, while establishing non-contract baselines as of project initiation) as a column in project cost reports and in annual project plans.

4.1.6 Require capital grants staff and project managers to work together to prepare annual project plans that establish fixed project milestones for both budget and schedule for the fiscal year, and that include a matrix allocating the line item budget to funding sources. Revise monthly cost reports to include comparisons of annual baselines to actual project progress. Annual project plans should include a historical overview, with cost figures and narrative explanations, of changes to the baseline and milestones.

4.1.7 Utilize the information from the revised project cost reports and annual plans to (1) evaluate capital projects staff; (2) improve budget estimation techniques; and (3) identify sensitive cost/time elements so these can be addressed by management.

The above recommendations can be implemented without additional cost. While cost savings from these procedural and organizational reforms cannot be projected, MUNI plans to spend approximately $732.5 million in federal, State and local Proposition B Transportation Sales Tax funds on fleet acquisitions over the next ten years. The vehicles that are purchased will effect MUNI operations and maintenance costs for nearly two decades. Improvements to the management of capital projects will thus have significant, system-wide financial and operational benefits.

4.2 Warranty Administration

The Public Transportation Department does not currently have a formal and dedicated warranty program that covers new vehicle procurement, parts, and contract repair work. A dedicated warranty program should be established with staff who are responsible for identifying warranty problems with vehicles and equipment, and submitting, monitoring and collecting on warranty claims.

Although no warranty program currently exists, MUNI collected an average $800,000 annually between 1984 and 1989 in warranty claims. That amount declined to $27,000 annually between 1989 and 1992, and thereafter MUNI has not reported any reimbursements.

The addition of a MUNI fleet and parts warranty program, with dedicated staff, would generate warranty reimbursements and credits from manufacturers and parts vendors which would exceed program cost. For example, MUNI currently contracts with outside vendors to rebuild diesel engines. These rebuilds have a one year, or 100,000 mile warranty on major parts used to complete the rebuilt engines. Two of the major components are the 6V92 Diesel Engine (mechanical or D-deck) which costs between $11,000 and $14,000, and the 747 Atec Allison Automatic Transmission which costs between $5,000 and $14,000. Since approximately 130 of these engines are programmed for replacement each year during the next few years, there is an estimated annual value of between $2.1 million and $3.6 million annually in warranties during this period. Because MUNI does not have a dedicated program to track what happens to these rebuilt engines after the diesel buses are returned to service, there is currently no opportunity to pursue warranty claims for reimbursement on these components within the warranty period.

We estimate that two additional staff costing an estimated $67,600 per year would result in at least $500,000 in annual savings, based on credits and reimbursements received in prior years and the planned purchase of $732 million in new revenue vehicles over the next ten years.

The Mayor and the Board of Supervisors should:

4.2.1 Approve staff and funding for a Warranty Administrator position and clerical support, as described in our finding.

The Director of Public Transportation should:

4.2.2 Assign the authorized staff to a dedicated program to administer warranties for new revenue vehicles, major vehicle repairs, and parts;

4.2.3 Establish procedures which require the Warranty Administration to develop and recommend warranty terms and conditions to be included in all contact proposals for vehicle and parts purchases and rehabilitation;

4.2.4 Amend on-going parts supply contracts to include more specific warranty language, as developed by the Warranty Administrator;

4.2.5 Formalize a process for capturing all in-service information on new revenue vehicle purchases as is required for warranty purposes;

4.2.6 Initiate negotiations with major parts suppliers to base warranty time periods on vehicle installation dates rather than the date a part is received;

4.2.7 Review detailed coach repair and parts issue records on a periodic basis to provide more accurate and timely identification and processing of warranty claims;

4.2.8 Enforce a policy requiring that all parts with warranties be dispensed on an exchange basis only. In order to identify these parts, a parts exchange list and parts issue log should be developed and utilized; and,

4.2.9 Develop a cross referencing system to identify and to match maintenance work orders and component failures by individual vehicle number. Use this system for claim follow-up and analysis.

Implementation of these recommendations would result in costs of $67,600 for warranty program staff.

We conservatively estimate that such a program would generate at least $500,000 in annual savings, based on actual credits and reimbursements received in prior years, and on estimated purchases of $732 million in new revenue vehicles and $10 million annually in major replacement modules and parts over the next ten years.

Accordingly, MUNI should realize a net benefit of at least $432,400 annually after implementation of these recommendations.

5.1 Work Rule Impacts on Service and Costs

As part of this study, we reviewed Department surveys and independently contacted the following transit properties regarding their work rule provisions: (1) Santa Clara County Transit District-SCCTD, (2) Portland Tri-Met, (3) Pittsburgh-PAT, (4) Atlanta-MARTA, (5) Baltimore-MTA, (6) Seattle-Metro, (7) Washington DC-WAMTA, (8) Boston-MBTA, (9) Philadelphia-SEPTA, and (10) Los Angeles-LACMTA. The current Memorandum of Understanding for Platform Operators contains various work rules which are inconsistent with the practices of these other major transit operators nationally and within the Bay Area, and impact the ability of management to efficiently operate the Municipal Railway. These work rule issues are listed below:

1. Limitation on Use of Part Time Operators

The MOU allows MUNI to utilize a maximum ratio of 12 percent part-time operators to full-time operators. Six of the ten properties surveyed allowed a higher percentage of part-time operators than are allowed in MUNI"s current MOU.

2. Requirement to Schedule Saturday and Sunday as Days Off

The MOU requires that a minimum of 700 operators (amended to 650 operators by a side letter) be scheduled to have both Saturday and Sunday as days off. None of the ten transit properties surveyed are required to schedule any number or percentage of their operators off on both Saturday and Sunday.

3. Split-Time Overtime Penalty

Operators are paid overtime (split-time) for all hours scheduled to be at work in excess of 10 hours, even if total actual work time is 8 hours or less. This provision is also included in Section A8.450 of the City Charter. Of the ten transit properties surveyed, only Boston and Washington DC require payment of overtime after 10 hours. The remaining eight transit properties are not required to pay split-time pay until 10 hours and 30 minutes, or longer.

4. Maximum Scheduled Time Per Day

The MOU prohibits the Municipal Railway from scheduling part-time or full-time operators to be at work in excess of 12 hours unless the operator agrees. This limitation requires the Municipal Railway to add runs on certain lines to meet the scheduled service at greater cost than paying additional overtime. All of the ten transit properties surveyed are allowed to schedule spread times of more than twelve hours for all or part of their operators.

5. Number of Months Driving To Reach Maximum Salary

Newly hired Platform Operators presently receive maximum platform operator pay after 18 months from the date of hire. All of the ten transit properties surveyed require 30 months or more before operators are paid the maximum rate of pay.

6. Limitation on Driving Time

Operators assigned to more than six hours of continuous work are paid 20 minutes straight-time pay in lieu of a lunch period. Only three of the ten transit properties surveyed have similar requirements for additional pay in lieu of a lunch period.

The Director of Public Transportation should:

5.1.1 Develop a negotiating package which clearly separates efficiency from compensation issues, and approach the union with a proposal for modifying the current bargaining agreement to allow for more efficient use of platform salary appropriations.

5.1.2 Identify potential program enhancements that mutually benefit employees and the public, such as increased training and safety on transit vehicles.

The combined savings from recommendations contained in this finding would result in savings of at least $3.2 million per year which would be saved by reducing the number of non-productive operator hours which must be scheduled to provide current services, and result in more efficient use of platform operator resources. These savings could be reprogrammed for other MUNI services, or used to obtain program enhancements that mutually benefit employees and the public, such as increased training for vehicle operators.

6.1 MUNI Security

The San Francisco Police Department"s MUNI Transit Company police officers are effectively deployed given current SFPD personnel assignments and 1995 criminal activity reports.

In addition, decisions by the Mayor to require District Station police officers to inspect MUNI vehicles at least one ride per shift is a good mechanism for increasing 24-hour police officer presence on the system. Other initiatives to coordinate school related juvenile ridership with the SFUSD, and place civilian monitors on MUNI vehicles (including teachers and parents) are also positive crime prevention actions.

Despite these efforts and a recent reported drop in criminal activity on MUNI vehicles, public perception that the Municipal Railway is unsafe continues. Although most of the trouble reported on MUNI vehicles is not considered by the SFPD to be major crimes, all such trouble has a significant impact on perceptions of safety held by the riding public. One high profile crime can become the cause of significant concern among riders, as can multiple "uncomfortable situations" experienced by some passengers who may share transit vehicles with large groups of loud and offensive riders.

Based on our review, several general conclusions can be drawn regarding criminal activity on MUNI vehicles, and at stations and stops.

• Although criminal activity on MUNI occurs during all hours, the highest weekday concentration of trouble occurs during two primary periods: (1) approximately 2:00 PM to 4:00 PM; and, (2) approximately 6:00 PM to 9:00 PM each afternoon and evening.

• Criminal activity occurs on some transit lines more frequently than on others. The lines with the most criminal activity include the 15, 14, and 38, which also have some of the highest ridership in the City. Trouble is reported, on average, more than once per day on these lines.

• Over 54 percent of the trouble reported on MUNI is for less serious crimes, infractions, and disturbances. Approximately 15 percent of the trouble reports involve operators, either as the victims of assault or threatened assault, or in altercations with passengers.

• Criminal activity occurs at MUNI stops and stations primarily within the Mission and Ingleside Police Districts. These two districts experienced over 50 percent of the trouble reported at major transfer point intersections during the past year.

• Juveniles are identified as the perpetrators or victims of crime in approximately 25 percent of all trouble incidents reported by the MUNI Transit Company. However, this profile is probably understated since reporting depends on the perceptions of the individual making the report and the accuracy of the record. SFPD estimates that juveniles are involved in more like 60 percent to 75 percent of all criminal incidents in the City.

The City could increase public safety on MUNI vehicles, in stations and at stops by: (1) modifying Deployment practices related to district station, Juvenile Division, and MUNI Transit Company operations; (2) increasing efforts to enhance rider awareness of safety and crime reporting; and, (3) adopting the best practices of other jurisdictions related to crime prevention and suppression in transit systems.

The Chief of Police should:

6.1.1 Incorporate modified deployment policies to provide expanded juvenile and MUNI law enforcement capacity at the district stations, as described in this report.

6.1.2 With the Director of Public Transportation, evaluate the best practices of other transit properties for implementation in San Francisco. Adopt programs used at these other properties, as appropriate.

The Director of Public Transportation should:

6.1.3 Initiate a campaign to obtain private sector contributions for an expanded public Crime and Safety Awareness Campaign;

6.1.4 Direct the Acting Director of Community Relations to develop a proposal for a public Crime and Safety Awareness Campaign which incorporates contributed services from the private sector, and is at least partially funded from private donations.

6.1.5 With the Chief of Police, evaluate the best practices of other transit properties for implementation in San Francisco. Adopt programs used at these other properties, as appropriate.

There should be no additional costs to redeploy police officers within the SFPD. Costs for implementing an expanded public awareness campaign and adopting best practices in other transit properties can not be determined until MUNI and the SFPD complete efforts to obtain private sector contributions, and evaluate the appropriateness of programs used by other transit properties for implementation in San Francisco.

Implementation of these recommendations will improve SFPD effectiveness at addressing juvenile crime on MUNI buses, and will increase public awareness and participation in crime prevention and reporting on MUNI vehicles and at stations and stops.

7.1 Contracting for MUNI Service

MUNI currently contracts for many transportation and transportation-related services. However, the only contract to provide direct passenger services is for paratransit services, which costs MUNI approximately $10.7 million per year.

Many transit agencies throughout the United States presently contract with private companies to provide other passenger services. Our review of available literature, and of the experience of these other transit agencies, indicates that competitive contracting generally results in cost savings due to lower transit employee salaries and higher productivity work rules.

However, the quality of service and the level of vehicle maintenance can be at risk under a contracting system. Also, some representatives of properties that use contract services have publicly reported that after the first several years of contracting, costs can begin to reach those that would have been incurred with an in-house program.

Before considering potential contracting opportunities, the Mayor, the Board of Supervisors, the Public Transportation Commission, and MUNI management need to clearly define: (1) the criteria to be used for selecting routes and services to be contracted; (2) the controls that are needed to ensure continued service and maintenance quality; and, (3) a process that would ensure fair competition between MUNI employees and the private sector when evaluating proposals. Until these major policy issues are defined, the City should not pursue contracting opportunities for specific routes.

The Public Transportation Commission should:

7.1.1 Direct the Director of Public Transportation to identify service elements, and develop and present criteria that will encourage practical, cost effective contracting solutions for transit services.

7.1.2 Require that MUNI management submit a report to the Commission, no later than three months after the acceptance of these management audit recommendations, that clearly presents potential service elements, selection criteria and quality controls appropriate for a contracting program.

7.1.3 Direct the Director of Public Transportation to update and utilize the transit service costing model previously implemented by the Department to aid in identifying routes and services to be contracted.

7.1.4 Direct the Director of Public Transportation to establish a process to ensure fair competition between public sector employees and the private sector when evaluating proposals.

There are no costs associated with these recommendations.

By implementing these recommendations, MUNI will be better positioned to determine whether or not the implementation of a contract service program would result in cost savings, and whether service quality and safety would be maintained.

7.2 Coordinating Inter-Jurisdictional Service

The Golden Gate Bridge, Highway and Transportation District, AC Transit, and SAMTRANS provide passenger service within the City and County of San Francisco which, in part, duplicates service provided by the Municipal Railway.

While the current level of service of these transit properties is needed during the AM and the PM peak hours, excess capacity is available during the middle of the day and evening hours. Municipal Railway lines, some of which partially duplicate this service, also have excess capacity during the middle of the day and evening hours.

The Municipal Railway should work with the adjacent transit properties to provide coordinated service at reduced cost during non-peak hours. Agreements with these adjacent transit properties would allow MUNI to adjust schedules to provide the same or an increased level of services to commuters within the City limits. The savings to the other transit properties would be shared with MUNI either through revenue transfers, or by the other property assuming direct responsibility for providing equivalent or improved service on existing MUNI lines.

The Director of Public Transportation should direct MUNI staff to:

7.2.1 Review all transit services provided by adjacent operators to identify duplication of service and mutually beneficial changes in schedules that would provide the same or an increased level of services at reduced cost.

7.2.2 Work with these adjacent transit properties and the Metropolitan Transportation Commission to coordinate service which would result in cost savings that could be shared by each property.

There would be no increased cost to implement these recommendations.

Implementing these recommendations would provide improved service at reduced cost for the citizens of San Francisco and adjacent communities.

The detailed discussion of each of these findings and recommendations is contained in the body of our report, which is attached. We are available to present the report to the Public Transportation Commission, and will attend each of the public hearings which will be scheduled during the next three months to respond to questions and comments regarding the report content. We are also available to present the report to the Board of Supervisors and to the Mayor, as requested.

We are available at all times to respond to any questions related to the findings and recommendations contained in our report.

Respectfully submitted,  

Harvey M. Rose
Budget Analyst

cc.
Kathleen Knox, Vice President, Public Transportation Commission
Andrew Sun, Member, Public Transportation Commission
Dennis Herrera, Member, Public Transportation Commission
H. Welton Flynn, Member, Public Transportation Commission
Emilio R. Cruz, Director of Public Transportation
Mayor Brown
President Shelley
Supervisor Alioto
Supervisor Ammiano
Supervisor Bierman
Supervisor Brown
Supervisor Hsieh
Supervisor Katz
Supervisor Kaufman
Supervisor Leal
Supervisor Teng
Supervisor Yaki
Clerk of the Board
Controller
Margaret Kisliuk
Ted Lakey

Footnotes

1. During interviews with Maintenance Division personnel, we were advised that graveyard shift maintenance staff at