Panel calls for T to rein in its costs

Group convened by Baker doesn’t urge Legislature to invest in agency

A report to be issued this week by an expert panel will not call on the Legislature to invest more money in the struggling MBTA.Dina Rudick/Globe Staff/File

An expert panel convened by Governor Charlie Baker to diagnose problems at the MBTA faults the agency for “limited cost control, low labor productivity, and high maintenance costs,” according to a draft of the group’s report, set to be released this week.

The report will outline strategies to contain costs. But it will not call on the Legislature to invest more money in the struggling agency, an administration official familiar with its contents said.

The focus on reform over revenue probably will draw criticism from public transit advocates, who argue that belt-tightening can do only so much to improve the bottom line of an agency in need of a major cash infusion.

A portion of the report obtained by the Globe says the T’s operating costs are growing by 5.25 percent per year, or “twice the rate of inflation.” And side-by-side charts comparing the MBTA’s bus and subway maintenance expenses with those at public transit agencies in Chicago, New York, Washington, Philadelphia, and other cities find the T’s costs are among the highest.

The growth in maintenance and other expenses — fuel and health care, for instance — has outpaced what the study calls “stagnating revenues,” which have ticked up by just 2.12 percent annually between 2001 and 2015.

The report notes that some key sources of revenue are capped by law. The agency can raise fares by only 5 percent every two years, for instance.

But the panel calls on the T to do more with its existing resources, such as cracking down on passengers who evade fares and squeezing more money from its parking lots and real estate holdings.

“There are fundamental management practices and operational practices that really need to be put in place first and foremost,” said Jane Garvey, a panelist and former administrator of the Federal Aviation Administration. “We certainly acknowledge that chronic underinvestment has been an issue, but we need to right the ship first.”

The full scope of the study, still being finalized, is not yet clear.

Baker convened the special panel to review the MBTA in late February.

Members include Garvey; Robert P. Gittens, Northeastern University’s vice president of public affairs; Jose A. Gomez-Ibanez, a Harvard University urban planning and public policy professor; Katherine Lapp, the former chief executive of New York’s Metropolitan Transportation Authority; Brian McMorrow, the chief financial officer for Massport’s aviation division; and Joe Sullivan, the mayor of Braintree.

The group’s chairman, Paul L. Barrett, the former director of the Boston Redevelopment Authority, resigned just a week into the panel’s work when the Globe raised questions about his personal financial dealings, including nearly $200,000 in unpaid federal taxes.

Baker charged the group with putting together a rapid diagnostic of the T: synthesizing previous reports on the agency; reviewing maintenance, operations, and governance; and diving into the capital plan, which governs the repair of aging trains and buses and plots spending on expansion projects.

The tension between fixing the fifth-largest public transit agency in the country and expanding it sits near the center of a fierce debate about the MBTA’s future.

Public transit advocates argue the state must do both; an expansion of the system is necessary, they say, to keep the economy humming. Some close observers, though, say the MBTA must halt growth while it fixes a broken infrastructure.

Baker has put himself in the latter camp. But what, exactly, his panel will recommend on capital expenses and other key issues, such as governance of the system and approaches to a debilitating debt burden, remains to be seen.

The panel consulted with MBTA staff, the board that oversees the agency, union officials, transit advocates, and business leaders, among others. Group members met 20 times in the governor’s fourth-floor conference room at the State House, sometimes joined by Baker himself.

Management consultant McKinsey & Company crunched numbers for the panel, including a deep dive into a Federal Transit Administration database that includes information on wages, hours worked, and capital and operations spending at dozens of public transit agencies across the country.

The panel found labor productivity problems. Some tasks, especially maintenance, take longer than they do at peer agencies and therefore cost more — a phenomenon, administration officials say, that can only be partly explained by the age of the T’s equipment. The group also cites an overall inability to control costs.

The report, in its latest iteration, is a slide presentation in silver and blue, filled with bullet points and charts on all manner of subjects.

One reviewed by the Globe showed passenger fares cover a relatively small share of the MBTA’s operating expenses — 39 percent — compared with cities such as Chicago (44 percent), San Francisco (76 percent), and London (90 percent for its subway system alone).

At least some of the numbers in the report will probably stir debate. The T’s operating costs might be rising faster than inflation, as the study notes, but the growth is roughly in line with that of other large transit agencies.

The panel is just the latest to take a high-profile look at the long-troubled MBTA.

The Massachusetts Transportation Finance Commission, empaneled by former governor Mitt Romney, found a staggering funding shortfall for highway and public transit projects of $15 billion to $19 billion over 20 years, just to maintain existing infrastructure.

The figure for the T, in particular, was $4.8 billion to $9 billion.

Two years after the release of the Finance Commission report, former governor Deval Patrick tapped former John Hancock chief executive David D’Alessandro to lead an examination of T finances. His dire report, laced with subtitles such as “The Outlook is Bleak,” said “a private sector firm faced with this mountain of red ink would likely fold or seek bankruptcy.”

D’Alessandro found that the MBTA’s costs were average, in many areas, compared with other larger public transit systems. And he has argued, in recent months, that pushing the MBTA to contain costs is a “politically attractive distraction” from the central task: pouring substantially more revenue into the system.

But Baker, who campaigned for governor on his management acumen, has said he finds it disappointing that “everybody just says we should raise taxes.” And House Speaker Robert A. DeLeo argues the T must improve its management before the state will provide more resources.