California Common Sense (CACS) released a brief report (and accompanying data) analyzing the impact of rising personnel costs on the Bay Area Rapid Transit (BART) system’s budget since 1999-00. The report found that though BART’s compensation levels have declined as a portion of its operating budget since 2000, they have remained above those of most California public transit systems. While rising compensation levels have strained the system’s operating budget, rising retiree health costs, in particular, account for the greatest growth among the system’s personnel spending.
We must recognize that higher compensation levels ultimately impact everyone – workers, retirees, the system, and riders. Retirement costs have already started to consume greater portions of the system’s budget. If collective bargaining drives up costs further, the natural outcome will be a decline in the quality of services BART riders have come to expect, increase in rider fees, or both.
The following are among the report’s findings:
- The system’s overall annual retirement costs nearly quadrupled from since 2000, growing to $58 million. Its total compensation spending grew 61%, rising from $257.8 million $416.5 million.
- While BART’s compensation level relative to its operating budget declined from 61% to 58% from 2000-11, its compensation relative to its budget remains higher than the transit sector statewide, and its decline was not nearly as large as most systems’ during the period. The median level of compensation as a portion of the budget throughout the sector declined from 44.4% to 20.9%.
- Under the Moody’s credit rating agency’s recommended investment assumptions, BART’s unfunded pension liability would rise from $187 million to $797 million.
- Retiree health care now comprises 42.6% of the system’s benefit spending, compared to just 10.7% in 2000.
- BART has been prefunding its retiree health benefits since 2005, ultimately enabling the system to slow the growth of its retiree health costs and secure benefits for future retirees in the long term. In the short term, however, bringing the plan to full funding levels requires higher contributions during the initial years. When BART’s prefunding costs are taken into account, the system’s total annual OPEB spending rose from $1.0 million in 2000 to $24.7 million in 2012, a 2271% increase.
See more here.