Leadership, Management, and Political Decisions: The Chicago Transit Authority

The CTA is one of three operating units of the Northern Illinois Regional Transportation Authority (RTA). Serving northeastern Illinois (Chicago and its suburbs), the RTA was established in 1973 to oversee public transportation; its role as an oversight planning and budgeting authority was clarified in 1985 legislation. (I was part of a group defining new powers for the RTA in 1985. Many became part of RTA reform passed by the Illinois legislature.)

The RTA has oversight for the CTA (serving the city of Chicago), Metra commuter rail, and Pace suburban bus. RTA was led by a board of thirteen members, including four who were appointed by the mayor of Chicago and the chair of the CTA board. CTA is governed by a board of seven members, four appointed by the mayor of Chicago and three by the governor of Illinois. The executive director of the CTA is appointed by the CTA board. Terms of employment are negotiated with the CTA board chair.

Typical of current U.S. transit system organizations, a board has the responsibility for setting policy and overall organizational oversight. The staff is responsible for day-to-day operations. For a transit system, of course, this means that the staff is responsible for insuring service can be met every day. The first memos to greet me every morning were the availability of bus and rail vehicles for service; inability to meet service meant that vehicles were inoperable, or that adequate personnel were unavailable.

In Chicago, as outlined above, there were two boards that held staff accountable. The CTA board addressed policy issues and the budget as well as legal issues. The board had contract authority: everything CTA procured or requested for procurement needed the signature of the chair and the approval of the board. Staff would prepare candidate budgets, the board would approve them, and then track budgets as the budget year progressed. But the annual budgets needed approval by the RTA board. Each year, by a fixed date, there had to be a final budget that detailed the capital and operating needs for CTA, Metra, and Pace. Through the RTA Act amendment of 1983, the farebox recovery ratio for the combined operating units was set at 50 percent (minimum). This became a constraint on the operating budget and defined the subsidy that the RTA would provide. County sales taxes were one source of funding for operating programs. CTA was, by far, the largest provider. It served (during the period 1986–1989) approximately 2 million trips per day (1.5 million bus and 0.5 million rail). Metra served 300,000 trips per day and Pace served 160,000 trips per day. Operating twenty-four hours and across an extensive geographic region, CTA needed substantial funding in addition to fare revenue to meet the service policies established by the board. One immediate political consideration was that only five of the thirteen RTA board members were from the city of Chicago, and CTA supporters. The remaining board members represented the suburbs. Why such imbalance? The first RTA Act was set to address critical funding needs of the CTA and the growing needs of the commuter services. To get state legislature approval, the RTA was given primarily suburban representation. There is an “upstate-downstate” temperament to the legislature, similar to that found in other states such as New York.

The annual budget was a source of difficult negotiation. The RTA had to approve the total budget of the three service boards as well as each one individually. From the perspective of the CTA executive director, there was never enough operating support. The sales tax and other legislated sources of funds were never enough to meet the minimal operating budget. We needed subsidy and RTA approval. RTA put constant pressure on staff to find internal efficiencies. To some extent, I found this pressure helpful in looking at necessary organizational change. But, I felt that there was a limit to such efficiencies before the quality of service would be affected. At the time, and as the “chief advocate” for the CTA, I was bothered by the urban-suburban frictions. But it was necessary to develop strategies to work within these constraints in order to achieve any objectives I had set for the organization. Key objectives were to improve service, make the organization more market oriented, create a modern vision for the organization, and improve the image of public transit within the community.

CTA had a nearly forty-year history when I began as executive director, and had developed the means to deliver 1.5 million bus trips and 0.5 million rail trips every day. The organization was compartmentalized to do so, starting with bus operations, bus maintenance, rail operations, and rail maintenance. All other activities, finance, capital programs, human resources, labor relations, procurement, legal, and government relations were there to support service. But the organization needed modernization, it needed the introduction of desk top personal computers, and it needed to understand its changing customer base. I believed that one of my first tasks was to carry out internal strategic planning, which included restating the CTA mission. I also needed to simplify budgeting and move the agency from purely operations-based to market-based thinking. To do this I had to determine whether the CTA was organized appropriately, whether I needed new personnel and new leadership, and where I would turn to bring new ideas into the agency. It should be noted that under the Act that established the CTA, reorganization was very difficult and removing personnel was even harder. This is a consequence of the political trade-offs made in enacting legislation to create the CTA.

On paper RTA and CTA are separate units of state government and should be independent. In fact, the purpose of Authority legislation is to give such organizations independence and insulate them from external interference. That, of course, is not the reality. Depending on state and local subsidies, having all problems aired fully in the media, and with board members appointed by elected officials, there is some compromise with real independence. There are two broad groups of stakeholders, internal and external, that both the CTA board and I had to respond to.

As executive director, a major objective was to have senior staff converge on achieving the organization’s mission. An initial problem was that the organizational structure was, in my opinion, inefficient and sustained turf problems and organizational inertia. A first activity was to initiate reorganization that would reduce the number of reports to the executive director, and push responsibility—and recognition—down to appropriate levels. I brought in professionals from outside of CTA to serve as senior deputy executive directors for operations and for administration. This created initial resentment, but evolved into developing greater operating efficiencies. Another activity was to have the senior staff from the various CTA line functions identify “critical issues.” These were summarized and discussed as a group and actions were taken to address the issues that had been identified. This process gave senior staff a sense of belonging to an organization. Although all of the above actions did not eliminate internal politics, they did improve the sense of community, and the realization that leadership was professional and not political.

The board, as noted, was composed of four mayoral appointees and three gubernatorial appointees. There was always active discussion (the press always attended board meetings) of procurements, cost overruns, sole source and single bidder contracts, real estate, and fare policy. Board decisions were CTA policy and staff had to carry out this policy. One illustrative example of a divergence of opinion on policy occurred with a particular real estate transaction. This example also illustrates the constant divergence between operating policy and efficiencies and public interest. An outdated bus depot had been torn down to make room for a new, modern depot. The depot was located at a point that minimized bus travel time (and cost) to and from revenue routes. A developer approached the alderman in whose district the depot was located and proposed a development that would bring higher use to the land. Staff disagreed, believing that the costs of relocation with setting new route access would be high, resulting in operating inefficiencies. Further, they believed that the developer’s pro forma was inaccurate and that CTA would not recover the promised revenue from sale of the land. However, the board believed that the development, as proposed by the alderman, was a better use of the land and they voted to approve the transfer. The bus depot was developed at a different location; the developer’s project never materialized.

No issue was more charged than that of fares. No politician wants to be on the side of raising fares. Because the combined operating and capital budgets were $1 billion, public perception was that CTA was a large, and by nature, wasteful organization. The reality was that CTA was as efficiently run as a public organization could be. The difference between public and private management is openness. Except for personnel issues and contract negotiations, board meetings and board committee meetings are open to the public. The Freedom of Information Act made all documents available to whoever requested them. In addition, many federal and state mandates had to be addressed in hiring, promotions, procurements, and requests for proposals. CTA had to abide by labor contracts agreed on through negotiation or arbitration, including a number of past practices. Difficult labor negotiations had significant impact on the constrained budget, which needed final approval by the RTA, and the implicit, but powerful approval of the state and city political leadership. As noted above, each year CTA as part of RTA had to have a balanced budget. When subsidies were inadequate to meet operating needs, fare increases were suggested. Because this was discussed openly, even a hint of a fare increase brought media accusations of waste and public outcries of “too much.” To address the issue, I initiated a number of strategies. The first was to create a program-based budget. Rather than just showing CTA as departments and line staff, we developed a budget that showed the operations as a set of programs (e.g., bus operations, railcar maintenance, finance, etc). This made it easier to grasp the complexities of meeting service, for those both inside and outside the organization. I also began a series of meetings with community leaders in both the private and public sectors and in nongovernmental organizations to explain the budget, its constraints, sources of revenue, and expenses. The operating expenses were based on a level of service designed to meet the needs of the public. Operations planning personnel were always asked to revisit service, including under-served routes and under-performing routes to try to find operating efficiencies. But levels of service were always under political pressure; no alderman wanted service reduced or stations closed in his district and the board was responsive to their concerns. Eventually, we did go through a fare increase, but only after a fare study, looking at options for amounts and differentials in fares.

Two major newspapers and three major network TV stations kept their eyes on CTA, which had, in previous years, gone through a number of scandals. But agency reorganization, lawsuits concerning hiring and firing, difficult procurement issues, and customer complaints insured that we would always have space in the media. Our response was openness. We gave media access to leadership, and access to information. We spent many hours each week explaining our operating policies, our budget philosophy, hiring practices, and other information that, we believed, would make their readers or viewers more informed. Often, these discussions fell on deaf ears: reporters that thought they had their stories locked up, but we persisted in being heard. I still believe that openness is the only approach, although it is time-consuming, and may slow down internal decision making.

I began as executive director at CTA when Harold Washington was mayor of Chicago. A year after he died in office, I resigned, following (by several months) the resignation of the CTA board chair (who still had the majority of his term to serve). The acting mayor had his own needs and philosophies and wanted his own appointments to carry them out. This is political, but it is how politics should be. There are a number of “lessons learned” to be shared:

Ideally, service would be perfect if all busses and trains met schedule, there were no breakdowns or incidents, and all personnel were customer oriented. When serving 2 million trips a day, perfect service is difficult to obtain. Vehicles break down or are in accidents, drivers don’t report for service, or other factors keep service from being one hundred percent. Yet, the public expects excellent service independent of their fare. The public always thinks the fare is too high; the operator always thinks it is much too low. Complaints about service turn into political comments and discussions and pressures on board and staff to “do something.”

I had the privilege of serving on the Transit Cooperative Research Program oversight board for six years following its inception in 1990. One of our early tasks was to define a program known as “New Paradigms in Public Transit.” The thesis was that to survive and grow, public transit had to change and adopt methods used in modern businesses. To gain public confidence and market share (hence political buy in) transit had to look and be managed quite differently than it was in the mid- to late twentieth century. Lessons that I learned in Chicago about organization, operating issues such as fare collection, maintenance and procurement, and the value of market research all led into the new paradigms. Changes in U.S. transit systems today, such as electronic fare collection, automatic vehicle location, improved labor management agreements and task definition have been part of transit’s resurgence in the last few years. The responsibility for managing a very technical operating system is simultaneously a very political undertaking. The success of service delivery depends on recognizing and responding to the opportunities that politics provide.