Toronto’s Mayor Tory finds himself painted into a corner, a task he achieved all on his own with a mindless, solitary focus on controlling taxes and reducing waste in government spending. One might almost think Rob Ford was still in the Mayor’s office, especially considering that Tory’s understanding of the City’s financial situation is on a par with his predecessor’s. By “understanding” I do not mean simply reading and digesting reports from the City Manager, but of moving beyond knee-jerk reactions and policies where facts are not allowed to intrude on political fiction.
The fiction that we don’t need more taxes, that there are “efficiencies” to be found throughout the City, has strangled services through the Ford years, and shows no sign of releasing its grip under Tory. Unquestionably, from a starting point back in the “old days”, one might find money to be saved in any organization. However, there is a limit to how many rabbits there are in the budget hat, and as years go on, those rabbits get rather scrawny. In his recent presentations to Council, City Manager Peter Wallace warned that the hat is empty, and that the hocus-pocus by which past budgets have allowed low tax increases cannot continue. New revenues must come from somewhere because cuts simply won’t provide the level of savings required.
Shawn Jeffords in the Toronto Sun quotes Tory:
Tory said he would accept the TTC’s submissions as an “interim report” and assume that further efforts will be undertaken to meet the council directive. He also pointed to a report from the city’s Auditor General earlier this year which said the TTC had only implemented 14 of 53 cost-saving recommendations from her previous reports as evidence that further belt-tightening could be done.
This fundamentally misrepresents that Auditor General’s findings in a May 11, 2016 report:
Of the total 53 recommendations assessed in the current follow-up process, 14 recommendations, or 26 per cent, have been determined as fully implemented. For the remaining 39 recommendations, TTC staff have made significant progress towards implementing the recommended changes. [p 1]
In other words, the TTC is working on all of the recommendations and the AG is not breathing fire with any implication of foot-dragging or obstruction. That’s the implication Tory brings to the discussion with the attitude that if the TTC won’t fix itself, he will find someone to do it for them. As Ben Spurr reported in The Star:
“If (the TTC) can’t do this themselves, and I’m confident they have enough good management there to find these ways of doing things better and differently, then I guess we could help them,” the mayor said.
The AG’s recommendations flow from four reports going back to December 2012.
What, exactly, does “not fully implemented” mean? Have they started? Are they almost finished? Is there a dispute about the validity of the AG’s proposals? How much will each of the changes actually save and, thereby, contribute to “fixing” the TTC’s financial crisis?
The background reports reveal that the “Total” counts shown above are only the items that were not “fully implemented” in previous reports. For example, the December 2012 Wheel-Trans audit had 22 recommendations of which 9 had already been implemented by April 2014 as reported by the AG. The numbers here imply a much lower rate of addressing issues because previously completed items have been dropped from the count.
When one takes the time to read the details, one will find that many of the 39 items listed above are on the verge of being completed, or are dependent on changes (such as updated computer systems) that will address clusters of recommendations in one fell swoop later in 2016. Few of the items will lag into 2017 and beyond, and at least some of these are dependent on other systems or events for their timing.
What is consistent throughout the reports is that outright rejection of the recommendations is rare, and work on many is well underway. Moreover, the dollar savings by each of the changes is rarely stated by the AG and so there is no way to gauge their relative importance and budgetary effect.
Mayor Tory is renowned for being at work at 6:00 am at City Hall digesting his reports. From the way he has presented the Auditor General’s information, it is clear that he does not know that the vast majority of the recommendations have, in fact, been acted on by TTC management. Moreover, he would also know that few of the recommendations have a concrete dollar saving attached, and for those that do, it is not on the scale needed to rescue him from the TTC funding crisis.
The TTC faces a shortfall of $184 million for its base system, and a further $31m for Wheel-Trans. The total budget for 2016 is $1.860.4 million of which $1,736.7m is for the base system, and $123.7m is for Wheel-Trans. Year-end actual expenses will be slightly lower due to some cost reductions in 2016, but the subsidy requirement will be higher due to ridership and fare revenue at a lower-than-predicted level.
This shortfall is very much the product of the political optics of the 2016 budget in which a rosy ridership and revenue projection removed the need for hard discussions about subsidies and allowed a continued focus on service improvements. That particular trick failed when the riders did not show up as expected, and 2016’s budgetary scam is only compounded in 2017. However, this time around, the numbers are too big to fudge.
The Sun quotes Mayor Tory:
“I just think that any big organization, where you’ve got billions of dollars and tens of thousands of employees, there are going to be those opportunities without diminishing service that just see you doing differently, running things better,” Tory said.
Tory, who never gives up the opportunity to spend money the City does not have in aid of yet another feel-good photo op, might be forgiven for confusing the “billions” in the TTC’s capital budget (the one that builds new subways and performs major repairs) with the operating budget that actually provides service (including basics like air conditioner maintenance). Most of the operating costs arise from putting service on the street and maintaining vehicles and infrastructure.
The TTC faced ongoing budget crises twenty years ago thanks to the early 1990s recession. By 1995, the proposed budget cuts were severe, but at least the effects were discussed in the open. The 1995 Operating Budget report and a companion response to a proposed 5% cut in agency spending laid out the situation. In 2016, we have yet to see a public debate on the TTC’s 2017 plans, and the issue has been conspicuously absent from TTC Board agendas. The TTC Budget Committee has not met this year, and currently plans call for a September 6 meeting with the results going to the full Board on September 28. This is hardly an organization chomping at the bit. Is the Board trying to avoid a confrontation with Mayor Tory? Why do we even have a TTC Board if the Mayor’s office will make all decisions of any consequence?
In the 1990s, the TTC took the politically necessary “we can make do” position on funding cuts, but this had major effects on service and maintenance. Then, on August 11, 1995, the Russell Hill crash permanently changed the TTC’s view of itself. Three people died thanks to a combination of poor training and inadequate maintenance.
To his credit, CEO Andy Byford has taken a firm position, or so it would appear, on the level of cuts the TTC can actually endure, but whether his position will win the day either at the TTC Board or at Council is quite another matter. Will Josh Colle, TTC Chair, finally stand up to the Mayor or risk losing any remaining credibility of his office?
The remainder of this article reviews the four Auditor General reports in detail.
2012 Wheel-Trans Audit
Recommendation 7: Maintain an up-to-date registrant database. This change resulted in registrants moving from “active” to “inactive” status if they had not used WT for 12 months. No dollar savings were identified, and the issue was more that a no-longer eligible client might re-appear and receive WT trips.
Recommendation 9: Improve the flexibility of the policy re late cancellations and no shows for trips including provision for unusual circumstances. As of the May 2016 report, this had changed to “fully implemented” status.
Recommendation 12: Reduce overtime. A cost saving of $707k was achieved in 2013 through a combination of reduced absenteeism and staffing at a level adequate to cover service. This “saving” is the reduction in “overtime” with no recognition of the offsetting staffing costs incurred to make this possible. It is an example of the problem of a narrow focus on “overtime” as a problem without looking at the larger picture for total staff costs.
Recommendation 13: Reduce preventable WT bus collisions. This was regarded as a training issue, although the benefits were not expected to appear until 2014 or later. No dollar value was assigned to this.
Recommendation 14: Improve trip routing. This was addressed by updating the trip dispatching software including changes to the “maps” and timings it uses to plan the route of a WT vehicle. No dollar value was assigned to this.
Recommendations 16-20: These relate to the sedan taxi contracts, an issue on ongoing problems for the TTC. The AG was satisfied that the updated taxi contracts would save the TTC $2.35m annually. Whether this is still the case given the dispute over the terms of that contract and its effect on payments to drivers is another question.
Recommendation 21: Update the WT Standard Operating Procedures (SOPs) especially those relating to administration of taxi contracts. As of April 2014, 78% of this work was complete. As of the May 2016 report, this had changed to “fully implemented” status.
The following recommendations were outstanding as of May 2016.
Recommendation 1: Explore free-ride programs to encourage WT users to shift to the “conventional” system. The intent is to avoid the much higher cost of a WT trip, although why WT users would regard free TTC rides as much of an incentive to shift is an open question. No doubt, we would then find the TTC arguing that they no longer actually needed WT, and therefore did not deserve free trips. This is a Catch-22 situation.
By 2015, the TTC reported that this has been addressed through the wider question of making the system accessible and providing for trip planning that spans both WT and the conventional system. This is related also to eligibility changes reducing door-to-door requirements for some WT users. Changes to trip planning were expected to go in effect from January 2017 through mid-2018. Changes to door-to-door services were planned in late 2016.
Recommendation 2: Develop a plan to integrate WT users into the conventional system. This is closely linked to accessibility issues on the system as a whole including subway stations, the old streetcar fleet, and the degree to which WT users can actually navigate to transit stops and between routes. In 2015, the TTC reported that this will be addressed as part of the previous recommendation.
Recommendation 3: Expedite the development of an eligibility classification system for WT as set out in AODA. The irony of this recommendation, intended to trim the user list, is that the standards now enlarge the base of eligible WT users. This is a major budget problem for the TTC. In 2015, the TTC reported that the rollout with re-registration of the existing client base is planned for June 2016 to December 2018. This was updated in 2016 to January 2017 to December 2019.
Recommendation 4: Enhance the WT eligibility assessment process. This was not well received by the Advisory Committee on Accessible Transit (ACAT), notably the proposed requirement for a medical certificate. In 2015, the TTC reported that this was in progress together with Recommendation 3. Management will report to the Board on the Eligibility Changes Project in 3Q2016.
Recommendation 5: Establish a photo ID card for WT users. In 2015, the TTC reported that improved identification would be incorporated with the Presto fare card rollout. If this is not possible, WT will pursue its own photo ID card (as per 2016 report).
Recommendation 6: Establish a policy regarding repetitive late cancellations and “no shows” for eligibility assessments or appeals. In 2015, the TTC reported that this would be implemented by June 2015. It is not clear why this item remains on the outstanding list.
Recommendation 8: Improve the responsiveness of the WT call centre. Many changes were planned by the TTC including improved staffing, but the issue was still open as of April 2014. In 2015, the TTC reported that many changes had been made at the Call Centre including additional staffing, but the call volumes continue to rise faster than capacity to handle them. Some trip booking has been shifted to web access. Changes to staffing and practices continued according to the 2016 report, but the major change depends on the implementation of new scheduling software in 2017.
Recommendation 10: Develop procedures to identify WT users who consistently miss trips. In 2015, the TTC reported that technical problems had limited the ability to implement automated calls to these users. A solution was expected to be implemented by 3Q15, but this item is still on the outstanding list. TTC management reported that these users were 6% of the customer base in 2014 and 2.3% in 2015. It is unclear why this remains on the outstanding list.
Recommendation 11: Consider adopting a more restrictive policy re late trips and cancellations. In 2015, the TTC reported that this is part of the planned new scheduling system to go into operation in January 2017. In 2016, the TTC noted that better scheduling and tracking of vehicles could allow a less restrictive policy.
Recommendation 15: Assess the need for WT Community Bus routes. In 2015, TTC Management’s position is that the Community Buses provide a worthwhile service by eliminating the need for single-rider trips. In 2016, TTC continues to evaluate whether any of these routes can be replaced by regular transit services operating in the same areas.
Recommendation 22: Reduce the number of printed newsletters and consider advertising to offset the cost. The amount of printed material has been reduced and some info shifted to the web. The idea of advertising was rejected by TTC management as likely to be uneconomic given the low circulation. As of 2015, TTC was reviewing the need for continuing this publication.
The outstanding recommendations include many items aimed at trimming the WT user base and hence service costs. While some of this may be possible, it has been more than offset by the growth in WT eligibility both through demographic shifts and legislative changes.
January 2014 Bus Maintenance Phase One Audit
This report contained 18 recommendations of which two were fully implemented by 2015, and one was considered no longer applicable. This reduced the outstanding count to the 15 shown in the table above. Of these, two more have been fully implemented by 2016 leaving 13 outstanding. Many of these are actually related items that are to be addressed as a package.
Recommendation 1: Evaluate the merits of the 5,000 km preventative maintenance program. The TTC reviewed industry practices, and determined that a less-frequent PM cycle of 10,000 km was appropriate only for buses in their first three years. Thereafter, the shorter cycle is required. The projected annual maintenance saving is about $120,000 starting in 2016.
With more detailed tracking information, the TTC might extend the 10k cycle to buses in their first five years.
It is worth noting that the fleet average mean distance to failure lies between 5 and 10k kilometres. It would not make sense to schedule PMs less often than the average failure rate because this would increase the likelihood of buses failing on the road rather than having problems caught during inspection. A proposal by the TTC to shift to a pro-active policy of replacing/overhauling components before their expected failure was denied by Council in the 2016 round.
Recommendation 2: Ensure compliance of bus maintenance with Provincial legislation.
Recommendation 6: Ensure adequate annual bus brake inspections and relines.
Recommendation 7: Improve bus repair quality. The TTC has implemented a quality assurance group to track maintenance, and the mean distance between on road failures has been rising indicating some success on this front. The AG considers this recommendation to be fully implemented.
However, there are related concerns that have not been addressed in these reports. First is the effect of fleet demographics on reliability. To some extent, changes in the mean mileage to failure could be the effect of fleet aging (older buses fail more often), or of the replacement of an older fleet with a batch of new buses. To be meaningful, the numbers have to be reported on a more fine-grained level. For example, the TTC knows that its hybrid fleet is troublesome, and even within that fleet, some buses are worse than others. As the worst of these are candidates for early retirement, reliability numbers will improve with no underlying change in TTC maintenance practices. There is also the distinction between an “on road” failure and one that occurs before a bus even leaves the garage. They are counted separately, but only the former show up in the stats the AG cites.
The following recommendation was dropped:
Recommendation 5: Assigning Service Persons as the primary staff members to perform the 10,000 kilometre Lubrication Inspections. TTC management noted that the “Service Persons” are not qualified to perform this work, and that doing so incorrectly would affect the reliability of engines, transmissions and differentials with a resulting high cost. One might wonder what provoked the AG to make such a recommendation in the first place.
The following recommendations are still not fully implemented as of the May 2016 report:
Recommendation 3: Ensure that bus mileage records are accurate for proper scheduling of preventative maintenance. To be completed as part of the new automated vehicle location system rollout in 2017-18.
Recommendation 4: Consolidate safety checks and inspections to reduce the number of times a bus is out of service. TTC reports that the target for completion is june 2016.
Recommendation 8: Establish standard repair times for common bus repairs, a monitoring system to review work and incorporate this in performance evaluations. TTC reports that this is in progress with data collection underway at two garages. Target completion date for implementation is December 2018.
Recommendation 9: Establish training programs for technicians. TTC reports that training is underway as of mid-2016.
Recommendation 10: Establish failure rates for major internal bus parts rebuilds. This affects both warranty claims and internal quality control. TTC reports that this is in progress with a completion date in 2017.
Recommendation 11: Conduct a complete analysis of bus rebuilds conducted at Duncan Shops. TTC management report that a “no contracting out” clause prevents them from sending this work outside of the TTC, but they are reviewing whether some component work could be shifted in anticipation of future contract negotiations. The target date for implementation is 2018.
Recommendation 12: Improve the process for retrieval of defective parts. TTC reports that this is well underway with completion at all sites by mid 2016. Design of a process to improve claims for these parts is to be finished by the end of 2016.
Other recommendations for which work is incorporated with this item are:
- 13: Maximize use of bus warranty provisions.
- 14: Minimize the “no fault found” problem with warranty claims.
- 15: Ensure proper accounting for bus warranty claims and payments.
- 16: Provide a management information system for warranty claims and recoveries.
Recommendations 17 & 18: Review the effect of shortening bus lifespan to 15 years from 18, and a plan to minimize future costs of hybrid buses. TTC approved a revised fleet plan for the hybrid buses in February 2016. Early retirement of all of this fleet is impractical because of the large bulge it would create in capital requirements and the fact that part of the fleet is reliable enough to stay in operation. Early retirement of some buses will contribute parts to a spare pool that will reduce ongoing costs. The report on bus lifespan is not expected to be ready in time for the 2017 capital budget round (already in progress), but its findings will be incorporated in future years.
December 2014 Bus Maintenance Phase Two Audit
This is a more recent report for which the 2016 review is the first in the annual cycle. There were 21 recommendations in 2014 of which 9 have been fully implemented:
Recommendation 1: Non-revenue fleet management. The TTC consolidated functions that were distributed through various departments in one position in 2015 to co-ordinate vehicle requirements.
Recommendation 5: Assess needs for non-revenue vehicles and equipment prior to finalizing procurement decisions. In effect, ask “do you still need this” before authorizing a replacement.
Recommendation 6: Replace aging and high-usage vehicles to reduce repair costs. The TTC has replaced the target vehicles, but has retained most of them as spares to avoid rental costs when the newer vehicles are in for repair. This is another example of the tug-of-war between capital and operating budgets. Capital constraints lead to vehicle retention beyond a reasonable age, but this drives up operating costs.
Recommendations 9 & 10: Rationalize rental vehicle needs. TTC has reviewed its needs across the agency and replaced some rentals with purchased vehicles. Annual savings are $500,000.
Recommendation 11: Review rental vehicle insurance costs and compare them to self-insurance (as the TTC does for all but major liabilities on its revenue fleet).
Recommendation 12: Work with the City of Toronto to determine whether a joint RFQ could be issued for non-revenue vehicles.
Recommendation 19: Reduce the time to bring a new non-revenue vehicle into service. The TTC has reduced the time required to fit out a new vehicle for service by 50%. The AG’s concern appeared to be that the longer time left old vehicles in service (and running up maintenance expenses) longer than necessary. What is not clear is whether the original elapsed time of 28 days was a function of such work being done at low priority among other work at the affected garages.
Recommendation 21: Ensure that non-revenue vehicle procurement takes into account the ease and practicality of warranty administration.
Many of the outstanding recommendations are linked, and their number is more a testimonial to granularity than it is to the pervasiveness of problems. The same “fix” addresses many of the items, and all of these are scheduled for completion by 4Q16 when updates to the TTC’s inventory control system will be completed.
Recommendation 2: Consider implementing a chargeback system to departments for their use of non-revenue vehicles.
Recommendation 3: Enhance the procurement process for non-revenue vehicles to evaluate their need and purpose.
Recommendation 4: Review the utilization of non-revenue vehicles. TTC reports that a trial installation of GPS trackers took place in 2015. Full rollout scheduled for 4Q16.
Recommendation 7: Review life cycle costs of vehicles to optimize maintenance and replacement. The TTC’s replacement criteria were aligned with the City’s in early 2015. Vehicle cost monitoring is being done to provide information for fleet management.
Recommendation 8: Ensure that fleet inventory and vehicle work orders are accurate, complete and up-to-date. TTC reports that this has been incorporated in the Fleet Manager position (recommendation 1).
Recommendation 13: Ensure that the non-revenue fleet receives scheduled maintenance. This was implemented in part with the GPS tracking pilot in 2015 that allowed vehicle mileage to be centrally monitored.
Recommendation 14: Ensure that up to date vehicle mileage is available for scheduling of preventative maintenance. This was addressed through the GPS project.
Recommendation 15: Improve the effectiveness of the Vehicle Work Order System for the non-revenue fleet.
Recommendation 16: Implement a non-revenue fleet quality assurance program.
Recommendation 17: Ensure adequate controls to prevent the ordering of non-revenue vehicle parts for non-TTC uses. Some controls are already in place.
Recommendation 18: Shorten garage turnaround times and address capacity issues for non-revenue vehicle repairs.
Recommendation 20: Establish a warranty management process for non-revenue vehicles.
Non-Revenue Vehicle Fuel Card Controls
One of four recommendations is considered completed by the AG.
Recommendation 2: Develop procedures to hold management accountable for non-compliance with policies, undertake a review of PINs and cancel those associated with terminated employees and decommissioned vehicles, and develop procedures for timely notification that an employee with a PIN has been terminated.
Outstanding recommendations as of May 2016:
Recommendation 1: Review and revise the current fuel card policy and procedures such that adequate controls are developed and implemented to facilitate effective monitoring of fuel card transactions and detection of questionable transactions. TTC reports that the second round of procedure revisions is in progress.
Recommendation 3: Strengthen fuel card controls by ensuring that cards and PINs are issued in accordance with policy, improve the effectiveness of sample transaction reviews, and define exception reporting requirements. Several procedural changes were implemented, and this work was completed in June 2016.
Recommendation 4: Work with the City’s Fleet Services Division to examine using the City’s fueling stations and fuel card. TTC conducted a pilot and is now rolling this out for its non-revenue fleet with an expected completion of 4Q16. This will “significantly reduce” but not eliminate the TTC’s need for its own fueling system and cards.