MBTA Budget & Capital Performance

The ongoing COVID-19 pandemic has continued to have significant impacts on the MBTA in FY21, primarily through significant declines in MBTA ridership and associated revenue losses. Fare revenue typically funds 40 percent of operating costs across the authority. In FY21, this fare recovery ratio was just 10 percent, meaning that subsidies and other revenue sources supported the remaining 90 percent of costs to run service and operate the system. To mitigate the lost fare revenue in FY21 and expected losses in FY22, the MBTA received over $842 million in one-time federal relief funding between the CARES Act and CRRSAA in FY21.

Operating Budget

Fare Recovery Ratio

The fare recovery ratio is the revenue received from fares and passes divided by total operational expenses, excluding expenses due to debt. This measures how much of the cost of providing transit services is paid directly by MBTA riders. The FY20 fare recovery ratio was 33.5 percent, a decrease of 9.2 percent from FY19 due to the COVID-19 pandemic.

Monthly Fare Recovery Ratio

The fare recovery ratio fell significantly at the onset of the COVID-19 pandemic, because operational expenses did not decrease proportionally to lost ridership. The fare recovery ratio was 7.7 percent in July 2020 and had reached 13.7 percent by the end of the fiscal year, still far below the typical pre-pandemic 40 percent.

Actual Expense Details

Total expenses (not including capital spending) encompass wages and benefits for employees, materials and services involved in providing transit service, contracted transit services like commuter rail and the RIDE, other operating expenses, and debt service. Total expenses grew 1.8 percent from FY20 to $2.16 billion in FY21, while operating expenses grew 0.8 percent. Total expenses in the FY22 budget are $2.35 billion, an increase of 3 percent above the FY21 budget baseline.

Actual Revenue Details

Total revenues encompass fare revenues from transit riders, other operating revenues such as from advertisements and parking, state and local assistance including sales tax revenue, and other non-operating revenues. Total revenues grew 16.3 percent from FY20 to $2.64 billion in FY21, largely due to non-operating sources and additional state and federal assistance, while operating revenues (fares and other operating revenues) decreased by 67.5 percent. Total revenue sources in the FY22 budget are $2.77 billion, a 2 percent increase above the FY21 budget due to one-time federal revenue and fare revenue, recovering from historic lows due to the COVID-19 pandemic.

Actual Closing Balance

The closing balance for the operating budget is defined as total expenses subtracted from total revenues. The closing balance in FY21 was $487 million. However, $365 million of this net revenue was reserved to balance the FY22 budget gap, leaving a true net revenue balance of $119 million to mitigate the projected deficit in FY23 or FY24 and any other current or future obligations. This true net revenue balance was achieved with the assistance of $842M in one-time federal relief funding, without which FY21 net revenue would be deficient by $355 million.

 

Capital Projects

Total Capital Investment Plan (CIP) Spend

The MBTA Capital Investment Plan (CIP) is a rolling five-year investment program to improve and modernize assets, meet strategic priorities and performance goals, and expand service. The annually updated CIP includes over 400 capital projects working to improve reliability, safety, and accessibility for riders. More information on the current CIP and historical updates by fiscal year can be found on the MBTA website.

CIP spend largely funds projects in two broad categories: projects focused on reliability and modernization, and projects focused on expansion of the MBTA system or MBTA service. Major capital projects currently include the Green Line Extension, the Red Line Transformation and Orange Line Transformation programs, South Coast Rail, and Fare Transformation. Total CIP spend in FY21 increased by $250 million over FY20, with a total of $1.93 billion spent on capital improvement projects. Of the total, $1.36 billion was spent on reliability and modernization projects, with $563 million spent on expansion. Total capital spend surpassed the CIP spend target by 10 percent in FY21.

Projects Completed On/Under Budget

This measure tracks the percent of capital projects completed on or under budget. In FY21, 94 percent of all construction contracts were completed on or under their approved budget, an increase of 40 percent over FY20. The remaining 6 percent of contracts were completed within 10 percent of the original budget. Cost increases occur for a variety of reasons, including unforeseen conditions, errors or omissions in design, and scope added to projects when determined to be advantageous. The MBTA’s Capital Programs departments closely track cost performance on projects and are implementing an electronic project management system to improve efficiencies and transparency. Capital Programs maintains a Lessons Learned database and conducts risk workshops prior to bid as cost control measures. The MBTA is also investing in the Capital Programs QA/QC program to improve design quality.

Projects Completed On/Under Time

This measure tracks the percent of capital projects that were completed on or under their approved contract duration. In FY21, 57 percent of completed construction contracts were finished by their approved delivery date, an increase of 49 percent over FY20. The remaining 43 percent of projects were completed within 90 days of originally scheduled completion. Projects are delayed for many reasons, but delays are largely caused by unanticipated field conditions and scope added to projects when determined to be advantageous. To reduce delays, the MBTA identifies and accounts for construction risks early in the development of contract duration, exploring opportunities to complete enabling or early works ahead of construction projects, and working with design and contracting partners to improve the overall timeliness of the capital program. The MBTA is also implementing a program of exclusive construction access to track and station infrastructure intended to decrease the cost and duration of its construction projects.

Average Elapsed Time Between Advertising and Notice to Proceed (NTP)

When the MBTA advertised a contract to advance a capital project in FY21, it selected a contractor and approved work to begin within 126 days on average, an increase of 31 days from FY20 and longer than the target of 90 days. The MBTA is working with the engineering community to ensure better quality of its bidding documents and contractors, to maintain bid schedules and reduce procurement timelines. In addition, the MBTA is streamlining internal processes and procedures to ensure timelier processing of documentation for contract execution of its Capital Projects.