MATA brass presented the first in what promises to be a long-series of updates to Memphis City Council members, as the area transit authority attempts to course correct its long-trending downturn.
Along with learning the recent deficit wasn’t a fluke, members were also briefed on plans to right-size the failing agency during the Tuesday, September 10 Transit Committee meeting.
“There seems to be a very big misconception about what is being presented to the council and to the press about the $60 million loss – as many people put it – that MATA incurred. This is not something that occurred in one year. This is something that has been continuing for many years,” said MATA external CFO Hamish Davidson. “Over that last 10 years, MATA has had an unrestricted net deficit position in every single year.”
Moreover, last year’s shortcomings weren’t the steepest.
“Back in 2014, it was as low as $19 million. In 2019, prior to COVID, it actually reached $91 million, which is significantly higher than the $60 million that has been reported in the press and to everybody, and what everybody seems to be lambasting MATA about.”
Davidson was brought on board to peruse the authority’s books. He is also Managing Director of J.S. Held accounting firm. Within its operations, the consulting firm provides financial and strategic advice to clients.
During the meeting, MATA interim CEO Bacarra Mauldin denied knowledge of the annually recurring deficits. She also said board members weren’t aware of the shortfalls. The admission was met with skepticism.
“No one’s going to say they didn’t know. Your board knew. They handle the budget. They saw the money. They saw the deficiency. They saw the dollars. They saw what was happening before the CARES and the ARPA money,” said council member Yolonda Cooper-Sutton.
Largely funded through grants, MATA’s budgets trended upwards as ARPA funds, for example, flowed in during the pandemic years. A chair was pulled out from under the transit authority, when the $180 million well dried up.
Last year, MATA’S budget was $85 million.
The budget for FY2025 is $60 million. Furthermore, a surplus of $800,000 has been estimated. Budget trimming measures – particularly numerous layoffs – are largely responsible for the reduction.
“Unfortunately, as we know, in restructuring a business there are costs that are involved. Unfortunately, sometimes you have to restructure your head count. MATA has made a provision for this of $6.2 million, which then should leave a potential surplus for the year of $800,000,” said Davidson. “I believe this is the first time in as far back as I have looked that MATA has actually presented a surplus budget.”
In all, 173 roles were “reduced.” It was the second step in a 4-step approach to righting MATA’S floundering operation. Seventy-five positions were also eliminated. There are 340 staff members left.
It followed a forensic audit performed earlier this year.
In addition to 18 trolley workers laid off during a recent safety “stand down,” 28 administration personnel were let go. The 52 unionized members affected were given 60 days notice. Efforts are underway to inform them of access to benefits, like 401k accounts. Overtime hours were also trimmed by 30%.
Despite the savings, members of the committee expressed their intentions to put the former employees back to work.
“I’m trying to save two dollars if I can, because I want to put these people back to work,” said committee chair Edmund Ford, Sr.
The next phase of the restructuring could complicate Ford’s ambition. It calls for a 30% reduction in routes. This would largely be achieved by removing Cordova zone from traditional bus routes. Instead, MATA would expand its curbside on-demand services to the largely rural area. Apps are available for both.
“These work like Uber/Lyft, new technologies that we’re trying to leverage to really improve our service. It takes us time to change the network. Both use online apps, along with traditional phone reservation system,” said John Lancaster, MATA Chief Development Officer.
The final step of the restructuring will be to reduce costs. MATA officials will attempt to do this by modernizing its fleet to a greener, less-fuel reliant fleet of buses and vehicles.
They also plan to adjust routes to meet current needs. Overall, ridership on the transit system’s 300 mile coverage area has dropped significantly since the pandemic.
In the meantime, council members have already penciled in another update on the committee’s upcoming calendar.
