Since fiscal 2021, system operating costs have risen more steeply every year, including by nearly 15 percent between fiscal 2023 and 2024.
The biggest culprit is the bus system. In 2019, the MBTA spent $153 per hour in operating costs to run a bus, compared to $220 at New York’s Metropolitan Transit Authority. By 2023, costs had risen slightly to $263 in New York, but the hourly cost of operating an MBTA bus nearly doubled to $297, exceeding New York’s costs.
An analysis of eight comparable US transit agencies found that MBTA bus operating costs rose by more than 90 percent. The Chicago Transit Authority had the next sharpest increase at less than 40 percent.
One way the T control board succeeded at keeping operating costs under control was through the agency’s three-year exemption from the Commonwealth’s so-called Pacheco Law. That unique statute makes it exceptionally difficult to contract out any service provided by state (or MBTA) employees.
During the exemption, the T contracted out operation of its secure cash counting facility. It reduced costs by 65 percent and the time it takes to deposit funds by 80 percent. Contracting out the operation of warehousing and logistics cut costs and improved inventory accuracy from 57 percent to 80 percent, with 99.8 percent of deliveries completed within 10 hours.
The threat of competition also brought the Carmen, the MBTA’s largest union, to the table to renegotiate their contract, saving an estimated $218 million over a decade. All told, the T estimated the 1o-year savings from actions taken under the Pacheco Law exemption at more than $450 million. This exemption expired before the pandemic and should be restored.
It’s also long past time for the Commonwealth to address the MBTA’s nearly bankrupt pension system. When the T contributed $37.7 million to the retirement fund in fiscal 2007, its funding ratio was over 90 percent. The fiscal 2025 budget called for the MBTA to contribute $207.7 million to a system that is just 56 percent funded.
The fundamental problem is that there are more people collecting benefits than paying in, mostly due to how early MBTA employees can retire. Those hired before December 2012 can retire with a full pension after 23 years of service, regardless of age. Those hired after December 2012 can retire with a full pension at age 55 after 25 years. In addition, T employees receive pensions that are significantly more generous than those of their state government counterparts.
There has been progress at the MBTA of late. Thanks to increased capital funding and the leadership of General Manager Phillip Eng, service is more reliable and subway slow zones have disappeared.
But making T finances more sustainable by bringing them in line with other large urban transit agencies takes more than just capital improvements. It will require legislative leaders and Gov. Healey to reinstate and empower an entity like the Fiscal and Management Control Board to explicitly focus on operating cost control. | 
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