Myths and Facts

   
 
 
Myth: Milwaukee County is now trying to privatize our transit system.
 

Fact: Our transit system is currently privatized and has never been run by Milwaukee County directly. The current private provider, MTS, has managed the system since 1975. All the management and staff of MTS are private, non-County employees. The County has and will continue to own the buses and infrastructure, and set the fares and routes.  This move is being made to ensure the transit system and riders are getting the most out of our transit funding.

 

The current contract is deficient and out of date. Under the current arrangement and contract, the County has limited oversight and control over how taxpayer dollars are spent. There is no incentive to optimize system performance under the current contract. This is why a national search for the best transit provider could offer a cost savings, more oversight and transparency and better service overall.

 

 
Myth: Milwaukee County transit is better run by a non-profit company.
 

Fact: The top priority for Milwaukee County is to retain a provider who can provide the best value to Milwaukee County – the best service at the best price. Further, the bidding process cannot give preference to a non-profit or for-profit because that could be perceived as a restriction of competition by the FTA and could put federal transit funding at risk.

 

We do know that the vast majority of like-sized cities have transit services managed and operated by large, for-profit providers. The main reasons for this include:

  • Economies of scale when purchasing goods and commodities for the transit system operations, allowing for the redirection of a greater proportion of tax dollars to service.

  • Specialized management experience, operational efficiencies, technological and logistical improvements and innovations-experiences gained and lessons learned in other systems can be utilized to the benefit of the County.

  • Centralized infrastructure can allow for further redirection of dollars to service. For example, a call center that can be made available for local transit users. It is more efficient for a firm to add marginal resources to an existing function, than for a local provider to create the entire function.

  • Training resources currently not available to Milwaukee County.

  • Competition. Private firms have a national reputation to uphold and will want to retain this business line, creating an incentive to manage effectively and provide value to the taxpayers and riders.

  • Flexibility. A transit contractor is not bound by some of the limits that make government less nimble. This means less risk to riders and service.

Myth: It is impossible for Milwaukee County to find a transit management vendor that is more efficient, effective and responsive than our current transit provider.

 

Fact: We know through a thorough look at best practices around the country that Milwaukee County’s transit system can do better. We know that our current system could be more efficient in terms of the amount of public dollars it spends on administration versus service. We also know that the current system can be more responsive and that the current contract does not allow the County to have sufficient oversight into the transit operation.

 

Through our recent procurement efforts, we were able to identify a firm who has not only demonstrated the ability to provide greater efficiency, effectiveness and responsiveness across the country, but they identified how their size and buying power would save us more than $15 million annually. This would have allowed us to provide riders with more routes, improved services, greater oversight and transparency.

 
Myth: The County Executive keeps raising bus fares and cutting routes.
 

Fact: In the three years County Executive Abele has been in office he has never raised fares and has added service. He has also decreased fares for paratransit users in 2014.

 

Myth: Bringing transit in-house is the best option – it will be cheaper and will create more jobs.

 

Fact: One possible outcome is that the transit system would come under direct County management and operation ("in-source"). This recommendation was proposed by the County Board and would make all positions (over 1,000 employees) that operate the system, including executive leadership, administrative and planning staff, bus drivers and mechanics, etc. county employees.

 

The 2014 Adopted Budget required the Office of the Comptroller to convene a workgroup to examine "the advantages and challenges of in-sourcing versus outsourcing transit management and operations." The workgroup is tasked with issuing a report that "...shall examine employee ramifications, unfunded liabilities, taxpayer impacts and other issues related to in-sourcing".

 

This workgroup has since met and issued its report; however, the complexity of this move meant that in the short time-frame, the group was only able to provide a high level analysis and was not able to fully detail the short and long-term impact to taxpayers, and thus the full implications have not been laid out for the decision-makers. One of their initial observations was that transit and the county has separate and distinct systems for Human Resources, Procurement, Risk Management and Central Accounting. Integration of these systems would take time and be costly. The exact fiscal estimate of what it would cost to build capacity in these systems is unknown at this time but it’s expected to be costly.

 

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