Independent Oversight Committee approves transit agencies’ financial efficiency review

The Financial Efficiency Review Independent Oversight Committee established following last year’s enactment of state Senate Bill 63 today adopted the Bay Area Financial Efficiency Review, which identifies strategies AC Transit, BART, Caltrain and San Francisco Muni can pursue to improve operational efficiency; outlines near-term opportunities to increase and improve service with existing resources; notes real estate development opportunities that could increase ridership and revenues in the coming years; and details more than $1 billion of cost-saving measures taken by the four agencies from July 2019 through June 2025 in response to the economic pressures and changing travel patterns that emerged during and after the COVID-19 pandemic. In their motion approving the analysis, the Oversight Committee directed staff to make several minor revisions to the report and to add one additional early action strategy. Staff will post the updated version of the report to the same link on the MTC website by May 27. The analysis details the following measures:

• AC Transit – renegotiated contracts ($9.3 million); scaled back Transbay commute-oriented bus service ($157 million); and deferred major initiatives ($7.3 million).
• BART – avoided planned pre-COVID service increase ($102 million); consolidated headquarter offices to smaller footprint; eliminated planned increase in BART Police staff ($51 million); eliminated pension prepayment allocation ($40 million); eliminated vacant positions ($32 million); instituted wage freeze ($29 million); and optimized train lengths ($15 million).
• Caltrain – improved operator crew efficiency and reduced overtime ($37 million); instituted strategic hiring freeze ($17 million); and realized fuel savings ($6.5 million). 
• SF Muni – reduced service and held positions vacant ($226 million); implemented transit priority improvements enabling more frequent service with fewer resources ($30 million); and eliminated planned one-time expenditures ($30 million).

The report also notes that BART realized $549 million in one-time capital cost savings —including project savings related to its new rail car contract — and that SFMTA realized $389 million in capital cost savings.

The Bay Area Financial Efficiency Review is a requirement of SB 63, which also requires that AC Transit, BART, Caltrain and SFMTA identify specific strategies they are committed to implementing and adopt formal policy or budget actions by July 1 of this year. BART’s announcement this week of new demand-based pricing for parking at select stations (effective July 1) and SFMTA’s new Fares for our Future initiative both align with strategies identified in the Phase 1 Financial Efficiency Review Analysis. 

Other strategies identified in the Bay Area Financial Efficiency Review include reconsidering the timeline for a transition to zero-emission bus fleets; reducing barriers to fare payment for new customers by beefing up transit pass programs such as Clipper BayPass, which can lead to additional revenues and increased ridership; assessing scheduling efficiencies; implementing more transit-priority projects on local streets to provide faster and more reliable speeds for buses and streetcars; and boosting non-farebox revenues via parking fees, leasing fiber and other communications assets, and capturing regenerative braking credits for which agencies can receive compensation by feeding electricity generated during braking back to the power grid. The report includes a strategy that BART revisit the terms of its San Francisco International Airport lease payment for possible negotiation to more accurately reflect the benefits, costs, incentives and risks to both parties of BART service to the airport.

Additional strategies identified in the Bay Area Financial Efficiency Review include transit agencies tracking and reporting on any additional cost-saving or revenue-enhancing measures over time and calculating the financial impact of any implemented strategies using the same framework used in the Phase 1 analysis. The report recommends that MTC establish a consistent approach and standard for reporting on transit agencies' financial conditions and tracking progress on early action strategies to support clear, consistent and transparent communication with decision-makers and the public. 

Looking farther ahead, the Phase 1 report provides an inventory that highlights the transit agencies’ opportunities to capitalize on their real estate assets — including through joint ventures with development firms — to deliver more long-term value through lease revenue and ridership growth. 

SB 63 established the Public Transit Revenue Measure District covering Alameda, Contra Costa, San Francisco, San Mateo and Santa Clara counties and authorized placement of a regional sales tax measure on the November 2026 ballot in these counties to raise new revenue for public transit and fund other transportation improvements. If the proposed measure qualifies for the ballot and is approved by voters, proceeds from the sales tax would be allocated to AC Transit, BART, Caltrain and SFMTA to support transit operations and prevent major service cuts, and transferred to other Bay Area transportation agencies — including the Alameda County Transportation Commission, the Contra Costa Transportation Agency, the San Mateo County Transit District and the Santa Clara Valley Transportation Authority — for specified transportation purposes. 

MTC will undertake a second phase of analysis if voters in November 2026 approve a SB-63 enabled regional transit sales tax measure. This multi-year phase requires a deeper evaluation of cost structures and strategies to support financial sustainability. A second report also will be subject to review and final approval of the Financial Efficiency Review Independent Oversight Committee.

MTC is the transportation planning, financing and coordinating agency for the nine-county San Francisco Bay Area.