More public transit — except buses — on road to privatization


LANSING — Most public transit agencies across the country contract with private firms to provide some services and operations, a new federal study shows.

A survey by the General Accountability Office found that local agencies across the country are most likely to contract out for paratransit services for disabled riders, dial-a-ride and commuter rail service.

“Transit agencies most consistently cite reducing costs as a factor influencing their decision to contract,” said GAO, a nonpartisan investigatory arm of Congress. “Contracting can reduce costs because contractors’ work forces are more flexible, with more employees working in part-time positions, and lower insurance costs, among other things.”

Other common reasons are more efficiency, more flexibility and starting new services, it said.

Michigan has a long history of helping to fund public transit in every county, according to Clark Harder, executive director of the Michigan Public Transit Association. In counties without a local transit agency, the Department of Human Services or an Office for the Aging may arrange for services.

Transit agency contracting practices vary across Michigan, from small systems such as those in St. Joseph and Monroe counties to large ones such as those in Grand Rapids and Metro Detroit.

For example, the Detroit Department of Transportation and The Rapid in Grand Rapids rely on a combination of employees and contractors.

DDOT has always contracted out paratransit service for passengers with disabilities, and its Detroit MetroLift program works with four private contractors, according to Deputy Director Angelica Jones. “We didn’t have the staffing and the wheelchair lift vans.”

Jones said the department has no plans to contract out its fixed routes — buses, which account for the major part of its services.

In Grand Rapids, The Rapid has contracted for paratransit and demand-response services for many years, said Jennifer Kalczuk, the agency’s external relations manager. Employees provide bus services.

Monroe County uses a different hybrid model: Lake Erie Transportation Commission employees provide bus services, a private company provides management and the Suburban Mobility Authority for Regional Transportation, or SMART, owns the buses, said Lake Erie Transit general manager Mark Jagodzinski.

In contrast, SMART doesn’t contract out for any of its own fixed bus routes or small bus services, said Beth Gibbons, its marketing and communications manager. The agency serves Macomb, Oakland and Wayne counties.

In the 1990s, SMART did contract out its fixed routes “but we brought it back in-house because we could do it cheaper,” Gibbons said. In addition, she cited concern about “quality of service because you don’t have the control.”

She also said SMART’s union contracts prohibit subcontracting existing work, so any future contracting out would be limited to new services.

The GAO findings are based on a survey of 637 transit agencies that file reports with the U.S. Department of Transportation. Of those, 463 agencies responded. GAO staff also interviewed transit officials, union leaders and representatives of citizen advisory groups.

“Transit agencies and contractors cited benefits and challenges to contracting, while labor unions primarily noted disadvantages — most notably, reduced wages and benefits and a potential decline in safety and service, among other issues,” the report said.

Challenges included the agencies’ loss of direct control of operations, it said, while contractors reported they could improve operational efficiency with the newest technologies, such as routing systems, and lower costs through more affordable insurance.

The GAO study comes at a time when Michigan’s state government, municipalities and school districts are increasingly looking to privatize services to save money.

For example, the Department of Corrections is hiring a Pennsylvania-based food contractor to provide meals to prisoners. The $145 million, three-year deal eliminates about 370 state government jobs. The Snyder administration estimates that the food service contract will save $12 million to $16 million annually, a claim that union leaders dispute.

In addition, a growing number of school districts have privatized nonacademic services such as cafeterias, bus transportation and janitorial services.

Sharon Edgar of the Michigan Department of Transportation’s Office of Passenger Transportation said she hasn’t seen increased use of outside contractors by local transit agencies, adding that MDOT has no policy that encourages or discourages the practice.

Local transit agencies make their own decisions, Edgar said.

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