Consultants recommend contracting administrators
A consulting firm hired to evaluate the Capital Area Transit System recommended Tuesday that the agency replace its top management by contracting administrators from a transit management firm that offers more experience and expertise.
In October, the CATS board solicited TMG Consulting, of New Orleans, to make recommendations about the agency’s management structure to ensure CATS will meet service expansion goals — promised in the April property tax election — by 2014.
The CATS board took no official action on the recommendations, but some board members were dismissive of the report and offered their support to the current staff members and to CATS CEO Brian Marshall.
TMG President Anthony Mumphrey Jr. said after the meeting that CATS will not be able to deliver on its promises to expand and improve service with its current management structure.
He said CATS has a “better chance” of delivering its goals if it fills key administrator positions, such as the CEO and the chief financial officer, with employees contracted through a qualified transit management firm.
“The firm has expertise, it has coordination, it’s a team,” Mumphrey said after the meeting. “Do you hire a bunch of guys on the sandlot or do you hire the Green Bay Packers?”
The report received mixed reviews from the CATS board.
“Contract management is the same as privatization. You can try to dress it up however you want,” said Montrell McCaleb, a CATS board member. “I’m not comfortable with contract management or privatization.”
The sentiment was echoed by board member Dalton Honoré II who made a motion to accept the report but said after the meeting that he supported Marshall.
“I have always known that CATS had done more with less, but with the passing of the tax, we now have the opportunity to do more with more,” he said. “And I want Brian in charge.”
Board member Isaiah Marshall, no relation to Brian Marshall, said he would keep an open mind, but added that based on the limited information provided to the board Tuesday night, he was leaning against hiring new management.
“If I had to make a decision tonight, my vote would be against the recommendation,” he said.
Board President Jared Loftus said the board will have to decide if it will take any action on the recommendations, but added that the report had piqued his interest.
“We are committed to doing whatever we need to do to make sure the system accomplishes its goals and does what was promised to voters,” Loftus said after the meeting. “Whatever that takes is something we need to strongly consider, and some viable options were presented to us tonight.”
Brian Marshall, who sat among the board members as the presentation was given, said after the meeting that TMG’s report displayed a lack of understanding about the system.
“What they know is just the snapshot that they see,” he said. “They didn’t do anything about the history of what we dealt with. We’ve done way too much to be discounted, and the citizens know about the progress that the employees of CATS have made.”
TMG’s report weighed the pros and cons of seven different management options ranging from no changes to “delegated management,” which TMG officials stressed was different than privatization.
“We did not consider privatization because it was not a viable alternative,” said Dwight Norton, a TMG senior analyst. He said fully privatized companies are not eligible for federal grants, which are key to CATS funding structure.
TMG recommended CATS solicit a two-year minimum contract for new managers with the option to move into delegated management — which they defined as a private firm that is contracted to manage, operate and maintain the entire system.
The report acknowledges that contracted management, as recommended, is more expensive than hiring someone directly.
But Norton said it gives public agencies access to talent they might otherwise not get because they can’t compete with private sector salaries.
“Like everything else, you pay for what you get,” Mumphrey said. “If you want someone to turn the system around, move it to the next level, then you need a world-class management firm to come in here.”
The TMG report also noted that based on CATS funding and plans for 2014, it will be ranked among peer agencies in the middle in areas including budget, service hours and population.
But it ranked No. 1 among peer agencies in terms of total square mileage of its service area, suggesting the agency will be stretching itself thinner than other agencies.
TMG’s report also said that CATS will be 29 employees short of being able to deliver its intended service based on its current plans for 2014, and it will have a disproportionately small administrative budget.
According to budget projections, CATS intends to spend 9 percent for administrative costs, 22 percent for maintenance and 69 percent for vehicle operations in 2014.
TMG said the peer average is 19 percent for administrative costs.
“The world assumes you should reduce administrative costs as much as possible, but you can reduce it to zero and have no system to run,” Mumphrey said. “To run a high-quality system, you need high-quality administration and right now that’s out of balance.”
Mumphrey also said the recommendations were not a critique of the current staff’s qualifications and individual abilities — rather the evaluation was of the CATS organizational structure.
Last year CATS, which has suffered financial shortfalls for years, successfully campaigned for a 10.6 mill property tax, which was passed in Baker and Baton Rouge.
CATS gave itself a deadline of 2014 to use the tax money to dramatically improve the bus service and ultimately reduce wait times at peak hours from 75 minutes to 15 minutes.
The new tax money is expected to boost CATS budget to about $24 million by 2014. Before the tax, CATS had a budget of about $12 million.
Editor’s note: Some wording in the fifth paragraph was changed on Jan. 16.