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MCTS projects roughly $10.9 million 2025 operating shortfall; agency cites overtime, parts and reporting delays
Summary
Milwaukee County Transit System leaders told the finance committee they project a 2025 operating deficit (about $10.9M), will rely on federal COVID relief through 2026, and plan service adjustments and cost controls to align operations with available funds.
Milwaukee County Transit System (MCTS) staff told the county finance committee that MCTS is projecting a 2025 operating shortfall of roughly $10.9 million and outlined the drivers that have produced the shortfall and steps intended to limit the gap.
Sandy Kelner, MCTS interim president and CEO, apologized to supervisors for “how the information and the service changes were communicated,” and said MCTS will provide more timely information going forward. CFO Alexander Corona and other MCTS staff explained several business drivers contributing to the deficit: rising overtime costs, higher-than-expected absenteeism, increased healthcare and parts costs, lower passenger revenue related to fare‑capping and ridership trends, and productivity shortfalls with contracted paratransit providers.
Corona told the committee that the agency is using federal COVID (CARES/CRRSA/ARPA) funds to cover the gap in 2025 and 2026 but warned that those funds will not be available after 2027. He cited an overtime trend in the operations division that has risen from roughly 17% to about 25% in the most affected groups; supervisors asked for historical overtime data for 2022–24 to review the trend. MCTS also cited a recent financial-systems (ERP) conversion that delayed closing the books and slowed the agency’s ability to recognize and respond to the trend quickly.
The agency said some of the projected shortfall has been reduced by proposed frequency reductions planned for the fall; staff said the service cuts were already factored into the $10.9 million projection. MCTS also reported higher parts and vehicle maintenance costs and said paratransit contracted hours were higher than planned because of productivity differences.
Nut graf: MCTS leaders asked supervisors for continued partnership while the agency aligns service levels and operations with constrained resources. The agency said short-term federal funds will blunt the 2025 impact on the county’s bottom line but emphasized that service and budget choices will be required once one-time federal support ends.
Supervisors pressed staff for more detail on the overtime drivers, the ERP transition and how service changes affect passenger revenue. MCTS committed to deliver comparative overtime and absence data for prior years and to provide follow-up on steps taken with contractors to improve productivity.
Ending: MCTS framed the shortfall as multi-causal—labor costs, absenteeism, parts/pricing and revenue factors—and described short- and mid-term adjustments that would reduce operating exposure while noting the need to plan for the post‑federal‑funding period.
