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MCTS projects $10.9 million 2025 shortfall; agency cites overtime, lower fare revenue and paratransit costs
Summary
Interim MCTS leadership told the County Finance Committee the transit system expects a $10.9 million operating deficit for 2025 driven by higher overtime, lower passenger revenue and paratransit contract costs; MCTS plans service and contract adjustments and to use federal COVID stimulus funds to cover the shortfall this year.
Milwaukee County Transit System (MCTS) leadership briefed the Finance Committee on July 16 that it expects a roughly $10.9 million operating shortfall for 2025 and outlined steps being taken to reduce the gap.
Sandy Kellner, interim president and CEO, and CFO Alexander Corona told supervisors the agency is seeing rising overtime (operations overtime increasing from roughly 17% toward 25% in recent months), higher health‑care claims for some employees and lower passenger revenue since the introduction of fare capping. "We are seeing a trend that is concerning," Corona said of overtime and spread (time‑on‑duty premium pay). The transit team said more than 200 operators regularly accumulate overtime under the existing labor agreement and that higher absenteeism this year has contributed to more overtime demand.
MCTS officials said they will use federal COVID‑19 stimulus (ARPA/CARES) funds to cover the 2025 shortfall so it does not affect the county’s bottom line this year; that funding is expected to be exhausted by 2027. The agency also described actions already underway: negotiating paratransit invoices and contracts, seeking to manage overtime through scheduling and reassessing vendor productivity, and planning service frequency reductions in the fall to align service with available resources.
Supervisors pressed for more detail on the cost drivers and the timing of corrections. Supervisor Shaquana Taylor asked about mandatory call‑in practice for operators; COO Kevin Pumphrey said schedule changes are posted on the planning day and operators may be assigned additional pieces consistent with the collective bargaining agreement but staff seek voluntary coverage first. MCTS acknowledged a delay in recognizing the trend related in part to a February implementation of a new ERP financial system that lengthened monthly close timelines; officials said they now expect more timely month‑end reporting and will return with additional data for prior years to illuminate trends.
Committee members asked for written breakdowns of the MCTS capital and operating capital stack, tax‑credit assumptions for grants, and history of overtime trends going back to 2022 so supervisors can assess whether the current pattern is new or an accelerating long‑term trend. Kellner and Corona said they would provide the data to the committee and that the agency is pursuing multiple mitigations including renegotiating vendor terms and reducing nonessential vacancies.
