Press Release: 7/15/2025
Study Finds MBTA Operating Costs Surging Since Control Board’s Elimination
July 14, 2025by Editorial Staff
Rose nearly 15 percent from FY 2023 to FY 2024
BOSTON – In the years since fiscal 2018, when the MBTA last balanced its budget without state contract assistance or federal funds, operating costs have been rising at an alarming rate, culminating in an increase of nearly 15 percent from FY 2023 to FY 2024 alone, according to a new policy brief published by Pioneer Institute.
“Governor Healey just approved an additional $535 million for the MBTA,” said Andrew Mikula, who co-authored “Cost Control Takes the Wheel: Priority Reform Areas for Balancing the MBTA’s Operating Budget” with Charles Chieppo and Aidan Enright. “Without it, the Authority was looking at a projected $700 million deficit for the fiscal year that began on July 1.”
The Fiscal and Management Control Board (FMCB) was created after the MBTA collapsed in the record snows of 2015 to address operational and financial issues at the T and was critical in bringing operating efficiency to the beleaguered agency. The trend since the FMCB’s term wasn’t extended in 2021 suggests the T would benefit from reinstating a similar entity to refocus on controlling costs.
The pandemic caused MBTA fare revenue to fall by $285 million between FY 2018 and FY 2023. But state operating support increased by $539 million during that time and the T also received about $2 billion in federal COVID relief money. In addition, the number of unlinked trips the Authority provided fell by around 36 percent between FY 2019 and FY 2023.
Cost increases have been especially sharp in several areas:
Bus operations
In 2019, MBTA buses had operating expenses per vehicle revenue hour of $153, compared to $220 at New York’s Metropolitan Transit Authority. By 2023, costs had risen slightly to $263 in New York, but the hourly cost of operating an MBTA bus nearly doubled, to $297, far exceeding New York’s costs. During that same period, the number of annual passenger miles traveled on the MBTA bus network fell from 258 million to 205 million. The graphic below compares the T’s bus operating cost growth to that of peer agencies.
Overtime
Historically, more than 40 percent of MBTA overtime pay has gone to employees who spent less than 40 hours working at their base rate during the same week. Under the
FMCB, the T introduced an accountability system in 2016 that cut average daily overtime hours by a quarter in the first year. But between FY 2021 and FY 2024, overtime costs rose by more than 48 percent, from $85.3 million to $126.4 million.
The MBTA Retirement Fund
When the T contributed $37.7 million to the retirement fund in FY 2007, the fund had just come off a year in which it was 94 percent funded. The MBTA was budgeted to contribute $207.7 million in FY 2025 to a fund that is just 56 percent funded.
The fundamental problem is that there are more people collecting benefits than paying in, mostly due to how early MBTA employees can retire. Those hired before December 2012 can retire with a full pension after 23 years of service, regardless of age. Those hired after December 2012 can retire with a full pension at age 55 after 25 years.
In addition, T employees receive pensions that are significantly more generous than those of their state government counterparts. Unlike state employees, they are also part of Social Security, meaning they can collect both pension and Social Security benefits. Employees and the MBTA also contribute to it. In FY 2024, the T paid $63.1 million in Social Security taxes.
Pacheco Law exemption
The FMCB also took advantage of cost-saving options that aren’t currently available to the MBTA. It was granted a three-year exemption from the Commonwealth’s so-called Pacheco Law, a unique statute that makes it difficult to contract out any service provided by state (or MBTA) employees.
During the exemption, the T contracted out operation of its secure cash counting facility, better known as the Money Room. This reduced costs by 65 percent and the time it takes to deposit funds by 80 percent. Contracting out the operation of warehousing and logistics cut costs and improved inventory accuracy from 57 percent to 80 percent, with 99.8 percent of deliveries completed within 10 hours.
The threat of competition also brought the Carmen, the MBTA’s largest union, to the table to renegotiate their contract, saving an estimated $218 million over a decade. All told, the T estimated the 10-year savings from actions taken under the Pacheco Law exemption at more than $450 million.
“You can’t deliver public transportation on the cheap, but the data and experience indicate that expenses can be trimmed without harming system safety or operations,” Chieppo said. “Every dollar of waste we can eliminate is one that can be put to work in the regional economy by improving mobility in Greater Boston.”
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Charles Chieppo is a senior fellow at Pioneer Institute and principal of Chieppo Strategies LLC, a public policy writing and communication firm. Previously, Chieppo was an adjunct professor at Suffolk University and a research fellow at the Harvard Kennedy School, where he was the primary contributor to “Better, Faster, Cheaper,” which was the most read blog on Governing.com. His columns and articles have appeared in numerous local and national publications, including The Wall Street Journal, The Boston Globe, Boston Herald, National Review, Education Next, USA Today, CommonWealth magazine and The Hechinger Report. Chieppo is a graduate of Boston University’s College of Communication and Vanderbilt University Law School.
Andrew Mikula is a Senior Fellow in Housing at Pioneer Institute. Beyond housing, Andrew’s research areas of interest include urban planning, economic development, and regulatory reform. He holds a Master’s Degree in Urban Planning from the Harvard Graduate School of Design.
Aidan Enright is Pioneer’s Economic Research Associate. He previously served as a congressional intern with Senator Jack Reed and was a tutor in a Providence city school. Mr. Enright received a B.S. in Political Science and Economics from the College of Wooster.
About Pioneer Institute
Pioneer empowers Americans with choices and opportunities to live freely and thrive. Working with state policymakers, we use expert research, educational initiatives, legal action and coalition-building to advance human potential in four critical areas: K-12 Education, Health, Economic Opportunity, and American Civic Values.