Jul 12, 2007

Chicago Transit Gives 1,000 A Free Ride To The Unemployment Line

From an Associated Press article reported on WQAD web site, the CTA took a shot at the Illinois legislature by threatening layoffs and service disruption if the state doesn’t fork over additional funds.

“In announcing the layoffs, CTA officials said the job cuts were part of a contingency plan that would take place in September if the Illinois legislature fails to increase transit funding.”

When digging through the CTA web site I found the “2007 Contingency Plan” (pdf and very slow). The plan offers five paths that the transit authority may take; Option A is a service cut only contingency illustrating total layoffs of 10,833. Evidently this plan calls for a combination of layoffs in August, and fare increases in September, to provide the board with time to determine how to cover the $110 million anticipated shortfall.

What I find of special note is that the first graph illustrates that “pension and health care cost increases” are identified as the principle cause for the anticipated shortfalls. There was no mention of the cost of fuel or the escalated cost of maintaining the 9.6 year old fleet.

Pensions should not be a problem if they were properly funded when the commitment is incurred. This is a significant problem in America today, businesses and organizations, like the CTA, have failed to adequately fund pensions and have put the problem off to-a-later-date.

Inadequate funding of pension responsibilities is going to become a major problem, you will see company after company shift the blame for poor performance on to their older employees.