The private contractor that runs the New Orleans Regional Transit Authority’s operations will see its control of the agency's management shifted to public employees under a new leadership plan approved Tuesday by the transit agency's board.
Under the new plan, Transdev, the RTA’s private contractor for the last decade, will no longer manage the transit agency after its current contract expires next year. Instead, the RTA will hire its own executives to handle administrative and management functions.
Transdev — or potentially a different private contractor — will continue to operate the RTA's buses, streetcars and ferries, and will remain in charge of maintenance and other operations.
The decision to bring management responsibilities back under the RTA board marks a major shift in the way public transit has been run in New Orleans over the past few decades.
It also represents a victory for critics who said the outsourcing of most functions to Transdev resulted in little public oversight of an agency that provides 19 million rides to residents and tourists every year.
“One of the reasons we did the management study is because there was a sweeping number of people who thought we should go back to direct management,” said Flozell Daniels, the RTA’s board chairman. “We still have the option to continue to do what we do (now), if it turns out that we can’t do this, or do it well.”
Across the country, only New Orleans and one other transit agency — Nassau Inter-County Express in New York — contract nearly every facet of their transit operations and management to a private vendor, according to a report from the national consulting firm Management Partners and the local firm TMG Consulting.
The consultants said the current fully outsourced management structure offers simplicity, access to the contractor’s expertise, and fewer in-house staff and overall costs.
But it can also result in less accountability to local leaders and diminished oversight by the public agency, which sometimes results in poor transit-system performance or higher-than-necessary costs, the consultants said.
The management structure approved by the RTA board Tuesday is less complex than taking on full management of the agency's operations, but it likely would require some employees to work under the state’s civil service system instead of for the private contractor. It was unclear whether that would mean changes to their retirement packages or benefits.
The new structure was approved 6-1 by the RTA board and is to go into effect in September.
Daniels and other members voting in favor of the idea stressed that the RTA has a year to work out any kinks associated with the deal.
Daniels also said that preliminary reviews suggest that current employees' salaries and benefits might be preserved under the state system.
Alex Posorske, of RIDE New Orleans, a transit advocacy group that has long called for more transparency in the RTA’s operations, said in an interview that the new model will provide a larger voice to commuters and other members of the public.
“It’s pretty clear, here and elsewhere, that if you want real transparency to build public trust, then you need real public employees, and a public staff, and a public board, that’s going to listen and empower them” Posorske said.
But not everyone endorsed the new plan. Sharon Wegner, the lone board member to vote against the change, said Transdev has performed well during its tenure and that the new plan has sparked too many unanswered questions.
She also said the board should wait until a replacement for former member Al Herrera — who resigned this month after an investigation into his personal contracts with RTA vendors — is appointed and can weigh in.
“Overall, RTA has not been performing that badly with Transdev’s management,” Wegner said. “Until I have more information, and I feel that everyone who has been associated with RTA has had a chance to speak, I do not think we should move forward.”
The head of Transdev’s national transit division, Mike Setzer, urged the board to think of the needs of the agency's 750 mostly contracted employees.
The company’s $80 million annual contract with the RTA ends in August, and while RTA board members have welcomed the prospect of a new Transdev bid, they also have been courting other potential vendors who could work under the new model.
Setzer said his firm will seek a new deal next year even if the contract would limit its current authority.
“I can’t imagine a situation where we wouldn’t want to compete, and we expect to be a very effective competitor,” Setzer said. “We’re all in.”