July 1, 2004 - From the September, 2001 issue

The Trials & Tribulations Of L.A. MTA: An Exit Interview With CEO Julian Burke

The L.A. County MTA has been historically characterized by the media, legislators and even its own employees as an overwhelmingly disfunctional organization, lacking a coherent vision and filled with an enormous amount of bureaucracy. However, in the last 4 years that perception has been uplifted with the help of turnaround specialist and outgoing CEO Julian Burke. Under his watch the MTA has streamlined budgetting, completed the Red Line extension to North Hollywood, started construction on the Blue Line, weathered a labor strike, the Consent Decree and implemented a new long-range plan. In this interview, Mr. Burke speaks candidly about his accomplishments, the difference between public and private management and the lasting effects of the Consent Decree on mobility in the region. MIR is pleased to present this honest look at the inner-machinations of our region's transportation provider.


Julian Burke

Mr. Burke, September is your last month at the helm of L.A. MTA.

Four years ago MTA Commissioners stated that your mission was to restore credibility and financial stability to the region's flailing transportation agency. As you exit, elaborate upon what your personal priorities were, what you did to address them, and how successful you have been.

My initial priority was to understand MTA's financial situation. I was briefly introduced to the financial reports of this agency before I came here, but I had only a cursory idea of how out of balance they were. At that time the organization relied heavily on a projected revenue stream that was unlikely to materialize. My first priority was to understand why that was and how to fix it.

At that point in time we had the Eastside and Mid-City extensions of the Metro Red Line subway in the planning stages, the Pasadena Blue Line in the beginning stages of construction, and the Metro Red Line through Hollywood and into North Hollywood in a stage of substantial construction. Those projects represented an enormous amount of sunk cost. That substantial investment led to my initial worry that we might need to shut down some of those projects. However, after struggling with the issue for a few months, our conclusion was to continue with construction of the Hollywood and North Hollywood projects, but to suspend the other three projects with a commitment to undertake an alternative analysis for the corridors of the suspended projects.

Another issue that I immediately became aware of was this agency's shabby reputation not only with its public, the press and the legislators in Washington and Sacramento – but internally as well. The morale of the staff, the real heart of this organization, was extremely low to the point that many were even embarrassed that they still worked for the agency. That became my second priority, restoring the credibility of the MTA to our employees, our customers and our funding partners.

In order to address those two priorities, stabilization of the financial picture and the restoration of credibility of the organization, we had to craft an accurate and believable message to our multiple critics that made them understand what we were doing, that the previous reputation of the MTA was no longer acceptable and that the agency was being fixed.

The fruits of that plan are now evident in the current perception of the MTA, internally and externally. Washington and Sacramento are much more comfortable with this organization, the public recognizes that we are doing a markedly better job and our employees now have a renewed confidence that we are moving in the right direction. That's not to say all issues have disappeared, but there has been substantial positive change and continuing improvement in where we're going.

In an interview with Metro Investment Report in 1999 we talked about your background and the difference between managing in the private vs. the public sector. Could you shed more light, with the advantage of four years experience, on what differences in management duties and approaches there might be between the two sectors?

In all of my prior experience, the stabilization and reorganization of a private institution, even one with publicly distributed shares, was not a matter of constant daily public attention. Almost uniformly, those assignments were in context of a board of directors or a government agency pressing for a change in management. The turn-around group that I was a part of for more than 20 years-The Palmieri Company-would develop a recovery plan outside of the prying eye of the press and without the need to schedule public meetings, etc., and we would be allowed to fashion, implement and market a solution, carefully and without a great deal of controversy.

Here in my first month as CEO I had to appear in five public meetings. That, in itself, was extremely foreign to me and made me realize that I could not plan, strategize and implement this turnaround without substantial public overview all along the way. Everything about this agency belonged to the public.

Of course, public oversight slows things down, and one can never expect a public agency to be as efficient as a private company, even a publicly held private company. But in this venue, it's perfectly sensible. This agency is funded by the public and is operated for the public. Our Board members are elected officials and, together, represent the people of our County, and should be involved in all the policy decisions of the MTA. Opportunity for direct public input is essential to their decisions and to the vision and direction of this agency.

How do you in practice separate policy from management? And how did you explain the distinction to your Board?

The statute that created the MTA has a list of six or seven issues that have to go to the Board – the annual budget, labor agreements, etc. Those enumerated items are clearly policy issues. The Board over time has established other areas of policy by resolution. The CEO of the MTA is required to run the day-to-day operations of the agency consistent with Board policy, and the Board is meant not to micromanage the agency. Thus, there is some grey area between policy issues and management issues. What I've tried to do is to make the decisions I believe are solely managerial. Sometimes, but not often, one or another Board member will suggest that I stretch the definition of management issues, but, in every case, I've tried to act carefully and honestly in distinguishing policy issues from purely managerial issues.

You mention labor agreements. You've now had time to reflect on last year's labor strike. What are the lessons you gleaned from that experience? And what are the lasting impacts from that agreement that your successors at MTA must understand?

First, I regret the public endured a 32-day strike but it was necessary to forge new labor agreements that let MTA operate more efficiently so we can expand and improve service to the transit dependent and others.

I think the key to reaching those agreements is the unity the MTA Board demonstrated throughout the negotiating period, even preceding the strike.

The Board members cover the whole political spectrum but each one knew that we had to be united and insist on a contract that benefited not only our employees but the public, as well.

Last year's labor agreement could only have been accomplished with the following procedural concepts: 1) Keep the Board fully informed of each issue in the negotiations as the issues unfold and what the financial and operational implications were of the various options to deal with each such issue; 2) Request instructions from the Board, as a Board, on all important negotiating issues.

In the last two weeks, the negotiating team had meetings with the Board almost every day, sometimes two or three times a day. The Board members counseled themselves repeatedly throughout the process that the agency would negotiate only through the negotiating team, which, in turn, would be instructed by the Board. That process, although somewhat cumbersome and exhausting for the Board and the negotiating team, is the lesson learned for managing an otherwise complicated labor negotiation when the goals, albeit fair and reasonable, are likely to be controversial.

And what were the essential Agency goals and objectives that kept your Board united during the negotiations?

We wanted to offer the unions a fair increase in compensation and no reduction in benefits. We needed to have the unions understand how difficult the work rules had become over time and how inefficient they had made the organization. We wanted to convince the union leaders that it was in their best interest to deal with the reality that some of the work rules were unnecessarily cumbersome operationally and had stunted our ability to run a reliable and expanding transit system. Our main intent was to demonstrate that when the agency achieved a more efficient operation we could actually increase service and hire more union members, and, in that context, we were offering a very reasonable compensation and benefit package.

In a companion piece in this month's MIR we have an interview with Gary Gleason, Director of Santa Barbara's MTD. In that interview he said, "We learned that we have to provide what our customers want. And we've been able to do that." You have a 4,000-square-mile county with multiple constituencies and varying needs. Santa Barbara is a much more compact area. Is it possible for an agency at the scale of MTA to have a customer/community-friendly public transit system? Is the Agency's scale as much of a disadvantage as it is an advantage?

First, let me emphasize that Los Angeles County's transit and overall transportation issues are, indeed, totally different than those of Santa Barbara. Given the size of this county, its population density, the economic diversity of that population, and the existing level of congestion of its roads and highways, I very much doubt that the Los Angeles County MTA can ever provide all of its customers "what they want."

Nevertheless, we must continue to focus our work on delivering more and ever-improved mobility for our customers. Mobility is our business and the county transportation users are our customers. Like almost every business, serving the customers' needs and desires is the path to success.

What we can and must do is to employ our available resources to reducing congestion and increasing mobility, which, given the current and projected state of congestion on our streets and highways, necessarily involves increasing the capacity and efficiency of our public transit system.

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When I came on board, the MTA's bus system was so old and decrepit that it was totally unreliable. The fact that the agency had not purchased new buses over a substantial period of time was at the root of much of the public outcry. So early on we implemented an accelerated procurement plan to completely replace our bus fleet with new reliable, compressed natural gas buses.

We also have expanded our bus service, increased the peak fleet, and initiated the new Metro Rapid Bus lines because that's what the people who are transit-dependent need and want. They want to be able to get to more places more easily and more reliably. Right now, the MTA is more responsive to our transit users than it has been in years.

We will never have enough money to fully satisfy all of our users' potential transit needs, however, we can improve. And during my tenure we have begun a process of changing how the public views and uses public transit. Metro Rapid has put an entirely new kind of service on the streets of L.A. The expanding Metro Rail system today also is carrying a greater share of the Metro ridership.

But simply adding more MTA systems isn't the answer. We want to improve the desirability of the countywide transit system through better coordinating with the municipal bus service providers. The aim is to provide seamless travel. Riders should be able to transfer easily from one system to the other. With limited resources, MTA and the munis must work closely to avoid duplicating service yet make sure that we serve all the destinations that our riders need to access via public transit.

You mention the Agency's long-range plan. We've carried a number of interviews re: this plan. But given the constituencies that you represent and the targeted funding that you are allowed to appropriate, do you presently have the discretional financial resources to make a difference in transportation? Obviously your funding is segregated between a myriad of governmental institutions, regulations and local agencies. But again, as you leave, does the MTA CEO presently have the wherewithal to really make a powerful impact on the gridlock that faces L.A. in the next 25 years?

The bottom line is we need more money to improve mobility on a variety of fronts. On the public transit side, Sacramento and Washington must give us more flexibility to use transit dollars to operate our bus and rail service. We get less than 30 percent of our operating costs from the farebox. The balance is hard to come by. Compounding matters, there's competition with the 16 municipal bus operators and MTA for limited operating funds.

However, the vast majority of trips in the county are not made by public transit. It's primarily commuters and others jamming already crowded streets and freeways. Bicyclists and pedestrians also are part of that equation.

We need a comprehensive transportation system that addresses these and other components bearing in mind not only today's needs but those 10 and 20 years from now. The Legislature and Congress must make transportation a higher priority than they have in decades past and then give us sufficient resources and the broad authority to allocate those funds to where they're needed most.

Speaking of flexibility, let's turn to the Consent Decree of 1996, which clearly limits management's discretion. What's the current status of the Consent Decree, your appeals and your attempt to modify its interpretation? Bring us up to date.

First of all, I don't mind saying that it's unfortunate that this agency has the Consent Decree in the first place. However, early in my tenure I agreed that we must comply with it and we believe we have and are continuing to do so. Unfortunately, the Special Master has set out an interpretation that is greater than what we believe is contemplated by the Consent Decree.

The agency already is spending nearly half its budget on the bus side at the expense of street and highway and other MTA funded programs that serve the county's residents. While MTA agrees bus service will always be the backbone of our transit service, that service alone will never be able to solve all of the mobility needs of this county. For example, buses alone will not solve the traffic gridlock on L.A.'s crowded streets and freeways. It is very troublesome to imagine that the Consent Decree intended to give the Special Master the broad discretion to demand more and more buses on top of everything else MTA already had planned and since has implemented to improve bus service. The mobility of the region is at stake and that is why we must still seek to have the courts define the limits of any such discretion.

What effect will this have on the Valley busway? And can that project be used to address the Consent Decree's stipulations?

At a minimum the busway should qualify as part of the bus service expansion plan contemplated by the Consent Decree. However, the Master has not yet ruled on that portion of the Consent Decree. I frankly don't know what the BRU or the Special Master will say regarding the busway. They might say that it pretends to be bus service, but it's actually train service being run on tires.

If you have a terrific, friendly, attractive and reliable service, it hopefully will always be at least substantially full during its peak periods. But there is no way to put enough buses on the street without some crowding in excess of whatever the prevailing load factor target is. It's simply impossible. If you interpret the load factor calculation with the strictness that the Master has employed, L.A. will never have an acceptable transportation system. You can't put enough buses on the street to alleviate all crowding in excess of the load factor target your service was scheduled for. It's simply impossible.

The MTA hasn't lost every Court decision. The recent $29.5 million Tutor-Saliba verdict will infuse an enormous amount of cash back into the agency. How has that impacted the agency both in terms of morale and capital?

The immediate financial impact from that judgment will be negligible. I assume that Tutor-Saliba will appeal the judgment and will issue a bond leading to additional appellate litigation. If that happens we won't get that money for a substantial amount of time.

However, in the interim it has positively affected our other contracts. In effect, it has changed the bidding system so that we are now receiving more legitimate bids. I think the technique of underbidding and then trying to have us approve a number of change orders will cease.

Given what you've been able to accomplish over the last four years, what suggestions, advice, warnings and observations are you communicating to your successor, incoming CEO Roger Snoble?

My message is to focus on the overall mobility issues facing this county, with special attention to further improvements to, and expansion of, the region's public transit operations and the congestion on its roads and freeways. In other words, continue to emphasize in decision-making, policy recommendations and in public understanding, the breadth and regional nature of this agency's responsibilities.

As for specific goings-on in the agency, there are some policy issues that are outstanding. A number of policy issues will arise in connection with the pending applications for the creation of transit zones in the San Fernando Valley and the San Gabriel Valley. Those issues must be understood and dealt with over the next year.

Further, we are in the midst of another labor negotiation with our bus and rail supervisors. That's a complex set of issues and he must help that negotiation move forward.

And lastly, he needs to understand the process and status of our current corridor bus and rail projects, including their planned funding mechanisms. The projects are an integral part of our current plans moving forward.

Lastly, what's in store for Julian Burke? You don't seem the type to simply retire and fade from the public spotlight? What might be your next challenge?

I don't want to think about that yet. I really fell in love with this job. In fact I probably love this job too much. But change is important. And now that we are substantially stabilized, I believe the agency is ready for an experienced transportation manager as its CEO.

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