The Case for Letting Nonprofits Run Public Transit
Even a popular public transportation service can struggle to cover its expenses. Take the recent case of Caltrain, the commuter line that links San Francisco and San Jose. Ridership is up 38 percent since 2010. Still, this past May, the agency announced an expected budget shortfall for 2015. You wouldn't think that could be the case, but across the American transit landscape, it's actually the norm.
The difficulties of fixing transit funding have occupied some top minds in recent years. Count New York City planner turned Stanford University scholar Rohit T. Aggarwala among them. In the summer issue of the Stanford Social Innovation Review, Aggarwala argues that inefficient public sector management is at the root of public transportation troubles.
For that reason, he says, U.S. transit systems would be far better off run by non-profit groups than by government — especially commuter lines:
Turning a commuter rail operation into a nonprofit is both feasible and potentially desirable. Doing so has the potential to reap great benefits, both for that transit system and, by demonstration, for the rest of the transit industry as well.
Aggarwala builds his case for transferring transit power from the public to non-profits on three points:
- A clearer mission. All too often, transit agencies try to be everything to everyone. They try to attract more riders to generate revenue, and they also try to cover more space in the metro area to serve the public — even though, as the work of Jarrett Walker has shown, these two purposes run counter to one another. If non-profit groups took control of transit they could pick a mission and stick with it, in large part because of point number two …
- Political autonomy. Generally speaking, transit agencies are managed by boards whose members are beholden to an elected official in some way or another. That makes every decision to change a route, raise a fare, or negotiate new labor contracts a politically charged debate rather than an objective business move. As a result, writes Aggarwala, operating costs tend to be higher than they should be, and service quality lower.
- Access to new revenue. Even as non-profit transit agencies improved their business model, they could also seek out charitable donations. Private donors don't usually money to the government, but they do give to non-profits — to the tune of nearly $300 billion in 2011 alone [PDF]. And it need not be huge lumps, either; Aggarwala envisions library-type of mailers that read: "Your $10 donation would eliminate 200 vehicle-miles from our roads this year."
A good first candidate to make the shift into non-profit hands? Try Caltrain, says Aggarwala.
Here's why. For one thing, Caltrain has a wealthy ridership (43 percent make six figures). That means its focus should be on enticing people out of their cars, instead of providing an equity service. But past efforts to make the train more attractive to drivers — say, by running express trains that skip some local stops — have been met with public outrage. As things stand, the agency would rather cut service to meet financial gaps than implement upgrades that could spark a social uproar.
Aggarwala's whole argument is well-conceived and worth the read. He explains why non-profits would have no trouble running a transit system (they already dip into sectors that traditionally fall under the public domain, such as schools and hospitals). He also makes clear why this "non-profitization" is preferable to privatization (basically: less fear of profit-gouging).
The real question, of course, is whether or not the idea could ever happen. A powerful philanthropist would have to lead the charge — probably someone of Bloomberg's or Gates's stature — since it requires a fairly radical commitment by elected officials. The public would also need an option to reclaim the system (as well as some alternative mode for low-income riders being displaced by the shift).
For his part, Aggarwala wants the non-profit community to jump into the discussion the next time a commuter line faces a funding crisis. Shouldn't be too long before the next chance comes along.