ANN ARBOR – The Ann Arbor Area Transportation Authority (TheRide) announced that is will be permanently laying off 42 workers as a cost-cutting measure as the public transit system reports significant financial losses due to the COVID-19 pandemic.
The layoffs will impact 15% of its workforce -- both union and nonunion employees -- and executive staff have voluntarily taken pay cuts during this time.
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Since the pandemic began, ridership has dropped, fixed route services have been temporarily reduced by 70% and the agency has made all bus rides free in order to avoid interaction between drivers and passengers to slow the spread of the virus.
TheRide estimates that the loss of all fare revenue amounts to $600,000 per month, about 15% of the agency’s budget.
Since a state of emergency was declared by Michigan Gov. Gretchen Whitmer on March 11, TheRide has kept all staff employed and paid in full, whether they were staying home or coming into work. Frontline staff were paid time and a half.
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“TheRide was fortunate to be able to afford this temporary stopgap to help maintain peace of mind while we flattened the curve, but we cannot continue this spending indefinitely,” CEO Matthew Carpenter said in a statement. “Without changes, our projections suggest insolvency could happen before summer 2021, and we are still expecting unforeseen costs and additional loss of revenue. Changes to our staffing costs are an unavoidable and unfortunate necessity.
“This is a tremendously difficult decision, but the impacts of COVID-19 have forced us to quickly update our priorities in order to ensure we can continue to provide services in the future. There are no easy solutions – TheRide faces great uncertainty in its finances, and the economic impacts of the pandemic pose a threat to the agency’s mission in the community."
Carpenter and TheRide’s two deputy CEOs have voluntarily reduced their salaries by 10% for at least the next six months. All offsite training and travel has been canceled and hiring efforts have been reduced.
TheRide estimates these measures will save the agency roughly $4.9 million for the year. Along with its federal CARES Act relief funds and remaining reserve funds, Carpenter said the cost-cutting efforts leave the agency “in a momentarily strong financial position.”
However, he said that the future remains “very uncertain” due to several factors, including the cost to restore services, how long the funds will be required to last, whether the state government will cut funding and any unforeseeable expenses in the future.
“For all those reasons, we believe that preserving our resources now is the best strategy to ensure we can continue to meet the community’s needs in the future," Carpenter said in a statement.
“Going forward, we will rebuild our team along new lines and chart a sustainable course in our new circumstances. The organization that emerges will look different from how it was before, but we will still be here to support our communities, residents and passengers.”