1. Operating Budget Stability
FY17 Recap
Report to Fiscal and Management Control Board

2. FY17 Recast vs. FY17 Actual Results
Agenda
Executive Summary
FY17 Recast vs. FY17 Actual Results
FY16 Actual Results vs. FY17 Actual Results
FY17 Service Metrics
FY18 & FY19 Update
Appendix
FY17 Budget vs. FY17 Actual Results

3. MBTA operating budget performance exceeded expectations in FY17
Executive Summary
Executive Summary
MBTA operating budget performance exceeded expectations in FY17
FY17 structural deficit of $30M was a 65% improvement over FY16 deficit
Deficit 63% favorable to FY17 approved structural deficit of $80M
No significant service cuts
MBTA continues to hold the line on expense growth
For second straight year, core operating expense growth was flat
Core operating expenses controlled by headcount reductions and active management of materials & services
Revenue solid despite $35M shortfall in budgeted Statewide Sales Tax Receipts
Total revenue -0.8% (-$16M) versus budget
Own-source revenue slightly lower due to contract transitions
Results are draft pending audit by KPMG; no material adjustments expected
Forward funding goal that dedicated revenues cover operating expense still not met

4. Executive Summary
Cost control puts MBTA on track for Forward Funding goal: Dedicated revenues close to covering operating expenses
STATUS QUO FY17 PRO FORMA (AUG 2015)
COMPARED WITH ACTUAL PERFORMANCE
FY17A EXPENSES – $1.955B
FY17A REVENUES - $1.925B
Note: Structural deficit includes debt service and transferred capital employees annual expense, does not include Additional Assistance

5. Since FMCB, lowest operating expense growth in 15 years​
Executive Summary
Since FMCB, lowest operating expense growth in 15 years​
FY00 – FY15
Average: 5%
FMCB / New Mgmt
August 2015
Note: For comparative purposes, FY17 core operating expenses exclude capital employees transferred in FY17. Energy costs forecast to be $8M less in FY17 than in FY16

6. Since FMCB, lowest operating expense growth in 15 years
Executive Summary
Since FMCB, lowest operating expense growth in 15 years
Over this period, MBTA annual operating expense increased by more than $500M
FMCB / New Mgmt
August 2015
Note: For comparative purposes, FY17 core operating expenses exclude capital employees transferred in FY17. Energy costs forecast to be $8M less in FY17 than in FY16

7. FY17 Recast vs. FY17 Actual Results
Agenda
Executive Summary
FY17 Recast vs. FY17 Actual Results
FY16 Actual Results vs. FY17 Actual Results
FY17 Service Metrics
FY18 & FY19 Update
Appendix
FY17 Budget vs. FY17 Actual Results

8. Structural deficit is 40% or $20M below FY17 recast
FY17 Recast vs. FY17 Actual Results
Structural deficit is 40% or $20M below FY17 recast
FY17 Recast vs. FY17 Actual Results
($M)
FY17 RECAST
FY17 ACTUAL $
VARIANCE
NOTES
REVENUES
Operating Revenues
$717.4
$715.6
($1.8)
Transition to new Advertising & Parking Partners
Non-Operating Revenues
$1,203.1
$1,209.5
$6.5
Total Revenues
$1,920.5
$1,925.2
$4.7
EXPENSES
Wages, Benefits and Payroll Taxes*
$767.0
$771.8
$4.8
Overall headcount down; offset by OT & CBA increases
Non-Wage
$774.9
$755.3
($19.6)
Cost Controls
Operating Expenses
$1,541.9
$1,527.1
($14.8)
Debt Service
$428.7
$427.9
($0.8)
Lower interest costs
Total Expenses
$1,970.6
$1,955.1
($15.5)
Structural Deficit
($50.1)
($29.9)
$20.2
Fare Recovery Ratio
42.7%
43.2%
Revenue Recovery Ratio
49.6%
50.4%
*Includes transfer of employees from capital to operating budget

9. FY17 Recast vs. FY17 Actual Results
Agenda
Executive Summary
FY17 Recast vs. FY17 Actual Results
FY16 Actual Results vs. FY17 Actual Results
FY17 Service Metrics
FY18 & FY19 Update
Appendix
FY17 Budget vs. FY17 Actual Results

10. FY16 Actual Results vs. FY17 Actual Results Revenue Recovery Ratio
Core operating expense down 0.4% in FY17; Structural deficit down 65% compared to FY16 – fare recovery ratio increased to 43%
FY16 Actual Results vs. FY17 Actual Results
($M)
FY16 ACTUAL
FY17 ACTUAL $
VARIANCE
NOTES
REVENUES
Operating Revenues
$678.5
$715.6
$37.2
FMCB approved Fare increase
Non-Operating Revenues
$1,183.7
$1,209.5
$25.8
One-Time Real Estate Transactions
Total Revenues
$1,862.1
$1,925.2
$63.1
Increase of 3.4%
EXPENSES
Wages, Benefits and Payroll Taxes
$735.7
$742.8
$7.1
Overall headcount down (288); offset by OT & CBA increases
Non-Wage
$768.6
$755.3
($13.3)
Cost Controls
Core Operating Expenses
$1,504.3
$1,498.1
($6.2)
Capital Employee Transfer -
$29.0
Transferred 219 heads
Total Operating Expenses
$1504.3
$1527.1
$22.8
Debt Service
$443.7
$427.9
($15.8)
Termination of swaps and debt restructuring
Total Expenses
$1,948.0
$1,955.0
Structural Deficit
($85.9)
($29.9)
$56.1
65% below FY’16
Fare Recovery Ratio
41.2%
43.2%
Revenue Recovery Ratio
47.4%
50.4%

11. FY16 Actual Results vs. FY17 Actual Results
Increased revenues and lower debt service drove the reduction of 65% in structural deficit compared to FY16
Note: Increase in operating expenses primarily due to transfer of employees from capital to operating budget
Source: MBTA Internal Data. Analysis above excludes revenue from monthly FY17 Additional Assistance payments

12. Total revenue increased 3% ($63M) over same period last year
FY16 Actual Results vs. FY17 Actual Results
Total revenue increased 3% ($63M) over same period last year
Total
Note: Other income increase over FY16 primarily due to $12.0M in one-time South Station payment from Equity Office, $5.9M from Massport (Silver Line)
Source: MBTA Internal Data

13. Own-source revenue is down 4% ($3M) due to contract transitions
FY16 Actual Results vs. FY17 Actual Results
Own-source revenue is down 4% ($3M) due to contract transitions
FY17 trending down - transition to new contract; FY18 early indicators trending up (i.e., new panels & higher revenue share)
Total
Note: FY17 transitional year in Advertising/Parking contracts
Source: MBTA Internal Data

14. Core operating expense lower than FY16 (excluding debt service)
FY16 Actual Results vs. FY17 Actual Results
Core operating expense lower than FY16 (excluding debt service)
Note:
1.5% growth in total operating expenses for FY17 when including one-time transfer of capital employee wages and benefits ($29M);
(b) Lower Energy & fuel costs of $13.8 M and reduction in materials, services and insurance of $10.4 M contributed to essentially flat year over year growth
Source: MBTA Internal Data

15. Total Expenses (Including Debt Service) up $7M
FY16 Actual Results vs. FY17 Actual Results
Total Expenses (Including Debt Service) up $7M
$29M transfer of
capital employee wages and benefits to operating budget
743*
Total
Source: MBTA Internal Data

16. capital employee wages and benefits to operating budget
FY16 Actual Results vs. FY17 Actual Results
Core employee costs grew 1% ($7M) FY17, with an increase across all categories
$19M transfer of
capital employee wages and benefits to operating budget
499*
Total**
Source: MBTA Internal Data
*$19M wages transfer to operating budget; without transfer, core wage and OT growth was 0.8%; $10M pension/fringe transfer to operating budget
**Includes transfer of $29M in capital employee wages and benefits to operating budget. Without transfer, FY17 growth would be $7.1M, or 1.0% growth

17. FY17 headcount down 288 positions (5%) from prior year
FY16 Actual Results vs. FY17 Actual Results
FY17 headcount down 288 positions (5%) from prior year
KEY DRIVERS
FY16-17
FY17-18B
VRIP/VSIP
(384)
(14)
Other
(123)
(261)
Critical Hires
+58
Cap. Transfers
+219
(+)
(+)
(-)
(-)
Note: Actual headcount numbers reflect end-of-fiscal year totals; FY17 operating budget headcount figures include capital employee transfers, which results in an increase in operating budget wages.
Source: MBTA Internal Data

18. Materials, services, and financial costs down 9% ($24M)
FY16 Actual Results vs. FY17 Actual Results
Materials, services, and financial costs down 9% ($24M)
Change in Materials and Services
(24.2)
Services
($9.0)
Computer services
($3.5)
Contract cleaning
($2.4)
Engineering
($2.7)
Utilities
($7.2)
Temporary help
($0.6)
Other services
$7.4
Materials and Supplies
($10.8)
Equipment components
$3.1
Fuel
($6.6)
Inventory Adjustment
$0.0
Maint. Supplies/other materials
($7.3)
Insurance
($3.9)
Financial Services
($0.5)
Total
Source: MBTA Internal Data

19. FY17 Recast vs. FY17 Actual Results
Agenda
Executive Summary
FY17 Recast vs. FY17 Actual Results
FY16 Actual Results vs. FY17 Actual Results
FY17 Service Metrics
FY18 & FY19 Update
Appendix
FY17 Budget vs. FY17 Actual Results

20. Subway reliability, quarterly, FY16-FY17
FY17 Service Metrics
Subway reliability, quarterly, FY16-FY17
Subway reliability is the percent of customers who wait no longer than the scheduled time between trains.
Calculations do not yet account for the effects of overcrowding or bus shuttles.

21. FY17 Service Metrics
Bus reliability, FY13-FY17
Bus reliability is how often bus service arrives when it is expected. Service scheduled to arrive every 15 minutes or less should not have long gaps between buses. Other service should arrive within a few minutes of schedules.
The MBTA sets a higher reliability target for Key Bus Routes, which serve high-density travel corridors.

22. Commuter rail reliability, unadjusted, FY15-FY17
FY17 Service Metrics
Commuter rail reliability, unadjusted, FY15-FY17
Commuter Rail reliability is the percent of trains that arrive at their final stop no more than 5 minutes later than scheduled.
Unadjusted reliability is what passengers experience, not what Keolis is measured on.

23. FY17 Recast vs. FY17 Actual Results
Agenda
Executive Summary
FY17 Recast vs. FY17 Actual Results
FY16 Actual Results vs. FY17 Actual Results
FY17 Service Metrics
FY18 & FY19 Update
Appendix
FY17 Budget vs. FY17 Actual Results

24. FULL-YEAR RUN-RATE IMPACT INCLUDED IN FY18 ITEMIZED BUDGET
FY18 & FY19 Update
FY18 Budget Package (April 2017): Target bus maintenance annual run rate cash savings of $21M
($ Millions)
FULL-YEAR RUN-RATE IMPACT
TARGET DATE
ESTIMATED FY18 IMPACT
BASELINE STRUCTURAL DEFICIT
($42)
INCLUDED IN FY18 ITEMIZED BUDGET
Hybrid In-Station Customer Service Model $6
8/1/2017
Four (Focus40) Garage RFPs
$11 $8
Cabot Garage Efficiency $5
Everett Bus Shop
Chelsea Silver Line
($5)
1/1/2018
($3)
Strategic Operations Hires
($7)
7/1/2017
SUBTOTAL - Adjusted Structural Deficit
($27)
($38)
FY18 DEFICIT SPENDING
The RIDE $3 $1
Commuter Rail
CR Revenue Expansion and Advertising $4 $2
STRUCTURAL DEFICIT
($15)
($30)
TARGET PAY-GO TRANSFER AS OPEX SAVINGS ACHIEVED
$22 $7
($37M – STRUCTURAL DEFICIT)

25. FY19 Structural Challenges: Operating Budget
FY18 & FY19 Update
FY19 Structural Challenges: Operating Budget
Total Existing Debt Service Costs
Amortization Tables require additional debt service payments totaling $50M in FY19 over FY18 Budget
Increase in principal: $41M
Increase in interest expense: $9M
Compliant with FMCB approved Debt Policy (Jun16)
Requires level repayment of principal consistent with useful life of capital investments
Transfer of Capital Employees to Operating Budget
Legislative mandate to transfer final phase of the capital employees to Operating Budget in FY19
220 budgeted headcount relating to legacy Design & Construction
Net estimated increase to structural deficit: $27M
Pension Expense
Actuarially determined Annual Required Contribution (“ARC”) to increase by $10M in FY19 over FY18 Budget
Based on current Actuary Valuation
FMCB Approved Pilots
Foxborough Commuter Rail Service
Net estimated increase to structural deficit: $500k
Early Morning Bus Service (i.e., Sunrise Service)
Net estimated increase to structural deficit: $1M

26. MBTA forecast to pay down $1.1B debt principal next 4 years
PRESENTED MONDAY 6/19/2017
MBTA forecast to pay down $1.1B debt principal next 4 years
Total Existing Debt Amortization to increase $50M from FY18 to FY19: $42M of principal & $9M of interest

27. FY18 & FY19 Update
Despite progress, Forward Funding goal that dedicated revenues cover operating expense still not met
$212M improvement:
- $180M (85%) - lower costs
- $32M (15%) - higher revenue
Source: MBTA management in process of recasting FY18-FY20.
Operating Deficit does not include additional state assistance of $155M in FY16 or $187M FY17 (forecast)

28. FY17 Recast vs. FY17 Actual Results
Agenda
Executive Summary
FY17 Recast vs. FY17 Actual Results
FY16 Actual Results vs. FY17 Actual Results
FY17 Service Metrics
FY18 & FY19 Update
Appendix
FY17 Budget vs. FY17 Actual Results

29. Structural deficit 63% below budget ($51M) in FY17
FY17 Budget vs. FY17 Actual Results
Structural deficit 63% below budget ($51M) in FY17
FY17 Budget vs. FY17 Actual Results
($M)
FY17 BUDGET
FY17 ACTUAL $
VARIANCE
NOTES
REVENUES
Operating Revenues
$722.7
$715.6
($7.0)
Fare revenue increase offset by lowered than expected own-source revenues
Non-Operating Revenues
$1,218.8
$1,209.5
($9.3)
Total Revenues
$1,941.5
$1,925.2
($16.3)
EXPENSES
Wages, Benefits and Payroll Taxes
$784.1
$771.8
($12.3)
Planned headcount reductions
Non-Wage
$779.6
$755.3
($24.3)
Cost controls
Operating Expenses
$1,563.7
$1,527.1
($36.6)
Debt Service
$458.1
$427.9
($30.2)
Termination of swaps and debt restructuring
Total Expenses
$2,021.8
$1,955.1
($66.8)
Structural Deficit
($80.4)
($29.9)
$50.5
63% below budget
Fare Recovery Ratio
42.2%
43.2%
Revenue Recovery Ratio
48.0%
50.4%