Financial Efficiency Review Independent Oversight Committee Receives Draft Report

On April 1, MTC transmitted to the newly formed Financial Efficiency Review Independent Oversight Committee the draft report for Phase 1 of a two-phase Financial Efficiency Review of four of the Bay Area’s largest transit agencies — AC Transit, BART, Caltrain and SFMTA — as required by last year’s enactment of state Senate Bill 63 (SB 63). Also known as the Connect Bay Area Act, the bill established a Public Transit Revenue Measure District covering Alameda, Contra Costa, San Francisco, San Mateo and Santa Clara counties and authorized placement of a regional sales tax measure on the November 2026 ballot in these counties to raise new revenue for public transit, upgrade riders’ travel experiences and fund other transportation improvements.

If the proposed measure qualifies for the ballot and is approved by voters, proceeds from the sales tax would be allocated to AC Transit, BART, Caltrain and SFMTA to support transit operations and prevent major service cuts, and transferred to other Bay Area transportation agencies — including the Alameda County Transportation Commission, the Contra Costa Transportation Agency, the San Mateo County Transit District and the Santa Clara Valley Transportation Authority (VTA) — for specified transportation purposes. See full details of the SB 63 expenditure plan.

Phase 1 of the Financial Efficiency Review details cost-saving and revenue-raising measures taken by the transit agencies from July 2019 through June 2025 in response to the economic pressures and changing travel patterns that emerged during and after the COVID-19 pandemic; describes near-term opportunities for the agencies to increase and improve service with existing resources; and identifies real estate development opportunities that could increase ridership and revenues in the coming years.

The draft Financial Efficiency Review report details over $1 billion in operating cost savings achieved by AC Transit, BART, Caltrain and SFMTA since 2020, largely through workforce adjustments, service reductions, and revamped investment policies.

The draft report also recommends several near-term strategies that each agency could take for further efficiency. These include reconsidering the timeline for a transition to zero-emission bus fleets; reducing barriers to fare payment for new customers by beefing up employer- and institution-sponsored transit pass programs; assessing scheduling efficiencies; implementing more transit-priority projects on local streets to provide faster and more reliable speeds for buses and streetcars; and boosting non-farebox revenues via parking fees, leasing fiber and other communications assets, and capturing regenerative braking credits, compensation agencies can receive for feeding electricity generated during braking back to the power grid. 

The report recommends that transit agencies track and report on any additional cost-saving or revenue-enhancing measures over time and the financial impact of any implemented strategies using the same framework used in the Phase 1 analysis. Additionally, the report recommends that MTC establish a consistent approach and standard for reporting on transit agencies’ financial conditions and tracking progress on early action strategies to support clear, consistent and transparent communication with decision-makers and the public. 

Looking farther ahead, the Phase 1 draft report provides an inventory that highlights the transit agencies’ opportunities to capitalize on their real estate assets — including through joint ventures with development firms — to deliver more long-term value through lease revenue and ridership growth. The Financial Efficiency Review Independent Oversight Committee is expected to explore this topic and others at its April 17 meeting at the Bay Area Metro Center in San Francisco. The meeting starts at 10 a.m. and is open to the public. 

MTC will undertake a second phase of analysis if voters approve an SB 63-enabled regional transit sales tax measure in November 2026. This multi-year phase requires a deeper evaluation of cost structures and strategies to support financial sustainability. A second phase also will be subject to review and final approval of the Financial Efficiency Review Independent Oversight Committee.

The Public Transit Revenue Measure District, which was established by SB 63 to administer the potential tax revenue, determined in January 2026 that it would not pursue a measure directly. However, an independent signature-gathering effort is underway to place the measure on the ballot via a petition. 

For more information, see the SB 63 fact sheet.