TRANSIT: A price to pay Wages, salaries and employee benefits eat up the biggest part of the financially troubled Port Authority's $282.7 million operating budget -- $212.6 million, or more than 75 percent. A three-part series examines overtime, pensions and a special retirement incentive for certain managers at the agency, which could make severe service cuts due to a budget deficit of $30 million. Next in the series Day Two: Liberal pensions start to hit authority finances Day Three: Transit managers cash in on pensions

In the 1970s, Pittsburgh was No. 1, paying the highest wages in the nation to union bus and trolley operators.

Times have changed.

Now the $22.79 top hourly rate for operators at the financially crippled Port Authority is fourth-highest in the United States among similar-size transit agencies and 17th highest overall when larger cities like San Francisco and New York are included.

When overtime is counted, one-third of the 2,700 hourly employees and first-level supervisors grossed $50,000 or more in 2003, the latest year for which statistics are available.

Two bus drivers earned more than $90,000.

Even bigger money went to the chief executive officer and his top staff, as it does in public transit systems across the United States.

Port Authority CEO/General Manager Paul Skoutelas grossed $198,756 in 2003, a year when his salary was $195,000. "I sold back some unused vacation time," he explained.

The annual salaries of seven other administrators topped $100,000.

But a state-mandated study corroborates the Port Authority's claim that it is a relatively lean, cost-effective operation.

"Relative to peer agencies, Port Authority has maintained one of the lowest levels of administrative or overhead cost relative to total operating cost," concluded Booz Allen Hamilton, an independent consulting firm hired by the Pennsylvania Department of Transportation last year.

	Online Graphics: A look at Port Authority's high (pay)rollers Bus drivers' pay across the U.S. Profile of Port Authority wages

"Overall, on the administrative side, we've been lean for a long, long time," Skoutelas said. "I've been sensitive to this. We're the lowest among our peer groups" when it comes to the total money spent on administration and management.

At $195,000, Skoutelas tied for No. 10 nationwide. Top executives were paid as much as $295,000 by the Los Angeles County Metropolitan Transit Authority.

Booz Allen Hamilton praised the authority for reducing overtime by 33 percent, increasing labor productivity by 12 percent and holding operating cost increases to 0.5 percent while inflation increased by 10 percent.

Nevertheless, the authority is in a financial fix, facing a $30 million shortfall in its $282 million operating budget for the fiscal year that is half over, and an estimated $45 million deficit for the 2005-06 fiscal year that begins July 1.

The authority places most of the blame for its troubles on years of inadequate operating subsidies under the administration of former Gov. Tom Ridge and, more recently, the failure of the Legislature to pass long-term, dedicated funding to help it and four dozen other struggling transit systems across the state.

As a result, riders who account for 235,000 bus, trolley, incline and paratransit trips a day face a 25-cent increase in the base fare to $2 on March 1; a 12 percent reduction in service March 6; another 50-cent fare increase to $2.50 on July 1; and another 15 percent reduction in service on or about July 1.

It is a predicament that Skoutelas said will leave the nation's 15th largest transit system a skeleton of itself and that riders and businesses have said will cause irreparable harm to their mobility and to businesses in Allegheny County.

During public hearings about proposed fare increases and service cuts in November, at least a half dozen people complained that employee wages and benefits were too high and should be cut to match revenues.

Skoutelas said the authority already has taken unprecedented cost-cutting steps, including a year-long wage freeze for 2,700 union workers and more than 300 management and non-represented employees, saving $23.7 million; laying off 85 people; and eliminating 55 administrative and three hourly jobs, saving another $5 million.

In a recent interview about administrative salaries and union wages, Skoutelas elaborated:

The two highest-paid bus drivers got $94,143 and $91,219 in 2003, but those wages reflect a drop since 2001, when the two top drivers grossed $103,318 and $95,552, respectively. He said better management led to less overtime overall.

Those who work a lot of overtime are usually the most experienced, reliable workers. "We know we can depend on them," Skoutelas said. "We're a seven-day, 24-hour operation. We have people working in the middle of the night."

It is cheaper to pay overtime than to add employees and pay fringe benefits, especially with the soaring costs of health care.

The authority is neither top-heavy with administrators nor is their pay out of line with that of other urban transit systems.

He said the authority has trouble holding onto some people with special skills. He cited three light-rail managers lured away by other cities in recent years at wages at least 50 percent higher than they received here.

He said the authority was lucky to recruit Steve Banta in mid-1999 to help fill the gap. Banta, who was paid $118,154 in 2003 and recently moved up to No. 3 on the wage list, is now operations manager. He came with extensive experience starting and managing light-rail systems in Los Angeles, Denver and San Diego.

"Some of these jobs require national experience and can't be pulled out of the local market," Skoutelas said. "They sleep with pagers under their pillows."

As for the rank-and-file workers who pad their salaries with overtime, Skoutelas described them as "the ones not looking for reasons not to come to work. They're people who enjoy doing their jobs."

He also dismissed the notion that a bus operator racking up $94,143 in gross wages could not perform his job safely or might have violated provisions of a commercial driver license restricting the number of hours of work and rest to no more than 11 hours of driving over a 14-hour period.

"I don't subscribe to the idea that we create a safety issue with overtime and our safety records bear this out," Skoutelas said. "[Port Authority drivers] work in a different environment than a Greyhound bus driver and have breaks built into schedules."

In addition, a number of drivers work split shifts on weekdays, with built-in overtime, to accommodate the morning and afternoon peak ridership periods.

Patrick McMahon, president and business agent of Local 85, Amalgamated Transit Union, which represents Port Authority drivers and others, also defended overtime.

"Every time the pay issue comes up, everybody wants to jump on the few people who take advantage of the chance to work overtime," he said. "They spend their lives here. But I'll tell you, point blank, that Skoutelas has told me in negotiations that he depends on overtime. It's a financial thing to keep down overall costs."

McMahon said he's a friend of the unidentified bus driver who grossed $103,318 in 2001.

"He lived a half-block away from the garage," he said. "Anytime day or night that they needed a driver, he was there in 10 minutes."

The average wage of all Local 85 members in 2003 was $47,304, but the figure includes 116 drivers who work at 65 percent of the top rate of $22.79 an hour.

The contract with union bus-trolley operators, mechanics and other support personnel expires June 30.

Tomorrow: A look at pensions