Caltrain Board approves FY27 operating budget, maintains regular operation in near-term

Caltrain’s Board of Directors has approved the agency’s operating budget for fiscal year (FY) 2027, as well as all recommendations for early action strategies recommended by the Senate Bill (SB) 63 Financial Efficiency Review Independent Oversight Committee’s final Phase 1 report. The agency says that this ensures that Caltrain service will continue its regular operation in the near term, but long-term financial challenges remain for the rail agency absent a new revenue source—like the Connect Bay Area campaign.

The FY27 operating budget is nearly $270 million, with funds coming from multiple sources, including fares, GoPass, Measure RR, parking and rental income, state transit assistance and a one-time loan from the state of California through the Metropolitan Transportation Commission (MTC) that is intended to help address transit agency operations shortfalls in the Bay Area. With a balanced budget, Caltrain says it is able to continue its popular electric service, running trains every 15 minutes at most stations during peak hours and half hourly service at all other times—including weekends. 

Caltrain says it adopted a balanced budget by limiting cost increases across its operations, reducing professional services, stronger than anticipated fare revenue and the one-time state loan. The agency notes it continues to break ridership records, shattering previous records in March of this year, and again in April.

Since 2020, Caltrain notes it has achieved over $76 million in cost savings—approximately 7% of the agency’s operating budget over the last five years. Caltrain’s cost savings were measured by MTC as required by SB 63, the Connect Bay Area act. The MTC report, issued earlier this month, showed that Caltrain’s cost savings were achieved primarily through workforce controls, service optimization and operating efficiencies. 

Ongoing cost-reduction measures include a targeted hiring freeze saving $17 million, 30-minute service reducing the need for special trains, improved operator crew efficiency and reducing overtime saving $37 million and the integration of the maintenance of new infrastructure into existing operating contracts saving approximately $2.1 million. Other measures include reducing professional services, temporarily deferring service increases and efforts to reduce fuel and electricity costs. 

Since Caltrain began its electrified service, these cost-saving measures have slowed the growth of operating costs, offsetting some of the inflationary pressures that many transit agencies continue to suffer from. Caltrain has also been actively pursuing additional avenues to monetize assets through a non-fare revenue strategy. 

The efficiency report highlighted Caltrain efforts and opportunities to grow parking revenue, leasing fiber and communications assets, pursuing an energy storage project to further optimize power use and finding new customers for Clipper BayPass and GoPass while also studying ways to activate and enhance retail at stations in addition to monetizing Caltrain’s real estate holdings. The Caltrain Board voted to approve and move forward with each of the “early action strategy” recommendations of the independent financial review committee.

“Ensuring we are responsible stewards of taxpayer money is vitally important to any public agency, regardless of the economic climate,” said Caltrain Executive Director Michelle Bouchard. “We are hard at work finding ways to be more efficient than ever before while still providing a safe, world class service for the people who rely on us.”

Despite the steps Caltrain is taking to control costs, generate revenue and grow ridership, the agency notes it still faces an average $75 million deficit that would start in FY28. Absent a new funding source—through a regional measure or other external support—Caltrain will be forced to make significant service and staffing cuts. The agency says those cuts could have potentially lasting consequences for the tens of thousands of people and businesses that depend on—and have begun to benefit from—the newly electrified system. Caltrain says that it carries as many people as three lanes of Highway 101 daily, avoiding 36,000 additional car trips, 828,000 miles of driving and an additional 220 metric tons of carbon dioxide each day.