Metropolitan Transportation Authority Metro-North Railroad 2011 Proposed Operating Budget December 13, 2010

Metro-North’s Proposed 2011 Budget Reflects the Principles of the Overall MTA Financial Plan No budget-driven service cuts Metro-North’s contribution to cost cutting efforts that will achieve $750 million of recurring savings by 2014 for the MTA as a whole. $525 million of recurring savings implemented this year $200+ million of new efficiency savings Work with Labor to achieve $200 million in “net zero” savings Implementation of agreed-upon fare/toll increases Assumes continued receipt of dedicated taxes and subsidies

Proposed 2011 Operating Budget Reflects Metro-North Strategies Continues strategies to improve service while reducing costs and spending money wisely Reinvests savings to fund critical corporate priorities Improve service delivery/customer communications Fund federally mandated programs Pursues strategies to maximize passenger and non-passenger revenues Ensures efficient working relationships with Metro-North’s service partners in Connecticut and New Jersey Continues Progress Toward Achieving Vision 2013 Goal of Customer Service Excellence. Bullet #1 (Continued Strategies): Details to be discussed Bullet #2 (Reinvest savings): Details to be discussed Bullet #3: Passenger Revenue - $578 Million (including fare increase) - Ridership up 1% Non-Passenger Revenue - $43.3 Million. Up 33% since 2005 GCT Retail Parking Vending Machines Bullet #4 (CT & NJ): Programs have been developed in concert with service partners in New Jersey and Connecticut Bullet #5 (Vision 2013): A Brand Name for Excellence

Proposed 2011 Operating Budget Metro-North Savings MTA has identified over $525 million in annual recurring savings Metro-North savings were identified in the following areas: Select service consolidations Reduced train consists Reduced workforce largely in administrative areas Reduced overtime More efficient use of staff to perform the following functions: GCT ushers, coach cleaning, facility maintenance and ticket selling In 2011 Metro-North will continue identifying savings from: Strategic Procurement Initiatives Inventory reduction/control initiatives A new Maintenance of Way Material Management Unit “Just in Time” delivery/inventory program in GCT Additional reductions will be pursued in concert with MTA all-agency activities (e.g. consolidation of work/work units; joint procurements, other efficiency efforts) Bullet #1 ($525 Million): as is Bullet #2 (2011 MNR Savings): Strategic Procurement: How much are we buying? What are we buying? How are we buying it (joint procurements)? Inventory Controls – (two examples were done in concert with MTA Audit) MofW Material Management – stronger controls/more efficient procurement approach. Board will see an increase in inventory balances when all stock is included as a result of these improvements GCT – new approach, stronger controls, more efficient Additional Reductions – as is

Proposed 2011 Operating Budget Operating the Service Provide high-quality service every day – safely & reliably Continue critical maintenance activities Railcars Maintain, inspect and clean 835 cars and locomotives to operate 721 trains for 270,000 daily customers Perform required periodic inspection/maintenance programs on 293 railcars/locomotives (includes first life-cycle maintenance program for M-7 fleet) Complete overhauls for last 30 M3 cars Stations Clean 121 stations in two states – including landmark Grand Central Terminal – every day Paint and perform top-to-bottom maintenance at 8 New York State stations every year Track, Signals & Switches Inspect 795 miles of track twice each week Install 35,000 ties Renew 7,000 track miles Resurface 200 miles of track Replace 35 switches Critical Maintenance: Railcars – on slide Stations – top-to-bottom maintenance is a new program that will improve the customer environment through preventive maintenance/will save capital monies down the road. Track, Signals & Switches – critical to safe, reliable operation of service

Proposed 2011 Operating Budget Operating the Service Provide high-quality service every day – safely & reliably (continued) Add train service to meet growing ridership Introduce the new M-8 Fleet on the New Haven Line Add Sunday service on Upper Harlem and Lower New Haven Lines Continue to monitor train consists to ensure standards for customer capacity are maintained Add parking Open 730-space Parking Facility at Cortlandt Station Open new Fairfield Metro Center station with 1,400 parking spaces (CDOT project) Remain focused on implementing effective Safety/Security Initiatives Implement federal mandates required in the Rail Safety Act Dash #1: Add train service M8 – major improvement to address car shortages/standees, reliability, customer comfort. Will allow the retirement of 40-year-old M-2 cars. Will need to operate more cars to serve the same number of customers (M8s have 100 seats; M2s have 120 seats). Additional costs associated with maintenance/inspection/operation. Sunday Service on Upper Harlem/Lower New Haven – Weekend ridership has increased 10% since 2009. It is our fastest growing market with tremendous growth opportunities Monitoring loading standards – as is on slide Dash #2: Parking – as is on slide Dash #3: Safety/Security – as is on slide Dash #4: federal mandates – as is on slide

Proposed 2011 Operating Budget Improve Customer Communication Establish a consolidated customer communication center to ensure customers receive consistent, accurate and timely information no matter how the customer retrieves that information Improve Metro-North real time service status information to Customers on the web, via mobile (cell) phones, at outlying stations, at GCT and on-board trains Work jointly with other MTA agencies to provide real time service status information that is coordinated and consistent Participate fully in all-agency initiatives to provide full customer service capabilities no matter what transportation system(s) the customer uses Explore the use of digital technology in GCT and on-board trains Seek to combine the ability to provide service information and advertising (with MTA RE) Intro to slide: In 2010, Metro-North combined its Customer Service and Stations Departments to provide a central location responsible for improving the customer experience. In 2011, this new department will assume responsibility for all real time service delivery information for customers. Bullet #1– as is Bullet #2: On the Web and Via mobile (cell) phones Done– Place MNR Traintime on MTA Home page to improve access 1st Qtr 2011 – Finalize license agreement and launch use of CooCoo At Outlying Stations Scroll MNR real-time service status on LED signs above each TVM (At GCT too) 2011 – 50 stations with existing VMS signs will have more information (service status/next train) Select stations will have LCDs for information about next 12 trains 2012 – Expansion if money available Bullet #3 (all-agency real time info) – working with NYCT at GCT & at outlying transfer points Bullet #4 (consolidations/all-agency initiatives) - Working very closely and productively with Diana Ritter and her staff at HQ on coordinated communications Bullet #5 (digital) – On-Board trains and at GCT Various concepts that involve customer information and advertising Working with MTA RE GCT Main Concourse Advertising Diorama conversion to digital, with capability for select real time MNR messages Under Negot. With CBS for 2011-2012- Trainshed Track/Block Departure Boards to depict real time departure and service alerts integrated with advertising. Look for initially fund with payback/revenue share model.

Metro North Railroad Operating Expense Budget