Public Workers, Secret Pensions

Under an unusual arrangement dating back to 1948, information about the Boston-area transit agency's pension system doesn't have to be made public. That may soon change, and it ought to.
by | April 18, 2013

Plenty of Massachusetts voters were already in a cranky mood about the tax increases Gov. Deval Patrick and state lawmakers have been wrangling over to raise hundreds of millions of dollars annually for transportation, with much of it going to bail out greater Boston's deficit- and debt-ridden transit agency, the Massachusetts Bay Transportation Authority.

The MBTA is carrying nearly $8.9 billion in accumulated debt and interest, and it faces a deferred-maintenance backlog of more than $3 billion. Another contributor to the MBTA's financial problems is the cost of funding its generous pensions, so you can imagine the response from taxpayers--particularly those outside the Boston area who aren't served by the MBTA--when the Boston Herald reported that information about the transit authority's pension fund did not have to be made public.

It turns out that the pension system was set up in 1948 as a private trust in an agreement with unions from what was then the Metropolitan Transit Authority. In 1986, Massachusetts' Supreme Judicial Court ruled that the MBTA pension system is not a public pension fund under state law. Seven years later, the same court ruled that the MBTA Retirement Board is a private trust that is exempt from public-records laws.

The system may be private in the eyes of the commonwealth's highest court, but the MBTA Retirement Fund's 2011 annual report revealed that the taxpayer-funded authority's annual pension contributions had grown since 2007 from $30 million to more than $52 million.

Uncontrolled expansion is the biggest cause of the MBTA's financial woes, but labor costs come next. Some of the problems--such as a provision that allowed some MBTA employees to retire in their 40s with a pension and free taxpayer-funded health insurance for the rest of their lives, with active employees contributing little toward their health plans--were addressed by a 2009 transportation reform law.

But the MBTA pension fund's "private" status kept it from being folded into the state retirement system. Unlike with state workers, the amount MBTA employees pay into their fund is subject to collective bargaining. On average, about 10 percent of state-employee salaries go to fund pensions; at the MBTA, it's about 4 percent.

In a move that was long overdue, the state Senate voted recently to make the MBTA's pension fund public. The House should follow suit and Gov. Patrick should sign the bill into law.

Massachusetts' transportation system certainly needs more funding. But if taxpayers are going to be asked to shoulder the burden, they at least deserve to know that state leaders are addressing the lowest of the low-hanging fruit when it comes to costs.

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