The Massachusetts Bay Transportation Authority defused a legal battle over disclosure by releasing details of payouts to the system's retired workers, but controversy over the generosity of MBTA pensions still percolates.
According to a database that the system's retirement board tried to keep private, 17% of its workers started to collect pensions while in their 40s.
The revelation came right after the state kicked in $115 million to cover the latest deficit of Greater Boston's mass transit system as part of a transportation funding bill that passed last month. That bill also required the secretive $1.4 billion MBTA retirement board to open its books.
The "T," as locals call Boston's regional public transportation system, is the most leveraged in the United States, with about 33 cents of every dollar it spends going to pay debt service. The authority owes $5.2 billion in principal.
Public finance is rife with pension debate. The strains pension plans place on municipal budgets were major talking points in bankruptcy filings by Detroit and Central Falls, R.I. In addition, Rhode Island overhauled its benefit system for state workers, though it's being challenged in court, while Illinois, Pennsylvania and other states have weighed similar moves.
MBTA retirement board counsel had been examining the sunshine amendment for a possible legal challenge, but last week Transportation Secretary Richard Davey and other state officials pushed for disclosure. The MBTA is part of the Massachusetts Department of Transportation under a 2009 reorganization, though its retirement board is independently run.
Secrecy has surrounded the retirement fund for years. The retirement board fought back efforts by governors William Weld and Paul Cellucci in the 1990s to open its books.
The Federal Bureau of Investigation and U.S. Attorney's office targeted it in corruption probes in 1992 and 2000, respectively. A Boston Herald report in 2000 linked the board's business dealings to racketeer and admitted arsonist Francis Fraine, allegedly connected with crime boss James "Whitey" Bulger. A Boston jury on Monday convicted Bulger of 11 counts of murder.
"State and local taxes amount to about two-thirds of the MBTA's budget. They're definitely a public agency," said Jim Stergios, the executive director of the Boston think tank Pioneer Institute. "Richard Davey and MBTA General Manager Beverly Scott have done some good things, but this one they had to get right."
Last Thursday, the MBTA, not the pension board, released the pension data to the Herald, which reported that 35% of the 6,359 people listed retired before age 55 and 17% left in their 40s. Many in the latter category benefited from a "23 and out" retirement provision under which workers with 23 years of service could retire regardless of age. That went out with the MBTA's reorganization in 2009.
"It's significant that Secretary Davey took this step. The pension board doesn't report to him directly but I appreciate his leadership," said State Sen. Will Brownsberger, D-Watertown, who sponsored the sunshine amendment.
Legal arguments in Massachusetts revolved around whether the fund remains a private trust, established as such in 1948 and upheld by the state Supreme Judicial Court in 1986 and 1993, or is a now public concern, given the millions of taxpayer dollars pumped into the system.
"The starting point is that the fund is a private trust and its board of trustees is not a public agency or instrumentality," said Carl Valvo, the retirement board's attorney and a partner at Boston firm Cosgrove, Eisenberg and Kiley PC. "The language of the law has aspects of general application to entities beyond the retirement fund."
Language, he said, could apply to other private concerns such as Fidelity Investments, State Street Global Advisors, Putnam Investments or Vanguard that receive funds from a Massachusetts public unit to manage a retirement benefit program such as a basic employee pension plan.
Taxpayers put $56 million into the MBTA retirement fund in 2012, up from $30 million in 2007. The MBTA's actuarial required contribution to the pension program rose to 20% of payroll in 2011 from a 9.5% rate in 2007.
"If public dollars are going to pay for employee pensions, then the books should be open. They can say it's a private trust, but public money is going into it," said Anthony Figliola, vice president of Empire Government Strategies in Uniondale, N.Y.
MBTA employees contributed 5.1% as of 2011, up from 4% in 2007.
"It was the great Justice [Louis] Brandeis, who of course was educated across the river at Harvard, who said 'sunshine is the best disinfectant,' " said St. John's University law professor Anthony Sabino. "That is especially apropos for the pension fund of a public entity that is very much dependent upon taxpayer money."
