Pioneer Institute Public Statement to the MBTA Fiscal and Management Control Board

Earlier this week, Fox 25 News reported that Michael Mulhern, the executive director of the MBTA Retirement Fund, will be triple-dipping from taxpayer-funded pensions.

A few days earlier, Mulhern announced his intention to resign from the fund in August. In addition to healthcare coverage, he is already receiving a $65,000 pension from the T as well as $86,000 in deferred compensation. The Fox 25 report revealed a further $167,000 in a retirement account set up during his time at the pension fund.

Pioneer’s recent report “The Reckless Cost of Investment Mismanagement at the MBTA Retirement Fund” revealed that the MBTARF’s underperformance relative to the state pension board over 14 years has cost taxpayers and T employees $902 million. In a number of other reports, the Institute has documented countless failings at the MBTARF.

The takeaway is clear: without transparency, disastrous policies and abuse of taxpayer money can go on unchecked for decades.

Last fiscal year the MBTA spent on wages and benefits 50 percent more than it raised from its core activity – transportation. Labor expenses were just short of $900 million. Transit revenues were about $600 million. Overall, labor costs accounted for 44% of all operating expenses.

As we have said time and time again, the MBTA’s labor costs do not compare favorably with peer transit authorities and other agencies in the commonwealth. The reasons for that are complex, but the root cause of them all is clear: the public was largely kept in the dark about the MBTA’s labor dealings.

We urge the Fiscal Management and Control Board to vote without delay and make public:

• The pension agreements between the MBTA and its transit and police unions.
• The terms of the deferred compensation plans for MBTA executives.
• The trust agreements for the MBTA’s retirement funds.
• The labor contracts between the MBTA and its police and transit unions.
• The model contract for nonunion employees.

These are all public records which should be made available on the MBTA’s website. It is more than reasonable to do this within 15 business days.

Pioneer Institute believes that Massachusetts taxpayers deserve a thorough account of how tax dollars are spent and how decisions are made. We also believe that this is an important part of ensuring that thousands of current and future T retirees have a pension that they can count on.

The culture of secrecy must end.

Related News & Commentary:

State House News Service: STUDY: LAWMAKERS SHOULD ACT TO ADDRESS MBTA RETIREMENT FUND UNDERPERFORMANCE FOX25 Investigates: MBTA pension chief headed for triple dipper retirement NECN: Report: MBTA Independent Retirement Fund Costly The Boston Globe: Baker administration may press T pension fund to join state’s Boston Herald: T cops pension fund won’t open books The Bond Buyer: Chief of Embattled MBTA Retirement Fund to Resign Boston Herald: T undercount: Pensions higher than predicted due to sick days, vacation time Boston Herald: Atanasov: Ts ˜private” pension board veers off track The Bond Buyer: Interview Public Pensions and Disclosure The Bond Buyer: Report: Cronyism, Conflicts Stunt MBTA Retirement Fund  Public Sector: Will the MBTA’s retirement fund ever come clean? CommonWealth Magazine: T Retirement Fund fights transparency WCVB NewsCenter 5: “Battle over MBTA retirement fund transparency takes center stage” (Feb. 26, 2014) The Boston Globe: “MBTA pension fund may release more data” (Feb. 26, 2014) The Boston Globe: “Report urges state to fire T’s pension directors” (Feb. 6, 2014) The Boston Globe: “Mass. leaders back significant boost to pension fund”(Jan. 15, 2014) Associated Press: Study warns of delays in funding Mass. pensions

 

Recent research:

The Reckless Cost of Investment Mismanagement at the MBTA Retirement Fund Myths and Reality about MBTA Pensions A $49 Million Sweetheart Deal How MBTA Employee Unused Sick Time Perk Enhances Pensions Hard Lessons for Institutional Investors from the MBTA Retirement Fund  Have the MBTA’s Retirement Plans Gone Off the Rails? The Reckless Cost of MBTA Financial Derivatives  MBTA Reform – The Case of Full, Final and Binding Interest Arbitration How to Save the MBTA More Than $100 million a year Solvency and Insolvency of the MBTA Retirement Fund Data Reveals Out of Control Administrative Staffing Budget Increases at MBTA The Pacheco Law has cost the MBTA more than $450 million – here’s the evidence. Testimony Before the Joint Committee on Transportation in Support of House 3347 Testimony in Support of House 3347 Transportation Reform  MBTA’s Problem Is Not Lack of Funding The MBTA Commuter Rail’s Cost Structure is Off the Rails Massachusetts Experience with Hard and Soft Receiverships