The Single Biggest Obstacle to Reform at the MBTA

post by Gregory W. Sullivan & Matthew Blackbourn

In an article published in the Globe last week, the MBTA Carmen’s union threatened to block MBTA federal transit funding if the legislature enacts the governor’s proposal to give the proposed fiscal and management control board final say on collective bargaining agreements.

We hope that the legislature sees this threat for what it is: bully tactics by MBTA unions against the house and senate.

This isn’t the first time MBTA unions have used the nuclear option of attempting to shut off federal funding to block a legislative reform that endeavored to do nothing more than treat MBTA employees exactly the same way other public employees in the state are treated.

In 2009, Local 589 actually blocked the T from receiving federal funding in order to thwart a legislative action to rein in health insurance costs at the T.  In that bill, the legislature bailed out the T by raising the state sales tax and moved MBTA employees to the state employee group insurance plan that covers more than 300,000 active employees and retirees.  The Carmen’s Union responded by demanding to be reimbursed for what it termed the “devastating” effects of having to pay the same premiums, deductibles, and co-pays that other public employees pay, including legislators.  The Carmen’s Union first sued in state superior court, raising the same issues it enunciated yesterday, and lost. The superior court judge upheld the legislature’s right to enact the insurance plan migration.

The Carmen’s Union then filed an official action with the federal Department of Labor to block transit funding to the MBTA.  Per its rules, the Department of Labor put a temporary hold on federal funding and kicked the matter into state interest arbitration before considering the matter.

Because the state legislature had previously granted MBTA unions final and binding arbitration, rather than another arbitration methodology that applies everywhere else except at the MBTA (whereby state or local officials have final funding approval of arbitration agreements), an arbitrator once again was put in charge of making the final decision, despite the legislature’s having enacted legislation mandating the insurance plan migration.

Following more than three years of subsequent delays costing $61 million in lost savings according to the MBTA, the arbitrator restored numerous expensive components of the T union’s prior health insurance plan and ruled that the question of whether the Commonwealth is obligated to make T employees whole for any additional expenses borne by them would be subject to continuing arbitration.

The attorneys representing the Commonwealth during litigation described the detrimental role that final and binding arbitration has played at the MBTA as follows:

 “The fair conclusion that can be drawn is that Local 589 uses interest arbitration to avoid, delay or frustrate the application of legislative changes that it perceives are adverse to its members.”

“The Union’s tactical use of interest arbitration has inured to the benefit of all Local 589 members, active and retired, the past 25 years and cost the MBA millions of dollars in lost savings.”

“Our purpose here is to expose for the arbitrator the corrosive effect the utilization of this tactic of delay has had on the financial stability of the MBTA as she considers the gross imbalance between a MBTA total compensation and benefits and the compensation and benefits paid the rest of the public sector since the 1970’s.  There is no acceptable rationale to preserve for Local 589 active and retired employees the significant premium they have long enjoyed.”

The attorneys for the Commonwealth presented a lengthy and detailed analysis chronicling the legislature’s efforts to effectuate reforms at the MBTA and the long history of legal and procedural opposition raised by MBTA unions.  They also described decisions by arbitrators that thwarted reforms through delays, dilutions, and outright reversals of legislative action.

The irony here is that the legislature has effectively handcuffed itself by subjecting its legislative reforms of the T to being overruled by the final arbitration system the legislature itself created.

The legislature has legal authority to enact the Governor’s proposal regarding final and binding arbitration. Federal court case ATU v Donovan, 767 F. 2d 939 makes it clear that states are not required to use final binding interest arbitration at transit authorities, and that they have other permissible options.  One of these options is represented by Governor Baker’s legislation. This linked document from the Transit Cooperative Research Program, sponsored by the Federal Transit Administration, provides further explanation regarding this point.

The legislature also has authority to adopt cost-saving reforms of the T, notwithstanding prior Department of Labor federal funding agreements.  Justice Stephen Breyer, then a federal circuit court judge, ruled in 1981 in Local 589, et al  v Commonwealth, et al (666 F.2d 618) as follows:

“. . . [W]e hold that the specific detailed assurances given by a union and a transit authority to the Labor Department under (UMTA) § 13(c) do not invalidate a state law to the contrary.”

All of this raises the question: since the legislature has legal authority to reform interest arbitration at the MBTA and legal authority to adopt cost-saving state legislation that supersedes Department of Labor funding agreements, why have the legislature’s reforms been consistently undermined?  The answer is that the legislature has not amended its final and binding arbitration law that applies exclusively at the MBTA.

The Carmen’s union yesterday threatened the legislature and Governor by announcing that it will try to strangle the T by cutting off federal funds if the legislature adopts Gov Baker’s arbitration reforms.  In the past, this has worked for one simple reason: binding arbitration.  Despite superior court rulings and legislative acts, the T unions have used final and binding arbitration to thwart reforms.

The governor’s proposed reform to the MBTA’s interest arbitration law is critically needed to eliminate the single biggest obstacle to reform and put the legislature and governor back in charge.

Gregory W. Sullivan is research director at Pioneer Institute, and formerly Inspector General for the Commonwealth of Massachusetts and a state representative for 17 years.  Matthew Blackbourn is Research and operations Associate.