Better Government

The goal of this report is to highlight developments at the MBTA and MBTARF and outline a path towards improved transparency and accountability in order to secure employees’ benefits at a reasonable cost to MBTA riders and Massachusetts taxpayers.

While the recent pension reforms focused primarily on reducing the cost to the government, one component of the changes had the opposite effect: the legislation allowed local retirement boards the option of offering retirees a larger annual cost-of-living adjustment, or COLA. While Massachusetts has made its COLAs more generous, many retirement systems around the country have been reducing COLAs to save money.

Governor Patrick now concedes it was a bad idea and it appears that the so-called tech tax will be repealed. Repeal will leave a $160 million hole in state transportation funding. But that hole need not be filled exclusively by new revenue. It can be filled by savings, revenue, or a combination of the two, and Pioneer Institute research shows there are plenty of savings to be had from a series of reforms.

Currently, there are 103 municipal, regional and agency retirement systems for public employees in Massachusetts, each administered by a five-person board and various numbers of board staff.

Pioneer has generally produced at the time of release of key budget documents a series of "The Good, the Bad and the Ugly" reports. The conference committee's fiscal year 2014 budget was circulated on the first of the month, just as the new fiscal year started.

This policy brief introduces the MassPensions data accessibility tool by Pioneer Institute. MassPensions is a website presenting in clear and convenient format key data about the state of public employees' pensions in the Commonwealth of Massachusetts for the period 1985-2012. The low cost and fast turnaround of this project illustrate that government transparency is not always as complicated or expensive as it may seem.

This policy paper compares the MBTA's bus maintenance costs to those of other bus transit agencies and considers the causes of the T's inordinately high bus maintenance spending. Considering that the MBTA spent a whopping $832 million on bus maintenance between 2000 and 2011, any significant improvement in cost-effectiveness in this area is certain to translate into large savings.

Recent news demonstrates that the state’s transportation system has problems that go beyond a shortage of funding. The Boston Herald has reported that the MBTA doesn’t make public information available about how much they are paying out in pension benefits and who is receiving benefits.

Reform is hard work. A massive injection of new money into Massachusetts’ troubled transportation system is no substitute for a serious plan that delineates clear and achievable goals, accountability for results, and provides the money to move forward.

The adoption of these reforms can significantly improve the performance of retirement systems statewide and reduce the costs of funding public pension benefits. Investment and payment planning will be facilitated by more predictable cash flows from investing activities, helping avert potential liquidity crises.