MBTA, State Government, Taxes and Budget Issues, Transportation

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THE CASH-STRAPPED MBTA, with a seemingly bottomless supply of bad financial news, received another jolt on Wednesday when an audit revealed the agency owes about $80 million to retired agency executives who were promised extra money in exchange for leaving the Carmen’s Union to work in management.

Shawn Warren, an auditor for KPMG, which did a year-end review of the T’s books for fiscal 2015, could not say how long the plan has been in place, how much money is owed, or even how many managers are eligible for the added pay.

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“The rules are very convoluted and very intimate, which makes the administration of this very tough,” he said. “The funding level is zero. There is no funding set aside. Because there are no assets, there is nothing to audit.”

The revelation came toward the end of a lengthy joint meeting of the board of directors of the Department of Transportation and the MBTA’s Fiscal and Management Control Board, with members saying they were under the impression the program, which is labeled deferred compensation, had been funded over the years through regular set-asides.

“So this is ‘pay as you go,’” said Steve Poftak, a member of the DOT board of directors as well as the control board. “Not only is nothing going into the fund, we’re actually donating… You’re essentially stealing from the future here.”

DOT board member Russell Gittlen, a union representative, said the fault lies with the transit authority. “We negotiated this thing with the T,” he said. “That should have been kept up to a respectable level.”

Brian Lang, a member of the T’s oversight board, said, “We didn’t have our arms around the full liability.”

Transportation Secretary Stephanie Pollack said the issue is the way the T operates, as a hybrid that is an independent authority but receiving a large chunk of taxpayer money to run.

“Commitments were made and there was never actually any agreement on the part of the taxpayers,” she said. “We need to find a way to make it live up to obligations that were made. It’s too easy to spend someone else’s money.”

Under questioning by the board members, Warren, interim Chief Financial Officer Michael Abramo, and MBTA Chief Administrator Brian Shortsleeve said the plan was part of the agreement with unions to lure union members into management positions and pay them for overtime they may miss out on. Warren said the money is called deferred compensation as part of the collective bargaining agreement but he said that is a “misnomer.” He said the agreement is more akin to a pension plan.

According to Warren, about $6 million is being paid annually to roughly 900 qualified management retirees under the agreement. Warren said the $80 million is part of more than $911 million the T has in unfunded liabilities for retirement accounts, including $811 million for the private MBTA Retirement Trust Fund and roughly $21 million for the MBTA police retirement fund.

“This plan is a defined benefit plan,” Warren said. “It has nothing to do with compensation, nothing to do with deferred compensation. It is, in essence, a pension plan. If you are an executive [who comes under this plan], you are entitled to receive a monthly check.”

Poftak and others recommended folding the compensation into current paychecks, but Shortsleeve pointed out that it’s part of the collective bargaining agreement and would have to be dealt with through that process.

Outside the meeting, union officials made it a point to say the money was going to management, mindful of the backlash union members have received over six-figure salaries inflated by overtime. James O’Brien, president of the Carmen’s Union who serves on the MBTA pension fund board, said the managers who qualified for the extra retirement benefit also were given compensation days while they worked at the T for those extra hours.

“They get deferred comp later on in their life when they left and they also got the time off earlier in the year, too,” said O’Brien. “That’s an important factor that needs to get out there. This was for executives only.”

Earlier in the meeting, board members heard an update on the progress of the bloated Green Line extension, which has been taken off the board while officials attempt to redesign the project and cut the pricetag from an astronomical $3 billion back to under $2 billion, with the cost split between the state and federal governments.

Jack Wright, the interim project manager, laid out a schedule for benchmarks with hopes to have a design and scope on the scaled-back project by May 11 and painted an optimistic picture of the project and his belief that the line can move forward within the tight fiscal restraints.

But Joseph Aiello, chairman of the control board, said the scaling back would have to be more than simple pruning of excess design and creature comforts to meet the budget expectations. He said he expects the state will have to ask for contributions from affected communities and the design cannot be opulent.

“The cutbacks in scope really need to be on the side of brutal,” said Aiello. “This has to be a bare-minimum system in order to get to a point financially where we’re making a minimum ask to third parties because the state’s tapped.”

Some board members pointed out, in the rush to move forward, the timelines had dates that showed start dates preceding end dates or did not allow sufficient time to accomplish what was needed, such as negotiating a Memorandum of Understanding with Cambridge and Somerville.

“Having a start date four days before an end date for an MOU probably isn’t feasible,” said Lisa Calise, a member of the control board.

Meet the Author Jack Sullivan Senior Investigative Reporter , CommonWealth About Jack Sullivan Jack Sullivan is now retired. A veteran of the Boston newspaper scene for nearly three decades. Prior to joining CommonWealth, he was editorial page editor of The Patriot Ledger in Quincy, a part of the GateHouse Media chain. Prior to that he was news editor at another GateHouse paper, The Enterprise of Brockton, and also was city edition editor at the Ledger. Jack was an investigative and enterprise reporter and executive city editor at the Boston Herald and a reporter at The Boston Globe. He has reported stories such as the federal investigation into the Teamsters, the workings of the Yawkey Trust and sale of the Red Sox, organized crime, the church sex abuse scandal and the September 11 terrorist attacks. He has covered the State House, state and local politics, K-16 education, courts, crime, and general assignment. Jack received the New England Press Association award for investigative reporting for a series on unused properties owned by the Catholic Archdiocese of Boston, and shared the association's award for business for his reporting on the sale of the Boston Red Sox. As the Ledger editorial page editor, he won second place in 2007 for editorial writing from the Inland Press Association, the nation's oldest national journalism association of nearly 900 newspapers as members. At CommonWealth, Jack and editor Bruce Mohl won first place for In-Depth Reporting from the Association of Capitol Reporters and Editors for a look at special education funding in Massachusetts. The same organization also awarded first place to a unique collaboration between WFXT-TV (FOX25) and CommonWealth for a series of stories on the Boston Redevelopment Authority and city employees getting affordable housing units, written by Jack and Bruce. About Jack Sullivan Jack Sullivan is now retired. A veteran of the Boston newspaper scene for nearly three decades. Prior to joining CommonWealth, he was editorial page editor of The Patriot Ledger in Quincy, a part of the GateHouse Media chain. Prior to that he was news editor at another GateHouse paper, The Enterprise of Brockton, and also was city edition editor at the Ledger. Jack was an investigative and enterprise reporter and executive city editor at the Boston Herald and a reporter at The Boston Globe. He has reported stories such as the federal investigation into the Teamsters, the workings of the Yawkey Trust and sale of the Red Sox, organized crime, the church sex abuse scandal and the September 11 terrorist attacks. He has covered the State House, state and local politics, K-16 education, courts, crime, and general assignment. Jack received the New England Press Association award for investigative reporting for a series on unused properties owned by the Catholic Archdiocese of Boston, and shared the association's award for business for his reporting on the sale of the Boston Red Sox. As the Ledger editorial page editor, he won second place in 2007 for editorial writing from the Inland Press Association, the nation's oldest national journalism association of nearly 900 newspapers as members. At CommonWealth, Jack and editor Bruce Mohl won first place for In-Depth Reporting from the Association of Capitol Reporters and Editors for a look at special education funding in Massachusetts. The same organization also awarded first place to a unique collaboration between WFXT-TV (FOX25) and CommonWealth for a series of stories on the Boston Redevelopment Authority and city employees getting affordable housing units, written by Jack and Bruce.

Wright apologized for the “obviously misinformation” and said he hadn’t caught the errors. Outside the meeting, in talking with reporters, he passed off the mistakes as “typos.”

“I don’t think the typos have anything to do with anything material on the project,” he said. “The typos come from my focusing on the completion dates and not looking at the start dates.”

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