MBTA Pension Transparency

Back in 2008, I became aware and concerned that the MBTA Retirement Fund is not subject to the same transparency rules that apply to state agencies. My understanding of this issue has greatly evolved over the past few months: While I have undiminished passion for transparency, I have to admit that the Retirement Fund is a unique animal legally.

Last summer, I worked to pass language intended to extend the public records law to the Retirement Fund. In August, the MBTA released, for the first time, an electronic file containing pensioners’ names and their pension amounts, a file which the Boston Herald promptly published on its website and has recently updated. As a result of previous transparency efforts, the state publishes on its own website the compensation or pension of every currently active or retired employee. MBTA employee compensation is included in the state website, but until last August, MBTA pensions were secret.  They still do not appear  on the state’s own website.

There was an important twist in how the records release happened.  The Retirement Fund itself did not release the records. Rather, the MBTA released the records. The Fund is a legally separate entity and it has continued to maintain that it is, itself, exempt from the public records law. It has declined to respond to recent media inquiries related to its own operations, including the Fletcher loss. The Fund won a legal victory recently when the Secretary of State’s Supervisor of Public Records issued rulings holding that the public records law, even as we recently amended it, still did not apply to the entity.

Last week the legislature’s Public Service Committee convened a hearing on the question. We learned a lot in the hearing, but it was really the preparation for the hearing that was most valuable. For the first time, we had direct conversations with the leaders of the fund and obtained access to basic documents about the organization of the fund.

Most of the pensions and pension administration entities in the state were defined and established by legislative action. The MBTA Retirement Fund is a creature of collective bargaining and survives as a quasi-private entity from the days when private companies operated the buses and trains. The MBTA pension rules themselves — the required age and term of services for pension eligibility, the amount of pensions, etc. — emerged from collective bargaining through the years and have never been directly amended by statutory fiat. In 2009, when we sought to reform MBTA pensions, we did so by requiring the MBTA to enter into a new agreement (see Section 146 of Chapter 25 of the Acts of 2009) . Good lawyers who have tackled the issue as advocates of change seem to agree that the legislature lacks the power to alter the contract by fiat.

The contract that the MBTA unions have with the MBTA could be read to impose a duty upon the Retirement Fund’s board to protect confidentiality by refusing to disclose personal financial details like pension amounts. Had the Supervisor of Records ruled that the language we passed last summer imposed an obligation on them to disclose pension details, the Fund’s board would arguably have faced conflicting legal mandates.

The good news is that the fund routinely discloses individual pension amounts to the MBTA and the MBTA is obliged to make them public and recently has been entirely willing to do so.  So, my remaining concern is for transparency designed to give both taxpayers and union members full assurance as to the operational integrity of the Fund. At the hearing, and in conversations over the past few weeks, the leaders of the fund have sent very positive signals about their willingness, even eagerness, to define and comply with a higher level of operational transparency.

The framing of the issue as a “public records” issue forced a legal impasse.  The true goal should be achievement of modern pension fund transparency standards, which are more about procedures, analysis and regular disclosure of specific audited information and less about random public access to records. The next few months of discussions will be crucial, but I’m very hopeful that the principals will be able to agree upon a legally and financially sound approach to transparency that will end the controversy over the issue.