Banker & Tradesman file photo
MBTA officials voiced concern about rising pension costs in arbitration hearings more than a year ago, according to a document released Wednesday that a union chief involved in the proceedings said was “out of date” because its provisions never took effect.
The Pioneer Public Interest Law Center, an arm of the business-backed Pioneer Institute think tank, on Wednesday published a 37-page arbitration award stemming from deliberations over the pension agreement between the T and Carmen’s Union Local 589, its largest employee union.
The document penned by arbitrator Elizabeth Neumeier recounts testimony union and MBTA officials offered in a series of hearings between Oct. 7, 2021 and Jan. 31, 2022. During that process, Neumeier wrote, MBTA retirement fund actuary David Driscoll projected that the agency’s pension costs are projected to surpass $220 million by 2038, reflecting nearly a third of the T’s operating revenue – a sharp increase over the 14 percent of operating revenue that went to pension costs in 2018.
MBTA Chief Financial Officer Mary Ann O’Hara testified that “pension funding could cause the MBTA to be insolvent over that time period,” the arbitrator wrote.
The arbitration award dated Aug. 26, 2022 never went into effect. As MBTA Senior Director of Labor Relations Ahmad Barnes detailed at a board meeting last month, both parties decided to vacate the document and struck their own agreement increasing pension benefits. Talks are ongoing about implementation.
“The commentary in the old arbitration paperwork was based on old data, a funding mechanism that is now out of date, and false assumptions that the public would tolerate further austerity measures like those put in place by the prior administration,” Carmen’s Union President Jim Evers said in a statement Wednesday.
He added, “As long as MBTA management hires enough workers to keep the MBTA reliable and safe, which is what riders and workers want and deserve, there will be no issues with the retirement funds. It is unfortunate prior administrations – often at the encouragement of discredited groups like the so-called pioneer institute – failed to hire in ways that kept the MBTA reliable and safe, but we’re confident the new administration and GM will be hiring in a way that is safe and sustainable for the benefit of riders, workers, and retirees.”
T spokesperson Joe Pesaturo said the since-spiked arbitration award would have been “unacceptable to the Union and would have a detrimental impact the Authority’s hiring efforts in this challenging labor market” and touted the agreement MBTA and union officials reached in its place. “The agreement reached between the MBTA and its largest Union is a foundational step towards achieving workforce stability in the near and long term,” Pesaturo said.
WBUR previously reported on the arbitration award Tuesday.
