MBTA officials voiced concern about rising pension costs in arbitration hearings more than a year ago, according to a document released this week that a union chief involved in the proceedings said was “out of date” because its provisions never took effect.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, just 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% 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“The commentary in the old arbitration paperwork was based on old data, a funding mechanism that is now out of date, and false assumptions that the public would tolerate further austerity measures like those put in place by the prior administration,” Carmen’s Union President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.”
