Monday, September 18, 2017
Jimmy O’Brien, Boston Carmen’s Union
Testimony

Good afternoon. Thank you, Chairman McGee, Chairman Straus and members of the committee for the opportunity to testify today. My name is Jimmy O’Brien, I am the President of the Boston Carmen’s Union Local 589.

The Boston Carmen’s Union is the largest of 28 unions with members employed by the MBTA. Over 4,100 MBTA employees are members of the Carmen’s Union, we are the men and women who operate and maintain the MBTA’s buses, trains, trolleys and tracks.

I am a board member of the MBTA Retirement Fund, but I do not speak for the Board or the Fund unilaterally. I am here to give voice to the members of the Boston Carmen’s Union, and all MBTA employees and retirees who have a stake in the MBTA pension fund.

The Pension Fund has long been criticized for being a Private Trust. But, it is important to understand the history of the MBTA Retirement Fund. The retirement Fund is a private trust because the Legislature decided not to include the Retirement Fund under Mass. General Law c. 32.

Instead, when the Commonwealth acquired Boston Elevated Railway, a private trust was created for the pension plan. The Trust Agreement was negotiated by the Union and the MTA.

The MBTA is unlike any other publicly supported entity in Massachusetts because it is subject to the Federal Urban Mass Transportation Act of 1964 and because, in addition to paying into the pension system, members also pay into Social Security, as required under the Social Security Act. This makes the fund far more complicated than many realize.

It would take an Act of Congress to allow MBTA employees out of Social Security, and would require certification by the Secretary of Labor determining that taking MBTA employees out of social security is fair and reasonable under the Urban Mass Transportation Act. Additionally, MBTA workers would still have the right to bargain collectively over their retirement benefits.

Because the MBTA Retirement Fund is a private trust, the Commonwealth is not legally responsible for the Retirement Fund’s unfunded liability. This would, of course, change if the Fund comes into the State Fund.

If the decision was made to move MBTA workers into the state plan, MBTA funding requirements would increase. Most of the pension contributions of today are helping to pay for the unfunded liability. Moving the employees does not eliminate the unfunded liability. Rather, it would be distributed across a shrinking payroll base – requiring higher contribution rates by both the MBTA and the employee.

The MBTA Pension Fund has been portrayed to the public, to employees, to retirees, and to the Legislature as being in crisis. It simply is not true. Time and time again, the MBTA presents carefully selected statistics in an attempt to paint this picture. The MBTA Retirement Fund has been criticized for its current unfunded liability and labeled “in crisis.” But, at the same time, the Massachusetts State Retirement Fund’s unfunded liability is 62% and ranked 36/50 in the country.

I am dumbfounded as to how our pension fund is in crisis – while the state pension fund is not.

What management also chooses to ignore is the role they have played in where the fund is today. They can no longer ignore that the most significant challenge facing the MBTARF is that the MBTA has continually reduced the workforce, for decades, and as a result there are more retirees than contributors. Investment performance is not the major driver of the unfunded liability. It is the result of fewer people paying into the system because of declining employment through early retirement offerings and privatization.

The Boston Carmen’s Union is committed to the long term viability of the pension fund – of course we want it to succeed. We would not stand in the way of anything we thought might improve the fund’s performance and funding levels. Additionally, the Retirement Fund Board has established a committee to examine potential investment into PRIT.

The MBTA Pension Fund is a complex system and it is being managed to succeed so that our members and retirees can retire with dignity.

Thank you for your time today.