Over the past few years, we’ve seen first-hand the impact unfunded pension obligations can have on municipal economies. Across our state, cities are borrowing from pension plans to pay current pension obligations, and the entire retiree benefits structure is starting to resemble a pyramid scheme.
In essence, then, an organization with obligations to future retirees can choose one of two avenues: They can sacrifice the future to pay off costs now or they can attempt to build for those future obligations while paring down services today. After years of pursuing the first avenue, the MTA appears to be on the second course, but now TWU members looking to reclaim their old jobs (and argue for increased service as well) want the authority to forego fiscal sanity for more money today.
Here’s the TWU’s essential argument: The MTA has recognized that it will one day have $12 billion in retiree benefits and health care costs to pay out, and the agency has begun to set aside some money in a fund for those future obligations. The fund has grown in spurts over the past decade, but it now totals $500 million. The TWU, in a flyer and at MTA Board meeting protests, says the authority should use this money to increase worker salaries and restore service cuts.
Yesterday, Occupy Wall Street representatives and TWU officials railed on the MTA Board for what amounts to a semblance of fiscal responsibility. “The transit workers serve the 99 percent,” Tony Murphy, a member of Occupy for Jobs, said. “It is beyond ludicrous for the M.T.A. to claim a retirees fund as an excuse to deny justice to the transit workers.”
With some TWU members calling for the return of station agents — a dubious idea considering the jump in ridership last year even as station agent staffing levels decreased — union officials toed a hard line. “Enough is enough,” Maurice Jenkins, a TWU Local 100 vice president, said. “Utilize the GASB funds.”
The MTA had other thoughts on the matter. “We are doing everything we can to work with the fragile budget conditions that we have,” MTA Chairman Joseph Lhota said. “Their reference to money that’s squired away to pay for retiree health care—we have a $13.2 billion unfunded liability, of which we have put against it $470 million. It’s nowhere near enough. It’s a problem, and we need to continue to fund the funds so that we can make sure that the retiree benefits are there when the retirees of the MTA need it.”
Another Board member echoed Lhota’s take. “You’re essentially borrowing money that actuarially you’re told that you need to have to protect people’s benefits in the future,” Allen Cappelli said. “So it’s not a fiscally prudent thing to do. It’s the kind of practice that gets government agencies into trouble. And then if you run into a crisis and you don’t have the money, then you’ve got to raise fairs and cut services, and we’re trying to avoid that kind of instability.”
Now, I don’t begrudge the TWU for searching for ways to secure raises for their members; that’s what a good union is supposed to do. But while most unions are willing to sacrifice their future members for the current staff, here, the TWU is concerned with current payments without keeping an eye on what they have coming to them in the future. The MTA is, for worse, saddled with high levels of future obligations thanks to a low retirement age and a generous benefits package. Union members can’t enjoy those luxuries while asking the MTA to tap into a fund to pay those benefits now. If so, the losers will be the fare-paying public who will be saddled with these costs one way or another.
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