Mass Citizens for Jobs has always been concerned about having a transparent government and the latest bad news from the MBTA shows the importance of effective public records laws. The MBTA retirement fund has always kept their accounting shrouded in secrecy. Now that it’s finally become public, thanks to one of the same accountants who tried to warn the SEC about Bernie Madoff, it’s clear that the accounting is little more than wishful thinking.
According to reporting from the Boston Herald, “the long-secretive MBTA Retirement Fund is failing to count unused sick days and vacation time in calculating how much money would be needed to pay retirees… Three of five T retirees in a sampling reviewed by FTI Consulting are getting higher pensions than predicted.” Additionally, the retirement fund pays annual administrative costs of $3.7 million, higher than comparable private sector pension funds.
Accounting that underestimates more than half of the benefits it projects is just delusional optimism. It lets the MBTA pretend to be in better fiscal health than it actually is, but eventually the bills are going to come due.
If the MBTA had its way, nobody would have known about this problem. The MBTA Retirement Fund fought for years to be exempt from public records laws and was often aided and abetted by Beacon Hill. Action was taken only after Harry Markopoulos, an early whistleblower on Bernie Madoff’s Ponzi scheme, criticized the MBTA’s accounting practices.
The retirement fund’s problems are encouraged by a culture of secrecy. Outside observers could have discovered the fund’s chronic underestimation of benefits when they began. Instead, the problem festered for years and will end up costing the taxpayers millions. This kind of failure is exactly why Beacon Hill needs to update our broken public records laws.