[PRCo] PATransit Taking A Look At Pension Payouts

[Herb Brannon]

I'm glad I retired from Greater Cleveland Regional Transit Authority.
Anyone on The List who is retired or will retire in the future from PAT
needs to keep informed of what they may do. The story below, from
yesterday's  Pgh Trib, is interesting reading.
 Experts: Port Authority retiree cost cuts critical
 About Tom Fontaine
 Tribune-Review Staff reporter Tom Fontaine can be reached via
e-mail<tfontaine at tribweb.com>or at 412-320-7847.
 TribLIVE Mobile <http://triblive.com/Mobile/mhome/> | Contact
us<http://triblive.com/home/contactus/>
More Tribune-Review [image: Tribune-Review] <http://triblive.com/news/>
 Details
Top recipients

Nine of Port Authority’s top 10 pension recipients are former executives
who are paid through the agency’s plan for non-represented employees and
police, designated below as NRP.

Annual Annual Retirement Name Job title pension supplement date

Paul Skoutelas CEO, NRP $83,750 $6,000 Sept. 10, 2005

Claudia L. Allen Chief financial officer, NRP $70,382 Oct. 1, 2010

Stephen R. Banta Chief operating officer, NRP $66,725 $6,000 May 1, 2007

William W. Millar CEO, NRP $63,107 Nov. 1, 1996

Theodore C. Hardy Engineering director, NRP $62,995 Jan. 1, 1993

Robert M. Parker Operations director, NRP $62,304 Jan. 1, 1987

Patrick J. McMahon Operator/ATU president $60,873 $6,000 Oct. 1, 2010

Allen D. Biehler Planning director, NRP $60,193 Feb. 1, 1997

Judilyn H. McNeil Communications officer, NRP $58,283 April 1, 2011

Robert F. Brecht Civil engineering director, NRP $56,310 $6,000 July 1, 2007
 Related .pdfs

   -
   document.pdf
   <http://triblive.com/csp/mediapool/sites/dt.common.streams.StreamServer.cls?STREAMOID=fwCb6mmvFItqPaF3mPJdwpM5tm0Zxrvol3sywaAHBAkmHVtdeFONspCRuyHcxtPtE0$uXvBjavsllACLNr6VhLEUIm2tympBeeq1Fwi7sIigrCfKm_F3DhYfWov3omce$8CAqP1xDAFoSAgEcS6kSQ--&CONTENTTYPE=application/pdf&CONTENTDISPOSITION=ptr-gx-portauth-071512.pdf>

[image: Get Adobe Reader] <http://get.adobe.com/reader/>
 Tweet <https://twitter.com/share>

By Tom Fontaine <tfontaine at tribweb.com>

 *Published:* Saturday, July 14, 2012, 10:42 p.m.
 Updated 56 minutes ago

Thirty-five of Port Authority’s top 50 pension recipients are former
managers who helped lead the agency that now faces unprecedented job and
service cuts and skyrocketing pension costs, financial records show.

“Some things aren’t sustainable,” Bob Jazwinski, president of the
Pennsylvania Institute of Certified Public Accountants, said of Port
Authority of Allegheny County’s runaway retiree costs.

Reducing pension and retiree health-care costs will be discussed during
contract talks between Port Authority and Amalgamated Transit Union Local
85, the agency’s largest union whose deal expired on June 30. Pension costs
have soared 1,123 percent since the 2005 fiscal year, from $3.1 million to
$37.9 million of a $333.1 million operating budget.

Leading the list of pension recipients is the authority’s former CEO Paul
Skoutelas, who receives a yearly pension of more than $83,000, and its
retired chief financial officer, Claudia L. Allen, who gets more than
$70,000.

Pension costs will be 34.5 percent of Port Authority’s $109.8 million
payroll in the coming year, a number Jazwinski found troubling. A sound
plan is to keep pension costs between 5 percent and 10 percent of payroll,
he said.

As a group, former drivers, mechanics and other workers represented by the
union collect the agency’s largest average pensions, data show. ATU Local
85 pension recipients outnumber management retirees seven to one.

County Executive Rich Fitzgerald, Gov. Tom Corbett and PennDOT Secretary
Barry Schoch are involved in the contract talks with leaders of the
2,200-member union and management. Representatives are scheduled to meet on
Monday.

Port Authority records show there are 3,294 people on the agency’s three
pension plans. In addition to nearly 2,600 retirees, 700 other recipients
include widows and widowers of former workers and ex-wives receiving money
through court orders.

Pension recipients are to receive more than $65 million this calendar year
— $37.9 million from Port Authority’s budget and the rest from money in the
pension plans, records show.

“More and more, it’s becoming an agency that’s just there to pay out
benefits and not run the public service that it’s tasked with running,”
said Eric Montarti, a senior policy analyst at the Castle Shannon-based
Allegheny Institute for Public Policy.

ATU Local 85 retirees will collect an average pension of $23,800. The
average payout to non-union retirees, including management and police is
$21,142. International Brotherhood of Electrical Workers Local 29 retirees,
most of them former customer-service workers, will receive an average
pension of $15,213. Jazwinski said the payments don’t appear out of line. A
past agreement allowing many workers to begin collecting full pensions
after 25 years of service, regardless of age, and the sheer number of
recipients present challenges, he said. Layoffs planned for September are
expected to leave Port Authority with about 1,600 active workers and 3,300
retirees.

The agency can’t cut benefits to current retirees but could reduce the
financial burden of future pensions, officials said.

“I’d recommend that they move to a 401(k)-type plan for all new hires,”
Jazwinski said, noting that that would reduce costs in years to come
because those retirement contributions would be set at a certain percentage
of workers’ earnings instead of tied to fluctuating market conditions and
pension demands.

In addition to his annual pension payout of $83,750, Skoutelas, 58, of Mt.
Lebanon receives an early-retirement supplement of $6,000 a year through
June 2014. Almost 1,400 retirees receive similar payments.

Skoutelas, who did not return calls, left Port Authority in September 2005.
The agency began cutting pension checks to him three years earlier through
the controversial and since-disbanded Deferred Retirement Option Program,
known as DROP. It placed pension money into an interest-bearing account
that enabled him to receive a $380,213 lump-sum payment when he retired.

Skoutelas worked two stints at Port Authority totaling 19 years. He retired
with about three decades of service by paying $181,530 to get credit for
time worked at other transit agencies. Port Authority reimbursed that
expense through terms of a contract signed in 2000. The agency has since
eliminated such “buybacks,” except for military service.

Skoutelas originally received a pension of more than $9,000 a month, with
about a third of the money coming from a special bank account that provided
payments beyond maximum pension limits. Port Authority closed the account
five years ago, eliminating the boost.

Like several top pension recipients, Skoutelas has continued to work since
retiring from Port Authority. Based Downtown, he is a senior vice president
and transit market leader for the international engineering and planning
firm Parsons Brinckerhoff.

Allen, 63, of Stanton Heights, who retired in October 2010, is to receive
the agency’s second-largest pension this year at $70,382. She works as a
consultant at the Regent Square accounting firm Crawford Ellenbogen LLC,
headed by former Port Authority board member Joan Ellenbogen.

Former Chief Operating Officer Stephen R. Banta, who retired in May 2007,
will collect the agency’s third-largest pension at $66,725. He has held
several transit jobs since leaving Port Authority. In March, he became CEO
of the Valley Metro Regional Public Transportation Authority and Valley
Metro Rail in Phoenix.

“Pensions were normal for big-city transit systems when I left Port
Authority 16 years ago,” said former agency CEO William W. Millar, who
recently retired as executive director of the Washington-based American
Public Transportation Association. He receives Port Authority’s
fourth-largest annual pension at $63,107.

“From a national perspective, there increasingly is pressure on public
agencies to reduce costs, and it’s not unusual to try to do that by
reducing the costs of pensions,” Millar said.

Millar said the most common approach is to close off more costly pension
plans to new hires and offer them a 401(k)-style plan — something APTA did
during his tenure there to achieve long-term savings. He said there wasn’t
blowback: “Younger people don’t value pensions the way old guys like me
did. They don’t expect to retire from the same place they started. They
change jobs like I change clothes, so a 401(k) works better for them
because it’s more portable.”

Former Port Authority planning director Allen D. Biehler, who receives the
eighth-largest pension at $60,193 a year, became Pennsylvania’s Secretary
of Transportation under former Gov. Ed Rendell.

“I think in the last couple of union contracts there has been some
significant progress made in reducing legacy costs,” Biehler said, noting
that minimum years-of-service and age-at-retirement requirements increased
and that decreased the agency’s pension obligations to newer retirees.

“Whether the current structure is too generous, I don’t know,” he said.
“The current administration got this problem from previous times and it
sits there as a real issue to deal with.”

In recent years, management, police and unionized customer service workers
eliminated pensions for new hires, offering a 401(k)-style
defined-contribution plan instead. Current workers in those groups are
allowed to switch to the defined-contribution plan, but only 31 workers
have done so, Port Authority said. The three groups employ 360 people.

“It’s something we certainly have to look at,” Fitzgerald said.

Fitzgerald said he wants at least $15 million in concessions from ATU Local
85, along with $10 million in concessions from management, with the hope
that it will spur the state to provide $30 million to $35 million. That
could help close a deficit and prevent 35 percent service cuts and more
than 500 layoffs scheduled for September.

Tom Fontaine is a staff writer for Trib Total Media. He can be reached at
412-320-7847or tfontaine at tribweb.com.


-- 
Herb Brannon
In Cuyahoga Valley National Park