Quirky Perks of the MTA

As anyone who reads a newspaper knows, the Metropolitan Transportation Authority has a peculiar way of doing things.

For example, four of the five Los Angeles County supervisors, who automatically assume seats on the transit agency’s board, receive an unusual and little-known taxpayer MTA perk that will boost their pensions.

Under an arrangement set up without public debate, the fees that the supervisors receive for tending to MTA business--up to $7,200 a year--are tacked on to their $127,793 a year in county compensation when calculating their retirement pay.

That could add as much as $2,800 a year to the $49,604 annual pension received by a supervisor who retires at age 65 with 16 years of service. Fees received by some supervisors for serving on the county’s obscure Local Agency Formation Commission also are included in those pension calculations. Supervisors’ pensions are based on an average of the highest three years of compensation, age at retirement and years of service.

The MTA’s chief fiscal officer speculated that the pension benefit was never brought before a public session of the board because of the “small amounts” involved. The MTA makes an employer contribution--$1,700 last year--to the county retirement system on the supervisors’ behalf. The supervisors also contributed a total of $2,500 out of their MTA stipends.

The supervisors’ MTA pension benefit is unusual, according to a survey of public transit agencies. All members of the 13-member MTA board can receive $150 a day, up to $600 a month, for tending to transit business. But only the supervisors can have their MTA stipends added to their county pay in calculating their pensions.

“Great scam. I should have run for supervisor,” said former Assemblyman Richard Katz, who wrote the legislation creating the MTA. “This is extreme--even for them.”

The retirement benefits were implemented in 1991 by one of the MTA’s predecessor agencies, the County Transportation Commission. They took effect at about the same time that the county adopted a more controversial change to the county pension system, one that boosted the retirement pay of top executives, including the supervisors. That pension change allowed the value of benefits, such as car and medical insurance allowances, to be counted as income for calculating pensions. The county changes led to passage of state laws designed to prevent such benefit improvements.

Supervisor and MTA board member Zev Yaroslavsky was unaware of the MTA pension benefit until informed by The Times and said that he directed officials not to include his MTA and Local Agency Formation Commission stipends in calculating his retirement pay.

“I do not believe in getting a benefit that other members of the [MTA] board are not entitled to,” Yaroslavsky said.

A spokesman for Supervisor Gloria Molina said she was unaware of the MTA pension benefit and would look into it.

The pension perk is separate from other benefits that the supervisors receive from the MTA.

There is the matter of health insurance.

Each supervisor gets $20,404 a year from the county to buy medical insurance and other benefits. But they can pocket the money and use a share of their MTA meeting stipend to buy subsidized health insurance from the transit agency.

“Board members give valuable time in support of this public agency and are deserving of the protection from catastrophic illness and injury,” said a report that authorized that deal.

Accused of Double Dipping

But state Sen. Richard G. Polanco (D-Los Angeles) accused the supervisors of double dipping. He also questioned whether the supervisors should receive extra pay for serving on the MTA board. “Every hour that they serve on that board, they’re being paid as county supervisors. They shouldn’t be paid twice.”

All MTA board members can buy health insurance for themselves and their families for $50 a month, the same price paid by other nonunion MTA employees, according to documents obtained under the California Public Records Act. The cost to taxpayers of providing the health insurance for all board members is about $40,000 a year.

MTA board members also receive $250,000 in accidental death and dismemberment insurance, $250,000 in business travel accident insurance and $50,000 in “letter bomb” insurance--the latter prompted by the Unabomber attacks.

Los Angeles’ dollar-a-year Mayor Richard Riordan, a multimillionaire who chairs the MTA board, accepts no MTA pay.

Board members also receive transit passes, good for free rides on buses and trains--and critics believe that the overcrowded and often unreliable bus system would run better if MTA board members used their passes.

County supervisors receive extra pay for serving on other government boards and commissions. Yaroslavsky, for example, collected $15,819 last year, in addition to his county salary, for serving on the County Sanitation Districts’ 16 boards. Some of the positions, such as seats on the Sanitation Districts boards, are rotated among the supervisors.

Another pension oddity was the creation of an organization within the MTA known as the Public Transportation Services Corp. Mostly for pension purposes, employees work side by side for one or the other of the two organizations--the MTA and the transportation services corporation--depending on their retirement system.

MTA critics joke about the irony of the MTA, which was created when the Legislature merged two local transit agencies, quietly splitting itself in two.

It appears to be another of the agency’s obscure failures--in this case, its unsuccessful effort to set up a uniform retirement system for its employees.

An Expensive Foul-Up

Like other MTA foul-ups, this one is expensive; it already has cost taxpayers $14 million, and the price could go higher.

Union leaders contend that the Public Transportation Services Corp. is a sham designed to help the agency’s highly paid nonunion employees “take as much pork out of the MTA as possible.” The agency’s officials respond that a court recently ruled that the corporation is legal.

The new 1,960-employee corporation with a $140-million budget--virtually all of its money transferred from the MTA--was largely set up as a way for the MTA to get around restrictions on what kind of retirement benefits it could offer its employees.

Officials say the corporation--run by a three-member board appointed by the Los Angeles mayor, the Board of Supervisors and the county’s smaller cities--has broader powers, including the power to award contracts, condemn property and incur debt.

It grew out of the shotgun marriage of the Southern California Rapid Transit District and the County Transportation Commission to form the MTA in 1993.

Officials sought to set up a uniform retirement system that would treat all workers the same and provide better benefits at lower cost.

Before the merger, RTD employees paid into Social Security. The transportation commission paid both the employer and employee contribution for its staffers. The commission employees were members of the California Public Employees’ Retirement System but not Social Security.

After the merger, MTA officials wanted to pull out of Social Security. But the transit unions opposed the withdrawal. “Our members put a lot more trust in the United States of America than they put in anything the MTA would come up with,” said a union activist.

While MTA officials tried to resolve the issue, the agency decided to pay Social Security employer and employee contributions for 551 former commission staffers to “play it safe.”

Forcing the former commission staffers to start paying Social Security would have been tantamount to a pay cut, officials reasoned. “The administration was advised that it would not be good employment practice to force the former commission staffers to start paying Social Security when they did not opt for it,” said Linda Bohlinger, a former commission staffer who was the MTA’s acting chief executive until last summer.

So the agency--for 3 1/2 years--paid employee and employer contributions to CalPERS for some of its employees and then the full share of Social Security contributions for the same employees. The payments increased the employees’ personal taxes, which the MTA also agreed to pay.

In January of last year, after nonunion former RTD workers complained, the agency began picking up the employee contributions to those 1,923 workers too.

Finally, the MTA and a team of private lawyers hired to study the problem found a solution: Set up a “governmental nonprofit public benefit corporation” into which mostly nonunion administrative and planning employees would be transferred if they chose to be in the state retirement system. Employers of the new corporation carry MTA business cards and wear MTA identification tags but receive paychecks from the Public Transportation Services Corp.

MTA officials insist that the new organization is not a sham. “Officially, we do have other business purposes,” said Terry Matsumoto, chief financial officer for the new corporation and executive officer for finance at the MTA.

Matsumoto said the unions, in blocking the MTA’s withdrawal from Social Security, cost the taxpayers hundreds of millions of dollars in refunds and savings. “If anyone should have to answer some difficult questions over this situation, it ought to be the union leaders,” he said.

Union activists dispute the MTA’s claims that the withdrawal from Social Security would have saved money.

The new corporation has become a source of amusement to some MTA staffers. “When people ask, ‘Who do you work for?’ ” said a staffer, “I can say ‘PTSC,’ and I don’t get a dirty look.”

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Pension Sources

Los Angeles County supervisors serve on a variety of boards and commissions, some of which pay the supervisors a fee on top of their county salaries. Fees received by the supervisors for serving on the Metropolitan Transportation Authority board and the Local Agency Formation Commission are tacked onto their county salary to calculate their pensions. The supervisors’ pensions are based on an average of the last three years’ compensation, age of retirement and years of service.

Mike Antonovich

1997 County Salary: $107,389 plus $20,404 for benefits and $7,440 car allowance

Other Posts (1997 pay shown): South Coast Air Quality Management District--$1,600

Metropolitan Transportation Authority--$5,853

*

Yvonne Brathwaite Burke

1997 County Salary:$107,389 plus $20,404 for benefits and $7,440 car allowance

Other Posts (1997 pay shown): Southern California Assn. of Governments-$240

Local Agency Formation Commission-$1,350

Sanitation Districts-$1,059

Metropolitan Transportation Authority-$6,750

*

Don Knabe

1997 County Salary: $107,389 plus $20,404 for benefits

Other Posts (1997 pay shown): Metropolitan Transportation Authority-$5,464

*

Gloria Molina

1997 County Salary: $107,389 plus $20,404 for benefits and $7,440 car allowance

Other Posts (1997 pay shown): Metropolitan Transportation Authority-$3,450

*

Zev Yaroslavsky

1997 County Salary: $107,389 plus $20,404 for benefits

Other Posts (1997 pay shown): Southern California Assn. of Governments-$240

Local Agency Formation Commission-$1,500

Sanitation Districts-$15,819

Metropolitan Transportation Authority-$6,602

MTA benefits:

All MTA board members receive:

*$150 a day for tending to the agency’s business up to $600 a month.

*Subsidized health insurance

*$250,000 in accidental death and dismemberment insurance

*$250,000 in business travel insurance.

*$50,000 in letter bomb insurance

*Transit passes, good for free rides on MTA buses and trains.

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Agency Comparison

In an effort to get around restrictions on the kind of retirement benefits it could offer its employees, Los Angeles County’s Metropolitan Transportation Authority has transformed itself into two agencies: the MTA and the Public Transportation Services Corp. Here is a comparison of the two organizations:

Employees

MTA: 6.040 mostly union bus and train operators

PTSC: 1,960 mostly non-union planners, supervisors and administrative personnel

Headquarters

MTA: One Gateway Plaza

PTSC: One Gateway Plaza

Budget

MTA: $2.8 billion

PTSC: $140 million

Mission

MTA: operates buses and trains and plans highway and public transportation improvements

PTSC: responsible for transportation planning, overseeing rail construction and providing administrative support for bus and train operations

Governing Board

MTA: 13 member board consist of the five county supervisors, the Los Angeles mayor and his three appointees, and four elected representatives of the county’s other cities.

PTSC: 3 member board consists of one appointee each of the Board of Supervisors, the Los Angeles mayor and the county’s other cities.