Public employees of all stripes earn defined benefit pensions through their service to their communities. We frequently discuss teachers and firefighters, nurses and librarians, sanitation workers and police officers. Another group of public employees who earn defined benefit pensions are transit workers, including the employees of the Washington Metro Area Transit Authority, also known as Metro, the subway system for the Washington, DC metropolitan area. Recently, the pensions for these public employees have been attacked by opponents using the same, tired, old playbook of pension opponents everywhere.
Metro has a funding problem. The subway system crosses three jurisdictions: Washington, DC; Virginia; and Maryland. Any decisions regarding Metro, including funding the system, have to reach agreement from these three jurisdictions and the federal government. This creates obvious opportunities for disagreement and deadlock. Also, until recently, Metro had no dedicated funding stream. Other major metropolitan transit systems, such as those in Boston and New York City, receive significant amounts of their annual funding from dedicated sources: 62 percent for Boston’s MBTA and 36 percent for New York’s MTA. Meanwhile, Washington’s Metro was the only major subway system in the nation without a tax or other dedicated source of funding. That finally changed in the spring of 2018 when all three jurisdictions agreed to provide a combined $500 million per year in dedicated funding for Metro.
How do Metro’s funding problems relate to pensions? One of the major operating costs for Metro is paying the wages and benefits of its employees. As the system has struggled in recent years to catch up on making needed repairs while dealing with its funding challenges, some pension opponents have seen this as an opportunity to attack Metro’s employees and their pensions. This is straight out of the anti-pension playbook: seize on a financial crisis, such as the Great Recession or Metro’s funding problems, and use it as a pretext to cut pensions.
What do these pension critics propose as a solution to this alleged problem? If you’re familiar with the anti-pension playbook, then you already know the answer: switch to 401(k)s. Barbara Comstock, a Republican congresswoman from northern Virginia, has been one of the most vocal opponents of Metro’s employees and their pensions. She recently introduced legislation, H.R. 6852, that would impose a variety of changes on Metro. One of those changes would be forcing all future hires into a defined contribution 401(k) plan. So far her legislation has zero cosponsors and is unlikely to ever receive a vote. Other pension critics have echoed her call to force new hires into 401(k) plans, including Metro board chairman Jack Evans, a Democratic member of the DC City Council.
It’s also worth noting that Metro did not contribute to the largest of its five pension plans for eight years from 1997 to 2006. Metro only began contributing to the pension plan again two years before the financial crisis, which hurt the funding of pension plans across the nation. It seems laughable to argue that the unfunded liability of the pension plan is the fault of employees when Metro itself has been so negligent in properly funding the plan. Again, this is straight from the anti-pension playbook: a government, or government entity in this case, neglects its pension obligations and then tries to blame workers and cut their benefits. We’ve seen this in Illinois, Kentucky, New Jersey, and so many other places where public pensions have been attacked.
Earlier this year, an arbitration panel ruled that Metro could not force future employees into a 401(k) plan. For the time being, the pensions of Metro employees are safe. However, Metro, its funding, and its ongoing maintenance challenges remain contentious issues and it seems certain that pension critics will continue to rely on the anti-pension playbook to threaten retirement security for these public employees.