Grossman is one of three new appointees to the board, which has faced criticism for not being open to the public.
BOSTON - The Massachusetts Department of Transportation board has appointed three new members to the board of the MBTA pension system - including Gov. Charlie Baker's former rival, former state treasurer Steve Grossman.
The pension fund has come under fire for a lack of transparency, and Grossman could be an influential voice calling for change. Grossman said he would like to see the MBTA's pension system become subject to the same open meeting and open records laws that apply to the state retirement system.
"An entity that is using public resources should be subject to a similar set of rules and procedures as other (state) pension funds," Grossman said. "To the extent that tax dollars are ultimately flowing into that fund, it should behave and operate in a way that's consistent with what I'd call best practices."
Grossman said for the retirement fund meetings to be closed to the public, "I just think that's wrong."
Grossman is not the first to call for more transparency, however, and previous efforts have failed.
"The appointment of the new board members is definitely a step in the right direction, but it's by no means enough to get things going," said Iliya Atanasov, who is a senior fellow on finance and has researched the MBTA for the conservative-leaning Pioneer Institute. "It remains to be seen what they'll be able to do to improve transparency and accountability and remove conflicts of interest from the decision making of the board."
In addition to Grossman, an unsuccessful Democratic candidate for governor in 2014, Baker's administration appointed Mike Heffernan and Betsy Taylor to the pension board. Heffernan was the unsuccessful Republican nominee for state treasurer in 2014 and has a long background working in the financial industry. He also sits on the board of the state pension fund. Taylor is the former director of finance at Massport.
"With these new appointments, this Board can send a strong signal to the MBTA Retirement Fund about the need to be more transparent and accountable," said Secretary of Transportation Stephanie Pollack. "The Retirement Fund is charged with the administration of a significant amount of money, and the Trustees owe it to the retirees and to the public to demonstrate that they can be entrusted to invest that money appropriately."
The biggest issue related to transparency is that the MBTA pension fund is run by a private trust. So unlike the state employee retirement system, the MBTA pension fund is not subject to open meeting or open records laws. The money going into the pension fund comes from the MBTA and its employees, so to the extent that taxpayer money is used to fund the MBTA, taxpayer money is being invested in the pension fund.
The pension fund came under increased scrutiny after the Boston Globe reported on a $25 million hedge fund investment that went bad. The Globe filed a lawsuit to get access to documents related to the pension fund. The Legislature last year tried to force more disclosure by the board, but instituted only modest rule changes, the Globe reported.
Baker wants to open up the MBTA pension records. In the wake of winter weather that crippled the MBTA, Baker filed legislation that would completely overhaul the MBTA's management and finances. Part of the legislation would open the pension fund up to public records laws.
A letter Baker submitted to the Legislature when he filed the bill wrote, "Consistent with the requirement that the public expenditures must be open to review, the legislation requires a full and independent audit of the MBTA Retirement Fund...and subjects the MBTA Retirement Fund to the public records law."
But Baker is not the first person to want to open up the fund's books. Under former governor Deval Patrick, the three pension fund directors appointed by the Department of Transportation voted to make the MBTA pension fund subject to public review. But the three pension fund directors representing MBTA employees refused. A seventh board member, who is brought in only in case of a tie, sided with the unions.
Among the other new board members, Taylor, in an email, declined to comment. Heffernan could not be reached on Thursday.
The head of the Carmen's Union, which appoints two of the three board members representing labor, also did not immediately return a call.
Steve Crawford, a spokesman for the MBTA pension fund, said, "The Fund management and staff are looking forward to working with the new board."
The $1.59 billion pension fund manages the retirement payments of approximately 6,000 retirees. It had an unfunded liability of $757 million at the end of 2013.