T cites $400m in Pacheco Law waiver savings

T cites $400m in Pacheco Law waiver savings

Estimate for 5 current outsourcing programs over next decade

THE MBTA EXPECTS TO SAVE more than $400 million in operating and avoided capital expenses over the next 10 years because of privatization initiatives engineered under a waiver from the so-called Pacheco Law, according to an agency report issued Friday.

The report didn’t document precisely where the savings will come from, but it said “one of the most effective tools for bringing real and lasting improvement to the T has proven to be the three-year exemption granted to the MBTA from the requirements of what is commonly known as the Pacheco Law.”

The Pacheco Law requires state agencies to document privatization savings and to gain the approval of the state auditor before proceeding. Critics say all the red tape associated with the Pacheco Law thwarts privatization efforts, but Auditor Suzanne Bump says the financial justification for privatization would have to be done by the agency anyway.

The transit authority is now in the third and final year of the Pacheco Law waiver. Despite claims that the waiver has been a huge success, Baker administration officials have no plans to seek an extension of the waiver from the Legislature.

The MBTA report identified five completed privatization initiatives – hiring a third party administrator to manage overtime expenses and absenteeism, contracting out cash processing operations, outsourcing warehouse and logistics work, and retaining firms to operate a customer service call center and provide customer service agents in stations.

The report said three initiatives are underway to privatize police dispatch services, to implement automated fare collection, and to perform bus maintenance at three garages.

The T said its privatization work had three other benefits. The agency said the mere existence of privatization forced the Carmen’s Union to the table to negotiate changes in workplace rules and wage concessions. The agency also said privatization had forced the agency to begin reviewing its operations looking for efficiencies. “Just the process of developing an RFP requires the T to comprehensively review the entire business process in question from beginning to end, something that in many instances had not been done at the T,” the report said.

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Bruce Mohl

Editor, CommonWealth

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

The MBTA said the waiver process has also prompted a “new level of engagement” with its unions. For example, the T report said unions have typically argued that outsourcing efforts could violate section 13c of the Urban Mass Transit Act, and could jeopardize federal funding of the transit authority. When the T moved to privatize the operations of its cash processing operations, the Carmen’s Union took the matter to arbitration and lost.

“This is a significant precedent that should reduce union efforts to interfere with MBTA outsourcing efforts,” the MBTA report said.

  • Mhmjjj2012

    “The report didn’t document precisely where the savings will come from…” The “report” is 24 pages of nothingness and wasn’t worth the time, effort or space in CommonWealth.

  • Stephen Graves

    Herd that the privatized parts department (Mancon) ran out of windows, mirrors, and other BASIC highly replaced items. Also still have Temps doing the work. They get applicants, but when they see the job, and are told the pay, they say, never mind!

    • JohnSmith

      This is the foundation of “privatization!” Low wage personnel with no benefits! Well, there is not an army of people out there willing to work for peanuts!

  • Luke

    Why didn’t the report document the savings ???
    How can you say there is a savings and not say were it came from??? Im calling bs

    • Mhmjjj2012

      LOL! That’s what I should have done!

  • Mhmjjj2012

    Speaking of the MBTA, the Boston Herald just reported the MBTA hired a commuter rail overseer at $30G per month or more accurately “$360,000 a year, which is more than the base salary of the T’s controversial pick for general manager, Luis Ramirez, who starts Sept. 12.” The incoming commuter rail consultant Dan Grabauskas “resigned last August from his $299,000-a-year post as the chief executive of the Honolulu Authority for Rapid Transportation amid what local media described as escalating costs for its rail project there.” Yeah, Transportation Secretary Stephanie Pollack’s hires are all about fixing the MBTA.

  • SNS77

    How shocking. This agenda driven rag once again shows it’s bias rather than any real desire to either be journalists or at least have the integrity to expect proof before printing a story. Maybe it’s time we take a hard look at the people behind this waste of reading.

  • J Powers

    “The report didn’t document precisely where the savings will come from”… we’ve heard this load of crap repeatedly from the T Bruce. They’ve been fudging the numbers since the arrival of mr. shortsleeve,a bain capital graduate. how about printing some facts bruce? 320 k per year w/expense bonuses,plus 60 k to move, plus money for staffing for ramirez. 360k for gruboskis to return as a consultant. In 2015 when the trains were down it was the buses that were still running at 98%!!! 98%! the T wants to spend money like drunken sailors w/no support for their loyal employees who keep the bus system strong and running! i’m really sick of the press, you, the herald, the globe not calling BS on them. happy labor day bruce

  • Mhmjjj2012

    What I can’t get over is this article has appeared on CommonWealth’s front page for four straight days…four days this headline boldly asserts “T cites $400m in Pacheco Law waiver savings” when in fact no such documentation appears ANYWHERE in the “Annual Report to the Legislature: Waiver from Provisions of Sections 52-55 of Chapter 7 of Massachusetts General Laws.” This “report’ has no substance but is treated by CommonWealth as though it has real, verifiable facts. How will the state legislature determine whether or the Pacheco Law waiver was worth it? Anyhow, here’s my real beef…when Boston Public School teacher Alycia Steelman’s commentary, “Time to update state school funding formula,” appeared on CommonWealth’s front page…it did so for a mere few hours. A thoughtful, informative and factual commentary was given short shrift by CommonWealth while this article lives on to misinform CommonWealth’s 6,000 subscribers.

  • QuincyQuarry.com

    On one hand, show us the money.

    And on the other, $40 million a year in savings at the gushing open wound that is the T is but a pinprick.

    At the same time, leveling the playing field between management and the unions would be a step in the right directions.

    Whether – or sadly most likely not – both sides will then manage to see value received for value provided is a whole other matter.