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RTA Moves To Stop Pension Abuse

CHICAGO (WBBM) - Members of the Regional Transportation Authority board took action to curb pension abuses Thursday, one day after the release of the latest report to document irregularities at Metra under its late executive director, Phil Pagano.

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The RTA board voted to amend its pension plan, effective Jan. 1, so that future retirees' pensions will be calculated using only base salary, specifically excluding bonuses, unused vacation or sick days or other compensation.

The RTA continues to study how to implement an inspector general's office.

Proposals would place a new RTA inspector general over the existing CTA inspector general. The RTA inspector general would directly investigate complaints at the RTA, Metra and Pace.

A major unanswered question is who should have the power to appoint the inspector general. Several board members said they would not be comfortable with giving that power to the governor.

State Sen. Susan Garrett (D-Lake Forest) appeared before the board to express frustration over the pace of negotiations to set up the office.

Not everyone on the RTA board supports such an office. Attorney William Coulson, who represents suburban Cook County on the RTA board, said he wants to know "who will police the police."

"What is waste and what is not? I think it's very dangerous," he said. "I would like to work with this legislation to see that there are some reasonable checks and balances (on an inspector general), so that they can't just run riot."

Coulson said he has seen his own clients have to spend hundreds of hours and thousands of dollars to defend themselves against baseless charges lodged by other inspectors general.

Other board members appeared to share the view of RTA Chairman John Gates, who voiced
support for the concept and said that at Metra, "There was too much power in the hands of one man."

Metra is moving ahead with changes that mirror recommendations in a report released Wednesday from the accounting firm of Ernst & Young, said the RTA's division manager for external audit, Carol Lampard.

"There were some bumps in the road but I think at the end of the day Metra will embrace the report," she said.

The 53-page report, obtained by WBBM Wednesday under a Freedom of Information Act request to the RTA, found nothing illegal. But it noted a number of irregularities and exceptions to the rules that applied to most of the commuter rail agency's employees.

Among the findings:

  • Other than a 2004 competitive market analysis, pay increases for top Metra officials were not monitored by internal audit, outside advisors or a Metra board sub-committee.
  • Top executives disregarded written policies for the use of Metra-issued credit cards by purchasing flight upgrades, airline club memberships, magazine subscriptions and professional memberships, and failed to attach required receipts for executive meals both locally and on the road.
  • Pagano, his chief financial officer, his chief communications officer and his deputy executive directors all received exceptions to a rule which allows the carryover of, or payout for, unused vacation time only in "rare cases." In a letter from Metra Acting Executive Director Bill Tupper, the agency continues to insist that it did not constitute a variance with policy.
  • Three officials, including Metra's audit director, received $25 monthly contributions to their 401(k) plans even though executives were supposed to be ineligible for the program, which rewards safety on the job.
  • Although pool cars were regulated, there was no policy governing the use of company cars provided to three top administrators.

The report concluded that Pagano's pay was high, even for the day-to-day head of a major metropolitan transit agency. It called for a complete review of current laws and Metra board ordinances relating to the authority provided to its executive director over pay and benefit programs. It also recommended periodic comparisons to assure that top-tier executive pay is in line with other big-city transit agencies, and controls to assure that Metra-issued credit cards are not misused.

Metra Acting Executive Director William Tupper wrote in his letter, dated Oct. 14, that Ernst & Young failed to properly note changes that Metra's board has ordered since Pagano's death, and said that the report contains inaccuracies and misleading statements.

He also wrote that no current Metra executives have deferred compensation agreements, or the ability to borrow against them, that Pagano and former deputy G. Richard Tidwell had.

"The report specifically recommends updating the appropriate policies to prohibit loans from Metra to executives," Lampard said.

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