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Authority, union relationship has another problem

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By Richard Gazarik
Monday, Nov. 11, 2013, 12:01 a.m.
 

For five years, the Municipal Authority of New Kensington paid retirement benefits to a former supervisor using union pension funds and continued the practice even after auditors informed the board of the mistake, according to authority documents and a union attorney.

The transfers are raising concerns within Local 220 of the Utility Workers Union of America, which represents 23 workers with the authority that provides water service to residents of New Kensington, Arnold, Lower Burrell, Upper Burrell, Allegheny Township, Washington Township and parts of Plum.

Robert Eberle of Pittsburgh, who represents the local, said the handling of pension money is a “warning sign” of deeper problems that may exist within the union pension fund.

“It may be just a mistake, just some oversight, but certainly the length of time it took, even after the mistakes were uncovered, weren't rectified even after they were uncovered,” Eberle said.

Authority attorney David Regoli conceded mistakes were made but said the union's pension fund has been made whole.

“I don't think they lost a penny,” Regoli said.

The union has been working without a contract since 2008. For the past five years, negotiations have stalled. Regoli believes the pension dispute surfaced because of the union's frustration with the contract talks.

“Are they related? One hundred percent,” Regoli said.

Local President Ron Balla questions whether the interest payments are accurate.

“How were they calculated?” Balla asked. “What measures have been taken to make sure it doesn't happen again? How did it happen? We still don't know who was responsible.”

The two sides are scheduled to meet on Nov. 17 to discuss the problems, Balla said.

Even though the authority has returned the money with interest, Eberle said the union doesn't know how much money it may have lost through investment income.

“That's a concern,” he added. “That's been brought to the attention of the authority and the Bank of New York Mellon.” The bank is the trustee for the non-union pension fund.

Authority General Manager James Matta said there is no paperwork documenting the transfer.

“There are no records of pension payments in the minutes of the board,” Matta wrote on April 9 to Balla.

The authority transferred $13,410 from the union's pension fund on April 2, 2009. Another $53,044.59 was transferred this March.

In an Oct. 10 letter to the Bank of New York Mellon, Eberle posed the questions:

• How did the deposits end up in the wrong pension plan?

• Why did it take five years for the money to be replaced?

• Has the bank taken steps to ensure that similar problems do not occur?

• How was the potential loss of investment income determined?

• Why hasn't the bank asked for an independent audit?

“The only plausible explanation that the union can reach for the dismissive attitude they have received to date is that someone wants to obscure some wrongdoing,” Eberle wrote. “The more entities responsible for this plan hide behind a facade of institutional arrogance the more the union and its members come to believe that there really is something improper that is being hidden from view.”

Eberle said the bank officials told him that it has “no legal obligation to talk to you.”

Regoli said the authority maintains two pension funds that have the same name. One holds union pension funds; the other management. Both plans are underfunded, but the Public Employees Retirement Commission does not consider either one distressed.

Richard Gazarik is a staff writer for Trib Total Media. He can be reached at 724-830-6292 or rgazarik@tribweb.com.

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