Massachusetts state officials expect to fall billions of dollars short of the savings promised to taxpayers under a landmark merger of transportation agencies, an investigation by the New England Center for Investigative Reporting has found.
Eighteen months after the Turnpike Authority and other agencies were rolled into the state’s new Department of Transportation to cut costs and duplication, the Patrick administration now predicts the merger will save about $2 billion over the next two decades – far less than the up to $6.5 billion in savings promised by legislative leaders. An examination of agency personnel records obtained by the New England Center for Investigative Reporting also shows that 457 new employees – many of them temporary – have been added since the merger.
When retirements, resignations, and layoffs are taken into account, the combined Transportation Department has trimmed a net total of 31 positions out of a payroll of 4,254.
“It’s not so much that the reorganization was a bad idea. It’s that it was oversold,” said David Tuerck, executive director of the Beacon Hill Institute, an economic-research center at Suffolk University.
Patrick administration officials told legislators at the time of the merger that it would result in a decrease of 300 positions.
“I thought at the time the merger was announced that the administration was being overoptimistic about the number of jobs it would eliminate and the cost savings it would achieve,” Tuerck said.
But Transportation Secretary Jeffrey Mullan said 313 of the employees who have been added since the merger are assigned to work on an eight-year program to repair bridges, which ends in 2016, and 72 were hired using federal stimulus money. He said those shouldn’t be counted as permanent additions. These workers, Mullan said, have signed agreements acknowledging that their positions will be cut when the stimulus money runs out and the bridge program ends.
“If I have a vacancy, and I have a high performer, I’m going to see if I can hire that person. But unless there’s a job for them, they’re going away,” Mullan said.
If the employees hired for the bridge projects and under the stimulus program are set aside, Mullan estimated he’s cut the payroll by about 10 percent, even more than the administration projected.
“We’ve exceeded our objective,” he said.
When he estimated a reduction of 300 employees, Mullan said, “I did not anticipate that three things would happen, one being the advent of the accelerated bridge program, which would drive payroll up. Nor did we anticipate that the Congress would pass the stimulus program, and that drove head count.”
“I also didn’t anticipate we would be so successful in doubling our highway investment in such a short period of time,” he said. “We’ve doubled the amount of investments in our roads and bridges because they’re in embarrassingly bad shape. And when you double the program, you need the people to do that. So the trick really is, we’ve taken down head count since the merger, but you still need managers to manage the organization.”
Transportation Department officials also contend that they’ve removed 149 state troopers from the books who patrol the turnpike, transferring them to the State Police. But this is only an accounting change, since the DOT still pays all of the troopers’ salaries and benefits. More recently, 17 managers in the department were given raises averaging 9 percent so far this year, and as high as 18 percent, during a time when Governor Deval Patrick was calling on public employees to forgo salary increases.
Mullan said the raises went to executives who were promoted, and who are doing work previously shared among several top administrators.
“As much as people think it’s 17 people getting raises, I think it’s more about a comprehensive management review that results in fewer managers at the DOT, which actually saves money.” He said, “The real goal is to take down overhead. So instead of having three general counsels in three different agencies, for example, we now have one.”
The records obtained by the New England Center for Investigative Reporting show that Mullan himself took a 6 percent pay cut, from $160,000 at the time of the merger to $150,000 this year. Andrew Bagley, director of research and public affairs for the Massachusetts Taxpayers’ Foundation, said the department nonetheless seems to be on track.
“The 31 number is not the right number to focus on,” said Bagley, who was shown the payroll figures. “You’re including 385 people who were hired on the capital side based on the fact that the Legislature passed this $2.9 billion bridge program and because the feds gave them money. I’d take that as a unique situation. We would never have said, ‘We don’t want the capital money in there because we’re looking at head count.’”
The once-autonomous Turnpike Authority was combined with the state Highway Department, MBTA, Registry of Motor Vehicles, Massachusetts Aeronautics Commission, and all or part of several other agencies on Nov. 1, 2009.
State legislators who supported the merger, including state Sen. Steven Baddour, D-Methuen, chairman of the Joint Committee on Transportation, repeatedly declined requests to comment. The governor’s office also did not respond to email and voicemail messages asking for a response to the personnel numbers.
But one legislator furnished, on condition of anonymity, a PowerPoint presentation made during Beacon Hill committee hearings at which administration officials said that combining the Turnpike Authority with Mass. Highway and all or parts of other transportation agencies would eliminate hundreds of positions. The reorganization, the presentation promised, “streamlines transportation planning and programming and creates a more efficient and cost-effective system by consolidating multiple existing layers of bureaucracy” and “consolidates legal, human resources, IT, and procurement departments into shared services.”
There have been some savings from the merger, mainly due to lower debt-service costs and from switching MBTA employees to the state employee insurance plan under which they have to pay a portion of their health-care costs. These have helped result in a 2.5 percent reduction in the department’s $698.4 million operating budget this year, DOT officials said, when compared to last year’s. That’s a reduction of about $17 million.
At the time of the merger, Baddour projected savings of $6 billion over 20 years, and Senate President Therese Murray, D-Plymouth, and House Speaker Robert A. DeLeo, D-Winthrop, put the figure at $6.5 billion.
“There’s no way in the world we were ever going to see a $6 billion savings,” Bagley said. “That was way too excessive a figure to put out there.”
Mullan said the state, over 20 years, would probably save closer to $2 billion. But he added: “That’s a very large savings.”
