By Alana Melanson
FITCHBURG -- Montachusett Regional Transit Authority Administrator Mohammed Khan, at the center of an alleged double-dipping probe since January, said he is appealing a State Retirement Board decision that he owes about $674,000 in overearnings.
Khan, who previously worked at the Montachusett Regional Planning Commission before MART broke off from the agency to become a separate entity in 2003, has been collecting a pension since then through the Massachusetts State Employees' Retirement System while earning a full-time salary at MART. He said he will remain at MART until the matter is settled.
"I wanted to retire at one point in time, but my intention is to do so after this retirement issue is resolved," Khan said.
At the request of the State Retirement Board, MART officials used a state formula to calculate Khan's overearnings over the past 10 years, which came out to about $980,000, he said.
In a March 31 letter, State Retirement Board Executive Director Nick Favorito told Khan that, in accordance with the Fair Standards Labor Act, for each year he earned more than the pension he received, he would only be obligated to refund the amount of his pension. From 2003 to 2013, Khan received a pension totaling $674,138, and that is the amount the state is expecting to be repaid.
Khan said he was also given the option to waive his pension while continuing to work, so that he would not be subject to state restrictions on post-retirement earnings and hours worked.
Khan said he and his attorney, Nicholas Poser, are appealing the amount for the pension, arguing that MART is a private entity, not public. Poser has also argued that the law limiting the public earnings of retired public employees did not cover transit authorities until the state Legislature added them to the law in 2009. Khan believes he is grandfathered-in under this law, and that if he owes anything, it should only be earnings from 2009 forward.
Favorito, however, said in his letter that MART is indeed a public entity, because it provides a public service, and its "enabling legislation" indicates that it is a "political subdivision of the commonwealth." Therefore, he said, MART employees are subject to public earnings limitations.
MART, having come out of the MRPC, which was categorized as a "district" under state law when it joined the state retirement system in 1972, would also be categorized as such, Favorito said, and was therefore subject to the earnings law from the beginning. He said other regional transit authorities have also used this provision over the past several years to join other public contributory retirement systems in the state.
Favorito also went on to say that while "authority" was added in 2009 to the statutory language, that portion of the law "only describes the entity from which a retiree is receiving a pension or retirement allowance." He said authorities were already previously included in the portion of the statute covering public entities at which those receiving public pensions would face earnings limitations.
"As such, if one is retired from a 'district' and receiving a pension from the commonwealth or MSERS and is working for an authority post-retirement then (the law) applies to their post-retirement earnings and hours worked," Favorito wrote.
The MART Advisory Board was previously informed by Favorito that if they do not move to recoup the over-earnings, that the State Retirement Board will.
Another March 31 letter from Favorito to the MART board presenting his findings gave them 30 days to respond, but their Wednesday morning meeting was their first full board meeting since the letter was received. The board voted to send a letter to Favorito to request an extension as well as a meeting to discuss options. In consideration of potential ramifications resulting from the board's eventual decision, they also gave Gardner Mayor Mark Hawke, newly elected as chairman of the board, authority to hire legal counsel of his choosing to seek advice on the matter.
MART Director of Procurement Susan Gallien, a former MRPC employee who has also been involved in the double-dipping allegations, said she is also contesting the amount she has been told she owes to the state.
Gallien said she resigned from her MRPC position in 2003 to work for MART, but did not seek her pension there until last year when impending legislation appeared it might hurt her chances to take advantage of the full benefits of the state retirement system, which MART is currently seeking to join.
"There was legislation that if we didn't have 25 years in, then you wouldn't be eligible for the GIC health insurance portion of the state retirement, and there was a potential it would be effective July 1, 2013," she said. "So that's the only reason why I decided to start taking it out last year. Otherwise, I would have waited."
Gallien said she also saw that Khan was having no issues with collecting his pension while working, and made a "poor assumption" that she could do the same.
She said she collected her pension for only eight months, beginning last May, before it became a problem.
Gallien said MART calculated the amount she owes to the state as being around $48,000, and submitted it to the State Retirement Board without reviewing it with her first, as requested.
She said she disagrees with the number. Using another allowable method of calculation based on her salary at her previous job, Gallien said she believes she only owes about $6,700, an amount she is "perfectly willing to reimburse."
Follow Alana Melanson at facebook.com/alanasentinel or on Twitter @alanamelanson.