board of directors Archives - Allegheny Institute for Public Policy

The Governor has signed legislation that will dramatically alter the board of directors of the Port Authority (PAT). What was a nine member body with members serving staggered five year terms and appointed solely by the Allegheny County Chief Executive will become an eleven member body with members eventually serving staggered four year terms with appointment power shared by six individuals.

The idea behind what is now Act 73 of 2013 began germinating a few years ago with recurring financial problems at PAT. The argument was made that since the state put in a significant portion of PAT’s budget there ought to be state level appointees on the board. The Auditor General’s 2007 performance audit of PAT called attention to our work (see Policy Brief Volume 7, Number 9) and that of the 2006 Governor’s Transportation Commission’s thoughts on the matter, and pointed out that “taxpayers from across the state have been providing most of the funds to operate [PAT] for many years…the governing structure of [PAT] must be changed to include permanent representation by the state on the behalf of state taxpayers”. The Authority did not challenge the Auditor General’s argument in its response to the audit, noting that state law determines who serves on the board.

Fast forward six years to this year’s legislative session. A bill changing the PAT board was introduced in the Senate in early June. Though the Act went through many changes, these items remained the same from the first proposal:

A new board would have eleven members.
The Governor and the legislative leaders of both chambers would make appointments.
Board members would be term limited and would have to possess a background in finance, transportation, or economic development.
PENNDOT would be charged with undertaking a study on what benefits consolidation and privatization can have on revenues and expenses.

Most of the changes dealt with how to apportion local appointments. In earlier versions of the bill the County Executive would have had either one or four appointments to the new board. The Mayor of Pittsburgh, County Council at Large members, and County Council members of the opposite political affiliation of the Executive would have had appointments but those were eliminated as amendments were adopted. The final version of the Act gives the Executive six appointments in total. Here’s how those appointments will be made: four will be chosen freely by the Executive, and two will be drawn from a list compiled by four community-based organizations and confirmed by County Council. There is no requirement that a member of County Council serve on the board as the law currently requires, but a member could certainly be appointed.

The terms of current board members end in 60 days, and the law permits any of those members to be reappointed. Once the new board is seated, the terms will be staggered so that expirations occur at various times. Board members cannot serve more than three consecutive terms, including the initial appointment. The table below shows when appointments would be made over the next decade.

Appointing Official	Years Making Appointments
Governor	2013, 2017, 2021
Senate Pro Tem and Senate Minority Leader	2013, 2017, 2021
House Speaker and House Minority Leader	2013, 2016, 2020
County Executive-2 free nominations	2013, 2015, 2019
County Executive-2 free nominations	2013, 2016, 2020
County Executive-2 nominations drawn from list and confirmed by County Council	2013, 2015, 2019

Assuming all of the initial 2013 appointments serve for the maximum three terms, the appointees of the Governor and the Senate leaders will have served twelve years, House leadership appointees and two Executive appointees would have served eleven years, and four Executive appointees would have served ten years.

A quorum for meetings is six members, but it will require seven members to “take action on behalf of the Authority”. That means it could require one state level appointee to join with the six County appointees on a decision, or, conversely, two County appointees to join with the state appointees to get business moving forward. Obviously the point of this requirement is to ensure that the County-level appointees can’t do anything unilaterally without at least one state appointee consenting.

The state will exercise significant power on the board in two other ways. First, for adopting by-laws, appointing a CEO, authorizing bonds, borrowing, leases, and contracts in excess of $5 million the two board members appointed by the General Assembly who are not of the same political affiliation of the County Executive can move to table this business to stop it and/or second it to move it forward. Under current partisan arrangements, that would mean the appointees of the Senate Pro Tem and the House Speaker would get important veto power over these areas.

Second, the Governor’s appointment is the only one that does not have to be a resident of Allegheny County, only a resident of the Commonwealth. This appointee might come from another part of the region or another part of the state and would provide a broader perspective should indeed the Governor not select someone residing in Allegheny County.

A statewide say on PAT business, board members with qualifications, and a study to determine what exactly privatization and consolidation can bring: is a new day dawning for PAT? While not as draconian as it might have been, the just enacted law will certainly offer opportunities to bring professionalism and business acumen to oversight of the Authority.

By a 16 to 10 vote in the Senate Appropriations Committee on June 10th, Senate Bill 700 took another step toward becoming law. Of course, the full Senate has to consider it and, likewise, the House must approve and it is not clear what the reception will be in that body.

The bill, sponsored and heavily supported by the president pro tem of the Senate, has two key provisions. First, the naming of board members of the Port Authority of Allegheny County (PAT) is changed dramatically. Eleven members will be appointed. One by the Governor, one each by officers of the four legislative caucuses, one by the County Executive, one by the Mayor of Pittsburgh, and four by the at-large members of County Council. The at-large member appointees will be named from a list of nominations by four designated organizations (Allegheny Council of Governments, ACHIEVA, the Southwest Regional Commission and the Allegheny Conference on Community Development). Existing members’ terms would end in 60 days. Existing members would also be eligible to serve in the new regime.

The effect of this new appointment scheme will be enormous. By removing all but one of the member appointments from the County Executive and placing five with state government officials, the state assumes more of an oversight role for the Authority. By having four board members appointed by at-large council members from various entities presumably there will be some vetting and possibly a variety of viewpoints represented by the members.

Appointments-Current Law and Proposed Law

Component	Current Law	Proposed Law
# of Board Members	9	11
Appointment Power	County Executive	Governor (1), County Executive (1), Mayor of Pittsburgh (1), State Legislative Leaders (4), At-Large County Council Members (4)
Residency Requirements	U.S. Citizen, resident of County	Resident of Commonwealth
Qualifications	None Specified	Experience in Budgeting, Finance, Economic Development, Transportation, Mass Transit
Term Limits	None Specified	Three Consecutive Terms

It is worth noting the changes in qualifications. Under the proposed law, members will have to have expertise or experience in areas important to the management of a large organization and specifically some will have to have experience related to transportation issues.

The second key provision is a mandate to PENNDOT to (1) study the possibility of consolidation with other local transportation organizations to determine if revenues could be enhanced or expense reduced and (2) to study the opportunities for privatization that will enhance revenues or lower expenses. A report with findings and recommendations for each study is to be ready within 180 days of the enactment of the bill and provided to the Governor, the General Assembly and PAT.

These study requirements are useful but could be worded better to include such things as improved operational efficiency, lower cost per rider, and better service. Moreover, it is not enough to recommend consolidation or privatization, there needs to language to require the adoption of recommendations when the analysis strongly supports them. A mandate to privatize some percentage of bus service within three years is a reasonable requirement.

Obviously, the County Executive and many loyal supporters of the status quo at PAT will be extremely opposed to these steps. But given the state’s financial support and the chronic financial crisis PAT finds itself in and is unable to resolve on its own, there simply must be some major reform.

The steps contained in the legislation are a start but they alone do not adequately address the primary source of the Authority’s long term problems-the right of the transit workers to strike. As long as that situation exists, it is only a matter of time until the threat of a strike will force the board, no matter how the appointments are allocated, to choose to approve a contract it cannot afford or a shutdown of the system and all the attendant difficulties and hardship that entails.

Still, there is no gainsaying the fact that this proposal is a game changer. It represents a very strong signal regarding the state government’s exasperation with PAT and its constant demands for more funding while operating one of the most expensive per rider systems in the nation.

The only question is whether the House members have the same level of exasperation. Will it concur that substantial change needs to occur at the Port Authority?

Tag Archives: board of directors

Port Authority Board Appointment Bill Moves Forward