FOR IMMEDIATE RELEASE

March 28, 2017

Cumberland County Commissioners Cite Mounting Cost of CAT Mismanagement

Cumberland County Commissioners stated today that they will bring the issue of extravagant executive
compensation to the attention of the Capital Area Transit Board of Directors at the upcoming Board
meeting on Thursday, March 30, in Carlisle. Per County Board Chairman Vince DiFilippo, CAT is funded
by taxpayers to provide transit service, not to provide excessive benefits to its senior managers. It is
already known that CATs cost structure is far higher than any other transit agency in the area.
Rewarding poor performance of senior managers as they leave undermines the notion of accountability
to our taxpayers.

The Commissioners made the statement as details of former CAT General Manager William Jones
severance package recently were revealed after approval by majority vote of the CAT Board of Directors.
Jones resigned from the position in February after a seven year term during which CATs finances and
services deteriorated significantly.

The details show that the severance package is, in a word, generous; totaling over $50,000. Jones will
be provided with 4 months of salary about $36,000 - beyond any unused leave he is entitled to; and 2
years of health coverage; worth about $15,000. If Jones obtains other employment within the 2 years,
he will be paid the value of the remaining premiums covered by CAT. As part of the settlement, CAT
agreed not to contest any unemployment compensation claims made by Jones.

On top of the severance, Jones was a member in two defined benefit pension plans at CAT: one that all
CAT staff receives; and a second one for a small number of CATs top executives that, unlike the general
pension, requires no employee contributions. Under the standard pension, one can receive up to 56%
of ones adjusted salary. Under the executive pension, one can receive an addition 40% of ones salary
on top of the base pension. Thats 96% of ones final salary. The extent of Jones actual payout from
both pensions will be actuarially determined in accordance with the terms of the plans and will be,
based in part, of course, on the extent to which he is vested. It is unlikely that Jones, due to his
relatively short tenure, would receive the full 96% of his salary.

Not a bad reward for poor performance.

But the most disturbing part of the package is a provision that if CAT fails to fund a vested benefit
including pension he can still make a claim, which CAT would have to pay out of its operating funds. Last
week, Cumberland County Commissioners requested that Pennsylvanias Auditor General investigate
the legality and ethics of CATs second executive pension. In response, the CAT Board Director Eric
Bugaile released a statement that it had frozen the second pension. It should be noted, however, that
no such official action of the CAT Board has been taken on the issue.

If the second pension were terminated for whatever reason, Jones severance provision would create a
significant financial obligation for CAT that would have to be paid out of tax dollars. CAT would be in the
position of having to make payments in lieu of the executive pension annuity, to Jones and others,
until their passing. There are currently nine individuals, in addition to Jones, eligible for the second
executive pension.

With its existing exposure on the second pension, one would expect CAT management to formally avoid
increasing its exposure. Press releases aside, this does not seem to be the case. No official action has
actually been taken by the CAT Board to freeze the executive pension plan at CAT. The third party
administrator of the plan has not been notified of any official action to freeze the plan. Nor has the plan
document been amended to reflect that it is frozen.

As part of efforts to obtain relevant documentation about the executive pension plan, Jones in January
2017 stated he recently located documentation from 2012, approved by CAT Board Chair Eric Bugaile
admitting Jones and another CAT executive into the management pension plan. Such documentation
was not provided in response to an initial Right to Know request by CAT Board members. A follow-up
Right to Know Request has been sent to CAT to obtain this, and other missing documentation regarding
the management of the executive pension plan.

Further research of public records failed to uncover any mention in the 2012 CAT Board minutes of an
official action by the CAT Board approving adding the two senior executives, including Jones, to the plan.
This raises the questions of whether Bugaile approved the additions to the executive pension plan
unilaterally; and that if he were so disposed, might he do so again?