The former CEO of Port Authority of Allegheny County has filed a federal lawsuit against his old employer and its board of directors, claiming that they illegally reduced his monthly pension by more than $3,000.

Paul Skoutelas

Paul Skoutelas, along with his wife, Denise, filed the civil complaint late last week in U.S. District Court. It includes claims for breach of contract, denial of property without due process and impairment of contractual rights and obligations.

He is seeking to have his $9,066 per month pension restored, as well as receive interest and attorney fees.

According to the lawsuit, Mr. Skoutelas received notice in May that the 1998 creation of a Qualified Governmental Excess Benefit Agreement, which allowed for the payment of a "participant's annual pension benefit that exceeds the maximum annual benefit limitations," had been discontinued by a board resolution.

The board found that the original agreement had never been approved by the board and was therefore nonbinding on the Port Authority. It deemed the prior payments Mr. Skoutelas received to be illegal and demanded repayment of $64,778.88.

In addition, it reduced his monthly pension to $5,947.05.

His attorney, Eric Stoltenberg, called that "unconscionable."

Instead, he said, the pension amount stated by an employer is a kind of promise that the employee should be able to rely upon in retirement.

"It doesn't matter where it comes from," Mr. Stoltenberg said. "It matters what the contractual promise is." In his client's case, the promise was $9,066 per month.

The Port Authority, facing huge budget shortfalls this year, enacted a 15 percent service cut on June 17. It eliminated 30 routes and reduced service on more than 100 others. In addition, hundreds of jobs were cut.

Mr. Skoutelas began working for the Port Authority in 1980 as a transit planner/engineer. He stayed with the organization until 1991, when he left to become the CEO of the public transit system in Orlando, Fla.

Mr. Skoutelas returned to Allegheny County as the executive director and CEO on March 31, 1997.

In 1999, Mr. Skoutelas was permitted to pay $180,000 into the pension fund to buy credit for his past years of service. It allowed him to buy a total of 20 years -- which included his previous 11¹/₂ years with Allegheny County, plus more than eight years with other agencies.

Then, in 2002, Mr. Skoutelas implemented a "Deferred Retirement Option Program," to entice retirement-eligible employees -- at the time 15 percent of the authority's nonunion work force -- to stay on.

Though the lawsuit contends the DROP provisions were "cost neutral," it was a controversial program that ended this summer.

The program allowed dozens of management employees to begin collecting their pensions in a DROP account until they left the agency.

Though Mr. Skoutelas entered the DROP program in 2002, he didn't officially leave the Port Authority until September 2005.

When he retired, he left with his monthly pension, a $380,213 one-time DROP payment, as well as $106,000 in unused vacation and sick time.

According to the lawsuit, Mr. Skoutelas was never told his pension would be capped.

The Port Authority had no comment on the pending litigation. John A. Brooks, chair of the organization's board of directors, did not return a call seeking comment.