TriMet’s 32-month-old contract dispute with Amalgamated Transit Union (ATU) Local 757 reached a conclusion of sorts July 13. Arbitrator David Gaba sided with the transit agency, a decision that trims health benefits for 2,026 union members and 1,200 retirees and eliminates the pension for future hires. Under an Oregon law the union helped pass in 2007, transit workers can’t strike; instead, when they can’t agree, they submit contract offers to binding arbitration, and the arbitrator picks one side’s final proposal in its entirety. The arbitrator is supposed to base the decision on the public interest, and consider other issues, such as an employer’s ability to pay.
Local 757 proposed to keep everything the same as under the previous six-year agreement, except for health insurance, where members for the first time offered to pay up to 3 percent of the premium. TriMet’s proposal, on the other hand, contained 11 contract changes, most significantly to pension and health insurance.
In his written decision, Gaba lamented not being able to pick and choose parts of the two offers. Gaba wrote that he was in the uncomfortable position of having to approve contract language that he found “personally offensive.” An arbitrator since 1997, Gaba was at one time an attorney for a Washington nurses union. Parts of the TriMet package are “unwarranted, poor public policy, and simply unfair,” he wrote.
For example, TriMet’s proposal eliminated pension benefits for future hires; instead they’ll get a 401(k)-style “defined contribution plan” to which TriMet will contribute 8 percent of wages. That transfers all the investment risk to employees, Gaba said, and takes away a longstanding benefit without providing anything in return.
TriMet’s proposal also limits retiree pension benefit increases to 90 percent of inflation, a provision that could open the agency up to legal liability, since it alters what was promised in the past.
The TriMet-ATU health plan is not just an elephant but a two-headed Siamese twin elephant that has been ignored for well over a decade. — arbitrator David Gaba
Still, all those objections were insignificant compared to what Gaba called not just an elephant in the room but “a two headed Siamese-twin elephant that has been ignored for well over a decade.” That was the extraordinary cost of health care for members and retirees, and particularly the plan provided by Regence Blue Cross Blue Shield, which costs TriMet $30,969 per year for individuals with full family insurance coverage, and $33,694 for retirees and their families. TriMet’s union employees choose between a Regence preferred provider plan and a Kaiser HMO plan, and 58 percent choose the former.
Gaba interpreted the union’s concession — agreeing to pay 1.5 percent of the Regence premium for 2011 and 3 percent for 2012 — as a recognition that the health plan had become prohibitively expensive. But he said the union’s offer to share a portion of the premium didn’t address the underlying source of the expense — the plan’s benefit design, in which members and their dependents pay only $5 co-pays.
“Sharing the premium does nothing to reduce usage,” the arbitrator wrote. Translation: The plan is so expensive because workers use it too much, and they need to be discouraged from using it.
TriMet’s proposal does that: The agency continues to pay 100 percent of the monthly premium for both plans, and keeps the Kaiser plan the same, but modifies the Regence plan: instead of $5 co-pays, employees and dependents would pay 10 percent of the medical bills, after a $150/$450 deductible, up to an out-of-pocket maximum of $1,500/$4,500. Those changes reduce the premium by approximately 15 percent, and those savings account for most of the $12 million difference between the union and management proposals.
The new contract takes effect immediately, and is retroactive to Nov. 30, 2009, though it’s unclear how TriMet will collect 10 percent of past health care expenses. The dispute took so long, however, that the three-year contract runs only four more months, expiring November 30. Arbitration was delayed twice when the union successfully sued TriMet before the Oregon Employment Relations Board saying the agency’s final offer to the arbitrator was different than the one it presented in actual bargaining.
TriMet’s reaction to the arbitrator’s decision suggests they’ll be looking for even more concessions when bargaining begins: “This is the first step in realigning our benefits to be in line with the market,” said TriMet General Manager Neil McFarlane in a press statement. “It’s a good first step, but we’re in a marathon. We face many years and several contracts to truly make our benefits financially sustainable.”
Local 757 president Bruce Hansen called the arbitration loss “disappointing,” and said the union will be meeting with attorneys to study the decision.
“We’re not done with this,” Hansen said.
“We’re going to war,” said Jon Hunt, Local 757 vice president. “You can guarantee there’s gonna be no labor peace until Randy Stedman and Neil McFarlane are in the unemployment line.” [Stedman is TriMet’s recently hired labor relations director; McFarlane is TriMet’s general manager, whose resignation Local 757 has been calling for.]