At first glance, the 42-page decision issued Friday by a Seattle arbitrator seemed to augur a win for TriMet’s union.
The arbitrator, who was deciding between rival contract proposals from TriMet and the Amalgamated Transit Union Local 757, appeared to side with the union on nearly every contested issue that came before him.
But it was the massive expense of retirees’ health benefits saddling TriMet — and the union’s more-costly proposal — that ultimately guided his verdict. Arbitrator David Gaba concluded that no matter how much he disliked parts of TriMet’s contract, the transit agency’s cheaper solution to retirees’ health care “best promotes the interest and welfare of the public.”
“Simply put, additional service cuts or fare increases will have to occur if the (union contract proposal) is accepted,” wrote Gaba. The cash-strapped transit agency has already hiked fares and greatly scaled back bus routes and train runs, and further cuts could plunge the system into “a vicious downward spiral.”
By the numbers
Transit operator top wages
San Francisco $29.50
*TriMet and the union have agreed on $26.40 in the next contract. After 15 years, employees get “longevity pay” starting at 30 cents extra an hour and topping out at $2.30 extra an hour at 35 years.
TriMet and Amalgamated Transit Union 757 took their labor impasse before Seattle-based arbitrator David M. Gaba in May. At the heart of their long-running dispute was a disagreement over health benefits for active employees and retirees. On Friday, Gaba sided with TriMet’s final best offer for a contract. Here were the key elements of both proposals.
TriMet’s offer (Goes into effect immediately)
$5 prescriptions or 20% of cost – whichever is greater
$150/member or $450/family deductible
No premium contribution
Out of pocket maximum: $1,500
*1.5% monthly premium contribution (average over three-year contract)
Out of pocket maximum: $1,000
*The union wanted to preserve the health care package that has existed since 1994, save for paying into monthly health-care premiums. Union officials have said TriMet’s offer will likely cost its members an average of $4,000 a year.
Note: This is the Regence Blue Cross Blue Shield preferred provider plan. TriMet also offers a Kaiser plan, which is has reduced costs.
The decision means that TriMet, which said it faced an additional $5 million in cuts if it lost arbitration, can breathe a little easier now that its three-year contract will go in effect. The decision resolves — for now — a labor saga that dates back to Nov. 30, 2009, when the last contract for TriMet’s 2,000 unionized employees expired. Employees have continued working without a contract.
“Today’s ruling is terrific news for the entire region,” said General Manager Neil McFarlane in a statement. “It provides quality benefits to our union employees, while beginning to rein in unsustainable health care benefits.”
But he warned that it’s just “the first step in realigning our benefits to be in line with the market” and that the agency will continue to face financial problems.
Union president Bruce Hansen said they are studying the decision and determining next steps.
“This issue is not over or settled yet,” he said.
The two sides made their arguments last May to Gaba, who was authorized to select one contract, in its entirety, as the one that best met “the interest and welfare of the public,” among other criteria.
The two contracts, both three-year pacts that are about $12 million apart, are largely similar except for pension and medical benefits.
Under TriMet’s proposal, the transit agency will continue to pay 100 percent of the monthly premiums for employees and retirees in plans offered by Regence and Kaiser. However, the employees and retirees enrolled in the more-costly Regence health plan will now have to kick in 10 percent of the cost of health care services that they receive up to a cap.
In addition, employees and retirees would also have to pay deductibles and increased prescription co-insurance for brand-name drugs.
The union had offered to have employees pick up 1.5 percent of the premium in 2011 and 3 percent in 2012.
“TriMet’s retiree medical benefits appear to be the most generous offered by any public employer in the Northwest,” Gaba wrote, causing in part the agency’s unfunded liability. Health benefits for active employees and retirees are the “two-headed Siamese twin elephant” in the room, he said.
But TriMet may not be out of the woods. The agency’s offer included elements he called “unwarranted, poor public policy and simply unfair” and said the union may well see opportunities to sue about some of the proposals that are “riddled with legal questions and other infirmities.”
Among the problems: TriMet wants to make the health care contribution changes retroactive to December 2009, triggering questions of fairness and logistics, he said. Employees made decisions about their health care services based on the benefits they had at the time, and how, he wondered, will TriMet collect the payment due from employees no longer with the system?
TriMet said it is reviewing the decision, but believes “that the award is sound.”