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TriMet's Future Depends on a Sustainable Labor Contract

Here's what's happening with our contract with ATU Local 757, where we stand and what we're doing about it.

 

TriMet can no longer afford the increasing cost of health care benefits for union employees and retirees. In order to restore financial stability and focus on our core mission of providing transit service, we must bring union benefits more in line with the market.

Union leadership has refused to make the modest changes we proposed, and they have used legal maneuvering to delay progress toward a contract agreement. As a result, we are facing an additional $5-10 million shortfall in next year's budget, and even more in future years—which is likely to cause further cuts to transit service.

On this page, we provide facts, source documents and our perspective on TriMet's efforts to reach a financially sustainable agreement with the Amalgamated Transit Union Local 757 (ATU).

About 87% of our workforce belongs to the Amalgamated Transit Union Local 757 (ATU). Among transit workers, ATU members receive what is perhaps the most generous total compensation package in the country.

 

Under the previous labor contract (now expired), union employees contribute nothing toward their health care premiums and co-pays are only $5. They also receive unlimited chiropractic care and other services that are limited in most health plans. While we believe everyone deserves quality health care, this level of coverage is simply out of step with other U.S. transit agencies and local/state government—let alone the private sector.

As shown in the chart above, health care benefits for a union employee at TriMet cost us more than $18,000 per year on average, versus just over $10,000 for other U.S. transit agencies.

 

Like families and businesses everywhere, TriMet has had to cut costs and find ways to do more with less, due to the worst economic slump since the Great Depression.

In addition to reducing costs by $80 million between 2001 and 2011 through various internal efficiencies, we have cut 200 staff positions, used stimulus money, and delayed new bus purchases and other investments, in order to weather budget shortfalls caused by the last two recessions.

Our non-union employees (which include management) are in their fourth year of a salary freeze and are now paying more out-of-pocket for health care. Non-union retirement benefits have also been trimmed.

More important, our riders are feeling the pain: In recent years, they saw fare increases and the elimination of free bus service downtown. And in 2009 and 2010, we had to cut some bus lines and reduce bus and rail service to close our budget gaps—which means longer wait times, crowded vehicles and inconvenient transfers for some riders.

The cost of active and retiree health benefits now represents 29% of our incoming revenue from payroll taxes (our primary source of funding). Costs increased 12% per year between 2001 and 2011. If these trends continue, health benefits will equal more than half of our underlying payroll tax revenue by 2020. This is not sustainable, and TriMet and the ATU have a responsibility to bring these costs under control.

 

The graph assumes that Public Employees' Benefit Board (PEBB)
PPO rates would apply to TriMet's union employees.

 

In the short term, the bottom line is simple: We must find ways to change our cost structure and/or raise revenue. In order to bring balance to our budget and maintain our financial stability, everything must be on the table—including union employee wages and benefits.

 

Nearly 10 years ago, we negotiated the most recent contract with the ATU (which expired in 2009). Since then, skyrocketing health care costs have affected our ability to increase service and invest in new buses and other amenities.

In November 2009, negotiations began for the next contract period. At that time, we proposed modest cost-saving measures that would rein in some of the health care benefits that are out of step with the market. We also asked the union to limit wage increases and adjust retirement plans. This is not uncommon, as transit agencies throughout the U.S. wrestle with the costs of unsustainable health care and retirement benefits.

The ATU's proposal was to renew the previous contract unchanged, maintaining 3-5% annual raises and free health care with only a $5 co-pay for both employees and retirees.

• We proposed that union employees participate in the same health care plan as non-union employees (which is a high-quality plan) and begin making a small contribution to the monthly premium.
• We asked the union to limit cost-of-living wage increases for employees. In 2008 and 2009, most U.S. transit workers received no wage increases. During the last labor contract (2003-2009), TriMet's union employees received annual raises between 3% and 5%, based on the Consumer Price Index. We proposed to continue wage increases for union employees, but lower the minimum to 1%.
• The ATU proposed to continue free health care for retirees, their spouses and dependents—even after they became eligible for Medicare. To reflect the changed marketplace, we proposed changes to retiree benefits because the agency simply cannot afford to continue paying 100% of these costs.

ATU's Final Offer	TriMet's Original Final Offer
The ATU proposed to renew the previous contract unchanged, leaving in place so-called "Cadillac" benefits for union employees, perhaps the best in the country.	TriMet proposed reasonable cost-saving measures that would bring union health care benefits and wage increases more in line with other U.S. transit agencies, local/state governments, and their non-union co-workers.
Health care benefits
No contributions to health care premiums or co-insurance ($5 co-pay) for union employees and retirees	Begin employee and retiree contributions to health care premiums, add co-insurance for medical and pharmacy.
Wage increases
3-5% annual wage increases based on Consumer Price Index (CPI)	1-5% annual wage increases based on Consumer Price Index (CPI)
Retiree health care
Free health care for pre-65 retirees and their families at age 55 with 10 years employment or 30 yrs	Limit family retiree medical benefit for pre-65 retirees to 3 years
Retiree Medicare
Continue no-cost Medicare supplement plan for retirees and their spouses; TriMet pays Medicare Part B for retirees/spouses	Create Health Reimbursement Arrangement (HRA) for Medicare supplement of: $500/month for employee and $500/month for spouse
Retirement plan
Continue Defined Benefit pension plan for new employees with minimum 3% annual increase, same as active employees	Change to Defined Contribution pension plan for new employees. Retiree Cost of Living Allowance (COLA) Defined Benefit plan= 90% of CPI for new retirees and same as active employees for current retirees. Comparable to COLA for non-union retirees Defined Benefit plan.

 

The ATU was not willing to make any of the changes we proposed. In July 2010, after a fruitless 150-day negotiation period and an unsuccessful mediation, TriMet and the ATU declared an impasse and both parties submitted final offers to the Oregon Employment Relations Board (ERB), which administers the state's collective bargaining law. The next step is a process known as "interest arbitration," scheduled for March 2012.

 

 

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