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Our PSC Welfare Fund benefits
were seriously underfunded by CUNY.
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For most of the prior decade,
the Fund had run annual operating deficits.
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There was an outstanding $3.8
million liability owed to CUNY for overpayments to the Fund
prior to 1998.
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Prescription drug costs were
skyrocketing.
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Fund consultants were projecting
unsustainable annual multi-million dollar operating deficits
with bankruptcy a certainty within a few years.
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And, unless we developed a plan
of action, members would lose meaningful prescription drug
benefits and eligible adjuncts would lose health insurance
coverage.
Here is what New Caucus leadership
did:
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First, we negotiated a
substantial increase in CUNY contributions to the Welfare Fund
and negotiated a reduction of the $3.8 million liability to a
net payment of $1 million. We also threatened to sue CUNY and
successfully recouped $1 million for disputed underpayments from
1998 to 2001, and an additional $1.7 million for 2002 and 2003.
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Second, we understood that
contributions from CUNY, alone, could not solve the Welfare
Fund’s financial problems. (Click here for details below)
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Third, we empanelled a
Strategic Planning Committee composed of a broad range of old
and new Welfare Fund leadership to examine the extent of the
problems and to recommend actions. (Click
here for
article on PSC website)
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Fourth, membership was
informed, for the first time in years, of the nature and scope
of the problem (Click
here for
article in Sept. 2002 Clarion, pages 5-7).
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Fifth, we held extensive
consultations with Welfare Fund Advisory Committee members and
members at special chapter meetings about courses of action to
take.
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After this broad-based
consultation members and Fund Trustees agreed on the following
set of principles to guide restructuring: 1) maintain
substantial equality of benefits between active and retiree
members, and 2) make the impact of the changes on our sickest
and most plan-dependent members the least burdensome.
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Based on these principles,
Welfare Fund Trustees voted for benefit changes that saved $7.9
million in 2004 and much more on an annual basis going forward.
Why were some benefits cut and
others restructured?
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Prescription drugs were
restructured and millions of dollars were saved without reducing
benefits.
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Adjunct benefits were
restructured – saving about three quarters of a million dollars
annually, preserving both health insurance and prescription drug
coverage for eligible adjuncts. Moving eligible adjuncts onto
the City’s health plan remains a goal of New Caucus leadership.
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While all members were asked to
contribute more, each group had its own contribution: retirees
were asked to pay a $50 per family deductible for prescription
drugs, actives were asked to pick up the cost of term life
insurance and higher deductibles in the Cigna supplemental
medical policy, adjuncts were asked for higher copays and
deductibles on health insurance and prescription drugs.
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A large amount of money
($600,000) was being spent on term life insurance for a policy
that was worth very little to actives and basically subsidized
term life coverage for a handful of older members. While the
loss of subsidy was real for these members, continuing it could
not be justified given the principles adopted.
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Our dental plan was woefully
underfunded at the start. Members already complained bitterly
about the dental plan and dentists were leaving the in-network
panel of dentists (SIDS). We did not have the money to fix it.
Using what little money we had, we chose a plan that would
reimburse for preventive care and provide substantial discounts
for in-network dentists. Enhancing the dental plan remains a
goal of the New Caucus leadership.
The last contract put a record
amount of money into the Welfare Fund compared to the previous two
contracts.
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The value of the last
contract’s increase for the Welfare Fund was $253 per member per
year. This compares to $76 per member per year for the 1996 –
2000 contract and $240 per member per year for the 1990 – 1996
contract. There were increases in rate ($200/member) and lump
sum amounts ($350/member) from the Municipal Labor Committee
negotiations and increases from the PSC – CUNY
negotiations in rate ($1.5 million per year) and a lump sum
amount ($1.4 million). In addition, there was a $2.8 million
savings from the overpayment prior to 1998 and a $1 million cash
infusion from the settlement of the underpayment dispute with
CUNY from 1998 - 2001. An additional $1.7 million was added to
CUNY payments for 2002 and 2003.
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Even with this record amount of
increase, it was not enough to cover the projected deficits and
benefit restructuring was necessary.
Then, why not just put more of the 2000 – 2002 contract settlement
into Welfare Fund benefits instead of cutting and restructuring
benefits?
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Let’s look at the numbers. In
Fiscal Year (FY) 2002, the Fund had an operating deficit of $4
million. Without changes in benefits, this deficit was
projected to grow to $6 million in FY 2003 and $10 million in FY
2004. In the last contract, to pay for an annual operating
deficit of $10 million we would have had to divert as much as
1.5% of salary increase to the Welfare Fund.
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But, 1.5% of salary would not
have been enough because the benefit structure was generating
exponentially greater deficits as far as the eye could see. It
would not be long before the union would be forced to divert
most of the money in any contract settlement to the Welfare Fund
just to maintain existing benefits, leaving little for raises or
other improvements.
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The benefit structure we
inherited in 2000 was simply not sustainable unless we were
prepared to devote the bulk of our contractual package to
maintaining an increasingly expensive and in many ways
inefficient benefit structure.
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Finally, we negotiated with the
City, State, and CUNY. They also have to agree to put
additional rate money and cash from our contractual package into
the Welfare Fund. In principle, the City is opposed to allowing
large infusions from contracts to go into union welfare funds,
and CUNY would rather see us cut benefits than enhance Fund
contributions. So, even if the PSC negotiators wanted to devote
additional large amounts from the settlement to the Fund, it
would be very difficult to get the City and CUNY to agree.
The
New Caucus leadership took a responsible, balanced approach by
adding additional rate and lump sum cash from the contract
settlement and restructuring benefits. Without taking these
actions, the entire benefit structure would have collapsed leaving
vulnerable members without life-sustaining drugs and health
insurance.
“CUNY Alliance” is attempting to
use the Welfare Fund’s problems for political advantage. This is
pure political opportunism, not leadership.
Either “CUNY Alliance” is willfully
misrepresenting the facts about the Welfare Fund or they do not
understand what they are talking about. Either way, they should
know better because the person at the top of their slate, Rina
Yarmish, was appointed treasurer of the Fund by the old leadership
and served out her term from 1998 to 2003.
Rina Yarmish’s
record as Treasurer:
1) Starting in 1998 (two years before New Caucus was elected to
leadership) and continuing for several years, CUNY underpaid the
Welfare Fund by undercounting the actual Fund membership. CUNY pays
the Welfare Fund on a per capita basis. Treasurer Yarmish never
questioned CUNY’s underpayments, even though this is the Treasurer’s
responsibility. Upon discovering this underpayment, Steve
London and New Caucus leaders threatened to sue CUNY unless payment
was made. As a result, the Fund received from CUNY: $1 million for
underpayments from 1998-2001 (the disputed period) and $1.7 million
for 2002-2003.
2)
From 1998 to 2000, Treasurer Yarmish allowed $3.8 million
owed to CUNY to remain as a liability on the Welfare Fund books.
After Barbara Bowen and New Caucus leaders were elected, we engaged
in tough negotiations with CUNY to win a favorable settlement with
CUNY agreeing to wipe $2.8 million of liability off the books.
If it was left up to Treasurer Yarmish, the
Welfare Fund would be millions of dollars more in the hole.
3) Under Treasurer Yarmish, the Fund’s bookkeeping and financial accounts were in
disarray. Benefits were
not properly categorized, bookkeeping software was outdated, and
specific benefit costs could only be approximated. New Caucus
leaders brought in a new independent auditor and a new consultant to
straighten out and modernize the Fund’s finances.
With this shoddy record, it is not
surprising to find “CUNY Alliance’s” statements about the Welfare
Fund to be riddled with inaccuracies and misinformation:
· “CUNY Alliance
Pledge #1” and its linked “Welfare Fund Woes” completely misstates
the structure and funding of the Welfare Fund. They claim the Municipal Labor Committee (MLC) is one of two boards
that “oversees a package of basic benefits for all city workers
including some at CUNY.” This is just not true. Welfare
Fund Trustees have sole authority over benefits. The MLC negotiates
with the City for basic per capita payments to all Welfare Funds.
Funds apply those per caps differently. For example, the
UFT provides only minimal prescription drug coverage for retirees
while the PSC/CUNY Welfare Fund provides the same drug benefit for
actives and retirees. President Bowen serves on the Executive
Committee of the MLC and has been instrumental in City-wide
negotiations.
· “Pledge 1” also
contains an outright lie.
They say, “…the [2000 – 2002]
contract did not require the University to add new funds to the WF.”
In fact, $1.5 million in annually recurring funds and a $1.4 million
lump sum amount were added from the contract. In addition, New
Caucus leaders brought in millions of dollars more from CUNY’s
underpayments in the past and saved millions by negotiating away
liabilities. This is all verified by independent auditor’s
reports and has been publicized in Clarion.
· “CUNY Alliance
Pledge #3” irresponsibly mischaracterizes a prudent and necessary
action by the Trustees.
New Caucus leaders have made no secret
of the dire financial difficulties of the Fund. As required by our
auditors, Fund Trustees put in place contingency plans to be certain
that the Fund maintains itself as a “going concern” for the upcoming
year. On July 27, 2005, Fund Trustees adopted such a contingency
plan, which was the responsible thing to do.
Using scare tactics
(“drug benefits will disappear”) and inflammatory charges
(“cover-up”) to frighten vulnerable members does nothing to resolve
the Fund’s financial difficulties.
· In
“CUNY Alliance’s” constantly changing “mission statement,” they
mistakenly say there is a “$50 per person deductible for
prescription drugs.”
In
fact it is $50 per family for retirees. They also get the
end date of the last contract wrong in their mission statement. It
was October 31, 2002, not 2001. If they are running for union
office they should know the basic facts.
With Rina Yarmish’s dismal
performance as Welfare Fund Treasurer and CUNY Alliance’s inability
to get basic facts and relationships straight, how can you trust
them to oversee and protect our Welfare Fund?
New Caucus leaders have made
adequate funding of the Welfare Fund and the enhancement of the
dental benefit a goal of this round of bargaining. We continue to
seek your support in pursuit of this objective. Meanwhile, we will
continue to responsibly administer the Welfare Fund for all the PSC
membership.
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