Teamsters' insurance bill raises questions

9/23/2007

Each month Toledo cuts a $240,000 check to Teamsters Local 20, a transaction that explains what happens when contract negotiations and politics collide in a cash-strapped city.

The payment covers health insurance for the 245 Teamsters who haul trash and treat wastewater for the city. It gets deposited in a trust controlled by Local 20.

Toledo is contractually bound to shoulder all increased costs for the insurance, but has no information about the medical benefits offered to Teamster employees.

"I have no idea," said Calvin Brown, Toledo's commissioner of administrative services. "That is the nature of things. That is how the contract is written."

Toledo insured each Teamster for $10,846 last year, about $1,500 more than it spent on the typical unionized employee. The city government could have saved $600,000 last year if the Teamsters joined its health-insurance plan, according to a May fact-finder's report.

To put that in context, the entire $2.9 million raised by the $5.50-a-month trash collection fee this year should match all the checks sent monthly to the Teamsters Local 20 Insurance and Health and Welfare Fund. And provided the trash fee continues, Toledo still must close a projected $10 million budget deficit next year.

The Teamsters said their trust delivers superior medical coverage to city employees, who labor in the rain, snow, and sleet or are exposed to sewage. They say Toledo can obtain a list of benefits from them and has a representative on the trust's board. And they explain that Local 20 is beholden to its membership, not taxpayers.

"We want our people to have the best service with the best benefits with the least amount of heartache," Local 20 President Bill Lichtenwald said last week. "We have friends, I guess, in city hall, but we have members who depend on us. Our job is to directly benefit them. We have to answer to them. They're our board of directors."

As a result, the city has a difficult balancing act, demonstrating fiscal responsibility to taxpayers while not offending a force in regional politics.

According to federal filings, Local 20 spent $48,823 on political activities in 2005, when Mayor Carty Finkbeiner returned to Government Center after a four-year absence and Mark Sobczak, a Local 20 vice president, won an at-large seat on City Council.

Various Teamsters entities gave at least $6,875 to the mayor's campaign. And during the last weekend of the race, Mr. Finkbeiner rallied 150 volunteers at Local 20 headquarters off the Anthony Wayne Trail.

With a sense of impending victory, Mr. Finkbeiner encouraged them to "be classy" as they trudged door-to-door, noting that once the campaign ended, they all should extend a hand to the supporters of Jack Ford, the incumbent mayor.

Mr. Finkbeiner, who was mayor in 1997 when the city began paying the trust, ended with a prayer.

"Finally, Sir, thank you for giving us an opportunity to walk on this Earth," the once and future mayor said. "May the journey be filled with service. Not greed, service."

Mr. Finkbeiner was unavailable for comment.

Bob Reinbolt, chief of staff for Mr. Finkbeiner, said support from the Teamsters has had no impact on contract negotiations because the administration is "looking out for the best interests of the citizens."

Although Mr. Sobczak, in his union capacity, serves on the board of the Local 20 trust, he said last week that he does not have any details of the health insurance deal with the city.

Under the agreement forged between Local 20 and the city, the two groups will continue negotiating the health insurance package during 2008. If the Teamsters fail to contain costs by Dec. 1, 2009, a month after the next mayoral election, Toledo has the option of adding their members to its program.

The contract has a clause enabling the city to transfer Local 20 employees to its plan, but only if the city provides benefits equivalent to the trust.

"We feel that all employees in the city should be part of the city plan," Mr. Reinbolt said. "We each have our own interests in this, and we need to sit down and find something agreeable."

But the structure of the trust should make controlling costs a relatively easy task. There are 1,024 participants in the Local 20 trust. They range from municipal employees to those working in small businesses to retirees in need of catastrophic coverage.

According to 2005 IRS filings, the last year publicly available, the trust had revenues of $10.42 million, about a quarter of which came from the city. The trust paid out $98,449 in salaries and has administrators working in its ground-floor offices at Local 20 headquarters, but the tax forms list no key employees.

It purchases health insurance in three-year blocks at a fixed rate, said Terry Barror, a trustee. As a result, the Teamsters estimate they will pay about $10,780 per city employee in 2006, 2007, and 2008, which creates the appearance of controlling costs without necessarily changing their health insurance plan.

By comparison, the city spent $9,373 last year on health insurance for the 872 employees belonging to the American Federation of State, County, and Municipal Employees, about 16 percent less than it spent for each Teamster.

For the Teamsters' plan to save money for taxpayers, the price of the city's plan would need to grow by more than 32 percent in the next two years. This is an unlikely scenario because since 1999, the cost of medical care has increased by about 4.3 percent annually, according to the Consumer Price Index.

Also, the city has taken steps to minimize its health-care expenditures by having a cost-containment committee. When negotiating its contract with the city, AFSCME Local 2058 actually offered to increase emergency room co-payments to $65 from $25, according to a separate May fact-finder report.

"It was in the best interest of maintaining our health-care costs and getting our employees to be more responsible and attentive with how they were using their health-care benefits," Local 2058 President Alan Cox said.

Through the fact-finding process, the city eventually charged Local 2058 employees monthly health insurance premiums between $25 and $55 in addition to the co-pay. By contrast, the Teamsters pushed to continue existing contribution levels to the trust despite dire circumstances for city finances.

Toledo hit a maelstrom in 2001 when a national recession sunk the local economy. Unfilled potholes, battered police cars, and empty desks have kept the city afloat since then.

Toledo met payroll and other obligations "only by utilizing the cash reserves it had built up during the 1990s, by deferring or eliminating contributions for capital improvement and equipment replacement, and by leaving many funded employee jobs temporarily vacant," the Teamster fact-finder report states.

The Teamsters responded by asking the city to divert money from specially designated funds to pay the union's health-care tab, a move John Bibish, commissioner of Toledo's budget office, said violated both the principles of accounting and the law.

While Local 20 has held firm on the trust, it has been flexible in negotiations with regard to holidays and benefits for temporary refuse collectors. It also receives a lower contribution from the city into the Ohio Public Employee Retirement System than AFSCME members.

As a result, the situation comes down to the give and take of compromise. The Teamsters are willing to surrender benefits, only if they have gains in other sections of the contract, a strategy that can limit health-care costs without entirely curbing city expenses.

"My argument is, 'OK if you do have a cost-savings and our members are paid this much, are you willing to return it to us in hourly wages?'•" Mr. Lichtenwald said. "Well, no. If you're not willing to do that, then why should I agree to do it for you?"

Contact Joshua Boak at:

jboak@theblade.com

or 419-724-6728.