In the second segment (of four) of our conversation with TriMet General Manager Neil McFarlane, we cover the status of TriMet’s contract with ATU (Amalgamated Transit Union).

A transcript of the interview, prepared by EngineerScotty, is after the jump.
CS: So let’s shift over to the labor issues. So you made a presentation to the City Club a couple of weeks ago, where you very strongly indicated that the labor contract was going to be an ongoing issue for TriMet. I guess my first question is, obviously that the union has a different position, in terms of independent analysis I’ve seen, there seems to be some agreement among the independent views that the post-employment labor costs are disproportionally impacting the budget, and that’s likely to get worse before it gets better.

NM: Yes.

CS: So the first question is, how did we get here. Did TriMet management not see this coming? I mean, we seem to have gotten ourselves into a bind, that’s going to take a lot of work to get out of–how did we wind up here?

NM: Well, I’d say–my experience, not even as a TriMet employee, and certainly not as a TriMet manager, goes back no more than about thirty years, and so I would say that I think it took two parties thirty years to get here. But I’d also say that this is not a uniquely TriMet problem. I think TriMet is an extreme example when it comes to the post-employment and medical benefits, and also the level of medical benefits, and as I outlined in the City Club, the average Regence price for an ATU employee right now is $22k a year. For TriMet management employees, we have a much more market-based plan, 80% coverage, 20% co-insurance, some deductibles, sort of normal, some premium co-share, we’re about half that, in terms of TriMet management, so we’re leading with the management staff. That’s… those are stunning numbers, and partially, those numbers and that plan design is what also drives the post-employment benefits. So if we were able to bring those costs down to what I think is a reasonable market response, and what our peers in the public sector have, and what our peers, frankly, in other transit districts have, you’d see both the current active employee levels of expense, as well as those for retirees, go down. So that’s sort of Step 1. But I would also say that it is absolutely essential that we get ahold of this. And it’s very hard, and it’s very painful, and obviously I don’t have a cooperative, willing partner with the ATU. But I would also come back and strongly say that it’s in everybody’s interest to make sure that TriMet’s finances are sustainable. What TriMet does is absolutely essential to the region. You know how committed I am to public transit, and to making sure that we can meet the kind of needs that this region is counting on us to do. Right now, with that contract, with the level of employee benefit associated with it, we can’t. That’s pure and simple. We can’t.

CS: We’ve already mention the binding arbitration, decisions coming up. I think some of us have been watching this process, and find it interesting that at least a couple of times, the Employee Relations Board has ruled against Trimet; either that something you are trying to do is not procedurally allowable, or I think in one case, that it is an Unfair Labor Practice. I think for some of our readers it begs the question: Does TriMet really understand the binding arbitration process, or are you in a field that you’re not familiar with and we’re having problems because of that?

NM: Well, I, as you know, in public statements I’ve referred to what I have described as a bit of a Byzantine process, related to the binding arbitration process, and to the regulations associated with that, that come out of the Employee Relations Board. That said, I’m not at all defensive about where we’ve been. I’m also very willing to admit that we’ve had some missteps along the way and that we can do things better. To that end, over the last few months I’ve hired a new labor relations executive, a fellow by the name of Randy Stedman who is a real pro in this, and will be providing I think great leadership as we move forward on the labor relations issues. I, again, noted that this took thirty years to get us where we are, and two parties, it’s going to take those two parties to get us out of this. I think we just have to step up to it, as a region and as a community, if we really believe in public transit and what TriMet does. So, you know, certainly, we’ve not been perfect in the past in terms of our procedurally-driven responses to all of these things. I think we’re on the right when it comes to actually describing the math associated with this. I want to emphasize, and I try do this every time I bring up this topic, is this is not anti-union, and this is with full regard for how hard our employees work. They work incredibly hard; they do a great job, as you well know, on a regular basis. And they deserve good compensation and they deserve good benefits. This is really about the math, about the current program. It just needs real market reform. I would also, for a moment, add that TriMet is not alone in this, it’s the same problem that the Federal Government is facing with Medicare expenses, it’s the same problem that, to some extent, the state government faces with PERS, but it’s an extreme example, and it’s really focused not so much on pension, in the case of TriMet, it’s really focused on these medical benefits that just need to get to be real, in terms of the market.

CS: So we have the ruling coming up, some time in the next budget year. After that, what are the steps? What else needs to happen to get this under control?

NM: Well, there is in any situation, we’re immediately back into negotiations with the union, so we start again. Immediately. In the case of the union winning the arbitration, their contract proposal actually ended last November. In the case of a TriMet proposal, it actually ends this November. So in any case, we’ll be asking the union to come back to the table to address these issues with us immediately. And we’ll be readying ourselves, if indeed, to move the arbitration process just like we did this time. Hopefully we can get there sooner than two years, two plus years, really two and a half years by the time we’re actually done with this, since the contract was expired by the time we get to the solution.

CS: At the City Club presentation your co-panelist was David Knowles who chairs the Transportation Committee for the Portland Business Alliance. I know David as a planner, he mentioned that he was trained as a lawyer, and he said that as a lawyer he felt like binding arbitration favored the status quo, and that it was going to be difficult, in the binding arbitration context, to make the kind of changes that may be necessary. And so I guess I’d ask the question: Will it be part of TriMet’s legislative agenda to change the classification of your employees so they are able to strike, rather than being classified as essential employees and requiring binding arbitration?

NM: Well, it’s a good question, and I’ll be very honest with you, it’s a great topic of debate right now. Nobody wants a strike, obviously. A strike is a bad thing for everybody–the employees, the employers, and obviously the economy of the region and the service to our riders. That said, as I said at the City Club, I do believe our current contract is slowly strangling TriMet, and I actually think that we need to get this resolved. The history of labor relations in the country is that the way those kinds of issues do get resolved is you come to a cliff, which is called the end of a contract, and a decision on one party or another to either accept it or reject it. So, now, we’ve moved away from that sort of status quo, or a standard labor relations environment, into what is now, was created for police and fire. And while I think transit is important, I’m not sure that transit union employees are the same sort of life-sensitive, life/safety sensitive that police and firemen are. And I think that, frankly, nobody is going to die if your bus doesn’t show up, but you may if your police or fire doesn’t show up.

CS: Hardships if the bus doesn’t show up, but I think you’re right, probably not in the same category.

NM: Not kind of the same category. So I think there’s a reasonable debate to have on that. We haven’t come to a final conclusion on that. I would love to see the arbitration process work. Candidly, I guess I’m sharing pretty candid, that I’m frustrated with it, and I’m not sure that it is working to the benefit of the district, or even to the employees in the long run, because these are really long-term financial issues that really deal with the security of our employees, and their benefits over the long term as well.