Healthy Contracts?

Healthy Contracts?

Healthy Contracts?
April 13, 2015

There’s little debate that the de Blasio administration has moved quickly to settle contracts of the municipal workforce since he assumed office with all of the city's agreements outstanding.

But what the legacy of these commitments will be has already become a contentious debate.

New York City Mayor Bill de Blasio has said the city could afford to pay retroactive raises for years workers went without contracts and new raises because unions agreed to find $3.4 billion in health care cost savings over four years. New York City Labor Commissioner Robert Linn and some economists say settled contracts benefit the city through improved morale and with unions using a more collaborative approach on matters such as health care.

But some contended the health care cost reductions detailed by the administration this fiscal year are not entirely composed of actual savings, which points to the risk in de Blasio’s arrangements.

Linn’s team has reached agreements with 67 collective bargaining units, which account for 76.2 percent of the city’s workforce. The administration first worked with unions whose contracts had lapsed for five years, such as the United Federation of Teachers’, which ultimately served as a template for future negotiations. A pattern emerged of 10 percent raises over seven years and $1,000 ratification bonuses, while including lump sums for retroactive raises—in this case amounting to the 8 percent raises teachers missed when contracts lapsed under the prior administration.

The city then moved on to labor groups working without a contract for three years, like municipal employees covered by District Council 37. Next, Linn said he would focus on settlements with firefighters, correction officers and sanitation workers, among other, smaller labor groups.

But, he noted, the administration will be busy in May and June as it goes to binding arbitration with the NYPD Patrolmen’s Benevolent Association, which has balked at agreements modeled after other unions’ that do not include a raise in the first year.

“There’s hardly a week or two that we don’t announce some new settlement that we’re reaching,” Linn said. “The process was a substantial one of coming in with 144 unsettled labor agreements and now working through all those agreements and reaching toward a conclusion, where hopefully, before too long, 100 percent of city workers all have labor agreements.”

Union leaders and Linn say new contracts boost public personnel’s morale and can pave the way for more collaboration. While many labor leaders said there was no connection between having a contract and attendance, Winslow Luna, vice president for SEIU 1199, said he believed the roughly 3,700 personnel at city hospitals and other facilities he represented were calling out sick less. The Health and Hospitals Corporation did not respond to a request for attendance data.

And employees also appear more flexible. Luna said his members did not receive all of a scheduled 3 percent raise this February, but were understanding when the city explained the accounting glitch and agreed to pay the difference in late April.

“Some members, of course, they were upset,” Luna said. “But it wasn’t a really big deal. … They know the city will eventually pay it.”

Linn said such cooperation has allowed the city to tackle rising health care costs that the government had so far struggled to rein in since the 1980s.

“There was a relationship where nothing was accomplished. We were unable to implement some of the types of changes that employers all across the country have been implemented,” Linn said. “We reached an agreement with the unions that we would together establish savings … that would dramatically reduce health care costs.”

Linn announced at the beginning of the month that the $400 million in savings the Municipal Labor Committee, an umbrella group for unions, agreed to find this fiscal year had been identified. Roughly $153 million of the savings would come from unions authorizing the city to use payments it made to a stabilization fund for federally mandated mental health care costs, $108 million from an audit launched under the prior administration aimed at removing ineligible dependents, $58 million from shifting to a less expensive insurance plan and $17 million from lower premium hikes than anticipated, the administration said.

Nicole Gelinas, a fellow at the right-leaning Manhattan Institute policy research group, contended some of these projected cost reductions—such as rooting out fraud—do not qualify as savings.

She added that there is still a lot of room for cutting costs, noting that health care and other benefits accounted for the most unaffordable elements of the contracts. She described the agreements as risky for pushing payments for retroactive raises into 2021.

“No mayor has ever gotten to do two terms without a recession, and so then you are back to that same problem—if we have another recession, but yet we can’t afford the current services because we’re paying for past services,” she said.

But James Parrott, chief economist at the left-leaning Fiscal Policy Institute, said the administration had accounted for savings and was on track to reduce costs $3.4 billion in the coming years. He said the contracts were fiscally responsible.

“If somebody wants to cry wolf in that context, they’re going to cry wolf in any context,” Parrott said. “The city has budgeted for it, and the city is showing surpluses that it never has before for the entire four years of the financial plan.”

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Sarina Trangle