NORTHWEST LABOR PRESS | May 18, 2018 | PAGE 5
...Pension crisis sparks reform debate
BUILDING COMMUNITY
Photos courtesy of Tom Richardson, NALC Branch 82
From Page 3
Mike Magarro of
NALC Branch 82
points to the turkey
he scored at the MDA
Labor Bowl. A turkey
is bowling lingo for
three strikes in a row.
LABOR BOWLS FOR MDA. This year’s La-
bor Bowl Challenge raised $9,000 for the
Muscular Dystrophy Association. The 29th
annual event was coordinated by the Na-
tional Association of Letter Carriers (NALC)
Branch 82 and the Northwest Oregon Labor
Council. Money from pledges and a silent
auction pays for wheelchairs and braces for
children, as well as for research and summer
camps. Since 1989, the Labor Bowl has do-
nated $401,119 to MDA. Top bowlers this
year were Donna Wash of NALC Branch 82
(left) and Mike Hemmings of Oregon
School Employees Association Beaverton
Chapter 48 (below left with Branch 82
MDA coordinator Abe RedCloud). The top
fundraiser was NALC Branch 82 member
Mike O’Connor, who raised $700.
COLLECTIVE BARGAINING
New contract for support staff at
Portland Public Schools
By an overwhelming 329 to 6
vote, Portland Federation of
School Professionals (AFT Lo-
cal 111) ratified a new contract
last month that covers about
1,400 support staff in almost 50
classifications, including school
secretaries, classroom assistants,
and about 450 para-educators
who work with special educa-
tion students.
The contract provides across-
the-board raises of 3 percent
retroactive to July 1, 2017, and
2 percent for July 1, 2018. It
also gives annual step increases
to employees who haven’t
reached the top of the wage
scale for their classification.
And it raises pay an additional 5
percent July 1 for para-educa-
tors, who will make $17.05 to
$22.65 an hour.
Local 111 president Belinda
Reagan said the district hired an
inexperienced outside attorney,
and bargaining was contentious.
The new contract runs
through June 30, 2019.
charges that eventually reached
$6.15 an hour — and none of
those extra dollars were at-
tached to additional benefit for
employees. Such extraordinary
sums risk bankrupting employ-
ers, or send them running for
the exits. [Last fall, Daimler ne-
gotiated a withdrawal from the
Machinists pension.]
By 2011, it was clear that the
2008 crash was going to result
in the collapse of many multi-
employer pensions, including
Central States, which would
bankrupt the PBGC. Something
needed to be done.
The National Coordinating
Committee for Multiemployer
Plans (NCCMP) — a group
representing multi-employer
plans and their sponsoring
unions and employer groups —
put together a task force to
come up with proposals for
Congress to consider. One of
them became law in 2014 —the
Multiemployer Pension Re-
form Act (MPRA).
MPRA allows pension trusts
to cut benefits to current and fu-
ture retirees to a certain extent
— if doing so can save the
trusts from insolvency. But they
can only cut benefits down to
110 percent of what retirees
would receive if the trust were
to become insolvent and have
benefits paid by the PBGC.
PBGC’s insurance for multi-
employer pensions doesn’t
guarantee everything retirees
were promised — only 47 per-
cent, on average. So MPRA
gave pension trusts a lot of
room to cut benefits.
But pension fund trustees —
half of whom are union ap-
pointees — haven’t been eager
to use the new authority to cut
retiree benefits, and the Treas-
ury Department hasn’t made it
a slam-dunk for those who
tried. In the three years since
MPRA became law, just 19
trusts have applied for permis-
sion to make the cuts, and just
two applications have been ap-
proved by Treasury — trusts
connected to Ironworkers in
Cleveland, Ohio, and Alaska.
MPRA was written above all
in order to prevent the Central
States collapse, in order to save
the PBGC itself from insol-
vency. But in 2016, the U.S.
Treasury department rejected
Central States’ application to
make benefit cuts. Treasury
said the proposal’s investment
assumptions were too rosy, and
its cuts weren’t fairly appor-
tioned. The rejection spelled
doom for Central States: It can’t
apply again, because its assets
continued to shrink and now
trustees would have to cut ben-
efits beyond 110 percent of the
PBGC benefit in order to re-
store solvency.
What to do now
With Central States and the
PBGC headed for collapse,
Congress in February created a
special task force to come up
with a solution. The Joint Select
Committee on Solvency of
Multiemployer Pension Plans,
made up of 16 members of the
House and Senate, eight from
each party, is supposed to hold
hearings and deliver a report by
November, with the expectation
that Congress would take action
by the end of the year. But
unions are at odds over what
proposal to push the Joint Com-
mittee to recommend.
NCCMP, backed by many
building trades unions, is pro-
posing a bill called the GROW
Act that would create a new
kind of pension without with-
drawal liability or rehab sur-
charges, or even the need for
PBGC insurance.
Mack, along with the Ma-
chinists, Boilermakers, and
Steelworkers unions, is critical
of that, saying it fails to address
the problems of the failing pen-
sions. Instead, they back a bill
called the Butch Lewis Act that
would provide renewable low-
interest government loans that
might enable the trusts to invest
their way out of their hole.
Western region Teamsters have
gathered 35,000 signatures op-
posing the GROW Act to pres-
ent to Congress.
NCCMP Executive Director
Michael Scott says Mack is
right that GROW does nothing
to help distressed plans, but
says the antagonism is mis-
placed: “Just because a hammer
is different from a screwdriver
doesn’t mean you have to be
mad at the screwdriver,” Scott
told the Labor Press.
Meanwhile, Scott calls
Butch Lewis a bailout, and says
it’s unlikely that Congress
would approve a plan that re-
quires no retiree sacrifice. NC-
CMP is floating its own pro-
posal, which similarly uses
long-term government loans
but also requires some level of
benefit cuts.
Scott says the belief that ben-
efits are currently guaranteed is
misplaced, because the PBGC
is only replacing 47 percent of
promised benefits, and — be-
cause the PBGC is not backed
by the full faith and credit of the
U.S. government — when it
runs out of money, retirees will
get 2 to 6 percent of what they
were promised.
“Benefit reductions are com-
ing to retirees in insolvent
plans. It’s just a question of how
deep,” Scott said.
How Congress could fix the pension crisis
Butch Lewis Act of 2017 (S.2147) sponsored by Senator
Sherrod Brown (D-Ohio), would create
a federal loan program to bail out
failing multiemployer pension funds,
funded by the sale of Treasury-issued
bonds. It’s named after Butch Lewis,
president Teamsters Local 100 in
Cincinnati, who died in 2015 after years
of fighting to protect pensions. It has 22
cosponsors including Jeff Merkley (D-
Ore.) HR 4444, a similar bill in the
Butch Lewis
House sponsored by Rep. Richard Neal
(D-Mass.), has 162 cosponsors, including Oregon Democrats Earl
Blumenauer, Suzanne Bonamici, and Peter DeFazio.
Give Retirement Options to Workers (GROW) Act (H.R.
4997) sponsored by Reps. Donald Norcross (D-NJ) and Phil
Roe, M.D. (R-TN) would prevent future pension collapses by
giving healthy multi-employer pension plans the ability to
create a new hybrid or “composite” option combining features
of defined benefit and defined contribution pensions. Trustees
would freeze legacy defined benefit plans, and all their accrued
benefits would be fully paid out. They’d then create a new plan
going forward to provide guaranteed monthly benefits within a
range, with the actual amount determined upon retirement.
Trustees would aim for a 120 percent funding level as cushion
against financial shocks. Employers would face no withdrawal
liability in the new plan. The bill has four co-sponsors.