Me, too! Me, too!

From WSPD News:

The city of Toledo has a new deal with the Fire Chiefs Association. The agreement is the end to the first of four negotiations for new contracts in divisions of Police and Fire. Toledo City Council unanimously approved a fact-finding report calling for concessions from the Toledo Fire Chiefs Association that included: A wage freeze until January 2014 with a possible increase in 2013, elimination of the city's pension pick-up, which will be phased out gradually over the three year contract, and increased employee contributions to health insurance.The report also has new bargaining rules: If the city declares "exigent circumstances," the union must go back to the table and bargain.The Fire Chiefs Association approved the terms last week, despite a union spokesperson saying that the concessions will cost every member $17,000 per year. The city could save millions of dollars if similar concessions hold for all of those unions.

All I want to know now, is when do the other unions follow the 'me-too' clauses in their contracts and take these concessions as well??

Friday Roundup: Neil Cavuto, Durbin Fee, Ohio Issue 2, Democrats Anonymous

I've collected a bunch of miscellaneous items that I wanted to share, so here's a roundup for your Friday reading:

* My friend and fellow blogger, Warner Todd Huston, who writes at Publius Forum, is in the Chicago area and recently had the opportunity to see a behinds-the-scenes look at the Your World With Neil Cavuto show. Cavuto was in Chicago as part of the celebration of the 15th Birthday for Fox News. WTH, as he's known to his friends, also had a chance to talk with Cavuto and his interview is here. Interestingly, I did not know Cavuto has Multiple Sclerosis nor that he is a survivor of Stage 4 cancer. It's a good interview and I hope you take the time to read it.

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* In response to the union-backed We Are Ohio bus tour urging a no vote on Ohio's Issue 2 in November, Building a Better Ohio issued a press release detailing how much the various cities on the tour could save if Issue 2 is passed. Issue 2 is the referendum on Senate Bill 5, the public sector collective bargaining reform bill.

Toledo: The city's police contract includes a 10% pension pick-up, and other city employees get between a 5.5% to a 10% pension pick-up. Pension pick-ups alone cost the city $11.4 million in 2011. Teachers pay nothing toward their health care premium.

How much better would our roads be if we put that $11.4 million toward road repair rather than 'picking up' the employee's portion of their pension? Don't forget, that's over and above the city/employer's portion that we are required by law to pay.

Now, I realize that pension pick-ups have been negotiated in lieu of pay increases. But what many people fail to realize (union and non-union alike) is that the me-too clauses mean that one union might have gone without a pay increase, but all the other unions in the city got the same pension pick-up without the same concession. That's the way a me-too clause works.

So remember this when you hear the claim that pension pick-ups were in exchange for pay increases. It may be accurate in some instances, but more likely than not, it's not true for all - and certainly not for the entire amount.

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* In response to the Durbin Fee, Bank of America, along with many others, decided to begin charging customers a monthly fee for the use of a debit card. Rather than blame himself, Sen. Dick Durbin (D-IL) took the floor of Congress to urge a run on the bank.

Now, he didn't talk about the other banks doing the same thing, so this wasn't a blanket statement telling people that if they're unhappy with one provider of a service, they can (and probably should) try a competitor. No - this was a directed attack against a single company.

So I'm wondering: do shareholders have any legal recourse to hold Durbin personally accountable for any negative consequences or decline in stock value of Bank of America? Probably hundreds of thousands of individuals have an investment interest in the bank - and its subsidiaries - through direct holding of stock or through pensions, IRAs and mutual funds. Can Sen. Durbin be sued personally for using the power of his office to target a single company and urge its demise?

Why does Sen. Durbin hate the working people of America and seniors and retirees who rely upon the value of their investments to either provide them with their retirement income now or in the future? Why would Sen. Durbin want people to lose income? Aren't people hurting enough?

And what about all the bank employees? If the bank loses too many customers, it will have to lay off workers - tellers and secretaries and janitors - due to less need and less income. Why does Sen. Durbin hate all these working-class people who were fortunate enough to actually have a job in today's economic climate?

And if any elected official agrees with Durbin, we should have them answer the same questions. Elected officials need to be held accountable and it's time we start doing so.

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"The ultimate result of shielding men from the effects of folly is to fill the world with fools." ~ Herbert Spencer

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* I'd not heard of the non-profit American Crossroads before, but was sent a link to their latest video, which I found amusing. According to their website, they are:

"...a new kind of non-profit political organization dedicated to renewing America’s commitment to individual liberty, limited government, free enterprise and a strong national defense—through informed and effective political action by citizens like you.
...
Today, America faces much more than a choice among various candidates for public office. We face a Crossroads – a fundamental decision about the future direction of our country that will impact America’s strength and character for years to come."

Here is the video, "Democrats Anonymous," which might actually be pretty timely considering the dissatisfaction we're seeing from the left. Enjoy!

Prime example for banning 'me-too' clauses in union contracts

I've previously written about 'me-too' clauses in public sector union contracts - how they distort the give-and-take of a negotiation process and lead to increased costs for taxpayers.

Nearly all the government union contracts in Lucas County contain them, in effect guaranteeing that any benefit negotiated by one union will be shared by others - without the corresponding concession that resulted in the first union gaining the benefit.

Whether wages, pensions, educational reimbursement, or any other term that can be negotiated, it is likely that you will find such benefits are identical across the governmental jurisdiction because of this clause in the contracts.

My position when in office was that 'me-too' applied to concessions as well as benefits. I often told unions they could have the benefit if they were willing to give up whatever had been traded to get it, which effectively ended all such discussions on the matter. While I believe such clauses distort the negotiation process and are bad in a significant number of ways, today we have a prime example (an 'unintended consequence' effect) showing why they should be banned.

The Toledo Police Patrolman's Association (TPPA) has filed a grievance with the City of Toledo over the merger of the Toledo and Village of Ottawa Hills Fire Departments. You're probably wondering why in the world police would object to this merger. They're not objecting, they just want their 'me-too' clause enforced.

In 2009, Toledo City Council approved a contract extension for the TPPA and it included the following:

Other Bargaining Units The City will provide the TPPA with any greater economic benefits provided to the Toledo Firefighters and/or the Toledo Police Command Officers Association that they may receive either through settlement or impasse proceedings including fact finding and/or conciliation.

So the city - meaning council and the mayor - have previously agreed that any 'economic' benefit that the Firefighters or the Command Officers may negotiate, regardless of what they give up in order to get it, must be given to the members of the TPPA. These are the legally-binding terms the city must meet as they approved the contract and the language.

One of the things negotiated in the fire department merger was protection of seniority for the Ottawa Hills employees. When they become Toledo employees, they will earn wages and vacation time based upon their number of years with Ottawa Hills.

And that's a problem for the TPPA because they have members who previously worked in other jurisdictions who did NOT get similar credit when they became Toledo police officers. They are making the logical case that this is an economic benefit afforded to another union and they are, per their contract, guaranteed the same.

"The TPPA demands that each affected member be properly reimbursed for their back wages and annual vacation accrual. The TPPA further demands the affected members continue to receive the appropriate rate of pay and annual vacation accrual according to the steps they should have began with had they been properly credited with their prior service."

To make matters worse, I understand that TPPA, as well as the Toledo Police Command Officers (TPCOA), Firefighters Local 92 and the Battalion Chiefs union all told the city ahead of time that they would pursue such a grievance if the city went forward with their plan for granting seniority to the Ottawa Hills employees.

If the TPPA wins the grievance, it will cost the city millions to pay back wages and vacations for 200-300 police officers (estimated number affected) and the other related employees, since they were first hired into the city. It will also dramatically increase the 2011 budget and, accordingly, our projected deficit. Remember - last year they deferred overtime payments into 2011 to help 'balance' the 2010 budget and pay out the time at a higher rate of pay. Those payments will be even more if TPPA wins.

When they calculated how much the merger could cost us, did the city include the cost estimates of how much more it would be if they lost the grievances they were told would be filed? I certainly don't remember hearing about them.

Now, you could say (and I'm sure the city will argue) that a merger is a much different circumstance - and they should be correct. But this is a union contract and arbitrators and judges who decide such things are not bound by common sense - or even taxpayer interest. They are bound to examine the terms of the contract before them and TPPA can make a strong argument under their me-too clause.

But you just never know when it comes to deciding a grievance, which is why such terms should not be in contracts in the first place.

Unions should not expect to get something they didn't bargain for simply because someone else did. Unions should negotiate their own terms and be willing to abide by them. If they like the terms in another union's contract, they can seek to include them when their contracts expire.

But it is the elected officials who make the final decision and they should 'just say no' to any contract that includes such unfair terms - and they should be replaced if they don't have the will to do so.

In the meantime, Toledo administrators will spend time to fight the grievance and hope for a favorable outcome. Should they lose, they will be forced to either grant the seniority, vacation and back pay to hundreds of employees, or renege on the terms of the merger.

Either way, I believe the real losers are the Toledo taxpayers.

Pension cuts or layoffs?

Quite some time ago, I interviewed Dan Wagoner, president of the Toledo Police Patrolman's Association (TPPA) on Eye On Toledo. We were discussing budgetary issues and I asked him a question that has perplexed me for ages:

If given the choice between keeping every union member employed, but at a reduced wage/benefit package or maintaining current wage/benefit package and having some of your members laid off, what would the union do?

His answer: "Unfortunately," the union membership historically has chosen maintaining current compensation levels and accepting layoffs.

I've never been in a union, primarily because I never worked anywhere that there was one to represent the workers. And I've never felt the need for a union to represent me, figuring I could do as good a job as them in that regard. But my understanding of the reason for a union was to work collectively to benefit everyone - not benefit some at the expense of others.

I bring this up because today's paper has a story about Mayor Carty Finkbeiner asking the unions to assume - for one year only - some of the pension costs that the city has, over the years, agreed to pay.

Pension pickups can be a confusing subject. In Ohio, public employees do not participate in Social Security, but in the state's Public Employees Retirement System (PERS). Unlike Social Security, the contributions you and your employer make are in a fund under your name, so you get back everything you've contributed, plus interest earnings, when you retire.

Like Social Security, you contribute an amount and your employer contributes an amount - and they are equal amounts. However, when negotiating contracts with public sector unions, many employers have offered to 'pick up' a percentage of the employee's portion instead of doing a wage increase. This can save money in the short term, but has serious long-term consequences.

In Toledo, some union contracts call for the city to assume ALL the pension costs, with the employees paying none of it themselves. Again - this is negotiated so the union must have given up something in order to get that benefit.

Except...

The city's unions often have a me-too clause, so if one union negotiates a benefit, the other unions automatically get to say 'me too' and receive that benefit as well. However, the other unions don't give up anything when they get that benefit ... they just get that benefit. It's a 'me too' on the get portion, but not the give portion, of the contract.

So it is that the city finds itself paying for both the employee portion and the employer portion of the pensions for almost all its workers.

And now, in the face of huge deficits, the mayor wants to have the employees pay only 3% of their portion, for only one year. And the unions are asking questions - like what do we get if we do this.

Proper question for negotiations - do they ensure no layoffs if they agree to this provision? Do they get some other concession they've been seeking in exchange for what is, essentially, a reduction in take-home pay? The article doesn't say.

Additionally, Carty has spent money irresponsibly for non-essentials, so he's not in the best of positions when asking for concessions. Union members will rightly point to flowers and bike paths, lights for trees, and even Carty's bathroom and shower as examples of expenditures that shouldn't have been made and would have resulted in less of a financial crunch than what the city is experiencing. They'll look at the number of employees in the mayor's office and wonder why they must assume the brunt of the impact of the deficit. And they'd be right.

But city unions need to be very careful in their approach to this. The non-public workers have Social Security and most of us are pretty sure it will be bankrupt long before we'll ever collect the measly amount the government deigns to grant us. Others who have defined pension plans with their employers are seeing less and less contributions to those accounts by their employers. And the rest of us aren't counting on anyone but ourselves to fund our retirement and have been saving on our own, paying into IRAs or 401(k) plans without help from anyone else.

So to find that our tax dollars are paying the total cost of public employee pensions will not sit very well with the struggling families of the area who don't have such a benefit.

For the record, I'm in favor of the city reducing its pension pickup back to the mandatory contribution level for the employer. But I'm realistic enough to know that unions will want something in return, since some of them gave up things in order to get that pickup in the first place. Considering the economic condition of Toledo and Lucas County, I think offering them continued employment is a pretty good trade-off ... and there are plenty of unemployed/laid off people who'd gladly accept their positions with such reduced compensation.

But then I go back to the answer TPPA President Wagoner gave me, and I look at the refusal of the UAW to agree to renegotiate their contract in 2009 rather than 2011 in order to get the Detroit 3 bailout, ... and I'm not hopeful.

The "me-too" clause

When it comes to union negotiations, government unions have it made. Most contracts with public unions contain what's known as a 'me-too' clause. Meaning that anytime a union within the government's jurisdiction gets a benefit, the other unions get it too.

In some instances, this is politically expedient...if you're able to negotiate a 2% pay increase with one union, you've got better standing for sticking with a 2% pay increase for other unions.

But in other instances, such provisions are extremely costly and negate the value of the concept of 'negotiation.'

For example: If a union decides that it wants a revision to its vacation schedule, they may be willing to give up something in exchange...it's all a matter of what particular item is most important to its members. In the 'negotiation' process, the union requests the vacation revision and the administration says, we'll trade that for a consolidation of job descriptions. After discussion, an agreement is reached...not as much vacation as was originally requested and not as many reductions in job descriptions. Both sign off on the agreement.

However, other unions see only the additional benefit - never the compromise which allowed for the extra benefits. The 'me-too' thinking comes into play when other unions start saying that they now get to have the additional vacation time. And rarely does the administration say...okay - but you also have to give up what the first union gave up. No - they just give in and everyone gets the additional benefit. And the cost is even greater than just for the unions because employees not in or not eligible for union membership often get the additional benefits as well. After all, you can't let your administrative and exempt staff have less of a benefit than those they're responsible for...

What we need in government is more leaders who are willing to take a stand on this issue and require unions and their staffs to look at the whole picture and not just the 'gains' that come from negotiations. We need more unions (there are some) who realize that all negotiated 'takes' are accompanied by negotiated 'gives' and elected officials who are willing to insist upon true negotiation any time that a union wants the same benefits another union has achieved.

COMING UP: Last week, after reading an article on Glass City Jungle, I started working on a post about PERS pickups...I'm still waiting for the information from the City, but it looks like the issue will be discussed at the next Toledo City Council meeting according to this Toledo Blade article about the Council's agenda review meeting. I was promised the information by noon Thursday, so look for the post (or an update) after then.