CTA Dissents Arbitrator Ruling

July 10, 2006

Chicago Transit Authority officials today said they were very dissatisfied with an arbitrator's ruling on wage and working agreements for the CTA's two largest unions because it failed to consider and address critical financial issues facing the agency. The CTA has filed a dissenting opinion.

Due to long term funding problems and a new directive from the General Assembly to increase funding to the Retirement Plan, the CTA had argued for greater efficiency and flexibility in a number of areas, urged restraint in wages and sought greater employee contributions for benefits. The Interest Arbitration Award, which was issued by Arbitrator George R. Fleischli, did not make any changes to pension contributions, did not institute many of the proposed new efficiencies and did not exercise restraint in wage increases. It affects more than 8,600 CTA employees who work as bus operators, bus repairmen, bus servicers, and warehouse, treasury and office administrative staff. The award, which is binding, covers the period of January 1, 2004 through December 31, 2006.

"We are very disappointed with this outcome. The arbitrator punted," said CTA President Frank Kruesi. ?Arbitrators are supposed to decide issues, not avoid them. We were optimistic that an impartial third party could help us tackle some of the core problems on which we and the unions have failed to agree. Unfortunately, the result was harmful, not helpful. The arbitrator failed to act on any of the key issues, awarded a generous series of wage increases and dismantled rostering, which was an efficiency provision from the previous agreement."

Rostering allowed the CTA to schedule employees and pay overtime based on a 40-hour week instead of an 8-hour day.

"The most disturbing aspects of the award is that it does nothing to begin to resolve the problems that confront the CTA, its employees, and its retirees; does not state why it refuses to act; and, indeed, does not even mention the existence of the core problems," said Chicago Transit Board Chairman Carole Brown. ?Basically, it does nothing to help the CTA or the Retirement Plan meet looming financial challenges even though these are issues that directly impact all CTA employees. In fact, this award makes those challenges worse."

?The Authority proposed that both the CTA and its employees increase contributions for both pension and healthcare to be consistent with the benefit and contribution levels for other public employees, including State of Illinois employees and public teachers," she added. ?It is simply not sustainable for the CTA pension plan to continue to provide free health care coverage to its retirees."

The award includes retroactive wage increases of 3 percent, 3.25 percent, and 3.5 percent r-spectively for each year of the three year term of the agreement.

The ruling did not change pension contribution amounts or contributions for any other benefits, nor did it incorporate many of the operating efficiencies proposed by the CTA.

In bargaining and interest arbitration, the CTA made addressing pension and health care issues a top priority, continued to press for greater efficiency and flexibility in operations, and urged restraint in wages. It proposed that both the CTA and its employees increase contributions for both pension and healthcare, and the CTA also proposed changes in the benefit structure. These proposals were fair and reasonable and also consistent with the benefit and contribution levels for other public employees including State of Illinois employees and public teachers. In interest arbitration, the CTA presented hundreds of exhibits and thousands of pages of testimony by management and outside experts in support of its proposals, including its proposals for operational efficiencies, active and retiree health care and retirement funding.

By contrast, the unions sought wage increases far in excess of current national averages, attempted to expand archaic work practices, and steadfastly resisted greater sharing of the growing cost of benefits. As for the financial crisis, at the outset of these proceedings, the unions essentially took the position that the General Assembly would ultimately assume responsibility for the CTA's financial crisis, and therefore, the award did not need to consider facts related to CTA finances and the precarious state of the Retirement Plan. Well before the award issued, however, state officials made it clear that it was the CTA's responsibility to meet the new statutory requirements without any additional funding or other assistance from the State of Illinois.

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