Updated Jan. 3, 2017

Razzle Dazzle

Still Sparring With PBA, Linn Looks Beyond Ring

‘CHANGING AN ARGUMENT TO A CONVERSATION’: Labor Commissioner Bob Linn, notwithstanding his charged dealings with the Patrolmen’s Benevolent Association, said he believes greater collaboration between the city and its unions is essential to dealing with problems on the horizon. ‘I believe management has every bit as legitimate a reason to raise issues as labor, like health-care costs,’ he said. ‘I have a broad view of what can be discussed at the table.’

Carole Kellerman: 'A mixed report card'“He’s ever the optimist, Bob,” Carol Kellermann said with a chuckle when informed that Bob Linn, the city’s Labor Commissioner, had indicated she’d had a change of heart after scoffing at his claim nearly three years ago that municipal unions were fully committed to helping the de Blasio administration cut health-benefit costs by $3.4 billion by June 30, 2018.

Ms. Kellermann is the president of the Citizens Budget Commission, a business-funded watchdog group that has been known to find fault in even the leanest of contract settlements if productivity improvements weren’t offsetting at least some of the cost of the raises.

When Mr. Linn sat down with top officials of the Municipal Labor Committee at the headquarters of the Uniformed Sanitationmen’s Association in March 2014, less than three months after Mayor de Blasio began his term, he presented the $3.4-billion savings target and made clear that he didn’t care whether it came without the kind of pain and suffering for city workers that gladdens the heart of a tabloid editorial writer. It’s a position he has maintained amid criticism from some fiscal hawks that the city is closing in on the target primarily through the use of “soft” savings that focus on administrative economies and increases in health-care costs being smaller than what the state had projected.

In Praise of Cooperation

During a Dec. 21 interview in his office, six days before Ms. Kellermann offered some objections to how he had characterized her changed outlook on the program, Mr. Linn made the case that being ahead of schedule on an agreement reached less than two months after that MLC meeting had opened doors to other labor-management collaborations that would not only save money but improve agency operations and ultimately benefit the public, as well as the city’s workforce.

The health-benefits deal, he contended, was “an example of labor and management working together to solve important issues. And changing an argument into a conversation.”

It was that approach, he said, that allowed the de Blasio administration to hack its way through the underbrush of overdue contracts it inherited from Mayor Michael Bloomberg, who refused to negotiate any deals during his final four years in office that didn’t require the unions to self-fund raises through givebacks.

There are currently just 3,000 employees working under deals left over from the last administration, most of them trades workers who under Section 220 of the state Civil Service Law are entitled to negotiations outside the municipal bargaining pattern that are pegged to the prevailing rate paid in their titles in private industry. There are smaller groups of Emergency Medical Service Chiefs, Fire Alarm Dispatchers, ferry workers and some Sanitation Enforcement employees.

There is one caveat, however: the Patrolmen’s Benevolent Association reached a deal through arbitration with the current administration 14 months ago, but because of the two-year limit on such awards under the rules of the state Public Employment Relations Board, it ran only through July 31, 2012, meaning it is now 4½ years out of date. The two sides are currently meeting with a mediator tapped by PERB to try to produce enough progress to reach a long-term settlement; if that process fails, the next step would be a return to arbitration, which more than likely would yield a new deal that would run only until mid-summer of 2014.

Clearly, the balky contract talks between the city and the PBA run counter to Mr. Linn’s ideal of labor and management solving problems of mutual concern. The jarring tone of those talks—including an angry union demonstration outside the Upper East Side home of arbitrator Howard Edelman shortly before his November 2015 award, followed by a vituperative newspaper ad campaign questioning his integrity—is sharply at odds with the smooth resolution of the other city contracts that Mr. Linn has achieved.

An Intriguing Offer

Neither side has been willing to comment publicly on a document this newspaper received recently from a union member purporting to be the city’s most-recent offer in mediation. It would keep to the established bargaining pattern but provide a $2,500 stipend for officers on patrol duty, $750 a year for those with bachelor’s degrees, and a 1-percent salary boost above the pattern for 1,000 cops who agree to wear body cameras. The cost of those benefits, according to the document, would be offset by a change in the salary schedule for future hires, who would take a year longer than the current 5½ to reach maximum pay, and the forsaking of the $522 annual annuity payment for those “unborn” cops.

PBA President Pat Lynch has continued to maintain that his members deserve a “market rate of pay,” which Mr. Edelman noted in his arbitration award would have provided a 17-percent raise over the same two-year period in which other uniformed unions had accepted two 1-percent hikes. His decision to conform to the pattern was what triggered the union’s fury.

Mr. Linn has declined to comment on whether the document we received purporting to be the city’s offer is an accurate representation of its latest position in the mediation, which is expected to resume at some point in January. But there’s no reason to expect that this “offer” would break the pattern established with other unions, including all four that represent higher-ranking officers in the NYPD, given the outcry a deviation that worked to the PBA’s advantage would generate among those groups.

A Productivity Payment

The possible exception would be the body-camera bonus, since that could be regarded as a kind of productivity gain, consistent with past payments like the differential to Firefighters in return for taking on medical-response duties.

Mr. Linn would undoubtedly be thrilled to get a long-term PBA deal done to clear the deck for new bargaining with the unions—including many uniformed ones and District Council 37—whose contracts will expire at some point in 2017. Not incidentally, Mayor de Blasio would benefit from a resolution that could avoid PBA demonstrations aimed at hurting his chances for re-election.

From the union’s point of view, a certain amount of restlessness in the ranks is inevitable given how far behind its members are compared to other city workers. Mr. Lynch’s rhetoric about how poorly they are paid in comparison to cops whose jobs are often less demanding in Long Island departments as well as in the Metropolitan Transportation Authority and the Port Authority offers them a powerful rallying cry.

The question is, how much their will to hold out and take their chances on a break­through in arbitration might be eroded by a mushrooming amount of back pay that awaits them. Even with the back-loaded nature of the city’s offer, under which 5.5 percent of the proposed 9-percent wage hike would not come due until the final two years of the five-year deal— beginning Aug. 1, 2015 and Aug. 1, 2016—a scrap-paper calculation indicates those at maximum salary would be entitled to nearly $15,000 in retroactive money if a deal was reached shortly, with that total growing with time. With salaries for those at top pay also suddenly becoming more than $7,000 higher under those terms, it starts to look like an offer they would at least have to think about.

Seeking On-Time Deals

In contrast with the PBA’s long, strange sojourn in the bargaining wilderness, Mr. Linn expressed a longing for restoration of a long-discarded tradition, saying, “I would like to change the nature of the city’s contracts and reach agreements before they end.”

The days in which the concept of “no contract, no work” brought urgency to the bargaining table began to fade with the 11-day transit strike in 1980. That proved to be a disaster for Transport Workers Union Local 100 because of the Taylor Law penalties that were imposed on the union and its members, who got docked 22 days’ pay under the 2-for-1 provision of that law governing illegal walkouts.

Gradually, municipal-union pay talks, with occasional exceptions, moved further away from the concept that the expiration of a contract was a serious event: the May 1988 PBA deal negotiated by then-President Phil Caruso that changed the nature of uniformed-union bargaining was reached 10 months after the old contract expired. Since then, gaps for that union between expiration date and replacement contract have widened. While the current situation is extraordinary and in large part a consequence of Mr. Bloom­berg’s untenable bargaining position, previous protracted struggles between the former Mayor and the union produced a situation in 2008 in which, even after the two sides reached the union’s last negotiated settlement just three months after a bitter arbitration battle, that four-year deal took effect with two years of it already past.

Complicating Factors

But there are a variety of factors that could complicate speedy negotiations, not least among them the reluctance some uniformed-union leaders may have to negotiate new deals if the PBA contract has not been resolved. The others include the ongoing TWU Local 100 negotiations to replace a contract that will expire Jan. 15, the impact of a Federal Government that will be completely controlled by Republicans once Donald Trump is sworn in as President, and the effect that his expected nomination of a conservative judge to fill the Supreme Court vacancy created by Justice Antonin Scalia’s death last February could have on key cases affecting public-employee unions.

Asked about one of them, brought by some California Teachers challenging that state’s requirement that they pay a form of dues even if they choose not to join their union—which following Mr. Scalia’s death wound up in a 4-4 tie but is likely to be resubmitted once a replacement is confirmed—Mr. Linn said, “Certainly I think every­body views that as something that’s likely to be on the horizon. We have had conversations with the MLC about the potential impact.”

If the Supreme Court ruled in favor of the plaintiffs, it would surely lead quickly to a lawsuit—likely financed by the same wealthy right-wing interests bankrolling that one—challenging New York’s Agency Shop Law. The concern among municipal unions is that if that law were overturned, those objecting to joining a union on some grounds might be joined by other employees taking advantage of the chance to be exempted from paying dues even while their unions would still be required to negotiate on their behalf.

A significant loss of dues income—which those right-wing interests hope would diminish the strength of unions at the bargaining table and in both the governmental and political arenas—would threaten the continued viability of public-employee unions.

City Filed Court Brief

Mr. Linn noted that the de Blasio administration has filed a brief supporting the State of California in its battle to preserve its “fair-share” pro­vision.

“I believe in the process,” Mr. Linn said of the current collective-bargaining structure. “I am not in favor of any approach that weakens that process or that eliminates that process. I’m talking about dues checkoff and the ability of unions to represent the workers. I believe that makes sense.”

Even during his six years as Mayor Ed Koch’s chief negotiator in the 1980s, when many labor leaders believed he drove unnecessarily tough bargains, Mr. Linn points out that he created the city’s Deferred Compensation Program, which is widely regarded now as a low-cost, well-run outlet for workers seeking to supplement their retirement income beyond their pensions. He credits the program’s longtime Director, Georgette Gestely, for its growth and the awards it regularly wins for its service delivery, which now includes 130,000 Medi­care Part B checks being sent to retirees via direct deposit.

The Office of Labor Relations holds quarterly human-resources meetings in which 150 or so staffers from other city agencies gather to discuss labor-relations issues over coffee and Danish.

And as part of the health-benefit savings program, he noted, some of the gains have come from a wellness program within OLR that has enlisted Weight Watchers to aid in getting city workers to eat healthier as a way of preventing diabetes and, not incidentally, reducing the city’s medical costs.

Pays to Give Flu Shots

“We reinstituted flu vaccinations at work sites,” he said. “It was cut [during a prior administration] as a budget savings, but it turns out it costs you more when the employees are out sick than it does for the program.”

In looking at why the city’s medical costs had continued to grow at an alarming rate, Mr. Linn said, it was found that “we had low utilization of primary care, high utilization of specialists.”

In collaboration with the unions, he continued, the city put together incentives to reverse those trends. “We increased the cost for an employee who uses an emergency room and then isn’t admitted,” Mr. Linn said, and increased co-pays for seeing specialists. But at the same time, he said, co-pays were reduced for visits to primary-care physicians.

Ms. Kellermann argued that while such changes were laudable, “three-quarters of the savings is the result of administrative savings.” She cited a recent report by State Comptroller Tom DiNapoli stating that “cost-containment initiatives are expected to save $544 million (mostly from higher co-pays), or 16 percent of the total” of $3.4 billion the city is aiming to save by 2018.

‘Give Them Skin in Game’

So for the most part, Ms. Kellermann said, “it’s not that anybody took affirmative action” by, for example, requiring city employees to pay a share of their premiums. She said such payments would give them “skin in the game” to take steps including healthier living and more-selective use of medical care.

She noted that Mr. DiNapoli’s report stated that the city was crediting about $75 million a year of the needed savings to an accounting change that occurred when the state recently pegged the increase in health-insurance premiums at 7.8 percent for the coming fiscal year, compared to the original projection of 9 percent.

“That’s not really an initiative” produced by the unions, she said. “Bob’s putting in these wellness initiatives which generate savings in the long run. It certainly is a plus that the MLC and the city are looking at these things. They’re trying to achieve a culture change, but it isn’t manifesting billions of dollars in savings, which is what we need.”

Mr. Linn, who said that the city had already met its health-care savings target for fiscal 2017 and was just $115 million short of the target for the following fiscal year and to complete the first phase of the program, countered that from the outset, the administration had said that the deal would be based on “savings as opposed to what was in the financial plan that was originally put together by the Bloomberg administration and that we updated.”

‘Nothing Squishy Here’

That had included instances in which premium hikes fell below projections, he said, pointing out that the deal reached with the unions included a provision under which the city could have asked for additional savings if those costs had exceeded what was anticipated.

“There was nothing squishy about the settlement,” Mr. Linn continued, noting that it required that if mutual agreement couldn’t be reached on how the savings target should be met, an arbitrator would be called in to rule on the steps to be taken.

The two sides, he said, have a shared interest in getting government to work more efficiently, since positive changes could both improve morale and then double up that impact by leaving more money available for wage and benefit improvements.

He offered as an example collaborating with DC 37 on a single hiring hall for School Crossing Guards, ending a shortage in the job by producing 1,300 new applicants.

He cited the deals providing significantly-improved disability coverage for more-recently-hired Firefighters, Sanitation Workers and Correction Officers.

(Noticeably absent from that list is Police Officers, with talks for them breaking down this past spring because Mr. Lynch believed the city was treating his members hired after 2009 unfairly compared to those other groups in the additional percentage of salary it was asking them to contribute in return for the disability benefit equaling 75 percent of final average salary, tax-free.)

Reduced Contracting-Out

There was also the agreement reached with DC 37 to reduce the city’s contracting-out of technical work and instead relying more on in-house staff.

And Mr. Linn pointed with particular pride to a deal reached last April with the unions representing school custodial workers that gave the Department of Education greater control over their services under a city-managed non-profit while paying $10,000 bonuses to some employees and imposing a 12-year ban on outsourcing.

“We took a system that people had wanted to change for decades and made significant changes,” he said. “We moved from this system where you had 1,000 entrepreneurs [the Custodian Engineers who set their own budg­ets, hired staff and bought their own supplies] to a system where one is able to build in a lot of efficiency.” The bonuses to the Custodian Engineers and the ban on outsourcing—which until then had been done for 10 percent of the custodial work—were inducements for them to give up the control they had exercised, which some critics said led to nepotism in hiring, which is now handled by the non-profit known as NYC School Support Services.

There have been occasional stumbling blocks beyond the PBA impasse, though. A parental-leave benefit the city gave to managerial workers while having its cost covered by making small reductions in a couple of other areas has not been embraced by city unions, which unlike the managers had the power to prevent it from being imposed.

Not Giving Up Yet

Mr. Linn, implying that the givebacks were a not-unreasonable price to pay for the benefit gained, said, “I believe that was an approach that made sense and I hope to explore that further with union leadership.”

Ms. Kellermann gave him more credit for his contract deals than CBC presidents generally dole out. “They’ve done well,” she said of city officials, before adding the obvious “but.” “With the exception of the [PBA], they’ve resolved contracts for a lot of unions covering a long period of time. They gave the financial plan stability and predictability.”

That didn’t mean there wasn’t a looming concern, she said. That had to do with the key element of the bargaining strategy put together by Mr. Linn in tandem with city Budget Director Dean Fuleihan. He made the two 4-percent raises that more than two-thirds of the city workforce had negotiated with Mr. Bloomberg midway through his second term but which the then-Mayor subsequently withheld from the UFT, the centerpiece of a nine-year contract with that union that over its following seven years provided raises of just 10 percent, below the anticipated rise in the cost of living for that period.

Back Pay on Back End

The delay of 4½ years between the expiration of the previous Teacher contract and the new one meant a huge back-pay obligation had accumulated, one that makes the retro money for the PBA look small by comparison. To avoid having a mammoth payout that would have been unaffordable for the city budget that began in mid-2014—two months after that deal was reached—Mr. Linn persuaded UFT President Mike Mulgrew to break with the long tradition of having the retro money included in the second employee paycheck after a deal was ratified. Instead they agreed to have 75 percent of the payout be implemented in three annual installments starting in October 2018, or just as the union contract was about to expire.

The deferral of so much of the retro money allowed the city to begin setting aside what it was going to need when those larger payments—which for more-senior Teachers would amount to more than $40,000 paid over those three installments—began coming due.

Nonetheless, Ms. Kellermann claimed, “we don’t have the money” to cover that obligation without placing stress on the budget.

Was it possible, she was asked, that the cash had been tucked away in the reserve areas of the budget that often seem to produce the means to pay where it hadn’t previously been visible?

“We’re about to find out,” she said.

‘Being Funded Right Now’

Mr. Linn brushed off that concern. “Part of the back-pay obligation is being funded right now,” he said. In looking to maintain the long pre-Bloomberg practice of including retroactivity for raises that were agreed to after contracts had expired but without getting hammered by an immediate $4-billion back-pay tab, he said, “The city found a solution that worked for both the workers and the city’s finances.”

He wouldn’t be the one to say it, but maintaining the tradition of including retro­activity wasn’t simply about giving equal treatment to what is arguably the city’s most-powerful union. Denying the UFT the 4-percent raises other labor groups had gotten from Mr. Bloom­berg or declaring, as he had, that the city lacked the means to offer back pay would have been difficult arguments to win in arbitration. Just as Mr. Edelman’s emphasis on the importance of maintaining bargaining patterns worked to the disadvantage of the PBA, another arbitrator would have been equally likely to cite that principle to the benefit of the UFT.

Leverage for PBA

Had there been some deviation, however, that would have posed a potentially greater dilemma for Mr. Linn in his jousting with the PBA by giving the union the leverage to state that such a break in the established pattern opened the door wide for an arbitrator to give greater weight to city Police Officer salaries falling so far below what is paid by neighboring jurisdictions.

That’s one headache Mr. Linn won’t have to endure in what figures to be an eventful year ahead for him and his boss.