Pennsylvania Commission Signs Off on Actuarial Analysis of “Rescue Effort” Pension Reform Plan, Skepticism Abounds

After an hour-long executive session and an hour long public meeting, the Public Employee Retirement Commission (PERC) unanimously approved an actuarial note to the hybrid pension plan offered by Rep. Mike Tobash (R-Schuylkill).

Rep. Tobash called the plan a “rescue effort” in terms of pension reform and a first step in broader changes designed to attack an estimated $40 billion-plus unfunded liability.

As explained by PERC’s executive director, James McAneny, three amendments to House Bill 1353 – A06917, A07089, and A07096 – would have the combined effect of creating a new hybrid benefit tier, commonly referred to as a “stacked hybrid” plan, for both the State Employee Retirement System (SERS) and the Public School Employee Retirement System (PSERS).

According to McAneny, the plan would maintain the current defined benefit plan for the first $50,000 of income with an employee contribution rate of six percent. The defined contribution component consists of a one percent employee contribution on the first $50,000 of income and then the full seven percent contribution rate would apply to any salary above $50,000.

The defined benefit would be capped at an annual retirement benefit of $25,000 per year and the vesting would revert to pre-Act 120 timeframes.

In sum, he noted, the plan is “basically a safety net provided for rank-and-file government employees.” He also stated that the average state employee makes less than $50,000 and receives a benefit of less than $25,000.

The hybrid plan would apply to all new state and public school employees except sworn officers of the Pennsylvania State Police.

Depending on the assumptions and the actuarial analysis used, savings from the plan could be between $9 billion and $14 billion over 30 years.

Despite the savings, the sponsor of the amendments said this is not a “silver bullet” to address the unfunded pension liability, but is rather a “first step.”

“Is there a silver bullet? Is there a magic wand? No. But there is a first step, and we need to take it,” Rep. Tobash stated. “With this legislation we can draw a line in the sand, we can reduce costs, we can save money and we have to get to work on rescuing the benefits that people have earned.”

Rick Dreyfuss of the Commonwealth Foundation, however, is not so sure the plan offered by Rep. Tobash will even decrease the unfunded liability since the actuarial analyses used in projecting savings from the plan are based on an aggressive 7.5 percent assumed return on investment, something he believes cannot be maintained over time.

He noted Rhode Island used that rate of return in recent pension reform measures and was predicted by that state’s version of PERC to only have a 40 percent chance of meeting that rate of return.

“I don’t believe we invest money any better or any worse than Rhode Island does down here in Pennsylvania,” he said.

“There is considerable risk and uncertainty in achieving the 7.5 percent and the downside to that is any shortfall goes directly into the unfunded liability and now you have a bigger debt to pay off,” he told The PLS Reporter.

Rep. Glen Grell (R-Cumberland) also speculated that the 7.5 percent assumed rate of return might be unrealistic going forward.

However, sources within PERC confirmed that when looking at a long-term historical window, the actual rate of return has exceeded the assumed rate of return.

Dreyfuss argued a better solution would immediately lower the unfunded liability by providing more funding to pay off the existing debt.

He conceded the approach being taken in the Tobash amendments might be the most politically feasible, but argued that does not make good policy.

“Just because they can get 102 votes in the House, 26 in the Senate, and have the governor sign it doesn’t make it a good bill.”

Rep. Grell, however, was not convinced the funding exists for such a plan.

“We have all sorts of competing concerns,” he noted of the budget in explaining why it would be difficult to put extra money toward the unfunded liability.

Despite this, he noted that while PERC believes with its action today that the hybrid plan will yield small, but measurable savings, the problem is much larger than what the hybrid plan accomplishes.

“We don’t have a small problem, we have a big problem,” he noted of the unfunded liability.

House Democrats were similarly skeptical of the legislation.

A memo from the House Democratic Appropriations Committee Chairman Joe Markosek (D-Allegheny) argued the plan does not pay off the unfunded liability any faster than under Act 120 and makes a large chunk of its savings in PSERS by cutting a $100 per month supplement to help public school employees pay for health care insurance.

“The Tobash amendment is hundreds of pages long. As with any bill that size, the devil is always in the detail. Pension changes this dramatic should be fully vetted through public hearings. Most importantly, any changes to the pension systems need to be carefully considered in light of recent warnings from credit rating agencies,” the memo goes on to state.

Steve Nickol of the Pennsylvania State Education Association also expressed concerns at the meeting that eliminating the health care supplement would reduce employment incentives.

Raising a number of other issues at the meeting, including applying the new plan to employees following a break in service—something he called “draconian” for female employees—Nickol went on to say the plan requires “enormous risk” to be borne by employees for a relatively small employer savings.

House Bill 1353 currently sits on the tabled calendar in the House and would need to be moved to the active calendar before it—and the aforementioned amendments—could be considered.

Calls to the Pennsylvania Budget and Policy Center seeking reaction were not returned.

Source: PLS Reporter

Pennsylvania Convention Center Moves to Improve Reputation

A new customer satisfaction agreement has been signed by four unions working at the Pennsylvania Convention Center Authority. Despite controversy over two unions that did not sign the agreement, the move is the latest positive step taken by the venue and its recently named management company, SMG, to improve the center's reputation and correct negative perceptions of its labor force.

In May, venue leadership presented six labor unions with the agreement, which outlined more client-friendly work rules. Two union chapters -- Carpenters Local 8 and Teamsters 107 -- refused to sign by the May 5 deadline. The center then divvied up those unions' responsibilities among the four chapters that did sign. The carpenters and Teamsters have since filed charges with the National Labor Relations Board, claiming they believed they had until the end of their contracts -- May 10 -- to sign, and that the PCCA had negotiated in bad faith.

In an open letter on May 15 to Pennsylvania Gov. Tom Corbett, Philadelphia mayor Michael Nutter and 10 other local officials, the leaders of the four labor unions still working at the center stated, "We...share our support for the new work rules and customer rights as contained in the recently ratified Customer Satisfaction Agreement," affirming that the May 5 deadline had been "clearly delineated" by the venue's management.

The four unions that signed the agreement were Local 8 of the International Alliance of Theatrical Stage Employees, Local 332 of the Laborers International Union of North America, Local 98 of the International Brotherhood of Electrical Workers and Local 405 of the International Association of Iron Workers. They called out Carpenters Local 8 in the letter: "We believe [the new agreement] is the only way to shift the negative perception that customers have about doing business at the Center -- a perception we believe is largely the result of the actions and behavior of one union."

The letter arrived one day after the general vice president of the regional Iron Workers District, Stephen Sweeney, expressed solidarity with the ousted unions and insisted the iron workers would not do any of the carpentry union's work. However, the city's Iron Workers Local 405 leader, Samuel Malone, was one of the four signatories of the letter and has since been reelected to his leadership position.

Despite the squabbling, the BIO World Congress on Industrial Biotechnology, held May 12-15, ran smoothly. A conference spokesperson said work was efficient, the experience was positive and the organization looks forward to returning for the BIO International Convention in June 2015. 

Source: Meetings & Conventions

GLASS Report: Legislative Action Alert: Senate Bill 1384: Regular Session 2013-2014

Text [History] [Votes]

Short Title: An Act providing for the highway capital budget project itemization for the fiscal year 2014-2015 to be financed from current revenue or by the incurring of debt.

Prime Sponsor: Senator GORDNER

Last Action: Referred to TRANSPORTATION, May 30, 2014 [Senate]

Printer's No.
2063*

GLASS Report: Legislative Action Alert: Senate Bill 1383 - Regular Session 2013-2014

Text [History] [Votes]

Short Title:  A Supplement to the act of December 8, 1982 (P.L.848, No.235), known as the Highway-Railroad and Highway Bridge Capital Budget Act for 1982-1983, itemizing additional State and local bridge projects.

Prime Sponsor: Senator WHITE

Last Action: Referred to TRANSPORTATION, May 30, 2014 [Senate]

Printer's No.
2062*

Summary of NLRB Decisions for Week of May 19 - 23, 2014

Summarized Board Decisions

Latino Express, Inc.  (13-CA-077678, et al.; 360 NLRB No. 112)  Chicago, IL, May 21, 2014.
The Board found that the Respondent Employer violated the Act by failing to bargain in good faith for a first contract with the Union, unilaterally changing work place rules, and withdrawing recognition from the Union.  The Board also affirmed the judge’s denial of the motion of employee petitioners in a decertification case to intervene in this case, his denial of the petition of those employees' attorney to revoke the General Counsel’s subpoena of the attorney to testify, and the modified sequestration procedure the judge used with respect to this attorney.  Charges filed by Teamsters Local Union No. 777, affiliated with the International Brotherhood of Teamsters, AFL-CIO.  Administrative Law Judge David I. Goldman issued his decision on October 30, 2013.  Chairman Pearce, and Members Johnson and Schiffer participated.

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FJC Security Services Inc.  (10-RC-115744; 360 NLRB No. 115)  Nashville, TN, May 21, 2014.
The Board denied the Employer’s Request for Review of the Regional Director’s Decision and Direction of Election.  In denying review, the Board stated that it did not rely on the Regional Director’s finding that UGL-UNICCO Service Co., 357 NLRB No. 76 (2011), and Lee Lumber & Building Material Corp., 334 NLRB 399 (2001), are inapplicable because the Employer and Intervenor reached an agreement prior to the filing of the petition.  Instead, the Board concluded—for the reasons stated by the Regional Director—that there was no successor bar at the time the petition was filed because under UGL-UNICCO and Lee Lumber, a “reasonable period for bargaining” had elapsed.  The Board noted that no party argued that the Board should modify or overrule UGL-UNICCO.  Member Miscimarra concurred, but stated his belief that UGL-UNICCO is inappropriate and inconsistent with the Act.  Instead, Member Miscimarra would adhere to the standard established in MV Transportation, 337 NLRB 770 (2002), which UGL-UNICCO overruled.  Under that standard, Member Miscimarra would find that the petition in this case warrants an election, without any evaluation of whether a “reasonable period for bargaining” had elapsed.  Petitioner—United Government Security Officers of America International Union and Its Local 350.  Intervenor—International Guards Union of America, (IGUA) Local 137.  Chairman Pearce, and Members Miscimarra and Schiffer participated.

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Healthbridge Management, LLC; 107 Osborne Street Operating Co. II, LLC d/b/a Danburg HCC; 710 Long Ridge Road Operating Co. II, LLC d/b/a Long Ridge of Stamford; 240 Church Street Operating Co. II, LLC d/b/a Newington Health Care Center; 1 Burr Road Operating Co. II, LLC d/b/a Westport Health Care Center; 245 Orange Avenue Operating Co. II, LLC d/b/a West River Health Care Center; 341 Jordan Lane Operating Co. II, LLC d/b/a Wethersfield Health Care Center  (34-CA-012964 and 013064; 360 NLRB No. 118)  Fort Lee, NJ, May 22, 2014.
A Board panel unanimously affirmed the judge’s finding that, under Bethlehem Steel Co., 136 NLRB 1500 (1962), the Respondent did not violate Section 8(a)(5) and (1) by ceasing to honor employees’ dues-checkoff authorizations after the expiration of the parties’ collective-bargaining agreements.  Although the Board overruled Bethlehem Steel in WKYC-TV, 359 NLRB No. 30 (2012), the Board also decided to apply the new rule prospectively only.  The Board panel also unanimously affirmed the judge’s finding that the Respondent violated Section 8(a)(1) by removing Union flyers, bearing the message that the Respondent had been “Busted” by the NLRB, from a Union bulletin board and by prohibiting employees at Newington Health Care Center and Westport Health Care Center from wearing stickers bearing the same “Busted” message in all areas of the facility.  A Board panel majority consisting of Members Hirozawa and Schiffer adopted the judge’s finding that the Respondent also violated Section 8(a)(1) by prohibiting employees at Danbury  Health Care Center, Long Ridge of Stamford, West River Health Care Center, and Wethersfield Health Care Center from wearing the “Busted” sticker in immediate patient care areas. The majority stated that, although bans limited to immediate patient care areas ordinarily enjoy a presumption of validity, under Saint John’s Health Center, 357 NLRB No. 170 (2011), an employer must demonstrate the existence of “special circumstances” to justify a selective ban on only some nonofficial insignia.  The Board panel majority found that the Respondent did not meet that burden.  In dissenting as to the selective ban limited to patient care areas at Danbury Health Care Center, Long Ridge of Stamford, West River Health Care Center, and Wethersfield Health Care Center, Member Miscimarra would find that such a ban was entitled to a presumption of validity.  Further, Member Miscimarra would find that the ban was justified under the “special circumstances” test. Charges filed by New England Health Care Employees Union District 1199, SEIU, AFL-CIO.  Administrative Law Judge Steven Davis issued his decision on July 20, 2012. Members Miscimarra, Hirozawa, and Schiffer participated.

***

Le Fort Enterprises, Inc. d/b/a Merry Maids of Boston  (01-CA-123707; 360 NLRB 119) Dorchester, MA, May 22, 2014.
The Board granted the General Counsel’s motion for summary judgment in this refusal-to-bargain test-of-certification case on the ground that the Respondent did not raise any issues that were not, or could not have been, litigated in the underlying representation case in which the Union was certified as the bargaining representative.  The Board also found that the Respondent’s unsupported affirmative defenses that the complaint failed to state a claim on which relief could be granted; that the proceeding was barred by waiver, estoppel, and unclean hands; and that some of the allegations were untimely, are insufficient to warrant denial of the motion.  Charge filed by International Association of Bridge, Structural, Ornamental and Reinforcing Iron Workers, Local 7, AFL-CIO.  Chairman Pearce, and Members Hirozawa and Johnson participated.

***

Intertape Polymer Corp.  (11-CA-077869, et al.; 360 NLRB No. 114)  Columbia, SC, May 23, 2014.
A Board panel majority consisting of Members Hirozawa and Schiffer adopted the Administrative Law Judge’s findings that the Respondent violated Section 8(a)(1) of the Act by interrogating an employee regarding his union sentiments, confiscating union literature from employees’ breakroom, and engaging in surveillance of employees’ union activities by leafleting at the plant gate.  The majority ordered a new election based on these violations.  Member Miscimarra agreed that the Respondent unlawfully confiscated union literature, but dissented from the majority’s findings of an unlawful interrogation and unlawful surveillance.  Member Miscimarra would not have ordered a new election because he found that the Respondent’s conduct was so minimal that it could not have affected the election results.  A different panel majority, Members Miscimarra and Schiffer, reversed the judge’s finding that the Respondent made an unlawful threat of futility because the complaint did not allege a threat of futility and counsel for the General Counsel made it clear that he was not pursuing such a theory when questioned at the hearing by the judge.  Member Hirozawa, dissenting, would have adopted the judge’s finding because the violation was closely connected to other complaint allegations and was fully and fairly litigated.  Charges filed by United Steel, Paper & Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIO-CLC.  Administrative Law Judge Robert A. Ringler issued his decision on February 20, 2013.  Members Miscimarra, Hirozawa, and Schiffer participated.

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Unpublished Board Decisions in Representation and Unfair Labor Practice Cases

R Cases

Giles and Ransome Inc.  (04-RC-124785) B ensalem, PA, May 20, 2014.  Order denying Employer’s request for review of the Regional Director’s decision and direction of election on the ground that it raised no substantial issues warranting review.  Petitioner--International Union of Operating Engineers, Local 542, AFL-CIO.  Chairman Pearce, and Members Johnson and Schiffer participated.

Olean General Hospital  (03-RC-111355)  Olean, NY, May 2014.  No exceptions having been filed to the Administrative Law Judge’s recommended disposition of objections and challenged ballots in an election held October 25, 2013, the Board adopted the Judge’s findings and recommendations, and directed the Regional Director to open and count the challenged ballots of 11employees, prepare a revised tally of ballots, and issue the appropriate certification.

Klochko Equipment Rental Company, Inc.  (07-RC-104929)  Saginaw and Melvindale, MI, May 21, 2014.  The Board adopted the hearing officer’s recommendations to overrule the Employer’s objections to a self-determination election.  The Board found no evidence that the Petitioner misrepresented to the sole eligible voter that he would be covered by a separate collective-bargaining agreement than that covering the employees in a Melvindale, MI bargaining unit if he voted for representation by the Petitioner.  Accordingly, the Board certified that Petitioner Local 324, International Union of Operating Engineers, AFL-CIO may bargain for the employee/voter who works at the Employer’s Sagninaw, Michigan plant, as part of the existing collective-bargaining unit of mechanics and truck drivers working at the Employer’s Melvindale Michigan plant, which unit is currently represented by the Petitioner.  Chairman Pearce, and Members Miscimarra and Hirozawa participated.

Rehabcare Group of California, LLC d/b/a Rehabcare  (21-RC-116808)  Westminster, CA, May 23, 2014.  A Board panel majority of Chairman Pearce and Member Hirozawa denied on the merits the Employer’s request for special permission to appeal the Regional Director’s Order Withdrawing Approval of the Stipulated Election Agreement and Order Cancelling Election.  The majority found that the Regional Director did not abuse her discretion, and acted consistent with the Board’s Casehandling Manual, Part Two, Representation Proceedings.  The majority stated that the Regional Director was faced with the prospect that approximately half of the employees would be voting subject to challenge.  Member Miscimarra, dissenting, would have granted the Employer’s appeal and find that the Union remains bound by its election agreement.  Member Miscimarra found that, to the extent that a party discovers that there were fewer employees than it had anticipated in classifications that were stipulated to using the names of the classifications, this situation does not constitute an “unusual circumstance” warranting withdrawal from the stipulation.  Chairman Pearce, and Members Miscimarra and Hirozawa participated.

Boulevard Health Center  (07-RD-107966)  Rochester Hills, MI, May 23, 2014.  The Board denied the individual Petitioner’s Request for Review of the Regional Director’s administrative dismissal of the decertification petition.  The Board stated that its affirmance of the Regional Director’s dismissal does not preclude the filing of a new, otherwise timely decertification petition based on a fresh, untainted showing of interest.  Petitioner—an individual.  Union involved—SEIU Healthcare Michigan.  Chairman Pearce, and Members Johnson and Schiffer participated.

C Cases

Random Acquisitions, LLC  (07-CA-052473)  Grand Rapids, MI, May 19, 2014.  No exceptions having been filed to the Administrative Law Judge’s Supplemental Decision in this compliance case, the Board adopted the Judge’s findings and conclusions, and ordered the Respondent to pay the backpay amounts owed to the discriminatees, as set forth in the Judge’s recommended Order.  Charge filed by an individual.  Administrative Law Judge Paul Bogas issued his decision on April 8, 2014.

AAA Residential Services of Montana, Inc.  (19-CA-072863, et al.)  Missoula, MT and Tacoma, WA, May 19, 2014.  No exceptions having been filed to the Administrative Law Judge’s findings that the Respondent had engaged in certain unfair labor practices, the Board adopted the Judge’s findings and conclusions, and ordered the Respondent to take the remedial action set forth in the Judge’s recommended Order.  Charges filed by SEIU Healthcare 775NW.  Administrative Law Judge William L. Schmidt issued his decision on March 28, 2014.

National Emergency Medical Services Association  (01-CB-110915)  Quincy, MA, May 20, 2014.  The Board denied the petition to revoke a subpoena duces tecum filed by American Medical Response of Massachusetts, Inc.  The Board found that the subpoena sought information relevant to the matter under investigation and described with sufficient particularity the evidence sought, and that the Petitioner failed to establish any other legal basis for revoking the subpoena.  The Board noted that to the extent that the Petitioner provided some of the requested material, it is not required to produce that information again, provided that it describes which documents it has already provided, states whether those documents constitute all of the requested documents, and provides all of the information that was subpoenaed.  Charge filed by an individual.  Chairman Pearce, and Members Johnson and Schiffer participated.

American Medical Response of Massachusetts, Inc.  (01-CA-118967)  Natick, MA, May 20, 2014.  The Board denied the Employer’s petition to revoke a subpoena duces tecum.  The Board found that the subpoena sought information relevant to the matters under investigation and described with sufficient particularity the evidence sought.  Further, the Board held that the Employer failed to establish any other legal basis for revoking the subpoena.  Charge filed by United EMS Workers-American Federation of State, County and Municipal Employees, Local 4911.  Chairman Pearce, and Members Johnson and Schiffer participated.

Taylor Farms Pacific, Inc./Slingshot Connections, LLC/Abel Mendoza, Inc.  (32-CA-116854) Tracy, CA, May 24, 2014.  The Board denied the Employer’s petition to partially revoke a subpoena duces tecum. The Board found that the subpoena sought information relevant to the matter under investigation and described with sufficient particularity the evidence sought, and that the Employer failed to establish any other legal basis for revoking the subpoena.  Member Johnson found that, to the extent that the state law privacy interest is implicated by the Employer’s generalized privacy claim, that privacy interest would be generally cognizable in the context of objections to Board subpoenas.  However, he noted that here, the Employer made no showing that mere contact information of employees sought as potential witnesses would be protected, and state law seems to the contrary.  Member Schiffer noted that the Employer did not assert any state law privacy interest, and she found that its generalized privacy claim fails as a matter of law, and does not implicate any state law where, as here, no such claim was made.  Charge filed by Teamsters, Local 601, International Brotherhood of Teamsters.  Chairman Pearce, and Members Johnson and Schiffer participated.

H&M International Transportation, Inc.  (22-CA-089596, et al.)  Jersey City, NJ, May 23, 2014.  The Board denied, on the merits, the General Counsel’s request for special permission to appeal from an administrative law judge’s ruling that the cell phone memory card of a witness must be produced at the hearing for reliability purposes.  The Board agreed with the judge and the General Counsel that under Board law, the witness’s testimony was likely sufficient to authenticate the recording that the witness made with his phone for admissibility purposes.  However, the Board found that the General Counsel failed to establish that the judge abused her discretion in ordering production of the memory card for reliability purposes.  The Board additionally found that with respect to the legitimate privacy concerns raised by the General Counsel regarding the personal information on the witness’s cell phone memory card, production of the memory card should be subject to a protective order agreed upon by the parties, or formulated by the judge in the absence of such agreement, requiring that the memory card be given to a designated qualified expert in forensic analysis of electronic records, not in the direct employ of any party, for retrieval and review of the audio file at issue, and any associated metadata, in order to protect the confidentiality and integrity of the data.  The Board further noted that there was no contention that the memory card contained evidence of protected activity.  Charges filed by an individual.  Members Hirozawa, Johnson, and Schiffer participated.

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Appellate Court Decisions

No Appeals Court decisions involving Board decisions to report.

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Administrative Law Judge Decisions

Hallmark-Phoenix 3, LLC  (12-CA-090718 and 094037; JD(NY)-24-14)  Cocoa, FL.  Administrative Law Judge Joel P. Biblowitz issued his decision on May 19, 2014.  Charges filed by Transport Workers Union of America, Local 525, AFL-CIO and International Alliance of Theatrical Stage Employees and Motion Picture Technicians, Artists and Allied Crafts of the United States, its Territories, and Canada, Local 780, AFL-CIO.

Hoot Winc, LLC and Ontario Wings, LLC d/b/a Hooters of Ontario Mills, Joint Employers  (31-CA-104872, et al.; JD(ATL)-17-14)  Ontario, CA.  Administrative Law Judge William Nelson Cates issued his decision on May 19, 2014.  Charges filed by individuals.

Pennsylvania State Corrections Officers Association  (04-CA-037648, et al.; JD-24-14)  Harrisburg, PA.  Administrative Law Judge Robert A. Giannasi issued his decision on May 23, 2014.  Charges filed by Business Agents Representing State Union Employees Association.

Source: NLRB