The months-long contract negotiation between officials at the Bay Area Rapid Transit (BART) system and public employee unions representing BART employees has been a protracted display of the stranglehold public employee unions have over California government. At the center of the dispute are modest proposals by BART to have BART employees contribute more towards their pension and health insurance plans.
BART employees were so incensed at the proposal that they even went on strike for four and a half days in July, disrupting services for the tens of thousands of Bay Area commuters reliant on the BART system. Demanding a 23% salary increase over three years, the Service Employees International Union Local 1021 and Amalgamated Transit Union Local 1555 launched the strike without regard for taxpayers and BART riders.
Far from being “blue-collar” workers resisting mistreatment by BART management, full-time BART employees have benefited from high wages, low health insurance contributions, and perks transit employees across the state don’t even have.
- The average BART employee is paid more ($76,551) than the median household income in San Francisco ($71,745)
- The average BART employee is paid far more than transit workers in other systems; $30,000 more than Los Angeles transit employees and $10,000 more per year than employees of San Francisco Muni
- Unlike most people with retirement plans, BART employees have never contributed to their pension plans
- BART employees only contribute $92 a month towards their health insurance, half the national average for individuals
As a consequence of these advantages, the BART system is facing several systemic problems:
- BART’s pension plan is underfunded by $187 million using the most optimistic 30-year investment return assumptions (7.5%) ; using assumptions more in line with the private sector (5.5%) the system is actually short $797 million
- In 2012, taxpayers lost $17 million that could have gone towards services to pay the contributions BART employees should be making (the “pension pickup”)
- Between 2000 and 2012, retirement benefits grew from 3% to 8% of the BART budget, with retirement benefits projected to grow even further
In order to address this problem, BART has offered the following plan, from the San Francisco Chronicle:
- Length of contract: 4 years
- Pay: 2.5 percent raise each year
- Pension: Employees would pay 1 percent the first year with their contribution increasing 1 percent every year.
- Health insurance: BART would cap its contribution at the cost of the cheapest family coverage plan.
In countering this, the two public employee unions are counter offering:
- Length of contract: 3 years
- Pay: 4.5 percent raise each year
- Pension: 1.4 percent first year, 2.8 percent second year, 4.9 percent third year
- Health insurance: Increasing average premium contribution by 15 percent
Incredibly, this latter plan is more modest than prior demands by the unions. With regards to salary, the unions began with an “offer” of accepting a 23% pay increase, then 20.1%, then 15%, and now the present 13.5%. Under the current offer, the average salary for full-time BART employees can be projected to far exceed the median household income in the region.
However, perhaps the most unreasonable portion of both plans is the phasing in of what ought to be a common sense policy: having BART employees pay their full share of their statutorily established contribution rates towards their pensions. Why taxpayers should have to not only finance a lavish compensation and benefits packages, but continue to exempt BART employees from paying their fair share isn’t clear.
While BART employees certainly do provide an important service for Bay Area residents, that doesn’t justify lavish, unsustainable, and irrational perks. Bringing common sense and fairness into the heated negotiations is much needed, but difficult to see, particularly with the looming threat of a second strike.
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