What a difference four years can make.
At the end of 2012, the Port Authority was an agency in disarray, having just weathered a bruising union contract fight only through intervention by Allegheny County Executive Rich Fitzgerald and then-Gov. Tom Corbett. The agency faced serious financial difficulties and had told the Amalgamated Transit Union it would make 35 percent cuts in transit service and lay off 560 workers. The county and state intervened with a promise of more state funding if the union made contract concessions including a two-year wage freeze.
Fast-forward to the end of 2016. As a result of new leadership, enhanced state funding and a better relationship with the union, the agency is in a much stronger financial position. Its board Tuesday approved a four-year contract with 2,200 drivers, mechanics and first-line supervisors that grants raises totaling 11.25 percent over four years.
Employee wages ($13.5 million), a pension contribution increase ($6.1 million) and increased uniform allowances ($1.7 million) will cost the agency $21.3 million over the life of the contract.
But with savings through changes in the employee health plan ($11.2 million) and the phasing out of 24 off-board fare collectors and other position changes ($4.5 million), the overall increase in spending for the authority will be only $5.6 million over four years.
“This was really about health care,” said authority CEO Ellen McLean, who came aboard in early 2013. “What we worked together on [with the union] was that we would share the costs. That’s where the savings came from.
“As a result, they were able to get the wages they needed and we were able to get the health care savings that reduce our obligation.”
The contract includes several changes in health care that could mean higher or lower costs for employees, depending on the plan they choose.
Right now, employees pay 3 percent of their wages toward health insurance. Beginning April 1, that will change to 8 percent of the cost of the premium for the plan they choose.
Also, the authority’s coverage currently is provided by Aetna and includes two levels, single or family. In the first two years of the new contract, employees can choose between UPMC and Highmark insurance with coverage for a single person, a couple or family and various levels of deductibles that determine the out-of-pocket cost.
Healthy, single employees may pay less than they pay now while an older one with a family plan may pay a little more. After two years, the agency and union will seek new bids for health care.
Steve Palonis, president and business agent for Local 85 of the transit union, said the contract is a good deal for his members.
“It locks in our health care for four years and it’s a pretty good wage package,” he said. “We were facing draconian cuts the last time, but we worked together and this time we both got what we needed.”
With the wage increases, pay for drivers will increase from about $59,000 a year now to about $66,000 the last year of the contract. That will place drivers among the top five highest-paid in the country, Mr. Palonis said.
Union members rejected a similar contract offer in September, but Mr. Palonis said leadership didn’t do a good enough job explaining the deal to the rank-and-file, who approved it overwhelmingly Sunday. A fact finder had recommended only minor changes to the original deal, and after an appeal to Mr. Fitzgerald, the agency agreed to restore the fourth-year raise to 3 percent when the fact finder had recommended 2.5 percent.
Overall, the authority is in a stronger financial position. Through November, it had $82.2 million in “unaudited deferred revenue,” the agency's long-term savings account. Better fiscal management and substantially lower fuel prices have been a major factor in building that cushion, Ms. McLean has said.
Stronger finances also will allow the authority to move forward with a major change in its fare policy Jan. 1. Instead of a two-tier system with fares of $2.50 and $3.75 for longer rides, the agency will switch to a flat $2.50 fare for riders who use pre-paid ConnectCards and $2.75 for cash customers.
The change reduces fares for about 26 percent of riders, costing the authority a projected $4.5 million in fare box revenue the first year. It hopes to make that up in future years through increased ridership, especially in outlying areas.
“Our customers have told us this is what they want,” Ms. McLean said.
Ed Blazina: 412-263-1470, eblazina@post-gazette.com.
First Published: December 20, 2016, 2:42 p.m.
Updated: December 21, 2016, 4:49 a.m.
