Health-Care Rift Is the Flashpoint for MTA Strike

At the heart of the labor dispute that has yanked thousands of buses off Los Angeles County streets is a volatile issue that has little to do with transit: health care.

The mechanics who fix the Metropolitan Transportation Authority’s 2,400 buses walked off the job Tuesday after negotiations over their health plan stalled.

It is a struggle over cash and control, magnified by a difficult economy that has left public agencies determined to trim costs and public employees eager to hang onto or boost benefits granted in better times. In this case, the disagreement centers on the mechanics’ union’s Health and Welfare Trust Fund, a $17-million pool funded by the MTA but administered by the union.

Of the six trustees who oversee the health fund, five are union officials and one represents the MTA. The transit agency contributes about $1.4 million a month to the fund, about $500,000 short of what the union has said it needs to cover rising health-care premiums.

“We haven’t had an increase in that medical fund since 1993,” said Jim Lindsay, the union’s treasurer and a fund trustee. “As a matter of fact, we’ve taken a decrease. I don’t think it’s fair at all.”

In 1993, he said, the fund provided health benefits worth $573 a month to each mechanic. That amount slipped to $533 the following year and hasn’t changed since. The MTA is now offering to increase its subsidy by 19%, to $634 per employee, in the first year.

Overall, the transit agency has proposed boosting its health-care contribution by 49% over the next three years, as well as providing a $4-million infusion to stabilize the trust fund, said Los Angeles County Supervisor Zev Yaroslavsky, who heads the MTA board.

“It’s a fortune, and they have the gall to turn around and say that they’re not getting enough,” Yaroslavsky said. “I think this strike is an embarrassment to organized labor.”

Lindsay said the union wants the MTA to boost its contribution to $705, retroactive to Oct. 1, with annual increases of 15%.

By some measures, the mechanics enjoy a richer menu of health benefits than other MTA employees who do not have a contract. They pay less money in annual deductibles and out-of-pocket costs, as well as less for some health services, such as dental and orthodontic care, prescription drugs, and contact lenses and glasses, according to a September study conducted for the MTA.

An unmarried MTA mechanic pays nothing for health care; a married worker with children pays $6 per month.

The mechanics had worked without a contract for more than a year. But with a strike imminent last weekend, the MTA released an audit by an outside accountant that the agency said cast doubt on the union’s management of the health fund.

The accounting firm, Thompson, Cobb, Bazilio & Associates of Torrance, found that the union had “adequate” controls over the fund and reported no major misspending.

But there were some problems. The union spent as much as $720,000 over the last four years in an attempt to automate its accounting system; it still is not automatedThe audit found that the union transferred $432,000 per year from the health fund to its general fund to cover administrative costs, but it refused to give the auditors documentation to support the spending. “It’s a breach of trust,” Yaroslavsky said.

Another MTA board member, County Supervisor Yvonne Brathwaite Burke, said she had been troubled to learn that the fund’s insurance broker earned commissions based on health-care premiums -- a situation the audit branded “an inherent conflict of interest.”

The broker, William Delaney of PGA Insurance Services in Torrance, made about $280,000 per year in fees and commissions, according to the audit. Delaney did not return calls for comment Tuesday.

But mechanics union leader Neil Silver said that the union, which pays Delaney $59,000 annually, was willing to change its arrangement with the broker to reach a deal.

Lindsay, the union treasurer, said the mechanics would be willing to give up some control of the foundering fund, perhaps allowing an even split between union and MTA trustees.

“We’d be able to go three and three, for equal representation,” he said. “But we’re not willing to give management control, because they’ve already demonstrated in negotiations that they want to gut our medical benefits.”