Some strange bargaining going on in Evanston say some teachers. The board will match 403(b) contributions only for those who can afford it.

I normally don’t get into the details of collective bargaining agreements.

First of all, I know how hard the process is for those on the union side of the table. It is mostly volunteer labor and it usually involves long hours. At the end there are always those who think you could have done better and got more.

How do I know? Because I have bargained on the union side more times than I can remember.

Another reason I don’t normally comment on the details of collective bargaining is that it is a democratic process. The members have a vote. If they don’t like the deal, it’s on them. I don’t have to work it.

Having said that, I got some calls this week from teachers in Evanston.

The newly bargained CBA has a clause that allows teachers to have up to one percent of their salary matched by the board if it is placed in a 403(b).

By the way, 403(b)s have a ton of problems.

I am hearing that Evanston is not the only place where IEA (and maybe IFT locals) are bargaining this kind of a deal. I have been told that Oak Park River Forest has a similar arrangement.

So I am commenting because it seems to be a trend.

Matching 401(k)s is not unusual in the private sector. But this is a new trend in the public sector and in collective bargaining agreements.

And not a good one.

It is beyond a slippery slope.

The union can bargain special compensation for those in the bargaining unit based on what they do.

They should not bargain special benefits for a group of teachers based on who they are, on the fact that they have more or less money to save.

It is perfectly legitimate and a long-standing practice to bargain on behalf of a group of teachers within the bargaining unit for some benefit that may be preferential, such as a bump for those about to retire, or extra hours and compensation for those who teach special needs children. It is not okay to bargain on behalf of a group that is arbitrarily established, like those without kids in college or those without elderly parents at home and who have more or less discretionary income to place in a 403(b).

These are among the teachers who have written to me.

They have also written to the IEA and contacted lawyers.

I think they have a case to bring to the Illinois Educational Labor Relations Board (IELRB).

The Evanston school board will report out to the community those matching 403(b) funds as part of the bargained package.

Yet, the money wasn’t the collective part of the agreement.

Those Evanston IEA members who object say those funds should have been part of the salary package offered to every member of the bargaining unit. It should have been part of their TRS pensionable compensation. It should not be compensation available to only those who can afford to bank it.

It violates the basic principle of collective bargaining, they say. It’s what Governor Rauner has been pushing for.

It’s not my contract. So maybe it’s not my business.

That doesn’t make it a good idea.

28 Replies to “Some strange bargaining going on in Evanston say some teachers. The board will match 403(b) contributions only for those who can afford it.”

  1. You may have a point here, but for another reason. Don’t know how expensive this would be for a district, but suppose they take a cue from the State, and say, “Well, we can’t match the funds this year, for lack of revenue, but we’ll make it up next year.” So, what happens if they never do?

  2. Quote: ” It should not be compensation available to only those who can afford to bank it.”

    Gad, when I worked in the States, I was only able to bank money for ONE YEAR. I managed to save $50.00. I was a single parent who never had enough money to live on. My ex was a teacher so my support check was regular but wasn’t very much.

    I totally dislike the thought of those who can afford a benefit can use it and the majority who have responsibilities can’t.

    Glad I went to work overseas. It was the only decent salary I ever got. Couldn’t get tenure as a music teacher after going through 4 districts in 6 years. [My ‘home’ district eliminated my music position so I went roaming to other districts.] I was too exhausted to keep trying in the US and had to leave the country.

  3. Essentially I agree with you – however, As a retired teacher (38 years), I do not see how you separate out teachers of ‘special needs’ children. All children deserve equal, fair, and compassionate treatment as do all teachers.

    Sent from my iPhone

    >

    1. Thanks for the attached article on 403b[s]. Was with Lincoln Financial for years until I asked the representative how brokerage fees were determined and what I was being charged per trade. She vaguely answered it was based on the trade and then commented that she worked very hard on my behalf. I got the impression that she was insulted I even asked the question. I knew then I wasn’t in the best hands and transferred everything to another company where fees were low and statements easily understood. Wish I had known then what I know now. I often wondered what kind of kick-backs, if any, school districts were getting from Lincoln Financial and Valic who seemed to be the two companies allowed into my district.

  4. I retired from Evanston Township High School District 202 in 2012. We had a contract where the district deposited a fixed dollar amount in our retirement accounts that did not have to be matched by the employee and it may have been into a 457 rather than into a 403b. Generally I agree with the views you post here and if this trend is an attempt to replace our defined pensions with 403b and 457s I agree with you here. I don’t think that is what is happening here.

    Think about a salary of $100,000.00. If the employee puts in %1 ($1,000.00) the district also puts in $1,000.00 which is %100 return on your investment before any returns that the account may earn.

    This is a good deal as long as there is no attempt to replace our pensions with 403bs and 457s. They are supplemental not replacements, or at least they should be.

  5. I believe the objection is that only some teachers in the bargaining unit are eligible for the matching: Those that can afford the $1,000. Many teachers cannot. Duty to fair representation in bargaining a contract would suggest that this is not representing the interests of the bargaining unit as a whole. The board has a bucket that is dedicated to teacher compensation. The 1% match is money from that bucket that is now being arbitrarily distributed.

  6. The IFT is promoting interest-based bargaining over traditional bargaining during contract negotiations. While promoting common ground, it also reeks of company unionism, allowing provisions such as this 403b proposal to slip through.

    In a perfect world, we all would be holding hands and singing Kumbaya, which seems to be happening in some bargaining units.

    Memo to union leadership: This ain’t Utopia. Shelve the Kumbaya for your next campfire, and pass out the lyrics for songs about social justice and solidarity.

    Our predecessors fought too damn hard to get workers benefits we take for granted. Stop squandering it.

  7. Thanks, Fred for drawing attention to this issue.

    If I was a District 202 teacher I would be concerned about:
    Forced to put my raise in a fund, decided by my union – no opting out.
    Not being represented fairly since I can’t compete with someone who has the ability to tuck more money away, therefore earning more on their raise.
    And excuse me…but how much are the taxpayers (me, a teacher and Evanston taxpayer) getting hit with this? How do they even begin to project calculate when there’s matching funds?
    Lastly, who’s got the buddy in the finance world that’s sealing this deal for D202? No choice offered of providers, you take who they give you. And…it is NOT optional! A sweet, slippery deal if I ever heard one.
    Interestingly, I work in the same town, different district (65, K-8 schools) and I would find it hard to believe that these shenanigans would ever slide through.

  8. Thank you, Fred, for shining a light on this serious problem that needs to be nipped in the bud asap by NEA and AFT leadership. As the previous writer noted, the problem at D202 is accentuated by the fact that the teachers there have had only one 403(B) vendor (and not several to chose from) for many years now. As you (Fred) pointed out in your response comment, indeed, if a teacher cannot manage to come up with the funds, she will be excluded from this additional % bargained financial package- bargained by a union to which she paid equally in union dues to be represented. I don’t like the idea in the first place of my money being forced into a 403(b) instead of into my salary where I can decide how I need or want to spend it. But if a union negotiating team feels this is a good idea to have the district sock money away for teachers (for whatever reasons) than do it for all teachers and not just some who have the $ means available to them. Why would a union want the school to only contribute to a retirement fund for some teachers who can afford to invest and not for for those who can’t? This needs to stop.

  9. Use caution! The board lawyers are unscrupulous! A lot depends on how strong a position the union is in overall, are they willing to go on strike over it? The union should see what the district would offer instead of the 1% 403b match, without closing the door on it. Otherwise the district (lawyers) might say, “OK, the union does not agree to the 1% match, we will withdraw the offer”, and replace it with nothing. Then the district lawyers will act like they have given something when they actually have not.
    I saw something similar to this happen decades back. Part of our contract was our district supplied health insurance. Everybody, single or family coverage, teaching, support staff, and administrators all had the same insurance, and it was employer paid. The administration was going to leave the insurance intact, they were concentrating on low salary increases. The board made their offer. Some individuals who were single thought the insurance was unfair, as the board was spending more on family coverage for those with families. They felt that since the board was spending less on their coverage, they should get paid more. The union negotiators did not want to bring it up, but those members insisted. The board came back and thanked the union for pointing the different cost out, which (the board lawyers) used to reopen the insurance part of the contract which had initially been agreed to leave “as was”. The board did not increase their low salary offer at all, instead they began charging employees for family coverage. That did not help any union member, but it certainly hurt a lot of us. We also had the 403b, which was a “zero match”, the board never put in even one penny. The board acted like they were doing us a favor by “allowing” it, they contended they did not have to do so. Most of us had very little (or nothing) left to put into a 403b anyway, especially when we had to start paying for insurance coverage, so as Fred pointed out, a match to contributions would not have helped most of us anyway.

  10. As this was something that was bargained for, removing the matching % 403(b) contribution would have to be replaced with a fair benefit of near or equal $ value, this is the union’s responsibility to its members. The union must ensure that this gets replaced with a fair benefit since the % match was part of the negotiated financial package. Suggesting otherwise (that it will get tossed out and this negotiated benefit will be entirely lost) is a dubious tactic to insure the continuation of this unfair deal or to punish those who challenge it.

    1. Legally “fair bargaining” requires that once a financial offer is placed on the table by either side, the union cannot go up and the board cannot make an offer of lesser value.

  11. Terrible plan!!!!!

    It’s not fair to those members that can’t afford or don’t want to contribute to a 403b plan. The union should have negotiated a contract that would have benefited everyone equally!

    It’s true that in the private sector there’s a plan like this (401Ks). However, there’s one very important difference between these two scenarios, the participants in the 401Ks don’t belong to a union, they don’t pay union dues.

    Another problem with this plan is that there’s only one vendor.
    To this day, I question the reasoning behind the decision to go from multiple vendors to just one. This eliminated competition, which in turn could have benefited all employees. I wonder what was the incentive for this change? ?????

    1. I personally know people working in the private sector with a 401k that the employer will match up to the legal limit (I think it was 6%). They are union, and they pay union dues. They are basically in the same boat, if they can’t afford the full 6% they get less company match. They are in social security, no pension system per se, the 401k is supposed to be in place of a pension. One important difference is it was put in place by the employer, (not negotiated with the union). There are other technical differences but the main ideas are the same.

  12. Fees paid to Mass Mutual are much lower than the fees paid to all of the previous vendors.

    There are many unionized workers that participate in 401ks.

    1. Of course. This is not a simple voluntary contribution to a 401(k) or even a 403(b). I did that. It is a contractual arrangement where the board matches the contribution of members of the bargaining unit, but only those who can afford to bank money of their own. In your experience, is this a common practice? Not from my experience. Why would you bargain that a member of a collective bargaining unit receive a bonus based on their ability to put money into a privately managed defined contribution annuity?

      1. I don’t believe that annuities are one of the choices available. In my opinion most annuities are a rip off.

        401ks, 403bs, and 457s are not bonuses. They are tax incentivized accounts to encourage savings for retirement beyond SS and other pensions. Evanston has fairly wealthy school districts and they compensate their employees well enough that all could afford a %1 contribution. That would be 1% of each pay and would diminish their take-home pay by less than %1 because of the tax benefits.

        I understand that some do not want to put money in a 403b, and that is a compelling argument against this provision, but I don’t understand why they don’t want to make an investment that is guaranteed at least a %100 return.

      2. It is a bonus. The form is a match from the board that comes from the district budget earmarked for teacher compensation.

    2. Mike, I was very happy with my 403b. I had been contributing to it since I started at ETHS in the 1980’s.. My fees were not any higher than Mass Mutual’s , but more importantly, it was my money, and I should have been able to chose were I wanted it to go. Almost all the schools in the area have multiple vendors. If Mass Mutual was such a much better company, I wonder why more districts didn’t go for the better investment and chose to have just one vendor?

      1. There are a number of fees beyond the annual fee that investment advisers and vendors charge for mutual funds that are taken from your investments that you don’t see or notice easily. MM was able to give us lower fees because they had an exclusive contract and because the choices they provided such as index funds were not available from other vendors.

        Mass Mutual isn’t necessarily a better company but the district negotiated a better deal with them than they had with any of the previous vendors.

  13. Thank you Fred. Yes, that’s exactly the problem and why this is a violation of a union’s duty to fair representation.

  14. MIke Barret, you’re missing the point. Not “everyone” can have this benefit, and therein lies the violation of fair representation. Only those who HAVE THE DISPOSABLE MONEY AVAILABLE TO THEM can have access.

    1. They are not “disposing” anything they are saving it and earning a 100% return. They are already living with less money and can use their increase in salary to provide the funds to earn the match and still have more than they have now.

  15. To “Anonymous” above,
    Sigh. Not sure why this is so hard for a few folks to get: Some of us simply do not have that extra saved money (equivalent, in this case, to 1% of our salary) available to invest. I should not have to enumerate some of the financial woes that many of us face and why we are living paycheck to paycheck (at best) and cannot afford to take money from our savings or checking account to invest in this matching plan. You appear to be missing the point. I agree with above statements from Harvey Gordon, Maritza Figiel and Klonskey.

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