Massive Losses in Local 804 Health Fund

June 20, 2008: A report by Local 804 members reveals that the union’s health fund lost nearly $18 million from 2003 to 2007. During that time, the fund lost 55 percent of its assets. Local officials diverted millions of dollars to the local’s pension plan and hiked members’ co-pays.

Now members are asking what the new contract will mean for the health fund and their benefits.

This crisis in the health fund was brought to light by Local 804 Members United, a network of UPS Teamsters in the New York local who work together to defend their contract and benefits.

Local 804 members reviewed the fund’s financial documents through 2007—the most recent year that the plan’s financial records are publicly available. The fund’s own records revealed that the money allocated under the 2002 UPS contract was not enough to cover members’ healthcare costs. For years, the fund spent down its reserves to make up for the shortfall.

With the health fund already in trouble and losses topping $6 million, Local 804 officials voted with UPS to cut the company’s contributions to the fund. Over the next year, UPS’s healthcare payments were reduced and millions were diverted from the health fund to the pension fund.

Starved for contributions, the health fund lost a whopping $11.3 million in two years. Local 804 members were never told a word.

“It’s totally irresponsible how they let these reserves disappear,” said Pete Mastrandrea, a Local 804 feeder driver. “It’s inexcusable how they’ve managed these funds and they need to answer to the membership for it.”

Information Brownout

By June 2007, the Local 804 Health Fund had lost nearly $18 million and negotiations on a new UPS contract were underway.

The negotiations gave the union the opportunity to make UPS pony up the money the health fund would need to protect members’ benefits and beef up the fund’s depleted reserves.

Local 804 officials voted with UPS to hike members’ co-pays while the new contract was still being negotiated.

“It’s unprecedented to make givebacks like that in the middle of bargaining,” Mastrandrea said.

When the contract came to a vote, Local 804 members showed they were ready to take on the company to defend their benefits. Members mobilized to reject the company’s first contract offer over the objections of both management and the local executive board.

As a result, members won a better deal that included record pension money. But unaware of the extent of the damage to the Health Fund, members approved a new contract that included just a 30¢ an hour increase into the medical plan in the first year.

It remains to be seen if that will be enough to rebuild the depleted fund without raising the healthcare costs of Local 804 members or retirees—or dipping into contributions that are supposed to go into the Local 804 pension fund.

“When Local 804 members turned down the contract by three to one, that gave our negotiators leverage to make UPS put the money on the table to protect our benefits,” said steward Tim Sylvester. “Our pension fund has sunk into Endangered Status and our Health Fund has lost $18 million on this Executive Board’s watch. There is no excuse if they settled short in bargaining and failed to get what they need to rebuild our benefit funds.”

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