Dear Board of Governors,
We are taking the unusual step of writing to you directly because of the urgency of the current situation and our growing conviction that you have not been provided with a complete picture of the sequence of events that has resulted in the University’s first full scale work stoppage in decades.
As you know, CUPE Local 233 represents about 110 TMU employees working as custodians, maintenance and trades workers. We are the ones that work to maintain and clean the buildings, systems, and grounds of our campus. Since the start of the Covid-19 pandemic, most of our members have continued working on site, keeping the campus operating and safe until the return of students and other staff. In fact, CUPE 233 members were recipients of the 2022 “President’s Blue and Gold Award of Excellence” as the University’s pandemic essential on-campus workers team. We are proud of the work that we do and the role we play in securing the best learning environment for TMU students.
We are now well into a second week on strike picket lines when we want to be back at work. The breakdown in our efforts to negotiate a new collective agreement was a serious disappointment and we are deeply concerned at what we view as an intransigent approach to negotiation on the part of University management.
We believe a real wage increase and the recognition of our basic right to negotiate the terms of our pension plan – on the same basis as our faculty colleagues – is entirely reasonable, particularly in a context where University decisions have resulted in our members paying higher pension contributions than our faculty colleagues for the same benefits. It is deeply disturbing to our members, particularly following their loyalty and work during the pandemic, that TMU management has taken the official position that our members deserve fewer bargaining rights than faculty members and a second-tier pension.
As we hope you have heard, the issue of the pension plan is one of the two key outstanding issues in dispute – along with wages. However, we are concerned that you may not have been provided a complete picture of the pension problem.
We have had an opportunity to review the briefing materials on pensions provided to the Board on September 28, 2022 and we believe that the material provided did not give accurate and complete information about the issue, particularly in light of collective bargaining with CUPE 233, OPSEU 596, and TFA. We would like to briefly explain why we believe this.
In 2020 Board Approves Contribution Rate Increase Despite Lack of Negotiated Terms
As you know, in September 2020, TMU management recommended to you the filing of a new actuarial valuation (dated December 31, 2019) and the implementation of a 0.8% member contribution rate increase (BOG binder, p. 3) required by that valuation when filed with the provincial pension regulator. That recommendation was presented in a manner that made the member contribution increase sound like it was a legally required and automatic change. It was not.
In the supplementary actuarial slide deck prepared by Willis Towers Watson (WTW) for the Board, readers could see that in fact “Ryerson management is recommending an increase in Ryerson/employee contribution rates effective January 1, 2021” (emphasis added).
This increase applied to all members – including the members of the faculty association, TFA, whose collective agreement stipulates a fixed contribution rate that can only be modified through negotiation. To the best of our knowledge, no reporting of this collective agreement provision, or its potential consequences, was provided to the Board of Governors.
Even more significantly, no warning was provided to the Board of the threatened potential dispute or litigation or other labour relations disruption that might result from the Board’s approval of that contribution rate increase in 2020. There was also no mention made in this document of the fact that all three of the main unions representing pension plan members were strongly opposed to this unilateral increase of member contribution rates. It was a highly contentious and costly action by management.
As you now know, the Board of Governors approval of that management recommendation in 2020 led directly to the filing of a legal grievance against the Administration by TFA. Rather than attempt to negotiate a resolve as it had done previously in similar situations, management decided to fight the faculty grievance, and allocated an undisclosed but surely substantial amount of funding for associated lawyers’ fees, related billings, and staff time. Following months of hearings, legal submissions, testimony, and deliberations, arbitrator Matthew Wilson found that the Board of Governors had violated the TFA collective agreement. In his April 26, 2022 decision, arbitrator Wilson ordered the University to address this violation.
Same Issue Leads to Work Current Stoppage
Yet, this was not the end of the problem. Subsequent to the release of this arbitration award, the Board of Governors received a further set of recommendations from management that led directly to the current work stoppage.
On September 28, 2022, the Board of Governors received a recommendation from management to approve another actuarial valuation report applying as at March 31, 2022.
In the material that management provided to the Board, management reported the good news that “no additional contributions would be required” if the draft valuation were filed with the regulator, and that the plan was in a surplus on both the going concern and solvency bases. The Board of Governors accepted the management recommendation and the valuation was filed.
What the Board was not informed was that this new valuation showed not only that no contribution increases were required, but that the plan’s actuarial cost had fallen significantly.
Where the prior valuation had reported that the normal cost contribution obligation had increased from 16.84% up to 17.60%, the new normal cost obligation had fallen back to just 16.22%. At this lower level, it would have been possible to return the contribution rates to where they had been in 2020 – 16.84% – and still provide a healthy margin (or additional contribution) to the plan.
In fact, such a rate reduction could have restored the previous uniformity of contribution rates across all unions and employee groups and even re-established an equal contribution level between the employer and all plan members – in keeping with management’s stated preference. This is why we believe our current proposal on the table to resolve this pension dispute is very reasonable and should be no issue for the university to agree to so we can bring an end to this strike and return to work.
We have no idea why this was not considered, and even more seriously, why this option does not appear to have been shared with the Board of Governors. This is all the more concerning in light of the faculty association’s grievance and the arbitrator’s finding against the Administration.
Even in the event that management had preferred to maintain the higher level of contributions (despite the drop in actual required cost), it was clearly an option for the Administration to restore the prior contribution rates for all plan members and bring the pension cost issue into collective bargaining for all of the unions.
Instead, the Administration recommended to the Board that you approve a plan amendment that reduced contribution rates of faculty members only – leaving lower paid workers at TMU contributing to the plan at a higher rate than faculty, and moreover, one that was clearly unnecessary. We are certain that you can understand why this decision – and the imposition of a clearly inequitable two-tier pension structure on our members – was simply unacceptable to us.
Rapidly Growing Excess Funding
Finally, you may have heard that a further aspect of the dispute over pension matters is about a credit account established in the last three valuation reports known as the “Prior Year’s Credit Balance” or PYCB.
This controversial and rarely used mechanism allows employers in single employer pension plans who hold the sole liability for normal cost increases to accumulate and recognize voluntary “over-contributions”, that is, amounts contributed that are above the legal minimums, as a “credit” to the employer’s account. That credit can then be utilized to fund employer obligations. That is, management is creating a credit account using the higher contributions of the lowest paid workers at the University, which it uses for its own benefit.
In case of any doubt on this point, the guidance documents published by the Financial Services Regulatory Authority (FSRA) make it clear that “a PYCB may be applied to reduce certain employer contributions or payments”. A PYCB can even be used to pay for employer obligations to fund deficiency payments. Given the new, higher level of “overcontribution” flowing in to the plan, the roughly $8 million in PYCB balance is now likely to be well over $10 million and growing more quickly than ever.
We are sure you will agree that it is reasonable for CUPE – and other trade unions – to want to ensure that the monies contributed to our pension plan are used for the benefit of our members. This is also an issue in the current dispute that we believe should be easily resolved.
Finally, it is important to underline that CUPE’s pension bargaining proposals do not seek pension benefit improvements that would increase University costs. The valuation now filed has established cost certainty for the Administration until at least April 2025. The pension plan now holds a comfortable surplus and, as indicated above, the University’s actuarial cost has declined significantly. In the general market, long term interest rate increases have recently led many pension plans to increase their discount rates (reflecting improved projections of long-term rates of return) for the first time in over 20 years.
In this light, we are very disappointed to find ourselves on strike picket lines over an issue that could have been resolved quickly and at minimal cost. CUPE is simply seeking to ensure that along with a reasonable wage increase, our members can exercise the same right to negotiate over our pensions as our faculty colleagues. CUPE Locals at many other universities have this right and we see no reason that TMU is unwilling to recognize it for our members.
We ask that you take whatever steps may be in your power to ensure that Administration negotiators are given a new mandate to negotiate a resolve to the ongoing strike.
Sincerely,
Jason Vigilante
On behalf of the CUPE Local 233 Executive Board
CC: Simon Archer (Goldblatt Partners)
Jesmen Mendoza (Toronto Metropolitan Faculty Association)
Kella Loschiavo (OPSEU 596)
Mark Hancock (President, CUPE National)
Jenny O’Donnell (Chief Human Resources Officer, Toronto Metropolitan University)
Joanne McKee (Chief Financial Officer, Toronto Metropolitan University)