Summary: CTA and Unions Agree to Historic Contract (June 27, 2007)
- Five-year contract agreement reached
- CTA and 17 labor unions reached a new five-year contract through an expedited arbitration process.
- The agreement covered approximately 10,200 CTA employees (88% of the workforce).
- Contract period: January 1, 2007 – December 31, 2011.
- Pension and healthcare changes required approval from the Illinois legislature.
- Purpose of the agreementAddress rising pension and healthcare costs.
- Reduce CTA expenses and improve long-term financial stability.
- Create reforms intended to make CTA operate more efficiently.
- Move away from repeated financial crises.
- Leadership statementsMayor Richard M. Daley said CTA employees and management had taken steps to control costs and urged state lawmakers to provide additional funding.
- CTA President Ron Huberman said management and employees recognized they needed to address pension and healthcare issues together.
- CTA Board Chairman Carole Brown stated that the pension problem had been identified and a solution had been created, but state funding was still needed.
Retiree Healthcare Reform
- Created an independent healthcare trust to manage retiree healthcare benefits.
- Trust would be funded through:
- Investments
- Contributions from active employees
- Contributions from retirees and dependents
- Active employees would begin contributing:
- At least 3% of compensation on a pre-tax basis
- Trust governance:
- 3 union representatives
- 3 CTA representatives
- Illinois Auditor General representative
Pension Reform Changes
- Goal:
- Bring CTA pension funding into compliance with the state requirement of reaching 90% funded status by 2059.
- Pension board structure:
- 5 union representatives
- 5 CTA representatives
- Illinois Auditor General representative
- Voting changes:
- Eliminated “bloc voting.”
- Members would vote independently.
- Contribution increases:
- CTA contribution increased from 6% of payroll to 12%3% credited toward debt service on pension obligation bonds.
- Employee contribution increased from 3% to 6%.
Benefit Changes for Employees Hired After January 1, 2008
- Retirement eligibility changed:
- Previously:
- Reduced pension: age 55 with 3 years of service
- Full pension: age 55 with 25 years of service
- New rules:
- Reduced pension: age 55 with 10 years of service
- Full pension: age 64 with 25 years of service
Key Takeaway
The 2007 agreement was presented as a solution to CTA’s pension and healthcare challenges by increasing contributions, restructuring benefits, and creating new oversight systems. The plan shifted more financial responsibility onto employees through higher pension and healthcare deductions while attempting to stabilize the pension system long term