PENSION BENEFIT GUARANTYCORPORATIONWASHINGTON, D.C. and LOCAL R3-77, NATIONAL ASSOCIATION OF GOVERNMENT EMPLOYEES, SEIU,AFL-CIO

United States of America

BEFORE THE FEDERAL SERVICE IMPASSES PANEL

In the Matter of

PENSION BENEFIT GUARANTY
CORPORATION
WASHINGTON, D.C.

and

LOCAL R3-77, NATIONAL ASSOCIATION OF GOVERNMENT EMPLOYEES, SEIU,
AFL-CIO

Case No. 02 FSIP 67

DECISION AND ORDER

      The Pension Benefit Guaranty Corporation (Employer or PBGC) filed a request for assistance with the Federal Service Impasses Panel (Panel) to consider a negotiation impasse under the Federal Service Labor-Management Relations Statute (Statute), 5 U.S.C. § 7119, between it and Local R3-77, National Association of Government Employees, SEIU, AFL-CIO (Union).

      Following investigation of the Employer’s request for assistance in the case, which arose from negotiations over the renewal of a child care subsidy program,(1) the Panel determined that the dispute should be resolved through written submissions from the parties. The parties were informed that, after considering the entire record, the Panel would take whatever action it deems appropriate to resolve the impasse, which could include the issuance of a binding decision. Written submissions were received pursuant to this procedure, and the Panel has now considered the entire record.(2)

BACKGROUND

      The Employer guarantees payment of nonforfeitable pension benefits in covered, private-sector, defined benefit pension plans. It is a self-financing, wholly-owned Government corporation that does not receive appropriated funds. The Union represents approximately 520 bargaining-unit employees who work in such positions as attorney, accountant, actuary, and auditor, at grades GS-3 through -14. The most recent collective bargaining agreement (CBA) governing unit employees’ conditions of employment was negotiated by the Employer with a predecessor union, and expired in 1989. The parties have been negotiating over an initial CBA since the Union became the exclusive representative in 1999.

ISSUES AT IMPASSE

      The parties essentially disagree over four child care subsidy issues: the eligibility cutoff; the monthly amount of the subsidy; the amount of money the Employer annually will make available to fund the program; and the duration and retroactive effect, if any, of the agreement.

POSITIONS OF THE PARTIES

1.   The Union’s Position

     The Union proposes that PBGC make available "the sum necessary to provide for child care subsidies," but does not specify an exact amount. Payments would be retroactive to October 1, 2001, and would continue "for the life of the contract and thereafter until modified." The purpose of the program is to provide "an incentive" to recruit and retain PBGC employees by subsidizing their licensed child care costs.(3) Eligibility for the program is based on total family (or household) income (TFI or THI): for Fiscal Year (FY) 2002, employees must have a TFI of $65,000 or less; for FY 2003, $85,000 or less; and for FY 2004, $90,000 or less.(4) The amount of subsidy available to employees would also be based on employees’ TFI.(5) To determine the amount of the subsidy, applicants will be assigned a different set of percentage points based on the number of qualified children they have in child care.

    The proposed TFI and monthly subsidy levels are in the best interest of the Agency and its employees and "fulfill the goals set by Congress to provide a child care tuition program that serves to recruit and retain employees and provide a family friendly workplace." The initial program for FY 2001 "was so stingy that it was an embarrassment." In this regard, only 10 employees applied for child care benefits, and only 7 employees actually received subsidies.(6) An increase in both the TFI threshold and the monthly amount of the subsidy for the new program is, therefore, justified.

     As to the TFI threshold, the U.S. Census Bureau reports that median income for the Washington, D.C., area is $85,000 per year. As such, a TFI of $85,000 or higher is "in line with OPM’s [guidance]," and is consistent with TFI levels utilized by other Federal agencies for their child care subsidy programs. By increasing the TFI cutoff in FY 2003 to $85,000, and to $90,000 in FY 2004, the proposal expands child care subsidies so more employees may be eligible. Surveys conducted jointly and by the Union indicate that as many as 30 employees, 23 of whom currently have a TFI of over $60,000, would benefit from the Union proposal by FY 2004. Based on its huge reported surplus, PBGC can well afford to fund an expanded program. The cost of the program, if about 30 employees were deemed eligible, would be approximately $71,000 per year. In contrast, the Employer’s proposal would severely restrict eligibility and treats child care support as a form of welfare. The Employer’s arbitrary budget allocation of $60,000 per year "could very well reduce the tuition provided by the program in the middle of the year" and, in that event, would discourage participation. Finally, the Employer’s objection to raising TFI above $65,000 is at odds with its current practice of providing free or "highly subsidized parking spaces," that each cost approximately $180 per month, "to top managers and executives . . . without regard to income or budget caps."

2.   The Employer’s Position

     Basically, a 3-year child care subsidy program should be adopted. The parties’ initial agreement on child care subsidies for FY 2001, modeled after the child care subsidy legislation, was designed to assist lower income Federal employees. Its proposed program is also intended to assist such employees. In FY 2002, PBGC would make available for payment of subsidies a sum not to exceed $60,000. The same amount would also be made available in FY 2003 and in FY 2004, "subject to availability." To be eligible, employees must be full-time, have one or more qualified dependents for whom licensed, quality child care provider expenses are incurred, and a THI that does not exceed $65,000. THI for FY 2003 and 2004 would increase "by the percentage increase in General Schedule pay for the Washington, D.C., area." The subsidy would not exceed $400 per month(7) ($4,800 per household) or the actual child care provider expenses incurred, if they are lower. Child care subsidies would be allocated to applicants in inverse order of THI, "provided that eligible child care subsidy households shall not be removed from the program as long as they remain eligible to receive a child care subsidy." The parties’ agreement would remain in effect until October 1, 2004.

      The proposal represents a substantial increase in benefits to employees over the prior program. The allocation of $60,000 annually is more than sufficient to meet program needs and constitutes a per capita subsidy of $80.(8) In contrast, the Overseas Private Investment Corporation, the agency most comparable to PBGC in size, has allocated a per capita subsidy of only $42.11. Its proposed THI of $65,000 or less also is "closely in line with other Federal agencies’ positions," specifically the IRS and Department of the Interior, which both define THI as $65,000 or less.(9) In this regard, the bulk of PBGC’s employees, who hold positions at grades GS-12 and GS-13, and receive salaries between $55,694 and $86,095, do not fall far below the middle of this range. Thus, the proposed THI threshold "would enable many PBGC employees to qualify for child care subsidies," without being inconsistent with the legislation’s purpose of assisting lower income Federal employees. Furthermore, the monthly subsidy is nearly four times higher than the amount afforded eligible employees in the prior agreement, and also is consistent with what other agencies provide.(10) It is likely that 12 employees would be able to obtain maximum benefit. Finally, while the Employer previously offered to provide child care subsidies retroactive to October 1, 2001, this was proposed in an attempt to settle the dispute voluntarily. At this point, retroactivity is not justified because the Union delayed bargaining over the program for months and failed to cooperate with the Panel during its investigation and mediation efforts.

CONCLUSIONS

     Having carefully considered the evidence and arguments presented by the parties on the issue of the child care subsidy program, we shall order the adoption of the Employer’s proposal to resolve their dispute, but modified so the subsidy is retroactive to the beginning of FY 2002.(11) In our view, the Employer’s proposal is more consistent with the intent of Congress in authorizing Federal agencies to expend funds to assist "lower income Federal employees" with their child care expenses than the Union’s, and more closely resembles child care subsidy programs adopted by other Federal agencies. Among other things, we are persuaded that the THI eligibility threshold of $65,000 for FY 2002, with amounts in subsequent years based on the percentage increase in GS pay for the Washington, D.C., area, constitutes a reasonable definition of "lower-income employee" pursuant to OPM guidance.(12)

     With respect to retroactivity, it appears from the record that one of the reasons the parties opened negotiations at the conclusion of their FY 2001 agreement was to ensure that the reimbursement of child care expenses to eligible PBGC employees would continue without interruption. In the circumstances presented, we are unwilling to penalize lower-income PBGC employees on the basis of the allegations the Employer raises concerning the Union’s bargaining behavior. Moreover, by previously offering to make these benefits available to eligible employees from the beginning of FY 2002, the Employer has implicitly acknowledged that sufficient funds have been allocated for this purpose.

ORDER

    Pursuant to the authority vested in it by the Federal Service Labor-Management Relations Statute, 5 U.S.C. § 7119, and because of the failure of the parties to resolve their dispute during the course of proceedings instituted under the Panel’s regulations, 5 C.F.R. § 2471.6(a)(2), the Federal Service Impasses Panel, under 5 C.F.R. § 2471.11(a) of its regulations, hereby orders the following:

    The parties shall adopt the Employer’s proposal, modified by adding the following wording

15. Duration and Retroactivity. The Parties agree that this memorandum of understanding agreement shall be retroactive to October 1, 2001, and that this memorandum of understanding shall remain in effect until October 1, 2004.

By direction of the Panel.

H. Joseph Schimansky

Executive Director

July 2, 2002

Washington, D.C.

1. In 1999, Congress passed Public Law 106-58. Section 643 permitted agencies to use appropriated funds “otherwise available for salaries” to provide child care for civilian employees in order to “improve the affordability of child care for lower income Federal employees.” The legislation initially was effective through September 30, 2000, but was later extended through December 15, 2000. The Office of Personnel Management (OPM) issued regulations to implement the legislation in March 2000. The legislation was made permanent on November 12, 2001. Pub. L. No. 107-67, Section 630. The parties reached agreement on a 1-year child care subsidy program following enactment of the legislation.

2. In a May 31, 2002, letter to the Panel following receipt of the parties’ submissions, the Union requested that the Panel reject the Employer’s final offer, purportedly on the ground that it is “improper” or, in the alternative, grant it additional time to respond to the final offer. In this regard, the Union asserts that the day before it made its submission, it requested a “copy” of the Employer’s final offer. The Employer asserts that it “mistakenly” gave the Union a copy of a previous offer, dated March 6, 2002, which included a provision making the child care subsidy program retroactive to the beginning of FY 2002. In its May 29, 2002, submission to the Panel, the Employer’s final offer did not contain the retroactivity provision. In light of the decision herein, it is unnecessary to address the Union’s request.

3. Under the Union’s proposal, “qualified dependents” are children under age 13 (under age 18 for disabled children) who are members of the child care subsidy recipient’s household. To qualify, an applicant must be (i) a full-time PBGC employee; (ii) have one or more qualified dependents; and (iii) have at least one qualified dependent who receives child care from a licensed child care provider.

4. For employees whose TFI is over this threshold in any of the periods, and who have two or more children age 5 and under “requiring significant child care costs, the maximum TFI (to be eligible) is $90,000, $95,000 and $100,000 (respectively for each of the periods) to [be eligible for] 100% of $250 in subsidies.”

5. Eligible employees will receive a total “top benefit amount” of up to $450 per month.

6. The Union contends that PBGC expended only $10,000 initially, even though it budgeted $75,000 for the FY 2001 program.

7. For example, an employee with a THI of $64,995 would be entitled to 60 percent of $400, or $240 as a “base monthly subsidy.” The monthly subsidy would be increased by 15 percent (of $400) for each additional child, up to two children, in full-time child care; and 10 percent for additional children in part-time child care.

8. In its submission, PBGC notes that 5 C.F.R. § 792.221(a)(2002) requires agencies to notify Congress of the “specific amount” of appropriated funds the agency has budgeted for child care subsidies. The Employer asserts, therefore, that the Union’s proposal is nonnegotiable because it would have the agency ignore this legal requirement.

9. The Employer provided the March 2001 Report to Congress on “Child Care Subsidies in the Federal Government” (the “2001 OPM Report”), in which OPM states that the average THI threshold utilized by agencies is $50,000, and the range is $25,000 to $75,000.

10. According to the Employer, of the nine agencies polled, PBGC’s monthly subsidy is higher than four agencies and lower than five. Those agencies’ subsidies range from $240 to $1,136 per month.

11. Because the Employer’s proposal fixes the amount to be budgeted for the program each FY, we need not address its jurisdictional argument, raised for the first time in its written submission, that the portion of the Union’s proposal which would require PBGC to “make available the sum necessary” to fund the program, is nonnegotiable because it violates OPM regulations.

12. In its guidance to agencies, OPM sets forth several methods for defining “lower income employee,” one of which is to calculate 85 percent of a State’s median income. Contrary to the Union’s assertion, the “median income” in Washington, D.C., Virginia, or Maryland is not $85,000. According to U.S. Census Bureau figures, the State median income for four-person families in Federal FY 2002 is as follows: Washington, D.C. - $62,281; Virginia - $64,352; Maryland - $74,806. See Notice of Estimated State Median Income for FY 2002, 66 Fed. Reg. 16,060, 16,061 (March 22, 2001). Eighty-five percent of Maryland’s m