Labor: Nassau could owe bus workers

Nassau County could be on the hook for the full salary and benefits of 930 Long Island Bus union employees for the next six years, regardless of whether the system's new private operator intends to hire all of the workers or cut their pay, labor officials contend.

The situation stems from an agreement Nassau signed in 1973 when it consolidated several private systems into Long Island Bus. At the time, federal funds were provided under a section of the Federal Transit Act with the condition that Nassau cover the "wages, salaries, hours, working conditions, sick leave, health and welfare and pension or retirement benefits for employees" for six years after a new operator takes over the system.

"This is a straightforward agreement," said Robert Molofsky, an employment law attorney in Manhattan and counsel to the Amalgamated Transit Union, International, who is not involved in the Long Island Bus matter. "There is a strong case for the union."

Critics of the law, however, argue the wages-and-benefits issue is not cut-and-dried.

Charles Chieppo, a senior fellow at the Pioneer Institute, a Massachusetts think tank, said the transit act's Section 13(c) applies only when there is a specific connection between the acceptance of federal funds and the decision to privatize. After reviewing Nassau's 1973 agreement, Chieppo said, "The decision to contract it out doesn't seem to have anything to do with the federal grant."

Brian Nevin, spokesman for County Executive Edward Mangano, said, "Much of this will be settled in the courts, as the law is not clear." The 1973 agreement stipulates that an arbitrator settle any disputes.

Union officials said the Section 13(c) issue was discussed Tuesday at a Mineola meeting that included Mangano; officials of Veolia Transportation, the Illinois-based firm chosen to run LI Bus; and the president and attorneys for Transport Workers Union Local 252, which represents LI Bus drivers and mechanics. Mangano's office declined to commenton the meeting, which Nevin said was requested by the union.

"Nassau County's signed agreements with the federal government are still in force," Patricia Bowden, president of Local 252, said afterward in a statement. "We have the right to follow our jobs, keep our contract, and maintain our income and pensions. Nassau County officials signed those agreements, and the county is legally responsible to pay the cost of these obligations -- not the MTA and not any private operator."

The specifics of LI Bus' privatization -- including the estimated cost to run the system, which serves 100,000 daily riders -- are just beginning to take shape. Mangano has championed the switch as a cheaper, more efficient alternative to the Metropolitan Transportation Authority's operation. Skeptics, including rider advocates, have questioned whether a private operator can do the job for significantly less money and have pointed to the possibility of higher fares and service cutbacks, as already occurred under the MTA's aegis.

On June 10, Mangano said a committee he appointed had chosen Veolia, one of North America's largest private transit operators, to run LI Bus. Veolia was one of three bidders seeking the contract.

The bus system's entire annual budget under the public-private partnership would be $106 million, Mangano announced -- more than 24 percent less than its current $140-million operating budget.

It is not known how much of that $106 million would be for payroll costs. Details of the contract with Veolia are to be worked out by late July.

That budget number stands in stark contrast to the MTA's reckoning. Projected labor expenses alone for LI Bus in 2012 are expected to top $110 million, including for "payroll, overtime, health and welfare, other post-employment benefits current payment, pensions, other fringe benefits, reimbursable overhead," MTA documents say.

Nevin declined to comment on the financial gap, noting the formal contract between Nassau and Veolia is in the works. The MTA's "projections of future costs are not necessarily the same as what will be established in this Nassau-Veolia partnership," he said.

"In order to construct the operating budget and finalize the contract, this process will include a due-diligence period during which Veolia will assess and review all aspects of the system, how it operates, and its costs," Nevin said. "This due-diligence period is necessary because a significant amount of financial data, including labor costs and other vital information about Long Island Bus, resides with the MTA. Veolia will be meeting with the MTA and reviewing all relevant data as part of this process."

Mangano has said Veolia agreed not to raise fares or cut services in the first year and to run the system with little financial help from the county. Veolia said it intends to hire existing LI Bus employees.

Peter Bee, special counsel to the county, said "the implications of Section 13(c) are in dispute," and added that the county "has and always will abide by all rules and regulations that govern transportation policy."

Local union officials, however, said there is no question about the requirement: Nassau, they say, must make sure all of the system's union employees are made whole after Veolia takes control on Jan. 1.

TWU officials said they repeatedly reached out to the county regarding the federal obligation, including through a letter to Mangano in October.County officials said union pensions also are a point of contention. As MTA employees, LI Bus drivers and mechanics are covered under the state pension system, but would lose that benefit if LI Bus is privatized.

Union representatives, however, say Nassau is legally bound to find a way to keep workers in the state pension system, or offer them an equivalent.