ADMINISTRATIVE REPORT

Date: January 8, 1998

Author/Local: K. Dobell/7627

CC File No. 1308

TO: Vancouver City Council

FROM: City Manager

SUBJECT: Dissolution of Dental Pool 061

RECOMMENDATION

THAT Council approve the City of Vancouver proceeding with the proposed mediation/arbitration process for the distribution of Dental Pool 061 funds.

CITY MANAGER'S COMMENTS

The City Manager RECOMMENDS approval of the foregoing.

COUNCIL POLICY

There is no applicable Council policy.

SUMMARY

A difference of opinion has arisen between municipalities regarding the dissolution of a regional Dental Pool, and the handling of voluntary surpluses and deficits. To avoid litigation between municipalities, a mediation/arbitration process has been recommended by the Labour Relations Administrative Committee (LRAC) to resolve the matter. The process has been also endorsed by the Labour Relations Bureau (LRB).

PURPOSE

This report will provide Council with background information on the dissolution of the Dental Pool, to enable Council to approve the proposed mediation/arbitration process.

BACKGROUND

The Dental Pool was established in 1986 collective bargaining following a dispute with the union groups related to the establishment of premiums which were based on experience patterns for each group. The 1986 Agreement with the unions provided that premiums in the Pool would be common to all groups and that withdrawal from the Pool would require any group to either pay any deficit or receive any surplus generated by the group from the date of the last general increase in the Pool.

In late 1995, a recommendation was made to the LRAC that the premium structure for employers in Dental Pool 061 should be increased by 2% to reflect overall usage in the Pool. The last increase in premiums had been in February 1989.

When the LRAC received the report in 1995, questions were raised relative to variances in the usage patterns of the various groups in the Pool. Subsequent reports showing the actual deficits and surpluses for each group were provided to the LRAC and as a result of that information some employers, including the City of Vancouver, made the decision to withdraw from the Pool. Those decisions effectively created a "domino effect" and led to the withdrawal of all groups from the Pool. As of 1996 November 30 the Pool had a balance of $500,000 which equated to approximately a two month surplus.

The Pool was effectively dissolved as of November 30, 1996, but as a result of the process specified in 1986 vis-à-vis withdrawal from the Pool, a disagreement arose among the employers regarding the application of the language.

A subcommittee of the Human Resources Advisory Committee was established to review the situation and to provide recommendations to the LRAC. The subcommittee recommended that the balance in the Pool be distributed to the groups with surpluses and that the deficits be forgiven. That recommendation was rejected by the LRAC and letters requesting payment of the deficits were sent out in May 1997. This led to a request from some employers to have the LRAC reexamine the issue. It became clear that there were different interpretations of the 1986 Memorandum and as a result the LRAC established a subcommittee to develop terms of reference for a mediation/arbitration process to resolve the issue.

A mediation/arbitration process was endorsed by the LRAC and by the LRB. The LRAC also resolved to request that all employers in the Pool, not just those represented at the LRAC, seek endorsement from Councils (or Boards) for the Terms of Reference for the mediation/arbitration process.

If municipalities choose not to proceed through the mediation/ arbitration process, lengthy and expensive litigation over the matter involving the unions and benefit carriers, would ensue.

Financial Implications

The costs associated with the mediation/arbitration process will be paid from the interest account in the Pool.

City employees overall will benefit if the terms of the 1986 Agreement are upheld. In that event, deficits will be recovered by increased premiums; CUPE 1004 has negotiated to have their surplus used to provide their members with a premium holiday. The following indicate the approximate values of the outstanding surplus/(deficit) amounts:

City/CUPE Local 1004 $689,300

City/CUPE Local 15 ($257,000)

Parks/CUPE Local 1004 ($ 5,200)

Parks/CUPE Local 15 ($ 12,600)

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(c) 1997 City of Vancouver