More than 20,000 health-care workers in Nova Scotia — from lab technicians to nurses to housekeeping staff — may be days away from the first province-wide strike. The deal-breaker: what to do with the pension-plan surplus.

Such a strike would cripple the health-care system, says Carl Crouse, president of CUPE Local 451 with the Annapolis Valley District Health Authority, whose union will be in a legal strike position in early November. (Within weeks, the other four unions involved in the dispute will also be in a legal position to strike.)

“I’m hoping and praying it will be averted,” he says. “To date, we have seen extremely minute movement.”

Negotiations have not gone well from the outset. And they took a turn for the worse when the province’s eight district health authorities made a formal complaint to the Labour Relations Board that the Canadian Union of Public Employees was bargaining in bad faith. The foundation for that claim was the fact that the union had dared to raise the issue of pension benefits at the table.

From the health authorities’ perspective, that is a no-no. Any changes to the defined-benefit plan, which is administered by the Nova Scotia Association of Health Organizations on behalf of its members, must be made by the NSAHO’s board of directors, which has no union representatives. Changes are usually made following recommendations from the board of trustees, which was revamped in 1998 to allow four of the 20 members to be labour representatives.

“We did not feel we could negotiate with CUPE on behalf of 3,500 employees without affecting everyone else’s pension as well. We felt this was an unfair practice,” says Bob Cook, NSAHO president and CEO.

The Labour Relations Board dismissed the district health authorities’ contention “that while pensions and benefits may be bargainable in principle, the structure of the NSAHO pension and benefits plan puts this particular plan beyond the control of the DHAs and, thus, changes to this particular pension plan are not a bargainable issue.”

The five unions involved in the process — four of which are involved as intervenors — heralded the board’s ruling as a “landmark” decision.

What sparked the issue was the discovery by the unions — CUPE, the Nova Scotia Government and General Employees Union, the Nova Scotia Nurses’ Union, the Canadian Auto Workers and the Service Employees International Union — that employers had been using surplus funds generated by the $2.2-billion plan to pay the plan’s service costs.

“What they have been doing is putting in the same amount as employees and paying the outstanding from surplus. This was not publicized to the members of the plan or their unions,” says Crouse.

According to the NSAHO, the pension plan is fully funded and among the top DB plans in the country. It is in the top 25%, based on early retirement provisions; top 35%, on bridge benefits; top 20%, on post-retirement indexing provisions; and top 6%, on post-retirement spousal survivor benefits.

“Our plan is a very traditional one,” says Crouse. “Employers are obliged to fund an outstanding service cost.”

Not so, says Cook: “Employers would not have paid this outstanding amount out of their own pockets. Employers match what employees put in. It’s been that way since the inception of the plan, 45 years ago.”

Using the surplus to fund outstanding service costs, he notes, is not “unusual.” In the absence of a surplus, these costs would be funded by increased contributions from members. (Rates went up 1% this year and are slated for a similar increase next year.)

Although it’s not clear when or how the practice of using surplus monies to fund service costs began — and why the unions were not aware of this practice — one thing is clear, says Janet Hazelton, president of the Nova Scotia nurses’ union. The Plan Text, the legal document that outlines how the plan must be governed, states that any use of the surplus must be approved by the board of trustees — every time. “If they ever asked the board of trustees for permission, we can find no record of it,” says Hazelton.

“Many members feel this is unethical,” she adds.

Labour is pushing to have surplus funds spent on plan benefits from now on, and there is some indication the unions may fight for employers to replace funds taken from the surplus in the past.

@page_break@Employees currently contribute about $37 million to the plan each year. Employers pay an equal amount, raising total contributions to $74 million. The cost of managing the plan and meeting future obligations for payouts, however, is $90 million. At issue is how the remaining $16 million gets paid.

Bottom line, it will cost employers an additional 1.4% of their payroll to pay for service costs out of their budget. “Is it worth having everyone out in the province for 1.4%?” asks Hazelton.

Until recently, the NSAHO has been quiet on this issue. As the deadline for strike action nears, the association is becoming more vocal. In an Oct. 18 release, the NSAHO stated that “the union has tabled proposals to change significantly the cost-sharing arrangement that has historically been in place between the employer and the employees who participate in the NSAHO pension plan.”

“These proposals require substantial health-system dollars to implement and are beyond our ability to pay,” says Peter MacKinnon, CEO of the Colchester East Hants Health Authority. But, he adds, “It is our hope that, with more discussion, a resolution to these outstanding issues can be reached without resorting to a strike.”

That cautious optimism is shared by everyone, but the situation does not look rosy. “We have spent a lot of time trying to convince people that they have an exceptional plan and that the way the trustees have operated in the past is prudent and in keeping with industry practices. But that is a tough message,” says Cook.

That message is being met with tough measures from the unions. “Nobody wants a health-care strike in this province — especially health-care workers,” Hazelton says.

But, she asks, “What choice do we have?” IE